SMDC says condo ‘safe’ after a wall collapsed

May 1, 2020 | 12:01 am

SM Development Corp. (SMDC) assured residents that its condominium in Makati City is safe for occupancy despite a collapse of a part of the building on Thursday.

In a statement, the property developer said it had conducted an investigation and found that the incident “does not affect the structural integrity of the development and that the buildings are safe for occupancy.”

It noted, however, that the cause of the incident was still to be determined.

On Thursday morning, a wall of a parking level at SMDC’s Jazz Mall property in Makati City “sustained damages that caused its outer slab to collapse to the driveway.” This resulted in two people getting “minor abrasions.”

SMDC said it would commit to necessary measures to address the situation and avoid it in the future.

SMDC is the residential arm of listed SM Prime Holdings, Inc. Shares in SM Prime at the stock exchange climbed five centavos or 0.16% to P31 each on Thursday. — Denise A. Valdez

Insurance sector ‘well-capitalized’ to weather risks

May 1, 2020 | 12:01 am

THE INSURANCE SECTOR can weather the impact of the coronavirus pandemic on their businesses, according to the Insurance Commission (IC), even as investments and sales face difficulties.

Insurance Commissioner Dennis B. Funa said insurance companies have been “well-capitalized” even before the pandemic hit and assured no company will go bankrupt.

“Insurers are well-capitalized. I don’t think that is the immediate issue. The initial impact will be on their investments and the sales of insurance products,” Mr. Funa said in a mobile phone message Wednesday.

Mr. Funa admitted that investments of insurers in businesses in other sectors will surely take a hit, with sales also affected by lockdowns across the country.

“That is why I allowed them to resort to online selling. In terms of investment, we all know that all industries will take a hit,” Mr. Funa said.

For life insurers, Philippine Life Insurance Association, Inc. (PLIA) President Benedicto C. Sison said firms remained “adequately capitalized” with enough buffers to “absorb any volatility in financial markets.”

Insurance companies’ minimum capital requirement was hiked to P900 million as of end-2019 from P550 million according to Republic Act No. 10607. This will increase further to P1.3 billion by end-2022.

To help firms amid the strict quarantine protocols imposed around the country, the insurance regulator has allowed companies to sell their products digitally or through any information and communication technology (ICT) channels.

On April 15, the IC conducted a survey to measure the impact of the coronavirus pandemic to their businesses. Insurers were scheduled to submit the forms earlier this week but IC said it is still compiling and assessing the results of the survey as of Thursday.

Mr. Sison said life insurers expect their assets to suffer “some drag” due to local equity sell-offs, although equities only account for a “small portion” of total assets of companies.

“It is also worth mentioning that the recent decline in bond yields have benefitted the valuation of the fixed income portfolio which make up the majority of the assets of most insurance companies,” Mr. Sison said in an e-mail.

PHILPLANS FIRST
Pre-need company PhilPlans First, Inc. told its planholders in a recent advisory that it will shut down all of its provincial branches starting June 6 to stay afloat after incurring massive losses in their investments.

PhilPlans said as a “strategy for survival,” it will only operate in Metro Manila “with barest and leanest workforce,” where they will continue to sell pension, memorial and life products as well as STI educational plans.

Its trust fund values were affected as pandemic fears hit markets and lockdown protocols “made recovery of these values even more difficult,” it said.

“While we have carefully chosen the trustees of the funds you have entrusted to us, as required by law, and while the trustees have invested the funds prudently, the economic repercussions of the pandemic has now affected our ability to generate adequate returns,” PhilPlans’ letter dated April 21 read, a copy of which was posted on its website.

The letter was jointly issued by PhilPlans President and CEO Monico V. Jacob and Eusebio H. Tanco, the company’s executive committee chairman.

PhilPlans said it even considered selling its assets “at their depressed values” to meet the company’s immediate maturing obligations, that could have resulted in “losses which we would no longer be able to recover — to the detriment of all our planholders.”

“We have weighed our options and considered the interest of all and we have decided to wait for the asset values to recover before we liquidate. Admittedly, this could take a rather long time,” it said.

