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SEC warns against investing in SK Pools Mining, SOAO

THE Securities and Exchange Commission (SEC) has cautioned the public against investing in SK Pools Mining Corp. and SOAO, saying these entities are not authorized to solicit investments.

In two separate advisories on its website, the corporate regulator said that the two entities do not have the necessary license to offer and sell securities.

SK Pools Mining is allegedly enticing the public via social media to purchase a cloud mining machine, ranging from P700 to P75,000, with promised daily earnings of P70 to P1,950, the SEC said.

The SEC also said that SK Pools Mining is using a fake certificate of incorporation to establish its legitimacy.

“The scheme employed by SK Pools Mining has the characteristics of a Ponzi scheme where monies from new investors are used in paying fake profits to prior investors and is designed mainly to favor its top recruiters and prior risk takers and is detrimental to subsequent members in case of scarcity of new investors,” the SEC said. 

Meanwhile, the SEC said that SOAO, SOAO Technology, SOAO-TechnologyCo.Ltd. Advertising OPC, SOAO Energy and SOAO Group are reportedly offering investments through a power generator rental scheme.

The entity allegedly promises earnings of P9 per kilowatt for 24 hours of rental.

“The amount and duration of rental and power output per 24 hour varies depending on its offering posted on their social media account and website,” the SEC said.

“An investor will also earn a commission from recruitment of new investors/partners up to level C,” it added.

According to the SEC, only SOAO-TechnologyCo.Ltd. Advertising OPC is registered with the government as a one-person corporation. However, all entities are not authorized to offer and sell any investments to the public.

“Such activities require a secondary license from the commission and the securities or investment product should likewise be registered with the SEC before they can be offered or sold to the public under Sections 8 and 12 of the Securities Regulation Code,” the SEC said.

BusinessWorld sought the comments of the two entities but has yet to receive a response as of the deadline. — Revin Mikhael D. Ochave

Triton tested

PHOTO BY KAP MACEDA AGUILA

Mitsubishi PHL unveils the brand’s latest pickup truck

By Dylan Afuang

BY INTRODUCING locally the Triton — which boasts new hardware and modern features — Mitsubishi Motors Philippines Corp. (MMPC) strengthens its presence in the popular pickup truck sector.

Unveiled worldwide last year, the Triton succeeds the Mitsubishi’s pickup truck line that once bore the names L200 and, of more recall to the local market, the Strada.

Seven variants of the Triton are available, with three four-wheel drive (4WD) and four two-wheel drive (2WD) models, with available with six-speed manual or automatic transmissions and four doors.

These trims are the Triton GL 2WD MT (P1.134 million), GLX 2WD MT (P1.311 million), GLX 2WD AT (P1.383 million), GLS 2WD AT (P1.582 million), GL 4WD MT (P1.157 million), GLX 4WD MT (P1.561 million), and the range-topping Athlete 4WD AT (P1.909 million).

“We believe this pickup will be a game-changer in the pickup segment,” MMPC President and CEO Takeshi Hara boasted during the Triton’s press launch, which also began the public showcase for the pickup that was graced by two-time Dakar Rally champion Hiroshi Masuoka, who raced a Triton Athlete around on a makeshift dirt course.

“Because we designed (the Triton) from the ground up,” Mr. Hara continued, “(it will) cater to Filipinos’ different lifestyles, it can be a workhorse or travel companion… a comfortable and functional (truck) at the same time.”

Powering the new truck is the brand’s newly developed 4N16 2.4-liter turbodiesel engine with varying outputs. The twin-turbo mill of the Triton Athlete model produces 201hp and 470Nm of torque. Exclusive to this model are electric power steering, seven drive modes, and active yaw control and Super Select II 4WD for better traction.

Lower variants use a single-turbo unit with 180hp and 430Nm, with the 4WD versions receiving Easy Select 4WD and hydraulic power steering. Standard on all 4WD trucks, regardless of trim level, is a rear differential lock that boosts its off-road capabilities.

All these are supported by the Triton’s new chassis, which is said to feature a redesigned suspension upgrade utilizing lightweight leaf springs with a longer suspension rebound. Depending on the variant, ground clearance ranges from 203mm to 223mm.

For his part, MMPC Senior Manager for Product Planning Allan Cruz explained to “Velocity” the reason behind the pickup’s new name. “The Triton name has actually been used in other markets for some time, and with the launch of the all-new model, we wanted to align with the global branding for our pickups,” Mr. Cruz said.

The executive added that the model’s GL 2WD- and 4WD MT variants are poised to serve fleet customers. In keeping with their fleet orientations, these GL trims feature basic black fabric upholstery in their five-passenger cabin.

In the more upscale Athlete and the GLS, these come with a nine-inch infotainment screen with six speakers, and wireless Apple CarPlay and Android Auto. These two trims also come standard with wireless charging, dual-zone automatic climate control, keyless entry, and push-start ignition.

Beyond its orange exterior finish contrasted by gloss black finishes, the Triton Athlete further differentiates itself inside with orange leather with black suede inserts and a 10-way power adjustable driver’s seat.

When asked by the media on the sidelines of the launch about the Triton’s expected monthly sales, Mr. Hara said that MMPC will aim for a “higher segment market share.” The executive also confirmed that Mitsubishi’s Thailand plant, which will produce the model for the Philippines, is ready to supply the model’s demand here.

