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BSP to keep policy rates steady — poll

The Philippine central bank is widely tipped to keep its benchmark interest rate at a near 16-year high of 6.25% at its Aug. 17 meeting. — PHILIPPINE STAR/WALTER BOLLOZOS

By Keisha B. Ta-asan, Reporter

THE PHILIPPINE central bank will likely keep its benchmark policy rates steady at 6.25% for a third straight meeting on Thursday, amid easing inflation and slowing economic growth.

Some analysts, however, expect the Bangko Sentral ng Pilipinas (BSP) to start cutting rates in the fourth quarter to boost consumer demand following the disappointing second-quarter gross domestic product (GDP) data.

A BusinessWorld poll last week showed 13 of 15 analysts predict the Monetary Board will extend its pause at its Aug. 17 meeting.

On the other hand, two economists expect the BSP to hike borrowing costs by 25 basis points (bps), mirroring the move of the US Federal Reserve last month. If realized, this would bring the key rate to 6.5%. 

Alvin Joseph A. Arogo, an economist from the Philippine National Bank, said a pause is appropriate since inflation continued to trend downwards in July.

Headline inflation slowed for a sixth straight month to 4.7% in July from 5.4% in June. It marked the slowest headline figure in 16 months, or since the 4% in March 2022.

For the first seven months of the year, inflation averaged 6.8%, still higher than the BSP’s 5.4% full-year forecast.

“I think BSP will extend its policy hold and continue to reassess the current economic situation. Slower second-quarter GDP growth will make BSP a bit more cautious in raising interest rates at this time,” University of Asia and the Pacific (UA&P) Senior Economist Cid L. Terosa said.

The Philippine economy expanded by 4.3%, easing from the 6.4% growth in the first quarter and 7.5% a year ago. This was much lower than the 6% median forecast in a BusinessWorld poll, and the slowest in two years.

For the first semester, GDP growth averaged 5.3%. Economic managers have said the economy has to expand by at least 6.6% in the second half to achieve the government’s 6-7% full-year target. 

“We think that the BSP will likely pause in its August meeting as the effect of the cumulative tightening since last year has taken a toll on the economy,” China Banking Corp. Chief Economist Domini S. Velasquez said in an e-mail.

While government spending was a major drag on growth, Ms. Velasquez said weaker consumption, flat investments and muted private construction growth “will likely be major considerations in hiking rates too much.”

Government spending contracted by 7.1% in the April-to-June quarter, a reversal of the 6.2% growth in the first quarter and 10.9% a year ago.

Household spending growth slowed to 5.5% from 6.4% in the first quarter and 8.5% expansion a year earlier.

Gross capital formation — the investment component of the economy — dipped by 0.04%, ending eight straight quarters of growth. This was a reversal from 17.2% in the second quarter of 2022.

“We believe the BSP governor will need to consider a pause to provide growth with some support while remaining hawkish in his statement by vowing to hike if upside risks to the inflation outlook materialize,” Nicholas Antonio T. Mapa, senior economist at ING Bank N.V. Manila, said.

BSP Governor Eli M. Remolona, Jr. last week said the central bank wants to ensure a smooth exit from its tightening cycle.

“If there’s a chance that we might have to raise rates again after we start cutting, we don’t want to take the risk from these quick reversals. I think the exit has to be a smooth process and this is what central banks have learned over the years — sudden reversals are bad,” he said in a transcript of a discussion with Nomura Chief ASEAN (Association of Southeast Asian Nations) Economist Euben Paracuelles provided by the BSP on Thursday.

Mr. Remolona said the BSP is ready to resume its policy tightening should supply shocks on inflation emerge, especially if the El Niño weather event will turn out to be severe.

Meanwhile, Jonathan L. Ravelas, senior adviser at Reyes Tacandong & Co., said the BSP will likely raise policy rates by 25 bps on Thursday to match the recent hike of the US Federal Reserve.

“This is to keep the difference in interest rates between the Philippines and the US healthy, which can help stabilize the value of the Philippine peso compared to the US dollar and control inflation,” Mr. Ravelas said. “It will also serve as a calibrated preemptive response to the upside risks to inflation.”

The US central bank raised the federal funds rate target by 25 bps to 5.25-5.5%, the highest level in more than two decades.

RATE CUTS BY YEAREND?
Pantheon Chief Emerging Asia Economist Miguel Chanco said the Monetary Board may cut rates by 25 bps in November and another 25 bps in December.

“This call has been bolstered by disappointing second-quarter GDP report, which shows a broad-based and sharp slowdown in domestic demand. Our core view now is that the economy will enter a shallow technical recession, implying another quarter-on-quarter contraction in GDP in the third quarter,” he said.

Patrick M. Ella, economist at Sun Life Investment Management and Trust Corp., likewise said there is room for a possible 25-bp cut in the fourth quarter if inflation continues to ease.

BSP Deputy Governor Francisco G. Dakila, Jr. on Friday said inflation could return to the 2-4% target range earlier than expected.

“There’s actually some chance that we may even go back to within target before the fourth quarter and that is something that will be considered,” he said at an economic briefing in Cebu, adding the full-year inflation forecast will be reviewed this week.

However, Mr. Arogo said the BSP will likely hold the key rate at 6.25% for the rest of the year due to the upside risks to prices.

“In particular, we are concerned about the impact of the minimum wage hike, El Niño, typhoons, oil production cuts, and prolonged Russia-Ukraine war,” he said.

A P40 wage hike in the National Capital Region took effect on July 16. Pending wage hike petitions for various provinces in the country will likely be decided on by September.

The El Niño weather phenomenon is expected to persist until the first quarter of 2024.

“If the exchange rate sharply weakens due to the lower BSP-Fed interest rate differential, however, then we believe that BSP may need to temporarily sacrifice supporting growth until the peso stabilizes,” Mr. Arogo said.

Meanwhile, HSBC Global Research ASEAN economist Aris Dacanay said the BSP will likely keep rates steady until yearend.

