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Palace: South Korean telco keen to be third player

By Arjay L. Balinbin

A SOUTH KOREAN firm, apart from Beijing’s China Telecom, is interested in entering the telecommunications industry in the country, according to Communications Secretary Jose Ruperto Martin M. Andanar.

“We had a Cabinet meeting with the President, the 21st Cabinet meeting which was also the first Cabinet meeting for this year. At the meeting, DICT (Department of Information and Communications Technology) Acting Secretary Eliseo M. Rio, Jr. mentioned that so far there are two foreign companies that have expressed interest to be the third player in the telecommunications industry. First, the China Telecom, plus the consortium which was not mentioned. Second in the list is the Korean telecom company with its partner, the Philippine Telegraph and Telephone Corp. (PT&T),” Mr. Andanar said in Filipino in a radio interview on Tuesday night, Jan. 9.

It will be recalled that in November last year, President Rodrigo R. Duterte had offered the People’s Republic of China the opportunity to operate as one of the key players in the telecommunications industry in the country.

Mr. Andanar likewise announced that the government is targeting to have the third telecommunications player start its operations “this year.”

He added that the DICT has been “fast-tracking” the entry of the third telecom player in order to make the telecommunications industry in the country “more competitive,” noting that the PLDT Group, through the initiative of Manuel V. Pangilinan, has already committed “P58 billion” as its capital expenditure for this year. For its part, Globe Telecom, the only other telco player in the country, will be “adding over P47 billion” to its investment.

“We can really see that even just the announcement itself encourages these two telco giants to invest more money for the improvement of their services. So, that in itself is already a victory for the Filipino people,” Mr. Andanar said.

This is really going to be an exciting year for the telco industry for 2018,” he added.

Term deposits met with strong investor demand

By Melissa Luz T. Lopez
Senior Reporter

DEMAND for week-long term deposits continued to climb to reach more than triple the amount offered by the central bank yesterday, driving yields lower as market liquidity normalizes after the holidays.

Banks wanted to place as much as P127.119 billion as term deposits under the Bangko Sentral ng Pilipinas (BSP) on Wednesday, climbing from P95.55 billion the previous week and more than triple the P40 billion on offer.

Yields on these instruments also dropped amid overwhelming demand to average at 3.2223%, coming from a narrow range of 3.15-3.25%. This spells a sharp drop from the 3.3654% fetched a week ago.

Yesterday’s turnout sustains a steady pickup in demand for the third straight week, accompanied by declining rates sought by banks.

The term deposit facility (TDF) is currently the central bank’s primary tool to mop up excess funds in the financial system. The window allows banks to park the idle cash they hold under the BSP in exchange for a small margin, which is determined through weekly bids hosted by the central bank.

Through this process, the BSP expects to bring market rates closer to the 3% benchmark borrowing rate, coming from below the 2.5% floor of the interest rate corridor when the TDF auctions started in June 2016.

BSP Deputy Governor Diwa C. Guinigundo said the recovering demand for TDF placements showed that “significant liquidity” is returning to the banks after the holiday season.

“We also see continued disbursement by the government to fund its normal current operations as well as capital spending especially for infrastructure projects. Hence, banks are now awash with liquidity,” Mr. Guinigundo said in a text message to reporters.

Despite the rebound in money supply, the central bank still kept next week’s auction limited to the week-long tenor for the fifth consecutive time. Another P40 billion worth of seven-day instruments will be offered on Wednesday.

“We are therefore witnessing the gradual normalization of liquidity conditions. The BSP does not want to interfere with this process by bringing back liquidity into its deposit facilities at this transition stage,” Mr. Guinigundo added.

He noted that the BSP still sees “sustained high demand” for loans, foreign exchange, offshore investments and debt payments in the market.

The BSP stopped offering 28-day term deposits on Dec. 20 as market players preferred the week-long instruments as they anticipate a seasonal spike in demand for cash as Filipinos spend more for celebrations and gift-giving activities for Christmas and New Year.

