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Q3 GDP growth likely slowed — poll

PHILIPPINE STAR/ MICHAEL VARCAS
The Philippine Statistics Authority is scheduled to release third-quarter economic data on Nov. 9. — PHILIPPINE STAR/ MICHAEL VARCAS

By Jenina P. Ibañez, Senior Reporter

ECONOMIC GROWTH likely slowed in the third quarter after lockdowns were reimposed in August to curb a surge in coronavirus infections, economists said.

The country’s low vaccination rate and inflationary pressures could continue to weigh on recovery for the rest of the year, they added.

A BusinessWorld poll of 18 analysts yielded a gross domestic product (GDP) growth median estimate of 4.7% for the July to September period, much slower than 11.8% in the second quarter but a turnaround from the 11.4% contraction a year earlier.

Growth in the second quarter this year signaled the country’s exit from recession after five straight quarters of decline.

If realized, the third-quarter GDP estimate would bring economic growth this year to an average of 4% in the first nine months, settling at the lower end of the government’s reduced GDP target of 4-5% for the year.

The Philippine Statistics Authority is scheduled to release third-quarter economic data on Nov. 9.

The government once again placed Metro Manila under a stricter enhanced community quarantine (ECQ) for two weeks in August as coronavirus disease 2019 (COVID-19) cases soared.

Analysts expect third-quarter growth to have slowed compared with the previous three months, although at different extents.

Rajiv Biswas, chief economist for Asia and the Pacific at IHS Markit, said third-quarter GDP growth could have slowed to 3.5%.

“The imposition of enhanced community quarantine measures in August and September in Metro Manila disrupted consumption spending and also impacted adversely on many segments of industrial production,” he said in an e-mail.

University of the Philippines economist Jefferson A. Arapoc said the country’s GDP likely grew by 4.8%, which he said came from a very low base a year ago.

“This positive growth isn’t that impressive given the worst recession we experienced last year,” he said in an e-mail.

Makoto Tsuchiya, an economist from Oxford Economics, said in an e-mail that the elevated inflation and mobility restrictions have dampened consumer spending.

“Higher inflation is also weighing on consumer’s real purchasing power leaving less to spend on nondiscretionary income,” he said.

Meanwhile, Colegio de San Juan de Letran Graduate School Dean Emmanuel J. Lopez said in an e-mail he expected third-quarter GDP growth at 8% as the economy has “started to take off under the new normal.”

“The economy is operating almost under full capacity. The economy has its hands full to satisfy a normal operation as proven by the increase in the country’s inflation rate approximating the government inflation target of 2-5%,” he said.

Lockdown restrictions were gradually loosened in September, allowing more businesses to operate although at a limited capacity.

Inflation in August was 4.9%, the fastest recorded in 32 months as food and utility prices soared during the strict lockdown. The consumer price index slightly eased to 4.8% in September.

Analysts expect economic growth to improve as most businesses restart activities ahead of the holidays, but low vaccination rates may prove to be a risk.

More mobility for fully vaccinated individuals will help improve domestic consumption, Moody’s Analytics Associate Economist Sonia Zhu said in an e-mail.

“However, a huge proportion of household savings lost during the pandemic will weigh heavily on private consumption in the near term,” she said.

“Headline inflation needs a close watch. The risk of elevated price growth becoming more entrenched has increased amid a global energy crisis and supply-side disruptions. There is a possibility that (the Bangko Sentral ng Pilipinas) may be forced to tighten monetary policy settings earlier to anchor expectation if inflation does not cool.”

Oxford Economics’ Mr. Tsuchiya said momentum could pick up in the fourth quarter as COVID-19 cases continue to decline, but he said full-year GDP could still grow at 3.4%, falling short of the government target.

“Looking further ahead, the gradual loosening in restrictions bodes well for domestic recovery, but a low vaccination rate means the country remains vulnerable to COVID-related setbacks and the recovery path will be bumpy,” he said.

ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in an e-mail the widening trade gap could also cap overall GDP as exports and remittances are unable to keep the current account in surplus.

The trade gap in the nine months to September widened to $29.19 billion from $17.95 billion a year earlier, data from the Philippine Statistics Authority showed.

“Unlike in previous episodes, the stark ballooning of the trade deficit in 2021 is not solely driven by a sustained surge in capital goods designed to build future capacity,” Mr. Mapa said.

“The 2021-2022 episode shows a modest pickup in capital goods but also a bloated energy and commodities bill due to higher global costs. These developments alongside a possible global slowdown due to higher inflation and hawkish central banks, the timeline just to get back to where we were before COVID may just have to be extended further.”

Analysts’ Q3 2021 GDP growth estimates

House to tackle fuel tax as it resumes sessions

PHILIPPINE STAR/ MICHAEL VARCAS

THE HOUSE of Representatives will tackle measures seeking to either suspend or lower the excise tax on oil when sessions resume on Monday.

“Congress would like to be informed of how fuel prices have shot up so fast in a matter of weeks, so that we can possibly come up with measures that will help mitigate this emerging obstacle towards our recuperation,” Speaker Lord Allan Jay Q. Velasco said in a statement.

The House Ways and Means Committee will begin hearings on the bills proposing to reduce or suspend excise tax on fuel products.

