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Boeing CEO admits error, says mid-air blowout ‘can never happen again’

REUTERS

WASHINGTON — Boeing chief executive officer (CEO)  Dave Calhoun on Tuesday addressed Friday’s mid-air panel blowout from an Alaska Airlines jet, acknowledging the planemaker made a mistake and telling staff it would work with regulators to make sure it “can never happen again.”

The statements were Boeing’s first public acknowledgment of error since the incident on Friday left the 737 MAX 9 plane with a gaping hole.

Alaska Airlines and United Airlines, the two US carriers that use the temporarily grounded planes, have found loose parts on similar aircraft, raising fears such an incident could have happened again.

In a separate meeting, Boeing told staff that findings of loose bolts in airplanes were being treated as a “quality control issue” and checks were under way at Boeing and supplier Spirit Aerosystems, sources familiar with the matter said.

Boeing has ordered its plants and those of its suppliers to ensure such problems are addressed and to carry out broader checks of systems and processes, they said.

“We’re going to approach this, number one, acknowledging our mistake,” Mr. Calhoun told employees, according to an excerpt released by Boeing. “We’re going to approach it with 100% and complete transparency every step of the way.”

Boeing shares fell 1.4% Tuesday as United canceled 225 daily flights, or 8% of its total, while Alaska canceled 109, or 18%. Similar cancellations were expected on Wednesday.

Mr. Calhoun also told Boeing employees the company will “ensure every next airplane that moves into the sky is in fact safe.”

He praised the Alaska Airlines crew that swiftly moved to land the 737 MAX 9 plane with only minor injuries to the 171 passengers and six crew.

Mr. Calhoun, who was a Boeing board member when all MAX jets were grounded worldwide in 2019, paid tribute to Alaska Airlines for quickly grounding its 737 MAX 9 jets, adding he knew “how hard it is to ground planes, much less the fleet,” the sources said.

Mr. Calhoun said the accident had shaken Boeing customers and “shook me to the bone,” the sources quoting him saying.

Boeing has suffered numerous production issues since the full-blown grounding of the 737 MAX family in March 2019 that lasted 20 months, following a pair of crashes in 2018 and 2019 that killed nearly 350 people.

The U.S. Federal Aviation Administration (FAA) grounded 171 planes after Saturday’s incident, causing numerous flight cancellations. The panel that blew off Alaska Air Flight 1282 replaces an optional exit door on 737 MAX 9 planes used by airlines that have denser seating configurations.

Boeing has checked the service records of earlier Boeing 737-900ER aircraft that had a similar door plug, but all have undergone extensive maintenance since being delivered and none has shown a sign of similar problems, the sources said.

On Monday, Alaska Airlines and United Airlines both said they had found loose parts on multiple grounded aircraft during preliminary checks, raising new concerns about how Boeing’s best-selling jet family is built and its approval process.

The airlines have not yet started official inspections of their grounded aircraft. Boeing was still working out inspection guidelines to ensure safety lapses are fixed.

The FAA said Tuesday that Boeing was revising its instructions for inspections and maintenance, which the FAA must still approve before checks can begin on the 171 grounded planes. The FAA said it “will conduct a thorough review” and public safety will “determine the timeline” for returning the MAX to service.

Mr. Calhoun said Boeing had had a “very anxious moment with customers” and would have to “deal with that reality,” one source said.

Boeing did not comment on any of his remarks beyond the extract issued by statement.

Boeing met delivery targets but ended 2023 in second place behind rival Airbus for the fifth year running, according to Boeing data and industry sources.

Boeing delivered 528 jets. Airbus will announce 735 deliveries for 2023 later this week, sources have said.

Boeing booked 1,314 net new orders, up 70%. However, the company faces an aggressive timetable for production.

The FAA could also take a harder line on certifying designs for other models, including required changes to the MAX 7. Boeing has sought an exemption to allow certification before the design changes that analysts say is much less likely now.

Two senior industry sources said they expected the plane eagerly awaited by Southwest Airlines could face another six-month delay.