“Despite the challenges in growth, we continue to expect the BSP to maintain the policy rate at 6.25% and only cut rates after the Fed cuts its own. Since our baseline view is for the Fed to cut in the second quarter of 2024, we expect the BSP to begin its easing cycle in the third quarter of 2024,” he said.

After Aug. 17, the BSP will hold policy-setting meetings on Sept. 21, Nov. 16, and Dec. 14.

PHL may miss full-year GDP target after Q2 miss

A man works at a construction site in Quezon City. — PHILIPPINE STAR/MICHAEL VARCAS

PHILIPPINE economic growth is expected to remain lackluster in the second half, making it increasingly unlikely it will meet the government’s 6-7% growth target this year, analysts said.

Disappointing gross domestic product (GDP) growth in the second quarter prompted several analysts to slash full-year projections.

Philippine economic expansion slowed to 4.3% in the April-to-June period, from 6.4% in the first quarter and 7.5% a year ago. It was well below the estimates of 21 economists in a BusinessWorld poll with a median forecast of 6%. This was the slowest print in over two years, bringing average growth to 5.3% in the first half.

“We were already skeptical about the chances of the government hitting its growth target for 2023 and, needless to say, we’re even more skeptical now following the huge miss in the second quarter,” Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco said in an e-mail.

“It will be difficult to salvage the year in the second half, as the weakness in the economy is quite broad-based, affecting all aspects of domestic demand, and the government has little room fiscally to stimulate growth.”

Pantheon slashed its growth projection for the Philippines to 4.5% (from 5.5% previously) this year and 4% (from 5% previously) in 2024.

With the slower-than-expected growth, Mr. Chanco said the Philippines has lost its status as one of the fastest-growing economies in the Association of Southeast Asian Nations (ASEAN) region.

“As things stand, [the Philippines] is now underperforming relative to the likes of Indonesia and Malaysia, and it isn’t faring that much better than Vietnam which is also experiencing a sharp cyclical slowdown,” he said.

In the second quarter, the Indonesian economy expanded by 5.17%, slightly faster than the 5.04% growth in the first quarter.

Vietnam’s economy accelerated by 4.14% in the April-to-June quarter, from 3.3% in the previous quarter. Singapore grew by 0.7% in the second quarter (from 0.4% in the first quarter).

Malaysia and Thailand have yet to release second-quarter data.

“The more dependent the country is on exports, the slower the economic expansion. This is mainly due to a slowing global economy,” Finance Secretary Benjamin E. Diokno said in a Viber message to reporters on Sunday.

He noted the Philippines is not as export dependent as some of its ASEAN neighbors.

“Its growth is consumption-based, that is why it is less susceptible to the weaker exports demand owing to the slowing global economy,” Mr. Diokno said.

CATCH-UP SPENDING
To achieve the government’s 6-7% growth target for 2023, the Philippine economy has to grow by at least 6.6% in the second half, Mr. Diokno said.

“An aggressive catch-up plan for infrastructure projects (roads, bridges, airports, seaports, power, water, irrigation, telecommunications facilities, digitalization, school buildings, housing and others), quicker response by GOCCs (government-owned and -controlled corporations), and strong and deliberate spending by resource-surplus local governments are essential parts of the solution to the relatively weak second-quarter growth performance of the Philippine economy,” he said.

The weaker-than-expected growth in the second quarter was partly attributed to the 7.1% contraction in government spending, which was a reversal of the 10.9% growth a year ago.

Despite the “formidable external challenges,” Mr. Diokno expressed confidence the government will still achieve the 6-7% target this year.

“Before the disappointing second-quarter GDP release, we had expected full-year growth to scratch the lower bound of the government’s target range of 6%-7%. But given the undershooting in the June stanza and headwinds from the slowing global economy, it is going to be increasingly harder to meet the government’s GDP target this year,” Sarah Tan, an economist from Moody’s Analytics, said in an e-mail.

Meanwhile, Citigroup, BofA Securities, Inc., and BMI Country Risk & Industry Research lowered their full-year projections for the Philippines, following the disappointing economic data.

Citigroup downgraded its GDP forecast to 5.2% for 2023 (from 5.9% previously) and to 5.9% for 2024 (from 6.1% previously).

“It appears that high inflation and policy rate hikes had a larger-than-expected impact on growth than were evident in some of the high-frequency indicators that remained strong. In the second half, we expect GDP growth to gradually pick up pace as easing inflation and continued strength in the labor market and minimum wage hikes would support consumer spending,” Nalin Chutchotitham, economist for the Philippines at Citigroup, Inc. said.

However, a global economic slowdown and the potential impact of the El Niño weather pattern on agriculture production remain downside risks to growth this year and next year, she added.

“We expect the return of inflation to long-term trend of 3% and policy rate cuts (towards 4.5% at end-2024 estimate) to bolster consumption and investment (in 2024),” Ms. Chutchotitham said.

BMI in a note said it also slashed its full-year forecast to 5.3% from 5.9% previously as economic activity will remain lackluster amid high interest rates, a weak external sector, and adverse weather conditions.

“Tight credit conditions will continue to weigh on domestic activity,” BMI said. “The lagged effects of aggressive tightening will pass through to the economy and will weigh on business sentiment.”

Bloomberg reported that BofA Securities, Inc. cut its Philippine growth outlook to 4.8% for this year, from 5.5% previously.

The Bangko Sentral ng Pilipinas (BSP) raised borrowing costs by 425 basis points from May 2022 to March 2023 to tame inflation. This brought the key interest rate to a near 16-year high of 6.25%.

The BSP will likely keep its benchmark policy rates steady for a third straight meeting on Thursday. A BusinessWorld poll last week showed 13 of 15 analysts expect the BSP to extend its pause at its fifth policy meeting for the year on Aug. 17. — K.B.Ta-asan

Increasing real estate sector risks may affect asset quality of Philippine banks

Buildings are seen along EDSA in Quezon City, July 3, 2022. — PHILIPPINE STAR/ MIGUEL DE GUZMAN

By Keisha B. Ta-asan, Reporter

RISKS to the commercial real estate sector in the country may also pose threats to the asset quality of the banking industry given its exposure to the property sector, according to S&P Global Ratings.

