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Credit raters caution against watering down tax reforms

By Elijah Joseph C. Tubayan
Reporter
THE CURRENT FORM of the second tax reform package, as approved by a House of Representatives committee earlier this month, risks slowing momentum of progress in state revenues and infrastructure spending, senior executives of Fitch Ratings and Moody’s Investors Service warned.
“One of the drivers of the improvement in the credit rating is the government’s tax reform initiative,” Stephen Schwartz, head of sovereign ratings for Asia Pacific Fitch Ratings, said in an e-mailed response on Sunday to BusinessWorld queries.
When Fitch affirmed its “BBB” rating — a notch above minimum investment grade — with a “stable” outlook in July, it noted that revenue improvement from Republic Act No. 10963 — or the Tax Reform for Acceleration and Inclusion Act (TRAIN) that slashed personal income tax rates in order to give households more money to spend, raised or added taxes on several goods and services and removed various value added tax exemptions when the law took effect on Jan. 1 — should help preserve fiscal stability as the government ramps up spending on infrastructure.
“If the package were to result in a significant loss of revenue, rather than being revenue neutral, it could pose a partial setback to the tax reform program in our view, since the Philippines’ revenue ratio is low compared to its ‘BBB’ peer median (16.2% vs the median 32.1%),” said Mr. Schwartz.
“Higher revenues will also be needed to finance the ambitious infrastructure program.”
Both analysts, however, said it was too early to estimate the fiscal impact of the legislated reform, since it has yet to secure plenary approval in the House and in the Senate.
The second tax reform package, filed as House Bill No. 8083, or the Tax Reform for Attracting Better and High-quality Opportunities (TRABAHO), is up for second and third reading approval in the House after it hurdled Ways and Means committee deliberations on Aug. 7.
It seeks to cut the corporate income tax (CIT) rate to 20% gradually from 30% currently in order to put the regime at par with the country’s Asian rivals for investors, while removing redundant tax incentives.
The House committee, however, did not adopt the Department of Finance’s (DoF) proposal to peg gradual CIT cuts to incremental revenues from removal of select tax incentives in order to keep the measure “revenue-neutral,” meaning the package in its current form would bleed the revenue stream by P62 billion from the planned first two percentage point CIT cut in the first year of implementation in 2021 that will not be matched by an offsetting provision.
In a separate e-mail on Tuesday, Christian de Guzman, Moody’s Investor Service vice-president and senior credit officer said: “As the government had intended TRAIN 2 (as TRABAHO was initially called) to be revenue neutral, the absence of conditionality between the rationalization of fiscal incentives and the cuts in the corporate tax rates poses some risk to that revenue neutrality.”
“This is not to say that it would be impossible to achieve revenue neutrality, but it would be more difficult to do so,” he added.
“Ultimately, if corporate tax cuts were not ultimately funded by the additional revenue from lower fiscal incentives, the government may have to pare back expenditure to maintain deficits at a sustainable level,” he explained.
“We expect the main revenue gains to come from tax package 1, that went into effect at the beginning of this year, with additional gains from tax administration.”
Moody’s Investors Service late last month affirmed Philippines’ “Baa2” rating — a notch above minimum investment grade — and “stable” outlook, citing the economy’s overall strength, even as it flagged risks from rising inflation and the planned shift in government form.
State revenue collections grew 20% to P1.41 trillion last semester — exceeding a P1.30-trillion target for those six months by eight percent — from P1.18 trillion in 2017’s first half, while disbursements grew 20% to P1.60 trillion last semester — two percent more than a P1.57-trillion spending goal — from P1.33 trillion in the same period in 2017.
Infrastructure and other capital outlays surged by 41.6% to P352.7 billion last semester — 4.3% more than that period’s P338.3-billion target — from P249.1 billion recorded in 2017’s first half.
The Finance department has lined up as many as five tax reform packages cumulatively designed to shift the tax burden more to those who can afford it, while increasing collections. The government targets to raise the proportion of revenues to gross domestic product (GDP) to 17.7% by 2022, when President Rodrigo R. Duterte ends his term, from 15.6% in 2017 and share of infrastructure spending in GDP to 7.4% in 2022 from 5.6% in 2017. By doing this, it hopes to prod GDP growth to 7-8% annually until 2018 — thereby lifting more Filipinos out of poverty — from 6.3% in 2010-2016.
Other tax reform packages include a general and estate tax amnesty with eased bank secrecy law provisions and a higher motor vehicle user’s charge; higher excise taxes for alcohol and tobacco products; a bigger state share in mining revenues; a simplified, uniform property valuation scheme; and rationalized capital income taxation, among others.
PROPERTY VALUATION
Also on Tuesday, the DoF said in a statement that Finance Secretary Carlos G. Dominguez III has written lawmakers to outline his department’s proposal on real property tax reform.
House Speaker Gloria M. Macapagal-Arroyo, Albay 2nd District Rep. Jose Maria Clemente “Joey” S. Salceda and Senator Panfilo M. Lacson filed separate bills in 2016 that aim to simplify land valuation and ensure prompt updates in order to make local governments less dependent on their annual share in national taxes.
The DoF said the letters “suggested several enhancement measures to their proposals to further strengthen the country’s real property valuation and taxation system.”
“Essentially, real estate is the most valuable asset and biggest financial resource. But its contribution to government revenues — particularly for local governments — has remained dismal due to outdated Schedule of Market Values (SMV), poor collection efficiency and tax administration and lack of uniformity in the valuation of real property,” Mr. Dominguez was quoted as saying.
“Thus, the need to put in place an equitable, efficient and transparent valuation system has become even more urgent and necessary to stimulate the property market, attract investments, improve government’s resource mobilization through property taxation, and foster greater confidence in the real estate sector.”
The DoF also said that it proposed provisions that will bar local governments that fail to update on time their SMVs — with approval of the Finance chief — from getting credit financing or performance-based grants from the national government; require local assessors and other personnel involved in real property valuation to undergo training with the Philippine Tax Academy; as well as mandate automation, adoption of tax mapping technology and of a software-enabled valuation system, data cleansing and computerization of record management systems, among others.

