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Iran: we don’t intend any aggression in region

TEHRAN — President Hassan Rouhani said Wednesday that Iran “does not intend any aggression” against its neighbors but will continue to produce all the weapons it needs for its defense. “We tell the world that we will produce any weapons that we need, or if necessary we will procure them. We have not been waiting… and will not wait for your remarks or agreement,” said Rouhani at a military parade in Tehran to mark the annual Army Day. “But at the same time we announce to our neighboring countries in the region… we do not intend any aggression against you.” The United States and its allies have been demanding that Iran curb its ballistic missile program, but Tehran sees this as crucial to its defensive posture. US President Donald Trump has threatened to tear up the 2015 nuclear deal that lifted sanctions on Iran in exchange for curbs to its atomic programme unless new restrictions are imposed on its missile programme and other areas by May 12. “We want friendly and brotherly relations with our neighbors and we tell them that our weapons, our equipment, our missiles, our planes, our tanks are not against you, it is for deterrence,” said Rouhani. “The only way to resolve problems is political negotiation and peaceful behavior,” he added. Regional rival Saudi Arabia accuses Iran of seeking to dominate the Middle East through the expansion of proxy forces in countries like Syria, Iraq and Lebanon. Iran argues these forces operate with the permission of allied governments to fight jihadist groups and prevent the disintegration of states. Rouhani did not appear to reference Israel, which Iran considers an “illegitimate regime” and whose dissolution is a top priority for the country’s Islamic rulers. — AFP

Ideas are not enough to build a sustainable business

You have a great startup idea. You’ve built a company on it. You’ve launched your big app that could change the lives of millions of Filipinos. Now all you have to do is sit back and wait for your company to turn into a unicorn.

At least that’s what Robert Suyom of Snipe thought when he launched his company three years ago. Formerly posted on GooglePlay, the Snipe Shopping App let users earn discount coupons from partnered stores every time they shopped. It targeted entry-level and low wage employees who would benefit from being able to save money.

“Sounds like a brilliant idea, right? That’s what we thought too,” the CEO told students at the Spark Series x De La Salle-College of Saint Benilde. The team, he recounted, hustled to get the word out to everyone, networked, talked to potential clients and customers, and they even went as far as to come up with a forecast for their finances. Suyom thought that he’d be swimming in cash in a year or two.

But instead, he was met with unsatisfied customers and one-star reviews on the app’s page. “Worst app ever,” a one-star rating on GooglePlay read. Moreover, no one redeemed a coupon using the app a year since it launched.

“Ideas were not enough,” Suyom said. “Not enough to build a sustainable business and not enough to build a unicorn.” Snipe went through a revamp, which is still based on the idea of giving employees more bang for their buck, but through other means.

Since then, Snipe has been remodelled into an employee rewards platform. Companies using Snipe can reward hard-working employees with digital medals which the employee can then use to get exclusive discounts from partnered stores, online or offline. The hustle still continues for the Snipe team to get more companies and merchants to use their platform, but Suyom admitted that they have been getting better feedback compared to their initial idea.

Companies that have been receptive to Snipe include Hewlett Packard Enterprise, Tata Consultancy Service, and Sykes.

“Luckily for us we encountered a lot of people and organizations that helped us along the way,” said Suyom. Snipe is one of the official incubatees under IdeaSpace, which comes with a seed fund of around half a million pesos to launch your idea. “A lot of local incubation programs in the Philippines have their own ecosystem of startups. A lot of these startups have excellent ideas and products who are just waiting to scale up.”

Snipe also found support from the Department of Trade and Industry through QBO, one of the many initiatives by the government to create a good environment for startups.

Still, all this help is worthless if you, as a startup founder or a future business leader, do not have the right mindset.

“Value over valuation. When we talk about unicorns it’s easy to get caught up with how much a company’s worth,” Suyom advised. He admitted that when he started Snipe he and his team were more interested in making the business look good by generating buzz, looking for investors and making themselves visible. “We learned that we should look at value, customer value. Because while we can fool them with valuation, there is no way that we can fool customers about the value that we offer.”

“A customer or user will only receive or embrace your product if it fits their life… if it actually means something to them.”

And to get to where they are in their three year startup rollercoaster, Snipe had to constantly experiment and validate their product. “No matter how impressed you are by that idea of yours, it has a lot of room for development,” said Suyom. “In order for you to know if your idea can be turned into a sustainable business or something that could scale up, do something unscalable first. Do something manually.”

