Ayala Land raises P20.5B via sustainability-linked financing program

July 22, 2024 | 12:06 am

LISTED Ayala Land, Inc. (ALI) said it has raised P20.5 billion through its sustainability-linked financing (SLF) program.

The SLF package includes a P6-billion SL-bond and a P14.5-billion SL-loan from the International Finance Corp. (IFC), ALI said in an e-mailed statement over the weekend.

The P14.5-billion SL-loan is ALI’s first loan from a multilateral agency and the IFC’s first SL-loan for a Philippine corporation.

The loan will be disbursed in up to four installments.

The funding will be used to implement energy and water-saving measures across ALI’s commercial real estate portfolio, including energy-efficient lighting and cooling systems, passive building design, low-flow water fixtures, and water harvesting and recycling systems.

ALI reported high demand for the P6 billion 10-year term SL-bond, which reached P18.2 billion.

The bond has a coupon rate of 6.9931% per annum and was primarily supported by pension funds and institutional investors. It was listed on the Philippine Dealing & Exchange Corp. on July 18, marking the first ASEAN SL-bond in the local capital market.

ALI said the interest rates of the SL-bond and SL-loan need to meet sustainability metrics such as a 42% reduction in emissions from malls, offices, and hotels by 2030, and achieve EDGE Zero Carbon certification for 1.5 million square meters of office properties by 2025.

Failure to meet the targets will result in a five-basis-point increase in interest rates for each unmet target, up to a total of 10 basis points.

“This landmark investment supports our efforts in portfolio decarbonization and reinforces our commitment to a greener property sector in the Philippines,” said ALI President and Chief Executive Officer Anna Ma. Margarita B. Dy.

ALI said its SL-program is aligned with international standards such as the ASEAN Sustainability-Linked Bond Standards, the Sustainability Linked Bond Principles issued by the International Capital Market Association, and the Sustainability Linked Loan Principles issued by the Asia-Pacific Loan Market Association.

Norway-based international accredited registrar and classification society Det Norske Veritas independently verified ALI’s funding package.

ALI shares were last traded on July 19, finishing at P31.65 per share. — Revin Mikhael D. Ochave

Accountancy, the hidden engine of national progress

July 22, 2024 | 12:05 am

SF_business-man-financial--document-audit-concept_FREEPIK-OL — STOCK PHOTO | Image by Snowing from Freepik

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

The success of an economy often relies on the hard work of many unnamed and unrecognized people. At the core of any thriving economy lies the diligent work of government workers, bankers, economists, entrepreneurs, logistics professionals, educators, engineers, and accountants.

Accounting, in particular, is an irreplaceable element in the equation for a modern, thriving society as they play a role in everything from managing personal finances of individual entrepreneurs and business owners to running multinational corporations. Their expertise ensures that financial information is not only accurate but also transparent, and that transparency is necessary in creating an environment ripe for business growth and economic stability.

According to the International Federation of Accountants (IFAC), accountants support businesses in securing investment and accessing credit, which in turn propels economic expansion. An IFAC study, titled Nexus 2: The Accountancy Profession — A Global Value Add, showed that accountancy is strongly linked to prosperity and improved living standards, highlighting the scale of the profession’s importance to the global economy, particularly in developing economies where accountants have a significant role to play in strengthening the institutions and architecture that will improve people’s lives.

“The accountancy profession plays a pivotal role in our financial ecosystem. Without reliable financial reporting, we cannot build the trust that investors and stockholders need to make investment decisions, thus impacting the Philippines’ competitiveness in the global capital market,” Sharon G. Dayoan, chairman and chief executive officer of KPMG in the Philippines (R.G. Manabat & Co.), said in an interview.

Ms. Dayoan explained that as external auditors, accountants provide assurance on the fair presentation of a company’s financial statements, needed to attract foreign investment and foster business confidence. Moreover, accountants also work with various stakeholders for tax compliance, business transformation, sustainability reporting and digital adoption and transformation, which help shape policies that promote economic growth.

Notably, accountants assist businesses in setting up in the Philippines, providing transfer pricing advisory services, as well as expertise in cybersecurity, robotic process automation, and intelligent automation, helping catalyze business growth and help with economic development.

“Accountants significantly impact small and medium-sized enterprises (SMEs) by acting as trusted advisors and providing essential financial management and planning services to drive their businesses forward. We help businesses navigate complex regulatory environments, make informed investment decisions based on financial analysis, and maintain competitiveness in a rapidly evolving market,” she said.

This has only become more essential today as the world pushes for more sustainable development across all nations and industries. The World Bank highlighted the importance of public sector accounting in managing state assets and curbing illicit financial flows, which pose a substantial threat to global economic health. This level of transparency ensures that governments can be held accountable by their citizens, fostering trust and efficient governance.

In 2016, Samia Msadek, former director of Governance Global Practice at the World Bank, said in an interview that in the public sphere, the accounting profession supports a public sector that is more transparent and accountable to its citizens.

