Property price slide worsens in Q2

September 27, 2021 | 12:33 am

The coronavirus pandemic has continued to dampen the demand for residential property, particularly in Metro Manila. — PHILIPPINE STAR/ MICHAEL VARCAS

By Luz Wendy T. Noble, Reporter

RESIDENTIAL PROPERTY PRICES in the second quarter contracted at its steepest rate since 2016, primarily due to the continued decline in prices of condominium units and single houses amid the prolonged pandemic.

Data released by the Bangko Sentral ng Pilipinas (BSP) on Friday evening showed the Residential Real Estate Price Index (RREPI) declined by an annual 9.4% in the April to June period, worsening from the -4.2% in the first quarter.

This is the biggest annual contraction since the data series started in 2016.

The BSP said the pandemic continued to dampen the demand for residential property.

“High base effects may also have contributed to the drop in prices given the registered peak of the index (26.6%) in the second quarter of 2020,” it added.

Quarter on quarter, property prices increased by 4.8%.

The RREPI tracks the average change in prices of residential properties across housing types and locations, which gives the BSP insights into the property market where bank exposure is regulated.

Nationwide, the prices of condominium units declined 14.3% year on year in the second quarter, reversing the 30.1% increase in the same period last year. This is also the steepest contraction since the 15% drop in the third quarter of 2020. It was also the fourth straight quarter of a decline in condominium prices.

Demand for property has been subdued, particularly in Metro Manila, said Joey Roi H. Bondoc, associate director for research at Colliers International Philippines.

He noted that only 10,000 condominium units were taken up in the pre-selling market for the first half, adding the industry is unlikely to equal the 36,000 units brought in 2020.

“We no longer see demand from POGOs (Philippine Offshore Gaming Operators), while local end-users and investors are still on a wait and see,” Mr. Bondoc said in a Viber message.

Chinese nationals employed by POGOs had fueled demand for condominium unit rentals before the pandemic, prompting many unit owners to raise rental fees.

Also, single detached/attached houses saw prices drop by a record 7.4% during the second quarter, a reversal from the 23.4% increase in the second quarter last year.

On the other hand, prices of duplexes and townhomes increased by 28.9% and 15.1% year on year in the April to June period, respectively.

The RREPI also showed NCR residential property prices continued to slump year on year, but saw a quarter-on-quarter improvement.

Home prices in Metro Manila decreased 18.3%, mainly due to the lower prices of single attached/detached houses (-22.5%), condominium units (-17.8%) and townhomes (-3.5%).

Quarter on quarter, home prices went up 3.4% in Metro Manila.

This annual drop in home prices in the NCR reflects reduced demand for urban housing as work-from-home arrangements have become the norm, said Asian Institute of Management economist John Paolo R. Rivera.

“It is more economical for employees to cut on rental cost and just stay in their permanent residence and reallocate rental spending to telecommunication spending. Given uncertainties in income and jobs, it is difficult to sustain a medium- or long-term rental commitment,” Mr. Rivera said in a Viber message.

In the provinces, residential property prices slipped 0.6% amid the 6% drop in prices of single detached/attached houses. On the other hand, other housing types such as duplexes (24.3%), townhomes (27.2%), and condominium units (9.6%) saw higher prices.

HOUSING LOANS
Data from the central bank showed residential home loans in the second quarter rose 82.3% year on year, but dropped 3.6% compared with the first quarter.

Half (49.5%) of these loans were used to finance the purchase of condominium units, followed by single detached/attached houses (39.2%), townhouses (10.3%), and duplexes (0.9%).

NCR accounted for the bulk of the loans at 44.9%, followed by Calabarzon (26.4%), Central Luzon (10.5%), Central Visayas (5.3%), Western Visayas (4.4%), Davao Region (3.2%), and Northern Mindanao (1.2%). Together, the regions accounted for 95.9% of the approved housing loans during the second quarter.

The pandemic and its impact on work arrangements and employment will continue to weigh on the housing market, Mr. Rivera said.

On the other hand, he said the pickup in vaccinations will mean more people will be eventually allowed to return to offices which would lift housing demand in the cities.

“Until we see a more predictable movement in the economy, income, jobs, the housing prices would continue to be constrained,” Mr. Rivera said.

The country’s unemployment rate in July improved to 6.9% representing 3.073 million Filipinos. However, underemployment rate worsened to 20.9% or 8.692 million Filipinos.

Meanwhile, Mr. Bondoc is optimistic that money sent home by overseas Filipino workers (OFWs) could buoy demand for housing in rural areas.

Cash remittances increased 2.5% year on year to $2.783 billion in July. This brought the year-to-date tally to $17.771 billion, up by 5.8% from the same period of 2020.

“House-and-lot demand in the provinces will remain stable given sustained OFW remittances that are starting to pick up,” Mr. Bondoc said.

Marawi rehab, 2 power projects top Mindanao business sector’s priority list

September 27, 2021 | 12:32 am

Marawi_DSHUD_2021 — The reconstruction of the iconic Grand Mosque is part of the rehabilitation works in Marawi. — COURTESY OF DEPARTMENT OF HUMAN SETTLEMENTS AND URBAN DEVELOPMENT

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By Marifi S. Jara, Mindanao Bureau Chief

THE BUSINESS SECTOR in Mindanao has passed a resolution listing shelters in Marawi City and two big-ticket power facilities as the top infrastructure projects that they want government to prioritize for completion.

In the recommendation passed by 32 business chambers during the annual Mindanao Business Conference (MinBizCon) on Sept. 23-24, the shelter projects under the Marawi rehabilitation program were identified as top priorities, followed by the Mindanao-Visayas grid interconnection project, and rehabilitation of the Agus and Pulangi hydropower plants.

They also pushed for the completion of the Mindanao railway, Laguindingan airport expansion, and Panguil Bay Bridge, as well as the improvement of night landing and runway facilities of secondary airports across Mindanao.

Perfecto F. Mayor, Philippine Chamber of Commerce and Industry (PCCI) regional governor for central Mindanao who presented the MinBizCon resolutions, said these are “strategic infrastructure projects” that are crucial to boosting Mindanao’s contribution to national growth and recovery from the coronavirus pandemic.

