T-bond yields drop as market awaits BSP move

August 14, 2024 | 12:04 am

THE GOVERNMENT made a full award of the reissued 20-year Treasury bonds (T-bonds) it offered on Tuesday at a lower average rate amid strong demand and despite some uncertainty regarding the Bangko Sentral ng Pilipinas’ (BSP) policy decision on Thursday.

The Bureau of the Treasury (BTr) raised P30 billion as planned via the reissued 20-year bonds it auctioned off on Tuesday as total bids reached P73.348 billion, or more than double the amount on offer. This brought the outstanding volume for the series to P383.3 billion, the Treasury said in a statement.

The bonds, which have a remaining life of six years and 11 months, were awarded at an average rate of 6.128%. Accepted yields ranged from 6.05% to 6.14%.

The average rate of the reissued papers dropped by 29.9 basis points (bps) from the 6.286% fetched for the series’ last award on July 9, and was also 39.3 bps lower than the 8% coupon for the issue.

However, this was 0.8 bp higher than the 6.115% seen for the same bond series and 5.4 bps above the 6.117% quoted for the seven-year bond, the tenor closest to the remaining life of the papers on offer, at the secondary market before Tuesday’s auction, based on PHP Bloomberg Valuation Service Reference Rates data provided by the BTr.

The BTr fully awarded its T-bond offer as rates declined versus the previous reissuance of the series, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

This, even as the average rate fetched for the papers was slightly higher than secondary market levels ahead of the BSP’s policy meeting, Mr. Ricafort said.

“The higher rate was due to some investors being uncertain of BSP’s move on Thursday. Still, this auction result is good if you compare it to the one-year bills,” a trader said in a text message.

On Monday, Treasury raised the planned P7 billion via the 364-day Treasury bills (T-bills) as demand totaled P19.985 billion. The average rate of the one-year debt inched down by 1.2 bps to 6.062% from the 6.074% quoted for the tenor last week.

Analysts are divided on the Monetary Board’s rate decision this week as faster inflation in July caused BSP Governor Eli M. Remolona, Jr. to take a less dovish policy stance.

The BSP is now “a little bit less likely” to cut rates at Thursday’s policy meeting following the elevated July inflation print, Mr. Remolona said last week, adding that they remain open to off-cycle moves.

A BusinessWorld poll showed that nine out of 16 analysts surveyed expect the central bank to deliver a 25-bp rate cut at Thursday’s review.

This would bring the target reverse repurchase rate to 6.25% and would be the first reduction in benchmark borrowing costs since November 2020, or during the height of the coronavirus pandemic.

Meanwhile, the seven other analysts polled expect the BSP to keep rates steady this week amid lingering risks to the inflation outlook and with the US Federal Reserve seen to deliver a jumbo rate cut next month.

The Monetary Board has kept its policy rate at an over 17-year high of 6.5% since October 2023 following cumulative increases worth 450 bps.

Headline inflation picked up to a nine-month high of 4.4% in July from 3.7% in June, the Philippine Statistics Authority reported last week. This was slower than the 4.7% print in the same month a year ago and was within the BSP’s 4%-4.8% forecast for the month.

However, this was the fastest print in nine months or since the 4.9% clip in October 2023. It also marked the first time since November that inflation exceeded the central bank’s 2-4% annual target.

Meanwhile, the Fed is expected to begin its monetary easing cycle by September, with markets seeing more than 50 bps in cuts following recent data pointing at a potential slowdown in the world’s largest economy.

The Fed has kept its benchmark overnight interest rate at the current 5.25%-5.5% range since July 2023 after increases worth 525 bps.

The Treasury is looking to raise P220 billion from the domestic market in August, or P80 billion from T-bills and P140 billion via T-bonds.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.48 trillion or 5.6% of gross domestic product for this year. — AMCS

Food banking to alleviate hunger

August 14, 2024 | 12:04 am

unrecognizable-volunteers-packing-donated-food-cardboard-boxes — DRAZEN ZIGIC-FREEPIK

(Part 1)

All over the world, levels of hunger are expected to remain “shamefully” high according to United Nations (UN) officials in a recent report that predicts that almost 600 million people will be undernourished by 2030.

The report was issued by UN officials asking donor governments to rethink prioritizing national interests over foreign aid. Despite the very high level of hunger, especially in Africa, UN estimates also show that official development assistance (ODA) is going down. Only about a quarter of that assistance ($77 billion) went to improving food security and nutrition in 2021, the most recent year for which there is data.

