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Rice import bid fails, NFA to rely on private traders

The National Food Authority (NFA) will continue to depend on private traders to provide cheaper rice in the market after its first bidding for the importation of 250,000 metric tons (MT) of rice failed on Friday, April 27.
NFA Deputy Administrator for Marketing Operations Judy Carol L. Dansal said that should there be any delays in the importation due to the failed bid, the local traders will only have to support for only up to five days.
“This is a G2G procurement. our governments are watching over us and they are supporting each other,” she added.
“They are committed to help each other. We are positive because our neighbors are also friendly to the Philippine government.”
Citing the province of Isabela, Ms. Dansal said that it has committed 100 trucks carrying 500 bags of rice to be sold at P39 per kilo.
The NFA has set a reference price of $483.63 for 15% broken and $474.18 for 25% broken, as approved by its administrator Jason Laureano Y. Aquino.
However, both countries failed to comply with the reference price.
Thailand did not submit any bid for the 15% broken, while it has set a price of $530 per metric ton for 25% broken. The country also only pledged to ship 120,000 MT of 25% unbroken rice.
Vietnam offered a bid of $540 and $532 for 15% broken and 25% broken, respectively.
It pledged to ship 50,000 MT of 15% broken and 100,000 MT for 25% broken, which still falls below the 250,000 MT demand of NFA.
On its re-offer,Thailand lowered its bid to $445 per MT, while Vietnam had set its prices to $450 per MT and $441 per MT for 15% broken and 25% broken, repsectively.
The NFA will be conducting a second bidding next week, no later than Friday.
When asked if the Philippines is willing to recalibrate its reference prices to meet halfway, Ms. Dansal said that it will still have to be discussed by their supervisors. — Anna Gabriela A. Mogato

Marcventures posts revenue growth on higher nickel ore shipments

Listed company Marcventures Holdings Inc. said its mining subsidiary Marcventures Mining & Development Corp. (MMDC) saw an increase in revenue last year due to higher volume of saprolite nickel ore shipped.
In its annual report, Marcventures said MMDC sold 40 shipments or an aggregate of 2.18 million wet metric tons (WMT) of nickel ore.
Of the total shipment, saprolite filled up 26.5 vessels while limonite shipments took up 13 vessels.
This led to a 6.34% increase in revenues from 2016’s P1.92 billion to P2.04 billion.
Operating expenses, however, increased by 24.24% to P562.34 million, the highest increase in expenditures came from advertisement which saw a 2,537.90% increase to P2.27 million. — Anna Gabriela A. Mogato

North, South Korea seek peace, denuclearization in historic summit

The leaders of North and South Korea agreed to pursue a permanent peace treaty and the complete denuclearisation of their divided peninsula at a historic summit Friday laden with symbolism.
The North’s leader Kim Jong Un and the South’s President Moon Jae-in embraced after signing what they called the Panmunjom Declaration, following a day that began with an emotional handshake over the Military Demarcation Line that splits their countries.
The pair issued a statement confirming their “common goal of realising, through complete denuclearisation, a nuclear-free Korean peninsula”.
They agreed they would this year seek a permanent end to the Korean War, 65 years after hostilities ended in an armistice rather than a peace treaty.
Moon would visit Pyongyang in “the fall”, the two leaders said, also pledging to hold “regular meetings and direct telephone conversations”.
But Kim did not mention denuclearisation and analysts warned that while the summit was a good first step, similar promises had been made before and much remained to be done to resolve the issue of the North’s atomic arsenal.
In coming weeks Kim is due to hold a much-anticipated meeting with US President Donald Trump — who has demanded Pyongyang give up its weapons — that will be crucial in shaping progress.
Trump hailed the Korea summit as historic but warned “only time will tell”.
He implicitly claimed credit for the meeting, tweeting: “KOREAN WAR TO END! The United States, and all of its GREAT people, should be very proud of what is now taking place in Korea!”
The Panmunjom Declaration capped an extraordinary day unthinkable only months ago, as the nuclear-armed North carried out a series of missile launches and its sixth atomic blast, earning itself new sets of UN Security Council sanctions.
Kim and Trump had traded personal insults and threats of war, sending tensions soaring before Moon seized on the Winter Olympics to try to broker dialogue, beginning a dizzying whirl of diplomacy that led to Friday’s meeting in the Demilitarized Zone.
‘Heart-wrenching division’
Kim said he was “filled with emotion” after stepping over the concrete blocks that mark the border, making him the first Northern leader to set foot in the South since the Korean War ceasefire in 1953.
At his impromptu invitation, the two men briefly crossed hand-in-hand into the North before beginning the summit, only the third of its kind.
The truce village of Panmunjom was the “symbol of heart-wrenching division”, Kim said afterwards, but if it became “a symbol of peace, the North and South that have one blood, one language, one history and one culture, will return to becoming one”.
He pledged the two Koreas would ensure they did not “repeat the unfortunate history in which past inter-Korea agreements… fizzled out after beginning”.
In the declaration, the two sides said they would seek meetings this year with the US and possibly China — both of them parties to the 1953 ceasefire — “with a view to declaring an end to the war, turning the armistice into a peace treaty, and establishing a permanent and solid peace regime”.
But agreeing a treaty to formally close the conflict will be complicated — both Seoul and Pyongyang claim sovereignty over the whole of the Korean peninsula.
The two previous Korean summits in 2000 and 2007, both of them in Pyongyang, also ended with displays of affection and similar pledges, but the agreements ultimately came to naught.
‘First step’
Moon welcomed the North’s announcement of a moratorium on nuclear testing and long-range missile launches as “very significant”, calling it “an important step towards complete denuclearisation of the Korean peninsula.”
But how much progress was made on the nuclear issue remained unclear.
Pyongyang has always insisted it needs nuclear weapons to defend itself against a US invasion, and its past references to denuclearisation of the “Korean peninsula” have been code for the removal of US troops from the South and the end of its nuclear umbrella over its security ally — prospects unthinkable in Washington.
The North is demanding still unspecified security guarantees to discuss its arsenal, while Washington is pressing it to give up its weapons in a complete, verifiable and irreversible way.
Affirming a commitment to “denuclearisation of the Korean Peninsula”was “not new”, said MIT political science professor Vipin Narang, “historic summit notwithstanding”.
But he added: “Reaffirming it is better than not reaffirming it.”
Paul Haenle of the Carnegie-Tsinghua Center in Beijing said it was “really just the first step in broader diplomatic efforts”.
“Similar to a game of chess, this move opens up a series of possible developments but in many ways, the hard work really begins now.”
Tree planting
Before signing the declaration, Moon and Kim held a symbolic tree planting ceremony near the demarcation line.
The soil came from Mount Paektu, on the North’s border with China, and Mount Halla, on the South’s southern island of Jeju.
It was a far cry from the last time the South Korean leader was on duty for a tree-related event in the DMZ, in 1976, when he had a supporting role in a monumental US and South Korean show of force after Northern soldiers killed two US officers trying to prune a poplar.
After the planting, Kim and Moon spoke alone for more than half an hour in an open-air tete-a-tete, the younger North Korean leader nodding and listening attentively to the former special forces soldier — who has long advocated dialogue. — AFP