The Mindanao-Visayas grid interconnection, which will integrate Mindanao’s power supply into the national grid, was originally targeted for completion by December 2020. It was delayed due to pandemic restrictions and submarine cable damage, according to the Department of Energy.

The Agus-Pulangi rehabilitation, meanwhile, is still undergoing feasibility study.

From the perspective of foreign investors, Davao-based Japanese Consul General Yoshiaki Miwa said the government should address infrastructure and connectivity to improve the supply chain at the production level as well as the export process.

“Japanese companies operating in Mindanao… they always mention the expensive electricity supply, also expensive foreign ocean freight, and discouraging to get some parts or materials,” he said during the MinBizCon.

He also cited the need to promote the “perception on Mindanao” as a full value chain player rather than just a raw material supplier.

“These kinds of things should be solved through the improvement of infrastructure.”

MARAWI
On Marawi, Housing Secretary Eduardo D. Del Rosario reported last week that public structures under the war-torn city’s rehabilitation were “75% to 80% complete” and were on track to be completed before the end of the Duterte administration in June next year.

Mr. Del Rosario, who heads the task force managing the rebuilding of Marawi, also said about 2,800 permanent housing units in resettlement sites are expected to be completed by end-2021.

However, tension persists for those who will have to repair or rebuild their own homes in the city as the proposed law that will provide compensation remains pending in Congress.

“On Oct. 1, 2021, Congress will adjourn. If the Marawi Compensation Bill is not passed, we will be commemorating yet another anniversary of the so-called ‘Marawi Liberation Day’ on Oct. 17 without a Marawi Compensation Law that would help us, victims of war, rebuild our lives,” said the multi-sector group Marawi Reconstruction Conflict Watch during a Senate joint committee hearing last Friday.

They also reiterated the warning that “criminal and extremist groups can tap these frustrations to heighten anti-government sentiments among local communities that could be used to recruit members and rally their support.”

AGRICULTURE
Meanwhile, agricultural innovation was also a focal point of discussion at the two-day event given Mindanao’s position as a major food producer for both domestic consumption and export.

“Mindanao’s agriculture contributes a third of the country’s agriculture gross value added and I believe that this can be significantly increased by addressing such issues as low productivity, access to finance, and improvement of infrastructure,” said Philippine Chamber of Commerce and Industry President Benedicto V. Yujuico.

Agriculture Secretary William D. Dar, for his part, said the modernization and growth of the agri-fisheries sector in Mindanao will need private sector contribution.

“The government is fully prepared to continue investing in Mindanao’s future, but government alone cannot finance Mindanao’s long-term progress. The island region’s private sector — its entrepreneurs and business leaders — must continue to make significant investments… especially in those places where investments are most needed,” Mr. Dar said.

BSP warns play-to-earn gamers on potential illicit activities

September 27, 2021 | 12:31 am

Axie Infinity — IMAGE COURTESY OF YIELD GUILD GAMES

THE CENTRAL BANK warned the public that illicit financial activities may occur through “play-to-earn” online games, even as it recognized such platforms have the potential to boost financial inclusion and digital payments in the country.

“The Bangko Sentral ng Pilipinas (BSP) advises those engaging in these games to be thoroughly aware of how these work as the digital space provides a borderless and wider playing field for fraudsters or cyber criminals to carry out illicit financial activities,” it said in a note sent in response to a query.

Earlier, the BSP noted that Axie Infinity, a play-to-earn online game that has become popular among Filipinos, is not yet registered with regulators, although it is keeping a close eye on its activities which are similar to an operator of a payment system.

Axie Infinity allows players to earn smooth love potion (SLP) by completing various quests through the game. BSP Director for Technology Risk and Innovation Supervision Department Melchor T. Plabasan has earlier said they are still looking at SLP as a payment scheme in a case when more merchants start accepting the virtual currency.

In its note, the BSP said users should exercise caution in participating in these play-to-earn games as there is a potential for abuse.

“Digital gaming token transactions have high degree of anonymity and are not subject to Know Your Customer policies,” it said.

The BSP warned that such activities are vulnerable to hacking, theft, and cyber threats given it involves virtual assets.

It also cautioned users about the difficulty in filing complaints in cases of unauthorized or fraud transactions given there is no central authority that guarantees such digital tokens.

The central bank also said digital tokens are generally volatile given they are subject to speculations.

“In such cases, end-users will have to bear the risk of losses and the lack of legal protection,” the BSP said.

The BSP said it has been working closely with other regulators including the Securities and Exchange Commission (SEC) in order to develop a coordinated approach in dealing with emerging trends on virtual assets or cryptocurrency, including play-to-earn games. It also acknowledged that these digital games may also be helpful in achieving the central bank’s aim to increase digital payments in the country.

“When harnessed in a responsible manner, these innovations have the potential to contribute to the BSP’s mutually reinforcing goals of financial inclusion and payments digitalization by increasing the awareness and familiarity of Filipinos on the use of digital platforms,” it said.

Registered virtual asset service providers are required by the BSP to conduct background checks on customers in order to boost financial consumer protection.

Filipinos have flocked to games such as Axie Infinity as it is another way to earn at a time of income losses during the crisis, Swarup Gupta, an industry manager at The Economist Intelligence Unit said.

“Unemployment will remain markedly above pre-pandemic levels until at least late 2022 which means that many more individuals will be drawn into the play-to-earn arena in a country with a reasonably high level of mobile phone ownership and internet access as well as a young and tech-savvy population,” Mr. Gupta said in an e-mail.

Given this development, Mr. Gupta said it is crucial for regulators like the BSP and SEC to raise awareness regarding risks related to dealing with virtual assets.

He said regulatory approach should keep up as cryptocurrency continues to gain traction.

“The SEC and the central bank need to usher in comprehensive legislation to regulate virtual assets and cryptocurrency and ensure that norms applicable to such operators are as stringent as those that financial companies have to abide by,” he said. — Luz Wendy T. Noble

Energy sector in transition: A rebalancing act

September 27, 2021 | 12:06 am

By Arjay L. Balinbin, Senior Reporter

COAL-FIRED power plant companies in the Philippines have, in recent months, declared plans to rebalance their portfolio into one that has a growing share of renewables in the mix.

