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Jollibee takes 47% stake in US Mexican-food business

JOLLIBEE Foods Corp. (JFC) said Friday that it achieved deal closing on a US partnership to build a Mexican-themed restaurant business.
The company, through its wholly owned subsidiary Jollibee Food Corp. (USA), entered into a business venture with chef Rick Bayless for a fast-casual establishment. The partnership was approved by its board in September.
“This partnership is in line with the JFC group’s strategy to continue building its business abroad and expanding its presence in North America,” it said.
JFC will build a “significant business in the large and fast-growing Mexican food category” in the US together with the organization build by Mr. Bayless and the brand Tortas Frontera.
“This venture is very much in line with JFC’s mission: to serve great-tasting food and spread the joy of eating to everyone,” it said.
The listed company said Mexican food is a rapidly growing and popular segment in the US restaurant industry with estimated sales of $40-45 billion in 2017.
The partnership will be formalized through an investment by JFC of $12.4 million in Tortas Frontera LLC, which owns the Tortas Frontera business founded by Mr. Bayless.
The investment is for 47% of the fully-diluted interest in the business. The remaining 53% will be held by the chef and other shareholders. The shares were valued at $1.62.
“This is a negotiated price mutually agreed upon by the parties,” JFC said, adding that it will fund the acquisition through available cash.
JFC said Tortas Frontera is based in Chicago and has four restaurants in the US — three in Chicago O’Hare International Airport and one at The Arc in the University of Pennsylvania.
“The Tortas Frontera restaurants use high-quality ingredients with recipes capturing the vibrant flavors of Mexico. It offers mainly tortas — griddle-baked Mexican sandwiches with a variety of fillings such as beer-braised beef short ribs, chipotle chicken, garlicky shrimp and goat cheese — and molletes — warm, open-faced sandwiches. They also feature a guacamole bar with freshly made guacamole and the customer’s choice of toppings,” it said.
On Friday, JFC fell 0.20% to P302.40. — Victor V. Saulon

First Gen unit seeks clearance to build LNG terminal

FIRST Gen Corp. said its subsidiary sought clearance from the Department of Energy (DoE) to proceed with the construction of the group’s liquefied natural gas (LNG) import terminal project.
In a disclosure to the stock exchange, First Gen said its unit FGEN LNG Corp. submitted on Friday an application to the department for a “notice to proceed” as defined in and required by the agency’s Philippine Downstream Natural Gas Regulation.
“The application is for the construction of the FGEN Batangas LNG Terminal Project to be located in the First Gen Clean Energy Complex in Batangas City,” the listed company said.
First Gen, the country’s leading gas power generation company, has around 2,000 megawatts (MW) in operating gas facilities: the 1,000-MW Santa Rita power plant, the 500-MW San Lorenzo power plant, the 414-MW San Gabriel power plant and the 97-MW Avion power plant. They run on gas supplied by the Malampaya gas-to-power project in offshore Palawan.
“The FGEN Batangas LNG Terminal Project is intended to serve the natural gas requirements of existing and future gas-fired power plants of third parties and FGEN LNG affiliates,” First Gen said.
The company’s application to proceed with the project comes after it announced on Dec. 5 that it signed a joint development agreement (JDA) with Tokyo Gas Co., Ltd. to pursue the joint development of an LNG terminal.
The agreement comes after recent pronouncements from the government describing LNG as vital to ensuring the country’s energy security once the Malampaya gas field is depleted.
Tokyo Gas will take a 20% participating interest in the LNG project and provide support in development work to achieve a final investment decision. Upon reaching that decision under the JDA, the parties will enter into a definitive agreement to proceed with the construction of the project, First Gen said.
In an earlier interview, First Gen Executive Vice-President Jonathan C. Russel said the project could potentially supply the company’s own facilities as well as the 1,200 MW Ilijan power plant.
He also said the company is looking at a power plant expansion by another 1,000 MW, thus a post-Malampaya gas importation could require an initial supply of 3 to 5 million tons per annum. He said the investment cost of the project is estimated at between $700 million and $1 billion.
On Friday, First Gen shares rose 2.97% to P9.02. — Victor V. Saulon

