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Inflation may ease to near 4-year low

PHILIPPINE STAR/RYAN BALDEMOR

By Luisa Maria Jacinta C. Jocson, Reporter

HEADLINE INFLATION likely slowed to a near four-year low in September amid falling prices of rice and fuel, giving the Bangko Sentral ng Pilipinas (BSP) room to cut benchmark interest rates further, analysts said.

A BusinessWorld poll of 15 analysts conducted last week yielded a median estimate of 2.5% for the September consumer price index (CPI).

If realized, September inflation would be sharply slower than 3.3% in August and 6.1% in the same month a year ago.

Analysts’ September inflation rate estimates

This would also be the lowest monthly print in nearly four years or since the 2.3% clip in October 2020.

The Philippine Statistics Authority is scheduled to release September inflation data on Friday (Oct. 4). The BSP has yet to release its month-ahead inflation forecast.

Easing rice prices likely caused the CPI to go down this month, analysts said.

“Price pressures will ease on rice, which makes up a significant proportion in the heavily weighted food basket. Prices for the staple soared in 2023 when India banned the export of non-basmati white rice,” Sarah Tan, an economist from Moody’s Analytics, said in an e-mail.   

Rice inflation eased to 14.7% in August from 20.9% in July. Rice typically accounts for nearly half of overall inflation.

The Agriculture department earlier this month said they are eyeing to bring down rice inflation to single-digit levels.

“The cut in the tariff on imported rice, which took effect at the end of June and will last until year’s end, will help bring down inflation for this staple,” Ms. Tan added.

In June, President Ferdinand R. Marcos, Jr. issued Executive Order No. 62, cutting tariffs on rice imports to 15% from 35% until 2028.

“Food price base effects will remain quite favorable, stemming from last year’s rice price surge. This should pull food inflation down quite sharply, even if there is no material change month to month,” Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco said.

Philippine National Bank economist Alvin Joseph A. Arogo said the steady food and non-alcoholic beverage index in August also “provides buffer against the potential adverse impact of the current and upcoming typhoons on overall food prices.”

Lower fuel prices may have led to slower September inflation, analysts added.

“Disinflation may come largely from broad food and transport CPI. Particularly, we expect declines from rice prices and lower gasoline/diesel prices from declining global prices,” Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in an e-mail.

In September, pump price adjustments stood at a net decrease of P0.95 a liter for gasoline, P2.10 for diesel and P2.35 for kerosene.

“Retail fuel prices fell by as much as 7% month on month on the back of lower oil prices globally and a stronger peso against the US dollar,” Aris D. Dacanay, economist for ASEAN (Association of Southeast Asian Nations) at HSBC Global Research, said.

“Transport deflation should also deepen, further pulling down headline inflation, thanks to the rolling over in domestic pump prices, which reflect the weakness in global oil prices,” Mr. Chanco added.

“(Inflation) was likely within the target band as an effect of easing supply-chain constraints, slowdown in oil prices, and inflow of agricultural imports. However, it is still threatened by natural calamities that can disrupt food supplies,” Oikonomia Advisory & Research, Inc. said.

MORE ROOM FOR RATE CUTS
The expected downtrend in inflation in the coming months will give the BSP more space to continue its policy easing cycle, analysts said.

“For the coming months, it is possible for inflation to sustain at 3% levels for the rest of 2024, or well within the BSP inflation target range of 2-4%, that could justify further BSP rate cuts that would match any future Fed rate cuts from 2024-2026,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

“With CPI inflation remaining on a downward path and the US Fed already starting its cutting cycle, BSP has plenty of scope to further remove the restrictiveness of its monetary stance,” Nomura Global Markets Research Chief ASEAN Economist Euben Paracuelles said. “We still forecast BSP to cut by 25 bps at each of the October and December meetings, and by 75 bps in the first three meetings in 2025, bringing the policy rate to 5%.”

BSP Governor Eli M. Remolona, Jr. last week signaled that the central bank could deliver a 25-bp rate cut each at its remaining two meetings.

The Monetary Board in August reduced borrowing costs by 25 bps, bringing the key rate to 6.25% from the over 17-year high of 6.5%.

It will have its next policy review on Oct. 17, while its last meeting for the year is scheduled for Dec. 19.

Meanwhile, the Fed this month kicked off its easing cycle with a supersized 50-bp cut, bringing its target rate to the 4.75-5% range.

Markets are fully pricing in a cut of at least 25 bps at the Fed’s November meeting according to CME’s FedWatch Tool, Reuters reported.

“A cooling inflation print for September will convince the BSP that inflation has returned to target for good after July’s spike. Coupled with the recent 50-bp cut by the US Federal Reserve, this increases the chances for an October rate cut in the Philippines,” Moody’s Analytics’ Ms. Tan said.

