How PSEi member stocks performed — December 22, 2017
Here’s a quick glance at how PSEi stocks fared on Friday, December 22, 2017.
TRAIN to aid SSS pension hike plan
THE Social Security System (SSS) remained keen on a pension contribution hike for 2018, as members’ additional take-home pay from the tax reform program could aid them in funding it.
However, Social Security System (SSS) President and Chief Executive Officer Emmanuel F. Dooc said Congress needs to pass the amendments to the pension fund’s charter that would allow them to raise contribution rates, without having an Executive Order (EO) signed by the President.
“Insofar as we are concerned, we still have to wait for the passage of the SSS charter amendment which will give us the power to do it,” he said in a text message to BusinessWorld.
The House of Representatives approved on final reading House Bill 2158 in January this year, which amends Republic Act 1161 or the Social Security Act.
However, its counterpart measure — Senate Bill No. 1198 — is currently pending a committee report.
He said that he hopes that the bill will pass “early next year.”
With the passage of the Tax Reform for Acceleration and Inclusion (TRAIN) Act, Mr. Dooc said that contributing members should cope up easily with the planned hike.
“The TRAIN will both directly and indirectly make it easier for our members and employers to shoulder the contribution hike. The tax relief and the resulting economic developments will boost their savings and income. The rising tide will lift all boats,” said Mr. Dooc.
The tax measure lowers individual income tax rates, except for the “ultra-rich.”
The SSS earlier eyed a 1.5% increase to 12.5% for the member’s contribution rate out of their monthly salary.
The contribution hike was initially planned to be implemented in May, as it was made a condition to the first P1,000 across-the-board pension hike approved by the President in January. Ever since, no EO was signed.
The second P1,000 pension increase is expected by 2019. Economic managers said that without a corresponding contribution increase, the pension hikes would cut the pension fund’s actuarial life by 14 to 17 years.
Aside from a contribution hike, the SSS said that it wants to raise the maximum salary credit to P20,000 in the first year from the current P16,000. This will then be hiked to P25,000 in the succeeding year until it reaches P30,000. — Elijah Joseph C. Tubayan
Nation at a Glance — (12/27/17)
News stories from across the nation. Visit www.bworldonline.com (section: The Nation) to read more national and regional news from the Philippines.
Oil’s bull run wavers as investors pause
OIL’S BULL RUN is grinding to a halt.
Hedge funds lowered their bets on Brent crude after they rose to a record a week earlier. And the net-bullish position on West Texas Intermediate (WTI), which hit a nine-month high last month, dwindled for a third straight week. The message: After a months-long build-up, investors are wavering, concerned US crude will continue to boom in 2018, undercutting the Organization of the Petroleum Exporting Countries (OPEC)’s push to drain a global glut.
“It seems like now most people have got their positions and are waiting to see what 2018 brings,” said Rob Thummel, managing director at Tortoise Capital Advisors LLC.
Oil futures in New York have jumped almost 40% since June as OPEC and its allies extended their production-cut deal and US inventories shrank to two-year lows. But the decline in American stockpiles is largely due to refinery maintenance and exports near an all-time high. Meanwhile, gushers in the country are producing at a record pace.
Global stockpiles won’t fall enough to reach the level targeted by OPEC when the group meets in June, Saudi Arabia’s Energy Minister Khalid Al-Falih said last week.
American output is poised to reach 9.99 million barrels a day in May, according to the Energy Information Administration. That would surpass Saudi Arabia’s curtailed production of 9.97 million barrels a day in November.
The Brent net-long position — the difference between bets on a price increase and wagers on a drop — fell 1.1% to 538,045 contracts in the week ended Dec. 19, according to data from ICE Futures Europe. That’s after reaching a record 544,051 contracts in the previous week. Longs fell 1.2%, while shorts decreased 1.8%.
Money managers cut their WTI net-long position by 1.8% to 383,828 futures and options during the week, according to data from the US Commodity Futures Trading Commission on Friday. Longs fell by 1.2%, while shorts rose 3.9%.
