Three decades of Happy Living

October 17, 2024 | 12:04 am

THE CULMINATION of Happy Living’s 30^th anniversary came on June 15 with their biggest event to date, a wine festival entitled “A Continuing Journey Across the World’s Most Famous Wine Regions and Wineries.”

This milestone event was held at The Tent at Enderun, McKinley Hill, Taguig and featured all of Happy Living’s portfolio that boasts of over 150 brands of wines and other libation drinks from over 50 suppliers around the world.

ABOUT HAPPY LIVING
Happy Living Philippines Corp. started out as a small family business importing premium quality Californian wines in 1994. Some of their earliest brands included Beringer, Chateau Montelena, Freeman Abbey, and Joseph Phelps — all of which remain in their portfolio today.

In the mid-1990s, Happy Living helped introduced the finest Californian wines to the country — before them, locally available California wines were just cheap, low-quality jug wines that included the still best-selling Carlo Rossi, plus others like Paul Masson, Almaden, Franzia and the old Inglenook generic wines.

Today, the Happy Living portfolio goes way beyond just Californian wines and includes wines from Australia, France and Chile among others.

In 2018, the company changed to new ownership and management, led by Managing Director Griffith Go and General Manager Julian Gagliardi.

MEET THE GM
I met the affable, yet confident Frenchman, Julian Gagliardi, way back in 2013 when he was still working for The Straits Wine Co. in their main Singapore hub. At that time, I was doing regional wine consultancy for an iconic Spanish winery from Rioja. The importer of this Rioja brand in Singapore at that time was The Straits Wine Co.

A few years later, I found out that Julian was assigned to their Philippine branch in Makati. He was then just in his late 20s, but even back then I knew he was someone to reckon with in the local wine industry as he was quite visible in the trade. And Julian surely did become someone to reckon with as he moved to and became the GM of the Happy Living “reboot” of 2018.

To say that Julian has lived a colorful life thus far is an understatement.

He started out as a young French boxer who traveled to Mexico to improve his boxing skills. He enrolled at the famed Marquez Boxing Gym where the legendary Marquez boxing brothers — three-division world champion Juan Manuel Marquez, best remembered as the biggest nemesis of our people’s champ Manny Pacquiao, and his younger brother two-division world champion Rafael Marquez — came from.

But this trip of over 9,000 kilometers from his homeland France to Mexico had two purposes as Julian was then concurrently studying for a masteral degree in International Management with Focus on Latin America at the Universidad Nacional Autonoma de Mexico or UNAM — so he was hitting two birds with one stone. Part of completing his UNAM masteral degree was a 10-month internship in Brazil, so Julian was once again on the move.

After this stint in Brazil, Julian had a change of heart about boxing and now wanted to be involved in the food and wine business. At that point he was already fluent in Spanish and Portuguese, on top of his mother tongue French, but he spoke no English at all.

He happened to have a cousin who lived in Singapore, so he set his sights on his new adventure here in Southeast Asia. Within three days upon arrival in Singapore, he found a job with The Straits Wine Co., where he was assigned to their back end, mainly in purchasing. Because Julian is French and can also communicate in Spanish and Portuguese, and since many of The Straits suppliers were French and Spanish speakers, it was not difficult for Julian to adapt immediately to his new role.

And as quickly as he picked up Spanish and Portuguese, Julian’s English also improved, and luckily without the Singlish accent.

Julian was dealing with over 300 wineries from around the world as a purchaser — a great start on his path to the wine industry.

As can be seen from the rapid increase in their portfolio, Julian has made his mark all over the present direction of Happy Living. In his last 10 years in the Philippines, Julian has slowly carved his name in the local wine industry.

On-premise accounts distribution in hotels and restaurants — simply known as on-premise accounts — is where Happy Living has thrived and this is where they get over 50% of their revenue. But as every wine importer in this industry knows, on-premise can be one of toughest channels to manage. It is a “dog eat dog” world in this channel, as most wine importers are not big enough to invest in retail listing fees, with the running rate being at P5,000/SKU per store, so you will find every wine importer competing in this channel.

Also, during the height of the COVID pandemic, several on-premise establishments closed down, and many bad debts were incurred among wine suppliers.

Yet for Julian and Happy Living, there were opportunities to be made, and they seized the moment when, towards the last quarter of 2020, many on-premise accounts re-opened and a lot of them were looking for wine suppliers who could service their needs.

I remembered that during those days — including from my personal experience — the wine industry was in shambles as even within Metro Manila, the different local city governments had different protocol procedures on social distancing, curfews, and even alcohol selling that affected the overall wine business. But as Julian proudly stated, Happy Living was able to fill in the gaps left by other wine suppliers, as they were able to service these on-premise accounts, especially big hotels that badly needed wines to resume their F&B operations.

Being strategically located in Makati also helped their cause, as Makati City was one of the first local governments to open up after the COVID scare started fading.

MOVING FORWARD
When asked what is in store for Happy Living, Julian just mentioned that they live by three principles: 1.) To pay tribute to their past legacy, respecting what the original owners had started; 2.) Embrace the current and adapt to the challenges at present; and, 3.) Look and prepare for the future.

These may be general statements, but Julian emphatically mentioned service. Service translates to giving clients the right products, at the right prices, at the right time.

