Emerging trends in the property sector this year

February 27, 2023 | 8:50 am

2022 was quite a challenging year for the real estate sector, especially with the economic crisis and climate change. But, the industry was set to recover and continue growing as one of the major players in economic recovery and development. Setting foot into 2023, real estate leaders are optimistic about real estate, following the easing of travel restrictions and the low COVID-19 infection rate, which have increased the economic performance and growth of the sector.

With such optimism at the backdrop, the real estate industry is encountering emerging trends that will help in shaping its future in the months and years ahead.

Workforce transformation

As pandemic restrictions ease, workforce transformation will come in handy, primarily when the work-from-home or hybrid setup is being implemented in most sectors. Unlike pre-pandemic, most of the employees have yet to return to working face-to-face, and as professional services firm PricewaterhouseCoopers (PwC) observed, only a handful of employees work in a physical office within a day, thus leading to increasing demand for a return to office in most leading companies.

However, the complete shift of face-to-face work is still under discussion, as most employees have their own work preferences and are still not ready to go back amidst the ongoing health pandemic until today. However, the real estate sector is impacted by the work-from-home setup since the office real estate stock can be eliminated or repurposed.

On the other hand, many companies will continuously cling to working in a hybrid setup, as a precaution in keeping their workspaces and respecting the work preferences of their employees. The hybrid setup sets an advantage for employers’ and employees’ work preferences and brings real estate into the digital world, creating an opportunity for sustainable growth in the sector.

Sustainability and climate change

Like other sectors, the impact of climate change is a strong incentive for the real estate industry to take action. For instance, the industry has been incorporating environmental, social, and governance (ESG) initiatives in its business operations.

Some sustainable initiatives that the sector is currently focused on include: developing green buildings and using water, eco-friendly, and energy-efficient materials in business operations that will help achieve a net-zero future.

As the Urban Land Institute (ULI) noted on its latest Emerging Trends in Real Estate report for the Asia-Pacific, many countries have already started this green movement. For instance, new net-zero buildings were being constructed to raise sustainability awareness and acquire carbon efficiency in leading countries like Australia and Japan. But in other Asian regions, adopting net zero standards can be extremely challenging, considering the region’s overall energy and density intensity. However, countries can bridge this gap by taking little steps in adopting net-zero initiatives such as acquiring renewable energy from electricity and purchasing carbon offsets.

In addition, water usage effectiveness and renewable energy have also been impacting the sector. As of now, data centers are searching for ways to reduce energy usage and cut carbon by using rechargeable batteries and rooftop solar panels, according to the said report.

Affordable housing

As a solution for production backlog, micro-apartments are also a rising trend, as Gino Olivares, the national president of the Organization of the Socialized and Economic Housing Developers of the Philippines, Inc., was quoted as saying in a previous report by online property marketplace Lamudi for the third quarter of 2022.

Micro-apartments are smaller studio apartments that have all the amenities and functions similar to a standard apartment in a space that is less than 350 square feet. Known as a place with minimal space, it features essential amenities, including a bathroom, kitchen area, and living and sleeping space. Recently, micro-apartments are attracting young professionals or those people who tend to live alone, according to real estate and landlord expert Erin Eberlin in www.liveabout.com.

Another trend mentioned by Mr. Alvares is co-buying or co-ownership, defined as the decision made by two or more persons in dividing ownership of a residence after it has been purchased.

The property owner in a co-buying arrangement could be the following: family, friends, couples, or business entrepreneurs. Unlike being the owner and co-owner of a business, co-buying is based on the individual interest of the owners.

Co-buying is still an emerging real estate trend that may be the key to ending the ongoing housing crisis because it is said to provide cheaper mortgage payments, more equity growth, and utility cost savings.

Moreover, the rights and ownership of co-buyers in property interests are also crucial. Although co-buying may be relatively new to the Philippine market and may pose some complications if not done right, it can still be a good strategy for owners who are eyeing investing in real estate.

Metaverse

Metaverse is also taking a spotlight on the real estate industry, according to PwC, as leaders are optimistic and eyeing the impact of the digital platform and how it can shape business enterprises and consumers to engage with products, services, and with each other.

The digital platform can improve the workplace experience, such as enhancing collaborative spaces, complementing the physical office, and upskilling employees and business operations.

With metaverse, properties can be bought, sold, purchased, and leased. Given that buying virtual homes is significantly less expensive compared to physical houses, this might make real estate create an opportunity to invest more accessible to a broader range of investors.

Similar to other new technologies, the metaverse still has many risks and is far from perfect, yet it’s been already attracting the interest of the sector.

“Interest in the metaverse is hot, even though many of its concepts are years away from being solidified. Your company doesn’t need to be a metaverse leader today, but you should explore the potential implications to your organization,” PwC advised.

Despite the obstacles brought on by the pandemic, the outlook for the real estate sector largely shows optimism as it adopts long-term goals and perspectives for the industry and as real estate professionals are working on strategies that allow the industry to thrive and see steady growth in return.

