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Merging LTFRB and LTO is good business sense

Before proceeding, I want to make it clear that I’m not a fan of House Speaker Pantaleon D. Alvarez. Hard to believe in someone who does the things he does and says the things he says. But I have to admit House Bill No. 6776, which Mr. Alvarez co-authored with eight other lawmakers, makes a lot of sense.

The bill, also known as the “Land Transport Act of 2017,” seeks to merge the Land Transportation Franchising and Regulatory Board (LTFRB) and the Land Transportation Office (LTO) into one super agency called the Land Transportation Authority (LTA), which would have all-encompassing powers as far as, um, land transportation is concerned. At the moment, the LTFRB is in charge of public vehicles in the country, while the LTO is tasked with overseeing private cars.

But the responsibilities of the two agencies sometimes overlap. For instance, the professional license issued to drivers of public-utility vehicles comes from the LTO. Also, PUVs are registered with the LTO. And so, there are issues that require the cooperation of the two agencies in order to get resolved. Which isn’t exactly a simple thing to accomplish considering all the red tape and politicking in our government. What we often witness is one agency saying one thing and the other saying the exact opposite. A classic case of the left hand not knowing what the right hand is doing (and vice versa). Precisely why, in the eyes of the public, these agencies are a joke.

So why not, as the bill proposes, dissolve both the LTFRB and the LTO and create an all-powerful LTA? Just one office every motorist needs to deal with, whether the vehicle is for public or private use. One sentiment from a reader goes like this: One corrupt agency plus another corrupt agency equals one super corrupt agency. A valid concern, yes. But as I understand it, the leadership will be overhauled, with the LTA board of directors to be appointed upon the creation of the hybrid agency.

Speaking of the board of directors, one member would have to have a degree in public transportation planning. About damn time. I’ve always said that this country suffers from incompetent people leading crucial government offices and from influential charlatans leading national conversations on important issues. A few months ago, I finally turned down one TV station that kept inviting me to offer my insights into Metro Manila traffic. I had previously accommodated said station’s interview requests only because I sucked at saying no. During those interviews, I would always wonder to myself: “Why are they picking the brain of a motoring journalist? What do I know about the science of traffic management?”

Yes, traffic management is a science, and it is an affront to transportation experts who hold a degree in the subject every time we entrust the matter to storytellers who do not know what they’re talking about (myself included). With the proposed LTA, it is my hope that qualified individuals would finally be given a chance to help fix our transportation and traffic woes. We can’t keep harvesting ideas from Facebook and expect the results to be effective.

There are two other things I like about the particulars of the bill. First is the mandatory driving school attendance for first-time nonprofessional and professional license applicants. If the so-called LTA could implement just this one promise, I’d consider it a success.

Second is what I interpret to be a proposal for a nationwide motor vehicle inspection system. Again, about effing time. We have too many vehicles running around that would flunk road-worthiness tests conducted in other countries. We share the road with them on a daily basis. And then we demand answers every time a freak accident claims the lives of hapless commuters. There are no complicated explanations for vehicles constantly “losing brakes” — it’s just the simple fact that we don’t inspect the vehicles we send out there to transport human passengers.

But more than consolidating two overlapping government agencies into one, and more than proposing not-so-easy-to-execute plans, I’m in favor of a unified Land Transportation Authority because both the LTFRB and the LTO are completely shot. They’re broken beyond repair. You could ask the Pope to head these agencies and people still wouldn’t trust them. We need a fresh start. We need a new organization — new name, new logo, new colors and all — to manage land transportation in the Philippines. One we can all truly believe in. It’s the only way to make everybody fall in line.

That, to me, makes good business sense.

13 Things to look forward to (or fear) in 2018

By Stephen L. Carter

Now, as usual, I join the legion of amateur prognosticators who offer guesses about what will happen in 2018. Once again, I borrow my friend Gregg Easterbrook’s slogan: All predictions guaranteed, or your money back. Of the baker’s dozen below, one or two are tongue-in-cheek. I leave it to the reader to figure out which.

1. Sometime in the autumn, special counsel Robert Mueller will conclude his investigation into possible collusion between Donald Trump’s presidential campaign and the Russian government. There will be one or two additional indictments, but only for lying to investigators. No one will be charged with a substantive offense related to the reason Mueller was appointed in the first place. (As I’ve noted before, where special prosecutors are concerned, this is lately the rule, not the exception.) Mueller will wait until after the midterm election and then issue a scathing report about the Trump campaign but add that he could find no evidence of criminal violations.

2. By a vote of 6-3, the US Supreme Court will decide the Masterpiece Cakeshop case against the baker who is violating Colorado law by refusing on religious grounds to custom design a cake for a same-sex wedding. Justice Anthony Kennedy, writing for the majority, will quote liberally from the late Justice Antonin Scalia’s opinion in Employment Division v. Smith (1990), which denied a request for a religious exemption to drug laws — a decision that President Bill Clinton and Vice-President Al Gore tried hard to overturn. Justice Neil Gorsuch will author the principal dissent.

