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Oakwood has a new home in Makati

ASCOTT’s Oakwood has a new home in Makati, sharing space with Worldhotel Inc.’s I’M Hotel in the intersection of Makati and Kalayaan Avenues in Makati’s Poblacion.

“We actually have two properties under one roof,” said Melissa Lim, General Manager of Oakwood Makati Avenue, during the April 16 launch. The property has 434 rooms in total. 150 of them, all suites, belong to the Oakwood brand, occupying floors 22 through 34. The remaining 284 rooms belong to I’M Hotel, occupying floors nine through 21.

“We want to take I’M to the next level essentially. We saw the opportunity to rebrand some of our suite rooms,” she said. “It’s the suites that needed more push.”

BusinessWorld took a tour of the property. The suites have been given touch-ups, with balconies and voice-activated smart television sets, and fully equipped modular kitchenettes. The rooms range in size from the Studio Premier at 44 sqm., to the two-bedroom executive suite at 100 sqm., with prices beginning at P10,000. The hotel is also pet-friendly. “For I’M Hotel, what we’re trying to attract is the leisure traveler,” said Ms. Lim. “Whereas for Oakwood, what we’re trying to attract is the corporate guests as well as long stays.”

Along with the rebranding of the suites, I’M Hotel also announced the opening of two new food and beverage outlets: Osteria M and Barangay Bar.

Osteria M is led by Ms. Lim herself (who happened to be a finalist of Singapore MasterChef’s second season). This will feature Italian cuisine infused with Filipino ingredients, as well as handmade pastas, and sourdough Naples-style pizzas. Meanwhile, Barangay Bar (punnily pronounced as Barang-gay) is their LGBQ+-friendly bar, located by the poolside. “Because we’re situated in Poblacion, I think it’s high time that Poblacion supports the community with an LGBTQ+-friendly bar,” she told BusinessWorld.

I’M Hotel’s I’M Onsen Spa, according to Ms. Lim, will also venture into aesthetic treatments as well. As for the hotel itself, she said, “In the next three to five year-window, we’re going to actually be franchising I’M Hotel as a brand to the provinces. We wanted to get the blueprint.”

Oakwood Makati Avenue is located in Kalayaan Ave. corner Makati Ave., Brgy Poblacion, Makati City. — JL Garcia

PHINMA Corp. says it’s boosting cement capacity with new Mindanao facilities

LISTED conglomerate PHINMA Corp. is set to increase the capacity of its cement business with new facilities in Mindanao, a company official said.

The company is putting up a cement plant in Davao valued at around P2 billion, said Eduardo A. Sahagun, PHINMA Corp. director and executive vice-president for the construction materials group (CMG), during a briefing last week.

“We’re putting (up) our Davao plant, which is almost similar to Mariveles, Bataan. That is a joint venture with some of our partners in Davao. That will bring our total capacity to like five million tons if all those things will be completed in a couple of years,” he said.

“The Davao plant is about to start. We’re just working on its environmental clearance certificate,” he added.

PHINMA Corp. has presence in the cement business through its subsidiary Philcement Corp., which is part of the conglomerate’s CMG consisting of Union Galvasteel Corp. and PHINMA Solar Energy Corp.

The company’s Mariveles plant, located at the Freeport Area of Bataan, has an initial annual capacity of two million tons.

In addition, Mr. Sahagun said Petra Plant in Zamboanga del Norte has also started and is expected to help boost the company’s cement business.

Philcement signed a manufacturing and sale agreement with Petra Cement, Inc. in January, allowing the former to operate the latter’s Petra Plant.

“It has started and after that, we’re almost there for the actual purchase for the Petra Plant. We actually look at that as an opportunity. When we look at where it is located, it is almost like we’re the only one there serving Northern Mindanao,” he said.

“We think that has a good potential for us. And bring us closer to where we want to be as we actually put in together our model of being more sustainable for our cement business,” he added.

The Petra Plant has a cement grinding facility with a capacity of 500,000 metric tons per annum.

Meanwhile, PHINMA Properties said in a separate statement that it plans to explore the provision of socialized housing to the underserved and low-income sector.

“What we hope to do is develop a successful model for this, finding a balance between serving our mission of making lives better and compliance with the price ceiling for these properties as set by the government,” PHINMA Properties President and Chief Executive Officer (CEO) Raphael B. Felix said.

PHINMA Hospitality, Inc. President and CEO Jose Mari R. del Rosario said the company is exploring expansion and more franchising opportunities for the Microtel brand, along with a Visayas venture for TRYP.

The company is currently working on a TRYP condotel project in partnership with Damosa Land, Inc. in Samal Island, Davao.

“This will, in effect, disperse the locations of Microtels in the countryside where they are much needed,” he said.