“Although real estate capital markets are constricting, they are still open for business, investors are still buying high-quality properties, leaders will continue to lend, and companies should move forward with cautious optimism through this current cycle and prepare to adapt to quick market changes,” Byron Carlock, Jr., US real estate leader for PwC, said in a statement. — Angela Kiara S. Brillantes

Sustaining PHL’s growth as IT-BPM hot spot

February 27, 2023 | 8:50 am

SF_asia-businesswoman-social-distancing-OL — Photo by tirachardz on Freepik

The Philippines remains to be a prime hot spot for offshore information technology and business processes management (IT-BPM) services that the country serves as a model for other countries.

The country is one of the world’s leading outsourcing destinations for business process and IT-enabled services. The cost-competitiveness, excellent talent base, proven track record in dealing with global customers, strong English language ability, proximity to key markets and improving infrastructure have all contributed to its continued success.

Looking onward, however, as the shape of the industry evolves and matures, moving toward higher value-added deliverables such as big data analytics, digital media and creative services, which will be increasingly delivered remotely over the Internet, will the Philippines be able to keep up?

Jack Madrid, president and CEO of the IT Business Processing Association of the Philippines (IBPAP), seems to think so.

In talks with BusinessWorld columnist Flor G. Tarriela, Mr. Madrid said that in 2022, the IT-BPM industry employed 1.55 million Filipinos, contributed over $31 billion to the economy and was the second largest source of foreign exchange earnings.

In the next six years, the industry has the potential to add one million more new jobs and generate over $59-billion revenue, representing 8% of the Philippines’ gross domestic product.

“Without a doubt, the industry is, and will continue to be an indispensable pillar of our economy,” he was quoted as saying.

Mr. Madrid stated during a previous press briefing that the sector hopes to make Philippines the world’s top experience hub for digitally enabled and customer-centric services while promoting inclusive and sustainable growth throughout the nation.

He said that the IBPAP’s growth target of 54% will be driven by IT-BPM firms setting up and expanding rural operations.

Upskilling the local work force will be one of the goals of the IT-BPM sector in order to support the industry’s growth target. This is shown in IBPAP’s plans to increase the number of high-skill positions over the next six years, with a 13% increase in revenue per FTE by 2028.

Mr. Madrid told Ms. Tarriela that the Filipino talent will be the basis of the industry’s future growth, adding that aside from excellent communication skills and English fluency, Filipinos are world-renowned for their adaptability, creativity, empathy, and resilience.

Due to their special skill sets, Filipino providers may now provide services to clients worldwide in a variety of sectors, including financial services, healthcare, hospitality, animation, and IT technical assistance.

He added that the BPO sector, which demonstrated the adaptability and resiliency of the Filipino population and led to the creation of 255,000 new employment from 2020 to 2022, was one of the pandemic’s silver linings.

Mr. Madrid went on to further claim that despite increasing inflationary pressures and constricting regulatory frameworks, the positive economic trajectory nevertheless stayed its course.

Carrying office space, business demand

The industry contributes by preserving jobs, creating new opportunities, encouraging rural development, promoting investments, and increasing demand for real estate.

Real estate services firm JLL Philippines affirmed this with a statement they released in January about the real estate industry’s resilience against global economic headwinds like skyrocketing inflation and interest rates alongside the depreciating peso.

“The IT-BPM industry is likely to carry the market in trying times. In 3Q22, IT-BPM firms made up 85.3% of Metro Manila office transactions, higher than the 6% share taken by POGOs (Philippine Offshore Gaming Operators),” JLL Philippines said.

“Continued activities from the IT-BPM sector are anticipated as they further scale up operations which may offset the impact of the probable POGO exit in the market. The Bangko Sentral ng Pilipinas expects IT-BPM earnings to see 9% and 5% y-o-y growth in 2022 and 2023, respectively.”

Mr. Madrid was quoted as saying that “the future is bright as a growing number of global business services are incorporating offshoring and outsourcing into their strategic initiatives to improve efficiencies and optimize costs in multiple geographies.”

“The sustained growth will be spurred by next-generation business models and assets, the talent and skills supply-demand gap, and ongoing cost optimization. Expansion across select industry horizontals and verticals, and increased digital adoption by traditional players will also be key drivers of growth in the coming years,” he said.

Measures moving forward

This pursuit of growth may face challenges in the coming years, and in order to maximize the country’s growth potential and reinforce its global competitiveness the country must take measures. Mr. Madrid outlined several of them.

Supply chain talent resilience, he said, will be essential in the midst of a talent battle that is heating up due to greater attrition rates and rising demand for specialized and emerging capabilities like automation, cloud computing, data analytics, and cybersecurity.

Hybrid work models must be included into company initiatives. Around the world, 70% of IT-BPM businesses claim to have used hybrid work arrangements. 80% of local IT-BPM workers in the Philippines said they preferred a hybrid work approach.

