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New flavors and food trends for 2018

By Romsanne R. Ortiguero

The emergence of different food concepts every now and then as well as the Philippines’ hosting of international food events such as the World Street Food Congress and the prestigious Madrid Fusion Manila are a testament of how Filipinos are always on the lookout for new flavors and novel gustatory experience.

Players in the food and beverage (F&B) industry take up the challenge to feed the insatiable appetite of Filipinos for fresh offerings through keeping up with trends, which change constantly and quickly.

Adolf Aran, Jr., president and chief executive officer of Courage Asia, a management consulting firm focusing on food service; and Liza Hernandez-Morales, director for business development and public relations of the Center for Culinary Arts, Manila, shared their thoughts on the food trends for 2018 in an interview with BusinessWorld.

Mr. Aran and Ms. Morales said that there is a growing interest for heritage cuisine or traditional dishes like the pyanggang of the Tausugs, the kinalas from Bicol, pancit batil patong of the Ibanags. Along with this, according to Mr. Aran, is an ongoing rediscovery of local ingredients such as adlai (a type of grain often used as a substitute for rice) and batwan (local souring agent).

“We have this generation of really innovative chefs like JP Anglo and Jordy Navarra, among others. They do respect Filipino heritage cuisine but they innovate, they play with it; make it relevant, contemporary, and exciting without losing sight of the soul of the food,” she said.

As Filipinos continue to explore the world, there is also a demand for new flavors apart from cuisines such as Japanese and Italian that are already familiar to the local palate.

“I see Peruvian and even some African flavors that are coming out now. Traveling and appreciation for different cuisines go hand in hand. We continue to be more sophisticated as a people in terms of taste, flavor, and interest,” Ms. Morales shared.

Ms. Morales also noted that Filipinos are getting busier, thus, are eating out more often than before. Add the worsening traffic, the demand for on-the-go food or food delivery will further increase. While Filipinos will opt for quicker food options, they will also look for healthier options. Echoing the latter point, Mr. Aran said that healthier substitutes such as cauliflower rice will be a trend this year.

On the other hand, restaurants with unlimited rice and eat-all-you-can concepts will continue to cater to a market who wants the “busog” ( feeling full) factor. However, as Mr. Aran continued, there will also be a market segment willing to go beyond buffets and will look for more value in terms of add-ons instead of discounts, who will look for completeness of meals (with portions of carbohydrates, proteins, beverage, and desserts) and real alternatives to bigger portion sizes.

Proudly home-grown concepts will also continue to be visible this year, according to Mr. Aran. “Because of food parks and a deluge of culinary arts graduates, we continue to see an influx of new concepts. The availability of locations from all over such as malls, high-traffic communities, and office buildings give rise to both new players and old players testing new concepts.”

Along with these, foreign players will actively be in the scene as well. Mr. Aran shared, “In the Japanese segment alone, there are more than 10 new concepts that opened in 2017, such as Kazunori, Hibana, Kyo-to, Ikomai, and Tsujiri. Popeye’s and Shake Shack from the U.S. found some local partners who will help them expand in the Philippine shores.”

Inspired by the continuing acquisitions being done by Jollibee and the Max’s Group, mergers and acquisitions as a strategy will continue to be a viable way to expand one’s food business, noted Mr. Aran.

Meanwhile, as a tip to those in the fast-paced Food and Beverage industry, Ms. Morales and Mr. Aran underscored that it is important to know your market well.

“Nowadays, good food, great service, and great ambience are already a given. Therefore, gone are the days when ‘It’s the sauce handed down from one generation to another’ that will make or break a food business. One needs to tap into a specific market segment. One needs to have a deeper understanding of the target market that it serves and immediately act on them. Demise and casualties happen because of the speed of its decisions, more often than not,” Mr. Aran said.

Treating your employees right can mean a lot on the food business, too. Mr. Aran pointed out that food entrepreneurs have to realize that the food business is still a “people business,” and establishing a basic code of conduct, healthy working environment, and a positive culture will allow employees to serve their guests better.

Lastly, Mr. Aran said a good food concept should be a breathing dynamic concept. “Once you have a good concept, continue to tweak it until it becomes your own concept, transformed after a period of character building and many months or even years of menu innovation, marketing strategy, and people empowerment.”

Travel agencies’ digital dilemma

IN an age when practically anyone with a smartphone, a stable Internet connection and a credit card can book a flight and hotel room on his own and personalize his itinerary, it seems that travel agencies are no longer useful. Indeed, stories revolving around their decline abound, and it’s not unusual to encounter headlines containing the words “death” and “dying.” But are they really on the verge of permanent obsolescence?

