How PSEi member stocks performed — February 26, 2019
Here’s a quick glance at how PSEi stocks fared on Tuesday, February 26, 2019.
Philippine Stock Exchange’s most active stocks by value turnover — February 26, 2019.
DA signals willingness to protect poultry industry from import surge
AGRICULTURE Secretary Emmanuel F. Piñol said that the Department of Agriculture (DA) is looking at the possibility of removing the minimum access volume (MAV) on chicken as a preliminary step in imposing special safeguards (SSGs) to protect domestic producers.
“UBRA [the United Broiler Raisers Association] has suggested [the removal of the MAV] which we are looking into right now,” Mr. Piñol said in an interview with DZMM.
He said the proposal for concrete action was more “welcome” than some of the criticism the DA has come in for as local producers find themselves pressured by weak prices due to competition from imports of pork and chicken.
“There was a marked increase in the importation of pork and chicken, but these are problems actually that we can address if we sit down together and discuss the solutions rather than label us as the Department of Importation,” Mr. Piñol said in the radio interview.
The Samahang Industriya ng Agrikultura (SINAG) led by Chairman Rosendo O. So called the DA the Department of Importation in the course of lobbying for a total meat import ban from Europe, which he said will minimize the chances of African Swine Fever (ASF) reaching the Philippines.
In letters to Senator Grace S. Poe-Llamanzares and Senator Cynthia A. Villar dated Feb. 26, SINAG requested a public hearing to tackle ASF and falling hog prices.
“The ASF outbreak has reached Vietnam, making the Philippines more susceptible to the ASF pandemic and yet the quarantine and border control measures at our airports and seaports and other contingency preparations supposedly being carried out by the DA remain inadequate given the personal testaments and reports reaching us over a period of four weeks. The DA may be unaware of the devastating impact to the agriculture sector once ASF reaches the country. Or perhaps, that is the intention to justify more pork importation which is our second pressing concern,” SINAG said.
“Backyard farmers have been raising their concern about the progressive decrease of farmgate prices for hogs in the last six months, as imported pork is flooding the market. Some (imports) are now being brazenly sold at wet markets. At no moment in our country’s history have we been importing this much pork — a whopping 392 million kilos for 2018. Chicken imports on the other hand for 2018 were 311 million kilos,” SINAG added.
On Sunday, UBRA President Elias Jose M. Inciong said that his group is “calling for the abolition of the MAV for chicken so that the special safeguard (SSG) trade remedy can apply to all imports.” — Reicelene Joy N. Ignacio
Piñol says not dragging feet on rice tariffication
AGRICULTURE Secretary Emmanuel F. Piñol has rejected claims that his department is delaying the implementation of Republic Act (RA) 11203, or the Rice Tariffication law, saying that consultations are currently under way in key rice growing areas to facilitate the drafting of the law’s implementing rules and regulations (IRR).
Senator Sherwin T. Gatchalian suggested in a DZBB radio interview last week that the Department of Agriculture (DA) is resisting rice tariffication.
“Contrary to the claim of Senator Gatchalian, the DA is in fact facilitating the conduct of nationwide information campaign and consultations to explain to the rice industry stakeholders what the law is all about,” Mr. Piñol said in a social media post on Tuesday.
“The consultations will start in Muñoz, Nueva Ecija today (Tuesday) and will move to three other areas all over the country within the week “ Mr. Piñol added.
Last week, Mr. Gatchalian called on Mr. Piñol to cooperate in implementing the newly signed law which is about to take effect starting March 5. Mr. Gatchalian is one of the authors of the law.
“(Mr. Piñol) must work for the success of the law even if he is against it,” Mr. Gatchalian said in the interview.
Mr. Piñol said that consultations are part of the process of drafting the law’s IRR.
“These consultations are needed in the formulation of the IRR which are requirements before the Rice Tariffication Law can take effect,” Mr. Piñol said.
“To clearly state, the DA and I, a supporter and friend of President [Rodrigo R.] Duterte, support the law he has signed. It has to be implemented effectively and we in government must ensure that there are no problems encountered in its implementation,” Mr. Piñol added. — Reicelene Joy N. Ignacio
Palace: China warns against unlawful deportations
CHINESE AMBASSADOR to the Philippines Zhao Jianhua warned the Philippines against arbitrary deportations of Chinese nationals, and conveyed a warning that Beijing might retaliate, the president’s spokesman Salvador S. Panelo said.