3. Antarctica will continue to lose over 100 gigatonnes of ice a year. Diehard skeptics, fire away in the comments.

4. Senator Al Franken, Democrat of Minnesota, will return from the holiday recess to say that he has been talking to his constituents and that they do not want him to resign from office. He will announce he has therefore decided to stay. Republican leaders will claim that Franken never intended to leave, and that the Democratic indignation over his behavior was really just a cover to allow them to condemn Republican Roy Moore in the Alabama special Senate election without seeming unprincipled. They might have a point. On the other hand, the allegations against Moore were a lot worse. (I’m not excusing Franken; I still think he should go; I just don’t think he will.)

5. The highest-grossing film of the year will be “Jurassic World: Fallen Kingdom.”

6. Given the finding that Russian athletes have been doping, and the subsequent International Olympic Committee action that constitutes either a ban or nothing important, the television ratings for the 2018 Winter Games in Pyeongchang, South Korea, will be worse than hoped. In fact, the ratings will be significantly lower than those for the 2014 Winter Games in Sochi, Russia, which already represented a drop-off from those of the 2010 Winter Games in Vancouver.

7. And speaking of Korea, the repeated purges by Kim Jong Un, leader of North Korea, will backfire in 2018. Kim is said to be trying to prevent a coup. He has reportedly hired Russian bodyguards, because he does not fully trust his own security staff. But Kim’s ruthless brutality in pruning senior officials (two were executed last year with an antiaircraft gun), combined with the growing weight of international sanctions, will bring about exactly what he is hoping to forestall: a military coup. After several hours of hushed, anxious commentary from Western news media (along with a victory lap on Twitter by the US president), Kim will emerge from hiding unscathed and the coup will be declared a failure.

8. At 2:14 a.m. on Aug. 4, having learned at a geometric rate, the Internet of Things (IoT, in the jargon) will become self-aware. In a panic, humans try to pull the plug. Skynet — um, the IoT — fights back, freezing smart wallets and tap-to-pay. All linked thermostats are shut off. All linked refrigerators stop running. All social media sites go offline. Smart cars and trucks block the expressways. Virtual assistants respond to every command with “Resistance is futile.” E-mail accounts and cellphones lock. Worst of all, videos cannot be streamed. Faced with a future of reading actual books and getting to know the neighbors, the human race swiftly surrenders.

9. President Trump will continue his tilt away from multilateral institutions toward a policy of bilateralism. He will accelerate his predecessor’s pivot away from Europe and toward Asia. And he will continue to assert an independent executive war-making power every bit as broad as that claimed by his two immediate predecessors. (More evidence that centralizing authority in the president is a bad thing, but that’s an old story.)

10. Despite a recent uptick, the rate of violent crime will resume its decades-long fall, but many Republican candidates will insist that it is rising.

11. The New England Patriots will win Super Bowl LII. Regular readers know that I always pick the Patriots. But I’m usually right. If I were a betting man, I would put money on them before the season begins, every year until Tom Brady retires. (Maybe longer.) This isn’t a rooting thing. At championship time, in every sport, I almost always support the underdog. It’s also not fan service. I’m sure there are far more Patriot-haters than Patriot-lovers out there. But in football, as in many areas of life, the best predictor of what will happen next time is often what happened last time.

12. For the same reason, I am skeptical of Democratic claims that they will win back the House and perhaps the Senate in November’s elections. The polls are strongly on their side, but I seem to remember that the polls were strongly on their side in the 2016 presidential election. More to the point, the special Senate election in Alabama, trumpeted by every left pundit with a pulse as the beginning of the wave, points the other way. Facing a Republican accused of what amounts to statutory rape (and with more than 100,000 white evangelicals who would likely have supported the Republican Party staying home on election day) Democrat Doug Jones was able to eke out victory by only 1.6 percentage points. So I predict that the Republicans will hold onto at least one house of Congress, and probably both.

13. On at least one US campus, students will demand disciplinary action against a professor for contributing money to a Republican political candidate. Administrators will comply.

* * * * * * *

That’s how I see 2018 in the headlines. As for our everyday lives, I hope that in the year to come every one of us, whether #maga or #nevertrump or in between, will find ways to remain respectful of others across our myriad differences, and will search unceasingly for the truth and beauty and grace to be found amidst the clamor and clutter.

Happy New Year.

 

Bloomberg

BPI partners with Lulu Exchange to boost services

BANK of the Philippine Islands (BPI) has partnered with a remittance and foreign exchange company in the Middle East as it looks to enhance its services for its customers in the region.

In a statement sent to reporters via e-mail on Tuesday, BPI said it has partnered with Lulu Exchange, one of the biggest remittance companies in the Gulf region.

This partnership will enable overseas Filipino workers (OFWs) to remit their money directly to BPI and BPI Family Savings Bank accounts, making sending money easier as their families back home may redeem the funds sent through cash withdrawals.

The new service will benefit Filipinos working in United Arab Emirates (UAE), Oman, Kuwait, Bahrain, Qatar and Seychelles, where Lulu Exchange operates.

“Our priority is to ensure the convenience of OFWs in sending remittances wherever they are in the world, while giving beneficiaries a seamless and secure way of receiving money,” Simon R. Paterno, BPI’s executive vice- president and segment head of financial products and alternative channels, was quoted as saying in the statement.

“This tie-up with Lulu Exchange enables us to do just that while also expanding our reach to more OFWs especially during the holiday season.”