“Given the banking sector’s sizable exposure at about 13% of total loans, any significant deterioration in the commercial real estate sector will affect the banks’ asset quality,” S&P Global Ratings Associate Director Nikita Anand said in an e-mail.   

Based on the latest data from the Bangko Sentral ng Pilipinas (BSP), the exposure of Philippine banks and trust entities to the commercial real estate sector stood at 63.08% as of end-March.

Commercial real estate loans went up by 4.5% to P1.62 trillion in the first quarter from P1.55 trillion in the same period a year ago. Meanwhile, residential real estate loans increased by 4.6% to P950 billion in the first quarter from P908 billion a year ago.

Overall, the banking industry extended P3 trillion worth of loans to the real estate sector in the January-to-March period. This is 5.3% higher than the P2.85 trillion in the same period in 2022.

According to Ms. Anand, the office vacancy rate in Metro Manila is still elevated due to the supply overhang and continued hybrid work arrangements.

“This has not translated into asset quality issues so far as reflected by the low reported NPL (nonperforming loan) ratio of 2.1% for commercial real estate loans,” she said.

The gross soured loans in the commercial real estate sector dropped by 14.1% to P34.1 billion as of end-March from P39.7 billion in the same period in 2022.

This brought the gross NPL ratio for commercial real estate loans to 2.1%, lower than 2.56% a year earlier.

Joey Roi H. Bondoc, research director at Colliers International Philippines, said the office vacancy rate in Metro Manila is projected to increase to 21.2% this year. As of the first half, the office vacancy rate is at 18.4%.

“We’re projecting a 21.2% vacancy rate because there will be about 670,000 square meters of new office space to be completed in Metro Manila,” Mr. Bondoc said in a phone call interview.

For the retail property sector, the vacancy rate may inch up to 15% this year, from 14% last year.

“For the commercial real estate sector, that’s a big concern as this might stifle the growth of retail rents. We might see slower growth in rents for 2023,” Mr. Bondoc said.

Vacancy rates continue to rise as many companies do not renew or pre-terminate their lease contracts. Some companies are also rightsizing their office space requirements as workers continue to opt for hybrid work arrangements.

“There are companies that are rightsizing. For example, if they have two floors now, they’ll just occupy one floor instead of two,” Mr. Bondoc said. 

“Companies who are occupying brick-and-mortar space will also be gauging whether they will occupy the large spaces they used pre-pandemic, or will they be rightsizing given some headwinds that are being forecast,” he added.

Data from Colliers Philippines showed that office transactions in the National Capital Region in the first half reached 306,000 square meters, lower by 5% year on year.

Meanwhile, Ms. Anand said other segments within the commercial real estate sector, such as hotels and shopping malls, are performing better due to robust domestic consumption and a recovery in local and international tourism.    

“The BSP’s comprehensive collateral caps and stress tests for the real estate sector should lower ultimate losses. Since 2014, the Philippine central bank has adopted a preemptive stance to curb potential overheating in the real estate sector,” Ms. Anand said.

The BSP has mandated banks to cap real estate loans at 60% of their collateral values as appraised by an appraiser acceptable to the central bank.

The central bank has also adopted a real estate stress test limit of 25% write-off rates on exposure to the real estate sector so that banks may have enough capital buffers to be able to weather any property price corrections.

Business groups welcome amended CREATE rules

NEW LOCATORS based in economic zones such as Aboitiz-led LIMA Estate in Batangas will be able to enjoy tax benefits from the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law. — COMPANY HANDOUT

INDUSTRY GROUPS welcomed the amendments to the implementing rules and regulations (IRR) of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law which clarified the eligibility of exporters seeking to avail of value-added tax (VAT) zero-rating.

Philippine Chamber of Commerce and Industry President George T. Barcelon said they are “happy” with the new rules as it addressed the issues raised by registered business enterprises.

“[Before,] when they buy supply or materials from a local source, they’re still charged with VAT. With the amendments, it’s now clear. If you are an export-oriented company, or you’re in the Philippine Economic Zone Authority (PEZA) zone or special zone, you are exempted from those taxes,” Mr. Barcelon said in a phone interview. 

The departments of Finance (DoF) and Trade and Industry on Friday approved the amendment of Rule 18 Section 5 of the IRR, in response to a Malacañang directive to review VAT-related issues concerning both domestic market enterprises (DMEs) and registered export enterprises (REEs).

Transitory registered DMEs within an economic or a freeport zone availing of the 5% gross income tax regime may now register as VAT taxpayers.

“This will enable VAT-registered DMEs covered by the transitory provisions of CREATE to either charge output VAT to domestic customers or receive a refund from the Bureau of Internal Revenue (BIR) for the input VAT directly attributable to their zero-rated sales,” DoF said in a statement on Friday.

On the other hand, transitory REEs, whose income tax-based incentives have expired, will continue to enjoy VAT zero-rating on their local purchases until the electronic sales reporting system is fully operational or until the expiration of the 10-year transitory period, whichever comes earlier.

Mr. Barcelon said the amendment will indirectly help local suppliers, as exporters previously warned that the failure to resolve the VAT zero-rating issue may force them to consider imports instead of local purchases, and even move their operations overseas.

“It would just make things easier to be honest. At that time, when it was not yet (approved), there’s unnecessary bureaucracy. So, we’re glad that (the government approved it) and we hope that the amendments will stay,” Mr. Barcelon said.

With the new rule, Confederation of Wearables Exporters of the Philippines (CONWEP) Executive Director Maritess J. Agoncillo said majority of its members can now enjoy the VAT zero-rating on local purchases as they are manufacturing for the export market.

“This will definitely bring back investor confidence to our industry since the amendment now recognizes the cross-border doctrine principle on taxation,” she said.