On this point, Mr. Madrid had previously told the media that they have called for partners in the telecommunication industry to build infrastructure to support the IT-BPM industry outside Metro Manila, where many companies are now keen on expanding.

“As a whole the Philippines is more than holding its own and in retaining its position. What’s more important in the coming six years is how much more market share we can capture. It’s there and it’s ours for the taking,” he had said.

“Our industry has been the focal point of what I believe to be a global desire for more flexible work, location-independent setups. The future of work is already happening… It’s loud and clear that an overwhelming majority in the Philippines, but even across other parts of the world have shown that the future is going to be about finding that optimal balance.”

The strategic imperatives that IBPAP will work on with industry and government partners are described in the IT-BPM Industry Roadmap 2028. They include enhancing business accessibility, tackling the talent shortage, and bolstering our digital infrastructure.

The nation’s ability to capitalize on new trends and avoid looming threats from around the world will be crucial to the industry’s survival. The Philippines has to keep focusing on building a strong talent pool, a stable regulatory framework, and an infrastructure that is more conducive to investment. — Bjorn Biel M. Beltran

PHL eyes retail dollar bonds in Q2

February 27, 2023 | 12:34 am

American Dollars Cash Money in sack on black table in the dark r — JCOMP-FREEPIK

THE PHILIPPINES is looking to offer dollar-denominated retail Treasury bonds (RTBs) in the second quarter, Finance Secretary Benjamin E. Diokno said.

“There’s a lot of interest from London and Frankfurt. Even in Japan. What’s good about dollar-denominated is that even if the peso depreciates, you still win because of high interest and it’s tax free too,” he told reporters on Friday on the sidelines of the 2023 Annual Reception for the Banking Community in Manila.

Mr. Diokno said there is no set volume for the proposed retail dollar bond offering.

In December, the Finance chief said the government was targeting to offer retail dollar bonds within the first quarter. At that time, the bonds were expected to have a tenor of at least five years and raise around $3 billion, depending on demand.

Mr. Diokno said the offering was pushed back after the government held an RTB sale this month. The government raised P162.180 billion or almost $3 billion from the second RTB issue under the Marcos administration.

The Philippines’ last retail dollar bond sale was in 2021, where it raised $1.6 billion.

The government plans to borrow P2.207 trillion this year, where 75% is expected to be sourced domestically.

MORE AID
Meanwhile, Mr. Diokno said the government will also extend its Targeted Cash Transfer (TCT) program, which will provide P1,000 each for around 9.3 million beneficiaries.

“There are some 9.3 million beneficiaries which will have P1,000 each, (that) translates to P9.3 billion (for) the poorest of the poor beneficiaries. This is different from the Pantawid Pamilyang Pilipino Program (4Ps). Some beneficiaries under 4Ps are under this program,” he added.

Mr. Diokno said they are considering a two-month subsidy for these beneficiaries. Malacañang will make the announcement, he added.

Mr. Diokno said there is a possibility the cash transfer program may be extended again when needed.

“Others may still be in need of the cash transfers. I cannot say if this is the last,” he said.

The government released a total of P18.3 billion in subsidies to about 9.2 million household beneficiaries under the TCT program, according to the Department of Finance (DoF).

The program was launched in June last year and granted cash payments for poor households amounting to P500 per month for six months.

The TCT program was aimed at mitigating the impact of rising commodity prices on the most vulnerable households. The program expired on Dec. 31, 2022. — Luisa Maria Jacinta C. Jocson

25-bp hike ‘most likely’ in March — BSP chief

February 27, 2023 | 12:33 am

There are signs that inflation in February is slowing, according to the Philippine central bank. A store employee arranges packs of sugar in a supermarket in Quezon City in this undated file photo. — PHILIPPINE STAR/MIGUEL DE GUZMAN

THE BANGKO SENTRAL ng Pilipinas (BSP) will likely hike the benchmark rate again next month, with its governor eyeing a smaller 25-basis-point (bp) move amid signs of slower inflation in February.

“We’re actually looking at the month-on-month (inflation), but the most likely scenario is maybe one more hike,” BSP Governor Felipe M. Medalla told reporters on the sidelines of the annual reception of the banking community on Friday.

He said that a 25-bp hike is the “most likely” option at the March 23 meeting, due to a “great possibility” that inflation has already peaked in January as non-monetary measures are starting to dampen price increases.

“There are signs that (February inflation) will be (lower), there are lots of sugar imports and we’ll probably be seeing that with other products as well,” Mr. Medalla said in a mix of English and Filipino.

He also said that the economic team was able to convince Philippine President Ferdinand R. Marcos, Jr. to import more food items such as sugar.

At the same event on Friday, Finance Secretary Benjamin E. Diokno said February inflation is “definitely lower” than January.

“The price of oil has stabilized, peso has stabilized, all that’s left is food. We really have to focus on food items. It’s not just importation, but the food has to reach the market,” Mr. Diokno told reporters in a mix of Filipino and English.

