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From Wall Street to Silicon Valley, LGBT+ investment on the rise

When Michele Bettencourt stepped down as chief executive of a billion-dollar cyber-security firm to begin her transition from male to female, she thought her career was over.

Two years later, Ms. Bettencourt is not only living as a transgender woman, but she was also named chairwoman of the board of directors for an up-and-coming tech company.

“I’m not worried about hiding my secret,” Ms. Bettencourt told the Thomson Reuters Foundation. “I wore my red Dior dress on a Zoom call—it’s so liberating to be me and not worry about it.”

Ms. Bettencourt is part of a growing number of LGBT+ executives, investors, and entrepreneurs in the United States who are using their financial capital and corporate savvy to support LGBT+ friendly firms—and promote greater inclusion in the process.

Some 17 million people in the United States are LGBT+ and they spend $1.1 trillion a year, according to LGBT+ Capital, one of a growing number of specialist asset management firms.

“The (LGBT+ investment) space is expanding,” said Nicole Douillet, senior advisor at LGBTQ Loyalty, an LGBT-focused financial services company that last year created the LGBTQ100 Index of the top 100 gay- and trans-friendly public companies.

“People really care not just about earning top dollar with their investment, I think people are starting to see that you can do well financially while doing good in the world.”

Among them is Ms. Bettencourt, who as an angel investor looks to finance minority- and women-led startups.

“If there were two investment opportunities and one was LGBT-run, and the other was (not), and both were equal, I would go the LGBT,” she said.

“If you look at the panoply of investment opportunities, why would you just invest in white males?”

SOCIALLY RESPONSIBLE

While data on LGBT-specific investment is not widely available, analysts say it is part of a wider trend towards environmental, social, and governance (ESG) investing, such as avoiding fossil fuel companies.

ESG investment in Europe, the United States, Japan, Canada, Australia, and New Zealand hit $30.7 trillion dollars in 2018, up by more than a third in two years, said the Global Sustainable Investment Alliance, a group of investment organizations.

“Back in the ’80s and ’90s … the investment opportunities around socially responsible investing were pretty much limited,” said Stuart Armstrong, a financial planner with Centinel Financial Group, an investment firm.

“But increasingly you’re seeing Black Rock and other global firms that specifically have (those) kind of ESG, socially responsible portfolios.”

Gaingels, a network of some 700 investors, like Ms. Bettencourt, who fund gay- and trans-inclusive firms, has seen its investments grow 10-fold in just two years: from $5 million in 2018 to about $50 million in the first eight months of 2020.

For managing director Lorenzo Thione, LGBT+ investing is not just about generating strong economic returns, it is also about having an impact in business and on society at large.

“If you create financial-economic empowerment that drives through and flows to people who are supportive of causes of equality … you are making the lives of every other LGBTQ person better,” he said.

SUPERIOR EDGE

Although many LGBT+ rights have been won in the courtroom—including gay marriage in 2015 and protection from discrimination at work in June—business has also been at the forefront of social change.

When the Human Rights Campaign, an LGBT+ advocacy group, began ranking US companies on their inclusive policies, such as health care benefits for same-sex partners, just 13 firms achieved a 100% rating in 2002.

This year, 686 firms achieved the top score.

Growing LGBT+ acceptance in the business world has opened up new possibilities for socially conscious investors, both gay and straight, who are keen to advance LGBT+ rights, analysts said.

Pro-LGBT+ investors have a history of successfully using shareholder proposals to boost protections for LGBT+ workers.

“Once you have shareholders, who are shareholders because of these LGBT issues specifically, it can push those companies to do even more and go even further to be LGBTQ-friendly,” said Ms. Douillet from the financial services company LGBTQ Loyalty.

Research suggests firms that promote LGBT+ equality in the workplace tend to also have improved employee recruitment and retention, better consumer perceptions, and higher profitability and productivity.

“Employees bringing their whole selves to work tend to be more engaged at work, they tend to be more loyal to the company,” said Ms. Douillet. “All of those things should lead to a better economic outcome.”

The LGBTQ100 Index outperformed the S&P 500 Index benchmark—which tracks the stocks of 500 large US companies—by 3.4% in the first six months of 2020, LGBTQ Loyalty said.

Ashley Flucas, a Gaingels member with a portfolio of more than 100 companies, agrees that LGBT+ entrepreneurs are a smart investment.

“Chances are … you really had to hustle and grind your way, facing challenges that, for example, a straight, white male founder would never have to face,” she said. “I think that gives you an invaluable, superior edge.”

SUCCESS

As the majority of investors backing startups are white, some pro-LGBT+ groups are also promoting inclusion by helping gay and trans entrepreneurs from ethnic minorities get ahead.

“It’s hard to be an entrepreneur in the first place,” said Stephanie Imah, community engagement manager at StartOut, a non-profit which mentors LGBT+ entrepreneurs.

“When you’re constantly stepping into rooms with people that don’t look like you and who don’t want to invest in you … how many times do you want to do that?”

Gaingels partners with other minority investors like Harlem Capital, which finances Black, Latino, and women entrepreneurs, and supports the Diversity Rider initiative which requires startups to include co-investors from minority groups on deals.

