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Oil prices may climb with tensions, but bearish factors persist — DoE official

PHILSTAR FILE PHOTO

By Sheldeen Joy Talavera, Reporter

THE TENSION between Israel and Iran could cause upward adjustments in the prices of petroleum products if it continues to escalate, but other factors such as oil production still weigh down possibilities, an official from the Department of Energy (DoE) said on Wednesday.

“If the tensions continue to escalate, expect increases in the prices of petroleum products but there are lingering bearish factors that pull the prices down such as increased oil production, economic indicators and supply and demand outlook,” DoE Oil Industry Management Bureau (OIMB) Assistant Director Rodela I. Romero said in a Viber message.

Oil prices rose by more than 2% on Wednesday as the tensions in the Middle East raised concerns that it could escalate and disrupt crude oil output from the region, following Iran’s missile attack on Israel, Reuters reported.

In separate advisories on Monday, oil companies said pump prices would climb by P0.45 per liter of gasoline, P0.90 per liter of diesel, and P0.30 per liter of kerosene.

This marks the second straight week that prices of gasoline and diesel have increased.

The latest adjustments bring the year-to-date net increases of gasoline and diesel prices to P6.40 per liter and P2.85 per liter, respectively. Kerosene has a net decrease of P6.05 per liter.

Ms. Rodela said that the oil price hike has already factored in the geopolitical conflict in the Middle East, along with the US Federal Reserve rate cut, the withdrawal in the US inventories, and production cut of the Organization of the Petroleum Exporting Countries and its allies, also known as OPEC+.

“On the increase yesterday (Oct. 1), part of the reasons is the fear over escalated tension due to the Israel and Iran conflict because of additional premium on the cost of the petroleum products plus the potential supply disruption,” she said.

OIMB Director Rino E. Abad said that the agency bases its reference on Mean of Platts Singapore price benchmarks, hence the actual movement of the daily price will dictate the adjustment next week.

“The daily price movement for the past two days indicated a decreasing trend, hence the estimate of possible decrease of price adjustment next week, but still subject to the price movements in the next three days of the week,” Mr. Abad said.

The Philippines is a net importer of petroleum products. In the first half of 2023, the country imported 3.476 billion liters of crude oil, up 23.7% from 2022, data from the DoE showed.

Gerry C. Arances, executive director of the Center for Energy, Ecology, and Development, said that the possible rise in oil and diesel rates due to the Middle East conflict puts off-grid areas in a dire situation as they rely on diesel-powered plants for electricity.

“The Philippine government must immediately implement measures to relieve consumers from fuel price hikes, especially in transport, and in electricity in off-grid areas. If circumstances take the turn for the worse, price caps should also be put in place,” he said in a Viber message.

Dining In/Out (10/03/24)

Hope & Sesame’s Bastien Ciocca takes over The Pen’s Bar

ON FRIDAY, Oct. 4, starting at 8 p.m., The Bar at The Peninsula Manila welcomes cocktail aficionados for an evening with Bastien Ciocca, co-founder of Guangzhou’s speakeasy, Hope & Sesame. Hope & Sesame has been a consistent standout in Asia’s 50 Best Bars list for the past six years, and ranked No. 14 in the 2024 list. Mr. Ciocca is the final guest mixologist in The Peninsula Manila 2024 Bar Takeover Series. This year, Masahiko Endo of The Library in Hong Kong, Toru Ariyoshi and Keisuke Yamamoto of Kyoto’s Bee’s Knees, Fauzan Ramon and Fabri Duemillio of Jakarta’s top-rated Pantja, and Ryota Tokomitsu of Tokyo’s legendary The SG Club have collaborated with The Bar in a bid to introduce to the city the cocktail cultures of Japan, Indonesia, and Hong Kong. During his one-night takeover, Mr. Ciocca will take Manila on a sensory cocktail journey. For inquiries, call 8887-2888, extension 6694 (Restaurant Reservations) or e-mail diningpmn@peninsula.com.

