Facebook Instagram Linkedin X Youtube
Home Blog Page 10953

Audi begins 2019 with multiple international awards across the range

SEVERAL MODELS of the Ingolstadt, Germany-based car maker Audi have recently been feted acclaim and recognition by various third-party institutions worldwide on the basis of its design and safety features, technology, and market satisfaction. Here are the more notable ones:

AUDI Q5 WINS IN AUTO BILD ALLRAD GERMANY
Leading German automobile magazine AUTO BILD Allrad presented the readers’ choice “All-wheel-drive Car of the Year 2019” Award to the Audi Q5. Garnering the most votes in the “Off-roader and SUV” category, the Q5 came out on top of a field of 29 rivals.

THE AUDI A8 AND A7 SPORTBACK ARE ‘WORLD LUXURY CAR’
The A7 Sportback is the second Audi to take home the award after the Audi A8 won the title in 2018. The awards were presented at the New York International Auto Show. The World Car jury, consisting of 86 members from 24 countries, voted to distinguish the A7 Sportback as the best new luxury car in the world. This is the tenth victory for Audi in one of the World Car categories.

INTERNATIONAL ENGINE OF THE YEAR AWARDS: AUDI’S 2.0 TFSI ENGINE WINS IN ITS CLASS
The 2.0 TFSI from Audi has won the “International Engine of the Year” award in the category of engines with between 150 and 250 hp. An international panel of experts comprising 70 automotive journalists voted the four-cylinder gasoline engine the winner of its class.

KELLEY BLUE BOOK USA: AUDI Q5 AND AUDI Q7 AS BEST BUYS:
The Audi Q5 also received the Best Buy Award in the Compact Luxury SUV category while the Audi Q7 is the Best Buy in the Midsize Luxury SUV category for the 2019 model year. The winners were chosen by a panel from Kelley Blue Book, a leading market observer in the US. With the Q5, which has now won the Best Buy Award two years in a row, the panelists cited the innovative technology, quattro all-wheel drive, extraordinary finish and the high efficiency. Tipping the scales in favor of the Q7 were not just its quality and luxury character, but also the elegant design and the quiet, comfortable ride.

U.S. NEWS & WORLD REPORT’S BEST FAMILY SUV: THE AUDI Q7
The American news magazine U.S. News & World Report has named the Audi Q7 the “Best Luxury 3-Row SUV for Families.” They praised the large rear seat with optional third row, the rear USB ports, the 360-degree cameras, the sensor-controlled tailgate and the sunblinds for the rear windows and rear side windows. The interior reflects the high-quality materials and craftsmanship for which Audi is known. Innovative infotainment abounds with such features as MMI navigation plus, the Audi virtual cockpit, head-up display, Audi smartphone interface and Bang & Olufsen Advanced Sound System with 3D sound. A wide range of assist systems, from the standard Audi pre sense basic and Audi pre sense city to the optional lane change assist provide additional convenience and safety. The Q7 also shined in terms of driving dynamics thanks largely to the standard quattro drive.

US TOP SAFETY PICK 2019: AUDI A6 AND AUDI Q8
The Insurance Institute for Highway Safety (IIHS) in the United States recognized the new Audi A6 and Q8 for their high safety standards. The A6 was named Top Safety Pick+, the top honor from the IIHS, for its Matrix LED and HD Matrix LED headlights. The latter are also available for the Q8, which was awarded Top Safety Pick. Both models received good ratings in all six IIHS safety tests as well as the top scores for frontal protection thanks to numerous assist systems. Both the A6 and the Q8 come standard with Audi pre sense front. It can warn of impending collisions and initiate appropriate braking depending on the situation and speed. Pedestrians and cyclists can be detected while the vehicle is traveling at up to around 85 km/h and other vehicles can be detected when the vehicle is moving at speeds of up to 250 km/h.

CAR AND DRIVER USA: FIVE BUYING RECOMMENDATIONS FOR AUDI MODELS
The prestigious US magazine Car and Driver tested nearly 500 vehicles and selected five Audi models as 2019 Editor’s Choice. Four of these recommended buys are classified according to US standards as compact, mid-size and full-size sedans. The Audi A8 was the top choice for its excellent ride comfort and quiet, first-class interior. Dominating the Mid-Size Sedan category was the Audi A6, which stood out in particular for its strong performance, acoustic comfort and upscale instrument panel, and the A7 Sportback with its sophisticated styling, cohesive operation and top technologies. The A5 Sportback was praised for its strong powertrain, high-quality and large rear hatch, which makes loading easy. Rounding out the success of the four rings brand was the Audi Q7, which was named a recommended buy among the Mid-Size Crossovers and SUVs thanks to the high flexibility afforded by the third row of seats, its attractive design and remarkable ride quality.

WHAT CAR? UK: SUCCESSES IN ENGLAND, AUDI Q7 HONORED
The British automotive magazine What Car? honored two Audi models in its annual Best Choice awards. The Audi Q7 was named Luxury SUV of the Year, winning the category for the third year in a row. Supplementing the two overall wins were an additional five What Car? awards for the brand with the four rings: The A1, A3 Sedan, A3 Cabriolet, Q5 and A8 L were each named the best buy in their price class.

For more information, contact Audi Philippines at 727-0381 to 85 or visit its showrooms in Greenhills, Global City, Alabang and SM Seaside City Cebu.

Why Nike picked this tiny atelier to make its denim shoe

IN THE back corner of a clothing boutique in downtown Manhattan, past the bolts of denim hanging from the wall, eight tailors and one cutter are at work sewing custom jeans. Each will make just two or three pairs in a day.

The shop, called 3×1 (three-by-one), has intrigued shoppers and industry insiders alike. It is known for experimenting with selvedge denim sourced from mills around the world and for playing with new designs. Fans include professional athletes such as Lebron James, Tony Parker, and Victor Cruz, whose superhuman physiques are ill-served by off-the-rack denim. A fully bespoke 3×1 pair can run upward of $1,200, but there are other ways for a high-end label to gain exposure to new shoppers.

On Friday, 3×1 and Nike Inc. are releasing three limited-edition selvedge denim shoe styles, putting the type of fabric on the Air Force 1 for the first time ever, after 1,500 iterations. The sneakers cost $130 and come in stonewash blue, raw indigo, and black denim. It’s an important moment for the small denim house. “We’ve had so many Nike relationships over the years,” said owner and denim industry veteran Scott Morrison. “I hope that this will be the first of many things we get to do.”