Albay Rep. Jose Ma. Clemente S. Salceda, who heads the committee, filed a bill that seeks to exempt diesel and kerosene from excise tax, and reduce the excise tax on gasoline to P7 per liter (/L) from P10/L from Dec. 1, 2021 to June 1, 2022.

Deputy Speaker and Cagayan de Oro Rep. Rufus B. Rodriguez also filed a bill that would roll back the excise tax on fuel products for the next five years to the rates provided under the National Internal Revenue Code before it was amended. This would lower the excise tax on regular gasoline to P4.35/L and unleaded to P5.35/L, while no excise taxes will be imposed on diesel, kerosene, and liquefied petroleum gas.

“As we prepare for the wider reopening of businesses, we must ensure that our economic recovery will not be hampered by unwelcome disruptions, such as the unimpeded sharp rise in the cost of fuel,” Mr. Velasco said.

Business groups on Friday asked politicians to reconsider their request to suspend oil and electricity taxes, and instead provide targeted relief measures for transport workers such as subsidies and cash transfers.

“For example, on the oil tax, public utility vehicles (PUV) account for only around 30% of total diesel consumption. Therefore, most of the benefits of a blanket suspension would go to people who don’t operate or use PUVs, as well as other oil consumers. These are funds that the government could and should use on public services that would most benefit lower income and vulnerable Filipinos,” according to the statement.

The statement was signed by eight groups, including the Financial Executives Institute of the Philippines, Makati Business Club and Philippine Chamber of Commerce and Industry.

Energy Secretary Alfonso G. Cusi earlier suggested the suspension of excise taxes on oil, as pump prices continued to soar. If implemented, Mr. Cusi said removing excise taxes might reduce pump prices by P8 to P10 per liter.

However, the Department of Finance warned that the suspension of excise tax would force the government to forego as much as P131.4 billion in revenue next year, possibly hindering economic recovery.

Meanwhile, Mr. Velasco said the House would prioritize the ratification of the proposed 2022 national budget as soon as the Senate passes its own version.

Senate leaders earlier said they aim to pass the budget bill by end-November.

“With such assurance from the Senate leadership, we do not see any major stumbling block in having a ratified and enacted 2022 national budget by December,” the Speaker said.

The House passed House Bill 10153 or the General Appropriations Act on third and final reading on Sept. 30. It was transmitted to the Senate on Oct. 25.

Congress adjourns for the Christmas break on Dec. 18. It will hold sessions from Jan. 17-Feb. 4, before adjourning for the national elections. Sessions will resume on May 23, with sine die adjournment on June 4. — Russell Louis C. Ku

Finance chief Dominguez backs multilateral support for clean energy transition

SOLARPHILIPPINES.PH

FINANCE SECRETARY Carlos G. Dominguez III said financing from multilateral institutions is crucial to encourage private sector capital in clean energy transition projects in the Philippines. 

Vetting done by multilateral agencies boost investor confidence to participate in resource-intensive clean energy transition programs done by developing countries, Mr. Dominguez said at a high-level ministerial dialogue at the 26th United Nations Climate Change Conference in Glasgow last week.

“It is very important that these multilateral agencies actually begin the projects that will allow the private sector to take part, I believe, and give them confidence that these projects have been studied very well, have been vetted by the multilateral agencies,” he said.

Mr. Dominguez told the panel that the multilateral banks could set transparency standards.

He had proposed that climate financing be done through a three-point “blended approach” in the form of grants, investment, and subsidies to improve vulnerable communities’ ability to adapt to climate risks.

The Finance chief has been pushing for more climate financing from wealthy economies that have not offered enough to help developing nations reduce their carbon footprint.

Such countries bear the most responsibility for their historic emissions, he said in the lead-up to the conference.

The dialogue tackled the progress made by countries to come up with a financial system to support climate resilience. Representatives from the UK, Uruguay, the NatWest group, and the Organisation for Economic Cooperation and Development also joined the meeting.

The Philippines has committed to reduce greenhouse gas emissions by 75% from 2020 to 2030. Of the 75% target, just 2.71% can be achieved with internal resources, while the remaining 72.29% rests on international assistance.

The Asian Development Bank (ADB) has partnered with the Philippines and Indonesia to launch an energy transition mechanism (ETM) that aims to fund the early retirement of coal-run power plants and replace them with renewable energy alternatives.

Meanwhile, nongovernment organizations (NGOs) said the state should not bail out coal power plant developers and their financiers, at the expense of taxpayers.

In an e-mailed statement on Sunday, Center for Energy, Ecology and Development (CEED) Executive Director Gerry C. Arances said the ADB’S ETM “seems eager to bail out coal developers and their financiers — using resources that include public funds, to boot — even though many of them pursued projects aware of stranding risks and social, environmental, and climate destruction they would bring.”

Asian Peoples’ Movement on Debt and Development Coordinator Lidy B. Nacpil noted the ADB’s ETM proposes the closure of half of coal-fired power plants in Asia within 15 years, starting with the Philippines, Indonesia, and Vietnam.

“Such a scheme would most likely involve the use of public funds to bail out private corporations invested in coal projects,” Ms. Nacpil said in a separate statement. She noted this would likely involve more loans, adding to the country’s debt burden.

CEED’s Mr. Arances said there is also no assurance that consumers will not shoulder the costs of the bailout through additional charges.