Expectations of another interest rate hike mount

A FOURTH successive tightening move may be announced by the central bank next month, a global bank said, as it sees inflation topping six percent until September.
“We believe that inflation could breach six percent in the next two inflation reports. If our view is correct then further tightening is likelier,” ING Bank N.V. Manila senior economist Jose Mario I. Cuyegkeng said in a report published on Monday.
The Bangko Sentral ng Pilipinas (BSP) has adopted three rate hikes in a row this year in the face of surging inflation.
Benchmark yields have risen by a cumulative 100 basis points (bp) from May to August as policy makers sought to rein in inflation expectations, in an attempt to temper future price increases for basic goods and services.
Inflation leaped to a fresh multi-year high of 5.7% in July, and the central bank sees the year-on-year pace of overall price increases even faster this month. BSP Governor Nestor A. Espenilla, Jr. said on Friday that August’s inflation rate will likely be higher, even as he clarified it will not go beyond six percent.
July marked the seventh straight month that inflation quickened and the fifth consecutive month that the pace pierced the central bank’s 2-4% target range for full-year 2018.
Mr. Cuyegkeng noted that monetary policy makers remained hawkish in their Aug. 9 meeting as they signalled readiness to tighten rates further as needed. He took it as a hint that another rate hike is on the table later in the year.
“We expect the tightening to continue with another 25bps hike as early as the September meeting or as late as the November meeting,” the bank economist said.
“We continue to see upside risk on the inflation front, especially with the latest reports of rice prices continuing to rise while supply-related constraints also compounding the pressures.”
Prices have climbed by an average of 4.5% during the first seven months, well above the central bank’s 2-4% target for 2018. The BSP has raised its full-year inflation forecast to 4.9%, with the fastest pace expected to be logged this quarter.
In turn, the BSP’s hawkish stance is seen to support the peso, which has been trading weaker versus the dollar.
ING Bank said the effect of the aggressive 50bp rate hike announced by the central bank during its Aug. 9 policy meeting has “worn off,” but markets are holding on to hints that the BSP may hike further.
Most emerging market currencies, including the peso, came under pressure last week amid contagion fears over Turkey’s crisis, which saw a huge sell-off of the lira and sowed investor aversion towards emerging markets as an asset class.
A wider trade gap is likewise keeping the peso on the defensive following a 4.5% slip in remittances in June, ING said. These dollar inflows have been a source of strength, fueling household spending that contribute nearly 60% to the country’s economic output and offsetting an outflow of greenback due to heavy importation. — Melissa Luz T. Lopez

