Total approved foreign investments
FOREIGN direct investment (FDI) commitments rose in the third quarter, partially recovering from four straight quarters of decline. Read the full story.
Decoding a prospective monster boss in a job interview
An HR manager interviewed me for the vacant post of the operations manager of a medium-size manufacturer. After an hour-long job interview, he asked me to draw a monster with a one-sentence description on bond paper. I was told that it’s part of a simple psychological exam that he’s performing on other candidates. I have not heard from him for two weeks. What do you think is my chance of getting the job? Really, what’s the reason for that “monster” exercise? — Puzzled
A boy entered a neighborhood grocery store and asked the grocer for a box of detergent. Since the store was not so busy, the puzzled grocer asked why he would want a box of detergent. The boy was going to wash his cat. “Young man, you should not wash your cat with this kind of soap,” the grocer exclaimed. But the boy insisted it would be OK.
A few days later, the boy returned, and the grocer asked about the cat. “Oh, he died!” The grocer replied: “Well, son, I warned you not to wash your cat with that detergent!” The boy replied with a sad face, “The soaping didn’t hurt him a bit! The spin cycle got him.”
Read on until the end of the article and you’ll know your chance for that job. Now, let me tell you this — forewarned is forearmed. As a job applicant, it is possible you were being tested on your reaction to stressful work conditions. In other words, they could be trying to find out whether you can fight fires in a complex work situation. I would not be surprised if the job carries with it many challenges that include the possibility of you reporting to a dictatorial, toxic boss.
The trouble is that the HR manager may not have been honest with you, maybe because of the difficulty of getting a replacement.
You should ask the HR manager why the post is vacant. That alone could give you an important understanding of the job you’re taking on. If the incumbent has retired or has moved to another company, then it would appear normal and ordinary.
However, if the former operations manager was dismissed for “incompetence,” then you need to watch out as there’s also a chance that you will be placed in a similar situation. You may want to investigate further. Check with the security guard, receptionist, or janitor for the name of the former operations manager. Google him and try to talk to him about that job. He may or may not answer, but there’s always that chance that you will get another perspective.
Further, one question that could give you an insight about that job vacancy is why they are looking for some persons outside the organization rather than promoting someone from within. For me, that’s a red flag.
The HR manager may have characterized the process as “a simple psychological exam.” He may have asked you about your definition of a toxic boss and how would you propose to manage him. Since we don’t have a copy of your drawing, at least you may remember that “one-sentence description.”
Who among us has actually seen a monster? Tadahiko Nagao and Isamu Saito may have the answers for you. In their 2000 book Kokology: The Game of Self-Discovery, the coauthors say you “(a)sk a hundred people to draw a monster and they’ll paint you a hundred very different pictures. There are all kinds of monsters — the ones we see in movies, those that chase us through our dreams, the monsters of fairy tales, ghost stories, and even video games.
Monsters can be like Theory X managers who believe that man is lazy and must only be coerced or threatened to produce something. If you can still remember your “one-sentence description” about your concept of a monster, then at least take heed of what Nagao and Saito have written:
“The monster in your imagination is a manifestation of the archetype known as the Shadow, representing the darker side to every person’s personality. The Shadow is present in each of us, and the monster’s anger is actually directed at a source of stress in our own life.” Now, here are the four interpretations by Nagao and Saito:
One, a “hungry and hunting for food” monster is “reacting to your own fight against your appetite. Have you been wrestling with a diet recently? It’s hard to keep a clear head when you’ve got an empty stomach. Remember, everything in moderation and that includes moderation itself.”
Two, a monster “searching for its lost love” means you “have been going through some difficulties on the romantic front.” I guess this applies if you’re still single and beyond the calendar numbers. Nagao and Saito say “a love life without worries is no love life at all.”
Three, a monster who is “despondent because it’s so ugly” applies to persons who “are dissatisfied with their own appearance in some way. Faults can be magnified in the mind’s eye, and that negative self-image influences the way the rest of the world.”
Lastly, a monster that “is angry at the entire world” has a “pessimistic outlook. Not only is the glass half-empty, but the water is warm and tastes bad. It’s good to be able to find mistakes that need correcting, but you’ll never change the world just by complaining.”