Hyundai posts gains in Nov. sales

HYUNDAI Asia Resources, Inc. (HARI), the official importer of Hyundai vehicles to the Philippines, said November sales rose 5.65% year-on-year to 3,426 units.
It added however than in the 11 months to November, sales were at 32,444 units, down 4.6% from a year earlier.
Cars remained the company’s top sellers accounting for 56.7% of total unit sales in the eleven months.
Car sales fell 20.6% year-on-year to 18,389 units.
HARI expects car sales to pick up next year with the introduction of a new Accent small car.
Sales of light commercial vehicles, on the other hand, rose 29.4% year-on-year to 14,055 units in the first 11 months
“The successful introduction of the Kona in the subcompact SUV segment, coupled with the significant increase in the sales of the H-100 due to the rise in construction activity from the administration’s ‘Build, Build, Build’ program, easily offset any negative effects that were experienced in the automotive industry for the year,” HARI said.
Citing the easing of inflation in November, the company still hopes to close 2018 on a positive note.
“As economic headwinds begin to slow down, Hyundai is in the best position to take advantage of what is left of 2018,” Ma. Fe Perez-Agudo, HARI President and CEO, said in the statement.
“Backed by a strong Hyundai community in the country, we have proven time and again that our products and services remain relevant in the country’s automotive industry,” she added. — Janina C. Lim

GSIS extends condonation program for housing loans

THE Government Service Insurance System (GSIS) said it extended for a year its housing loan condonation program to help members stave off foreclosure on their properties.
In a statement sent to reporters Friday, the state-run pension fund said it extended until the end of December 2019 its program waiving unpaid penalties and surcharges to housing buyers and borrowers with past due accounts who are willing to settle their obligations in full.
The extension of the deadline will “give prospective applicants more time to pay off their housing accounts.”
GSIS started waiving penalties for housing account obligations in October, with the initial cutoff period ending on December 31, 2018.
“We fully understand the predicament of our housing buyers and borrowers who are struggling to keep their homes, so we heeded their appeal,” GSIS President and General Manager Jesus Clint O. Aranas was quoted as saying in the statement. “The program’s cutoff date was moved to December 2019 to help them finally own their house”
The program is open to members, active or inactive, as well as non-members with deeds of conditional sale or real estate loan accounts that are in arrears or default.
Accounts that have been cancelled but not yet uploaded as investment property, and those which have been foreclosed but with titles yet to be consolidated in the name of GSIS, may still avail of the condonation.
Likewise, buyers of rights and legal heirs of deceased borrowers may apply for the condonation program.
Mr. Aranas said in October a majority of GSIS housing borrowers will benefit from the condonation program as almost 55% of its 29,000 housing accounts are for cancellation, foreclosure or have incurred several months of arrears.
Applicants who wish to avail of the program should request an appointment and condonation statement of account from the nearest GSIS office.
Mr. Aranas encouraged buyers or borrowers to apply for condonation as early possible to avoid incurring further penalties of at least one percent per month. — Karl Angelo N. Vidal