Copper’s weakness a worrying signal for global growth

LONDON — The plunge in the price of copper by more than 20% since the beginning of June has worried analysts who see it as a bad signal for the global economy.
The red metal has acquired the sobriquet Doctor Copper for its ability to take the temperature of the world economy.
Doctor Copper is able to tell when the world economy is going to get sick or get better because of the ubiquity of copper in the modern world. It is used in plumbing, heating, electrical and telecommunications wiring. “Trains, planes and automobiles are full of copper, so too are homes and appliances,” said Russ Mould, investment director at AJ Bell.
So, it is hard to imagine economic growth without copper, and the market price of the metal reflects fluctuations in demand.
Economists at the Bank of England who monitor the global growth to set monetary policy said on their blog that for them it “is crucial to assess what is happening in the world economy in real time or ‘nowcast’ economic activity.”
Copper prices provide such a real-time signal.
Last year’s acceleration of global growth surprised the International Monetary Fund and several central banks.
The Bank of England economists noted that: “Metals prices rose 30% over 2017, reflecting the continued and surprising strength of the global economy.”
It also works the other way.
“The price of copper fell steeply during the global financial crisis,” said Andrew Kenningham, Chief Global Economist at Capital Economics. “And if it continues for much longer, the latest leg down will begin to look ominous.”
But copper prices aren’t a foolproof signal as they are also due to supply factors.
“Copper prices are driven not only by physical demand but also by supply shocks, speculation and exchange rate movements,” said Mr. Kenningham.
As copper is traded in dollars, when the value of the Chinese yuan or other emerging market currencies fall it becomes more expensive, dampening demand and pulling the price of the metal lower.
What is behind current weakness?
On Wednesday last week, shares and raw materials prices tumbled as global trade tensions ratcheted higher and emerging market currencies fell against the dollar.
Three-month copper futures prices, which were over $7,200 per ton in early June, struck a 13-month low of $5,773 per ton.
“Copper prices have collapsed as concerns over trade tariffs” increased wrote analysts at ANZ banking group.
Some analysts believe the current lack of appetite for risk assets was presaged by the drop in copper prices.
“Copper is widely considered to be a bellwether for the global economy and so a weak price is cause for concern” said Mr. Mould at AJ Bell. — AFP

Adi Alsaid is a rare bird in Young Adult fiction: he’s male

YOUNG ADULT (YA) fiction is dominated by women writers, but there are some men who have established their names in the genre, such as David Levithan and John Green, whose respective books, Every Day and The Fault in Our Stars, have been made into movies. Adi Alsaid is another young and male author who joins the gang. He likes the idea of his novels being turned into films just like the others’.
“I cannot speak for all authors, but for me, a tie-in novel would be amazing. I am a huge movie fan, and I would love to see any of my books turned into movies. But it’s out of my control. I have to wait for that phone call or e-mail saying that I have an offer. So far, nothing else,” he said, smiling, during a conversation with BusinessWorld at the Raffles Hotel Makati on Aug. 10.
The young Mexican author was in the Philippines for the National Bookstore Readers and Writers Festival which ran from Aug. 10 to 12 at the hotel.
Of his published books, Mr. Alsaid thinks that North of Happy would be the best choice for on-screen version. It is about a privileged Mexican-American boy, Carlos, who lives a comfortable life. He is in love with food and cooking, but his parents see this as a passing hobby. His older brother, who left home to pursue a life of travelling, is tragically killed, and Carlos soon starts to hear his brother’s voice encouraging him to pursue what he really wants.
But tie-ins are just the icing on the cake, and besides, there’s no need to hurry. Following the central theme in coming-of-age fiction, everything has a season. Mr. Alsaid, born in 1987, published his first novel, Let’s Get Lost, in his mid-20s (“I was 26 or 27”), and is thankful for it.
“I feel lucky to have been published in my 20s. So many people submit to agents and publishers. I did it for two to three years before I got a book deal. When I was in those years, it felt like a long time already. Some people get published quicker, others take 10 years, while some who are as talented never get published. I feel fortunate. Lucky,” the 31-year-old author said.
Published by Harper Collins Publishers in 2014, Let’s Get Lost was a Young Adult Library Services Association (YALSA) Teen’s Top 10 nominee in 2015. It is about five teen strangers who meet during an adventure of a lifetime. His other novel, Never Always Sometimes, was nominated for the Kirkus Reviews Best Books of 2015. It’s about two high school best friends who make a pact to never be typical, cliché kids. They even have a “Never List” — never hook up with a teacher, never dye your hair of any rainbow color, and never date your best friend. It’s about the two learning that, sometimes, it’s okay to break some rules.
Mr. Alsaid is happy to be thriving in an genre often monopolized by women.
“It is an industry that has a lot of women writing. Sometimes 10 out of 10 spots in the bestselling lists are taken by women. I am honored to be in an industry that isn’t male-led. I’m lucky to be one of the few. Even though there are few men writing, we also get attention. Just by being male grants us disproportionate attention,” he said.
“My writing will only be different because of my experience. But I think there’s a difference in perception: how readers perceive a man versus a woman writer. Even though there are few male writers in YA, the perception sometimes skews in our favor.”
He has always been interested in writing — he started when he was 11. “I’ve been in love with writing ever since. I didn’t know that I was going to be an author writing novels. In high school, I never had the idea of writing a novel, or, if I did, I was like ‘No my specialty is short stories.’ I could never finish a novel.” But he did. His books average 300 pages.
He did not study writing, though. He took up Marketing in University of Nevada in Las Vegas. “When it was time to study for college I thought of something that will get me a job because no one checks your degree when you’re writing… It was towards the end of college when I was applying for jobs that I had an idea. I was getting closer to graduation and the plans I had, for many reasons, did not happen. I had a book idea kept in the back of my mind and I thought ‘Okay maybe this is my backup plan,’” he said.
Still, nothing happened in his fledgling career after college. “But I was given encouragement by my parents and certain people along the way to keep me doing it. I was lucky to get a book deal.”
His stories are combinations of imagination and reality. “I like to [make] stuff up, but everything I write has a basis [in] reality. How will you know that your writing is good if [it is] not reflective of life or a commentary of life and how things are,” said Mr. Alsaid
When not writing, he travels around the world with his wife. Before coming to the Philippines, he was in Japan. Next month, he’ll go to Hong Kong. Travelling definitely helps him get ideas for his next stories. But when a writer’s block sets in, he said he steps away from the computer, goes out, watches a move, or takes a walk.
“But most of the time I just power through. Writer Jennifer Egan, in an interview, said ‘Writer’s block is just the fear of writing badly.’ You’re going to write badly anyway so might as well do it. We’re lucky because we can fix our writing. The first thing that we write is never the final draft. We have time to edit ourselves and we have our editors.”
Now in its final draft is his latest book, Brief Chronicle of Another Stupid Heartbreak, which will be released in April 2019. He said he also is thinking about writing for middle-school kids or for TV cartoons, “but there’s nothing solid yet,” he said.
Maybe what comes next is his first tie-in movie? — Nickky Faustine P. de Guzman

