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NEDA Board OKs P63-billion projects

Workers are seen mixing cement at a construction site in Quezon City, May 19, 2020. — PHILIPPINE STAR/ MICHAEL VARCAS

THE NATIONAL Economic and Development Authority (NEDA) Board on Tuesday approved two projects worth P63.2 billion, as well as the release of an executive order (EO) that will implement the tariff commitments under the Philippines-South Korea free trade deal.

The EO will cover Manila’s tariff commitments under the Philippines-South Korea Free Trade Agreement (FTA), which was sealed in September last year, NEDA Secretary Arsenio M. Balisacan said in a statement.

South Korea is the Philippines’ third-largest import source, accounting for $989.72 million or 8.3% of Philippine imports in October this year, the Philippine Statistics Authority reported earlier this month.

Seoul is also the sixth-largest destination of Philippine exports.

Total trade between the two countries hit $12 billion last year.

Mr. Balisacan said upon the FTA’s implementation, South Korea will grant preferential duty-free entry on 11,164 Philippine products worth $3.18 billion.

These products account for 87.4% of total South Korean imports from the Philippines, he added.

Mr. Balisacan said the Philippines-South Korea FTA will help Manila address its lagging trade competitiveness in the region and “secure more preferential concessions” than those currently available under the ASEAN-Korea FTA and the Regional Comprehensive Economic Partnership Agreement, which is touted as the world’s largest FTA.

The FTA was signed by the two countries on the sidelines of the 43rd ASEAN Summit in Jakarta, Indonesia in September 2023. The Philippine Senate ratified the deal in September this year, while South Korea’s National Assembly gave the greenlight last month.

Meanwhile, the NEDA Board, chaired by President Ferdinand R. Marcos, Jr., also greenlit the National Irrigation Administration’s P37.5-billion Ilocos Norte-Ilocos Sur-Abra Irrigation Project, which is “set to improve agricultural output and water management across the three provinces,” according to Mr. Balisacan.

The project, which will irrigate agricultural lands up to 14,672 hectares during the wet season and 13,256 hectares during the dry season, includes the construction of an earth and rockfill dam across the Palsiguan River in Abra, an afterbay dam in Nueva Era in Ilocos Norte, and various linked irrigation canals serving as major irrigation systems.

“Additionally, the project plans to incorporate renewable energy components, such as hydroelectric power plants and a solar power farm, through a public-private partnership,” the NEDA said. 

The Board also approved the Department of Public Works and Highways’ (DPWH) P25.7-billion Accelerated Bridge Construction Project for Greater Economic Mobility and Calamity Response, which aims to improve connectivity and disaster resilience by constructing 29 bridges nationwide. 

The project, which is funded by official development assistance loan from the French government, is divided into two components, with the first one comprising seven long bridges and scheduled for implementation from January 2025 to December 2029.

The second component, which consists of 22 calamity response bridges, will be implemented from January 2025 to December 2027.

Meanwhile, the NEDA Board approved adjustments to various parameters of five ongoing projects, namely:

• Value Chain Innovation for Sustainable Transformation in Agrarian Reform Communities of the Department of Agrarian Reform; 

• Health System Enhancement to Address and Limit COVID-19 Project of the Department of Health;

• Panglao-Tagbilaran City Offshore Bridge Connector Project of the DPWH; 

• Metro Manila Interchange Construction Project, Phase VI of the DPWH; and 

• North-South Commuter Railway System Project – Malolos-Clark Railway Project, Tranche 1 of the Department of Transportation.

The projects saw changes in project scope, cost, partial loan cancellation, and extensions of the implementation period and loan validity.

Also, the NEDA reported the completion of the Arterial Road Bypass Project Phase III (Plaridel Bypass) and the Panguil Bay Bridge. 

“Through these investment and infrastructure initiatives, we are advancing connectivity to enhance economic opportunities and ensure that progress reaches all regions of the country,” Mr. Balisacan said. — Kyle Aristophere T. Atienza

Banks’ real estate exposure sinks to 5-year low

Construction continues on a building in Quezon City, Nov. 20, 2024. — PHILIPPINE STAR/MIGUEL DE GUZMAN

By Luisa Maria Jacinta C. Jocson, Reporter

THE EXPOSURE of Philippine banks and trust entities to the property sector continued to decline at the end of September, hitting a five-year low, data from the Bangko Sentral ng Pilipinas (BSP) showed.

Banks’ real estate exposure ratio dropped to 19.55% at end-September from 19.92% at end-June and from 20.55% at the end of September in 2023.

This was also the lowest real estate exposure ratio recorded in five years or since the 19.5% as of September 2019.

The BSP monitors lenders’ exposure to the real estate industry as part of its mandate to maintain financial stability.

Investments and loans extended by Philippine banks and trust departments to the real estate sector inched up by 2% to P3.22 trillion as of September from P3.16 trillion a year ago.

BSP data showed real estate loans rose by 7.9% to P2.84 trillion as of end-September from P2.64 trillion a year ago.

Residential real estate loans jumped by an annual 8.1% to P1.07 trillion, while commercial real estate loans climbed by 7.8% to P1.78 trillion.

Past due real estate loans stood at P148.157 billion, higher by 10% from P134.828 billion a year prior.

Broken down, past due residential real estate loans rose by 10.1% to P104.967 billion, while past due commercial real estate loans went up by 9.4% to P43.189 billion.

Meanwhile, gross nonperforming real estate loans went up by 7.1% to P111.554 billion as of the third quarter from P104.138 billion a year ago.

This brought the gross nonperforming real estate loan ratio to 3.92% at end-September, slightly lower than 3.95% a year earlier.

On the other hand, real estate investments fell by 15.5% to P376.406 billion as of end-September from P445.666 billion in the same period a year ago.