Take Airbnb for example. While it’s hard to find someone who doesn’t know about this affordable way to book a room for a few nights at someone else’s property, Airbnb founders Brian Chesky and Joe Gebbia used to go door-to-door in New York to take photos of the rented out properties, write the online profiles, and chat to their clients about what they want to see on their platform.

Because great businesses aren’t just about the great product. “Along product is a thing called process, the secret sauce of businesses,” Suyom said. “It’s the experiments and validations that businesses do to develop product and operations further.”

“And then there’s purpose,” Suyom stressed. “A business should never forget why it’s there, who it’s serving, and how it’s enriching the lives of the people they serve.”

“Without understanding of that human need,” Suyom said, “we don’t see any of our products succeeding at all.”

ALI further expands in Malaysia

AYALA Land, Inc. (ALI) is setting the stage for its Malaysian expansion with the acquisition of a four-hectare property in the country’s capital, seeking to transform it into a residential area.
The listed property giant said its board of directors approved on Wednesday, April 18, the purchase of the property located in Klang Valley, Kuala Lumpur.
The acquisition was made through MCT Bhd., since ALI has been able to secure a majority share in the Malaysian property developer, or 50.19%, last January. — Arra B. Francia

Cebu Landmasters to develop Radisson RED in Mandaue

CEBU Landmasters, Inc. continues the expansion of its hotel portfolio with the development of Radisson RED Hotel in Mandaue City, Cebu.
In a statement issued Wednesday, April 18, the listed property developer said it has signed an agreement with Radisson Hotel Group to bring the hotel brand to the country.
CLI will develop the Radisson RED within its mixed use project Astra Centre, and will offer 146 hotel rooms.
The project will bring CLI’s hotel room count to 756 once it opens by the fourth quarter of 2019.
“This unique hotel concept will offer a completely new style of hospitality in Cebu City, appealing to a generation of tech-savvy travelers who appreciate more fun hotel experiences and flexible stays,” CLI Chief Operating Officer Jose Franco B. Soberano said in a statement. — Arra B. Francia

How to develop a brand voice for millennial-targeted content

Studies show that millennials are the undisputed leaders in the consumption of digital content. They spend more time on social media, watch more videos online, and surf the web more than any other generation. In other words, millennials are very much digital natives. For them, consuming content is second nature.

Despite the fact that there are only a handful of resources that advise business leaders on how to create content that resonates with their generation, there are even several articles that blame that generational cohort for killing everything. This includes home ownership, golf, beer, and many more that Business Insider even created a full list of the things the millennials have supposedly killed. But with all the claims and blame, none of them acknowledged the difference of millennials in terms of what engages them, speaks to their passions, or inspires them.

With this gap in mind, I would like to share my tips for creating compelling brand content for millennials, especially in the Philippine context. At TaskUs Philippines, I oversee the creation of all our photos, videos, posts, and campaigns which you can find on our Facebook page: all of which exclusively target the coveted millennial demographic.

Here are my five tips for creating great millennial-friendly content. 

Give them a voice.

From a digital marketing perspective, this means you should actively hire millennials to be part of your team, so they can help you craft an authentic, young voice.

You’ll see this in full practice with my team at TaskUs: There are many team members in their early to late-twenties, even in positions of leadership. The results are evident in how authentic some of our best content comes across. For example, in a video we did for Heroes’ Day last year, our young team members conceptualized a short film about a TaskUs teammate, fighting through heartbreak. The video got 1.7 million video views, the bulk of which came from millennials who could relate with her story.


Throw job descriptions out the window.

Picture your standard organizational chart that illustrates how departments are arranged and who reports to whom. If you only accept content ideas from those under your designated creatives team, then you are already limiting yourself on the number of ideas you can come up with. On the other hand, if you open your content to everyone across the organization, you will generate exponentially more ideas which will give you an opportunity to find the perfect one.

This ideal begins by letting people operate outside of their job title and description, if they are inspired to do so. We experience this all the time at TaskUs. Who wrote, produced, and filmed our Heroes Day video that netted 1.7 million views, for instance? A team member who belongs to partnerships and public relations, not the creatives or social media team.

Pull, don’t push.

