Tax court upholds airline’s P169M refund

May 28, 2018 | 12:04 am

THE Court of Tax Appeals (CTA) en banc has upheld two rulings that awarded Air Philippines Corporation (APC), otherwise known as PAL Express, separate tax refunds amounting to P169,187,010.61 over excessive excise taxes paid for its importation of Jet A-1 juel used in domestic operations in 2006 and in 2008.
The first decision promulgated on May 21 and penned by Associate Justice Catherine T. Manahan dismissed for lack of merit the petitions for review filed by the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BoC) that sought to reverse a June 10, 2016 decision and an Oct. 4, 2016 resolution that awarded APC a P94,689,001.50 refund.
On the same day, another decision penned by Associate Justice Cielito N. Mindaro-Grulla denied a similar petition for review filed by the same agencies that sought to dismiss an Amended Decision dated July 1, 2016 and a resolution dated Oct. 10, 2016 that granted APC’s P74,498,009.11 refund.
The two agencies pointed out in the first decision, among their many arguments, “APC is not exempt from the payment of excise taxes on its importations of Jet A-1 fuel” and that “APC failed to adduce proof of compliance with the conditions requried to avail of tax exemption.”
They also argued that, “APC failed to prove that the imported Jet A-1 fuel (was) actually used for its transport and non-transports operations.”
In response, APC said in both decisions that the issues the two agencies raised werea mere rehash of their previous arguments.
It was also cited as saying in the first decision, “it is entitled to the same tax treatment or terms as PAL (Philippine Airlines,) whose favorable tax treatment is recognized by the BIR and the Supreme Court” and that “it sufficiently established compliance with the requisites for tax exemption.”
Under Presidential Decree (PD) No. 1590, PAL is entitled to excise tax exemptions on imported jet fuel.
Meanwhile, APC said in the second decision, “the price of locally available fuel was completely unreasonable compared to the price of imported fuel,” thus justifying its importation.
The court, persuaded by APC’s arguments, said in the first decision, “the arguments raised by the (BIR) and (BoC) are a mere rehash of their respective arguments before the Court in Division and which have been exhaustively passed upon and resolved by said Court in Division.”
It explained: “Considering that PAL continues to enjoy the tax benefits under Sec. 13 of PD 1590,…APC shall also be entitled to the exemption from all taxes due on importations of aviation fuel provided it meets the requirements therefor.”
On the issue of fuel availability and pricing raised by the BIR in the second decision, the court said, “APC was able to prove that the price of locally available supply in the Philippines (is) reasonable.”
The court also upheld in the first decision its earlier conclusion that APC was able to prove that the fuel was used for its operation. — Dane Angelo M. Enerio

Indonesia plans to roll out 25% biodiesel rule from 2019

May 28, 2018 | 12:03 am

JAKARTA — Indonesia will make it mandatory for biodiesel to have a bio-content of at least 25% from 2019, an energy ministry official said on Thursday, as the country pushes to boost local consumption of palm oil.
New and Renewable Energy Director Rida Mulyana sent a text message saying the policy would start in 2019 in response to questions on the matter from Reuters.
Indonesia is the world’s top producer of palm oil, the raw ingredient for fatty acid methyl ester (FAME), which can be used to make biodiesel.
Mulyana later said he estimates the B25 program, for which guidelines are currently being discussed by the energy ministry, would bring Indonesia’s FAME consumption to between 5.5 million and 6 million kiloliters (kl) in 2019. That would be more than double the last year’s consumption of FAME.
The government is pushing to increase domestic biodiesel usage to reduce oil imports and soak up excess palm oil supply. It is also considering expanding mandatory biodiesel use to include trains and the mining sector.
Rules introduced in 2015 require a 20% bio-content in biodiesel for land transportation from January 2016 to January 2020, after which a 30% bio-content would be mandatory.
Fadil Hasan, Executive Director of the Indonesian Palm Oil Association (GAPKI), said the B25 mandate would require the additional production of 750,000 kl of FAME annually.
Last month, Mulyana said Indonesia was targeting consumption of between 3.28 million and 3.52 million kl of FAME this year, up from 2.57 million kl in 2017.
Indonesian palm oil producers are facing increasing pressure in markets such as Europe due to concerns over environmental damage related to deforestation.
In the United States, Indonesian biodiesel faces steep anti-subsidy measures, as well as anti-dumping duties. — Reuters

