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Peso hits six-and-a-half month high but ends session weaker

THE peso rallied to a six-and-a-half month high against the dollar in intraday trade on Friday after latest government data showed inflation remained subdued in December, but the local currency pared some of those gains to close weaker against the greenback for a second straight session.

The peso rallied to as much as P49.705 against the dollar in midday trade, its best showing since June 15, 2017, according to Philippine Dealing System data. The local currency was Asia’s third worst performing currency in 2017, losing as much as 0.5% against the greenback, but remained among the region’s “most stable”, the Department of Finance said on Friday.

The intraday gains came after the Philippine Statistics Authority reported that inflation settled at 3.3% in December so that the average for the year, 3.2%, fell within the central bank’s target range for 2017.

Still, traders took profit in late trading and trimmed their holdings in favor of the dollar. The peso-dollar exchange rate settled at P49.865, a depreciation of four-and-half centavos from Thursday’s close.

“Dollar-peso [trading] tried to head [higher in the] morning, but failed to sustain the momentum in the afternoon,” a trader said over the phone on Friday.

“The local currency opened stronger after the release of December inflation rate at 3.3%, sustaining November’s pace which has shrugged fears of an overheating Philippine economy,” another trader said in an e-mail.

“[T]raders took the opportunity for bargain-hunting towards the afternoon so that the peso lost its initial strength.”

The amount of dollars traded rose to $715.7 million from the $519.25 million that changed hands in the previous session.

Ruben Carlo O. Asuncion, chief economist of Union Bank of the Philippines, said the subdued inflation data for December boosted optimism over the local currency.

“I think it’s [inflation] a major indicator that inflation will be manageable in spite of probable spikes,” Mr. Asuncion said in a phone interview on Friday, adding that the spikes will be brought about by the effects of the local tax reform.

“Although we’re not expecting big spikes, there’s still the impact of the TRAIN (Tax Reform for Acceleration and Inclusion Act) on inflation, but it’s going to be short-term rather than something long-term,” he added.

“It’s [inflation data] an indication that 2018 will be okay, so they’re betting on the peso.” — Karl Angelo N. Vidal

PSEi sets fresh record in Wall Street’s wake

By Patrizia Paola C. Marcelo

THE Philippine Stock Exchange index (PSEi) has set a new all-time high on Friday, the latest in a string of records propelled by investor optimism over the Philippine economy and corporate earnings.

Philippine stocks took the cue from Wall Street’s gains overnight that saw the Dow industrials break above the 25,000 for the first time.

The bellwether PSEi closed at 8,770, a gain of 30.17 points or 0.35%. The all-shares index closed at 5,076.32, higher by 16.57 points or 0.33%.

“Our market has breached records for the first three days of 2018 after a string of favorable news in the local scenario buoyed investors’ sentiment,” Jervin S. de Celis, equities trader at Timson Securities, Inc., said in a text message.

“The above 7% gross domestic product (GDP) growth prospects, the expected higher government spending, and double digit earnings per share (EPS) growth for the blue chips were the reason behind the rally of the index from the 8,500 level to as high as 8,858,” Jervin S. de Celis, equities trader at Timson Securities, Inc., said in a text message.

Analysts said that Philippine economic growth can be expected to accelerate further this year, above 7% given favorable domestic and global conditions despite commodity price pressures from a revised tax law.

First Metro Investment Corp. (FMIC) has a 7-7.5% growth forecast for this year, faster than its 6.5-7% estimate for last year.

Finance Secretary Carlos G. Dominguez told reporters on Thursday that disbursements grew by 13.8% for 2017, which would mean P2.901 trillion, based from recorded P2.549-trillion overall disbursements in 2016.

“This is an indication that investors are pricing in these news in the market already as macroeconomic fundamentals appear to be really attractive. For this reason, foreigners have bought P730 million worth of shares this week,” Mr. de Celis added.

“Philippine markets ended the week on another record high, while U.S. stocks posted their third consecutive day of gains on Thursday,” Luis A. Limlingan, managing director of Regina Capital Development Corp., said in a text message.

The Dow Jones Industrial Average closed at 25,075.13, breaching 25,000 mark for the first time. The S&P 500 closed at 2,724.85 and Nasdaq Composite at 7,077.92.

Five of the PSEi’s six sub-indices gained. Financials went up by 1.50 points or 0.07% to close at 2,253.48; industrials by 155.84 points or 1.37% at 11,500.13; holding firms by 9.67 points or 0.11% at 8,940.68; mining and oil by 70.22 points or 0.61% at 11,599.49; and property by 41.98 points or 1.03% at 4,096.22.

Services closed at 1,606.65, losing 11.76 points or 0.73%.

Total value traded was P10.57 billion. Gainers outnumbered losers 126 to 87 while 51 stocks were unchanged.

