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Sanctions response to Russia’s invasion offers clues for China

REUTERS

BEIJING — Under President Xi Jinping, China has pushed for self-reliance in key areas of technology and the payments needed to settle trade to minimize its vulnerability to economic pressure over flashpoints, from trade policy to Taiwan.

Russia’s invasion of Ukraine and the tough global response, including curtailment of access to the SWIFT payments system and a freezing of Russian assets, provide a case study for China on the economic and financial vulnerabilities analysts expect it will continue to address.

The unexpectedly heavy sanctions, led by the West, have exposed vulnerabilities for Russia, including dependence on the US dollar, that China would want to mitigate before becoming the target of any such measures.

While the China-US trade war during the Trump administration forced China to seek greater self-sufficiency, the sanctions on Russia are a louder wake-up call, said Abraham Zhang, chairman of Shenzhen-based China Europe Capital.

“Just as China needs food security, China also needs oil reserves, and a complete industrial system, so that if China is one day cut off from external supplies as Russia is now, China can still be self-sufficient, maintain internal circulation, and survive,” Mr. Zhang said.

China has in recent years ramped-up efforts to develop home-grown technologies, from semiconductors to advanced materials to aircraft, to ease reliance on imports. Huawei Technologies, crippled by sanctions preventing its access to high-end chips, is a cautionary example.

“China needs to accelerate the development of key technologies. Otherwise, it would be too late once you’re suffocated by sanctions, if Russia offers any lessons,” he said.

To be sure, China has a much bigger and more diversified economy than Russia’s, although it depends on imported energy and food, and relies heavily on global commerce as the world’s largest trading economy.

Also, Ukraine is not Taiwan, which Beijing has vowed to bring under its control, by force if necessary.

The political and geostrategic circumstances are vastly different, including the likely response to a Chinese attack on the democratically controlled island, which among other factors is a linchpin in the global technology supply chain.

Where the United States has ruled out intervening militarily in Ukraine, its policy of “strategic ambiguity” towards Taiwan and its strengthening defense ties with the island, including stepped up arms sales and the development of the AUKUS grouping with Australia and Britain, convey a warning.

China, which has declined to condemn Russia’s attack or call it an invasion, has blamed the Ukraine conflict on NATO expansion.

Taiwan has reported no unusual Chinese military movements since the Ukraine war began and US President Joseph R. Biden, Jr., this week dispatched a team of former senior officials to visit the island in a show of support.

CURRENCIES, PAYMENTS 

China has in recent years sought to internationalize its currency by settling more trade with the yuan, including with Russia. The yuan accounted for 13.1% of the Russian central bank’s foreign currency reserves last June, compared with just 0.1% in June 2017

China’s central bank is developing a digital currency, which would have the benefit of further encouraging yuan settlement for trade, but the project, while ahead of efforts elsewhere, is still in its early days.

China has an alternative system to bypass SWIFT, the Cross Border Interbank Payment System (CIPS), which saw a 75% increase in processing volume last year, although 80% of CIPS transactions still involve SWIFT.

Bert Hofman, director of the East Asian Institute at the Lee Kuan Yew School of the National University Singapore, said China has been concerned about dollar dominance of international payments since the global financial crisis.

“The sanctions may therefore lead China to accelerate the development of alternative options, including the China-led CIPS system, and the further internationalization of the (yuan).”

WORRY ABOUT ISOLATION 

While the unity and strength of the diplomatic response to the invasion, which many experts believe Russia underestimated, may be instructive to China, the unexpectedly sluggish early performance of Russia’s forces in Ukraine is less applicable, with the United States not engaged there militarily.

US intervention would be China’s biggest worry in the event that it attacked Taiwan, said Yun Sun, director of the China Program at the Washington-based Stimson Center.

“The international isolation of Russia, and the broad coalition … make China worry about the potential international isolation of China in a similar event on Taiwan,” she said.

Still, she said, China would take comfort that countries that have joined in sanctions against Russia remain in the minority, and the fact that China has yet to face secondary sanctions for its Russia ties.

Steve Tsang, director of the SOAS China Institute in London, said Beijing was unlikely to be happy with the way things are going in Ukraine but the ultimate effectiveness of the international response would determine its outlook.

If Russia was not brought to its knees, “China will be relatively relaxed about what the West could do when China is finally ready to take Taiwan,” he said.

“If the responses should prove effective against Russia, Xi will be a lot more cautious about when and how he will try to bring Taiwan into the fold,” he said. — Tony Munroe/Reuters 

February inflation steadies as food prices ease

The overall year-on-year increase in prices of widely used goods steadied in February as food costs eased, the government reported this morning.

Preliminary data from the Philippine Statistics Authority (PSA) showed headline inflation at 3% last month, steadied from 3% in January 2021 though slowed down from 4.2% in February 2021.

Month on month, inflation picked up by 0.1% in February.

