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BSP may go for up to 50-bp hike — poll

PHILIPPINE STAR/ MIGUEL DE GUZMAN
Latest data from the Department of Energy showed prices of gasoline, diesel, and kerosene increased by P28.70, P41.14, and P37.95 per liter respectively since the start of the year. — PHILIPPINE STAR/ MIGUEL DE GUZMAN

By Keisha B. Ta-asan

THE BANGKO SENTRAL ng Pilipinas (BSP) is widely expected to raise interest rates on Thursday, with several analysts now forecasting a 50-basis-point (bp) increase after the aggressive tightening by the US Federal Reserve last week.   

A BusinessWorld poll last week showed 15 out of 16 analysts anticipate the Monetary Board increasing its benchmark interest rate at its June 23 meeting. However, analysts appear divided on the pace of tightening, with nine analysts seeing a hike of 25 bps while six analysts anticipate an increase of 50 bps.

“Considering the current volatility of the economy, where inflation rate is at its highest since 2018 at 5.4% (in May) and expectations are high that this will further erode and may breach the government target… coupled with the US Federal Reserve decision to increase their policy rate to 75 bps, it is expected that local policy rate to likewise increase by another 25 bps,” Colegio de San Juan de Letran Graduate School Associate Professor Emmanuel J. Lopez said in an e-mail.

Analysts’ expectations on policy rates (June 23)

Inflation rose to 5.4% in May, the highest in three and a half years and above the BSP’s 2-4% target range. The BSP last month raised its average inflation estimate to 4.6% this year, higher than the previous estimate of 4.3%.

Makoto Tsuchiya, an economist at Oxford Economics, said the BSP will likely put more focus on elevated prices than economic growth at the next meeting, citing the stronger-than-expected gross domestic product (GDP) growth in the first quarter.

“We think the BSP will be wary of stifling the recovery and will continue to tread carefully between maintaining growth momentum and containing inflationary pressures,” Mr. Tsuchiya said.

The Philippine economy already surpassed pre-pandemic levels in the first quarter, with GDP expanding by 8.3%.

Economic managers are targeting a 7-8% GDP growth this year.

China Banking Corp. Chief Economist Domini S. Velasquez said a more measured monetary tightening cycle is ideal for the Philippines.

“We think that continued moderate hikes by the BSP will allow the economy to absorb interest rate increases at a more measured pace. In this time of uncertainty, it also provides time for the BSP to assess the impact of monetary tightening on our growth recovery,” she said.

In a June 14 roundtable with BusinessWorld editors, incoming BSP governor and current Monetary Board member Felipe M. Medalla signaled the pace of subsequent tightening will be gradual, ruling out rate hikes of more than 25 bps.

However, Mr. Medalla’s statement was made a day before the US Federal Reserve approved a 75-bp interest rate hike, its biggest since 1994.

The aggressive monetary tightening by the US Federal Reserve may spur capital outflows and put more downward pressure on the peso, some analysts said. This may prompt the Monetary Board to consider a 50-bp rate hike, they said.

Philippine National Bank economist Alvin Joseph A. Arogo said he now expects a 50-bp increase by the BSP after the Fed’s latest rate hike and the peso breaching the P53-$1 level.

The peso closed at P53.75 per dollar on Friday, weaker by 28 centavos from its P53.47 finish on Thursday, based on Bankers Association of the Philippines data.

It also shed 75 centavos from its P53 close a week earlier. This was the peso’s weakest close in over three and a half years or since its P53.80 finish against the greenback on Oct. 25, 2018.

“A 50-bp bump in June will let the BSP balance growth recovery and manage inflation, while getting ahead of the Fed’s pace. This should also help temper the peso’s weakness with the current account deficit projected at $19.1 billion this year,” Security Bank Corp. Chief Economist Robert Dan J. Roces said in an e-mail.

Some analysts expect the BSP’s policy normalization to be gradual as inflation is expected to return to the 2-4% target range by 2023.

The Monetary Board kicked off its tightening cycle on May 19 by raising the yield on the BSP’s overnight reverse repurchase facility by 25 bps to 2.25%. Interest rates on the overnight deposit and lending facilities were also hiked to 1.75% and 2.75%, respectively.

This was the first increase in borrowing costs since 2018 and followed cuts worth 200 bps in 2020 as the BSP moved to support the economy amid the coronavirus pandemic.

“As things stand, we expect only two more interest rate hikes next year, taking the rate to 3%, implying that a full reversal of the COVID-era cuts is unlikely to take place until after 2023,” Pantheon Chief Emerging Asia Economist Miguel Chanco said.

Moody’s Analytics analyst Sonia Zhu said the central bank may increase rates three more times, with the policy rate seen at 3% and above by end-2022.

Oxford Economics’ Mr. Tsuchiya said the BSP is likely to hike the policy rate by 100 bps this year.

“We expect the BSP to gradually continue tightening beyond this year, and unwind all the 200 bps cuts implemented at the onset of the pandemic by early 2024,” he said.

However, for ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa, the BSP should “not simply be in ‘normalization mode’ but it should assume a tightening stance” to curb red-hot inflation.

“We have the BSP back at 4% by early next year,” he added.

After Thursday, there are four more Monetary Board meetings scheduled this year — Aug. 18, Sept. 22, Nov. 11, and Dec. 15.