If your description of a monster falls into any or all of the above interpretations, then chances are, you may have unwittingly described yourself to the hiring manager who may be looking now at the direction of the other candidates. But don’t despair. Tell me your “one-sentence description” of what you’ve drawn, and we’ll try to ask Nagao and Saito about it.
ADB turns even more bullish on PHL
By Elijah Joseph C. Tubayan
Reporter
THE ASIAN Development Bank (ADB) has again raised its economic growth outlook for the Philippines this year and in 2018 over accelerating infrastructure spending and robust consumption.
The regional lender in its December Asian Development Outlook Supplement now expects the country’s gross domestic product (GDP) growth to average 6.7% this year and 6.8% next year, from 6.5% and 6.7% estimates in its September Asian Development Outlook 2017 Update.
This was the fourth upgrade for 2017 since the lender’s first 6.1% projection in its March 2016 Asian Development Outlook (ADO).
The latest 2018 forecast, on the other hand, was the second hike since a 6.6% estimate made in the April 2017 ADO.
DRIVERS
“This outlook assumes that growth in the government’s infrastructure program will accelerate, supported by improvements in budget execution, with more large investment projects under way,” the report read.
If ADB’s forecast were realized, it would be slightly slower than the actual 6.9% GDP growth clocked in 2016. Actual economic growth averaged 6.7% in the nine months to September.
ADB’s projection for Philippine growth this year matches those for India and Vietnam, placing second to China’s 6.8% among Asia’s major economies.
The Philippines is also expected to outpace Southeast Asia’s projected 5.2% and the 6.0% forecast this year for “developing Asia” that consists of 45 of ADB’s 67 members covered by the report.
ADB’s forecast is higher than the 6.6% projection of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), International Monetary Fund (IMF), World Bank and Organization for Economic Cooperation and Development (OECD).
Next year, IMF and World Bank see the country growing 6.7%, while ESCAP has projected 6.8%.
The government has set 6.5-7.5% and 7-8% targets for this year and for 2018, respectively.
ADB noted that “the government is on track to achieve its target of spending 5.3% of GDP on public infrastructure this year.”
The January-October period saw disbursements on infrastructure and other capital outlays grow 11.8% to P442.7 billion from P395.8 billion in 2016’s comparable 10 months.
ADB also retained its inflation projections for the Philippines at 3.2% this year and 3.5% in 2018.
Headline inflation settled at 3.3% in the 11 months to November, matching the BSP’s full-year forecast and keeping within its 2-4% target band.
Consumer loan rates steady in face of looming central bank tightening
By Maria Eloisa I. Calderon
Editor-At-Large
HOMEBUYERS with jumbo mortgages have less to fear about the end of ultra-low borrowing costs, while consumers contemplating personal loans or car financing have time to lock in affordable fixed-rate deals, bankers said.
Today’s the D-day when the Bangko Sentral ng Pilipinas (BSP) decides on whether to close the era of cheap money but it’s unlikely to pull surprises. It’s widely expected to keep interest rates at where they have been since 2014, according to a BusinessWorld poll published Monday.
The Philippine central bank’s Thursday rate-setting meeting — its last for 2017 — comes just hours after Janet L. Yellen delivers her final press conference as chairwoman of the US Federal Reserve.
The Fed was due to announce its decision late Wednesday, but markets had already factored in one more rate hike, the third increase for the year.
The consensus is that the BSP won’t move in lockstep with the Fed.
While most financial markets look to the US federal funds rate for guidance on rates for mortgages, credit cards and other borrowing, Philippine borrowing costs are not solely dictated by BSP rates.
Chances are mortgage payments will remain the same in the near term no matter what BSP Governor Nestor A. Espenilla, Jr. and his deputies say today, bankers said.
“You have to distinguish between market and policy rates,” Bank of the Philippine Islands (BPI) lead economist Emilio S. Neri, Jr. said in an interview at the bank’s headquarters on Dec. 12.
“This year is a good example of how the two actually diverge, because BSP didn’t do anything this year despite the Fed hiking.”
The national government’s renewed appetite for borrowing to finance its massive infrastructure program, “policies outside the central bank” and “global developments” have influenced domestic market rates, Mr. Neri said. Still, borrowings costs are at levels lower than those seen from five years ago.
BPI – which according to BusinessWorld’s Research unit is the third-largest bank in terms of loan book size – priced its home loans at a range of 5.25% for those falling due in one year and 11.5% for 16-20 years.