Initiatives like these, said Mr. Thione of Gaingels, are proof the industry is beginning to change.

“People who would’ve found it twice as hard 20 years ago to start a business—trans people, people of color, people who are LGBT— … are now finding it easier,” he said.

“You get more stories of success.”

Ms. Bettencourt recognizes the impact of simply showing up to work in her red Dior dress.“If there are trans success stories—of folks who thought they were done, went back, got the job, made good things happen, have good reputations—then that should be a beacon for everyone trans thinking about going to work,” she said. — Thomson Reuters Foundation

As Citi taps Fraser, Wall Street’s poor record on diversity is put in focus

NEW YORK — Citigroup Inc.’s appointment of Jane Fraser as its next chief executive on Thursday was celebrated on Wall Street as the first woman to lead one of the top US banks. Yet this is a glass ceiling that corporate America shattered decades ago.

It was 1972 when the Washington Post, then a Fortune 500 company, named Katherine Graham as its CEO. While progress for female leaders has been slow, 36 of the Fortune 500 companies are now run by women, including automaker General Motors Co., chocolate maker Hershey Co., and Northrop Grumman Corp., according to corporate governance services firm BoardEx.

But the male-dominated financial services industry has fared poorly. Even beyond the major banks, only four of the 200 largest public US financial services companies—Synchrony Financial, Franklin Resources Inc., Nasdaq Inc. and CIT Group Inc.—have female CEOs, according to BoardEx.

Women are also underrepresented in CEO roles at financial firms when smaller companies are included. Of the 551 financial companies in the Russell 3000 index, 19, or 3.4%, are led by a woman, compared to 5.4% when counting all Russell 3000 companies, according to The Conference Board, a non-profit representing corporations, and Esgauge, a data-mining firm.

The only sector with a lower representation of women as CEOs is real estate, where there are five female chief executives out of 196 companies, according to The Conference Board and Esgauge.

“These are really positions that women have not pursued because of the work-life balance. We have seen years and years of struggle for women who have to choose,” said Charlotte Laurent-Ottomane, executive director of the Thirty Percent Coalition, which encourages diversity in corporate boardrooms.

CEO candidates typically come from roles in finance, operations, or running a business line, where there are few women leaders, according to a study from accounting and consulting firm Deloitte.

Women have higher representation in roles that historically have not been heavily recruited for the top job, such as in legal or human resources departments, according to the study.

Ms. Fraser, 53, has been a rising star in the financial industry, with a career that spans investment banking, wealth management, troubled mortgage workouts, and strategy in Latin America—a key business for Citigroup. She was being groomed for the top job after she was elevated to Citigroup president last year.

Among the Citigroup board directors who tapped Fraser as CEO, eight of 17 are women, compared to about a quarter at most other US banks. — Reuters

La Nina may disrupt global food supply, send prices higher

The La Nina weather system could roil global food production, sending prices higher, as potential droughts and floods bring upheaval to a suite of key agricultural commodities from Southeast Asia to South America.

The highly anticipated phenomenon has officially formed, the US Climate Prediction Center said Thursday, after the last significant La Nina event occurred in 2011.

During that period, upheaval in commodity production led to steep increase in world food prices, with the United Nations’ Food & Agriculture World Food Price Index surging to a record in February 2011, up 37% from the end of 2009.

La Nina typically affects a broad range of farm commodities, as it brings above-average winter-spring rainfall in Australia, particularly across eastern, central and northern regions, as well as in Southeast Asia, with the potential for flooding.

It can also dry out the southern US through winter, bringing cooler temperatures and storms across the north. In South America, croplands in Argentina can become more arid, with drought possible across parts of Brazil.

“The weather phenomenon disrupts production of a broad range of agricultural produce, such as soybeans, corn, rapeseed, sugar, coffee and rubber,” said Bloomberg Intelligence’s Alvin Tai.

WHEAT

The 2010–11 La Nina brought Australia’s wettest two-year period on record, according to the country’s Bureau of Meteorology, and with it a strong 2011-12 winter wheat crop. This season, the crop could climb 78% year-on-year to 27 million tons, the US Department of Agriculture Foreign Agricultural Service said in July.

“A wet spring will support pasture development and grain fill for the winter crop,” Rabobank said in its September agribusiness report. “However, if wet conditions continue into harvest, it can reduce crop quality.”

A late-season La Nina is unlikely to have any impact on the current winter crop in Australia, forecaster Abares said in its June outlook. The country’s harvest of grains including wheat and barley is due to start within weeks.

La Nina may also exacerbate a bout of dryness in Argentina, jeopardizing what was supposed to be a record wheat crop in one of the world’s top exporters.

SOYBEANS

Soy growers in the US might escape damage, with harvests typically complete by November. Brazilian soy may be more at risk “if drought and high temperatures weaken conditions for planting, which stretches from mid-August to mid-December,” said Mr. Tai.

The US, Brazil and Argentina account for about 80% of soybean production and smaller harvests can raise prices, according to Mr. Tai. In the 2011–12 season, Brazil’s soy production declined 12%.