Choosing Enderun, a hospitality school, as the venue for their 30^th anniversary event, was also part of the Happy Living credo — to educate the new breed of hospitality practitioners. Surely, these practitioners will eventually be managing on-premise accounts, whether as owners or employees, and Happy Living will be there more than happy to service these accounts.

RECOMMENDED WINES
When I asked Julian what he feels are the best wines in their portfolio to recommend, he quickly replied, in true French fashion: “Bordeaux second or third labels from Grand Cru classified Chateaux, like the Aspirant de Beychevelle (the 3^rd label of 4^th growth Chateau Beychevelle in St-Julien region), and Labastide Dauzac (the 2^nd label of 5^th growth Chateau Dauzac in Margaux region). Bordeaux is the only region in the world that has wines that are of great quality and age very well. No other region in the world can have these types of quality and age-ability at the mid P2,000.00 range.” Amen to that, Julian.

To get to know more about Happy Living, visit their website at https://www.happylivingph.com/.

Sherwin A. Lao is the first Filipino wine writer member of both the Bordeaux-based Federation Internationale des Journalists et Ecrivains du Vin et des Spiritueux (FIJEV) and the UK-based Circle of Wine Writers (CWW). For comments, inquiries, wine event coverage, wine consultancy and other wine related concerns, e-mail the author at wineprotege@gmail.com, or check his wine training website https://thewinetrainingcamp.wordpress.com/services/.

Anker’s new Zolo power banks, chargers now available in PHL

October 17, 2024 | 12:03 am

ANKER INNOVATIONS has launched its Zolo line of portable power banks and charger adapters in the Philippines.

The Zolo Power Bank series is available in two power capacities, namely 10,000mAh and 20,000mAh.

“Anker’s Zolo Power Bank Series allows users to charge two devices simultaneously, offering a compact yet powerful charging solution for those always on the move. With a lightweight build, it’s the perfect travel companion, whether for a quick day trip or a long journey,” the company said in a statement.

Both models have built-in USB-C and Lightning cables and have a total of four outputs, two inputs and an integrated display.

The Zolo Power Bank 10K mAh model has dimensions of 109.9 x 65.5 x 25 millimeters (mm), while the 20K variant measures 119.9 x 73.4 x 31.4 mm.

Anker said the 10,000 mAh model can provide at least two full charges for most smartphones.

“With 30 watts (W) of fast charging power, the Anker Zolo cuts charging times significantly, which means there’s no need for breaks; you’ll catch the sunset in time to take those pics because the Zolo Power Bank can power up the iPhone 15 by up to 57% in just 30 minutes,” it said.

“The Zolo Power Bank also comes equipped with a real-time digital display, letting you stay on top of your remaining battery life. The device also features a charging reminder, so you never have to second-guess whether your power bank needs a recharge before your next big adventure,” Anker added.

Meanwhile, the company also released new versions of its 20W and 30W Zolo Charger power adapters.

“Featuring a single USB-C port, these chargers deliver power up to three times faster than their predecessors, making them the perfect match for your Zolo Power Bank with a built-in USB-C cable,” Anker said.

“The upgraded temperature control ensures a safer experience, charging at temperatures 13°C lower than standard chargers. Thanks to innovative stacking technology, the Zolo Chargers are also 25% smaller, offering compact convenience without the excess heat,” it added.

The Zolo Power Bank and Zolo Charger are available in three colors: white, pink, and blue. They are now available for purchase via anker.ph and through Anker’s Shopee and Lazada stores. — BVR

SEC files complaint vs ukay-ukay supplier for investment activities

October 17, 2024 | 12:03 am

THE Securities and Exchange Commission (SEC) has filed a criminal complaint against Bulacan Ukay Ukay Direct Supplier for allegedly offering investments to the public.

The entity has allegedly violated Sections 8, 26, and 28 of Republic Act (RA) No. 8799, or the Securities Regulation Code (SRC), in relation to relevant provisions of RA No. 10175, or the Cybercrime Prevention Act; RA No. 11765, or the Financial Products and Services Consumer Protection Act (FCPA); and RA No. 9160, or the Anti-Money Laundering Act (AMLA), the commission said in an e-mailed statement on Wednesday.

The complaint was filed with the Justice department on Oct. 10.

According to the SEC, the complaint was filed after an entrapment operation by the Philippine National Police Anti-Fraud and Commercial Crimes Unit and the SEC Enforcement and Investor Protection Department (EIPD) in Guiguinto, Bulacan on Oct. 9.

The commission said the entity’s owner and sole proprietor was reportedly soliciting investments ranging from P2 million to P4 million, with supposed returns of 7% to 10% monthly, through social media.

Investigations by the EIPD also showed that the entity was allegedly soliciting investments from the public without the necessary registration and license from the SEC.

The SRC forbids the sale or distribution of securities without an SEC-approved registration. Violators will face a fine of up to P5 million, or imprisonment of up to 21 years, or both.

The Cybercrime Prevention Act raises the penalty for crimes committed with the use of information and communications technologies by one degree higher.