“Indeed, the start of the monetary policy easing cycle in the US gives the BSP room to further loosen its monetary policy. The BSP could move with two 25-bp cuts in the fourth quarter across their two meetings in October and December,” Ms. Tan added.

Pantheon Macroeconomics’ Mr. Chanco said that if there is no “major shock” until the next inflation release, then the Monetary Board could implement another 25-bp cut at its October meeting.

“However, potential risks from oil and typhoons may keep the BSP cautious about interest rate cuts. The central bank is likely to opt for a gradual approach, with 25-bp reductions in October and December,” Security Bank Corp. Chief Economist Robert Dan J. Roces added.

Zamros Bin Dzulkafli, an economist at Maybank Investment Banking Group, likewise expects the BSP to reduce rates by a total of 75 bps this year, “supported by the recent ‘aggressive’ 50-bp rate cut by the US Fed.”

PEZA investment approvals reach P54.19B in Sept.

BW FILE PHOTO

THE PHILIPPINE Economic Zone Authority (PEZA) approved P54.19 billion in investment pledges in September, almost four times as much as the P14.04 billion okayed in the same month last year.

The investment promotion agency’s (IPA) board approved 16 new and expansion projects at a meeting on Sept. 23, it said in a statement on Sunday.

The pledges approved last week are expected to generate $541.04 million in exports and 4,044 new jobs, PEZA said.

Eight of these projects are in export manufacturing, five are in the information technology and business process management sector, one is in facilities development, and one each in economic zone (ecozone) logistics services and development.

In terms of investment destination, 11 of the projects will be put up in Calabarzon, two in Region VII, two in the National Capital Region, and one will be in Central Luzon.

One of the pledges approved this month is for a P50-billion project that the PEZA said may be eligible for an incentive package for highly desirable projects under the CREATE or Corporate Recovery and Tax Incentives for Enterprises law.

The September approvals also include a P988.29-million new ecozone development by a Filipino developer in Lima, Batangas.

“Such big-ticket investment plays a pivotal role in driving investment opportunities across the country, aligning with President Ferdinand R. Marcos, Jr.’s vision of elevating the Philippines to upper middle-income status,” PEZA said.

The green-lit commitments for this month brought PEZA-approved investment pledges for the first nine months to 179 projects, which have a combined cost of P115.89 billion. This represents a 4.21% increase from the investments approved in the same period last year.

The year-to-date approvals are expected to generate $2.51 billion in exports and 35,871 jobs.

“These approvals… strengthen the outlook for reaching the P200-billion investment target of PEZA for the year,” it said.

It added that it recorded an “exceptional surge” in investment approvals in the third quarter.

“With significant increases across various sectors, the Philippines is poised for an even more robust performance in the final quarter of 2024,” it added.

SUPPORT FOR MSMEs
PEZA said in a separate statement that it is working on programs that will support micro, small, and medium (MSME) enterprises.

To date, there are 722 Filipino PEZA-registered business enterprises (RBEs) that are micro-, small-, and medium-sized, representing 20% of the businesses registered with the IPA.

A PEZA survey showed that 89% of its registered MSMEs source their materials locally, such as packaging materials, raw materials, and machinery and equipment.

The survey, which was conducted from Aug. 7 to Sept. 9 and had 579 RBEs across different ecozones as respondents, also showed that MSMEs also engage in subcontracting non-PEZA registered companies for die-cutting services, sewing, and manpower and security services.

The IPA has been conducting reverse trade fairs to connect MSMEs with local suppliers, it said, as well as putting up a startup accelerator hub inside ecozones, producing an online PEZA digital marketplace, and promoting investments in labor-intensive manufacturing sectors, among others.

“PEZA recognizes that the steady growth of MSMEs will strengthen the Philippines’ competitive advantage as the source of high-quality materials that cater to both domestic and international markets,” it added. — Justine Irish D. Tabile

Government borrowings climb 40% in August

BW FILE PHOTO

THE NATIONAL Government’s (NG) gross borrowings rose by 40.28% year on year in August as domestic debt jumped on increased issuances of government securities, the Bureau of the Treasury (BTr) reported.

Treasury data showed that gross borrowings increased to P174.03 billion in August from P124.06 billion in the same month a year ago.

However, month on month, state borrowings declined by 7.75% from P188.65 billion in July.

Domestic debt accounted for the bulk or 95.98% of the government’s gross borrowings last month, Treasury data showed.

Gross domestic borrowings surged by 42.33% to P167.05 billion in August from P117.37 billion in the same month in 2023.

Broken down, domestic debt in August consisted of P140 billion in fixed-rate Treasury bonds (T-bonds) and P27.05 billion in net issuances of Treasury bills (T-bills).