PALM

Additional rains in Southeast Asia could boost palm oil production, while the industry could also benefit from lower output of rival soy oil, Mr. Tai said.

There has already been more rain in Southeast Asia, particularly in Sabah and Kalimantan, since June, said Ling Ah Hong, director of plantation consultant Ganling Sdn. La Nina’s impact on the palm crop would depend on how strong it is, Mr. Ling said.

“A weak to moderate La Nina is usually beneficial to palm production in the following year,” he said. “However, the heavy rains, if any, may cause immediate short-term disruption to harvesting and crop quality.”

Palm oil production usually declines in December and January, after rising in August and September, said Derom Bangun, chairman of the Indonesian Palm Oil Board. More rain in those typically drier months could be positive for monthly output, providing conditions aren’t extreme, he said.

COFFEE

La Nina and El Nino events can lead to steep differences in coffee prices. During the last big La Nina, arabica prices surged as much as 127% between 2010 and 2012, while robusta gained as much as 105%.

Arabica is mostly grown in Brazil, which can be hit with drought during La Nina, while the premium narrows during El Nino years, as robusta crops in Vietnam and Indonesia are hit by drought, said Tai.

The coffee output from Brazil, Colombia, and Indonesia fell 5–10% during the same period, while Vietnam’s output climbed as more areas were planted with beans, Mr. Tai said.

La Nina tends to bring adverse above-average rains to many parts of Colombia, and its effect may start to show up from October to December, said Roberto Velez, chief executive officer of Colombia’s National Federation of Coffee Growers.

While that may benefit areas that traditionally get less rain, the darker days caused by excess clouds reduce the luminosity necessary for flowering to occur, eroding overall yield potential.

Higher humidity can also trigger outbreaks of coffee-leaf rust, which happened between 2010–12, curbing output. However, about 80% of the plants in the second-largest arabica producer are now resistant to rust, compared with a very low percentage during the last La Nina, he said.

Still, Indonesia’s coffee production may decline, as the rain causes coffee cherries to fall or rot, especially if rain occurs more than 10 days straight, said Moelyono Soesilo, head of specialty coffee and processing at the Association of Indonesian Coffee Exporters and Industries.

SUGAR

Sugar output from Australia, Brazil, and Thailand could be affected, Tai said. Drought could cut production in Brazil, with yields down 12% during the last big La Nina. In Australia, it’s heavy rain in the country’s north that could create harvest delays.

The crush is almost halfway done in Australia’s growing regions and “La Nina years can bring an unwanted wet end to the domestic crushing season,” said Charles Clack, a Rabobank commodities analyst, in the September report.

COTTON

For cotton, drier-than-normal conditions in southern and western Brazil and northern Argentina could have a negative impact on crops there, while more rain could benefit Australian fiber, according to Donald Keeney, senior meteorologist with Maxar in Gaithersburg, Maryland. — Bloomberg

Singapore Air cuts 20% of workforce as virus smashes travel

Singapore Airlines Ltd. (SIA) is eliminating about 4,300 jobs, or 20% of its workforce, as the coronavirus outbreak devastates the aviation industry.

The cuts will be made at Singapore Airlines and its SilkAir and Scoot units. Discussions are underway with unions and arrangements will be finalized as soon as possible, the carrier said in a statement late Thursday.

The job losses are the first at Singapore Airlines since the SARS outbreak in 2003.

“Having to let go of our valuable and dedicated people is the hardest and most agonizing decision that I have had to make in my 30 years with SIA,” Chief Executive Officer Choon Phong Goh said. “The next few weeks will be some of the toughest in the history of the SIA Group.”

The decision shows that even the world’s top carriers can’t evade the biggest financial crisis in the industry’s history after the pandemic eviscerated air travel. The International Air Transport Association doesn’t expect passenger traffic to recover to pre-pandemic levels until 2024. Singapore Airlines is particularly vulnerable because it has no domestic market to fall back on.

The carrier’s shares slipped 0.6% early Friday following a 1.1% loss Thursday. They are down 45% this year.

WHO WILL SURVIVE?

“When the battle against COVID-19 began, none of us could have predicted its devastating impact on the entire aviation industry,” Mr. Goh said. “Eight months on, the number of carriers that have collapsed continues to rise. It is still not clear who will ultimately survive this crisis.”

The job losses come despite the airline raising about S$11 billion ($8 billion) through loans and a rights issue in June, and receiving aid from a government job-support program. The Ministry of Finance said it spent about S$15 billion as of July to help companies in the city-state pay staff.

Unlike many of its peers, Singapore Airlines initially managed to resist job cuts, though some staff were redeployed to work in hospitals, social services and on Singapore’s transport network.

HIRING FREEZE

It also imposed a hiring freeze in March and offered early retirement and voluntary redundancies that eliminated some 1,900 positions. As a result, the potential cuts across the group have been reduced to about 2,400, the airline said Thursday.

Singapore Airlines expects to be operating at less than 50% of capacity at the end of this financial year.