How to make classical music less intimidating

CLASSICAL music is often described as being “high culture,” “elite,” and “unreachable.” For Cultural Center of the Philippines (CCP) president Nick Lizaso — who described himself as a “layman” — these tags should be dropped and everything should be referred to simply as “music.”
“It’s just music, and it speaks to you. You don’t understand Mozart? It’s okay. But do not be afraid to listen to him. You may not understand everything, but somehow, I know it will speak to you. Music is a universal language after all,” he said.
And, once music does speak to you — when it tugs at your heart, makes you emotional, or reminds you of something — that’s when you start to research about it, learn about it, and appreciate it, said Mr. Lizaso on Aug. 1 during a press conference at the Manila Hotel for the CCP’s resident company, the Philippine Philharmonic Orchestra (PPO) and its series of concerts.
It’s a matter of giving it a try, said Mr. Lizaso, after all, he noted, classical music is accessible via YouTube and Spotify. But then, listening to the music online is only an initiation because, as far as Mr. Lizaso is concerned, orchestra music is best enjoyed live, like theater.
“You can always listen to digital music, but it is a different experience [to hear it in a live performance],” he said.
Meanwhile, in its quest to spread the gospel of classical music and make it more accessible and less intimidating, the Philippine Philharmonic Orchestra will be holding many free outreach concerts in different parts of the country.
Just this month, on Aug. 3, the PPO performed at the University of Baguio, and on Aug. 29 it will visit Malolos Bulacan. It will be holding free concerts on Nov. 23 and 24 in Davao, Dec. 8 in UP Diliman, Dec. 20 in Nueva Ecija, and Jan. 29, 2019 in Bacolod.
Not only does the PPO bring its music to public spaces, but as much as possible it reinvents its repertoire to accommodate all kinds of music. If PPO associate conductor Herminigildo G. Ranera is the conductor for a certain concert, he said his repertoire is usually composed of 30% pop music, 30% Filipino and Broadway, and 30% classical music.
“We ask people what is ‘in’ today? It’s a challenge to convert pop to symphonic [music], but it’s fun,” said Mr. Ranera. — Nickky Faustine P. de Guzman

Coca-Cola open to refranchising PHL operations

THE COCA-COLA CO. took over Coca-Cola FEMSA’s bottling operations in the Philippines. — REUTERS