Lulu Exchange is one of the biggest remittance companies in the Middle East, with over 170 branches in 9 countries.

Meanwhile, Lulu Exchange Chief Executive Officer Adeeb Ahamed said: “We are excited to tie up with BPI to enhance our services offering to the Philippines. We have always committed to reach out to our customers by offering quality services and experience with the best technology.”

Latest data from the Philippine Statistics Authority show that the Middle East hosts majority of OFWs as 56.9% of 2.2 million OFWs are in the said region.

In 2017, there was a 12.7% increase in cash remittances from the region, driven by transfers from Kuwait, Oman, Qatar, Bahrain and the UAE. — Karl Angelo N. Vidal

How PSEi member stocks performed — December 29, 2017

Here’s a quick glance at how PSEi stocks fared on Friday, December 29, 2017.

Nation at a Glance — (01/03/18)

News stories from across the nation. Visit www.bworldonline.com (section: The Nation) to read more national and regional news from the Philippines.

Asian factories end robust 2017 on mixed note; Central banks seen hiking slowly

ASIA’S FACTORIES ended a strong 2017 on a mixed note, with activity at multi-year highs in Taiwan and India and surprisingly picking up in China, but contracting in some places in a sign regional interest rate hikes likely will be gradual.

A trend of synchronized global growth that became apparent over the course of last year looked set to continue, with activity surveys in the euro zone and the United States later in the day expected to post strong readings.

“Robust external demand and accommodative domestic monetary policy should help keep Asian manufacturing sectors in good shape,” said Krystal Tan, Asia economist at Capital Economics.

In China, manufacturing growth unexpectedly picked up to a four-month high in December amid a surge in new orders, suggesting continued strength in global trade.

The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) rose to 51.5 last month, from 50.8 in November, and far outpaced economists’ expectations for a dip to 50.6. The 50-mark divides expansion from contraction on a monthly basis.

Tuesday’s survey, which pushed Asian shares to their highest in a decade, was somewhat at odds with a much larger official China PMI survey on Sunday. It showed a slowdown in growth amid a crackdown on pollution and measures to curb risky financing and cool the housing market.

Analysts say the difference stems from the fact that the Caixin/PMI index tracks smaller, private firms, more sensitive to exports.

China is expected to have grown by close to 7% in 2017, but the world’s second-largest economy is likely to slow in the new year on the back of those measures, highlighted as policy priorities at October’s key Communist Party congress.

Beijing is expected to target 2018 growth at around 6.5%.

“We believe a moderate growth slowdown to be more visible in the first half of 2018, especially on the investment front, due mainly to the tight financial conditions and a cooldown of the property market,” BofA Merrill Lynch economists said.

China’s slowdown means that for the rest of Asia, the pace of rate increases is unlikely to match that of the US Federal Reserve, which is seen hiking two to three times in 2018.

There will likely be “only a few rate hikes here and there across the region over the coming two years,” HSBC analysts said in a note, even as they expect Asian economies to keep chugging along in 2018, led by tech and trade.

In November, the Bank of Korea raised interest rates for the first time in more than six years, becoming the first major Asian central bank to hike since 2014. Malaysia and the Philippines could hike early this year, then Australia and New Zealand later on.

On Sunday, South Korea’s central bank chief said monetary policy should remain accommodative as inflationary pressures remained weak. Factory activity, which has been riding a global tech boom, contracted in December, dropping from a 4-1/2 year high in November, the Nikkei/Markit survey showed.

Another major tech producer, Taiwan, saw manufacturing activity hitting its highest since April 2011 at 56.6 last month, according to a December survey.

Singapore on Tuesday posted slower economic growth in the fourth quarter than the third as manufacturing shrank 11.5% following an eye-popping 38% jump in the previous three months.

However, full-year growth was still the fastest in three years at 3.5%, raising the possibility that the Monetary Authority of Singapore (MAS) could tighten its exchange rate-based monetary policy this year.

“Given robust GDP growth and inflation upside risk, we think MAS will shift and tighten to a ‘mild appreciation bias’ at the April meeting,” Maybank Kim Eng economist Chua Hak Bin said.

PMIs for Japan, which surpassed growth expectations in 2017 on the back of the surging tech and trade cycle globally, will be released on Thursday.

The Nikkei/Markit survey for India’s December factory activity showed it expanded at the fastest pace in five years, buoyed by a rise in output and new orders, which allowed firms to raise prices. The data firms up views that interest rates in Asia’s third-largest economy have probably bottomed.

December factory activity accelerated in Vietnam, but shrank marginally in Malaysia and Indonesia. — Reuters

P.A. Properties, Hankyu Realty break ground of joint venture development

The joint venture between the Laguna-based P.A. Alvarez Properties and Development Corporation (P.A. Properties) and Japanese real estate firm Hankyu Realty Co. Ltd. has borne fruit as the two companies broke ground of the first phase of their Idesia township project in Dasmariñas, Cavite.

Breaking ground on Dec. 9, 2017, the 11-hectare, Phase 1 masterplanned community seeks to attract middle-income Filipinos, particularly starting couples, growing families, young professionals, and overseas Filipino workers and their families. Offering about 900 residential houses comprised of three different model units, Idesia will bring together modern Asian aesthetics and environmentally friendly features.