PHL needs to ratify RCEP, says Balisacan

Vendors unpack sacks of vegetables in Balintawak market, Jan. 27, 2021. — PHILIPPINE STAR/ MICHAEL VARCAS

THE PHILIPPINES stands to lose potential foreign investments if it fails to ratify its membership in the Regional Comprehensive Economic Partnership (RCEP), incoming Socioeconomic Planning Secretary Arsenio M. Balisacan said.

In a June 16 roundtable with BusinessWorld editors, Mr. Balisacan said membership in RCEP would send the signal to investors that the Philippines is “open for business.”

“We want to be part of [the] global value chains. If investors [and] international traders don’t see us as a key player in those value chains, then we could not expect investors to think about us. That is important and I think that we need to ratify the RCEP,” he said.

The Senate failed to give its concurrence to the RCEP before it adjourned sine die on June 1, despite appeals from economic managers and business groups.

The RCEP, which entered into force on Jan. 1, is a major trade agreement involving Australia, China, Japan, South Korea, New Zealand and the 10 members of the Association of Southeast Asian Nations (ASEAN).

Representing about 30% of the global gross domestic product (GDP), the RCEP allows for zero or reduced tariffs in trade between the members of ASEAN and its free trade agreement partners.

Hesitation over the ratification of the RCEP comes from concern that local farmers will be negatively impacted by imports from other RCEP members. Some senators also cited the lack of safeguards for the agriculture sector.

“We can never really protect and do justice to our agriculture if our means of protecting our agriculture is inhibit competition, prevent competition,” Mr. Balisacan said.

The incumbent Philippine Competition Commission chairman said the main problem of low agricultural productivity has nothing to do with trade.

“It is the lack of public investments, the lack of institutional support… bad governance in the sector. I’m talking about infrastructure, research and innovation for agriculture. Our productivity, yield per hectare or production per hectare, is so low compared to our neighbors,” he added.

Mr. Balisacan said the government should raise the budget for agriculture research and development (R&D), which is around 0.3% of the country’s GDP compared with other countries that allocate around 1-2% of their GDP.

“We have very little regard for science and even more for agricultural sciences… Investing 2% of your GDP in R&D, you are likely to grow fast with productivity likely to go up,” he added.

“So we have to reset our priorities, go back to the basics, and address the key sources of productivity growth.”

Agriculture typically makes up around 10% of overall economic output, and a fourth of the country’s jobs.

President-elect Ferdinand R. Marcos, Jr. previously said he wants a review of the RCEP to determine if the agriculture sector is not unduly disavantaged by the trade deal.

Mr. Marcos would have to endorse the trade agreement to the 19th Congress when sessions open in late July.

President Rodrigo R. Duterte signed the trade deal on Sept. 2, 2021.

A video of the roundtable with Mr. Balisacan will be shown on BusinessWorld’s Facebook page on June 27. — Diego Gabriel C. Robles

Incoming BSP governor not keen on cryptocurrency

Representations of virtual currency Bitcoin are placed on US dollar banknotes in this illustration taken on May 26, 2020. — REUTERS/DADO RUVIC/ILLUSTRATION

INCOMING Bangko Sentral ng Pilipinas (BSP) Governor Felipe M. Medalla is not keen on regulating cryptocurrency, dismissing the virtual asset as based on the “greater fool theory.”

“Every Bitcoin buyer that I know does not use (cryptocurrency) for anything… The only reason you’re using this is you think somebody else will buy it from you at a higher price. That’s a very scary investment,” Mr. Medalla said during a virtual roundtable discussion with BusinessWorld editors on June 14.

Mr. Medalla, currently a member of the Monetary Board, said cryptocurrency is based on the “greater fool theory.” The theory goes that a market player can make money buying overpriced items if there is a “greater fool” that wants to purchase it at an even higher price.

Billionaire Bill Gates also cited the same theory in criticizing cryptocurrency at a TechCruch event last week.

“The value of crypto is what some other person decides someone else will pay for it, so not adding to society like other investments,” Mr. Gates was quoted as saying.

Mr. Medalla noted that cryptocurrency is valuable for people who want to hide their money from the government.

“This is a new tool that adds to the ability to do that. There are plenty of people who want to hide their money from the government,” he said.

The BSP does not regulate cryptocurrency itself but has guidelines on virtual asset service providers. Under the rules, entities that engage with virtual assets are required to secure a license from the BSP.

Cryptocurrencies in the Philippines are classified as digital or virtual assets.

“My view is the moment you cross from the virtual world to the fiat and physical world, you have to have KYC (Know Your Customer) policies… and apply the same anti-money laundering policy,” Mr. Medalla said.

KYC refers to the process that institutions use to verify identities of their clients and ascertain fraud risks they may pose. This can keep money laundering, terrorism financing, and other types of unlawful financial activities in check.

BSP data showed transactions in virtual currency, including cryptocurrency, surged by 71% to P105.93 billion in the first semester of 2021.

The cryptocurrency industry has suffered significant losses in recent weeks amid problems with stablecoins such as TerraUSD and cryptocurrency lending company Celsius Network. Bitcoin, the biggest cryptocurrency, dropped below the $20,000 level on Saturday.

