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First Gen, Japan’s Murata unit renew power supply deal

FIRST GEN Corp. on Tuesday said it will continue supplying renewable energy for the Philippine Manufacturing Co. of Murata, Inc.’s (PMM) Batangas facility under a renewed contract.

“The supply deal is aligned with the commitment of the Japan-based electronics giant to shift electricity used in all its factories and offices around the world to 100% renewable energy by 2050,” the Lopez-led energy provider said in a statement.

PMM is the local branch of Murata, a worldwide manufacturer and innovator of electronic components and solutions, providing parts for various technology companies.

PMM and First Gen first signed a supply contract in 2021.

First Gen said the new deal stipulates that PMM’s power supply will originate from the Bacon-Manito geothermal power facility in Bicol, which is operated by First Gen subsidiary Energy Development Corp., the world’s largest vertically integrated geothermal company.

“The renewal of our supply agreement with First Gen highlights our companies’ decarbonization and sustainability goals,” said Masayoshi Koda, president of PMM.

“While we aim to capture the demand for components that support emerging technologies, we want to do so in a manner that is cost-efficient, best in class, and carbon-neutral,” he added.

PMM’s manufacturing facility is located within First Philippine Industrial Park economic zone in Batangas, which is said to be the company’s largest manufacturing facility in Southeast Asia.

Its facility manages the production of multilayer capacitors for electric vehicles and sixth-generation wireless communications technology.

“Together, we in First Gen and PMM are not just reducing emissions but also shaping a future where environmental responsibility and growth go hand in hand,” said Francis Giles B. Puno, president and chief operating officer of First Gen.

First Gen is targeting to grow its renewable energy portfolio to up to 13 gigawatts (GW) by 2030 from the current capacity of more than 3.4 GW. — Ashley Erika O. Jose

Gov’t partially awards reissued 20-year bonds

BW FILE PHOTO

THE GOVERNMENT made a partial award of the reissued Treasury bonds (T-bonds) it offered on Tuesday as its average rate surged amid expectations of a delayed start to the Bangko Sentral ng Pilipinas’ (BSP) planned easing cycle due to sticky inflation.

The Bureau of the Treasury (BTr) raised just P16.633 billion via the reissued 20-year bonds it auctioned off on Tuesday, below the P30-billion program, despite total bids reaching P34.927 billion or higher than the amount on offer.

The bonds, which have a remaining life of 19 years and 10 months, were awarded at an average rate of 7.017%, with accepted yields ranging from 6.9% to 7.08%.

The average rate of the reissued bonds surged by 82.8 basis points (bps) from the 6.189% quoted for the papers when they were last offered on March 19 and was 76.7 bps above the 6.25% coupon for the se-ries.

The average rate was also 21.8 bps higher than the 6.799% quoted for the 20-year bond and 21.2 bps above the 6.805% seen for the same bond series at the secondary market before Tuesday’s auction, based on PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury.

“The higher T-bond awarded rate today reflected renewed inflationary concerns and prospects of likely fewer BSP rate cuts this year,” a trader said in an e-mail on Tuesday.

BSP Governor Eli M. Remolona, Jr. last week said they could begin their easing cycle in early 2025 if price risks persist, but they could still cut rates by 25 bps in the third quarter if inflation is within target and economic growth is weak.

The Monetary Board kept its target reverse repurchase rate unchanged at a near 17-year high of 6.5% this month. It hiked borrowing costs by 450 bps from May 2022 to October 2023 to help bring down elevated inflation.

Headline inflation picked up to 3.7% year on year in March from 3.4% in February. This was slower than the 7.6% clip in the same month last year and marked the fourth straight month that the consumer price index was within the BSP’s 2-4% annual target.

For the first quarter, headline inflation averaged 3.3%, below the central bank’s baseline forecast of 3.8% and risk-adjusted forecast of 4%.

Recent expectations of later and fewer cuts from both the BSP and the US Federal Reserve versus earlier bets of aggressive easing caused the T-bond yields to rise from the previous auction, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Comments from Federal Reserve officials and a run of hotter-than-expected inflation data forced a paring back of rate cut expectations, Reuters reported.

Markets are pricing in a 46% chance of the Fed’s first rate cut starting in September, with November not far behind at 42%, according to the CME FedWatch Tool. That was in sharp contrast to just a few weeks ago when markets were betting on June for the US monetary easing cycle to begin.

Investors will have another chance to assess the strength of the US economy this week, with first-quarter gross domestic product data on Thursday and personal consumption price expenditures index, the Fed’s preferred measure of in-flation, on Friday.

The US central bank last month kept its target rate at the 5.25%-5.5% range for a fifth straight meeting following cumulative hikes worth 525 bps from March 2022 to July 2023.

The average yield for the T-bonds also rose due to the movements in global crude prices recently due to tensions between Israel and Iran, Mr. Ricafort added.