2017 forex reserves beat BSP forecast

THE country’s foreign exchange reserves rose to a level that surpassed the Bangko Sentral ng Pilipinas’ forecast for 2017 on the back of higher gold valuations and higher inflows from the central bank’s investments abroad, data on Friday showed.

Gross international reserves (GIR) totalled $81.467 billion last month, preliminary data from the BSP showed. This is up from November’s $80.309 billion and $80.691 billion logged in December 2016.

The end-2017 level of reserves was higher than the central bank’s forecast of $80.7 billion, Reuters reported on Friday. The BSP expects the GIR to be at $80 billion by year’s end.

Boosting the reserves were “inflows arising from the BSP’s foreign exchange operations, net foreign currency deposits by the National Government, revaluation adjustments on the BSP’s gold holdings resulting from the increase in the price of gold in the international market, and income from the BSP’s investments abroad,” the statement read.

Value of BSP’s gold holdings rose to $8.336 billion from November’s $8.045 billion and December 2016’s $7.259 billion, reflecting higher gold prices in the market.

Central bank’s foreign investments, which accounts for the bulk of GIR, grew to $65.763 billion, up from $65.178 billion registered in November, but shrinking from end-December 2016’s $68.290 billion.

The BSP’s foreign exchange holdings also rose to $5.742 billion at end-December from $5.445 billion in November and from $3.563 at end-2016.

The central bank sometimes uses the reserve fund to influence daily peso-dollar trading by buying or selling more units in a “tactical intervention” in attempts to temper exchange rate swings.

The peso averaged P50.379 versus the dollar last month, recovering slightly as the local currency traded between the P50 and P51 level in November.

The country’s special drawing rights — the amount which the country can tap from the IMF’s reserve currency basket — was $1.2 billion.

Amounts in the IMF basket are expressed in US dollar, Japanese yen, euro, British pound and the Chinese yuan.

“The end-December 2017 GIR level remains adequate as it can cover 8.3 months’ worth of imports of goods and payments of services and primary income,” the BSP statement read.

“It can likewise pay up to 5.8 times the country’s short-term foreign debt when computed on original maturity, and up to 4.2 times based on residual terms,”

International reserves are a key measure of a country’s macroeconomic footing, providing a buffer against external financial shocks. — Karl Angelo N. Vidal

Faeldon vents on Twitter about Senate punishment

By Arjay L. Balinbin

DETAINED former customs commissioner (BoC) Nicanor E. Faeldon posted a statement on his Twitter account on Thursday night, Jan.4, accusing Senator Richard J. Gordon, chairperson of the Senate blue-ribbon committee (SBRC), of inflicting “cruel, degrading and inhuman punishment” upon him.

“I thought all along that cruel, degrading and inhuman punishment had been outlawed under our Constitution. I was wrong,” Mr. Faeldon said.

“Sen. Gordon, in his capacity as Chairman of the SBRC, and for reasons known only to him, has inflicted and is inflicting upon me the following cruel, degrading and inhumane punishment: a.) he deprived me of the company of my loved ones last Christmas and New Year’s day, b.) he deprived me of my right to be examined by my cardiologist, in view of my heart ailment for which I was confined last August 2017, c). he deprived me of my right to my religious practices, d.)he deprived me of my right to take my oath of office before DND Secretary (Delfin N.) Lorenzana and Usec. (Ricardo B.) Jalad at 0800 hours on 10 January 2018, and to whom I was supposed to take orders from before returning to my detention room (a mere 4-hours request, under guard), and, e.) he deprived me of my human and father’s right to be present at my youngest child’s birth.”

President Rodrigo R. Duterte appointed Mr. Faeldon as deputy administrator III of the Office of Civil Defense (OCD) last Dec. 22.

Mr. Faeldon has been detained since September last year for failing to attend the Senate probe on the P6.4-billion shabu smuggled from China. He has been also accused of raking in bribes, including the P100-million “welcome gift” he purportedly received upon assuming office at the Bureau of Customs in 2016.

The former customs chief likewise said that Mr. Gordon inflicted those punishments “upon the orders of the cement-smuggler senator, who vowed vengeance against (him) for exposing him and his son’s cement-smuggling racket.”

Mr. Faeldon had earlier accused the son of Senator Panfilo M. Lacson, Jr. last year of smuggling cement through the BoC. He claimed that the younger Mr. Lacson’s company, Bonjourno, is the country’s number one smuggler of cement.

“I thought that Sen. Gordon was man enough to stand up to the cement-smuggler senator. I was wrong again. While I totally expected extreme cruelty from the likes of Lacson and (Sen. Antonio F.) Trillanes, I never expected that from Sen. Gordon. What happened to you, Sen. Gordon?” Mr. Faeldon also said.

He further said he was “warned” that if he “came out with this press statement, (his) visitation rights would be totally cut off, along with the electricity and water in (his) detention room.”

“Go ahead Sen. Gordon, kick me and punish me some more, if that makes you a bigger man,” Mr. Faeldon said.

