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Monetary board member says BSP ready to pause tightening

By Melissa Luz T. Lopez
Senior Reporter
THE BANGKO SENTRAL ng Pilipinas (BSP) may pause its tightening moves should month-on-month inflation show deceleration, a member of the policy-making Monetary Board said, noting that the impending removal of rice import quotas should help prod overall price increases back to target in 2019.
Monetary Board Member Felipe M. Medalla said the central bank may “take a pause” should the pace of price increases soften starting this month. But he did not discount the possibility that commodity prices could still pick up faster.
“We are yet to see the data on what we will do the next policy meeting. If there are signs that inflation is already abating, as measured by the month-on-month (reading), then we may take a pause, but that’s too early to tell at this point,” Mr. Medalla said during the press briefing of the Development Budget Coordination Committee (DBCC) yesterday.
The Monetary Board will hold its seventh review for the year on Nov. 15.
Policy makers have raised benchmark interest rates by a cumulative 150 basis points (bp) since May as the central bank sought to rein in inflation expectations at a time that prices of basic goods have been surging beyond the central bank’s 2-4% target band for full-year 2018. The BSP raised rates in four consecutive meetings, including a back-to-back 50bp increase in August and September, as inflation was seen breaching the target range even in 2019.
Inflation hit a fresh nine-year-high 6.7% in September, pushing the year-to-date pace to five percent. The BSP foresees 2018 inflation averaging 5.2% and by 4.3% next year, both piercing the ceiling of the target range.
Mr. Medalla said monetary authorities are watching month-on-month inflation as it shows the “momentum” of price movements. He explained that a month-on-month pace of 0.3% or less would be more in line with the original target, but noted that eight of the past nine months have clocked in a faster pace.
September’s month-on-month seasonally adjusted pace clocked in at 0.8%, coming from 0.9% in August.
The Monetary Board member noted that there may be a chance that inflation could still log faster this month, versus the central bank’s expectation that the prices may have already peaked last month.
“Month-on-month is almost certainly going to be lower, but year-on-year, there is no guarantee that it will be lower,” Mr. Medalla added when pressed further.
Still, he said that October or even November inflation could match last month’s pace.
The implementation of the rice tariffication law — which would replace a minimum quota scheme with a regular duty scheme — will be instrumental in tempering inflation, since it is expected to slash rice retail prices by about P7 per kilogram. “The real big item is rice,” Mr. Medalla said, noting that the measure will bring down inflation by 0.7 percentage points. “Without rice tariffication, average inflation year-on-year will be higher than four percent in all likelihood.”
The measure has been approved by the House of Representatives and which is expected to clear the Senate soon after lawmakers return from their Oct. 14-Nov. 12 break.
The DBCC also expects the peso to average P52-55 to the dollar in 2019, making key imports like oil more expensive.

SE Asia among FDI growth drivers

FOREIGN DIRECT INVESTMENT (FDI) inflows to the Philippines grew faster than the Southeast Asian average last semester, though the country’s volume paled in comparison with those of some of its regional peers.
The latest Investment Trends Monitor of the United Nations Conference on Trade and Development (UNCTAD) said FDI flows to Southeast Asia increased by 18% year-on-year to $73 billion, driven largely by Singapore’s $35 billion, Indonesia’s $9 billion and Thailand’s approximately $7 billion.
In comparison, data from the Bangko Sentral ng Pilipinas (BSP) showed that FDI net inflows to the Philippines rose 42.4% to $5.755 billion last semester from $4.041 billion in 2017’s first half.
The central bank has projected these inflows to hit $9.2 billion for full-year 2018 from the actual $10.049 billion actually received in 2017.
American Chamber of Commerce of the Philippines, Inc. Senior Advisor John D. Forbes said in a mobile phone reply to a request for comment that “… the high level of FDI flowing into developing countries is good for the Philippines, which is increasingly receiving a larger part of this pie than previously”.
BSP data also show the Philippines’ closest Southeast Asian competitors for FDIs, Thailand and Vietnam, growing inflows by 67.08% to $6.912 billion from $4.137 billion and by 11.84% to $6.99 billion from $6.25 billion, respectively.
The UNCTAD report said global FDI inflows fell by 41% to $470 billion last semester from $794 billion in 2017’s first half “mainly due to large repatriations by United States parent companies of accumulated foreign earnings from their affiliates abroad following (US) tax reforms”.
The decline was driven largely by a 69% year-on-year drop to $135 billion in developed economies, while inflows to developing markets slipped by four percent to $310 billion.
Inflows to developing Asia similarly dipped by four percent to $220 billion.
China, which saw inflows grow by six percent to $70 billion, was the biggest global FDI recipient, the report noted.
Britain placed second with $66 billion and the United States followed with $46.5 billion.
“The investment flows are more policy-driven and less economic cycle-driven,” UNCTAD investment chief James Zhan said at a news conference in Geneva, citing the US tax reform and economic liberalization in China.
“Overall, the picture is gloomy and the prospect is not so optimistic.”
FDI, comprising cross-border corporate takeovers, intra-company loans and investments in start-up projects abroad, is a bellwether of globalization and a potential sign of growth of corporate supply chains and future trade ties.
But it can also go into reverse as companies pull out of foreign projects or repatriate earnings.
Such reversals could erode the importance of international supply chains, which became an increasingly important driver of international trade until 2011 and subsequently stagnated, Mr. Zhan said.
“If there’s a lack of FDI for expansion of the value chains then of course it will impact on global value chains and therefore impact on global trade,” he said.
“It’s difficult to tell whether we are at a turning point (in globalization) or if this is only a slowdown.”
Despite the overall slowdown, money going into newly announced start-up projects — so-called “greenfield” investments — increased by 42%, providing a glimmer of hope that more money will follow and drive more spending and trade in future.
Greenfield investments in Asia hit a record, driven by China’s $41-billion crop and a surge of Southeast Asian projects, especially in Indonesia ($28 billion), Vietnam ($18 billion) and the Philippines ($12 billion). — with Janina C. Lim and Reuters