Nike is under constant pressure to develop new styles, so it often collaborates with outside fashion houses and designers. Drops happen every few days in an eternal cycle of hype, long lines, and sellouts. Nike delivered strong results globally last quarter, but had weak sales in North America due to a slow period at its US retail partners. Using non-traditional materials is one way to stand out, but the new collaboration won’t be the first denim sneaker. Adidas, Puma, and Converse have all sold denim styles. Nike previously made denim skateboarding sneakers and Air Jordans in collaboration with Levi’s.

The relationship between Nike and 3×1 began, at least in part, like many New York relationships: thanks to forced proximity. The 3×1 store is right next door to NikeLab 21 Mercer, a high-concept shop that’s frequented by celebrities and hosts regular sneaker drops. Nike Chief Executive Officer Mark Parker began visiting the neighboring shop in 2011, and Morrison often chats with Al Baik, senior creative director of men’s footwear at Nike Sportswear. Baik wanted to put high-end denim on people’s feet. ”It only made sense to leverage Scott’s passion and expertise to get us there,” he said.

Denim is enjoying a widespread resurgence at the moment, having mounted a comeback in the past two years after shoppers passed over the classic style in favor of leggings and yoga pants throughout the mid-2010s. Morrison was along for that whole ride: He’s been in the denim business for decades, first with Paper Denim & Cloth, then Earnest Sewn, before going on to run Japanese denim company Evisu.

At 3×1, the custom jeans are its standout product, but the bulk of its business is in wholesale. The label’s regular jeans run for around $200 to $400 and can be found in luxury retailers such as Saks Fifth Avenue, Bloomingdale’s and Net-a-Porter.

Morrison hopes to open additional 3×1 stores in California and Europe. He declined to share revenue numbers, but said the business is now “as close to I’ve ever seen to profitable.” — Bloomberg

Analysts selective on bank stocks

ANALYSTS are painting a rosy picture for banking stocks following the sector’s mixed performance in the first quarter and the central bank’s decision to slash reserve requirements, but advise investors to remain selective on which ones to include in their respective portfolios.

The barometer Philippine Stock Exchange index (PSEi) gained 6.1% in the first quarter, higher than the 2.6% posted in the last quarter of 2018 and was a reversal from the 6.8% decline in 2018’s comparable period.

Banks, in general, underperformed the market last quarter, with the financials sub-index dipping one percent. The quarter-on-quarter loss was a reversal from the 9.8% gain in the final three months of 2018 but was an improvement from the 6.3% decline a year ago.

This decline was reflected by the listed banks’ share prices during the January-March period with only six of the 14 listed banks posting quarter-on-quarter gains: Philippine National Bank (ticker symbol: PNB, 33.3%), Philippine Business Bank (PBB, 15.2%), Security Bank Corp. (SECB, 11.6%), Philippine Bank of Communications (PBC, 6.2%), BDO Unibank, Inc. (BDO, 2.3%) and East West Banking Corp. (EW, 2.2%).

Philippine Trust Co. (PTC) saw the biggest drop in its share price during the quarter at 24.2%, followed by Bank of the Philippine Islands (BPI, -10.4%) and Philippine Savings Bank (PSB, -7.2%).

Rizal Commercial Banking Corp. (RCB, -6.3%), Union Bank of the Philippines (UBP, -4.9%), Metropolitan Bank & Trust Co. (MBT, -1.3%), Asia United Bank (AUB, -1.1%), and China Banking Corp. (CHIB, -0.9%) also saw their share prices decline last quarter.

Meanwhile, the country’s universal and commercial banks booked a cumulative P49.54-billion net income last quarter, 24.6% higher than the P39.77 billion posted in the first quarter of 2018, data from the Bangko Sentral ng Pilipinas (BSP) showed.

Net interest margin (NIM) — the ratio that measures banks’ efficiency in investing their funds by dividing annualized net interest income to average earning assets — improved to 3.3% in the first quarter from 3.2% in the final three months of 2018 and 3.1% posted a year ago.

“Interest rates play an integral role in the operation of banks, so monetary policies and policy expectations were one of the main factors which influenced their price movement in the first quarter,” Philstocks Financial, Inc. Client Engagement Officer and Research Associate Piper Chaucer E. Tan said in an e-mail.

“As of May 15, 2019, the financials index was down 5.55%… This could be attributed to the slowdown in bank lending growth from end-2018 to start of 2019 due to the series of policy rate hikes done by the BSP during the preceding year,” he said.

“Net foreign sell-off has been also a major culprit to the banks’ share price slump. Year to date, net foreign selling registered at almost P4.5 billion, [which] clearly shows that they are hesitant in banking sector…”

Mr. Tan also cited the global economic growth slowdown, which led the US Federal Reserve to pause on its tightening of monetary policy. This, Mr. Tan said, led others to expect another “era of low interest rates” that in turn would affect profitability of banks.

China Bank Securities Corp. Research Director Garie G. Ouano noted the “steep decline” in domestic benchmark yields during the quarter as a negative development for many banks as the “potential for better trading gains was likely eclipsed by the potential for lower NIMS.”

“Note that most listed banks have a positive repricing gap for the year, so lower yields may dampen the outlook for NIMs,” he said.

As of end-March, yields on government securities (GS) declined on average by 111.8 basis points (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.

For Papa Securities Corp. Research Head Arabelle C. Maghirang: “[The] slow 9.9% industry loan growth in March pulled down sentiment across the banks, with the exception of PNB which was buoyed by M&A (mergers and acquisitions) rumors.”

According to BSP data, outstanding loans increased by 9.9% year on year in March, slower than the 13.7% pace logged the previous month.

Likewise, money supply growth eased in March to 4.2%, posting the slowest pace in almost eleven years since April 2008’s 2.5%.

PNB Securities, Inc. President Manuel Antonio G. Lisbona pointed to news on Hanjin Heavy Industries and Construction Philippines’ $412-million loan default as having a “direct effect” on the stock prices of those listed banks that have exposure.