In western countries like the U.S., where technological advancements are embraced much more rapidly than in less developed nations, travel agencies are actually thriving. According to the online research company Statista, the American travel agency industry is predicted to generate $17.3 billion in revenue in 2020, up from $15.5 billion in 2015. And its profit-to-revenue ratio is estimated to have increased twofold from 6% roughly a decade ago to 12% by 2015.

It’s no different here. In the 2009 Survey of Tourism Establishments in the Philippines (STEP) for Transport Operators, Tour and Travel Agencies of the Philippine Statistics Authority (PSA), there were only 864 establishments engaged in activities of tour and travel agencies. In PSA’s 2014 STEP, the number shot up to 1,532. Revenue of the agencies also rose. The 2009 STEP showed that transport operators, tour and travel agencies made P164.5 billion. In the latest STEP, their revenue reached P229.6 billion.

The Philippine Travel Agencies Association (PTAA), a group established in 1979 to foster unity in the travel industry and promote the welfare of its members and the traveling public, has been seeing its membership grow every year, its president, Marlene Dado Jante, told BusinessWorld in an interview. There are currently 623 travel agencies that belong to PTAA. In January of this year alone, the association inducted 18 new members.

The increase is even more astonishing considering that PTAA has strict requirements like physical office in a commercial area. In addition, Ms. Jante said, “You need to show that you are actually paying government taxes.”

Online travel agencies

It’s no doubt an encouraging development, but travel agencies, particularly the brick-and-mortar ones, are still facing threat, not from their perceived uselessness by the public but from their digital brethren, online travel agencies (OTAs) like Expedia. “We admit that OTAs are really our competitors,” Ms. Jante said. “That’s why we have to do better.”

In a 2014 survey of 3,500 American leisure travelers (and 1,500 business travelers) conducted by Google, one in three chose to transact with OTAs for their superior site tools and options. The other reasons that they had for booking on OTAs: lower prices/better deals, past positive experience or recommendations for the site, existence of loyalty/rewards programs, and prominence in Google search results.

According to Ms. Jante, traditional travel agents have their own advantage: their superior knowledge of tourist destinations. “If you come to me and say you want to go hiking or mountain climbing, we know the place” to recommend, she said. Travel agents, like all members of PTAA, are constantly sharpening their touristic knowledge. “Travel agents continue to have and attend trainings and familiarization tours,” she said. “We go to a lot of places.”

Traditional travel agents have also started to focus more on corporate accounts. “We do group tours,” Ms. Jante said. “And I believe that OTAs cannot do that.” She went on to say that those tours include pre-departure briefing that includes information about which specific places are best to visit and warnings about which places are best to avoid.

At the end of the day, Ms. Jante emphasized, “Computers do not talk. We talk.” And having someone to talk to in case of an emergency while on a trip abroad can be life-saving. Ms. Jante, who runs her own travel agency, Queenspoint Travel & Tours Corp., always keeps her phone within reach in case someone needs her help. “I see to it that I’m ready to take calls anytime,” she said, even in the dead of the night.

Globe deactivates over 14,000 SIM cards found to be sources of text scams

Globe Telecom Inc said it has deactivated over 14,000 SIM cards found to be sources of spam and scam text messages.

The telco giant said in a press release on Monday, March 5 that it deactivated 14,013 SIM cards, which turned out to be sources of spam text messages. Using a filtering function and blocking mechanism, Globe said it also blocked over 400 million spam SMS messages in 2017.

“Text spamming is an industry-wide issue, and we acknowledge that Globe Telecom’s anti-spam campaign will not be as effective without the help of our customers. We encourage our customers to be vigilant and report any text scam they receive,” Anton Bonifacio, Globe Chief Information Security Officer, said in a statement.

Globe established its anti-spam solution and blocking mechanism in 2014, which consisted of a new hardware and software solution that can filter up to one billion SMS a day. Globe said this mechanism enabled the company to prevent the transmittal of spam/scam messages which have been sent through the Globe network. The following year, the mechanism was upgraded and expanded to effectively prevent spam-scam messages coming from other networks.

Globe added it has lowered the spam attempts, from 2.9 million daily spam traffic in 2016 to 182,000 in 2017. “This represents a 94% success rate. In addition, the number of spam call complaints has been reduced to 1,085, which is 65% lower from 3,073 total calls accumulated from 2014 to 2016.”

