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On upward trajectory

The government has long considered the automotive industry as one of the key drivers of the country’s economy. In the past years, the industry showed no signs of slowing down, and has seen a steady growth of sales over the past years, with the bulk of it attributed to commercial vehicles (CV).

In 2014, a total of 234,747 auto units were sold according to the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and the Truck Manufacturers Association (TMA) — 90,287 units of which were passenger car (PC) segment sales, while the 144,460 units were CV segment sales. On the other hand, the Association of Vehicle Importers and Distributors (AVID) reported a total of 35,565 auto sales, which is comprised of 18,467 units sold in the passenger car (PC) segment and 17,098 units sold were CVs, particularly in the light commercial vehicle (LCV) segment.

Continuing its upward trajectory, a total of 288,609 auto unit sales were reported by CAMPI and TMA in 2015 with PC and CV segments indicating notable increase in sales. The former segment recorded 116,381 number of units sold while the latter segment recorded a total sale of 172,228 units. In the same year, AVID also indicated a sales take-up of 58,712 units; with total sales of 22,386 units for the PC segment and 36,326 units for the LCV segment.

In 2016, according to a joint report of CAMPI and TMA, the Philippine automotive industry indicated a 24.6% growth in sales, recording a total of 359,572 units sold, with CV segment getting the bulk of sales (226,384 units) compared to number of units sold by the PC segment which is 133,188 units. AVID also reported a 60% increase in sales with a total of 93,179 units of autos sold, where majority of the sales were from the category 2 (LCV) segment (57,409 units) ; while the PC segment recorded a total of 35,770 units sold.

Keeping a bullish stance in 2017, CAMPI and TMA reported that the industry indicated an 18.4% increase in sales with a total of 425,673 units sold; 286,249 units of which belong to the CV segment while the remaining 139,424 units were attributed to PC segment. On the other hand, AVID recorded a total of 106,286 units sold in 2017, which is 14% higher than the previous year, with the LCV segment recording total sales of 66,564 units while the PC segment recorded a total of 39,722 units sold.

As indicated in the report over the past years, CAMPI, TMA, and AVID noted a continuous growth from the CV segment. Vehicle brands such as Toyota Motors Philippines Corp., Mitsubishi Motors Philippines Corp., Ford Motor Company , Honda Cars Philippines, Inc., Isuzu  Philippines Corporation, and Hyundai Asia Resources, Inc. (HARI) are consistently listed top performers in general.

Optimism despite challenges

While the auto industry continues to be bullish, 2018 poses some challenges with the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Law, which took effect Jan. 1 of this year. The law reduces the personal income tax rates, however, imposes higher excise tax on automobiles, petroleum products, and sugar, among others

Both CAMPI and TMA noted a slower growth in sales of automotive vehicles at the start of the year. Their joint report indicated only 4% growth in sales compared to the 27% growth in the same period of last year.

In a separate media report, CAMPI president Rommel Gutierrez said: “We started the year with a modest growth of 4% in January 2018 against the same period last year. While this is considerably low compared to the growth rate of January 2017, we still consider January 2018 sales as satisfactory and a good start for the auto industry. We will continue our efforts in sustaining the growth momentum of past years.”

On the other hand, AVID President and concurrently HARI President and Chief Executive Officer Ma. Fe Perez Agudo, said in a statement, “For the year ahead, we remain optimistic as we expect short-run market adjustments resulting from the TRAIN. Nevertheless, the new automotive landscape opens waves of opportunities for the luxury, e-vehicles, and hybrid vehicles market. Thus, AVID will continue supporting efforts to sustain inclusive growth and build a positive environment for business.”

Despite these hurdles, industry experts remain positive as the Philippines continue to be one of the fastest-growing economies in Asia. Moreover, opportunities are on the way especially now that the government, under President Rodrigo Duterte, is aggressively pushing for its infrastructure projects under the ambitious “Build, Build, Build” program.

These infrastructure projects can encourage a surge in sales in the CV segment. As stated in Fitch Group Co. unit’s industry trend analysis released in March 2017, “CV demand is closely linked with the performance of a country’s construction sector.”

