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Exports contract in December

Merchandise export sales contracted in December due to declines posted by four out of the top ten commodities for the month, the government reported Friday morning.

Preliminary data released by the Philippine Statistics Authority (PSA) showed exports contracting by 4.9% to $4.72 billion in December. This was a reversal from the previous month’s 1.6% increase ($4.96 billion) and the 6.6% increment ($4.97 billion) recorded in December 2016.

The commodities that declined were coconut oil (-56.7%); ignition wiring set and other wiring sets used for vehicles, aircrafts and ships (-27.1%); other manufactured goods (-24.4%) and metal components (-3.0%).

Those that gained were electronic products (15%), components/devices (semiconductors) (18.9%), machinery and transport equipment (62.8%), gold (198.8%), electronic equipment and parts (20.31%), and miscellaneous manufactured articles (10.6%).

Hong Kong was the Philippines’ top export market in December with a 16.7% market share at $789.61 million. It was followed by US (13.9% share), Japan (13.5%), China (11%), and Singapore (6.9%).

The thriving travel and tourism sector

By Mark Louis F. Ferrolino, Special Features Writer

Despite economic and political challenges across the globe, the travel and tourism industry remains as a key sector for economic development and job creation. The industry has experienced a steady growth in the past years, contributing around seven trillion US dollars to the global economy each year.

According to a report by one of the largest professional services networks in the world, Deloitte, the global travel industry gross bookings in 2017 reached up to $1.6 trillion, making it one of the largest and fastest-growing sectors in the world. The industry now accounts for 10.2% of the global gross domestic product (GDP).

Deloitte noted that the number of international travel departures has more than doubled from roughly 600 million to 1.3 billion over the past two decades. With its ancient history and rich culture, Europe receives the most international tourist arrivals, followed by the Asia-Pacific region.

For the next 10 years, South Asia is expected to be the fastest growing world region with expected average annual direct travel and tourism GDP growth of 6.7%, according to the World Travel and Tourism Council (WTTC). It is followed by Northeast Asia and Southeast Asia, where average annual growth of 5.9% and 5.7% are expected, respectively.

Globally, the travel and tourism industry’s contribution to Gross Domestic Product (GDP) is expected to grow at an average of 3.9% per year over the next 10 years, the WTTC says. It is expected to support more than 380 million jobs, which equates to one in nine of all jobs in the world. The sector is expected to outperform the global economy throughout the forecast period and increase its share of global economic activity in the years to come.

In the Philippines, the travel and tourism industry is one of the major contributors to the economy. With over 7,100 islands, the archipelago boasts a rich biodiversity, breathtaking attractions, and colorful historical and cultural heritage that attract millions of foreign tourists each year.

In the latest report released by the Department of Tourism (DoT), foreign tourist arrivals in 2017 reached 6,620,908, an 11% higher from the previous year’s arrival of 5,967,005. South Korea remained as the top tourist market for the country, posting 1,607,821 arrivals; followed by China with 968,447, and the United States with 957,813.

In the previous years, the contribution of the travel and tourism industry to the country’s total GDP has been steadily rising. From around 7.8% in 2014, it grew at 8.2% in 2015 and 8.6% in 2016. The share of employment in tourism industries to total employment in the country was recorded at 12.5%, 12.7% and 12.8% in 2014 to 2016, respectively.

To further boost the country’s tourist arrivals, the DoT has been conducting various marketing strategies and securing agreements with international institutions that help promote the country. Also, the agency is supporting travel and tourism events that create opportunities for Philippine tourism to expand.

The annual Travel Tour Expo (TTE), organized by the Philippine Travel Agencies Association (PTAA),  is one of these. TTE is the biggest travel and tourism event in the country that extensively brings together industry stakeholders in one venue to showcase their discounted package deals. TTE allows exhibitors to expand their networks and grow their businesses and gives Filipinos the best opportunity to plan their trips either as individual or group.

This year, the annual event is happening today until Sunday, Feb. 11, at SMX Convention Center in Pasay City, accommodating a record high of 400 exhibitors including 94 travel agencies with expected visitors of more than 140,000.