“It’s been a good year,” but there’s “some worry about what next month is going to bring,” said John Kilduff, founding partner at Again Capital LLC in New York. “There’s not as much enthusiasm about the OPEC/non-OPEC accord as there was even a few weeks ago.”
The North Sea’s Forties Pipeline System, which carries crude used to price the Dated Brent benchmark, is set to return to normal flows early in the new year, according to a statement from operator Ineos Group. The outage, which gave a boost to prices, was the first time a force majeure had been declared in the North Sea since 1988. Repairs are expected to be completed by “around Christmas.”
In the fuel market, money managers reduced their net-long position on benchmark US gasoline by 2.1%. Meanwhile, the net-bullish position on diesel rose by 1.9%.
Heading into next year, investors will be watching how long it takes to get inventories back to the five-year average, Thummel said. The OPEC deal extension brought some certainty to the market, which is now waiting to see how the cuts and US production play out.
“That was the big cloud overhanging the oil market and prices,” he said. — Bloomberg
The ingredients for a successful small business
When venturing into business, an entrepreneurial bent is not always enough. Theoretical knowledge must be paired with practical knowledge essential in running a long‑lasting business.
This is the belief of 27‑year‑old Bea Atienza before establishing her own bakeshop called Bellefleur by Beatrix. In her case, she thought that her knowledge about baking alone would not give her an easy pass to a successful business.
Atienza, whose interest in baking began in high school where she would bring homemade cookies to her classmates, instead continued to crave for learning that she would later on use in operating her own business.
“My classmates tried them and liked them so much. They started asking if they could order more. That’s when I realized that people are willing to purchase what I bake and turn it into a business,” she recounted.
In college, she left the Philippines to take up a four‑year business course and finished another three‑month culinary course upon her return.
Following the short course, she enrolled in the baking and pastry arts program of the Center for Culinary Arts where she learned the ropes of baking entrepreneurship, including product development, costing and marketing, as well as creating a viable business plan.
“Immediately, I was taught the ins and outs of forming and maintaining a baking business. Aside from the fundamentals of baking, I learned how to mass-produce baked goods, how to find a target market to finding an ideal location,” she said.
Equipped with mentoring she gained from the culinary school, Atienza began her business venture and opened Bellefleur as an online store offering pastries like cakes, cupcakes, and cookies, among others.
In July this year, she stepped out of the digital space and launched a physical version of Bellefleur at Unimart Greenhills, located in one the business districts in the metro.
The Frozen Ube Brazo has become a favorite among its patrons that even Filipinos abroad order it online for their loved ones living here in the country. Bestsellers also include the Double Decker Ube Leche Flan, which sells out everyday.
“I love brazo, but I also wanted to enhance the flavor by adding ube for a balanced sweetness, just like what my mentors at CCA taught me about not adding too much sweetness when baking,’ she said.
“LinkedIn has millions of job posts and distributes them to candidates based on skill sets, but it’s your descriptions that will compel them to view and apply,” it added.
With her sweet success, Atienza seeks to reach more milestones for her business in the future. Her plans include launching more kiosks for Bellefleur and cafes bearing her brand.
S&P sees five BSP rate hikes in 2018-2019
S&P GLOBAL RATINGS sees five rate hikes from the Bangko Sentral ng Pilipinas (BSP) over the next two years in the face of the Federal Reserve’s own continued tightening and against the backdrop of robust Philippine domestic economic activity.
“We expect a tightening bias from Bangko Sentral ng Pilipinas, especially if markets continue to take Fed rate hikes in stride,” S&P said in the December report it released last week.
The debt watcher expects the central bank to raise interest rates three times in 2018 and twice in 2019 in increments of 25 basis points, according to its latest economic outlook.
Hence, S&P sees the BSP’s policy at 4.25% by end-December 2019, compared to the current 3.0% benchmark borrowing rate.
