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FEU says Sept.-Nov. income down 6% to P665M

BW FILE PHOTO

LISTED educational institution Far Eastern University, Inc. (FEU) saw a 6% decline in attributable net income for the second quarter of its fiscal year that ends May, driven by higher operating expenses.

In a regulatory filing on Monday, FEU said its attributable net income for the September to November period fell to P664.71 million from P707.35 million in the previous fiscal year.

FEU’s revenues rose 8.7% to P1.59 billion from P1.46 billion previously.

The institution’s operating expenses, however, increased 4% to P880.73 million from P847.21 million in the previous year.

FEU’s operating expenses include depreciation and amortization, insurance, and real property taxes incurred by the organization in relation to investment properties.  

For the first six months, FEU said its attributable net income fell 3.5% to P591.62 million from P613.36 million the previous year.

Revenues  for the period rose 14% to P2.16 billion compared to P1.88 billion, led by the 6% increase in student population as well as higher tuition fees.

The jump in revenues also resulted in a 9% increase in operating expenses to P1.54 billion from P1.41 billion previously.

FEU also expressed optimism that it would sustain its “strong financial position” and “sound operating results” for the remainder of the school year 2023-2024.

“With an increase in group-wide student population during the first semester, the group is positive that it will maintain its enrollment base for the incoming second semester,” FEU said.  

The institution added that it maintains a “conservative outlook” on the national economy.

“With this, the management will continue to be prudent in the implementation of its operations, investment, and business continuity plans, both at the corporate and the academic levels, to mitigate any foreseen negative impacts on the overall operations,” it said.

Shares of FEU at the local bourse were last traded on Jan. 11 at P594.50 apiece. — Revin Mikhael D. Ochave

Not even Taylor Swift can bring back CDs

AMAZON.COM

VINYL snobs, unclench: Reports of the compact disc’s resurrection are greatly exaggerated. Contrary to claims that CDs are making a comeback on the back of Gen Z interest, its long fadeout has, at best, been interrupted. Not even the kiss of life from the industry’s reigning princess charming is likely to revive the fortunes of music’s most unloved format.

The figurative smooch from Taylor Swift, who released albums in both formats last year, pushed CD sales up just a scooch from 2022’s 35.87 million to 36.83 million albums, not enough to match 2021’s dead-cat-bounce of 46.7 million albums. On the other hand, sales of long- and extended-play records continued an 18-year growth streak to 49.61 million albums in the US — again, with a solid assist from Swift.

To be clear, all these numbers are dwarfed by streaming. According to Luminate, the music data tracking firm, there were 1.2 trillion (no typo) on-demand audio streams in the US last year, up 12.7%. Morgan Wallen’s One Thing At A Time was the US chart topper of the year, with 6.36 billion audio streams; Swift’s Midnights was a distant second at 2.86 billion.

Still, the contest between physical album formats is significant, vinyl overtook CDs in sales in 2022 for the first time in a quarter of a century; not coincidentally, it was also the year Swift sold more vinyl records than CDs, with her Midnights becoming the first album to accomplish that feat since the 1980s.

And the older format looks likely to widen the gap. Vinyl sales ended 2023 on a high, with over 2 million units sold in the week ending Dec. 21, the third largest since 1991.

This is, on the face of it, somewhat counterintuitive. Vinyl’s steady growth since 2005, and its especially strong performance since streaming platforms became the main mode of music consumption, is usually attributed to fans’ desire for a physical representation — an artifact — of their passion. A record is not only more tangible than a song list, it also conveys a sense of greater commitment: Whereas an average Swiftie might satisfy themselves with a T-shirt or hoodie from the merch table at one of her concerts, a superfan would demonstrate a higher devotion by purchasing an album.

You’d think that CDs would allow more Swifties to aspire to super-Swiftie status. After all, they are much cheaper, running from $12.89 to $18 per album on the singer’s website. Her vinyl offerings start from $29.99. And yet, look at the 2023 annual report from Luminate and you’ll see that five Swift vinyl albums topped 300,000 units in sales, compared to only one of her CDs. All of the top five vinyl records sold in the US were Swift albums, with 1989 (Taylor’s Version) becoming that rarest of things — an album that moved more than a million vinyl units. The CD version sold 800,000.

But then, forking out 30 bucks for something you can have for less than half the price is the whole point of superfandom, and not just in its Swiftie variant. This writer has, over the years, bought half a dozen vinyl variants of AC/DC’s Back in Black — the first album I ever acquired, and still my all-time favorite — including a tribute version in a hideous translucent curacao color that set me back more than $50. (Will the friend who “borrowed” it kindly give it back?)

Alert readers will have noticed that I avoided discussion on the relative sonic merits of vinyl records and CDs. Having been a passionate debater on this topic during my misspent youth, when I was a vinyl snob myself, I have long since concluded that the dichotomy was ever false. For all the scorn heaped on them by purists and vinyl partisans, CDs — which turned 40 last year — became the dominant format of the late 1980s and ’90s because they were cheaper and easier to store.   

