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Calamansi is hot in Seoul, but can local suppliers deliver?

By Cathy Rose A. Garcia, Associate Editor

Calamansi-flavored Peppero rides on the “calamansi craze” in South Korea. — APRIL ESTORES

SEOUL — Calamansi is the latest food fad in South Korea, as health-conscious Korean women believe the Philippine lime is a good source of Vitamin C, and perfect for detox.

Calamansi juice and tea drinks, as well as calamansi-flavored cookies and even Peppero biscuit sticks, are being sold online and in supermarkets.

“I’ve tried calamansi, and I believe it helps to lose weight,” said Park Ja-young, an office worker, who first learned about its health benefits on Instagram.

Emmanuel W. Ang, Philippine Trade & Investment Center (PTIC) commercial counselor for South Korea, said he was surprised by the sudden interest in calamansi among Korean buyers this year.

“Calamansi is a very hot item right now. I regularly bring buying missions from Korea to the Philippines, and when Philippine companies  come here, I match them with buyers, so I know what the Korean market is looking for and right now, it’s calamansi,” he told BusinessWorld at the Philippine embassy on Oct. 19.

Mr. Ang noted a Korean food company they invited to the Philippines had developed a calamansi juice drink in Tetra packs, which are now being sold online and in stores.

“The Korean market for food and beverage is a very competitive one. There are so many products in the market, so companies are trying to differentiate to give new products to market. Calamansi has gotten to that stage where it’s very different from other lemon products. Probably before when they put calamansi as a flavor, some Koreans would not know what it was. I think we have come to the point where there are a lot of Korean tourists coming to the Philippines, they’re familiar with calamansi,” he said.

But while the interest in calamansi is strong, the question is whether Philippine companies, particularly small and medium enterprises (SMEs), can address the demand.

“The capacity to supply (the market) is the biggest problem. Generally, it’s not a problem of finding a buyer. It’s a problem of finding a supplier who can give the appropriate volume, quality, consistency, and supply that they need,” Mr. Ang said.

For instance, he recalled a Philippine exporter showcased coconut products at one of the trade fairs in Seoul. While they received many inquiries, the Philippine exporter was unable to fullfill  the orders from Korean companies since these were at volumes that they could not supply, or did not meet the packaging standards.

“That’s the problem — capacity — not just volume, but proper packaging, proper certifications that they need. Some exporters still don’t get that. When we supply to a market, we don’t ask the market to adapt to our product. We ask the market what do they need, and we change our product to meet the need,” Mr. Ang said.

The PTIC, which is under the Department of Tourism, regularly invite SMEs to Seoul to participate in trade fairs, and also bring Korean buyers to the Philippines.

“The Korean companies are looking for products they can source (from the Philippines). I’ve explained to them that we have the natural resources, but we have a problem with the processing part… But the Koreans, because they want to buy from us as well, they sent experts to talk about what they need from Philippine exporters. They talk about how a Korean company sources products, what are the certifications, documents they require,” Mr. Ang said.

Trade between Korea and the Philippines stood at around $7.75 billion in 2016. The Philippines exported around $2.5 billion worth of mostly semiconductors and electronics, fresh fruit such as bananas, pineapples and mangoes, and copper and other minerals to South Korea.

INTEREST REMAINS
Despite reports of some Korean manufacturing firms leaving the Philippines for Vietnam, Mr. Ang said Koreans are very keen on investing in the Philippines.

“We’re seeing investments in many industries, much more than before,” he said.

He noted Korean companies have previously invested in semiconductor and electronics manufacturing, shipbuilding, agri-business and food processing in the Philippines because of efficiency of production.

“They see manufacturing (costs in Korea) is higher compared to Philippines. Maybe they have problems with labor unrest here, so they see opportunities in leveraging quality and efficiency,” Mr. Ang said.

Korean firms involved in engineering and construction, as well as renewable energy, have also expressed interest in the Philippines to take advantage of the growing economy, particularly the government’s massive infrastructure program.

