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Every project has its story

SINCE its inception in 1997, Suntrust Properties, Inc. has become one of the most significant and dynamic real estate companies in the Philippines. From exclusively building residential communities in several Southern Luzon provinces, it has successfully branched out into putting up vertical properties in Metro Manila and massive mixed-use developments.

And the company, a wholly owned subsidiary of a giant in the industry, Megaworld Corp., just keeps going.

Recently, it finished erecting four of the 12 buildings of Suntrust Shanata complex in Quezon City. This Modern Asian cluster of mid-rise buildings, which occupies more than 30,000 square meters (sq. m.) of land along Quirino Avenue, will contain 1,752 affordable residential units upon completion. Meanwhile, the six towers of the resort-inspired Suntrust Parkview in Manila are nearly done. There are three available unit types — studio, two-bedroom and three-bedroom — that range in size from 24 to 48 sq. m.

All land development for Suntrust Ecotown-Tanza in Cavite, the firm’s first-ever mixed-use development and most ambitious real estate project to date, has recently ended. It will cover around 350 hectares of land, more than thrice the size of its current area. The 22 commercial lots in the township are already sold out, and only 31 of the 107 industrial lots remain for sale.

By next year, most, if not all, of the 473 residential units, which range from 30 to 200 sq. m., of Suntrust Capitol Plaza, a 33-storey-tall structure in Quezon City, will have been turned over to their buyers. And Suntrust Asmara (the Indonesian word “asmara” translates as “love”), another development in Quezon City, will have its first tower constructed next year. There will be three in all, and they will feature a combined 1,975 living units.

A follow-up to Suntrust

Ecotown-Tanza is already in the works, and it is called Davao Park District which is a partnership with its parent company Megaworld Corporation. Suntrust will take care of the residential component of the 11-hectare mixed-use development. Recently, all 354 units of the township’s One Lakeshore Drive, were sold.

According to Atty. Harrison M. Paltongan, president of Suntrust, their vertical projects, including some of the aforementioned, are being put up in response to demand from their clients. “But we want to focus more on developing outside the urban centers,” he said in an interview with BusinessWorld.

He noted that one prominent example of that center, Metro Manila, where Suntrust has a number of properties, is beset with problems like heavy traffic. “How do we contribute to solving that? For us the answer is you make your developments outside Metro Manila,” he said.

Suntrust has already established a presence in Batangas, Laguna, Cavite, and Baguio, to name a few. Atty. Paltongan said they are looking to penetrate the real estate markets in the Bicol and Ilocos regions and several provinces in Visayas, including Samar and Leyte. As Suntrust expands into these areas, Atty. Paltongan hopes that they can help address the country’s housing backlog of more than five million units.

This rural expansion is all the more promising because the Philippine government has embarked on a multibillion-peso “Build! Build! Build!” program to remedy the country’s poor and inadequate infrastructure, which is more glaring in the countryside.

“That is what the private developers want — the infrastructure,” Atty. Paltongan said. “Developers should come and be able to provide all of these necessary developments beside all of this infrastructure,” he added.

Whatever Suntrust chooses to build next, and whether or not it can do so successfully, rest primarily on its greatest asset: its people. “That is why everyone involved in our projects must feel that they’re part of this vision to make reliable buildings and houses,” Atty. Paltongan said.

The management does not just a lend a willing ear to what the employees have to say; it actively seeks suggestions from them. Atty. Paltongan said they hold workshops for their employees, where they are asked to come up with recommendations for a project while thinking that they are in charge of it.

But Suntrust also pays attention to ideas of their homebuyers. And all that listening translates into communities that are conceptually different from each other. For example, Suntrust Sentosa in Laguna is Singaporean in style while Suntrust Verona in Cavite is hinged on an Italian concept.

“We are not just building like other real estate developers,” Atty. Paltongan said. By that he meant they are not simply reusing their ideas. Recycling can lead to a dull environment where, in his words, “Everything is the same, the same color, same concept. ”That is not the case with any of Suntrust’s development. “Every project has its own story,” he said. That — combined with flexibility and competitive costing — are what merit Suntrust properties more than a second look.

Spending surge drives Oct. budget gap

By Elijah Joseph C. Tubayan
Reporter

THE NATIONAL government’s budget gap grew ninefold in October from a year ago as spending surged at its fastest clip in 11 months.

According to Bureau of the Treasury (BTr) data shown to reporters yesterday, the government’s budget balance amounted to a P21.8-billion deficit last month from a P2.3-billion gap in October 2016.

The national government spent P226.9 billion in October, 28.2% more than the year-ago’s P177 billion. This was the fastest pace since November 2016’s 33% spending growth.

