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AGI unit bags original proponent status for Skytrain

THE infrastructure arm of tycoon Andrew L. Tan’s Alliance Global Group, Inc. (AGI) bagged the original proponent status (OPS) for its proposed P3-billion monorail project connecting Fort Bonifacio to the Guadalupe station of the Metro Rail Transit (MRT) Line 3.
In a statement issued Monday, AGI said Infracorp Development, Inc. has secured the Department of Transportation (DoTr)’s approval for the project. It will now be submitted to the National Economic and Development Authority Board’s Investment Coordination Committee for review.
As an unsolicited proposal, the project will then be subjected to Swiss challenge, which requires an invitation for other companies to make competing offers, while giving the original proponent the right to match them.
Infacorp submitted the unsolicited proposal to DoTr last October 2017. Under the agreement, the company will build the two-kilometer Skytrain at no cost to the government. The ownership title will be transferred to the government, while Infracorp will be given the sole right to operate the project.
The Skytrain will make use of automated cable-propelled monorail technology, effectively reducing the travel time from the MRT Guadalupe station to Fort Bonifacio, where Infracorp’s sister company Megaworld Corp. is developing the Uptown Bonifacio township, to five minutes. It will have a capacity of 60,000 to 100,000 passengers daily.
Infracorp noted that its proposal also includes provisions to interconnect the Skytrain with other transport hubs that it will pass through.
“We envision to connect Makati to Taguig and vice versa. These two largest business districts in the country need an efficient and fast transport system that is at par with what the other business districts in cosmopolitan cities like Tokyo and Sydney have,” Infracorp President Kevin Andrew L. Tan was quoted as saying in a statement.
With the approval of the project, the company said it is ready to start building the Skytrain which it hopes to finish within two years.
“We can start the project before the year ends and this will take us two years to complete it. By early 2021, we can open the Skytrain to the public,” Mr. Tan said.
The Skytrain is Infracorp’s first project since its incorporation last year. The company is also part of the consortium that proposed to rehabilitate the Ninoy Aquino International Airport for around P105-106 billion.
The consortium includes Aboitiz InfraCapital, Inc., AC Infrastructure Holdings, Corp., Asia’s Emerging Dragon Corp., Filinvest Development Corp., JG Summit Holdings, Inc., and Metro Pacific Investments Corp.
Infracorp said it is also looking at other infrastructure projects it could participate in, mostly to provide transport solutions in Metro Manila’s key business districts as well as growth areas around the country.
The company is part of AGI, which also has investments in property development through Megaworld, gaming through Travellers International Hotel Group, Inc., liquor through Emperador, Inc., and quick service restaurants through Golden Arches Development Corp.
Shares in AGI went down eight centavos or 0.61% to close at P13.02 each at the stock exchange on Monday. — Arra B. Francia

BusinessWorld Discussions | Episode 01 | Brian Cu

BusinessWorld sits down with Grab Philippines’ Brian Cu to talk about surge pricing, government restrictions, and lessons he’s learned from drivers. These and more are on the first episode of BusinessWorld Discussions.
The interview took place minutes after Mr. Cu delivered a presentation during the BusinessWorld Economic Forum on Friday, May 18, 2018 and days before the Philippine Competition Commission released a decision on Monday, May 28, 2018, citing issues with Grab’s acquisition of Uber.

Looking into the future of health care

The health care industry stands to benefit greatly from the strong economic growth of the Philippines, but it may also face new, unprecedented challenges.

Prosperous times have an outsized effect on population growth. Affordability and accessibility, though they have always been the main concerns of the country’s health care system, will become ever the more important as the population of Filipinos in both rural and urban areas follows its economic trajectory.

It then seems prudent that the Philippines keeps its sights focused on finding solutions to both new and longstanding health care concerns, as it steps forward into its bountiful future.

“The Philippine Health Care Industry is enjoying unprecedented growth,” Ma. Cristina G. Coronel, Healthcare Information Management Association of the Philippines president, had said in the Healthcare Information Management Services (HIMS) Conference in 2016.

“[By 2022], the HIMS industry could be making $5 billion in revenues with 210,000 direct employment or 14.8% growth,” she said.

The opportunity lies in the new avenues of service that technology is opening up. Ms. Coronel noted new and expanded types of services of the industry, like telemedicine, which is the remote diagnosis and treatment of patients by means of telecommunications technology, could allow patients to access medical expertise in more convenient ways, providing ease of access and a potential cost savings for the patient.

Aside from Telemedicine, Ms. Coronel also pointed out the potential of innovative work in voice, non-voice, information technology, and analytics coming from the pharmaceutical businesses, health IT, and from the provider-and-payor-centric processes.

Technology and innovation are also providing a buffer against the rise of chronic, or noncommunicable diseases that continue to put undue strain on the country’s taxed health care systems. According to the World Economic Forum, the five leading noncommunicable diseases — cardiovascular disease (CVD), chronic respiratory disease, cancer, diabetes and mental ill-health — will cost the global economy US$47 trillion by 2030.

To combat this, GE Healthcare’s Sustainable Healthcare Solutions (SHS) for emerging markets seeks to develop technologies that are clinically and economically relevant to countries like the Philippines.

