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Yields on Treasury bills, bonds may go down on easing signals

BW FILE PHOTO

RATES of Treasury bills (T-bills) and Treasury bonds (T-bonds) on offer this week may decline after a Monetary Board member said the Bangko Sentral ng Pilipinas (BSP) could begin its easing cycle after the US Federal Reserve kicks off its own.

The Bureau of the Treasury (BTr) will auction off P15 billion in T-bills on Tuesday, or P5 billion each in 91-, 182-, and 364-day papers.

On Wednesday, it will offer P30 billion in reissued 20-year T-bonds with a remaining life of 14 years and seven months.

This week’s T-bill and T-bond auctions were moved as Monday, June 17 was declared a holiday in observance of Eid’l Adha or the Feast of Sacrifice.

The rates of T-bills and T-bonds on offer this week could track the decline in secondary market yields following monetary easing comments from Finance Secretary and Monetary Board member Ralph G. Recto after the Fed’s policy meeting, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Secondary market rates were mostly lower on Friday “as profit takers continued to dominate the market. Speculative buying… lacked aggressiveness still amid Finance Chief Recto’s statement on the BSP possibly cutting rates after the Fed,” a trader likewise said in an e-mail on Friday.

The trader expects the reissued T-bonds on offer this week to fetch yields ranging from 6.7% to 6.85% as the market “remains tepid on bonds with tenors of longer than 10 years.”

At the secondary market on Friday, the 91-day, 182-day, and 364-day T-bills went down by 3.69 basis points (bps), 3.09 bps, and 0.36 bp week on week to yield 5.6669%, 5.9694%, and 6.0778%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data published on the Philippine Dealing System’s website.

The yield on the 20-year bond likewise went down by 1.14 bps week on week to end at 6.814%.

The BSP will probably cut its policy rate after the US Federal Reserve, which has signaled it may start easing as late as December, the Finance chief said on Thursday.

Asked if the BSP would begin its easing cycle once the US central bank cuts rates, Mr. Recto said this was “highly probable.”

The Monetary Board has kept its benchmark rate steady at a 17-year high of 6.5% since October 2023 following cumulative hikes worth 450 bps to bring down inflation.

BSP Governor Eli M. Remolona, Jr. has said that the earliest the central bank can begin cutting rates is in August, with a total of 25-50 basis points in easing likely this year.

Mr. Remolona earlier said the BSP does not need to wait for the Fed to begin its own easing cycle.

The Monetary Board’s next policy meeting is on June 27.

Meanwhile, the US central bank on Wednesday kept its benchmark overnight interest rate in the current 5.25%-5.5% range, where it has been since last July, Reuters reported. Fed officials pushed out the start of rate cuts to perhaps as late as December, with policy makers projecting only a single quarter-percentage-point reduction for this year.

Last week, the BTr raised P15 billion as planned from the T-bills it offered as total bids reached P42.385 billion or almost thrice the amount on the auction block.

Broken down, the Treasury borrowed P5 billion as programmed from the 92-day T-bills as tenders for the tenor reached P17.36 billion. The average rate for the three-month paper went down by 3.1 bps to 5.667% from the previous week. Accepted rates ranged from 5.65% to 5.69%.

The government likewise made a full P5-billion award of the 183-day securities, with bids reaching P12.56 billion. The average rate for the six-month T-bill stood at 5.908%, inching up by 0.8 bp, with accepted rates at 5.898% to 5.925%.

Lastly, the BTr raised the planned P5 billion via the 365-day debt papers as demand for the tenor totaled P12.465 billion. The average rate of the one-year debt went down by 0.7 bp to 6.039%. Accepted yields were from 6.015% to 6.065%.

Maturity dates were adjusted across all tenors last week due to the June 12 holiday for Independence Day.

Meanwhile, the reissued 20-year bonds to be auctioned off on Tuesday were last offered on May 14, where the government raised just P11.528 billion out of the P30 billion placed on the auction block. The bonds were awarded at an average rate of 6.95%, 20 bps above the 6.75% coupon for the series.

The BTr wants to raise P180 billion from the domestic market this month, or P60 billion from T-bills and P120 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. — A.M.C. Sy with Reuters

OceanaGold PHL sees strong year with upward trend in gold, copper

OCEANAGOLD Philippines, Inc. (OGPI) is poised for enhanced financial performance this year, buoyed by the upward trend in global gold and copper prices, the company’s president said. 

“The positive outlook for gold and copper definitely helps,” OGPI President and General Manager for External Affairs and Social Performance Joan D. Adaci-Cattiling told BusinessWorld over the weekend.

In the first quarter, the average gold price rose to $2,070.05 per troy ounce from $1,889.05 the previous year, according to Mines and Geosciences Bureau.

Copper prices averaged $3.83 per pound, declining from $4.05 per pound a year earlier. However, the global shift to green energy and the limited supply is expected to bolster copper prices, according to Chamber of Mines of the Philippines.

Ms. Cattiling said that even modest increases in metal prices could potentially elevate OGPI’s free cash flows by approximately 7 to 8%. 

She said the guidance is “under the assumption that OGPI’s production comprises 71% gold and the rest copper.

For the first three months, the company’s net income dropped by 47.9% to $11.5 million from $22.1 million in 2023.

The company operates the Didipio gold and copper mine in Nueva Vizcaya.

By the second half of the year, OceanaGold expects to increase its ore production.

“We’re following our mine plan, and the second half of the year sees a higher production,” OceanaGold General Manager David John Bickerton said.

“We’ve been moving the dirt. We’ve been moving low-grade dirt to access some of the high-grade (areas) later in the year,” he added.

Gold sales for first quarter totaled 31,863 ounces. It sold 33% of the first-quarter gold doré to the Bangko Sentral ng Pilipinas.

Similarly, copper production dropped by 22% to 3,015 tons from 3,500 tons during the same period in 2023. Copper sales were at 3,180 ounces.

