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December inflation hits 3.3%, gov’t says

By Jochebed Gonzales, Senior Researcher

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

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

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

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

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

DoF chief touts collection, spending rise

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

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

“Disbursements 13.8% growth.”

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

DBM cites Nov. capital outlay surge

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

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

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

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

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

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

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

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

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

DBM cites Nov. capital outlay surge

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Hair’s the thing

Text and photos by Michelle Anne P. Soliman

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

For more information, visit www.lynellehair.com.

BSP says ready to tweak rates when needed

By Melissa Luz T. Lopez
Senior Reporter

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Lendr records P12 billion in loans amid demand from young adults

FINTQ, the financial technology arm of Voyager Innovations, Inc., saw growth in its loans in 2017 as it saw borrowers coming from the “starting out” segment.

In a statement sent to reporters on Thursday, FINTQ said its lending arm Lendr booked a loan volume of P12 billion in 2017, nearly “a third” higher than the volume recorded in the previous year.

This brings FINTQ’s total loan volume since its launch in 2015 to about P27 billion.

Angelito M. Villanueva, FINTQ managing director, said majority of its borrowers came from the “starting out” segment, or young adults who are just beginning with their careers.

“At this stage of their lives, they only have need for relatively simple financial products such as a transaction account and/or a credit card,” Mr. Villanueva was quoted as saying in the statement.

In terms of loan application types, Mr. Villanueva said majority came from salary loans, while he also saw a number of applications for microfinance and business loans.

“Lendr has the most expansive loan offerings. On top of the traditional salary, personal, home, and auto loan products, it offers mobile crop loan, medicine loan, MSME (micro-, small and medium enterprise) loan, overseas Filipino loan, and truck and equipment loan, among others.”

Meanwhile, eight out of 10 borrowers of FINTQ are from provinces, with nearly 26% residing in low-income communities. Mr. Villanueva said it only proves that “there is really a huge untapped market by formal financial institutions in rural communities.”

This is in line with the central bank’s National Strategy for Financial Inclusion, where it targets 30 million Filipinos to be included into the formal financial system by 2020.

KasamaKA, a grassroots-based program, was launched in September to provide financial services using a digital platform.

Meanwhile, FINTQ’s 2017 performance was bolstered by its partnerships with banks and non-bank institutions, as well as its regulatory support given.

“[A]pplications through Lendr registered the highest loan approval rate at around 40% last year due to ‘digital efficiencies,’” Mr. Villanueva noted.

As of December 2017, FINTQ has inked agreements with 70 financial institutions including the Land Bank of the Philippines, China Bank Savings, RCBC Savings Bank and Philippine Bank of Communications, among others.

Looking forward, FINTQ is set to launch “game-changing platforms” and enhance its digital lending initiatives.

“These will further galvanize our position in the industry as the leading fintech company with the largest digital footprint in the country,” Mr. Villanueva said, adding that they will also expand its operations outside the country.

Voyager Innovations is PLDT, Inc.’s digital innovations unit. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a stake in BusinessWorld through the Philippine Star Group, which it controls. — Karl Angelo N. Vidal

Record capital raising at PSE expected this year

By Krista A.M. Montealegre,
National Correpondent

ENCOURAGED by the positive economic outlook, corporates are expected to raise a record amount of capital from the stock market this year, even with a slowdown in initial public offerings (IPO), First Metro Investment Corp. (FMIC) said in a briefing on Thursday.

Capital raising will accelerate by a third to P934 billion this year from P724 billion in 2016 on the back of higher equity and fixed-income issuances, FMIC Head of Investment Banking Group Jose Pacifico E. Marcelo said.

Equity issues will advance 79% to an all-time high of almost P247 billion, with issuances from listed companies driving the increase.

The flurry of fund-raising activity at the stock market comes at a time when the bellwether Philippine Stock Exchange index (PSEi) is seen peaking at 9,400 this year, translating to a price earnings (PE) ratio of 21x and supported by a growth of 10% in earnings per share, First Metro Investment Corp. (FMIC) Head of Research Cristina S. Ulang said. PE ratio is a measure of how expensive a market is.