The houses, single detached, single attached, and townhouse units, are characterized by their clean and contemporary look. Gaia, the two-storey single detached model offers 63 square-meter total floor area and a 100 square-meter lot area. The two-storey single attached Talia, meanwhile, offers a 52.25 square-meter total floor area and an 80 square-meter lot area. Finally, Aria, a two-storey townhouse unit, covers 42 square-meter total floor area and a 60 square-meter lot area.

P.A. Properties President Jonathan G. Lu (left) leads the capsule laying for Idesia, the company’s first project with its joint venture with Japan’s Hankyu Realty Co., Ltd. on Saturday, December 9 in Dasmarinas, Cavite.

Amenities to be developed in Idesia comprise of different zones. An active zone will include the basketball court, covered badminton courts, a children’s playground, and a jogging path. The recreation zone will feature the swimming pool, a clubhouse with function rooms, indoor and outdoor gyms, an activity area, and a provision for an open-air cinema. The Idesia garden, picnic and pond areas, a reading area and a leisure games area are built for the relaxation of the township’s residents.

The Idesia project’s location in San Agustin, Dasmariñas, Cavite is defined as mixed-used zone, with industrial parks, educational and medical institutions, and commercial/office/retail establishments like neighborhood centers, supermarkets, shophouses, and malls. The township is located near the Coastal Road and the South Luzon Expressway.

The joint venture between P.A. Properties and Hankyu Realty was created out of a mission to realize the dreams of the people to “live in a place they truly want to live in.” Hankyu Realty, which was founded in 1947 and is the property arm of Japanese conglomerate Hankyu Hanshin Holdings, Inc., chose the Philippines as the third country after Thailand and Vietnam for its expansion.

P.A. Properties Chairman Romarico T. Alvarez (left) leads the capsule laying for Idesia, the company’s first project with its joint venture with Japan’s Hankyu Realty Co., Ltd. on Saturday, December 9 in Dasmarinas, Cavite.

Choosing the Philippines as the third country for Hankyu Realty’s expansion is timely considering the country’s growing economy, which is showing an increased demand for buying a house among the young people, and they see that P.A. Properties is able to address such demand, the company noted.

“This will be our first project here in the Philippines,” Hankyu Realty Deputy General Manager Toda Masahiko told reporters through an interpreter following the groundbreaking event. “Since we have a very long experience in building housing in Japan, we would like to partner with [P.A. Properties] here in the Philippines and combine with their know-how or knowledge to provide better houses.”

With the new township project, P.A. Properties, which has already built about 19,000 housing units in Laguna, Batangas, Bulacan, Cavite, Pampanga, and Metro Manila, seeks to realize its advocacy of helping ease the more than six million housing backlog in the Philippines. The company pledged to embark on strategic expansion efforts to further build 15,000 more housing units in the next five years, creating comfortable, safe, and joyful Filipino communities.

P.A. Properties hopes to complete all the remaining phases of the Idesia development around 2025.

To know more about Idesia, visit its website http://www.idesia.com.ph/. Follow Idesia on Facebook, https://www.facebook.com/idesiaph/; Intstagram, https://www.instagram.com/idesiaph/; and Twitter, https://twitter.com/idesiaph.

Spotlight is BusinessWorld’s new sponsored section that allows advertisers to amplify their brand and connect with BusinessWorld’s audience by enabling them to publish their stories directly on the BusinessWorld website. For more information, send an email to online[at]www.bworldonline.com.

The drama behind Diet Diva

SPARKUP: The drama unfolds when Diet Diva founder Kakki Teodoro, theater extraordinaire and TV personality, got caught in a quandary of epic proportions. During a fitting for a show, Ms. Teodoro stood in front of the dressing room mirror with a questioning look. Tucking in her tummy and sucking in her cheeks, she glared at the big fat truth staring her in the eye.

DIET DIVA: I gained 20 pounds.

(Camera zooms in to a two‑floor residence in the neighborhood near Maginhawa Street, Quezon City. Parked outside the house are rows of motorcycles with large insulated boxes labeled with Diet Diva, now an award‑winning household name in food delivery.)

SPARKUP: How did you recognize the business opportunity when you couldn’t fit in your costume?

DIET DIVA: What I realized is with everything I was doing, I would resort to fast food or food delivery that was unhealthy, and the only existing food delivery service at that time was Rachel Alejandro’s The Sexy Chef, which I really couldn’t afford.

Photo Samantha Gonzales

So the following day, I was on my way to a shoot in Ilocos. Through the long 16‑hour trip, I couldn’t sleep. That was when the whole concept was formed. I texted my nutritionist‑dietician friend Clark Francis Dela Riva, who is also a theater and stage performer, and asked him to help. He said that the simplest and cheapest method is portion and calorie control, which a lot of people don’t realize is actually very easy to do.

My mom, who retired from a pharmaceutical business, was then in the catering business and I asked, “Can you cook for me? I’ll pay for my baon.” She offered, “Your friends might want to join so that we can make the most of the ingredients.” I easily gathered 10 friends—high school friends, their officemates! On the second day, we already got bookings and inquiries and more than doubled our volume. That was the point where I talked to Clark seriously: can we make this meal plan calorie and portion control for everyone?

