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Gross borrowings fall 28% as of end-April

PHILIPPINE STOCKS inched lower while the peso continued to rise against the dollar on Dec. 27, the last trading day of 2024

GROSS BORROWINGS dropped by 28% as of end-April, as the National Government saw lower financing requirements despite the prolonged pandemic.

Based on preliminary data from the Bureau of the Treasury (BTr), total gross borrowings stood at P1.18 trillion, lower than the P1.65 trillion seen in the same period last year.

For April alone, gross borrowings plunged by 62% to P101.26 billion year on year.

The government borrows from domestic and foreign sources in order to fund a budget deficit that has since grown due to the need to finance the country’s pandemic response.

Domestic gross borrowings slumped by 37% to P66.38 billion in April, from P106.15 billion a year ago.

The month saw the net issuance of Treasury bills (T-bills) amounting to P34 billion, where more repayments were made than debt incurred.

However, this was offset by fixed-rate Treasury bonds (T-bonds), which raised P100.38 billion.

Foreign gross borrowings plummeted by 78% to P34.88 billion in April. The government raised P28.55 billion from Samurai bonds and P6.33 billion from project loans during the month.

The Samurai bonds, issued on April 12, were the country’s first sustainability bond in the Japanese market. Funds will be used for sustainable development and climate change mitigation initiatives.

The government repaid P5.6 billion to foreign creditors in April.

In the first four months of 2022, gross domestic borrowings fell by 34% to P915.49 billion.

The government generated P457.99 billion from Retail Treasury bonds (RTBs), and P331.24 billion from fixed-rate T-bonds.

Gross external borrowings went up by 9% year on year to P267.9 billion in the four-month period.

The government wants to raise P2.2 trillion to help fund its budget deficit this year, with 75% coming from the local market while the remainder will be loaned from foreign lenders.

As of end-April, the National Government’s outstanding debt stood at a record-high P12.76 trillion. Debt inched up by 0.7% from March’s P12.68 trillion “due to the net issuance of government securities to both local and external lenders and the depreciation of the local currency against the US dollar.”

In an economic bulletin on Saturday, the Department of Finance (DoF) said the recent buildup of debt is mainly due to the country’s pandemic response. 

“The pandemic has found the economy more or less in a position of strength and the outgoing administration will be bequeathing the incoming administration with reforms in place with which to reboot and sustain economic growth and execute an orderly fiscal consolidation,” the DoF said.

Tax and structural reforms as well as the infrastructure program “are important ingredients in the country’s economic recovery cocktail that should restore investment-led growth with which to outrun the buildup of debt,” the DoF said.

In addition, the DoF said the incoming government should immediately reform the pension system of the military and uniformed personnel.

“The current scheme is costing the country around P114 billion annually. This is clearly a drag on fiscal policy which will have serious fiscal sustainability implications,” it said. — T.J.Tomas

Philippine history circles back with continuity president

Ferdinand “Bongbong” R. Marcos, Jr addressed his supporters during a campaign rally in Isulan, Sultan Kudarat province, March 28, 2022. — PHILIPPINE STAR/KRIZ JOHN ROSALES

By Kyle Aristophere T. Atienza, Reporter

FERDINAND “BONGBONG” R. MARCOS, JR., 64, won the Philippine presidency by a landslide based on a message of unity and not much anything else.

He skipped debates, wary of traditional media known to bring up his father’s two-decade autocratic rule and leaving both his staunch supporters and critics guessing about how he really plans to run the country once he’s in control.

Mr. Marcos will start his six-year rule on June 30, heralding the return to power of the country’s most notorious political family that was driven out by a popular street uprising in 1986.

He’s widely seen as a continuity president, picking up from where President Rodrigo R. Duterte left off, including his infrastructure program that was delayed by a coronavirus pandemic and reviving remittances and a consumption-based economy.

“While these programs led to some measure of success during President Rodrigo R. Duterte’s time, it can prove disastrous when these are applied now,” said Leonardo A. Lanzona, who teaches economics at the Ateneo de Manila University, citing the Philippines’ rising debt.

He also said Mr. Marcos should address corruption that had slowly crept in the final part of the Duterte administration. “Unless corruption is checked, further declines in credit ratings are expected, making it more difficult to access funds from abroad.”

Mr. Marcos faces a tricky balancing act of supporting economic recovery and containing the country’s rising debt, Oxford Economics Lead Economist Sian Fenner and Assistant Economist Makoto Tsuchiya said in a recent note.

The Philippines’ budget deficit widened during the pandemic, as revenue collections remained lackluster.

The Philippine economy grew by 8.3% in the first quarter, slightly faster than government expectations, and that could give Mr. Marcos time to adjust and think of his game plan.

But analysts said growth remains unstable, with consumer spending likely to be stunted by rising inflation, worsened by Russia’s invasion of Ukraine.

Like Mr. Duterte, Mr. Marcos is likely to pursue closer trade and investment ties with China, even if a shift away from the United States is unlikely and will be frowned upon by Filipinos wary of China.

Aside from continuing Mr. Duterte’s infrastructure program, the public should expect an economic recovery that highly relies on a 1980s labor export policy and consumer spending, said Emy Ruth Gianan, an economist at the Polytechnic University of the Philippines

There are heavy trade-offs for these macroeconomic solutions, which might no longer be responsive to the changing times, she added.

