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[B-SIDE Podcast] Personal finance 101: Where to put your money during the pandemic

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REITs (real estate investment trusts), thematic mutual funds (those focused on technology and essential retail), and regional funds are the pandemic picks of Rex Ma. A. Mendoza, president and chief executive officer of Rampver Financials, a distributor of investment funds in the Philippines. 

In this B-Side episode, Mr. Mendoza shares financial advice with BusinessWorld reporter Patricia B. Mirasol, along with his thoughts on alternative asset classes such as NFTs (non-fungible tokens) and cryptocurrency. 

“A lot of people think that getting into millionaire status means needing to earn more and save more. No. The real issue here is consistency,” he said. “It’s always a balancing act … That’s why we recommend a robust portfolio that is diversified so that, through hell or high water, a part will do well, and the other part will recover when the time comes.” 

A note on the other hats that Mr. Mendoza wears: he is lead independent director of Globe Telecom and Ayala Land Logistics Holdings Corporation, director of Seedbox Technologies, and the chairman of Singapore Life Philippines and The Soldivo Funds. He has been working in the financial services industry for 38 years. 

TAKEAWAYS 

Interest in health insurance will remain post-pandemic…   

Filipinos are more interested in health and life insurance products versus investment-linked offerings amid the coronavirus disease 2019 (COVID-19) pandemic, said officials from The Philippine American Life and General Insurance Co.    

This interest in insurance for health will be here to stay, Mr. Mendoza said. “There is a realization that this is not going to be the end of it. There’s always going to be a new variant or virus,” he said. “In the future, we have to be ready for anything… getting covered for medical insurance will always be relevant.”   

 … as will interest in retail investing.   

According to the Department of Finance, retail investors accounted for 43.3% of the volume traded by local investors in the January to March period — significantly higher than the 26.9% in 2020 and 18.2% in 2019. 

This interest will have grown even if the pandemic didn’t happen, Mr. Mendoza added, as financial literacy gains traction: “A lot of people are now talking about the topic, even on TV and radio shows.”   

Investing is also more accessible. “When I was a lot younger, you will never see a [local] company to be the number one brokerage,” Mr. Mendoza said. “Number one would always be a multinational player with foreign funds to boot. Now it’s COL Financial.” 

Other platforms such as YouTrade and MyTrade are also growing leaps and bounds, he said. “Retail investing is going to be the way to go.”   

Individuals need to know which investment vehicles suit their needs.   

VULs, Mr. Mendoza said, have become popular because Filipinos like combos — with VULs bundling life coverage with an investment component. The other reason, he said, is the number of financial advisors selling it to people.   

“Many financial advisors are equipped and capable, but some give advice connected to their pocket,” Mr. Mendoza said. “We need to be sure it is our best interest that is on the table.”   

Individuals need to analyze their life goals, and allocate assets based on those. Mr. Mendoza suggested an emergency fund that’s at least 10% of one’s income, with the rest of the pie spread across managed funds like bonds (2025%), real estate (2530%), business or mutual funds (2530%), security like insurance (10%), and risky instruments like cryptocurrencies (5%).    

“I’d love to see the day Filipinos become natural entrepreneurs,” he added.   

Greed will be your downfall. 

Filipinos are savvy about Ponzi-like schemes, said Mr. Mendoza, but they still fall prey to greed, which is why these schemes still succeed.   

 “It’s sad. It’s like a trip to the cliff, with the intent to stop right before going off the edge,” Mr. Mendoza said of their intention to bail after earning money from the scam. “But who knows when the music will end?”   

Diversification is key.  

A robust portfolio is the way to go if you find yourself with a cash windfall — as in the case of Olympic medalists.   

When asked by BusinessWorld what he would do with his cash prizes if he were one of the victorious Tokyo Olympics athletes, Mr. Mendoza said he would first set aside an amount for his income needs, and place the rest in growth positions.   

“As an athlete, you know your career is short-lived. I would compute backwards to assume the income I need,” he said. “If you need a million a year for your upkeep, and you set aside P20 million in a portfolio that earns at 5%, then your P1 million will be assured annually from today ’til the day you die.”   

What’s key, he said, is setting aside what you need for your income so if you continue working, that’s because you choose to work, and not because you have to.   

Recorded remotely on Aug. 5.  Produced by Paolo L. Lopez and Sam L. Marcelo.    

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Syngenta Participations AG issues intellectual property notice

INTELLECTUAL PROPERTY NOTICE

Syngenta Participations AG, a company organized and existing in accordance with the laws of Switzerland, of Rosentalstrasse 67, CH-4058 Basel, is a member of the Syngenta Group, which is a global enterprise with core competencies in the fields of agri-business and is involved in crop protection and seeds.

Syngenta Group considers effective Intellectual Property (IP) protection essential to encourage innovation. To be effective, any IP system must maintain the right balance between the needs of society and the interests of the inventor. We protect and assert our IP rights rigorously and will respect the IP rights of others in accordance with local laws.

