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CREATE may dim prospects for electronics industry

Electronics exports are expected to decline by 5% this year. — REUTERS

THE electronics exports industry is pessimistic about the longer-term growth prospects of the sector, once the measure rationalizing tax incentives is signed into law.

“I’m not optimistic after the transition period that we will be able to engage expansion investments, let alone new investments,” Semiconductor and Electronics Industries in the Philippines, Inc. (SEIPI) President Danilo C. Lachica said at the Arangkada online forum on Tuesday.

The Senate last week approved Senate Bill No. 1357, or the “Corporate Recovery and Tax Incentives for Enterprises Act (CREATE),” on third and final reading. Once signed into law, the bill will immediately lower the corporate income tax (CIT) to 25% from the current 30% rate and rationalize tax incentives for investors.

The Finance department had been pushing to make tax incentives performance-based and time-bound, noting the country has been giving some investors the special rate of 5% on gross income earned (GIE) in lieu of all taxes with no time limit.

Under CREATE, exporters and domestic industries will now be given between four to seven years of income tax holiday. Exporters and critical domestic industries may later pay the 5% on GIE for 10 years in lieu of all local and national taxes. The bill also increased the sunset provisions to 10 years from the initial proposal of 4-9 years.

Mr. Lachica said that without new investments for the production of new electronic products, current production would soon become obsolete.

“After the next 10-year transition period, if we don’t attract investments or expansions or even new investments in the industry — the nature of the industry is that with expansion, come new products and these new products obviously cater to the new devices, the hardware to support the technology trends,” he said.

“If you don’t bring in those new products with new investments, then there will come a time that the companies here will be running what we call legacy products, which will eventually be obsolete.”

At the start of the lockdown, Mr. Lachica said the industry lost up to 15% of their production volume, because multinational companies transferred production to other facilities in Asia.

SEIPI expects electronics exports to decline by 5% this year, better than the earlier forecast of a 15% decline after industrial, consumer, mobility, and medical electronics demand spiked.

The industry at the time said that it expected 7% growth next year. But Mr. Lachica in a mobile message on Tuesday said that the industry will retain the 7% projection despite the approval of CREATE.

“We may not see immediate fallout next year,” he said. 

To attract foreign investments, Mr. Lachica said that the Philippines must enhance incentives, improve infrastructure, reduce red tape, allow more foreign ownership of companies, and support local supply chain development. — Jenina P.Ibañez

19M workers need upskilling amid automation

MORE THAN 19 million Filipino workers will need additional training as more jobs are expected to be displaced by automation, McKinsey & Company said.

McKinsey & Company Senior Partner Kaushik Das said on Tuesday that the manufacturing, accommodation and food services, agriculture, and retail and wholesale sectors have the most automation potential in the Philippines.

“(A) pretty significant number of workers in each of these sectors can get affected or will get affected,” he said during the Arangkada online forum, referring to displacement based on existing technologies.

But Mr. Das also said that technology can also translate to the creation of millions of jobs.

“In the Philippines, I think we have various estimates of somewhere between 10 and 14 million new jobs over the next 10 years — how do you prepare your people for that?”

In April, the country’s unemployment rate surged to a 15-year high of 17.7% due to the lockdown. This translates to 7.25 million jobless Filipinos, three times more than the same month last year. The rate eased to 10% in July after restrictions were eased.

Mr. Das said private firms and the education sector will play important roles in economic recovery post-pandemic.

“We do think that this skilling and reskilling of people, of workers of scale — not reskilling a thousand people or 5,000 people but a million people over the next 18 months, that’s very important,” he said.

“That’s important for social reasons. It’s important for economic reasons. Empowering or figuring out a way to reach out to SMEs (small- and medium-sized enterprises) is very important.”

Mr. Das cited Singapore as a model, noting that its government created a facility with the private sector and the academe for research and learning.

Initial experimentation and training stages for small businesses is shouldered by the Singapore government, he said.

“There is a lot that governments can do to accelerate change, to accelerate adoption, and to take out the risks that some of these companies face in trying new technology.”