“Filipino labor export could worsen our brain drain suffering, while prioritizing infrastructure over equally important human capital investments is also not good,” Ms. Gianan said in a Facebook Messenger chat.

She also expects Mr. Marcos to continue Mr. Duterte’s tax agenda that sought to further lower income taxes, though “lower corporate taxes could mean a greater burden on individual taxpayers because we will be doing much of the economic heavy lifting.”

“Marcos Jr. did not really lay down a platform of governance,” Ms. Gianan said. “To what criteria can we make him accountable if there is no benchmark to begin with? Our expectations are set so low that any meager change can be construed as an improvement.”

Mr. Marcos faces serious economic obstacles, and economists said his lack of experience in policy making is unlikely to inspire confidence.

“Economic managers are going to be critical for the next several years because of the pandemic and economic crisis, something that we are looking at very carefully,” Mr. Marcos told reporters days after an unofficial count showed him headed for a landslide victory.

With old names being tapped to be part of Mr. Marcos’ Cabinet, economists and political analysts worry that his government might fail to respond to the changing times.

“It seems that the basis for choosing the member of the Cabinet is one’s proximity to the people in power,” said Arjan P. Aguirre, who teaches political science at the Ateneo. “The closer or more loyal you are to the president the higher you get into the political ladder.”

“The Marcos administration has no choice,” he said in a Messenger chat. “They don’t have the support of many of the pool of highly educated and respected leaders, emerging generation of new technocrats, known governance specialists, veteran reformists and progressive professionals needed for public service.”

‘ANYTHING HE WANTS’
Mr. Marcos has named Arsenio M. Balisacan his Socioeconomic Planning chief, Benjamin E. Diokno as his Finance secretary and Felipe M. Medalla as his central bank governor. Amenah F. Pangandaman, a central bank assistant governor, will become Budget secretary.

Mr. Balisacan, an Ilocos native like his boss, held the same post under the late President Benigno S.C. Aquino III -— the son and namesake of the dictator’s political nemesis.

Former Labor Secretary Bienvenido E. Laguesma and Filipino worker advocate Susan V. Ople have also accepted the offer to head the Labor department and Department of Migrant Workers, respectively.

Ms. Ople is the daughter of the late Senator Blas F. Ople, who served as labor minister of Ferdinand E. Marcos for 17 years. Mr. Marcos’ running mate, Vice-President Sara Duterte-Carpio, will head the Education department.

“Given that your government will be filled with people who are more of a loyalist than a technocrat, expect that their participation in the government will be more about realizing the objectives of their patron than pushing for long-term reforms and changes needed in our society,” Mr. Aguirre said.

Mr. Marcos has not hinted at reforming the country’s political system dominated by dynasties, and some political analysts expect him to push constitutional changes that could benefit the Marcos dynasty.

“I don’t expect this government to be that serious in supporting political reforms such as banning political dynasties and reforming the electoral system, among other things,” Mr. Aguirre said.

He will have a “legitimacy ticket” to do anything he wants, Jan Robert Go, who teaches political science at the University of the Philippines, said in a Messenger chat. “He might initiate some policies, but these would more or less preserve the status quo, if not exacerbate the deeply oligarchic nature of our politics.”

“Marcos did not run with a progressive political change platform,” said Robin Michael U. Garcia, a political economy professor at the University of Asia and the Pacific. “We should not rule out the possibility, but I think he will not walk down that road.”

Higher daily wages to take effect in 14 regions 

A mural depicting a laborer is seen in Paco, Manila, May 16. — PHILIPPINE STAR/KRIZ JOHN ROSALES

A NEW daily minimum wage will be implemented in 14 regions this month, the Labor department said on Sunday, adding that domestic workers will also have higher monthly pay.

The Department of Labor and Employment (DoLE) in a statement said 14 regional wage boards have already approved wage hikes ranging between P30 and P110.

The minimum wage in Metro Manila increased by P33 on June 4, bringing the daily minimum wage rate to P570 for workers in nonagricultural sectors, and P533 for those within the agricultural industry.

Central Luzon workers will see a P40 increase, bringing the new minimum wage to P414-P460.

A new daily wage will be implemented in Calabarzon, ranging from P390-P470 in the nonagriculture sector; from P350-P429 in the agriculture sector; and P350 in retail and service establishments with not more than 10 workers.

The Cordillera Administrative Region’s (CAR) minimum wage will be raised by P50-P60 in two tranches, bringing the daily pay to P380 on June 14 and to P400 starting Jan. 1, 2023.

In the Ilocos Region, the P60-P90 pay hike will be implemented in two to three tranches, starting June 6. This will bring the daily pay to P372-P400.

In the Visayas, the daily minimum wage will now range from P410-P450 for workers starting June 5.

A new minimum wage in northern Mindanao will range between P378 and P405, after the P25 increase is implemented on June 18 and the P15-P22 increase on Dec. 16.

The Davao Region will have a P47 wage hike for workers across all sectors starting June 19. The daily minimum wage rates will be P438 in the agriculture sector, P443 in the nonagriculture sector, and P443 for retail/service establishments employing not more than 10 workers.

DOMESTIC WORKERS
Meanwhile, domestic workers will see wages increase between P500 and P1,500 in some regions.

In Bicol, a domestic worker’s monthly pay will increase to P4,000, while those in CAR and Mimaropa will see their wages go up to P4,500.