On Tuesday, oil prices recovered some of the sharp losses overnight as investors continued to assess the situation in Middle East, Reuters reported. Brent futures rose 0.4% to $87.34 a barrel, while US crude gained 0.4% to $82.25 a barrel.

Iran launched more than 300 drones and missiles on Israel in what it said was retaliation against a suspected Israeli bombing of its embassy compound in Damascus, Reuters reported.

On Monday, European Union foreign ministers agreed in principle to expand sanctions on Iran by agreeing to extend restrictive measures on Tehran’s weapons exports of any drone or missile to Iranian proxies and Russia.

The BTr wants to raise P195 billion from the domestic market this month or P75 billion from Treasury bills and P120 billion via T-bonds.

The government borrows from local and foreign sources to help fund its P1.48-trillion budget deficit, which is capped at 5.6% of gross domestic product for this year. — A.M.C. Sy with Reuters

Need to upskill agribusiness executives: The Dualtech Agritech approach

PARENTS of students of Dagatan Family Farm School harvest the vegetables their kids sowed and nurtured. DAGATAN FAMILY FARM SCHOOL, INC.

(Part 3)

I told the graduating participants of the Agribusiness Executives Program (AEP) that these strategies will remain at the theoretical level, unless their respective business enterprises operationalize them through concrete ac-tion programs in the short run, which must be reflected in their respective budgets for 2024 to 2025. I want to see in their plans for the current year their acquiring more hectares of land to reach more efficient scales; budg-eting larger amounts for the mechanization of their farming operations; diversifying into other food products, whether in livestock, vegetables and fruits benefiting from the technologies provided by such companies as East-West Seeds and Harbest Co.; being more daring in approaching the leading banks (including the Maharlika Investment Fund) to obtain longer-term credit for their diversification, digitalization or industrialization strate-gies; and, pursuing forward or backward linkages along the entire agribusiness supply chain.

They can study the experiences of the role models of Philippine agribusiness such as San Miguel Corp. that successfully diversified from being a food and beverage company to a major participant in the infrastructure, and transport and logistic sectors. It will not be long before these large agribusiness ventures, joined by medium-size companies like North Star Meat and Bounty Fresh, will loom large not only in the domestic market but become multinational giants in the food industry like Jollibee already is today.

As a last piece of advice, I told the graduates that as top executives of some of the leading agribusiness companies in the country, they have a serious responsibility to respond to the appeal of industry leaders, especially from the officers and members of the Philippine Chamber of Commerce and Industry, to be very involved in upskilling, reskilling, and retooling their respective workforces.

In this regard, let me describe here a very innovative approach to producing, as quickly as possible, highly skilled workers for the different phases of agribusiness, from farming to post-harvest to logistics and all the way to manufacturing of the finished food or feed products. I am referring to the launching of Project Dual Agritech by a group of businessmen, in cooperation with some technical schools. This is a combination of the French-inspired Family Farm School that was established in 1986 by an NGO called the Pampamilyang Paaralan Agrikultura Foundation in Batangas (inaugurated by the late President Corazon C. Aquino herself) and the now famous Dualtech Institute, put up with the help of a German foundation in 1981, that has turned out more than 10,000 electro-mechanic workers through the dual training system perfected in Germany.

The family farm approach had little success in the Philippines because the students were limited to the children of small farmers who are among the poorest in Philippine society, in contrast with the economically well-endowed French and Spanish farmers among whom the model was perfected. The early students of the family farm school were frustrated by the lack of resources of their farmer-parents who were unable to help them apply the new ap-proaches and technologies they were learning in the classroom.

The new approach of the Dual Agri-Tech collaboration model will not limit the students to children of farmers. In addition to learning modern farming techniques, the students will spend six months at the Dualtech campus to acquire electro-mechanical skills that are needed in such tasks as repairing and maintaining farm machinery, irrigation systems, post-harvest facilities, cold storage facilities, and other equipment. While at Dualtech, they will also develop digital skills that are increasingly needed in the various phases of agribusiness operations.

Both the Family Farm School in Dagatan, Lipa and the Dualtech are well known for giving as much importance to character or values formation as to technical competence.

As regards farming technology, the learning modules will be established in a 1,000-square meter pilot farm inside the school campus in Barangay Dagatan, Lipa, Batangas, together with a two- to three-hectare off-campus cooperator demo farm. The modules will showcase the latest technology and best practices of select crops’ value chain, from planting materials, growing, post-harvest, and processing. These modules will be used and main-tained by students at the Senior High School Technology and Livelihood Education strand.

As has already been perfected by Dualtech over more than 40 years, on-the-job training (OJT) corporate slots will be provided by cooperating agribusiness enterprises. The students will have access to OJT opportunities for six months on the farm or factory facilities of agribusiness companies in different parts of the Philippines. This will allow the trainees to acquire hands-on experience to perform as farm operators or as skilled workers in other phases of the agribusiness value chain. The host collaborating companies may provide regulated approved allowances for the trainees.