Five years ago, the rates were six percent to 11.5%, it said.
In 2013, Philippine Savings Bank, the country’s second-biggest thrift lender, cut home loan rates by as much as two percentage points for those maturing in one year and by a percentage point for 25-year term loans.
It raised lending rates for mid-term housing loans by 2014, but the borrowing costs had been steady since, documents the bank uses for its pitch to customers showed.
It’s the same narrative for car loans and credit cards: their interest rates fell to historic lows, and have stayed where they are in the past five years.
“Our rates are actually quite stable and competitive in the last five years,” BPI Senior Vice President and Retail Lending Group Head Joaquin Ma. B. Abola told BusinessWorld.
“We believe rates will remain competitive in the coming years, with only a slight increase in the next couple of years.”
Improved interest spreads — the difference between the rate banks pay deposits and what they charge borrowers — have partly been driving lenders’ profitability.
Combined with higher loan volume and a good mix of exposure to long-tenored project financing, BPI, for one, grew its bottom line by an annual 13.8% to P5.4 billion in the third quarter after net interest income rose by 13%.
Those loans — the boost to banks’ earnings — are unlikely to be the same drag to their balance sheets when the BSP tightens monetary policy, which banks like ING and Nomura believe the central bank will do come 2018.
Philippine lenders’ exposure to household debt is not as alarming as their counterparts elsewhere in Asia, Standard & Poor’s said last week.
Just this quarter, personal loan rates at BPI have risen to a monthly one percent for one-year loans from below one percent, but that segment accounts for just a “tiny fraction” of the lenders’ loan books.
Personal loans are “unsecured” — without collateral — so banks charge a premium for uncertainty.
“You’re talking of a business that’s very small. Personal loans is not a very big business. The reality of it is that much of the retail market is the housing loans, auto loans, then you got credit cards,” said Mr. Abola.
“Remember these are unsecured loans… Considering that it is just small, we have the ability to adjust pricing because there really is demand. Even if we double our business there, it’s not going to make a dent on the entire unibank,” he added.
“You can’t use personal loans as a barometer for what’s happening in the entire market.”
Should homebuyers lock in a fixed-rate mortgage now to avoid defaults when rates become unaffordable?
“If you’ve signed up for variable rate mortgage — that is the rate changes yearly — you can still sign up for longer-term fixed-rate mortgage. But if you are already locked in say five years and want a 10 or 15-year fixed rate, that comes with a fee,” said a PSBank loan officer who spoke on condition of anonymity.
“When you know that interest rates will rise, then you lock in now,” the source added.
“But since 2012, I have seen rates remain stable.”
Brisk money supply growth — at a double-digit pace — should keep the rise in interest rates at bay, said BPI’s Mr. Neri, who forecasts the BSP will hold fire on rates next year.
And even if a bank were to charge more for financing a new home or car, there will always be another lender that will be ready to offer a better deal.
“The other thing is competition. As soon as you make an adjustment up, competition takes it from you. It’s a highly competitive market,” said Mr. Abola.
Moody’s sees ‘stable’ conditions for PHL banks
By Melissa Luz T. Lopez
Senior Reporter
THE PHILIPPINE banking system will remain “stable” in 2018, Moody’s Investors Service said, noting that conditions will steady across all indicators on strong macroeconomic footing and improving asset quality.
In a Dec. 12 report, the global debt watcher gave a “stable” outlook for the Philippine banking sector next year, in line with expectations across Asia Pacific.
The industry will benefit from “synchronized global recovery and moderate credit growth,” according to Eugene Tarzimanov, vice-president and senior credit officer for Moody’s Financial Institutions Group.
Banks in the Philippines and 12 other economies got a stable outlook, while Vietnam and Indonesia were the only two on the list that rated “positive.”
Only Sri Lanka received a “negative” overall outlook amid deteriorating profitability, government support and a weaker operating environment.
“Macroeconomic conditions have stabilized in most APAC economies and improved in some parts of the region, easing asset quality risks,” the report read, adding that improving global growth will also benefit financial players in the region.
The Philippine economy expanded by 6.7% in the nine months to September, faster than Moody’s 6.5% forecast for the entire year and keeping within the government’s 6.5-7.5% growth goal.
