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ANALYSIS – Malaysia’s labour abuse allegations a risk to export growth model

KUALA LUMPUR, Dec 21 (Reuters) – Malaysia’s government and companies must address mounting allegations of workplace abuse of migrant labourers who fuel the country’s economy, or face risks to its export-reliant growth model, experts warn.

Malaysia has for decades banked on migrant workers to power mainstay manufacturing and agriculture, becoming an integral part of the global supply chain for products as diverse as semiconductors, iPhone components, medical gloves and palm oil.

But as the reliance on foreign labour has increased, so have complaints of abusive working and living conditions for workers, who come mainly from Indonesia, Bangladesh and Nepal.

Southeast Asia’s third-biggest economy must reform its labour laws and improve enforcement, while companies should invest to ensure better conditions, said 11 analysts, ratings agencies, researchers, corporate consultants and activists interviewed by Reuters.

In the past two years, seven Malaysian firms, including the world’s biggest glove maker and palm oil producer, have faced U.S. import bans over allegations of forced labour. Last month, high-tech home-appliance maker Dyson Ltd cut ties with its biggest supplier, a Malaysian firm, over labour conditions.

“It is a wakeup call,” said Anthony Dass, head of AmBank Research in Kuala Lumpur. “If Malaysia does not change and with the global focus on environmental, social and governance practices, businesses could move to other countries.”

Malaysia’s labour department did not respond to questions about changing the country’s labour laws, and the trade ministry did not reply to questions on potential investment losses.

Human Resources Minister M. Saravanan acknowledged early this month that “forced labour issues” had “affected foreign investors’ confidence towards Malaysia’s supply of products.” He urged companies to protect workers’ rights and welfare.

“Malaysia has become the poster child” for forced labour issues, said Rosey Hurst of London-based ethical trade consultancy Impactt. “And that starts to do economic damage. Real change needs to happen.”

Hurst said queries from global investors about Malaysia’s labour practices have increased, including from asset managers and private equity firms.

Other Asian manufacturing hubs, including China and Thailand, face similar accusations of labour abuses. But investors have taken an immediate interest in recent scrutiny of Malaysia, and this could affect future foreign direct investment and supply contracts, analysts say.

 

FORCED-LABOUR INDICATORS

Malaysian officials have acknowledged excessive overtime hours, unpaid wages, lack of rest days and unhygienic dormitories. Those conditions are among 11 indicators of forced labour, according to the International Labour Organisation (ILO).

Malaysian law allows more than the widely accepted maximum of 60 hours of work a week and allows work on what are supposed to be rest days.

“The legal framework in Malaysia allows, and indeed sometimes insists on, practices which are on a collision course with the ILO 11 indicators of forced labour,” Hurst said.

Malaysia last month launched a National Action Plan on Forced Labour to eliminate such practices by 2030.

The country is the world’s second-largest palm oil exporter and its chip-assembly industry accounts for more than a tenth of global chip trade. Malaysia had about 2 million foreign workers in late 2020, 10% of its workforce and double that of 20 years ago, according to the Department of Statistics. The government and labour groups estimate as many as 4 million more undocumented migrants work in the country.

Foreign workers are concentrated in manufacturing, agriculture, construction and services.

As Malaysians shy away from lower-paid, labour-intensive work, the country’s electronics and palm oil companies especially are relying on migrants, whose treatment is gaining scrutiny.

Malaysia has had the most U.S. Customs and Border Protection bans after China. In July, Washington put Malaysia on a list with China and North Korea for limited progress in eliminating labour trafficking, its lowest ranking.

Dyson terminated its contract with parts maker ATA IMS Bhd just months after the Malaysian firm posted record profits. ATA has acknowledged some violations, made some improvements and said it now complies with all regulations and standards.

ATA told Reuters in a statement it is stepping up practices for sustainable and equitable growth amid scrutiny of the company and Malaysia.

“For ATA, this has meant relooking at some of the practices that have long been a norm, not just in Malaysia but overseas too, for instance, excessive overtime and more engagement between management and rank and file employees,” the company said.