Syngenta has obtained IP rights (such as granted invention patents and trademarks) in several countries for its crop protection products or pesticides, including in the Philippines.

As the IP rights holder in the Philippines, Syngenta has the exclusive right to, among others, prevent third parties from making, using, offering for sale, selling, or importing products protected byitsIPrightsin the Philippines, without authority from Syngenta.

These exclusive IP rights of Syngenta, or of any other IP rights owner, remain the case notwithstanding the grant by the relevant government entity of licenses or certificates of registration for crop protection products or pesticides, as the government agency which has sole jurisdiction over intellectual property rights matters is the Intellectual Property Office of the Philippines.

This hereby serves as notice to the public that Syngenta will not hesitate to take legal action, including but not limited to the institution of civil and criminal actions, to protect and enforce its IP rights and, if no appropriate agreement is reached, to prosecute all those involved in the infringement thereof.

Dealing with the issues on South China Sea

In photo during the BusinessWorld Insights, in partnership with Meralco, on the “Economic Impact of the West Philippine Sea Dispute,” are (clockwise, from top left) moderator Timothy Roy Medina of BusinessWorld; and panelists Henry S. Bensurto, Jr., a former Philippine consul general to San Francisco; and Richard Heydarian, professorial chair on geopolitics at Polytechnic University of the Philippines.

By Chelsey Keith P. Ignacio, Special Features Writer

The territorial and maritime disputes on the South China Sea have been intensely lingering for years among some of its surrounding countries in Southeast and East Asia. But, despite the landmark international arbitration case under the United Nations Convention on the Law of the Sea that was brought by the Philippines against China in 2013, the tension on the waters is still far from ceasing.

In a recent BusinessWorld Insights online forum on the “Economic Impact of the West Philippine Sea Dispute,” held in partnership with Meralco last Aug. 11, experts looked at some issues on these waters and delved into the possible solutions.

Implementing the arbitration

The South China Sea is complex because of the overlapping territorial and maritime claims, said Henry S. Bensurto, Jr., a former Philippine consul general to San Francisco.

“When you look at the South China Sea in a snapshot, it looks like a bowl of spaghetti noodles with a lot of crisscrossing noodles or lines. Every time those lines intersect with each other, they mean disputes,” Mr. Bensurto described.

“Before arbitration, this is how the South China Sea looks like,” he continued. “What we wanted to do is [find] a way we can narrow, lessen, or reduce those lines. Perhaps, then it would be a key solution for us to engage [with] each other, reduce the tension, and minimize those disputes.”

Among the maritime disputes, the more complicated is the nine-dash line, an expansive claim of China that almost covers the entire South China Sea.

The clarifications of the nine-dash line and certain features in the South China Sea were among the reasons why the Philippines went to arbitration.

Currently, the exclusive economic zones of the countries around the South China Sea become clear, Mr. Bensurto said. But several disputed areas remain, such as those features in the Spratly Islands.

“The decision of the arbitration is final. It is legal [and] international law, despite what China says. That said, it is a fundamental tenet that all the parties in the South China Sea dispute must look into,” Mr. Bensurto said.

However, he observed that the focus of the debate on arbitration is whether it is enforceable or not. He said that the focus should be on how to implement it.

“We only have to ask a question for ourselves, ‘Is the result or the outcome of the arbitration good?’ And if the answer to that is yes, then it behooves us to be moved by that goodness by directing ourselves, our will, power, all available tools in our toolbox to focus on how we are going to implement this,” he said.

Another concern on how the Philippine government handles the dispute is the inconsistency, which can be understandable for a state where the administration lasts only six years, said Mr. Bensurto.

The policy of China, on the other hand, never changed. “[Its] ability to be strategic and long-term on its policy [is] because [its] leaders are there for life,” he explained.

This does not mean that a democratic state like the Philippines is weaker than a dictatorship country, Mr. Bensurto clarified. He is not also suggesting that the Philippines should go in that direction.

Nonetheless, the country should be smart on how it would address the issue. “One way of addressing this is through the institutional memory,” he said.

Thus, for every administration, institutions like the Department of Foreign Affairs and the Department of National Defense should be strengthened and insulated from any politics. “By nature, they are supposed to be objective and professional in their analysis. Because of their historical understanding, they will have the ability to think strategically,” Mr. Bensurto said.

Mr. Bensurto further emphasized the significance of putting the arbitration in operation. “No matter how beautiful [a] law is, if it is not utilized for the right purpose for the objective for which that law was passed, then it’s nothing,” he stressed.

So if this ruling is good for the country or region, “we have to do it by ourselves, in cooperation with other like-minded states, on how we can systematically, peacefully put this in operation. No matter how long it will take, we have to have the political will to put it into effect and make sure that it is not pushed back. But we have to exercise, approach, and think of other creative ways by which we can methodically implement this,” he added.

