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PHL developers to see increased buyer demand as rates go down

Condominium buildings are seen in Manila amid dark rain clouds, April 14, 2023. — PHILIPPINE STAR/MIGUEL DE GUZMAN

PROPERTY DEVELOPERS in the Philippines are expected to see increased buyer demand and more affordable financing options for projects as borrowing costs decline, according to consulting firms.

“As key policy rates go down, borrowing costs will also go down for both the developers and the buyers,” Sharon R. Saclolo, head of research at Leechiu Property Consultants, Inc., said in an e-mail interview on Aug. 27.

“This should have a positive impact on the real estate market because it will increase liquidity, meaning more money can be spent to invest in real estate,” she added.

The residential property sector saw a slight decline in total residential real estate loans (RRELs) in the first quarter of the year.

The total granted RREL fell 9% to 9,064 for the first quarter of 2024 from 9,975 loans in the fourth quarter of 2023, according to Leechiu, citing Bangko Sentral ng Pilipinas (BSP) data.

This month, the BSP lowered benchmark interest rates for the first time in nearly four years, citing an improving inflation outlook and strengthening economic conditions, with its governor indicating that at least one more rate cut could occur before the end of the year.

The Monetary Board lowered its target reverse repurchase rate by 25 basis points (bps) to 6.25%, a move anticipated by nine out of 16 analysts in a BusinessWorld poll. BSP Governor Eli M. Remolona, Jr. has indicated that another rate cut of 25 bps could be implemented within the year. The remaining policy-setting meetings of the Monetary Board for 2024 are scheduled for Oct. 17 and Dec. 19.

With the BSP signaling the possibility of an additional rate cut before the end of the year, prospective homeowners may be more inclined to enter the market sooner rather than later, anticipating more favorable borrowing conditions, according to analysts.

“That should fuel the take-up for condominium units, especially in Metro Manila for the mid-income segment, P3.6 to 12 million, which is the most sensitive right now to interest rate spikes,” Joey Roi Bondoc, director and head of Research of Colliers Philippines, said in an interview with BusinessWorld.

He noted that while demand remains somewhat stable, it has not yet reached pre-pandemic levels. The interest rate cut is expected to “definitely jump-start” the infusion of “much-needed confidence” in the residential market.

Mr. Bondoc also expressed hope for additional rate cuts toward the end of the year and into 2025.

Similarly, lower credit card interest rates may boost consumer spending, leading mall operators to expand and occupy larger retail spaces, he noted.

He also said that this renewed interest in the retail sector could attract more foreign retailers to the Philippines, leading to an increase in new store openings.

“And while those that are already here, they might even find that as an impetus to expand brick-and-mortar spaces,” he added. — A.R.A. Inosante

Give my regards to Ho-land

HO-LAND HOPIA Binondo branch. — HO-LAND HOPIA FACEBOOK PAGE

THE GHOST month was not even in yet when a fire struck a famous street corner in Binondo, Carvajal corner Nueva (now Yuchengco), early on the first Friday of August, resulting in 11 deaths, mostly boarders of a dormitory in the upper floors of a building that also housed Ho-land Hopia and Chinese deli on the ground floor, which also wasn’t spared.

Among the dead were two coast guard trainees possibly about to wrap up studies in one of the merchant marine schools that sprout like mushrooms in that part of town, like the spaghetti electric wires and cables above the shops and residences; the wife of the building owner; as well as a cashier or other workers in nearby establishments, maybe including Ho-land, in the city to earn enough to occasionally send money home to the province.

Carvajal Street of course is no stranger to habitues of the noble and ever loyal city, surely part of walking tours of travel agency brochures, being just a stone’s throw away from Ongpin and its famed Binondo church fronting the plaza at Quintin Paredes and the first Filipino saint Lorenzo Ruiz doing battle with the ghost of ages.

Anak ng hopia” was an expression unique to the old man, in fact it was only from him I heard it, a variation from the more popular, surely less savory, interjections of similar construction, and which you could also repeat after me — anak ng hopia — upon seeing the sprawling cornucopia of vegetables and fruits among other exotic foodstuff in the alley of Carvajal, named perhaps after the ancestors of showbiz columnist Dollywood and the tallest basketball player of his time that gave Jose Rizal University its last NCAA championship back when it was still a college on Shaw.

It was in that bountiful alley, so typical of the maze and labyrinths of the world’s oldest Chinatown, where we sometimes shopped on special occasions or merely as a foray or side trip when the office was in nearby Port Area, for the medicinal ulikba always sold in pairs, chicken so small and so black and so tasty shouldn’t be lonely, as well trays of freshly sorted langka, random memory chestnuts, anonas fruit rare as the holy grail, but always don’t forget to drop by Ho-land for the incomparable hopia otaosa or black mongo, the origs yellow mongo and baboy with their vintage paper wrappers long before the franchise experimented with other hopia flavors including ube and the best kept secret kondol or winter melon.

Such a trip would not be complete without a quick meal at the carinderia at the corner of Nueva and Ongpin, with its comfort food of kiampong and camto, ice cold soda on the side, to nourish oneself before the long walk to the LRT through scenic Escolta and the since shuttered Book Sale, or even hitch a ride on the Pasig river ferry, which now you see now you don’t.

