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The perks of realizing sustainable transportation

Photo by DCSTUDIO/freepik

The evolution of transportation has been one of the hallmarks of human progress, facilitating the mobility of people, goods, and ideas around the globe. However, this advancement has come at a cost, with conventional transportation systems contributing significantly to environmental degradation, social inequalities, and economic inefficiencies. In response to these challenges, sustainable transportation has emerged as a way to reshape the future of mobility for the better.

According to the International Institute for Sustainable Development (IISD), sustainable transportation refers to the provision of services and infrastructure for the mobility of people and goods in a manner that is safe, affordable, accessible, efficient, and resilient while minimizing carbon and other emissions and environmental impacts.

Sustainable transportation promotes equality and economic development. Thus, the concept of sustainable transportation transcends beyond mere efficiency, as it envisions a holistic approach that harmonizes human mobility while rebuilding the future.

Environmental urgency

Traditional modes of transportation that rely on fossil fuels are significant contributors to air pollution, greenhouse gas emissions, and habitat disruption. According to a report from IISD, transportation is responsible for a majority of economic and social development challenges, accounting for 64% of global oil consumption, 27% of all energy use, and 23% of energy-related carbon dioxide emissions.

Transportation requires a significant amount of energy, much of which comes from non-renewable sources. This energy consumption contributes to climate change by increasing the demand for fossil fuels and other non-renewable resources. Fossil-fueled transportation emissions also create smog, soot, and other harmful air pollution.

Embracing sustainable options, such as electric vehicles (EVs) powered by renewable energy sources, significantly reduces greenhouse gas emissions. For instance, electric buses and trains, as well as bus rapid transit (BRT) systems, are found to be capable of carrying people more efficiently than cars.

Social equality

In urban areas, marginalized communities may have limited access to reliable, affordable transportation options. As such, people who do not have access to transportation, particularly in areas with limited transportation, may face difficulties accessing employment, education, healthcare, and other essential services. According to the 2020 UN Sustainable Development Goals Report, only half of the world’s urban population has convenient access to public transportation.

Higher-income groups typically have more transportation alternatives and easier access to stations, bicycles, bike lanes, and other modes of transportation. In contrast, people from low-income households are more likely to have restricted access to modes of transportation, which can exacerbate already-existing disparities and social exclusion.

Sustainable transportation aims to provide equal access to transportation options for all individuals, regardless of their socioeconomic status and background. The concept of sustainable transportation is to create an affordable, accessible, and convenient transportation system for everyone, reducing mobility disparities between social groups, as noted by the United Nations.

Creating transportation systems that promote gender equality requires a holistic approach that considers everyone’s needs, experiences, and challenges. Thus, sustainable transportation initiatives often prioritize safety and security in urban planning. According to the International Transport Forum, well-lit and pedestrian-friendly infrastructure can enhance the safety of women who may feel vulnerable, especially during evening hours.

Economic benefits

The country’s worsening traffic problem and the seen inefficiencies in the transport system have affected the economy. According to the Philippine Institute for Development Studies, Filipinos waste roughly P5.5 billion annually on traffic in Epifanio de Santos Avenue (EDSA) alone. This amount reflects the value of time lost due to delay, fuel costs, impact on health, and environmental destruction.

Promoting sustainable transportation modes, such as public transit, cycling, and walking, encourages a shift away from private vehicles. This approach reduces the number of cars on the road, alleviating traffic congestion and improving overall traffic flow.

The shift towards sustainable transportation and practices drives innovation and economic growth. Thereby, EVs, high-speed rail systems, and clean energy sources create new industries, job opportunities, and investments. According to a study by the United Nations Economic Commission for Europe (UNECE), greening the transport sector in the post-COVID-19 recovery could create up to 15 million jobs worldwide.

Reimagining mobility options

The traditional approach to mobility, centered around private car ownership and reliance on gasoline-powered vehicles, has led to various problems. Urban areas have traffic congestion, which wastes time and productivity and contributes to air pollution and greenhouse gas emissions. Additionally, the automobile-centric lifestyle has caused a disconnect between communities and increased health issues.

According to IISD’s report, sustainable transportation can be achieved through promoting low and zero-emission vehicles, developing sustainable infrastructure, optimizing transport operations and logistics, implementing transit-oriented development, and using sustainable transportation performance measures to evaluate the effectiveness of sustainable transportation initiatives.

The shift towards sustainable transportation offers benefits that extend beyond environmental considerations. Reduced traffic congestion leads to less time wasted in transit, improved air quality enhances public health, and increased reliance on active transportation modes promotes physical fitness. Moreover, sustainable transportation can stimulate economic growth by creating jobs in industries related to manufacturing, infrastructure development, and technology innovation. — Mhicole A. Moral

Building the bridge towards digital inclusion

By Bjorn Biel M. Beltran, Special Features and Content Assistant Editor, BusinessWorld

The benefits of the digital age need no more preaching. They are obvious to anyone living in any major city anywhere in the world. It is an understatement to say that technology — particularly the internet — has completely changed modern life.

