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Major sporting events affected by virus

The novel coronavirus has affected even sports. Major organizations are now preventing members of the media from accessing locker rooms after matches, with pressers held in strict compliance of social distancing measures. Other decisions will most likely be made on an as-needed basis, but preparations for any contingency are already being done. National Basketball Association teams have been told to be open to the possibility of holding matches without any paying spectators on hand, initially thumbed down by the Lakers’ LeBron James, by far the league’s biggest draw, but later on accepted as a worst-case option in the interest of public health.

Not coincidentally, the BNP Paribas Open, deemed be even casual observers to be tennis’ unofficial fifth major tournament, flirted with the prospect of going through its schedule while keeping fans away from Indian Wells. With Coachella Valley among those affected by the onset of the virus in California and governor Gavin Newsom having already declared a state of emergency, event officials nixed the concept even though the Association of Tennis Professionals and the Women’s Tennis Association Tours signified their openness to it.

Prior to the cancellation, the BNP Paris Open has declared itself ready for a fortnight’s worth of festivities, which typically attract some half a million people all told. From the setup of hundreds of hand-sanitizing stations to the use of gloves by frontliners and service providers to the pruning down of scheduled player-public interactions, it appeared to have its bases covered. Until, that is, state authorities figured the event to be risky at best and inimical to the interests of Riverside County. Containment was key moving forward, and any congregation for any reason stood to make the work even harder.

The implications are dire, leading decision makers to balance the need for life to go on with the acceptance that sacrifices must be made. Longtime can’t-miss affairs are in danger of being overrun by circumstances, but there can be nothing more important than the preservation of life. And so fingers are being crossed for the Masters and the London Marathon to push through next month, for the Champion’s League and the French Open to be free of kinks in May, and for the NBA Finals to deliver as promised in June — but with due cognizance that they all take a back seat to the real battles against a virus that can kill.

 

Anthony L. Cuaycong has been writing Courtside since BusinessWorld introduced a Sports section in 1994. He is a consultant on strategic planning, operations and Human Resources management, corporate communications, and business development.

2019 FDI falls on global uncertainties

By Luz Wendy T. Noble
Reporter

FOREIGN direct investment (FDI) net inflows to the Philippines fell by almost a quarter last year, the central bank said on Tuesday, as global uncertainties, regulatory risks and an unclear path for a local tax reform program dampened investor sentiment.

Net inflows settled at $7.647 billion last year, 23.1% lower than a year earlier, the Bangko Sentral ng Pilipinas (BSP) said in a statement.

The central bank had originally targeted $9 billion in net inflows back in May, only to lower it to $6.8 billion later. It has an $8.8-billion goal this year.

“Notwithstanding the country’s sound macroeconomic fundamentals, global uncertainties dampened investor sentiment during the year,” it said.

FDI inflows in December alone jumped by 69% to $1.153 billion from a year earlier.

Net investments in debt instruments fell by 23.2% to $5.153 billion from the previous year.

Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, Inc., said positive developments in the US-China trade negotiations might have led to higher FDI inflows in December.

“The end of 2019 signaled a better outlook coming into 2020 with the almost resolution of the US-Sino trade war with the signing of the phase 1 deal in January 2020,” he said.

“Investment sentiment was better during this month, with an expectation that a visible turning point was near the corner for a global economic recovery starting with an improved general trade atmosphere,” he added.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., traced higher December inflows to increased government spending.

”That could have provided business opportunities for FDIs and other businesses that are part of the supply chain of infrastructure and other government spending,” he said.

Last year, equity other than reinvested earnings also fell by 38.2% to $1.449 billion after gross placements dropped by more than a quarter to $2.147 billion.

On the other hand, gross withdrawals rose by 18.4% to $698 million from a year earlier, BSP data showed.

Singapore, Japan and the United States were the main sources of equity capital placements, the central bank said. These investments were funneled mainly into the financial, insurance, real estate, electricity, gas, steam and air-conditioning supply, and manufacturing industries.

BSP said reinvested earnings rose by 16.6% year on year to $1.046 billion.

Analysts said foreign companies had deferred their expansion plans due to global uncertainties and the lack of clarity in local tax reforms.