PHL found among most improved in global competitiveness index

By Victor V. Saulon, Sub-Editor
THE PHILIPPINES placed fifth among the nine economies of the Association of Southeast Asian Nations (ASEAN) covered by the Global Competitiveness Report 2018-2019, which measures a country’s standing using a set of criteria that determine level of productivity, and 56th globally among 140 economies on the list.
As reported by the World Economic Forum, the Philippines ranks lower than Singapore — the most competitive in ASEAN and second globally — and other regional neighbors Malaysia (25th globally), Thailand (38th), and Indonesia (45th).
The global competitiveness index 2018 ranking

The latest report qualified that it is not comparable to previous reports, as the Forum has transitioned to a new methodology.
The Forum said in a statement that about 60% of the indicators used in the new index “are brand new, as we increasingly believe factors such as workforce diversity, labor rights, e-government and disruptive businesses are driving competitiveness”.
While the Philippines ranks 56th in this year’s index, applying the new methodology to 2017 yields “a 12-place rise in the ranking, one of the best performances globally”.
The Philippines’ highest score of 90 out of 100, relates to its macroeconomic stability. In the pillars of labor market, financial system, market size and business dynamism it ranks in the top 40 globally. It also ranks 12th worldwide for number of disruptive businesses and 15th for growth of innovative companies.
Its biggest challenge lies in fixing its institutions, ranking 101st, ranking at the bottom worldwide (120th or worse, in the indicators of organized crime, reliability of police services and conflict of interest regulation. Another weakness is actual innovation in the economy where it ranks 67th for innovation, with research and development expenditures (99th) and trademark applications (98th) particular areas of concern. Under the same pillar, however, it scores relatively well in terms of social capital at 21th worldwide.
ASEAN economies covered by the report are Singapore, Malaysia, Thailand, Indonesia, Philippines, Brunei, Vietnam, Cambodia and Lao PDR. Myanmar was not included.
Regionally, the Philippines is third in Labor Market behind Singapore and Malaysia, and also third in Macroeconomic Stability, also behind the two, as well as fourth in Innovation Capability and Financial Systems.
A summary of report findings was also provided in a press release of the Makati Business Club (MBC), the Forum’s partner in the Philippines.
The country placed seventh out of the ASEAN nine and 101st out of the 140 economies in the pillar of Institutions.
It was also seventh regionally in Health and Infrastructure. Its global ranking in the two pillars are 101st and 92nd, respectively. The three pillars are also the country’s weakest, MBC noted.
In a statement, MBC Chairman Edgar O. Chua said that the Philippines’ business dynamism noted in the report was primarily driven by the private sector’s mindset, in finding innovative ways to become more efficient and productive.
“We see companies integrating sustainability and innovation into their business models and harnessing the potential of technology to increase productivity — and this drives the continued growth of the Philippine economy,” he said.
“Hopefully, we will see more business-government-academe linkages to support the growth of priority sectors. This type of dynamic ecosystem has been pursued by other economies which can be improved in the Philippines.”
The Philippines’ competitive advantage or its strong pillars out of 12 in the index are its Market Size, Labor Market, Financial Systems and Business Dynamism.
Top-ranked indicators, or those within the top 10 globally, include rate of change of inflation (tied at #1 with 74 countries), insolvency regulatory framework (eighth out of 140), internal labor mobility (ninth), pay and productivity (10th).
Strong indicators highlight the private sector as a driver for innovation and competitiveness. In terms of companies embracing disruptive ideas, the Philippines ranked 12th globally, as well as 15th each in terms of growth of innovative companies and diversity of workforce.
Under Business Dynamism, time to start a business (115th out of 140), cost of starting a business (97th) and insolvency recovery rates (112th) remain indicators where the Philippines performed poorly.
“While time and cost of starting a business remain problematic factors for the business community, it is worthy to note that the Philippines ranks high in e-participation, or the use of online platforms to link government information to citizens,” Mr. Chua said.
“With the recently passed Ease of Doing Business Act, we remain optimistic that the government will be able to sustain these gains and address the concerns of efficiency in doing business.”
The report noted that in many countries, the root causes of slow growth and inability to leverage new opportunities offered by technology continue to be the “old” developmental issues of institutions, infrastructure and skills.
Two of these are among the Philippines’ three bottom-ranked pillars: Institutions, Infrastructure and Health. In ASEAN, the country consistently ranked seventh out of nine in these three pillars.
Under Institutions, which is the Philippines’ weakest pillar, critical indicators where the country ranked poorly include: terrorism incidence, homicide rate, organized crime, and reliability of police services.
Under Infrastructure, the Philippines lags in road connectivity (129th), exposure to unsafe drinking water (101st), efficiency of train services (100th) and electrification rate (100th).
Among the country’s weakest indicators are under the Institutions pillar, namely: terrorism incidence (136th), reliability of police services (123rd), conflict of interest regulation (121st) and organized crime (120th).
The report cited the Philippines as one of the countries — along with Nigeria, Yemen, South Africa and Pakistan — with problems related to violence, crime or terrorism, and where the police are considered unreliable. Across all countries, the relationship between the prevalence of organized crime and the perceived reliability of the police is strikingly close, it said.
“With WEF’s new competitiveness index, policy-makers and business leaders are guided to focus on long-term development,” Mr. Chua said.
“While we continuously build on our strong pillars, it is equally important to address our weak spots. The business community remains committed to work with the government to address these gaps, especially in our weakest links in ease of doing business, corruption incidence, and infrastructure, particularly in road connectivity.”
The MBC administered the 2018 Executive Opinion Survey, a major component of the Global Competitiveness Report, last Feb. 1-April 31.