The US Federal Reserve itself raised interest rates for a third time this year during the Dec. 12-13 review of its Federal Open Markets Committee, and held on to plans for three more rate hikes over the next two years. US benchmark rates are now 1.25-1.5%.
The BSP kept its policy stance unchanged during the Dec. 14 meeting of its Monetary Board as domestic inflation remains within target and economic growth prospects upbeat. Central bank officials have said that they do not have to match the Fed’s tightening moves as they come.
The Fed hike did not cause a substantial reaction among financial markets, with analysts saying that the fresh “lift-off” had long been priced in by investors. The peso even edged slightly stronger versus the dollar after the rate hike, with its impact offset by enactment of the first of up to five planned tax reform packages.
The BSP last hiked key rates in September 2014, although procedural cuts were introduced in June 2016 for the shift to an interest rate corridor scheme.
BSP Deputy Governor Diwa C. Guinigundo has said that there’s “hardly any need” to adjust policy settings given current growth and inflation dynamics.
S&P last month raised Philippine growth forecast to 6.6% for 2017 from 6.4% previously, taking into account the faster-than-expected 6.9% pace during the third quarter.
A “region-wide” boom in electronics exports supported the faster gross domestic product growth despite an easing in domestic household spending, S&P said.
If realized, economic growth will settle within the 6.5-7.5% goal set for the entire year by economic managers of President Rodrigo R. Duterte.
The credit rater also expects the country’s current account — which measures the international trade flows of goods and services — to revert to a small deficit, but will remain at a manageable level.
It shared assessments by other economists that the deficit should not by itself cause alarm since it was fueled largely by increasing imports that, in turn, are prompted by business expansion plans and the government’s ambitious infrastructure development drive.
MORE VULNERABLE
“Though we do not foresee the deficit widening significantly to an unsustainable level, any widening implies that external shocks would have a bigger potential of causing sudden capital outflows,” S&P said.
“Possible sources of such a shock would be an escalation of geopolitical tensions, trade issues, or market turbulence coming from surprises in the pace of Fed normalization.”
As of its latest review, the BSP expected the current account to settle at a $100-million deficit this year. Exports are now seen growing by 11% this year, roughly matching a 10% increase in imports.
In 2018, the current account deficit is expected to widen even further to $700 million — still “manageable” as far as the central bank is concerned. — Melissa Luz T. Lopez
SEC readies preliminary findings of 2GO review
THE Securities and Exchange Commission (SEC) will release next month initial findings of its investigation on the accounting issue involving logistics company 2GO Group, Inc., SEC Chairperson Teresita J. Herbosa said in a recent interview.
The probe ran longer than expected, prompting the regulator to add another person to the four-man task force conducting the review, she said.
“There are quite a number of issues — I think about 10 — that we have to clarify,” Ms. Herbosa said, without elaborating due to the confidential nature of the probe.
The corporate regulator had said the investigation could last about a month.
“We have to go back and verify each one, find out if the representation made regarding every item — whether it is the amount or the notes were really sourced from working papers, which in turn were sourced from the company,” the corporate regulator’s chief said.
“We’ll be coming up with the initial findings in January.”
SEEKING CLARIFICATION
The new management of 2GO, led by businessman Dennis A. Uy’s Udenna Corp. and Henry Sy, Sr.’s SM Investments Corp., had hired SyCip Gorres Velayo & Co. (SGV) to conduct the review after they took over the logistics company in April.
A special audit of 2GO’s financial statements revealed that the company underreported debt and inflated non-cash assets, resulting in additional P1 billion in income in each of the past two years.
In July, the SEC launched an investigation into the financial reporting issue.
A month later, the SEC’s Market and Securities Regulation Department and Office of the General Accountant sought written clarification from the previous management of 2GO, as well as from auditors R.G. Manabat and SGV, before making any conclusion in its investigation of the discrepancy in 2GO’s financial statements.
Among others, the probe will determine if cases have to be filed against previous principals of 2GO and its auditors.