By Janina C. Lim, Reporter
ATLANTA-BASED The Coca-Cola Co. said it is open to potential partners for its bottling operations in the Philippines, after Mexico’s Coca-Cola FEMSA S.A.B de C.V. exited the local market.
“As with other markets that are operated by BIG [Bottling Investments Group], Coca-Cola has no deadlines or timetables for potential refranchising. We continually evaluate potential partners,” Coca-Cola Co. Senior Director for Financial Communications Scott Leith said in an e-mail when asked by BusinessWorld if the company is considering buyers for the Philippine business.
He is confident the company’s subsidiary, Bottling Investments Group, will be able to face the challenges such as the Philippines’ excise tax on sweetened beverages.
“We know that long-term, sustainable success is built on strong fundamentals. We always face changes and challenges — whether it involves new competition or new taxes — but our company has a heritage of focusing on the decades ahead, not just the quarters ahead,” Mr. Leith said.
“With BIG’s depth of experience and solid track record in Southeast Asia, we believe they will bring significant value to the Philippines business,” he added.
Coca-Cola Co. established BIG in 2004. BIG is now present in 18 countries, six of which are Southeast Asian nations namely Vietnam, Cambodia, Brunei, Malaysia, Singapore and Myanmar.
Meanwhile, Mexico-based Coca-Cola FEMSA S.A.B de C.V. confirmed that the excise tax on sugar was the primary reason in its decision to exit the Philippines.
Coca-Cola FEMSA Philippines has been struggling since last year after the government regulated imports of high fructose corn syrup (HFCS), a sweetener used by the food industry as an alternative to cane sugar.
The government, under the first package of its tax reform program, also levied a P12 tax on HFCS-sweetened drinks at the start of the year, double that of beverages using sugar.
Since then, Coca-Cola FEMSA Philippines has laid off an undisclosed number of workers and has reduced volumes of some products.
“This put restrictions on sweetener imports, sugar sources in the country and soaring local pricing of sugar. Prices of sugar have been up, up to 50%,” John Santa Maria Otazua, Coca-Cola FEMSA’s chief executive officer, said during its Aug. 17 teleconference with investors. A recording of the teleconference was made available on the Coca-Cola FEMSA website.
In 2013, Coca-Cola FEMSA bought the 51% stake in Coca-Cola FEMSA Philippines — named Coca-Cola Bottlers Philippines, Inc. (CCBPI), pre-sale — from the Atlanta-based firm for $688.5 million in an all-cash transaction.
Under the deal, Coca-Cola FEMSA was given an option to purchase CCBPI’s remaining 49% stake within seven years of the deal’s close or sell the acquired majority stake back to its parent firm after six years.
Mr. Santa Maria said the firm has sought modifications on its agreement with Coca-Cola Co., but only half of the requested conditions were approved.
“We have a different view on the impact of the excise taxes and the change in the local sugar market dynamics could have in the value and profitability of the operations, elevating the uncertainty level of our original investments in this asset,” Mr. Santa Maria said.
“This was a particularly difficult decision. After more than five years of deploying our capabilities to develop this market, we have included an efficient turnaround. We achieved important milestones such as obtaining 3.5% compounded annual growth rate in volumes, 5% compounded annual growth rate in revenues historic profitability levels, EBITDA margins 12% to 16%; record investments and last year hitting all time system profit highs for the last 15 years,” he added.
Coca-Cola FEMSA invested some $650 million in its Philippine operations in the last five years.
“As always, in Coca Cola FEMSA we are internalizing potential strategic opportunities that exist without being restricted to a territory or region. So we’ll continue to evaluate opportunities in various markets that could even be in Southeast Asian countries,” Mr. Santa Maria said.