RCBC doubles medium-term note program to $2 billion

Rizal Commercial Banking Corp. (RCBC) doubled its medium-term note program to raise additional capital.

In a disclosure to the local bourse on Monday, March 5, the Yuchengco-led RCBC said it has undertaken an update of its $2 billion medium-term program, from the previous $1 billion, as approved by its board on Jan. 29.

“With the updated program, RCBC retains the flexibility to capitalize on favorable market conditions and tap the debt capital markets, while conforming to its term foreign currency borrowing strategy,” the bank said in the disclosure. — Karl Angelo N. Vidal

Philippines ‘best country to invest in’ — report

The Philippines was named the top investment destination by a global research firm, noting that its young population will attract more firms looking for a good labor force.

The US News & World Report named the Philippines as the “Best Country to Invest In” for its 2018 Best Countries report.

“In contrast to declining inflows of foreign direct investment, or FDI, to Southeast Asia as a whole, the Philippines continued to perform well, according to United Nations data. In years to come, the country is expected to receive more FDI from within the region from powerhouses like China that are looking to utilize available labor in developing nations,” the US-based firm said in a report published online.

The 2018 Best Countries report and rankings are based on how global perceptions define countries in terms of a number of qualitative characteristics, impressions that have the potential to drive trade, travel and investment and directly affect national economies. The report covers perceptions of 80 nations. — Melissa Luz T. Lopez

Solicitor general files quo warranto petition against Sereno

The Office of the Solicitor General (OSG) on Monday, March 5, filed before the Supreme Court (SC) a petition for quo warranto against Chief Justice Maria Lourdes P.A. Sereno.

Solicitor General Jose C. Calida in a press conference pointed out impeachment was not the proper legal process Ms. Sereno should pursue, but rather it should be quo warranto.

“This is the proper remedy to question the validity of Sereno’s appointment,” Mr. Calida said in a press statement.

He added: “Quo Warranto is recognized as an extraordinary legal remedy sanctioned not only by the Rules of Court, law and jurisprudence but by the constitution itself whereby the State challenges a person to show by what authority he holds a public office or exercises a public franchise.” — Dane Angelo M. Enerio

Misdeclared cigarettes, fireworks from China seized at Port of Manila

Two 40-foot container vans from China, which carried misdeclared cigarettes and fireworks said to be worth a total of P8.98 million were busted by the Bureau of Customs-Port of Manila (POM), the agency reported on Monday, March 5.

The BoC said one container van, consigned to Paragon Platinum International Trading Corporation, was declared as brackets when the shipment arrived on Febr. 21. Customs authorities discovered boxes of cigarettes instead.

The agency disclosed the cigarettes are worth P8.2 million.

Another shipment consigned to Power Buster Marketing raised an alert at the Customs on February 27 for alleged misdeclaration.

“Upon inspection, we discovered boxes of fireworks instead of the declaration which is footwear,” Customs chief Isidro S. Lapena said in a statement.

The BoC said the fireworks will be turned over to Philippine National Police- Firearms and Explosives Office for proper disposition while the cigarettes are subject to destruction.

The shipments are now waiting for the issuance of warrant of seizure and detention while cases will be filed against the importers for violation of Section 1400 of RA 10863 or Customs Modernization and Tariff Act.

The Customs exceeded its revenue target for February by 5.3%. Initial reports from Financial Service showed a total collection of P43.9 billion against the P41.709 billion target; posting a surplus of P2.2 billion.

CAAP 10th anniversary: Excellence in the skies

Today, the Civil Aviation Authority of the Philippines (CAAP) celebrates 10 years of its commitment to ensuring a safe, secure and green Philippine sky. A decade ago, in 2008, Republic Act No. 9497 was enacted into law. And by its virtue, the CAAP was created.

Aviation had an early start in the Philippines, and the creation of CAAP in 2008 was not where it all began. Before it became the CAAP that we know today, the office governing Philippine aviation underwent numerous name changes; from the Office of Technical Assistant of Aviation Matters in 1931, it became the Aeronautics Division in 1933. In 1936, the passage of the Civil Aviation Law of the Philippines created the Bureau of Aeronautics. Only a bit more than a decade later, in 1947, the Bureau of Aeronautics was renamed Civil Aeronautics Administration (CAA). After 32 years, the CAA was placed under the Ministry of Transportation and Communications and was once again renamed the Bureau of Transportation (BAT). Then in 1987, it was renamed the Air Transportation Office (ATO), headed by the Assistant Secretary for Air Transportation. And then only two decades later, in 2008, the ATO was abolished to make way for the Civil Aviation Authority of the Philippines.