 

‘MODERN SLAVERY’

When the United States last year banned Top Glove Corp , the world’s biggest medical glove maker agreed to pay $33 million to workers to reimburse recruitment fees they paid in their home countries – which activists say result in debt bondage.

U.S. customs revoked the ban after Top Glove made the changes.

Top Glove told Reuters in a statement that exporters must “follow the best global practices as customer expectations have changed over the years,” adding it was “no longer sufficient for businesses to just be cost-efficient”.

Its peers also decided to repay recruitment fees.

Palm oil producers in Malaysia, the world’s biggest exporter of the widely used product after neighbouring Indonesia, have spent tens of millions of dollars to improve workers’ living conditions following similar bans.

To be sure, higher costs from improving working and living conditions may not necessarily drive away investors.

“Companies operating in Australia, the UK, the EU and some U.S. states are subject to regulations that address modern slavery in supply chains,” said Nneka Chike-Obi, director of sustainable finance at Fitch Solutions. “So they may have to accept higher costs in exchange for less supply-chain risk.”

The impact on the electronics industry, which accounts for nearly 40% of Malaysia’s exports, in particular could have a multiplier effect on the economy.

Dell Inc, Samsung Electronics Co and Western Digital Corp have manufacturing facilities in Malaysia, while Apple Inc uses local suppliers.

Samsung declined to comment. The other tech firms did not respond to Reuters’ requests for comment on their Malaysian operations or suppliers.

“If companies start scrutinising and pulling out contracts” from electric and electronics companies, “it will have a knock-on effect on the economy,” said AmBank’s Dass. – Reuters

Qatar Airways sues Airbus in A350 jet damage dispute

PARIS – Qatar Airways said on Monday it had started proceedings in a UK court against planemaker Airbus in a bid to resolve a dispute over skin flaws on A350 passenger jets, bringing the two sides closer to a rare legal showdown over aviation safety.

The companies have been locked in a row for months over damage, including blistered paint and corrosion to a sub-layer of lightning protection, which Qatar Airways says has now led to the grounding of 21 A350 jets by its domestic regulator.

Airbus insists the carbon-composite passenger jets are safe to fly despite some “surface degradation,” while Qatar Airways says it is too early to say whether safety has been compromised.

The dispute came to a head last week when Airbus, in what experts called an unprecedented move, accused the Gulf airline of misrepresenting the problem as a safety issue and threatened to call for an independent legal assessment.

On Monday, Qatar Airways hit back, saying it had taken its complaint against Airbus to the High Court in London.

“We have sadly failed in all our attempts to reach a constructive solution with Airbus in relation to the accelerated surface degradation condition adversely impacting the Airbus A350 aircraft,” it said in a statement. “Qatar Airways has therefore been left with no alternative but to seek a rapid resolution of this dispute via the courts.”

In a statement late on Monday, Airbus confirmed it had received a formal legal claim. “Airbus intends to vigorously defend its position,” it said.

A spokesman earlier reiterated it had found the cause of the problem and was working with customers and Europe’s safety regulator, which has said it has not identified a safety issue.

Qatar Airways denies that the surface flaws – which witnesses say have left some of the jets with a pock-marked appearance – are properly understood and said on Monday that it wanted Airbus to mount a “thorough investigation”.

 

JETS GROUNDED

Several industry executives said such a public legal fight between two of aviation’s leading players is unprecedented.

The row widened this month when documents seen by Reuters revealed at least five other airlines in varying climates had complained about paint or other surface problems since 2016. Airbus had until recently maintained the problem was focused on paint on Qatar‘s A350s, based in the Gulf.

Reuters also first reported that Airbus was looking at changing the anti-lightning system.

The planemaker has said it is proposing interim solutions ranging from repairs to repainting and has accused Qatar Airways of ignoring those proposals without reasonable justification.

Qatar Airways reiterated on Monday it could not be sure whether proposed repairs would work without deeper analysis. Its chief executive has questioned why Airbus is still working on a solution if a reliable fix is already available.

The 21 grounded jets represent 40% of its current fleet of A350s, for which it was the launch customer with the biggest order. Other airlines still operate the jet, saying its airworthiness is not affected by what they term cosmetic issues.

