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By Ashley Erika O. Jose, Reporter
THE EXPECTED INCREASE in fees at the soon-to-be privatized Ninoy Aquino International Airport (NAIA) could alter travel demand dynamics, potentially impacting passenger volumes and operational margins for airlines operating at the airport, according to analysts.
“Higher charges ultimately end up in passengers’ wallets, and it may depress demand in the short term,” Rene S. Santiago, former president of the Transportation Science Society of the Philippines, said in a Viber message on Sunday.
“[This is] highly favorable to SMC (San Miguel Corp.) as it inherits these higher charges that cannot be attributed to it,” he added.
In June, the Department of Transportation announced that the proposed increase in passenger service fees at NAIA is intended to enhance operational efficiency.
The department said that the planned rate hike is within the approved parameters, terms, and conditions specified in the tender documents for the NAIA rehabilitation project.
Passenger service charges, also known as terminal fees, are imposed on departing passengers. Landing and take-off fees, on the other hand, are charges levied for the use of airport facilities and services during aircraft landings and takeoffs. Both fees contribute to the total cost of airfares paid by passengers.
Currently, domestic travelers pay a passenger service charge of P200, while foreign travelers pay P550. It is anticipated that these fees will rise to P390 and P950, respectively.
“The passenger service fees will be [implemented] in 2025, but other planned airport fees [are expected] before the end of the year; we have to finalize the amounts,” Transportation Secretary Jaime J. Bautista said, noting that the proposed hike will still require approval from Congress.
This means that landing and take-off fees levied on airlines will also increase by the end of the year.
“There will be an increase because the concessionaire needs to be compensated for their investments. The charges they will collect are expected to improve the airport’s efficiency,” Mr. Bautista said.
Enrico P. Villanueva, a senior lecturer at the University of the Philippines Los Baños Economics department, described the expected increase in airport fees as enhancing services but said, “It is just lamentable that fee increases appear to be sudden and pervasive, and mostly front-loaded.”
He said the new airport operator could phase in the proposed hike gradually or wait until services improve.
“Air travel is not a necessity for the majority, so demand for it is price sensitive or elastic. It is unfortunate that service fee increases come at a time when air travel is just beginning to surge again,” Mr. Villanueva said.
Nigel Paul C. Villarete, senior adviser on public-private partnership at the technical advisory group Libra Konsult, Inc., said the proposed hike is justified.
“This will result in better airport terminal services in NAIA, which seems to lag behind,” he said in a Viber message.
“Airlines may be tempted to increase airfares too, but let us hope they won’t… These [fees] are negligible in amount compared to the ticket sales revenues,” he added.
He also said that travel demand might not be directly impacted by the proposed increases in passenger service charges or landing and take-off fees, as these costs are already included in the ticket price.
“It is just a small portion thereof. It is when airlines jack up their fares that may affect demand.”
For the first quarter, international passenger volume surged to 6.97 million from 3.8 million in the corresponding period last year, according to data from the Civil Aeronautics Board.
Domestic passenger numbers for the first quarter alone totaled 7.44 million, equivalent to 25.7% of last year’s total domestic passenger volume of 28.97 million.
This year, the Department of Tourism aims for 4.8 million international arrivals, up from 2.65 million last year.
In March, the New NAIA Infrastructure Corp. (formerly SMC SAP & Co. Consortium) signed a P170.6-billion contract to operate, maintain, and upgrade the country’s primary gateway for 25 years. It is scheduled to assume NAIA operations by September.
The New NAIA Infrastructure plans to construct a new passenger terminal building with a capacity of 35 million passengers annually, as part of efforts to alleviate airport congestion.
The government anticipates earning P900 billion from the project, equating to P36 billion per year. This figure is 20 times larger than the P1.17 billion annually remitted by the MIAA over the 13 years through 2023, according to the Department of Transportation.
IN 2020, Kelvin Morales came out with a collection of cloth masks (one of our weapons against the COVID-10 global pandemic) embroidered with the death’s-head hawkmoth (Acherontia atropos) — an insect cemented in pop culture thanks to the film The Silence of the Lambs. The masks were eerie; a beautiful memento mori, in that time of death and despair.