The company is targeting to produce 120,000 to 135,000 ounces of gold and 12,000 to 14,000 tons of copper this year.

“We’ve been fairly consistent on hitting our guidance… We’re always striving to make more ounces every year, but importantly it’s to stick to the plan,” Mr. Bickerton said. — Adrian H. Halili

Empowering whistleblowers

BRGFX-FREEPIK

As the world prepares to observe another World Whistleblowers Day on June 23, 2024, it’s imperative to reflect on the evolving dynamics of corporate accountability and the indispensable role whistleblowers play in unveiling wrongdoing. Amidst deliberations concerning corporate governance and transparency, the Philippines finds itself at a pivotal juncture, presenting an opportune moment to fortify its mechanisms for combating corruption and malfeasance within corporate entities.

Central to this discourse is the imperative to reassess the 1980 Corporation Code of the Philippines, a fundamental pillar of corporate law in the country. While this legislation has laid the groundwork for business operations over the decades, its deficiencies in addressing contemporary challenges have become increasingly conspicuous. 

One glaring lacuna pertains to the absence of explicit provisions safeguarding and promoting whistleblowers within corporate frameworks. Often, people within organizations such as members of audit committees, compliance officers or finance officers possess intimate knowledge of unethical practices or legal transgressions.

Nevertheless, a culture of silence frequently prevails, fueled by apprehensions of retaliation, ostracization, or the perception that speaking out is futile. It is incumbent upon us to challenge this status quo and acknowledge that those privy to misconduct have a moral obligation to raise their voices.

The repeal and amendment of the 1980 Corporation Code present an avenue to institutionalize novel provisions for whistleblowers and establish mechanisms to ensure their concerns are duly acknowledged. By mandating the incorporation of whistleblower protection measures, the revised code can incentivize people to step forward without fear of reprisal, thereby nurturing a culture of accountability and integrity within corporate realms.

However, legislative reform alone proves insufficient without complementary measures to bolster whistleblowers and furnish them with avenues to securely report misconduct. This is where the ascendancy of independent whistleblowing platforms and processes assumes paramount significance in fostering transparency and accountability.

Independent whistleblowing platforms furnish a secure, confidential and accessible conduit for people to divulge malfeasance within their organizations. By affording anonymity and safeguards against retaliation, these platforms empower whistleblowers to voice concerns without imperiling their careers or personal safety. Moreover, they serve as a vital conduit between whistleblowers, corporate governance entities and regulatory authorities, expediting the investigation and adjudication of corporate malpractice.

A primary advantage of independent whistleblowing platforms lies in their impartiality and autonomy from corporate vested interests. Diverging from internal reporting channels susceptible to manipulation or suppression by management, independent platforms operate autonomously, ensuring that reports are handled objectively and ethically.

This independence assumes pivotal importance in engendering trust and confidence among whistleblowers, encouraging them to step forward, assured that their grievances will be earnestly addressed. Furthermore, independent whistleblowing platforms can complement regulatory frameworks by plugging gaps in enforcement and oversight.

Regulatory bodies may lack the resources or jurisdiction to effectively probe every reported instance of misconduct. Independent platforms can serve as a frontline defense, triaging reports and providing preliminary assessments to regulatory authorities, thus streamlining the investigative process and optimizing the use of limited resources.

Crucially, the proliferation of independent whistleblowing platforms conveys a resounding message to corporations that transparency and accountability are nonnegotiable imperatives. In an era where corporate malfeasance routinely makes headlines, companies face mounting pressure to evince their commitment to ethical conduct and good governance. Embracing independent whistleblowing platforms not only signifies a readiness to confront malpractice but also augments corporate reputation and investor confidence in the long haul.

As we commemorate World Whistleblowers Day, let us reaffirm our pledge to shield those who hazard everything to expose corruption and injustice. The repeal and amendment of antiquated laws, such as the 1980 Corporation Code of the Philippines, represent pivotal strides toward crafting a legal framework that empowers whistleblowers and holds corporations accountable for their deeds. Nonetheless, legislative reform must be accompanied by the establishment and bolstering of independent whistleblowing platforms to ensure whistleblowers find their voice and that their voices resonate.

By embracing transparency, accountability and the potency of whistleblowing, we can forge a more equitable and just society for all stakeholders.

This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or MAP.

 

Lujer P. Danao is a member of the MAP and partner for Risk Advisory and the Clients and Market head of MOORE Roxas Tabamo & Co.

map@map.org.ph

lpdanao@roxastabamo.com

Fête de la Musique takes over 100 stages for its 30th year in Philippines

FÊTE de la Musique is turning 30 in the Philippines. The global free music event from France has month-long activities that are ramping up to bring hundreds of artists to more than 100 stages nationwide.

The music festival’s Philippine edition, simply known as FDLM or Fête PH, is presented by Alliance Française de Manille, B-Side Productions, FunkyBeat Entertainment, and the Embassy of France to the Philippines. The multi-stage, multi-genre event will have live celebrations from June 21 to 29 in Metro Manila, Cavite, Laguna, Pampanga, Zambales, Baguio, Baler, Bicol, Mindoro, Palawan, Masbate, Cebu, Siargao, Cagayan de Oro, Davao, and South Cotabato.

“We will be breaking our record in terms of the number of stages and also the scope — this is the first time we’re having over 100 stages, coming from last year with only around 50,” said B-Side Productions’ Giselle Tomimbang, one of Fête PH’s co-producers, in a Zoom interview with BusinessWorld.

She added that the wider reach is “due to the South representing hard.” Davao in particular will have the longest celebration, for the full nine days.

“Back then it was Manila-centric, plus Baguio and Palawan. Now, I feel that it has really become more of a nationwide celebration, covering Luzon, Visayas, and Mindanao,” she said.

Fête de la Musique began as a music festival in Paris on June 21 (Fête’s official date) in 1982 and has since spread to 120 countries. This year’s edition in the Philippines kicked off on June 16 with its pre-Fête “Music Heals” gathering: a Medicine Music Circle, Ecstatic Dance, and Sound Bath, hosted by Lee Grane Musiq at Ayala Triangle Gardens.