Mr. Guinigundo has said they will restore the 28-day tenor “in due time” as they monitor emerging money supply dynamics. He added that the central bank is also looking to introduce a new tenor for term deposits, which would likely be longer than a week but shorter than a month.

Troops to add to pension — Diokno

By Elijah Joseph C. Tubayan
Reporter

THE GOVERNMENT eyes to have the military pension contributory by next year, the Budget chief said.

“We plan to address that by next year. We will have a solution not later than middle of this year,” Budget Secretary Benjamin E. Diokno said in a press briefing yesterday.

Asked whether military pension will now be contributory by then, he said: “We will make sure.”

The new scheme will mandate new recruits to contribute to their own pension, while those already under the current scheme will be untouched.

Currently, taxpayers pay for military and uniformed personnel’s pension. It is also indexed to the salaries of those troops active in service, meaning an increase in salaries would have a corresponding increase in the pension.

The country’s economic managers flagged this as a fiscal risk in the Development Budget Coordination Committee 2017 Fiscal Risk Statement.

He also floated the option to “buy out” in lump sum the retiree’s total pension in a period of time, to avoid the increase in cost from possible military salary hikes in the future.

Mr. Diokno said they may tap the Government Service Insurance System (GSIS) to manage the new pension fund for the military, but this would require a capitalization of about “P9 trillion.”

“I think you cannot avoid infusing government funds to make it attractive. [GSIS] is the logical body. But you have to make a distinction between civilian employees and military employees,” he said.

Mr. Diokno said earlier that the move would require legislation.

Payments last year for military pensions stood at P90 billion, or about two-thirds of the Department of National Defense’s P134.29-billion budget that year.

Mr. Diokno said they will be looking at entering into joint ventures with private firms in military properties to partially fund the required fund.

He said earlier the government wouldn’t compromise its P8.4-trillion infrastructure spending plan.

Meralco to reduce electricity rates this month

By Victor V. Saulon, Sub-Editor

HOUSEHOLDS can expect a reduction in the cost of electricity in January as Manila Electric Co. (Meralco), the country’s biggest distribution utility, announced on Wednesday it will lower rates by P0.5260 per kilowatt-hour (kWh).

This brings the overall rate to P8.7227 per kWh from P9.2487 per kWh previously. A typical residential customer with a 200-kWh consumption will see their monthly bill reduced to around P105.

Households consuming 300 kWh, 400 kWh and 500 kWh will see a reduction of P157.8, P210.4 and P263, respectively, in their monthly bills.

“The lower January rate is mainly due to a P0.5277 per kWh reduction in the generation charge,” Meralco said in a statement.

The reduction is the second straight month of decrease in overall electricity rates, the company said, placing the total reduction at P0.9045 per kWh during the two-month period.

Meralco said lower power supply agreements (PSAs) as well as lower charges at the wholesale electricity spot market (WESM) largely contributed to the drop in the generation charge to P4.0768 per kWh in January from P4.6045 per kWh in December.

Charges from the supply contracts were down by P0.9810 per kWh, the company said.

“The lower PSA charges were brought about by a reduction in capacity fees as a result of the annual reconciliation of outage allowances done at the end of each year under the PSAs approved by the Energy Regulatory Commission (ERC),” it said.

“The reduction in capacity fees of generator companies represents savings immediately passed on to consumers by way of lower electricity rates. The capacity fees from PSAs will return to normal levels after the downward adjustment this month. PSAs provided 40% of Meralco’s total energy requirement,” it added.

Lower spot prices because of the drop in power demand within the Luzon grid accounted for the decrease in WESM charges by P1.6943 per kWh, the company said. Purchases at the spot market made up 19% of Meralco’s total requirement for the month.

In contrast, charges from independent power producers increased by P0.3808 per kWh because of the lower average plant dispatch. Their share to Meralco’s requirement this was at 41% this month.

Transmission charge of residential customers also rose in January by P0.1168 per kWh because of higher ancillary service charges from the National Grid Corporation of the Philippines (NGCP). The rise was offset by a decline in taxes and other charges by P0.1151 per kWh.