FAA head Mike Whitaker, who took the job in October, will testify before Congress next month, according to sources, and could face questions about approval of the 737 MAX planes. The hearing was in the works before the incident on the Alaska Airlines flight.

The FAA said it continues to inspect each new 737 MAX before an “airworthiness certificate is issued and cleared for delivery,” when it typically delegates the final sign-off on individual airplanes to the manufacturer.

The FAA did not directly answer questions about how it typically inspects those bolts before approving delivery.

Probes will also include Spirit AeroSystems, which makes the fuselage for Boeing 737 planes. Spirit has a technical team working with the US National Transportation Safety Board on the investigation, a source told Reuters.

US-based crisis communications expert Paul Oestreicher, who critiqued Boeing in 2019 for taking weeks to acknowledge its mistake following two fatal crashes involving the MAX, said this time Calhoun was “acting with much more speed, acknowledging the importance of transparency, expresses some empathy, and commits to a fix.” — Reuters

US saw record ‘billion-dollar’ climate disasters, high temps in 2023

THE SHELLS of burned houses and buildings are left after wildfires driven by high winds burned across most of the town in Lahaina, Maui, Hawaii, US Aug. 11. — HAWAI’I DEPARTMENT OF LAND AND NATURAL RESOURCES/HANDOUT VIA REUTERS

THE US had more “billion-dollar” floods, fires and other climate disasters in 2023 than ever before, and the country’s average temperature was the fifth highest on record, the National Oceanic and Atmospheric Administration (NOAA) said on Tuesday.

Among the disasters was a wildfire on Maui, the nation’s deadliest in more than a century, severe floods in California, two tornado outbreaks in central states, a winter storm in the northeast last February, and Hurricane Idalia in August.

“For millions of Americans impacted by a seemingly endless onslaught of weather and climate disasters, 2023 has hit a new record for many extremes,” NOAA chief scientist Sarah Kapnick, said as her agency released its annual report.

Ms. Kapnick added that the extremes we now face “will continue to worsen due to climate change.”

Most mainstream scientists say the burning of fossil fuels is causing more floods, droughts, heat waves and rising sea levels. The El Niño weather phenomenon, which warms surface waters in the eastern Pacific Ocean, also contributed to higher temperatures last year.

What scientists do not yet know is whether 2023’s extreme heat is a sign that global warming is accelerating.

NOAA said the 28 climate disasters that caused over a billion dollars in damage each topped the previous record set in 2020 by six. The 28 events caused nearly $93 billion in damages, NOAA said, adding the price tag is expected to rise once the costs of a December storm and flooding on the East Coast are totaled.

NOAA said the average temperatures last month made it the warmest December in its 129 years of keeping track.

The average annual temperature in the contiguous U.S. was 54.4 degrees Fahrenheit (12.4 degrees Celsius) last year, which was 2.4 degrees Fahrenheit above the average in NOAA’s records.

Five US states — Louisiana, Massachusetts, Mississippi, New Hampshire and Texas — saw their warmest years on record, while another six states recorded their second-warmest. — Reuters

Philippine media entity announces partnership with California-based media group

Brian Poe-Llamanzares, CEO of Oracle Media Group; and Vincent Gotti, PLPG Deputy Editor and Group Business Development Executive for Asia, Pacific, and Australia

In a meeting at the center of luxury and fashion in Beverly Hills, California, Brian Poe-Llamanzares was able to work out a strategic distribution and representation agreement with Publicom Latina Publishing Group (PLPG) Deputy Editor and Group Business Development Executive for Asia, Pacific, and Australia, Vincent Gotti.

Mr. Poe-Llamanzares’ goal is to get more international exposure for more Filipinos. He says that the two groups have been negotiating the details of the agreement for the past few months and that he is excited to strengthen the presence of Business Concept magazine and Luxury Trending magazine in the Philippines.

Brian Poe-Llamanzares, CEO of Oracle Media Group

“This is a strategic move for our group of companies. With this combination of lifestyle and business magazines, we’ll be able to expand our offerings for local customers and increase exposure for local personalities,” shared Mr. Poe-Llamanzares.