RG Manabat & Company, the local unit of accounting firm KPMG, stood by its audit and the camp of the former 2GO president, Sulficio O. Tagud, Jr., has denied allegations of wrongdoing.
If proven that the company had violated provisions of the Securities and Regulation Code, 2GO could face of fine of at least a million pesos, with an additional P10,000 fine for every day since the mistake was discovered. — Krista Angela M. Montealegre
Thailand’s airport misery may last years as Chinese visitors overwhelm upgrades
BANGKOK — Thailand, land of golden temples, white-sand beaches, smiling hosts.
Or of overcrowded airports, epic traffic jams and littered seashores.
Facing a deluge of Chinese tourists that has strained its airports beyond capacity, the Southeast Asian nation is spending billions to upgrade its infrastructure, open up new islands and cities to travelers, and tone down its image of cheap shopping, hotels and sex that underpinned the industry for half a century.
But the change will take years and even then may fail to keep up with soaring visitor numbers that have given the Land of Smiles a reputation for delays, overcrowding and government crackdowns.
“Our strategy was more for less, not less for more, so we invited a lot of tourists from China,” said Suvit Maesincee, in an interview last month, when he was the minister attached to the Prime Minister’s office.
“I think in the near future we need to change from volume to value.”
The military-backed government relies on tourism for 18% of the economy and foreign inflows have made the baht one of the strongest performers in Asia this year, a bright spot amid weak domestic consumer demand and private investment.
While it plans to spend more than $5 billion to double capacity at its international airports, it’s planning to increase foreign tourist numbers at a similar pace, reaching 68 million in the next decade.
Weerasak Kowsurat, who returned to the post of tourism minister in November in a cabinet reshuffle by the military government, is frank about the challenge:
“Today we’re not even ready,” he said after a Dec. 1 press briefing in Bangkok.
“To get us prepared within a year is not even possible.”
At the heart of the upgrade, and the congestion, are Bangkok’s two international airports: Suvarnabhumi and Don Mueang, which are running at 40% beyond designed capacity.
New terminals, facilities and another runway would allow them to handle 130 million passengers a year, including inbound and outbound trips.
But work won’t be completed until 2022 at the earliest, and the first taste most travelers get of the Thai capital is a long queue at immigration.
“In three to five years time we might not reach our targeted tourist growth due to a lack of airport capacity,” said Thongyoo Suphavittayakorn, a spokesman for the Association of Thai Travel Agents.
“The problem with the Thai government is they want to increase the number of visitors but they don’t stop to check first if we’re able to accommodate” them.
Once out of the terminal building, visitors must contend with the Bangkok traffic, the world’s most congested after Mexico City, according to TomTom NV’s traffic index.
“We took five hours to go to the hotel just because of the traffic,” said Diogo Matos, a 28-year-old first-time visitor from Portugal.
“It was a horrible start to our trip.”
Thailand’s ability to attract tourists has defied the effects of a military coup, floods, political protests, a tsunami, airport blockades and the global financial crisis.
In the past 15 years, more visitors have arrived from Europe, North America, Japan and Southeast Asia. But it is the explosion in Chinese visitors since the 2012 Chinese road movie Lost in Thailand that has changed the industry.
The number of Chinese visitors to Thailand has tripled in the past five years, to 8.8 million in 2016. They account for more than a quarter of all foreign tourists and 28% of revenue, according to official data.
The sudden influx, boosted by packaged tours arranged in China, led to accusations of so-called zero-dollar tourism, where groups were shepherded through shopping and sightseeing itineraries that provided little benefit to the host country.
A clampdown last year on those tours — 29 operators were prosecuted — caused a temporary dip in Chinese arrivals, but the tour numbers soon rebounded, and the number of independent travelers from China, making their way around the country with the help of their smartphones and Google Translate, continues to rise.
