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Maynilad Water partners with Waze mobile app

MAYNILAD Water Services, Inc. has partnered with Waze, the app that guides riders on how best to avoid congested roads, to mitigate the impact of the west zone water concessionaire’s roadworks on traffic flow in Metro Manila.
“We strive to alleviate the effect of our roadworks activities on the motoring public. Through this partnership with Waze, we can empower drivers by providing real-time information about Maynilad roadworks that will allow them to better plan their daily routes,” said Maynilad Chief Executive and President Ramoncito S. Fernandez in a statement.
Through Waze’s “Connected Citizens Program (CCP),” Maynilad will be uploading real-time data regarding its road-digging activities, including projects that may require road closures, to the Waze Map.
Maynilad said the initiative is expected to promote better road safety and traffic flow, as drivers who use the Waze app can avoid possible traffic buildup near Maynilad worksites.
The Waze app is powered by the world’s largest community of drivers. It provides free and real-time crowd-sourced traffic and navigation advise. The Waze Map strengthens with every data point contributed across its vast community. Government and private organizations can directly upload traffic-related information on the map through Waze’s CCP. — Victor V. Saulon

Shares may fall as volumes thin in shortened week

By Arra B. Francia
Reporter
SHARES may continue falling in the week ahead as investors stay on the sidelines ahead of the holiday break.
The bellwether Philippine Stock Exchange index (PSEi) jumped 1.39% or 97.49 points on Friday, managing to end on a positive note amid the sell-off that wreaked havoc on most international markets last week.
The main index’s weekly loss, however, still reached 3.04%, weighed down by the financial and property sectors which dropped 3% and 2.3%, respectively. Daily net foreign outflows averaged at P480 million, higher by 22% from the previous week on the back of a P4.9-billion average daily turnover.
“Despite the losses, the index managed to close above the key-support level at 7,000 after falling beneath it several times this week. Our market also performed better than our Asian peers…. The market’s performance this week is clearly an indication that we are not out of the woods yet.” Eagle Equities, Inc. Research Head Christopher John Mangun said in a weekly market report.
Analysts expect little activity in the market this week as financial markets will be closed on Thursday and Friday for All Saints’ Day and All Souls’ Day, respectively.
“With only three trading days next week, it is to be expected that we will see little action in the market as investors may stay on (the) sidelines and start the holidays before everybody else. By now it is certain that the index will end the month of October down two to three percent unless we see some window dressing,” Mr. Mangun said.
Online brokerage 2TradeAsia.com noted the same, saying it expects thinner participation unless “significant catalysts come up to re-entice investible cash into equities.”
The brokerage also warned about more volatility in global markets, which the PSEi has been mirroring for most of last week. Major US indices were down last week, with the Dow Jones Industrial Average losing 3% for the week. The S&P 500 index also fell 3.9%, while the Nasdaq Composite index shed 3.8%.
“Expect to see volatility in global equities, as fund managers run clueless in weighing the odds between ‘fear’ and ‘opportunities.’ US authorities are on a delicate balance in ensuring internal stability within their political sphere, while being in the midst of a gray zone on trade relations with peers,” 2TradeAsia.com said in a weekly market note.
On a technical note, Eagle Equities’ Mr. Mangun said the PSEi could find a bottom soon.
“Historically, October — December has always been a turning point for our market. In the last 18 years, buying the index between the fourth quarter and closing positions by the end of the first quarter of the following year has showed the least risk,” he explained.
2TradeAsia.com placed the index’s immediate support from 6,800 to 7,000, with resistance from 7,100 to 7,200.