The pre-need company said it is working on “quite a number of implementing strategies” to stay afloat during this crisis.

PhilPlans’ affiliates are health maintenance organization PhilHealthCare, Inc. and insurance provider Philippine Life Financial Assurance, Inc.

Sought for comment, IC’s Mr. Funa said the company will write a letter to the regulator on the matter.

IC earlier ordered pre-need companies selling three or more types of plans to maintain a minimum unimpaired paid-up capital of P100 million, P75 million for those selling two types of plans and P50 million for firms offering just one kind of plan including those who do not sell any type of plans. — B.M. Laforga

How PSEi member stocks performed — April 30, 2020

May 1, 2020 | 12:00 am

Here’s a quick glance at how PSEi stocks fared on Thursday, April 30, 2020.

COVID-19 may jeopardize gradual gains in vulnerable and informal employment

May 1, 2020 | 12:00 am

Index boosted by optimism about easing lockdown

April 30, 2020 | 9:00 pm

By Denise A. Valdez, Reporter

THE MAIN INDEX kept its upward trajectory yesterday as investors remained optimistic in anticipation of easing quarantine measures in select areas across the country.

The bellwether Philippine Stock Exchange index (PSEi) rose 56.74 points or 1% to end at 5,700.71 on Thursday. The broader all shares index also climbed 20.55 points or 0.60% to 3,445.83.

“The local bourse ended the shortened week on a positive note as some areas previously under ECQ (enhanced community quarantine) will be part of the more relaxed GCQ (general community quarantine) conditions,” Timson Securities, Inc. Trader Darren T. Pangan said in a text message.

“Investors may have seen this as a positive thing for our economic well-being,” he added.

As the ECQ in select areas was set to expire yesterday, the government has started issuing clearer rules on which sectors may start going out and resume operations to oil the economy.

This is expected to help dampen the economic toll of the 1.5-month-long ECQ in Luzon, which shut down the operations of most sectors except a few ones considered “essential.”

Trading at the local bourse is suspended today in observance of the Labor Day holiday.

Regina Capital Development Corp. Head of Sales Luis A. Limlingan said the sustained climb of the PSEi yesterday is also driven by positive development on finding a solution for the coronavirus disease 2019 (COVID-19) and the result of the meeting of the US Federal Reserve.

“Philippine equities jumped on the back of positive data from a potential coronavirus treatment from Gilead Sciences, continued effort from the Federal Reserve to sustain US growth,” he said in a mobile message.

US-based healthcare firm Gilead Sciences, Inc. continued reporting positive development from its trials of its anti-COVID-19 drug yesterday.

Also after meeting on Wednesday, the US Federal Reserve decided to keep its benchmark interest rate near zero until its economy has recovered from the COVID-19 pandemic. It likewise committed to do what it takes to lift the economy, Reuters reported yesterday.

All sectoral indices at the PSE closed with gains at the end of Thursday’s session: services improved 24.82 points or 1.84% to 1,373.82; financials added 18.80 points or 1.61% to 1,188.67; property rose 34.19 points or 1.18% to 2,921.92; holding firms gained 34.92 points or 0.63% to 5,544.29; mining and oil climbed 15.63 points or 0.33% to 4,708.57; and industrials increased 9.54 points or 0.12% to 7,474.93.

Some 590.40 million issues valued at P6.58 billion switched hands yesterday, slightly improving from Wednesday’s 584.34 million issues worth P4.54 billion.

Advancers stood at 120, decliners at 71, and unchanged names at 46.

Net foreign selling slowed to P658.39 million yesterday from P726.05 million the day prior.

Peso continues to rise on strong reserve data

April 30, 2020 | 9:00 pm

THE PESO continued to strengthen on Thursday on the back of higher dollar reserves and continued risk-on sentiment due to news of the gradual lifting of lockdowns in some parts of the United States.

The local unit finished trading at P50.40 per dollar yesterday, strengthening by 11 centavos from its P50.51 close on Wednesday, according to data from the Bankers Association of the Philippines.

Week on week, it also appreciated by 43 centavos from its P50.84 finish on April 24.