But not for everyone. The United Nations Development Programme put it best: “Digital technology is advancing at an incredibly rapid pace all over the world — but it’s not happening evenly. Around 60 percent of the world’s population is now online, but most of those people are in developed countries. In less-developed countries, only one in five people are online.”

“This matters because education, work, and public services are increasingly reliant on digital access. Lack of connectivity therefore is a growing impediment to human development,” Robert Opp, chief digital officer of the UNDP, wrote.

In the Philippines, the digital divide is easily seen in data. According to “DataReportal’s Digital 2023 Report,” there were 85.16 million internet users in the Philippines recorded at the start of 2023, putting internet penetration at 73.1%.

The Department of Information and Communications Technology (DICT) in June puts the number higher at around 83%, but admits that many of such internet users have only a shallow relationship with the technology.

“The Philippines is already — I think, in five or six successive surveys, global surveys — first in terms of use of internet. The world average is only around six hours (of internet use daily). In the Philippines, we have more than 10 hours exposure,” DICT Undersecretary Jocelle Batapa-Sigue had said.

“The global average use of internet for social media is two to three hours only. But in the Philippines, it is four to five hours, it is double. There are many countries with strong internet, and many users of the internet. But they use it for productive means, for learning, for employment, for building new enterprises, for government transactions,” she said.

Ms. Sigue pointed out that this highlights a key problem with the digital divide: “It is not only about connectivity. The digital divide is also caused by digital gap in terms of skills. We need to really emphasize on digital skilling, especially in the countryside.”

Closing the ‘digital divide’

Clearly, addressing the digital divide needs both addressing the lack of accessible means by which many Filipinos can utilize the internet, and the lack of digital literacy to navigate the continuously changing internet landscape — a daunting task for the government alone.

The Bankers Institute of the Philippines (BAIPHIL) is committed to helping the government with this goal, as they celebrate the start of Fiscal Year 2023-2024 with the theme “Bridging the Digital Gap in Financial Services.”

“Though it’s true that the pandemic accelerated the digital transformation of the country, the pandemic made it more pronounced, more obvious, this big gap. For many students, they may not be able to complete assignments because they do not have computers or access to the internet. For employees, they may not be able to work remotely due to connectivity issues; they may not have access to information on job opportunities. For many seniors, they cannot access online medical consultations because of this digital divide reinforcing socioeconomic inequality,” Ms. Racquel B. Mañago, president of BAIPHIL, said in an interview.

“The goal is to close that gap, or at least minimize the gap or divide. The ultimate goal is for digital financial inclusion which is possible when we bring technology and digital know-how to everyone so no one is left behind.”

She said that BAIPHIL, as an organization comprised of the country’s most prestigious financial institutions and respectable bankers, can help push the digital agenda, both among the financial industry and outside of it.

“Digitalization will make the banking industry more competitive. Innovation will drive efficiencies and bring about wider reach. Digitalization is imminent and BAIPHIL is here to help,” she said.

Part of this effort is by promoting the BSP’s initiatives relative to the Digital Payments Transformation Roadmap. In its biennial convention held last March 11, BAIPHIL in partnership with Philippine Payments Management, Inc. (PPMI) awarded the 2022 Bank Champions in Digital Payments & Financial Inclusion Initiatives; namely: Grand Champion — Rizal Commercial Banking Corp., 1st Runner-Up — Land Bank of the Philippines, and 2nd Runner-Up — Robinsons Bank Corp.

BAIPHIL recognizes that collaboration is essential in bridging the digital gap. The organization actively engages with various stakeholders, including government agencies, financial institutions, and technology providers, to foster a collaborative environment.

Such an initiative is through the various financial literacy programs the organization is running in partnership with the BSP to educate parents of elementary school children and their teachers about financial literacy. BAIPHIL also partners with Rags2Riches, Inc. to train artisans who are mostly women from Payatas.

BAIPHIL’s financial literacy programs are open to members of LGUs and senior citizens as well. The organization plans to offer digital financial literacy programs as a supplement to teach Filipinos the skills needed to navigate financial services with the skills to use digital technologies.

As part of its corporate social responsibility advocacies, BAIPHIL has in the past donated old computers and solicited donations to purchase computers for schools. BAIPHIL is looking to do something similar.

In addition to helping bankers and consumers make sense of the currently evolving financial landscape, Ms. Mañago also underscored their efforts at promoting the security of the country’s digital financial system.

What is now known as the Bankers Institute of the Philippines, Inc. (BAIPHIL) was established in 1941 as a non-stock, non-profit corporation with the primary objective of enhancing efficiency and uniformity in bank accounting, auditing, and operations among banks.

The Institute has grown from a modest group of primarily accountants and auditors into a prestigious and respected institution for bankers. It now has 71 institutional members, including universal, commercial, and thrift banks, as well as organizations involved in the banking industry.