The Philippine Philharmonic Orchestra’s 36th season

THE Philippine Philharmonic Orchestra, under maestro Yoshikazu Fukumura, will have eight concerts for its 2018-2019 season — its 36th.
• Sept. 14, Main Theater, Cultural Center of the Philippines (CCP) — French pianist Monique Dupil opens the season as a soloist. Program includes Greeting Prelude (Happy Birthday), G. Rossini’s Semiramide Overture, Johann Bach’s Sinfonia in Bb, and Ravel’s Piano Concerto in G major.
• Oct. 12, CCP Main Theater — Violinist Lee Chin Siow is the soloist in the concert. The program includes Berlioz’ Le Corsaire Overture, M. Bruch’s Violin Concerto no. 1 op. 26 G minor, and P.I. Tchaikovsky’s Symphony no. 4 op. 36, F minor.
• Nov. 15, Manila Cathedral, Intramuros, Manila — Japanese violinist Ryu Goto will perform with PPO at this special concert whose program includes Vivaldi’s The Four Seasons and A. Dvorak’s Symphony no. 8 op. 88 G minor.
• Dec. 14, CCP Main Theater — Filipino violinist Joaquin Gutierrez performs with the PPO under the baton of PPO associate conductor Herminigildo G. Ranera. The program includes Mozart’s Violin Concerto, E. Humperdick’s Hansel and Gretel Prelude to Act One, Tchaikovsky’s The Nutcracker Suite, and Christmas music.
• Jan. 18, 2019, CCP Main Theater — Filipina pianist Hiyas Hila performs with the PPO. The program includes R. Wagner’s Die Meistersinger von Nurnberg Prelude, Beethoven’s Symphony no. 7 op. 92 A major, and Schumann’s Piano Concerto.
• Feb. 8, CCP Main Theater — Hungarian pianist and conductor Tamás Vásáry will lead the PPO in performing Chopin’s Andante spianato, Mozart’s Symphony no. 39 K. 543, e-flat major, and Kodaly’s Variations on a Hungarian Folk song.
• March 15, CCP Main Theater — Cellist Ray Wang performs with the PPO in a program that includes Toshiro Mayuzumi’s Bacchanale, R. Schumann’s Cello Concerto op. 129 A major, and Tchaikovsky’s Symphony no. 6 op. 64 E minor.
• April 12, CCP Main Theater — To conclude the season, Japanese guitarist Kiyoshi Shomura performs with the PPO in program including F. Mendelssohn’s Symphony no. 4 op. 90, A major, I. Stravinsky’s The Rite of Spring, and Castelnuovo-Tedesco’s Guitar Concerto no. 1.

SM Retail ramping up store expansion

SM Retail, Inc. aims to grow the number of stores under its portfolio to 3,000 within the next five years, banking on the increasing spending power of Filipinos alongside the growing economy.
SM Retail Director Jorge T. Mendiola said the company is open to adding more specialty retail brands under its network when the opportunity arises.
Asked when the company targets to hit the 3,000-store mark, Mr. Mendiola told reporters on Aug. 9: “Hopefully soon, probably in the next five years or so. We’re in that mode right now for expansion.”
The retail unit of country’s richest man Henry Sy, Sr. ended the first half of the year with 2,149 stores, consisting of 61 The SM Stores, 1,304 specialty stores, 55 SM Supermarkets, 49 SM Hypermarkets, 190 Savemore stores, 49 WalterMart stores, and 441 Alfamart stores.
For this year alone, the company is set to open four The SM Stores, four SM Supermarkets, 18 Savemore stores, two SM Hypermarkets, and 76 specialty stores, according to a regulatory filing.
To accelerate expansion, the company is considering introducing more foreign brands in the country.
Mr. Mendiola cited the company’s partnership with Japanese clothing retailer Uniqlo, saying this has been “fairly successful.”
Aside from Uniqlo, other specialty stores under SM Retail include Ace Hardware, Forever21, Watsons, Crate & Barrel, The Body Shop, Miniso, Toy Kingdom, Kultura, and Surplus.
“We’re always open to anything, if something comes by then we take a look at it and if we think that it will really help us then we will engage,” the SM Retail executive said.
SM Retail is getting a boost from the increased consumer spending as a result of the continued growth of the economy.
“The Philippines is a growing market, at least unemployment is down to five percent. Hopefully with more BPOs and other investments coming in, it would be lower. And of course with employment there’s spending power, and I think that’s key. And there are remittances, it’s really helping us a lot,” Mr. Mendiola said.
SM Retail’s net income went up 10% to P5.7 billion in the first six months of 2018, buoyed by the 10% increase in total sales to P145 billion. Revenues from specialty retail stores alone rose by 17% to P37.3 billion. The company attributed to increase to the expansion of new formats such as Miniso, which ended the first semester with 55 stores.
SM Retail is part of Mr. Sy’s holding firm, SM Investments Corp., which also has core interests in property and banking.
The listed conglomerate reported a nine percent profit growth to P18.1 billion in the first half of the year, driven by a 12% uptick in revenues to P204.9 billion during the period. — Arra B. Francia