As for Mr. Gotti and PLPG, the move taps a large Asian base. Mr. Gotti says he has high hopes for the partnership. This will effectively make the Philippines a strong regional base for the US-based media group.

“At first, I thought Brian just owned a watch company, but then when I found out he also owns a media group I said, ‘sure man! Let’s do it!,’” said Mr. Gotti.

When asked why partner with Oracle Media Group, Gotti brought up two reasons: the Philippines has a strong social media presence and including more Filipino personalities on the covers of their international publications would help grow PLPG’s digital footprint.

“I’m excited because I believe Oracle Media Group is the perfect Media Partner to expand our distribution in Manila,” added Mr. Gotti.

The PLPG website says, “PLPG GLOBAL MEDIA has expanded its portfolio offering different products for all kinds of audience. Headquartered in Colombia and California US, PLPG operates in 35 markets including US – Colombia & Latin America – Brazil – Australia – Canada – Italy – France – UK – Spain – Portugal – Switzerland – Germany – Belgium – Netherlands – Poland – Bulgaria – Greece – South Africa – Ukraine – Philippines – India – Turkey – Japan – China – Taiwan – Hong Kong – Dubai – Russia, producing some of the world’s leading print, digital, video and social brands, reaching a lot of consumers around the globe, bringing our readers to a world of luxury life style, fashion, sensuality, excellence, creativity and passion.”

This is the second publication group that Mr. Poe-Llamanzares has partnered with recently. Late last year he was able to secure a similar agreement with “The Purple Stroke” a Media entity based in Dubai which owns Aspire magazine.

Oracle Media Group currently is comprised of different publications, including Rising Tigers magazine, Alike magazine, The Manila Journal, Negosyante News, and Rapid News PH. It also handles the distribution and representation of Business Concept magazine, Luxury Trending magazine, and Aspire magazine.

For more information, you may visit https://oraclemediagroup.ph.

 


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US, UK forces shoot down Houthi missiles, drones in Red Sea -US military

Location of the Red Sea as seen in a screenshot from Google Maps.

WASHINGTON- US and UK forces shot down 21 drones and missiles fired by Yemen-based Houthis on Tuesday into the Southern Red Sea towards international shipping lanes, the U.S. military’s Central Command said.

US Central Command said there were no injuries or damage reported, adding that this was the 26th Houthi attack on commercial shipping lanes in the Red Sea since Nov. 19.

Iranian-backed Houthi militants have stepped up attacks on commercial vessels in the Red Sea in protest against Israel’s war in Gaza. Various shipping lines have suspended operations, instead taking the longer journey around Africa.

The Houthis have vowed to continue attacks until Israel halts the conflict in Gaza, and warned that it would attack U.S. warships if the militia group itself was targeted.

US Central Command said 18 drones, two anti-ship cruise missiles and one anti-ship ballistic missile were shot down by US and British forces. — Reuters

Boeing hits 2023 jet delivery goal in blockbuster sales year

REUTERS

WASHINGTON – Boeing met its jetliner delivery goals and recorded a 70% boost to annual net orders in 2023, reflecting a record-shattering year of sales for planemakers.

The U.S. manufacturer released the year-end figures on Tuesday as it contends with the fallout from an accident involving an Alaska Airlines 737 MAX 9, which lost a fuselage panel in mid-air last week.

Boeing delivered 528 planes in 2023 and booked 1,314 net new orders after allowing for cancellations, up from 480 deliveries and 774 net new orders in 2022.

It delivered 396 narrowbody 737 jets last year, meeting its revised goal of at least 375 single-aisle planes but falling short of the initial target of 400 to 450 jets.

The target was downgraded in October after a manufacturing flaw by fuselage supplier Spirit AeroSystems forced the it to inspect planes, slowing deliveries.

Boeing delivered 73 787 Dreamliners in 2023, meeting its goal of 70 to 80 aircraft.

Boeing’s orders and deliveries are likely to eclipsed by its European rival Airbus, which broke industry records for gross and net orders and beat its delivery target of 720 airplanes in 2023 with deliveries in the mid-730s, sources told Reuters last week.