The PTAA is also bringing back the International Travel Trade Expo (iTTE), the business-to-business component of TTE, where there will be more than 250 travel agencies and 80 companies from 16 countries participating as buyers and sellers, respectively. The iTTE gives travel agencies the opportunity to expand their respective outbound products and services by networking and starting partnerships with their foreign counterparts.

After these activities, the PTAA sets to hold its regular trainings and seminars for its members and industry players and planned to keep in touch with government agencies that impact the country’s travel and tourism industry.

Rates steady even as inflation view rises

By Melissa Luz T. Lopez
Senior Reporter

THE BANGKO SENTRAL ng Pilipinas (BSP) kept benchmark borrowing rates steady on Thursday despite expectations that inflation will surge to breach four percent in the months ahead, although authorities discounted its impact as “temporary.”

The Monetary Board kept policy settings steady in its first of eight planned reviews for 2018.

Rates were kept at 3.5% for the overnight lending rate, 3.0% for the overnight reverse repurchase rate and 2.5% for the overnight deposit rate.

“The Monetary Board’s decision is based on its assessment that while latest baseline forecasts show higher inflation outturns for 2018, the inflation path is expected to moderate and settle within the inflation target range… in 2019,” BSP Governor Nestor A. Espenilla, Jr. said in a statement as read by Managing Director Francisco G. Dakila, Jr.

“[T]he Monetary Board saw that inflation expectations continue to be anchored within the inflation target band over the policy horizon. The BSP is watchful against any signs of second-round effects and inflation becoming broader-based.”

The central bank last hiked policy rates in September 2014, although procedural cuts were introduced in June 2016 for the shift to an interest rate corridor scheme designed to better influence market rates and mop up unwanted liquidity.

Inflation clocked four percent in January, which came as a surprise against a 3.5% consensus estimate among economists asked in a BusinessWorld poll. The government attributed the price spikes to the impact of Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion (TRAIN) law that took effect on Jan. 1.

TRAIN imposed an additional P2.50 excise tax per liter of diesel and P3/liter for kerosene, which came at a time of three-year highs for world crude prices. The new law also either hiked or introduced new taxes on cars, coal, sugar-sweetened drinks and a host of other items that likely drove up prices of other widely used goods and services.

January’s inflatio pace touched the ceiling of the central bank’s 2-4% target band for the entire year, and is the fastest pace recorded since October 2014.

Several analysts have said that inflation will likely trend higher over the coming months as the second-round impacts of TRAIN – such as increases in transport fares and daily minimum wages – creep in.

The central bank also kept reserve requirement ratios (RRR) for big banks steady at 20%. Mr. Dakila said cutting the reserve level remains a “continuing issue” for the Monetary Board, but noted that the focus is now on the policy rate.

Last week, the central bank chief said adjustments to the RRR should not be taken as a change in monetary policy stance, as they merely form part of the government’s financial market reform strategy.

FASTER INFLATION
The BSP raised its inflation forecast, with the monetary authority now expecting price increases to overshoot its 2-4% target for 2018.

Mr. Dakila said the central bank now sees full-year inflation at 4.3%, jumping from the 3.4% expected back in December.

“Now that the TRAIN law has been passed, the baseline assessment now includes impact of tax reform program,” Mr. Dakila said during the press briefing, noting that rising global crude oil prices and the faster-than-expected January inflation rate prompted the BSP to adjust its estimates.

“It should be emphasized that although the inflation number for 2018 has been adjusted upwards, it is a change in inflation due to supply-side factors essentially of a transitory nature,” Mr. Dakila added.

“The forecast shows that by March of next year, we should be back to the inflation target band.”

BSP Deputy Governor Maria Almasara Cyd N. Tuaño-Amador also pointed out that drivers of inflation remain “short-lived” and are expected to “recede” over the year ahead.

Inflation is expected to return within target by 2019 to 3.5%, although still higher than 3.2% previously estimated.

‘SLIGHTLY HAWKISH’
One economist said that the BSP’s statement has turned hawkish as it acknowledged the need to tighten rates due to rising inflation.