The Information Technology and Business Process Association of the Philippines (IBPAP) said that it is scaling down its upskilling pilot program due to disruptions caused by the pandemic. The industry group plans to start pilot classes online in January.

Victor Andres Manhit, Stratbase Group founder and managing director, said that the private sector plays a big role in creating jobs.

“Jobs will help boost the consumption-driven economy that has been the main driver of the economy,” he said, adding that beyond government, the civil society and private sector play a role in recovery.

“In the end, the government will not create the investments that will address the economy, it’s the private sector. So we need both sectors to work together, and you need to create that environment for the sector to feel confident that their investment will really prosper, and on their part indirectly the necessary economic recovery through job creation.” — Jenina P. Ibañez

Customs exceeds reduced target in November

By Beatrice M. Laforga, Reporter

THE Bureau of Customs (BoC) collected P44.69 billion in November, exceeding the revised target for the sixth consecutive month, but it was still lower than year-ago level as imports remained weak amid the pandemic.

In a statement Tuesday, the BoC said its collections last month exceeded its P42.221-billion goal by 5.85%, citing preliminary data.

The bureau has surpassed its monthly targets since June. It slashed its full-year target due to the global economic slowdown.

The November tally, however, was 11.67% smaller than P50.592 billion collected in the month prior and also 11.35% lower compared with P50.414 billion collected in November of 2019.

The decline in collections was expected, said BoC Assistant Commissioner and Spokesperson Vincent Philip C. Maronilla, since the volume of imports is still weaker than its year-ago level.

“Import volume is still down compared to last year and there is an increase in low value imports,” he said.

Mr. Maronilla said historically, the month of November usually sees lower imports than in October based on their data.

The BoC said twelve of the 17 collection districts reached their targets that month, namely the ports of Manila, Ninoy Aquino International Airport (NAIA), Batangas, Cebu, Tacloban, Surigao, Cagayan De Oro, Zamboanga, Davao, Subic, Clark and Aparri.

In the 11-months to November, the bureau raked in P493.324 billion to account for 97.47% of its full-year target worth P506.15 billion. Before the pandemic, Customs was meant to collect P730 billion this year.

Latest collections by the Bureau of Internal Revenue (BIR), the country’s largest tax-collecting agency, has not been released at the deadline time. The BIR’s collection target for the year has been slashed 23% to P1.744 trillion.

Government’s overall revenues are projected to fall sharply to P2.612 trillion this year as tax collections drop amid the economic downturn.

House approves AMLA amendments on final reading

THE House of Representatives on Tuesday approved on third and final reading the bill amending the Anti-Money Laundering Act (AMLA), which is crucial for the Philippines to avoid being included in the Financial Action Task Force’s (FATF) so-called “gray list.”

With 231 affirmative votes, seven negatives, and three abstentions, the chamber passed House Bill No.7904, which seeks to strengthen Republic Act No. 9610 or the AMLA.

The FATF gave the Philippines up to February 2021 to address the deficiencies in the anti-money laundering law and to implement regulations to improve its efforts to curb money laundering and terrorist financing. The original deadline was in October, but it was moved to February due to the pandemic.

It will now be up to the Senate to approve its version of the bill, which is still pending at the committee level. The timeline appears to be tight as Congress is scheduled to go on another break on Dec. 19 and resume session on Jan. 17, 2021. — K.A.T.Atienza

Emperador sees further expansion of brandy business in the US next year

LIQUOR MANUFACTURER Emperador, Inc. is continuing the expansion of its brandy products in North and South America for 2021 despite the challenges posed by the coronavirus disease 2019 (COVID-19) pandemic.

In a stock exchange disclosure on Tuesday, the Andrew L. Tan-led company said the volume of its Don Pedro and Presidente products in the United States (US) have been growing in the last five months amid the pandemic.

“Don Pedro recorded double digit volume growth particularly in Nevada, New Jersey, and Illinois while Presidente also enjoys rapid growth in Arizona, New Mexico, and Oklahoma,” the company said in the statement.