For safety, the Athlete and the GLS boasts of advanced driver-assistance systems and a 360-degree camera. The GLX, on the other hand, comes with a single reversing camera.

The top two variants’ safety suite include forward collision mitigation with pedestrian detection, blind-spot warning with lane-changing assist, rear cross-traffic alert, lane departure alert, and auto high beam.

Above these, the Athlete offers hill-descent control, emergency assist for pedal misapplication, lane departure warning, and parking sensors.

Q&A: ‘I respect the people’

Mr. Takeda speaks to the press for the first time at the Geely North EDSA dealership. — PHOTO BY KAP MACEDA AGUILA

New Geely PHL chief Naoyuki Tekada is prioritizing existing customers, along with employees and dealer partners

Interview by Kap Maceda Aguila

LET’S GET this out of the way: Pretty much no one was surprised with the “reassignment” of former Sojitz G Auto Philippines (SGAP) or Geely Philippines President and CEO Yugo Kiyofuji.

To anyone following the tale of the Chinese automaker here in the country, it had seen better days – namely those overseen by the first SGAP chief Yosuke Nishi (before moving on to head Sojitz Fuso Philippines Corporation) who spearheaded the brand’s successful establishment here in 2019.

There were two general issues that people can say eventually led to the ouster of Mr. Kiyofuji, who had a tumultuously brief tenure from April 2022 to the end of 2023: A lack of – and we use the term loosely – likeability, and the savaging of the brand on social media as a result of after-sales woes.

First, it appeared that the executive wasn’t exactly the Mr. Popular in the organization – leading to an exodus of key people. Second, we also heard from the grapevine that dealers were left underwhelmed by him.

Even the optics on the turnover of command suggested a less-than-amicable split from SGAP. When the press release on the announcement of Mr. Takeda’s appointment was sent out, there was no traditional photo of the outgoing with the incoming. Instead, Geely Automobile International Corporation Regional Sales Director Will Wan appeared on a couple of images shaking hands with the new president. It seemed that Mr. Kiyofuji made – or was forced into – a hasty exit.

Still, Mr. Takeda’s quote on the official press statement was gracious. “I am grateful for Mr. Kiyofuji’s contributions as he leaves SGAP to focus on other aspects of the auto business in (the) Sojitz headquarters in Tokyo where his distinct management capabilities are required. He has completed his mission in SGAP in a very short time, making vast improvements in the organization, particularly in various systems processes and parts availability,” he said.

And after all, it’s no use to flog a dead horse. What can be worked on is the here and now. The executive seems to be cognizant that the first step toward reviving the Geely brand is to bravely face the music – to answer the questions previously met with silence and the vacuum of attrition.

Mr. Takeda is no stranger to the Philippine automotive industry as he had a “pivotal role” with Mitsubishi Motors Philippines Corporation (MMPC) Auto Financial Services and JACCS Finance Philippines for over six years until July 2022.

Last week, he presided over a preview of the Geometry C electric vehicle, expected to be launched this year. More importantly, he declared in a speech to media invitees: “At Geely, our commitment to excellence is more than a promise; it’s a pledge,” adding that “customer satisfaction is a yardstick of success.”

Alluding to the previous, much-publicized shortcomings in after-sales service, Mr. Takeda vowed to work on parts availability “supported by a fail-safe mechanism.” He promised that customer service representatives will be on hand to ensure the fulfillment of service concerns.

Directly addressing the media, he averred, “We are not just asking you to observe, we are inviting you to engage.”

Here are excerpts from our exclusive interview with Naoyuki Takeda.

VELOCITY: What were the marching orders upon your appointment?

NAOYUKI TEKADA: Sales are down, and the first priority is of course to bring back sales to (previous) levels. Also, my priority is to improve after-sales and customer satisfaction. For me, the most important thing is to take care of existing customers and regain their full trust – to make them happy and satisfied.

People have been very concerned about the brand. Were you aware of the issues, particularly those raised on social media? One of the concerns was after-sales service. Another is the exodus of executives from Geely Philippines.

I’m aware that many people left the company last year, but it’s already calmed down. My style is to completely follow the Philippine way. I manage the company in the Philippine way; I respect the people. I respect our employees, I respect the dealers, I respect the media, I respect the banks. My style is the Philippine way, and I believe that in doing it the Philippine way, I will motivate the internal and external people. By doing so, I hope we can regain the employees’ motivation and loyalty to the company.

With regard to after-sales service, there have been concerns about the lack of parts, and service that’s not up to par. How are you going to change this?

This is my first priority. For parts availability, we have already improved a lot. The current service fill rate is over 90%. However, I know it’s still far from perfect, because there is no perfect in this field. My commitment is to keep improving service.

For 2023, Geely Philippines is ninth in sales, per CAMPI (Chamber of Automotive Manufacturers of the Philippines). Do you have a sales target for 2024? Are you going to open more dealerships?

Of course, we have plans to launch new models, although we haven’t decided on anything concrete. We will increase the number of dealers, but the number of dealers is not so important at the moment because we’ve already reached close to our target number. The more important thing is the quality and performance of the existing dealerships. We have to keep improving our collaborations with our existing dealers to increase sales and service quality. We will support our dealers.

Are you happy being in ninth place?

Of course, we are targeting a higher position.