We believe that millennials like to be self-directed and choose which types of brands they want to interact with. As such, we have found that trying to hard sell or do any kind of push marketing just doesn’t work with them. Instead, what we should try to do is to show them TaskUs’ unique culture.

This contrast is most evident in our language wherein we avoid any pull marketing type phrases like “contact us now” or “inquire today” or “join us.” Instead, we like to tell stories both fictional and flash documentaries, that demonstrate what distinguishes TaskUs as not only a workplace, but as a culture.

Here is an example from our current campaign for Valentine’s Day. Rather than stuff the video with many different call to actions pressuring them to apply to our company, we adopted an unconventional medium to tell the story of one of our team members. 


Don’t neglect the in-person element.

While you are creating digital content, your means of collaboration should not only be digital. While apps like Slack and Facebook’s @Work are beneficial for execution, you should still do the lion’s share of your brainstorming in-person, as a group.

We do this formally at TaskUs once a month through our regular huddles. Our team, which is spread out across our multiple offices in greater Metro Manila, convenes at a single location. We spend the day sharing great content, including everything from our favorite movies and series to viral articles and videos. This process is generative: through sharing and appreciating content that moves us, we are able to think of ideas that may also work well for our audience.

One example of the kind of zany but effective idea that can emerge from casual, in-person brainstorming is Freaky Friday. One of our team members suggested that we have leaders immerse themselves in another role at our company to subtly showcase our unique culture and our workspaces. The series was a hit—perhaps the most memorable episode so far is the video of our SVP of South East Asia Robert Hayes spending the day as a team member of TaskUs Titans, our very own eSports team (yes, this meant he spent the day playing DOTA for the video!)

Build your castle in the sky.

The same rule that applies to business applies to content: execution is everything. Great ideas do not mean anything unless you write, shoot, or produce them. To create an environment that emphasizes taking an idea through the full course of conceptualization, production, revision, release, and promotion, each concept must be accountable to a single person. While someone must approve their work for quality control, they are encouraged to be as creative as possible—we want them to go so far as to challenge our own brand guidelines. This notion circles back to my first point: You must not only give millennials a voice, but also the freedom to sing.

Addi Dela Cruz is the Head of Brand, Environment for Communications & Design at TaskUs, LLC.

Energizing a nation

Electricity consumption in the Philippines continues to grow every year, and in 2017, it reached a new peak of 94,370 gigawatt hours (GWh), latest data from the Department of Energy (DoE) shows. But consumption growth in 2017 slackened considerably to 3.9% from 10.2% in 2016.

Among the factors that contributed to the large increase in power consumption in the latter year were “the increase in temperature and utilization of cooling equipment aggravated by the strong El Niño, the conduct of National and Local elections during the first half of the year, increase in economic growth, and entry of large power generating plants,” the DoE said in its 2016 Philippine Power Situation Report.

The residential sector expended 26,782 GWh of electricity last year, making it the main driver of electricity consumption in the country. Meanwhile, the commercial and industrial sectors, consumed 22,768 GWh and 25,573 million GWh of electricity, respectively.

When it comes to power generation, the country is still reliant on coal; this source accounted for 46,847 million GWh or 49.6% of the total generated power. But it managed to substantially reduce the power it generated from oil, from 5,661 GWh in 2016 to 3,793 GWh in 2017.

Meanwhile, power generated from natural gas increased 3.5% from 19,854 GWh to 20,547 GWh. But the growth of power generated from renewable energy sources — from 21,979 GWh to 23,183 GWh — was bigger at 5.5%. Intriguingly, the country generated less power from geothermal (from 11,070 GWh to 10,270 GWh) and wind (975 GWh to 690 GWh), and more from hydro (8,111 GWh to 9,605 GWh), biomass (726 GWh to 1,335 GWh) and solar (1,097 GWh to 1,283 GWh) sources.

“Coal remains the main supply for our baseload and we also rely on indigenous sources such as the Malampaya gas and conventional renewables such as geothermal and hydro,” Meralco PowerGen Corp., the power generation arm of Manila Electric Co. (Meralco), said. “Recently, there is a significant entry of variable renewable energy such as solar, wind, and biomass.”

“A review of the last 40 years shows that the government steered the industry with the goal of achieving energy security by reducing dependence on oil, increasing our indigenous energy, and pursuing diversity of supply,” the company added.