Financial markets are closed today, May 1, for Labor Day.

The peso opened the session at P50.41 per dollar. Its weakest was seen at P50.50 while its strongest was its close of P50.40 against the greenback.

Dollars traded surged to $906.8 million on Thursday from the $498.5 million logged in Wednesday.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso’s gains came on the back of the latest gross international reserves data from the central bank.

“The peso exchange rate closed stronger after the country’s GIR (gross international reserves) reached a new record high, thereby providing greater cushion for the peso,” Mr. Ricafort said in a text message.

Preliminary data from the Bangko Sentral ng Pilipinas showed GIR hit a record-high $88.995 billion as of end-March, surpassing the $88.187 billion seen at end-February as well as the $83.613 billion logged a year ago.

Meanwhile, a trader said optimism continued to buoy the peso amid news of the possible easing of lockdowns in some parts of the world.

“The peso’s movement is recently headline driven and there was risk-on sentiment from investors as some authorities state their plans to gradually lift lockdowns because this could help economic recovery,” the trader said in a phone call. — LWTN

Philippines seeks $750-M COVID-19 loan from AIIB

April 30, 2020 | 8:30 pm

THE Philippines has applied for a $750-million facility from China’s Asian Infrastructure Investment Bank (AIIB) to help fund the coronavirus pandemic 2019 (COVID-19) containment effort, with the application expected to be acted on by mid-May.

According to a statement Monday from the Beijing-based bank, the Philippine government has asked the AIIB for $750 million to cofinance its COVID-19 Active Response and Expenditure Support (CARES) Program, alongside the Asian Development Bank (ADB).

“The program will provide critically needed support to help the Government of the Philippines mitigate the severe health, social, and economic impact caused by the COVID-19 pandemic,” AIIB said.

Finance Undersecretary Mark Dennis Y.C. Joven, who also heads the department’s International Finance Group (IFG), told BusinessWorld that the AIIB is expected to decide on the loan in mid-May.

“AIIB will deliberate mid-May, I think,” Mr. Joven said in a mobile phone message Wednesday.

He added that the government does not have plans for a second tranche of COVID-19 funding support from the AIIB, “unless the need arises.”

The funds will be sourced from AIIB’s $5-10 billion COVID-19 Crisis Recovery Facility.

AIIB said it expects the COVID-19 response program to increase the country’s testing capacity to 8,000 per day by next month, reduce the average turn-around time for tests to 48 hours or less by July and have all health care workers and COVID-19 patients be covered by the Philippine Health Insurance Corporation by July.

On Tuesday, the government signed a $100-million loan agreement for the COVID-19 Emergency Response Project with the World Bank as well as a new $200-million loan from the Asian Development Bank for the Social Protection Support Project.

The Philippines has also tapped the World Bank for a $500-million loan to fund its pandemic response programs, on top of the $500-million (P25.4 billion) Third Risk Management Development Policy Loan approved earlier this month.

The ADB has likewise approved a $1.5-billion loan to supplement the government’s funds as it seeks to contain the outbreak.

The Department of Finance has said it hopes to tap $5.7 billion worth of financial assistance from multilateral agencies such as the World Bank and ADB. — Beatrice M. Laforga

DoE could outline plans for strategic oil reserve by June

April 30, 2020 | 8:29 pm

THE Department of Energy (DoE) is planning to issue a circular by June outlining plans for the establishment of a strategic oil reserve.

Rino E. Abad, director of DoE’s Oil Industry Management Bureau (OIMB), said that the drop in global oil prices represents an opportunity to stock up on petroleum products.

“Plano po namin in the next month or two, makapag-isyu po tayo ng circular (We plan to issue a circular on the oil stockpile program in the next month or two),” he told BusinessWorld by phone.

“We really have to move forward on this,” he added.

The DoE has been pushing for an oil reserve to guard against oil price volatility and supply disruptions.

State-owned Philippine National Oil Corp. is currently putting together a feasibility study on the strategic reserve. The study will form the basis of the DoE’s planned regulatory regime.

The strategic reserve will also undergo the budgeting process in Congress.