Yields on gov’t debt drop

YIELDS ON government securities declined last week following a correction, even amid a more hawkish central bank.
Local debt yields, which move opposite to prices, fell 15.91 basis points (bp) on the average week on week, data from the Philippine Dealing & Exchange Corp. as of Oct. 26 showed.
“Most of the long-term…yields declined by about 30-40 bps week-on-week, the first major downward correction after reaching the highest levels in nearly a decade earlier this week and after the sharp increase in yields since Sept. 2018,” Michael L. Ricafort, economist at the Rizal Commercial Banking Corp. (RCBC).
“However, this was offset by the latest signal from the Bangko Sentral ng Pilipinas (BSP) about the possibility of a modest hike in policy rates for the rest of 2018. [This was] more hawkish compared to earlier hints by some BSP officials about a possible pause in policy rate hikes, thereby curbing any further declines in yields,” added Mr. Ricafort.
For Security Bank Corp. First Vice-President and Head of Institutional Sales Carlyn Therese X. Dulay: “Yields moved down by 50-85 bps week on week after traders felt rates were toppish following a 300-bp move year-on-year.”
“The rejection of the [seven-year bond], which boosted risk appetite from end users, dealers and offshore players, was also a factor in lower rates,” she added.
Despite tenders reaching P24.456 billion versus its P15-billion offer, the Bureau of the Treasury rejected all bids during the auction of the reissued seven-year bonds last week. Investors asked for higher rates which averaged 8.284% compared to the bond’s 5.75% coupon rate and 7.085% average yield fetched when the papers were last sold in September.
Moreover, Ms. Dulay said the maturity of some P11-billion in government debt last week “also called for the reallocation of cash which spurred yields to move downward even further.”
At the secondary market on Friday, the yield on the 91-day Treasury bill (T-bill) fell by 19.06 bps from the previous week to end at 4.6433%. The 182- and 364-day T-bills, meanwhile, saw their rates go up by 53.13 bps and 3.61 bps, respectively, to finish at 6.1385% and 6.2950%.
At the belly of the curve, the two-, three-, four-, and five-year Treasury bonds (T-bond) saw their rates drop by 51.49 bps, 42.59 bps, 40.52 bps and 43.20 bps, respectively, to end with 6.7815%, 6.9874%, 7.9019% and 8.1519%. On the other hand, seven-year T-bond rose 42.62 bps to fetch 8.3604%.
At the long end, the 10- and 20-year bonds saw their yields decrease by 38.44 bps and 23.18 bps, respectively, to 7.6685% and 8.8228%.
Moving forward, Security Bank’ Ms. Dulay expects the market’s correction to continue this week.
“We still see yields moving down a bit more assuming Treasury bill auction yields are within market expectations,” she said.
RCBC’s Mr. Ricafort shared the same view, noting that the downward correction for long-term interest rates might extend to this week if signals of easing inflation remain.
“Lower global crude oil prices, lower food/rice prices, and stronger peso exchange rate could lead to lower inflation and inflation expectations and could fundamentally support the downward correction in local interest rates/PDST-R2 yields as well,” he said. — Lourdes O. Pilar

SMARTSeas PH Project aims to arrest marine resource degradation

DAVAO CITY — Small-scale fishermen, whose livelihoods depend mainly on municipal waters, require expanded fishing territory due to the continued degradation of the marine habitat, according to Vincent V. Hilomen, project manager of SMARTSeas PH.
SMARTSeas PH — Strengthening Marine Protected Areas to Conserve Marine Key Biodiversity Areas in the Philippines — aims to help arrest the degradation through better management at the local level among officials and people’s organizations, ensuring financial sustainability, and establishing enabling policies.
In an interview, Mr. Hilomen said based on studies assessing Philippine coral reefs, only 5% of the country’s marine resources are in “excellent condition.”
“What this tells us is simple. We have not arrested the factors that degrade our reefs. This explains why our municipal fishers have to roam larger areas in search of fish compared with a decade or so before,” he said.
“Our problems with our marine resources have been there a long time, and considering that the Philippines is an archipelago, the second-largest worldwide, the degraded portion is really large,” he added, speaking in English and Filipino.
Mr. Hilomen cited the estimate of National Scientist Angel C. Alcala, a marine science expert, that when reefs are in excellent condition, fisherfolk can yield as high as 20 metric tons of fishery products per square kilometer per year.
“Now imagine if all three million hectares of reefs yield this much,” he said.
The SMARTSeas PH Project will be piloted in the Verde Island Passage; Palawan South; Cebu Canyon Strait; Davao Gulf; Lanuza Bay; and the Tañon Strait.
“There is uniqueness in each area. The Verde Island Passage (between Mindoro and Batangas) was chosen as the center of biodiversity; Palawan was chosen as an area that has a lot of mangroves; Lanuza (in Surigao del Sur) is popular for its ridge to reef; Davao Gulf ‘s governance is a perfect example for all the Philippines.
In addition, the organization is looking at the Tañon Strait between the islands of Negros and Cebu as the only NIPAS (National Integrated Protected Areas System) site, Mr. Hilomen said.
A three-day conference, “Partners’ Forum: People and the Sea” held recently in Davao City, was attended by more than 400 national and local officials and marine conservation leaders for an exchange on lessons and strategies at the sites.
“The main goal of this is for us to have management bodies that are competent,” Mr. Hilomen said.
SMARTSeas PH is led by the Department of Environment and Natural Resources-Biodiversity Management Bureau, and supported by the United Nations Development Programme and Global Environment Facility.
The forum was co-organized by the Bureau of Fisheries and Aquatic Resources (BFAR) under the Department of Agriculture. — Maya M. Padillo