Through close collaboration among Technical Education and Skills Development Authority (TESDA), industry, and the academe (UA&P, for example, is providing the faculty for the IT component of Dualtech), it is hoped that this new skills training approach of the Dualtech Agritech School will be replicated by other groups in the agribusiness sector. I already am aware that family farm schools in other regions such as Mindoro, Iloilo, and Dumaguete are contemplating making the same transition towards a dualtech agritech curriculum.

This new initiative is a very concrete response to the appeal of President Ferdinand Marcos, Jr. in his second State of the Nation address for the business and academic communities to collaborate in modifying the K to 10 and K to 12 curricula to motivate more senior high school students to follow the TESDA track rather than continue pursuing college degree programs that do not produce employable workers. For more information about the Dualtech Agritech School, contact Rey dela Cruz at kingrcdc@gmail.com. n

 

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

bernardo.villegas@uap.asia

Arts & Culture (04/24/24)

CCP to launch Earth Day installation by Leeroy New

IN celebration of Earth Day, CCP Thirteen Artists awardee Leeroy New is presenting Mebuyan’s Colony, an installation at the front lawn of the Cultural Center of the Philippines (CCP). The immersive and interactive outdoor installa-tion is part of the CCP’s annual program that promotes environmental awareness and action through arts. Aside from the art installation, the main building’s façade and the Bamboo Pavilion will also be lit up with a new light design by D. Cortezano, resident technical director of Arete in Ateneo de Manila University. The installation and new lighting will be launched on April 25 at 6 p.m. It will run until May 25.

French Embassy opens Olympic photo exhibit

IN the lead-up to the 2024 Paris Olympics this year, Greek Ambassador Loannis Pediotis and French Ambassador Marie Fontanel recently inaugurated the exhibit “Legacy in Motion: A Visual Tribute to Olympic and Paralympic Ath-letes.” The collection of images from Agence France-Presse serves as a tribute to athletes and sports that have defined the Olympics. Included are photos of Filipino athletes Hidilyn Diaz-Naranjo, Margielyn Didal, Eumir Marcial, Carlos Yulo, Nesthy Petecio, and Michael Martinez. Weightlifter Hidilyn Diaz-Naranjo, who didn’t make the cut for the Paris Olympics this year, attended the inauguration and was proud to show support for the upcoming Philippine delegation. The exhibit at S Maison, Mall of Asia, Pasay City, runs until April 26.

Choral festival at UST to honor EU-PH relations

THE DELEGATION of the European Union (EU) to the Philippines has partnered with the University of Santo Tomas (UST) to host a choral festival to celebrate 60 years of bilateral relations between the European Union and the Phil-ippines. The concert will feature choral groups from all over the country, showcasing the diversity of music and culture in the EU and the Philippines. Two choirs will receive awards for their outstanding performances expressing cultural diplomacy and the rich heritage of the EU and the Philippines. Sounds of Celebration: Sixty Years of EU-PH Relations will take place on April 26 at 2 p.m. at the Buenaventura Garcia Paredes OP Building at UST, Manila.

Comilang, Speiser talk on collaborative works

TO celebrate Stephanie Comilang and Simon Speiser’s collaborative exhibition “Piña, Why is the Sky Blue?” at Silverlens Manila, the artists will join in a conversation with artist and curator Ian Carlo Jaucian to discuss their works. The conversation will center on the Manila exhibition and how art interacts with the overarching theme of new technologies, including artificial intelligence and virtual reality. It will take place on April 27 at 1 p.m. at the Silverlens Gallery along Chino Roces, Makati City. To register, e-mail Angel at rsvpmanila@silverlensgalleries.com.

Lecture tackles music, stage in Japanese occupation

FILIPINAS Heritage Library’s “Jeepney Jazz Talks” will be returning with a look into the swing era and an exploration of the Philippine entertainment scene during the war. Led by WWII historian Ricardo T. Jose, “Bakit hindi ka dumarating? Music & Stage during the Japanese Occupation” will talk about how Japan’s propaganda affected music and theater in Manila, downplaying American themes of freedom. The event takes place on April 27 at 2 p.m. at the Ayala Museum in Makati City. It will also be livestreamed via Zoom and Facebook Live. For more details, visit bit.ly/fhl-jeepneyjazz2024.

ARTablado presents watercolor exhibit

THE PHILIPPINE Guild of Watercolorists, established in 2016 to showcase its member artists’ talent with watercolor works, has put up an exhibit at ARTablado at Robinsons Galleria. Titled “Our Stories in Color,” the two-week exhibit features watercolor artists Erwin Mallari, Richard Romeo, JC Vargas, Dan Macapugay, and Ton Ador, among many others. It aims to make watercolor painting more accessible to beginners and artists of all levels. The exhibit runs at ARTablado at Robinsons Galleria, Ortigas, until April 30.

