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Central bank might deliver fewer rate cuts this year

Bangko Sentral ng Pilipinas main office in Manila. — BW FILE PHOTO

THE BANGKO SENTRAL ng Pilipinas (BPS) is expected to deliver fewer rate cuts later this year as the US Federal Reserve is likely to delay its own policy easing.

“The BSP may begin its own easing cycle in the fourth quarter, lagging the Fed’s first policy rate cut to support the peso,” the Metrobank Research and Market Strategy Department said in a report.

“Given the new projections on US policy rate, we now forecast a total of 50 basis points (bps) in cuts for the year to 6%, down from our previous projection of 75 bps.”

Fed officials are now pricing in just one rate cut this year, compared with expectations of three cuts previously. They also signaled that policy easing might be pushed back to as late as December.

Last week, the US central bank left its policy rate unchanged at 5.25%-5.5% for a seventh straight meeting.

“The Fed kept rates unchanged and remained cautious of the future of rate cuts, implying just one cut — a far departure from three to five cuts,” Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said in a Viber message.

Metrobank Research said the Fed might cut rates as early as September.

“The Fed may begin cutting rates as early as its Sept. 18 Federal Open Market Committee (FOMC) meeting and by a total of 50 bps for the full year to 4.75%-5% as inflation is expected to have peaked by June and July, observable by August,” it added.

BSP Governor Eli M. Remolona, Jr. earlier said the BSP could begin cutting rates as early as August, for a total of 25-50 bps for the entire year.

Mr. Remolona also said the BSP does not need to wait for the US central bank to begin reducing rates because its own monetary decisions are “independent” of the Fed.

On the other hand, Finance Secretary Ralph G. Recto, who is a member of the Monetary Board, said it is unlikely for the BSP to cut ahead of the Fed.

Mr. Recto said it was “highly probable” that the BSP would only begin its easing cycle once the Fed starts cutting rates.

Mr. Ravelas said he expects “no change” in the monetary decision of the BSP at the next policy meeting.

The Monetary Board is set to hold its next policy review on June 27.

The central bank has kept its benchmark rate steady at a 17-year high of 6.5% since October 2023. 

The BSP raised borrowing costs by 450 bps from May 2022 to October 2023. — Luisa Maria Jacinta C. Jocson

Medical Doctors, Inc. to conduct virtual Annual Meeting of Stockholders on July 16

 

 


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PXP Energy Corp.’s Annual Stockholders’ Meeting set on July 8 at Grand Hyatt Ballroom III

 

 


Spotlight is BusinessWorld’s sponsored section that allows advertisers to amplify their brand and connect with BusinessWorld’s audience by publishing their stories on the BusinessWorld Web site. For more information, send an email to online@bworldonline.com.

Join us on Viber at https://bit.ly/3hv6bLA to get more updates and subscribe to BusinessWorld’s titles and get exclusive content through www.bworld-x.com.

Wilcon Depot sets P2.2-B capex to expand store network

@WILCONDEPOT.PH

WILCON Depot, Inc., a publicly listed retailer specializing in home improvement and construction supplies, has set aside a capital expenditure (capex) budget of up to P2.2 billion for this year.

This allocation comes as the company moves closer to achieving its goal of opening 100 stores, Wilcon Depot Vice-President for Investor Relations Mary Jean G. Alger said during a virtual press conference on Monday.

“This year, we only budgeted P2.2 billion because some of the stores that we opened, especially in the first quarter, were all spillovers from last year,” she added.

Last year, the company’s capex spending did not surpass P3 billion. Wilcon Depot had allocated P3.8 billion as its capex budget for that year.

“We’ve always budgeted way above what we spent. For the last two years, we budgeted close to P4 billion but we haven’t even exceeded P3 billion (in capex spending),” Ms. Alger said.

Wilcon Depot is aiming to open ten stores this year. The company opened a branch in Bacolod on May 31, marking its 94th store.

“We’re targeting to open ten stores, but we always do more than what we target. We’re doing construction work for more than what we target because in construction, you’re never really sure that the target date of completion will be met,” Ms. Alger said.

She also said the company is expected to recognize a one-time loss following the fire incident at its Baliuag City branch in April.

“We may need to recognize the loss already because one of our branches, the Baliuag branch, was burned down. The assessment is not complete yet, but once it is, or even before the official assessment is completed, we may have to acknowledge the loss,” she noted.

Wilcon Senior Executive Vice-President and Chief Operating Officer Rosemarie B. Ong said the company is banking on stronger same-store sales for the remaining months of 2024.

The company sees softer demand in the home improvement sector, citing macroeconomic challenges such as high interest rates.