The cross-border doctrine is a legal principle that mandates that no VAT be imposed on goods destined for consumption outside the territorial border of the taxing authority, including sales to export processing zones.

However, Ms. Agoncillo said they are still concerned with the application process for the VAT refunds of their member firms.

“Especially those that are Board of Investments-registered facilities doing 100% exports, I hope they may be provided proper and efficient attention as they process for their corresponding VAT refunds,” she said.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the amended rules will help lift investor confidence in the country. 

“This is consistent in giving certainty on investment incentives in the country under the CREATE law and removing other remaining uncertainties, especially from the point of view of foreign investors and exporters that are enticed with incentives at the various ecozones, in view of competition with other ASEAN countries,” Mr. Ricafort said.

Exporters had previously called on the government to address the “conflicting provisions” in the VAT zero-rating guidelines stemming from the CREATE Act, which was signed in 2021.

Under the CREATE Act, business enterprises are required to prove that the local purchases of goods and services are directly and exclusively used in their registered activities in order to avail themselves of the VAT zero-rating.

Prior to the CREATE Act, local purchases by enterprises registered with and located in economic and freeport zones were entitled to VAT zero-rating. — Keisha B. Ta-asan

Globe expects capex to drop to $1 billion in 2024

BW FILE PHOTO

GLOBE TELECOM, Inc. expects its capital expenditures (capex) to drop to $1 billion next year amid the reduction of purchase order issuances this year.

Globe’s capex for this year will remain at around $1.3 billion, it said in a statement, after spending P37.7 billion in the first six months of the year.

The continuous decline in capex will be enabled by the reduction of purchase order issuances for the year to $600 million, the company said.

“This steep reduction will directly impact capex spending over the next few years allowing capex to drop further to $1 billion by 2024, without sacrificing network quality or customer experience,” it added.

The company also revised its service revenue guidance for the year to mid-to-low single digit from mid-single digit growth, which it said is because of extended macroeconomic pressures.

“This adjustment takes into account the extended inflationary environment that weakened the Filipino consumers’ purchasing power, coupled with the continued decline in our legacy broadband business,” Globe said.

SECOND QUARTER PERFORMANCE
Globe reported an increase of 17.7% in its attributable net income to P7.07 billion for the second quarter from P6.01 billion in the same period last year.

From April to June, the company’s top line reached P44.49 billion, an increase of 1.7% from P43.76 billion in the corresponding period of 2022.

Cost and expenses during the period rose 6.6% to P39.34 billion from P36.91 billion last year.

However, Globe’s net income for the first semester declined 27.1% to P14.33 billion from P19.65 billion a year ago, despite a 2.5% increase in its top line to P89.52 billion from P87.32 billion last year.

The sharp decline was attributed to a P10.51-billion gain from the sale of its controlling interest in a data center business booked in the first six months of 2022.

The company’s first-half service revenues, which accounted for P80.4 billion or 89.8% of its top line, rose 1% from P78.88 billion in the first half of last year.

Meanwhile, non-service revenues climbed 8.1% to P9.12 billion for the first six months of the year from P8.44 billion last year.

“The Globe group’s consolidated service revenues rose… showing stable revenues year-on-year, backed by the data revenue growth across mobile and corporate data businesses,” the company said.

First semester consolidated data revenues were P53.11 billion, a 6.2% jump from the P49.99 billion booked a year ago, while broadband revenues were 7.1% lower at P12.81 billion from P13.79 billion last year.

Mobile data traffic grew to 2,814 petabytes as of the end of June, higher than the 2,177 petabytes reported in the year earlier.

“This was mainly fueled by the growing popularity of streaming and user-generated content through social media,” the company said.

Meanwhile, the company said its total Home Broadband subscribers declined by 31% to 2.2 million, which it attributed to the shift of the market to more reliable wired connectivity.

The company also saw a decline in revenues for the first half from voice services and SMS or short messaging service by 12.9% and 10.1% to P7.65 billion and P3.99 billion, respectively.

It also saw P77.99 billion in costs and expenses in the first six months of the year, a 4.4% rise from P74.71 billion a year ago.

“The Globe Group continues to perform well during the first half of the year, despite facing macroeconomic challenges,” said Ernest L. Cu, president and chief executive officer of Globe.

“We are confident that Globe will maintain its leadership in mobile going forward. The company is also well-positioned to adapt to the industry’s changing landscape and take first mover advantage with its innovative digital solutions that deliver life-enabling services to Filipinos,” he said. — Justine Irish D. Tabile

Mitsubishi aims to produce 100,000 units within the year for CARS

MITSUBISHI Motors Philippines Corp. (MMPC) is aiming to hit 100,000 units of produced vehicles within the year as part of the company’s commitment to the government’s incentives program for local car manufacturing. 

MMPC First Vice-President for Corporate Division Imelda M. Abadilla-Brown said the company has already produced 90,916 units as part of its commitment to the Comprehensive Automotive Resurgence Strategy (CARS) program.

The MMPC is required to produce at least 200,000 units of the Mirage hatchback and Mirage G4 sedan models under the incentives program.

“We have already reached more than 90,000 units produced. We’re hoping we can hit the 100,000 units by the end of the year,” Ms. Abadilla-Brown told reporters at the sidelines of the company’s anniversary expo launch in Pasay City last week. 

Ms. Abadilla-Brown said MMPC is eyeing to manufacture over 20,000 units of the Mirage models for the 2023 fiscal year, which is from March to April next year.

MMPC has produced 14,167 units to date, she said.

Meanwhile, the company sold 14,366 units to date, higher than over 12,000 last year, Ms. Abadilla-Brown added.

“The CARS program is something that the industry needs. It is a very good program. It’s very beneficial to the society. It generates jobs. We preserve jobs. We want to continue producing the Mirage,” she said.

MMPC has plans to add another model for local production, but said the company needs government support, Ms. Abadilla-Brown added.