Unfortunately, in some of the donor countries, national interests are being prioritized over foreign aid (e.g., America First) leading to a cutback on foreign aid. Alvaro Lario, president of the UN’s International Fund for Agricultural Development (IFAD), told the Financial Times that there is a clear danger that there will be less resources available for tackling the global issue of food insecurity.

Worldwide, rates of hunger rose during the COVID-19 pandemic and the full-scale invasion of Ukraine by Russia. In 2023, between 712 million and 757 million people were facing hunger, according to the UN Report. While the number of people without enough to eat has declined in Latin America and the Caribbean and is relatively unchanged in Asia, it is continuing to rise in Africa. Overall, a higher portion of people are undernourished today than 10 years ago.

If the trend is not reversed, there will be 582 million people chronically undernourished by 2030. UN officials believe that the goal of zero hunger by 2030 could have been achieved with more funding from donor governments and better coordination. Often foreign aid is focused on emergency assistance, but more funds should have been channeled to help farmers improve their productivity.

According to the same UN study, food insecurity in the Philippines was among the worst within the Southeast Asian region during the period 2021 to 2023, with some 51 million Filipinos experiencing moderate or severe hunger or severe “food insecurity.” According to the UN, a person is considered food insecure if he or she lacks regular access to safe and nutritious food for normal growth and for an active and healthy life. The UN defines food security as a situation where all people, at all times, have physical, social, and economic access to sufficient, safe and nutritious food that meets their dietary and food preferences.

The rate of moderate or severe food insecurity in the total population was 44.1% in the Philippines, the third highest in the region, after Timor-Leste (53.7%) and Cambodia (50.5%). The average cost of a healthy diet in the Philippines increased to $4.10 per person daily in 2022, higher than the $3.84 the year before. At this level, it became more expensive than the world average of $3.95 per person. All in all, the number of Filipinos who were not able to afford a healthy diet stood at 55.6 million in 2022 among a total population of some 115 million.

It was admirable for President Ferdinand Marcos, Jr. not to gloat over the many reports from international agencies — like the World Bank and the Asian Development Bank as well as multinational banks and think tanks — that the Philippines is now, together with Vietnam and India, the fastest growing country GDP-wise, not only in the Indo-Pacific region but all over the world at about 6% per annum. He was quick to point out in his third State of the Nation Address (SONA) that such a high GDP growth is pointless because a large portion of the Philippine population continue to wallow in poverty and hunger. Indeed, on the Saturday after he delivered his SONA, prominent economist Mahar Mangahas reported in his regular column entitled “Social Climate” in a leading daily that the rate of hunger in the Philippine population is not only so high but is also rising quickly.

According to his Social Weather Station (SWS) — which was started in July 1998 — despite so much general economic growth, in terms of GDP per person, there has been no long-term decline in hunger, in contrast with self-rated poverty, which has declined slightly over the past four decades.

What is even more worrisome is that hunger happens to both the poor and the non-poor.

According to the SWS survey it is expectedly higher among the poor at any point of time. In June 2024, for instance, the hungry were 21.3% among the poor versus only 12.7% among the non-poor. Among the non-poor, the hunger rate fell momentarily, from 10.4% in September to 5.9% in December 2023. But then it rose to 9.8% in March 2024 and most recently to 12.7% in June 2024.

The surge of hunger among the non-poor is more recent and may be partly attributed to the high food inflation in the first semester of 2024, resulting from the drop in agricultural output that the extremely hot weather of El Niño brought with it. Surveying hunger and poverty together has enabled the fluctuations of hunger among the poor and non-poor to be seen. The relation of hunger to food poverty is even stronger.

Another correlation now universally recognized is that between hunger and malnutrition among children and education quality.

Educators, economists, and medical practitioners have repeatedly pointed out that it is impossible to address the educational outcomes in our public schools without the government addressing the problem of malnutrition affecting some 30% of early learners, as was pointed out by former Secretary of Education Edilberto de Jesus in a column of a prominent daily. In his words: “This is the silent, ticking time bomb serially crippling every generation that suffers through it. Past a certain point, the malady permanently limits the children’s capacity to learn, aggravating the problem and raising its cumulative burden and costs. Investments in additional classrooms, curricular reform, and additional training and incentives for teachers are necessary, but they will not achieve the level of learning expected from children who go to school hungry. Even the Divine Teacher had to perform the miraculous multiplication of loaves and fishes to make sure the people were properly fed before He began teaching them the Gospel values.”