Bangus-themed exhibit opens at Gateway Gallery

LOCAL artists are showcasing how beautiful the humble bangus could be, in the exhibit “BANGUS ART: A Collective Art Exhibit on our National Fish.” Presented by Bang Bang Special Crispy Bangus, ArtShow Philippines, and Gateway Gallery, the unique exhibit features drawings, paintings, and sculptures inspired by the bangus (milkfish). It is open to the public until May 3 at the Gateway Gallery on the 5th floor of Gateway Tower, Araneta, Quezon City.

De León, Lukban exhibits at MO_Space

THIS April, two exhibitions will open at MO_Space in Bonifacio Global City (BGC). The first is Pardo de León’s “The Crack, the Gap, the Alleyway,” which delivers coded transmissions echoing through time inscribed in brushwork. Also opening this month is “Anecdotal Evidence.” Her latest paintings aim to elicit a mistrust in the formal properties of her depiction of everyday functional objects. Both exhibits open on April 27 and run until May 26 at the MO_Space gallery at Bonifacio High Street, BGC, Taguig City.

‘Likha Art Caravan’ spotlights Filipino artists

THE MONTH-long multi-site exhibition “Likha Art Caravan” is showcasing young Filipino talents and their works, ranging from digital artworks and graphic designs to illustrations and photographs. The works are now available for purchase and public viewing in Everything’s Fine Books and Gallery and MatchaLater in Makati City, and Cappo Coffee in Quezon City this April. At TheGoodFoodMNL in Quezon City, it will run until May. With the theme “Embracing Diversity from the Different Walks of Life,” the event presents a curated compilation of imaginative works that capture the personal narratives, experiences, and backgrounds of 48 artist-designers from De La Salle-College of Saint Benilde.

CPG says it retains AA+ credit rating from CRISP

CENTURY PROPERTIES Group, Inc. (CPG) said it has retained an “AA+” credit rating from Credit Rating and Investors Services Philippines, Inc. (CRISP), driven by sustained market position and continued revenue growth.

In a statement on Tuesday, CPG said the rating agency cited its diversified market portfolio in maintaining its position in the market.

The revenue mix of CPG was led by vertical developments at 27%, followed by horizontal affordable housing at 58% in 2023. Commercial leasing and property management shares were 11% and 4%, respectively.

CRISP said the company has completed 30 condominium buildings with 17,479 residential units and a total gross floor area of over 1.24 million square meters (sq.m.) as of December 2023.

It also noted the company’s venture, PHirst Park Homes, which has launched over 17 home communities with over 24,583 units occupying 123 hectares of land. This venture, worth P48.73 billion, is situated in eight provinces on Luzon.

As of end-December 2023, PHirst Park Homes had 18,166 units valued at P33.43 billion.

CPG’s property portfolio includes five leasing assets with an aggregate gross leasable area of 145,026 sq.m.

These are the Century City Mall, Centuria Medical Makati, Asian Century Center, Century Diamond Tower, and the recently opened Novotel Suites Manila at Acqua.

The firm manages 97 buildings covering 7.55 million sq.m. of gross floor area, including properties such as office buildings, condominiums, major banks, medical facilities, an embassy, and a school.

The rating agency noted that CPG’s revenue increased by 14% to P12.7 billion, a recovery from the downturn. While its gross profit ratio stood at 47% and earnings before interest, depreciation, and amortization margin at 26.5%.

CPG’s total real estate segments contributed a 79% share of net income after tax, followed by commercial leasing at 18%. — Aubrey Rose A. Inosante

Return of colonial-era statue to Congo fuels environmental revival

LUSANGA, DEMOCRATIC REPUBLIC OF CONGO — Joyful singing and cheers echoed around the hills surrounding a small village in western Democratic Republic of Congo as a procession emerged from an underground cave bearing an antique wooden figure of a Belgian colonial officer.

The Balot sculpture was made in the area in the 1930s when Congo was under Belgium’s brutal colonial rule. An artist collective led a long-running campaign for its return from a US museum under a project to regain lost herit-age and restore depleted forests.

“It’s symbolic,” said Joel Kashama, a resident of Lusanga, where colonial-era plantation farming reduced once-dense rainforests to sparse pockets.

The sculpture, which depicts a colonial administrator who was killed during a worker revolt at the plantation in 1931, is now considered a symbol of colonial resistance.

It is back in Lusanga for a six-month display after spending more than 50 years at the Virginia Museum of Fine Arts. Its homecoming coincides with growing global pressure on Western institutions to repatriate artifacts taken during the colonial era.

Its return results from years of activism by the Congolese Plantation Workers Art League (CATPC), a collective of Lusanga-based artists who use the proceeds from their art, including sales of digital images of the Balot statue, to fund reforestation projects around Lusanga.