Ho-land may have been best known for its hopia, and rightly so as these taste buds consider it head and shoulders above the competition, but it also had other products worthy of merienda or pasalubong, the typical pantawid gutom before the meal proper comes along or even never arrives, like the assorted empanadas with filling ranging from kuchay and mushrooms to chicken a la king and beef curry — all going at a bargain after 6 p.m. Also the phased-out chicken galantina that regaled many a family reunion spread, an assortment of machang, string color-coded whether pork, chicken, or a combination of both and/or with mushroom. Not to forget the gabi or radish cakes, slices of which are ready for frying.

Correct me if I’m wrong but wasn’t the original Mei-ling restaurant located in a Carvajal alley, a mere hole in the wall amid the overflowing merchandise, before it branched out to wealthier more accessible abodes in Megamall and Jupiter Street and other commercial spots? It was in such a nondescript place where we took the father-in-law for merienda of Schezwan noodles, after an adventure in nearby Sto. Cristo and Blumentritt in search of a crankshaft or similar major spare part for a passenger jeepney in Negros province. Comfort food gives me hope.

The hopia of the fatherland can’t be diminished by 11 deaths, though at times this recollection of so much food may leave a bad taste particularly for the bereaved — our condolences. But with ghost month well in I am thinking of taking a trip down to Pioneer Center to see whether the Ho-land deli branch has reopened — its metal gates were drawn down and padlocked the weekend after the fire. Just curious to see if the otaosa can rise from the ashes, as well it should, sesame seeds in the flaky pastry tasting like heaven, far and away from the hubbub of Binondo.

Glossary

hopia – a small bean-filled moon cake-like pastry

anak ng hopia – son of a hopia

ulikba – a breed of chicken with black feathers and meat

langka – jackfruit

anonas – sugar apples

mongo – mung beans

baboy – pork

ube – purple yam

carinderia – streetside restaurant

kiampong – glutinous rice casserole

camto – flank steak

merienda – afternoon snack

pasalubong – take-home gift

pantawid gutom – something to stave off hunger

empanadas – stuffed pastries

kuchay – Chinese chives

galantina – stuffed chicken

machang – stuffed glutinous rice packets

 

Juaniyo Arcellana is a semiretired/senior desk editor at BusinessWorld’s sister publication The Philippine Star. Thirty years ago he had a sports column called The Mopman in BusinessWorld.

SM Prime’s FourE-Com Center: Innovative form and function in an office complex

The FourE-com Center has slopes that allow more sunlight to penetrate the podium, as well as to create more viewpoints across the building.

SM Prime Holdings, Inc. has been at the forefront of creating innovative and sustainable property developments that enhance the quality of life for Filipinos. As the demand for office spaces continues to evolve and adapt to “new ways of working,” SM Prime is ready to meet the needs of the corporate and business processing sectors with FourE-Com Center.

Located in the thriving Mall of Asia Complex, SM Prime’s FourE-com Center is an office complex comprised of three 15-storey towers spanning more than 103,000 sq.m. of leasable space. The development is the perfect answer for businesses looking for a premier office base in a prime location.

An Architectural Marvel

Awarded Best Office Architectural Design 2023 at the 11th Property Guru Philippines Property Awards, FourE-Com Center is truly an architectural gem. The three-tower Pre-LEED Gold-certified edifice stands out for its sapphire crystal-like structure designed to give FourE-Com Center a strong identity. This majestic design is not arbitrary either. The building’s slopes not only allow more sunlight to penetrate the podium where the infrastructure stands, but also create more viewpoints of the sea and surrounding environ.

Designed for Today’s Businesses

SM Prime’s FourE-com Center’s sapphire crystal-like structure is designed to give the building a strong identity among other buildings in the Mall of Asia Complex.

From the outside in, FourE-Com Center’s meticulous design shows. The office’s strategic location puts it in the heart of a bustling district that makes it a more accessible and convenient workplace for office workers. The center is only 9 kilometers from the South Luzon Expressway’s Nichols Toll Plaza and even closer to the Ninoy Aquino International Airport. Within the MOA Complex, too, is the National University MOA Campus, giving SM Offices business partners easy access to a rich talent pool.

SM Offices Business Unit Head Alexis Ortiga adds, “We also put a priority on employee conveniences. Through a network of elevated walkways, FourE-com Center is strategically interconnected to the MOA Complex. This means easy access to other amenities and facilities, such as the Mall of Asia, SMX Convention Center, SM MOA Arena, SM by the Bay, and transport terminals among others.”

Fusing industrial and modern styles, the FourE-com Center’s interior design is crafted to meet current tenant pre-requisites and create a cohesive aesthetic. Each tower’s entrance lobby is elegantly lined with marble, while the office floors boast of floor-to-ceiling glass windows that provide tenants with an unobstructed view of the picturesque Manila Bay.

Energy-saving systems are implemented in the center by utilizing natural light, energy-efficient LED lighting, water-efficient fixtures and aerators, and motion-activated escalators. Water and waste management systems are also in place to ensure that non-potable water and wastes are recycled. Other low-carbon footprint features in the complex include an electric vehicle charging station, bike racks, and even a Trash-To-Cash Program.

With plans to expand its offerings, the FourE-Com Center’s fifth-level open-air sky garden will introduce more amenities by the third quarter of 2024, including outdoor work spaces, free Wi-Fi, and multi-purpose outdoor event spaces for tenant-centric activities, such as exercise classes and holiday parties. These amenities are sure to add to the allure of FourE-Com Center, providing businesses an inspiring work environment tailored for today’s dynamic work culture.

Experience Growth in a Premier Office Space

For businesses looking to occupy one of its spaces, FourE-Com Center has floor plates ranging from 2,500 to 3,000 sq.m., allowing BPOs and corporate markets to choose from a selection of sizes. These office spaces are also offered in bare-shell condition, allowing tenants the liberty to customize their environments according to their specific needs and preferences.