This was due to bigger expenditures by the Department of Social Welfare and Development (DSWD), Bureau of Fire Protection (BFP), Philippine National Police (PNP), and the Department of Public Works and Highways (DPWH), Budget Secretary Benjamin E. Diokno told reporters yesterday. “Higher expenditures for social services by the DSWD, transportation and equipment by the BFP and PNP, and road infrastructure by the DPWH buoyed government spending for the period,” Mr. Diokno said in a press briefing.

Netting out interest payments, spending grew 28% to P206.4 billion from P160.9 billion.

In a separate press release e-mailed to reporters, Mr. Diokno noted that the third quarter had seen expenses for maintenance and operations grow 8.2% annually due to bigger disbursements for education, health care and social protection programs; public construction growth accelerate to 12.6% from the second quarter’s 12.1%; capital outlays surge 17.2% to P172.9 billion; as well as infrastructure and other capital outlays exceed a P137.8-billion program, increasing by 15.4% year-on-year to P142.1 billion.

October also saw overall revenues grow 17% to P205.1 billion from P174.6 billion a year ago, with tax revenues alone rising 18% to P186.5 billion from P157.4 billion. The Bureau of Internal Revenue (BIR) raked in P142.5 billion that month, 17% more than P121.9 billion previously, while the Bureau of Customs (BoC) collected 29% more at P42.9 billion from P33.4 billion.

The national government’s performance in October took its year-to-date deficit to P234.9 billion, nine percent more than the year-ago P216-billion gap and 48.72% of the P482.1-billion budget shortfall programmed for this entire year.

Sought for comment, Angelo B. Taningco, economist at Security Bank Corp., said this year’s programmed deficit — equivalent to three percent of gross domestic product (GDP) — is now likely out of reach.

“I think the fiscal deficit size in October was relatively modest and appears to be not in line with the government’s program,” Mr. Taningco said in an e-mail.

“In fact, my full-year fiscal deficit forecast for 2017 is only 2.0% of GDP, which is below the government’s target of 3.0%,” he added.

“I think the main reason why fiscal deficit is likely to fall short of its target this year is because government’s revenue performance is relatively strong, outpacing its expenditure activity,” he noted.

“Public infrastructure spending has been doing relatively well in terms of meeting its program, but the government’s current operating expenditures — such as on personnel services — appear to be lagging behind the target.”

The government’s 10-month spending level was 10% up to P2.241 trillion from P2.037 trillion the past year. This is equivalent to 77.04% of 2017’s P2.909-trillion disbursement program.

Netting out interest payments, spending grew 11% to P1.972 trillion from P1.772 trillion.

Overall revenues as of end-October, meanwhile, increased a tenth to P2.007 trillion from P1.821 trillion in 2016’s comparable 10 months and was equivalent to 82.69% of 2017’s P2.426-trillion revenue program.

Tax revenues alone totaled some P1.826 trillion, up 12% from P1.63 trillion a year ago.

The same comparable 10 month periods saw the BIR rake in 11% more at P1.442 trillion from P1.293 trillion and the BoC collect 14% more at P366.7 billion from P321.3 billion.

Mr. Diokno told reporters that “[g]overnment spending is expected to further strengthen for the remaining two months of the year due to faster implementation of programs and projects, provision of the year-end bonus of government employees, and request for payment by contractors before the end of the year.”

Updated revenue estimate allays dilution fears for tax reform in the Senate

AMENDMENTS to the Senate’s tax reform bill — which had initially halved collections projected from the version approved by the House of Representatives last May — have raised forecast revenues that now top even the target of the Department of Finance (DoF), the head of the Senate Ways and Means committee said in a press release on Wednesday.

“We were able to meet the revenue target using the more comprehensive and accurate data that the DoF has provided the committee after the filing of the committee report [in the plenary],” the statement quoted Senate Ways and Means committee Chairman Senator Juan Edgardo “Sonny” M. Angara as saying.

Senate Bill No. 1592 — which has worried credit raters and economists due to the dilution of projected revenues that are otherwise supposed to help finance the government’s P8.44-trillion infrastructure program till 2022 — is now estimated to yield P159.5 billion in the first year of implementation, compared to just P59.9 billion when the measure secured Ways and Means committee approval in September.

The latest estimate also compares to House Bill No. 5636’s P119.4 billion when this version was approved on third and final reading last May 31, and the DoF proposal’s P149.6 billion (which itself was scaled down from P157.2 billion originally).

Mr. Angara attributed the revenue projection boost to the repeal of certain value added tax (VAT) exemptions that raised estimated additional revenues by P14 billion to P45.5 billion and to the doubling of prevailing documentary stamp tax rates to yield some P40 billion. Specifically, those whose rates doubled during the period of interpellations in plenary session included the stamp tax on bank checks (to P3 from P1.50 currently), on the original issue of shares of stock (to P2 from P1), on sale or transfer of shares of stock (to P1.50 from P0.75) and on certificates of profit or interest from property (P1 from P0.50).

