MERCHANDISE EXPORTS grew by double-digit pace for the third straight month, while factory output increased at a faster clip in May, the Philippine Statistics Authority (PSA) reported yesterday, supporting hopes for robust economic growth this quarter. Read the full story.
Venezuelan opposition activists remain behind a shield as they clash with riot police during a protest against Venezuelan President Nicolas Maduro in Caracas on July 10, 2017.
Venezuela hit its 100th day of anti-government protests amid uncertainty over whether the release from prison a day earlier of prominent political prisoner Leopoldo Lopez might open the way to negotiations to defuse the profound crisis gripping the country.
FRANCE — A man vaults over a bull on June 26, 2017 at the Jean Barrere Arean in Escalans.
For a lot of gamers, creating an original video game is “the dream.” Discussions between gamers sometimes revolve around how to make current games better or how to make something completely original. But successfully launching a game requires time, skills, talent, and, of course, money.
A company of millennial game developers (their “oldest” employee is 27 years old), took to Kickstarter to fund their horror video game, The Letter. The company, called Yangyang Mobile, launched their Kickstarter campaign in October 2015, hoping to raise $30,000, and ending up raising more than that. By November 2015, they had $33,946—enough money to complete their game. But that’s not all. They opened a subsequent campaign on IndieGoGo, which helped them raise an additional $5,000, and allowed them to hire voice actors to breathe life to their game. The game will be released on July 24.
Even if the days before game release could be considered the most hectic time in a game developer’s career—with all the fine‑tuning that must be done to ensure that the game is running perfectly and the additional advertising to remind the market that, hey, we still exist—Yangyang Mobile co‑founder Danni Ann Taylan took the time to talk to SparkUp about the ups and downs that their company experienced in completing their first PC game.
“At first we were making mobile games then we decided to switch to desktop,” said Ms. Taylan, who named the company after her child. “Supposedly our company’s goal was to create small mobile games and then see if one of them clicks. But then the mobile market is very saturated, so many games are released every day. So that’s why we decided to find a niche and decided to make a visual novel game.”
Visual novel is a type of video game that is, indeed, notable for being story‑driven, with players making choices that would affect how the game ends. Playing a visual novel often entails a lot of reading, and much pause, literally, when you have to make a game‑changing choice or are rewarded with more character development and art. (Think of it as the video game version of the Choose Your Own Adventure books that were so popular in the ’80s and ’90s.) This style of video game is often used for romance games, but popular examples of visual novels also include the courtroom drama series of Ace Attorney and the horror game Corpse Party (which is one of the inspirations behind The Letter, along with several Japanese horror movies—the people at Yangyang being huge fans of Japanese horror and pizza).
“We needed to find that certain market that we can hit: it’s not that big, but it’s enough for us to have a following for our future games,” explained Ms. Taylan. “Right now we’re targeting the visual novel market, gamers who enjoy how to read. It’s not a very popular genre but it’s big enough for us to make a market out of it.”
Despite being overshadowed by other game genres such as fighting games, action‑adventures and platformers, visual novels have a huge following on Kickstarter, which is why Yangyang games chose the American‑based crowdfunding platform to raise funds for their game. “There’s a strong support for visual novels on Kickstarter compared to IndieGoGo. I think it’s because even if it’s a niche market, the players are supportive. They really help developers get their games started in order to play something new,” said Ms. Taylan.
“Majority of our Kickstarter backers pledged $10 for the game, but we’ve also had some whales (large supporters) that paid around $1,000‑$2,000 for the game.” In fact, one whale in particular pledged $3,000, an amount that came with the power to design a new playable major character for the game. From its original six, the game now has one more playable character. The Kickstarter supporters who pledged $80 or more to the game were given the chance to test the game, having their input on design and story changes (such as the main monster design and when to throw in jump scares) considered throughout the game development.
Putting the game up on Steam, a popular gaming platform where players can buy games and communicate not just with each other but also with game developers as well, also helped Yangyang Mobile get the word out about The Letter. Steam Greenlight, a service once offered by the platform that allowed game developers to get feedback on their developing game, showed there were enough people on Steam who were willing to buy The Letter upon its release. “Just putting the game up on Steam Greenlight helped in publicity because there are a lot of eyes on Steam. When our game was on Greenlight, a lot of players—our target market is in the US—discovered the game just by browsing through Steam,” Ms. Taylan said. “We even have a Steam store page up now. The organic traffic in Steam is high, so we get 5,000 to 10,000 unique views on the game even if it hasn’t been released yet.”
