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LGUs encouraged to collaborate to create disaster-resilient communities

Local government units (LGUs) must work together and take advantage of technology to create disaster-resilient towns and cities, according to architect Nathaniel “Dinky” von Einsiedel, president of the Alliance for Safe, Sustainable, and Resilient Environments (ASSURE). 

ASSURE is a group of environmental planners, architects, engineers, and related professionals directly involved with disaster risk mitigation and climate adaptation work. The group provided emergency assistance and built shelters in poor municipalities affected by Typhoon Yolanda in 2013.

“The impact of climate change, of weather-induced disasters, is that they do not respect political boundaries,” said Mr. von Einsiedel during the Liveable Cities Lab on Resilience webinar on October 21. 

This is apparent in projects such as ASSURE’s Binahaan Watershed River Flood Study, initiated in 2015. By integrating rainfall data, information from flood hazard maps such as the extent and depth of flooding, and expertise from different organizations, ASSURE was able to create diagrammatic models showing how an area could be made both disaster-resilient and enjoyable for the community. 

A model for Candiis Creek in Leyte, for instance, identified flood-safe areas and a potential trail for runners and bikers. The study, which covered five municipalities in Leyte, required LGUs to share their issues and limitations as well as optimize their respective resources.

Projects and engineering interventions were based on on-the-ground information collected in numerous surveys conducted in the affected barangays, said Geraldine Santos, vice-president of ASSURE.

Technology also plays a huge role in making disaster-resilience efforts more efficient. “It is necessary to create that kind of balance between the technology that’s available there in the market, and the need for us to build this resiliency considering that we are facing more and stronger typhoons and all kinds of disasters, including the pandemic,” said Mr. von Einsidel.

Leonard Travis, team lead for urban and regional planning at real estate developer Empark Land Development, proposed a nationwide operations control center (OCC). International or national hubs, such as the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA), can use information and communications technology (ICT) and the Internet of Things (IoT) to cascade real-time weather data to status-viewing screens in municipal hubs.

In the meantime, Empark is running a sample implementation in Cauayan City in Isabela Province. Built in 2019, the OCC in Cauayan monitors the weather through sensors installed in hydroponic sites across Isabela’s municipalities. 

The Philippine Disaster Resilience Foundation (PDRF), an organization on disaster management for the private sector, established an operations system called Handa in 2018 which identifies the hazard risks in different areas. This helps their member companies make informed decisions on how to set up their facilities and workforce. Handa runs on ArcGIS, a geographic information system that is used for creating and using maps, and compiling and analyzing geographic data.

PDRF also runs the Innovations Academy for Disaster Awareness, Preparedness, and Training (iADAPT), an e-learning platform on disaster risk reduction, business continuity, and climate change adaptation. “Our thinking is that, during the pandemic, the typhoons will not stop… we have active volcanoes, we have active fault lines… The advocacy for preparing the community must continue,” said Veronica Gabaldon, executive director at PDRF. — Mariel Alison L. Aguinaldo

Italian startup with Filipino roots sets up shop in the Philippines

Mash&Co launches app in the Philippine market aims to provide educational content for preschoolers focusing on values and key 21st-century skills

The COVID-19 pandemic has accelerated the demand for edtech solutions in the Philippines to address the needs of schools, administrators, faculty, learners, and parents and create a learner-friendly experience for blended learning. A key component of the digitalization of education and education systems is content creation, creating engaging, child-friendly content addressing the evolving needs of Filipino children.

A forward-thinking approach to edtech led entrepreneurs Vincenzo Merenda and Katrin Ann Orbeta to create Mash&Co, a startup and production company focused on conveying values through positive communication and creating transmedia experiences for preschoolers.

“Mash&Co aims to use interactivity, storytelling, and gamification to introduce preschoolers to important values and concepts such as social inclusion, cultural heritage, ecology, empathy, and diversity and help younger children start to build key skills such as creativity, collaboration, and critical thinking,” shared Mash & Co. Founder Katrin Ann Orbeta.

