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The establishment of WESM’s independent market operator

The Wholesale Electricity Spot Market or WESM is the centralized venue for the trading of electricity between distribution utilities (as well as the other bulk users of electricity) and generation companies wherein the price of electricity is based on the interaction of demand and supply. The establishment of WESM is provided in Section 30 of RA 9136 or the Electric Power Industry Reform Act (EPIRA).

The law further provides for the creation of an Independent Market Operator (IMO) to operate the WESM within one year of WESM’s commercial operations. On 26 September 2018, this EPIRA provision was finally achieved with the incorporation and designation of the Independent Electricity Market Operator of the Philippines (IEMOP) as the IMO.

IEMOP adheres to the objective of WESM in ensuring a competitive, efficient, reliable, and transparent electricity market for the benefit of the Filipino consumers.

Is the establishment of IEMOP pursuant to the RA 9136 (EPIRA)?

Yes. EPIRA provides for the creation of an independent entity which will operate the Wholesale Electricity Spot Market (WESM). Pursuant to the letter of the law, the Department of Energy, jointly with the electric power industry participants, endorsed the transfer of the Market Operations of WESM to an Independent Market Operator (IMO) on 06 February 2018.

With the endorsement as required by the law, the Independent Electricity Market Operator of the Philippines (IEMOP) was incorporated and from there, it took over the operations of WESM on 26 September 2018. The Energy Regulatory Commission (ERC) and the Joint Congressional Energy Commission (JCEC) were duly informed of the transition of the Market Operations of WESM to IEMOP.

As further directed by EPIRA, the IEMOP Board of Directors consists of independent personalities who have no interest in any electric power industry participant.

From the foregoing, the establishment of IEMOP as the Independent Market Operator was clearly in accordance with EPIRA and the DOE Department Circular No. 2018-01-002.

Does DOE and IEMOP have a contract wherein DOE “allowed” IEMOP to perform the Market Operations?

No. IEMOP, as the Independent Market Operator, was created pursuant to a mandatory provision of RA 9136 or EPIRA:

Not later than one (1) year after the implementation of the wholesale electricity spot market, an independent entity shall be formed and the functions, assets and liabilities of the market operator shall be transferred to such entity with the joint endorsement of the DOE and the electric power industry participants.

Thus, pursuant to the law, IEMOP is formed, not by a contract, but through a joint endorsement by the DOE and electric power industry participants.

Why is IEMOP’s capital only Php7,000.00?

Because the law does not require that it should be more. For the formation of IEMOP, its incorporators contributed amounts totaling to Seven Thousand Pesos (Php 7,000.00), which is the initial capitalization as provided in the IMO Transition Plan, and in line with the requirements by the Securities and Exchange Commission (SEC) for non-profit corporations.

EPIRA provides that the functions, assets, and liabilities of the Autonomous Group Market Operator (AGMO) be transferred to IMO upon its formation. EPIRA did not mandate that such transfer be with consideration, or that the AGMO be reimbursed for the cost of such assets. Therefore, IEMOP does not require capital to assume the functions of the Market Operator.

IEMOP is a non-stock, non-profit corporation; thus, it does not require capital stock to be divided into shares and consequently, neither does it need to distribute any dividends to its members, trustees, or officers. By its nature and functions, IEMOP does not earn income or profits. To recover its yearly operating costs, IEMOP applies for “market fees” which are filed with and approved by the ERC. The market fees of IEMOP are recovered from the generator trading participants.

Does IEMOP have the requisite expertise to perform Market Operations?

Yes. The men and women of IEMOP, who are operating the WESM, has been with the electricity market since its inception. The IEMOP as an organization has the requisite expertise to perform the Market Operations.

 

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IEMOP set to launch the Green Energy Option Program on Dec. 3, 2021

The Independent Electricity Market Operator of the Philippines (IEMOP) is gearing to launch the Green Energy Option Program or GEOP on 03 December 2021, following the Energy Regulatory Commission’s issuance of ERC Resolution No. 08, Series of 2021. GEOP is one of the various programs under the Renewable Energy Act of 2008 which aimed to promote the development of renewable energy in the country. The program provides consumers an option to source their electricity supply from renewable energy resources, such as biomass, solar, wind, geothermal, ocean energy, and hydropower.

The ERC Resolution, in harmony with the Department of Energy’s Circular No. DC2018-07-0009, announced that those with average peak electricity requirements equal to or greater than 100kW are the first set of consumers that may avail of GEOP. Similar to the Retail Competition and Open Access (RCOA) program, consumers who are qualified to participate in the GEOP are no longer constrained to only source their electricity supply from the distribution utility of their location. Eligible consumers may now choose from various “Renewable Energy Suppliers” that are authorized by the DOE to procure energy from renewable energy facilities. Through such mechanism, GEOP aims to contribute to energy sustainability and promote further competition in the electricity sector.

