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Bangko Sentral dispels worries bank reserve cut leaves policy too loose

THE CUT in bank reserves is a “neutral” move as far as monetary policy is concerned, with succeeding moves to depend on how much liquidity can be mopped up by central bank operations, its chief said.

Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla, Jr. said the “phased reduction” in the country’s high reserve requirement ratio (RRR) does not constitute an easing of monetary policy, since any excess liquidity that will be released to the system will be mopped up by other central bank’s tools, particularly via the term deposit facility (TDF) and the interest rate corridor.

“What BSP is executing is just an operational adjustment that should have a neutral effect on the monetary policy stance,” Mr. Espenilla told reporters in a text message.

“If BSP wants to change the monetary policy stance, BSP will signal that overtly, by changing the policy rate,” he added.

“But it can also do that more subtly without necessarily changing the RRP (reverse repurchase) rate, by allowing the market-determined TDF rates to rise (or fall) by altering auction volumes.”

On Feb. 15, the BSP announced that bank reserves will be reduced to 19% — from 20% among big banks — effective March 2, in keeping with Mr. Espenilla’s long-term goal of reducing the RRR level to single-digit levels.

The RRR cut is estimated to unlock about P90 billion of idle funds, which the central bank expects to mop up through its weekly term deposit auctions and via placements in its overnight deposit facility. The weekly term deposit volumes have been hiked to P110 billion following the surprise RRR reduction.

“The speed and timing of the RRR phase-down is largely a function of the liquidity-absorbing ability of OMO (open market operations),” Mr. Espenilla added.

“Therefore, analyst fears of ensuing looser monetary policy that can fuel more inflation is really unfounded,” he added.

“The bottom line: the BSP has many options to maintain firm monetary control. The key reason it is lowering the RRR is to promote a more efficient, level financial system that’s less biased against deposit-taking financial institutions which creates market distortions.”

Aside from the RRR, the central bank is also pursuing parallel reforms in capital markets and in easing foreign exchange restrictions as part of a “grand normalization” process, the BSP chief added.

Several analysts have pointed out that the reserve cut will effectively free up additional money into the system, at a time when markets remain awash with cash. These observers said the BSP may need to raise borrowing rates in order to prevent excess funds from bumping up prices of goods beyond expectations. — Melissa Luz T. Lopez

Monetary bodies’ tap-turning risks parching recovery

LONDON — The global recovery has powered through into the new year, bringing with it expectations for tighter monetary policy, something that tends to be followed eventually by recession — and last time round, financial and economic shock.

Major central banks such as the US Federal Reserve, the Bank of England and the Bank of Canada have already raised interest rates, while the European Central Bank (ECB) is moving ever closer to unwinding its own ultra-easy monetary policy.

So far, those banks have been reluctant to move rapidly, instead leaving the monetary taps open to try to drive up stubbornly low inflation and maintain growth.

“The danger is that we end up stoking bubbles which ultimately have even more disastrous long-term consequences,” said Peter Dixon at Commerzbank.

But if they tighten policy too soon — or too fast — they risk choking off the synchronised global upturn that has delighted policy makers, politicians, and vast swathes of jobless people who have finally got back into work.

If the current US economic expansion, already 102 months long, lasts another two years as many expect, it will be the longest in more than 150 years.

Already-solid US growth will be lifted this year by tax cuts, something most economists polled by Reuters say is not warranted at this late stage of the business cycle.

But it’s not just the US economy that is steaming ahead. Dozens of countries are now enjoying economic growth well above their 10-year moving averages.

HSBC economists noted in a recent report that periods in which the majority of countries are expanding at above their long-run trends tend to be associated with heightened monetary and financial risks.

“Synchronised global growth has tended to occur during only three stages in each economic cycle: in the initial recovery from recession; the years immediately preceding the next recession; or ahead of some sort of financial trauma,” they said.

While some individual forecasters have racked up impressive track records for accuracy, economists as a group consistently fail to predict recessions. In a late-January survey, they said the global economy would expand 3.7% this year and 3.6% in 2019, faster than they expected in October.

“Global growth has been accelerating since 2016 and all signs point to a continuous strengthening of that growth, in 2018 and next year,” the IMF’s Managing Director, Christine Lagarde, told a news conference at January’s World Economic Forum annual meeting in Davos.

Meanwhile, stock markets across the world repeatedly set record highs in 2017 but have had a turbulent start to the year.