In 2024, Mr. Morales has moved on to relatively lighter fare.
The young designer graduated from the De La Salle-College of St. Benilde in 2018, and his graduation collection was featured in several magazines, putting him on the radar of some of the city’s fashionistas. We caught up with Mr. Morales at a menswear event at Rustan’s on June 27, where his edgy collections were recently onboarded at the department store which is otherwise the epitomé of Establishment.
“We weren’t super-prepared,” he said about his collections getting picked up by Rustan’s. “Now, we’re still establishing our internal(s): our business plans and ganiyan (such).
“Pero (but) we’re so happy with Rustan’s; the response of the new market.”
Mr. Morales has been known to dress indie celebrities like singers KZ Tandingan and Unique Salonga, as well as mainstream actresses with artistic bents like Nadine Lustre. “They’re more experimental in embracing artistry,” he said about these celebrities, and his own clientele.
At Rustan’s what are stocked are some of his tamer collections of modern barongs, made of silk cocoon and embroidered with more avant-garde patterns, like fish, riots of flowers, or entire blackwork cities (unlike the more traditional barong with dainty embroidered flowers).
“Next collection, we will introduce the new calado technique,” he told BusinessWorld, referring to the open threadwork technique traditionally used in barongs.
Mr. Morales’ work shares a similar thread with a few young designers, showing traditional clothes with bolder, more modern strokes: it’s not to pit them against each other, but one wonders why modern Filipino menswear is moving in that direction. He said that there was a gap in more contemporary barong in ready-to-wear collections.
“Usually, iyong nakikita ko (what I see), more intentional,” he said, meaning these bolder barongs are usually custom-made.
At the same time, he compares the slow movement and evolution of the barong, to its female counterpart in Filipiniana dress, the terno. He observes that while still keeping its traditional shape, the terno can be played with, with different materials, or techniques. “Now, iyong market, it’s trickling down, like people really appreciate the contemporary and modern barong. Kaya naman palang maging (Turns out it can be) wearable, anytime.”
A way to preserve is to adapt: perhaps the intricacies of the barong are making it difficult to wear today, thus delegating them to special-occasion wear. In adapting the barong to contemporary settings, Mr. Morales might be helping in preserving them.
“Iyong goal ko with my barong, ayoko lang siyang maging (my goal with my barong is for it not to be for) one-time use. Kaya ko siya ginawang (that’s why I made it) more easy to wear, and style. I’m so happy na nakikita ko iyong mga people wearing barong in a random event. You can wear it in a techno party, or the beach.” — Joseph L. Garcia
MITSUBISHI Motors Philippines Corp. (MMPC) said it is studying the potential launch of hybrid electric vehicles (HEVs) and plug-in hybrid EVs in the Philippines following the expansion of the coverage of Executive Order (EO) No. 12.
MMPC President and Chief Executive Officer Ritsu Imaeda said the company actively monitors developments in Philippine government policies.
“We are now very much studying the implementation of those hybrid or battery EV products with stronger momentum. So right now, we are working on that,” Mr. Imaeda said on the sidelines of the launch of the Mitsubishi XForce on Friday last week.
The National Economic and Development Board approved in May the expansion of the coverage of EO 12, which temporarily reduces tariffs on EVs to zero until 2028.
Aside from the 34 lines of EVs covered by EO 12, it will now also cover e-motorcycles, e-bicycles, nickel metal hydride accumulator batteries, e-tricycles and quadricycles, hybrid EVs, and plug-in hybrid EV jeepneys or buses.
However, Mr. Imaeda said the company does not anticipate launching HEVs or plug-in hybrids in the near future.
“In a shorter term, for the model that is going to come in next year, we are not expecting that to come,” he said. “But we are expecting it to come at a certain time. But the actual time, I cannot say when it is going to be.”
“We are intensively studying which is the most reasonable solution for this market. So, whether we should go for battery EVs, plug-in hybrids, or hybrids, there are decisions that we have to make that fit the market,” he added.