AUB joins UnionPay payments network

ASIA United Bank Corp. (AUB) said it signed a partnership agreement with China’s UnionPay in order to better serve UnionPay cardholders’ cashless transactions in the Philippines.
In a statement Friday, the bank said the partnership with UnionPay will allowing cardholders from China, Hong Kong, Macau, Singapore and Vietnam to purchase items from AUB partner merchants through UnionPay’s quick-response (QR) code starting this month.
Under the terms of the deal, AUB’s merchant partners will be able to accept payments from UnionPay cardholders though the AUB PayMate mobile application which will process the QR code-based transactions.
“Partnering with UnionPay also has the potential to accelerate the country’s shift to cashless transactions, which is aligned with AUB’s goal of flexibility and innovation,” AUB Head of Cards & Acquiring Business Maria Magdalena V. Surtida was quoted as saying in the statement.
She added that UnionPay QR code payments offer the benefits of a cashless economy to cardholders and businesses.
Banks have been developing and enhancing their electronic banking systems, in line with the central bank’s directive to promote a shift to a “cash-lite” economy.
The main goal is to raise the share of electronic payments to 20% of total transactions by 2020, from 1% in 2013.
AUB has also partnered with Chinese mobile payment providers WeChat Pay as well as Alipay to better service the needs of Chinese visitors.
AUB added that the partnership will strengthen UnionPay’s acceptance network globally, bringing the total number of the payment firm’s QR code merchants to over 10 million in over 25 economies.
Currently, UnionPay has over 7 billion cards issued in 51 countries, with an acceptance network of 52 million merchants and 2.6 million automated teller machines across 171 countries.
AUB booked a P2.3-billion net profit in the first nine months of the year, up 4.5% from a year earlier, on the back of strong growth in its lending business.
AUB fell 20 centavos or 0.34% to close on Friday at P59. — Karl Angelo N. Vidal

Peso closes higher as banks stock up for holidays

THE peso recovered against the dollar on Friday as banks built up their peso holdings ahead of the holiday break, a high-spending period when peso bills are also in high demand for gift-giving.
The peso ended the week at P52.86 to the dollar, 24 centavos stronger compared with its Thursday close.
The peso opened the session weaker at P53.15. The low was P53.215 intraday before the unit rallied to close at its high.
Dollars traded rose to $726.55 million from the $685.92 million the previous day.
Two foreign exchange traders attributed the recovery to the demand for the peso as banks sought more pesos ahead of the four-day weekend.
“Initially, the market traded [weaker] at around P53.15-P53.21. But as peso liquidity was squeezed, we saw a quick selloff. So it traded stronger to P53 in the morning, closing at its best showing in the afternoon session,” one trader said in a phone interview.
The other trader said the peso strengthened as the dollar-peso swap market was “significantly higher in the past few days,” especially on Friday.
“If you want to buy dollars just for position taking today, the cost of going long dollar against the peso is expensive given the high interest rate of the peso in the swap market,” the second trader said.
“I don’t know it it’s liquidity since most banks are trying to cover for their peso requirements.”
The traders also noted an influx of remittances from overseas Filipinos in time for the holiday season.
“I think for this year-end, there’s an anticipation of inflows for (the traders), so the market is repositioning for that,” the first trader noted.
Markets will be closed on Monday and Tuesday for Christmas. — Karl Angelo N. Vidal