CAAP is now reaping the fruits of its years of hard work, but its journey has not always been smooth sailing. CAAP’s creation is the main component of an intensive civil aviation reform program launched by the government. Months before CAAP’s creation in March 2008, the Federal Aviation Administration (FAA) downgraded the Philippines to “Category 2” rating after finding out several deficiencies in the country’s air transport and aviation sector. Then in 2010, the European Union (EU) banned airlines from the Philippines from flying to Europe. Determined to get past these turbulent times and prove itself as a competent aviation regulator, CAAP has since worked toward improving its services and facilities. Its efforts showed to be paying off as just in April 2014, following a successful International Aviation Safety Assessment (IASA), the FAA determined that the Philippines has met the criteria for a “Category 1” rating. And in June 2010, the EU lifted its ban on Philippine commercial flights, allowing all of the country’s airlines to once again fly around in Europe’s skies.

As it marks its 10th anniversary this year, CAAP finds more reasons to celebrate its remarkable accomplishments that continue to bring pride to the country and give reasons to hope for a brighter future for the aviation industry. Though beset by all the pressure from international aviation authorities and other challenges in the industry, under its present team of leaders — spearheaded by Capt. Jim C. Sydiongco as director-general, Capt. Donaldo Mendoza as deputy director-general for operations, MGEN. Ricardo Banayat (Ret.) as deputy director-general for administration, and Capt. Manuel Antonio Tamayo as undersecretary for airport and aviation — the CAAP has braved many tests and is continuously streamlining itself and the entire aviation industry in the country.

Mr. Sydiongco and his team have made significant progress in setting new benchmarks for performance and safety advancements in the local aviation industry.

Before becoming the head of the country’s aviation regulator, Mr. Sydiongco flew all over the world as commercial pilot for Philippine Airlines and Taiwan’s Eva Air. Upon retirement, he then used his flying experience as safety consultant of then Manila International Airport (MIA) General Manager Alfonso Cusi, and Cebu Pacific’s flight safety head, before becoming Cebu Pacific’s vice-president for flight operations.

As a veteran in the aviation industry, Mr. Sydiongco’s experience as pilot is crucial to his position as CAAP chief. With his goals of fully automating and digitalizing the services of CAAP, upgrading the standards of flying schools through regulations, and supporting young aviation professionals, Mr. Sydiongco is bringing the country’s aviation sector to greater heights.

En route to excellence in the skies, the CAAP is steadily performing its duties of providing safe and convenient air travel experience. Just last year, Philippine airports were named and given recognition for their facilities and services. In a survey conducted by Sleepinginairports.net, four Philippine airports, namely the Iloilo International Airport, Mactan-Cebu International Airport, Clark International Airport, and Davao International Airport, joined the 2017 list of the top 25 best airports in Asia. Meanwhile, eight airports in the country were awarded a one-star rating for On-Time Performance (OTP) based on the results of a 2016-2017 survey conducted by the United Kingdom-based air travel intelligence company Official Aviation Guide (OAG). On top of the regional airport’s achievements, the country’s main international gateway, the Ninoy Aquino International Airport (NAIA), is no longer included in the top 20 worst airports in the world, and even in the list of the top 5 worst airports in Asia for 2017 by travel Web site The Guide to Sleeping in Airports.

In 2017, CAAP became one of the country’s biggest dividend contributors by contributing P5.83 billion to the treasury. That same year, the CAAP also passed the Universal Safety Oversight Audit Programme (USOAP) of the ICAO Coordinated Validation Mission, with an overall result of 69.68%, higher than the global average. And in May 2017, Puerto Princesa International Airport’s new terminal was opened.

The CAAP, meanwhile, opened 2018 with a milestone, the inauguration of the Communications Navigation Surveillance/Air Traffic Management or the CNS/ATM systems which will help minimize flight delays and enhance air traffic safety in the country.

With capacity expansion as one of its goals, CAAP has simultaneously commenced the expansion of Kalibo International Airport in Aklan and embarked on the processing of night rating regional airports which include the following: the Naga Airport in Naga City, Camarines Sur; Tuguegarao Airport in Tuguegarao, Cagayan; Cauayan Airport in Cauayan City, Isabela; Cotabato Airport in Awang, Maguindanao; Pagadian Airport in Pagadian, Zamboanga Del Sur; Ozamiz City Airport (Labo Airport) in Labo; Ozamis, Dipolog Airport in Dipolog, Zamboanga Del Norte; Dumaguete Airport (Dumaguete–Sibulan Airport, Sibulan Airport) in Sibulan, Negros Oriental; and Caticlan Airport (Godofredo P. Ramos Airport, Boracay Airport) in Malay, Aklan.