Responding to Mr. Faeldon’s accusation, Mr. Gordon said, “It is…preposterous for there to be any claim that Captain Faeldon would be deprived of water, power and visitation rights. This is beneath the dignity of the Committee and the Chair.”

Mr. Gordon also said Mr. Faeldon’s “request for a furlough could not be granted…because (he) is held for contempt of the Committee and thus of the Senate. The citation for contempt was, and still is, a collegial act which the Chair, on his own, cannot reverse,” adding, “(he) has been appointed to a position in the Executive Department. If he is allowed to go out and take his oath, nothing can prevent him from hiding behind his appointment and then saying, you cannot detain me anymore as I am now Assistant Secretary.”

“Prudence, in this situation, dictates that such possible constitutional crisis between the Legislative and Executive be prevented before it becomes probable,” Mr. Gordon further explained.

For his part, Mr. Lacson said: “No wonder Faeldon is in big trouble facing a non bailable case of agricultural smuggling. He doesn’t have a clue about the customs and tariff code and the CMTA (Customs Modernization and Tariff Act). Why? There can’t be smuggling of cement simply because it is not subject to tariff. For quite a long time that he served as commissioner, he dedicated most if not all his time counting Tara instead of learning the customs code.”

MBC up sharply after taking control of hotel affiliate

MANILA Broadcasting Co. (MBC) shares rose 10.3% on Friday to P18.20, days after the company acquired more shares in an affiliate hotel business for P240 million to bring its stake to a controlling 80%.

“The acquisition aims to maximize MBC stockholders’ returns by investing in the high growth industry of hotel and resort business,” the Elizalde-owned listed media and events company told the stock exchange.

MBC said it acquired on Dec. 29, 2017 an additional 43.64% shares in Elizalde Hotels and Resorts Inc. (EHRI), an affiliated company. The purchase price was determined based on the par value of the acquired firm, it added.

Company officials did not immediately respond to phone calls for additional information on the deal.

“The closing of the transaction shall be subject to the completion of all customary closing conditions as stated in the agreement,” MBC said.

The terms of payment of the cash transaction include 25% upon subscription and 75% within a year. Standard conditions in the deal include the delivery of original stock certificates and the execution of the necessary transfer documents.

“This acquisition will increase MBC’s income through dividends and capital gains that will be beneficial to MBC stockholders,” the listed company said.

In its disclosure, MBC placed the 440,000 shares it had acquired to account for 80% of EHRI’s total 550,000 issued shares. Elizalde Holdings Corp. holds the remaining 20%. It described the acquired firm’s major project or investment as Feliz Hotel in Boracay.

MBC, which was incorporated on Sept. 30, 1947, started in radio broadcasting until it expanded to organizing special events. Its business model provides advertisers with a combination of benefits, including its AM and FM networks as well as exposure in company-led events.

MBC was the second top gainer at the Philippine Stock Exchange on Friday with a total of 181,000 shares changing hands valued at around P3.73 million. — Victor V. Saulon

DICT delays one-year validity for some prepaid ‘load’

THE Department of Information and Communications Technology (DICT) has given telecommunications companies PLDT, Inc. and Globe Telecom, Inc. six more months to implement a one-year validity period for prepaid phone services, also known as “load,” covering amounts under P300, saying that companies need time to adjust their systems.

A memorandum circular (MC) jointly issued in December by the Department of Trade and Industry (DTI), DICT, and the National Telecommunications Commission (NTC) providing for a one-year validity period for prepaid mobile load due to take effect on Jan. 5.

Prepaid load of P300 and higher bought after Jan. 5 will be valid for one year.

“We are giving the telcos six months from today (January 5) to adjust their systems so that all regular prepaid loads no matter what amount will be valid for one year. However, loads of P300 and higher made after Jan. 5 shall be already valid for one year,” DICT Officer-in-Charge and Undersecretary Eliseo M. Rio, Jr. said in a social media post.

“We allowed this to prevent their systems from the possibility of crashing if changes are made abruptly, which will not only highly inconvenience the consuming public but may even cause serious damage to the telco industry,” he added.

Mr. Rio added that the DICT has instructed NTC to monitor and address complaints of load expiring before their validity lapses during the adjustment period.

In a statement, Smart Communications, Inc. Public Affairs Head Ramon R. Isberto said that Smart, Talk ‘N’ Text (TNT) and Sun Celllular will comply with the MC.

He said that the extension will give the PLDT wireless subsidiary time to reconfigure its systems. “This provides us more time to implement the extensive reconfiguration of our IT and other support systems, and to conduct the needed tests, in order to ensure trouble-free implementation of the new expiry period.”

Globe Telecom, Inc., general counsel Vicente Froilan M. Castelo said that the company will need to build more capacity and purchase additional licenses, including software programming by third party vendors.

The company will also conduct system tests and need additional number series from the NTC.