The job cuts could initially save the airline S$13 million a month until March, when the government’s job support program is due to end, and almost S$20 million after, according to James Teo, an analyst with Bloomberg Intelligence in Singapore.

“I think these cuts are overdue and the delay was likely due to the time taken to finalize voluntary departures,” Mr. Teo said.

The carrier suffered a record S$1 billion operating loss in the first quarter through June, with revenue passenger kilometers plunging more than 99%. The virus woes are exacerbated by fuel-hedging losses, with as much as 79% of its needs locked in at $71-$74 a barrel for jet fuel and $58-$62 for Brent, Mr. Teo wrote earlier Thursday, before the job-cuts announcement.

GLOBAL PAIN

Few in the aviation industry have been spared by the coronavirus, with the likes of British Airways, Deutsche Lufthansa AG, Emirates and Qantas Airways Ltd. announcing thousands of dismissals and unpaid leave programs. Many more are expected in the US after a moratorium on job cuts—one condition of a $50 billion government bailout—is lifted at the end of September.

Since January, airlines globally have flagged that as many as 400,000 people will either be let go or furloughed, according to data compiled by Bloomberg. In North America alone, some 130,000 jobs are expected to be lost. United Airlines Holdings Inc. said last week it will eliminate 16,370 jobs in October as it shrinks operations, adding to the 19,000 staff cuts planned by American Airlines Group Inc.

Singapore Airlines is reviewing its fleet size and network. In July, it agreed with Airbus SE to defer deliveries of some aircraft and reschedule some payments, while it is in similar talks with Boeing Co. — Bloomberg

Banks’ soured loans highest in 6 years

LOCAL BANKS’ bad loans continued to rise in July as the economy was battered by the coronavirus pandemic, bringing the industry’s nonperforming loan (NPL) ratio to its highest level since 2014.

Gross bad loans climbed by nearly a third (32.1%) to P290.1 billion in July from P219.6 billion a year ago, according to data from the Bangko Sentral ng Pilipinas (BSP).

The industry-wide gross bad loan ratio stood at 2.67% as of end-July, rising from the 2.53% as of end-June. This was also the highest in six years or since the 2.74% logged in August 2014.

Bad loans are those left unpaid for at least 30 days after the due date. These are considered risky assets because borrowers are unlikely to settle these loans.

The central bank is projecting the bad loan ratio to rise to 4.6% by end-December. It reached 17.6% in the aftermath of the Asian financial crisis in 2002.

The rise in soured loans outpaced the 5.14% growth in the industry’s loan portfolio to P10.86 trillion in July.

Economic activity in the country was halted due to strict lockdown measures that began in mid-March to curb the rise in coronavirus infections. Metro Manila remains under a general community quarantine until Sept. 30. Coronavirus cases stood at 248,947 as of Thursday.

Past due loans ballooned by 88.8% to P573.2 billion in July, pushing the industry’s past due loan ratio to 5.28% from 3.49% in June.

Restructured loans jumped by 23.14% to P49.03 billion in July. The ratio of restructured loans to the total loan book stood at 0.45% for the third consecutive month, up from the 0.39% a year ago.

As the pandemic continues to affect the quality of loan books, banks’ provision for credit losses jumped by 59% to P321.85 billion from the P202.22 billion it set aside last year.

The industry’s bad loan coverage ratio, which measures their allowance for potential losses due to soured loans, stood at 110.94% as of end-July, higher than 92.1% a year ago and 109.87% logged in June.

Meanwhile, the capital adequacy ratio (CAR) stood at 12.69%, slightly worse than 12.85% a year ago and 12.73% in the prior month. Despite this, the end-July ratio of the banking industry was still beyond the 10% minimum requirement set by the BSP.

The continued rise in nonperforming loans comes as no surprise with the economy in recession, according to Colegio de San Juan de Letran Graduate School Dean Emmanuel J. Lopez.

“The situation is an offshoot of the economic recession that the country is experiencing currently, and this phenomenon is expected to worsen until the end of the year, when economic authorities project a major economic contraction in our GDP (gross domestic product),” Mr. Lopez said in a text message.

The country entered a recession after economic output plunged by a record 16.5% in the second quarter. The government expects GDP to shrink by 4.5% to 6.6% this year.

Mr. Lopez said banks are now left with no choice but to buy time and wait for the economy to “at least return to a semblance of normalcy.”

In July, bank lending expanded by 6.7% year on year, the slowest since 5% in March 2010.

The Financial Institutions Strategic Transfer Bill, which will create asset management companies to relieve banks of their bad loans, has been passed in the House of Representatives and is pending in the Senate. — Luz Wendy T. Noble

External trade weakness persists in July amid global slowdown

By Lourdes O. Pilar, Researcher

PHILIPPINE international trade further contracted in July as trade activity remains subdued here and the rest of the world, the Philippine Statistics Authority (PSA) reported on Thursday.

Preliminary data from the PSA showed merchandise exports in July declined by 9.6% to $5.654 billion compared with a revised 12.5% fall in June and 4.8% growth recorded in July 2019.

The July result marked the fifth straight month of decline for exports, as well as the slowest decline this year after the double-digit decline that started in March.