DoubleDragon partners with Equicom for clinics at CityMalls

DOUBLEDRAGON Properties Corp. said it has partnered with the operator of MyHealth Clinics to open medical clinics in its community malls.
In a statement issued Tuesday, the listed property developer said its subsidiary CityMall Commercial Centers, Inc. (CMCCI) signed a strategic partnership with Equicom Group for the rollout of the latter’s multi-specialty medical clinics in CityMalls nationwide.
DoubleDragon said the first batch of clinics will be built in 12 CityMalls in the next 12 months, with four each in Luzon, Visayas, and Mindanao.
“These strong alliances further solidifies the relevance of CityMalls in the communities we serve,” DoubleDragon Chairman Edgar J. Sia II said in a statement.
“With the addition of state-of-the-art medical and dental clinics in CityMalls, we will now have the best modern retail brands, the strongest fastfood brands, the leading entertainment cinemas and the foremost medical clinic provider all in one roof,” he added.
MyHealth Clinic is under the Equicom Group and an affiliate of Maxicare Healthcare Corp., touted as the largest health maintenance organization in the country. It operates a network of full-service ambulatory clinics offering outpatient health care products and services.
The Equicom Group is led by businessman and banker Antonio L. Go, who was previously the chairman of Equitable PCI Bank. The bank was considered the third largest in the country in terms of assets until it was acquired by Sy-led BDO Unibank, Inc. in 2007.
CMCCI, the umbrella company for all CityMall projects, is 66% owned by DoubleDragon and 34% owned by SM Investments Corp.
The company is targeting to have 50 CityMalls by end of the year. This month, community malls opened in Iponan in Cagayan de Oro City and Sorsogon City in Bicol. It is set to open in Calapan City, Mindoro; and San Carlos City, Pangasinan next week, and in November, branches in Isulan, SOCCSKARGEN; Roxas Avenue, Capiz; Bulua, Cagayan de Oro City; and Cadiz City, Negros.
DoubleDragon aims to have 100 CityMalls covering 700,000 square meters (sq.m.) by 2020. The malls are mostly located in Tier 2 and 3 cities in the provinces, as the company seeks to position itself as the number one mall operator in those areas.
DoubleDragon’s net income surged 234% to P1.26 billion in the first six months of 2018, on the back of a 123% jump in consolidated revenues to P3.63 billion. Recurring revenues amounted to P1.41 billion during the period, 199% higher year-on-year.
Shares in DoubleDragon jumped 2.44% or 44 centavos to close at P18.46 each at the stock exchange on Tuesday. — ABF