It currently boasts more than 250 prominent executives who actively contribute to its different projects as associates and sustaining life members.

Throughout eight decades of its existence, the institute continuously pursues its purpose of assisting banks in increasing productivity through research, information exchange, and education programs.

 

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Oil prices seen to remain elevated

REUTERS

PHILIPPINE INFLATION could again breach the target in 2024 and 2025, the Bangko Sentral ng Pilipinas (BSP) warned, as it raised forecasts for Dubai crude oil prices for the next three years.

The BSP in its latest monetary policy report said Dubai crude oil would average $81.90 per barrel this year, higher than the previous forecast of $77.20 per barrel given in May.

It also sees Dubai crude oil slightly higher at $82.30 per barrel next year from $72.70 per barrel previously, before easing to $78 per barrel in 2025.

According to the BSP, the projections were based on the average futures path from July 31 to Aug. 9. This was because the Organization of the Petroleum Exporting Countries (OPEC) and its allies, also known as OPEC+, continued to reduce oil output this year.

“The sharp rise in the global crude oil price path reflects expectation of declining international oil inventories owing to the extended production cuts of OPEC+ countries announced in June and an extension of voluntary cuts through September by Saudi Arabia,” the BSP said.

The BSP said global liquid fuel consumption may also increase this year and in 2024 due to robust demand from non-Organisation for Economic Co-operation and Development countries such as China and India.

The central bank also cited the US Energy Information Administration, which expects global oil inventories to transition to consistent inventory draws until the fourth quarter of 2024 from inventory builds in the first half this year. This may put upward pressure on global oil prices during the period, it added.

The BSP said if average oil prices reach $95 per barrel next year and $105 per barrel in 2025, inflation may breach the 2-4% target once again.

This was the result of a simulation in which the BSP analyzed scenarios to determine the inflationary impact of several outturn for global oil prices. In the simulation, prices ranged from $60 to $120 per barrel.

“It should be noted that these oil price scenarios considered only the direct effects and do not incorporate any potential second-round effects on transport fares, food prices, and wage increases among others,” the BSP said.

Last week, the BSP raised its 2023 inflation forecast to 5.6% from 5.4% previously. It also hiked projections to 3.3% for 2024 (from 2.9%), and to 3.4% (from 3.2%) for 2025.

“The upward adjustments in the inflation forecast path over the policy horizon were driven mainly by the significant rise in Dubai crude oil prices in recent weeks,” the BSP said. 

The consumer price index (CPI) slowed for a sixth straight month to 4.7% in July, bringing the seven-month average to 6.8%.

‘UNLIKELY’
According to analysts, global crude oil prices are unlikely to breach the $100-per-barrel level for the next three years.

“It will be difficult for global crude oil prices to breach above the $100 mark, unless there are geopolitical risks involving major oil producing countries that would lead to supply disruption globally,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

He noted that economies have reduced their reliance on oil as a major source of energy, reflected by a greater shift towards renewable power sources.

China Banking Corp. Chief Economist Domini S. Velasquez said oil prices will likely stay elevated at $80-$90 per barrel due to supply constraints and as demand remains strong, but this may be offset by China’s slow recovery.

“For next year, we are assuming oil prices to be below $100 per barrel. Unless geopolitical tensions between Russia and Ukraine worsens or other geopolitical shocks materialize, we expect oil prices to be nearer its historical price of $80-$90,” she said in a Viber message.

A likely stronger peso will also help in stabilizing domestic pump prices, she said.

“For this year, aside from higher oil prices and a recent uptick in key food items, we expect inflation to be slightly higher than BSP’s projections. Our emerging inflation estimate for this year is 5.8% and 3.1% next year,” Ms. Velasquez said.

The BSP sees inflation slowing to 3.4% in the fourth quarter.

Meanwhile, prices of non-oil commodity items are seen to remain stable in the coming years due to good supply conditions amid a weakening global demand, the BSP said.

The BSP cited the International Monetary Fund’s (IMF) World Economic Outlook which projected that non-fuel price inflation globally may decline to 4.8% this year, 1.4% in 2024, and 0.5% in 2025.

“Meanwhile, the potential impact of El Niño weather conditions on global non-oil prices is projected to be muted. This reflects the relatively small weight of global rice prices in the IMF’s non-energy price index at only 1%, which is lower than the weight of rice in the domestic CPI basket,” it said.

According to the state weather agency, El Niño will likely persist until next year. The El Niño weather pattern increases the likelihood of below-normal rainfall conditions, which could bring dry spells and droughts in some areas of the country. — Keisha B. Ta-asan

House to accommodate DND chief’s proposals in MUP pension reform bill

The government wants to reform the pension system for military and uniformed personnel (MUP) to avert a fiscal crisis. — PHILIPPINE STAR/EDD GUMBAN

By Beatriz Marie D. Cruz, Reporter

CONGRESSMEN will debate proposed changes to a bill seeking to reform the pension system for the Philippine military and police, including fully indexing pensions to the salary increases of active personnel and exempting all active members from making contributions, according to Albay Rep. Jose Maria Clemente S. Salceda.