Players look for signals amid Q1 market volatility

May 28, 2018 | 12:03 am

By Lourdes O. Pilar, Researcher
UNCERTAINTY may once again be the theme for 2018 as developments at home and abroad in the first quarter sent local financial markets on a spin.
In the first quarter, the Philippines saw Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion Act (TRAIN) taking effect in January. The law, which was passed last December 2017, effectively reduced income taxes of almost all of the country’s taxpayers, but also levied additional taxes on products that include sugar-sweetened beverages, cigarettes, fuel and cars.
The passage of TRAIN was met with good news by the market, as they now anticipate higher government spending on infrastructure. The recently enacted tax reform is expected to fund 25% of the government’s P8.4-trillion infrastructure spending program.
This bullish sentiment showed in the stock market. In January, the Philippine Stock Exchange Index (PSEi) breached the 9,000-point mark, making nine record-highs in the month alone.
The euphoria, however, was short-lived as concerns over the faster-than-expected domestic inflation and perceived high stock valuations sent the index crashing below the 8,000-level. Adding to the volatility are the timing of interest rate hikes in the Philippines and the US as well as the looming trade tensions between the US and China.
“Amid concerns over the uptick in inflation and the economy overheating, most investors have remained on the sidelines in the local bourse…,” said Zeno Ronald R. Abenoja, senior director at the Bangko Sentral ng Pilipinas’ (BSP) Department of Economic Research.
Mr. Abenoja added that investors during the quarter were pricing in a rate hike by the BSP at its monetary policy meeting in May, of which the central bank eventually did.
The increase in May marked the BSP’s first tightening move in nearly four years, raising borrowing costs by 25 basis points (bps). At the new settings, rates now stood at 3.75% for the overnight lending rate, 3.25% for the overnight reverse repurchase rate, and 2.75% for the overnight deposit rate.
Prior to raising rates in May, the BSP kept policy rates unchanged during its February and March monetary board meetings although it announced a reduction of banks’ reserve requirement ratios by a percentage point starting March.
Jitters were also felt in the money and bond markets as the peso depreciated for much of the quarter while bond yields increased.
The same three months brought the value of the peso down with the currency averaging P51.43-to-a-dollar in the first quarter of 2018, according to BSP data. After starting the year at the P49-per-dollar level, the peso slipped to an 11-and-a-half-year low at P52.45-per-dollar in February. The peso’s performance in March rebounded somewhat, averaging P52.07-per-dollar.