Duterte to meet with leaders from Singapore, Indonesia, Vietnam during ASEAN summit

President Rodrigo R. Duterte is set to have bilateral meetings with leaders of Singapore, Indonesia, and Vietnam on the sidelines of the 32nd Association of Southeast Asian Nations (ASEAN) Summit in Singapore.
Singapore, the chair of the ASEAN for 2018, is hosting the 32nd ASEAN Summit and related meetings at the Shangri-La Hotel from April 25 to 28.
The Presidential News Desk (PND) said Mr. Duterte arrived in Singapore on Thursday night, April 26, and he was “welcomed by Philippine Ambassador to Singapore Joseph Del Mar Yap and Sam Tan Chin Siong, Minister of State in the Prime Minister’s Office.”
Department of Foreign Affairs (DFA) Secretary Alan Peter S. Cayetano, the PND told reporters in an interview in Singapore that Mr. Duterte’s meetings “will be with leaders of Singapore, Indonesia and Vietnam.”
On Saturday, according to the PND, Mr. Duterte is scheduled to have a bilateral meeting with Singaporean Prime Minister Lee Hsien Loong, and he is also expected to meet with the members of the Filipino workers (OFWs) there before returning to the Philippines.
On its Web site, the office of Singapore’s Prime Minister said: “The 32nd ASEAN Summit is the first gathering of the ASEAN Leaders hosted by Singapore this year.”
“The Leaders will discuss ASEAN’s priorities, as well as the challenges and opportunities that it faces, in line with the focus on strengthening ASEAN’s resilience and innovation this year. The Leaders will also exchange views on regional and international developments,” the Prime Minister’s office also said. — Arjay L. Balinbin

Bloomberry unit wins bid for 16-hectare land in Entertainment City

The Philippine Amusement and Gaming Corp. (PAGCOR) has awarded 16 hectares of land in Entertainment City to a unit of Bloomberry Resorts Corp. for P37.3 billion, the listed firm said on Friday.
In a disclosure to the stock exchange, Bloomberry said its wholly-owned subsidiary Sureste Properties, Inc. (SPI) was the winning bidder for the property, where Solaire Resort and Casino is set to expand. SPI was the only bidder for the property after two failed biddings. — Arra B. Francia

Cemex earnings drop in first quarter

Earnings of Cemex Holdings Philippines, Inc. (CHP) dropped by 71% in the first quarter of 2018, as higher volumes for the period failed to offset the increase in fuel and power costs. — Arra B. Francia

Puregold divests from Lawson brand

Puregold Price Club, Inc. has divested from the Lawson chain of convenience stores, after accepting its Japanese partner’s offer to buyout its 70% stake in the venture.
In a disclosure to the stock exchange on Friday, Puregold said it has signed a share purchase agreement with Lawson, Inc to sell its 4.9 million shares in PG Lawson, Inc. — Arra B. Francia