HARI, the official distributor of Hyundai vehicles in the Philippines, noted in a statement that they expect the economy to continue its impressive growth for 2018, anchored on sound macroeconomic fundamentals and the current administration’s “Build, Build, Build” program, which is expected to pump prime the economy.

“With the passing of the TRAIN into law, pressure for further price increase, particularly in the automotive sector, is likely inevitable. Nevertheless, the automotive sector remains optimistic that the additional disposable household income of taxpayers resulting from TRAIN and the technology-driven value proposition of car players would likely to sustain high demand for automotive vehicles,” the statement added.

Commercial vehicle as a trend

Meanwhile, car companies like Nissan Philippines, Inc. (NPI) are seeing the potential in commercial vehicles, specifically pickups as the preferred vehicle by consumers.

NPI President and Managing Director Ramesh Narasimhan said in separate media reports: “The pickup truck is going to grow given the excise tax exemption.” — Romsanne R. Ortiguero

Indian firm wants to join PH telco market — Duterte

By Arjay L. Balinbin

President Rodrigo R. Duterte announced on Tuesday, Feb. 20, that an Indian firm is seeking to invest in the Philippines’ telecommunications industry.

“So, we now talk about why we are here. Most of you are here because you are in business. And in this world of big business now, most of you or some of you are already in the Philippines, even in the construction business. There’s a new application from an Indian company,” Mr. Duterte said during his speech at the induction ceremony of the new board of directors of the Federation of Indian Chambers of Commerce Phils. Inc. (FICCI) held at the Malacañan Palace on Tuesday evening.

He added: “India is also interested to enter into the telecom industry, and we are considering… I invited them during my talks with the businessmen in India during my official visit.”

The selection of a third telecommunications service provider is one of the top priorities of Mr. Duterte’s administration for the first quarter of the year.

The Department of Information and Communications Technology (DICT) has recently released the draft criteria for the selection of the third telco player, and it is set to be presented to the stakeholders in a consultation on Feb. 27.

Also during his speech, the President reminded the Filipino-Indian businessmen that he has “opened up the third frequency for telecommunications.”

“If you are the representative there, you can always go to them and discuss business. But if you are asked to shell out money or there is a transaction which involves corruption for a favor or for a permit, then let me know,” Mr. Duterte said. “Unless you are ready to give it, then just shut up because it’s yours. But you are not supposed to spend for anything unless it’s part of the official fees and the collections of government, regulatory fees most of it.”

 

DoF mulls 3 kinds of tax amnesty offer

THE GOVERNMENT is considering three kinds of tax amnesty as part of an overall bid to overhaul taxation in the country, the Finance chief said on Tuesday.

“There are three kinds of amnesty we want,” Finance Secretary Carlos G. Dominguez III told reporters on the sidelines of the launch of the Philippines’ hosting of the Asian Development Bank annual meeting in May.

“We want to give an amnesty for the estate taxes that were not paid so that assets will become developable,” Mr. Dominguez explained.

“Second, we want amnesty for those who have not paid the correct taxes in the past, and that will be based most likely on your total declared assets,” he added, referring to a planned general tax amnesty.

“You’ll know if you paid the right taxes and we’ll not ask you what you did not pay. Based on your assets, you’ll pay this amount and we’ll not look anymore into your accounts.”

Already being implemented starting January is Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion Act that is the first of up to five planned packages designed to shift the burden to those who can afford to pay more and cover about a fourth of the government’s P8.13-trillion infrastructure development program until 2022, when President Rodrigo R. Duterte ends his six-year term. Among others, that first package imposes a flat six percent estate tax. Before that, the National Internal Revenue Code of 1997 exempted from tax a net estate value of up to P200,000, and levied 5%, 8%, 11%, 15% and 20% depending on which bracket the property belonged.

Settling unpaid estate tax will unlock properties with such liabilities for development for residential or commercial purposes, Mr. Dominguez said.

Collection of appropriate estate taxes has been elusive for the Bureau of Internal Revenue, with the past administration estimating that annual take could actually go up to P10-50 billion from less than P1 billion currently.

