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T-bonds fetch lower rates on BSP, Fed easing bets

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THE GOVERNMENT made a full award of the reissued Treasury bonds (T-bonds) it offered on Tuesday as yields declined on expectations of rate cuts from the Bangko Sentral ng Pilipinas (BSP) and the US Federal Reserve in the coming months.

The Bureau of the Treasury (BTr) raised P25 billion as planned via the reissued 20-year bonds it auctioned off on Tuesday as total bids reached P54.601 billion, or more than double the amount on offer.

This brought the outstanding volume for the series to P164.3 billion, the Treasury said in a statement.

The bonds, which have a remaining life of 14 years and five months, were awarded at an average rate of 6.103%. Accepted yields ranged from 6.05% to 6.125%.

The average rate of the reissued papers dropped by 67.8 basis points (bps) from the 6.781% fetched for the series’ last award on June 19. This was also 64.7 bps lower than the 6.75% coupon for the issue.

It was likewise 0.9 bp below the 6.112% seen for the same bond series and 3.4 bps lower than the 6.137% quoted for the 15-year bond, the tenor closest to the remaining life of the papers on offer, at the secondary market before Tuesday’s auction, based on PHP Bloomberg Valuation Service Reference Rates data provided by the BTr.

The government fully awarded its T-bond offer as the average rate fetched was lower than the bond series’ prevailing secondary market rate and previous average yield quoted for the issue, the BTr said.

The T-bonds auctioned off on Tuesday fetched lower yields amid “aggressive buying” for long tenors as the market expects the monetary easing cycles of both the BSP and the Fed to extend until next year, a trader said in a phone interview.

The BSP’s first rate cut in nearly four years and signals of more cuts ahead, as well as expectations that it would match future Fed easing moves, led to the lower awarded yields for the T-bonds on offer, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort likewise said in a Viber message.

The Philippine central bank on Thursday cut benchmark interest rates for the first time in almost four years to mark the start of a “calibrated” easing cycle amid an improving inflation and economic outlook, with the BSP chief signaling at least one more reduction before the end of the year.

The Monetary Board reduced its target reverse repurchase rate by 25 bps to 6.25%. This was in line with the expectations of nine out of 16 analysts surveyed in a BusinessWorld poll.

Prior to the cut, the BSP kept its policy rate at an over 17-year high of 6.5% for six straight meetings following cumulative hikes worth 450 bps between May 2022 and October 2023 to combat inflation.

“With inflation on a target-consistent path, the current macroeconomic outlook supports a calibrated shift to a less restrictive monetary policy stance,” BSP Governor Eli M. Remolona, Jr. said at a briefing.

He said they could cut rates by another 25 bps within the year. The Monetary Board’s remaining policy-setting meetings this year are scheduled for Oct. 17 and Dec. 19.

Analysts expect the BSP’s easing cycle to continue until next year amid stabilizing inflation, with at least 100 bps in rate cuts seen in 2025.

Meanwhile, the BSP expects the Fed to begin cutting rates next month, possibly by 50 bps, and by 100 bps more until the end of 2024 and by 125 bps in 2025, Mr. Remolona said last week.

Fed policy makers have in recent days signaled a potential rate easing in September, priming markets for a similar tone from Fed Chair Jerome H. Powell and other speakers at the annual meeting of global central bankers and other policy makers in Jackson Hole, Wyoming, Reuters reported.

Investors largely expect Mr. Powell to acknowledge the case for a rate cut and will parse his words for cues on whether the Fed will start with a 25-bp cut or a 50-bp cut in September.

While labor market deterioration led to the markets expecting a bigger rate cut in September, data since has been mixed, with upbeat retail sales still signaling a resilient consumer.

Markets are pricing in a 24.5% chance of a 50-bp cut in September, down from 50% a week ago, with a 25-bp reduction having odds of 75.5%, the CME FedWatch Tool showed. Traders are pricing in a total of 93 bps of cuts this year.

A slim majority of economists polled by Reuters expect the US central bank to cut rates by 25 bps at each of the remaining three meetings of 2024.

The BTr wants to raise P220 billion from the domestic market this month, or P80 billion through Treasury bills and P140 billion via T-bonds.

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

Kuya J eyes overseas expansion in 2025

FILIPINO restaurant Kuya J, owned and operated by Kuya J Holdings Group, Inc., is planning to enter the overseas market next year, with Singapore identified as the ideal location due to easier logistics, a company official said.

“Singapore is an ideal country in Asia. It’s easier on logistics in terms of importation… The importation in Singapore is more lenient compared to the others,” Carlo L. Fajardo, chief operations officer of the Kuya J group’s Franchise Division, told BusinessWorld on Tuesday on the sidelines of a media briefing.

Mr. Fajardo also said that most franchising offers come from the Middle East. However, the restaurant’s core product is pork, including the best-seller crispy pata.

“We’re looking at other alternative pork dishes. That’s why we don’t want to say we’ll go ahead with the Middle East. As long as we fine-tune the menu, that it’s appropriate for the Filipinos,” he said.

In the Philippines, Mr. Fajardo said the company is bullish on expansion. It expects to open two to three stores by the end of 2024 and is looking to expand 20 branches in 2025.

Currently, Kuya J has 86 branches nationwide, including the recently opened 218-square-meter branch at Robinsons Antipolo, which has a seating capacity of 64.

Don Edrain Tirol, the Kuya J group’s chief operating officer, said that Kuya J is financially healthy enough to fund its own expansion.

Kuya J currently has 15 franchised and 71 company-owned stores.

“We have the store, the store size, products, and the organization to back it up. Now we’re ready to expand because unlike before, we expanded rapidly, like one to 100 and then, there was a problem…,” Mr. Tirol said.

“You have to build a commissary right away, you have to build the organization right away. So now, it’s set, it’s ready,” he added.

He said that with an investment of P1.5 million, one can acquire a local franchise for a duration of 10 years.