Philippine trade year-on-year performance (July 2020)

Meanwhile, merchandise imports contracted for the 15th consecutive month in July by 24.4% to $7.481 billion, worsening from the year-on-year declines of 23.1% in June and 0.9% in July last year.

The trade deficit in July stood at $1.827 billion, lower than the $3.641-billion gap in the same month last year. This was, however, the biggest in four months, or since March’s shortfall of $2.368 billion.

The country’s total external trade in goods — the sum of export and import goods — was $13.134 billion in July, 18.6% down year on year. This brought the total trade in the seven-month period to $80.771 billion, nearly a fourth lower than the $105.725 billion a year ago.

For the seven months to July, exports fell by 16.4% to $34.135 billion, worse than the Development Budget Coordination Committee’s (DBCC) revised projection of a 16% fall for the year.

Meanwhile, the import bill declined by 28.1% to $46.636 billion, faster than the DBCC’s revised target of an 18% contraction for 2020.

Year to date, the trade balance amounted to a $12.501-billion deficit, narrower than the $24.066-billion trade gap in 2019’s comparable seven months.

Manufactured goods, which made up 83.8% of total sales in July, slid by 8.8% to $4.738 billion from $5.194 billion previously.

Electronics, which made up about 70% of manufactured goods and more than half of the total exported goods, declined by 2.6% to $3.351 billion in July, with semiconductors contributing $2.501 billion, down 1.8%.

Outbound shipments of agro-based products likewise shrank by 21.7% to $342.578 million, followed by forest products which fell by 6% to $29.240 million, and petroleum products which dropped by 92.2% to $258,710.

Bucking the trend were exports of mineral products, which rose 0.1% to $437.853 million.

On the import side, purchases of raw materials and intermediate goods, which made up 41% of the import total, declined by 14.8% to $3.066 billion in July.

Capital goods, comprising 31.5% of the total, fell by 29.8% to $2.358 billion.

Imports of consumer goods fell by 27.3% to $1.227 billion and mineral fuels, lubricant and related materials dropped by 36.2% to $746.962 million.

“The continuous contraction of exports and imports reflect the lethargy of both domestic and world economies due to the seemingly increasing rampage of the COVID-19 (coronavirus disease 2019) pandemic,” said University of Asia and the Pacific (UA&P) Senior Economist Cid L. Terosa in an e-mail. 

In a statement, ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said the severe contraction in major import commodities reflects “fading domestic demand with the economy in recession.”

The economy plunged into a recession as gross domestic product (GDP) fell by a record 16.5% in the second quarter. For the first half, the country’s GDP decline at 8.6%.

The country’s external trade, while a net negative contributor to the calculation of GDP growth, is still considered an essential growth component. This as exports and purchases of investment goods abroad such as capital goods and raw and intermediate materials are seen to contribute to growth in capital formation and government spending through its “Build, Build, Build” infrastructure program.

Mr. Mapa said the “sustained double-digit contraction” in capital goods and raw materials “point to fading potential output,” increasing the possibility that Philippine economic growth could slow in the next few years.

“The drop in trade performance will constrain economic growth by curtailing domestic production and income-earning activities,” UA&P’s Mr. Terosa said. Many exporters will find smaller and limited world markets while import-dependent industries will encounter some supply bottlenecks.”

“As long as domestic and world markets remain listless, trade performance will continue to be sluggish until the first quarter of next year. Trade activities may start to pick up after that,” he added.

In a phone interview, Philippine Exporters Confederation, Inc. President Sergio R. Ortiz-Luis, Jr. said that while it would be difficult to reverse the decline in exports this year, the recent “established trend” of slower year-on-year declines would hopefully make it possible for export performance to even out by the end of the year.

Philippine trade year-on-year performance (July 2020)

PHILIPPINE international trade further contracted in July as trade activity remains subdued here and the rest of the world, the Philippine Statistics Authority (PSA) reported on Thursday. Read the full story.

Philippine trade year-on-year performance (July 2020)

Business group pushes for satellite access liberalization

By Marifi S. Jara, Mindanao Bureau Chief

THE BUSINESS sector is appealing to President Rodrigo R. Duterte to issue an order that will ease the licensing requirement on satellite access to speed up the delivery of internet services, especially outside major urban areas.

“We are pushing for the signing of a new executive order on satellite access liberalization to effect an immediate, expanded internet coverage and to improve productivity,” Philippine Chamber of Commerce and Industry (PCCI) President Benedicto V. Yujuico said on Thursday.

This means an internet service provider (ISP) can offer broadband connection using satellite technology without getting a congressional franchise.

“We are the only country in the world that requires a congressional franchise to establish a satellite broadband company. We are using outdated regulations that hinder the entry of more players in the broadband industry,” he said during the virtual opening of the Mindanao Business Conference 2020.

Mr. Yujuico said this would benefit areas outside urban centers where the rollout of telecommunication infrastructure is too costly for private companies. 

This change in telecommunication policy, he said, should be made part of the government’s infrastructure development program amid coronavirus disease 2019 (COVID-19) pandemic.