“They see Philippines is rolling out more of these big-ticket projects. And they want to be a part of that,” Mr. Ang said.

Korean companies, ranging from banks to consumer goods, are also entering the Philippines to take advantage of the growing middle-class market.

“We have a big population and we are slowly becoming more and more affluent. They see the economic growth we have had for the last six or seven years continuing and they want to take advantage of that,” Mr. Ang said.

NSFR guidelines set for release by yearend

By Melissa Luz T. Lopez, Senior Reporter

THE CENTRAL BANK is looking to release guidelines on the net stable funding ratio (NSFR) by yearend, with banks broadly seen capable of complying with the liquidity buffers prescribed as a global standard.

“Before the year ends, we’ll be coming out with a circular on this,” Bangko Sentral ng Pilipinas (BSP) Deputy Governor Chuchi G. Fonacier told reporters.

Once in place, the NSFR will require universal and commercial banks to hold enough liquidity or “reliable” sources of funding for a one-year period so that they won’t rely too much on shorter-term funding.

“It’s a minimum acceptable level of stable funding over a one-year time frame to ensure that long-term assets are funded,” the central bank official added.

The new standard will be on top of the Liquidity Coverage Ratio (LCR), which requires big banks to hold high-quality and easily convertible assets to cover its projected net cash outflows over a 30-day period.

Both measures mandate big players to hold more than enough buffers that will allow them stay afloat even during episodes of a possible funding crunch. Among the assets considered to be “high-quality” are cash, funds placed with the BSP, and investments in government securities.

The BSP adopted the Basel 3 reform measures to improve risk management and prevent a repeat of the 2008 Global Financial Crisis, which was triggered by massive credit defaults that led to the collapse of big banks and caused widespread recession.

Much like the LCR, the central bank will implement the longer liquidity measure in phases with a pilot run next year and “full adoption” by 2019.

An initial review conducted by the BSP showed that banks are equipped with enough buffers to meet the requirements under the NSFR, Ms. Fonacier said.

The BSP has been introducing tighter regulatory standards under the Basel 3 regime since 2014, which include the 10% capital adequacy ratio; a framework for domestic systemically important banks; the 30-day liquidity coverage ratio; and the 5% leverage ratio.

Earlier this month, the central bank also issued fresh guidelines on liquidity risk management to ensure that financial firms can maintain enough money supply to meet “both expected and unexpected cash flows and collateral needs” for its day-to-day operations.

Nation at a glance — (11/20/17)

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

How PSEi member stocks performed — November 17, 2017

Here’s a quick glance at how PSEi stocks fared on Friday, November 17, 2017.

PHL economy poised to sustain growth momentum

By Melissa Luz T. Lopez, Senior Reporter

THE Philippine economy will maintain an above-6% expansion in 2018 supported by “broad-based” growth drivers, a local think tank said, touting the need to put the tax reform plan in place to keep the economy competitive.

Economists tapped by the Center for Philippine Futuristics said the Philippines is poised to keep growing between 6-7% in 2018, with local conditions supportive of steady expansion.

“I don’t see anything going terribly wrong in 2018, leaving 2018 with a relatively stable economic environment for business to proceed,” former Finance Secretary and now Philippine Veterans Bank chairman Roberto F. De Ocampo said in a Friday forum held at the AIM Conference Center Manila.

Mr. De Ocampo said Philippine gross domestic product (GDP) will likely continue to move at a pace “between 6-7%,” in line with forecasts given by global lenders such as the International Monetary Fund and the World Bank at 6.6%.

The economy grew by 6.9% between July-September, beating expectations to surpass the upwardly revised 6.7% climb during the second quarter, the Philippine Statistics Authority announced on Thursday.

The third-quarter GDP print brought the year-to-date average to 6.7%, well within the 6.5-7.5% growth goal of the government.