“Furthermore, there may be new conditions applied to prepaid services within the next six months to ensure a sustainable quality of service,” Mr. Castelo said.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a stake in BusinessWorld through the Philippine Star Group, which it controls. — Patrizia Paola C. Marcelo

December inflation hits 3.3%, gov’t says

By Jochebed Gonzales, Senior Researcher

Prices of widely used goods logged in 3.3% year-on-year increase in December, sustaining growth observed in the previous month, the Philippine Statistics Authority (PSA) reported this morning.

The headline print landed within the 2.9-3.6% estimate range given by the Bangko Sentral ng Pilipinas (BSP) on Dec. 29. It also matched the median estimate yielded in BusinessWorld poll among economists last week.

For the entire 2017, inflation averaged at 3.2%, well within BSP’s 2%-4% target band, at the same time, matching the central bank’s full-year forecast.

Excluding volatile food and energy prices, core inflation stood at 3% last month, faster compared to December 2016’s 2.5%.

The PSA said higher mark-ups were observed in the following indices: food and non-alcoholic beverages (3.5%); alcoholic beverages and tobacco (6.4%); furnishing, household equipment and routine maintenance of the house (1.9%); and restaurant and miscellaneous goods and services (3%).

DoF chief touts collection, spending rise

THE GOVERNMENT grew tax collections and disbursements at a double-digit pace last year, the Finance chief said yesterday, citing preliminary data.

“Indicative 2017 collection performance of BIR 12.5% growth BoC 17% growth,” said Finance Secretary Carlos G. Dominguez III in a Viber message to reporters on Thursday, referring to top revenue-generating agencies Bureau of Internal Revenue and Bureau of Customs.

“Disbursements 13.8% growth.”

Final data on the national government’s fiscal performance are scheduled to be released on March 2, according to the Bureau of the Treasury’s Web site.

The BIR raked in a total of P1.567 trillion in 2016, and a 12.5% increase would result in a P1.763-trillion collection for 2017.

The BoC on the other hand collected P396.37 billion in 2016, and a 17% growth would result in a P463.75-billion take last year.

Overall disbursements in 2016, meanwhile, totaled P2.549 trillion and a 13.8% increase would result in P2.901 trillion for 2017.

The preliminary figures would show the BIR falling short of its P1.783-trillion 2017 target by 1.12%.

The BoC on the other hand exceeded its P459.6-billion collection program by 0.85%.

For disbursements, the government is only short by 0.3% from its P2.909-trillion target.

Latest final data so far available show that the BIR raked in P1.621 trillion as of November last year, 12% more than the P1.45 trillion it collected in 2016’s comparable 11 months.

The BoC on the other hand collected 14% more in the same comparative periods at P413.1 billion from P361.5 billion.

End-November state spending totaled some P2.494 trillion, 10% more than the P2.266 trillion spent in 2016’s comparable 11 months.

BIR TARGET
The BIR is now looking at a P2.039-trillion collection target for this year, its Commissioner said separately yesterday.

BIR Commissioner Caesar R. Dulay, however, said that the target is still up for discussion with economic managers of the Development Budget Coordinating Committee (DBCC).

“P2.039 trillion — that’s a ballpark figure,” Mr. Dulay said during a press briefing when asked for the bureau’s collection goal for this year.

“We have to validate with the DBCC because they set our goals together with the DoF (Department of Finance). But our initial feedback — it’s in that area.”

It is 15.66% more than the downward-revised P1.763 trillion target stated under the Budget of Expenditures and Sources of Financing (BESF) medium-term program, and 11.48% higher than the P1.829 trillion target it initially set early last year.

It is also higher than the P2.005-trillion 2018 target initially set by the DBCC under the 2018 BESF.

Mr. Dulay said with the enactment of Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion (TRAIN) Act, he is confident that the BIR can meet the target this year.

“Formulation of the bill was policy matter crafted out by the DoF and economic managers and I am confident when they run through the figures, we will be able to collect more taxes with the TRAIN bill in place,” he said.

“Our mandate is to go for gold, complemented by the new taxes that have to be posted. We are confident that we can collect at least more than what we have achieved last year.”

DBCC estimates that the TRAIN would generate a total of P82.3 billion in additional revenues this year.

However, Mr. Dulay said that there may be some initial difficulties in implementing the new tax law. “It will take some extra effort on our part because there are new taxes and rates being imposed. We have to craft out a good revenue regulation to address the mandate and the requirements,” he said.

Mr. Dulay said that the BIR aims to have the law’s implementing rules and regulations signed “within the month,” as it will hold public consultations on Jan. 11-12 on the draft.

The tax bureau had released initial guidelines on the revised withholding tax table for personal income tax, as well as the excise tax returns for sugar-sweetened beverages, which are available on its Web site.

