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France mulls penalties to rein in ultra-fast fashion brands

PARIS — Fashion brands with ultra-fast product turnover such as China’s Shein should be subject to penalties of up to 50% of their garments’ selling price to offset their environmental impact, French ruling-majority MPs have proposed in a new bill.

The MPs say that ultra-fast fashion brands, rather than renewing their collections four times per year like traditional clothing brands, offer thousands of new products per day, inciting excessive spending and unnecessary pollution.

“This evolution of the apparel sector towards ephemeral fashion, combining increased volumes and low prices, is influencing consumer buying habits by creating buying impulses and a constant need for renewal, which is not without environmental, social and economic consequences,” the bill said.

The bill singled out Chinese ready-to-wear company Shein, saying that it on average presents more than 7,200 new garment models a day, and makes more than 470,000 different products available to consumers.

To offset the environmental impact of ultra-fast fashion, the MPs propose penalties of up to 10 euros ($10.86) per item sold, or up to 50% of the selling price, by 2030.

Shein, in a statement to French news agency AFP, said it follows “best international practices in terms of sustainable development and social commitment.”

Following discussion in a parliamentary committee, the bill will be presented to parliament in the second half of March.

French Environment Minister Christophe Bechu said in a statement last Monday that following a meeting with industry players, activists and researchers, his ministry plans several measures to reduce fashion’s environmental impact.

He said France plans a ban on advertising by ultra-fast fashion companies and the introduction of a financial incentives system to make ultra-fast-fashion more expensive while sustainable fashion will become cheaper.

The popularity of fast fashion e-commerce retailers like Shein and Temu has disrupted the retail sector. Shein taps a network of largely China-based suppliers, bucking traditional manufacturing trends by accepting small initial orders, then scaling up based on demand.

The ultra-flexible supply chain has allowed Shein to create a different business model than established fast-fashion players like Zara and H&M, which pioneered shorter production timelines but still largely rely on predicting shoppers’ preferences. — Reuters

Marcos government told to review rice program

REUTERS

By Adrian H. Halili, Reporter

THE government of President Ferdinand R. Marcos, Jr. should review its rice program before extending Rice Competitiveness Enhancement Fund (RCEF), industry experts said at the weekend.

“RCEF should be extended, but we should undertake a thorough review not only of RCEF but of the whole rice program of the Department of Agriculture to find out why it has not been working as expected and what changes need to be introduced,” Raul Q. Montemayor, national manager of the Federation of Free Farmers, said in a Viber message.

Last week, Senator Cynthia A. Villar said she would propose another six-year extension of the rice competitiveness fund, with a higher yearly budget of P20 million from P10 million.

Mr. Montemayor said the program has yet to attain its objective of boosting the competitiveness of rice farmers “despite the billions of pesos poured into the various programs.”

“For rice farmers to attain higher income, they will have to pursue rice-based crop diversification, that is, planting other high-value crops in between two cropping seasons of rice,” former Agriculture Undersecretary Fermin D. Adriano said in a Viber message. “That is what is being done in Vietnam and Thailand.”

“For marginal rice lands where water is scarce, shift to planting high-value crops. Whether this happens will depend on the Agriculture department pushing it,” he added.

The rice program is meant to modernize the rice industry and is funded by import tariffs for rice under the Rice Tariffication Law. The Bureau of Customs collected P30 million in rice tariffs last year.

The fund supports the supply of P10 million worth of machinery, seeds and fertilizers, among other things, to rice. The tariff allocations under RCEF are set to expire in June.

The Rice Tariffication law, which took effect in 2019, allowed private traders to bring in rice shipments without restriction.

“It should continue to give focus on the rice farmers tilling two hectares and below, while those tilling more than two hectares should be given more opportunity to secure credit from Land Bank of the Philippines or Development Bank of the Philippines,” former Agriculture Secretary William D. Dar said in a text message.

He added that the rice program should also allot funding for balanced fertilization, integrated pest management and crop diversification, while reducing the budget for mechanization.

The Philippine Center for Postharvest Development and Mechanization gets P5 billion yearly so it can buy farming equipment and machinery.

The Agriculture department expects palay or unmilled rice output to hit 20 million metric tons (MT) this year from 20.06 million MT last year.

Hyundai introduces new brand ambassadors

Sarah Geronimo with (left) Viva Artists Agency Chairman and CEO Vic del Rosario, Jr. and Hyundai Motor Philippines Managing Director Cecil Capacete — PHOTO FROM HYUNDAI MOTOR PHILIPPINES

HYUNDAI MOTOR PHILIPPINES, INC. (HMPH) recently named four celebrity “icons” as its first-ever ambassadors. The car maker, said to have undergone a brand transformation in the local market “determinedly reintroduced itself as a mobility solutions provider” in 2023. Now, it calls Piolo Pascual, Sarah Geronimo, Kim Chiu, and Paulo Avelino its brand ambassadors.

“We warmly welcome Piolo, Sarah, Kim, and Paulo to Team Hyundai! This select group has been put together not only because they are the most esteemed and talented stars of this generation but, more importantly, since they are known to have positively adapted and evolved themselves at every stage of their respective careers. And as we find ourselves going through a similar journey, we look forward to them becoming catalysts. We believe they will be helpful in broadening our reach. This means forming deeper connections while communicating our vision on innovation and sustainability with Filipino motorists,” said HMPH Managing Director Cecil Capacete.