Domestic workers in Cagayan Valley will now have a monthly pay of P5,000. In Region 7, those in chartered cities and first-class municipalities will have a monthly minimum wage of P5,500, while those in other municipalities will have a wage of P4,500.

In Mindanao, domestic workers will have a monthly wage of P4,500 for cities and first-class municipalities and P3,500 for other municipalities. — JVDO

Megaworld hikes capex to P50B 

MEGAWORLD Corp. is hiking its capital expenditure (capex) budget this year to P50 billion as it begins accelerating the development of its projects amid eased restrictions and the reopening of the economy, the property developer said during the weekend.

“We have accelerated some projects to pave the way for opportunities coming from the pandemic recovery,” Megaworld Chief Strategy Officer Kevin L. Tan said in a statement.

In 2021, capital spending reached around P38 billion, almost 6% higher than its earmarked P36 billion, as the company began resuming construction activities.

Of the total budget, 75% will be spent for real estate developments, particularly on the construction of new residential properties and land development of townships. The remaining 25% will be used for investment properties and land banking.

The company said it is also launching four additional townships across Metro Manila, Calabarzon, and Mindanao. The new townships will cover around 500 hectares of land, which will add to the company’s existing land bank of around 4,500 hectares.

“This will bring the total number of Megaworld’s townships to 32 this year. We look forward to further expanding our portfolio of residential, office, hotel, and mall properties in these new areas that are considered among the key growth centers in the country today,” Mr. Tan said.

The group is also scheduled to launch 14 new residential and commercial lot projects with a total sales value of P30 billion.

These new projects are Maple Grove and Arden Botanical Estate in Cavite; Eastland Heights in Rizal; The Hamptons Caliraya in Laguna; The Upper East in Bacolod; Iloilo Business Park in Iloilo City; Capital Town in Pampanga; McKinley West in Taguig City; Alabang West in Las Piñas City; Arcovia City in Pasig City; Paragua Coastown in Palawan; Northwin Global City in Bulacan; and another one in Makati City.

In May, Megaworld launched its first upscale residential village in its Maple Grove township in General Trias, Cavite.

Megaworld has 28 integrated urban townships, integrated lifestyle communities, and lifestyle estates in around 30 cities across the country. At the stock exchange on Friday, Megaworld shares went down by 1.07% or three centavos to close at P2.77. — Luisa Maria Jacinta C. Jocson

Petrochemical firms seen at risk without import duties

THE local petrochemicals industry is seen to struggle after the government’s decision not to impose safeguard duties on the importation of linear low-density polyethylene (LLDPE) pellets and granules.

JG Summit Olefins Corp. President Patrick Henry C. Go said that the recommendation of the Tariff Commission (TC) to not grant safeguard duties will be detrimental to the local petrochemicals industry.

LLDPE resin is used for various products such as food, beverage, consumer products, and packaging.

“The TC recommendation not to grant safeguard duties on imported LLDPE will be detrimental to the local petrochemical industry and will only benefit foreign resin manufacturers as they continue to increase the volume of their exports of resin products into the country,” Mr. Go said in a statement over the weekend.

“In the long run, if this influx of foreign resins remains unabated, a different environment will possibly materialize where the biggest drivers in the country’s petrochemical industry will be foreign companies instead of the local petrochemical players, which are struggling to survive and compete with much larger foreign petrochemical companies who continue to flood our markets with their oversupply of products,” he added.

Further, Mr. Go said the local petrochemicals industry needs government support such as trade remedies to become competitive and attain long-term viability.

“In order for many local industries, including the domestic petrochemical industry, to become globally competitive and achieve long-term viability, the support of the government in the form of trade remedies is needed in areas where trade imbalances adversely affect the particular local industry who is still in the process of catching up to foreign competition,” Mr. Go said.

In 2021, the Department of Trade and Industry (DTI) asked the TC to conduct an investigation on the safeguard duties for LLDPE resins. This is after the DTI found out in its preliminary investigation that there was a “causal link” between the higher LLDPE imports and serious injury to the local industry.

The TC issued a summary report dated May 23 in its website saying that it recommends “no definitive general safeguard measure be imposed on the importations of the LLDPE pellets and granules subject to this investigation.”

“There was no increase in imports of LLDPE pellets and granules, both in absolute terms and relative to domestic production, during the period of investigation from 2015 to June 2021,” the TC report said.

“Since it has been established that LLDPE pellets and granules were not imported in increased quantities (whether absolute or relative to domestic production) during the period of investigation, the determination of serious injury or threat thereof, causation, and unforeseen developments has become moot and academic,” it added.

The TC has yet to release its summary report for the ongoing petition of safeguard measures against high-density polyethylene pellets and granules imports, which was also previously requested by the DTI. The resin is used in the production of consumer and industrial packaging. — Revin Mikhael D. Ochave

Scottie Thompson named PBA Most Valuable Player

PBA Season 46 Most Valuable Player Scottie Thompson — PBA IMAGES

By Olmin Leyba

THE do-it-all-guard largely considered as the “new face of Barangay Ginebra” is also the top dog of the entire league.

Gin Kings star Scottie Thompson formalized his new-found status by hoisting the coveted Season 46 Most Valuable Player (MVP) trophy to loud applause from fans and peers alike during Sunday’s Philippine Basketball Association (PBA) Leo Awards.

Mr. Thompson, the first guard since Ginebra great Mark Caguiao won the plum in Season 37, said this achievement should serve as an example of how a role player like himself can make it big through persistence.