Those qualities seem to matter less to those who buy physical albums these days, so the pendulum has swung the other way. There may be room for both formats on merch tables, but there’s no denying which is the fan favorite. — Bloomberg Opinion

REITs expected to do better in 2024

PHILIPPINE STAR/ MICHAEL VARCAS

By Sheldeen Joy Talavera, Reporter

THE OUTLOOK for real estate investment trusts (REITs) is more positive this year on the back of rate cut prospects and attractive dividend yields, analysts said.

“REITs are expected to do better in 2024 as interest rates start to decline on the back of a dovish pivot in monetary policy,” Juan Paolo C. Colet, managing director of China Bank Capital Corp., said in a Viber message.

Mr. Colet said a much better interest rate environment and a “more buoyant” stock market could open the door to more REIT initial public offerings (IPOs).

The Bangko Sentral ng Pilipinas (BSP) has kept the policy rate at a 16-year high of 6.5% at its last meeting in December as inflation remains elevated. From May 2022 to October 2023, the Monetary Board raised borrowing costs by a cumulative 450 basis points to tame inflation.

However, the market anticipates the BSP will loosen monetary policy once the US Federal Reserve begins its easing cycle.

Toby Allan C. Arce, head of sales of Globalinks Securities and Stocks, Inc., said the outlook for REIT listings “appears more promising” this year.

“REITs possess hybrid characteristics combining equity and fixed-income features, making them more attractive to investors amid the prevailing uncertainties,” Mr. Arce said in a Viber message.

China Bank Securities Corp. Research Associate Lance U. Soledad likewise said in a Viber message that they are bullish on the REIT sector due to its relatively attractive dividend yields compared to prevailing benchmark rates.

However, Mr. Soledad said another spike in inflation and “persistent weakness” in the office sector may hurt the outlook for REITs.

The REIT sector’s performance was weak in 2023 due to elevated interest rates and declining occupancy rates.

“This [2023] was a lackluster year for REITs in terms of price performance, with most of them trading below their IPO prices and even below where they were at the end of 2022,” Mr. Colet said.

Mr. Soledad noted that challenges in the office segment have affected the REITs’ price performance in 2022, as most REITs are exposed to office assets.

“Investor sentiment may have also been affected by negative reports concerning vacant downtown office spaces, a consequence of the widespread adoption of remote work,” Mr. Arce said.

The Philippine REIT market has grown since Ayala-led AREIT, Inc. listed on the Philippine Stock Exchange in August 2020.

There are currently eight REITs in the country, namely AREIT, DDMP REIT, Inc., Filinvest REIT Corp., RL Commercial REIT, Inc., MREIT, Inc., VistaREIT, Inc., Citicore Energy REIT Corp., and Premier Island Power REIT Corp. The REITs’ portfolio includes office buildings, hotels, malls, land, renewable energy and infrastructure.

Data collated by Colliers Philippines showed that six out of the eight REITs had prices that are lower than their IPO prices as of Nov. 28.

“In our view, the Philippine REIT market is primed for further diversification and developers should be on the lookout for other assets that can be divested into their REIT companies,” Colliers said in a report.

Sy-led SM Investments Corp. last year deferred the record $1-billion REIT IPO of its real estate unit SM Prime due to unfavorable market conditions.

More suggestions on movies with historical themes

FREEPIK

The success of the movie GomBurZa prompted me to suggest in my last column the production of more movies about our national heroes, like Marcelo del Pilar, Graciano Lopez Jaena, Emilio Jacinto, Melchora Aquino alias Tandang Sora, Gregoria de Jesus, and other less celebrated patriots. The remarkable success of the 49th Metro Manila Film Festival (MMFF) as a whole now prods me to suggest the production of more motion pictures not only about personages but about organizations, events, and places with historical significance.

As Don Artes, chairman of the Metro Manila Development Authority, which runs the film festival, said last week, “We received reports that moviegoers watched multiple films while others watched films repeatedly. Hopefully, we can sustain this beyond the festival so that our film producers can offer quality movies all year round. We also encouraged filmmakers to create better films for the MMFF’s 50th edition.”

No movie about the secret revolutionary organization Katipunan has been produced, although there was a TV docudrama on it. The film, Bonifacio: Ang Unang Pangulo, a 2014 action drama about the life of Andres Bonifacio, founder of Katipunan, touches on it. Movies about La Liga Filipina, the group formed by Rizal to unite all Filipinos into one society; La Solidaridad, the organization created in Spain by Filipino liberals and students to make Spain aware of the needs of Filipinos in the homeland; and the Katipunan would inspire greater love for country.

GomBurZa made hundreds of thousands of Filipinos learn about the previously unknown Padre Pedro Pelaez. Movies about La Solidaridad, La Liga Filipina, and Katipunan would make Filipinos know more about Marcelo del Pilar, Lopez Jaena, Juan Luna, Mariano Ponce, Antonio María Regidor, Jose Alejandrino, Isabelo de los Reyes, Pedro Paterno, Ambrosio Salvador, Deodato Arellano, Melchora Aquino, Gregorio de Jesus, Procopio Bonifacio, the Brains of the Katipunan Emilio Jacinto, and many others about whom little is written in history books.