Bulacan airport gets NEDA Board OK

THE NATIONAL Economic and Development Authority (NEDA) Board chaired by President Rodrigo R. Duterte gave the go signal for eight new infrastructure projects, including a P753.63-billion international airport project proposed by San Miguel Corp. (SMC).
Finance Secretary Carlos G. Dominguez III said in a mobile phone message to reporters on Wednesday evening that the NEDA Board approved SMC’s unsolicited proposal to build a new international airport in Bulacan, although “confirmation is subject to final review of the concession agreement.”
SMC’s proposed airport will be built on a 2,500-hectare property with up to six runways, and to be configured to handle about 100 million passengers a year.
As an unsolicited proposal, SMC’s project will have to undergo a Swiss challenge, which requires an invitation for other companies to make competing offers, while giving the original proponent the right to match them.
The NEDA Board also approved the P50-billion 71.13-kilometer railway project that will connect Subic Bay Freeport Zone to Clark Freeport Zone, and the P12.55 billion operations and maintenance contract for the Clark International Airport expansion project. The Subic-Clark railway is funded by Chinese official development assistance (ODA).
Also given the green light were the P39.22-billion Ambal-Simuay River and Rio Grande de Mindanao River flood control projects; the P27.369-billion project involving the construction of 10 priority bridges crossing the Pasig-Marikina river and Manggahan floodway; and the P11.37-billion Bridge Construction Acceleration Project for Socio-Economic Development, which includes five four-lane bridges and 25 two-lane truss bridges in nine regions.
These big-ticket infrastructure projects are part of the government’s P8.4-trillion “Build, Build, Build” program. Under the six-year plan, the Philippines aims to lift infrastructure development spending from 5.4% of GDP in 2017 to over 7% in 2022.
The NEDA Board also gave the go signal for the P1.02-billion Davao Food Complex project, which involves the development of a 20-hectare government property in Toril, Davao City into an agri-industrial complex; and the P4.78-billion Rural Agro-Enterprise Partnership for Inclusive Development and Growth (RAPID Growth) project aimed at supporting 78,000 farming households.
Aside from the eight new projects, the NEDA Board also gave the go-ahead for adjustments in projects approved in earlier meetings, such as the change in scope and cost and loan validity extension of the Integrated Disaster Risk Reduction and Climate Change Adaptation Measures in Low-Lying Areas of Pampanga Bay Project worth P6.151 billion.
The NEDA Board also confirmed the restructuring for the P7.24 billion Integrated Natural Resources and Environment Management Project; the change in scope and cost for the Integrated Marine Environment Monitoring System Phase 2 Project now worth P1.68 billion; and the Metropolitan Waterworks and Sewerage System’s proposed increase in cost of the New Centennial Water Source-Kaliwa Dam Project worth P14.321 billion.
The following projects were given provisional approval: Land Bank of the Philippines’ P1.27 billion Conflict-Sensitive Resource and Asset Management Program – Financial Cooperation Project, the Department of Interior and Local Government’s Safe Philippines Project Phase 1 worth P20.3 billion, and the Department of Public Works and Highways’ (DPWH) Improving Growth Corridors in Mindanao Road Sector Project (Tawi-Tawi Bridges) worth P25.26 billion.
The NEDA Board also approved the change in financing from local funding to ODA of the Arterial Bypass Project Phase 3; the National Irrigation Administration’s proposed change in design and increase in cost of the P4.37 billion Chico River Pump Irrigation Project and its request for 46-month extension of loan validity and project completion schedule for the P11.21-billion Jalaur River Multi-Purpose Project, Stage 2.
The DPWH’s request for a 24-month loan validity extension, revision of construction period and schedule, and change in scope of the P1.03-billion Samar Pacific Coastal Road Project were likewise given the go-signal, as well as the Department of Transportation’s request for a supplemental loan for the New Bohol Airport Construction and Sustainable Environment Protection Project.
“We are pleased to see more infrastructure projects in the pipeline. As we roll them out, government shall keep working towards developing the country’s infrastructure to ensure easing of congestion in Metro Manila and spreading growth to the regions,” Socioeconomic Planning Secretary Ernesto M. Pernia was quoted as saying in a separate statement yesterday. — E.J.C. Tubayan