International efforts 

Another issue on the nine-dash line claim of China is its unclear coordinates, according to Richard Heydarian, professorial chair on geopolitics at Polytechnic University of the Philippines.

The ambiguity of China’s claims is wary, which can also show its opportunistic and potentially flexible definition, Mr. Heydarian said.

“China can have a maximalist definition, meaning all islands and natural resources within the nine-dash line are part of [their] blue national soil,” he explained. “But they can also have a minimalist definition, which they claim the land features, their surrounding waters, and their fishery resources or oil and gas resources in that area.”

According to the professor, if there is a “concerted pushback” against China, it could fall back on the more minimalist definition of the nine-dash line. But if one goes weak or subservient towards China, it could go for the maximalist definition.

“That is why it’s important for the Philippines and other rival claimant states to stand their ground so that we can pressure China and come up with a final outcome that is as mutually beneficial as possible, considering still the asymmetries in power,” Mr. Heydarian said.

“And if it were not for the freedom of navigation operations of the United States and the growing naval presence from European countries and other external powers, it would be just between China and us smaller ASEAN (Association of Southeast Asian Nations) countries. And you know who will dictate the terms of that engagement,” he expressed.

This denotes the importance of supporting international efforts to uphold rule of law, Mr. Heydarian added. “This is about China, acting against international law and this is about us getting whatever help we can so that we can get the best outcome out of the disputes on the ground. Otherwise, we can have a very dangerous conflagration there.”

Mr. Heydarian also considered that “the cumulative effect of multiple powers coming in and telling China to care about international law could be positive if it is coupled with good diplomacy.”

However, if this participation only means sending more warships, it appears to be a dangerous escalation and militarization. Thus, he also reminded the importance of engagement with China.

“It’s important for Europeans and the quad powers, together with key powers in ASEAN, to come up with a common strategy to tell China, ‘If you want to be a respectable leader in this part of the world, you have to regain our trust and confidence. One way to do that is to tone down some of your excesses in the South China Sea and move towards a much more international rule-based order in the area.’”

The involvement of some foreign powers in the dispute may reflect the insufficiency of actions or that the ASEAN is not stepping up to the plate, Mr. Heydarian added. Nonetheless, it is not true that ASEAN is ineffectual, going back to its history like what the region did during the Cold War.

Also, Mr. Heydarian continued, those external powers will only go to a certain degree. “At the end of the day, the heavy lifting should come from us because this is about our sovereign rights,” he said.

This session of #BUSINESSWORLDINSIGHTS is supported by Management Association of the Philippines, Philippine Chamber of Commerce and Industry, Bank Marketing Association of the Philippines, and The Philippine STAR.

SLMC Bonifacio Global city MAB Corp. announces schedule of stockholders’ meeting

SLMC Bonifacio Global City MAB Corp.

NOTICE OF ANNUAL MEETING OF THE STOCKHOLDERS

To:                     The Stockholders
From:                 The Corporate Secretary


Please be notified that the Annual Stockholders’ Meeting of SLMC Bonifacio Global City MAB Corp. (the “Corporation”) will be held on September 8, 2021, 12:00 noon through teleconference. The access to the meeting and the relevant Definitive Information Statement, Management Report, Annual Report (SEC Form 17-A) will be distributed prior to the meeting.

CONRADO S.DARSANTOS
Corporate Secretary

 
 
 
 
 


 

ANNUAL MEETING OF THE STOCKHOLDERS
September 8, 2021
12:00 noon
Through teleconference

AGENDA

  1. Call to Order
  2. Certification of Notice and Quorum
  3. Approval of the Minutes of the Annual Stockholders’ Meeting held on September 9, 2020
  4. President’s Report
  5. Financial Report
  6. Election of Directors
  7. Approval of the Audited Financial Statements for Year Ended December 31, 2020
  8. Amendment of the Articles of Incorporation and Bylaws
  9. Ratification of Acts of Management and Board of Directors
  10. Appointment of External Auditor
  11. Other Matters
  12. Adjournment

 

The Indo-Pacific economy beyond COVID: An Indian view

Dr. S. Jaishankar, External Affairs Minister of India

By Dr. S Jaishankar

The Indo-Pacific represents a return of history. A seamless and integrated space was disconnected decades ago by the strategy of the day. Today, as many Indian Ocean economies trade further east and as Pacific ones have displayed a presence south and westwards, we are quite sensibly seeing the landscape for what it really is. Indo-Pacific reflects the reality of globalization, the emergence of multipolarity, and the benefits of rebalancing. It means the overcoming of the Cold War and a rejection of bipolarity and dominance. Most of all, it is an expression of our collective interest in promoting global prosperity and securing the global commons. The Indo-Pacific Oceans Initiative advanced by India clearly validates this assertion.