“Right now, prices of sugar are still high,” he added.

The Sugar Regulatory Administration has issued Sugar Order No. 6 earlier this month, authorizing imports of 440,000 metric tons of the commodity, part of which would form a buffer stock in order to stabilize prices.

However, a higher month-on-month increase in February inflation may prompt a bigger move at the Monetary Board’s meeting on March 23, Mr. Medalla said.

“We’re still hawkish. If the results are bad, we will act… If the month on month is 1%, which implies a year on year of 12%, we have to act,” he added.

Inflation accelerated to a 14-year high of 8.7% in January from 8.1% in December. Stripping out seasonality factors, month-on-month inflation rose by 1% in January.

“The main impetus behind inflation is not demand. What’s happening is what we call second-order effects. Prices are rising because the previous increases influenced future increases,” Mr. Medalla said.

He reiterated that he expects inflation to return to within the 2-4% target range by November or December this year.

The BSP projects inflation to average 6.1% this year, higher than the actual 5.8% recorded last year, before easing to 3.1% in 2024.

Asked if another rate hike is possible at the Monetary Board’s next meeting after March, the BSP governor said it is “hard to forecast because the data is so fluid.”

After March 23, the BSP will discuss policy on May 18.

ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa expects the BSP to hike borrowing costs by 25 bps next month as well, adding that a whole-of-government approach is needed to address high inflation.

“BSP rate hikes can only do so much to quell demand hikes with supply-side remedies needing to kick in to make a dent in the inflation fight,” Mr. Mapa said.

“BSP will still need to hike to maintain the hawkish stance, but it’s clear that a 50 bps will not be able to effectively deal with searing price pressures, especially as the main driver for this episode is food inflation best addressed by the Department of Agriculture and Bureau of Customs,” he added.

Security Bank Corp. Chief Economist Robert Dan J. Roces said a month-on-month increase of about 0.3% may result to a year-on-year headline inflation of 8.9% this month.

“So, the risk is on the upside as disinflation lies in food prices which is a significant portion of the CPI (consumer price index). Solve the supply side there, then disinflation is guaranteed,” Mr. Roces said.

While many central banks worldwide, such as the US Federal Reserve, have slowed monetary tightening to 25-bp rate hikes this year, the BSP has so far stuck to large rate increases with the 400 bps in cumulative hikes since May 2022.

RRR CUT?
Meanwhile, the BSP may reduce banks’ reserve requirement as part of efforts to encourage financial institutions to cut or eliminate fees for small-value digital transactions.

“We are ready to collaborate with banks and payment system operators to explore a cost-sharing system that excludes small transactions from these types of fees,” Mr. Medalla said.

“We may even consider cutting the reserve requirement to enable banks to make these concessions. All these, in pursuit of a financial system that leaves no one behind,” he said.

The BSP earlier reduced the banks’ reserve requirement ratio (RRR) to 12% from 18%. It aims to reduce the country’s RRR, the highest in the region, to single digit this year.

Mr. Medalla said one way to make digitalization more inclusive is to make small transactions free of charge.

“If the fee is P15 for a P200 transaction, then the fee is quite large relative to the amount being sent,” he said.

The value of electronic fund transfers coursed through the PESONet and InstaPay rose by 36% to P955.9 billion in January from P702.6 billion in the same month last year, latest data from the BSP showed. The combined volume also grew by 25.8% to 58.922 million from 46.83 million in 2022.

Last year, the combined value of PESONet and InstaPay transactions went up by 36% to P9.94 trillion from P7.24 trillion in 2021, with the volume rising by 21% to 633.46 million from 523.59 million. — Keisha B. Ta-asan

Big Philippine banks’ assets up nearly 10% in Q4

February 27, 2023 | 12:32 am

Makati City skyline — PHILIPPINE STAR/MIGUEL DE GUZMAN

By Lourdes O. Pilar, Researcher

THE ASSETS of the Philippines’ largest banks grew by nearly 10% in the fourth quarter of 2022, as economic activity continued to pick up.

BusinessWorld’s latest quarterly banking report showed the combined assets of 45 universal and commercial banks (U/KBs) jumped by 9.4% to P22.51 trillion in the October-to-December period, from P20.56 trillion in the same three months last year.

Asset growth quickened from the 8.38% year-on-year expansion in the third quarter of 2022 and the 8.59% in the same period in 2021.

Aggregate loans of big banks expanded by 9.73% year on year to P11.14 trillion in the October-December period, faster than the 5.93% growth in the same period in 2021. However, it was nearly unchanged from the 9.74% growth in the third quarter.

The fourth quarter also saw nonperforming loans (NPLs) drop by 9.45% year on year to P336.54 billion from P371.65 billion in the fourth quarter of 2021.