The BSP is currently working on a pilot project that will test the use of wholesale central bank digital currency (CBDC) for large-value financial transactions among selected financial institutions.

“The pilot project covers the experimentation of the CBDC’s use to transfer large-value financial transactions on a 24 [hours] by 7 [days] basis, across a limited number of financial institutions but possibly covering both banks and nonbank institutions,” BSP Governor Benjamin E. Diokno said in April.

Project CBDCPH is a major step for the country’s central bank and the finance industry to understand the opportunities and risks of wholesale CBDCs.

The BSP chose to focus on the wholesale aspect of CBDCs as it assessed that it will have a bigger impact compared with retail use cases. — K.B.Ta-asan

‘Trading from home’ is the new normal as PSE set to close trading floor

BW FILE PHOTO

By Luisa Maria Jacinta C. Jocson, Reporter

AS THE Philippine Stock Exchange (PSE) is poised to permanently shut its trading floor on Friday, traders said there will be little impact as many are now used to “trading from home” during the coronavirus pandemic.

“The pandemic brought out and proved the possibility of floorless trading was efficient and viable. It was imminent but it would not have been that fast, the pandemic was a catalyst that accelerated the move to go floorless,” R.S. Lim and Company, Inc. nominee and former PSE director Alejandro T. Yu said in a phone interview.

In an advisory on June 10, the PSE announced that it will shift to floorless trading, citing the technological advancements have made this trading setup “efficient and responsive to the needs of the investing public.”

The last day of trading on the floor will be June 24 (Friday).

PSE President and Chief Executive Officer Ramon S. Monzon has said only a third of brokers renewed their lease on the trading floor amid the pandemic.

“We had about 85 brokers that were trading on the floor but since the pandemic, when the time for lease renewal came up, only 29 renewed their leases. And of the 29, every day there are about nine to 10 participants that use the floor. Obviously, it has reflected the fact that we don’t need a trading floor,” Mr. Monzon told ANC.

He pointed out that the Philippines is the only stock market in the ASEAN that still operates a trading floor.

“We are able to prove during the pandemic we can go on floorless trading,” he said.

When the coronavirus pandemic struck in 2020, Mr. Yu said that traders learned to set up shop from home.

“We can work from home, trade from whenever. The writing became clearer on the wall that the floor has become redundant. After the Omicron surge, that drove the final nail in the coffin,” he said, referring to the strict lockdown implemented in January to combat the Omicron-led surge in coronavirus cases.

Regina Capital Development Corp. Head of Sales Luis A. Limlingan said that the shift to “floorless trading” will have a minimal impact as traders have gotten used to trading from home.

“It was during the pandemic that traders shifted to trading online and have already gotten used to this setup,” he added.

Marc Kebinson L. Lood, head of online trading at Timson Securities, Inc., said that the pandemic has accelerated the push to digitalize all sectors, including the capital market.

“The majority of our neighboring markets do not have a trading floor and operate entirely digitally. During the lockdown, it only took a few days for the PSE to transition to floorless trading, and trading is relatively seamless even when the trading floor is not able to operate,” Mr. Lood said in a Viber message.

“Investors are still taking direction from the fundamentals of the company and the market as a whole, and they are unworried about the trading floor’s closure.”

First Metro Investment Corp. Head of Research Cristina S. Ulang said the trading floor’s closure is a reflection of the increasingly digital world.

“It’s a new ecosystem emerging for the capital markets where brick and mortar could become more muted and subdued. Just look at e-commerce which is now competing with brick-and-mortar shopping,” she said in a Viber message.

The pandemic also encouraged more retail investors to enter the stock market.

Online stock market accounts rose by 23.8% to 1.16 million in 2021, PSE data showed. These made up over 70% of the total stock market accounts. Online investors also accounted for 74.7% of total trades in 2021.

“Innovations are the order of the day. It is on the horizon as people are gradually shifting this move. I think PSE should be a strong forefront of this and develop platforms and applications that will make trading online easier,” Mr. Yu said.

For his part, Mr. Monzon said the trading floor will likely be used as office space or as an events venue.

“I want to assure you our trading floor is going to remain open because we will continue to have a lot of bell ringing ceremonies,” he said.

Supermarkets say commodity prices to further rise 

PHILIPPINE STAR/ MICHAEL VARCAS

By Revin Mikhael D. Ochave, Reporter

THE prices of commodities are expected to increase in the coming months amid the challenges faced by manufacturers, according to the Philippine Amalgamated Supermarkets Association, Inc. (Pagasa).

Pagasa President Steven T. Cua said in a mobile phone interview with BusinessWorld that prices are seen to go higher due to global and local events.

“Given the circumstances such as the Ukraine-Russia conflict, continuous lack of supply of imported raw materials, fuel, and grains, increasing peso-dollar exchange rate, slight surges in coronavirus disease 2019 (COVID-19) count both here in the Philippines and abroad, expected disarray or birth pains in a new administration, I would expect prices to be on the upside in the coming months,” Mr. Cua said.

He made the projection after the Department of Trade and Industry (DTI) recently said that the prices of basic necessities and prime commodities (BNPCs) included in its suggested retail price (SRP) list are expected to be stable in the next two to three months.