Other revenue regulations will involve reduced exemptions for value added tax; higher excise tax rates on petroleum, automobiles, mineral products, tobacco and cosmetic procedures; simplified estate and donor’s tax systems; as well as higher percentage and documentary stamp tax rates.

He admitted that manpower remains one of the bureau’s constraints in enforcing tax laws effectively.

“I am even short. I am only operating at 50% of the plantilla,” he said.

“We will do it. It doesn’t mean that we will stop implementing it even if there’s a shortage of personnel. We have to do it, that’s our mandate.” — Elijah Joseph C. Tubayan

DBM cites Nov. capital outlay surge

INFRASTRUCTURE spending and other capital outlays surged in November last year with the completion of flood control and road projects across the country, the Department of Budget and Management (DBM) said.

DBM data show that national government disbursements in infrastructure and other capital outlays grew 44.8% — the fastest pace so far in 2017 — to P43.8 billion from P30.3 billion in 2016.

The report said the increase was due “to the completed road infrastructure program of the DPWH (Department of Public Works and Highways) such as flood control projects and improvement of road networks nationwide (e.g., construction, concreting, widening); acquisition of various equipment under the Capability Enhancement Program of the DILG-PNP (Department of the Interior and Local Government-Philippine National Police); and payments for supplies, repair and maintenance of patrol vessels of the Philippine Coast Guard.”

This brought 11-month infrastructure and other capital disbursements to P486.5 billion, 14.2% up from P426.1 billion in 2016’s corresponding period.

WATCHING AGENCIES
“The statistics on government disbursements only bolster our thrust for efficient and effective public service delivery,” Budget Secretary Benjamin E. Diokno said in a statement yesterday.

He said the Budget department has been prodding departments and agencies to ramp up spending.

“I assure you that the DBM, in coordination with the line agencies, has exerted all efforts to ensure the expedient and prudent management of public resources,” he said.

Budget Undersecretary Laura B. Pascua had said earlier that government departments and agencies have been speeding up disbursements ahead of the yearend expiry of budget allotments.

According to the DBM’s statement of allotment releases, agencies had a cumulative balance of P183.6 billion as of end-November, as P3.17 trillion — or about 94.5% — of the P3.35 trillion 2017 budget had already been released by then. — E. J. C. Tubayan

DBM cites Nov. capital outlay surge

FMIC, UA&P economists: above-7% growth doable

PHILIPPINE economic growth can be expected to accelerate further this year, with favorable domestic and global conditions fueling above-seven percent expansion despite rising commodity prices, analysts of First Metro Investment Corp. (FMIC) and the University of Asia and the Pacific (UA&P) said yesterday.

An improving global outlook coupled with upbeat domestic demand should enable the Philippines to realize a much faster growth rate over the coming years, with investments on the rise and consumption remaining robust, UA&P economist Victor A. Abola said during an economic and capital markets briefing at the Makati Shangri-La hotel.

“A 7-8% growth with low inflation is doable for 2018 to 2022,” Mr. Abola said during FMIC’s Economic & Capital Markets Briefing yesterday.

FMIC kept its 2018 growth forecast at 7-7.5%, faster than its 6.5-7% estimate for last year. Philippine gross domestic product expanded by 6.9% in the first nine months of 2017, against the government’s 6.5-7.5% full-year growth goal.

Bigger and faster spending on infrastructure, the continued buildup of capital goods and strong private construction will boost economic activity, alongside the recovery of the manufacturing sector and an upbeat tourism sector, Mr. Abola said.

Lower self-rated poverty rates, sustained remittance inflows and bigger take-home pay among workers due to tax reform — which will add about P137 billion to consumers’ pockets — will boost consumer spending.

This will occur against the backdrop of faster but within-target 3.5-4% inflation, reflecting the impact of increased taxes on basic goods, particularly fuel.

FMIC estimates incremental collections under the recently enacted tax reform law will add 0.6 percentage points to inflation, which compares to the “less than one percentage point” expected impact by the Bangko Sentral ng Pilipinas (BSP) for 2018.

Mr. Abola, however, flagged emerging concerns about overheating, a weaker peso-dollar exchange rate and geopolitical risks in the Middle East and the Korean peninsula as risks to the outlook.

At home, the impeachment proceedings versus Supreme Court Chief Justice Ma. Lourdes P.A. Sereno could be a “litmus test” for the local political climate.

FMIC chairman Francisco C. Sebastian cited the “strong political mandate” of President Rodrigo R. Duterte as he continues to enjoy high trust ratings despite some “misgivings” about his leadership style.

On the other hand, the peso is expected to trade at the P52.50 level against the greenback by yearend, which will help boost the value of exports.

Accelerating inflation coupled with rising global yields would prompt policy responses from the central bank.

“As the Fed continues to move higher in terms of their policy rates, I think the BSP will also be trying to move in the same direction. Inflation this year will be higher, and with our economy as well accelerating… there is room for rates to be adjusted upwards,” FMIC Senior Vice-President Christopher Ma. Carmelo Y. Salazar added.