“It’s hard not to see recent market turmoil as a taste of what’s to come as we enter a world in which central-bank support for asset prices can no longer be taken for granted,” Alliance Bernstein economists told clients.

About 23% of investors believe the biggest tail risk for markets is a policy mistake by the Federal Reserve or ECB, according to a December survey by Bank of America-Merrill Lynch.

The Fed is almost certain now to raise rates three times in 2018, in line with the central bank’s own projections, a Reuters poll found, even though some US policy makers are still worried about weak wage inflation and overall price pressures.

The risks are increasing that it will deliver four hikes.

Polls also found that Britain’s Bank of England will increase borrowing costs in May, earlier than previously thought, and while it will be a long wait before the ECB raises interest rates, it is expected to end its asset purchases by the end of the year.

Those predictions for tightening come despite persistently below-target inflation. Policy makers say those price pressures will come and that robust growth rates can withstand tighter policy.

Yet who can forget the ECB raising borrowing costs in July 2008, just before the biggest financial crisis in recent memory and as European growth was already at a near-standstill, only to be forced into slashing rates months later.

It flip-flopped again in 2011.

The world is different now to how it was then, however, said Commerzbank’s Dixon, with many of the imbalances and problems that afflicted economies resolved.

“The fact is, you can’t continue to run economies on this kind of ultra-expansionary monetary policy forever. You have to take away the punch bowl now in order to prevent a bigger hangover later,” he said. — Reuters

Treasury bills seen to fetch higher yields

YIELDS on Treasury bills (T-bills) on auction today are seen to move sideways following the release of minutes of the January meeting of the US Federal Reserve.

The Bureau of the Treasury plans to raise as much as P20 billion from the short-tenored securities today.

Broken down, the government will auction off P9 billion in three-month debt papers, P6 billion in six-month T-bills, and P5 billion worth of one-year papers.

A trader said in a phone interview on Friday that the movement of yields will be slightly flat with an upward bias, as market players are seen to factor in the release of the January Fed meeting minutes.

“[The yield increase, probably] slightly flat. Around 10 basis points higher,” the trader said.

During the Federal Open Market Committee’s Jan. 30-31 monetary policy meeting, a number of officials said they had marked up their economic growth forecasts as “labor market continued to strengthen and that economic activity expanded at a solid rate.”

This supported market expectations that the US central bank will increase its rates this year.

Though the Fed officials decided not to hike interest rates at last month’s meeting, the minutes indicated that the possibility of tweaking rates is bigger.

The minutes of the January Fed meeting were welcomed by volatility in the bond and stock markets.

Ten-year US Treasury notes on Wednesday slid to 2.921% from its four-year high of 2.95% earlier that day. This prompted the Dow Jones Industrial Average index to close 166.97 points lower at 24,797.78 after climbing 303.24 points in the early session.

The government only borrowed P14.17 billion out of the P20-billion program during its offering of Treasury bills on Feb. 2 after total tenders reached P22.96 billion.

Broken down, the government borrowed P7.394 billion under the 91-day term, below the P9 billion it wanted to sell, as it received bids worth P13.024 billion.

Meanwhile, the government also raised P5 billion as planned from the 182-day securities. Offers came in at P18.902 billion, more than three times the P5 billion offered.

Lastly, the 364-day T-bills were also fully awarded at P4 billion after offers reached P12.376 billion, more than three times the offer.

At the secondary market on Friday, the three-month, six-month, and one-year papers fetched 2.7461%, 3.4218% and 3.6914%, respectively.

Asked on expectations for demand for the papers on offer today, the trader said the T-bills may be twice oversubscribed across the board, especially on the three-month tenor.

“So far, the T-bills auction is getting a lot of demand up to now. I’m still expecting higher demands by more than two times, especially in the short-end,” the trader said.

The Treasury plans to auction off P120 billion worth of Treasury bills and another P120 billion worth of Treasury bonds in the January to March period. This is higher than the P200 billion it offered in the last quarter of 2017.

The government borrows from local and foreign sources to fund its budget deficit, which for this year is capped at 3% of the country’s gross domestic product.

