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Farmer groups told to directly import fertilizers

THE Department of Agriculture (DA) has called on farmers’ cooperatives and associations (FCA) to directly import fertilizers from international producers and suppliers in a bid to address the farm input’s high prices.

Agriculture Secretary William D. Dar said in a statement on Friday that urging farmers to import fertilizers will not only reduce prices, but will also allow them to sell the surplus to other farmers in their areas.

“This is a win-win proposition for farmers because they could negotiate for lower-priced fertilizers, and engage in trading that could give their respective FCAs additional source of revenue,” Mr. Dar said.

“By doing so, the FCAs would get first-hand experience in fertilizer importation and trading, and learn the logistical requirements. The DA through the Fertilizer and Pesticide Authority (FPA) will assist interested FCAs engage in this agribusiness venture — from registration, warehousing, to logistics and marketing,” he added.

Mr. Dar said FCAs are granted tax-free importation of farm inputs, including fertilizers, under Republic Act No. 8435 or the Agricultural and Fisheries Modernization Act of 1997.

In spite of this, FPA Director Wilfredo C. Roldan said only a few FCAs opted to import fertilizer despite being liberalized in 1986 and providing value-added tax (VAT) exemption to suppress the price increase.

Mr. Roldan said government data showed that the average price of imported fertilizers as of July 2021 was at $500 per metric ton (MT), higher than the $276 per MT average price from January to May this year.

“The Philippines is a net importer of fertilizers, at 95%, and thus is highly dependent on international market conditions. The country requires an average of 2.6 million MT of various fertilizer grades yearly,” Mr. Roldan said.

“Fertilizer prices on the average have increased by as much as 40.5% annually, depending on the grade, as a result of supply and demand in the international market,” he added.

Mr. Roldan said interested FCAs must apply for product registration and license to operate with the FPA before getting permission to engage in the trade and importation of fertilizer.

Interested importers should obtain a certificate to import samples of the product for analysis and pass the confirmatory analysis to be done by the FPA.

“FCAs eligible to apply for an importer license will also have to apply for importer, national distributor, and warehouse registration. The warehouse will also be subject for inspection by respective FPA regional offices,” Mr. Roldan said.

“After undertaking these requirements, the registered FCA may then import the products and even avail of duty-free benefits by applying for VAT exemption certificate that also serves as the import clearance at the Bureau of Customs,” he added.

Meanwhile, Mr. Dar said he is hoping that large FCAs and farmers’ federations would consider importing fertilizers.
“If FCAs are involved in fertilizer trading, they would know if commercial traders are overpricing fertilizers, at farmers’ expense,” Mr. Dar said. — Revin Mikhael D. Ochave

Bankruptcy court allows PAL to draw from $505-M financing

A Philippine Airlines plane is seen flying over Antipolo, Rizal in this file photo. -- Photo by Michael Varcas, The Philippine Star

Philippine Airlines, Inc. (PAL) announced on Friday that it won the approval of a United States bankruptcy judge to access the first $20 million of its debtor-in-possession financing totaling $505 million, describing the development as an “initial milestone” in its recovery journey.

PAL, which is majority owned by billionaire Lucio C. Tan, issued the statement after Shelley C. Chapman, US bankruptcy judge for the Southern District of New York, approved “all” its “First Day” motions on Sept. 9.

“These approvals mark an important step forward in PAL’s recovery plan, which will reduce the company’s debt by $2 billion and help [it] recover from the impact of the global pandemic,” the airline said.

Aside from allowing PAL to draw $20 million from its $505-million debtor-in-possession financing, the bankruptcy judge also authorized the airline to “[p]ay ongoing suppliers and trade creditors in the ordinary course for goods and services delivered throughout the Chapter 11 process,” the company said.

It also received authorization to “[c]ontinue to pay all employee wages, compensation and benefit obligations, subject to the continuation of any temporary work arrangements as necessary and maintain employee benefit programs in the ordinary course of business throughout the Chapter 11 process.”