“There are business aspirations, future plans, to bring in more local models. We want to add to the model lineup. But we need support from government to make it happen,” she said.

Asked about the possibility of producing its Xpander multipurpose vehicle (MPV) model locally, Ms. Abadilla-Brown said that the company has “intentions” to do so. 

“We have aspirations. We have intentions. That’s why we’re engaging the government to provide us with the needed support to make it happen. On the timeline, it all depends on the extent of support that government will be able to provide,” she said. 

The Trade department previously said it is hoping that MMPC would consider producing Xpander in the Philippines.

Meanwhile, Ms. Abadilla-Brown said an extension to its CARS commitment is “welcome.”

“For MMPC, we are hoping that the government will give us at least a minimum of five years (extension). Of course, anything more than that will be very much welcomed,” she said.

“With the support, we’ll be able to sustain the gains under the program. So, it’s not just about getting the volume, but to continue supporting our local suppliers. The CARS program should not be a one-time program. We hope to be able to continue enhance this program, sustain this program and in fact, we’re asking for a CARS 2,” she added.

The Private Sector Advisory Council (PSAC) in May announced that President Ferdinand R. Marcos, Jr. approved the group’s recommendation for the five-year extension of the CARS incentives program to help boost local automotive industry.    

According to the PSAC, the five-year extension will continue the provision of tax incentives and support for car manufacturers that achieve the requirements for investment, production, and technology development

Launched in 2015 under Executive Order No. 182, the CARS program mandates participating car manufacturers to produce at least 200,000 units of their enrolled model in order to avail of incentives. The enrolled model is eligible for P9 billion in fiscal support.

The program, participated in by the MMPC and Toyota Motor Philippines Corp. (TMP), was launched as part of efforts to revive the local car production industry. MMPC produces the Mirage hatchback and G4 sedan, while the TMP manufactures the Vios sedan.

MMPC has until this year to meet the requirement under the program, while TMP has until next year. — Revin Mikhael D. Ochave

Paris Baguette targets to open first PHL store in Q4

KOREAN bakery chain Paris Baguette is targeting to open its first store in the Philippines by next quarter, its operator said last week.

Berjaya Food Berhad (BFood) subsidiary Paris Baguette Singapore and Philippines’ Middle Trade, Inc. on Aug. 10 signed a franchise agreement to launch the bakery in the local market, “with its first store slated to open in the fourth quarter of 2023,” it said in a statement.

Under the deal, BFood’s Berjaya Food (International) Sdn. Bhd. and Middle Trade will be the principal operators of the Paris Baguette Philippines, Inc. which will operate the stores locally.

Berjaya Food International is also the master franchisor of Kenny Rogers Roasters together with local franchisee, Middle Trade.

“What we hope to do now that we have signed is to be able to start growing the Paris Baguette brand in the Philippines,” Dato’ Sydney Lawrance Quays, group chief executive officer of BFood, told reporters.

“We actually launched in Malaysia back in January and we know how popular this brand is and I think it will do really well in the Philippines — that is why this is our next (target market),” he said.

Mr. Quays said the company is planning to open five stores in its first year in the country, with an estimated cost of $300,000 per store, which could be higher for its flagship store.

“Typical investment for a store is about $300,000 but that will depend on how big the store is and on the location,” he said. “The day we open our first store, we hope to open four stores after that. So, in totality we hope to have five stores within the year after the first opening.” 

Mr. Quays said the company has not yet decided on the location of its first store but noted that it will likely be in a mall in Metro Manila.

“We are exploring now. We are speaking with some of the bigger malls, and we are yet to confirm. Realistically, we want to confirm it anytime, it is just that we are really looking for the right location to be able to present the brand to the Philippine people,” he said.

“We hope to open the first store by this year and if we are not able to make it due to external factors, then probably we will go on to the first quarter of next year, but we hope to have it within this year,” he added.

Asked why the company chose the Philippines, Mr. Quays said Berjaya Food has a long relationship with local partners.

“We know the business in the Philippines. We know the customers in the Philippines, and after a lot of considerations, I strongly believe that this is really the right brand for the Philippines,” he said. — Justine Irish D. Tabile

Hybrid power to the people

PHOTO BY KAP MACEDA AGUILA

The Yaris Cross is now the most affordable electrified Toyota here

By Dylan Afuang

REPRESENTING a car maker known for championing hybrid power, Toyota Motor Philippines (TMP) recently launched its most compact and attainable hybrid electric vehicle (HEV) to date — the Yaris Cross.

The Yaris Cross is now the gateway to the hybrid roster of Toyota cars — comprised of the Corolla Cross and RAV4 SUVs, the Corolla Altis and Camry sedans, and Zenix MPV — that boast a smaller carbon footprint and fuel consumption through the melding of gasoline and electric power.

Even if an internal-combustion-engine-only option is available, the limelight obviously belongs to its hybrid version. This much was gleaned at the crossover’s launch at TMP’s showcase of its HEV range called the “Go Electrified with Toyota” at the Bonifacio High Street Amphitheater in Bonifacio Global City, Taguig over the weekend. Lexus Philippines also flaunted its HEVs and fully electric RZ at the venue.

“In Toyota, we believe in a multiple pathway approach to achieve carbon neutrality,” TMP President Atsuhiro Okamoto stated in a release. “The way to maximize the environmental benefits of electrified vehicles is through widespread adoption. That is why (TMP offers) the widest range of (HEVs) in the market.”

Retailing for P1.598 million, the top-spec Yaris Cross 1.5 S HEV version is the lone hybrid in the range — P82,000 more affordable than the Corolla Cross HEV. Meanwhile, the conventionally powered variants, 1.5 G CVT and 1.5 V CVT, are priced at P1.199 million and P1.296 million to P1.306 million, respectively. A Scarlet Pearl finish can be optioned on the V model for an additional P10,000.

