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Tourism contribution to national output in 2019 biggest since at least 2000

By Lourdes O. Pilar, Researcher

THE TOURISM industry’s contribution to the economy grew in 2019, Philippine Statistics Authority (PSA) data released on Friday showed.

Preliminary data from the PSA showed tourism’s direct gross value added (TDGVA) accounting for 12.7% of gross domestic product (GDP) in 2019, bigger than the revised 12.3% in 2018.

TDGVA measures the tourism-related value created by various industries. It is based on the results of the Philippine Tourism Satellite Accounts report, in which the PSA compiles from the Department of Tourism.

Last year, the combined economic contribution of tourism activities amounted to P2.48 trillion, up 10.8% from the previous year’s P2.24 trillion.

Last year’s TDGVA was the highest since 2000, based on available PSA data.

Accommodation services for visitors had a 20.9% share of gross value added, followed by country-specific tourism characteristics services and miscellaneous with 17.9% and 16.1%, respectively.

Domestic tourism expenditures, which covers spending of resident visitors within the country either as a domestic trip or part of an international trip, amounted to P3.14 trillion last year, 10.4% more than P2.85 trillion in 2018. Domestic tourism expenditures were equivalent to 22% of household spending in 2019, according to PSA.

Meanwhile, tourism expenditure by non-residents amounted to P548.76 billion in 2019, up 23.2% from P445.58 billion in 2018.

Compared to the country’s total exports, the share of inbound tourism expenditure was 9.9%.

Employment in tourism industries was estimated at 5.7 million in 2019 or 13.5% of the total working population. For that year, it was up 3.1% from a year earlier.

Farmgate price of palay climbs 0.5% in third week of May

THE AVERAGE farmgate price of palay or unmilled rice rose 0.5% week-on-week to P19.15 per kilogram in the third week of May, with prices increasing 5.3% year-on-year, according to the Philippine Statistics Authority (PSA).

In its weekly update on palay, rice and corn prices, the PSA said the wholesale price of well-milled rice (WMR) rose 0.5% to P39.43 per kilogram while the retail price rose 0.3% to P42.50.

The wholesale price of regular milled rice (RMR) rose 0.3% to P35.83 while the retail price rose 0.2% to P38.25.

The average farmgate price of yellow corn grain rose 1.2% to P12.63.

The wholesale price of yellow corn grain rose 0.2% to P19.17 while the retail price fell 0.6% to P23.36.

The average farmgate price of white corn grain fell 0.5% to P15.04 per kilogram.

The wholesale price of white corn grain fell 0.6% to P18.88 while the retail price fell 1.1% to P27.60. — R.M.D. Ochave

Generic medicine sales projected to outpace industry

SALES of generic medicine will outperform the overall pharmaceutical market’s growth as the country applies price controls on medicines, Fitch Solutions Country Risk and Industry Research said.

Price controls on 133 drug formulas took effect this month following an executive order signed by President Rodrigo R. Duterte in February.

Fitch Solutions said in a report on Friday that this poses a threat to multinational drugmakers and local distributors of medicines for cancer, diabetes and cardiovascular conditions, adding that pharmaceutical companies may withdraw existing products.

But the report said the market may benefit in the longer term as patients attracted to the lower-priced medicines could increase demand and attract more suppliers to the Philippine market.

“Over the longer term, with higher volume sales and greater competition in the market, these price controls could be positive for the market.”

Fitch Solutions said more focus on cost-containment measures could trigger more generic substitution.

“An increasing focus on cost-effective expenditure will further promote generic substitution rhetoric. As such, generic medicine sales growth will outperform overall market growth over the long term,” the report said.

The maximum retail prices were introduced to increase access to medicines, including those that address hypertension, cardiovascular disease, and cancer, with the Health department saying that current prices are inaccessible to poor Filipinos.

Trade Secretary Ramon M. Lopez in May said the pandemic warranted a review of drug price controls to study if adjustments can be made to address the pandemic.

The Pharmaceutical and Healthcare Association of the Philippines (PHAP) had opposed the executive order, saying the government stands to lose P28 billion in revenue from lost taxes.