“It’s an advocacy of ours to show that music is not only for partying and having fun, but also a means to nourish the mind, heart, body and soul,” said Ms. Tomimbang.

Noe Fuentes, cultural coordinator at Alliance Française de Manille, told BusinessWorld that they hope the 30th year can draw more people compared to the 25th anniversary in 2019, also the last Fête PH before the pandemic.

“We want to connect with a new generation of music-lovers every year. Of course, there’s nostalgia for people who’ve been going for a while, but the idea is to also connect with those Gen Zs in their early 20s,” he said via Zoom.

Since its first year in 1994, which used physical posters and flyers to draw a meager crowd of 40 attendees, Fête PH has evolved to promoting online.

As with every year, FDLM 2024’S main event will be the Main Stage, held at Greenbelt 3 park on June 21. It will boast a full day of music from Filipino artists SHANNi, Jason Dhakal x Lustbass, Sinosikat x Jose Miguel, Dwata, Jewelmer Jazz Band, Any Name’s Okay, Morobeats, Autotelic, and Dilaw.

To promote French-Filipino cultural exchange, major French act Pfel & Greem of C2C will grace the Fête PH stage. They are also set to perform at Mistral in Raffles Makati on June 20.

100 STAGES
It was in 2011 that Fête PH opened pocket stages, each organized by independent producers.

“We’ve been here for 30 years and the key to holding these multi-stage events is the strong partnerships. A lot of our partners have wanted their own Fête stage, in their own turf,” said Mr. Fuentes.

Ms. Tomimbang explained that with an “approach informed by inclusivity,” the chase of numbers always fell secondary to bringing music to all.

“There used to be a lot of active work to push for productions to independently put up pocket stages, but over the years people started to come to us, rather than us having to plead with them,” she said.

On June 28, the vibrant district of Poblacion in Makati City will be a musical haven, with over 41 multiple independently produced pocket stages simultaneously featuring various genres: the Blues, Soul & Funk Stage at H&J, the Acoustic Stage at Coro Hotel, the Rock Stage at Alibi Music Lounge, and the Reggae Stage at Handle Bar, just to name a few.

The Medicine Music Stage in Astbury and the Kirtan Stage featuring meditation & mantras at Gnostic will be new additions for FDLM 2024, in keeping with this year’s “Music Heals” advocacy.

Meanwhile, the Destination Stages will all happen between June 21 and 29, reaching Luzon, Visayas, and Mindanao. Some notable locations this year are Siquijor, a Fête PH first-timer, and El Nido, which will hold multiple stages on the same day.

“I think the shift to being nationwide has a lot to do with leaning into the fact we couldn’t celebrate in person together for a while in the pandemic. We leveraged that virtual musical journey that helped catalyze this spread,” said Ms. Tomimbang.

“This time I feel that there’s so much more diversity,” she added.

SONIK Philippines will also be returning for the second SONIK SESSIONS FETE, a conference that educates both the business and artist sides of the Philippine music ecosystem. The SONIK SOIREE is happening on June 22 at Astbury, featuring Gwen Sharp of The Green Room France.

Fête PH is free and open to all. For the lineup of events, visit their pages on Facebook, Instagram, and TikTok. — Brontë H. Lacsamana

China offshore asset rush spurs HK wealth inflows

REUTERS

HONG KONG — Hong Kong (HK) investment products such as insurance and high-yield time deposits are seeing resurgent demand from wealthy Chinese who are aiming to shield returns from a domestic economic and property sector downturn and also a weaker currency.

The trend became evident last year but has accelerated in recent months after China relaxed investment rules for the “wealth connect” program in February, Hong Kong wealth managers said.

It is sparking a scramble among financial firms in Hong Kong to seize the opportunity and should help the city burnish its status as a wealth hub that has been hit in recent years by pro-democracy protests, Beijing’s tighter control, and geopolitical tensions.

Those factors had pushed clients and wealth managers to foray into or expand in rival Singapore.

“There are about 45 million affluent individuals in China, and increasingly they want more international exposure, education, and protection,” said Maggie Ng, HSBC’s Hong Kong head of wealth and personal banking.

“There is an increasing demand to manage wealth outside of China.”

Launched in late 2021, “wealth connect” allows residents of nine cities in the southern province of Guangdong, which borders Hong Kong, to buy investment products sold by banks in Hong Kong and Macau, while allowing residents of the two offshore centres to do the same in the world’s second-largest economy.

Under the program, investments by mainland investors into Hong Kong and Macau hit a record monthly high of 13 billion yuan ($1.8 billion) in March, up nearly eight times from February, data from the Chinese central bank showed.

Inflows in April grew 70.5% from the preceding month to 22.3 billion yuan, the data showed, while northbound investments in April by Hong Kong and Macau residents were just 14 million yuan, largely unchanged since the program was launched.

HSBC, a leading wealth manager in Hong Kong, saw new account openings in the city rise by more than three times in 2023 from the pre-COVID level in 2019, driven mainly by Chinese mainland retail wealth clients, said Ng.

The strong momentum has continued in the first quarter of this year, she said, declining to give details.

Apart from the mass affluent who are utilizing the cross-border investment channels, ultra rich people from China and Southeast Asia are also exploring their options in Hong Kong, according to executives at global wealth managers.

“If we look at the inquires (from potential family office clients) that we got last year versus the previous year, we’re talking about an 85% increase,” said L.H. Koh, head of global family and institutional wealth APAC, at UBS.

More than 60% of the inquiries in Hong Kong are about setting up family office-type entities in the city by mainly Chinese clients, he said, adding that the trend has continued this year.

‘SITTING ON CASH’
While there are still tight capital controls in China, with an individual allowed to remit a maximum $50,000 per year, the tripling of the investment cap to 3 million yuan under the “wealth connect” program in February has bolstered outflows.