PSE falls on investor caution ahead of Christmas weekend

THE PHILIPPINE STOCK EXCHANGE index (PSEi) closed below the 7,500 mark on Friday and was lower on the week after climbing for five straight weeks, dragged down by Wall Street’s plunge ahead of a long Christmas weekend.
The Philippine bourse resumes trading on Dec. 26.
All six sectoral indices closed the day in the red, and foreigners remained predominantly bearish for the sixth straight trading day.
PSEi finished Friday 83.7 points or 1.1% lower at 7,479.71 — down 0.59% on the week — while the all-shares index retreated by 42.55 points or 0.93% to 4,501.58.
“With the US experiencing a massive sell-off in December and analysts pointing to a recession that could occur, Philippine shares were sold heavily right before the long holiday period,” Regina Capital Development Managing Director Luis A. Limlingan said in a mobile phone message on Friday, while Jervin S. De Celis, trader at Timson Securities, Inc. noted that persistent signs that Sino-US trade tensions will persist made the market dig in ahead of the long weekend, saying: “Investors may have pocketed some gains as many uncertain events may happen in the next four days.”
Noting that US Federal Reserve Chairman Jerome Powell last Dec. 19 had taken on a “more hawkish-than-expected tone on the outlook on interest rates”, RCBC Securities, Inc. Analyst John Paolo D. Ayson noted in a Stock Market Weekend Recap that “[f]or the week, investors focused on the US Fed policy meeting last December 19.”
“They positioned ahead in anticipation that the Fed would issue a more dovish tone after the meeting, but were instead disappointed by (Mr.) Powell’s statement and consequently sold the market the next couple of days.”
Reuters on Friday reported that fears of a partial US government shutdown due to a budget deadlock pushed the Nasdaq Composite Index near bear market territory on Thursday as it closed 1.63% lower at 6,528.41, the Dow Jones Industrial Average down 1.99% to 22,859.6 and the S&P 500 down 1.58% to 2,467.42.
Asia, however, was a mixed bunch, with the Nikkei Stock Average 225 and the Shanghai Composite Index joining PSEi down 1.11% and 0.79%, respectively, while Hong Kong’s Hang Seng Index, South Korea’s KOSPI Index, the Jakarta Composite and the FTSE Bursa Malaysia KLCI climbed 0.51%, 0.07%, 0.26% and 1.31%, respectively.
Locally, all sectoral indices lost: property by 71.24 points or 1.93% at 3,620.82, mining & oil by 116.67 points or 1.44% at 7,943.55, financials by 23.32 points or 1.31% at 1,756.28, holding firms by 53.27 points or 0.71% at 7,368.92, services by 9.26 points or 0.63% at 1,450.55 and industrials by 51.15 points or 0.46 at 11,010.54.
Stocks that declined were double those that gained 123 to 59, while 47 others ended flat.
Friday saw 724.217 million shares worth P7.095 billion change hands, compared to Thursday’s 875.14 million shares worth P5.881 billion.
Only four of Friday’s 20 most active stocks closed with gains, namely: JG Summit Holdings, Inc. that increased by 3.7% to P56.10 apiece; Aboitiz Power Corp. which climbed by 1.89% to P35; International Container Terminal Services, Inc. which rose by 0.98% to P103 and Metro Pacific Investments Corp. which added 0.43% to P4.62 each.
Manila Electric Co. and Megaworld Corp. closed flat at P390 and P4.80 apiece, respectively.
The rest that lost were led by Semirara Mining and Power Corp. which dropped 4.26% to P22.50 apiece; Bank of the Philippine Islands which fell by 3.36% to P90.70; SM Prime Holdings, Inc. which retreated by 2.51% to P35 and SM Investments Corp. which went down by 2.15% to P910 each.
Net foreign selling persisted, though two percent lower at P480.628 million from Thursday’s P490.561 million. — Janina C. Lim

From the Front Page: Remittances up, construction boost, “BBB” rating

Fitch Ratings maintained its “BBB” credit rating for the Philippines, marking the economy as a stable investment opportunity for foreign creditors. Despite citing rapid bank lending and a growing trade gap as potential overheating risks, the debt watcher highlighted the country’s strong overall economic growth and rising infrastructure investments in its optimistic outlook.
As the government dives into its ambitious infrastructure push, improved bilateral relations with China is expected to boost the local construction industry. Fitch Solutions found that the sector could grow by an average of nine percent between 2019 and 2027. The group expects increased Chinese involvement in the road and railways sectors, in particular.
Remittances from overseas Filipino workers grew by 8.7 percent to $2.474 billion in October, the fastest growth rate in six months. This brings year-to-date remittances to $23.768 billion, led by OFWs from the United States, Saudi Arabia, United Arab Emirates, Singapore, Japan, United Kingdom, Qatar, Canada, Germany, and Hong Kong.
Despite falling short of their fundraising goal this year, the Philippine Stock Exchange is projecting P200 billion raised from listed companies in 2019. PSE President and CEO Ramon S. Monzon is hopeful that a strong market showing next year may encourage more firms to IPO and enter the public market.
Meanwhile, the Mining Industry Coordinating Council is maintaining a now six-year-old moratorium temporarily prohibiting the authorization of new mining permits as it waits for the passage of a bill outlining a new fiscal regime for mining. The bill is currently up for Senate committee-level deliberations, after passing its third and final reading in the House of Representatives.
 

