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Russian company considering Bataan pipe-coatings facility

MOSCOW-based BT SVAP LLC is interested in building a pipe-coatings facility in Bataan, the Department of Industry (DTI) said.

The DTI said in a statement that the agency and the Board of Investments (BOI) met with representatives from BT SVAP LLC on Dec. 20 to discuss investment plans particularly on a pipe-coating facility in the Philippines.

DTI said that the company is looking at building in Mariveles, Bataan.

“Igor Shaporin, BT SVAP LLC’s Chairman of the Board of Directors, expressed the company’s intention to put up a facility in Mariveles… where accessibility to sea and land transportation is easily available,” the DTI said in a statement.

The company’s intended location “would require a big land area.”

BT SVAP is an engineering, industrial and civil construction company, and also produces anti-corrosion polymer coatings for pipes and pipeline components.

“This could be a pioneer technology in the country. Apart from investments, sharing of technological know-how, and employment generation, this will also open opportunities for our domestic market and export industry,” DTI Secretary Ramon M. Lopez said in a statement. — Patrizia Paola C. Marcelo

Davao’s public bus project could be opened to international bidders

DAVAO CITY — The High Priority Bus System (HPBS) project here could be opened to international bidders, with about 1,000 units required for the mass transport system, according to a city official.

City Planning and Development Office head Ivan Chin Cortez told the media that under the comprehensive public transport plan that is being developed, these buses are expected to replace most of the more than 7,000 public utility jeepneys plying the city.

“These mini buses are the same buses you see abroad,” Mr. Cortez said, noting that the network would include a main line, intermediate, and local feeders.

The HPBS project study is being undertaken by the city government with the Asian Development Bank (ADB).

The ADB started its study on the HPBS in mid-2016, with the initial findings submitted to the city government in April.

“There are already routes that have workable plans,” Mayor Sara Duterte-Carpio said in September when she announced the bus plan.

Mr. Cortez said the city’s Transportation and Traffic Planning Committee that is working with the ADB is currently in the evaluation and assessment stage for the HPBS loan package.

“Perhaps we will decide the loan package by August next year,” he said.

Mr. Cortez said the HPBS and the overall local transport plan would be in line with the Omnibus Franchising Guidelines (OFG) released by the Department of Transportation.

“The main meat of the OFG is to modernize,” Mr. Cortez said.

The target date of fully implementing the HPBS is 2021, while an initial number of buses could be deployed by 2020.

Mr. Cortez said a modern and efficient public transport system is expected to reduce the estimated 80,000 private vehicles currently plying the city’s roads.

“That is what is happening in other countries (with) a very effective (public) transport system. The very reason why we have a lot of private cars plying the streets is because they do not want to experience the inconvenience of a PUJ,” he said. — Maya M. Padillo

Aquino, others charged over Dengvaxia

GABRIELA Women’s Party filed on Friday, Dec. 22, a complaint at the Office of the Ombudsman against former president Benigno S.C. Aquino III and other officials over the controversial Dengvaxia vaccine.

In the complaint filed by Gabriela Reps. Emmi A. De Jesus and Arlene D. Brosas, secretary-general Joan May E. Salvador, and the parents of children inoculated with the dengue vaccine, they accused Mr. Aquino, former executive secretary Paquito N. Ochoa, Jr. former budget secretary Florencio B. Abad, former health secretary Janette L. Garin, and officials of pharmaceutical company Sanofi Pasteur, among others, of violation of Section 3 of the Republic Act (RA) 3019 or the Anti-Graft and Corrupt Practices Act and RA 9184 or the Government Procurement Reform Act.

“This is practically a whole generation ng mga bata na buong buhay nila ay mangangamba kung ano ang magiging adverse effect nitong ginawa na parang guinea pigs ‘yung ating mga kabataan,” Ms. Salvador told reporters. (This is practically a whole generation of children who have to deal with dread their whole lives as to the possible adverse effect of being made guinea pigs.)