The top individual plum put the cherry on top of Mr. Thompson’s memorable 2021-22 season that saw him cop the Best Player of the Conference and Finals MVP plums plus the championship in the Governors’ Cup.

The former NCAA MVP from Perpetual Help piled up 2,836 points from stats and votes from players, media and the PBA to beat TnT’s Mikey Williams (1,332), NorthPort’s Robert Bolick (1,295) and Magnolia’s Calvin Abueva (10,66) for the Leo Trophy.

He was joined in the Mythical First Team by Messrs. Williams, Abueva, six-time MVP June Mar Fajardo of San Miguel Beer (SMB) and NorthPort’s Arwind Santos.

Mr. Bolick headlined the Mythical Second Team with SMB’s CJ Perez, Ginebra’s Christian Standhardinger, Phoenix’s Matthew Wright, and Magnolia’s Ian Sangalang.

Mr. Williams, meanwhile, was feted as Rookie of the Year while Juami Tiongson of Terrafirma received the Most Improved Player accolade.

Meralco’s Cliff Hodge, Santos, TnT’s Kelly Williams, Magnolia’s Jio Jalalon, and SMB’s Chris Ross composed the All-Defensive Team while NLEX’s Kevin Alas was handed the Sportsmanship Award during the hour-long ceremonies preceding the Season 47 opening.

Bigger DA budget seen needed prior to RCEP market opening

REUTERS

By Alyssa Nicole O. Tan, Reporter

SENATORS who will serve in the next Congress said agriculture budgets must be enlarged to make farmers more competitive in preparation for the market opening contemplated under the proposed Regional Comprehensive Economic Partnership (RCEP).

Francis Joseph G. Escudero, a recently proclaimed Senate candidate, told BusinessWorld in a Viber message that the agriculture industry can only be made more competitive “by increasing the budget of agriculture which, for 2022, is only 10% of the budget of the DPWH (Department of Public Works and Highways).”

About P786.6 billion was allocated to the DPWH in the 2022 General Appropriations Act, while the Department of Agriculture (DA) and National Irrigation Administration were provided P102.5 billion.

Business groups that support RCEP have backed bigger agriculture budgets that are more closely aligned with the spending levels of other ASEAN economies.

“We see our membership in RCEP as an important challenge to our government to step up genuine and meaningful support for Filipino producers, especially in the agriculture sector, which is the backbone of the Philippine economy. We, therefore, urge the government to provide a substantial increase in the agriculture budget commensurate to that provided in our comparable ASEAN neighbors, as we urge our Senators to ratify the RCEP Agreement without delay,” various chambers of commerce said in a joint statement.

Re-elected Senator Ana Theresia N. Hontiveros-Baraquel told BusinessWorld in a Viber message also pointed to the need for increased budget utilization and measures against the smuggling of farm goods.

“According to the farmers and fishermen themselves, the government must first prove that it is monitoring the DA budget because its unliquidated expenses have reached P22 billion, according to the 2020 report of the CoA (Commission on Audit),” she said.

“We also need an oversight committee against smuggling and strict trade safeguard mechanisms to ensure that the sales of our producers are not affected,” she added, noting that she agreed with demands for stronger quarantine and border control measures to prevent the entry of viral diseases such as African Swine Fever.

The best indicator that the Philippines is strengthening and developing the industry is if the budget set aside for the DA is at least 8% of total appropriations, or about P424 billion of the proposed P5.3-trillion 2023 budget, Ms. Hontiveros said.

“Pushing for this marked increase is a strong signal of institutional support for all farmers, fisherfolk, and various producers,” she added.

Senate Foreign Relations Committee Chairman Senator Aquilino Martin L. Pimentel III has said it would be up to President-elect Ferdinand R. Marcos, Jr. to endorse the trade deal to the Senate when the 19th Congress opens next month.

“The 19th Congress (will) wait for (Office of the President) to endorse the said treaty again to the Senate,” he said in a mobile message to BusinessWorld, noting that previous deliberations on the free trade deal will be made part of the committee’s records while new hearings will be held by the appropriate Senate committee in the incoming administration.

Mr. Pimentel said there was no vote on the RCEP since only 17 senators were present during plenary. The trade deal needed 16 affirmative votes to be ratified by the Senate.

“Two senators were abroad, one quarantined, two went out. In short, many members were not on the floor. We didn’t want to deprive them the chance to participate and or vote on the measure,” he said.

The RCEP, which came into force on Jan. 1 in other signatory countries, involves Australia, China, Japan, South Korea, New Zealand and the 10 members of the Association of Southeast Asian Nations (ASEAN).

The Philippines is one of three ASEAN countries that have not signed on to RCEP, along with Indonesia and Myanmar.

“The only question that needs to be answered is what is the real benefit of RCEP for Filipinos? Because we seem to be on the losing side,” Ms. Hontiveros said.

She noted that the agreement is predicted to worsen the Philippines’ trade balance, leading to job losses and a $58 million or a P3 billion drop in annual tariff revenue. Under the RCEP, the Philippines only made concessions on 33 tariff lines, which are equivalent to 0.8% of total imports and 1.9% of all agriculture tariff lines.

Although net exporters of intellectual property may benefit more due to the increased protection under the treaty, Ms. Hontiveros said the Philippines is a net importer.

She also said the treaty is not likely to benefit small and medium enterprises as cooperation mechanisms between developed countries and developing countries are voluntary and not enforceable.

