Cebuana Lhuillier aims to expand network, services

August 18, 2022 | 12:01 am

cebuana-CL-PP-Auth-Agents — BW FILE PHOTO

CEBUANA LHUILLIER plans to strengthen and expand its business in the country by offering products and increasing its branches in provinces to bring financial services to the underbanked and unbanked.

“We already have more than 3,000 branches across the archipelago, with 500 branches due to open before the year ends. On top of these branches, we have a network of 25,000 domestic partners nationwide and 1.7 million international partner doors for our money transfers business,” Cebuana Lhuillier Integrated Marketing and Communications Group Head Emirosco “Michael” R. Sena said in an interview with BusinessWorld last week.

“This expansion to more than 3,000 branches is based on market need, targeting areas where immediate cash solutions are needed,” he added.

Mr. Sena said the limited availability of locations, especially in rural areas, remains a challenge in the pawnshop chain’s current network expansion.

He said even as a lot of transactions have shifted online, their clients still want to go to physical branches.

“Our experience in the last three years proved that the ‘next normal’ is not purely online, because the reality is, here in the Philippines, many rural communities are still dependent on the physical branches in doing their transactions,” Mr. Sena said.

“What we’re doing in ensuring that our products and services are easily available through online platforms while also making sure that we have a strong network of physical branches that will complement and complete the online-offline journey in transactions,” he said.

This strategy of using both online and offline platforms or technology and brick-and-mortar stores to deliver its services is called “TechBrick” by Cebuana Lhuillier President and CEO Jean Henri Lhuillier, the company said in a statement on Wednesday.

“Cebuana Lhuillier’s core mission is to break the barriers in finance through effective financial solution offerings. Our TechBrick strategy allows us to make our products and services available on demand, while optimizing our robust network reach in over 3,000 branches in the country,” Mr. Lhuillier said.

The company developed the Cebuana Xpress app for pawning transactions, the Quikz mobile remittance app, and the eCebuana app, which gives customers access to banking services within the Cebuana Lhuillier ecosystem.

It has also made its microinsurance products available online via ProtectNow, a web-based e-commerce platform.

Mr. Sena noted in the interview that the market has become homogenous since the coronavirus pandemic as there is no single brand that captures the market.

“Rather, transactions now flow from one channel to another, from one provider to another,” Mr. Sena said.

EXPANDED PRODUCTS
The official said Cebuana Lhuillier also plans to expand its microinsurance business to add more lifestyle products, including life, health insurance, and pet insurance, among others.

The company is also working on expanded access to purchasing jewelry, pushing for jewelry as a form of micro-investment, Mr. Sena said.

“In essence, what we’re trying to do is open a complete portfolio of products and services that will complement every Filipino’s financial inclusion journey, from loans to microinsurance, from money transfers to saving and even microinvestments (jewelry selling), eventually encouraging each and every one of our kababayans to save and invest for their future,” he added.

He noted that the pawnbroking industry has evolved through the years. Pawnshops such as Cebuana Lhuillier now offer micro financial services such as remittances and bills payment and also serve as cash agents.

“Pawnshops also became financial touch points for the Filipino masses, for small businesses, and even an access point for government amelioration programs. This became more evident during the pandemic where Filipinos flocked to pawnshops for quick access to cash,” Mr. Sena said.

“As the business evolved through the years, what remained consistent was our mission of financial inclusion for every Filipino. It is this mission that serves at the core of the many innovations introduced by Cebuana Lhuillier through the years, as we strive to provide access to essential financial services to the Filipino masses anytime, anywhere,” he added. — Keisha B. Ta-asan

Apple suppliers to make Apple Watch, MacBook in Vietnam — Nikkei

August 18, 2022 | 12:01 am

APPLE, INC.’s suppliers are in talks to produce Apple Watch and MacBook in Vietnam for the first time, Nikkei Asia reported on Tuesday, citing people familiar with the matter.

Apple’s Chinese suppliers Luxshare Precision Industry and iPhone assembler Foxconn have started test production of Apple Watch and MacBook in Northern Vietnam, the report added.

Apple has been shifting some areas of iPhone production from China to other markets, including India, where it started manufacturing iPhone 13 this year, and is also planning to assemble iPad tablets.

India, the world’s second-biggest smartphone market, along with countries such as Mexico and Vietnam are becoming increasingly important to contract manufacturers supplying American brands, as they try to diversify production away from China.