“SM Offices continues to set the standard in office developments. Advancing innovative and sustainable solutions that cater to the evolving needs of the modern workplace, SM Offices facilitates the growth and success of business enterprises in a premier and strategically located office complex,” said Ortiga.

For more information on FourE-Com Center and other office developments from SM Prime, visit https://www.smoffices.com.

 


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S&P upgrades Meralco’s credit rating to ‘BBB’

PHILSTAR FILE PHOTO

CREDIT WATCHER S&P Global Ratings has upgraded Manila Electric Co.’s (Meralco) credit rating to “BBB,” noting the company’s strong financial position and steady cash flow.

“We raised our long-term issuer credit rating on Meralco to ‘BBB’ from ‘BBB-’,” S&P said in its report on Meralco’s credit upgrade e-mailed to journalists on Wednesday.

A “BBB” rating indicates that Meralco has an adequate capacity to meet its financial commitments but remains more vulnerable to adverse economic conditions.

S&P affirmed a stable outlook for Meralco, reflecting expectations of steady cash flow from its regulated distribution business and prudent management of leverage and growth spending over the next 12-24 months.

“We expect financial ratios to remain strong, despite heavy capital spending on the power generation businesses,” S&P said.

The agency anticipates Meralco will maintain a strong ratio of funds from operations (FFO) to debt of 39% to 45% over the next two years, surpassing the previous 30%.

S&P said that Meralco’s support will come from improving profitability in power generation and steady cash flow from distribution.

The agency also noted favorable power purchase agreement contract terms for Global Business Power Corp. (GBPC) and additional earnings from the local contingency reserve market.

Meralco is expected to undertake capital spending of approximately P120 billion in 2024 and P30 billion to P40 billion in 2025, including acquisitions. This includes sizable distribution-related growth capital expenditure of P23 billion to P25 billion annually for network strengthening and asset renewal.

Additionally, Meralco plans to ramp up investments in power generation assets, including renewables, over the next two to three years.

The company has announced a proposed joint venture with Aboitiz Power Corp. to invest in two gas plants of San Miguel Corp. and a liquefied natural gas import terminal, with an expected cost of P70 billion to P75 billion for its effective 40.2% stake.

Meralco will likely provide capital injections of up to P40 billion to SP New Energy Corp. for a 3.5-gigawatt Terra Solar Project over the next two to three years. The actual capital spending will depend on the project’s final financing and ownership structure.

S&P cautioned that it could lower Meralco’s rating if the company’s ratio of FFO to debt declines sustainably below 30% or if its financial policy becomes more aggressive.

POWER SUPPLY DEALS
Meralco expects a “swift” approval of its power supply agreements (PSAs) from the Energy Regulatory Commission (ERC) so that customers can enjoy lower rates, a company official said on Wednesday.

The power distributor recently announced that it had secured the best bids from two generation companies, San Miguel Global Power Holdings Corp. and Aboitiz Power Corp., following a competitive selection process (CSP) for 600 MW of baseload capacity.

“We are happy that the main objective of the CSP, which is to secure the least cost supply for our customers, has been achieved. We hope that there will be no further delays as we work towards immediate signing of the PSAs resulting from the 600-MW CSP,” Meralco Senior Vice-President and Regulatory Management Head Jose Ronald Valles said in a statement.

“We trust that ERC evaluation and approval will also be swift so customers can enjoy these very low rates upon scheduled delivery date in August 2025,” he added.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT, Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Sheldeen Joy Talavera

No longer just the past

REENACTORS in corporate setting.

Every time I visit Mum to check on her, I find her seated in front of a television set or her laptop, her eyes glued to some historical drama series on NHK.

One flick which I watched with her was about one of the Meiji Restoration’s top reformers. It has never ceased to amaze me that an ordinary Japanese like her could rattle off milestones and key dates in the lives of that country’s heroes or historical organizations, and explain their significance to life in her homeland today.

Chances are that many of us Pinoys have perceived a general lack of interest among our countrymen in our origins as a nation. This was so long before kids asked actor Jeffrey “Epy” S. Quizon why Apolinario Mabini — the hero he played in the 2015 historical flick Heneral Luna — was portrayed seated throughout the film. True, Mabini was not an invalid since birth, losing use of both legs only in his early 30s after contracting polio in 1895, but the disease had incapacitated him by the time the Philippine Revolution ignited the following year.

It is a flaw that some foreigners have noticed. One visiting Brit who joined me on a historical tour in Quezon province in the early 2000s said that he would never fail to take his two half-Filipino daughters on similar excursions whenever his family visited this country, as he lamented a general lack of familiarity among many Pinoys with their own history.

I have yet to come across research explaining the link between historical consciousness, patriotism, and socioeconomic development (there must be one, of course), but there seems to be enough of a casual correlation for governments to appeal to patriotism as they remind their constituents to fulfill their civic duties like paying the right amount of taxes.

AWARENESS ERODED
Ricardo T. Jose — a graduate of Tokyo University who has been teaching history for decades at the University of the Philippines in Diliman, Quezon City and specializes in the Philippine Commonwealth period, the Japanese occupation of the Philippines, Japan-Philippine relations, and Philippine diplomatic history — said in a recent chat that a sense of history “gives you perspective” in dealing with current socioeconomic and political issues.

