Federal Reserve may cut rates if inflation weakens

May 23, 2019 | 12:02 am

FURTHER weakness in inflation may cause the US Federal Reserve to ease. — *WIKIPEDIA.ORG*

HONG KONG — Further weakness in inflation could prompt the US Federal Reserve to cut interest rates, even if economic growth maintains its momentum, James Bullard, President of the Federal Reserve Bank of St. Louis, said on Wednesday.

The risk of the Fed missing its 2% inflation target and the trade war were two key macroeconomic challenges to the policy-setting Federal Open Market Committee (FOMC), he said in a presentation prepared for an audience at the Foreign Correspondents’ Club (FCC) in Hong Kong.

The Fed held interest rates steady earlier in May, when Chairman Jerome Powell said there was “no strong case” for either a cut or hike in interest rates.

But Bullard said on Wednesday “a downward policy rate adjustment even with relatively good real economic performance may help maintain the credibility of the FOMC’s inflation target going forward.”

“A policy rate move of this sort may become a more attractive option if inflation data continue to disappoint,” he said.

Bullard and Chicago Fed’s Charles Evans, both voting members of the FOMC, have in recent days expressed concerns over the Fed’s failure to meet its target. Bullard said on Wednesday that another ‘low-side miss’ is on the horizon in 2019.

Bullard said any policy adjustment going forward would be in response to incoming data, and not a continuation of the rate normalisation process which has stopped earlier this year after 225 basis points worth of hikes from near zero levels.

He remained upbeat about growth prospects.

Bullard drew comparisons with 2-1/2 decades ago — when rates were increased by 300 basis points between early 1994 and early 1995, and the economy still boomed during the second half of the 1990s — to stress that rate normalization can be accomplished without damaging prospects for an extended period of growth.

The next FOMC meeting will convene on June 18.

TRADE RISKS
Bullard expects agreements on trade will be reached in the near term, but warned that a failure to do so, with substantial barriers “erected and maintained,” could alter “global trading patterns over the medium term.”

These unresolved trade disputes and the below-target inflation “suggest that the FOMC needs to tread carefully in order to help sustain the economic expansion,” he said.

Bullard said that from a macroeconomic perspective, China should agree to “everything that’s being asked” in the negotiations because it would lead to a domestic economic boom.

“They will establish credibility on trade inside China, and will reassure foreign investors that they can invest in China and be treated appropriately. If that occurs, I would see blue skies ahead for the Chinese economy,” Bullard said.

“It’s not just the US that’s doubting Chinese credibility. Many global players all around the world have found that it’s a difficult place to do business.”

In an interview with Bloomberg TV earlier on Wednesday, Bullard said tariffs would have to stay on for “something like six months” with no prospect of a resolution in sight to weigh on Fed policy.

In his FCC remarks, he added China selling its large stock of US Treasuries was not “as big of a threat as it’s being made out to be” as it would be hard to replace them with other assets. — Reuters

Tunneling work on Metro Manila subway to start next year

May 23, 2019 | 12:02 am

TUNNELING work on the Metro Manila Subway Project is not expected to begin until next year, but the Department of Transportation (DoTr) is already considering bidding out to real estate developers the soil and rock that will be excavated.

Transportation Secretary Arthur P. Tugade told reporters Monday that parts of the tunnel boring machine are starting to arrive piece by piece from Japan, with the cutter head already here in the Philippines.

“Dumadating ’yun then ia-assemble. Pero ’yung cutter head nandito na… Ang actual drilling, next year [The parts of the boring machine will be assembled, but the cutter head is already here… The actual drilling will be next year],” he said.

Mr. Tugade noted around five million cubic meters of soil, equivalent to 2,500 Olympic-sized pools, will be excavated for the project.

“Kaya ang gagawin ko ngayon…ipapa-bid ko. Ang daming lupa nun eh. Kung sinong may kailangan, kunin niyo lahat dito [What I will do is bid that out to whoever needs it],” he added.

The construction of the Japan International Cooperation Agency (JICA)-funded Metro Manila Subway started in February, which signaled the beginning of preparation works for the 36-kilometer underground railway system.