PHINMA Corp. shares were last traded on April 30 at P20 per share. — Revin Mikhael D. Ochave

LANDBANK seeks to tap capital markets faster through charter amendments

LAND BANK of the Philippines (LANDBANK) wants to be able to tap the capital markets faster as part of its proposed charter amendments, its top official said.

“We’re looking at a lot of different aspects with the aim of making LANDBANK more competitive and to allow us the ability to go to market in a swifter manner,” LANDBANK President and Chief Executive Officer Lynette V. Ortiz told BusinessWorld in an interview.

The official said part of the goals for the planned changes to its current charter is to improve LANDBANK’s “ability to be able to access the debt markets in a more nimble way, as well as proper representation in the board of a wider industry, including infrastructure.”

Department of Finance Secretary Ralph G. Recto said in March that bills seeking to amend the charters of LANDBANK and the Development Bank of the Philippines will be filed with Congress soon.

The charter changes will also increase the two state-run banks’ authorized capital stock and allow them to conduct an initial public offering (IPO).

Ms. Ortiz added that the amount LANDBANK will seek to raise through the IPO will depend on the provisions that will be approved by Congress, and that it will be a percentage of their capital.

Meanwhile, LANDBANK has also received regulatory relief following its capital contribution to the Maharlika Investment Corp. (MIC), she said.

LANDBANK was mandated to contribute P50 billion to the MIC for its initial funding.

“But generally, I think if you look at our financials, our common equity Tier 1 (CET1) ratio and capital adequacy ratio (CAR), we are well above [the mandated levels],” Ms. Ortiz said.

As of end-2023, LANDBANK’s CAR stood at 16.35%, while its CET1 ratio was at 15.46%, both above the Bangko Sentral ng Pilipinas’ (BSP) minimum requirements of a 10% CAR and 6% CET1 ratio.

BSP Governor Eli M. Remolona, Jr. previously said both LANDBANK and DBP remained compliant with the regulator’s capital requirements, even after remitting their contributions to the MIC.

LANDBANK’s net income grew by 34% to P40.3 billion last year, driven by revenues from loans and investments and improved cost management. — Aaron Michael C. Sy

PHL cyberattacks averaged 5B daily in 1st quarter, report shows

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By Aubrey Rose A. Inosante

THE PHILIPPINES was hit by an average of five billion cyberattacks per day in the first quarter, with 87% of those targeting the gambling and gaming industry, according to cloud services and cybersecurity provider Cloudflare, Inc.

This marked a 28% increase from 3.9 billion cyberattacks in the fourth quarter of 2023, Cloudflare said in its Quarterly Global Internet Trends & Insights Report released on April 17.

The most targeted sector was the gaming and gambling industry with an 87% share, followed by telecommunications at 6%, hospitality at 5%, and media with 1%, it said.

“There have been more high-volume cyberattacks, e.g. denial-of-service (DDoS) attacks, targeting the Philippines’ Internet properties protected by Cloudflare in the last quarter than in the previous one,” Cloudflare said in an e-mailed statement on April 26.

A DDoS attack aims to disrupt Internet services such as websites or mobile applications and make them unavailable for users.

Gambling and gaming were also the top targeted industries in Asia, seeing 53% of total threats, Cloudflare said.

Thailand and Indonesia saw two billion cyberattacks per day with the same top-targeted industry, while Singapore was hit by six billion attacks daily, with its most attacked industry being cryptocurrency, the report showed.

“We observed around two trillion Hypertext Transfer Protocol (HTTP) requests blocked as potential threats (not only DDoS) in the previous quarter in Asia related to the gaming/gambling industry,” it said.

This was also the case globally, as over seven of every 100 DDoS requests mitigated attacked the gaming and gambling industry, followed by the information technology and Internet sector and marketing and advertising, it added.

The online gaming industry is competing for customers in cyberspace, with some even acquiring the services of DDoS attackers to gain market share, according to Allan S. Cabanlong, regional director for Southeast Asia at the Global Forum on Cyber Expertise.

These attacks can cause downtime in gaming sites, leading to a loss in revenue and a decline in player retention, he said.

Extortion is also one of the main objectives of those targeting the gambling industry, said e-commerce advocate Janette Toral.

“Gambling platforms use e-commerce transactions and payments connectivity elements,” Ms. Toral said.

Cloudflare said it served an average of 44 billion daily content requests to the Philippines, with three billion or 6% classified as DDoS attacks originating locally.

Globally, it mitigated 10.5 trillion HTTP DDoS attack requests in the first quarter and blocked 59 petabytes of DDoS attack traffic on the network layer, it said.

The source countries were the United States (19.8%), China (7.73%), Germany (6.5%), Indonesia (6.07%), and Brazil (5.96%).

The quarterly DDoS threat report provides a comprehensive overview of DDoS attack insights and trends over three months. Cloudflare sends an automated survey to victims of a DDoS attack or a ransom note.

