Marcos to focus on economic team after claiming poll victory

May 12, 2022 | 12:41 pm

Philippine presumptive president Ferdinand “Bongbong” Marcos Jr. said he is looking to build up cabinet that will steer the economy by boosting jobs, managing food and fuel prices and pushing more infrastructure projects.

“The economic managers will be critical for the next several years because of the pandemic and the economic crisis. So that’s something that we are looking at very carefully,” Marcos Jr. said in his first appearance before the media after winning the election.

“I am also guided by the critical areas that we talked about during the campaign. So that’s what we are prioritizing. Of course, it’s the economy, prices, it’s the price of energy, lack of jobs, education, infrastructure,” he added.

The former senator said he wants to keep his election campaign team as his advisers and look at appointing specialists for each government department. However, in a first step he said running mate Sara Duterte, who won the vice presidency by an even bigger margin, has agreed to helm the Education Department.

Marcos Jr. is poised to inherit an economy forecast to grow at one of the fastest rates in Southeast Asia this year, after the pandemic reduced household incomes as tourists stayed away and remittances from foreign labor dried up. Inflation is also surging at one of the fastest paces in Asia as food and fuel prices soar in the wake of Russia’s invasion of Ukraine.

The only son of the late dictator Ferdinand Marcos has cemented his family’s return to power more than three decades after his father was ousted from power. However, Marcos Jr. initially made his claim of victory through his spokesman Vic Rodriguez, signaling a little caution even as his supporters have held celebratory parties over the past two days.

“To the world, he says: judge me not by my ancestors, but by my actions,” Rodriguez was quoting Marcos Jr. during a televised briefing earlier on Wednesday.

His lead in the presidential vote has become “unassailable,” Rodriguez said, adding that Marcos Jr. intends to be a leader for all citizens. The presumptive president will now work across the Philippines to address critical issues, his spokesman added.

The new president is expected to expected to be sworn in on June 30.

Marcos Jr.’s rival Leni Robredo didn’t concede, though she addressed her followers and prepared them for a prospect of a defeat in the early hours on Tuesday. She was hoping for a come-from-behind victory as she attracted some of the biggest pre-election rallies in decades and depended on volunteers to speak of her accomplishments.

Earlier in the day, Marcos Jr.’s team tweeted photos of him visiting his father’s tomb after he won the election and placing a wreath of flowers. The elder Marcos died in exile in 1989 but President Rodrigo Duterte defied a public outcry in 2016 to get the remains buried in the national heroes cemetery in Manila with full military honors.

The photos made the rounds in Marcos-related social media accounts. Marcos Jr.’s victory was helped by the prevalence of these handles on Facebook and Twitter that painted a favorable picture of his father’s dictatorship, calling it a “golden age.”

Marcos Jr. appealed for unity in his first media appearance while acknowledging that over 31 million people voted for him and there was some opposition to his win.

“I will continue for a government, an administration that gives voice to everyone who wants to help. We may not agree. We may not do exactly what they say. It is not important who the messenger is. The importance is going to be the message,” he said. — Bloomberg

Zoom urged by rights groups to rule out ‘creepy’ AI emotion tech

May 12, 2022 | 12:33 pm

LOS ANGELES — Human rights groups have urged video-conferencing company Zoom to scrap research on integrating emotion recognition tools into its products, saying the technology can infringe users’ privacy and perpetuate discrimination.

Technology publication Protocol reported last month that California-based Zoom was looking into building such tools, which could use artificial intelligence (AI) to scan facial movements and speech to draw conclusions about people’s mood.

In a joint letter sent to Zoom Chief Executive Eric Yuan on Wednesday, more than 25 rights groups including Access Now, the American Civil Liberties Union (ACLU) and the Muslim Justice League said the technology was inaccurate and could threaten basic rights.

“If Zoom advances with these plans, this feature will discriminate against people of certain ethnicities and people with disabilities, hardcoding stereotypes into millions of devices,” said Caitlin Seeley George, director of campaign and operations at Fight for the Future, a digital rights group.

“Beyond mining users for profit and allowing businesses to capitalize on them, this technology could take on far more sinister and punitive uses,” Ms. George said.

Zoom did not immediately respond to a request for comment.

Zoom Video Communications Inc emerged as a major video conferencing platform around the world during coronavirus disease 2019 (COVID-19) lockdowns as education and work shifted online, reporting more than 200 million daily users at the height of the pandemic in 2020.

The company has already built tools that purport to analyze the sentiment of meetings based on text transcripts of video calls, and according to Protocol it also plans to explore more advanced emotion reading tools across its products.

In a blog post describing the sentiment analysis technology, Zoom said its tools can measure the “emotional tone of the conversations” in order to help salespeople improve their pitches.