“Virtually all agricultural groups in the Philippines have opposed RCEP — from small farmers to big agriculture groups,” she said. “We must listen to why there is an overwhelming consensus because they are the ones who will experience the first wave of impact after its implementation.”

Mr. Escudero said: “The playing field between our farmers and that of other countries is clearly not level and will only result in benefits to the more competitive country and its farmers, not ours.”

“Putative future gains should never outweigh definite losses and suffering by our farmers given the imbalance I mentioned above,” he added.

The DA has recommended that its budget be reoriented towards diversification, value addition and consolidation of production to improve volume and productivity. 

An enhanced marketing campaign for Philippine products should also be implemented so producers can maximize benefits from expanded market access once RCEP is ratified, the DA said.

T-bills, bonds may fetch higher rates with inflation seen surging

BW FILE PHOTO

GOVERNMENT SECURITIES to be auctioned off this week could fetch higher yields as investors want higher returns, with inflation seen to have surged last month.

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

On Tuesday, it will auction off P35 billion in reissued seven-year Treasury bonds (T-bonds) with a remaining life of three years and eight months.

Traders said the government debt on offer this week could be quoted at higher rates as inflation is expected to have breached 5% in May.

“With consumer price index (CPI) poised to print 5.4% for May, we may see a cautious market next week,” a trader said in an e-mail.

The first trader said the average rate of the reissued seven-year T-bond would likely be between 5.3% and 5.5%.

“Expect upward pressure on rates to continue but the extent will be clearer once CPI data for May is out on Tuesday,” a second trader said via Viber, noting the data will influence the central bank’s rate hike path going forward.

The second trader added that the results of the T-bill auction will dictate the tone for Tuesday’s T-bond offering.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said T-bill rates could move slightly higher to track yield movements at the secondary market following the release of data showing outstanding National Government debt reached a new record high as of May.

The Philippine Statistics Authority will release the May inflation report on Tuesday, June 7.

Analysts said inflation likely accelerated and went above 5% last month as food and oil prices continued to climb due to disruptions in global supply chains.

A BusinessWorld poll of 16 analysts yielded a median estimate of 5.4% for May inflation, matching the midpoint of the Bangko Sentral ng Pilipinas’ (BSP) 5% to 5.8% outlook.

If realized, this would be faster than the 4.9% in April and the 4.1% print in May 2021. This would also be well above the central bank’s 2-4% target for the year.

Headline inflation last hit the 5% level in December 2018 and stood at 5.2% that month.

BSP Governor Benjamin E. Diokno last month said the central bank is likely to raise key interest rates by another 25 basis points (bps) at its next policy review on June 23 following a hike of the same magnitude at its May 19 meeting to curb growing inflationary pressures.

At the May meeting, the central bank upwardly revised its average inflation forecast for 2022 to 4.6% from the previous forecast of 4.3%, above the 2-4% target band. For 2023, the BSP’s inflation forecast was hiked to 3.9% from 3.6% previously.

Meanwhile, the National Government’s debt rose to a new record high of P12.76 trillion as of May due to loans for the state’s pandemic response.

At the secondary market on Friday, the 91- 182- and 364-day T-bills were quoted at 1.4464%, 1.8098%, and 2.2203%, respectively, based on the PHP BVAL Reference Rates published on the Philippine Dealing System’s website.

Meanwhile, the four-year bond, the closest benchmark to the remaining life of the reissued seven-year papers to be auctioned off on Tuesday, fetched a yield of 5.3559%.

Last week, the BTr partially awarded its offer of T-bills despite tenders reaching P42.88 billion, nearly triple the P15 billion on offer.

Broken down, the government fully awarded the 91-day T-bills, raising P5 billion as programmed as tenders for the tenor reached P22.34 billion. The average yield on the three-month debt paper was at 1.46%, 21.5 bps lower than the 1.675% seen previously.

The BTr also raised P5 billion as programmed from the 182-day securities as bids for the tenor reached P14.96 billion. The average rate on the six-month T-bill was at 1.812%, down by 8 bps from the 1.892% fetched at the previous auction.

Lastly, the Treasury rejected all bids for its P5-billion offer of one-year T-bills even as bids reached P5.58 billion. Had the government made a full award, the average rate of the one-year tenor would have been at 2.716%, 67.59 bps higher than the 2.0401% fetched at the secondary market prior to the auction. 

Meanwhile, the last time the government offered the reissued seven-year bonds to be auctioned off on Tuesday was on Jan. 21, 2020. At that auction, the BTr raised just P27.203 billion from the papers out of the P30-billion program despite bids reaching P52.71 billion. The papers fetched an average rate of 4.732% and carry a coupon of 6.25%.

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

The government borrows from local and external sources to help plug a budget deficit capped at 7.7% of gross domestic product this year. — T.J. Tomas

A new day for Hyundai

Hyundai Creta — PHOTO FROM HYUNDAI

Get ready for a revitalized brand this July

“EXACTLY ONE MONTH and two weeks ago,” Lee Dong Wook recalled with a smile after he was asked when he was tapped to head Hyundai’s passenger car business in the Philippines. “You have to move to the Philippines,” he remembers being told.

It’s an assignment that is both daunting and promising.

At one point, Hyundai was the third most popular brand in the Philippines by sales volume until a precipitous fall from grace overtly caused by a number of problems — including an acute lack of model units. I’ve spoken to a dealer principal who rued that even newly launched models were not supported with inventory.