“We’re hoping that same-store sales growth will be positive. It’s not just in the Philippines, but basically it’s a global phenomenon. It’s a global challenge. We’re hoping that you know, at least it will still be positive on the low side but seeing the trend, though, it’s been very erratic,” Ms. Ong said.

Meanwhile, Wilcon President and Chief Executive Officer Lorraine Belo-Cincochan said the company is exploring opportunities to expand internationally.

“There are many possibilities. It might be in Southeast Asia or in Asia, particularly where it’s closer logistically,” she said.

“This is something we study. This is something we discuss and, ultimately, we do want to plan for it if ever. It’s not yet in the immediate future,” she added.

For the first quarter, Wilcon Depot posted a 23.1% drop in its net income to P740 million as net sales fell by 2.5% to P8.31 billion.

Wilcon Depot stocks were last traded on June 14 at P18.32 apiece. — Revin Mikhael D. Ochave

PLDT’s data center sale may boost operations, financial standing — analysts

By Ashley Erika O. Jose, Reporter

PLDT Inc.’s plan to sell at least 49% of its data center business is expected to improve the company’s data center operations and its financial position, according to analysts.

“The sale of a substantial stake in its data center business could significantly improve PLDT’s debt situation, freeing up capital for future investments,” First Grade Finance, Inc. Managing Director Astro C. del Castillo said in a Viber message on Monday.

PLDT plans to sell a 49% stake in its data center business, ePLDT, Inc., to a foreign company for over $1 billion.

“If they get a good valuation for their stake, then that should be positive for PLDT. The sale is expected to generate a windfall that can be used to cut debt and fund capital expenditures,” Chinabank Capital Corp. Managing Director Juan Paolo E. Colet said.

In a regulatory filing, PLDT said its consolidated long-term and short-term debts grew by P141 million to P254.94 billion as of end-March.

PLDT’s decision to partner with a foreign entity in its data center business will enable the company to expand and strengthen its presence in the rapidly advancing fields of technology and artificial intelligence, Mr. Colet said.

With this development, the company will not proceed with its planned real estate investment trust listing for ePLDT. 

First Grade Finance’s Mr. Del Castillo said the sale would also make PLDT attractive to investors by improving the company’s debt situation.

“Additionally, PLDT could benefit from the new investor’s data center management expertise and access to more technologies,” he said.

However, the sale presents some challenges such as losing a portion of future revenue generated from the data center, he added.

“The long-term impact on PLDT’s profitability will depend on how effectively it reinvests the proceeds from the sale and manages its remaining assets,” he said.

He also said that there are regulatory risks involved, as the data center industry is relatively new in the country, and the government might impose restrictions on partnerships in this sector.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.

Yields on Treasury bills, bonds may go down on easing signals

BW FILE PHOTO

RATES of Treasury bills (T-bills) and Treasury bonds (T-bonds) on offer this week may decline after a Monetary Board member said the Bangko Sentral ng Pilipinas (BSP) could begin its easing cycle after the US Federal Reserve kicks off its own.

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

On Wednesday, it will offer P30 billion in reissued 20-year T-bonds with a remaining life of 14 years and seven months.

This week’s T-bill and T-bond auctions were moved as Monday, June 17 was declared a holiday in observance of Eid’l Adha or the Feast of Sacrifice.

The rates of T-bills and T-bonds on offer this week could track the decline in secondary market yields following monetary easing comments from Finance Secretary and Monetary Board member Ralph G. Recto after the Fed’s policy meeting, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Secondary market rates were mostly lower on Friday “as profit takers continued to dominate the market. Speculative buying… lacked aggressiveness still amid Finance Chief Recto’s statement on the BSP possibly cutting rates after the Fed,” a trader likewise said in an e-mail on Friday.

The trader expects the reissued T-bonds on offer this week to fetch yields ranging from 6.7% to 6.85% as the market “remains tepid on bonds with tenors of longer than 10 years.”

At the secondary market on Friday, the 91-day, 182-day, and 364-day T-bills went down by 3.69 basis points (bps), 3.09 bps, and 0.36 bp week on week to yield 5.6669%, 5.9694%, and 6.0778%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data published on the Philippine Dealing System’s website.

The yield on the 20-year bond likewise went down by 1.14 bps week on week to end at 6.814%.

The BSP will probably cut its policy rate after the US Federal Reserve, which has signaled it may start easing as late as December, the Finance chief said on Thursday.

Asked if the BSP would begin its easing cycle once the US central bank cuts rates, Mr. Recto said this was “highly probable.”