“In 2019, investors faced difficulties from the trade war as well as regulatory risks plus uncertainties from tax reform bills that went pending for several months and impaired expansion plans,” Robert Dan J. Roces, chief economist at Security Bank Corp., said in an e-mailed reply to questions.

President Rodrigo R. Duterte this week certified a proposed Corporate Income Tax and Incentives Rationalization Act as urgent, which would allow the Senate to approve the measure on second and third reading on the same day.

Senators are still debating the bill, which will gradually cut corporate income tax to 20% from 30% and streamline fiscal incentives, in plenary. Congress will go on an almost two-month break starting March 13.

The drop in Philippine FDI suggests that investors might be picking regional peers over the Philippines, said Emilio S. Neri, Jr., lead economist at Bank of the Philippine Islands.

STILL LAGGING
Indonesia, Malaysia and Vietnam seem to be more attractive destinations because they are better prepared to exploit redirected trade due to protectionist policies in China and the US, he said in an e-mail.

These policies include “wage competitiveness, adequacy of infrastructure, predictability of policies, quality of governance and ease of doing business,” Mr. Neri said, noting that FDI in these countries are higher than in the Philippines.

Indonesia’s FDI hit $28.2 billion last year, down from $29.3 billion in the previous year, Reuters reported, citing the country’s Investment Coordinating Board.

Total approved FDI flows to Malaysia rose by 6.5% to 66.3 billion ringgit or about $15.3 billion in the first nine months of 2019, according to Reuters, citing the Malaysian Investment Development Authority. Vietnam’s FDI inflows had reached $11.96 billion by August.

Some analysts think the government should step up efforts to boost investment flows amid the potential of a prolonged novel coronavirus outbreak.

The central bank is expected to review its targets and estimates for the year in the next quarter.

BSP Governor Benjamin E. Diokno earlier said FDI could drop as the coronavirus disease 2019 (COVID-19) outbreak that has killed almost 3,900 people and sickened about 111,000 more dissuades companies from expanding.

“Moving forward, we will not be surprised if FDI in early 2020 will continue to slow down or contract on the back of intensified regulatory risks in the Philippines as well as the rising risks, financial market turbulence and uncertainty arising from COVID-19,” Mr. Neri said.

Targeted fiscal stimulus including a supplemental budget for the Health department and other “careful, specific and coordinated policies” from the central bank, the National Government and Legislature could help restore investor confidence, Mr. Asuncion said.

Local health authorities yesterday reported nine new cases, bringing the total to 33 infections. — with Reuters

Exports growth outpaces imports rise in January

By Marissa Mae M. Ramos
Researcher

THE COUNTRY’S trade-in-goods deficit narrowed in January as merchandise export growth outpaced the increase in imports, the Philippine Statistics Authority (PSA) reported on Tuesday.

However, economists said this may be short-lived as global value chains are being disrupted by the ongoing coronavirus disease 2019 (COVID-19) outbreak.

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

Preliminary PSA data showed the total value of merchandise sales abroad increased by 9.7% year on year to $5.79 billion at the start of 2020.

This was a turnaround from the 6.7% drop in January 2019, albeit slower than the 21.6% growth seen in December 2019.

The export growth in January was above the four-percent growth target set by the Development Budget Coordination Committee (DBCC) for 2020.

Meanwhile, the country’s import bill went up by one percent to $9.29 billion in January. This marked a reversal from the 7.6% contraction in December, but was slower than the 3.6% import growth in January last year.

The January result marked the first time since March 2019 that imports grew year on year. Nevertheless, this was below the DBCC’s eight-percent growth target set for this year.

The country’s trade-in-goods deficit amounted to $3.5 billion, narrower than the $3.92-billion shortfall recorded in the same month last year.

However, economists said the gains made in January may not be sustained as effects of the COVID-19 outbreak are expected to be seen in the subsequent months of trade data.

“Exports [at 9.7%] were very good, but it is hard to say [on whether this will continue] since January data is still a bit noisy,” said George N. Manzano, University of Asia and the Pacific (UA&P) economist and a former tariff commissioner.

