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SEC approves Globe’s creation of new tower firm

Globe Telecom, Inc. is moving closer to establishing a separate tower holding company now that it has secured clearance from the Securities and Exchange Commission (SEC).
In a disclosure to the stock exchange on Wednesday, Aug. 22, the telco giant said it was granted approval by the SEC on Monday to incorporate GTowers, Inc.
It said putting up a distinct tower company would “help speed up the building and deployment of cellular towers in the country.”
This development comes after Globe secured approval from its Board of Directors last month to start the process of incorporation for the new tower company.
The company said in February it was considering divesting its cellular tower assets to build a tower unit with third party companies. It said at that time it had already started talking to independent companies, but Globe President and Chief Executive Officer Ernest L. Cu told reporters last month it has yet to come up with an agreement.

DBM releases P2.29 billion for Marawi social projects

THE DEPARTMENT of Budget and Management (DBM) has released P2.29 billion for social projects under the Marawi City Rehabilitation and Recovery program.
The projects, which is carried out by the Department of Social Welfare and Development (DSWD), includes the Basic Transitory Family Support Package worth P1.43-billion for 25,537 displaced families.
They will also get an additional P675.20 million from the Provision of Livelihood Settlement Grants program.
The fund release also includes a P183.02-million Operational Support Fund for other administrative expenses.
The sum is taken from the Marawi Recovery, Rehabilitation, and Reconstruction Program (MRRRP) through the P25.5 billion 2018 National Disaster Risk Reduction and Management (NDRRM) Fund. — Elijah Joseph C. Tubayan

Five power projects cleared for grid impact study — DoE

The Department of Energy (DoE) has cleared five projects to conduct their separate study on their project’s impact on the national transmission grid as they will potentially add 1,233 megawatts (MW) to the country’s installed power capacity.
Based on latest DoE data, the five projects secured their clearance in July with Limay LNG Power Corp. accounting for the bulk of the expected new power capacity at 1,100 MW for its combined cycle gas turbine project in Limay, Bataan.
The rest of the projects are renewable energy development that ranges in capacity from 14 MW to 80 MW.
The DoE data show that no other projects had been cleared for grid impact study (GIS) so far this year except for the five facilities. — Victor V. Saulon

Building your wardrobe with a bit of digital magic

Two years ago, Abbie Victorino found herself in between a day job and a side business supplying accessories to an e-commerce site. Perennially crunched for time, she was eating a lunch sent to her through a meal delivery service, a convenience she wished she could bring into the rest of her professional life.
“Buti pa ’yung isa kong problem, it’s solved already,” Abbie said, thinking about where else a service like this might come in handy.
“Why isn’t there a delivery plan for clothes?” she asked, the gears in her head turning. “What if I’m the one who would do it?”
As a former international fashion buyer and model, with a background in the field of e-commerce, she decided to capitalize on these musings. That’s how, in 2016, styling subscription box StyleGenie was born.
“I talked to my friends and said, ‘I have this idea, it’s crazy, but do you think people would subscribe to styling box?’ It’s actually doing a lot better in the US, and I think in Singapore now, so, why not do it here in the Philippines?” Abbie said.
StyleGenie, considered the first styling and clothing subscription box in the country, aims to provide a unique, effortless shopping experience for Filipino customers.
Users of this digital stylist, currently numbering at around 2,500, follow a three step process: create a style profile, subscribe to a budget and delivery plan, and “Shazuums,” receive a curated box set of clothes.
“We want to make closet wishes come true,” Abbie said. “We don’t want to be just a shop. We want to be someone who can help you develop and improve your style. That’s why we called it a genie.”
In addition to Abbie, Steph Oller, 29, and Rhijean Sarenas, 28, round out the StyleGenie team. Together, they are planning to scale their operations to cover the entire Philippines, and even move into Malaysia and other Southeast Asian markets before the end of the year.
“Their eyes sparkled when I was pitching my basic five-slide presentation,” Abbie said, recalling how she first tapped her partners. “They got the idea and they’re like, ‘This is going to work’.”
Abbie admits that starting an online business today is quite a challenge. But with Steph and Rhijean, she says she’s found just the right kind of magic to make it work.
“It’s very important that you have the same vision — that you see where the company is going, what kind of purpose, or what kind of problem you are really solving,” Abbie said.
“We believe that clothes may not change the world, but the people who wear them can,” she said. “That’s our belief.”
And if the team behind StyleGenie can manage to help those potential world-changers be confident enough to try, then that’s its own kind of magic altogether.