The latest headline figure is lower than the 3.3% median in a BusinessWorld poll conducted late last week, below the 3.2% midpoint forecast for February but falls within the 2.8%-3.6% estimate given by the Bangko Sentral ng Pilipinas (BSP).

Year to date, inflation settled at 3%, still fell within the BSP’s 2-4% target for the year.

February core inflation print is still not available.

Heavily weighted food and non-alcoholic beverages slowed to 1.2% year on year in February from 1.7% in January and the 6.2% print recorded in February last year. It accounted for 37.75% of the theoretical basket of goods and services that an average Filipino household buys under the 2018 prices.

Meanwhile, inflation for housing, water, electricity, gas, and other fuels increased to 4.8% that month from 4.5% in January; transport (to 8.8% from 7%); and recreation, sport, and culture (to 1.6% from 1.5%).

The food alone index decelerated to 1.1% in February from 1.6% the previous month and 6.8% print a year ago.

Meanwhile, the February inflation rate for the bottom 30% of households slowed down to 2.7% from 3.2% in January and 5.5% in February 2021. Year to date, bottom 30% inflation settled at 2.9%. — Lourdes O. Pilar

Inspiring partnerships to create a greener world 

In photo during the BusinessWorld Insights (clockwise, from top left) are moderator Victor V. Saulon of BusinessWorld, with panelists Ferdinand A. Pecson, Public-Private Partnership Center of the Philippines undersecretary and executive director; Erwin O. Avante, Energy Development Corp. senior vice-president and chief financial officer; and Jean-Marc Arbogast, International Finance Corp. Philippines country manager.

By Bjorn Biel M. Beltran, Special Features Writer

The climate crisis has been dubbed as “the greatest threat to global health and security” of our time. And it will take a monumental collaborative effort between individuals, enterprises, governments, and corporations all over the world to address it.

Green finance could be key to accomplishing this feat. The World Economic Forum defines it essentially as any structured financial activity — a product or service — that’s been created to ensure a better environmental outcome. These consist of loans, debt mechanisms and investments that are used to encourage the development of green projects, minimize the impact on the climate of more regular projects, or do a combination of both.

The second leg of BusinessWorld Insights’ two-part series on “Green Finance for a More Sustainable Future,” with the topic “Public-Private Collaboration to Pivot into a Greener World,” gathered experts to discuss how public and private partnerships facilitated through green finance could lead the way to a more sustainable world.

Ferdinand A. Pecson, undersecretary and executive director of the Public-Private Partnership Center of the Philippines, began the discussion pointing out the need for the government to take a holistic approach to enacting new policies to meet the country’s sustainability goals.

“What we need on the government side is a whole-of-government approach; involving policy makers who set the rules for greenness and sustainability; project implementers who develop projects according to those rules; and oversight bodies and regulators who ensure that the private partners in a public-private partnership follow those rules,” he said.

Mr. Pecson said that much remains to be done to facilitate green and sustainable infrastructure in the Philippines. He pointed out the area of solid waste management and the potential of the country to convert waste pollution into renewable energy as an example.

Currently, the potential of the Philippines to develop waste-to-energy technology is hampered by several issues, among which is the uncertainty surrounding the resulting fuel product and whether it classifies as renewable energy and thus would benefit from government-issued incentives.

“Without this being put into law, as part of a legal framework, it will not be easy to encourage investors to put money in projects like this. My understanding is that investors are waiting for more clarity,” he said.

“Some of those rules are still being developed. There are deals as we speak that are in place, but they still have a long way to go before they become laws. But it is quite an exciting time in so far as laying the groundwork for green and sustainable infrastructure. Much still needs to be done, and this will require the efforts of multiple bodies working together,” Mr. Pecson added.

Jean-Marc Arbogast, country manager of the International Finance Corporation Philippines, agreed, saying that the country has been “faring quite well” in terms of creating regulatory and policy work to support green infrastructures.

“I think it’s been faring quite well, but there is still more to do especially on the adaptation side. A lot of infrastructure needs to be built in the coming decades, and it is an opportunity for building it greener and making sure it is sustainable,” he said.

Mr. Arbogast particularly noted the Bangko Sentral ng Pilipinas’ Sustainable Finance Framework and the Securities and Exchange Commissions’ Sustainability Reporting Guidelines for Publicly-Listed Companies as good initiatives to support the country’s sustainability effort.

However, he underscored the importance of bringing climate-centered finance into the mainstream through products like green bonds, as well as specific policies and regulations supporting public-private partnerships to quicken investment into these areas.

The private sector, he noted, is typically more innovative, efficient and cost-effective than the public sector, making it uniquely positioned to accelerate green investments at scale.

“We all know the green transition will be costly. It’ll be very expensive. Getting to net zero (greenhouse gas emissions) by 2050 will cost an extra $3.5 trillion a year, according to a new study by McKinsey, and surely for the Philippines that means an extra 10s of billions of dollars every year,” Mr. Arbogast said.

