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Dollar reserves still ‘adequate’ — BSP

REUTERS

THE COUNTRY’S dollar reserves remain at an “adequate” level despite slipping below the $100-billion level as of end-July,  Bangko Sentral ng Pilipinas (BSP) Governor Felipe M. Medalla said.

At the same time, S&P Global Ratings noted the Philippines’ foreign exchange reserves remain “very high” but will likely drop as global commodity prices and interest rates continue to rise.

Many central banks have deployed the tandem of rate hikes and foreign exchange spot intervention as the US Federal Reserve continued its aggressive monetary policy tightening.

“We were responding just like other central banks to this global situation. The monetary policy in the United States is causing currencies to depreciate, so in response to that, we raised interest rates, not as much as the US did, and we also sold reserves… Nonetheless, our reserves remain comfortable and adequate,” Mr. Medalla said at the Development Budget Coordination Committee’s (DBCC) briefing for the House Committee on Appropriations on Friday.

The peso touched its all-time low of P56.45 per dollar in July.

Year to date, the peso has weakened by P6.02 or 9.84% from its P51-per-dollar close on Dec. 31, 2021.

The country’s gross international reserves (GIR) stood at $98.83 billion as of end-July, 2% lower than the $100.85-billion level as of end-June. The dollar reserves fell below the $100-billion level for the first time since August 2020 when GIR stood at $98.95 billion.   

The GIR level has been on a decline since February this year.

“Despite the recent declines in gross international reserves, the overall level remains very high, especially when put into the context of the fairly consistent trend of around $80 billion in the five years prior to the pandemic,” S&P Global Ratings Senior Economist Vincent Conti said in an e-mail.

Having an ample level of dollar reserves safeguards an economy from market volatility and is an assurance of the country’s capability for debt repayment in the event of an economic downturn.

The country’s foreign exchange buffer hit a record high of $110.12 billion in December 2020.

“In a way, the weak domestic economy during the COVID (coronavirus disease 2019) period had the positive and related side effects of a stronger currency and a strong buildup of reserves, by dampening imports and thus boosting the trade balance,” Mr. Conti said.   

“This is of course being reversed as the Philippines and the region faces capital outflow pressure amid high commodity prices and prospects of still higher global interest rates, as we note in our most recent report. That has resulted in peso depreciation as well as a slightly lower buffer from reserves,” he added.

In a research note dated Aug. 22, S&P Asia-Pacific Chief Economist Louis Kujis said foreign reserves in emerging markets in the region have declined amid heightened exchange rate volatility.

“Asian currencies have depreciated appreciably against the US dollar this year; and this has allayed much of the burden on the balance of payments,” he said.

The BSP is expecting a GIR of $108 billion for this year and $109 billion for next year. — Keisha B. Ta-asan

Elevated inflation, rising rates to drag growth, says Medalla

Department of Trade and Industry officials inspect the price of sugar at a supermarket, Aug. 26. — PHILIPPINE STAR/EDD GUMBAN

ELEVATED INFLATION and rising interest rates will drag Philippine economic growth this year, the central bank chief said.

Bangko Sentral ng Pilipinas (BSP) Governor Felipe M. Medalla on Friday said inflation is “very high” this year, but the Philippines will likely be “less affected” than other countries.

“Nonetheless, it will affect the growth because if people are spending more money on transport, fuel, food, they will have less money for other things,” he said during the Development Budget Coordination Committee’s (DBCC) briefing for the House Committee on Appropriations on Friday.

The consumer price index quickened to 6.4% year on year in July, the fastest in nearly four years, amid the continued climb in global prices of fuel and other commodities. It exceeded the central bank’s 2-4% target band for a fourth straight month.

Inflation averaged 4.7% in the first seven months, still below the central bank’s 5.4% inflation forecast for this year.

“But there’s very little we can do about it since those prices are totally beyond our control. The question whether inflation will hurt us, the answer is yes,” Mr. Medalla said.

For the first half of 2022, the economy expanded by 7.8%, exceeding the government’s 6.5-7.5% full-year target.

Mr. Medalla noted the peso’s depreciation against the US dollar is also adding inflationary pressure. As of Aug. 26, the peso has weakened by P6.02 or 9.84% from its P51-per-dollar close on Dec. 31, 2021.

“There’s too much depreciation, that is bad on the inflation for the economy. And the central bank raises interest rates, of course that will also affect the economy,” Mr. Medalla said. “But as I already stated, not enough to prevent us from achieving what was stated in the budget.”

The Marcos administration last week submitted to Congress its proposed P5.268-trillion national budget for 2023.

Most of next year’s proposed budget will go to social services at P2.071 trillion (39.31%) and economic services at P1.528 trillion (29.01%). The rest of the proposed budget is allocated to general public services at P807.2 billion (15.32%); debt burden, including net lending, at P611 billion (11.59%); and defense at P250.7 billion (4.76%).

Economic managers are targeting 6.5-8% gross domestic product (GDP) growth in 2023.

IMPACT
“Inflation or higher prices would erode the purchasing power of the government’s national budget or curtail the power of government spending as an economic growth driver/pillar,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

Higher interest rates would also require a bigger budget for interest payments on borrowings incurred to finance the budget deficit, he added.

“Same goes with the private sector: Higher prices/inflation reduce the funds that would otherwise go for spending and investments by consumers (about 78% of the economy), by businesses and other institutions,” Mr. Ricafort said.

China Banking Corp. Chief Economist Domini S. Velasquez said in a Viber message that rising prices have impacted the purchasing power of ordinary Filipinos.