The depiction in motion pictures of the Cry of Pugad Lawin on Aug. 23, 1896, the Declaration of Independence from Spain on June 2, 1898, the opening of the Malolos Congress on Sept. 15, 1898, and the Battle of Manila on Feb. 4, 1899 that marked the beginning of the Philippine-American War, would exemplify Filipino bravery and dedication to independence, instilling in the current generation of Filipinos a love of country and devotion to liberty.

The movie about the massacre of Filipinos by American troops in September 1901, Balangiga, The Howling Wilderness, put in proper perspective in the mind of those who saw the picture America’s part in Philippine history. A drama film about the clashes between then Undersecretary of the Interior Jose P. Laurel and Governor-General Leonard Wood in 1923, and the consequent mass resignation of the Filipino members of the Cabinet would give local moviegoers a clearer understanding of Philippine-US relations.

Movies can be about places. There was a movie produced in 1937 called Zamboanga starring Fernando Poe, father of FPJ, and Rosa del Rosario, the original Darna. It was a fictional love story with no connection to historical events. The British film Metro Manila was another fiction film without historical content. The 1964 movie Intramuros, the Walls of Hell dramatizes the desperate stand Japanese troops took during the liberation of Manila in 1945. A movie on the history of Intramuros would draw sizable crowds. Intramuros as it is now, is a major tourist destination.

A film on how Binondo, the oldest Chinatown in the world and the country’s center of commerce during the American colonial period, came about would be a bigger blockbuster. Other places that are potential themes of future films are Fort William McKinley, now Bonifacio Global City, and Fort Stotsenburg, now the Clark Special Economic Zone. Both were established during the Philippine-American War by the US Expeditionary Force to the Philippines — Fort William Mckinley in 1901 as home of the 31st Infantry Regiment, and Fort Stotsenburg in 1902 as the base of the 5th Cavalry. Fort Stotsenburg was converted into an airfield in 1919 and re-named Clark Field, subsequently Clark Air Base, to host the 13th Air Force of the US Army Air Forces.

The movies need not be heavy dramas like GomBurZa or action pictures like Heneral Luna. They can be horror films like Mallari, about Fr. Juan Severino Mallari, a serial killer during the 1800s, or a musical like Broadway’s Here Lies Love, a musical on the life of Imelda Marcos.

Speaking of musicals, a good subject for a musical is the music composed by Julian Felipe, composer of the music of the Philippine national anthem. All the songs he composed could be sung in the movie. Felipe was a patriot himself. He fought against the Spaniards during the Philippine Revolution. He was captured and jailed.

Another possible musical with historical content is an adaptation of the musical play Walang Sugat. The play was originally a zarzuela, which the Oxford Dictionary defined as a “lyric-dramatic genre that alternates between spoken and sung scenes, the latter incorporating operatic and popular songs, as well as dance.” It was written by playwright Severino Reyes in 1896 and first performed in 1902. The music for the original version of the play was composed by Fulgencio Tolentino. The play is about the injustices Filipinos suffered under the Spanish rulers and the cruelty inflicted by Spanish friars on Filipino prisoners.

In fact, Walang Sugat had been adapted into a film twice — in 1939 and in 1957. The 1939 version starred Rosa del Rosario and Leopoldo Salcedo, and the 1957 version, directed by Lamberto V. Avellana, had in its cast Rosa Aguirre, Miguel Anzures, Tony Dantes, Joseph de Cordova, Oscar Keese, Mario Montenegro, Charito Solis, and Jose Vergara. None of the actors in the two versions were singers. If a third version is produced, the cast should be composed of the current crop of talented actor-singers, like Darren Espanto and Jhoanna Robles.

As for comedy films, they can be based on the huge collection of funny stories told by the Thomasites, the American teachers who came to the Philippines in 1901 to assimilate young Filipinos into the American culture. About 600 teachers, men and women, were sent all across the country. There was culture shock on both sides. The teachers kept a daily diary of their experience in the course of their own assimilation into the local culture.

 

Oscar P. Lagman, Jr. is a retired corporate executive, business consultant, management professor, and an avid reader of Philippine history.

DoE receives over 24 recommendations for 10th port in offshore wind dev’t study

UNSPLASH

By Sheldeen Joy Talavera, Reporter

THE Department of Energy (DoE) has received more than 24 recommendations for the 10th port to be studied for repurposing for offshore wind development, an official said on Monday.

“We are deliberating on the 10th port, taking into account the recommendations of the offshore wind developers, also the proximity to the service contracts,” Energy Undersecretary Giovanni Carlo J. Bacordo told BusinessWorld.

“Medyo nahirapan kami (We’re having a bit of difficulty determining) the 10th port because… the developers submitted… more than 24 (recommendations),” he also said.