We should appreciate the fact, therefore, that President Marcos Jr. spent the first 10 minutes or so of his SONA on the most serious economic problem of the Philippines today, i.e., food security and related issues of the high prices of food and hunger. As Alex Escucha, a fellow columnist in this paper and President of the Institute for Development and Econometric Analysis, Inc., pointed out in a recent column, the President however fell short of setting measurable goals. It is hoped that in his next SONA, he will heed the advice of Alex to come out, for example, with the following metrics as regards the serious problem of the stunting of children because of undernourishment and malnutrition: “Accelerate the target to cut the rate of stunting (of children) from 26.7% in 2021 to 5% by 2030, instead of 17.9% in the 2023-2028 Philippine Development Plan (page 87).”

This setting of measurable goals will also help concerned citizens in the business sector and civil society to identify their respective roles in fighting hunger in the Philippines, especially among children. It is clear that the Government cannot attain the goal of Zero Hunger alone.

(To be continued.)

Bernardo M. Villegas has a Ph.D. in Economics from Harvard, is professor emeritus at the University of Asia and the Pacific, and a visiting professor at the IESE Business School in Barcelona, Spain. He was a member of the 1986 Constitutional Commission.

bernardo.villegas@uap.asia

Spanish techno festival introduces tests to detect spiked drinks

August 14, 2024 | 12:03 am

CULLERA, Spain — An electronic music festival on a beach in eastern Spain has set up tents where revelers can drug-test their drinks to ensure they do not contain psychoactive substances slipped into the beverages without their consent.

At the so-called “violet point” of the Medusa Sunbeach Festival, social workers also respond to possible cases of gender-based violence or sexual abuse.

The testing kits, a first for Spain, detect GHB, also known as liquid ecstasy, a color- and odorless party drug that acts as a central nervous system depressant. In recent years, it has gained notoriety as a “date-rape” drug.

The violet points rolling out at public gatherings such as fairs and concerts are an initiative of the Spanish Equality Ministry, in collaboration with local governments, to aid victims and witnesses of sexual harassment and gender-based violence. Their name derives from the purple color associated with the feminist movement.

Rosana Galvez, a social worker for the Valencia region’s women’s network, said the tests were a way to prevent sexual assaults.

Samples are taken with droppers from attendees’ drinks and inserted into a test tube with a chemical reagent. If the liquid contains GHB, it turns bright red. The protocol mandates alerting emergency services and law enforcement whenever there is a positive reaction.

“I think the violet point is very important. At a festival, you’re surrounded by a lot of people and it’s very normal for somebody to slip something into your drink without you noticing,” 18-year-old Adriana Barros told Reuters.

Raquel, 23, who declined to give her last name, said it was reassuring to “have a place where, if something happens to you, you know that you can go for help or advice.”

Medusa, Spain’s largest electronic music festival, celebrated its 10^th anniversary with more than 56,000 people attending Saturday’s performances, according to organizers.

In 2022, it made headlines when strong winds caused the collapse of a metal structure, killing a 22-year-old man and injuring nearly 40 people. — Reuters

LT Group’s earnings hit P12.8B amid tobacco decline

August 14, 2024 | 12:03 am

LUCIO C. TAN-led conglomerate LT Group, Inc. said its first-half attributable net income reached P12.8 billion, down by 2% from P13 billion last year, amid a decline in its tobacco business.

First-half revenue increased by 13.2% to P61.13 billion from P54 billion a year ago, LT Group said in a regulatory filing on Tuesday.

Among business segments, Philippine National Bank (PNB) contributed P5.77 billion, or 45% of the total net income, followed by the tobacco business at P4.87 billion, or 38%.

Tanduay Distillers, Inc. and Asia Brewery, Inc. (ABI) added P712 million and P508 million, respectively, or 6% and 4% each.

Eton Properties Philippines, Inc. and Victorias Milling Co., Inc. accounted for 2% each, at P326 million and P277 million, respectively. Other income was at P336 million, or 3%.

LT Group’s tobacco business recorded a 16% drop in net profit to P4.89 billion from P5.85 billion a year ago.

Most of the tobacco business’s income comes from its share of profits from the 49.6% stake in PMFTC, Inc., which totaled P4.43 billion. This is a 22% decrease from P5.68 billion last year.

PMFTC’s volume for the first half dropped by 14% to 10.6 billion sticks. The industry’s volume, excluding illicit trade, was 8% lower at 20 billion sticks from 21.7 billion sticks last year due to affordability challenges among consumers, increasing illicit incidence, and the proliferation of vaping products.

For the banking business, PNB’s net profit under the pooling method rose by 5% to P10.29 billion. Loans and receivables rose by 7% to P632 billion, while net interest income climbed to P24.03 billion.

Net service fee and commission income fell by 27% to P2.27 billion.

In the beverage business, ABI grew its net profit by 49% to P509 million from P340 million a year ago.