“BSP’s recent aggressive actions seem to have re-anchored inflationary expectations and have brought some stability to the peso. However, both higher inflation and higher interest rates affect economic growth prospects,” she said.

The Monetary Board has raised its benchmark policy rate by a total of 175 bps so far this year, bringing it to 3.75%.

“We think that inflation is still on its way to peak in the fourth quarter. Hence, we expect BSP to keep raising rates at a moderate pace of 25 bps in its meetings before ending with a terminal rate of 4.5%,” Ms. Velasquez added.

If inflation starts easing in the coming months, Mr. Ricafort said there would be a lesser need for the BSP’s aggressive tightening.

The next Monetary Board policy meeting is scheduled on Sept. 22. — Keisha B. Ta-asan

‘Revenge’ partygoers spur Manila’s nightlife revival

People enjoy al fresco dining at restaurants in Quezon City, June 11. — PHILIPPINE STAR/ MIGUEL DE GUZMAN

By Joseph L. Garcia, Reporter

TIM NG reopened Mow’s, an “underground” bar near Manila, the Philippine capital in July after two years of being shuttered amid a coronavirus pandemic.

The bar, located in the basement of a family-owned building — the Kowloon House in Quezon City — resumed business months after the industry was allowed to operate again as infections eased.

Manila’s nightlife appears to have come to life again, thanks to “revenge” partygoers eager to spend more on food and booze.

In 2020, the combined sales of cafés and bars in the Philippines reached $1.1 billion, significantly lower than before the coronavirus pandemic hit, according to Statista.

“A number of bars started reopening months before, but we wanted to wait until cases really went down,” Mr. Ng said in an e-mail. “We reopened a couple of weeks after the government allowed 100% occupancy rates for establishments.”

Booze joints in the National Capital Region (NCR) were closed to contain the coronavirus disease 2019 (COVID-19), which in many parts of the world including the United States spurred a rapid spread in infections in 2020.

Lockdowns covered both old and young people, including those aged 21 and younger, who enjoy partying.

In Quezon City where Mow’s is located, liquor bans and curfews were enforced at the start of a Luzon-wide lockdown in March 2020 and sporadically months later during infection surges.

The glamorous Palace Manila club complex in Bonifacio Global City in Taguig — one of the top party destinations in the Philippines with five nightclubs — was also forced to shut during the pandemic.

“The Palace complex was forced to close for almost two years to minimize our overhead expenses and tide us through,” Palace Manila co-owners JM Rodriguez and Alexandra Habaluyas said in an e-mail.

The bohemians in Mow’s and the fashionistas at Palace Manila face the same problems in the post-pandemic world, including spiraling prices.

“All industries were heavily affected by the pandemic but as the world was slowly getting used to living with the virus, the nightlife industry was in the back of the line due to important aspects such as government guidelines,” its owners said.

“Many businesses had to close because they didn’t have savings to keep them afloat,” they said. “We pivoted to doing online shows to preserve the clubbing culture and remain relevant in people’s minds but nothing beats experiencing it live.”

In January 2021, they tried opening The Island — one of the nightclubs under their umbrella — that had a swimming pool. “It didn’t really work because the government had very strict guidelines and people were still fearful of the virus. Everyone was still treading carefully because no one knew how it was going to pan out,” they said.

They reopened The Island later that year, when the government had eased the lockdown level in the NCR to Alert Level 3.

“Our patrons were more receptive,” they noted. Xylo, their flagship club, was only allowed to open when Metro Manila had transitioned to Alert Level 2.

“We reopened Xylo’s doors in February and it just blew up from there. We eventually decided to open Revel last April when we saw that more and more people were comfortable going out.”

The two nightclubs only accept vaccinated patrons, who must wear masks as mandated by the government.

At Xylo, security officers check the temperature of each guest before entry, while Mow’s regularly sanitize the bar and test its staff for the coronavirus.

“We’ve also had to put caps on attendance to avoid overcrowding,” said Mr. Ng. At Palace Manila, reservations are kept at half its occupancy rate.

MORE PROFITABLE
Both nightclubs cited a return to pre-pandemic sales numbers.

“We’ve definitely surpassed our older numbers,” Mr. Ng said. “It may be because we just reopened but they’re higher than what we expected given the pandemic and higher prices.”

Meanwhile, Mr. Rodriguez and Ms. Habaluyas said they have become more profitable amid restrictions and despite operating at 50% capacity.

“Gigs start and end earlier,” Mr. Ng said. “We have more customers coming in earlier to have dinner before the gig. The crowd always had their masks on and the smokers comply with the one-meter social distancing at the designated smoking area.”

Some vocalists also bring their own mics to gigs. Surprisingly, people order more food and drinks these days, according to the owners of both night clubs.

“Now that it’s less packed, people tend to order more and service isn’t sacrificed,” Mr. Rodriguez and Ms. Habaluyas said. “People are on a mission to make up for lost time and ‘revenge’ party.”

The Palace Manila ensures that each patron’s visit becomes an enjoyable but safe experience.

People’s behavior seems to have changed. Those who used to go out before the pandemic have graduated from partying.

“You see a lot of new faces — teens who have grown up and introverts who are tired of staying at home. People now also go out earlier and drink more, so nights are extended.”

“One of the most important lessons we learned is to strike while the iron is hot,” the Palace Manila owners said. “Being at the forefront of the local nightlife scene, we always strive to outperform ourselves by being updated with relevant trends and making sure guests have a great time.”