“Solid macroeconomic fundamentals will continue to support the country’s robust economic growth. The strong fiscal position backed up by robust revenue collection will support double-digit expansion in public construction, which is one of the main pillars of growth,” the Department of Finance (DoF) said in a statement, noting that conditions will remain favorable to sustain this momentum.

The DoF, however, cited the need for increased investments on infrastructure and basic services, as well as the passage of fiscal reforms to fund public spending.

While noting that there are no “major” threats in the domestic scene, Mr. De Ocampo said tensions in the Korean peninsula and terrorist incidents globally could potentially affect growth dynamics.

However, he noted a more urgent concern would be the passage of the government’s tax reform plan.

“The tax reform bill is expected by the Executive branch to generate revenues that would allow it to have a healthy kind of ‘Build, Build, Build’ in tandem with expected inflows from ODA (official development assistance) and from the private sector. It’s going to be a necessary element in maintaining this growth prospect,” Mr. De Ocampo said, noting that he expects these reforms to take effect by the “middle of next year.”

The DoF expects Congress to approve a unified version of the Tax Reform for Acceleration and Inclusion (TRAIN) bill and have it ready for President Rodrigo R. Duterte’s signing into law by Dec. 15, although the Senate is yet to conclude its plenary debates on the measure as of this writing.

The Duterte administration wants to raise P157.2 billion through the measure, although the House of Representatives approved a bill that would raise P133 billion in net revenues. The Senate version, which is still under discussions, is expected to generate a smaller amount.

The Senate and the House have to thresh out the final version at a bicameral meeting before it can be forwarded to Malacañang for Mr. Duterte’s signature.

Jonathan L. Ravelas, chief market strategist at BDO Unibank, Inc., said the Philippine economy is seen to grow by 6.6% this year and 6.8% in 2018, although the policy shifts and interest rate tweaks in the United States pose a big concern.

“The sentiment continues to be here. There’s nothing to be worried about on the domestic front but the only thing I’ll be waiting for is the TRAIN plan to be passed — the earlier, the better in light of what’s happening in the US,” Mr. Ravelas said, noting a parallel tax reform initiative in the US.

Offhand, Mr. Ravelas said this could trigger volatilities by way of portfolio investment outflows from emerging markets moving into developed economies.

Mr. De Ocampo, however, warned that an extremely watered-down version of the tax bill could be rendered next to useless, and would do little to help support the government’s ambitious spending plans.

Sittie M. Butocan, deputy director at the Bangko Sentral ng Pilipinas’ Department of Economic Research, said the country’s fundamentals remain “intact” alongside benign inflation that is comfortably within the 2-4% target band.

However, issues on political and policy uncertainty, the pace of rate hikes in the United States, China’s economic rebalancing, delays in tax reform, and infrastructure gaps stand as key risks to the outlook, Ms. Butocan said.

IMF backs BSP plan to cut bank reserve requirement

By Melissa Luz T. Lopez, Senior Reporter

TIGHTER liquidity conditions would likely be an opportune time for the Bangko Sentral ng Pilipinas (BSP) to trim banks’ required reserves, an official of the International Monetary Fund (IMF) said.

The multilateral lender has thrown support behind the BSP’s plans to reduce the 20% reserve requirement ratio (RRR) imposed on big banks, although warned such tweaks must be approached with caution.

“We agree with the BSP that these high reserves need to be reduced but needs to be calibrated… It will have to be a data-driven exercise,” IMF country representative Yongzheng Yang said during a press briefing on Friday.

“The condition will be when liquidity falls — if there is such that there will be capital outflows and liquidity tightens — then you can inject liquidity by introducing the (lower) reserve requirement.”

BSP Governor Nestor A. Espenilla, Jr. has said he wants to bring down the 20% reserve standard imposed on big banks, calling it as an “inefficiency” to the local financial system.

The 20% RRR, which was last set in May 2014, is deemed as one of the highest in the world. This essentially mandates all lenders to keep a fifth of their cash holdings untouched.