This comes after Defense Secretary Gilberto C. Teodoro, Jr. objected to key provisions of the military and uniformed personnel (MUP) pension reform bill that was approved by a House ad hoc committee last week.

“As chairman of the ad hoc committee, I would like to assure the (Defense) secretary that his requests are acceptable,” Mr. Salceda, who also heads the House of Representatives Ways and Means Committee, said in a statement.

“We will adopt the Teodoro proposal of indexation for all retired and retireables and a transitioned contribution scheme… And I will heed the request for full indexation for those who are retired and due for retirement.”

Mr. Teodoro had opposed the bill’s provision that capped the indexation of pensions to 50% of the salary increase of active personnel, from the 100% automatic indexation.

Under the current pension system, pension payments to retired MUPs are automatically indexed to the current salaries of personnel in active service.

“Of course, the proposal will add some P1.2 trillion more to the actuarial reserve deficiency, from the current P2.2 trillion under the current substitute bill,” Mr. Salceda said.

He also appeared amenable to addressing Mr. Teodoro’s concerns over the proposed blanket mandatory contributions for military personnel, particularly those who have completed at least 20 years of service.

Under the bill, all MUP would be required to contribute to the pension fund. For active personnel, they would contribute 5% for the first three years, 7% for the following three years, and 9% thereafter. New entrants would have to contribute 9% immediately, with the government contributing 12%.

However, Mr. Salceda said he will ask the Department of National Defense (DND) to clarify its objections to the bill.

“We are hearing clarifications that they just want to ensure that those who have given 20 years of service or more will not pay contributions or be subject to lower indexation. Our initial impression from (Mr. Teodoro’s) statement is that they don’t want anybody from the active service to pay any contribution or to give up any amount of indexation,” he said.

Mr. Salceda expects some pushback on Mr. Teodoro’s proposals from the economic managers but expressed hope these will be sorted out within the Executive.

“I would also like to remind all stakeholders that the aim of fiscal sustainability is to ensure that the pension system is substantially preserved in a way that can still be guaranteed by the State. In other words, a reform that is not too expensive, but also not too disruptive,” he said.

Sought for comment, Finance Secretary Benjamin E. Diokno said he will wait for the final House version before giving a statement.

Leonardo A. Lanzona, who teaches economics at the Ateneo de Manila University, said Mr. Teodoro’s proposed changes to the bill would not solve the pension system’s problem “entirely” but “at least it does not aggravate the problem.”

“Since people apparently are willing to provide for the retirement needs of soldiers, why doesn’t the state also take care of the health and other needs of everyone, not just a select group,” he said.

Defense and security analyst Chester B. Cabalza said a “mutual contribution” only for new entrants is “achievable.”

“As long as the 9% contribution will redound to the public service of the MUP entrants in their long and entire service for the country and will not be burdened to the additional 12% coming from the government, it becomes a win-win solution for the sustainability of the MUP pension system,” Mr. Cabalza, founding president of the Manila-based International Development and Security Cooperation, said via Messenger chat.

The MUP pension reform bill is part of the Legislative-Executive Development Advisory Council’s list of priority measures that are targeted for approval by end-2023.

BSP keeps 3% interest rate ceiling on credit card transactions

REUTERS

THE BANGKO SENTRAL ng Pilipinas’ (BSP) policy-setting Monetary Board has kept the 3% interest rate ceiling on credit card transactions unchanged.

“The BSP’s decision to maintain the current ceilings on credit card transactions strikes a balance between providing consumers with access to credit card financing at steady rates and ensuring long-term viability of banks/credit card issuers so that they can continue to provide quality service to their clients,” BSP Governor Eli M. Remolona, Jr. said in a statement on Tuesday.

The maximum interest rate on unpaid outstanding card balance of a cardholder was maintained at 3% per month or 36% a year.

Meanwhile, the monthly add-on rate that credit card users can charge on installment loans is still at 1%.

The maximum processing fee for credit card cash advances will remain at P200 for each transaction. 

The BSP will review the ceilings on credit card transactions after six months.

The move followed the earlier decision of the Monetary Board in January, where it hiked the credit card cap to 3% from 2% previously. This was meant to reflect the BSP’s policy tightening and to mitigate the impact of inflationary pressures on banks and credit card issuers. 

The BSP hiked its benchmark interest rate by 425 basis points to a near 16-year high of 6.25% from May 2022 to March 2023.   

Under the Republic Act (RA) No. 10870 or the Philippine Credit Card Industry Regulation Law, the BSP has supervisory authority over all credit card issuers.

As of end-May, credit card receivables grew by 29% annually, higher than the 17.1% year-on-year growth registered a year ago.

Credit card billings surged by 34.6% as of end-March, from the 28.5% growth a year ago, reflecting the firm demand for credit cards, the BSP said.