But the rights groups’ letter said rolling out emotional recognition analysis for video calls would trample users’ rights.

“This move to mine users for emotional data points based on the false idea that AI can track and analyze human emotions is a violation of privacy and human rights,” said the letter, a copy of which was sent to the Thomson Reuters Foundation.

“Zoom needs to halt plans to advance this feature,” it added.

From classrooms to job interviews and in public places, emotional recognition tools are increasingly common, despite questions about their accuracy and human rights implications.

Critics of the technology often draw parallels to facial recognition technologies, which have been shown to have high error rates on non-white faces, and have led to wrongful arrests.

Esha Bhandari, deputy director of the ACLU Speech, Privacy, and Technology Project, called emotion AI “a junk science.”

“There is no good reason for Zoom to mine its users’ facial expressions, vocal tones, and eye movements to develop this creepy technology,” she said in emailed comments. — Avi Asher-Schapiro/Thomson Reuters Foundation

Philippine GDP jumps 8.3% in Q1, beats market estimates

May 12, 2022 | 10:23 am

The Philippine economy grew by 8.3% year on year in the first quarter, beating market estimates, buoyed by base effects and reopening of the economy, the Philippine Statistics Authority reported this morning.

Preliminary gross domestic product (GDP) data in the first quarter was a turnaround from 3.8% decline in the same period last year and faster than the revised 7.8% in the fourth quarter of 2021.

It also beat the median estimate of 6.7% in a BusinessWorld poll. It was also within the government’s 7-9% target.

The GDP growth in the quarter ended March was the highest in three quarters or since the 12.1% in the second quarter last year.

On a seasonally adjusted quarter-on-quarter basis, the country’s GDP went up by 1.9%. — A. M. P. Yraola

Agricultural output shrinks in Q1

May 12, 2022 | 12:34 am

egg-vendor — A vendor arranges eggs at the Paco public market in Manila. — PHILIPPINE STAR/ RUSSELL PALMA

By Luisa Maria Jacinta C. Jocson, Reporter

THE COUNTRY’S overall agricultural output shrank by an annual 0.3% by value in the first quarter, due to a decline in fisheries, livestock and crop production, government data showed.

In a report released on Wednesday, the Philippine Statistics Authority (PSA) said the value of agricultural production at constant 2018 prices dipped by 0.3%, a slight improvement from the 3.4% contraction seen in the first quarter of 2021.

“Poultry registered expansion during the period while crops, livestock, and fisheries posted declines in the value of production,” the PSA said.

Quarter on quarter, farm output worsened from the 0.5% growth seen in the last three months of 2021.

At current prices, the value of agricultural production went up by 2.1% to P498.61 billion in the January to March period.

The PSA is scheduled to release first-quarter gross domestic product (GDP) data on Thursday morning. Agriculture usually contributes around a tenth to GDP.

Agriculture Secretary William D. Dar said first-quarter agricultural production was affected by the spike in oil and fertilizer prices that began in late February after Russia’s invasion of Ukraine.

“We will study the extent to which recent developments in the global food supply chain, which is severely rocked by the Ukraine-Russia war, have had impact on our local agriculture sector in the first quarter… Crops were affected by skyrocketing fuel and fertilizer prices,” Mr. Dar said in a virtual webinar.

Crop production, which made up 58% of the total farm output, slipped by 1.6% in the first quarter as palay (unmilled rice) and corn production dropped by 1.9% and 0.2%, respectively.

Double-digit expansion was seen in the production of abaca (14.1%) and potato (11.7%). On the other hand, tobacco and sugarcane output slumped by 24.1% and 10.1%, respectively.

Federation of Free Farmers National Manager Raul Q. Montemayor said that the drop in palay production may be due to the initial effects of higher fertilizer prices and other production costs.

“Farmers had to cut down on input usage which led to lower yield,” he said.

Roehlano M. Briones, a senior research fellow at the Philippine Institute for Development Studies, said poor weather also affected palay and corn output. He also noted that there was “not enough growth” in other crops.

At current prices, the value of crop production went down by 0.9% to P268.13 billion from the previous year’s record.

Meanwhile, livestock production, which accounted for 14.1% of the total, dropped by 1% in the January to March period amid the prolonged outbreak of African Swine Fever (ASF).

There were still declines in production for hog (-1.2), goat (-7.5%), and cattle (-1.6%).

“The hog [industry] is still suffering from ASF and unwillingness of some growers to rebuild their inventory,” Mr. Briones said in a Viber message.

However, Mr. Dar pointed to the slower contraction in hog output as a good indication that the repopulation program is working.