Orbeta, who is of Filipino descent, wanted to bring the company and their app to the Philippines to share the engaging, educational experience with more young learners and their families. Mash&Co’s content can be delivered through various systems and devices, from TV, the web, its app, and even consoles.

Inspired by the Montessori and Reggio Emilia approaches, Mash&Co collaborates with educators and child psychology experts to ensure that their content is safe and kid-friendly, while being mindful of digital wellbeing.

“Our app has no dialogue or voice-overs. The absence of typical gaming elements and dynamics encourages children to explore the stories and mini-games. In our interactive cartoons, we enable the microphone to encourage children to unleash their creativity by telling their own stories based on the scenes that they see,” shared Mash&Co Co-Founder Vincenzo Merenda. “Moreover, the app allows parents to monitor children’s progress based on their playing performance. The special control panel on the app does not show any grade to the children but enables parents to understand their progress and aptitude in key cognitive skills such as interaction, coordination, and recognition.”

Mash&Co’s app will be available in Google Play Store in the Philippines starting October 22, 2020. Merenda and Orbeta hope to link up with education and child psychology experts, educational institutions, and other partners as they build and grow their Philippine operations.

Their startup has already started to make waves internationally, with the Europe-based team securing funding from organizations such as French Tech Ticket, Microsoft, and Telecom Italia and distribution from IGroup Korea South Korea. Mash&Co is also a recipient of the Digital Ehon Award, an award given by the Digital Children’s Book Fair, a leading international children’s book fair in Japan. The Digital Ehon Award is a digital children’s book award and is given to exciting digital productions to encourage new digital expression methods for children. The Mash&Co. app has also been downloaded 250,000 times outside of the Philippines.

“We believe that storytelling and interactivity can create a more engaging and more effective learning experience. Our goal is not just to create content, but to help young children understand their emotions, their community, and their role in society,” said Orbeta. “With Mash&Co, we aim to help parents and schools instill a strong foundation in young children so that tomorrow’s leaders can create a better world.”

For more information on Mash&Co, you may find them on Facebook at Mash&Co Philippines or contact them through katrin@mashandco.it.

Packed bars and mask-less catwalks: With COVID curbs fading, China set for consumption rebound

BEIJING — Over the weekend, crowds packed a former industrial warehouse in Beijing as China Fashion Week got underway, with models strutting mask-less on a square runway and guests oblivious to social distancing norms.

Similarly vibrant scenes are being seen elsewhere in China as consumers return to cinemas, live performances, and restaurants.

To many, they indicate a late-summer recovery in Chinese household spending is broadening and propelling the next stage of the economic recovery.

“This August, sales in the domestic (apparel) market turned from negative to positive,” Zhang Qinghui, chairman of the China Fashion Designers Committee, told Reuters last week.

“I think the numbers for September, or even the fourth quarter, will be better.”

Sales of consumer goods, a proxy for consumption in China, rose across the board at the end of the third quarter, led by auto purchases, as household incomes returned to positive growth and employment conditions improved after being slammed by the COVID-19 pandemic.

The recovery made China a lone bright spot in the retail world and a major source of earnings for global consumer brands from Starbucks to Louis Vuitton.

Still, Chinese spending on services lagged that on goods, and sectors such as hospitality and catering sector fared particularly badly due to social distancing rules, restrictions on operating hours, and caps on capacity.

But with the easing of curbs gathering pace in the third quarter, the hospitality sector is poised to accelerate its recovery. Already, its contraction in output narrowed in the third quarter versus the previous three months.

“The services industry had been the most affected by COVID. Now, with restrictions being lifted, the industry is gradually emerging from its downturn, which would provide a strong boost to the broad recovery in the consumer market,” said Ernan Cui, analyst at Gavekal Dragonomics.

“We expect growth would return to pre-COVID levels by the end of the year.”

LIVE MUSIC
September’s retail sales growth was still a third of pre-COVID-19 levels, but economists expect the overall consumer market would stage a sharp rebound in coming months, after entertainment venues from cinemas to KTVs reopened in August.

On Oct. 1, the first day of the “Golden Week” holiday, China’s box office raked in 745 million yuan ($111.42 million), the highest single-day sales in 2020 and the second-best ever for the holiday.