The move comes as the Energy department issues policies that make renewable energy (RE) projects more lucrative, while announcing a ban on new coal power stations.

Indicative projects, or those that have yet to secure financial backing, will have a “hard time” selling their products now because “we have too much baseload,” Energy Undersecretary Felix William B. Fuentebella told BusinessWorld at a virtual roundtable discussion.

While energy companies say coal will remain a necessity in providing stable power to a growing economy, they nonetheless disclosed plans to diversify their investments into more renewables.

In January, the Alcantaras’ Alsons Consolidated Resources, Inc., which claims to be Mindanao’s first and most experienced private sector power generator, started building a 14.5-megawatt (MW) run-of-river hydro power plant in Sarangani.

Its P4.5-billlion foray into renewables came with a promise that renewable energy will constitute the largest segment of its portfolio in terms of number of power facilities.

In April, Aboitiz Power Corp. said it was looking at building 3,900 MW of renewable energy in about a decade to achieve an equal share of renewables and thermal energy in its portfolio. Four months later, it said it was considering a budget of P190 billion to build the target renewables capacity.

Given the increase in energy demand in the country, even during the pandemic, it is unclear whether such investments imply the start of coal-fired power plant closures.

Aboitiz Power Corp. believes that coal will still play a crucial role in the country’s energy system.

“While we are seeing the emergence of alternative technologies, coal remains to be the most economically viable option for baseload power for a developing country like the Philippines in the short- to mid-term to meet demand growth,” AboitizPower President and Chief Executive Officer Emmanuel V. Rubio said in an e-mail interview.

The company aims to grow its renewables portfolio from around 900 MW to 4,600 MW by 2030.

“We welcome and fully support the global move towards decarbonization,” Mr. Rubio noted. “But as far as our existing coal assets are concerned, these are still necessary to meet our country’s baseload energy needs.”

“As one of the Philippines’ largest power producers, we are well-positioned and committed to supporting the growth of renewable energy in the country. But at the same time, we have the responsibility to ensure that our energy supply remains sufficient and cost-competitive,” he added.

Jaime T. Azurin, president and chief executive officer of Meralco PowerGen Corp. (MGen), shared with BusinessWorld last Friday the company’s aspirations to build more renewable energy capacity.

“The growing concern over climate change and increasing demand for cleaner energy prompted the development of renewable energy with the help of policies and regulations like the renewable portfolio standards, or the RPS, and the green energy option program, or GEOP, in a bid to boost the country’s renewable energy share to 35% by 2030,” he said.

GEOP allows consumers using at least 100 kilowatts of power to source their supply from retail energy suppliers that generate electricity from renewables. RPS requires electricity providers to source an agreed portion of their supply from eligible RE facilities.

But he said the challenge remains how to address the need for reliable, affordable and sustainable energy supply to support economic development.

The Energy department said earlier this year that peak power demand may hit 16,333 MW, topping the 15,282 MW high from 2020, which was recorded before the lockdowns were imposed.

MGen has begun to transition to low-carbon energy “in an orderly and cost-competitive manner by adding more environment-friendly power supply to our portfolio,” Mr. Azurin said.

“We have set our sights in building 1,500 MW of RE projects in the next seven years,” he added.

AC Energy Corp. expects a “very limited or no” new coal plants to be built following the Energy department’s announcement of a coal moratorium.

“We therefore expect the industry to focus on building gas, renewables and storage to address the growing power needs of the country,” AC Energy President and Chief Executive Officer Eric T. Francia said via e-mail.

Renewable energy company Citicore Power, Inc. is seeing a shift in investment capital towards more renewable energy projects.

“We’ve been seeing at the market quite a number of coal-fired power plants trying to shift to using biomass as an alternative fuel but not really mainstream yet. I think it’s inevitable that, globally, everyone is shifting towards renewable,” Citicore Power President Oliver Y. Tan said in an online interview.

The Energy department is still working to complete the latest edition of the National Renewable Energy Program covering the 2020-2040 period.

The department is proposing an adjustment in the yearly RPS increment for the country to achieve a 35% renewable energy share of the total generation mix by 2030.

The annual RPS increment is currently at 1%, but the National Renewable Energy Board wants it to be at least 2.52% by 2023 in order to meet the country’s “aspirational” renewable energy targets.

“With the RPS, the renewable portfolio standards being implemented by the Department of Energy…, we’ll see demand growth because of the policy. We anticipate that renewable energy would grow in terms of total mix, total supply mix,” Mr. Tan said.

“We believe that solar will corner a meaningful size, but because of the sheer size of geothermal and hydro, we believe that these will still be cornering a significant chunk of the renewable energy,” he added.

Mr. Francia said the 35% renewable energy goal by 2030 is “achievable.”

“Most of the incremental renewables capacity will come primarily from solar and wind, and some from geothermal, hydro and biomass. To achieve this 2030 goal, we estimate that the country should build at least 2,000 MW of renewables every year between 2023 and 2030,” he added.

“This would have to be complemented by a total of about 5,000 MW of new thermal or gas plants during the same period.”

Mr. Francia also pointed out that one critical issue that needs to be addressed is the upgrade of the national grid to enable the additional power capacities.

For Mr. Rubio, no one single technology can address all of the country’s energy requirements. “We are taking a pragmatic approach to serving our energy needs while pursuing environmental sustainability.”

AboitizPower is a pioneer of renewable energy in the Philippines. It claims to be the country’s largest owner and operator of renewable energy today based on installed capacity.

“We intend to sustain this momentum with the significant growth of our Cleanergy portfolio over the next 10 years,” Mr. Rubio said.

AboitizPower currently has a balanced mix of renewable energy sources under its Cleanergy portfolio, which include run-of-river hydro, large hydro, geothermal, and solar.

Meanwhile, AC Energy focuses on scaling up its investments in solar and wind. The company intends to complement renewables with battery storage when the technology becomes scalable and competitive, which it hopes to see within the next five years, according to Mr. Francia.

Based on the Energy department’s 2020 power statistics, coal accounts for 57.17% of the power mix, followed by renewable energy (21.24%), natural gas (19.16%), and oil-based sources (2.43%).