He added that introducing hybrids or plug-in hybrids next year is possible but will be difficult.
“If the miracle happens, then we can expect that. So the right timing and the right component are something that we are studying right now,” he said.
“Maybe it could be like 2026 or 2027; of course, at least, I would like to enjoy the two-year period of the zero tariff,” he added.
He said that what is making the launch in the Philippines a bit difficult are government directives, infrastructure, and capacity issues.
“We acknowledge that the EV market is a bit too early for this market to implement in terms of infrastructure, uncertainty, and electricity supplies,” he added.
Meanwhile, MMPC is projecting its sales for this fiscal year at 90,000 units amid increasing demand for its existing products and new products.
Mr. Imaeda said that the company recorded its highest sales last fiscal year at 81,500 units. The company’s fiscal year is from April to March.
“So for this fiscal year 2024, we are aiming to go around 90,000 units,” he said on the sidelines of the launch of the Mitsubishi XForce on Friday.
“The biggest driver is the wealthy demands coming from the customers. They are very proactive in buying cars. So that is very much supporting us,” he added.
For their part, he said that to support this target, the company plans to push forward several product lines.
“We have several lineups that we would like to push forward, led by Xpander. We are also having good sales of Mirage, and we have the Triton, which we launched this January, which is also picking up right now,” he said.
“On top of that, we have this new XForce. So it’s very difficult to say which product we are focusing on because we have a good balance in the sales for all of those products. So with all of those models, we are aiming to achieve 90,000,” he added.
Mitsubishi launched on Friday a new compact sports utility vehicle, which will retail for P1.37 million for the GLS CVT variant and P1.58 million for the GT CVT variant.
In terms of market share, Mr. Imaeda said that they are targeting to go over 20% from the 18.5% share last fiscal year.
For 2024, the Chamber of Automotive Manufacturers of the Philippines, Inc. and Truck Manufacturers Association projected sales to reach 470,000.
From January to May, MMPC sold 35,146 units up 16.4% from the 30,200 units sold in the same period last year, accounting for 18.78% of the total vehicle sales during the period. In May, MMPC’s sales increased by 7.3% to 7,318 units from the 6,822 units in the previous year.
“So, yes, at least for this fiscal year, we are quite confident that Mitsubishi Philippines is going to be the number one in the ASEAN region again,” Mr. Imaeda said. — Justine Irish D. Tabile
ACCORDING to Cosmopolitan magazine, supermodel Gigi Hadid (and probably, her cohorts) is hooked on Korean skincare brand Dr. Jart+. Now Filipinos can pamper themselves like Gigi, because the brand was just launched in the Philippines.
In an event on the first day of July in Makati, the brand, bought by beauty giant The Estée Lauder Companies Inc., was officially launched in the country. It is currently sold at Watsons and LOOK At Me stores, and its products cost between P300 to P2,250.
The brand commands a bit of a steep price, but perhaps the brand’s history gives some sense why.
While BB cream was first developed in the 1960s in Germany as a way to protect the skin of dermatology patients, it has been mainstreamed for use in Korea (and later, around the world) as a lighter alternative to foundation. That was the handiwork of Dr. Jart+, which was founded in 2005, thus igniting one of the sparks of the Korean beauty wave.
At the event, guests were taken across a room lit by red light, then to a room lit in green, symbolizing how the products help with skin sensitivity, and reducing redness. This is one of the promises of one of their hero products, Cicapair Tiger Grass Color Correcting Treatment SPF 30. It helps correct redness and helps protect skin from environmental aggressors like the sun’s rays and pollution.
The Cicapair collection (it also includes cleanser and Intensive Soothing Repair Gel Cream) is made with tiger grass from Asian wetlands and other lab-tested cica skincare ingredients.