“Our geographical layout as an archipelagic country makes the internet even more crucial to our recovery,” he said.

Mr. Yujuico said many micro, small and medium enterprises (MSMEs), which make up 99.5% of business establishments in the country, were “caught unaware and have not been able to leverage on the internet economy and rising digitalization” prompted by the COVID-19 crisis due to limited internet access.

The Philippines ranked 66th out of 85 nations in the 2020 Digital Quality of Life Index released by information technology firm Surfshark Ltd.

Among Southeast Asian countries, the Philippines trailed Indonesia, Malaysia, Singapore, Thailand and Indonesia in terms of internet affordability and quality.

Under Republic Act 10929 or the Free Internet Access in Public Places Act, the Department of Information and Communications Technology can partner with the private sector to meet and the program’s targets.

Section 6 of the law allows existing ISPs to “acquire and utilize internet connectivity directly from satellites and other emerging technologies to ensure universal coverage, which when used to provide internet connectivity shall be considered value-added services.”

Mr. Yujuico said an expanded opening of satellite access is one infrastructure intervention that the government can do to help ensure business survival and continuity.

“As with agriculture, infrastructure has multiplier effects and economic benefits that are higher than any fiscal intervention.”

Presidential Spokesperson Harry L. Roque, Jr., told an online news briefing on Thursday the PCCI’s proposal requires a comprehensive study.   

“That needs a comprehensive study because as we know, the use of these resources are subject to the grant of a franchise issued by Congress,” he said in mixed English and Filipino.

He added that an executive order could infringe on the powers of Congress. — with inputs from Gillian M. Cortez

Mindanao businesses want gov’t to resume infrastructure projects

THE Mindanao business community wants the government to restart its infrastructure projects in the region as the economy reopens.

Mindanao is transitioning to fewer lockdown restrictions, with 75% of industrial and commercial businesses reopened, the Philippine Chamber of Commerce and Industry (PCCI) said at the 29th Mindanao Business Conference on Thursday.

In its recommendations, the business group urged the government to resume infrastructure projects such as the Marawi rehabilitation shelters,  Mindanao-Visayas interconnection, Mindanao Railway, Panguil Bay bridge, rehabilitation of hydropower complexes, and airport expansion.

The PCCI also asked the Finance department to prioritize funding for road infrastructure development programs to “efficiently transport raw materials from agricultural areas to main processing or manufacturing centers.”

At the same event, Finance Secretary Carlos G. Dominguez III said the government continues to prioritize infrastructure projects in Mindanao.

“Mindanao is at the front and center of the ‘Build, Build, Build’ infrastructure program. The DoF has been able to secure financing for some infrastructure and peace-building projects in the region even amidst the pandemic,” he said in a speech during the conference.

He said the government signed the P18.5-billion loan agreement with the Japanese government in June to finance the Davao City bypass construction project, and a P1.4-billion grant from the European Union for development and peace-building programs in Mindanao.

“These projects also demonstrate the Duterte administration’s commitment to move Mindanao from the margins, and transform it into the center of agriculture and industry,” Mr. Dominguez added.

Meanwhile, PCCI Mindanao also sought faster telecommunication cell tower approvals, and to allow private telcos to secure access to existing tower facilities to improve internet bandwidth.

The business group said the interagency task force on the coronavirus should include regional private sector groups in its discussions of lockdown guidelines.

PCCI Mindanao also asked the government to boost healthcare capacity by establishing more COVID-19 testing labs, and to use digital technologies for contact tracing.

The group also said the Board of Investments and local governments should offer incentives to companies investing in the healthcare sector.

PCCI Mindanao said the Trade department should help assist and financially support local chambers in helping prepare micro-, small- and medium-sized enterprises (MSME) in applying for government loans.

State banks should also restructure loan terms and maturity dates for microfinance institutions to reopen credit assistance to microenterprises in retail or services sectors, they said.

PCCI Mindanao said microenterprises capitalized below P3 million should be exempted from income tax and minimum wage adjustments.

The Trade, Science and Technology and Labor departments should also immediately roll out their retraining programs for MSME workers in sectors considered nonessential, they said. — Jenina P. Ibañez and Beatrice M. Laforga

Pepsi-Cola to delist from local bourse

By Denise A. Valdez, Senior Reporter

PEPSI-COLA Products Philippines, Inc. (Pepsi-Cola Philippines) will be exiting the Philippine Stock Exchange (PSE) after its public ownership dropped below the minimum requirement.

The company told the exchange on Thursday its board of directors had approved the voluntary delisting of shares from the PSE main board due its inability to comply with the 10% minimum public float after a Korean conglomerate bought its shares in June.

Pepsi-Cola Philippines sold a 30.7% stake or 1,132,950,431 shares to Lotte Chilsung Beverage Co. Ltd. for P2.21 billion, which brought down its public float to 2.1%. Breaking the PSE’s 10% threshold for minimum public ownership is a ground for delisting.

“After due evaluation and study of the options available to the company, the board of directors approved and authorized the voluntary delisting of the company’s shares from the PSE,” the company said.