Digital Pinoys National Campaigner Ronald B. Gustilo said there must be stiffer fines and penalties for government agencies and private institutions that will be affected by data breaches, depending on the severity of these incidents.

Amazon’s top-to-bottom spending on AI is paying off

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THE storm clouds are finally starting to clear over the head of Amazon.com, Inc. Chief Executive Officer Andy Jassy.

After taking over from Jeff Bezos, Jassy has mostly been confronted with challenges. Regulators have been on his back. The e-commerce business needed some serious reining in after overexpanding during the pandemic. Amazon’s grocery stores have been a disappointment. He’s laid off thousands of employees and shut down some projects.

Amazon Web Services (AWS), the golden goose cloud business that has long girded the company’s profit margins, was under pressure from cash-strapped businesses seeking a better deal during the pandemic. Revenue growth slowed. Then, when Microsoft Corp. entered a partnership with OpenAI, there was worry that AWS’ market share might suffer as businesses flocked to invest in the artificial intelligence (AI) offered by Amazon’s biggest cloud competitor.

Jassy, who had been responsible for AWS’ rise as the division’s CEO before taking the top job, kept a level head. He assured investors that Amazon had been working on AI for years — long before ChatGPT set the tech world alight with the promise of world-changing possibilities.

Amazon’s message was that while OpenAI may have been grabbing headlines, investors should think of AWS as the Swiss Army knife for AI, one where businesses could run any number of cutting-edge AI models without worrying about shifting their sensitive data from one cloud provider to another.

To answer worries about the availability of computing power, which had driven up the cost of procuring Nvidia Corp. hardware to do AI training and inference, Amazon had already been making its own hardware for those purposes with its Trainium and Inferentia chips, something that Microsoft and others are rushing to catch up on. Underlining its seriousness with AI, Amazon bought a $4 billion stake in leading AI maker Anthropic, which said it would run its workloads on AWS.

On Tuesday, the company’s first-quarter earnings showed these investments are starting to pay off, prompting an after-hours stock price boost of as much as 6.5%. Jassy’s reassurances have proved accurate, and more good times are on the horizon. AWS posted its second consecutive quarter of accelerating sales growth, with client interest in AI contributing significantly, Jassy said. AWS now has an annual revenue run rate of $100 billion, with AI spending accounting for “multibillion” of those dollars. As Jassy predicted, clients that had pulled back cloud investment in the “survival mode” of the pandemic have started to pick up the pace and shift more of their spending to the cloud. “I think people have moved to newer initiatives that at a macro level I would describe as modernizing their infrastructure and then trying to drive value out of generative AI,” he said on a conference call to discuss the results.

Operating margin for AWS in the quarter was a record 37.6%, thanks to cost cuts and heightened demand. In all, Amazon’s cloud business was “climbing out of what was a pretty tough year,” Jefferies analyst Brent Thill said on Bloomberg TV. “Investors aren’t paying for Twinkies and toilet paper being delivered to your house. They’re paying for these high-margin, recurring businesses like AWS.”

The strong quarter meant Amazon could get away with vague pronouncements like saying it would “meaningfully” step up its capital expenditure this year to pay for all this AI infrastructure — without putting a figure on it. Unlike Meta Platforms, Inc., which was punished for saying its spending would increase, Amazon can get away with bigger investments because of its strong presence in multiple layers of the AI “stack”: the bottom infrastructure layer for AI model builders, the middle layer of developers working with AI, and the top layer of consumer-facing software applications like chatbots.

It all puts Amazon in excellent stead amongst this fiercely competitive AI crowd. The initial money is being made on the bottom and middle layer, but there’s no reason Amazon can’t have a commanding presence in consumer-facing AI as well — this week, it fully rolled out its competitor to Microsoft’s code-writing AI assistant, CoPilot.

In other words, Jassy has seized the agenda and set Amazon up to both sell the shovels and dig for the gold.

BLOOMBERG OPINION

Dining In/Out (05/02/24)


Edsa Shangri-La will have event fair

EDSA SHANGRI-LA, Manila will stage an experience expo called Strictly RSVP. Strictly RSVP, an invitation-only event, will feature a series of special packages and premium offers for selected prospecting guests. Edsa Shangri-la’s partners, Styled Events by Beng Villanueva, Royal Flower Shoppe by Gina Galang, Blooms Event Styling by Allen and JP, Kyno Kho, Nikki Chatto Floral Designs, Jo Claravall, and Flowers & Events by Teddy Manuel, will join the experience expo. Themes to be explored during the June 1 event include Kids’ Lab, The Big Bash, @Eighteen, Ting Hun, and Me & You. For more information on offers, email events.esl@shangri-la.com.