For renewable energy, geothermal remains the most dominant at 10.57%, followed by hydro (7.07%), biomass (1.24%), solar (1.35%), and wind (1.01%.).

Sharon O. Montañer, director for market operations service at the Energy Regulatory Commission, said in a roundtable discussion with BusinessWorld that the Philippines has been showing improvements in terms of renewable energy adoption.

“We are showing improvements even after the Renewable Energy Act (of 2008), when we implemented all the incentives. In fact, there is one project coming up that we have been coordinating closely with the Department of Energy, the green energy auction program. It is the extension of the feed-in tariff system program, but the rate will be set through an auction. This is one program that will improve the share of renewable energy in the total energy mix,” she said.

On whether the incentives offered will change as renewable energy adoption increases, she said: “We expect our programs to complement that. Nothing needs to be changed. The GEOP (green energy option program) and the net metering will complement our move towards more renewable energy.”

The net metering scheme allows qualified customers to generate their own electricity through their RE facilities with a capacity of up to 100 kilowatts. Participants can sell excess power to distribution utilities for peso credits that will offset their power bills.

She said that the future of the feed-in tariff system, a scheme that provides a fixed and subsidized rate to RE developers, depends on the Energy department.

Smaller oil firms edge out majors in first half

September 27, 2021 | 12:06 am

gas pump — PHILIPPINE STAR/KRIZ JOHN ROSALES

By Angelica Y. Yang Reporter

THE market share of smaller firms in the domestic petroleum industry has increased to over 50% in the six months ending June, edging out the three largest oil players, according to the Department of Energy (DoE).

Data obtained by BusinessWorld showed that 51 firms, classified as “other players” participating in the petroleum market, accounted for 52.59% of the sector in the first half of 2021.

Among the smaller players, Phoenix Petroleum Philippines, Inc. cornered the biggest market share in terms of total petroleum products sold at 8.23%, followed by Unioil Petroleum Philippines, Inc. and Insular Oil Corp. at 6.94% and 5.77%, respectively.

Meanwhile, major oil companies Petron Corp., Pilipinas Shell Petroleum Corp., and Chevron Philippines, Inc., took a combined 38.96% market share in the same period.

Of the percentage, Petron registered an 18.60% share, lower than its year-on-year level of 21.94%. Pilipinas Shell and Chevron Philippines recorded a 15.5% and 4.86% share, respectively, a decline from their previous levels.

“Based on records, bumababa ang share ng majors at tumataas ‘yung share ng mga new players. In short, mas lumalakas competition ng mga new players,” DoE Oil Industry Management Bureau (OIMB) Director Rino E. Abad told BusinessWorld on Viber last week.

(Based on records, the share of majors is going down, and the share of new players is rising. In short, new players are getting more competitive.)

End users, which are comprised of 24 entities, accounted for 8.45% of the market.

During the first half of 2020, the petroleum market share of smaller firms beat that of major players by a small margin. Smaller players held a petroleum market share of 46.57%, while the majors hit 46.40% during this period.

Sought for comment on why competition from new oil players is increasing, Mr. Abad said he observed there are more small players that are joining the sector. This is in contrast to what was happening before when Petron, Pilipinas Shell and Chevron Philippines (formerly known as Caltex) were relatively the only ones in the market, he added.

Milan Fashion Week

September 27, 2021 | 12:05 am

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D&G glitters, seaside chic for Armani, Prada strips dresses back, foulard inspires Versace, Fendi offers disco glam, butterflies at Ferretti

MILAN — Glitter lit up the catwalk at Dolce & Gabbana’s Milan fashion show on Saturday, with the designer duo peppering their spring/summer 2022 women’s collection with sparkling, sequined blouses and rock-studded mini-skirts and trousers.

The #DG Light show, which was held in a disco-like atmosphere with glimmering mirrors as a backdrop, also featured black biker jackets and camouflaged overcoats, cargo pants worn with crystal-encrusted tops, fringed gold and silver dresses.

Designers Domenico Dolce and Stefano Gabbana incorporated elements seen in previous collections, such as embroidery, lace, flowers, animal prints, bras, corsets and tight black dresses. Some jackets had large, butterfly-like shoulders, while accessories included thigh-high denim boots.

The creative pair said on the sidelines of the presentation they had looked back at the early 2000s, when their exuberant designs broke with the dominant minimalist style.

The lights and glitzy glamor of the show were a call to leave behind the darkness of the coronavirus pandemic, they said.

GIORGIO ARMANI
Veteran designer Giorgio Armani, 87, used pastel colors and soft shades of green and blue for a light collection inspired by the sea. The show featured elegant chiffon dresses, embroidered evening gowns, small tailored jackets, fluid trousers and sleeveless tops in an ode to effortless elegance.

The models, at times resembling undulating mermaids, were openly smiling on the runway, and Mr. Armani said the world today needed sweetness, kindness and smiles.

PRADA
Prada deconstructed dresses at Milan Fashion Week on Friday, using elements including trains and corsets in a spring collection that explored seduction through clothes.

Co-creative directors Miuccia Prada and Raf Simons, who joined the Milan-based, Hong Kong-listed luxury group last year, added silk trains on miniskirts, put corset lacing on the front of jackets and mimicked brassiere cups on knitwear.

The spring/summer 2022 collection, called “Seduction, stripped down,” also featured long back-baring dresses in pink, lime, and tangerine that were cinched at the waist.

Short dresses were also slit behind and had trains while biker jackets were given a worn look and paired with the brightly colored miniskirts.

“We thought of words like ‘elegant’ — but this feels so old-fashioned. Really, it’s about a language of seduction that always leads back to the body,” Ms. Prada said in a statement.

“Using these ideas, these references to historical pieces, this collection is an investigation of what they mean today, what seduction means.”

For accessories, there were belted arm bands and pointy slingback shoes in bright colors.

Like New York and London, Milan Fashion Week is hosting both in-person shows and digital presentations this season following virtual editions in February due to the coronavirus disease 2019 (COVID-19) pandemic.