Look good, feel good, do good

BEAUTY is nice, sure, but if you go with the credo of Neal’s Yard Remedies, what can really brighten up your face is a dose of tranquility and doing good in this world.
The UK-based company recently released its Frankincense Intense Lift Eye Cream, which promises to make the eye area firmer and brighter and “more radiant” in as little as four weeks, while use of the product for six weeks promises to reduce wrinkles, dark circles, and eye bags. This conclusion came after clinical consumer trials on 100 women over a six-week period.
Gloria Yuan, International Trainer for Neal’s Yard, pointed to chunks of frankincense resin during the launch earlier this month at the Grand Hyatt Manila. Frankincense resin, extracted from trees of the Burseraceae family, have been used since ancient times for a multitude of purposes. Notably, it has been used as an incense for sacred rituals (its name comes from the Old French for “high quality incense”). It was one of the three legendary gifts given to Jesus Christ when he was born, along with gold and myrrh. In aromatherapy, it is believed to simultaneously calm and alert the mind, bringing one’s consciousness to a higher state — as fits its purpose in masses and other spiritual activities.
As for its skincare properties, Ms. Yuan pointed out that normally, essential oils extracted from the resin are used in beauty products, but an innovation from Neal’s Yard also extracted compounds from the resin itself. Polyphenols and other antioxidants present in the resin are used in the Lift Eye Cream, with the effect of reducing skin inflammation and helping reduce the oxidation process.
Ms. Yuan said that the company works under the tenets of “do good, feel good, and look good.” We’ve covered looking good, but the company does good in the world by collecting its frankincence resin fairly from sources in the Middle East, as well as being certified organic (its face cream indicates that it’s 75% organic), so no harmful waste products are pumped out to the surrounding environment. Plus, very little potentially harmful chemicals go into your skin.
And as for feeling good? If fair sourcing and helping the environment in your own little way hasn’t helped, maybe this will. We asked Ms. Yuan if the aromatherapy benefits of tranquility from inhaling frankincense are still present in the cream, and she said, “Of course! Definitely.” She advised that as you rub the cream on your face, take a minute to cup your hands to your face to take deep breaths.
Just maybe, a more peaceful you will look back from the mirror. — Joseph L. Garcia

How PSEi member stocks performed — October 26, 2018

Here’s a quick glance at how PSEi stocks fared on Friday, October 26, 2018.
psei102918
Philippine Stock Exchange’s most active stocks by value turnover — October 26, 2018.
pseiactive102918