“Effective financial reporting is critical to governments’ understanding of their fiscal position and prospects. It is also crucial for providing legislators, markets, and citizens with the information they need to make efficient policy decisions, and to hold governments accountable for their performance,” she said.

“The profession can contribute significantly to the achievement of the Sustainable Development Goals (SDGs) that aim to end poverty, protect the planet and ensure prosperity for all. The ability of countries and corporations to measure progress, monitor impact and report on achievements in these areas will be critical. This is where, in my opinion, accountants have a key, but easily overlooked, role to play.”

Accountants, through their expertise and proficiency in the tools to measure and report on various financial data, can help many organizations progress toward sustainability goals, pushing businesses and governments to track their social, environmental, and economic impacts.

Ms. Dayoan agreed, saying that the transparency that accountants provide public institutions attracts local and foreign investments, and is vital for assessing the effectiveness of government programs.

“Additionally, the expertise of accountants in financial analysis helps shape policies that promote economic growth, sustainability and social equity, contributing to overall economic development in the Philippines,” she said.

Accounting in a changing world

Naturally, as a profession concerned mostly with numbers and metrics, accounting is seeing rapid evolution due to technology. Advances in data analytics, artificial intelligence, and other technologies are revolutionizing accounting practices, making them more efficient and insightful, while also enabling accountants to offer deeper, more insightful strategic advice.

For instance, Ms. Dayoan said that in the Philippines today, accountants are expected not only to report on numbers but also to provide insights, identify trends, flag risks, and contribute strategically.

The expectations of stakeholders, from investors, clients, regulators, to the general public, are also changing. More are demanding greater transparency, enhanced ethical standards, and a more proactive advisory role from accountants.

“The role of accountants has expanded from record-keeping and providing assurance on financial statements to being strategic advisors proficient in areas like data and analytics, sustainability reporting, and risk management,” she said, adding that while technologies like AI and blockchain are enhancing efficiency and accuracy, they also pose risks.

“As an example, AI automates routine tasks and improves data analysis, while blockchain offers secure, transparent record-keeping. This shift allows accountants to focus more on strategic and advisory roles, increasing their value to clients. However, these technologies also pose risks, such as data security concerns and implementation challenges. Accountants must balance leveraging technology with maintaining critical judgment, ensuring they stay relevant and drive innovation in the evolving business landscape.”

Mitigating security risks and taking a proactive stance against any emerging issues will be the key to using these technologies to their fullest. After all, at the heart of accountancy is the unwavering commitment to transparency and integrity.

“The accountancy profession can better serve the needs of the Philippine economy and society by continuing to uphold the highest standards and by embracing the role as catalysts for transparency, sustainability and innovation,” Ms. Dayoan said.

With the integration of Environmental, Social, and Governance (ESG) principles into business practices, she highlighted the crucial role that accountants play in creating a sustainable future by measuring and reporting on ESG performance, providing data to inform sustainable decision-making, ensuring compliance with sustainability standards, managing sustainability-related risks, identifying cost-saving opportunities through sustainable practices, and engaging with stakeholders to communicate an organization’s commitment to sustainability.

“Now, more than ever, continuous learning and the rapid adoption of new technologies are essential. Accountants must proactively upskill and adopt innovative methodologies to effectively meet evolving demands. Additionally, maintaining strong connections and fostering collaboration with fellow professionals, organizations, and stakeholders is vital. By actively sharing knowledge, resources and best practices, we can collectively address challenges and drive positive change.”

Payless marks 14^th year in the Philippines with new look, new stores

July 22, 2024 | 12:05 am

THE DISCOUNT shoe brand’s name says it all: pay less. Payless, a leading affordable shoe retailer from Kansas, USA, founded in 1956, came to the Philippines in 2010.

After 14 years, the brand unveiled a new store concept at the One Ayala Mall on July 18. Boasting a more industrial look, it joins the 48 stores they have in the Philippines, with five more coming this year.

During a tour of the store on July 18, Raissa Barzaga, General Manager of Footwear Specialty Retailers, Inc. (a subsidiary of the SSI Group that operates the Philippine franchise for Payless shoes) told BusinessWorld about what Filipinos buy at Payless. “You see everything. We offer from Men’s, Women’s, and kids; it’s all across categories. It’s also across ages. There’s also for lola (grandma), then we have also for the toddlers. We have the shoes for everybody in this store. That’s really the trend, and that’s really our thrust,” she said.

Among their new lines are Comfort Plus for men and women, which offer memory foam soles for added comfort. Most of their stock is made of fabric or faux leather. Ms. Barzaga gave us tips on how to care for them. “You just wipe them with an ordinary cloth. Or a damp cloth. Aside from the shoe care, you can just do that. Sorry, sometimes, I wash my shoes,” she said.

She also said that Payless’ own shoe care line will arrive in the Philippines soon.

Payless, founded by the Pozez cousins in Kansas in 1956, went public in 1962. It passed through many hands, filing for bankruptcy twice, in 2017 and 2019. The store closures that followed its bankruptcies gave way to a silver lining: it opened an e-commerce venture in 2020. But the silver lining has dulled.