Boeing won 1,456 gross orders for 2023, or 1,576 net orders after accounting adjustments.

In December, the company booked 371 gross orders, including highest-ever monthly sales of the 737 MAX at 301 planes. Spanish carrier Air Europa canceled a booking for two Dreamliners.

The company delivered 44 737 MAXs and one older-model 737NG last month. It also handed over seven 767s, four 777 freighters and 11 787s.

Its order backlog increased from 5,324 to 5,626.

Airbus is set to announce its orders and deliveries on Thursday.

Boeing executives are expected to lay out new goals for 2024 alongside the release of the company’s fourth-quarter results on Jan. 31. — Reuters

Microsoft’s OpenAI investment could face EU merger probe, EU regulators say

BRUSSELS – Microsoft’s financial backing for ChatGPT maker OpenAI may be subject to European Union merger rules, EU antitrust regulators said on Tuesday, underscoring a similar warning from its UK peer in December.

The US software giant, which last year committed to invest over $10 billion into OpenAI with a non-voting position on the board, has said it does not own any portion of OpenAI.

The European Commission had previously said it was following developments closely.

“The European Commission is checking whether Microsoft’s investment in OpenAI might be reviewable under the EU Merger Regulation,” the EU executive, which acts as the EU competition enforcer, said in a statement.

Microsoft said its partnership with OpenAI forged in 2019 has fostered more AI innovation and competition while preserving independence for both companies.

“The only thing that has changed recently is that Microsoft will now have a non-voting observer on OpenAI’s Board,” a Microsoft spokesperson said.

The Commission said some agreements agreed between large digital market players and generative AI developers and providers were being investigated for their impact on market dynamics. It did not name the companies.

The Commission on Tuesday also gave interested parties until March 11 to provide feedback on competition in virtual worlds and generative artificial intelligence.

It also sent requests for information to several large digital companies on the two topics.

“We are inviting businesses and experts to tell us about any competition issues that they may perceive in these industries, whilst also closely monitoring AI partnerships to ensure they do not unduly distort market dynamics,” EU antitrust chief Margrethe Vestager said. — Reuters

Meralco Power Academy executive named as Outstanding Energy Auditor

Seen in the photo (L-R) are DOE Energy Utilization Management Bureau Director Patrick Aquino CESO III, DOE Energy Utilization Management Bureau OIC-Director III Lana Rose Manaligod, DOE Assistant Secretary Mylene Capongcol, DOE Undersecretary Felix William Fuentebella, Meralco Power Academy (MPA) Program Research and Development Director Engr. Eugenio F. Araullo, MPA President Nixon Hao, MPA Program Management Director Marc Lester Malibiran, and MPA Corporate Affairs Consultant Angelina Tibayan during the awards ceremony held at Hilton Manila in Pasay City last December 19, 2023.

For his contributions in the promoting energy efficiency and conservation, Meralco Power Academy (MPA) Program Research and Development Director Engr. Eugenio F. Araullo was recognized by the Department of Energy (DOE) as the sole recipient of the Energy Efficiency Excellence (EEE) Award under the Certified Energy Auditor subcategory in this year’s EEE Awards.

The EEE Awards, held annually as part of the National Energy Consciousness Month, recognizes members of from the public and private sectors including institutions, buildings, and individuals who demonstrate outstanding energy management practices.

Engr. Araullo, an electrical engineer with over 30 years of professional experience, has constantly demonstrated quality energy audit in various sectors here and abroad. His expertise spans various fields such as process excellence, supply chain, information technology, renewable energy, power economics, energy management, and people development.

 


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Banks’ NPL ratio slips to two-month low

BW FILE PHOTO

PHILIPPINE BANKS’ asset quality improved in November as the banking industry’s gross nonperforming loan (NPL) ratio slipped to its lowest in two months.

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed banks’ NPL ratio stood at 3.41% in November, easing from the five-month high of 3.44% in October but still above 3.35% a year prior.

The November bad loan ratio marked the lowest in two months or since 3.4% logged in September.

