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DA studying rubber partnership with Papua New Guinea

THE Department of Agriculture (DA) said it is is studying a parnership with Papua New Guinea for the development of the rubber industry.
Agriculture Undersecretary for Agribusiness and Marketing Assistance Service (AMAS) Jose Gabriel M. La Viña told BusinessWorld in a chance interview that a collaboration is a “new possibility to look into” after Papua New Guinea Rubber Board Chairperson Josephine Kenni on Wednesday last week paid a visit to the DA.
“They’re looking at the same thing — how they can upstream their own rubber and plant more. Maybe we can get Filipino investors there to plant so maybe that’s something we can work together with them,” he added.
Mr. La Viña was appointed in June with a brief to develop the rubber industry.
“(Secretary Emmanuel F. Piñol) is not happy about how our rubber is being bought very cheaply and comes back here very expensive in [the form of] tires,” Mr. La Viña said.
The Philippine Statistics Authority (PSA) said raw rubber exports in the four months to April dropped by 42.3% to $23.90 million while rubber manufacture imports in the same period rose 3% to $191.62 million.
AMAS wants to recruit more processors and manufacturers to locate in the Philippines, preferably closer to or in Mindanao, where the rubber industry is located.
Prior to the prospective rubber partnership, the Philippines and Papua New Guinea in March agreed to collaborate in rice production, with companies from the Philippines planting rice on a 100-hectare demonstration farm in Papua New Guinea.
According to the Philippines’ industry road map for rubber, the government has a revenue target of P100 billion by 2030.
The 2017-2022 road map also hopes to increase rubber exports by 10% while establishing a tire manufacturing facility in Mindanao.
The government, however, found that the land formerly allotted for planting rubber was used instead for bananas or cash crops.
Despite this, PSA reported that the first quarter of 2018 saw rubber (cup lump) production go up by 4.4% to 45,370 metric tons due to more tappable trees in North Cotabato and Zamboanga Peninsula. The bulk of the country’s rubber was sourced from Soccsksargen. — Anna Gabriela A. Mogato

When a physical therapist designs a pillow, it can get very interesting

THE PRIGINA: Mr. Big pillow is called the “9” after its shape.

BANGKOK-BASED sleep essentials brand, Mr. Big, known for “physical therapist-designed pillows” for “ergonomic comfort” has arrived in the Philippines hoping to improve Filipino’s sleep quality.
“There’s this wellness movement that is happening globally and that includes people wanting to have a really good night’s sleep,” Tom Castaneda, AVP for Marketing at SM Home, told BusinessWorld during the launch in June 21 at SM Makati.
“In recent years, we noticed that linens are really important for our customers. We saw an increase in pillowcases [sales] and mattresses do really well,” he said, before adding that this is likely because more and more people are renting or buying condominium units.
Mr. Castaneda said they thought of bringing Mr. Big to the country because “the items are really well thought out and are designed by a physical therapist.”
Mr. Big founder, Chawakit Kaoien, was formerly a physical therapist who was working in the intensive care unit (ICU) of a hospital’s respiratory unit. It was because of his responsibility to ensure that critical care patients in this unit could breathe properly and were comfortable that he was said to have “mastered the clever positioning of pillows.”
“To improve the condition of my patients, as well as their quality of life, I would arrange their sleeping positions for various purposes such as to reduce pressure and soreness, to ease pain, to promote blood circulation, and many more,” Mr. Kaoien was quoted as saying in a press release.
He then created what he calls the “9” pillow (named for its shape) which offers an “ergonomic solution for those who prefer to sleep on the sides” as it provides support “in all the right places, ensuring a much more comfortable and restful sleep that won’t result in body aches the next day,” said a company press release.
Aside from the “9” pillow, Mr. Kaoien also created several other pillows, plus duvets and mattresses meant to cater to people of different needs, sleeping habits, and demographics.
Before buying a custom pillow, staff are supposed to input a person’s height, weight, as well as preferred sleeping position (side, back, or stomach) in an app which then recommends the most suitable pillow for the customer.
The pillows are stuffed with “Elasta Fiber,” a material imported from the UK that is said to provide “optimum cushioning and tension and does not clump over time. Pillow shells are 100% cotton, hypoallergenic and dust mite resistant,” said the release.
“The Philippines is quite like Thailand in body size and shape, so the products we offer are suitable here,” Mr. Kaoien told BusinessWorld shortly before the launch.
The brand is currently in six markets in Asia — Thailand, Vietnam, Malaysia, Korea, the Philippines, and Hong Kong — but Mr. Kaoien revealed that they are already setting their sights beyond the region with Australia and the US coming next.
Though he refused to say when they are going to expand into these markets, he said they would have to create and adjust their products to fit the Australian and US markets because the people there are generally bigger than their Asian counterparts and “have different preferences.”
“I have to do a lot of homework [before the expansion],” said Mr. Kaoien.
Mr. Big is currently available in SM Home stores in SM Makati, SM Aura, SM Megamall, and SM Mall of Asia. — Zsarlene B. Chua