The group had urged the government to explore other approaches including price negotiations and patient access programs. — Jenina P. Ibañez

Wirecard’s $2.1-billion hole deepens after forgery claim

Wirecard AG shares continued their free-fall after the two Asian banks that were supposed to be holding $2.1 billion of missing cash denied any business relationship with the German payments company.

BDO Unibank Inc., the Philippines’ largest bank by assets, and the Bank of the Philippine Islands said in separate statements on Friday that Wirecard isn’t a client.

“It was a rogue employee who falsified documents and forged the signatures of our officers,” BDO Unibank Chief Executive Officer Nestor Tan said in a mobile phone message. “Wirecard is not even a depositor — we have no relationship with them”.

The Bank of the Philippine Islands (BPI) said in a separate statement that Wirecard isn’t a client and it continues to investigate the issue.

Wirecard shares plunged 24% at 9:11 a.m. in Frankfurt on Friday, taking the stock’s losses to 71% since Wednesday’s close.

The denials from BDO and BPI follow a statement on Thursday from Wirecard, which claimed that auditor Ernst & Young (EY) couldn’t confirm the location of the missing cash that was supposed to be held in Asian banks and reported that “spurious balance confirmations” had been provided.

BDO has reported the Wirecard issue to Bangko Sentral ng Pilipinas, Mr. Tan said.

The crisis has engulfed Wirecard in recent days. The payments company suffered one of the worst stock slumps in the history of Germany’s benchmark index after warning that as much as 2 billion euros in loans could be called due if its audited annual report, delayed for the fourth time, was not published by June 19.

Wirecard spokespeople did not immediately return calls and emails for comment.

Wirecard Chief Executive Officer Markus Braun said the trustee involved is in “constant contact” with EY and the company has promised to clear up the issue quickly with two Asian banks.

The company temporarily suspended its outgoing Chief Operating Officer Jan Marsalek, it said in a statement late Thursday. Mr. Marsalek — who has been suspended on a revocable basis until June 30 — had tried to get in touch with the two Asian banks and trustees over the past two days to recover the missing money, but wasn’t successful, a person familiar with the matter said Thursday. It’s unclear if the funds can be recovered, the person added. — Bloomberg

JFC to raise $600 million from bond issue

By Denise A. Valdez

Jollibee Foods Corp. (JFC) is looking to raise $600 million with bonds, as it braces itself from the impact of the coronavirus disease 2019 (COVID-19) pandemic.

The fast food chain operator told the exchange Friday it has priced in a $300-million 5.5-year and a $300-million 10-year dual tranche guaranteed senior notes, which will be issued by its wholly-owned subsidiary Jollibee Worldwide Pte. Ltd.

The 5.5-year notes will have a coupon rate of 4.125%, while the 10-year notes will have a coupon rate of 4.750%. Both are payable semi-annually. They will be unrated and listed on the Singapore Exchange Securities Trading Ltd.

JFC said proceeds from the offering will be used for general corporate purposes, “intended as a precautionary measure from unforeseen eventualities that may be caused by the COVID-19 pandemic.” It will also fund other initiatives from the JFC Group.

Earlier this week, JFC announced it had tapped banks to arrange the planned offering. Citigroup, Goldman Sachs, J.P. Morgan, and Morgan Stanley were joint global coordinators, and Citigroup, Goldman Sachs, J.P. Morgan, Morgan Stanley, BPI Capital Corporation, Credit Suisse and UBS were joint lead managers and joint bookrunners.

JFC posted a net loss of P1.8 billion in the first quarter, a turnaround from its net profit of P1.46 billion the same period last year, due to temporary store closures as the country implemented lockdown measures to curb the spread of COVID-19.

As the lockdown that started in mid-March dragged on through May, losses in the second quarter are expected to be bigger. JFC earlier said financial performance for the whole year “will not be a good one.”

Despite the challenges, JFC said it has sufficient cash of P26.5 billion or $522.3 million as of end-March and enough liquidity to support operations and meet all obligations.

The company has so far reduced its capital expenditures by 63% to P5.2 billion this year. It has also set aside P7 billion for rationalization and re-design of its business structure.