Myra Eskes, president & CEO of GE Healthcare ASEAN, said in the Hospital Management Asia conference in 2017 that they are aiming to engage in providing skills training for medical personnel as they believe that having good equipment does not automatically mean having good patient outcomes. GE Healthcare also provides financing solutions that are viable and sustainable in the long term to address the issue of funding for players in the industry.

Elisabeth Staudinger, president of Siemens Healthineers, Asia Pacific, likewise, said during the conference that her company is using artificial intelligence to help interpret radiology images, whether it’s X-ray, CT or MRI scans.

“We see opportunities helping hospital providers to become a lot more efficient by utilizing information coming off equipment they’ve installed in the hospitals. Then there’s also this greater vision of creating information which is available globally and can be utilized no matter where you are in this planet for determining the best care for a patient,” Ms. Staudinger said.

In the advanced field of biopharmaceuticals, impressive work is being done on immuno-oncology, gene therapy, and personalized medicine, all of which can be used to treat fatal diseases like cancer. Immuno-oncology, for instance, aims to coax the body’s own immune system to fight the disease. Unlike traditional approaches such as radiation therapy and chemotherapy, which kill healthy cells along with cancerous ones, immunotherapies target cancer cells by enhancing the body’s own innate ability to fight off rogue invaders.

“Rapid change and unprecedented opportunity are now the hallmarks of the biopharmaceutical industry. But the future of health won’t just be defined by the innovations we set out to create; it will be equally shaped by how we respond to — and anticipate — the challenges and consequences of each great advancement. The more we know, the more “known unknowns” are revealed. The boundaries of areas left for researchers to explore constantly expand, while possible applications of new technologies proliferate,” Albert Bourla, chief operating officer of Pfizer Inc., wrote for the World Economic Forum.

The most meaningful changes in health care, Mr. Bourla noted, will come from the right blend of innovation and deliberation. As new discoveries in medicine push the boundaries of what was thought possible, there should also be an equivalent and simultaneous effort in building mechanisms that explore each innovation through a prism of social, economic and political filters to better anticipate the consequences of progress.

“As we map out new health care territories, we must make sure each route leads back to patients. Large-scale changes driven by tech innovation are only as valuable as their impact on individual people’s lives, lives we are constantly striving to improve and extend. I believe that the best way to protect and treat the people we all serve is to identify the potential benefits and the potential challenges of each new breakthrough. Leveraging innovation wisely will let us help more patients than ever before.” — Bjorn Biel M. Beltran

Reinventing how care is delivered

As technology evolves through time, it has become the driving force of all the improvements in every industry including health care. Digital innovations are revolutionizing the industry in almost all processes — from consultations to health monitoring, and from the ways how lab tests are done up to ensuring patients’ conditions with self-care tools. With these, countless of lives have been saved and the overall quality of life continues to improve.

“In today’s world, technology plays an important role in every industry as well as in our personal lives. Out of all of the industries that technology plays a crucial role in, health care is definitely one of the most important. This merger is responsible for improving and saving countless lives all around the world,” health care information brand Healthcare Business & Technology said in its Web site.

From small innovations like adhesive bandages and ankle braces to large and more complex technologies like MRI machines, artificial organs and robotic prosthetic limbs, technology has made a significant impact. More innovations are expected in the following years as health care professionals continue to find ways to improve their practice.

“Today, the health sector faces a daunting new digital challenge: unleashing the power of technology to fundamentally reinvent how care is delivered,” PwC Global Healthcare Markets Leader David McKeering, was quoted as saying in “Digital health in emerging markets” report, published last year. “On top of their existing technology needs and priorities, today’s health providers need to address the digital requirements demanded by health policy or by consumers and other stakeholders.”

For developing countries like the Philippines, impressive developments in medical technology have helped the country deliver better services to its citizens and addressed some of the challenges in its health care system. However, the country’s adoption with the essential technological innovations remain slow.

“Given the remarkable strides in improving health outcomes since the 1970s, Filipinos are generally living longer and healthier lives,” global publisher Oxford Business Group said in its Web site. “But despite these advances, the country lags behind many of its neighbors on key health indicators, such as the maternal mortality rate and incidence of tuberculosis, and its health expenditure is considerably less than other countries in Southeast Asia. At the same time, lifestyle diseases are emerging as a new health challenge, requiring different responses. These are the issues that the Philippines faces as it moves forward with its commitment to achieve universal health coverage, ensuring that all Filipinos have access to quality, affordable health care.”

Given these, the call for digital adoption in the country’s health care system is essential. As Mr. McKeering explained, “digital health care” is not about the technologies, it’s about new ways of solving health care problems that create unique experiences for patients, and accelerating health care providers’ growth. Over the longer term, the digitization of health services can help improve the quality and access to health care while cutting the costs.

Making its transition to digital, the Philippines has made several initiatives towards ensuring the achievement of the health system goals of better health outcomes, sustained health financing and responsive health system. Through eHealth, or the use of information and communication technologies for health, the Philippines by 2020 is envisioned to “enable widespread access to health care services, health information, and securely share and exchange patients’ information in support to a safer, quality health care, more equitable and responsive health system for all the Filipino people by transforming the way information is used to plan, manage, deliver and monitor health services.”