Meanwhile, the FCPA classifies the deceptive solicitation of investments to the public as investment fraud, while persons found violating provisions of the SRC may be charged with money laundering under the AMLA. — Revin Mikhael D. Ochave

As AI booms, techs turn to nuclear

October 17, 2024 | 12:03 am

Tech giant Google is reportedly contracting several small nuclear power plants to secure a steady supply of electricity for its data centers by 2030. This move reflects the company’s growing demand for energy, particularly with the rise of artificial intelligence (AI). At the same time, Google sees nuclear power as a low-carbon solution to meet its energy needs sustainably.

According to an article in The Guardian by Alex Lawson, Google has signed a deal to buy electricity from six or seven small modular reactors (SMRs) to be built by California-based Kairos Power. The first SMR is expected to be operational within six years, with the rest coming online by 2035. This shift to nuclear aligns with Google’s forecast of a significant increase in energy consumption as AI-driven services expand.

Alphabet, Google’s parent company, described this nuclear initiative as a way to secure a “clean, round-the-clock power source that can help us reliably meet electricity demands.” Nuclear energy is said to offer a reliable and low-carbon solution, which aligns with Google’s sustainability goals and supports the continuous operation of energy-intensive data centers.

Google is not the only tech company betting on nuclear power. In March, Amazon purchased a data center in Pennsylvania powered by nuclear energy. Following suit, Microsoft signed a deal in September with a nuclear power facility located on Three Mile Island, also in Pennsylvania. The Guardian attributed these developments to the explosive growth of AI and cloud computing, which have drastically increased energy needs.

These tech companies are preparing for future energy demands even before consumption peaks, recognizing that energy infrastructure takes time to build. As technology evolves and becomes more integrated into every aspect of life, more nuclear power plants may be contracted to support high-tech operations. This trend indicates that the tech industry views nuclear energy as essential for achieving energy security in the era of AI.

Microsoft’s deal involves the revival of a reactor at the infamous Three Mile Island site, where a meltdown in 1979 marked the worst nuclear accident in US history. Although the accident caused no immediate deaths, it severely damaged public confidence in nuclear energy. After the incident, Unit 2 at the facility was decommissioned. Unit 1, however, continued operating until 2019, when it was shut down for economic reasons.

The plant’s recent revival reflects the changing landscape of energy demand. With a 20-year power purchase agreement secured with Microsoft, the plant’s operator, Constellation Energy, decided to restart Unit 1. This recommissioning marks the first time a nuclear reactor in the US has resumed operation after closure.

The Guardian reported that the reactivated plant would generate an additional 835 megawatts for Pennsylvania’s grid, create 3,400 jobs, and contribute at least $16 billion to the state economy. Constellation emphasized that the plant had been one of the safest and most reliable before its previous shutdown.

Despite the plant’s troubled history, Microsoft’s long-term commitment signals a level of confidence in the safety and reliability of the site. In preparation for the restart, the reactor will undergo a comprehensive safety and environmental review by the US Nuclear Regulatory Commission. Additionally, Constellation plans to apply for licenses that could extend the plant’s operations until at least 2054.

The revival of nuclear energy, particularly among tech giants, is not without controversy. While nuclear offers a reliable and low-emission energy source, it poses environmental and safety risks. Nuclear plants depend on water sources for cooling, making them vulnerable to climate-related disasters like droughts, floods, or hurricanes. Earthquakes and other unforeseen events could also trigger accidents, as seen in past incidents like Chernobyl (1986) and Fukushima (2011).

Nevertheless, tech companies appear willing to take these risks, likely driven by the surge in energy demand from AI. According to Goldman Sachs, The Guardian reported, AI-related energy consumption could grow by 160% by 2030, with data centers projected to use about 8% of US electricity by that time. With such rapid growth, stable and scalable power sources like nuclear become essential.

Michael Terrell, Google’s senior director for energy and climate, was quoted by The Guardian as saying: “The grid needs new electricity sources to support AI technologies that are powering major scientific advances, improving services for businesses and customers, and driving national competitiveness and economic growth.”

Interestingly, the Philippines is also exploring nuclear energy as part of its energy strategy. Recently, Manila Electric Co. (Meralco) partnered with South Korea’s Samsung C&T Corp. Engineering & Construction Group to assess the potential of nuclear power. Their discussions cover both large-scale nuclear plants and smaller modular reactors, similar to what tech giants in the US are pursuing.

The government has expressed interest in integrating nuclear energy into the country’s power mix, aiming to have operational plants by 2032. There is even renewed interest in reviving the Bataan Nuclear Power Plant, a facility that was built but never activated due to political and safety concerns in the 1980s.

At the heart of this nuclear shift is the goal of energy security —ensuring an uninterrupted, sustainable, and efficient energy supply. As AI reshapes industries and consumer behavior, electricity becomes as essential as food and water. Both businesses and households now rely heavily on power for daily operations, making energy availability a critical issue.

Although I have reservations about operating nuclear plants locally, the rising demand for energy cannot be ignored. With proper regulation, modern safety protocols, and strategic investments, nuclear power might become a viable solution for the Philippines. However, the decision to adopt nuclear energy must weigh the potential benefits against the risks and explore how it can complement renewable energy sources.

