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SEC to follow phased timeline for sustainability reporting

PHILIPPINE STAR/RYAN BALDEMOR

THE SECURITIES and Exchange Commission (SEC) will gradually enforce revised sustainability reporting among publicly listed companies, the guidelines for which will be released this year, according to the corporate regulator.

“The implementation of the new guidelines will follow a phased timeline, with compliance requirements staggered across tiers of publicly listed companies to ensure a smooth transition,” it said in a notice posted on its website.

The SEC said 2024 sustainability reports due this year could still use the rules issued in 2019. Under the rules, listed companies must submit sustainability reports via a “comply or explain” approach that allows them to disclose corporate sustainability data when available, and provide explanations for items where there are none.

Since requiring listed companies to submit sustainability reports in 2019, the SEC said it has recorded a consistently high compliance rate, reaching 96% in 2023.

In October last year, the commission said the draft memorandum circular containing the revised reporting guidelines would require listed companies to submit reports in the sustainability reporting narrative and sustainability report form formats.

The corporate regulator also said it would create a web-based app to manage the sustainability reports.

The SEC will create the in partnership with climate data and analytics software firm Komunidad Global Services & Operations Philippines, Inc.

“The customized web application will streamline the data collection, verification, management, and analysis of sustainability data, improving the monitoring capabilities of the commission on sustainability reporting compliance of publicly listed companies,” the SEC said. — Revin Mikhael D. Ochave

LandBank, DBP capital issues post-Maharlika: Why the IMF is half-wrong and one year late

RA 11954 created the Maharlika Investment Corp. with its initial capital coming from the Land Bank of the Philippines (LBP, P50 billion) and the Development Bank of the Philippines (DBP, P25 billion). Contrary to the impression by the framers of the law that these equity contributions were just a portion of the loanable and investible funds of both state-owned banks, they are actually counted as deductions to capital (emphasis authors).

This fact was obvious to the Banko Sentral ng Pilipinas (BSP) and compliance and risk management professionals in the banking industry even before RA 11954 was signed into law. The negative impact on the capital ratios of the LBP and DBP were clearly discussed in this column of Oct. 23, 2023 (https://tinyurl.com/2bryoqyz).

More than one year later, now comes the IMF calling for the recapitalization of the LBP and DBP. (https://tinyurl.com/22xekz9d). This article shows that IMF statement apparently did not show any computation at the bank level, which lead to an erroneous statement with respect to LandBank.

This point is worth repeating, precisely because it was ignored or not appreciated by those giving advice to the lawmakers crafting RA 11954 — these equity contributions are counted as deductions to capital and not merely part of their loan or securities portfolio — following Basel 3 and the BSP rules provided in the Manual of Regulations for Banks (MORB).

The accompanying chart shows the impact on the LBP and DBP of the Maharlika investment to their Common Equity Tier 1 (CET1) and total Capital Adequacy Ratio (total CAR) numbers (Source: LBP & DBP Audited FS 2022, 2023).

LANDBANK CAPITAL RATIOS ABOVE REGULATORY MINIMUM
As the chart shows, the capital ratios of LandBank were still above the regulatory minimum immediately after it remitted its P50 billion equity contribution to Maharlika. Its regulatory minimum capital ratios ex-Maharlika were 10.20% CET1 and 10.73% Total CAR. This is an empirical matter that the IMF staff apparently did not review at the granular level before it issued its statement on the need to recapitalize LandBank so it could exit the regulatory relief.

This is the part that the IMF got wrong in its statement, based on numbers it apparently did not compute (or did not show such computations to support its statement). Put plainly, LandBank did not have to resort to any regulatory relief in meeting the minimum CET1 or total CAR.

LandBank quickly issued a press statement to note that the IMF statement on the need to recapitalize to meet regulatory minimum did not apply to it. That is indeed the case. On the other hand, this writer takes exception to the LandBank press release claiming that its capital ratio is healthy at 16%.

This is the wrong number on two counts:

1. The press release refers to the total CAR ratio, instead of the CET 1 ratio, which is the ratio to meet the regulatory minimum of 10%.

2. The number in the press release refers only to the total CAR (not CET1) before deducting the P50 billion equity investment in Maharlika. It should have shown the ratios after the Maharlika contribution.

As the chart accompanying this piece shows, based on numbers from the LBP audited financial statements, the correct ex-Maharlika numbers for CET 1 are: 10.2% for end-2023 and 12.23% end-2024. It clearly shows that LBP is above the regulatory minimum even after its Maharlika investment. There was absolutely no need for the LBP to be less than forthright or disingenuous and spin it to look better than it actually is. See the last two paragraphs below for the rationale.

SEVERE IMPACT ON DBP
During the year that it remitted its P25 billion contribution for Maharlika, DBP’s capital ratios went below the regulatory minimum of 10% (CET 1 at 7.4% and total CAR of 8.36%), using the 2022 audited financial statement (FS). These ratios in 2023 improved slightly to a CET 1 of 8.63% and a total CAR of 9.55% but remained below the regulatory minimum.

In remitting its P25 billion equity contribution to Maharlika, the DBP was complying with Section 6.2 of RA 11954, but at the same time it violated Article III Section 12 of the same law, which specifically states that its equity investment should not exceed 25% of its equity.