Revenues increased by 12% to P9.4 billion from P8.41 billion on higher sales volume across product lines. The Cobra energy drink maintained its leadership at a 56% market share, while bottled water brands Absolute and Summit had the third-largest share at 18%.

Meanwhile, Eton Properties grew its net income by 59% to P327 million from P206 million. Leasing revenues increased by 5% to P1.01 billion on higher occupancy rates and lease rates.

The property developer recorded P105 million in residential sales as the company resumed selling the remaining inventory of projects 68 Roces in Quezon City and Eton City in Laguna.

Eton Properties currently has a leasing portfolio of 288,000 square meters (sq.m.), of which close to 192,000 sq.m. is for office space.

On Tuesday, LT Group shares fell by 0.2% or two centavos to P9.90 apiece. — Revin Mikhael D. Ochave

DBP says capital hike to boost financing for its priority sectors

August 14, 2024 | 12:03 am

THE PROPOSED HIKE in Development Bank of the Philippines’ (DBP) capital stock to P300 billion from P35 billion will help it fund more state projects to boost the economy, its top official said.

“Other banks in our country have much more capital than we do,” DBP President and Chief Executive Officer Michael O. de Jesus said during a Senate banks committee hearing on a bill that seeks to amend its charter. “The more capital we have, the more we can finance, do business, and promote development in the country.”

“As a general rule, when there is more capital in the bank, it has more resources to lend out money to be able to comply more with its mandate to finance development projects,” Mr. De Jesus added.

End-2023 data from the DBP discussed during the hearing showed 55% of the bank’s loan portfolio went to the infrastructure and logistics sectors, with 21% being allocated for social projects such as social services, public education and healthcare.

Under Senate Bill No. 2761, which Senate President Francis “Chiz” G. Escudero filed this month, the National Government shall own 70% of the total outstanding capital stock of DBP at all times. Meanwhile, P32 billion or 10.67% of the authorized capital stock of the bank, shall be subscribed to and fully paid by the National Government.

“The Board, upon the recommendation of the Secretary of Finance and with the approval of the President of the Philippines, may increase the capitalization of the bank up to such an amount as may be necessary to attain the objectives of this Charter, and may allocate part or all of the bank’s unrestricted retained earnings towards paying for the increase in capital,” it said.

The amended DBP Charter will also let the bank conduct an initial public offering to expand its resources to increase financing for its mandated sectors.

The bill also expands DBP’s mandate to include the development of infrastructure; expansion of businesses, particularly micro, small, and medium enterprises; and education, healthcare, housing, and the environment.

It seeks to grant the state-run lender a “perpetual” corporate existence and give two seats in its board to ex officio members from the Department of Finance and the National Economic and Development Authority, with the President appointing the seven other board members.

Senator Mark A. Villar, who heads the committee, backed the proposal to raise DBP’s capital stock.

“It is crucial that our institutions are equipped with proper funding that will enable them to pursue growth initiatives which in turn will help expand local capital markets and create more opportunities for the public and private sectors to access development financing,” he said at the same hearing.

“Amending the DBP Charter will lead to an increase in funds to assist the government in pursuing economic growth and development, promoting economic empowerment and inclusivity…”

Mr. Villar referred the measure to a technical working group to refine it before it is sponsored before the Senate plenary. — J.V.D. Ordoñez

Tapping into strengths, maximizing opportunities

August 14, 2024 | 12:03 am

macro-shot-old-vintage-globe — PRESSFOTO-FREEPIK

The Stratbase team went to Cebu and Cagayan de Oro last week to hold our Stratbase Business Roundtable Discussions with business leaders and chambers of commerce in the Visayas and Mindanao. We believe it is important to know the sentiments of businesses in other parts of the country. It is they who know best what is happening in their respective spheres.

What we gathered was this: local businesses believe that the Philippines has distinct strengths and competencies, that there are specific opportunities available to us that we can maximize, that challenges remain, but that we could act on and address these challenges. They share the belief that the Philippines can be a premiere destination for both local and foreign investors.

The strengths are many, but it is these three that emerge: we have a young and dynamic population, we are rich in natural resources, and we have a strategic location at the heart of the Indo-Pacific region.

Our population of 118 million has a median age of 25 — this is a huge pool of actual and potential talent, eager to learn and participate in the economy. This makes for a booming and large consumer market, as well as a dynamic workforce. According to the think tank ASEAN+3 Macroeconomic Research Office (AMRO), the Philippine population is expected to be among the youngest in the region, with the number of working-age individuals seen to peak by 2051 — the latest among Southeast Asian economies.