The row meanwhile looks set to cost Airbus a big Qatar order for a new A350 freighter version. It received the first firm order for the model on Monday, confirming a previously tentative order for four planes from France’s CMA CGM.

Qatar Airways Chief Executive Akbar Al Baker told the South China Morning Post last week he had previously looked at placing a large order for the cargo A350. Sources now expect Boeing to win the order to replace Qatar‘s 34-35 freighters. – Reuters

UK, U.S. and other nations express concern after Hong Kong elections

LONDON/SHANGHAI – Britain, the United States, Canada, Australia and New Zealand expressed grave concern over the erosion of democracy in Hong Kong in a joint statement issued on Monday following Legislative Council elections in the former British province.

“We, the Foreign Ministers of Australia, Canada, New Zealand, and the United Kingdom, and the United States Secretary of State, noting the outcome of the Legislative Council elections in Hong Kong, express our grave concern over the erosion of democratic elements of the Special Administrative Region’s electoral system,” the statement said.

A spokesperson for the Chinese embassy in Britain called the comments “irresponsible” and said they distorted facts and maliciously discredited the election, which “gravely interfered in China’s internal affairs and violated the basic norms governing international relations.”

“The Chinese side expresses firm opposition and strong condemnation,” the spokesperson said in a statement on the embassy’s website. – Reuters

IMF executive board extends debt service relief for 25 low-income countries

The International Monetary Fund said on Monday its executive board has extended Fund debt service relief for 25 eligible lowincome countries for another three months until April 13, 2022.

The approval of the fifth and final tranche of debt service relief totaling about $115 million follows four prior tranches approved in April and October of 2020 and 2021, the IMF said in a statement on Monday.

The tranche completes the two-year COVID-related debt service relief first approved in April 2020, providing relief worth about $964 million to eligible countries.

Countries receiving debt service relief in the fifth tranche under the Catastrophe Containment and Relief Trust include Benin, Burkina Faso, Burundi, Central African Republic, Comoros, Djibouti, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Kyrgyzstan, Lesotho, Liberia, Madagascar, Malawi, Mali, Nepal, Niger, Rwanda, Sao Tome and Principe, Sierra Leone, Solomon Islands, and Tajikistan. – Reuters

PHL secures P14-B loan from France

Many houses were destroyed in Surigao del Norte during the onslaught of typhoon Odette. Photo taken by the Philippine Coast Guard, Dec. 17. Courtesy of Philippine Coast Guard

THE Philippine government signed a €250-million (about P14-billion) loan agreement with France’s development agency to support local governments’ disaster response, the Department of Finance (DoF) said.

The DoF in a statement said the Agence Française de Développement (AFD) is providing the policy-based loan to support the decentralization of disaster risk reduction and climate change management to the local government units.

The fund will be used to build local government capacity and to support ongoing reform programs that take into account public health emergency concerns.

The project aims to boost local community resilience to disasters, as well as cut emergency response times to improve recovery efficiency.

“This will complement our move to shift our focus from theorizing about global warming to executing practical climate adaptation and mitigation projects on the ground,” Finance Secretary Carlos G. Dominguez III said.

Laurent Klein, AFD country director, said the loan is a result of a partnership with the Department of Interior and Local Government and a disaster management program financed by the European Union through the French development assistance institution.

“It aims to further develop our cooperation on disaster risk management and climate change adaptation capacity for a period of three years,” he said.

“It is also in line with France’s commitment to support climate action under the Paris Agreement in order to help the Philippine Government meet the ambitious targets it set for itself when it submitted its Nationally Determined Contribution.”

The Philippines, under its first Nationally Determined Contribution for the United Nations Framework Convention on Climate Change, aims to reduce greenhouse gas emissions by 75% by 2030.

Of the 75% target, just 2.71% can be achieved with internal resources, while the remaining 72.29% would rely on international assistance.

The Finance department has been pushing for climate financing from wealthier economies that have not offered enough to help developing nations reduce their carbon footprints. Such countries bear the most responsibility for their historic emissions, Mr. Dominguez has said.

Just last week, Typhoon Odette (international name: Rai) brought heavy rains and destructive winds over central and southern Philippines.

The Agriculture department on Monday said farming and fishing losses due to the typhoon have reached about P362.3 million so far.