The government targets a P888.23-billion gross borrowing plan this year, 22.05% higher than last year. Of this amount, P176.27 billion will be from external financing while P711.96 billion will be sourced locally. — Karl Angelo N. Vidal

Filinvest-JG Summit proposal for Clark rejected by government

THE GOVERNMENT has rejected the unsolicited proposal of Filinvest Development Corp. (FDC) and JG Summit Holdings, Inc. (JGS) for the long-term development of Clark International Airport (CIA) in Pampanga.

Department of Transportation (DoTr) Secretary Arthur P. Tugade said the government instead will conduct a bidding for Clark’s operations and maintenance (O&M) contract.

This is in line with the government’s strategy to build the infrastructure for CIA, and bid out the O&M contract to the private sector.

“We approved the parameters and guidelines for O&M, then they will be published, then we will have a bidding process,” Mr. Tugade told reporters on the sidelines of an event on Feb. 22.

Mr. Tugade did not specify a timeline for the bidding process.

Public-Private Partnership Center Executive Director Ferdinand A. Pecson said the O&M contract for Clark is targeted to be rolled out this year.

Last November 2017, the Filinvest-JG Summit joint venture submitted to the DoTr and the Bases Conversion and Development Authority (BCDA)   a P839-billion proposal for the long-term development of the airport, which includes the expansion of terminals and runways, along with the operation and maintenance of passenger terminals.

The Gokongwei and Gotianun companies also proposed to develop, operate and maintain the commercial assets of the CIA, which include facilities for general aviation and fixed-base operations, and real estate. FDC and JGS tapped Singapore’s Changi Airports International as the technical partner for the project.

After evaluation by the DoTr and BCDA, Filinvest and JG Summit’s unsolicited proposal was forwarded to the National Economic and Development Authority — Investment Coordination Committee (NEDA-ICC).

The DoTr had earlier thumbed down the consortium’s P186.64-billion proposal for the expansion of CIA’s passenger terminal building. The government opted to build the infrastructure, and bid out the O&M contract to the private sector.

The government last December awarded the contract for the construction of Clark’s new terminal building to the joint venture of listed builder Megawide Construction Corp. and Bangalore-based airport operator GMR Infrastructure Ltd.

CIA has long been singled out as a potential alternative gateway to Ninoy Aquino International Airport (NAIA), which accommodated over 39.5 million passengers in 2016, well above its 30.5 million designed capacity.

While this is the second time an offer by the FDC and JG Summit was rejected, the two companies are part of the “super consortium” of seven corporations that submitted to the government a P350-billion proposal to rehabilitate NAIA.

Other members of the consortium include Aboitiz Equity Ventures, Inc.’s Aboitiz InfraCapital, Inc.; Ayala Corp.’s AC Infrastructure Holdings Corp.; Alliance Global Group, Inc.; Metro Pacific Investments Corp. and Asia’s Emerging Dragon Corp. — Patrizia Paola C. Marcelo

Alsons unit asks DoE chief to intervene as NGCP continues to ignore request

By Victor V. Saulon, Sub-Editor

A UNIT of the Alcantara-led Alsons Consolidated Resources, Inc. has asked the Department of Energy (DoE) secretary to intervene in its request to connect the second phase of its Sarangani power plant to the grid operator’s substation, in a move that it claims to have an impact on three million people in Mindanao.

In a letter to Energy Secretary Alfonso G. Cusi dated Feb. 20, 2018, the chief executive officer of Sarangani Energy Corp. (SEC) accused privately owned National Grid Corporation of the Philippines (NGCP) of abusing its position as system operator for not acting on the power developer’s request.

“NGCP’s inaction on SEC’s request is an abuse of its position as the transmission grid operator and in violation of its mandate as a franchised public utility,” SEC CEO Tirso G. Santillan Jr. said in the letter.

“SEC has been requesting NGCP… that it be allowed to install the necessary facilities in the NGCP Klinan Substation to connect Phase II to the grid. Unfortunately, the request has been pending with NGCP for 15 months already. This has severe consequences not just on SEC but also on its customer distribution utilities who have considered the Phase II supply in their supply projections,” he added.

NGCP did not immediately respond to a request for comment on the issue.

SEC is currently constructing the second 105-megawatt (MW) of its 210-MW circulating fluidized bed coal-fired power plant in Maasim, Sarangani province. It targets to start commercial operations by Jan. 15, 2019.

“In order to meet its timetable, SEC has to ensure that every aspect of Phase II’s project is completed on time, including the completion of the connection to the grid,” Mr. Santillan said.