JFC owns 5,945 stores across the world under brands such as Jollibee, Chowking, Greenwich, Red Ribbon, Mang Inasal, Burger King, PHO24, Yonghe King, Hong Zhuang Yuan, Dunkin’ Donuts, Highlands Coffee, Hard Rock Cafe, Smashburger and Coffee Bean and Tea Leaf.

Shares in JFC at the stock exchange increased 10 centavos or 0.07% to close at P150 each on Friday.

Ayala forms consortium to build coronavirus testing labs

The healthcare arm of Ayala Corp. (AC) is forming a consortium with five other companies to build coronavirus disease 2019 (COVID-19) testing laboratories in various Qualimed hospitals across the country.

In a statement Friday, Ayala Healthcare Holdings, Inc. (AC Health) said it signed a memorandum of agreement with the Aboitiz Foundation, ABS-CBN Corp., Alfonso Yuchengco Foundation, Gokongwei Brothers Foundation and Metrobank Foundation to build the biosafety modular laboratories.

These facilities aim to add 5,500 to the country’s capacity for confirmatory COVID-19 tests per day.

“Increasing the country’s confirmatory testing capacity is not easy. We are grateful to have been able to form a consortium of friends from the private sector who are just as committed to battling this pandemic,” AC Health Chairman Fernando Zobel de Ayala said in the statement.

Donations from the partner companies will be used for the construction of the facilities and the purchasing of equipment for the new laboratories.

Each laboratory will have one automated RNA (ribonucleic acid) extractor and two RT-PCR (reverse transcription-polymerase chain reaction) machines, which can perform 1,000 RT-PCR tests a day.

The facilities will be set up in Qualimed hospitals located in Sta. Rosa, Laguna; San Jose del Monte, Bulacan; Tanauan, Batangas; and Iloilo City, Iloilo.

Prior to forming the consortium for the four new laboratories, AC Health has partnered with the Tropical Disease Foundation in Makati, the University of Cebu Hospital in Mandaue City and the Southern Philippines Medical Center in Davao to develop their respective laboratory facilities.

AC Health said in a briefing in May it has set aside P300 million for COVID-19 relief efforts such as helping increase the country’s testing capacity and providing triaging facilities. — Denise A. Valdez

Cirtek profits surge in 1st quarter

Earnings of Cirtek Holdings Philippines Corp. surged to $1.27 million in the first quarter due to improved sales and better operating profit margins.

In a regulatory filing disclosed Friday, the electronics manufacturer said its attributable net income during the January-to-March period is 8,664% higher than last year’s $14,500.

Gross revenues went up 6% to $22.27 million due to the increase in orders for its antenna products. Contributions from Cirtek’s wholly-owned subsidiary Quintel USA, Inc. stood at $6.9 million, up 3% from the previous year.

Revenues from radio frequency/microwave/millimeter wave (RF/MW/mmW) and antenna manufacturing businesses rose 37% to $5.7 million, while revenues from the semiconductor business fell 4.5% to $9.7 million.

Gross profit jumped 68% to $6.3 million as cost of sales declined 8% to $15.97 million.

The increase in gross profit is attributed to reductions in costs, particularly in design improvement and price reductions to China contract manufacturers. Freight costs also fell due to the increased sea shipments and a reduction in air shipments.

The company’s gross margin improved by 10% to 28% for the three-month period.

Last month, Cirtek said it was exploring opportunities in China and Taiwan as part of diversifying its supply chain. The company’s manufacturing capacity is currently limited to 60% because of quarantine restrictions and safety protocols amid the coronavirus outbreak.

“As part of Cirtek’s business continuity and expansion plans, it is in talks with an additional contract manufacturing partner in China as well as qualifying a new Taiwan facility in response to supply chain diversification and business resiliency plans moving forward,” it said in a May 12 statement.

Cirtek is in the business of manufacturing technology products used in communications, consumer electronics, power devices, computing, automotive and industrial sectors. These are exported across Europe, United States and Asia.

Shares in Cirtek at the stock exchange gained 46 centavos or 5.48% to P8.86 each on Friday. — Denise A. Valdez

Golden Bria earnings hit P2.6B in 2019

Golden Bria Holdings, Inc. reported a record P2.6 billion profit in 2019 after showing strong sales of housing units and memorial lots.

