PHILIPPINE AIRLINES (PAL) is strengthening its push to be awarded a five-star rating by international airline rating organization Skytrax by 2020 with the delivery of two new aircraft.
PAL President Jaime J. Bautista told reporters in a rollout ceremony for the new planes in Pasay City on Tuesday that the airline’s new Airbus A350 XWB and A321neo have the necessary improved entertainment system that would push the company to move up its current four-star rating.
“Kailangan pa natin i-train yung mga (We still need to train the) staff on the ground and on the air. Yung cabin crew sa aminang rating is almost five star eh (Our cabin crew’s rating is almost five stars). But we need some more improvements that we can implement. Then we need to improve the contents of the in-flight entertainment system. (These new aircraft), puwede na ‘to (these would do),” he said.
The delivery of the two aircraft are the first of six A321neos expected to arrive within the year and of six firm orders of the A350 unit.
Although the aircraft are marketed by Airbus for long haul flights, Mr. Bautista said these new planes were leased to service different distances of trips.
“Actually we look at both long haul, medium haul and domestic because all these are growing markets… So hindi lang yung long haul ang ina-address namin (So we’re not just addressing long haul flights), but the whole market,” he said.
Mr. Bautista also noted foreign investors are taking the company’s efforts to get a good rating “very positively.” He added that Skytrax looks at the overall customer experience with an airline — from the lounge to the in-flight service and amenities — to give it a high rating.
The flagship carrier was awarded by Skytrax a four-star rating in February this year, the only local airline to receive the certification from the rating organization.
Aside from improved aircraft features that cater to passengers, the two new planes are also expected to help the company cut on fuel costs by within 20% per seat kilometer basis as they have reduced fuel burn and emissions and lower maintenance costs.
Mr. Bautista said PAL is taking a hit from rising fuel prices and has refiled its fuel surcharge application in the Civil Aeronautics Board (CAB) last month. He noted PAL consumes up to 11 million barrels of fuel a year, hence a $10 increase in fuel prices would translate to a $110 million increase in the company’s fuel spending. — Denise A. Valdez
CIBI President and Chief Executive Officer Marlo R. Cruz. — CIBI.COM.PH
CREDIT INFORMATION and industry benchmarking can be beneficial for small and medium enterprises (SME) as these can help them obtain access to lending and assess their performance against other industry players, CIBI Information, Inc. said.
In an interview, CIBI President and Chief Executive Officer Marlo R. Cruz said small businesses can grow with the help of credit information.
“SMEs will definitely be able to gain a lot of ground now. With credit information, SMEs will gain because they will [now have access to] banking and credit,” Mr. Cruz told BusinessWorld on the sidelines of Philippine Credit Forum held in Taguig City last week.
Through credit information, Mr. Cruz said banks and other lending institutions can assess the capability of SMEs to meet their financial obligations, enabling them to borrow capital and grow their businesses.
“Lending institutions does not want to deal with SMEs simply for one reason: they do not have any information about them. When banks have information about them, it gives them knowledge to make better decisions.”
Mr. Cruz added that industry benchmarking can be a useful tool for small businesses to assess their performance against other firms.
“Benchmarking can help them know how they are performing vis-a-vis their competitors. This gives them a chance to plan their direction in the short- and long-term,” Mr. Cruz said.
“It gives you a wider perspective on how the industry and the economy in general is performing,” he explained. “You can align yourself and be able to adapt and adjust to the current market trends and therefore become a better organization.”
CIBI was established in 1982 by then-Central Bank of the Philippines, Securities and Exchange Commission and Financial Executives Institute of the Philippines to collate, develop and analyze credit information of individuals and businesses. It was transformed as a private entity in 1997.