Similarly, the DBP was in violation of the General Banking Act (RA 8791) Section 24 which limits “equity investments in allied undertakings” to 25% of the bank’s equity. The same limits are contained in the corresponding provisions of the BSP’ MORB.

Complying with the General Banking Act means that with a total equity of P82 billion as of December 2023, the maximum amount that DBP was allowed by law to remit was only P20.5 billion (25% of P82 billion at the time of remittance).

Scenario: if the DBP earns another P6,755 in 2024 and its Risk weighted asset grows to 600,000, its CET 1 ratio would improve to 9.31%.

At this rate, CET1 will hit the minimum regulatory level of 10% by 2025 (assuming no additional regulatory deductions to qualifying capital).

To quantify the impact on the DBP of taking out P25 billion of its equity for Maharlika:

• They fell below the minimum regulatory capital, in violation of BSP’s MORB, the General Banking Act, and even the Maharlika Law (RA 11954) itself. By itself, this necessitated the need to recapitalize DBP, as called for by the IMF.

• The P25 billion in capital which was removed meant taking out P190 billion in lending capacity (on a leverage ratio of 7.5x – as computed in the DBP audited FS).

Instead of shrinking its loan book which it was forced to do, the DBP would have retained the lending capacity of P190 billion and would have earned incremental net interest income of P5.6 billion on a net interest margin (NIM) of 2.95% (actual for 2024), and improved its ROE to double digits. As a reference, the NIM of top unibanks is at least 4%. That is what economists call the “opportunity cost” of taking out money where it could have been deployed, into an entity where it cannot yet be deployed.

This the main reason why my October 2023 piece noted that the ideal scenario would have been a “capital call” scenario where the equity contribution is remitted only when the money is actually needed or when the projects to be funded are identified, and fully vetted.

As a result of the capital shortfall, especially for the DBP, there was news of a request for a regulatory relief from the minimum capital requirement and renewal of prior requests for dividend relief. This would temporarily suspend the declaration of dividends (at least 50% of the prior year’s net income) until the capital shortfall is addressed. Since any fresh capital infusion from the national government is out of the question, the capital build up can only be achieved through earnings.

HIDING IN PLAIN SIGHT, CURIOUS ACCOUNTING TREATMENT
Unknown to many, the equity investments of both the LBP and DBP in Maharlika are not recorded as equity as should be done according to International Financial Reporting Standards rules. Despite the money having actually been taken out of their balance sheets by the 4th quarter of 2023, the audited FS of both LBP and DBP do not show a reduction in their CET1 and total CAR ratios. Instead, the Maharlika equity is listed as Miscellaneous Assets, as a deposit for future subscriptions to shares of stock of the Maharlika Investment Corp. (MIC). The excuse: the corporate secretary of MIC has not yet issued the stock certificates for the said investments.

This begs the question: how long does it really take for the MIC corporate secretary to issue the stock certificates for equity investments it has already received? The annual FS audited by Commission on Audit is released at least six months after the calendar year, hence there was more than enough time (nine months) to issue the said stock certificates. Officials of both the LBP and DBP say that the COA has agreed to such accounting treatment. However, COA’s consent does not necessarily make such an accounting calisthenic correct, although they would expectedly assert it is just a “timing issue.” This writer doubts if reputable external auditors would agree to such an approach.

The “delay” in the issuance of MIC shares to LBP and DBP became a convenient excuse not to reflect the reduction in CET1 and CAR ratios in the annual reports. For a high-profile investment that hogged the headlines for most of 2023, this “classification” consigns it to an accounting whisper. So much for transparency, disclosure and good governance.

(Next: The Proposed Recapitalization of LBP and DBP via IPO — An analysis of the proposed amendments to their charters)

 

Alexander C. Escucha is the president of the Institute for Development and Econometric Analysis, Inc., and chairman of the UP Visayas Foundation, Inc. He is a fellow of the Foundation for Economic Freedom and a past president of the Philippine Economic Society. He is an international resource director of The Asian Banker (Singapore). Send feedback to alex.escucha@gmail.com.

Exclusive: Jetour du monde

T1 units on display just outside the Fuzhou Strait International Convention and Exhibition Center — PHOTO BY KAP MACEDA AGUILA

SUV specialist outlines aspirations at third global conference in China

HARD TO FATHOM that Jetour was once just an SUV model line of the considerable Chery Holding Group. Conceived almost exactly eight years ago and “upgraded to an independent brand” in 2021, it is positioned as a company of “equal footing” with the other brands under Chery. Today, the marque not only stands on its own but thrives in its home country and in many territories and markets around the world. As it obviously benefits from the history and girth of the conglomerate to which it belongs, Jetour is particularly honing what it considers to be its key products — SUVs, with keen attention to hybrid off-roaders (see interview below). The formula has apparently been successful to the tune of 1.4 million units sold over the course of 74 months since the brand’s launch, per Jetour’s reckoning. In 2023 alone, the company delivered 315,617 vehicles.

At its third annual (in as many years) global conference, Jetour brought close to 300 media practitioners, influencers, and owner representatives from all over the world to Fuzhou in China. The agenda was to flex its brand-specific manufacturing facility, reiterate and reinforce its image, as well as to show what’s in the pipeline — while underscoring that it is the “fastest-growing new Chinese SUV brand.”