By 03 December 2021, IEMOP will commence with the registration of Renewable Energy Suppliers into the Wholesale Electricity Spot Market (WESM). Upon successful completion of registration requirements, Renewable Energy Suppliers may now submit applications to enrol their customers into the GEOP starting 03 January 2022. The IEMOP, as the Central Registration Body for GEOP, facilitates and processes all switch requests to ensure all GEOP transactions are recorded.

IEMOP has undertaken preparations and has submitted proposals to amend market rules and manuals to fully commence GEOP. These proposals will be deliberated by power industry stakeholders and will eventually be submitted to the DOE for approval. IEMOP commits to provide steadfast support to implement the state’s policies and initiatives to encourage renewable energy and consumer choice. — Danyella Jamina Santiago

 

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Collaborating in social responsibility

The call to address inequalities and vulnerabilities in the system was increasingly resounding in the past years, then got further loudened by the coronavirus pandemic. This told the private sector to respond by putting corporate social responsibility (CSR) further into action.

In his article titled “Reimagining Corporate Social Responsibility in the Era of COVID-19: Embedding Resilience and Promoting Corporate Social Competence” published in an open-access journal titled Sustainability, Jingchen Zhao, a professor at Nottingham Law School, stated that as the pandemic has amplified existing societal inequalities and pushed them to the forefront of public consciousness, businesses have inevitably been urged to reconsider the endurance of their current business models as well as their corporate strategies and effectiveness in the future.

“Companies are prioritizing issues such as governance frameworks, corporate objectives, possibilities for developing more sustainable and localized supply chains, and possibilities for working remotely,” he continued. “The pandemic has revived the debate surrounding CSR and is fast constructing a new landscape for the sustainable development of businesses.” 

CSR, as defined by the United Nations Industrial Development Organization (UNIDO), is a management concept in which companies incorporate the addressing of social and environmental issues on their business operations and interactions with stakeholders. CSR issues can deal with environmental management, social equity, labor standards and working conditions, and good governance, among others.

“A properly implemented CSR concept can bring along a variety of competitive advantages, such as enhanced access to capital and markets, increased sales and profits, operational cost savings, improved productivity and quality, efficient human resource base, improved brand image and reputation, enhanced customer loyalty, better decision making, and risk management processes,” UNIDO said.

In the Philippines, CSR during the health and economic crisis involves support for the frontliners and vulnerable segments. Moreover, the significant contribution of the private sector to make a positive impact during the pandemic is done in collaboration with the government.

The partnership between the private and public sectors has been seen to somehow boost the coronavirus disease 2019 (COVID-19) testing in the country.

The private sector’s entrepreneurial mind-set and innovation capacities have been historically shown valuable in the country’s response to outbreaks and persistent communicable diseases in the past, according to an article published in the website of Health Systems Governance Collaborative, a group of practitioners, policy makers, academics, civil society representatives, agencies, decision-makers, and other citizens.

In addition, the Universal Health Care (UHC) Law also encompasses provisions and institutional mechanisms that allow contracting, paying, and linking the private sector with government facilities and networks of providers.

The collaborative, however, observed that these lessons were seemingly forgotten in the early weeks of COVID-19.

“After managing the first three cases confirmed in the end of January 2020, the Philippines was blindsided after local transmission was confirmed in March 2020. The country settled into thinking that there was adequate testing capacity with its national reference laboratory, the Research Institute for Tropical Medicine. Although 17 sub-national laboratories were upgraded and certified within three months, it was clearly not enough,” the group said.

“There was no concerted effort to tap the private sector in expanding COVID-19 testing. Private laboratories only started to be certified starting mid-April, and private sector support such as donations and innovations were not strategically organized,” it added.

Nevertheless, the group reported that in March last year, Asian Development Bank (ADB) stepped in and offered assistance to the Department of Health (DoH) to expand testing capacities. The ADB lend a hand to the publicly-owned Jose B. Lingad Memorial Hospital in building a testing facility, mobilizing international partners from China for the technology and tapping local private pharmaceutical company Unilab to help retrofitting the facility.

Meanwhile, the DoH crafted a four-pronged strategy with the technical support from ThinkWell Philippines, a health systems development organization, to likewise expand the testing in the country.

These efforts have pushed to mobilize private sector support, which led to the establishment of the Taskforce T3 (Test, Trace, Treat).

Partnering in pandemic response

On April 24, 2020, the Inter-Agency Task Force-National Task Force (IATF-NTF) and DoH, with support from the ADB, organized the Taskforce T3. Government agencies, international organizations, expert groups, and private corporations in the pharmaceuticals and health service industry joined forces for this initiative.