Rogelio L. Singson, president of Meralco PowerGen, noted in an interview with BusinessWorld that the share of solar may still be small but it may significantly increase in the coming years.

When it comes to power generation by grid, Luzon came out on top with 68,512 GWh, an amount dwarfing Visayas’ 14,054 GWh and Mindanao’s 11,804 GWh.

The country’s installed generating capacity went up 6.1% from 21,423 megawatts (MW) in 2016 to 22,728 MW 2017. This capacity came mainly from coal (8,049 MW) and renewable energy sources (7,079 MW). The rest came from oil (4,153 MW) and natural gas (3,447 MW). Dependable generating capacity also rose from 18,346 MW to 20,515 MW

Mr. Singson pointed out, however, that many of the country’s power plants are old — about 60% of them have been in existence for 15 years or more. “Typically you can prolong the life of a plant for 10 to 15 years from the conventional 30 years. But as a plant gets older, it becomes less predictable,” he said, adding that it also becomes less efficient. This unpredictability and inefficiency can result in unplanned outages.

Meralco PowerGen aims to improve the situation by building two technologically advanced coal-fired power plants in Quezon province. One is a 455-MW plant located in Mauban, which, upon completion, will be the first power generation facility to utilize supercritical technology. The other one is a 1,200-MW ultrasupercritical plant that will rise in Atimonan. These coal-fired power plants will operate at higher temperatures and pressures compared to sub-critical power plants, allowing them to achieve higher efficiencies and reduce their carbon dioxide emissions. (The company is also looking at a number of solar and energy storage projects.)

To be able to meet the growing power demand more cost-effectively and sustainably, several critical issues must be tackled, including bureaucratic red tape. “In fairness, the energy direction, policies are in place,” Mr. Singson said, “but processing remains a headache.”

Meralco PowerGen is calling on the government to streamline the processing of government permits and licenses to shorten the four to six years it currently takes before a power project can be carried out. The company also suggests reassessing the regulatory approval process to the reduce the amount of time — almost two years — that the Energy Regulatory Commission takes to approve power supply agreement.

“The government should let the power market work as intended by EPIRA whose principal reform was to transform the industry from a sellers market under a government monopoly (Napocor) to a buyers market where DUs (distribution utilities) and Contestable Customers are empowered with choice and competition,” the company added.

EPIRA stands for the Electric Power Industry Reform Act of 2001, while Napocor stands for the state-run National Power Corporation.

Cutting business costs by improving energy efficiency

Running a business comes with never ending expenses starting from the processing of the permits and licenses down to office space rent, equipment, payroll, and operations maintenance. Among all the expenses, business owners are mostly surprised with the unpredictable cost caused by energy consumption.

In the United States, small businesses collectively spend a staggering $60 billion on energy each year, according to US Environmental Protection Agency’s Energy Star program. In addition, a survey conducted by the National Federation of Independent Business (NFIB) found that energy cost is one of the top three business expenses in 35% of small businesses.

Energy efficiency, which uses less energy to provide the same productivity, should be included in every business plan. It helps businesses in a range of ways: reducing its operating costs and impact on the environment, and enhancing the image of the company.

Consulting firm McKinsey&Company said in a report that energy efficiency represents about 40% of the greenhouse gas reduction potential that can be realized at a cost of less than €60 per metric ton of carbon dioxide equivalent worldwide.

“In many cases, it is an extremely attractive upfront investment that plays for itself over time, while providing the added benefits of reducing the cost of energy and increasing the energy productivity of the economy,” McKinsey&Company said.

Interest in energy efficiency, then, is now given attention by most companies. There are many ways to improve energy efficiency for businesses, and most of these can be made with little efforts on maintenance and small changes in office setup and employees’ behavior.

Office lighting is a workplace necessity. Wherever possible, use energy-saving lighting such as fluorescent bulbs and LED (light-emitting diode) light bulbs instead of incandescent or halogen lighting, an Australian-based electricity supplier Powerdirect said in its Web site.

“Both incandescent and halogen bulbs consume significantly more electricity and will have a big effect on your power bills. Should halogen spotlights be important in promoting specific products or services, investigate using low-voltage halogen lights,” Powerdirect explained.

Ensuring that lights are free of dust and build ups is also important. In this way, lights remain bright and its longevity in reducing heat increases.