“And that’s a large chunk of the country’s GDP. Can the public sector do this alone? No, not in a post-COVID environment. The cost is too high for the government to bear it alone, and therefore the private sector has a real role to play.”

Enabling public-private collaboration

Echoing the sentiment, Erwin O. Avante, senior vice-president and chief financial officer of the Energy Development Corporation (EDC), cited the government’s Green Energy Auction Program (GEAP) as an example of a system that can drum up support from the private sector.

The GEAP is a market development support program which aims to provide additional options for renewable energy (RE) developers and generators, and promote a competitive setting of rates for RE supply in the country.

Mr. Avante noted that EDC, the Philippines’ leading renewable energy producer and the world’s largest integrated geothermal producer, is very interested in participating in the program and urged the government to create similar initiatives such as the GEAP to address other climate issues.

“The Green Energy Program allows consumers with electricity consumption of 100 kilowatts and above to source their power directly from renewable energy sources. In terms of market, it’s quite big. In Metro Manila alone we have about 6,000 megawatts of customers that are able to shift to the Green Energy Program. It is quite substantial. I think sooner or later we want this to go down to the retail level, 10 kilowatts for example, so that retail consumers will be able to participate in the program,” he said.

Around half of the country’s greenhouse gas emissions come from the energy sector, Mr. Avante said, highlighting the need for expediting a transition into an efficient, low-carbon or even zero-carbon system.

“It will take a herculean effort to avert the climate crisis in the future and ease our transition to a greener world. But I believe the energy sector, which I’m a part of, plays an important role. But with the right policies, enforcements, and incentives from the government, support of local and foreign financial institutions for sustainability financing, and the technical expertise and investment by the private sector, I think we can all collaboratively make into reality a decarbonized and regenerative future,” he said.

 

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Duterte seeks to revive nuclear power

REUTERS
The Bataan Nuclear Power Plant (BNPP) is seen in Morong town, Bataan province, Philippines, Sept. 16, 2016. — REUTERS/ROMEO RANOCO

By Kyle Aristophere T. Atienza, Reporter

PHILIPPINE President Rodrigo R. Duterte has signed an executive order allowing the country to tap nuclear power as an alternative energy source, more than a year after an interagency body submitted its recommendation.   

“The National Government commits to the introduction of nuclear power energy into the state’s energy mix,” Mr. Duterte said in Executive Order (EO) No. 164.

The order was signed on Feb. 28, three months before Mr. Duterte steps down from office.

The President said he looked into the economic, political, social and environmental aspects in reviving the country’s nuclear power program.

“For the country to achieve its sustained growth targets, it must ensure that it has a reliable, secure, sustainable, quality and affordable electricity supply, including sufficient reserve to guarantee that there will be no disruptions in power supply,” he said. 

Mr. Duterte said nuclear power should be tapped as a “viable baseload power source” alongside renewable energy, in order to address the projected decline of coal-fired power plants.

In 2020, the Philippines’ power mix consisted of 57% coal, 21% renewable energy, 19% natural gas, and 2% oil-based.

The EO also directed the Department of Energy to conduct a pre-feasibility study on the viability of introducing nuclear power.

The Nuclear Energy Program Inter-Agency Committee (NEP-IAC) was also tasked to make recommendations on the use and viability of the mothballed Bataan Nuclear Power Plant (BNPP) and the establishment of other facilities for the utilization of nuclear energy.

The $2.2-billion BNPP was completed in 1984 but mothballed in 1986 after the ouster of dictator Ferdinand Marcos, Sr. His son, Ferdinand Jr., is currently running for president.

Energy Secretary Alfonso G. Cusi has endorsed the use of nuclear power, claiming it is safe and will help the Philippines achieve energy security.

“Nuclear power is cheaper and more consistent than other energy sources,” Caloy A. Arcilla, director of the Department of Science and Technology-Philippine Nuclear Research Institute, said in a Viber message.

LEGISLATION NEEDED
Energy Undersecretary Gerardo D. Erguiza, Jr. said the government needs to come up with a regulatory framework for the nuclear energy program, which will require legislation.

It will also be up to the next administration if it will support the nuclear energy program, Mr. Erguiza added.

“2027 is the earliest possible [time when we can build a traditional] nuclear power plant,” he said during a virtual press conference on Wednesday.

He said that those nuclear power plants with small modular reactors, which are being eyed in off-grid areas, can be built as soon as the regulatory framework is already in place.

Sixteen areas are being considered as possible locations for nuclear power plants, 13 of which have been on the list since 1980s.

These areas are located in Bataan, Batangas, Cagayan, Negros Occidental, Zamboanga del Norte, Quezon, General Santos City, and Sulu.

“These areas are considered because they are isolated, the availability of the cooling system, basically based on the general standards, but again, there is a process,” Mr. Erguiza said.

SAFETY CONCERNS
Civic groups have been opposing the possible use of nuclear energy in the country, citing environmental and safety concerns.