These were higher than the P110.235 billion in T-bonds and the net P7.139 billion in T-bills issued in the same month last year.

On the other hand, gross external borrowings also rose by 4.64% to P6.99 billion in August from P6.68 billion a year ago, according to BTr data. This was entirely made up of new project loans.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort attributed the higher borrowings for the month to increased issuances amid maturing debt.

“The increase in the NG gross borrowings may have been attributed to higher maturing debt in August 2024 that required new borrowings to serve the matured government securities,” he said in a Viber message.

Year to date, gross borrowings as of end-August increased by 16.97% to P1.93 trillion from P1.65 trillion in the same period in 2023, Treasury data showed.

For the first eight months, 85.49% of NG borrowings came from the domestic market.

Gross domestic borrowings jumped by 32% to P1.65 trillion in the period from P1.25 trillion a year ago.

These were made up of P904.21 billion in fixed-rate T-bonds, P584.86 billion in retail Treasury bonds, and P161.7 billion in net issuances of T-bills.

On the other hand, external gross borrowings dropped by 28.41% to P282.46 billion as of August from P394.56 billion in the comparable year-ago period.

Broken down, these consisted of P115.25 billion in global bonds, P100.5 billion in program loans, and P66.72 billion in new project loans.

“Borrowings increased due to the persistent budget deficit, albeit narrowing due to fiscal consolidation,” John Paolo R. Rivera, senior research fellow at the Philippine Institute for Development Studies, said in a Viber message. “It can also be due to increased funding requirements given unforeseen outlays like calamity response, reconstruction, among others.”

The government’s budget deficit narrowed by 4.85% to P697 billion in the January-August period from P732.5 billion a year prior.

“For the coming months, NG debt borrowings and debt servicing could be tempered by the narrower budget deficit recently, and further US Federal Reserve rate cuts in the coming months that could be matched locally,” Mr. Ricafort added.

The Fed this month started its long-awaited easing cycle with a 50-basis-point (bp) cut, bringing its target rate to the 4.75-5% range. Markets are pricing in more reductions at the US central bank’s Nov. 6-7 and Dec. 17-18 reviews.

Meanwhile, BSP Governor Eli M. Remolona, Jr. last week said the central bank could deliver a 25-bp cut at each of its remaining meetings for the year scheduled for Oct. 17 and Dec. 19.

The Monetary Board in August reduced borrowing costs by 25 bps, bringing the key rate to 6.25% from the over 17-year high of 6.5%. This marked its first easing move in nearly four years.

For this year, the NG plans to borrow P2.57 trillion, with 75% coming from local sources and 25% from external sources, to help fund its P1.48-trillion budget deficit that is equivalent to 5.6% of gross domestic product. — Beatriz Marie D. Cruz

Making avocado a vocation

The EY Entrepreneur Of The Year 2024 Philippines has concluded its search for the country’s most visionary leaders shaping opportunities and transforming industries. It is a program of the SGV Foundation, Inc., with co-presenters: the Asian Institute of Management, the Department of Trade and Industry, the Philippine Business for Social Progress, and the Philippine Stock Exchange.

Czarina J. Sevilla
Founder and CEO
Avocadoria.ph

CZARINA J. SEVILLA’S entrepreneurial journey is a tale of transformation, innovation, and commitment to community values. Initially pursuing computer science, she pivoted to the dynamic world of hospitality and restaurant management. This was a step toward her dream of founding Avocadoria.ph, a business that celebrates her favorite fruit and embodies her commitment to uplifting the lives of local avocado farmers. Ms. Sevilla has been a fan of avocados since she was a child, where she would combine it with milk and sugar to have as a snack.

The brand name, which is a portmanteau of the word avocado and Ms. Sevilla’s first name Czarina, includes “.ph” to represent the Philippines and encourage consumers to support locally owned businesses and products.

As a budding entrepreneur, Ms. Sevilla encountered several challenges such as ensuring a consistent avocado supply. Her initial batch came from a small-scale farmer in Davao who had plans of working abroad. Before he left, he promised that he would seek help from other farmers in the region to secure a consistent supply for Avocadoria.ph, which he made good on.

Avocadoria.ph has reimagined the avocado as a staple ingredient in various treats. The brand’s signature product, the “Avocado Lover” ice cream, captured the hearts and palates of consumers with its creamy texture and rich flavor. This product was the beginning of a line that would then grow to include various innovative offerings, from refreshing avocado shakes to the indulgent avocado tin can ice cream cakes. Each creation is a testament to Ms. Sevilla’s culinary prowess and her dedication to providing healthier food options.