This success is predicated on two “mature” product lines in “family travel” and off-road travel” SUVs, and Jetour is quick to point to commendations and recognitions in countries such as Saudi Arabia and Chile. The boxy, Defender-like T2 has been a global hit as well, and is said to be a domestic best-seller in China.

At the Fuzhou Strait International Convention and Exhibition Center, Jetour also rolled out a dizzying array of modifications and accessories that speak to the customization options of the T2. Capitalizing on its robust build, the imagination of designers ran even wilder because of the plug-in hybrid electric vehicle (PHEV) version or i-DM variant of the model.

Aside from the usual camping versions associated with rugged off-roaders, we saw a T2 (curiously called “Clear Serenity Through Deep Refinements”) that was decked with plush toys and featured mobile-game-inspired skin, a collab with the Discovery Channel complete with a cheetah depicted on its vinyl wrap and a tent on the roof, and, my favorite, “Coffee Mate” with a complete and well-appointed espresso bar in the rear.

A range of Jetour-branded apparel and merchandise was also available — serving to provide and promote excitement and loyalty while stoking the enthusiasm of owners, fans, and owners-to-be. Of course, this serves as a crucial, necessary image infrastructure.

The notion of “Travel+” has also been floated by the brand for a while now, and it promised to continue working on this, which embodies a “holistic” view of ownership, “aiming to better link owners worldwide, share travel experiences and tips, and create a truly global Travel+ owner community.” The brand added in an official statement, “Jetour will release its lifestyle brand and member benefits policies, offering a convenient and diversified travel experience via rich accessories collection and diversified member programs.”

The priority is “to become the world’s leading hybrid off-road brand” while elevating Jetour as the de facto off-road marque of China. As posited by Jetour Auto International President Ke Chuandeng, it should be what Jeep is to the United States, and Land Rover is to the United Kingdom.

Toward this aspiration, Jetour is very conscious about adhering to global yardsticks — particularly regional safety standards. It is touted to be a true global brand with eight research and development facilities all over the world, and boasts “top international suppliers” such as Bosch, Continental, Sony, Huawei, and DJI. Jetour also isn’t shy about the numbers it wants to realize by 2030: presence in 80 markets, 1,600 dealerships, and annual sales of 1.1 million units — with vehicles churned out by 19 overseas manufacturing facilities.

In the Philippines, we can expect the Jetour T1 — an “urban light off-road SUV” that is smaller than the T2 but shares its platform — to be launched within the year. Other models in various stages of development include the T0, T5, P5 (its pickup sibling), and T7 (which can “sail” on water for up to 40 minutes).

It’s clear that Jetour wants to continue impressing a global audience that is keen on seeing what toys the brand will bring to the table, and road, next.

Treasury bill, bond rates to track secondary market movements

BW FILE PHOTO

RATES of the Treasury bills (T-bills) and bonds (T-bonds) to be auctioned off this week may end mixed to track secondary market movements as the market continues to price in their inflation and monetary policy expectations.

The Bureau of the Treasury (BTr) will auction off P22 billion in T-bills on Monday, or P7 billion each in 91- and 182-day papers and P8 billion in 364-day papers.

On Tuesday, the government will offer P30 billion in reissued seven-year T-bonds with a remaining life of five years and six months.

T-bill rates could mirror the week-on-week declines seen at the secondary market as players continued to price in their inflation and rate-cut expectations for this year, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The Bangko Sentral ng Pilipinas (BSP) has cut benchmark borrowing costs by a total of 75 basis points (bps) since it began its easing cycle in August 2024.

BSP Governor Eli M. Remolona, Jr. last month said that while they remain in an easing cycle, 100 bps worth of cuts this year may be “too much” amid inflation concerns. He said the BSP is “neither more dovish nor less dovish” and is open to delivering another cut in their first policy meeting for 2025.

Meanwhile, the Fed began its own easing cycle in September 2024 with a 50-bp cut and followed it up with 25-bp reductions at each of its November and December meetings, bringing the fed funds rate to 4.25%-4.5%.

Fed Chair Jerome H. Powell has signaled cautiousness about future cuts due to stubbornly elevated inflation, with US central bank officials seeing just two 25-bp reductions this year, down from previous expectations of about four cuts.

Meanwhile, Mr. Ricafort said the reissued seven-year bonds to be auctioned off on Tuesday could fetch higher yields as December Philippine inflation may have picked up from the month prior.

The bonds could be “fairly received” and fetch rates ranging from 6.075%-6.125% as this week’s offer volume is higher compared to previous T-bond auctions, a trader added in an e-mail.

A BusinessWorld poll of 13 analysts yielded a median estimate of 2.7% for the December consumer price index, within the BSP’s 2.3%-3.1% forecast for the month.

This would be faster than the 2.5% in November and mark a third straight month of acceleration. However, this would be slower than 3.9% in December 2023.

The Philippine Statistics Authority will release December and full-year 2024 inflation data on Jan. 7 (Tuesday).

At the secondary market, yields on the 91-, 182-, and 364-day T-bills went down by 6.54 bps, 7.8 bps, and 12.85 bps week on week to end at 5.8286%, 5.9730%, and 6.0491%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data as of Jan. 3 published on the Philippine Dealing System’s website.

Meanwhile, the seven-year bond’s yield inched up by 0.21 bp week on week to 6.1418%, while the five-year paper, the tenor closest to the remaining life of the T-bonds to be offered this week, saw its rate rise by 1.32 bps to 6.1116%.