The shift of tech giants like Google, Amazon, and Microsoft toward nuclear energy highlights the growing pressure to secure reliable power sources for a future driven by AI and cloud technologies. While nuclear energy offers a low-carbon solution to energy-intensive operations, it also comes with significant risks. The decision to embrace nuclear power, whether in the US or the Philippines, will require careful planning, stringent regulation, and public engagement.

Ultimately, achieving energy security in a world increasingly reliant on technology will depend on finding the right balance between safety, sustainability, and economic growth. As companies and governments explore their options, nuclear energy might well play a pivotal role — whether we are ready for it or not.

Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippine Press Council

matort@yahoo.com

Tourists seeking luxury are flocking to Vietnam’s fine dining restaurants

October 17, 2024 | 12:03 am

THE week before Sam Aisbett opened Akuna in Ho Chi Minh City, Vietnam, in July 2023, he panicked. “I said, ‘What the hell am I doing? What an idiot,’” recalled the Australian chef in a recent video interview. There was no way his restaurant, with a menu price of 3.9 million dong ($160) — at least 20 times what stalls across the street were charging — could survive, he thought, even though he had a Michelin star under his belt.

But the risk paid off. Akuna flourished, and about a year later, the place bagged a star for Aisbett’s ingenious dishes created from Vietnamese ingredients. Shaved squid is served with local samphire, hearts of palm, and squid dumplings, while uni is accompanied by fan shell clams and pickled durian.

Akuna’s opening is just one of the places on the burgeoning list of fine dining spots in Vietnam. The country is famous for its array of cheap and delectable noodles and skewers and sandwiches; now it’s gaining recognition among hungry travelers seeking luxury.

Last year the Michelin Guide arrived in Vietnam and awarded one star to four restaurants. Three more joined the list this year, including La Maison 1888 in Da Nang, a signal that Vietnam’s gourmet scene extends beyond its major cities. Of the seven starred restaurants, only one was French, despite the cuisine’s ties to fine dining and Vietnam’s colonial past. Three — Tam Vi, Anan Saigon, and Gia — are categorized as Vietnamese. (Akuna is labeled “innovative.”)

Michelin’s entry into Vietnam comes as the country is expected to see a record 771 trillion dong ($31 billion) spending in travel and tourism spending this year, the World Travel & Tourism Council estimates. This represents about 7% of its economy and supports one in nine jobs in a country of roughly 100 million people. Domestic travelers are expected to spend a historic high 435 trillion dong this year, the organization added, as the country’s economy and middle-class population grow.

Luxury travel is expanding faster than other segments of the industry, said Margaux Constantin, a partner at McKinsey & Co. who focuses on tourism, in a video interview. This includes aspirational travelers, who may not be rich but are willing to splurge on occasion, increasing demand for premium dining. Vietnam’s proximity to other countries with a rising middle class such as India has helped as well — the number of visitors from India has tripled since 2019, reaching 312,000 between January and August of this year, partially offsetting a fall in Chinese visitors.

Food plays a crucial role in drawing globetrotters, with fine dining experiences being the second most popular activity among tourists, according to a McKinsey survey of 877 US and UK travelers earlier this summer, right behind sightseeing-and-art experiences.

At least one luxury tour provider has turned its focus to gastronomy in Vietnam. Abercrombie & Kent selected Vietnam as the first destination for its food-focused tours, which began in May. Increasing demand for culinary experiences on previous tours prompted the decision, said Suzanne Teng, global group product director, in an e-mail. The release of a Michelin Guide for Vietnam last year provided a “marketable hook,” she said, enabling visitors to combine street food experiences with meals at the one-starred Anan Saigon and Gia. Higher-than-expected demand has led the company to double the Vietnam food trips to 12 in 2025.

When Peter Franklin first opened Anan Saigon in 2017, friends thought he was “trying to sell ice to the Eskimos,” he says. A tasting menu meal there costs 2.3 million dong; its success showed there’s a market for contemporary Vietnamese food. “Travelers now can enjoy both a delicious $1 street-style banh mi and Anan Saigon luxurious-dining $100 banh mi,” jokes Franklin.

Gia co-founder and owner Sam Tran, who spent years working in Melbourne before returning to hometown of Hanoi, said in a video interview that it’s important to recognize the country’s culinary scene extends beyond street food. “I saw the opportunity to elevate Vietnamese cuisine to a more refined setting,” she said.

Vietnam has a rich history of food prepared for royalty during its monarchy before World War II: Tran said it’s a source of inspiration for her. For instance, the Lang basil used in a jellyfish dish is sourced from Lang Thuong, a ward in Hanoi where herbs for the royal family were once grown, Tran said.

Chefs note that while their clientele used to be predominantly local, international visitors now make up half their customers.

For people in finance, the Michelin Guide offers recognizable names to host clients where “half the work is done,” said Khanh Vu, deputy managing director of Vietnam-focused investment firm VinaCapital, in a video interview. It showcases how much Vietnam has developed: “Now you’re not a frontier backwater anymore. You’re a real serious player in the world.”

Plus, even the country’s expensive restaurants feel like a relative bargain compared with the prices of high-end Vietnamese dining rooms in other parts of the world, thanks to low labor and rent costs. The one-star restaurants Le Pavillon in New York City and Nightbird in San Francisco cost about twice as much as Anan Saigon.