It was reported that RCB, Land Bank of the Philippines, MBT, BPI, and BDO have a $412-million dollar loan exposure to the firm.

“At the time of default, the BSP assured the public that Hanjin’s local debt only accounted for 0.24% of the total gross loans in the Philippine banking system and 2.5% of total foreign exchange loans granted by local lenders,” Mr. Lisbona said.

FIRST-QUARTER PERFORMANCE
Despite the slump in the financials index during the period, analysts noted some listed banks that stood out during the quarter.

For Zoren Philip A. Musngi, research analyst at Mandarin Securities Corp., BDO was the top performer during the period, citing the growth in the lender’s net income.

“Another one that caught our attention was UBP, which had lower net income (-25%) year on year due to a rather weak loan growth of 7.5%. We believe that high funding costs and the impact of the government’s directive on teachers’ loans continued to drag their overall profitability,” Mr. Musngi said.

For IB Gimenez Securities, Inc. Research Head Joylin F. Telagen, “[i]t depends on the bank.”

“[O]verall, I expect stable big banks (BDO, MBT, BPI) to capture the larger percentage of the rising market demand, banking the unbanked and higher corporate earnings towards the end of the year and possibly better stock performance,” she said.

“[W]hen it comes to technology, I’m rooting for UBP, being the first commercial bank that will issue bank-backed Peso blockchain-based token (PHP Token) after it gets approval from the BSP. This is an interesting future revenue stream of UBP as we are seeing ‘Generation Z’ (i.e. those born in the late 1990s to the early 2010s) increasing rate on using the blockchain/cryptocurrency,” Ms. Telagen explained.

For Unicapital Securities, Inc. Research Head Wendy Estacio, BDO’s first-quarter showing “was a surprise due to a challenging market environment.”

“BDO was able to grow its net interest income by 24.8% led by the rise in loans and CASA (current and savings account) base. Even non-interest income grew double digits in spite of volatile market condition. Results were in line with our [first quarter 2019] estimates,” Ms. Estacio said.

Likewise, IB Gimenez’s Ms. Telagen noted the “spectacular performance” of BDO’s earnings.

“Compared to other banks, BDO managed to increase its bottom line [attributable to parent company] by 66% to P9.76 bllion [in the first quarter] versus P5.88 billion in the [same period last year,]” Ms. Telagen said.

AP Securities, Inc. Research Analyst Rachelle C. Cruz noted BDO, BPI, and MBT as positive standouts. On the other hand, she was “slightly disappointed” with SECB and PNB given the former’s “higher-than-expected operating expenses” that dragged earnings growth and the latter’s gains coming mostly from chopping trading and foreign exchange gains.

Ms. Cruz is neutral on the banking sector given “higher intermediation costs as well as intense competition” that continue to put pressure on earnings and capital.

“While valuations are attractive, we prefer to be company-specific at this point,” she said.

China Bank Securities’ Mr. Ouano, who is “selectively bullish” on listed banks, pointed to SECB and PNB as standouts during the quarter, noting that not all banks are “equally attractive in terms of valuation.”

“Recent management changes in PNB and plans to bring in a new investor has sparked optimism over the bank due to its proactive growth strategy,” Mr. Ouano said.

“SECB is among the most attractively valued among the index banks, has among the narrowest repricing gaps, and has the lowest loan-to-deposit ratio among the index banks,” he added.

OUTLOOK
Moving forward, analysts cited local and external factors which may affect bank stocks’ performance in the second quarter.

For Unicapital’s Ms. Estacio, lowering the reserve requirement ratio (RRR) would further benefit the banks as it would free up loanable funds without them having to “incur additional costs from issuing securities such as LTNCDs (Long-Term Negotiable Certificates of Deposit).”

AP Securities’ Ms. Cruz noted that while loan demand is expected to go up, a sharp cut in policy rates “would be negative for banks’ NIMs.”

In its third policy review this year on May 9, BSP’s Monetary Board slashed benchmark interest rates by 25 bps amid easing inflation. This partially dialed back a cumulative 175-bp hike to benchmark rates last year as monetary authorities scrambled to put a lid on accelerating inflation.

A week later, the BSP announced a series of reductions in the RRR of universal and commercial lenders. The rate will be reduced to 17% effective May 31, 16.5% effective June 28, and to 16% effective July 26.

Currently, big banks are required to keep in reserve at least 18% of their deposits. The BSP has said that trimming big lenders’ reserve requirements by a percentage point will likely unleash about P90-100 billion into the financial system.

Aside from global uncertainties, major macroeconomic data will continue to affect market performance, according to AB Capital Securities, Inc. junior equity analyst Alyssa Mae U. Lit.

“Given a more favorable macro outlook this year, we are maintaining our ‘Buy’ rating as these banks’ core business remains intact. We believe there is only little downside risk to the banking industry amid solid fundamentals. Hence, we think that bank stocks are currently trading at attractive levels,” Ms. Lit said.

For his part, PNB Securities’ Mr. Lisbona noted the ongoing US-China trade war as well as the US Federal Reserve’s monetary policy stance as among the external factors that may influence banks’ stock movements.

Some analysts maintain a positive outlook on bank stocks despite its first-quarter performance.

“Even though the economic environment remains difficult/uncertain and bank earnings/lending are showing signs of slowing down, we are still optimistic banks would weather through and show year-over-year growth as they manage their risks/exposures,” Mandarin Securities’ Mr. Musngi said.

“Bank stock valuations are quite attractive relative to other industries and to historical averages.”

For COL Financial Group, Inc.’s senior research analyst John Martin L. Luciano: “We remain positive on banks as we believe that the sell-off was overdone.”

Timson Securities, Inc. trader Jervin S. De Celis shared a similar view: “While some of the banks have underperformed, I think this gives investors the opportunity to buy them at bargain prices especially that many of these companies have booked good bottom line figures for 2018,” he said.

“Most of the banking stocks remain fundamentally sound and I still expect this sector to perform well in the next coming months.” — Christine Joyce S. Castañeda and Macky A. Madrid

Senate approves franchise extension for RJ Jacinto’s network

THE Senate has approved on second reading the bill extending the franchise of Rajah Broadcasting Network, Inc. (RBN), owned by presidential adviser Ramon “RJ” P. Jacinto, for another 25 years.