Even the office color and window coverings matter. Businesses should pay attention on how much light can be gained by using light colors for walls and window coverings that allow the maximum possible light penetration throughout the day.

To further cut the costs in energy, turning off the lights when are not needed must be observed. Making this a routine does not only saves energy, it also extends the overall lamp life and reduces replacement costs. Thus, taking advantage of the natural light is beneficial.

In terms of business equipment including copiers, printers and faxes, choose those that are equipped with standby feature. Also consider using timers to turn off larger copiers and printers as these devices still consume valuable electricity when in standby mode, Powerdirect said.

In today’s modern age, computer is a basic need in all businesses. Similar to other equipment, ensure that its power-saving feature is activated so the monitor and computer both go into standby mode after a certain amount of inactivity. In addition, all the staff must be advised to always turn off the computers when they leave the office.

In purchasing new computers, consider whether a laptop could be a better option than a desktop computer. Powerdirect said that aside from increased productivity, laptops consume less energy than their desktop counterpart.

For heating and cooling aspect, there are also simple tips that can help cut the energy cost. First, ensure that the workplace is well insulated; most especially the ceiling. As Powerdirect noted, this is one area that often ignored and the one where businesses can save significant energy usage.

Second, look at weathering the building to reduce the cooling bill. “Installing window shades, solar reduction film or awnings will reduce the heat entering your building,” Powerdirect said.

Furthermore, install automatic closers on external door so they are not left open. Also consider installing blinds or curtains on external windows to reduce heat from entering.

Above all these, employers should educate and encourage its employees to be energy-conscious and to offer ideas about how energy can be saved. Designating a responsible party to promote good energy practices within the organization is a good idea to consider. — Mark Louis F. Ferrolino

Meralco PowerGen Corporation (MGen): Powering the future and transforming communities

By Romsanne R. Ortiguero

A wholly-owned subsidiary of the Manila Electric Company (Meralco), the largest electric distribution utility in the Philippines, Meralco PowerGen Corporation (MGen) was incorporated in 2010 with the aim to ensure adequate, reliable and cost-competitive supply for electricity consumers.

MGen’s plans are centered around state-of-the-art power generation projects, using pioneering high efficiency, low emission (HELE) technology.

The company is building the country’s first 455-MW supercritical coal-fired power project in Mauban, Quezon through San Buenaventura Power Ltd. Co., its joint venture with Thailand’s Electricity Generating Company.

MGen, through Atimonan One Energy, Inc., will also build a bigger 1200-MW plant in Atimonan, Quezon. The ultra supercritical coal plant will be the first of its kind in the Philippines and will be the most efficient when it starts commercial operations.

Former Public Works Secretary Rogelio L. Singson currently leads Meralco PowerGen Corporation as president and chief executive officer. He formally assumed the post on Oct. 1, 2017.

“We’re not just doing conventional coal plants. What MGen has decided is to go into what we refer to as high efficiency, low emission technology. If you will compare the plants we have in mind in terms of carbon dioxide emissions, we’re much, much lower than all existing plants in the country,” Rogelio L. Singson, MGen president and chief executive officer, told BusinessWorld in an interview.

“With these plants, you’re able to generate more power with less fuel input, therefore, less emission,” added Mr. Singson, underscoring that as a responsible power company, MGen is observing strong environmental stewardship and strictly complies with the local and international environmental standards.

Amid concerns on climate change, MGen aims to set an example that will demonstrate that the Philippines does not have to choose between affordable and reliable electricity or a cleaner environment.

Mr. Singson emphasized that MGen is also considering major renewable energy projects to have a diversified power generation portfolio.

“We also have to understand that climate change is real so we have to start looking into low emissions and more efficient renewables,” he said.

As of now, according to Mr. Singson, MGen is looking at developments and trends in renewable energy sector, including solar and battery storage, hydropower and wind.

“We’re seriously looking in what way we can play a major role in the renewables market. At the end of the day, we cannot be dependent on one fuel source. We’ve seen the predictions — renewables could potentially eat up to 35% of the Meralco market,” Mr. Singson said.

He added: “Do we allow other players to disrupt or do we also join the disruption? And the decision is we will get involved.”

While MGen has a lineup of promising projects to build and operate power plants, the company is also facing challenges when it comes to the approval of its power supply agreements (PSA), which is a requirement before the company starts construction of its power plants.