The Philippines is also rich in natural resources. There is a huge potential to grow our blue economy, an industry identified by business leaders to be “untapped” especially since we are first and foremost, a maritime nation. We also have huge reserves of critical minerals such as copper and nickel which are essential components as we transition into clean energy.

The Philippines’ strategic location makes it a vital gateway for over 600 million people in the ASEAN market and a natural entry point to East Asian economies. It is positioned at a key junction for international shipping and airlines. For example, business leaders from Cebu talked about how the city is the gateway between Visayas and Mindanao. Their international airport also provides easy access to different parts of Asia. Hence, Cebu leaders are confident that the province and the region has huge potential to make the area very competitive, not just in the Philippines, but in Southeast Asia.

This location of the Philippines at the heart of the Indo-Pacific region also offers boundless opportunities. The region is said to be a key growth driver for the global economy in the coming years. In light of the recent geopolitical tensions, major global economies have been looking to derisk and decouple to shift investments to countries that share the same values that they hold.

Notwithstanding this, there are roadblocks in making the Philippines a premier investment destination, both for foreign and domestic businesses. According to the Visayas and Mindanao business leaders, while there has been interest by foreign investors to enter their region, they are having difficulty doing so due to inadequate infrastructure, the high cost of electricity, and bureaucratic concerns in starting a business. There are also misconceptions that foreigners have on the security risks in the Mindanao region — even though certain cities of the region are peaceful and have thriving business environments.

The business leaders also said that given new technologies and the world’s entry into Industry 4.0, investing in the education of the Filipino youth to upskill and reskill them is a must. They are concerned that manpower in the country is decreasing — many Filipinos are seeking jobs abroad and many also lack the skills necessary to do certain jobs.

We need to strengthen the technical and vocational education and training (TVET) program of the government and equip and train the young population to be industry ready.

Business leaders also said they need greater support to boost competencies in the following sectors: trading, agriculture, manufacturing (furniture, food, steel, light materials such as food packaging and garments), arts, the creative industry, and Information and Communication Technologies (business process outsourcing or BPO and knowledge process outsourcing or KPO), among others.

To address these concerns, business leaders from Cagayan de Oro and Cebu urge the government to listen to the concerns of the business sector and work closely with them. They also propose developing more renewable energy sources and constructing physical infrastructure, modernizing the agriculture sector, investing in connectivity, and increasing exports, since the country is importing more than we are exporting.

The business leaders affirmed the private sectors’ commitment and willingness to work with the government to develop a more attractive business environment in the region for both domestic and foreign corporations.

Our macroeconomic fundamentals are sound, with GDP growing by 6.3% in the second quarter of 2024. The Philippines remains on track to be the fastest-growing economy in the Southeast Asian region. We build on our innate strengths and on the dynamic consumption patterns of our population. But this is not enough. The economy can grow further if investments come into the country, which would create more quality, secure, green jobs for the people.

Local businesses, with their exposure to the economic realities of our country and their respective regions, have shared their grounded, realistic, and more importantly actionable insights.

We hope the administration is listening.

Victor Andres “Dindo” C. Manhit is the president of the Stratbase ADR Institute.

Edamama targets underserved parenting market

August 14, 2024 | 12:03 am

By Patricia B. Mirasol, Multimedia Producer

MANILA-BASED parenting platform Edamama wants to capitalize on the country’s underserved market as it continues to build an online-to-offline retail experience for its target market.

“We really want to be where the customer is, and 90% of retail in the Philippines today is still offline, so our goal is really to build the leading omnichannel in the country,” Bela Gupta D’Souza, one of Edamama’s founders, said in an interview on Aug. 1.

The company started in May 2020 as an online platform selling third-party childcare and mother care products. It now also sells 95,000 wares including in-house brands in its four brick-and-mortar stores in Manila, with another one set to open this month.

Edamama sells online only through its app and its website to give parents a curated shopping experience, according to co-founder Nish D’Souza.

“When you go to a horizontal marketplace, you have millions of products,” he told BusinessWorld. “When you come to Edamama, that experience is curated… You can find what you need very easily, even curated down to the age and gender of your baby.”

The company, which was No. 1 out of nine Filipino startups that landed on the Forbes Asia 100 to Watch list of 2023, also has its own in-house fleet for deliveries within the capital “to have more input on the delivery experience of the customer,” he said.

The children’s apparel market in the Philippines is projected to experience grow by 1.94% from 2024-2028, according to Statista.

The Hamburg-based web portal in a separate study in April said the size of the global parenting app market is expected to surpass $900 million (P51.4 billion) by 2030.

In June, Edamama partnered with KonsultaMD to open a pilot clinic at its Ayala Malls Feliz outlet.