Habi Footwear: Weaving a way out of poverty

Habi Footwear’s story begins in 2012, in an urban poor community in Quezon City. Janine Mikaella Chiong, the company’s president and co-founder, was on an immersion trip and had spent considerable time with the mothers of the community.
She noticed that they were incredibly skilled at weaving rugs, but barely made a profit from their output — roughly P10 to P15 per foot of fabric. That’s when she reached out to them with a business idea.
“[We] decided to incorporate woven mats into footwear as we wanted to come up with a functional, affordable yet stylish shoe brand that will capture the market,” Janine said.
Enter Habi Footwear.
Since its launch in 2012, Habi has grown into a lifestyle enterprise offering not only espadrilles, sandals, and heels, but also bags, pouches, and corporate giveaways — all produced by women from impoverished communities.
“Our aim is to address poverty and lack of empowerment and livelihood opportunities for women in communities,” Janine said.
The Habi team consists of Ms. Chiong, who is also in charge of the sales and marketing; Bernadee Uy, head of finance and community development; Maria Paulina Savillo, head of product development; and Allister Roy Chua, operations manager.
Currently, the team has partnerships with four communities in Quezon City, engaging a total of 30 weavers earning as much as P200 a day for their output.
According to Janine, the Habi team measures success not only on the basis of financial and developmental sustainability, but also by the impact on the quality of lives of their community partners.
“We try as much as possible to really gauge their well-being and productivity within the company,” Ms. Chiong said. Today, the team has plans to expand their partnerships to reach communities in Ifugao, as well as a correctional facility in Mandaluyong.
“If you want to put up your business, don’t be motivated just by prestige or profit,” Janine said, speaking of the lessons she’s learned from running Habi and what advice she’d give aspiring entrepreneurs. “Wherever you are, find something that bothers you and do something about it in whatever endeavor you wish to pursue.”

DoT Usec Kat De Castro moved to IBC-13

President Rodrigo R. Duterte has appointed Department of Tourism (DoT) Undersecretary Katherine Chloe S. De Castro as a member of the board of directors of the Intercontinental Broadcasting Corporation (IBC-13), Malacañang said on Wednesday, Aug. 22.
Ms. De Castro was replaced by Edwin R. Enrile as tourism undersecretary.
The President signed the appointment papers of Ms. De Castro and Mr. Enrile last Monday, Aug. 20.
“Pursuant to the provisions of existing laws, you are hereby appointed Member, Board of Directors, Intercontinental Boadcasting Corporation (IBC-13), to serve the unexpired Term of Office (of Manolito O. Cruz) that began on 01 July 2018 and will end on 30 June 2019,” Ms. De Castro’s appointment paper read in part.
IBC-13, according to the official Web site of the Governance Commission for Government-Owned and-Controlled Corporations (GCG), “started out in 1960 as a private company known as Inter-Island Broadcasting Corp., and then was sequestered by the Presidential Commission on Good Government (PCGG) in 1986 as part of the recovery of ill-gotten wealth.”
“It has been one of 2 networks considered as GOCCs aside from Philippine Television Network, Inc. (PTV-4). The State also has a minority share in Radio Philippines Network (RPN-9),” the GCG also said.
The President has also signed the appointment papers of the following new officials:
• Michael P. Ong, Acting Senior Deputy Executive Secretary, Office of the President
• Mcjill Bryant T. Fernandez, Acting Deputy Executive Secretary for General Administration, Office of the President
• Vanessa B. Goc-ong, Assistant Secretary, Office of the President
• Beatrice A. Avelino-Vega, Assistant Secretary, Office of the President
• Francisco P. Acosta, Chairman, Commission on Filipinos Overseas
• Ruben V. Lopez, Member, Board of Directors, United Coconut Planters Bank
• Joe Jay T. Doctora, Member, Board of Directors, Small Business Corporation
• Dengel P. Palmares, Member, Board of Directors, Philippine Sugar Corporation
• Danilo C. Trongco, Member, Board of Directors, National Tobacco Administration
• Amador T. Tabuga, Jr. Member, Board of Directors, Philippine Mining Development Corporation
• Paul J. Paulin, Provincial Agrarian Reform Program Officer I, Department of Agrarian Reform
• Peter Joseph L. Fauni, Register of Deeds II, Land Registration Authority, Department of Justice
— Arjay L. Balinbin

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.