“At least for those that are in our SRP list, we can assure the consumers that we see that these will be stable at least probably the next two, three months,” Trade Assistant Secretary Ann Claire C. Cabochan said during a June 16 television interview in The Chiefs on One News Channel.

According to Mr. Cua, the industry group does not share the same view with the DTI in terms of expected price increases.

“Pagasa does not totally agree with the DTI’s prognosis of stable prices for the next few months. By the middle of June, more than 30 manufacturers have increased prices on some of their commodities. This ‘parade/march’ of increases by suppliers has been ongoing since last year,” Mr. Cua said.

“The good thing is, not all suppliers chose to increase all their products at the same time and some did it on a staggered basis,” he added.

The DTI said earlier that it had received price increase requests from manufacturers of products such as bread and canned sardines due to rising production costs of wheat, fish, tin, and logistics. It added that it was studying the requests, which usually take four to six weeks to process.

In the latest SRP list issued on May 11, the DTI approved the price increases of 82 BNPCs while keeping unchanged the prices of 136 others.

The price increases vary from 2% to 10% for products such as bread, canned fish, potable water in bottles and containers, processed milk, locally manufactured instant noodles, coffee, salt, laundry soap, detergent, candles, flour, processed and canned pork, processed and canned beef, vinegar, fish sauce (patis), soy sauce, toilet soap, and batteries.

SM makes going green easier

IN the past, if one wanted more sustainable finds to place in the home or wardrobe, one needed to go to some obscure little shop run by some free spirit. This means that living sustainability, now a bit of an urgency, would have been inaccessible to many. SM Retail, Inc., the retail arm of SM Investments Corp., is now making sustainable living easier to achieve with SM Green Finds.

Like charity, sustainability begins at home, so on June 10, media guests were taken on a tour of SM Retail’s new headquarters in the Mall of Asia complex. The new building boasts of lighting automation, centralized air, recycled water, energy-saving glass, and waste management programs.

The tour ended with a display of their green products. One can expect to see wooden bowls and woven grass baskets and such in a store like Kultura, SM’s Filipiniana store, but apparently, SM’s green initiatives extend to other parts of the home. Watsons, and other beauty brands, for example, boasted bottles of lotion and conditioner in recycled (and recyclable) plastic, made with natural and biodegradable ingredients. Catherine Ileto, Vice-President for Corporate Communications for SM Retail, pointed to baby toys made with silica (no plastic), and bedsheets made with bamboo fibers (bamboo uses less water and resources to grow), packaged in cardboard bundlers instead of plastic. Selections from their own stocks have also done away with a lot of plastic, using paper bags and paper packaging in stores.

They’ve also been partnering with a lot of micro, small to medium enterprises (MSMEs) for sourcing products made with sustainable materials, consulting with the Department of Trade and Industry (DTI).

Speaking about mainstreaming sustainability, Ms. Ileto said, “That’s really the intent: to make all of these green finds accessible.”

Still, it’s a business, and businesses need to make profit. In the long run, does SM see green in going green?

In response to a question about sustainability translating into profitability, SM Retail, Inc. President and CEO Ponciano C. Manalo, Jr., said in an interview, “It will have to be. We’ll have to be able to find the right scale among our local producers to be able to make it really profitable and make it sustainable for them. But for us, it’s also (for) our suppliers.

“When we give them work to do, and we feature their products, what happens is people buy it, and there’s a ripple effect,” said Mr. Manalo in a mixture of English and Filipino. “We have a lot of MSMEs that we partner with, and we help them. Over time, that should build itself up.

“The question is not: ‘is it expensive?’ The question is, ‘is it a good investment?’ As an investment, what it does is it pays out in the end.”

He says that the Filipino mindset has always been geared towards sustainability, or at least recycling. He points out how our elders used to keep and pack away packaging for future use, among other practices. “It’s now aligned with what is now being a global phenomenon.”

According to the SM Investments Corp. website, as of the fiscal year ending 2020, SM Retail operates 66 SM Stores, 59 SM Supermarkets, 52 SM Hypermarkets, 209 Savemore stores, 71 WalterMart stores, 1,012 Alfamarts, and 1,550 specialty stores scattered over several brands. Its sister, SM Prime Holdings, is the largest mall operator in the Philippines.

On a related note, both sources said that SM Malls have sustainability measures in place, such as using LED lighting, water efficiency measures, among other green building initiatives.

Asked why sustainability measures have become so important to SM, Ms. Ileto said, “We’re the largest retail brand in the Philippines. We can really launch this at scale. We can advocate being the brand that advocates for green lifestyles. There’s really an awakening for the consumer now —  even in the little choices they make.”

“Sustainability is a growing phenomenon in the world. It’s not just SM. Everybody in the world is looking at sustainability,” said Mr. Ponciano. “I think my generation, probably, we’re part of the modern generation where we waste everything. But younger people… they’re becoming more conscious.

“It’s because of you. It’s your future. We can just make money and forget about everything else. I’m being very candid, or almost joking, in a way,” he said.