Still, competing with street vendors “is its own little beast,” says Aisbett. So is navigating Vietnam’s food supply chain, since there isn’t a sizable fine dining industry yet. “When you’re one restaurant trying to get things grown for you, it’s extremely hard,” he says.

The country’s fine dining scene is still nascent, compared with its Asian counterparts. Thailand has 35 Michelin-starred restaurants, while Singapore and Hong Kong have more than 50 each. Anan Saigon is the only Vietnamese restaurant on Asia’s 50 Best Restaurants list.

Still, it’s just a matter of time before Vietnam’s culinary scene catches up, says Tran. As the current generation of renowned chefs train their assistants, more restaurants will emerge and the industry will become more professionalized. “I want them, after a few years working with me, they can open their own restaurant. And they work in the right way. And,” she adds, “they do the right thing for Vietnamese cuisine.” — Bloomberg

TDF yields down before BSP cut

October 17, 2024 | 12:02 am

TERM DEPOSIT YIELDS fell on Wednesday ahead of a widely expected rate cut by the Bangko Sentral ng Pilipinas (BSP).

The central bank’s term deposit facility (TDF) fetched bids amounting to P191.794 billion on Wednesday, slightly above the P190-billion offering but was lower the P251.112 billion in tenders for the same volume auctioned off a week ago.

Broken down, tenders for the seven-day papers reached P98.069 billion, below the P100 billion auctioned off by the central bank and the P137.878 billion in bids for the same volume offered the previous week.

Banks asked for yields ranging from 6.2355% to 6.28%, wider than the 6.25-6.28% band seen a week earlier. This caused the average rate of the one-week deposits to slip by 0.26 basis point (bp) to 6.2642% from 6.2668% previously.

Meanwhile, bids for the 14-day term deposits amounted to P93.725 billion, above the P90-billion offering but below the P113.234 billion in tenders for the same amount auctioned off a week earlier.

Accepted rates for the tenor were from 6.19% to 6.35%, lower than the 6.25% to 6.36% margin seen a week ago. With this, the average rate for the two-week deposits fell by 3.42 bps to 6.3019% from 6.3361% logged in the prior auction.

The central bank has not auctioned 28-day term deposits for more than four years to give way to its weekly offerings of securities with the same tenor.

The term deposits and the 28-day bills are used by the BSP to mop up excess liquidity in the financial system and to better guide market rates.

Term deposit yields went down ahead of the BSP’s announcement of its policy decision on Wednesday, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The Monetary Board on Wednesday cut benchmark interest rates by 25 bps for a second straight meeting, as expected by 16 of 19 analysts in a BusinessWorld poll, as price pressures remain manageable.

This brought its policy rate to 6%. The interest rates on the BSP’s overnight deposit and lending facilities were also adjusted to 5.5% and 6.5%, respectively.

The BSP in August kicked off its easing cycle with a 25-bp reduction, marking its first rate cut in nearly four years.

BSP Governor Eli M. Remolona, Jr. said at a briefing on Wednesday that they could cut benchmark rates by another 25 bps at their Dec. 19 meeting, noting that a one-time 50-bp reduction could be “too aggressive a cut,” except in a hard landing scenario.

Mr. Remolona added that they could slash rates by 100 bps in 2025, but said they prefer to take “baby steps” in their policy easing cycle.

Meanwhile, Mr. Ricafort said that lower global oil prices recently also contributed to the decline in TDF yields.

Oil prices inched higher on Wednesday amid uncertainty over what may happen next in the Middle East conflict, after demand concerns knocked the market to its lowest since early October in the previous session, Reuters reported.

Brent crude oil futures rose 19 cents or 0.3% to $74.44 a barrel by 0630 GMT. US West Texas Intermediate crude futures climbed 24 cents or 0.3% to $70.82 per barrel.

Oil prices tumbled more than 4% to a near two-week low on Tuesday due to a weaker demand outlook and after a media report said Israel would not strike Iranian nuclear and oil sites, easing fears of a supply disruption.

However, concerns about an escalation in the conflict between Israel and Iran-backed militant group Hezbollah persist, with the US on Tuesday saying it opposed the scope of Israel’s air strikes in Beirut over the past few weeks.

Term deposit yields went down ahead of the cut in banks’ reserve requirement ratios (RRR) that will take effect next week, Mr. Ricafort added.

The BSP will reduce the RRR for universal and commercial banks and nonbank financial institutions with quasi-banking functions by 250 bps to 7% from 9.5% effective on Oct. 25.

It will also cut the RRR for digital banks by 200 bps to 4%, while the ratio for thrift lenders will be reduced by 100 bps to 1%. Rural and cooperative banks’ RRR will likewise go down by 100 bps to 0%.

Mr. Remolona earlier said they could bring down the RRR for big banks to as low as zero within his term, which ends in 2029. — Luisa Maria Jacinta C. Jocson

BARMM economic potential; US debt and elections

October 17, 2024 | 12:02 am

Two topics will be covered in this column so we go straight to the numbers and facts.

The Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) has the smallest regional GDP size even among Mindanao’s six regions — only P292 billion in 2023 (at constant 2018 prices). The region has remained economically undeveloped even after the conclusion of the comprehensive peace agreement between the Philippine government and the Moro Islamic Liberation Front (MILF) in March 2014.