“Considering the level of its public ownership and the prevailing market conditions, it will not be able to comply with the minimum public ownership requirement by Dec. 18, 2020,” it added.

Lotte Chilsung will be doing another tender offer to buy 77,858,236 Pepsi-Cola Philippines shares owned by the public, excluding those currently held by Lotte Corp. and Quaker Global Investments B.V.

The new tender offer will be on Sep. 16. Lotte Chilsung is yet to file its tender offer report with regulators that would contain the conditions for the planned offer.

While the delisting of Pepsi-Cola Philippines may have minimal effect on market movement, some investors may dislike the company’s decision, and lose confidence in the bourse, Philstocks Financial, Inc. Research Associate Claire T. Alviar said.

“Long term investors of Pepsi could be disappointed by the decision of the management since it will be hard for them to liquidate, particularly if they choose not to participate in the anticipated tender offer,” she said in a text message.

“Some people may also lose confidence as the IPO (initial public offering) price of [Pepsi] back then was at P3.50, lower than its current price of P1.70, and there’s a possibility that the tender offer price would also be lower than the IPO price,” she added.

Shares in Pepsi-Cola Philippines stopped trading on June 17, when it closed at P1.70 apiece. Despite its delisting from the PSE, it will remain the exclusive bottler of PepsiCo’s beverage brands Pepsi, Mountain Dew, 7-Up, Mirinda, Mug, Gatorade, Tropicana, Sting and Aquafina in the Philippines.

Ayalas’ AC Energy pulls out of Australian firm Infigen

AN affiliate of Ayala Corp. sold its material stake in an Australian energy firm, which might be delisted from the stock market soon.

UAC Energy Holdings, a 75%-owned company of the Ayalas’ power arm AC Energy, Inc., divested its 20% shareholdings in Infigen Energy, Ltd. for A$0.92 per share to former rival bidder Iberdrola, S.A., the local conglomerate told the Philippine Stock Exchange, Thursday.

“With the potential delisting of Infigen, AC Energy has decided to divest its stake in the company. We wish Iberdrola well on its successful acquisition of the platform,” AC Energy International Chief Operating Officer Patrice R. Clausse said in a statement.

To recall, UAC Energy tried to fully acquire Infigen but later conceded to the Spanish multinational utility. Its old shareholdings were bought for an average price of A$0.794 per share. It previously said that its “offer was not predicated on control.”

UAC Energy’s investment in the Australian company was valued at A$178 million, or about US$128 million, if pegged against Iberdrola’s bid price.

Iberdrola is one of the biggest energy players in the world, having over 55 gigawatts of installed capacity in Spain, the United Kingdom, South America, and the United States. It powers around 34 million consumers worldwide. Presently, it owns three quarters of Infigen’s shares, while it is still accepting more until Sept. 23.

Both Iberdrola and UAC Energy pounced on Infigen, which has a portfolio of renewable projects with 670 megawatts (MW) of capacity, after its share prices dropped with the fall in power prices in the country.

Despite withdrawing investments from Infigen, AC Energy said the joint venture firm will continue to invest in the country with its renewable projects in the pipeline located in four Australian states.

“AC Energy remain[s] committed to invest in Australia as it moves to ramping up construction of its 720 MW New England solar farm in the coming months,” Mr. Clausse said.

It is also developing a 250-MW hydropower plant and 300-MW solar farm in South Australia; a 160-MW solar facility in Victoria; and 1,200-MW renewable energy parks in northwest Tasmania.

UPC\AC Renewables Australia, AC Energy’s joint venture with Hong Kong-based UPC Renewables Group, holds the remaining quarter interest in UAC Energy.

In the first half of 2020, AC Energy commenced the construction of some 700 MW clean power projects in the Philippines, Vietnam, India, and Australia which have a combined cost of A$1.23 billion.

On Thursday, shares in Ayala Corp. fell by 2.23% to close at P700 each. — Adam J. Ang

Mulan, once a sure thing, becomes a problem for Disney

IT WAS supposed to be another $1 billion blockbuster for Walt Disney Co. — a live-action remake of a 1998 animated hit featuring an all-star Asian cast, breathtaking cinematography, and plenty of martial arts.

Instead, the new Mulan is proving to be a political hot potato, reflecting the US’s fraying ties with China, and the choices companies face when operating in the highly politicized, but lucrative environment that is modern-day China.

The $200 million film, which was made available for purchase online in the US and Europe last week and is set to open in China on Friday, has seen a string of controversies — all while the coronavirus knocked out its chances of getting a successful run in theaters.

An online boycott that began last year, when one of the stars spoke supportively of the crackdown on anti-China protesters in Hong Kong, has continued. Now, Disney is facing heat for filming in a part of China where the government has detained as many as 1 million ethnic Uighurs in camps called “voluntary education centers,” and then thanking that region’s authorities in the movie’s credits.

Disney is the latest US business to be embroiled in a political controversy involving China. Last year, the National Basketball Association (NBA) was plunged into turmoil after a team manager tweeted in support of the Hong Kong demonstrators, triggering a backlash and a blackout of games in China. DreamWorks Animation’s movie Abominable stirred up a storm in Asia after the film featured a map reflecting China’s maritime claims disputed by its neighbors.