This, as debt securities dropped by 14.6% year on year to P246.041 billion, while equity securities fell by 17.2% to P130.365 billion.

Joey Roi H. Bondoc, director and head of research at Colliers Philippines, said the slowing real estate exposure seen at end-September is due to the developers’ “lukewarm appetite” for new projects.

“They’re not launching a lot of new projects. Whether it’s for office or for residential, there’s really a tepid appetite at this point for new developments,” he said via phone call.

Over the next three years, Colliers expects about 400,000 to 450,000 square meters (sq.m.) of new office space to be added to the Philippine market.

“That is much smaller, in fact, less than half of 1 million square meters of new office space from 2017 to 2019,” Mr. Bondoc said.

“If you look at launches in the first nine months of this year, they are down by about 50-60% compared to the same period in 2023,” he added.

Mr. Bondoc said developers are opting to prioritize their existing inventory.

“We don’t see a lot of expansion because they are waiting for their remaining current inventory to be taken up, to be absorbed.”

For example, he noted there is 2.6 million sq.m. of vacant office space that will take five years to be absorbed by the market.

“In the residential market in Metro Manila, it will take more than five years. Meaning, that’s about 70 months that you need for the remaining unsold condominium inventory which covers pre-selling and ready for occupancy to be absorbed by the market.”

“It’s really ranging between that period, five to about six years, whether you look at office or residential. They’re waiting for this remaining inventory to be taken up or absorbed by the market.”

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort also noted the higher vacancy rates amid the ban on Philippine Offshore Gaming Operators (POGOs).

During his State of the Nation Address in July, President Ferdinand R. Marcos, Jr. ordered a complete ban on all offshore gaming operations, citing links to illegal activities such as money laundering and human trafficking.

The Philippine Amusement and Gaming Corp. earlier this month said that only 17 POGOs remain in operation from a total of 298 licensed POGOs in 2019.

“Right now, why are we seeing a lot of vacated office space and unabsorbed condominiums in Metro Manila? POGO exodus,” Mr. Bondoc said, adding that POGOs had previously driven demand for office and condominiums.

Moving forward, Mr. Bondoc said that banks’ real estate exposure is seen to ease further in the next three to five years.

“We will likely see less completion resulting from these less launches that we’re seeing in the market right now, especially in Metro Manila,” he said.

On the other hand, the central bank’s rate-cutting cycle could offset this outlook.

“Hopefully, further cuts from the central bank up to this month spill over to next year and result in lower mortgage rates. Hopefully that provides a much-needed impetus,” Mr. Bondoc said.

“Although, will it substantially stoke the market? I don’t think so. We’ve yet to see as to how big the impact will be on mortgage rates by these interest rate cuts,” he added.

The Monetary Board is expected to reduce the benchmark rate by 25 basis points (bps) at its meeting on Thursday, according to 13 out of 16 analysts surveyed for a BusinessWorld poll.

The central bank began its easing cycle in August this year with a 25-bp cut and again delivered another 25-bp reduction in October.

BSP Governor Eli M. Remolona, Jr. has also signaled further rate cuts next year in the 100-bp ballpark.

“Further cuts in local policy rates would be a positive offsetting factor for the real estate sector that could lead to some pickup in demand for real estate loans by both developers and buyers, but with some lag effects,” Mr. Ricafort added.

In 2020, the central bank raised the real estate loan limit of banks to 25% of their total loan portfolio from 20% previously to help free up additional liquidity as a relief measure during the coronavirus pandemic.

PHL’s twin deficits to persist — Nomura

BW FILE PHOTO

THE PHILIPPINES’ twin fiscal and current account deficits are seen to persist, Nomura Global Markets Research said.

In its Global Macro Outlook 2025 report, Nomura said the Philippines’ twin deficits will “remain significant.”

“In the Philippines, we expect the government to slightly miss the targets under its medium-term fiscal framework (MTFF), running a still-large deficit of 5.5% of gross domestic product (GDP) in 2025, owing to spending priorities on infrastructure and the midterm elections,” it said.

Nomura expects the deficit-to-GDP ratio to settle at 5.9% this year and 5.5% in 2025.

While the deficit is seen to narrow, Nomura said this is still above the government’s medium-term fiscal framework assumptions and is also “still well above the pre-COVID average of 2.4%.”

“We think MTFF targets will likely be challenging to meet due to the elections and spending priorities (e.g., the flagship infrastructure projects),” it added.

Based on the Development Budget Coordination Committee’s (DBCC) assumptions, the deficit ceiling is projected to hit P1.52 trillion or 5.7% of economic output this year.

The deficit is seen to decline to 5.3% of GDP next year and further to 3.7% by 2028.

The DBCC has said that it has had to recalibrate its medium-term fiscal program to reduce the deficit in a “more gradual and realistic manner” as well as to bolster long-term investments to create more jobs and increase incomes.

The National Government’s budget deficit narrowed to P963.9 billion in the first 10 months from P1.02 trillion in 2023, latest Treasury data showed.

Meanwhile, Nomura expects the current account deficit to continue ballooning.

“The changing composition of growth we expect in 2025 (i.e., softer export growth but mitigated by robust domestic demand) suggests current account balances will be generally weaker,” it said.

Nomura projects the current account deficit (CAD) to widen to 2.5% of GDP in 2025 from 2.3% in 2024.

This is driven by the “government’s push to build additional infrastructure and bolster domestic food supply, pushing capital goods and food imports higher.”

It is also “consistent with a more domestic demand-led economic recovery and higher external pressures.”

Latest data from the Bangko Sentral ng Pilipinas (BSP) showed that the current account deficit stood at $5.7 billion in the third quarter, equivalent to 5.2% of GDP. This was much higher than the 2.2% deficit logged in the same period a year ago.

In the nine-month period, the current account deficit widened by 19.3% to $12.9 billion or 3.9% of GDP.