China presumably is less worried about outflows under the program because the investments are eventually required to be remitted back to the country. 

Wealth managers in Hong Kong are pushing the authorities to further relax the investment scheme to meet the demand of richer clients to move larger sums to Hong Kong, industry executives said.

The Hong Kong Monetary Authority would “continue to explore further enhancement measures in due course, taking into account the industry’s feedback as appropriate,” the city’s de-facto central bank said in a statement to Reuters.

To capitalize on the momentum, some banks in Hong Kong have started offering as much as 10% a year interest rates on short-duration term deposits as part of the wealth link program compared to about 2% offered by the banks in the mainland.

Besides banks, Hong Kong-based insurers have also seen a surge in demand from mainland customers since border controls previously installed to curb the spread of COVID were lifted in early 2023.

Horace Yip, Citigroup’s private banking head of Hong Kong and Greater Bay Area, said the bank saw record new account openings in Hong Kong in 2023, and the momentum remained strong this year, thanks to the demand from mainland Chinese clients.

The surge in demand comes against the backdrop of Chinese mainland investors facing limited options to park their cash at home, as yields of long-dated bonds have dropped to record lows.

China’s currency is hovering around its weakest since 2008. And stocks and property have seen returns plunging.

“Many mainland people are now sitting on cash,” said 51-year-old Ms. Wang, owner of an internet firm in Shenzhen whose bets on opaque investment products at home soured after the collapse of a leading shadow bank late last year.

Wang said she has since parked her money in a current account in the mainland, and is studying the “wealth connect” program now. — Reuters

Maynilad partners with MPower to increase RE use

MAYNILAD Water Services, Inc. on Monday said it is working with MPower, the local retail supply arm of Manila Electric Co. (Meralco), to increase the use of renewable energy (RE) in its operations by 15%.

“At Maynilad, we are committed to sustainable practices and reducing our carbon footprint. Increasing our use of renewable energy by 15% is a significant step towards our goal of carbon neutrality by 2037,” Maynilad President and Chief Executive Officer Ramoncito S. Fernandez said in a statement.

“This initiative reflects our dedication to environmental stewardship and our responsibility to future generations,” he added.

Under the deal, MPower will supply renewable energy from solar and biomass sources to run nine Maynilad facilities, particularly the water treatments plants at La Mesa Compound in Quezon City and at Brgy. Putatan in Muntinlupa, and the pumping stations in Pasay, Las Piñas, Quezon City, and Parañaque.

Maynilad said it aims to further increase its use of renewable energy by 30% next year and 40% by 2027.

As it expands renewable energy use to more of its facilities, Maynilad hopes to reduce its carbon dioxide emissions in the next five years.

Maynilad serves Manila, except portions of San Andres and Sta. Ana. It also operates in Quezon City, Makati, Caloocan, Pasay, Parañaque, Las Piñas, Muntinlupa, Valenzuela, Navotas, and Malabon.

It also supplies the cities of Cavite, Bacoor, and Imus, and the towns of Kawit, Noveleta, and Rosario, all in Cavite province.

Metro Pacific Investments Corp., which has a majority stake in Maynilad, is one of three Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT Inc.

Meanwhile, Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Sheldeen Joy Talavera

Lessons from World War II

President Ferdinand R. Marcos, Jr. asked the Armed Forces of the Philippines to prepare as the country faces growing risks arising from Chinese aggression in the Taiwan Strait.  “The external threat now has become more worrisome. And that is why we have to prepare (for any eventuality),” he said. 

Emerging threats have compelled him to make Cagayan, a province facing Taiwan, a site under a Philippine Enhanced Defense Cooperation Agreement (EDCA) with the United States. Robin Michael U. Garcia, a political economy professor at the University of Asia and the Pacific, said China’s aggression in the Taiwan Strait should be a major defense issue because the escalation of armed conflict between China and Taiwan could spill over to Luzon. Taiwan is just over 300 kilometers away from Batanes, the northernmost province of Luzon.

The President should also tell the National Security Council to be vigilant about the covert entry of elements of foreign armed forces and their auxiliary intelligence operatives into the country. Authorities found a total of 18 sets of Chinese military uniforms at the raided Philippine Offshore Gaming Operator (POGO) hub in Porac, Pampanga.

POGOs
Senator Sherwin Gatchalian said the sets of People’s Liberation Army uniforms and some military pins discovered are a clear evidence that POGOs are a national security threat to our nation. “It has opened the doors, not only to criminal syndicates, but also to those who want to destabilize and infiltrate our governmental and political institutions. This is another reason why the administration should no longer allow them to operate in our country,” he told reporters.

Senator Risa Hontiveros said the implications of these uniforms should send chills down Filipinos’ spine. The discovery of these uniforms only proves the information shared by intelligence agencies that there are credible links between POGOs and foreign intelligence assets, she said. “It is so clear that every POGO has exploited our economic vulnerabilities and that POGOs have now evolved into a breeding ground for crime and a national security threat.”

On the other hand, Senator Robin Padilla said the discovery of such clothing means there is a “clear and present danger” to Filipinos. This prompted Padilla to renew his call for strengthened law enforcement at the local level.

It is interesting what former Interior and Local Government Secretary Rafael Alunan III wrote in Capiz News in October last year. He wrote: “On Oct. 16, 2023, the National Bureau of Investigation (NBI) raided a house in Valle Verde 5 in Pasig. Arrested and detained were six Chinese nationals and their two Filipino security personnel. Taken from them were high-powered firearms and ammunition marked with “From People’s Republic of China,” as well as badges designating roles such as “blasting team,” “recon team,” “support team,” “assault team,” “machine gun team” and “sniper team.””

Valle Verde V is about a 15-minute ride from Camp Aguinaldo — the general headquarters of the Armed Forces of the Philippines — and Camp Crame, the national headquarters of the Philippine National Police. As Mr. Alunan wrote, the signs of “China’s malevolent intentions” are clear.   

