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Thailand’s airport misery may last years as Chinese visitors overwhelm upgrades

BANGKOK — Thailand, land of golden temples, white-sand beaches, smiling hosts.

Or of overcrowded airports, epic traffic jams and littered seashores.

Facing a deluge of Chinese tourists that has strained its airports beyond capacity, the Southeast Asian nation is spending billions to upgrade its infrastructure, open up new islands and cities to travelers, and tone down its image of cheap shopping, hotels and sex that underpinned the industry for half a century.

But the change will take years and even then may fail to keep up with soaring visitor numbers that have given the Land of Smiles a reputation for delays, overcrowding and government crackdowns.

“Our strategy was more for less, not less for more, so we invited a lot of tourists from China,” said Suvit Maesincee, in an interview last month, when he was the minister attached to the Prime Minister’s office.

“I think in the near future we need to change from volume to value.”

The military-backed government relies on tourism for 18% of the economy and foreign inflows have made the baht one of the strongest performers in Asia this year, a bright spot amid weak domestic consumer demand and private investment.

While it plans to spend more than $5 billion to double capacity at its international airports, it’s planning to increase foreign tourist numbers at a similar pace, reaching 68 million in the next decade.

Weerasak Kowsurat, who returned to the post of tourism minister in November in a cabinet reshuffle by the military government, is frank about the challenge:

“Today we’re not even ready,” he said after a Dec. 1 press briefing in Bangkok.

“To get us prepared within a year is not even possible.”

At the heart of the upgrade, and the congestion, are Bangkok’s two international airports: Suvarnabhumi and Don Mueang, which are running at 40% beyond designed capacity.

New terminals, facilities and another runway would allow them to handle 130 million passengers a year, including inbound and outbound trips.

But work won’t be completed until 2022 at the earliest, and the first taste most travelers get of the Thai capital is a long queue at immigration.

“In three to five years time we might not reach our targeted tourist growth due to a lack of airport capacity,” said Thongyoo Suphavittayakorn, a spokesman for the Association of Thai Travel Agents.

“The problem with the Thai government is they want to increase the number of visitors but they don’t stop to check first if we’re able to accommodate” them.

Once out of the terminal building, visitors must contend with the Bangkok traffic, the world’s most congested after Mexico City, according to TomTom NV’s traffic index.

“We took five hours to go to the hotel just because of the traffic,” said Diogo Matos, a 28-year-old first-time visitor from Portugal.

“It was a horrible start to our trip.”

Thailand’s ability to attract tourists has defied the effects of a military coup, floods, political protests, a tsunami, airport blockades and the global financial crisis.

In the past 15 years, more visitors have arrived from Europe, North America, Japan and Southeast Asia. But it is the explosion in Chinese visitors since the 2012 Chinese road movie Lost in Thailand that has changed the industry.

The number of Chinese visitors to Thailand has tripled in the past five years, to 8.8 million in 2016. They account for more than a quarter of all foreign tourists and 28% of revenue, according to official data.

The sudden influx, boosted by packaged tours arranged in China, led to accusations of so-called zero-dollar tourism, where groups were shepherded through shopping and sightseeing itineraries that provided little benefit to the host country.

A clampdown last year on those tours — 29 operators were prosecuted — caused a temporary dip in Chinese arrivals, but the tour numbers soon rebounded, and the number of independent travelers from China, making their way around the country with the help of their smartphones and Google Translate, continues to rise.

Meanwhile, the government is making efforts to clean up the country’s image. Former Tourism Minister Kobkarn Wattanavrangkul, who was replaced in the cabinet reshuffle, began a crackdown on sex tourism last year, with police and army officials raiding bars and hostels in Pattaya’s red-light district.

On the island of Phuket, attempts have been made to clear away the beach touts and reduce littering.

In October, the government extended a ban on trips to the nearby Koh Khai islands, because of damage to the coral reef from speedboats that brought thousands of day-trippers.

Last month, 21 beaches in popular spots like Pattaya and Krabi instituted a smoking ban.

“They want to shift the emphasis away from quantity and towards the quality of tourists coming,” said Patrick Cooke, an editor in Manila for Oxford Business Group Ltd.

“To do that, obviously more investment is required in the luxury segment and the wellness segment.”

One plan includes a Japanese-backed $15-billion double-rail link from the capital to Chiang Mai in the north that would open up cities and towns along its route. Another is to build a new regional airport in the south at Betong, an area prone to unrest from Muslim separatists. Phuket opened a new international terminal last year, looking to become a gateway for surrounding regions like Phang Nga and Krabi.