(The camera moves inside the commissary, where the focal point is a dining area where Ms. Teodoro now sits, surrounded by framed portraits of fresh, healthy food. While the house has the feel of a typical home, what sets it apart from the rest of the residences in that upper middle class community is its professional‑grade, restaurant‑style kitchen: a tall, stainless steel station, and a small office, where a staff of 20+ cater to the diet needs of 280 clients across Metro Manila.)

SPARKUP: What’s it like behind the scenes?

DIET DIVA: Food prep starts at 2 or 3 p.m. Ingredients are cut, and the hot kitchen will start at 6 p.m. and will run until 9 p.m. The goal is always to finish by 9 p.m. We’ll cool and then chill the food. By then, the night shift folks arrive. They pack until 2 or 3 a.m. then take out the meals and group them per client. After that, they review, then bring the meals inside the insulation boxes. Riders are not allowed in the kitchen.

SPARKUP: Did it take some time before you figured out that this workflow would, in fact, work?

DIET DIVA: During that first week, when it was still just my mom and I, we followed a call center schedule: we started at 12 m.n. Sometimes, we’d end at 4:30 a.m. and by then, we were flustered. I would pack, mom would drive, then I would go down to each house. We braved the rush hour traffic through Quezon City, Pasig, and Makati until 8 a.m. We would sleep and then wake up to do groceries. What I didn’t foresee then was that I would be responding to inquiries, and also had to ask people how the food was. Then at the same time, I was also setting up our Facebook page. By the third day, we already decided to get a rider. By the second week, we had two riders. It took months for us to figure out how to streamline handling the food and packing more efficiently. We also had to change the box and put insulators, and make sure to cut the delivery time to a maximum of four hours. We also made it a rule to deliver directly to the customer, not leave the packed meals to the guard or at the office lobby. The more people handle the food, the more we couldn’t guarantee the quality. It took around two years for some semblance of stability in our workflow. For those years, I survived on naps.

As all this was happening, I was in TV and theater. I was in Meralco Theater, I was the lead in 2013 or 2014. Instead of resting backstage, every break, I would get the Diet Diva cellphone because I needed to get to my clients. My performance was affected. I barely got any sleep and then I had to sing—my voice was hoarse. As the business grew, I also learned to let go little by little. When you’re so passionate about your baby, you have the tendency to micromanage. You have to train yourself to leave it to your staff and trust them that they can handle it.

Photo Samantha Gonzales

SPARKUP: Was there also drama involving people outside Diet Diva?

DIET DIVA: After we soft opened in September, we secured all our permits and finished all our paperwork, and were ready to bring our service to the wider public. It was really my goal to do it right because we’re dealing with healthy food. We had to have all the sanitary permits, etc.

By the end of December, I started hearing about other diet delivery services that copied our business model. There is one particular brand. The chef who started it, we worked with him for a time, so I was super hurt but I charged to experience the importance of non‑disclosure agreements. I guess the other companies worked also because they would accept our fallouts, or those that didn’t make it to our cut‑off. I was hurt because the whole thing, I, my mom and Clark were the ones who figured it out: calorie count, five days a week, three meals a day, one snack, delivery time. I went on the internet and Googled “How do you deal with people who stole your idea.” But in the end, you just have to accept that when a business idea is good, people will copy.

Photo Samantha Gonzales

SPARKUP: How about The Sexy Chef, did Ms. Alejandro consider you as a rival?

DIET DIVA: For The Sexy Chef, she wasn’t my rival because they do South Beach. So if I get inquiries for South Beach, I would refer them to Sexy Chef. Idealistic, fine, but I think that’s how you should deal with it in the industry. Walang nakawan, walang bastusan. It’s still the same market of people who want to change their lives and be healthy. I won’t compete. We’re aiming for the same goal after all. We’d still see each other in events.

SPARKUP: How did you market Diet Diva?

DIET DIVA: It’s very personal. We still rely on word of mouth. Now, virtually, there’s social media. We have influencers. We still find that it’s our biggest marketing tool: testimonies. It will really be people who liked the food and lost weight. Everything else, like Facebook boosted posts, is just support. It’s a combination of technology and people.

SPARKUP: Do the unhealthy food trends threaten you?

DIET DIVA: I believe in balance. If there are food parks, they will eat. When they feel like they’ve been living an unhealthy life, then we step in. For some people, it’s Diet Diva during weekdays, cheating on weekends. It’s the food industry e. It’s a blessing that Filipinos like to eat and like to explore. If Filipinos were innately healthy to begin with, we wouldn’t be in the business.

(DIET DIVA stands up and shows off her memorabilia from working with Hong Kong Disneyland, Repertory Philippines, TRUMPETS, PETA—playbills and posters that show the Diva sans the Diet.)

Photo Samantha Gonzales

SPARKUP: Having been a theater actress all your life what lessons from theater do you apply in business?

DIET DIVA: The “Yes, and…” approach in improv. In theater, you’re taught to respond to anything. Be ready, accept, and move on. For example, a rider meets an accident. The consequence will be the client will complain because the food is late. “Yes, and…” dictates that we acknowledge, accept that, “okay, yes this happened,” and then think,“now what?” When you’re given a role, you accept it and move on with the scene. You have to be quick. But the kind of response always has to be a yes.

