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ICBC gets BSP green light to start PHL operations

By Melissa Luz T. Lopez,
Senior Reporter

A CHINESE BANK has secured regulatory approval to operate in the Philippines, which comes at a time of warmer ties between the two nations.

The Bangko Sentral ng Pilipinas (BSP) has approved the application filed by the Industrial and Commercial Bank of China Ltd. (ICBC) to open a branch in Manila, a source familiar with the matter said.

The approval has not been announced in the Philippines as the Beijing-based lender has yet to make the announcement back home, being a publicly listed company at the Shanghai Stock Exchange and Stock Exchange of Hong Kong Ltd.

ICBC is the biggest lender in China in asset terms.

With the approval, ICBC is the 12th foreign lender to secure the BSP’s nod to start operations in the country, following the passage of a 2014 law allowing more global banks to offer their services here. It is also the first Chinese bank to set up shop in recent years after Bank of China’s entry in 2002.

Republic Act 10641 signed by then-President Benigno S.C. Aquino III lifted the limit that allowed only 10 foreign-owned banks to operate in the country at any given time. Prior to this, a new foreign bank can set up a branch here only if one of the previously accredited foreign lenders pulls out.

Ties between Manila and Beijing grew cozier as President Rodrigo R. Duterte’s call for a “pivot” towards China was taken as a signal for increased trade and investments between the two nations. 

Following Mr. Duterte’s visit to Beijing in October 2016, China has pledged around $7.34 billion in soft loans and grants for the Philippines over the past two years, according to the Department of Finance.

The Duterte administration is counting on these financing agreements to support its ambitious Build, Build, Build infrastructure program which needs some P8.44 trillion until 2022.

A strong middle class market and a young population make the Philippines more attractive for foreign players looking for new clients and for new sources of growth, BSP Deputy Governor Chuchi G. Fonacier previously said.

She added that foreign banks are likely following their corporate clients to sites where they expect increased trade and investment volumes.

Malaysia’s CIMB Bank won the nod of the Monetary Board to operate a full branch here, completing plans of its parent firm CIMB Group Holdings Berhad to expand their footprint in every country within the Association of Southeast Asian Nations.

Five Taiwanese banks have opened branches in the Philippines over the last three years: Cathay United Bank, Yuanta Commercial Bank Co. Ltd., First Commercial Bank, Hua Nan Commercial Bank Ltd., and the Chang Hwa Commercial Bank, Ltd.

The South Korean lenders Industrial Bank of Korea, Shinhan Bank, and Woori Bank also started their businesses here, as well as the Japan-based Sumitomo Mitsui Banking Corp. and the Singapore-based United Overseas Bank Ltd.

Reviving an old tradition for a younger generation

By Joseph L. Garcia
Reporter

Two young women have sifted through space and time to bring back an age-old craft, and so far, everything’s coming up gold.

Danielle Tan and Christine Tiu, both of whom entered college in 2012, found a town in Ilocos that made tambourine jewelry as part of one of Ms. Tiu’s requirements for a sociology program. Unfortunately, according to Ms. Tiu’s research, the local artisans were leaving the town for greener pastures abroad. Thus, the pair set out to create opportunities for the workers through a business venture called Amami.

Tambourine jewelry (sometimes spelled tamborin, or tambourin) melds Filipino pre-Hispanic traditions in jewelry and imbues them with Spanish designs and intentions. Apparently, the colonizers, spotting the attractive granulated and filigree designs used by the locals, used these for rosary beads — not just for their aesthetic value, but also as tools of soft power to spread Christianity within the islands. The venture by Ms. Tan and Ms. Tiu takes its name from “Ama Namin” (Our Father), as one of their more elaborate beads were once intended to mark a new mystery in the rosary.

According to the pair, since tambourine jewelry fell out of fashion many years ago, rising up only to service a niche market or else the costuming industry, some of the craftsmen had lost hope of ever selling their work again. Some would go two years without orders, so they would take up jobs in other professions such as carpentry, or move on to making mainstream fine jewelry. As much as consumers are at the risk of forgetting a local fine jewelry tradition, so are the artisans behind it, leaving behind generations of heritage and tradition — Ms. Tiu notes that some of the artisans they work with come from families that have been doing it for five generations.