“If there is need to inject liquidity, you lower the reserve requirement. This will take time… It will take a while to get to the single digit that the Governor mentioned,” Mr. Yang added.

IMF-yongzheng_yang
International Montary Fund (IMF) country representative Yongzheng Yang discusses latest observations on the Philippine economy in this photo taken on Nov. 17. — Photo by Melissa Luz T. Lopez

Still, the multilateral lender remains of the view that current monetary policy conditions remain appropriate, saying there is no need to adjust its stance over the near term.

The Monetary Board kept key rates unchanged during its seventh review last week, noting that inflation remains within target and domestic economic activity remains firm. Rates were kept at 3.5% for the overnight lending rate, 3% for the overnight reverse repurchase rate, and 2.5% for the overnight deposit rate for its seventh review this year.

The IMF has been generally upbeat about the Philippine economy, as it expects a 6.6% growth for the entire year and 6.7% in 2018. This would mean that the government’s 6.5-7.5% growth goal is doable for the year, but will fall short of the 7-8% target set for 2018.

“In our view, the Philippines is in a position to have even stronger growth by pursuing more ambitious reforms,” the IMF official said.

To sustain the growth momentum, the IMF said the Philippines must continue building more infrastructure, pursue capital market reforms and enhance financial inclusion strategies as part of its reform agenda. The multilateral lender also touted the need to amend the BSP charter and relax restrictions on foreign ownership in order to attract significant investments.

“If there are more reforms, growth can be higher,” Mr. Yang said.

Former MRT contractor washes its hands of glitches

THE company that until recently provided maintenance services for the Metro Rail Transit-3 (MRT-3) denied having any involvement in the recent mishaps involving the crumbling train system.

“The very serious recent incidents involving the MRT3, including the reduction in the number of running trains, at least did not occur during BURI’s service,” Busan Universal Railways Inc. (BURI) said in an emailed statement.

The reduced number of running trains and the accidental unhitching of a coach from the other train cars while in between the Ayala and Buendia stations “show that the [Department of Transportation] doesn’t appear ready to assume our work,” BURI said.

Owing to frequent and recurring train breakdowns, the government had to resort to deploying buses to lessen the congestion of commuters using the MRT-3 last week.

With the train system now completely under the government, BURI recommended that the DOTr should be checked even more thoroughly.

Even though its contract has been terminated, the company underscored the importance of an overnight train preparation, an inspection, and the driver’s confirmation which should be done together with the regular maintenance work under the supervision of engineers.

“The MRT3 is now entirely in the control of the government. It must be asked what are the qualifications of the engineers presently responsible for the maintenance after the BURI contract was suddenly terminated and its expert engineers were immediately banned from entering the depot,” BURI said.

SENATE PROPOSALS: EMERGENCY SERVICES, DOOR PANELS
These glitches — including an incident in which a rushing train severed an awaiting passenger’s arm from her body — have prompted three senators to propose solutions to the train mess.

“We need to reverse this situation by mandating local government units to establish emergency dispatch centers with adequate and qualified personnel,” Senator Juan Edgardo M. Angara, the Senate’s local government committee chairman, said.

While MRT staff are trained to respond to emergencies, no MRT staff was on the platform at the time of the incident except for two security guards who assisted the victim who lost her arm.

Mr. Angara has called for the passage of the Senate Bill (SB) 1573 which mandates the development and institutionalization of emergency medical services system to ensure that there are enough qualified emergency medical service personnel in the country.

For her part, Sen. Grace Poe, chair of the Senate committee on public services, sought to temporarily halt MRT operations.

“If it is necessary to stop the operations, we know that 500 thousand passengers will be affected. But if we think about the possibly of casualties due to negligence, then we probably have to take this,” she said in Filipino.

Ms. Poe also expressed dismay over the management of the Department of Transportation (DOTr).

“The DOTr has to present their plans. What should be done if we stop the operations and how long the rehabilitation will take?” Ms. Poe added.