“Coal companies should be made to shoulder their proper part in early closure expenses…on top of any penalties that those of them who incurred complaints or violations are required to pay,” he said.

Convenor of public policy think tank Infrawatch PH Terry L. Ridon in an e-mailed statement said the ADB program should also be used to fund the rehabilitation or expand renewable energy projects.

However, that without safeguards in place to determine what technologies will be selected for filling the gap in power generation, NGO Forum Energy Policy and Campaigns strategist Tanya Lee Roberts-Davis said “there is the risk of new large-scale dams, waste-to-energy incinerators, or expanded fossil gas infrastructure being built.”“All of which would have devastating impacts on fishing and farming dependent families across the country,” she added. — Jenina P. Ibañez and Bianca Angelica D. Añago

Voyager to seek fresh funding to continue growth — president

VOYAGER Innovations Inc., the digital arm of PLDT, Inc., will need additional funding to meet its growth requirements in 2022 and beyond, the company’s president said.

“We believe that for us to continue our growth, we need to be able to provide an end-to-end system… For us to be able to do that…, we need to invest, our shareholders including PLDT and Smart,” Voyager President Shailesh Baidwan said at a virtual briefing last week.

PLDT announced in June that Voyager had raised an additional $167 million (P8.15 billion) for the expansion of its financial technology unit PayMaya Philippines, Inc., including the establishment of a digital bank.

“[F]or our 2022 and beyond plans, we will be talking to our investors, and as part of that, we will decide on whether we want to keep it internal or get some other investors that would make sense for us to bring [in] as part of the mix. We will see our valuation at the next round when we get to it,” Mr. Baidwan, who is also the president of PayMaya, added.

Voyager’s shareholders include PLDT, global investment firm KKR, Chinese technology firm Tencent, and World Bank’s IFC Asset Management Company through its IFC Emerging Asia Fund and IFC Financial Growth Fund.

Manuel V. Pangilinan, chairman of PLDT, Voyager and PayMaya, said PayMaya “was valued at $747 million” in the last fund-raising exercise.

“[But] given the improvements…, the digital bank and with the gross transaction value increasing, I think our sense is that it’s about a billion US dollars,” he added.

“Of course, it’s subject to market test, but our sense is that we’ve probably achieved the unicorn status as we speak. It’s not quite at the level of Globe yet, but it’s about a billion US dollars.”

GCash operator Globe Fintech Innovations, Inc. (Mynt) announced on Nov. 2 that it raised over $300 million in fresh funding, bringing its valuation to more than $2 billion.

Mynt said GCash now has more than 48 million users, or nearly half of the national population. It aims to reach P3 trillion in gross transaction value this year, which would be three times more than the previous year’s record number.

For its part, PayMaya now has more than 41 million registered users across its consumer platforms, according to Mr. Baidwan.

He said PayMaya expects a 50% growth in gross transaction value by the end of 2021.

Orlando B. Vea, Voyager and PayMaya chief executive officer and founder, said in May that the digital payments company had processed P700-billion worth of transactions in 2020.

Meanwhile, the Bangko Sentral ng Pilipinas granted in September a digital banking license to PayMaya’s Maya Bank, which will be launched in the first quarter of 2022.

With the launch of Maya Bank and the expected higher gross transaction value, Mr. Pangilinan hopes that starting 2022, PayMaya’s valuation will be “higher.”

“I don’t think the market yet appreciates the impact of the increasing value of PayMaya onto the share price of PLDT,” he said.

For the first nine months, PLDT’s attributable net income declined 4.6% to P18.8 billion from P19.7 billion a year ago.

PLDT’s telco core income, which excludes the impact of asset sales and Voyager Innovations, climbed “10% year on year, or P2.1 billion, to P23.1 billion in the first nine months of 2021, helped by lower tax rates,” the company said in a statement.

PLDT shares closed 1.60% higher at P1,650 apiece on Friday.

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. — Arjay L. Balinbin

DITO CME plans to build ‘hyperscaler’ data center

By Arjay L. Balinbin, Senior Reporter

DITO CME Holdings Corp. is looking to put up a data center in Clark to service global technology companies, its president said.

“We have been in talks with about three foreign interested partners,” DITO CME President and Director Ernesto R. Alberto told BusinessWorld in a recent virtual interview.

“We are in continuing discussions with foreign partners that will allow us to look at a business model to tap into the hyperscalers, because this [will determine] the viability of [our] investment [to] lure these big locators to the country. These hyperscaler companies serve their customers across… Asia-Pacific and ASEAN,” he added.

He noted it is just a matter of “timing” for the company to move to the next level of its plan, considering the pandemic.

“When the opportunity arises, I think what we can bring to the table in any partnership is we have the real estate, we [also] have internally accomplished it particularly with the telco…, and we have the local expertise that will deliver that,” Mr. Alberto said.

Data center hubs in the region, particularly in Singapore and Hong Kong, are facing challenges. Hong Kong faces geopolitical risks as a result of China’s National Security Law, while Singapore has issued a moratorium to freeze data center construction due to sustainability concerns and landmass shortage.

“There is… opportunity, not only by telcos but also standalone technology companies that are moving away from Hong Kong because they have over-invested there, such as Google and Amazon — particularly US companies — for reasons we already know, and they are looking at the Philippines, amongst many other countries, for data center space. That’s under discussions today,” Mr. Alberto said.