Banks and credit card issuers also maintained the quality of their credit card portfolio amid the expansion in receivables.

Nonperforming credit card receivables reached P23.4 billion as of end-May, lower than P29.3 billion in the previous year.   

The ratio of nonperforming credit card receivables to credit card receivables also declined to 3.9% as of end-May from 6.3% as of end-2022.

According to the central bank, it will continue to pursue strategies in promoting digitalization in the financial industry.   

“Through the prudent use of innovation, banks/credit card issuers will be able to improve delivery of their services as well as enhance customer experience at lower operating cost,” it said.   

The BSP will also continue to highlight the importance of responsible credit card usage in its financial literacy programs. This will help consumers make appropriate personal financial decisions.   

“All these efforts are geared towards ensuring a resilient, dynamic and inclusive financial system,” the BSP said. — Keisha B. Ta-asan

Catch-up spending plans need to also boost productivity, say analysts

PHILIPPINE STAR/MIGUEL DE GUZMAN

By Luisa Maria Jacinta C. Jocson, Reporter

GOVERNMENT AGENCIES’ catch-up spending plans should also focus on boosting productivity and not just accelerating expenditures, analysts said.

“To justify more spending, the government must ensure that this program leads to higher productivity. ‘Catch up’ should be used as a synonym for matching the more productive countries and technologically advanced countries like Thailand and Vietnam, not to just expand government expenditures,” Ateneo de Manila University economics professor Leonardo A. Lanzona said in an e-mail.

“The best way to do this is to improve the bureaucracy by increasing its absorptive capacity and to undertake an aggressive industrial policy that can challenge the capabilities of our people and result in greater production,” he added.

The disappointing 4.3% gross domestic product (GDP) growth in the second quarter was partially attributed to a contraction in government spending. Government spending contracted by 7.1% in April to June, a reversal of the 6.2% growth in the first quarter and 10.9% a year ago.

Government agencies have been ordered to catch-up on spending plans amid low budget utilization in the first half.

Filomeno S. Sta. Ana III, coordinator of Action for Economic Reforms, said that there is a need to strengthen and improve capacities of local government units (LGUs) to improve spending.

“Government spending eventually will catch up but devolution of spending to local governments faces teething problems. LGUs don’t have the capacity, and reaping fruits from building capacity takes time as well,” he said via Facebook Messenger chat.

The government is currently working on devolving National Government functions and programs to LGUs, but full devolution has been delayed due to capacity issues.

“To be more specific, LGUs must learn to do data-driven development planning, including doing the diagnostics that can inform planners on allocating scarce resources. LGUs must likewise learn to cooperate with one another to scale up spending. Fragmented spending is wasteful and inefficient,” Mr. Sta. Ana added.

Terry L. Ridon, a public investment analyst and convenor of think tank InfraWatch PH, said in an e-mail that agencies should decentralize planning and procurement while still maintaining a mechanism for accountability.

“Improving budget utilization requires broader staffing, wider training and an agile bureaucracy, as centralized procurement and planning teams can only process a finite number of projects and programs within specific timeframes,” Mr. Ridon said.

He also recommended that the government should increase private sector participation in ramping up spending.

“The government should be able to broaden its list of properly vetted private sector partners which it can engage to implement its programs and projects,” he said. “Agile planning and procurement teams will still have their work delayed if there is a lack of private sector partners which can implement specific programs and projects.”

Mr. Ridon said the government can implement safeguards and strict timeframes to ensure checks are released promptly to avoid slow spending.

“There are various reasons for the non-release of checks by implementing agencies, which are not always due to unreasonable delay or red tape. There is clear justification for the non-release of checks if there are deficiencies in project documentation, or if there are concerns relating to a project’s quality or actual completion,” he added.

Budget Secretary Amenah F. Pangandaman noted that underspending was partially due to unreleased checks in the first half.

“It’s possible that agencies were able to prepare their checks or payments for projects that need to be paid, but it hasn’t been encashed,” she said during a Laging Handa briefing.

The Bureau of the Treasury in its latest Cash Operations report attributed the sluggish spending to “substantial outstanding checks recorded as of end-June amounting to P124.1 billion, according to consolidated bank reports.”

Ms. Pangandaman also cited lower interest payments as a factor behind slow spending.

Other contributors to slow expenditures are ongoing social protection programs, such as the Pantawid Pamilyang Pilipino Program and the Tulong Panghanapbuhay sa Ating Disadvantaged/Displaced Workers program.

She also cited procurement-related difficulties and billing concerns from suppliers and creditors.

During the same briefing, Ms. Pangandaman also named the government agencies that continue to have low obligation rates.

As of June 30, the Department of Information and Communications Technology (DICT) had the lowest obligation rate at only 9.2%, followed by the Commission on Elections (26.1%), Department of Agrarian Reform (28.9%), Department of Social Welfare and Development (34.2%), and Department of Energy (34.3%).

“If you look at it on average for all the agencies, (the obligation rate) is 32% as of June 30,” she added.