Piolo is regarded as “Asia’s Drama Superstar,” having cemented his status with more than three decades in showbiz. Overseen by Erickson Raymundo’s Cornerstone Entertainment, Inc., Mr. Pascual is highly acclaimed for acting and modeling, adding hosting, producing, and directing to his list of accolades. “It’s always a great feeling to be tapped by brands that are trusted and well-respected in their respective fields. Hyundai Motor Philippines is proving to be one filled with dynamism when it comes to this. Hyundai’s promise on ‘Freedom of Mobility’ that goes beyond vehicles intrigues and excites me. I can’t wait to further discover it with my fellow Filipino car owners and enthusiasts,” he said.

Sarah, the “popstar royalty” known for her versatility and music performances, has been with Viva Artists Management, under Vic Del Rosario, since winning the television talent show, “Star For A Night.” Her popularity extends abroad, and she is a recipient of various recognitions including the Global Force Award she will receive at the upcoming 2024 Billboard Women in Music Awards in Los Angeles, California. She stated, “It’s always a pleasure whenever I get to work with brands that allow me to maximize my platform and continuously grow. So this partnership with Hyundai Motor Philippines is extra special because I get to work with a group who has a unique approach toward mobility. I’m eager to being one with Hyundai’s efforts and contribute in its vision of a sustainable and progressive future for Filipinos.”

Kim rose to fame after winning Filipino reality show, “Pinoy Big Brother Teen Edition.” Since then, she has flourished as an actress, host, recording artist, and has been named as Forbes Asia’s 2020 most influential Filipino personalities and recognized for her philanthropic works.

“Those around me, even my followers for that matter, know that I enjoy being behind the wheel. I’ve had the privilege of experiencing some of Hyundai’s new-gen cars already during our taping. And as I officially become a member of the Hyundai Motor Philippines family, I’m excited that there is more to come,” said Ms. Chiu, dubbed as the country’s multimedia idol and managed by Star Magic’s Laurenti Dyogi. “Though it’s only been a few years since I started to drive, the car buying and servicing process is very familiar to me. So I feel grateful to be given the chance to work with a brand whose commitment towards ownership is centered on ‘quality time’ to ensure that customers can make the most out of their cars.”

Similarly, Paulo — an actor, singer, and film producer — also kick-started his career after participating in “Starstruck,” a reality celebrity search show. After years in the entertainment industry, he has been acknowledged by peers and the general public as one of the country’s best actors of his generation, proven by his numerous acting awards and is considered to be one of the industry’s prominent leading men due to his multiple hit shows and movies.

Mr. Avelino, who is being managed by Leo Dominguez of LVD Management Corp., said during the official signing ceremony, “It’s a plus to be endorsing a brand that you believe in and share the same passion with. So you can just imagine how happy I am that Hyundai Motor Philippines has placed its trust in me. I am even more pleased that I get to be a part of their ‘innovate everyday’ movement.” He added, “I’m one who’s not afraid to branch out in terms of show business, as seen in my involvements in e-sports and gaming. Much like Hyundai, who is stepping out of its comfort zone on being just a car manufacturer to redefine innovation. There’s so much more to the brand that I’ve learned about and excited to share.”

LRMC expects higher ridership in 2024

LIGHT Rail Manila Corp. (LRMC), the operator of Light Rail Transit 1 (LRT-1), aims to sustain daily ridership growth in 2024, its president said.

“It’s been increasing, it’s difficult to say [the exact growth] because there’s so many parameters but year on year, there is growth… it is improving,” Juan F. Alfonso, president and chief executive officer of LRMC, told reporters on the sidelines of a media briefing last week.

LRMC said LRT-1’s average daily ridership last year was between 350,000 and 370,000, while its pre-pandemic or 2019 level was around 450,000 daily.

Despite seeing the ridership figures bouncing back, Mr. Alfonso described the trend as growing at a slower pace from the previous levels.

Last year, the Transportation department approved fare hike adjustments for LRT-1 and LRT-2.

The approval of the Department of Transportation to implement a higher fare has somehow helped the company reach higher revenues for the year, Mr. Alfonso said.

Last week, the LRT-1 operator said the first phase of the Cavite extension is nearing completion as it hit 97% progress rate.

Once finished, the first phase of the LRT-1 Cavite extension will add a total of 6.2-kilometer line, connecting Baclaran Station in Pasay City to Dr. Santos Station in Parañaque City.

The company said securing the right of way for the second and third phase of the project is still a challenge.

“It is just the right-of-way process, it is always the challenge,” he added.

Earlier, the company said that the project’s 2027 target completion date will heavily depend on the right-of-way acquisition.

For now, Mr. Alfonso did not provide a clear timeline on whether the initial target would be met.

“We don’t have exact timelines yet and, of course, we are working with the government to try and make it happen,” he said.

LRMC is the joint venture of Ayala Corp., Metro Pacific Light Rail Corp., and Macquarie Infrastructure Holdings (Philippines) Pte Ltd. Metro Pacific Light Rail is a unit of Metro Pacific Investments Corp., which is one of three Philippine subsidiaries of Hong Kong’s First Pacific Co. Ltd., the others being PLDT Inc. and Philex Mining Corp.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., maintains interest in BusinessWorld through the Philippine Star Group, which it controls. — Ashley Erika O. Jose

Increase and multiply

FREEPIK

“Increase and multiply!” God told Adam, the first Man, in Genesis 1:28. “Be fruitful and multiply, and fill the earth, and subdue it; and rule over the fish of the sea and over the birds of the sky and over every living thing that moves on the earth.” One rule: “You must not eat fruit from the tree that is in the middle of the garden, and you must not touch it, or you will die” (Genesis 3:3)

“Eat, and you will be like God,” the Serpent tempted. Adam and Eve ate the Forbidden Fruit and so they were banished from the fully enlightened ambience of the Garden of Eden, where there was peace and harmony among all creatures in Creation.