For added publicity, Yangyang mobile also sent copies of the game’s demo to Youtubers who have Let’s Play channels. “We emailed a lot of them—of course, a lot of them ignored us. But we also got the interest of some of them like The Anime Man who has a lot of subscribers who found our Kickstarter campaign because of his video,” said Ms. Taylan.
The story of The Letter follows seven playable characters as they explore the haunted Ermengarde Mansion. (Yes, they named it after the character from Princess Sarah/A Little Princess.) The cast of playable characters includes a Filipina real estate agent, a Scottish history teacher, an American photographer, an American detective, a British couple and an Irish interior designer. Their relationships with each other and the choices of the player determine if they and their friendship can survive the curse of the Ermengarde mansion. (“As much as possible we want the characters to be relatable, everyday people that you can encounter in real life,” said Ms. Taylan.) The game also has quick-time events which can add tension.
As the game nears its release, Ms. Taylan said Yangyang has another game in the works. “We’re trying to make a girl‑on‑girl romance game next,” she said. “That’s also a popular type of visual novel game. We’re also thinking of making a hack‑and‑slash type game.” Art and previews of “Project Yuri” (working title), the girl‑on‑girl romance visual novel can be seen by supporters of Yangyang mobile on Patreon.
The Letter will be released on July 24. Visit www.yangyangmobile.com to stay posted.
The existence of unicorns—mythical creatures depicted in medieval folklore as horse‑like animals with a single horn on their forehead—remains a big question until now. But in business, these whimsical creatures certainly exist. They are startups that have reached a valuation of $1 billion or more.
Famous young companies that have gained the title are Uber, Grab, Airbnb, Xiaomi, and Spotify, to name a few.
In the Philippines, however, a unicorn is yet to emerge.
For Manuel Ayala, managing editor and chief operating officer of investment banking company IRG, mentorship is the key for a Filipino startup to flourish in the global business scene.
Mr. Ayala is also the co‑founder and chairman of Hatchd Digital, an accelerator for tech‑related startups in the country. Among the young companies that the group has supported are online pawnshop PawnHero and digital news website Rappler.
Hatchd Digital provides selected tech startups with six‑to‑nine month feedback sessions and an access to more than 3,000 mentors worldwide, on top of a financial assistance.
“Personally I don’t want to focus on the word unicorn or on a particular number. Our endeavor is to help companies accelerate and scale up from where they are,“ he said.
If you ask Jomari Mercado, national technology officer of Microsoft Philippines, local startups should know how to utilize technology effectively.
“They should find the real business reason behind investing in technology. It’s the same concern we have in a major organization,” he said. “Same thing with startups, if they just buy technology just for the sake of technology it’s not gonna get them anywhere. They should invest in right technology because there is a use for it in their business process.”
According to Mr. Mercado, a Filipino unicorn is “just around the corner.” It’s just a matter of “how well they can leverage on what it takes.”
“Microsoft is very firm in supporting startups, as well as in encouraging the proper use of technology and all the latest development in technology that will turn out to be beneficial to companies whether large, small, or startup, ” he said.
Like Mr. Mercado, Donald Lim—CEO of global media and digital marketing firm Dentsu Aegis Network Philippines—is also confident that a Filipino unicorn will exist.
“There is no way for the Philippines not to have a unicorn because we’re the most creative people in the world,” he said.
According to him, startups in the country have strong ideas, but selling their products to the market remains to be a big challenge.
Aside from the right funding, effective marketing strategy, and clear target audience, Mr. Lim said local startups needs “a bit of humility.”
“They have a good idea, but when people give them new ideas, they think their idea is already the best,” he explained. “I think they need to be more open. They need to get the help from the venture side, marketing side, and even the government.”
For Francis Simisim, CEO of technology products and services provider Social Light, Inc., the government has a huge role in developing a startup that could become a unicorn. He said the government should establsih a friendly environment for investors.
“It will come down to the government and their policies on pushing for more investors and having a more investor‑friendly environment,” he said.
“With the government’s support, we can expect the private sector to follow on supporting these disruptive startups. For unicorns to exists, the environment must be investor friendly.”
STATE-RUN Credit Information Corp. (CIC) is on track to get the country’s centralized credit information system up and running by January next year, albeit noting that several system issues may delay the process.
The CIC said its January 2018 target for the database to go live may be pushed back should the firm experience issues in the system primarily involving security measures.
“I think so, the only thing that might possibly delay it is if we encounter any major connectivity issue or any security issues,” CIC President and Chief Executive Officer Jaime P. Garchitorena told BusinessWorld in an interview when asked if they are on track to make the database live by January.