BSP eases SBL rules for project contractors

By Melissa Luz T. Lopez
Senior Reporter

THE CENTRAL BANK has eased lending ceilings imposed on banks in order to accommodate financing for big-ticket infrastructure projects.
In a statement, the Bangko Sentral ng Pilipinas (BSP) said it will allow firms implementing major infrastructure projects to have a separate single borrower’s limit (SBL) as they secure funding from banks and quasi-banks.
The SBL is intended to limit the credit exposure to a single client to a maximum of 25% of a bank’s net worth. This is to minimize risks for the bank in the case of default, as relying too heavily on one borrower could damage the bank’s performance and bottom line.
The ceiling — which has been in place since 2004 — includes loans, as well as securities underwritten by universal banks and investment houses unsold after 90 days.
The central bank previously provided a separate 25% credit limit for public-private partnership (PPP) projects from 2010 to 2016. The PPP was the preferred mode of the former Aquino administration in pushing infrastructure development.
The new rules will soon allow project contractors — which the BSP called special purpose entities (SPEs) — to have a separate 25% exposure cap from lenders. This effectively gives them a bigger loan line to tap, as it would be treated separately from credit secured by their parent firms.
The central bank recognized that SPEs may be treated as independent units despite being owned by conglomerates, saying that these firms are “ring-fenced” by appropriate legal structures and operational controls that set their assets and cash flows apart from shareholders and related parties.
SPEs are usually composed of several conglomerates forming a consortium as they bag big-ticket construction contracts from the government.
Among the popular consortiums include the Megawide Construction Corp. and GMR Infrastructure Ltd. which is building a new terminal for the Clark International Airport, as well as the “super-consortium” proposing to rehabilitate the Ninoy Aquino International Airport which include Ayala Corp., Aboitiz Equity Ventures, Inc., Alliance Global Group, Inc., Asia Emerging Dragon, Filinvest Development Corp., JG Summit Holdings Inc. and Metro Pacific Investments Corp.
The central bank said the move is “in support of the government’s Build, Build, Build initiative,” referring to the plan of the Duterte administration to spend as much as P8 trillion from 2016 to 2022 on high-impact infrastructure projects nationwide.
The Duterte administration veered away from the PPP model in favor of a “hybrid” mode where the government takes on the construction. Several projects in the pipeline — which include railways, airports, and toll roads — are eyed to be transferred to the private sector for operations and maintenance, to improve efficiency.
Still, banks are expected to maintain sound practices despite the relaxed rules.
“Lending to such dedicated SPEs shall be subject to certain conditions to ensure effective risk monitoring and management. It is also required that purposes of project finance loans be in line with the government’s priority programs and projects,” the central bank added, pointing out that loan applications need to be prudently assessed by checking an SPE’s assets, revenues and project documents.
The central bank also reminded banks to be mindful of their project finance exposures and check the concentration of their loan portfolios in order to curb “excessive” credit risk-taking.
Sought for comment, Budget Secretary Benjamin E. Diokno said the BSP’s new rules will have a “positive” impact on the state’s infrastructure push: “The facility will be especially useful for construction firms who will bid for construction of projects and those who will bid for the operations and maintenance of an existing or new projects.”
“I know that the 25% rule has been a binding constraint for private construction,” Mr. Diokno said via text.
Economic managers said aggressive public spending will be supported by a mix of government debt, foreign grants, and additional revenues expected from up to five packages of the comprehensive tax reform program.
The massive infrastructure spending agenda is seen to propel economic growth to average 7-8% by 2022, while plugging connectivity and logistics woes in order to improve the ease of doing business in the Philippines.

CAR fastest-growing region in 2017 — PSA

By Jochebed B. Gonzales
Senior Researcher

THE ECONOMY of the Cordillera Administrative Region (CAR) grew the fastest among the 17 Philippine regions in 2017, though the National Capital Region (NCR) — or Metro Manila — still has the biggest share in the country’s output.
Preliminary results from the Philippine Statistics Authority (PSA) showed growth in CAR — which includes Baguio City and the provinces of Abra, Apayao, Benguet, Ifugao, Kalinga, and Mountain Province — picking up to 12.1% annually from 2.3% in 2016. This outpaced NCR’s 6.1% and the national growth rate of 6.7%.
Lifting CAR’s growth last year was the industry sector, which saw an 18.6% growth in 2017. This was a reversal of the 0.3% contraction posted in 2016. The sector was also the region’s predominant source of output, accounting for 52.1% of its gross regional domestic product (GRDP).
Union Bank of the Philippines (UnionBank) chief economist Ruben Carlo O. Asuncion cited infrastructure development as the driver of CAR’s double-digit growth last year.
“Current trends indicate that real estate developments are growing in non-traditional economic centers,” Mr. Asuncion said.
“Incidentally, CAR and Central Luzon are hosts [of] recent game-changing infrastructure [projects] like the SCTEX (Subic-Clark-Tarlac Expressway), NLEX (North Luzon Expressway), and TPLEX (Tarlac-Pangasinan-La Union Expressway), which I believe, have direct impact on local economic activities,” he added.
Among the industry subsectors, construction in CAR grew 23.6%, a turnaround from the 26.4% contraction in 2016. Manufacturing growth accelerated to 19.5% from the year earlier 3.8%.
Aside from CAR, seven other regions posted growth above the national average, namely Davao Region (10.9%); Central Luzon (9.3%); Western Visayas (8.4%); SOCCSKSARGEN (8.2%); Autonomous Region in Muslim Mindanao (ARMM, 7.3%); Cagayan Valley (7.2%); and Calabarzon (6.7%).