“History… enables you to better appreciate where you stand today, whether you are better or worse off. How can you prepare for the future if you have no basis to appreciate what the present is all about?” he said.

“Aside from giving you a sense of perspective, it also gives you a sense of pride, a sense of belonging. You are part of a bigger picture and a continuing evolutionary trend.”

He noted, however, that “the level of [historical] awareness of our people has gone down” over the years.

The problem lies, perhaps, in the way History is taught, especially amid the confluence of factors like the proliferation of misleading information on the internet, and the fact that younger generations no longer read and have generally poor comprehension.

“People just no longer read, and without reading, you do not get to appreciate what we have,” Mr. Jose said, adding that “students are just not interested” in history.

And this comes at a time of disinformation, historical revisionism, as well as information on the internet that is generally “biased” for the developed world’s perception of history.

Since he began teaching in 1979, he said that he has had to supplement lectures with “articles students could see and touch,” to the point that he would occasionally bring artifacts or even occasionally don period costumes for his lectures. The need for more visual modes of instruction has just grown over the years.

“Today’s generation is visually oriented, but how do one visualize ideas like the philosophy of History?”

ENTER HISTORICAL REENACTMENT
One phenomenon that could prove useful in addressing this situation is the proliferation of historical reenactors.

Beginning with a group of professionals — none of them career historians — who formed the group Buhay na Kasaysayan (Living History) in the early 2000s that would reenact events in the Philippine Revolution and Philippine-American War, there are now similar groups scattered across Metro Manila and the Visayas (check out the likes of the Renacimento Manila cultural group, as well as the Republica Filipina Reenactment Group and Historia Viviente Manila on Facebook).

Composed of professionals and students who share a zest for Philippine history — especially the Philippine Revolution, the First Philippine Republic, the Commonwealth period, and the Second World War — a few of these volunteer groups have been recognized by some local governments and offices like the Intramuros Administration and the Armed Forces of the Philippines which have tapped them to add color to ribbon cuttings, conferences, and other events.

Even as Mr. Jose said some reenactments seem to be little more than cosplay for some participants, others “can be very concerned about accuracy.” The reenactors can be very knowledgeable about particular details of Philippine history, and use the reenactments as a platform to show the results of their personal research.

Mr. Jose said he himself has invited some reenactors to basic History classes, describing this as “a learning tool” that has captivated students. “It is a limited way of showing history, but it inspires people to read more,” he said, recalling that one spectator had told him once that “if you teach history that way, then more people would be interested.”

STARTING POINT
So it is a starting point for becoming more aware of Philippine history and its contemporary significance. Hopefully, it goads spectators to read more or even do their own research. That way, they learn to be more discriminating and deal better with the flood of information — both truth and errors — on the internet.

One of the original reenactors, Pedro Antonio V. Javier — a practicing electronics and communication engineer with an MBA — would attend Dec. 30 ceremonies in the City of Manila dressed as Jose Rizal, or as Mabini on some other occasions. He even appeared as the First Philippine Republic officer who barked a command at the funeral procession near the closing scenes of Heneral Luna. Reenactment is a family affair for him, with his wife and son joining him occasionally in 19th Century costumes.

He is one of the better-informed reenactors and can field questions from bystanders at such events. His research has been cited by some foreign collectors of Spanish-American War artifacts.

For him, reenactment can help instill idealism, heroism, and other values even in the private sector. His electronics company employed this theme in its audiovisual presentation for employee service awards. “It’s a kind of edutainment through historical reenactment” that will “influence Filipinos to be heroes in their own special way, whatever career they choose in life,” Mr. Javier said.

Local reenactors have even linked up with their foreign counterparts here in Asia, as well as in the United States and Europe, some of whom can be very comprehensive in and known for their research.

Professor Jose noted that Philippine history is enriched by the unique stories of the country’s provinces. Provinces, cities, and municipalities looking to cash in on the potentials of tourism — long touted as a compelling growth sector for the country — may consider tapping reenactors to lend flavor to local tourism events, as is done in some historical centers of Japan. That, in turn, should help reenactors themselves hone their knowledge.

Hopefully, taking reenactment to the next level will add to quality historical TV series and indie films as effective tools for keeping our identity as a people intact and alive in an increasingly globalized environment.

 

Wilfredo G. Reyes was editor-in-chief of BusinessWorld from 2020 through 2023.

Mid-Autumn Festival offers

THE ASIAN Mid-Autumn Festival falls on Sept. 17, so there is still time to grab these mooncakes, a symbolic (and tasty) way of celebrating the holiday.

Kee Wah Bakery

Kee Wah Bakery created mooncakes that boast of the modern and authentic taste of Hong Kong’s rich heritage. The Kee Wah Supreme Mooncakes come in the bakery’s signature tin can decorated with a classic emperor’s portrait. The cakes are made with lotus seed paste, peanut oil and salted egg yolks. Flavors include White Lotus Seed Paste Mooncake with Two Yolks and Golden Lotus Seed Paste Mooncake at four pieces in a tin for P3,600. It also has mini variants, with each mooncake weighing around 60 gm. The Mini Golden Lotus Seed Paste Mooncake with Yolk and Mini White Lotus Seed Paste Mooncake with Yolk come in eight pieces per box for P2,800. Additional flavors include: Red Bean Paste Mooncake, Assorted Nuts Mooncake, and Red Bean Paste Mooncake with Two Egg Yolks (prices starting at P3,100 for four). Kee Wah is also releasing new flavors, such as Egg Custard and Dried Figs. For every P5,000 order of mooncakes, customers will receive freebies (a Mini Panda Cookie Tin or a Mini Shortcake Tin). Visit its stores at Robinsons Magnolia, S Maison, and The Podium. The products are also found on Lazada, Shopee, Pickaroo, Metromart, and GrabMart.