“Trump policies will likely weaken remittances from the US, weighing on the CAD further. From a savings-investment gap perspective, this reflects a faster pickup in investment ratios, which is positive in the long run,” Nomura said.

US President-elect Donald J. Trump has promised to implement stricter immigration controls and tighter trade policies, such as plans to slap tariffs on Chinese goods.

Markets are pricing in the impact of these policies on the Philippines, which heavily relies on the US for business and economic activities.

The US accounted for 41.2% or the biggest share of the Philippines’ overall cash remittances in the January-October period, central bank data showed.

“Nonetheless, we still caution that financing the CAD is now coming from more volatile sources, with external loans larger than net FDI (foreign direct investment) inflows, leaving a deficit in the ‘broad basic balance’ and suggesting a higher reliance of the overall balance of payments on net portfolio investment flows.”

The administration’s plans to ramp up infrastructure spending may also drive the widening current account deficit, it added.

“This might lead to a wider current account deficit, as infrastructure spending is a top priority of President Marcos.”

The government plans to spend 5-6% of GDP on infrastructure annually.

‘GRADUALLY IMPROVING’ GROWTH
“We expect growth to gradually improve in 2025 but still undershoot official targets. The economy is vulnerable to Trump policies but public investment and election-related spending will support domestic demand,” Nomura said.

On the other hand, domestic demand will help fuel growth, it added.

“We expect growth outperformance in Asian economies with stronger domestic demand buffers — like Malaysia and the Philippines, whereas growth disappointment is likely in India, Thailand and Korea.”

Nomura expects the Philippine economy to grow by 5.6% this year, 6% in 2025 and 6.1% in 2026.

If realized, GDP would fall short of the government’s revised 6-6.5% target this year but hit near the low end of the 6-8% target for both 2025 and 2026.

“We think public investment spending will remain a significant growth engine, as the government pushes for more progress on infrastructure projects,” it said, noting that the upcoming elections will also boost infrastructure spending.

However, it also flagged “strong external headwinds” such as the impact of the incoming Trump administration’s proposals.

Nomura said the Philippines is among the most vulnerable economies to Mr. Trump’s possible policies.

“Therefore, we pencil in slow growth of goods and services exports, with the tariffs likely to weigh on external demand, while worker remittances, which support domestic consumption, are likely to be negatively affected by tighter immigration policy in the US, similar to Trump’s first term.”

“FDI inflows have been more limited than in regional peers and might be further constrained by rising tensions in the South China Sea, if the US provides less regional security under Trump amid China’s increased assertiveness in the disputed waters.”

FDI net inflows slumped by 36.2% to $368 million in September, its lowest level in over four years, BSP data showed.

Meanwhile, inflation is also seen to “remain benign” and settle within the BSP’s target 2-4% target band.

“In coming months, we pencil in headline inflation at the lower end of BSP’s target, partly due to the impact of lower rice import tariffs on food inflation and a still-negative output gap, allowing BSP to deliver rate cuts and front-run the implementation of Trump’s policies,” Nomura said.

Headline inflation stood at 2.5% in November, bringing the 11-month average to 3.2%. The central bank expects inflation to average 3.1% this year.

“In the Philippines, a benign inflation outlook implies BSP will keep cutting its policy rate by another 100 bps (basis points), despite still-large twin deficits.”

Nomura expects the Monetary Board to cut by 25 bps on Thursday and deliver three more 25-bp cuts at the first three meetings of 2025.

A BusinessWorld poll conducted last week showed that 13 out of 16 analysts expect the Monetary Board to reduce the key rate by 25 bps at its final meeting of the year.

If realized, this would bring the benchmark rate to 5.75% from the current 6%.

“If inflation continues on a downward path, as we expect in the near term, BSP will likely look to further remove the restrictiveness in the monetary stance to support a recovery in domestic demand,” Nomura said.

“A shallower cutting cycle by the Fed is unlikely to be a significant constraint, taking into account BSP’s laissez-faire approach on currency weakness, if interest rate differentials with the US become narrower.”

Nomura also noted the country’s improving policy transmission.

“This reflects various issues we’ve discussed previously, including a fragmented banking system and constraints from structurally tight liquidity conditions,” it said.

It said the “quicker and more complete” transmission is due to the implementation of structural reforms such as the policy corridor framework in 2016 as well as the use of more liquidity management tools.

“In the Philippines, BSP kicked off the cutting cycle in the region in August and has delivered a total of 50-bp cuts thus far. Lending rates have fallen by 41 bps since, suggesting an 81.5% pass-through that is much higher than 34% in 2019/20.”

“The availability of these instruments has allowed BSP to resume reserve requirement ratio cuts, the latest one being the 250-bp cut to 7% effective in late October, with an estimated liquidity injection of more than 1% of GDP and coinciding with BSP’s rate cuts, thus helping transmission further.” — Luisa Maria Jacinta C. Jocson

Developing countries’ debt fears increase with new climate finance

A family stays at their home in Meycauayan, Bulacan despite rising floods caused by Typhoon Kristine, Oct. 24, 2024. — PHILIPPINE STAR/RYAN BALDEMOR

DHAKA  — The growing costs of the climate crisis are forcing developing nations to make painful choices, compelling them to pay off debts rather than spend money on crucial services like health and education.

Only 28% of climate finance was provided as grants in 2022 to developing countries recovering from floods or shifting to clean energy, and the rest was channeled as loans, leaving them swamped by overwhelming and pressing external debt.

“For many developing countries, climate finance is now increasingly tied to debt,” Sherry Rehman, a senator and former climate change minister of Pakistan, told the Thomson Reuters Foundation.

Nations like hers spend more on interest payments than on health, education and infrastructure, which are critical expenditures for protecting people from climate disruptions to food, water and housing.