Interest rates and interbank rates are also expected to trend higher this year. Mr. Salazar said yields on short-term papers are likely to climb by 20 basis points (bps) by yearend, while longer tenors will pick up by 30 bps.

A “gradual” reduction in the 20% reserve requirement ratio (RRR) imposed on big banks may also be considered by the BSP, and may be introduced simultaneously with a rate hike. However, timing remains a crucial element, although Mr. Salazar said he expects at most a 200 bps reduction this year.

BSP Governor Nestor A. Espenilla, Jr. said that the central bank is “always looking for the opportunity” to reduce the RRR, but added that monetary authorities continue to manage liquidity in the financial system.

The government is likewise expected to rely on retail bonds as a “primary source” of financing, as it also explores new funding channels through note offerings to Chinese and Japanese investors, said FMIC’s Jose Pacifico E. Marcelo.

The government raised P437 billion from two retail Treasury bond auctions in 2017, which are expected to support increased infrastructure spending for the years ahead. — Melissa Luz T. Lopez

Hair’s the thing

Text and photos by Michelle Anne P. Soliman

White lights illuminate quite a narrow space. A variety of colorful and stylishly coiffed heads fill the shelves. At the corner on the right are hairstyles for everyday use and special occasions such as weddings and parties (i.e. Ariana Grande’s high ponytail); on the left side are eye-catching multi-colored styles with varying lengths (spotted: Marie Antoinette’s bouffant); and at the center are hairstyles worn by Wonder Woman, Cinderella, Snow White, and is that Chiyo Sakura? For a second, it felt like entering a dressing room shared by popular celebrities and fictional characters.

In a hidden corner at Fisher Mall’s second floor, a shop filled with wigs and hair accessories with its name lit in flashing pink letters contrasts with the lineup of retail clothing stores. The wigs’ various styles, lengths, and colors tempt a passserby to look around and possibly purchase one. A good investment to your beauty arsenal — it’s a classic, it’s reusable, and does not expire.

BACK TO THE ROOTS
What started as a five-piece display of wigs for mannequins grew to become a business currently carrying a thousand styles and counting.

Actress and owner of Lynelle House of Hair Fashion Jennifer Sevilla arrived for the interview at the store’s Fisher Mall branch in a black-and-white striped long-sleeved blouse and white trousers. Her long brown hair cascaded a few inches below her shoulders.

“I really have a passion for hair. I liked experimenting with hair especially when I was in my teen years in That’s Entertainment (GMA Network’s teen-oriented variety show which aired from 1986 to 1996). I would change my hair constantly. [And] we had production numbers that had us wearing wigs from time to time and altering our looks with costumes,” said Ms. Sevilla enthusiastically in her gentle voice.

“Critical lagi ang buhok (Hair is always critical)… It instantly puts me in character,” Ms. Sevilla added about hairstyle as a critical part of characterization.

The actress explained that in 2004, the wigs functioned primarily as accessories to her then-boyfriend’s (now her husband) mannequin business. Ms. Sevilla told him how important wigs were for her work, making it convenient for actors to change their looks or character on set.

In October 2007, they opened Lynelle House of Hair Fashion’s flagship store at V-Mall in Greenhills, San Juan.

“It’s really experimental. It’s not like a basic need like clothes. Mahirap ito kasi hindi mo laging kailangan bilhin everyday (It’s a challenging business because you don’t have to buy the product everyday),” Ms. Sevilla said.

The actress thought it was a good idea to make wigs accessible to Filipinos and avoid the need to spend on expensive ones abroad. “If I can just have a place where I can gather so many styles where people can conveniently try on and buy, it would be nice,” she said.

Like new parents deciding on a name for a baby girl, Ms. Sevilla and her husband chose Lynelle (which means “pretty”) for the store.

“It’s funny because we did not have a child yet, but we were already looking for a baby name,” she said — the couple wed in November 2007. “We wanted a name of a person, specifically of a girl, which has a nice ring to the ears, is easy to remember and is associated with beauty,” Ms. Sevilla said in a mixture of English and Filipino. “The first name we decided on [became] the name of the store.”

What started as a small mannequin wig business in Tutuban, Manila has since branched out to Greenhills in San Juan, Makati, Cebu, and Quezon City.

AN ACTOR’S INSTRUMENT
While the business started out to fulfill a personal need, it eventually found itself serving several niches. “Initially, it (Lynelle) was made for actors like me because I found it very convenient to use [wigs] for an instant change of look in the tapings,” said Ms. Sevilla.

“When we keep changing scenes. [For example] forgetting to shoot a part of a wedding scene where an actor had curly hair. But you have already shampooed and taken off your curls. There are contingencies on set. ‘We need to go back, one scene we need to retake…’ So, they had to set your hair again. Just imagine how tedious it is to do it again,” Ms. Sevilla explained speaking in a mixture of English and Filipino. The people in the television and movie productions, stylists, and fellow actors saw the advantages of using wigs as convenient energy savers, and also a way of giving the actors time to rest.