Other collections include the Ceramidin collection (with ceramides, panthenol, and glycerin), the Vital Hydra Solution collection (with Hyaluronic Acid and Pentavitin), and finally, Dr. Jart+’s Every Sun Day Sunscreen collection. — JLG
Ordinarily, I, a Jesuit-educated Atenean would have not known Brother Andrew Gonzales, a De La Salle Christian Brother and President of De La Salle University. But our common friendship with Anthony C. Aguirre brought us together.
Upon the untimely death of Anthony, the Aguirre family established the Anthony C. Aguirre Foundation. (Mission Statement: To do the good that Anthony would have done if God had granted him a longer life). Brother Andrew was elected Chairman and I a member of the board of trustees.
Being a trustee in a foundation is not financially rewarding as the trustees are not even allowed to receive per diems.
Brother Andrew, a well-known food connoisseur compensated for this lack by holding our dinner-time board meetings at five-star restaurants with their delicious dishes.
It was during these sumptuous dinners, where Brother Andrew explained the delicacies before us while we discussed the projects we would fund in honor of Anthony, that Brother Andrew and I grew closer.
For a start, we discovered our Capampangan (Pampanga) roots (he from Apalit and me from Guagua) and our academic credentials (he a doctorate in linguistics and I a doctorate in business education). Most importantly we both held the firm determination that the academic rigor we acquired through our doctoral degrees would not dull our practical sensibilities.
It is this combination of academic rigor and practical sensibility that underlined the educational innovations introduced by Brother Andrew: The Trimester and the College of Saint Benilde.
As a hard-headed school administrator, Brother Andrew knew the biggest capital investment of a school are the land and buildings and the biggest operating expense is faculty salary. And yet, the present school schedule of an annual two-month summer vacation meant low utilization of the facilities and faculty. He therefore switched the college schedule from two semesters (of five-months each) and a summer vacation (two months) to a three-trimester schedule (three four-months periods) with no vacation.
This move effectively increased the utilization of the facilities and faculty of the school.
Moreover, this move made not only economic sense but academic sense as well.
The main academic insight of Brother Andrew is that while high school and college followed the same academic calendar, their academic missions were completely different.
In high school, the academic mission is a sound grounding in basic education, whereas in college the academic mission is preparation for a professional career. In high school, students belong to a class cohort who studies the same subjects, is promoted as a group and graduate at the same time. In college, students are grouped according to their career objectives and have the flexibility to increase or decrease their academic load (thus accelerating or delaying their graduation).
Given this difference, college is academically more suited to a trimester system. Students wishing to graduate early could continue studying without a vacation and so could graduate in less than four years. Those who wish to take a vacation — students as well as teachers — could take such vacations at any time of the year while the semester system restricts vacation time only during summer. Semester courses are, of course, five months long while trimesters are only four months long. But the college system of credit units adjusts for that. And this also further increases facilities utilization.
Most importantly, the trimester system is a better preparation for work compared to the semester system. In the workplace, assignments vary in duration and complexity. Employees are certainly not promoted at the same time and pace. Employees in a company do not take their vacations at the same time. Each employee schedules their vacation time based on their preferences and company needs. Employees have the option to forgo their vacation in exchange for additional compensation.
Brother Andrew’s trimester system was an educational innovation as it has greatly enhanced the academic system and produced substantial economic returns as well.
La Salle, like all elite schools, is swamped with more applications than there are available slots. School administrators therefore have the luxury of selecting the best and the brightest.
Brother Andrew with his inquiring mind dared to ask, “What about those being rejected?” He further rejected the usual response that they were not as smart as those who were accepted. Instead, he formulated a different hypothesis, namely that those rejected had talents and capabilities that do not match the education system of La Salle. Instead of consigning them to lesser schools using the same education system as La Salle, what should be done was to design a completely different education system more suited to their talents. Thus was born the College of Saint Benilde, designed by Brother Andrew to cater to students with different intelligences.
As background, De La Salle College is based on an educational system called liberal education. Wikipedia defines a liberal education as a system or course of education suitable for the cultivation of a free (Latin: liber) human being. It is based on the medieval concept of the liberal arts or, more commonly now, the liberalism of the Age of Enlightenment. It has been described as “a philosophy of education that empowers individuals with broad knowledge and transferable skills, and a stronger sense of values, ethics, and civic engagement.”