Trade dep’t makes pitch for TRABAHO bill incentive retention

THE DEPARTMENT of Trade and Industry (DTI) is hoping to reach a compromise with the Department of Finance (DoF) on provisions of the Tax Reform for Attracting Better and High-quality Opportunities (TRABAHO) Bill, which seeks to rationalize investment incentives.
A document obtained by reporters last week represented the minutes of an Oct. 18 meeting of the DTI’s Board of Investments (BoI) with the DoF.
One of the adjustments DTI offered for the proposed legislation was lengthening the domestic input expense incentive to five years after the expiry of income tax holiday, as a sweetener for exporters sourcing their raw materials locally.
“Currently, many of our industries are performing low-value, back-end processes in the value chain (for instance, legacy products and activities like assembly, process, test in electronics) and to be able to upgrade and move up in the value chain, we need to grow our domestic supply of raw materials, parts, and components similar to what successful manufacturing countries like Thailand and China, and now Vietnam (which has already overtaken the Philippines) have done,” it said.
The minutes indicate that a lack of raw materials and intermediate parts and components represents “a major gap” for most industries and incentives “have an important part to play in addressing the issue of missing markets.”
“Without addressing the market failure, the Philippines might not be able to grow and develop new and high value-added exports which put the country at risk of incurring higher trade deficits in the near future,” it added.
According to the Philippine Statistics Authority, the trade deficit in the first eight months widened to $26 billion from $15.79 billion a year earlier.
This surpasses 2016’s full-year trade deficit of $24.521 billion and is approaching 2017’s $29.608 billion.
Other tweaks sought by the DTI to strengthen the value chain include the maintenance of value-added zero-rating for indirect and constructive exporters regardless of location; the reduction of the threshold to exempt an exporter from VAT to 70% exports from the proposed 90%; and the exemption of ecozone-registered projects from import duties similar to the arrangements at freeports.
Other incentive-focused proposals include stretching the income tax holiday to five years from the current proposal of three years.
“This is to make our income tax-based incentives competitive with other ASEAN countries,” it said.
It also suggested deleting the references on research and development; deduction on additional labor expense; and domestic input expenses.
Asked to verify the contents of the document, Trade Secretary Ramon M. Lopez said the points are “not exactly” what was discussed.
However, the official confirmed that there are negotiations on the transition period of existing locators into the new regime and “performance-based incentive or support,” among others.
Sought for specifics, Mr. Lopez said in a mobile message: “Let’s keep it broad bec [the points are] under negotiation.”
He added that the negotiations with the DoF hope to yield a “common position” when both departments present to the Senate.
The minutes of the meeting between the DTI and the DoF also indicate that the former sought to retain the arrangement for direct remittances to local government units (LGUs) of corporate income tax to maintain the “one stop” nature of ecozones, whose locators value the relative lack of dealings with other government agencies. However, there was no mention of the exact share that LGUs should be given from the CIT.
At present, 2% of the 5% gross income earned (GIE) tax incentive enjoyed by locators of the Philippine Economic Zone Authority is channeled to LGUs.
The BoI also sought the removal of the provision that gives the DoF the sole power to interpret the provision of the proposed bill.
The DTI is also pushing for registered enterprises to be entitled to income tax holidays as agreed under their certificates of registration, including those under the GIE regime.
The DTI also wants to give locators an option to be governed by the provisions of the proposed law once it takes effect in two years, “provided it is in good standing and qualified for registration thereunder.”
The options will accommodate foreign investors who signed up under the terms of bilateral investment treaties.
“Limiting and/or reducing the granted incentives under their Certificates of Registration may constitute a contractual breach that may be elevated as a treaty breach under the aforecited protection provisions,” it added.
DIVERSIFYING EXPORTS
The DTI also noted how exports “have largely been concentrated” in electronic products, machinery and transport equipment, and other electronics. These three items accounted for 65% of outbound shipments last year.
“To reduce the trade imbalance, we need to expand and diversify our exports by growing and developing our materials, intermediate parts and supplies sector; we need to prioritize the manufacture of selected strategic parts that are heavily imported as well as link manufacturers operating in economic zones with SMEs (small and medium enterprises) and large companies in the domestic economy,” the report said, noting this linkage is a priority in its inclusive innovation industrial strategy.
“The success of the industry will depend on a more consistent implementation of an effective incentive mechanism,” it added. — Janina C. Lim

