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PHL insurance gap at $4.9 billion

THE PHILIPPINES is one of the countries with the largest insurance gap even as the country is susceptible to natural disasters and effects of climate change, a report from Lloyd’s said.
In a statement on Monday, the insurance and reinsurance market said the country had the third-highest insurance gap out of the 43 countries surveyed with $4.9 billion, equivalent to 1.3% of its gross domestic product (GDP).
The Philippines only lagged behind Bangladesh which had an insurance gap equivalent to 2.1% of GDP and Indonesia with 1.4% of GDP.
In terms of underinsurance, or the expected losses that will exceed insurance coverage, the country’s shortfall amounted to $4.2 billion.
Meanwhile, the country’s insurance penetration, or total premiums as a percent of the economy, remains at 0.6% of GDP, although higher than the 0.4% in its 2012 report.
Lloyd’s said the insurance gap in the country is still prevalent as the Philippines is among the most exposed to natural disasters.
“Bangladesh, India, Vietnam, Philippines Indonesia, Egypt and Nigeria each have an insurance protection rate of less than 1%. They are also among the most exposed countries to risks such as climate change and some of the least able to fund recovery efforts,” Lloyd’s said in its 2018 Underinsurance Report.
The report cited the Joint Typhoon Warning Centre, saying 19 typhoons enter the Philippine area of responsibility, nine of which make landfall.
Aside from this, the Philippines is also prone to volcanic eruptions and earthquakes as the country is situated along the Pacific Ring of Fire.
Lloyd’s said Filipinos are still unable to invest on insurance policies as annual incomes remain low at just under $3,000 per capita.
“This has a dampening effect on investments in insurance, disaster prevention measures and early warning systems that help disasters before they occur,” the UK-based insurer said.
Last month, the government met with officials from Lloyd’s as well as the World Bank in London as they seek to expand the risk management policy on government assets as it ramps up its infrastructure thrust amid natural calamities.
“We are embarking on a large infrastructure program and we expect to spend somewhere $150 and 170 billion in improving our physical infrastructure. Leaving it and building it without thinking about risk management is irresponsible,” Finance Secretary Carlos G. Dominguez III earlier said. — Karl Angelo N. Vidal

Crown Asia profit rises 9% in Q3

CROWN ASIA Chemicals Corp. grew its net profit by 9.21% in the third quarter of 2018, even as revenues decreased due to slower exports and infrastructure projects during the period.
In a regulatory filing, the listed manufacturer of polyvinyl chloride (PVC) and Crown pipes reported a net income of P34.80 million in the July to September period, higher than the P31.87 million posted in the same period a year ago.
This pushed net profit to P104.33 million in the nine months ending September, 2.84% higher than the P101.45 million recorded in the same period in 2017.
Revenues meanwhile dropped by 6.78% to P304.26 million during the quarter, resulting to a 5.84% decline to P912.79 million in the first nine months of the year. “This was due to the decrease in export sales and slower infrastructure projects,” Crown Asia said.
The company sources its revenues from its compounds and pipes groups. The compounds segment includes PVC compounds such as wires and cables, films, sheets, and bottles, among others. Its pipe group meanwhile has a line of PVC potable pipes and fittings, electrical conduits, flexible electrical pipes, and sanitary pipes.
At the same time, the company was able to lower the cost of sales to 6.71% to P651.53 million from P698.39 million in the first three quarters of 2017, attributed to its management of manufacturing overhead.
Incorporated in 1989, Crown Asia engages in the production of plastic compounds, plastic pipes, and other related products which are used directly and indirectly in the construction and telecommunications industries.
The company was previously tapped to supply pipes for the P35.68-billion Cavite-Laguna expressway, which spans 44.6 kilometers. It is also the supplier for the Metro Manila Skyway Stage 3, a 14.8-kilometer expressway connecting Buendia Avenue, Makati City to Balintawak, Quezon City.
Shares in Crown Asia ended flat at P1.60 each at the stock exchange on Monday. — Arra B. Francia

Hotel opens in Bacolod

Global Comfort Group Corp (GCGC) formally opened Bell Hotel in Bacolod City on Sunday. Situated at San Juan St., Barangay 13, Bacolod City, the hotel has 54 rooms targeting “young, budget-conscious travelers.” “We want to make travel affordable and accessible to discerning guests,” Laurence Peña, GCGC chief operating officer, said in a statement. Icon Hotel manages Bell Hotel, which is under GCGC. GCGC also manages the Apo View in Davao city, the Eurotel Hotels, and the Icon Hotels.

