VICTORIAS Milling Co., Inc. saw its net income drop in the third quarter ended May. — AFP
EARNINGS of Victorias Milling Co., Inc. (VMC) in the third quarter ended on May 31 dropped by 57.90% due to a decline in sugarcane production and a late start in its distillery operations.
In its quarterly report filed with the bourse on Tuesday, the company said it ended the third quarter of crop year 2017 to 2018 with a net income of P181.04 million.
This led to a total of P418.14 million in earnings for the first nine months of the crop year, 55.25% lower from the year-ago level. Its net income margin narrowed during the period to 7.2% from 7.5% a year ago.
The company’s overall revenue likewise dropped 19.5% to P1.62 billion as both price and volume of its sugar, molasses and alcohol were lower from a year ago.
This was tempered by a 48.2% increase in tolling revenues.
In the first three quarters of the crop year, VMC milled 2.88 million tons of cane sugar, down by 3.3% amid the 9.1% overall decrease in sugarcane production in Negros.
Despite this, VMC’s market share went up to 23.5% from 22.1% in the province while its nationwide share likewise inched up to 12.3% from 11.5%. VMC noted an increase in direct cane deliveries.
Meanwhile, raw sugar production went down by 5.1% to 5.31 million 50-kilogram bags (LKG). Recovery dropped to 1.86 LKG per ton cane milled from last year’s 1.88 LKG per ton cane milled.
Molasses output, on the other hand, went up by 1.2% to some 136,480 metric tons in the first nine months of the crop year.
Likewise, total production of refined sugar increased by 12.6% year-on-year to 4.63 million LKG due to the company starting its refinery operations earlier.
The distillery operations, which only began on January after a hiatus, saw a 47.4% drop year-on-year in alcohol production to 3.38 million liters. The company postponed its operations to make way for expansion and dehydrator projects.
“[Crop year 2016 to 2017] was a banner year in terms of cane production and the decline in cane supply and sugar recovery in the current crop year negatively affected all stakeholders in the sugar industry, not just the Group,” VMC said in the report.
VMC sells raw sugar, alcohol and molasses to Interbev Phils., Inc., Tanduay Distillers, Inc. and Absolute Distillers, all subsidiaries of LT Group., Inc. which has a significant interest in the firm.
Shares in VMC closed dropped a centavo or 0.40% to close at P2.50 apiece. — AGAM
SHAKEY’S PIZZA Asia Ventures, Inc. (SPAVI) is stamping its presence in the Middle East with the opening of its first store in Dubai, banking on expected demand from the large population of Filipinos living in the area.
Franchised by Dubai-based firm Aljeel Capital, SPAVI’s newest store is located across Burjuman Mall and near Exit 4 of Burjuman Metro Station, described as one of the busiest stations in the city.
“We are excited to have more stores in the UAE (United Arab Emirates), with our flagship Dubai restaurant finally open and with the overwhelming turnout we had during opening night,” SPAVI quoted Aljeel Capital Chief Executive Officer Firas Hurieh as saying in a statement.
Mr. Hurieh noted that the store recorded the highest total net sales during opening day as well as the largest number of pre-sold loyalty programs cards called Supercards.
“(T)he new store is strategically located and very accessible, thus attracting good traffic and high brand visibility. It features the familiar store environment of a Shakey’s pizza parlor in the Philippines and offers the many iconic products which many Filipinos have grown to love,” the company said.
All the choices on the Dubai store’s menu is halal-certified, as per the city’s Islamic culture. SPAVI however noted that it has kept the trademark experience of the Shakey’s brand, with marinade, breading, dough blends, and the spice mix for pizzas, chicken, and spaghetti all being imported from the Philippines.
The Dubai store is the first of 10 Aljeel Capital has committed to open within five years, and the second international store for SPAVI after its first store opening in Kuwait.
“Dubai, UAE, and the rest of the Middle East are great markets for us. Aside from the strong and welcoming Filipino communities which really love the Shakey’s brand and are excited about experiencing it away from home, PIZZA is also a Western concept with Western menu — thus giving us tremendous growth opportunities within the mainstream markets there,” SPAVI President and Chief Executive Officer Vicente L. Gregorio said in a statement.