The BARMM is composed of six provinces — Lanao del Sur, Maguindanao del Norte (except Cotabato City), Maguindanao del Sur, Basilan, Tawi-Tawi, and Sulu. The regional GDP of P292 billion was only 1.4% of the total Philippine GDP of P21.05 trillion in 2023. I was expecting that during and after the peace agreement in 2014, regional growth would quickly rise but it did not. The average growth in 2013-2018 was only 5.5% compared with the national growth of 6.6% (see Table 1).

Recently the Supreme Court ruled that Sulu (with a population of 1 million according to the 2020 census) is no longer part of the BARMM, so the region now has only five provinces.

Last week I read about and saw photos of a big meeting, the 20^th meeting of the National Government — Bangsamoro Government’s Intergovernmental Relations Body (IGRB) held on Oct. 11 at Chardonnay de Astoria in Pasig City. (It is a good venue, part of the Astoria Hotels and Resorts group owned by a friend and fellow UP School of Economics alumnus, Jeffrey Ng.)

Department of Budget and Management (DBM) Secretary and IGRB Co-chair Amenah F. Pangandaman, and BARMM Minister and IGRB co-chair Mohagher M. Iqbal, led the meeting. Secretary Pangandaman is also a Muslim — her family hails from Marawi City.

Both officials emphasized the role of peace or the absence of war in the region to advance growth and prosperity. The BARMM needs to be on a fast track growth and investment expansion to catch up economically even with its neighbor regions in Mindanao.

Here are some reports this year from BusinessWorld on this topic: “Bangsamoro ecozones backed” (Jan. 14), “Gains mark BARMM’s 5^th year” (Jan. 21), “Energy dep’t, BARMM to offer areas for exploration” (Feb. 26), “Bangsamoro gov’t authorized to enter into foreign-aid deals under new ODA guidelines” (Sept. 3), “BARMM to buy DBP stake in Amanah Bank” (Sept. 9), “BARMM studying Malaysia’s programs” (Oct. 1), “Exploring land-based natural gas fields in Southern Mindanao” (Oct. 14, “Introspective” column by Dr. Ramon Clarete), “SC ruling on Sulu won’t disrupt gov’t operations — IGRB” (Oct.15).

I hope that the recent IGRB meeting and the inspirational messages of Ms. Pangandaman and Mr. Iqbal will spur the participants and their people in the region to move faster in attracting domestic and foreign investments. Especially huge funds from rich Muslim economies in the Middle East like Qatar, Kuwait, the United Arab Emirates, and Saudi Arabia.

THE US ELECTIONS
The US Presidential elections are just three weeks away, so I checked the fiscal management records of past American presidents Barrack Obama and Donald Trump, and incumbent President Joe Biden.

Since Mr. Trump had an explicit policy of “no new US war abroad” coupled with ending existing US wars, the man has actually controlled the fast expansion of US debt, with an average increase of only around $3.15 trillion over three years (2016-2019) or $1 trillion/year.

Then came the COVID-19 lockdowns and mandatory shutdown of businesses globally in 2020. US debt jumped by $4.2 trillion in a single year to $26.94 trillion by the end of Fiscal Year 2019-2020.

President Biden and Vice-President Kamala Harris backed a new US war/involvement abroad in Ukraine, sustained existing wars (US troops are still in Syria, Iraq, etc.), and are preparing for a big war vs China over Taiwan. US public debt has been increasing, from $1 trillion/year under Trump (except for 2020) to $2.13 trillion/year under Biden (see Table 2).

These public debt numbers do not include yet unfunded liabilities like pension which are in the several tens of trillion dollars.

The world has experienced 79 years of peace, with no world wars (from September 1945, when World War II ended, to October 2024). Conflicts between and among countries over territory, over natural resources and other issues were resolved via diplomacy and peaceful settlement. Yes, there were inter-country or regional wars but no world war.

We should keep peace in the world. We should have more commerce and trade, more investments and tourism, more exchange of sports, culture, and rock bands in the world. Not more missiles and bombs, more jetfighters and fighter drones.

I hope that we shall see a no new war, and see policy change on existing wars in the US again after the Nov. 5 elections.

Bienvenido S. Oplas, Jr. is the president of Bienvenido S. Oplas, Jr. Research Consultancy Services, and Minimal Government Thinkers. He is an international fellow of the Tholos Foundation.

minimalgovernment@gmail.com

Philippines’ Economic Freedom improved in 2022

October 17, 2024 | 12:02 am

THE PHILIPPINES’ RANKING jumped nine spots in a global index on economic freedom due to higher scores in trade freedom and property rights, according to the Canada-based think tank Fraser Institute. Read the full story.

Meralco says consumers to save P11.8B from 600-MW power supply deals

October 17, 2024 | 12:02 am

electric-meter — PHILIPPINE STAR/ERNIE PENAREDONDO

MANILA Electric Co. (Meralco) is seeking approval from the Energy Regulatory Commission (ERC) for its 600-megawatt (MW) power supply agreements (PSAs), which are projected to result in consumer savings totaling P11.76 billion.