We argue it has a more recent vintage.
Harvard College was founded in 1636 by Puritans as a school for their clergymen. Harvard was expected to educate these prospective clergy not only on the Puritan religion but, more importantly, to spread their religion. To spread their religion, they were taught to think clearly, write persuasively, and argue convincingly, or be liberally educated.
Later on children of the Boston elite were admitted and eventually Harvard became a secular school, dropping its religious courses while retaining the liberal courses. (Its motto was changed from Veritas Christo et Ecclesiae [Truth for Christ and the Church] to Veritas [Truth]). But as before, Harvard College produced men of thought whose main output is words, written and spoken. But instead of clergy men, Harvard now produced lawyers, politicians, writers, and journalists. Men of action went to West Point or Annapolis.
In 1908, the Harvard Business School was founded. It blazed the trail by educating young people for careers in business. From the start it developed a strong relationship with the corporate and business world. Unlike Harvard College, Harvard Business School sought to produce men of thought and action.
To simplify, De La Salle College was patterned after Harvard College while the College of Saint Benilde was patterned after Harvard Business School. However, in addition to business and unlike the Harvard Business School case method, the College of Saint Benilde uses “learner-centered instruction” and offers degree and non-degree programs in the arts, design, management, service industries, computer applications in business, and special fields of study. It is the first school in the Philippines to offer Bachelor of Arts degrees majoring in Animation, Film, Production Design, Multimedia, Fashion Design and Merchandising, Dance, and Photography.
Basically, the College of Saint Benilde and the Harvard Business School are trade schools who, by granting academic degrees (in the case of Harvard, masters degrees) and producing outstanding graduates, have made them the equal of the traditional liberal colleges.
The College of Saint Benilde, founded by Brother Andrew, is an education innovation, offering an academically different but equal educational system compared to De La Salle College.
By the way, it is no coincidence that the College of Saint Benilde — the best trade school in the Philippines and an academic (bachelor degree granting) institution — is under CHED (the Commission on Higher Education), not the TESDA (or the Technical Education and Skills Development Authority). For so long as the students of TESDA are deemed academically inferior, unworthy of receiving bachelor’s degrees, for so long will TESDA fail in its mission.
I wrote this article to honor a man I greatly admire and to call upon my fellow educators to follow in the footsteps of Brother Andrew to come up with education innovations that will rescue our failing public education system.
Dr. Victor S. Limlingan is a retired professor of the AIM and a fellow of the Foundation for Economic Freedom. He is presently chairman of the Cristina Research Foundation, a public policy adviser and of Regina Capital Development Corp., a member of the Philippine Stock Exchange.
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THE Department of Agriculture (DA) said that it will provide a fuel subsidy worth P3,000 to farmers that own or rent machinery for crop, livestock, and poultry production.
“This initiative aims to alleviate the financial burden on farmers amid the rising cost of fuel,” Agriculture Secretary Francisco P. Tiu Laurel, Jr. said in a statement on Sunday.
The DA said that about 160,000 beneficiaries will receive the fuel subsidy, which will be disbursed starting late July.
“The disbursement of subsidies to beneficiaries is contingent upon the Department of Energy’s certification that the average monthly price of Dubai crude oil per barrel has reached $80,” it added, citing the benchmark price for fuel traded to east Asia as determined by the Mean of Platts Singapore.
The Department of Energy had said that fuel prices are expected to increase this week with gasoline increasing by P1.50 per liter, by P0.60 for diesel and by P0.80 for kerosene.
Last week, oil companies raised prices by P0.95 per liter for gasoline, P0.65 for diesel, and P0.35 for kerosene.
Farmers listed in the Registry System for Basic Sectors of Agriculture will be eligible for the subsidy.
The DA added that the funds will be distributed via cards provided by the Development Bank of the Philippines and its financial technology partners.
“This project underscores the government’s commitment to providing immediate financial relief to farmers grappling with increased production costs due to elevated fuel prices, thereby supporting their ongoing agricultural activities crucial to sustaining the country’s food supply,” the DA added.