Meanwhile, Senate committee vice chair for public services and public works Joseph Victor G. Ejercito proposed that MRT maintenance should be entrusted to Sumitomo again.

“Sumitomo…has a good track record and has knowledge of MRT or any equally capable company which has capability to operate and maintain the MRT,” Mr. Ejercito said.

Autre Porte Technique Global Inc. (APT Global) replaced Sumimoto for the maintenance work for the Metro Rail Transit line 3 (MRT-3) on September 5, 2013.

Mr. Ejercito also proposed that the “DOTr should look into installing glass panels with doors that open synchronized with trains in the platform, similar to what HK MTR did when there were accidents that happened before.” — Anna G. A. Mogato and Arjay L. Balinbin

Metro Pacific to ramp up water business expansion

By Arra B. Francia, Reporter

SYDNEY, Australia ― Metro Pacific Investments Corp. (MPIC) is ramping up the expansion of its water business outside of Metro Manila, as it eyes 26 projects in partnership with local water districts.

During a press briefing here on Thursday, Metro Pacific Water Investments Corp. (MetroPac Water) President Laurence R. Rogero said the proposed projects, with a total volume of 3,214 million liters per day (mld), targets to serve 19.1 million people.

“With Maynilad as a platform for growth, the group is very, very well positioned to take advantage of the opportunities of the water sector outside Metro Manila,” he said, referring to sister company Maynilad Water Services Inc. which holds the west zone concession for Metro Manila. “What it takes is a good understanding of the patchwork of regulations that are very difficult to understand.”

Of the 26 projects, 11 are for bulk water, eight are for full concession, and one is for waste water. Two are international projects, while the remaining four are under different classifications.

For its partnerships, Mr. Rogero said the company looks for those classified as Class A water districts based on Local Water Utilities Administration guidelines.

“These are basically water districts that have good credit standing but are unable to tap into funding sources, not necessarily because of their inability to or inexperience,” he said. “These are small water districts that maybe have outgrown their capabilities already, so that’s why they’re not able to supply the water.”

MetroPac Water noted the market outside Metro Manila is 85 million, compared to the nine million being served by Maynilad and 13 million for the east zone served by Manila Water.

“Metro Pacific Water could be selling twice as much water as Maynilad, by the time these projects come to fruition. And in terms of contextualizing the size opportunity, it’s a huge undertaking. It’s small today, but the potential is huge,” MPIC Chief Finance Officer David J. Nicol said during the same press briefing.

To-date, MetroPac Water has five projects, including the Metro Iloilo Bulk Water Supply Corp., where the company holds 80% ownership. Mr. Rogero noted Iloilo had been unable to deliver proper services to around 860,000 customers until the company’s entry. The company invested P2.8 billion to produce a capacity volume of 46 MLD, from the previous 32 MLD.

MetroPac Water also poured in P2.8 billion for Cagayan de Oro Bulk Water, Inc., where it effectively owns 95%. This project serves around 600,000 people through 100 MLD bulk water supply.

Another is the Maragondon Bulk Water Supply, a joint venture agreement with Lucio Tan-led MacroAsia Corp. in partnership with the Maragondon Water District.

For water distribution, MetroPac Water owns 27% of Laguna Aquatech Resources Corp. (LARC). LARC is a joint venture partnership with Equi-Parco Construction Company for the full concession of Laguna Water District.

In waste water solutions, MetroPac Water holds 65% of Ecosystem Technologies International, Inc.

MPIC is one of three key Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.

Terrorists, gov’t forces committed abuses during Marawi conflict, Amnesty International report says

By Rosemarie A. Zamora

BOTH terrorists and Philippine government forces have been found to commit commit human rights abuses during the five-month long crisis in Marawi City.

Amnesty International came out with this assessment on Friday, November 17, citing its report based on research and interviews of 48 survivors and witnesses, including 36 men, 11 women and a child.

Civilians were “displaced and slaughtered by militants and both sides have committed abuses,” said Tirana Hassan, Crisis Response Director at Amnesty International.