A CVT, front-wheel drive drivetrain, and 1.5-liter engine (good for 106hp and 138Nm) are shared across Yaris Cross models. The hybrid powertrain option employs the same 1.5-liter mill with an Atkinson Cycle and is paired with an electric motor. The gas-powered engine in the HEV provides 90hp and is linked to an electric motor generating 79hp.

The Toyota HEV system continues to work in its tried-and-tested ways. When there’s sufficient charge in the battery and depending on the driving mode, the gas engine deactivates, and the vehicle can travel on low speeds for short distances solely on electric power. During faster speeds, the motor provides the engine additional boost — saving fuel in the process.

There’s no need to plug the car when the lithium-ion battery is depleted or requires charging. It gets energy through the engine and recuperates kinetic energy when the vehicle decelerates.

The attractions of the Yaris Cross go beyond its running gear.

This crossover measures 4,310-mm long, 1,770-mm wide, and 1,615-mm tall, with a wheelbase of 2,620mm and ground clearance of 210mm. In comparison, the Corolla Cross is 4,460-mm long, 1,620-mm tall, and has a 2,640-mm wheelbase. The Yaris Cross 1.5 G has 17-inch alloy wheels, while the 1.5 V and 1.5 S HEV get 18-inch rollers. The V and S HEVs are available in two-tone paint.

Inside, eight-way power-adjustable seats and a power tailgate are standard on the middle and top grades. All versions come with a digital instrument cluster, a 10.1-inch touchscreen audio display with Apple CarPlay and Android Auto, and wireless charging. Exclusive to the 1.5 HEV S is a Pioneer six-speaker sound system and full-length panoramic sunroof.

For heightened safety, the 1.5 V CVT and 1.5 S HEV come with Toyota Safety Sense, which includes a pre-collision system, auto high beam, lane tracing aid, lane keeping assist, rear cross traffic alert, and adaptive cruise control. These models also include a 360-degree camera, but all trim levels feature front and rear parking sensors, a built-in dash cam, and six air bags.

So far, the Yaris Cross appears to be a sustainable and well-appointed choice — but given its price, will it be a sales success? One can be optimistic, since the more expensive Corolla Cross — as shared by Mr. Okamoto to “Velocity” — is so far the most popular Toyota hybrid locally.

When asked whether we can expect more affordable Toyota HEVs, Mr. Okamoto answered, “We aim to launch a sedan and MPV in a few years’ time.”

There will be no stopping Toyota from bringing hybrid power to the people.

Outstanding partners shine in LANDBANK’s diamond celebration

CHEERS TO 60 YEARS OF SERVICE: LANDBANK President and CEO Lynette V. Ortiz leads a celebratory toast alongside industry regulators, business leaders, development partners, and outstanding clients in commemoration of LANDBANK’s diamond jubilee on 08 August 2023.

To mark six decades of meaningful public service, the Land Bank of the Philippines (LANDBANK) honored outstanding clients and partners who have become its strong allies in promoting countryside and national development during an appreciation event on 08 August 2023 in Pasay City.

The 60-year-old state-run Bank conferred the prestigious Distinguished Initiators and Movers of National Development (DIAMOND) Awards to exceptional loan clients, and fund management and digital banking partners from across the country.

LANDBANK President and CEO Lynette V. Ortiz extends her appreciation to clients and partners for their trust and support for the bank over the past 60 years.

“May these awards inspire you to dream bigger and achieve more, while serving as a testament to our solid partnership, and to our unified resolve to continue making a lasting impact to the sectors and people we serve,” said LANDBANK President and CEO Lynette V. Ortiz.

Finance Secretary and LANDBANK Chairman Benjamin E. Diokno likewise expressed appreciation to the DIAMOND awardees for their contributions in accelerating the post-pandemic recovery of the Philippine economy.

Finance Secretary and LANDBANK Chairman Benjamin E. Diokno congratulates the DIAMOND awardees and assures all stakeholders of the bank’s continued support towards building a more resilient, inclusive, and sustainable economy.

“As chairman of this Bank, I assure you that we will continue to be a reliable partner in your development journey as we build a more resilient, inclusive, and sustainable economy where no one is left behind,” said Finance Secretary Diokno.

Executive Secretary Lucas P. Bersamin joined Finance Secretary Diokno and LANDBANK President Ortiz in presenting the DIAMOND Awards to clients. Department of Agrarian Reform (DAR) Secretary Conrado M. Estrella III, Department of Labor and Employment (DOLE) Secretary Bienvenido E. Laguesma, and Department of Agriculture (DA) Senior Undersecretary Domingo F. Panganiban also graced the event.

LANDBANK bestowed the DIAMOND Awards to outstanding loan clients nationwide who have trusted the Bank for the growth and development of their business operations, and have made ripples of positive change in their respective communities.

Executive Secretary Lucas P. Bersamin (rightmost), Finance Secretary and LANDBANK Chairman Benjamin E. Diokno (2nd from right), and LANDBANK President and CEO Lynette V. Ortiz (leftmost) confer the DIAMOND Award to Lamac Multi-Purpose Cooperative.

Awardees include the Lamac Multi-Purpose Cooperative as the Outstanding Agri-based Cooperative; ACDI Multipurpose Cooperative as the Outstanding Non-Agri-based Cooperative; Dolefil Agrarian Reform Beneficiaries Cooperative and Goodyear Agrarian Reform Beneficiaries Multi-Purpose Cooperative (GARBEMCO) as the Outstanding Agrarian Reform Beneficiaries’ Cooperatives; and Biotech Farms, Inc. as the Outstanding Partner in Agribusiness.

Other LANDBANK outstanding loan clients include the Green Innovations for Tomorrow Corporation as the Outstanding Partner in Renewable Energy; Leyte Metropolitan Water District as the Outstanding Partner in Water Development and Distribution; Fiesta Communities Incorporated as the Outstanding Partner in Socialized Housing Development; Allah Valley Medical Specialists’ Center, Inc. as the Outstanding Partner in Health Services; Juan Sumulong Memorial Schools Systems Inc. as the Outstanding Partner in Learning and Development; spouses Marcelina and Salvador Cabaero as the Outstanding Agri-based SME; and Mr. Porfirio P. Mina as the Outstanding Non-Agri-based SME.