“We can call it slightly hawkish. It is the part that possible tweaks in the future will now come from external sources like the mention of global oil prices. But, I think, it is clear that the surge in inflation is simply what it is: a surge,” Ruben Carlo O. Asuncion, chief economist at the Union Bank of the Philippines, said when sought for comment.

“Slightly hawkish also because BSP still expects inflation to come back to the official 2-4% inflation target.”

Mr. Asuncion added that he expects one to two rate increases this 2018, possibly by “midyear.”

“If there are signs that inflation is spreading out among all the commodities in the economy, then that will be a factor that will be taken into account in deciding the monetary policy stance. But all adjustments on taxes are essentially supply-side factors,” Mr. Dakila said.

However, Gareth Leather of Capital Economics said he expects the BSP to keep policy moves on hold throughout 2018 as he projects inflation to “drop back” by the start of 2019.

The BSP will hold its next rate-setting meeting on March 22.

Bangladesh central bank, RCBC gird for legal fight

DHAKA/MANILA — Bangladesh’s central bank and Rizal Commercial Banking Corp. (RCBC) late on Wednesday said they were prepared to do legal battle over their purported roles in one of the world’s biggest cyber heists two years ago.

Unidentified hackers stole $81 million from Bangladesh Bank’s account at the Federal Reserve Bank of New York in February 2016, using fraudulent orders on the SWIFT payments system.

The money was sent to accounts at Manila-based RCBC and then disappeared into the casino industry in the Philippines.

“Bangladesh Bank will file a lawsuit in a New York court within two to three months in connection with the reserve theft,” central bank deputy governor Abu Hena Mohd. Razee Hassan told Reuters.

“We are in talks with the Federal Reserve Bank and SWIFT to join us as they are also victims.”

For its part, RCBC said the cyber heist was an inside job and Bangladesh Bank was engaging in a cover-up by maligning it.

“Bangladesh Bank should stop making RCBC its scapegoat,” the Philippine bank said in a statement. “RCBC has revealed everything it legally could to the Senate and to the Bangko Sentral ng Pilipinas (BSP).”

RCBC said it “will consider a lawsuit against Bangladesh central bank officials for claiming the bank had a hand in the $81-million cyber heist two years ago.”

“We will not allow them to continue to malign RCBC,” read the statement which was e-mailed to journalists.

“If they sue, RCBC is ready and prepared.”

RCBC shares lost 5.1% to end P46.50 apiece on Thursday, compared to the 0.32% slip of the financials sectoral index of the Philippine Stock Exchange. The bank was one of the listed firms whose share prices suffered some of the biggest losses for the day.

SWIFT spokeswoman Natasha de Teran declined comment, saying SWIFT does not comment on customers.

Reuters reported in December that Bangladesh Bank had asked the New York Fed to join a lawsuit it was considering filing against RCBC seeking damages.

After two years, there is no word on who was responsible and Bangladesh Bank has been able to retrieve only about $15 million, mostly from a Manila-based junket operator.

The BSP fined RCBC a record one billion pesos ($20 million) in 2016 for its failure to prevent the movement of the stolen money through it.

RCBC has blamed rogue employees and Philippine prosecutors have filed money laundering charges against a former RCBC bank manager and four people who owned the bank accounts where the funds were sent, but are not identifiable since the accounts were in fake names. They are the only people to be formally cited anywhere in the world in association with the crime.

RCBC has said it would not pay any compensation to Bangladesh Bank and the Dhaka bank bore responsibility for the theft since it was negligent. — main report by Reuters

Year begins with thinner foreign currency reserves

THE COUNTRY’s dollar reserves slipped in January as the central bank tapped these funds to smoothen exchange rate swings and as the government settled more debts, the Bangko Sentral ng Pilipinas (BSP) said.

Gross international reserves (GIR) reached $81.206 billion last month to post a slight decline from December’s $81.57 billion and the $81.376 billion recorded in January 2017, the BSP announced late Wednesday.

The figure is the smallest since November’s $80.31-billion tally, but is still bigger than the $80-billion GIR level expected by the central bank for the entire year.

International reserves are composed of gold, central bank assets expressed in foreign currencies, country quotas with the IMF, and foreign currency deposits held by government and state-run firms.