Shangri-La Plaza unveils Streetscape

SHANGRI-LA PLAZA will unveil the refreshed look of its al fresco dining spot, Streetscape, starting May. Streetscape’s new look is inspired by the warmth and charm of Filipino heritage streets but with contemporary twists and convenient features. Restaurants include Manam with its inventive twists to Filipino fare and Refinery, with its creative new takes on comfort food; Italian pizzeria and resto a mano, popular French-American bistro café and restaurant Wildflour, and American steakhouse Longhorn, or sample the best of Asian cuisines like modern Izakaya Sakagura, contemporary Thai-Asian spot Ginger Lily, and chic resto-bar Red Lotus. Chef-driven dining spots such as Sala Martinez by Chef Luis Martinez and Juniper Club by Chef Josh Boutwood are also serving exquisite bites at Streetscape. Shang’s new al fresco spot will also sport organic food resto The Wholesome Table and Harlan + Holden Coffee. “When you step into the revamped Streetscape, you’ll instantly feel the inimitable Shang DNA. From the warm hospitality to the meticulously curated zoning to surroundings inspired by Filipino heritage streets and green spaces, every detail has been thoughtfully crafted to ensure a uniquely personal and inspired dining experience,” said Joy R. Polloso, Shang Properties EVP for Retail and Commercial. To learn more, follow Shangri-La Plaza on Facebook and Instagram @shangrilaplazaofficial.


Carmen’s Best Powerplant Mall branch reopens

CARMEN’S BEST reopens its original Powerplant mall branch just in time for the summer. This first-ever ice cream parlor of Carmen’s Best opened in 2018. Similar to the Mall of Asia branch, Carmen’s Best Powerplant Mall is now sporting the new, refreshed look of the brand following its recent relaunch. Classic flavors available include Salted Caramel, Strawberry, Malted Milk, Dark Chocolate, and Brazilian Coffee — in a cup, scoop, or even a kiddie scoop. Other offerings include milkshakes, SoftServe ice cream and even a coffee lineup. Some well-loved flavors are making a comeback for a limited time. These include Hokey Pokey (vanilla ice cream with handmade honeycomb candy), Natural Cheddar (made with 100% fresh milk and natural grated cheddar cheese), Matcha Kakigori (Japanese inspired dessert with red mung beans and a light matcha flavor), and Strawberry Cheesecake (cream cheese based ice cream swirled with strawberry ripple and graham crackers). These flavors will only be available until June. The menu is also expected to include more limited edition items in the coming months. According to Jovy Hernandez, President and CEO of Metro Pacific Agro Ventures and Carmen’s Best, “There’s no better joy than seeing more Filipino families enjoying our best-in-class, gourmet, and proudly local ice cream. Our goal is to build more of these joyful stores where families and friends can experience all that Carmen’s Best has to offer, and the joy that comes when you share it with people you love.” For more information and latest announcements, visit www.carmensbest.com and Instagram @carmensbest.


Australian Table Grape Association announces export season

THE AUSTRALIAN Table Grape Association (ATGA) announces the official launch of the Australian table grape export season in the Philippines, complemented by a promotional program across selected retailers throughout the country. Funded by Hort Innovation through grower levies, this initiative brings Australian table grapes to Philippine consumers. The promotional program aims to solidify the presence of Australian table grapes in the Philippine market. Through this campaign, consumers will have the chance to sample a diverse range of grape varieties from Australia, including popular favorites and new, innovative breeds that offer a unique taste experience. The promotional campaign will feature in-store tastings, educational materials about the benefits and varieties of Australian table grapes, and special promotions to celebrate the launch. Select retail partners across the country will participate in this program like Landers, Metro Supermarket, Robinsons Supermarket, S&R, Shopwise, The Marketplace as well as Dizon Farms. Jeff Scott, CEO of the Australian Table Grape Association, said, “Our growers have worked tirelessly to produce the highest quality grapes, and we are proud to share them with the Philippines consumers. This promotional program is a significant investment in connecting with our Filipino consumers and retailers, ensuring that the excellence of Australian table grapes is recognized and enjoyed across the market.” The Philippines represented almost 7% of Australian table grape exports for the 2022/23 season. The Philippines is currently the fourth largest export market for the 2023/24 season. For more information about the Australian table grape season in the Philippines and the promotional program, please visit http://www.AustralianGrapes.com.au.

BAP says selling PDS to PSE hinges on ‘right conditions’

THE Bankers Association of the Philippines (BAP) said it is open to selling the Philippine Dealing System Holdings Corp. (PDS Group) to the Philippine Stock Exchange (PSE) under the right conditions.

“We’re willing to sell at the right conditions,” BAP President Jose Teodoro K. Limcaoco told reporters on the sidelines of a media briefing last week.

“(The PSE) has given us a letter saying that they are interested, but there’s no price,” said Mr. Limcaoco, who is also the president and chief executive officer (CEO) of Ayala-led Bank of the Philippine Islands.