FASTEST GROWING REGIONS by BusinessWorld
On the other hand, Eastern Visayas, which was the fastest growing region with 12% in 2016, had the slowest growth recorded in 2017 at 1.8%. Other regions that had below-average growth include Zamboanga Peninsula (2.3%); CARAGA (4.3%); Bicol Region (5.1%); Central Visayas (5.1%); Ilocos Region (5.8%); Northern Mindanao (5.9%); NCR (6.1%); and MIMAROPA (6.2%).
NCR STILL TOP CONTRIBUTOR TO GROWTH
Still, Metro Manila remained the biggest contributor to economic growth last year even as expansion eased. NCR’s share in the national economy slightly dipped to 36.4% from 2016’s 36.6%, followed by Calabarzon (16.8%) and Central Luzon (9.7%), the locations of the country’s biggest firms and industrial zones.
Dragging NCR’s output was construction, which worsened to a 16.1% decline in 2017 from the 3.5% drop posted the year earlier.
“The slowdown [in the NCR’s construction output was due to] the drop in private construction spending… from approved construction permits,” said Paciano B. Dizon, officer-in-charge regional director for the PSA’s NCR office in a press conference yesterday.
UnionBank’s Mr. Asuncion attributed Metro Manila’s construction decline last year to the Duterte administration’s goal of redistributing growth to other regions, among others.
“The priority of decentralizing economic growth may have caused this decrease of private construction GVA (gross value added). But, it must also be noted that this private construction decline has been a marked trend more recently,” said Mr. Asuncion.
“It may also be because that real estate developers are now more focused outside of the usual economic centers where economic potential have initially originated.”
Meanwhile, other economists pointed to the rising prices of construction materials.
“The growth slowdown in NCR’s private construction may have been influenced by the increase in prices of construction materials amid stronger inflationary pressures,” said Security Bank Corp. economist Angelo B. Taningco.
Guian Angelo S. Dumalagan, market economist at the Land Bank of the Philippines (LANDBANK), shared the same opinion. “Rising interest rates and commodity prices could be the reasons behind the slowdown in private construction. These two trends raised the cost of construction, tempering the sector’s output growth.”
NCR also led all regions in terms of per capita GRDP with P244,453, growing 5% and higher than the national average of P82,592. Calabarzon and CAR likewise topped the national average at P99,328 and P83,044, respectively. On the other hand, ARMM had the lowest GRDP per capita last year at P13,989.
Also worth noting is that among the regions, only Eastern Visayas recorded a drop in GRDP per capita (-0.1%) last year to P37,125.
Looking forward, UnionBank’s Mr. Asuncion expects NCR to still be the main source of economic growth although other regions “are slowly and surely catching up.”
“In the next coming quarters, I expect the private construction GVA trend to continue with other regions taking up the slowdown,” the economist said.
For Security Bank’s Mr. Taningco, “I expect growth of select regions outside NCR… to continue its relatively fast growth over the medium term as I see the current administration’s priority [to] promote more inclusive growth via regional development. I believe that such trend will help reduce the economy’s dependence on NCR and narrow income inequality.”
LANDBANK’s Mr. Dumalagan concurred: “We could expect faster rates of growth in other regions given the administration’s thrust to invest more outside of NCR. The government’s plan to build bridges and roads in the Visayas and Mindanao could improve connectivity and promote economic activity in these two island groups.”