The perfect white shirt

SEIKISHI White Shirt from Benjamin Barker

RUSTAN MARKETING CORP. President Bienvenido “Donnie” Tantoco III has found the perfect white shirt, and all it took was to spill wine on someone else.

At a business conference he attended, a Malaysian tycoon he knew told Mr. Tantoco to throw a glass of wine on the shirt he was wearing — “[It was] a very nice, crisp white shirt that was also very flattering,” Mr. Tantoco told the guests on Feb. 1. “I just met the guy, [and] he was asking me to commit violence against him.” But Mr. Tantoco went along with the request and poured the wine on his new friend’s shirt.

“It looked terrible at first,” he recalled. The man then simply took a white cloth and wiped the shirt clean. Next, he told Mr. Tantoco to spill coffee on his cuffs — which also wiped off quite easily. “His shirt looked like it was freshly laundered and pressed,” Mr. Tantoco said.

He had found the perfect white shirt.

Mr. Tantoco had told the story during the launch of the men’s suit brand Benjamin Barker in Rustan’s Makati. The man in the perfect white shirt turned out to be an investor in the brand, created by Nelson Yap.

Mr. Yap, who had been a filmmaker living in Australia, left that life to care for his ailing father and his business selling suits in Singapore. That was in 2009.

While Mr. Yap may have been exposed to suits because of his father’s job of selling them, he found gaps in the market when it came to price and in size. Singapore’s multicultural nature means many international brands can be found there, but, “They don’t fit very well. We’re Asians.” He also noted that suits of Western origin really weren’t always built for the hot, humid Asian climate.

So he created Benjamin Barker, a suit business focusing on the Asian client. His fabric choices include linen and mixed cottons, for better breathing in the tropics. The suit jackets are half-lined for ventilation.

Benjamin Barker is present not only in Singapore, but also in Australia, Malaysia, Cambodia, Vietnam, and in the Philippines.

Mr. Yap, in a speech, recalled this his first employees in Singapore were Filipinas, who used to chide him about opening in the Philippines. “Today, here we are, after 15 years.”

He explained to BusinessWorld the secret of the perfect white shirts: they are dipped in special chemicals at the yarn level to make them resistant to stains, and also to UV light, viruses, bacteria, and wrinkles.

The fabrics and the tailoring are fit for Asian bodies, and the price isn’t too bad either: a look at their racks shows items priced between P6,000 to P12,000.

“I feel like there are a lot of luxury brands out there already,” he said. “We want the everyday man to be able to express themselves.”

Benjamin Barker is available at Rustan’s Makati. — Joseph L. Garcia

Cebu Pacific targets to resume China route by October

CEBUPACIFICAIR

BUDGET CARRIER Cebu Pacific is planning to defer the resumption of its Manila-Beijing flights to October as the company weighs the current market demand, its president said.

“It looks like it’s going to be [October] 2024 and again, it is because China’s been so soft. Until we see a rebound in terms of our forward bookings, I think we have to take a deliberate approach on China,” Alexander G. Lao, Cebu Pacific president and chief commercial officer, told reporters in a media gathering last week.

Cebu Pacific’s Manila-Beijing route was initially set to resume in 2023 but was then deferred to early 2024.

The budget carrier is working to increase its international source market by intensifying its frequencies in other existing networks, Mr. Lao said. 

“International though our tourism numbers are still far behind and one of the key reasons is China, I think it was our second largest source market and today it’s not even within out top five or six,” he said, adding that the potential contributions of China’s market was not as large as its share pre-pandemic level.

Last year, Cebu Pacific launched its Manila-Da Nang flight, which operates three times a week. 

“I think Da Nang is probably the most recent route we’ve opened. We’re looking at maybe one to two routes to come back. Our strategy is to try to bring back our international capacity to pre-COVID level which we should see this year,” he said.

The company is planning to bring its wide-body aircraft to routes where there is a strong demand, he added.

“Whether it is Japan, Thailand, or Hong Kong. So not a lot of new routes this year, but we will try to open routes selectively, whether through more frequencies or higher capacity,” he said.

The company is expecting to complete its aircraft purchase by the first half of the year, allowing it to increase its network capacity. — Ashley Erika O. Jose

Indonesia’s Valentine’s Day vote

PRANANTA HAROUN-UNSPLASH

On Feb. 14, Indonesians will vote in parliamentary and presidential elections in what is likely to be the country’s most consequential elections since the fall of Suharto in 1998. Indonesia is Southeast Asia’s largest country by population, area and economic output. It is among the top global exporters of thermal coal, processed nickel, copper, bauxite, and palm oil, among others. Indonesia supplies almost all of the coal for Philippine power plants, while its mineral export policies affect our own nickel and copper sectors. Indonesia is also one of the largest consumers of rice, and occasionally imports from Vietnam and Thailand in competition with the Philippines.

Indonesia is also a regional political leader. The Bandung conference held in West Java in 1955 eventually became the basis for the Non-Aligned Movement that was formed in the early years of the Cold War, and which became the single largest grouping of countries outside the nuclear superpowers. Until today Jakarta continues to have a strong voice across many regional foreign policy issues, from ASEAN cooperation to the region’s stand on the many crises in the Middle East to the return of democracy in Myanmar.

