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Tourists get free halo-halo in Mang Inasal-DoT tie-up

Restaurant gives foreigners a taste to whet their appetite before expanding abroad

MANG INASAL has worked with the Department of Tourism (DoT) to give tourists a special, limited time treat — a free halo-halo, the famous Filipino snack of sweet preserves served on crushed ice. This is a strategic decision on Mang Inasal’s part to introduce its flavors to foreigners before expanding abroad.

Until Sept. 27, local and foreign tourists can enjoy a free 8 oz. Extra Creamy Halo-Halo when they order Chicken Inasal Paa or Pecho Large. To avail of the dine-in offer, tourists must present a valid ID along with a boarding pass or e-ticket dated between Sept. 1 and 27. The promo is open to both foreign and domestic tourists.

This is part of the DoT’s “Love the Philippines” campaign (this collaboration with Mang Inasal tacks “Love the Flavors” on to the DoT’s tagline).

“The flavor of the Philippines is really Mang Inasal. Whenever you see foreigners coming here, they enjoy the flavors of Mang Inasal: our chicken, our pork barbecue, and our halo-halo. And the palabok (a noodle dish),” Mang Inasal President Mike V. Castro told the press at the sideline of the campaign’s launch in Novotel in Quezon City on Sept. 23.

Last month, Mang Inasal won multiple awards at the Marketing Excellence Awards for 2024, including Gold for #MangInasalAt20: The 20th Anniversary Digital and PR Campaign (Excellence in Anniversary Marketing); Silver for Mang Inasal Creators’ Circle (Excellence in Influencer/KOLs Marketing) and National Halo-Halo Blowout (Excellence in Customer Engagement); and Bronze for the MAS Juicy Campaign (Excellence in Integrated Marketing). Earlier this year, Mang Inasal was named the Strongest Brand in the Philippines by Brand Finance, according to Mr. Castro’s speech during the launch.

He said afterwards that, “Every campaign that we make is for the Filipino people, and they’re responding to it, and because of that, they are visiting the stores more often right now.”

EXPANSION AT HOME AND ABROAD
Since it was acquired by Jollibee Foods Corp. in 2010, Mang Inasal expanded and now has 600 stores across the country. “We’re not only about growth. Right now, we’re enjoying one of our highest growths this year, even without this promo. What we want right now is to make Mang Inasal known to the world,” Mr. Castro said.

In addition to opening a target of 22 stores this year and 50 next year — “We will be 1,000 (stores) in five years’ time,” said Mr. Castro — they’re also planning to open abroad soon. “We’re looking at 2025 to 2026 to be present abroad,” he said. “We’re looking at two countries right now: it’s the US, and in the Middle East.”

“That’s why we’re inviting our tourists, because we want them to taste it, so when we go there, they already know Mang Inasal.” — JL Garcia

TDF yields decline after Bangko Sentral’s reserve ratio reduction

BW FILE PHOTO

By Luisa Maria Jacinta C. Jocson, Reporter

TERM DEPOSIT YIELDS fell on Wednesday after the Bangko Sentral ng Pilipinas (BSP) slashed the reserve requirements for banks and nonbanks.

The BSP’s term deposit facility (TDF) attracted bids worth P175.473 billion, below the P190 billion on the auction block and P213.935 billion in bids a week ago for a P200-billion offer.

Tenders for the seven-day debt reached P93.21 billion against the P120 billion auctioned off by the central bank. It was also below the P134.256 billion in bids for the seven-day deposits offered last week.

Banks asked for yields of 6.25% to 6.31%, narrower than 6.2495% to 6.315% a week earlier. This caused the average rate of the one-week deposits to slip to 6.2872% from 6.2878%.

Meanwhile, bids for the 14-day term deposits rose to P82.267 billion from the P70-billion offer and P79.679 billion in tenders a week ago. 

Accepted rates ranged from 6.298% to 6.41%, compared with 6.298% to 6.445% a week ago. As a result, the average rate for the two-week deposits decreased by 0.9 basis point (bp) to 6.3737% from last week.

Meanwhile, the BSP has not auctioned off 28-day term deposits for more than three years to give way to its weekly offer of securities with the same tenor.

The central bank uses the term deposits and 28-day bills to mop up excess liquidity in the financial system and to better guide market rates.

“The TDF average auction yields were slightly lower week-on-week… after the latest RRR cut that would infuse about P400 billion into the financial system effective Oct. 25, 2024,” Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message.

The central bank on Friday said it would reduce the RRR for big banks and nonbank financial institutions with quasi-banking functions by 250 bps to 7% effective next month.

It will also reduce the ratio for digital banks by 200 bps to 4%; thrift banks by 100 bps to 1%; and rural banks and cooperative banks by 100 bps to 0%.