CIBI is one of the four special accessing entities (SAEs) accredited by the state-run Credit Information Corp. (CIC), the country’s credit information registry. SAEs are authorized to access credit information being kept by the CIC. — Karl Angelo N. Vidal
AT the recent International Food Expedition (IFEX) at the World Trade Center and Trade Training Center, Kusina ni Mama Sita showcased a wide range of Filipino flavors along with more than 700 food exhibitors from Southeast Asia. Mama Sita served plentiful tasting portions including arroz caldo, chicken inasal, paksiw na bangus, pansit palabok, sitaw and tofu-stir-fry, caldereta, champorado, sisig, barbeque, and the newly introduced adlai paella. Adlai is an ancient heirloom grain that needs to be preserved. The Department of Agriculture states that adlai is a great alternative for rice and they see a potential for it to be the solution for the country’s national food security problem. Adlai is also a grain packed with medicinal purposes. Kusina ni Mama Sita is helping to promote this product by packing it with spices in a kit for convenience, such as the new Adlai Paella Kit — which can be prepared using a rice cooker. Check out Kusina ni Mama Sita’s boutique range at the kiosk at the Greenhills Shopping Center, San Juan City, Metro Manila. For inquiries, contact Kusina ni Mama Sita at info@msita.com.
DNA TESTING at home in Japan is starting to gain traction as more people age and seek answers about their risks for diseases.
The market for consumer genetic tests is poised to reach ¥6.6 billion ($58 million) in sales by 2022, up from ¥4.3 billion last year, according to Fuji Chimera Research Institute. The sector is dominated by two local companies, Genesis Healthcare, Co. and Genequest, Inc. For ¥5,000 to ¥30,000, customers can send off a cheek swab to find out their propensities for alcohol intolerance and allergies, to risks of diabetes and strokes.
Japan is rapidly aging, with a third of the population projected to be 65 or older by 2035. While more people are aware of health risks that can be detected through early DNA testing, Japan’s self-testing market is dwarfed by the US, where people spent $73 million on genetic exams last year, according to Kalorama Information. The two Japanese start-ups are betting that testing kits, as well as online services using compiled genetic data, will find greater demand as people become more confident in the technology.
“I see a lot of potential in the business,” said Genequest founder Shoko Takahashi.
Genesis, the No. 1 testing firm with 70% of the domestic market, has compiled data for more than 600,000 users, and is aiming to reach 1 million this year. It also operates as GeneLife in Japan. Rakuten, Inc. invested ¥1.4 billion in the Tokyo-based start-up last August, with Chief Executive Officer Hiroshi Mikitani joining its board.
So far in Japan, there aren’t any legal restrictions to consumer genetics tests. The Ministry of Economy, Trade and Industry has, however, cited the quality of tests as an area of concern. In 2013, the US Food and Drug Administration told US DNA-testing company 23andMe to stop selling their kits because the company failed to back its marketing claims. The FDA lifted the ban in 2017.
Market growth will depend on how accurate home kits get, said Fumiyoshi Sakai, an analyst at Credit Suisse Securities. “It is about technological innovation,” he said.
Although home-testing kits aren’t as accurate as more thorough clinical tests, they are useful for identifying enough genetic factors for people to change their lifestyle, according to Genequest’s Takahashi. There’s still room for improvement, and growth, she said.
“No one in the world has found a winning pattern in this business yet,” Takahashi said. “It is going to take time and money” for the sector to grow, she said. — Bloomberg
HANDCRAFTED and prepared the traditional way, Jasmine restaurant’s chef Wong Kam On’s mooncakes are back to celebrate the Mid-Autumn Festival. Available with four fillings — namely, red bean, white lotus, red lotus, and five kernels — the mooncakes are elegantly packaged gifts for family and friends. Boxes may also be customized with a logo for a personal touch, for a minimum order of 100 boxes of four. Early birds will receive a 20% discount for orders until Aug. 15, while bulk orders with a minimum of 30 boxes will receive a 30% discount. Prices start at P588 per single box and P1,788 per box of four. Mooncakes are traditionally eaten during the Mid-Autumn Festival and symbolize unity, togetherness, and prosperity. For more information and reservations, call New World Makati Hotel at 811 6888 ext. 3338. Stay updated and follow New World Makati Hotel on Facebook (New World Makati Hotel) or Instagram (@newworldmakati).