SPAVI holds the perpetual rights to the Shakey’s brand for the Middle East, Asia (excluding Japan and Malaysia), China, Australia, and Oceania. The company has recently signed two area development agreements, bringing its total international pipeline to at least 20 outlets over the next few years.
Locally, SPAVI ended the first quarter of the year with a total of 212 stores after four store openings for the period. The company plans to open 16 new stores this year, for a total of 228 stores for 2018.
The listed full-service restaurant operator generated a net income of P184 million in the first quarter of 2018, 6.3% higher year-on-year, after system-wide sales rose 10% to P2.2 billion for the period.
Shares in SPAVI gained four centavos or 0.3% to close at P13.28 each at the stock exchange on Tuesday. — Arra B. Francia
THERE’S an upside to transparency in the art market after all.
That’s the lesson Gagosian Gallery, the world’s biggest and one of the most secretive, learned through its new internet selling platform.
Bucking a longtime practice of not disclosing prices, Gagosian publicly listed them for 10 artworks at its inaugural “Online Viewing Room” during Art Basel last month. Five pieces sold for a total of $2 million, with individual prices as high as €950,000 ($1.1 million) for a painting by Albert Oehlen. The site was viewed more than 110,000 times and its content reached 2.2 million people on social media, Gagosian said.
Like auction houses before them, galleries are embracing online sales to boost revenue and expand their global reach as foot traffic is declining. Online art sales grew 12% in 2017, reaching $4.2 billion, according to a report by Hiscox Ltd., a London-based insurer. Nine of 10 new art buyers see price transparency as critical when shopping online.
“We’re realizing that we may be leaving business on the table by being so opaque and impenetrable,” said Sam Orlofsky, a Gagosian director who developed the virtual viewing room.
So for 10 days, starting June 11, the gallery tested a more transparent model. Within the first 24 hours, it sold a 10-foot-tall abstract painting, made with a spray gun by German artist Katharina Grosse, for €200,000. ‘ARTIFICIAL MANIPULATION’
Galleries typically don’t disclose prices publicly. Some might produce a price list upon inquiry at the front desk, while others may insist on having a salesperson engage with a potential client. Such secrecy has been the norm in the art market for at least a century, according to Todd Levin, director of Levin Art Group in New York.
“There’s a commonly held tacit agreement among gallerists representing artists and estates on the primary market that artificial manipulation of market supply is the best way to stimulate demand: How and when art is released into the market, and who it is released to,” he said. “One of the efficient ways to manipulate supply is through opaque pricing.”
But even the cloistered art world can’t avoid being disrupted by the facts-at-your-fingertips nature of the internet.
Gagosian isn’t the first major gallery to venture online. David Zwirner launched its virtual viewing room in January 2017. Since then, it has presented drawings, paintings, prints, photographs and sculptures, with prices ranging from $1,000 to $500,000, according to a spokeswoman. About 37% of inquiries through the viewing room came from new clients.
“Everyone is jockeying to harness the power of the internet to do business and expand their audience,” said Wendy Cromwell, a New York-based art adviser. “They’re trying to create events with a sense of urgency and excitement.”
Auction houses have invested millions of dollars in technology to lure new clients and streamline data. They create original digital content, stage online-only sales, publish newsletters and offer online-estimate tools. At Sotheby’s, more clients now bid online than by phone, the auction house said in May. Christie’s online sales reached £55.9 million in 2017, up 12% from a year earlier, and were the entry point for 37% of new buyers.
“They’ve made their material hyper-accessible,” Orlofsky said. “There’s no barrier to participating.”
Gagosian’s online viewing room was based on an actual one at its branch in Manhattan’s Chelsea art district. The space has a 30-foot-wide viewing wall, concrete floors, and a 22-foot ceiling with a long skylight. As far as viewing rooms go, this is the “gold standard,” Orlofsky said. That’s where the gallery’s premier offerings are seen by billionaire clients, top advisers, and museum directors.