Nobu Manila celebrates brand’s 30th anniversary

THE MANILA outpost of Nobu Restaurant is among the 57 Nobu locations in the world celebrating the 30th anniversary of the brand. The milestone celebrates chef Nobu Matsuhisa’s innovative take on Japanese cuisine with Peruvian ingredients. For the occasion, Nobu presents a special five-course dinner omakase menu that is offered worldwide from Oct. 7 to 13, celebrating the rich three-decade history of Nobu. Each featured dish is imbued with Chef Nobu’s personal story. The limited-time special tasting menu is priced at P8,871.43 net per person, which commences with a four-way starter of Toro Tartar, Salmon Tataki in Karashi Su Miso, White Fish Tiradito, and Yellowtail Jalapeño. A selection of sushi will then be served, followed by Black Cod Butter Lettuce and Crab Amazu Ponzu, Japanese Beef Anticucho with hijiki seaweed, grilled tomato, and oshinko. The meal concludes with a selection of mini desserts. The experience offers diners a full taste of Nobu’s signature dressings and sauces. For pre-dinner cocktails or simply to hang out, Nobu Manila also offers during the same period Nobu’s Anniversary Bar Bites. Guests can opt to lounge at the Nobu bar, cabanas, or main dining area and pair their choice of bar bites with the featured anniversary cocktail Matsuhisa Martini (P560) or their favorite beverage. Nobu Hotel’s in-room dining menu also offers the anniversary special Four-Way Starter selection. Nobu Manila is open from 5 to 10 p.m., Sunday to Thursday, and until 11 p.m. on Fridays and Saturdays. For inquiries, call 8800-8080 or e-mail noburestaurant@cod-manila.com.

Newport World Resorts does Jura

THE Whisky Library opens its doors to Jura Single Malt Scotch Whisky. Brand spokesperson George Schulze will oversee the single-malt whisky flight showcasing the Jura 12, Jura 12 Sherry Cask, and newly launched Jura 15 Sherry Cask. The session will also feature a bespoke menu that pairs with the whisky flight. The exclusive masterclass is on Oct. 16, 6:30 to 8:30 p.m. Tickets are P4,000 net per person via https://tickets.newportworldresorts.com/products/jura-masterclass?group=experiences.

Jollibee has a new dessert

JOLLIBEE now offers its new Cookies & Cream Sundae: creamy vanilla soft serve topped with crushed Oreo cookies and a chocolate shell coating. The Jolly Sweet Treats lineup also includes Iced Mocha and Peach Mango Pie. They are available at Jollibee branches via dine-in, take-out, or drive-through, with prices starting at P40. Delivery is available via the Jollibee App, JollibeeDelivery.com, #87000, GrabFood, and Foodpanda.

Financial sector cloud adoption slowed down by privacy issues

PHILIPPINE financial institutions’ adoption of cloud technology has been slower than other industries amid privacy and security concerns, according to Rocket Software, Inc.

“I think the adoption that we have noticed while we engage with the other sectors has been equally high. The financials have been a little more constrained because of the privacy as well as the security rules that have been set up by the central bank,” Praveen Kumar, vice-president for Asia-Pacific at Rocket Software, said in an interview.

Financial firms without local data centers face challenges when transitioning to the cloud, he said.

Rocket Software has been operating in the Philippines since 2008 and mostly deals with banks and other financial institutions. The Philippines is a big market for the company as many businesses in the country are still using mainframes or legacy systems such as banks, insurance, healthcare, and more, Mr. Kumar said.

“The financial sector’s adoption has been a little slower compared to the other industries because for the other industries, operational expenses are a huge chunk of their cost and that is not something that they can recover easily,” he said.

Still, increased demand for electronic banking among younger individuals has led to hybrid cloud adoption among Philippine banks, he added, especially for those banks with legacy infrastructure that mainly cater to branches and clients who do in-person transactions.

“The Gen Z is all about mobile — it’s less about branches. It’s more about self-service, whereas the elderly population is all about ‘I need someone to assist me to do anything, whether it be deposit money, withdraw money, update my statement, look at my passport,’ ” Mr. Kumar said.

“Legacy infrastructure need not always to run on-premises but can be on the cloud as well. While Rocket is all about protecting legacy, most of the cloud service providers can provide security as well,” he added.

One of the benefits of moving to the cloud is the digitalization and safe storage of old documents such as invoices and receipts, Mr. Kumar noted.

“If you keep all of that stored in a production storage environment, your costs may go up, even if you don’t need them. So, you can move them to a virtual storage environment in the cloud itself and make it cheaper in terms of how you store them and retrieve them in real time, whenever you want to,” he said.

Rocket Software provides solutions for unstructured and structured documents so that invoices and receipts that are 10 years old that were scanned and stored can be moved to the cloud, leading to cheaper storage costs, he added. — Aubrey Rose A. Inosante

Yields on central bank’s term deposits go down

BW FILE PHOTO

TERM DEPOSIT yields went down on Wednesday ahead of the upcoming cut in banks’ reserve requirement ratios (RRR) and expectations of further policy easing by the Bangko Sentral ng Pilipinas (BSP).

The BSP’s term deposit facility (TDF) attracted bids amounting to P239.098 billion on Wednesday, above the P190 billion on the auction block as well as the P175.473 billion in bids seen a week ago for the same offer volume.