In a statement, BSP Governor Nestor A. Espenilla, Jr. attributed the decline in reserves to its foreign exchange operations, as well as debt payments made by the national government for its foreign obligations.

The central bank sometimes uses reserves to influence in the daily peso-dollar trading by buying or selling more units in order to temper sharp movements in the exchange rate. This forms part with the BSP’s “tactical intervention” to temper sharp currency swings.

A steady stream of investment income from abroad as well as dollar deposits held by the government partially offset declines in other reserve components, the central bank said.

Foreign investments accounted for the bulk of the GIR at $65.363 billion, even as it dipped from $65.815 billion in December and $68.366 billion in January last year.

The central bank’s foreign exchange holdings also slipped to $5.701 billion, coming from the $5.783 billion the previous month. This, however, surged from the $3.772-billion level recorded in January 2017.

BSP officials have said that a weaker peso spelled trading gains for the central bank, as the regulator remains long on dollars.

The peso averaged P50.5087 against the greenback last month, coming from a P50.3947 average in December.

Higher gold prices in the international market also propped up reserves, with the value of the BSP’s holdings rising to $8.501 billion from December’s $8.337 billion and January 2017’s $7.642 billion.

Funds kept with the International Monetary Fund (IMF) increased to $430.5 million in January from $424.4 million the previous month, even as they were down from the $446.3 million logged in January last year.

Special drawing rights — the amount which the Philippines can tap in the IMF’s reserve currency basket — steadied at $1.211 billion.

The IMF uses the US dollar, the Japanese yen, the euro, the British pound and the Chinese yuan in computing each country’s reserve position.

January’s GIR can cover up to 8.2 months worth of import duties, well above the three-month global standard. It can also settle 5.8 times the country’s outstanding external debt falling due in up to a year and up to 4.2 times of such liability when computed on “residual maturity” — or such short-term debt plus principal payments on medium- and long-term loans of public and private sectors falling due within the next 12 months.

The central bank described the latest GIR as a “more than ample liquidity buffer” for the economy.

International debt watchers and multilateral lenders have said that these reserves are a source of credit strength, as it lends resilience to external shocks. — Melissa Luz T. Lopez

Philippines could be more vulnerable to fund outflows if US rate hikes pick up pace

MANILA/HONG KONG — The Philippines has drawn kudos and inflows as one of Asia’s fastest growing economies, but some economic indicators raise a question of whether it could be a soft spot if US interest rate hikes spur capital outflows from Asia this year.

The last episode of major outflows, triggered by the US Federal Reserve’s 2013 announcement that it would reduce monetary stimulus — an event dubbed the “taper tantrum” — saw markets zeroing in on India and Indonesia because of their external imbalances then.

While these imbalances still exist, they are much narrower and the central banks of the two countries have accumulated foreign exchange reserves.

That should make them better able to cope with an episode of global outflows than in 2013-14, when both temporarily raised interest rates to keep investors interested.

But in some ways, the Philippines — which reported 6.7% economic growth for 2017 — may seem more vulnerable to outflows than five years ago. It hasn’t been accumulating reserves since 2012 and President Rodrigo R. Duterte’s ambition to upgrade the country’s outdated infrastructure has depleted its other main line of defence, the current account surplus.

“The vulnerability for Philippines is that the current account positioning is deteriorating,” said Sanjay Mathur, chief economist for Southeast Asia and India at ANZ.

The central bank projects there was a current account deficit last year — the first since 2002 — of $100 million, and it forecasts one of $700 million this year.

BID TO ALLAY CONCERN
Bangko Sentral ng Pilipinas Governor Nestor A. Espenilla, Jr. has sought to allay concerns about the deficit, attributing it to rapid economic growth backed by rising investments.

Rajiv Biswas, Asia Pacific chief economist for IHS Markit, isn’t worried by gaps in the current account, saying that “it’s not a chronic problem; it’s still a relatively moderate deficit.”

The account is backstopped by large foreign worker remittances. In the first 11 months of 2017, these were $25.3 billion, up four percent from a year earlier. Also up in 2017 was foreign direct investment: January-October saw $7.86 billion versus $6.52 billion one year earlier.