Such a multi-sectoral collaboration, according to the same article from Health Systems Governance Collaborative, proved to be an “effective catalyst.”

T3 private sector partners and their networks were quick to organize the needed resources for the testing centers, which included infrastructure, equipment, and supplies donations. Supply chain, logistics, and information technology professionals from the private sector were also tapped to enhance the complementary systems for testing.

“The very nature of both public and private sectors allows for a more synergistic response as they bring to bear their respective strengths and adapt these to the context of the greater challenges and needs confronted by our country, such as the COVID-19 pandemic,” the Health Systems Governance Collaborative said. “As the country continues to achieve UHC beyond this pandemic response, learnings from the success of this public-private partnership should be carried on.”

The collaboration between the public and private sectors continued in the COVID-19 vaccination program.

In December last year, the IATF-NTF, DoH, and a core group of companies including Boston Consulting Group (BCG), Philippine Disaster Resilience Foundation (PDRF), AC Health, Unilab, and Zuellig Pharma came together to host the COVID-19 Vaccine Logistics Summit.

“This summit is all about recognizing our challenges, learning from experts, mobilizing our resources and assets, and coordinating across government, LGUs, and the private sector. This is a public-private partnership,” said Guillermo Luz, chief resilience officer at PDRF, in a statement.

“We don’t think the government can do it alone. We don’t think the private sector can do it alone. This requires a very strong partnership as we have seen throughout the journey of T3 as we go from testing to distribution of supplies, PPEs, isolation, and treatment. Vaccination will be the same thing but even more complex,” he considered.

Private companies also collaborated to promote vaccine willingness among Filipinos through the Ingat Angat Bakuna Lahat campaign. The companies have contributed funds, expertise or talent, and time to support the national vaccination program.

“It was an unprecedented collaboration,” Margot Torres, managing director of McDonald’s Philippines and the Ingat Angat communication advocacy co-lead, said during the campaign launch in May. “Multiple companies, even competing brands, set aside their differences for the future of our country.” — Chelsey Keith P. Ignacio

Keeping hope alive through compassion and commitment

Metrobank Foundation awarded 4 teachers, 3 soldiers, and 3 police officers who are guided by the value of “Beyond Excellence.” Each awardee received P1-million cash incentive, a gold medallion, and ‘The Flame’ trophy.

At its core, the COVID-19 pandemic is a humanitarian crisis. Behind the losses in productivity and economic activity are millions of people who have lost their income, have been displaced or left isolated by lockdown measures, and — worst of all — have suffered losses or died because of the virus.

It is during these times that those with the most influence have the duty and obligation to help their fellow man. Metrobank, as one of the country’s biggest and most successful companies, is doing its part through Metrobank Foundation, Inc. (MBFI).

In celebration of Metrobank’s 59th anniversary, this year’s batch of beneficiary organizations received financial aid to implement programs on health, education, livelihood, and sustainable feeding during the virtual George S.K. Ty Grants Turnover.

“Over the past months, while the COVID-19 pandemic has shaken the world and challenged economies and millions of lives, Metrobank Foundation did not waver on hope, no matter how elusive it proved to be. We believe that nurturing this hope, amid dire circumstances that threaten to defeat it, is the most vital thing we can all do,” Aniceto M. Sobrepeña, president of MBFI, said in the company’s 2020 Annual Report.

MBFI continued to utilize its influence by implementing initiatives for social good. All this was achieved through various collaborations with institutional partners, formalized to mobilize efforts towards supporting communities, frontliners, and the government.

Saluting the Filipino spirit

In the past, the MBFI championed this effort by honoring the best of the best public servants in the country, whose service and community involvements have helped shape better Filipino communities and have created a lasting positive impact upon the people.

This year, the Foundation continued this tradition by awarding the 2021 Metrobank Outstanding Filipinos — composed of four teachers, three soldiers, and three police officers — with P1 million cash prize, a gold medallion, and ‘The Flame’ trophy.

MADE CARES is part of the Metrobank Foundation’s initiatives to reach out and assist Filipino painters and sculptors whose means of livelihood were severely affected by the COVID-19 pandemic.

The long-running Metrobank Art & Design Excellence (MADE) also continued despite the difficulties of the pandemic. On its 37th year, MADE adopted the theme “Spectrum: The Art of Possibilities,” inviting every Filipino artist to tap into the expansive realm of creativity and transpose their spectrum of ideas into works that mirror the human experience and reshape the world anew.

Moreover, MADE maximized social media to continue its advocacy through a yearlong #SpectrumMADE2021 campaign, bringing art experience and art education to stakeholders through a series of online activities such as webinars and artist’s talks.

A cash assistance program dubbed as MADE CARES (Community Aid and Relief for Emergency Situations) was also implemented, benefitting over 200 artists from the P1-million financial aid.