“The biggest challenge facing MGen at the moment is the delay in the approval of its PSAs by the Energy Regulatory Commission. The delay in PSA approval is preventing the company from constructing these vital infrastructure projects that are needed to secure the country’s power supply in the next four to five years,” Mr. Singson said.

But despite the challenge, MGen remains committed in building power plants that will support the country’s growth trajectory.

It aspires to set a standard of excellence not only in power plant operations but also in developing and engaging host communities to make them progressive and sustainable.

“MGen is committed to the development of power projects and the transformation of our host communities into progressive, sustainable and smart communities,” Mr. Singson said.

For the town of Atimonan, for instance, the company already engaged a third-party urban planning expert to develop a Comprehensive Land Use Plan that will prepare the municipality in handling and utilizing the financial resources that it will get from the project.

“Where we are, the community should develop with us. It’s really to transform the community hosting the plant,” Mr. Singson added, sharing the company’s vision under his new leadership

“As we work on this, MGen will continue driving the development advanced power projects to completion and commercial operations, to further boost available supply in the country.”

Joblessness a blot on PHL’s growth lead

By Melissa Luz T. Lopez
Senior Reporter
THE PHILIPPINES can be expected to lead growth across major Asian economies, except India, up to 2019, according to an International Monetary Fund (IMF) report that nevertheless showed the country suffering the worst unemployment in Southeast Asia in the same years.
The multilateral lender sees world output picking up to 3.9% annually for 2018 and 2019 coming from 3.8% last year on the back of “faster-than-potential” expansion among advanced economies.
World output appears to be more upbeat given strong momentum, favorable market sentiment, as well as “accommodative” financial conditions, which is boosted by expansionary fiscal policy in the United States. The partial recovery in crude prices also provides room for growth in oil-exporting countries to gradually improve, the IMF said.
This, in turn, will lift growth prospects for emerging markets like the Philippines.
“The current strong growth of the global economy will help boost growth in emerging market economies,” IMF country representative Yongzheng Yang said in an e-mail response to queries.
“In the case of the Philippines, this means a favorable external environment for its exports, OFW (overseas Filipino workers) remittances, and BPOs (business process outsourcing).”
LEADING SOUTHEAST ASIA
The IMF expects Philippine gross domestic product to expand by another 6.7% this year and 6.8% in 2019, steady from 2017’s 6.7%.
While the forecasts fall short of the 7-8% annual growth goal set by the administration of President Rodrigo R. Duterte up to 2022, when he ends his six-year term, they are better than those of most major Asian economies — excluding India (7.4% this year, picking up to 7.8% in 2019) — the 5.3% and 5.4% averages of the five major Association of Southeast Asian Nations members (ASEAN-5) for the same respective years, 6.5% and 6.6% for “Emerging Asia” (ASEAN-5 plus China and India) as well as 5.6% for both years for the entire Asia.
Mr. Yang said the Philippines “will continue to grow strongly,” supported by solid domestic demand and public investment.
Reforms in the local tax system and a deeper domestic debt market will also attract more private sector investment, including foreign direct investments.
Headline inflation, however, could breach the central bank’s 2-4% target range to register 4.2% this year before easing to 3.8% in 2019.
Continued heavy importation of capital goods will likely drive the current account balance to deficit equivalent to 0.5% of gross domestic product this year and 0.6% in 2019 from 2017’s 0.4%.
Moreover, unemployment will be the worst across much of Asia at 5.5% for this year and 2019, though down from 2017’s 5.7%.
Ensuring that economic growth lifts more Filipinos out of poverty is a primary goal of the current administration, which targets unemployment rate to drop to 4.7-5.3% this year and 4.3-5.3% in 2019 from 5.5% in 2016, as well as poverty incidence to fall to 17.3-19.3% this year from 2015’s 21.6%.
Meanwhile, growth across emerging markets and developing economies is seen to accelerate by 4.9% this year and 5.1% in 2019, coming from a 4.8% climb a year ago.
Advanced economies are projected to grow by 2.5% this year and 2.2% in 2019, from 2.3% in 2017.
IMF’s Mr. Yang flagged tightening moves by central banks abroad as a key risk for the Philippines, as this could trigger investment outflows and higher borrowing costs.
“As advanced economies are expected to grow ‘faster than potential’ in 2018 and 2019, some central banks in these economies have begun and will likely continue to tighten monetary policy which will lead to tighter global financial conditions. This in turn could result in capital outflows from some emerging market economies,” the IMF official said.
“Thus, one of the main risks to the growth outlook for emerging market economies such as the Philippines stem from tighter global financial conditions.”
The US Federal Reserve is expected to hike interest rates further this year after raising them by 25 basis points in the March meeting of its Federal Open Markets Committee.
Other areas of concern include inward-looking policies in some advanced countries, trade tensions among major economies, and geopolitical events.
“However, the Philippines is in a strong position to manage shocks to its economy as it has ample foreign reserves and a low level of public debt,” Mr. Yang added.
Dollar reserves totalled $80.128 billion in March, marking a third straight month of decline though still providing a “very comfortable” buffer, according to the Bangko Sentral ng Pilipinas. The reserves can cover 7.8 months worth of import payments, above the three-month global standard, though lower than the 8.2-month ratio logged in February.
Debts incurred by the Philippine government totalled P6.652 trillion as of end-December to account for 42.1% of the local economy. Economic managers have said this share remains “manageable” and relatively low compared to the ratio for other Asian countries.