Screen and theater actors, comedians, and comedy bar performers would as her about wigs, and then eventually visit the store. She also received requests for popular personalities. Her clientelle grew through word of mouth since they didn’t advertise.

Soon, the market expanded to include cosplayers looking for character wigs, and people who simply liked wearing wigs.

MEET THE HAIRSTYLES
At this point of the interview, we took a tour around the store and Ms. Sevilla showed samples of the products.

The wigs, manufactured in and imported from Asian countries, come in two major types — synthetic and human hair.

The synthetic wigs are made of Japanese Kanekalon synthetic fiber. It is classified into Class A and Class B — synthetic Class B wigs have a shinier finish.

The selection also includes regular wigs that have interlayered wefts attached to skin-friendly lace caps with a fixed hairline; and the Lynelle-pioneered lace front wigs with sheer lace at the hairline that gives a natural look as if the strands grew from the scalp. The latter sort may be re-styled due to its movable hairline.

Hair irons and blow dryers cannot be used to style synthetic wigs as heat damages the fiber. However, minimal hairspray and water-based coloring spray allows the user to be creative with the product.

The human hair products on the other hand, can withstand the heat from blow dryers and curling irons. It may also be dyed permanently.

Lynelle also sells Keira, its own brand of hair extensions which come in 12-, 16-, and 22-inch lengths. Ms. Sevilla noted that the business started with 16-inch extensions meant to add volume and length for thin hair or use them as highlights. The 12- and 22-inch extensions came later along with darker shades. The hair extensions are either clip-ons or semi-permanent stick hair which is a strand-by-strand attachment temporarily attached to the user’s real hair for a given period.

Ms. Sevilla makes it a point to keep up with trends. “I’m constantly updating myself. I always watch, read, observe, think, and experiment. Somehow, now it’s so easy because you can see the coming trends online. We keep up and we make sure that we have them.”

This is evident through the interesting selection of character wigs on display — from Marie Antoinette’s bouffant to Queen Elsa’s long braid, Harley Quinn’s ponytail to Wonder Woman’s dark waves. “It’s fun because it’s ever-evolving,” Ms. Sevilla commented.

CHALLENGES
“The fact that the hair is not a basic commodity is very challenging for us,” said Ms. Sevilla, “and since providing our clients with quality products is key for sustainability and for them to come back.”

Ms. Sevilla explained that a client who purchases a high-quality synthetic wig which would last him/her a few months or years (when not used often) would probably not purchase new products every month. “A regular person would not keep on buying every month even if they like to…Pero ayaw mo naman mag-provide ng product na sirain para lang balik nang balik. At saka, ’di na sila babalik kapag pangit ang quality mo (You wouldn’t want to provide a product that easily breaks just so the customer comes back often. They also wouldn’t purchase your products again if they are of low quality).”

Hairs stylists, celebrities, beauty queens, and theater performers have frequently used their products. “We are thankful that when people need something, even the clients would tell their family and friends where they can find us,” Ms. Sevilla said.

THE UNEXPECTED ROLE AND VALUE OF HAIR
“I don’t know if I’d call it accidental or maybe, it was destined somehow,” Ms. Sevilla said of producing wigs for cancer patients.

“I think it started with my mom. In 2005, she was [undergoing] chemotherapy. She had lung cancer… At that time, we only had a few choices for short hair. We did not have human hair wigs then. We manufactured human hair and more pixie styles because of her.”

Slightly teary-eyed, Ms. Sevilla continued: “Going to [chemo], she’d wear a wig. I know her face, eyes, and heart would light up. I’d feel that she’d feel better in an instant when she looks in the mirror. She’d feel that ‘It’s still me.’ And it’s very important for somebody who is struggling, when you’re physically deteriorating because of the strong medicines of [chemo]. The disease is also fighting you and you’re fighting back. Your sense of self is important. Your physical well-being is directly linked with your emotional well-being.

“It was devastating for her when she was losing hair. And having her wear a wig in the chemo was something. She was back… Ang saya-saya niya (She was so happy).”

Her late mother used to bring wigs to fellow patients who were also undergoing treatment. “That is the heart of Lynelle. We cannot stop caring for families… That simple hair pala can do wonders for somebody. If that’s what we can extend to another person, why not?”

When asked about how it feels to have started this business that has grown to extend help beyond entertainers, Ms. Sevilla said, “This is beyond my imagination, myself, and how we imagined things. [It’s] so fulfilling. [It’s] so heartwarming to see that there are more and more people benefiting from simple products. Like this one (she points to a wig on display), when you see this hair, it doesn’t mean anything. [But] when you have someone wear it and a character comes to life, or if someone is having his or her struggle physically be overcome and getting better every day with the help of wearing a wig, suddenly this thing becomes significant.”