The Villar-led deathcare and mass housing company said in a regulatory filing Friday last year’s net income was 64% up from the P1.56 billion profit recorded in 2018.

Total revenues grew 49% to P8.64 billion, backed by a 49% jump in real estate sales to P8.45 billion. Real estate sales account for 98% of the company’s total revenues.

Income from interest on contract receivables rose 14% to P110.5 million, while income from chapel services grew 15.6% to P41.9 million and internment income rose 18.3% to P38.9 million.

On the other hand, cost and expenses increased by 42% to P5.8 billion.

Golden Bria’s assets grew 50% to P27 billion, which it attributed to business expansion and an increase in inventories and contracts receivables.

Golden Bria Chairman Manuel B. Villar Jr. said that the company has aggressively expanded projects and sales networks.

“The company is also looking at widening the Golden Bria footprint across the country,” he said.

The company’s housing subsidiary Bria Homes Inc. is planning new projects in inner-city pocket developments in metropolitan areas. Golden Haven Memorial Parks, Inc. on the other hand is planning three new projects.

Bria Homes is present in more than 50 locations in the country.

Shares in Golden Bria added P8 or 7.14% to close at P300 apiece at the Philippine Stock Exchange on Friday. — J.P. Ibañez

Over P1.4-B in financial aid disbursed via PayMaya

Various government units and agencies have turned over more than P1.4 billion worth of financial aid to 120,000 beneficiaries through PayMaya Philippines, Inc.’s e-Wallet

The Department of Social Welfare and Development (DSWD) tapped PayMaya to distribute monetary aid for displaced workers under its Assistance to Individuals in Crisis Situations (AICS) program.

The Social Security System also partnered with PayMaya in sending funds to beneficiaries of its Small Business Wage Subsidy (SBWS) program.

PayMaya’s digital financial services are also being used by the city governments of Caloocan, Las Piñas, Manila, Mandaluyong, Pasig, and Quezon City in delivering cash aid to PayMaya accounts of senior citizens, persons with disabilities, solo parents, and scholars, among their constituents.

“To address the COVID-19 (coronavirus disease 2019) crisis, government agencies and LGUs (local government units) have adopted digital technologies such as PayMaya in providing crucial aid to their constituents,” PayMaya Founder and Chief Executive Officer Orlando B. Vea said in a statement.

“Having an e-Wallet is the fastest and easiest way for citizen beneficiaries to avail of critical services such as government aid, ensuring that no one is left behind,” Mr. Vea added.

Recently, PayMaya partnered with the Bureau of Customs, the Department of Foreign Affairs, and Valenzuela City to provide an online payments gateway for their services.

PayMaya is part of Voyager Innovations, Inc., whose portfolio includes PayMaya Enterprise for end-to-end merchant-acquiring solutions and Smart Padala, which has over 30,000 partner agent touchpoints nationwide.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — A.J. Ang

Pandemic offers telco challenger a boost in PHL rivalry

The pandemic is giving a Philippine telecommunication company an opportunity to grab market share from its well-entrenched rivals as vast swathes of the population remain stuck at home.

Converge ICT Solutions Inc., which specializes in fiber-optic broadband services, saw a record jump in subscriptions in May, Chief Executive Officer Dennis Anthony Uy said in an e-mail interview. New activations surged 150% from a year earlier to more than 50,000, driven by retail and corporate clients like call centers equipping their employees to work remotely, he said.

Converge is accelerating its expansion, and is recasting revenue, spending and subscriber growth forecasts to account for the uptick in demand, Mr. Uy said. PLDT Inc. and Globe Telecom Inc. are looking to scale back spending this year amid delays in their network rollout.

The coronavirus pandemic is reshaping the telecommunication landscape in a country with a young, technology-savvy population and an increasing amount of services moving online. The Philippines is home to the world’s heaviest Internet users despite having one of the slowest connection speeds, according to a Hootsuite report.

Converge, backed by a $225-million investment from Warburg Pincus, is betting that broadband penetration will double over the next five years from less than 15% of households today. From a fiber network that is limited to the island of Luzon and covers 2 million households, it plans to expand nationwide by 2021 and boost its international bandwidth.