Bar owners have learned a lot during the pandemic and are still learning as they go along. “Nothing is certain given that our industry heavily depends on the government’s guidelines.”

Meanwhile, supply chain and labor issues overseas have also entered the party scene. But suppliers have prioritized the Palace Manila given its sheer size and big volume requirements.

It has raised prices, though its clients didn’t seem to mind, its owners said.

Mow’s, which gets its food from Kowloon House, also had to raise its prices.

Mr. Ng remains cautiously optimistic. “With how careful the gig scene has been, we’re feeling a bit optimistic,” he said. “There have also been a couple of big concerts and festivals lately so the industry doesn’t seem like it’ll slow down any time soon. Because of how bad the economy is too; businesses will want to remain open.”

“We are definitely on our toes because of how volatile it is nowadays, so we’re prepared to make the necessary adjustments.”

PEZA defers approval of WFH extension for BPOs

BW FILE PHOTO

THE PHILIPPINE Economic Zone Authority (PEZA) board has deferred the approval of the extension of the work-from-home (WFH) arrangement for information technology and business process outsourcing (IT-BPO) firms to March 2023.

Tereso O. Panga, PEZA officer-in-charge and deputy director-general for policy and planning, said in a Viber message that the WFH extension for IT-BPOs until March 2023 has been “approved in principle,” but the final approval was deferred by the PEZA board at its Aug. 26 meeting.

“The WFH 30% limit extension is approved in principle. We just need to revise our memo to include the inputs of the PEZA board — that the 30% WFH is a long-standing policy of PEZA and not just as a business continuity plan measure. We will pursue that in the ad referendum and there is no need for the PEZA board to convene,” he said.

Mr. Panga in a Facebook post on Sunday said the PEZA board wants to get “further clarification” from the Department of Finance (DoF) and the Board of Investments (BoI) regarding the extension.

However, he said they will push to approve the extension before the earlier resolution expires on Sept. 12.

On June 21, the interagency Fiscal Incentives Review Board (FIRB) issued Resolution No. 017-22, which temporarily allowed registered IT-BPO firms to have a 70% on-site and 30% WFH arrangement until Sept. 12, while still enjoying fiscal incentives under Republic Act No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law.   

Registered firms are usually required to conduct their business inside economic zones (ecozones) in order to avail of tax incentives. However, IT-BPO companies were allowed to implement WFH schemes during the strict lockdowns implemented amid the pandemic.

The FIRB released Resolution No. 19-21 in August 2021 that allowed registered IT-BPO firms to implement a 90% WFH and 10% on-site work arrangement and still avail of tax incentives. The resolution ended on April 1 this year.

The FIRB is in charge of granting tax incentives to registered business enterprises including IT-BPO firms.   

IT-BPO industry stakeholders such as the IT and Business Process Association of the Philippines have been pushing for the WFH arrangement while keeping their tax incentives, citing benefits to employees and productivity.   

According to Mr. Panga, the PEZA board agreed that the DoF should coordinate with the Bureau of Internal Revenue (BIR) regarding the issues affecting the ecozone industry on the application of WFH policy.

At the same time, Mr. Panga said that the PEZA board deferred and subjected to ad referendum the inclusion of ecozone logistics services activity in the Strategic Investment Priority Plan (SIPP).  

“The DoF just wanted to make sure that ecozone logistics is included in the SIPP. The BoI initially confirmed its inclusion under Tier 1 of SIPP as support to export activities. This will encourage the registration of more ecozone logistics service enterprises (ELSEs) as a critical ecozone supply chain as they cater exclusively to the requirements of export-oriented locators,” Mr. Panga said.   

“Under the old regime, PEZA has been approving ELSEs but subject only to tax- and duty-free importation and zero value-added tax rating on local purchases as their incentives. We recommended the same incentives for new ELSEs to be registered by PEZA under the CREATE law,” he added.   

He added that the DoF and BIR will also address inconsistencies in the issuances of FIRB, BIR, and Bureau of Customs regarding the grant of incentives to registered business enterprises (RBEs) under the CREATE law.

Meanwhile, Mr. Panga said that the PEZA board also approved 30 ecozone developer and locator application projects worth P8.685 billion in capital investments.   

“We will release more details on these approved applications,” Mr. Panga said.   

In first half of 2022, the PEZA’s approved investments dropped by 29.85% to P22.488 billion. The agency is eyeing to achieve a 6% to 7% investment growth for 2022. — Revin Mikhael D. Ochave

PAGCOR needs to settle conflicting roles, says DoF

THE PHILIPPINE Amusement and Gaming Corp. (PAGCOR) should present its plans as the Marcos administration decides whether its gaming operations are up for privatization, the Department of Finance (DoF) said.

“PAGCOR’s new leadership will have to make known their plans moving forward. They should resolve the seemingly conflicting roles as an operator and regulator,” Finance Secretary Benjamin E. Diokno told reporters on Friday.

Mr. Diokno’s statement came after he told the House Committee on Appropriations on Friday that the administration is open to supporting a supplemental budget, possibly funded by the privatization of government-owned and controlled corporations (GOCCs) such as PAGCOR.

“We would like the economy to grow [and] to recover. So, if there [are] additional resources available to us — either through maybe new loans or maybe additional revenues coming from, say, privatization of some corporations — we would be willing to support a supplemental budget… Because if there are ready to implement projects, and we had the money, then better spend it now rather than, say, a year from now,” Mr. Diokno said.

“PAGCOR, as it is right now, is a GOCC, so when the government regulates it, it’s like regulating themselves,” said Antonio A. Ligon, a law and business professor at De La Salle University.