FLAGSHIP
It will be recalled that his purported control of Congress notwithstanding, President Rodrigo R. Duterte had met leaders of both chambers, and separately with members of the Senate majority bloc, in mid-March to emphasize the need to approve the measure after noting “resistance” and “rough sailing” then in the House.

The first of up to five tax reform packages cuts personal income tax rates and offsets projected foregone revenues from this step by removing some VAT exemptions, increasing excise taxes on oil products and automobiles, introducing a sugar excise tax, as well as simplifying estate and donor’s tax rates, among others.

No property bubble in sight for now — UA&P

By Melissa Luz T. Lopez
Senior Reporter

THE PHILIPPINES is far from seeing a property bubble amid buoyant demand for both residential and commercial space, with the influx of more foreign investors driving demand for real estate amid limited supply.

David T. Leechiu, president and chief executive officer at Leechiu Property Consultants (LPC), said demand for real property will soar across segments over the next few years driven by increased investments to the Philippines.

“Next year, you have the removal of many industries from the negative list. Everyone including the President has been talking about liberalizing many more industries that are only for Filipinos and [in which] no foreigners are supposed to participate,” Mr. Leechiu said during the Year-end Business Economics Briefing of the University of Asia & the Pacific (UA&P) yesterday.

“This means that more companies will start buying existing companies and expanding their presence in the Philippines.”

The government is moving to allow foreign contractors to take on public construction projects under a more “aggressive” Foreign Investment Negative List that is now up for approval by President Rodrigo R. Duterte, alongside opening up retail trade further, as well as professions and public utilities to foreigners.

For business process outsourcing (BPO) alone, the property consulting firm sees a need for 450,000-650,000 square meters (sq.m.) of office space next year, against the 390,000 sq.m. available.

“As we get closer to the new year, more and more space of the PEZA (Philippine Economic Zone Authority) will be taken up… There’s a lot of office space under construction. We think there’s going to be a glut in office space for the second half of 2018 that will last all the way until 2019, and it will stabilize in 2020 because all the supply will get absorbed,” Mr. Leechiu said.

“There clearly is a gap between supply and demand,” he added, noting that slow approval of ecozone sites is constraining available space for business.

Take-up of commercial space in Metro Manila is shaping up for another record at 750,000 sq.m. this year, largely due to sustained though slower BPO growth.

The entry of more Chinese and Japanese companies — amid even warmer tries under Mr. Duterte — should boost demand further.

Mr. Leechiu said Chinese online gaming firms were first to venture into the Philippines after Mr. Duterte announced in a speech in Beijing in October last year his “separation” from the United States and his realignment with China and Russia.

Mr. Leechiu said he expects banks, energy, food and others from the mainland to follow.

The LPC executive sees the share of BPO rentals shrinking with Chinese gaming operators — who now have a third of market share — taking a bigger slice of workspace leasing.

Country risks in terms of possible policy shifts and political noise could have some foreign firms “rethinking” expansion plans here, even as Mr. Leechiu noted that such headwinds have become a “way of life” here.

The emergence of flexible, “co-working” spaces are likewise pushing rental rates up, the property expert said.

On the residential front, worsening road congestion also pushes up demand for condominiums and apartments closer to workplaces among the mass market.

Robust demand coupled with limited supply has been driving the increase in property prices, quelling fears of a bubble.

“For as long as debt levels continue to be low — and it looks like it is — then unlike the boom from 1992-1997 where most of that growth is debt-fueled, this boom involves very little debt. You’re not seeing debt artificially inflating prices yet,” Mr. Leechiu said.

UA&P economist Victor A. Abola also allayed concerns over a real estate bubble and overheating of the overall economy, with actual demand driving prices higher.

“We are deviating from the threshold and we’re actually far from that… Developers are slowing from the 2012-2013 peak,” Mr. Abola said, even as he flagged an oversupply in the luxury segment for multimillion-peso properties.

To add, he said real estate developers are still unable to meet the annual requirement of about 325,000 new residential units and a three million backlog for the low-cost segment.

The economy is likewise far from overheating, with credit growth seen manageable and upbeat industrial sector driving further expansion.

Mr. Abola sees Philippine gross domestic product expanding by 6.9% this year and by 7.1% in 2018, supported by robust domestic demand and fuelled by rising investments.

Both forecasts render the government’s growth targets doable, while keeping inflation in check in the years ahead.

S&P says ‘impressive’ Q3 PHL growth to warrant forecast hike

By Melissa Luz T. Lopez
Senior Reporter

S&P Global Ratings will likely increase its gross domestic product (GDP) growth forecast for the Philippines in the wake of the faster-than-expected expansion last quarter.

In its monthly report, the international debt watcher said the “impressive” 6.9% GDP growth clocked in the July-September period showed that the Philippine economy could expand faster than the 6.4% pace it has projected for 2017.