In the mortal world, Good and Evil constantly fight to win over Man. Death is unescapable, as a reminder of that end in time, of the struggle to return to harmonious Eternity in Eden. Man’s first sin against Man in the temporal world was when Adam’s son, Cain, killed his brother Abel. Power “over everything that moves on the earth” became an obsession of Fallen Man. Greed and corruption, killing and stealing were prevalent in the competitive struggle for dominance and survival. God was unhappy with this. He found one just man among the descendants of Seth: Noah.

God said to Noah, “I am going to destroy all flesh because the world is full of violence. Build an ark of gopherwood, with rooms inside, three decks, and a door. Cover it inside and out with pitch.” And Noah did exactly as God commanded him (Genesis 6:13–22).

Rain poured for 40 days and the resulting floods stayed for 150 days, destroying all living things except those whom God permitted Noah to bring with him on the ark: Noah and his wife; their three sons, Shem, Ham, and Japeth and their wives (eight humans); seven pairs each, a male and a female, of all clean animals and birds; one pair each, a male and a female of all unclean animals and birds (Genesis 7:1-5).

“I will never again curse the ground on account of man, for the intent of man’s heart is evil from his youth; and I will never again destroy every living thing, as I have done,” God promised Noah after the Flood. “Increase and multiply and fill the earth,” God said to Noah (Genesis 9:7) as He had said to Adam.

Call the story of Genesis “historical narrative” or even folklore, if one does not believe in “God Almighty, Creator of all things visible and invisible” or other Supreme Being or Principle who rules over Mankind. Genesis, which starts from the creation of Adam, is a central starting story for the religious traditions of Judaism, Christianity, and Islam. Even for a person who claims neither faith nor disbelief in God, or believes that nothing is known or can be known of the existence or nature of God or of anything beyond material phenomena — basic human intuition and logic gained from empirical experience in living and dying must urge the acceptance that Man by himself cannot control human existence. Natural laws call on the peaceful co-existence of living creatures.

And so the world worries about the growing or declining population, and its burden on economics (competition, gains, and survival) and socio-politics (power and influence, hierarchies and dependencies).

As of Jan. 1, 2024, the world’s population was 8,019,876,189, up 75,162,541 (0.95%) from New Year’s Day 2023, according to estimates of the US Census Bureau’s International Database (IDB) for 227 countries and equivalent areas, plus 15,237 subnational areas. Through January 2024, 4.3 births and 2.0 deaths were expected every second worldwide. (Trending is refined through the focus year.) Around 108 billion people have ever lived on our planet. This means that today’s population size makes up 6.5% of the total number of people ever born (ourworldindata.org).

Demographers study birth rates and death rates, which affect the level of natural change (increase or decrease) within a population. Emigration and immigration, quite common in globalization, adjust individual countries’ population growth rates. Other factors that affect the change in a population’s growth include the impact of urbanization (easier access to medical facilities, medical technology, and medicine), the emancipation of women (women working, fewer or delayed pregnancies), agricultural changes (more food production, shift of labor to industry), and education (health and hygiene, family planning), according to a UK study (coolgeography.co.uk).

The population of the Philippines on January 2024 was 119,106,224, 1.47% of the total world population. The Philippines is ranked No. 13 of countries with a population of more than 100 million, with China and India each having more than one billion people. The population grew 1.51% (1,768,856) from last year 2023. This considers a net migration of -69,996 meaning more people have gone out of the country than those who came in. The total fertility rate (TFR) is 2.67 live births per reproductive-age woman, with the TFR steadily declining since 1970, when it was 6.20.

The urban population makes up 47.4% of the total, having grown from 31.5% in 1970 — indicating the movement to the cities and/or urbanization of erstwhile rural areas to serve the economic and social needs of the growing population. The problem with urbanization is the “crowding out” principle, where opportunities and resources are easily taken by the powerful (e.g., the rich), leaving little for the weak (e.g., the poor). The Gini ratio representing the income and wealth inequality in the Philippines per the World Bank is at 40.70 (as at 2021) reflecting a large gap between a country’s richest and poorest citizens.

Population growth and distribution has been a critical planning parameter for the country’s bid to keep pace with the exciting rise of the developing ASEAN region that started in the 1970s. Republic Act No. 6365 (Aug. 16, 1971) established the National Population Program and created the Commission on Population (PopCom). However, little — or more like nothing — concrete was accomplished in the policymaking, planning, coordinating, and monitoring of the Population Program until Republic Act No. 10354, The Responsible Parenthood and Reproductive Health Act or Reproductive Health Law (RH Law), was passed in 2012. It provided universal access to methods on contraception, fertility control, sex education, and maternal care in the Philippines.

There was much controversy and opposition raised by the Catholic clergy on the RH Law, especially on the availability of contraceptives and their distribution to the poor. The use of contraceptives is prohibited by the Catechism of the Catholic Church. But after a three-year appeal raised to the Supreme Court, it was decided that the RH Law was not unconstitutional. Its Implementing Rules and Regulations (IRR) was signed on March 15, 2013.

It has now been 11 years since the RH Law’s IRR was passed and meant to weave itself into the lives of Filipinos. Has it been effective in ordering better harmony in society? Controversy still rages, even among the implementors of the Law — modules for sex education in schools have not been standardized; some local government units (LGUs) seem to be still fumbling with family planning services and the handling of selective free contraceptives. And there’s finger-pointing over budget allocations for the administration and implementation of this very specialized program. And somehow it has expanded from population control to discussions of women’s rights, human rights, and gay rights.