After rallying to uncharted territory at the start of the year, the PSEi’s level is still “well-justified” because income growth remains robust, but investors have to be more “picky” in selecting stocks, Ms. Ulang said, noting property, banks, consumer, infrastructure, conglomerates, manufacturing and utilities are its preferred sectors.

The planned $3-billion follow-on offering of an enlarged San Miguel Pure Foods, Inc. will quadruple the total value of follow-on offerings and private placements to P162 billion from P41 billion in 2016.

Stock rights offerings, on the other hand, will slightly go down to P73 billion from P75 billion.

Likewise, the value of maiden share sales will fall by nearly half to P12 billion from P23 billion, Mr. Marcelo said, noting IPOs take a long time to prepare and banks are still the primary source of corporate debt financing.

“We’re not too optimistic that there will be many IPOs, which is sad because IPOs add depth to the market,” Mr. Marcelo said.

One possible new entrant in the stock market is The Lush Company, the firm behind the Fruitas brand. FMIC was tapped to handle the deal, which may take place in the first half, depending on market conditions, Mr. Marcelo said.

For the fixed-income market, corporates will drive the expected 17% uptick in total volume of P687 billion from P586 billion, with retail treasury bonds steady at P437 billion, as the government taps new foreign markets for financing.

Corporate bond floats will climb 68% to P212 billion from P126 billion, and preferred share issuance will increase 65% to P38 billion from P23 billion.

Merger and acquisition activity will remain strong because of the favorable economic growth prospects, with the food and beverage, infrastructure and construction sectors on top of investors’ radar, Mr. Marcelo said.

Peso slips as Fed minutes bare upbeat US outlook

THE PESO slipped against the dollar, breaking its eight-day streak, due to the upbeat outlook on the US economy in the minutes of the Federal Reserve meeting last month.

The local currency finished at P49.82 against the greenback yesterday, dropping a centavo from its P49.81-per-dollar close on Wednesday.

The peso opened the session weaker at P49.90 against the dollar, while its intraday low was seen at P49.93. Yesterday’s best showing, meanwhile, stood at P49.805 versus the greenback.

Dollars traded slid to $519.25 million from the $634.2 million that changed hands in the previous session.

“The peso slightly depreciated today, breaking its recent upward trend due to hawkish outlook on the US economy as reflected by the minutes of the December Fed meeting released [early yesterday],” a trader said over the e-mail on Thursday.

Most Fed officials said in the December meeting of the Federal Open Market Committee that the larger take-home pay provided by the federal tax reform will bolster consumer spending.

“Many participants expected the proposed cuts in personal taxes to provide some boost to consumer spending,” the minutes stated, adding that some officials said the expectations on the tax reform “may have already raised consumer spending.”

However, a number of Fed officials raised uncertainty about the effects of tax reform on consumer spending.

In line with this, the officials raised their 2018 economic growth projection to 2.5% from the previous 2.1%.

“Most participants indicated that prospective changes in federal tax policy were a factor that led them to boost their projections of real GDP (gross domestic product) growth over the next couple of years.”

For Ruben Carlo O. Asuncion, UnionBank of the Philippines chief economist, the slight descent of the peso against the dollar is attributable to some profit-taking.

“I think some of the investors are already taking their profits, although it doesn’t mean that people are no longer bullish,” Mr. Asuncion said over the phone.

He added that the peso will likely continue its strength, but this might be tempered by the waning volume of remittances since the holiday season is already over.

Another trader noted that the peso, along with the other Asian currencies, were “trading quiet” yesterday.

“Actually, it’s pretty much sideways trading the entire day. All the other currencies were also relatively quiet,” the trader said over the phone.

For today, the first trader expects the peso to move between P49.70 and P49.90 against the dollar, while the second trader gave a slightly wider range of P49.70 to P50.