“The surprise in Q3 GDP puts upward pressure on our current 2017 forecast of 6.4%, even as sequential growth suggests a slight moderation on the cards for the coming quarters,” S&P said in its Asia-Pacific Economic Snapshots report for November.

A 17.2% surge in goods exports provided a big push for GDP growth during the quarter to add to the buoyant business process outsourcing sector, helping offset a slowdown in domestic consumption growth to 4.5% from 7.2% a year ago.

S&P has held on to a 6.4% growth forecast, but now sees an upside to this figure given latest developments. Economic growth averaged 6.7% in the nine months to September to log within the government’s 6.5-7.5% target, according to the Philippine Statistics Authority.

Economic managers said domestic activity will likely pick up further during the last three months of the year as more infrastructure projects are rolled out, coupled with the seasonal boost in household spending in time for the Christmas season.

In a separate report, analysts from First Metro Investment Corp. said the economy is well on track to hit their 6.5-7% forecast for the full year, supported by improving investor confidence as government spending picks up as promised.

A pickup in economic activity in the United States, Europe, Japan and China would also lift domestic conditions, FMIC said: “[W]e think exports will accelerate further in Q4, and provide the additional thrust to bring Philippine GDP growth within government targets.”

POLICY TIGHTENING BIAS
For S&P, upbeat growth prospects will likewise prompt the Bangko Sentral ng Pilipinas (BSP) to “shift to a tightening bias” in the latter part of the year.

But the BSP will not have to raise interest rates just yet given manageable inflation and uncertainty on the timing of succeeding rate hikes in the United States.

Inflation has averaged 3.2% from January-October, comfortably within the 2-4% target band.

“External factors continue to be the main source of economic risks, whether from rising protectionism overseas, geopolitical tensions or uncertainty in financial markets that could lead to capital outflows,” the debt watcher added.

BSP Governor Nestor A. Espenilla, Jr. has similarly flagged uneven monetary policy conditions in advanced economies as the biggest source of volatility for financial markets, but said that the central bank has “several anchors of stability” to weather these headwinds.

For its part, S&P said the country’s current account deficit — the first in 15 years — could trigger more episodes of sudden capital outflows amid heightened market uncertainty.

The central bank expects the full-year current account gap to settle at roughly $600 million, equivalent to 0.2% of GDP, reversing a $601-million surplus in 2016 amid increased importation of raw materials and capital goods as the Philippine government pushes its ambitious infrastructure spending plan.

The country’s balance of payments position stood at a $1.735-billion deficit as of end-October, substantially wider than the $500-million gap BSP expects for the entire 2017.

The Philippines currently holds a “BBB” rating — a notch above minimum investment grade — with a “stable” outlook from S&P.

Eagle Cement on track to hit P4.3-B profit target

EAGLE CEMENT Corp. (ECC) projects to grow its revenues by 20% for 2017, in order to hit earnings of at least P4.3 billion in the same period. 

“I think for year 2017, our revenue will grow by at least 20% up to about full year is about P15 billion. And gross profit of about more than P7 billion, and net income of maybe P4.3 [billion] to P4.5 billion,” ECC Chairman Ramon S. Ang told reporters in a briefing after the company’s annual shareholder meeting in Mandaluyong City yesterday. 

ECC has so far generated a net income of P3.29 billion for the first nine months of 2017, growing by 7% amid stiff competition and softer prices.

The listed cement manufacturer expects to sustain its growth until 2018, with the completion of its third cement line in Bulacan by 2018. This will bring its annual capacity to 7.1 million metric tons (MT), from the current level of 5.1 million MT. 

“It will continue because line 3 of (ECC) will start with production about January or February, but it’s not yet full production because usually there’s bottlenecking in the first six months,” Mr. Ang explained. 

With this, ECC targets to increase its sales by 35% in 2018, or up to 130 million bags. Mr. Ang noted this comprises a market share of around 25%.

This will allow the company to book at least P6.5 billion in earnings for next year, amid a gross profit of P10 billion, according to Mr. Ang. 

CEBU EXPANSION
Also in the pipeline for its expansion program is the construction of the company’s fourth cement line in Cebu that would expand its reach to the Visayas and Mindanao regions.

ECC has already broken ground for the P12.5-billion plant that would add another two million MT to its capacity, bringing its overall capacity to 9.1 million MT. 

“This groundbreaking brings us a step further to achieving our long term goals as a company, which is to strengthen the brand and increase market share. We hope to continue succeeding by increasing capacity to better serve our consumers nationwide,” ECC President and Chief Executive Officer John Paul L. Ang said during the shareholder meeting. 

Should other cement companies withhold their expansion plans, the completion of the Cebu plant by 2020 would make ECC the largest cement firm in terms of manufacturing capacity. 