Politically and socially, if the Philippines wanted to find a country today that faces many of the same challenges and seemingly unfulfilled potential, none in Asia comes closer than Indonesia, as it faces many of the same challenges. Its institutions are weak, and corruption is a pervasive problem that has discouraged foreign investors and destroyed economic value, with the most visible effect being Indonesia’s decline as an oil and gas exporter. Patronage politics is rife. Deforestation, land rights disputes, and plastic waste in the rivers are common environmental and social problems. The moniker “land of broken investor promises” could be applied as much to the Philippines as to Indonesia.

The country is also attempting to move a large part of its population out of agriculture into the manufacturing and service industries, with a particular emphasis now on manufacturing for renewable energy, batteries, and autos. And like us, many of its citizens work abroad as ours do — on cargo and cruise ships, as caregivers in Singapore and Hong Kong, and in the service sectors in the Middle East. Like us, its overseas workers give hope to their families, and it is similarly concerned with how to protect its own OFWs from maltreatment, abuse, and war. And Indonesia’s creation of its own sovereign wealth fund, the Indonesia Investment Authority, was one of the models for the Maharlika Investment Fund.

Therefore, what happens to Indonesia as a country not only affects the Philippines through trade and commerce but makes for an interesting mirror for our country and could provide additional context for what we are trying to do to lift our country to the next stage of development. Its industrialization mistakes today could serve as lessons for us.

The vote next week is therefore more than a passing interest. What makes it especially consequential is that the leading candidate is a retired general with a checkered human rights history, who occasionally voices his impatience for democratic politics and has, through three election campaigns, railed against foreign investor participation in the economy.

THE PERSONALITIES INVOLVED
Indonesian presidents are limited to two terms, which makes President Joko Widodo ineligible to run again, having won in 2014 and 2019. Should none of the three candidates win a majority next week, a runoff between the top two vote-getters will be held in June.

Leading the race is the country’s defense minister, Prabowo Subianto, a retired general who spent most of his career in Indonesia’s special forces command, Kopassus, during the Suharto era. Prabowo is estimated to have around 46%-48% voter support, which puts him within range of winning it all next week. Trailing him are the former governor of Jakarta, Anies Baswedan (with roughly 26%-27%), who is running as an independent, and the former governor of Central Java province, Ganjar Pranowo (with 20%-21%), who belongs to the Indonesian Democratic Struggle Party (PDI-P) of Widodo. Should Prabowo fall short of a majority, he is still the strong favorite to defeat either of the two in June.

Curiously, Widodo supports Prabowo, not Ganjar of his own PDI-P party. Until early this year, Widodo had backed Ganjar, strongly lobbying PDI-P leader and former president Megawati Sukarnoputri to select him as the party nominee. Megawati preferred that her daughter, Puan Maharani, be PDI-P’s presidential candidate. But Puan was not popular and Widodo eventually prevailed.

However, while Widodo was lobbying Megawati to choose Ganjar, his inner circle was apparently also considering that their political future might be better served by siding with Prabowo. Ganjar was a PDI-P loyalist after all, assuring that Megawati would have a strong, if not dominant, voice in a Ganjar administration. Meanwhile, Prabowo was also open to an alliance with the popular Widodo, due to the electoral boost that it would give. Eventually, Gibran Rakabuming Raka, Widodo’s son and Solo city mayor, became Prabowo’s vice-presidential running mate. Widodo has not openly endorsed Prabowo yet, but his support for the defense minister is the worst-kept secret in all of Indonesia.

WHY THIS VOTE MATTERS
Foreign investors are hoping that Widodo’s influence in what is likely to be a Prabowo government and the fragmented nature of Indonesia’s politics make it unlikely that there will be a major shift in policy, and that continuity will largely prevail, from the shift of the capital to Nusantara to the development of domestic manufacturing sectors. What gives them hope is that Prabowo has proven to be a team player in the Widodo cabinet and a largely uncontroversial defense minister since 2019.

But Prabowo has another side. He admitted to having played a role as head of the strategic forces (Kostrad) in the abduction and torture of pro-democracy activists during the last days of the Suharto regime, with at least a dozen of those taken still missing. He has also been accused of leading violent crackdowns in what was then East Timor while he was in the special forces. But Prabowo puts this as being in the context of him as a soldier in the autocratic Suharto regime.

It is Prabowo’s combination with Widodo that makes some local political analysts uncomfortable, because Widodo has shown a willingness to also disregard democratic guardrails, as could be seen indirectly in his lieutenants’ efforts over the past year to take over the Democrat Party, a half-hearted attempt to postpone the elections or to let his son Gibran run as VP despite the fact that the Constitutional Court decision that lowered the age for vice-presidential candidates (and which directly benefited Gibran) was decided while Widodo’s brother-in-law was chief justice. An ethics panel later removed him from the chief justice post. Widodo oversaw the passage of a law in 2019 that weakened the Anti-Corruption Commission.

As presidential candidate in 2014, 2019, and 2024, Prabowo has railed against foreign investor participation in the economy; he believes that foreigners have extracted much of the wealth in the economy, with benefits only trickling down to the citizens. He described Indonesians partnering with foreign investors as “lackeys” and “puppets,” while ordinary Indonesians become employees who only get “small salaries.” Recently, he said that “a neoliberal economy cares only about profit and… we cannot be like that.”

Regardless of Prabowo’s framing, if his administration adopts more nationalist policies and is successful in advancing Indonesian industry forward in the short-term, then this could add to the clamor in other countries such as the Philippines to adopt industrial policy and for the government to intervene more in the economy and to have national champions.