“Everywhere you look there used to be huge forests, and when the white man came, they cut down all the wood to use it,” said artist and CATPC member Alphonse Bukumba. “We wouldn’t live like this unless we had seen the world burn.”

CATPC’s efforts have already reforested 230 hectares around Lusanga, with ambitions to expand to 2,500 hectares to create a carbon sink, restore biodiversity, and mitigate the effects of climate change.

Congo ranks among the world’s nations most vulnerable to climate disasters, with a population of 95.3 million and a poverty rate of 62.3% in 2022, according to the World Bank.

The collective will showcase their work at the 60th annual Venice Biennale in November, in hopes of inspiring global action on climate change and advocate for African artists’ recognition in environmental sustainability efforts. — Reuters

A game changer in attracting foreign investments

The Philippines has long languished behind its Southeast Asian neighbors in attracting foreign investments. Many factors have been cited for this including the state of our infrastructure and the relatively high costs of pow-er across the archipelago. But the one fundamental thing that lies underneath it all is the restrictiveness of the economic provisions of the primordial law of the land. Compared to its Southeast Asian counterparts, the Philippines has the most restrictive provisions regarding foreign investment and businesses in its Constitution.

The 1987 Constitution effectively limits the foreign ownership of companies to 40% to ensure that Filipinos hold a majority stake in them. At the time of the constitutional deliberations, this appeared to be the sound, logical, and patriotic thing to do. Only Filipinos must be in control of businesses operating in the Philippines. This is our country, after all, and we refused what could be seen as control by forces driven by interests outside of the Filipinos’ common good.

As the decades passed and the global economy opened up, however, we saw how such provisions clipped our economic wings, while we watched other similarly situated countries realize their potential with the help of foreign capital. Foreign investments, after all, are key to many things: they bring expertise and know-how, cause the improvement of infrastructure, create jobs for locals translating into higher disposable income, and provide opportunities for economic activity and upward mobility.

This, too, creates a virtuous cycle: the more Filipinos are exposed to industry, the better they get at their jobs and the more vibrant the economy becomes, the better the infrastructure gets, and the more attractive the Phil-ippines becomes to investors.

Unfortunately, in the past, any moves to change the Constitution were met with skepticism by many policy leaders, believing this to be a political maneuver to enable some families to perpetuate themselves in power. Make no mistake about it: at-tempts at Charter Change are not new. They have been tried, in varying degrees, by previous administrations, whatever their real intentions were.

This time around, Filipinos appear to be better at making the distinction between effecting sweeping, licentious Charter Change, per se, and changing its economic provisions.

A Pulse Asia survey commissioned by the Stratbase ADR Institute and conducted last month revealed that 37% of Filipinos agreed that fostering a more open economy — one that is friendly to foreign investors — would be the optimal strategy to boost the country’s economic growth and development.

Respondents to this same survey highlighted significant factors hindering foreign investments in the Philippines. Among these: complicated regulations (56%), restrictive foreign ownership rules (55%), and public sector cor-ruption (46%).

The removal of restrictions against foreign investments in the Constitution, the respondents believe, will yield benefits for the people. Six in 10 believe that this will lead to an increase in high-quality jobs with better salaries and benefits.

They also think companies will be able to provide better service to their stakeholders because of increased efficiency and quality, driven by competition. In fact, half the respondents anticipate a decrease in prices of goods and services. Ultimately, then, the higher number of players in any given industry would result in better deals and more options for Filipino consumers.

Such results show that Filipinos are now more optimistic about the benefits of lifting economic restrictions.

For some time now, the Stratbase ADR Institute has articulated its support for investment-led growth. Through investments, businesses can create more and better job opportunities and establish a solid foundation for sus-tained economic growth. By doing so, the Philippines enhances economic security, reduces external dependencies, and strengthens resilience against global uncertainties.

Thus, a crucial step would be to address the barriers to the entry of foreign investments by changing the legal framework to complement the Executive’s efforts to go to different countries obtaining investment pledges.

Collaboration is also crucial. The private sector is willing and able to help, as it has demonstrated countless times. It plays a critical role in creating more quality jobs for the Filipino people. And, indeed, the people acknowledge this. In a September 2023 survey commissioned by the Institute, 70% of Filipinos see the private sector as key to achieving economic security. The public perceives the private sector as able to offer affordable goods and services while expanding job opportunities and livelihood activities.

But it must be given the chance to perform this role to the fullest. The government must be consistent with its moves to build an environment that is conducive for businesses. Ease of doing business must be a priority, and while there have been early steps to do this — shortening the steps in registration, for instance, or requiring fewer signatories to permits and licenses — streamlining bureaucratic processes should be implemented across all local government units around the country.

There is a trend among developed countries to derisk and decouple given the numerous uncertainties in the global geopolitical and geoeconomic situation. The Philippines should take advantage of this trend by asserting its attractiveness as an investment destination. We should not allow ourselves to be left behind. We must reap the benefits of a globalized economy while harnessing the competitive advantage of our people and our resources. Ultimately, this will translate to a better life for all — and what could be more patriotic than that?