“I strongly disagree with the idea of a return to ‘normal’ — we must draw lessons from this moment. We have learned that we, in fashion, engage with a much wider world,” Ms. Prada said.

Prada held simultaneous shows in Milan and Shanghai, livestreaming both.

“Doing these shows simultaneously demonstrates a new possibility: that a Prada show can happen anywhere,” Mr. Simons said. “It’s about sharing — not just sharing imagery, not just sharing through technology but sharing a physical event.”

VERSACE
Singer Dua Lipa opened and closed the Versace show, which built on the fashion’s house’s printed silk scarf, or foulard.

Designer Donatella Versace transformed the scarf into lining for dress slits and asymmetric hems, jacket sleeves, shirts, trouser flares, and knotted headscarves.

The line featured latex dresses and shiny miniskirts in neon colors. Some designs bore large safety pins.

For men, there was casual wear, loose suits and relaxed printed shirts.

“The foulard is a fundamental component of Versace’s heritage and character,” Ms. Versace said in show notes. “…This season (it) turns everything on its head, it is no longer fluid or dreamy, the scarf is provocative, sexy, wound tight.”

EMPORIO ARMANI
Giorgio Armani presented a light and fluid Emporio Armani collection for women and men at Milan Fashion Week on Thursday, as he marked 40 years of the label.

The spring/summer 2022 catwalk show featured an array of chiffon dresses, jumpsuits, light blazers and pyjama-like suits in soft materials. Emporio Armani is seen as a more youthful brand than the veteran designer’s main Giorgio Armani line.

For women, parka jackets were adorned with zips, trousers were light and at times see-though, while chiffon tops were paired with chiffon skirts or shorts.

Mr. Armani, 87, started the catwalk show in soft hues of camel, grey, beige, pink that turned into bolder blues, greens and reds. Eveningwear consisted of shimmering sequined gowns and sparkling top and skirt outfits. Some designs had floral prints and decorations.

“This season, the journey begins in an imaginary desert, crossing its oasis and ending in vibrant colorways,” show notes said. “Everything blends together, quite freely.”

For men, there were tailored blazers, tunic tops and pajama pants. Trousers also bore prints while Bermuda shorts were matched with silky shirts.

FENDI
Fendi designer Kim Jones took fashionistas to the disco at the opening of Milan Fashion Week on Wednesday, in his first in-person catwalk show since joining the Italian luxury label.

In a nod to the heyday of Studio 54 and 1970s disco glamour, models took to the runway in kaftan tops, silk floaty dresses, and sharp trouser suits for the spring/summer 2022 womenswear presentation.

“This is my first live show for Fendi, and it’s a celebration,” Mr. Jones said in a statement. “Our woman has let loose a bit — she’s going out, dressing up. We’ve all been locked away for so long that I think that’s what we all need right now.”

Mr. Jones, who was named artistic director for Fendi womenswear and couture last September, said he looked to a hand-sketched logo by fashion illustrator Antonio Lopez found in the brand’s archives as the foundation for his collection.

He opened the show with all-white ensembles of slit coats, waistcoat and trouser suits, cape-like gowns and short frocks.

Lopez’ brushstrokes adorned cream kaftan tops and dresses. His artwork also featured on handbags.

Mr. Jones, who succeeded late designer Karl Lagerfeld at Fendi and works alongside the founding family’s scion Silvia Venturini Fendi, also took inspirations from Lopez’s drawings for intarsia leather designs, lace dresses, and shimmering evening frocks.

There were wide-leg trouser suits worn with bralettes, tassel dresses and an array of furry coats, a staple at Fendi, part of luxury conglomerate LVMH.

Mr. Jones chose a color palette of soft grey, pink and blue before moving to chocolate brown and black for evening wear.

“While I’ve been looking at Karl’s legacy at the house, I’ve also been looking around him, at his contemporaries — at who he was interested in,” Mr. Jones said. “Lopez was a friend of Karl’s and has always been someone who inspired me…I wanted to introduce him to a new generation.”

ALBERTA FERRETTI
At the Alberta Ferretti show, models wore fringed crochet tops and floaty shirts in sandy colors with wide-leg trousers as well as macs and colorful short halter-neck dresses.

The designer also put fringes on dresses and trousers, paired cropped jackets with miniskirts, and encrusted large sequins and colorful beads on wispy chiffon evening dresses in turquoise, blue, purple and black.

Butterfly patterns and prints adorned some of the designs.

Milan Fashion Week runs until Monday. — Reuters

Restructuring MGen: Solar gets biggest slice of RE investments

September 27, 2021 | 12:05 am

By Angelica Y. Yang, Reporter

MERALCO POWERGEN CORP. (MGen) is likely to comprise the biggest portion of its investments in renewables before 2030, according to the firm’s top official.

“You can expect to witness more solar, hydro and wind projects from us in the coming years as we endeavor to provide cleaner and sustainable energy supply to the market,” MGen President and Chief Executive Officer Jaime T. Azurin told BusinessWorld reporters in a roundtable discussion on Friday.

The firm earlier said it has committed to developing 1,500 megawatts (MW) in utility-scale renewable energy (RE) plants over the next five to seven years.

“[Out of] all ongoing projects, solar will take the biggest pie at about 60%. For, hydro, maybe another 30% and about 10% of wind,” Mr. Azurin said.

The projects will mostly be located in Luzon to address tightness in supply, he said.

The Department of Energy (DoE) previously estimated that committed power projects totaling 7,712 MW are expected to bring capacity to the grid by 2027, with coal facilities making up half of the projection.

Of the number, coal plants will comprise around 50% or 3,821 MW, followed by natural gas and renewable energy facilities, at 2,400 MW and 1,053 MW, respectively.

Committed projects have secured financial closing with their investors or bankers.

According to Mr. Azurin, issues on climate change and the increasing demand for clean energy sources have driven the development of RE in the form of several policies including the renewable portfolio standards and the green energy option program, which both aim to ramp up the country’s RE share to 35% in the power generation mix.

For him, the increased push for more RE brings about the need to ramp up the supply of reserves.

“As you increase renewables, you would have to increase ancillary services to provide backup [so you can] address intermittency issues. In the UK, for every kilowatt of renewables, they should have at least maybe half a megawatt of backup supply. You must be prepared to pay for ancillary [services] for that backup supply,” he said.