Philippine foreign-exchange reserves, unlike those of Indonesia and India, haven’t been rising. At the end of December, they were $81.57 billion, compared with $83.83 billion five years earlier.

Between Jan. 29 and the Feb. 6 Asia stock sell-off, Philippine shares fell 7.7% peak-to-trough, as much as India’s but twice as much as Indonesian and Malaysian stocks.

The peso has been the weakest Asian currency against the dollar so far this year, shedding nearly 2.5%. Mr. Espenilla has said the Philippines was “very far from any foreign exchange crisis” and the currency is supported by healthy economic fundamentals.

Inflation is another number drawing attention, after hitting four percent — its highest since October 2014 — in January.

Only three out of 12 analysts in a Reuters Poll thought the Philippines would raise its key rate on Thursday, but the central bank is seen edging closer to a its first hike since 2014.

If the Fed steps up its pace of US rate hikes, the Philippines and other emerging Asian economies will need to raise theirs to fend off capital outflows, economists say.

Mr. Biswas of IHS Markit says the Philippines is “somewhat more vulnerable to capital outflows now but India and Indonesia are still top of the list.” — Reuters

Vista Land targets to have 60 malls by 2020

VISTA LAND & Lifescapes, Inc. is pouring in P50 billion in capital expenditures in 2018, as the company embarks on a three-year program to nearly triple its mall developments by 2020.

In a statement issued Thursday, the Villar-led firm said bulk of the spending for 2018 will be for the development of malls, in line with its vision to reach 1.4 million square meters of gross floor area from leasing spaces by the end of the year. Malls will corner 85% of this target, while office projects will account for 15%.

Vista Land is ramping up its spending to reach its target of 60 malls by 2020, which are expected to generate a steady stream of leasing revenues. It currently has a total of 22 malls, including those operated by its subsidiaries.

This year’s P50-billion capex is 42% higher than the P35.3-billion it has committed to spend in 2017.

“Our company is poised to have another banner year for 2018 as our additional leasable spaces are now contributing significantly to our current financial results in addition to the sustained double digit growth in our residential business,” Vista Land President and Chief Executive Officer Manuel Paolo A. Villar said in a statement.

Vista Land’s net income grew by 12% in the nine months ending September to P7.1 billion, following a 12% year-on-year increase in revenues to P26.9 billion during the period.

Of this, leasing income accounted for P4.3 billion, 30% higher than its contribution to revenues a year prior. The residential segment was the company’s primary growth driver as sales reached P20.8 billion for the period.

The company has earlier announced its P10-billion net income target for this year, 11% higher than the projected P9 billion it expects to have made in 2017.

Vista Land continues its expansion program as it expects more demand for both residential and office spaces.

“We remain optimistic for the industry, given the strong demand for our commercial spaces and housing products, propelled by the stable growth in the disposable income, OF (overseas Filipino) remittances and sound Philippine macroeconomic fundamentals,” Vista Land Chairman Manuel B. Villar, Jr. said in a statement.

Vista Land is currently present in 133 cities and municipalities across 46 provinces. Considered the largest property developer for horizontal communities, the company’s long term goal is to establish its presence in around 200 cities.

Shares in Vista Land rose 20 centavos or 3.23%, closing at P6.39 apiece at the Philippine Stock Exchange on Thursday. — Arra B. Francia

DoF looks to tap Alibaba Group’s digital financial services for OFB

THE Department of Finance (DoF) is eyeing to tap digital financial services offered by China’s Alibaba Group for remittances processed by the newly opened Overseas Filipino Bank (OFB). 

In a statement, Finance Secretary Carlos G. Dominguez III said they are looking to tap financial technology (fintech) solutions offered by Ant Financial, a unit of Chinese billionaire Jack Ma’s empire.

Mr. Dominguez led a team of DoF officials in paying a visit to Mr. Ma’s Alibaba Business School last week in Hangzhou, China, where they attended at three-day workshop on the New Economy.