He noted that the BAP had engaged an adviser to assess the value of the potential sale to the PSE.

“That’s where we are. There is no result yet,” he said.

The PSE is eyeing the acquisition of up to 100% of the PDS, the operator of the Philippine Dealing & Exchange Corp. (PDEx), which caters to the fixed-income market, as part of merging the country’s capital market infrastructure.

The PSE has a 20.98% stake of the issued and outstanding capital stock of the PDS Group, while BAP members and institutions have a 21% stake.

Some of the other PDS shareholders include Singapore Exchange Ltd. (20% share), Whistler Technologies Services, Inc. (8% share), Tata Consultancy Services Asia (8% share), San Miguel Corp. (4% share), Financial Executives Institute of the Philippines Research and Development Foundation (3.08% share), and Social Security System (1.54% share).

PSE President and CEO Ramon S. Monzon said that the local bourse is hoping to finalize the planned takeover of PDS within the year.

He added that negotiations have not started because the power of attorney of the BAP has expired. The power of attorney allows BAP to decide on the merger on behalf of its member banks.

“I’m not sure if we’re waiting for a power of attorney,” Mr. Limcaoco said after being asked about the PSE’s recent statement.

He said that they want to understand the governance structure of the proposed merger.

“If we were to sell PDS, we wouldn’t understand how PDEx is governed. So we’re trying to understand how they are supposed to govern PDEx.”

In December last year, the Securities and Exchange Commission (SEC) approved the application of the PSE for exemptive relief, allowing it to exceed the mandatory ownership in PDS.

This move allows the PSE to exceed the mandatory limit of 20% on ownership and voting rights in an exchange, permitting it to own up to 100% of PDS, subject still to certain conditions.

The SEC’s move allows unified or integrated local bourses, referring to a financial market where assets like stocks and bonds are traded under a single entity as part of developing the country’s capital market.

Under the Securities Regulation Code, no industry or business group may beneficially own or control, directly or indirectly, more than 20% of the voting rights of the exchange.

In 2017, the PSE almost finished its takeover of PDS. However, the SEC blocked the transaction as it would breach the individual ownership limit under the law. — Revin Mikhael D. Ochave

Bakeries bring bread to north Gaza but hunger persists

ASMAA AL-BELBASI walks an hour to her nearest bakery each day to fetch bread for her children and other relatives in the north Gaza districts where aid agencies say famine still looms despite rising supplies.

The route can be dangerous, along streets strewn with rubble from blown-up buildings that are impassable to cars and with fighting between Hamas militants and Israeli forces still sporadically raging. Her journey shows how desperately Gazans need bread to stave off deadly hunger.

“Before they opened up the bakeries we would get corn flour, which you couldn’t knead. It was like a log and would come out like a biscuit. After a day or two it’d be difficult to eat,” she said, talking about the flour people in Gaza made from animal feed and baked on open fires.

When the first bakery opened using flour and fuel provided by the World Food Programme (WFP), unruly queues of hundreds of people crammed into nearby streets between the ruins of houses. The bakers had to employ dozens of stewards to maintain order.

A few more bakeries have now opened, some of them operating 24 hours a day, but while the queues are now smaller, Ms. Belbasi still waits at least 20 minutes each day for the two bags of flat pitta bread she needs for her large family, she says. 

Restoring Gaza’s bakeries and ensuring a regular supply of flour, water and fuel will be crucial to stopping famine spreading across the tiny, crowded enclave nearly seven months into the conflict.

Israel’s ground and air campaign was triggered when Hamas stormed border defenses on Oct. 7, killing around 1,200 people and seizing 253 more as hostages according to Israeli tallies.

The offensive has left Gaza in ruins, killing more than 34,500 people, according to health authorities in the Hamas-run enclave, and leaving nearly all the survivors homeless and destitute.

Bread has always been the main staple for people in Gaza, though before the war plenty of other food was available too, from locally grown vegetables, chickens and sheep, fresh fish from the sea and imported tinned and packaged food.

At the start of the war Israel announced a total blockade. Though it then started to let in some food, aid agencies including those run by the United Nations said it was not doing enough to facilitate supplies and their distribution.

Israel says it puts no limit on humanitarian supplies for civilians in Gaza and has blamed the United Nations for slow deliveries, saying its operations are inefficient.

But with pockets of famine emerging in Gaza, with some children dying from malnutrition and dehydration, and with people across the enclave hungry, even Israel’s closest allies have increased pressure on it to do more to let in food.

Aid started to flow in higher volumes into northern Gaza this month after Israel opened a new crossing point, and the WFP has been supplying bakeries as part of the wider effort.

But aid agencies warn it is still nowhere near enough to end a humanitarian disaster there and the WFP said last week that northern Gaza is still heading towards famine.