“It’s almost intimidating because it’s so massive,” Cromwell said. GRANULAR LEVEL
Because of the privacy required for such viewings, most people have never seen the room, Orlofsky said.
The online version, on the other hand, has been visited by almost 25,000 people. A sleek, mid-century black chair was placed on the side, for scale. Viewers could zoom in to see the works at a granular level. Essays and videos accompanied the works. Live assistants were a chat away to answer questions 24 hours a day.
At the end of the 10 days, 537 individuals contacted live assistants and left e-mail addresses, and the gallery has been receiving about a dozen e-mails a day since the sale ended June 20.
“We consider this the equivalent of meeting a new collector at an art fair booth,” said Alison McDonald, another gallery director responsible for the experiment. WEALTHIEST COLLECTORS
Unlike the auction houses, which specialize in the resale of art, Gagosian has access to new works by some of the most sought-after artists.
“If you can wed the customer-acquisition potential of the auction houses with the known demand for work fresh out of artists’ studios, then you have something really special,” Orlofsky said.
The gallery plans to open its virtual viewing room during key moments when a “larger-than-usual amount of material is being offered” and the world’s wealthiest collectors are paying extra attention to the art market, Orlofsky said. Among those he noted are the Frieze art fair in London in October, semiannual sales in New York in May and November, and Art Basel Miami Beach in December.
“You have to look at how many times a year people who are not art professionals are going to put aside a few hours to focus on art,” Orlofsky said. “We’ll want to capture their attention.” — Bloomberg
PROBLEM DEBTS held by thrift banks grew in May to log faster than the pickup in retail lending, latest central bank data showed.
Non-performing loans (NPLs) reached P46.067 billion as of end-May, inching higher from the P44.768 billion logged in April and up 12.8% from the P40.85 billion tallied a year ago, according to the Bangko Sentral ng Pilipinas (BSP).
NPLs pertain to unpaid debts for at least 30 days past due date and are considered as risky assets due to a high risk of default, which would spell losses for the bank. Having a low share of bad debts meant a bank is on solid financial footing.
The growth in bad loans even outstripped the 9.7% rise in total credit. Thrift lenders handed out P879.415 billion worth of loans as of May, compared to the P801.554 billion granted as of May 2017.
The NPL stash accounted for 5.24% of the total loan portfolio, a bigger share compared to the 5.1% ratio posted during the same period last year.
In contrast, the bigger universal and commercial banks posted a lower NPL ratio at just 1.34% of total lending as they cater to more stable clients like big businesses.
Thrift banks mainly target retail clients and small-scale firms, which are deemed riskier segments due to bigger chances of default. Consumer lending grew by 18.4% in May, according to BSP data.
NPLs also grew faster than the banks’ deposit-taking activities, with the sum growing by just 4.3% year-on-year to P954.07 billion.
Despite the bigger amount of soured loans, thrift banks scaled down the allowance set aside to cover possible credit losses. Loan loss reserves were slashed to P27.91 billion from P28.44 billion the previous year. This will cover just 60.6% of the NPLs, a lower ratio compared to 69.6% the prior year.
On the other hand, non-performing assets held by banks in the form of seized properties stood at P22.6 billion, down from the P23.07 billion a year ago.
There are 53 thrift banks doing business in the Philippines as of March. These lenders made a cumulative P4.05 billion net income during the first quarter, 7.2% higher than the P3.777 billion raked in during the same period in 2017.
The BSP monitors the NPL ratios of banks and financial firms in order to keep asset quality in check and maintain the soundness of the local financial system. — Melissa Luz T. Lopez
By Victor V. Saulon, Sub-Editor
US-BASED Akamai Technologies, Inc., which claims to be the world’s largest and most trusted cloud delivery platform, sees strong potential for its business in the Philippines as the country’s big businesses go through a digital transformation while smaller ones begin to realize the need to accelerate and secure their online systems.