On Dec. 16, the BTr raised P15 billion as planned from its last T-bill offering for 2024 as total bids reached P46.74 billion, more than three times as much as the amount on offer.

Meanwhile, the reissued seven-year bonds to be auctioned off on Tuesday were last offered on March 26, 2024, where the government P30 billion as planned at an average rate of 6.237%, lower than the 6.375% coupon.

The BTr plans to raise P213 billion from the domestic market this month, or P88 billion via T-bills and P125 billion through T-bonds.

The government borrows to help fund its budget deficit, which is capped at P1.54 trillion or 5.3% of gross domestic product this year. — A.M.C. Sy

China approves more genetically modified crops to boost yields, ensure food security

REUTERS

BEIJING — China has approved five gene-edited crop varieties and 12 types of genetically modified (GM) soybean, corn and cotton, expanding approvals to boost high-yield crops, reduce import reliance, and ensure food security.

The Ministry of Agriculture and Rural Affairs awarded safety certificates to the 17 crop varieties, according to a document on its website.

The approved gene-edited crops include two soybean varieties, and one each of wheat, corn, and rice.

The approved varieties include seeds from Beijing-based feed group Dabeinong and China National Seed Group, a subsidiary of seeds and pesticides maker Syngenta Group.

Unlike genetic modification, which involves inserting foreign genes into a plant, gene editing alters existing genes to enhance or improve the plant’s traits. Some scientists view gene editing as less risky than genetic modification.

China has also authorized the import of an insect-resistant and herbicide-tolerant GM soybean variety from the German chemicals firm BASF exclusively as a processing material, the ministry added.

Over the past year, China has increased approvals for higher-yielding GM corn and soybean seeds to raise domestic production and reduce grain imports.

China mostly imports GM crops such as corn and soybeans for animal feed, while cultivating non-GM varieties for food consumption. Many Chinese consumers remain concerned about the safety of GM food crops.

The safety certificates for the newly approved varieties are valid for five years, starting from Dec. 25, according to the ministry document. — Reuters

Celebrating Filipiniana

Barong-bomber jacket designer Jor-el Espina opens atelier

DESIGNER Jor-el Espina is celebrating his 20th anniversary in fashion in 2025, and he’s doing it in style.

In the last month of 2024, he opened his new atelier on the 7th floor of One Corporate Plaza building in Makati.

Prior to the opening last month, Mr. Espina told BusinessWorld that he used to conduct business from his condominium, while his clothes were sold in pop-ups in SM Aura and SM Mall of Asia, as well as the artisanal fair circuit during the “-ber” months. He’s already planning another pop-up in Rockwell for 2025.

“I really wanted an industrial-themed atelier that can be transformed into anything,” he said during the atelier’s opening last month. “I love to entertain also.”

Mr. Espina is best known for his viral barong-bomber jacket hybrids, which brought him to mainstream fame in 2017. His client list is as diverse as that design’s sources, with figures in both showbiz and politics. We expected to see a line of these bomber jackets during the opening, but instead wedding gowns and more formal dresses were prominently displayed at the atelier.

There was a long white shift in piña, hemmed with lace, while a similar sheath was completely overlaid with lace and strewn with seed pearls. Another gown had a tiered skirt, with the tiers made of lace outlined in seed pearls, which stood next to a relatively casual summer dress made of ribbons woven together like a banig (a native woven mat). Most striking of all because (or despite) its simplicity was a gown with a tiered skirt made with unbleached piña, with no embellishments.

He has been doing bridal gowns for quite some time, but it’s always been his little secret. “The inspiration of my ready-to-wear are still from the gowns that I made,” he said. “I’m still doing it — secretly.”

Mr. Espina talked about some of the difficulties in working with Filipino textiles, but how they’re all worth it in the end. What seem to be deficiencies and gaps in the manufacturing process are instead seen as chances for innovation. For example, “The length is (of a fabric is) short, or sometimes it shrinks when you wash it. But it has to be celebrated… it needs to be there.”

Mr. Espina is part of a cohort that made Filipiniana outfits cool and casual in 2010s, a trend which we’re happy to report is still going strong. “The awareness of the market is wide already,” he said. “Filipiniana is not just there to be framed. It’s meant to be seen, and to be worn.” — Joseph L. Garcia

Jor-El Espina Atelier Manila is located at 703 One Corporate Plaza, Arnaiz Ave., Makati City. For appointments, contact 0931-127-2802. Store hours are from 10 a.m. to 8 p.m. For updates, follow @jorel_espinaph on Instagram.

Stock brokerages told to comply with reportorial rules

REUTERS

THE Philippine Stock Exchange, Inc. (PSE) has asked stock brokerages to submit their information sheets by Jan. 31 as part of the bourse’s reportorial requirements.

In a notice posted on its website, the PSE is also requiring brokerages to submit their stock market investor profile surveys for 2024 by the end of the month.

“The information you will be providing will be reflected in the official records of the exchange and will be used for reportorial requirements to the Securities and Exchange Commission (SEC),” it said. “Hence, your prompt submission of a complete and accurate trading participants’ information sheet is essential.”

Philippine stock market transactions are done through PSE-accredited stock brokerages. The local bourse has traditional and online stock brokerages.

In April last year, the SEC removed the minimum commission that stockbrokers may charge their customers to boost market activity.