As noted on the “Philippines eHealth Strategic Framework and Plan 2013-2017”, eHealth has proven to provide improvements in health care delivery and is at the core of responsive health system.

eHealth’s desired outcomes include the improvement of health consumers’ access to health information and maintenance of their personal health record; improved access to appropriate health care services for those in rural, remote and disadvantaged communities via electronic means; and improved access to knowledge, health care services and availability, and resources to assist in managing one’s health.

On health care providers’ part, eHealth would allow them to make more informed decisions through these following desired outcomes: improved access to an integrated or single view of the patients’ health information at the point of care, improved access to systems and health information like clinical decision support tools, medications, clinical knowledge, skills development and others, improved collaboration and coordination among health care providers and interactions with health consumers, improved reporting and monitoring of health care deliveries and/or outcomes, and improved monitoring and tracking of patients.

As Mr. McKeering said, digital health can dramatically improve an organization’s productivity. “This means that if the costs of digital health care solutions can be made affordable, digital health could be an answer to the emerging markets’ challenge to achieve sustainable growth and leapfrog the developed nations to provide quality, affordable, universal and patient-centric care,” he explained. — Mark Louis F. Ferrolino

Adapting trends to advance health care

The health care industry in the country had undergone various transformations, displaying progress in some areas over the years. According to a 2017 Oxford Business Group (OBG) report, the country has displayed improving health outcomes since the 1970s, thus, Filipinos are generally living longer and healthier lives.

“But despite these advances, the country lags behind many of its neighbors on key health indicators, such as the maternal mortality rate and incidence of tuberculosis, and its health expenditure is considerably less than other countries in Southeast Asia. At the same time, lifestyle diseases are emerging as a new health challenge, requiring different responses. These are the issues that the Philippines face as it moves forward with its commitment to achieve universal health coverage, ensuring that all Filipinos have access to quality, affordable health care,” the report continued.

With regard to the emergence of new health challenges related to lifestyle and longer life span, it is foreseen that there will be an increase in number of clinics that cater to this area of need.

Former President and CEO of St. Luke’s Medical Center Dr. Edgardo R. Cortez was quoted in the same report by OBG, “As a result of longer life spans due to improved care, providers need to face the challenge of catering to a rise in degenerative illnesses. Ageing will be an increasingly major component of health care demand, and hospitals will be evaluated on how well they attend to chronic diseases caused by ageing. Additionally, the business process outsourcing industry and the characteristics of its work environment have created high demand for cardiovascular and hypertension services, leading to the establishment of more dedicated clinics for occupational health and programmes that address diabetes or other lifestyle-related diseases.”

“The health sector needs to shift its attention from curative to preventive, but not all diseases are preventable. Addressing preventable diseases generally involves immunization or lifestyle changes, both of which are primary preventive measures. For diseases that cannot be prevented, one performs secondary prevention, meaning early detection. As a result, there will be growth in wellness clinics and diagnostic facilities to meet this demand,” he continued.

In light of digital revolution, IT solutions is perceived to play an increased role in the country’s health care industry. As Mr. Cortez mentioned to OBG, this trend will intensify further as the industry seeks to replicate global best practices.

Moreover, OBG stated in a report that technology is also transforming the drug and pharmaceuticals retail market. To illustrate, OBG mentioned that some companies are tapping into the online platform to sell medicines.

On the side of the government, OBG reported that the Philippines is looking at e-health to help it meet its goal of achieving universal health coverage given that Filipinos has high level of social media engagement and is an Internet-literate population.

“For the government, technology is a way to streamline the management of devolved health systems and improve health care delivery in rural areas by providing remote clinics, which often lack the necessary equipment and specialist expertise, with new ways to assess and test patients. E-health also gives patients themselves the opportunity to consult medical professionals through their smart phones and the internet, which means they no longer need to rely solely on health care providers for information,” OBG said.

In particular, part of the strategies indicated in the Philippine Health Agenda 2016 to 2022 by the Department of Health (DoH) is investing in eHealth and data for decision-making. The strategies include mandating the use of electronic medical records in all health facilities; and making online submission of clinical, drug dispensing, administrative, and financial records a prerequisite for registration, licensing, and contracting.

It also includes the following: commission nationwide surveys, streamline information systems, and support efforts to improve local civil registration and vital statistics; automate major business processes and invest in warehousing and business intelligence tools; and facilitate ease of access of researchers to available data.

The DoH, in collaboration with other government agencies, envisions that by 2020, “eHealth will enable widespread access to health care services, health information, and securely share and exchange clients information in support to a safer, quality health care, more equitable and responsive health system for all the Filipino people by transforming the way information is used to plan, manage, deliver and monitor health services.”

On another note, the country’s National Telehealth Center is addressing the distance barrier to enable access to health care for those living in remote areas with the use of IT solutions.

One of the center’s projects is the Community Health Information Tracking System (CHITS), which is an electronic medical record system that aims to improve health information management. Another is the RxBox, a telemedicine device that can capture medical signals, store data in an electronic medical record, and transmit health information via internet to a clinical specialist.