Broken down, tenders for the seven-day papers reached P120.556 billion, higher than the P100 billion auctioned off by the central bank. This was also well above the P93.206 billion in bids seen for the same volume of seven-day deposits offered the previous week.

Banks asked for yields ranging from 6.2575% to 6.3%, a narrower band compared with the 6.25% to 6.31% seen a week ago. This caused the average rate of the one-week deposits to drop by 0.82 basis point (bp) to 6.279% from 6.2872% previously.

Meanwhile, bids for the 14-day term deposits amounted to P118.542 billion, higher than the P90-billion offering and the P82.267 billion in tenders for the same offer volume recorded on Sept. 25. 

Accepted rates ranged from 6.3% to 6.38%, also slimmer than the 6.298% to 6.41% margin recorded a week ago. With this, the average rate for the two-week deposits fell by 1.36 bps to 6.3601% from the 6.3737% logged in the prior week’s auction of 14-day papers.

The BSP has not auctioned off 28-day term deposits for nearly four years to give way to its weekly offerings of securities with the same tenor.

The term deposits and the 28-day bills are used by the central bank to mop up excess liquidity in the financial system and to better guide market rates.

TDF yields went down ahead of the reduction in banks’ reserve ratios, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The BSP last month announced that it would reduce the RRR for universal and commercial banks and nonbank financial institutions with quasi-banking functions by 250 bps to 7% from 9.5% effective on Oct. 25.

It will also cut the RRR for digital banks by 200 bps to 4%, while the ratio for thrift lenders will be reduced by 100 bps to 1%. Rural and cooperative banks’ RRR will likewise go down by 100 bps to 0%.

Mr. Ricafort added that TDF yields declined following dovish policy signals from the BSP chief.

Mr. Remolona last week said the Monetary Board could slash benchmark interest rates by 50 bps more this year and deliver two more 25-bp cuts at its next two meetings scheduled for Oct. 16 and Dec. 19.

The central bank began its easing cycle in August, cutting its policy rate for the first time in nearly four years by 25 bps to 6.25% from the over 17-year high of 6.5%.

On Monday, Mr. Remolona said that while the BSP has the space to reduce borrowing costs by 50 bps in one meeting, this would only be done in a “hard landing” scenario. — Luisa Maria Jacinta C. Jocson

How MediaQuest’s ThinkAMuna aims to address AI-driven lies

MEDIAQUEST Holdings, Inc.’s media information literacy (MIL) initiative ThinkAMuna Pilipinas hopes to combat artificial intelligence (AI)-driven disinformation beyond the election period, aiming to promote critical thinking and media literacy year-round.

“The elections are going to be one period where the threat of disinformation will become much more elevated, but if you look at it, disinformation is there every day of the year,” Ramon “Mon” R. Isberto, communication consultant of Pangilinan-led MediaQuest, told BusinessWorld on Oct. 1.

ThinkAMuna Pilipinas was initially implemented as part of the election coverage program “Bilang Pilipino 2025, Bayan ang Ipanalo.”

“What we’re hoping to achieve is that over time, we help build the counterculture of critical thinking upon which media information literacy is really the core of critical thinking,” Mr. Isberto said.

MediaQuest news organizations include News5, One News, One PH, Radyo5 TrueFM, The Philippine Star, BusinessWorld, The Freeman, and Pilipino Star Ngayon.

The group partnered with the Kapisanan ng mga Brodkaster ng Pilipinas.

“We want to make this part and parcel of the information flow of the news coverage agenda of our organizations,” Mr. Isberto said.

“ThinkAMuna” is about the first thing you should do when dealing with information, he added.

He said that with the flood of information, it has become increasingly difficult to distinguish what is real or not, especially with AI.

Moving forward, MediaQuest would like to establish working relationships with schools and community organizations that are conducting MIL activities or programs themselves in the later stages, Mr. Isberto added.

He also noted that false news stories were 70% more likely to be re-tweeted than true stories. Meanwhile, it takes true stories around six times longer to reach 1,500 people.

“All those who wish to push disinformation and misinformation design it so that it stimulates an emotional reaction from you. Because an emotional reaction short-circuits the normal thinking of individuals,” Mr. Isberto said. — Aubrey Rose A. Inosante

China hasn’t destroyed the tech sector. It’s sharpened it

FREEPIK

TO MOST Western observers, it would appear that China has driven its technology industry off a cliff.