But it could also lead to a turn away from broader party-based politics and the democratic institutions such as the anti-corruption agency KPK that had been seemingly strengthened after the fall of Suharto — a backsliding that warns that democracy’s move forward should never be taken for granted.

Widodo has gained international recognition for how far forward he has brought Indonesia’s economy, including the development of Morowali for its nickel industry and the construction of Southeast Asia’s first high-speed rail service. But the country and its people deserve a deeper look because its political and economic evolution could also serve as both cautionary tale and model for the Philippines.

 

Bob Herrera-Lim is a managing director at Teneo, a New York-based consulting firm that advises companies and investors globally. He covers all of Southeast Asia for the firm’s clients. He is also a fellow of the Foundation for Economic Freedom.

Lexus cornered 42% of premium auto market in ’23

The Lexus LBX on display at the recent Singapore Motor Show — PHOTO BY KAP MACEDA AGUILA

Toyota’s luxury brand is now a leader as well

AT THE RECENT media thanksgiving party of Toyota Motor Philippines (TMP), Chairman Alfred Ty looked back at 2023 as a “remarkable year,” and outlined some of the many highlights for the company.

“On the occasion of our 35th anniversary, we were fortunate to have President Ferdinand Romualdez Marcos, Jr. visit our Sta. Rosa factory. (Toyota Motor Corp. Chairman) Akio Toyoda and I hosted him during his visit, and we were very encouraged by his high level of interest in our operations. In fact, PBBM mentioned that he felt like he was visiting an automotive factory in Japan given the level of quality he observed,” shared Mr. Ty.

Speaking of Mr. Toyoda, he also attended TMP’s first-ever GR Festival last August and got behind the wheel of a WRC-spec Toyota GR Yaris — assuming his motoring nom de guerre Morizo to showcase his drifting skills in front of a Quirino Grandstand crowd. That was certainly a particularly unforgettable moment for me personally, as I was among only a handful of individuals who rode shotgun as the smiling executive pushed the vehicle to do donuts and more.

“To this day, Morizo is all smiles when he recalls his visit to Manila last year,” Mr. Ty continued.

Arguably the centerpiece of TMP’s embarrassment of riches is the company’s 22nd consecutive “triple crown.” It again led auto companies in passenger car, commercial vehicle, and total sales. “I am also very happy that we set a new all-time sales record in 2023, with sales shattering the 200,000-unit barrier,” he told the attendees. The exact figure, 200,031, represents 46.54% of total vehicle sales, per the reckoning of the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and Truck Manufacturers Association (TMA).

If the triple crown has perennially been a foregone conclusion owing to the utter domination in sales numbers, TMP added a welcome feather on its cap through Toyota’s luxury brand. You could even say it’s a now a quadruple crown as Lexus annexes the luxury auto market sales title with a sum of 1,843 units — good for 41.92% of the total.

“What this tells me is that the Filipinos are on their way to a higher quality of life and standard of living, in line with the government’s goal of making the Philippines an upper middle-income society,” stated Mr. Ty.

The executive additionally noted that, “carbon neutrality is gaining ground with sales of our hybrids and Lexus RZ BEV increasing their representation in our lineup to 3.6% from 1.2% in 2022.”

As vehicle production across the industry has largely returned to its pre-pandemic state, Lexus Philippines can surely gird for more growth this year. As the table above suggests, there is healthy demand (and, surely, supply) anew for its popular MPV model, the LM — outpaced only by the RX (also in all-new guise).

On the horizon, too, is the opening of a new, bigger Lexus facility at the Bonifacio Global City, this one near Mitsukoshi and a breath away from its original location. That one, we’ve heard, will revert back to Federal Land control.

But surely, all eyes must be on the LBX crossover, slated to debut locally in the first quarter, according to Lexus Philippines. Even smaller than the UX, the LBX will effectively become the new entry point into the Lexus stable. This, of course, will make the brand even more accessible to more people seeking admittance into the luxury segment.

Treasury bill, bond rates may climb as Fed remains hawkish

BW FILE PHOTO

RATES of Treasury bills (T-bills) and Treasury bonds (T-bonds) on offer this week could rise amid hawkish signals from the US Federal Reserve.

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

On Tuesday, it will offer P30 billion in reissued five-year T-bonds with a remaining life of four years and 11 months.

T-bill and T-bond rates could track the increase in secondary market yields last week after Fed Chair Jerome H. Powell signaled that the US central bank is unlikely to cut borrowing costs at their March meeting, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

At the secondary market on Friday, rates of the 91-, 182-, and 364-day T-bills went up by 2.02 basis points (bps), 6.18 bps, and 0.32 bp week on week to end at 5.4422%, 5.8126%, and 6.044% respectively, based on PHP Bloomberg Valuation Service Reference Rates data published on the Philippine Dealing System’s website.

The yield on the five-year bond likewise rose by 1.01 bps to end at 6.0864%.

The Federal Open Market Committee last week held its target rate steady at the 5.25-5.5% range for a fourth straight meeting.

It raised borrowing costs by a total of 525 bps from March 2022 to July 2023.

Mr. Powell, speaking after the end of a two-day policy meeting, declined to declare victory in the US central bank’s two-year inflation fight, vouch that it had achieved a sought-after “soft landing” for the economy or promise that rate cuts would come as soon as the Fed’s March 19-20 meeting, as investors had hoped in the run-up to last week’s policy decision, Reuters reported.