Smart says proposed common tower policy violates its franchise

By Denise A. Valdez, Reporter
SMART Communications, Inc. said the proposed policy on common towers violates its legislative franchise, which gave PLDT, Inc.’s wireless unit the right to build its own telecommunications towers.
In a position paper submitted to the Department of Information and Communications Technology (DICT) on Oct. 5, Smart said the proposed memorandum circular (MC) cannot amend a legislative measure such as its franchise under Republic Act no. 10926.
“Here, the proposed MC violates Smart’s franchise. By providing that future deployment can only be performed by the independent TowerCos (tower companies), the draft MC effectively amends Smart’s franchise. This is essentially an encroachment of legislative powers. If the proposed MC is issued, the DICT and NTC (National Telecommunications Commission) would arrogate upon itself the power and authority to amend the law — a power solely vested in Congress. Unless and until repealed through the enactment of another law, the provisions of Smart’s franchise are controlling,” the company said.
Congress renewed Smart’s franchise for another 25 years in April 2017.
The DICT presented last month a draft MC, prepared by Presidential Adviser for Economic Affairs and Information Technology Communications Ramon P. Jacinto, which seeks to limit the building of telco towers to only two registered tower companies.
Smart noted that efficient tower markets should allow different ownership models, including ownership by telecommunications companies.
Citing cases in United States, Nigeria, Ghana, India, Indonesia and Germany where telcos are allowed to own towers, Smart said the government’s objectives in issuing the infrastructure sharing policy “can still be achieved even without prohibiting (telcos) from building their own towers pursuant to their franchise.”
Smart also said independent tower companies would go through the same bureaucracy that telcos do in building towers, therefore there is no guarantee that the tower companies would roll out the infrastructure at a faster pace.
“This very tedious process of securing permits is really the main culprit behind the lack of telecommunications infrastructure in the Philippines. Inasmuch as (telcos) are able and willing to expand their networks and build more cell sites, permitting issues are hampering their efforts,” it said.
At the same time, Smart said the MC provision limiting the number of tower companies to two “unfairly” excludes other companies, and leads to a duopoly. It added this may violate the Philippine Competition Act.
“Notwithstanding the existence of independent TowerCos, MNOs should still be permitted to exercise their right to build telecommunications towers in accordance with their respective franchises. Finally, the number of independent TowerCos should not be limited to two as it is anti-competitive,” the company said.
Sought for comment, DICT Acting Secretary Eliseo M. Rio, Jr. said he agrees the government cannot keep the telcos from building their own towers.
“Yes, it is in their franchise and they cannot be prevented to put up their own infra including towers. We can’t come out with a Department policy or order that we cannot implement because we can be sued in court. We will have a dialogue with the telcos on how to resolve this,” Mr. Rio said in a text message to BusinessWorld.
Mr. Rio previously said the DICT targets to finalize the tower sharing policy by November.
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.

The politics of the barong Tagalog


WHO WEARS the barong Tagalog most often? Presidents and other political figures. Using the national men’s shirt as her metaphor and metonymy for politicians, artist Ninel Constantino unpacks the meanings and messages of the garment in her solo exhibition, Facade.
Currently on view at the Pinto Art Museum in Antipolo, Rizal, Facade uses the barong Tagalog as a canvas and conduit for criticism. Here, the artist, whose background is in industrial design, sewed the barong by hand into symbols of political power like keys, gavel, and batuta (a policeman’s club). The pieces are beautiful, but you can see that they are hollow and seemingly fragile. The artist intentionally designed them that way.
“My main purpose is to use the barong as a material. I didn’t want to use wire frame or structure or any stuffing. It’s to mirror our leaders today — parang walang (as if they have no) substance, no big plans for the Philippines, and all about self-interest. Kumbaga parang ampaw (in other words, like the hollow rice cake). From there, doon na ako naglaro (that is where I played). My discipline was that I shouldn’t use wire frames no matter how tempted I was. Syempre gusto mo nang mas complicated structure, pero hindi eh, kailangan tahi lang talaga (of course you would like a more complicated structure, but no, it really had to be sewn only),” Ms. Constantino told BusinessWorld during her exhibition’s launch on Oct. 14.
The daughter of historian Renato Constantino said the statement behind Facade isn’t necessarily a reaction to the upcoming national elections in 2019. “It’s not really about that only, or even about the current leadership, but, it’s all about the start — kung sino man ang leaders natin ngayon (whoever are our leaders now), it’s a result of our past leaders before them. It’s all about that,” she said.
The artist’s father, back in 1959, wrote a classic observation of Filipino politicians. As quoted in the exhibition’s notes by art critic and writer Carlomar Daoana, Mr. Constantino once wrote: “With a few notable exceptions, the Filipino politician presents a pitiful figure. Because of the shallowness, vulgarity, lack of worthy purpose, and unashamed corruption of many politicians, political leadership in the Philippines has lost prestige.”
“Everything has become a facade, a pretense,” said Ms. Constantino.
The process behind making her works was elaborate. She used heat for the barong to take shape, and then she handstitched the structure she formed to reinforce the shape. “Maganda sa barong (what is nice about the barong is) the structure stays after ironing it. But instead of using [an] iron, I used [a] heat gun, so it formed a structure, and then, I sewed it.”
The artist has already had more than 10 solo shows, but this is the first time she has done a social commentary.
“Before, it has always been very personal, about my personal memories and relationship. This is my first time to go beyond that,” said the artist who is a faculty member of the University of the Philippines Diliman College of Fine Arts.
She said she started out doing paintings. “Feeling ko it’s a natural progression. I am an industrial designer by training so we always work in 3D objects but I have always wanted to do paintings. Slowly, it’s becoming object-based. Hindi ko na lang pinipigalan ang sarili ko (I stopped holding myself back),” she said.
This is the first time she has used barong Tagalog as a medium. “I’m always excited about exploration, which becomes the impetus for my works.”
Facade runs until Oct. 28 at the Pinto Art Museum. — Nickky Faustine P. de Guzman