“But we understand what it’s all about. It’s a big word. It’s education, it’s social, it’s economic; it’s everything that you can think of. You can put all the labels that you want. At the end of the day, we know it’s important. It’s for the generation that’s coming. We know that. The earlier that we’re able to get people to be aware and conscious: that’s our part to play.” — Joseph L. Garcia

Common tower providers see no threat from satellite firms

By Arjay L. Balinbin, Senior Reporter

SOME telecommunication tower companies operating in the Philippines said the entry of satellite firms into the local scene poses no threat to their business or to that of traditional telco providers, as the technology complements terrestrial connectivity, which does not reach many of the country’s remote areas.

“If you look at the geographical situation in the Philippines, some areas will be best served by satellite technology,” edotco Group Chief Executive Officer Adlan Tajudin told BusinessWorld in a recent interview.

“They complement us. We still need towers. It’s just that instead of transmitting the signal through microwave or through fiber, they transmit through satellite. I think it really, really complements us,” he added.

“Typically, that solution is for the rural areas. It helps in terms of accelerating rural coverage.”

Rahul Singh, country manager of Singapore-based iSON Tower Ltd. Inc., which is set to build digital infrastructure in the Philippines, said in an e-mailed reply to questions: “Well, the Philippines as a country needs 50,000 towers, fiber connectivity, high-speed voice and internet, and all telecom ecosystem players together are addressing these needs.”

“Typically, satellite connectivity companies coexist with traditional MNOs (mobile network operators)/tower companies, and are not considered to be a threat to traditional telecommunications operators as the service will serve roughly 3% to 4% of the customers that traditional providers find most difficult to reach,” he added.

“From ISON Tower perspective, we are committed to working with mobile network operators enabling voice and high-speed broadband internet for Philippine consumers.”

He noted that the company is rolling out tower sites in Mindanao and the Visayas to enable voice and high-speed internet along with telecom operators.

Alliance Towers Corp. President and Chief Operating Officer Alvin D. Tolentino said the entry of foreign satellite companies into the Philippines will be “good for the economy,” as local telecommunications providers will be forced to keep up.

“It’s a question of scale. If you are just serving one barangay on a remote island, it doesn’t make sense for you to invest in a submarine cable… just to connect one barangay. In that sense, it’s cheaper to do satellite,” he said.

“But if you’re looking at Cebu or places where you can get more users, I think the traditional (connectivity) is still more economical,” he added.

The National Telecommunications Commission (NTC) recently approved the registration of Starlink Internet Services Philippines, Inc. as a value-added service provider (VAS). Starlink is a subsidiary of Elon Musk’s Space Exploration Technologies Corp.

The agency expects more foreign satellite broadband providers to enter the Philippines because of the amended Public Service Act, which eases the restrictions on full foreign ownership of businesses in key sectors such as telecommunications, shipping, airlines, railways, and subways.

Starlink’s registration as a VAS provider allows it to directly access satellite systems, as well as build and operate broadband facilities to offer internet services in the country. The company’s certificate of registration is valid until April 14, 2023. It is expected to cover villages in urban and suburban areas and rural areas that remain unserved or underserved with internet access services.

“The service is expected to bring cost-effective internet access in these areas,” the NTC said in a statement.

Bandage made with coconut wins Good Design Awards 2022

A WOUND dressing made from nata de coco (coco cellulose) bagged several major awards at the second Good Design Awards on June 14, held at the Ayala Museum in Makati City.

The Good Design Award Philippines is a national design excellence recognition program initiated by the Design Center of the Philippines — an attached agency of the Department of Trade and Industry (DTI), and mandated to promote design as a tool for Philippine product quality, competitiveness, and branding.

Launched in 2019, the Good Design Award Philippines as described in a briefer as seeking “to discover local artists, designers, and businesses with outstanding designs that embody the universal design values of form, function, innovation, plus the Philippine value of malasakit (compassion).”

The program is held bi-annually in partnership with the United Nations Development Program in the Philippines (UNDP Philippines), the ASEAN Japan Center, and the Japan Institute of Design Promotion.

The competition highlights malasakit as “the heart of good design” and “its ability to improve lives and to address social, economic, and environmental sustainability.”

This year, the Good Design Jury was tasked to evaluate 161 entries. Out of 150 entries, 45 were shortlisted among the following categories: object-making (two); image-making (16); place-making (16); and systems/services design (11).

The entries were evaluated according to form, functionality, innovativeness, and malasakit  which were all given equal weight.

This year’s competition jury was composed of by architect Royal Pineda of BUDJI+ROYAL Architecture + Design who chaired the jury, architect Joey Yupangco, creative director Jowee Alviar, entrepreneur Reese Fernandez-Ruiz, industrial designer Kenneth Cobonpue, and jewelry designer Bea Valdes.

Out of the shortlisted entries, 11 finalists received awards.

THE WINNING DESIGNS
The awards are classified into Red, Gold, Green, and Malasakit Award Grand Prix. The Red Award “entails that an idea showcased good design with innovation and function in mind”; the Gold Award: Best in Show, “exemplifies the best application in each design category”; the Green Award (Special Award), is “a special award for outstanding entries that address the United Nation’s Sustainability and Development Goals (UN SDGs) related to the environment and sustainability”; and the Malasakit Award Gran Prix, is “the highest form of recognition for the best entry exemplifying design excellence and having the most impact in addressing the UN SDGs.”