Mr. and Ms. D’Souza, who are parents to three children, said it could sometimes take an hour to see a pediatrician.

“Healthcare is a friction point for some parents,” Ms. D’Souza told BusinessWorld. “The parent is seeking out not just products, but also solutions and services to help simplify their parenting journey.”

“Can we help reduce the friction in accessing healthcare by integrating a healthcare clinic in our stores?”

The reality of setting up at the height of the coronavirus pandemic brought in a lot of agility, she said.

“Everybody saw that shift to online very quickly once the lockdown came into effect,” she said. “It was very easy to work with seller-partners to onboard them quickly onto the platform, given that a lot of them knew that online was the future.”

Edamama has raised $35 million from its Series A funding round, according to Mr. D’Souza.

“The Philippines is one of the biggest markets in Southeast Asia, with high fertility rates, and one of the largest under-10 and under-14 populations globally, yet the parents here are underserved in terms of affordable quality options,” he said.

“At the end of the day, when you have a market size that big, that attracts the attention of investors,” he added.

Van Gogh’s Starry Night recreated as park in Bosnian hills

August 14, 2024 | 12:02 am

VISOKO, Bosnia and Herzegovina — Amid the green hills and meadows of central Bosnia, a local businessman has realized his long-held dream: recreating one of Vincent van Gogh’s most famous paintings, The Starry Night, in the form of a nature park.

Halim Zukic from the town of Visoko decided to create a park after buying some land and a cottage in a nearby village 20 years ago, but he had no clear idea of what it should look like.

Then, six years ago, as he stood on a hill watching tractors in a hay meadow, he noticed their spiral-shaped wheel tracks in the earth, which reminded him of the swirling motifs in Van Gogh’s canvas from 1889.

“From that moment, I was no longer in doubt,” Mr. Zukic told Reuters. But his vision took time, money and effort to realize.

Mr. Zukic wanted the 10-hectare Starry Night park to be part of a larger complex offering a retreat to visitors. He planted more trees and created 13 lakes using existing natural streams.

To match the painting, 130,000 bushes of lavender in six different shades were planted, as well as other medicinal and aromatic herbs such as sage, echinacea, wormwood and chamomile, forming colorful circles, spirals, and natural amphitheaters.

Mr. Zukic did all the landscaping himself. He said recreating the painting had helped him understand artists and the creative challenges they face.

“This is the largest representation of The Starry Night, and the result of 20 years of dreams, of living those dreams to make them real,” he said.

The Starry Night park will focus on art programs and the promotion of central Bosnia’s cultural heritage, Mr. Zukic said. — Reuters

Cosco Capital Q2 profit rises 21% to P3.55B on recovering demand

August 14, 2024 | 12:02 am

LUCIO L. CO-led retail holding company Cosco Capital, Inc. recorded a 21% increase in its consolidated net income for the second quarter to P3.55 billion from P2.94 billion last year, led by growth across all its business segments amid recovering consumer demand.

Consolidated revenue jumped by 9.6% to P55.55 billion from P50.7 billion last year, Cosco Capital said in a regulatory filing on Tuesday.

For the first half, Cosco Capital saw a 15.5% jump in consolidated net income to P6.97 billion from P6 billion last year.

Consolidated revenue surged by 8.4% to P106.4 billion from P98.2 billion a year ago.

“The group continued to benefit from the economic recovery amidst the prevailing macroeconomic challenges by way of sustained and stronger revenue growth across all its business segments, which indicates the recovering consumer demand,” Cosco Capital said.

Among segments, the grocery business group led by Puregold Price Club, Inc. and S&R Membership Shopping Club contributed 71% of total net income, followed by the liquor distribution business with 20%, the commercial real estate business with 7%, the energy and minerals business with 1.5%, and the specialty retail business with 0.5%.

First-half net income of the grocery retail group rose by 12.5% to P4.95 billion from P4.4 billion. Net sales increased by 8% to P98.5 billion on store expansion and higher comparative sales.

“During the period, the enterprise experienced positive same-store sales growth of 1.9% from Puregold Stores driven by higher traffic and 2.4% from S&R Warehouse clubs driven by higher ticket size. The company continues to see a buoyant trajectory in top line growth for the second half of 2024,” Cosco Capital said.

Cosco Capital’s liquor distribution business led by The Keepers Holdings, Inc. saw a 23% jump in its first-half net income to P1.43 billion due to the better sales performance of imported brandy, spirits, wines, and specialty beverages.

Consolidated revenue surged by 19% to P7.7 billion, carried by the 22% growth in the volume of cases sold.