The Hilton Manila

The Hilton Manila at Newport World Resorts unveils its Lunar Legacy collection, handmade mooncakes crafted by chef Kevin Xu Qiao Yuan. The Lunar Legacy collection offers the Traditional Set for P3,088++, the Boutique Set for P2,888, the Snow Skin Set for P2,888++, the Shanghainese Set for P988++, and the Do-It-Yourself Set for P788++. Each mooncake set comes in ruby red packaging adorned with intricate gold trim and patterns, inspired by a traditional Chinese cabinet. Hilton Manila also offers a luxury hamper featuring a box of six of either Traditional, Boutique, or Snow Skin mooncakes paired with a bottle of Dalmore 12 Years whisky for P12,888++. The Lunar Legacy collection is available until Sept. 17 via 7239-7788 or www.hiltonmanila.com.

The Marriott Manila

The Marriott Manila at Newport World Resorts is celebrating the occasion with its own mooncake collection. Presented in gift boxes, the sweet and savory mooncakes come in three flavors: Red Lotus Paste with Yolk, White Lotus Paste with Yolk, and Wine Cranberry. Complement this mooncake experience with pralines available in Chocolate Galaxy and Marble Chocolate flavors. Add-ons include Candied Walnuts and Tie Guan Yin Tea. Available until Sept. 17, the mooncake package starts at P1,488 nett. Every purchase of Marriott Manila’s mooncakes supports a worthy cause with part of the proceeds going to the chosen beneficiary of Marriott Worldwide Business Councils-Philippines. Discounts apply for early bird and bulk orders. For inquiries, call 0917-624-5980 or 0917-584-9553.

MX Durian Mooncake

The MX Durian Mooncake Series, sought after by durian lovers, returns this year with three variants: the Snowy Musang King Durian Gift Box, the Snowy mini 4Musang King D-24 Durian, and the Musang King Durian Molten Mooncake. Every MX Durian Mooncake is filled with 100% Musang King Durian pulp from naturally ripened fruits from Malaysia. For a limited time only, buyers can collect exclusive free gifts for orders of P3,000; meanwhile, delivery is free delivery within Metro Manila for orders worth P6,000 and above. The Hong Kong MX mooncakes are available on Facebook (Hong Kong MX Products Philippines), Instagram and TikTok (@hkmxproductsph), its official website (www.doubledownimportexportinc.com), on Lazada and Shopee (Hong Kong MX Products Phils), through GrabFood, Pickaroo, and MetroMart (various locations of Hong Kong MX Bakery). There are also physical stores at SM Mall of Asia, V-Mall Greenhills, Uptown Mall, and Ayala Malls Cloverleaf.

Unicapital Group sees more IPOs ahead

LOCAL investment firm Unicapital Group expects more initial public offerings (IPOs) to proceed due to a favorable outlook on interest rates.

“I think we’re going to be seeing rate reductions, (and) there will be more to come,” Unicapital Group President and Chief Executive Officer Jaime J. Martirez said during a briefing on Wednesday.

He said that this will lead to a gradual shift in the equity market.

“I see right now that there is a lot of upside, so there would be more interest right now (from companies) to pursue their IPO plans,” Mr. Martirez added.

The Bangko Sentral ng Pilipinas recently cut its target reverse repurchase rate by 25 basis points (bps) to 6.25%, marking its first reduction in nearly four years. The move is in response to an improving inflation and economic outlook. The central bank’s governor also indicated the possibility of another cut before the end of the year.

Unicapital Head of Research Wendy B. Estacio-Cruz expects that the PSE index could reach 7,000 by the end of this year, revising the company’s earlier estimate of 7,200.

“That’s a 9% gain from end-2023. That’s based on our bottom-up analysis, which is based on an 11% earnings per share growth rate and at 12.5% target price-to-earnings,” she said.

Ms. Cruz added that Unicapital anticipates a “more pronounced easing of key policy rates” as early as the next Monetary Board meeting in October, driven by the downward trend in inflation rates.

 “The inflation rate is anticipated to drop further in the coming months due to the recent rice tariff reduction from 35% to 15%. We expect easing key policy rates in the second half of 2024, with up to a 50-basis-point rate cut, driven by a cooling inflation rate,” she said.

Meanwhile, Mr. Martirez hopes more companies will list on the Philippine Stock Exchange (PSE) to spur market activity.

He noted that the main challenge in improving value turnover compared to the Association of Southeast Asian Nations (ASEAN) neighbors is to increase the number of companies listing on the market.

“In terms of the number of listed companies, I believe we still are not in the same breath as our ASEAN neighbors. We’re getting there. It’s just a question of time,” he added.

As of this writing, the PSE has 286 listed companies. The market operator aims to achieve six IPOs this year. 

So far, the local bourse has had three IPOs: OceanaGold (Philippines), Inc., Citicore Renewable Energy Corp., and NexGen Energy Corp.

Founded in 1976, Unicapital Group provides a range of services, including investment banking, financing and lending, treasury services, and securities brokerage. — Revin Mikhael D. Ochave

Water to the people is power to the people

PHILIPPINE STAR/EDD GUMBAN

This Saturday, Aug. 31, is the 117th birth anniversary of the late Ramon Del Fierro Magsaysay, the 7th president of the Philippine republic. Born in 1907, “The Guy” was only 49 when his plane, the Mount Pinatubo, crashed in Cebu in March 1957 killing all but one of its passengers. To many who remember him, he was the country’s best president.