“It’s a good opportunity. It’s just a matter of timing and capital. We do have land assets particularly in Clark, with Udenna Land, Inc. owning the new central business district,” he added.

DITO Telecommunity Corp. and Udenna Land broke ground in April this year on the new telco player’s first data center in Clark Global City, which is poised to become the central business district of North and Central Luzon.

DITO CME, which owns 54% of DITO Telecommunity, handles the Udenna group’s investments in media, communications, entertainment, and information technology. It has three digital companies: Unalytics, which provides managed analytics services; Acuity Global, which curates media properties across platforms and provides media planning and buying; and Luna Academy, an online education platform aimed at equipping users with future-ready skills, credentials, and certificates.

On Friday, DITO CME shares closed 1.19% lower at P6.62 apiece.

As more Pinoys turn to online shopping, exclusive deals pepper 11.11 sale

‘Mr. Christmas’ Jose Mari Chan is Shopee’s Christmas sale ambassador.

SHOPEE can vouch for the fact that e-commerce has seen a substantial boost over the past year, and with the 11.11 sale set for Thursday, another boost can be expected.

“This year, the e-commerce industry saw a 7.6% increase in conversion versus 2020,” Martin Yu, Director at Shopee Philippines, said during a press conference on Nov. 3, citing a global special report from We Are Social and Hootsuite.

“Heavier shopper traffic has been translating into a spike of checkouts, an encouraging sign of how consumers have responded to the online shopping experience,” he said.

During the press conference, Shopee presented the bargains that shoppers can grab on 11.11 and again on 12.12. They also presented a new commercial by actor Jackie Chan, as well as introduced their Christmas sale ambassador, Mr. Filipino Christmas himself, singer Jose Mari Chan.

New Shopee users get a free welcome package, bills cashback, free shipping, 100% off vouchers, and ₱1 deals with their first purchase.  Mr. Yu pointed to these gifts as proof of the increase of the impact of e-commerce with Filipino shoppers. “Five million welcome gifts for new Shopee users have been redeemed since the start of the year,” he said.

He added that during the 9.9 sales, one out of every three shoppers was new to the platform. He also reported that eight million new local shops opened on Shopee.

The number of sellers and brands on Shopee increased by 60% in 2021, “proving the importance of scaling up digitization.” On the consumer side, Mr. Yu said that 64% of Filipinos surveyed said that had bought something online during the past week. “They turn to online shopping for their daily essentials,” he said.

DEALS ONLINE AND IN-STORE
Shoppers can look forward to exclusive deals from top brands such as Xiaomi, POCO, realme, Samsung, Nokia, Vivo, DJI, PerySmith, Deerma, Coocaa Home, and Bata Philippines during Shopee’s 11.11 sale.

Brands also stand to generate more in-store traffic through promotions from ShopeePay. Users can turn to Deals Near Me to check for special in-store deals from brands such as Puregold, National Bookstore, Fully Booked, Power Mac Center, The Generics Pharmacy, Family Mart, Lawson, Olympic Village, Shoe Salon, Potato Corner, Mary Grace, Bonchon, Papa John’s, Siomai House, and Fruitas Group of Companies.

Users can enjoy a quick and easy holiday shopping experience with Shopee’s Christmas in our Carts gift guides. They can get discounts up to 90% off on a wide range of branded gifts and bundles, from the latest gadgets to luxurious personal care items. They can also check out Shopee Mall for 10% off Mall vouchers, special deals on holiday gifts, and vouchers from their favorite brands. Highlights include 1-for-1 Deals, Early Platform Voucher Hunt, and Mega Midnight Sale, the Big Shopee Mall Sale on Nov. 8, the Big Electronics Sale on Nov. 9, and the Big Vouchers Sale on Nov. 10.

The 11.11 Christmas Sale TV Special, airing on GMA 7 and Shopee Live on Nov. 11, at 9:30 p.m., will showcase K-Pop stars NCT 127, as well as celebrities Jessy Mendiola, Aira Bermudez, Rocco Nacino, Klea Pineda, Andre Paras, and Gil Cuerva. Viewers stand a chance to win prizes and giveaways worth over ₱12 million, including two new house and lots and a car.

For more information on brands dropping their prices and other Shopee deals, visit https://shopee.ph/m/christmas-sale. — JLG

Rates of Treasury bills, bonds may climb this week

BW FILE PHOTO

RATES of government securities could rise this week as yields at the secondary market climbed despite slower-than-expected inflation in October.

The Bureau of the Treasury (BTr) plans to raise P15 billion via the Treasury bills (T-bills) it will auction off on Monday, or P5 billion each in 91-, 182- and 364-day debt papers.

On Tuesday, the BTr will offer P35 billion in reissued 10-year Treasury bonds (T-bonds) with a remaining life of nine years and eight months.

Rates on the government debt to be auctioned off this week could track the slight climb in secondary market yields following the US Federal Reserve’s announcement of the start of the reduction of its $120-billion monthly asset purchases at $15 billion per month, despite inflation turning out lower than expected, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message over the weekend.

He said the three- to 10-year tenors posted the highest weekly rise, “reversing the previous week’s downward correction as the Fed finally announced details of the $15-billion tapering as widely expected, but an important signal for the market is the patient stance of the Fed before any rate hike, which supported market sentiment.”