Asked if the company has acquisition plans, the ECC chairman said: “It is very very seldom to come by an opportunity to acquire cement plant. And most of them are now controlled by the Big Three.” 

Shares in ECC lost six centavos or 0.41% to close at P14.70 each at the stock exchange on Wednesday. — Arra B. Francia

Bids for term deposits drop after RTB auction

By Melissa Luz T. Lopez,
Senior Reporter

TERM DEPOSITS offered by the Bangko Sentral ng Pilipinas (BSP) yesterday saw tepid demand, with banks left with a smaller amount of excess funds to deploy as they opted to purchase retail bonds offered by the government.

Bids for Wednesday’s auction of term deposits totalled a mere P92.776 billion, sliding from the P114.346 billion received a week ago and settling well below the P130 billion which the central bank wanted to sell, with the month-long instruments not even halfway filled.

Banks crowded the seven-day tenor as offers reached P52.415 billion, up from the P45.16 billion received last week and surpassing the P40-billion auction size. As a result, yields stood barely changed at 3.4057% from 3.4054% previously.

On the other hand, tenders for the 28-day term deposits slid to P40.361 billion against the P90-billion offering. The amount likewise dropped from last week’s P69.186 billion.

As a result, the average rate steadied at 3.4926% from 3.4933% a week ago, hovering close to the 3.5% ceiling set by the central bank.

The term deposit facility is currently the central bank’s main tool to capture excess liquidity in the financial system by allowing banks to place extra cash they hold, in exchange for a small return. Through this, the BSP expects to influence market rates to log closer to the 3% benchmark rate, coming from below the 2.5% floor of the interest rate corridor.

BSP Deputy Governor Diwa C. Guinigundo said the weak demand seen during the exercise reflected “lower excess liquidity” as banks opted to invest these funds on instruments with better yields.

“This is due to the recent issue of P130 billion in retail Treasury bonds (RTB) by Bureau of the Treasury,” Mr. Guinigundo said in a text message to reporters, which served as a fresh avenue to deploy the surplus funds apart from granting more loans, bond investments, and foreign currency purchases.

The government ramped up the RTB volume from an initial P30 billion following “tremendous” demand. The five-year papers come with a 4.625% coupon rate and may be availed of by individual investors from Nov. 20-29. 

“[T]he expected US Fed tightening in December also underlies this large undersubscription,” the central bank official added, reflecting a wait-and-see stance taken by market players.

Investors are on the lookout for a fresh rate hike from the United States Federal Reserve during their Dec. 12-13 review.

The central bank will again offer P130 billion in term deposits next week.

BSP Governor Nestor A. Espenilla, Jr. has cited monetary policy tightening in advanced economies as a key risk to financial markets, with the fresh “lift-off” expected to trigger bouts of volatility over the near term.

Despite this, the Philippine economy remains well-equipped to ride these headwinds and maintain price and financial stability.

BPI to open more new, refurbished branches

BANK of the Philippine Islands (BPI) is looking into opening new and refurbished branches as it ramps up its presence across the country.

At the opening of a new branch in Makati on Tuesday, BPI retail banking head Joseph Albert A. Gotuaco said the Ayala-led bank is looking to add nine new branches until the end of the year and 17 more in 2018, which will add to its current 841 branches.

“Yes we are [looking to open more branches.] I could see us adding another 20 to 30,” Mr. Gotuaco said.

“The central bank has given us permission to go up about almost 50 to 60 branches so we would use up all the licenses pretty soon between this year and next year.”

However, Mr. Gotuaco noted that the lender is more inclined to refurbish more branches to refresh the bank’s branding.

“What we focus on a lot that is quite different from our competition is that we are refurbishing quite a few branches… This is quite unique for us because we’re not seen as open, bright and modern. People think of us as 166-year-old [bank], but here it’s fresh and bright,” he noted.

On Tuesday, the bank started this as they opened a new flagship branch at the Insular Life building in Makati.

The 680-square meter branch situated along Ayala Avenue and Paseo de Roxas will complement other branches nearby. BPI also intends to cascade the new design to three to four branches in the Makati central business district.

The Insular Life branch features lounges for preferred customers, safety deposit boxes, as well as trusted advice corners where clients can course their queries.

“We are continually enhancing our customers’ banking experience and developing innovative products and services that cater to their needs,” BPI President Cezar P. Consing said in a statement.

“It is not only about expanding our branch footprint, but also about offering what our customers need, and being present where our customers need us to be.”

Meanwhile, Mr. Gotuaco said the third biggest bank in asset terms remains committed to shield customers against cyber attacks.

We’re very sensitive to the protection of our customers. We spend a lot on security, we monitor the incidents of security and frankly, we’re quite pleased with the relative safety that [we have],” Mr. Gotuaco noted.