Mr. Panelo said in a briefing Tuesday that Mr. Zhao told him over dinner that “if this government will just deport Chinese, not in accordance with the law, then we will also do the same. That’s tit for tat.”
Mr. Panelo also clarified that the government’s intent is to crack down on Chinese nationals who are working in the country without the required permits.
“The President wish to clarify that the immigration laws will be strictly enforced against anyone who violates it. He was actually referring to Chinese workers with working permits — they will be protected because they have been [given] the green light to work here. (All he is saying is that) if there are hundreds of Chinese immigrants perceived to be working illegally here, we cannot be so harsh and reckless to just deport them (because) the Chinese government may also react (because) there are 300,000 Filipinos (in China),” he said.
Asked to comment, Liu Yiqun, Second Secretary at the Chinese Embassy said via text message that the embassy will not be releasing a statement on the matter. “Now, no statement to be released. Thank you.”
Mr. Panelo said in a statement: “Chinese workers who have working permits and are compliant with immigration rules and do not violate the laws of the land will be accorded the protection they are entitled to.”
“The Government will tread cautiously and in accordance with the Constitution in dealing with any matter involving Chinese migrants perceived or alleged to be staying illegally, given the situation of thousands of Filipinos staying in China,” he added.
Mr. Duterte said in a speech at a campaign rally in Laguna on Feb. 23 that he would not order the deportation of Chinese nationals who are illegally working in the country, noting that at least 300,000 Filipinos work in China. — Arjay L. Balinbin
DoLE to require more funding to issue Special Working Permits
SECRETARY Silvestre H. Bello III said the Department of Labor and Employment (DoLE) lacks the funding and manpower to issue special working permits (SWPs) to foreigners, after Congress last week proposed to give DoLE that authority.
In a briefing on Tuesday, Feb 26, Mr. Bello said DoLE will ask legislators to authorize more personnel and funding if SWPs authority is transferred to it from the Bureau of Immigration (BI). The DoLE currently issues Alien Employment Permits (AEP).
SWPs are effective for six months at most pending the processing of AEP applications.
“We will ask Congress to provide plantilla items so we can have employees to perform this procedure,” he said. A plantilla item is an authorized slot for personnel in a government agency, duly funded. He also added, “If we are given that responsibility, we may have to ask for a bigger budget.” Mr. Bello said that if not given enough funding, it will affect the issuances of the SWPs, adding, “We do not have that capacity.”
Last week, Senator Emmanuel Joel J. Villanueva said during a hearing on the influx of Chinese workers that he proposes to remove the authority of the BI to issue SWPs.
DoLE issued 169,000 AEPs between 2015 to 2018. Mr. Villanueva added that the BI issued nearly 185,000 in the past 11 months.
DoLE will take part in an interagency meeting on March 1 along with the BI, Department of Finance (DoF), Department of Trade and Industry (DTI), Department of Justice (DoJ), and the Philippine Amusement and Gaming Corporation (PAGCOR), which regulates gaming companies that employ many Chinese.
“There will be an interagency committee that will to address this concern about the employment of foreigners in our country,” Mr. Bello said.
He added that the Bureau of Internal Revenue (BIR) will also take part in the meeting as requested by DoF, saying “(They included) BIR because of the concern of the DoF of foreign workers not paying taxes.” — Gillian M. Cortez
CA upholds regular-employee status of GMA Network workers
THE Court of Appeals (CA) has upheld a National Labor Relations Commission (NLRC) ruling that 96 “talents” working for GMA Network, Inc. are regular employees.
In a 19-page decision dismissing a GMA petition and promulgated on Feb. 20, the CA special fourteenth division rejected GMA’s argument that the NLRC committed grave abuse of discretion for not considering “history and the peculiarities of the broadcast industry and its practice,” among others.
“In this case, it is not shown that the NLRC exercised its judgment whimsically, arbitrarily or despotically by reason of passion and hostility considering that its findings are supported by substantial evidence,” the CA ruled.