Mr. Ricafort said that the RRR cut would “increase banks’ loanable funds, reduce intermediation costs that could lead to some easing of lending rates, and allow banks to purchase more bonds, money market and other fixed-income investments that would lead to some easing of yields.”

Mr. Ricafort also noted recent signals from the Philippine central bank of further policy easing.

Finance Secretary Ralph G. Recto, who is a Monetary Board member, said the BSP could further cut interest rates and match the US Federal Reserve’s 50-bp rate cut.

“The Fed cut by 50 basis points (bps) or half a percent. I think we can also do half-a-percent,” he told reporters on Tuesday.

The Federal Reserve last week cut interest rates by 50 bps to 4.75%-5%, the first cut since 2020 that Fed Chairman Jerome H. Powell said was meant to demonstrate policy makers’ commitment to sustaining a low unemployment rate, Reuters reported.

BSP Governor Eli M. Remolona, Jr. earlier said they could cut by another 25 bps in the fourth quarter.

The Monetary Board delivered a 25-bp rate cut in August, bringing the key rate to 6.25% from an over 17-year high of 6.5%.

Far Eastern University, Inc. to hold Annual Stockholders’ Meeting on Oct. 19

 

 

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That is one target-rich environment!

WIKIMEDIA.ORG

(First of two parts)

A soldier on a mission uttered that exclamation under his breath as he realized that his squad of eight men was cornered by hundreds of the enemy.

That was just a movie, by the way, but the remark captures the kind of spirit any manager would wish to see in his team.

“Now where does one get an employee like that?” I recall asking myself in jest, as I watched that flick a few years back.

It is probably the kind of question that pops up in the minds of managers across industries when faced by some employees’ less-than-optimal performance. The culprit, however, may not necessarily boil down to flawed attitudes. Casual conversations with peers from various companies left me with the impression that many have been bewildered by changing behavior and priorities in the workforce, especially over the past decade.

IT’S THEIR TIME
It just so happens that the next few years will increasingly be the age of Gen Zs — those born from 1995 to 2010 — who are expected to make up a growing chunk of any work force, even as Gen Y/millennials (those born 1981-1996) will dominate organizations and assume more business helms until the early 2040s.

In fact, that is one of the Philippines’ (and other Southeast Asian markets’) most compelling come-ons to investors from developed economies with their fast-aging populations: our growing pool of young workers.

Latest available final data of the Philippine Statistics Authority show that those aged 15-24 years made up 14.6% of the country’s labor force (employed and unemployed) and 13.2% of those with jobs as of July 2021, trailing people aged 25-34 years (28.6% of the labor force, 28.2% of those employed), 35-44 (23.4% of the workforce, 24.1% of those with jobs) and 45-54 (18.3% of the labor force, 18.9% of those with jobs). But it is a demographic that, at least according to some expectations, will account for up to a third of the Philippine work force in two years as Baby Boomers — those born between 1946 to 1964 —bow out and as a few of the Gen X (1965-1980) start doing so.1

Gen Zs are expected to make up a fourth of the global population by 2030, and while they now make up “a smaller percentage of working adults than other generations, meeting their needs is an important consideration for employers.”2

So, there is this growing pool of talent out there, but then, what makes them tick?

That is a million-dollar question for anyone keen on maximizing all his business’ resources. Without dehumanizing workers as individuals, managers have increasingly realized that they need to understand the nature of this particular resource if the company is to get the best out of each one.

Forcing lessons from one’s own unique experience on younger generations with their own value sets, i.e., “if I could do it, why can’t they?,” would be like forcing a nut on to an over- or undersized screw and still expecting it to do the job, and results in these youngsters just leaving for other options, which (unfortunately for any employer) abound. Guess who ends up on the losing end.

FIRST THINGS FIRST
The importance of this topic is borne by the growing literature on it, such that there is no lack of prescriptions on how to attract and retain Gen Zs.

According to 2022 study on Gen Zs in the Philippines, key factors in choosing work were salary, opportunities for career growth, and that the job jibed with their advocacy or at least was meaningful to society.3

One overarching priority for this demographic is that their work “must mean something,” making them part of something bigger than themselves that benefits society, or at least a segment of it. In a chat earlier this month, an executive of advisory, broking and solutions provider Willis Towers Watson (WTW) noted that more and more entrepreneurs — increasingly composed of millennials and Gen Zs — have been incorporating a social or environmental (or both) mission to their businesses. Remember that this is a generation that was born and grew up at a time of heightened awareness of climate risks: the first United Nations Climate Change Conference meeting was held in Berlin, Germany in March 1995, while the legally binding Paris Agreement for climate change mitigation was adopted in Paris, France in December 2015.