The chamber approved on Wednesday House Bill No. 8177, whose enactment will renew RBN’s franchise a second time. It was first granted in 1965, under Republic Act No. 4505, and later renewed in 1995 through RA 8104. The franchise was set to expire in July 2020.

RBN’s flagship radio station is RJ100.3 FM, which operates ten stations in key cities nationwide. The RBN also broadcasts through its AM radio station, DZRJ 810 AM Radyo Bandido.

Aside from RBN, Mr. Jacinto, currently serves as the presidential adviser for economic affairs and information technology communications, also owns other companies under the RJ Group.

If enacted, the measure will allow RBN to “construct, install, establish, operate and maintain” radio or television broadcasting stations. This, however, may b revoked upon failure of RBN to operate continuously for two years.

Moreover, it shall require the RBN to offer at least 30% of its outstanding capital stock to Filipinos, in compliance with the constitutional provision, promoting public participation in public utilities.

It shall also allot a maximum of 10% of paid commercial time to public service time, as needed by the government.

RBN shall also be prohibited from the “sale, lease, transfer, grant of usufruct, or assignment of franchise,” without the approval of Congress.

The network is also required to submit an annual report to Congress on or before April 30 of every year. Non-compliance will subject RBN to a fine of P500 per working day. — C.A.Tadalan

China April soybean imports from US up 15.9% month on month; Brazilian imports soar

BEIJING — China’s soybean imports from the United States rose in April, helped by an earlier easing of trade tensions with Washington, while imports from Brazil surged after buyers backloaded their March orders to benefit from a tax cut on agricultural products.

China, the world’s top soybean buyer, brought in 1.75 million tonnes of the oilseed from the United States, up 15.9% from 1.51 million tonnes in March, according to data from the General Administration of Customs released on Saturday.

Soybean imports from the United States, China’s second-largest supplier, slid to a virtual halt after Beijing slapped a 25 percent tariff on American cargoes last July in the trade war between the world’s two largest economies.

After the pair agreed to a truce on Dec. 1, limited buying resumed. China has bought about 14 million tonnes of US beans since then.

But another 6 million tonnes of anticipated purchases could be in jeopardy as Sino-US trade relations entered deadlock again earlier this month.

The April data precedes the this month’s escalation in the trade war between the world’s two largest economies.

Meanwhile, China in April bought 5.79 million tonnes of soybeans from Brazil, more than doubling the 2.79 million tonnes in March, customs data showed.

For the month, China’s soybean imports hit 7.64 million tonnes, up 11% from March, as buyers scheduled cargoes to arrive in April to take advantage of a cut in value-added tax (VAT) on agricultural products effective from April 1.

China crushes soybeans to produce soymeal for its massive livestock herds, but an African swine fever epidemic has dampened domestic demand for animal feed. — Reuters

Bridging the generational gap through coffee and pastries

Pursuing passion, how to adapt to a rapidly changing world and the secret to a successful life.

Such topics and more were brought to light at the recent event held by the European Chamber of Commerce of the Philippines (ECCP) Young Professionals Committee (YPC) at SPACES World Plaza, Bonifacio Global City on May 16.

Named ‘Fika: unconference: Building Capacity for Emerging Leaders’, after the Swedish concept of making time for friends and colleagues to share food and drinks, the event sought to develop the capabilities of young professionals and entrepreneurs in the Philippines through a networking forum where they could hear insights and counsel from Filipino and European business leaders in a friendly, informal environment.

The ECCP is a bilateral business organization that seeks to foster closer economic ties and business relations between the Philippines and Europe. Towards that purpose, the YPC serves as an avenue where young entrepreneurs and professionals from diverse backgrounds within the Philippine-European business community can establish connections and get acquainted with senior business executives in the field.

Laura Veralo de Bertotto CEO, VMV Hypoallergenics , Nabil Francis CEO, Republic Cement, Ros Juan Founder, Commune Café, and Richard Walker Managing Director, Robert Bosch, Inc. (Philippines)

The YPC aims to bridge the work-place generational gap between senior executives and

young professionals in the community and enable the next generation to take an active part in the ECCP’s activities, focusing not only on business but also on CSR and advocacy-related initiatives.

“The European Chamber of Commerce is focused on connecting European businesses with Philippine businesses. Within that overarching thing, there are also young professionals who want to pursue that [same goal]. So we wanted to create a committee and a community for that. So I would say that’s our core,” Penny Estrada, YPC chair, said in an interview.

“What I find here as a challenge in the Philippines is that they don’t really teach you how to get into the business world in university. It’s the same in the US. But I think we still have certain avenues. I want this space to be that for young professionals. That’s my vision,” Mr. Estrada said.

Nabil Francis, president and CEO of Republic Cement; Richard Walker, managing director of Robert Bosch, Inc. Philippines; Laura de Bertotto, CEO of VMV Hypoallergenics; and Rosario Juan, chief extractor of coffee at Commune, shared their own career experiences, gave advice, and fielded questions from aspiring leaders about the nature of work, purpose, and how the next generation should solve problems of the future.

“Salary is not a real source of motivation. Having a sense of purpose is the main thing,” Mr. Francis told the audience when asked about passion and motivation.

“Passion and purpose may not have to be the same things. For you to be able to get yourselves out of bed every day and do meaningful work, you really need to have to find the purpose in it,” Ms. Juan added.

Ms. de Bertotto cautioned young adults against pursuing their passions to a point that they start to burn out, and instead praised the value and nobility of doing humble work. “When you turn your passion into work, it becomes work,” she said.

For Mr. Walker, the most important thing is that young leaders find companies that they sincerely believe in. “For me passion and motivation comes from working in a company that you really believe in: their products, their ethics, their values. As young leaders, your integrity is everything so you want to work for a company that has integrity,” he said.

The event was supported and sponsored by Commune and Foodie Box.

How PSEi member stocks performed — May 24, 2019

Here’s a quick glance at how PSEi stocks fared on Friday, May 24, 2019.

 

How NAIA is coping with air traffic growth

The Ninoy Aquino International Airport (NAIA) was declared the worst airport in the world from 2011 to 2013, according to a survey conducted by the travel website, the Guide to Sleeping in Airports. In 2014, it was adjudged the 4th worst. In 2015 and 2016, it was ranked the 8th and 5th worst airport in Asia, respectively. In 2016, it regained its crown as the worst airport all over again.