Before this, the SEC issued a resolution in 1977 setting a broker’s commission rate of 1.5%, while PSE guidelines mandated a minimum commission of 0.05% to 0.25% of the value of a trade transaction.

The PSE is aiming for companies to raise P120 billion in capital including from six initial public offerings (IPO) this year.

Listed companies raised P82.37 billion in capital in 2024, 42% lower than a year earlier. The market also had three IPOs by OceanaGold (Philippines), Inc., Citicore Renewable Energy Corp. and NexGen Energy Corp.

On Friday, the benchmark PSE Index gained 0.81% or 53.42 points to 6,603.81, while the broader all-share index improved 0.8% or 30.38 points to 3,785.48. — Revin Mikhael D. Ochave

Stealing our dignity

PEXELS/BW FILE PHOTO

As taxpayers, we have the right to know where our money is being spent. And in 2025, the government will spend a lot of it: P6.326 trillion. So let us call a spade a spade: the recently signed budget is a license to steal our dignity as Filipinos.

This is a pork barrel scandal worth hundreds of billions of pesos, many times larger than the one involved in the Supreme Court case where the practice was declared illegal. Former Senate President Franklin Drilon estimates the amount of pork barrel to be at P731.4 billion for both fiscal years 2024 and 2025, “a massive amount that has largely remained unchecked,” a level he has not seen in his 24 years as a legislator.

How did it get to this point?

Here are five problems with the 2025 budget.

Problem No. 1. Congress inserted billions of pesos in secret pork barrel projects during the bicameral conference committee.

This budget cycle goes through four phases: preparation, legislation, execution, and accountability.

During budget preparation, the President proposes his budget to Congress, based on recommendations from his cabinet members and staff. The result is the President’s budget proposal, called the National Expenditure Program.

During budget legislation, members of the House and the Senate discuss the President’s proposed budget during their respective sessions, with each chamber passing their own version of the budget. Since the Philippine Congress is bicameral, the versions of bills passed by each would normally have differences. To reconcile their versions, a select few senators and members of the House meet in a Bicameral Conference Committee, or simply, the bicam. The approved version of the bicam would then be read in each chamber for their respective approval.

Once approved by each chamber, Congress then submits this reconciled version of the budget bill to the President for his signature. Once signed, this General Appropriations Bill becomes a law, and will be now called the General Appropriations Act. Before he signs the budget, the President has the power to veto, or remove, specific items.

During budget execution and accountability, National Government agencies implement the projects based on the budget law.

In the whole budget process, the least transparent part is the bicam. Congress took advantage of the secrecy of the bicam to maximize their pork barrel in the 2025 budget.

The bicam is a closed-door session. No one outside Congress and their select staff can join these meetings. There is no public record of which lawmakers inserted or deleted provisions. All that citizens have access to is a document summarizing the changes between the reconciled version.

The most egregious insertion is the massive increase of P289 billion in the Department of Public Works and Highways (DPWH) budget.

This list of congressional insertions in DPWH was kept secret during the bicam until the President signed the budget. We still do not know the full list of projects covered by the said P289 billion.

If previous years are an indication, however, these DPWH insertions may consist of more flood control, road construction, road widening, and many other projects without proper studies.

So while it is good that the President vetoed P26 billion of the net P289 billion in DPWH projects that Congress inserted during the bicam, this still leaves behind P263 billion in DPWH projects that Congress inserted.

A simple question we can ask: given the recent flooding from the typhoons in Bicol, and terrible road conditions for provincial travel, can we really feel the impact of hundreds of billions of pesos of our taxpayer money invested in public works?

Meanwhile, budgets for key priority public transport projects, such as service contracting for buses and jeepneys and the provision of protected bike lanes, have either been slashed or removed altogether.

Baguio City Mayor Benjamin Magalong says up to 70% of contract amounts spent in public works go to corruption, otherwise known as “SOP.”

Problem No. 2. They want us to beg them for medical assistance when we’re sick.

Congress zeroed out the Philippine Health Insurance Corp. (PhilHealth) subsidy this year even if we’re so far from having expanded benefits packages that achieve universal healthcare.

And because PhilHealth is far from sufficient to cover our medical expenses, they want us to keep begging them for guarantee letters when we’re sick, under the Medical Assistance to Indigent and Financially Incapacitated Patients (MAIFIP).

Guarantee letters are endorsement letters from politicians that citizens need to present to hospitals to pay for part of their bills. There would be no need for guarantee letters if universal healthcare is achieved and PhilHealth is adequately funded and run.

But instead of increasing PhilHealth’s subsidy so it could, in turn, expand the benefits towards achieving universal healthcare, politicians want us citizens to feel personally indebted to them using our own taxpayer’s money. Instead of improving the healthcare system as a whole and patients receiving our benefits automatically, Congress is handing out our own taxes on a “tingi” (piecemeal) basis so that recipients in exchange for votes and “utang na loob” or debts of gratitude.

Not to mention, the list of beneficiaries and even the amount of medical assistance are in practice approved by legislators, even though they are legally not allowed to.

Lastly, Congress also violated the sin tax law and the universal health care law, which were supposed to make the earmarking of a certain percentage of revenues to PhilHealth automatic every year. Healthcare advocates all over the country now chant, “PhilHealth namin, ‘wag nakawin” (Do not rob our PhilHealth).