Mr. Powell said rate cuts would come once the Fed becomes more secure that inflation will continue to decline from a level it still characterizes as “elevated,” at least on a one-year basis, with the personal consumption expenditures price index, a key measure used by policy makers, at 2.6% on an annual basis as of December.

Market expectations of a near-term rate cut dimmed, with futures tied to the Fed’s main policy rate reflecting a 70% chance of the central bank lowering borrowing costs at its May 1 meeting, from over 90% on Thursday, according to the CME FedWatch Tool. The probability of a March cut stood at about 20%, from just under 50% a week ago.

Last week, the BTr raised P15 billion as planned from its offering of T-bills as total bids reached P38.137 billion, or more than twice the amount on the auction block.

Broken down, the Treasury made a full P5-billion award of the 91-day papers as tenders for the tenor reached P11.46 billion. The average rate of the three-month T-bill rose by 9.2 bps from the previous week to end at 5.398%. Accepted rates ranged from 5.300% to 5.424%.

The government also raised P5 billion as planned from the 182-day securities as bids stood at P12.37 billion. The average rate for the six-month T-bill was at 5.81%, up by 4.4 bps week on week, with accepted rates at 5.795% to 5.843%.

Lastly, the BTr borrowed the programmed P5 billion via the 364-day debt paper as demand for the tenor totaled P14.307 billion. The average rate of the one-year T-bill went up by 3.9 bps to 6.076%. Accepted yields were from 6.02% to 6.10%.

Meanwhile, the reissued T-bonds to be offered on Tuesday were first offered on Jan. 9, where the government raised P30 billion as planned, with the papers fetching a coupon rate of 6.125% and an average rate of 6.073%.

The BTr plans to raise P210 billion from the domestic market this month, or P60 billion in T-bills and P150 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. — A.M.C. Sy with Reuters

World’s biggest jeweler Pandora stops using mined silver and gold

PANDORA.LUCERNELUXE.COM

LONDON — Pandora, the world’s largest jeweler by amount of products sold, has stopped using mined silver and gold and now only manufactures with recycled precious metals, which require less energy to produce.

The Danish company, known for its $65 to $95 charm bracelets, buys around 340 tons of silver and one ton of gold every year. Its supply chain generated 264,224 tons of CO2 in 2022, according to its annual report.

Using recycled, instead of newly mined, metals cuts Pandora’s indirect CO2 emissions by around 58,000 tons annually, said Mads Twomey-Madsen, its senior vice-president of communications and sustainability.

Recycled metal supply chains pose risks, as stolen gold can be sold as scrap to be recycled, and it is difficult to prove the origin of metals once melted down.

To mitigate the risks, Pandora uses a chain of custody standard developed by the Responsible Jewelery Council (RJC). That standard, for example, excludes gold coins and gold bars as a source of recycled gold.

Pandora, which said it reached 100% recycled silver and gold in December, is investing around $10 million a year into the switch, a cost it will absorb rather than pass on to consumers through price hikes, Mr. Twomey-Madsen said.

“We pay a premium for recycled, because we also need to help our suppliers make these transitions,” he said. Pandora declined to provide specifics on the premium.

Pandora requires its suppliers to be assessed against the RJC standard by independent auditors, including documenting the source of recycled silver. As part of the transition, Pandora suppliers had to segregate certified recycled metals from non-certified, Mr. Twomey-Madsen said.

Pandora, which sold 103 million pieces of jewelery in 2022, produces jewelery in two factories in Thailand and is building a third in Vietnam. Rivals like Monica Vinader and Missoma also advertise their use of 100% recycled silver and gold.

Metal refineries recycle silver from industrial catalysts, X-rays, electronic equipment, and old silverware. They obtain recycled gold from jewelery manufacturing waste and old jewelery. — Reuters

CTA reverses denial of wind farm’s refund claim

CTA.JUDICIARY.GOV.PH

THE Court of Tax Appeals (CTA) has overturned its denial of EDC Burgos Wind Power Corp.’s refund claim for its excess P34 million value-added tax (VAT) traced to zero-rated sales from Jan. 1 to June 30, 2014.

In an 11-page decision dated Jan. 31, the CTA full court said that the wind farm is not required to present a Certificate of Compliance (CoC) from the Energy Regulatory Commission to prove that its sales qualified for a 0% VAT.

“Given the foregoing, there is a need to ascertain whether the petitioner’s (EDC Burgos) claimed VAT zero-rated sales comply with the invoicing and substantiation requirements under Section 113 of the National Internal Revenue Code of 1997,” Associate Justice Lanee S. Cui-David said in the ruling.

The tax court remanded the case to the CTA Third Division to determine the amount entitled to EDC Burgos.

It noted that as a renewable energy (RE) developer, the firm only had to present its Department of Energy and Board of Investments registration certificates.

In a June 2 decision last year, the tribunal denied the refund claim citing the firm’s failure to present a CoC required under the Electric Power Industry Reform Act of 2001 (EPIRA).

Under EPIRA, RE developers must secure a CoC from the ERC before their operations start to categorize their sales as 0% VAT, which does not translate to output tax.

The CTA noted that the claim of EDC Burgos was anchored on the Tax Code and not on EPIRA, which does not require it to submit a CoC.