AID SUPPLY
The first big bakery in northern Gaza that reopened, on April 13, was one of five run by Kamel Ajour Bakeries, which now makes pitta bread and puffy sandwich loaves to sell at a subsidized rate.

“We suffered heavy damage. We have five branches and there are other selling locations and most of them were either partially or completely damaged. Thank God we were able to re-operate this place so we can make bread for people again,” said Karam Ajour, a quality control administrator at the bakery.

To reopen, the bakery workers had to salvage machinery from different branches that had been destroyed or damaged by Israel’s military campaign, moving them to the single branch they decided to reopen with WFP support.

They knead the bread into balls and flatten it into pockets that puff up as they pass through the oven to be put into large bags for collection. They are sold through windows with grills to the crowd pressing outside.

As demand for bread among the hundreds of thousands of people still living in northern Gaza was so high the Ajour owners decided to run a 24-hour operation, installing a third production line there alongside the existing two.

A steady supply of both wheat flour and fuel to operate the bakery oven are vital. Aid deliveries into northern Gaza have been far more complex than those to southern parts of the enclave nearer the crossings with Egypt.

In March, more than 100 people were killed during a botched aid delivery in the north. Earlier this month an Israeli strike killed foreign aid workers in a convoy carrying food aid into northern Gaza. Some aid convoys have been mobbed by desperate, hungry people.

Karam Ajour bakeries has employed people to handle the WFP aid deliveries into two Gaza City roundabouts and bring them safely to the bakery.

When asked how he felt about the bakery reopening, Mr. Ajour said: “I’m part of the people and I share their feelings and their need for food.” — Reuters

Ramping up investments to boost digital economy

THE PHILIPPINES needs to tighten its cybersecurity laws and increase investments in infrastructure to strengthen the digital sector’s contribution to the economy, analysts said.

“Factors for the slower growth pace [of the digital economy] include the lack of access to affordable or reliable internet, low digital literacy, and cybersecurity concerns,” Security Bank Corp. Chief Economist Robert Dan J. Roces said in a Viber message.

“Low-hanging fruits include increasing investments in digital infrastructure, promoting digital literacy, encouraging tech adoption by more businesses, and establishing a favorable regulatory environment that can boost the digital economy’s GDP (gross domestic product) share,” Mr. Roces added.

The digital economy accounted for 8.4% to Philippine GDP last year, a tad lower than its 8.6% contribution in 2022, government data released last week showed.

The digital economy runs under transactions through digital-enabling infrastructure, e-commerce, digital media or content, and government digital services, the Philippine Statistics Authority said.

Cybersecurity remains a key issue in the digital economy’s growth, John Paolo R. Rivera, president and chief economist of Oikonomia Advisory & Research, Inc., said in a Viber message, adding that laws like the SIM Registration Act and the Data Privacy Act have failed to protect consumers against scams.

“[The] slowdown in the digital economy may also stem from the lack of confidence of consumers for its facility as it has been used as a platform for scrupulous and fraudulent activities. This has resulted in slower demand,” he said.  The government must “penalize to the full extent of law those who will use the digital economy for fraud, regulate the digital economy through more stringent consumer protection,” Mr. Rivera added.

The Philippines saw the highest number of detected and blocked financial phishing attempts last year in Southeast Asia, global cybersecurity firm Kaspersky earlier said in a report.

A weaker peso increased importation costs and slowed down investments and growth in the digital economy last year, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

Elevated inflation and interest rates also affected the sector, he added.

Despite this, the digital economy is expected “to grow with the new normal with more online or digital transactions even for the coming years… given the greater convenience, with more choices for consumers at lower prices and bigger market locally and internationally for sellers,” Mr. Ricafort said.

The Philippines’ digital economy is projected to be valued at $150 billion by 2030, according to a report by Google, Temasek Holdings, and Bain & Company. — B.M.D. Cruz

DBP may raise 20% of capital stock through planned listing

By Luisa Maria Jacinta C. Jocson, Reporter

DEVELOPMENT Bank of the Philippines (DBP) is studying the possibility of raising 20% of its capital stock from its proposed initial public offering (IPO) under planned changes to its charter, its top official said.

“It’s something that’s being studied. But maybe no more than 20% (of our capital stock),” DBP President and Chief Executive Officer Michael O. de Jesus told BusinessWorld.

This would be equivalent to around P7 billion, which is 20% of the bank’s P35-billion capital stock, Mr. De Jesus said.

In March, DBP said it is looking to hike its capital stock to P300 billion to expand its products and services and support more development projects.

The Finance department is working on a proposal that seeks to amend the charters of both the DBP and Land Bank of the Philippines (LANDBANK) to increase their authorized capital stock and allow for their public listing.

“Initially, we’re looking at things like maybe just preferred shares. Maybe to make it more attractive, it should not just be preferred shares, but also common. All that is being studied,” Mr. De Jesus said.