Antonio Gabriel M. La Viña, a climate justice advocate, said the government has yet to convince the public that safety issues about nuclear plants “can be properly addressed.”

“I think Bataan is a nonstarter because of its location and the sheer density of people in Central Luzon,” he said in a Telegram message.

In a statement, environmental group Greenpeace urged the government to revoke the order, saying it is a “blatant disregard” of the public’s call for a concrete, sustainable, and safe solution to the energy crisis through renewable energy.

“Nuclear is the most dangerous and most expensive source of electricity and is the last thing the Filipino people need at a time when we are already deep in debt and trying to recover from a major health crisis,” it said.

Greenpeace said the next administration should ensure that its first order of business is to scrap the order. “The next administration will already inherit a huge debt burden and the pursuit of nuclear will make this even heavier due to steep capital costs for construction, operation of nuclear plants, enormous costs of radioactive fuel storage, and costs for managing a nuclear incident that can reach billions of dollars, as well as price volatility as almost all sources of uranium are in conflict areas.”

The group said it’s “unfortunate” that the order came right after the release of a report by the United Nations-led Intergovernmental Panel on Climate Change, which highlighted the need for nature-based solutions and strong political commitment to address the climate crisis. — with Marielle C. Lucenio

Consumers to see lower water bills as VAT removed

PHILIPPINE STAR/ MICHAEL VARCAS
Repairmen work to fix the damaged water pipe along West Avenue, Quezon City, March 3. — PHILIPPINE STAR/ MICHAEL VARCAS

CUSTOMERS of Maynilad Water Services, Inc. and Manila Water Co., Inc. will see lower bills starting this month due to the removal of the 12% value-added tax (VAT), the regulator said on Thursday.

The Metropolitan Waterworks and Sewerage System Regulatory Office (MWSS-RO) said customers’ bills will instead include a 2% national franchise tax and the actual rate of the local franchise tax.

“These changes will result in a reduction in Maynilad and Manila Water customers’ monthly water bills,” MWSS Chief Regulator Patrick N. Ty said at a virtual briefing.

This after Manila Water and Maynilad were granted new legislative franchises to maintain and operate the waterworks systems in their respective concession areas.

“If you have a franchise, you are subject to the franchise tax instead of VAT,” Mr. Ty said, noting the tax rate is determined by local government units (LGUs).

These changes will be reflected as “government tax,” which will range between 2% and 2.85% depending on the LGU.

Mr. Ty said Manila Water and Maynilad customers will see these changes in their bills starting March 21, the date of the effectivity of the two companies’ legislative franchises.

If the government tax rate is at 2%, Maynilad customers consuming 10 cubic meters (cu.m.) will pay P118.78 a month, which is P11.64 less than their current P130.42 monthly bill with the 12% VAT.

On a government tax rate of 2.825%, customers will pay P119.74 a month, a reduction of P10.68 from the previous bill.

Maynilad customers using 20 cu.m. a month will see a reduction of between P40.04 and P43.64 in their bills, while those using 30 cu.m. will pay P81.75 to P89.10 less every month.

Manila Water customers using 10 cu.m. every month will pay P138.40 if the government tax rate is 2%, and P138.83 if the rate is 2.825%, reflecting an average reduction of P12 from the current P151.22 bill.

Low-income households in the Manila Water concession area will see an average reduction of P7 in their monthly bills, while those consuming 20 cu.m. will pay around P27 to P28 less a month. Customers using 30 cu.m. will see bills lowered by P55 to P57 a month.

“The MWSS remains committed to ensuring the availability, accessibility, and affordability of water supply in the East and West Concession Areas,” the agency said.

Maynilad supplies water to customers in the west zone, comprised of Caloocan, Pasay, Parañaque, Las Piñas, Muntinlupa, Valenzuela, Navotas, Malabon, Manila, Makati, and Quezon City, as well as parts of Cavite province.

Manila Water provides water and wastewater services in the east zone of Metro Manila, which includes Marikina, Pasig, Taguig, Makati, San Juan, Mandaluyong, portions of Quezon City and Manila, and Rizal province.

Metro Pacific Investments Corp., which has a majority stake in Maynilad, is one of three 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 an interest in BusinessWorld through the Philippine Star Group, which it controls. — Luisa Maria Jacinta C. Jocson

Higher oil prices may dampen consumption in Asia, PHL

PHILIPPINE STAR/ MICHAEL VARCAS
A worker cleans LPG gas tanks sold at a distributor in Kamuning, Quezon City, March 1. — PHILIPPINE STAR/ MICHAEL VARCAS

THE CONTINUED SURGE in global oil prices driven by the war in Ukraine could affect consumption patterns in Asian countries like the Philippines and may in turn impact economic growth, according to JPMorgan Chase & Co.

“The recent escalation in geopolitical tensions is expected to deliver a shock to commodity prices, centered so far on energy prices and wheat prices. In our baseline scenario, we expect Brent oil prices to lift to an average US$110/bbl (barrel) in Q2 from a prior estimate of around US$90/bbl,” JPMorgan Chief Economist for ASEAN Sin Beng Ong said in a note sent to reporters on Wednesday.