Supporting health, education

With the challenges brought by the pandemic, MBFI adapted to the changing needs of its target beneficiaries by supporting programs with a holistic approach and multi-sectoral collaborations. Testifying to such support, MBFI has recently given away P15 million worth of grants to 12 social development partners during the virtual “George S.K. Ty Grants Turnover,” to implement their programs on health, education, livelihood, and sustainable feeding.

Through its collaboration with LCF and MWF in 2020, MBFI was able to construct 10 handwashing facilities and distribute 2,000 hygiene kits which benefit more than 31,000 individuals.

Initially proposed as a way of keeping schools safe during the pandemic by installing proper hand hygiene facilities modified in compliance with the government health and safety protocols, the Helping Hands WASH initiative of MBFI through and in partnership with Manila Water Foundation is now extending to public spaces like government hospitals and public markets.

For its education-centric initiatives, MBFI has donated equipment such as risograph machines, photocopiers, and printers to schools. Made in partnership with the Department of Education, the donation of equipment under Phase 2 of Project TEACH (Taking-up Education Access Challenges with a Heart) aims to support schools within high-risk areas and far-flung communities during the pandemic in their printing of learning modules for public students. The project has reached 59 schools in 2020 and will reach additional 45 schools by the end of 2021.

Furthermore, non-tuition support for students were granted in the form of internet accessibility in geographically isolated and disadvantaged areas and digitalized blended learning modules for early learners. Through St. Vincent Seminary, 200 students in Pollilo Island, Quezon Province benefited from an internet scholarship for 10 months. Meanwhile, by supporting Communications Foundation for Asia’s project on Digitalized Blended Learning Modules for early learners, 125 students in Caloocan City will receive digitalized modules that will facilitate their learning without interruption due to unstable internet connections.

Sustainable feeding, livelihood

MBFI also led food augmentation programs that supported the agricultural sector, as well as feeding programs which do not only benefit the indigent families but also support others who were greatly affected by the pandemic such as local farmers and jeepney drivers.

These programs include the Ateneo Center for Educational Development’s Food Augmentation Program, which supports 100 indigent high school students of Bagong Silangan High School in Quezon City and their families; Kids International Ministries (KIM) Meals and Values Program, meanwhile, benefitting 15,000 individuals every week for one year from its communities in Mindoro, Antipolo, and Tondo; Yellow Boat of Hope Seeds of Hope, providing gardening seeds for communities, particularly in Bulacan, Sorsogon, Camarines Sur, and Masbate; and International Institute of Rural Reconstruction’s Gulayan sa Barangay Kontra-COVID community garden program.

YBH Foundation has been a long-time ally of MBFI in sustaining a vision that endures beyond the pandemic. From donating boats to building classrooms, dormitories, bridges, and supporting locals’ livelihood projects — all geared towards exploring ways to better aid children in pursuing education.

MBFI has also taken the initiative to seek out sustainable interventions to augment the impact the pandemic has had on livelihood as well as to respond to the growing challenge of food access.

These efforts manifested in the support of Lokal Lab’s project to teach 50 women farmers, producers, and artisans financial skills and digital programs that will help sustain their local vegetable business as well as their household income. This is coupled as well by Care Philippines’ project to provide 250 households with livelihood starter kits. In addition to this, the aGAP sa Batangas project will teach households sustainable vegetable production techniques and various resilience strategies as they continue to cope with the pandemic, while training roving agents to facilitate support and act as mentors to the beneficiaries after the project is concluded.

 

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New batch of SM scholars: A step closer to their dreams

As the famous saying goes, “Education is the passport to the future, for tomorrow belongs to those who prepare for it today.”

This is what the SM scholars believe in — that education is their key to uplift not just their own, but also their family’s economic status.

Just recently, SM Foundation Inc. (SMFI), the corporate social responsibility arm of SM, welcomed 250 new college students to their SM College Scholarship Program for school year 2021-2022 which was streamed on SMFI’s official Facebook page.

With the addition of these college freshmen, the total number of current SM scholars is now at more than 1,300. To date, SMFI has already produced over 3,400 college graduates.

SM scholar Kisses Liwanag

One of the 250 new SM scholars is Kisses Liwanag. She is taking up Bachelor of Secondary Education Major in English at the Batangas State University. A daughter to a tricycle driver and a food vendor, Kisses knew that she had to step up for her to finish her tertiary education.

“Mula po noong nalaman ko ang about sa SM Scholarship ay talaga pong inabangan ko ang pagbubukas ng kanilang online application. Ipinagdasal ko po ito sa bawat araw at pinaglaanan ko talaga ng oras ang pagkolekta sa mga kinakailangang documents at agad-agad po akong nag fill-out sa online application the moment na nagbukas ito,” Kisses recalled.