Closed for renovation


By Teddy Y. Montelibano
BORACAY — A few days before the closure, the mood in Boracay was, understandably, subdued, if not totally gloomy.
“This is the island’s darkest hour,” is how Randy Salvador, manager of the two-year-old Coast, a boutique hotel on the island’s Station 2, put it.
When he first heard talk that the government would be closing Boracay for rehabilitation, he felt dread over what would happen to Coast’s workers, particularly those working on a contractual basis. Resort management has since assured the workers they would be taken care of during the closure period.
“Now, my thoughts are with the informal workers on the island, the tricycle drivers, the taho (tofu) and ice cream vendors, the masajistas (masseuses) on the beach with grade school children — how will they now be able to send their kids to school? How many out-of-school-youths will there be on the island,” wondered Mr. Salvador.
Yesterday authorities shut down Boracay, widely regarded as the crown jewel of Philippine tourism, to all tourists, whether foreign or local. For the next six months at least, the national government hopes to address what President Rodrigo Duterte, in reaction to a report on the state of the island’s environment submitted by Department of Environment and Natural Resources (DENR) Secretary Roy Cimatu in February, described as a “cesspool.”
SEWAGE IN BULABOG
There seems to be a general view among people here that the expletive spewed by Mr. Duterte was provoked by that part of Cimatu’s report on a specific spot in Boracay — the 2.5 kilometer-long less-developed Bulabog beach area on the island’s east side where coliform levels, thanks to a drainage system that empties into the sea, have been found to have exceeded safety standards.
That drainage system, or “storm drain,” according to long-time Boracay resident, restaurateur Jose Carlos Remedios, was meant to expel excess rainwater into the sea. “But they found that a lot of illegal connections to the drainage system were made by establishments wanting to get rid of their wastes. Thus, what was being expelled out into the sea in Bulabog beach wasn’t just rainwater, but waste as well,” he said.
There is a local government ordinance issued in 2012 which mandates businesses and residents to connect to the sewerage system of Boracay, or, if they are located too far from the lines or for other reasons cannot connect to the system, are required to build and maintain sewerage treatment plants and septic tanks. Despite the ordinance, according to the DENR, “Boracay has been hounded with the issue of untreated wastewater being dumped into the drainage system of the island, instead of the sewerage system. This untreated wastewater, which contains harmful bacteria and other substances, eventually reaches the open waters in and around Boracay.”
Not much swimming happens in Bulabog. Also known as Boracay’s “back beach,” this is where windsurfing, kiteboarding, and jetski enthusiasts go.
In contrast to Bulabog is Boracay’s famed White Beach, on the island’s west side, where the concentration of resorts and other establishments catering to tourists is located along 4.5 kilometers of silken smooth white sand lapped by clear turquoise waters.
Luxe resorts and restaurants offering all sorts of varied cuisines, and stunning sunsets which signal the start of a vibrant nightlife all played a part in Boracay’s getting luxury travel magazine Conde Nast Traveler’s Readers’ Choice Award for Top Island in the World in 2016.
Mr. Remedios said that indeed, since he came to the island 23 years ago in 1995 to put up the first ice plant on Boracay, then opening the popular Spanish Filipino restaurant Dos Mestizos in 1998, progress and unrestrained tourism activity has had adverse impacts on the island’s fragile ecosystem.
But, he stressed, most of the pollution on the island is concentrated on Bulabog, not on White Beach, “and the national government could’ve done the rehabilitation of the island by phases, starting with the Bulabog beach area while allowing stakeholders on White Beach to prepare and make provisions for their workers for the closure.”
DAMAGE IS DONE
“Whether the island is closed or not, the damage has been done; when the President declared Boracay a ‘cesspool,’ the whole world picked that up, and what not too long ago was regarded by tourists as one of the most beautiful beaches in the world is now just a dirty place,” Mr. Remedios stressed.
“There’s a chance government might consider reopening the island in three, four months, but now Boracay has been given such bad publicity that the harm has been done,” said Mr. Remedios, who had worked with Philippine Airlines overseas for eight years. “Airlines are pulling out, travel agencies have to refund packages, and it will take time for Boracay to be included again in these packages and airline routes. With no tourists and no business for us, of course we will lose money. And when the island reopens, I’d be happy if we can just break even in the next two years.”
Tourism Congress of the Philippines president Jose Clemente III estimates that nearly 700,000 or so bookings to Boracay within the six month that the island will be closed will be canceled, resulting in some P30 billion in losses in terms of tourist receipts.
“There’s one owner of a property I’ve talked to here who says he’s already lost some P46 million worth of bookings,” says Mr. Clemente, whose family owns the nearly 40-year-old Rajah Travel Corp.
“There’s 430 resorts and similar establishments on the island, and the property I’m talking about is not one of the big hotels,” said Mr. Clemente. “So you can just imagine how much losses will be incurred by the big ones like Discovery Shores and Shangri-la.”
Not hiding the irritation in his voice, Mr. Clemente added, “That’s why I don’t like it when I hear Tourism Secretary Wanda Teo say that the closure of Boracay will have minimal effect on overall tourism. She also said that there have been no cancellations in Europe. And her sources are our tourism attaches. But bookings are not done through attaches, they’re done through tour operators and hotels!”
For his part, White House Beach Resort owner Leonard A. Tirol says he believes the prime agencies involved in closing and rehabilitating Boracay “do not seem to be aware of the full impact of Boracay’s closing.”
“People here will be losing their jobs, farmers supplying Boracay hotel and resort establishments won’t be able to sell their produce, workers sending children to school now won’t have enough money to enroll their kids next month, some 19,000 workers whose employment status are in limbo will have to think very hard about how to take care of family members dependent on them for their daily sustenance,” he said, adding that “if each of these 19,000 workers have, say, three other family members dependent on them, that’s 57,000 people who will go hungry.”
At the same time, Mr. Tirol said he is concerned with stakeholders on the island who have incurred hefty loans. “I know of establishment owners here who have loans as much as P250 million. How they’ll be able to pay that loan when they have no operations, no business coming in, I really don’t know.”
GOING HOME
This writer chanced upon an overflow of people at the Operations Center at the office of the Department of Social Welfare and Development (DSWD) on Boracay and asked what they were there for. One young man, Ed Baringao, said he was there to ask for transport fare so he could go back home to his parent’s house in Cebu.
A waiter in one of the smaller resorts on the island, he along with some 10 other contractual workers in the establishment were laid off. So he intends to go back home and look for another job in Cebu.
In the local dialect, Mr. Baringao said, “it’s a pity because we came to Boracay thinking there would be a lot of work here as normally, April is the height of the summer season. Well, I came here (in late March) and there was plenty of work. Then all of a sudden, no more.”
Informal workers, like, say the masseuses providing massage services to tourists under makeshift tents along White Beach, will be particularly affected by the closure.
Rowen Aguirre, Mayor Ciceron Cawaling’s spokesman and municipal executive assistant for Boracay affairs said, “the informal workers here on the island are basically dependent on tourists. But since no tourists will be allowed entry for six months, then that means they would lose their means of livelihood. The DSWD has its Cash-for-Work program, but that’s for those who will provide manual labor during the rehabilitation period. So if you’re a masajista who’s already past 60, I don’t know if you’d be able to qualify.”
So what’s going to happen to them? “Well, perhaps if there’s a younger member of their family who could do manual labor under the DSWD program then he or she could do that and help provide for other family members who can’t work.”
What if the elderly masseuse has no one to depend on? Mr. Aguirre couldn’t say.
I asked Mr. Aguirre if it was true that the basis for Mr. Duterte’s ire was on account of conditions in Bulabog? He said, “Yes, it’s not the whole island.”
“It’s like the last option — closure — became the only option. The President said he will follow the recommendation of the three agencies (DoT, DILG, and DENR). They recommended closure. So therefore, he we are,” he said.
DENT IN THE ECONOMY
Just exactly what kind of a dent to the economy in Western Visayas and the country as a whole would the closure of Boracay be? Consider this: in 2017, reports say the third biggest contribution to Philippine GDP came from tourism, with at least some 20% coming from receipts derived from some two million local and international tourists who visited Boracay.