Throughout this period, the country’s principal gateway was managed by retired Major General Jose Angel Honrado, a former pilot and close security aide of both former Presidents Cory and Noynoy Aquino. As far as the Aquinos were concerned, Honrado’s loyalty was beyond reproach and his record of honesty was unquestionable. These were probably the reasons why he was made the General Manager of the Manila International Airport Authority (MIAA).

I was covering the NAIA beat at that time and witnessed Honrado in action. Honrado at NAIA was a classic case of giving the wrong job to the wrong person. The demands of the job were simply too big for him. The man had neither the competence nor understanding of the aviation industry to make timely and intelligent decisions, let alone lead NAIA towards being a half decent airport. Among many management errors, he spent little time inspecting operations as he preferred managing the entire airport remotely from his office. This separated him from realities on the ground. Worsening matters is that he managed MIAA with an iron fist and cocky haughtiness, refusing help from well-meaning people who wanted to contribute. Ineptitude and arrogance is a lethal combination. Suffice to say, his clumsy and detached management style were the reasons why NAIA became the nation’s embarrassment.

In 2016, the Department of Transportation and Communications (DOTC) was split into two, the Department of Communications (DOTr) and the Department of Information and Communication Technology (DICT). Respected businessman and former Clark Development Corp. CEO Arthur Tugade was named Secretary of the DOTr. One of his first acts as DOTr Secretary was to appoint Eddie V. Monreal as NAIA’s new General Manager.

Before his appointment as NAIA’s GM, Monreal was the Country Manager of Cathay Pacific. He was responsible for operating its Manila and Cebu hubs, both of which remained profitable throughout his 37 year stint. Monreal assumed his role in NAIA with the insights of an airline operator, passenger, and professional manger. This made all the difference. His knowledge of the aviation industry allowed him to hit the ground running — and run he had to. It will be recalled that the airport was getting untenable, what with inefficiencies left and right, the “tanim bala” (planted bullets) scam, poor maintenance, and personnel with low morale.

Its been three years since Monreal took the helm of the airport authority and it is now operating with relative efficiency. This is no small feat considering the airport is operating at 45% above its true capacity with most of its facilities having surpassed their useful lives.

In 2016, reforms considered “low hanging fruits” were done to improve passenger experience. New waiting benches were installed, baggage conveyor belts and air-conditioning systems were repaired, restrooms were expanded, and preventive maintenance practices were put in place. Entering the terminals became easier as most gates have been opened and equipped with X-Ray machines (there were only two X-Ray machines functioning in Terminal 1 before). The long-awaited closed circuit high resolution CCTV system was installed for better security management. More importantly, the “tanim bala” scam was solved.

From being the worst airport, it is now counted among 10 most improved in the world.

While the improvements are noteworthy, lets be honest, NAIA is still plagued with many problems, not the least of which is runway congestion and over-crowded terminals. To understand the reasons behind runway congestion, check out my column last week entitled, “The real reasons behind NAIA’s runway congestion.” Suffice to say that congestion is inevitable given that NAIA only has two runways with air traffic that necessitates four. The fact that the authorities are able to make it work is a feat in itself.

Last year, NAIA handled 293,981 aircraft movements, 45 million passengers and 738,698 tons of cargo. As mentioned earlier, this is already 45% more than the capacity it was built for. Believe it or not, the overstressed airport must still take on 20% more volume in the next three years or until Clark and the new Bulacan airports can absorb a portion of the air traffic.

Clark becomes operational in 2020 and San Miguel Corp.’s airport in Bulacan can come online in 2022, assuming it passes the Swiss challenge (the results of which will be announced on June 23) and other legalities.

airport dawn
PEXELS.COM/SKITTERPHOTO

Is Monreal preparing for the inevitable spike in air traffic? Lets put it this way… they are doing all they can within NAIA’s limitation of space and budget. From what I see, we can be sure that they are not ignoring the inevitable and leaving it up to the next administration to solve. They are working on it now.

Among the works already accomplished is the construction of a new rapid exit taxiway on runway 06/24. This will allow shorter times between aircraft movements on NAIA’s principal runway. Ageing aerobridges in Terminal 1 were replaced with brand new units. New apron lighting using LED lamps were installed in Terminal 2. Ageing baggage claim conveyors were replaced in Terminal 2 and the layout of the entire baggage collection hall is being reconfigured to accommodate more carousels. The rehabilitation of electrical facilities in the runways were also done.

Ongoing projects include the expansion of Terminal 2’s check-in hall which will soon include the arcade formerly used as a waiting area. The overlaying of both runways from asphalt to cement which will enable the runways to better handle the new generation of large aircrafts like the Boeing 777X. The repair and upgrade of taxiways.

In the pipeline is the long awaited rehabilitation of Terminal 1’s decrepit arrival area, greeters waiting area, and parking lot. This cannot come soon enough.

Last year, the MIAA received an upgrade of its ISO certification, from ISO 9001:2008 to ISO 9001:2015. This tells us that systems and processes have been standardized.

All these improvements are meant to have NAIA merely cope with the anticipated spike in volume. Make no mistake, however, conditions will get worse before they get better. NAIA will become increasingly crowded, increasingly busy, and, oftentimes, wrought with flight delays. We all have to brace ourselves for this. The reality is that past administrations have failed to build an airport with sufficient capacity to meet our current and future volume. Hence, we must make do with NAIA, however small and old it is.

Aviation analysts foresee air traffic to and from Manila to top 100 million passengers by 2027. Not even the combined capacity of NAIA and Clark can absorb this.

The only light at the end of the tunnel is San Miguel’s Bulacan airport. It is the airport with the size and scale to meet our needs and one that is ready for construction. Ramon Ang says that phase one of the airport, consisting of a passenger terminal and one runway, can be made operational before President Duterte’s term comes to an end.

This is why it is important for the DOTr and the DOF not to further delay San Miguel’s airport proposal. We can no longer afford to dilly-dally — construction must start now. To further delay it will have grave ramifications not only on the travelling public but on the entire economy.

Lest the DOTr, DOF, and NEDA be spoken in the same way we talk about Honrado today, they will do well to move forward with the San Miguel proposal with urgency.