The commercial real estate segment grew its January-to-June net income by 5% to P486 million from P463 million last year. Rental revenue increased by 9.4% to P613 million, led by the improved business operations of tenants, as well as the full resumption of rental rates based on contracts.

In the specialty retailing segment, Office Warehouse, Inc. increased its net income by 10.5% to P39 million, while revenue declined by 4.3% to P994 million.

The energy and minerals segment generated a P98 million net income, while revenue reached P172 million.

Cosco Capital stocks were unchanged at P4.80 per share on Tuesday. — Revin Mikhael D. Ochave

PERA contributions climb by 24%

August 14, 2024 | 12:02 am

PERSONAL Equity and Retirement Account (PERA) contributions jumped by 24.3% in the first half of the year, data from the central bank showed.

Contributions to PERA rose to P457.6 million in the first semester from P368 million in the same period a year ago, according to data from the Bangko Sentral ng Pilipinas’ (BSP) website.

The total number of contributors likewise rose by 5.3% to 5,688 in the period from 5,402 a year earlier.

Broken down, the bulk or 69% of the total were employee contributions, equivalent to P315.7 million.

This was followed by overseas Filipino worker (OFW) contributions at P78.8 million, and self-employed contributions at P63.1 million.

Launched in 2016, the PERA is a voluntary fund scheme meant to supplement retirement benefits from the Government Service Insurance System or the Social Security System, as well as private employers.

Contributors aged 18 and above and have a tax identification number are allowed to open a PERA account. Self-employed and locally employed contributors can make an annual contribution of P200,000 while OFWs can invest up to P400,000.

The PERA Law also offers various incentives to contributors, such as tax exemptions on earnings from PERA investments, a 5% income tax credit on contributions that can be used for paying income tax liabilities, and a tax-free distribution on qualified withdrawal of PERA investments.

In 2020, the BSP launched the digital platform for PERA to make it more accessible, allowing Filipinos to open PERA accounts, choose different accredited products, and settle transactions online.

Central bank officials said last month that PERA take-up has been slow despite the scheme’s digitalization. They said wider use of PERA can help increase government savings, foster investment and capital market development, which would support economic growth.

The BSP is also working to incorporate open finance in the PERA program, they said. — L.M.J.C. Jocson

Crypto startups raised more VC money during market slowdown

August 14, 2024 | 12:02 am

CRYPTO STARTUPS raised more money but closed fewer deals in the most recent quarter, mirroring the broader slowdown seen in the digital-asset world.

Venture capital (VC) investment in crypto companies totaled $2.7 billion in the three months ended in June, a 2.5% increase from the first quarter and a 9.8% decrease from the year-earlier period, PitchBook data show. The number of deals closed dropped 12.5% from the first quarter.

Overall, the crypto market faced a more challenging period after prices reached all-time highs in the first quarter amid the exuberance over the introduction of US exchange-traded funds (ETFs) being allowed to hold Bitcoin for the first time. Investor inflows into the ETFs slowed to $2.8 billion in the second quarter, down 80% from $13.7 billion in the quarter before, based on Bloomberg’s estimates.

“While still far below the 2021 and early 2022 highs, VC investing in crypto reached somewhat of a fever pitch in March and April,” said Rob Hadick, a general partner at crypto venture fund Dragonfly. “Later stages have continued to be soft and as the market turned in late April and into May, the VC market slowed again.”

Crypto market bellwether Bitcoin fell 13% in the second quarter, and has been little changed so far this quarter.

It was the third sequential quarterly increase in the total value of investment. The broader recovery this year in token prices and continued institutional adoption of digital assets suggests that fund raising will grow, Robert Le, senior analyst at PitchBook, wrote in a report on Monday.

The rise in valuations of projects in the second quarter came “as founders tried to capture the more rosy secondary market,” said Jason Kam, a founder of crypto venture firm Folius Ventures.

Investment continued to be focused on infrastructure projects such as new blockchains, while venture capitalists remained leery of consumer-focused applications. Shuyao Kong, co-founder of blockchain startup MegaETH, raised $20 million in a seed funding round in June, saying the fundraise came as the market remained “hungry” for high-performance blockchains.

The only large funding round that closed in the past quarter for a crypto application was for the social media platform Farcaster, which raised $150 million in May. Venture capitalists said there’s growing fatigue in infrastructure investment, and more VCs are looking for investment opportunities in applications, which has also contributed to the slowdown in the second quarter.

“It is a rebalancing of private investments away from infrastructure to applications,” said Tarun Chitra, a partner at Robot Ventures. “People are looking for applications and there are just fewer of those that are private market investable at the moment.”