LANDBANK also recognized outstanding partners in fund management who have extended resolute confidence in the Bank and remained loyal clients over the years.

Recipients of the LANDBANK DIAMOND Awards under fund management include the Bureau of the Treasury; San Miguel Group of Companies; OceanaGold (Philippines) Inc.; Peninsula Electric Cooperative, Inc.; WCS Construction Inc.; JM Maligaya Group of Companies; Metro Retail Stores Group Inc.; ECJ Negros Farms ARB Cooperative; and Ulticon Builders, Inc.

The DIAMOND Awards were also conferred to LANDBANK’s outstanding digital banking clients and partners who have helped advance digitalization and financial inclusion by leveraging on the Bank’s innovative products and services.

Awardees comprise of the Department of Education as Top in eMDS and weAccess Utilization; the Philippine National Police as Top in Link.BizPortal Utilization; Mastercard Transaction Services (Philippines) Inc. as Top Remittance Partner through LBRS (Local); and the Rural Bank of Sipocot (Camarines Sur), Inc. as the Top Agent Banking Partner.

Lamac Multi-Purpose Cooperative General Manager Elena C. Limocon (left photo) delivers a message of appreciation to LANDBANK on behalf of all the DIAMOND awardees. (Right photo) Executive Secretary Lucas P. Bersamin (rightmost), Finance Secretary and LANDBANK Chairman Benjamin E. Diokno (2nd from right), and LANDBANK President and CEO Lynette V. Ortiz (leftmost) confer the DIAMOND Award to Lamac Multi-Purpose Cooperative.

Lamac Multi-Purpose Cooperative General Manager Elena C. Limocon delivered a special message on behalf of all the DIAMOND awardees and thanked LANDBANK for its unwavering support to clients.

“Our deepest gratitude to LANDBANK for the trust and support showed to us throughout our institutional journey. This award serves as a reminder that through collaboration, convergence, perseverance and a strong sense of purpose, we can truly make a difference in the lives of our people,” said General Manager Limocon.

LANDBANK is celebrating its 60th anniversary this month, representing six decades of uplifting lives, empowering communities, and serving the nation — all in pursuit of an inclusive and sustainable economy.

 

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Audi dives deeper into electric

PHOTO BY KAP MACEDA AGUILA

The ‘e-tron’ moniker makes its way into the flagship model lineup

THERE WAS a little bit of irony that just as the incessant rains of the last couple of weeks relented, Audi Philippines introduced a new offering by submerging it in knee-deep water. But we’ll get to that later.

Launched globally in the early part of the year, the Audi Q8 e-tron is the latest iteration of what previously simply known as the e-tron. This name change is crucial, for it signifies what is to come (see our interview below) — greater electrification for a brand which has surely been one of the pioneers of the space, particularly here in our country.

In a release, Audi Philippines described the nameplate as “(forming) part of Audi’s largest model offensive in history. It serves as the flagship model among Audi SUVs and crossovers as it further evolves the e-tron, which has been setting standards in the 100% electric luxury SUV class since its debut in the global market.”

The Ingolstadt-headquartered brand reports that around 150,000 units of the e-tron have been sold since its introduction in 2018, and the firm’s “systematic electric roadmap” has thus far resulted in eight electric models — set to grow to “more than 20” by 2026.

Its aggressive BEV strategy will mean that by that year, “Audi will only be releasing fully electric models on the global market.” Said Audi AG Chairman Markus Duesmann in a release, “We’ve set a fixed date for our withdrawal from combustion engines and clearly decided that Audi will be a fully electric brand within 11 years.”

The Audi Q8 e-tron certainly appears to be the poster child — and bridge — to that future. Positioned as suitable for everyday use, it is heretofore the best representation of Audi’s electrified prowess. Improved efficiency, range, battery capacity, and charging performance are underscored by a look that fits right into the portfolio. Coming in SUV and Sportback guises, the Q8 earns its place in the Q lineup. It certainly doesn’t look like an EV — whatever that means these days. Improved motors, progressive steering, and chassis control have also been enhanced to imbue this BEV with “the dynamic driving characteristics that are typical of Audi.”

The only thing different about it is the guilt-free electric powertrain. The Audi Q8 e-tron 55 delivers 408hp and 664Nm — and can travel as far as 582km on a full charge. The Q8 e-tron 50 submits 335hp and 664, with a range of up to 491km. As for the Sportback, the power and torque outputs are the same, but range is significantly higher (up to 600km) on account of a better aerodynamic shape. With two electric motors powering the front and rear axles to recreate the quattro capability, the top speed is 200kph.

Said Audi Philippines Managing Director Christopher Chan to “Velocity” on the sidelines of the local launch event for the Q8 e-tron at the Bonifacio Global City, Taguig, “We’re doing this test-drive event now because we want to dispel a lot of the things that people are worried about with electric vehicles.”

The makeshift course — set up at the 30th East B Open Parking — consisted of two sets of uneven steel beams designed to highlight the quattro prowess of the vehicle. Despite at times having only three wheels making contact with terra firma, the Q8 took it like a champ. Having experienced the exercise on board “regular” ICE-powered Qs, I can say with much confidence that e-tron fares in a similar fashion — with an aplomb worthy of its quattro badge.

Mr. Chan said that motorists needn’t worry about range. Perish, too, the notion that the Q8 is “a little too dainty” or that “it can’t go off-road and be shaken around.” The course certainly showed off the SUV’s tough-as-nails demeanor.

The obvious centerpiece in terms of visuals and actual message was the 500-mm wading pool, where the Q8s suffered (or rather, enjoyed) repeated immersion. “This knee-deep wading pool, albeit a little cleaner than what we might find on the streets, is there to show that this car is ready for everyday use,” said Mr. Chan with a smile. Sans an intake that might choke on the water or a tailpipe that might sip it, the Q8 simply shook the liquid off.