The appellate court rejected the claim of the GMA that there is no employer-employee relationship as the private respondents “were merely engaged independent contractors” since they render services to the network because of their skills and expertise in their tasks and also the high talent fees given to them.
Citing Article 280 of the Labor Code, the CA said the private respondents are regular employees as they are part of the production crew who are performing functions necessary for the business of GMA.
“Truly, without their work, petitioner GMA would have nothing to air, hence the private respondents’ services in the former’s television program were unquestionably necessary,” the CA said.
“Needless to state, petitioner GMA’s goal was to ensure excellent delivery of its programs to the viewing public. This could not have been achieved had it not been for the skills of the private respondents,” it added.
The court also noted that even if the employment contracts were for a fixed term, the respondents’ employment were renewed from “one, three, or six months or for one or five years which (made them) petitioner GMA’s regular employees.”
The CA also said the “four-fold test” in determining an employer-employee relationship which included that selection and engagement, payment of wages, power of dismissal, and power to control employee’s conduct, was established.
“More importantly, the private respondents were subjected to the control and supervision of petitioner GMA, a fact which is regarded as the most crucial and determinative indicator of the presence or absence of an employer-employee relationship,” the court said, adding that the network has set standards for the private respondents to follow.
GMA Vice-President for Corporate Communications Angela Carmela J. Cruz said the network has “not received a copy of the decision yet.”
The NLRC in its decision on Sept. 30, 2015 partially affirmed the decision of Labor Arbiter Julio R. Gayaman on June 22, 2015 which ruled the Talents Association of GMA Network (TAG) to be regular employees entitled to security of tenure and other benefits.
NLRC affirmed the regular status of 97 of the complainants while eight others were declared regular employees only until the dates of their resignation in 2014.
TAG filed the regularization complaint on June 4, 2014.
The decision was written by Associate Justice Zenaida T. Galapate-Laguilles and concurred in by associate justices Mario V. Lopez and Gabriel T. Robeniol. — Vann Marlo M. Villegas
Davao Oriental hoping to energize agriculture, tourism sectors
DAVAO CITY — The Davao Oriental provincial government is gearing up to improve its competitiveness in agriculture and tourism, with the province also in the process of drafting a 10-year plan for these industries.
Gov. Nelson L. Dayanghirang has ordered his department heads to reorganize their units in six months and come up with comprehensive plans that will maximize the potential of the two sectors.
In a planning session last week, Mr. Dayanghirang said provincial officials “need to think outside the box” to maximize the potential of the two sectors.
One of the focus areas is coconuts through more industrialized production processes. According to the Provincial Planning and Development Office, coconut production in 2013 fell 54.6% after Typhoon Pablo destroyed about six million coconut trees.
The top nut producer in the Davao Region, the province also has some of the lowest yields, based on 2013 data. Meanwhile, Davao del Sur and Davao City increased their yields to 9.36 metric tons per hectare (MTH) and 7.99 MTH, respectively from 8.84 MTH and 7.71 MTH previously. Davao Oriental’s production fell to 4.9 MTH that year from about 6.8 MTH in previous years.
Another issue is the low price of copra, the main by-product of coconut, which fetches at most a farmgate price of P20 per kilogram.
Ednar G. Dayanghirang, the governor’s chief of staff, told BusinessWorld that it is important for both the province and the national government “to find solutions to the problem, or the industry will die a natural death.”
Other issues are pests, lack of fertilizer and old trees, which help explain the lower yields. The land area planted to coconut also declined between 2012 and 2017 at a rate of 1.5% annually.
Initially, the governor said there is a need for coconut farmers to be organized into cooperatives to increase the chances of funding.
He added that the provincial government is looking at investing in industrializing the industry. “This would help maximize the value of products and services as means of improving farmers’ income, generating more and better employment to ensure a stable and progressive economy,” he said.
The governor said the province has also become a top destination in this part of the country.
According to data from the provincial government, the province attracted 801,479 tourists in 2015 from 91,165 in 2012.
The province is home to Mt. Hamiguitan Range and Wildlife Sanctuary, which was declared a UNESCO World Heritage Site.
The provincial government said there is a lack of accommodations and other amenities for tourists, and other infrastructure.