However, bad loans inched up by 1.1% to P454.281 billion in November from P449.454 billion in the prior month. Year on year, it rose by 11.3% from P408.097 billion in November 2022.

Lenders’ total loan portfolio expanded by 9.3% year on year to P13.34 trillion as of November.

Loans are considered nonperforming once they remain unpaid for at least 90 days after the due date. They are deemed as risk assets given borrowers are unlikely to settle such loans.

Despite high borrowing costs, Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion noted the NPL ratio in November remained low due to strong economic growth.

“Even with the high interest rate environment, the view of BSP Governor [Eli M. Remolona, Jr.] on 6.5% still being appropriate for growth and expansion to thrive must be lent apt credence,” Mr. Asuncion said. 

At its November meeting, the Monetary Board decided to keep the key interest rate unchanged at 6.5%, its highest print in 16 years. The BSP hiked borrowing costs by 450 basis points (bps) from May 2022 to October 2023 to tame inflation. 

Mr. Remolona earlier said that at 6.5%, the benchmark rate still remains supportive of economic growth. He noted the BSP’s hawkish stance has not derailed the economy’s growth momentum.

The BSP chief had said gross domestic product (GDP) likely expanded by around 5.9% in the fourth quarter of 2023. He expects stronger GDP growth in the first six months of 2024.

Mr. Asuncion said the economy likely grew by 6.2% in the fourth quarter last year, which would bring the full-year average to 5.7%. This is below the government’s 6-7% goal and the 7.6% seen in 2022. 

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the seasonal uptick in economic activity ahead of the holidays led to better business and livelihood conditions, which allowed borrowers to pay their loans.

BSP data showed past due loans rose by 14.3% to P563.384 billion as of November from P492.528 billion a year ago. These accounted for 4.22% of the total loans, slightly higher than 4.04% a year ago.

In the same month, restructured loans fell by 6.7% to P305.81 billion from P327.76 billion a year ago. This brought its ratio to 2.29% of banks’ gross loan portfolio from 2.69% in November 2022.

Lenders’ loan loss reserves jumped by 6.8% year on year to P460.953 billion, equivalent to 3.46% of the total loans. The latest ratio is lower than 3.54% seen in the same month in 2022.

NPL coverage ratio — which indicates banks’ allowance for potential losses due to bad loans — was a tad lower at 101.47% from 105.73% a year ago.     

“Possible local policy rate cuts for the coming months would help boost loan demand, investments, and other economic activities, thereby would help further reduce the NPL ratio for the coming months,” Mr. Ricafort said.

The BSP may likely cut borrowing costs by as much as 100 bps this year as inflation is seen to stay mostly within the 2-4% target band, Finance Secretary and Monetary Board member Benjamin E. Diokno said on Monday.

Most analysts also expect the Philippine central bank to start its policy easing in the second half of the year. 

“A more expansive monetary policy into 2024 will definitely bode well for lower and more stable NPLs,” Mr. Asuncion likewise said.

However, Mr. Remolona has said that the Monetary Board will only consider rate cuts if inflation is seen staying firmly within the 2-4% target range.

The BSP will have its first policy review this year on Feb. 15. — Keisha B. Ta-asan

BIR waives annual registration fee for business taxpayers

PHILIPPINE STAR/EDD GUMBAN

By Luisa Maria Jacinta C. Jocson, Reporter

BUSINESS TAXPAYERS will no longer have to pay the annual registration fee with the Bureau of Internal Revenue (BIR) starting this year.

In an advisory, the BIR said it will stop collecting the annual registration fee from business taxpayers effective Jan. 22 in compliance with the Republic Act No. 11976 or the Ease of Paying Taxes Act.

President Ferdinand R. Marcos, Jr. signed the Ease of Paying Taxes Act into law on Jan. 5.

“As a result, business taxpayers are exempt from filing BIR Form No. 0605 and paying the P500 annual registration fee on or before Jan. 31 every year,” it said.

The BIR said that business taxpayers with existing certificate of registration, which includes the registration fee, will remain valid. They can have the certificate of registration updated or replaced at the Revenue District Office where they are registered on or before Dec. 31, 2024.