Based on his estimates, a $17 per barrel or 20% increase in oil prices to $110/bbl could mean a 0.4-percentage-point (ppt) reduction in the gross domestic product (GDP) growth of the Philippines.

“For emerging market Asia, we estimate that the first order shock on consumption would trim growth by around 0.2 percentage point, with the largest impact on the Philippines,” Mr. Ong said.

South Korea is expected to suffer a 0.3-ppt reduction in GDP, while the economies of China, India, Malaysia, and Thailand are estimated see a 0.2-ppt drop in GDP.

“In our view, there are two main channels through which an adverse energy price shock would impact the region, the first via a negative real income impact on growth, initially via private consumption, and second, with a lag, through trade, which then affects capital spending,” Mr. Ong said.

He said there will be “a sharp decline in the current account balances, with a 0.4% of GDP hit, with the largest impact on Korea, Taiwan and Thailand.”

“If there are limited offsetting capital inflows or indeed outflows, the net impact would be additional pressure on their balance of payments,” Mr. Ong added.

The rising oil prices and its impact on inflation could affect both consumers and businesses, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said.

“Definitely there will be some cost-push inflation that can soften consumer and business consumption that incidentally are just recovering from the crippling impacts of the coronavirus disease 2019 pandemic,” Mr. Asuncion said in a Viber message.

The economy expanded by 5.6% in 2021 after a record 9.6% contraction in 2020. Household consumption, which makes up about 70% of the economy, rose by 4.2% last year after slumping by 7.9% in 2020.

Economic managers expect the economy to grow by 7-9% this year, but are keeping a close eye on the impact of higher oil prices, especially on transport and agriculture.

President Rodrigo R. Duterte on Wednesday has approved a P3-billion fuel subsidy program for public utility drivers as well as agricultural workers.

Since the start of the year, gasoline, diesel, and kerosene prices per liter rose by P9.65, P11.65, and P10.30.

There are calls to amend the oil deregulation law to include the creation of a strategic petroleum reserve when oil prices are lower.

“This is good because it will soften the blow of any other future oil price shocks,” UnionBank’s Mr. Asuncion said.

Based on JPMorgan estimates, oil and gas accounts for $2.7 billion of the country’s imports.

It also projects that a 20% increase in oil prices will have a 0.8-ppt impact on inflation, given that oil has a 6.9% weight in the Philippine consumer price index.

“Given these shocks, we expect macro-policy to mitigate the price shock via fiscal policy and also for central banks to be more mindful of the growth impact relative to the rise in inflation,” JPMorgan’s Mr. Ong said.

“Thus, central banks may not necessarily respond to the supply-side driven rise in headline inflation, given its negative repercussions for growth, but instead be focused on labor markets and by extension, core inflation, as was the case last year,” he added. 

The BSP raised its inflation forecast for the year to 3.7% from 3.4% previously last month amid higher oil and nonoil prices. Still, it kept interest rates at record lows to support growth but stressed they are ready to act in case there is a need to respond to second-round effects of inflation. — Luz Wendy T. Noble

SEC strengthens rules on removal, disqualification from firms

By Keren Concepcion G. Valmonte, Reporter

THE Securities and Exchange Commission (SEC) is strengthening its rules on the disqualification and removal of the directors, trustees, and officers of companies “in line with its commitment to ensure good corporate governance in the country.”

SEC Memorandum Circular No. 4, Series of 2022 was issued on Feb. 15 and published online on March 2.

“The memorandum circular covers pleadings, practices and procedures before the SEC in all matters of hearing and proceedings for independent administrative actions for the removal of directors; removal of directors, trustees, and officers as a sanction in the Commission’s proceedings; and imposition of sanctions on the board of directors or trustees who, with knowledge of disqualification, failed to remove a disqualified director or trustee,” the SEC said in a statement on Thursday.

The said memorandum operationalizes Sections 26 and 27 of the Revised Corporation Code of the Philippines (RCC) or Republic Act No. 11322.

Section 26 provides grounds for an executive’s disqualification, while Section 27 allows the commission to order the removal of a director or trustee elected, despite the disqualification, upon verified complaint and after due notice and hearing.

“Under the rules, disqualification refers to the fact or condition that disqualifies a person from being a director, trustee, or officer, while removal pertains to the act of taking away a person from such position,” the SEC said.

The disqualification guidelines apply if the director, trustee, or officer commits violations stated within five years before their election or appointment or during their tenure as a company executive.

A person may be disqualified if they have been convicted by final judgment of an offense punishable by being imprisoned for over six years or for violating or having an offense involving fraudulent acts punishable by the RCC or the Securities Regulation Code on top of other rules implemented by the SEC.

An individual may also be disqualified if they were found administratively liable by a foreign court or an equivalent foreign regulator for misconduct related to the ones stated under the RCC.