The chaos and confusion might intuitively beg questions in one’s conscience: why is all this turmoil happening? What have I got to do with this? How is this going to end? The answer might not be a practical one — not like the Great Flood that drowned all creatures except Noah’s family of eight and representative pairs of animals and birds.

“Increase and multiply,” God said to Noah after the flood, as He said to Adam in the beginning of time. From the eight people from Noah’s Ark, there are now eight billion people in the temporal world — “temporary” for sure, because of the sureness of death. Instinctively, Man wants survival for oneself, but must also respect the right of others to live. Thou shalt not kill.

The RH Law only prescribes and makes available population control measures and means for the better practical life for Filipinos. Each person has the power of choice and instinctive moral guidance on surviving in our crowded earth.

 

Amelia H. C. Ylagan is a doctor of Business Administration from the University of the Philippines.

ahcylagan@yahoo.com

BSP seeks to revive swap market

ADAM SMIGIELSKI-UNSPLASH

THE PHILIPPINE central bank wants to revive the swap market to deepen the country’s capital markets, its governor said last week.

“We used to do swaps quite a bit, but somehow, they disappeared,” Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. told a forum last week. “I would like to revive the swap market, the interest rate swap markets and insist on market making at least the five-year maturity, which is the sweet spot for fixed-income securities, for corporate bonds, for derivatives contracts so maybe that will work.”

He cited markets in Europe, where the swap curve emerged without regulatory intervention. “Without any government initiative, without any central bank taking the lead, the swap curve emerged as the benchmark curve. Maybe that’s the way to do it now.”

A swap is a derivative contract where one party exchanges the values or cash flows of one asset for another.

Swaps are traded over the counter, versus options and futures that are traded on a public exchange.

Interest rate, equity, credit default and currency swaps are the most common types of swaps.

“If we had a swap curve, maybe you need to make markets, maybe just one maturity, maybe the five-year,” Mr. Remolona said.

He said the country does not have a good repurchase market to tie down the short end.

“I don’t understand what the reason is because we have GMRA (Global Master Repurchase Agreement), which is supposed to be so simple and so acceptable that the whole world will use it,” he said. “Somehow, it hasn’t worked here.” — BMDC

Rustan’s: Thanking women

“IF IT wasn’t for women, we wouldn’t even be here,” said Michael Tantoco Huang, Rustan Commercial Corp. VP for Store Development and Expansions in an interview with BusinessWorld.

Mr. Huang is the younger son of the late Rustan Commercial Corp., SSI Group, Inc., and Rustan Marketing Corp. Chair Zenaida “Nedy” Tantoco. She had passed away on Feb. 8 (story here: https://www.bworldonline.com/arts-and-leisure/2024/02/12/574791/rustans-zenaida-nedy-tantoco-77/), just about a month before the “Rustan’s Beauty GRLPWR 2024: Resort To Beauty” event launch at Rustan’s Shangri-la on March 7, a day before International Women’s Day (March 8).

“Not just my mother — she took after my grandmother (Gliceria Rustia Tantoco, who died in 1994), who had the vision for Rustan’s. It was my grandmother together with my grandfather (who died aged 100 in 2021). You see, my grandfather was always the one supporting my grandmother, and (she) had that vision from the very start, what she saw for Rustan’s.  And I think that was pushed over to my mom, where she had the vision of what Rustan’s should be, and continued on through the years.”

Since his mother’s demise earlier this year, his brother Anton Huang has been named CEO, and his cousin Donnie Tantoco was named Chair. “As part of the third generation, we’ve always seen ourselves as stewards to keep the family business going. We’re just acting as stewards for the next generation,” said Mr. Huang.

RENOVATIONS AND  PROMOS
Jackie Avecilla, Marketing and Communications Head for Rustan’s Beauty, said that following the renovation of their flagship in Rustan’s Makati, they’re planning renovations for their branches in Shangri-la, Alabang, and Cebu. “We’re expanding certain areas there, and also renovating. That’s long overdue,” she said. While she can’t disclose their names, she said there are new brands entering their beauty roster this year.

The “Rustan’s Beauty GRLPWR 2024: Resort To Beauty” event and seasonal campaign will highlight three female artists: singer Clara Benin, who performed at the event; illustrator Elle Battung, who did a mural for Rustan’s Shangri-la, and designer Zarah Juan, whose new bag, the Mobula, will be available for Rustan’s Beauty Addict members with a minimum purchase of P30,000 (available in white, black, and tan) from March 1 until April 30.

Other promos are lined up, but more importantly, “Because a lot of our shoppers are mostly women, especially for beauty, it’s also thanking them, and making them feel like this is a place where they can freely be themselves… and just really a safe place for them,” said Ms. Avecilla.

For every purchase of P5,000 at Rustan’s The Beauty Source from March 1 until May 31, Rustan’s Beauty Addict members are entitled to one e-raffle entry for a chance to win an all-inclusive four days and three nights-stay for two in the Garden View Villa of Nay Palad Hideaway in Siargao, inclusive of round-trip flights. From March 8 to 31, Rustan’s Beauty Addict members can enjoy times-five Beauty Addict points for any purchase at Rustan’s The Beauty Source. — JL Garcia

Ayala Land breaks ground for Evo City South District and Technohub

From left: Mariana Zobel de Ayala, Senior Vice-President, Leasing and Hospitality of Ayala Land; Mike Jugo, Premium RBG Head and President of Alveo Land and Ayala Land Premier; Robert Lao, Group Head, Estates Business of Ayala Land; Engr. Rey Santos, Municipal Administrator of Kawit, Cavite; Councilor Armie Aguinaldo of Kawit, Cavite; Meean Dy, President and CEO of Ayala Land; Plaridel Abaya, Chairman and President of Kawit Prime Holdings, Inc.; Peter Abaya, Director of Kawit Prime Holdings, Inc.; Carol Mills, President of Ayala Land Offices; and Paul Birkett, Chief Operating Officer of Ayala Malls

Ayala Land recently broke ground for Evo City’s second commercial lot and first office building developments, Evo City South District and Evo City Technohub.