 

Andrew J. Masigan is an economist.

Pass the Tobacco Tax

The Philippine Congress, particularly the Senate, has a handful of days left to pass important legislation. One of the urgent bills that the Senate should pass is the increase in the tobacco tax rate.

The Executive has strongly endorsed the bill of Senator Manny Pacquiao and has even certified its urgency. Pacquiao’s bill proposes a tax rate of P60 (against the current rate of P35). Subsequently, the rate increases by 9% annually to keep cigarettes less affordable in light of rising income and inflation. Senators Sherwin Gatchalian and JV Ejercito have bills that introduce higher rates — P70 and P90, respectively.

Senator Sonny Angara, the Ways and Means Committee Chair, has consolidated the bills and has submitted a Committee Report that proposes a starting rate of P45 in the first year of implementation, followed by a series of annual P5 increases till the rate reaches P60. Thereafter, the rate automatically increases by 5% as adjustment to inflation.

For many stakeholders — civil society, the medical profession, the Department of Finance (DoF), the Department of Health (DoH), among others — the Committee Report falls short of what is needed to meet health and revenue objectives.

The DoH’s goal is to reduce the smoking prevalence rate from the current 23.3% to 15% by 2022. The proposed rates of the Committee report are estimated to result in 27,757 less smokers, not really dramatic, but the rates can prevent new entrants. Hence by 2022, we can expect smoking prevalence rate to go down to 19.61%.

Moreover, a hefty increase in the rates is necessary to generate the resources for the newly legislated Universal Health Care (UHC) law. The DoH estimates the funding gap for UHC is equivalent to P62 billion in the first year. But the incremental revenue from a tobacco tax rate of P45 is estimated at P14.5 billion

If the advocates had the luxury of time, they could have pushed for the rate of P60 per pack in the first year. (In fact, the optimal tax rate is closer to the Gatchalian bill of P70.) But the time constraint and the political constraint prevent a drawn-out struggle for the reformers to meet the maximum objectives.

In this light, Senator Angara’s Committee Report is welcome, albeit it is not the first-best measure. That is the real world of politics.

Increasing the tobacco tax (to the max) is a popular measure. Pulse Asia’s latest survey on tobacco reveals that 75% of Filipinos support an increase in the tobacco tax, and seven out of 10 Filipinos will vote for a politician who supports a tobacco tax increase.

Yet, it is so difficult to pass such a popular measure. For the tobacco industry has huge resources to influence the behavior of politicians. Thus, some politicians, particularly in the leadership, waver or are afraid to stand up and make a credible commitment to have the bill passed.

Senate President Tito Sotto can only say that the Senate would exert its “best effort” to pass the Committee Report. Why couldn’t he be firm and say that the Committee Report will pass, no ifs and buts? If there’s a will, there’s a way.

More disappointing is the statement of Senator Koko Pimentel: “Let us not overtax businesses to death. If this tax would imperil the viability of a business, then I’ll not agree to it.” In 2012, Senator Pimentel voted for the passage the historic sin tax law. He was proud of his vote, given the tremendous pressure that he faced from the tobacco lobby. The Senate ratified the sin tax by a margin of one vote; hence Pimentel’s vote mattered. My hope is that Senator Pimentel will remain consistent in his tobacco control advocacy.

Messrs. Sotto and Pimentel are both angling for the Senate presidency in the next Congress. My piece of advice to them: Support the tobacco tax. To avoid political disaster, they should not go against the Executive; they should not defy the people’s wishes; they should not undermine the funding for UHC

The good news is that support for a big increase in the tobacco tax rate has broad mutipartisan support. The majority of the senators endorse a high tobacco tax rate. The senators from the opposition like Frank Drilon, Kiko Pangilinan, and Risa Hontiveros have also endorsed the Committee Report.

The tobacco tax reform thus has a fighting chance to win.

But it is also imperative for the leadership of the House of Representatives to adopt the Senate version as expressed in the current Committee Report in the bicameral conference committee. The House version of the tobacco tax is weak. The House’s rate merely increases the tax from the current P35 per pack to P37, followed by a series of paltry increases till the rate reaches P45 in 2022.

The struggle does not end there. Even if we obtain the rates proposed by the Senate in the Committee Report, additional revenue will be necessary to meet the funding gap for UHC. In the immediate future, the advocacy for an increase in the alcohol tax must commence. In the medium term, a new round of tobacco tax rate increases will likewise have to be done.

 

Filomeno S. Sta. Ana III coordinates the Action for Economic Reforms.

www.aer.ph

The global taxpayers conference

Many economists along with other social scientists and social philosophers, enjoy playing God, by which I mean laying out in detail their own private versions of the “good society” without being required to suggest ways and means of implementing their precepts or even defend these precepts with democratic political processes.

— James Buchanan

SYDNEY — That quote I borrowed from one of the slides of Prof. Sinclair Davidson of RMIT University in Melbourne, Australia. He was among the many speakers in the recently concluded 7th ALS Friedman Conference and 17th World Taxpayers Association (WTA) Conference on May 23 to 26 in this city.

That big event, with 500+ participants and speakers from many countries across the world, was jointly sponsored by the Australian Libertarian Society (ALS), Australian Taxpayers Alliance (ATA), Tax & Super Australia, and WTA. The Americans for Tax Reforms (ATR) was among the major sponsors.

Sinclair is a quantitative, facts-based researcher so I attended his two panel lectures, one on “Money and Macro” where he showed the above quote, and one on “Plain Packaging & Tobacco Harm Reduction.” He observed that with the plain packaging policy in force in Australia since December 2012, “premium pricing models were undermined, smokers trade down on branding, effectively smoking cheaper, a failure to meet its stated objectives.”

Many participants were leaders of national taxpayers groups, like the Canadian Taxpayers Association headed by departing WTA Chairman Troy Lanigan, UK’s Taxpayers Alliance headed by incoming WTA Chairman John O’Connell, HK’s Momentum 107, India Taxpayers, Korea Taxpayers Association, Taxpayers Association from Germany, Sweden, Finland, and many more.

I got curious about the tax rates for personal and corporate income, and sales tax — the major pocket-boring policies of many governments — so I searched the numbers, which are in the table.