As Avocadoria.ph grew, so did the challenges it faced, including the surge in franchise demand in 2019. Ms. Sevilla’s leadership was crucial during this period, and she implemented systems and processes that allowed the company to scale up without sacrificing the quality and integrity of its products. Her hands-on approach ensured that the brand’s values were upheld, even as it expanded its reach.

The company’s commitment to sustainability and social responsibility is deeply integrated in its business model. Ms. Sevilla’s plans to establish a cooperative for local farmers reflect her values that emphasize growth and mutual support. This cooperative aims to provide farmers with the tools, resources, and knowledge that they need to succeed in a competitive market, ensuring that the benefits of Avocadoria.ph’s growth are shared with those who contribute to its success.

Ms. Sevilla is also in talks with the Department of Science and Technology (DoST) to recycle the brand’s wastage and transform it into packaging for their products, which illustrates her resourcefulness and environmental awareness.

Ms. Sevilla’s forward-thinking mindset is also evident in her expansion plans. From selling just two cups on its opening day, Avocadoria.ph now has over 224 branches throughout the Philippines and is now expanding its international presence with three locations in Singapore. Moreover, Ms. Sevilla’s exploration of skincare and avocado oil is a natural extension of her mission to promote health and wellness.

Ms. Sevilla understands that a company’s strength lies in its people, and Avocadoria.ph has been known to employ single moms, senior citizens, and persons with disabilities. This culture of innovation, inclusiveness, and meritocracy is a driving force behind the brand’s ability to stay ahead of industry trends and respond to changing consumer needs.

Ms. Sevilla’s personal motto, “Know what you want and always aim higher,” has been a guiding light in her journey as an entrepreneur. It is a philosophy that garnered her the prestigious Go Negosyo’s Inspiring Filipina Entrepreneur 2024 award. Avocadoria.ph illustrates the power of innovation and the impact of ethical business practices. With Ms. Sevilla at the helm, it remains a beacon of Filipino entrepreneurship, a brand that satisfies taste buds, nourishes the body, and uplifts the farming community.

Media sponsors are BusinessWorld and the ABS-CBN News Channel. Gold Sponsors are SteelAsia Manufacturing Corp., Uratex, and Converge ICT Solutions, Inc. Silver sponsor is International Container Terminal Services, Inc. Bronze sponsor is Lausgroup Holdings, Inc. Banquet Sponsor is Bounty Fresh Foods, Inc.

The winners will be announced on Oct. 23, 2024. The EY Entrepreneur Of The Year 2024 Philippines will represent the country in the World Entrepreneur Of The Year 2025 in Monte Carlo, Monaco in June 2025. The EY Entrepreneur Of The Year program is produced globally by Ernst & Young (EY).

Wall Street’s risk binge expands to even unloved assets amid policy easing

REUTERS

THE multitrillion-dollar boom in risky assets that’s raged all year is engulfing more and more of Wall Street — and this time global policy makers are starting to lend their support.

Fueled by the latest “Goldilocks” economic data, once-unloved market pockets are rallying anew in the aftermath of the US Federal Reserve’s dovish pivot. At the same time, the rest of the world is beginning to join the policy-easing party, from China to Europe.

Among the latest assets to jump higher last week: Once-berated emerging-market equities, companies acutely sensitive to the economic cycle, and speculative technology bets that win big during falling interest-rate regimes.

Thank the latest raft of benign data showing good times for Corporate America and a still-healthy consumer, even as the Fed is just starting to administer its monetary medicine.

As such, bears are getting crushed day in, day out. And life is getting harder for investors who failed to go all-in on equities, as dip-buying opportunities vanish.

One way of dissecting the risk-on bonanza up and down Wall Street is to look at the daily motion of markets. A Societe Generale (SocGen) SA index tracking cross-asset momentum has jumped to the highest in more than one year. With its 11 components — including copper versus gold, cyclical stocks versus defensive, cryptocurrencies, high-yield bonds and more — flashing hot, the gauge has reached these bulled-up levels only 5% or so of the time, going back to 2011.

“Investors have been hearing of recession risk, political uncertainty and poor seasonals in September — what you got was a jumbo Fed cut and China stimulus, sparking a big change in sentiment to the upside,” said Matt Miskin, co-chief investment strategist at John Hancock Investment Management. “You are closing out a full-blown risk-on quarter across US small caps, Chinese equities, and high yield.”

For people paid to predict the unknowable future, there are plenty of risks ahead — with stretched valuations chief among them — yet worrywarts were hard to find last week.

Animal spirits flared in nearly every asset class from gold to crypto, as optimism surged that the world’s largest economy is still expanding, even as its manufacturing sector continues to stagnate.

Last week saw a mercifully mild increase in the Fed’s preferred gauge of inflation, strong gross domestic product data and a dip in jobless claims. And the relentless artificial-intelligence boom continues to prove relentless, with Micron Technology Inc. emerging as the latest winner.