At their peak, POGOs hired more than 300,000 Chinese workers. According to official estimates, POGO workers legally staying in the Philippines number between 100,000 and 150,000. That most of them are in their 20s and are of athletic build has led many observers to suspect they are soldiers in disguise as POGO workers.

However, National Security Adviser Eduardo Año said the existence of POGO sites in the country does not yet constitute a “national security threat” that would need military involvement. “We do not view POGOs per se as a national security threat at the level that would necessitate the direct involvement of defense forces,” Año said. “At the moment, it is a national concern that law enforcement and regulatory agencies can address.”

CHINESE STUDENTS
The reported influx of Chinese students into a Philippine province close to what is regarded as a militarily sensitive area raised another public furor. That there were more than 4,000 Chinese students at universities in Cagayan province in Northern Luzon facing Taiwan sounded alarms of a national security threat.

Cagayan Rep. Joseph Lara and Isabela Rep. Faustino Dy V noted “an alarming increase in the number of Chinese citizens coming into the province of Cagayan, where another EDCA site is situated, as students enrolled in universities.” The province now hosts two military bases that can be used by US troops in the Philippines. Rep. Lara said the number of Chinese nationals in the province has become “highly suspicious and alarming.”

Referring to tensions in Philippine territorial waters in the South China Sea, he said: “[With] the prevailing situation in the West Philippine Sea and in view of Cagayan’s strategic geographical location, the increasing number of Chinese students in the province poses a serious concern to the national security of the Philippines.”

However, universities and higher education officials were quick to play down the issue. The number of students is still unclear. Reports received only show more than 400 Chinese nationals are on site because the school is said to be implementing distance learning,

While Rep. Lara referred to over 4,000 Chinese students, the Bureau of Immigration said a total of 1,516 Chinese students in Cagayan were granted student visas in 2023. The bureau added that the Chinese nationals were “legally processed” and had “complete documentation.”

The Philippine Inter-Agency Committee on Foreign Students, which includes officials from the Bureau of Immigration, Department of Foreign Affairs, Philippine National Police, National Bureau of Investigation and National Intelligence Coordinating Agency, will hold a special meeting this week, outside its regular schedule of meetings, to discuss the reported influx of Chinese students in Cagayan province.

Jonathan Malaya, assistant director-general of the Philippine National Security Council, said a team had been dispatched to the capital of Cagayan. “Our intelligence units have been assigned to take a look at the situation there. Is this a case of a national security threat, or is this just a case of people wanting to study in the Philippines?” Malaya said.

AFP spokesperson Colonel Francel Margareth Padilla said last week the AFP was looking into the “national security implications” of the reported surge of Chinese students in Cagayan. Dana Sandoval, the spokesperson for the Bureau of Immigration, told local media it is “only right” for intelligence agencies to verify the concerns because it is a security area, though legitimate foreign nationals who want to study in the Philippines should not be denied entry, she said, referring to the need to maintain a balance.

The Philippines Commission for Higher Education (CHED) said in a statement on April 18 that a significant number of Chinese students were enrolled at Saint Paul University Philippines — Tuguegarao City in Cagayan. The university was granted autonomous status by CHED in 2002 and has the authority, granted by the Bureau of Immigration, to accept foreign students — the only higher education institution in Cagayan with this authority.

According to the university’s website, it is a center for excellence in nursing and teacher education and is a center for development in information technology. CHED noted: “The foreign students are attracted by the affordable cost of quality education, the use of English as a medium of instruction and the globally recognized quality of instruction in such fields as medicine, dentistry, optometry, physical therapy, public health and engineering.”

The foreign student enrollment at Saint Paul in Tuguegarao City was 486 graduate students as of April 17, 2024. They consist of various nationalities — Americans, Chinese, Indonesians, Japanese and Vietnamese. Other institutions in Cagayan do not have foreign students.

WORLD WAR II LESSONS
Years before the outbreak of war in the Pacific region, imperial Japanese soldiers in disguise steadily infiltrated the country as traders, laborers even street sweepers. But when Japanese war planes attacked the US Naval Base in Pearl Harbor and the US military camps in the Philippines on Dec. 8, 1941, the Japanese infiltrators immediately wore their military uniforms, to the great surprise of their Filipino neighbors and friends.

The Japanese who planned the attack on Pearl Harbor was Admiral Isoroku Yamamoto, who studied at Harvard University and served as Japan’s naval attaché in Washington. But the real espionage work on Pearl Harbor was done by Takeo Yoshikawa.

Here is the story of the “Japanese spy in Hawaii before the attack on Pearl Harbor.” Yoshikawa was a 1933 graduate of the ImperiaI Japanese Naval Academy at Etajima, graduating at the top of his class. A year later, he began a career in Naval intelligence, being assigned to the Navy Headquarters in Tokyo. He became an expert on the US Navy, perusing every source he could possibly get his hands on. In 1940, he became a junior diplomat after passing the English examinations.

Because of his expertise on the US Navy, Yoshikawa was sent to Hawaii posing as a vice-consul named Tadashi Morimura. He rented a second-story apartment that overlooked Pearl Harbor and would often wander around the island of Oahu, taking notes on fleet movements and security measures. He rented small airplanes at John Rodgers Airport and flew around, observing US installations. He also dove under the harbor using a hollow reed as a breathing device. He gathered information by taking the Navy’s own harbor tugboat and listening to local gossip.

How many “Isoroku Yamamotos” are there among students in Philippine universities? How many “Takeo Yoshikawas” are there among POGO workers?

Will we let our World War II history repeat itself? 

 

Oscar P. Lagman, Jr. is a retired corporate executive, business consultant and management professor.

PHL financial system’s resources expand to P31.5 trillion as of April

THE TOTAL RESOURCES of the Philippine financial system grew to P31.531 trillion as of end-April, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.

Resources of banks and nonbank financial institutions rose by 9.9% from P28.7 trillion in the same period a year ago.

Meanwhile, month on month, resources slipped by 0.5% from P31.683 trillion recorded at end-March.