“This is not only a health issue; this is a national issue,” she added. “Naghahabol tayo na mapanagot sa mga kasong ito ang mga kinauukulan at mga responsible at mga involved na officials because public office is a public trust. At bilang mga taxpayer, halimbawa po kami, gusto po nating makamtan ang accountability ng ating mga public officials.” (We are going after those responsible and the officials involved because public office is a public trust. And as taxpayers, like us, we want accountability for our public officials.)

The complainants are also looking into adding some members of the present administration under President Rodrigo R. Duterte as respondents in the case for continuing with the vaccination.

Gabriela also filed for a writ of continuing mandamus before the Supreme Court to call for the government’s continued support for the affected children.

Also named respondents in their petition Health Secretary Francisco T. Duque III; Mr. Lyndon L. Lee Suy, program director of the National Center for Disease Prevention and Control of the Department of Health; Nela Charade G. Puno, director-general of the Food and Drug Administration; Education Secretary Leonor M. Briones; and Catalino S. Cuy, officer-in-charge of the Department of Interior and Local Government.

One of the parents present during the filing said she hopes the government would at least extend financial help to the families of the affected children.

She said she has spent about P1,600 when she had her 13-year-old daughter checked after experiencing high fever and rashes. Her daughter was thrice inoculated with Dengvaxia. She said she blames Sanofi for what happened to her daughter. — Minde Nyl R. Dela Cruz

Peso gains on remittance flows

THE peso ended the week stronger against the dollar lifted by remittances that also tempered the dollar’s earlier gains from news of strong US gross domestic product data.

The peso ended the session at P50.14 against the dollar, gaining ten centavos versus Thursday’s P50.24-per-dollar finish.

“Seasonally, we expect our OFWs (overseas Filipino workers) to send lots and lots of dollars,” Ruben Carlo O. Asuncion, chief economist of UnionBank of the Philippines said in an e-mail.

“We saw foreign currencies pouring in ahead of the holidays, so that’s fuelling the stronger peso this week” a trader added.

The US Department of Commerce said the US economy grew by 3.2% in the July to September period, its fastest pace in more than two years.

“The peso continued its appreciation despite stronger US third quarter gross domestic product (GDP) growth rate reading relative to that of the previous quarter,” a trader said.

The peso opened stronger at P50.18 versus the dollar, while its intraday low was P50.35. It appreciated to as much as P50.13 against the greenback.

Dollars traded slightly increased to $740.8 million on Friday from the $630.2 million traded in the previous session.

“For the past two trading days, we are seeing a little bit of volatility where there’s a little bit of demand from the onshore market. Just today, we saw as [low] as P50.35 in the morning session, yet we saw peso close at P50.14,” the trader said over the phone.

Shares end week in the green on “window dressing”

STOCKS rose for a second straight day on Friday in a session analysts said was characterized by “window dressing” as fund managers rebalance their portfolio on the last trading days of 2017.

The Philippine Stock Exchange Index (PSEi) ended at 8,432.31, higher by 54.03 points or 0.65%, while the all-shares index ended at 4,921.41, higher by 28.61 points or 0.59%.

“The PSEi ended positive today after Sy companies such as SM and BDO, which rose by 1.34% and 2.33% respectively, lifted the index probably due to window dressing or portfolio rebalancing as we have only a few days of trading left for 2017,” Jervin S. de Celis, equities trader at Timson Securities, Inc. said in a text message.

“The market has also been trading in a range for quite some time and may retest its all time high of 8,605.15 before year end,” he added. “Also, investors are slightly staying on the sidelines due to the long holiday vacation and lack of fresh leads in the local scene.”

Portfolio managers use “window dressing”, or that strategy where an underperforming stock or those with losses are dumped and replaced with high-flying stocks, to flatter the results of their books before presenting to clients or shareholders.

While there was positive sentiment given the approval of a key tax reform in the Philippines, as well as the tax reform package in the United States, reaction from the local financial market was muted.