“As ruled by the Supreme Court, where zero-rated VAT incentive invoked is not based on the EPIRA, the taxpayer-claimant cannot be required to comply with the requirements under the EPIRA,” it said. — John Victor D. Ordoñez

Protecting COP10 from tobacco industry interference

SHAUN MEINTJES-UNSPLASH

The 10th meeting of the Conference of the Parties to the World Health Organization (WHO) Framework Convention on Tobacco Control (FCTC), or COP10, will take place from Feb. 5 to 10 in Panama City this year.

COP, which holds regular sessions every two years, provides a platform for 182 member countries, including the Philippines, to discuss the implementation of the WHO FCTC, the world’s first modern-day global public health treaty and the first treaty negotiated by the WHO.

However, the tobacco industry seems to be using the forthcoming COP as a battleground for its offensive. Pro-vape groups have not been hiding their desire to participate in the COP, ostensibly in the name of “harm reduction.”

According to a Guardian article from Oct. 12, 2023, a leaked e-mail from Philip Morris International (PMI) senior vice-president for external affairs Grégoire Verdeaux revealed the tobacco industry’s campaign to intervene at COP10 to prevent countries from strictly regulating heated tobacco products (HTPs) and electronic cigarettes.

The leaked e-mail instructed staff to find “any connection, any lead, whether political or technical” to the COP, urging its agents in “every country, regardless of its size” to carry out their campaign. Verdeaux, who did not deny the veracity of his message when asked for a statement, called the COP10 agenda “nothing short of a systematic, methodical, prohibitionist attack on smoke-free products.” He also called the exclusion of tobacco companies from the public health event “absurd,” claiming that PMI was “undoubtedly the most helpful private partner WHO could have in the fight against smoking.”

Meanwhile, in the Philippines, it has come to light that one of the members of the country’s delegation to COP10 is SAGIP Party-list Representative Rodante Marcoleta, one of the primary sponsors of Republic Act 11900, the deregulatory Vape Law which made e-cigarettes and HTPs more accessible to the youth by lowering the age of access from 21 to 18 years old.

Civil society is concerned that the presence of industry-linked COP10 delegates could jeopardize the tobacco control policies of the government. The Philippines, which ratified the WHO FCTC in 2005, has passed monumental policies, including the Graphic Health Warnings Law and several laws increasing tax rates on tobacco, e-cigarettes, and HTPs, cementing our place as a global leader in tobacco control. Given the gravity of the COP10’s forthcoming discussions on regulation of e-cigarettes and HTPs, delegates representing the Philippines should be committed, not only to public health, but to protecting the Philippines from the damage to our international reputation that could arise from further loosening regulation of these products or even becoming a purveyor of these harmful products.

Globally, tobacco industry interference has been worsening. According to the Global Tobacco Industry Interference Index 2023 by the Global Center for Good Governance in Tobacco, the tobacco industry has recovered rapidly post-pandemic and has stepped up its interference by signing more agreements with government offices and engaging in diplomatic missions.

In the Philippine context, since the 2022 elections, there has been a series of events and interactions involving the tobacco industry which call to mind the question: how does the tobacco industry engage national government? Further: is their goal to roll back tobacco taxes?

Just a few months into the Marcos administration, on Nov. 24, 2022, President Ferdinand Marcos, Jr. and the First Lady hosted a luncheon with officials from Philip Morris International in Malacañang, posting their photo on the First Lady’s Facebook page. It is worth noting that the president hails from Ilocos Norte, a tobacco-producing province.

On Aug. 2, 2023, the Department of Trade and Industry (DTI) released a statement encouraging manufacturers to make the Philippines a manufacturing hub for e-cigarettes and HTPs and welcoming PMI’s investment to build a modern HTP factory in Batangas worth P9 billion. The Department of Health (DoH) cautioned against this, noting that the “economic burden resulting from premature sickness and deaths [due to the use of e-cigarettes and HTPs] outweigh the potential economic gains from investing in these industries.”

The industry narrative in recent years has been focused on the argument that illicit tobacco trade will worsen if tobacco taxes are increased. Japan Tobacco International (JTI) has partnered with Economist Impact to legitimize its participation in policy discourse on tobacco taxes, as seen in its Global Anti-Illicit Trade Summit in Shangri-La The Fort in May 2023, which likewise took place in different cities across the world.

JTI has noted: “With higher taxes, however, the government risks losing revenue as legal products become unaffordable, leading to unintended consequences such as a corresponding surge in illegal trade.”

These industry arguments are echoed even in the academe. The University of Asia & the Pacific, with the Federation of Philippine Industries (FPI), published a study entitled “Illicit Cigarette Trade in the Philippines: Economic and Social Impacts of Weak Regulatory Enforcement” in October 2023. The study found that “There is a direct correlation between the imposition of new taxes and the rise of illicit trade,” adding that the government must leave no stone unturned “to provide legitimate industry players with a level playing field and to preserve consumer rights.” However, it must be noted that the tobacco industry, notably JTI, has published FPI’s position on tobacco smuggling on its website, suggesting a possible conflict of interest.

Further, independent studies, both global and local, have long proven that there is no evidence on causality that shows illicit trade being driven by higher tobacco taxes. A 2020 gap analysis study by Lavares, Francisco, Ross, and Doytch, published by the Ateneo School of Government, concluded that: “In spite of the large tax increases by the Philippine government through the Sin Tax Law starting from 2013 until 2018, the illicit share in 2018 remains similar to its 1998 level of 16% of the total market. Hence, our study finds no evidence of a positive relationship between tobacco taxes and the size of the illicit cigarette market in the Philippines.”