The subway will have 15 stations from Quirino Highway to Bicutan, with an optional extension from Lawton West to the Ninoy Aquino International Airport (NAIA).

The first phase of the project will be built by Japanese consortium Shimizu Joint Venture (Shimizu Corp., Fujita Corp., Takenaka Civil Engineering Co., Ltd. and EEI Corp.), which the DoTr signed a P51-billion contract with in February. The contract also involves the construction of the subway’s depot and the Philippine Railways Institute.

Five more contracts for the subway project are expected to be bid out and awarded by middle of next year. The underground train line is scheduled to be partially operational by 2022, and to be fully operational by 2025.

Upon partial operations, around 100,000 daily passengers are expected to benefit from the project, and some 370,000 daily passengers by its full completion. — Denise A. Valdez

China’s NetEase to launch first official Pokémon game in China

May 23, 2019 | 12:01 am

GUANGZHOU — Chinese gaming giant NetEase said on Monday that it would partner with The Pokémon Company and Marvel to release new games for the domestic market, as it looks to add more foreign content to its roster and shore up revenue.

A local version of Pokémon Quest will mark the first official Pokemon mobile game release for China, set to arrive nearly three years after Pokémon Go first hit the global market.

“The Pokémon Quest partnership is a new start and highly anticipated,” NetEase VP Ethan Wang said at an industry event.

NetEase will release the game in China in partnership with Japan’s Game Freak, the Pokémon developer.

NetEase did not reveal a release date for the game. Pokémon Quest first hit app stores globally in the summer of 2018.

The company said it had formed a separate partnership with Marvel to release “five or six” mobile games by the end of this year.

The partnership with Marvel will include a global product, Wang said, adding NetEase hopes overseas revenue to account for 30% of its total in three years, versus 10% now.

NetEase, along with rival Tencent and other gaming firms, came under pressure last year as China stopped approving game licenses. NetEase shares plunged about 30% in 2018.

The stock has recovered since December after China resumed approvals. In March, regulators greenlit titles from NetEase.

Wang was he was hopeful the Marvel games will receive approval in time for a release by the end of the year.

“My understanding is now we are gradually getting back to the right track,” he said. — Reuters

10 business establishments ordered closed in Boracay island

May 23, 2019 | 12:01 am

THE Department of Environment and Natural Resources (DENR) on Tuesday ordered the closure of 10 foreign-owned business establishments for operating in Boracay island without government permits.

The Boracay Inter-Agency Task Force (BIATF), through the local government of Malay, Aklan, shuttered Bella’s Bar and Restaurant, Old Captain Cuisine, Ken Minimart, Ken St., Island Staff Restaurant, Coco Spa, Kim Ji Man, W Hostel Boracay Dragon, VIP Souvenir Shop, and YH World Network Service, Inc.

“I once said that Boracay will never be a ‘cesspool’ again, but we need all the support and cooperation of everybody to sustain the gains we have made from the massive rehabilitation we have done to the island. Let us continue to be guardians of the island and prevent it from sliding back,” Environment Secretary Roy A. Cimatu said in a statement on Wednesday.

Mr. Cimatu earlier ordered the crackdown on business establishments in Boracay, after receiving reports there have been an increase in the number of Chinese-owned businesses catering exclusively to Chinese tourists.

In a statement, Natividad Y. Bernardino, general manager of BIATF, said a committee was formed to look into possible violations of foreign-run businesses, as well as foreigners working in Boracay without valid work permits and visa.

The committee inspected 49 establishments from May 7-9, and 10 were found to be operating without permits from the mayor’s office. Another 14 were found to have incomplete requirements from the local government unit and the Bureau of Fire Protection.

“We cannot allow flagrant violation by foreign nationals of our country’s laws and regulations, especially in the island which we have painstakingly rehabilitated,” Department of Interior and Local Government Undersecretary Epimaco Densing III said. — VMPG

The Thai Connection

May 23, 2019 | 12:01 am

THE Dusit Thani Hotel Manila pulled off a wine dinner coup of sorts recently when it held Epicurean, a Thai gastronomic journey, at its top-rated and critically acclaimed Benjarong restaurant. This was the first wine dinner of its kind in the country, where both an established Michelin star restaurant chef and a winemaker from Thailand, came over to collaborate on a six-course Thai wine-pairing dinner. While wine dinners are obviously nothing new, it was the concept of going all-authentic Thai that made this unique.