The Department of Finance (DoF) previously said it was supporting House Bill No. 7105 general amnesty measure pending in Congress.

The department is also considering a form of amnesty that will cover existing tax evasion cases, saying it will seek authority from Congress to collect tax settlement amounts “below what is allowable in the law.” — Melissa Luz T. Lopez

Mr. Dominguez said the department expects “quite significant” collections from tax amnesty, even as he said: “It’s not so much the amount — it’s the fact that we start with a clean slate.”

The department also wants Congress to prescribe a moratorium period for amnesty, saying it was an offer that should not be used often.

Easing rules on deposit secrecy would likewise help the government go after tax evaders and money launderers after the amnesty period.

“If they pay (under) the amnesty then wala na ‘yun (we can no longer run after them),” Mr. Dominguez said.

“But if they didn’t (pay appropriate taxes) and they didn’t avail of the chance (for amnesty), then we can look (into their accounts) if we have suspicions.”

The planned amnesty forms part of tax reform “Package 1-B” that is expected to bring additional revenues this year to P130 billion from P89.9 billion under the first package enacted as RA 10963. — Melissa Luz T. Lopez

Bourse expected to weather global volatility

By Krista A. M. Montealegre
National Correspondent

PHILIPPINE EQUITIES are unlikely to return to bear territory for some time despite volatility in global markets, with the country’s long-term economic growth prospects remaining intact against a backdrop of normalizing interest rates and mounting inflation pressure, stock market analysts said on Tuesday.

After a dizzying ascent to record levels at the start of the year, global equity markets have recently succumbed to a sharp sell-off after the United States Treasury yields hit a four-year high.

This revived concerns of a repeat of the 2013 “taper tantrum” that prompted the Federal Reserve to gradually scale back its monetary stimulus program, eventually roiling worldwide financial markets.

The local market was not spared, with the Philippine Stock Exchange index (PSEi) — a barometer of investor confidence — erasing its gains early this month at the height of the correction.

During the BusinessWorld Stock Market Roundtable at the Makati Shangri-La, COL Financial Group, Inc. Vice-President and Head of Research April Lynn L. Tan said the online brokerage downgraded its 2018 forecast for the PSEi to 8,750 from 9,300 after factoring in the impact of higher borrowing costs.

Philstocks Financial, Inc. Head of Research and Engagement Justino B. Calaycay, Jr. also hinted that a revision of its base-case forecast of 7,900-8,200 and best-case projection of 10,700-11,000 is in the cards after the release of the first-quarter corporate earnings.

Taking into account past corrections, COL Financial’s Ms. Tan expects the PSEi to bottom out at the 7,881 and 8,062 levels around March and May. The benchmark PSEi added 0.14% to close at 8,722.70 on Tuesday after spending most of the day in the red.

“Those waiting for a bear market, I’m sorry, I think you will be disappointed,” Ms. Tan said.

The Philippines, while vulnerable to wild price swings because of the sharp rally at the start of the year, deserves to trade at a premium over other Asian markets, said Michael Gerard D. Enriquez, chief investment officer at Sun Life of Canada Philippines, Inc., citing the robust domestic economy, acceleration of the government’s infrastructure program and the passage of other tax reform packages.

“As a long-term investor, we are excited about how infrastructure will play a role in the GDP. Right now, it’s 70% consumption, but if the government starts to spend and investments come into play, we can see our (gross domestic product) growth breaching seven percent,” Mr. Enriquez said.

First Metro Asset Management, Inc. President Augusto M. Cosio said the global asset allocation for emerging markets has been increasing in recent years, even as international fund managers are still underinvested in the Philippines.

“Emerging markets are the trade of the decade. Emerging markets, indeed, are the place to be,” Mr. Cosio said.

Another key risk this year is higher inflation as a result of weak peso and a new tax reform law, which threatens to dent consumer spending, Ms. Tan said. Consumption is one of the key drivers of the economy, accounting for two-thirds of gross domestic product (GDP).

The central bank expects inflation to average 4.3% this year, topping the 2-4% target range due to price pressures from fuel, cars, tobacco, coal and sugar-sweetened drinks.