All that helped the S&P 500 eke out a fresh gain last week, set for its best first three quarters since 1997 with its 20% advance in 2024.

“Aggressive policy easing, led by the Fed, when economic activity is still reasonably robust is keeping the hope of soft landing alive,” said Marija Veitmane, senior multi-asset strategist at State Street. “We also see a lot of other central bank joining the policy easing party, giving extra support to risk assets.”

A Goldman Sachs Group, Inc. basket of most-shorted stocks is up 17% year-to-date, in the latest sign of pain for equity bears. And hedges of all stripes are underperforming against the backdrop of the so-called everything rally. The Cambria Tail Risk ETF, which protects against an extreme market crash, is headed for a fourth consecutive year of losses.

It’s not all good news. Momentum indicators suggest the euphoria will be hard to sustain in the near term, even if the big picture is bullish. 

“There should be tactical caution,” said SocGen’s Manish Kabra. “But fundamentally, our view hasn’t changed. If the Fed follows the rate path guided by the bond market, we should see a strong cyclical improvement, increased profits for the weakest parts of the market.”

After an advance in the Treasury market in recent weeks, riskier fringes of the debt-investing landscape are rising. A Bloomberg index of US high-yield credit is poised for its best start in five years with year-to-date gains of about 8%.

The rest of the world is fueling the bullish spirits. Stimulus pledges by China’s Politburo — the largest since the pandemic — pushed Chinese equities to their best week since 2008, while Saudi Arabia looks ready to abandon its unofficial oil price target, possibly ushering in a new era of lower prices. Alongside the Fed, global central banks have expressed their intent to join the rate-cutting cycle to support economic growth.

So far, September 2024 is shaping up to be the biggest month of global monetary policy easing since the pandemic crash, Bank of America Corp. data show. In the US, traders are pricing in 75 basis points of cumulative cuts by the end of 2024.

To Florian Ielpo of Lombard Odier Investment Managers, it’s starting to look risky out there. As such, his team is diversifying his equity bets and hedging in the volatility market.

“The term ‘cautiously optimistic’ has truly earned its relevance this month,” he said. “The Fed’s change of tone and China’s coordinated stimulus plan have significantly alleviated two of the financial markets’ biggest concern.”

For now, there’s nothing but cheer for markets. BlackRock, Inc.’s momentum exchange-traded fund ETF (ETF) hit a record high last week and is up nearly 30% for the year. A $25-billion semiconductor ETF, meanwhile, rose 4% last week, eclipsing the gains of the S&P 500 and the tech-heavy Nasdaq 100.

“The market is telling you that things are different this time than previous rate cut cycles,” Jason Bloom, head of fixed income, alternatives, and ETF strategies at Invesco, said. “There’s been enough stress and enough jolts of volatility that I think we would’ve shaken that bubble loose if it was there. Things are different.” — Bloomberg

SEC: No deadline extension for delinquent firms

ALL COVERED companies should present fee-related information in a two-year comparative format as a supplement to their annual financial statements. — BW FILE PHOTO

THE SECURITIES and Exchange Commission (SEC) said there will be no extension for the Nov. 30 deadline of the recently launched enhanced compliance incentive plan (ECIP) for delinquent companies.

“We’re sticking to the Nov. 30 deadline; there is no plan for an extension,” SEC Commissioner Javey Paul D. Francisco told BusinessWorld on the sidelines of a forum in Quezon City last week.

“We just want people to have a compliance culture,” he added.

Launched on Sept. 2, the ECIP lets corporations settle fines and penalties for the late or nonfiling of their annual financial statements (AFS), general information sheets (GIS), and noncompliance with Memorandum Circular No. 28 for only P20,000.

MC 28 mandates corporations to identify and submit official and alternative mobile phone numbers and e-mail addresses for their transactions with the corporate regulator.

Suspended or revoked corporations may apply for the lifting of the order suspending or revoking their corporate registration by paying a P3,060 petition fee and settling only 50% of their total assessed fines and penalties.

Corporations that do not avail themselves of the ECIP are at risk of higher penalties for noncompliance with reportorial requirements.

The updated scale of fines and penalties is at least 900% higher than the previous rates, which had been in effect for over 22 years

Mr. Francisco said the ECIP helps the country’s efforts to exit the financial action task force’s (FATF) “gray list” of jurisdictions under increased monitoring for “dirty money” risks.

The commission is tasked with ensuring beneficial ownership compliance and transparency for local corporations.

“We are about 68% compliance so far, higher from like 25% at the start of last year. We recently launched the version two of the amnesty program, which is the ECIP, from Sept. 2 until end of November,” Mr. Francisco said.