As of March 2022, ASF was still active in five regions, nine provinces, seven municipalities, and 12 barangays. The industry has lost three million hogs to the disease or to precautionary culls between 2019 and 2021, the PSA said.

On the other hand, dairy and carabao production rose by 22.2% and 6.5%, respectively.

“All things considered, the livestock subsector is rebounding from its negative growth last year,” Mr. Dar said.

At current prices, the livestock production value amounted to P89.89 billion, or 9.7% higher than the previous year’s record.

Fisheries output, which has a 12.9% share of total agricultural production, contracted by 5.8% in the first quarter.

“Aside from having an average of 20 typhoons a year, storms are now stronger compared to back then and flooding is vaster and more intense,” Rene Cerilla, Legal and Policy Advocacy Officer of Pambansang Kilusan ng Samahan ng Magsasaka, said in Filipino via Viber message.

Double-digit declines were seen in mudcrab or alimango (-24.8%), skipjack or gulyasan (-20.2%), fimbriated sardines or tunsoy (-13.5%), milkfish or bangus (-12.7%), tiger prawn or sugpo (-11.3%) and slipmouth or sapsap (-10.0%).

On the other hand, higher production was seen for threadfin bream or bisugo (34.1%), squid or pusit (12.7%), and bigeye tuna (10.9%).

The value of fisheries production at current prices dropped by 2.2% to P65.42 billion.

BRIGHT SPOT
Poultry production was the lone bright spot as it registered a 12.3% increase in the first quarter, thanks to higher production for chicken (13%), chicken eggs (12.4%), and duck eggs (11.8%). Duck production, however, slumped by 21.5%.

Poultry accounted for 15% of total production in the three-month period.

“Only poultry registered positive growth, brought about mainly by increased volume of production of chicken, which in turn could have been induced by high prices and low supply of pork,” Mr. Montemayor said in a Viber message.

Samahang Industriya ng Agrikultura (SINAG) Executive Director Jayson H. Cainglet said that the expansion in poultry is “artificial,” given the high cost of production and little government support.

At current prices, the value of poultry production went up 8.8% to P75.17 billion.

Moving forward, analysts said the Department of Agriculture (DA) must reevaluate its import policies if it wants to really improve local production.

“I think the government must undo its import policy because this has discouraged many farmers from investing and intensifying their production out of fear that prices will fall down when they are harvesting,” Mr. Montemayor said.

Despite the higher budget for the DA, Mr. Montemayor noted that the agriculture sector has been on a decline since 2019.

Mr. Cainglet said that local production would continue to slide if the DA would continue its policy of unhampered agricultural imports across commodities, reduction of agricultural tariffs and lukewarm response to unabated smuggling.

“We are hoping that the next administration will reverse all these anti-local agriculture policies and programs,” he added.

Mr. Briones said that the next administration must focus on programs ensuring crop diversification and biosecurity for the animal industry.

FDI inflows surge in February

May 12, 2022 | 12:33 am

Currencies — EURO, Hong Kong dollar, US dollar, Japanese yen, pound and Chinese 100 yuan banknotes are seen in this picture illustration, Jan. 21, 2016. — REUTERS

By Keisha B. Ta-asan

NET INFLOWS of foreign direct investments (FDI) jumped by 46.3% year on year in February, as the further reopening of the economy lifted investor confidence.

Data released by the Bangko Sentral ng Pilipinas (BSP) on Wednesday showed that FDI net inflows climbed by 46.3% to $893 million in February from $611 million in the same month in 2021.

This was the highest monthly FDI inflow recorded since the $10.5 billion in December last year.

In February, FDI net inflows rose by 9.03% from $819 million in January.

“The sustained improvement in FDI flows reflect improving sentiment towards the Philippines as coronavirus disease 2019 (COVID-19) cases slip and the economy reopens,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in an e-mail.

“However, just as in January, the bulk of FDI was in debt instruments while equity and reinvestment of earnings was actually negative,” he added.

The government placed Metro Manila and some provinces under Alert Level 2 in February amid the decline in COVID-19 infections.

The BSP said the higher FDI reflected the “continued infusion of funds by non-resident direct investors to their local subsidiaries.”

February data showed a 40.8% increase in foreign firms’ investments in debt instruments of local affiliates to $722 million from $513 million a year ago.

Foreigners’ net investments in equity capital also surged by 320% to $97 million from $23 million in February 2021. Equity capital placements jumped by 26.5% to $116 million, while withdrawals declined by 72.4% to $19 million.

The equity placements were mainly from Japan, the United States, and Kuwait. These were invested mostly in manufacturing, financial and insurance, and real estate industries.

Reinvestment of earnings stood at $74 million in February, slightly lower than $75 million in the same month in 2021.