“Meralco’s distribution, supply, and metering charges, meanwhile, have remained unchanged for 30 months, after these registered reductions in July 2015,” the company said as it reiterated that it does not earn from the pass-through charges, such as the generation and transmission charges.

“Payment for the generation charge goes to the power suppliers, while payment for the transmission charge goes to the NGCP,” it said, adding that taxes and other public policy charges are collected by government.

ERC ASKED TO APPROVE PSA
Separately, Meralco President Oscar S. Reyes said he wanted to be able to assure consumers in the utility’s franchise areas “that we will have adequate, reliable, least cost power.”

“That’s why ERC approval of our PSAs is critical,” he told reporters, referring to seven Meralco supply contracts that are pending with the regulator.

Meralco was hoping to see the approval of the contracts by end-2017 but the Office of the Ombudsman ordered the suspension of the four ERC commissioners and its former chairman for a year, leaving the regulator without a quorum to approve PSAs.

“It may put at risk the capability of the industry to assure not only supply to customer but security of supply moving forward,” Mr. Reyes said.

He said the vacuum at the ERC has placed at risk the country’s growth trajectory in view of the “critical pending issues” relating to the operations, investments, building of new power plants, power supply to distribution utilities and electric cooperatives.

“So I think it’s quite critical that the ERC be restored to its regular functioning position,” he said.

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 interest in BusinessWorld through the Philippine Star Group, which it controls.

Office demand from offshore gaming firms to slow this year

By Arra B. Francia,
Reporter

TRADITIONAL OFFICES and the information technology-business process management (IT-BPM) sector will drive demand for office spaces in 2018, as expansion of offshore gaming companies are expected to slow due to stricter government regulations.

This is according to real estate consulting firm Pronove Tai International Property Consultants, which said traditional offices will take up 60% of the 354,000 square meters (sq.m.) in office stock already been pre-leased for this year. The remaining 40% or 143,000 sq.m. will be occupied by the IT-BPM sector.

“(Traditional offices) account for a large portion. It just became bigger because offshore gaming has been taken out, and the reason that it has been taken out is because there’s no space to take up,” Pronove Tai Chief Executive Officer Monique Cornelio-Pronove said in an interview after a presentation of the company’s 2018 market outlook.

Offshore gaming firms previously accounted for 35% of the 775,000-sq.m. pre-leased space in 2017. The IT-BPM industry cornered the largest chunk at 41%, while traditional offices only accounted for 23% of the pre-leased space.

Pronove Tai noted government regulations are restricting the expansion of offshore gaming firms, as only two cities have granted the sector Letters of No Objection (LONOs). Local government units are asking gaming companies to secure LONOs before they can operate in a specific area.

“We’re saying the sustainability of this sector is really dependent on government initiatives, security and availability of space. To date, there’s only two cities that are giving LONOs, and only 50,000 sq.m. of space is available for this offshore gaming. These two cities are Makati and the Bay Area,” Ms. Cornelio-Pronove said.

The Pronove Tai executive added offshore gaming firms would have expanded without these government restrictions.

“What I’m encouraging is developers actually lobby for their LGUs to be more open. So I think there are certain cities that are looking at it very closely, and these three cities are Quezon City, Mandaluyong, and Taguig. They should be attuned more to their constituents and business opportunities there are available,” Ms. Cornelio-Pronove said.

Pronove Tai identified Quezon City, Mandaluyong, and Taguig as the three central business districts with the highest vacancy rates in Metro Manila at 11%, 8%, and 7%, respectively.

Without room for offshore gaming firms to expand, the company said President Rodrigo R. Duterte would have to speed up the signing of Philippine Economic Zone Authority (PEZA) proclamations to ensure that IT-BPM firms would take up spaces once buildings are completed.

“If we did not have the take-up from offshore gaming, our vacancies would have gone up in 2017 by as much as 8%, so basically the delays of the proclamation, the delay in take-up of IT-BPM, the buildings that have already been built would have been largely vacant,” Ms. Cornelio-Pronove said.