 

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

BPI optimistic on profit, loan growth this year

BANK of the Philippine Islands (BPI) is bullish on continued growth in its profit and loans this year, supported by resilient consumer spending despite elevated rates and economic risks.

“What we see… is that the consumer market remains fairly resilient. There’s a lot of confidence. We’re beginning to see very strong growth along those segments, and for us, I think the reason why our income was quite healthy was that we’ve been able to transform our book more towards the consumer side,” BPI Chief Executive Officer Jose Teodoro K. Limcaoco said in a briefing after their annual stockholders’ meeting on Tuesday.

He said the bank’s corporate loans currently make up 74% of its total loan book, down from 78% in March last year.

Profit growth is expected to be flat, depending on when the Bangko Sentral ng Pilipinas (BSP) cuts interest rates, he added.

“If the BSP doesn’t cut rates or raise rates, then our NIMs (net interest margins) should be fairly consistent,” he added.

Mr. Limcaoco said the bank’s asset quality will not be too affected by rates staying higher for longer and that the economy is strong enough to withstand elevated borrowing costs.

“Obviously, there are risks from external factors. There are some risks from inflation, maybe potentially coming from fuel or imported food,” he added.

“We are now trying to push to expand our loan book, and that necessarily means taking more risks. Traditionally, BPI has always been seen as a place where we’re extremely conservative about our credit policies. I don’t think that changes,” Mr. Limcaoco said. “I think we take measured risks, and we are willing to lend to more and more people, which means we might have a little more defaults.”

BPI expects its loans to grow by 11-12% this year, driven by a 6% boost following its merger with Robinsons Bank Corp., BPI Chief Financial Officer Eric M. Luchangco said.

BPI Head of Consumer Banking and Executive Vice-President Maria Cristina “Ginbee” L. Go said that the lender’s consumer lending business has grown significantly despite elevated borrowing costs. Housing and auto loans grew by 50% and 30%, respectively, in the first quarter, she said.

The bank is looking to launch digital initiatives to boost its consumer segment, such as incorporating generative artificial intelligence into its services, both online and in-branch, she said.

As for corporate lending, clients’ expectations for growth were stronger in the beginning of the year versus at present, with companies becoming more conservative with spending, BPI Executive Vice-President and Institutional Banking Head Juan Carlos L. Syquia said.

“What we’re seeing now is more of a mixed scenario where we still have most of our clients still looking at their growth plans for 2024 for capacity building and feed into the robust growth prospects of the country,” Mr. Syquia added.

BPI saw its net income grow by 25.8% year on year in the first quarter to P15.3 billion as higher revenues helped offset increases in loan loss provisions and operating expenses.

Its shares climbed by P4 or 3.31% to end at P125 apiece on Tuesday. — A.M.C. Sy

Further reforms to FX rules on foreign investments

VIACHESLAV BUBLYK-UNSPLASH

On April 11, the Monetary Board approved further amendments to the Manual of Regulations on Foreign Exchange Transactions (the FX Manual) in line with the Bangko Sentral ng Pilipinas’ (BSP) commitment to further facilitate access to foreign exchange (FX) resources of authorized agent banks or their subsidiary/affiliate FX corporations (AABs/AAB forex corps) for legitimate transactions and to streamline documentary requirements, procedures, and reporting.

The FX Manual provides that a Bangko Sentral Registration Document (BSRD) shall evidence registration of investments with the BSP. Under BSP Circular No. 1192, series of 2024 however, a BSRD shall no longer be issued for the following foreign investments registerable with AABs/AAB forex corps under Section 37 of the FX Manual: a.) debt securities issued onshore by the National Government and other public sector entities; b.) equity securities issued onshore by residents that are listed at an onshore exchange (e.g., the Philippine Stock Exchange); c.) debt securities issued onshore by private sector residents that are listed at an onshore exchange and not covered by the provisions of Part Three, Chapter I of the FX Manual (Loans/Borrowings and Guarantees); d.) exchange-traded funds issued/created onshore by residents; e.) Philippine Depositary Receipts that are listed at an onshore exchange; f.) Peso time deposits with an AAB with a maturity of at least 90 days; g.) Equity securities issued onshore or offshore by non-residents that are listed at an onshore exchange; h.) debt securities issued onshore by non-residents that are listed at an onshore exchange; and, i.) instruments under Section 37.1 (a-h) [listed above] used as collateral involving transfer of legal/beneficial ownership of the collateral to the non-resident investor.

The abovementioned foreign investments shall now be considered registered upon: (i) submission by the non-resident investor, or his duly authorized representative to the registering AAB of the applicable supporting doc-uments (i.e., proof of funding and investment made) under Appendix 10.C of the FX Manual and a duly accomplished “Authority to Disclose Information” form under Appendix 10.4 of the FX Manual; and, (ii) reporting thereof by the registering AAB to the BSP using the Report on Foreign Investments Registered with the BSP through AABs and confirmation of receipt of the report submitted by the registering AAB to the BSP.