Mr. Garchitorena added CIC could face these types of issues amid constant reports of hacking, but noted the firm remains keen on keeping to its schedule.
To recall, in June, technology troubles hit some of the country’s biggest banks, namely Bank of the Philippine Islands (BPI) and BDO Unibank, Inc. (BDO), which the central bank said likely dealt a “reputational” blow to these lenders.
BPI said the incorrect account balances that occurred early last month due to human error after a programmer made a mistake in posting debit and credit transactions that doubled amounts deposited or withdrawn. Some 1.5 million BPI clients were affected by the data processing error that saw about P46 million mistakenly withdrawn from bank accounts.
Meanwhile, Sy-led BDO Unibank, Inc. in June said it recorded at least 95 cases of card fraud after seven automated teller machines were reportedly tapped into using skimming devices that stole client data and passwords.
“So we’re committed to the January or early 2018 live launch but we’re constantly monitoring the environment for any changes in the security [or] any changes in connectivity,” Mr. Garchitorena noted.
Early this year, the CIC said it expects the country’s centralized national credit information system to go live by January or even earlier should the database’s nine-month pilot phase — which began on May 8 — run smoothly.
Republic Act No. 9510 or the Credit Information System Act mandates the establishment of a comprehensive and centralized credit information system, with CIC tasked to consolidate the data.
The law also states that submitting entities, which are the lenders, are required to submit and provide all credit data of their borrowers in their database to the CIC.
“Of course, this is not a ‘launch or die’ kind of thing. If you recall, the thing that we protect the most is the data… The National Privacy Commission also has some influence on how the data is used,” Mr. Garchitorena said.
“I can guarantee that the system will be ready but if the environment is not ready for whatever reason, then we’ll delay,” he said. “So let’s just say the probability of us launching in January is very high, but…what we’re saying is that we would never sacrifice the integrity of the data if there is a circumstance that will require us not to launch in January.”
To date, the CIC has recruited 104 financial entities to join the testing phase of its database. The system has two current users: the special accessing entities (SAEs) or credit bureaus and the submitting financial institutions, such as banks, cooperatives, lending firms, to name some.
The CIC has said the pilot database will be used by financial firms and SAEs solely for review purposes and not meant for any decision-making involving credit.
Currently, there are four official SAEs namely local firm CIBI Information, Inc., South Africa’s Compuscan, Italy’s CRIF S.p.A, and United State’s TransUnion Information Solutions, Inc.
The law has defined an SAE as a duly accredited private corporation engaged primarily in the business of providing credit reports, ratings and other similar credit information products and services. — Janine Marie D. Soliman
THE CENTRAL BANK’S rediscount window remained untapped in June, ahead of adjustments in the borrowing rates which will kick in this month.
In a statement, the Bangko Sentral ng Pilipinas (BSP) said the total loan availments under the peso rediscount facility remained at P15 million as of end-June, as banks saw no need augment their money supply to service client transactions.
The rediscount facility has been left untouched for two straight months, with the entire P15-million loan recorded in April.
Philippine banks may avail loans from the BSP’s rediscount window in order to meet their short-term liquidity needs, where they can present promissory notes from outstanding client debts as collateral.
These loans mature in different tenors, ranging from three to six months. The lenders may then use the fresh money supply to extend more loans or service withdrawals.
This comes ahead of the shift to uniform borrowing rates under the peso rediscount window which take effect on July 21, after the central bank decided last month to lift the preferential rates extended to small lenders.
The BSP said it will be closing the special rediscount window for thrift, rural, and cooperative banks, where they are allowed to incur loans at a smaller margin compared to those imposed on universal and commercial banks.
With the adjustment, rediscount loans availed by the small banks will be charged the same rates imposed on the big lenders, which currently stand at 3.5625% for loans maturing in 90 days and 3.625% for 180-day credit lines.
Likewise, no banks tapped the dollar and yen rediscount facility during the first semester, according to central bank data.
Still, interest rates under the foreign currency windows went up this July, in sync with an uptrend in global borrowing rates.
Yields for dollar loans inched up to 3.29917% for 90-day loans; 3.36167% for 91- to 180-day loans; and 3.42417% for 181- to 360-day loans. On the other hand, yen borrowings will also likewise see higher rates at 1.99986% for one to 90-day loans, 2.06236% for 91- to 180-day loans, and 2.12486% for 181- to 360-day loans. — Melissa Luz T. Lopez
THE PESO weakened against the greenback yesterday, hitting a new 10-year low, as upbeat US jobs data supported the case for another interest rate hike by the US Federal Reserve by yearend.