And during the eight-day National Day break, China saw 637 million domestic tourists, though the number was only 79% of last year’s total.

“We’ve returned to our old habits,” said a 57-year-old Shanghai retiree surnamed Chen, who went on a 22-day self-drive tour in western Xinjiang region with her friends.

In Beijing, local rock bands have been playing to enthusiastic crowds each weekend at the Temple Bar nestled in Beijing’s many winding “hutong” alleyways, since the bar resumed such live gigs in September.

“Business is more or less back to pre-COVID levels,” said a staff at the bar. “All we need right now is a vaccine. With that, everything can truly return to normal.”

The return of spending is as vital to business-to-business companies as it is to consumer-facing businesses.

Benjamin Barthélémy, a Parisian who runs a film production studio in Beijing, said many small entertainment businesses had started recovering from COVID-19 in the past two months.

“Many, many meetings, many projects are coming back—it’s like the machine slowly restarts. Commercials for cars and for everything else are really good now,” Barthélémy said.

ONLINE BOOM
Next month, Tmall, Alibaba Group’s e-commerce marketplace, expects over 2,600 foreign brands—an all-time high—to take part in the annual online “Double 11” shopping festival with sales set for another record in its 12th year.

The booming online consumption is helped by an improving job market.

In the first nine months, China created 8.98 million urban jobs, nearly hitting the government’s full-year target of over 9 million. In the third quarter, household income growth turned positive, up 0.6% year-on-year.

For some sectors, the recovery has taken a different form.

Riviera Events, a Singapore-based event management company with branches across China, did not hold any virtual event before 2020.

Now, half of their events are online.

“For an industry that was so hard-hit, we’re lucky in some ways that the industry has rebounded in this way,” said Stephane de Montgros, co-founder of Riviera Events.

“We’re very hopeful that from the fourth quarter, the event industry in mainland China will be growing year-on-year.” — Stella Qiu and Ryan Woo/Reuters

Pope names new cardinals, putting his stamp on Church’s future

Among them is Jose F. Advincula, 68, Filipino, archbishop of Capiz

VATICAN CITY — Pope Francis, leaving his mark on the Roman Catholic Church into the future, named 13 cardinals from eight countries on Sunday, including nine who are eligible to enter a conclave to elect his successor after his death or resignation.

The nine new cardinal electors, whom the pope listed in a surprise announcement while addressing pilgrims from his window overlooking St. Peter’s Square, include Archbishop Wilton Gregory of Washington DC.

Gregory, who will become the first African-American to hold the rank, has become a national figure in recent months. He has called for dialogue to ease racial tensions in the United States following the death of George Floyd in the custody of Minneapolis police in May.

He has also indirectly clashed with US President Donald J. Trump last June when he said he found it “baffling and reprehensible” a Catholic Church in Washington allowed Mr. Trump to use the facility for a photo opportunity. Trump supporters later denounced Gregory.

The 13 new cardinals will be elevated to the high rank at a ceremony known as a consistory at the Vatican on Nov. 28, and the selection of more cardinal electors increases the possibility that the next pope will be someone who will continue Francis’ policies.

Pope Francis has now appointed about 57% of cardinal electors, whose number rises to about 128 with the naming of the new cardinals. The others were appointed by Francis’ two more conservative predecessors, Pope Benedict XVI and Pope John Paul II.

Church rules usually limit the number of cardinal electors to 120 but popes have bent that limit by naming more, factoring in that some will turn 80 in the coming year.

The nine new electors come from Italy, Malta, Rwanda, the United States, the Philippines, Chile, Brunei and Mexico.

Two of the new cardinals, Archbishop Antoine Kambanda of Kigali, Rwanda, and Bishop Cornelius Sim of Brunei appear to be part of Francis’ policy of giving more prestige to the Church in far-flung places, often where Catholics are a tiny minority.

His elevation of Archbishop Celestino Aos Braco of Chile to the rank of cardinal is significant because it is part of Francis’ attempt to heal the country still reeling from a sexual abuse crisis.