“Trying to fund resilience while falling further into debt is what I call recovery traps,” Ms. Rehman said.

Under the new climate finance deal struck at the 29th Conference of the Parties (COP29), rich countries pledged to provide $300 billion annually to developing nations by 2035, a figure dwarfed by the developing nations’ public debt repayments worth $443.5 billion in 2022 alone.

The deal included a broader goal of raising $1.3 trillion annually by 2035 from public and private sources, matching what economists say is needed and what developing nations sought from wealthy governments.

However, what the COP29 deal failed to specify is how much of the $300 billion will come in the form of loans or as grants or how the debt distress of climate-vulnerable countries will be addressed.

“What has obviously dampened enthusiasm is the opacity,” said Ms. Rehman, who called for a breakdown of the sources and types of finance, including the share of grants versus loans.

SEVERE DEBT CHALLENGES
Overall debt repayments faced by developing countries have accumulated to such a level that climate finance receipts pale in comparison.

In 2022, 58 developing countries spent twice the amount, $59 billion, to pay back their debts compared with what they received in climate finance.

Public debt in developing countries has been racing higher for years, growing two times faster than in developed countries since 2010. Standing at $29 trillion in 2023, that debt has left more than half of low-income countries stuck with severe debt challenges.

Along with incurring debt to meet economic needs, growing climate extremes like cyclones, floods and droughts have forced these countries to borrow even more.

Communities on the climate frontline, in particular, have been grappling with repayment of loans, from Indian farmers sunk in debt after drought destroyed their crops to coastal residents in Bangladesh servicing loans to rebuild cyclone-ravaged homes. 

Added to that pressure, a growing share of debt stems from funding for climate actions like reducing emissions or investing in resilient infrastructure like flood protection structures and early warning systems.

Such loans add to the already excessive debt burden of developing countries, which is “totally unacceptable” for countries that had little role in creating the climate crisis, said Syeda Rizwana Hasan, environment adviser of Bangladesh, one of the most climate-vulnerable countries.

Bangladesh has a per capita debt of $80 arising from its climate-related loans, which make up a sizable share of its overall per capita external debt of $604, said M Zakir Hossain Khan, chief executive of the Dhaka-based think tank Change Initiative.

STEEP SOCIAL COSTS
Wary of debt risks that can have steep social costs, countries may just opt not to pursue climate actions, Mr. Khan added.

When rich countries offer finance for energy transitions, there should be a careful mapping of how much grant funding is needed and which actions should be financed by investment or loans, said Sandeep Pai, research director at the Swaniti Initiative, a policy think tank.

Some climate actions can generate clear financial returns. For example, research by the International Finance Corp. in 2020 pointed to $30 trillion of climate investment opportunity in emerging markets by 2030.

But investment to protect communities on the frontline may not present a clear business case, and it doesn’t make sense for those communities to take on more commercial debt for most climate projects, Mr. Pai said.

SIGNS OF PROGRESS
Calls to address climate and debt issues have focused on institutions that channel climate finance mostly in the form of loans.

These include multilateral development banks that jointly provided $74.7 billion of climate finance to developing countries in 2023 — only 6.7% of which was in the form of grants, according to the World Resources Institute, a global nonprofit research group.

Activists are urging these institutions to offer more non-debt finance and take concrete steps towards providing debt relief, with some recent signs of progress.

“The world is slowly waking up to the ‘climate-debt nexus’ and testing solutions to reduce the debt burden, but the change is happening far too slowly,” said Sejal Patel, senior researcher at the International Institute for Environment and Development.

The Asian Development Bank (ADB), which calls itself “Asia and the Pacific’s Climate Bank,” has set up a fund to provide grants and soft loans to those most in need, such as small island developing states and least developed countries.

“Many adaptation projects are of a public goods nature and target the most vulnerable, and you need grant resources for them,” said Arghya Sinha Roy, the ADB’s senior climate change specialist.

This year, the ADB allocated $430 million in additional support to the most vulnerable countries while making loans to small island states more concessional.

DEBT-FOR-CLIMATE SWAPS
Beyond expanding the share of grants and making loans easier to obtain, global institutions are testing instruments such as debt-for-climate swaps, whereby a nation can write off part of its debt in return for taking measurable climate actions.

Barbados, for example, just completed a successful debt swap in which the Caribbean Island state replaced a portion of its debt with financing from international institutions to invest in climate-resilient water and sewage projects.

Another helpful step could be offering climate-linked debt relief to debt-distressed nations, such as pausing debt repayments when such countries are hit by disasters, Ms. Rehman suggested.

“We need to reimagine climate finance, so it doesn’t force countries to mortgage their future,” she said. — The Thomson Reuters Foundation

The Thomson Reuters Foundation is the charitable arm of Thomson Reuters.

AIC says LIMA Estate to see 7,000 new jobs with incoming 13 firms

ABOITIZINFRACAPITAL.COM

By Beatriz Marie D. Cruz, Reporter

ABOITIZ Infracapital, Inc. (AIC) expects the 13 additional companies currently building facilities in its LIMA Estate in Batangas to create up to 7,000 new jobs, according to a company official.

“Right now, there are about 73,000 jobs, and there are 180 companies [within LIMA Estate], but only 120 of those are operational,” Clifford Academia, vice-president for Luzon operations at AIC, told BusinessWorld last week.

“There are about 13 companies that are under construction and another 30 companies that are currently designing or in the planning stages of their respective facilities,” he added.

The next 13 companies are expected to generate around 5,000 to 7,000 jobs in the estate, according to Mr. Academia.

These companies are in the sectors of plastic molds, automotive parts, metal products, solar panel components, packaging materials, and dental products.

LIMA Estate, an 826-hectare mixed-use development owned by the Aboitiz group, hosts around 4,000 households and is registered under the Philippine Economic Zone Authority.