“This country has a lot of potential,” said Gerald Penaflor, Akamai head of enterprise business in the ASEAN, in a media roundtable discussion in Makati City on Tuesday.
“We have 110 million people over here, 48% of our population are already, one way or the other, part of an online community and about 98% of them are all subscribers of Facebook,” he said.
He said based on how Facebook or Google are positioning themselves in the Philippines, attention is focused on the potential of an emerging country with a big population, many from younger generations, that are online everyday.
“So that’s why the potential definitely is much much more bigger compared to other countries,” he added.
Fernando Serto, Akamai head of security strategy in the Asia-Pacific, said the company started operating in the Philippines about three years ago with a few servers that have since expanded to more than 800 as of the last count.
“So it’s a very rich market for us from a target perspective. The last two years have been amazing for us in the Philippines, but we haven’t even scratched the surface yet,” he said.
Aside from its servers, Akamai’s footprint in the Philippines is seen in its presence in 16 data centers across the country. It is also co-located with six Internet service providers locally.
Around the world, the company has more than 7,600 employees and has deployed a content delivery network with more than 240,000 servers in at least 130 countries and within at least 1,700 networks.
Incorporated in 1998, Akamai closed 2017 with annual revenues of $2.5 billion, up 7% year-on-year using figures adjusted for foreign exchange.
The two Akamai officials said the need for the company’s services is borne out of threats from bot-based abuse that targets the hospitality industry and advanced distributed denial of service (DDoS) attacks.
In its study, the company said cyberattack trends for the six months from November 2017 to April 2018 show the importance of maintaining agility not only for security teams, but also for developers, network operators and service providers in order to mitigate new threats.
In the Philippines, Mr. Penaflor said the company is “very excited” about its plans for the future as the government, the banking sector, universities and homegrown e-commerce sites undergo an online transformation.
E-commerce, for instance, presents big prospects as companies in the sector have grown in neighboring countries such as Indonesia, Thailand and Malaysia, he said.
“In the Philippines, we don’t have [that] yet. Most of them are coming from regional players. So it’s just a matter of time until we start developing these services for Filipinos,” he said.
Mr. Penaflor said Akamai had tweaked its local offers to include services for small and medium enterprises, which are also embarking into their digital transformation.
“We need to make sure that we have a price point that they can leverage and they can afford,” he said, referring to small hospitals, rural banks and small e-commerce sites.
He said the company made a study on what is affordable for small companies that pay for a speed of, say, 100 megabits per second to arrive at what makes sense for them.
“We make it a point that the services that they get from Akamai is affordable to be able to bundle with the internet gateway that they have,” the official said.
AFTER THe success of Love Sings!, the Philippine Opera Company’s Young Artists’ Series (YAS) Season 2018-2019, in cooperation with the Cultural Center of the Philippines and The Friends of the Philippine Opera Foundation, present the second offering for the season T’AINT OPERA! (Hits from the Weird and Wonderful World of OPERETTA!). An operetta is a short opera, usually on a light or humorous theme and typically having spoken dialogue. It is often considered less “serious” than operas. While an opera’s story is usually believable and more relatable to its audience, an operetta aims to simply amuse. Notable composers of operettas include Offenbach, Johann Strauss, Lehár, and Gilbert and Sullivan. T’AINT OPERA! features familiar, easy-to-listen-to music combined with dance, acting, and storytelling that recalls happy memories of a time when life was less complicated. Listen to arias from Die Fledermaus, Merry Widow, The Mikado, Pirates of Penzance, The Land of Smiles, Yeomen of the Guard, Christopher Columbus, Candide, and many more. Directed by Jaime del Jaime Del Mundo. For details call Philippine Opera Company at 0917-645-2946.
A bit of Shakespeare
HEROES, LOVERS & VILLAINS, the culminating showcase for Repertory Philippines’ Adult Master Class 2018, will be held on July 21, 8 p.m., at The Mirror Studio, 5F SJG Center, Kalayaan Avenue, Makati. There will be excerpts of Macbeth, The Merchant of Venice, Much Ado About Nothing, A Midsummer Night’s Dream, and Shakespeare’s sonnets featuring Sofia Capua, Rico del Rosario, Elliott Hay, Elliot Miranda, Elle Sebastian, Kurt Soberano, Nico Torio, and Althea Vega, directed by Jeremy Domingo and Goldie Soon. Tickets are P300 at the door.