“If it is privatized, then the audit or internal control of the entity may be privatized also. So, you may see stricter and more efficient internal controls, with the hiring of employees having different criteria. But definitely, it will avoid, if not minimize, political factors,” he added in a Viber message.

Public investment analyst and convenor of think tank InfraWatch PH Terry L. Ridon rejected the idea that PAGCOR’s role as both regulator and operator makes up a conflict of interest, noting that it is an excuse for those who have an agenda in privatizing PAGCOR-operated casinos.

“Casino operators merely derive their power to operate from PAGCOR itself, as PAGCOR by law has the monopoly of casino operations in the Philippines,” Mr. Ridon said in an email.

“If government revenue will be less under a privatized regime, there is no point privatizing PAGCOR-operated casinos, particularly at this time of limited fiscal space, in which every peso going into public services counts,” he added.

Economist Bernardo M. Villegas of the University of Asia and the Pacific said that the state-run gaming firm should focus on the public good as opposed to maximizing profits.

“PAGCOR should limit its role to regulating and allow a private enterprise to operate it. Government revenues need not be reduced if the regulation is enlightened,” he said in an email.

The previous administration sought to privatize the gaming operations of PAGCOR to raise an estimated P300 billion in revenues, in lieu of imposing additional taxes amid the coronavirus disease 2019 (COVID-19) pandemic.

The plan did not push through as it was thought that the move might eventually result in foregone revenues for the government after PAGCOR foregoes its gaming operations.

But, “in the short and medium term there will be no revenue loss because of privatization proceeds,” Mr. Diokno said.

When asked if taxes and license fees collected from its potential new owners in the future would be enough in the long term, Mr. Diokno reiterated that “the new leadership should consider the worthiness of their move appropriate to their role.”

“I’m not sure if the government can put conditions on privatization. But let’s say if PAGCOR does not make a higher yield within three or five years as compared to the present, then it should go back to being government-run,” Mr. Ligon said.

“As to profitability, I think the private entity, which is profit-driven, can make it more profitable than the government operation.”

In the first half of the year, PAGCOR posted a 68.11% expansion in its revenue collection, obtaining P26.7 billion against P15.88 billion in the same period last year.

Its net income after tax also surged to P2.15 billion compared with the P79.07-million income in the first semester of last year.

PAGCOR also said that its contributions to nation-building from January to June increased by 62.69% to P21.23 billion. This includes P11.71 billion that went to the Bureau of the Treasury, P6 billion to the national coffers as cash dividends for the dividend year 2021, and P1.23 billion to the Bureau of Internal Revenue as franchise tax.

Last week, new PAGCOR officials were sworn into office. Alejandro H. Tengco was appointed chairman and chief executive officer, while Juanito L. Sañosa, Jr. was appointed president and chief operating officer. — Diego Gabriel C. Robles

You can’t spell GR86 without ‘GR8’

PHOTO BY KAP MACEDA AGUILA

Toyota’s popular 2+2 pocket rocket is back for more

IF YOUR EXPECTATIONS are spot on, the Toyota 86 will deliver in spades – for much less.

And therein lies the secret to its unqualified success. The 86 (and its soul sibling, the Subaru BRZ) have been hits in their segment – as reachable aspirations for performance-seeking drivers who don’t want to fork over the deed to the condo in exchange for the price of admission to an adrenaline-pumping experience.

That’s exactly what these pocket rockets are, to be honest – affordable sports cars. Now that is not to demean what the 86 is all about. In fact, you can say that the model democratizes exciting mobility.

When it first came out in 2012, the 2+2 fastback coupe captured the imagination for ticking all the right boxes: rear-wheel drive, 50:50 weight distribution, peppy old-school (read: naturally aspirated) engine, and great styling. It absolutely looked the part of the sports car you would have flaunted the first time you learned to drive – the pogi car that would have negated the awkward teenager in you. But I’m blabbing.

The 86/BRZ group project for Toyota and Subaru designers and engineers has entered its second chapter with an all-new iteration, and Toyota is so proud of the result that it bestowed its hallowed “GR” prefix to the 86. GR, of course, stands for Gazoo Racing, which essentially encapsulates the motorsports spirit and efforts of the brand – spearheaded by no less than its “Master Driver” Morizo (aka Akio Toyoda, the boss man himself) .

Last weekend, Toyota Motor Philippines Corporation (TMP) afforded a small group of media practitioners not just a glimpse of, but actual seat time on, this all-new iteration of the GR86.

Priced at P2.328 million for the six-speed manual, and P2.499 million for the six-speed automatic, there’s quite a bit of a price bump from the outgoing version (the manual used to be priced at P2.086 million, while the automatic went for P2.186 million). Bear in mind though: This the GR86 does not merely get new toys or aesthetic upgrades here and there. It’s a totally different beast altogether. At first blush, that much is obvious: The GR86 is a reimagination of the 86.

Though I must admit I kind of miss the keyhole-like shape of the headlamp and taillamp assemblies which make the 86 immediately recognizable, the more sedate-looking front and rear of the GR86 aren’t bad at all. The headlights, daytime running lamps and foglamps all feature LEDs – same with the illumination at the rear.

TMP Vice-President for Product Planning Nico Bravante, who most graciously sat in the front passenger seat while allowing me the pressure, I mean pleasure, of driving the GR86 on the speed-limited internal roads of Clark in Angeles, Pampanga, talked about what’s new in the all-new.