As of April 27, the Philippines had an estimated 3.29 billion liters of petroleum in its inventory, equivalent to 56.7 days’ consumption. Finished petroleum products are good for 27.9 days, and crude oil 28.8 days.

Oil prices have continued to drop due to a glut caused by the decline in demand due to the coronavirus disease 2019 (COVID-19) pandemic.

Mr. Abad said that the decline in oil demand is only temporary and that it may recover, along with prices, by the fourth quarter or early 2021, as major world economies roll out stimulus programs to ensure their economies recover.

Meanwhile, Energy Secretary Alfonso G. Cusi said on ANC Thursday that domestic fuel prices will remain volatile up to the end of the third quarter as demand will not return to pre-quarantine levels.

“I think that the (oil) prices up to the end of the third quarter will be volatile, and we will be seeing lower demand (from) consumers because there will still be restrictions in the mobility of people and somehow it will affect the demand for oil,” he said.

Mr. Cusi said the country is not reaping the benefits of low oil prices “because people are not traveling.” It has also affected retailers because they are not selling fuel.

“They bought some stocks at the high price that are still being sold at a low price. So they are experiencing cash flow problems,” he added.

He has noted around 10% of domestic fuel retailers closed down during the enhanced community quarantine (ECQ).

The oil rout has also affected exploration activity as concession holders evaluate whether exploring is worthwhile with prices so low.

The government could return to formal discussions with Chinese partners for joint exploration in the disputed West Philippine Sea (WPS) as soon as the ECQ is lifted.

“Maybe after the ECQ, we will sit down with our Chinese counterpart to see what is the best way to explore and exploit the resources,” Mr. Cusi said.

The ECQ will be lifted after May 15. — Adam J. Ang

ASF largely confined to Luzon except for two Mindanao provinces

April 30, 2020 | 8:29 pm

AFRICAN swine fever (ASF) has been confirmed in 23 provinces across eight regions as of April 27, the Department of Agriculture (DA) said, noting that outside of Luzon, the disease is present only in two of the Davao provinces.

In a virtual news conference yesterday, DA Spokesperson Noel O. Reyes said the national count for culled hogs is 282,486 animals, who were killed as a precaution.

The DA identified the provinces with confirmed cases as Benguet, Ifugao, Kalinga, Mt. Province, La Union, Pangasinan, Isabela, Nueva Vizcaya, Nueva Ecija, Cagayan Province, Bataan, Bulacan, Pampanga, Tarlac, Aurora, Batangas, Cavite, Laguna, Quezon, Rizal, Camarines Sur, Davao del Sur, and Davao Occidental.

ASF cases have also been detected in the National Capital Region.

“According to veterinary experts consulted by the DA, areas should be 100% free from the virus before we can declare that the country is safe from ASF,” Mr. Reyes said.

The DA has reported that the pork supply will fail to meet demand towards the end of the year, and estimated the size of the shortfall as equivalent to 31 days’ consumption.

According to the latest food outlook issued by the DA, pork demand is estimated at 1.2 million MT, with committed supply estimated at 1.1 million MT.

To augment pork supply, the DA said it will organize logistics for hog raisers in Mindanao to bring their surpluses to Luzon and the Visayas.

Hog raisers in Davao have committed to ship 500 metric tons (MT) of surplus pork monthly while those in General Santos City and Cagayan de Oro can send 3,000 MT monthly.

“Consumers should shift to other sources of protein such as poultry, which by the end of the year will be in sufficient supply, equivalent to 233 days,” Mr. Reyes said. — Revin Mikhael D. Ochave

Garment industry seeks revival of domestic textile production

April 30, 2020 | 8:28 pm

THE Philippines must revive its textile industry following global supply chain disruptions during the coronavirus disease 2019 (COVID-19) outbreak, which cut off the garment industry from imported raw material, Philexport textiles, yarn, and fabric trustee Robert M. Young said.

“Right now, the Philippines is the only country without a textile industry,” he said in a webinar Wednesday, adding that lockdowns in China delayed textile imports for the garments industry.

“If we had factories nearby, we could have been supplied from these textile companies.”