Other requirements and reporting guidelines are discussed in detail in Appendices 10.B and 10.C of the FX Manual.

The dispensing of the issuance of the BSRD for the instances covered by Section 37 of the FX Manual is a welcome development to the FX rules as it allows for greater flexibility for non-resident investors to source FX in the Philippines which, in turn, promotes a more conducive environment for foreign investments to support economic development.

It must be noted, however, that a BSRD will still be issued for foreign investments registerable with the BSP under Section 36 of the FX Manual. Among others, this would include foreign direct investment such as assigned capital and operational working fund for onshore branches/regional headquarters/regional operating headquarters and offices/representative offices and contributed capital for onshore partnerships/joint ventures.

The Circular provides for a transitory period until Sept. 30 to allow registering AABs to make the necessary preparations and adjustments to their systems and processes to ensure compliance with the new reporting guide-lines. As such, the registering AABs shall submit to the BSP-International Operations Department (IOD) the list of existing and valid BSRDs issued by them as of Jan. 31 within 15 banking days from the issuance of the Circular, while BSRDs issued from Feb. 1 until the day prior to the effectivity of the Circular must be reported within two banking days from registration date or prior to the effectivity date of the Circular (whichever is earlier). Upon the effectivity of the Circular until Sept. 30, registering AABs shall continue to report the transactions of registered investments under Section 37 of the FX Manual using the old report forms. The submission of the revised report forms shall commence on Oct. 1.

The views and opinions expressed in this article are those of the author. This article is for general informational and educational purposes only and not offered as and does not constitute legal advice or legal opinion.

 

Christine Joy S. Escalente is an Associate of the Corporate and Special Projects Department of the Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW)

csescalante@accralaw.com

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Philippine digital lenders attract over $700 million in investments

BW FILE PHOTO

THE PHILIPPINE digital banking sector has received more than $700 million from local and foreign investors, resulting in a significant growth in depositors, an industry group said.

“Global and local investors have poured over $700 million into the digital banking sector, setting a new milestone that underscores the industry’s robust growth and its potential to reshape the digital financial landscape,” the Digital Bank Association of the Philippines (DiBA PH) said in a statement on Tuesday.

“In a sign of investor confidence, digital banks have attracted substantial capital since 2021 and are now showcasing extraordinary growth, with depositor numbers reaching 5.9 million at the end of 2023 alone,” it added.

Total deposits in the sector reached P69 billion last year from P35 billion in 2022.

Gross loans rose to P25 billion from P11 billion a year prior.

“The significant and continued investment in the digital banking industry sector is a strong vote of confidence in its ability to stimulate economic growth, create jobs, and broaden access to savings and credit,” DiBA PH and Maya Bank President Angelo S. Madrid said.

He added that digital banks will need to focus on strategic investments and capital to reach profitability and boost financial inclusion.

“The global digital banking industry norm shows a five- to seven-year trajectory to break even,” DiBA PH said.

The Bangko Sentral ng Pilipinas (BSP) earlier said only two out of the six licensed digital lenders posted a net profit in 2023.

The digital banking sector posted a combined net loss of P4.38 billion in 2023, BSP data showed, with total assets at P88.69 billion. As of end-February, the industry’s assets stood at P91.55 billion.

“We see this (investment) as more than a financial endorsement from the global and local investment communities; it’s a recognition of the sector’s potential to drive economic inclusivity and innovation, setting a new standard for the future of banking in the Philippines,” DiBA PH Trustee and UnionDigital Bank President and Chief Executive Officer Henry R. Aguda said.

DiBA PH said digital banks can help fill the gaps in the national financial structure as the sector can facilitate access to deposit accounts and credit despite ongoing challenges such as the slow rollout of the national ID system and limited coverage of the national credit bureau.

“All our members have credible investors who are committed to growing the Philippine market in the long run. We all look forward to growing the industry as we stabilize the sector and scale up our various initiatives, including credit,” DiBA PH Trustee and GoTyme Bank President and Chief Executive Officer Nathaniel D. Clarke said.

The central bank has capped the number of digital banks in the country at six since 2021 as it wants to foster competition and monitor developments in the sector.

The six online lenders currently operating in the Philippines are GoTyme Bank, Maya Bank, Overseas Filipino Bank, Tonik Digital Bank, UnionDigital Bank, and UNO Digital Bank. These banks in 2022 formed DiBA PH to boost fi-nancial inclusion.

BSP Governor Eli M. Remolona, Jr. last year said they could lift the moratorium on the grant of new licenses “pretty soon” as more entities have expressed interest in entering the market. — A.M.C. Sy

Mayani eyes overseas market with PHL law boosting exports

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By Kyle Aristophere T. Atienza, Reporter

SINGAPORE — Philippine agricultural supply startup Mayani expects to expand overseas with the help of a new law that seeks to boost export competitiveness, and as the company partners with a half-a-million farmers in the next two years.