“Hopefully, we can ramp up even more to higher compliance rates. Our target back then was 65%, and it was acceptable to assessors. But of course, we want the highest possible compliance rate,” he added.

In July, Bangko Sentral ng Pilipinas Governor Eli M. Remolona, Jr. said the country was eyeing to exit the FATF’s “gray list” by January 2025.

The FATF in its June update kept the Philippines in its “gray list” for a third straight year or since June 2021.

It said the Philippines has made “significant” steps in improving its anti-money laundering and counter financing of terrorism regime but still needs to address remaining deficiencies. — Revin Mikhael D. Ochave

How Klook is leveraging content creators for growth

MARCUS YONG

By Chloe Mari A. Hufana, Reporter

TRAVEL PLATFORM Klook is capitalizing on social media’s influence by aiming to onboard 35,000 content creators to boost its marketing strategy by the end of the year, according to a company leader.

In an interview with BusinessWorld in Singapore, Klook Vice-President of Global Marketing Marcus Yong said that the platform currently has over 20,000 content creators globally and aims to reach 35,000 by yearend.

“I would say that at the rate that it’s growing, I wouldn’t be surprised if this number continues to double, triple each year because it’s not just about opening the creative program in more markets,” he said.

“It’s also kind of like targeting new kinds of creators because today you see most of the creators tend to be Generation Zs [and] millennials,” he added, noting that niche topics from other different age brackets could emerge.

Mr. Yong said that to be a Klook creator, an account must have at least 1,000 followers. Applicants receive a verdict within a week on whether they are accepted into Klook’s creator program.

While Klook is welcoming, it rejects applicants who do not align with the company’s ethos.

A top Klook content creator can earn up to $12,000 monthly from commissions alone, Chief Executive Officer Ethan Lin said during the Kreatorverse Summit on Sept. 23.

However, Mr. Yong noted that content creators do not generate much of the company’s revenue.

“I wouldn’t say that it is one of the top revenue contributors. The reason for that is because it’s still a growing program and we are recruiting good quality content and we believe that when those ingredients are done properly, then later on we can look at a meaningful revenue contribution from the creator program,” he added.

He noted that Klook is focusing on building a community with creators, which was the purpose of the Kreatorverse Summit held in Singapore from Sept. 23-26. Klook creators from around the world gathered to celebrate the company’s 10th anniversary and explore the Lion City.

“If we start looking at revenue too early, then we lose the essence of the community and all that, right? And it becomes just another commercial program,” he added.

During the welcome dinner on Sept. 23, BusinessWorld spoke with Filipino content creators Happy and Busy Travels, founded by Ma. Katrina A. Tiong and Ryan Dave G. Remulla.

According to Mr. Remulla, those within the top 10 of Klook’s creator program could earn at least P100,000 monthly.

Despite this, Ms. Tiong shared how much hard work and patience are necessary to build a brand, noting she and her boyfriend started blogging about their travels back in 2015.

Mr. Yong described the Philippine content creator market as “dynamic” and “fast-growing” for Klook.

“The reason for that is because one thing that very many in the Philippines tapping into these communities and work very closely with partners, and brands in the Philippines are community-driven, you have to invest time in building relationships,” he said.

According to Digital 2024, the Philippines is the world’s vlogging capital as almost 51% of Filipinos watch vlogs or influencer videos per week.

Klook said it is leveraging such a trend by ramping up its social presence in the country.

“I think leveraging our creative program is definitely in terms of creating not just content but ramping up our social presence in the Philippines, too with a lot of not just creators to be able to create and amplify those content,” he said, noting it is a key strategy for them.

TRAVERSING FAST-PACED TRENDS
Mr. Yong also touched on the latest trends reshaping travel, noting that the rise of social media and its influence on travel content consumption is undeniable.

“There’s a clear shift toward ‘social travel,’” he said, explaining that people are consuming more travel content and leaning towards meaningful experiences, an area where Klook specializes.

The next travel trend Klook sees is the rise of “impact travel,” where people underscore sustainability and impact the world.

He said this is the reason why Klook launched its initiative on elephant sanctuaries in Thailand and their animal cruelty badges.

Lastly, the rise of wellness-centered travels. Mr. Yong said tourists are now prioritizing their well-being more than ever.

Klook is leveraging such trends by offering experience-based, unique attractions on their platform, while not veering away from typical touristy activities like theme parks.

Mr. Yong said these trends are usually set by Generation Z and millennial customers, but older generations are also starting to contribute due to social media exposure.

Klook is a Hong Kong-founded travel company launched in 2014. It specializes in Asia-Pacific experiences through its online application.

According to its website, users can choose from over half a million products and services in over 2,700 destinations.