Earlier data from the DBM showed that the cash utilization rates of government agencies stood at 92% at end-July, slower than the year-earlier pace of 94%.

In July alone, the utilization rate was at 67%. This was also slower than the 71% rate in the same month a year ago.

Local governments and state-owned companies used P2.3 trillion of the P2.5 trillion worth of notices of cash allocation issued as of the end of July. This left P194.19 billion in unused allocations.

Jollibee bullish on breaching this year’s targets

JOLLIBEE FOODS Corp. (JFC) is bullish that it would exceed its store opening, sales, and income targets this year, an official of the listed quick-service restaurant operator said on Tuesday.

“For the rest of the year, we believe that we will not only deliver to guidance but we will likely exceed it,” JFC Chief Financial Officer Richard Chong Woo Shin said in a virtual media briefing.

“At the end of the first half, we are on line with the store network, we are a little bit behind on the capital expenditure because we are most selective,” he said.

“Our system-wide sales and same-store sales are outside of the higher end of the guidance, meaning we are beating the guidance, and our operating income is ahead of guidance,” he added.

Mr. Shin said in his presentation that as of the first half, JFC’s store network had a 5.1% increase, a bit higher than the target of at least a 5% increase for 2023.

He added that as of the semester, JFC’s system-wide sales rose 23.3%, while same-store sales increased by 15.1%, which are both higher than the 2023 targets of 15-20% growth and 7-10% growth, respectively. 

Mr. Shin also said JFC’s operating income rose 50.7% in the first half, higher than the 2023 target of 20% to 25%.

However, he said JFC’s gross store openings across the world as of the first half reached 270 stores, far from the 550 to 600 gross store openings aimed for this year.

Also, Capital expenditure for the first six months was at P5 billion, way lower than the P17 billion to P19 billion planned this year.   

JFC posted a 13.9% decline in its first-half attributable net income to P4.39 billion from P5.1 billion a year ago.

“As it turns out, I think in particular, with all the macro headwinds and the challenges that we have with inflation and so forth, our consumers are telling us that great value, great tasting, innovative quick-service restaurant segment is the right place to be,” Mr. Shin said.

According to Mr. Shin, the optimism is due to the strong performance of its primary businesses.

“The optimism comes from seeing strong month-on-month performance in our domestic business and also seeing some of our laggards of last year turning around. Europe has always been steady,” Mr. Chin said.

“I think it is really coming from the fact that our bigger engines have been performing well based on fundamentals. We are not price discounting, we are not taking extreme pricing either. We are just continuing to do what we do and it seems to be gaining momentum,” he added.   

On Tuesday, shares of JFC at the local bourse dropped P4.80 or 1.97% to end at P239 apiece. — Revin Mikhael D. Ochave

Ayala unit divests from German car parts maker

AYALA Corp.’s AC Industrial Technology Holdings, Inc. has sold its stake in German auto parts maker MT Technologies GmbH (MT) in a bid to refocus on the expansion of its other units.

In a stock exchange disclosure on Tuesday, Ayala said that AC Industrials completed an agreement on Aug. 18 for the sale of its 92.45% stake to Germany-based Callista Asset Management 18 GmbH, which is an affiliate of Callista Private Equity.

“The transaction will result in an approximately 26 million euro loss, to be booked by AC Industrials and in turn Ayala,” the company said.

AC Industrials’ shares in MT were previously held via its Singaporean subsidiary, AC Industrials (Singapore) Pte. Ltd. MT was folded into AC Industrials in 2017.

“The sale will be executed alongside a sale and leaseback by MT of its property in Ingolstadt and assignment of shareholder loans to the purchaser,” the company said.

Aside from the 92.45% stake, Ayala said that MT’s minority shareholders also sold their shares, which resulted in the 100% transfer of MT’s ownership to Callista.

MT is a German auto parts maker engaged in the design and manufacture of injection molds for metal and plastic car parts.

“The sale of MT continues Ayala’s strategic priority to realize value through a combination of strategic partnerships and divestments from certain non-core assets. Ayala will sharpen its focus on the continued expansion of its core businesses in real estate, banking, telecommunications, and power, and scaling up its emerging businesses in healthcare and logistics,” the company added.

Apart from MT, Callista said in a separate statement on its website that it also acquired the C-CON Group from AC Industrials.

“Callista announces the acquisition of MT and C-CON Group from AC Industrials, a subsidiary of AC Industrials (Singapore) Pte. Ltd.,” the company said.

“[MT and C-CON Group] have 313 employees distributed across eight locations in Germany (Ingolstadt, Munich, Lebach, Eitensheim, Garmisch-Partenkirchen, Neuburg, Kinding, und Hannover) and generated 46 million euros in sales in 2022. The companies serve leading automotive original equipment manufacturers (OEMs) and suppliers with their expertise in engineering, design, over modelling, a tool shop, special machinery to serial production,” it added. 