Meanwhile, the government is making efforts to clean up the country’s image. Former Tourism Minister Kobkarn Wattanavrangkul, who was replaced in the cabinet reshuffle, began a crackdown on sex tourism last year, with police and army officials raiding bars and hostels in Pattaya’s red-light district.
On the island of Phuket, attempts have been made to clear away the beach touts and reduce littering.
In October, the government extended a ban on trips to the nearby Koh Khai islands, because of damage to the coral reef from speedboats that brought thousands of day-trippers.
Last month, 21 beaches in popular spots like Pattaya and Krabi instituted a smoking ban.
“They want to shift the emphasis away from quantity and towards the quality of tourists coming,” said Patrick Cooke, an editor in Manila for Oxford Business Group Ltd.
“To do that, obviously more investment is required in the luxury segment and the wellness segment.”
One plan includes a Japanese-backed $15-billion double-rail link from the capital to Chiang Mai in the north that would open up cities and towns along its route. Another is to build a new regional airport in the south at Betong, an area prone to unrest from Muslim separatists. Phuket opened a new international terminal last year, looking to become a gateway for surrounding regions like Phang Nga and Krabi.
In addition, the government is revamping the old U-Tapao navy airbase near Pattaya, from which US B-52s flew to bomb Vietnam in the 1960s. A Chinese-funded high-speed rail link would connect the beach resort with Bangkok’s airports, 150 kilometers to the north.
“What they’re doing is adding more spots to see, while not taking care to preserve the old spots that are becoming worn out,” said Puttachard Lunkam, a tourism analyst at Krungsri Research in Bangkok.
“You see islands being closed or national reservations being barred to tourists as a way to fix things when it’s gone too far, but not enough is being done to maintain the sites before it gets to that point.”
There are some signs that the more-from-less strategy may be having an effect. Revenue from tourism in the first 10 months of this year increased by about 9.0%, outpacing a 6.4% growth in visitor numbers, according to data from the Thailand Department of Tourism.
But extracting more profit from visitors won’t be easy. Thailand is already one of the world’s top destinations for medical tourism, and high-end resorts have nestled in its secluded bays and picturesque forests for decades. Ultra-luxury chain Aman Resorts International began life in Phuket in 1988 and Four Seasons Holdings, Inc. opened its first-ever boutique resort in Chiang Rai in 2005.
And other countries in the region are also trying to emulate Thailand’s success in turning Chinese leisure into loot.
Indonesian President Joko Widodo plans to create “10 new Balis,” to try to replicate the success of the Island of the Gods, which hosts more than 40% of the 11.6 million visitors to the country.
Malaysia is investing billions in opening up its eastern coast, including building a railway to the capital.
With competition for the tourist yuan heating up, Thailand’s influx of Chinese visitors, and the congestion at its airports and resorts, are likely to remain for years. — Bloomberg
Could the ‘curve’ be warning of a US recession?
NEW YORK — The US economy may be basking in the warm glow of solid growth, but economists are nervously eyeing a trend in the bond market that could spell stormy weather ahead.
Even though President Donald Trump is touting unemployment at its lowest level in 17 years and Wall Street soaring to new heights, economists are worried about one indicator that is often a harbinger of recession: the yield curve.
“Since 1950, each recession has been preceded by a reversal of the yield curve,” said Christopher Low, chief economist of FTN Financial.
This closely scrutinized graph maps the difference in yield, or return on investment, of short- and long-term US Treasury debt, usually comparing two-year notes to 10-year bonds.
Normally, the shorter the investment, the lower the yield, and conversely, the longer the investment, the higher the return, to offset the greater risks of losing access to funds for an extended period.
But for the past year, the yield curve has been flattening as the return on short-term debt has been getting close to long-term yields, possible signaling eroding confidence in the economy’s performance in the coming years.
The spread between the yield on two- and 10-year Treasury paper fell from 135 in December 2016 to 51 basis points on Dec. 15, the lowest since October 2007 — just before the start of the global financial crisis.
Worse still would be if the yield curve inverts, as short-term returns outpace the longer-dated debt — meaning the spread is negative — and if officials ignore the warning.