The transformation of the last decade is today overshadowed, unfortunately, by the impact of the COVID-19 pandemic. It has disrupted our supply chains, negatively impacted manufacturing, made international trade unpredictable, and ruined many services sectors. Globalized production networks remain vulnerable and fragile, with global merchandise trade falling by 5.6% in 2020, compared to 2019, and the predicted trade in services declining by as much as 15.4% in the same duration. This decline in merchandise trade is the sharpest since 2009, whereas the decline in services trade is the biggest since 1990. The hit taken by travel, transport, and tourism activities is alarming and really moves us into unchartered territory.

Even as we each plan our national and collective recovery in these difficult circumstances, there are three issues that the pandemic has brought to the fore: 1) The salience of health, 2) the power of the digital, and 3) the importance of building or re-building greener.

COVID-19 had brought out many inadequacies in the global health system and resulting debates. What is relevant for us here is to recognize that in every society, the expectation of our public with regard to health has gone up. This is particularly so in developing countries, including India. Whether it is the next wave, the next pandemic, or indeed something quite different, part of the answer lies in greater international collaboration. This means working together not just of governments, but of businesses and the medical and scientific professions.

Prime Minister of India Narendra Modi has called for adopting a ‘One-Earth-One-Health’ approach at the recent G7 Summit where India was a guest. We need meaningful partnerships, sharing of advanced technologies, collaboration in vaccine and pharmaceutical production, capacity building, and transparency in health information. And in all of this, the role of our private sectors is critical.

The compulsions of the COVID era have all made us much more digital. This may be literal in terms of contact tracing and vaccination registration; facilitative in terms of home delivery and virtual calls; or just a lifestyle, in case of work from home. New opportunities and efficiencies have been discovered in that process. And accordingly, the risks, too, have magnified.

High-speed internet, cybersecurity, enhanced digital literacy, deeper technical cooperation, regional e-commerce, and efficient e-governance will have a more salient place in the conversations in the coming days. The strengthening of digital connectivity both within and between the countries of the Indo-Pacific is an essential condition for our economic prosperity and development. Like-minded countries must work together for data-driven digital development partnerships. The templates of that could draw on the framework that governs existing development partnerships.

COVID may have slowed the building of the global economy and the promotion of economic development; it has obviously not stopped it. This is, therefore, an occasion to reflect on how to build greener. Collaborating more closely is obviously to our mutual benefit. Our collective efforts can certainly redefine the quality of infrastructure and indeed the nature of urbanization. They can make agriculture more sustainable and harness the Blue Economy more seriously. Physical and digital connectivity remain important for supporting shorter, efficient, and diversified supply-chains, risk mitigation, enhanced trade facilitation, and reduction in the costs of intra-regional trade.

India is responding to these challenges of recovery and re-building. We have reformed even as we have rebuilt. On health, our programme of wider coverage has been accelerated by the rapid expansion of health infrastructure. Currently, mass vaccination and addressing the ongoing waves are the focus. But the goal is to transform the sector entirely by augmenting human resources, equipment, and capacities. On the digital side, the expansion of connectivity, a skills initiative, and a start-up culture are helping to change the game. On infrastructure, a range of initiatives is unfolding that will surely spur greater investment. On agriculture, empowering farmers and enabling freer trade has been matched by a stronger commitment to post-harvest infrastructure. And across 13 key sectors, performance-linked initiatives promise to upscale manufacturing. And all of this is encapsulated by a framework that envisages an India of deeper strengths, greater capacities, and more responsibility.

In conclusion, my message is this: India is fast emerging out of the second wave and will witness a strong economic recovery. It will be a more dynamic and friendlier business destination. We will contribute to being an engine of growth for the global economy. And we will be very much a part of more reliable and resilient supply chains that the post-COVID world requires. International cooperation, especially among businesses, will be very much a key to the better world that we all seek. The Indo-Pacific a region in which we are so deeply invested historically — will be an arena of particular activity and energy for India.

Based on the External Affairs Minister of India Dr. S. Jaishankar’s address to the CII Indo-Pacific Business Conference on 6 July 2021

Debt payments surge in first half

BLOOMBERG

THE National Government’s debt service bill rose to P773.79 billion in the first half, as principal payments nearly doubled from its year-ago level, data from the Bureau of the Treasury (BTr) showed.

Preliminary data from the BTr showed overall debt payments went up by 41.4% in the first six months of the year, from P547.35 billion paid in the January-June period of 2020.

In June alone, debt payments increased by 146.6% to P150.195 billion from P60.911 billion recorded in the same month last year.

The government borrows from local and foreign sources to plug its budget gap that is seen to widen to 9.3% of gross domestic product (GDP) this year. Its borrowings were ramped up in 2020 as revenues plunged and spending ballooned amid the coronavirus pandemic. This translated to bigger debt payments as obligations matured.

The bulk or 80% of the total debt payments in June went to settle amortizations, with the rest used to pay off interest.

Principal payments skyrocketed by 1,661% to P120.27 billion in June from P6.826 billion a year ago, largely because of BTr’s P113.424-billion redemption of its existing local debt during the month.