He added that there is a “strong possibility” that the amendments to the banks’ charters will be finalized within the year.

The charter of DBP was last changed in 1998, which hiked its authorized capital stock to P35 billion from P5 billion previously.

Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said DBP’s initial plan for its listing is a “strategic move.”

“By limiting the amount of capital raised through the IPO, DBP can maintain a significant portion of ownership and control, which is crucial for a government-owned financial institution,” Mr. Arce said in a Viber message.

Issuing both preferred and common shares also “adds flexibility to their capital structure.”

“Preferred shares typically offer fixed dividends and priority over common shares in the event of liquidation, which can attract certain types of investors seeking stable income. On the other hand, common shares offer ownership rights and potential for capital appreciation, appealing to investors looking for growth opportunities,” Mr. Arce added.

Meanwhile, Aniceto K. Pangan, an equity trader at Diversified Securities, Inc. said the high interest rate environment may impact the bank’s public listing.

“The current market condition is illiquid with low valuation due to the elevated interest rates, and thus not conducive to fundraising,” Mr. Pangan said in a text message.

The Monetary Board has raised borrowing costs by 450 basis points (bps) from May 2022 to October 2023, bringing the policy rate to a near 17-year high of 6.5%.

Mercantile Securities Corp. Head Trader Jeff Radley C. See also said there are already many banks listed and most investors tend to prefer the bigger banks.

However, he said that an IPO is still viable for both DBP and LANDBANK.

“They should provide liquidity and volume for the stock so investors can buy and sell easily,” Mr. See said in a Viber message.

Both state banks should also ensure transparency throughout the listing process, Mr. Arce said.

“Clear communication about their financial health, growth prospects, and the intended use of proceeds can instill confidence in potential investors,” he said.

“Both should conduct thorough valuation exercises to determine the appropriate pricing for their shares. This involves analyzing financial statements, comparable companies, and market conditions to arrive at a fair valuation that attracts investors while not undervaluing the institutions,” he said.

Both banks should also make sure to showcase the investment opportunity of the IPO by highlighting “unique value propositions and growth potential” as well as strong corporate governance practices and risk management frameworks, Mr. Arce said.

What if Russia wins in Ukraine? Ask Georgia

FREEPIK

THERE’s been a lot of debate about what the future holds for Europe and its neighborhood if Russia’s invasion of Ukraine succeeds. We already know at least part of the answer, because it’s happening in Georgia.

This is the small Caucasus country where President Vladimir Putin first made clear he was willing to use force to reimpose a Russian sphere of control and influence. How that war began remains controversial, and I’ll get to the question later. What happened since shouldn’t have been.

On Monday evening, Bidzina Ivanishvili, a Georgian businessman who made his billions in Russia, gave a speech in which he accused a “global party of war” of trying to block his nation from asserting its freedom and sovereignty.

This is the same global party of war that used civil society non-governmental organizations, or NGOs, to foment Georgia’s 2003 Rose Revolution, according to Ivanishvili, who now runs his native country from an unelected position as chairman of the ruling Georgian Dream party. The uprising brought to power what he described as a puppet government that steeped the nation in crime and repression, and then forced Georgia into war with Russia in 2008. Later, this ill-defined global conspiracy forced Ukraine into wars with Moscow in 2014 and 2022.

Now, Ivanishvili said in his speech, those same people were trying to unseat his government and impose foreign values such as LGBTQ+ rights, because he refuses to open a second front against Russia. The NGOs now need to be dealt with, according to Ivanishvili, while members of the former government of President Mikheil Saakashvili — already in jail on what his lawyers say were trumped up charges — should be prosecuted for unspecified crimes.

This was, as the lifelong scholar of the Caucasus region Thomas de Waal put it on Tuesday, “an extremely dangerous speech that will chill anyone who cares about Georgia to the bone.”

It also amounted to a public declaration by Ivanishvili that he has sided with Moscow in its confrontation with the West, using the same paranoiac, unhinged language and gaslighting that Russian leaders spout daily. “It is completely clear that Bidzina Ivanishvili and ‘Georgian Dream’ have changed the foreign policy course from the West to Russia,” a group of 67 current and former Georgian diplomats wrote in a joint letter responding to the speech.

Twice now, Ivanishvili has persuaded the government to propose a law on foreign agents that’s very similar to the one Russia uses to suppress any nonprofit that receives grants from outside the country and doesn’t toe the Kremlin line. Such laws, aimed at suppressing civil society, are the gateway drugs of would-be autocrats, as they look to remove all institutions that could pose a risk to their hold on power.

Georgian Dream dominates the Parliament, but backed down from the attempt in March last year, after the bill triggered mass street protests. Russia, not coincidentally, was on the back foot in Ukraine at the time, recovering from two major battlefield defeats and looking stretched as even a regional superpower.