The orders granted also covered the authorization to “[h]onor and maintain all customer programs, including valid tickets and travel vouchers, Mabuhay Miles and benefits, and refund obligations, subject to PAL’s usual terms and conditions of use.”

PAL said it expect to continue to meet all its current financial obligations throughout the Chapter 11 process.

Under its restructuring plan, PAL also aims to secure $150 million in debt financing from new investors.

The airline is hoping to exit the Chapter 11 process before the end of the year.

PAL Holdings, Inc., the listed holding company of PAL, and Air Philippines Corp., or PAL Express, are not included in the Chapter 11 filing.

Its top five creditors with the largest “secured claims” (excluding claims of insiders) totaling to $866.09 million are Philippine National Bank ($156.51 million), Banco De Oro Unibank, Inc. ($80.42 million), China Banking Corp. ($54.83 million), EXIM Guaranteed Loans ($240.1 million), and PK Airfinance S.A.R.L. ($334.23 million).

The company’s 40 largest creditors with “unsecured claims” (and which are not insiders) totaling to more than $1.4 billion include Philippine National Bank ($115.92 million), China Banking Corp. ($65.27 million), and Asia United Bank ($75.30 million).

PAL Holdings had been incurring losses even before the pandemic crisis. Its attributable net loss widened to P71.91 billion in 2020 from P10.31 billion in 2019. — Arjay L. Balinbin

Megaworld’s REIT sets lower price for IPO

By Revin Mikhael D. Ochave, Reporter

MREIT, Inc. finalized the offer price of its initial public offering (IPO) at P16.10 per share, lower than the P22 ceiling it previously set.

MREIT President Kevin Andrew L. Tan said the company decided to put the price of the IPO at an “attractive level” to allow more upside for IPO investors looking to invest in the long-term.

“At this IPO price, MREIT will be offering investors an attractive dividend yield of 5.65%, to be distributed quarterly, and at the same time, we will be giving them exposure to high quality, fast-growing portfolio of assets,” he said in a statement on Friday.

In a listing notice, MREIT said that the offer will consist of 844,300,000 firm shares and up to 105,537,500 option shares. The company is the real estate investment trust (REIT) sponsored by Tan-led Megaworld Corp.

The offer, consisting of the firm and option shares, stands to raise a total of P15,292,383,750 in proceeds.

According to its preliminary prospectus dated Aug. 31, MREIT planned to offer 1,078,000,000 common shares with an overallotment option of up to 161,700,000 common shares at an offer price of P22 per share. It would have produced P27.3 billion in proceeds.

COL Financial Group, Inc. Chief Technical Analyst Juanis G. Barredo said in a mobile phone message that MREIT’s price of P16.10 offers a “decent” prospective dividend yield of 5.65% for June 2022 and 6.08% for June 2023.

“Although it is lower than Filinvest REIT Corp. and RL Commercial REIT, Inc., it does bring itself competitively closer to the average yield range of present REIT offerings,” Mr. Barredo said.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said the decision of MREIT to make adjustments in its IPO will help entice more investors

in terms of providing more price upside and capital appreciation potential, on top of the dividend yield.

“Market conditions also partly weighed recently by the more contagious coronavirus disease 2019 (COVID-19) Delta variant that could potentially delay economic recovery prospects,” he said in a mobile phone message.

MREIT has 10 office assets in its initial portfolio with a total gross leasable area of 224,430 square meters, three of which are located in Eastwood City in Quezon City, five in Bonifacio Global City’s McKinley Hill, and two in Iloilo Business Park in Mandurriao, Iloilo City

Properties included in the company’s portfolio are 1800 Eastwood Avenue, 1880 Eastwood Avenue, E-Commerce Plaza, One World Square, Two World Square, Three World Square, 8/10 Upper McKinley, 18/20 Upper McKinley, One Techno Place, and Richmonde Tower, which houses Richmonde Hotel Iloilo.