Fed Chairman Jerome H. Powell last week said they could stay patient and keep rates low to support the economy as the job market remains weak.

Meanwhile, inflation eased to a three-month low in October amid a slower increase in food prices, the Philippine Statistics Authority reported on Friday.

Headline inflation settled at 4.6%, slower than the 4.9% median estimate of 21 analysts in a BusinessWorld poll.

The October figure was slower than the 4.8% in September, but faster than 2.5% a year earlier. Still, this was the third straight month inflation exceeded the 2-4% target of the Bangko Sentral ng Pilipinas (BSP) for the year. Inflation has topped the BSP target this year except in July.

This brought headline inflation for the first 10 months to 4.5%, faster than the 4.4% forecast by the central bank for the year.

On the other hand, a bond trader expects higher yields as the market awaits the results of this week’s auctions.

“The Fed taper and rates announcements were already priced in as it was well-communicated beforehand,” the trader said in a Viber message.

“What market is looking for now is how aggressive BTr will borrow in the coming auction after awarding the FXTN 5-77 at higher than forecast rates,” the trader said, referring to the last week’s auction where the government made a full P35-billion award of the reissued five-year papers even as its rate climbed. 

The bonds, which have a remaining life of four years and five months, fetched an average rate of 3.762% on Wednesday, up by 18.6 basis points (bps) from the 3.576% quoted for the tenor during the previous auction.

Tenders reached P46.65 billion, higher than the offer but lower than the P56.08 billion in bids fetched the last time these debt papers were auctioned off on Oct. 12, where the government made a full award.

At the secondary market on Friday, the 91- 182- and 364-day T-bills were quoted at 1.2164%, 1.4427% and 1.655%, respectively, while the 10-year bond ended at 4.9573%, based on the PHL Bloomberg Valuation Reference Rates published on the Philippine Dealing System’s website.

The government made a full award of the T-bills it auctioned off last week even as rates inched up ahead of the release of inflation data.

The BTr raised P15 billion as planned via the T-bills it auctioned off on Tuesday as the offer attracted P41.78 billion in bids, making it almost 2.8 times oversubscribed.

Broken down, the BTr borrowed P5 billion as planned via the 91-day T-bills from P13.08 billion in tenders. The three-month debt paper fetched an average rate of 1.13%, 1.1 bps higher than the 1.119% quoted in the previous auction.

It also raised the programmed P5 billion from the 182-day T-bills as the tenor attracted bids worth P14.94 billion. The average yield on the six-month debt stood at 1.395%, up 0.8 bp from 1.387%.

Lastly, the Treasury made a full P5-billion award of the 364-day securities as demand reached P13.76 billion. The one-year paper fetched an average rate of 1.613%, up by 0.7 bp from 1.606% previously.

Meanwhile, the last time the BTr auctioned off the reissued 10-year bonds on offer on Tuesday was Sept. 28, when it made a full P35-billion award from P73.59 billion in tenders.

The 10-year note fetched an average rate of 4.689% at that auction, higher than the 4.246% recorded in the previous offering and its 4% coupon rate.

The BTr plans to raise P200 billion from the domestic market in November, or P60 billion via weekly offers of T-bills and P140 billion from weekly T-bond auctions.

The government wants to borrow P3 trillion from local and external sources this year to help fund a budget deficit seen to hit 9.3% of the country’s gross domestic product. — Jenina P. Ibañez

BMW 520i Sport: Executive decision

PHOTO BY KAP MACEDA AGUILA

Keep calm and 5 on

IT’S HARD to argue against the BMW 5 as the quintessential executive sedan. In fact, perhaps the only thing missing from its cache of C-suite goodies is a clip-on tie. It’s an exaggeration, of course, but it’s accurate to say that the 5 is the de facto poster boy for corporate titans.

Sure, there are higher numbers in the BMW portfolio, but the 5 continues to be the more realistic, (and, really, more reasonably priced) aspiration for those who seek to convey that they’ve arrived. What also distinguishes this vehicle is that it does not call attention to itself, but rather commands it naturally without having to resort to bells and whistles.

The variant I got a chance to test was the 520i Sport, which now bears a discounted price of P3.49 million (from P4.29 million). Yes, that’s a whole lot of savings that you can even buy a reasonable mass market car with.

Underneath the hood of this 5 is a 2.0-liter BMW TwinTurbo four-banger serving up 184hp and 290Nm. It’s mated to a smooth-shifting eight-speed auto with Steptronic. Suffice it to say that there’s a lot of performance you can extract from this engine. Executives do need to overtake on demand, you see. There’s nary a sniff of turbo lag to be found. And for the times you get bogged down in traffic, the 5 can get downright miserly through an automatic start-stop system.

Whether you choose the driver’s seat (which methinks is the best seat in the house because, well, it’s a Bimmer) or any of the passenger spaces, there is ample room for your extremities and for collecting your thoughts and memories of the journey. If you’ve ever been cooped up in a claustrophobia-inducing, headroom-deficient ride, you know what I mean.

Aside from being spacious, the cabin of the 5 is tastefully appointed. While the piano black surfaces only too readily show dust and fingerprints, engineers and designers deserve style points for the legible, intuitive controls — which includes grippy dials for the AC. There’s also a laudable measure of restraint in how technology complements the driving experience and not overwhelms it. The so-called BMW Live Cockpit Plus allows access and control to key functions via the now familiar rotary controller, along with the touchscreen and/or voice control. And while there’s a learning curve to be surmounted, it’s a lot easier to hurdle compared to the previous system.