The company noted the issuance of presidential proclamations of PEZA-accredited buildings have slowed during Mr. Duterte’s term, whereas his predecessors only took one to two months to sign PEZA accreditations.

Teachers’ pay hike not priority — DBM

THE BUDGET chief said the raising of teachers’ salaries would cost “a huge amount,” as the administration seeks to put infrastructure and social spending first, but this would still be considered after the succeeding tranches of government pay hikes lapse.

“That requires a huge amount. That’s 600,000 teachers. Salaries alone, it would cost half a trillion pesos (and) that involves the doubling of the salary of teachers,” Budget Secretary Benjamin E. Diokno said in a press briefing yesterday.

“That is not our priority at this time. Our priority is the Build, Build, Build and the social protection,” he added.

President Rodrigo R. Duterte on Tuesday said he wants to raise public schoolteachers’ salaries after he has signed a joint congressional resolution authorizing the increase in base pay of military and uniformed personnel.

Mr. Diokno said his department would still continue to study the proposal through an independent body.

“So I think we have to study that very carefully…So what I am planning to do is have a study done by a third party or private sectors to compare the salaries,” he said.

The Budget chief said there are still annual salary increases granted under the Salary Standardization Law (SSL) until 2020, which also covers public schoolteachers.

“By the way, there is still two years to go for the SSL. There’s about 15%-16% increase in the salaries of teachers,” said Mr. Diokno.

“I would prefer we go through with it in the meantime,” he added.

Mr. Diokno also noted that salaries of public schoolteachers are about “twice more” than those in private schools.

He said the study would also include other salary classifications in the government.

Mr. Diokno, however, said he has yet to consult Mr. Duterte about the plan.

“What you don’t want to do is to see the entire budget as simply salaries because the government has other responsibilities. We don’t want the budget as simply salaries. I don’t think Filipino taxpayers will like that,” he said.

The administration plans to shell out P8.4 trillion in infrastructure and social spending to boost economic growth to 7%-8% starting this year until 2022. — Elijah Joseph C. Tubayan

Rediscount borrowings climb ahead of holidays

MORE BANKS tapped the central bank’s rediscount window in December to get hold of fresh money supply, at a time of strong demand for cash for the holidays.

Peso rediscount loans reached P447 million last month, rising from the P171 million availed by local lenders in November and P11.5 million borrowed in December 2016, data from the Bangko Sentral ng Pilipinas (BSP) showed.

Banks may borrow from the BSP’s rediscount facility in order to meet short-term funding if their usual supply of cash falls short of client demand. This also allows the central bank to fulfill its duty as lender of last resort.

The window lets banks submit promissory notes from outstanding debts as collateral to acquire fresh money supply. The cash can then be used to grant more loans or service withdrawals.   

The December borrowings brought the full-year tally to P1.591 billion, well below the P10.767 billion in total rediscount loans secured by Philippine banks in 2016.

Around 94.5% of the amount has been allotted for additional corporate lending, the BSP said in a statement. The remainder went to the services sector (4.2%), housing (0.9%), and production (0.4%).

Banks returned to using the rediscount window after the central bank streamlined the rates imposed on these borrowings.

Since July 21, all rediscount loans are charged a uniform rate after the BSP shut down the special window for thrift, rural and cooperative banks. The central bank took away the preferential rates imposed on small lenders due to low availments, with the view that these players do not need the facility in order to remain liquid.

Two rates are imposed for short-term peso borrowings secured by banks: 90-day loans are charged a 3.5625% rate, while 180-day credit lines carry a 3.625% spread. This is computed based on the BSP’s overnight lending rate at 3.5% plus term premia.

Meanwhile, the central bank’s rediscount window for foreign currencies remained unused for the entire 2017. In particular, the facility for dollar-denominated debts has been untapped since June 2015.

For January, rates for dollar loans have risen to 3.69428% for 90-day loans; 3.75678% for 91- to 180-day loans; and 3.81928% for 181- to 360-day loans. This follows a fresh interest rate hike introduced in the United States in December, which has triggered a pickup in global yields.