The new cardinal’s predecessor as archbishop of Santiago, Cardinal Ricardo Ezzati, was the highest-ranking member of the Chilean Church to be caught up in the scandal.

The appointment of Aos Braco was particularly stinging to Chileans because he is Spanish and not a native, signalling the pope’s conviction that an outsider was needed to clean up the situation.

LONG SERVICE
The four non-electors, who will not be allowed to enter a conclave because they are over the age of 80, are being elevated to the high rank because of their long service to the Church. They come from Italy and Mexico.

They include Archbishop Silvano Tomasi, an Italian who has worked around the world and is one of the Church’s top experts on immigration.

The nine new cardinal electors under the age of 80 are:

• Archbishop Mario Grech, 63, Maltese, Vatican-based Secretary of the Synod of Bishops

• Archbishop Marcello Semeraro, 73, Italian, prefect of the Vatican’s Congregation for the Causes of Saints

• Antoine Kambanda, Rwandan, 61, archbishop of Kigali

• Wilton D. Gregory, American, 72, archbishop of Washington DC

• Jose F. Advincula, 68, Filipino, archbishop of Capiz

• Celestino Aos Braco, 75, Spanish, archbishop of Santiago, Chile

• Archbishop Cornelius Sim, 69, Brunei, apostolic vicar of Brunei

• Augusto Paolo Lojudice, 56, Italian, archbishop of Siena, Italy

• Father Mauro Gambetti, 54, Italian, custodian of the Franciscan convent of St. Francis in Assisi

—  Philip Pullella/Reuters

Israel to start COVID-19 vaccine human trials on Nov. 1

JERUSALEM — Israel will begin human trials for a potential COVID-19 vaccine developed by a research institute overseen by the Defence Ministry on Nov. 1 after receiving regulatory approval, the ministry said on Sunday.

The Israel Institute for Biological Research (IIBR) began animal trials for its “BriLife” vaccine in March. The Health Ministry and an oversight committee have now given the green light to take it to the next stage.

Eighty volunteers aged between 18 and 55 will be monitored for three weeks to see if virus antibodies develop, the ministry said in a statement. A second phase, expected to begin in December, will involve 960 people over the age of 18.

Should those succeed, a third, large-scale phase with 30,000 volunteers is scheduled for April/May 2021. If successful, the vaccine may then be approved for mass use.

The vaccine, the ministry said, has already tested well on a number of animal models and the IIBR has produced more than 25,000 doses for the first and second phases of the clinical trials.

“Our final goal is 15 million rations for the residents of the State of Israel and for our close neighbors,” said IIBR Director Shmuel Shapira.

There are no internationally approved vaccines yet, but several are in advanced trials, including from Pfizer Inc., Johnson & Johnson, AstraZeneca Plc., and Moderna.

Israel, with a population of 9 million, has begun easing a second nationwide coronavirus lockdown after a steady decline in the rate of daily infections. The country saw 692 new cases on Saturday—down from a peak of more than 9,000 several weeks ago. It has reported 2,372 deaths from the pandemic. — Reuters

Online application for the SM Scholarship program starts on January 1, 2021

SM Foundation (SMFI) announced the start of the online application period for the SM College Scholarship program for School Year 2021-2022 which will open on January 1 and end on February 28, 2021.

The SM College Scholarship Program started from the vision of the late SM patriarch, Henry “Tatang” Sy, Sr. He believed that if you send one child from an economically challenged family to college, that child would have more opportunities to have gainful employment and later on uplift the economic status of his/her family.

The SM scholarship program is open to the following:

  • Grade 12 public high school graduates from schools in the areas covered; or
  • Grade 12 graduates from private schools in the areas covered (given that they have Department of Education (DepEd) voucher and finished Junior High from a public school)
  • General Weighted Average grade of at least 88% or its equivalent for Grade 12 – 1st semester
  • Total household income of at most P150,000 per year.

The program covers the following field of studies: Computer Science, Information Technology, Engineering (Civil, Electrical, Mechanical, Computer, and Electronics), Education (Elementary and Secondary); Accountancy, and Financial Management, among others.