Now the government in Tbilisi is trying again, triggering mass protests, as well as formal criticism from Georgia’s Western allies. The European Union (EU) has said the law would be incompatible with membership, which opinion polls show some 80% of Georgians want. A bipartisan group of US senators expressed their disappointment in a letter, warning that the shift in policy could force the US to impose sanctions.

So what actually happened in Georgia? Saakashvili, a US-educated lawyer, had indeed worked for an NGO and led the Rose Revolution to power in 2003. The country was at the time a failed state, much of it controlled by criminal gangs and with three enclaves carved away by pro-Russia separatists; Ivanishvili, recently returned from Russia, gave no sign of opposing the uprising and even bankrolled some of Saakashvili’s reforms. The young new leader, for all his failings, quickly retrieved one lost territory, radically reduced corruption, collected taxes and left behind a functioning, investible state.

It wasn’t until 2008 that the two men became enemies. The North Atlantic Treaty Organization (NATO) had just said “no” to membership plans for Georgia and Ukraine, but offered a long-term promise that trespassed on what Putin saw as his backyard.  The Russian military began to prepare fuel depots and rail infrastructure in Abkhazia and South Ossetia, its two remaining Georgian enclaves. When it started feeding unmarked tanks and soldiers into South Ossetia, in August, Saakashvili attempted a disastrous preemptive strike.

Saakashvili became the first Georgian leader to step down and allow a peaceful transfer of power when he lost elections in 2012. And for a while, it seemed Ivanishvili and Georgian Dream might offer a less impetuous path to the EU and NATO integration that the vast majority of the country wanted, as well as more protections for the rule of law.

But the country has instead been slipping on indices for corruption and freedom. Opponents of the government have been beaten or shot at. And this time, when Ivanishvili pushed for the repressive NGO law, Russia was on the offensive in Ukraine, taking territory as Kyiv ran out of ammunition for the front. Rather than back down again in the face of widespread demonstrations, Ivanishvili has now stepped out of the shadows to claim the foreign agent law as his own and the West as his enemy.

In doing so, Georgia’s strongman is flying in the face of what most of the population want, while obscuring the fact with appeals to conservative Georgians over gay rights. He’ll also doubtless enjoy backing from Moscow, which keeps troops in Abkhazia as well as South Ossetia, about a two-hour tank drive from the capital. The result is I have no idea how this will play out, but the impact of Putin’s military success in Ukraine is already clear; it’s turning the dreams of Russia’s neighboring populations into nightmares.

BLOOMBERG OPINION

Meralco proceeds with feasibility study on micro modular reactor

PHILIPPINE STAR/MICHAEL VARCAS

MANILA Electric Co. (Meralco) said it has started conducting a full feasibility study with US-based company Ultra Safe Nuclear Corp. (USNC) for the installation of micro modular reactors (MMR) in the Philippines.

“On the formal feasibility study, we will need to deep dive more on the financial safety and other very important parameters as well as on the site-specific study like where do we install these micro modular reactors,” Meralco Executive Vice-President and Chief Operating Officer Ronnie L. Aperocho said during a recent briefing.

He noted that the company had decided to proceed with the formal feasibility study following the presentation of the pre-feasibility results.

The full-scale feasibility study would take approximately six months, and they are already making progress, he added.

Meralco Chairman and Chief Executive Officer Manuel V. Pangilinan said that the pre-feasibility study identified five areas that are subject to a geological study.

The study is to ensure that the locations are safe places to build micro modular reactors, which would likely be completed before 2028.

“What’s important is that given the circumstances around this nuclear in this country, it is important that we start today with a fairly modest proof-of-concept plan, and they’re prepared to do that, whatever the size might be, 5, 10 megawatts (MW) and located in a safe place,” he said.

In November last year, Meralco and USNC signed a cooperative agreement to study the potential deployment of one or more micro modular reactor energy systems in the country.

Under the deal, USNC conducted a pre-feasibility study for four months.

“Our goal is to be able to start an operational plant perhaps in one of the island provinces to produce power and demonstrate that it’s a safe mode of producing power,” Mr. Pangilinan said.

An MMR unit or “nuclear battery” can “safely and reliably” provide up to 45 megawatt thermal of high-quality heat, delivered into a centralized heat storage unit, according to Meralco.

“One or more MMR nuclear batteries combine their heat in the heat storage unit, from where electric power or superheated steam can be extracted through conventional means to meet a wide range of power requirements, from tens to hundreds of MW,” the power distributor has said.

 Meralco is sending five engineers to a two-year graduate program abroad this year to develop skilled professionals and help the country develop local nuclear energy experts.

The scholarship is part of the company’s Filipino Scholars and Interns on Nuclear Engineering program that was launched in September last year.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc.

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