On the production side, the two women have worked on streamlining the process. While some tools which have been passed down for generations have been kept, they introduced new tools like weighing scales (Ms. Tiu noted that weighing the gold and silver the old-fashioned way took at least five minutes). They also say that they give fair wages, for the artisans apparently used to sell their wares at a loss — Misses Tiu and Tan sat down with them and worked on estimates and costing. Safety measures have also been introduced in the workshops.

The beads are made by pouring in the metal in molds, all done by hand, while more elaborate pieces are made by twisting the silver into wires, these are then cut and joined together to make shapes like flowers or leaves. Pieces from Amami are made in silver dipped in 24-karat gold. Ms. Tan noted that due to the intricacy of and detailing that goes into the beads, softer metals (like silver) have to be used.

On the consumer side, the women have made smaller pieces in order to make them more accessible to younger buyers. Vintage tambourine pieces can go up to the hundred of thousand pesos, barring most except serious collectors from buying them. The partners decided to make smaller pieces like stud earrings which sell for about P2,000, and rings for P5,000. Bigger pieces like chokers can cost up to P40,000. The designs are also modified to fit with the younger crowd, who might be turned off by wearing something that matches pieces worn by their ancestors.

“The reality is, we have a very impressive jewelry tradition that we just don’t know about,” said Ms. Tiu, noting that the artisans they work with themselves didn’t know the history of their own product, until the partners told them about it. Since then, the artisans have used this as a selling point for other customers. “We just want people to be more aware of what our Filipino craftsmen are capable of.”

“A lot of Filipinos have been migrating; it’s because they think there are no opportunities here. We want to try to make opportunities for them, and help them continue to do what they love doing,” said Ms. Tiu.

This also reflects a trend seen in marketing to younger crowds: the importance of storytelling, and an attachment to heritage. Some analysts are still baffled over the increase in sales of vinyl records and record players, despite music-streaming services being readily available. “We have an appreciation for the old, but it’s always, like, how do you improve it, how do you make it better?” said Ms. Tan.

“When you find out the story, how they make it, they’ll have a renewed appreciation for it.”

The pieces are available online through facebook.com/amami.ph/

PLDT expands ultrafast broadband coverage in 2017

PLDT, Inc. continues to ramp up its fixed broadband connection, with four million homes passed as of end-2017.

In a statement, the telecommunications giant said its “fiber-fast Internet connection” reached four million homes passed nationwide, 43% higher than end-2016.

PLDT also doubled the capacity of its fixed broadband network to over one million ports at the end of 2017. A significant increase in the number of ports or actual broadband lines were seen in Cavite, Pampanga, Bataan, Zambales, Cebu, Pangasinan, Bulacan, Tarlac, Nueva Ecija, and Laguna.

PLDT has been installing fiber-to-the-home (FTTH) facilities and the “fibrization” of its current copper-based network through hybrid technologies used in Germany and South Korea.

The company says that FTTH can provide speeds of up to 1 Gbps (gigabit per second), while hybrid fiber can provide data speeds ranging from 100 Mbps (megabits per second) up to 500 Mbps (for G.fast) over copper lines.

“By 2019, virtually all of PLDT’s 1.2 million copper-based DSL subscribers will enjoy fiber-fast Internet. PLDT will further expand its ultrafast broadband coverage to 6 million homes passed by 2020, reaching more areas of the country,” PLDT Chairman, President and CEO Manuel V. Pangilinan said in a statement. 

PLDT earlier said it will double its fiber and hybrid fiber broadband capacity to over 2.2 million ports, with about 650,000 of the additional ports for fiber and another 550,000 for hybrid fiber broadband.

The telco is targeting to provide fiber-fast Internet to nearly all of its 1.2 million copper-based digital subscriber line (DSL) subscribers by 2019. PLDT eyes to have as much as 10 million homes passed with FTTH within 2021-2025. 