Ramon Magsaysay (RM) was elected to office in November 1953. He did not get to finish his four-year term. He would have gone for reelection in November 1957, and according to some accounts, would have most likely won. But a second term was not meant to be for the “Guy.” His only son and namesake, Jun Magsaysay, would later serve four years in Congress and 12 years in the Senate.

When RM took office in January 1954, he was taking over the government of a country that has just been ravaged by war, and was in the midst of reestablishing its economy as it sought war reparations. The Philippines had significant national debt because of post-war reconstruction; the government was running a budget deficit; economic growth was uneven; and rural poverty was significant.

RM wanted to prioritize rural development and social services, but the government was short of funds. So, in February 1954, soon after taking office, he issued Executive Order No. 11 creating a committee under the Department of Health that would take charge of the construction of artesian wells nationwide. This was in recognition of the people’s urgent need for greater access to clean and potable water.

In rural Philippines, then and now, water is power. Beyond irrigation, access to clean and potable water and proper sanitation facilities are among the factors significantly impacting public health, peace, and economic growth. Realizing this, RM also knew that the cash-strapped government needed the help of the private sector. Under his EO 11, a committee was formed known as the “Liberty Wells Association.” It was tasked to solicit “funds and materials to be used exclusively for the construction and development of artesian wells and other sources of potable water supply for rural communities lacking in financial resources, to provide an adequate and safe water supply.”

The Association was tasked “to see to it that the moneys and materials donated to constitute the fund are used solely to carry out the purposes of the donation,” and to “recommend to the government measures calculated to facilitate and further the establishment of community water supplies.” Also, the Association was to set the rules for the selection of installation sites.

The Secretary of Health was designated ex-officio chairman of the Association, whose members were “donors of P5,000 or more and those who have rendered very signal service to the Association. The members [of the Association] shall be appointed by the President upon recommendation of the Executive Committee.”

EO 11 further states that “all contributions to the Association shall be deposited with any bank or banks designated by the Executive Committee. Disbursements from the fund shall be made with the approval of the Executive Committee upon checks signed by the Chairman and Treasurer and supported by vouchers approved by authorized officials representing the Philippine Council for United States Aid and the Foreign Operations Administration.” And to encourage contributions, the President ordered that all “contributions to the Association fall within the tax exemptions prescribed for income and gift taxes.”

Also, “none of the moneys or materials contributed shall be used for any purpose other than for the labor and materials required to establish artesian wells or develop water supplies. The department heads concerned are authorized and directed to apply public funds legally available for the purpose to defray expenses of surveys, technical supervision, transportation, inspection, administration, and surcharges.”

Admittedly, under today’s procurement and auditing rules, EO 11 would have been questioned. But in RM’s day, lack of government funds would not have been an acceptable excuse not to help, particularly the poor. Not under RM anyway, whose government vowed to give people who have less in life more in law. And so, EO 11 came to pass.

It was, to an extent, the precursor of the Public-Private Partnership. And, maybe in that sense, RM was ahead of his time. He figured the Department of Health was the appropriate lead for the artesian wells program, probably seeing it more as a public health rather than a public works initiative. And perhaps rightly so. Lack of water and sanitation is a public health nightmare.

It may have been a calculated move on RM’s part. An initiative that can win votes particularly in the countryside. One cannot discount the value of donors, obviously. However, while plaques may be affixed at well sites giving credit to donors, people will also remember the very government that started the initiative in the first place. As if RM was not popular enough.

But in this case, I am more inclined to believe that the driving force for EO 11 was RM’s earnest desire to help the rural poor. However, given the government’s limited resources, tapping the private sector was his alternative. Bayanihan may have been foremost in his mind, because he was that kind of man.

Former UP President Jose Veloso Abueva, in his second edition of Ramon Magsaysay: “Servant Leader” with a Vision of Hope, published 2012, wrote about RM: “Restlessly energetic, Magsaysay demanded action and was impatient for results, as reflected in his impulsive personality and kinetic behavior. For he was preeminently a man of action, a pragmatist, an improviser. He absorbed ideas from many sources, even as he generated several of his own.

“Magsaysay was not consciously guided by articulated theories of social reform or economic development. His approach to problems was pragmatic, not ideological,” Abueva wrote. He added that RM also believed that “the government starts at the bottom and moves upward, for the government exists basically for the welfare of the masses”

Truly, as a man and as a leader, RM is worth remembering on his 117th birth anniversary.

 

Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippine Press Council

matort@yahoo.com

Treasury fully awards reissued 20-year bonds

BW FILE PHOTO

THE GOVERNMENT made a full award of the 20-year Treasury bonds (T-bonds) it offered on Wednesday as rates were mostly in line with secondary market levels following dovish hints from the US Federal Reserve.

The Bureau of the Treasury (BTr) raised P25 billion as planned via the reissued 20-year bonds it auctioned off on Wednesday as total bids reached P45.114 billion, or almost double the amount on offer.

This brought the outstanding volume for the series to P102.7 billion, the Treasury said in a statement.

The bonds, which have a remaining life of 19 years and nine months, were awarded at an average rate of 6.198%. Accepted yields ranged from 6.174% to 6.22%.

The average rate of the reissued papers dropped by 66.2 basis points (bps) from the 6.86% fetched for the series’ last award on June 26. This was also 67.7 bps lower than the 6.875% coupon for the issue.