Nam June Paik and technology as a canvas


WEARING a tailor-made pink shirt marked with multi-colored strokes of acrylic paint, Ken Hakuta sat down to talk about the “father of video art” Nam June Paik — whom his family called their “crazy uncle.”
Mr. Hakuta — who is executor of the Nam estate — was in Manila to talk about his uncle and the first exhibition of works by the artist in the Philippines, Nam June Paik in Manila, which is on view at the Leon Gallery’s new space at the ground floor of Makati’s Corinthian Plaza.
The exhibit is a collaboration between Leon Gallery International and the Gagosian Gallery.
A VISIONARY ARTIST
Korean-American artist Nam June Paik (1932-2006) trained as a classical musician in Germany, then settled in New York City and explored video art. It was there where he became better acquainted with artists such as avant-garde composer John Cage and conceptual artist (among many other things) Joseph Beuys.
“He was interested in classical piano but then he realized he was not very good at it,” said the artist’s nephew (his uncle became Mr. Hakuta’s legal guardian when he went to New York as a child in 1964). “Then he wanted to be, for some reason, a classical music composer — then he realized he was not good at it either,” Mr. Hakuta said as he explained his uncle’s transition from a musician to video artist. “I’m serious, that’s what he told me. And then, he became very avant-garde.”

As an artist, Nam June Paik coined the term “electronic superhighway” to denote how advancements in technology connect people and have a lasting impact on their lives.
Among the emerging technologies of that time, the artist was particularly fascinated by television.
“I was his interpreter for television. Given that he made a career out of making art out of television, he never watched television. I would tell him what was going on television then he’d steal my ideas. And he never gave me credit,” Mr. Hakuta said, jokingly.
“I guess he found it (television) very new and very exciting. He wanted to try something different… I guess he was just very creative. He thought this would be a completely new area,” Mr. Hakuta said, adding that the style was “visionary” since few households had television sets in the 1960s.
According to the National Endowment for the Arts’ website, “Nam June Paik transformed video into an artist’s medium with his media-based art that challenged and changed our understanding of visual culture. As Paik wrote in 1969, he wanted ‘to shape the TV screen canvas as precisely as Leonardo, as freely as Picasso, as colorfully as Renoir, as profoundly as Mondrian, as violently as Pollock and as lyrically as Jasper Johns.’”
The Leon Gallery exhibit will showcase 24 pieces from 1983 to 2005 such as One Candle, in which a lit candle is placed inside the casing of a TV; and TV Buddha, which features a statue of the Gautama Budhha facing a TV screen which is showing a video feed of its image.
Describing the two works as “highly intellectual, yet sarcastically funny,” Mr. Hakuta said that his uncle was also fascinated by zen and Buddhism which is reflected on the use of the Buddha and the candle in his works.
THE COLLABORATION
“He is probably the most relevant artist in modern art. He is a game-changer. He changed the way we see things. [He turned] technology into art,” Leon Gallery director Jaime Ponce de Leon told BusinessWorld at the exhibit’s press launch in Makati last week.