For more information about the SM College Scholarship program, visit www.sm-foundation.org, and follow its social media accounts @SMFoundationInc (Facebook, Instagram, Twitter, and YouTube).

SM Foundation, through its Scholarship program, provides deserving and qualified students with access to college education and technical-vocational studies since 1993. To date, SMFI has supported almost 5,500 scholars nationwide.

US disease expert Fauci says vaccine verdict due by early December

LONDON — US infectious disease expert Anthony S. Fauci said on Sunday it would be clear whether a COVID-19 vaccine was safe and effective by early December, but that more widespread vaccination would not be likely until later in 2021.

“We will know whether a vaccine is safe and effective by the end of November, the beginning of December,” Mr. Fauci told the BBC.

“When you talk about vaccinating a substantial proportion of the population, so that you can have a significant impact on the dynamics of the outbreak, that very likely will not be until the second or third quarter of the year.” — Reuters

[B-SIDE Podcast] Bend, don’t break: business lessons from bamboo

Follow us on Spotify BusinessWorld B-Side

The COVID-19 pandemic wiped out 80% of the revenue of Bambike, a socio-ecological enterprise that handcrafts bamboo bicycles. Prior to the lockdowns, Bambike was renting out thousands of bikes a month for its ecobike tours, which won the company a Tripadvisor award in March. Bambike founder Bryan Benitez McClelland tells BusinessWorld reporter Patricia B. Mirasol how the company is bouncing back. “Be resilient like the bamboo,” he said.

TAKEAWAYS

Recognize the value of your assets.

When Bambike’s city tours evaporated, Mr. McClelland realized that he could turn his idle fleet of bamboo bikes into transportation for frontliners who were having trouble getting to work because of the lockdowns.  

Bicycles are enjoying a growing acceptance among a populace long burdened by poor public transport. Bambike has pivoted from conducting tours to selling bikes to customers. While operations are still not back to pre-pandemic levels, Bambike nonetheless finds itself fortuitously positioned in a growth market. 

“Your business plan is never executed exactly as you wrote it… We’re very fortunate to be positioned in a growth market. We are able to survive now,” he said.

The future of transportation is electric.

Bambike began producing e-bikes during the pandemic. Capable of covering longer distances with less pedaling power (and less perspiration), e-bikes get people around without emitting carbon. Bambike offers a range of e-bikes, from 500-watt commuter kits for easy cruising to 1,500-watt turbo kits for long distances to 3,000-watt hauler kits for extra power. 

“We’re making sure we’re doing the right thing for people and the planet as we become part of the new green economy and the next normal,” said Mr. McClelland. 

Support local.

Mr. McClelland makes a case for supporting MSMEs like Bambike instead of hopping on e-commerce platforms and importing goods. “There’s a lot to be said about still purchasing things from the palengke, or going to the small shops, or finding the entrepreneurs that just opened their online stores and are trying to continue to make a living,” he said.  “We should always look to buy Filipino first. It will pay off in the long run.” 

Be like bamboo.

This year is going to be “a year of survival, tenacity, and grit,” according to Mr. McClelland, who considers Bambike to be a customer service company at heart and counts on his team to adjust to the needs of the times, whether it’s by touring clients or selling bikes. “The goal is to keep all people employed and pull through together,” he said. “Be resilient like the bamboo, where you bend but you stay strong and stay firm throughout the challenging times.” 

Recorded remotely on October 1. Produced by Nina M. Diaz, Paolo L. Lopez, and Sam L. Marcelo.

Follow us on Spotify BusinessWorld B-Side

PLDT, Smart select Nokia’s WING for breakthrough IoT services

First IoT offer for enterprises in the Philippines

PLDT Inc., through PLDT Enterprise and its Wireless arm Smart Communications. Inc., is in an advanced stage of discussion with long-time partner Nokia to provide next-generation Internet of Things (IoT) services for its customers. Together, Smart and Nokia intend to build the “Smart IoT Platform” – the first of its kind for enterprises in the Philippines. This platform aims to help businesses easily deploy IoT services and solutions to manage their connected devices for growth opportunities in the future.