This brought the NPL ratio, or the bad loans as a portion of the total loan portfolio, to 3.17% in the fourth quarter, higher than the NPL ratio of 2.91% in the third quarter of 2022. Year on year, the NPL ratio was an improvement from the 3.95% in the same quarter of 2021, reflecting Filipinos’ increased capacity to repay their loans.

Loans are classified as nonperforming if the principal and/or interest are unpaid for more than 90 days from contractual due date. These may pose risk to the lenders’ asset quality as borrowers are likely to default on these debts.

The big banks’ nonperforming asset (NPA) ratio — the share of NPLs and foreclosed properties to total assets — stood at 0.99% as of the quarter ending December. This was the lowest NPA ratio since 0.91% in the first quarter of 2020, when the coronavirus pandemic began.

Foreclosed real and other properties as a share of the big banks’ total assets steadied to 0.28% quarter on quarter, but higher than 0.25% in the final three months of 2021.

Meanwhile, total loan loss reserves inched up 0.34% quarter on quarter to P382.54 billion in the fourth quarter. On an annual basis, this was 12.10% higher than P341.23 billion in the fourth quarter of 2021.

Big banks’ median capital adequacy ratio — the ability to absorb losses from risk-weighted assets — stood at 17.97%, lower than the 19.60% in the third quarter and 21.30% year on year. This was still above the minimum of 10% set by the Bangko Sentral ng Pilipinas as well as the international minimum standard of 8% under the Basel III framework.

Profitability as the median return on equity (RoE) slightly eased to 6.36% from the preceding quarter’s 6.42%, but still higher than the RoE of 3.11% in the fourth quarter of 2021.

The RoE ratio measures the amount that shareholders make on every peso they invest in a firm, and is calculated by dividing the net profit to average capital. It also measures how well a firm makes use of the money from shareholders to generate income.

BDO Unibank, Inc. (BDO) remained the largest bank in terms of assets with P4.01 trillion as of the fourth quarter. State-owned Land Bank of the Philippines (LANDBANK) came in at second with P3.16 trillion, while Metropolitan Bank & Trust Co. (Metrobank) ranked third with P2.92 trillion.

The Sy-led bank was also the top bank in terms of loans issued with P2.53 trillion, followed by Bank of the Philippine Islands (BPI)’s P1.69 trillion and Metrobank’s P1.39 trillion.

Among banks with assets of at least P100 billion, Union Bank of the Philippines (UnionBank) posted the fastest year-on-year asset growth of 31.13%, followed by China Banking Corp. (27.94%), and Security Bank Corp. (25.46%).

Hongkong and Shanghai Banking Corp. Ltd. saw the quickest loan growth, with a year-on-year expansion of 70.78%, followed by Bank of Commerce (42.64%) and UnionBank (42.52%).

BDO had the most deposits with P3.22 trillion, followed by LANDBANK with P2.78 trillion and Metrobank with P2.22 trillion.

BusinessWorld Research has been tracking the financial performance of the country’ big banks on a quarterly basis since the late 1980s using banks’ published statements.

The full version of BusinessWorld’s quarterly banking report will soon be available for download on https://bworld-x.com/product-category/bw-in-depth-banking-report/.

Indian companies keen on further expanding PHL operations

February 27, 2023 | 12:31 am

crowd-shoppers-public market — Filipinos shop for clothes and toys in Divisoria, Manila in this undated file photo. — PHILIPPINE STAR/WALTER BOLLOZOS

By Alyssa Nicole O. Tan, Reporter

INDIAN COMPANIES are looking to further expand in the Philippines this year.

Biocare Lifesciences, Inc. Managing Director Dileep Tiwari, who also heads the Indian Business Forum, said the company already distributes affordable generic medicine to over 200 hospitals and drug stores in the country. The pharmaceutical distributor is planning to introduce 15 new products this year.

“In the next five years, Biocare is eyeing to set up a manufacturing facility in the Philippines to support the government’s plan… to boost manufacturing, generate employment and bring cutting-edge technology to the Philippines, which in large will lessen the import of crucial medicine,” Mr. Tiwari told BusinessWorld in a WhatsApp message.

Biocare currently has several partnerships with Philippine pharmaceutical companies, including Unilab, Inc. It also participates in government bidding to make critical care products available to indigent patients.

Datamatics Global Services Limited Country Head Praveer Chadha said the Philippines is one of the best markets to grow the customer management business.

He cited the country’s high level of education, proficiency in English, admirable work ethic, and ability to adapt to digital technologies.

“We have been working with various colleges to start employment-ready programs which will assist talents to be future ready,” Mr. Chadha told BusinessWorld in a WhatsApp message.

Datamatics, an information technology (IT) consulting company, recently inaugurated its third customer support center in Pasig City, which allows it to employ up to 3,000.

“We are actively scouting for acquisition or partnering opportunities which will enable us to bring more of our technology and service offerings to the Philippines,” Mr. Chadha said.

He identified five sectors as priorities: travel, transportation, hospitality, and logistics; retail, with focus on e-commerce; education; life sciences and healthcare; and financial technology.