The number of startups fell by 50,000 between the peak in 2018 and 2023, with this year on track to be even lower. The market capitalizations of the biggest tech companies, including Alibaba Group Holding Ltd. and Tencent Holdings Ltd., have shrunk to the tune of hundreds of billions, and pale in comparison to US peers. There is no sign that the sector will ever rebound to what it was before a government crackdown that kicked off in late 2020, even as policymakers have signaled it’s over. Becoming a billionaire entrepreneur has become something to be feared, rather than celebrated.

It’s easy for US policymakers to see this with vindication and yet more evidence of a superior tech landscape at home. And from their vantage point, they are correct: President Xi Jinping strangled a generation of entrepreneurs who could have benefited consumers and made investors a lot of money.

But that doesn’t mean China’s innovation ecosystem is slowing. If anything, Xi has only sharpened its goal to focus on national clout and security in a way that could shift the global balance of power.

Beijing has given its tech industry something that Silicon Valley can only dream of: a mission. It may be easy for investors and free-market capitalists to scoff at the idea of innovation being driven by a purpose. But as the ongoing drama at OpenAI has laid bare — and as my colleague Parmy Olson has recently written — US tech entrepreneurs and workers alike have long been obsessed with this concept. And a vast majority of Gen Z say having a sense of purpose is an important factor for work. OpenAI started as a nonprofit research organization with the goal of creating artificial intelligence that “benefits all of humanity,” and ended up launching ChatGPT, spurring the global AI boom. As it evolved to a “capped-profit” and now is poised to become a for-profit company, it has seen an exodus of much of its founding team.

Many Chinese, meanwhile, now believe the world is less secure than it was five years ago, and see tensions with Washington as one of the most pressing concerns. This existential threat of losing to the US is being used as a driving force for China’s tech ambitions.

Fresh off dismantling the get-rich-quick era, Xi has doubled down on a push for tech-driven “high quality growth” as well as “common prosperity.” The government has laid out a vision for a technological future where China leads in strategic areas such as artificial intelligence, advanced manufacturing, and green industries like solar and electric vehicles. This is already reaping dividends as exports of batteries, electric cars, and solar panels hit records.

The US may currently have a lead in advanced technologies such as AI, but China is progressing rapidly with a laser-sharp focus to close that gap. New research suggests that the Communist Party’s top-down determination to dominate these global markets is driving innovation at a faster pace than thought, and many Chinese tech firms will likely equal or surpass Western companies within roughly a decade.

Washington seems acutely aware that Beijing’s tech prowess is posing a threat, and has reacted with a slew of export measures to prevent China from accessing cutting-edge AI chips and manufacturing equipment. But these policies have further spurred Beijing’s commitment to its tech self-sufficiency goals. A recent teardown of Huawei’s Xinchuang laptop shows that the country is making rapid progress on this front, with most of the important chips in the device coming from Chinese groups.

More recently, Beijing has been supporting this push by asking tech firms and electrical vehicle makers to buy more locally produced chips. This has provided a market for domestic semiconductor firms, and also opened sources of revenue that can be used for research and development as well as expansion.

The US innovation ecosystem, driven by entrepreneurship, has spurred decades of rapid economic growth and consumer benefits. But after startups became the biggest companies in the world, the incentive to experiment and invent something truly new became obfuscated. It’s no longer innovate or die, but create shareholder value or perish. This has encouraged the brightest minds in Silicon Valley to focus on short-term returns rather than novel breakthroughs. It has turned once-exciting product launch events into boring updates.

China’s use of national interests as an incentive for innovation isn’t as far off from an all-too-American playbook that predated the US tech revolution. Like the space race during the US-Soviet Union Cold War that paved the way for Silicon Valley, many of these developments may end up having a dual use, providing downstream benefits to consumers.

It’s too soon for US policymakers to look at the decimation of China’s internet and consumer tech sectors as signs of victory in this Cold War. Washington would be wise to foster purpose-driven research, whether at universities or independent labs, rather than leave America’s boldest ambitions to the whims of Big Tech interests.

BLOOMBERG OPINION

GoTyme Bank deposits hit P19 billion

GOTYME BANK reached P19 billion in deposits as of August, driven by improved customer acquisition.

The Gokongwei-led digital bank saw its customers surge by about 300,000 to 4 million in August, which drove the increase in its deposits, it said.

This puts it on track to reach its target to have P20-billion deposits and 5.2 million in customers by yearend.

“I think we had our biggest customer acquisition month in August. I think this third, fourth quarter we should average over that,” GoTyme Bank President and Chief Executive Officer (CEO) Nathaniel D. Clarke said.

With the bank continuing to onboard more new customers, he said he does not expect the impending entry of more digital lenders to have a significant impact on the industry.