“During the conflict, militants regularly targeted civilians and carried out numerous extrajudicial executions. The civilian victims were nearly all Christians, and most—if not all—were targeted because they were not Muslim,” said the report which narrated several atrocities that began when the Maute terrorists took over the city in late May.

“Militants usually performed the killings with a pistol, a rifle, or by cutting the victim’s throat. Journalists have reported cases where civilians were beheaded. Most victims were shot and killed immediately after being questioned by the militants,” the report said.

Others were killed while standing or kneeling on the ground, and some were shot while running away.

Those who were taken hostage narrated how they were forced into labor and used as human shields.

“The government and journalists have reported that hostages were also forced to make improvised bombs, fight, and loot, and were used as sex slaves. Hostages were also killed by government air strikes, according to witness accounts,” it added.

‘Those who escaped through peace corridors were tortured’

Government forces were also accused of torture and other ill-treatment.

“Members of the armed forces detained numerous people and accused them, without evidence, of being militants. Detainees were allegedly then subjected to various forms of ill-treatment including sustained beatings and threats of execution,” the report said.

In the first months of the conflict, thousands of civilians were unable to evacuate through the peace corridors and remained trapped in Marawi for weeks. They were afraid to move for fear of being killed or captured if they were identified by militants.

Some of those who managed to escape “were subsequently apprehended and abused by government forces, who were reportedly suspicious of why the civilians had remained inside Marawi for so long,” the report said.

One report said that the Philippine Armed Forces detained an escaped civilian and was “beaten severely all over his body” then the civilian later passed out and was handed to the Red Cross later on.

Meanwhile, the report also said that an unknown number of civilians who were trapped were alleged to “have been killed by the government’s shelling and aerial bombardment.”

‘LOOTING’
On Oct. 31, six soldiers were being arrested for alleged looting in Marawi City.

Defense Secretary Delfin N. Lorenzana said that government will apply “the full force of the law” against six soldiers once they are found guilty of looting. He also vowed to compensate the victims.

According to the report, the allegations of looting of military forces “are potentially violations of the rules prohibiting pillage in non-international armed conflict, under customary international law, international criminal law, and Philippine military regulations.”

Also on Friday, AFP Spokesperson Maj. Gen. Restituto F. Padilla said that the Amnesty International had informed them of their study. He further said that they requested the team to relay the report to the Department of Foreign Affairs, and as of now, they do not have a copy of the report yet.

But he then reiterated that the AFP remains respectful of the international humanitarian law and human rights.

Basic Energy to invest in 2 Thai firms

By Victor V. Saulon, Sub-editor

BASIC Energy Corp. said on Friday it had signed a term sheet with a Thai firm for the possible acquisition of at least a 12.5% stake the latter’s two companies that have been awarded the engineering, procurement and construction (EPC) contract of a solar farm in Myanmar.

The company signed the investment term sheet with Vintage Engineering Public Co. Ltd. (VTE) of Thailand, which owns Vintage EPC (VEPC) and Vintage International Construction Co. Ltd. (Vinter).

The document covers the non-binding intention of the company to invest in VEPC, its successor or designated assignee, and Vinter.

Basic Energy described the two companies as the first counter-parties for the supply and construction service contracts for the EPC of a 220-megawatt (MW) solar power plant in Myanmar’s Minbu district in Magway region. It said the development and construction of the project’s first phase, which is expected to generate 50 MW, is ongoing.

“As greenlit by the Board of Directors of Basic Energy in its meeting of October 26, 2017, the term sheet grants Basic Energy the exclusive right to negotiate and finalize the terms of the investment,” Basic Energy told the stock exchange.

Under provisions of the term sheet, Basic Energy will aim to finish the due diligence process in 60 days, but may ask for an extension subject to VTE’ s consent.

The covering shareholders agreement will then be signed upon favorable results of the due diligence process on the VTE companies and the EPC contract, during which time Basic Energy can opt to increase its planned investment to up to 20%.