Apple, Foxconn and Luxshare Precision did not immediately respond to a Reuters request for comment.

Last week, Taiwanese contract manufacturer Foxconn gave a cautious outlook for the current quarter after posting results that exceeded expectations, citing slowing smartphone demand after a pandemic-fueled boom.

Like other global manufacturers, Foxconn — formally called Hon Hai Precision Industry Co. Ltd. — has dealt with a severe shortage of chips that hurt production, as bottlenecks from the pandemic lingered and the Russia-Ukraine war further strained logistical channels. — Reuters

Rich-poor income gap slightly narrowed in 2021

August 18, 2022 | 12:00 am

AROUND 2.3 million Filipinos have been plunged into poverty between 2018 and 2021, as the coronavirus pandemic left lasting scars on the Philippine economy, according to the Philippine Statistics Authority (PSA). Read the full story.

How PSEi member stocks performed — August 17, 2022

August 18, 2022 | 12:00 am

Here’s a quick glance at how PSEi stocks fared on Wednesday, August 17, 2022.

Peso weakens vs dollar ahead of Fed minutes, central bank meet

August 17, 2022 | 9:00 pm

THE PESO retreated versus the greenback on Wednesday as market players expect the US Federal Reserve to remain hawkish to keep rising prices under control.

The local unit closed at P55.86 per dollar on Wednesday, depreciating by three centavos from its P55.83 finish on Tuesday, based on data from the Bankers Association of the Philippines.

The peso opened Wednesday’s session steady from Tuesday’s close at P55.83 versus the dollar. Its weakest showing was at P55.91, while its intraday best was at P55.70 against the greenback.

Dollars exchanged dropped to $918.65 million on Wednesday from $1.02 billion on Tuesday.

“The peso weakened from hawkish expectations prior to the release of Fed policy minutes overnight,” a trader said in an e-mail.

Investors are betting on the US central bank to continue raising rates aggressively as inflation remains high.

The minutes of the Fed’s July review, where it hiked rates by 75 basis points (bps) for a second straight meeting, are expected to provide hints on the direction of policy rates in the world’s largest economy.

The Fed will hold its next meeting on Sept. 20-21. Fed funds futures traders are currently pricing in a 60% chance of a 50-bp increase and a 40% probability of a 75-bp hike.

It has raised rates by 225 bps since March.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message the local unit weakened due to market concerns over local sugar supply, which could affect food prices.

President Ferdinand R. Marcos, Jr. is looking into allowing food manufacturers to directly import sugar amid tight domestic supply and high prices.

For Thursday, the trader said the peso may recover against the dollar as the Bangko Sentral ng Pilipinas (BSP) is expected to deliver a rate hike of as much as 50 bps at its policy meeting.

The Monetary Board has raised rates by a total of 125 bps since May, including a 75-bp off-cycle hike last month, as it sought to keep rising inflation in check.

Headline inflation quickened to 6.4% in July, which was a near four-year high. This was also faster than the 6.1% in June and 3.7% a year ago.

For the first seven months, inflation averaged 4.7%, higher than the 4% seen in the same period in 2021 and the central bank’s 2-4% target for the year but lower than its 5% forecast.

For Thursday, both the trader and Mr. Ricafort expect the peso to move from P55.75 to P55.95 versus the dollar. — K.B. Ta-asan

Stocks drop on profit taking ahead of BSP review

August 17, 2022 | 9:00 pm

STOCKS declined on Wednesday as investors pocketed their gains from the market’s recent rally ahead of an expected rate hike by the Bangko Sentral ng Pilipinas (BSP).

The Philippine Stock Exchange index (PSEi) went down by 31.65 points or 0.46% to close at 6,818.99 on Wednesday, while the broader all shares index slipped by 5.20 points or 0.14% to 3,619.88.

Mercantile Securities Corp. Head Trader Jeff Radley C. See said the market declined due to profit taking.

“The PSE index has been bullish as foreign funds went into shopping spree for the past four days,” Mr. See said in a Viber message. “Investors are seeing good quarterly reports and inflation numbers are making a U-turn.”

“After seven consecutive days of gains, investors took some gains, bringing the local bourse to 6,818.99, down by 31.65 points or 0.46%,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message.

“The profit taking was also ahead of the interest rate decision of the Bangko Sentral ng Pilipinas,” she added.