The Cabinet official said Ant Financial’s low-cost mobile payment technology — which helped boost financial inclusion in China — could also be used in the Philippines for overseas Filipino workers (OFWs). In particular, the fintech-enabled service is eyed to reduce the costs of worker remittances. 

“There are over 10 million Filipinos working abroad, Ant Financial’s technology is helpful for them. The technology can help them manage their cash, their earnings wisely,” Mr. Dominguez was quoted as saying.

The DoF is looking at the OFB launched last month as the “launching pad” for this digital service, which will likewise allow more migrant workers to test the platform.

The government remodelled the Philippine Postal Savings Bank to a new entity that will primarily service OFWs, in fulfilment of a campaign promise made by President Rodrigo R. Duterte.

The new bank — which is run by the Land Bank of the Philippines — will be offering 15 banking products and services, including peso savings, time deposits, and checking accounts, loan products, investment products such as Unit Investment Trust Funds, payment services, and remittance services.

The OFB is targeting to open representative offices in Dubai at the United Arab Emirates and in Bahrain, where a big number of Filipinos are based.   

Eric Jing, chief executive officer of Ant Financial, has vowed to support the DoF’s plans to go digital. He said that their company’s fintech products have extended formal financial services to 40 million small and medium-sized companies in China. Other digital solutions offered by the Alibaba unit include payment services via QR codes on smartphones for a local subway system and in the Wufangzhai, an unmanned restaurant. — Melissa Luz T. Lopez

Hot air balloons and a flying circus

Fiesta
22nd Philippine International Hot Air Balloon Fiesta
Feb. 8 to 11
Clark, Pampanga

By Nickky Faustine P. de Guzman,
Reporter

BESIDES the usual hot air balloons that dot the skies of Clark, Pampanga at this time of year, the Philippine International Hot Air Balloon Fiesta adds another spectacle up in the air: a flying circus.

Called the Aerosuperbatics WingWalkers, the 30-year-old United Kingdom-based flying circus uses two Boeing-Stearman Model 75 biplanes in tandem and it is the only aerobatic formation group in the world.

WWW.AEROSUPERBATICS.COM

The 17-minute routine consists of the two orange biplanes flying together, doing loops, turns, and inverted flights while two women stay strapped on top of each plane, doing their own acrobatic stunts.

“The hardest part is the strong wind pressure. You have to stay elegant in the air while doing the stunts — which is exhilarating and exciting,” Emily Guilding, one of the two stuntwomen, told BusinessWorld during a media launch on Feb. 6 in Pampanga.

Wing walkers Emily Guilding (L) and Kattie Hobbs — NICKKY FAUSTINE P. DE GUZMAN

The women’s acrobatics include doing loops, rolls, and handstands at 1,000 feet in the air, all while fighting against the strong wind.

Ms. Guilding said she got bored doing office work and decided that she wanted to do something fun. Her pursuit of something exciting to do led her to join the WingWalkers in 2014.

Asked about the requirements needed to become an aerial acrobat, Kattie Hobbs, the other wing walker, said one has to be short (no more than 5’5”), flexible, and strong. And, of course, you should not be scared of heights.

Ms. Hobbs said her first she did the routine — just last year — was her scariest experience, but she’s now used to doing it with ease.

The two women said they have been practicing and perfecting the stunts for nine weeks for their Philippine audience in what will be their first-ever stint in Southeast Asia.

The two said the best thing about their seemingly frightening job is the opportunity to travel the world. The two have toured in China, Australia, and Europe, among other places.

The Aerosuperbatics WingWalkers will be up in the air on Feb. 8 to 11 in Clark, Pampanga, along with the festival’s other spectacles in the sky.

With the theme “A Weekend of Everything that Flies,” the 22nd Philippine-International Hot Air Balloon Festival (PIHABF) includes shows and rides for the festival goers, including hot air balloons, tandem skydiving, paragliding, formation flights, and kite flying, among others.

Balloon enthusiasts prepare to take flight during the annual International Hot Air Balloon Festival at the former Clark US Air Force base in Pampanga province, north of Manila on February 9, 2017.
— AFP

On the ground, there will be supercar drifting exhibitions, drone racing, archery, horseback riding, camel riding, animal feeding, and shopping at the Fly Market. There will also be a One World Music Cultural Exchange Concert series in the evenings.