Extreme weather events have caused P506.1 billion in losses and damage to the Philippines over the past decade, emphasizing the country’s vulnerability to the climate crisis, DoF said previously.

The government’s outstanding debt has swelled to P11.97 trillion as of end October, up by 19.38% year on year, data from the Treasury showed.

Accounting for about 30% of the total, external debt as of end-October reached P3.5 trillion, up by 18.74% from a year earlier. Foreign debt consisted of P1.53 trillion in loans, while the rest are sourced from government securities. — Jenina P. Ibañez

DPWH no longer keen on Marikina dam project

riverbasin.denr.gov.ph

By Jenina P. Ibañez, Senior Reporter

A DAM at the Pasig River-Marikina basin will not be built by the government as originally planned under a World Bank loan, as a similar project would instead be done by the private sector.

World Bank in its implementation report of a $2.73-million grant on flood management in the greater Metro Manila area said the studies and designs were achieved despite delays caused by the pandemic.

“However, the long-term development outcome of flood control and management in the Pasig River-Marikina Basin may not be fully realized,” the World Bank said in a report released on Saturday.

“As of the preparation of this (report), the government has indicated that the dam will not be constructed as originally planned.”

The World Bank loan was used for preparing priority projects identified in a flood management master plan to improve flood control in and around the capital region.

The flood management master plan approved by the National Economic and Development Authority in 2012 estimated a P352-billion cost over at least two decades. The plan includes measures to reduce flooding from rivers running through the city, improvements on city drains, and the development of early warning systems.

The World Bank-financed project studied flood management priority projects through engineering, economic, and social and environmental analyses.

The project, implemented by the Department of Public Works and Highways (DPWH), prepared proposals for upper Marikina River structural measures, flood forecasting, and institutional arrangements for sustainable flood management.

The project successfully developed studies for a heightened upper Marikina dam, flood retention basin design, early warning system, and institutional plan.

This was done amid delays that extended the closing date by 54 months after election and pandemic-related disruptions.

“The grant became effective in June 2015 and national elections happened in May 2016. During this period, DPWH did not carry out any procurement as the outgoing administration decided to leave the decision on the grant to the incoming administration,” the World Bank said.

The new government approved the plan, but DPWH decided on a consultant strategy that led to delays.

Linking the design of the upper Marikina dam and the retention basin also required design adjustments in both, after a study found that basin excavation would be deeper than expected.

Consulting teams in 2020 were also caught in the lockdown during the start of the pandemic last year.

The loan was approved in 2014 and came into effect in 2015. The original closing date of January 2017 was extended and the project closed by June 2021.

DPWH, in the report, said that it agreed with the World Bank’s assessment on pandemic-related delays, which “significantly impacted the consultant’s conduct of field works and liaisons with the stakeholders.”

“Nevertheless, the project’s expected outcomes were eventually realized amidst substantial delays,” the department said in an Oct. 1 letter to the bank.

The flood control management outcome may not be fully done under the bank’s assistance, the department added, as it would be done by the private sector.

“We would like to assure, however, that the department is very much keen on pursuing the implementation of the flood retention basin under the bank’s financial auspices.”

World Bank said studies from the project would likely still be used by the government in coming up with alternative flood management solutions.

DPWH Flood Control Engineer Lydia Aguilar said the proposed upper Marikina dam is similar to a project under the Metropolitan Waterworks and Sewerage System, the Upper Wawa Dam. The project, under Wawa JVCo., aims to provide additional water supply in the greater Metro Manila region.

“During our coordination meeting, which was instructed by the NEDA Investment Coordination Committee, it was found out that both projects are almost on the same location, approximately 250 meters away from each other,” she said in a Viber message.

The private firm had already secured all clearances for the Upper Wawa Dam under the same location, while the DPWH had yet to secure complete documents.

“The Department has decided to forego the implementation of the Upper Marikina Dam on the condition that the Wawa JVCo accommodate the total required flood volume equivalent to 87.0 MCM (million cubic meters) designed under the DPWH Dam, including all the necessary operating protocol in the dam management for flood control and water supply,” she said.

The DPWH, she added, will instead focus on other flood control infrastructure like the retarding basin.