Upon viewing the website as of press time, the website only has a photo of two legs in the air wearing flats, saying, “We’ve got something in the works.”

“We appreciate your patience with us as we’re busy behind-the-scenes working on a shopping experience that will knock your socks off,” said the website, while providing links to their stocks on Amazon. “Effective Aug. 11, 2023, retail sales in North America on Payless.com are no longer available. Please note that all orders made on or after June 6, 2023, are final and non-returnable. We thank you for your patience as we continue to work diligently on the future of Payless.com.”

However, Payless.ph in the Philippines is up and jumping. While their American parent only embraced going online in 2020, the Philippine counterpart been at it since 2018. “We were trying to make sure that the current customers, the Millennials and the Gen Z — it’s different when you shop right?,” said Ms. Barzaga of how online appeals to younger shoppers.

She recalled how the pandemic jumpstarted online sales. It has stabilized now, with Ms. Barzaga telling us that today, while there is a 2% to 3% difference in their online sales versus their in-store sales, the difference was up to 5% during the pandemic. Aside from payless.ph, their shoes are also carried on online platforms Shopee, Lazada, and Zalora.

The pandemic also influenced the styles they carry: “More than anything else after the pandemic, the shoes are really for comfort,” she said.

It’s not hard to find cheap shoes in the Philippines, if you know where to find them. Ms. Barzaga, however, comparing their shoe prices to those in other marts, noted, “Some of our shoes are actually even cheaper. They have (shoes at) P1,650. I have [shoes at] P795!” She said that the most expensive shoes they carry cost P2,200. “We have markdowns every month, because we have arrivals every week.”

More than the price, she says that people come for the store experience: because all of the shoes are on display, “You’re not going to wait for your shoe size.” This is an important point to make as at some of the larger shoe stores it may take up to 15 minutes before the requested style and size can be retrieved from the storeroom for the customer to try on.

Payless Philippines has also made a mark in other countries where their parent company is present. “We were able to dominate the design in terms of influencing the whole Payless business in the US and Latin America. They actually copy the designs (sold here),” she said.

The rest of the Payless stores in the Philippines will be renovated according to the One Ayala store’s current look, and there are plans to build more stores in SM malls in Seaside Cebu, Baguio, Dasmariñas, Cavite, Iloilo; and in Ayala Center Cebu. — JLG

Changan Auto PHL opens mega facility in Pasig City

July 22, 2024 | 12:05 am

VELO_PAGE1_image1 — PHOTO BY KAP MACEDA AGUILA

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The flagship dealership is part of Inchcape’s distribution complex in the country

CHANGAN AUTO, represented by global auto distributor and retailer giant Inchcape in the Philippines, recently opened the fourth dealership — the biggest by far — in its growing network of facilities. Located on C5 in Pasig, the showroom and service area measure a combined 4,373 sq.m.

Directly operated by Inchcape Philippines, the flagship 3S establishment is itself tucked into the larger 11,222-sq.m., so-called Inchcape Philippine Distribution Complex. Once completed, this facility will include a 1,338-sq.m. parts distribution center, which can accommodate “six months’ worth of inventory for all parts including common damaged parts for collisions and maintenance items for all models.” There will also be a body and paint workshop (3,168 sq.m.), and training academy with dormitory facilities.

“This milestone highlights our shared commitment to excellence and signifies more exciting things to come for Changan Auto,” said Inchcape Managing Director for South Asia and Pacific Alex Hammett in a speech after the ribbon-cutting ceremony to formally inaugurate Changan Auto Pasig.

Added Inchcape Philippines Chief Operating Officer Francis Jonathan Ang, in his own speech, “At Inchcape, we believe that our commitment to excellence is beyond delivering quality vehicles. It involves assuring a seamless car shopping experience and exceptional after-sales service to our valued customers… We are able to realize these with state-of-the-art facilities, digitized systems, and, most importantly, through our dedicated team.”

Mr. Ang said that Changan Auto Pasig can service up to 10 vehicles a day — a number they will expand to 60 in the future. The rest of the sprawling Inchcape Philippines location is expected to be fully operational by September this year, added the executive.

“Apart from upgrading our facilities, we are also maximizing our unique digital platforms to support our distribution channels. The Philippines serves as one of Inchcape’s key digital delivery centers, boasting a workforce of over 700 professionals specializing in data science, analytics, and sales force management,” continued Mr. Ang. “Through Inchcape’s expertise and Changan Auto’s global network — which has 35 vehicle and engine plants all over the world as well as research and development centers — Changan owners can confidently expect unmatched quality and service excellence.”

Inchcape is said to be “the leading global automotive distributor with operations in more than 40 markets around the world.” This allows the Changan Auto brand to be “well-positioned for substantial growth.”

Meanwhile, Changan Auto Philippines General Manager Maricar Parco maintained that the flagship showroom and service center “underscore (a) dedication to providing great customer experiences and reinforce (the) commitment to the Philippine market.”