The central bank is widely expected to raise its benchmark rates anew on Thursday, with most analysts forecasting a 50-basis-point (bp) increase as inflation remains elevated.

A BusinessWorld poll held last week showed 16 out of 18 analysts expect the BSP’s policy-setting Monetary Board to hike rates at its Aug. 18 meeting.

Headline inflation quickened to 6.4% in July, a near four-year high. This was also faster than the 6.1% in June and 3.7% a year ago.

For the first seven months, headline inflation averaged 4.7%, higher than the 4% seen in the same period in 2021 and the central bank’s 2-4% target for the year but lower than its 5% forecast.

The Monetary Board has raised rates by a total of 125 bps since May, including a 75-bp off-cycle hike last month.

The majority of sectoral indices ended in the red on Wednesday except for mining and oil, which went up by 157.02 points or 1.31% to 12,076.96; and holding firms, which climbed by 28.45 points or 0.42% to 6,668.19.

Meanwhile, industrials dropped by 88.26 points or 0.88% to 9,901.85; property went down by 24.19 points or 0.78% to 3,072.65; services declined by 12.88 points or 0.73% to 1,744.37; and financials lost 11.25 points or 0.69% to finish at 1,598.94.

Value turnover declined to P8.04 billion on Wednesday with 1.17 billion shares changing hands from the P8.89 billion with 967.13 million issues seen the previous trading day.

Advancers outnumbered decliners, 117 versus 94, while 34 names closed unchanged.

Net foreign buying declined to P857.07 million on Wednesday from P1.27 billion seen the previous trading day.

Philstocks’ Ms. Alviar placed the PSEi’s immediate support at 6,800 and resistance at the 7,000-7,100 range, while Mercantile Securities’ Mr. See put support at 6,400 to 6,600 and resistance at 6,900. — J.I.D. Tabile

Gov’t ‘working on’ sovereign rating upgrade, Diokno says

August 17, 2022 | 8:35 pm

THE Philippines’ credit rating is not expected to worsen, with officials presenting the case to the rating agencies for an upgrade because of the attainability of the country’s growth targets, the Department of Finance (DoF) said in a statement on Wednesday.

The DoF was quoting remarks delivered on Aug. 10 by Finance Secretary Benjamin E. Diokno in an appearance on a public affairs program.

“I think we are very confident that there will be no downgrades. In fact, it is notable that despite the two-year pandemic, the rating agencies have affirmed our investment-grade rating, and downgraded nearly one-third of the emerging economies and even some developed countries. We’re confident that we have presented a medium-term fiscal plan, as stated by the President, that is credible and doable. So, we don’t expect any downgrade within the next few years. In fact, we are working on an upgrade,” Mr. Diokno said.

Fitch Ratings in February maintained the Philippines’ investment-grade “BBB” rating, but retained a “negative” outlook, flagging uncertainties surrounding medium-term growth and hurdles to bringing down debt.

A negative outlook means a downgrade is possible within the next 12 to 18 months.

S&P Global Ratings last affirmed the Philippines’ “BBB+” rating with a stable outlook in May 2021. Meanwhile, Moody’s last affirmed its “Baa2” credit rating with a stable outlook for the Philippines in July 2020.

In July, the Marcos administration unveiled its medium-term fiscal strategy, with a target of 6.5-7.5% gross domestic product (GDP) growth this year, and 6.5-8% starting next year until 2028.

It also seeks to bring down the debt-to-GDP ratio to 61.8% by the end of 2022, from 62.1% at the end of the second quarter. The ratio is expected to drop to 61.3% by next year and 52.5% by 2028.

On Tuesday, National Treasurer Rosalia V. de Leon told the Senate Committee on Ways and Means that the debt load is sustainable and resilient to external shocks because 75% of the debt is expected to be sourced domestically by year’s end.

In the first half, domestic debt accounted for 69% of the total, with the Treasury hoping to raise the share to 80% for borrowing in the second half.

“Because of our conscious practice of stretching our maturities, our debt portfolio provides sufficient time to expand our revenue base and our economy before principal payments fall due,” Ms. De Leon said.

“Only 11.1% of our debt (has) variable interest-rate terms, minimizing our exposure to interest-rate resetting in light of the interest rate normalizations observed locally and abroad,” she added.

Ms. De Leon said the borrowing requirement was reduced to P2.2 trillion this year from P2.5 trillion last year, with the government also aiming to gradually reduce the fiscal deficit from 7.6% this year to 6.1% next year, then to 3% by 2028.