“This too will pass. It is not a runaway inflation,” Ms. Tan said. “The Bangko Sentral has the tools to control inflation. It is not a long-term problem. It is a short-term issue.”

Aside from the possibility of more aggressive pace of rate hikes by the Fed and faster inflation, Sun Life’s Mr. Enriquez tagged the peso’s depreciation, worsening current account deficit and government execution of projects as the other key risks.

“There’s a lot of near-term potential disruptors, but over the medium-term, we continue to be constructive on equities market in general,” Mr. Enriquez said.

The analysts were overweight on banks because of rising interest rates, lower reserve requirement and fast loan growth.

The consumer sector may be “challenged” because of quickening inflation, and the infrastructure sector faces some “uncertainty” over how the government pursues big-ticket projects, they said.

“Whether the world is going up or going down, there are always opportunities out there. It’s only a matter of looking for them,” Philstocks’ Mr. Calaycay said.

Kuwait extends amnesty for overstaying OFWs

By Arjay L. Balinbin

The Kuwaiti government has granted the Philippines’ request to extend its amnesty program for Filipino workers who have overstayed their visa, Philippine Ambassador to Kuwait Renato Pedro O. Villa said.

In a statement on Tuesday night, Feb. 20, the Department of Foreign Affairs (DFA) confirmed that the “amnesty program for Filipinos in Kuwait has been extended by two months until April 22.”

The information, according to the DFA, is based on Mr. Villa’s latest report to Foreign Affairs Secretary Alan Peter S. Cayetano.

“Ambassador Villa informed the Secretary that the order for the extension of the three-week amnesty that was supposed to end on Thursday was signed today by Kuwait Interior Minister Sheikh Khalid Al-Jarrah Al-Sabah,” the foreign affairs department said.

This decision, according to the DFA, “came less than a week after Mr. Cayetano formally conveyed the extension request to Kuwaiti Ambassador Mousaed Al-Thwaikh in Manila.”

Mr. Cayetano said “the extension is being requested to allow the Embassy to accommodate more of the 10,800 Filipinos believed to have overstayed their visas or ran away from their employers as only close to 3,000 of those qualified have applied so far.”

“[The] DFA remains in close coordination with Labor Secretary Silvestre H. Bello III and the Department of Labor and Employment (DoLE) to ensure a successful outcome of negotiations with the Kuwaiti Government to improve protection mechanisms for the more than 250,000 Filipinos working there,” he added.

For his part, President Rodrigo R. Duterte said he is not yet ready to lift the OFW deployment ban to Kuwait.

“I’m not ready to lift it now. I was outraged by what happened there… We will have to come up with a[n] agreement. Like passports taken by the employer, no day off, they are only allowed to sleep for almost four hours, three hours, and sometimes their meals are garbage. These are the things that have to be sorted out before I will agree to deploy Filipinos outside,” Mr. Duterte said during his speech at the induction ceremony of the new board of directors of the Federation of Indian Chambers of Commerce Phils. Inc. (FICCI) held at the Malacañan Palace on Tuesday night.

The President also noted that the Philippines has been losing skilled workers.

“Problem is there are constructions that have stopped building and everything and even in my place, Davao, because we have lost our skilled workers. They are trained but they are all in the Middle East, so we do not have the workers now,” Mr. Duterte said.

He added that the government is currently “trying to entice [the skilled Filipino workers] to come back to the Philippines to work.”

[Come back to the shores…The Philippines is growing a little bit, moving faster than usual,” he said.

“So these are the things which should [be solved]. There’s a dearth of skilled workers. And it’s because of the many years of hardships, they were forced to migrate to other places,” the President added.

Inclusive development in focus at ADB meeting

THE PHILIPPINES will compare notes on inclusive growth best practices with some of the 66 other members of the Asian Development Bank (ADB) when the regional lender holds its annual meeting in Metro Manila this May, the Finance chief said on Tuesday.

Manila is likewise expected to enjoy some boost in tourism revenues, with about 3,000 delegates expected to fly in for the May 3-6 meetings to be held in the Ortigas business district.