The visiting guest chef, Thanintorn “Chef Noom” Chantharawan, is the chef of Siam Wisdom, a Bangkok Michelin-star restaurant, while all the wines were from GranMonte, a winery from the Khao Yai district in Nakhon Ratchasima Province, northeast of Bangkok, which has been making a name for itself in international wine competitions. It was represented by Visootha “Nikki” Lohitnavy, the winemaker and general manager. The dinner was a collaboration between Chef Noom, Nikki, and Benjarong in-house chef Watcharaphon “Chef Ja” Yongbanthom.

And, YES, Thailand makes wines.

THAI WINERY GRANMONTE
Gran monte means “great mountain” in Spanish, and the location of the winery and its vineyards are in Khao Yai, which in Thai language also means “large mountain.” Khao Yai is roughly 180 kilometers away (just over a two-hour drive) from Bangkok. Khao Yai is already known for its very popular local park (of the same name) and for being part of a UNESCO World Heritage Site. Khao Yai is undisputed as the best Thai district with the right growing conditions for vineyards. As visiting winemaker Nikki Lohitnavy revealed, the “average evening temperature in Khao Yai is just 12°C and the altitude ranges from 350 to 600 meters above sea level.”

Aside from GranMonte, Khao Yai also hosts Village Farm and PB-Valley Khao Yai Winery, among others. GranMonte may not be the first Thai winery — that distinction goes to Chateau de Loie, operating out of Loie province and credited with the first commercially released Thai wine in the mid-1990s — neither is GranMonte the first winery in Khao Yai as that recognition goes to PB-Valley Winery. However, GranMonte is riding high on the recent wave of Thai wine interest and has done very well in export.

The winery has also won various international awards as proof of its acceptance in the international wine scene. Recently, its wines were imported by Philippine Wine Merchants for distribution exclusively at the Dusit Thani hotels in the country, which includes Makati City, Cebu, and Davao hotels.

A TETE-A-TETE WITH NIKKI
GranMonte’s Nikki Lohitnavy best exemplifies the future of the Thai wine industry. She is young, passionate, well-educated and very driven. She finished a bachelor’s degree in oenology from the University of Adelaide in Australia, and is as engaging and smart as any veteran winemaker I have met and interviewed from around the world.

Q: GranMonte is your family’s business. How did it start? Is your dad like a huge oenophile and he just wanted to pursue this wine venture to chase his dream?

A: My parents like wines, but they are not really into serious wine collections. They just enjoy drinking wines. My father actually just wanted to do something in his retirement. As a start, he planted a little bit of vineyard. And when we started making wines, there was kind of a good demand for the wines. And then my father slowly expanded and made this into a serious business.

I sort of grew up in the vineyards. I really liked it a lot, though initially I wanted to be a botanist, which really is not much different from oenology, except on the winemaking part.

Q: Can you tell me a little bit about your vineyard size, your present volumes and expansion plans?

A: We started with around 14 hectares of vineyards from our original site (20 years ago), but we have added three extra sites in the last few years, also within Khao Yai. Our present volume is around 7,500 cases (of nine liters), but we expect to triple that in the next five years. Since there are really no existing wine grape growers in Thailand, it really takes time. We have to plan and plant the vineyards from scratch.

Q: How many different wines do you do at present, and what are your most grown grape varietals?

A: We do 13 different wines at the moment, and we grow several varietals in our vineyards, ranging from syrah, cabernet sauvignon, chenin blanc, durif, merlot, grenache, verdelho, semillon, muscat and viognier. We are even experimenting with cabernet franc now. Forty percent of all our vineyards are growing syrah, followed by cabernet sauvignon and chenin blanc.

Q: Given the relatively small volume of your production and vineyard size, is the idea to produce many wines simply to test the market on what works and what does not, and then eventually to concentrate on a few wines and varietals?