The Philippine banking system scored a stable outlook across all six indicators, with the credit rater citing a viable operating environment, funding liquidity and government support. Lenders are broadly seen to maintain asset quality, ample capital and profitability next year.
Bad loans held by Philippine banks dropped to 1.96% of total debts as of end-October, despite a 16.1% surge in lending that reached P8.342 trillion, central bank data showed.
Moody’s expects Philippine lenders to keep the share of soured debts below two percent in 2018 — among the lowest levels in the region — while maintaining enough reserves to cover non-performing loans.
But a focus on corporate and consumer lending, as well as rising property prices are potential threats to the financials of the region’s banking systems, Moody’s added.
Still, strong government support for domestic banks provides some comfort for these lenders in case of a funding crunch, the report said.
Increasing digitization is expected to present both opportunities and risks, improving cost efficiencies and revenues while at the same time challenging the industry’s “traditional foothold” in payments, deposits and lending, the debt watcher noted.
The Philippines holds a “Baa2” rating — placing the country a notch above minimum investment grade — with a “stable” outlook from Moody’s which was affirmed in June.
Surging debt to make central banks in Asia cautious on rates
HONG KONG/SEOUL/MUMBAI/BEIJING/TOKYO — Years of cheap money across Asia have left a legacy of surging debt that will force the region’s central bankers to be cautious when they eventually follow in the footsteps of South Korea by raising interest rates.
In South Korea, whose borrowing costs were boosted on Nov. 30, household debt has ballooned to about 150% of disposable income. It’s an even larger 194% in Australia. In China, it’s companies feeling the strain with corporate debt equating to about 160% of gross domestic product.
Years of unprecedented stimulus have swollen the Bank of Japan’s balance sheet to almost the size of the economy. Given the two percent inflation target is still in the distance, a tightening of monetary policy remains a long way off, so that debt pile is set to keep on swelling.
With the Federal Reserve set to lift its benchmark rate this week and forecast to do so three more times next year, investors’ taste for Asian assets is set to be tested. If and when Asian monetary authorities follow suit next year, the region’s mountain of debt will mean each incremental move packs an ever greater punch.
“Asia’s high debt leaves it exposed to a global repricing of credit risk, possibly triggered by inflation surprises,” economists at Nomura Holdings, Inc. led by Rob Subbaraman, head of emerging markets economics and Asia ex-Japan fixed income research, wrote in a note.
The vulnerabilities vary and not every central bank in the region will be raising interest rates. But it may not be a coincidence that one of the nations with low household debt — the Philippines — may be one of the most aggressive in raising interest rates next year. Mr. Subbaraman said he expects four increases.
At the other end of the spectrum is Australia. The central bank there left its official rate unchanged at a record low 1.50% on Dec. 5 and warned that growth in housing debt is outpacing growth in income.
South Korea’s household debt, including loans and purchases on credit, surged to 1,419.1 trillion won ($1.3 trillion) at the end of September, despite efforts from the government to cool the property market. Considering that about 70% of financial institutions’ loans to households are floating rates, a 25 basis points increase in lending rates would lead to an overall 2.3 trillion won rise in interest payments per year, according to Bank of Korea estimates.
Malaysia — which some tip may be next to tighten in Asia — also faces hurdles. Household debt of about 88% of gross domestic product (GDP) is high for a developing nation and Bank Negara Malaysia Governor Muhammad Ibrahim has said any adjustment would be a “normalization” rather than a tightening.
The People’s Bank of China is expected to refrain from raising open-market interest rates in line with the Fed, according to a Bloomberg survey. Rather than higher interest rates, it’s keeping a lid on debt with macro-prudential policies, which cut leverage without causing economic shock.
India — with total government debt at nearly 70% of GDP — must also tread lightly. The central bank has been tightening liquidity by mopping up excess funds in the banking system. That move, along with expectations that official interest rates are close to bottoming and inflation is likely to head higher, have pushed up bond yields.
Soumya Kanti Ghosh, State Bank of India chief economist, says a rise in bond yields of 40-50 basis points would translate into an additional interest cost of 32 billion rupees ($496 million). While that’s a fraction of the 21 trillion rupees budget size for India, a sustained rise in rates could choke off a nascent recovery and discourage companies from borrowing.