“Both brandy products are part of the Casa Pedro Domecq portfolio in Mexico, which is now under Grupo Emperador Spain and currently controls 57% of the Mexican brandy market,” it added.

Grupo Emperador Spain Chief Executive Officer Juan Cortès Vilardell said aside from Don Pedro and Presidente, the company has also been selling its imported brandies such as Fundador and Emperador across the United States.

“We see brighter prospects in further growing our brandy business across the United States in 2021. From January to September this year, we have already increased our Fundador sales in the United States by around 23% and this is a very positive signal for us,” Mr. Vilardell was quoted as saying.

Meanwhile, the company said its product Brandy Domecq has already occupied 91% of the brandy market share in Colombia.

“Just like in Mexico where we have dominated the market share for brandy, we have also seen a steady growth in Colombia’s brandy market in the last five years,” Mr. Vilardell said.

He said the market presence of Brandy Domecq in other Latin American countries like Peru, Ecuador, Chile, Panama, Aruba and Brazil has also been increasing.

“We remain focused on further expanding our presence across Latin America by also introducing our imported brandy products, particularly the Philippine-made Emperador Brandy, because the taste preference for brandy in this region has been remarkably growing,” Mr. Vilardell said.

Emperador posted a 26% jump in its net income to P2.5 billion in the third quarter of the year.

From January to September, the company’s net income rose 11% to P5.9 billion due to the strong sales of its brandy and whisky products in international markets.

Shares of Emperador at the stock exchange rose 0.20% or two centavos to end at P10.10 apiece on Tuesday. — Revin Mikhael D. Ochave

PAL ready to offer nonstop flights as gov’t eases travel requirements

PHILIPPINE AIRLINES (PAL) on Tuesday said it is ready to offer nonstop flights after the government allowed the visa-free entry of returning Filipinos or “balikbayans” beginning Dec. 7.

“We are ready to do our part to serve our balikbayans and perk up the Philippine tourism industry to help sustain Filipino jobs and livelihoods,” the flag carrier said in a statement.

PAL said it has “nonstop flights” to the Philippines for travelers from the United States, Canada, the United Kingdom, Australia and some Asian countries.

The nonstop flights are “designed for a safe travel experience that avoids connecting via other countries,” it added.

PAL also assured the public it has “strong” health and safety measures to protect its passengers.

“The flag carrier observes the highest safety standards in all phases of the travel experience. Our HEPA (High Efficiency Particulate Air) filters disinfect cabin air of bacteria and viruses with 99.99% efficacy. Our cabin crew wear protective gear throughout the flight. We carry out intensive disinfection of aircraft surfaces before and after every flight,” it explained.

PAL has a testing center at the Ninoy Aquino International Airport Terminal 2 for arriving passengers who are non-overseas Filipino workers. They will pay P4,000.

Test results will be released within 12 to 24 hours, PAL said.

“Overseas Filipino workers will be swabbed by the government testing center at the airport, free of charge,” it added.

The flag carrier also noted that foreigners with Philippine resident visas, seamen or foreign airline crew with crew visas, accredited foreign government officials or international organization officials and their dependents with diplomatic visas, and holders of special non-immigrant visas are also allowed to enter the country.

“Passengers arriving at Manila airport are required to register at least three days prior to their date of departure to arrange for the mandated COVID-19 swab test to be administered upon arrival,” PAL said. — Arjay L. Balinbin

Semirara defers mining operations in Antique due to water buildup

SEMIRARA MINING and Power Corp. (SMPC) has voluntarily deferred mining operations in one of the four mining blocks in its Molave Mine in Antique.

In a disclosure to the stock exchange on Tuesday, the Consunji-led firm said the deferral is due to water buildup in the sump of North Block 7 caused by water seepages and was worsened by the heavy downpour brought by recent typhoons that hit the country.

Semirara said it has yet to determine when mining operations in the area will normalize.

“Deferring mining operations in North Block 7 will allow our technical consultants and mining personnel to implement remedial measures to manage the water buildup,” the company said in the statement.