For the first two months of the year, total FDI net inflows rose by 8% to $1.7 billion, mainly due to the 29.3% jump in foreign investments in debt instruments to $1.4 billion. Reinvestment of earnings was flat at $152 million in the January to February period.

However, net investments in equity capital slumped by 46.7% to $204 million in the two-month period, as placements declined by 49.4% to $234 million. Equity withdrawals also dropped by 62% to $30 million.

“This suggests that although there have been improvements with regard to outlook, most investors are still on the fence on whether to put in more substantial investments into the country,” Mr. Mapa added.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a note that FDIs could continue to go up in the coming months as global economic prospects improve “as some developed countries that are the major sources of FDIs move towards population protection/herd immunity.”

He also noted the lower corporate income tax rates and recent laws that opened up more sectors to foreign ownership would help attract more FDIs into the Philippines.

However, a potential spike in COVID-19 infections here and abroad, as well as a protracted Russia-Ukraine war may hurt FDI inflows, Mr. Ricafort added.

Investors will also be closely watching the incoming administration’s plans as the economy is still recovering from the pandemic.

“In the coming months, we will need to see more clarity on the incoming president’s plans for the economy and Cabinet lineup,” Mr. Mapa said.

Former Senator Ferdinand “Bongbong” R. Marcos, Jr. secured a landslide victory in Monday’s presidential election, garnering over 30 million votes according to an unofficial tally by the poll body.

“Improved foreign relations with major sources of foreign investments for the new Philippine president after the May 2022 elections would also help further boost more FDIs into the country,” Mr. Ricafort said.

The central bank projects FDI net inflows will reach $11 billion this year.

Manufacturing grows at its fastest pace in 7 months

May 12, 2022 | 12:32 am

By Ana Olivia A. Tirona, Researcher

FACTORY OUTPUT in March grew at its fastest pace in seven months as manufacturers propped up inventories after restrictions eased.

Preliminary data from the Philippine Statistics Authority’s Monthly Integrated Survey of Selected Industries showed manufacturing, as measured by the volume of production index (VoPI), surged more than four times or 336.3% year on year in March.

This was faster than February’s revised 75.5% growth and a turnaround from the 73.3% contraction recorded in March 2021.

March marked the 12^th straight month that the manufacturing output was in positive territory. March’s print was also the highest year-on-year growth in seven months or since the 521% surge in August last year.

Manufacturing growth averaged 80.9% in the first quarter.

Philippine Chamber of Commerce and Industry President George T. Barcelon said in a Viber message the factory output growth in March was mostly driven by the need to build up inventory.

Security Bank Corp. Chief Economist Robert Dan J. Roces said the manufacturing’s rise was further fueled by the looser lockdown in March.

“We can attribute this surge to robust output and new orders growth, as validated by the PMI (purchasing managers’ index) reading as well,” Mr. Roces said in a separate Viber message.

“Easing mobility had a profound effect on output, which both improved the consumption footprint and ability to move raw materials for production purposes,” he said.

The government placed Metro Manila and most parts of the country under the most lenient alert level in March, allowing businesses to become fully operational.

S&P Global Philippines Manufacturing PMI jumped to a three-year high of 53.2 in March, signaling improvement in operating conditions.

Fifteen of 22 industry divisions posted VoPI growth in March, led by manufacture of coke and refined petroleum products, which grew almost 23 times (2,175.6%) annually — faster than the revised 482.1% growth in February.

Other industry segments that showed growth included machinery and equipment except electrical (43.2% in March from 37.2% in February); textiles (24.2% from 25.8%); other manufacturing and repair and installation of machinery and equipment (24% from 15.3%); and tobacco products (17.1% from 24.9%).

Meanwhile, declines were recorded for the manufacture of electrical equipment (-36.5% in March from -27.4% in February); printing and reproduction of recorded media (-10.9% from -10.7%); leather and related products, including footwear (-5.9% from 31.4%); other non-metallic mineral products (-5.4% from 22.6%); transport equipment (-4.6% from 6.2%); basic pharmaceutical products and pharmaceutical preparations (-0.6% from 7.2%); and food products (-0.1% from 20.3%).

The capacity utilization — the extent to which industry resources are used in producing goods — averaged 70.4% in March, faster than the revised 69.7% the previous month.

Of the 22 sectors, 21 reached an average capacity utilization rate of at least 50%.

Mr. Barcelon said he expects factory output numbers to “still be okay” until the first half of 2022 as inventory remains sufficient.

“There will be more supply chain disruption in the third quarter and manufacturing will go down a bit,” Mr. Barcelon said.

Mr. Roces said manufacturing output likely further improved in April, but risks from high inflation remain.

“[I]inflation, supply chain difficulties emanating from China, and commodity price jumps due to the Russia-Ukraine conflict may dampen and remain downside risks in the months ahead,” Mr. Roces said.