For Japan, one of the most indebted nations in the world, few are expecting any near-term tightening. That leaves the Bank of Japan as a major player in government bonds, exchange-traded funds, real estate investment trusts, corporate bonds and commercial paper. It owns more than 40% of Japan’s outstanding bonds and holds more than 70% of ETFs.
Collectively, Asia’s swollen debt pile will keep a lid on any tightening cycle, said David Mann, chief economist at Standard Chartered Plc.
“It will be harder to raise rates knowing the sensitivity must be higher,” Mr. Mann said.
All of that debt “doesn’t matter until it suddenly does.” — Bloomberg
Uy plans to list other companies in 2018
By Arra B. Francia, Reporter
DAVAO-BASED businessman Dennis A. Uy is aiming to list his other companies on the Philippine Stock Exchange by next year, citing the positive business climate in the country.
“We plan to do more listings next year,” Mr. Uy told reporters in Taguig City late Tuesday.
Mr. Uy’s holding firm, Udenna Corp., has a diverse range of businesses under its control, including oil retailing firm Phoenix Petroleum Holdings, Inc., Chelsea Logistics Holding Corp. (CLC), property company Udenna Development Corp., and Udenna Management and Resources Corp.
Of these firms, Phoenix Petroleum conducted an initial public offering (IPO) in 2007, followed by Chelsea Logistics in June this year. 2GO Group, Inc., where Mr. Uy acquired a 28.15% direct economic interest earlier this year, is also listed at the PSE.
Asked which company would do an IPO in 2018, Mr. Uy said it depends on a number of factors that would determine if the company is “ripe” for public trading.
“Fundamentals should be good. There should be growth potential, you have meet the expectations of the public as your members. And timing. If it’s bear market, how can you list,” Mr. Uy said.
The businessman has currently been on an acquisition spree that would expand his shipping company by 10%, as well as contribute to the company’s earnings in the fourth quarter of this year.
Among these include a cargo vessel named MV Orient Spirit with a gross registered tonnage (GRT) of 6,348 traversing the Cebu-Cagayan and Cebu-Butuan routes. The vessel with a capacity of 400 20-foot equivalent units (TEUs) that will ply the Manila-Cebu-Manila route starting the first quarter of 2018.
CLC’s unit Fortis Tugs Corp. purchased a 125 GRT Japanese-built tugboat, MT Fortis VI, set to be operational by this month, increasing its tugboat fleet to nine.
CLC also earlier added three vessels to support the cargo transport requirements of 2GO Group with a combined GRT of 15,811.
“The newly acquired vessels will bring us another step closer to fulfilling our commitment to growth in order to realize more value for our stakeholders, from investors to the consumers,” Mr. Uy, who also sits as CLC’s chairman, said in a statement.
Mr. Uy also recently completed the buyout of management school Enderun Colleges, Inc. as well as purchased the chain of convenience stores under the FamilyMart brand.
In terms of growing the FamilyMart business, Mr. Uy said it would complement Phoenix Petroleum’s 518 stations in the country.
“It’s expanding in our stations and outside the stations,” Mr. Uy said.
Central bank cuts TDF offerings as demand continues to weaken
By Melissa Luz T. Lopez,
Senior Reporter
THE CENTRAL BANK will not offer month-long term deposits next week amid feeble demand for these instruments, with market players preferring the shorter tenor as they expect higher global yields and bigger cash requirements for the holidays.
The decision came as bids received during yesterday’s offering declined further to P71.925 billion yesterday from the P74.109 billion recorded the previous week. This settled below the P80 billion the Bangko Sentral ng Pilipinas (BSP) wanted to sell.
Banks offered to place P38.92 billion under a seven-day term, slipping from P41.269 billion in tenders received a week ago and below the P40-billion offering. Despite the narrower demand, the average yield sought by the firms climbed to 3.4542% from last week’s 3.4171%.
The 28-day tenor likewise saw tepid demand at just P33.005 billion, failing to maximize the P40 billion placed on the auction block even as it inched up from P32.84 billion during the Dec. 6 offering. Rates steadied at 3.4954%, compared to 3.494% previously.
The term deposit facility (TDF) is currently the central bank’s main tool to capture excess money supply in the financial system by allowing banks to place extra cash they hold, in exchange for a small return.