Problem No. 3. They want us to beg them for ayuda (assistance) during an election year.

They want us to beg politicians for guarantee letters and for us to be included in their ayuda list for the AKAP (Ayuda sa Kapos ang Kita Program) or the ayuda program implemented by the Department of Social Welfare and Development (DSWD).

Many see politicians’ faces plastered at the covered courts during “payouts” for AKAP, and even cash-for-work programs like the Department of Labor and Employment’s TUPAD (Tulong Panghanapbuhay sa Ating Disadvantaged Workers) program. According to many budget watchers, programs like these will be used to buy votes this coming midterm elections.

Meanwhile, they cut the Pantawid Pamilyang Pilipino Program (4Ps) by P50 billion, even if there is a lot of research that this conditional cash transfer program works for poverty alleviation, health, and education. The 4Ps notably also has more objective and proven criteria for beneficiary selection.

I support Professor Cielo Magno’s call to open up the beneficiary list of AKAP and amounts per barangay, similar to the release of the Social Amelioration Program list during the COVID-19 pandemic. This is possible, given that we got a National Privacy Commission ruling a few years ago stating that it is allowable, under the provisions of the Data Privacy Act, to release the names of beneficiaries per barangay and the amounts they received from the government.

Problem No. 4: Despite our learning crisis, they prioritized pork over education.

Some of the P26 billion that the President vetoed might be reallocated to education if Congress passes a special law next year doing so. Much has been said about the net P12 billion removed from the Department of Education (DepEd) budget, its computerization program, and basic education facilities, and further cuts to the budgets of TESDA and CHED (the Technical Education and Skills Development Authority and Commission on Higher Education) — amid our learning crisis.

Still, education is not given the “highest budgetary priority” as the Constitution requires, contrary to what the government said in their statements. They just made up another formula, arbitrarily adding and subtracting agencies and line items, to maximize the DPWH budget while making it appear smaller than education and therefore “constitutional.”

Problem No. 5. They bloated unprogrammed appropriations to maximize pork, and to rationalize sweeping the cash of and weakening government corporations.

Unprogrammed appropriations are budget items that require revenue collections that exceed targets before they can be implemented. This has grown to several hundreds of billions of pesos the past three years under this administration. This is where they place the projects which they deem are of a lower priority. The reality is that projects under unprogrammed appropriations get delayed or are not actually implemented. Tragically, many projects under the Philippine Development Plan have been moved to the unprogrammed appropriations.

While the President vetoed more than P100 billion in projects from unprogrammed appropriations, this has no effect on the total amount that can be reallocated next year. The President needed to veto from the programmed part of the budget and within the government’s target revenues and borrowings.

So why place unprogrammed appropriations at all? To maximize pork. Unprogrammed appropriations are being used to rationalize stripping away cash from important government corporations and financial institutions to maximize space for pork in the programmed part of the budget. Even with the President’s veto, the unprogrammed appropriations still run up to hundreds of billions of pesos.

On a related note, the International Monetary Fund has already issued warnings about the capital of DBP (Development Bank of the Philippines) and LANDBANK, given the cash that was swept away from them for the Maharlika Investment Fund. Several analysts have also warned about the sweep they are doing with the Philippine Deposit Insurance Corp. (PDIC), that may affect the confidence of depositors that the PDIC can actually cover our deposits.

Where to go from here will be the subject of another essay.

 

Kenneth Isaiah Ibasco Abante coordinates the Citizens’ Budget Tracker, a community of volunteers that has been tracking the budget since the COVID-19 pandemic. He served in various leadership roles in the Department of Finance from 2012 to 2016, including chief-of-staff to senior officials and lead technical staff for national budget hearings.

Q&A: ‘We want to be known for our world-class hybrid off-roaders’

Jetour Auto International Vice-President Kevin Xu (right) talks to ‘Velocity’ Editor Kap Maceda Aguila in China. — PHOTO BY JOYCE REYES-AGUILA

Jetour Auto International Vice-President Kevin Xu talks growth and the near future

Interview by Kap Maceda Aguila

VELOCITY: We’ve been hearing about how Jetour wants to grow its market internationally, and that it’s one of the leading brands in China. What’s the percentage of sales coming from overseas versus domestic?

KEVIN XU: We now have a seven-year history, and our growth has been very fast. We started to develop international markets almost immediately. Right now, almost a third of our sales volume comes from our overseas market.

In April of 2023, we visited Wuhu where we saw Jetour vehicles rolling out of Chery production lines. Is that still the case?

We now have Jetour-dedicated plants in Fuzhou; in Kaifeng, Henan; Bekasi, West Java; Kaliningrad, Russia, and others.

How would you differentiate the market of the Jetour X series versus the T series? What demographic or customers are you looking at for the two of them?

For the Jetour product strategy, we have two categories. The X series are family SUVs, including the X70, X90, Dashing, and X50. The second category is comprised of the T series — off-road SUVs which include the T1, T2, and even the future T5 and T7 models.

The Philippine market today features many China-headquartered auto brands. How is Jetour being positioned to stand out versus the competition? What do you want the market to know about Jetour?

Yeah, yeah. I understand there are so many Chinese brands there now. For Jetour, we want to build up a reputation for having world-class hybrid off-road SUVs. That’s what we want to be known for.