In addition, the government is revamping the old U-Tapao navy airbase near Pattaya, from which US B-52s flew to bomb Vietnam in the 1960s. A Chinese-funded high-speed rail link would connect the beach resort with Bangkok’s airports, 150 kilometers to the north.

“What they’re doing is adding more spots to see, while not taking care to preserve the old spots that are becoming worn out,” said Puttachard Lunkam, a tourism analyst at Krungsri Research in Bangkok.

“You see islands being closed or national reservations being barred to tourists as a way to fix things when it’s gone too far, but not enough is being done to maintain the sites before it gets to that point.”

There are some signs that the more-from-less strategy may be having an effect. Revenue from tourism in the first 10 months of this year increased by about 9.0%, outpacing a 6.4% growth in visitor numbers, according to data from the Thailand Department of Tourism.

But extracting more profit from visitors won’t be easy. Thailand is already one of the world’s top destinations for medical tourism, and high-end resorts have nestled in its secluded bays and picturesque forests for decades. Ultra-luxury chain Aman Resorts International began life in Phuket in 1988 and Four Seasons Holdings, Inc. opened its first-ever boutique resort in Chiang Rai in 2005.

And other countries in the region are also trying to emulate Thailand’s success in turning Chinese leisure into loot.

Indonesian President Joko Widodo plans to create “10 new Balis,” to try to replicate the success of the Island of the Gods, which hosts more than 40% of the 11.6 million visitors to the country.

Malaysia is investing billions in opening up its eastern coast, including building a railway to the capital.

With competition for the tourist yuan heating up, Thailand’s influx of Chinese visitors, and the congestion at its airports and resorts, are likely to remain for years. — Bloomberg

Could the ‘curve’ be warning of a US recession?

NEW YORK — The US economy may be basking in the warm glow of solid growth, but economists are nervously eyeing a trend in the bond market that could spell stormy weather ahead.

Even though President Donald Trump is touting unemployment at its lowest level in 17 years and Wall Street soaring to new heights, economists are worried about one indicator that is often a harbinger of recession: the yield curve.

“Since 1950, each recession has been preceded by a reversal of the yield curve,” said Christopher Low, chief economist of FTN Financial.

This closely scrutinized graph maps the difference in yield, or return on investment, of short- and long-term US Treasury debt, usually comparing two-year notes to 10-year bonds.

Normally, the shorter the investment, the lower the yield, and conversely, the longer the investment, the higher the return, to offset the greater risks of losing access to funds for an extended period.

But for the past year, the yield curve has been flattening as the return on short-term debt has been getting close to long-term yields, possible signaling eroding confidence in the economy’s performance in the coming years.

The spread between the yield on two- and 10-year Treasury paper fell from 135 in December 2016 to 51 basis points on Dec. 15, the lowest since October 2007 — just before the start of the global financial crisis.

Worse still would be if the yield curve inverts, as short-term returns outpace the longer-dated debt — meaning the spread is negative — and if officials ignore the warning.

The yield curve inversion “could be heralding a contraction of the economy,” says Gary Duncan, chief economist at Oxford Economics.

As Gregori Volokhine, of Meeschaert Financial Services, explained: “An inversion of the curve indicates that investors do not have confidence in the future.”

The main factor behind the flattening of the yield curve is the US central bank’s moves to raise the benchmark interest rate five times since the end of 2015, including three increases this year and three more expected in 2018.

The long-term yields fluctuate more in line with growth and inflation expectations. And while growth prospects have been revised upwards for next year — in part due to the impact of the massive corporate tax cuts just approved by Congress — the Federal Reserve’s inflation target will not be reached until 2019, according to its latest forecasts. The Fed’s preferred inflation measure was just 1.6% year on year in October.

Two voting members of the Fed’s policy committee — including Minneapolis Fed President Neel Kashkari — dissented from the Dec. 13 decision to raise rates, preferring to wait for inflation to rise further. Mr. Kashkari also mentioned his concerns about the yield curve and the signal it is sending to policy makers. “While the yield curve has not yet inverted, the bond market is telling us that the odds of a recession are increasing,” he said in a statement explaining his opposition to raising rates again.

Oxford Economics’ Mr. Duncan cautioned that “if the Fed tightens its policy too quickly, the markets anticipate a slowdown in the economy in the longer term” as credit becomes more expensive.