Megaworld previously said it identified four additional office assets to be placed in MREIT in the next four years.

“MREIT, being Megaworld’s flagship REIT, is being structured to deliver fast growth and strong aftermarket performance. At the current issue size, the institutional tranche was close to 2x oversubscribed, which bodes well for aftermarket performance,” Mr. Tan said.

He said that Megaworld will be retaining a 62.5% stake immediately after the IPO in order to get more near-term and long-term valuation upsides for its shareholders.

He added that Megaworld will be receiving additional proceeds as it completes the impending cash injection of three buildings into MREIT, which is expected to be done by early 2022.

“The resulting total proceeds is what the sponsor (Megaworld) intended to raise to fund its 21 projects all over the country during the next 12 months,” Mr. Tan said.

The 21 projects consist of 15 office developments, five malls, and one hotel.

Vehicle sales decline 11.5% in August

Vehicles sold declined 11.5% in August to 15,847 from 17,906 units sold in the same month a year ago, data from the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and Truck Manufacturers Association (TMA) showed.

Passenger cars sold fell 10.3% to 4,894 from 5,454 units in August last year.

Commercial vehicle units sold in August decreased 12% to 10,953 from 12,452 in the same month last year.

CAMPI attributed the results to the decline in economic activity and consumer spending, worsened by the stricter two-week lockdown in the National Capital Region and nearby provinces.

“The message of this bleak performance is worth noting: stricter lockdown strategy in response to curbing the COVID-19 (coronavirus disease 2019) pandemic affects the auto industry’s recovery this year,” CAMPI President Rommel R. Gutierrez said in a statement.

“The industry targets to achieve total sales of 295,400 units or 20.9% growth than the actual sales recorded last year,” he noted.

From January to August, vehicles sold grew 37.8% to 170,112 units from 123,489 units in the same period in 2020.

Passenger cars sold increased 53.1% to 54,402 from 35,523 in 2020. Commercial vehicles sold went up 31.5% to 115,710 from 87,966 previously. — Arjay L. Balinbin

Del Monte Pacific sees up to $7-M revenue from Vinamilk

DEL MONTE Pacific Ltd. (DMPL) projected up to $7 million in revenue from its dairy products in the Philippines under a partnership with Vietnam Dairy Products JSC (Vinamilk).

“In terms of sales, as we would be launching in the middle of the year, we expect the revenue to be anywhere between $5 [million] to $7 million,” said Parag Sachdeva, chief financial officer of Del Monte Pacific, in a virtual briefing on Friday.

“But considering that it is a significant launch for us, it would definitely require more investments too in terms of marketing and also listing the product in the marketplace,” he added.

Mr. Sachdeva said the company does expect profit in the first year after its launch in the Philippines.

“We expect to be breakeven by year three,” he added.

The generated revenue will be under subsidiary Del Monte Philippines, Inc., which announced in August that it would venture into the Philippine dairy sector under a “strategic alliance” with Vinamilk. Both companies will be providing 50% to the total investment capital of the joint venture.

Vinamilk has 13 dairy farms, nearly 160,000 cattle, 13 factories, and 250,000 retail outlets in Vietnam. It also operates three factories in the United States, New Zealand, and Cambodia, and an organic dairy farm complex in Laos.

For the first quarter of its fiscal year ending in 2022, Del Monte Pacific posted a net profit of $18.3 million, a turnaround from the $3.2-million loss it incurred in the same period a year ago. Its sales for the period improved 12% to $462.1 million.

On Friday, its shares rose 8.05% or P1.08 to close at P14.50 each. — Revin Mikhael D. Ochave

AyalaLand Logistics’ to auction delinquent stocks on Sept. 24

AyalaLand Logistics Holdings Corp. announced on Friday that its board of directors has approved the sale of all the remaining delinquent stocks of the company.