Goldman Sachs changes Asia investment banking leadership

HONG KONG — Goldman Sachs Group Inc. has named veteran banker Todd Leland as its investment banking head for Asia Pacific excluding Japan, according to an internal memo seen by Reuters, adding to leadership changes at the bank with CEO David Solomon taking over this month.
Mr. Leland, an American who joined Goldman in 1992, will replace Andrea Vella and Kate Richdale who were appointed co-heads of the unit in 2015.
Ms. Vella and Ms. Richdale will remain in the region to become the co-chairs of the unit, said the memo sent to the bank staff and seen by Reuters on Monday.
Mr. Leland was named a co-president of the bank for Asia Pacific excluding Japan in September last year, a designation that he will retain, the memo said. He had previously worked in London for 10 years.
A Goldman spokesman in Hong Kong confirmed the content of the memo.
Mr. Leland takes over at a time when China’s aggressive outbound push for mergers and acquisitions has slowed this year amid an escalating trade war with the United States, and weaker markets are expected to weigh on the appetite for new equity offerings.
In the first nine months of 2018, Goldman’s revenue in Asia, which is smallest of its three regions, rose 9% to $3.9 billion. Asia’s share of group sales fell by 1% percentage point to 14% in that period, its filings showed.
Ms. Richdale, a fluent Mandarin speaker with experience in Southeast Asian dealmaking, joined Goldman from Morgan Stanley in March 2013.
Before taking over the Asia leadership role, Ms. Vella had been co-head of the financing group in the region since January 2014. Prior to that he was head of credit capital markets in Asia excluding Japan.
In a separate memo, Goldman also announced that Raghav Maliah, its head of the technology, media and telecom group in Asia Pacific excluding Japan, will become global vice-chairman of the investment banking division.
Among other executive changes since Solomon was named the group chief executive, Goldman last month named Dan Dees, who heads the technology, media and telecom investment banking group globally, as investment banking co-chief.
Mr. Dees will share his new title with Gregg Lemkau and Marc Nachmann.
Mr. Dees’s promotion came about a week after Goldman elevated former investment banking co-head John Waldron to president and chief operating officer and named Stephen Scherr as its new finance chief. — Reuters

Davao’s new party venue

Aeon Luxe Properties is positioning Aeon Towers as Davao City’s next events hub, when it opens next year. The 33-storey Aeon Towers will have a Grand Ballroom that can accommodate up to 500 people for parties, weddings, and corporate events. It also has meeting rooms and board rooms at the 31st floor, as well an all-day dining area that can fit 200 people. Located at JP Laurel Avenue, Bajada, Aeon Towers will have 144 hotel rooms and 144 serviced apartments, as well as a gym and spa.