The DA allocated about P510.447 million for the fuel subsidy program in its 2024 budget. — Adrian H. Halili
FILIPINOS LOVE to move in groups. That truism explains why the multi-purpose vehicle (MPV) remains a vibrant segment in the industry. The challenge therefore is in moving more for less — while keeping a keen eye on quality.
One could make an argument that Suzuki has mastered this formula, which explains the success of its seven-seater Ertiga. It is a beyond-the-basics econobox that has been a popular model for a while now. Last year, the Ertiga — which now comes equipped with a mild-hybrid powertrain — sold a healthy 2,805 units.
Coming at a price of P954,000 for the GA MT, there was additional excitement over the fact that the Ertiga initially qualified for coding exemption from the Unified Vehicular Volume Reduction Program (UVVRP), until that privilege was taken back. However, market reception for the good-quality, value-for-money MPV continued to be warm for SPH.
Following in the footsteps of its more affordable sibling, the XL7 is also now fitted with a mild-hybrid powertrain, wherein a 12V electric motor provides supplemental grunt whenever possible to an internal combustion engine. Based on Automobile Association Philippines (AAP)-administered testing, the XL7 attains an attractively frugal fuel economy rating of up to 22.029 kilometers per liter of gas. This rate was mustered while the vehicle had two occupants, and maintained an average speed of 60kph to 70kph.
Starting at P1.252 million, the XL7 obviously breaches the usual psychic barrier of P1 million, but you have to remember that the lower price bracket is occupied and served by, yes, the Ertiga. While still not an all-new model, the XL7 deserves a serious look for car browsers who want to dip their feet in electrification, and maybe get a taste of the fuel-saving benefits that comes along with it.
Aside from the (mildly electrified) powertrain, there are a lot of other niceties that distinguish this same-gen, albeit upgraded XL7 from its older iteration.
It sports a new tailgate garnish which has a silver accent. On the instrument panel within, the vehicle gets a carbon-fiber finish. A black marble texture, again with a silver accent, is on the doors for a decidedly more premium look. Meanwhile, the XL7 now has follow-me-home or lead-me-to-vehicle headlamps, which improve on convenience and safety. The MPV also gets cruise control, as well as a fuel-saving engine auto-start-stop feature — which switches off the engine during stops like at a traffic light and engages it when the throttle is pressed. The instrument cluster has been refreshed, but still features a pair of analog gauge windows — tachometer and temperature on the left, speedometer and fuel gauge on the right — flanking a digital multi-information display.
The center-stack infotainment screen measures 10 inches, and boasts compatibility with either Apple CarPlay or Android Auto. Two cup holders in front are ventilated to help keep cold drinks cold.
Under the hood is the familiar KB15B heart — a 1.5-liter DOHC mill, submitting 77kW at 4,400rpm and 138Nm at 6,000rpm. An electric motor provides 1.77kW of aforementioned electric assist.
The hybrid battery is recharged through deceleration, and kicks in when the vehicle is cruising — reducing engine load. It similarly aids in more miserly fuel consumption by giving the ICE some assistive grunt when starting from a standstill and even during acceleration.
The XL7 is positioned by Suzuki Philippines (SPH) as an SUV, but I think it’s a perfect example of an MPV, done the right way for its price point. The second-row room is pretty decent and well-spaced from the first row, and the air-conditioning is decent and adequate. As for the last row, it really depends on how tall you are whether you should even give it a try or not. The large second-row doors swing wide to provide ingress/egress ease to both the second and third rows, with the third-row passengers needing to push forward the second row to gain access. Persons of average height could expect a decent experience in the rear bench — particularly since it is elevated to give occupants a clear line of sight to the air-conditioning vents on the ceiling, and presumably to help mitigate any feeling of claustrophobia. The 50:50 split third-row seats can recline separately by up to 16 degrees.
The front armrest opens to swallow small items and such, while the second row boasts a smartphone holder. To the bottom left of the steering wheel column is a banknote/coin holder with partition, and door pockets in front accommodate a bottle of up to one liter in size — same with the third row (which also includes an accessory socket).