“The game changer for the country’s external trade is the COVID-19 outbreak, which can alter world trade fundamentally,” he told BusinessWorld in a phone interview.

In a note to reporters, Security Bank Corp. Chief Economist Robert Dan J. Roces said the export figures in January have not yet captured the impact of COVID-19 with the gains likely being “residual effects from December levels” as well as driven by orders related to the phase one trade deal signed between the US and China in January.

“Import numbers [are] also not capturing [the] outbreak impact yet as inbound shipments from China grew 16.4%, which we think will be hard-pressed to perform until the second half of the year as manufacturing and logistics concerns still hounding mainland China might lead to a negative economic feedback loop,” Mr. Roces said.

In a separate note, ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said the 9.7% gain in exports was “driven largely by the mainstay electronics subsector,” and that the “surprise exports growth” in January may “not likely to last much longer.”

By commodity group, exports of manufactured goods — which accounted for 81.25% of the total overseas sales in January — grew by 7.5% to $4.7 billion. Exports of electronic products, which made up around 56% of total merchandise exports in January, rose 15.8% year on year to $3.23 billion. Semiconductors, which made up 43% of electronics, jumped 21.9% to $2.48 billion.

Similarly, exports of mineral products went up 33.5% to $482.17 million, followed by that of agro-based products (14.5% to $429.7 million) and forest products (14.2% to $27.97 million).

On the other hand, overseas sales of petroleum products declined by 17.6% to $38.03 million.

Meanwhile, imports of mineral fuels, lubricant and related materials; and capital goods increased by 20.2% ($1.03 billion) and 1.7% ($3.05 billion), respectively.

Imports of raw materials and intermediate goods fell by 3.7% to $3.51 billion. Consumer goods also dipped by 0.3% to $1.62 billion.

“In the coming months, we may expect a drop in demand for these electronic components as the global supply chain remains impaired by work stoppages and depressed demand due to [COVID-19]. A projected slowdown or contraction in electronics exports will likely drag on the entire export sector in 2020,” ING Bank’s Mr. Mapa said.

Mr. Mapa added that import gains from China “will likely reverse to contraction” with the bulk of these goods being raw materials used for construction or re-export.

“This development may be crucial for the government and its ambitious infrastructure plans as iron and steel are sourced from China which could lead to delays in the government’s construction efforts. Meanwhile, Philippine exports may also revert to contraction in the coming months as raw materials used in the re-export of these products fail to arrive and resulting in overall weakness in overall exports,” Mr. Mapa said.

UA&P’s Mr. Manzano shared a similar assessment: “Most of the country’s exports of semiconductors were imported before being processed in the country, then exported the next month. This may constrain the country’s trade activity further as our exports are dependent on imports of component parts.”

“Expect the DBCC to revise import and export growth assumptions downward — as this was formulated in December and COVID-19 may not yet be taken into account,” he added.

The United States was the top market for Philippine goods in January, accounting for 16.3% with $941.73 million. It was followed by Japan with a 16.1% share of $930.89 million, and Hong Kong’s 14% share of $809.74 million.

On the other hand, Mainland China was the biggest source of foreign goods purchased by locals in January, accounting for 25.5% at $2.37 billion. Other major import trading partners were Japan and Korea, which contributed 8.7% ($810.69 million) and 7.5% ($698.27 million), respectively.

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

THE COUNTRY’S trade-in-goods deficit narrowed in January as merchandise export growth outpaced the increase in imports, the Philippine Statistics Authority (PSA) reported on Tuesday. Read the full story.

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

Gov’t collections may drop by up to P100 billion

GOVERNMENT revenue collections may fall by between P91 billion to P100 billion if disruptions caused by the coronavirus disease (COVID-19) drag on until June, with the budget deficit projected to balloon to as much as 3.6% of gross domestic product (GDP) this year, government economic managers said on Tuesday.

In a press conference following the Economic Development Cluster (EDC) meeting, Finance Secretary Carlos G. Dominguez III said the government’s borrowing program may be increased to plug the funding gap that is projected to widen this year.