DoF backs plan to tap BNPP to lower power costs

THE FINANCE department is backing a plan to study the feasibility of tapping nuclear energy as a means of lowering electricity costs.
“I want to encourage [Energy Secretary Alfonso G.] Cusi to really study it well and we will support him as much as we can if its safe and if it makes economic sense,” Finance Secretary Carlos G. Dominguez III told reporters last week.
“That is something that we should consider if we want to bring down power rates. It might be a good investment (because some facilities are) already there,” he added.
Mr. Dominguez said that the government has settled all debt taken on to construct the Bataan Nuclear Power Plant (BNPP).
The plant was built in 1976 by President Ferdinand E. Marcos at a cost of over $2 billion.
Construction was halted in 1986 after Mr. Marcos was ousted.
Mr. Dominguez said plants similar to BNPP have been safely operating for the past 40 years.
“It is probably the asset that we will use to lower the cost of electricity,” Mr. Dominguez said.
“We have to have all the safety measures, but I think it’s something that we should really consider,” he added.
The DoE completed the draft national policy on nuclear energy last year.
Mr. Dominguez noted that the government is currently in the process of rehabilitating the Agus-Pulangi Hydroelectric Power complex to also lower the cost of electricity, ahead of the expected depletion of the Malampaya gas field.
“We are also investing quite a bit of money, probably close to half a billion dollars, in refurbishing the Agus system. That currently is running at only 40% capacity. We will probably bring that up to something like 88.5% capacity. That should help lower the cost of electricity,” he said.
The project, which will be financed by China, is expected to begin construction in 2020, and completed by 2022. — Elijah Joseph C. Tubayan

US pork industry backs free trade deal with PHL

THE US National Pork Producers Council (NPPC) said that it hopes Washington will conclude a free trade agreement (FTA) with the Philippines, which it views as a priority market.
In a statement, NPPC President Jim Heimerl said: “The Philippines is a large pork-consuming nation, with a fast-growing population and a burgeoning middle class. It also has some of the highest food prices of any Southeast Asian nation and would benefit from a free trade agreement.”
The NPCC said that US shipped nearly $100 million worth of pork to the Philippines in 2017, with room to grow under an FTA.
It also noted that pork is one the most competitive US export products.
NPCC said that it welcomes progress in addressing issues under the bilateral Trade and Investment Framework Agreement (TIFA) with the Philippines, and is hoping that the progress on such matters would move the US to initiate FTA negotiations with the Philippines.
“We thank the Trump administration for the steps it is taking to expand US pork access to many international markets including the Philippines,” Mr. Heimerl said.
The US Department of Agriculture (USDA) earlier said that the Philippines is expected to import 285,000 metric tons (MT) of pork this year, up 18% from the 241,000 MT last year.
According to the Philippine Statistics Authority, the Philippines imported 260,720 MT in 2017, up 16.52% from a year earlier.
The Philippines was reported to have begun FTA negotiations with the US in September 2017 with the first round of talks focused on labor, intellectual property and agriculture. — Reicelene Joy N. Ignacio

BIR reduces reporting workload for district offices

THE BUREAU of Internal Revenue (BIR) ordered its district offices to dispense with the monthly reporting of “irrelevant” information concerning withholding taxes, and focus on attaining collection targets.
Revenue Memorandum Order (RMO) 47-2018 dated Oct. 10 and made public on Oct. 26, discontinued the Monthly Report on Registration and Remittance of Withholding Taxes, and Accomplishment Report on Pre-Audited Withholding Tax Returns.
“The preparation of the Monthly Report on Registration and Remittance of Withholding Taxes (Form No. W7) and the Accomplishment Report on Pre-Audited Withholding Tax Returns (WTRs) (BIR Form No. W8) by all concerned Revenue District Offices, including the concerned revenue offices under the Large Taxpayers Service, and its subsequent submission to the Miscellaneous Operations Monitoring Division (formerly Withholding Tax Division) of the Collection Service is hereby terminated,” it said.
“In case of need for information that are otherwise available in the said reports, the concerned Office under the Information Systems Group of this Bureau shall extract the desired information, in so far as available in the Integrated Tax System or other electronic systems or facilities of this Bureau, in coordination with the Miscellaneous Operations Monitoring Division,” it added.
The BIR said that the level of compliance with the said reports was “notably low,” amid the lack of available manpower as there was a need to pay “immediate attention to high-priority activities.”
The BIR said that despite measures to streamline processes, its personnel are still required to perform such manual procedures due to existing Revenue Regulations.
“After reevaluation of the governing revenue issuances and the availability of information in the Bureau’s data warehouse, these reports may be considered irrelevant and can therefore be dispensed with in order that the concerned revenue personnel of the RDOs can focus their efforts towards the attainment of their tax collection targets,” it said.
The BIR collected P1.44 trillion in the nine months to September, up 11% from a year earlier, but 2% below its P1.47-trillion target, according to the Bureau of the Treasury.
The latest collection total is equivalent to 70.62% of the original full-year target of P2.039 trillion.
The Development Budget Coordination Committee (DBCC) on Oct. 16 lowered the overall revenue target by P26 billion to P2.820 trillion due to the deferred implementation of the electronic receipts and fuel marking program under the Tax Reform for Acceleration and Inclusion law. The BIR has yet to disclose its new target reflecting these adjustments. — Elijah Joseph C. Tubayan