It was through Mr. Ponce De Leon’s friendship with Mr. Hakuta that the idea of mounting an exhibit started. “Through Ken, there was an introduction (with the Gagosian Gallery). We expressed our interest, and that was how it came about,” Mr. Ponce De Leon said.
He said that it was a “difficult” negotiation with the prestigious gallery. “We had to rely on the Gagosian’s own research on how Leon Gallery fared in a national context, because an entity like the Gagosian gallery will not just partner with anybody who does not have the wherewithal to mount an exhibition or the reputation to be at par with them,” he told BusinessWorld. “They did their research and we are fortunate to say that they have decided to pursue the partnership.”
“We are delighted to collaborate with Leon Gallery in bringing the work of Nam June Paik to Manila,” Nick Simunovic, managing director of the Gagosian Hong Kong, told BusinessWorld in an e-mail.
“It is not an exaggeration to say that Paik was one of five or six most important artists of the 20th century. In addition to inventing video art, he helped establish the fields of performance and installation art. His influence on other artists and on art history itself cannot be overstated,” Mr. Simunovic wrote.
“At the same time, Paik’s enormous contribution remains largely unknown and underappreciated. The exhibition in Manila aims to share his work with a broader audience in Southeast Asia,” he wrote.
For Mr. Hakuta, the exhibit is an opportunity for the Filipino audience to learn and appreciate video art.
“It’s not the matter of catching up. It’s the matter of learning this, because Nam June Paik’s art is very sophisticated. And yet, a child would enjoy it,” he said. — Michelle Anne P. Soliman
Leon Gallery’s new space is at the ground floor of the Corinthian Plaza, 121 Paseo de Roxas, Makati City.

Petron completes sale of P20-billion fixed-rate bonds

PETRON CORP. has completed the sale of the P20-billion second tranche of its peso-denominated fixed rate bonds last week, the listed oil refining and distribution company told the stock exchange on Tuesday.
The bond offering, which the company completed on Oct. 12, is the remaining portion of its P40-billion shelf registration with the Securities and Exchange Commission (SEC). The first tranche was offered about two years ago.
The second tranche was divided into P13.2 billion Series C bonds and P6.8 billion Series D bonds. They were listed and traded at the Philippine Dealing & Exchange Corp., for which a certificate of permit to offer securities for sale was issued by the SEC on Oct. 4, 2018.
Petron previously said BDO Capital & Investment Corp. and BPI Capital Corp. had been appointed as joint issue managers and, together with China Bank Capital Corp., as joint bookrunners and joint lead underwriters, including other banks that may be invited to join the group.
When the first tranche was offered in 2016, Petron said the proceeds would be used mainly to refinance existing debt and fund working capital requirements. That year, the company commissioned its $2-billion refinery upgrade, increasing its capability to produce more high-value fuels and petrochemicals.
The first issuance, which was Petron’s first listing at the bond exchange, was twice oversubscribed over the base offer and was priced at the tight end of the marketing range, the company had said.
On Tuesday, shares in the company slipped by 0.60% to close at P8.28 each.
Petron, the country’s largest oil refiner and marketer, earlier reported a 16% increase in its first-half net income to P9.5 billion from P8.2 billion a year ago as sales volumes in its Philippine and Malaysian operations were sustained while prices of petroleum products during the period had come out higher. — Victor V. Saulon

Bring on the pain: strategists say go defensive in Southeast Asian stocks

SINGAPORE — With a little less than a quarter left of a year that’s already witnessed a trade war between the world’s two largest economies, higher oil prices and a still ongoing emerging-markets rout, what’s an investor in Southeast Asia to do?
For Morgan Stanley, DBS Group Holdings Ltd. and Nomura Holdings, Inc., the answer is simple: double down on defensive trades in Singapore and Thailand as the rest of 2018 may see more hiccups. The MSCI ASEAN Index, which tracks markets across the region, sank to its lowest level since March 2017 last week as a rout ravaged equities worldwide.
“In ASEAN, we face the same challenges with trying to pick safer markets, particularly with the Fed tightening,” Sean Gardiner, a Southeast Asian equity strategist at Morgan Stanley said in an interview. Singapore and Thailand have better balance of payments and will be able to work through that, he said.
Higher interest rates in the US have sent the dollar surging — triggering a slump in currencies from the region’s nations. The Indonesian rupiah is hovering around its weakest level since 1998, while the Philippine peso has plunged as the nation faces its fastest inflation in more than nine years.
Mr. Gardiner favors banks in Singapore, which have seen net interest margins expand with rising interest rates, and Thai energy stocks that can benefit from higher oil prices. Even after a jump this year, major oil trading houses are predicting the return of $100 crude for the first time since 2014 as OPEC and its allies struggle to compensate for US sanctions on Iran’s exports. Tensions between the US and Saudi Arabia may also ratchet up a notch after the disappearance of a journalist working for the Washington Post.
Thai shares may also get a lift from upcoming elections expected to be held in February, according to Joanne Goh, an equity strategist at DBS who has overweight ratings on Singapore and Thailand for the quarter.
Looking to 2019, Nomura’s regional strategist Chetan Seth says investors can reconsider markets such as Indonesia and the Philippines. Their benchmark indexes have fallen more than 9 percent this year, with the Philippine Stock Exchange becoming one of the world’s biggest decliners among equity gauges.
“At some point in time in the fourth quarter, all these issues get priced in,” he said by phone. You’ll want to be in markets with higher earnings growth rates, he said. — Bloomberg