The director, trustee, or officer may also be disqualified if they were found administratively liable by final judgment by not allowing the inspection and/or reproduction of corporate records.

“An independent administrative action for the removal of a director, trustee, and/or officer of a corporation may be commenced upon the motu proprio issuance of a formal charge by the SEC operating department that has jurisdiction over the subject matter, or upon filing of a verified complaint with the operating department,” the SEC said.

The SEC operating department concerned may dismiss the complaint if it was filed without complying with requirements or if the commission or the operating department has no jurisdiction over the subject matter.

The regulator may also dismiss the complaint if there is already a pending action or if a complaint was filed beforehand regarding the same matter or issues in any court, tribunal, or agency. It may also be dismissed if there is insufficient evidence to support the complaint’s allegations.

“On the other hand, a summons will be issued to the respondent/s should authority to act over the complaint be established by the SEC. The respondent/s will be given 15 days from receipt of the formal charge or summons to file a verified answer,” the SEC said.

If the respondent does not issue an answer, the commission may go forward with a judgment on the complaint. The SEC may also schedule a clarificatory hearing.

The procedures on the decisions, resolutions, final orders, appeals and motions for reconsideration will be done according to the 2016 SEC Rules of Procedure.

Meanwhile, the SEC may remove a director, trustee, and/or officer of a corporation if it establishes grounds that the individual may be disqualified from his/her post following an administrative or adjudicative proceeding.

“The SEC will first issue an order directing the director, trustee, and/or officer of the corporation to show cause why they should not be disqualified from their position or be administratively penalized,” the commission said.

Similar to the procedures on disqualification, the respondent will be given the opportunity to file a response within 15 days from notification. The SEC may go ahead motu proprio with a judgment to impose sanction/s “as the evidence presented or established in the course of the proceedings may warrant.”

If a one-person corporation’s sole director is removed, the SEC said the nominee will take the place of the single stockholder as director and the nominee will also be put in charge of the corporation’s affairs.

The regulator may also opt to issue a permanent cease-and-desist order and/or slap a monetary penalty of P10,000 to P400,000 for every violation of its orders or any relevant laws and regulations.

The commission will also record all orders, decisions, or resolutions involving the removal of a director, trustee, and/or officer of a corporation via a Removed Directors, Trustees, and Officers Index. Its access is limited to the SEC unless they receive authorization from the concerned individual and approval from the SEC operating department’s director.

PLDT eyes over P50B from sale of towers, lowers capex

By Arjay L. Balinbin, Senior Reporter

PLDT, Inc. on Thursday said it expects more than P50 billion from the sale of its 6,000 towers to global tower companies this year, which will be used to pay down debts.

PLDT also announced that its capital expenditure (capex) guidance for the year has been set at P76 billion to P80 billion, lower than the P89 billion capex last year.

“We’re pleased to report that the bids we’ve received are north of the P50 billion mark, so that should provide us with a bit of liquidity to reduce debts moving forward,” PLDT Chairman Manuel V. Pangilinan said during a briefing.

Alfredo S. Panlilio, president and chief executive officer of PLDT and its unit Smart Communications, Inc., said six global tower companies are vying for the towers, which will be awarded in the second quarter of the year.

“These players have massive investments globally,” he noted.

The PLDT group has around 12,000 towers nationwide.

PLDT Chief Finance Officer Anabelle L. Chua said that capex for 2022 is expected to be lower by up to P13 billion and to decline to below 40% of service revenues.

“One of the major goals this year is to realize positive free cashflow,” Mr. Pangilinan said.

The company also expects its consolidated service revenues to grow by mid-single-digit in 2022 and telco core income, which excludes the impact of asset sales and Voyager Innovations, Inc., to be up to P33 billion.

PLDT’s net income for 2021, which includes exceptional costs, grew by P2.1 billion or 9% to P26.4 billion.

Its total service revenues for 2021 went up 6% to P182.1 billion from P171.5 billion in 2020.

“2021 proved to be record-breaking year for PLDT as we delivered all-time highs across the board despite the challenges brought about by the pandemic, calamities and hyper competition,” Mr. Panlilio said.

Broken down, revenues from the company’s consumer and enterprise segments increased 7% to P176.1 billion from P165.3 billion.

Its telco core income rose 8% to P30.2 billion last year from P28.1 billion in 2020.

The company’s EBITDA, or earnings before interest, taxes, depreciation, and amortization, reached P96.2 billion in 2021, up 8% from P88.8 billion previously.

Mr. Pangilinan said: “We are determined to strengthen our financial standing as we focus on generating positive free cashflow.”

“After years of massive spending on infrastructure, we are transitioning to a more deliberate approach to our capital expenditures, having built the country’s most extensive networks. We are also renewing efforts to throttle down on operating expenses to further enhance our EBITDA,” he added.

PLDT shares rose 4.57% or P80 to close at P1,830 apiece on Thursday.