The Bangko Sentral ng Pilipinas’ (BSP) policy-setting Monetary Board in August approved the lifting of the moratorium on digital banking licenses, allowing four more digital banks to operate in the country starting next year.

The four additional licenses may come from either new applicants or banks seeking to convert their existing license to a digital one.

“I don’t think it significantly changes the competitive dynamics because today, the cap of six has not prevented other new digital-first entrants,” Mr. Clarke said.

“To that end, we don’t see that the market will really change given that there’s been a workaround and we’re already playing in a market that has those players… If ever, it’s only going to serve for heightened awareness and faster adoption because there are more players that will make people aware — and comparison and competition is always good,” GoTyme Co-CEO and Chief Commercial Officer Albert Raymund O. Tinio added.

He said new entrants are also unlikely to affect their business significantly.

“We don’t believe it’s an issue of access to licenses. There are 450 [banks]. We think it’s all about executing well — offering a differentiated, beautiful customer experience, offering the right products, and making them accessible,” Mr. Tinio said.

It would also take these new players some time before they can launch their operations, he added.

“Maybe it will be quicker for some of the existing players because they already have operators, but a minimum of six months. So it’s not going to change. And it’s going to be harder. By then we have another three or four million customers,” Mr. Clarke said. 

SALARY LOANS, CREDIT CARD
Meanwhile, GoTyme Bank plans to boost its consumer lending business through a salary loan product following its acquisition of SAVii in May and the launch of a QR-based credit card, Mr. Clarke said.

The bank will roll out a limited, invite-only pilot of its salary loan product by December, he said.

“SAVii has their existing payroll salary loan. That’s their main [product]. They also do overall financial wellness with the employees of the companies they partner with, so they also give insurance and offer savings. Over time, we will strengthen that joint employee-employer proposition. But for now, we’ve started to support them with some receivables purchasing. So, we’re bringing some of their loans to our balance sheet,” Mr. Clarke said.

“There’s a good marriage between the accounts that SAVii serves and the enterprise accounts that we’ve currently gotten onboard in our survey. So, there’s an opportunity to provide leads across SAVii and GoTyme,” Mr. Tinio added.

Currently, the digital bank’s only loan product offering is a micro, small, and medium enterprise loan through its partnership with merchant payments solutions provider PayMongo Philippines, Inc.

Meanwhile, for the QR-based card, Mr. Clarke said GoTyme Bank will launch an employee-only pilot by yearend and then an initial rollout exclusively for its “best” customers by the first quarter of 2025.

The lender is also waiting for BSP approval for a virtual asset service provider license as it wants to launch investment and cryptocurrency features on its platform. Mr. Clarke said they hope to get the regulator’s green light before 2024 ends.

GoTyme Bank is a partnership between the Gokongwei group, which holds a 60% stake, and Singapore-based digital banking group Tyme, which has 40%. It is one of six online banks currently operating in the country. — Aaron Michael C. Sy

Owner of Harry’s Bar demands Venice tackle speeding boats and ‘damaging waves’

SPEEDING BOATS are a particular nuisance for Harry’s Dolci, a branch of the more famous Harry’s Bar which overlooks the Giudecca canal, as they make waves that splash customers. — CIPRIANI.COM

ROME — The owner of Harry’s Bar, a Venetian bar and restaurant frequented by Ernest Hemingway, has filed a legal complaint demanding city authorities do more to stop boats speeding through canals and causing damaging high waves.

Venice has long been threatened by flooding and “moto ondoso,” the erosion of its buildings by waves. To try and limit the waves, strict speed limits apply to boats within its waters of between five to 20 kilometers per hour.

Harry’s Bar owner Arrigo Cipriani says the speed limits are often ignored and poorly enforced, however.

“We filed a complaint with the authorities in charge of maritime traffic in Venice (…) about the state of the (canal) banks which are lapped by the waves and become slippery and unsafe,” he told Reuters.

Speeding boats were a particular nuisance for Harry’s Dolci, a branch of the more famous Harry’s Bar which overlooks the Giudecca canal, as they make waves that splash customers, he added.

Mr. Cipriani, 92, said he had suggested installing wooden barriers to keep his patrons dry, but the idea was rejected by city conservation and heritage authorities.

Michele Zuin, a city councilor in charge of water traffic, said he understood Mr. Cipriani and other entrepreneurs’ complaints, and the municipality was working to address their concerns.

He told Reuters there would be more speed checks.

“We are not starting from scratch, but we are improving the system,” Mr. Zuin said.

Mr. Cipriani’s father Giuseppe founded Harry’s Bar — which is just off the Grand Canal, near St. Mark’s Square — in 1931, with money an American named Harry Pickering had given him to pay off a loan.