Fed Chair Janet Yellen downplayed those fears. “There are good reasons to think that the relationship between the slope of the yield curve and the business cycle may have changed,” Ms. Yellen said in her press conference last week.

FTN’s Mr. Low said Ms. Yellen could be making the same mistake as her predecessors Alan Greenspan in 1998 and Ben Bernanke in 2006, who each saw recessions after the yield curve inverted.

“Janet Yellen is making the same speech,” Mr. Low said. “This is worrying.”

Like most analysts, Mr. Low does not anticipate an inversion before 2019, or a recession until “early 2020.”

Historically the economy has seen four to six quarters between a curve inversion and the start a recession.

Of course, not every flat curve brings on an economic downturn, and some economists agree with Ms. Yellen that it may be too early to panic.

Noted economist Mohamed El-Erian, chief economic adviser at Allianz SE, parent company of PIMCO, notes several reasons the yield curve could steepen, including many indicators signaling the economy still has room to expand and inflation to pick up.

If it doesn’t, the Fed could reverse course quickly, he wrote in a blog post.

In addition, “the synchronized pick-up in growth in the rest of the world is supportive of the US expansion.” — AFP

Six Asian banks in talks with BSP for establishment of local offices

By Melissa Luz T. Lopez,
Senior Reporter

SIX ASIAN BANKS are in talks with the Bangko Sentral ng Pilipinas (BSP) to venture into the local market, a senior official said, signalling mounting interest towards the Philippines as it continues to enjoy robust growth.

BSP Deputy Governor Chuchi G. Fonacier said several Asian lenders have “signified interest” to establish their presence in Manila, as these banks pursue expansions within Southeast Asia.

Although she refused to name the lenders, Ms. Fonacier noted two of the live inquiries came from Taiwanese banks, two from China, one from Indonesia, and one from South Korea.

Seoul-based media reported back in July that KB Kookmin Bank is currently looking to set up a branch in Manila after plans to acquire a 20% stake in Philippine lender East West Banking Corp. did not materialize.

Ms. Fonacier earlier pointed out “aggressive” expansions among Taiwanese and South Korean banks as they catch up with their corporate customers who are also setting up businesses in this country.

She clarified that these lenders have yet to file formal application documents with the regulator.

Eleven foreign lenders have entered the Philippines since the signing of Republic Act 10641 in 2014, which lifted the previous limit that allowed only 10 global banks to operate in the country at a given time.

Prior to this, a new foreign bank can set up a branch here only if one of the previously accredited foreign lenders bails.

Of the new players, five banks originate from Taiwan: Cathay United Bank, Yuanta Commercial Bank Co. Ltd., First Commercial Bank, Hua Nan Commercial Bank Ltd., and the Chang Hwa Commercial Bank, Ltd.

Three are from South Korea: Industrial Bank of Korea, Shinhan Bank, and Woori Bank. Others are the Japan-based Sumitomo Mitsui Banking Corp. and the Singapore-based United Overseas Bank Ltd.

Approved in November, Malaysia’s CIMB Bank is the newest to win the nod of the Monetary Board for a full branch here. This completes plans of its parent firm CIMB Group Holdings Berhad to expand their footprint in every country within the Association of Southeast Asian Nations.

BSP’s Ms. Fonacier said foreign lenders are seeing the robust growth of the Philippine economy as an opportunity to score additional yields, especially with both consumer and corporate lending posting double-digit expansions.

“[F]oreign banks are aggressively entering the Philippine market given the economic conditions of the Philippines,” Ms. Fonacier said in a recent interview with BusinessWorld. “I think the expectation is more foreign banks coming in than domestic banks expanding abroad.”

A strong middle-class market as well as a young population also makes the Philippines more attractive for foreign players looking for new clients.

The Philippine economy grew by 6.9% during the third quarter, bringing the nine-month pace at 6.7% versus the 6.5-7.5% growth goal for 2017. By next year, the government is targeting an expansion of between 7-8%.

Food and entertainment corner bigger space in shopping malls

By Arra B. Francia, Reporter

SHOPPING MALL operators are drawing more food and entertainment tenants into their establishments as customers want more diverse offerings from brick-and-mortar stores than what is available online.

Ayala Land, Inc. (ALI), which leases out about two million square meters across its shopping malls, has seen food and entertainment tenants expanding and taking up as much as 45% of space in each mall.

“You’ll see a larger share of food and entertainment component. Our malls have now become more substantial … 20% to 30%, ngayon lumalaki na [now they have expanded] to 45%. And sometimes we even have places geared just for food and entertainment,” Maria Rowena M. Tomeldan, group head at Ayala Malls, said in an interview.