In 2024, the capital expenditure (capex) per store reached P15 million, but a lower capex of P14 million is expected in 2025 due to the smaller format of stores.

Mr. Tirol said the company’s focus is to reduce the kitchen’s physical footprint to make it more efficient for the cooks.

When asked about the company’s initial public offering  plans, Mr. Fajardo said that while it is not part of the immediate strategy, it remains a consideration for the long term.

In 2018, the Kuya J group announced its intention to go public once it reaches the 100-store mark. — Aubrey Rose A. Inosante

Food banking to alleviate hunger: Inspired by Pope Francis

FOODBANK.ORG.PH

(Part 2)

It was in 2013 that the world first learned about Pope Francis’ commitment to the urgent task of eradicating hunger when he visited the UN World Program. He gave the full support of the Catholic Church to eliminating hunger, especially among children all over the world.

Not too long after that historic visit, he wrote the encyclical Laudato Si, addressed to all men and women of good will, where he lamented about the prevailing culture of waste or the “throw-away culture” through which millions of tons of food are thrown away as surplus (especially in the United States) while tens of millions of people are going to bed hungry every day. 

This message reverberated around the world, including the Philippines, and inspired a group of businesspeople led by industrialist Jose Sandejas to do something concrete to address this problem affecting millions of people in the Philippines.

Motivated by the Christian imperative of undertaking corporal works of mercy (the first of which is to feed the hungry), this group, following the usual practice in business to do environmental scanning as a step towards strategic planning of any enterprise, turned to data of the World Bank (where the Pope first announced his great interest in mobilizing the Catholic Church to fight world hunger).

The key findings of the World Bank can be summarized as follows:

1.) Undernutrition is, and has always been, a serious problem in the Philippines. For nearly 30 years, there have been almost no improvements in the prevalence of undernutrition in the Philippines. One in three children (29%) younger than five years old suffer from stunting, or being small in size for their age. The Philippines is ranked 5th among countries in East Asia and the Pacific region with the highest prevalence of stunting and is among the 10 countries in the world with the highest number of stunted children.

Micronutrient undernutrition is also highly prevalent in the Philippines: 38% among infants six to 11 months old; 26% among children 12 to 23 months old; and 20% of pregnant women are anemic. Nearly 17% of children aged six to 59 months suffer from Vitamin A deficiency, of which children aged 12-24 months have the highest prevalence (22%) followed by children aged six to 12 months (18%).

2.) Good nutrition is a foundation for economic prosperity, and investments in nutrition are highly cost-effective. The persistence of very high levels of childhood undernutrition, despite decades of economic growth and poverty reduction could lead to a staggering loss of the country’s human and economic potential. A Filipino child with optimal nutrition will have greater cognitive development, stay in school longer, learn more in school, and have a brighter future as an adult, while undernutrition robs other children of their chance to succeed. 

The burden on the Philippine economy brought about by childhood undernutrition was estimated at $4.4 billion or 1.5% of the country’s GDP in 2015. The country’s Human Capital Index (HCI) of 0.52 indicates that the future productivity of a child born today will be half of what they could have been achieved with complete education and full health. In 2013, it was estimated the benefit cost ratio for nutrition investments in the Philippines at 44. In other words, every dollar invested in nutrition has the potential of yielding $44 return. A lower estimate projecting benefits accruing from a nutrition intervention scenario (NIS) at the national level through key nutrition-specific interventions rolled out over 10 years at full coverage reaches $12.8 billion over a 10-year period with a corresponding cost of $1.062 billion, yielding a benefit cost ratio of 12:1.

Predictably, the World Bank recommended certain policy and programmatic actions to the Philippine Government to address the challenge of reducing childhood undernutrition. Among these were building a strong and more coordinated partnership for nutrition by strengthening the National Nutrition Council to provide the supervisory and oversight capacities needed for programs to run effectively and efficiently and be enabled to respond to gaps in program implementation. 

It was also suggested that high priority and strong support for nutrition should be on the agenda of both the executive and legislative bodies in the municipalities. I was personally aware that at least two progressive LGUs — Quezon and Bataan provinces — were implementing the so-called 1,000-day nutrition program for pregnant mothers and children until the age of two (approximately 1,000 days) to address the most crucial period of growth of a human being to avoid damage to the brain due to undernutrition and malnutrition.

It was obvious to the group of concerned businesspeople that the Government needed help from the private sector (both business and civil society) to implement the recommendations of the World Bank. It is a well-known practice in the Philippines that the business and the NGO sectors try as much as possible to fill in the inadequacies and shortcomings of the public sector. That is why one of the strengths of Philippine society — despite our many weaknesses — is the very vibrant NGO sector.

Fortunately, in 2016, when Lito Sandejas and his colleagues from the private sector resolved to do something about the serious problem described in the World Bank report — and were encouraged by the words of Pope Francis about a throw-away culture — I was still sitting in the board of one of the leading manufacturers of milk products in the country: the Alaska Milk Corp.

It did not take much convincing for Alaska’s CEO then, Freddie Uytengsu, Jr. (famous in local sports circles for promoting basketball and the Ironman events) to agree that the firm’s soon-to-expire (SOTEX) milk products be donated to orphanages and other institutions so the children could be better nourished with protein-rich milk products.

This first experience of donating SOTEX food products to alleviate the hunger of children would give rise to the organization of the Philippine Food Bank Foundation. The incorporators of the Foundation were Lito Sandejas, the late Jaime Ladao, Danilo Navarro, Rafael (Itong) Torres, and myself.  We were soon joined on the board by Quintin Pastrana, Chito Perez, and architect Mike Torres. Through the generosity of the business enterprises owned by Lito Sandejas, the cash expenses of the Foundation (manpower, warehousing, logistics and transport) were subsidized.

Since milk products were the most suitable for the children in the orphanages and other feeding clinics such as those in the public schools, we were fortunate that Alaska’s example was soon followed by other milk manufacturers such as Anchor Milk, Arla, Century Pacific, Holly’s, and Meadow Fresh.