“We intend to grow our base and set up more tech-enabled centers across the country by reaching out to second-tier (larger) cities and provinces,” he said. “Some of these show high, untapped potential when it comes to opportunities for CX (customer experience) transformation.”

For multinational IT services and consulting company HCL Technologies Limited Country Manager Sourabh Jha, the Philippines is a “strategic location” for its services.

“We wish to provide services to all modern emerging technology clusters like workplace engineering; unified communication and collaboration; and unified messaging and collaboration,” he said, citing as examples Microsoft Teams, Amazon Connect, Google Workplace, among others.

Mr. Jha said HCLTech is looking to further expand in the country.

“An already identified location is Bacolod and (it) will have a center in next quarter. We have recently invested in a new site in Manila,” he said.

HCLTech is also in talks with universities to provide training support in order to bridge the gap between education and the industry’s requirements.

“We plan to create 2,000 IT jobs this year in digital workplace space alone,” Mr. Jha said. “Our aim is to move the Philippines job landscape beyond call centers and make this country skilled with more IT related jobs.”

Meanwhile, Advanta Seeds Philippines and North East Asia Business Lead Siraj Ahemad said the global seed company is looking to expand operational areas in the Philippines and increase manpower.

“This year we are planning to expand our operational areas, especially on the southern part of Luzon, Visayas and the Mindanao area in which we have minimal operation and manpower,” Mr. Ahemad told BusinessWorld in a WhatsApp message.

At present, Advanta Seeds has 53 active direct distributors and 35 employees.

“We are planning to appoint more distributors to serve more dealers or financiers and more farmers to experience growing our products,” he added, noting the need to standardize operations.

Mr. Ahemad said the company’s main interest is “to serve smallholder farmers by providing them quality seeds and services that will help improve their lives.”

PHL still on FATF’s ‘gray list’

February 27, 2023 | 12:30 am

THE LOGO of the Financial Action Task Force (FATF) is seen at the OECD headquarters in Paris, France, Oct. 18, 2019. — REUTERS

THE Financial Action Task Force (FATF) kept the Philippines on its “gray list” of jurisdictions subjected to increased monitoring for “dirty money” risks, urging the country to address deficiencies “as soon as possible.”

In a statement dated Feb. 24, the FATF said the Philippines should continue addressing its strategic deficiencies in combatting money laundering.

The Philippines had made a high-level political commitment to strengthen its Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) initiatives in June 2021.

“The FATF notes the Philippines’ continued progress across its action plan, however all deadlines have now expired and work remains. The FATF encourages the Philippines to continue to implement its action plan to address the strategic deficiencies as soon as possible,” it added.

According to the FATF, the country should demonstrate effective risk-based supervision of designated nonfinancial businesses and professions such as jewelry dealers, real estate brokers and developers, and service providers for financial businesses.

The Philippines should ensure that supervisors are using AML/CFT controls to mitigate risks related with casino junkets, the FATF said.

The dirty money watchdog said the country should also enhance and streamline the access of law enforcement agencies to accurate and up-to-date information regarding beneficial ownership.

The Philippine government is currently reviewing proposed changes to the country’s Bank Secrecy Law, which is seen to help address money laundering and cybercrime incidents.

The Paris-based FATF also said it will check if there is an increase in investigations and prosecutions related to money laundering cases, and the effectivity of the targeted financial sanctions framework for both terrorism financing and proliferation financing.

The Philippines will submit its next progress report to the FATF in May.

BSP Governor Felipe M. Medalla earlier said officials are now hoping that the Philippines will be removed from the FATF’s gray list by January 2024, after missing an earlier deadline.

The Philippines and 22 other countries remained in the FATF’s gray list, while Cambodia and Morocco were removed.

Meanwhile, North Korea, Iran, and Myanmar were countries in the FATF’s black list. — KBT

Mitsubishi Motors targets to expand market share

February 27, 2023 | 12:11 am

By Revin Mikhael D. Ochave, Reporter

MITSUBISHI Motors Philippines Corp. (MMPC) is eyeing a higher market share this year as the car manufacturer is banking on increased demand for its vehicles.

Jack S. Ramirez, Jr., MMPC first vice-president for sales and marketing, said the company is aiming for a 16% market share by the end of its fiscal year in March, and an 18% share by 2025.

“Our fiscal year is from April to March [of the following year]. We’re pushing hard in the remaining month to attain this. By 2025, we are eyeing 18% market share for MMPC,” he said in a chance interview on the sidelines of the company’s 60^th anniversary at its Sta. Rosa, Laguna plant on Friday last week.

According to Mr. Ramirez, MMPC is aiming to sell 59,800 units in 2023, relying on its Xpander multipurpose vehicle and Mirage G4 subcompact sedan to boost sales and reach its target market share.

The Xpander accounts for 36% of overall sales while the G4 contributes 31%, he said.