“Differentiate your company with strong CSR initiatives,” read one article on online job platform SEEK. “Corporate social responsibility (CSR) is a dark horse in attracting Gen Z. These talents are no longer content with just having a job. They are looking for a career with a purpose that would enable them to realize their vision and make a difference in humanity, the world and its future.4

Deloitte’s 2023 Gen Z and millennial survey in the Philippines showed that “more that 60%” of Filipino millennials and Gen Zs rejected a potential employer or an assignment when they perceived that these violated their beliefs.

Now, there may be sectors that are more inherently imbued with public interest and social/environmental relevance than others, but that does not excuse any lack of or poor communication of such priorities to the workforce. Besides outright, clear communication of such values, organizations — starting from the top — must actually live them, for actions always speak louder than words. Younger generations of workers are no fools and can smell BS a mile away.

Gen Z’s generally altruistic leaning does not mean that wage levels do not matter, or even matter less than this factor does to their predecessors, according to the WTW executive, while an officer of career platform Handshake noted that Gen Zs, “unlike some older colleagues,” are more wont to discuss salaries with peers and, in some cases, even seek salary audits.5

“This is to be expected,” said the WTW executive, since Gen Zs need to be able to afford their many activities outside work, including vacation trips abroad, in their quest for work-life balance.

Hence, it is advisable to regularly benchmark salaries — at least every other year — against those in the industry and even against those of allied sectors which could indirectly compete for one’s talent. So, this exercise goes beyond just making sure that wages are not eroded by inflation (WTW tracked a median 5.7% salary increase in the Philippines in 2023 and expects roughly the same pace this year, vs. an actual 6% inflation in 2023, 3.6% in the eight months to August, as well as the central bank’s 2-4% inflation target range and 3.4% latest forecast for 2024.)6

And, especially if a company cannot compete when it comes to wages, it may also need to lighten up on absolute bans on moonlighting, provided that the other job/s are not direct competitors. A 2023 Deloitte study on Millennials and Gen Zs showed that 71% of Filipino Millennials (compared to 37% of global Millennials) and 65% of Filipino Gen Zs (compared to 46% of global Gen Zs) have taken on either a part- or full-time paying job on top of their primary job — compared to 61% and 64%, respectively, in 2022. Asked why they decided to take on a side gig, 66% of millennials and 56% of Gen Zs said they needed a secondary income source, while about 40% of both groups said their side job helps them develop important skills and relationships. Moreover, more than half of Filipino Millennials (58%) and Gen Zs (59%) said they lived paycheck to paycheck and worry that they won’t be able to cover expenses.7

There should just be clear parameters to ensure that such employees will perform their main jobs competently, as well as an agreement that they will have to choose should holding multiple gigs prove untenable.

(To be continued)

1https://www.pluxee.ph/blog/heres-what-you-really-need-to-know-about-the-gen-z-workforce/

2https://www.axios.com/2023/11/22/gen-z-boomers-work-census-data

3“Generation Z in the Philippine Labor Force: Profile, Perspectives and Prospects,” Athena Mari E. Son, ILS Working Papers 2022

4https://ph.employer.seek.com/market-insights/article/here-comes-gen-z-but-are-you-ready

5https://www.axios.com/2023/11/05/gen-z-workplace-communication

6https://www.wtwco.com/en-ph/news/2024/01/philippines-pay-raises-continue-to-trend-upwards-in-2024-wtw-survey-finds

7https://www2.deloitte.com/ph/en/pages/about-deloitte/articles/2023-millennial-survey.html

 

Wilfredo G. Reyes was editor-in-chief of BusinessWorld from 2020 through 2023.

DoF says Semirara mining shares among assets set for privatization

THE PHILIPPINE government is looking to sell its mining shares in Semirara Mining and Power Corp. by next year, an official from the Department of Finance (DoF) said on Wednesday.

“We’re still reviewing it but that’s up for privatization already,” Finance Undersecretary and Chief Economist Domini S. Velasquez told reporters on the sidelines of a forum.

“The timeline should be anytime soon. I think that’s being discussed. Should be within the next year,” she added.

The Philippine government has over 145 million worth of shares in Semirara.

To narrow its budget deficit, the government intends to generate revenues from privatizing its assets to lessen the need to impose new taxes. It plans to raise P42 billion and P101.02 billion in 2024 and 2025 from privatization.

“Part of what we’re doing in the government is to increase or beef up our nontax revenues, and this is through the sale of some of the idle assets that we do have in the government,” Ms. Velasquez told the forum.