“Nag-apply po ako sa SM scholarship dahil gusto kong makatapos sa kolehiyo at makatulong sa aking mga magulang at kapatid, lalo’t nasasaksihan ko po ang hirap ng aking mga magulang at ang kagustuhan nila na mapatapos kaming magkapatid sa aming pag-aaral,” she further shared.

According to Kisses, the SM scholarship grant is a big help for her and her family especially because of their current situation, “Sa kasalukuyan po, masasabi ko pong hindi gaanong maganda ang estado ng aming pamumuhay lalo’t humina po ang biyahe ng tricycle dahil sa pandemya at ‘di rin po araw-araw na nakapaglalako si mama ng puto.”

SM scholar Mark Lawrence Bacasmo

Same with Kisses, new SM scholar Mark Lawrence Bacasmo also prepared ahead for the scholarship application. “When I learned about the scholarship program of SM from my mom’s friend, I immediately prepared all the documents I needed for the application,” Mark shared.

“The application was smooth. The application portal can be easily navigated as long as you have the requirements. Same with the qualifying exam up until the interview,” he added.

Mark is taking up Bachelor of Science in Accountancy at the Asia Pacific College. His father is a security guard while his mom sells homemade food.

“After I graduate, I hope to pass the board exams and become a Certified Public Accountant. And when I get a job, I am planning to save up and buy my parents a house,” Mark said.

Both Kisses and Mark expressed their gratitude to SM Foundation and the Sy family for giving them an opportunity to continue their college education without having to think of the financial burden of tuition and allowance.

(File photo) SM Scholars General Assembly in 2019

Of the 250 new SM scholars, 40% are from the National Capital Region and 60% are from the provinces across the country. This makes the total current number of SM college scholars to more than 1,300.

Under the flagship program of SM Foundation, scholars enjoy full tuition and miscellaneous fees subsidy. They also receive monthly stipend and are exposed to various enrichment activities and job opportunities at SM malls during their semestral or Christmas breaks. After graduating, they also have chance to land their dream jobs in companies within SM.

SMFI, through its Scholarship program, provides deserving and qualified students with access to college education and technical-vocational studies since 1993.

To know more about the social good programs of SM Foundation, visit www.sm-foundation.org, or follow its social media accounts on Facebook, Twitter, and Instagram (@SMFoundationInc).

 

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House moves to suspend fuel tax

THE HOUSE Committee on Ways and Means on Thursday approved a bill that would temporarily suspend or lower the excise tax on some fuel products for six months, a move that is estimated to cost the government around P45 billion in foregone revenues.

The committee approved a substitute bill that would temporarily scrap the excise taxes on diesel, kerosene, and liquefied petroleum gas (LPG). The excise tax on low-octane gasoline will be lowered to P4.35 per liter (/L), while the tax on premium gasoline will remain in place.

Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law raised excise tax on fuel in three tranches from 2018 to 2020. The tax rates are currently at P10/L for gasoline, P6/L for diesel, P5/L for kerosene, and P3/L for LPG.

“It’s immediate relief for Filipino families, especially affected sectors. The bill will cost the government around P45 billion, but what the government loses, the consumer gains,” Albay Rep. Jose Ma. Clemente S. Salceda, chair of the committee, said in a statement.

The suspension of excise tax on fuel will last for six months.

The substitute bill would be mainly based on House Bill (HB) 10438, authored by Mr. Salceda, but would incorporate HB 243, 10411, 10426, and House Resolutions 2318 and 2320.

“We embedded a mechanism (in the bill) for reverting it back to TRAIN rates if the prices normalize. If it goes back to $65 per barrel of crude oil, then the excise tax rates will also normalize,” Mr. Salceda said.

The bill also proposes a social impact stabilization fund that would provide subsidies for affected sectors such as farmers, fisherfolks, and transport workers when prices of fuel increase.

This will be funded by a P2/L charge for diesel and gasoline if global crude oil prices go below $45 per barrel.

“Basically, it addresses the cyclicality of prices. When they are too low, we can charge more so that we have funds in reserve for future assistance. When the prices are high, we can release these funds to the public,” Mr. Salceda said.

Mr. Salceda expressed confidence the House of Representatives will approve the bill and send it to the Senate by the fourth week of November, adding that this is a priority measure of House Speaker Lord Allan Jay Q. Velasco.

Bayan Muna Rep. Carlos Isagani T. Zarate, meanwhile, urged President Rodrigo R. Duterte to certify the bill as urgent to fast-track its approval.

The suspension of the excise tax on oil was first floated by the Energy department, as pump prices soared in recent weeks.

As of Nov. 9, year-to-date pump prices for gasoline and diesel have increased by P20.95/L and P17.50/L, respectively, according to data from the Energy department.