“Philippine and US stocks rose on Thursday, with major indices trading near record levels, although local market action was quiet as traders look for fresh catalysts following the recent approval of the tax bill in the Philippines and in Washington,” Regina Capital Development Corp. managing director Luis A. Limlingan said in a text message.

“While the TRAIN [Tax Reform for Acceleration and Inclusion] bill has been signed by President [Rodrigo R.] Duterte, the market’s reaction to it was rather muted since many were expecting the market to at least end the year around 8,800-9,000,” Mr. de Celis said.

US markets ended positively on Thursday. S&P 500 closed at 2,684.57, higher by 0.20%; while the Dow closed at 24,782.29, higher by 0.3%.

The Nikkei ended at 22,902.76, higher by 0.16% or 36.66 points; the Hang Seng index ended at 29,578.01, higher by 0.72% or 210.95 points.

Across the sectors, all gained except industrial, which ended at 11,126.36, down by 24.98 points or 0.22%.

Financials ended at 2,158.95, higher by 18.27 points or 0.85%; holding firms at 8,588.14, higher by 79.25 points or 0.93%; services at 1,604.31, higher by 6.02 points or 0.38%; mining and oil at 11,374.96, higher by 185.12 or 1.65%; and property at 3,904.06, higher by 14.86 points or 0.38%.

Total volume traded was 839.41 million, while total value was P10.15 billion. Advancers outnumbered decliners 108 to 96, while 40 remained unchanged. — P. P. C. Marcelo

Vinta weakens into depression

STATE weather bureau Pagasa, in its online bulletin as of 5:00 p.m. of Dec. 22, said Tropical Storm Vinta has weakened into a tropical depression over the Zamboanga del Sur area as of that time.

Vinta’s center is in the vicinity of Sominot town, Zamboanga del Sur, with maximum winds of up to 60 kph near the center and gustiness of up to 90 kph.

Vinta’s forecast movement is west at 20 kph. It is expected at 435 km west southwest of Puerto Princesa, Palawan, by the next 48 hours, and outside the Philippine Area of Responsibility by Monday afternoon.

Tropical Cyclone Warning Signal (TCWS) No. 2 has been downgraded to No. 1 in Southern Negros Occidental, Southern Negros Oriental, and Siquijor in the Visayas; and, in Mindanao, Misamis Oriental, Lanao del Norte, Lanao del Sur, Misamis Occidental, the Zamboanga Peninsula, the western part of North Cotabato, and the northern part of Maguindanao. “TCWS elsewhere are now lifted,” Pagasa said.

“Residents of these areas must make appropriate actions against flooding and landslides, coordinate with their respective local disaster risk reduction and management offices, and continue monitoring for updates,” the bulletin read in part.

Meanwhile, the Department of Public Works and Highways in an advisory also on Friday said four road sections in Regions 10 (Northern Mindanao) and 13 (Caraga) have been closed to traffic due to soil collapse, flooding, fallen trees, and electrical posts:

REGION

 

ROAD SECTION

SITUATION

REGION X

 

 

 

Bukidnon 1st DEO

1.  Kapalong – Talaingon – Valencia Road, K1574+800, San Fernando, Bukidnon

 

 

Closed to traffic due to soil collapse

Bukidnon 3rd DEO

1.  Jct. S.H Aglayan – Alanib Ticala-an Road (Ticalaan – Paganan), Ticalaan, Talakag, Bukidnon

 

 

Closed to traffic due to soil collapse

Cagayan de Oro 1st DEO

1.  CDO – Airport – Bukidnon Road, K1456+000 (Bayanga) Street)

 

 

 

Closed to traffic due to fallen tree and electrical post

 

REGION XIII

 

 

 

Agusan del Sur 2nd DEO

1.  Approaching Upper Baobo BridgeNaval-Caibiran Cross Country Road, K1546+540, Brgy. Sinobong Veruela

 

 

Closed to traffic due to flooding

 

 

 

All other national roads of the affected regions are passable as of the DPWH advisory at 12:00 p.m. The department said it has deployed manpower and equipment, installed warning signs, and is conducting ongoing clearing operations. DPWH will issue further updates.