“First, it rides on a much-bigger platform,” he said. “The engine now has 2.4 liters of displacement, compared to the 2.0 liters of the previous model.” While we’re at it, the previous 86 had 200ps and 205Nm; the GR86 now gives you 237ps and 250Nm – a great gain in both power and torque. The wheelbase has also increased marginally from 2,570 millimeters to 2,575mm, and overall length from 4,240mm to 4,265mm. While the width stays the same at 1,775mm, the GR86 stands 10mm shorter at 1,310mm versus the 1,320mm versus its older sibling.

Mr. Bravante added that the goal for Toyota in the new GR86 is a much sportier stance, something that is definitely apparent owing to how low slung and longer the car is. It also has a longer bonnet now, under which resides the aforementioned 2.4-liter boxer engine, which still does its breathing the normal way sans turbo. The new model reportedly gets to 100kph from a standstill much more quickly (6.3 seconds, if you’re wondering), 1.1 seconds better than its forerunner.

On the both sides of the vehicle are pronounced vents for the front wheel arches which, explained the TMP executive, aids in aerodynamics and managing the temperature of the brakes during dynamic driving. The higher-spec automatic transmission variant gets 18-inch alloys shod in 215/40 Michelin Pilot Sport as standard.

The ducktail spoiler is integrated to the body, and a high-mount third brake lamp completes the picture of the GR86’s hindquarters as substantial and dynamic — particularly with a good-looking diffuser in black that’s accentuated by a large tail pipe on both sides.

Inside, the GR86 is pretty much the same 2+2 coupe. If you’re looking to seat more than “small fry” in the rear, perish that thought. I still like to think of this car as having two trunks rather than seating four. To be fair though, we did manage to squeeze in two adults back there, who had to Indian-sit the entire time I was driving and talking to Mr. Bravante. I didn’t hear a peep of complaint, so I guess that was a good sign.

The front two seats are where the action is, of course, and I’m happy to report that they are adequately bolstered for dynamic driving. The instrument cluster has been thoroughly modernized through a seven-inch thin-film-transistor multi-information display plus other digital meters that aren’t crass or gimmicky. On the center console is an eight-inch touchscreen display upon which the infotainment system is predicated. Rejoice some more because it now supports Apple CarPlay and Android Auto, and the car will play your content through six speakers. There are also two USB ports for your convenience, as well as a 12-volt socket.

For safety, Toyota’s entry-level sports car gets the GR86 Active Safety Suite, which includes a pre-collision system, automatic high beam, lane departure alert, and dynamic radar cruise control. On top of these are an adaptive front lighting system, blind spot monitoring, SRS airbags, anti-lock brakes, vehicle stability control, hill-start assist control, and limited slip differential, among other niceties. There’s a reversing camera as well and back sonar, just so you can park more easily.

“When engineers and designers were conceptualizing this new generation, they wanted to keep the sportiness and performance, but they also considered the daily-driving aspect of the vehicle such as in the comfort and amenities it provides to passengers,” reported Mr. Bravante.

Surely, I can see the results of this effort showing up in the GR86. While NVH levels have improved, at least based on our short drive time, you need to manage your expectations because, again, this is a sports car.

And obviously, you should have the most fun with the GR86 on the track, or at least in the open road. For now I’ll reserve a full-on review hoping that we can get another, longer date with the GR86 and its wellspring of performance promises.

SPNEC’s SRO favors long-term investors — analysts 

ANALYSTS see the stock rights offering (SRO) of Solar Philippines Nueva Ecija Corp. (SPNEC) to be more appealing to long-term investors as they expect its business to grow in the long run amid favorable government support for green energy projects.

“Long-term investors who wish to subscribe to the SRO can look forward to a bright future as the government favors green energy projects and the expansion of SPNEC will be supported by the government,” Timson Securities, Inc. Head of Online Trading Marc Kebinson L. Lood said in a Viber message.

Separately, Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said that the continuous rise of the country’s power demand presents growth opportunities for SPNEC as it looks to further expand its renewable energy portfolio.

“SPNEC is on track to complete its major deals this year, including its [SRO] within the next few weeks and its asset-for-share swap with parent Solar Philippines [Power Project Holdings, Inc. or SPPPHI] by the end of 2022,” Mr. Arce said in a Viber message.

In June, SPNEC filed its preliminary SRO prospectus with the Securities and Exchange Commission and Philippine Stock Exchange for nearly 1.88 billion shares.

After the SRO’s price adjustment in July to now range from P1.50 to P1.75 per share, it placed the aggregate offer amount at P2.81 billion to about P3.3 billion.

The offer period will start on Aug. 30 and end on Sept. 5. It has an entitlement ratio of one share for every 1.28 shares held.

“While this SRO may not be appealing for short-term players as they stay on the sidelines, those players who’ll participate are probably banking on the bright prospects that this project may yield for SPNEC’s bottom-line figures in the future,” Mr. Lood noted.

In a media briefing on Friday, SPNEC President and Chief Executive Officer Leandro Antonio L. Leviste said the SRO’s P2.8-billion proceeds “will help complete the P10 billion that we plan to invest to complete the development of 10 gigawatts (GW) of projects.”

“As a project developer, our job is to consolidate land and permits so the projects can secure off-take and become construction-ready, to enable the projects to raise financing to complete the capital expenditure with the help of partners,” he added.

Mr. Leviste said brokers had begun taking orders for Aug. 22, with the deadline for orders with most brokers on Aug. 30 or 31.

SPNEC placed the industry standard cost of putting up a megawatt (MW) of solar power at $700,000, which can translate into revenues of P6 billion per MW per year. It added that its 10 GW of projects would have a total non-land capital expenditure budget of $7 billion, or revenues of P60 billion per year.