“We see a long runway for Converge to continue to grow rapidly,” Warburg Pincus managing director Saurabh Agarwal said, adding that the company saw 75% average revenue growth over the last three years.

Asked about prospects for an initial public offering, Mr. Uy said the company will focus on rolling out its infrastructure nationwide in the immediate term. He also nixed the idea of a merger or acquisition. “At this point in time, we think we can reach our aspirations for scale through organic growth.” — Bloomberg

Huawei Ascends Technology in an Intelligent Era: Winning with an Ecosystem

AI technology takes a collective effort for its best outcome. Through the Ascend Partner Programme, Huawei is building an innovative, sustainable ecosystem to share success with partners. 

Artificial Intelligence (AI) is no longer just a catch phrase, but is slowly becoming a new type of general computing technology. Inevitable it is one of the key drivers of technological innovation and thus social and economic revolution. Huawei never stops investing in AI research and development of such capacities to support ground-breaking cooperation among 5G, cloud, edge, and devices, reshaping various industries, such as financial services, transportation, power supply, manufacturing and more.

Such technologies usually require collaboration to obtain fruitful results. For that, Huawei has been spending a whole lot of efforts in building an ecosystem which include academia, industries and relevant communities to AI development, which advances both technology and those sectors together. With an open approach, opening up hardware, making software open-source and pursuing shared success with our partners.

Collaboration is Fundamental of Technological Success

In fact, Huawei applies its Ascend series AI processors to run the Atlas AI Computing Platform, allowing all-scenario AI infrastructure solutions for device-edge-cloud set-ups.

Huawei Asia Pacific Partner Ascend Program would be one of the gateways for AI talents and companies to come to us, learn to adopt and then proliferate the use of Ascend AI products.

It will also be one of the channels where support will be given to R&D projects and to Institutes of higher learning for talent development.

Programmes Cover Wider Range of Aspects

The programme covers four key areas, namely AI development, support, knowledge transfer, and go-to-market, and strategic resources. The visionary goal which comes with three segments:

1. Independent Software Vendor (ISV) AI Collaboration Programme

Under this sub-programme, ISVs, innovators and entrepreneurs can access through the online portal. A three-tier partnership system categorise partners as “Members”, “Certified”, or “Preferred” with relevant benefits for each tier. Such benefits include NREs (Non-Recurring Engineering funding), cloud resource vouchers, knowledge transfers via Ascend AI Community, exam-vouchers for HCIA-AI (Huawei’s specialized AI Certification), Go-to-Market support as well as other strategic resources.

2. Institute of Higher Learning (IHL) AI Talent Cultivation Programme

Huawei will provide support according to the following three tiers, from ”Course Collaboration”, “Technology Innovation” to “Business Ventures”. It aims to help IHLs to build AI disciplines, cultivate AI talents, improve academic and scientific research in the AI field based on the Huawei full-stack Atlas AI technological capabilities.

“In the new AI era, a strategic partnership between National University of Singapore and Huawei in research and talent development will make great impact to society,” said Huang Zhiyong, Deputy Director of the university’s Business Analytics Centre.

3. Government AI Industry Development Programme

Huawei will provide technical support in enhancing the country’s AI innovation facilities using the Ascend technology. Huawei will also share experience in terms of industrial best practices and assist the government in various policy matters, including setting of the National AI Industrial Standards.

“Indonesia National AI strategy empowered by BPPT, is the most important milestone toward Innovation-driven nation, the golden vision of Indonesia 2045. It is inevitable, ubiquitous AI will drive our nation journey to achieve Sustainable Development Goals.” said Dr Ir. HammamRiza, M.Sc, Head of Agency for the Assessment and Application of Technology (BPPT).

With these innovative strategy, Huawei is building the Ascend AI Ecosystem with shared success. Currently, the company is assisting firms in each and every Asia Pacific countries in achieving a series of goals in a structured, systemised programme, such as:

– Adoption and Use of Ascend AI products
– Proliferation of ISVs & Start-ups Ecosystem
– Support of local R&D and talent development
– Proficiency in the knowledge and skills of programming and testing Ascend AI products
– Growth of the AI Ecosystem in different industry domain of AI technology

APAC Partners Enjoying Benefits with AI

The APAC region is now enjoying tremendous business opportunities via the programmes and the ecosystem. AI development in regions, demographic dividend and supportive policy of various countries have created marketplace opportunity for AI computing.