However, the Department of Finance (DoF) is cool to the proposal. The DoF noted a six-month suspension of the fuel excise tax would lead to foregone revenues worth P37.5 billion, which may hamper the country’s economic recovery from the coronavirus pandemic.

Lawmakers are also running out of time to tackle the legislative agenda. Congress adjourns for the Christmas break on Dec. 18. It will hold sessions from Jan. 17-Feb. 4, before adjourning to prepare for the national elections in May. — Russell Louis C. Ku

NPL ratio eases to 4.43% in September

SOURED LOANS held by banks slipped month on month in September, bringing the nonperforming loan (NPL) ratio slightly lower to 4.43%, data from the Bangko Sentral ng Pilipinas (BSP) showed.

Based on BSP data, NPLs declined by 1.3% to P485.532 billion in September from the P491.926 billion in August.

However, bad loans increased by 30% from P374.304 billion in September last year.

The NPL ratio stood at 4.43%, easing from the 4.51% in August which was the highest since the 4.52% in September 2008. It was higher than the 3.51% a year earlier.

The easing NPL ratio in September from August reflected the impact of the relaxed quarantine measures, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

“More businesses reopened, thereby partly reducing NPLs from businesses. This also fundamentally led to some pickup in demand for credit that also expands the denominator and effectively reduces the NPL ratio,” Mr. Ricafort said in an e-mail.

High-risk areas including Metro Manila were placed under a two-week strict lockdown in August due to a surge in coronavirus cases. Restrictions have gradually been eased as infections declined.

However, the increase in NPLs year on year in September shows the extent of the pandemic’s impact on Filipinos’ income and on the asset quality of banks, said Asian Institute of Management economist John Paulo R. Rivera.

“Rising bad loans is still an indication of uncertainties in the income-generating opportunities of people, but it is slowly improving given the relaxing of restrictions because jobs are slowly returning,” Mr. Rivera said in a Viber message.

Earlier data released by the central bank showed bank lending continued to grow for the second consecutive month by 2.7% year on year in September. Prior to August, lending contracted annually for eight straight months since December 2020.

In September, banks’ total loan portfolio rose by 2.63% to P10.959 trillion from P10.678 trillion a year ago.

Past due loans increased by 8% to P570.199 billion from P528.097 billion a year earlier. These borrowings were equivalent to 5.2% of the industry’s total loan portfolio, up from 4.95% a year earlier.

Meanwhile, restructured loans surged by 158% to P338.462 billion from P130.883 billion in September last year. This brought the ratio to 3.09% from 1.23%.

Banks continued to beef up loan loss reserves to P409.571 billion, up by 20.8% from P339.027 billion. With this, its ratio rose to 3.74% from 3.17% in September 2020.

Lenders’ NPL coverage ratio — which shows the allowance for potential losses due to bad loans — dropped to 84.36% from 90.58% a year earlier.

Mr. Ricafort said he expects the continued easing of restriction measures and the faster pace of vaccination to boost business and consumer confidence, which may help improve banks’ asset quality. He also noted the seasonal increase in economic activities during the fourth quarter could support borrowers’ capacity to pay debts, and drive demand for loans.

Central bank officials earlier said the bad loan ratio could reach 5-6% by the end of this year before peaking at 8.2% in 2022. If realized, this will still be much lower than the 17.6% seen in the aftermath of the Asian Financial Crisis in 2002. — Luz Wendy T. Noble

PEZA says investment pledges decline by 13.7%

REUTERS

THE Philippine Economic Zone Authority (PEZA) reported a 13.7% decline in approved investments in the first 10 months of 2021, reflecting the impact of the coronavirus pandemic on investor sentiment.

In a statement, PEZA said it approved 215 projects worth P62.72 billion in the January to October period, lower than the P72.64-billion worth of projects during the same period in 2020.

PEZA Director-General Charito B. Plaza said the drop in investments was more pronounced this year compared with 2020 amid the prolonged coronavirus disease 2019 (COVID-19) pandemic.

“The decline in investment pledges and projects in PEZA was felt more in 2021. This is because when the first quarantines began in Philippines in March 2020, there were pending applications for investments and projects that were approved. Thus, 2020 performance didn’t immediately decrease,” she said.

In 2020, the investment promotion agency registered P95.03 billion in pledges, falling by 19.15% from the P117.54 recorded in 2019.

“Due to the strict lockdowns implemented last year, the approval of projects filed in early 2020 were delayed until mid to late last year. Business groups, entrepreneurs, and exporters were on a wait-and-see mode and had lower risk appetite in their investments during the pandemic. Hence, the impact of the pandemic was really felt this year,” Ms. Plaza said.

According to PEZA, most of the investments will be for ecozone development with P28.75 billion, and the manufacturing sector with P24.13 billion. The projects will be located in Regions IV, VII and the National Capital Region.