Through harnessing technology, these initiatives have helped in advancing health care in rural communities. — Romsanne R. Ortiguero

Moody’s flags weak peso’s credit risk

By Melissa Luz T. Lopez
Senior Reporter
A SUSTAINED PESO depreciation would be “credit negative” for the Philippines as it pushes up the cost of foreign debt and triggers capital outflows, Moody’s Investors Service said.
The Philippine peso is among the Asia-Pacific currencies which have been hit the hardest by a stronger dollar, the debt watcher said, even as it noted that the region has been “susceptible” to foreign exchange fluctuations.
“For Indonesia and the Philippines, currency pressures will exacerbate already weak debt-affordability metrics and, to the extent that they are accompanied by capital outflows, may have wider repercussions for the balance of payments,” Moody’s said in a report published late Friday.
The peso is the second-worst performer among emerging market currencies as it depreciated by 5.2% year-to-date, according to Moody’s. This is second to the Indian rupee’s 7.2% depreciation and worse than the Indonesian rupiah’s 4.8% weakening as of May 24.
Of 18 sovereigns, only five have currencies that have so far appreciated against the dollar, namely: Mongolia, Thailand, Malaysia, China and Maldives.
Moody’s said this showed that the Philippine economy may face “greater credit challenges” as the local unit remains slumped against the greenback, especially after it touched P52.70 on Friday — its weakest performance in nearly 12 years.
Tightening financial conditions have also resulted in higher yields. The credit rater added that the peso has been “on a depreciating streak” since December as weaker remittance inflows and a wider current account deficit spook investors.
The Bangko Sentral ng Pilipinas (BSP) has attributed the wider trade gap largely to a surge in imports to support the local infrastructure boom, which should boost growth prospects and optimism for the economy in the long run.
Central bank officials also noted that the Philippines’ economic backbone remains solid and should allay investor concerns.
Outstanding foreign currency debt held by the Philippines accounted for more than a third of total obligations, the debt watcher noted. The country’s ability to settle these liabilities could weaken as a stronger dollar drove up their face value when expressed in peso terms.
At the same time, the global debt watcher noted that the “large” dollar reserves held by the BSP serve as a comfortable buffer against exchange rate-related shocks.
Gross international reserves stood at $80.062 billion in April, enough to cover 7.8 months’ worth of import payments. The ratio is well above the three-month international standard.
Despite region-wide currency depreciation, Moody’s analysts noted that current weakness is not as bad as in previous episodes.
“In all cases, however, the extent of depreciation and more generally, tightening in financing conditions, is nowhere similar in magnitude as in the taper tantrum in 2013, although it is comparable to episodes of market stress in the second half of 2015 (when there were fears of a China slowdown) and the period after the US elections in late 2016,” the debt watcher noted.
BSP Governor Nestor A. Espenilla, Jr. has said the central bank employs “tactical” interventions to temper sharp swings of the currency during day-to-day trading, but maintained that monetary authorities prefer to allow the exchange rate to be “market-driven.”

$2B left in foreign borrowing program

THE GOVERNMENT has about a $2-billion borrowing space left for its planned “samurai” bond and second global bond sale under its program for foreign commercial loans this year, the Bureau of the Treasury (BTr) said.
According to Deputy Treasurer Sharon P. Almanza, the national government is tapping about $2.5 billion in official development assistance (ODA) and $4.2 billion in foreign commercial loans under the share of external borrowings in its 2018 loan portfolio.
With the issuance of $2 billion worth of 10-year dollar-denominated global bonds in January and $230-million renminbi-denominated three-year “panda” bonds in March, the government has about $2 billion left for its succeeding offshore bond offers.
“$4.2 billion for the entire commercial [borrowing program] and then we already raised $2.2 [billion]. So remaining $2 billion, but then it’s split between the samurai and dollar,” she told reporters last week.
However, Ms. Almanza said that Treasury officials “don’t know yet how much” will be allocated for each of the planned external bond sales.
“We issued the proposal already to banks,” she said, referring to the second dollar-denominated global bond sale.
Finance Secretary Carlos G. Dominguez III has said that the government was looking to offer the global bonds by “later third or early fourth quarter,” in anticipation of further policy tightening by the US Federal Reserve, which has already raised its benchmark rates by 25 basis points so far this year in a meeting of its Federal Open Market Committee earlier this month and could implement two more hikes within 2018.
Mr. Dominguez also said the yen-denominated “samurai” bond sale could take place in September or October.
The government plans to borrow a total of P888.23 billion this year to help plug its budget deficit that is capped at three percent of gross domestic product, or P523.68 billion. Of this amount, 35% will be sourced from foreign creditors while the 65% balance will be borrowed locally.
The share of foreign loans was widened from 26% earlier programmed for 2018, and from 20% in 2017, in a bid to diversify its financing base and to tap lower interest rates.
From 2019 to 2022, however, the share of loans borrowed externally will be trimmed to 25%. — Elijah Joseph C. Tubayan