Yields on gov’t debt mixed

By Jochebed B. Gonzales, Senior Researcher
YIELDS saw mixed movements last week as investors priced in the escalating trade war between the US and China and after domestic inflation reached a fresh five-year high.
Prices rose as yields on government securities dipped by 6.16 basis points (bps) on the average week on week, data from the Philippines Dealing and Exchange Corp. as of July 6 showed.
“There were two main factors that affected yields [last] week: the US-China trade war and the country’s higher-than-expected inflation,” said Land Bank of the Philippines (LANDBANK) market economist Guian Angelo S. Dumalagan.
“The influence of lingering trade tensions more than offset the impact of the country’s upbeat inflation data, resulting in an overall downward bias in interest rates,” he added.
Last week, the US began slapping 25% customs duties on $34 billion worth of Chinese commodities to which China responded by also imposing 25% border tax on the same amount of American goods that enter their country.
Meanwhile, domestic prices rose at a rate fastest in at least five years in June, the Philippine Statistics Authority reported on Thursday. The 5.2% headline print was beyond market and government expectations.
“Last month’s higher-than-expected inflation increased the yields of some tenors. While market participants expected inflation to pick up, many were surprised that inflation breached the BSP’s forecast range for the month, an occurrence which increases the chances of more rate hikes from the BSP this year,” said Mr. Dumalagan.
Also last week, the Bureau of the Treasury (BTr) rejected all bids for the reissued 10-year bond after investors demanded higher rates for the said tenor. The offer was also undersubscribed, attracting only P14.84 billion in tenders against the P15 billion programmed by the government.
“The 10-year auction rejection due to elevated bids and the higher than expected CPI (consumer price index) data at 5.2% versus market consensus at 4.8% led to more defensive levels and greater selling interest from end clients and market participants,” said Carlyn Therese X. Dulay, first vice-president and head of institutional sales at Security Bank Corp.
A bond trader agreed, saying some investors had “unloaded” after inflation was “way too far” from market expectations.
At the secondary market on Friday, the yield on the 91-day Treasury bill (T-bill) saw the steepest decline, losing 64.32 bps to close with 3.2639%.
It was followed by the 10-year Treasury bond (T-bond) which shed 6.69 bps to fetch 6.3548%. Yields on the three- and four-year tenors decreased by 4.57 and 2.32 bps, respectively, to 4.9766% and 5.6536%, while that of the 91-day T-bill dipped 1.99 bps to 3.8254%.
On the other hand, ending the week with gains were the 364-day T-bill and the two-, five-, seven- and 20-year T-bonds which went up 8.83 bps, 2.17 bps, 2.80 bps, 4.26 bps and 0.18 bp, respectively, to finish with 4.5625%, 4.8059%, 5.79%, 6.2908% and 7.3625%.
This week, the market will take its cue from the results of the US Bureau of Labor Statistics employment survey for the month of June, said Security Bank’s Ms. Dulay.
LANDBANK’s Mr. Dumalagan said players will also monitor external developments, particularly in the US and China.