Giuseppe Cipriani named the bar and his first son Arrigo (Italian for Harry) in Pickering’s honor.

Hemingway made Harry’s Bar his Venice headquarters and mentioned it in Across the River and Into the Trees, published in 1950. — Reuters

Bang & Olufsen unveils flagship store, new headphones

DANISH luxury audio brand Bang & Olufsen (B&O) is set to strengthen its presence in the Philippines with an updated flagship store.

At the unveiling of B&O’s newly renovated space at the Shangri-La Plaza mall in Mandaluyong on Sept. 24, Ferdinand Ong, owner of B&O’s official Philippine distributor Living Innovations, showed off the range of audio equipment that can be found at the showroom.

Mr. Ong told the media that while the 124-square-meter space has been there for almost eight years, the renovation allows them to “follow the global image of B&O reflecting Scandinavian design.”

“This year, we really committed to renovating it to be the best possible space ever so that the brand can showcase its products’ timeless design and beautiful acoustic experiences,” he said.

Of the wide selection of portable speakers and headphones on display, the latest is the Beoplay H100, a pair of headphones with high-quality sound and state-of-the-art noise cancellation. It has a scratch-resistant glass touch interface and detachable components. Available in the colors Sunset Apricot, Infinite Black, and Hourglass Sand, Beoplay H100 is priced at P115,000.

The flagship store’s most engaging section is the home theater, with speakers that have studio-grade sound calibrated to the room and listener’s position. Called the Beovision Theater, the setup can be paired with the 97-inch Beovision Harmony, a 4K OLED screen TV, that works seamlessly with the Beolab 50 and Beolab 90 floor-standing speakers.

Throughout the space, the Beosound Shape keeps visitors wondering if they are decor or speakers. The personalized wall-mounted system looks like an art piece, with a minimum of eight cube-like tiles mounted on the wall in various patterns and arrangements.

A notable thing to remember about all of B&O’s audio equipment is that their “cradle-to-cradle design has enhanced durability,” according to Soren Kokholm, head of B&O Southeast Asia.

“We want to make products that last for a very, very long time. We do it by ensuring that the products we make have a long life,” he said.

One example is their speakers, which have a platform inside that can be updated to new devices. “You can simply open up an old model, remove the module inside, and replace it with a new one compatible with your new device. When you invest in a B&O product, we promise you that you will have it for many, many years,” explained Mr. Kokholm.

“Instead of calling it sustainable, we look at longevity. And, of course, luxury.”

The Bang & Olufsen flagship showroom is on the mid-level of the 3rd floor of Shang-ri-La Plaza mall’s East Wing. — Brontë H. Lacsamana

ERC approves over 500 applications from generation facilities

THE ENERGY REGULATORY Commission (ERC) has approved over 500 generation facilities, issuing 414 certificates of compliance (CoCs) and 101 provisional authorities to operate (PAOs).

In a statement on Wednesday, the ERC said the approvals were made as acting ERC chairperson and chief executive officer Jesse Hermogenes T. Andres held his first commission meeting.

“These approvals are set to boost the capacities of generation facilities and improve the reliability and supply of electricity,” the ERC said.

CoCs are issued by the ERC to entities operating a power plant or other power generating facilities. Meanwhile, pending the issuance of a CoC, the ERC grants PAOs to enable a generation company to immediately operate its generation facility.

Mr. Andres formally assumed office last week, temporarily replacing suspended ERC chair Monalisa C. Dimalanta. — Sheldeen Joy Talavera

Precious parking

BW FILE PHOTO

First, it was the Boracay airport in 2010. Then came the proposed New Manila International Airport in Bulacan in 2019, now under construction. And finally, in 2024, the Ninoy Aquino International Airport (NAIA) joined the list. All three airports are now under the control of San Miguel Corp. (SMC), led by Chairman Ramon Ang. For now, it seems, Mr. Ang has his hands full with these three major projects.

As the SMC Chairman told a press conference in early September, “With our three assigned airports — Caticlan, NAIA, and Bulacan — eh sobra sobra na ’yun (that is more than enough). Let’s focus on making sure we can deliver the quality and the timeline that we promised.” And rightly so, as no other private entity currently operates more than two major airports in the Philippines.

SMC now faces the challenge of balancing resources and expertise across these three airports. While a significant amount of capital is flowing into the development of the Bulacan Airport, revenues are currently derived only from Boracay and now NAIA. Unsurprisingly, SMC’s first move after taking over NAIA was to increase service charges, starting with parking fees.