Although majority of mall space is still allotted for department stores, the mix of food and entertainment tenants allows shoppers to have a “full experience” whenever they visit the establishment, the ALI executive noted.

“We are the go-to of the community, especially now that you just want to be in one place, you want to have everything in one place. You don’t want to add to the stress of the customer, in fact you want to have that sense of community for your malls, the accessibility,” Ms. Tomeldan said.

The increase of food and entertainment tenants is also true for Megaworld Corp., which operates what it calls “lifestyle malls” within its township projects.

“Food and beverage [before was at] 20%. [Now it is], 40%,” said Megaworld Senior Vice-President Jericho P. Go in a separate interview.

The rise is because Megaworld has a captive market, he said, adding that the “beauty” of this is that food is a high-market business.

Mr. Go added that these types of tenants are not susceptible to the impact of online shopping.

The change in tenant mix comes amid the so-called “retail apocalypse” currently seen in the United States and United Kingdom, where companies are shutting down brick-and-mortar stores as more people shift to online shopping.

Property firm Leechiu Property Consultants, Inc. in a report explained that this will not be the case in the Philippines since Filipinos go to malls as part of their lifestyle. Malls are more than just places where they buy goods.

Ms. Tomeldan said that with the mall closures overseas, operators would just have to be more competitive.

“I’d like to think that seamless shopping should really be provided [because] if they want the convenience, then you give them online shopping,” she said.

Megaworld’s Mr. Go meanwhile said that accepting food tenants depends on the needs of the market to ensure their longevity.

“We are very selective in our process. Napakaimportante ng branding na lifestyle [Lifestyle branding is very important]” he said, adding that certain branding would work in Eastwood but not in McKinley, and vice versa.

“So because of our large table of food and beverage tenants … we have learned through the years which kind will work in a particular lifestyle mall, and which one will not,” he said.

Number of start-ups expected to pick up next year

By Anna Gabriela A. Mogato

A LOCAL public-private start-up incubator expects a rise in the number of technology-based business models in the Philippines next year as digitally innovative businesses continue to increase overseas.

“Start-ups are becoming more and more important in terms of the Philippines’ economy. We’ve had our first unicorn this year, which is a billion-dollar Philippine company [that] has been initially crafted,” said Rene S. Meily, president of QBO Philippines Innovation Hub, in an interview.

“We hope that it’s a beginning of a trend and we’re looking forward to more successes in 2018 — both successful exits in terms of initial public offerings or sales by these start-ups, but we’ve had a great year this year.”

Mr. Meily said he was confident that start-ups would pick up pace locally despite the large number that failed even before launching.

He said it would be hard to pinpoint an accurate target for next year given the nature of the start-ups.

QBO Philippines is a year-old joint project of the Department of Trade and Industry (DTI), Department of Science and Technology (DoST), First Pacific Co., Ltd.’s own incubator and accelerator program for start-ups IdeaSpace Foundation, Inc. and JPMorgan Chase &Co.

Since April, QBO has conducted more than 100 programs, one competition and gained at least 1,700 members. In October, it launched the 2017 Philippine Start-up Report with PWC Philippines to better gauge the environment and standing of start-ups in the country.

For 2018, Mr. Meily’s group is planning to start QBOs in other areas and will be launching an online platform and expand from the coworking space in one of the DTI offices in Makati City in an attempt to increase the number of start-ups. The DoST is targeting to have 1,000 start-ups in the Philippines by 2020.

Diane D. Eustaquio, IdeaSpace Foundation, Inc. executive director, said the country as of 2017 has only 547 start-ups, most of which are in highly urbanized cities such as Metro Manila, Cebu and Davao.

“[Of the total], 84 are ‘dead’ [or not operating]. Among those who are alive, 127 said ‘I don’t know [if the start-up is still alive or not].’ So apart from the dead, we have zombies. Apart from the dead, those moving forward or gaining traction [are] not very many,” she said.

Despite the small numbers, Ms. Eustaquio said that there was no choice but to continue supporting the shift to more digitally inclined business models to achieve sustainability among entrepreneurs given the rising costs of labor, utilities and real estate.

“I think technology-based inclusive businesses are the key. You cannot stop it anymore. The era of big business is dying. The era of big platforms is coming in and that’s why the Googles of this world, the Facebooks of this world, are coming up as the new giants,” she added.