China roots for last US soybean cargo to land before tariffs kick in

BEIJING — It is not often that the niche world of commodities trading enters the public conversation, but on Friday China’s social media was rooting for a ship carrying soybeans from the United States to beat the deadline before Chinese tariffs kicked in.
Tracking the journey of the vessel, Peak Pegasus, as it motored toward the northern Chinese port of Dalian was the 34th highest trending topic on the country’s Twitter-like Weibo on Friday, beating out the World Cup, showbiz gossip and Beijing’s escalating trade war with Washington.
Reuters was the first to report on the final stages of the vessel’s one-month voyage to China as the countdown began for the United States and China to impose their tit-for-tat duties on $34 billion worth of each other’s goods.
Weibo users offered encouragement and support to the cargo, which left Seattle on June 8, as it became uncertain whether the ship would dock and unload its cargo before noon on Friday when the new tariffs took effect.
“Good luck bro!” said one Weibo user.
“You are no ordinary soybean!” said another.
Soybeans are the top US agricultural export to China, with the trade worth $12.7 billion in 2017.
Last week, the Peak Pegasus had been scheduled to land with just hours to spare, according to Thomson Reuters Eikon shipping data. Its arrival was pushed back in recent days to 5 p.m. (0900 GMT) on Friday.
Alas, the Peak Pegasus fell short. At 5:30 p.m., it was at anchor near Dalian, missing the noon deadline.
The comments showed how aspects of Beijing’s rift with Washington have seeped into the public consciousness. They also offered a rare moment of humor in an increasingly acrimonious row between the world’s top two economies.
Chinese state media have slammed the protectionist policies of US President Donald Trump and on Friday likened his administration to a “gang of hoodlums,” but the trade conflict has gained little traction on China’s tightly controlled social media.
Still, one Weibo user with tongue firmly in cheek worried that the soybeans might get seasick, while another offered the beans some wry advice on how to avoid getting snarled up in the deepening row.
“Poor little soybeans. Try to become a bean sprout, maybe it’s not on the tariff list,” the user said.
One post offered to take the beans on a romantic break to Turkey.
It is not the first time the Peak Pegasus has had a starring role in Beijing’s trade showdown with Washington. In April, the ship detoured to South Korea from southern China after the country imposed hefty margin deposits on imports of US sorghum, a grain used to make liquor and animal feed. — Reuters

Stephen Ditko, Spider-Man co-creator, 90

NEW YORK — US comics artist Stephen Ditko, co-creator of Marvel superheroes Spider-Man and Doctor Strange, has died. He was 90.
Police in New York said he was found in his apartment on June 29, according to the Hollywood Reporter. No cause of death has been confirmed.
Born in 1927 in Johnstown, Pennsylvania, Ditko worked alongside the then-future Marvel Comics CEO Stan Lee in the early 1960s. It was Ditko who came up with Spider-Man’s iconic red and blue suit, complete with web-shooters.
“Today, the Marvel family mourns the loss of Steve Ditko. Steve transformed the industry and the Marvel Universe, and his legacy will never be forgotten,” Marvel Entertainment President Dan Buckley said in a statement Saturday.
Ditko, a reclusive figure who is thought to have never married, had left Marvel by 1966, reportedly due to a disagreement with Lee.
He went on to work for other publishers — including DC Comics, where he created characters such as The Creeper — but did draw for Marvel again from in 1979.
“Of course, he is best known for co-creating Spider-Man but he also ushered in a slew of unique, very personal and eclectic characters for DC such as the Question, Blue Beetle, Hawk and Dove, and more,” said DC Entertainment Chief Creative Officer Jim Lee on Twitter.
“Polite and unassuming — he never sought attention or the limelight but in many ways represented the hidden hero he saw in all of us,” he added.
Elsewhere on social media, fans paid tribute to Ditko alongside images of his work — hailed by many for its unique, zany style.
“RIP to comic book legend Steve Ditko, beyond influential on countless planes of existence,” wrote film director Edgar Wright, whose works include Shaun of the Dead (2004).
Meanwhile, author Neil Gaiman reflected: “Steve Ditko was true to his own ideals. He saw things his own way, and he gave us ways of seeing that were unique. Often copied. Never equalled.” — AFP

Maynilad completes upgrade of sedimentation basin at La Mesa


MAYNILAD Water Services, Inc. has completed the upgrade of a sedimentation basin at La Mesa treatment plant 1 in Quezon City, the west zone water concessionaire said.
“While there are 11 more basins to go, this is a significant milestone in the rehab project of La Mesa and our ability to respond to the challenges of climate change,” said Maynilad Chief Operating Officer Randolph T. Estrellado in a statement on Sunday.
The sedimentation basin is part of the company’s P7-billion rehabilitation project for Maynilad’s La Mesa treatment plant 1 and 2, which produce about 2,400 million liters of water per day to serve about nine million customers.
The 12 sedimentation basins at treatment plant 1 are being fitted with tube settlers and sludge scrapers. This increases the plant’s capacity to address high turbidity in the raw water during the rainy season.
“We are upgrading one basin at a time, because we cannot shut down the plant and interrupt water service to give way to the rehabilitation work,” Mr. Estrellado said.
The rehabilitation of the basins is being done in phases to not disturb plant operations during the upgrades.
Aside from rehabilitating the sedimentation basins to improve treatment capacity, other upgrades being done at the La Mesa treatment plant 1 and 2 are the retrofitting of structures for enhanced earthquake resiliency, and the automation of processes for more reliable operations.
“The rehab project is targeted for completion in 2020,” the company said.
Maynilad serves certain portions of the cities of Manila, Quezon and Makati. It also covers Caloocan, Pasay, Parañaque, Las Piñas, Muntinlupa, Valenzuela, Navotas and Malabon in Metro Manila.
Outside the Philippine capital, it serves the cities of Cavite, Bacoor and Imus, and the towns of Kawit, Noveleta and Rosario, all in Cavite province.
Metro Pacific Investments Corp., which has majority stake in Maynilad, is one of three Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT, Inc.
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has interest in BusinessWorld through the Philippine Star Group, which it controls. — Victor V. Saulon