The SEC official said the timely installation of the necessary facilities at Klinan substation is needed in order to meet the deadline. He noted the necessary assets should be operational by May 15, 2018 to enable SEC to accomplish the commissioning stage of the second phase, including various commercial operation tests.

Mr. Santillan said the request has not been granted “despite our compliance with all applicable rules and regulations and repeated requests for action on the part of NGCP.”

He warned SEC’s customers would suffer “considerable power shortages” if supply from the second unit is delayed.

SEC is contracted to supply a total of 105 MW to Mindanao distribution utilities, namely: Cagayan Electric Power and Light Co., Inc.; Cotabato Electric Cooperative, Inc.; Davao del Sur Electric Cooperative, Inc.; Iligan Light and Power, Inc.; South Cotabato I Electric Cooperative, Inc.; and Zamboanga del Sur I Electric Cooperative, Inc.

Mr. Santillan said NGCP’s “discriminatory treatment” of SEC was in contrast to a past experience involving the company’s first unit where it was able to install similar facilities in the same substation.

“It is noteworthy that NGCP is treating SEC differently from all other generation companies by taking upon itself the installation of assets necessary for the grid connection. As far as SEC knows, generation companies have been advancing the cost of these assets because NGCP refused to provide them, on the ground of lack of capital expenditure allocation. When SEC requested treatment identical as that given to other generation companies, NGCP has refused to do so,” he said.

Should NGCP be allowed to continue disregarding its mandate “to provide open and non-discriminatory access to the grid, Mr. Santillan said it will set a dangerous precedent that will unsettle the entire power industry.”

His letter was furnished to Agnes T. Devanadera, chairperson of the Energy Regulatory Commission, and Melvin A. Matibag, president and chief executive officer of National Transmission Corp.

PSE can bring down broker ownership in March

THE Philippine Stock Exchange, Inc. (PSE) is confident it will finally be able to bring down broker ownership in the bourse to less than 20% after the conduct of its stock rights offering (SRO) in March.

In a statement issued over the weekend, the PSE said it has signed an underwriting agreement with BDO Capital and Investment Corp. and First Metro Investment Corp. for the issuance.

With the two firms underwriting the SRO, the PSE said this guarantees that the shares will be fully subscribed and result in diluting broker ownership below 20%.

Under the SRO, PSE shares will be sold at P252 apiece to existing shareholders as of March 1 — excluding trading participants — from March 12 to 16.

“The firm commitment of our underwriters to our SRO effectively reduces the ownership of brokers in the Exchange to below 20%. Compliance with the Securities Regulation Code (SRC) on the 20% maximum broker ownership in the Exchange has finally been achieved,” PSE President and CEO Ramon S. Monzon was quoted as saying in a statement.

Item C of Section 33.2 of the SRC states that “no person may beneficially own or control, directly or indirectly, more than five percent (5%) of the voting rights of the Exchange and no industry or business group may beneficially own or control, directly or indirectly, more than twenty percent (20%) of the voting rights of the Exchange.”

Complying with this rule has prompted the PSE to conduct the SRO, alongside revoking the trading participant status of inactive brokers.

“It took time as part of the process involved the revocation of the trading participant status of inactive brokers and this required a period of six months to afford said inactive brokers with due process. But we were committed and focused all throughout the process and we are happy to see its completion and conclusion,” Mr. Monzon said.

In August 2017, the PSE said there were 52 inactive trading participants in the bourse, 14 of which held shares. If declassified, the PSE said broker ownership will then be brought down to around 23-24%, from the previous level of 27.9%.

Ensuring compliance with the single-industry cap is also necessary in obtaining the Securities and Exchange Commission’s approval for the PSE’s proposed acquisition of the Philippine Dealing System Holdings Corp. (PDSHC).

“We are introducing monitoring and trading mechanisms, including the necessary system automation to ensure that broker ownership limits in the Exchange will no longer be breached moving forward,” Mr. Monzon said.

To finalize the deal, the PSE has filed a petition with the SEC for exemptive relief, allowing the former to own more than 20% of the fixed-income exchange.

Aboitiz Group’s new unit inks partnership deal with Japan-based Weathernews

WEATHER SOLUTIONS, Inc., a newly created unit of the Aboitiz Group, is partnering with Japan-based Weathernews, Inc. (WNI) for the delivery of hyperlocal weather information to Philippine businesses.