However, it was 0.6 bp above the 6.192% seen for the same bond series and 2 bps higher than the 6.178% quoted for the 20-year bond at the secondary market before Tuesday’s auction, based on PHP Bloomberg Valuation Service Reference Rates data provided by the BTr.

“The higher tendered rate for the bond auction today reflected the upward correction in bond yields following the recent declines from the dovish hints from the FOMC (Federal Open Market Committee) minutes and the Jackson Hole Symposium,” a trader said in an e-mail on Wednesday.

Demand for longer bond tenors has also declined in recent months as more global central banks embark on their monetary easing cycles, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Federal Reserve Chair Jerome H. Powell on Friday endorsed an imminent start to interest rate cuts, saying further cooling in the job market would be unwelcome and expressing confidence that inflation is within reach of the US central bank’s 2% target, Reuters reported.

“The time has come for policy to adjust,” Mr. Powell said in a highly anticipated speech to the Kansas City Fed’s annual economic conference in Jackson Hole, Wyoming. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”

Analysts and financial markets had already widely expected the Fed to deliver its first rate cut at its Sept. 17-18 policy meeting, a view that was cemented after a readout of the central bank’s July meeting said a “vast majority” of policy makers agreed the policy easing likely would begin next month.

With its policy rate currently in the 5.25%-5.50% range, the Fed has “ample room” to reduce borrowing costs to cushion the economy, Mr. Powell said.

Investors are unanimous in bets that the Fed will begin cutting interest rates next month following Mr. Powell’s dovish tilt last week, with the debate now centered on whether or not it will be a super-sized 50-bp cut.

The current pricing sits at a 36% chance for the larger cut, up from 29% a week ago, according to the CME Group’s FedWatch Tool.

Markets, which are fully priced for a 25-bp cut next month, see just over 100 bps worth of easing by the end of the year.

Wednesday’s auction was the last T-bond offering for the month. The government raised the programmed P140 billion from the long-tenored papers as it fully awarded its offerings at all five auctions.

In total, the BTr raised P225.2 billion from the local market in August, higher than the P220-billion plan as it upsized its Treasury bill (T-bill) awards at two auctions.

In September, the Treasury wants to raise P195 billion from the domestic market, or P80 billion from T-bills and P115 billion from T-bonds.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.48 trillion or 5.6% of gross domestic product for this year. — A.M.C. Sy with Reuters

PHL AI guardrails must be in line with regional standards, focused on data

REUTERS

By Aubrey Rose A. Inosante, Reporter

SINGAPORE — The Philippines should draw up governance and ethics guidelines or guardrails for the use of artificial intelligence (AI) that are aligned with those in the Association of Southeast Asian Nations (ASEAN) and prioritize data privacy amid a booming digital economy, industry experts said.

“There is no point drafting your own [AI] guardrails or guidelines when not in concert with the ASEAN guidelines,” Raju Chellem, editor-in-chief of the AI Ethics and Governance Body of Knowledge, told BusinessWorld at the sidelines of the annual IBM Think Singapore 2024 conference held on Aug. 14-15.

“It’s better to work together so that we are all together to work for the common good because many countries are looking at AI in isolation and not including data as part of it,” Mr. Chellem added.

The ASEAN Guide on AI Governance and Ethics was released during the 4th ASEAN Digital Ministers’ Meeting chaired by Singapore in February. This is meant to serve as a guide for organizations in the region that wish to design, develop, and deploy traditional AI technologies.

In the Philippines, the Department of Trade and Industry this year released its National AI Strategy Roadmap 2.0, which consists of seven strategic imperatives: building a robust connected and networked environment; improving data access and data value extraction; transforming education and nurturing future AI talents; upskilling and reskilling the workforce; building an AI ecosystem “conscience”; mastering and pushing the boundaries of AI; and accelerating innovation with AI.

According to an IBM Institute for Business Value study, 60% of executives surveyed said they believe the adoption of generative AI (GenAI) comes with major ethical risks that would be difficult to manage without new or at least more mature governance structures.

Mr. Chellem said without AI guardrails, the finance and healthcare sectors, which are considered “supercritical industries,” will be at high risk as both need “high regulation for data privacy, data security, and the use of personally identifiable information.”

“Hackers can do phishing, probably destabilize governments, or ransomware as a service,” he said.

The digital sector has a “massive” contribution to the gross domestic product (GDP) of ASEAN countries, and “a huge chunk of that is because of the power of AI or the power of companies using GenAI,” Mr. Chellem said.

“The current GDP of the Philippines is about $472 billion, and the ICT (information and communications technology) sector contributed roughly about 9.4% to the GDP in 2022,” he said.

To educate people on AI, the Philippines needs to apply the same model it used to boost the nursing sector, which is integrating it in schools, Mr. Chellem added.

“The number one lesson is that the Singapore government does not work in isolation. It always includes the community, industry, and academia. All three work together to form policy and set guidelines, set governance frameworks [in AI],” he said.

Catherine Lian, general manager and technology leader for IBM ASEAN, told BusinessWorld that governance is key in the adoption of GenAI.

“The GenAI adoption that we talk about is all about governance. We have a watsonx.governance model that enables appropriate design principles across governance and building up the enterprise-wide application of multiple AI models,” she said at the sidelines of the same event.

The model ensures that the adoption of an AI-first approach does not compromise the data provided and follows the code of ethics of an organization, Ms. Lian said.