Inflation soared to an over three-year high of 4.9% year on year in April — breaching the central bank’s target and beating market expectations — as food and energy prices continued to rise amid the ongoing war between Russia and Ukraine.

Marcos likely to focus on infrastructure but funding remains unclear

May 12, 2022 | 12:31 am

Marcos-campaign-rally — PHILIPPINE STAR/KRIZ JOHN ROSALES

By Kyle Aristophere T. Atienza, Reporter

THE INCOMING ADMINISTRATION of Ferdinand R. Marcos, Jr. is expected to focus on infrastructure development to drive the Philippine economy’s recovery from the pandemic, but questions remain on how these projects will be funded.

Mr. Marcos, the only son and namesake of the late dictator, is poised to become the country’s 17^th president after a landslide win in Monday’s election.

“(Mr. Marcos) did, however, pledge to continue with President Duterte’s economic policies, particularly the ‘Build, Build, Build’ infrastructure program that was the flagship project of the Duterte administration and helped boost the Philippines’ economic growth prior to the pandemic,” MUFG Bank analyst Sophia Ng said in a note.

In a commentary, Fitch Solutions said Mr. Marcos’s victory bodes well for policy continuity in the country, as his economic and foreign policy stances are similar to those implemented by Mr. Duterte.

“Marcos is likely to continue to focus on infrastructure development on the economic front, while striving to maintain a delicate balancing act between the US and China in terms of foreign policy,” Fitch Solutions said.

Infrastructure spending hit P895.1 billion in 2021, growing by a nearly a third from a year earlier.

Under the P5-trillion 2022 budget, about a fifth is allocated for capital outlays which includes infrastructure projects.

Terry L. Ridon, convenor of infrastructure think tank InfraWatchPH, said Mr. Marcos has not identified potential funding sources for his infrastructure plan. He said it is also not clear if Mr. Marcos would continue the Duterte administration’s shift from public-private partnership (PPP) to official development assistance (ODA) funding for major infrastructure projects.

“This is a policy which he must decide on in the coming days, and we hope he will decide considering mainly our debt position at the moment and the least cost to the public or end users of PPPs,” Mr. Ridon said in a Messenger chat.

“He should really put more meat on his pronouncement regarding the continuity of the ‘Build, Build, Build’ program because he has never provided specific details during the entire campaign,” he said.

Mr. Ridon urged the incoming Marcos administration to consider a shift to PPP projects to avoid incurring more debt.

As of end-March, the National Government’s (NG) total outstanding debt stood at a record P12.68 trillion.

BALANCING ACT
“(Mr.) Marcos faces a tricky balancing act between supporting the economic recovery and containing the Philippines’ burgeoning fiscal deficit,” Oxford Economics Lead Economist Sian Fenner and Assistant Economist Makoto Tsuchiya said in a note.

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

The government has set a 2022 budget deficit ceiling of P1.65 trillion, equivalent to 7.7% of gross domestic product (GDP).

The country’s outstanding debt stood at P11.73 trillion as of end-2021. This pushed the debt-to-GDP ratio to a 16-year high of 60.5%, slightly beyond the 60% threshold considered as manageable by multilateral lenders for developing economies.

“It’s also possible that Macros Jr. announces a more expansionary fiscal agenda than we currently forecast… While the additional fiscal spending would support the recovery, it would undoubtedly catch the attention of the major rating agencies,” Oxford Economics said.

“We believe Marcos Jr. will need to balance the risks of a deteriorating external financing position against providing ongoing support for the recovery.”

Zyza Nadine Suzara, an economist and public finance expert, said Mr. Marcos will likely continue major infrastructure projects and implement “populist” measures such as subsidies for rice that may not be fiscally sustainable for the government.

“That way, we can actually expect a higher deficit, which means a higher level of debt to finance those kinds of programs,” she said in a phone interview.

She said the Marcoses need to settle their unpaid estate tax, which has ballooned to more than P200 billion due to interests and other penalties, to show their willingness to fix the country’s public finances.

UNCERTAINTY
Pantheon Macroeconomics, a think tank based in the United Kingdom, said that while uncertainty over the election is all but over, “ambiguity over Mr. Marcos’s economic policy positions is still there” as his campaign was devoid of specific proposals.

The public will only get an idea of the policies under a Marcos presidency by next month at the earliest, when the next administration will start to take shape, it said.

“We maintain, though, that this will be too late to salvage this year’s economic growth prospects, assuming we’re proven right about the temporary — but harsh — brakes likely applied in the current quarter to government spending and investment,” it added.