The governor said the province has been allocated P2.5 billion by Congress for tourism roads and a sports complex. — Carmelito Q. Francisco
Panay food terminal seen lowering costs for Iloilo market vendors
The regionwide Panay Food Center and Terminal in San Miguel, Iloilo is not a threat to the public markets in Iloilo City and will lower costs by doing away with the need to travel to distant suppliers, a city official said.
The terminal is intended to better connect producers and their markets, according to Iloilo City Local Economic Enterprise Office (LEEO) head Jose Ariel D. Castañeda.
“With the introduction of food terminals, we can create opportunities to bridge the gap between the producers and the businessmen. Local Food Terminal (LFT) has no effect to our public markets here in the city. It’s actually an opportunity for dealers, businessman, and farmers,” he said.
According to Mr. Castañeda, 60% of the fruit and vegetables coming into the city being sold in the markets are from outside of Iloilo Province.
He noted that 70-80% of these requirements can be supplied by Iloilo farmers.
“The 60% of the supply will be captured instead of being supplied from ouside the province. The produce of the farmers will not go to waste because of the food terminals,” Mr. Castañeda said.
Mr. Castañeda added that food terminals will also lower costs for vendors and entrepreneurs because it rules out the need to procure from other provinces.
“If there is local supply, that reduces their expenses and risk,” he said.
The P11.8-million LFT was inaugurated on Feb. 7.
The project also includes a solar-powered cold storage facility with a capacity of 12 cubic meters, an office, training center, and delivery vehicles.
The LFT was built with assistance from the Korea International Cooperation Agency (KOICA), which supports the Panay Island Upland Sustainable Rural Development Project (PIU-SRDP) with the Department of Agriculture (DA) with the aim of empowering upland communities by providing them direct market links to consumers.
It will serve as the regional consolidation hub for upland products from the various Bayanihan Tipon Centers (BTCs) in Panay.
KOICA also provided a P20-million loan fund which can be tapped by farmers’ groups and individual farmers for their marketing-related activities.
Meanwhile, Mr. Castañeda is hopeful that Iloilo City will be included in the next KOICA grant.
He said KOICA and DA will meet on Feb. 27-28 to discuss future plans.
“Initially, (Iloilo City) was included but somebody told KOICA that city markets do not need any help,” he said.
If Iloilo City is included, Mr. Castañeda said KOICA is ready to provide a grant to rehabilitate markets and upgrade vehicle fleets.
“In our initial talks, they are looking into rehabilitating the facilities of food terminals and markets to accommodate the producers from out of town,” he said.
Mr. Castañeda added that the city is proposing for funding the rehabilitation of one of the top three highest earners among the public markets in the city. The top three are La Paz Market, Jaro Market, and Terminal Market. — Emme Rose Santiagudo
DENR targets El Nido’s Bacuit Bay for cleanup by May
THE Department of Environment and Natural Resources (DENR) said that it hopes to make the waters of Bacuit Bay in El Nido, Palawan safe for swimming by May.
“We are confident we can present to the public an improved Bacuit Bay — safe and fit for bathing and swimming,” Executive Director Henry A. Adornado of DENR Region IV-B said in a statement on Tuesday.
The DENR is currently looking at the possibility of declaring Bacuit Bay a Water Quality Management Area (WQMA), which authorizes the implementation of an integrated water quality management system to protect and save bodies of water.
The DENR is currently rehabilitating Manila Bay, with the goal of making its waters safe for swimming this year by reducing its fecal coliform level, after the agency mounted a 6-month cleanup of Boracay Island.
Establishments found to be contributing to the pollution of Manila Bay are currently being issued cease and desist and ex-parte orders, and notices of violation, forcing them to comply with environmental laws particularly the Clean Water Act.
“Water quality management is one of the priorities of Secretary (Roy A.) Cimatu. The establishment of Bacuit Bay as a WQMA adheres to the thrust of his administration for clean water,” Reynulfo A. Juan, DENR Assistant Secretary, said in a statement.
“We look forward to having a sustained and collective action toward saving Bacuit Bay and the rest of our natural resources here in El Nido,” Mr. Juan added.