The DoE is studying the upgrade of ports to support the development of offshore wind projects in the Philippines, with technical assistance from the Asian Development Bank, which requires 10 ports to be included in the study.

Nine ports have already been identified, including the Port of Irene in Sta. Ana, Cagayan; Port of Subic; Port of Currimao in Ilocos Norte; Port of Pulupandan in Negros Occidental; Port of Tabaco in Albay; and Bulalacao Port in Oriental Mindoro.

The list also includes the International Container Port Complex in Iloilo; the Energy Supply Base port facility of the state-run Philippine National Oil Co. in Batangas; and the port facility of the International Container Terminal Services, Inc. in Bauan, Batangas. 

Mr. Bacordo said that the submission of the proposed 10th port location is expected no later than February.

The study results are expected to be ready by October 2024.

“We are requesting the owners or the operators of these ports for their cooperation to allow the people who will be conducting feasibility study access to their ports, to furnish them with whatever available information,” he said.

The nine identified ports are the areas with the highest wind potential and also the areas where there are clusters of offshore wind service contracts.

To date, the DoE has awarded a total of 82 offshore wind energy service contracts, with a potential capacity of about 63 gigawatts (GW).

Under the Philippine Offshore Wind Roadmap, the Philippines has an estimated potential capacity of 178 GW in offshore wind resources.

This is expected to help the country reach its aim of increasing the share of renewables to 35% by 2030 and 50% by 2040.

“Right now, we have 82 offshore wind energy service contracts. If we just have these 10 ports, I’m sure that these 10 ports will not suffice for the mobilization of these 82 service contracts,” Mr. Bacordo said.

The pre-feasibility study forms part of the ports development plan of the Transportation department and the Philippine Ports Authority, he said.

“If it’s a government port but not included in the budget, maybe we can go into PPP (public-private partnership) agreements with the private sector,” Mr. Bacordo said.

“For private ports, we are hoping that the private owners who develop these ports… can go to a joint venture with another private firm for the repurpose of ports for offshore wind,” he said.

How DiCaprio shaped ‘twisted’ love story in Killers of the Flower Moon

LOS ANGELES — The unusual relationship of a married couple in historical drama Killers of the Flower Moon could have been left as just a small part of the Martin Scorsese movie about a dark time in American history.

Star and executive producer Leonardo DiCaprio said that he alongside fellow producers decided to center the film around the “twisted” but true love story of Ernest Burkhart, a white man, and Mollie, the Osage woman that he married, to help drive home the human toll.

“When we made the shift to making Ernest and Mollie the centerpieces of the story … it seemed like a dynamic shift,” Mr. DiCaprio, who plays Ernest, told Reuters.

“We flipped the whole story on its head,” the Oscar winner added. “We got to not only explore this very twisted relationship, we got to explore the Osage and the Osage community and how they were affected by all of this.”

Killers of the Flower Moon debuted in cinemas in October and just began streaming on Apple TV+.

In the film, Mr. DiCaprio’s Ernest gets caught up with the machinations of his Uncle William (Robert De Niro). As part of his uncle’s plans, Ernest begins poisoning his wife, Mollie (Lily Gladstone), while also acting as her nurse and protector.

Producers listened to input from Osage members, including descendants from that era, and often changed narratives based on their opinions, Mr. DiCaprio said.

“The Osage community really, they talked in great detail about that relationship, and even though it was an incredibly bizarre, twisted love story, there was love between them,” Mr. DiCaprio said. — Reuters

Ernst & Young: Philippines improves in RE attractiveness

The Philippines went up a notch to 32nd out of 40 markets in the 62nd edition of the biannual Renewable Energy Country Attractiveness Index (RECAI) by Ernst & Young (EY). The index ranks the attractiveness of a country in renewable energy (RE) investment and deployment opportunities. With a score of 56.1 (out of a possible 100), the Philippines remained the third lowest amongst its peers in the East and Southeast Asia region, only ahead of Vietnam and Thailand.

 

Ernst & Young: Philippines improves in RE attractiveness

Gov’t fully awards T-bills at higher rates

BW FILE PHOTO

THE GOVERNMENT made a full award of the Treasury bills (T-bills) it offered on Monday at higher rates, even as investors are pricing in that the Bangko Sentral ng Pilipinas (BSP) has finished its tightening cycle and is ready to cut borrowing costs this year.

The Bureau of the Treasury (BTr) raised P15 billion as planned via its offering of T-bills on Monday as total bids reached P43.188 billion, or nearly three times the amount on the auction block.

Broken down, the Treasury made a full P5-billion award of the 91-day T-bills as tenders for the tenor reached P13.752 billion. The three-month paper was quoted at an average rate of 5.226%, 12.4 basis points (bps) higher than the 5.102% seen for the P7-billion award last week. Accepted rates ranged from 5.193% to 5.25%.

The government also raised P5 billion as planned from the 182-day securities as bids for the tenor reached P13.06 billion. The average rate for the six-month T-bill was at 5.685%, up by 10.3 bps from 5.582% seen for the P7 billion raised from the tenor last week, with accepted rates at 5.668% to 5.7%.