The Ease of Paying Taxes Act aims to modernize tax administration, update the taxation system, and protect taxpayer rights and welfare.

The law amends several sections of the National Internal Revenue Code of 1997, such as the introduction of a taxpayer classification system and a risk-based classification for VAT refund claims.

Taxpayers may also now file returns electronically or manually to any authorized agent bank, Revenue District Office, or authorized tax software provider.

The law also mandates the BIR to adopt an “integrated digitalization strategy by providing automated end-to-end solutions for the benefit of taxpayers.”

The agency is also ordered to develop an Ease of Paying Taxes and digitalization roadmap to ensure ease of tax compliance and streamlining of tax processes.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the amendments under the Ease of Paying Taxes Act will improve the ease of doing business in the country.

“This is consistent with the overall efforts to reduce business costs, make it more convenient, and encourage more people to do business and also pay taxes for their fair share of nation-building,” he said in a Viber message.

Mr. Ricafort said that simplifying tax processes for businesses will help boost revenues and promote better transparency.

Philippine Chamber of Commerce and Industry President Eunina V. Mangio said in a statement that the passage of the law is a welcome development for the business community.

“I hope this law, coupled with proper implementation and monitoring, will significantly ease the paying of taxes in the country,” she said.

Ms. Mangio also said that the law could help attract more foreign investors.

“We need to harmonize and streamline our processes for us to attract investors into the country. Otherwise, we will remain low in the ease of doing business,” she added.

BIR COLLECTION
Meanwhile, Finance Secretary Benjamin E. Diokno said the BIR should surpass its collection target for this year.

“We have much to accomplish in 2024. Thus, I urge the agency to not just meet, but exceed its collection targets this year and beyond,” Mr. Diokno said in a press release on Monday.

The BIR is expected to collect P3.05 trillion this year, based on the latest Budget of Expenditures and Sources of Financing.

Data from the Treasury showed that BIR revenues stood at P2.34 trillion in the January-to-November period, accounting for 88.77% of its P2.64-trillion full-year target.

The agency collects about 70% of government revenue.

DoF data also showed that the BIR filed a total of 221 cases against tax evaders before the Department of Justice in the 11-month period. These cases had estimated liabilities worth P13.24 billion.

“Meanwhile, 38 cases with an estimated tax liability of P5.06 billion were filed with the Court of Tax Appeals (CTA) during the said period,” the department added.

In the first 11 months, the BIR also collected P410.94 million and issued 186 closure orders against businesses in violation of value-added tax (VAT) requirements.

Manufacturing output up 1.9% in November

Workers are seen inside a manufacturing plant in Sto. Tomas, Batangas, March 1, 2023. — PHILIPPINE STAR/KRIZ JOHN ROSALES

By Lourdes O. Pilar, Researcher

FACTORY OUTPUT expanded in November, but the activities related to food items continued to drag the overall manufacturing sector.

Preliminary results of the Philippine Statistics Authority’s (PSA) latest Monthly Integrated Survey of Selected Industries showed factory output, as measured by the volume of production index (VoPI), rose by 1.9% year on year in November.

The November output was faster than the revised 1.5% recorded in October.

This is the highest print in two months or since the 10.4% recorded in September.

On a monthly basis, November’s output grew by 2.7%, a reversal from the 1.2% contraction in the previous month. Stripping out seasonality factors, manufacturing that month edged up by 0.7%, a reversal from the 4.1% drop in October.

Year to date, factory output averaged 5.1%, lower than the 45% growth a year ago.

To compare, S&P Philippines Manufacturing Purchasing Managers’ Index (PMI) rose to 52.7 in November, higher than the of 52.4 in October. A PMI reading of above 50 means improvement in operating conditions compared with the previous month, while a reading below 50 shows deterioration.

PSA said the annual growth of the VoPI in November can be attributed to  the faster rise in transport equipment (17.1% from 5.8% in October), as well as the smaller declines in beverages (-11.6% in November from -34.4% in October), and chemical and chemical products (-2.4% from -10.9%).