“IoT is a technological revolution with immense potential in improving the way we do things, and we are finalizing a partnership with Nokia to fortify our initiatives in this space. With Smart’s proven robust network and Nokia’s Global IoT ecosystem, this strategic partnership aims to simplify IoT deployment at scale,” said Jovy Hernandez, ePLDT President & CEO and SVP & Head for PLDT and Smart Enterprise Business Groups. “Our aim is to further complement PLDT Enterprise’s already extensive solutions portfolio with the launch of this platform.”

With its newfound capability, PLDT Enterprise intends to scale its current LTE based IoT offerings. This platform will also enable their customers, to explore and deploy 5G based IoT solutions, on Smart’s 5G network — which is on a virtualized core network, and deployed on a software-defined transport network, launched earlier this year. This IoT initiative is part of PLDT’s strategy in building a complete 5G ecosystem.

This enables PLDT to deliver the next-generation digital services like Machine Learning (ML) and Artificial Intelligence (AI) enhancing the IoT solutions, at a faster and more cost-effective manner. Now, with the platform being available for 5G IoT use cases, customers can opt for different combinations of ultra-low latency, high security, and enhanced throughput based services—fortifying the group’s commitment to provide critical public services, real-time industrial monitoring, and control, as well as remote healthcare.

Given this, the group aims for the public sector, as well as the transport & logistics, manufacturing, utilities, and retail industries to be among principal beneficiaries of the platform. These IoT solutions will be fully ready by 2021 but PLDT is already in discussions with enterprise clients that intend to utilize IoT technology for their operations.

The platform is set to be powered by Nokia’s Worldwide IoT Network Grid (WING). This simplifies the expansion of current LTE based IoT to 5G based IoT solutions, providing mission-critical services. The 5G ultra-low latency services are enabled by separating and extending the user plane functions (UPF) to the far network edge or enterprise premises. Such capability, of Multi-Access Edge Computing (MEC) technology, provides the support for real-time, compute-intensive IoT services, such as AR/VR based maintenance.

Further, the PLDT Group’s roll-out of 5G SA (Standalone) will enable their customers to leverage WING’s cloud-native architecture—effectively laying the groundwork for network slicing and providing them with more comprehensive 5G based IoT use cases.

“I look forward to seeing our Enterprise customers, utilizing this platform, to expand their deployment of IoT solutions and services, easily, on our LTE and 5G networks,” said Joachim Horn, PLDT Group Chief Technology Advisor. “This will also be a catalyst for the Philippines manufacturing industry, to embrace IR4.0.”

PLDT Enterprise and Nokia executives will introduce the Smart IoT Platform in time for the PLDT group’s upcoming Philippine Digital Convention (PH Digicon) 2020 on October 28-30, the first all-virtual event featuring key technology industry leaders with more than 10,000 expected global attendees.

“We recognize the great value potential of IoT. In 2025, the projected value creation potential is at US$3.7 Tn/year for factories, US$1.7 Tn/year for smart cities, and US$1.6 Tn/year for humans. With Nokia WING, we will continue to drive the adoption of next-generation technologies, providing our customers with not only connectivity but solutions to maximize their IoT potential,” said Andrew Cope, Country Manager for Nokia Philippines.

PH Digicon 2020 will introduce the latest industry 5.0 solutions to delegates and customers. The Industry 5.0 Breakout Session will cover enterprises’ need for a seamless, automated and zero-touch client experience. It will also tackle the co-existence of man and machine, and how this collaboration affects the ever-evolving digital world.

For more information, visit pldtenterprise.com.

Gov’t borrowings hit P2.56 trillion

THE National Government (NG) borrowed P2.56 trillion from local and foreign sources in the first nine months of 2020, data from the Bureau of the Treasury (BTr) showed.

The government’s gross borrowings in the nine-month period surged by 179% from the P917.282 billion recorded a year ago.

In September, borrowings reached P90.6 billion, more than five times the P15.46 billion logged in the same month in 2019. Domestic debt accounted for 55% of the total.

Gross domestic borrowings stood at P50.02 billion in September, versus the P14.45 billion in net redemptions made the year prior. The Treasury issued P45 billion worth of Treasury bonds (T-bonds) and P5.02 billion of Treasury bills (T-bills) through its regular auctions in September.