How to launch your stock trading career

2018 hasn’t been great for the Philippine stock market. The Philippine Stock Exchange Index (PSEi) fared among the worst performing markets this year, sowing a lot of fear and doubt among new traders on the wisdom of investing locally.
But where there are problems, there are also massive opportunities. And it’s in this economic context that non-brokerage stock market platform Investagrams held its Traders’ Summit 2018. Investors, traders, and stock market enthusiasts gathered together to discuss strategies for getting ahead as a trader.
For those new to trading on the stock market, or interested in launching a career in trading, here are some key insights from some of the best in the field.

You don’t need a ton of money or time to start trading in the stock market

David Ramolete (a.k.a. King Trade) opened the day with a discussion about balancing stock market trading with a full-time career. According to him, many people are hesitant to become more involved in the stock market because they feel they don’t have enough money or time. He stressed that you don’t need much of both to start.
“What’s important is that you start as soon as possible and maximize the power of time and compound interest to our advantage,” he said.
Starting small and just getting the ball rolling is the best move for beginners, he says.

End-of-Day Trading is the busy person’s tool to gain from the stock market

For people with full-time jobs, Ramolete said, around fifteen to thirty minutes a day would be enough to execute end-of-day (EOD) trading strategies. EOD simply refers to a time in the market where the stocks reflect the closing prices for the day. In the Philippine market, that’s between 3:17 and 3:30 p.m.
“Being busy is not an excuse to not earn from the stock market,” he said.
EOD Trading fits most market profiles, from long term investors to short and medium term traders so anyone can profit from it provided they put in the work. What’s more, EOD trading protects traders from the noise of intra-day fluctuations in stock prices, allowing them to focus on bigger moves and capital preservation.
The only limitation to EOD is that it doesn’t give much room for high risk trades that reward quick responses and precision timing.

Choose your battles well

Because EOD traders don’t have much time to monitor market performance, it’s crucial to make safe decisions to be able to turn a profit. The focus should be on bigger moves, based on patterns like swings and trends.
Look for uptrending stocks that have consistently been hitting higher highs and lower lows over a given period, or stocks that are trading above their moving average. Wait for a breakout before putting it on your watchlist, then plan accordingly.
If things go poorly, set a stop loss at levels you’re comfortable with. If things go well, sell at the first sign of resistance. Rinse and repeat.

Focus is what differentiates success from failure in the stock market

“What is the difference between a market loser and a profitable trader? That one thing that will make you fail as traders. That is a lack of focus,” said Nikki Jurado (a.k.a Nomad Finance Girl).
Newbie traders often get so distracted by obsessing over the most successful strategies and the best performing traders that they tend to jump from one strategy to another.
Develop a strategy that works for you and fits your appetite, and stick to it. To be a successful trader, you must be willing to put in the effort needed to hone your own skills and strategies.

Find your purpose. Focus on the right things

The reason so many people quit trading early, Jurado said, is that they simply don’t have a purpose strong enough to sustain them whenever they suffer losses. When money is the goal, it becomes much harder to power through a process that may end up losing more money down the road.
“What makes people successful is what they do with their time and their money. They live their lives everyday with purpose. They have something to fight for; they have values that drive them. That for me is what makes a successful trader,” she said.
“Money is never strong enough to make you stay when everything goes to shit. And I’m telling you right now, everything will go to shit.”

Be welcoming of mistakes and the lessons that come with them

Since much of stock market trading relies on statistics and probability, mistakes are par for the course. Trial-and-error is an essential part of the process, especially when you’re just starting out building your own strategies. Jurado recommends making as many mistakes as you can learn from.
“Make mistakes that you’ll never forget,” she said. “Mistakes that you’ll always regret. Unless you make these mistakes, stupid embarrassing decisions, unless you’re able to go through the shit, you’ll never make it.”
“So make mistakes, fail often, fail hard, but never quit,” she said.

The goal is growth

Celeste Rodriguez (a.k.a. Rooting for Celeste) said that people who are just starting to trade have to commit to being a student.
“You have to have the hunger to keep learning,” she said.
At this stage, the focus should be on building the character and grit you need for success. And that means looking for the best mentors available to you. Positive influence and a supportive community can dictate what direction you go in the future, and is crucial to your early development as a trader.
Rodriguez also recommended establishing early habits like journaling to help navigate what she calls the “Learning Jungle”, where traders try to build a system of their own.