Fruit Frappuccinos at Starbucks
STARTING July 24, Starbucks will serve up two fruity Frappuccino blended beverages — Apricot and Peach Yogurt Frappuccino and Açaí Mixed Berry Yogurt Frappuccino for a limited time only. The Apricot and Peach Yogurt Frappuccino has two fruits in three layers: peach jelly with real bits, a creamy, tangy yogurt blend, and a drizzle of apricot sauce. Making a return this season, the Açaí Mixed Berry Yogurt Frappuccino is a light purple, Açaí berry-infused drink with pearls that burst with mixed berry flavors, topped with milk foam.
NY pastry chef to do demo
PASTRY CHEF Nick Malgieri
PASTRY CHEF Nick Malgieri will be in town in August to show chocolate aficionados how to make cakes and pastries using cocoa and chocolates alongside local chef Jill Sandique. He will do a demo titled “A Date with Chocolate” at the World Food Expo 2018 at the SMX , Mall of Asia complex on Aug. 3 from 10 a.m. to 1 p.m. Malgieri was inducted into Who’s Who of Food and Beverage in America. In 1998 and 1999, he was voted one of the 10 best pastry chefs in America by Chocolatier and Pastry Art and Design magazines. His book, Chocolate — which was published by Harper Collins in 1998 — was included in Food & Wine magazine’s Best of the Best for 1998, was voted Best Chocolate Book in the World by the 1998 Salon International du Livre Gourmand, and was the winner of an International Association of Culinary Professionals (IACP)/Julia Child Cookbook Award for the best baking book of 1998. After a long career as a pastry chef in numerous restaurants including Windows on the World, he founded the Total Heaven Baking company, He is a consultant to Inhilco, Inc. and restaurants and pastry shops throughout the United States, and has developed recipes for a variety of food producers, and for Food and Wines From France and A.I.D.I., and the Italian Confectionery Industries Association.
Classic Pinoy merienda with a twist at Andrew Café
DEEP-FRIED pancit palabok: deep-fried vermicelli with egg, chicharon, smoked fish flakes, squid, and cream sauce
CLASSIC Filipino snacks such as kakanin (rice cakes), pansit (noodles), and palamig (cold drinks) take on a new look in the Merienda Menu of Andrew Café. Chef Jester Arellano, resident culinary professor of Hotel, Restaurant, and Institution Management at the De La Salle-College of Saint Benilde, together with his students, curated the new menu inspired by merienda must-haves, but are also perfect as hearty meals for breakfast, lunch, or dinner. Lumpia wrappers made in-house are used in spring rolls like piniritong lumpia, ube lumpiang sariwa, spicy laing lumpia, sisig lumpia, and shrimp sauce drenched palabok lumpia. Noodles are made from scratch for deep-fried pancit palabok, which is seasoned with eggs, chicharon (pork crackling), smoked fish flakes, squid, and drizzled with shrimp sauce; the laing ravioli, dressed in chili coconut tomato sauce; and the bestseller sisig pasta drenched in tamarind cream sauce. For something sweet there are Champorado (chocolate rice porridge) mousse cake which blends tablea (local chocolate), rice crispies, pinipig-polvoron (milk powder candy), and optional caramelized tuyo (dried fish). On the other hand, the sapin-sapin panna cotta takes layers of ube (purple yam) and coconut pudding served with jack fruit coulis and coconut sauce. Complement the meal with beverages such as langka samalamig, a serving of sago’t gulaman infused with hints of jack fruit, or the house-blend sampaloc (tamarind) juice. The merienda menu is available all day until Aug. 4 at the Andrew Café, located at the De La Salle-College of Saint Benilde Taft Campus, corner of Estrada and Leon Guinto Sts., Malate, Manila. It is open Mondays to Fridays from 7 a.m. to 6 p.m. and on Saturdays from 7 a.m. to 5 p.m.
Shake Shack coming to the Philippines
SHAKE SHACK’s burgers (and more) will be coming to PHL by Q1 of 2019.