The property also includes retail stores, restaurants, a four-star hotel, a transportation hub, business process outsourcing (BPO) companies, schools, and dormitories.

Earlier this year, AIC announced a P4-billion investment for a 40-hectare expansion of the business district within LIMA Estate. Once completed, this expansion will extend the hub to approximately 70 hectares.

The full expansion is expected to be completed in 2027, with the first phase finishing by July next year, according to Mr. Academia.

LIMA Estate also features a 9,100-square-meter (sq.m.) outdoor mall, The Outlets at Lipa, which is nearing full occupancy, AIC said.

“We’re reaching already about 95% of signed-up [contracts,] and then, we’re going to end the year with about 85% operating occupancy for the mall,” Mr. Academia said.

“The consumer market has been on the rebound since the beginning of the year, and there’s a lot of interest from the homegrown brands in the mall, particularly the market in Lipa and Batangas,” he added.

LIMA Tower One, a premium office building located inside LIMA Estate, had the second-largest office space take-up nationwide in the third quarter, according to real estate services and investment firm CBRE.

This was driven by BPO company Conduent, Inc., which leased 9,000 sq.m. of office space.

PAVI’s Iloilo airport proposal clears negotiation phase, awaits review

PATRICKROQUE01-WIKIPEDIA

VILLAR-LED Prime Asset Ventures, Inc.’s (PAVI) unsolicited proposal for the operations and maintenance of the Iloilo International Airport has successfully completed negotiations, according to the Public-Private Partnership (PPP) Center.

“There’s a successful negotiation as of Sept. 16, 2024. The next step is they will have to submit it to the appropriate approving body. The implementing agencies are DoTr (Department of Transportation) and CAAP (Civil Aviation Authority of the Philippines),” PPP Center Deputy Executive Director Jeffrey I. Manalo told reporters on the sidelines of a press briefing last week.

The project must be submitted to the ICC (NEDA Investment Coordination Committee) before it can be endorsed and recommended for NEDA Board’s final approval, Mr. Manalo said, adding that the comparative challenge will begin once the final NEDA approval is secured.

“The project cost is above P15 billion, so it will have to be submitted to the ICC before it can be endorsed and recommended for final NEDA approval. Then after that, a minimum 90-day comparative challenge (to one year),” he said.

PAVI holds the original proponent status for the P21.16 billion rehabilitation, expansion, operation, and maintenance of the Iloilo International Airport.

The project aims to improve the management and operational capability of the Iloilo International Airport through an operate-add-transfer agreement, according to information from the PPP Center.

PAVI has also submitted an unsolicited proposal and is the original proponent of the P10.24-billion Puerto Princesa International Airport.

The Transportation department expects to privatize the Iloilo and Puerto Princesa airports by next year. — Ashley Erika O. Jose

Discovery World boosts resort investments

DISCOVERYWORLD.COM

LISTED hotel and resort operator Discovery World Corp. is investing up to P762.2 million to expand its resorts and township properties business.

In a stock exchange disclosure on Tuesday, the company announced that its board of directors has approved an increase in its subscription to shares of Cay Islands Corp. by 300 million shares, priced at P1 each, totaling P300 million.

This brings the total subscription to P430 million, the company said, adding that with the additional subscription of 300 million shares, Cay Islands’ outstanding capital stock now stands at 700 million shares.

Cay Islands is a property holding and investment company. It is the owner and operator of the Vanilla Beach property and Shoppes at Vanilla Beach development in El Nido, Palawan.

In a separate regulatory filing, Discovery World said that investments in One Davao Townships Corp. had been approved.

This came after its board greenlit an increase in the subscription by 265 million shares, priced at P1 each, for a total of P265 million. This is equivalent to 88.33% of the total outstanding shares of One Davao Townships Corp.

“This acquisition is in line with DWC’s business and will create opportunities for the expansion of DWC’s resort business,” it said.

One Davao Townships Corp. is a wholly owned subsidiary of Discovery World.

The company said this acquisition would help augment working capital for the expansion of its resort business.

Further, Discovery World also said that its board had approved the subscription of five million shares to Lucky Cloud 9 Resorts, Inc. at P1 apiece, bringing its total subscription to P60 million.

The board also resolved to increase its subscription by 7.2 million shares at P1 each, or P7.2 million, in Balay Holdings, Inc.

Balay Holdings owns properties in El Nido, Palawan, and Siargao. Its properties are being developed for staff housing for the future development of the Discovery World group.

At the local bourse on Tuesday, shares in the company closed one centavo, or 0.83% higher, to end at P1.22 apiece. — Ashley Erika O. Jose

A celebration of life and nature

POLLENTIA (might, power) with sculptural frame, by Solenn Heussaff-Bolzico

IT IS an artist’s dream to capture nature’s awe-inspiring force, sense of mystery, and healing power. At Provenance Gallery, artworks that take a close look at the natural world, made by two longtime friends, are on view.

Vīta, Solenn Heussaff-Bolzico and Olivia d’Aboville’s dual exhibit — also their first time to collaborate despite growing up together — represents different facets of how life and nature are in a constant state of flux. Curated by Stephanie Frondoso, the exhibit highlights their varying odes to humans’ relationship to the natural world: Ms. Heussaff-Bolzico’s colorful, detailed floral paintings and Ms. D’Aboville’s geometric, abstract textile works.

“We installed the show by putting Solenn’s figurative paintings side-by-side with Olivia’s more material works,” Ms. Frondoso pointed out at the exhibit’s media walkthrough on Dec. 10.

While Ms. Heussaff-Bolzico is known as a muralist who explores social realist themes, her artistic breadth expands to include more textured, mixed-media works (utilizing posca pen, acrylic, gel, and oil pastel all in one painting, for example) to depict nature in a way that jives with her friend’s work.