In a release, Inchcape Philippines said that “Changan Auto is recognized by the China Passenger Car Association (CPCA) as one of the top five best-selling brands in China… (and) has consistently demonstrated growth and strength in the global market. As one of China’s largest car manufacturers and one of the top 15 automakers worldwide, Changan Auto’s commitment to customer satisfaction is evident in its expanding market presence, and its dedication to innovation and quality has earned the brand numerous accolades including being named the number one Chinese brand by JD Power and ranking among the top global car makers in recent years.”

For more information, visit www.changan.ph and follow Changan Auto Philippines on Facebook (ChanganAutoPH).

7-Eleven eyes to increase presence in VisMin

July 22, 2024 | 12:05 am

7-ELEVEN operator Philippine Seven Corp. (PSC) is eyeing further expansion in Visayas and Mindanao (VisMin), with plans to allocate up to P4.5 billion in capital expenditure (capex) to open 450 new stores this year.

PSC President and Chief Executive Officer Jose Victor P. Paterno said last week that the company aims to meet the growing demand in these regions.

“It has been our intention to target greater expansion in Visayas and Mindanao because there is high demand and there is still competition. People suddenly have more to spend, but there are not enough convenience stores to meet that demand. We’re scrambling to provide that,” Mr. Paterno said during a virtual briefing.

“We are bullish on the growth in the regions. We’re expanding faster than we ever have and plan to continue expanding,” he added.

PSC Finance and Accounting Head Lawrence M. De Leon said that the company has allocated up to P4.5 billion in capex for opening 450 new stores this year and for renovating existing branches.

This amount is higher than the P3.5- to P4-billion capex budget allotted by the company last year.

“The total capex to support the 450 new stores this year will be around P4 billion to P4.5 billion and will mainly go to opening new stores, 60% of which will be franchise-operated and 40% corporate-owned,” he said.

“We are also allocating part of the P4.5-billion budget to remodel older stores as we renew contracts for existing stores,” he added.

As of the end of June, PSC had opened 170 new stores in addition to the 3,768 stores it had at the start of the year, with around 3,000 located in Luzon. The company expects to have 4,000 stores across its network by the fourth quarter.

Meanwhile, Mr. Paterno said that PSC is adapting to changing consumer shopping patterns. “People are shopping closer to home and shopping from home. A lot of what we sell is for on-the-go needs. We need to respond to that,” he said.

Mr. Paterno also expressed confidence in the company’s economic prospects. “We are confident in the general economic conditions in the Philippines. We believe the government is taking the right steps and has put in place the right people,” he said.

PSC saw a 21.2% increase in its first-quarter net income to P639.3 million.

First-quarter system-wide sales, including the sales and service income of corporate and franchise-operated stores, rose by 19.7% to P22 billion, while same-store sales improved by 8.8%. PSC shares were last traded on July 19, ending at P109.50 apiece. — Revin Mikhael D. Ochave

Style (07/22/24)

July 22, 2024 | 12:04 am

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Puma’s Palermo with Rosé

PUMA and K-pop star Rosé from South Korean musical quartet BLACKPINK are unveiling their first official campaign. For the campaign, the star wears the Palermo shoe in Cobalt and Black, showcasing the shoe’s bright, playful colors and classic terrace gum sole. Puma’s partnership with Rosé will center around the brand’s catalog of silhouettes such as the “Rewrite the Classics” program, which celebrates Puma’s most timeless footwear shapes and brings them into a new generation. The Puma Palermo is available now from Puma.com, Puma flagship stores, and selected Puma stockists, with more colorways coming soon.

Lavojoy products with essential oils

LAVOJOY has a line of bath products — shampoo and conditioner, among others — which use some essential oil to make them special. Lavojoy products were formulated in Australia together with Ron Guba, an expert in the therapeutic use of essential oils. Lavojoy also collaborated with French master perfumer Anne Flipo to develop the scents and aromas of its products. Products by Lavojoy include shampoos, conditioners, body washes, and body serums. Lavojoy is exclusively available at Watsons, SM Beauty, Lazada, Shopee and TikTok Shop.

Fendi makes lollipop holders for Chupa Chups

BLENDING craftsmanship and irony, Fendi unveils its latest accessory created in collaboration with Chupa Chups: the Fendi x Chupa Chups lollipop holder. This unique piece made its viral debut on the Fendi Women’s Autumn/Winter 2024-2025 runway. This was conceived by Silvia Venturini Fendi, Artistic Director of Accessories and Menswear. Available in the form of a charm attached to the Peekaboo ISeeU Soft, Simply Fendi, and By The Way Selleria bags as seen on the runway, or as a necklace, the lollipop holder can be adjusted through the leather strap to ensure it is never out of reach. This “sweet” accessory is made in soft leather that bears the Selleria macro-stitching — a symbol of the brand’s 100-year long history and a tribute to Roman master saddlers — and is adorned with the signature FF logo in metal. A magnetic closure enables a smart opening and closing, while hiding the lollipop inside. Available in an extensive palette ranging from soft hues to vibrant pop tones, the lollipop holder adds a cheerful twist to any look. Warm beige and dove grey complement aquamarine and deep red shades, while dark teal and plum hues follow the palette of the collection. Adding exclusivity to this collector’s item whilst paying homage to the Maison’s legacy, this accessory comes with five co-branded and limited-edition lollipops — a symbolic reference to the five Fendi sisters. Wrapped in a distinctive FF logo cover, the special lollipops combine the iconic FENDI pattern with the Chupa Chups lollipop logo. The lollipop holder is now available in Fendi boutiques worldwide and on fendi.com.