The Monetary Board has kept its benchmark rate steady at a 17-year high of 6.5% since October 2023 following cumulative hikes worth 450 bps to bring down inflation.

BSP Governor Eli M. Remolona, Jr. has said that the earliest the central bank can begin cutting rates is in August, with a total of 25-50 basis points in easing likely this year.

Mr. Remolona earlier said the BSP does not need to wait for the Fed to begin its own easing cycle.

The Monetary Board’s next policy meeting is on June 27.

Meanwhile, the US central bank on Wednesday kept its benchmark overnight interest rate in the current 5.25%-5.5% range, where it has been since last July, Reuters reported. Fed officials pushed out the start of rate cuts to perhaps as late as December, with policy makers projecting only a single quarter-percentage-point reduction for this year.

Last week, the BTr raised P15 billion as planned from the T-bills it offered as total bids reached P42.385 billion or almost thrice the amount on the auction block.

Broken down, the Treasury borrowed P5 billion as programmed from the 92-day T-bills as tenders for the tenor reached P17.36 billion. The average rate for the three-month paper went down by 3.1 bps to 5.667% from the previous week. Accepted rates ranged from 5.65% to 5.69%.

The government likewise made a full P5-billion award of the 183-day securities, with bids reaching P12.56 billion. The average rate for the six-month T-bill stood at 5.908%, inching up by 0.8 bp, with accepted rates at 5.898% to 5.925%.

Lastly, the BTr raised the planned P5 billion via the 365-day debt papers as demand for the tenor totaled P12.465 billion. The average rate of the one-year debt went down by 0.7 bp to 6.039%. Accepted yields were from 6.015% to 6.065%.

Maturity dates were adjusted across all tenors last week due to the June 12 holiday for Independence Day.

Meanwhile, the reissued 20-year bonds to be auctioned off on Tuesday were last offered on May 14, where the government raised just P11.528 billion out of the P30 billion placed on the auction block. The bonds were awarded at an average rate of 6.95%, 20 bps above the 6.75% coupon for the series.

The BTr wants to raise P180 billion from the domestic market this month, or P60 billion from T-bills and P120 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

OceanaGold PHL sees strong year with upward trend in gold, copper

OCEANAGOLD Philippines, Inc. (OGPI) is poised for enhanced financial performance this year, buoyed by the upward trend in global gold and copper prices, the company’s president said. 

“The positive outlook for gold and copper definitely helps,” OGPI President and General Manager for External Affairs and Social Performance Joan D. Adaci-Cattiling told BusinessWorld over the weekend.

In the first quarter, the average gold price rose to $2,070.05 per troy ounce from $1,889.05 the previous year, according to Mines and Geosciences Bureau.

Copper prices averaged $3.83 per pound, declining from $4.05 per pound a year earlier. However, the global shift to green energy and the limited supply is expected to bolster copper prices, according to Chamber of Mines of the Philippines.

Ms. Cattiling said that even modest increases in metal prices could potentially elevate OGPI’s free cash flows by approximately 7 to 8%. 

She said the guidance is “under the assumption that OGPI’s production comprises 71% gold and the rest copper.

For the first three months, the company’s net income dropped by 47.9% to $11.5 million from $22.1 million in 2023.

The company operates the Didipio gold and copper mine in Nueva Vizcaya.

By the second half of the year, OceanaGold expects to increase its ore production.

“We’re following our mine plan, and the second half of the year sees a higher production,” OceanaGold General Manager David John Bickerton said.

“We’ve been moving the dirt. We’ve been moving low-grade dirt to access some of the high-grade (areas) later in the year,” he added.

Gold sales for first quarter totaled 31,863 ounces. It sold 33% of the first-quarter gold doré to the Bangko Sentral ng Pilipinas.

Similarly, copper production dropped by 22% to 3,015 tons from 3,500 tons during the same period in 2023. Copper sales were at 3,180 ounces.

The company is targeting to produce 120,000 to 135,000 ounces of gold and 12,000 to 14,000 tons of copper this year.

“We’ve been fairly consistent on hitting our guidance… We’re always striving to make more ounces every year, but importantly it’s to stick to the plan,” Mr. Bickerton said. — Adrian H. Halili

Empowering whistleblowers

BRGFX-FREEPIK

As the world prepares to observe another World Whistleblowers Day on June 23, 2024, it’s imperative to reflect on the evolving dynamics of corporate accountability and the indispensable role whistleblowers play in unveiling wrongdoing. Amidst deliberations concerning corporate governance and transparency, the Philippines finds itself at a pivotal juncture, presenting an opportune moment to fortify its mechanisms for combating corruption and malfeasance within corporate entities.