He added that BPI has advanced information on how other banks are attacked by hackers, giving them a head-start in case of an attempt.

“Whether it’s on the ATM (automated teller machine) or in mobile phone or computer, we have advanced information how other banks get attacked. We don’t want to wait for criminals to come here to the Philippines to implement their ideas. We watch that before it comes,” he said. — Karl Angelo N. Vidal

Millennials are the ‘missing voice in the boardroom,’ says expert

By Krista A.M. Montealegre,
National Correspondent

THE next generation of leaders in some of the country’s biggest conglomerates are taking corporate governance seriously, as businesses take on unconventional threats in the digital age.

During the fourth Securities Exchange Commission-Philippine Stock Exchange Corporate Governance Forum in Pasay City on Wednesday, De La Salle University Prof. Benito L. Teehankee said millennials are the “missing voice in the boardroom” that will help businesses understand a generation reshaping consumer preferences and disrupting business models.

Apart from this, a millennial perspective can help companies become more transparent and accountable, adopt an inclusive business model and implement sustainable and environment-friendly practices, Mr. Teehankee said.

“The idea of governance and transparency is more innate in millennials than anyone else because of the natural access to flow of information,” said Mariana Zobel-Aboitiz, general manager of Ayala Malls The 30th and eldest daughter of Ayala Corp. Chairman and CEO Jaime Augusto Zobel de Ayala.

Being with the country’s oldest conglomerate, Ms. Zobel-Aboitiz said she is aware of how corporate governance has played a critical role in “driving consistency and continuity in what we do and our values.”

“Our President and Chief Operating Officer Fernando Zobel de Ayala said it best that earning the Filipinos’ trust has been central to the success of the company for so many years. These internal and external checks that are driven by prioritizing corporate governance has allowed us to build our relationship with the Filipino consumer,” she said.

Danel C. Aboitiz, president of Aboitiz Power Corp.’s oil business unit and son of businessman Endika Aboitiz, stressed the importance of operating with a social license and cooperating with stakeholders because of the growing interdependence between companies and societies.

Poverty alleviation and addressing inequality will be the greatest challenge of millennials, Solar Philippines President Leandro L. Leviste said, noting that the Internet has increased this generation’s awareness of pressing global issues.

Hans T. Sy, Jr., vice-president of SM Engineering, Design and Development, said millennials have adapted to two decades of technological advancements, citing how he was taught to write a letter, use a telephone, send e-mails and use instant messaging applications like Viber.

“We are fully capable of handling all these potential uncertainties and challenges because God knows we were dealt these uncertainties and challenges growing up,” Mr. Sy, grandson of tycoon Henry Sy, Sr., said.

CYBERSECURITY
Corporate boardrooms are urged to embrace a proactive role in establishing a cybersecurity policy against a backdrop of a rapidly evolving risk landscape for businesses.

Federal Bureau of Investigation Supervisory Special Agent Joshua T. Farlow estimated the global cost of cybercrime will “get remarkably worse” to anywhere between $3 trillion and $6 trillion by 2021.

“It’s not a question if your systems can be hacked or not. It’s a question of what will you do when the attack happens,” said Jonathan Gerard A. Gurango, independent director at Xurpas, Inc.

For Isabel Pastor, head of enforcement and cooperation at the International Organization of Securities Commissions (IOSCO) — the agency that develops and promotes standards for securities regulation — a weak domestic financial system is a systemic threat to both domestic and global stability.

Ms. Pastor said the Philippines is among the 28 non-signatories to the Multilateral Memorandum of Understanding Concerning Constitution and Cooperation and the Exchange of Information (MMOU), which facilitates the integration of securities markets.

The SEC is pushing for the amendment of the Securities Regulation Code (SRC) to gain access to every document or record in investigations relating to securities, among others.

“This information, we might get through the Anti-Money Laundering Council, but under IOSCO, this power should be a power possessed by the securities regulator. The layering is not acceptable to IOSCO,” SEC Commissioner Emilio B. Aquino said.

SEC Chairperson Teresita J. Herbosa said the agency has received the approval of IOSCO on the compliance of the proposed SRC amendments to MMOU requirements, and the bill has gained support from Congress.

Industry stakeholders backed the amendment of the six-decade-old Bank Secrecy Law, which negatively promotes the Philippines as a haven for money laundering and tax evasion.

“We really look for market stability and transparency, and the improvement in the Bank Secrecy Law is a step towards greater financial market stability,” First Metro Asset Management, Inc. President Augusto M. Cosio, Jr.

Peso extends climb

THE PESO continued its rally against the dollar on Wednesday amid market caution over developments in the US.

The local currency closed at P50.62 against the greenback yesterday, gaining 12 centavos from Tuesday’s P50.74-per-dollar finish.

This is the peso’s best finish in more than three months or since Aug. 9’s P50.575-per-dollar close.