On top of these airport milestones, the CAAP is also working toward minimizing the negative effects of aviation and air transport on the environment. To this end, the CAAP is in the process of improving fuel efficiency by an average annual rate of at least 2%, reducing the total aviation CO2 emissions by an average of 2% per year until 2020, and enhancing awareness of and compliance to the program on carbon footprint reduction in the aviation sector.

To promote the green airport concept, all frequently used CAAP airports will now be installed with solar power systems to power up office lightings and small equipment as well as runways lights and lighted cones.

With the support of the CNS/ATM program implementation, the CAAP will soon establish the Performance-Based Navigation (PBN) System in all public aerodromes by the year 2020 to reach its goals of improving air traffic management and infrastructure and significantly reducing fuel burn and carbon emissions.

Engaging with our neighbors in aviation, the CAAP is now working toward fully adopting the Beijing Declaration’s visions in aviation safety, air navigation services, accident investigation, and human resource development that were discussed at the first Asia Pacific Ministerial Conference on Civil Aviation last Jan. 31 to Feb. 1.

Such projects as the opening of Bicol International Airport in 2022, completion and start of the commercial operations of New Bohol Airport’s (Panglao International Airport) by August 2018, Tacloban City’s Daniel Z. Romualdez Airport’s terminal extension soft opening on March 16, and the inaugural flight of Cagayan North International Airport in Lal-lo, Cagayan are just some of what the country can look forward to in terms of improvements in the country’s airports.

In line with these, the CAAP will commemorate its 10 years with a two-week-long celebration by its employees stakeholders, and friends. With the theme “Ten Years of Excellence in the Philippine Skies,” the agency is set to kick off celebrations with a thanksgiving mass on March 5 and launch its Gender Awareness Development (GAD) gender-neutral restrooms with a blessing ceremony. In the succeeding days, the aviation regulator is set to continue its celebrations with a clean-up drive, a bloodletting program, a sports fest, and a fun run. A fellowship night on March 16 will cap off the anniversary festivities.

As the Philippines’ aviation safety oversight mechanism, the CAAP is responsible for providing safe and efficient air transport and regulatory services in the country. Headed by Mr. Sydiongco as the director-general, CAAP is stationed at the Old MIA Road in Pasay City and in 12 area centers around the Philippines, and employs approximately 6,000 people.

Poll puts Feb. inflation beyond target

By Melissa Luz T. Lopez
Senior Reporter

INFLATION likely picked up further in February as prices of food, fuel and electricity rose faster on higher taxes, analysts said in a BusinessWorld poll that also bared mounting bets on a central bank rate hike.

A poll of 14 economists yielded a 4.2% median forecast for the month, with 10 analysts saying that the overall pace of price increases went faster than the four percent rate seen in January. If realized, this would also surge from February 2017’s 3.3% and would pierce the 2-4% target set by the Bangko Sentral ng Pilipinas (BSP).

The estimate falls within the 4-4.8% estimate range given by the BSP’s Department of Economic Research and will be the fastest since the 4.3% pace clocked in October 2014.

The Philippine Statistics Authority (PSA) will report official inflation data on Tuesday.

Inflation Poll

“As older inventories are used up, the full impact of higher taxes under first package of tax reform may have already been largely reflected in terms of upward adjustments on the prices of fuel, sweetened beverages, tobacco, coal/mining, and vehicles,” said Michael L. Ricafort, economist at the Rizal Commercial Banking Corp.

Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion (TRAIN) Act that took effect Jan. 1, imposed additional taxes on fuel, cars, coal, sugar-sweetened drinks and a host of other items. Among others, TRAIN imposed an additional P2.50 excise tax per liter of diesel and P3/liter for kerosene, which came at a time of three-year highs for world crude prices. The new law also introduced an excise rate of P6/liter on drinks containing caloric or non-caloric sweetener and P12/liter on drinks containing high-fructose corn syrup.

Aside from TRAIN-related price movements, the economists also cited the higher cost of food items like fruits, beef, pork and rice. Among others, dwindling buffer stocks of the National Food Authority have driven rice prices up for seven straight weeks, according to PSA data.

The peso’s depreciation against the dollar also likely put pressure on import prices last month, as the currency touched fresh 12-year-lows versus the dollar, added Guian Angelo S. Dumalagan, market economist at the Land Bank of the Philippines.