Since hunger cuts across all ages, the Foundation actively sought donations of food products from a variety of manufacturers and food establishments like All Day Supermarket, Alegro Beverage Corp., Amici Pasta, Andre Kahn Vegetables, Bizu, Caramia Cakes, Colgate-Palmolive Phils., Concept Foods, Delbros, Del Monte Phils., Dole Philippines, Dunkin Donuts, Energen, Gardenia Bakeries, Green Cross, Jollibee, Krispy Kreme, Makati Sports Club, Mama Sita’s, Mary Grace, Monde Nissin Corp., Nutri-Asia, Pan de Manila, Pick-Up Coffee, Procter & Gamble, RFM Corp., Shakey’s Pizza, Starbucks, Subway, Toscana Farms, Unilever Philippines, and URC.

Also, a very crucial partner is the transport delivery company, Grab, that donates its logistics services for the transport of goods either directly to the recipient institution from the donor company or from the donor company to the Foundation’s warehouse. As of this writing, the Food Bank is delivering food donations not only in the National Capital Region, but to municipalities in cities and provinces like Cebu, Iloilo, Cagayan de Oro, Davao, Pampanga, and Tarlac.

(To be continued.)

 

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

bernardo.villegas@uap.asia

The rich can’t sell their art, so they’re borrowing against it

PRIVATEBANK.BANKOFAMERICA.COM

A WEALTHY client at Bank of America Corp. put up his fine art collection so he could borrow enough to buy a sports franchise. Another posted his caché of 19th century American landscapes to renovate his estate.

Such is the burgeoning world of art lending — where pieces are used to secure loans, allowing their affluent owners to tap their collections for cash without having to part with prized possessions. Art sales have slowed, forcing many to reevaluate their options. The major May New York auction season fell about 23% by value from the prior year, with the world’s richest waiting on the sidelines to buy.

“If you’re an owner and need liquidity now, you pause on selling, and instead borrow against your art, waiting for better market conditions,” said Adriano Picinati di Torcello, global art and finance coordinator for Deloitte. That’s contributing to the growth of the art-lending market, he said.

As the market expands, Wall Street’s biggest firms are growing their efforts by adding staff and marketing the service to new and existing clients. While the precise size of the market isn’t certain, Deloitte estimates outstanding loans against art could surpass $36 billion in 2024, up from $29 billion to $34 billion last year. That also compares with $20.3 billion to $23.6 billion of such loans outstanding five years ago, according to Deloitte.

The largest US banks are looking to broaden their reach into the art market as a way to bring on and retain some of the world’s wealthiest individuals and families. Catering to the affluent often means competing with rivals to offer more diverse products, fighting the constant threat that clients can move their money elsewhere.

Art lending offers specific advantages for wealthy owners evaluating their investments as broader financial markets face volatility. Unlike stocks, art isn’t subject to daily swings and is valued annually.

“We’re not asking what the value of your Andy Warhol is every day,” said Katy Lingle, US head of lending solutions at JPMorgan Chase & Co. Private Bank.

The global art market has cooled from record-high valuations coming out of the pandemic. Even as sales have slumped and values have pulled back, demand for art loans is there.

Bank of America has seen new credit lines backed by art rise more than 14% compared to a year ago, according to Drew Watson, head of art services. Its book of art loans recently hit its highest on record. Within JPMorgan’s asset and wealth management business, art lending is up 1% year over year, in line with other loans in that business, according to a spokesperson.

“Even in a higher rate environment, people are still taking advantage of timely opportunities,” taking out loans on their art over selling it at a discount or selling stock, Mr. Watson said.

Bank of America, since it formed its art services group in 2017, has grown to capture over 30% market share, according to a spokesperson. The team, which the bank is continuing to invest in, has 12 specialists in the art market across credit, wealth planning, and philanthropy. The bank’s clients that already have loans keep them, while utilization has remained around 70% this year, according to Mr. Watson.

“The retention and strong utilization is reflected in the balances outstanding, which have remained strong,” he said.

Bank of America structures these loans on a variable rate, so over time the cost of capital could decrease if rates fall. The interest rate is based on the secured overnight financing rate, plus a spread, Mr. Watson said. So as rates get cut, loans like this are even more likely to increase.

Citigroup, which estimates its share of the market at 10% to 15%, has a steady base of art-lending clients because rates on art loans are still favorable compared to other loans, according to Fotini Xydas, head of art finance at Citi Private Bank.

“Even though rates are higher, art is a very stable asset over the long term, compared to other assets in terms of volatility,” she said.

Art loans function as lines of credit, so clients draw on them and pay them back as they can. They’re only available to the wealthy, given the nature of the collateral. The larger the collection, the more flexibility there is for the borrowers.

To qualify at Bank of America and Citigroup, a collection usually needs to be worth at least $10 million, which secures a loan of $5 million or more. Bank of America typically offers 50% loan to value, with each piece worth a minimum of around $100,000. The terms run from around one to three years, with an option to renew, and clients can still keep their pieces protected at home as long as its within the US. Citigroup looks for a minimum value of $200,000 per piece.

JPMorgan bases its loan sizes on the value of the collection and strength of the borrower. The bank looks for diversity of pieces, ensuring they are of “museum quality,” Ms. Lingle said. It also does a financial analysis on borrowers to make sure they can service the debt.

One Citigroup client who had collected several pieces from Pablo Picasso and Claude Monet used them to secure a line of credit to cover taxes tied to estate planning, another common use of this product.

Another private equity principal wanted a line of credit to help fund a capital call. Bank of America facilitated a $10-million loan for one borrower worried about market volatility, using his collection of post-war and contemporary art as collateral.