The financial system’s resources include funds and assets such as loans, deposits, capital, as well as bonds or debt securities.

BSP data showed resources of banks rose by 11.7% to P26.301 trillion as of April from P23.549 trillion a year prior.

Broken down, total resources held by universal and commercial banks increased by 11.7% year on year to P24.641 trillion from P22.069 trillion.

Resources of thrift banks stood at P1.101 trillion at end-April, up by 9.1% from P1.009 trillion in the same period in 2023.

Meanwhile, digital banks’ resources jumped by 48.5% to P101 billion at end-April from P68 billion a year prior. The BSP only started collecting data from digital lenders from March 2023 onwards.

For their part, rural and cooperative lenders held P458 billion in resources as of end-April, 13.4% higher than the P404 billion recorded in the previous year.

On the other hand, there were no updated data for resources held by nonbank financial institutions, which stood at P5.23 trillion as of end-2023.

Nonbanks include investment houses, finance companies, security dealers, pawnshops and lending companies.

Institutions such as nonstock savings and loan associations, credit card companies, private insurance firms, the Social Security System and the Government Service Insurance System are also considered nonbank financial institutions. — Luisa Maria Jacinta C. Jocson

Entertainment News (06/18/24)

BLACKPINK’s Lisa announces solo comeback

LISA (full name: Lalisa Manobal), one of the members of the iconic K-pop girl group BLACKPINK, has uploaded a content clip through her official TikTok account teasing her upcoming solo work. The new song, used as background music in the teaser, can soon be pre-saved on Spotify and Apple Music. Stay tuned to LISA’s social media pages for more information.

HBO Original series House of the Dragon set for new season

THE HBO Original drama series House of the Dragon has been renewed for a third season, ahead of the launch of the second season on June 17. Based on George R.R. Martin’s Fire & Blood, set 200 years before the events of Game of Thrones, it tells the story of House Targaryen. Season two of the hit show stars Matt Smith, Emma D’Arcy, Olivia Cooke, Rhys Ifans, Steve Toussaint, Eve Best, Fabien Frankel, Matthew Needham, Sonoya Mizuno, Tom Glynn-Carney, Ewan Mitchell, Harry Collett, Bethany Antonia, Phoebe Campbell, Phia Saban and Jefferson Hall. It is now available to stream on HBO GO.

Jeepney Jazz’s next guest is Skarlet Brown

FOR the second session of Jeepney Jazz 2024, the Filipinas Heritage Library’s music series, musician Skarlet Brown is set to perform for guests. The concert will take place on June 29, 8 p.m. onwards, in the main lobby of the Ayala Museum in Ayala, Makati City. Tickets, inclusive of food and drink, cost P1,500, with discounted tickets at P1,200 for students, teachers, and Ayala employees, and P1,000 for seniors and PWDs. Sign up via bit.ly/fhl-jeepneyjazz-skarlet.

Eddie Romero films to screen for centennial birth anniversary

NATIONAL Artist for Film Eddie Romero’s centennial birth anniversary will continue with more screenings of his digitally restored films through the CCP Cine Icons special: Eddie Romero @ 100. The Cultural Center of the Philippines, in partnership with the Society of Filipino Archivists for Film, ABS-CBN Sagip Pelikula, Cinema One, and the FPJ Archives, will mark the June celebrations by screening the fantasy film Kamakalawa. This 1981 work by Mr. Romero explores the folklore of prehistoric Philippines in an adventure of mortals to the world filled with gods and mythological creatures. It will screen at the Polytechnic University of the Philippines (PUP) Theater on June 25. It is free and open to the public, with a talkback after the film screening.

The Itchyworms to launch craft beer brand with special show

FILIPINO pop-rock icons The Itchyworms are celebrating the release of their own brand of craft beers with a music event that features some of their friends and favorites in the local music scene. “The Itchyworms: Beer o Pag-ibig?” will be graced by Ebe Dancel, Ciudad, Blaster, The Revisors, and The Itchyworms themselves. It takes place at the 123 Block on July 13, 6 p.m. onwards, co-organized by GNN Entertainment Productions. Inspired by the band’s hit “Beer,” the craft beer brand will have two variants: the light and fruity blonde ale “Beer” and the hazy, flowery, bitter-tasting “Pag-ibig.” Entrance to the event is P999 for two people, inclusive of a free six-pack of beer. Early tickets are available via bit.ly/beeropagibig.

Julia Barretto series Secret Ingredient tops Viu Philippines

VIU’s romance series Secret Ingredient, which concluded its run on June 4, marked a first-time collaboration with Julia Barretto, Lee Sang Heon, and Nicholas Saputra. The finale led the show to soar to the top spot on Viu Philippines a week afterwards. Fans can relive the characters’ culinary adventures for free, exclusively on Viu.

Barbie Almalbis, Clara Benin, and more join Munimuni concert

ACCLAIMED singer-songwriters and musicians Barbie Almalbis, Clara Benin, Keiko Necesario, and Sofia Abrogar of Any Names Okay were announced as the special guests of ALEGORYA: A Munimuni Concert, happening at the UP Theater on July 20. The folk-pop band Munimuni revealed the lineup through their social media. “Some of them already have collaborations with us, and some are collaborating with us for the first time. We are excited to see how they will be able to give a different color to our songs,” the band said. Barbie Almalbis in particular contributed vocals to the song “Tupa” on their recently released album, Alegorya.

Willie Revillame unveiIls TV5 comeback show Wil To Win

IN a surprise Facebook Live post, Filipino television host Willie Revillame recently announced the title of his grand comeback show on TV5, Wil To Win. The rebranding of his social media pages from “Wowowin” to “Wil To Win” mark the new partnership with MQuest Ventures, Inc. As with his previous shows, it will have “a commitment to deliver thrilling surprises and exciting prizes for the whole Kapatid community.” An interactive telethon on June 20 will allow fans to ask questions about the new show.