U.S. Embassy closed Dec. 25, 26

The Embassy of the United States in the Philippines and affiliated offices will be closed to the public on Monday, Dec. 25, in observance of Christmas, and Tuesday, Dec. 26, in observance of a Philippine holiday. The Embassy and affiliated offices will resume services on Wednesday, Dec. 27.

MMDA Alabang area advisory

THE Muntinlupa Local Government will close the National Highway from Susana Heights to Alabang Viaduct on Saturday, Dec. 23, from 12:00 to 6:00 p.m. to give way to the Metro Manila Film Festival Parade of Stars. Expect heavy traffic.

Big firms team up for NAIA rehab

SEVEN MAJOR COMPANIES, including some of the country’s biggest conglomerates, have formed a consortium to rehabilitate, operate and maintain Ninoy Aquino International Airport (NAIA), those listed among them said in separate disclosures on Thursday.

The companies concerned — Aboitiz Equity Ventures’ (AEV) Aboitiz InfraCapital, Inc.; Ayala Corp.’s AC Infrastructure Holdings Corp.; Filinvest Development Corp. (FDC); JG Summit Holdings, Inc.; Alliance Global Group, Inc.; Metro Pacific Investments Corp. (MPIC) and Asia’s Emerging Dragon Corp. — have formed a consortium that will submit an unsolicited proposal to the Department of Transportation “for rehabilitation, operation and maintenance of NAIA,” they said in a joint statement.

“The terms of the memorandum of understanding or framework of the consortium are still under negotiation,” the statement read, adding that the group “will work with foreign technical partners with world-class track records in airport operations” on the project.

“Augmenting NAIA’s capacity,” the companies said, “is the quickest way to address airport congestion while other airports are being developed outside Metro Manila.”

NAIA accommodated over 39.5 million passengers in 2016, way more than its 30.5 million designed capacity.

“The consortium believes that NAIA will continue to be a strategic gateway and a key hub of airline operations for the Philippines. With proper upgrades and strategic improvements, NAIA can easily accommodate an additional 11 million passengers annually from the current 39.5M passengers, and can increase its hourly aircraft movements from 40 movements per hour to 48 movements per hour,” the companies said in their statement.

The development complements other initiatives to develop alternative gateways to decongest NAIA.

San Miguel Corp., for instance, has submitted an unsolicited proposal for the construction, operation and maintenance of a P700-billion airport in Bulacan with designed capacity of 200 million passengers per year and equipped with four runways.

Moreover, the consortium of listed builder Megawide Construction Corp. and Bangalore-based airport operator GMR Infrastructure Ltd. has been awarded the contract to build a new terminal building at Clark International Airport that will build for P9.36 billion by 2019 a 82,600-square-meter terminal building designed to handle eight million passengers a year, nearly double the current 4.2 million capacity.

Sought for comment, MPIC Chief Financial Officer David J. Nicol said the proposal involves the entire NAIA system.

“There is no figure at this point. It will take a little while to finalize,” Mr. Nicol said when asked for project cost.

An e-mail from AC Infrastructure’s corporate communications office said the group was “in the middle of assessing the needs and scope for the project”, hence was unable to elaborate.

Harry G. Liu, president of Summit Securities, Inc., said that the proposal showed that the companies were betting big on the economy. “You can see seven big companies joining together. If they work together to rehabilitate NAIA, it means they see that there is economic growth in the country. They will not join together and try to construct if they don’t see any benefit from the airport,” Mr. Liu said in a phone interview.

Thursday saw stock prices of listed firms concerned end mixed.

Those of AEV, JG Summit and MPIC rose 3.05% to P71 apiece, 0.69% to P72.50 and by 0.60% to P6.75 each, respectively.