Through its subsidiary, New NAIA Infrastructure Corp. (NNIC), the new airport manager raised parking fees at NAIA starting Oct. 1. The standard fee for cars went up by 25% to P50 from P40 for the first two hours, with an additional P25 for each subsequent hour. Overnight parking fees saw a dramatic 300% increase: from P300 to P1,200 for cars; to P480 for motorcycles; and to P2,400 for buses.

For regular travelers like myself, the cost of parking at the airport for a five-day trip has now soared from P1,200 to P4,800. The previous rate seemed reasonable, but the new rate feels excessive. I reckon the new parking rates apply to all passengers, crew, visitors, and people dropping off or picking up passengers. Airport workers, including Customs and Immigration staff, I presume, park for free.

NNIC justified the hike by explaining that the increase was part of a broader effort to optimize airport operations. According to NNIC, the old parking fees inadvertently encouraged misuse of the airport’s limited parking space, leading to congestion. They claimed that many non-travelers took advantage of the low overnight rates. The steep rise, they said, would deter such practices.

While this rationale may seem plausible, I find it difficult to believe that non-travelers regularly parked at the airport simply because the rates were low. Given NAIA’s location, it’s unlikely that people would go out of their way to park there unless absolutely necessary. NNIC’s argument could be more convincing if it provided hard data to back up its claim.
Moreover, the airport compound is not that accessible, neither is convenient to ingress and egress. Also, commercial establishments and residences around the airport have their own parking facilities. In fact, it is the spillover from the airport that park at nearby commercial establishments like Newport Mall and not the other way around.

This move by NNIC mirrors trends observed in other countries when private investors took over public airports. For example, after London Heathrow was privatized in 1987, fees for landing, takeoff, and even parking were significantly increased to fund infrastructure improvements. Parking fees at Heathrow also vary, depending on the lot’s proximity to terminals.

The London airport also reportedly faced significant criticism when it raised parking fees by 60% over a few years, similar to the jump seen at NAIA. These fee hikes were justified by promises of improved services and infrastructure, though passengers often felt the pinch long before seeing tangible results.

Another example is the privatization of Fraport AG, the operator of Frankfurt Airport. After privatization, Fraport implemented a series of fee increases to finance terminal expansions and infrastructure upgrades. Similar to what we are seeing in NAIA, airport users initially balked at the parking and service fee hikes, but over time, Frankfurt Airport’s efficiency and passenger experience improved substantially.

In the Philippines, the current NNIC move suggests a similar pattern. While fee increases are immediately felt, infrastructure development and service improvements take time to materialize. NNIC’s plans to double NAIA’s capacity from 35 million to 62 million passengers annually, and to raise the number of flights from 40 to 48 per hour, are ambitious and could lead to long-term gains. However, as seen in global examples, such moves require heavy investments, which are often passed on to consumers through higher charges.

SMC’s concession for NAIA involves an upfront payment of P30 billion, with the government reportedly expecting it to generate around P900 billion over 15 years through yearly payments and revenue sharing. I am unsure about the payment formula, but with a P900-billion target for 15 years — assuming the news report I quoted was correct — then NAIA operations need to generate at least P60 billion yearly. Whether this pertains to revenue or profit, I don’t know. But just to compare, I believe that in 2023, NAIA reported revenues of about P12 billion.

As I have written before, the concern for most travelers and airport users isn’t who operates the airport, but rather the quality and cost of the services provided. The critical question now is whether SMC and NNIC will deliver on their promises of better airport facilities and a smoother travel experience. Historically, it’s common for privatized airports to increase fees early in their tenure, but the success of such efforts ultimately depends on whether passengers see real improvements.

Hitting the government’s revenue target will likely involve further price hikes in addition to the initial increases. By some estimates, NNIC may need to raise airport charges by up to 200% to meet its financial goals. Improvements are all meant to raise the standards of customer service and user satisfaction. But raising parking fees by 300% right at the start may not be the way to go as no improvement whatsoever has been done just yet.

For now, though, it seems that the era of expensive travel is making a comeback. And for those of us who rely on airport parking, the cost of convenience has certainly gone up. Perhaps we should get used to higher costs. After all, if the government doesn’t perceive particularly foreign travel as a luxury rather than a necessity, then why do we continue to tax it?

 

Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippine Press Council

matort@yahoo.com

UK’s oldest fine wine and spirits merchant is entering the auction business

BBR.COM

THE UK’s oldest fine wine and spirits merchant, Berry Bros. & Rudd, celebrated its 325th birthday last year, and announces today that it’s taking on a major new challenge: holding online auctions.