Performance art with Ronnie Lazaro
RONNIE LAZARO BREATHLESS, a collaborative performance art work featuring renowned actor Ronnie Lazaro, will focus on exploring the limitations of the human body. It will be held on July 21, 6 p.m., at the Black Box Theater of the of De La Salle-College of Saint Benilde (DLS-CSB). Developed over months by Lazaro and students under the Benilde Arts and Culture Cluster, the initiative will be the first in the Philippines to use crowdsourcing to support performance art. The event is free and open to the public. Online pre-register is on-going. Visit http://bit.ly/RonnieLazaroBreathless or call 0920-299-2573 to confirm attendance. The Black Box Theater is located at the 6th floor, School of Design and Arts Campus, Pablo Ocampo (Vito Cruz) St., Malate, Manila.
Something completely different
THE Benilde Arts and Culture Cluster and the Benilde Arts Management Program present A History of Ideas, a performance/lecture written, produced, and presented by Lourd de Veyra and Erwin Romulo. This will be held on Aug. 4, 6 p.m., at the 5F School of Design and Arts Campus Theater, De La Salle — College of Saint Benilde, Pablo Ocampo (Vito Cruz) St., Malate, Manila. Tickets cost P500. For inquiries, ticket reservations and group discounts, e-mail Kaye de la Rosa at benildeartsandculturecluster@benilde.edu.ph, text Julia Francia at 0955-563-1368, text Vangie Binarao or Jaz Tugas at 0917-563-8926, call Vangie Binarao or Jaz Tugas at 230-5100 ext. 3863, or visit https://www.facebook.com/AHistoryofIdeas/. Tickets may also be purchased from Ticket World.
Submission deadline for art award extended
THE Maningning Miclat Art Foundation, Inc. (MMAFI), in cooperation with District Gallery and Far Eastern University (FEU), has extended the submission of online entries to the 2018 Maningning Miclat Art Award to July 31. Entries must be submitted to maningning2018@gmail.com. Artists of shortlisted entries will be informed through e-mail on Aug. 13. The actual artwork of shortlisted entries should be submitted along with other requirements to the FEU President’s Committee on Culture office no later than Aug. 28. Shortlisted entries will be unveiled and displayed at the Exhibit Hall of the FEU Institute of Architecture and Fine Arts from Sept. 3 to 28. Awarding will be at FEU on Sept. 28 back-to-back with the performance art, Ginugunita Kita. All submitted artworks will be available for sale. The grand prize winner, to be chosen by the Board of Judges, will receive a Julie Lluch sculpture trophy, P28,000, a Miclat book collection, and a solo exhibit at District Gallery. Maningning Miclat was a poet of three languages, prize-winning artist, published essayist, translator/interpreter and teacher. She passed on at the age of 28 in 2000. In her honor, the MMAFI, which was formed in 2001, has been organizing activities aimed at encouraging creativity and recognizing, awarding and nurturing outstanding and talented young poets and artists 28 years old and younger, the same age when she died. Poetry and painting competitions are held alternately, poetry during odd-numbered years and painting during even-numbered years. For more information, visit https://www.facebook.com/brilliant.maningning/. For inquiries, e-mail maningningfoundation@gmail.com.
BANK OF AMERICA Corp. reported quarterly profit above analyst expectations on Monday as the second-largest US lender cut expenses and benefited from growth in loans and deposits on the back of a strengthening economy.
Noninterest expense dropped 5% in the quarter from a year earlier as the bank trimmed headcount and worked on digitizing its retail operations to lower overhead.
Revenue rose in each of the bank’s segments with the exception of global banking, where lower investment banking fees dragged revenue down 2%.