Banks bare stronger sheets in first quarter

By Mark T. Amoguis
Researcher
THE COUNTRY’s biggest banks opened the year on stronger footing as the first quarter sustained a streak of double-digit asset and loan growth, even as profitability slipped.
BusinessWorld’s 1st Quarter Banking Report shows the combined assets of the country’s universal and commercial banks (U/KBs) grew by 10.97% to P15.02 trillion in the January-March period from P13.54 trillion recorded in the same three months last year.
The first quarter’s growth pace, however, was slower than the 11.51% year-on-year increase in the fourth quarter of 2017 and 13.41% in the first quarter of 2017.
Still, the latest figure marked the ninth straight quarter of double-digit growth in the balance sheets of the local and foreign U/KBs, now numbering 43.
Bank loans, which comprised around 54% of big banks’ assets, grew 17.8% annually to P8.07 trillion from last year’s P6.85 trillion.
Q1 Banking
In terms of profitability, the U/KBs’ median return on equity (RoE) dipped to 5.09% in the January-March period from the preceding quarter’s 5.70%. ROE, which is the ratio of net profit to average capital, measures the amount that shareholders make on every peso invested in a company
BDO Unibank, Inc. (BDO) continued to have the biggest assets among U/KBs, followed by Metropolitan Bank & Trust Co. (Metrobank) and the Bank of the Philippine Islands (BPI). They were also the same banks that issued the most loans during the period, also in that order.
Among the banks with assets worth at least P100 billion, Robinsons Bank Corp. continued to post the fastest growth in assets and bank loans at 30.26% and 48.58%, respectively.
BDO had the most deposits with P2.24 trillion, followed by BPI (P1.59 trillion) and Metrobank (P1.55 trillion).
In terms of growth in its deposit base, Robinsons Bank saw the biggest jump at 34.56%, followed by the Development Bank of the Philippines (32.53%), and Asia United Bank Corp. (22.62%).
ASSET QUALITY
Banks’ ability to absorb losses improved as their median capital adequacy ratio (CAR) went up to 18.19% in the first quarter from the fourth quarter’s 17.2%, well above the regulatory minimum of 10% set by the Bangko Sentral ng Pilipinas and the international standard of eight percent.
CAR is a measure of a bank’s ability to take losses without putting at risk the funds entrusted by depositors.
The non-performing loans (NPL) ratio of big banks increased to 1.57% in the first quarter from 1.42% in 2017’s fourth quarter.
The non-performing assets ratio — a measure of bank health that combines NPLs, foreclosed properties and total assets — likewise went up to 0.61% from 0.53% in the same comparative periods.
As a percent of total assets, foreclosed properties steadied at 0.35% from 2017’s fourth quarter.
Banks’ NPL coverage ratio — the ratio of the total loan loss reserves to gross NPL — remained more than enough to cover the entire value of bad loans held by U/KBs, improving to 152.84% from 149.39% in the same periods.
Loan loss reserves totaled P159.570 billion, 15.17% more than a year ago.
BusinessWorld Research has been tracking the financial performance of the country’s U/KBs on a quarterly basis since the late 1980s using banks’ published statements of condition.

Europe, US lurch closer towards a trade war

PARIS — With Italy in political turmoil, oil prices on the rise and North Korea tensions back on the burner, the last thing the global economy needs is a big lurch towards a trade war further clouding the outlook.
But that is exactly what the Trump administration faces if it does not extend temporary exemptions on steel and aluminum imports from Europe that expire on Thursday.
The Europeans have opportunities for last-minute diplomacy when the Organization for Economic Cooperation and Development (OECD) holds its annual ministerial council in Paris on Wednesday.
For his part, French President Emmanuel Macron is to due to make the case for breathing new life into the international economic order in a speech before the OECD on Wednesday.
But there are few signs of US appetite for that ahead of talks between US Commerce Secretary Wilbur Ross and European Union (EU) trade chief Ceclia Malmstrom on the sidelines of the OECD meeting.
“The question is how can we accept a situation where the Americans manage their dialogue with a rival like China the same way as with their allies without special treatment for being a US ally,” a senior French diplomat said.
Even before Mr. Trump raised the specter of import tariffs, trade flows faced an increasing number restrictions as economies struggled to get back on their feet following the global financial crisis of 2008-2009.
G20 economies have put up 1,400 new trade restrictions over the last decade against only 200 liberalization measures during the same period, according to an OECD tally.
OECD Chief Angel Gurria said some governments were blaming globalization, and by extension the broader multilateral trading system, rather than fixing bad policies that have failed to address voters’ concerns about jobs going overseas.
“Globalization does not have a face, globalization does not have a neck from which you can hang it, so you use a proxy, the closest proxy is multilateralism,” Mr. Gurria told journalists.
There is little prospect for a quick fix in the trade standoff between Washington and its allies after the Trump administration opened a new front on Wednesday by also threatening tariffs on auto imports.
The prospect of a trade war is particularly a concern in Europe where the economy is already losing steam, complicating the European Central Bank’s (ECB) return to more conventional monetary policy as rising oil prices drive inflation higher.
“In this context, the ECB now faces a classic stagflationary shock, with higher inflation and slower growth,” Oxford Economics Chief European economist James Nixon said in a research note. “Nevertheless, we continue to believe the ECB will end quantitative easing this year in order to avoid the risk of second round effects at a time when there is clear evidence of increasing labour shortages.”
Preliminary May euro zone consumer price data due on Thursday will offer evidence of how close inflation has come to the ECB’s just-below-two percent target.
Economists in a Reuters poll predict on average that it rebounded to a 13-month high of 1.6% from 1.2% in April.
Among other data on the horizon next week are US non-farm payrolls on Friday for the month of May.
Economists polled by Reuters forecast on average the world’s biggest economy added 185,000 new jobs this month, up from 164,000 in April. — Reuters