The situation had gotten so bad that some dealers were putting in other brands in their previously Hyundai-exclusive showrooms. On the other hand, the same group responsible for Hyundai had brought in the Changan automobile brand in 2020. Just last January, Hyundai’s passenger car business literally hit bottom with a thud. That month, not one Hyundai automobile was sold. Zero.

For the South Korean auto giant, this obviously has to change.

“The Philippines is one of our major markets in Southeast Asia, and we have seen such substantial growth here in the past. Obviously, we would like to increase our growth, business and partnership with various of shareholders in the country,” said Mr. Lee in a speech to a handful of motoring media last week. “Hyundai is coming back here to the Philippine market with a refreshed brand and high-quality standards to connect local customers to community.”

Over about two hours, Mr. Lee patiently and gamely fielded questions pertaining to how the next chapter of Hyundai will be like in the Philippines.

First, Hyundai Asia Resources, Inc. (HARI), responsible for the brand since 2001, will be turning over the passenger and light commercial vehicle portfolio to Hyundai Motor Philippines, Inc. (or HMPH). However, HARI will retain control of Hyundai’s thriving truck and bus business.

Mr. Lee, who brings a wealth of international experience borne of stints in India and Malaysia, also crucially has had responsibility for Asia-Pacific territories.

Asked by this writer if he had already met with HARI President Ma. Fe Perez-Agudo, he replied, “Not yet, but I think we’ll have a chance to. We already have a good relationship when I was working for (Hyundai Asia Pacific) from 2013 to 2019. I don’t hesitate to meet with her. We’re already friends.”

Mr. Lee was candid, but also sometimes appeared to temper his words. “It’s not a takeover,” he corrected. “We’re building up a business. It’s a totally different concept.” Referring to Ms. Perez-Agudo, he declared, “We are partners; I’m focusing on passenger cars, Miss Ma. Fe is focusing on trucks and buses. Together we’re Hyundai family.”

Still, Mr. Lee is cognizant of the work to be done to bring Hyundai back to a position of leadership — or at least where the brand had peaked in terms of market position. “Customer satisfaction and experiences will be the benchmarking rules for (the) new Hyundai in the Philippine market,” he continued in his speech.

He spoke of working on customer experience, customer satisfaction, and rebuilding the brand. But, first things first. Perhaps one of the most urgent asks from beleaguered dealerships is making vehicles available to be viewed — and to be sold. Indeed, it’s hard to sell cars when even the showroom has none.

“Dealers would say ‘I don’t have any cars for display in my showroom. So many customers visit our showroom, and the customer (would ask) when can I buy our Hyundai cars?’” shared Mr. Lee. “I gave a promise to our dealer principals like this: My first role is to fill up our cars in your showroom display, then customers will visit (so) they can enjoy and see the choices. We will move forward.”

HMPH currently has 39 dealerships, with a plan to grow the number to 44 by yearend.

As for other brands encroaching in Hyundai showrooms, Mr. Lee compared it with going to an Apple store for an iPhone and a Google shop for a Google device. “When our customer visits our showroom dedicated to Hyundai, I don’t want to give them confusion,” he stated.

I asked if he was going to ask them to move. “Yes. It’s related to customer satisfaction. This situation gives confusion to customers,” he repeated.

Another persistent problem that has long undercut and hampered the brand’s growth is the proliferation of gray market imports. “We cannot stop gray market importers immediately. But we have to try continuously. We will minimize the number, like what we did in Vietnam. We have to protect our customers and dealers.”

Mr. Lee said he even so far as to check on the vehicle identification numbers of the “three to five Starias” that have made their way into the country through parallel importers. Remember that HARI hasn’t even officially launched the MPV yet. “We can tell if it’s a gray one,” he underscored.

HMPH will be focusing on Hyundai’s SUV models from the B-segment SUV Creta (to be launched in July) to the Palisade. Mr. Lee is particularly excited about the Creta, which will be sourced from Indonesia and has been launched there. He said that the model now leads its segment with 45% market share, followed by the Honda HR-V with 40%. The MG ZS is a distant 0.7% there. The new Tucson will also be launched here in July, along with a “Mitsubishi Xpander competitor” (also manufactured in Hyundai’s Indonesia facility able to churn out 250,000 vehiles a year) which, by all indications, is the Stargazer. Expect the Staria to debut as well. Meanwhile, the subcompact sedan Reina will be discontinued; the Kona appears to be dead in the water, too.

What of the Venue? Well, there’s a bit of a kerfuffle here. While the Venue never really had a chance after it was launched with no supply of units to back it up, production will be transitioned to India. What that means is that import duty will rise from five percent (when it was sourced from Korea) to a whopping 30%. “We have to think carefully if we will sell it or not,” said Mr. Lee.

As far as electric vehicles are concerned, HMPH is mulling over bringing in the Ioniq 5 — “triple-crowned” in 2022 via the World Car Awards as “World Car of the Year,” “World Electric Vehicle of the Year,” and “World Car Design of the Year.” The company is looking at the feasibility of bringing it vis-à-vis availability of charging infrastructure and government policies.

For now, it’s about “starting from the bottom,” said Mr. Lee. The company just inaugurated its BGC headquarters last week, and is looking at “three or four candidates” for a parts warehouse. HMPH also secured a stockyard in Laguna.