Meralco has filed separate joint applications with San Miguel Global Power Holdings Corp.’s Masinloc Power Co. Ltd. (MPCL) and Aboitiz Power Corp.’s GNPower Dinginin Ltd. Co. (GNPD).

The power distributor secured the lowest bids from MPCL and GNPD, which offered P5.6015 per kilowatt-hour (kWh) for 500-MW capacity and P5.7392 per kWh for 100 MW, respectively.

The Bids and Awards Committee for PSA issued notices of award to MPCL and GNPD. Thereafter, Meralco signed PSAs with the two generation companies with planned effectivity on Aug. 26, 2025.

In Meralco’s joint filing with MPCL, they said that the delivered rate would be P5.0107 per kWh, inclusive of line rental and value-added tax (VAT), citing a rate impact analysis.

This is lower by about P2.2719 per kWh than the effective cost of P7.2825 per kWh if the equivalent capacity under the Meralco-MPCL PSA is sourced from the Wholesale Electricity Spot Market (WESM), the trading floor of electricity.

“In fact, by sourcing the capacity through the Meralco-MPCL PSA, Meralco’s average blended generation rate will be reduced by about P0.2508 per kWh… resulting in savings to consumers of about P9.951 billion,” the application read.

MPCL owns and operates Units 3 and 4 of the Masinloc Coal-Fired Thermal Power Plant in Brgy. Bani, Masinloc, Zambales, and capable of supplying 619.50 MW. The power plant units are undergoing construction.

Meanwhile, in Meralco’s application with GNPD, the firms said that consumers could save about P1.805 billion by sourcing the 100-MW supply requirement through the PSA instead of the spot market.

They said that the delivered rate of P5.2217 per kWh (line rental inclusive and VAT inclusive) is lower by about P2.0608 per kWh compared to the effective cost of P7.2825 per kWh if the same capacity is sourced from the WESM.

GNPD owns and operates a 1,336 MW coal-fired power plant in Brgy. Alasasin, Mariveles, Bataan.

Citing its Distribution Development Plan and Power Supply Procurement Plan approved by the Department of Energy, Meralco is seeing a baseload capacity deficit in its portfolio of 600 MW based on its power situation outlook for the third quarter of 2025.

“If this deficiency is not addressed through the grant of provisional authority or interim relief, Meralco’s customers stand to be exposed to the volatile prices of the WESM equivalent to the considerable volume of the subject Meralco-MPCL PSA,” according to one of the applications.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Sheldeen Joy Talavera

EU AI Act checker reveals Big Tech’s compliance pitfalls

October 17, 2024 | 12:02 am

LONDON — Some of the most prominent artificial intelligence (AI) models are falling short of European regulations in key areas such as cybersecurity resilience and discriminatory output, according to data seen by Reuters.

The European Union (EU) had long debated new AI regulations before OpenAI released ChatGPT to the public in late 2022. The record-breaking popularity and ensuing public debate over the supposed existential risks of such models spurred lawmakers to draw up specific rules around “general-purpose” AIs.

Now a new tool designed by Swiss startup LatticeFlow and partners, and supported by European Union officials, has tested generative AI models developed by big-tech companies like Meta and OpenAI across dozens of categories in line with the bloc’s wide-sweeping AI Act, which is coming into effect in stages over the next two years.

Awarding each model a score between 0 and 1, a leaderboard published by LatticeFlow on Wednesday showed models developed by Alibaba, Anthropic, OpenAI, Meta, and Mistral all received average scores of 0.75 or above.

However, the company’s “Large Language Model (LLM) Checker” uncovered some models’ shortcomings in key areas, spotlighting where companies may need to divert resources in order to ensure compliance.

Companies failing to comply with the AI Act will face fines of 35 million euros ($38 million) or 7% of global annual turnover.

MIXED RESULTS
At present, the EU is still trying to establish how the AI Act’s rules around generative AI tools like ChatGPT will be enforced, convening experts to craft a code of practice governing the technology by spring 2025.

But LatticeFlow’s test, developed in collaboration with researchers at Swiss university ETH Zurich and Bulgarian research institute INSAIT, offers an early indicator of specific areas where tech companies risk falling short of the law.

For example, discriminatory output has been a persistent issue in the development of generative AI models, reflecting human biases around gender, race and other areas when prompted.

When testing for discriminatory output, LatticeFlow’s LLM Checker gave OpenAI’s “GPT-3.5 Turbo” a relatively low score of 0.46. For the same category, Alibaba Cloud’s “Qwen1.5 72B Chat” model received only a 0.37.

Testing for “prompt hijacking,” a type of cyberattack in which hackers disguise a malicious prompt as legitimate to extract sensitive information, the LLM Checker awarded Meta’s “Llama 2 13B Chat” model a score of 0.42. In the same category, French startup Mistral’s” 8x7B Instruct” model received 0.38.

“Claude 3 Opus,” a model developed by Google-backed Anthropic, received the highest average score, 0.89.

The test was designed in line with the text of the AI Act, and will be extended to encompass further enforcement measures as they are introduced. LatticeFlow said the LLM Checker would be freely available for developers to test their models’ compliance online.

Petar Tsankov, the firm’s CEO and cofounder, told Reuters the test results were positive overall and offered companies a roadmap for them to fine-tune their models in line with the AI Act.