European countries are notorious for having very high rates in all three taxes. Australia has high Personal income tax (PIT) and Corporate income tax (CIT) but modest Value Added tax (VAT).

In Asia, Japan, South Korea, and Taiwan’s high PIT and CIT may be understandable because of their high level of development and industrialization. But India, Indonesia, and Philippines have high PIT and CIT yet they remain less developed.

Several countries and jurisdictions do not impose these taxes:

• Zero both PIT and CIT: Bahamas, Bahrain, Bermuda, Cayman Islands, United Arab Emirates

• Zero PIT: Brunei, Kuwait, Oman, Qatar, Saudi Arabia

• Zero CIT:, Isle of Man, Maldives, Vanuatu

• Zero VAT or Gross sales tax (GST): HK, Oman, USA

ALS founder and President John Humphreys, and ATA Executive Director Tim Andrews, are very explicit about their organizations’ goals — less government regulations, taxes, size, and waste.

I met Joh for the first time at a Heartland Institute’s climate conference in Chicago in 2010, Tim in a WTA conference in Bangkok in 2017. Both are young, cool, dynamic, and frank. Aside from leading their dynamic organizations, they successfully put up that fantastic conference and really fun-filled networking cocktails, gala dinner, and harbor cruise for three nights.

The torch of the free market, less government movement is alive and fiery in Australia and other parts of the world. There is more hope for a world of more individual freedom, more personal responsibility, and less state nannyism.

 

Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers.

minimalgovernment@gmail.com

Gen Z: Lakas ng amatz

Lakas ng amats ko
(I’m on a super ‘high’)

Sobrang natural
(very natural)

Walang halong kemikal
(no added chemicals)

Amatz/amats = “tama” which in Filipino is the root of “tinamaan,” meaning “it hit me straight away” like the “kick” from drinking lambanog (Filipino “coconut vodka” which 80 to 90 proof, or as high as 166 proof after second distillation, they say).

What’s wrong with that — it’s your liver, not mine. But “tama” for the older generation and “amats” for the younger generation could likewise refer to the “high” from abuse of forbidden drugs.

That’s what’s wrong with the now-viral “Amatz” rap song by this Shanti Dope, an 18-year-old grade 10 student in a Cavite school — “the lyrics of the song promotes the use of marijuana which runs contrary to the Duterte administration’s crusade against illegal drugs,” Philippine Drug Enforcement Agency (PDEA) Director General Aaron Aquino said (ABS-CBN News, May 23, 2019).

Aquino said the song may mislead the vulnerable youth to think that it is all right to use drugs. He submitted a letter to the Movie and Television Review and Classification Board (MTRCB), Organisasyon ng Pilipinong Mang-aawit (OPM), and the ABS-CBN Corp. to prevent the airing of “Amatz” and its promotion in the different media stations throughout the country. The PDEA also recommends that similar songs should also be banned from airing” (UNTV News May 23, 2019).

CENSORSHIP!
Shanti, through his managers, asked the PDEA to “listen to the whole song, and not just take a few lines out of context” (ABS-CBN op. cit.). “None of it promotes marijuana use; in fact it clearly shows the persona taking a stand against illegal drugs, pointing out that what has made him ‘fly’ (so to speak) is not drugs, but music” (Ibid.). Sean Patrick Ramos (a.k.a. Shanti Dope) had previously written another rap song “Norem,” a commentary on the war on drugs (Ibid.). He is best known for “Nadarang,” a rap life-and-love song, which won the 2018 Awit Award for Best Rap/Hip Hop Recording. Shanti is popularly listened to in Spotify and YouTube.

How can you censor Spotify, YouTube, Facebook, or other social media apps, many now free? Netizens are angry. Mainstream media (which can be censored) is even angrier at the implications on freedom of expression being curtailed, as if the country were under a dictatorship. Rappler CEO Maria Ressa had been arrested in February on a cyberlibel charge, “a dramatic escalation in government pressure bearing down on Ressa and her website Rappler, which was already facing tax evasion charges that could shut it down” (philstar.com/headlines/2019/02/13). It comes after Duterte has cracked down on high-profile critics in the press and legislature who dared oppose his signature anti-drug campaign that has killed thousands (Ibid.).

The anti-drug campaign is sacrosanct to the administration, and we understand why 18-year-old Shanti Dope is now in hot water for rapping so raptly about marijuana, albeit he admonishes his audience not to start on it, for the sureness of getting hooked: “Payong kapatid pag tumikim di na madali tumakbo sa halik niya” (Brotherly advice, if you even taste it, it will be hard to turn away from her kisses). But why on earth did this supposedly reformed teenage user choose the damning name of Shanti Dope?

Shanti is a typical confused and still-evolving member of Gen Z — “the group of kids, teens and young adults roughly between the ages of seven and 22” in 2019 (Holman, Jordyn [25 April 2019]. cited by Bloomberg. Retrieved 30 April 2019). A 2017 study conducted by Kantar Millward Brown titled “AdReaction: Engaging Gen X, Y and Z” described Filipino teenagers compared to global counterparts of the so-called Generation Z as “harder to impress than the older generations” (BusinessWorld Feb. 17, 2017).

Both Holman and Brown analyzed Gen Z in terms of business marketing — with Brown focusing on Gen Z reactions to advertising as these reflect idiosyncrasies of their generation compared to Gen X (35-49 years old) and Gen Y or the Millenials (20-34 years old). Generational marketing has perhaps never been more critical to the distribution systems of businesses and services than now, when technology has created a virtual infinity pool of communication in digital social media. Gen Z, the generation “born with gadgets in their hands,” is now coming of age (2013-2020), and Brown’s conclusion in its study is “Gen Z is shaping the future.”

Social research has found Gen Z to be more conservative and risk-averse than the previous cohort, the Millenials. Gen Z are mostly the children of Gen X and a few of the Millenials, and have subconsciously imbibed the anxieties of their parents during a time of disillusionment marked by high divorce rates, rising cases of AIDS, phony values (materialism), and the corporate greed of the 1980s (Douglas Coupland, Generation X: Tales for an Accelerated Culture, 1991). Columnist Mary Meehan observes that generations go through alternate pendulum swings of optimism and skepticism — when the Baby Boomers were exuberant, liberal and optimistic, the Gen Xers were pessimistic and dissatisfied (see where the Baby Boomers brought us), then the Millennials after them coped with the pendulum swing of a “live for the moment” liberalism (forbes.com/sites/marymeehan/2014/04/15).