The peso opened the session stronger at P50.61 and registered an intraday high of P50.575. Yesterday’s low, meanwhile, stood at P50.67 versus the greenback.

Dollars traded slid to $533 million from Tuesday’s $584.9 million.

Traders interviewed said the stronger peso is in line with the movement of Asian currencies as the fifth round of talks on the North American Free Trade Agreement (NAFTA) yielded little results.

“The market traded lower [yesterday], I think overnight there’s a news regarding NAFTA, triggering the dollar to weaken,” a trader said over the phone.

While NAFTA’s fifth set of talks saw some progress in some technical terms, the more controversial issues such as the intention of the US to terminate the trade deal easily was met with opposition from Mexico and Canada.

“The peso continued to appreciate [yesterday] amid inflation and policy uncertainties, which weighed on the US yields. There was also caution ahead of the FOMC minutes,” Guian Angelo S. Dumalagan, market economist at Land Bank of the Philippines, said in an e-mail.

“I don’t see any bad news that will make the peso weak,” another trader said. “Especially that Thursday and Friday are remittance days so we’re going to see a lot of selling.”

Traders said the peso will likely trade between P50.45 and P50.90 versus the dollar today, as Mr. Dumalagan noted that “[t]he dollar might recover due to likely hawkish FOMC minutes, which keep open the chances of another US rate hike this December.” — K.A.N. Vidal

San Miguel planning to merge packaging unit with SMFBI in the future

By Arra B. Francia, Reporter

SAN MIGUEL Corp. (SMC) is looking to consolidate its packaging business into newly formed San Miguel Food and Beverage Inc. (SMFBI) in the future.

SMC President and Chief Operating Officer Ramon S. Ang said SMFBI forms part of the first phase of the consolidation process of its investments. Aside from food and beverage, SMC also has investments in infrastructure, power, and fuel and oil sectors.

“Yung iba, in the future, may mga plano din,” Mr. Ang said, noting that its packaging business will also be merged with SMFBI in the following years.

SMC’s packaging unit San Miguel Yamamura Packaging Corp. has been ramping up expansion through the acquisition of bottling firms in Australia. Most recently, it bought Best Bottlers Pty. Ltd., a wine bottling and packaging facility in Victoria, Australia.

“Sana packaging isasama, kaya lang marami pang kailangang gawin to seek stockholder’s approval of so many small companies of packaging. Eventually we will and we can. The plan is to put it into (SMFBI) in the future,” he added.

Earlier this month, SMC said it is conducting a P336.5-billion share swap deal that would lead to the merger of its food and beverage businesses. SMC’s liquor and brewery businesses, through Ginebra San Miguel, Inc. and San Miguel Brewery, Inc., were transferred to San Miguel Pure Foods Company, Inc. Pure Foods later changed its name to SMFBI. 

Following this transaction, SMC plans to sell $3 billion worth of shares in SMFBI via a combination of private placement and follow-on offering. This comprises around 30% of shares of SMFBI’s shares, according to Mr. Ang.

“We received many offers to invest so we think we will sell the consolidated company. We’ll probably sell maybe 30% of the company, around $3 billion estimate,” he said.

The proceeds of the private placement will be used as equity for new businesses, according to Mr. Ang.

BREWERY BUSINESS
Mr. Ang said the company is scheduled to break ground for a brewery in Los Angeles, California in the next few months. The brewery, which will have a capacity of at least two million hectoliters per year, is valued at $150 million.

“Sa America, mabibili na ang lupa. Siguro in the next few months mag-ground break kami ng brewery dun na malaki (In America, we are buying the land. Maybe in the next few months, we can break ground for the big brewery),” he said.

As for its potential acquisition of a stake in Saigon Alcohol Beer and Beverages Corp., Mr. Ang said they are still assessing whether or not to go ahead with the plan, as the Vietnamese company is bidding out a stake of only 15% to 20%, as opposed to a controlling share.

“Minority shares, pero titignan pa rin natin. Baka naman mura, pero mahal ng valuation eh. (It’s for a minority share, but we will still look at it. Maybe it will be cheap, but the valuation is expensive),” he said. “I think they’re thinking of selling 15%, 20%.”

The diversified conglomerate generated a net income attributable to the parent of P20.89 billion in the first nine months of 2017, 19% lower than the P25.92 billion it booked in the same period in 2016. Revenues on the other hand increased by 19% to P596 billion during the period.

Shares in SMC added 40 centavos or 0.36% to close at P110 each at the stock exchange on Wednesday.

Sereno to House: Impeach me now

CHIEF JUSTICE Maria Lourdes P.A. Sereno in a statement on Wednesday, Nov. 22, urged the House committee on justice through her lawyers to expedite its proceedings and cause the immediate transmittal of the articles of impeachment to the Senate.