In contrast, yen-denominated borrowings will see lower margins at 1.97583% for one to 90-day loans, 2.03833% for 91- to 180-day loans, and 2.10083% for 181- to 360-day loans.

Central bank officials have said that there is ample liquidity in the financial system, leaving local lenders with enough cash to service day-to-day transactions. — Melissa Luz T. Lopez

Peso extends decline vs dollar

THE PESO continued to decline against the dollar yesterday following the release of local trade data for November, which further underscored the “weakness” in the country’s external payments position.

The local currency closed Wednesday’s session at P50.38 versus the greenback, losing nine centavos from its P50.29-per-dollar finish on Wednesday.

The peso opened weaker at P50.35 versus the dollar. Its intraday low stood at P50.45, while its best showing was at P50.28 against the greenback.

Dollars traded climbed to $1.1 billion from the $917.2 million that changed hands on Tuesday.

“Forex (foreign exchange) traders are looking at that particular data wherein the deficit is bigger than the previous one,” Ruben Carlo O. Asuncion, chief economist of UnionBank of the Philippines, said by phone.

Data from the Philippine Statistics Authority showed the country registered a trade deficit of $3.78 billion in November, wider than the $2.49 billion shortfall in a comparable year-ago period.

Jose Mario I. Cuyegkeng, senior economist of ING Bank, said the data “continues to indicate a strong economy,” considering raw materials import growth “remained high” while capital goods imports “recovered.”

UnionBank’s Mr. Asuncion shared the same sentiment, saying that the data is not worrisome.

“Personally, I’m not worried about it because it’s specifically an effect of a consumption-led economy driven to a more investment-led economy.”

However, Mr. Cuyegkeng noted that the “challenging” trade data, and, consequently, current account position, could pressure the local currency again this year.

“[Forex] market would be reminded of the weakness in external payments position with the November trade data,” he said, adding that the deficit will continue to offset remittances sent by overseas Filipinos.

Meanwhile, a trader noted: “I think it gave a little of a reason for the market players to buy dollar-peso as well, as we continue to see the trade balance worsen.”

For today, one trader said the peso may play within P50.25 to P50.55 against the dollar while the other trader sees the pair moving between P50.30 and P50.50. The third trader said the local currency may range from P50.30 to P50.60.

“The peso is seen to continue weakening amid bets of stronger US producer prices inflation to be released tomorrow, which is usually viewed to be likely indicative of consumer prices,” the second trader said. — Karl Angelo N. Vidal

$2-B wireless network to be built in ARMM

By Carmencita A. Carillo,
Correspondent

DAVAO CITY — TierOne Communications, a Davao-based telecommunications company, is set to start building a $2-billion high-speed wireless communications network in Autonomous Region in Muslim Mindanao (ARMM), including Marawi City, this month.

The company is teaming up with Boston-based Parallel Wireless, Finland-based Nokia, and China-based ZTE to build the largest and most modern network across the Philippines, focusing particularly on underserved areas.

“We are committed to installing 50,000 towers in five years and complete the project within the term of President Rodrigo R. Duterte,” TierOne Chairman Jonathan B. Stevens said in a press conference on Wednesday.

He described TierOne as a Philippine-owned corporation with equity and strategic partners from South Africa, Melbourne and Sydney in Australia, New York, Boston and Europe. The company was established in 1999, and completed a five-year project providing one-stop telephone boxes operated on V-Sat in rural areas. It was then awarded a 25-year franchise to operate cellular and broadband, with the first 10 years exclusively in the ARMM.

“”We are starting in Cotabato with 100 Mbps (megabits per second) line to build their new network and assist the regional government with its critical lack of connectivity, and after completing Cotabato we will do Marawi University (Mindanao State University) and Marawi City by March,” Mr. Stevens said.

He said the company picked Marawi City as early as May 2017 due to Mindanao State University and the students’ need to have access to information and technology. However, the project was postponed after the terror attacks in the city.