By the way, the Q8 e-tron gets air suspension and controlled damping — allowing the vehicle to adapt to where it’s driven on. The ride height can be upped by as much as 76mm. Meanwhile, the air suspension has received some tweaks to “optimize lateral dynamics, improving control while remaining comfortable.”

This Q is, well, on cue and on point, that’s for sure.

AboitizPower looks to increase capacity of Cebu plant

ABOITIZ POWER Corp. (AboitizPower) is looking to increase the capacity of its plant in Cebu through liquefied natural gas (LNG) or by expanding its coal assets, the company’s top official said.

Emmanuel V. Rubio, president and chief executive officer of AboitizPower, said the company is considering a baseload capacity of about 150 megawatts (MW) through LNG to add to the current 300 MW in Therma Visayas, Inc. (TVI), the operator of the 340 MW coal-fired power plant located in Toledo City, Cebu.

“We are looking at LNG at 150 MW, looking at what’s going to cost, and what if we actually expand TVI with another unit of coal, and compare the cost,” Mr. Rubio told reporters on the sidelines of a climate change and disaster resilience forum last week.

The company is also considering expanding its coal assets in Cebu as an option as it is not covered by the coal moratorium, he said. The government imposed a moratorium on the construction of new coal-fired power plants in 2020.

“Certainly, it is outside the moratorium because it has an ECC (environmental compliance certificate). It has all the permits so that we can actually build it if we want to. But we don’t just want to build it. We just want to make sure that we justify it if we’re going to use that option,” he said.

The company expects to add these capacities by 2026 to 2027, Mr. Rubio said, adding that availability of line transmission from Mindanao plays a crucial role in this plan.

“It’s not that power is not available. It’s that expensive plants are running, so they need to be displaced by cheaper technologies. I don’t think there is really available renewable energy resource in Cebu. It’s hilly, crowded, so the availability of solar is limited,” he said.

“We have been presenting this to the DoE (Department of Energy). This is LNG, this is coal. How do you want us to proceed? At the end of the day, we really have to balance everything, and we need to provide the most optimum solution,” Mr. Rubio added. — A.E.O. Jose

Beauty in diversity

IN AN increasingly diverse world, an artist is taking multiple influences around the world and fusing them with her own Filipino heritage.

Adrienne Charuel, the founder of Maison Métisse, took us around her booth at MaArte at the Pen, which ran from Aug. 4 to 6 at The Peninsula Manila. There, we saw a Japanese loom, pieces embroidered by artisans from Abra, and various fabrics dyed with native ingredients (coconut apparently yields a dye like old rose).

The name comes from her own experiences studying in France: “It was my very first time living alone in a foreign country,” she said, recalling her fashion design studies at ESMOD (École supérieure des arts et techniques de la mode) Paris. “Métisse” is French and refers to a woman of mixed heritage (as she is) and has the same root for the Spanish mestiza. However, she says, “It’s also not just about mixed blood — it’s also a mix of things that I’ve learned.”

Ms. Charuel, by the way, is also the niece of celebrated Filipino designer Josie Natori. She said that they only formally met when she was studying abroad. “She’s also an Almeda, but it’s a really big family. I actually met her for the first time when I was studying design in Paris. I reached out to her.”

Asked how her aunt’s name looms over her own work, she said, “It’s really how she tells me to keep going.”

“I think the tenacity, and doing what we love, and being passionate — the tenacity probably comes from the women in the family,” she said.

Ms. Charuel’s clothing, while rooted in Filipino heritage, as seen in the handwoven pieces she creates, contain various references to other cultures. There are crocheted pieces that resemble Irish lace (also colored with the pink coconut dye). Cloud-like prints on handwoven silk and cotton reflect her own studies in Japan, where she learned dyeing techniques. Another interesting collection are various clothes woven in some parts, joined together by loose, unwoven thread (her own innovation).

From her own studies in France, she learned precision. “It’s really on another level, what I experienced there. The teachers are very strict. If you’re one millimeter out of your pattern, you have to repeat the whole thing,” she said.

After her studies in Paris, she moved in New York in 2015, where she also sold woven fabrics. However, because of her husband’s career, they moved to the Philippines in 2018. Here, she decided to explore her own heritage through her work. “It was like finding who I am, in different ways.”

She showed BusinessWorld some pieces hand-embroidered by a local group in Abra. She pointed out symbols in the embroidery: a nail that represented hard work, next to an embroidered rice plant, symbolizing a good harvest. She said that at one point she met with the artisans once a month (taking a seven- to 13-hour bus trip to get up there) and witnessed firsthand the poverty that these groups face. She recalls a story about some families having to sell their ancestral textiles for cheap, just to eat. The story was not lost on her, and she donated sewing machines, mannequins, and solar lamps (due to frequent power outages). She told BusinessWorld that for their work for her, they are paid above living wage, and she also set up an artisan fund that gives the artisans 80% of the sale price from the items they have worked on. “I let them price their products, and if it’s too low, then I help them,” she said.

A Saori loom in the center of the room she occupied for MaArte was not just for show (she did encourage guests to have a seat and weave). Saori encourages the practice of simple weaving techniques for creative expression, but another organization has adopted Saori looms for providing creative therapy for children with autism and other developmental disorders. She herself teaches weaving and offers her support by buying fabric created from these activities and donating a part of the proceeds from the garment made from the fabric. “It celebrates mistakes, compared to patterned weaves where you have to be perfect,” she said.

As we approach a world sometimes afraid of diversity, where new faces can be shoved out for being different, Ms. Charuel’s brand explores the possibilities for harmony that can be created through mixing and combining. “I was privileged enough to have many different experiences in my life in different countries,” she said. “I get to have my personal experiences expressed through what I’m creating — not just from one point of view, but from multiple points of view.

“There’s nothing bad in incorporating what you’ve learned, and still not lose who you are in the process.”

Learn more about Maison Métisse through maison-metisse.com. — Joseph L. Garcia

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