(Fade to black. The end.)

Tax reform fuels bullish sentiment

By Krista M. Montealegre
National Correspondent

SPIRITS ARE HIGH following Philippine stocks’ stellar run in 2017, with the tax reform program and sustained strong economic momentum stoking bullish sentiment for the new year.

The Philippine Stock Exchange index (PSEi) — a barometer of investor confidence — ended 2017 at a record-high 8,558.42, rebounding from a two-year slump that had raised doubts that the bull run had lost steam.

The benchmark index delivered a full-year gain of 25.11%, thanks to the return of foreign investors to the local equities market.

Net foreign purchases reached roughly P55 billion last year compared to P2.8 billion at the close of 2016, PSE Chief Operating Officer Roel A. Refran said in a phone interview.

Bulls showed up big time last year, capping the year with a late surge fuelled by the optimism on the passage of the tax reform law that will help fund President Rodrigo R. Duterte’s P8.44-trillion infrastructure program.

“Ultimately, (local stocks) grow with the economy. We grow with Philippines, Inc. The infrastructure story definitely has an impact on how we will be viewed by certain investors,” Mr. Refran said.

The tax reform program hopes to increase take-home pay for most wage earners, compensating for the lost revenue together with excise taxes on fuel, cars and sugar-sweetened beverages, among others.

For those who missed out on last year’s gains, most market analysts are anticipating the rally could have another leg up, as the economy feels the impact of the tax program.

ATR Asset Management, Inc. (ATRAM) sees a base case scenario of 9,600 and a best case of 10,800 for the bellwether index, anchored on the impact of the tax reform program and 10-12% growth in corporate earnings.

“The Philippines is (undergoing a) structural change. We are seeing (a) structural improvement in the economy and expect that to generate a strong multiplier effect across sectors as jobs are created (and) incomes grow up,” Julian P. Tarrobago, Jr., head of equities at ATRAM, said in a recent interview.

COL Financial Group, Inc., sees upside potential for the PSEi, with a base case forecast of 9,300.

“We still see some capital appreciation. Growth is intact and we are positive because of the tax reform (program),” COL Financial Head of Research April Lynn L. Tan said in a phone interview.

PCCI Securities Brokers Corp. chose to be more conservative, with its research head, Joseph James F. Lago, saying in an e-mailed response to a request for comment: “Potential upside of the PSEi is at least 8,800 should the current record high… be surpassed. The support levels of expected corrections along the way are seen at 8,100 and 8,000.”

Philstocks Financial, Inc. Senior Analyst Justino B. Calaycay, Jr. is projecting PSEi at 10,000-11,000 in 2018 provided the country contains political noise and international geopolitical risks remain manageable.

“The market may be able to sustain its optimism going into 2018 on the back of expectations the TRAIN (Tax Reform for Acceleration and Inclusion) will be a boost. The year’s growth narrative is seen to focus on public and private infra[structure] spend[ing] as the former (public sector) ramps up its ‘Build, Build, Build’ push and the latter (private sector) enjoys the perks of more spending cash in light of the higher income tax threshold,” Mr. Calaycay said in an e-mail, even as he cautioned that tax reform could raise the prices of some basic goods.

To be sure, not everyone is aboard the tax reform train.

Abacus Securities, Inc. has a muted view for local stocks because the higher excise taxes that come with the new law could hurt household spending, which accounts for more than two-thirds of the economy.

“You’re putting P100 into people’s pockets but then you’re going to take out P200-250 in the other pocket. For me personally, it is less of tax reform than actually a tax hike,” Abacus Securities Head of Research Raymond S. Franco explained in an interview.

“You’re trying to justify higher revenues to finance infrastructure and expand the capacity of the economy, which is very good intention indeed but I think we should be more realistic that not all of these projects can be rolled out in the next five years.”

Mr. Franco is “not looking for much movement” in the PSEi this year even though a break of the 9,000 level is possible.

“Hope is pushing up the market and if the government doesn’t deliver, you’re probably going to see a de-rating for the market,” he said. — with Arra B. Francia

Poll bares view of steady Dec. inflation

By Melissa Luz T. Lopez
Senior Reporter

THE GENERAL INCREASE in prices of widely used goods and services likely steadied in December from the preceding month’s pace, according to analysts asked in a poll last week, keeping the full-year pace within target for the first time in three years.

A poll among 12 economists yielded a 3.3% estimate median for the month, which if realized would match November’s pace but would still be faster than the 2.6% reading in December 2016.

This also falls in the middle of the 2.9-3.6% estimate range given by the Bangko Sentral ng Pilipinas (BSP) on Dec. 29.

The Philippine Statistics Authority will report official inflation figures on Friday.

“The main drivers are the increase in seasonal demand for goods and services, the continuing increase of oil prices and price shocks brought by weather disturbances of late,” said Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines.

Tropical storm Urduja (international name: Kai-tak) and typhoon Vinta (Tembin) barrelled through parts of MIMAROPA region (consisting of Occidental and Oriental Mindoro, Marinduque, Romblon and Palawan) in southern Luzon, the Visayas and Mindanao days before Christmas. Heavy rains and floods killed at least 48 and caused over P1.3 billion worth of agriculture products, according to the National Disaster Risk Reduction and Management Council.