The late dictator’s son, who had a wide lead in pre-election surveys, declined major presidential debates, which experts said were necessary to determine the stances of candidates on key economic issues.

“Marcos has made it a point to not give any detail regarding his platform during the campaign, which is likely to drive economic uncertainty since he’s now leading the race,” said Leonardo A. Lanzona, who teaches economics at the Ateneo de Manila University.

Mr. Lanzona cited Mr. Marcos’s promise to lower rice prices by P20 to P30, which was done without consulting various sectors and considering economic aspects that might swell National Government debt.

“This is not the way elections are supposed to be conducted. It should offer the voters information about the public goods that the administration is supposed to produce and how much this will cost,” he said.

Agustin L. Arcenas, an economist at Ateneo, said some investors may reconsider plans to invest due to lack of clarity regarding an economic recovery plan.

“Investors have choices when it comes to where they will place their money, and they are likely to choose the country that has a positive business outlook,” he said in an e-mail. “In Southeast Asia, the Philippines must compete against countries like Vietnam and Thailand for investment.” — with Luz Wendy T. Noble

Cebu Pacific sets 2022 capex at nearly P33 billion

May 12, 2022 | 12:10 am

BUDGET carrier Cebu Pacific, operated by Cebu Air, Inc., said on Wednesday that it had set a capital expenditure (capex) budget of P32.8 billion for 2022, mainly for fleet replacement.

“This year, Cebu Pacific will have seven NEO (new-engine-option plane) deliveries, replacing eight CEOs (current-engine-option planes), which will exit the fleet. Capex for the year totaled P32.8 billion, which was 100% financed via sale and leaseback,” Cebu Pacific Chief Executive Officer Lance Y. Gokongwei said during the company’s annual stockholders’ meeting on Wednesday.

The company ended 2021 with 74 aircraft, the same as in 2020. It received six new aircraft last year.

“While we remain conservative in our 2022 fleet growth, over the next five years, we will have 48 deliveries and 35 exits, ending 2026 with 87 aircraft,” Mr. Gokongwei said.

In its audited financial statement for 2021, Cebu Air said that its capex commitments, related primarily to the acquisition of aircraft fleet, were at P183.85 billion as of end-2021 and P154.14 billion as of end-2020.

At the same time, the airline expects its share in the domestic market to rise further to 62.4% in May due to increased demand and “resilience” of its financial position amid the pandemic.

“The resilience of our financial position throughout 2021 has enabled us not only to maintain our leadership in the domestic market, but also to grow well ahead of our competitors,” Mr. Gokongwei said.

“As of mid-April of 2022, our domestic market share posted at 60%, which is already well ahead of our full-year 2019 and 2021 domestic market shares, which were both at 53%. We continue to boost our domestic capacity and estimate that by the end of May, our capacity share will increase further to 62%,” he added.

Domestic bookings and flight frequencies to Cebu Pacific’s key destinations have “breached pre-pandemic level,” he noted.

“As of April 20, 2022, seven-day average bookings were at plus 29% versus the same period in 2019. Removing Holy Week seasonality, booking velocity was at plus 15% versus 2019.”

Mr. Gokongwei also said that the Alert Level 1 status paved the way for relaxed travel restrictions such as 100% passenger capacity, while doing away with health declaration and the S-PaSS travel management system, making contact tracing optional, and recommending coronavirus testing only for priority groups.

The budget carrier recently reported a net loss of P24.9 billion for 2021, widening from a loss of P22.2 billion a year earlier. It generated P15.7 billion in revenues in 2021, 30% below the 2020 level.

The decline in revenues was mostly driven by the 50% drop in passenger revenue to P6.3 billion last year from P12.6 billion in 2020, the airline said.

Cebu Air shares closed 6.05% lower at P45 apiece on Wednesday. — Arjay L. Balinbin

PAL ‘on track’ to fully restore pre-pandemic domestic flights

May 12, 2022 | 12:09 am

FLAG carrier Philippine Airlines, Inc. (PAL) said on Wednesday that it is adding more domestic and international flights this month and is on track to get back to the number of domestic flights it had before the pandemic.

“We are on track to full restoration of pre-pandemic domestic flights. As to the full restoration of international flights, this will depend on the reopening of specific markets. So potentially, we should be back to 2019 levels — except for China market — by end of the year,” PAL Spokesperson Cielo C. Villaluna told BusinessWorld in a phone message.

On PAL’s flights in the first three months of the year, she said, “It was a slow and gradual increase as far as regular commercial flights are concerned.”

“But domestic and international repatriation flights, bayanihan flights, vaccine cargo flights, all cargo charters never stopped.”

The airline saw “revenge travel” kick in by March, the start of the summer season.

PAL reached 40% of pre-pandemic daily frequencies in the fourth quarter of 2021, Ms. Villaluna noted.