A: Not really. To me it is very important for us to have many different wines. This industry in our country is quite new and we need to explore what varietals we can grow, what varietals suit our climate and soil best, what style of wine we can make, and, eventually, what to drink. Also, this makes my job challenging and not boring. I really do not see myself making only four different wines. I want to grow different varietals and make them into our wines.

Q: We all know that Thailand has one of the world’s highest tax rates levied on wines. Is there therefore an advantage for GranMonte, being local produced as against imported wines?

A: Actually, we do not enjoy much of an advantage against imported wines. The bulk of the wine tax is based on excise tax as a luxury product, and not on import duty. It is, sadly, kind of unfair as the wine tax law has been enforced for like 40 years already. When this law was created during those times, wine was not popular among local drinkers and there were no Thai wineries too back then.

This is therefore quite remarkable. A Thai-made wine competing head-on with imported wines at almost a level playing field and is still succeeding both domestically and even exporting. As a parting shot, I asked winemaker Nikki what her wine influences are, whether she likes Burgundy or Bordeaux wines, and her answer was quite succinct: “I just like Thai wines.”

There you have it. The Thai wine industry is in good hands and the future looks really bright with dedicated hardcore Thai winemakers like Nikki leading the charge.

The author is a member of UK-based Circle of Wine Writers. For comments, inquiries, wine event coverage, and other wine-related concerns, e-mail the author at protegeinc@yahoo.com. He is also on Twitter at twitter.com/sherwinlao.

Insular Life books double-digit growth in revenues, premiums

May 23, 2019 | 12:01 am

INSULAR LIFE Assurance Co., Ltd. (InLife) posted double-digit growth in revenues and insurance premiums in 2018 on the back of the strong performance of its bancassurance channel and agency force.

In a statement sent to reporters on Wednesday, InLife said it booked P22.2 billion in consolidated revenues last year, up 13% from P19.71 billion tallied in 2017.

Net insurance revenues climbed 18% to P14.38 billion in 2018 from the P12.2 billion booked the previous year, while operating revenues stood at P7.8 billion, 4% higher than the P7.5 billion tallied in the comparable year-ago period.

InLife’s operating revenues came from investment income, dividend income, property rentals, sale of assets, as well as other forms of income.

“There were challenges along the way, such as the rapid spike in inflation rates, but thankfully, our revenue sources still posted growth rates,” InLife President and Chief Executive Officer Mona Lisa B. De la Cruz was quoted as saying in the statement.

Meanwhile, insurance premiums grew 18% to P13.98 billion in 2018 from P11.85 billion the previous year.

Ms. De la Cruz added that the insurer’s bancassurance channel with the Aboitiz-led UnionBank of the Philippines, Inc. is “now delivering results” on its first full year of implementation.

“Our bancassurance production grew by 53 percent versus the 10 percent it recorded from year-ago levels,” she said.

The life insurance firm added that its agency force ended 2018 “with a strong push” amid its improvements in technology.

“Our continuing enhancements on our automated underwriting system, which remains to be the only such technology in the domestic market, enabled our financial advisers to adapt this technology, which in turn exponentially increased our underwriting capacity,” Ms. De la Cruz said. “And this is one of the major contributors to the 19 percent growth of our agency production in first year premiums.”

Based on the data from the Insurance Commission, InLife ranked second among life insurers in 2018 in terms of net worth with P37 billion, third in assets with P130.4 billion and fifth in net income with P2.3 billion. — K.A.N. Vidal

Can domestic savings cover increasing investment needs?

May 23, 2019 | 12:00 am

How PSEi member stocks performed — May 22, 2019

May 23, 2019 | 12:00 am

Here’s a quick glance at how PSEi stocks fared on Wednesday, May 22, 2019.

NEDA expects China pushback on priority hiring of Filipinos

May 22, 2019 | 10:05 pm

SOCIOECONOMIC Planning Secretary Ernesto M. Pernia said donor countries like China are likely to resist hiring mostly Filipinos in any projects funded by Official Development Assistance (ODA), after Senator Sherwin T. Gatchalian filed a bill calling for priority hiring.

“China will probably negotiate and bargain hard,” Mr. Pernia said in a briefing in Makati on Wednesday.

“They (China) are probably going to be more resistant to it,” Mr. Pernia added.