“But the beauty of Facebook and Google is that it’s not a monopoly. It’s creating a platform. A mega-platform for all these small companies to latch on to, clustering them if it’s EdTech (education technology), clustering them if it’s logistics, clustering them if it’s FinTech.”

Ms. Eustaquio said that with their technological and digital dependence, start-ups are helping link smaller companies to larger enterprises through the use of technology, which the DTI is also working on to strengthen the supply chain among micro, small and medium enterprises.

“Large companies still want to [reach more customers but] companies usually reach a certain band of customers and then the net customer segment is too small or too retail for them,” she said.

“So, start-ups are in that band of bridging every retail to the more, the bigger cluster so they are able to curate and cluster in order to connect to the larger companies.”

Yields on government debt up on client-driven trades

By Jochebed B. Gonzales,
Researcher

YIELDS on government debt inched higher last week amid thin trading, stirred mostly by trades for shorter-dated papers.

Prices dipped slightly as bond yields climbed by an average of 4.95 basis points (bps) week on week, data from the Philippine Dealing and Exchange Corp. as of Dec. 22 showed.

“Trades [last Friday] were very limited. A number came from client-driven transactions for securities with tenors of five years or less,” said Helen G. Oleta, head of Trust Trading at Rizal Commercial Banking Corp. (RCBC).

“I think everyone’s already on vacation mode as we saw markets were very quiet, across equities and fixed income,” she added.

A bond trader said: “Trading volume slowed during the week with traders focusing on the short-end of the curve but most deals were for clients.”

For Security Bank Corp. Head of Institutional Sales Carlyn Therese X. Dulay, “Yields traded slightly higher [last] week both on US data and US Tax reform expectations, and despite the rejection of the four-year [fixed-rate Treasury notes] auction last Tuesday.“

The Bureau of the Treasury rejected all bids for its P20-billion offer of reissued five-year bonds as it saw weak demand from investors seeking yields higher than the bond’s 4% coupon rate.

National Treasurer Rosalia V. de Leon attributed the rejection to “tight liquidity” after the government’s successful retail bond offering last month, which raised P255.4 billion.

Offshore, expectations of a strengthening US economy were further supported due to strong data releases on Friday. New orders for manufactured durable goods went up by 1.3% month on month to $241.4 billion in November, while personal spending rose 0.6% to $87.1 billion.

Also last week, US President Donald J. Trump signed into law the tax reform bill that reduces income taxes for individuals and corporates, to which Mr. Trump said was “very much a bill for the middle class and a bill for jobs.”

Amid these developments, the yield on the 10-year US benchmark bond reached a nine-month high of 2.504% on Thursday and closed on Friday with 2.4810%.

At the local fixed-income exchange on Friday, the yield on the three-year Treasury bond (T-bond) gained the most, up by 19.36 bps to 4.4436%.

It was followed by the seven- and 10-year T-bonds whose rates respectively rose 14.03 bps and 14.19 bps, finishing at 5.4385% and 5.8269%. The yield on the four-year bond also climbed 12.40 bps to 4.9519%, while that of the five-year Treasury increased by 7.16 bps to 4.7559%.

Meanwhile, Treasury bills saw fewer gains in yields with the 91-, 182- and 365-day papers rising just 5.57 bps, 6.14 bps and 5.88 bps, respectively, to end with 3.1750%, 3.3135% and 3.0782%.

Declines were observed in rates of the two- and 20-year T-bonds which respectively shed 9.02 bps and 26.18 bps to 3.9617% and 5.7339%.

Sought for her outlook, RCBC’s Ms. Oleta said: “We expect very quiet trading for government securities. For now, the focus of the market is to fund the short-term liquidity crunch we’re seeing.”

For Security Bank’s Ms. Dulay, “Expect yields to hold at current levels as trading winds down over the holidays.”

Peso may climb on remittances

THE PESO is expected to strengthen this week as remittances continue to pour in amid uncertainty on the US tax reform law.

The local currency continued to climb versus the dollar to close Friday’s session at P50.14. This is ten centavos higher than the P50.24-per-dollar finish on Thursday. Week on week, the peso also strengthened versus its P50.445 close last Dec. 15.

Financial markets were closed yesterday and will remain shut today for the holidays.

An economist said the peso may continue to ascend in the last trading days of the year amid seasonal remittance inflows from overseas workers.

“The peso is expected to still be stronger as the holiday remittances continue to probably pour in,” Ruben Carlo O. Asuncion, chief economist of UnionBank of the Philippines, said in a text message.