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.

Looking for the next big thing

FROM left to right: Luis Paolo Pineda (KUMU Chief Commercial Officer) Robert P. Galang (Cignal Entertainment President and CEO TV5), Erickson Raymundo (Corner Stone Entertainment President), and Jeff Vadillo (Corner Stone Entertainment Vice President)

TV5, Kumu, Cornerstone Entertainment to launch new P-pop group search

TV5’s CIGNAL Entertainment has partnered with content streaming platform Kumu and multimedia company Cornerstone Entertainment for the Pinoy singing boy group talent search, Top Class, The Rise to P-Pop Stardom.

Top Class is an original talent search “survival” series focusing on male performers. The show will highlight young aspirants as they undergo training and take on challenges while competing to become a member of the next Filipino boy group.

“We have the raw talent. It’s just a matter of providing the right training, the right influences, and the right support,” Cornerstone Entertainment Vice-President Jeff Vadillo told members of the press after the contract signing at the TV5 Media Center on Feb. 28. “This is the kind of future that we’re working on, to be able to create Filipino artists and doing [so] excellently that other people from other countries can appreciate and relate with it.”

Cornerstone Entertainment is the talent agency behind performers such as Erik Santos, Kayla, Jay-R, Arci Muñoz, Moira Dela Torre, Julia Montes, and Markki Stroem. It is also the creator of shows like the drama series Niña Niño and singing game show Sing-Galing through its production arm, CS Studios.

“In terms of the trends nowadays, you can see that there’s diversity. It’s not just one genre running the airwaves in terms of music. If we’re talking about music, a lot of genres getting their own market, and getting their own audience,” Mr. Vadillo said.

The talent series will feature Filipino hosts and mentors who are known globally for their body of work. They will guide and prepare the young talents for the music and entertainment scene.

STREAMING THE SHOW
The growing popularity of the content found on Filipino live streaming app Kumu also motivated the decision to discover the next P-pop group. Launched in 2018, there are more than 10 million registered users on the platform from over 55 countries.

“It’s a natural direction for us to partner with Kumu, because of their appreciation for developing diverse styles [of entertainment],” Mr. Vadillo said of the partnership.

“It’s natural progression that we actually put together a show where we can allow these creators to progress in their career. We are not in the business of talent management and production, so we work with Cornerstone who will help us and will always complement the show that we’re putting together,” Kumu Chief Commercial Officer Luis Paolo Pineda said, “And [of course], you need a free to air platform so that a majority of the Filipinos can watch.”

Since its return to the entertainment production scene in 2020, TV5 has been working to create more content through partnerships.

“It’s very encouraging that our decision in 2020 to work with different production companies has performed well,” TV5 President and CEO Robert P. Galang said.

“2021 was a year of building capabilities, not just the network side but also the content creation side because we’ve also been able to team inside Cignal. We got very talented people [who] know how to execute [shows],” he said.

The mechanics of the competition and the requirements for interested candidates are yet to be announced. Top Class, The Rise to P-Pop Stardom is set to premiere this year.

For more information and updates, visit Cignal TV’s official Facebook page (www.facebook.com/cignaltv) and the official account of Top Class on Kumu (http://app.kumu.ph/topclass). —  Michelle Anne P. Soliman

SEC issues halt order against RGS World, PawisNgPinoy

THE Securities and Exchange Commission (SEC) has issued cease-and-desist orders against RGS World Marketing Corp. and PawisNgPinoy Online Investment for their respective illegal investment programs.

The commission, sitting en banc, is calling on the two entities to stop promoting their investment programs as these are not registered with the SEC. The regulator issued two separate orders dated March 1.

Investigations done by the SEC Enforcement and Investor Protection Department (EIPD), SEC Bacolod Extension Office (BacEO), and the SEC Iloilo Extension Office revealed that RGS World has been selling and/or offering compensation plans worth P1,000 to P20,000. The entity has been promising investors returns worth P3,500 to P80,000.

Investors of RGS World were also being lured with non-monetary returns like frozen goods and rice on top of bonuses, incentives, and products given after referring or recruiting more people into the scheme.

RGS World also distributes products like soap, liniment oils, rice, eggs, and other poultry products “to disguise its investment scheme as a legitimate distribution business,” the regulator said.

However, records from the Food and Drug Administration showed that the entity does not have a license to operate a distribution business.

The SEC said RGS World’s program “involves the pooling of the resources consisting of the moneys of its investors which are actually utilized to satisfy and pay the guaranteed returns of its existing investors.”

“This is the common enterprise that is being sustained by the investments received by RGS World from the public, although the same is masked by a product distribution business which, in reality, does not exist,” the commission en banc held.

Members of RGS World’s scheme do not do anything but invest and give their money to the directors, officers, agents, and promoters of RGS World to receive their returns.

“However, BacEO has already received complaints from numerous investors claiming that they have not received the profits or products promised to them,” the SEC said.