In a statement released over the weekend, Weather Solutions said it signed a memorandum of understanding with WNI, which will allow the companies to collaborate on various areas such as providing training for meteorologists, consumer services, and new tools.

Weather Solutions, described as the country’s first weather-centric social enterprise, provides available historical and real-time weather data, forecasting, and consultancy to companies across different industries.

WNI, the world’s largest private weather service company, has over 30 years of experience, technology and operating systems that “can help local businesses interpret how weather data can be used to mitigate operational risks and/or drive industry-specific solutions to boost performance.”

Weather Solutions President Jojo Z. Marasigan said WNI would help analyze the available weather data for companies.

“For instance, in retail, WNI’s data analysis can predict which specific products are supposedly sellable for a particular time of the year. We are excited to take this journey with WNI, possibly creating breakthrough platforms that will change the way businesses operate, especially around the communities that they support. In incorporating use of weather data for business, we are seeing growth in our prospective partners’ gains,” Mr. Marasigan was quoted as saying.

With its partnerships with WNI and Aboitiz Group’s WeatherPhilippines Foundation, Inc., Weather Solutions can “create a robust and reliable data-as-a-service (DaaS) solution for its customers.” The company offers customizable weather datasets that companies and individuals can use for decision making.

“This partnership with Weather Solutions is a very big step in moving forward. We understand that the company has already installed around 800 automated weather stations (AWS), and this is a very good thing. We appreciate what you have done and we feel very honored to be a partner,” WN Weatherstreet Philippine Branch General Manager Hirokazu Koro was quoted as saying.

Bailey out, balloons on top: London Fashion Week wraps up

LONDON — Christopher Bailey’s goodbye as the head of Burberry, Christopher Kane’s prints of women having orgasms and flamboyant balloon headdresses were among the highlights of London Fashion Week, which wrapped up on Tuesday last week.

BYE BYE BAILEY
Burberry embarks on a new chapter in its history following Bailey’s final catwalk for the quintessential British brand. The 46-year-old, who helped boost the historic company’s fortunes, is leaving at the end of the year.

He presented a very personal collection — a homage to the LGBT community with designs inspired by the internationally recognized gay pride flag.

The favorites to succeed him are Phoebe Philo, who was at Celine, and Kim Jones, formerly at Louis Vuitton, according to trade publications.

PAISLEY AND STAMPS
Shirts in the collection of J.W. Anderson, Jonathan Anderson’s label, were adorned with paisley motifs.

Paisley was also a feature for Mary Katrantzou, covering coats and pink-and-gold trousers.

Margaret Howell also carried the pattern on vintage-style robes flowing down to the knee, worn with black socks and town shoes.

Other motifs included still-life flowers for Preen by Thornton Bregazzi, abstract and minimalist figures for Roksanda and stamps for Temperley London.

ALL IN PINK
Pink triumphed on London’s catwalks.

The color of the season, peach-colored “Millennial pink,” was on show in the collections of J.W. Anderson, Emilia Wickstead and Molly Goddard.

At Nicopanda’s show, the pink was more candy-like and used for racy miniskirts. Roksanda and Jasper Conran opted for a yellow theme — vibrant in the former and with more of an ochre hue in the latter.

SO SEXY
The women of Fashion Week were independent and wilfull, proud of their femininity and sensuality… and sometimes super-sexy. Christopher Kane stole the show with a femme fatale little red dress — ultra-short and transparent. The Scottish designer also used prints depicting women having orgasms from the 1972 best-seller The Joy of Sex.

Frenchman Roland Mouret showed off a range of colorful lingerie and there were plenty of see-throughs and subtle sensuality in the designs of Supriya Lele, Charlotte Knowles, and Mulberry.

UNUSUAL ACCESSORIES
Donut keyrings were spotted at J.W. Anderson, who also had pom-pom like rabbit ears sticking out of jumpers.

Britain’s Matty Bovan, who was making his fashion week debut, had a particularly eye-catching headdress design composed of red, gold, silver or tiger-skin balloons.

Gothic-punk Turkish designer Dilara Findikoglu adorned her belts with antique objects including mini-statues and black-and-white photos.

Less fun but more provocative was a creation by Gareth Pugh, a mask made entirely of construction nails.

CLOTHES YOU WOULDN’T WEAR
Edwin Mohney, a young New York designer and graduate of London’s Central Saint Martins school, showed off a giant pink dress in the form of a pink condom entirely covering the top half of the model’s body.