BSP Deputy Governor Diwa C. Guinigundo said recent liquidity forecasts done by the monetary authority showed that lenders had smaller amounts to place under the TDF, which inspired the drastic cut in the auction volume.
For Dec. 20, the central bank slashed the auction volume to P40 billion in seven-day papers, and will offer none under the 28-day tenor. This offering is the smallest since the P30 billion offered back in June last year when the weekly TDF auctions started.
“Our numbers suggest that banks continue to lend more, buy FX (foreign exchange) for imports, debt servicing and foreign investments. Hence, they have sustained demand for funds that would translate into lower excess demand in the system,” Mr. Guinigundo said in a text message to reporters.
Still, the central bank official expects players to continue placing what’s left of their excess funds under the week-long tenor, especially ahead of cash requirements during the holidays.
“Banks continue to demand very short-term instruments like the 7-day TDF to allow them greater flexibility in servicing the needs of their clients and deploying the rest of their funds,” Mr. Guinigundo added.
Central bank officials have pointed out that banks are sitting on a smaller stash of idle funds, especially after the overwhelming P255.4-billion amount raised by the Treasury during its retail bond sale last month. Lenders may also be choosing to hold on to cash to address an increase in withdrawals in time for Christmas.
Market players are likewise anticipating a fresh rate hike from the United States Federal Reserve this week, which is expected to bring global yields up.
RLC says 3 Go Hotels to open within next 3 years
By Arra B. Francia, Reporter
THE GOKONGWEI GROUP looks to expand its chain of budget hotels with openings in three new locations until 2019, banking on the surge of local and foreign tourists in the country.
Robinsons Land Corp. (RLC) General Manager of Hotels and Resorts Elizabeth Kristine D. Gregorio said they will be developing Go Hotels located in Iligan, Naga, and Tuguegarao in the next three years, with the Iligan branch set to open by the first quarter of 2018.
“Iligan is a hundred rooms, Naga is a combination of a Go Hotel and a Summit Hotel, so it will have a total of over 100 rooms combined, and Tuguegarao is another 100 rooms also,” Ms. Gregorio told BusinessWorld during the last week’s opening of Go Hotel Timog in Quezon City.
This will be added to the company’s current chain of 15 Go Hotels across the country. RLC is expanding the chain by partnering with other property companies who would then carry the homegrown hotel brand.
“We continue to look for other sites, other properties. Our goal is to populate Go Hotels throughout the Philippines. So we continue to look for areas where we could partner and sites that we could purchase,” Ms. Gregorio explained.
Asked on how much the company is investing for the construction of the hotels, the RLC executive explained that the investment cost is discussed directly with the franchisee of the brand.
For Go Hotels Timog, RLC partnered with Roxaco-Vanguard Hotels Corp., the hotel development group of Roxaco Land Corp. This is the fifth time Roxaco-Vanguard has franchised the Go Hotel brand, as it also operates Go Hotels Ermita-Manila, Go Hotels North EDSA-Quezon City, Manila Airport Road Parañaque, and Cubao-Quezon City.
Roxaco Land President and Chief Executive Officer Santiago R. Elizalde noted they chose to open their fifth Go Hotel branch in Timog Avenue, Quezon City because of its prime location.
“The property was made available to us by our friends who were the previous owners. We were looking for a location within the vicinity because we feel the Quezon City market is a very strong one and Timog just seemed like a very central location with a lot of activity going on,” Mr. Elizalde told reporters in a briefing during the hotel’s opening last week.
Go Hotels Timog has a total of 219 rooms, that comes with free Wi-Fi, spa, parking spaces, and 24-hour CCTV security.
Ms. Gregorio noted the government’s efforts to bring in more tourists in the country is driving the company’s expansion.
“The strong tourism industry, particularly domestic tourism. Then we also have a lot of increase in foreign travel to the Philippines. So it’s actually the efforts of the government to improve tourism,” she said.
The Department of Tourism reported a 10.61% year-on-year growth in international tourist arrivals in the January to August period to 4.47 million.
By the end of September 2017, the hotel segment contributed 8% or P1.37 billion to RLC’s total revenues, up 5% against from year-ago levels. This was primarily driven by a system-wide occupancy rate of 66% during the period.
RLC, meanwhile, booked an attributable profit of P4.57 billion for the nine months ending September, a 1% increase from the same period in 2016.