ACR, Ayala to invest P20 billion to develop Davao City property

ALSONS Consolidated Resources, Inc. (ACR) has placed at P20 billion the initial investment in a Davao City property it is jointly developing with the Ayala group that is expected to break ground this year, company officials said.
“The commitment of the partners is P20 billion in investment for the infrastructure, the amenities, plus the products,” ACR Chairman and President Tomas I. Alcantara told reporters.
The project, named Azuela Cove, is a 27-hectare development in Lanang, Davao City.
On its website, Ayala Land, Inc. said Azuela Cove is set to become the city’s “prime waterside business and residential district.”
Mr. Alcantara said Azuela Cove is a 60%-40% partnership between his group and the Ayala-led property giant.
“[The] products, that is the one that we will sell. [The] infrastructure are the come-ons. The amenities [include] the tents, the commercial centers,” he said.
The property, Mr. Alcantara noted, used to be the location of ACR’s plywood plant.
“Before, it [plywood plant] was in the outskirts of the city. Now, it is in middle of the city already,” he said.
Mr. Alcantara declined to give an estimate on the expected revenues from the project, but noted Azuela Cove’s first residential building alone is valued at P195,000 per square meters, which he said translates to about a gross selling price of P30 million per unit. The building has 70 units, he added.
In a presentation before stockholders on Thursday, ACR said the first residential tower at Azuela Cove has been sold out with total sales of P2.5 billion.
The company plans to launch Tower 2 in the fourth quarter.
Azuela Cove will have two Ayala Premier and three Alveo developments — ALI’s the high-end residential brands.
Robert F. Yenko, ACR chief financial officer, said the company had allocated P9 billion for capital expenditures this year, slightly higher than last year’s P8.8 billion. He said Azuela Cove is envisioned to be a “somewhat smaller version of BGC (Bonifacio Global City).”
ACR currently operates four power facilities in Mindanao. The plants generate a combined capacity of 363-megawatts (MW) and serves more than 8 million people in 13 cities and eight provinces, including urban centers in Davao City, Cagayan de Oro, General Santos, Iligan and Zamboanga City.
The listed holding firm targets to have a total capacity of 588 MW by 2021, which is equivalent to 25% of Mindanao’s projected peak power demand by that year.
A number of ACR’s power plant projects are currently at different stages of development. — Victor V. Saulon