During his near-decade long tenure, Chief Executive Brian Moynihan has focused on making the bank’s sprawling operations more efficient. Two years ago, he pledged to cut expenses to $53 billion by the end of this year, and the bank confirmed it is on track to meet that goal and plans to hold expenses at that level through 2020.
Banks have been broadly expected to report higher investment banking fees this year as lower US corporate tax rates and a friendlier regulatory environment encourage deal making.
Moynihan acknowledged on a call with analysts that the bank is underperforming peers when it comes to earning M&A advisory fees.
“The team knows they can do a better job, and they’re after it,” he said.
Total loans increased 2% in the quarter for Bank of America, led by growth in its consumer banking and wealth management businesses.
Total loan growth continued to be weighed by its runoff portfolio of consumer real estate loans, while year-over-year growth in Bank of America’s business segments was 5%.
Overall, Bank of America’s net income applicable to common shareholders rose 36.3% to $6.47 billion in the second quarter.
Excluding items, it earned 64 cents per share compared with the average expectation of 57 cents per share, according to Thomson Reuters I/B/E/S.
Net interest income rose 6% as the bank’s large stock of deposits and rate-sensitive mortgage securities helped it take advantage of four interest rate hikes in the past year.
Revenue, net of interest expense, fell 1% to $22.76 billion. Revenue in the year earlier quarter included a $793 million pretax gain on the sale of the bank’s non-US consumer card business. Analysts had expected revenue of $22.29 billion. — Reuters
THE Department of Labor and Employment (DoLE) said the wage board for the National Capital Region (NCR) will meet later this month to consult stakeholders and determine whether there are “supervening conditions” that will allow it to conduct wage hearings as soon as legally possible.
The NCR is one of six Regional Tripartite Wage and Productivity Boards (RTWPBs) currently assessing socioeconomic conditions, Undersecretary Ciriaco A. Lagunzad III told reporters. The other boards are those of Region I (Ilocos ), II (Cagayan Valley), IV-B (Mimaropa), X (Northern Mindanao) and Caraga.
Boards are not allowed to hear wage petitions within one year of the last action. The NCR board’s last action was issued on Sept. 14, 2017, taking effect on Oct. 5 that year.
NCR inflation in June was 5.8%, according to the Philippine Statistics Authority (PSA). In Region I, inflation was measured at 5.1%, while for Region II it was 3.9%. Inflation in Region IV-B was 4.1%, and in Region X it was 4.9%. Caraga inflation was 3.6%.
“For boards who determine that there are supervening conditions, they could actually entertain petitions before the anniversary,” Mr. Lagunzad said.
“But that has to be determined by the board and confirmed by the (National Wage and Productivity Commission). Usually, the boards will decide on the wage issue when the anniversary happens,” he added.
Mr. Lagunzad said that the NCR board “is set to meet on July 24 and will conduct consultations in preparation for the immediate conduct of public hearings once its wage order (WO) reaches its anniversary date.”
Cagayan Valley also plans to perform “continuous monitoring and consultations with government agencies” and “publish notices of public hearing upon the anniversary date of the current WO.”
Ilocos region, whose WO anniversary is Jan. 25, 2019, will perform a “desk review of socioeconomic indicators.” Caraga will also be performing a desk review but will “start the wage setting process” after its anniversary date on Dec. 8.
Mimaropa’s earliest date to issue a WO is October.
Northern Mindanao will be conducting public hearings in July and August.
Mr. Lagunzad also added that “Nine boards have decided to raise their minimum wage and two boards are about to issue their wage order.”
These nine regions are Region III (Central Luzon), IV-A (Calabarzon), VI (Western Visayas), VII (Central Visayas), VIII (Eastern Visayas), IX (Zamboanga Peninsula), XI (Davao Region), XII (Soccsksargen), and the Autonomous Region in Muslim Mindanao (ARMM).
Davao may end up with the highest increase in wages at P56.43, though the Labor department has yet to announce when this increase will take effect.
The regions whose WOs have yet to be published are Central Visayas (P10 to P52) and Zamboanga (P20).