“TierOne management attended the recent Marawi and Lanao del Sur investment forum and was surprised at the progress and rebuilding of Marawi City,” Mr. Stevens said, noting this is the right time to rebuild a new cellular and broadband network in Marawi City.

Mr. Stevens said Parallel Wireless, which supplies transmitters, has agreed to develop micro-cell towers ideal for remote locations.

TierOne intends to put up the towers in 52 government buildings in ARMM.

“The plan is to put up a mini-tower in every school, police and Armed Forces responder station that is disaster-proof, self-contained and with back-up power good for the next three days so it can connect to other agencies and can face any threat whatever happens,” Mr. Stevens said.

The TierOne official admitted this is a big undertaking, as the company goes up against the country’s telecommunications giants. However, he said the company hopes to complete these projects within five years.

BoC chief orders creation of anti-corruption unit

CUSTOMS CHIEF Isidro S. Lapeña has ordered the creation of the Interim Internal Affairs and Integrity Unit (IIAIU), the Bureau of Customs (BoC) said in a statement on Wednesday. The said unit’s functions, according to a Dec. 29, 2017, memorandum issued by Mr. Lapeña, are as follows: investigate complaints against BoC personnel, receive and gather evidence in support of an open investigation; conduct motu propio investigation on incidents where evidence in the prosecution of smuggling cases was compromised, tampered with, obliterated, or lost while in the custody of customs personnel; conduct lifestyle checks on said personnel; evaluate or recommend the filing of appropriate criminal cases against BoC personnel before the court as evidence warrants and assist in the prosecution of the case; and undertake liaison work, coordination, and provide assistance to the Office of the Ombudsman, National Anti-Corruption Commission of the Office of the President, and Revenue Integrity Protection Service of the Department of Finance. The IIAIU is headed by the commissioner and composed of one attorney, two special investigators, and three administrative staff. All reports will be submitted monthly to the commissioner.

Senator: Don’t forget public schools in free Wi-Fi rollout

DON’T FORGET our public schools and state universities and colleges (SUCs). Senator Paolo Benigno Aguirre Aquino IV in a statement issued this call as the government prepares the rollout of Republic Act (RA) 10929 or the Free Internet Access Program in Public Places, of which he is principal sponsor and co-author. “Magagamit din ito ng ating mga guro para mapabuti ang kanilang mga sistema ng pagtuturo,” he added. (Our teachers can avail themselves of this to develop their system of teaching.) RA 10929 provides free Internet access in all national and local government offices, public schools, public transport terminals, public hospitals and public libraries. In addition, the law contains provisions for the faster processing of permits for Internet infrastructure, which is designed to fast-track the improvement in the country’s internet backbone.

Marcos claims ‘obvious bias’ by PET justice

FORMER SENATOR Ferdinand R. Marcos, Jr. in a statement on Wednesday decried the “obvious bias” of Supreme Court Associate Justice Benjamin Caguioa, the ponente of his election protest pending before the Presidential Electoral Tribunal (PET), against him and in favor of Maria Leonor G. Robredo, the senator’s rival in the 2016 vice-presidential race. “It has now become fairly obvious that his resolutions are biased against me and biased in favor my oppositor,” Mr. Marcos said at the Kapihan sa Manila Bay forum on Wednesday. Mr. Caguioa, Mr. Marcos noted in his statement, was appointed by Ateneo classmate former president Benigno S.C. Aquino III. The former senator enumerated some of the orders issued by Mr. Caguioa “which showed his one-sidedness in favor of Robredo,” citing that as early as April 2017, the PET gave him only two working days, right during the Holy Week, to pay his initial P36 million protest fee. Ms. Robredo, on the other hand, did not to pay on the deadline set by the PET but Mr. Caguioa gave her an extension, Mr. Marcos said, adding that Ms. Robredo “has still not managed to fully complete the payment of her deposit.” Mr. Marcos also said he found it “strange that Romeo Macalintal, lead counsel of his opponent, kept issuing unsolicited advise that he should run for a Senate position in 2019 and forego his election protest.”

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