Tourism Secretary Wanda Teo said that her department is hoping to top the number of attendees — 130,000 — last year. She said the number of people who go to the festival increases every year, and the target for this year is  200,000 visitors. She said she wants to hold the next PIHABF outside Pampanga, and holding it with the different regions across the country to draw more tourists, foreign and local.

Entrance tickets to the festival cost P500, with a percentage of the amount going to the PIHABF Foundation Scholarship Fund, which grants scholarships to underprivileged students who want to pursue a career in the aviation industry.

Ayala unit buys National Teachers College

By Arra B. Francia, Reporter

AYALA Corp. (AC) is strengthening its foray into the education sector with the acquisition of majority of National Teachers College (NTC), a transaction it believes would be strategic for its proposed merger with the Yuchengco group’s education business.

In a disclosure to the stock exchange on Thursday, the country’s oldest conglomerate said its wholly owned unit AC Education, Inc. (AEI) has signed a share purchase agreement to buy around 96% of NTC, after it was selected as the winning bidder for the tender offer of the company’s stocks.

Founded in 1928 in Quiapo, Manila, NTC specializes in teacher education, and was the first to offer general education courses up to the Bachelor of Science in Education program. The school’s student population currently stands at over 10,000, around 3,500 of whom are taking up education as a degree and at the graduate level.

NTC has a Level III accreditation from the Philippine Association of Colleges and Universities Commission Accreditation, which recognizes the school’s quality standards for its elementary and secondary education programs.

“We believe that NTC can play an integral role in our efforts to contribute to a better education system in the Philippines, because of NTC’s long and successful track record in producing quality educators who go on to teach in both public and private schools,” AC Chairman and Chief Executive Officer Jaime Augusto Zobel de Ayala said in a statement.

For its part, NTC Chairman Rolando de Castro said the partnership with the Ayala group will help the school move forward with its vision to become a world-class institution.

“In selecting the buyer who shall acquire the shares of NTC, it was important to look not only at the capability to expand the school’s horizons, but also at the alignment of values and vision for raising our Filipino youth,” AC quoted Mr. De Castro as saying.

AEI currently operates the largest chain of stand-alone private high schools through Affordable Private Education Center (APEC) Schools, accommodating 16,000 students across 23 locations in Metro Manila, Cavite, Rizal and Batangas. The company also controls University of Nueva Caceres in Naga City with 8,000 students, and is one of the oldest private schools in the Bicol region.

With the acquisition of NTC, AEI’s schools will have a total student population of around 34,000.

AC has beefing up its education portfolio, disclosing at the start of the month negotiations to merge AEI with iPeople, Inc., which has under its network Mapua University, Malayan Colleges Laguna and Malayan Colleges Mindanao.

“We are committed to investing in further quality at NTC, and building on its traditions of excellence and inclusiveness… We believe that NTC will be a key strategic element in the merger we have proposed between AC Education and iPeople,” AEI Chief Executive Officer Alfredo I. Ayala said in a statement.

The Ayala and Yuchengco groups said they will complete due diligence for the proposed transaction by the first quarter of 2018. Should the merger push through, iPeople will be the surviving entity, and will cover the whole spectrum of the education cycle.

AC’s attributable profit grew by 18% to P23.2 billion in the first three quarters of 2017, following a 21% uptick in revenues to P170 billion.

Shares in AC gained 0.77% or P8 to close at P1,042 each at the Philippine Stock Exchange on Thursday.

S&P wants in on China’s $11-trillion bond market

S&P GLOBAL Inc. plans to offer its ratings services in the Chinese domestic bond market, with an eye on buying a majority stake in a local agency or setting up a new entity there to do so, its chief financial officer said.

The world’s largest credit rater’s plan to assess the yuan-denominated bonds of Chinese firms follows the People’s Bank of China’s decision last year to allow international ratings companies to set up their own businesses in the nation, according to CFO Ewout Steenbergen.

“That’s been a game-changer with respect to the domestic Chinese bond-market situation,” he said in an interview. “We are very actively looking at opportunities for the future.”