Meanwhile, SPNEC is also planning to conduct an asset-for-share swap with its parent Solar Philippines after the first round of SRO.

“Following the exercise, SPNEC will obtain basically all the operating assets of SPPPHI, and the latter’s pipeline projects under development. After the asset-for-share swap exercise, SPNEC is expected to have an operating capacity of a total of 904 MW, making it the biggest solar power generation company in the country,” Mr. Arce said.

SPPPHI and SPNEC have signed the share-swap agreement for the issuance of around 24.37 billion shares at P2.50 apiece, in exchange for the shares of SPPPHI in a portfolio of projects.

“SPNEC’s future earnings growth outlook and value depend largely on its ability to execute more than 10 GW of pipeline developments. These developments require high level of capital, the bulk of which will likely be funded through debt,” Mr. Arce said.

Mr. Arce said that SPNEC would utilize the strategy of forming joint ventures and partnerships going forward to develop its pipeline projects of over 10 GW.

“SPNEC’s earnings growth will depend largely on the successful development of its solar power generation pipeline projects. Any delay in the development and construction of these projects will likely affect SPNEC’s earnings growth outlook,” he added.

Mr. Lood expects the stock to perform better in the second half of the year “as the company begins to roll out its operations to meet its ambitious goals and as we anticipate positive earnings figures.”

On the stock exchange on Friday, shares in SPNEC climbed by 2.42% or P0.04 to P1.69 apiece. — Justine Irish D. Tabile

The scent of a Filipino

INSTAGRAM.COM/FARAH_ABU

Oscar Mejia uses Filipino ingredients to create perfumes that are uniquely our own

“UNLIKE the other senses, smell needs no interpreter. The effect is immediate and undiluted by language, thought, or translation. A smell can be overwhelmingly nostalgic because it triggers powerful images and emotions before we have time to edit them,” said Diane Ackerman in her book, A Natural History of the Senses.

During last week’s bazaar, MaArte at The Pen, we wandered into the booth of perfumer Oscar Mejia III, who displayed his scent, Paraluman (Muse) at one of the tables. “Paraluman can smell like a movie star,” he told BusinessWorld.

“It’s a personal experience,” he said about scent. “It can conjure different images that can only be associated to you alone,” he said. “For you, it smelled like — ”

“My favorite tita (aunt).” Paraluman smelled like her embrace, scented as it was with amber, geranium, sampaguita, green tea, and chamomile. The final seal was the note of sandalwood, which reminded me of the wooden fans she held in church.

Mr. Mejia was lucky enough to open his senses to perfume at an early age, as he was raised on a flower farm in Davao. “My first memories of scent was actually going through the gardens. There were orchids, and other cut flowers,” he said. At an early age, he began to make perfume, giving it to family and friends as gifts. “I got fascinated with the idea of scent: how it can communicate different feelings.”

His scents are named in Filipino: while there was Paraluman, he showed me Tadhana (destiny). “It’s like speckles of gold — that same feeling when you meet someone, your destined person,” he said. That one was made of ginger, chamomile, and bergamot; and had an electrifying effect that mellowed into a smolder. The names, of course, come with the association that they would be made of Filipino scents too. While he imports oils from Thailand, Grasse in France (where he received an education in perfumery), and India, he sources many oils locally: ylang ylang, calamansi, elemi, and almasiga (an endangered tree called the Manila Copal). “The Department of Science and Technology is now promoting a sustainable harvesting of the sap,” he said of the latter (meaning no trees were harmed in making the perfume).

Mr. Mejia is only one of a handful of local perfumers. There are perfume giants in the country, but what they usually make are copies of foreign scents. “It’s easier to copy, especially when we have the technology,” noted Mr. Mejia. “You just run a sample through a spectrophotometer and it gives you what chemicals or oils are inside. The other thing is, wearing a perfume is like a statement. For you to be able to smell like Chanel No. 5 says something about who you are, and what you want to convey. They want that attachment.”

He notes though, that the Philippines is abundant in the raw materials that could be used for perfumery: citruses, woods, and florals. However, the gaps in a local perfume industry can be attributed to land use. “I” order for you to produce an ounce of a particular oil, you need kilos and kilos flowers. You would need several large tracts of land to cultivate those flowers,” he said. “Because there’s no buyer or no one that can help them sell it here or abroad, they won’t get enough. They’d rather plant rice or something that is high-yielding,” he laments.

“We have the land, we have the botanicals, but [the chance] for them to invest that parcel of land for flowers is very low.”

He tries to condense what it is to smell like a Filipino. “It’s more of the Filipino sensibility — iyong gaan ng loob (lightness in being) — like the translucence of capiz,” he said, referring to the shell used to glaze traditional windows.

He explains: “The compositions are not simple. Layers and layers of oils, but the overall effect is translucent,” he said. “We have multiple layers of personalities, behaviors —  our culture is very rich. But then, when you express it externally, they feel gaan ng loob.”

To order scents from Mr. Mejia, visit his website at https://www.oscarmejiaartisanfragrances.com/ — Joseph L. Garcia

Some soul-searching as Mazda PHL turns 10

The MX-5 (or Miata) has been a popular model for Mazda in the Philippines. — PHOTO FROM MAZDA PHILIPPINES

Envisioning a society wherein cars, people, and the planet can peacefully co-exist

TEN YEARS ago, I was wowed by my first glimpse of a Japanese car that showed off graceful lines and styling cues reminiscent of a Jaguar. It was the Mazda CX-5 compact SUV and it marked the local debut of the Hiroshima-based brand’s stunning Kodo-Soul of Motion design language.