PSBank looks to raise P8 billion via stock rights offer in Q1 2019

By Karl Angelo N. Vidal, Reporter
PHILIPPINE SAVINGS Bank (PSBank) is set to raise approximately P8 billion through a stock rights offer (SRO) next quarter to support its growth.
PSBank, the thrift lending arm of Metropolitan Bank & Trust Co. (Metrobank), said in a regulatory filing on Tuesday it will issue a maximum of 184.7 million common shares equivalent to its remaining unissued shares through an SRO as approved by its board of directors on Oct. 15.
The bank targets to conduct the rights offer in the first quarter of 2019. However, the timing and transaction size, including the offer price, are still subject to regulatory approvals and market conditions.
PSBank has tapped First Metro Investment Corp. as the issue manager and underwriter of the offer, while Metrobank’s Trust Banking Group will serve as the stock transfer agent. Meanwhile, Picazo Buyco Fider and Santos Law Offices will be the legal counsel.
In an e-mail, PSBank President Jose Vicente L. Alde said the objective of the stock rights issuance “is to support the projected growth of the bank.”
In a previous interview, he said the thrift bank has been preparing for expansion as it is growing its consumer business.
“We have been growing our consumer business for the past years, and we still expect the consumer business to be robust in the next years. We’re preparing for that expansion,” he told BusinessWorld in July.
Last month, the Ty-led savings bank announced it will issue medium-term notes amounting to P10 billion, to “give PSBank an opportunity to access medium-term and stable funding as the bank further expand its consumer banking business.”
Prior to this, it raised P5.08 billion in August through the issuance of long-term negotiable certificates of time deposits which carry a 5% coupon.
Local banks have been conducting various fund-raising activities ahead of tighter risk management requirements by the central bank under the international Basel 3 standard, which will take effect next year.
Aside from PSBank, other banks have raised additional capital through SROs this year, such as its parent Metrobank, UnionBank of the Philippines, Rizal Commercial Banking Corp., and Bank of the Philippine Islands.
PSBank saw its net profit climb to P1.35 billion in the first half of the year, up 14.7% from P1.18 billion booked in the same period in 2017, supported by strong net interest income and service fees.
Shares in PSBank closed at P74.50 each on Tuesday, down P2.25 or 2.93% from the previous session.