With regard to its cargo capacity, SPH reports a “maximum volume” of 803 liters for the XL7, and when the third-row seatback is folded and luggage board lowered, it’s at 550 liters. There’s also wide opening in the rear — a height of 850mm and width of 980mm. For more valuable items, users can actually stow them away from prying eyes through a removable floorboard at the back of the third row. This is 170-mm deep and 440-mm wide from seatback to rear.
The 1.5-liter mill isn’t the most powerful of engines, but it gets the job done for a point-A-to-point-B mover. What it delivers is consistent, reliable performance while keeping close tabs on fuel consumption.
Sharing the Heartect platform with the Ertiga, the XL7 is said to similarly benefit from the “smoothly curving frame’s” underbody stiffness leading to “excellent fundamental vehicle performance while contributing to collision safety by efficiently dispersing energy.”
In an interview, Suzuki Philippines Assistant to the General Manager and Auto Sales Department Head Nasuki Yakagawa said, “We are very excited to introduce another hybrid model to the public, and we invite people to test the superior performance and more eco-friendly features of the XL7. We are focusing on fuel efficiency as our part in contributing to environmental care. We look forward to expanding our hybrid offerings in the market. As the price of fuel goes up, we see that a lot of our customers are also interested in fuel efficiency.”
The Suzuki XL7 surely makes a solid case for consideration as a fuel-saving people mover that gives a reasonable amount of spice and substance for someone looking to go beyond basics. Time to think about the group.
RATES of Treasury bills (T-bills) and bonds (T-bonds) to be auctioned off this week may go down after June Philippine headline inflation came out below market expectations.
The Bureau of the Treasury (BTr) will auction off P20 billion in T-bills on Monday, or P6.5 billion each in 91- and 182-day papers and P7 billion in 364-day debt.
On Tuesday, the government will offer P30 billion in reissued 20-year T-bonds with a remaining life of seven years and nine days.
Rates of T-bills and T-bonds to be offered this week could track the mixed movements in secondary market yields in the past few days in anticipation of the release of Philippine June inflation and US jobs data on Friday, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
Easing June inflation boosted chances of a rate cut by the Bangko Sentral ng Pilipinas (BSP) by next month, which could lead to lower yields on government debt, a trader said in an e-mail.
The soft US nonfarm payrolls report released on Friday, which also renewed expectations of the US Federal Reserve easing its policy stance within this year, may also cause T-bill and T-bond rates to go down this week, the trader added.
“We expect another well-bid seven-year auction with a current indicative range of 6.3-6.4%,” the trader said.
At the secondary market on Friday, the rates of the 91-day and 182-day T-bills went down by 2.81 basis points (bps) and 3.66 bps week on week to end at 5.7152% and 5.9669%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data published on the Philippine Dealing System’s website. Meanwhile, the 364-day T-bill’s yield went up by 1.07 bps week on week to 6.0848%.
On the other hand, the rate of 20-year bond decreased by 4.77 bps week on week to 6.7718% on Friday, while the seven-year debt, the tenor closest to the remaining life of the T-bonds on offer this week, fell by 10.28 bps to yield 6.4364%.
Philippine headline inflation rose to 3.7% year on year in June, easing from 3.9% in May and 5.4% in the same month a year ago.
This was below the 3.9% median estimate in a BusinessWorld poll of 14 analysts.
The June consumer price index (CPI) was within the BSP’s 3.4-4.2% forecast for the month, and also marked the seventh straight month that inflation settled within the central bank’s 2-4% annual target.
For the first six months, the CPI averaged 3.5%, slightly faster than the central bank’s 3.3% full-year forecast.
BSP Governor Eli M. Remolona, Jr. has said the Monetary Board may kick off its easing cycle at its Aug. 15 review — the only policy meeting scheduled in the third quarter — as they expect inflation to continue easing this semester.