Philippines has most to gain from China’s ‘Belt’

THE PHILIPPINES has the most to gain from China’s Belt and Road Initiative (BRI) by way of infrastructure investments, a global bank said, even as it cautioned that geopolitical tensions and construction delays could weigh on benefits to the country.
In an April 16 report, titled: Belt and Road: Globalization China Style, Nomura said the Philippines and Malaysia have the most to gain from warmer ties with Beijing, with the Belt and Road agenda expected to support the ambitious infrastructure development plan of the government of President Rodrigo R. Duterte.
At the same time, Nomura economists cautioned that it could take long for China-funded projects to go from blueprint to actual rollout, citing the track record of construction firms.
SMOOTH SAILING ‘UNLIKELY’
“As mentioned, progress of China-funded infrastructure projects is unlikely to be smooth sailing as is evident in delays of even the smaller projects,” Nomura said in the report which it released on Tuesday.
“Most of the big-ticket multi-year projects in the pipeline are still under consideration and may therefore be susceptible to the risk of another pivot when a new president takes over in 2022, unless they get under way soon.”
China has pledged around $7.34 billion in soft loans and grants for the Philippines over the next two years, according to the Department of Finance. The Duterte administration is counting on such easy financing to support its ambitious “Build, Build, Build” infrastructure program that needs some P8 trillion until 2022.
Nomura noted that Beijing’s investment pledges account for 10.5% of gross domestic product.
Mr. Duterte announced a “pivot to China” during his first visit to Beijing as president in October 2016, initially shocking the Philippines’ traditional partners and reversing decades of US-aligned policies.
Last week saw the Philippines sign six agreements at the Boao Forum in China, which include a $62-million credit line for the Chico River Pump Irrigation Project and a 500-million renminbi economic and technical cooperation grant to finance infrastructure and other projects.
Other big-ticket projects eyed for Chinese funding are the P10.9-billion New Centennial Water Source-Kaliwa Dam Project and the P151.3-billion Philippine National Railway South Commuter Line.
However, Nomura flagged that unresolved maritime tensions between the two nations could affect the future of investment commitments and funding.
“[A] lot will hinge on whether tensions in the South China Sea remain contained, which in turn may also depend on the next administration,” Nomura added.
“Even today — amid President Duterte’s high popularity ratings — there are growing concerns about the mismatch between the speed with which China has built structures on disputed islands and how little progress has actually been made on infrastructure projects or the FDI inflows that the Philippines has received from China so far.”
China has been building structures capable of accommodating warplanes and warships in a disputed area in the South China Sea even after the Permanent Court of Arbitration in July 2016 junked Beijing’s claims to much of the waters as being without legal basis.
On trade, the global bank said Philippine trade links to the Mainland will likely remain limited.
“[T]here are no major port development projects — which would have been more in line with the BRI’s thrust of increasing regional connectivity and allow the Philippines to be linked to the Maritime Silk Road — and as such we believe the project will actually somewhat limit the prospects of new trade linkages,” Nomura said.
China (excluding Hong Kong) was the fourth-biggest market for Philippine goods in 2018’s first two months after the Japan, the United States and Hong Kong, as well as the Philippines’ biggest source of imports in the same period, according to latest available Philippine Statistics Authority data.
Foreign direct investments from China nearly tripled to $28.79 million in 2017 from 2016’s $10.77 million. The figure soared to $151.27 million in January alone to account for 16% of the $919.22-million inflows that month. — Melissa Luz T. Lopez