“These idle assets not only will generate revenues for the government but will also increase the value of these assets that have been lying around in Metro Manila,” she added.

The government is also keen on privatizing its Star City property, which had a zonal value of P14 billion as of September last year.

It also seeks to privatize its shares of stock in United Coconut Chemicals, Inc., the Elorde Sports & Tourism Development Corp., and condominium units in Atrium, Makati City.

In a list sent to reporters, the government aims to privatize 19 assets next year. These include the Food Terminal, Inc. in Taguig City, the Financial Center Area in Pasay City, the Ecology Villages (I, II, III) and the Mile Long Complex in Makati City, its National Housing Authority property in Caloocan City, and the Pioneer Glass Manufacturing Corp. in Rosario, Cavite.

In Quezon City, three government assets are up for privatization: the Fil-Eastern Woods Industries, Inc., the Mindanao Progress Corp., and the Al-Almanah Islamic Investment Bank of the Philippines.

It also aims to dispose of assets in Central Bank-Board of Liquidators in Iloilo City, its Technology Resources Corp. offices in South Cotabato, Pampanga, Rizal, and Bataan, and Office of the Ombudsman properties in Baguio, Batangas, and Laguna.

The government also plans to privatize the Sta. Clara Lumber Co., Inc. in Davao del Norte, the Anti-Money Laundering Council office in Cavite, and the Peninsula Development Bank in Quezon Province.

Earlier this year, the government raised P3.3 billion after divesting its 3.46% stake in NLEX Corp.

The government aims to narrow its deficit to P1.48 trillion this year and P1.54 trillion next year. — Beatriz Marie D. Cruz

Steak deflation hits New York City restaurants with $35 beef menus

TAOGROUP.COM

LAST NOVEMBER, when Tao Group began offering unlimited ribeye steak with French fries and salad for $45 at Legasea Bar & Grill in Herald Square, the response was initially tepid. But then a popular influencer’s Instagram video touted it as the “best all-you-can-eat steak deal in New York City.” Almost overnight, the seven-year-old restaurant doubled its nightly bookings and became one of the hottest dinner destinations in town.

The company expected business to slow down after the holidays; instead, because of the ribeye promotion, sales climbed. According to Matt Strauss, who oversees Tao Group’s New York hotel food and beverage operations, the restaurant increased its monthly covers 55% year over year in February, with revenue rising by 178%. “We were busy before the viral video,” says Mr. Strauss, “but after it came out, our sales went parabolic.”

As the cost of dining out in New York becomes increasingly prohibitive and restaurant sales show signs of softening, city residents are finding value in an unexpected place: steak restaurants. The city’s clubby chophouses, such as the Major Food Group’s The Grill and 4 Charles Prime Rib, are still routinely packed with customers looking for trophy cuts and three-figure côtes de boeuf. But with a wave of recent openings, including the new Washington, DC, import Medium Rare, affordable steak deals are more and more common.

But even while customers are still clamoring for the $154 Chateaubriand steak for two at Keens Steakhouse, enterprising operators see the appeal of a steak dinner that’s more approachable, and affordable, for everyday dining. Medium Rare, which opened over Labor Day weekend in Manhattan’s Kips Bay, is the latest to offer what seems like an impossible steak deal. For $35 per person, the restaurant serves a six-ounce serving of sliced Culotte steak (top sirloin cap) followed by an offer for seconds, with a “secret sauce” (a creamy accompaniment reminiscent of au poivre), a simple green salad, and unlimited French fries. According to Mark Bucher, who co-founded the restaurant’s original DC location in 2011, the New York restaurant doubled the company’s initial sales projections in its first three weeks. (He declined to cite actual figures.)

It’s hardly surprising that New Yorkers are excited about the recent steak deflation trend. For about the same price as one 32-ounce tomahawk steak at Del Frisco’s ($135 without sides or salads) in Midtown Manhattan, four people can enjoy a meal at Medium Rare. Affordably priced set menus, says Mr. Bucher, also attract more repeat customers, who are looking for a streamlined dining experience that simplifies the decision-making process. According to Mr. Bucher, 86% of Medium Rare customers in Washington dine there at least once a week.

But the value proposition is increasingly challenging to sustain with US beef prices rising by more than 40% since the pandemic began. At Skirt Steak, which opened near Penn Station in Chelsea in 2021, chef Laurent Tourondel offers a $45 set menu that includes an eight-ounce prime skirt steak with peppercorn bearnaise sauce, market salad, and fresh-cut fries. Three years in, business is still booming but controlling prices hasn’t been easy. “It’s been challenging from Day 1,” says Mr. Tourondel. “We’ve had to raise the price three times since we opened, but I refuse to sacrifice quality.” (The menu was originally priced at $27.)