Evo City is a highly connected Estate connecting Cavite, Laguna, and Metro Manila through major thoroughfares such as Cavitex, CALAX and future infrastructures such as the LRT-1 Cavite Extension Project. Spanning 207 hectares, the estate integrates commercial, residential, retail, and institutional spaces, offering a complete mix of urban amenities.

Following the success of Evo City’s commercial and residential projects — Evo City West District and The Residences at Evo City — the estate is breaking ground on a 25-hectare commercial district in Evo City South District and a two-tower office complex in Technohub Evo City, reinforcing its status as a leading hub for business and modern living.

At the heart of Evo City is its Active Park, 2.5 hectares of green space that will connect the church to the mall and the office blocks. The first phase of Ayala Malls will open by end-2024 and its second phase by 2026, bringing more than 50,000 sq.m. of retail space. The soul of Evo City is a 1,000-seater church designed by Dominic Galicia Architects, set to be completed by the second quarter of 2025.

Held onsite last March 7, 2024, this groundbreaking milestone was graced by Councilor Armie Aguinaldo and Municipal Administrator Engr. Rey Santos of Kawit, Cavite; Chairman and President development-partner, Plaridel Abaya of Kawit Prime Holdings Inc; and Meean Dy, President and CEO of Ayala Land, underscoring the collaborative effort towards shaping Evo City’s vibrant future.

 

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High rates, geopolitical tensions dragged markets in Q4

THE COUNTRY’S financial markets swayed in the final quarter of 2023 as geopolitical tensions and interest rates pushed the market and policy makers to a waiting game in search of better economic conditions.

The Philippine Stock Exchange index (PSEi) closed the fourth quarter at 6,450.04, down 1.8% year on year from the 6,566.39 in the same period in 2022. On the other hand, the index was up by 2% from 6,321.24 in the July-to-September 2023 period.

In a Viber message, Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines (UnionBank), said that despite the “challenging environment,” PSEi rebounded from its lowest close last year at 5,961.99 last Oct. 27 as inflation eased further and the US Federal Reserve (US Fed) hinted at policy rate cuts this year.

However, other analysts said headwinds such as the breakout of the Israel–Hamas war in October last year contributed to the slower year-on-year growth.

“At a local level, investors continued to monitor and sat on the side watching over the rates for better investment opportunities given interest rate fluctuations, indicating risk for investors,” Mr. Asuncion added.

“Prospects for lower inflation rates and interest rates in many countries around the world made investors cautious to enter the market for fixed-income securities and more eager to explore the equities market,” Cid L. Terosa, senior economist at University of Asia and the Pacific (UA&P), said in an e-mail.

“The higher-than-average interest and inflation rates, however, continue to make the fixed-income securities market more attractive than the equities market,” he added.

Demand for Treasury bills reached P300.51 billion with only P112.30 billion total offered amount in the fourth quarter. This was lower than the P220.6 billion seen in the same quarter in 2022, and the P654.9 billion in the third quarter.

The oversubscription amount of P188.22 billion was lower than P384.8 billion in the third quarter.

Similarly, Treasury bonds eased to P461.69 billion from P642.2 billion in the previous quarter. This was higher than the aggregate offered amount of P210 billion in the last three months of last year.

At the secondary bond market, domestic yield went up by 97.5 basis points (bps) on average year on year, according to data from the PHP Bloomberg Valuation Service Reference Rates published on the Philippine Dealing System’s website.

On a quarterly basis, yields grew by 93.5 bps.

“There was growing expectation that the Fed could be winding down its tightening stance and eventually shifting to potential easing by [first half of] 2024. This helped drive a bit of a rally for bonds with US treasuries trading below 4% at one point in December. Local bond yields for [10-year papers] similarly also fell below 6%,” Nicholas Antonio T. Mapa, senior economist at ING Bank N.V. Manila, said in an e-mail.

Makoto Tsuchiya, an economist at Oxford Economics, attributed the rise in long term yields from the Bangko Sentral ng Pilipinas’ (BSP) move to hike rates by 25 bps as a preemptive move to control inflation in effect of the Israel–Hamas war.

“Following the start of the war, the rise in risk premium led long term yields to rise in the Philippines. In addition, flight to safe assets led to a broad-based appreciation of the US dollar, which exerted downward pressures on the peso,” Mr. Tsuchiya said in an e-mail.

The peso kept at the P55 range as it closed at P55.370 against the dollar on the last trading day of December, according to the Bankers’ Association of the Philippines. This was stronger than the P55.755 finish on Dec. 29, 2022.

The BSP said in an e-mail that in the last quarter of 2023, the exchange rate was broadly manipulated by the uncertain monetary policy direction of the US Fed amid easing inflation rates.

“Despite the volatility in the peso-dollar rate, the peso closed the year stronger than the US [dollar] and became one of the better performing currencies in Asia and the ASEAN region,” Mr. Terosa said.

While the geopolitical tensions did not have a direct effect on the country’s financial market, analysts said that the market remained uneasy and cautious amid supply disruptions and price concerns arising from the Israel–Hamas war.

The central bank said that the heightened conflict in the Middle East moved the financial markets as outlook on international oil prices remain uncertain.