Negotiations underway for MPT Mobility’s Baguio congestion fee proposal

By Ashley Erika O. Jose, Reporter

MPT Mobility Corp., the innovation arm of Metro Pacific tollways Corp. (MPTC), said its proposal to implement a “congestion fee” in Baguio City is currently being negotiated.

“MPTC, the project proponent, is still currently undergoing negotiations with the city,” Mark Richmund M. de Leon, vice-president for Smart Mobility Solutions, told BusinessWorld in a Viber message over the weekend.

He said that congestion fees, also known as mobility fees, represent just one of its four technology-driven mobility proposals. The congestion pricing scheme involves charging drivers a fee for traveling through designated areas during peak times.

The company said the goal of charging up to P250 in mobility fees is to ease congestion. “It is not a fine or penalty, like the current number coding scheme, but rather it is to change the behavior of everyday motorists and allow redistribution of traffic across the day during off-peak hours and not be concentrated during peak hours,” Mr. De Leon said.

Baguio City Mayor Benjamin B. Magalong said the amount may be reduced further.

“The government is being transparent. The P250 fee is just a proposal, it is not final yet and it is based on a study. The stakeholders’ engagement will continue,” he said in a video statement.

In 2023, MPT Mobility secured the original proponent status (OPS) from the Baguio local government for its proposed comprehensive smart urban mobility solutions. The project, valued at P2.5 billion, aims to enhance transportation efficiency within the city.

Mr. De Leon said  the company’s proposals include a public transport fleet management system, advanced traffic management system, smart parking management system, and the mobility fees program.

“None of these components will be effective on its own, but together they make up the holistic but head-on approach to tackling the issues of traffic congestion,” he said.

Additionally, there is a proposed mechanism to redistribute revenues generated from mobility fees to enhance public transportation within the city.

He said the public transport fleet management system will give the city the capability to monitor and  ensure that the dispatch and operations of public transportation are reliable, efficient, and responsive for commuters.

“As the private sector proponent, we will also install hardware and systems on each franchised public utility jeepney required by the city to be enrolled into the system,” Mr. De Leon said. 

Under the new PPP code, the negotiations with the City Interim Code public-private partnership (PPP) committee is  until June 29.

“After which, they will decide whether our OPS will be reissued. The city is also setting up more public consultations and stakeholder engagement,” MPT Mobility said.

“We are expecting that the council will be conducting more public hearings before their approval. Only after these approval from the councils, then the comparative proposals will commence,” it added.

Nigel Paul C. Villarete, senior adviser on PPP at the technical advisory group Libra Konsult, Inc., said that implementing mobility fees might not effectively resolve congestion problems.

“MPTC’s tech-driven mobility solutions to Baguio City falls short of what should be considered ‘inclusive mobility,’” he said in a Viber message on Sunday.

Mr. Villarete said traffic congestion is a symptom of poor transport planning.

“When you have pneumonia, you will have a fever. Your sickness is pneumonia, not the fever….  in the same way ‘traffic congestion’ is not the problem, it is a symptom of the deeper problem — transport and mobility,” he added.

“The traffic might be ‘relieved’ for a short while, but it will resurface because of the deeper problem,” he said.

Rene S. Santiago, a founding member of the Transportation Science Society of the Philippines, said that congestion charging is an effective solution for addressing traffic issues.

“But without a good public transport system, it would be counterproductive,” he said.

Further, Libra Konsult’s Mr. Villarete said the government must also take a solicited scheme instead of going the solicited route.

“It will always be better and preferable, for the government, national or local, to execute PPP on public transport and mobility through solicited modes, rather than simply accepting unsolicited proposals,” he said.

MPTC is the tollways unit of Metro Pacific Investments Corp., one of three key Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.

Metro Manila office vacancy to hit 5.7% by 2027 — CBRE

DMITRY BERDNYK-UNSPLASH

THE OFFICE SPACE vacancy rate in Metro Manila is now projected to drop to 5.7% by 2027, driven by the growth of the information technology and business process management (IT-BPM) sector, according to real estate services and investment firm CBRE.

This revised estimate is slightly higher than the 5.4% vacancy rate projected in the fourth-quarter briefing in February.

CBRE Philippines Country Head Jie C. Espinosa said that this projection is based on the Information Technology and Business Process Association of the Philippines forecast of an 8.5% annual increase in full-time employees.

“It will also be contingent on the traditional office space takers or non-business process outsourcing segment not dropping in terms of share of demand quarter on quarter, which usually is roughly around 30%,” Mr. Espinosa told BusinessWorld during a video call on June 8.

CBRE maintained its forecast of an 18.8% vacancy rate for 2024 and adjusted its projections to 14.9% from 15.1% for 2025 and 10.9% from 10.6% for 2026.

Mr. Espinosa said CBRE assumes that 30% of the market activity each quarter will continue to be driven by non-business process outsourcing companies making flight-to-quality decisions.

For the first quarter, IT-BPM led the demand with 52%, followed by 29% of traditional offices, 13% of Philippine Offshore Gaming Operators (POGOs), 4% for agile, and 2% for others, respectively.

CBRE reported that the office vacancy rate dropped to 19% in the first quarter of this year, down from 20.4% in the same period last year.

Mr. Espinosa said this was buoyed by transactions from shared services companies or global in-house centers setting up their back-office operations in the country, rather than typical third-party outsourcers.

“They then go for premium office space and that’s why if you look at most of those transactions happened in grade A buildings mostly in Fort Bonifacio but also in Makati,” he added.

Vacant office space decreased to 822,500 square meters (sq.m.) in the first quarter, with Makati accounting for 204,200 sq.m. and Fort Bonifacio for 127,900 sq.m.

For the first quarter, the firm recorded 128 transactions totaling approximately 1,536 sq.m., down from 133 transactions in the previous quarter.

According to CBRE, the Bay Area, which had a vacancy rate of 30.1%, has rebounded from its lowest occupancy point in the first quarter of 2023 and is no longer considered an underperforming area of Metro Manila. “The steady re-infusion of close to 80,000 sq.m. of POGO demand in this sub-district is bringing it close to sub-30 levels.”