Mr. Bucher says his company controls costs by locking in annual contracts with vendors when beef prices are traditionally lowest, such as around Easter, when meats like lamb are more popular. “Because we buy one cut of steak and do massive volume, our raw material prices go down every time we open a new unit,” he says.

Managing a menu with limited choices brings other built-in operational advantages. At Medium Rare, less than 10% of the restaurant is dedicated to kitchen space, which allows Mr. Bucher to allocate more square footage to customer seating. Skirt Steak has been able to boost check averages with upsells, such as offering to upgrade the steak to wagyu beef ($25), a la carte side dishes such as stuffed mushrooms ($12) and a roving, glass-enclosed dessert cart that tempts guests with an array of desserts ($12) including a homemade peach and raspberry tart and New York-style cheesecake.

Meanwhile, local stalwarts such as Le Relais de Venise, the Parisian import that opened in Midtown in 2009, survive by hewing closely to tradition. After shuttering its original location on Lexington Avenue during the pandemic, the restaurant reopened this past winter in a new space on East 54th Street and was immediately greeted with lines out the door for its $38 prix fixe — a thinly sliced six-ounce sirloin bathed in its signature butter sauce (allegedly laced with chicken livers), a mustardy green salad with walnuts, and French fries. “We don’t want to be trendy,” says Darin Nathan, one of the partners in the New York restaurant. “We cater to the masses, not the classes.” Even though the new location has 48 fewer seats, Nathan says sales haven’t suffered.

In early July, Legasea scaled back the unlimited ribeye deal to offer it exclusively on Sundays and Mondays. “Guests were exceeding our projections on how much they could eat,” says Tao Group’s Strauss. “Revenues were up, but our food and labor costs were higher than any venue in our company.” To account for higher costs, the restaurant raised the price of the all-you-can-eat offer to $49 and added a more affordable 14-ounce ribeye with fries to its a la carte menu for $39. “The venue has remained popular, but of course Sundays and Mondays are now our most popular nights of the week,” Strauss says. — Bloomberg

BSP revises rediscounting facility

BW FILE PHOTO

THE BANGKO SENTRAL ng Pilipinas (BSP) has launched an “enhanced” rediscounting facility that would let banks directly offer central bank securities in exchange for advances.

The Discount Window Facility will replace the old rediscounting facility, it said in a statement late on Tuesday.

“The BSP will enhance its rediscounting facility, adding advances against government and BSP securities, helping align its credit operations with global best practices,” the BSP said.

It will take effect in November, it added.

BSP only rediscounts loans, accepting government securities as additional collateral. Under the new facility, banks can directly offer state debt and BSP securities in exchange for advances, it said.

“This gives the BSP an additional mode to influence credit volume, consistent with its objectives of maintaining price and financial stability,” it added.

Banks can tap approved Discount Window Facility lines by rediscounting loans or by offering their government or BSP securities for advances.

“Banks can tap existing rediscounting lines until these lines expire a year after their effectivity, but only for rediscounting loans,” it added.

Credit instruments that are eligible for rediscounting include interbank, extended and restructured, past due, unsecured and personal consumption loans. It also covers loans to nonbank financial institutions and those funded by other borrowings.

Meanwhile, the BSP said it would accept unencumbered marketable debt instruments issued by the National Government or BSP as eligible collaterals for advances.

“Banks shall execute a security agreement and register any notice or take any action necessary to perfect the Bangko Sentral’s security interest over their eligible collaterals and make it binding against third parties prior to any availments,” it added. — Luisa Maria Jacinta C. Jocson

Digital solutions, AI seen to boost PHL education sector

STOCK PHOTO | Image by DC Studio from Freepik/THIS RESOURCE WAS GENERATED WITH AI

EDUCATIONAL TECHNOLOGY (edtech) and artificial intelligence (AI) can help improve efficiency among learners and educators in the Philippines, experts said.

“I do think if the Philippines doesn’t embrace hybrid learning and technology in face-to-face ways, it could easily slip behind in its competitiveness,” Martin Bean, chief executive officer of The Bean Centre and professor at the University of New South Wales, told BusinessWorld at the sidelines of an event this month.

The Bean Centre partners with education experts, technology companies, and education providers.

Ryan Lufkin, vice-president of Global Academic Strategy at Instructure Holdings, Inc., said AI can boost learning efficiency among both educators and students.

“AI literacy training is key to really upping that skill level for educators and students across the Philippines,” Mr. Lufkin said.

Instructure is the maker of learning management system Canvas, which is used in many  Philippine educational institutions. Canvas recently rolled out AI-powered tools like automated discussion summaries, content translation, and a Smart Search API feature.