‘ADDICTED TO CHINA’
Senator Tom Cotton, a Republican from Arkansas, slammed Disney on Twitter Tuesday, saying the entertainment giant is “addicted to Chinese cash and will do just about anything to please the Communist Party.” Another Republican senator, Josh Hawley of Missouri, sent Disney Chief Executive Officer Bob Chapek a letter Wednesday with nine questions, including whether the company would donate any Mulan profits to “organizations dedicated to fighting human trafficking and the other atrocities” in China.

Disney has a lot at stake in the country. The company spent $5.5 billion developing its Shanghai Disneyland resort and has been expanding its smaller park in Hong Kong. The movie market there is also on track to become the world’s largest. But with both Republicans and Democrats focusing on China trade and cultural issues in the run-up to the presidential election, the company could continue to find itself in the political crossfire.

“I wouldn’t be surprised if they’re called before Congress,” said Stanley Rosen, a political-science professor and specialist on China at the University of Southern California.

HIGH HOPES
It certainly didn’t begin this way when Disney started work on the film more than five years ago.

The company sought to address cultural and social concerns about the earlier picture, which featured Donny Osmond and Harvey Fierstein voicing Asian characters. For the new picture, they were replaced with a largely Chinese or Chinese-American cast, including Yifei Liu as the heroine who dresses as a male soldier to save her father, and Jet Li, as her emperor.

Disney chose a female director, New Zealander Niki Caro, because “she has a long tradition of going into very specific communities and telling a story,” said Mulan producer Jason Reed. He pointed to films she had done, such as North Country, about Minnesota iron miners, and McFarland, USA, about a Latino track team in California.

Mulan, which is based on a centuries-old Chinese folk song, incorporates traditional Chinese architecture, costumes and spirituality.

“We spent a great deal of time with scholars, consultants and various creative people really listening to how they look at the world,” Reed said.

CONTROVERSIAL COMMENTS
Then Liu, the film’s star, voiced her support for the mainland Chinese government during Hong Kong pro-democracy protests last year. A #BoycottMulan movement began trending on Twitter.

After the film’s release last Friday, others began to notice that the credits included thanks to local authorities in Xinjiang for letting the company film there. The region is where members of China’s Muslim minority are being held in camps as part of a crackdown that followed a series of Uighur attacks on civilians in 2013, including a flaming car attack in the heart of Beijing: Tiananmen Square.

In 2014, Chinese President Xi Jinping vowed to employ a “strike-first” strategy in Xinjiang. Officials in the region then set up a vast security state along with mass internment camps, which United Nations experts said in 2018 could hold as many as one million Uighurs.

International criticism has been building over the camps for several years, with the US sanctioning officials from the region and European governments condemning the repression of Uighurs. China has sought to defend them by calling them “education” camps that Uighurs attend voluntarily, even though a visit to one last year showed dormitories featuring bars on the windows and doors that only lock from the outside.

Representatives for Disney did not respond to requests for comment.

MARKETING MUSCLE
The financial impact of the controversies on Mulan remains to be seen. The movie already faced a steep climb to profitability because so many theaters were closed by the coronavirus and Disney took the unusual step of releasing it online for $30 on its Disney+ streaming service.

The company also spent tens of millions of dollars marketing Mulan, over and above its production budget. Given the state of the movie-theater business, it will be tough to make back its investment.

Disney hasn’t released numbers on online purchases of the film, although data from third parties suggest there was a lot of interest. Box-office results from China, currently the world’s second-largest movie market, won’t be available until the weekend. Some, like USC’s Rosen, think it will do well there. Chinese theaters have come roaring back from the COVID-19 shutdown since reopening in July, and the film’s stars are popular.

‘SPREADING HATRED’
Meanwhile in China, while many eagerly await the release of Mulan, some users of Weibo, the country’s largest social media platform, touched upon the Xinjiang controversy in their posts and voiced support for the movie.

“The western anti-Chinese forces, Hong Kong and Taiwan independence forces and others are spreading hatred against China’s soft power using Xinjiang,” said one user. Another said, “I seriously don’t understand.”

Rich Gelfond, chief executive officer of Imax Corp., which has a big presence in China, predicts no backlash against US pictures there — even with the trade war and other issues between the countries. The Warner Bros. sci-fi thriller Tenet took in $30 million in China last weekend, the biggest opening for a Christopher Nolan-directed film in the country.

The bigger problems for Mulan could be ones that studios are more accustomed to: piracy, for example, because the movie is already available online. The reviews have also been less than unanimous — 76% of critics and 54% of the audience gave it a thumbs up, according to Rotten Tomatoes.

But the woes for US companies doing business in China aren’t close to being over, said Michael Berry, who teaches Chinese culture at the University of California, Los Angeles.

“Part of this feels like a political pile-on,” he said. “Companies like Disney are faced with difficult decisions when it comes to balancing where they stand with core principles like human rights and access to global markets.” — Bloomberg

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