“With the volatility of the oil market, as a third world country who heavily relies on international market movements, spillovers are guaranteed to be felt. As a result, investor confidence was subdued toward the end of 2023,” Mr. Asuncion said.

The US Federal Open Market Committee (FOMC) retained their interest rates at the 5.25% to 5.5% range for the fourth straight meeting last January on a wait-and-see stance tracking inflation movements before cutting rates.

Similarly, the BSP kept its benchmark interest rate steady at 6.5% for the fourth consecutive meeting last Feb. 15 to keep watch on the US Fed’s move despite easing inflation.

Since May 2022, the BSP raised a total of 450 bps.

On the other hand, inflation eased further to 2.8% as of January this year, lowest in three years or since the 2.3% print in October 2020 during the height of the pandemic.

This was also an improvement from the 8.7%-high inflation recorded in January last year.

While analysts think the BSP’s move last year to hike interest rates by another 25 bps was “overstated” with inflation slowing, they said that they expect local interest rates to remain high until the US Fed makes a move to cut their policy rates.

INDICATORS TO WATCH OUT FOR
Analysts are pegging the central bank to continue to rein in policy rate cuts as long as the US Fed remains cautious. However, they are expecting policy rate cuts as early as mid-2024 should the US Fed strike a move to also cut rates.

UnionBank’s Mr. Asuncion said that any move by the BSP before the US Fed could add pressure to the peso-dollar rally.

“With a March cut out of the question for the US Fed, we may see a sliver of likelihood in June. Thus, a cut by the BSP may come in August, the only meeting of the Monetary Board in the [third quarter of 2024]. Inflation will continue to be front and center and how it is trending,” he added.

“We believe that the target RRP (reverse repurchase) rate of 6.5% is likely the peak and our baseline view for now is still 50 bps cut in 2024. We believe that inflation will re-accelerate anew before sustainably settling within the BSP’s 2-4% target in [fourth quarter 2024],” Alvin Joseph A. Arogo, economist at Philippine National Bank (PNB), said in an e-mail.

The central bank assured that they remain “forward-looking” when it comes to its monetary policy, keeping track of recent inflation data, their forecasts, and noting risks that could arise surrounding their forecasts.

“While our latest inflation forecasts are lower as risks to inflation have receded amid improved conditions, the BSP considers it appropriate to keep the BSP’s monetary policy settings unchanged in the near term as risks are still mostly skewed to the upside,” the central bank said.

“In view of lingering risks, the Monetary Board deems it necessary to keep monetary policy settings unchanged in the near term. Along with a sustained decline in headline and underlying/core inflation, we also want to see inflation expectations settling well within our inflation target range,” the central bank added.

Analysts are tracking several headwinds that could push the central bank to delay rate cuts until the last quarter of this year.

“We think the major risk remains in inflation, where risks are tilted to the upside. Continued weather-related disturbances, geopolitical tensions and possible related rise in commodity price and shipping rates, and possible minimum wage hikes could all lead to a reacceleration in inflation,” Mr. Tsuchiya said.

In addition to inflation, UA&P’s Mr. Terosa said to look out for the same external pressures felt back in 2022 with the Russia–Ukraine war to the breakout of the Israel–Hamas war last year.

“The possibility of tremendous wage increases this year as recommended by legislators can help pull up inflation beyond the range set by the BSP,” he added.

PNB’s Mr. Arogo said that should conditions improve in the coming months, rate cuts may happen earlier, and a reduction in the RRP rate and above 50-bps cut is possible.

“The Fed also has opened the door for a total 75 bps cut this year and investors believe that it should be more,” he added.

“The BSP has maintained a 100-bps interest rate differential from the Fed rates, and we think this will continue,” Mr. Asuncion said.

“The pursuit of price stability remains the BSP’s primary objective, and we remain committed to keeping inflation within the government’s target range while also ensuring inflation expectations remain anchored. That being said, the BSP continues to monitor current developments and the risks to inflation and remains ready to adjust monetary settings as necessary,” the BSP said.

FOREIGN EXCHANGE (FX) MARKET
BSP: Uncertainty over the path of US monetary policy amid potential upside risks to inflation as well as lingering geopolitical concerns are likely to remain key factors in regional currency movements in the near term. Nevertheless, the country’s improving current account outlook amid the expected increased growth in services exports and the business process outsourcing sector will provide support to the peso. Structural FX flows from overseas Filipino remittances, foreign direct investment inflows as well as recent recovery in travel receipts will likewise influence the domestic currency. The substantial gross international reserves also provide a level of comfort in the peso amid the current challenging global environment.

Mr. Arogo: We believe financial markets will remain volatile due to the possibility of inflation re-acceleration in [second quarter 2024] to [third quarter 2024]. Nevertheless, average inflation in 2024 and 2025 should generally be better. This is because we assume that supply shocks will not be as severe compared to 2022 (Russia-Ukraine war) and 2023 (State of Calamity from November 2022 to April 2023 due to Typhoon Paeng). As such, the USD/PHP trade at a range of P54.5-P57.5.

Mr. Asuncion: We expect the USD/PHP to rewind back to the P53-P54 trading range by year-end 2024. We trace this bullish year-end PHP outlook to the fundamental arguments of: 1) waning USD due to Fed rate cuts; 2) lower net external outflows—a reflection of a 2024 GDP (gross domestic product) growth below 6% that supports a gradual GIR (gross international reserves) buildup; and 3) a rate differential that would buck pressures to compress amid central bank rate cuts with the BSP on course to cut its policy rate in [fourth quarter 2024] and thus, trail the Fed’s rate easing schedule.