Test your system and strategies once you have them, but don’t risk too much

After about a year into trading and finding a system that works for you, you should then focus on gaining more experience, tweaking your strategies as you go. Focus on risk management. At this point, it’s more about building your own competence and confidence in your system than it is about making money.
“Your goal is to build a system, learn, and survive,” Rodriguez said.
“The more you know about your methods, the more you figure out what its strengths and weaknesses are. If you know it enough, you’ll know when to play and when to pass.”

Always be conscious of the market and adapt when necessary

When you hopefully achieve mastery of your own system, try to strive for consistency. Just because you’ve become a successful trader doesn’t mean you can be complacent. Always evaluate yourself and how you perform in the market.
“It is not the strongest species that survive. It’s the one that is most adaptable to change,” Rodriguez said.

Set rules for yourself and stick to them

It’s often easier to find what you’re looking for if you know how to look for them. This is what Akio Kashiwagi (MoneyGrowers.ph) talked about in his session, ‘The Art of Bottom Picking’. He said that every trader should have a trading strategy, a specific set of entry and exit rules in trading.
Sticking to your rules even if they put you at a loss or you feel like you’re missing out on a good trade will save you some heartache later on.
“Patience is not inaction. It is simply knowing what you are looking for and taking action at the right time,” he said.

Don’t compare yourself to another’s success

What may work for another trader may not necessarily work for you. This is why system-hopping, or frequently changing trading strategies, is so detrimental to your overall growth as a trader.
Kashiwagi suggested that you find a strategy that works best for your lifestyle, your goals, and your temperament, then master it.
“The biggest determinant of a trading system’s success is the ability of the trader to follow it one hundred percent.”

Have faith in yourself

The only way to be a successful trader is to build confidence in yourself and your system. Backtest and forward test your strategies. Collect and look at the data. Look at the patterns that form over time. If you’re unsure, try virtual or paper trading first before you put money on the market.
Once you’ve found a system that works for you, believe in it even in the worst of times.
“If you trade, you must remember it’s like a pendulum. You will experience both the extreme sides: the pain and the joy. That’s how your character will be tested,” Kashiwagi said.
“How you will be able to pick yourself up from the bottom, that is the real art of bottom picking.”
 