Despite the deferral of mining operations, the mining firm said its coal shipments for the year will not be affected, adding that it has a coal inventory at 3.4 million metric tons (MT) as of Dec. 1.

However, SMPC said it might be unable to meet the coal quality requirements of a few customers due to the expected delay in high calorific coal production.

Meanwhile, the company said it still lacks 1.7 million MT from its 2020 coal production target of 15 million MT.

“Ramping up production to meet the full-year target is unlikely at this point given the water seepages at North Block 7,” SMPC said.

“With the lower production, estimated financial impact is an increase of around P900 million in cost of coal sold owing to higher weighted average cost, which will negatively impact 2020 profitability,” it added.

Shares of SMPC at the stock exchange fell 1.94% or 24 centavos to close at P12.16 per piece on Tuesday. — Revin Mikhael D. Ochave

Gov’t makes full award of T-bill offering

THE GOVERNMENT made a full award of the Treasury bills (T-bills) it offered on Tuesday as yields ended mixed due to expectations of faster inflation and a sluggish economy.

The Bureau of the Treasury (BTr) borrowed P20 billion as planned via the T-bills as the offer was almost four times oversubscribed, with bids amounting to P75.906 billion.

Broken down, the BTr borrowed the programmed P5 billion from the 91-day T-bills as tenders reached P19.321 billion. The three-month debt fetched an average rate of 1.006%, up by two basis points (bps) from the 0.986% seen in the previous auction.

The Treasury also awarded P5 billion as planned in 182-day debt as bids amounted to P20.41 billion. The six-month papers were quoted at an average rate of 1.386%, inching up by 0.1 bp from the 1.385% logged in last week’s offering.

Lastly, the government raised P10 billion as programmed via the 364-day securities as tenders totaled P36.175 billion. The average rate of the one-year securities stood at 1.693%, slipping by 0.2 bp from the 1.695% logged in the previous auction.

National Treasurer Rosalia V. de Leon said the yields on the three-month and six-month papers rose yesterday as investors expect inflation to have accelerated slightly last month.

“Increase in 91-day [debt’s rate] was due to expectations of a higher inflation print in November following a spate of typhoons,” Ms. De Leon told reporters via Viber after the auction.

Headline inflation in November likely quickened as a recent spate of typhoons pushed the prices of food and agricultural products higher, economists said.

A BusinessWorld poll of 13 analysts conducted last week yielded a median estimate of 2.7%, near the low end of the 2.4-3.2% forecast range of the Bangko Sentral ng Pilipinas (BSP) but still within the 2-4% target for the year.

If realized, the median estimate will be faster than the 2.5% logged in October and the 1.3% seen in November 2019. The BSP expects inflation to average 2.4% this year. The consumer price index rose 2.5% as of October year to date.

The November inflation report will be released by the Philippine Statistics Authority on Friday (Dec. 4).

A trader said via e-mail that investors are becoming more wary of inflation risks.

The trader also noted that the slight decline in the rate of the one-year T-bills reflected market expectations of a slow economic rebound.

“The economy will probably return to its pre-pandemic level only in the last quarter next year as cases of coronavirus continue to linger and some doubts on the safety of some vaccines against the disease remain,” the trader said.

The Philippine economy remained in recession in the third quarter as gross domestic product (GDP) contracted by 11.5%, following the record 16.9% decline in the three months ended June.

This brought the GDP performance for the first nine months to a 10% contraction. The government expects the economy to shrink by 4.5-6.6% this year.

The Treasury plans to borrow P120 billion from domestic lenders in December: P60 billion in weekly T-bill auctions and P60 billion in fortnightly Treasury bond (T-bonds) offerings.

On Wednesday, the government will auction off P30 billion in reissued three-year T-bonds which have a remaining life of two years and nine months.

The Treasury is also offering another tranche of Premyo bonds to raise at least P3 billion. The offer period is set to run from Nov. 11 to Dec. 18.

The government wants to raise around P3 trillion this year from local and foreign lenders to help fund its budget deficit, which is expected to hit 9.6% of the country’s gross domestic product.