With GDP growth averaging 7.8% in the first half, the economy in the second half would need to grow by 5.2% to attain the lower end of the end-of-year growth target, according to economic managers.

While Mr. Diokno acknowledged inflation as a hindrance to growth, he said inflation has peaked at 6.4% in July, the fourth consecutive month it exceeded the central bank’s target.

“As you know oil prices have started to go down. So, we expect inflation to start to decelerate towards the end of the year. And in fact, we are confident that inflation will be within our target range of 2-4% next year,” Mr. Diokno said.

At the same time, Mr. Diokno expects the peso to stabilize to P55 or even stronger against the dollar by year’s end.

“As you know, there’s usually an influx of overseas Filipino remittances towards the fourth quarter. The peso has actually stabilized and, in fact, it’s strengthening, and so I bet it will be around P55 by the end of the year,” Mr. Diokno said. — Diego Gabriel C. Robles

House ways and means panel OK’s bill imposing VAT on digital transactions

August 17, 2022 | 8:34 pm

THE House Committee on Ways and Means said it approved a measure on first reading that would impose value-added tax (VAT) on digital transactions.

On Wednesday, the panel approved a substitute bill consolidating House Bills (HB) 372, 3253, and 3341.

If passed, the bill would subject to 12% VAT on the sale of digital services such as online advertisements, subscription services, and others that can be delivered through the internet.

The measure would add a new section in the National Internal Revenue Code of 1997 that would require foreign digital service providers to collect and remit VAT for all transactions.

“This measure seeks to level the playing field between traditional and digital businesses by clarifying the imposition on VAT on (digital service providers),” Albay Rep. Jose Ma. Clemente S. Salceda, who chairs the House Ways and Means Committee, said in HB 372’s explanatory note.

A similar bill, HB 7425, was approved on third reading in the House during the 18^thCongress but was not passed by the Senate. — Matthew Carl L. Montecillo

Bill on ease of paying taxes hurdles House committee

August 17, 2022 | 8:34 pm

BIR-taxpayers — PHILIPPINE STAR/ RUSSELL A. PALMA

A MEASURE seeking to ease the process of paying taxes has been passed at the House Committee on Ways and Means.

At a hearing on Wednesday, the committee approved a substitute bill consolidating House Bills (HB) 53 and 2823.

The measure hopes to modernize tax administration as a means of improving taxpayer compliance, specifically by simplifying the process of filing tax returns on the part of small taxpayers.

If passed, the bill will also remove the P500 annual taxpayer registration fee, introduce a medium-sized taxpayer classification, and remove the distinction between sales invoices and official receipts for purposes of recognizing VAT transactions.

“The bill aims to simplify tax filing and payment, and address burdensome tax compliance which affects our small and medium enterprises and turns off our investors,” the committee’s chairman, Albay Rep. Jose Ma. Clemente S. Salceda, said in a statement on Viber.

A similar bill, HB 8942 or the Ease of Paying Taxes Act, was approved on third reading at the House during the 18^th Congress. — Matthew Carl L. Montecillo

Port passenger volume up 144% in first half; cargo down

August 17, 2022 | 8:34 pm

THE Philippine Ports Authority (PPA) said on Wednesday that passengers using its facilities in the first half rose by 144% with the resumption of domestic tourism, trade, and regular travel activity.

Passenger volume for the first half of 2022 rose to 26.053 million, from 10.692 million a year earlier, a PPA representative said in a phone message to BusinessWorld.

The agency said cargo throughput for the first half fell by 1.46% year on year to 125.485 million metric tons.

“Export volume posted the most significant decrease of 14.4%, dragging down foreign cargo volume by 5.5%,” the agency noted.

“In terms of containerized cargo traffic, a 2.66% hike was recorded to 3.733 million twenty-foot equivalent units (TEUs), anchored on the 6.14% increase posted by imported boxed cargoes,” it added.

The PPA said domestic box volume fell by 1.83% to 1.413 million TEUs.

“The agency continues to rebound from the effects of the global pandemic as net income increased by 9% in the first six months of the year,” it also said.

Net income for the period rose to P5.024 billion from P4.611 billion a year earlier.

“Against the target of P4.056 billion, the actual figure is 24% higher,” the PPA said.