COMING soon to the Philippines is New York’s iconic modern-day “roadside” burger stand, Shake Shack. SSI Group, Inc., is bringing in Shake Shack, adding it to its roster of food offerings which incudes SaladStop!, Good Eats, and TWG Tea restaurants. Shake Shack is known for its 100% all-natural Angus beef burgers, chicken sandwiches and flat-top Vienna beef dogs, fresh-spun frozen custard, crinkle cut fries, craft beer, and wine. Shake Shack will open its first store in Manila in the first quarter of 2019.
THE LAND Transportation Franchising and Regulatory Board wants Hype to explain its fare structure. — BW FILE PHOTO
THE LAND Transportation Franchising and Regulatory Board (LTFRB) has issued a show-cause order to transport network company (TNC) Hype Transport Systems, Inc. for allegedly imposing a P2 per minute travel time charge without authority from the Board.
In an order released on Tuesday and shared with reporters on Wednesday, the LTFRB said it wants the ride-hailing company to explain its fare structure or else it may face suspension.
“Acting on a report forwarded by a concerned citizen to the Board, respondent Hype Transport Systems, Inc. is hereby ordered to show cause in writing within a period of five days from receipt of a copy hereof, why its Certification of Accreditation as a Transport Network Company should not be suspended…,” the order read.
But in a text message to BusinessWorld, HYPE President Nick L. Escalante said the company is not breaking any policies.
“We are currently drafting our reply to the LTFRB’s order. We assure the public that HYPE is transparent and abides by the law, and rules and regulations concerning TNCs. HYPE is one with LTFRB in its aim or providing quality choice for the riding public,” he said.
The LTFRB said the charge is on top of a flag-down rate of P40 and an additional charge of P14 per kilometer. It also set a hearing for the said case on July 24, Tuesday.
Hype was sought for comments on the show-cause order but has yet to issue an official statement as of press time.
In April, Grab Philippines (MyTaxi.PH) was also questioned for its P2 per minute waiting time charge which led to the fare component’s suspension.
It also brought the LTFRB to slap a P10-million fine on the company last week for the said charge, and an order to rebate the P2 per minute Grab collected from passengers for its almost one-year implementation.
Hype is one of the local ride-hailing companies accredited by the LTFRB in April after Grab’s buy-out of the southeast asian operations of Uber Technologies, Inc., leaving it the sole TNC in the market. — Denise A. Valdez
IN INDONESIA, a nation of about 17,000 islands, it’s getting tough to even make a few bucks from a coconut these days.
Surging interest rates and a deepening currency rout have dealt a double blow to PT Niramas Utama, which makes food products from the tropical fruit. The company is finding it more expensive to import necessary inputs while the central bank’s steep tightening means expansion plans may be shelved.
“We are trying to find alternative raw materials,” said Adhi S. Lukman, a director at Niramas Utama. “Otherwise, our profit margin will be slashed down and an increase in the prices of our products will be inevitable.”
As Indonesia’s central bank moves aggressively to shield the local currency from a global emerging-market sell-off, businesses are increasingly rattled. The 100 basis points of hikes since mid-May have so far failed to halt the rupiah’s slide and at the same time are set to jack up borrowing costs.
Policy makers have been forced to take action to stabilize the local currency against a stronger dollar, as the Federal Reserve raises interest rates faster than anticipated. The rupiah has lost almost 6% against the greenback this year, among Asia’s worst performers, as an emerging-market exodus shows little signs of abating.
After three rate hikes in the past two months, Governor Perry Warjiyo and his board may be ready to pause. Of the 27 economists surveyed by Bloomberg, 24 predict the benchmark rate will stay unchanged at 5.25% on Thursday.
That’s scant relief for some. Firms remain worried about how many more rate increases they may endure and the impact on economic momentum that was starting to build. Economists see one more hike by the end of this year.
“We understand that BI (Bank Indonesia) had to increase the interest rate following the rupiah’s weakening,” said Shinta Widjaja Kamdani, the deputy chairwoman of the Indonesian Employers’ Association. “However, this will lead to a deceleration in the manufacturing industry and in people’s spending levels — two very important things in our national economy.” CUTTING SPREE
Interest rates were last at 5.25% two years ago, when the central bank was in the midst of a cutting spree aimed at spurring growth. That saw the benchmark rate lowered eight times, with the last move in September 2017. Yet the economy has failed to fire up and growth remains stuck around 5%, well short of the 7% targeted by President Joko Widodo.