The end of the first quarter brought the peso-dollar exchange rate to P52.16-per-dollar, depreciating by 4.28% during the period from December 2017’s closing rate of P49.93-per-dollar level.
“This is in contrast with the strengthening of most Asian currencies during the period,” the BSP noted in its quarterly inflation report with other exceptions being the Indian rupee, Indonesian rupiah, and the South Korean won.
Guian Angelo S. Dumalagan, market economist at the Land Bank of the Philippines (LANDBANK), said that the largely hawkish statements from the US Fed officials, the US-China trade war and “generally upbeat” US labor and employment reports “have weakened the local currency by igniting fears of four US rate hikes this year.”
The same sentiment was echoed by Michael L. Ricafort, economist at the Rizal Commercial Banking Corp. (RCBC): “Since the start of 2018, peso-to-dollar exchange rate has gone up already by about 4%, while other Asian currencies have ironically declined by 2-4%,” he said.
Meanwhile, in the local bond market, investor demand for government securities stayed robust based on oversubscriptions in the Bureau of Treasury’s auctions during the quarter. This reflected the market’s cautious sentiment amid the uncertainty in both the Philippine and US central bank’s direction on monetary policy.
For instance, the primary bond market saw average yields for the 91-, 182-, and 364-day Treasury bills (T-bills) in the three-month period increase to 2.637% (from 2.034% in the previous quarter); 2.813% (from 2.497%); and 3.088% (from 2.878%), respectively.
With the exception of the 6-year Treasury bond, yields for debt papers in the secondary market also increased relative to rates in the fourth quarter of 2017, with yields higher by a range of 4.3 bps for the 1-year T-bills to around 145.9 bps for the 20-year Treasury bonds compared to last year.
“Philippine bond yields followed the same trend as the dollar-peso exchange rate in that yields climbed initially before consolidating in March 2018… After rising in January and February, yields lost some momentum in March 2018 after the BSP affirmed the appropriateness of its policy settings, despite higher domestic inflation,” LANDBANK’s Mr. Dumalagan said.
MORE VOLATILITY AHEAD
Locally, inflation will continue to remain a downside risk for economic growth.
“[T]he BSP believes that a timely increase in the policy interest rate will help arrest potential second-round effects by tempering the buildup in inflation expectations. Moreover, the BSP observed that strong domestic demand allows some scope for a measured adjustment in the policy rate without adversely affecting the country’s economic growth momentum,” BSP’s Mr. Abenoja said.
Ruben Carlo O. Asuncion, chief economist at the Union Bank of the Philippines (UnionBank), concurred: “Upward pressure on inflation or price level will continue to persist due to TRAIN law effects and other supply-side issues. However, this is seen as transitory and temporary due to the structural changes implemented through TRAIN,” he said.
For LANDBANK’s Mr. Dumalagan, economic data on the Philippines and the US, especially that on inflation “warrants attention… since they may further fuel speculations of more tightening moves from either the BSP or the US Fed.”
Besides domestic inflation, BSP’s Mr. Abenoja said investors should also keep an eye on external developments, citing the protectionist policies by the US and China, the geopolitical tensions over Syria, and the pace of tightening by the US Federal Reserve.
The US and China have been imposing tariffs on each other’s goods since March, triggering fears of a looming trade war that has unsettled financial markets worldwide. Following the decision to impose higher rates on Chinese imports of aluminum and steel, China has responded with a $3 billion worth of tariffs on US fruits, nuts, pork and wine.
“While latest indications are that the Trump Administration is looking to negotiate with China on trade, the prospect of trade restrictions and counter-restrictions have undermined investor confidence and growth prospects,” Mr. Abenoja said of the US-China trade war, adding that an increasing preference towards protectionism by the US “would have painful ramifications for emerging markets.”
Meanwhile, he pointed out the volatility in other stock markets amid fears that the US Fed might quicken its pace of tightening to curb inflation.
“The surge in US jobs growth and wages in January pointed to quickening inflation during the early half of February. Mid-month, reports of a higher-than-expected 2.1% US inflation in January and the slightly hawkish tone of minutes of the January meeting, combined with rising US Treasury yields, prompted caution across global markets,” Mr. Abenoja said.
So what’s next for financial markets? Below are the forecasts made by the economists interviewed.
FIXED-INCOME SECURITIES
BSP’s Mr. Abenoja: “[B]ond prices are expected by the market to fall, on continued expectation of faster policy rate hike adjustments by the US Fed. The Fed has forecasted as much as four rate hikes for 2018 on the account of strengthening economic activity in the US. Consequently, capital flow reversal could dampen investments in fixed-securities in the Philippines.”
LANDBANK’s Mr. Dumalagan: “Yields are expected to rise continuously in response to higher inflation and rate hike expectations. For this reason, fixed income securities may register wider mark-to-market losses. There might be heavier demand for shorter-dated notes, as these securities are less price sensitive to rising interest rates.”
Jose Mario I. Cuyegkeng, ING Bank senior economist: “We expect the market to recover once inflation slows and as government slows financing. But near term consolidation is likely in the meantime until cues over inflation and government financing needs turn more favorable in third or fourth quarters.”
RCBC’s Mr. Ricafort: “Upward trend in yields [is] still intact (could still go up), [which is] partly a function of local inflation (recently at new 5-year highs) and how US government bond yields fare as a function of future Fed rate hikes.”
UnionBank’s Mr. Asuncion: “The upward pressure on yields is mainly due to inflation expectations by the market. The level of prices is expected to remain elevated in the coming months until about all of the first half of 2018 and will consequently keep upward pressure on yields.”
EQUITIES
BSP’s Mr. Abenoja: “While the BSP remains optimistic that headline inflation will settle to average within the target range in the last quarter of 2018 (and moderate further in 2019), the continued uncertainty about trade policies and geopolitical tensions overseas is expected to continue to cast a shadow over the equities market and keep investors on edge. Moreover, the PSE has also recently announced its withdrawal from its initial plan to integrate the equities market with fixed income exchange that would have boosted sentiments with the launch of new products and services.
“Moving forward, the market is expected to continue to consolidate amidst lingering geopolitical and trade tensions abroad, and in the absence of fresh leads or new catalysts. Positive earnings of listed firms and higher economic growth for the first-quarter could provide the market a much needed boost.”
LANDBANK’s Mr. Dumalagan: “Equities are expected to remain volatile in 2018, even as they might bounce back towards the end of the year amid prospects of an infrastructure-led growth. Geopolitical concerns and shifting rate hike views would drive volatility, although expectations of stronger domestic economic activity would provide an overall upward momentum in the latter part of the year.”
ING’s Mr. Cuyegkeng: “Recent weakness open up good value for investors. If our view of slowing inflation and lower market rates is realized during the year, there is reason to expect a recovery in the local equity market.”
UnionBank’s Mr. Asuncion: “A recovery is expected in a short amount of time. [The] higher-than-expected inflation and weaker peso are not enough reasons to cause a bear market.”
PESO-DOLLAR EXCHANGE RATE
BSP’s Mr. Abenoja: “Over the policy horizon, the peso is expected to be supported by good macroeconomic fundamentals. The expected growth in foreign exchange inflows from overseas Filipino remittances and business process outsourcing revenues (in 2018 by 4% and 10%, respectively); and sustained inflows from foreign investments, tourism receipts, as well as the ample level of the country’s gross international reserves, are expected to support the peso.
“Likewise, business and investor confidence, as reflected in the recent Fitch Ratings’ upgrade of the Philippines’ investment grade score to ‘BBB,’ should continue to provide stability to the peso.”
LANDBANK’s Mr. Dumalagan: “The dollar-peso exchange rate is expected to remain volatile this year due to geopolitical concerns and changing rate hike expectations. While the peso may remain weak until mid-year, it could recover towards the end of 2018, as the government’s aggressive infrastructure spending starts to exert a stronger boost to economic growth, complementing the impact of the recent cut in personal income taxes.”
ING’s Mr. Cuyegkeng: “Moderate weakness before modest strengthening by the end of the year is likely. The underlying US dollar demand from imports for a domestically driven economy remains strong…”
RCBC’s Mr. Ricafort: “[The foreign exchange will be around the] P51- to P52-per-dollar levels, up vs. P49.93 in end-2017, as the peso exchange rate is partly a function of the trade deficit data. Relatively wider trade deficits compared to recent years have led to higher US dollar/peso exchange rate in recent months.”
UnionBank’s Mr. Asuncion: “The downward pressure on the peso is expected to continue as import demand increases due to increasing investments, both public and private ones.”