“We’re looking at a total of 58,700 units sold but we are pushing it to 59,800 units sold because we see an increase in the demand. The market conditions are good. In terms of growth, I think it is 22% growth,” Mr. Ramirez said.

He said that there is still pent-up demand from consumers who opted not to purchase vehicles at the height of the coronavirus disease 2019 (COVID-19) pandemic.

“There are also other business sectors. We have seen a lot of increase in demand for business use. So, we’re also pushing the pickups and L300. These can be for cargo or passenger use,” Mr. Ramirez said.

Based on data from the Chamber of Automotive Manufacturers of the Philippines, Inc., MMPC had the second-highest sales among car manufacturers last year with a 15.09% market share equivalent to 53,211 units sold.

Meanwhile, Mr. Ramirez said that MMPC is urging the government to delay the proposed lifting of the excise tax exemption on pickup trucks if it pushes through.

He disclosed that MMPC’s Strada pickup model contributes roughly 15% to the company’s total sales.

“If the government can consider postponing the implementation of the excise tax on pickups until next year, that would be best for the automotive industry. We want to continue the good sales of the pickups in our market,” Mr. Ramirez said.

“The delay is to give time for the public to prepare,” he added.

Mr. Ramirez said that there would be a price increase of over P200,000 for pickup trucks if the government opts to impose excise taxes.

“Definitely, it would affect our pickup segment. The segment might suffer since it will be applied to all brands,” Mr. Ramirez said.

In November last year, the House of Representatives approved on third and final reading House Bill 4339 or the fourth package of the Comprehensive Tax Reform Package program, which calls for the removal of the excise tax exemption enjoyed by double cab pickup trucks.

Currently, double cab pickup trucks are exempted from excise tax under Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion Law in a bid to help small business owners and professionals.

The Finance department previously said that P52.6 billion in revenues will be generated until 2026 if pickup trucks are charged with an excise tax.

JG Summit businesses seen performing better amid full mobility

February 27, 2023 | 12:10 am

By Justine Irish D. Tabile, Reporter

GOKONGWEI-led JG Summit Holdings, Inc. expects its businesses to benefit from the full return of consumer mobility, the resumption of face-to-face classes and on-site work, and China’s reopening.

“I think we will have a better year this year primarily because the economy continues to grow,” JG Summit President and Chief Executive Officer Lance Y. Gokongwei told BusinessWorld last week about his optimism for the company’s performance for 2023.

He said that the group’s airlines, tourism business and malls, which were affected by the coronavirus disease 2019 (COVID-19), are seen to recover “very strongly.”

“The businesses that suffered [from the pandemic] were benefiting from the economy and the return to mobility. This is the case for a lot of our businesses that were severely affected by COVID-19, particularly airlines, tourism and mall businesses. They are all coming back very strongly,” he added.

Meanwhile, Mr. Gokongwei welcomed the reopening of China as it will create opportunities for the group’s budget carrier Cebu Pacific.

“China’s the number two source of tourists to the Philippines and the number one source of growth, so naturally if China opens up then that will create opportunities for our airlines,” he said.

For its food business, Universal Robina Corp., Mr. Gokongwei said it has been recovering along with the resumption of in-person school and work.

“We will have full-year mobility, kids are back at school, they are getting their baon again, people are going back to work and they eat more,” he said.

“Our food business is mostly snacks and iced teas and coffee, so when people travel, have merienda, and socialize they consume these products,” he added.

Meanwhile, Mr. Gokongwei said the group sees the effects of inflation to taper off while it is still recovering its margins after the rise in the company’s input costs.

“I think the effects of inflation are beginning to ease. But of course, we still have a long way to go to recover our margins because we cannot pass through price increases as much as our input costs went up, but we view that inflation is beginning to subside this year,” he said.

Ayala Land aims to raise P60B via bond offering, bank loans

February 27, 2023 | 12:09 am

AYALA LAND, Inc. (ALI) is targeting to raise P60 billion this year through a bond offering and bank loans, its finance chief said, citing plans aimed at lowering the property developer’s financing costs.

“It’s gonna be a very busy year for us,” said Augusto Cesar D. Bengzon, the company’s chief finance officer, in an interview last week. “Approximately the number [that we will] raise is P60 billion.”

“P22 billion is incremental financing, P18 to P22 billion for maturities, which we will refinance, and there’s another P20 billion that is a little bit opportunistic, but we think we’re going to do it,” he said, citing a “term out” of short-term debt and a call on an outstanding bond.

“It looks like the terms that we could get will allow us to achieve lower costs,” he added.

Mr. Bengzon explained that the company plans to raise the funds through a P22-billion bond offering and through sourcing the balance from banks.

“So roughly P22 billion is going to be through a bond offering. We are already in talks with seven joint lead underwriters,” Mr. Bengzon said.

“The pricing and listing [will be] sometime in maybe mid-April to mid-May,” he added.

According to Mr. Bengzon, the P22 billion will be split between two tenors: five years and 10 years.