Central to this discourse is the imperative to reassess the 1980 Corporation Code of the Philippines, a fundamental pillar of corporate law in the country. While this legislation has laid the groundwork for business operations over the decades, its deficiencies in addressing contemporary challenges have become increasingly conspicuous. 

One glaring lacuna pertains to the absence of explicit provisions safeguarding and promoting whistleblowers within corporate frameworks. Often, people within organizations such as members of audit committees, compliance officers or finance officers possess intimate knowledge of unethical practices or legal transgressions.

Nevertheless, a culture of silence frequently prevails, fueled by apprehensions of retaliation, ostracization, or the perception that speaking out is futile. It is incumbent upon us to challenge this status quo and acknowledge that those privy to misconduct have a moral obligation to raise their voices.

The repeal and amendment of the 1980 Corporation Code present an avenue to institutionalize novel provisions for whistleblowers and establish mechanisms to ensure their concerns are duly acknowledged. By mandating the incorporation of whistleblower protection measures, the revised code can incentivize people to step forward without fear of reprisal, thereby nurturing a culture of accountability and integrity within corporate realms.

However, legislative reform alone proves insufficient without complementary measures to bolster whistleblowers and furnish them with avenues to securely report misconduct. This is where the ascendancy of independent whistleblowing platforms and processes assumes paramount significance in fostering transparency and accountability.

Independent whistleblowing platforms furnish a secure, confidential and accessible conduit for people to divulge malfeasance within their organizations. By affording anonymity and safeguards against retaliation, these platforms empower whistleblowers to voice concerns without imperiling their careers or personal safety. Moreover, they serve as a vital conduit between whistleblowers, corporate governance entities and regulatory authorities, expediting the investigation and adjudication of corporate malpractice.

A primary advantage of independent whistleblowing platforms lies in their impartiality and autonomy from corporate vested interests. Diverging from internal reporting channels susceptible to manipulation or suppression by management, independent platforms operate autonomously, ensuring that reports are handled objectively and ethically.

This independence assumes pivotal importance in engendering trust and confidence among whistleblowers, encouraging them to step forward, assured that their grievances will be earnestly addressed. Furthermore, independent whistleblowing platforms can complement regulatory frameworks by plugging gaps in enforcement and oversight.

Regulatory bodies may lack the resources or jurisdiction to effectively probe every reported instance of misconduct. Independent platforms can serve as a frontline defense, triaging reports and providing preliminary assessments to regulatory authorities, thus streamlining the investigative process and optimizing the use of limited resources.

Crucially, the proliferation of independent whistleblowing platforms conveys a resounding message to corporations that transparency and accountability are nonnegotiable imperatives. In an era where corporate malfeasance routinely makes headlines, companies face mounting pressure to evince their commitment to ethical conduct and good governance. Embracing independent whistleblowing platforms not only signifies a readiness to confront malpractice but also augments corporate reputation and investor confidence in the long haul.

As we commemorate World Whistleblowers Day, let us reaffirm our pledge to shield those who hazard everything to expose corruption and injustice. The repeal and amendment of antiquated laws, such as the 1980 Corporation Code of the Philippines, represent pivotal strides toward crafting a legal framework that empowers whistleblowers and holds corporations accountable for their deeds. Nonetheless, legislative reform must be accompanied by the establishment and bolstering of independent whistleblowing platforms to ensure whistleblowers find their voice and that their voices resonate.

By embracing transparency, accountability and the potency of whistleblowing, we can forge a more equitable and just society for all stakeholders.

This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or MAP.

 

Lujer P. Danao is a member of the MAP and partner for Risk Advisory and the Clients and Market head of MOORE Roxas Tabamo & Co.

map@map.org.ph

lpdanao@roxastabamo.com

Fête de la Musique takes over 100 stages for its 30th year in Philippines

FÊTE de la Musique is turning 30 in the Philippines. The global free music event from France has month-long activities that are ramping up to bring hundreds of artists to more than 100 stages nationwide.

The music festival’s Philippine edition, simply known as FDLM or Fête PH, is presented by Alliance Française de Manille, B-Side Productions, FunkyBeat Entertainment, and the Embassy of France to the Philippines. The multi-stage, multi-genre event will have live celebrations from June 21 to 29 in Metro Manila, Cavite, Laguna, Pampanga, Zambales, Baguio, Baler, Bicol, Mindoro, Palawan, Masbate, Cebu, Siargao, Cagayan de Oro, Davao, and South Cotabato.