Alternergy keen on green energy auctions this year

ALTERNERGY Holdings Corp. may participate in the Department of Energy’s (DoE) green energy auction (GEA) program this year, the company’s president said.

“We are working with industry players, with our colleagues in the industry, together with the DoE, to make sure that all the policies are in place, the mechanics are very clear,” Alternergy President Gerry P. Magbanua said during a briefing last week.

Mr. Magbanua said the attractiveness of the third round of the green energy auction would depend on the price set by the Energy Regulatory Commission.

“We will see if GEA-3 would be more attractive to us depending on what prices will be made available. And of course, there’s always the possibility of entering into a bilateral agreement with a potential off taker,” he said.

The DoE is planning to stage two green energy auctions by the fourth quarter.

GEA-3 involves geothermal, pump-storage hydro, run-of-river hydro, and impounding hydro worth a total capacity of 4,399 megawatts (MW).

Meanwhile, GEA-4 will cover integrated renewable energy and energy storage systems and possibly liquefied natural gas.

Mr. Magbanua said that there was a “huge gap” in the subscribed capacities compared to what was offered during GEA-2 due to the price signals that the government has set.

“Hopefully that provides also feedback to the regulators that they have to change the pricing structure or the pricing levels at which they set the reserve price,” he said.

Alternergy is targeting to increase its renewable energy capacity to 500 MW by 2026.

For the fiscal year 2024, the company reported a consolidated net income of P130 million, nearly four times higher than the P38 million reported last year.

It attributed the increase to the surge in revenues, which grew by 60% to P275 million, particularly from its operating assets. — Sheldeen Joy Talavera

CTA favors DMCI in P103.68-M tax appeal

THE Court of Tax Appeals (CTA) ruled in favor of DMCI Holdings, Inc. in the company’s appeal against the Bureau of Internal Revenue (BIR) regarding over P103.68 million in deficiency income tax assessment for 2014, citing erroneous audit calculations and a lack of substantial evidence.

The tax court’s first division, in a decision publicized on Sept. 23, rejected the BIR’s computation of the company’s taxable income for 2014.

“Finding that petitioner has no more deficiency income tax liability for [the] calendar year 2014, the Formal Letter of Demand dated 01 September 2020 and the Final Decision on Disputed Assessment dated 27 December 2021 are canceled and set aside,” the 35-page ruling penned by Associate Justice Jean Marie A. Bacorro-Villena read.

DMCI initially faced a P159.18-million assessment from the BIR, which was eventually reduced to P103.68 million.

The assessment covered alleged deficiencies in income tax, value-added tax (VAT), and other tax categories for the 2014 fiscal year.

In ruling in favor of DMCI, the tribunal said that there was no factual basis for the BIR to determine and set DMCI’s taxable income per income tax return (ITR) as zero, as records showed DMCI suffered a net loss of over P159 million.

The tribunal added that DMCI was correct in arguing that the BIR’s method of computation would result in double disallowance.

Based on the report of the independent certified public accountant, DMCI arrived at a net loss of over P159 million.

DMCI also claimed stock issuance costs of over P92 million as part of its other deductions, arriving at a net loss of more than P159 million.

The court noted that if the stock issuance costs were disallowed, DMCI’s net loss would decrease to more than P66 million, but this would not create any taxable income for a deficiency.

However, under the BIR’s method, disallowing the stock issuance costs would generate a taxable income of P92,922,746, resulting in a deficiency of P27,876,823.80.

“This tax liability is expectedly arrived at since the respondent used zero as the tax base, and again deducted the same expense based on the finding of his or her disallowance,” it said.

“However, in this method, the respondent had seemingly disallowed all the expenses that the petitioner had claimed as deductions for [year] 2014 without any evidence to support its action. Simply put, this transgresses the petitioner’s right to due process.” — Chloe Mari A. Hufana

MPTC unit to seek TRB nod for CAVITEX segment expansion

CAVITEX.PH

MPT South Corp., a unit of Metro Pacific Tollways Corp. (MPTC), will seek approval from the Toll Regulatory Board (TRB) to expand Segment 4 of the Manila–Cavite Expressway (CAVITEX), the company’s president said.

The company is planning to expand Segment 4 from the current 2×2 lanes to 3×3 lanes, Raul L. Ignacio, MPT South president and general manager, said during a roundtable discussion with reporters last week.

“We are submitting to the TRB the expansion of that section,” he added.

According to its website, Segment 4 is a 7.4-kilometer, 2×2 expressway lane from Zapote Interchange in Bacoor to Kawit Toll Plaza. The Segment 4 extension starts 330 meters from Kawit Toll Plaza, passes south, and ends 720 meters after Tirona Highway, connecting CAVITEX and Cavite-Laguna Expressway (CALAX).