She said prior to the pandemic, PAL was operating an average of 300 flight legs daily or domestic and international inbound and outbound flights daily.

“Today, we have restored 80% of our pre-pandemic number of domestic flights and 60% of our pre-pandemic number of international flights. To be specific, 80% of our average 170 domestic flight legs daily and 60% of our average 130 international flight legs daily.”

“We will be increasing flights progressively as travel restrictions further ease. We look forward to reverting back to pre-pandemic levels in due time. Safety remains our top priority,” she added.

PAL Holdings, Inc., the listed operator of PAL, recorded a net income of P60.6 billion last year, turning around from a loss of P73.1 billion in 2020, primarily due to an increase in “other income” attributable to gain from debt settlement and condonation.

Its revenues for 2021 reached P58.7 billion, 6.2% higher than the P55.3 billion in 2020.

In April, PAL and the Singapore Tourism Board announced a partnership to encourage more Filipinos to visit Singapore.

PAL Holdings shares closed 1.61% lower at P6.10 apiece on Wednesday. — Arjay L. Balinbin

Refund cuts Meralco power rates in May

May 12, 2022 | 12:08 am

meralco-lineman — PHILIPPINE STAR/ RUSSELL PALMA

POWER users’ electricity bill in May is set to decrease by 12 centavos per kilowatt-hour (kWh) or around P24 for a typical household using 200 kWh, the country’s biggest utility firm said on Wednesday.

In a media release, Manila Electric Co. (Meralco) said the overall rate this month is down to P10.063 per kWh from P10.183 per kWh in April. Distribution-related refund has offset an increase in power generation charge, it said.

“The overall rate reduction was mainly due to the Energy Regulatory Commission’s (ERC) order to Meralco to refund a total of P7.8 billion,” the listed electricity distributor said.

The company said the refund is equivalent to P0.4669 per kWh for residential customers. The power seller’s customer count is around 7.46 million, of which 92% are residential users.

“This (refund) will appear as a separate line item in customers’ power bills,” it said.

This month’s rate adjustment translates to a P36 decrease in the power bill of residential customers using 300 kWh, while those consuming 400 kWh and 500 kWh can expect a decline of P48 and P60, respectively.

Ronald V. Valles, Meralco head of regulatory management, said: “As a highly regulated entity, Meralco’s rates are constantly being reviewed to make sure they are fair and reasonable.”

“The immediate implementation of the ERC’s order more than offset the impact of the increase of the generation charge this month, benefitting Meralco customers,” he added.

This month, the power generation charge is up by P0.3553 to P6.2277 per kWh from the P5.8724 per kWh in April.

Charges from power supply agreements (PSAs) rose by P0.8045, while those from independent power producers (IPPs) went down by P0.4319 per kWh.

Meralco said the price of Malampaya natural gas went up by 10% starting in the second quarter to reflect the surge in global crude oil prices.

It identified the power suppliers with pass-through adjustments for the offshore gas field’s fuel as First Gas Power Corp.’s Sta. Rita and San Lorenzo plants, and First NatGas Power Corp.’s San Gabriel plant. The plants accounted for 36% of Meralco’s supply in April.

Meralco added that the peso’s depreciation had an impact on the suppliers’ charges. It cited the increase in usage of more expensive liquid fuel after the Malampaya consortium’s continued failure to provide enough supply of natural gas.

It said the generation charge for May includes the second of three installments of the deferred generation costs for the March bill and the first of three installments for the deferred generation costs for the April bill. It placed the installments to be equivalent to an add-on of around P0.20 per kWh in the generation charge.

Charges from the wholesale electricity spot market (WESM) declined by P0.8664 per kWh with the lower demand in the Luzon power grid due to nonworking holidays and cooler temperature in April.

“PSAs, IPPs, and WESM accounted for 48%, 41%, and 11%, respectively, of Meralco’s energy requirement,” Meralco said.

Meanwhile, the transmission charge, taxes, and other charges for residential customers had a slight decrease of P0.0084 per kWh, it said, adding that the collection of P0.0025 per kWh for the universal environmental charge remains suspended as ordered by the ERC.

Meralco earns from distribution, supply, and metering charges, which have stayed unchanged since the reduction in July 2015.

Pass-through charges from power generation and transmission are paid to the suppliers and the grid system operator, respectively. Taxes, universal charges, and the feed-in tariff allowance are remitted to the government.

In the same media release, Meralco said that there were no major power interruptions in its service area during the May 9 national and local elections, which it attributed to “months-long preparations.”

“The distribution utility reported 35 isolated outage incidents, all of which were immediately addressed by field personnel that were strategically positioned across its franchise area,” it said.