The National Economic and Development Authority (NEDA) estimates the six-month closure of Boracay will cost the economy close to P2 billion

NEDA Director General Ernesto M. Pernia sees a drop in the economic growth of Malay town which includes Boracay, Aklan province and the entire Western Visayas region whose gross regional domestic product would be cut by 5.7%.

Said Mr. Aguirre, “Unless the DoT (Department of Tourism) has enough substitutes to make up for the shortfall in income, for certain, there will be a dire negative impact on the P60 billion that we originally were expecting from tourists’ spending in Boracay this year.”

In a meeting with stakeholders on the island on April 17, Department of the Interior and Local Government (DILG) Assistant Secretary for Plans and Programs, Epimaco V. Densing III said Boracay could be reopened to tourists in four months if certain major milestones are met. 

“We could have a soft opening in August if certain standards regarding water discharge, solid waste management, drainage cleanup, full easement compliance, road widening, and wetlands recovery are met,” he said.

Specifically, he said, water discharge for 30 straight days in Bulabog Beach should be within DENR standards. By end of April or early May, the Bulabog drainage system must already be fully rehabilitated. Also by end July there should be a functioning sanitary landfill.

In the next three or four months, all intrusions of establishments violating the 25 plus 5-meter road and beach easement should already be demolished. Also, three of five identified wetlands in Boracay on which structures have been built should be reclaimed by government. 

At least 70% of the road widening project — which involves widening the road from Yapak, where Puka Beach is located in the north, to the Cagban jetty port in the southernmost tip of the island, to 12 meters — as well as completion of the Boracay Circumferential Road, must also have been completed.

“If those are done, the island could very well be reopened even before six months,” Mr. Densing said.

SOLDIER ON
Mr. Tirol doubts that six months is enough time to rehabilitate Boracay fully.

A member of the Philippine Coast Guard Auxiliary’s elite Executive Squadron, Mr. Tirol said he fully supports efforts of the security force responsible for peace and order in the island during the six-month closure period. “I will just help implement whatever guidelines are given to the security force by the DoT, DILG, and DENR,” he said.

Retired from running his posh White House resort along White Beach on Station One, Mr. Tirol now preoccupies himself with community service. In 2009, he organized his Boracay Action Group (formerly the Boracay Fire Rescue and Ambulance Volunteers). He has some 40 personnel on call, and keeps a number of fire trucks and ambulances, including an ambulance speedboat on standby for emergency fire rescue and medical aid.  

Rehabilitating Boracay, Mr. Tirol says, “will be a long, tedious process. And I just wish everyone would cooperate, help government achieve what needs to be done in the fastest possible way so we can all go back to normal.”

Mr. Remedios, meanwhile, intends to keep his 25 employees, all regular employees, and pay them their usual wages for six months. “I will retain them all as it will take time and effort to train new ones when we reopen,” he said.

His restaurant will be closed and an al fresco eatery will be put up on a vacant portion of the lot on which his restaurant sits. This will cater to the locals who will be left on the island after it closes, serving bulalo (bone marrow soup), rice toppings, grilled barbecue items, and other simple, affordably priced home-cooked fare.

Also on offer will be sourdough and whole wheat bread, cheese and chocolate croissants, and other such specialty bread products churned out by Remedios’ bakers which are popular among the island’s European residents.

“My hard-earned savings, along with whatever we hope to generate from the eatery will be used to pay my workers’ wages,” Mr. Remedios said.

“No one will be laid off. We’re all in this together, through thick and thin. Most of my workers have been with me for a long time, and I will keep them all. I just don’t have the heart to let anyone go after all the years of service they’ve given the restaurant.” 