Q&A: ‘We’re very, very confident about the brand’

July 22, 2024 | 12:04 am

VELO_PAGE1_image5 — Alex Hammett delivers a speech at the formal opening of Changan Auto Pasig. — PHOTO BY KAP MACEDA AGUILA

Inchcape Managing Director for South Asia and Pacific Alex Hammett has lofty ambitions for Changan Auto

Interview by Kap Maceda Aguila

SHORTLY AFTER Inchcape Philippines’ inauguration of the flagship showroom of Changan Auto in the country, we spoke with the global auto distributor’s Managing Director for South Asia and Pacific Alex Hammett.

He said that Inchcape’s overarching responsibility is to “create great experiences for both customers and partners by leveraging in-market expertise, unique technology, and advanced data analytics,” which is reflected in how the company is moving on the ground in the country.

Mr. Hammett described the first half 2024 as “very fruitful,” on the back of a dealer forum and the launch of the Changan CS15 crossover at the Manila International Auto Show (MIAS) — underscoring a vision of providing more Filipinos “smart mobility options.” He expressed bullishness for the brand amid a very pronounced influx of Chinese auto brands.

Here are excerpts from our exclusive interview with Mr. Hammett.

VELOCITY: This is a very huge facility for Changan Auto. Why decide to establish such a large dealership?

ALEX HAMMETT: “(Inchcape) represents Changan now in five countries. We’re incredibly confident about the brand. But this property is quite scale — not only the showroom, but the entire complex because it’s going to be a real integral part of our operations in the Philippines. And so while it does have a 10-car showroom for our full lineup of Changan vehicles, and we have a full service center, this property also houses our body and paint operations, our new parts distribution center that will be multi-branded for all of our dealers across the country, as well as the very scale training academy to make sure that our sales associates and our technicians are world-class.

What’s the growth plan like for Changan Auto in terms of dealerships?

We have some plans for locations down south like Cagayan de Oro, Dumaguete, and Davao later this year. We also have plans to get our network up to 29 dealerships by yearend.

The local auto industry in the Philippines has seen quite an influx of brands, mainly coming from China. How does Changan Auto intend to compete in this kind of environment? What do you think are the key things that will drive sales for the brand?

It’s a really good question. Because the Philippines is a left-hand-drive market, a lot of Chinese products can come into the market quite simply. And I believe there are about 32 brands now in the Philippines, and they’re all competing for a small space, making it extremely competitive. But as I said, we have a global partnership with Changan, and we operate in a lot of markets in Latin America. And what we can say is, we’ve seen this in other markets, and we’re confident we can do that here in the Philippines.

Changan has a full lineup from the CS15 all the way up to the Uni-K; the product range is fantastic. Also, the quality of the products is world-class and they constantly win JD Power China’s IQS (Initial Quality Study) and they have since 2018. So, it’s great value for money. It’s great quality product, and with the power of Inchcape, we’re very, very confident about the brand.

Farmers call for tight biosecurity as trials for ASF vaccine continue

July 22, 2024 | 12:04 am

Pigs — STOCK PHOTO | Image by Barbara Barbosa from Pexels

HOG FARMERS are urging the government to implement tighter biosecurity measures to help curb the spread of the African Swine Fever (ASF) in the Philippines as they wait for the government’s approval for the commercial use of a vaccine.

“For now, we push for the strictest biosecurity, based on their capacities, of all our hog raisers,” Alfred Ng, vice-chairman of the National Federation of Hog Farmers, Inc. said in a Viber message.

“We support the announcement of the DA (Department of Agriculture) of controlled vaccination trials with strict monitoring as we do not want the indiscriminate use of vaccine as it is still being tested,” Mr. Ng added. “We all want to have an ASF vaccine soon, but it should be one that has passed all guidelines set forth by experts.”

The decision to use these vaccines should also be left to hog raisers based on their own appreciation of their safety and efficacy, he said.

There were 20 municipalities across nine provinces with active cases of ASF as of July 12, according to the Bureau of Animal Industry.

Last week, Agriculture Assistant Secretary and Spokesperson Arnel V. de Mesa said the government has allocated about P350 million for the procurement of ASF vaccines for a trial run.

He added that the vaccine for controlled vaccination is expected by September after getting approval from the Food and Drug Administration.

“If the results are favorable, then commercial vaccination will follow,” Mr. De Mesa said.

Agriculture Secretary Francisco P. Tiu Laurel, Jr. earlier said the ASF vaccine to be tested by the government would be procured from Vietnam.

Leonardo Q. Montemayor, chairman of the Federation of Free Farmers, said the ASF vaccine from Vietnam is only being used by their local farmers.