In the first quarter, the firm observed the largest transaction in both provincial and Metro Manila areas was POGO occupying 17,900 sq.m. in the Bay Area.

However, Mr. Espinosa noted that POGO transactions still account for less than 10% of the market share. While they will have an impact on certain subdistricts, particularly in the Bay Area, it is not expected to create a “very seismic impact” as it did at the start of the pandemic, he said.

Currently, Metro Manila has a total supply of 1.707 million sq.m. and anticipates an additional 528,300 sq.m. in new developments for 2024, including the completion of projects like One Filinvest in Ortigas, Southfield in the Bay Area, and Park Triangle North in Fort Bonifacio.

“Focusing on the headline rates, it’s been mostly steady. Of course, there will be certain areas that will see a drop because you know vacancy will continue to be a factor,” Mr. Espinosa said. — Aubrey Rose A. Inosante

Declining borrowings and improving credit ratings

There are two good economic developments in the Philippines recently. Let’s go straight to the numbers.

DECLINING DEFICIT AND BORROWINGS
In the first four months of 2024, revenues reached P1.47 trillion, 17% higher than P1.26 trillion a year earlier. This is significant for two reasons. One, a high percentage increase despite no tax hike this year, better tax administration and higher nontax revenues. And two, the 17% revenue increase is twice as high as the 8.8% increase in GDP at current prices in the first quarter from a year ago.

But expenditures in January to April 2024 reached P1.7 trillion, 16% higher than P1.46 trillion a year earlier. So the budget deficit was P230 billion, 12.7% higher than P204 billion a year ago but 26% lower than P312 billion in 2022 and 37% lower than P366 billion in 2021.

Financing or borrowings in January to April 2024 was only P0.79 trillion, the first time it fell below P1 trillion since 2020. There was a big drop in foreign or external financing — P8 billion in 2024 vs P277 billion in 2023, which is a good development (see Table 1).

The jump in expenditure came from National Government (NG) disbursements and interest payment due to a high public debt stock and the high interest rate policy. Interest payment this year already reached P260 billion or twice the P131 billion in 2019. There is a need to significantly reduce the public debt level to save resources for social and infrastructure needs instead of diverting these to higher interest payments.

Related recent stories in BusinessWorld on the fiscal situation were “GOCC subsidies more than triple in April” (June 9), “LGUs to receive P1.034-trillion NTA in 2025” (June 16), “PHL gov’t should consider raising taxes, analysts say” (June 17).

In the last report where I was one of the quoted analysts, I argued that there is no need to raise taxes because there are short- to long-term sources of additional revenues. For instance, Finance Secretary Ralph G. Recto has raised the dividends that government-owned and -controlled corporations (GOCCs) should remit to NG to P100 billion in 2024 alone. Many of the GOCCs also raised their dividend payments to NG from a minimum 50% to 75%.

Better tax administration will also help control illicit trade and smuggling, especially of tobacco products. I elaborate on the privatization of several government land assets soon.

IMPROVING CREDIT RATINGS
On June 7, Fitch ratings released a report where it affirmed the Philippines at ‘BBB’, with a stable outlook. This is good news. I checked other Asian economies in Fitch Ratings, and I added two other prominent rating companies — S&P and Moody’s. The Philippines is near “A” ratings and we may be able to overtake Italy and Thailand and be at par with Malaysia soon (see Table 2).

I particularly like this part in the Fitch report where they noted that “The Finance secretary has publicly indicated that no new taxes would be imposed in 2024, and possibly until the end of the Marcos Jr. administration in 2028. Nevertheless, we note that overall budget balances have tended to be close to the targets in recent history.”

There were three reports in BusinessWorld related to this — “Finance secretary wants to keep original revenue goals” (June 5), “Recto says Philippines still on track to achieve ‘A’ credit rating” (June 10) and “Banking industry outlook is ‘improving,’ says Fitch” (June 12).

Secretary Recto is correct in making an optimistic announcement that “this affirmation is highly encouraging as it shows a strong vote of confidence in our ability to grow the Philippine economy in a higher path over the medium term… We are on the road to an ‘A’ rating. A better credit rating will help us create more jobs and reduce poverty by 2028.”

Budget Secretary Amenah F. Pangandaman expressed the same optimism, saying that “It bears noting that Fitch cited the Philippines’ strong medium-term growth as one of the reasons for our rating. We hope to sustain our momentum for growth and keep our lead as one of the fastest-growing economies in Southeast Asia.”

On spot there, Mr. Recto and Madame Pangandaman. We just need to sustain high GDP growth of 6% or higher for several years while controlling borrowings so that the public debt/GDP ratio can be reduced and by extension, cut the budget deficit target of 3.7% of GDP by 2028. Productivity-enhancing budgetary spending like infrastructure should continue while wasteful spending like endless subsidies and freebies that lead to endless state dependence, war preparations and military and uniformed personnel pensions from the budget should be controlled.

In 2019, the debt-to-GDP ratio of the Philippines was only 37%, while Thailand had 41% and Malaysia had 57%. When the lockdown was imposed in 2020, their respective ratios jumped to 51.6%, 49.4% and 67.7%. By 2023, their respective ratios were 56.6%, 62.4% and 67.3%.

In average GDP growth from 2021-2023, the Philippines had 6.3%, Malaysia had 5.2% and Thailand had 2%. So in both reducing the debt-to-GDP ratio and raising overall growth, the Philippines had better performance than Thailand and Malaysia. From these two important metrics, the Philippines overtaking Thailand and being at par with Malaysia in credit ratings are a realistic and desirable trend.

 

Bienvenido S. Oplas, Jr. is the president of Bienvenido S. Oplas, Jr. Research Consultancy Services, and Minimal Government Thinkers. He is an international fellow of the Tholos Foundation.

minimalgovernment@gmail.com

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