Lastly, the BTr borrowed the programmed P5 billion via the 364-day debt paper as demand for the tenor stood at P16.376 billion. The average rate of the one-year T-bill went up by 2.6 bps to 5.999% from the 5.973% quoted last week. Accepted yields were from 5.985% to 6%.

At the secondary market on Monday, the 91-, 182-, and 364-day T-bills were quoted at 5.337%, 5.5956%, and 5.9734%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data provided by the BTr.

The government made a full award of its T-bill offer amid strong market demand for the securities, a trader said in a Viber message.

“We continue to see good demand as bid-to-cover [ratio] remains above two times… Looks like the market is quite convinced that the period of policy tightening may end this year,” the trader said.

BSP Governor Eli M. Remolona, Jr. earlier said the central bank will likely keep rates higher for longer and would only consider cutting borrowing costs once inflation settles firmly within the 2-4% target.

Headline inflation slowed to 3.9% in December from 4.1% in November and 8.1% a year ago.

However, the 2023 inflation average stood at a 14-year high of 6%. This was above the 5.8% in 2022 and marked the second straight year that average inflation breached the BSP’s 2-4% target.

Meanwhile, Monetary Board member and former Finance chief Benjamin E. Diokno last week said the central bank may cut borrowing costs by as much as 100 bps later this year to keep a healthy rate differential with the US Federal Reserve and amid expectations of easing domestic inflation.

The BSP raised borrowing costs by a cumulative 450 bps from May 2022 to October 2023 to help bring down elevated inflation, bringing the policy rate to a 16-year high of 6.5%.

The Monetary Board will hold its first policy meeting for this year on Feb. 15.

T-bill rates rose on Monday amid a healthy correction after yields went down significantly late last year, tracking secondary market movements, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

“The core US consumer price index and producer price index data eased further. That could still support or justify possible Fed rate cuts in the latter part of 2024,” Mr. Ricafort added, noting the US central bank’s policy easing could be matched locally.

Financial markets still see more than a 60% chance of a rate cut at the Fed’s March 19-20 policy meeting, according to CME Group’s FedWatch Tool, Reuters reported.

The Fed has hiked its policy rate by 525 bps to the current 5.25%-5.5% range since March 2022.

It will hold its first policy review for 2024 on Jan. 30-31.

On Tuesday, the BTr will auction off P30 billion in fresh seven-year Treasury bonds (T-bonds).

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

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at 5.1% of gross domestic product this year or P1.39 trillion. — Luisa Maria Jacinta C. Jocson with Reuters

Madrid’s new business district aims to learn from rivals

A view shows the Chamartin Train Station rail tracks around and over which the Spanish capital’s ‘Madrid Nuevo Norte’ new business district is set to be built, in Madrid, Spain, Oct. 24, 2023. — REUTERS

MADRID — Madrid has broken ground on a new business district three decades in the planning, but with similar zones in London, Paris and New York struggling as more people work from home, critics see a risk the project could become a giant white elephant.

With a first phase due to be completed by 2035, Madrid Nuevo Norte (MNN) will add 1.6 million square meters (17 million square feet) of office space to the capital, including Spain’s tallest skyscraper.

The plans also include 10,500 new homes and a large park, while Chamartin station will be upgraded to become Madrid’s hub for high-speed and local trains.

Wary that areas like London’s Canary Wharf are losing tenants as remote working grows, developer Crea Madrid Nuevo Norte has tried to future-proof by studying 16 similar projects.

That informed the decision to mix offices with housing, shops and restaurants, head of strategy Miguel Hernandez said.

“Today people want to work, to live, to have leisure, to have retail in areas that are not completely empty by night,” he told Reuters.

Crea Madrid Nuevo Norte is a consortium made up of Spanish bank BBVA, real estate investment trust Merlin Properties and constructor Grupo SanJose.

It is working with Madrid’s mayor’s office on the project, which was snarled up by legal challenges for almost 30 years.

MNN will also seek to attract a more diverse range of tenants than business districts that have relied heavily on the financial sector to fill their offices. These include health sector companies, to take advantage of their location next to one of Madrid’s largest hospitals, Mr. Hernandez said.

The vacancy rate in New York’s financial district has almost doubled since the pandemic, when remote working surged, to 21% in the third quarter of 2023, according to real estate data provider CoStar Group.

Vacancies at Paris’ La Defense soared to 19.7% in the first half of 2023 from 6.7% at the end of 2018, while Canary Wharf has lost 1 million square feet in demand for its offices since the pandemic, according to CoStar.

HSBC is set to leave Canary Wharf for a smaller office in central London, while Barclays is reducing its footprint there. Credit Suisse’s long-running presence is also uncertain after its takeover by UBS, which plans to axe thousands of jobs.

Canary Wharf Group is seeking to adapt and diversify by developing a giant life sciences campus and building more flats, restaurants and bars. Canary Wharf Group did not respond to a request for comment.