BSP studying applications from players eyeing to set up virtual currency exchanges
THE Bangko Sentral ng Pilipinas (BSP) is evaluating 12 applications from new players looking to set up virtual currency exchanges in the country amid rapidly growing interest in bitcoin and similar platforms.
BSP Deputy Director Melchor T. Plabasan said applications from 12 financial technology (fintech) firms are being evaluated by the central bank, which would add to two players already approved by the regulator this year.
The new applications come from “locally incorporated” fintech players which are majority owned by foreigners, Mr. Plabasan said, most of which are using bitcoin as their currency. Eight are completing documentary requirements, while four have finished presenting their business models to the regulator.
“We first have to ensure that the activity or service being offered by this particular company should be regulated by the BSP,” Mr. Plabasan, who also heads the BSP’s core information technology specialist group, said during a media briefing yesterday.
“As long as the applicants can substantially complete all the requirements, we can [approve] probably within the first or second quarter of next year.”
Bitcoin is a form of easily transferable electronic currency used for paying goods sold through the Internet, which sometimes stands as an investment for its holders given its fluctuating valuation. It is a form of digital money that is not issued or guaranteed by a central bank, and can be sent or received by anonymous users internationally.
Under the law, the BSP is the sole authority that can issue money in the Philippines through bank notes and coins used as legal tender for day-to-day transactions.
Any person can buy and sell bitcoins, which may be traded by tapping the services of bitcoin dealers or brokers who look for good deals for a bitcoin investor; going to bitcoin exchanges — an establishment that allows bitcoin holders to directly buy and sell the virtual currency; participate in a “mining pool” — a group of individuals with top-of-the-line computers that can solve complex math problems to unlock codes in exchange for a bitcoin; or look for someone to trade cash or goods for bitcoins.
Currently, two virtual currency exchanges are registered with the BSP: Rebittance, Inc. and Betur, Inc. more popularly known as Coins.ph.
Transactions using virtual currency have increased fourfold, with monthly volumes averaging at $8.8 million between January-June of this year, Mr. Plabasan said.
ADVISORY
In the same vein, the central bank is also preparing a new advisory to warn the public against fraudsters who pass off pyramid scams as bitcoin investments with the promise staggering returns, leveraging on the strong appeal of virtual currencies.
“We also recognize that there are a lot of pyramid schemes right now disguised as ICOs (initial coin offerings) or investment channels. We will also advise the general public to be wary of these types of institutions,” Mr. Plabasan added.
“If they are enticing, some of them… are really too good to be true, [but] no one can ever guarantee that the price of bitcoin will always be rising.”
Albeit unregulated, bitcoin values have been soaring in recent days to a steady ascent towards the $20,000 mark, Reuters reported.
The central bank official added that they are asking the public to deal with exchanges registered with the BSP, noting that they are waiting for Monetary Board approval for the public notice.
The regulator issued its first public warning on the use of digital currencies in March 2014, when foreign regulators banned banks and brokers from handling the new currency following the collapse of Mr. Gox, a Tokyo-based bitcoin exchange.
The BSP will also be starting discussions with the Securities and Exchange Commission for “cooperative oversight” on coin offerings, especially for those with investment features.
Mr. Plabasan said the Philippines is an “ideal market” for virtual currencies given a young and tech-savvy population, widespread use of smartphones and social media and a big portion of unbanked citizens. Bitcoin transfers are likewise attractive due to cheaper remittance fees, with the country being the third-biggest receiver market in the world.
However, risks attached to bitcoin and similar platforms include volatile valuations, irrevocable transfers, consumer protection and security concerns, and its possible use for illegal activities, the official said. — Melissa Luz T. Lopez
Robinsons buys into BeautyMNL operator
ROBINSONS Retail Holdings, Inc. (RRHI) is joining the roster of firms taking a slice in the e-commerce industry by acquiring a stake in the operator of online cosmetics marketplace BeautyMNL.
In a disclosure to the stock exchange on Wednesday, the Gokongwei-led firm said it has purchased a 20% stake in Taste Central Curators, Inc. The transaction involves one million shares in Taste Central.
RRHI said the acquisition is expected “to further expand and strengthen (the company’s) presence in the beauty format and e-commerce space.”