Spending by consumers and business, which makes up almost 60% of gross domestic product, remains subdued by Indonesian standards with annual growth below 5%. Inflation is also low, with prices rising 3.1% in June from a year ago — about half the average rate back in 2014 when Widodo came to power.
Industry Minister Airlangga Hartarto said rising interest rates and a falling rupiah were a “double hit” for some manufacturers. “There have to be other tools to be used for reducing the depreciation of the rupiah,” he said in an interview, adding that rate hikes will also reduce Indonesia’s economic growth. BITTERSWEET
Bank Indonesia’s Warjiyo is adamant that stability of the currency must be the priority. He also insists that the impact of higher rates will take longer to filter through to the economy than measures the bank has taken to boost lending, such as relaxing mortgage rules.
“Bank Indonesia will keep calibrating various domestic and foreign indicators in order to optimize its future policy mix,” Warjiyo said Friday. “As I’ve said before, we have one bitter herbal drink to stabilize exchange rate and four sweet herbal drinks to boost the economy.”
For Niramas Utama’s Lukman, who’s also chairman of the Indonesian Food and Beverage Producers Association, the central bank’s policy mix is indeed proving a bittersweet cocktail.
On one hand, “if the rupiah keeps weakening, the food and beverage industry will also see a decline,” he said. However, “if the Bank Indonesia rate keeps increasing, it’s harder for us to think about making further investments. So, Bank Indonesia must also take this into its consideration.” — Bloomberg
CHINA WILL TOLERATE higher volatility in the yuan and a moderate weakening of the currency, according to Pacific Investment Management Co.
As long as the moves are driven by fundamental factors, the central bank is unlikely to defend the yuan at a particular level, according to Isaac Meng, an emerging market portfolio manager at Pimco in Hong Kong. Officials are more comfortable with swings in the currency and foreign funds have been boosting investment in onshore bonds, while domestic households already hold significant assets overseas, he wrote in a blog.
The yuan is Asia’s worst performing currency since mid-June, sliding 4.4% as China’s economy showed signs of slowing and friction with the US worsened. Senior central bank officials said the currency would be kept stable and not used as a weapon in the trade dispute after it slipped past 6.7 per dollar earlier this month, raising speculation that authorities had drawn a line in the sand for the exchange rate at that level.
“The central bank has shown willingness to tolerate higher volatility and to let the currency act as a shock absorber — as long as the moves are driven by fundamentals and there’s no big spillover to financial stability,” Meng wrote. “This likely reflects a perception of restored credibility in China’s currency regime.”
A potential compromise in the trade dispute with the US would “almost certainly entail a sizable reduction” in China’s trade surplus, which will weaken fundamentals and the exchange rate, Meng said. He added that a depreciating yuan will help offset US tariffs, the first round of which will trim 10 to 20 basis points off Chinese gross domestic product.
The onshore yuan rose 0.02% to 6.7021 per dollar as of 11:24 a.m. in Shanghai. — Bloomberg
MALACAÑANG said it has “clarified” matters with Socioeconomic Planning Secretary Ernesto M. Pernia on the economic impact of a shift to federalism, and asserted that the change of government system does not carry the risk of weakening the country’s fiscal position, as Mr. Pernia had warned.
In a statement on Wednesday, Presidential Spokesperson Herminio L. Roque, Jr. said, “We have discussed and clarified the matter with National Economic and Development Authority (NEDA) Director-General and Secretary Ernesto Pernia. The shift to federalism, we reiterate, would have no adverse effect on the Philippine economy.”
He added: “Our budget will remain the same, as identified national projects would be devolved and transferred to the internal revenue allotment (IRA) of local government units. These projects include maintenance of barangay roads and bridges, water supply services, barangay health centers and daycare centers, solid waste disposal system of municipalities, among others.”