But I digress. Learning every single thing to customize and control to your liking is gratifying. For instance, you can choose from (count ‘em) 11 color schemes for the cabin lighting. Speaking of hues, the amber color the instrumentation takes at night is just signature BMW; it will bring tears to your eyes. And while the gauges and such are digital, they depict good-ol’-fashioned analog. Very tasteful, indeed.

The automatic (and very adequate) two-zone air-conditioning with extended contents should make short work of hottest of days. But just in case, there’s a nifty electric roller sunblind for the rear window, and mechanical roller sunblinds for the rear side windows. The driver and front passenger both benefit from electric seat adjustment — with a memory function for the driver. The system also gets Apple CarPlay, from where you can choose to blast music through the high-fidelity system.

A mix of highway and city driving (and remember that urban congestion is steadily going back to pre-pandemic levels) yielded at least eight kilometers per liter or better — not bad at all.

The Sport trim gets well-bolstered seats in Dakota leather, 19-inch V-spoke-type alloys with 245/40s in front and 275/35s in the back (all of which are also run-flats). Further good news (depending on your preference): the 5 still has the more normal interpretation of BMW’s kidney grille — unlike the polarizing “lungs” expected to creep into the lineup.

There’s a whole slew of safety features in the 5: air bags for the driver and front passenger (plus head and side bags), head air bags for the back, side impact protection, Isofix child seat mounting, anti-lock brakes, dynamic stability control, crash sensor, passive protection for pedestrians, automatic lock when driving away, and the aforementioned runflat tires with run-flat indicator.

On the outside, the BMW 520i Sport is fitted with LED headlamps, LED fog lights, park distance control in the front and rear, rear view camera, comfort access system, automated tailgate, and expanded exterior mirror package.

And because executives are also adept at sniffing out the best deals, BMW Philippines also features its now-standard five-year/200,000 warranty on the 5 Series.

So, if you’re ready for the effortless attention, and the trappings of success, then the 5 Series ought to be in your consideration set.

Medilines Distributors:  Growing, aging population drives healthcare growth

MEDICAL equipment distributor Medilines Distributors, Inc. is gearing up to grow as healthcare spending is expected to continue its upward trend, the company’s chairman said.

“We believe that there will always be demand for medical products, in as much as there will always be a patient needing care,” Medilines Distributors Chairman Virgilio B. Villar said in an e-mailed statement on Friday.

In a report by Ken Research, healthcare spending went up by a CAGR (compound annual growth rate) of 10.9% to P911.4 billion in 2020 from P489.1 billion in 2014. It is projected to grow by 11.2% to P1.5 trillion in 2025.

This takes into account the overall spending by the government as well as private healthcare units and household expenses.

“The growth of the healthcare sector is driven by a growing and aging population,” Medilines Distributors said, adding that the increase in incidences with non-communicable diseases and respiratory diseases in the country is also a factor.

Medillines Distributor is a distributor of medical equipment to private and public healthcare facilities across the country, offering products from brands such as Germany-based Siemens Healthineers for diagnostic imaging and B. Braun for dialysis equipment, as well as US-based Varian for cancer therapy equipment.

“Because of the alarming increase in Filipinos with serious diseases, there has been a huge demand for medical devices, particularly for the diagnosis and treatment of patients, thereby showcasing the promising growth prospects for the medical device industry in the Philippines,” the company said.

Medilines Distributors is preparing to go public with a P2-billion offer, selling as much as 825 million common shares for up to P2.45 apiece.

The company will offer up to 550 million common shares. The majority, or P743.1 million, of the proceeds will be used to repay debt, while the P541.5 million will be used for product procurement and to fund its plans to enter the medical consumables segment.

Medilines Distributors’ Mr. Villar will be offering as much as 275 million common shares, the proceeds of which will not be received by the company.

The company aims to conduct its offer period from Nov. 22 to Nov. 26, with a tentative listing date of Dec. 7 on the Philippine Stock Exchange. It will list under the ticker symbol “MEDIC.”

PSE President and Chief Executive Officer Ramon S. Monzon said previously the PSE is “pleased to see a company in this space tap the stock market for capital raising” after the healthcare industry was put at the forefront due to the pandemic.

As the year ends, market sentiment is boosted by the reopening of the economy amid lower coronavirus cases as well as improved economic data.  

First Metro Investment Corp. (FMIC) Head of Research Cristina S. Ulang said they expect the benchmark Philippine Stock Exchange index (PSEi) to finish the year within the 7,400 to 7,800 range.

“We think there is a chance of the market overshooting above 7,400. That’s due to looser quarantine restrictions we earlier anticipated based on the vaccination drive which is on the way to the targeted 70% of the population,” Ms. Ulang said in a Viber message on Saturday.

The index is near FMIC’s initial 7,400 year-end forecast, as market sentiment is boosted by optimism on economic reopening and a “tamed virus.” On Friday, the PSEi climbed 137.05 points or 1.90% to close at 7,340.77.

Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said the PSEi’s gains in the past week were supported by lower inflation data and the improvement in the country’s exports and imports. — Keren Concepcion G. Valmonte

Luxury ditches the slash-and-burn for share-and-care

Gucci, through its Vault online concept store, is customizing some vintage pieces for resale. — VAULT.GUCCI.COM

“IF only we could find the dumpster before they light the match.”

That was the joke circulating a few years ago when it emerged that Burberry Group Plc had burned millions of dollars worth of pricey designer goods that it couldn’t sell.

But the practice of destroying unsold luxury products is no laughing matter. Tapestry, Inc.’s Coach apologized recently after a story broke on the social media platform TikTok about the US label slashing its handbags and dumping them.

High-end retailers have traditionally sought to destroy goods they couldn’t sell in order to preserve their exclusivity. It was deemed better for unwanted designer handbags, shoes and dresses to go up in smoke than to get marked down, end up in down-market stores, or be worn by the less affluent. Seeing a brand’s logo in any of these scenarios would jeopardize its value, so the thinking went.

To put it mildly, this view has gotten old. Brand cachet doesn’t just revolve around being exclusive anymore; consumers care more about inclusivity and ethics. Any monetary gain that might come from getting rid of excess supply is now outweighed by shoppers’ outrage at harmful practices. Millennials and Gen Z are most likely to be concerned about whether a brand pollutes or preserves the planet. France is banning the destruction of unsold non-food items next year.

Burberry was criticized by some investors in 2018 after it revealed in its annual report that it had destroyed £28.6 million ($38.9 million) worth of goods. Coach came under fire last month after a video suggested the company slashed bags that customers had returned to stores. Because they were deemed damaged, they could no longer be sold or donated, the company responded.

It’s hard to put a monetary value on what a brand gains by preventing goods from being sold through unofficial channels, and what it loses from a consumer backlash. But there are some clues.

Consumer sentiment toward Burberry, and the company’s overall reputation, dipped in July 2018 after the stock destruction issue emerged, according to YouGov’s BrandIndex. Coach’s brand buzz has also edged lower over the past few weeks.

In Sept. 2018, Burberry said it would end the practice of bag-burning and promised to increase efforts to reuse, repair, donate, or recycle unsold products. It also said it would no longer use real fur. These commitments helped Burberry’s brand value climb in 2019, according to consultancy Interbrand. Of course, Burberry also recruited a new designer in 2018, but its environmentally friendly policies likely also made a difference.

That’s because more shoppers, particularly younger ones, care about going green. According to Tensie Whelan, director of New York University’s Center for Sustainable Business, having a reputation for being environmentally friendly elevates clothing brands, as it does for Reformation and Patagonia. Shares in green sneaker-maker Allbirds, Inc. rose 93% on its first day of trading on Wednesday last week.

Luckily, there are a number of ways that fashion groups can make sure that, 1.) they don’t have too much leftover stock, and, 2.) they dispose of any excess supply ethically.

Preventing a glut starts with controlling inventory. According to McKinsey & Co., 40% of all apparel produced ends up being discounted or disposed of in some way. For example, companies including Gucci owner Kering SA, which prohibits the destruction of unsold products, are already investing in artificial intelligence to better predict how many dresses or handbags they will be able to sell.

Leftover goods can then go to a brand’s discount stores, private sales for employees, or donations to charities and fashion schools. Earlier this year, Coach started a program for goods it couldn’t sell or donate called Reloved, where damaged items could be rehabilitated and sold again. About 40% of stores give their damaged bags to the program, but the company says it’s committed to increasing that number and will no longer destroy returned merchandise that can’t be sold or donated.

Luxury groups are also reusing and recycling materials, such as the metal hardware on bags at Gucci and old sneakers at LVMH Moet Hennessy Louis Vuitton SE’s biggest brand, Louis Vuitton. A decade ago, Hermes International set up Petit H to create new items from ends of lines and leftover materials, including leather scraps and silk.

But fashion could go further.

Gucci, for example, through its Vault online concept store, is customizing some vintage pieces for resale. Why couldn’t the same approach be taken to unsold stock? Reconditioning items from past seasons in a creative way could turn them from discount to desirable. The rise of luxury resale platforms, such as the RealReal, Inc. in the US and Vestiaire Collective in Europe, creates an alternative channel to traditional outlet stores.

Perhaps the most striking stance was taken by Italian cashmere maker Brunello Cucinelli SpA, which donated unsold garments from the first half of 2020, estimated to be worth about $35 million, to those in need. Yes, such projects take effort and resources, but top-end groups on both sides of the Atlantic have enjoyed a rebound in sales in the wake of the pandemic. They can afford it.

Amidst a growing environmental and social consumer consciousness, donating unwanted luxury goods to the less fortunate is more likely to win over shoppers than alienate them. — Bloomberg

Agricultural output expected to come in flat in third quarter

PHILIPPINE STAR/MICHAEL VARCAS

By Revin Mikhael D. Ochave, Reporter

THIRD-QUARTER GROWTH in agriculture output is expected to be flat after typhoons disrupted production, analysts said.

Pampanga State Agricultural University Professor Roy S. Kempis said in a phone message that he projects growth to be negative to flat, weighted on the contraction side.

“I believe that growth figures will remain flat closer to a negative number between minus 1.5 to 0.5%; about minus 1.0%,” Mr. Kempis said.

The Philippine Statistics Authority is scheduled to release its third-quarter estimate for agriculture growth on Nov. 8, Monday.  