China is seeking to open up the world’s third-largest bond market as it seeks a greater global role for its currency. Debt ratings have been one sticking point, as regulators and investors have expressed concerns that some local assessments are inflated. More than 40% of the country’s domestic corporate notes are graded AAA, according to data compiled by Bloomberg based on assessments issued by the four major domestic agencies.

Regulators want the “market to open up, to get more mature, so that the standards are different,” Steenbergen said. “That way it will become more attractive for international investors.”

S&P Global’s ratings unit already grades the international bond offerings of Chinese companies. Its potential entry into the domestic note market, and the timing of such a move, will depend on how regulations continue to develop, Steenbergen said.

“Once that becomes more clear, we are ready,” he said. “For us it’s very important we can apply our important global standards also to the Chinese market.”

Lulled by years of implicit government support for troubled companies, locals are now having to get acquainted with defaults, which have jumped since the end of 2015 as Beijing shuts down unproductive industries.

Opening up China’s $11-trillion bond market is a crucial step to balancing pressures on capital flows in and out of China. If sustained, it could make it less risky for policy makers to relax controls on domestic companies and households taking money out of the country.

S&P Global Ratings cut China’s sovereign credit rating by one step to A+ from AA- and revised its outlook to stable from negative in September. Its first downgrade to the rating since 1999 was due to risks of its growing debt burden, it said at the time. — Bloomberg

The flowers of Baguio

BAGUIO — The temperature was a cool 14.5° Celsius as onlookers stood at the sidelines of Panagbenga Park — the stretch of Session Road and Harrison Road to the Baguio Athletic Bowl that is coopted for Baguio’s yearly flower festival — as elementary students from 11 schools, along with local government officials and Philippine Military Academy (PMA) cadets, paraded in colorful costumes, carried flower props, and showed off their dance moves.

Baguio City ushered in the 23rd Panagbenga (a Kankanaey term for “a season for blossoming”) Festival, with the theme “Celebration of Culture and Creativity,” on Feb. 1 with opening ceremonies that included a street dance parade of the elementary schools division, a drum and lyre competition, and the opening of the Baguio Blooms exposition and exhibition.

This year’s festivities have been in the works since July 2017, with Panagbenga Festival chief-of-staff Vanj Payno and Baguio Flower Festival Foundation, Inc. (BFFI) co-chair Freddie Alquiros noting during a briefing with visiting media on Jan. 31 at The Manor that a boxing competition and a showcase of works by resident Baguio artists such as film director Kidlat Tahimik and National Artist for Visual Arts Benedicto “BenCab” Cabrera at Malcolm Square have been added to this year’s lineup of events. The latter is in line with Baguio’s being named as a creative city by the United Nations Educational, Scientific and Cultural Organization (UNESCO).

TRAFFIC
Over the past few years, Baguio has gained a reputation for terrible traffic, especially at peak seasons like Christmas and the Panabenga Festival. In part as a reaction to this, Ms. Payno said that Victory Liner buses plying the Metro Manila to Baguio routes during the run of the festival will play promotional videos encouraging guests to walk in the mountain city during the festivities.

“We re-route traffic during those two days (Feb. 24 and 25) because undoubtedly we close so many roads for the parade. We have to really re-route traffic. So, we really encourage people to park outside of the central business district and just walk to watch the parade in their own strategic areas where they would like to be,” Mr. Alquiros added.

Among the festivals highlights are the Baguio Blooms Exposition and Exhibition which is ongoing until March 4 at Juan Luna and Lake Drive; a kite flying competition, flower show, and cultural show on Feb. 11 at the Melvin Jones Grandstand and football grounds; the Flower Tee Open Golf Tournament on Feb. 16 at the Baguio Country Club and Camp John Hay; the Grand Street Dance Parade on Feb. 24 at Panagbenga Park; the Grand Float Parade on Feb. 25 along Session Road, Maharlika, Harrison Road to the Melvin Jones football grounds; Pony Boys Day on March 3 at Wright Park; and the closing ceremonies and awardings on March 4 which will be capped by a fireworks display. — Michelle Anne P. Soliman

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