Mr. Gatchalian, through Senate Bill No. 2223, wants to require foreign bidders or contract awardees funded by ODA to hire Filipino workers for manual, technical and other labor.

“Ordinary Filipino workers are deprived of the opportunity to work and partake in the benefits of the loans that Filipino taxpayers will be paying for,” according to Mr. Gatchalian.

Mr. Pernia said prioritizing Filipinos workers is only possible “if ODA partners will agree.”

Mr. Pernia also said that the passing of the National Economic and Development Authority (NEDA) bill, also sponsored by Senator Gatchalian, is unlikely to be passed soon.

The NEDA bill aims to firm up the agency’s role in integrating major regional and local development priorities into the Medium-Term Philippine Development Plan (MTPDP) and Medium-Term Regional Development Plans (MTRDPs), respectively.

Mr. Gatchalian, in a statement, said that he hopes to pass the bill before the end of the 17^th Congress.

“It’s hard to predict what’s going to happen because the time is rather tight so the window for having the requirements for legislation is still in second (reading). It’s not as close as we would have wanted it to be by this time,” Mr. Pernia said.

Asked if NEDA considers passing the NEDA bill a priority, Mr. Pernia said, “Actually, that was not discussed with NEDA… This is a spontaneous initiative of Senator Gatchalian. We didn’t request it. We didn’t suggest (that he) sponsor a bill like this.”

“I think the House has to be at the same stage so that it can move faster and according to Congressman [Jose Maria C.] Salceda, they will work on it next week,” Mr. Pernia added. — Reicelene Joy N. Ignacio

South Korea promises help in taking back 5,177 MT of garbage shipments

May 22, 2019 | 10:04 pm

THE South Korean government has committed to help ship back 5,177 metric tons (MT) of plastic garbage that was illegally brought to the Philippines last year.

In a statement from the Department of Finance yesterday, Bureau of Customs (BoC) Commissioner Rey Leonardo B. Guerrero said in his report to Finance Secretary Carlos G. Dominguez III that the South Korean government has expressed its willingness to help repatriate the waste imported by Verde Soko Philippines Industrial Corp.

“The Korean government has expressed its commitment in collaborating with the Philippine government to execute the repatriation of these materials should Verde Soko fail to follow the Notice of Repatriation Order which it issued, and its willingness to shoulder the shipping cost without the arrester and demurrage charges,” Mr. Guerrero said.

Cebu-based Verde Soko illegally imported thousands of tons of plastic waste materials into the country. The cargo is currently stored at the PHIVIDEC Industrial Authority site in Misamis Oriental.

The commissioner said in his report that an order of forfeiture and order of re-expatriation were issued by the Port of Cagayan de Oro (CdO) against the waste materials, which arrived in the country in bulk and containerized shipments.

A separate shipment of 51×40 container vans was loaded on a cargo vessel on Jan. 13 and shipped back to South Korea the following day. The remaining 5,176.9 MT of garbage in Tagoloan, Misamis Oriental will be balled and compacted in preparation for shipment.

“The Port of CdO District Collector informed that PHIVIDEC has already applied for power supply with the Cagayan de Oro Electric Power Light Company in order that the Balling and Compacting Machine, which are already in place, can be used in the compacting and bagging of the waste materials prior to their shipment to Korea,” Mr. Guerrero added.

Both Manila and Seoul are signatories to the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal, an environmental treaty designed to reduce movements of such shipments between nations.

Apart from the South Korean trash, the Philippines is also bound to return 69 container vans of garbage back to Canada, by a May 15 deadline which Canada has allowed to lapse.

The BoC said despite the country’s preparedness to send back the garbage, the Canadian government might take weeks to process necessary paperwork.

Between 2013 and 2014, a total of 103 container vans of household garbage were shipped to the Philippines in several batches by Canada’s Chronic Plastics, Inc. Thirty-four of the containers have been shipped, while the rest are housed in the Manila International Container Port and the Port of Subic. — Karl Angelo N. Vidal

Program to expand corn and sorghum planting may cost P2B

May 22, 2019 | 10:04 pm

THE Department of Agriculture (DA) said it is seeking an additional P2 billion to fund the expansion of corn and sorghum production to help develop the livestock industry, which is heavily dependent on feed imports, in anticipation of a surge in meat consumption.