Philippine education spending trails behind region, PIDS study shows

Students attend class at Pedro Cruz Elementary School in San Juan City, Dec. 6. Photo by Michael Varcas, The Philippine Star

PHILIPPINE education spending still lags behind regional peers despite strong growth over more than two decades, contributing to poor international testing performance, the Philippine Institute for Development Studies (PIDS) said.

In a discussion paper “Education Spending and Schooling Quality in the Philippines,” PIDS fellow Michael R.M. Abrigo found that education spending per person in the Philippines grew faster than the recorded gross domestic product (GDP) per person over the same period.

The large part of growth occurred more recently as total education spending increased by 6.4% over the last 15 years. By 2019, spending was at P1.2 trillion annually, from just half a trillion in 2005.

“During this period, households bear majority of the expense, reaching as high as 59.3% in 2005, although increasing government expenditures contributed to the decline in the household share, settling at 54.5% in 2019,” Mr. Abrigo said.

Education spending reached 7.5% of GDP by 2019 versus 5.8% in 2005.

Mr. Abrigo studied spending through basic education consumption. The Philippine cumulative basic education consumption almost tripled between 1990 and 2015, increasing by 3.3% year on year in the first decade then by 6.3% per year in the next five years.

“It is noteworthy that these rates are significantly larger than the annual growth in per capita GDP, which registered at 1.7% between 1990 and 2010 and 4.3% between 2010 and 2015,” he said.

The private sector spends about just as much to finance basic education as the government over the said period.

But the country’s education spending still lagged behind others in the Asia-Pacific region.

“While per student public spending appears to be strongly correlated with per capita income, the Philippines spends only about 60% and 72% of Indonesia’s per student public spending for primary and secondary levels, respectively, despite the Philippines’ per capita income being 84% of Indonesia for the years presented,” Mr. Abrigo said.

Mr. Abrigo said education spending does not necessarily lead to better school outcomes. But he also cited reports showing how average schooling quality increases with more basic education consumption.

“This observation is true for the science, mathematics, and reading scores. While this association may not be interpreted as causal, it is suggestive that greater resources may be needed to raise schooling quality, especially in resource-poor settings,” he said.

The Philippines received poor scores under the 2018 Programme for International Student Assessment (PISA) of the Organisation for Economic Co-operation and Development (OECD). It showed 15-year-old Filipino students ranked the lowest among 79 countries in mathematics, science, and reading.

Mr. Abrigo suggested policy responses based on cost-effective education for better schooling outcomes.

“Poor schooling quality need not be the necessary and only outcome of subpar education spending levels,” he said. “A more important and arguably more urgent challenge for government is to identify and to scale cost-effective education interventions that better translate resource inputs to desired education outcomes.” — Jenina P. Ibañez

Colliers expects real estate recovery next year

BW FILE PHOTO

Colliers Philippines expects a rebound for the country’s property market next year on the back of the country’s coronavirus disease 2019 (COVID-19) vaccination rate and improved consumer and business confidence, the real estate services firm said in a report on Monday.

“The Philippine property marketing is raring to roar back in 2022. In our view, office, residential, retail, and industrial sectors will benefit from a macroeconomic rebound,” Colliers Philippines Associate Director Joey Roi H. Bondoc said in the report.

“Landlords should prepare to capture pent-up demand, while tenants and investors should maximize opportunities as the market is on its way to recovery,” he said.

For the office market, Colliers expects the rebound to be supported by the country’s continued COVID-19 vaccination program. It also noted that some companies continued to look for office spaces despite work-from-home arrangements.

In 2022, Colliers expects new office supply to reach 723,400 square meters (sq.m.). It also expects “heightened preference” for sustainable office buildings, with features that allow its spaces to have natural lighting and optimized air quality.

For the residential market, Colliers anticipates increased interest in the northern-central part of Luzon thanks to the upcoming completion of major infrastructure projects and new township projects of property developers.

“Colliers also believes that Bulacan will most likely be an attractive residential investment destination as it will benefit from major infrastructure projects,” the real estate services firm said, citing the completion of the New Manila International Airport and MRT-7.