“Discussion summaries seem simple, right? But if you’ve got a large class with 100 students, those discussions get very large very quickly. [By using Canvas’] discussion summary, we can hit a button and understand exactly what conversation is being had without having to go through hundreds of posts,” Mr. Lufkin said.

Mr. Bean said some uses of generative AI for student services include personalized course advice, interactive career development, sentiment analysis, and smart campus navigation, among others.

For learning and teaching, it can help with grading support, plagiarism detection, assessments, personalization of course materials, and content summarization, he added.

Both Mr. Bean and Mr. Lufkin said that educators should be given ample time for AI training to fully reap the technology’s benefits, as its use also comes with various risks and challenges.

“We need to make sure that the models we’re using aren’t skewing towards those biased feedback in the content that they generate,” Mr. Lufkin said.

According to the Digital Education Council Global AI Student Survey 2024, 58% of students feel they do not have sufficient AI knowledge and skills.

Meanwhile, 72% agree that universities should provide training for students on AI and expect faculty to be prepared for AI integration.

Mr. Bean added that edtech companies should also invest in offline and mobile-first technologies to support educations in countries that lack digital infrastructure.

“Instructors’ desire to double down on offline experiences for their technologies is a classic example of not running away from the challenge, but actually being prepared to invest in the technologies to meet the challenge,” he said. — A.R.A. Inosante

NAIA: Now comes the hard part

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The Bureau of the Treasury was reported to have recently received P30 billion in upfront payment from San Miguel Corp. (SMC) as its New NAIA Infrastructure Corp. (NNIC) took over from the government the operations of the Ninoy Aquino International Airport (NAIA) complex consisting of four terminals and two runways.

In March, SMC won the bid to rehabilitate and modernize NAIA. Last week was the official turnover of NAIA’s operations and maintenance to NNIC, in line with its 15-year modernization program to improve the gateway. The government expects to receive around P900 billion during the 15-year concession period through yearly payments plus a share in airport revenues.

If NNIC does well, its concession to operate NAIA can be extended by 10 years. Its target is to increase airport capacity to 62 million from 35 million passengers annually, and to raise flights to 48 from 40 per hour. One can only hope that the Marcos II Administration, through NNIC, will succeed where many other administrations have failed: making NAIA efficient.

If memory serves me, one of the more famous examples of airport privatization was London’s Heathrow, which was turned over to private operators in 1987. Heathrow is said to be the first ever privatized airport, following the sale of the British Airports Authority (BAA). Heathrow Airport Holdings successfully improved airport capacity, efficiency, and passenger services.

In 2001, Lima, Peru’s Jorge Chavez International Airport was also privatized. It is now one of the busiest hubs in South America. Sydney Airport in Australia followed in 2002, then Mumbai International Airport in India in 2006. In Germany, Frankfurt Airport is only partially privatized with the involvement of privately owned Fraport AG. Many other airports were privatized after.

Over here, NNIC’s payment of P30 billion is just the start. What comes after is the hard part. Obviously, NAIA’s rehabilitation will not happen overnight. Meantime, as the airport complex undergoes modernization, there will be plenty of birth pains to experience. On average, airport privatization typically begins to show positive results after three to five years.

For sure, there will be plenty of confusion during the transition of airport management to NNIC. Moreover, as NNIC undertakes infrastructure development, parts of the airport complex will have to be closed for renovation. While management change can result in operational improvements, significant operational efficiencies such as faster processing times and improved passenger experience can be expected only after the development phase.

The goal is for NAIA to accommodate more passengers and aircraft. But even with increased volumes, there should be reduced passenger processing times and better utilization of airport resources, and higher standards of customer service and user satisfaction. It is only after this that the airport operator can expect better profitability from aeronautical revenues (fees from airlines) and non-aeronautical revenues (retail, parking, real estate, etc.).

This is not to say that privatization is the only solution. In fact, among the world’s best airports are several which are government-operated such as Singapore’s Changi, Tokyo’s Haneda and Narita, Doha’s Hamad, Seoul’s Incheon, Paris’ Charles De Gaulle, Hong Kong’s International Airport, and Germany’s Munich airport.

The Changi Airport Group is under the Singapore government. Haneda is run by Japan Airport Terminal Co., Ltd. and the Japanese government, while Narita is run by the government-owned Narita International Airport Corp. Doha Hamad is operated by Qatar Airways, which is a state-owned enterprise, while Incheon International Airport Corp. is also state-run.

Charles de Gaulle is managed by the partly privatized Groupe Aéroports de Paris, while Munich Airport is operated by Flughafen München GmbH, which is majority-owned by the German government. Hong Kong International Airport is managed by the Airport Authority Hong Kong, a statutory body.