Most economists in the poll said that inflation will keep picking up over the next few months, owing to base effects and as other producers and suppliers introduce staggered price adjustments.

“The full effect of TRAIN will be felt over around half a year or more,” said Victor A. Abola, economics professor at the University of Asia & the Pacific.

“Raising prices in a competitive environment may not happen too fast, as players would observe what others are doing.”

Six economists expect the BSP to raise benchmark rates during its March 22 review with inflation in an upward path, as February would mark the second straight month of an increase.

The BSP has kept its monetary policy stance unchanged since September 2014, although procedural cuts were introduced in June 2016 for the shift to an interest rate corridor. Rates currently range from 2.5-3.5%.

However, the central bank reduced the reserve requirement ratio (RRR) on big banks by a percentage point to 19%, effective last Friday – a move that is expected to unleash some P90 billion into the financial system. Some observers said this was tantamount to an easing of monetary policy, in turn bolstering the case for higher benchmark rates.

“I’m keeping my forecast of a 25bp policy rate hike by BSP on 22 March, mainly as a response to rising inflation risks,” said Nomura economist Euben Paracuelles. “The BSP’s on-going communication challenge as a result of the surprise RRR cut only adds to the impetus to hike the policy rate sooner rather later, if BSP were to cement its inflation-fighting credentials.”

Keeping prices stable is the central bank’s main mandate.

Trinh D. Nguyen, senior economist at Natixis, said the BSP would be among the first central banks in Asia to raise rates following an expected US rate hike at the March 20-21 meeting of the Federal Reserve.

On the flipside, Ruben Carlo O. Asuncion of the Union Bank of the Philippines believes that the BSP will not tweak rates anytime soon, saying that the recent cut in bank reserves “signals their confidence in long-run inflation.”

The central bank expects full-year inflation to average 4.3%, settling above target and soaring from last year’s 3.2%.

Landbank starts offer to acquire PDS shares

LAND BANK of the Philippines (Landbank) will start making offers to shareholders of the country’s fixed-income exchange this week, with the state lender hoping to sign enough purchase agreements and acquire a majority stake within a month.

Landbank President and Chief Executive Officer Alex V. Buenaventura said on Friday that the state-run lender will be reaching out to current shareholders of the Philippine Dealing System Holdings Corp. (PDS) today to make counter-offers for existing shares, amid agreements previously secured by the Philippine Stock Exchange (PSE).

“We will offer starting [this] week so that will be March 5. April 5 will be the deadline to accept the offer,” Mr. Buenaventura told reporters late Friday.

“With respect to the offer period, I said we cannot keep the development of the financial markets waiting,” he added.

“Landbank is serious and we intend to move fast — we plan to lock this deal up in 30 days.”

Last week, Landbank’s board of directors approved a plan to acquire 66.67% of PDS at P360 per share, kicking off a showdown between the biggest state-owned lender and the local bourse operator.

The PDS Group operates trading, clearing and settlement for bonds and foreign exchange, namely the Philippine Dealing & Exchange Corp., the Philippine Depository & Trust Corp., Philippine Securities Settlement Corp.

The PSE initiated steps for the PDS buyout as early as 2013, as it looks to merge the country’s equities and fixed-income bourses.

Since June last year, the PSE has signed share purchase agreements with the Bankers Association of the Philippines (BAP); Whistler Technologies Services, Inc.; Investment House Association of the Philippines; The Philippine American Life and General Insurance Co.; FINEX Research and Development Foundation, Inc.; San Miguel Corp. and Tata Consulting Services Asia-Pacific Pte. Ltd., giving the PSE a 69.03% total stake in PDS.

The Philippine Competition Commission approved these agreements in November, even as the Securities and Exchange Commission (SEC) initially rejected the PSE-PDS merger in 2016.

Currently, Landbank owns 1.56% of PDS through the BAP, which holds a cumulative 13.26% share for itself and its member-banks.

‘IN CASH’
Landbank intends to buy 4.167 million common shares worth a total of P1.5 billion, with Mr. Buenaventura describing PDS as a “potentially profitable investment” for the bank.

“Having offered something higher than what PSE is offering at P320 — and we are paying in cash unlike PSE’s offer of paying in shares — I think we have a very much more attractive offer,” the bank president added, noting that the funds will be drawn from Landbank’s existing capital.

Landbank booked a P14.05-billion net income in 2017, four percent more than P13.58 billion the preceding year.