Mr. Azurin also underscored the importance of gas as a transition technology in lieu of coal, following the DoE announcement of a moratorium on endorsing new coal-fired power plant projects.

“The transition technology from our viewpoint is really gas,” he said, adding that the firm is considering getting into the gas business through its proposed ultra-supercritical Atimonan coal-run plant in Quezon province.

“We’re still reviewing the possibility of either still doing coal or gas depending on the upcoming CSP (competitive selection process) requirements of the utility companies. So we are now trying to match whether which one is more competitive…maybe there’s an opportunity to shift the technology to gas,” he added.

For the MGen executive, the policy on determining the country’s fuel mix will dictate investments in the energy sector.

“A mix should send the right signal to the investing public. [It should] … be able to balance off renewable and thermal plants until we are able to solve the next technology to replace thermal plants,” he said.

MGen and its parent firm Manila Electric Co. (Meralco) acquired the shareholdings of affiliate company Global Business Power Corp. (GBP) earlier this year.

“The integration of MGen and GBP benefits both companies in terms of scale and operational efficiencies. Through MGen’s 1,355 MW capacity from its business operations in Luzon and in Singapore, combined with GBP’s 1,091 MW capacity from Visayas and Mindanao operations, we have effectively ramped up and doubled our [gross] capacity to 2,446 MW,” Mr. Azurin said.

“MGen and GBP are now in a better position to serve the growing energy requirements of the entire nation including that of Southeast Asia.”

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has interest in BusinessWorld through the Philippine Star Group, which it controls.

D&L plans more products as Batangas facility boosts R&D

September 27, 2021 | 12:05 am

LISTED D&L Industries, Inc. said it is ramping up its investments on research and development (R&D) to launch more products following its successful maiden bond offering, which will fund the expansion of its facility in Batangas.

“With our new facility coming online, they can expect more innovative businesses solutions and product offerings from us,” D&L President and Chief Executive Officer Alvin D. Lao said in an e-mailed statement over the weekend.

The company said it has one of the “most extensive R&D investments in the country.” D&L said its customers view it as an R&D extension of their respective businesses.

D&L completed its maiden P5-billion bond offering this month, which saw total bids exceed its base of P3 billion by 4.6 times.

Proceeds from the bond issuance will be used for the expansion of its Batangas expansion. The facility is expected to partially start operations by May next year. The facility is “envisioned to be a world-class manufacturing plant which boasts of its cutting-edge R&D and innovation capabilities.”

“At the peak of the lockdown in 2020, the company was able to realign its resources to manufacture essential food and chemical products that were badly needed during those times,” the company said.

D&L developed surface disinfectant in aerosol format Solbac Surface Disinfectant via its Aero-pack Industries, Inc. unit in less than three months.

Meanwhile, its subsidiary Chemrez Technologies, Inc. manufactured and exported food and health supplement Laurin CocoMCT oil.

The company also developed Biorez and Biomate, proprietary lines of plastic materials and additives of plastic materials which help plastics become compostable and biodegradable.

“While times have changed especially with the pandemic, our company remains rooted in its core mission of dedicating itself to better lives with R&D and innovation as its main tool,” Mr. Lao said.

Shares of D&L at the stock market closed unchanged for the third consecutive day on Friday at P7.80 apiece. — Keren Concepcion G. Valmonte

Hog raisers say industry can’t withstand pork import surge

September 27, 2021 | 12:04 am

HOG RAISERS said the industry cannot withstand the volume of pork imports due to arrive based on the volume of approved import clearances.

Pork Producers Federation of the Philippines, Inc. President Rolando E. Tambago said the volume of future imports, as indicated by the approved sanitary and phytosanitary import clearances (SPSICs) in the eight months to August, are “too much for the hog industry to take.”

According to the Bureau of Animal Industry, pork imports with approved SPSICs amounted to 837,955.34 metric tons (MT) as of Aug. 31, from 276,424.23 MT a year earlier.

Overall meat imports with approved SPSICs as of end-August hit 1.72 million MT, up 107% from a year earlier.

“The whole industry is worried about the huge amount of approved SPSICs. Imported pork will flood local markets and will put an additional burden on hog farmers,” Mr. Tambago said via mobile phone.

Mr. Tambago projected a surplus of pork, as per capita consumption in 2021 is 14.17 kilograms, based on an estimated population of 110 million.

He said domestic pork production for 2021 is expected at 1.32 million MT. When combined with the 837,955.34 MT approved pork imports, the surplus will be 603,260 MT due to weaker demand caused by the coronavirus disease 2019 (COVID-19) pandemic.

“To put into perspective, our total demand or consumption for the whole year is estimated only at 1.56 million MT,” Mr. Tambago said.

“Philippine pork per capita consumption for this year is expected to be much lower versus previous years due to the economic impact of the COVID-19 pandemic. Market demand is also shrinking,” he added.

As a result, Mr. Tambago urged the Department of Agriculture (DA) to pay attention to the hog industry’s needs.

“Only 30% of hog production was lost (due to African Swine Fever). But why are there so many imports? I understand that the government wants to tame inflation. But their efforts should be focused on improving local production. The DA should indemnify farmers for all culled pigs affected by ASF, subsidize feed inputs to reduce production costs, and help with postharvest operations up to the marketing of produce,” Mr. Tambago said.

To address the tightening pork supply in the wake of ASF, President Rodrigo R. Duterte issued two executive orders on May that raised the minimum access volume allocation for pork imports by 200,000 MT; and decreased the tariff rates of in-quota and out-of-quota pork imports. — Revin Mikhael D. Ochave

Peso expected to appreciate on likely manufacturing boost

September 27, 2021 | 12:04 am

THE PESO could strengthen versus the greenback this week due to likely improvement in manufacturing data.

The local unit closed at P50.65 per dollar on Friday, weaker by 31 centavos from its P50.34 finish on Thursday, based on data from the Bankers Association of the Philippines.

It also shed 70 centavos versus its close of P49.95 per dollar a week earlier.

The peso’s Friday finish was its weakest in nearly 16 months or since May 28, 2020 when it closed at P50.69 a dollar.