“In the course of the deliberations, we hope to craft modes of development interventions that will be more inclusive… The Asia Pacific is now the center of gravity of the global economy and its most important growth driver,” Finance Secretary Carlos G. Dominguez III said at the launch of the event at the Ayuntamiento de Manila.

Mr. Dominguez chairs the ADB Board of Governors as Manila hosts the 2018 meetings. The Cabinet official is looking to share the country’s experience in enacting tax reform, which has been implemented starting this year.

In turn, the Philippines also seeks to learn best practices employed by other countries in addressing specific challenges or economic issues, as well as integrated Customs operations with other Southeast Asian countries.

The ADB’s 51st meeting will explore opportunities on “linking people and economies for inclusive development,” with a focus on tapping emerging technologies to uplift poor communities and provide sources of resilient growth.

“We also see a dynamic and increasingly complex development landscape emerging – rapid technological progress offering opportunities and challenges, climate change and environmental pressures, aging populations, urbanization and infrastructure gaps,” ADB Board Secretary Woochong Um said in a separate speech.

“The technology aspect is very much in the forefront of our discussion and how we can tap that to make development more inclusive.”

The Philippines last hosted the ADB annual meeting in 2012.

Mr. Dominguez said the government wants to remain “frugal” with a P90-million budget for this year’s events, much less than the P200 million spent six years ago.

Apart from advancing the development agenda, Mr. Dominguez said he also expects the hosting of these events to lift tourist arrivals and potentially usher in more foreign capital.

“All businesses in other countries start with tourism, and later on either decide to invest or live there,” Mr. Dominguez said.

“This is a first step for us… we certainly would put our best foot forward to show what’s available in the Philippines,” he added.

“We have a very good policy environment, a stable system of government, we have a workforce that is young and very well-educated — those are the things we want to display.”

Mr. Dominguez said ADB-related events will be concentrated within the Ortigas area in order to limit impact on traffic.

Mr. Um said the regional lender will maximize use of its headquarters by holding most of the breakout meetings there.

The ADB provided $1.08 billion in loans to the Philippines in 2017, which Mr. Um described as a record high.

“We hope to sustain and even surpass this level of assistance to the Philippines,” the official said.

Across Asia and the Pacific, the ADB has extended over $250 billion in grants and loans over the last 50 years.

ADB expects the Philippine economy to grow by 6.8% this year, faster than the 6.7% pace in 2017 but below the 7-8% target set by economic managers. — Melissa Luz T. Lopez

Gov’t partially awards T-bonds

THE GOVERNMENT made a partial award of fresh 20-year Treasury bonds (T-bonds) it offered yesterday as investors sought higher returns on the back of expected interest rate hikes by the local and US central banks.

At its auction on Tuesday, the Bureau of the Treasury raised just P8.853 billion out of the planned P20-billion borrowing from the fresh bonds maturing on Feb. 22, 2038.

Total tenders reached P22.766 billion, slightly more than the amount the government wanted to raise.

The 20-year bonds fetched a coupon rate of 6.5%, higher than the 5.035% average rate fetched during the last 20-year T-bonds auction in June 2017.

Had the government made a full award of the bonds, yesterday, the rate would have climbed to 7%.

At the secondary market yesterday before the auction, the 20-year papers were quoted at 7.0857%.

It fetched a higher rate of 7.1161% at the close of trading.

National Treasurer Rosalia V. De Leon said after the auction that banks sought higher returns due to the expected rate hikes from the US Federal Reserve and the Bangko Sentral ng Pilipinas (BSP).

“We see the expectations about…the Fed hike, and then domestically, we’re also waiting for the BSP to hike rates… So those were priced in,” Ms. De Leon said on Tuesday.

Market expectations on the Fed rate hike are buzzing ahead of the release of the January monetary policy minutes as jobs and household growth in the world’s largest economy remain solid.

Earlier this month, the Bureau of Labor Statistics reported that there were 200,000 new jobs in January, higher than the 180,000 market consensus.

Housing starts, or new homes to be constructed, rose by 9.7% to a seasonally adjusted annual rate of 1.326 million units last month.

Back home, market players are expecting a rate hike from the BSP as early as next month after the 4% inflation print in January.