“It’s financeable, and quite frankly, it is necessary. Despite these difficulties, we are not contemplating a reduction in our expenditures, our ‘Build, Build, Build’ will go full blast and so will all other programs of the government… and make sure the economy is humming along as it should,” Mr. Dominguez told reporters.

The government set a P3.49-trillion revenue collection target this year, alongside a P4.1-trillion expenditure program.

Socioeconomic Planning Secretary Ernesto M. Pernia said up to 1.2 percentage points could be shaved off this year’s gross domestic product (GDP) growth if the coronavirus outbreak drags on until yearend.

Earlier estimates by the National Economic and Development Authority (NEDA) showed GDP growth may be reduced by 0.5 to one-percentage point if the COVID-19 outbreak lasts until June. This would mean a lower full-year growth of 5.5-6.5% against the 6.5-7.5% official target.

Amid higher government spending, Mr. Pernia said fiscal deficit could hit 3.6% of GDP this year. This would be higher than NEDA’s initial estimate of 3.3-3.4%, but still above the 3.2% official budget cap.

Economists have suggested that higher government spending, particularly on infrastructure projects, will probably cushion the effects of the COVID-19 on the economy.

“It’s very (easy) for us to fund a P100 billion to cover the budget shortfall, that is not difficult at all… We assure you that we have enough in our toolkit to make sure that our expenditures are going to remain at what the plan levels are despite the fact that we might get a hit on our growth and revenues because of this COVID,” Mr. Dominguez added.

Mr. Pernia said the Development Budget Coordination Committee (DBCC) will review the official targets and assumptions when they meet later this month.

At the same time, Mr. Dominguez said the EDC recommended the approval of an additional budget worth P2.92 billion for the Department of Health (DoH), particularly for its “additional testing, augmentation of contact tracing and surveillance and additional personnel protective equipment for health workers at the national and local levels.”

The Finance chief said the additional funds for the DoH will be sourced from both foreign and domestic lenders. He said the Philippines, as a borrowing country, is at an advantage at a time of declining interest rates.

Asked if the economic team will release a “stimulus package” to boost growth and help affected sectors mitigate the impact of the outbreak fallout, Mr. Dominguez said: “as of now, we see the stimulus program as being just keeping our expenditure budget where it is despite the fact that our revenue is going down, so that in itself is already stimulus package.”

On food prices, Mr. Pernia said they expect month-on-month inflation rate to accelerate by 0.1-0.2 percentage points due to “supply disruptions in arrival of China-dependent food imports.”

AFFECTED SECTORS
In that same briefing, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco G. Dakila, Jr. said remittances sent home by overseas Filipino workers (OFWs) could also decline by 0.2 to 0.8 percentage points amid temporary ban on deployment of workers to China, Hong Kong, Macau and Taiwan. A three percent remittance growth target for this year was set prior to the COVID-19 outbreak.

Meanwhile, Labor Assistant Secretary Dominique Rubia-Tutay said 47 establishments with 4,416 workers nationwide have implemented flexible work arrangements while 19 businesses with over 300 workers have temporarily closed to cope with COVID-19 outbreak.

“Temporary displacements are coming from Regions 3, 6, 7, and 12, with Region 6 reporting the highest number of covered local workers affected, and also followed by Region 7. There are also OFWs, 734 who have been displaced particularly in Macau, some of them have been terminated while some are undergoing unpaid leave,” Ms. Tutay said. — Beatrice M. Laforga

Vehicle sales rebound in February

AUTOMOTIVE SALES in February climbed as the industry recovers from the Taal Volcano eruption, a joint report from the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and Truck Manufacturers Association (TMA) showed on Tuesday.

Data released by the groups showed February sales of 29,790 units grew 13.2% from 26,327 in the same month last year, and surged 25.6% from 23,723 units in January.

Automotive sales had dropped in January after some plants and dealerships in the National Capital Region and the Calabarzon Region were forced to temporarily suspend operations due to ashfall from the volcanic eruption. CAMPI-TMA data showed vehicle sales stood at 23,723 in January, 12% lower year on year and 30% lower than sales December 2019.

CAMPI President Rommel R. Gutierrez said the double-digit growth in February exceeded industry expectations.