Global trading order to be restored over the long term, survey shows

DESPITE the trade tension between the United States and China, majority of business professionals are optimistic the global system of trade can be restored over the long term, according to results of the Bloomberg New Economy Forum survey.
However, the survey, which was conducted last month among 2,000 business professionals in 20 markets including the Philippines, also showed only half of the respondents believe there will be more global trade in five years.
Among the respondents from the Philippines, 51% are optimistic the global trading order will be restored soon, while 76% said there will be more trade in five years’ time.
Justin B. Smith, chief executive officer of the Bloomberg Media Group, said the New Economy survey provides a “barometer into public sentiment towards a world economy in transition,” ahead of the inaugural Bloomberg New Economy Forum to be held in Singapore in November.
“The survey reveals vast differences in perceptions for the future and highlights the need to bring together global leaders in business and government to find private-sector led solutions to some of the world’s biggest challenges,” Mr. Smith was quoted as saying in a statement.
The survey suggested that developing countries have a more positive trade outlook than developed countries. Around 63% of respondents from emerging markets see more global trade in five years, while only 36% from developed markets agreed.
“One of the striking findings from the survey is the divergence between optimism about the global trade outlook in emerging markets, and pessimism in developed economies,” Tom Orlik, Bloomberg’s Chief Economist said in the survey report.
“This suggests that, for emerging markets, the costs of the current slide towards a trade war could be less than expected. If businesses retain that fundamental optimism about the outlook for trade, continued hiring and investment could propel growth forward, even as tariff barriers rise,” he added.
The survey also showed 49% of Philippine respondents think the US-China trade war is hampering global growth, while 22% believe the trade tension “will set” US-China relations.
Majority (75%) of the Philippine respondents believe China will become the “strongest economic powerhouse in ten years’ time,” followed by the United States (71% of responses) and Japan (63%).
Meanwhile, a fourth of survey respondents pointed to global governance as the most critical global challenge requiring action. This sentiment was strong among respondents from the Philippines (35%), India (39%) and Middle East (41%).
“We think that private-sector businesses must take greater leadership in addressing key global challenges. New economies are playing an expanded role across trade and businesses today, and with a changing new world order, there is an urgent need for real dialogue and action on the long-term implications of this transitional moment,” Mr. Smith said. — Janina C. Lim

Fox Network taps the executive behind Walking Dead and Mad Men

THE MAN who brought The Walking Dead to the world will help bring a once-slumping broadcast network back to life.
21st Century Fox Inc. hired Charlie Collier, one of the top programming executives in the TV business, to run its broadcast network and entertainment operations, according to a statement Friday. The change is part of a broader shake-up at Fox, which is selling most of its entertainment assets to Walt Disney Co. The broadcast network will be part of a spin-off that’s currently being called New Fox.
Collier has been serving as president of AMC Networks Inc.’s namesake cable channel, as well as its studio. The executive worked at AMC for more than a decade, overseeing its transition from an outpost for classic movies to a reliable provider of high-end dramas like Mad Men and Breaking Bad.
His move to Fox extends a round of musical chairs for US broadcasting. All four main US networks have announced changes in leadership in the past couple months. Dana Walden, the current co-chair of Fox, will go run ABC after the Disney deal, while Gary Newman, her co-chair, hasn’t announced his plans.
Collier will steer Fox through a turbulent time in the television business. Viewership of all live networks is in decline because people are watching more TV on-demand, or abandoning it altogether for streaming services Netflix and YouTube. Fox has suffered a particularly steep drop in viewers over the past few years. Once the most-watched network — thanks to the music competition American Idol — Fox was in the ratings cellar last year.
But the company has begun staging a comeback, helped by its sports programming. Its ratings have grown double-digits this year thanks to Thursday Night Football, and the network has surpassed ABC in viewership so far this season. Football and wrestling will claim prime time slots in the years to come.
Collier is tasked with filling programming slots during the other nights of the week, and would oversee any new entertainment initiatives. Post-merger, Fox will own its namesake broadcast network, Fox News Channel and Fox Sports.
Collier is leaving AMC while the company is in the middle of figuring out what to do with its most important franchise, The Walking Dead. Collier had been leading the effort to prolong the zombie show, the first produced by AMC’s studio. AMC plans to make several movies and TV shows based on the series. — Bloomberg

How PSEi member stocks performed — October 22, 2018

Here’s a quick glance at how PSEi stocks fared on Monday, October 22, 2018.