The DENR said that it is working on building an additional office in El Nido, as well as a bacteriology laboratory to help the DENR’s Environmental Management Bureau (EMB) evaluate water samples. — Reicelene Joy N. Ignacio
Weak investment climate main 5G risk, not security fears — Ericsson
BARCELONA — Europe risks falling behind other regions in rolling out 5G mobile services because of onerous regulation and weak investment rather than any security concerns about Chinese equipment, Ericsson Chief Executive Officer (CEO) Borje Ekholm said on Monday.
High spectrum fees, regulatory uncertainty and a lack of investment were more pressing concerns, Mr. Ekholm said, alluding to calls by the US to ban Chinese network vendors on national security grounds.
“The debate here often becomes: it’s the lack of technology for operators, that’s what slowed down Europe. And that’s not the case,” Mr. Ekholm said in an interview on the sidelines of the Mobile World Congress, the telecoms industry’s main annual gathering.
“The reality is that less than half of the countries in Europe have actually given out spectrum for 5G. It’s a big uncertainty how much it’s going to cost.”
Ericsson has forecast that 5G subscriber numbers could reach 1.5 billion worldwide by 2024 as consumers and businesses move to next-generation networks slated to bring super-fast connections for everything from computer gaming through to medical surgery.
North America and northeast Asia will adopt the new technology fastest, the company said in a report last year, but 5G is also expected to account for about 30% of mobile subscriptions in Western Europe.
Ericsson has signed 10 contracts for 5G with operators in countries including the US, Britain, Australia and Switzerland, Mr. Ekholm said, but still faces challenges in Europe around the large number of operators and high spectrum fees.
He said Europe had more than 200 operators to contend with, against only a handful in China and the US, and pointed to 5G spectrum auctions in Italy last year which raised 6.5 billion euros ($7.38 billion) in a ferocious bidding war
The prices in Italy, he said, were equivalent to almost two years’ capital expenditure for some operators.
“It’s a very heavily regulated sector, so overall the investment climate I think is the key reason why we have been slow,” he said.
SECURITY WARNINGS
Ekholm took no position on calls by the US for Western countries to bar China’s Huawei from their networks over allegations the company and its equipment could be used by Beijing for spying.
But debate is raging in Europe over whether to heed the US-led warnings, even as big telecoms operators say that such a move could set back the deployment of 5G by years.
Huawei has repeatedly denied the accusations of state-spying and no evidence has been publicly produced.
Nokia CEO Rajeev Suri told Reuters on Sunday any future decision to bar Huawei would not delay the rollout of 5G in Europe, pointing instead to delays in issuing spectrum to operators and high auction costs as the main obstacles.
Asked if he agreed with his competitor’s assessment, Ekholm said he was not willing to speculate and it was for individual countries to decide how they managed their national security policy.
Mr. Ekholm said Ericsson was preparing for any eventuality by investing in product development and having a supply chain which can ramp up 5G demand if needed. He highlighted his company’s announcement on Monday that it was buying the antennas and filter operations of Germany’s Kathrein.
“Let’s look at it when it comes down. We have to remember the operators … have a lot of gear in the network, they are financially under a lot of pressure, in Europe especially,” he said.
“They’re under a lot of pressure here, so how they are going to act if something happens or doesn’t happen I think is very hard to speculate.” — Reuters
Averting a poultry industry panic
The Philippine poultry industry again faces a challenge after the much-dreaded avian influenza outbreak, or “bird flu,” a few years back: the lifting of the price-based special safeguard duty imposition (SSG) on imported chicken meat and products, which led to a sharp increase in importation to the detriment of the local poultry sector.
LOCAL VS. FOREIGN PRODUCTS: CLOSER LOOK AT SPECIAL SAFEGUARD DUTIES (SSG)
In order to protect local industries, Republic Act No. 8800 or the “Safeguard Measures Act” provides for the imposition of special safeguard duties (SSG) to be undertaken in response to increased importation in the country. It provides immediate and temporary protection from import surge or cheap importation of SSG-eligible products, regardless of the country of origin.
In the case of price-based SSG duty, it can be levied when the actual cost, insurance and freight (CIF) value of the product is below the trigger price. As of date, the current trigger price for poultry imports is Php 93.96 per kilogram.