The role of the national government, according to Mr. Roque, “would be to continue to implement Build, Build, Build projects and will… be concentrated on policy making.”
Asked to elaborate, Mr. Roque said in a text message to reporters that “[i]t was only a matter of clarifying that the federal form of government does not require a bigger budget, which might result in a higher deficit.”
Senator Francis N. Pangilinan, who chairs the Senate Committee on Constitutional Amendments and Revision of Codes, said: “Yesterday’s hearing raised a lot of difficult questions needing urgent clarification. Among those questions that need clear answers from the Consultative Committee refer to cost and funding: How much is the creation of a federal government going to cost the Filipino people? How is it to be funded?”
He said “about P55 billion is needed for salaries of new federal state elected officials, according to Dr. Rosario G. Manasan of PIDS (Philippine Institute for Development Studies). And the amount does not include the cost of new infrastructure.”
The committee’s response, according to Mr. Pangilinan, is that “there are already existing regional offices of national agencies. With P55 billion comprising half the tax take from TRAIN 1 (Tax Reform for Acceleration and Inclusion), what is clear so far is that federalism means more taxes or more borrowings or both.”
“These concerns prove that we cannot rush ‘Cha-cha.’ Doing so is like careening off the cliff to political and economic limbo. If we wish to avoid political and economic disaster, we should not rush Charter change,” the lawmaker also said.
In his interview with The Chiefs on Cignal TV’s One News on Monday, Mr. Pernia said that President Rodrigo R. Duterte’s economic management team believes not all regions in the country are ready for federalism.
“[I]t’s unlikely that the regions will be ready… The momentum of infrastructure improvement in the regions is going to be disrupted,” he said.
Mr. Pernia added: “That’s really going to wreak havoc in terms of our fiscal situation and we will certainly experience a downgrading in our ratings.” — Arjay L. Balinbin
SALES OF imported vehicles in the first half fell 11% year-on-year amid higher excise taxes and fuel prices, with a rise in interest rates also dampening vehicle purchases financed with loans, the Association of Vehicle Importers and Distributors (AVID) said.
AVID is the auto industry association whose members import their products and do not assemble in the Philippines. Its members include car brands at all price points as well as commercial vehicle distributors, and its results reflect the strength of the market for economy and high-end vehicles as well as trucks, which are considered investment goods for business buyers.
In a report issued on Wednesday, AVID said sales in the six months to June hit 43,138 units, down 11% from a year earlier.
The sales include 16,176 cars, down 14% from a year earlier. The leading AVID-affiliated car brand was Hyundai Motor Co., which accounted for 10,838 units.
Sales of light commercial vehicles (LCVs) also fell across all segments except for pickup trucks, which are exempt from excise taxes under the Tax Reform for Acceleration and Inclusion (TRAIN) law. LCV sales dropped 10% year on year to 26,528 units.
Ford Motor Co. was the top AVID seller in LCVs at 12,155 units.
In commercial vehicles, JAC Automobile International Philippines, Inc. was the only member to report results, booking sales of 434 units during the period.
JAC distributes light and heavy vehicles, buses, coaches and heavy equipment.
On Tuesday, AVID’s counterparts who assemble locally — the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and the Truck Manufacturers Association (TMA) — reported jointly that their vehicle sales in the first half of the year totaled 171,352 units, down 12.5% year-on-year.
AVID said the decline in its sales cannot be attributed to TRAIN alone, whose effects the group expects to be “short term and transitional,” with demand eventually adjusting to the tax regime.
It added that excise taxes have had a clear impact on cars and LCVs. However, exempt categories like hybrid and electric vehicles are viewed as an opportunity for the industry.
AVID also cited higher petroleum prices and the impact of higher interest rates as affecting sales.
“Consumers are still adjusting to new income and new commodity price levels. Nevertheless, we see this as a transitionary period and things may soon normalize as both supply and demand factors stabilize,” Ma. Fe Perez-Agudo, president of AVID, said in the statement.
AVID is counting on a robust economic outlook and strong private consumption to buoy auto demand. — Janina C. Lim