Solar dev’t agency bills filed in House

THREE new bills seeking to create a solar energy development agency were filed at the House of Representatives.
House Bills no. 8311 and 8326 both proposed to establish a Solar Energy Development Center as an agency of the Department of Energy (DoE).
The bills, written by Manila-3rd district Rep. John Marvin C. Nieto and Camarines Sur-2nd district Rep. Luis Raymund F. Villafuerte, Jr. respectively, provided that the Center shall be led by a 6-member Board of Directors.
The Board, as proposed, will be chaired by the President, who is authorized to appoint two members. The three other members will be the secretaries of the DoE, Department of Environment and Natural Resources (DENR) and the Department of Science and Technology (DoST).
House Bill 8337, written by Laguna-2nd district Rep. Joaquin M. Chipeco, Jr., seeks to establish a Solar Energy Development Authority to be headed by a five-member Board.
In this version, the Board of Directors will be led by a chairman, two members and two ex-officio members from the DoST and the DENR.
In his explanatory note, Mr. Chipeco noted that in the Philippines the private sector is active in solar energy development.
“In the Philippines, it appears that the private sector is taking the lead in developing and promoting the use of solar energy as an alternative to fossil and other ‘dirty’ fuels,” Mr. Chipeco said.
“There is therefore a need to come up with a regulatory regime and coherent policies and strategies with respect to this relatively new economic and scientific development.”
The bills propose to authorize the solar agency to conduct research into alternative energy sources.
Aside from the three House Bills, Congress is also considering Senate Bill 497, written by Senator Antonio F. Trillanes IV. — Charmaine A. Tadalan

PMO starts liquidating assets of Bicol dev’t agency

THE PRIVATIZATION Management Office (PMO) has begun the liquidation process for the Partido Development Administration (PDA), the Department of Finance (DoF) said in a statement.
The DoF said that Finance Secretary Carlos G. Dominguez III directed the PMO to “set in motion the process of disposing of the assets.”
Mr. Dominguez also told the PMO to “ensure the disposition of assets of the PDA pushes through.”
The Finance department said that the move was “in line with the Duterte administration’s goal of ridding Government of its non-performing assets (NPAs).”
Proceeds of the liquidation will also be used to settle PDA’s outstanding liabilities.
The Governance Commission for Government-Owned and Controlled Corporations recommended the abolition of the PDA in 2017 as it was determined to have overlapping functions with another government agency, and that it did not serve its objectives.
The PDA was created in 1994 with the goal of accelerating the development of 10 municipalities in the fourth district of Camarines Sur.
The Office of the President issued a memorandum order last month saying that “the PDA and its various operating units have been consistently operating at a loss for several years, which necessitates continuous subsidy from the National Government.”
Malacañang said that “despite the operation of the PDA for almost twenty (20) years, the 4th District of the Province of Camarines Sur has the highest poverty incidence level compared to other districts of the Province, and has a higher poverty incidence compared to the average for the entire Bicol Region.”
Mr. Dominguez also asked the PMO to speed up the liquidation of the Technology Resource Center (TRC).
The TRC was ordered abolished in 2014 under the previous administration amid alleged links to the Priority Development Assistance Fund (PDAF) scandal.
Some functions of the TRC were transferred to the Department of Science and Technology in 2015. — Elijah Joseph C. Tubayan

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