Agriculture Secretary Emmanuel F. Piñol said Tuesday that he put in a request to Finance Secretary Carlos G. Dominguez III for the P2 billion, which will support the planting of an additional 100,000 hectares to corn and another 100,000 hectares to sorghum.

“This year and next year, we will focus on additional production of corn and sorghum to support our poultry and livestock industry because we are expecting dramatic growth, especially for the hog industry,” he said in a news conference Tuesday.

These additional planting area will add 600,000 metric tons (MT) to corn production, and 400,000 MT to sorghum production. Most of the expansion area for corn will be in Mindanao, where the corn crop was greatly affected by the dry spell. On the other hand, sorghum production will focus on under-utilized, marginal land including ancestral domain areas of indigenous people.

Seed companies have estimated that they have available inventory good for 110,000 hectares of corn, while the sorghum seed inventory will be sufficient for the planned expansion within 45 days.

Mr. Piñol said he is seeking to import 300,000 MT of corn to help mitigate the impact of the dry spell.

“[We will catch up] for this year kasi kailangan suportahan ‘yung [because we need to support the] hog and poultry industry because of the expected shortage of pork in the market,” he said.

He also noted the spread of the African Swine Fever (ASF) in China, Hong Kong, Japan, and Russia, among others, which could be an opportunity to expand the exports of the Philippine hog industry.

The DA said El Niño damage as of April 25 to rice, corn, fisheries, and high-value crops has climbed to P7.96 billion with an estimated volume of 447,889 metric tons (MT) in lost output.

It said the dry spell has affected 277,889 hectares of agricultural land and 247,610 farmers and fisherfolk. The damage estimate for corn is currently at P3.89 billion and 254,766 MT worth of lost production affecting 133,007 hectares of land and 105,937 farmers.

As a feed, sorghum’s advantages include the possibility of three harvests per planting. The crop is also a candidate for interplanting in coconut farms, offering such farmers additional income amid low copra prices. — Vincent Mariel P. Galang

DTI notes export bright spot in gifts, decor, houseware

May 22, 2019 | 10:03 pm

GIFTS, décor and houseware (GDH) exports in 2018 grew 23.9% amid an overall decline across many exports, the Department of Trade and Industry (DTI) said, adding that it hopes to focus on the sector to generate more growth.

In statement Wednesday, the DTI said GDH shipments totaled $206.34 million in 2018 from $166.54 million a year earlier.

“The continuous growth of the country’s GDH sector is largely boosted by the collaborative efforts of government and private sector stakeholders to further push the competitiveness of the industry through various initiatives such as industry policy interventions, product development, strengthening the supply chain, and promotion activities,” the DTI said.

The DTI said some of its ongoing initiatives including the relaunch of MA’I Lifestyle, the sector’s official brand, during the recently-concluded 69^th Manila FAME, a lifestyle and design promotion event at the World Trade Center in Manila.

Conducted in cooperation with the Association of Negros Producers, Home Accents of the Philippines Inc., Mindanao Trade Exposition Foundation, Philippine Chamber of Handicraft Exporters and Artisans Inc., and the Philippine Lifestyle, Homestyle and Holiday Décor Association, the relaunch hopes to boost brand recall for MA’I Lifestyle and further promote the Philippines as a primary source of reliable GDH products.

Seminars will also be organized to help MA’I Lifestyle member companies comply with international buying standards. Selected MA’I products were also showcased at the Design Commune, one of Manila FAME’s special shows.

The DTI has been working on a road map of the GDH sector since July 2016 to come up with a unified brand for Philippine products, which will be used by the GDH sector’s website and catalogue. It will also help establish the industry’s identity when participating in international exhibitions.

MA’I was first unveiled to the public during the 66th Manila FAME in October 2016, following nationwide branding workshops and consultation sessions led by the Board of Investments (BoI) and the GDH sector’s business support organizations.

This year, the BoI will continue supporting the sector through partnerships with various agencies in identifying training opportunities that can further capacitate the industry. — Janina C. Lim