“To my knowledge, no other country is vaccinating its hogs,” Mr. Montemayor said in a Facebook Messenger chat.

He added that the government should exercise due diligence and caution before approving an ASF vaccine for commercial use.

Meanwhile, the government should also fast-track the construction of First Border Inspection sites that will examine all refrigerated containers that will enter the country, Mr. Ng said.

The DA plans to put up these facilities, which are meant to ensure imported agricultural goods are disease-free and minimize smuggling risks, in Bulacan, Manila, Subic, and General Santos.

Imported agri-fishery products need to undergo examination by food regulators overseeing the animal, plant, meat, and fisheries industries.

Meanwhile, the DA’s Integrated National Swine Production Initiatives for Recovery and Expansion (INSPIRE) program aims to increase the population of hogs in ASF-hit areas.

Under the modified INSPIRE program, the repopulation program will now focus on the construction of multiplier facilities and production farms using artificial insemination.

Hog production declined 4.3% year on year to 419,370 metric tons in the first quarter, data from the Philippine Statistics Authority showed. — A.H. Halili

CrowdStrike’s global outage doesn’t have to be a recurring nightmare

July 22, 2024 | 12:04 am

ONE OF THE MOST disturbing things about Friday’s devastating global outage of IT systems is how routine such ruinous events have become.

In the last few years, similar glitches from companies like Amazon.com, Inc. have temporarily shut down systems across the globe, and this latest issue comes as a result of a botched software update from cybersecurity firm CrowdStrike Holdings, Inc., whose link to mega customer Microsoft Corp. has led to worldwide problems — including chaos in airports, stock exchanges, and hospitals, though a fix has now been deployed.

This time the scale is unprecedented. That should spur Microsoft and other IT firms to do more than simply administer a band-aid. Policy makers could address the world’s over-reliance on just three cloud providers too. Today’s reality, where a single bug can harm millions of people at once, doesn’t have to be the status quo.

There’s a recommendation for you too, dear reader: Do something nice for your IT people today. Bring them donuts, coffee, or something stronger if it’s late enough, because they’re in for a rough weekend as resolving Friday’s shutdown becomes a slow, complicated process. Network technicians and engineers have been scrambling to address the blue screen of death that has popped up on Windows computers around the world, effectively making them useless. It’s forced airlines to write their flight times on white boards and issue hand-written paper tickets; one TV news station in Britain was forced to go off the air.

The glitch is due to an update of CrowdStrike’s Falcon software, ironically designed to prevent harm from viruses and cyber threats and described as a “tiny, single, lightweight sensor.” Falcon counts Microsoft as a key customer and crucially, has privileged access to one of the most fundamental cores of an operating system like Windows, known as the kernel.

In theory, this is a good idea. If CrowdStrike’s tool didn’t have this access, then any malicious hacker who got root access could simply deactivate CrowdStrike’s anti-virus software and run rampant.

But it’s now obvious there’s a flip side to having that kind of privileged access, if CrowdStrike itself makes an error.

That’s why blame shouldn’t just fall on CrowdStrike (whose shares had fallen by more than 20% early Friday morning) but also on Microsoft for arguably not designing a more resilient operating system. Damningly, Apple, Inc. and Linux’s operating systems were not impacted by the glitch at all, according to a blog post from CrowdStrike on Friday. And neither appear to give Falcon such privileged access to their kernel, which now looks unwise. Microsoft didn’t respond to a request for comment.

This wasn’t a cyberattack, but, like previous outages, the result of the Byzantine complexity of cloud IT processes. The cybersecurity industry has done a stellar job in the last decade in marketing itself as a salvo to all manner of frightening threat actors, but one downside may be that companies have neglected basic IT hygiene as that infrastructure becomes more intricate. “Over the last few years, most of our customers have ended up spending more on cybersecurity than on IT,” Palo Alto Networks, Inc. Chief Executive Officer Nikesh Arora said earlier this year.

One technical solution might go back, naturally enough, to the age-old trick of “turning it off and on again.” Joao Alves, head of engineering at online marketplace Adevinta, tweeted that the tech industry will likely demand that cloud providers, “double boot for OS and kernel-modules upgrades.” In plain English, that means restart a system twice when updating software. The first boot applies the update, and the second makes sure the system is stable before fully activating the changes. Microsoft didn’t reply to questions at the time of writing about whether it has such processes in place.

But these are only piecemeal solutions. The bigger problem is the supply chain itself for cloud computing and, by extension, cybersecurity services, which has left too many companies and organizations vulnerable to a single point of failure. When just three companies — Microsoft, Amazon, and Alphabet, Inc.’s Google — dominate the market for cloud computing, one minor incident can have global ramifications.

European lawmakers are furthest ahead in addressing the market stranglehold that these so-called hyperscalers have with its new Data Act, which aims to lower the cost of switching between cloud providers and improve interoperability.