The author, former Businessday and BusinessWorld reporter Teodoro Y. Montelibano first visited Boracay in the late 1970s and has since been a regular visitor to the island. He is currently a freelance journalist and is in the process of writing a book on the ancien regime in Negros. 

Global economy’s hesitation unnerves markets

LONDON — World markets entered 2018 speculating that the most synchronized global economic expansion in a decade was about to overheat but growth has since proved underwhelming.
While missile strikes and threats of a global trade war have hogged the headlines, it’s an unexpected loss of economic momentum, particularly in Europe, that has frightened investors who played down political risks for years and stayed firmly focused on brisk economic growth and rising corporate profits.
The recent surge in oil prices, adding inflation to the economic mix, may also weigh further on markets assessing whether a slowdown is afoot, or if the first quarter was merely a soft patch before the boom resumes.
“For the first time in 18 months, markets no longer have the protective shield of growth momentum,” said Luca Paolini, chief strategist at Pictet Asset Management, who so far considers the soft economic data an air pocket.
“There is not enough evidence to say this is the beginning of the end, yet if you look at fundamentals, there is deterioration relative to last year, no question about that.”
Big multilateral forecasters remain broadly optimistic. The International Monetary Fund predicts robust 3.9% growth for 2018 and next year, though it too warned last week of risks from trade tensions or the waning impact of US tax cuts.
Data this week showed euro zone business morale worsened further in April, while German authorities have cut growth forecasts after business confidence hit its lowest level in more than a year.
US first-quarter gross domestic product (GDP) data due on Friday is predicted by the latest Reuters polls to show a 2.2% expansion, down from a forecast in March of 2.6% growth.
Adding to investors’ concerns are warnings from companies such heavy equipment maker Caterpillar Inc., which said on Tuesday its forecast-beating first-quarter profits and sales were probably a high watermark for the year.
Richard Turnill, global chief investment strategist at BlackRock, told clients equities would continue to do well but he predicted lower returns and higher volatility than in 2017, partly because there was “less room for growth to top expectations.”
REASONS TO BE CAUTIOUS
So where, besides Europe’s faltering Purchasing Managers’ Indexes (PMIs), are concerns about growth evident?
Perhaps most illustrative are government bonds in Western countries where yield curves, the gap between short- and long-term interest rates, have inexorably narrowed all year — a fairly reliable indicator of growth pessimism.
Some of the curve flattening has reversed slightly after the oil price jump increased inflation worries and lifted long-term yields. But the gap between U.S. 2-year and 10-year yields remains almost 30 basis points below the highs hit this year.
“I don’t think the curve is telling us anything different from other indicators,” Pictet’s Paolini said. “It’s telling you that over the next one to two years there is reason to be cautious.”
Shipping market bellwether, the Baltic Dry Freight Index , fell to eight-month lows this month and while it has rebounded in recent days, it is still 20% off its December highs.
Copper, another growth barometer, has come off four-year highs hit late in 2017.
Then there are indexes that estimate how much pessimism or optimism is priced into markets, based on how often data beat or miss forecasts, and by how much. Perhaps the most closely watched is Citi’s Economic Surprise Index, which has slumped into the red after hitting 7-1/2-year highs at the end of 2017.
And finally, equities. After a record 15-month winning streak, world stocks are 7% below end-January highs.
Even more telling, U.S. shares in so-called defensive sectors such as telecoms and utilities have modestly outperformed cyclicals such as technology stocks since mid-March, Morgan Stanley analysts said last week.
Defensive stocks usually fare better during downturns while cyclicals thrive in booms. The slight shift may indicate, “economic growth is likely peaking not accelerating at this point in this cycle”, Morgan Stanley told clients.
BACK IN SYNC
What if markets are reading it wrong?
Most still believe that while growth has stuttered rather than roared into 2018, a powerful expansion continues nonetheless. Seasonal adjustments after a long and severe Northern hemisphere winter, early Easter holidays and China’s New Year, may also be to blame.
Barclays, for instance, believes U.S. growth did lose steam in the first quarter and has downgraded its forecasts. But it sees “residual seasonality” also playing a role.
Even though the U.S. government’s Bureau of Economic Analysis has adjusted its methodology to account for seasonal factors, they still cause weak reported growth in the first quarter each year and buoyant activity later, Barclays said.
In Europe too, analysts have blamed weak data on one-offs such as the harsh winter, Easter vacations and high sick levels of sick leave due to flu.
Finally, some such as Sebastian Raedler at Deutsche Bank don’t see indicators, market levels and growth forecasts as out of kilter. Instead, purchasing manager indexes were over-optimistic from late 2017, especially in the euro zone, he said.
“PMIs and GDP growth move very closely in line with each other, but suddenly this gap opened up between GDP running at 2.5 percent and PMIs implying 4 percent growth,” Raedler said.
According to Raedler, growth remains firm but the rate of change in growth looks less certain.
“If it’s the rate of change then that matters, then that has just started to roll over… and we have seen the impact on stock and bond markets.” — Reuters