“We will constantly perform our best to attract investors to the country. We still have two months left this year, and there’s still a lot to happen. Let’s continue to have a positive outlook as we unite in reviving our economy,” Ms. Plaza said.

Meanwhile, PEZA said its actual employment for the January to August period increased by 11.1% to 1.69 million, while export income climbed by 17.4% to $40.69 billion.

“PEZA continues to contribute 65% of export income on commodities and goods, and export service income of 85% from information technology-business process outsourcing (ITBPO) and tourism-oriented companies registered with PEZA,” Ms. Plaza said.

As of September, 90% of PEZA-registered companies are operating across the country under different work arrangements, an increase of 3% compared with 87% reported in the same period last year. — R.M.D. Ochave

 

Vehicle sales slip in October

AUTOMOTIVE SALES dropped by nearly 10% year on year in October, although the industry remains confident full-year sales will be better than a year ago.

Based on a joint report from the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and Truck Manufacturers Association (TMA) released on Thursday, carmakers sold 22,581 units in October, down by 9.8% from the 25,023 units sold in the same month last year.

October sales of passenger cars declined by 15.2% year on year, while commercial vehicle sales slipped by 6.7%.

Month on month, vehicle sales rose by 5.1%, as the 15.9% growth in passenger car sales offset flat sales in commercial vehicles. However, the pace of sales growth slowed from the 35.6% month-on-month increase seen in September.

The government placed the National Capital Region (NCR) under Alert Level 4, which was the second highest level under the new alert levels system, until Oct. 15. NCR was downgraded to a more relaxed Alert Level 3 until Oct. 31 as new coronavirus disease 2019 (COVID-19) cases continued to decline.

“Based on the October 2021 sales performance, the auto industry remains strong and will certainly surpass last year’s overall performance,” CAMPI President Rommel R. Gutierrez said in a statement on Thursday.

“Likewise, we continue to discuss relevant issues with the government aimed at ensuring full recovery of the industry as the country’s economic growth outlook is upgraded,” he added.

The industry is targeting to sell 295,400 units this year, higher by 20.9% compared with the 244,374 units sold in 2020.

For the first 10 months so far, total vehicle sales stood at 214,186 units, 23.8% up from the 173,035 units sold a year ago.

Sales of passenger vehicles increased by 29.3% to 68,608 units as of end-October, while commercial vehicles jumped by 21.3% to 145,578 units.

Toyota Motors Philippines Corp. continued to be the sales leader, accounting for 48.3% or 103,475 units of total vehicle sales. Mitsubishi Motors Philippines Corp. ranked second with a 13.8% market share, followed by Ford Motor Co. Phils., Inc. with 7.6%, and Suzuki Phils., Inc. with 7.4%.

Mr. Gutierrez said earlier in the year that the local car industry may see a return to pre-pandemic sales level as late as 2023. — Revin Mikhael D. Ochave

World’s record food bill is hitting poorer countries

The world’s food-import bill is set to jump even more than expected to a record this year, increasing the threat of hunger, especially in the poorest nations.

Higher shipping rates and prices of foodstuffs from grains to vegetables are likely to drive the cost of importing food up by 14% to $1.75 trillion, the United Nations (UN) said. It also warned of higher bills as farm inputs get more expensive.

Food prices have climbed to the highest in a decade, further pressuring household budgets strained by the pandemic and rising energy bills. A particular worry is that food-import costs in poor countries are climbing faster than those in developed economies, something that’s becoming an increasing problem in regions that are reliant on shipping in supplies.

Grain prices rallied in the past year as bad weather curbed harvests, freight rates rose and labor shortages hurt supply chains. That’s happened as global hunger hit a multiyear high, while an energy crunch also had a knock-on effect of raising fertilizer prices, giving farmers another headache.

“Food prices will inevitably rise with higher production costs, and do so without significant delays,” the UN’s Food and Agriculture Organization said in a report on Thursday. — Bloomberg

Converge income rises as pandemic boosts demand

https://www.convergeict.com/

By Arjay L. Balinbin, Senior Reporter

CONVERGE ICT Solutions, Inc. on Thursday said its attributable net income for the third quarter surged to P1.95 billion from P931.47 million in the same period a year earlier as demand continued to rise amid the public health crisis.

In a stock exchange filing, the listed fiber internet provider said its gross revenues for the third quarter of the year increased by 68% to P7.05 billion from P4.19 billion previously.

Broken down, the company’s third-quarter residential revenue climbed by 79% to P6.16 billion from P3.44 billion in the same period a year earlier, while revenue from its enterprise segment grew by 18% to P887 million from P752 million previously.