China is high on new energy (or electrified) vehicles. It seems that Jetour is starting to push for the PHEV (plug-in hybrid electric vehicle) format, although we know you also have the Ice Cream battery electric vehicle. What’s the outlook like for the Philippines?

We will provide the products to meet customer requirements. I think our product strategy is always being driven by customer needs. So firstly, we think about off-road SUVs as our main area, followed by hybrid off-roaders. I understand also that the Philippine government still has the incentives like tax reduction for PHEVs. So you could say that we will adapt to customer requirements, followed by the governmental regulation.

Are you surprised that the T2 is the top seller in the in the Philippines? It used to be the Dashing, correct? And why do you think T2 is very popular among Filipinos?

Actually, we launched T2 in April (last) year, and we think it’s a very successful model because of the driving and handling performance and even its unique design — the boxy styling. Another unique feature is the higher ground clearance. I understand that few months ago, there was a heavy flood. The T2’s 220-millimeter ground clearance is a certainly a draw.

Last question: When can we see the T1 in the Philippines?

I believe it’s coming soon, but still I think we need to have the product strategy, step by step. We just launched X50 compact SUV at the Philippine International Motor Show, and hopefully we can introduce to you the T1. But we don’t want to rush for this model. Okay, I need the customers to digest the T2 and even X50. For the X70 Plus and the Dashing, we have some upgrades and modifications coming. So, I believe these models will bring a whole new experience to the customers.

I thought there was already a specific month, because I asked Mr. Ke (Jetour Auto International President) earlier during the press conference, and he said that we could expect it in 2025.

Yes, but I don’t want to provide a specific month because it’s still being confirmed.

Indian sugar output down 15.5% as cane yields fall

REUTERS

MUMBAI — Indian mills have produced 9.54 million metric tons of sugar since the season began on Oct. 1, down 15.5% year on year, an industry association said, as cane yields fell in the three biggest producing states.

Lower output in the world’s second-largest sugar producer could eliminate the possibility of India allowing exports during the season ending in September 2025, supporting global sugar prices.

Sugar production in the western state of Maharashtra fell 21.5% from a year earlier in the first three months of the season to 3 million tons, while output in neighboring Karnataka fell 18.1% to 2 million tons, the Indian Sugar and Bio-Energy Manufacturers Association (ISMA) said in a statement.

Production in the northern state of Uttar Pradesh fell 4.5% from a year earlier to 3.28 million tons, the ISMA said.

By the end of December, 493 sugar mills had started crushing operations, compared to 512 a year earlier, it said.

Maharashtra, Karnataka, and Uttar Pradesh account for more than 80% of the country’s total sugar production, with lower cane yields in these states prompting trade houses to reduce their output estimates for the 2024/25 season.

Cane yields in Maharashtra and Karnataka have fallen due to last year’s drought, while in Uttar Pradesh, red rot disease has reduced yields, said a senior industry official, who declined to be named.

“The production is lower than our expectations. Exports now look difficult in the current season,” the official said.

The sugar industry seeks 2 million tons of exports, while the government says it may allow limited exports, if any surplus remains after ethanol needs are met. — Reuters

Debt yields mixed amid weak activity

YIELDS on government securities (GS) traded in the secondary market were mostly mixed last week amid weak market activity following the holidays.

GS yields, which move opposite to prices, inched down by an average of 1.87 basis points (bps) week on week, according to the PHP Bloomberg Valuation Service Reference Rates as of Jan. 3 published on the Philippine Dealing System’s website.

Rates at the short end of the curve declined, with the 91-, 182-, and 364-day Treasury bills (T-bills) decreasing by 6.54 bps (to 5.8286%), 7.8 bps (5.9730%), and 12.85 bps (6.0491%) week on week, respectively.

Meanwhile, at the belly, yields rose across all tenors. The two-, three-, four-, five-, and seven-year Treasury bonds (T-bond) saw their rates increase by 2.04 bps (to 6.0657%), 2.26 bps (6.0755%), 1.77 bps (6.0925%), 1.32 bps (6.1116%), and 0.21 bp (6.1418%), respectively.

The long end saw mixed yield movements. The rates of the 20- and 25-year T-bonds inched up by 0.48 bp and 0.51 bp to 6.0928% and 6.0984%, respectively. Meanwhile, the 10-year T-bonds went down by 1.97 bps to fetch 6.1567%.

GS volume traded reached P31.34 billion on Friday, higher than the P29.61 billion recorded a week earlier.

“With no new data released and a shortened trading week locally, we saw relatively subdued activity from the local market. Today, local yields broadly declined, closing 3-7 basis points lower. This decline was driven by demand from offshore investors, providing a supportive tone to the market,” ATRAM Trust Corp. Vice-President and Head of Fixed Income Strategies Lodevico M. Ulpo, Jr. said in a Viber message on Friday.

“There was quite minimal movement in yields during the shortened trading week. However, the movement seemed to have reflected investor expectations on inflation and policy decisions by central banks this year,” a bond trader said.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said rates of shorter tenors mostly went down as the market expects Philippine headline inflation to remain low, which could support further Bangko Sentral ng Pilipinas (BSP) rate cuts this year.

While December inflation could have picked up from the November level, this likely remained within the BSP’s 2-4% target, Mr. Ricafort said.

A BusinessWorld poll of 13 analysts yielded a median estimate of 2.7% for the December consumer price index (CPI), within the BSP’s 2.3%-3.1% forecast for the month.