But just as much as the sensuous lines that embodied Kodo, it was a spectacular shade of red paint that covered the car that caused my jaw to drop. The name of this paint color? Soul Red.

Kodo-Soul of Motion and Soul Red. If there’s one car company that’s deeply connected to its soul, it’s Mazda.

And it all began on August 10, 2012, when the Philippine distributor for Mazda, Bermaz Auto Philippines, Inc. (BAP) was incorporated. In the decade that followed, BAP brought in Mazda’s diverse lineup of head-turning and award-winning vehicles: the Mazda2, Mazda3, Mazda6, CX-3, CX-30, CX-5, CX-8, CX-9, MX-5, and BT-50. Imbued with the artful Kodo design language, premium Japanese craftsmanship, and fuel-efficient Skyactiv technology, the stylish vehicles enabled Mazda to carve inroads in the Philippine market.

Transcending the mere offering of premium products to Filipino customers, Mazda Philippines revolutionized after-sales service by introducing the country’s first all-inclusive ownership program—Yojin3 in 2013. This bundled a three-year warranty and three-year roadside assistance with three-year free periodic maintenance service. In 2020, this was extended to a five-year free service plan.

These after-sales initiatives helped Mazda rank first in the JD Power Customer Service Index (CSI) in 2016 and 2019. This level of customer care can now be experienced through one of Mazda’s 16 3S dealerships nationwide: Mazda Greenhills, Mazda Pasig, Mazda Quezon Avenue, Mazda Makati, Mazda Alabang, Mazda Sta. Rosa, Mazda Pulilan, Mazda Pampanga, Mazda Dagupan, Mazda Cabanatuan, Mazda Tarlac, Mazda Cebu, Mazda Iloilo, Mazda Negros, Mazda Cagayan De Oro, and Mazda Davao.

Aside from giving truly premium products and a high level of customer service, Mazda Philippines also nurtured a close relationship with several Mazda car clubs, fostering a feeling not just of camaraderie, but of family as well.

Ultimately, Mazda Philippines’ commitment expanded to sustainability with the inauguration of its net-zero facility in Cabuyao, Laguna – known as the Mazda Center of Excellence (MCOE) – in  2019.

Spanning a total area of 2.5 hectares, the warehouse and training facility is a testament to Mazda’s dedication to better serve the Philippine market. The facility can house 952 cars in its 12,269-sqm. covered vehicle depot prior to its deliver to dealerships. It generates its own electricity — up to 145,000 kWh annually — using its 270 solar panels. The MCOE can also harvest and store up to 135,000 liters of rainwater, which can be used to wash Mazda vehicles before delivery, and for general housekeeping.

The MCOE is just one part of Mazda Philippines’ alignment to the brand’s global long-term vision of Sustainable Zoom-Zoom 2030. This program has three interconnected pillars: People, Earth, and Society.

Internally, Mazda Philippines offers an environment for growth for its employees, who have now become partners for life. The partnership with the MFI Polytechnic Institute resulted in the graduation of 230 students, with some ending up working for Mazda Philippines, its dealer partners, and the automotive industry in general.

In 2020, at the height of the COVID-19 pandemic, Mazda Philippines initiated the Food for Heroes program wherein fresh, home-cooked meals were distributed to frontliners. A total of 6,000 meals were distributed across four hospitals over a three-month period.

Looking to reduce its global carbon dioxide emissions from a “well-to-wheel” perspective, which considers emissions over the vehicle’s entire life cycle, Mazda is instituting a multi-solution approach wherein it will introduce appropriate powertrain options in consideration of each country’s energy policies and energy mix. This aims to reduce CO2 emissions to 50% of 2010 levels by 2030, with an eye on achieving a 90% reduction by 2050.

Recognizing that traditional fuel options still remain during the transition to a carbon-neutral society, Mazda Philippines inked a partnership with Pilipinas Shell as the first local carmaker to participate in a carbon-offset program. The program calculates a fleet’s overall fuel expenditure and its associated CO2 emissions. The emissions are compensated by carbon credits purchased by Pilipinas Shell for the customers from a global portfolio of nature-based projects. Last year, Mazda Philippines was able to offset 11 tons of carbon dioxide from its fleet’s overall fuel expenditure.

Since planting trees is the easiest method to sink carbon back into the earth, Mazda Philippines initiated a program with the Department of Environment and Natural Resources (DENR). Supported by a community in Siniloan, Laguna, they will plant 500 trees on one hectare of land in five years. This year, 200 trees have already been planted.

Going beyond carbon offsetting, Mazda Philippines has also entered into partnerships with the Katala Foundation for conservation efforts of the endangered Philippine Pangolin and with the Mt. Pulag National Park for the production of an informative and educational video that will help the community understand the fragility of the environment and the importance of its protection.

“Mazda has gone a long way since we started back in 2012. We could not have done it without the support of our dealer partners, our owners, the various Mazda clubs, and the media. You guys have always been part of it, and have always been there for us,” said Bermaz Auto Philippines President Steven Tan.

With such unwavering support, BAP and Mazda are creating a future in which people, the earth, and society can co-exist with cars – a celebration of driving and a strong and soulful connection with each other.

SMEC tapped for viability of CLLEX’s 2nd phase

AUSTRALIA-based professional services engineering company SMEC said it will be working with the Department of Public Works and Highways (DPWH) to establish the viability of the Central Luzon Link Expressway (CLLEX) Phase II, which will link Cabanatuan City to San Jose City in Nueva Ecija.