“However, uncertainty remains in the markets with regards to the possible impact of the recently passed US tax reform bill to the overall US economy,” a trader said in an e-mail.

US President Donald J. Trump signed Republicans’ massive $1.5-trillion tax overhaul into law on Friday, cementing the biggest legislative victory of his first year in office, and also approved a short-term spending bill that averts a possible government shutdown.

The tax package, the largest such overhaul since the 1980s, slashes the corporate rate from 35% to 21% and temporarily reduces the tax burden for most individuals as well.

The spending bill extends federal funding through Jan. 19, largely at current levels. It does nothing to resolve broader disputes over immigration, health care and military spending.

Meanwhile, another trader said demand for the dollar may slightly temper the expected rally of the peso.

“[T]here is a demand for dollar. We’ve been getting some demands from the oil companies so it’s a bit volatile, but the direction is still for a stronger peso towards the yearend,” the trader said.

For this week, the traders are expecting the peso to move between P50 and P50.30. — KANV

More township development for Megaworld next year

MEGAWORLD Corp. is set to focus on the construction of townships in 2018 as it now has a total of 23 integrated estates launched from previous years.

Jericho P. Go, Megaworld senior vice-president, said the property company should be working on the build-up of these projects to ensure that it holds true to its concept.

“What is important to emphasize here is, more than the launching of townships, now is the time for execution … 23 is a very solid number in terms of townships, but what is important is to fill those townships with our live-work-play-learn concept. So that’s the next step,” he said.

Megaworld’s latest township is The Hamptons Caliraya, an P8-billion lakeside tourism estate in Laguna to be developed by its 82% owned subsidiary, Global-Estate Resorts, Inc. Launched earlier in December, the company has committed to develop the 300-hectare property in Lumban-Cavinti, Laguna over the next 10 years.

Among the company’s big-ticket projects also launched in 2017 is Capital Town, a 35.6-hectare township in San Fernando, Pampanga where Megaworld will be pouring in P30 billion worth of investments in the next 10 years.

Other townships undergoing development include the 640-hectare Eastland Heights in Antipolo, Rizal; Westside City, spanning 31 hectares within the gaming hub Entertainment City in Parañaque; and the Alabang West in Las Piñas City with a total of 62 hectares.

BULLISH FOR ONLINE GAMING
Mr. Go noted that Megaworld remains positive on the prospects of online gaming based on the growth it had exhibited over the last six months.

To date, online gaming — or Philippine offshore gaming companies (POGOs) — has taken up over 10% of Megaworld’s office inventory, or more than 100,000 square meters.

“Online gaming continues to grow. We’ve seen that the demand … is very healthy for the online gaming market. And they (POGOs) also help in driving the demand for residential ready-for-occupancy spaces. They show no signs of slowing down, but very strategic, mostly in township communities. You should have them best in a location where they (residents) can just walk to work,” Mr. Go explained.

Alongside the continuous growth of POGOs, Mr. Go said Megaworld is expecting the resurgence of the business process outsourcing (BPO) market.

While BPOs are still the largest lessor of office space in the country, the industry encountered a slowdown in 2017 due to delays in approval of Philippine Economic Zone Authority (PEZA)-accredited buildings.

International BPO firms rely on PEZA accreditation to secure incentives for operating in the Philippines.

Mr. Go said these delays caused a pent-up demand from BPO firms, which should push their growth next year as more PEZA licenses are approved.

He said a game changer was the recent issuance of PEZA certifications. He said about 50 licenses had been put on hold, but about eight came out in the past two months.

As of September, Megaworld booked an 11% increase in net income attributable to the parent to P9.98 billion from revenues that rose 5% to P35.43 billion because of the increased take-up in both office and residential spaces. — Arra B. Francia

Mine closure review set for Jan. after funding delays

THE REVIEW of mine closure orders is now expected to start by mid-January, nearly a year after the Environment department issued the orders, the Finance department said.

Finance Undersecretary Bayani H. Agabin said that the review process was delayed by the need to secure funding.

“As usual the deadline was moved, as what had happened several times already. Again we had to deal with bureaucracy. But we can probably say we are closer now than where we were before,” Mr. Agabin told reporters in a chance interview after the Mining Industry Coordinating Council (MICC) meeting last week.

“We are looking at maybe the second week of January,” added Mr. Agabin.

The review was initially set for March, and then deferred to September.

He said that the pool of experts who will participate in the review are now identified, with their contracts ready for signing.