“There are margin calls, death, divorce and bankruptcy, so we have endless interest for lending,” said Philip Hoffman, the founder of The Fine Art Group, an art advisory and finance specialist that competes with the banks. — Bloomberg

Trevolution Group sees 48.3% rise in PHL outbound travel for 1st half

YOUSEF ALFUHIGI-UNSPLASH

TREVOLUTION Group, a global player in the travel industry, saw a 48.3% increase in outbound tourism from the Philippines during the first half of 2024 compared with the same period last year.  

“[This] indicates the market’s rapid recovery and progressive economic growth,” the company said in a media release on Tuesday.

Trevolution Group operates several travel-related brands, including International Travel Network, ASAP Tickets, Skylux Travel, Dreamport, and Oojo.

“Today, more Filipino travelers choose foreign destinations that are closer to home or prefer to travel domestically, showing almost a threefold increase in flights taken across the country compared with the first half of 2023,” said Trevolution Group, a division of the global technology group Dyninno Group of Companies.

“Family-friendly destinations and extended weekend trips are stealing the spotlight while simultaneously boosting the local tourism sector,” it added.  

The Philippines accounted for almost 20% of Trevolution Group’s overall gross profit for the first half, with over 90,000 airline tickets sold, resulting in more than $120 million in gross bookings, the company said.

“Historically, the Philippines has been a top travel choice for the Group’s air passengers, and currently, the demand for transpacific flights departing from the country is also growing significantly and surpassing the levels seen before the pandemic,” it said.  

For the first half, economy class constituted 98.5% of all flight bookings, with a 9.6% increase in demand.

The share of round-trip tickets increased by 2.5%, amounting to 79.7% of all tickets sold, the company said.

The average length of stay abroad for Filipino travelers decreased to 39.5 days from 62 days last year, indicating a trend towards shorter, more frequent trips.  

Economy-class flight prices from the Philippines decreased by 23.7%, amounting to $767 per ticket, while business-class fares dropped by 14%.

The top departure countries for travelers to the Philippines were the United States, Canada, the United Kingdom, and Japan.

Notably, there was almost a fifteenfold increase in inbound flights from the UK’s major airports compared with the first half of 2023.

Similarly, the top departure cities remained Los Angeles, San Francisco, New York, Toronto, and Chicago, with Philippine Airlines, EVA Air, United Airlines, China Airlines, and Korean Air being the most popular air carriers.  

“Our objectives for the Philippines this year are very ambitious — we are now focusing on local expansion and active hiring, expecting to gain over 1,000 people in Cebu and over 500 in Manila. To provide more value for the market, we are now working on offering our travel products to the local clientele, including the introduction of financial options to help finance air travel,” said Alex Weinstein, founder of Dyninno Group of Companies.

“Additionally, our team is excited to launch a new product, the all-in-one travel super-app Dreampass, designed to further enhance customer engagement,” he added. — Sheldeen Joy Talavera

Security Bank raises P20 billion from five-year corporate bonds

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SECURITY BANK Corp. has raised P20 billion from its offering of five-year fixed-rate peso corporate bonds, four times as much as its initial target, amid robust investor demand, it said on Tuesday.

“Security Bank raised P20 billion worth of bonds… This is the largest issue size of the bank to date. Due to strong demand for the bonds, the bank exercised its oversubscription option and accepted offers above its minimum P5-billion issue size,” the listed lender said in a disclosure to the stock exchange.

“We’re humbled by the overwhelming response to our bond offering, which reflects the strong trust and confidence of our investors in Security Bank and our BetterBanking promise. We’re grateful for their support and will strive to keep delivering value to our clients and stakeholders,” Security Bank Executive Vice-President and Financial Markets Segment Head Arnold Q. Bengco said.

Proceeds of the bond issuance will be used to diversify the bank’s funding sources and support its lending activities, the lender said.

The notes, which have a tenor of five years and one month, were priced at 6.05% per annum.

The offer period for the five-year papers ran from July 8 to Aug. 5. The offering was originally set to end on Aug. 13 but was closed early “as volume significantly exceeded target.”

Philippine Commercial Capital, Inc. and SB Capital Investment Corp. were the joint bookrunners, joint lead arrangers, and selling agents for the issuance.

Security Bank issued the bonds and listed them on the Philippine Dealing and Exchange Corp. on Tuesday.

The papers were issued out of the bank’s P200-billion peso bond and commercial papers program.

Security Bank last tapped the domestic bond market in July 2023, where it raised P18.5 billion from the issuance of 1.5-year fixed-rate corporate bonds due 2025.

The lender’s net income rose by 10.19% year on year to P2.82 billion in the second quarter amid higher revenues.

Security Bank’s shares closed at P61.30 apiece on Tuesday, declining by 70 centavos or 1.13%. — A.M.C. Sy

To achieve energy security, balance is key

NURAGHIES-FREEPIK

On Aug. 13, nine business groups released a joint statement expressing their support for the Department of Energy’s pursuit of a balanced energy mix, saying that this policy is appropriate to the country’s particular context. “As an emerging market,” the group said, “the country must balance energy security and affordability with climate change concerns to support its economic progress.”

The groups — the Blockchain Council of the Philippines, the Employers Confederation of the Philippines, the Federation of Philippine Industries, the Financial Executives Institute of the Philippines, Fintech Alliance.PH, the Foundation for Economic Freedom, the Makati Business Club, the Management Association of the Philippines, and the Women’s Business Council Philippines — said that the country has growing energy demands and that our energy supply per capita is the third lowest in the ASEAN region. Thus, “we need to prioritize augmenting power capacity.”

They further pointed out that energy insecurity is expensive, using the power outage on Panay Island in January as an example. The outage led to about P3.8 billion in economic losses in Iloilo province.

Energy Secretary Raphael Lotilla has reaffirmed the importance of a balanced energy mix amidst claims that the Department of Energy’s moratorium on coal-fired projects is being violated. He stressed the need for a blend of renewable and traditional energy sources, such as coal, oil, and natural gas, to meet the Philippines’ energy demands while ensuring affordability, reliability, and environmental responsibility.