HMPH is still adding to its 50-strong complement of people at the moment. One of the key departments is Mobility. “This is our future,” he intimated. “This will prepare activities like shuttling service, subscription (or leasing).” Imagine paying a monthly sum then driving away in your Hyundai of choice. “We will check the regulations if this method is available or possible.”

“Every company will start like this,” declared Lee Dong Wook. “Frankly speaking, we are facing the same challenges as other brands when it comes to supply.”

Still, the 48-year-old executive is obviously full of excitement for what’s to come despite the challenges. You could say that there’s nowhere to go but up. After all, Hyundai has a wide array of popular vehicles and has certainly moved forward even if its presence here stagnated. It might truly just be a matter of making the products available to the Filipino buyers who want them.

‘No luck this time, just hard work’

POLAND’S Iga Świątek celebrates with the trophy after winning the women’s singles final match against Cori Gauff of the US. — REUTERS

Says French Open champion Iga Swiatek

PARIS — Iga Świątek said she felt lucky when she won her first French Open title in 2020, but the world number one credits hard work for her second Grand Slam title on the Parisian clay.

Świątek, who beat American teenager Coco Gauff 6-1, 6-3 in Saturday’s final at Roland Garros, went from being a largely unknown 19-year-old, ranked 54th in the world, to instant celebrity status after lifting her first Suzanne Lenglen Cup 18 months ago.

But she arrived in Paris last month as the overwhelming favorite, having won all five tournaments she had played before the claycourt major.

“I think in 2020 the main thing that I felt was confusion, because I have never really believed 100% that I can actually win a Grand Slam,” the Pole, who turned 21 last week, told reporters.

“This time it was, pure work. Just with everything that was going on, I’m also like more aware of how it is to win a Grand Slam and what it takes and how every puzzle has to come together and basically every aspect of the game has to work.

“With that awareness, I was even more happy and even more proud of myself, because in 2020… I just felt that I’m lucky. This time, I felt like I really did the work.”

Świątek struggled to handle her new-found fame after becoming a first-time major winner but said she felt more prepared this time for what would follow and “even ready to celebrate a little bit more.”

The setting was also different from the 2020 final for Świątek, with that tournament in Paris played with a limited number of spectators in the stands due to the coronavirus pandemic.

On Saturday, the 15,000-capacity center court was full and among those cheering for Świątek was Poland’s football captain and striker Robert Lewandowski.

‘SOMETHING SPECIAL’
Świątek did not drop a set during her 2020 triumph and lost just one during this year’s Roland Garros campaign, extending her winning run to 35 matches.

That took her past Serena Williams’ winning streak of 34 matches while she equaled Venus Williams with Saturday’s win over Gauff on Court Philippe Chatrier.

“It may seem pretty weird, but having that 35th win and kind of doing something more than Serena did, it’s something special,” Świątek added.

“Because I always wanted… to have some kind of a record. In tennis, it’s pretty hard after Serena’s career. So basically, that really hit me.

“Obviously winning a Grand Slam too, but this one was pretty special because I felt like I’ve done something that nobody has ever done, and maybe it’s gonna be even more. Yeah, this one was special.”

Świątek has now won both her majors on clay and having already proved earlier in the season that she has the game to dominate on hardcourts, she will turn her attention to grass — a surface on which she has not had much success — with Wimbledon starting from June 27.

“My coach (Tomasz Wiktorowski) believes I can win more matches on grass. I don’t know about that yet,” she said with a smile. “But I would like to add like one or two. Yeah, but honestly, grass is always tricky.

“I actually like the part that I have no expectations there. It’s something kind of refreshing.

“I’m going to just prepare my best. And maybe with the experiences he had with (Poland’s former world number two) Aga Radwańka, it was her favorite surface, he’s going to give me some tips that are actually going to be really helpful, and I’m going to enjoy playing on grass a little bit more.” — Reuters

Analysts see potential drags to upcoming initial public offerings

INVESTOR appetite for upcoming initial public offerings (IPOs) is seen by some analysts to be weaker than before amid uncertainties, including those that come with the transition to a new administration.

“Demand might not be as strong for IPOs given the weak performance of the market and the recent IPOs. Investors might prefer to just buy stocks that are already listed given that many are already trading at very cheap valuations,” COL Financial Group First Vice-President April Lynn C. Lee-Tan said in a Viber message.

Raslag Corp. is the first company to list this month. The solar energy developer will debut on Monday, June 6, and offer up to 350 million primary shares and up to 52.50 million over-allotment option shares at P2.00 per share.

Balai ni Fruitas, Inc., VistaREIT, Inc., and North Star Meat Merchants, Inc. have also been given the go signal by the Philippine Stock Exchange (PSE) for their respective IPOs.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the sentiment on these IPOs would be taken on a per-company or case-to-case basis, based on fundamentals and future industry prospects.

“However, both external and local risk factors could be potential drags on market sentiment, including the still wait-and-see attitude,” he added.

Mr. Ricafort said that the policy and reform priorities of the incoming administration, especially in tackling debt management, could lead to some pickup in prices, with higher inflation as an unintended consequence.

President-elect Ferdinand R. Marcos, Jr. has chosen Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno to be his Finance secretary, with Monetary Board member Felipe M. Medalla taking over as central bank head. Alfredo E. Pascual, former president of the University of the Philippines, was tapped as Trade secretary.