At the same time, exit activities — the process by which investors realize returns on their investments by selling stakes in a company, increased to the most since the first quarter of 2022. There are 26 exits in the second quarter, including the acquisition of Bitstamp by Robinhood Markets, Inc. PitchBook expects exit activities could extend throughout the rest of the year.

“We expect more consolidation among crypto exchanges, custodians, and infrastructure providers as the market matures and smaller players seek strategic exits,” the PitchBook report said. — Bloomberg News

Finance for the net-zero transition must maximize and share benefits equitably

August 14, 2024 | 12:02 am

THE ASIA AND PACIFIC REGION stands at a critical juncture, positioned both as a significant contributor to global greenhouse gas emissions and a potential leader in transformative climate action. The Asian Development Bank (ADB), alongside our member countries, is steering the region towards a sustainable future through support for a just transition. Our vision aims to reorient economic and social frameworks to foster low-carbon, climate-resilient growth that enhances prosperity and inclusion.

The need for a just transition, one that puts people at the center of the shift to net zero, cannot be overstated. Asia and the Pacific account for over half of the world’s annual greenhouse gas emissions, driven by its dependence on fossil fuels. At the same time, more than 200 million people in the region are impoverished, with many lacking access to basic electricity and relying on traditional biomass for cooking and heating. Women are particularly affected, and often face disproportionate impacts.

As Asia and the Pacific’s climate bank, ADB prioritizes an inclusive approach to ensure that the costs and benefits of the transition to net zero are fairly distributed. Achieving net zero requires us to restructure our economies and change the way we live and work. It is paramount that in this process, the burdens of change are not imposed on the most vulnerable and that the benefits of a low-carbon economy are both maximized and shared equitably. Ensuring that all segments of society, including women, share in these benefits is critical to the success of our just transition efforts.

To create opportunities for inclusive and sustainable growth, ADB works with partners to implement robust policy frameworks, enhance institutional capacities and engage stakeholders through participatory processes. These just transition efforts align with global commitments such as the Paris Agreement, and at the country level we support our developing members in crafting policies and programs that respond to their unique climate challenges and development needs.

At COP27, ADB launched a Just Transition Support Platform to help drive a just transition within our developing member countries. This platform focuses on supporting countries to incorporate just transition into their institutional and policy frameworks and identify innovative financing approaches that attract public and private capital for a just transition. The platform also supports the mainstreaming of just transition in ADB’s operations.

Moreover, at COP28, ADB launched an inclusive process to design a Just Transition Finance Facility that will provide targeted finance to address the socio-economic challenges of the transition to net zero. It will help countries realize the economic and social benefits of the transition and ensure these benefits are inclusive and widespread, ultimately supporting a robust and equitable shift to low-carbon and resilient economies.

Just transition is also a core part of ADB’s Energy Transition Mechanism (ETM). Developed in partnership with ADB member countries, ETM is a scalable initiative that has the potential to be one of the largest carbon-reduction programs in the world. Under it, public and private investments — governments, multilateral banks, private sector investors, philanthropies, and other long-term investors — finance country-specific ETM funds. These funds are designed to retire or repurpose coal power assets on an earlier schedule compared with a business-as-usual timeline.

Just transition principles are a cornerstone of ETM’s implementation, helping us to ensure that potential negative socio-economic impacts are minimized through policies and programs. For example, retraining and reskilling programs provide new opportunities in emerging industries for women and vulnerable workers.

The importance of managing the social impacts associated with the transition to net zero can be seen through ADB’s work on the Cirebon 1 coal-fired power station in Indonesia. This plant serves as an ETM pilot, for which ADB completed a preliminary just transition assessment earlier this year — the first of its kind for ADB and for the region. The assessment utilized a comprehensive methodology to identify impacts along the coal value chain and within the community and surrounding areas. It also established a process to further assess and develop a plan to manage impacts at the appropriate project stages.

Just transition offers a compelling vision for green and inclusive development across Asia and the Pacific. Its promise lies not only in avoiding the worst impacts of climate change, but in creating a more equitable social order that values well-being and gender equality, provides decent work, and ensures sustainable economic growth.

We must encourage optimism and concerted effort from all sectors of society to embrace the principles of justice and inclusivity that will be needed for a low-carbon, climate-resilient future. This journey faces challenges but is also filled with opportunities for transformative change that can forge a healthier, more equitable and prosperous world. The path we chart now will determine the climate legacy we leave for future generations.

Masatsugu Asakawa is president of the Asian Development Bank. This article was first published in the OECD Development Co-operation Report 2024: Tackling Poverty and Inequalities through the Green Transition [https://doi.org/10.1787/357b63f7-en].

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