First phase of Davao township launched

YHEST REALTY and Development Corp. has launched the mixed-use first phase of its P33-billion Davao Global Township (DGT) business district.

The first phase of the 22-hectare project will include residential towers, an office building, a cultural center, and the DGT City Center, which will include retail shops, the company said in a press release on Tuesday.

The phase is expected to be completed in 2023.

YHEST is a joint venture between Cebu Landmasters Inc. (CLI) and the Villa-Abrille family in Davao.

CLI President and Chief Executive Officer Jose Soberano III said he expects Overseas Filipino Workers and local residents who have been looking to buy a home since the pandemic to show interest in the township’s residential units.

YHEST President Fred Yuson said business confidence has been returning in Davao, where lockdown measures are less strict.

“This is likely to push the growth of innovative projects like the Davao Global Township, which introduces Davaoeños to fresh lifestyle, retail and corporate concepts.”

According to previous statements, the estimated P10-billion first phase includes 93,000 square meters of gross floor area.

The developer announced the project in April 2019. The township is the third partnership project between CLI and the Villa-Abrille family.

The property was previously a golf course owned by the Villa-Abrilles. — J.P. Ibañez

The show must go on

Ayala Triangle’s Christmas lights and sound show goes virtual

WHILE many of our Christmas celebrations and traditions have to be put on hold, the lights and sounds show at the Ayala Triangle Gardens went in step with the times. As we do almost all things virtually now, the lights and sounds show has also gone online on the social media pages of Ayala Land Inc. (facebook.com/officialayalaland and on Instagram as @ayalaland).

The lights and sound show, an annual tradition at the park in the center of Makati’s major streets Paseo de Roxas, Makati Ave., and Ayala Ave., has moved from the real world to the virtual world this year due to the pandemic.

“The annual lights and sound show has been a family favorite for years. It’s one of the most-awaited Christmas events that brings happiness to people,” said Mel Ignacio, Head of Makati Estate, Ayala Land said on Nov. during an online press conference. “For this reason, Ayala Land and Make It Makati decided to continue the annual tradition by bringing the show through digital channels. We want the event to spark hope among Filipinos — hope that will help them remember that brighter days lie ahead for all of us.”

Ms. Ignacio pointed out that the lights along the avenues have already been displayed: “Although the decorations are simpler, the response has been just as overwhelming. We are happy that we are able to bring a glimmer of hope especially during these challenging times.”

The lights show was brought online by making a 360-degree video superimposed with lights and holograms. Guests during the online press conference were given a preview, spotting a whizzing Santa Claus, fireworks, and fairy lights. This year’s virtual digital lights and sound show was conceptualized in collaboration with Globe Studios. Production was led by filmmaker and director Quark Henares. The video is accompanied by renditions of Christmas songs by singer Reese Lansangan.

Mr. Henares said during the press conference that Ayala Land had approached them as early as June, during the height of the pandemic. “Christmas was a world away from our minds. I guess we also realized that this Ayala Triangle tradition has to continue, especially this year,” said Mr. Henares.

The video was shot from June to August, in the park and surrounding areas. “It took us longer than we thought to shoot everything. It’s basically taking thousands of pictures so that we can all stitch them together. Wherever you look, because it’s VR, you’ll be able to see all around you,” he said. The effects were added in post-production.

A preview of the video made some eyes shine, basing on the reaction of event host Issa Litton. “That feeling of still trying to celebrate the holidays especially on such a difficult year — even if you can’t physically go there — they brought it to us,” said the host.

Now for the fun stuff: One can use the AR Ayala Triangle Garden filters on Facebook and Instagram starting this week, with new filters added every week in December. There’s also a Finders Keepers contest, where one can win prizes from Grab and Shopee. Visit www.makeitmakati.com and follow MakeItMakati on Facebook, Twitter, and Instagram, and Ayala Land Inc. (facebook.com/officialayalaland and on Instagram as @ayalaland) for details. — J.L. Garcia

BSP seen to continue easing to support economy

SOME ASIAN central banks, including the Bangko Sentral ng Pilipinas (BSP), will likely remain accommodative in 2021 to provide support to their coronavirus-battered economies, a think tank said.