Several industry divisions posted slower growth, such as printing and reproduction of recorded media (8.6% from 26.3%), basic pharmaceutical products and pharmaceutical preparations (15.5% from 16.5%), electrical equipment (29.9% from 30.5%), and coke and refined petroleum products (37% from 46.9%).

However, the PSA said 13 industry divisions recorded annual declines during the month, led by machinery and equipment except electrical (-27% from -23.1%); leather and related products, including footwear (-26% from -29%); fabricated metal products, except machinery and equipment (-25.4% from -16.4%); wearing apparel (-24.3% from -20%); and wood, bamboo, cane, rattan articles, and related products (-20.2% from -42%).

Average capacity utilization — the extent to which industry resources are used in the production of goods — averaged 74.8% in November, slightly higher than October’s 74.3% in the previous month.

All industry divisions have reached an average capacity utilization rate of more than 60%.

“Manufacturing activity related to food items were the drag on overall manufacturing with production of other items compensating for the decline in those items. This may reflect the struggles experienced by the agriculture sector which posted negative growth in the third quarter,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in an e-mail.

Mr. Mapa added that the manufacturing industry will likely help support growth, but gross domestic product (GDP) growth will likely remain largely driven by the services sector.

PSE names 55 Shari’ah-compliant companies, adds Fruitas, Petron, Prime Media 

REUTERS

SHARI’AH-COMPLIANT companies listed on the Philippine Stock Exchange, Inc. (PSE) have decreased to 55 from 60 after the market operator’s quarterly screening for the period ending Dec. 25.

Eight securities were removed, and three were added based on the PSE’s latest Shari’ah-compliant list, released in a memorandum dated Jan. 8.

The omitted securities comprise those of property developer Araneta Properties, Inc., construction aggregates supplier Concrete Aggregates Corp. “A” and Concrete Aggregates Corp. “B,” air conditioning and refrigeration solutions provider Concepcion Industrial Corp., cement manufacturer Holcim Philippines, Inc., flour producer Liberty Flours Mills, Inc., mining company United Paragon Mining Corp., and technology retailer Upson International Corp.

The newly added securities belong to food cart company Fruitas Holdings, Inc., oil giant Petron Corp., and holding firm Prime Media Holdings, Inc.

Shari’ah is the moral and religious code of Islam that encompasses rules, regulations, teachings, and values governing the lives of Muslims, the market operator noted.

“Shari’ah-compliant investment instruments create a mechanism for listed companies to gain access to potential funding from Islamic investors including those in countries in the Middle East and other countries with high Islam population such as Malaysia and Indonesia,” the PSE said.

The PSE issues a list of Shari’ah-compliant securities on a quarterly basis. It released the previous list on Oct. 4, covering the period ending Sept. 25.

“The adoption of Shariah in the capital market will help foster an ethical investment climate that provides opportunities for local Islamic investors to comfortably participate in the Philippine business community. Due to the ethical stance of putting premium on compliance to Islamic laws over profitability, Islamic investors can better gauge the risks involved in their investments,” the PSE said.

The market operator said it had engaged the services of IdealRatings, Inc. to screen listed companies in accordance with Shari’ah standards as specified by the Accounting and Auditing Organization for Islamic Financial Institutions.

The PSE also said that IdealRatings checks companies’ adherence to Shari’ah standards in terms of their business activities and financial ratios.

Under the business screening, the income of companies derived from activities such as adult entertainment, alcohol, cinema, defense & weapons, financial services, gambling, gold and silver hedging, interest-bearing investments, music, pork, and tobacco must be less than 5%.

In terms of financial ratio screening, a company’s cash or interest-bearing deposits or investments should not exceed 30% of its market capitalization, while its interest-bearing debt should not go beyond 30% of its market capitalization.

“Through the screening process, securities that are engaged in activities involved in Haraam (impermissible or unlawful) will be taken out from the list of Shari’ah compliant stocks,” the PSE said.  

IdealRatings, a provider of Islamic finance data, is a United States-based company that specializes in screening securities for Shari’ah compliance. — Revin Mikhael D. Ochave