The winners of the Red Award for Image-making (advertising) are the Macho Choir by the DDB Tribal Worldwide Philippines; Tubbataha Coral Rip by the TBWA\Santiago Mangada Puno Advertising, Inc.; Boysen, This Is a Tree by TBWA\Santiago Mangada Puno Advertising, Inc.; and the CCP Baybayan by TBWA\Santiago Mangada Puno Advertising, Inc. In Place-making, the winners are Streetlight Tagpuro by Leandro V. Locsin Partners; and Museo Ni Jesse Robredo by GPAD Studio. In Services and Systems Design, the winner is the Mechanical Water Kiosk by Alternative Indigenous Development Foundation, Inc.

The Gold Award winners in Object-making are the Nata De Coco Wound Dressing by Patchmed Cosmetic Trading; and Tumindig by Komiket, Inc. In Place-Making, the winner is MLR Polo Pavilion by Sangay Architects; while sakay.ph by Sakay Mobility Philippines, Corp. won for Service/Systems Design.

The Green Award and Malasakit Gran Prix Award were both given to the Nata De Coco Wound Dressing by Patchmed Cosmetic Trading.

Winners received the Arturo Luz Tribute trophy. Winners also get the lifetime use of the Good Design Award seal of excellence, and an appearance in the Good Design Award Philippines Yearbook and Winners gallery.

COCONUT DRESSING
“I had the idea (for the product) when I was still working at the Philippine General Hospital (PGH). Every time I see a patient in PGH, nakaka-awa (it’s pitiful). They don’t have money for the treatment,” Malasakit Award Gran Prix winner Denver O. Chicano said in his acceptance speech.

“Care is very important. Everything that we do is service…Care is creativity, attentiveness, resourcefulness, and enthusiasm,” he said of his profession as a nurse.

After resigning from the PGH, Mr. Chicano and his wife (who is a cosmetic surgeon) set up a wound clinic that catered to patients who cannot afford treatment in hospitals.

It was also at this time that Mr. Chicano began developing the coconut cellulose wound dressing called CocoPatch through PatchMed Cosmetic Trading, a pioneering biotechnology company focused on wound care and bio-engineered coco cellulose technology. Mr. Chicano is the company’s managing director.

The CocoPatch’s active ingredient, monolaurin is also derived from coconuts. According to the CocoPatch Facebook page, monolaurin is “a monoester formed from lauric acid and derived from virgin coconut oil, has profound antibacterial, antiviral, and anti-fungal properties.” Mr. Chicano said that it has a shelf life of two years, and can last three days on a wound before needing to be changed.

“There was a German company [Lohmann & Rauscher] who went here to buy the technology from me pero hindi ko siya binenta (but I did not sell it),” Mr. Chicano said. “Kailangan makilala ang Filipino with the product (The Filipino needs to be recognized with the product).”

PatchMed also provides products for cosmetic and industrial application of coconut cellulose. They have partners abroad and export to other countries.

“I invented it to provide availability of wound dressing specializing our coconuts,” Mr. Chicano told BusinessWorld before the awarding ceremony.

“Information dissemination that the product exists would really help. Right now, we are supported by the Department of Science and Technology (DoST) in continuing to improve the product,” he said. 

WHAT’S NEXT FOR THE AWARDEES
Executive Director of the Design Center of the Philippines Rhea Matute says that this year, the Good Design Award winners will participate at the ASEAN Japan Center’s Good Design Selection.

“ASEAN Japan Center will help find buying agents, and trade networks to make it a sustainable business opportunity for the winners of the Good Design Awards,” Ms. Matute told BusinessWorld, shortly after the ceremony.

“Since 2017, we’ve been trying to get a way to connect Good Design Philippines with [Japan’s seal of excellence for quality design] G-Mark,” Ms. Matute said. “Today, when they formalized that there will be a network established between Good Design Philippines, and bring all these new awardees, we need to prepare them so that it will be communicated with the Japanese jurors.”

Earning the G-Mark Seal of distinction, Ms. Matute said, “… commands a premium and earns a trust of Japanese consumers.”

The judging period will be in August, while the awarding is slated around the yearend. — Michelle Anne P. Soliman

Tax court affirms trading firm’s tax refund of around P13 million

THE Court of Tax Appeals (CTA) has affirmed a division ruling on PTT Philippines Trading Corp.’s refund of P13.35 million representing its erroneously paid advance value-added tax (VAT) on its importation of diesel fuel for the period covering Sept. 20, 2013, to Jan. 20, 2014.

In a decision on June 14 and made public on June 16, the CTA full court denied the appeal of the commissioner of internal revenue (CIR) to reverse the ruling, as it agreed with the Third Division granting the company’s refund.

“The Court in Division is correct in granting the refund of the VAT collected by petitioner (CIR) from the respondent (PTT) on the imported fuel in the total amount of P13.3 million since it is an illegal or erroneous tax or one which was levied without statutory authority,” according to the ruling written by CTA Associate Justice Marian Ivy F. Reyes-Fajardo.

PTT is a domestic corporation that engages in the distribution, marketing, and selling of petroleum and petroleum-related products within the Subic Bay Freeport Zone and other special economic and export processing zones in the Philippines.

It had previously imported diesel fuel from the Cayman Islands, British West Indies from Sept. 20, 2013 to Jan. 20, 2014, and paid VAT worth P13.35 to the Bureau of Customs.