“Indonesia, the Philippines and Vietnam have all cut rates in recent weeks, and we have further easing pencilled in for these three economies as well as India next year,” Capital Economics said in a report published late Monday.

Meanwhile, it said China may be the only country where rate hikes would be on the table in 2021.

The research firm said the Philippines, Thailand and India are among the region’s worst-hit by the virus as output remains 5-10% smaller than its pre-crisis level.

“Given the big hole that many countries still find themselves in, monetary policy will need to remain loose for some time to come,” it said.

In the Philippines, further easing is likely amid “the weakness of recovery and low level of fiscal support,” said Capital Economics.

The BSP last month unexpectedly cut benchmark rates to new record lows, the fifth reduction this year, citing the continued uncertainty caused by a fresh surge in coronavirus cases globally and the impact of recent typhoons on the struggling economy, with business and household confidence remaining low.

The Monetary Board trimmed the rates on the BSP’s overnight reverse repurchase, lending, and deposit facilities by 25 basis points (bps) to 2%, 2.5%, and 1.5%, respectively.

The latest easing move followed a “prudent pause” by the central bank since its June meeting. The central bank has already cumulatively lowered interest rates by 200 bps this year.

A central bank official last week said the regulator has space to keep an accommodative policy stance if the economy needs a monetary boost.

“For the foreseeable future, while there’s this impact of the pandemic that’s dampening of economic activity, then you can expect that the policy stance will remain accommodative over the near term. There’s a lot of available policy space should there be the need to act,” BSP Deputy Governor Francisco G. Dakila, Jr. said at the BusinessWorld Virtual Economic Forum on Thursday.

Meanwhile, on the fiscal side, government spending was down for the second consecutive month in October by 6.84% year on year to P290 billion from P310.8 billion.

Based on the policy tracker of the International Monetary Fund, fiscal measures implemented so far by the Philippine government are equivalent to 3.9% of the gross domestic product (GDP). This is smaller compared with responses from regional neighbors, including Malaysia at 5% of GDP, Thailand at 9.6%, Vietnam at 4.2% and Indonesia at 4.4%.

The Philippine economy remained in recession in the third quarter as GDP contracted by 11.5%, following the record 16.9% decline in the three months ended June.

This brought the GDP performance for the first nine months to a 10% contraction.

The government expects the economy to shrink by 4.5-6.6% this year. — L.W.T. Noble

Globe network upgrades done by 2021

GLOBE TELECOM, Inc. is expecting to complete its network upgrades by next year to offer a “dependable” telecommunications service to customers, as they continue to adopt digital solutions for their everyday needs, its top official said.

“As we target the completion of our network upgrades by 2021, expect a first-world network primed to serve Filipinos today and in the future,” Globe President Ernest L. Cu said at the virtual “Wonderful World of Globe” event on Tuesday.

He added that “a reliable and dependable” network is seen to encourage Filipinos to adopt digital solutions “with increasing trust and confidence to use technology in making their lives easier and more fulfilled.”

Mr. Cu also introduced the telco’s new offering, Surf4All, which allows prepaid, postpaid, Globe-at-Home, and TM customers to control how they want to use their data.

“With 20GB for all sites valid for seven days and for only P249, Surf4All provides a single data wallet that is seamlessly accessible and shareable with up to four users across Globe brands,” he said.

The Ayala-led telco recently reported a 22% drop in its attributable net income for the third quarter to P4.39 billion.

The company’s service revenues declined 3% to P36.68 billion, driven by the sustained drop in traditional voice and mobile SMS, but partly mitigated by the increase in the mobile data segment.

Globe is hoping that its fourth-quarter performance will be better than the third quarter as the economy gradually reopens, according to Mr. Cu.

Globe shares on Tuesday closed 1.13% higher at P1,970 apiece. — Arjay L. Balinbin

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