The industry has been building up its arguments against tobacco taxes, which again begs the question: Are there possible intentions to roll back these taxes?

The industry’s public message is that their goal is to eliminate illicit tobacco trade to recoup government revenues.

Illicit tobacco trade is indeed a serious threat, both to public health and public finances. However, if the industry’s goal is to prevent government revenue leakages, rolling back tobacco taxes will be a most inefficient and counterintuitive strategy. Sin taxes have proven to be a significant source of revenue for Universal Health Care, promoting public health, and addressing the negative impacts of tobacco use. Tobacco taxes have been associated with a sharp decrease in the number of Filipino adult smokers.

If the tobacco industry is genuine in its campaign against illicit tobacco trade, it should support effective governance measures, rather than opposing revenue-raising policies like tobacco taxes. The Anti Agricultural Smuggling Bill, or Senate Bill 2432, which has been approved in both Houses of Congress and is awaiting a bicameral committee meeting, has garnered public support from the tobacco industry through statements and appearances in hearings. However, upon scrutiny and consideration of its potential impact, the bill, which simply raises penalties on tobacco smugglers, will be insufficient to increase the likelihood of apprehension. A more holistic approach, which includes the integration of a track and trace system for tobacco and stronger coordination with local governments, is needed to reduce illicit tobacco trade in the country.

It is crucial for policymakers, public health advocates, and the Filipino public to remain vigilant against tobacco industry tactics. Through an intricate and sophisticated media campaign promoting “smokeless” products, the tobacco industry is masquerading as an ally for public health. However, the evidence tells us that e-cigarettes and HTPs bring with them the potential of a new epidemic — one that targets the innocent, non-smoking youth.

It is high time we paid closer attention to keeping our youth away from these deceptive products and countering the industry’s narrative of harm reduction. We urge our Filipino leaders at the WHO FCTC COP10 to represent us well and champion public health and evidence-based policymaking by countering the false narratives of the industry.

All views above are their own.

 

Emmanuella Iellamo is an advocate for tobacco control and sin taxes and Pia Rodrigo is strategic communications officer at Action for Economic Reforms.

Two doors up

PHOTO BY DYLAN AFUANG

Suzuki PHL brings in a longer, ingress/egress-friendly Jimny

By Dylan Afuang

A NEW VERSION of Suzuki’s famous off-road SUV recently made its local debut. Called simply the Jimny 5-Door, it’s the lengthened version of the current Jimny 3-Door, both of which will be retailed by Suzuki Philippines, Inc. (SPH).

The current Jimny, launched in 2018, boasts the squared appearance and off-road abilities of its predecessors that date back to 1970. For its distinctive styling and rough-and-ready reverence alone, throughout its four generations the Jimny has attracted a following here and abroad.

The SUV’s widespread appeal grew stronger still when it spawned two extra doors behind its two front ones last year.

The range starts with the Jimny 5-Door GL MT (P1.558 million), continues with the GLX AT (P1.698 million), and tops at the GLX AT Two-Tone whose color-combination options command a P10,000 premium over the standard GLX.

Over the 3-Door — and owing to its two rear passenger doors — the Jimny 5-Door is longer by 340mm for an overall length of 3,985mm. Between the two Jimnys, however, the total width (1,645mm) and height (1,720mm) remain the same.

The Jimny 5-Door retains the 3-Door’s styling cues, too, such as the upright and square body that features expansive windows to improve driver visibility. Similarities continue to the new model’s round headlamps and the chrome highlights on the grille that draw attention to its five-slot layout.

Supported by the existing body-on-frame construction and 15-inch alloy wheels, the new SUV keeps its counterpart’s 210mm of ground clearance.

While the standard model comes from Japan, the Jimny 5-Door is “manufactured in India, particularly by (Suzuki subsidiary) Maruti Suzuki,” SPH Managing Director Norminio C. Mojica confirmed to “Velocity” on the sidelines of the model’s press launch. “We chose India because of (Maruti’s) production capability to address the growing demand for this particular model,” the executive said, adding that Maruti’s production processes would enable the Jimny 5-Door to be “priced competitively” in the market.

Regarding demand, “We are expecting to sell 200 to 300 units per month this year,” Mr. Mojica said, noting that the target is taking into account the five-door model’s allocation for the Philippine market. “Depending on the market’s response, we’ll try to improve our allocation later this year… because, as you know, the Jimny is a ‘global phenomenon.’”

Behind the new doors that now feature power windows, the 5-Door’s rear seats accommodate two passengers, like the base SUV. The cargo hold (which now gets a power outlet and room lamp) has been bumped up in capacity to 211 liters, which can be accessed through the side-swinging tailgate.

Up front, new features such as a nine-inch touchscreen infotainment system with Apple CarPlay and Android Auto, automatic climate control, and cruise control on the Jimny 5-Door GLX, are introduced.

Similar to the original, the Jimny 5-Door is powered by Suzuki’s K15B 1.5-liter gasoline engine with 102hp and 134Nm of torque. The manual transfer case, the Suzuki AllGrip Pro 4WD part-time four-wheel drive system, and transmission choices of a five-speed manual and four-speed automatic are also retained.

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