Quantifying the arts

ART HEALS, literature enriches vocabularies and our sense of empathy, and theater helps children develop their imagination and creativity. But these truths aren’t quantifiable — or not quantified yet — which makes it hard for the government to see the positive impact and contributions of art and culture to economic development.
But this may be changing.
On Oct. 3, the National Commission for Culture and the Arts (NCCA) held the second International Conference on Cultural Statistics and Creative Economy, which aimed to quantify the impact of arts on society with the goal of providing a “platform for the discourse on quantifying contributions of culture to [our] development,” said Marichu Tellano, NCCA deputy executive director.
She said that the other reason of the conference was “to be exposed to different methodologies, processes, and tools of building cultural statistics and utilization of the cultural statistical framework.”
But what are “cultural statistics” and why do we need to quantify arts?
According to the NCCA book Bilang Filipinas, A Primer on Philippine Cultural Statistics, quantifying arts is “a means of formalizing what is currently viewed as an informal sector in spite of its considerable contribution to economic and social well-being. The collection and analysis of cultural statistics will help promote the growth of cultural industries and main-streaming culture into economic and social policy.”
The cultural domains, or industries, that are included in this sector are the country’s tangible and intangible heritage; performances and celebrations (e.g. theater, festivals, dance, literary performances); visual arts and artisan products (e.g. painting, industrial design, photography); books and press; audio, visual, broadcast, and interactive media; and creative services (e.g. fashion design, jewelry design, advertising, culinary arts).
Under Republic Act No. 7356, it is part of the NCCA’s mandate to “undertake a systemic collection of statistical and other data, which reflect the state of cultural conditions of the country, to serve as essential qualitative and quantitative basis for formulating cultural policies.”
For Pangasinan fourth district representative Christopher “Toff” V.P. de Venecia, who is also the managing creative director of the theater company Sandbox Collective, culture should count and should be seen as a good investment rather than a liability.
“I strongly believe that wider use of cultural statistics that highlight the economic benefits of the creative arts will somehow change our government’s perspective on prioritizing the arts and cultural endeavours. No longer would our cultural pursuits be seen as luxuries, or only of second importance to other sectors, but as the new prime movers of our economy. The new frontier where culture and the arts should not be seen as luxurious expense, but rather, an investment,” he said when he delivered his speech as the conference’s keynote speaker.
He pointed to how South Korea has been utilizing its creative industries — from K-pop to food, fashion, and cosmetics — to bolster its economic growth and soft power. South Korean government invested in the creative industry through the creation of its Ministry of Culture and Tourism.
Mr. De Venecia added that prioritizing and seeing the importance of our creative economy will also translate to the protection of our creative workforce.
“Many of our Filipino artists are world class — from Lea Salonga, Jose Llana, Red Concepcion, Rachel Ann Go, Shiela Francisco, and Christine Allado in the West End… or Kris Aquino in Crazy Rich Asians. The Philippines is never without talent that can make waves both locally and abroad. Yet, here in our own backyard, many of our so-called ‘artists’ remain disadvantaged in terms of social security, labor, medical, and legal conditions. It’s not a rarity that we hear of fund-raisers for artists who are bogged down with medical bills, those who bring pride to our country yet end up by the wayside. It is a debilitating cycle that has likened itself to the plight of most of our farmers in the agricultural sector that suffer from the stigma of poverty and thereby discourage future generations from emulating their trade. I question and challenge the assumption that to be an artist in a country that doesn’t provide enough support to this special category of workers means to prepare yourself for a life of poverty,” he said.
Besides working for long hours, Filipino creatives juggle multiple jobs to make ends meet. According to the study “Assessing the Needs of the Filipino Creative Economy Workforce” by Glorife Soberano-Samodio of the De La Salle University Culture and Arts office, “the employment and income situation of the creative workforce shows both promising and unfavorable scenarios.” She said that while creatives have a high level of commitment, the data show that most of the people surveyed said their welfare as workers is not given much attention by employers “as most of them are recruited on a per-project-basis and might not be aware of their rights.”
This study is part of the NCCA book Bilangan, which is a compilation of selected papers from the 2018 International Conference on Cultural Statistics and Creative Economy.
There are engineers and scientists, but the economy and society also need the editors, writers, composers, philosophers, and photographers.
“There was a film recently. The premise was this: when an asteroid was about to hit the earth, scientists and engineers scrambled to launch a ship, just like Noah’s Arc, to bring the best of 160 of our generation. One-hundred-sixty is the number required for a population to flourish. You would expect that the 160 humans would be the legalists, the geniuses of hard science. Yet, in this film — thankfully it was just that, a film — the government chose creative geniuses. After all, they believed that what makes us human is our heart: our culture, our art, our music, our history, our heritage. And in matters of past, present, and future, that alone was worth saving, and hopefully, in our case, worth spending,” said Mr. De Venecia. — Nickky Faustine P. de Guzman

BSP tightens standards for savings, loan associations

THE BANGKO SENTRAL ng Pilipinas is tightening its standards for non-stock savings and loan associations. — BW FILE PHOTO

By Melissa Luz T. Lopez, Senior Reporter
THE CENTRAL BANK is tightening rules covering non-stock savings and loan associations (NSSLAs) by capping service fees and requiring risk management protocols to enhance oversight.
The Bangko Sentral ng Pilipinas (BSP) issued Circulars 1013 and 1016 to raise the standards on NSSLAs, with the regulator seeing the need to elevate standards to “promote the safety and soundness” of these groups’ operations.
NSSLAs collect the savings of its members and provide long-term financing for home development and personal loans. This is usually formed by employees and officers in one country, government employees in one agency including member-retirees, and immediate family members.
These firms will soon be subject to stricter standards similar to those imposed on banks.
“The compliance risk management system shall be designed to specifically identify and mitigate risks that may erode the franchise value of the NSSLA, such as risk of legal or regulatory sanctions, material financial loss, or loss to reputation, an NSSLA may suffer as a result of its failure to comply with laws, rules and regulations, and codes of conduct applicable to its activities,” the issuance read.
In particular, an NSSLA must designate a chief compliance officer to ensure that their operations meet provisions of relevant laws and BSP issuances. The officer shall regularly report to the board of directors and police potential risks that may result in possible regulatory sanctions as well as reputational or financial losses.
Circular 1013 issued by BSP Governor Nestor A. Espenilla, Jr. last month also prescribes additional rules that which set minimum standards on the “judicious utilization of credit,” in order to “maximize the protection of members of NSSLAs.”
The measure specifically prohibits charging steep service fees as well as the non-disclosure of borrowing costs for financial services.
“For this purpose, service fee is considered unreasonably high if the service fee rate exceeds fifty percent of the annual nominal interest rate charged on a loan,” the BSP said.
Other unfair practices include recognizing unused insurance premiums as income, limiting capital contributions or concentrating control to family and relatives, granting unauthorized salaries, and handing out new or additional loans with poor credit history, among others.
The central bank has been tightening rules on non-bank firms as they seek to tighten its watch on the financial sector, as they seek a stronger hold on parallel markets.

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