The Treasury also paid P6.846 billion to its foreign creditors in June.

Interest payments also increased by 8.6% to P29.925 billion from P27.561 billion in the same month a year ago. This consisted of P27.11 billion in interest payments on domestic debt and P2.815 billion interest payments on foreign loans.

Out of the interest paid to local debt, P14.16 billion went to settle interest on outstanding retail Treasury bonds, P9.655 billion for Treasury bonds and P2.73 billion for Treasury bills.

June’s debt service bill pushed the overall payments in the first half higher to P773.79 billion, which consisted of 73% in amortization payments and 27% in interest payments.

Principal payments went up by 57% to P565.26 billion in the first half from P359.67 billion a year ago. Of which, P405.232 billion were paid to local creditors and P160.02 billion went to settle foreign obligations.

Meanwhile, interest payments grew by 11.1% to P208.53 billion in the six-month period from P187.68 billion the year before. Broken down, this comprised of P159.34 billion in interest for domestic debt and P49.2 billion for external loans.

The government aims to pay a total of P1.794 trillion of its existing debt by end-2021, and borrow P3 trillion from local and foreign creditors to support its P4.5-trillion spending plan meant to drive recovery from the pandemic.

So far, it has raised P1.93 trillion in the first half, up 12.2% year on year.

The economy grew by 11.8% in the second quarter coming from a deep 17% slump in the same period last year. Renewed lockdowns in late March to April, however, slowed down growth and resulted in a 1.3% quarter-on-quarter GDP contraction.

“The re-imposition of stricter but localized quarantine measures will have consequences on economic activities in the third quarter. Note, however, that unlike last year, this year’s stricter quarantine measures are much more localized,” the Department of Finance (DoF) said in an economic bulletin on Sunday.

The DoF said more supply of vaccines and a faster inoculation program should provide protection to a bigger portion of the population and minimize the pandemic’s impact on the economy.

Reforms like the recently passed law that slashed the corporate income tax and streamlined incentives, should also help boost the economy’s competitiveness.

The DoF reiterated that Congress should pass bills that will ease restrictions on foreign investor participation in the country. These measures are the amendments to the Public Service Act, Retail Trade Liberalization Act and Foreign Investments Act. — B.M.Laforga

Moody’s Analytics trims growth outlook for PHL economy anew

PHILIPPINE STAR/ MICHAEL VARCAS
A contact tracer is seen talking to a resident of a barangay in Quezon City, amid the enhanced community quarantine. — PHILIPPINE STAR/ MICHAEL VARCAS

MOODY’S ANALYTICS lowered its growth forecast for the Philippine economy to 4% this year, citing the impact of prolonged restriction measures that were paired with “limited” government support.

“Our forecast now for this year is only for about 4% growth, that’s fairly weak growth compared to the 6-7% growth we’ve gotten used to over the years prior to the pandemic,” Moody’s Analytics Chief Asia-Pacific Economist Steven Cochrane said in an interview with BusinessWorld Live on One News last week.

“Just a couple of months ago, we really thought that we would begin seeing a period of steady quarter-on-quarter growth as different parts of the economy began to accelerate,” he added.

This new projection is lower than the 4.9% gross domestic product (GDP) growth outlook penciled in last month, and is below the 6-7% full-year target of the government.

Moody’s Analytics revised the full-year forecast after the Philippines reported an 11.8% GDP annual growth in the second quarter. Quarter on quarter, GDP declined by 1.3%, reflecting the impact of the stricter lockdown from late March to April.

Mr. Cochrane said quarter-on-quarter growth was initially expected to continue its recovery, but this was proven wrong.

“Normally, we would think that there would be a good stability in exports and when the quarantines are lifted, we would see consumer spending grow quickly, and followed by government support, and infrastructure projects are restarted and accelerated and so forth.  But none of that process is happening right now,” he said.

Mr. Cochrane said the outlook for Philippines’ recovery has dimmed, as the government once again placed the capital region under an enhanced community quarantine (ECQ) to curb the Delta-driven surge in coronavirus disease 2019 (COVID-19).

It also does not help that infection rates are again peaking, he added.

The Health department on Sunday reported 14,749 new COVID-19 cases, the second-highest daily increase since the pandemic began. This brought the active cases to 102,748.

Also on Sunday, the government reported 182 cases of the more infectious Delta variant and the first case of the Lambda variant in the country.

Mr. Cochrane warned that “limited” support from the government for those affected by the restriction measures could worsen the economic impact of the pandemic, especially on the most vulnerable sectors.

The government has released P10.894 billion for financial aid meant for the bottom 80% of the population in Metro Manila. The Department of Budget and Management said low-income families are expected to receive P1,000 to P4,000 per household.

“The longer this [lockdown] goes on and the fact that there is only a limited amount of support from government in terms of lending a helping hand to either unemployed households or small- and medium-sized businesses, there’s a good chance that many of these businesses that employed people simply won’t have the ability to come back,” Mr. Cochrane said.