 
Philippine Stock Exchange’s most active stocks by value turnover — October 22, 2018

DICT to redistribute frequency after selection of new telco

THE Department of Information and Communications Technology (DICT) will seek to redistribute frequency spectrum fairly among the telecommunications incumbents, PLDT, Inc. and Globe Telecom, Inc. as well as the new industry entrant, the so-called “third player.”
“This is where we are going to come up with the policies, the DICT will come up with policies for the equal distribution, redistribution of the spectrum especially (based on) frequency requirement. These are best practices in other countries. Also there is now in Congress a bill in coming up with also the same focus in equitably redistributing our frequencies,” Acting Secretary Eliseo M. Rio, Jr. said.
Mr. Rio was responding to queries by Senator Risa N. Hontiveros-Baraquel on his position regarding the bill that seeks to allocate and manage the country’s radio frequency spectrum through competitive bidding. He said the frequency that will be provided to the third player are the “leftovers” of Globe and Smart. He added that once the playing field has been leveled, the government will introduce frequency auctions.
“We said there will be no auction for the third telco but once we have leveled the playing field then we can go to the auction for new frequency,” he said.
Asked by Senator Grace S. Poe-Llamanzares on how he intends to claw back frequency from the major telcos, Mr. Rio said that the DICT is considering administrative measures, though its ultimate course of action will be formed after consultation with stakeholders.
“What we’re going to take into consideration is that we can monitor frequencies that are not being efficiently utilized or not even utilized at all. We can measure that and we can increase the SUF (spectrum users fee). That is an administrative function that we can do so that they’ll be really forced to give it back,” he said.
Mr. Rio also said the third player will need about two years before rolling out mobile infrastructure for additional frequency, especially for fifth generation (5G) services.
A total of eight firms have purchased bid documents at the National Telecommunications Commission (NTC) office in Quezon City since they were made available on Oct. 8. Bid documents can be purchased online or at the NTC office for P1 million until the deadline for submission of bids on Nov. 7. — Camille A. Aguinaldo

Palace threatens to take over ‘3rd player’ selection

MALACAÑANG said the selection of a so-called “third player” for the telecommunications industry will be taken over by the Office of the President if a new entrant is not named by November.
Presidential Spokesman and Chief Presidential Legal Counsel Salvador S. Panelo said on Monday that the selection process is currently under way, but the President has said that “if selection has not happened by November he will take over.”
On whether the Palace is optimistic about the selection committee meeting the President’s November deadline, Mr. Panelo said: “Hopefully, hopefully.”
The President signed on April 7 Administrative Order (AO) No. 11 creating an oversight committee on the entry of a third player to “ensure reliable, inexpensive and secure telecommunications services.”
The Palace noted that a third player to challenge incumbents Globe Telecom and PLDT Inc., “is a matter of paramount national interest which shall redound to the benefit of the public by ensuring genuine competition in the telecommunications industry.”
The oversight committee is composed of representatives of the Department of Information and Communications Technology as chairperson; the Department of Finance as vice-chairperson; the Office of the Executive Secretary; and the National Security Adviser. — Arjay L. Balinbin

PEZA hoping expansions will offset expected decline in new project proposals this year

THE Philippine Economic Zone Authority (PEZA) said registered investments for new projects are expected to decline in 2018 but is hoping expansion proposals will help take up the slack.
“We feel that the declines can be tempered,” PEZA Director-General Charito B. Plaza said in a news conference at the agency’s headquarters in Taguig City, when asked for her outlook on new investment pledges.
In the first nine months of the year, investment registrations at PEZA fell 55.28% year-on-year to P87.85 billion.
PEZA was initially targeting to end 2018 with a percentage growth increase in the three digits, but revised the goal downward twice — first to 10% before forecasting a contraction.
Among the factors expected to keep new investment from declining more steeply are expansion by PEZA locators amid a looming overhaul of fiscal incentives under the Tax Reform for Attracting Better and High-quality Opportunities (TRABAHO) bill.
“Existing investors have taken a wait-and-see position, though some are expanding because of increased demand,” Ms. Plaza added.
The expansion trend first emerged in August within the information technology-business process outsourcing (IT-BPO) industry.
In the nine months to September, investment applications in the IT-BPO sector grew 8.8% year on year, making it the only sector to post growth during the period.
Ms. Plaza said in August IT-BPO investment grew 12% month on month, turning around after seven consecutive months of contraction.
She noted the investment applications by Convergys Philippines Services Corp. and Sitel Philippines Corp.
Ms. Plaza said this improvement in the IT-BPO sector appears to end a period of uncertainty for the industry after US President Donald J. Trump declared an America First policy encouraging businesses to transfer global operations back to the US.
She said the White House seems to want manufacturing operations to relocate to the US “but not services.”
US investment accounts for more than two-thirds of the sector, which consists of over 260 IT-BPO firms or nearly 70% of the 390 companies registered with PEZA.
Asked if she sees this trend sustained toward the end of the year, Ms. Plaza said investors are “motivated… to hold on.”
Next year, PEZA expects the elections to dampen prospects of a recovery in investment pledges, as investors again take a wait-and-see attitude pending more clarity on the makeup of the new legislature.
“Because of the forthcoming election… investors are on hold. They will not expand. New investors will take a wait-and-see attitude,” Ms. Plaza said. — Janina C. Lim