The local currency closed at P50.695 versus the dollar on Monday, dropping 11.5 centavos from its P50.58-per-dollar finish on Friday.
Yesterday’s close was a fresh low for the peso as this was its weakest close in over a decade or since it ended at P50.735 against the greenback on Sept. 1, 2006.
The peso opened Monday’s session a shade lower at P50.59 per dollar. Its intraday peak was logged at P50.58 against the greenback, while its worst showing for the day was at P50.695-to-the-dollar.
Dollars traded amounted to $438.8 million, down from $514.7 million seen last Friday.
Traders attributed the peso’s weakness against the dollar to upbeat US non-farm payrolls (NFP) data, which boosted expectations of the US central bank hiking interest rates anew before the year ends.
“Last Friday, we saw very good NFP numbers, which was more than what was expected in the market. However, wage growth came out less than what was expected,” one trader said by phone.
Similarly, another trader said on Monday: “The dollar appreciated today, as the jump in US non-farm payrolls increased the chances of another US rate hike before the year ends.”
The US Labor Department reported on Friday that US job growth surged more than expected last month and employers hiked hours for workers, which reflected a tightening in the US labor market, in return, could keep the Fed on track for a third rate hike by yearend despite sluggish wage gains.
Non-farm payrolls jumped by 222,000 jobs in June, driven by hefty gains in healthcare, government, restaurants and professional and business services sectors. That was the second biggest payrolls increase this year and beat economists’ expectations for a 179,000 rise. The economy also created 47,000 more jobs in April and May than previously reported. While the unemployment rate rose to 4.4% from a 16-year low of 4.3% in May, that was because more people were looking for work, a sign of confidence in the labor market.
The Federal Reserve raised its benchmark overnight interest rate in June for the second time this year.
“Still, overall, the dollar remains to be very supported. The data proved the US economy remains to be stable and improving and consistent with the tone of the Fed… Authorities think that any weakness like the previous NFP data may just be transitory, so their view still goes back on the upside of the data and stable economy,” the trader said.
One trader noted that the Bangko Sentral ng Pilipinas (BSP) was present in the market during yesterday’s session. As regulator to the Philippine financial system, the BSP sometimes intervenes in the daily foreign exchange market in order to temper any sharp peso swings and maintain its stability.
The second trader noted that the exchange rate could settle at P51-to-the-dollar level within the month.
“The next target is P51 levels. The range in the next few days depends where the authorities will try to temper the move but it looks as though the higher dollar is the general direction. I think we’ll see the P51 levels or higher than that if this continues… Maybe soon we’ll see it, probably this month or probably next week,” the trader said.
For today, the both traders see the peso moving within P50.60-P50.80 versus the dollar.
“The peso might generally move sideways, although it might show some upward bias due to profit-taking amid bets of softer US inflation and likely stronger Philippine data on exports and industrial production. The peso’s correction might be capped by continued expectations of another US rate hike this year,” the other trader said. — Janine Marie D. Soliman with Reuters
AXA LIFE Insurance Corp.’s (AXA Philippines) bancassurance partnerships with Metropolitan Bank & Trust Co. (Metrobank) and its thrift banking arm Philippine Savings Bank (PSBank) have borne fruit, as more than half of the insurer’s business operations now come from the lenders.
The chief of AXA Philippines — which is 25%-owned by GT Capital Holdings, Inc. and 28% by First Metro Investment Corp., both controlled by tycoon George S.K. Ty of the Metrobank Group — said its collaboration with Metrobank and PSBank “is doing extremely well,” as it contributes 60% of the life insurer’s total business operations.
“We’re doing extremely well and we’re very proud of our joint venture partnership with Metrobank and PSBank,” AXA Philippines President and Chief Executive Officer Rahul Hora said in a recent press conference.
“When a customer walks in a Metrobank or PSBank branch, he can get a full range of financial products from those institutions, from banking, to loan, to investment, to life insurance, to general insurance products, and that’s what really makes us closer to convenience that we want for our customers,” Mr. Hora said.
As of end-2016, AXA Philippines had more than 3,000 exclusive agents and 693 financial executives in a total of 938 Metrobank and PSBank branches nationwide.
Asked how the joint venture has contributed to the life insurer’s performance, Mr. Hora said, “For us internally, 60% of our business actually comes from Metrobank, so for us it’s a very, very important partnership.”
Metrobank is the country’s second largest bank in asset terms with P1.423 trillion at end-June 2016.