In its notice of sale, AyalaLand Logistics said its board approved and authorized at a regular meeting on Aug. 5 the re-auction of its remaining 9.22 million delinquent shares.

“To avoid the auction of such shares, delinquent stockholders should settle their outstanding liabilities with the company at any time prior to the auction date,” AyalaLand Logistics told the stock exchange.

The auction will be held Sept. 24.

The company said the amounts due will continue to be subject to the interest rate of 6% per annum until fully paid.

“The notice of sale with the list of delinquent stockholders will be published once a week for two consecutive weeks in one newspaper of general circulation before the sale,” it noted.

“Notice of the sale will also be sent by courier to the delinquent stockholders.” — Arjay L. Balinbin

NLEX Corp. completes Bulacan bridges rehabilitation

NLEX Corp. announced Friday that all lanes of Bulacan’s Meycauayan and Bigaa bridges are now open, following the completion of the rehabilitation of both bridges.

“Despite some restrictions caused by the ongoing pandemic and the challenges brought by inclement weather conditions and doing works in live traffic, we’re happy to announce that works in Meycauayan and Bigaa bridges are now completed ahead of schedule to provide motorists with safer and smoother travel,” J. Luigi L. Bautista, president and general manager of NLEX Corp., said in an e-mailed statement.

The tollways company said that it replaced the girders and slabs of the 1960s’-built 45-meter Meycauayan and 64-meter Bigaa bridges to improve their serviceability.

The rehabilitated bridges are seen to enhance the safety and mobility of motorists.

The rehabilitation of the Meycauayan bridge was expected to be completed this month, while the completion of the rehabilitation of the other bridge was expected in August.

NLEX Corp. operates two major expressways that link Metro Manila to North and Central Luzon: North Luzon Expressway and Subic–Clark–Tarlac Expressway.

NLEX Corp. is part of Metro Pacific Tollways Corp., the tollway unit of Metro Pacific Investments Corp. (MPIC). MPIC is one of three key Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Arjay L. Balinbin

Bank NPL ratio at 4.51% in July, highest since 2008

Non-performing loans (NPLs) held by banks surged 66% year-on-year in July to P487 billion, to bring the NPL ratio to 4.51%, their highest level since the 2008 global financial crisis. 

The Bangko Sentral ng Pilipinas (BSP) said Friday that the July gross NPL total was slightly higher than the June total of P483 billion, when the NPL ratio was 4.48%. 

NPLs were at 4.52% in September 2008.  

“The spike in bad loans is driven by the persistent uncertainties in the economy due to the pandemic,” Asian Institute of Management economist John Paulo R. Rivera said in a Viber message Friday. 

“The emergence of more (coronavirus) variants, slow vaccination in parts of the country, and ambiguity in policy to contain and manage the pandemic” are impairing incomes and job security, which are necessary conditions for NPLs to stabilize, Mr. Rivera added. 

The BSP said the industry’s total loan portfolio fell 0.42% year-on-year to P10.804 trillion, but expanded month-on-month from P10.776 trillion in June. 

Past-due loans rose to P573.79 billion in July from P576.17 billion a year earlier. This category accounted for 5.31% of the industry’s loan portfolio, unchanged from the year-earlier rate. 

Restructured loans in June rose 563% year-on-year to P330.16 billion, accounting for 3.06% of the overall portfolio, up from 0.46% a year earlier. 

Loan loss reserves rose 24.7% year-on-year to P401.5 billion in July, equivalent to 3.72% of the loan portfolio, up from 2.97% previously. 

The NPL coverage ratio — the degree to which provisions can cover bad loans – fell to 82.44% in July from 110.01% a year earlier. 

Central bank officials have estimated that NPLs may hit “a little over 5%” by year’s end. 

“If the situation does not improve and if income generating is still constrained, bad loans may continue to increase and banks may reduce their lending to avoid bad debts,” Mr. Rivera said. 

ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa also expects bad loan ratio to peak at 5% before the end of 2021 amid rising pressure on banks’ balance sheets. 

“We continue to expect NPL ratios to worsen in the near term as the Philippines remains in economic recession. With incomes challenged, the labor market hard-hit by widespread closures and inflation rising we can expect both firms and households to face obstacles to making payments on time,” Mr. Mapa said in an e-mail Friday. 

He also warned that a prolonged downturn could further dampen the ability of borrowers to make payments and erode banks’ balance sheets further. 

“Should this happen, then what started out as a health crisis, spilled over into an economic crisis will also devolve into a banking crisis. This of course is a situation we all hope to avoid,” Mr. Mapa said. – Beatrice M. Laforga 

SSS plans relief for salary, housing loan borrowers this year

The Social Security System (SSS) is planning to offer relief to borrowers with past-due payments on their salary or housing loans this year in response to the prolonged economic downturn 

In a briefing Friday, Rizaldy T. Capulong, SSS executive vice present, said the pension fund is currently working on five “pandemic relief and restructuring programs,” two of which are for delinquent housing and salary loans. 

Mr. Capulong said borrowers at least six months behind on their payments are eligible to apply for the programs within a three-month window allotted for applications. 

The proposed programs are subject to the approval of the Social Security Commission, headed by Ex-Officio Chairman Carlos G. Dominguez III, the Secretary of Finance. Its Vice Chairman is Aurora C. Ignacio, SSS president and CEO. 

Ms. Ignacio first floated a loan condonation program in June. 

The SSS offered a scheme in 2019 to condone penalties for those who were delinquent on their contributions. 

Relief schemes are authorized by Republic Act (RA) No. 11199 or the Social Security Act of 2018. 

The 2019 program set a target of waiving P13.91 billion in penalties due from 132,000 delinquent employers in an amnesty that hoped to generate a combined P10.66 billion. 

The SSS ended up collecting P7.88 billion from 55,750 employers who availed of the program. 

On the financial standing of SSS, Mr. Capulong said the pension fund collected P159.8 billion in contributions from its members between January and the first week of September, up 17% from a year earlier. 

Disbursement of loans, meanwhile, fell 59% to P16.53 billion during the period due to base effects. In 2020 the SSS launched a COVID-19 calamity loan program, which ended this year. 

“The fund’s actuarial life has been a continuing concern; at some point in time, the fund is expected to be depleted. However, in the short term, while we are experiencing fewer contributions than expected, there is no risk that any benefits will not be given. I’d like to reassure our members that their benefits will continue to be paid,” SSS Senior Vice President and Chief Actuary Edgar B. Cruz said. 

The SSS will also seek to make foreign investments as authorized by RA 11199, after the pandemic disrupted its plan to invest overseas, Mr. Capulong said. 

He said the law allows SSS to invest a portion of its reserves in foreign currency-denominated instruments that are at least investment–grade, starting with a 1% share of the portfolio in 2019, and an additional 1% every year, up to a cap of 15%. 

“Right now, we are trying to study the environment, we are definitely looking at global bonds and global equities and talking to foreign fund managers,” he said. 

The SSS prepared a five-year plan to invest in overseas securities from 2019 but was forced to defer this to prioritize benefits and pension loans. 

“We are actually seeing lower loan disbursements this year than last year, so that will help free up more funds to start investing abroad by next year,” he said. 

“Incidentally, this is also connected to another provision of RA 11199, which made the coverage of OFWs (overseas Filipino workers) mandatory, so as we are able to accumulate foreign currency from contributions of OFWs, we will also have to be ready to invest abroad,” he added. – Beatrice M. Laforga 

Zero demand for rediscount facility in August

BW FILE PHOTO

The central bank said banks did not avail of its rediscount facility in August as credit demand remained weak. 

The Bangko Sentral ng Pilipinas (BSP) said in a statement Friday that in the eight months to August, overall use of the facility amounted to P5.52 million, with loan activity taking place only in June and July. 