“We will be breaking our record in terms of the number of stages and also the scope — this is the first time we’re having over 100 stages, coming from last year with only around 50,” said B-Side Productions’ Giselle Tomimbang, one of Fête PH’s co-producers, in a Zoom interview with BusinessWorld.

She added that the wider reach is “due to the South representing hard.” Davao in particular will have the longest celebration, for the full nine days.

“Back then it was Manila-centric, plus Baguio and Palawan. Now, I feel that it has really become more of a nationwide celebration, covering Luzon, Visayas, and Mindanao,” she said.

Fête de la Musique began as a music festival in Paris on June 21 (Fête’s official date) in 1982 and has since spread to 120 countries. This year’s edition in the Philippines kicked off on June 16 with its pre-Fête “Music Heals” gathering: a Medicine Music Circle, Ecstatic Dance, and Sound Bath, hosted by Lee Grane Musiq at Ayala Triangle Gardens.

“It’s an advocacy of ours to show that music is not only for partying and having fun, but also a means to nourish the mind, heart, body and soul,” said Ms. Tomimbang.

Noe Fuentes, cultural coordinator at Alliance Française de Manille, told BusinessWorld that they hope the 30th year can draw more people compared to the 25th anniversary in 2019, also the last Fête PH before the pandemic.

“We want to connect with a new generation of music-lovers every year. Of course, there’s nostalgia for people who’ve been going for a while, but the idea is to also connect with those Gen Zs in their early 20s,” he said via Zoom.

Since its first year in 1994, which used physical posters and flyers to draw a meager crowd of 40 attendees, Fête PH has evolved to promoting online.

As with every year, FDLM 2024’S main event will be the Main Stage, held at Greenbelt 3 park on June 21. It will boast a full day of music from Filipino artists SHANNi, Jason Dhakal x Lustbass, Sinosikat x Jose Miguel, Dwata, Jewelmer Jazz Band, Any Name’s Okay, Morobeats, Autotelic, and Dilaw.

To promote French-Filipino cultural exchange, major French act Pfel & Greem of C2C will grace the Fête PH stage. They are also set to perform at Mistral in Raffles Makati on June 20.

100 STAGES
It was in 2011 that Fête PH opened pocket stages, each organized by independent producers.

“We’ve been here for 30 years and the key to holding these multi-stage events is the strong partnerships. A lot of our partners have wanted their own Fête stage, in their own turf,” said Mr. Fuentes.

Ms. Tomimbang explained that with an “approach informed by inclusivity,” the chase of numbers always fell secondary to bringing music to all.

“There used to be a lot of active work to push for productions to independently put up pocket stages, but over the years people started to come to us, rather than us having to plead with them,” she said.

On June 28, the vibrant district of Poblacion in Makati City will be a musical haven, with over 41 multiple independently produced pocket stages simultaneously featuring various genres: the Blues, Soul & Funk Stage at H&J, the Acoustic Stage at Coro Hotel, the Rock Stage at Alibi Music Lounge, and the Reggae Stage at Handle Bar, just to name a few.

The Medicine Music Stage in Astbury and the Kirtan Stage featuring meditation & mantras at Gnostic will be new additions for FDLM 2024, in keeping with this year’s “Music Heals” advocacy.

Meanwhile, the Destination Stages will all happen between June 21 and 29, reaching Luzon, Visayas, and Mindanao. Some notable locations this year are Siquijor, a Fête PH first-timer, and El Nido, which will hold multiple stages on the same day.

“I think the shift to being nationwide has a lot to do with leaning into the fact we couldn’t celebrate in person together for a while in the pandemic. We leveraged that virtual musical journey that helped catalyze this spread,” said Ms. Tomimbang.

“This time I feel that there’s so much more diversity,” she added.

SONIK Philippines will also be returning for the second SONIK SESSIONS FETE, a conference that educates both the business and artist sides of the Philippine music ecosystem. The SONIK SOIREE is happening on June 22 at Astbury, featuring Gwen Sharp of The Green Room France.

Fête PH is free and open to all. For the lineup of events, visit their pages on Facebook, Instagram, and TikTok. — Brontë H. Lacsamana

China offshore asset rush spurs HK wealth inflows

REUTERS

HONG KONG — Hong Kong (HK) investment products such as insurance and high-yield time deposits are seeing resurgent demand from wealthy Chinese who are aiming to shield returns from a domestic economic and property sector downturn and also a weaker currency.

The trend became evident last year but has accelerated in recent months after China relaxed investment rules for the “wealth connect” program in February, Hong Kong wealth managers said.