He further pointed out that the Energy department’s strategy involves not just the immediate expansion of renewable energy but also maintaining and upgrading existing coal and gas facilities to prevent power shortages.

We at Stratbase echo the sentiments of the business groups. Diversifying our energy sources will allow the Philippines to mitigate risks like power outages and wide-scale disruption, reduce the reliance on imports, and support economic stability while transitioning to cleaner energy which is a long and tedious process that will take decades to achieve.

We recognize the great need for power. An economy like the Philippines’ needs a reliable supply of electricity to power economic activity. Power costs here in the Philippines are among the most expensive in the region. We are also angling to attain middle-income status in the foreseeable future, and to achieve this, our industries must have a stable supply of power.

All this lies on a continuum between two extremes. On the one hand, there is a clear need to move away from dirty sources because these have been proven to cause harm to the environment on a planetary scale. Our commitment to the Paris Agreement and our very real experience of the calamitous effects of climate change should erase all doubt that we have to lessen and eventually eliminate our dependence on coal-fired power plants and fossil fuels as a source of energy.

On the other hand, purely renewable energy (RE) sources are not yet viable as a baseload alternative as these are still developing and costly technologies. While essential for reducing carbon emissions, renewables like solar, hydro, and wind are unpredictable and weather-dependent, risking power shortages without more reliable energy sources. The Philippine government’s targets — 35% RE by 2030, 50% by 2040, and over 50% by 2050 — reflect a keen recognition of this realty.

For the time being, only a balanced energy mix combining renewable and non-renewable sources will ensure energy security, affordability, and sustainability. This approach is what the Philippines needs at this time. It allows us room to manage the inherent variability of energy sources and recognize that there remains a significant need for fossil fuel-based sources to ensure energy reliability and affordability, all while moving toward the goal of being increasingly powered by cleaner energy over time.

With a balanced energy mix, we do not have to sacrifice economic growth and stability for environmental sustainability.

A crucial aspect of the balanced and optimal mix of energy sources are so-called transition fuels like natural gas. Natural gas delivers an adequate supply at the least social cost toward a smooth transition to cleaner energy. In the past two decades, the Malampaya gas field has served the country well in contributing a significant part of our energy needs, even as production has dropped significantly since 2022.

There is now an urgency to shift to imported liquefied natural gas (LNG) — a cleaner alternative as it emits 50-60% less carbon dioxide than coal. LNG also has quick startup and shutdown capabilities.

The private sector plays a crucial role in meeting the objectives of the country’s energy plan, including access to affordable energy, a reliable and resilient energy supply, and transition to clean, sustainable, and climate-centered energy resources. Private partners have the technical expertise and financial capability to build the necessary infrastructure to facilitate the transition to clean energy.

Thus, while the adoption of a policy of balanced mix of energy sources is commendable, as the business groups already articulated in their statement, there needs to be a parallel effort on the part of the government to create an attractive and enabling policy environment for investors. There are many private groups who would like to participate in helping in the transition to clean energy, and they should be given the opportunity to help and contribute to this crucial journey.

 

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

SMIC board greenlights property-for-share swap

SY-LED conglomerate SM Investments Corp. (SMIC) is poised to expand its real estate portfolio following board approval of a property-for-share swap with one of its subsidiaries.

On Aug. 7, the conglomerate’s board approved a transaction involving 184 hectares of land owned by Intercontinental Development Corp. (ICDC) in Susana Heights, Muntinlupa City, SMIC said in a regulatory filing on Tuesday.

Under the deal, the ICDC-owned land will be acquired by the conglomerate in exchange for new SMIC common shares. SMIC owns 96.75% of ICDC.

“SMIC will increase its real estate assets through the acquisition of the properties and issue new SMIC shares as consideration,” the conglomerate said.

“In accordance with applicable SEC rules and regulations, the respective boards of directors of the SMIC and ICDC deemed it necessary and advisable to enter into the transaction for optimal utilization and development of the properties and to align with their respective broader business strategies,” it added.

The conglomerate has not yet disclosed specific figures, as the transaction is still pending approval and valuation confirmation by the Securities and Exchange Commission.

SMIC’s core businesses are in the banking, property, and retail segments. It also has portfolio investments in the mining, leisure, renewable energy, and logistics sectors.

For the first half, SMIC grew its consolidated net income by 10% to P40.2 billion from P36.5 billion last year. Consolidated revenue rose by 5% to P301.4 billion. On Tuesday, SMIC shares rose by 0.54% or P5 to P930 per share. — Revin Mikhael D. Ochave

Peso rises further before Powell speech

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THE PESO continued to strengthen on Tuesday amid broad dollar weakness as markets await a speech by the US Federal Reserve chief this week, where he is expected to provide hints on the central bank’s policy easing path.

The local unit closed at P56.55 per dollar on Tuesday, appreciating by nine centavos from its P56.64 finish on Monday, Bankers Association of the Philippines data showed.

This was the peso’s strongest finish in more than four months or since its P56.53 close on April 12.

The peso opened Tuesday’s session slightly stronger than Monday’s close at P56.60 against the dollar. Its weakest showing was at P56.64, while its intraday best was at P56.51 versus the greenback.

Dollars exchanged went down to $1.55 billion on Tuesday from $1.61 billion on Monday.

The peso traded mostly sideways against the dollar on Tuesday as the market awaits Fed Chair Jerome H. Powell’s speech at the Jackson Hole Symposium this week, a trader said in a phone interview.

The peso was also supported by a generally weaker dollar due to softer US economic data recently, in addition to mostly dovish signals from Fed officials, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message

The dollar wobbled near a seven-month low on Tuesday on bets the US central bank will start cutting interest rates from next month, with traders bracing for comments from Mr. Powell on Friday, Reuters reported.