LESS COMMUTING
Spaniards embraced working from home during the pandemic more loosely than some neighbors. They attend the office an average of 2.6 days a week compared to the European average of 1.8 days, a study by CBRE — one of the world’s largest real estate investment managers — released last week showed.

Merlin Properties CEO Ismael Clemente said that factor, and a shorter commute than to Canary Wharf or La Defense, made him confident there would be demand for office space.

“If it takes you 20 minutes to get to work, why the hell are you going to work from home?” Mr. Clemente said.

But some analysts argue that Madrid, which already has the AZCA and Four Towers business parks nearby, really needs more residential, not commercial property.

PwC estimates that Madrid will need 11,000 new homes per year to meet demand while a study by Gesvalt found the city has a shortfall of 214,000 affordable homes.

According to EY, the city had 1.7 million square meters of empty offices in the first half of 2023 and an office vacancy rate of 11%, up from 9.3% in 2020.

Javier Garcia-Mateo, EY’s head of strategy and transactions for the real estate sector in Spain, said MNN should reduce its planned office space by 500,000 square metres and build 15,000-20,000 additional homes instead.

“Why are you going to develop offices when what you need there is residential?” Mr. Garcia-Mateo said.

But some local residents have campaigned against the project because they fear it will eventually become a giant upmarket suburb that marginalizes its working class neighbors.

“When they don’t have demand in the market the developers will convince the government to allow them a change of classification so that instead of offices in 20, 30 years they’ll be homes — luxury ones, of course,” said Vicente Perez, who led one such campaign. 

The mayor’s office did not reply to a request for comment. Crea Madrid Nuevo Norte´s Mr. Hernandez said it would be difficult to change the classification now the project is underway.

Merlin’s Mr. Clemente said the project will take as much as 40 years to complete, drip-feeding offices into the market to avoid flooding it.

Advocates for the development say it will help attract more international companies to the Spanish capital.

Paloma Relinque, director of capital markets at CBRE in Spain, said Madrid lacks prime offices that meet the sustainability standards they demand. The Grade A office vacancy rate in the area where MNN will be built is around 0.7% compared to 7.8% for all offices, according to CBRE.

Jose Ramon Iturriaga, a fund manager at Abante Asesores in Madrid, which holds shares in Merlin, drew parallels with a recent surge in luxury hotel construction in the city.

“If you don’t have this kind of premium office space, certain high-end business hubs won’t come,” he said. — Reuters

Revenue challenges faced by new Finance chief

HONG KONG — As my family’s belated vacation here is ending, I see that Hong Kong as a tourist and investment hub is back to where it was in 2019, or even better. The big crowds at Central, Tsim Shia Tsui, Mong Kok and other areas in Kowloon, the huge volume of passengers inside long trains, the huge construction projects at the airport, these are among the reasons why I say this.

Hong Kong’s extensive infrastructure — its smooth wide roads, its huge suspension bridges, tunnels, and flyovers, its subway train-walkway-shop complexes, its large modern airport, its huge, long seaports, its brightly lit roads and streets, etc. — they were all built with little public borrowing. Until 2019, its public debt to GDP ratio was only 0.3%. This went up to 4.2% in 2022 and is projected to reach 7% this year. In contrast, the Philippines had a debt/GDP ratio of 37% in 2019, and this increased to 57.7% between 2022 to 2024.

If the Philippines, or at least the Metro Manila-Cavite-Bulacan area, would strive to be at par with Hong Kong at the current pace of infrastructure development in the country, I think it would take us at least 40 years get to where Hong Kong’s infrastructure is now.

But if we get huge infrastructure financing (both public and private), and the various political hurdles and bureaucracies (both national and local) are removed, perhaps we will do it in 25-30 years. And this is the big challenge facing the new Secretary of the Department of Finance, Ralph G. Recto.

The previous Finance Secretary, Benjamin Diokno, as leader of the economic team, laid down a good foundation. The Philippines’ GDP growth was high at 7.6% in 2022, and 5.6% in Q1-Q3 2023 — the third highest among the world’s top 40 largest economies last year. Revenues overall have recovered even without any major tax hikes. Hats off to Sir Ben.

Here is the situation and the challenges the new secretary will face at the Department of Finance (DoF) in 10 points:

1. Expanding the tax base. Considering revenues were at P3.45 trillion in 2022 and are projected to be around P3.90 trillion in 2023, the target of at least P4.5 trillion this year should be attainable even without tax hikes because the recently enacted law Ease Of Paying Taxes (EOPT) Act (RA 11976, signed Jan. 5) should be able to expand the tax base. Other proposed revenue bills can help if they are enacted soon.

2. A busy BIR. The Bureau of Internal Revenue (BIR) in particular can target at least P3.3 trillion (about 67% of total revenues) this year as the EOPT law applies more to it than to the Bureau of Customs (BoC) and broadening of the tax base applies more to domestic than international business.