PLDT said its total fiber footprint grew 45% to over 174,000 kilometers (kms.) by end-2017, from about 120,000 kilometers in end-2015. For this year, it will add another 33,000 kms. of fiber cables and raise the total to nearly 210,000 kms. by yearend.

It also targets to increase the total capacity of its international fiber network by 80% to 8.92 Terabytes per second (TBps) by end-2019, of which 8.11 Tbps will terminate in the Philippines, to be boosted by its investment of P7 billion in the new Trans-Pacific undersea cable system called Jupiter.

PLDT, Inc. is set to expand its fixed and mobile networks as part of its five-year P260-billion capital expenditure (capex) program. 

It has earmarked a capex above P50 billion for this year. 

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a stake in BusinessWorld through the Philippine Star Group, which it controls. — PPCM

Soybean rallies on supply worries amid Argentina drought

TO UNDERSTAND WHY soybean meal is the best-performing commodity so far this year, talk to Ariel Striglio, a 52-year-old farmer in Argentina’s Santa Fe province.

Since January, his fields of soy and corn have received about 3.5 centimeters of rain (1.4 inches). That’s not even a fifth of what’s normal. Temperatures are also higher.

“The heat is unbelievable — we’re using air-conditioning all the time right now, which isn’t the norm,” Striglio said. “I’m looking at soy yield losses of 30%.”

Soybeans are one of the world’s most-common feed crops. The oilseeds are crushed to make high-protein meal that’s sold to livestock producers. The dry conditions gripping the heart of Argentina’s farming region are a key price driver because the country is the no. 1 exporter of meal. For meat producers like Tyson Foods, Inc. and Sanderson Farms, Inc., tighter supplies could end up raising feed costs at a time when Americans are projected to eat more meat than ever before.

The drought has already pushed most-active futures of soy meal up 19% in 2018. That’s the largest gain among the 22 raw materials tracked by the Bloomberg Commodity Index.

The US Department of Agriculture on Feb. 8 cut its outlook for Argentina’s soybean crop to 54 million metric tons from 56 million projected in January. Local estimates are even lower. The Buenos Aires Grain Exchange predicts 50 million, while AgriPac consultancy forecasts 47.2 million. If the last number becomes reality, it would be the smallest harvest since 2012, USDA figures show. The exchange said Feb. 15 that most beans are in poor or very poor condition.

On the Chicago Board of Trade, soy meal for May delivery reached $381.20 per 2,000 pounds on Friday, a record for the futures contract that debuted in December 2015.

Hedge funds are positioning for more gains. Money managers increased their net-long holding by 37% to 70,991 futures and options in the week ended Feb. 13, according to US Commodity Futures Trading Commission data released Friday. That’s the highest in almost a year. The figure measures the difference between bets on a price increase and wagers on a decline.

China’s appetite for soybeans and meal has grown over the last several years as its expanding population adds more meat to the average diet. The country’s robust consumption helps magnify any crop-production losses, even in an era of ample grain stockpiles, according to Matt Connelly, an analyst for Hightower Report in Chicago.

Adding to the supply tightness, growers in Argentina have limited crop sales amid expectations of lower export taxes and a decline for the peso, Heather Jones, an analyst for Vertical Group, said in a report Feb. 12. The nation’s meal exports in December fell to the lowest since 2013. Declines for the local currency favor commodity shipments that are priced in dollars. — Bloomberg

Staples Center welcomes George

Paul George will be playing extremely well at the National Basketball Association All-Star Game today — or at least he’ll want to, and not just because he traces his roots to the host city. He stunk up at joint the Three-Point Shootout yesterday, never mind the obvious leanings of the Staples Center crowd; he couldn’t even reach double figures, his poor output belying his regular-season prowess from beyond the arc and making his calm demeanor look more like indifference. Perhaps he felt the pressure of delivering the goods, especially after fans made no secret of their desire to welcome him off free agency in June.