The dollar index, which measures the US currency against six rivals, was last at 101.86 after touching its lowest since Jan. 2 of 101.76 earlier on Tuesday. The index is down more than 2% in August and set for a second month in the red.

The focus this week will be Mr. Powell’s speech during an annual gathering of central bankers in Jackson Hole, but minutes of the Fed’s last meeting — due on Wednesday — will also be in the spotlight.

Some analysts say the next few weeks will likely prove decisive on whether the Fed cuts by 50-75 basis points (bps) this year or by 150 bps or more. The Jackson Hole conference is the first opportunity for the Fed to push back against the chance of a 50-bp cut at one of the year’s three remaining meetings, they add.

While labor market deterioration led to expectations for a bigger rate cut in September, data since then has been mixed with upbeat retail sales signaling that consumer demand remains resilient.

Markets are pricing in a 24.5% chance of a 50-bp cut in September, down from 50% a week ago, with a 25-bp reduction having odds of 75.5%, the CME FedWatch Tool showed. Traders are pricing in a total of 93 bps of cuts this year.

A slim majority of economists polled by Reuters expect the Fed to cut rates by 25 bps at each of the remaining three meetings.

For Wednesday, Mr. Ricafort sees the peso trading from P56.45 to P56.65 per dollar. Meanwhile, the trader said the peso may move between P56.50 and P57 until Mr. Powell’s speech. — AMCS with Reuters

Arts & Culture (08/21/24)


Authors signing Duterte-China book

CAMILLE Elemia and Rappler’s Marites Vitug will have a book signing for their recently published book, Unrequited Love: Duterte’s China Embrace. The 1st print of their book had sold out, and they are now on their 2nd print run. The book signing will be held on Aug. 23, 3 p.m., at the Ateneo de Manila University – Rockwell Campus Amphitheater, Makati. Admission is free. Copies of the book are also available during the event for P550 each. To register for the event and reserve copies, interested parties may fill out the following form: https://forms.gle/5Uje84AQFa96HB5i6


Stephanie Syjuco solo debut in Manila at Silverlens

UPCOMING at Silverlens Manila is “Inherent Vice,” a solo exhibition by Stephanie Syjuco, opening on Aug. 29 at 4 p.m. Having explored American museums and institutional archives for representations of the Philippines during the American occupation, Ms. Syjuco’s works, featuring documentary photographs, attempt to deny the colonizers control of the narrative. Her latest exhibit uses images from the late 1960s to 1972 from the photo-morgue of the now defunct Manila Chronicle newspaper housed in the Lopez Museum and Library archives. Her layered visual composites acknowledge the fragmented way in which Filipinos remember history. The show runs at Silverlens Manila from Aug. 29 to Oct. 5.


Mula sa Buwan is back for a limited run

THE AWARD-WINNING original Filipino hit musical Mula sa Buwan has returned. At the Samsung Performing Arts Theater in Circuit Makati, two of its lead stars are reprising their roles: Myke Salomon as Cyrano and his real-life partner Gab Pangilinan as Roxane. MC Dela Cruz will portray the character of Christian. Having bagged Best Musical and Best Stage Direction for a Musical at the Aliw Awards and Outstanding Original Score at the Gawad Buhay Awards followings its 2022 staging, the musical about love and defiance is back under the supervision of director-playwright Pat Valera, under the Barefoot Theatre Collective. Mula sa Buwan runs from Aug. 16 to Sept. 8, with ticket prices ranging from P999 to P3,599 available via TicketWorld.


CCP art collection goes to Bencab Museum

THE CULTURAL Center of the Philippines (CCP) in partnership with the BenCab Museum in Baguio launches two new exhibitions: “Visions on Paper” and “Chronicles in Ink: Philippine Printmaking through the Decades,” at the museum’s Sepia Gallery and Gallery Indigo, respectively. They are on view until September. Both traveling exhibitions aim to showcase significant works of Filipino visual artists from the CCP 21st Century Art Museum (21AM) Collection. “Visions on Paper presents selected works by National Artists of the Philippines while “Chronicles in Ink: Philippine Printmaking through the Decades presents a sampling of the art of contemporary printmaking in the Philippines.


Pinoy folklore in Rep’s Jepoy and the Magic Circle

REPERTORY Philippines’ upcoming production, Jepoy and the Magic Circle, will center on a friendly troupe of Filipino mythical creatures — tikbalang, kapre, and engkanto — as they fight for their home. Repertory Theater for Young Audiences (RTYA) will present the show starting Oct. 5, also marking the company’s first show to be staged at its new home, the REP Theater at Citywalk, Eastwood City, Quezon City. Directed by Joy Virata, the interactive fantasy musical for children is based on the Palanca Award-winning short story “The Magic Circle” by Gilda Cordero Fernando. The English adaptation is written by the award-winning playwright and director Rody Vera, marking his first collaboration with REP. Ejay Yatco serves as the musical director.


NCCA celebrates master weaver Magdalena Gamayo

THE BIRTH centennial of Manlilikha ng Bayan Magdalena Gamayo, held at the Plaza del Norte Convention Center in Ilocos Norte, honored the revered master weaver’s life and contributions early in August. With the theme “Ang Inabel ni Magdalena Gamayo: Sinapupunan ng Ugnayang Pampamayanan,” the event was a convergence of cultural performances and tributes, marking a historic occasion as the first centennial celebration of a living GAMABA Awardee, also known as Nana Dalen.


Security Bank offers ArteFino access

IN a partnership with ArteFino, Security Bank celebrates local craftsmanship at the four-day fair from Aug. 22 to 25. Security Bank debit and credit cardholders will enjoy free access to ArteFino. Shoppers are also invited to apply for Security Bank Gold Circle, an exclusive membership program for VIP banking. Over 100 curated local designers and artist-entrepreneurs will be at the fair, taking place at The Fifth at Rockwell in Power Plant Mall, Makati City. Themed “Ka-PAMANA,” the 2024 ArteFino Fair aims to promote Philippine heritage, craft, and legacy while welcoming new voices into the community.