It said there were also no loan availments under the Exporters’ Dollar and Yen Rediscount Facility (EDYRF) in the eight months. 

Through the rediscount window, the central bank allows banks tap additional funds in exchange for security such as receivables. 

Banks may then use the pesos, dollars, or yen from the facility to release more loans to their corporate or retail clients and service unexpected withdrawals. 

It is less compelling for banks to tap the  rediscount facility due to muted demand for loans, and with the financial system still awash with cash, Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said. 

“Various regulatory relief measures mean that banks effectively increased their loanable funds… the liquidity infusion measures, with the objective of encouraging banks to increase their lending activities since the pandemic, also reduced the need for banks to tap the BSP rediscounting facilities,” he added. 

The BSP estimates that bank lending slipped for an eighth consecutive month in July, down 0.7% from a year earlier to P9.137 trillion. 

Lending continued to decline despite the 5.9% increase in the money supply in June, with banks remaining risk-averse during the prolonged economic downturn. 

Last year, the banks only tapped the rediscount window in March, April, August and September, availing of P26.9 billion, down 77.7% from a year earlier. 

Meanwhile, the EDYRF was not tapped last year. – Beatrice M. Laforga 

Peso strengthens on strong foreign investment data

BW FILE PHOTO

The peso closed stronger Friday in response to positive foreign investment data released by the central bank. 

 

The peso closed at P49.865 against its Thursday ending level of P49.92, the Bankers Association of the Philippines (BAP) said. 

The peso opened the session at P49.94, with a high of P49.83 and a low of P49.96. 

Dollar trading volume was $774.19 million, down from $1.164 billion Thursday. 

The peso was weaker compared to its week-earlier close of P49.84 on Sept. 3. 

The market was reacting to a central bank report on foreign direct investment (FDI), Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said. 

FDI net inflows rose 60.4% year-on-year in June to $833 million, according to preliminary data from the Bangko Sentral ng Pilipinas (BSP). 

The June total nearly doubled the $433 million result from May. That month, FDI had fallen 25% year-on-year. 

First-half FDI net inflows rose 40.7% year on year to $4.298 billion. 

Mr. Ricafort added that the government’s announcement of a new “granular” lockdown policy starting Sept. 16 also helped support the peso. 

The government’s pandemic task force said the new guidelines on lockdowns have been “provisionally approved” for pilot implementation in Metro Manila between Sept. 16 and 30. 

The new scheme will only have two community quarantine classifications with an “alert level” system to be determine by the health department every week. It will also implement barangay-level lockdowns in areas with high casec count. 

A trader said the peso appreciated in  anticipation of a weak US producer price report for August. – Beatrice M. Laforga 

Las Piñas achieves 100% COVID-19 vaccination rare – Rep. Vilar

The local government of Las Piñas has completed administering the first dose of vaccines to over 425,000 individuals as of Friday, September 3.

Deputy Speaker and Las Piñas Rep. Camille Villar announced the total number of persons who have had their first dose exceeds the local government’s target population.

“We are happy to have achieved this milestone in our vaccination drive as we work together toward achieving herd immunity,” said Villar.

Villar added an intensive vaccine drive is ongoing to encourage more to get covered in the face of a more transmissible Delta variant.

Las Piñas has administered more than 637,359 jabs to date. They aim to administer more than 800,000 jabs and fully vaccinate the target population by the end of September.

Meanwhile, 10 residents won grocery items worth P5,000 each during the second monthly raffle of “May BahaysaBakuna,” an incentive program initiated by Villar that seeks to reward residents who get vaccinated. A house and lot from Bria Homes and 2 motorcycles will be awarded to lucky winners later this year.

Two winners were also given e-learning tablets with a prepaid load.

“It is very important for as many Filipinos to get fully vaccinated as it not only protects themselves, their families but will also help the recovery of our economy” – Rep. Villar said.

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