The peso depreciated versus the greenback after the central bank further raised its inflation forecast for the year, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in an e-mail.

The Bangko Sentral ng Pilipinas (BSP) on Thursday kept rates steady to support recovery but warned that inflation will likely remain elevated this year due to low supply caused by the African Swine Fever outbreak and the impact of weather disruptions.

The central bank now expects 2021 inflation to quicken further beyond its 2-4% target at 4.4% from 4.1% previously. It said September inflation could reach around 5% before going back to within target by November.

In August, headline inflation rose to 4.9% from 4% in July, marking its fastest pace since the 5.1% in December 2018. This brought average inflation for the first eight months of 2021 to 4.4%.

Concerns over the debt situation of China’s Evergrande Group was also a major factor that affected the peso-dollar trading during the week, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message.

Evergrande, China’s second-biggest developer and a key player in the country’s housing boom, is facing liabilities worth more than $300 billion. This is equivalent to 2% of China’s gross domestic product.

The developer left several of its projects unfinished amid cash crunch, causing homebuyers to worry regarding their properties. The firm’s main unit on Wednesday said it would make a coupon payment on its domestic bonds on Sept. 23, providing some relief to market concerns.

The BSP on Thursday said local banks only have minimal exposure to China, citing claims from counterparties based in the country and its Special Administrative Regions is only 0.86% of the total banking system’s assets.

This week, Mr. Ricafort said the peso-dollar trading will be affected by market sentiment on upcoming manufacturing data.

IHS Markit will release the country’s September Manufacturing Purchasing Managers’ Index (PMI) on Oct. 1.

The PMI reading dropped to 46.4 in August from 50.4 in July, indicating factory activity was below the 50 mark that separates expansion from contraction. This was blamed on the two-week lockdown last month which temporarily shut factory operations.

Meanwhile, Mr. Asuncion said the market will continue to monitor developments related to Evergrande and its implications to China and other economies, which could then affect foreign exchange trading.

Finance Secretary Carlos G. Dominguez III last week said his department was assessing whether any of the Chinese contractors involved in the government’s infrastructure program will be negatively affected by the Evergrande situation.

For this week, Mr. Asuncion gave a forecast range of P50.00 to P50.50, while Mr. Ricafort expects the local unit to move within P50.25 to P50.75 per dollar. — Luz Wendy T. Noble

Overcoming pandemic difficulties, Robinsons opens mall in La Union

September 27, 2021 | 12:04 am

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THE 53^RD ROBINSONS MALL was opened on Sept. 24, setting up shop in the resort town and surfing capital of La Union.

The locale’s influences are reflected in Robinsons Place La Union’s decor, as shown in an online press conference on Sept. 22. Murals depicting ocean and surfing lifestyle themes dot the mall, which, with 34,906 square meters of space spread across four levels, is the province’s biggest mall so far.

This is the group’s third shopping complex in the Ilocos region, joining Robinsons Place Ilocos in San Nicolas and Robinsons Place Pangasinan in Calasiao. The mall operator’s other locations in the northern regions of the country include Robinsons Place Santiago and in Tuguegarao.

“All of those malls have been doing very well, and that’s why we are confident that Robinsons Place La Union will also be a successful mall,” said Arlene Magtibay, SVP and Robinsons Malls BUGM.
The location itself is an ace up their sleeves. More than its reputation as a seaside resort, La Union’s San Fernando — the provincial capital where the mall is located — happens to be the regional center of Region I (which includes the provinces of Ilocos Norte, Ilocos Sur, La Union, and Pangasinan). “San Fernando is easily the center of trade and commerce of the province. All of the businesses are practically located here,” said Ms. Magtibay.

RISING DURING THE PANDEMIC
The mall, which began general construction in March 2019, also suffered unavoidable setbacks due to the pandemic. “This mall is probably the most challenging that we’ve had to build,” said Ms. Magtibay. Remembering when the mall first began construction, “At that time, we were very confident that we would be able to open the mall in 2020.”
But then, she said, their deadlines kept getting pushed further because of pandemic-related restrictions, the difficulties of getting materials to La Union; not to mention the risk of the COVID-19 virus itself.

“On the tenant’s side, it was also difficult for our leasing department to bring the tenants to La Union,” she said. While distance was a factor, she added, “More than that, there were restrictions on travel, and people were really very wary about going anywhere far.
“We’re just really grateful that despite the hardships that we face, we are now at this point where we are ready to open Robinsons Place La Union,” she said.
As such, amenities and protocols that have been set throughout Robinsons Malls across the country because of the pandemic also apply in La Union, including wearing face shields and masks, signs reminding people of health protocols, having sanitation teams, and roving safety marshals.

On the bright side, Robinsons Place La Union is the pilot mall for the mall group’s first kids’ bathroom. Other amenities include a baby care room, a PWD-friendly layout with ramps and special parking, and a bike parking and repair station. The mall includes four cinemas, a 344-seater Eat Street food hall, and an outdoor Sky Deck.
Meanwhile, environmental concerns are also put to the fore with a partnership with the La Union City Environment and Natural Resources Office (CENRO), where recyclables are collected and turned over to the Eco Waste Association, a local group which upcycles plastics and converts them to plastic plant boxes. A sewage treatment plant aims to recycle water, while the mall uses LED lighting for energy efficiency.

LOCAL ENTREPRENEURS
Another highlight of Robinsons Place La Union are the local entrepreneurs that will occupy its space. Ms. Magtibay estimates that about 70% of their tenants will be micro, small to medium enterprises (MSMEs). When the mall is fully operational, it will have about 135 stores.

Local entrepreneurs on their list include Taco Tito’s, Gem’s Empanada Ilocandia, Sagat Crust Food House, Pasarabo, Seashack, Lorma Life Check Clinic, Dr. Brows, and Luxe Derm Skin Care Clinic, among others.