Stock prices of Ayala and Alliance Global, in contrast, retreated by 0.88% to P1,009 and by 0.38% to P15.88 apiece respectively, while that of FDC was flat at P7.80 each.

MPIC is one of the three key Philippine units of Hong Kong based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Patrizia Paola C. Marcelo

Top-level budget planning body to review macroeconomic targets

THE Development Budget Coordination Committee (DBCC) will meet today to review its macroeconomic assumptions for the medium term, with “improvements” expected particularly for merchandise export projections.

The Department of Budget and Management said in an e-mailed media advisory yesterday that the DBCC will meet at 10 a.m. today at the Department of Finance headquarters in Manila.

Asked whether the interagency committee will change economic assumptions for budget purposes, Finance Secretary Carlos G. Dominguez III told reporters last week: “If any it will be higher.”

Finance Undersecretary Gil S. Beltran in the same interview said that export growth will be one of those that will likely be revised upward.

“Export growth should be higher: now double digits,” he said.

Outbound shipment of Philippine goods grew 11.7% as of end-October, versus a 3.0% and 5.9% contraction in the same period in 2016 and 2015, respectively, according to Philippine Statistics Authority (PSA) data.

The DBCC in its June 9 meeting set a 5.0% merchandise export growth assumption this year — from 2.0% previously, 7.0% for 2018 from 5.0%, and 9.0% in 2019 from 7.0%. It also retained the 2020-2022 export growth projection at 9.0%.

“It will be announced later… but all are improvements over the previous,” Mr. Beltran said of annual export growth assumptions.

Aside from export growth revisions, the DBCC in its June meeting also adjusted foreign exchange assumptions for 2018 until 2022 to P48-51 versus the greenback, from P45 to P60, while it retained the assumption this year at P48-50 per dollar.

It also expects gross domestic product (GDP) growth at 6.5-7.5% this year, and 7-8% in 2018-2022.

The DBCC has also capped the budget deficit each year at equivalent to 3.0% percent of GDP until 2022.

For merchandise imports, the DBCC sees a 10% growth this year to 2019, and 11% from 2020 to 2022.

Actual GDP clocked 6.7% in the first three quarters while merchandise imports grew 8.3% as of end-October.

Dubai crude oil price projections were at $45-55 per barrel in 2017, $45-60 in 2018 and $50-65 in 2019 to 2022.

The 364-day Treasury Bill rate was assumed at 2.5-4% for 2017-2022. Foreign interest rate assumptions were at 1.0-2.0% in 2017 and 1.5-2.5% from 2018 to 2022. — Elijah J. C. Tubayan

BSP readies bank stress test guidelines

THE BANGKO SENTRAL ng Pilipinas (BSP) will soon prescribe standards on the conduct of stress tests by banks, as part of efforts to improve risk management protocols and recovery plans, especially for “too-big-to-fail” lenders.

As a rule, banks must conduct stress tests regularly to check how their balance sheets would hold up amid a funding crunch, in the process exposing potential weaknesses.

“Stress testing allows banks to prepare for events with severe financial impact,” the BSP’s policy-setting Monetary Board said in a statement yesterday, noting that the new guidelines are aimed at further strengthening risk governance and boosting the safety and soundness of the banking system.

Routine stress testing assumes “severe but plausible” scenarios — such as assuming a 50% default rate in outstanding loans — which would then show the potential effects and risks posed by these episodes to a bank’s financial position.

“[B]ased on the results of stress testing, banks may adopt proactive measures such as the implementation of capital build-up initiatives or enhancement of risk management practices all aimed at improving their resilience in times of actual crisis,” the central bank explained.

A bank’s board of directors is also expected to consider the results of regular stress tests in capital and liquidity planning, setting of risk appetite levels and planning business continuity measures in order to mitigate potential risks.

In the case of domestic systemically important banks — or the biggest players in the local financial system — the outcome of these stress exercises should also be factored in crafting recovery plans, the BSP added.