The company did not disclose the acquisition cost, but noted that the amount was less than 10% of RRHI’s stockholders’ equity by the end of September. RRHI’s stockholders’ equity stood at P53.9 billion by the end of this period.
RRHI described BeautyMNL as an industry leader in the local beauty e-commerce space. It operates as both an online magazine that offers beauty advice and as a marketplace.
This is the second time the Gokongwei group has invested in e-commerce, after RRHI’s parent JG Summit Holdings, Inc. participated in the $550-million funding program for Singapore-based Internet platform company Sea Ltd. in May this year.
Sea, which is present in countries across Southeast Asia, is behind Garena Interactive Holding, Ltd., Shopee, and digital financial services firm Airpay.
RRHI joins other companies that have strengthened their presence online.
The Ayala Group in February this year acquired a 49% stake in BF Jade E-Service Philippines, the owner and operator of Zalora Philippines. Zalora Philippines is the country’s largest online fashion marketplace where customers can choose over 120,000 products across more than 1,000 brands.
The SM group meanwhile is adopting a “clicks-to-bricks” strategy that would drive online shoppers to its physical stores.
RRHI ended September with a total of 1,658 stores, comprising 146 supermarkets, 46 department stores, 185 do-it-yourself (DIY) stores, 489 convenience stores, 467 drugstores, and 325 specialty stores.
The company generated a net income attributable to the parent of P3.49 billion in the nine months ending September, higher by 5.8% year on year. This comes on the back of a 10% increase in net sales to P81.18 billion for the period.
Shares in RRHI lost P2.30 or 2.45% to close at P91.70 apiece at the stock exchange on Wednesday. — Arra B. Francia
Peso sideways ahead of Fed decision, BSP meet
THE PESO moved sideways against the dollar on Wednesday as the market was cautious ahead of the result of the US Federal Reserve meeting.
The local currency closed the session at P50.48 yesterday, three centavos stronger than the P50.51-per-dollar finish on Tuesday.
The peso opened slightly stronger at P50.50, while its intraday high stood at P50.43. Its worst showing, meanwhile, was at P50.525 against the greenback.
Trading volume dropped to $576.95 million yesterday from the $665.6 million that changed hands the previous session.
A trader said there was not much movement in yesterday’s session as the market consolidated while waiting for clues ahead of the close of the Fed’s policy meeting.
“We’re still are in a quandary as to where the next direction will be,” a trader said over the phone, noting that the buying from oil companies was countered by inflows and remittances from overseas Filipinos ahead of the holidays.
“In terms of direction, there’s also a lot of factors to consider. Globally, we’re seeing the dollar to be supported, but domestic factors are also pointing at stronger peso as the [tax reform] will probably push the local currency higher,” the trader added.
“The peso slightly appreciated today due to lack of fresh leads with the US Federal Reserve already being perceived by the market to likely raise policy rates this December,” another trader said in an e-mail on Wednesday.
The Federal Reserve is widely expected to raise interest rates on Wednesday, but, more significantly, it may give its strongest hint yet on how the Trump administration’s tax overhaul could affect the US economy.
Investors will pay close attention to how the central bank aims to balance a stimulus-fueled economic boost with the ongoing weak inflation and tepid wage growth that has curbed some policy makers’ appetite for higher rates.
The Fed has increased rates twice in 2017 and is currently expected to push through three more hikes next year.
For today, traders are expecting the peso to move sideways, as one trader gave a forecast range of P50.35 to P50.65.
“The local currency is expected to move sideways amid uncertainties on policy rate decisions of various other major central banks [today] including the BSP (Bangko Sentral ng Pilipinas) and the European Central Bank,” the second trader said.
Meanwhile, the first trader gave a slimmer range of P50.45 and P50.65. “The next level of support should be around P50.24, which is the recent [high], while the next level of resistance might be at P50.65.”
Other Asian currencies were little changed as traders were wary of taking fresh positions ahead of a Fed rate decision later in the day. With the Fed widely expected to hike rates, the focus is turning to any clues on its 2018 tightening plans.
The dollar index, which tracks the greenback against a basket of six major rival currencies, fell as Democrat Doug Jones beat Republican Roy Moore in a bitter US Senate race in Alabama. The dollar index was down 0.2% at 93.948. — K.A.N. Vidal with Reuters