Stocks to move sideways ahead of Q2 earnings

By Arra B. Francia, Reporter
THE Philippine Stock Exchange index (PSEi) is likely to continue trading sideways this week as investors anticipate second-quarter results that could push trading volume higher.
The bellwether PSEi dropped 0.64% or 46.86 points to end at 7,186.71 on Friday following the release of inflation data for June, which turned out to be much higher than expected.
The Philippine Statistics Authority reported that inflation picked up to 5.2% last month, a fresh five-year high that beat the local central bank’s estimate range of 4.3-5.1% and the Department of Finance’s 4.9% estimate, as well as the 4.7% median in a BusinessWorld poll.
On a weekly basis, the index ended 6.97 points lower or 0.10%, with the industrial sector losing the most at 0.80%, versus the 1.6% gain of the services counter. Turnover slowed to P4.92 billion on average per day, lower by 22% from the week before.
“We started the month slow ending almost unchanged from the close in June. However, the index held support at 7,150 which is impressive despite the very low trading volume that we saw this week. Based on the technicals, the index will continue to trade sideways,” Eagle Equities, Inc. Research Head Christopher John Mangun said in a weekly market note.
Given higher inflation, online brokerage 2TradeAsia.com said people will be tightening their belts or at least cut back on non-essentials. This should prepare investors to put their money in assets with “good inflation hedge.”
“In equities, these are common in real estate assets and companies with solid recurring income sources… While controlling inflation rests on the hands of competent economic managers, it would be best to stay defensive by carefully selecting stocks anchored on business models where demand is supported,” 2TradeAsia.com said in a weekly market note.
Sectors with such demand include food and beverage, telco services, utilities, and fuel.
Philstocks Financial, Inc. said last week that good companies to invest in would be those with strong leasing income streams, such as SM Prime Holdings, Inc., Ayala Land, Inc., Megaworld Corp., and DoubleDragon Properties Corp.
Abroad, leads include developments on the trade war between the United States and China. While analysts noted the trade war has no direct impact on Philippine exports, it still continues to weigh on investor sentiment.
“All told, investors are simply scouting for opportunities to re-enter once negative headlines are fully absorbed. In the meantime, eyes are on first-half results and whether listed firms remain on track with their second-half prospects,” 2TradeAsia.com said.
Eagle Equities’ Mr. Mangun placed the index’s immediate support at 7,070, with resistance at 7,340.
“It’s all going to come down to volume, if we see more volume come in then we may end higher but if we get another low-volume week then we will see it come down even further,” Mr. Mangun said.

Heavily weighted items push inflation further away from target

How PSEi member stocks performed — July 6, 2018

Here’s a quick glance at how PSEi stocks fared on Friday, July 6, 2018.

NEDA rules out proposal to increase cash transfer payouts

THE NATIONAL Economic and Development Authority (NEDA) ruled out a legislator’s proposal to increase the monthly unconditional cash transfer (UCT) for poor families affected by the tax reform law.
“It’s kind of a quantum leap,” Socioeconomic Planning Secretary Ernesto M. Pernia told reporters during an inflation briefing last week, when asked whether he is open to raising the UCT to P500 a month from the current P200.
Representative Michael L. Romero of the One Patriotic Coalition of Marginalized Nationals (1-PACMAN) party-list said in a June 24 statement that he will file an amendment to Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion law (TRAIN), amid the rising price of basic commodities.
Inflation hit 5.2% in May, with a five-month average of 4.3% — breaching the government’s 2-4% target.
The TRAIN law grants a P200 per month UCT for the first to seventh income decile, which will increase to P300 per month next year until 2020.
NEDA Undersecretary Rosemarie G. Edillon said: “The more robust solution is to increase production, increase capacity, production capacity. So if you intervene of the side of the transfers, then we miss out on initiating what is supposed to be the robust medium- and long-term solution. And that is what we want to happen.”
“We have a stopgap, but at the same time, we’ll put in the measures that are necessary for the more robust expansion of capacity and expansion of production. And that is why we are using the additional revenue from TRAIN for the ‘Build, Build, Build,’ for human capital investment,” she added.
The government’s economic managers said that the high-inflation environment is “temporary,” as it is driven by the rise in world oil prices and a weaker peso, along with a spike in demand as the economy grows.
They forecast inflation to average between 4-4.5% for 2018.
They are also largely banking on the passage of the Agricultural Tariffication bill — currently pending in Congress — to combat rising inflation.
Economic managers expect inflation to peak in the third quarter and taper off by October, and that it will return to the 2-4% target band by 2019.
Some 30% of revenues from the TRAIN law are to be spent on social mitigating measures. Apart from the UCT, the TRAIN law also mandates the distribution on fuel vouchers to jeepney drivers and operators — targeted to be released this month — fare discounts in public transportation, discounted prices for National Food Authority rice, and technical and vocational skills training. — Elijah Joseph C. Tubayan