How Hapee Toothpaste became known through the Olympics

By Patricia B. Mirasol, Multimedia Producer

PRODUCTS struggling with market visibility can improve awareness about their brand by leveraging trendy events, according to a Filipino toothpaste maker.

Homegrown toothpaste brand Hapee was launched in 1988, the same year as the Seoul Olympics. Cecilio K. Pedro, founder of Lamoiyan Corp., said he managed to increase awareness about Hapee by capitalizing on the hoopla around the global sporting event.

“In the beginning, nobody knew Hapee, so I had to do some commercials,” he said in an interview on Aug. 7.

It was around that time when the Philippine Olympic committee asked if he was interested in sponsoring the Philippine delegation to Seoul.

“Nobody wanted to help the team then… and we could only afford P50,000, so I gave P50,000 [in exchange for] the use of the Olympic rings logo, which they allowed,” he told BusinessWorld.

“I came up with an ad announcing Hapee as the official toothpaste of the Philippine Olympic team… so people at that time believed that we sponsored our Olympic team,” he said. “That was the beginning of Hapee getting known in the community.”

Hapee was borne out of necessity, Mr. Pedro said, noting that his multinational customers had started shifting to plastic packaging from aluminum toothpaste tubes.

“In 1986, Colgate and Unilever decided to change their packaging to laminated tubes. I had to lay off more than 200 workers,” he said. “I went to the Lord. I said, ‘Lord, what happened? What is the plan for me in the coming days?’”

The solution came in the form of making a product to put inside the tubes.

The Philippine oral care market was valued at $100.4 million in 2022 and is projected to reach $147.5 million by 2030, based on February 2024 data by market research firm Insights10.

This translates to a compound annual growth rate of 4.93% during the forecast period.

There are 2.6 dentists for every 10,000 Filipinos, the World Health Organization reported in 2022.

Most Filipinos’ oral and dental health routine is limited to brushing with regular toothpaste, the International Trade Association said.

Mr. Pedro said toothpaste is a pandemic-proof product.

“We are fortunate to be in this particular segment,” he said. “You still brush your teeth even if there’s a typhoon or disaster,” he added in mixed English and Filipino.

Mr. Pedro, who is also the chairman of the board of the Deaf Evangelistic Alliance Foundation, Inc., said manufacturing has been made easier today with technology.

“When we started, it was manual,” he said. “Today, we automated most of the processes.”

“Of course, we intentionally kept a certain section manual so we can employ the deaf-mute people,” he said.

A third of their workers come from the hearing-impaired and people with disabilities,” he added. “If I remove that section from my production system, they will lose their jobs.”

Lamoiyan, named after Mr. Pedro’s grandmother who introduced him to the Christian faith, said his corporate motto is “Making a difference for the glory of God.”

There’s no mismatch between living one’s values and running a business, he said. “In order to do it quick, to make more money quickly, you have to do shortcuts, you know what I mean?” he said.

“We don’t want that to happen. We want to follow the rules, follow the laws of the government, so that we can be an example for generations to come.”

How to build a bucket list: Skip the Mona Lisa

THATS HER BUSINESS-UNSPLASH

EVERYONE seems to have a bucket list. In fact, too many of us seem to have the same bucket list: Climb Mount Everest; see the Mona Lisa; visit Versailles; circumambulate Stonehenge; sashay after geisha in Kyoto; float through Venice; ogle the Crown Jewels. The lack of originality has led to the overcrowding of these fabled sites — and a lot of grumbling from the locals. It’s also put many of the objects and sites at risk: Leonardo da Vinci’s masterpiece at the Louvre has been assaulted several times. Stonehenge was spray painted by climate activists. Kyoto’s elegantly kimonoed geisha have been harassed by amateur paparazzi dressed in dungarees.

But what’s a “bucket list” in the first place? It comes from the title of a 2007 movie about two terminally-ill men (played by Jack Nicholson and Morgan Freeman) who travel the world to see and do everything they’ve dreamed of before they die — that is, kick the bucket. It helped that Nicholson’s character is a billionaire who can fund the project. Warner Brothers scored a healthy global profit from the film. More importantly, the title entered the 21st century lexicon.

I’d rather see the world and live. It’s not that I think the aspirations we have in common are a bad catalog; but we’ve just been pursuing them like to-do lists, ticking things off without reflecting about what we’ve done or seen. Remember: Once you’ve reached a peak destination, you do have to return to everyday life. It would be a shame to do so unenlightened and unchanged. So this admittedly nerdy list is an antidote to some of that (I’ve been to three). The destinations require just as much planning as the more familiar rosters, but I think they provide a unique perspective on our objective of living — not dying — more fully. And, if some of you adopt one or two, it’ll also take some pressure off Kyoto, Venice, Everest, and the Louvre.

Skip the Mona Lisa: The room in Paris’s Louvre devoted to Leonardo da Vinci’s masterpiece is so packed with visitors many photographs show less of the painting than of smartphones raised in the air. Last year, the museum saw more than 7 million people, most of whom probably wanted a glimpse of La Gioconda.

There’s a less well known but just as enigmatic earlier work by the same artist. See the other Leonardo masterpiece, Lady with an Ermine, which is in the much, much less crowded Czartoryski Museum in Krakow, Poland. The sitter is Cecilia Gallerani, one of the most cultured women of the late 15th century and the mistress of the Duke of Milan. Leonardo distills life in this painting with her gaze — just as he does with Mona Lisa’s smile. She stares off frame, perhaps at her lover, as she cuddles the animal that is a pun on one his titles. As one contemporary poet described what Leonardo has done, “He’s made her seem to listen, but not to speak.” There had been little like this depth of psychology in Western painting before.