“And more importantly, if you look at the Metrobank branches, almost 100% of the branches are active, which means they do sell life insurance and general insurance products coming from AXA,” Mr. Hora said. “And I think that’s a big measure because the Metrobank staff, the Metrobank employees, are embracing the fact that they want to be a financial institution where the customer began all their financial products on one institution.”
Latest data from the IC showed AXA Philippines ranked second in premium terms in 2016 with P21.6 billion.
AXA Philippines has been operating here since 1999 and pioneered bancassurance operations — which is the distribution of insurance products through banks’ branch networks — in the country.
Shares in Metrobank gained P1.40 or 1.51% to close at P94.15 apiece on Monday, while PSBank shares went down by P1.90 or 2.11% to P88.10 each. — J.M.D. Soliman
By Melissa Luz T. Lopez
FOREIGN direct investment (FDI) net inflows to the Philippines hit a 12-month high in April even as they slid from the year-ago record haul, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.
Net FDI inflows jot $874 million that month, 71.71% more than March’s $509 million and the biggest haul since the $2.244 billion recorded in April 2016. But April’s net inflows were still down 61.1% year-on-year.
April’s net inflows brought the year-to-date haul to $2.434 billion that was a third less than the $3.581 billion recorded in 2016’s comparable four months.
In a statement, the BSP attributed April’s 12-month-high net inflows to the “continued investor confidence in the country’s sound macroeconomic fundamentals,” even as they were down from a year ago.
Analysts previously attributed April 2016’s one-time surge to front-loading ahead of the May 9 national elections, which saw former long-time Davao City mayor Rodrigo R. Duterte win the presidency.
In April this year, economic managers staged the “Dutertenomics” forum that showcased the government’s six-year P8.4-trillion “Build, Build, Build” infrastructure spending plan.
FDIs are a key source of capital for business expansion that, in turn, generate additional gainful jobs.
The central bank expects FDI net inflows to reach $8 billion this year, just a tad more than 2016’s actual $7.93 billion.
SAFER BETS
April also saw investors continue to prefer debt instruments more than equity placements, which analysts said reflected market caution.
Foreign firms’ lending to their Philippine affiliates sustained a three-month rise in April to reach $723 million, even as those inflows were just a little more than half the year-ago $1.345 billion.
Reinvested earnings were the only FDI segment that grew year-on-year in April, rising 9.3% to $81 million from $74 million.
Equity investments netted $70 million in April, dropping 91.6% from the peak $825 million posted a year ago. Gross placements reached $84 million, down 90% from the year-ago $839 million, while total withdrawals rose 6.4% to $14 million from $13 million in the same comparable months.
“The shift from equity placements to debt instruments might be reflection of rising uncertainty in the market. Debt is relatively safer than equity,” said Guian Angelo S. Dumalagan, market economist at Land Bank of the Philippines.
“With more uncertainty domestically and abroad, foreign investors might be opting for the safer alternative, which is debt.”
Mr. Dumalagan said April’s lower FDI net inflow was likely due to rising global interest rates, particularly after a 25-basis-point rate hike in the United States in March, as well as geopolitical tensions.
For his part, Union Bank of the Philippines chief economist Ruben Carlo O. Asuncion said the latest FDI tally showed that foreign investors are now focused on opportunities for expansion: “Instead of direct injections, foreign companies in the Philippines are either expanding existing projects and/or paying existing debts.”
“[D]espite all these external factors, the Philippine economy is resilient, and this resilience comes from a robust macroeconomic environment still despite the local political noise. The Philippines’ economic growth story is still seen to be intact and (the economy) is expected to grow further,” Mr. Asuncion added, noting that investors are drawing confidence from reforms on Mr. Duterte’s agenda.
Year-to-date, equity placements amounted to $170 million, 87.6% less than the year-ago $1.375 billion, reinvested earnings grew 7.5% to $274 million from $255 million while investment in debt instruments of local affiliates edged up two percent to $1.989 billion from $1.951 billion.
Japan, the United States, Singapore, Hong Kong, and Germany were the biggest sources of equity capital in the four months to April, with funds going to real estate; financial and insurance sectors; wholesale and retail trade; manufacturing; as well as electricity, gas, steam and air conditioning supply activities.
The US State Department said in a June 29 report that Philippines has become a “more attractive” investment destination, despite nagging constraints such as foreign ownership limits and poor infrastructure that prevent businesses from expanding operations. However, FDI to the Philippines continues to lag behind those of many of the country’s neighbors.