To avoid this scenario, another round of fiscal stimulus will be a welcome development, although it would have been better if it was implemented six months ago, Mr. Cochrane said.

He said this support should come in the form of assistance for businesses so they can retain employees and expand production once restrictions are lifted.

“It will depend on how long the quarantine will lasts. If the quarantines take longer, I would say there would be a need for more [support],” he said.

The proposed Bayanihan to Arise as One Act allocated P400 billion for stimulus response and included P108 billion in cash assistance which is equivalent to P2,000 for all Filipinos. The measure has been approved by the House of Representatives but remains pending in the Senate. — Luz Wendy T. Noble

LGU projects may face delays once full devolution starts

PHILIPPINE STAR/ MICHAEL VARCAS

LOCAL GOVERNMENT UNITS (LGUs) should boost their capacity to implement projects or risk delays in the implementation of certain functions that will be devolved to them starting next year, according to experts.

“I think there will be a slowdown (in project implementation) especially for LGUs who have lower capacity compared to bigger and highly urbanized LGUs,” Zy-za Nadine Suzara, executive director of the think tank Institute for Leadership, Empowerment, and Democracy (iLEAD), said in a mix of English and Tagalog over a phone call recently.

Ms. Suzara noted the National Government had identified the functions that will be devolved to LGUs quite late, putting added pressure on local units that are already constrained due to limited knowledge in planning, budgeting and implementation.

“LGUs need a huge capacity-building because they are going to receive funds and it’s supposed to benefit their constituencies, but how will their constituencies benefit directly from those higher fund allocations from the National Government if in the first place, they don’t know how to plan, budget, and they don’t have the technical capacity,” she added.

In response to a Supreme Court ruling on Mandanas case that increased the LGUs’ share from national taxes, President Rodrigo R. Duterte issued Executive Order No. 138 in June mandating the National Government to begin transferring certain functions to local units next year.

Budget data showed LGUs will be receiving P959.041 billion in national tax allotments (NTA) — or their share from national tax collections — in 2022. Broken down, this will mean allocations of P220.6 billion to 82 provinces; P220.6 billion to 146 cities; P326.1 billion to 1,488 municipalities; and P191.81 billion to 41,933 barangays.

“Based on our analysis of LGU budget data, absorptive capacity is a concern, particularly for capital outlay projects such as infrastructure investments,” World Bank Country Economist Kevin Cruz said in an e-mail.

“On average, only half of LGU budgets on capital outlays is spent, and this ratio tends to decline as the budget for infrastructure increases. The increase in underspending due to limited absorptive capacity, particularly for capital outlays, was one of the main risks,” Mr. Cruz said.

In a special chapter of a June report, the World Bank estimated LGU underspending could rise by up to P155 billion next year if their project implementation capacities will not be improved.

Despite these challenges, the experts believe that devolving functions to LGUs remains to be the most efficient way for the government to deal with the fiscal impact of the Mandanas ruling, instead of other measures like a tax hike to raise more funds.

“Increasing revenues (such as new taxes) in response to the increase in transfers to Local Government Units is not ideal given the current circumstances of the economy. Raising revenues is certainly an option, but it isn’t the ideal response right now,” Mr. Cruz said.

Ms. Suzara said raising taxes could also negate the move of the government to lower the personal and corporate income taxes under its comprehensive tax reform program.

“It’s less of a fiscal issue, it’s more a question of service delivery, especially those that will be devolved from the National Government. The Department of Finance already factored in the lower tax collections,” she said, adding the National Government and LGUs should develop stronger coordination while they are in the process of transferring key functions.

World Bank’s Mr. Chua said the government can also create an environment that will encourage LGUs to be more transparent and accountable, especially after the funds will be increased because of the Mandanas ruling.

“In general, we recommend policies which would focus on mechanisms which improve citizen participation in the budgeting process, leaning on digitalization initiatives to boost transparency and accountability, civic monitoring of intergovernmental transfers; and monitoring of local service provision,” he added.

BusinessWorld sought the Department of Budget and Management (DBM) for comment but did not get a response.

A DBM circular showed LGUs were mandated to formulate their own Devolution Transition Plans that will be used as a guide in monitoring and assessing their performances, while a capacity development agenda will be developed to further guide the local units. — BML

EDSA Greenways seen completed by Nov. 2024

AN ARTIST’S RENDITION of the EDSA Greenways.

By Arjay L. Balinbin, Senior Reporter

THE COMPLETION of a P8.79-billion project that aims to build elevated walkways along Epifanio de los Santos Avenue (EDSA) will be pushed back by nearly two years to 2024, as the Metropolitan Manila Development Authority (MMDA) now only allows utility relocation work at night, the Transportation department said.

“The project timeline completion was extended from December 2022 to November 2024 because MMDA only allowed night works schedule for the utility relocation versus the original plan of 24/7 works,” the Department of Transportation (DoTr) said in a document detailing the EDSA Greenways project’s progress obtained by BusinessWorld on Saturday.