For its 10th anniversary in 2017, Lynelle hosted an afternoon event and donated wigs for more than a hundred patients of the Kasuso Foundation, an organization which caters to the needs of breast cancer patients with whom they have been working with since 2013. Lynelle also extends its help to Alopecia Philippines, an organization founded by singer/songwriter Abby Asistio which aims to spread awareness about the condition which leads to hair loss and gives aid to patients.

Lynelle House of Hair Fashion has branches at Fisher Mall in Quezon City; V-Mall Greenhills in San Juan; Dela Rosa Square, Makati; and J Centre mall in Mandaue, Cebu.

For more information, visit www.lynellehair.com.

BSP says ready to tweak rates when needed

By Melissa Luz T. Lopez
Senior Reporter

THE BANGKO SENTRAL ng Pilipinas (BSP) is prepared to tweak interest rates to contain inflation pressures and navigate “challenging” markets this year, its chief said, while noting that a flexible exchange rate also lends support to the economy.

BSP Governor Nestor A. Espenilla, Jr. said the central bank remains watchful of price conditions following the implementation of the first tranche of the government’s tax reform program, even as it believes full-year inflation will not go beyond four percent.

“We expect inflation to remain within target range until 2019, ” Mr. Espenilla said in a speech before the Rotary Club yesterday.

“However, further increases in global crude oil prices may result in inflation trending in the upper bracket of the target range,” he added.

“[W]ith these tax changes in mind, BSP looks out for possible price spirals. You can count on us to timely adjust the monetary policy stance to ward off any threat to our inflation target.”

The tax reform law — Republic Act No. 10963 — reduces personal income taxes for those earning below P2 million, alongside a simpler system for computing donor and estate taxes. Foregone revenues will be offset by the removal of some exemptions from value-added tax as well as higher levies for fuel, cars, tobacco, coal and sugar-sweetened drinks, among others.

BSP Deputy Governor Diwa C. Guinigundo has said monetary authorities expect higher excise taxes to add “less than one percentage point” to inflation this year.

The BSP expects 2018’s full-year average at 3.4%, coming from a 3.2% estimate for 2017.

The Monetary Board has kept its policy stance unchanged since September 2014, citing manageable inflation and firm domestic demand.

RISK OF TOPPING INFLATION TARGET
Monthly inflation could overshoot the BSP’s target range this year on the back of higher duties on basic goods, economists said in a BusinessWorld poll late last week, even as they noted that price pressures would not immediately trigger rate hikes.

Rajiv Biswas, chief economist for Asia-Pacific at IHS Markit, said he expects higher taxes to push inflation to the top of the 2-4% target range by mid-2018.

“However, since the increases in indirect taxes will have a temporary impact on the headline inflation rate and drop out of the CPI calculation after 12 months, the BSP is expected to look through this temporary factor when assessing the inflation outlook its monetary policy decision,” Mr. Biswas said of the consumer price index.

On the flip side, another analyst said faster inflation could prompt multiple rate adjustments from the BSP just to contain its impact.

“[T]he risk of inflation overshooting the BSP’s 2-4% target is fairly high. Some of these pressures are obviously coming from the tax reform but we think it will be difficult for BSP to look through these risks at a time when growth continues to power ahead, the output gap is already positive and overheating concerns are more widespread,” Nomura economist Euben Paracuelles said, adding that he expects four rate increases from the BSP this year.

Mr. Espenilla acknowledged “transitory” price pressures as the higher taxes kick in, but noted that they expect productivity gains from additional public spending that will be funded by fresh revenues to be a net plus for the Philippine economy.

‘APPROPRIATE MEASURE’
The BSP chief also assured that the regulator is ready to “deploy appropriate measures” and regulations to prevent overheating, which has been flagged as a concern by external observers as credit growth hangs at double-digit levels.

“While the coming year is likely to bring continued challenges for the Philippines, we are well-placed to deal with these challenges,” Mr. Espenilla said.

“The country’s firm growth momentum and manageable inflation environment provide ample space to respond appropriately to evolving domestic and global conditions.”

The Philippine economy is expected to grow by 7-8% annually until 2022, supported by robust household consumption and aggressive public spending on infrastructure via the “Build, Build, Build” program.

Keeping a flexible exchange rate also provides extra support for the local economy, Mr. Espenilla said, as he clarified that the monetary authority does not target the peso-dollar rate.

“Maintaining a flexible and market-determined exchange rate can better insulate our economy from external shocks that could disrupt the pace of economic growth,” the central bank chief added.

Economic managers expect the peso to trade between P49-52 against the greenback from 2018 to 2022, weaker than the previous P48-51 forecast range. The peso hit 11-year-lows in late 2017 to peak at P51.77-per-dollar, before closing at P49.93 on Dec. 29, the year’s last trading day.