It is sparking a scramble among financial firms in Hong Kong to seize the opportunity and should help the city burnish its status as a wealth hub that has been hit in recent years by pro-democracy protests, Beijing’s tighter control, and geopolitical tensions.

Those factors had pushed clients and wealth managers to foray into or expand in rival Singapore.

“There are about 45 million affluent individuals in China, and increasingly they want more international exposure, education, and protection,” said Maggie Ng, HSBC’s Hong Kong head of wealth and personal banking.

“There is an increasing demand to manage wealth outside of China.”

Launched in late 2021, “wealth connect” allows residents of nine cities in the southern province of Guangdong, which borders Hong Kong, to buy investment products sold by banks in Hong Kong and Macau, while allowing residents of the two offshore centres to do the same in the world’s second-largest economy.

Under the program, investments by mainland investors into Hong Kong and Macau hit a record monthly high of 13 billion yuan ($1.8 billion) in March, up nearly eight times from February, data from the Chinese central bank showed.

Inflows in April grew 70.5% from the preceding month to 22.3 billion yuan, the data showed, while northbound investments in April by Hong Kong and Macau residents were just 14 million yuan, largely unchanged since the program was launched.

HSBC, a leading wealth manager in Hong Kong, saw new account openings in the city rise by more than three times in 2023 from the pre-COVID level in 2019, driven mainly by Chinese mainland retail wealth clients, said Ng.

The strong momentum has continued in the first quarter of this year, she said, declining to give details.

Apart from the mass affluent who are utilizing the cross-border investment channels, ultra rich people from China and Southeast Asia are also exploring their options in Hong Kong, according to executives at global wealth managers.

“If we look at the inquires (from potential family office clients) that we got last year versus the previous year, we’re talking about an 85% increase,” said L.H. Koh, head of global family and institutional wealth APAC, at UBS.

More than 60% of the inquiries in Hong Kong are about setting up family office-type entities in the city by mainly Chinese clients, he said, adding that the trend has continued this year.

‘SITTING ON CASH’
While there are still tight capital controls in China, with an individual allowed to remit a maximum $50,000 per year, the tripling of the investment cap to 3 million yuan under the “wealth connect” program in February has bolstered outflows.

China presumably is less worried about outflows under the program because the investments are eventually required to be remitted back to the country. 

Wealth managers in Hong Kong are pushing the authorities to further relax the investment scheme to meet the demand of richer clients to move larger sums to Hong Kong, industry executives said.

The Hong Kong Monetary Authority would “continue to explore further enhancement measures in due course, taking into account the industry’s feedback as appropriate,” the city’s de-facto central bank said in a statement to Reuters.

To capitalize on the momentum, some banks in Hong Kong have started offering as much as 10% a year interest rates on short-duration term deposits as part of the wealth link program compared to about 2% offered by the banks in the mainland.

Besides banks, Hong Kong-based insurers have also seen a surge in demand from mainland customers since border controls previously installed to curb the spread of COVID were lifted in early 2023.

Horace Yip, Citigroup’s private banking head of Hong Kong and Greater Bay Area, said the bank saw record new account openings in Hong Kong in 2023, and the momentum remained strong this year, thanks to the demand from mainland Chinese clients.

The surge in demand comes against the backdrop of Chinese mainland investors facing limited options to park their cash at home, as yields of long-dated bonds have dropped to record lows.

China’s currency is hovering around its weakest since 2008. And stocks and property have seen returns plunging.

“Many mainland people are now sitting on cash,” said 51-year-old Ms. Wang, owner of an internet firm in Shenzhen whose bets on opaque investment products at home soured after the collapse of a leading shadow bank late last year.

Wang said she has since parked her money in a current account in the mainland, and is studying the “wealth connect” program now. — Reuters

Maynilad partners with MPower to increase RE use

MAYNILAD Water Services, Inc. on Monday said it is working with MPower, the local retail supply arm of Manila Electric Co. (Meralco), to increase the use of renewable energy (RE) in its operations by 15%.

“At Maynilad, we are committed to sustainable practices and reducing our carbon footprint. Increasing our use of renewable energy by 15% is a significant step towards our goal of carbon neutrality by 2037,” Maynilad President and Chief Executive Officer Ramoncito S. Fernandez said in a statement.

“This initiative reflects our dedication to environmental stewardship and our responsibility to future generations,” he added.

Under the deal, MPower will supply renewable energy from solar and biomass sources to run nine Maynilad facilities, particularly the water treatments plants at La Mesa Compound in Quezon City and at Brgy. Putatan in Muntinlupa, and the pumping stations in Pasay, Las Piñas, Quezon City, and Parañaque.