It all started with a waste bin

May 28, 2018 | 12:03 am

ON ANY ordinary day, people from around the globe travel to Copenhagen to buy a product that is well-known for its unique stylish design and its versatility. The product is not a luxury watch nor car, but simply, a waste bin.
In 1939, in the small Danish town of Randers, lived Marie Nielsen, a hairdresser who asked her metalsmith husband Holger to create a device that would be useful for her salon. With no background in design, Holger relied on his expertise as a metalsmith which lead to the creation of neither a hot oil treatment machine nor a curling iron, but the first pedal-controlled waste bin.
The waste bin, which was initially made without the intention of selling it, became popular among clinics, and led to the birth of the Danish design brand, Vipp.
Today the brand has expanded its collection beyond the waste bin to include home appliances and accessories.
With the aim of expanding the brand’s accessibility, Vipp found a local partner in Mattony, Inc., a furniture merchandiser and subsidiary of Noble House Distribution Enterprise Inc., which paved the way for the launch of Vipp’s first concept store in Asia at the 2^nd floor retail area of Shangri-la at the Fort Bonifacio Global City, Taguig.
“[Our brand DNA] is very much founded on the bin and the fact that it was basically just a tool [for a hair salon]. It’s also based on the material and craftmanship that Holger [Nielsen] used,” Vipp chief designer Morten Bo Jensen told BusinessWorld at the launch, stating that Vipp’s products, mainly made of steel and rubber, “carry the DNA of the original bin.”
THE PRODUCTS
The pedal-controlled waste bin, kitchen and bedroom appliances, and lighting fixtures are among the products available at the showroom.
The waste bin, originally designed with a slightly pointed steel lid, now has a dome-shaped lid for the kitchen, bathroom, and office. According to Mr. Jensen, the bin is equipped with an oil damper underneath which allows for the slow and silent closing of the lid. The bins are available in black and white.
The Vipp kitchen, designed in 2013, is made of stainless steel and has three components — the kitchen island, wall module, and tall module. The countertop is made of 4mm solid stainless steel with an integrated sink and water tab, and the drawers are equipped with rubber plated handles. The kitchen is available only in black.
The powder-coated steel lighting fixtures — floor, desk, and wall lamps, and a light pendant — are equipped with movable arms and have a minimum of 3,997 perforations (depending on lamp size) of the shade for light diffusion.
VERSATILITY OF DESIGN
For the past 79 years, Vipp has been committed to manufacturing products that would last many years and not go out of style.
“Often, [we] talk about design as how things look only. It’s also about the experience, usability, and functionality. Style is more a type of interior setting. I think it’s important to not make conclusions that a certain style is to be mixed with something more of the same style,” Mr. Jensen said about the difference between style and design.
Notable characteristics of VIPP products are their minimalist and monochromic style, “Certain colors are really related to certain trends. Color schemes change all the time. By picking black as the main color of our products, we think we have chosen a color that ensures that in 20 years, you are not [going to] disregard your kitchen due to a color that was fashionable,” Mr. Jensen said on going against trends.
Mr. Jensen stressed that the brand gives value to a user’s interaction with the product by designing them with specific “touch points.”
“We’ve decided to stay so close to our mechanical approach to things. It’s [really] about finding the essence of the product that creates value on a daily basis,” he said. — Michelle Anne P. Soliman

RCI may revive plans for solar power plant

May 28, 2018 | 12:03 am

ROXAS and Company, Inc. (RCI) may revisit its plan of building a 50-megawatt solar power plant some time this year, a top official said.
“We revisit it once or twice a year. So toward the third quarter, we can look at it and see if we should consider it or if we will again (delay),” RCI President and Chief Executive Officer Fernando L. Gaspar told reporters on the sidelines of the company’s annual shareholders’ meeting in Makati last week.
The holding firm of the Roxas family first announced its plan to build the solar facility in April 2015, with a total investment of P1.7 billion. The plan has yet to push through, as the company focused on reorganizing and increasing efficiencies in its existing businesses.
The project will be located in Nasugbu, Batangas, where RCI has a land bank of around 2,500 hectares.
Mr. Gaspar noted that investing in a solar power plant now is starting to “come together” for the company.
“The cost of investment for solar is going down, and the price that we could sell it at is beginning to stabilize so this is coming together, it’s just a question of when. How long? It’s hard to say at this point,” Mr. Gaspar said.
“We’re doing so many start-ups… We have to focus on what we have,” he added.
RCI is currently focusing on its property and coconut processing businesses, which are expected to be the main growth drivers in the following years.
The company’s coconut processing facility stands on a 21,945-square meter land in Tupi, South Cotabato. It has a daily capacity to process 300 metric tons of raw coconut for the production of coconut milk, coconut cream, virgin coconut oil, and coconut water concentrate. All these products exported.
For the property segment, RCI is expecting more revenues from the sales of rooms in its Anya Resorts project in Tagaytay. The company is also expanding its franchise of Go Hotels, the homegrown hotel brand of the Gokongwei family. It plans to add 15 more Go Hotels in the next six to seven years, from its current network of five hotels.
The company swung to a net loss attributable to the parent of P33.6 million in the first three months of 2018, versus an attributable profit of P15.5 million in the same period a year ago. Revenues clocked in a 27% increase to P137 million.
Shares in RCI went down six centavos or 2.33% to close at P2.52 each at the stock exchange on Friday. — Arra B. Francia

Loans to small firms surge to P4.6B in 2017

May 28, 2018 | 12:03 am

BSP bldg — APPROVED LOANS to small businesses hit P4.6 billion in 2017, according to the central bank.