In the case of NAIA, I believe SMC is utilizing the expertise of the Incheon International Airport Corp. (IIAC). But considering that IIAC is 100% owned by Korea’s Ministry of Land, Infrastructure, and Transport, does this mean that a foreign government agency is going to be part of the consortium that would now run the Philippines’ main international airport?

Bottomline, NAIA is in dire need of rehabilitation. Its Runway 06/24 and taxiways are 70 years old, while its Terminal 1 is 43 years old. The control tower is also around 61 years old. Terminal 3, the newest terminal, was opened 16 years ago. Runway 13/31 is even older than 06/24, having been part of Nichols Airfield since World War II.

The Manila airport started operations in 1935 in Grace Park, Caloocan. In 1937, Nielson Airport opened in Makati, with what is now Ayala Avenue and Paseo De Roxas as parts of its runways. Nielson was closed in 1948, after the war, and airport operations were moved to its present site adjacent to Nichols Air Base (now Villamor) and made use of the base runway (13/31).

A longer international runway (06/24) was built in 1954, while the construction of a control tower and international terminal did not start until 1956. The international terminal was opened in 1961, but was closed after a fire in 1972. A smaller terminal was built beside it and this was used until Terminal 1 was opened in 1981. Terminal 2 was built in the 1990s. Terminal 3 partially opened in 2008.

As I have written before, it is obvious that NAIA is operating beyond capacity and is in desperate need of expansion and modernization. I used to think that rehabilitation would do little to improve capacity unless new runways were added. But I have been recently made to believe that even with just two runways, NAIA can still be made more efficient and more comfortable.

To airline passengers and other airport users, I doubt very much if it matters whether an airport is managed and operated by the government or a private corporation. After all, what counts is how service is delivered, and not necessarily who delivers it. As for ownership, being strategic public assets, I believe that airports should remain state-owned.

In NAIA’s case, it will remain state-owned. Only operations were privatized. The Cebu and Clark airports are also owned by the government. But the Mactan-Cebu International Airport is now operated by GMR Megawide Cebu Airport Corp. while Clark International Airport is run by Luzon International Premier Airport Development Corp. Cebu and Clark are seemingly better run than NAIA to date. So, with the privatization, there is still hope for NAIA.

 

Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippine Press Council

matort@yahoo.com

FLI to do P1.87-B voluntary tender offer via share swap for FILRT stocks

FILINVEST Land, Inc. (FLI) plans to make room for potential asset infusions into its real estate investment trust (REIT) company as the property developer’s board approved a P1.87-billion capped voluntary tender offer via a share-swap deal in exchange for Filinvest REIT Corp. (FILRT) stocks.

The tender offer aims to purchase or reacquire up to 1.866 billion FLI common shares, equivalent to 7.69% ownership, in exchange for FILRT shares owned by the property developer, FLI said in a statement to the stock exchange on Wednesday.

FLI shares will be exchanged at P1, which FLI said is “a 56% premium” to its 10-day and 30-day volume-weighted average prices (VWAP), both at 64 centavos. FILRT has a 10-day VWAP of P3.11 and a 30-day VWAP of P3.08.

The company will exchange 0.32 FILRT share for every one FLI share tendered.

Once the share swap is completed, FILRT’s public ownership will reach 46.75%, higher than the current 34.48% as well as the 33.33% minimum public ownership threshold set by the local bourse operator for REITs.

FLI President and Chief Executive Officer Tristaneil D. Las Marias said the share swap provides room for a “potential dividend-accretive asset infusion by FLI into FILRT.”

“Despite current share price challenges, we continue to believe in the intrinsic value of FLI, as we enter a more positive macroeconomic environment that favors our business. The share buyback allows existing FLI shareholders to unlock value,” Mr. Las Marias said.

“Not only does the offering value their shares higher than the current FLI market price, but they are also getting higher-yielding FILRT shares in return. With this offering, we intend to safeguard our investors from market volatility to allow them to maximize value from our shares,” he added.

FLI tapped FTI Consulting to issue a valuation and fairness opinion to determine the reasonable and fair range of prices for both shares and the exchange ratio between FLI and FILRT shares.

Meanwhile, FLI said the tender offer provides an opportunity for FLI shareholders to participate in REITs and to gain exposure to “income-generating properties with the potential for capital appreciation.”

“FLI shall submit its reinvestment plan on settlement date of the voluntary tender offer for the total value of FILRT shares that will be exchanged pursuant to such tender offer. The cash equivalent of the total value of FILRT shares shall be allotted by FLI for reinvestment for real estate projects in the Philippines,” the property developer said.