Maynilad said it aims to further increase its use of renewable energy by 30% next year and 40% by 2027.

As it expands renewable energy use to more of its facilities, Maynilad hopes to reduce its carbon dioxide emissions in the next five years.

Maynilad serves Manila, except portions of San Andres and Sta. Ana. It also operates in Quezon City, Makati, Caloocan, Pasay, Parañaque, Las Piñas, Muntinlupa, Valenzuela, Navotas, and Malabon.

It also supplies the cities of Cavite, Bacoor, and Imus, and the towns of Kawit, Noveleta, and Rosario, all in Cavite province.

Metro Pacific Investments Corp., which has a majority stake in Maynilad, is one of three Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT Inc.

Meanwhile, Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Sheldeen Joy Talavera

Lessons from World War II

President Ferdinand R. Marcos, Jr. asked the Armed Forces of the Philippines to prepare as the country faces growing risks arising from Chinese aggression in the Taiwan Strait.  “The external threat now has become more worrisome. And that is why we have to prepare (for any eventuality),” he said. 

Emerging threats have compelled him to make Cagayan, a province facing Taiwan, a site under a Philippine Enhanced Defense Cooperation Agreement (EDCA) with the United States. Robin Michael U. Garcia, a political economy professor at the University of Asia and the Pacific, said China’s aggression in the Taiwan Strait should be a major defense issue because the escalation of armed conflict between China and Taiwan could spill over to Luzon. Taiwan is just over 300 kilometers away from Batanes, the northernmost province of Luzon.

The President should also tell the National Security Council to be vigilant about the covert entry of elements of foreign armed forces and their auxiliary intelligence operatives into the country. Authorities found a total of 18 sets of Chinese military uniforms at the raided Philippine Offshore Gaming Operator (POGO) hub in Porac, Pampanga.

POGOs
Senator Sherwin Gatchalian said the sets of People’s Liberation Army uniforms and some military pins discovered are a clear evidence that POGOs are a national security threat to our nation. “It has opened the doors, not only to criminal syndicates, but also to those who want to destabilize and infiltrate our governmental and political institutions. This is another reason why the administration should no longer allow them to operate in our country,” he told reporters.

Senator Risa Hontiveros said the implications of these uniforms should send chills down Filipinos’ spine. The discovery of these uniforms only proves the information shared by intelligence agencies that there are credible links between POGOs and foreign intelligence assets, she said. “It is so clear that every POGO has exploited our economic vulnerabilities and that POGOs have now evolved into a breeding ground for crime and a national security threat.”

On the other hand, Senator Robin Padilla said the discovery of such clothing means there is a “clear and present danger” to Filipinos. This prompted Padilla to renew his call for strengthened law enforcement at the local level.

It is interesting what former Interior and Local Government Secretary Rafael Alunan III wrote in Capiz News in October last year. He wrote: “On Oct. 16, 2023, the National Bureau of Investigation (NBI) raided a house in Valle Verde 5 in Pasig. Arrested and detained were six Chinese nationals and their two Filipino security personnel. Taken from them were high-powered firearms and ammunition marked with “From People’s Republic of China,” as well as badges designating roles such as “blasting team,” “recon team,” “support team,” “assault team,” “machine gun team” and “sniper team.””

Valle Verde V is about a 15-minute ride from Camp Aguinaldo — the general headquarters of the Armed Forces of the Philippines — and Camp Crame, the national headquarters of the Philippine National Police. As Mr. Alunan wrote, the signs of “China’s malevolent intentions” are clear.   

At their peak, POGOs hired more than 300,000 Chinese workers. According to official estimates, POGO workers legally staying in the Philippines number between 100,000 and 150,000. That most of them are in their 20s and are of athletic build has led many observers to suspect they are soldiers in disguise as POGO workers.

However, National Security Adviser Eduardo Año said the existence of POGO sites in the country does not yet constitute a “national security threat” that would need military involvement. “We do not view POGOs per se as a national security threat at the level that would necessitate the direct involvement of defense forces,” Año said. “At the moment, it is a national concern that law enforcement and regulatory agencies can address.”

CHINESE STUDENTS
The reported influx of Chinese students into a Philippine province close to what is regarded as a militarily sensitive area raised another public furor. That there were more than 4,000 Chinese students at universities in Cagayan province in Northern Luzon facing Taiwan sounded alarms of a national security threat.

Cagayan Rep. Joseph Lara and Isabela Rep. Faustino Dy V noted “an alarming increase in the number of Chinese citizens coming into the province of Cagayan, where another EDCA site is situated, as students enrolled in universities.” The province now hosts two military bases that can be used by US troops in the Philippines. Rep. Lara said the number of Chinese nationals in the province has become “highly suspicious and alarming.”