Fitch affirms Philippines’ debt rating

FITCH RATINGS has maintained its grade for Philippine debt, citing the country’s sustained strong overall economic growth even as it flagged overheating risks evidenced by rapid bank lending and a growing trade gap.
The global debt watcher kept the Philippines’ credit rating at “BBB” — one notch above minimum investment grade — with a “stable” outlook. This is meant to vouch for the Philippine government’s ability to pay its debts, in turn helping reduce borrowing costs from foreign creditors.
“The ratings on the Philippines balance favorable growth prospects, lower government debt and a net external creditor position against lower per capita income levels, a weaker business environment and lower standards of governance compared with its rating category peers,” Fitch said in a Dec. 19 statement.
This comes a year after Fitch upgraded the Philippines from minimum investment grade, putting it on the same level as the ratings given by S&P Global Ratings and Moody’s Investors Service.
Fitch credit analysts drew optimism from “favorable” growth prospects here, as they expect strong domestic demand and rising infrastructure investments led by the state to propel expansion. They expect gross domestic product (GDP) to grow by 6.6% in 2019 and 2020, faster than the 6.3% January-September average.
Robust state spending for infrastructure will continue to drive growth, while keeping the budget deficit “manageable” at three percent of GDP over the next two years and in line with government projections.
At the same time, revenue collections are rising on a boost from the first tax reform package that took effect Jan. 1.
A healthy fiscal balance will keep the country’s debt burden “broadly stable” at 37% of GDP by 2020 from 37.5% this year, Fitch added.
Fitch also expects inflation to slow in 2019 after overshooting the central bank’s 2-4% target band this year. “Fitch expects full-year inflation to average 5.2% in 2018 and to decline to within the central bank’s target range of 2-4% in 2019 and 2020 as the cumulative rate increases of 175bp (basis points) in 2018 take effect and as the impact of excise tax hikes in 2018 dissipates,” the debt watcher said.
However, Fitch flagged overheating risks — or signs that the economy may be growing faster than potential that is capped by constraints like inadequate infrastructure — as seen through double-digit increases in bank lending as well as a ballooning external trade gap. “Fitch believes that overheating risks remain in place, highlighted by rapid credit growth and a widening current-account deficit, although the central bank’s stated intention is to remain vigilant against developments that could affect the inflation outlook,” the statement read further.
The current account — which measures fund flows from goods and services trading — is expected to expand to a $6.4-billion shortfall this year, equivalent to 1.9% of GDP which would be the widest since 2001. Latest data from the Bangko Sentral ng Pilipinas (BSP) put the current account deficit at $6.47 billion in the nine months to September, as imports continued to outpace exports.
Fitch said it sees the current account deficit at equivalent to two percent of GDP this year due to a surge in capital goods imports and a sharp drop in exports. The level is likely to be sustained at 1.9% of GDP in the next two years, buoyed by dollar inflows from remittances, tourism receipts and outsourcing revenues.
BSP Deputy Governor Diwa C. Guinigundo countered this view, saying the economy is not in danger just yet.
“While credit is growing, the pace of increase is within levels considered manageable based not only on the BSP’s own metrics but even on international benchmarks. Additionally, credit growth in the country is driven not only by consumption, but more importantly by investment activities which boost the economy’s productive capacity,” Mr. Guinigundo said in a press statement.
“As such, we see growth in demand continually and sufficiently being matched by rising supply, thereby continuing to dampen demand-side inflationary pressures moving forward.”
Still, the credit rater draws optimism from “high” dollar reserves maintained by the BSP and a “fairly steady” banking sector.
Foreign direct investments should also receive a boost from the recent easing of the government’s negative list that otherwise spells out sectors and economic activities where foreign participation is either banned or restricted.
Continued strong economic growth, stronger governance standards and increased revenue collections may trigger credit rating upgrades in the future, Fitch said.
On the flip side, the reversal of reforms and a “sustained period of excessive credit growth” could lead to downgrades. — Melissa Luz T. Lopez