The CAVITEX Segment 4 has a projected average daily vehicle count of 55,773, marking a 10.2% increase from this year’s 50,603 average daily traffic.

For 2025, MPT South is setting aside PHP 14 billion for its capital expenditure (capex) budget to fund key projects slated for completion next year.

MPT South expects a combined average daily vehicle count of 344,514 for next year, marking a 32.6% increase from the current 259,815.

MPTC is the tollways unit of Metro Pacific Investments Corp., which is one of three key Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Ashley Erika O. Jose

Paris Fashion Week: Controversial leather at Hermes, light and breezy at Beckham, a masculine note at Saint Laurent

HERMES

PARIS — For her spring summer runway show, Hermes designer Nadege Vanhee sent out a parade of mesh crop tops and calfskin coats in tan hues on Saturday, a lineup that was briefly interrupted by three animal rights activists.

The show was kicking off with a series of light, beige looks — loose trousers, sheer tops, and a suede coat cinched in the back — when the first protestor from the People for the Ethical Treatment of Animals (PETA) group burst on to the catwalk, wielding a sign calling for the label to stop using exotic skins. (Watch the show — sans protestors — here: https://tinyurl.com/mseetadf)

She was wrestled out of a side door by security guards just before the next model arrived, dressed in a buttery leather bomber jacket paired with a high waisted culotte.

Security guards nabbed another protestor who jumped on the catwalk shortly after, rushing her out the same side door in time for the next look — a sheer top in ivory that matched the model’s trousers and handbag.

The parade continued, featuring long sheer skirts unzipped to the thighs, bright pink dresses and belted outerwear.

When a third protestor suddenly appeared, the audience gasped. Her appearance was also brief, and the show continued.

It is not the first time PETA protestors have targeted the French label, known for its highly coveted Birkin bags, with versions in exotic skins famous for fetching prices reaching as much as several hundred thousand dollars in auctions.

PETA also targeted the Dior show earlier this week for the brand’s use of feathers, with just one protestor very briefly entering the catwalk.

Paris Fashion Week, which started on Sept. 23, wraps up Oct. 1.

VICTORIA BECKHAM
For the spring-summer collection of her namesake label, Victoria Beckham showed a lineup of minimalist dresses and deconstructed tailoring on a runway set up in the outskirts of Paris. (Watch the show here: https://tinyurl.com/25rutb36)

Models emerged from a neoclassical chateau in the sprawling Bois de Boulogne gardens after dark, the trains of their skirts trailing behind. The audience sat in a courtyard under a clear, plastic tent, huddled in blankets left on each seat, while rows of candles flickered under the sphinx statues nearby.

Models paraded by in skimpy, shoulder-baring tops, and asymmetric dresses, while trousers had slightly bulky cuts, adding volume, made of fabric pressed with wrinkles.

SAINT LAURENT
Saint Laurent creative director Anthony Vaccarello offered a lineup of ample, masculine suits for the Parisian label’s spring-summer 2025 collection, with prominent shoulders and matching ties. (Watch the show here: https://tinyurl.com/w3rcx8dc)

Models made their way steadily around an open-air runway set up in the central courtyard of the Kering-owned fashion house’s Left Bank headquarters.

They wore thick, studious glasses or aviator shades.

Bomber jackets added heft to the silhouettes, while chunky jewelry and pointy stilettos brought extra glamour to the looks, which were closely fashioned after the personal style of the house founder, Yves Saint Laurent.

Part way through the show, Mr. Vaccarello shifted to more feminine, bohemian styles, sending out flowing skirts in paisley motifs and shimmery brocade jackets covered with flowers and paired with short skirts. — Reuters

Disney Store opens in Manila

SM Mall of Asia now houses the only Disney Store in Southeast Asia, launched by International Toy World, Inc. (ITWI), an affiliate of SM Retail, Inc.

Located on Level 1 of the North Main Mall at SM Mall of Asia, the store opened on Sept. 27.

“In bringing Disney Store to one of the largest shopping malls in the Philippines, we aspire for it to become a welcoming retail destination where guests look forward to creating memories with their loved ones,” said Rose Marie Dylim, president of International Toy World, Inc., said in a press release last week.

“Disney characters from Disney, Pixar, Star Wars, and Marvel hold a special place in many people’s hearts and in minds. We are proud to partner with SM to bring the magic of Disney closer to home,” said Disney Consumer Products Asia-Pacific Retail Vice-President Sara Grewal.

Ms. Grewal said shoppers can find many original products, including toys, collectibles, fashion, and homeware.

SM said guests can visit photo spots and life-size sculptures of characters in the store, including Disney princesses, Queen Elsa, Winnie the Pooh, Mickey Mouse & Friends, Darth Vader, and Spider-Man. — Aubrey Rose A. Inosante

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