By Melissa Luz T. Lopez, Senior Reporter
LOANS GRANTED to small-scale firms surged in 2017 as the central bank relaxed rules on pricing risks and as more credit surety fund (CSF) groups were created during the year.
Data from the Bangko Sentral ng Pilipinas (BSP) showed that approved loans to small businesses reached P4.586 billion as of end-2017 via CSF cooperatives. This showed a 41% jump from the P3.253 billion of accumulated CSF credits in 2016.
Of the amount, P4.316 billion has been released to 17,169 beneficiaries as of December.
The central bank’s CSF program provides alternative collateral for micro, small, and medium-scale enterprises (MSMEs) by organizing them into cooperatives with a pooled fund. CSF units then serve as guarantors for its member businesses and non-government organizations as they apply for credit lines from banks, in order to improve their chances of securing loans.
A firm can incur a loan worth as much as 10 times the amount which they poured into the surety fund, with the minimum placement set at P100,000.
The central bank relaxed banking rules covering small business loans underwritten by CSF cooperatives last year. BSP Circular 979 assigned a 20% risk premium to CSF credit, a substantial drop from a 75% weight assigned to debts extended to MSMEs.
Implementing rules for Republic Act (RA) No. 10744 which made permanent the CSF system also took effect in October 2017, which brought the BSP and the Cooperative Development Authority together in assisting and organizing small firms into formal entities.
The year 2017 also saw six new CSF cooperatives established in San Fernando, La Union; Tacloban City, Leyte; Mandaue City, Cebu; Sta. Rosa Laguna; Dinagat Islands; and Batangas. This brought the program’s reach to 32 provinces and 19 cities, the BSP added.
RA 9677 or the Magna Carta for MSMEs require banks to set aside a tenth of their loanable funds for small businesses. In particular, lenders must allot 8% of its total loan portfolio for micro and small firms, while 2% should be allotted for medium-sized companies.
Despite this rule, banks have been reluctant to lend to the sector given the perceived risks, with the bigger players opting to pay fines instead.
Total loans extended by Philippine banks to MSMEs reached P537.638 billion as of December, short of the P643.826 billion required of them under the 10% rule set by law.

Agriculture exports to be driven by improved supply, logistics

May 28, 2018 | 12:02 am

THE agricultural sector needs to reach a point where supply is reliable and consistent before it can service the export market, food and export industry officials said.
Roberto C. Amores, president of the Philippine Food Processors and Exporters Organization, Inc. (Philfoodex), said at the International Food Expo (IFEX) that achieving a surplus in produce is a prerequisite, not just by addressing the production side but also logistics.
“You’ve seen (Agriculture Secretary Emmanuel F.) Piñol’s presentation, showing what can be done in order to improve our supply base directed towards self-sufficiency,” he said.
“Now the main concern the agribusiness section is looking at is supply. Supply needs to be available, consistent and competitive.”
The Department of Agriculture (DA) presented its 10-point agenda at during the opening of IFEX.
The “key strategies” include infrastructure such as ice plants to reduce the 40% loss in the marine catch and solar irrigation facilities to increasing easy-access credit while phasing out subsidies.
“You cannot do expansion of exports unless you are self-sufficient in your materials. After self-sufficiency, you should go moving forward to a surplus where you can really realize exports,” Mr. Amores said.
Philippine Exporters Confederation, Inc. President Sergio R. Ortiz-Luis, Jr. said the Department of Trade and Industry (DTI) has been continuously seeking new markets despite the supply problems.
“There are certain products in demand which we cannot supply,” he added.
Mr. Ortiz-Luis said that with the DA’s financing programs and the administration’s big infrastructure push, he expects agricultural exports to grow.
“Certain quarters (are slow) but we really hope that in the third and the fourth quarter, it will improve a little,” he added. — Anna Gabriela A. Mogato