Escalating geopolitical risks that can spawn supply chain bottlenecks and higher logistical costs can throw a monkey wrench at this too-good-to-be-true year-end trajectory of a weaker USD/PHP. But as geopolitical risks and drought conditions dissipate at some point (including safe-haven demand), the fundamental backdrop depicted by a weaker USD and Fed easing rates would re-surface and conclude the unfinished business of a weaker USD/PHP.

Mr. Mapa: Local financial markets will once again take their cue from global developments with the Fed rate cut cycle (once called the pivot) still in question.

Mr. Terosa: The peso can become strong this year if the Fed cuts policy rates and inflation will continue to be tame. In the first quarter, the peso will continue to trade sideways as interest rates in the USA remain elevated and inflation remains within the BSP range.

Mr. Tsuchiya: We expect the peso to depreciate a bit in [the first half of] 2024, before strengthening later in the year. Relatively high prices, particularly given assumed reacceleration in prices in [second quarter] due to base effects, would likely keep investors cautious. But once the Fed and the BSP starts cutting rates and inflation rate declines, it should provide support to the peso.

EQUITIES MARKET
BSP: The robust economic growth outturn for 2023, easing inflation, and the positive growth outlook for 2024 are expected to support investor confidence.

Domestic economic activity is seen to remain intact over the medium term. The projected GDP growth path is supported by improved global GDP growth outlook and a projected decline in global crude oil prices, tempered in part by the lagged impact of the policy interest rate adjustments.

Inflation also eased further to 2.8% in January 2024 from 3.9% in December 2023, and the lowest since October 2020 when inflation was at 2.3 percent.

Various multilateral organizations expect the Philippines to be one of the fastest-growing economies in Asia in 2023 and 2024.

Risks to the macroeconomic outlook include a temporary rise in inflation in April to July 2024 due to possible price pressures from lower domestic supply of rice and corn as well as positive base effects. Downside risks to global economic growth include new commodity price spikes from geopolitical shocks — including continued attacks in the Middle East — and supply disruptions and concerns over the property sector in China.

Mr. Arogo: We believe financial markets will remain volatile due to the possibility of inflation reacceleration in [second quarter 2024] to [third quarter 2024]. Nevertheless, average inflation in 2024 and 2025 should generally be better. This is because we assume that supply shocks will not be as severe compared to 2022 (Russia-Ukraine war) and 2023 (State of Calamity from November 2022 to April 2023 due to Typhoon Paeng). As such, PSEi may reach 7,250 as a baseline (8,150 as bull case).

Mr. Asuncion: Our updated PSEi year-end 2024 forecasts using autoregressive distributed lag models (commonly known as ARDL models) yielded a range of 6,900 to 7,100. ARDL models are often used to analyze dynamic relationships with time series data in a single-equation framework. Using the same set of economic variables used previously (PISM, Inflation, RRP, USD/PHP, and Dow), we updated our PSEi using this top-down forecasting method.

Initially using the assumptions from our latest PSEi ARDL forecasting exercise, we update the assumptions looking at the following: 1) PISM or the local version of the S&P Global Philippines Manufacturing PMI (or simply the PMI) monitored by the BSP was assumed to gradually slowdown (as the PMI noted a December 2023 manufacturing growth slowdown, albeit still above the 50-level that indicates an expansionary environment within the manufacturing sector) that will eventually recover as the US Fed eventually embraces monetary policy rate cuts starting third quarter 2024 with an upside of earlier-than-expected cuts; 2) For the inflation trajectory, we assumed our current view seeing El Niño impacts as upside to CPI food especially in the summer months; 3) Consequently, we adopted our BSP monetary policy rate stance that sees the BSP tracking its US counterpart’s monetary policy movements throughout 2024 with a potential 100 bps cut that starts around November 2024; 4) For USD/PHP, we assumed steady currency movements between P55-P56 and an end-2024 a little over P56 to the USD; and 5) Finally, US Dow Jones is expected with a steady rise in [first half of 2024] until rate cuts in June that may propel the said stock market index between [44,000-45,000].

Mr. Mapa: Local financial markets will once again take their cue from global developments with the Fed rate cut cycle (once called the pivot) remains in question.

Mr. Terosa: Possible policy rate cuts in the second half of the year and lower inflation rates will shift greater activity to the equities market. Global and domestic optimism [regarding] economic growth and the slowing down of inflation this year bode well for investors in the equities market.

Mr. Tsuchiya: We think normalizing economic conditions and policy setting should help equity prices, after four consecutive years of poor performance. But with slower economic growth, the recovery will be very gradual, falling short of the pre-pandemic level even by the end of the year.

FIXED-INCOME MARKET
BSP: Bond yields particularly in the short-term are expected to be influenced by the BSP’s monetary policy signals on the back of easing domestic inflation and continued demand expansion. Risks to the outlook include possible spillovers from international bond markets, particularly from the US’ signal of maintaining higher for longer policy rate than what market expects and, as a consequence, a potential fall in asset prices. Continued conflict in Gaza and Israel, compounded by attacks in the Red Sea, ongoing war in Ukraine, and extreme weather shocks, could also result in another episode of supply shocks that could impact global recovery and hence influence trends in global financial markets.

Mr. Arogo: We believe financial markets will remain volatile due to the possibility of inflation re-acceleration in [second quarter 2024] to [third quarter 2024]. Nevertheless, average inflation in 2024 and 2025 should generally be better. This is because we assume that supply shocks will not be as severe compared to 2022 (Russia-Ukraine war) and 2023 (State of Calamity from November 2022 to April 2023 due to Typhoon Paeng). As such, we believe that benchmark BVAL rates by end-2024 will be lower compared to end-2023 levels.