Those whose WOs are already effective are Eastern Visayas (P20-30), Soccsksargen (P16 to P18), Western Visayas, (P8.50 to P26.50), and Calabarzon (P9 to P45). ARMM, despite having the highest inflation rate of all the regions, had a P15 increase in basic pay and the region’s WO took effect last month.
Central Luzon (P20) will have its WO take effect on Aug. 1.
On the other hand, the Cordillera Administrative Region (CAR) and Region V (Bicol) are “expected to issue wage orders within the month of July and August 2018.”
CAR is expected to issue a new WO by this month. Bicol will hold a public hearing on July 20 and deliberations will be on July 24 and 31, and Aug. 7 and 14.
Mr. Lagunzad said factors considered in setting the minimum wage are “the requirements of the workers, the needs of the workers and their families, and the capacity of the employers to pay.” — Gillian M. Cortez
VEHICLE SALES in the first half dropped by more than 12%, auto and truck manufacturers said, noting that potential buyers prioritized their basic needs over the acquisition of high-value goods amid rising inflation.
The Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and the Truck Manufacturers Association (TMA) said in a joint statement that vehicle sales in the first six totaled 171,352 units, down 12.5% from a year earlier.
In June, auto sales amounted to 29,350 units, down 21.7% from a year earlier and down 4% compared with May.
Lawyer Rommel Gutierrez, president of CAMPI, said consumers are keeping their purchasing in check, preferring to satisfy their need for basic goods and services instead of big-ticket items at a time of high inflation.
In June, inflation was 5.2%, the highest in five years.
“This is typical consumer behavior when economic conditions are a bit gloomy… However, we remain optimistic that our sales will recover in the coming months, and sustain growth by the end of the year,” the industry associations added.
Car sales saw the biggest drop in June purchases, plunging 42.6% to 7,766 units. This was followed by sales of category-1 Asian Utility Vehicles, which declined 31.7% to 5,061 units.
June sales in the commercial vehicle segment fell nearly 10% to 21,584 units.
The decline in sales of light commercial vehicle and light trucks was less pronounced, falling 0.6% to 15,179 units and 5.7% to 706 units sold, respectively.
Sales of trucks and buses grew by 25% and 22.9%, respectively. Truck sales rose to 445 units and buses rose to 193 units.
Toyota Motor Philippines Corp. remained the industry leader with a 42.7% market share at the end of June.
This was followed by Mitsubishi Motors Philippines Corp. at 19.5%.
Rounding the top five were Nissan Philippines, Inc. with a 7.72% market share; Ford Motor Co. Philippines, Inc. at 7.3%; and Honda Cars Philippines, Inc. at 7.01%. — Janina C. Lim
THE Philippine Economic Zone Authority (PEZA) is proposing amendments to the law that created the investment promotion agency to convert it into an independent government-owned and controlled corporation (GOCC).
PEZA Director-General Charito B. Plaza said the agency is in the process of preparing amendments to Republic Act 7916 or the Special Economic Zone Act of 1995.
The push to become a GOCC appears to be an attempt to head off a diminution of PEZA powers being contemplated in reforms to the investment incentive system under the proposed package 2 of the Tax Reform for Acceleration and Inclusion (TRAIN) law.
“The PEZA law is now 23 years old. There are so many weaknesses,” Ms. Plaza said in a news conference on Monday.
PEZA is hoping to become a GOCC and be transferred to the control of the Office of the President from the Department of Trade and Industry (DTI).
“As a GOCC, we will fully independent, and have all the authority provided by law. No need for another body,” Ms. Plaza added, noting that PEZA is acting like a de facto GOCC at the moment as it generates its own revenue.
She said TRAIN package 2 is hoping to centralize all incentive approvals through the creation of a Fiscal Incentives Review Board (FIRB) combining the functions of the various agencies currently authorized to offer incentives.
She said an FIRB will have the effect of “abolishing” the agency’s primary function and “diminishing” it to a registry of investments.
She added that the FIRB will create redundancies as the PEZA board, the interagency decision-making body that approves incentives, includes some of the same regulators that will make up the proposed FIRB.