Meanwhile, Colliers expects consumers to continue shopping online beyond the pandemic and recommends retailers to design stores and spaces that would allow for flexible use, such as hosting COVID-19 vaccination sites, using spaces for pop-up stores, and having alternative dining options for shoppers.

Colliers expects retail vacancy to rise to 17% as 523,700 sq.m. of new retail spaces are completed next year, and as demand remains muted due to changing pandemic restrictions.

“Colliers expects rents to recover slowly starting 2022 with an improved vaccination program and a government-projected economic recovery spurring an increase in consumer spending,” it said.

Meanwhile, Colliers noted that the Department of Tourism is expecting domestic trips to reach 84.8 million next year. The real estate services firm expects hotel demand to be spurred by local travelers, while “slow recovery” with foreign tourists is anticipated to begin in 2023.

On the other hand, the growth of the industrial property sector will be supported by the growing e-commerce market, logistics sector, and manufacturing sectors.

Colliers recommends developers to look into expanding via cold chain facilities as demand is expected to be maintained for the next three years.

Colliers said renovating existing warehouse facilities can help firms maximize opportunities seen for the upcoming year.

“We encourage developers to utilize advanced-technology such as facility automation, artificial intelligence (AI) systems, and cloud- managed IT solutions,” it said. — Keren Concepcion G. Valmonte

The sound of Christmas

The Philippines is at No. 6 among countries with the most Christmas music streams on Spotify

CHRISTMAS tunes are very popular in the Philippines according to Spotify’s 2021 Holiday Music Listening Trends list, taking the 6th spot among countries with most Christmas songs played across the globe. The Philippines had over 216 mil-lion plays of holiday songs.

Using data gathered between Nov. 1 and Dec. 9, Spotify found that the most-streamed Christmas song on Spotify in the Philippines was “All I Want for Christmas Is You” by Mariah Carey which recently hit 1 billion streams on the platform and is also the most popular Christmas song around the globe. In the Philippines, this was followed by “Santa Tell Me” by Ariana Grande, “Christmas in Our Hearts” by Jose Mari Chan, “It’s Beginning to Look a Lot like Christmas” by Michael Bublé (which is No. 3 worldwide), and “Last Christmas” by Wham!.

For more holiday music, listeners can check out Spotify’s Paskong Pinoy and Maligayang Pasko! playlists. . — MAPS

GLOBAL MARKETS WITH MOST CHRISTMAS SONGS PLAYED

1. USA
2. Germany
3. United Kingdom
4. Canada
5. Sweden
6. Philippines
7. Netherlands
8. Mexico
9. Australia
10. Norway

MOST-STREAMED CHRISTMAS SONGS ON SPOTIFY THIS SEASON
(NOV. 1 TO DEC. 9)
  Philippines

1. “All I Want for Christmas Is You” by Mariah Carey
2. “Santa Tell Me” by Ariana Grande
3. “Christmas in Our Hearts” by Jose Mari Chan
4. “It’s Beginning to Look a Lot like Christmas” by Michael Bublé
5. “Last Christmas” by Wham!

  Global

1. “All I Want For Christmas Is You” by Mariah Carey
2. “Last Christmas” by Wham!
3. “It’s Beginning to Look a Lot Like Christmas” by Michael Bublé
4. “Jingle Bell Rock” by Bobby Helms
5. “Rockin’ Around the Christmas Tree” by Brenda Lee

POPULAR NEWER HOLIDAY HITS
(the most-streamed Christmas songs on Spotify released within the past five years)

1 “Snowman” by Sia
2. “White Christmas” by Amy Grant
3. “Santa’s Coming for Us” by Sia
4. “Hallelujah” by Pentatonix
5.“Merry Christmas” by Ed Sheeran, Elton John

MOST-STREAMED CHRISTMAS SONGS OF ALL TIME ON SPOTIFY GLOBALLY

1. “All I Want For Christmas Is You” by Mariah Carey
2. “Last Christmas” by Wham!
3. “Santa Tell Me” by Ariana Grande
4. “It’s Beginning to Look a Lot Like Christmas” by Michael Bublé
5.“Rockin’ Around the Christmas Tree” by Brenda Lee

MOST-REPEATED CHRISTMAS SONGS ON SPOTIFY IN THE PHILIPPINES

1. “All I Want for Christmas Is You” by Mariah Carey
2. “Santa Tell Me” by Ariana Grande
3. “Last Christmas” by Wham!
4. “Snowman” by Sia
5.“Mistletoe” by Justin Bieber

Telco DITO ending 2021 with over P2-billion revenue — Tamano

By Arjay L. Balinbin, Senior Reporter

DITO Telecommunity Corp. announced on Monday that it had generated P2 billion in revenue as of Dec. 18, and that it expects to reach up to P2.3 billion by the end of the year.