Mr. Ricafort said he sees market sentiment to be partly supported after Mr. Diokno signaled that the government would target a narrower budget deficit of about 3% of gross domestic product by 2028 as part of efforts to improve its fiscal performance. This was after the country reached a new record high outstanding national government debt of P12.76 trillion as of April 2022.

He added that better market conditions would support the demand for new IPOs, especially with the slow reopening of the economy amid eased restrictions.

Malacañang announced last week that Metro Manila will remain under Alert Level 1 until at least June 15. Under the most relaxed quarantine restriction, establishments including workplaces and public transportation are allowed to be fully operational.

“Definitely, better market conditions would support market demand and prices for the coming IPOs, with the further re-opening of the economy towards greater normalcy would be an offsetting positive factor vis-a-via the risk factors that are most external nature that are beyond the country’s reasonable control,” he added. — Luisa Maria Jacinta C. Jocson

Greenbelt gets even more fashionable

By Joseph L. Garcia, Reporter

SOME of the world’s most expensive brands can be found at the Greenbelt complex in Makati’s Ayala Center. Judging from plans laid out by the Ayala Malls’ top executives on May 26, the complex is about to get more fashionable.

Stores are expanding, getting refurbished, moving to new spots, while new ones are also opening their doors.

Interior architect J. Antonio Mendoza was tasked to redesign Greenbelt 3’s façade and interior to seamlessly fit the global prestige of the brands it would carry, as well as meet the needs, desires, and expectations of Greenbelt 3’s discerning shoppers.

Christopher Maglanoc, President of Ayala Land Malls, Inc., points out as well the facelift that Greenbelt 4 is receiving. “More global brands now will call that home.”

NEW BRANDS AND OLD
The Louis Vuitton store has expanded, adding ready-to-wear collections to its repertoire. Other stores that have been retouched or have been added to the mix include global brands Dior, Kenzo, Fendi, Univers, Off-White, Thom Browne, L’Officine Universelle Buly, Max Mara, Rimowa, Patek Philippe, and Bvlgari. This month and next, Celine, Loewe, Jimmy Choo, and Ermenegildo Zegna will open their stores. A revamped Tiffany & Co. is slated to open as well as a Cartier.

As these three brands — Ermenegildo Zegna, Tiffany & Co., and Cartier — move from Greenbelt 4 to their new locations, they will remain operational until the final move.

Up to next year, Greenbelt 4 is getting retouched faces for favorites Burberry, Salvatore Ferragamo, Tod’s, Bottega Veneta, Givenchy, Gucci, and Prada. Balenciaga, Alexander McQueen, and Saint Laurent are opening their presence in Greenbelt 4.

Meanwhile, brands completely new to the Philippines — Roger Vivier (once the shoe designer of choice for Queen Elizabeth II; while Jackie O wore their pilgrim pumps) and Faure Le Page (an arms manufacturer for both the royal House of Bourbon and the imperial House of Bonaparte in France; it has since transitioned into creating handbags and other leather goods) will open their doors in the same complex.

“We were able to put together some of the world’s most prestigious global brands,” said Mr. Maglanoc. “This would not be possible without the brands that we’ve worked with through the years.”

Eunice Velasco, Marketing Director for Ayala Malls said, “Greenbelt is indeed the country’s fashion and lifestyle capital.”

“We confidently say this as we take pride in being the only one capable of putting together the most impressive lineup of international brands in one place,” she said.

“It was a huge undertaking,” Mr. Maglanoc said in an interview with BusinessWorld. “We first had to convince the global brands. The LVMH brands (the parent company of Louis Vuitton, among others), if you see them; they’re more or less in full force here.” According to him, negotiations with the brand principals from these luxury brands had been going on since 2018. “We had to sell the vision first.”

He gave the reasons for the brands expanding their operations here, and attracting new brands. “They really see the Southeast Asian market as a growth market. Otherwise, they wouldn’t be here. They’ve been around, but they were working with local partners.”

AHEAD OF THE STANDARD
The pandemic has taught the world about the usage of space. Offices have given way to work-from-home or hybrid arrangements; while restaurants and malls constantly have to be creative in using space, mindful of health risks and pandemic-related restrictions. “Greenbelt has always been about open spaces,” said Mr. Maglanoc. “There was very minimal adjustment.” Asked about other improvements they’ve made, such as more efficient air filters, he said, “We’re ahead of that standard. Even before the pandemic, we met it.”

Since pandemic-related restrictions for occupancy and mobility were imposed early in the pandemic, have the mall operations for the group stabilized? Mr. Maglanoc said, “Not stabilize, but we’re seeing a steady progression. Week on week, month on month.” He said that compared to their pre-pandemic levels of occupancy since 2019 they have since seen 80-85% of those levels return. “That varies per mall location,” he pointed out.

“The luxury category was hardly affected by the pandemic,” he noted. “Despite the lockdowns, people were still spending money on luxury goods.”

Still, present mall operations bear scars from nationwide closures and such incurred during the pandemic. Mindful that the Ayala Center is located in the country’s financial district, he noted that “Greenbelt as well as Glorietta are very dependent on the office market.” He cited data that as of now, only 40% of the country’s office workers are back, with others still serving on remote or hybrid arrangements. “We’re not yet seeing a large part of the office market driving the visits. But we see also — at least from the local community that they serve, they’re back.”

On the question of building anything new, he said, “The main thing is really to get our bearings again. Help our merchants again recover, and basically help our malls get back on track. That’s the main priority now. The expansion will be there when the opportunity presents itself.”

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