Of millennials and banking

May 28, 2018 | 12:02 am

By Karl Angelo N. Vidal, Reporter
AT TIMES, finding time to do mundane tasks such as paying bills or transferring funds to loved ones could be challenging. In doing so, one has to line up in kilometric lines in banks or payment centers, resulting in foregone time that could have been spent on doing something else.
Thanks to mobile banking, one has the option to do these things on a few taps and clicks.
“Mobile banking kind of streamlined the way I run errands because I can instantly pay my bills with just a click, and I can transfer funds without having to go and line up in a bank,” said Marcelli Q. Papas, a multimedia producer.
“I also monitor my investments online, because the bank has a portal for it that I can check every once in a while,” she said.
Ms. Papas is only one of larger demographic called “millennials” taking advantage of mobile banking. And just recently, this technology received an update by introducing near real-time fund transfers from one bank to another financial institution.
But the 21-year-old multimedia producer is also wary of the risks that comes with using the platform.
“I think user-friendliness and privacy measures are needed to be improved to enhance mobile banking not just among millennials like me, but also to older markets as well,” said Ms. Papas.
“User-friendliness of banking apps and portals can help streamline user experience, making processes more understandable.”
Ms. Papas also said that financial institutions should also make it secure and updated, giving “customers peace of mind when it comes to the digital security of their money and other private information.”
For most who loath to bring money, or shop mostly online, mobile banking is a joy to use.
The latest technology boom in recent years has played a key role in shaping up the behavior and attitude of millennials. Unlike the previous generations, this generational gap has been magnified as millennials were brought up at the time where computers, mobile phones, and the Internet were becoming more accessible.
These technological advances consequently led to the desire for swift and seamless transactions, leading players in various industries to find new ways to do business and attract these “digital natives.”
The banking industry is no exception to this gradual shift to doing business in the digital space.
“This generation were born [at the time] when the Internet is booming,” Abigail Marie D. Casanova, consumer business and operations group head of Security Bank Corp., told BusinessWorld in an interview.
“What is the behavior when the internet is gaining popularity? Everything becomes instant. Most of the things are instant, fast and online.”
Banks could not afford to miss out on tapping the millennial market segment. In the 2017 Digital Banking Consumer Survey conducted by PricewaterhouseCoopers (PwC), 82% of smartphone users aged 18-24 use mobile banking regardless of income level. The same research also noted that consumers who use only digital channels jumped to 46% last year from 2012’s 27%.
As the demand for digital channels continues to grow, banks lean on the said platform to reach younger customers.
“With online and mobile banking, you can now do transactions that you normally would go to the bank with your phone. What can you do? You can do payments, you can pay your cards, you can pay bills, you can do e-gifts,” Ms. Casanova added.
Banks have likewise cited the Bangko Sentral ng Pilipinas’ (BSP) initiatives in enabling them to conduct digital banking, and therefore reaching out to millennials, easier.
Joseph Albert L. Gotuaco, retail banking head of Bank of the Philippine Islands (BPI), said that the central bank has been “very receptive” to the idea of digital banking, citing the National Retail Payment System (NRPS) initiative as an example.
“In fact, I would say it’s the other way around: the BSP has helped us with innovation,” Mr. Gotuaco said.
Unveiled in 2015, the NRPS is poised to steer financial transactions gradually from cash and cheques to electronic fund transfers. As a result, merchants and suppliers will be able to collect payments real-time and workers will receive their salaries either through automated teller machines (ATMs) or mobile wallets.
“We take NRPS very seriously because millennials want to do things quickly for them, and convenience is key. In fact, what is important to us is to make banking possible without [them] coming to the branch,” BPI’s Mr. Gotuaco said.
For her part, Security Bank’s Ms. Casanova cited the central bank’s plan to allow financial institutions to conduct client identification and verification through electronic means, making the opening of accounts and loan applications easier.
“This will be helpful such that we no longer have to see or do face-to-face KYC (know your customer)… [A]n electronic KYC will be a substitute to it.”
‘WE GO WHERE THEY ARE’
The appeal for convenience led banks to get in touch with millennials through social networking sites to sell their products, link their clients to mobile and online banking services, and receive questions and complaints from customers.
“To engage the millennials, we go where they are. Where are they now? They’re on social media,” Ms. Casanova said.
Margarita B. Lopez, digital banking and operations group head of Rizal Commercial Banking Corp. (RCBC), concurred: “We go social, that’s essentially it. We go to YouTube to introduce banking products and its uses…,” she said.
Ms. Lopez has noted the importance of millennials in their business operations as they make up “about 50%” of their customer base.
One of the popular products millennials avail online are prepaid cards.
“Since they’re starting out, our millennial customers usually avail prepaid cards because they don’t have a lot of money — they still don’t have a credit line,” BPI’s Mr. Gotuaco said.
Prepaid cards, according to Mr. Gotuaco, are a big hit to the market segment since customers can avail of a card that can be used for digital payments without opening a savings account.
“A millennial will open a prepaid card mostly because they cannot open a bank account easily. You can use your prepaid card just as easily as an ATM card (Both of them are Visa or Mastercard). You can spend them in many different outlets,” he said, although he noted that BPI “tries to make it attractive for millennials to open an account.”
For RCBC, Ms. Lopez noted that it offers “virtual” prepaid cards, enabling customers to have prepaid banking accounts without the plastic card. These virtual wallets, she said, can be very helpful with how millennials manage their finances.
“We understand millennials want to enjoy their lives, but they should be cautious [with their money]…,” Ms. Lopez said.
“[W]e tell our young customers to set aside a little bit of their money, and then they can put the rest into their prepaid cards to be used for their lifestyle.”
COMPLEMENT
Despite the digital platform’s rising popularity, traditional banking still has its uses.
According to a report conducted by information technology firm Unisys Corp., younger Filipinos are less inclined to use artificial intelligence for online loan assessment, both for credit cards and home loans, than the other generations.
“Filipinos aged 18-24 are the least comfortable applying for a credit card online. This may seem odd for tech-savvy millennials, but it is likely because they have less experience with lending and so require more human interaction to answer questions and provide advise,” Richard Parker, vice-president for financial services at Unisys Asia-Pacific, said in a press conference last March.
In this case, the digital aspect of banking will serve as a complement to branch banking rather than a substitute.
RCBC’s Ms. Lopez explained that making transactions at the bank is still necessary when availing of “more complex banking products” such as loans and investments since it’s required by regulation.
BPI’s Mr. Gotuaco agreed, adding that BPI has adapted the so-called “omnichannel” strategy where digital platforms complement traditional modes of banking.
“We’ve created an online way of scheduling an appointment in the branch if you have a cheque you want to deposit into your account so you can leave right away without talking to anybody,” Mr. Gotuaco explained. “You don’t have to spend too much time inside the branch or step inside the branch too far to do that.”

Authentic signed sports memorabilia now available through HOFA

May 28, 2018 | 12:02 am

HOFA is specifically designed to cater to an “underserved” local market for authentic signed sports memorabilia.