“When it comes to AI ecosystem-based collaboration, Huawei has always focused on infrastructure. We work with the academic community and industries to promote AI development, which advances both technology and industries as a whole. Ultimately, we hope to bridge the divide, and achieve shared success as soon as possible,” said Daniel Zhou, President of Huawei Cloud & AI Business Group, Asia Pacific Region. “By leveraging our collaborative Connectivity + Computing + Cloud synergy, we are able to provide an intelligent, automated, information-driven platform for partners’ content, applications, and algorithms.”

“Together, we will build a thriving ecosystem and usher in a fully connected, intelligent world,” he noted. Ultimately, Huawei is building a fully connected, intelligent world; and the Asia Pacific Ascend Partner Programme is a cornerstone for this purpose.

To find out more, please visit https://e.huawei.com/sg/products/cloud-computing-dc/atlas.

Stories from the frontlines

Lopez Group supports PGH in the fight against COVID-19

This is one of the many stories from the frontlines of our battle against COVID-19. It has been a month since Nurse Ara from Philippine General Hospital (PGH) saw her five-year-old son because she does not want to expose her family to the virus. But as she said, “We got to do what we got to do, we are needed here and we must answer our calling.”

This is how most of our health workers face every day amidst the pandemic — with a sense of duty and by being of help however they can, even if it means sacrifice.

Just like any other human being, our health workers are also faced with anxiousness. One of the main problems PGH was confronted with was the lack of testing equipment.This meant that they were only able to test the patients and not the health workers.

PGH Director Dr. Gap Legaspi stressed the importance of testing not just the patients but the health workers too. He pointed out, “It’s the continuous testing that we need to do to make the services in the hospital more safe.And that would require more tests because you’d have to test the patients, you have to test the doctors, ideally, even the watchers, because you don’t want someone coming in and turns out they’re positive.”

After consulting with PGH officials, it was determined that there was an urgent need for testing machines and lab equipment for the hospital sincethe it would be a COVID-19 Referral Center and laboratory of the government and even private hospitals. Seeing this opportunity to help, the Lopez Group donated new machines and lab equipment which would allow the hospital totest more people.

Dr. Legaspi stated that, “Together with assistance from other government agencies and donors, these machines from the Lopez Group will bring us closer to the target of performing 30,000 COVID-19 RT-PCR tests daily.”

The benefits do not end there, in factit will have a ripple effect, as Dr. Legaspi added, “By strengthening our laboratories, this donation will eventually allow us to serve COVID-19 patients not only from Metro Manila, but also from nearby provinces.”

Still, the effect of this act can already be seen within the community of PGH. Angelo Javillonar, a Neurosciences nurse, expressed his relief that they can already be tested. He said that being uncertain adds stress to them as health workers but now, being able to get tested, somehow relieves them of this added burden.

Another nurse, Angelique Asis-Rosete, who tested negative of COVID- 19, expressed her happiness, not just of knowing but mostly because she could already go back to work and help those in need.

Nurse Ara said that it’s their decision to go home or not but since there is a need for manpower in the hospital, they opted not to go home and to go onduty for the meantime. She plans to see her family soon once she tests negative. When asked if her son knows what his mom is doing she answered, “He knows mom is fighting the virus, but other than that, he’s mad at Mom because she doesn’t get to go home. But mostly, I get to talk to him on a daily basis. As soon as we test everyone, I will have myself tested and be in quarantine. And when I get negative, I will have to go home, at least for three days. And then it’s back to work.”

Just like the many health workers who face this uncertain world with such inspiring determination, everyone has a part in this war against the virus. Every individual must do what they can, even if it simply meansstaying at home. Small acts of kindness are never unimportant; it keeps the gear moving towards this impending victory. It is by working together that we can achieve this future.

The world as we know has changed and it always will. It is in how one faces these changes that sets us apart, giving us that tenacity to help. AsMarcus Aureliusputs it, “You have power over your mind – not outside events. Realize this, and you will find strength.”This message is relevant for every individual during this time.

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