“While we anticipate a growth recovery coming from the previous month’s losses due to the adverse effect of the Taal Volcano eruption, this double-digit growth is more than what we have expected,” he said.

“Based on the industry’s statistics, we are also very pleased to report that the month of February 2020 has recorded with the highest sales figures, surpassing the same month’s sales performance in the last 10 years.”

Year-to-date, vehicle sales inched up 0.6% to 53,513 units, from 53,215 last year.

In February alone, commercial vehicle sales, which accounted for 72.83% market share, grew 21.5% year on year to 21,697 units.

Broken down, Asian utility vehicle (AUV) sales soared 112.5% to 4,733 units, and light commercial vehicle sales grew 10.8% to 16,003 units. Sales of light trucks dropped 24.1% to 555.

Passenger car sales, on the other hand, slipped 4.5% to 8,093 units.

For the first two months of the year, commercial vehicle sales grew 7.2% to 38,877 units, while passenger car sales dropped 13.7% to 14,636 units.

Toyota Motors Philippines Corp. retained its spot as the market leader with 41.23% share, with its sales growing 32.5% to 12,283 units in February.

Mitsubishi Motors Philippines Corp. followed with 18.73% market share, with sales growing 10.4% to 5,579 units. This was followed by Nissan Philippines, Inc. with 13.23% share and sales growing by 11.9% to 3,941.

Honda Cars Philippines, Inc. (HCPI)has the fourth-largest market share with 6.34%. Its sales slumped 24.2% to 1,890 in February.

HCPI is shutting its Philippine operations this month after a global automotive industry slowdown. The company has said it will continue to sell vehicles in the country through its regional network.

Mr. Gutierrez is expecting the coronavirus disease 2019 (COVID-19) to have an effect on vehicle sales this year.

“While the industry remains optimistic that this growth will be sustained in the coming months, we cannot disregard the ripple effect of COVID-19 moving forward. It must be noted that the auto industry remains one of the most complex and integrated supply chains regionally and globally,” he said. — Jenina P. Ibañez

Torre Lorenzo allots P7B for ‘premium’ projects

By Denise A. Valdez, Reporter

TORRE Lorenzo Development Corp. (TLDC) is investing up to P7 billion this year to boost its premium residential-business projects and expand further into leisure development, its finance chief said.

“Our objective is to launch a few more projects this year. We’re looking at premium projects with an inventory value of P6.9-7 billion,” TLDC Chief Finance Officer Emmanuel A. Rapadas said in a briefing in Makati City yesterday.

The property developer has three new residential towers scheduled to launch this year, on top of expansion plans in leisure properties in Batangas, Pampanga, Manila and Davao.

Mr. Rapadas identified three projects that the company plans to introduce by year-end: a P900-million premium university residence along P. Noval St., Manila City; a P1.5-billion mixed-use development in Davao; and a P3.7-billion mixed-use development in Katipunan, Quezon City.

The Manila property is expected to break ground by the third quarter and generate sales of up to P1.6 billion. The Davao project will similarly offer student residences, with more than 600 units to be offered and raise about P2.6 billion in sales.

The Katipunan project is planned to be TLDC’s biggest mixed-use development to date, totaling 2,200 square meters with two towers and a podium. It is expected to generate about P6.9 billion in total revenues.

Aside from the three residential projects, TLDC is also expanding its leisure portfolio this year, through projects such as Dusit Princess Hotel Lipa in Batangas; Tierra Lorenzo Hotel San Fernando in Pampanga; Lyf by Ascott in Malate; and dusitD2 and Dusit Thani Lubi Plantation Resort in Davao.

The company is known for building premium university residences for the past 20 years, but it opened last year its first hotel in Davao, the dusitD2 Hotel, and private island resort Dusit Thani Lubi Plantation Resort.

TLDC President and Chief Executive Officer Tomas P. Lorenzo said the company wants to invest in the leisure segment further given the tourism potential of the Philippines.

“It was an exciting year because people know us for our university residences, but we finally crossed over to doing leisure projects around the country. We’re excited because tourism was really a market that we saw early,” he said.