Excluding the P300-billion debt paid that month, domestic borrowings resulted in net redemption — or when more debts were repaid than new debts obtained — worth P249.98 billion.

Foreign debt reached P40.575 billion in September, up 162% (15.46) from a year ago. This included P38.35 billion worth of program loans and P2.22 billion in project loans.

Less the payments made worth P6.142 billion that month, net external borrowings totaled P34.43 billion.

Year to date, gross borrowings made up 85% of the government’s plan to raise P3 trillion for the entire year. Around 78% were from local creditors and the rest from foreign lenders.

Domestic debt hit P2 trillion, up 219% from a year ago.

Funds raised through retail Treasury bonds (RTBs) accounted for the bulk at P827.12 billion, after the BTr offered the debt papers twice this year, in February and August.

T-bonds issued so far amounted to P492.9 billion, while the net issuance of T-bills hit P390.3 billion.

The government also settled an outstanding P300-billion debt with the central bank at the end of September. After it was settled, the Bangko Sentral ng Pilipinas (BSP) approved another P540 billion in direct provisional advances to the government.

Meanwhile, gross external debt jumped 89% to P550.3 billion, with P344.9 billion in program loans, P19 billion in project loans, and the issuance of global bonds through dollar-denominated notes (P118.7 billion) and euro bonds (P67 billion).

Excluding all the repayments made, net borrowings hit P2.048 trillion as of end-September, up 157% year on year.

The budget deficit narrowed to P351 billion in September, but the nine-month shortfall was still up 194% to P879 billion from a year ago on the back of falling revenues and rising pandemic expenses.

The government runs a budget deficit as it spends more than the revenue it generates. It borrows to fill in the budget gap expected to hit 9.6% of gross domestic product this year. — Beatrice M. Laforga

Legal issues hinder privatization of state mining assets — DoF

By Beatrice M. Laforga, Reporter

THE Department of Finance (DoF) has created a task group to address the lawsuits and other legal issues that are slowing the efforts to privatize state mining assets.

“We are forming an interagency team to study ways on how we can clear the path for these assets to be privatized and revive their operations,” Finance Secretary Carlos G. Dominguez III said in a statement.

The newly created body consists of representatives from the DoF, the Department of Environment and Natural Resources (DENR), Mines and Geosciences Bureau (MGB), the  Privatization and Management Office (PMO), and the Office of the Solicitor General (OSG).

Aside from legal issues, MGB Director Wilfredo G. Moncano said the technical working group will also look at economic, environmental, social and technical issues.

“It appears there are legal impediments in at least two of these assets, social and environmental issues in some, and therefore a resolution of all these challenges will be ideal before the privatization can proceed, or there may be potential investors willing to shoulder the risks, provided they knew prior that there is or are such issue(s) existing,” Mr. Moncano said in a Viber message on Sunday.

“The government agencies will work to mitigate if not eliminate these issues,” he added.

Chamber of Mines of the Philippines (COMP) Executive Director Ronald S. Recidoro said developing the old and unused mines could help with overall economic recovery as well as resolve the long-standing social and environmental issues surrounding the abandoned assets.

“Government can avail of a range of legal options to resolve the legal entanglements involving these assets. The interagency team can review these options and make the proper recommendations to the DoF. But if time is of the essence, they may opt to negotiate with the parties and arrive at a good faith settlement that will be beneficial for all parties,” Mr. Recidoro said in a Viber message Sunday.

However, he stressed that the privatization efforts should be completed as soon as possible so the mines can be productive again.

“Government may also want to look at its other mineral assets that are similarly burdened by legal issues and package these into projects that may be opened for bidding,” he added.

Among the government’s idle mining assets are the copper-gold project of the Maricalum Mining Corp. (Maricalum Mining) in Negros Occidental, the nickel mines of the Nonoc Mining and Industrial Corp. (Nonoc Mining) in Surigao del Norte, and the gold- and copper-rich North Davao Mining property (North Davao Mining) in Davao del Norte, according to the PMO.