Indonesia expected to drop $19-B infrastructure projects

JAKARTA — Indonesia’s chief economic minister said on Monday that 14 infrastructure projects, worth 264 trillion rupiah ($19.17 billion), are expected to be dropped from the government’s strategic development plan due to lack of progress.
These projects will be dropped if they don’t meet some requirements by the third quarter of 2019, Darmin Nasution said, which is the end of President Joko Widodo’s current term.
Infrastructure development is one of Mr. Widodo’s main economic platforms as the economy struggles to remove logistical bottlenecks.
HONING FOCUS
Mr. Nasution said the government wants to focus on the 222 infrastructure that are still on its list of “strategic projects,” with a combined value of around 4,100 trillion rupiah.
Rating agencies have previously warned that balance sheets of state-owned enterprises (SOEs), which have been taking up most of the government’s infrastructure projects, have worsened as they took on more debt to fund projects.
“By slowing the pace of implementation, it could mean the government is prioritizing infrastructure projects, which may limit contingent liability risk, but have implications for medium-term growth,” Moody’s sovereign analyst Anushka Shah told Reuters ahead of Mr. Nasution’s announcement.
Moody’s upgraded Indonesia to one notch above its lowest investment grade last week, a move that could help Southeast Asia’s largest economy get cheaper financing for its projects.
But the agency said there was a risk of SOEs’ financial strength materially worsening to the point that it could hurt state finances.
S&P cautioned against the same issue last month and the government has said it would monitor liquidity risks of SOEs, especially those in construction and power sectors.
There were also safety concerns that led to the government suspending a number of road and rail construction projects for a short evaluation earlier this year.
Among the projects expected to be dropped are railways in Kalimantan and South Sumatra and several airport and sea port projects in Java.
“There are projects that have land (acquisition) problems, investor problems, and even there are problems related to the feasibility of the project itself,” Transportation Minister Budi Karya Sumadi told reporters.
Mr. Nasution said that the next government was welcome to reassess and resume the projects, if deemed necessary. — Reuters

Lopez Holdings income declines 36% in 2017

THE absence of one-time gains that inflated profits in 2016 dragged earnings Lopez Holdings, Inc. last year.
In a disclosure to the stock exchange on Tuesday, the holding firm of the Lopez family said its net income attributable to equity holders reached P4.225 billion last year, down 36% from the P6.557 billion reported in 2016.
Weighing on profitability was the lack of extraordinary items booked by First Philippine Holdings Corp. (FPH) in 2016 from the arbitration settlement received by First Philec, Inc. and the liquidated damages collected by First Gen Corp. for its San Gabriel power plant.
Also, ABS-CBN Corp. generated more revenues in 2016 from political ads on top of improved revenues from its Pay-TV and new business initiatives.
Lopez Holdings’ consolidated revenues increased 14% year on year to P104.890 billion from P91.910 billion on the back of higher electricity sales of FPH subsidiary First Gen Corp. coupled with higher real estate and merchandise sales.
Earnings from investments accounted for at equity method fell 12%, representing the performance of ABS-CBN for the period and the share in the performance of FPH units.
Lopez Holdings held 46% of FPH and 56% economic interest in ABS-CBN as of December 2017.
Including non-recurring items, FPH reported a 41% decrease in net income attributable to equity holders to P5.854 billion in 2017 from P9.933 billion in 2016.
Recurring net income of FPH stood at P6.829 billion in 2017, 15% higher than the P5.929 billion in the previous year, as revenues climbed 14% to P104.890 billion from P91.910 billion a year ago.
Earnings of ABS-CBN went down by a tenth to P3.164 billion from P3.525 billion, following an 11% decline in ad sales without the impact of election-related spending that boosted income in 2016.
Revenues of the broadcast giant reached P40.698 billion, two percent lower than P41.631 billion in the previous year, as consumer sales grew 9%.
Incorporated in 1993, Lopez Holdings was formerly known as Benpres Holdings Corp.
Shares in Lopez Holdings fell 12 centavos or 2.47% to close at P4.73 apiece on Tuesday. — Krista Angela M. Montealegre

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