Republic Act No. 7227, or the Bases Conversion and Development Act of 1992, grants locators in the former Subic and Clark military bases incentives such as tax and duty-free importation. PTT operates a fuel receiving terminal in the Subic Special Economic Zone.

The tax court noted that the company was duly registered with the Subic Bay Freeport Enterprise, which grants tax and duty-free importation of raw materials and fuel.

Under Republic Act No. 7916, or the Special Economic Zone Act of 1995, no taxes shall be imposed on business establishments within economic zones.

The Bureau of Internal Revenue’s (BIR) Revenue Regulations No. 2-2012, which imposes taxes on Freeport and Economic Zone (FEZ) enterprises, had been declared by the Supreme Court as unconstitutional for illegally imposing taxes on these areas that should enjoy tax exemptions.

PTT had sold the imported diesel fuel to Clark Development Corp., which the CTA said is a tax-exempt entity.

“Adverting to our earlier discussion, the diesel fuel imported by the respondent (PTT) is exempt from VAT,” it said.

The CTA noted the laws previously cited consider FEZs as foreign territories and when resources are brought to these areas, the goods remain in foreign territory and are not subject to Philippine customs and tax laws. — John Victor D. Ordoñez

Rates of Treasury bills, bonds may rise ahead of BSP review

BW FILE PHOTO

RATES of government securities are expected to climb this week ahead of the central bank’s policy review where it is widely expected to raise borrowing costs, which would cause investors to ask for higher yields.

The Bureau of the Treasury (BTr) will offer P15 billion in Treasury bills (T-bills) on Monday, or P5 billion each in 91-, 182-, and 364-day debt papers.

On Tuesday, the BTr will auction off P35 billion in fresh 10-year Treasury bonds (T-bonds).

Two traders in a Viber message said that rates are expected to climb this week ahead of the central bank’s policy meeting on June 23 where it is expected to raise rates by 50 basis points (bps), bigger than the 25-bp hike at its May 19 meeting that kicked off its tightening cycle and despite incoming Bangko Sentral ng Pilipinas (BSP) Governor Felipe M. Medalla’s earlier signals of a gradual policy normalization.

“I think it is market consensus that rates will be higher [this] week, [especially] with a growing number of analysts expecting a 50-bp hike from BSP. This [is] despite earlier guidance that they will do a gradual tightening,” the first trader said,

The first trader said the 10-year bonds on offer this week could fetch yields between 7% and 7.5%.

The second trader said T-bill yields could move 5-10 bps higher and the 10-year bond’s rate could be quoted from 7.125% to 7.5%.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort likewise sees rates moving slightly higher this week to track the rise in secondary market yields after the US Federal Reserve’s 75-bp hike last week and signals on the BSP’s path towards normalization from its incoming chief.

Mr. Ricafort said while Mr. Medalla signaled gradual tightening and ruled out hikes bigger than 25 bps ahead of the Fed’s decision last week, this could change following the US central bank’s bigger-than-expected increase.

The Monetary Board is holding a policy meeting on Thursday, June 23. Mr. Medalla last week said a rate increase this week is a “sure thing,” with hikes at subsequent meetings also possible.

Analysts in a BusinessWorld poll were divided on the magnitude of the BSP’s move on Thursday, with nine expecting another 25-bp increase and six betting on a 50-bp hike. 

At the secondary market on Friday, the 91-, 182-, and 364-day T-bills were quoted at 1.5705%, 1.9366%, and 2.2014%, respectively, based on the PHP Bloomberg Valuation Reference Rates published on the Philippine Dealing System’s website.

Meanwhile, the 10-year bond fetched a yield of 6.9816%.

Last week, the BTr raised just P14 billion from its offer of T-bills, even as total bids reached P29.68 billion, nearly double the P15-billion offer.

Broken down, the Treasury raised P5 billion as planned through the 91-day T-bills, with total bids reaching P12.33 billion. The average rate of the tenor went up by 13.2 bps to 1.572% from 1.44% previously.

The government also made a full P5-billion award of its offer of 182-day T-bills as tenders reached P15.02 billion. The average rate of the six-month tenor went up by 10 bps to 1.934% from 1.834%.

Meanwhile, the BTr partially awarded its offer of one-year securities, raising just P3.924 billion out of the P5-billion program even as tenders reached P6.84 billion in bids. The average rate of the one-year papers went up by 2.8 bps to 2.325% from the 2.297% seen at the previous auction, where it made a full award.

The Treasury wants to raise P250 billion from the domestic market in June, or P75 billion through T-bills and P175 billion through T-bonds.

The government borrows from local and external sources to help fund a budget deficit capped at 7.6% of gross domestic product this year. — T.J. Tomas

Two more gold for Yulo at the Asian Championships in Qatar

CARLOS Yulo with GAP president Cynthia Carreon. — GYMNASTICS ASSOCIATION OF THE PHILIPPINES

By Joey Villar

IN 2018 in Doha, Qatar, Carlos “Caloy” Yulo stood at the podium and shed tears of joy after delivering the Philippines a historic first Artistic Gymnastics World Championships medal — a bronze.

Four years into the present and the diminutive but big-hearted gem from Leveriza, Manila has harvested gold after gold in the international stage like he’s picking grapes from a vineyard.