As for Ms. D’Aboville, her expertise lies in playing with contemporary Filipino textiles’ visual complexities and collaborating with local artisans for the handwoven abaca fabric that is pleated and stitched on canvas.

At the exhibit, viewers can see how their art styles are complementary. “We arranged their works interspersed with one another to show dynamism, movement, and the circularity of nature,” Ms. Frondoso told BusinessWorld.

IN CONSTANT FLUX
The exhibit would not have come about if not for the personal growth of each artist in the past five to 10 years, which allowed them to slow down and reconnect, according to Ms. Heussaff-Bolzico.

“We’re both mothers of two, and we both work from home,” she told the press. “At a certain point of your life, you know, you edit people out. And you kind of go back to your roots, to what you’re comfortable with.”

Plants at home serve as a source of inspiration, particularly “how new leaves grow every month and shift to give way for new blades to sprout out.” This constant movement and change can be seen in Ms. Heussaff-Bolzico’s abstract botanical landscapes, profuse with tropical plants like ferns, orchids, and lilies, but depicted in dreamlike colors.

Her monumental, immersive triptych Incipere (coming to existence) looms over the viewer as a forest does. The varying mixed media patterns are able to highlight the fragility of the softest flowers amid the unceasing power of the lush, textured green around them.

Pollentia (might, power), a portrait of a Filipina farmer, is a highlight piece, framed in carved upcycled wood. Ms. Heussaff-Bolzico’s roots in the town of Paete, Laguna, known for its woodworkers, motivated her to commission Charming Baldemor, a carver and niece of local sculptor Fred Baldemor, for the intricate frame.

“I wanted to add a touch of Filipina hands. I designed the frame, but it was carved beautifully by Charming. It took 60 days to carve,” said Ms. Heussaff-Bolzico. The frame has a plethora of symbols — ylang-ylang flower for grace, a farmer’s basket for heritage, and the flag’s three stars and a sun for Filipino pride.

THE ACT OF MAKING
Ms. D’Aboville’s textile works reflect similar themes, except her material source — leftover stock fabric of weaving houses — also speaks volumes about sustainability. The textiles are woven in Cebu. In her atelier, the artisans pleat the rolls of fabric, then she creates the design, cutting and juxtaposing the pleats.

“It takes a village; a long process involving many hands,” said the artist. With fine needlework, each pleat is meticulously hand-stitched in the traditional diamond pattern, as if in an ancient script.

Her Sowing series of color field compositions evokes the natural geometry (tessellations) found in nature, in snakeskin, leaf patterns, tree bark. More than 100 yards of handwoven abaca, raffia, and polyester textiles were used for the show.

“These are actually the back of the piece. We pleated the raffia, and I found the knots in the back a lot more interesting than the front. It has this very contemporary feel to it, but also very ethnic, very tribal, and I decided to add pops of yellow to enhance it,” she said of one work.

The methodology of Ms. D’Aboville draws close attention to the act of making. On one hand, they present weaving and sewing as repetitive, meditative actions; on the other, these are gendered crafts previously associated with women’s domestic labor.

TENSION AND HARMONY
The two artists collaborated on pieces that contain both their touches. These are 60” x 48” dialogic works — two massive digital prints on handwoven abaca polyester fabric that is stitched on canvas then combined with acrylic, posca pen, and oil pastel.

Integrating each other’s ideas and aesthetics, the lush, floral images of Ms. Heussaff-Bolzico’s paintings have been digitally printed onto Ms. D’Aboville’s pleated textiles. The images become distorted, partly by the folds, and partly because the abaca weft is slightly lower than the polyester warp, creating the optical illusion of a shifting image when the viewer moves around it.

“Like in nature, things just happen and you can’t control it. If you move left and right or the time of day changes, then you see the intensity and density of the color change,” Ms. D’Aboville said.

The tension and harmony created by the pleated abaca and polyester against the canvas’ flatness invite visitors to go back to the works to see them in a new light. Even with the individual works, looking closely at both the paintings and the textile canvases yields tiny details that represent the undergrowth and overgrowth of nature, and humans’ relationship with it.

“It’s kind of what the exhibit is about. It’s growth, it’s life, it’s change, transformation,” explained Ms. Heussaff-Bolzico. “Basically that’s the process for our works, which both have layers over layers affected by change of emotion, change in day, change of environment.”

Vīta is on view throughout December at Provenance Gallery, at the 2nd floor of Shangri-La the Fort, Bonifacio Global City, Taguig. — Brontë H. Lacsamana

ERC denies Meralco-Masinloc Power supply deal

PHILIPPINE STAR/JESSE BUSTOS

THE ENERGY REGULATORY Commission (ERC) has denied the request for provisional authority by Manila Electric Co. (Meralco) and San Miguel Corp.’s Masinloc Power Co. Ltd. (MPCL) for their 500-megawatt (MW) power supply agreement (PSA).

Although the ERC found that Meralco’s bidding complied with the competitive selection process (CSP) policies, it determined that the urgency of the supply from MPCL has not been established.

“Considering that the expected delivery date of the instant PSA shall not occur until 26 August 2025, the urgency of supply from MPCL has not been established,” the regulator said.

The ERC said that it considers granting provisional authority to the applicants to be “premature.”

Following the CSP conducted in August, MPCL emerged as one of the bidders with a favorable offer, with the company offering 500 MW out of the required contract capacity of 600 MW, for P5.6015 per kilowatt-hour.

The government requires distribution utilities to choose the cheapest electricity supply through a CSP.

The 15-year PSA resulting from the CSP will cover the power distributor’s 600-MW baseload supply, effective on Aug. 26, 2025.

MPCL is a subsidiary of San Miguel Global Power, the power arm of SMC. It owns the 659-MW coal-fired thermal power plant in Zambales.

BusinessWorld reached out to Meralco for comment.