A walkthrough on InstaPay

By Ranier Olson R. Reusora, Researcher
The adoption of a second clearing house meant to process real-time money transfers is expected to push more Filipinos to use online channels for payment transactions.
Last month saw InstaPay, the country’s newest automatic clearing house (ACH), go live. The platform is expected to process electronic payments (e-payments) across accounts from different banks and digital wallets.
Specifically, InstaPay clears electronic fund transfers (EFTs) worth up to P50,000 per transaction and without a daily limit. The platform is available 24/7, with the funds to be made available to receivers almost immediately.
This is the second clearing house created particularly for e-payments after the Philippine EFT System and Operations Network (PESONet), which settles funds in batches, was rolled out in November last year.
For using InstaPay, the sender will be charged fees depending on the participating financial institution’s pricing strategy. The receiver, on the other hand, will get the full amount transferred without incurring any fees. Nevertheless, both senders and recipients must have accounts with participating financial institutions to be able to use the facility.
“InstaPay will be cheaper than most currently available alternatives given that the fund is received electronically and in real-time,” Bangko Sentral ng Pilipinas (BSP) Deputy Governor Chuchi G. Fonacier said.
Ms. Fonacier noted that InstaPay has a lower cost-to-serve compared to over the counter service or the use of third party collection agents, adding that it also presents an opportunity to “de-clog counters at branches.”
Aside from convenience, Ms. Fonacier said that the platform will also benefit customers and merchants by ensuring that payments made through InstaPay are final. “There is practically no waiting time for availability of funds to the recipient, no risk of bouncing checks or cancelled payments,” she said.
Lito M. Villanueva, chairman of FintechAlliance.ph and KasamaKA founder and lead convenor, said that adopting InstaPay would “really be more empowering” to consumers: “[Y]ou have to make sure that [the consumers] would be able to adopt to it… and see the benefits of doing this,” he said.
BSP Governor Nestor A. Espenilla, Jr. has said that the implementation of this platform under the National Retail Payment System (NRPS) is in keeping with the goal of raising the share of e-payments to at least 20% of total transactions by 2020, coming from a measly one percent in 2013. This, Mr. Espenilla said, serves as an “opportunity area.”
The rollout of ACHs such as InstaPay and PESONet would also help local banks by way of reducing their operating costs, according to a recent report by Moody’s Investors Service. The cost-to-income ratios of Philippine banks range from 50-75%, which Moody’s said is the highest compared to its peers in Southeast Asia.
Plans are also in the works to link the country’s payments platform to other digital clearing houses within Southeast Asia to facilitate real-time fund transfers across borders.
Of note, the Philippines is the third in the region to set up an e-payments platform. In November, the Monetary Authority of Singapore announced that it is working to link their PayNow platform with Thailand’s PromptPay system to allow people from either country to send money to each other using mobile phone numbers.
CHALLENGES AND OPPORTUNITIES
As of launch, there are only seven banks that offer real-time fund transfers while 11 other lenders and two electronic money issuers (EMIs) are able to receive payments, according to the BSP.
“As with any new system, there are challenges in technology development, policy and operational readiness and market acceptance,” BSP’s Ms. Fonacier said.
“As Governor [Espenilla] has noted at the InstaPay launch on April 23, the financial institutions will be challenged to develop innovative business models customized to their target markets’ needs, to ensure client loyalty, and to better compete for market share,” Ms. Fonacier added.
Ms. Fonacier also noted that the challenges, particularly the execution components, were viewed as “enhancements that were needed to be developed and implemented along with the formulation of the policy and regulatory framework suitable to the new payment stream being created under the InstaPay platform.”
“InstaPay would not have been possible without constant and close dialogue and collaboration of the BSP with the Industry and with the Philippine Payments Management, Inc. (PPMl), the industry-led self-governing body and an important ally of the BSP in the pursuit of the e-payments goal,” she said.
NRPS Core Team Chair Raymond O. Estioko said during InstaPay’s launch that banks are still developing their app solutions and that more financial institutions are expected to participate in InstaPay towards the middle of the year.
“A point in time will come that everybody in the InstaPay [platform] should be able to send and receive. It’s just that there are those banks who are ahead,” Mr. Estioko said as banks and other EMIs are updating their websites and their mobile apps to create an option to transfer funds via the platform.
FintechAlliance’s Mr. Villanueva said that there will definitely be some issues along the way that need to be threshed out, as industry players with various systems “are really not talking to each other.”
“That’s why the idea of having the NRPS is that, it’s practically having that interoperability in place. And we’re coming from that environment before of doing it in silo,” he said.
Launched in 2015 by the BSP, the NRPS Framework’s objective is to help promote a “cash-lite” economy wherein both physical and digital money find their own niche markets with the latter hoping to reach the unbanked especially in rural areas. This will improve the efficiency of transactions through the use of the electronic retail payment system.
The BSP’s report on the state of financial inclusion showed that there are 571 (34.9% of the total) unbanked local government units (LGUs) as of June 2017, down from the 589 unbanked LGUs (36%) in June 2016.
This was supported by the World Bank’s latest Global Findex report, which noted that only 34.5% of Filipino adults owned a bank account as of 2017.
And even more, those numbers were recorded ahead of the launching of the two ACHs.
Referring to the BSP data, Mr. Espenilla said that this is an “improvement already” from the 31.3% seen in 2014.
“So with a platform like this, there is more good reason to be able to open an account, and especially if you tie this up with the recent policy issuance of the BSP to create basic bank accounts, then the door is really wide open to enroll all Filipinos who want to have an account and be able to connect with one another digitally to this system,” Mr. Espenilla said.
Orlando B. Vea, president and CEO of Voyager Innovations, Inc., was of the same view: “[T]he only way to bring that now to the economic mainstream is providing them with a payment system that will operate outside even if they don’t have bank accounts,” he said during the InstaPay launch.
“[R]ight now, that is what we do as mobile wallet operators… and more and more, in significant rates, the users of mobile wallets are growing.”
Voyager Innovations is PLDT, Inc.’s digital innovations unit. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a stake in BusinessWorld through the Philippine Star Group, which it controls.
POTENTIAL USE CASE
Other than simply transferring funds, InstaPay could also be used to make transactions with the government.
“We are offering both InstaPay and PESOnet as additional options for making payments to the government. That is why we are engaging our colleagues from the other government agencies to ask their clients — the public, to pay through digital means,” NRPS Core Team’s Mr. Estioko said.
For instance, state-run Land Bank of the Philippines (LANDBANK) already has tie ups with most government agencies. LANDBANK president and CEO Alex V. Buenaventura cited the case of using InstaPay for paying taxes to the Bureau of Internal Revenue (BIR) instantly through their accounts in any participating financial institutions.
“There’s a lot now who pay their taxes through the mobile app. Now, InstaPay will even make it easier for the public to pay BIR because they can use their existing bank accounts to pay BIR,” Mr. Buenaventura explained.
Before InstaPay, consumers need to have a LANDBANK account to access online payment to BIR. With InstaPay now accessible in LANDBANK (can only receive as of launch), anyone who has an account in any participating financial institutions can now pay their taxes instantly.
Besides the BIR, Mr. Buenaventura said that they also have payments arrangements with other government agencies such as the National Bureau of Investigation (NBI) for the application of the NBI clearance and Department of Foreign Affairs for applications of passports. Arrangements with the Bureau of Customs are currently in the works.
“Our goal in LANDBANK is to activate a payments system with all government agencies, and we hope that by the end of next year, all payments to government can be done electronically,” Mr. Buenaventura said.
BSP’s Fonacier, for her part, said that the platform strengthens the value proposition of electronic channels. “By creating a cheaper way to transfer funds to any participating institution, BSFIs (BSP-supervised financial institutions) are able to add more use cases for their mobile and internet banking channels apart from bills pay and balance inquiry.”
INSTANT, BUT ALSO SECURE
InstaPay is not only fast and convenient, but is also said to be secured thus avoiding the usual convenience-security trade-off that comes along with digital applications.
“InstaPay and the financial institutions that deliver InstaPay are subject to the security standards required by the BSP,” BSP’s Ms. Fonacier said.
She added that all institutions participating under the InstaPay are required to comply with regulatory issuances on cybersecurity, including BSP Circular 982, which details the central bank’s expectations for banks and other financial institutions in addressing and mitigating security threats.
“BSFIs are required to have a comprehensive and tested incident response plan supported by well-trained incident responders, investigators and forensic data collectors. Accountability for any loss depends on the results of the fraud investigation,” Ms. Fonacier said.
“Only financial institutions under the supervision and oversight of the BSP are eligible to be members of PPMI and thereby able to participate in the ACHs.”
Earlier this year, the central bank signed an agreement with the PPMI. to serve as the industry-led body in facilitating digital payments clearing operations.
PPMI will serve as the payment system management body for ACHs, while the BSP will serve as the primary overseer of the platforms.
“We all know the fact that cyberattacks or cyberthreats would always be there. That’s why I think the BSP has been steadfast and vigilant when it comes to providing various circulars to all the BSFIs to be extra cautious and provide additional layers of defense to weed out cyberthreats or cyberattacks,” FintechAlliance’s Mr. Villanueva said.
In the latest report from the International Telecommunication Union, the Philippines ranked 37th out of 194 economies listed in the 2017 Global Cybersecurity Index, which measured economies’ commitment to adopting cybersecurity practices.
Mr. Villanueva said that the BSP provided instructions or circulars wherein if any BSFIs has experienced any cyberthreat or has been compromised, then the reporting requirement has to be within 24 hours, or immediate.
To address these cyberthreats further, Mr. Villanueva advised that consumers themselves have to be educated and informed about the responsibility in securing their respective accounts while the banks and the regulators are doing their share of protecting consumers’ financial transactions.
THE NEXT STEP
As PESONet and InstaPay go online, the next step would then be to drive consumer demand, said BSP’s Ms. Fonacier.
“The BSP has been collaborating with various government institutions to use these payment facilities and to discuss regulatory frameworks that can facilitate growth of e-payments. Moreover, the BSFls are enjoined to educate their customers with information on electronic channels and have these embedded in their marketing campaigns and consumer education programs,” she added.
“The vision for InstaPay is that it will eventually be integrated as part of every Juan and Maria’s daily life — may it be in making payments to another person, to businesses or to the government.”