FILIPINO sports memorabilia aficionados on the lookout for authentic signed items need not look further with the recent launch of online store Hall of Fame Authentics (HOFA).
Set up by collector friends Ron Uy, Stephen Songco, and Elvis Gutierrez, HOFA is specifically designed to cater to what the partners deemed to be an “underserved” local market for authentic signed sports memorabilia.
The online one-stop-shop (hofa.ph) was officially launched on May 23 at the NOVA Gallery in Makati and was greeted by much excitement by collectors.
“HOFA is a birthchild of my MBA. This was my final paper. I came up with a business plan for HOFA which I submitted in AIM (Asian Institute of Management). The professors looked at it and they said it is feasible and doable. So I made market research, industry analysis and all. I had a feeling it would click here so we came up with this,” said Mr. Songco in an interview with media on the sidelines of HOFA’s launch.
“In setting up HOFA, we partnered and submitted our business plan to Upper Deck, Steiner Sports, and other major sports companies in sports memorabilia. They saw there is a market here and that there is no one servicing that. Luckily we were given the approval to sell here in the Philippines. Buyers here can check it out that we are the authentic online sellers of these companies,” he added.
Mr. Songco further said that some of the items sold on hofa.ph come from their own personal collections but most are from their international partners.
“We are not just buying stuff out of the country and reselling them here. Whatever the retail price of an item that has Upper Deck on them, like say P100,000 landed price, we sell it here at P100,000. So we give buyers savings that way,” said Mr. Songco, adding that they are also offering flexible payment terms.
Basketball, baseball, boxing, football, golf, hockey, and football items are among those sold at HOFA.
Under basketball there are shoes, apparel, and gear by legends like Michael Jordan, Kobe Bryant, Kevin Garnett, and Wilt Chamberlain as well as those of still active players LeBron James, Kevin Durant, Russell Westbrook, and Ben Simmons.
Baseball has items from Ichiro Suzuki, Cal Ripken, Jr., Peter Rose, and Yogi Berra, among others, while boxing features items from the likes of champions Mike Tyson, Floyd Mayweather, Jr. and Manny Pacquiao.
INTERNATIONAL… FOR NOW
Mr. Songco said that in the absence of an authenticating company in the country, their roster of items for now features only international sports memorabilia, but having Filipino signed sports items is something they are not discounting selling down the line.
“For now, it is purely international sports memorabilia. We don’t have PBA (Philippine Basketball Association) or Gilas [Pilipinas] memorabilia yet because there is no company here that authenticates items. Unlike abroad, if you have a shoe signed by Jordan, Upper Deck authenticates it. Here there is no one who authenticates, say, PBA or Gilas items. And that is one market we feel is being underserved. But it’s something we are looking at down the line,” said Mr. Songco.
The same goes for having a physical store for HOFA items.
“No physical store for now because as we all know it’s (signed sports memorabilia) a niche market here in the Philippines. So we’re testing the water first and see how the market goes. And besides, everybody is online. Everything is online. It’s easier to do business there,” Mr. Songco said.
Mr. Songco said the memorabilia market is big in the country but the market for the signed items is something they want to elevate.
“There are a lot of collectors here but the thing about sports memorabilia is there is a little market that knows where to get signed ones. But the memorabilia market is big. It’s like buying a rare Jordan shoe or jersey. But the signed ones that is our target market,” he said.
“People need to be educated first of the potential of collecting signed sports memorabilia. They have to understand this is a good investment because the value of the items only appreciates. Worse case to happen is you break even,” Mr. Songco added. — Michael Angelo S. Murillo

Yields on gov’t securities drop on thin trading

May 28, 2018 | 12:02 am

By Jochebed B. Gonzales, Senior Researcher
DOMESTIC BOND yields fell on thin trading after the Bangko Sentral ng Pilipinas (BSP) trimmed bank reserve requirements by one percentage point, and amid stronger chances of a US rate hike in June.
Prices rose as yields on government securities declined by 19.58 basis points (bps) on the average week on week, data from the Philippine Dealing & Exchange Corp. as of May 25 showed.
“Activity was largely limited [last] week as the local bond market looked for movement from the release of the US FOMC (Federal Open Market Committee) meeting minutes that indicated a definite trend toward rates hiking but to a rather slower pace,” said Ruben Carlo O. Asuncion, chief economist at the Union Bank of the Philippines (UnionBank).
Minutes of the May 1-2 FOMC meeting released last week revealed the probability of a June liftoff increasing to 90% with staff projections suggesting that the US economy was expanding at an “above-trend pace.”
“People are really afraid to position right now, waiting what will happen to yields abroad,” said Reginald R. Reyes, trust trader at the Rizal Commercial Banking Corp.’s (RCBC) Trust and Investments Group.
He said trading last week was “very light” with market players being cautious of the developments in the US, including its trade war with China and uncertainty over talks with North Korea.
On the domestic front, the BSP’s announcement of a reduction in the reserve requirement ratio (RRR) by one percentage point to 18% next month drove yields lower towards the end of the week.
“Government securities [yields] were down by an average of 6-15 bps across the board with more emphasis on the short end after the surprise 1% RRR cut effective June 1, 2018 which is expected to release P90 billion of liquidity back into the market,” said Carlyn Therese X. Dulay, Head of Institutional Sales at Security Bank Corp.
“Market participants began to show better bids even after the Bureau of the Treasury (BTr) announced a new Retail Treasury Bond (RTB) with a tenor of three years to be auctioned off at the end of the month,” she added.
The government is looking to raise at least P30 billion via RTBs which will be priced on Wednesday. A public offering is expected to last until June 8 unless the BTr chooses to cut short the offer period.
At the secondary market on Friday, yields went down across all tenors except for the 20-year yield which gained 4.03 bps to 7.2921%.
The declines were led by the 10-year treasury whose yield shed 63.30 bps, closing with 6.1116%. It was followed by the four-year yield which lost 49.88 bps to 5.1887%.
The 182- and 364-day Treasury bills (T-bills) as well as the two-, three- and five-year bonds also saw double-digit decreases in yields, by 14.30 bps, 11.34 bps, 20.41 bps, 12.35 bps and 16.08 bps, respectively, finishing with 3.7710%, 4.0467%, 4.2522%, 4.6076% and 5.5069%.
Meanwhile, the 91-day T-bill and seven-year bond only dipped by 6.63 bps and 5.55 bps, respectively, to 3.3886% and 5.8445%.
“Market is seen to be taking in the RRR cut impact. Trading [this] week is expected to be muted with lack of domestic leads. However, external factors are seen to move markets,” said UnionBank’s Mr. Asuncion.
RCBC’s Mr. Reyes and Security Bank’s Ms. Dulay were also seeing market players on the sidelines for most of the week until the launching of the RTBs.
“It’s still going to be muted until the auction on May 30,” said Mr. Reyes.
For Ms. Dulay, “Expect yields to remain range-bound until the RTB is priced.”