And the most recent of this mighty conquests by the 22-year-old, three-time world champion came in the Asian Championships held in the exact, same place in the Arab country where plucked two more glittering gold in vault and parallel bars on Saturday night.

The quintuple Southeast Asian Games gold winner was nothing short of spectacular in vault where he registered an average of 14.884 from his two attempts of 14.967 and 14.800 as well in parallel bars where he tallied 15.167 on a degree of difficulty scale of 6.300 and execution score of 8.867.

Mr. Yulo’s splendor reduced the rest of the field in awe of the spectacle they were left to witness and settled for crumbs — a silver and bronze to South Korea’s Kim Hansol and Japan’s Shiga Tachibana in vault and Japan’s Tsuyoshi Hasegawa and China’s Yin Dehang in parallel bars, respectively.

Gymnastics Association of the Philippines (GAP) president Cynthia Carrion, who was in Doha to accompany Mr. Yulo, said the latter could have dominated the Asian Games in Hangzhou, China had it not been postponed due to the coronavirus disease 2019 (COVID-19) pandemic.

“This Asian Championships is the same as the Asian Games because all of the region’s best are here,” Ms. Carrion told The STAR. It capped a glorious performance for Mr. Yulo, who also struck gold in his pet floor exercise on Friday and snared silver in the individual all-around on Thursday.

It also opened the boundless horizon for Mr. Yulo in this year’s World Championships in October in Liverpool, England where he is a heavy favorite not just in floor exercise and vault where he was world titlist in 2019 in Stuttgart, Germany and last year in Ktakyushu, Japan, but also other apparatuses plus the individual all-around.

While Mr. Yulo was expected to reign supreme in vault, there were some doubts if he would perform better in the parallel bars as he came in sixth in the qualifying round on Friday.

That effort costs Mr. Yulo the individual all-around gold that was snatched by Chinese Shi Cong.

But when Mr. Yulo summoned the same force, power and grace in the finale that made him one of the best, if not the best, male gymnasts in the world, there was little doubt of the outcome where the pocket-sized wunderkind stood on top of everyone, received his glimmering medal and sang the national anthem while the country’s flag is being raised.

Refurbishing old jeans is one way to be sustainable

Levi’s new flagship store offers hand-painting, pins, patches, and embroidery to make the old look new

FANCY a pair of hand-painted jeans? At Levi’s new flagship store at the SM Mall of Asia, one can have any old Levi’s outfits (jackets included) refurbished, either with digital embroidery, painting, pins, and patches.

The tailor station at the store that does this is one of several around the country, but the one in the Mall of Asia flagship is the only one that offers hand-painting and embroidery. Refurbishing old Levi’s is a way for the company, founded in 1873, to prove its sustainability goals, as part of a campaign called Buy Better, Wear Longer.

Marielle M. Ardiente, VP for Marketing and Customer Experience for Signature Lines, Inc. (which distributes Levi’s in all the SM stores in the country) said, “Levi’s has efforts to, as much as possible, keep your clothes as long as you can.” She pointed out that her own jean jacket was about four years old, and has steadily grown its own collection of patches and pins, during the opening earlier this month.

“Foot traffic has already returned to its pre-pandemic levels,” she said, in response to a question about opening a flagship store in the (hopefully) last days of the pandemic.

These are not the only sustainability measures that the company has since adopted, in light of pollution, climate change, and other issues. Ms. Ardiente pointed out that the Fresh line is dyed in pale pastels made with plant-based dyes.

The official Twitter account of the United Nations posted that “10,000 liters of water are needed to make a single pair of jeans.”

“By shopping 2nd-hand, buying eco-friendly clothes & donating what you no longer use, you can reduce the environmental impact of your (jeans emoji) & protect our (planet Earth emoji),” the tweet continued.

Mindful of this, Levi’s has released a line called Waterless (styled as Water<Less). Its website says that the initiative came from people looking for the rugged, beat-up look for jeans, achieved with stonewashing and other techniques. “Sometimes we simply use a thimble of water and a bit of ozone instead of detergent. To get a soft feel typically achieved by using fabric softener, we might tumble jeans with bottle caps and golf balls, taking the water out of the wash altogether. The end result remains the same: the jeans you love made by using less water.”

On another note, Ms. Ardiente points out that Levi’s 501’s use organic cotton. She noted, “The younger generation is very, very particular with the companies that have sustainability as a value.”

Levi’s was founded in 1873 by immigrant Levi Strauss and his business partner, Jacob Davis, who both patented denim work pants with copper rivets, suitable for miners in California — the company is gearing up to celebrate its 150th anniversary. Since then, blue jeans have entered popular culture as a chameleonic piece in anyone’s wardrobe: a good pair can make one look cool, hardworking, casual, or sexy. The late Vogue editor Diana Vreeland pronounced: “Blue jeans are the most beautiful thing since the gondola.”

In those 150 years, the whole world has picked up on jeans, and any clothing company worth their salt has sold at least a pair. How does Levi’s keep its edge still? “Basically, they’re the inventor of denim (jeans),” said Ms. Ardiente. “In terms of the design, construction, durability and the trust in the brand — when you say Levi’s, they know it’s going to last.” — Joseph L. Garcia

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