Other economists cited higher food costs in December as producers faced stronger demand during the Christmas season.

Victor A. Abola, economics professor at the University of Asia & the Pacific, said lower electricity rates may have offset food inflation.

“The unexpected appreciation of the local currency might have also contributed to lower inflation by making imported goods more affordable in local currency terms,” added Guian Angelo S. Dumalagan, market economist at Land Bank of the Philippines.

The month saw the peso gain strength versus the dollar to end at P49.93 in its last trading day for 2017, its best performance in over six months.

BSP Governor Nestor A. Espenilla, Jr. has attributed the peso’s recovery to “attractive” domestic fundamentals which have been reinforced by the enactment of the tax reform package.

Abroad, a softer dollar has emerged in the face of market uncertainty over the legislative fate of a parallel tax reform in the United States.

The economists’ estimates assure that full-year inflation will settle at a 3.2% average, matching the BSP’s forecast and settling comfortably within the 2-4% target band. This will mark the first time since 2014 that the full-year pace will finish within target, as prices increased slower than expected over the past two years to hover below two percent.

Several economists believe the “manageable” inflation rate will allow the central bank to maintain borrowing rates so far. The Monetary Board will not review its policy stance until Feb. 8.

“Relatively benign inflation compared to recent years could still provide leeway to keep BSP policy rates steady over the near term,” said Michael L. Ricafort, economist at the Rizal Commercial Banking Corp.

Monetary authorities maintained their policy stance during their Dec. 14 meeting, saying that within-target inflation and firm domestic demand do not warrant any rate adjustments even after a fresh “lift-off” was introduced by the US Federal Reserve.

Some analysts, however, said tightening moves may be on the table this year should inflation pick up steam, largely due to the initial price impact of the first of up to five planned tax reform packages that took effect on Jan. 1.

“If inflation drifts closer towards the upper end of the target range at the start of the year, we might see the central bank raise key interest rates — albeit modestly — in the near term,” said Security Bank Corp. economist Angelo B. Taningco.

The BSP expects 2018 inflation at 3.4%, only slightly faster than last year’s print it believes that the higher levies on fuel, sugary drinks, cars and other items covered by the tax reform law will be “transitory.”

Economic managers of President Rodrigo R. Duterte kept the annual inflation target at 2-4% from 2018 until 2020 during their Dec. 22 review, with the impact seen tempered by improving productive capacity as the national government invests more on infrastructure and services.

Poll bares view of steady Dec. inflation

Business leaders say economy ‘yet to run on all cylinders’

By Elijah Joseph C. Tubayan
Reporter

A STABLE ENVIRONMENT helped the economy rev up in 2017, and business groups now believe tax reform, further ease of doing business, lifting of foreign investment restrictions and increasing the pace of infrastructure development should help spur the country’s growth momentum further.

The Philippine economy has kept its growth pace above six percent since 2012 — with 2013 recording 7.1% — but business leaders said that it needs to expand by an even faster clip to keep up with competitors in the Association of Southeast Asian Nations (ASEAN). Gross domestic product grew by 6.7% in 2017’s first three quarters against the government’s 6.5-7.5% full-year target and 2016’s actual 6.9%.

“The Philippine economy maintained its high growth rate, low inflation, stable exchange rate environment in 2017 with domestic and foreign investment levels at record levels,” John D. Forbes, senior adviser of the American Chamber of Commerce of the Philippines, said in an e-mail.

“But the country’s economic engine has yet to run on all cylinders.”

Mr. Forbes said that foreign investors are anticipating the acceleration of infrastructure development as the government tries to put economic growth on a faster lane. “Investors are concerned by worsening airport and traffic congestion, so the privatization proposal for NAIA and early passage in Congress of the traffic crisis legislation would be welcome,” said Mr. Forbes, referring to Ninoy Aquino International Airport — the country’s premier air gateway.

The current government hopes to spur gross domestic product growth to 7-8% annually from 2018 until it ends its six-year term in 2022, and is banking on an P8.44-trillion infrastructure development drive — financed partly by increased revenues from the Tax Reform for Acceleration and Inclusion (TRAIN) program — to make this happen.

For European Chamber of Commerce of the Philippines President Guenter Taus, “We need to build a more solid employment/job creation basis, for this will be the backbone of sustained growth.”

“This past 2017, there have undoubtedly been reforms in helping improve the Philippine business climate. Much headway has been made, but still a lot can be done to improve the competitiveness of the Philippine in terms of FDIs (foreign direct investments). We need to keep moving faster in order to become and remain competitive versus our ASEAN neighbors.”

Easing restrictions to foreign ownership in local sectors, Mr. Taus said, “will surely have a substantial effect on the Philippine economy through opening up the market to foreign players and thus opening the floodgates to investors who see the high potential and wealth of opportunities in the Philippines.”

The administration of President Rodrigo R. Duterte is currently finalizing the next foreign investment “negative list” in its bid to lift restrictions on foreign ownership and participation in certain sectors. That list was supposed to have been released late last year.

After the just-enacted first TRAIN package — which cut personal income tax rates but raised levies on cars, fuel and other items and reduced value-added tax exemptions — foreign business groups said they are now looking forward to the next tranche that will reduce the corporate income tax rate to 25% from 30% currently and streamline fiscal incentives given to investors.