Maynilad builds new central laboratory

May 28, 2018 | 12:02 am

MAYNILAD Water Services, Inc. is building a new structure to house an expanded “central laboratory” inside its La Mesa compound in Quezon City to monitor and test the quality of water supply within Metro Manila’s west zone, its concession area.
“Ensuring good water quality is of paramount importance to Maynilad. Hence, we continuously invest in our infrastructure to ensure that the water we deliver to our over 9 million customers is potable,” said Maynilad President and Chief Executive Officer Ramoncito S. Fernandez in a statement.
Maynilad said its central lab is equipped with state-of-the-art analytical instruments that allow its chemists to study compounds in the water samples drawn from over 1,000 sampling points throughout the west zone.
The new P70.4-million facility has the added capability to monitor more compounds that are part of the new quality parameters set by the Department of Health’s updated “Philippine National Standards for Drinking Water.”
Maynilad said the expanded central Lab could sustain its multiple accreditations. It obtained environmental laboratory accreditation from the Department of Environment and Natural Resources in 2015, and was conferred with the ISO 17025:2005 by the Department of Trade and Industry-Philippine Accreditation Bureau. It is also accredited by the Health department as a laboratory for drinking water analysis.
The company earlier said it is setting aside P9 billion this year for capital expenditures. Two-thirds of the capex or about P6.5 billion will be spent on the company’s infrastructure projects, while P1.7 billion will go to wastewater management projects to increase sewerage coverage and maintain network reliability.
Maynilad is an agent and contractor of Metropolitan Waterworks and Sewerage System (MWSS) for the west zone of the greater Manila area. Its coverage spans certain areas in Manila, Quezon City and Makati City. It also covers Caloocan, Parañaque, Las Piñas, Muntinlupa, Valenzuela, Navotas and Malabon.
Outside Metro Manila, the company covers 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

Single-day use contacts with moisture technology launched

May 28, 2018 | 12:01 am

THIRTY PERCENT of all people in the world are myopic — nearsighted — and by 2050, it is estimated that 50%, about 5 billion people, will be.
This according to data from the Brian Holden Vision Institute cited by Dr. Carmen Abesamis-Dichoso, former president of the Optometric Association of the Philippines and chairperson of Healthy Athletes Program of the Special Olympics Philippines, during a media launch on “Breakthrough Contact Lenses” on May 15 at BGC, Taguig.
Her presentation also showed that by 2020, an estimated 36.9 million Filipinos will be myopic. Myopia is a hereditary condition when one or both parents are also myopic.
With the increasing population of nearsighted patients, Alcon, an American eye care medicine and technology manufacturer, has developed Dailies Aqua Comfort Plus, one-day use contact lenses with blink-activated moisture technology. It claims that it is the first and only contact lens with the moisture technology (with moisture agents HPMC, PVA, and PEG) which provide comfort and cushioning effect. Patients as young as eight years old may use the product which may be worn up to 20 hours.
“A stable tear film is important for visual acuity, comfort, and a successful contact lens-wearing experience,” Dr. Dichoso was quoted as saying in a press release.
A clinical survey done in Italy, Spain, and Portugal showed that 78% of teenagers expressed an interest in wearing contact lenses, while 72% of parents agreed to teens wearing contact lenses.
Also present at the media launch were actress Dimples Romana along with her daughter Christiana, and athlete, TV host, and Dailies ambassador Gretchen Ho.
“Don’t be afraid to take that first step because you’ll never know what kind of life it might show you,” citing her experience as a volleyball player. “If there’s one thing I can’t live without it’s not my phone, [it’s would be] my contact lenses,” Ms. Ho said.
A 30-piece pack of Alcon Dailies Aqua Comfort Plus costs P1,495 and is available in leading optical clinics. Use upon advice of optometrist. For more information, visit www.myalcon.ph. — MAPS

1...12,53112,53212,533...14,239 Page 12,532 of 14,239