For Finance Secretary Carlos G. Dominguez, III, who attended yesterday’s auction, the Treasury only wanted to set a rate for the benchmark papers.

“I think they just want to set the rate because the last time they did [the 20-year bonds] was nine months ago. No need for the money — they just want to set the rates,” Mr. Dominguez said.

Meanwhile, a trader said the market was “surprised” at the result of yesterday’s auction.

“Market was clearly surprised about the decision to award at 6.5% even if it is less than the total offer. This is now causing yields to go higher,” the trader said in a text message, noting that the five-year paper’s rate is now eight basis points up from its Monday close.

The Treasury plans to auction off P120 billion worth of Treasury bills and another P120 billion in T-bonds in the January to March period.

The total amount the government intends to borrow from the local market is higher than the P200 billion it offered in the last quarter of 2017. — K.A.N. Vidal

New POPI chief focuses on Tutuban Center upgrade

By Arra B. Francia, Reporter

THE HEAD of the Ayala Malls Group has been elected as the new president and chief executive officer of Prime Orion Philippines, Inc. (POPI), the owner and developer of Tutuban Center in Divisoria.

In a disclosure to the stock exchange on Tuesday, POPI said Maria Rowena M. Tomeldan has been elected to the company’s top post, replacing Jose Emmanuel H. Jalandoni. POPI cited “organizational movement” as reason for Mr. Jalandoni’s cessation from the position.

“The focus of the company is still improving Tutuban Center. We’re still at this point wherein we’re improving operations… On the existing buildings, improving amenities, bringing in new features, that’s the main focus. It’s operating the (Tutuban) Center better,” Ms. Tomeldan told BusinessWorld in a phone interview when asked about plans for POPI.

Ayala Land, Inc. (ALI) currently has a 55.2% stake in POPI. The property giant’s investments in POPI has allowed the company to redevelop the Tutuban Center in Divisoria Tutuban Complex, which has a gross leasable area of 60,000 square meters sitting on a 20-hectare property. POPI earlier said that it plans to double its leasable area and convert the property into a mixed-use development.

“There’s been a marked improvement in Tutuban in what they have to offer to customers, you’ll see that in terms of security, facilities, there’s a marked improvement, and we will continue to do that,” Ms. Tomeldan said.

Asked whether the company will convert the retail space similar to what it is doing in Ayala Malls, Ms. Tomeldan answered in the negative, noting that the focus will be on improving the center’s existing features.

“We operate as a wholesale and retail center, given its very strategic location,” the POPI executive said.

POPI swung to profitability in the first nine months of 2017, recording a net income attributable to the parent of P91.6 million, against an attributable loss of P394.3 million in the same period a year ago. The company’s revenues, meanwhile, dropped 32% during the same period to P452 million.

Shares in POPI added 31 centavos or 10.13% to P3.37 apiece at the close of the Philippine Stock Exchange on Tuesday.

SEC cautions public against investing in Unitynet

THE Securities and Exchange Commission (SEC) has advised the public against investing in Unitynet Corp., which has not secured the necessary license to solicit any form of investment.

In an advisory posted on its Web site last week, the SEC said it has received reports that Unitynet has been enticing people to invest P2,990 in the company in exchange for access to a system that will guide them on how to conduct business better.

The country’s corporate regulator clarified that Unitynet does not have the authority to engage the public into any form of investment scheme. While Unitynet has a primary registration as a corporation with the SEC, it does not have a secondary license that allows it to offer, solicit, sell, or distribute any investment or securities.

Further, the investment products sold by the company must also be registered with the SEC, as per the Securities Regulation Code.

“In view thereof, the public is hereby advised to exercise caution before investing in these kinds of activities and to take the necessary precaution in dealing with Unitynet Corp. or its representatives,” the SEC said.

Unitynet allegedly gives investors access to the Ascending Profit System (APS) for an investment of P2,990. Originally priced at P70,000, this system contains items such as the 10 Steps Training Kit and One-on-One Coaching.

Through the APS, Unitynet will train investors on how to recruit or sponsor more downlines into their network marketing business, how to sell products online effectively, and how to promote their traditional businesses.