Further, SSG duties are imposed on imports outside the minimum access volume (MAV), which is defined by law as the amount of imports of an agricultural product allowed to be imported into the country at a customs duty lower than the out-quota customs duty.
Tariffs imposed on meat products range from 10% to 40%. Chicken imports are subject to a 40% tariff. The corresponding MAV for pork is 54,210 metric tons (MT) and 23,490 MT for chicken.
IMPORTATION INDICATORS AND IMPLICATIONS
In view of cushioning the rising prices and mitigating the impact of soaring inflation on the consuming public, the Department of Agriculture (DA) requested for the temporary lifting of the imposition of the price-based special safeguard duty (SSG) of imported chicken meat and products last August.
As a result, the levels of importation in the country soared. Latest data from the Bureau of Animal Industry (BAI) show that meat importation, namely beef, buffalo, chicken, duck, lamb, turkey and pork, shot up by 22.73 percent from 691,463 MT in 2017 to 848,648 MT in 2018.
For poultry products, importation rose by 18.06 percent from 244,104 MT in 2017 to 288,203 MT in 2018. Notably, these figures have already exceeded the MAV. At present, approximately two-thirds of the country’s total chicken imports are mechanically deboned meat (MDM), which is one of the primary raw materials used by meat manufacturers to produce processed meat such as hotdogs, sausages and chicken nuggets. BAI data likewise showed that majority of chicken products originate from the United States, followed by the Netherlands and Brazil.
In terms of the supply, data from the Philippine Statistics Authority (PSA) regarding the performance of Philippine Agriculture last October to December 2018 demonstrates an expansion of production by 6.99 percent, accounting for 16.18 percent to the total agricultural output. From January to December 2018, poultry production increased by 5.75 percent.
While this is so, poultry demand in the Philippines is also accelerating at a rapid rate due to urbanization and the “fast food culture” which, in turn, facilitates the growth in the restaurant and catering industries.
According to the latest Food and Beverage Report, consumption preferences in the Philippines, Vietnam, India, and Indonesia have changed due to the growing acceptance of eating out and fast food deliveries attributable to convenience. This change of consumer behavior entails serious implications on the supply of meat products, wherein cheaper imports threaten the margins of the local producers and farmers.
REINSTATEMENT OF SPECIAL SAFEGUARD MEASURES
As a response to the over importation of chicken products, there are calls for the Department of Agriculture to reinstate the imposition of SSG duty as there was “no significant reduction on retail prices of chicken meat even after SSG was lifted” as wet market retail prices still ranged between Php 125 and Php 160 per kilo. Accordingly, the Bureau of Customs (BOC) issued Memorandum Circular No. 209-2018 on October 2018 in order to reinstate the price-based special safeguard duty imposition on imported chicken.
Although the original intention of the temporary suspension of SSG was commendable, its effects were much worrisome for the local broilers and farmers. Based on reports, farmgate prices of chicken fell to almost Php 38 per kilo, below the cost-to-produce of Php 80 to Php 85 per kilo live weight. As a consequence, majority of local farmers quit raising chicken due to big losses.
PAVING THE PATH FOR POULTRY
Now that the special safeguard measures are back in place and inflation is expected to ease by this year, the government must consider long-term policies, which could ultimately pave the way for the growth of the Philippine poultry industry. Such measures include balancing the growing demand of meat by the consuming public, promoting healthy competition of big and small players in the industry, and protecting the welfare of local producers in the agricultural sector.
A review of the volume of chicken imports is recommended to safeguard the local industries, instead of pushing for a total ban on importation, which can affect our commitments in the World Trade Organization (WTO). Accordingly, an independent regulatory council should be established to recommend the ceiling of meat importation and its minimum access volume (MAV). Another proposed solution is to provide government incentives and subsidies to help local feed millers and farmers become profitable and sustainable. Their produce, namely corn and soya, compose 70 percent of the feeds of chicken, which in turn help the poultry sector. Lastly, investment in research and development in the farming sector is needed to decrease our dependence on imported chicken products.
Hannah Viola is a lawyer, Energy and Infrastructure Fellow at Stratbase ADR Institute, and Convenor of CitizenWatch Philippines.