Dining In/Out (08/29/24)


Italian gastronomy at Shangri-La The Fort

FROM Aug. 30 to Sept. 6, Shangri-La The Fort, Manila will host the Executive Chef of Shangri-La Le Touessrok, Mauritius, Luca Gallo. During this time the hotel will showcase lunch and dinner à la carte menus at The Hub crafted by Mr. Gallo, a master of Italian cuisine. Reserve seats by calling 0917-536-3287 or e-mail karenkae.laya@shangri-la.com.


Johnnie Walker Blue Luxury Artist Series out now

JOHNNIE Walker has collaborated with visual artist and art director Anna Bautista to launch the latest Johnnie Walker Blue Label Luxury Artist Series collection. This collaboration features three unique bottle designs inspired by animals of Davao, Bohol, and Cebu. The Davao bottle features the Philippine Eagle, depicted alongside the region’s natural treasures such as the waling-waling orchid, the Mickey Mouse plant, the durian, and Mount Apo. The Bohol bottle celebrates the tarsier amidst fireflies, with additional elements including the cacao plant, wildflowers, and the iconic Chocolate Hills. Finally, the Cebu bottle showcases the Philippine whale shark, or butanding, set against the vibrant marine life of the province, accompanied by the sampaguita, the Cebu Flowerpecker bird, and various aquatic elements. This collection marks Bautista’s second collaboration with Johnnie Walker, following the limited edition Blue Label Liwanag bottle in 2022, inspired by the dance, Pandanggo sa Ilaw. “I wanted to bring forth a collection that would celebrate our heritage by featuring the jewels that are distinct to the rich biodiversity of the Philippines. I am truly humbled to once again have the chance to collaborate with Johnnie Walker. More so that we are able to highlight the rarity of our country’s treasures, mirroring the attributes which have long defined Johnnie Walker Blue Label,” she said in a statement. Available now in limited quantities, these exclusive bottles can be purchased at all S&R branches nationwide.


McDonald’s PHL releases new glass collection

MCDONALD’S Philippines releases new collectible glasses that are a tribute to the 1990s and 2000s. The glasses feature toy designs from collaborations with Coca-Cola, Mattel, and Universal, and its own releases from years past. These include Shrek/Minions, Barbie/Hot Wheels, McDonald’s/Nanoblock, and McDonald’s/Coca-Cola. The McDonald’s Collector’s Meal can be availed for P79 along with a choice of a medium or large extra value meal (any meal with fries and drink). Each glass is individually packaged and sealed in a Collector’s Meal Box and comes in a limited-edition take-out paper bag beverage packaging. “These new collectible cups commemorate some of our most unforgettable designs and global collaborations over the years, allowing longtime fans to relive treasured moments and helping a new generation make their own lasting memories,” said Margot Torres, Managing Director for McDonald’s Philippines, in a statement. The new collectibles are available via the McDonald’s App from Aug. 27 to Sept. 2. They will also be available for purchase via the front counter dine-in, take-out, drive-through and McDelivery starting Sept. 3.


Milkana Creamy Lollipops now available

MILKANA, Savencia Fromage & Dairy’s international brand spotlights its Creamy Lollipops. Milkana Creamy Lollipops are formulated with milk proteins containing essential amino acids, calcium, vitamin D, and are made without preservatives. It comes in four flavors: Fruit Heart (with natural strawberry filling), Yogurt N Fruits, Mixed Berries, and Milky Ice Cream. For more information about Milkana’s Creamy Lollipops, follow https://www.facebook.com/MilkanaPhilippines and https://www.instagram.com/milkanaph/.

Indonesian airline TransNusa eyes Davao-Manado route

DREAMCATCHER-68/FLICKR

DAVAO CITY — Indonesian airline TransNusa Aviation Group has expressed interest in operating direct flights between Davao City and Manado, Indonesia, according to an official from the Mindanao Development Authority (MinDA).

Romeo M. Montenegro, MinDA assistant secretary, told BusinessWorld that he met with TransNusa executives at their Jakarta office on Aug. 21.

“The meeting with TransNusa was also a pitch for Mindanao and presented trade, investment, and tourism opportunities, particularly highlighting Davao. We also cited the passenger stats of previous Davao-Manado flights, the recently extended EAGA travel tax exemption, and other EAGA incentives for airlines,” Mr. Montenegro said.

The meeting took place during his visit to Indonesia for the Brunei Darussalam, Indonesia, Malaysia, and the Philippines-East ASEAN Growth Area (BIMP-EAGA) Special Senior Officials Meeting, which was held with the Asian Development Bank on Aug. 20.

He said TransNusa, which currently operates domestic flights within Indonesia and to several international destinations, is considering the first quarter of 2025 as a potential start date for the new route, with initial flights two-three times per week.

“Right now, Manado is serving as a hub for TransNusa’s ARJ21 aircraft flights,” Mr. Montenegro said. Manado, a major city in North Sulawesi, is known for its vibrant marine life and tourism industry.

To recall, Leading Edge Air Services Corp. (LEASCOR), an aviation services provider based in the Philippines and a subsidiary of ACDI Multi-Purpose Cooperative, was planning to begin servicing the air route between Davao and Manado this year.

LEASCOR and MinDA conducted an exploratory business mission to North Sulawesi in January to evaluate the potential resumption of air connectivity between Davao and Manado.

Mr. Montenegro noted that LEASCOR has not yet finalized its plans, as the company has deployed its ATR aircraft for domestic regional routes, including the Zamboanga-Jolo route. — Maya M. Padillo