“The peso is expected to move sideways tomorrow amid likely slightly weaker US ADP employment data and outlook on local December inflation to come relatively near inflation levels reported last November,” the first trader said.

Most Asian currencies also slipped against the dollar on Thursday after upbeat US economic data, plus minutes from the Federal Reserve’s December policy meeting, spurred some recovery for the weak greenback.

The dollar rose on better-than-expected US December factory data, and was further boosted after minutes of the Fed

“Today’s movement is largely driven by the dollar rebound,”  Sim Moh Siong, FX strategist at Bank of Singapore, said on Thursday.

Sim said the dollar’s rebound likely is short term and it should taper because global recovery should continue to keep the currency softer.

But if US payroll numbers due on Friday are strong, “there could be a bit more dollar strengthening,” he added.

The Malaysian ringgit shed as much as 0.3% against the dollar.

The Thai baht and the Indonesian rupiah were among Thursday’s few gainers among Asian currencies. Both currencies rose about 0.2% against the dollar.

Thailand and Indonesia, which are both major commodity exporters, have seen their economies benefit from a recent uptrend in oil prices.

“Rising oil prices will be positive for commodity driven currencies,” Sim of Bank of Singapore said.

Oil prices on Thursday remained near levels last seen in late 2014/2015, with markets tightening amid tensions in Iran and due to ongoing production cuts. — Karl Angelo N. Vidal with Reuters

D&L unit’s facility gets green light from PEZA

A SUBSIDIARY of D&L Industries, Inc. secured the approval from Philippine Economic Zone Authority (PEZA) to set up a manufacturing facility in Batangas.

D&L, in a disclosure to the stock exchange on Thursday, said Natura Aeropack Corp. (NAC) received a certificate of registration as an ecozone export enterprise from PEZA.

The PEZA approval means D&L will be entitled to incentives such as income tax holiday for a certain number of years, and tax and duty-free importation of raw materials and capital equipment. It will also have to comply with the 50% required export sales required for Filipino corporations in economic zones.

The facility, slated to be commercially operational in 2021, will be located at the First Industrial Township-Special Economic Zone in Batangas.

NAC will engage in the manufacturing of coconut oil fractions and coconut-based surfactants and downstream consumer products.

“The NAC facility is part of the expansion plans of the D&L Group, which will position the group to grow in the next 20 years,” the listed company said.

The construction of new manufacturing plants in Batangas is part of the D&L Group’s strategic direction to grow the export business and focus on higher value and higher margin products.

D&L’s export business comprises 25% of overall revenues.

The expansion program will also accommodate the demand from new contracts.

“Expanding to the new site will help our export business. So 50% of our business coming from exports, it will be something we will be able to achieve not just with our existing business, but also with our expansion,” D&L President and Chief Executive Officer Alvin D. Lao had said.

D&L expects increased export sales as the company enters new markets in the Asia-Pacific region, such as China, Hong Kong, Japan, and Indonesia.

D&L booked a 15% increase in earnings in the July to September period to P771 million, as revenues likewise increased 27% to P7.2 billion for the three-month period.

Shares in D&L rose 12 centavos or 1.08% to close at P11.22 apiece on Wednesday. — Krista Angela M. Montealegre

ABS-CBN, GMA claim TV ratings lead for 2017

RIVAL TELEVISION networks ABS-CBN Corp. and GMA Network, Inc. both claimed the lead in nationwide TV ratings for 2017.

In a statement, ABS-CBN said it ended the year with an average audience share of 46%, or 12 points higher than GMA’s 34%, citing data provided by multinational audience measurement provider Kantar Media.

Kantar Media uses a nationwide panel size of 2,610 urban and rural homes, which it says represent 100% of the total Philippine TV viewing population.

ABS-CBN said it dominated the primetime block (6 p.m. to 12 midnight) in 2017, with an average audience share of 50%, versus GMA’s 32%.