“It’s a question of funds; the terms of reference are ready,” he added.

The MICC has no funding in the General Appropriations Act.

Executive Order No. 79, which creates the MICC, only allows government agencies involved to source funds from their own budgets. The council is co-chaired by the Department of Finance (DoF) and the Department of Environment and Natural Resources (DENR).

“They were scrounging around and there were only two volunteers — DoF and DENR, and so we have to scrounge for funds. And in government, these things take time, looking for funds and putting it there,” Mr. Agabin said.

He said that the DENR is bringing in P10 million, and the DoF P15 million, which would be “enough” to finance the review.

Former Environment Secretary Regina Paz L. Lopez on Feb. 1 ordered the closure of 26 of the country’s 41 mines due to violations such as being located in watersheds and polluting surrounding bodies of water.

President Rodrigo R. Duterte has backed Ms. Lopez’s order, saying that the Philippines can survive without a mining industry.

The MICC, through five independent teams of experts, will investigate the legality of the closures, and issue recommendations taking into account the economic, technical, and social implications of the order.

MICC earlier said that it would tap the Development Academy of the Philippines (DAP) to implement and manage the “fact-finding and science-based” review process on these mining operations.

The council has said that the review will group mines by location and type of ore. The first team will investigate gold, copper and nickel mines in the Cordillera Administrative Region, Cagayan Valley, and Mindoro, Marinduque, Romblon and Palawan; with the second team to investigate iron and nickel mines in Central Luzon; the third team will look into chromite, nickel and iron mines in the Eastern Visayas and Caraga; the fourth and fifth teams on the other hand will handle nickel and chromite mines in the Caraga region. — Elijah Joseph C. Tubayan

NLEX stays unscathed

THE NLEX Road Warriors’ winning start in the season-opening PBA Philippine Cup continued yesterday as they notched their second win in as many games by beating the GlobalPort Batang Pier, 115-104, in the opener of the Christmas Day offering of the local pro league at the Philippine Arena in Bocaue, Bulacan.

Banking anew on balanced scoring, the Road Warriors proved up to everything that the Batang Pier gave to stave off the latter to book their second straight win early in the season-opening tournament of the Philippine Basketball Association (PBA).

The two teams fought it nip and tuck to start the contest, exchanging runs and counter-runs en route to finishing the opening quarter knotted at 25-all.

NLEX started the second half waxing hot, outscoring GlobalPort, 16-6, in the first five minutes to build a 10-point cushion, 41-31.

But the Batang Pier would fight back, going on a 14-4 run to level the count at 45-all with 1:26 remaining in the first half.

The Road Warriors though eventually seized a 50-45 advantage as the match hit the halfway juncture.

GlobalPort opened the third frame with five quick points inside the first minute to tie the score at 50-all.

NLEX, however, would respond with a 19-7 blast in the next four minutes to reestablish control anew, 69-57.

Much like in the second period, GlobalPort moved to gain some traction again, cutting down its deficit to as much five points, 76-71, at the 3:47 mark of the quarter before NLEX regained its bearing to race to an 84-76 lead heading into the final 12 minutes of the match.

Recognizing that they needed to up their competitiveness to get the better of their foes, the Batang Pier tried to make their move as the payoff quarter began.

Guard Stanley Pringle took the cudgels for GlobalPort but collectively the Road Warriors stood their ground and countered.

GlobalPort came to within four points, 99-95, with 4:22 remaining but the duo of veteran Larry Fonacier and rookie Kiefer Ravena would conspire to help NLEX get more breathing space, 104-96, at the 3:10 mark.

It was a leverage the Road Warriors would take full advantage of as they put the finishing touches after to close out the win.

Mr. Ravena once again led NLEX in scoring with 20 points to go along with five assists while JR Quiñahan added 19 points and nine rebounds.

Mr. Fonacier finished with 12 points and Juami Tiongson 10.

Kevin Alas, Michael Miranda, Cyrus Baguio and Fonso Gotladera, meanwhile, each chipped in eight points or more to underscore further the balance that NLEX (2-0) showed in the win.

GlobalPort (0-1), for its part, was led by Mr. Pringle, who stuffed the stat sheet with 33 points, 10 rebounds, four assists and two steals.

Sean Anthony added 19 points for the Batang Pier, who played sans leading scorer and currently injured Terrence Romeo.