In 2019, a share purchase agreement was signed by MT to acquire 75.1% of C-Con Group, which provides design, development, engineering, manufacturing, series production, and process management services to German automotive OEMs.

“Callista will continue to pursue the ongoing restructuring path and support with its turnaround expertise to bring the [two companies] back to profitability. Part of the strategy is also the collaboration with Schäfer Group, which was recently acquired by Callista and is also active in the engineering, design, modelling and prototyping for the automotive industry,” Callista said.

On Tuesday, Ayala shares retreated P5 or 0.85% to finish at P585 apiece. — Revin Mikhael D. Ochave

PLDT aims for 25% data center growth as Luzon expands

PLDT Inc. is targeting to grow its data centers by up to 25% with a planned expansion in Luzon, a company official said on Tuesday.

“We are currently growing double digits. The growth rate of any market in the data center and cloud professional services ranges anywhere from 20-25% and that is our aspiration,” PLDT First Vice-President and Head of Enterprise and International Business Groups Albert Mitchell L. Locsin, said in an interview with ANC.

To date, PLDT has 10 data centers, Mr. Locsin said, adding that the company is now building its 11th data center.

“We are building our 11th hyperscale data center so that we can actually attract more hyperscalers to set up their cloud regions in the Philippines,” he said.

Mr. Locsin described the company’s 11th data center as its “biggest” with a capacity of 50 megawatts (MW).

“[It has] an IT load of 36 that can cater to the largest hyperscalers, to the enterprises in the Philippines, and even supporting cloud for the national government,” he said.

Mr. Locsin added that the company also plans to launch its 15th data center soon.

“There is more to go. Our chairman even challenged us: ‘I want to see the plans for the 12th, 13th, 14th and 15th data center,’ ” he said.

PLDT is in the first phase of sourcing the location for its 12th data center, he said, adding that the company has a shortlist of locations for the plan.

“While we are finishing VITRO Sta. Rosa, we are already in the plans of building our 12th data center because of the demand. The country has become a regional transit hub for Asia and it was confirmed by a lot of our international companies or customers that we work with,” Mr. Locsin said.

The company’s data center arm, ePLDT, Inc., has earlier announced its plan to construct its 11th data center — VITRO Sta. Rosa, which will sit on a five-hectare lot in Sta. Rosa, Laguna.

It previously said that this will have a capacity of about 14 MW by 2024 which can be expanded by up to 50 MW upon full operation.

For its 12th data center, the company is considering either South Luzon or North Luzon, and a capacity of about a hundred megawatts, Mr. Locsin said.

“We do have data centers in Visayas and Mindanao but for the hyperscalers, it will have to be in Luzon,” he said. “It is still undecided. It could be anywhere in the south or in the north.”

At the local bourse on Tuesday, shares in the company fell by P5 or 0.41% to end at P1,210 apiece.

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. — Ashley Erika O. Jose

ACEN-ib vogt joint venture targets ‘shovel-ready’ solar projects in Asia

ACEN

ACEN Corp. said its subsidiary is proceeding with its partnership with German solar developer ib vogt (Singapore) Pte. Ltd. to set up a platform to fund at least 1,000 megawatts (MW) of solar projects in Asia.

In a regulatory filing on Tuesday, the Ayala-led company said the shareholder’s agreement for the joint venture of the ACEN Renewables International Pte. Ltd. and ib vogt had been declared effective on Aug. 18 after regulatory approvals and conditions had been satisfied.

“The joint venture will focus on shovel-ready projects in Bangladesh, Laos, Cambodia, Vietnam, Indonesia, Malaysia, and other countries in the Asia Pacific region, with a minimum target operational capacity of 1,000 MW,” the company said.

In its disclosure on April 4, 2022, ACEN said it was expecting equity investments under the terms of the deal of up to $200 million “in addition to debt funding to accelerate the deployment of renewable energy in Asia.”

The two companies will set up a funding platform that will be used for the construction and operation of large-scale solar power plants across the region.

In a televised interview on ANC’s Market Edge, ACEN President and Chief Executive Officer Eric T. Francia said the partnership is part of the company’s target.

“That is part of our 20-gigawatt plan, so that would represent 5% of our overall target. Our core strategy really is to focus our organic development efforts both in the Philippines and Australia where we have an end-to-end capability from development to operations,” he said.

“We will continue to work with partners to further our expansion outside of our core market simply because we don’t have the bandwidth,” he said. “But we do want to participate in the regional or even global energy transition, but we don’t want to spread ourselves too thinly so working with partners is a way to go.”

At the stock exchange on Tuesday, ACEN shares fell by 17 centavos or 3.24% to close at P5.07 apiece. — Sheldeen Joy Talavera

Bridging art and hospitality: New exhibit at airport hotel presents Filipino sensibilities

PAINTINGS by four Filipino watercolor artists are showcased at Belmont Hotel.

“OUR ART encompasses everything we are as Filipinos,” said Sharlene Z. Batin, the Department of Tourism’s regional director for the National Capital Region.