“How much goes to the five years and how much will go to the 10 years is something that we’re still discussing with our joint lead underwriters, [and will depend] on the appetite of the market,” he said.

The company is looking at coupon rates of anywhere from 6.2% to 6.9% for the five-year and 10-year bonds.

“For the balance of roughly P40 billion, we are already in talks with our creditor banks or relationship banks,” said Mr. Bengzon.

“For the balance of bilateral [loans], in our current discussions, we expect those to be priced fairly tightly,” he said.

ALI will be closing a 10-year facility for P5 billion, which could carry a 10-year fixed rate, while the balance of bilateral loans is expected to carry tenors between seven and 10 years.

“There’s quite a nice window for us to take on long-term fixed-rate debt. And we are following a rule of spreading out our maturities so that there’s no single year where we have an excessively large amount that we need to be financed,” Mr. Bengzon said.

According to Mr. Bengzon, the company is looking at spreading P25 billion to P30 billion maturities each year. — Justine Irish D. Tabile

See through

February 27, 2023 | 12:08 am

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Gallotti & Radice creates glass furniture with a difference

GLASS is one of the world’s most fascinating materials, enabling one to see through it, see it, and to see oneself in it. Glass is also the backbone of Gallotti & Radice, an Italian furniture brand.

During the opening of their BGC showroom on Feb. 20, Silvia Gallotti, daughter of co-founder Pierangelo Gallotti and present CEO, showed off various things the company has made in glass. There’s a tray with a golden mirror showing one’s face as if one were to go around with a flash of sunlight, spherical lamps of blown glass, and a sideboard made entirely of glass — but with a wooden finish.

Glass at home is now common, but during the 1950s, when the company was first started, glass furniture had been a novelty. Ms. Gallotti believes that her father created the first all-glass table in 1968. “It was new and innovative at the beginning,” she said. “They were different, presenting this material in furniture design. But then, glass became more popular and cheap because of the Chinese proposals and very cheap alternatives.”

Glass is still on the table for them, but with finishes exclusive to them, they eliminated the usual look for glass and created something completely new. “To still be glass, but to present it in another way. To dress it up with different clothes,” said Ms. Gallotti. For example, a collaboration with artist Simon Berger was created with sheets of broken glass, smashed strategically in places to form a picture.

“It allows you to have very thin surfaces,” she said on the advantages of working with the material.

The company first saw life in 1955, engraving glass for other customers. Mr. Gallotti and his partner, Luigi Radice, then decided to create their own glass furniture. “We evolved during that time. We evolved from a brand that was focused on glass only to a brand that today is focused on total living,” she said. As she said this, we had been looking at the Audrey sofa, made with soft cushions and a soft, rounded shape.

Galloti & Radice comes from the tradition of mid-century design, a look that has seen its renaissance. “Creativity after the war,” she said about the causes of this golden age of modern design. “Not only in Italy. We had a lot of renaissances in that time. Creativity and passion. They created everything from zero.”

Italy is considered one of the world’s design capitals, seen in its furniture, clothes, and architecture. “It’s creativity that I think belongs to the DNA of the people there,” she said. “It’s a concentration of knowledge, and heritage.”

Gallotti & Radice is distributed in the Philippines through Living Innovations Corp., with a showroom in Fort Victoria in BGC, Taguig. — Joseph L. Garcia

Metro Pacific allots P282.5M to improve systems in tollways

February 27, 2023 | 12:08 am

NLEX-tollway — PHILIPPINE STAR/ MICHAEL VARCAS

A UNIT of Pangilinan-led Metro Pacific Tollways Corp. (MPTC) is setting aside P282.5 million to enhance its electronic toll collection and traffic management systems.

In a press release, MPTC’s subsidiary NLEX Corp. said that the project includes the upgrade of various servers and the installation of new radio frequency identification (RFID) antennas and speed cameras.

“[This] aims to enhance the processing of toll plaza transactions and implementation of traffic regulations,” the company said.

In particular, the company is equipping new antennas that can help to facilitate more efficient RFID transactions in 80 toll lanes, while it will be equipping four-speed cameras in Tarlac- and Subic-bound portions of the Subic–Clark–Tarlac Expressway (SCTEX).

The new speed cameras are seen to help traffic officers in getting real-time data to flag down those who will go beyond the maximum speed limits or 80 kilometers per hour for trucks and buses and 100 kph for cars and sport utility vehicles.

Meanwhile, the company said it will be upgrading several servers at North Luzon Expressway-SCTEX for “improved performance and reliability.”

In 2022, the company upgraded close to 150 toll fare indicators, lane status indicators, traffic control gates, automatic vehicle classification devices, and loop detectors.

“These enhancements are part of the company’s thrust in providing safer and more convenient journeys along with the drive for continuous innovation and customer service excellence,” NLEX Corp. President and General Manager Jose Luigi L. Bautista said.

MPTC is the tollways unit of Metro Pacific Investments Corp., which is one of 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., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Justine Irish D. Tabile