RGS World is a corporation registered with the commission. However, it did not secure a secondary license from the commission as issuer of securities or broker dealer and it also did not register any securities to be offered to the public.

On the other hand, PawisNgPinoy Online is not registered with the commission as a corporation or partnership and it also does not have a secondary license from the commission to solicit investments.

The EIPD received an inquiry last year after PawisNgPinoy Online was flaunting a certificate of filing of amendment of by-laws and an advisory issued by the commission “to make it appear that it is authorized to solicit, accept, and/or take investments from the public, allegedly for use in furtherance of its rice trading business, construction and medical supplies distribution, and real estate operations.”

However, the EIPD found that the document PawisNgPinoy Online used was originally issued to Top Frontier Investment Holdings, Inc., which was then edited to make it appear as if it was issued to the entity.

PawisNgPinoy Online was promising would-be investors of a guaranteed passive income with a 205-265% return of investment within just five days. Members can invest in packages and promos worth P2,000 to P50,000.

In its Jan. 11 advisory against PawisNgPinoy Online, the SEC said its offering “is an indication of a possible Ponzi scheme where returns to early investors are likely to be paid out from the investments of new investors and not out of the companies’ profits similar to those already flagged by the Commission as scams.” — Keren Concepcion G. Valmonte

Star Trek: Picard romantically going where Picard hasn’t gone before

A SCENE from the drama series Star Trek: Picard

LOS ANGELES — After a successful first season, sci-fi drama series Star Trek: Picard returns to see its titular hero, played by British actor Patrick Stewart, boldly going where he hasn’t gone before — into a relationship.

“I really enjoyed the relationship aspects of the show, certainly when they are in a romantic atmosphere. That has been fascinating from the in,” Mr. Stewart, 81, told Reuters.

“Obviously in Picard what we’ve been trying to do is find places that haven’t been explored so there is no road map for Picard’s resistance to romantic intimacy but it’s apparent,” the show’s creator Akiva Goldsman added.

Dedicated to the much-loved starship captain Jean-Luc Picard, Star Trek: Picard originally was never meant to take off after Mr. Stewart decided he didn’t want to return to the role he portrayed in the 1987-1994 TV series Star Trek: The Next Generation and in four films, the last released in 2002.

“I went to the first meeting (with the show writers) in order to turn them down but I was so impressed and admiring of the people who had made… this offer, that I felt it proper to tell them to their faces why I was going to say no,” he said. “Well, something happened and here I am.”

In this season, Picard is called from his vineyard in France after a message is heard in deep space summoning him for help.

However, his old nemesis, the godlike Q, is waiting in the wings and once again means to test Picard.

Also returning to the series is a popular Star Trek character, former Borg drone Seven of Nine, played by Jeri Ryan, who has her own issues to deal with in this season.

“This character has been so beautifully written and so beautifully developed that I haven’t really felt the need, except on very rare occasions, to step in and say ‘Oh you know, I don’t know if what she did was right’,” Ms. Ryan said.

“That’s so unusual and I’m so fortunate to be in this position.”

The second season of Star Trek: Picard begins streaming on Paramount+ on Thursday. —  Reuters

ICTSI income surges to $429M

LISTED port operator International Container Terminal Services, Inc. (ICTSI) saw its attributable net income for 2021 surge to $428.6 million from $101.8 million a year earlier, mainly due to higher operating income.

The company’s gross revenues from port operations increased 23.9% to $1.9 billion in 2021 from $1.5 billion previously, it said in a media release on Thursday. Its expenses were reduced 4.7% to $1.1 billion from $1.2 billion in 2020.

It said last year’s net income attributable to equity holders was 321% higher “mainly due to higher operating income and nonrecurring charges in 2020; partially offset by increase in depreciation and amortization resulting from the new terminals; higher interest on loans, concession rights payable, and lease liabilities; additional impairment charges on other nonfinancial assets; and charges associated with the prepayment of loan facilities at Victoria International Container Terminal.”

The company’s equity in net loss of joint ventures was down to zero in 2021 from a $12.27-million loss in 2020 mainly due to its share in higher net income in Manila North Harbour Port, Inc. and lower net loss at Sociedad Puerto Industrial Aguadulce S.A. in 2021.

It handled consolidated volume of 11,163,473 twenty-foot equivalent units (TEUs) in 2021, higher by 10% compared with the 10,193,384 TEUs handled in 2020 primarily due to volume growth and improvement in trade activities as economies recover from the impact of the pandemic and lockdown restrictions.

The company also noted that it has no exposure to investments in Ukraine or Russia, which recently launched a military attack on the former.

“The scale and duration of these developments and event remain uncertain as of March 1, 2022. It is not possible to estimate the overall impact of the outbreak and war’s near-term and longer effects, and could have a material impact on the group’s financial results for the rest of 2022 and even periods thereafter,” it added.

ICTSI shares closed 4.59% higher at P228 each on Thursday. — Arjay L. Balinbin

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