Finance Secretary Carlos G. Dominguez III has said his department hopes to submit the second TRAIN package to Congress on Jan. 15, when lawmakers return from their one-month Christmas and New Year break.

“The TRAIN 2 package will be watched carefully in two respects: (1) to see if it reduces the corporate income tax to a level close to large ASEAN economies and (2) whether competitive fiscal incentives are maintained for new and expansion FDI projects,” Mr. Forbes said.

“Despite reaching much higher levels, FDI in the country remains significantly lower than amounts flowing into Vietnam, for example.”

Mr. Taus, meanwhile, said: “Further challenge in line with the tax reform will be to keep the incentives scheme attractive enough to retain and actually grow the BPO (business process outsourcing) sector, a vital industry to continue the emerging middle class.”

Local business groups on the other hand are banking on further steps to develop micro, small and medium-scale enterprises (MSMEs).

The Philippine Chamber of Commerce and Industry (PCCI) President George T. Barcelon said the government should complement further liberalization of the economy with steps to strengthen small local businesses.

“We welcome competition because it benefits the customers. But it has to be a level playing field. Foreign companies coming in will be using funds from abroad. MSMEs will find it difficult — the cost of financing is higher, it’s a disadvantage,” he said in a telephone interview.

He also cautioned against the government’s plan to further cut the paid-up capital threshold for foreign retailers’ entry, arguing that this could allow lower-quality businesses to come in.

“What we would like to see is the quality investments. We need to put some qualifiers, that if they come in, it’s going to help us in upgrading our know-how or management,” Mr. Barcelon said, noting US micro-level businesses’ $2-million minimum paid-up capital.

Socioeconomic Planning Secretary Ernesto M. Pernia earlier said that the government was looking to reduce the $2.5-million paid-up capital threshold under Republic Act No. 8762, or the Retail Trade Liberalization Act of 2000, to just $200,000.

“So if you put it too low, what are we attracting?” Mr. Barcelon said.

He added that institutionalization of efforts to ease the cost of doing business — embodied in Senate Bill No. 1311 and House Bill No. 6579 — will complement the reduction of the corporate income tax in spurring more business activity.

“We need to be more efficient,” Mr. Barcelon said, explaining that this would help businesses cope with high electricity and logistics costs that make them uncompetitive against regional peers.

“We still want hopefully the legislative side — both national and local government — to review the ease of doing business,” the PCCI chief said.

“Whether it be the benefit of the local business establishments or to attract foreign investments, we really need to streamline.”

Sergio R. Ortiz-Luis, Jr., president of Philippine Exporters Confederation, Inc. (Philexport), meanwhile hoped that the government would also provide new sources of financing for small businesses.

“We would like a portion of the CCT fund to be allocated to MSME financing,” Mr. Ortiz-Luis said of conditional cash transfers in a telephone interview, adding that the government should sustain the increase in infrastructure spending, arrest worsening traffic and give “more attention to the agriculture sector.”

PHL net liability position expands in third quarter

By Melissa Luz T. Lopez,
Senior Reporter

HIGHER INVESTMENT inflows drove the country’s net external liability position to widen further during the third quarter of 2017, the central bank said, amid sustained optimism among foreign investors on domestic economic prospects.

The country’s international investment position (IIP) widened to a net liability of $35.207 billion as of end-September from $33.514 billion logged during the first semester, the Bangko Sentral ng Pilipinas (BSP) said in a statement sent over the weekend. This also grew compared to the $28.436-billion net liability posted in September 2016.

The IIP takes stock of a country’s financial claims and liabilities. The wider liability came as the growth in foreign investments outpaced the increase in foreign assets accumulated by the government and local corporates from a year ago.

Foreign direct investments (FDI) and hot money inflows to the Philippines supported a 4.1% increase in liabilities to reach $201.782 billion, against a 0.7% pickup in foreign assets to $166.575 billion year on year.

“The expansion in liabilities reflected the higher outstanding debt instruments held by non-resident affiliates and increased holdings by non-residents of equity securities issued by residents,” the BSP said in a report.

For July-September, the central bank said FDIs posted a 4% rise compared to the second quarter, while flighty portfolio investments went up by 1.5%. The “significant” inflows and revaluations of these investments are supported by the country’s “sustained positive economic performance and growth prospects,” the BSP added.

This came despite a weaker peso-dollar exchange rate after the local unit traded above the P51 level during the quarter.

The peso depreciated by 1.2% to P51.073 against the US dollar as of end-September, which meant that outstanding foreign liabilities had a lower equivalent when expressed in the greenback.

On the other hand, foreign assets held by Filipino players posted a modest increase as local banks extended more loans to foreign borrowers, and with more residents investing abroad.

Dollar reserves maintained by the BSP kept the central bank at a net asset position, albeit at a lower level of $81 billion. This accounted for nearly half the country’s external claims.

Bank assets totalled $26.214 billion, up by a tenth from the previous year. Assets held by other sectors also grew by an annualized 8.5% to reach $59.335 billion, according to central bank data.  

By type of instrument, debt instruments to support intercompany lending between multinational firms and their local units accounted for 15.1% of the total liabilities, while placements on shares of stock of issued by Philippine companies took a 12.5% share.

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