“It is our inclination to have the proceedings in the Committee expedited. If they (members) believe that the complainant has evidence then by all means prepare and file the articles of impeachment,” lawyer Alex Poblador told reporters in an interview on Wednesday, after the committee voted 30-4 to deny her motion seeking recognition of her right to counsel and cross-examination of complainant Lorenzo G. Gadon and other witnesses.

Mr. Poblador said this decision by the committee has rendered the presence of Ms. Sereno’s lawyers in the proceedings unnecessary.

“We have decided to leave because we can’t do anything,” he said.

“We look forward to have this case brought before the Senate and we are confident that we will be able to defend the Chief Justice there consistent with her constitutional rights,” he added.

Another lawyer and spokesman of Ms. Sereno also expressed her eagerness for her impeachment.

“The Chief Justice is eager to defend herself consistent with her rights and looks forward to her trial before the Senate, where she is hopeful her rights will be fully respected,” lawyer and spokesperson Josalee S. Deinla said.

Mr. Poblador, for his part, said Ms. Sereno will not resign and “fight this to the end.”

Ms. Sereno was upheld in the House vote by Representatives Jose Christopher Y. Belmonte of Quezon City, Ramon V.A. Rocamora of Siquijor, Kaka J. Bag-ao of Dinagat Island and Lawrence H. Fortun of Agusan del Norte.

The House panel also voted 30-3, denying the request of non-members of the committee to be allowed to participate in the discussions.

For his part, House Majority Leader Rodolfo C. Fariñas recalled the 2012 impeachment trial of Ms. Sereno’s predecessor, the late Renato C. Corona, saying that when Mr. Corona was impeached, he was not afforded a preliminary hearing at the House, because the complaint, signed by more than one-third of the House membership, was directly sent to the Senate for trial.

Mr. Fariñas, who served as one of the public prosecutors in the Corona impeachment, said he did not sign the complaint because “medyo masama ang pagkagawa [it was badly written].”

“In this present case, there were many who want to do it again (send the case directly to the Senate), but I dissuaded them. Let us go to investigation first. Ang nangyari, finile agad, nangangapa kami dun (What happened in the Corona case was that they filed it right away, so we ended up grappling with a weak case during trial),” he said.

“We whittled the allegations [against Corona] to two, and this is what will happen here if we are in a hurry. We want a polished articles of impeachment this time,” Mr. Fariñas said.

During the hearing, Mr. Gadon was made to present his allegations against Sereno. His complaint contained 27 alleged impeachable acts committed by the chief magistrate.

But several lawmakers grilled Mr. Gadon for not having personal knowledge on the issues he raised against the chief magistrate.

All told, Mr. Gadon himself came under fire after failing to provide a key document backing one allegation, and then citing a newspaper reporter as his “friend” and source to bolster his claim on the existence of such document — only to have the supposed source of the source, Associate Justice Teresita De Castro, denying she ever released any information or document.

Referring to Manila Times reporter Jomar Canlas, whom lawyer Lorenzo Gadon tagged as his source for validating information he received, Justice de Castro said in a statement to reporters, “I have never released to Jomar Canlas any information, report, or document regarding the work of the Court.”

Mr. Gadon had claimed that Ms. Sereno “committed a culpable violation of the Constitution when she falsified the temporary restraining order of the Supreme Court in G.R. No. 206844-45” (Coalition of Associations of Senior Citizens in the Philippines v. COMELEC). Ms. De Castro supposedly recommended the issuance of a TRO and sent a draft to Ms. Sereno’s office, but the final version that emerged from the CJ was vastly different.

Mr. Gadon said it was Mr. Canlas who gave him the “facts” about the incident, and that he also asked some employees of the Supreme Court about the internal matter.

Mr. Gadon acknowledged that the allegation was not based on personal knowledge, but rather, from a secondary source. But he said it was confirmed after he “investigated,” found “authentic records,” and learned that Ms. De Castro also confirmed the incident “to some other person.”

Asked by Mr. Fortun if he had authentic documents that could back his claim that falsification did occur, Mr. Gadon said it was not attached to his complaint, and that he did not have it in his possession.

He added, “The clerk of court failed to give it to me, saying it’s not available yet… She cannot yet find it.”

But, he said, “It can be confirmed by Justice De Castro.”

Mr. Canlas supposedly talked to Ms. De Castro, who told him that Ms. Sereno did change the TRO.

Mr. Gadon said he had another “friend” talking to Ms. De Castro in his behalf.

But the best person to shed light on the matter was Ms. De Castro herself, he said.

This was the first stumbling block to establishing the reliability of Mr. Gadon’s evidence, who had sworn that his is a verified impeachment complaint. This means he can raise authentic documents, or rely on personal knowledge, for each of his allegations against Ms. Sereno. — reports by interaksyon.com and Andrea Louise E. San Juan

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