Even with the coronavirus outbreak, Mr. Rapadas said its effect on TLDC’s hotel business is “very negligible,” as the bulk of its guests are domestic travelers. “We have a very strong risk management system,” he added.

Over the next two years, Mr. Rapadas said TLDC wants its hotel business to contribute 20% of total revenues, and in the long-run, grow this further to 30%. “Leisure is the emerging economic leg of the Philippines… Leisure tourism is the next big thing,” he said.

TLDC booked total revenues of P2.2 billion in 2019, up 21% year-on-year. Its compound annual growth rate from 2015 to 2019 is 47%.

PSE tells listed firms to offer remote voting as virus lingers

THE Philippine Stock Exchange, Inc. (PSE) is reminding shareholders of publicly listed firms of their options to participate in annual stockholders’ meetings (ASM) as the virus outbreak persists.

In a memo on its website Tuesday, the operator of the local bourse said investors may remotely participate in ASMs scheduled over the coming weeks as a precautionary measure to the coronavirus disease 2019 (COVID-19).

“To mitigate the risk of contracting COVID-19, stockholders may prefer to participate in the ASM and vote through remote communication, instead of a face-to-face meeting,” it said.

Republic Act No. 11232, or the Revised Corporation Code of the Philippines, allows companies to participate in ASMs either remotely, in absentia or through a proxy. The requirements and procedures for these options are up to the companies to establish.

“For corporations vested with public interest such as publicly-listed companies, stockholders may vote in the election of directors through remote communication or in absentia, notwithstanding the absence of a provision to that effect in the by-laws,” the PSE said.

The memo came as the PSE said it talks with the Securities and Exchange Commission for other possible safeguards to protect investors.

Over the next few weeks, listed companies that have scheduled their ASMs are Roxas Holdings, Inc. (Mar. 18); BDO Leasing and Finance, Inc. (Mar. 20); Xurpas, Inc. (Mar. 24); Chelsea Logistics and Infrastructure Holdings Corp. (Mar. 26); and Phoenix Petroleum Philippines, Inc. (Mar. 27).

More corporations scheduled their ASMs from April to June, and are yet to announce any adjustments in schedule in light of COVID-19.

The Department of Health reported nine new cases of COVID-19 infection yesterday, bringing the total cases in the Philippines to 33 as of late afternoon. President Rodrigo R. Duterte had earlier announced a State of Public Health Emergency in the country due to the outbreak.

Classes across all levels in Metro Manila have been suspended until Mar. 14. Malls and other commercial establishments likewise started checking temperatures of guests and provided alcohol and hand sanitizers at building entrances.

Several gatherings across the country have also been either cancelled or postponed as a precautionary measure to the outbreak.

Health Secretary Francisco T. Duque III advised the public to practice preventive measures such as proper hand hygiene, cough etiquette and social distancing to prevent the virus from spreading.

“With the increasing number of cases, I implore everyone to fully cooperate with us in investigation and contact tracing activities… We also advise everyone to avoid visiting public places and/or attending mass gatherings at this critical time,” he said in a statement yesterday. — Denise A. Valdez

MPTC readies P60B as toll road projects continue

CAPITAL expenditure for 2020 has been fully funded via project financing and equity from parent firm. — BW FILE PHOTO

METRO PACIFIC Tollways Corp. (MPTC) is setting aside P60 billion for this year’s capital expenditure (capex) as the toll road operator continues with the implementation of expressway projects, its finance chief said.

“It’s (capex) fully funded already via project financing. The equity portion comes from our parent company Metro Pacific Investments Corp. (MPIC),” MPTC Chief Financial Officer Christopher Daniel C. Lizo told reporters last week when asked about the funding source.

He said this year’s budget, which is three times higher than the P20 billion spent in 2019, will be used to fund the Cebu-Cordova Link Expressway (CCLEx), Cavite-Laguna Expressway (CALAx), C5 South Link of the Manila-Cavite Expressway (CAVITEx), and North Luzon Expressway-South Luzon Expressway (NLEx-SLEx) Connector Road.

MPTC had planned to earmark P45 billion for 2019, but Mr. Lizo said there were delays in the acquisition of rights of way (ROWs).