The ultimate decision, however, lies in the hands of the SEC as it will determine which buyer can secure the biggest stake in PDS.

The SEC imposes a maximum of 20% industry ownership and five percent individual ownership of an exchange, but may grant exemptions if a bigger control “will not negatively impact on the exchange’s ability to effectively operate in the public interest.”

Mr. Buenaventura said the Landbank has already submitted its request for an exemption from this ownership limit and has made its case before the corporate regulator.

“We presented to them (SEC) our proposal. They said they have to decide to whom to give the regulatory relief — to PSE or to us — because they can only give one regulatory relief,” the Landbank chief said.

Mr. Buenaventura said Landbank’s control of PDS will help aid financial market reforms as the state lender plans to take bond transactions to a wider market via its nationwide branch network, as it envision corporate bonds floated by small- and medium-sized businesses. — Melissa Luz T. Lopez

Blockchain poised to change way of doing business

By Krista A.M. Montealegre
National Correspondent

TOKYO — Bitcoin has hogged the headlines for its price volatility and cyberheists, but the promise of the emerging digital currency lies in blockchain, the disruptive technology behind the cryptocurrency.

“Bitcoin is not an investment scheme. It is a new kind of technology,” Miguel Antonio C. Cuneta, co-founder of Philippine-based SCI Global Ventures, Inc., said during the Philippines-Japan Investment and Cryptocurrency Forum organized by Japan Cashless Association and Noah Foundation at the Four Seasons Hotel here on Sunday.

Bitcoin’s value had been going up since it was invented in 2009, peaking at almost $20,000 apiece in December. It had then plunged below the $10,000 mark amid concerns of increased regulation in South Korea and China, but the price has stabilized around $10,000 per unit.

Cryptocurrencies like Bitcoin are not regulated by any state or central bank.

They rely on cryptography to secure and verify transactions as well as control the creation of more units.

While much of the craze for now centers on the price, the potential is in the technology underlying cryptocurrency known as blockchain, where transactions are better secured by a peer-to-peer network of computers and can be verified.

Blockchain is poised to change the landscape of finance, governance and banking, the same way the Internet has disrupted telecommunications, media and publishing sectors, Mr. Cuneta said.

Noting that an undeveloped payments infrastructure and sheer size of the unbanked can enable Southeast Asia to become a cryptocurrency and blockchain hub, Mr. Cuneta said: “Technology wants to solve a problem. In Southeast Asia… you have a lot of problems…We’re hungry. We’re thirsty for options.”

The global financial crisis in 2008 led to increased regulation that raised the hurdle to opening and maintaining bank accounts.

But now, cryptocurrencies have allowed users to bypass conventional financial channels.

The Union Bank of the Philippines, Inc. is one of the more aggressive banks in embracing technologies like blockchain to do business.

“It is important for people (and) organizations in mainstream activities to get on board even if it is just a learning system,” UnionBank Chairman Justo A. Ortiz said.

“If you wait for the perfect environment to appear, you’re going to meet perfect competition.”

UnionBank is also empowering rural banks like Cantilan Bank in Davao through blockchain, giving them and their customers access to universal banking products.

“For rural banks, blockchain isn’t just about being included in the financial services industry. It may well be the answer to their survival because they are going down,” said Ramon Vicente V. De Vera, head of fintech business group at UnionBank.

Blockchain technology is also used in various applications in the Philippines. Coins.ph allows users to pay bills, buy load, buy Bitcoin and send money even without a bank account, while Salarium Payments offers a program that seeks to improve the efficiency and accuracy in managing payroll systems of companies through a self-service portal.

Likewise, non-profit organization Noah Foundation hopes to create a “crypto-empowered” Philippines through the use of its own tokens in the ecosystem of its services and projects. Noah Foundation Director Josef Werker is leveraging heightened interest in the Philippine market with the sale of Noah Coins to Japanese investors through an initial coin offering (ICO), involving sale of a virtual currency to the public to raise capital for start-up companies or funding projects.

Japan is the global leader in the development of cryptocurrency markets after becoming the first country to regulate exchanges at the national level, a stark difference compared to crackdowns in South Korea and China.

The digital token can be used in a number of projects that Noah is developing in the Philippines such as a mixed-use resort development on the undeveloped portion of the Dakak Beach Resort in Zamboanga del Norte, an organic agriculture program for farmers in Mindanao and a real estate project that will form part of Horizon Manila, an upcoming 419-hectare central business district on reclaimed land, according to its Web site.