He is also the man behind “Trumpettos” — stiletto shoes covered in masks of US President Donald Trump. — AFP

SEC set to release results of 2GO investigation

THE COUNTRY’S corporate regulator will be releasing within the week the results of its investigation on the 2GO Group, Inc., less than a year after the company disclosed accounting issues in its financial results from 2015 until the first quarter of 2017.

“It will be forthcoming by next week,” Securities and Exchange Commission (SEC) Chairperson Teresita J. Herbosa told reporters when asked about the status of the investigation last Friday.

To recall, the SEC launched a four-man task force last July to conduct a probe on the company’s financial reporting issues. A special audit initiated by the new management of 2GO — led by businessman Dennis A. Uy — found the company underreported debt and inflated non-cash assets. This resulted in an additional P1-billion income in 2015 and 2016.

In a disclosure filed in July 2017, 2GO restated its net income for 2015, saying the company’s profit stood at P109.131 million, 90% lower than the P1.08 billion it earlier disclosed in its 2015 annual report.

2GO’s restated net income for 2016 stood at P344.035 million, 74% lower against the P1.34-billion profit it earlier reported.

The special audit further showed that the company incurred a net loss of P264.86 million in the first quarter of 2017, instead of a net income of P267.562 million as previously reported.

Mr. Uy tapped SyCip Gorres Velayo & Co. (SGV) to conduct the review after his team took over 2GO in April 2017, while R.G. Manabat & Company, the local unit of accounting firm KPMG, was the company’s auditor under the previous management.

Following the release of the special audit, 2GO’s then Chief Finance Officer Jeremias E. Cruzabra resigned from his post, and was then replaced by Willam Charles Howell.

Ms. Herbosa earlier said the investigation ran longer than expected, as the commission resolved to clarify around 10 issues that hounded the case.

Should the SEC prove that 2GO has violated the Securities Regulation Code due to this accounting issue, the commission can slap the company with a fine of at least a million pesos, plus an additional P10,000 fine for every day since the wrongdoing was discovered.

2GO is currently being managed by Mr. Uy’s group through Chelsea Logistics Holdings Corp., alongside SM Investments Corp. (SMIC). SMIC holds an interest in 2GO after it purchased a 34.5% stake in its parent firm, Negros Navigation Co., Inc. in April last year.

Aside from 2GO, the SEC said it will also study whether to revoke or impose penalties on RG Manabat. — Arra B. Francia

Beyonce’s fave toilet paper and other select objects fill new pop-up store

THERE ARE several new kids in town, and they will be all under one roof. Noble House, Inc., which distributes brands such as Paul & Shark, Piquadro, Luminox, and Aigle, has a new subsidiary called Mattony, Inc., which manages its new lifestyle store, Xception.

BusinessWorld was taken around its Eastwood Mall pop-up last week, which serves as a preview for the store, set to open in May this year. Xception will house home and lifestyle brands under its roof, as opposed to the fashion brands currently under Noble House’s umbrella.

One of these brands is Emeco, the company behind the 1006 Navy Chair (made first for the US Navy in the 1940s). Most of the brands are obscure, and anyone who’s anyone is supposed to know about them: there’s the paper product company Octaevo from Spain, which makes paper vases and greeting cards, sexy European furniture brand Serax, and luxury trashcan, furniture, and light fixture manufacturer Vipp.

A definite surprise was Renova colored toilet paper, selling at about P600 per package. Lightly perfumed, dermatologically and gynecologically tested, it’s what Beyonce’s famous tush uses (the red kind, specifically), at least according to Cosmopolitan magazine and E! Online. Move your Ferrari over, folks, this is the new status symbol for the times.

“Both companies carry a solid assortment of premium international brands that highlight exceptional design and style,” said Xception’s Assistant Brand Manager, Angela Abores when asked why Noble House decided to add lifestyle goods to its usual fashionable fare.

“These brands are carefully curated, and chosen for their uniqueness and remarkable design. We want to focus on the different quirks and qualities of each item, revealing functionality that is commonly overlooked,” she said. — J.L. Garcia

Turnover of units at Davao’s Aeon Towers faces delay

DAVAO CITY — Local property developer FTC Group of Companies Corp. is facing a one-year delay in the turnover of units for its 33-floor mixed-use Aeon Towers, but it is embarking on another project, this time a complex of five residential buildings.