He noted that the company had spent only “P20 billion plus” for the toll road projects last year.

He said the company is hoping all ROWs will be delivered on time this year.

Mr. Lizo said further that the company had fully acquired the ROWs for CCLEx, 80% for C5 South Link of the Manila-Cavite Expressway (CAVITEx), 60% to 70% for NLEx-SLEx Connector Road, and 100% for CALAx.

“May kaunting delay last year (There was a slight delay last year). As you know, only three of eight subsections of CALAx have been opened,” he said.

He added that the Department of Public Works and Highways had assured him that all ROWs would be acquired within the first half of 2020.

“Then construction works will go full blast,” he said.

MPTC is the tollways unit of MPIC, one of the three key Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT, Inc.

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. — Arjay L. Balinbin

Petron income falls to P2.3B

PETRON opens 124 new stations to bring the total to more than 2,400. — BW FILE PHOTO

PETRON CORP., the country’s largest oil refiner, reported a consolidated net income of P2.3 billion last year, down 67% from the earlier year after the company’s refining business incurred losses in part because of low production.

“Despite the challenging business environment, we still pursued our strategic goals to sustain our leadership and deliver long-term growth for our company,” Petron President and Chief Executive Office Ramon S. Ang said in a statement on the company’s 2019 financial results.

“Moving forward, we intend to keep our focus on further expanding our reach, strengthening our services and product offerings, and increasing our operational efficiency to better secure our position for the future,” he added.

Petron, which is also a leading participant in the Malaysian market, posted consolidated revenues of P514.4 billion last year, down 8% from the previous year.

Its sales volume was slightly lower at 107 million barrels from the previous year’s 108.5 million barrels after the 5% decline in Philippine volumes as its Petron Bataan Refinery went through an emergency shutdown as a result of the earthquake in April 2019.

Petron’s sales volume in Malaysia grew by 3%, which helped offset the decline in the Philippines.

In the Philippines, operations swung to a net loss of P1.4 billion last year, reversing 2018’s income of P2.8 billion. The losses came after the unplanned total plant shutdown starting in April, resulting in its local refining business incurring losses on low production and the start-up and stabilization activities in August to September.

Petron said its financial results were also affected by the weak refining margins. It said the market remained volatile last year because of the political tensions in the Middle East and uncertainties in the global economy.

Regional prices of finished petroleum products and petrochemicals dropped amid oversupply, with the average Dubai crude down to $63 per barrel in 2019 from $69 per barrel in 2018. The decline also came with the slowdown in demand. Average crude premiums in 2019 rose by almost threefold, further depressing the margins.

Last year, Petron opened 124 new stations, keeping its record of having the most number of stations nationwide at more than 2,400.

Among the highlights in 2019 is the start of commercial operations of its new lube oil blending plant in Tondo, Manila. The facility, which produces lubes and greases for local and foreign markets, has a filling capacity that is twice bigger than Petron’s former plant in Pandacan, Manila.

Petron also started operating its import terminal located in Tagoloan, Misamis Oriental, improving efficiency in product handling and distribution in the south.

It said its major facilities had complied with the government’s fuel marking program before the end last year, affirming its support to the initiative to curb smuggling.

Petron has a combined refining capacity of 268,000 barrels a day. It produces a full range of fuels and petrochemicals. The company operates about 40 terminals in the region and has more than 3,000 service stations.

On Tuesday, shares in the company slipped by 1.92% to close at P3.07 each. — Victor V. Saulon

Chelsea Logistics losses hit P832 million in 2019

CHELSEA Logistics and Infrastructure Holdings Corp.’s net loss ballooned by 51% to P832 million last year as the Dennis A. Uy-led firm suffered from its share in the losses of some units and expenses for new vessels and a warehouse complex.

“A significant portion of the net loss reported by the Group can be attributed to its share in net losses of 2Go Group and DITO Telecommunity totaling to P483 million,” it said in a regulatory filing.

The company saw a 35% increase in its consolidated revenues to P6.97 billion as all its business segments improved profitability.

Revenues from the tankering segment grew 14% to P1.98 billion as a result of the operations of the company’s medium-range tanker MT Chelsea Providence.