“The more red tape, the more interference of various bodies and agencies, the more that our investors will be discouraged. The number one thing that they consider is the ease of doing business in the Philippines and PEZA is providing that,” Ms. Plaza said.
“We will propose in the PEZA law (amendments) to authorize the PEZA board to grant incentives instead of giving these to the proposed FIRB under the TRAIN 2,” she added.
In response to TRAIN 2, the agency will recommend a freeze to the proposed changes on incentives currently enjoyed by 4,202 locators.
“Incentives are proven to be good at attracting investors. They are happy. PEZA is gearing up to providing more and better packages that will attract more investors, so we will ask Congress to allow PEZA to continue with an enhanced role,” Ms. Plaza said.
In addition to its proposed amendments, PEZA is proposing an overhaul of incentive categories.
These will be divided into general incentives, to be given to all types of industries; customized incentives, for strategic industries in pioneer sectors; and incentives conforming to the Finance Department’s preference for perks that are performance-based and time-bound.
The generalization of incentives is expected to save PEZA the need to meet with the Department of Finance periodically to consult on incentive approvals.
Meanwhile, PEZA will also be recommending a provision authorizing the PEZA board to recommend to the President subsidies to grant to locators, especially those who will be bringing in projects worth at least $1 billion.
The PEZA said China’s Panhua Group, which is considering investing in a $3.5-billion integrated steel hub in the Philippines, is seeking support from the government in the form of subsidies.
Ms. Plaza said the government should consider power subsidies for Panhua.
The Panhua Group is expected to manufacture 10 types of steel products at volumes that will satisfy domestic demand.
Asked on the timeline the agency intends to submit its suggested amendments, Ms. Plaza said: “We will soon file in Congress. We hope to have this filed before the State of the Nation Address (SONA) or immediately after the SONA.”
“The Senate is 99% very supportive of PEZA. The ULAP (Union of Local Authorities of the Philippines) even assured PEZA that they will also lobby their respective congressmen to support PEZA,” she added. — Janina C. Lim
THE Department of Transportation (DoTr) said it will adopt new rules to address delays in the roll out of projects and fund disbursement pointed out by the Commission on Audit (CoA).
Transportation Secretary Arthur P. Tugade said in a media briefing in Clark on Tuesday, “We’ll start the process early, so when the Congress approves the budget, we can allocate and spend it more readily.”
He added that the reforms cover expediting the preparation of the detailed engineering design (DED) which usually takes three months after receiving budget approval from Congress, and to issue the notice of award and notice to proceed at the same time.
The CoA report found issues with the launch of 153 out of 159 projects because of policies that hamper execution.
The DoTr said the policy changes were meant to make the process more efficient as older policies cause longer delays.
“The CoA report is correct, but the conclusion or perception of others that it means we are not doing our jobs is wrong,” Mr. Tugade said.
The DoTr said its obligation rate, or the funding it secured for projects in 2017, was at 80%, with a disbursement rate of 25%.
He said getting to fund disbursement usually takes the DoTr eight months, but with the changes, it hopes to remove as many as four months from the process.
“If you remove the notice to proceed, you’ll save 30 days. If you remove the DED after Congress (approval), you’ll save around three months. That’s the time we’re looking to cut,” Mr. Tugade told reporters.
The DoTr also addressed the supposed “quadrupling of expenses” when it moved to its office in Clark, saying although it indeed pays more rent for its new office, it now occupies a bigger land area and pays its lease to the Clark Development Corp., which in effect goes to the government, instead of a private institution.
The former office of the DoTr was in 58 condominium units at Columbia Towers in Mandaluyong CIty.
Mr. Tugade noted the bigger space is meant to accommodate more DoTr units including the back offices of the Land Transportation Franchising and Regulatory Board (LTFRB), the Land Transportation Office (LTO) and the Toll Regulatory Board (TRB).
He said this is to help ease road congestion in Metro Manila, especially East Avenue in Quezon City where the LTFRB and LTO hold office. — Denise A. Valdez