The EDSA Greenways involves the construction of elevated walkways at four mass transit stations, namely the Balintawak station of Light Rail Transit (LRT) Line 1, Cubao station of Metro Rail Transit Line 3 (MRT-3), Guadalupe station of MRT-3, and Taft station of MRT-3 and LRT-1.

The DoTr noted that having 24/7 and simultaneous relocation of underground and aboveground utilities, including electricity, drainage, and telecommunications, may require more lane closures along the already traffic-clogged EDSA.

“A consecutive sequence of relocation works was envisaged instead of simultaneous works. Moreover, new information of the estimated relocation timelines provided by the utility service providers were also added in the overall project timeline,” the department added.

The government is planning to bid out the design-and-build and construction supervision consultancy packages of the EDSA Greenways project in September 2021, the DoTr said.

The design-and-build contract is targeted to begin by March 2022, starting with “site mobilization” or the preparatory stage prior to the civil works, which are expected to commence in July of that year.

“The partial operability is at Guadalupe station with the completion of Landing 2 from MRT-3 to Guadalupe Commercial Complex, and at Cubao station with the completion of Footbridge 1 at EDSA corner Monte de Piedad Street to the Five Star Bus terminal,” the DoTr said.

The DoTr said it anticipates that the walkway at the Guadalupe station will be partially open by February 2023, with Cubao station following in July of the same year.

The DoTr has already received no objection letters from the local government units (LGU) of Pasay City, Quezon City and Caloocan City. It is still waiting for the no objection letter for the project from Makati City LGU.

The total cost of the EDSA Greenways project, as approved by the National Economic and Development Authority, is P8.793 billion, with P6.954 billion coming from the Asian Development Bank (ADB) and the ASEAN Infrastructure Fund. The remaining P1.839 billion will be funded by the government.

The DoTr said an amount of P1 billion, under the General Appropriations Act 2021, is allocated for the utility relocation costs to be incurred by the utility service providers.

The P4.953-billion ADB loan “will be utilized for the civil works/build and design construction of the EDSA Greenways Project,” it added.

Crypto fashion: Why people pay real money for virtual clothes

THE “BIOMIMICRY” digital ready-to-wear collection made by the digital fashion company Auroboros. — PHOTO FROM AUROBOROS.CO.UK

LONDON — People care what their avatars are wearing.

When the virtual world Decentraland said in June that users could make and sell their own clothing for avatars to wear on the site, Hiroto Kai stayed up all night designing Japanese-inspired garments.

Selling kimonos for around $140 each, he said he made $15,000-$20,000 in just three weeks.

While the idea of spending real money on clothing that does not physically exist is baffling to many, virtual possessions generate real sales in the “metaverse” — online environments where people can congregate, walk around, meet friends and play games.

Digital artist and Japan-enthusiast Kai’s real name is Noah. He’s a 23-year-old living in New Hampshire.

After making as much in those three weeks as he’d earn in a year at his music store job, he quit to become a full-time designer.

“It just took off,” Mr. Kai said.

“It was a new way to express yourself and it’s walking art, that’s what’s so cool about it… When you have a piece of clothing, you can go to a party in it, you can dance in it, you can show off and it’s a status symbol.”

In Decentraland, clothing for avatars — known as “wearables” — can be bought and sold on the blockchain in the form of a crypto asset called a non-fungible token (NFT).

Mr. Kai’s kimonos include exquisite crushed blue velvet pieces with golden dragon trim.

NFTs exploded in popularity earlier this year, as speculators and crypto enthusiasts flocked to buy the new type of asset, which represents ownership of online-only items such as digital art, trading cards, and land in online worlds.

The niche crypto assets are also capturing the attention of some of the world’s biggest fashion companies, keen to associate themselves with a new generation of gamers — although most of their forays so far are for marketing.

LVMH-owned Louis Vuitton launched a metaverse game where players can collect NFTs, and Burberry has created branded NFT accessories for Blankos Block Party, a game owned by Mythical Games. Gucci  has sold non-NFT clothing for avatars within the game Roblox.

“Your avatar represents you,” said Imani McEwan, a Miami-based fashion model and NFT enthusiast. “Basically what you’re wearing is what makes you who you are.”

Mr. McEwan reckons he has spent $15,000 to $16,000 on 70 NFT wearable items since January, using profit from cryptocurrency investments. His first purchase was a bitcoin-themed sweater and he recently bought a black beret designed by his friend.

SELFIE SHOPPING
The overall size of the NFT wearables market is difficult to establish. In Decentraland alone wearable sales volume totaled $750,000 in the first half of 2021, up from $267,000 in the same period last year, according to NonFungible.com, a website which tracks the NFT market.

Some proponents say wearables and shopping in virtual shops could be the future of retail.