Zamboanga Del Norte Rep. Seth Frederick P. Jalosjos, whose family has partnered with Noah Foundation for the Dakak project, does not believe that regulation can get in the way of unlocking the potential of this technology, saying that the emerging industry “can be monitored but it can’t be stopped.”

“We are holding their (regulator’s) hand while we are taking a step forward,” Mr. Jalosjos said.

The Bangko Sentral ng Pilipinas (BSP) and the Securities and Exchange Commission have moved to regulate cryptocurrency transactions and ICOs to protect investors and reduce the risk of fraud. The BSP introduced in February last year Circular No. 944, regulating virtual currency exchanges — not the cryptocurrencies themselves — by requiring them to be registered and to install internal controls against money laundering. So far, the central bank has authorized two virtual currency exchanges: Betur or Coins.ph, and Rebit.

In the Philippines, virtual currency transactions have been steadily growing, averaging over $8.8 million per month.

“The regulation has evolved with us,” Coins.ph Founder Ron Hose said.

“The regulators in Philippines know we need to drive financial inclusion.”

Sy-Tieng group formalizes $12-B Sangley airport plan

A CONSORTIUM composed of Solar Group’s Wilson Y. Tieng and tycoon Henry T. Sy, Sr. has submitted to the government its unsolicited proposal for a $12-billion airport in Sangley, Cavite.

In a statement, the Sangley Airport Infrastructure Group, Inc., led by All-Asia Resources and Reclamation, Corp. and Belle Corporation, said it is proposing to build a new regional airport hub that can accommodate about 120 million passengers annually once fully developed.

Under its proposal for the Philippine Sangley International Airport (PSIA), the development of the airport component is pegged at around $12 billion, and involves a concession period of 50 years.

The project will start with the reclamation of about 2,500 hectares of land north of the Sangley peninsula, to be used for the development of airport infrastructure and a commercial establishment. The plan also includes the development of airside and landside facilities and transportation infrastructure.

“The PSIA will be designed with two parallel independent runways and sufficient airside and terminal capacity to accommodate future demand for domestic, international and transfer traffic, not only for the Philippines but for all Southeast Asia. The new airport hub is also envisioned to compete with other premier Southeast Asia airports like the ones in Bangkok, Seoul, Hong Kong, and Singapore,” Sangley Airport Infrastructure Group said in a statement.

The PSIA plan also includes the rehabilitation of the Danilo Atienza Air Base, which will be used in the future as a general aviation airport to decongest the Ninoy Aquino International Airport (NAIA) terminals. The air base will turned into an “aerotropolis” district which will accommodate service buildings, office towers, hotels, and conference centers.

The Tieng-Sy consortium said the new airport will also “reduce restrictions on land in Metro Manila.” It will also operate “with a significantly reduced noise impact” than the NAIA since its location is off Manila Bay.

In 2016, the Tieng-Sy consortium had proposed a $50-billion project to develop an airport and economic zone off Sangley Point.

The government recently received two proposals for the rehabilitation of NAIA, which accommodated over 39.5 million passengers in 2016, way more than its 30.5-million designed capacity.

The “super consortium” of conglomerates Aboitiz Infra Capital, Inc., AC Infrastructure Holdings Corp., Alliance Global Group, Inc., AEDC, Filinvest Development Corp., JG Summit Holdings, Inc. and Metro Pacific Investment Corp., submitted to the government on Feb. 13 a P350-billion proposal for the rehabilitation of NAIA to turn it into a regional hub, with a concession of 35 years.

The consortium of Megawide Construction Corp. and Bangalore-based GMR Infrastructure Ltd. submitted to the government last week a $3-billion proposal to improve NAIA, with a concession of 18 years.

The “super consortium” is considering putting a third runway to decongest the airport, but GMR-Megawide has already ruled out putting one, citing reasons such as possible reclamation needed and only marginal capacity to be added by a third runway and said will improve airside capacity by extending the existing runways and adding additional parking bays and rapid exit taxiways.

Department of Transportation Secretary Arthur P. Tugade has said that the agency will adopt a “the more, the merrier” type of strategy, saying that big metropolises such as London and Tokyo have multiple airports. The government is currently working on the terms for the operations and maintenance bidding of the expansion of Clark International Airport (CIA). GMR-Megawide last December won the contract to construct the new CIA terminal.

San Miguel Corp. has also submitted a proposal for an airport in Bulacan. The conglomerate has been granted original proponent status and its project is under evaluation by the National Economic and Development Authority — Investment Coordination Committee. — Patrizia Paola C. Marcelo

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