Meehan and other researchers predict Gen Z will swing back to traditional values and a more-planned life, helped much by good education and, yes, a more sedate and discerning use of technology. In the Brown study on online ads and their effect on generational groups, the Filipino Gen Z were less easily impressed with new formats such as augmented reality or sponsored lenses and their least favorite formats are the invasive kind (BusinessWorld, op. cit.). These young Filipinos wanted marketers to respect their online space.

Perhaps Shanti Dope’s now-controversial “Amatz” rap song says it for Gen Z — they want not only online space, but space and attendant recognition of their values and principles, as soon they will be leading their own independent lives and shaping their future. Like not wanting pop-ups and other ads inflicted on them in their online space, Gen Z does not want their thoughts and their art to be usurped. “I have always been keen about my surroundings. When I sense something wrong that I cannot accept, I express it through my songs. I write my opinions about society,” Shanti Dope said in an interview before PDEA’s shut-up (lifestyle.inquirer.net April 21, 2018). “There are still many people who question my message because they think I am still young and I do not know what I’m talking about,” he said (Ibid.).

Gen Z is still in school. Interestingly, it is this generation that has expressed interest in entrepreneurship as an economic way of life, and the educational system has responded by installing entrepreneurship as a major college course in their curriculum. It is a priceless opportunity to firmly establish and strengthen in the rising Gen Z the proper values, principles, and even time-tested Filipino traditions and practices of living an honest, peaceful, and happy life in the country we all love and honor.

And we parents, friends, and all in society have the sacred responsibility to hoist and save Shanti Dope from his expressed frustration as at the closing verse of “Amatz”: “Kawalang gana na (I’m losing hope).” Feeling the collective effort to make our country a better place for all will be the ultimate “amats” for our Gen Z.

 

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

ahcylagan@yahoo.com

Budget delay lessons to determine future of cash-based system

THE Department of Budget and Management (DBM) is still considering whether to implement a full cash-based budgeting system this year following the delayed approval of the 2019 General Appropriations Act (GAA).

“We’re pushing the cash budgeting but we’re studying the transition. Let’s see what will happen for 2019 then lets see if there’s still a need for a slower pace in trying to adopt it fully,” DBM Acting Secretary Janet B. Abuel told reporters in Manila on Friday.

“Based on the veto message of the President for the 2019 GAA, he actually clarified that in view of the delayed passage of the GAA for 2019, as well as the election ban, we recognized that it will be difficult to fully implement the cash budgeting system which requires all government agencies to (spend) within the year,” according to Ms. Abuel.

Ms. Abuel said that due to the budget delay, the national government moved its deadline to pay for infrastructure projects funded by the 2019 budget to Dec. 30, 2020 from the initial schedule of June 30, 2019. Payments for non-infrastructure outlays such as equipment are due on June 30, 2020.

“…The original transition plan or transition timeline was to move the payment or the deadline of the payment for these 2019 contracts and implementations to June 30, 2019. That was the original but what we did, because of the circumstances, we moved a little further to offset the delay as well as the election ban by six months…the deadline for infrastructure projects or payments for infrastructure contracts would be Dec. 31, 2020,” Ms. Abuel said.

“Infrastructure outlay… covers all other capital outlays. For capital outlays, Dec. 31, 2020… MOOE (Maintenance and Other Operating Expenses) plus other capital outlay, ito yung (these are) non-infrastructure capital outlays like equipment, that’s June 30, 2020,” Ms. Abuel said, noting that DBM hopes it would lessen the worries of the agencies in paying their creditors.

Government should have shifted from the usual obligation-based budgeting system to cash-based this year according to the veto message released on April 16.

According to Mr. Duterte, the shift would be necessary “to ensure the availability of cash resources for priority development projects and speed up of delivery services.”

The delay in the approval of the budget was deemed a major factor in the slowing of economic growth to 5.6% in the first three months of 2019 due to underspending from the public sector.

Ms. Abuel, however, said that DBM is committed to fast-track the release of funds to government agencies, particularly the Department of Transportation (DoTr) and the Department of Public Works and Highways (DPWH), which is expected to spend a combined P803.1 billion which the Finance department considers enough to cover the national government’s infrastructure target.

Finance Secretary Carlos G. Dominguez III has said that in order to achieve the government’s target of 6% growth this year, it needs to ramp up spending, with disbursements targeted at P3.774 trillion, equivalent to 19.6% of gross domestic product (GDP).

Total infrastructure disbursements, meanwhile, would have to hit P1 trillion, equivalent to 5.2% of GDP, according to Mr. Dominguez.

Ms. Abuel added: “We know that the DPWH has the largest chunk in so far as the infrastructure disbursements are concerned. They said that in order to be able to realize their commitment then everybody has to work together, not just the DPWH, so it would also entail the fast release of funds from the DBM, and we commit to that.”

“One thing that they raised earlier, in so far as the licenses of the contractors are concerned. For example there is a licensing requirement from the PCAB (Philippine Contractors Accreditation Board), that’s something that was raised… they alerted the DTI (Department of Trade and Industry) to double check if the licenses are indeed being issued immediately or as required. Otherwise, if there are delays in the other requirements before they can fully implement the project, it would be difficult to realize their commitment. That’s how the discussion came about,” Ms. Abuel added.

The 2019 budget, which was proposed at P3.757 trillion, was cut down to P3.66 trillion after Mr. Duterte vetoed a P95.3 billion allocation for DPWH in April.

Meanwhile, Ms. Abuel said that the DBM targets to submit the P4.1-trillion budget proposal on the same day of Mr. Duterte’s State of the Nation Address (SONA) on July 22.

“We’re done with the technical budget hearing, so may mga higher levels pa (there are still higher levels) before we present,” Ms. Abuel said. — Reicelene Joy N. Ignacio

1...10,95210,95310,954...14,238Page 10,953 of 14,238
ADVERTISEMENT
ADVERTISEMENT
© 2024 BusinessWorld Publishing.
All rights reserved.
Read our privacy guidelines
Facebook Instagram Linkedin X Youtube