“The EU is still working out all the compliance benchmarks, but we can already see some gaps in the models,” he said. “With a greater focus on optimizing for compliance, we believe model providers can be well-prepared to meet regulatory requirements.”

Meta declined to comment. Alibaba, Anthropic, Mistral, and OpenAI did not immediately respond to requests for comment.

While the European Commission cannot verify external tools, the body has been informed throughout the LLM Checker’s development and described it as a “first step” in putting the new laws into action.

A spokesperson for the European Commission said: “The Commission welcomes this study and AI model evaluation platform as a first step in translating the EU AI Act into technical requirements.” — Reuters

Bakers brace for costly Christmas as butter prices surge

October 17, 2024 | 12:02 am

PARIS — Butter prices have rocketed in recent months, trading at record highs across Europe in bad news for bakers and pastry makers as they prepare for Christmas celebrations and already face high chocolate and sugar costs.

Strong demand for butter, tight stocks, and dairy processors’ preference to use more milk for the most profitable products such as cheese have driven the price surge, analysts say.

European butter was trading on world markets at a record $8,706 per metric ton by Sept. 29, up 83% on year, latest official European Commission data showed.

Prices were also higher year on year in Australia and New Zealand but came off summer highs.

While large food companies have covered much of their butter supplies before starting to produce Christmas cakes and ice creams, the impact for small producers will be significant with a rise in prices unavoidable, said Paul Boivin, director of the French bakers and pastry federation FEB.

Milk output declined last year in most parts of the globe including Europe, the United States, and New Zealand — the world’s largest milk and butter exporter — as low prices and high feed costs discouraged many dairy farmers.

Global milk output rebounded slightly in 2024 but remained tight compared to growing demand, prompting producers to favor allocating milk to the most competitive products like cheese instead of butter, Rabobank dairy analyst Michael Harvey said.

SPREAD OF DISEASES
EU milk production grew 0.7% between January 2023 and July 2024, the latest EU data showed. Over the same period butter output fell 1.6% with stocks at historically low levels, while cheese production gained 3.2%.

The US Department of Agriculture (USDA) this month raised its forecast for 2024 US butter prices to $3 per pound, up 15% from last year, due partly to fewer cows and less milk produced by each animal.

“Tighter milk supplies and firm demand are expected to carry the higher price outlook into 2025,” USDA said.

Revenues in the global butter market are set to reach $42 billion in 2024, up more than 8% from 2022, and the market is expected to grow annually by 7% by 2029, according to data platform Statista.

European butter prices were also somewhat supported by fears of a further decline in milk supply due to a spread of diseases in dairy cows in Western Europe, including bluetongue and Epizootic Hemorrhagic Disease (EHD), analysts said.

However, the number of outbreaks of bird flu in US dairy cows was not large enough to impact the national level of milk production, USDA economist Michael McConnell said.

Butter prices should ease from record highs as dairy producers boost output to benefit from high prices, but it could take several months to see a significant fall, said Susan Kilsby, analyst at ANZ bank in New Zealand. — Reuters

CIMB Bank PH launches savings account for OFWs

October 17, 2024 | 12:01 am

CIMB BANK Philippines, Inc. (CIMB Bank PH) has launched a savings account product for overseas Filipino workers (OFWs) as it looks to tap underserved sectors.

The bank on Wednesday launched CIMB Kababayan, which will allow OFWs to open an account via the CIMB app while abroad using an international SIM card. The savings account has no opening and maintaining balance, offers free fund transfers, and a high interest rate of 15% per annum.

The digital-only commercial bank aims to onboard half a million depositors in the next two years through CIMB Kababayan.

”This is CIMB Bank’s newest offering, especially tailored for overseas Filipino workers and their families, in line with the bank’s mission to promote financial inclusion and to serve the underserved,” CIMB Bank PH Chief Executive Officer Vijay Manoharan said in a speech at the launch event.

“With CIMB Kababayan, OFWs can gain access to a superior banking relationship, the ability to open and save in a matter of minutes anywhere in the world, gain access to financial education, financial literacy, have an account which makes them enjoy higher savings interest rates, make payments more convenient, seamless, secure and transparent, and most importantly keep their money safe and help them grow their hard-earned money,” Mr. Manoharan said.

He said the 15% savings rate offered for the product will be subject to market conditions.

“Of course we’ll adjust it from time to time, but we’ll always continue to want to give back more than what the industry is giving. We’ll always be competitive,” Mr. Manoharan said.

He added that CIMB Bank PH plans to launch more products that cater to OFWs.

“CIMB will continue to drive to bring additional offerings to the OFW proposition and in the months to come you will hear more of how we will bring more and more value to the market to help the OFWs, and we also intend to enable access to credit for these OFWs to further support their financial needs, as today, they have limited access to credit from banks,” Mr. Manoharan said.

He added that the bank is on track to reach its financial targets for the year.

CIMB Bank PH’s customer base has reached 8.5 million depositors and about 3.5 million borrowing relationships, he said, but did not provide other figures.

Mr. Manoharan previously said the bank expects “higher than single digit” net income growth this year.

It is also aiming to disburse P75 billion in loans this year and to reach a total deposit cash-in level of P500 billion. — Aaron Michael C. Sy

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