Telstra not interested in bidding for 3rd telco slot

By Patrizia Paola C. Marcelo, Reporter
AUSTRALIAN telecommunications company Telstra Corp. Ltd. said it will not join the bidding process for the “third” major telecommunications player in the Philippines.
In an e-mail statement sent to BusinessWorld, Telstra said it has no plans of entering the mobile telecommunications market in the country.
“The Philippines remains an important market for Telstra as we grow our Enterprise business internationally. It is also a customer service hub for Telstra, where we have invested in world class facilities and talent to serve our customers. We are committed to these areas of business in the country and have no plans to enter the mobile telecom market,” the company said.
To recall in 2016, Telstra was in talks with conglomerate San Miguel Corp. (SMC) to form a venture to compete against PLDT, Inc. and Globe Telecom, Inc. However, talks bogged down, and SMC sold its telco assets to the two telco giants for around P70 billion.
Telstra did not officially state the reasons for the termination of the talks but analysts previously noted the Australian company may have been turned off by possible legal and pricing battles with the incumbents despite the attractive Philippine market.
The Department of Information and Communications Technology (DICT) is expected to release a second draft terms of reference on May 28. It is set to name the third player by August at the earliest.
Among the existing requirements for the third telco are: paid-in capital of at least P10 billion; experience in providing, delivering, and operating of telecommunications services for the last five years; a congressional franchise not related to either PLDT or Globe; and no uncontested liabilities with the National Telecommunications Commission (NTC) as of Jan. 31, 2018.
BMI Research had said that the P10-billion requirement is a big factor that may put off interested bidders.
The DICT had said that the financial requirement was reinstated after being initially removed, in order to ensure that the third player has the financial capability to compete with PLDT and Globe.
The DICT sees mobile number portability, change in foreign ownership requirements, open access, and spectrum reallocation, will make setting up a third player attractive to investors.
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.

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