“Instead of scrolling through a feed and shopping online, you can have a more immersive brand experience by exploring a virtual space — whether you are shopping for your online avatar or buying physical products that can be shipped to your door,” said Julia Schwartz, director of Republic Realm, a $10-million virtual real estate investment vehicle which has built a shopping mall in Decentraland.

For NFT enthusiasts, online fashion does not replace physical purchases.

But Paula Sello and Alissa Aulbekova, co-founders of the digital fashion start-up Auroboros, say it could be an environmentally friendly alternative to fast fashion.

Customers can send Auroboros an image of themselves and have clothing digitally added for 60 pounds ($83) to 1,000 pounds.

Ms. Sello argued that the virtual garment concept could limit the waste of consumers buying clothes to wear on social media, citing a 2018 Barclaycard study which found 9% of British shoppers have bought clothes for social media photos, then returned them.

“We need to have the shift now in fashion. The industry simply cannot continue,” said Ms. Sello.

Virtual sneaker company RTFKT sells limited edition NFTs representing sneakers which can be “worn” in some virtual worlds or on social media via a Snapchat filter.

“It really took off when COVID started and loads of people went more online,” said Steven Vasilev, RTFKT’s co-founder and CEO.

The company has posted $7 million of sales, with limited edition sneakers selling in auctions for $10,000-$60,000, he said. While the majority of customers are in their 20s and 30s, some are as young as 15.

RTFKT’s NFTs can also be used as a token to get a free physical version of the shoe, but one in 20 customers do not redeem that token.

“I didn’t do the redemption stuff because I couldn’t be bothered,” said Jim McNelis, a Dallas-based NFT buyer who founded NFT company, nft42.

“I try to avoid the physical stuff as much as possible.” — Reuters

DMCI unit to build P800-M solar-diesel plant

WIRESTOCK/FREEPIK.COM

By Angelica Y. Yang, Reporter

CONSUNJI-LED DMCI Holdings, Inc. said its unit will be pouring in P800 million to develop a 12-megawatt (MW) hybrid solar-diesel power plant, which is set to provide power in Masbate’s off-grid area by next year.

“Our off-grid energy business, DMCI Power [Corp.], is building a hybrid solar-diesel plant in Masbate, which is set for commercial operation by Q2 (second quarter of) 2022. The solar plant is 4 MW while the diesel plant is 2 x 4 MW (8 MW in total),” DMCI Holdings told BusinessWorld via e-mail on July 11.

The listed company said it is allocating “estimated capital expenditures of P800 million” for the hybrid plant. The planned project will be linked to the mini-grid of the province’s missionary area.

Three months ago, an executive from one of the firm’s subsidiaries Semirara Mining and Power Corp. said its parent company was looking at opportunities in the country’s renewable energy (RE) sector.

“DMCI Holdings is bullish on off-grid renewable energy. We believe the grid is already saturated, but the missionary market is ripe for RE expansion,” the firm said last week.

If the new Masbate plant does well, the company hopes to build similar plants in Palawan and Oriental Mindoro in the medium term.

DMCI Holdings fully owns DMCI Power, which was established to power up remote and off-grid islands in the Philippines.

On its website, DMCI Power said it continues to pursue its vision of becoming a “major off-grid player” in the local power industry.

At present, DMCI Power’s wholly owned unit DMCI Masbate Power Corp. operates a 15-MW circulating fluidized bed thermal plant in Brgy. Tugbo, Mobo.

NBA’s online PHL store celebrates first year with new T-shirt collection

NBAStore.com.ph is celebrating its first anniversary with the second NBA Philippines Tees Collection, which features two designs, namely “Hoop Tee” and “Homecourt Tee.”

TO CELEBRATE its first anniversary, NBAStore.com.ph has released a new T-shirt collection which is exclusively available in the country.

It is the second NBA Philippines Tees Collection from the online store, and features two designs which take inspiration from the Philippine flag’s blue, red, and yellow hues.

The “Hoop Tee” set takes a minimalist yet bold expression of the National Basketball Association (NBA) logos.

At the back of the shirt is the primary NBA logo at the center of a basketball outline, aptly describing the popularity of the game in the Philippines. Below the symbol are the statement “Made in the Philippines” and the country’s coordinates, which represent the unique brand of basketball played on this side of the world.

The shirt comes in black and white and in sizes from 2XS to 2XL.

“Homecourt Tee,” meanwhile, spotlights the etymology of the Philippines.

The shirt has the various names the country has taken throughout history printed in front of the shirt beside the NBA logo.

The back of the shirt has a heat map of the 7,641 islands superimposed on a basketball court that pins the NBA logo at the heart of an entire nation, showcasing the Filipinos’ passion for the world’s premier basketball league.

The shirt, too, comes in black and white and in sizes ranging from 2XS to 2XL.

The NBA Philippines Tees Collection shirts are available at nbastore.com.ph for P995.

The NBAStore.com.ph was relaunched last year to replace the physical stores here which closed in 2018. — Michael Angelo S. Murillo