“SMEC has been appointed by the Philippines’ [DPWH] to carry out transaction advisory services for the CLLEX Phase II,” the global engineering, management and development consulting company said in a statement.

The current administration has identified CLLEX Phase II as one of its priority public-private partnership projects for implementation.

SMEC said the main objective of its services for CLLEX Phase II is to help the DPWH establish the technical, economic, traffic, environmental, social, and financial viability of the expressway project, including the preparation of preliminary engineering designs and project reports.

“This will include a review of the impact of recent developments (on) road construction activities and recommend the most viable PPP scheme for CLLEX, taking into account the potential for future extensions of the project,” it added.

According to the DPWH, the estimated construction cost for the project is P9.19 billion, while the cost to acquire the right of way is P49.32 million.

“A kick-off meeting was conducted on July 13 together with the representatives from the consultant,” the department said on its website.

The project is a four-lane 35.7-kilometer extension of the existing CLLEX Phase I (Tarlac to Cabanatuan City).

“The project will pass through the municipalities of Talavera and Llanera in Nueva Ecija and will provide a free-flowing alternative route decongesting traffic along the Pan Philippine Highway between said cities of Nueva Ecija and Tarlac Province,” the DPWH said. — Arjay L. Balinbin

Artefino bazaar is a celebration of the local

Las Flores De Filipinas Fan by Casa Mercedes x Reena Gabriel — TESOROS.PH

ARTEFINO, the celebration of all things Filipino and artisanal, returns to Rockwell after a two-year hiatus because of the COVID-19 pandemic. In a weekly rotating schedule that lasts until Sept. 26, small Filipino businesses will show their rare finds at the first level of the Power Plant Mall in Makati. We found a few shops that piqued our interest during our visit last week.

CASA MERCEDES
Touted on their Instagram as the “oldest fan maker in the Philippines,” Casa Mercedes is operated by executive Monchet Diokno Olives. Their claim to fame is making fans to match the outfits of first ladies, as well as making a fan for Queen Sofia of Spain. During BusinessWorld’s visit, Mr. Olives showed us his new line, a collaboration with artist Reena Gabriel, showing a toile de Jouy-patterned fans, as well as a wooden fan edged with a print of waling-waling (Vanda sanderiana) orchids. His own line presents fans shaped like petals showing fruits, and a fishtail fan with a black and white print showcasing the patterns in artful pastillas wrappers. To view more fans, visit @casamercedesph on Instagram or the Tesoro’s website at tesoros.ph.

DAILY BAR
The Daily Bar provides summer essentials you couldn’t have thought of before. There’s the Aloe Vera After Sun Spray and a moisturizing Coconut Pili Body Oil. Insect bites and such can be covered by the fragrant Rescue Balm. To wrap it all up, one should get the waffle-weave towels, or the surprisingly city-appropriate beach ponchos, all made with 100% cotton by a handweaving community in Negros Occidental. Follow @daily.bar on Instagram to order.

SUSTAINABLYMADE BY MARSSE
We’ve fantasized about owning furniture made with wood struck by lightning. Haven’t you? The wood farm from Pangasinan makes a compromise by “electrocuting” the wood with the Lichtenberg method. The results are bowls, stump pedestals (in mahogany), and serving boards (in teak) with interesting charred snowflake patterns on the wood, unique on each piece due to the flow of electricity passing differently through each piece of wood. Check them out at sustainably-made.com.

FARAH ABU
When we think about the iridescent beauty at the back of mussel shells, it’s almost crazy how we just throw it away after a meal. Not as crazy as the idea by accessories designer Farah Abu, who saw how beautiful the shells were after making baked tahong for dinner. Inspired by her mother’s Tausug jewelry, she had the shells polished, dyed, laminated, and polished again. The result is a line of earrings with the shells dangling below. Other interesting products include translucent shell earrings carved to look like santan flowers, formed into similar clumps and mounted on springs, to make them seem as if they were moving. Visit @farah_abu to see more.

Toyota is 2nd among top Batangas Port revenue contributors

The Toyota Motor Philippines Batangas Vehicle Center — PHOTO FROM TOYOTA MOTOR PHILIPPINES

TOYOTA MOTOR Philippines Corporation (TMP) was recently recognized as the second top importer by the Bureau of Customs (BOC)-Port of Batangas (POB) from the period of January to July 2022.

The country’s largest automotive and mobility company remitted to the government a total of P16.46 billion in the form of duties and taxes. The amount is the second highest collected by the POB, contributing to the port’s higher revenue performance versus the same period last year.

TMP works with the POB for the importation of automotive products including various Toyota and Lexus vehicle models, multi-sourced parts for production, and service parts from the Asia Pacific region.

Moreover, the POB serves as a major gateway for TMP’s distribution of automotive products to Toyota dealerships in the Visayas and Mindanao regions.

At the 32-hectare TMP Batangas Vehicle Center (BVC), TMP processes completely built-up units (CBUs) arriving from the nearby POB at a higher capacity and level of efficiency. 

TMP First Vice-president for Vehicle Logistics Aimee Josephine Lopez said the BOC has always been crucial in supporting the local automotive industry and TMP in its commitment to deliver quality products and services to Toyota customers. “Process automation initiatives as well as the highly reliable port personnel continue to support Toyota’s operations through efficient customs processing and timely release of shipments.”

The BOC-POB celebrated its 65th founding year last August through an anniversary event where top locators and exporters were recognized for their support to the Port’s programs and activities.

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