Referring to tensions in Philippine territorial waters in the South China Sea, he said: “[With] the prevailing situation in the West Philippine Sea and in view of Cagayan’s strategic geographical location, the increasing number of Chinese students in the province poses a serious concern to the national security of the Philippines.”

However, universities and higher education officials were quick to play down the issue. The number of students is still unclear. Reports received only show more than 400 Chinese nationals are on site because the school is said to be implementing distance learning,

While Rep. Lara referred to over 4,000 Chinese students, the Bureau of Immigration said a total of 1,516 Chinese students in Cagayan were granted student visas in 2023. The bureau added that the Chinese nationals were “legally processed” and had “complete documentation.”

The Philippine Inter-Agency Committee on Foreign Students, which includes officials from the Bureau of Immigration, Department of Foreign Affairs, Philippine National Police, National Bureau of Investigation and National Intelligence Coordinating Agency, will hold a special meeting this week, outside its regular schedule of meetings, to discuss the reported influx of Chinese students in Cagayan province.

Jonathan Malaya, assistant director-general of the Philippine National Security Council, said a team had been dispatched to the capital of Cagayan. “Our intelligence units have been assigned to take a look at the situation there. Is this a case of a national security threat, or is this just a case of people wanting to study in the Philippines?” Malaya said.

AFP spokesperson Colonel Francel Margareth Padilla said last week the AFP was looking into the “national security implications” of the reported surge of Chinese students in Cagayan. Dana Sandoval, the spokesperson for the Bureau of Immigration, told local media it is “only right” for intelligence agencies to verify the concerns because it is a security area, though legitimate foreign nationals who want to study in the Philippines should not be denied entry, she said, referring to the need to maintain a balance.

The Philippines Commission for Higher Education (CHED) said in a statement on April 18 that a significant number of Chinese students were enrolled at Saint Paul University Philippines — Tuguegarao City in Cagayan. The university was granted autonomous status by CHED in 2002 and has the authority, granted by the Bureau of Immigration, to accept foreign students — the only higher education institution in Cagayan with this authority.

According to the university’s website, it is a center for excellence in nursing and teacher education and is a center for development in information technology. CHED noted: “The foreign students are attracted by the affordable cost of quality education, the use of English as a medium of instruction and the globally recognized quality of instruction in such fields as medicine, dentistry, optometry, physical therapy, public health and engineering.”

The foreign student enrollment at Saint Paul in Tuguegarao City was 486 graduate students as of April 17, 2024. They consist of various nationalities — Americans, Chinese, Indonesians, Japanese and Vietnamese. Other institutions in Cagayan do not have foreign students.

WORLD WAR II LESSONS
Years before the outbreak of war in the Pacific region, imperial Japanese soldiers in disguise steadily infiltrated the country as traders, laborers even street sweepers. But when Japanese war planes attacked the US Naval Base in Pearl Harbor and the US military camps in the Philippines on Dec. 8, 1941, the Japanese infiltrators immediately wore their military uniforms, to the great surprise of their Filipino neighbors and friends.

The Japanese who planned the attack on Pearl Harbor was Admiral Isoroku Yamamoto, who studied at Harvard University and served as Japan’s naval attaché in Washington. But the real espionage work on Pearl Harbor was done by Takeo Yoshikawa.

Here is the story of the “Japanese spy in Hawaii before the attack on Pearl Harbor.” Yoshikawa was a 1933 graduate of the ImperiaI Japanese Naval Academy at Etajima, graduating at the top of his class. A year later, he began a career in Naval intelligence, being assigned to the Navy Headquarters in Tokyo. He became an expert on the US Navy, perusing every source he could possibly get his hands on. In 1940, he became a junior diplomat after passing the English examinations.

Because of his expertise on the US Navy, Yoshikawa was sent to Hawaii posing as a vice-consul named Tadashi Morimura. He rented a second-story apartment that overlooked Pearl Harbor and would often wander around the island of Oahu, taking notes on fleet movements and security measures. He rented small airplanes at John Rodgers Airport and flew around, observing US installations. He also dove under the harbor using a hollow reed as a breathing device. He gathered information by taking the Navy’s own harbor tugboat and listening to local gossip.

How many “Isoroku Yamamotos” are there among students in Philippine universities? How many “Takeo Yoshikawas” are there among POGO workers?

Will we let our World War II history repeat itself? 

 

Oscar P. Lagman, Jr. is a retired corporate executive, business consultant and management professor.