More local projects in focus

THE NATIONAL Economic and Development Authority’s (NEDA) Investment Coordination Committee-Cabinet Committee (ICC-CabCom) approved on Wednesday the P14.07-billion Regional Fish Port Project for the Greater Capital Region and the P3.87-billion Philippines-Korea Project Preparation Facility, as well as adjustments in the scope of road and rehabilitation projects in Mindanao.
Meanwhile, on Thursday, the Public-Private Partnership (PPP) Center said it is looking at developing local health and renewable energy projects for 2019.
NEDA said in a statement yesterday that the fish port project under the Department of Agriculture-Philippine Fisheries Development Authority will rehabilitate and upgrade the Navotas Fish Port Complex by providing post-harvest facilities and services.
Meanwhile, the project preparation facility aims to “support the efficient and timely implementation of the projects under the ‘Build Build Build’ program, more specifically, priority projects of the National Irrigation Administration and Department of Public Works and Highways (DPWH), through the conduct of project preparatory activities.”
Other implementing agencies that need support for project preparation can also tap the facility, according to the statement.
The ICC-CabCom also “reconfirmed” its earlier approval of the DPWH’s P12.86-billion Road Network Development Project in Conflict-Affected Areas in Mindanao.
The committee also approved the change in scope and increase in the cost of the DPWH’s Reconstruction and Development Plan for a Greater Marawi-Stage 2, which now includes construction of the Marawi Transcentral Road (MTR) Phase 4 that adds 20.68 kilometers to the MTR, and the construction/rehabilitation of the three vital-link bridges located in the same area. The project now costs P6.84 billion, from P6.52 billion.
The four projects will now be up for approval of the NEDA Board, which is chaired by President Rodrigo R. Duterte.
The same committee also confirmed the reasonable rate of return submitted by the lone complying bidder of the Clark International Airport Expansion Project-O&M (operation and maintenance) PPP Concession of the Bases Conversion and Development Authority. This item no longer needs to be elevated to the NEDA Board as it had already bagged such final approval.
On Thursday, the PPP Center said separately that it will be pushing next year the development of health-sector PPP projects such as hospitals, and renewable energy infrastructure such as waste-to-energy facilities.
“PPP center will be pursuing two major sectors: one is the health sector especially the universal health-care push of the government, and in that sector, of course, PPPs have a strong role or significant role to play as demonstrated in other countries,” PPP Center Executive Director Ferdinand A. Pecson said in a media briefing at the agency’s headquarters in Quezon City.
“Renewable energy is also a new territory for PPP assistance… A priority is solid waste management, waste-to-energy… LGUs are responsible for municipal solid waste disposal and LGUs need technology that private sector could provide,” said PPP Center Deputy Executive Director Mia Mary G. Sebastian in the same briefing.
Mr. Pecson said that the PPP Center and concerned local government units (LGUs) are eyeing a Philippine General Hospital (PGH) in Diliman, Quezon City and a cancer center in the existing PGH in Manila, among others.
He said that the PPP Center will hold a stakeholder conference in the first quarter of 2019 with investors, implementing agencies and target beneficiaries of projects.
Last year, the agency set its priority on water supply projects for 2018, and is currently constructing the Bulacan Bulk Water Supply PPP project, and is readying the Baggao Water Supply Project for bidding, while the unsolicited Pampanga Bulk Water Supply is still under negotiation.
The PPP Center said that there are 68 local PPP solicited and unsolicited projects under development, 14 of which are water supply and sanitation projects, 16 involve solid waste management and energy and 35 involve vertical infrastructure, among others.
The NEDA-attached agency has focused on developing and assisting LGU projects, after the Duterte administration decided to rely more on government budget and official development assistance, rather than PPPs, for funding priority national infrastructure.
There are also 13 big-ticket unsolicited PPP projects currently under review of the NEDA’s Investment Coordination Council, namely: the Bulacan International Airport; Mactan-Cebu International Airport Integrated Development project; the Davao International Aiport expansion and O&M; the Kalibo Airport expansion and O&M; the Bohol International Airport expansion and O&M; the Davao Monorail; East-West Rail, Metro Rail Transit-10; Fort Bonifacio-Makati Sky Train; Modified Light Rail Transit Line 6; Information Technology project of Naga, Cebu; the Preservation and Development of Laguna de Bay; as well as the Manila Bay Integrated Flood Control Project. — Elijah Joseph C. Tubayan

DENR pushes, DoF backs tax on use of plastic

THE Department of Environment and Natural Resources (DENR), with the support of the Finance department (DoF), is pushing an environmental tax on companies to discourage the use of plastic, with a goal to implement the tax before President Rodrigo R. Duterte ends his term in mid-2022.
“How can we stop people and tell them to stop using plastic if it is not illegal to use plastic? Since that is the situation, we will just come up with an environmental tax proposal to the legislature and have them come up with a law imposing that environmental tax, which should not be that big. It will be minimal,” DENR Undersecretary Benny D. Antiporda told reporters on Thursday, explaining that the envisioned tax will help address the broader problem of solid waste management.
Asked for comment, Department of Finance (DoF) Assistant Secretary Antonio Joselito G. Lambino II said the DoF was consulted in drafting the bill and supports it.
Asked for a timetable for turning the proposal into a law, Mr. Antiporda replied: “Before the end of President Duterte’s term is our target.”
He said the proposal includes exemption for companies based on a point system if they practice environment-friendly measures like operating solar power systems, waste segregation and water recycling. A company earning a certain number of points may be exempted from the tax, Mr. Antiporda said.
“We will start in January by consulting with stakeholders and of course the National Solid Waste Management Commission. I’m positive it will be welcomed because, basically, it is about the environment,” Mr. Antiporda said. — Reicelene Joy N. Ignacio

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