Meanwhile, US employment increased solidly in June, but government and healthcare services hiring made up about three-quarters of the payrolls gain and the unemployment rate hit a 2-1/2-year high of 4.1%, pointing to a slackening labor market that keeps the Fed on course to start cutting interest rates soon, Reuters reported.
Nonfarm payrolls increased by 206,000 jobs last month, lifted by government hiring, the Labor department’s Bureau of Labor Statistics said. Economists polled by Reuters had forecast payrolls would increase by 190,000 last month, with the unemployment rate unchanged at 4%.
When added to the moderation in prices in May, the report could boost Fed policy makers’ confidence in the inflation outlook after the disinflationary trend was disrupted in the first quarter. Financial markets expect the US central bank, which aggressively tightened monetary policy in 2022 and 2023, to start its easing cycle in September.
Last week, the government raised P20 billion as planned from T-bills as total bids for its offer reached P43.025 billion, or more than twice the amount placed on the auction block.
Broken down, the BTr borrowed P6.5 billion as programmed from the 91-day T-bills as tenders for the tenor reached P19.06 billion. The average rate for the three-month paper rose by 2 bps to 5.686% from the previous week. Accepted rates ranged from 5.668% to 5.698%.
The government likewise made a full P6.5-billion award of the 183-day securities, with bids reaching P11.81 billion. The average rate for the six-month T-bill stood at 5.959%, up by 2.9 bps, with accepted rates at 5.918% to 5.999%. The six-month tenor was adjusted from the usual 182-day maturity due to a holiday.
Lastly, the Treasury raised the planned P7 billion via the 364-day debt papers as demand for the tenor totaled P12.155 billion. The average rate of the one-year debt increased by 1.9 bps to 6.05%. Accepted yields were from 6.03% to 6.085%.
Meanwhile, the reissued 20-year bonds to be auctioned off on Tuesday were last offered on June 4, where the government made a full P30-billion award at an average rate of 6.624%.
The BTr wants to raise P215 billion from the domestic market this month, or P100 billion from T-bills and P115 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 with Reuters
In June, inflation-adjusted wages were 17.5% to 24.6% lower than the current daily minimum wages across the regions in the country. Meanwhile, in peso terms, real wages were lower by around P74.48 to P114.20 from the current daily minimum wages set by the Regional Tripartite Wages and Productivity Board.
LOPEZ-LED First Gen Corp. has postponed the delivery of its fifth liquefied natural gas (LNG) cargo as it still has enough supply, its president said.
“Right now, we’re going through the operation and then there is the Malampaya. We still have the residual gas so we have to deplete residual gas,” First Gen President and Chief Operating Officer Francis Giles B. Puno told reporters on Friday last week.
In June, First Gen awarded Japanese company TG Global Trading Co. a contract to supply one LNG cargo of approximately 125,000 cubic meters with delivery scheduled this month.
”We have to defer to a time that [we are] ready,” Mr. Puno said.
The LNG will be used by First Gen’s four existing gas-fired power plants with a combined capacity of 2,017 megawatts (mw) that have been supplied for many years with gas from the Malampaya field, the country’s sole natural gas provider.
FGEN LNG Corp., a subsidiary of First Gen, constructed an interim offshore LNG terminal and executed a five-year time charter party for BW Batangas to provide LNG storage and regasification services.
In April, First Gen awarded a contract to Chinese company CNOOC Gas and Power Trading & Marketing Ltd. from its fourth tender process for one LNG cargo of approximately 130,000 cubic meters.
GEOTHERMAL
On Friday, First Gen’s renewable energy arm Energy Development Corp. officially unveiled its 28.9-MW Palayan Binary Geothermal Power Plant in Albay, as part of the expansion of its existing 140 MW Bacon-Manito (BacMan) facility.
The P7-billion project was synchronized with the Luzon grid in January and is one of the four geothermal projects targeted to be operational this year.
The other projects are the 28-MW Mahanagdong Binary in Leyte, 20-MW Tanawon Binary in BacMan, and the 5.6-MW Bago Binary in Neg-ros Occidental. — Sheldeen Joy Talavera