DoE threatens to revoke firm’s rights to Palawan exploration concession

THE Department of Energy (DoE) threatened to revoke the rights of Colossal Petroleum Corp. to a service area off the Palawan coast if it does not submit its work plan after winning Area 5 during the department’s last petroleum contracting round in 2014.
“If they do not push through with Area 5, which they won in PECR (Philippine Energy Contracting Round) 5, their proposal might be cancelled or [they might be] disqualified,” DoE Undersecretary Donato D. Marcos told reporters after a forum at the Manila Hotel on Monday.
DoE Secretary Alfonso G. Cusi, who was with Mr. Marcos, concurred, and called on Colossal to agree to abide by the outcome of a legal ruling that could determine the viability of the service contract.
Mr. Marcos said his office will send a letter to Colossal within the week to set terms.
The legal case pertains to a ruling from the Commission on Audit (CoA) that the government cannot assume the income tax due from the consortium operating the Malampaya gas-to-power project. Consortium members questioned the ruling, the resolution of which is pending with the Supreme Court.
Colossal, which Mr. Marcos described as a Filipino-led company, was among the winning bidders of the areas offered by the previous administration for exploration under PECR 5. Israeli firm Ratio Petroleum Ltd. won a separate exploration area under the same contracting round.
Mr. Cusi said the awarding of the contracts has been pending as problems emerged, including the CoA ruling. The PECR was established as a transparent and competitive system of awarding service or operating contracts for prospective petroleum or coal areas.
“We tried to untangle all those problems, including the CoA issue,” Mr. Cusi said, adding that Ratio agreed to abide by whatever ruling the Supreme Court will issue.
Last week, Ratio was formally awarded the petroleum service contract for Area 4 in the east Palawan basin covering 416,000 hectares for potential oil and gas resources. Area 5, which is within Philippine territory, and Area 7, which is within the disputed area with China, were the ones won by Colossal.
“We cannot leave it hanging,” Mr. Cusi said on the reason for the ultimatum for Colossal.
The DoE has been pushing for more oil and gas exploration in the Philippines in view of the country’s heavy reliance on imported fuel.
In the first half, the country’s payments for oil imports rose by 34.4% to $6.312 billion in part because of the peso’s depreciation against the dollar, making inward shipments of crude oil and finished petroleum products more expensive.
In August 2017, the DoE issued policy changes on energy exploration by doing away with the PECR and replacing it with the Philippine Conventional Energy Contracting Program (PCECP). The revised and transparent petroleum service contract awarding mechanism would allow investors to bid for exploration projects through a competitive selection process or by nomination.
The department has listed 14 areas that prospective investors may bid for, which does not preclude them from nominating other areas to develop subject to regulatory approval.
The identified areas are onshore and offshore sites located in the Cagayan basin (one area), eastern Palawan (three areas), Sulu (three areas), Agusan-Davao (two areas), Cotabato (one area) and in western Luzon (four areas). All the areas are within Philippine territory.
The DoE has since conducted road shows in Singapore, Palawan, Davao and Zamboanga ahead of the contracting program’s launch in Manila in the third week of November.
“We’re looking for investors that are really competent, both financially and technically,” Mr. Cusi said.
Yesterday’s Kapihan sa Manila Hotel Forum was hosted by the Association of Philippine Journalists Samahang Plaridel Foundation, Inc. — Victor V. Saulon

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