The SEC said that Unitynet tells prospective investors that they can earn as much as P11,000 for the investment, provided that they join the company immediately as there are limited slots. A member of Unitynet will also earn P1,000 for every person he refers into the system.

The methods of recruitment are primarily done online through a member’s social media account or Web site, where members are told to upload videos with catchy titles such as “Gusto mo bang kumita ng extrang P10,000?”

The SEC warned those who act as salesmen, brokers, dealers, or agents of Unitynet may be held criminally liable as per Section 28 of the SRC, in addition to a fine of up to P5 million or a penalty of 21 years in prison.

The commission may also sanction those who simply invite or recruit people into Unitynet.

The SEC added that any information relating to Unitynet should be immediately reported to its Enforcement and Investor Protection Department. — Arra B. Francia

Price of luxury condos in BGC skyrockets to all-time high — report

PRICES of high-end residential condominiums in key business districts soared to all-time highs last year, with units in Bonifacio Global City commanding as much as P300,000 per square meter (sq.m.), according to a property consultant.

Leechiu Property Consultants (LPC) said luxury condominium units in BGC start at P159,125 per sq.m. and go for as much as P302,588 per sq.m.

Residential units in Makati City have the second highest rates, ranging between P164,600 to P294,827 per sq.m.

“There’s so much liquidity in the market that it’s pushing the prices of these properties,” LPC Chief Executive Officer David Leechiu said in a press briefing in Makati on Monday.

LPC cited some high-end condominiums that have appreciated in value since their launch. Ayala Land, Inc.’s 12-hectare development called One Serendra in BGC, for instance, has doubled its value to P220,000 per sq.m. from P108,000 per sq.m. when it was unveiled in 2008.

Arthaland Corp.’s Arya Residences, also in BGC, is now valued at P220,000 per sq.m. from just P83,000 when it was launched in 2009.

Mr. Leechiu noted the surge in prices may also be attributed to the number of foreign investors who came into the market last year, snapping up properties mostly for investment purposes.

“Last year was the bulk of the foreign investment in the Philippines in terms of property. The mainland Chinese are buying everywhere, as far as Bulacan. They’re buying condos like crazy… The reason why they’re doing this is because Manila reminds them of Shanghai, Beijing 25 years ago,” Mr. Leechiu said.

Condominiums in the Bay Area in Pasay City have also become attractive for investors due to the growing presence of Philippine Offshore Gaming Operators (POGOs).

“Foreigners rent it out to the POGO companies,” Mr. Leechiu said, citing how POGOs with around 50,000 employees would need at least 12,500 units.

“And that’s in addition to the domestic demand,” he added.

At the same time, LPC also reported all-time high prices for luxury lots in the country.

Lots in Dasmariñas Village in Makati City, for example, are now valued at P374,000 per sq.m. With the smallest cut of around 700 sq.m. sold in the gated subdivision, the minimum spend of a buyer for a single lot could go as high as P261 million. This is 316% higher than the price of P70,000 per sq.m. in 2010.

Prices of lots in Forbes Park in Makati City, meanwhile, shot up by 275%, or P300,000 per sq.m. from just P65,000 per sq.m. six years ago.

“The supply will keep driving prices up. As the economy keeps expanding, this supply will become a smaller proportion of affordability, that’s why it will keep going up,” Mr. Leechiu said. — Arra B. Francia

Bank of Japan likely to stay on path to ‘virtual normalization’

THE Bank of Japan (BoJ) will likely continue its “virtual normalization” of monetary policy under its new leadership, former board member Takahide Kiuchi said. The appointment of reflationist Masazumi Wakatabe as a deputy governor is unlikely to change the course of policy toward additional easing, as some in the markets are speculating, Kiuchi said on Bloomberg TV on Tuesday.

The nomination of Executive Director Masayoshi Amamiya to the other deputy governor position is more important when gauging the course of monetary policy, Kiuchi said.

“The nomination of Amamiya means that the current virtual normalization policy is likely to continue,” he said, explaining that Amamiya is very influential among BoJ policy makers.

Kiuchi staunchly opposed much of Governor Haruhiko Kuroda’s easing program. His term ended last year.