The Tatak Pinoy Act, which President Ferdinand R. Marcos, Jr. enacted in February, should help local companies including Mayani comply with the export policies of foreign markets, Chief Executive Officer and Co-Founder JT Solis said in an interview.

Licensing and export permit requirements are among the key hurdles faced by aspiring exporters, he pointed out.

“What is the requisite documentation that’s needed?,” Mr. Solis told BusinessWorld on the sidelines of the Philanthropy Asia Summit in Singapore last week. “Maybe the government, particularly the Trade department and its Export Marketing Bureau could help facilitate these export license and code requirements.”

He said the Tatak Pinoy law should provide a platform that would let local enterprises boost relations with Philippine trade attaches and their foreign counterparts to ease export requirements.

Trade attaches should link Philippine companies with potential buyers in foreign markets, he added. “I’m sure they have communities there of prospective buyers.”

The Tatak Pinoy Act sets up a council that will create a multi-year strategy for exports. Senator Juan Edgardo M. Angara, one of the measure’s proponents, earlier said the council would consult the public and industry players from the agriculture, manufacturing, and services sectors for their inputs on how to enforce the law.

Last week, Mayani and four other startups across the world were chosen to receive S$250,000 (P10.5 million) under the yearlong Amplifier mentorship program of Temasek Trust ecosystem entities — the Centre for Impact In-vesting and Practices and Philanthropy Asia Alliance.

Supported by the Impact Innovation Partner Mastercard Center for Inclusive Growth, the program got 139 submissions from 35 countries in areas including energy, sustainable food and land conservation, ocean conservation, and waste.

Mayani, which has signed up more than 139,000 farmers and partnered with over 500 stores, seeks to reshape rural agricultural value chains in the Philippines by harnessing technology to provide sustainable pathways to mar-kets, boost yield and climate resilience through quality farm inputs and drive financial inclusion through alternative rural financing.

Mr. Solis said, Mayani, which was founded in 2019, seeks to increase its market reach to 12 from just seven regions in the next two years.

“We want to be able to reach at least half-a-million farmers within the next two years,” he said. “Maybe in the next five years, a million farmers and fishers.”

He said the private sector could help the government address the declining number of Filipino farmers by boosting their income and promoting financial inclusion.

“It’s going to encourage a lot of the younger generation to see that, ‘Hey, I think it’s a sector worth innovating for,’” he said. “And hopefully that sends a positive signal.”

Mr. Solis said the lack of cold chain storage facilities in the country is a key challenge for agro-food startups.

Mayani has its own cold storage facilities. “Obviously, it’s not enough. There has to be support from the government because the Philippines is a 7,000-island archipelago.”

In January, Agriculture Secretary Francisco Tiu Laurel said the government needs P93 billion to build post-harvest facilities in the next three years, to keep P10.7 billion worth of rice and corn yearly from going to waste.

Mr. Solis said Mayani seeks to use renewable energy such as solar panels as it brings its cold storage facilities closer to farmers.

“A lot of smart cold storage facilities, especially in other countries, use solar panels already,” he said. “In our case, we are looking in that direction especially if we bring post-harvest cold storage facilities closer to the farm. It just makes sense to install solar panels.”

He said startups are key to advancing the Philippines’ green transition goals.

“You would need firms that are very nimble, that can innovate fast,” he said. “On the ground, I think that’s what separates startups from normal companies — the ability to innovate fast, the ability to move fast, the ability to deploy solutions fast.”

ADB, PNB sign $36-M deal with Buskowitz Energy for solar projects

THE Asian Development Bank (ADB) and Philippine National Bank (PNB) have signed a $36-million financing deal with Buskowitz Energy, Inc. to fund solar rooftop projects in the country.

The projects will generate 88 gigawatts of clean energy annually and reduce about 54,000 tons of carbon dioxide equivalent emissions per year, ADB Private Sector Operations Department Director General Suzanne Gaboury said in a statement on Monday.

The deal aims to support the development, construction, and operation of 20 to 25 solar rooftop projects.

“This project not only provides an efficient way of delivering clean power to consumers and business establishments, but also potentially reduces costs and avoids transmission losses,” Ms. Gaboury added.

The financing deal is also in line with ADB’s partnership with the Philippine government which aims to increase the share of renewables to 35% by 2030 and 50% by 2040.

Projects in Buskowitz Energy’s pipeline, which will be financed by the deal, include 10 megawatts from Coca-Cola, 2.7 megawatts from Lufthansa Technik, four megawatts from UniLab Group, and 28 megawatts from SM Prime.

It also includes projects from San Carlos Town Center and Phelps Dodge. — Aaron Michael C. Sy

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