The yield curve inversion “could be heralding a contraction of the economy,” says Gary Duncan, chief economist at Oxford Economics.
As Gregori Volokhine, of Meeschaert Financial Services, explained: “An inversion of the curve indicates that investors do not have confidence in the future.”
The main factor behind the flattening of the yield curve is the US central bank’s moves to raise the benchmark interest rate five times since the end of 2015, including three increases this year and three more expected in 2018.
The long-term yields fluctuate more in line with growth and inflation expectations. And while growth prospects have been revised upwards for next year — in part due to the impact of the massive corporate tax cuts just approved by Congress — the Federal Reserve’s inflation target will not be reached until 2019, according to its latest forecasts. The Fed’s preferred inflation measure was just 1.6% year on year in October.
Two voting members of the Fed’s policy committee — including Minneapolis Fed President Neel Kashkari — dissented from the Dec. 13 decision to raise rates, preferring to wait for inflation to rise further. Mr. Kashkari also mentioned his concerns about the yield curve and the signal it is sending to policy makers. “While the yield curve has not yet inverted, the bond market is telling us that the odds of a recession are increasing,” he said in a statement explaining his opposition to raising rates again.
Oxford Economics’ Mr. Duncan cautioned that “if the Fed tightens its policy too quickly, the markets anticipate a slowdown in the economy in the longer term” as credit becomes more expensive.
Fed Chair Janet Yellen downplayed those fears. “There are good reasons to think that the relationship between the slope of the yield curve and the business cycle may have changed,” Ms. Yellen said in her press conference last week.
FTN’s Mr. Low said Ms. Yellen could be making the same mistake as her predecessors Alan Greenspan in 1998 and Ben Bernanke in 2006, who each saw recessions after the yield curve inverted.
“Janet Yellen is making the same speech,” Mr. Low said. “This is worrying.”
Like most analysts, Mr. Low does not anticipate an inversion before 2019, or a recession until “early 2020.”
Historically the economy has seen four to six quarters between a curve inversion and the start a recession.
Of course, not every flat curve brings on an economic downturn, and some economists agree with Ms. Yellen that it may be too early to panic.
Noted economist Mohamed El-Erian, chief economic adviser at Allianz SE, parent company of PIMCO, notes several reasons the yield curve could steepen, including many indicators signaling the economy still has room to expand and inflation to pick up.
If it doesn’t, the Fed could reverse course quickly, he wrote in a blog post.
In addition, “the synchronized pick-up in growth in the rest of the world is supportive of the US expansion.” — AFP
Six Asian banks in talks with BSP for establishment of local offices
By Melissa Luz T. Lopez,
Senior Reporter
SIX ASIAN BANKS are in talks with the Bangko Sentral ng Pilipinas (BSP) to venture into the local market, a senior official said, signalling mounting interest towards the Philippines as it continues to enjoy robust growth.
BSP Deputy Governor Chuchi G. Fonacier said several Asian lenders have “signified interest” to establish their presence in Manila, as these banks pursue expansions within Southeast Asia.
Although she refused to name the lenders, Ms. Fonacier noted two of the live inquiries came from Taiwanese banks, two from China, one from Indonesia, and one from South Korea.
Seoul-based media reported back in July that KB Kookmin Bank is currently looking to set up a branch in Manila after plans to acquire a 20% stake in Philippine lender East West Banking Corp. did not materialize.
Ms. Fonacier earlier pointed out “aggressive” expansions among Taiwanese and South Korean banks as they catch up with their corporate customers who are also setting up businesses in this country.
She clarified that these lenders have yet to file formal application documents with the regulator.
Eleven foreign lenders have entered the Philippines since the signing of Republic Act 10641 in 2014, which lifted the previous limit that allowed only 10 global banks to operate in the country at a given time.
Prior to this, a new foreign bank can set up a branch here only if one of the previously accredited foreign lenders bails.