“We already have that as of Dec. 18; we already reached our P2-billion revenue mark,”  DITO Telecommunity Chief Administrative Officer Adel A. Tamano said during a virtual briefing.

“For next year, our ambitions are much bigger,” he noted. “I am not allowed to say that because we are still working on our budgets and our plans for next year.”

DITO Telecommunity has already built more than 4,000 cell towers, the company said, up from 1,300 towers it ​reported in February this year. The telco, which began commercial operations in March this year, said in July that it was targeting to complete 4,500 cell towers by December as part of its nationwide expansion.

“Coupled with that is our milestone of achieving the 22,000 kilometers of fiber-optic cable,” DITO Telecommunity Chief Technology Officer Rodolfo D. Santiago said at the same briefing.

DITO Telecommunity now has more than five million subscribers in more than 500 areas, according to Mr. Tamano.

The company reached 52.75% of the national population in the second technical audit results released by the National Telecommunications Commission (NTC) recently. Its average broadband speeds were at 89.13 megabits per second (Mbps) for fourth-generation (4G) network and 853.96 Mbps for 5G.

DITO Telecommunity has committed to cover 51.01% of the national population and render a minimum average broadband speed of 55 Mbps in its second year of operations.

If it fails, the government must recall the Certificate of Public Convenience and Necessity and frequencies awarded to it and keep its performance bond of P25 billion.

In its first technical audit earlier this year, the NTC declared DITO Telecommunity compliant with its requirement to cover 37.03% of the country’s population and provide a minimum average broadband speed of 27 Mbps in its first year of service. R.G. Manabat & Co. conducted the technical audit.

The third telco player’s listed parent company, DITO CME Holdings Corp., is set to conduct an P8-billion stock rights offering. The rights offer period will begin at 9 a.m. on Dec. 27 and conclude at 12 p.m. on Jan. 18. The price per share has been set at P4.88.

“The proceeds from the offer will be contributed by the company as additional capital into DITO Telecommunity to support a successful commercial rollout and for general corporate purposes,” DITO CME said in a disclosure to the stock exchange on Friday last week.

DITO CME shares closed 4.78% lower at P5.18 apiece on Monday.

Figaro Coffee Group ‘cautiously optimistic’ on growth plans

FIGARO.PH

By Keren Concepcion G. Valmonte, Reporter 

Figaro Coffee Group, Inc. is “cautiously optimistic” about its growth plans as it prepares for a P1.77-billion initial public offering (IPO) in January.

“We’re targeting about 150 system-wide stores across all our brands by the end of next year — that’s the target, that’s our goal. We’re working towards it, but we are cautiously optimistic,” Figaro Chairman and Director Justin T. Liu told BusinessWorld in a virtual call on Monday.

“We are closely monitoring the pandemic situation, the Omicron variant, how the government will be responding, we’re also monitoring the consumer confidence,” he said.

The company is behind food brands such as Figaro Coffee, Angel’s Pizza, TFG Express, and Tien Ma’s Taiwanese Cuisine.

Figaro will be offering to the public 1.26 billion primary shares for up to P1.28 apiece, with an overallotment option comprising 126 million common shares.

The company will put a price tag on its IPO shares this Wednesday, Dec. 22.

Figaro deferred the timetable of its IPO, with an offer period now expected to run from Jan. 10 to 14. Meanwhile, it will list on the main board of the Philippine Stock Exchange on Jan. 24, 2022, instead of a New Year’s Eve debut.

Mr. Liu said the company is “not very worried” that market sentiment on recent public offerings might spill over to its own. The company expects its IPO “to be successful either way.”