“The agency’s net income is now only 13% down compared to the pre-pandemic figure. PPA’s net income declined by as much as 50% during the onslaught of COVID-19 in 2020,” it added.

Revenue rose by 14.28% year on year to P9.438 billion in the first half.

Expenses rose by 14% to P4.413 billion, it said. — Arjay L. Balinbin

‘High-risk’ warning prompts DoT to tout safety measures at destinations

August 17, 2022 | 8:33 pm

THE Department of Tourism (DoT) said health protocols remain in force at all destinations after the Philippines was classified as a “high-risk” country for the coronavirus by the US Centers for Disease Control and Prevention (CDC).

“The global pandemic continues to expose the tourism industry to challenges, but our travelers can rest assured that the Philippine government continues to ensure that minimum public health and safety standards are in place, coupled with the precautionary measures observed by our partners from the private and public sectors,” Tourism Secretary Maria Esperanza Christina G. Frasco said in a statement.

“Therefore, our guests can safely enjoy any of our 7,641 islands even in the time of the COVID-19 pandemic. We are confident of the measures and guidelines that we have instituted to strike a balance between safety and travel in the new normal,” she added.

The CDC warning applies to countries with more than 100 infections per 100,000 population in the past 28 days.

Citing a bulletin from the Health department, the DoT said that the Philippines has a 92.3% vaccination rate, equivalent to over 72 million fully vaccinated Filipinos as of Aug. 14.

It added that the bulletin indicates that intensive care unit (ICU) bed space was 28% utilized (719 of 2,571) while the corresponding utilization was 30.9% (6,781 of 21,968) for non-ICU beds.

Health department Officer-in-Charge Maria Rosario S. Vergeire has said that the Philippines is currently assigning more weight to the hospital bed utilization rate rather than new coronavirus disease 2019 (COVID-19) cases.

“There is also a stark difference between the COVID-19 positivity rate of the Philippines which is now averaging at 4,001 daily compared to that of US which recorded 13,609 new cases in the last 24 hours (Aug. 16, 7:20 PM Philippine time) according to the World Health Global Organization (WHO) website,” the DoT said.

Ms. Frasco said that the Philippines cannot continue to allow COVID-19 to disrupt travel.

“So much has been lost to this pandemic. We need to revise our perspective and learn how to live with this virus in a manner that is reasonable, rational, as well as responsible (in terms of following) health protocols, so not only lives, but livelihoods of people dependent on tourism may be saved in the process,” Ms. Frasco said. — Revin Mikhael D. Ochave

LANDBANK allocates P5.8B for agri climate resilience lending

August 17, 2022 | 8:33 pm

THE Land Bank of the Philippines (LANDBANK) said on Wednesday that it is allocating P5.8 billion to support climate resilience projects in agriculture.

“LANDBANK supports investment in innovative technology that will help address climate change risks in the agriculture sector. This modernization is aimed towards improving the production and income of our local farmers while ensuring national food security amid the changing global climate,” LANDBANK President and Chief Executive Cecilia C. Borromeo said.

The state-run bank intends to finance farming technology, systems, facilities and equipment that will help farms and fisheries become more adaptive and resilient to the effects of climate change, such as severe storms and prolonged drought.

“The program can finance crop, livestock, and fishery projects that utilize climate-resilient technologies, such as the adoption of planting materials and seedling techniques for climate-resistant food crops, pipe irrigation that helps prevent water loss during dry season, and climate-adaptive farming systems such as terracing,” LANDBANK said.

“Modern facilities and equipment that minimize harvest and post-harvest losses during typhoons can also be financed under the program, including rice harvesters, dryers and outdoor grain storage facilities,” it added.

The bank said it can provide credit for working capital and the construction of facilities such as greenhouses, reservoirs, rainwater collecting systems, and farm-to-market roads with drainage, and other new and emerging technologies approved and endorsed by the Department of Agriculture.

Cooperatives, associations, and private borrowers categorized as single proprietorships, partnerships, or corporations may borrow up to 80% of the total project cost.

Local government units may borrow not more than their net borrowing capacity as certified by the Bureau of Local Government Finance.

“Term loans for working capital and permanent working capital are payable up to one year and three years, respectively, while loans for fixed assets and construction of facilities are payable based on cash flow but not more than its economic useful life. Interest rates shall be based on the prevailing market rate,” it added. — Luisa Maria Jacinta C. Jocson