Of the new players, five banks originate from Taiwan: Cathay United Bank, Yuanta Commercial Bank Co. Ltd., First Commercial Bank, Hua Nan Commercial Bank Ltd., and the Chang Hwa Commercial Bank, Ltd.
Three are from South Korea: Industrial Bank of Korea, Shinhan Bank, and Woori Bank. Others are the Japan-based Sumitomo Mitsui Banking Corp. and the Singapore-based United Overseas Bank Ltd.
Approved in November, Malaysia’s CIMB Bank is the newest to win the nod of the Monetary Board for a full branch here. This completes plans of its parent firm CIMB Group Holdings Berhad to expand their footprint in every country within the Association of Southeast Asian Nations.
BSP’s Ms. Fonacier said foreign lenders are seeing the robust growth of the Philippine economy as an opportunity to score additional yields, especially with both consumer and corporate lending posting double-digit expansions.
“[F]oreign banks are aggressively entering the Philippine market given the economic conditions of the Philippines,” Ms. Fonacier said in a recent interview with BusinessWorld. “I think the expectation is more foreign banks coming in than domestic banks expanding abroad.”
A strong middle-class market as well as a young population also makes the Philippines more attractive for foreign players looking for new clients.
The Philippine economy grew by 6.9% during the third quarter, bringing the nine-month pace at 6.7% versus the 6.5-7.5% growth goal for 2017. By next year, the government is targeting an expansion of between 7-8%.
Food and entertainment corner bigger space in shopping malls
By Arra B. Francia, Reporter
SHOPPING MALL operators are drawing more food and entertainment tenants into their establishments as customers want more diverse offerings from brick-and-mortar stores than what is available online.
Ayala Land, Inc. (ALI), which leases out about two million square meters across its shopping malls, has seen food and entertainment tenants expanding and taking up as much as 45% of space in each mall.
“You’ll see a larger share of food and entertainment component. Our malls have now become more substantial … 20% to 30%, ngayon lumalaki na [now they have expanded] to 45%. And sometimes we even have places geared just for food and entertainment,” Maria Rowena M. Tomeldan, group head at Ayala Malls, said in an interview.
Although majority of mall space is still allotted for department stores, the mix of food and entertainment tenants allows shoppers to have a “full experience” whenever they visit the establishment, the ALI executive noted.
“We are the go-to of the community, especially now that you just want to be in one place, you want to have everything in one place. You don’t want to add to the stress of the customer, in fact you want to have that sense of community for your malls, the accessibility,” Ms. Tomeldan said.
The increase of food and entertainment tenants is also true for Megaworld Corp., which operates what it calls “lifestyle malls” within its township projects.
“Food and beverage [before was at] 20%. [Now it is], 40%,” said Megaworld Senior Vice-President Jericho P. Go in a separate interview.
The rise is because Megaworld has a captive market, he said, adding that the “beauty” of this is that food is a high-market business.
Mr. Go added that these types of tenants are not susceptible to the impact of online shopping.
The change in tenant mix comes amid the so-called “retail apocalypse” currently seen in the United States and United Kingdom, where companies are shutting down brick-and-mortar stores as more people shift to online shopping.
Property firm Leechiu Property Consultants, Inc. in a report explained that this will not be the case in the Philippines since Filipinos go to malls as part of their lifestyle. Malls are more than just places where they buy goods.
Ms. Tomeldan said that with the mall closures overseas, operators would just have to be more competitive.
“I’d like to think that seamless shopping should really be provided [because] if they want the convenience, then you give them online shopping,” she said.
Megaworld’s Mr. Go meanwhile said that accepting food tenants depends on the needs of the market to ensure their longevity.
“We are very selective in our process. Napakaimportante ng branding na lifestyle [Lifestyle branding is very important]” he said, adding that certain branding would work in Eastwood but not in McKinley, and vice versa.
“So because of our large table of food and beverage tenants … we have learned through the years which kind will work in a particular lifestyle mall, and which one will not,” he said.