3. The need to control smuggling. The BoC may target collecting P1.8 trillion by significantly controlling smuggling and illicit trade. From the estimates Representative Joey Salceda gave last October, tobacco smuggling alone results in about P60 billion/year in revenue losses. The BoC plus other lead enforcement agencies like the Philippine National Police and the Coast Guard should work harder in controlling illicit trade because their annual budgets are huge and come from taxes, so they should strive to control tax leakage.

4. Keeping the budget deficit under control. In partnership with the Department of Budget and Management, the Finance department must control some spending so the budget deficit this year does not exceed P1.4 trillion and the deficit/GDP ratio is limited to 6.5% or lower.

5. Keeping a lid on borrowing. Financing or borrowings, which averaged P2.2 trillion/year from 2020-2022, should be controlled so as not to exceed P1.8 trillion this year. If revenues increase significantly and the deficit is controlled, the need for borrowing is reduced and interest payments will be reduced in the succeeding years.

Accompanying this column is a table featuring the actual numbers in cash operations from 2019 (pre-lockdown) to 2023 (post lockdown) and on which my proposals for fiscal targets in 2024 are based (see Table 1).

6. Lowering the debt/GDP ratio. The outstanding debt stock (excluding contingent liabilities) should peak this year at around P16.5 trillion, then plateau for a year or two, and begin to decline by 2027. We should strive to bring back 2019’s debt/GDP ratio of 40% by 2028, down from 61% in 2022.

7. Avoiding long-term loans. We should reduce long-term loans even if the interest rates are lower because they create a big moral hazards problem. Agencies contracting the long-term debt can afford to be wasteful because the ones that will pay these off will be two to four administrations (six to 20 years) away. In November 2023, long-term debt constituted 79% of the total outstanding debt, up from 76% in 2019. Leave long-term financing to PPP projects and Maharlika funding. The vetting process and financial discipline in private financing is more strict and less political than government and foreign aid/ODA funding.

8. Avoiding forex risks. There is also a need to reduce borrowings from commercial or debt securities, not only because of higher interest rates, but also due to rising forex risks as the US$ is under constant and rising threat of large-scale instability because of huge increases in US federal debt.

Accompanying this column is a table of the actual numbers in public debt and their distribution (see Table 2).

9. Controlling spending. The major spending control challenges must be addressed by the economic team as a whole. These include reforming the huge and ever-rising military and uniformed personnel (MUP) pension which may reach P200+ billion this year alone. Then there are the subsidies which seem to stretch forever, with no timetable — freebies should have a limit. And war-mongering lobbies that say that we should buy very costly jet fighters, battleships, submarines, and missiles should be kept at bay. Our priority should be more domestic infrastructure and more job creation here, not more war mongering on faraway shores.

10. Sustaining the high GDP growth target. We ought to keep a high GDP growth target of 6.5% to 8% yearly until 2028 and beyond. Our deficit/GDP ratio and public debt/GDP ratio can easily decline if the denominator, our GDP size, expands fast at sustained level.

Ralph Recto has the maturity and wisdom of a seasoned legislator and statesman (he has been a senator, a congressman, and secretary of the National Economic and Development Authority or NEDA). His overview of economics and politics has been sharpened by long years of government experience and he has an extensive network with the public, especially tax-paying entrepreneurs and investors.

I extend my congratulations to Mr. Recto for taking up the challenge. The best is yet to come, here’s to a wealthy and prosperous Philippines.

 

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

minimalgovernment@gmail.com

UK housing market gains momentum at start of year

BUILDINGS in the City of London are seen behind Waterloo Bridge in London, Britain, Oct. 20, 2017. — REUTERS

LONDON — Average asking prices for British homes made the strongest start to the year since 2020, according to a Rightmove survey on Monday that added to signs that the slowdown in the sector could be easing as demand picked up in January.

The average price of homes put on sale between Dec. 3 and Jan. 6 was 1.3% higher than the month before, the biggest December to January rise since 2020 and more than double the average increase for this time of year, Rightmove said.

House prices in Britain typically pick up at the start of January after a lull in the run-up to Christmas.

“For now, the data at the start of 2024 points to building momentum, and reasons for growing market optimism,” Tim Bannister, director of property science at Rightmove, said.

Rightmove said the number of agreed sales was 20% higher in the first week of January compared to the same period last year, and buyer demand was up 5%. The number of homes coming to the market rose by 15%.

British house prices, like those in many other rich countries, surged during the COVID-19 pandemic, rising by more than 25% according to official data.

But transactions slowed sharply in late 2022 after then-Prime Minister Liz Truss’ budget plans caused turmoil in bond markets, which pushed up the cost of mortgages, while rising Bank of England rates acted as a brake through 2023.

Asking prices in Rightmove’s January period are still 0.7% lower than the year before.

Average mortgage rates have fallen, however, from a peak of 6.11% for a five-year fixed term in July 2023 to 4.86% now, Rightmove said.

Financial markets expect the Bank of England to start cutting rates from their current 15-year high of 5.25% in May.