Cost of services for the quarter reached P2.64 billion, up by 37% from P1.93 billion in the same period last year, bringing the company’s gross profit to P4.41 billion, up by 95% from P2.26 billion previously.

Converge said it added almost 280,000 subscribers in the third quarter, bringing its total residential subscriber count to nearly 1.6 million, by 75% higher compared to the same period last year.

“This was made possible as Converge reached peak levels in its port deployment at over 650,000 ports in the third quarter,” the company said.

Meanwhile, Converge’s attributable net income for the first nine months of the year went up by 137% to P5.20 billion from P2.19 billion in the same period in 2020.

January-to-September revenues increased by 76% to P18.83 billion from P10.68 billion last year. Cost of services reached P7.46 billion, up by 51% from P4.94 billion previously, bringing the company’s gross profit to P11.37 billion, up by 98% from P5.73 billion in the same period last year.

“As of end-September 2021, the nationwide network of Converge reached more than 9.6 million homes, allowing it to accelerate its target to cover approximately by 55% of Filipino households to 2023, two years ahead of the original 2025 schedule announced during the initial public offering last year,” the company said.

Converge also said it completed “in the past quarter” its P6-billion, 1,800-kilometer subsea cable project with its final landing in Coron, Palawan, connecting the country’s major islands to its domestic fiber backbone.

“As of September 2021, Converge’s domestic fiber backbone is at 90,000 kilometers, passing through some 440 cities and municipalities nationwide and introducing its broadband service to new markets including Iloilo, Cagayan, and Cagayan de Oro,” it noted.

At a virtual briefing, Converge Chief Executive Officer Dennis Anthony H. Uy said the company is “exploring potential new partnerships to serve [its] customers beyond broadband internet, such as fintech, e-games, con-tent, and others.”

Converge ICT shares closed by 3.24% higher at P35 apiece on Thursday.

SMC net income rises to P34.2B

San Miguel Corporation head office in Ortigas, Mandaluyong City, October 26, 2014

SAN MIGUEL Corp. (SMC) on Thursday said its consolidated net income for the first nine months of the year surged 218% to P34.2 billion from P10.7 billion in the same period last year, despite its three companies’ volumes growing at a “slower pace.”

“Consolidated revenues rose by 22% to P650.6 billion,” SMC said in an e-mailed statement. The company attributed the increase to volume growth across its major businesses.

SMC has yet to disclose its quarterly report.

The company said its operating income climbed by 112% to P87.7 billion in the first nine months.

SMC President Ramon S. Ang said the operating environment remains very challenging. “[B]ut we’ve managed to stay resilient, focus on our goals, and quickly adapt to changing conditions.”

“We’re determined to keep this momentum going, especially with the easing of quarantine restrictions,” he added.

Metro Manila mayors lifted the general curfew in the capital region last week along with the easing of the lockdown to Alert Level 2. Malls in the Philippine capital and nearby cities will adjust operating hours starting mid-November.

National Capital Region was placed under Alert Level 2 from Nov. 5 to 21 amid decreasing infections. Under the lockdown level, businesses may operate indoors at 50% capacity. They will get an additional 10% capacity if they have a so-called safety seal from the government. For outdoor operations, they may operate at 70% capacity.

“Petron and Power… delivered quarter-on-quarter volume and revenue growth. San Miguel Brewery, Inc. (SMB), Ginebra San Miguel, Inc. (GSMI), and San Miguel Foods likewise continued to grow volumes, albeit at a slower pace, due to mobility restrictions and liquor bans implemented in July and August,” SMC said.

San Miguel Food and Beverage, Inc. saw its revenues increase by 14% to P221.7 billion. Its operating income rose by 60% to P32.8 billion, while net income went up 68% to P24.2 billion.

Meanwhile, SMC Global Power Holdings Corp.’s revenues went up by 7% to 93.9 billion, while operating income decreased by 14% to P24.9 billion “due to higher spot purchases and rising coal prices,” SMC said.

“Net income amounted to P13.7 billion, down by 5%,” it said, noting that the company’s performance was “partly affected by ongoing gas restrictions at the Malampaya field, and the extended outage of the Sual plant.”

Petron Corp. reported a net income of P5 billion for the first nine months, a turnaround from a P12.6 billion net loss previously.

“Sales volumes in its Philippine operation posted recoveries from lubricants and retail stations, which increased by 28% and 9%, respectively, along with a significant growth in its petrochemicals business,” SMC said.

Meanwhile, SMC Infrastructure’s revenues for the first nine months totaled P13.3 billion, a 29% increase from last year.

“Average daily traffic volumes grew by 35% at all operating toll roads,” SMC said. “Operating income rose by 102% to P4.3 billion from the same period in 2020.”

SMC shares closed unchanged at P117.20 apiece on Thursday. — Arjay L. Balinbin

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