The Lopez-led network said it also had higher ratings for the morning block (6 a.m.-12 noon) with 39% versus GMA’s 32%; the noontime block (12 noon – 3 p.m.) with 45% versus GMA’s 36%; and afternoon block (3 p.m.-6 p.m.) with 43% versus GMA’s 38%.

ABS-CBN said it also bested its rival in Total Balance Luzon with an average national audience share of 48% versus GMA’s 36%; in Total Luzon with 42% vs GMA’s 36%, in Total Visayas with 53% versus GMA’s 28%; and in Total Mindanao with 53% versus GMA’s 31%.

In December, the Lopez-led network said it dominated nationwide ratings with an average audience share of 45% versus GMA’s 34%.

Meanwhile, GMA, in a separate statement, said it recorded an average 42.5% total day people audience share in the National Urban Television Audience Measurement (NUTAM), against ABS-CBN’s 36.8%, citing Nielsen TV Audience Measurement’s full year data.

GMA said it was the ahead for 2017 in all time blocks in both Urban Luzon and Mega Manila, posting 48.8% (against ABS-CBN’s 31%) and 51.9% (against ABS-CBN’s 26.7%), respectively.

The listed network said its December ratings hit 44.3% against ABS-CBN’s 37.2%. — P.P.C. Marcelo

Axed official is MARINA administrator, Palace says

By Arjay L. Balinbin

AFTER a day’s delay, Malacañang finally announced on Thursday, Jan. 4, that President Rodrigo R. Duterte has fired Maritime Industry Authority (MARINA) administrator Marcial Quirico C. Amaro III for his “excessive foreign trips.”

In a press briefing in Davao City aired on national television, Presidential Spokesperson Herminio Harry L. Roque, Jr. told reporters that Mr. Duterte had “terminate(d) the services” of Mr. Amaro for “excessive” travels abroad as alleged in a complaint letter to the President dated Dec. 21 purportedly sent by the Alliance of MARINA Employees (AME).

Mr. Roque said documents from the Department of Transportation (DoTr) could prove that the sacked MARINA administrator had gone on “24 foreign trips, 18 in the previous year and six in 2016.”

“I’d like to highlight that all of the trips except for one are official, but the point of the President is we have to be selective in the trips we take; and definitely, 24 trips is excessive. Of the 24 travels, only about three were sponsored trips. All the other trips were paid for by the Philippine government,” Mr. Roque added.

As for the possibility that Mr. Amaro’s foreign trips could not be the only reason for his dismissal, Mr. Roque said, “I have to admit I’ve heard some reports,” but added that the Presidential Management Staff (PMS) “has not dwelt” on them.

Mr. Roque clarified as well that he only has two documents related to the dismissal of Mr. Amaro: the complaint letter from MARINA employees and the DoTr’s report detailing his trips.

On the other hand, a resolution sent to the media on Jan. 3 by a group that identifies itself as the AME said its executive officers and board of directors are “vehemently, adamantly, and strongly denying the existence of the alleged letter complaint against Administrator Marcial Quirico C. Amaro III.”

The group said its executive officers and directors have “collectively agreed to come up with (an) official pronouncement against the fake news that the AME filed the letter complaint to once and for all clarify the sensitive matter which will cause damage to the integrity and credibility of the association.”

The Palace’s announcement of Mr. Amaro’s dismissal came after the President’s issuance of a memorandum that outlines new rules on foreign trips for all government officials and personnel in the Executive department.

The memorandum said a foreign travel will only be allowed if its purpose “is strictly within the mandate of the requesting government official or personnel, the projected expenses are not excessive, and if it is expected to bring substantial benefit to the country.”

Amaro’s termination comes after the removal of Presidential Commission for the Urban Poor (PCUP) Chair Terry Ridon due to junkets and his supposed failure to hold meetings, the Palace noted in a statement.

“This is the President’s unilateral decision to crack down on foreign travels of government officials. He believes that government officials should concentrate on their jobs here in the Philippines… Any foreign travel must conform [to] the guidelines,” Mr. Roque said in the statement.