The Mysterious Tortoises of the Mongol Khans: Mongolia has no native turtles. Yet standing within sight of the 16th century Erdene Zuu Khilid, the country’s oldest surviving Buddhist monastery, are a couple of large carapaced monsters carved from stone, hailing from a couple of centuries before. The reptiles are all that remain of the site of Karakorum, the first capital of the Mongol empire, a city that evolved from the tent settlement Genghis Khan set up in the 13th century. The statues were inspired by the mythical black turtle of the north, a potent symbol of fertility and eternity the Mongols borrowed from the Chinese they traded with and, for a while, ruled. Four were set up on the corners of the walled district where the Khan resided.

But that city itself is gone, its smaller relics residing in a nearby museum set up with Japanese funding. The Khan’s tortoises may not have the massive integrity of Stonehenge but they tell a wistful tale of how even the most fearsome empires can decline and fall and vanish.

Bigger than Versailles. The royal palace of Caserta, about a 40-minute drive outside of Naples, doesn’t quite get the 15 million visitors that Versailles has to deal with each year. But the immense residence of the Spanish side of the Bourbon dynasty receives its fair share. It is also substantially larger, both in breadth and height.

The Spanish-Neapolitan Bourbons, however, were not as rich as their French cousins. If it weren’t for all the attempt at grandiosity, it would be sad to see that some of the rooms could only be finished in trompe l’oeil not real marble and sculpture. But, just like the turtles of Mongolia, from that emanates a sic transit gloria mundi charm. The historical irony: The family line that, in part, ruled from Caserta outlasted their fancy French relatives. Spain still has a royal family and they are Bourbons.

Don’t Go Chasing Geisha. Kyoto is getting impatient with tourists. So you might want an alternative that’s got an even deeper history — and a population 14 times as large that makes it easier to absorb visitors. Chengdu — the capital of China’s Sichuan province — is about 1,000 years older than Kyoto; yet while the old capital of Japan seems bent on preserving the past, the Chinese city is one of the most dynamic and enterprising in the People’s Republic. Indeed, Chengdu is encouraging tourism with everything from giant pandas (which are native to Sichuan) to spicy culinary adventures to archaeological discoveries that have led to a rewriting of Chinese history.

To aficionados of the art of war, a visit to the memorial to Zhuge Liang in Chengdu is a must. The 3rd century statesman was an exemplar of the “empty fortress” strategy of psychological warfare. Suddenly beset by an overwhelming number of invading troops, he ordered the few hundred defenders of his citadel to fling open the gates and keep out of sight, making it appear to be easy pickings. The besieging commander, however, then second-guessed himself, believing that Zhuge — already famous as a tactician — must certainly be planning an ambush. He withdrew.

Take the Low Road. The photos of trash littering the trails of Mount Everest belie the fact that only about 500 climbing permits are issued each year by the Nepalese government. If so much damage can be done by so few, think of what will happen when China starts allowing folks to scale the world’s highest peak from the Tibetan side of the mountain.

Why not try the Camino de Santiago de Compostela, the trail that’s been busy with pilgrims for a millennium. It isn’t as challenging as going 5-½ miles uphill with thin oxygen (and managing not to fall into some snow-obscured crevasse). Still it is almost 100 times longer than Everest is high. I have friends who do parts of the camino or all of it each year. Go in winter if you want less congested wayside inns. You don’t have to be religious to discover that walking can free your soul to wander in the world and in your head.

Your Choice: Canals or Backwaters? Venice (population: about 260,000) puts up more than 12 million tourists each year. It’s time to give La Serenissima a break. And if you like the idea of a gondola ride on a canal, consider the rice boats of Kerala, at India’s southwestern coast, that have been repurposed into floating houses. You can sleep the night on these kettuvallam as you meander through the huge network of lagoons, which the locals call backwaters but seem more like a giant serpentine lake. The boatmen will fish and cook for you. I remember the food being delicious. The resorts at the end of the voyage were luxurious but the night on the kettuvallam was unforgettable.

One Jewel to Outshine Them All: The Gemma Felix is a tiny stone, just 3.5 centimeters (1.4 inches) wide, hardly in the class of the crown jewels in the Tower of London. About 2.5 million gawk at the Windsor treasures each year. The Felix sits quietly in its case in the Ashmolean Museum in Oxford. But its provenance reaches farther back than the histories of British kings. Dating from the reign of Tiberius Caesar, the sardonyx seal is inscribed by Felix, the man who carved it, and belonged to a Roman bureaucrat who used it to mark documents as authentic and official.

Depicting a scene from the Trojan war — Ulysses accusing Diomedes of sacrilege — the jewel survived the empire’s fall and eventually came into the possession of some of the most prominent personages of Western civilization. Among them, Pope Paul II, who amassed much treasure for the papacy; Cardinal Francesco Gonzaga, one of the great power brokers in Italy, depicted by Mantegna in a fresco; the great English art collector Thomas Howard, the 2nd Earl of Arundel, who purchased the Felix because King Charles I couldn’t afford to; and George, the 4th duke of Marlborough from whose descendants sprang the Spencer-Churchill family, which includes Diana on one side and Winston on the other. So much in one little stone (my hazy photo does not come anywhere close to portraying Felix’s craftsmanship). And no crowds.

It may be that the economy will lighten the tourist load on the more famous bucket list destinations, as my colleague Andrea Felsted has recently written.

But maybe the point is not to call the goals we long to reach “bucket lists.” In the end, the underlying notion of “kicking the bucket” is morbid. If we look beyond the euphemism, most of us will imagine a suicide standing on an upended pail ready to auto-asphyxiate from some joist — the container being knocked over by the death throes. The more likely origin of the term is grislier. The bucket — from the French trebuchet (also the word for a military catapult or the contraption used to torture witches by dunking them in water) — being a beam in an abattoir to which a pig’s back legs are tied, the animal hanging face down before its throat is slit. In its final squealing spasms, the pig’s hind trotters kick at the trebuchet.

Let’s make our lists about appreciating how far we’ve come from as a species — and where we might to go next.

BLOOMBERG OPINION