Once upon a time… preserving folk tales in Benin

COTONOU, Benin — Dusk settled on Sainte-Cecile square and the oil lanterns cast a soft yellow light as a storyteller took to the stage and bound the audience with a magic spell of words.
The tale was about a naughty little girl who disobeys her parents and whistles at night — a way of summoning evil spirits.
She is attacked by fierce beasts but is saved from death thanks to the courageous intervention of her neighbor, a hunter.
Djimada, a teenage high-school student, was among those who were captivated by the centuries-old story.
“I was always told never to whistle at night but never understood why,” she said. “Now I know.”
The tiny African state of Benin is perhaps best known to the world as the cradle of voodoo.
But this is only part of a rich cultural history that includes a seam of folk tales, many of them handed down from generation to generation by walking storytellers known as “griots.”
Each year, a festival is held in Cotonou, the capital, to honor the proud tradition.
For two nights in mid-August more than 30 communities from across Benin held the event organised by a Franco-Beninese association, Memories of Africa, that is now two decades old.
Amelie Armao, a professional storyteller from France, came to steep herself in Benin’s oral treasures — an extraordinary but vanishing catalogue of spirits, talking animals, magical creatures, kings and queens, heroes and villains and witches.
“I started my career telling African stories,” Armao said. “I find them steeped with meaning, humor and philosophy.”
Like Djimada, this was the first time many people in the audience were hearing the stories, a sobering reflection of the reality that oral storytelling has been losing its cultural prestige.
Chris-Mael Tonoukouin, a private school teacher in Cotonou, came to the square to relive his childhood memories.
“In the good old days, we sat on the floor around a kerosene lamp,” said Tonoukouin.
“We were listening to our grandparents tell these funny stories between humans and animals.”
‘AFRICAN WISDOM’
Tonoukouin can be forgiven for feeling nostalgic.
The oral tradition is being lost little by little, said Raoul Atchaka, a representative of Memories of Africa.
“We must act so that the African wisdom is not forgotten in the tombs of the old people who die,” said Atchaka.
The point of the festival, whose tales are recounted in French and a local language, Fongbe, is get younger people to hear them, “and then teach their children,” he said.
To do this, the association held a storytelling contest in 2000.
More than 1,000 young people took part in the contest to help create several books containing over 1,500 stories.
Getting the stories on paper is critical for Beninese author Carmen Toudonou, who says the future of African fairy tales is not under trees but on pages of books.
“I encourage writers here to be more interested in this genre, to be able to offer our children stories through which they can identify,” Toudonou said.
“We must create African heroes to stand alongside Snow White and Little Red Riding Hood,” she said.
“Then the parents have to read to them very early to make them later lovers of beautiful stories, lovers of reading.”
Transferring this knowledge is important to preserving Africa’s heritage, said Patrice Toton, a Benin storyteller based in France.
“Storytelling is for us a perpetuation of the knowledge, languages, practises and history of peoples,” Toton said.
“It plays a role of conservation of heritage, history, knowledge and perpetuates the identity of peoples.”
He hopes that 100 years from now a child in Benin will still know not to whistle at night, when wild creatures are lurking in the dark. — AFP

San Miguel may get go signal for TPLEx extension by next month

SAN MIGUEL CORP. is the government’s private concessionaire for the Tarlac-Pangasinan-La Union Expressway.

THE DEPARTMENT of Public Works and Highways (DPWH) said it is looking to give San Miguel Corp. (SMC) by next month the original proponent status (OPS) for its proposal to extend the Tarlac-Pangasinan-La Union Expressway (TPLEx).
“Sa TPLEx malapit na kami magbigay ng OPS…. Maximum siguro is next month [We’re giving the OPS to TPLEx soon…. Maybe the maximum is next month],” DPWH Public-Private Partnership (PPP) Director Alex G. Bote told reporters on Thursday.
In February, SMC submitted to the government a P23.948-billion unsolicited proposal to build a 59.4-kilometer toll road extending the TPLEx from Rosario, La Union to San Juan, La Union.
The extension has three sections, namely Rosario to Tubao, Tubao to Naguilian, then Naguilian to San Juan.
DPWH Build, Build, Build Committee Chairperson Anna Mae Y. Lamentillo told reporters on Friday that while the proposal for the extension is still under review, they are positive the third phase of the original alignment of TPLEx will be completed by 2019.
“We’re confident that we would be able to finish or to open the entire alignment by next year,” she said.
The original alignment of the 89.31-kilometer TPLEx is divided into three segments: the stretch from Tarlac City to Rosales, Pangasinan; then from there to Urdaneta City, Pangasinan; then from there to Rosario, La Union.
Right of way acquisition and construction of a portion of the third section is on-going. The third section, which stretches from Pozorrubio in Pangasinan to Rosario in La Union, is scheduled to open in June 2019.
SMC is also the government’s private concessionaire for the TPLEx project. — Denise A. Valdez