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

Luneta Art Fair connects up-and-coming artists to a wider market

ART will once again fill the sunny open spaces of the historic Rizal Park in Manila next February.

Galleries, art collectives, student groups, and individual artists will showcase their diverse artworks at the 2nd edition of the Luneta Art Fair on Feb. 1 and 2, 2025. Among the participating artists are Glenn Martinez, Badz Palacio, Odangputik, Nelz Yumul, Kenny Tai, Kaila Patricia Ang, and the Aint (Art in Things) collective.

Aside from entrance to the fair being free and open to the public, the event aims to showcase artists, groups, and organizations that are relatively young in their artistic journeys.

“We welcome everyone who wants to participate and sell their works, but we especially want to nurture the ones who are just starting out,” said Luneta Art Fair organizer Benjamin Canapi in a virtual interview with BusinessWorld.

After the success of the inaugural edition earlier this year, Puesto Manila — the creative events agency behind the fair — seeks to further its potential.

“We’ve been doing WE ART markets in different parts of Manila. These feature mainly college students who do arts and crafts like stickers, prints, zines, crochet, candles, and jewelry. From that, we see there’s a huge pool of young, creative people who need a big platform,” Mr. Canapi said.

“Luneta Art Fair is a step above the pop-ups, designed to give these artists a chance to level up what they’re doing, to sell not just stickers and the like, but also full-on artworks to a lucrative market.”

PUBLIC ART IN MANILA
A major draw of the fair is its location, in one of the most historic sites and public parks in Manila that has since struggled to maintain its previously beautiful image.

Mr. Canapi, also the head tour guide of WanderManila, explained that putting up an art fair in Luneta was a matter of convenience at first, thanks to their ties with the National Parks Development Committee.

“Now, a precious goal is to help promote public spaces in Manila. A lot of people are still unaware that Luneta is a far better place than it used to be over 10 years ago. It’s a means to reintroduce Rizal Park to a wider audience, to showcase the possibilities of doing events here,” he said.

Proof of the gradual improvement of the public spaces in Manila is the increase in the number of foreigners walking around in areas like Binondo and Quiapo, which in turn has forced the hand of the local government to better manage and police these areas.

It is high time to “reintroduce Manila,” Mr. Canapi told BusinessWorld. “A huge chunk of the local market still thinks it’s a confusing, confounding, chaotic, and dirty city. One way of proving that wrong is showcasing what activities you can do in the space.”

“Tourism, culture, art go hand-in-hand. At Puesto, we do our part by staging art fairs and art markets.”

TRANSITION POINT
The presence of lucrative venues like Art Fair Philippines, Art in the Park, Cubao Expo, and even Komiket shows the improving accessibility of art, according to Mr. Canapi.

“With these platforms being so open to the public, it means more people can know that you don’t have to go to a gallery for art,” he added. “They’re made aware that there are so many artists out there.”

The Luneta Art Fair will exhibit a wide array of works — paintings, sketches, sculptures (both handmade and 3D-printed), collages, photography, and even digital pieces.  Alongside booths, there will be free workshops and demos on a variety of art mediums.

Compared to other venues, it aims to be “the transition point between starting out as a young artist with collectibles and merch, and artworks for more traditional art fairs.”

“It’s an opportunity for these young artists to explore beyond their usual arts and crafts,” Mr. Canapi said.

Artists, galleries, collectives, and art groups can still register to participate in the Luneta Art Fair, but only until Dec. 31. The event will take place at Rizal Park from Feb. 1 to 2, 2025. — Brontë H. Lacsamana

Bloomberry’s Arasi resigns as president, COO

BLOOMBERRY.PH

RAZON-LED Bloomberry Resorts Corp. said Thomas Arasi has stepped down as the company’s president and chief operating officer (COO), effective immediately.

In a stock exchange disclosure on Tuesday, Bloomberry announced that Mr. Arasi has also resigned from the board of directors of Bloomberry Resorts, Bloomberry Resorts and Hotels, Inc., and all other positions in the company’s subsidiaries.

Bloomberry Resorts said Mr. Arasi’s resignation was effective on Tuesday, citing “personal reasons.”

Bloomberry is the operator of Solaire Resort & Casino.

The company recorded an attributable net loss of P472.43 million for the third quarter, down from a profit of P1.86 billion in the same period last year.

The company recorded a gross revenue of P13.67 billion, climbing by 27.3% from P10.74 billion in the comparable period a year ago. It posted a gross expense of P11.67 billion, 55.2% higher than the P7.52 billion in the third quarter last year.

For the January-to-September period, Bloomberry Resorts saw its attributable net income drop by 57.5% to P3.52 billion from P8.28 billion in the same period last year.

For the nine months ended September, Bloomberry Resorts’ gross revenue went up to P38.26 billion, marking an increase of 5.9% from P36.11 billion last year.

Its gross expense surged to P29.96 billion for the January-to-September period, climbing by 27.1% from P23.58 billion last year.

At the local bourse on Tuesday, shares in the company closed unchanged at P4.73 apiece. — Ashley Erika O. Jose

The demographic dividend of the Philippines: The case of South Korea’s decline

STEPHAN VALENTIN-UNSPLASH

(Part 5)

In the 1980s, the Total Fertility Rate (TFR) of the Philippines was six babies for every fertile woman. Today it has plummeted to 1.9 babies for reasons explained in the previous articles of this series. The question is: will the Philippines face the same fate as countries like Spain, Taiwan, and South Korea in which the TFR has fallen below one baby per fertile woman?

The extreme case is South Korea. Recently, in a report from Firstpost, it was indicated that South Korea could become the first country to disappear from the Earth. Once known for its economic growth and modernization over the last 20 to 30 years, this East Asian country is facing a major fertility crisis such that its population could decline to a third of its current size by the end of the current century.