The BoJ has been reducing its bond-buying since implementing its yield-curve control policy in 2016, a trend some have called de facto tapering.

One particular cut in bond purchases in January heightened speculation about policy normalization. Rising global yields have also led some observers to say the BoJ could move its yield target higher.

Prime Minister Shinzo Abe last week nominated Kuroda for another five-year term at the helm of the central bank, and Wakatabe and Amamiya as deputy governors. The nominations are subject to confirmation by parliament, but Abe’s coalition enjoys a strong majority.

It’s important to note that Abe nominated Kuroda even though the governor has failed to meet the BoJ’s 2% inflation target, Kiuchi said.

That means the government is more focused on the stability of financial markets and sustaining the economic recovery than actually achieving 2% inflation, he said.

While it’s hard for the BoJ to talk officially about an exit because 2% inflation hasn’t been achieved, and because the yen would likely strengthen as a result of such talk, the central bank will continue to look for ways to normalize policy without describing it as normalization, Kiuchi said.

One possibility is switching its yield-curve target to 5-year government bonds from 10-year bonds, Kiuchi said. The central bank could say it’s keeping the shape of the yield curve at the most stimulative for the economy without saying it’s starting to exit, he said. Such a step could take place this year, he said. — Bloomberg

Phoenix and Blackwater in all-important game today

By Michael Angelo S. Murillo
Senior Reporter

THE Phoenix Fuel Masters and Blackwater Elite, two teams that had a promising start in the ongoing PBA Philippine Cup, battle in an all-important game today at the Smart Araneta Coliseum whose result could well determine if they advance to the next round of the competition or not.

Set for 7 p.m., the Fuel Masters (4-5) and Elite (4-6) shoot for the key win in their main game encounter to boost their chances of booking a place in the quarterfinals of the season-opening tournament of the Philippine Basketball Association (PBA) even if they could well end up in seventh or eighth place and having to overcome a twice-to-win disadvantage in the quarters.

Phoenix, which won two of its first three games in the tournament, is coming off a loss its last game against the Meralco Bolts, 92-90, a match that could have helped it a lot had it come away with a victory.

While they fought resilient against the Bolts to pad their cause, the Fuel Masters just could not complete the task in the end as Meralco hung on tight to claim the win.

Veteran Willy Wilson led Phoenix with 24 points while sophomore Matthew Wright added 16 points before fouling out in the loss.

Despite falling short last time around, Fuel Masters coach Louie Alas is still bullish of their chances of advancing to the quarterfinals, saying their “fate is still in their hands.”

“We’re still in contention for a quarterfinal spot despite the loss [to Meralco]. The good thing about this is that our fate is still in our hands. The top six may be out of our reach at this point but we intend to see our goal of reaching the quarterfinals through,” said Mr. Alas.

Unfortunately for Phoenix it has to play today’s game sans Mr. Wright, who is with Gilas Pilipinas as it takes on Australia in a FIBA World Cup Qualifier away match on Thursday.

LOSE AND OUT
For its part, Blackwater is in a more precarious situation heading into today’s game as a loss translates to automatic exit.

Playing their last game in their elimination assignment, the Elite, who also won two of their first three games before hitting a major road block midway into the tournament, are in a must-win situation after dropping their previous game against the NLEX Road Warriors, 93-90, that pushed them on the brink of elimination.

Blackwater was pretty much in control of the contest against NLEX until the latter made a furious run in the payoff quarter to propel itself to the victory and deal a huge blow to the Elite’s playoff hopes.

Michael DiGregorio led Blackwater with 16 points with JP Erram adding 14 and Allein Maliksi 13.

Like Phoenix, Blackwater will be playing with one less key stalwart as Mr. Maliksi is also with Gilas Pilipinas.

Meanwhile, playing in the opener at 4:30 p.m. are the GlobalPort Batang Pier (4-5) and Kia Picanto (1-8).

The Batang Pier is gunning for win number five in their penultimate elimination round assignment that would allow them to remain in the hunt for a spot in the quarterfinals.

Kia, for its part, is already eliminated in the race and is out to have a better finish in the tournament.

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