Banks have two years from the date the circular takes effect to streamline internal mechanisms and comply with the new standards.

Banks should employ multiple approaches for stress testing from a range of a simple sensitivity analysis to scenario-based exercises, depending on the scale of operations and the complexity of products and services offered.

Simpler requirements are set for thrift, rural and cooperative banks, the BSP said.

Those forming part of conglomerates need to conduct stress tests on a consolidated basis — or at the level of the parent bank, including all banking subsidiaries.

As regulator, the central bank conducts its own stress tests among entities it supervises in order to ensure that the country’s financial system remains sound.

Levels of capital buffers, money supply and real estate exposure are among the key metrics monitored and tested by the central bank in regularly overseeing the financial system. — Melissa Luz T. Lopez

Indonesia bags Fitch rating upgrade after S&P lifts it from junk

JAKARTA — Indonesia won a second sovereign rating upgrade this year, with Fitch Ratings raising its assessment to the second-lowest investment grade, months after S&P Global Ratings lifted the nation out of junk status.

The nation’s stocks and currency rallied.

The rating on the nation’s long-term, foreign currency-denominated debt was raised one level to BBB with a stable outlook, Fitch said in a statement on Thursday.

AT PAR WITH THE PHILIPPINES
The upgrade puts Indonesia on par with the Philippines and Portugal, which received upgrades just this month.

Indonesia’s resilience to external shocks is among the key rating drivers as policy makers focus on stability, Fitch said, echoing similar comments from S&P which returned the country to investment grade in May.

These endorsements of the nation’s economic stability are likely to help President Joko Widodo as he embarks on a $62-billion borrowing plan next year.

“With US treasury yields trending higher lately, this upgrade will help limit any rise in Indonesia’s risk premium and keep yields low,” said Handy Yunianto, head of fixed-income research at PT Mandiri Sekuritas.

“We expect overall Indonesian yields to stay relatively low despite rising US yields. The pieces lined up for Indonesia on the macro front, where we see growth bottoming out while inflation is trending down with low volatility.”

Investors have been rewarded with the nation’s local notes surging 17% this year, compared with 12% for emerging Asian bonds, according to Bloomberg indexes.

The benchmark Jakarta Composite Index rallied as much as 1.1% to a record on Thursday, while the rupiah gained as much as 0.3% to 13,537 per dollar, the highest since Dec. 6, according to data compiled by Bloomberg.

FOREIGN RESERVES
Rising foreign-exchange reserves and strong economic growth are other reasons for the upgrade, Fitch said.

It expects Indonesia’s gross domestic product to rise 5.4% in 2018 and 5.5% in 2019, from 5.1% in 2017. Net foreign direct investment will cover the current-account deficit over the next few years as the ease of doing business ranking improves, the firm said.

Bank Indonesia welcomed the upgrade and said it will continue its commitment to maintaining macro-economic and financial system stability to support a strong, sustainable, balanced, and inclusive economic growth.

Moody’s Investors Service may follow the other two rating companies in upgrading the country, said Josua Pardede, an economist at PT Bank Permata. Mandiri’s Yunianto expects Moody’s upgrade as early as February.

ELECTIONS
Risks include potential emerging market pressure as the US proceeds with rate increases, Indonesia’s high dependence on commodities and high level of net and gross external debt, as well as the upcoming elections.

The possibility that political noise becomes a distraction from economic policy making in the run up to the 2018 local elections and 2019 presidential election represents a risk to the strong reform drive and could undermine domestic and foreign market sentiment, although such an outcome is not Fitch’s base case, it said.

INVESTMENTS ON A ROLL
Investment is set to gain further momentum on higher public infrastructure spending, lower borrowing costs and structural reform implementation.

The budget deficit will probably remain broadly stable at 2.7% of GDP and stay within the three percent ceiling.

Government revenue is very low; among Fitch-rated sovereigns, only four have lower government revenue as a percentage of GDP Sovereign’s exposure to banking-sector risks is limited. — Bloomberg

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