Thunder teammate Russell Westbrook would have none of the overtures, of course. Media Day had George being feted with cheers from behind the convention hall, prompting the reigning league Most Valuable Player to declare: “That’s out. Paul ain’t going nowhere. It’s over for that.” For the record, the five-time All-Star hasn’t yet made up his mind. “I know what I feel is best,” he said, “but it’s a long way until the end of the season.” Which is to say he won’t commit until he sees where he can best secure his future.

It’s good policy, to be sure. For George, his next stop may well be his last. “I’m not looking to bounce around and play for multiple teams throughout my career,” he disclosed. “The next decision, whatever it is, is to make sure I’m there for a duration.” In other words, he’ll be focusing on the here and now, and only after the dust of his 2017-18 campaign settles will he consider the then and there.

First things first, really, and it’s to erase the embarrassment of his pathetic showing yesterday, one in which even Westbrook couldn’t help but laugh at. And then after hopefully giving a good account of himself for Team LeBron today, he figures to be pumped heading into what he envisions as a deep run in the playoffs. After all, while, in his words, “it feels good to be welcome,” he has the hardware in his mind. And his quest for a championship will, no doubt, influence his career choice.

 

Anthony L. Cuaycong has been writing Courtside since BusinessWorld introduced a Sports section in 1994. He is the Senior Vice-President and General Manager of Basic Energy Corp.

Rail crunch leaves oil, wheat shipments stranded on Canada’s prairies

A SHORTAGE of rail cars in Canada is leaving grain and oil shipments stranded on the prairies, sending crude prices plummeting and leaving farmers in a cash crunch.

The nation’s biggest railways haven’t been able to deliver enough cars after harsh winter conditions and as a sudden boom in energy production sparked a swell of demand. Some farmers have been waiting for months to deliver wheat and canola to elevators before they can get paid. The squeeze also means that crude supplies are piling up in Alberta, pushing prices to the biggest discount relative to New York futures in more than four years.

The bottleneck mean some Canada’s commodity producers are getting left behind as other nations take advantage of a recent run up in global prices. Benchmark wheat futures in Chicago are up more than 9% since the end of November, while West Texas Intermediate in New York added more than 7%.

“We make these contracts because we have payment obligations at a certain time of the year, so we need that cash at that time of the year, not three, four months later,” said Norm Hall, a vice-president for the Canadian Federation of Agriculture. If farmers have loan payments, they’re “depending on this cash, or maybe it’s a rent payment. They get hit hard,” he said.

Since August, Canadian National Railway Co. has canceled almost 13,000 hopper car orders, and there are 1,072 outstanding orders for rail cars as of Feb. 8, data from the Ag Transport Coalition show. Another 996 orders for hopper cars from Canadian Pacific Railway Ltd. haven’t been filled, according to the group, which represents agriculture associations, including the Alberta Wheat Commission, Canadian Canola Growers Association and Pulse Canada.

Canadian National has been dealing with “challenging operating conditions,” including harsh winter weather, and the railway’s recent volume growth has created “pinch points” on its network, spokeswoman Kate Fenske said in an e-mailed statement. The railway is bringing on additional crews and locomotives as soon as the ground thaws and the company plans to boost capital spending to C$3.2 billion ($2.6 billion) this year to further support network capacity, Fenske said.

Canadian Pacific said it has moved 4% more grain this crop year.

“While we are dealing with some extreme weather currently, we continue to deliver for our customers and supply chain,” Jeremy Berry, a CP spokesman, said in an e-mail.

Earnings for Halliburton Co., the world’s biggest fracker, will be reduced this quarter due to temporary shipping delays of sand, the company said. Canadian National halted all new frack-sand shipments for a week across a wide section of Minnesota and Wisconsin amid winter weather. The region accounts for about a third of Halliburton’s total purchased sand volume, Chief Financial Officer Chris Weber told investors Thursday at the Credit Suisse Energy Summit in Colorado.

The grain backlog for farmers is the worst since 2013, according to the Western Grain Elevator Association.