In an exclusive interview with Bloomberg, Geordie Willis, director of new ventures at the venerable central London retailer, reveals that the inaugural global sale for Berry Bros. & Rudd Auctions will launch later this month, bringing yet another auction choice to the world’s thirsty collectors.

“It will feature 500 lots of classics from Bordeaux, Burgundy and Champagne, and well-known names not just from the Old World,” Mr. Willis says. He declined to provide details of individual lots but promises “there will be wines dating back to the 1950s, and I hope some surprises.” Rare spirits will be included, too.

Entering the auction business has been on the management team’s mind for some time, Mr. Willis says, the latest innovation for the company whose historic, eye-catching headquarters at No. 3 St. James’s Street exudes Old World charm and could easily be a set in a Harry Potter movie. While several retailers in the US such as Zachys and Acker host auctions, Berry Bros. says it’s the first major merchant to do so in the UK.

“In a way the expansion feels quite natural,” says Mr. Willis, a member of the eighth generation of the Berry family, who masterminded the project and likes to describe the company “as a 325-year-old startup.” It was the first wine merchant to host a website back in 1994 and decades ago began orchestrating sumptuous wine dinners in its cellar at No. 3 St. James’s Street, where Louis Napoleon Bonaparte (Napoleon III) held secret meetings to plot his return to power.

Certainly, it has in place key auction essentials and behind-the-scenes logistics.

For example, for buyers and consigners, it will build on an existing client base in more than 100 countries as well as on its experience and success with Berry Bros. & Rudd’s fine wine exchange BBX, an online marketplace launched in 2010 for customers to buy and sell bottles from each other.

In addition, the company’s private client and cellar service division has long advised on how to collect and invest in wine, and when and where to sell it. And although it has long offered storage for clients’ bottles, in 2022 Berry Bros. opened a state-of-the-art warehouse in Hampshire’s Andover Business Park with a capacity for 14 million bottles, one of the largest fine wine storage facilities for private clients in Europe. The site is also carbon neutral, generating its own energy supply through solar panels and harvesting rainwater. Mr. Willis calls it “a massive advantage.”

“We see what’s in our warehouse, we see the demand,” says Mr. Willis. “The online auctions will complement BBX, whose platform works best for selling a small number of cases. It’s more complicated if you have a big cellar.”

Since 2011, Berry Bros. has even had an in-house authentication expert on hand, Philip Moulin, who oversees a specialist team to verify the provenance of bottles sold on BBX. They’ll also apply their skills to the new auction business, a necessity in a dark era of frauds and fakes.

There’s also its existing global reach, with outposts in Asia— Hong Kong, Singapore, and Tokyo — where Mr. Willis, as well as other auction houses, sees a huge audience. The company’s long-held relationships with the most important wineries offer potential future partnerships for direct-from-the-cellar sale exclusives.

It’s all part of remaining relevant in a changing market and expanding and innovating without destroying your brand image. That’s a difficult balancing act in today’s business world, and Berry Bros.’ auctions will obviously cater to the kind of clients the company specializes in.

The company has been especially adept at moving with the times in the past few years, even acquiring Hambledon Vineyard, England’s oldest commercial vineyard, in a partnership with Symington Family Estates of port fame last year.

It responded to the surge in luxury spirits sales — Berry Bros. reported 42% year-on-year revenue growth in the category this spring — by opening a dedicated standalone shop in April with about 1,000 spirits products. The next month it offered sake en primeur for the second year; sales were up nearly 1,000% in the year to March 2024.

But what about the state of the auction market it’s entering? It’s a mixed bag and a buyers’ market, according to Nick Pegna, worldwide head of wine for Sotheby’s, which reported a record $159 million in auction sales for 2023. He points out that current global uncertainty and declining wine prices generally are affecting auctions. Lower, more conservative estimates are the name of the game.

To obtain the best cellars to offer, competition is already fierce among well-established names — Sotheby’s, Christie’s, Bonhams, Zachys, Acker, and Hart Davis Hart — and newer niche companies like Baghera. All conduct live and online sales, while Willis says Berry Bros.’ auctions will be online only for now.

Arguably it’s a good time for online auctions. During the pandemic, auction houses were forced to pivot quickly to online, and this attracted a new cohort of younger collectors. Now about two-thirds of Sotheby’s auctions are online-only, for example, and a recent one in Hong Kong brought in $6 million.

Berry Bros. & Rudd’s added incentive is a highly competitive buyer’s premium at 20%, while the average for other houses is about 25%.

And the historic company is banking on the legacy of trust built into its brand, its expertise and level of attention to detail, and its role as a custodian of wine for its global customers. “We believe there’s an opportunity,” says Mr. Willis. — Bloomberg

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