US lawmakers should get in the game too. One idea might be to force companies in critical sectors like healthcare, finance, transportation, and energy to use more than just one cloud provider for their core infrastructure, which tends to be the status quo. Instead, a new regulation could force them to use at least two independent providers for their core operations, or at least ensure that no single provider accounts for more than about two-thirds of their critical IT infrastructure. If one provider has a catastrophic failure, the other can keep things running.

As painful as Friday’s outage has been, it’d be a waste to not use it as a catalyst to stop what is fast becoming a recurring nightmare.

BLOOMBERG OPINION

MPIC’s mWell app goes global, targets OFWs

July 22, 2024 | 12:04 am

METRO PACIFIC Investments Corp. (MPIC) has announced the global expansion of its health and wellness mega app, mWell, to extend healthcare services to overseas Filipino workers (OFWs) and their families.

In a statement on July 17, MPIC said that the expansion ensures OFWs have access to healthcare services regardless of their location.

The app is now used in 140 countries with over 84,000 users from South America, Africa, Asia, North America, Oceania, and Europe, the company said.

“We are here to help our OFWs conveniently consult online with Filipino doctors who understand their needs and can provide the medical advice they need right away,” said June Cheryl “Chaye” Cabal-Revilla, chief finance, risk, and sustainability officer of MPIC and president and chief executive officer (CEO) of mWell.

MPIC noted that paying for mWell Pins through Ding, an international mobile recharge service provider, is now available.

OFWs can book video consultations, see doctors, and pay for services within the app.

Ding allows users to send prepaid value to a mobile phone globally, making it easy for migrant workers to send health passes to their families in the Philippines.

The mWell Healthsavers Plan 499 covers one checkup, while Plan 899 includes two doctor consultations.

MPIC also said that the mWell and PLDT Global partnership with SandBox Middle East allows access to health passes in the United Arab Emirates.

The health passes are sold at SandBox’s sari-sari convenience stores in Al Karama and Port Saeed, Dubai. A flagship store is opening in Burjman this August, featuring an mWell Kiosk for teleconsultations.

“SandBox Middle East, through its partnership with PLDT Global, is proud to be a selected partner of mWell in providing Filipino expats in the United Arab Emirates with excellent and affordable healthcare from home,” said SandBox Middle East CEO Lito German.

“This is another significant milestone in our quest to empower Overseas Filipino Workers by providing easy access to home-based products and services through our BayaDIRECT platform,” he added.

Additionally, a partnership with the Overseas Workers Welfare Administration and Tindahan ni Bossing (TINBO), PLDT Global’s online marketplace for overseas Filipinos, has been established to support OFWs as they leave the country.

“Our partnership with mWell reflects PLDT Global’s commitment to empowering overseas Filipinos through TINBO by providing access to essential services,” said Albert V. Villa-Real, President and CEO of PLDT Global.

mWell is an integrated digital platform that enables OFWs to consult with family doctors, specialists, and mental health experts 24/7. Services include consultations with internal medicine specialists, cardiologists, endocrinologists, ophthalmologists, and more.

MPIC is one of the three key Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., holds a majority share in BusinessWorld through the Philippine Star Group, which it controls. — Aubrey Rose A. Inosante

T-bill, bond rates to track secondary mart levels

July 22, 2024 | 12:03 am

RATES of Treasury bills (T-bills) and bonds (T-bonds) to be auctioned off this week may inch higher, mirroring the slight upward correction in secondary market yields following weeks of decline amid increased expectations of a rate cut by the Bangko Sentral ng Pilipinas (BSP) as early as next month.

The Bureau of the Treasury (BTr) will auction off P20 billion in T-bills on Monday, or P6.5 billion each in 91- and 182-day papers and P7 billion in 364-day debt.

On Tuesday, the government will offer P25 billion in reissued 20-year T-bonds with a remaining life of 19 years and 10 months.

Yields on the T-bills and T-bonds on offer this week could track the slight rise in secondary market yields on Friday, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Mr. Ricafort noted that secondary market rates inched up last week but still remained relatively low due to mounting bets of a BSP rate cut by August.

Secondary market rates rose week on week due to higher US Treasury yields recently, a trader said in an e-mail.

The trader added that the 20-year T-bonds on offer this week could fetch rates ranging from 6.4% to 6.5%.

“We believe that the BTr might do a partial award or reject if bids get higher than secondary yields, given its aggressive tap award in last week’s 10-year auction.”

At the secondary market on Friday, the rates of the 91-day, 182-day, and 364-day T-bills went up by 5.1 basis points (bps), 3.84 bps, and 5.73 bps week on week to end at 5.7355%, 6.0223%, and 6.1053%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data published on the Philippine Dealing System’s website. The 20-year bond likewise rose by 1.76 bps week on week to 6.3828%.

BSP Governor Eli M. Remolona, Jr. last month said the Monetary Board may deliver its first rate cut in over three years at its Aug. 15 review — the only policy meeting scheduled in the third quarter — as they expect inflation to continue easing this semester.

Meanwhile, the BTr on Tuesday raised P30 billion as planned via the bonds as total bids reached P96.605 billion, or more than thrice the amount on the auction block. The bonds, which have a remaining life of nine years and six months, were awarded at an average rate of 6.212%. Accepted yields ranged from 6.18% to 6.223%.