Basic Energy said its participation in the project is in line with its thrust to expand its portfolio of renewable energy projects in the Philippines and abroad.

“The investments are seen to provide Basic Energy with revenue streams of projects with fast turnaround times,” it said.

On Friday, shares in Basic Energy climbed by 4.15% to P0.226 each.

South Korean energy firms eye investments in Philippines

SOUTH KOREAN businesses have renewed their interest in the Philippines, especially in the energy sector, according to the Board of Investments (BoI).

In a statement released by the department of trade and industry’s investments promotion arm, the BoI said it met with Korean power companies to give assurances on previous concerns of South Korean businesses that caused them to pull out of the country, like high utility costs.

Director for International Investments Promotion Service Angelica M. Cayas told BusinessWorld on Friday that she had a briefing last Nov. 7 with a Korean delegation, which included the Korean Standards Association, on the current state of the energy sector in the Philippines, policies and development trends.

“They came here just as a side-trip. They attended a conference together with the Korean Standards Association — around 107 Korean [delegates] but 13 are from the energy sectors. [T]hey decided to explore the opportunities in investing in the energy sector here,” she added.

There were 10 energy companies that attended the meeting, which included the Department of Energy’s (DoE) presentation of the government’s policies and plans for the energy sector, aside from BoI’s briefing on incentives — which may include a number of tax exemptions — given as part of the Investment Priorities Plan.

“There’s a specific law for renewable energy so that’s for the DoE’s project, but we’re the ones administering the incentives for renewable energy, and there’s really a lot of incentives to encourage the investors to come here,” Ms. Cayas said.

Ms. Cayas added that they had welcomed the interest, as energy remains to be one of the top investment priorities seen by DTI due to the country’s thin power reserves.

“[Energy is] one of the binding constraints of the investments here in the Philippines. If you noticed, the BoI has been listing energy in our investments priorities plan for a long time even during the power crisis [in the early 1990s],” she added.

“We really have to address the power supply here because our reserves are really thin so we have to attract more investments to the power sector to ensure that we have enough supplies.”

On Friday, the BoI also granted tax incentives to nine projects of five local renewable energy firms. — A.G.A. Mogato

PHL, China sign agreement for maiden panda bond issuance

THE Philippine government and the Bank of China (BOC) on Thursday signed the underwriting agreement of the country’s maiden issuance of $200 million worth of yuan-denominated securities or panda bonds.

Finance Secretary Carlos G. Dominguez and BOC Chairman Chen Siqing signed the agreement during the official visit of Chinese Premier Li Keqiang at the Malacañang on Thursday. Mr. Keqiang and President Rodrigo R. Duterte stood as witnesses.

“The Panda bond issue will diversify our funding sources and provide benchmarks for other Philippine issuers in the onshore market, particularly at this time that the renminbi is a reserve currency,” National Treasurer Rosalia V. de Leon said in a statement, noting that the securities to be offered will bolster China’s financial support for critical infrastructure projects in the Philippines.

Mr. Dominguez added that the issuance of panda bonds “will depend on market conditions, the possible business risks and the trend in dollar interest rates.”

Moreover, Ms. de Leon told reporters on Thursday that the government is still working on issuing the panda bonds at the end of the year, as they are still waiting for the approval of the People’s Bank of China (PBoC), Bejing’s central bank.

“We’re working [to hopefully offer it] within the year. We’re waiting the approval of PBoC,” Ms. de Leon said after Thursday’s Treasury bill auction.

On September, the country’s economic delegation led by Mr. Dominguez headed to China for a non-deal roadshow to lure potential investors to buy Panda bonds.

Aside from the underwriting agreement, Mr. Dominguez also signed deals with Export-Import Bank of China President Liu Liange for the latter to partially finance three infrastructure projects, which include Kaliwa Dam-New Centennial water source and the Chico River pump irrigation facility. — K.A.N. Vidal

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