FLI improved its first-half attributable net income to P1.54 billion as consolidated revenue jumped by 15.8% to P11.49 billion, led by the growth of its residential and co-living segments.

FILRT saw a 7% increase in its net income for the first semester to P601 million. Despite the higher net income, the company recorded an 11% drop in revenue to P1.4 billion, which was offset by 3.1% reduction in costs and expenses to P643 million on “prudent” management of company resources.

The REIT company has a portfolio consisting of 17 office buildings spanning over 300,000 square meters of gross leasable area, of which 16 are located in Filinvest City, Alabang and another building in Cebu City. It also has a 2.9-hectare land leased to the owner and operator of Crimson Resort & Spa Boracay.

On Wednesday, FLI shares rose by 22.06% or 15 centavos to 83 centavos each while FILRT stocks gained by 1.63% or five centavos to P3.11 per share. — Revin Mikhael D. Ochave

Hong Kong plans to cut tax on liquor in bid to revive nightlife

CHI LOK TSANG-UNSPLASH

HONG KONG is planning to lower the amount of tax it levies on spirits, according to people familiar with the matter, as the Asian financial center seeks to regain its edge as a premier destination for nightlife, dining, and shopping.

The reduction is expected to be one highlight of Hong Kong Chief Executive John Lee’s policy address in mid-October, the people said, asking not to be identified because the deliberations are private. Liquor that has an alcohol content of more than 30% currently attracts a duty equivalent to 100% of its value in Hong Kong — among the highest anywhere in the world.

One approach the government is considering is a tiered system whereby more expensive spirits would be taxed less, one of the people said. It’s thought that could boost spending on premium liquor among a higher value type of clientele while discouraging consumers to stock up on cheap drink in a bid to also limit health risks, the person said.

Discussions around the spirits tax aren’t final and may still change, the people said.

Representatives for Mr. Lee’s office didn’t respond to a request for comment.

If implemented, the move would mark Hong Kong’s latest effort to rekindle sales for restaurants, bars, and retailers, all of which have been struggling with fewer tourists post COVID. There’s also been a slowdown in domestic spending amid lackluster property and financial markets.

At the same time, the city is under increasing pressure to regain its relevance as a travel and shopping hub as it faces rising competition from metropolises in mainland China, as well as Singapore and Japan, where there is a travel boom thanks to the weak yen.

Retail sales in Hong Kong fell 12% in July from the year prior and are still 25% down on 2018 levels, before Hong Kong’s economy was battered by years of political unrest and pandemic isolation. While restaurant receipts for the second quarter weren’t so far below 2018 levels, sales for bars were down almost 30%, making those types of establishments the worst hit.

The planned tax cut also reflects Hong Kong’s ambition to become a center for spirits trade, capturing a bigger share of an industry that’s estimated to have contributed $730 billion to the global economy in 2022, including $390 billion in tax revenue, according to a July report by the World Spirits Alliance.

Hong Kong in 2008 removed all duties on non-spirits-based alcohol drinks and saw strong growth in the wine trade the following year, with imports jumping 80% to HK$3.2 billion ($411 million), government data show.

More than 800 businesses related to wine sprung up in the following two years, including traders, retailers, restaurants, bars, and logistics firms. Total industry revenue meanwhile grew 30% over two years to HK$5.5 billion.

Tax on spirits accounts for a relatively small amount of Hong Kong’s overall revenue from duties, estimated to be about HK$717 million this financial year, or 5.6% of the total, according to government data. — Bloomberg

BSP coin deposit machines yield P950M as of Sept. 15

PHILSTAR FILE PHOTO

THE PHILIPPINE central bank’s coin deposit machines have collected P950.36 million worth of coins as of Sept. 15 this year, it said in a social media post on Wednesday.

This was a 6.9% increase from the P888.7 million collected a month ago. There were 228,482 transactions covering 250 million coins deposited in the machines, BSP data showed.

The BSP and its retail partners launched the deposit machines in June 2023 to help promote efficient coin recirculation.

It aims to address artificial coin shortage in the financial system and help ensure that the public uses only fit and legal tender.

All denominations of the BSP Coin Series and New Generation Currency Coins Series are accepted by the machines. Unfit and demonetized coins, foreign currency and foreign objects get rejected.

The value of coins deposited in the machines may be credited to a person’s e-wallet account or converted into shopping vouchers.

In February, BSP Deputy Governor Bernadette Romulo-Puyat said the central bank wanted to roll out another 25 deposit machines this year.

There are 25 deposit machines available in the Greater Manila Area. They can be found in select retail establishments of the SM Store, Robinsons Supermarket and Festival Mall. — Luisa Maria Jacinta C. Jocson

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