The agriculture sector posted growth of 0.7% in the third quarter of 2020 and contracted 1.5% in the second quarter of 2021.

For 2021, the Department of Agriculture (DA) is targeting growth of 2% for the industry.

“Production was still a challenge because of the weather disturbances. These challenges happen also because of the effects of 3rd Quarter syndrome, when productivity is reduced when the available production is more difficult to dry, as in the case of rice and corn,” Mr. Kempis said.  

“Livestock tend to get sick more in this quarter. Fishing is more difficult in stormy weather. On the other hand, the movement of goods and services improved with the easing up of lockdowns as vaccine supply substantially improved,” he added.

Mr. Kempis said the poultry subsector is likely to post growth as chickens are grown in climate-controlled areas.

According to the DA, Typhoon Jolina caused an estimated P1.36 billion worth of losses to the industry.  

Another weather disturbance that resulted in significant agricultural losses was the rains brought by the southwest monsoon and enhanced by Typhoon Fabian, which caused P698.53 million worth of damage.   

Rolando T. Dy, executive director of the Center for Food and Agri Business of the University of Asia and the Pacific, said growth in the farm sector is expected to be flat in the third quarter.

“For me, (the growth) is flat. The (third) quarter is affected by seasonality. The subsectors of livestock (hogs) and poultry will not recover,” Mr. Dy said in a mobile phone message.

Federation of Free Farmers National Manager Raul Q. Montemayor said in a mobile phone message that the growth rate of the agriculture sector could be negative due to the effect of the typhoons.  

“The gross value of production at constant 2018 prices for the first three quarters of 2020 was P1.30 trillion. In order to equal this in 2021, the value of production for the third quarter should be around P439 billion, or about 5.2% higher than the 3rd quarter output in 2020. This is a tall order, particularly given the spate of typhoons we encountered during the third quarter,” Mr. Montemayor said.  

Southeast Asian Regional Center for Graduate Study and Research in Agriculture Director Glenn B. Gregorio estimated that the farm sector will post improved output in the third quarter.

“I am hopeful that the overall value of production in the Philippine agriculture and fisheries sector would register a positive growth around 0.7 to 1.0%,” Mr. Gregorio said in a mobile phone message. 

“I have been observing positive growth in our crops sector which also has a high probability of achieving positive growth during this quarter as well. The typhoon months of the third quarter did not affect the production especially in rice and corn causing an expected increase in the value of production in the crop sector,” Mr. Gregorio said.  

Mr. Gregorio said the livestock subsector is expected to decline as it is still affected by the African Swine Fever outbreak.

He said the government should institutionalize biosecurity measures for the livestock sector.

“I would like to emphasize again the importance of instituting biosecurity measures for our livestock sector as we aim for a more system intervention that will overall strengthen its ability to respond to current and future diseases. In addition, a more action-oriented disease surveillance system would need to be actively promoted and instituted by regulatory bodies,” Mr. Gregorio said.

Physical remittance network remains important despite rise in online channels

THE PHYSICAL remittance network will continue to be relevant even as digital channels grow amid habits and some gaps that still make online transactions difficult, according to Western Union.

“In future-proofing your business, you need to have a digital strategy. But we’re not saying that retail will just be left behind,” Jeffrey D. Navarro Western Union’s head for the Philippines, Malaysia, Brunei & Indochina, said in an online interview.

“Our long-term view is that it (retail network) will continue to be substantial — it can also continue to grow. We don’t think that the growth may be as fast compared to digital, but retail will continue to be significant in terms of performance,” he added.

The central bank wants 50% of all transactions done online by 2023.

Mr. Navarro said 30-35% of their transactions are sent through digital channels, while 65% continue to be coursed through retail.

He said sender side economies like North America, Australia and Singapore are becoming more reliant on digital transactions. Meanwhile, he said retail remains huge in the Middle East and most of ASEAN.

“What we saw year on year is the percentage contribution of digital is growing and it really accelerated in the last few years because of the pandemic, but retail remains to be significant in the portfolio,” Mr. Navarro said.

He added that ensuring migrant workers have access to the “nakasanayan” or what they’re used to is also important, especially for Filipinos.

“When we go abroad, even though some of these [digital] facilities may be available, there’s nothing wrong if I’m using this certain service the same way. And sometimes, until something really inconvenient happens, we never shift,” he said.

The need to keep both retail and digital channels is also significant in a country where financial inclusion is still an issue. Mr. Navarro noted that while account accessibility in the Philippines has been increasing, it is still far from 100%.

“There is still the portion of the population that still needs it in cash, while there is also a growing percentage of the population who can also facilitate and get it via digital channels or bank accounts,” he added.

Western Union earlier this year teamed up with UnionBank of the Philippines, Inc. and Pera Hub to allow remittance recipients with the option to claim their cash in real time through UnionBank’s online app.

Mr. Navarro said they also have working partnerships with GCash, PayMaya Philippines and Coins.ph to let receivers transfer the money sent to them straight to their e-wallets.

He said they are keen to build more partnerships to expand Western Union’s offerings, taking advantage of its strength as a cross-border platform.

“We’re always monitoring the different players in the fintech space, including the top banks, because we want to also ensure that we partner with them in putting these services in their digital offering. So that’s going to be the strategy short to medium term,” he said. — Luz Wendy T. Noble

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