The DoF said the copper mines of the Basay Mining Corp. (Basay Mining) in Negros Oriental and the nickel mine that had been operated by the Marinduque Mining and Industrial Corp. (MMIC Bagacay Mine) cannot be operated because of the “legal concerns” hindering the privatization of the assets.

Mr. Dominguez earlier this month said the government is looking at privatizing its mining assets to revive the industry, raise more revenues and provide more jobs especially in rural areas.

The DoF said it once tried to auction off some shares of these mining companies but when the highest bidder did not fulfill its obligations, this led to “decades of litigation” and left the assets idle.

PMO estimates showed Basay Mining may have at least 105 million tons of copper ore and could generate at least P1 billion. Its operations were suspended in 1983 due to insufficient funds. The company had obtained credit and loan accommodations from the Philippine National Bank (PNB) through its deed of assignment of mining claims and leasehold rights.

Executive Order 79, issued in 2012, placed a moratorium on new mining permits “until a legislation rationalizing existing revenue-sharing schemes and mechanisms shall have taken effect.”

Converge makes market debut amid pandemic

By Denise A. Valdez, Senior Reporter

CONVERGE ICT Solutions, Inc. is set to debut on the  local stock market today (Oct. 26), with the fiber internet provider only the second company to conduct an initial public offering (IPO) this year amid the pandemic.

Despite being the country’s second-largest IPO to date, analysts expect Converge’s share price to close lower on its first trading day.

The fiber internet provider concluded its P29.08-billion IPO on Oct. 16, where it offered up to 1.51 billion common shares at P16.80 each. It will list its shares on the PSE main board under the stock symbol “CNVRG.”

“At P16.80 per share, our projected 2020 price to earnings ratio for Converge is at 48.64x. With this, we see CNVRG as overvalued relative to its peers. Thus, our projection for CNVRG’s trading (on Monday) is quite biased to the downside,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a text message.

In an Oct. 12 disclosure, the company said its market capitalization is projected at P126.44 billion and public float at 20% after the IPO.

Other internet providers currently listed on the PSE are PLDT, Inc. and Globe Telecom, Inc. As of Friday, PLDT’s market capitalization was P288.43 billion, and Globe’s was P271.94 billion. The two debuted on the market in 1953 and 1975, respectively.

In terms of earnings for the first six months of 2020, Converge posted a net income of P1.26 billion, while PLDT and Globe booked P12.28 billion and P11.48 billion in attributable net income, respectively.

Converge was initially targeting to raise up to P41.55 billion from its IPO with a maximum offer price of P24 per share. It lowered the ceiling price by 30% after securing cornerstone investors, or foreign groups that pre-committed to subscribe to its shares ahead of the IPO.

“Though its offer price has become less expensive, the possibility of correction could not be discounted due to its lofty valuation,” Diversified Securities, Inc. Equity Trader Aniceto K. Pangan said in a text message.

However, the local market has been rising since last week due to improving investor sentiment on the relaxation of quarantine rules in the Philippine capital. This may provide a cushion for Converge on its debut, Mr. Pangan said.

“The maiden offer of Converge comes at an opportune time when the local market is on an uptrend supported by net foreign buying,” he said.

The PSE index closed at 6,484.06 on Friday, up 585.59 points or 10% on a weekly basis. Foreign investors have also been posting net buying for three straight days.

Converge’s competitors PLDT and Globe closed at P1,337 per share and P2,020 per share, respectively, on Friday.

“With its vast expansion in the Visayas and Mindanao regions, you could expect Converge to sustain its growth momentum and increase its market share especially as a leading fixed broadband business in the country with better value for money proposition among its peers,” Mr. Pangan added.

In its prospectus, the company claimed to have a 55% market share in terms of high-speed residential fixed broadband as of end-June, citing research provider Media Partners Asia. During the first semester, its revenues surged 65% to P6.49 billion due to heightened demand for internet services as more people worked from home.

Converge is owned by Pampanga-based businessman Dennis Anthony H. Uy and is backed by US-based private equity firm Warburg Pincus. It intends to use the proceeds from its IPO to support expansion in Visayas and Mindanao.

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