It would be enlightening for our country’s leaders and policy makers to learn some lessons from this industrial behemoth so that we can avoid facing the same sad fate of disappearing from this planet, for the good of the future generations of Filipinos.

The TFR of South Korea hit a record low of 0.72 children per fertile woman in 2023 and was expected to fall further to 0.6 in 2024. In response to this demographic crisis, the South Korean government is considering offering parents 100 million won in cash for each child born, in a desperate effort to reverse the declining birth rate. This is reminiscent of what the Government of Singapore under Lee Kuan Yew tried to do when it realized it made a terrible mistake in implementing a birth control program in the 1960s and 1970s. In the 1980s, the Singapore government — still very much under the leadership of Lee Kuan Yew — realized that it made a mistake and decided to reverse the population decline through all types of economic incentives, however to no avail. Today, Singapore is highly dependent on imported manpower to sustain its economic growth which has slowed down significantly.

Of course, the beginning of the fertility decline in South Korea was due to a State-sponsored campaign in the 1960s when there was an undue concern that rapid population growth was outpacing economic development, leading to the implementation of family planning programs to curb birth rates. In the 1960s — very much like the Philippines — South Korea’s TFR was six babies per fertile woman. By 1982, with economic growth, the TFR had dropped to 2.4, still above the replacement level of 2.1. A year later, the nation reached the replacement level and the fertility rate continued to fall sharply in the following decades. What began as a controlled decline became a demographic crisis, with projections suggesting that South Korea’s population could shrink from 52 million today to just 17 million by the end of the century. Some experts estimate a 70% loss of population, bottoming at 14 million people, a dire situation that could destabilize the economy and lead to unprecedented societal challenges.

Because of the very low fertility rate, the population of South Korea is rapidly ageing. The proportion of those aged 65 or over is set to rise to 25.5% of the population in 2030 and 46.4% in 2070. According to the Organization for Economic Cooperation and Development (OECD), 40.4% of South Koreans over 65 years already live in relative poverty, the highest in the developed world, while the country’s national pension fund is forecast to run out of money in just over 30 years’ time. An economist at Societe Generale in Seoul warns that South Korea will soon start to experience a negative growth rate as its population falls, leading to social problems relating to social insurance, public pensions, education, and military manpower.

We can learn some lessons by studying the root cause of this demographic crisis. What could be the root cause of this demographic suicide of the South Koreans? According to the Firstpost report, in many urban areas, a good number of women place a higher priority on their careers over having children. According to a survey in 2023, more than half of the respondents identified the “burden of parenting” as the main problem of female participation in the workforce. The increase in dual-income households and better access to education have enabled women to delay or even skip marriage and childbirth altogether.

Further, marriage is no longer viewed as a necessity for having children. Over the last decade, the proportion of people who accept having children without having to get married has grown from 22% to 35%. However, only 2.5% of children in South Korea are born out of wedlock, the Economic Times reported. Among those who marry, women are increasingly demanding a more equal distribution of household responsibilities.

As the Singaporean Government attempted to do in the 1980s and 1990s, without much success, the Korean government is turning to matchmaking to boost low birth rates. As recently reported by Reuters, against the backdrop of Christmas songs, 100 South Korean men and women gathered at a hotel near Seoul dressed in their best, with name tags hanging on their clothes, hoping to find potential marriage partners. These were participants at a mass blind-dating affair hosted by Seongnam City whose government hopes to reverse a falling birth rate in a country where popularity of marriage and enthusiasm for parenthood have nosedived.

The City of Seoul had considered a similar matchmaking initiative but put the plan on hold after facing criticism that it would be a waste of taxpayer money unless the Government first addresses the reasons behind people opting not to marry and have babies — most notably the sky-high costs of housing and education. Jung Jae-boon, a university professor, remarked that it was nonsense to expect these events to lead to higher birthrates. He advocated instead to spend more money directly on supporting pregnancy, child delivery, and parenting in order to boost birth rates.

Our leaders today should do everything possible to avoid the social and economic problems that South Korea is facing today because of the precipitous decline in the fertility rate. At this early stage of our own fertility decline, we have to closely observe what this recently developed East Asian country is doing to prevent its population from disappearing from the earth.

In a recent article that appeared in the Financial Times (April 2, 2024), it was reported that Korean construction group Booyoung is offering its workers a $75,000 bonus for each baby they produce. Political leaders had increased promises of financial incentives for prospective parents ahead of elections in May 2024. Parties from across the political spectrum announced proposals ranging from generous housing allowances and tax breaks, to compulsory paternity leave for fathers, and extended subsidies for egg-freezing programs.

Some companies appear to have found success with financial incentives. Retail giant Lotte has boosted the fertility rate among its employees since it introduced mandatory maternity and paternity leave programs in 2012. Female Lotte employees are entitled to two years of maternity leave in addition to the three months’ leave guaranteed by the State.

Experts, learning from experiences of other countries like Singapore that tried financial incentives to boost birth rates in the past, warn that these incentives have generally not worked.  Between 2006 and 2023, South Korea spent $270 billion in policies ranging from cash payments to subsidized babysitting and infertility treatments, but fertility rates continued to decline.    

There are entrenched social attitudes that made it hard for women to build careers and raise a family. This early in our own demographic transition, we have to be convinced that decisions related to marriage, having children and raising a family go much beyond economic and other earthly motivations but necessarily involve moral, spiritual, and religious dimensions. A widespread materialist or consumerist approach to life is fertile ground for human infertility.

(To be continued.)

 

Bernardo M. Villegas has a Ph.D. in Economics from Harvard, is professor emeritus at the University of Asia and the Pacific, and a visiting professor at the IESE Business School in Barcelona, Spain. He was a member of the 1986 Constitutional Commission.

bernardo.villegas@uap.asia

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