To accommodate the strong demand, the BTr opened its tap facility window, from which it accepted another P30 billion in bids. This brought last week’s total award to P60 billion, and the total outstanding volume for the series to P201.9 billion.

Last week, the BTr raised P22.6 billion from the T-bills it offered, higher than the P20-billion program, as total bids reached P46.736 billion, or more than twice the amount placed on the auction block.

Broken down, the Treasury borrowed P6.5 billion as programmed from the 91-day T-bills as tenders for the tenor reached P15.51 billion. The average rate of the three-month papers rose by 1.9 bps to 5.717% from the previous week. Accepted rates ranged from 5.702% to 5.74%.

Meanwhile, the government awarded P9.1 billion in 182-day securities, higher than the P6.5-billion plan, as bids for the tenor reached P17.525 billion. The average rate for the six-month T-bill stood at 5.978%, inching up by 1 bp week on week, with accepted rates at 5.95% to 5.998%.

Lastly, the Treasury raised the planned P7 billion via the 364-day debt papers as demand totaled P13.701 billion. The average rate of the one-year debt decreased by 0.1 bp to 6.072%. Accepted yields were from 6% to 6.09%.

On the other hand, the reissued 20-year bonds to be offered on Tuesday were last auctioned off on June 26, where the government raised P30 billion as planned at an average rate of 6.86%, 1.5 bps below the 6.875% coupon rate.

The BTr wants to raise P215 billion from the domestic market this month, or P100 billion from T-bills and P115 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

New Burberry chief faces tough choices on high-end ambitions

July 22, 2024 | 12:03 am

PARIS — Burberry’s new boss Joshua Schulman faces an immediate strategy dilemma.

Last Monday, the former head of Coach was appointed to replace Jonathan Akeroyd, becoming the fourth chief executive officer (CEO) of the £2.6 billion ($3.36 billion) British fashion house in 10 years.

Chairman Gerry Murphy vowed on the same day to continue Burberry’s upmarket push to compete with upper tier European luxury labels including Louis Vuitton, Chanel and Dior.

The message disappointed those looking for stronger reassurance that the maker of iconic tartan trench coats will be able to reverse years of underperformance, with some expecting Mr. Schulman to focus on lower-priced products. Shares were trading at 722 pence by 0830 GMT on Friday, down around 19% since before the announcement.

In a call with journalists that Monday, Mr. Murphy described the abrupt top management shuffle as part of “a nudge of the tiller and adjustment rather than a fundamental change of strategy.”

The label’s struggles to reignite sales underscore the challenge of building new expectations around historic brands — especially when inflation-hit shoppers are less inclined to browse stores, as seen at larger rival Gucci, owned by the Kering conglomerate.

Burberry is a case in point. Under Marco Gobbetti, who ran the group between 2017 and 2021 and hired designer Riccardo Tisci, the company had started to focus on trying to elevate its products to the top end of luxury fashion, without much financial success.

Outgoing CEO Mr. Akeroyd, who took the helm in 2022, pinned a further attempt at Burberry’s turnaround on higher-margin accessories, like the medium-sized Knight leather bag — currently priced at £2,090 ($2,701.12) — launched by designer Daniel Lee last year.

Mr. Lee’s edgy designs generated some buzz around the label, but the drive into the higher echelons of luxury has left investors hanging. Underlying sales were down 21% year on year in the 13 weeks to end June. Burberry has scrapped its dividend and warned it expects to post an operating loss in the first half of its fiscal year.

Shares in Burberry have halved in value in the past decade while LVMH’s have meanwhile risen nearly 400%. They have also underperformed Kering’s shares even as the conglomerate’s star brand Gucci struggles.

Mr. Murphy said Burberry had gone too fast, too far with new styles, and pledged to focus on the British house classics, adding that shoppers prefer more familiar looks during economic downturns.

Some luxury experts believe the British brand should pursue a different route.

Bernstein analyst Luca Solca said he initially read Mr. Schulman’s appointment as an opportunity for the label to draw on his background in American accessible luxury to refocus on more basic, lower-priced items.

The executive, who headed mid-range brand Coach from 2017 to 2020, is credited with relaunching the label’s highly popular Tabby handbag, which sells for as much as $750 and has been a major growth driver.

The US brand increased its global market share to 2.9% from 2.8% in the decade to 2023 while Burberry’s shrunk to 2.4% over the same period, GlobalData figures show.

But after Mr. Murphy’s comments on strategy, Mr. Solca said: “We tempered our excitement.”

Burberry’s leadership change left many analysts unconvinced Burberry will regain market share soon.

The company said it would redirect marketing to iconic items while seeking to cut costs. But the potential of such new priorities to be transformational “remains unclear,” said Citi analyst Thomas Chauvet, predicting consensus estimates for 2025 earnings before interest and tax (EBIT) of £298 million could be halved.

“I wouldn’t expect any turnaround to be rapid,” said Art Hogan, chief market strategist at wealth management firm B Riley Financial. — Reuters