Freight revenues grew 43% to P2.44 billion while passage revenues rose 47% to P1.42 billion.

“The growth in the freight and passage revenues can be attributed to the operations of new vessels deployed during the year,” Chelsea Logistics said.

Revenues from the logistics segment, which accounts for 7% of the consolidated revenues, posted the biggest growth at 60% to P459 million from P287 million. The company attributed the increase in logistics revenues to its expansion program.

However, it said it had failed to achieve profitability last year “due to the full costing of ships (including, but not limited to, depreciation, financing costs, crew costs, insurance and other related costs, both fixed and variable) deployed during the year.”

Chelsea Logistics said further that there were additional interest expenses incurred for the new vessels and the 2.5-hectare parcel of land that the company had acquired.

The company also cited the construction of a warehouse complex, which will be completed by the third quarter of this year.

Cost of sales and services increased 44% to P5.42 billion from P3.76 billion due to “bunkering costs, depreciation and amortization, crew salaries and employee benefits, repairs and maintenance and insurance as a result of additional vessel deployments last year.”

Portions of the cash flows, Chelsea Logistics said, were also “used to pay P4.5 billion in maturing debts, both principal and interest, during the year.” — Arjay L. Balinbin

POGOs have insufficient AML, CTF awareness, regulation — study

PHILIPPINE OFFSHORE Gaming Operators (POGOs) have low defenses against dirty money transactions, according to a risk assessment done by the Anti-Money Laundering Council (AMLC).

In its attempt to conduct on-site compliance checking on POGOs, the dirty money watchdog found POGOs have yet to create anti-money laundering/counter-terrorism financing (AML/CTF) compliance units.

“The POGOs have no AML/CTF compliance units…there is a low level of AML/CTF awareness and regulation,” AMLC said in a study released on Tuesday.

The AMLC said compliance officers of POGOs could not be found and contacted in their provided addresses.

The study also found non-compliance of some POGOs with existing AML regulations, including the appointment of a local gaming agent.

“A foreign-based operator is required to appoint a local gaming agent, who will represent the said foreign-based operator in the Philippines,” AMLC said, noting these local agents are in charge of completing the documentary requirements during the application for gaming operations.

The AMLC also found that the offices of some POGOs, local gaming agents, and authorized representatives are not located in addresses they registered with the Philippine Amusement and Gaming Corp. (PAGCOR). Instead, their service providers (SPs) are the ones maintaining an office in the said addresses.

PAGCOR has clarified that SPs should be distinguished from POGOs, as SPs only offer services needed by POGOs including gaming software, and content streaming, among others.

With these findings, AMLC concluded there is a low level of AML/CTF awareness in the POGO sector.

“Generally, POGOs and IGLs (interactive gaming licensees) are a lesser threat compared to their SPs,” AMLC said.

The agency said insufficient AML/CTF regulations in POGO service providers is a “jurisdictional issue” as SPs are only merely accredited and not licensed by PAGCOR.

Meanwhile, POGOs are jointly supervised by the PAGCOR and AMLC in terms of their AML/CTF measures as they are considered casinos, which are covered by the 2017 amended version of the Anti-Money Laundering Act of 2001.

The AMLC also concluded there has been an increasing level of dirty money threats and fraudulent activities from the POGO industry.

“The number of investigations involving domestic Internet-based casino operators and SPs is growing. From 2017 to 2019, the recorded casino-kidnapping-related incidents totalled 63 cases,” the AMLC said.

The agency’s sectoral risk assessment, which was based on suspicious transaction reports from 2013 to 2019, found that the estimated value of suspicious transactions in this period amounted to P14.01 billion.

“Considering the high level of vulnerability risk to money laundering of Internet-based casinos, a collective mitigation strategy with concrete actions must be applied to SPs and Internet-based casino operators,” the AMLC said.

The sectoral risk assessment, which forms part of the study, covered the 59 POGOs under PAGCOR’s watch, 218 SPs, and three gaming laboratories as well as the Cagayan Special Economic Zone’s 24 interactive gaming licensees and 18 interactive gaming support service providers. — L.W.T. Noble

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