“All of the malls that we’ve opened, we really try our best to involve the local entrepreneurs. We believe that we should be all-inclusive. It’s not just about bringing in the national brands and the international chains. Wherever we put up a mall, we have to make sure that we include the local community,” said Ms. Magtibay. “It’s also because a lot of them are actually very good.”
“We really would want to help these MSMEs because as we all know, that’s really the backbone of our economy,” she said. “It’s been a very symbiotic relationship. Even as we support them, the mall ends up being more interesting.” — Joseph L. Garcia

LNG as transition fuel offers opportunities, lower costs

September 27, 2021 | 12:04 am

Energy World Corp. Pagbilao LNG Hub Terminal Jetty. This jetty is capable of unloading / loading from small LNG Carriers up to Q-max size.

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By Keren Concepcion G. Valmonte, Reporter

COMPANIES are supporting the Energy department’s initiative of looking into liquefied natural gas (LNG) terminal projects as one of the opportunities to source power for the country.

The country’s Energy department estimated that the Malampaya gas-to-power project, the country’s sole provider of natural gas to power around 20% of the country’s needs and 40% of Luzon’s, will be depleted by 2027.

The department is now exploring other options for sourcing energy, which include importing LNG. In a statement made in August, Energy Secretary Alfonso G. Cusi set a goal to transform the Philippines into a “leading LNG hub in Asia.”

Despite the coronavirus disease 2019 (COVID-19) pandemic, companies with LNG terminal projects said construction of their plants remains on track even with the stop-and-go lockdown restrictions in the country.

There are currently six LNG terminal projects in the country, down from seven after Batangas Clean Energy, Inc. (BCE) failed to secure financing for its project as it was not able to sign up an off-taker for the facility’s output.

The Shell Group, Excelerate L.P., First Gen Corp.’s unit, Atlantic Gulf & Pacific Co. of Manila, Inc. (AG&P), and A Brown Co.’s Vires Energy Corp. are building their projects in Batangas where the country’s gas-fired power plants are located.

Energy World Gas Operations Philippines, Inc., on the other hand, is building its plant in Pagbilao, Quezon.

First Gen’s FGEN LNG Corp.’s interim offshore terminal project started construction in June. The company aims to complete it as early as the third quarter of next year.

“In order to enable the introduction of LNG as early as possible at lower cost, First Gen, together with Tokyo Gas [Co. Ltd.], has pivoted to develop an interim offshore LNG Terminal, by modifying its existing jetty to become a multi-purpose jetty that can accommodate a floating storage and regasification unit (FSRU) and building an adjunct onshore gas receiving facility,” Jonathan C. Russell, First Gen’s executive vice-president and chief commercial officer, said in an e-mailed response to BusinessWorld’s query.

The offshore terminal will allow FGEN LNG to serve the natural gas requirements of existing and upcoming gas-fired power plants of its affiliates as well as those of third parties by 2022’s third quarter.

The target date is roughly the same time AG&P looks to complete its own import terminal in Batangas bay. AG&P’s Philippines LNG (PLNG) import terminal may be the first commissioned LNG terminal in the country.

“The project is progressing as planned. All engineering and procurement-related works are fully completed,” Karthik Sathyamoorthy, president of AG&P Terminals & Logistics, said via e-mail.

“Construction has started offsite using modular approach for on-track commissioning and the start of commercial operations of PLNG in the third quarter of 2022,” Mr. Sathyamoorthy added.

Energy World started to look into developing an LNG project in the Philippines in 2007. However, its project in Pagbilao, Quezon has paused due to the delay in connecting the power station to the national grid.

Energy World’s LNG terminal is around 80% complete, the company claims, while its 650-megawatt (MW) power station project’s first two 200-MW gas turbine units were said to be 75% to 80% complete each. Both are located in Pagbilao.

“Although we were able to obtain a connection agreement with NGCP (National Grid Corp. of the Philippines) way back in about 2016 or 2017, the designated connection point for our power plant is at the new Pagbilao substation, which is being built by the NGCP at the moment,” Graham Stewart Elliot, chairman and chief executive of Energy World, said in an online video call.

“That was originally scheduled for completion in about 2017 or 2018 when we first made the agreement with NGCP, however, it’s not yet complete. They have started construction, but until it’s completed, we don’t have an outlet for electricity,” he added.

Energy World said the project is under a “care and maintenance status” during the pandemic.

“We’re just waiting to get some clarity and finality on the completion of that substation and we will make sure we will come online in parallel with that,” Mr. Elliot said.

Meanwhile, Vires Energy’s project is undergoing pre-front end engineering design, A Brown Vice-President Paul Francis B. Juat told BusinessWorld in a phone call.

“I think LNG will be a very stable part of the energy mix and we’ve seen even modern countries transition using LNG first before they go full-on renewables,” Mr. Juat said.

Meanwhile, First Gen’s Mr. Russell said the introduction of LNG in the country “will encourage new power plant developments, as well as industrial and transport industries, to consider it as a replacement to more costly and polluting fuels.”

FGEN LNG also plans to introduce small-scale LNG, or ssLNG — an LNG-related facility but of “lower magnitude than conventional LNG infrastructure.”

“We believe that gas should continue to play an important role in the energy mix of the Philippines, providing a competitive, low carbon, secure and flexible complement to the increased use of intermittent renewable energy sources,” Mr. Russell said.

“The entry of LNG should thus play a vital role in decarbonizing the power sector of the country,” he added.

In late August, Kohlberg Kravis Roberts & Co. (KKR) unit Philippines Clean Energy Holding, Inc. offered to acquire up to 3% to 5.7% of the total listed and outstanding shares of First Gen.

KKR has deployed around $5 billion of total equity into renewable assets since 2011. It said it saw “potential” in the Philippines to develop more renewable and clean energy sources.

“We agree that the Philippines has huge potential to develop more renewable and clean energy sources, and we hope that KKR can continue to invest significant capital into this sector and the country overall,” KKR Asia Pacific Infrastructure Team Managing Director Michael de Guzman said in an e-mail to BusinessWorld.

Energy World’s Mr. Elliott said the Philippines “has the availability to grow into a major LNG demand center.”

“As countries move away from coal, unlike renewable energy, the increase in [the] gas energy mix will resolve power grid instability,” AG&P’s Mr. Sathyamoorthy said.

“In the long run, as the country improves its ability to access global LNG supply market, we expect access to this competitive fuel should support competitive power prices,” he added.