LANDBANK books higher net profit in 2nd quarter

LAND BANK of the Philippines (LANDBANK) posted a higher net income in the second quarter of the year propelled by steady growth in its loan portfolio.
In a statement sent to reporters on Tuesday, the state-led bank said it logged a net income of P7.8 billion in the April-June period, 5.4% more than the P7.4 billion booked in the same period last year.
LANDBANK President and Chief Executive Officer Alex V. Buenaventura said the increase in its net income was boosted by steady growth in its loan portfolio.
The lender’s total loan book expanded by 27% to P758.7 billion as of end-June from P597.1 billion in the comparable year-ago period, with revenues from loans climbing 30%.
Deposits also grew 15% to P1.5 trillion from P1.3 trillion as of June last year.
Return on equity stood at 13.4%, well above the latest industry average and surpassing the levels reported by the country’s top four banks. LANDBANK’s net interest margin was also above industry average at 3.32%.
Overall, the bank’s assets rose 14% to P1.7 trillion from a year-ago level of P1.48 trillion. Its capital, on the other hand, stood at P117.4 billion.
Mr. Buenaventura said LANDBANK remains among the most profitable banks in the country.
“We are confident about continued growth for the next half of the year,” he was quoted as saying in the statement. “We work hard to maintain the bank’s sound financial position as the profits from our commercial banking operations allow us to further drive support to our priority sectors, especially farmers and fishers.”
In a recent interview, Mr. Buenaventura said the bank sees its loan portfolio growing by “more than 25%” this year supported by corporate and local government financing.
“Our loans are so positive. The credit demand based on our increase in loan portfolio versus last year is so big. It’s a record growth,” Mr. Buenaventura told BusinessWorld.
“Our loans from local government units are very, very strong. Local governments are growing and progressive,” the LANDBANK chief said.
Aside from this, corporate loans will also support the lending expansion of the bank as companies grow their businesses rapidly.
“Our corporate loans are also equally strong. As you know, corporate income is good, and they are in a very expansive mood. This will also drive our growth,” the chief executive added.
Mr. Buenaventura also said the lender is on track to hit its profit target of P16 billion for the year. If met, this will be a climb from its P14.05-billion net profit last year. — Karl Angelo N. Vidal

David Hockney could become the most expensive living artist in the world

DAVID HOCKNEY, the 81-year-old British painter of saturated landscapes and portraits, could become the most expensive living artist at auction this year.
Hockney’s Portrait of an Artist (Pool with Two Figures) is being offered for sale to auction houses by billionaire Joe Lewis, who’s seeking at least $80 million for the work, according to people with direct knowledge of the matter. The current highest price for a living artist is $58.4 million for Jeff Koons’s orange balloon dog.
Christie’s, Sotheby’s, and Phillips have been approached, with Christie’s the front-runner, said the people, who asked not to be identified because the consignment hasn’t been formally announced.
Lewis has built a $5.5 billion fortune, according to the Bloomberg Billionaires Index. The foreign currency trader has parlayed his earnings into an array of assets that include London soccer team Tottenham Hotspur, real estate and masterpieces by artists including Pablo Picasso, Henri Matisse, Francis Bacon and Lucian Freud.
A current Tate Britain exhibition in London, All Too Human: Bacon, Freud and a Century of Painting Life, includes several works from Lewis’s collection.
A representative for Lewis, the chairman and founder of Bahamas-based Tavistock Group, didn’t return e-mails or a telephone call seeking comment. Christie’s declined to comment on the work or the seller and it’s unclear whether it will be offered during October sales in London or at the semi-annual auctions in New York in November.
ICONIC IMAGE
The 1972 canvas depicts two men: One, fully clothed, stands at the edge of a swimming pool gazing down at another, who is submerged. The hilly landscape behind them was inspired by the South of France. The standing man is Peter Schlesinger, an artist and Hockney’s ex-boyfriend; Hockney was working on the painting at the time when their relationship was ending.
Recently exhibited in Hockney’s retrospective at the Metropolitan Museum of Art, where it was also on loan from Lewis, the work is considered one of his most iconic images. A small study for the scene fetched $2.1 million in 2016.
Lewis’s asking price is a staggering figure even though prices for Hockney’s work have surged in recent months. Sotheby’s set two auction records for Hockney during the same sale in May. The most expensive, a 1990 landscape Pacific Coast Highway and Santa Monica, fetched $28.5 million. Works by the artist have generated a record $66.6 million at auction this year, up more than 80% from all his auction sales in 2017, according to Artprice, an online database. — Bloomberg

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