If realized, this would be faster than the 2.5% in November and mark the third straight month of acceleration. Still, this would be slower than the 3.9% recorded in the same month in 2023.

The Philippine Statistics Authority will release December and full-year 2024 inflation data on Jan. 7 (Tuesday).

For the full year, the BSP expects the CPI to average 3.2%.

The BSP’s policy-setting Monetary Board has slashed benchmark borrowing costs by a total of 75 bps since it began its rate-cutting cycle in August 2024.

BSP Governor Eli M. Remolona, Jr. last month said that while they remain in an easing cycle, 100 bps worth of cuts this year may be “too much” amid inflation concerns.

Still, Mr. Remolona said the BSP is “neither more dovish nor less dovish” and is open to delivering another cut in their first policy meeting this year. 

For this week, GS yields may continue to move sideways before the release of December inflation data, analysts said.

“Yields might move with an upward bias as the potentially stronger Philippine inflation and US labor reports might bolster views that the BSP and the US Federal Reserve could afford to pause with their rate-cutting cycles in their respective first policy meetings this year,” the bond trader said.

“Overall, yields may remain range-bound in the short term. We expect to see short-end rates likely to remain steady, while medium to long-tenor yields may rise in anticipation of increased bond supply… Should the CPI figure exceed market expectations, yields may still remain range-bound as any uptick in rates will be met with investors support, driven by persistent expectations of rate cuts throughout the year,” Mr. Ulpo said.

This week’s auction of reissued seven-year bonds could also affect yields as it would serve as a gauge of the market’s appetite for long-term papers, he added.

2025 OUTLOOK
For this year, the bond trader said GS yields may remain volatile as global central banks continue to adjust their monetary policy stance and as US President-elect Donald J. Trump assumes office.

“The local yield curve is expected to steepen further this year from the compounded effect of anticipated BSP rate cuts on short-term yields and growing inflationary concerns locally and globally, which could push long-term yields higher,” the bond trader said. “Market participants could experience more volatility in the bond market due to occasional market jitters from policy pronouncements by President Trump.”

Mr. Ulpo likewise said that policy guidance from the BSP could support short-end yields.

“On the contrary, concerns over bond supply and global rates volatility will continue to shape trading dynamics, keeping investors cautious particularly on duration,” he added.

The US Federal Reserve’s policy actions, which could be mirrored locally, could also affect GS yield movements this year, Mr. Ricafort said.

The Fed began its easing cycle in September 2024 with an outsized 50-bp cut and followed it up with 25-bp reductions at each of its November and December meetings, bringing the fed funds rate to 4.25%-4.5%.

Fed Chair Jerome H. Powell has signaled cautiousness about future cuts due to elevated inflation, with US central bank officials seeing just two 25-bp reductions this year. — Abigail Marie P. Yraola

Designer Rosita Missoni, pioneer of colored knitwear, 93

ROSITA MISSONI poses before the Missoni Spring/Summer 2018 show at the Milan Fashion Week in Milan, Italy, Sept. 23, 2017. — REUTERS FILE PHOTO

MILAN — Italian designer Rosita Missoni, co-founder of the eponymous fashion house known for its bright and patterned styles, has died at the age of 93, the family-owned company said on Thursday.

A Missoni statement said Rosita “passed away peacefully on January 1, 2025,” calling her “a visionary figure in the Italian and international fashion world.”

She had launched the business in 1953 with her husband Ottavio Missoni, developing a brand which became popular for its colorful knitwear featuring geometric patterns and stripes, including the signature zigzag motif known as fiammato.

Born into a family of textile artisans close to the northern Italian town of Varese, Rosita studied modern languages.

On a trip to London in 1948 to improve her English, she met Ottavio, who was competing with the Italian 400-meter hurdles team at the Olympics in the city.

The Missoni brand gained international recognition and awards for its distinctive patterns and avant-garde use of textiles and an approach to fashion often compared to modern art.

It was also helped by what was dubbed the “battle of the bras” in 1967.

Ms. Missoni had been invited to show at the Pitti Palace in Florence but before the models went out on the runways Rosita noticed that their bras were visible through their tops, ruining the intended color and pattern effect.

She told the models to remove their bras but, under the runway lighting, their outfits became totally transparent and the incident caused a sensation.

They were not invited to return the next year but Ms. Missoni was quickly on the covers of big-name fashion magazines such as Vogue, Elle, and Marie Claire.

Their layered designs caught the attention of a fashion world that was turning away from high fashion, and they became the standard bearer of the so-called “put together” style.

When the company moved its base to the Italian town of Sumirago, north of Milan, the Missonis set up home next door, with most of their windows overlooking Rosita’s beloved Monte Rosa mountains.

Rosita remained creative director for the womenswear collections until the late 1990s, when she passed the task on to her daughter Angela.

The couple suffered tragedy in 2013 when Vittorio Missoni, their eldest son and the company marketing director, was killed in a plane crash off the coast of Venezuela.

Ottavio died in May 2013 at the age of 92, four months after their son’s plane had gone missing but before the wreckage had been found.

The brand expanded into home collections and hotels. In 2018, Italian investment fund FSI invested €70 million in the company in exchange for a 41% stake.

Ms. Missoni picked Rothschild in 2023 as financial adviser to explore a potential sale of the company. — Reuters

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