The shortfall comes amid growing demand from other sectors, including frack sand, said Wade Sobkowich, executive director of the Winnipeg, Manitoba-based Western Grain Elevator Association, which represents the country’s largest grain shippers, including Richardson International Ltd. and Cargill Ltd.

Railways are also struggling to accommodate a surge of oil after several years of slower production growth. The as much as 45% surge in demand to ship crude by rail in the third quarter “caught us a little bit by surprise,” Ghislain Houle, Canadian National Railway’s chief financial officer, said Tuesday at a conference.

The boom in production coupled with the rail delays means that inventories are building up in Alberta, where it’s priced. Canadian heavy oil’s discount to West Texas Intermediate futures widened to $30.60 a barrel last week, the biggest discount since December 2013, data compiled by Bloomberg show. — Bloomberg

How PSEi member stocks performed — February 15, 2018

Here’s a quick glance at how PSEi stocks fared on Thursday, February 15, 2018.

Overseas Filipinos’ cash remittances

‘Third player’ may prefer to await bill liberalizing public services

By Camille A. Aguinaldo

SENATOR Sherwin T. Gatchalian wants the telecommunications industry’s new entrant, the so-called “third player,” to enter the market after the passage of a bill which would liberalize industries providing public services.

“On the third player, I’m sure he’s conducting due diligence. If he hears this, he might as well wait for the amendment of the public services act so he could enter the market quickly and he can majority-own the company,” he told BusinessWorld on Thursday.

“It is to the advantage of the new player to wait for this act to be approved,” he added.

Mr. Gatchalian said he expects the proposed measure to become law before Congress goes on break by March, noting its inclusion in the Legislative-Executive Development Authority Council’s (LEDAC) priority bills.

The senator’s remarks were made on the same day the Department of Information and Communications Technology (DICT) moved the deadline for selecting the “third player” to May 18.

The Senate committee on public services and on economy last week tackled Senate bill Nos. 695, 1261, 1441 and 1594, which proposed amendments to the 81-year-old Public Services Act or Commonweath Act. No. 146.

Mr. Gatchalian, who chairs the committee on economy, said the proposed measure will clearly provide a definition of public utilities and public services, which have been used interchangeably over the years and have caused confusion on whether certain sectors are subjected to foreign equity restrictions.

The Constitution limits the operation of a public utility to companies whose ownership is at least 60% Filipino-owned. Meanwhile, the Public Service Act does not define a public service or public utility and included only a list.

If the law is passed, Mr. Gatchalian said public service providers, such as airlines and telecommunications, will be open to foreign investment. Only electric power distribution and transmission, water pipeline distribution and sewerage pipeline system will be restricted.

“With public services, it’s basically liberalizing the industries. To give you a specific example, telecoms will now be considered public services so it would not be subjected to the 60-40 limitation. It will be open to the 100% foreign ownership,” Mr. Gatchalian said.

He added that the application for franchises will be easier since companies will no longer require approval from Congress.

Mr. Gatchalian said the proposed measure would increase competition, lower prices, and improve services. It would also attract foreign investors since they would be given control over companies.

“That’s what we want for the (third telco player): to be no longer hassled when it enters the country. This has always been the complaint of foreign investors that our system is too bureaucratic,” he said.

Transport dep’t evaluation of NAIA rehab proposal may take 2 months

THE Department of Transportation (DoTr) said it will take two months to evaluate a P350-billion proposal by a consortium of conglomerates to rehabilitate Ninoy Aquino International Airport (NAIA).

Undersecretary for Aviation Manuel Antonio L. Tamayo said that the agency will evaluate the proposal, but the Manila International Airport Authority (MIAA) will also need to come up with its own recommendation.

“About two months,” Mr. Tamayo told reporters on Feb. 15 on the sidelines of an event when asked about the timeline for evaluating the proposal.

The “super consortium” of conglomerates Aboitiz Infra Capital, Inc., AC Infrastructure Holdings Corp., Alliance Global Group, Inc., AEDC, Filinvest Development Corp., JG Summit Holdings, Inc. and Metro Pacific Investment Corp., submitted to the government on Feb. 13 a proposal for the rehabilitation of NAIA to turn it into a regional hub.