“It was team effort for us once again and it resulted well,” said Mr. Quiñahan, named player of the game, in the postgame interview even as he said that they hope to sustain their current fine form. — Michael Angelo S. Murillo

Paolo Duterte resigns as Davao City vice-mayor

By Arjay L. Balinbin

PRESIDENTIAL SON Paolo “Pulong” Z. Duterte resigned on Monday, Dec. 25, as vice-mayor of Davao City.

In his prepared speech before a special session by Davao’s City Council on Christmas Day, as later distributed to the media, Mr. Duterte said he was tendering his resignation “effective Dec. 25,” citing the controversy over the P6.4-billion worth of shabu smuggled from China to which, as he noted, he is being linked.

He also cited marital troubles and his recent “squabble” on social media with daughter Isabelle.

“There are recent unfortunate events in my life that are closely tied to my failed first marriage. These, among others, include the maligning of my reputation in the recent namedropping incident in the Bureau of Customs smuggling case and the very public squabble with my daughter,” Mr. Duterte said, adding, “the other person in this failed relationship is incorrigible and cannot be controlled. And I take responsibility for all that has happened as a result of a wrong decision to marry at a very young age.”

“When I was growing up, my parents never failed to remind me of the value of the time-honored principle of delicadeza, and this is one of those instances in my life that I need to protect my honor and that of my children,” Mr. Duterte also said.

Last November, the Office of the Ombudsman said it has formed a panel that would investigate the alleged P6.4-billion shabu shipment.

Opposition Senator Antonio F. Trillanes IV had earlier linked the younger Mr. Duterte and his brother-in-law, Manases “Mans” R. Carpio — husband of Davao City Mayor Sara Duterte-Carpio — to the so-called Davao Group, allegedly behind the smuggling of illegal drugs. Both Messrs. Duterte and Carpio denied the allegations against them in their appearance before a Senate inquiry last September.

“I am grateful to all Dabawenyos for your support to my office and I look forward to the day that I will be able to serve our country again,” Mr. Duterte also said in his remarks before the city council.

In her interview with DXRA “Radyo ni Juan”-Davao, Ms. Carpio said she and President Rodrigo R. Duterte knew her brother’s intention to resign.

Sought for comment on her brother’s sudden resignation, Davao City Mayor Sara Duterte said in a chance interview with DXRA “Radyo ni Juan”-Davao: “Alam ko na na magresign siya (I was aware he would resign).”

“Whatever makes him happy sa iyahang personal na kabuhi (in his personal life), duna man sya’y statement and klaro man sa iyahang statement ang iyahang rason (he has a statement, and his reasons are clear). Nakasabot ko (I understand) where he’s coming from.”

Trade dep’t confident EU willing to continue engagement, GSP+

THE Department of Trade and Industry (DTI) remains confident that exports will grow steadily with the continuation of the European Union’s (EU) Generalized Scheme of Preferences plus (GSP+) scheme, with the target for 2018 export growth estimated to hit double digits.

Trade Secretary Ramon M. Lopez said last week that he held informal talks with EU trade commissioner Anna Cecilia Malmstrom during the World Trade Organization’s 11th Ministerial Conference in Buenos Aires, Argentina early this month.

“The last time we talked it was about continuing the engagement,” Mr. Lopez said, and while he added that no firm commitments have been issued other parts of the EU have concerns about continuing the trade arrangements,” he added.

Mr. Lopez said that there is a good chance that the preferential tariff system will continue once the EU completes a review in January of the Philippines’ eligibility.

“It’s not [much of] an issue but it’s part of their monitoring, in reviewing labor compliance and many other aspects; I think the overall message is optimistic. I think they’d like to engage us,” Mr. Lopez added.

GSP+, which the Philippines was admitted to in December 2014, grants more than 6,000 export goods — mainly food products and textiles — zero-tariff treatment.

The Philippines is the only Southeast Asian country to belong to the scheme, which is intended to help developing countries improve their trade.

The Philippine Statistics Authority said growth in total exports slowed to 6.6% year on year in October to $5.37 billion. Total imports, on the other hand, rose 13.1% to $8.21 billion, raising the trade deficit to $2.84 billion.

“[Next year, we plan to] just maintain [export growth]. Remember that last year exports did not rise. It was challenging. We could go for 12% to 15%, so let’s target that. We haven’t talked about it yet but you know, the long-term and mid-term target is double digits,” he added.

Mr. Lopez also said that the EU was eager to provide aid to the Philippines despite President Rodrigo R. Duterte’s preference to not accept financial support from the West. — Anna Gabriela A. Mogato

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