“It is a testament to the growing love, knowledge, and substantive appreciation of what we have. Our culture and our heritage — what makes us uniquely us — is always reflected in what we wear, what we eat, what things we use at home. Of course, it is reflected in our arts.”

This panoptic view of the role of art in the Philippine consciousness served as a guiding light for the tourism industry’s leadership when it launched the exhibit “HIRAYA: A Visual Feast of Filipino Culture” on Aug. 16. The show, held at Megaworld property Belmont Hotel Manila, marks the first partnership between the hotel and the creative agency Artistespace.

“Though we have a permanent gallery in Capitol Commons, we can access wider audiences by partnering with a known airport hotel. We can reach people from all over the country, all over the world, and people of all ages, even kids as young as five years old,” Anton Magpantay, managing director of ArtisteSpace, told BusinessWorld at the opening.

With this in mind, the exhibit displays artworks from five award-winning Filipino artists: watercolor painters Wilfredo “Yeye” Calderon, Rene Canlas, Rolan Guina, and Joie Pabilando, and wood sculptor Joel Ajero. Their works are on view in the lobby of the Belmont Hotel.

Because of the hotel’s strategic location, being connected to Terminal 3 of the Ninoy Aquino International Airport via the Runway Manila footbridge, the Belmont exhibit was curated with much thought.

“These are all contemporary artworks that have universal appeal but with an unmistakable Filipino touch, so they can be appreciated by hotel guests coming in from various countries and provinces,” said Mr. Magpantay.

According to Socrates “Sonny” Alvaro, the general manager of Belmont Hotel Manila, the exhibit bridges art and hospitality.

“This is both a creative get-together for the artists brought by Artistespace and also an opportunity for our hotel to showcase the best of Filipino food, service, and hospitality,” Mr. Alvaro said in his opening speech.

One of the highly detailed watercolor paintings by Rolan Guina, Good Day, proves this point by depicting old potted plants akin to the ones seen in a rundown Filipino ancestral home, with overgrown tropical flora in the back. Here, there’s familiarity, the plants vividly untamed yet warm and welcoming.

Photo-realistic artworks by Joie Pabilando provide a unique glimpse into common scenery found in the Philippines. A larger-than-life painting entitled Just the Two shows with lifelike accuracy a girl crouched down and interacting with two white doves, which takes on a melancholic mood looking like it’s viewed from a window with raindrops on the surface.

A seascape by Wilfredo “Yeye” Calderon, Shore Fishing, shows a fisherman, appearing small on the shoreline where he stands. With the vast skies and nearby large cliff as witnesses, he persists with his little task.

There is also The Cliff by Rene Canlas, depicting what initially seems to just be a sweeping image of blue and white waves from atop brown, rough cliffs. A closer look reveals a tiny house nestled right on top the cliff across, once again a show of feeling small in the vastness of nature.

Finally, wood sculptor Joel Ajero’s works pack meaning, his wood assemblages reminiscent of Filipino ingenuity as they resemble makeshift houses, toolboxes, instruments. His abstract character sculptures, sharing their likeness with the carved bul-ul deities of the Ifugao, have lively designs and expressions that reference other Filipino cultural elements.

For those unable to visit the exhibit at the Belmont Hotel, there is a virtual guided tour at this link: https://bit.ly/HirayaAtBelmontHotelManila. — Brontë H. Lacsamana

Manila Water unit secures P1.6-B loan

A UNIT of Manila Water Co., Inc. has inked a P1.6 billion term-loan facility with the Bank of the Philippine Islands, the east zone water concessionaire said on Tuesday.

In a stock exchange disclosure, the company said the Laguna AAAWater Corp. or Laguna Water, a subsidiary of Manila Water Philippine Ventures, Inc. (MWPV), signed a 10-year term loan facility with the bank.

“The proceeds of the loan will be used to partially finance capital expenditures for the years 2022 to 2025,” the company said.

Laguna Water is a joint venture between the provincial government of Laguna and MWPV. It operates in the cities of Biñan, Santa Rosa, Cabuyao, and the municipality of Pagsanjan. It also supplies Alaminos, Calamba, San Pablo, Sta. Cruz, and Victoria.

Aside from Laguna Water, MWPV’s subsidiaries include Boracay Water, Clark Water, and Estate Water.

In the second quarter, Manila Water saw its attributable net income rise by 51.6% to P2.76 billion from P1.82 billion in the same quarter last year, based on its quarterly report.

Gross revenues during the period increased by 40% to P8 billion while expenses climbed by 12.1% to P3.91 billion.

At the local bourse on Tuesday, shares of Manila Water went up by 18 centavos or 0.96% to close at P18.88 apiece.

The water concessionaire serves the east zone network of Metro Manila, covering parts of Marikina, Pasig, Makati, Taguig, Pateros, Mandaluyong, San Juan, portions of Quezon City and Manila, and several towns in Rizal province. — Sheldeen Joy Talavera

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