The P350-billion project involves the improvement and expansion of the current NAIA terminals under the first phase, and the building of a second runway in the second phase, which will raise the airport’s capacity to 100 million passengers per year.

The consortium has tapped Changi Airports International Pte. Ltd. to provide technical support in the areas of master planning, operations optimization and commercial development.

The DoTr has to give the proponents original proponent status (OPS) before the offer can be evaluated by the National Economic and Development Authority (NEDA) Board. — Patrizia Paola C. Marcelo

General gov’t debt rises to 36.4% of GDP at mid-2017

GENERAL GOVERNMENT (GG) debt as share of the economy inched higher at the end of June 2017, the Finance department said yesterday.

The Department of Finance reported that the general government debt-to-gross domestic product (GDP) ratio slightly rose to 36.4% as of end-June 2017 from 35.3% a year earlier.

GG debt consolidates the outstanding debt of the national government (NG), local government units (LGUs), the Central Bank Board of Liquidators and social security institutions (SSIs), less that held by the Bond Sinking Fund (BSF).

According to the report, the debt share rose as “the debt ratios reflected the increase in programmed borrowings” since NG expenditures picked up last year resulting in a higher deficit.

NG debt, net of BSF, rose to P5.8 trillion, up 10.3% from a year earlier.

“Because the BSF can only invest in government securities, and these holdings are considered intra-sectoral and netted from total outstanding NG debt, the decline in BSF holdings, combined with peso depreciation, led to higher outstanding NG debt for the period,” the report added.

Debt owed to domestic creditors was P3.331 trillion at the end of last year’s second quarter, representing 61% of the total. Foreign borrowing, on the other hand, amounted to P2.166 trillion.

The national government intends to maintain an 80:20 financing mix, in favor of domestic lenders.

LGU debt climbed 9.2% to P85.8 billion in end-June from the P78.6 billion recorded in the same period in 2016.

Holdings of government securities by social security institutions reclined by P59.7 billion, far outweighing LGU loans held by the Municipal Development Fund Office, which rose by P3.5 billion. — Karl Angelo N. Vidal

Senate panel maintains ERC needs to conduct open hearings

THE Senate committee on energy has maintained its stance that deliberations at the Energy Regulatory Commission (ERC) be opened to the public to ensure transparency on the positions taken by its members on contentious issues.

“Here at the Senate, the deliberations are open. You can see which senator has taken what position or argument,” Senator Sherwin T. Gatchalian, the committee chairman, said in an interview.

“We’re open here. So the same principles (should apply to the ERC),” he added.

Mr. Gatchalian made the comments in view of the ERC’s preference to maintain confidentiality on some aspects of its deliberations before coming up with a decision on applications that seek the commission’s action.

In his proposed legislation, Senate Bill No. 1490 entitled “An Act Enhancing the Governance Structure of the Energy Regulatory Commission,” the senator called for an “open meeting” where the public may participate.

“So the same principles — so that we will inform the public of our arguments, we will enlighten the public and the public also will be guided accordingly,” Mr. Gatchalian said.

In its comments and position on the Senate bill, the ERC cited the “deliberative process privilege” invoked by the Supreme Court: “Broadcasting such discussions to the public would have a chilling effect on those who take part in it. One would be careful not to take unpopular positions or make comments that border on the ridiculous, which often is a way of seeing issues in a different perspective.”

Mr. Gatchalian said after last week’s hearing on his bill, a technical working group would go over the points raised by the invited resource persons, which included the ERC and industry stakeholders.

“There’s a need to really be specific in the roles of the chairman, the roles of the executive director, the roles of the commissioners because this is where difficulties in interpretation have emerged,” he said.

He said the “problem with interpretation” caused the squabbles at the ERC in the past, which also gave rise to a “power play” that delayed the issuance of crucial decisions. “We consumers are on the losing end,” he said. — Victor V. Saulon

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