PEZA banking on LGU support for exemptions from TRAIN 2

THE Philippine Economic Zone Authority (PEZA) said it hopes to attract more new investment this year, citing support from local government units (LGUs) to exempt the investment-promotion agency from the effects of the second round of tax reform.
“I am still very optimistic,” PEZA Director-General Charito B. Plaza told reporters on Friday when asked on her outlook for investment this year.
Investment pledges received by PEZA stood at P30.72 billion in the six months to June, down 40.2% year-on-year.
“I am happy that the local authorities, the Union of Local Authorities of the Philippines (ULAP)… passed a resolution, a strongly worded resolution which says they are appealing to the president and congress to exempt PEZA from the TRAIN 2,” Ms. Plaza added, referring to the second round of tax reform, known by the acronym TRAIN for Tax Reform for Inclusion and Acceleration.
“[T]his is the first time that the LGUs have learned about the program of PEZA. That we are giving incentives. They want to have a share of this spreading of jobs so they can also be ready to be federal states,” she added.
TRAIN, which took effect this year, reduced income taxes but imposed new excise taxes on diesel, liquefied petroleum gas, kerosene and bunker fuel for electricity generation.
TRAIN 2 seeks to reduce corporate income tax rate, while rationalizing the fiscal incentives system, creating uncertainty over the status of privileges enjoyed by economic zone locators.
The measure will cut the preferential corporate income tax rate to 15% from 30% but will replace the 5% perpetual gross income earned tax enjoyed by enterprises inside the PEZA ecozones.
Ms. Plaza, however, noted that locators have not shut down due to these uncertainties and have been taking a wait-and-see approach. — Janina C. Lim

DTI wary of price spike in canned meat if tariffs revert to old level of 40%

PRICES of canned meat could rise by about 25% should mechanically deboned meat revert to higher import duties, according to the Department of Trade and Industry (DTI).
“Looking into what’s best for the country and people, we should really keep the tariff at 5%. If not, we will all see higher major costing for the basic canned meat products that will push up prices of a basic commodity consumed by the mass-based market…” Trade Secretary Ramon M. Lopez told reporters in a mobile message over the weekend.
“My rough estimate, if the tariff goes up to 40% from 5%, costs and price of canned products will go up by around 25%. Assuming a P25 canned meat product, the price can go up to P31. We should not allow this thing to happen,” he added.
This estimated hike is due to the absence of local supply for mechanically deboned meat.
Price pressures on a basic commodity like canned goods are politically sensitive because of the impact on inflation.
Inflation in June spiked to 5.2%, the highest level in five years, exceeding expectations of both government and market analysts.
He said 40% tariffs will be “unfortunate” for manufacturers, who will bear the brunt of higher duties on one of its main ingredients, and ultimately force consumers to bear any added cost.
“Manufacturers may leave or reduce operations, leading to job losses,” he said, noting that it may be preferable for them to operate overseas and export products to the Philippines.
He added there is no evidence to blame manufacturers for causing inflation pressure, as prices of their products have been stable.
The DTI has long called for the current 5% duty levied for mechanically deboned meat imports to remain in place permanently even after a tariff regime is imposed on rice.
The tariff on mechanically deboned meat was supposed to revert to its original level of 40% since the commodity was among those offered at 5% in exchange for extending the quantitative restriction (QR) regime on rice.
The Philippines failed to legislate rice tariffs in time for the QR expiry, and economic managers instead, extended the validity of the QR waiver.
This allowed trade partners to continue bringing in some products at low tariff rates while the country was given more time to fulfill its commitment to the World Trade Organization.
The DTI’s position may not sit well with meat producers who have been lobbying for the imposition of higher tariffs on mechanically deboned meat to do away with technical smuggling. They claim that prime meat products are being misdeclared as mechanically deboned meat to take advantage of lower tariffs. — Janina C. Lim

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