Mr. Asuncion: Even with BSP’s average inflation for 2023 way off with its target range of 2%-4%, the December inflation went down to 3.9% which marked the lowest point for the whole year in 2023. With disinflation continuing and central banks likely to follow Fed’s preference of not rushing into a premature rate cut, the market play would be caution on long-term duration bonds.

Mr. Mapa: Local financial markets will once again take their cue from global developments with the Fed rate cut cycle (once called the pivot) remains in question.

Mr. Terosa: Fixed-income securities will continue to have a positive outlook as long as interest rates remain elevated in the first quarter.

Mr. Tsuchiya: We expect long term rates to rise over the course of the year, despite subsiding inflation and easing monetary policy. This is due to the widening term spread, which is now at a historic low. As monetary policy and economic conditions normalize, the spread should start to recover, exerting a small upward pressure on the long-term rates. — Bernadette Therese M. Gadon

PHL broiler chicken output may rise 2%

BW FILE PHOTO

PHILIPPINE broiler chicken production is expected to increase by 2% to 1.85 million metric tons this year amid higher demand, according to the United Broiler Raisers Association.

“That is an increase of 2% already, which is conservative,” group Chairman Elias Jose M. Inciong told reporters last week.

The Philippines is expected to increase its postbroiler chicken output by 3.4% to 1.53 million this year, according to estimates from the US Department of Agriculture.

“In a normal year, the industry can grow from 4% to 7%,” Mr. Inciong said. “But for the purposes of projections, we have placed it at 2% growth.”

He noted that consumers have chosen alternatives such as chicken and egg due to higher pork prices. “Right now, you can see that demand has increased due to the substitution of pork for chicken.”

Prices for pork belly ranged from P340 to P420 per kilo, while pork shoulder is priced at P290 to 270 per kilo as of March 7, according to the Department of Agriculture.

Mr. Inciong said the government should fast-track the approval of vaccines for type H5N1 highly pathogenic avian influenza (HPAI) or bird flu, which continues to threaten the industry.

“They should really work double time on the approval so that all vaccines being used are legal,” he added.

Nine provinces still have active bird flu cases as of Feb. 29, according to the Bureau of Animal Industry.

“The incidence of bird flu right now is low because of massive vaccination,” Mr. Inciong said.

The Department of Agriculture allows vector vaccines, killed/inactivated vaccines and recombinant vaccines.

Priority was given to commercial farms for layer chicken, layer chicken breeders, broiler chicken breeders, free-range breeders, grandparent broiler breeders, and small-hold layer/native chicken, duck, game fowl, turkey and goose farms.

On the other hand, commercial broiler chicken, small-hold broiler, quail, pigeon and exotic bird farms are ineligible. — Adrian H. Halili

Honda Cars Marcos Highway is Dealer of the Year

PHOTO FROM HONDA CARS PHILIPPINES

HONDA CARS PHILIPPINES, INC. (HCPI) recently held its 2024 Dealer Conference, where Honda Cars Marcos Highway emerged as the Dealer of the Year.

“Through the annual conference, HCPI gives the rightful recognition to its dealers who excel in sales and after-sales operations each year. HCPI awards top-performing individual Honda personnel as well. With this, HCPI hopes the ceremony can motivate and inspire all Honda employees to maintain their hard work and continuously improve to serve customers in the best way they can,” said the company in a release.

Honda Cars Marcos Highway’s victory came after placing third in 2021 and second in 2022. In second and third places this year were Honda Cars Fairview and Honda Cars Alabang, respectively. HCPI also gave out the following awards:

SALES ACHIEVERS
Honda Cars Marcos Highway (Metro Manila)

Honda Cars Baliuag (Provincial)

BEST IN SALES SATISFACTION PERFORMANCE
Honda Cars Manila (Metro Manila)

Honda Cars Angeles-Clark (First, Provincial)

Honda Cars Cebu (Second, Provincial)

Honda Cars Mandaue (Third, Provincial)

SERVICE INTAKE ACHIEVERS
Honda Cars Marcos Highway (First, Metro Manila)

Honda Cars Alabang (Second, Metro Manila)

Honda Cars Makati (Third, Metro Manila)

Honda Cars Pangasinan (First, Provincial)

Honda Cars Cauayan (Second, Provincial)

Honda Cars Batangas (Third, Provincial)

BEST IN SERVICE SATISFACTION PERFORMANCE
Honda Cars Alabang (First)

Honda Cars Shaw (Second)

Honda Cars Cagayan (Third)

TOP SAFETY ADVOCATES
Honda Cars Pangasinan (First)

Honda Cars Bulacan (Second)

Honda Cars Nueva Ecija (Third)

BEST IN AFTER-SALES OPERATIONS
Honda Cars Marcos Highway and Honda Cars Batangas (First)

Honda Cars Fairview (Second)

Honda Cars Alabang (Third)

SPECIAL RECOGNITION
Elijah Dave Villan of Honda Cars Makati

2023 Honda World Skills Contest Representative

Service Advisor Category Champion (Honda Asia and Oceania Skills Contest) and Philippines and Asia and Oceania Representative

Said HCPI President Rie Miyake, “The future mobility Honda dreams of will create a joy and freedom of mobility that enables people to transcend the constraints of time and place, and augment their every possibility. Such mobility will become the power for people who are trying to advance toward their own dreams. Dreams that will move even more people, until there is an endless expanse of new dreams. Through the creation of (the) mobility we dream of, Honda will become ‘The Power of Dreams’ of more and more people. That is how we will move people and society forward.”

For more information, visit https://hondaphil.com.

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