“We see that the market understands our growth story and the prospectus shows the excellent performance and I’m sure a lot of people are familiar with our products, so we basically trust that the market will price it in the right manner,” Mr. Liu said.

Figaro plans to use net proceeds from the P1.77-billion IPO to put up new stores and renovate existing branches, commissary expansion, debt repayment, information technology infrastructure developments, as well as for potential acquisitions.

The company aims to open 35 new Angel’s Pizza stores within the next three years, more than the planned 18 TFG Express kiosks, six new Figaro Coffee shops, and two Tien Ma’s Taiwanese Cuisine restaurants combined.

“Angel’s Pizza really is our growth driver and the growth of Angel’s Pizza was accelerated during the pandemic because of lockdowns,” Mr. Liu said, adding that the brand benefited from its availability through delivery services.

He added: “The major factor for choosing to allot more capital to Angel’s [Pizza] really is the market demand. We see a lot of our customers [always] clamoring for us to open in their hometowns or where they live so we took this into consideration.”

Figaro launched 12 new Angel’s Pizza stores this year. The company aims to put up more stores in Metro Manila, as well as nearby provinces like Laguna, Bulacan, Cavite, and “potentially” major cities like Cebu.

Mr. Liu said the company also took into consideration the effects of the pandemic on dine-in businesses, noting that “coffee shops were really affected” because of restrictions.

Meanwhile, the TFG Express kiosks are “a play on the cloud kitchen model” located in gasoline stations. The current five outlets serve the best products from all of Figaro’s food brands.

“It costs lower to put one of those stores up and we can quickly ramp up the location base for delivery, which is connected to Grab Food so we’re able to play on the take out and also the delivery with multi-brands,” Mr. Liu said.

Figaro plans to work on its “future growth prospects,” with Mr. Liu noting that the company’s business model has been effective and resilient “whether in a pandemic or pre-pandemic times.”

One of Figaro’s advantages is having diversified sales channels, he said. The group has dine-in services, take-out and delivery systems, as well as streamlined e-commerce and logistics channels.

“Through this IPO we look to cement our brands and our company in the Philippine [food and beverage industry] for many more years to come,” Mr. Liu said.

PSE reclassifies 11 firms to new sectors, subsectors

BW FILE PHOTO

The Philippine Stock Exchange (PSE) will reclassify 11 listed firms to new sectors and subsectors by next week, Dec. 27.

In a circular published on Monday, the local bourse said the reclassification “is in consideration of corporate developments disclosed to the exchange as well as the result of a review of the companies’ financial statements for the years 2018 to 2020 and the latest quarterly report for 2021.”

The PSE’s Sector Classification Guide provides that a company will be put under a sector and subsector that is closely related to at least 60% or more of its revenue-maker.

AyalaLand Logistics Holdings, Corp. (ALLHC) will be under Property from Holding Firms.

“Accordingly, ALLHC shall become a constituent of the Property index from the Holding Firms index,” the PSE said.

Berjaya Philippines, Inc. will be classified under Retail of the Services sector, coming from Casinos & Gaming. Meanwhile, Belle Corp. will be moved to the Services sector under Casinos & Gaming from Property.

Villar-led Golden MV Holdings, Inc. will be classified under the Property sector from Services. Jolliville Holdings Corp. will be classified under the Electricity, Energy, Power, & Water of the Industrial sector, instead of under Holding Firms.

The Keepers Holdings, Inc. will be moving to the Food, Beverage, & Tobacco subsector of Industrial, after being under the Construction, Infrastructure, & Allied Services subsector.

MJC Investments Corp. will be reclassified to Casinos & Gaming under the Services sector, after having been under the Holding Firms sector.

Omico Corp. will be moved to Property from Mining & Oil under the Mining subsector.

Synergy Grid & Development Phils, Inc. will be under the Electricity, Energy Power & Water subsector of Industrial, while SOCResources, Inc. will be reclassified to Property. Both firms were previously part of the Holding Firms sector.

Meanwhile, PhilWeb Corp. will remain with the Services sector under the Casinos & Gaming subsector, instead of Information Technology. — Keren Concepcion G. Valmonte