Other indicators have also shown a rise in house prices. Britain’s biggest mortgage lender Halifax earlier this month reported a 1.1% monthly increase in prices in December and the first annual rise in eight months. 

That said, buyers were still likely to feel the squeeze from elevated mortgage rates and the cost-of-living crisis this year, Mr. Bannister said.

And while the housing market appears to be gaining momentum, Mr. Bannister said activity was likely to slow in the weeks leading up to the national election which Prime Minister Rishi Sunak has suggested will be held in the second half of this year. — Reuters

Entertainment News (01/16/24)

Cinemalaya 2024 calls for short film entries

THE Cultural Center of the Philippines (CCP) and the Cinemalaya Foundation, Inc. are now accepting submissions to the Short Film Category of the Cinemalaya Philippine Independent Film Festival 2024. The deadline is before 6 p.m. on March 8. Interested parties may submit a maximum of three entries that were produced between March 3, 2023, and March 8, 2024. For full mechanics, visit the CCP website (www.culturalcenter.gov.ph) or the Cinemalaya website (www.cinemalaya.org).

Le Ciné Club shows French films on Wednesdays

Every Wednesday this January, Alliance Française de Manille hosts Le Ciné Club Manila’s screenings of French films. On Jan. 17, catch Poly, a 2019 film by Nicolas Vanier centered on the challenges of 10-year-old Cecile integrating into the social scene of her village in southern France. On Jan. 24, two films by Lola Quivoron will be shown. One is the 2021 film Annie colere (Angry Annie), set in 1970s rural France where the titular Annie finds herself pregnant on top of being a mother to two teens and explores the notions of abortion. The other is 2022 film Rodeo, which follows Julia, a teenager seeking solace in her love for motorcycles and urban rodeos despite its hyper-masculine culture. Visit Le Cine Club (https://www.facebook.com/LeCineClubAFM/) for more information.

Philippine Circuit Show 2024 to hold 4-day dog tilt

THE biggest dog competition in Asia, the Philippine Circuit Show, is back for its 2024 edition in Araneta City in Cubao, Quezon City. The Dog Fashion Show jumpstarted the events on Jan. 14 at the Quantum Skyview in Gateway Mall 2 in Cubao, Quezon City. Select entries from thousands of participants were paraded as this year’s opening stars. The four-day competition proper will take place next door at the Smart Araneta Coliseum in Araneta City from Jan. 18 to 21, with a series of challenges in varied categories to distinguish the 2024 champions. For more details on the competition, visit Araneta City’s social media pages.

SB19’s PABLO drops new single

BLENDING hip-hop with rock music influences, songwriter-producer PABLO has released a new bop, “DETERMINADO,” his first song this year under Sony Music Entertainment. The track experiments with hip-hop and rock. “We’re a team. We always work hand in hand, always learning from each other, and drawing inspiration back and forth,” said PABLO on having his brother Josue as a producer on the track. Integrating dense instrumentals with gloomy synths and booming beats, “DETERMINADO” is about confronting fears but still moving forward. It is out now on all digital music platforms worldwide.

NIKI kicks off 2024 with introspective new single

JAKARTA-born, LA-based singer-songwriter NIKI has released her intimate new single “24,” out now via 88rising. The song points towards a new sonic era for NIKI, combining lyrics and melodic sensibilities with a musical palette heavily inspired by Joni Mitchell’s performance of “Both Sides Now” at the 2022 Newport Folk Festival. “I came across that performance and was so unbelievably moved by it. I felt struck by some lightning bolt of inspiration and just ran to my studio and picked up my guitar and out flowed the words to ‘24,’ NIKI said in a statement. The song attempts to synthesize her early twenties. Grammy-nominated producer Tyler Chester and James Krausse produced the track, while multi-instrumentalist Rob Moose contributes and arranges strings. The song is out now on all streaming platforms.

Docuseries on K-pop group BTS now on Disney+

THE eight-episode docuseries BTS Monuments: Beyond The Star can now be viewed exclusively on Disney+. It takes audiences on an in-depth journey across the K-pop band’s 10-year career, highlighting their highs and lows through never-before-seen interviews, performances, and moments with band members RM, Jin, SUGA, j-hope, Jimin, V, and Jung Kook. It delves into how the band came to be, what it was like preparing for their debut, and what it was like winning the Best New Artist award at the 2013 Melon Music Awards. All eight episodes of BTS Monuments: Beyond The Star can now be streamed on Disney+.

Leah Halili releases electronic-tinged pop single

THE Ransom Collective’s Leah Halili reflects on the difficulties of navigating the recent events in her life on her new single, “Change,” out now on all digital music platforms worldwide. “The song touches on the brevity of life and the richness of experiences,” Ms. Halili said in a statement. “It emphasizes the belief in enduring truths despite pain, focusing on the positive and hope that surround us.” Produced by experimental/indie artist Nick Lazaro, “Change” integrates dreamy, textured guitar lines with electronic elements, temporarily veering away from the stripped-down and folk vibe of Ms. Halili’s previous releases.

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