It also called for more participants in the interruptible load program (ILP), or the voluntary, demand-side management scheme led by the Energy department. ILP taps businesses to collectively cut electricity drawn from the grid by using their own power generation sets during imminent power interruptions.

As of May 10, up to 121 companies with a combined de-loading capacity of 554 megawatts in Meralco’s franchise area have joined the program.

Meralco also called on consumers to practice energy efficiency methods amid the expected increase in power usage during the summer months.

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 an interest in BusinessWorld through the Philippine Star Group, which it controls.

On Wednesday, Meralco shares fell by 2.86% or P9.80 to close at P333.20 each. — Victor V. Saulon

DMCI net profit surges on units’ robust results

May 12, 2022 | 12:07 am

DMCI Holdings, Inc. reported that its first-quarter net income surged by 164.9% to P11.26 billion from P4.25 billion year on year, driven by robust operating results of its coal, nickel and power businesses amid skyrocketing commodities and electricity prices.

“Semirara exceeded our expectations while DMCI Mining and DMCI Power both grew double-digits. But our construction and real estate businesses are showing signs of slowdown because of knock-on effects of the pandemic and Russia-Ukraine war,” DMCI Holdings Chairman and President Isidro A. Consunji said in a statement on Wednesday.

Consolidated core net income surged nearly three times to P11.26 billion from P4.07 billion, excluding a nonrecurring gain of P179 million last year mainly from the deferred tax re-measurement impact of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act on Maynilad Water Services, Inc.’s service concession asset and a P12-million gain on sale of land of DMCI Homes.

Of its businesses, Semirara Mining and Power Corp. (SMPC)’s net income contribution surged more than six times to P8.52 billion from P1.32 billion, on the back of higher coal production, shipment and average selling prices, and higher spot electricity sales at elevated prices.

DMCI Homes contributed P1.41 billion, lower by 7% from P1.52 billion, due to lower construction accomplishments, fewer new accounts that qualified for revenue recognition, and higher sales cancellations.

Net income contribution from DMCI Mining Corp. grew 20% from to P499 million from P415 million on higher nickel ore shipment and forex rates.

D.M. Consunji, Inc. recorded a 7% drop to P367 million from P393 million due to the absence of a one-time related party transaction for a joint venture infrastructure project.

Maynilad’s contribution rose by 11% to P319 million from P287 million on lower personnel, utilities and interest expenses.

DMCI Power contributed P132 million, a 12% upturn from P118 million, driven by higher generation and sales across all its service areas.

On Wednesday, DMCI Holdings shares ended lower by 0.61% or five centavos to finish at P8.15 at the stock exchange. — Luisa Maria Jacinta C. Jocson

Monde Nissin income down 13.5% as commodity prices rise

May 12, 2022 | 12:06 am

MONDE Nissin Corp. reported that its core net income attributable to shareholders declined 13.5% to P2.1 billion for the first quarter due to continuing commodity price increases.

Quarterly reported net income likewise decreased by 0.9% to P2.3 billion despite lower interest costs.

Consolidated revenues increased by 7.2% to P18.3 billion due to the strong performance of the Asia-Pacific branded food and beverage (APAC BFB) domestic business.

Core earnings before interest, taxes, depreciation, and amortization (EBITDA) declined by 9.9% to P3.6 billion due partly to the company’s continued strategic investments in brand and new product development during the quarter.

APAC BFB net sales for the first quarter increased by 8.6% to P14.5 billion due to the improving performance of the domestic business, which grew 10.5% to P13.7 billion on price increases and continued volume growth for the noodles, culinary, and packaged cake categories.

However, the international business declined 15.4% to P854 million due to shipping constraints during the quarter.

Monde Nissin’s meat alternative business, Quorn Foods, posted a 1.3% revenue decline on an organic basis as the UK grocery market remains in decline and as the country continues to experience challenging macroeconomic conditions.

“While we had a strong start to the year and remain optimistic about the continuation of the growth we are seeing, commodity inflation remains a concern for our APAC BFB business and it is something that we will proactively respond to as the year progresses,” Monde Nissin Chief Executive Officer Henry Soesanto said.

“We are working hard to continually improve our efficiency and being mindful of our consumers when price increases become warranted, striving to maintain our growth momentum and recovering margin where possible,” he added.

On the meat alternative business, he said although the retail environment remains challenging, “our market share continues to be stable.”

“Our food service segment is also showing sustained momentum as it posted its best-ever quarter. We will leverage on these encouraging signs and work towards overcoming the short-term challenge,” Mr. Soesanto said.

At the stock exchange, Monde Nissin shares dropped by 0.45% or P0.06 to P13.34 on Wednesday. — Luisa Maria Jacinta C. Jocson

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