FTC held the topping-off ceremony for Aeon Towers in late February 2017. At that time, FTC Group Chairman Francisco T. Cruz said the P3.1-billion building was 70% complete and they were aiming to hand over the residential units to buyers by end-2017 or January 2018.

Last week, however, Ian Y. Cruz, president of FTC subsidiary Aeon Luxe Properties, Inc., said the turnover of the condominium units is set for December 2018.

“Aeon is just a developer and part owner of the hotel, and Aeon Towers will be operated by a third party, Vanguard (Hotels). We launched Aeon Towers in 2011 and now we are running to 2018. The reason for the delay is we have to ensure the safety of our property… (Another) one of the causes of the delay is we have changed so many designs from the original one. Because we have to adapt to the trend now,” Mr. Cruz said in an interview with the media.

Mr. Cruz said the total project cost has reached P4.5 billion, including the hotel fixtures and furniture.

Aeon Towers — a mixed condominium, commercial and hotel project — would become the tallest operational building in Davao City and the rest of Mindanao once opened.

In February 2015, a 100-meter section of the road that borders the site collapsed, the second time after a similar incident took place at the same portion in September 2014. The second incident prompted the Department of Labor and Employment to issue a temporary stoppage order due to worker safety concerns.

In October last year, the project figured in another controversy when Davao City Mayor Sara Duterte-Carpio issued an ultimatum against the company for not immediately removing a crane on its rooftop, which the Civil Aviation Authority of the Philippines said exceeded the allowable height and was posing an obstruction and risks to flights coming into the Davao International Airport.

NEW PROJECT
Meanwhile, Aeon Luxe Properties will be developing Aeon Bleu, a five-building condominium complex on a 1.6-hectare property in the Bacaca area.

“Aeon Bleu, which is a mid-cost development, is going to be the first inland residential condotel resort living in the city,” said Andrew P. Bautista, Aeon Luxe Properties vice-president for sales.

Mr. Bautista said the company is targeting to launch the project within the second quarter this year.

“We are prepared to launch it anytime, as soon as we get our permits that are expected in less than a month now. We are now in the process of doing it at HLURB (Housing and Land Use Regulatory Board) and the (city) council,” he said.

The tallest of the five buildings would be 26 floors, he added. — Maya M. Padillo

Italian investor looks to rev up Shanghai Tang sales

MILAN — Italian entrepreneur Alessandro Bastagli set his sights on Shanghai Tang two decades ago and having finally bought the brand in 2017 from Richemont he aims to increase the group’s sales by 15-20% next year.

Bastagli told Reuters last Wednesday he will invest “an important amount” in the brand for its relaunch.

“We bought a Ferrari, we now have to spend money to fill the tank,” Bastagli said, declining to say how much was spent on the acquisition because of a confidentiality agreement.

The Swiss luxury conglomerate sold a controlling stake in the Chinese fashion group to a consortium of investors led by Bastagli last July.

Founded in 1994 by late Hong Kong businessman David Tang as a high-end tailor, Shanghai Tang sold Asian-inspired clothes for men and women as well as accessories and homeware.

The group now has €40 million ($49 million) in sales, and 16 boutiques in China, Singapore, and Macau, as well as some airport outlets. Its London shop was closed months before the group was bought by Bastagli.

The entrepreneur, who owns Italian brands that make leisure wear, aims to open “a couple” of European shops in the next years, ideally Milan, Paris, and London. The aim is to extend its reach in the West and target “Millennials” — young customers born between 1985 and 2000 — who account for almost a third of the luxury market.

Production of clothes and accessories has been moved to Italy while that of homeware items remains in China.

Bastagli concedes that a big investment will have to be made on communication, particularly in Europe, where the brand is less well known, positioning it in a “high-end niche… but not necessarily too expensive.”

The creative helm of the Asian brand was handed to Massimiliano Giornetti, creative director at Florence-based luxury group Salvatore Ferragamo until March 2016.

Giornetti told Reuters his first collection for Shanghai Tang, with Chinese-inspired details, quilted pieces, animal-print patterns, and damasqued silks, was a “dream-like trip between two millenary cultures that are linked by the Silk Road.”

Giornetti added that it was his intention to maintain the Chinese heritage but blend it with a contemporary look that would be appreciated by Western and Eastern customers alike. — Reuters

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