The Philippines cannot continue to rely on imports, he said, and must attain some degree of self-reliance.

Mr. Young said that after the crisis, garment retailers will be focused on selling their remaining inventory, adding that consumers will likely be more conservative in buying clothing.

“The orders of the garment and apparel (from retailers) will be reduced by about 50%,” he said, adding that 50-70% of recent orders have been cancelled by buyers.

To boost the industry, Mr. Young said Internet and manufacturing technology capabilities must be improved, noting that bad Internet connectivity created difficulties.

“Most of the time, signals were dropped, especially in the provinces… the government should do something about the Internet speed because this is really vital,” he said, adding that factory machinery must be upgraded to improve efficiency.

Mr. Young also said the Philippines should continue its negotiations for free trade agreements (FTA), especially with the US.

“Selected goods such as garments, apparel, wearables can enter the USA tax-free, meaning we will have more business. Foreign buyers will be buying more from Manila because they will be paying zero tax,” he said.

Mr. Young said that he expects an industry recovery after 18 months, in the best-case scenario. — Jenina P. Ibañez

Railway projects on track, major airport works to proceed — DoTr

April 30, 2020 | 8:27 pm

THE Department of Transportation (DoTr) said its ongoing railway projects are still on track despite the disruptions from the enhanced community quarantine (ECQ).

The department also said the major airport projects such as Ninoy Aquino International Airport (NAIA) Rehabilitation and Bulacan Airport projects will push through as soon as the COVID-19 situation softens.

In a virtual news conference Thursday, Philippine National Railways General-Manager Junn B. Magno reported that the implementation of the Metro Manila Subway Project resumed two weeks ago, and described the delay as “minimal.”

As for the rehabilitation of the Metro Rail Transit (MRT) Line 3, he said the department was studying how to “accelerate” the works.

Transportation Secretary Arthur P. Tugade said of the major airport projects: “In so far as the NAIA Rehabilitation Project is concerned, there is ongoing checking and rechecking. As far as Bulacan Airport, may approval na yan, groundbreaking na lang (It has been approved and is awaiting groundbreaking). Sa Private airports proposals pwede natin ituloy yan but with mandates of safety and health. May mga balakid in pursuing these things because of ECQ and GCQ (general community quarantine). Itutuloy yan once the pandemic changes favorably (Private airport proposals can proceed but with adjustments for safety and health. We are constrained pursuing these projects because of ECQ and GCQ, but they will proceed one conditions improve).”

Civil Aviation Authority of the Philippines (CAAP) Director-General Jim C. Sydiongco said CAAP is planning to go ahead with at least 22 ongoing projects in CAAP-operated facilities that had been scheduled for 2020 but suspended due to the ECQ.

Transportation Undersecretary for Administrative Service Artemio U. Tuazon, Jr. said the department submitted to the Inter-Agency Task Force on Emerging Infectious Diseases (IATF-EID) its proposed protocols for the operation of public transportation in both ECQ and GCQ areas.

He said the proposed protocols were included in the omnibus guidelines, for submission to President Rodrigo R. Duterte for his approval.

Under the proposal, public transportation will remain suspended in ECQ areas while a gradual reopening of operations of public utility vehicles (PUVs) with 50% reduced capacity will be implemented in GCQ areas.

The department also proposed to encourage the general public to use bicycles or mobility devices.

It said PUVs will be required to secure special permits to operate in GCQ areas. — Arjay L. Balinbin

CIC launches portal for ‘contactless’ credit database access

April 30, 2020 | 8:26 pm

STATE-RUN Credit Information Corp. (CIC) said it launched its Covered Entity Portal, through which financial institutions can register and submit documents online.

“The CIC has always envisioned an end-to-end technology driven process. ARTA (Anti-Red Tape Authority) provided the initial motivation to improve government services so it was easier to switch to an almost fully automated process that would minimize physical interactions among CIC personnel, system users, and the general public,” CIC President and CEO Jaime Casto Jose P. Garchitorena was quoted as saying.

CIC recently issued Circular No. 2020-01, “Requirements on Becoming an Accessing Entity of the Credit Information Corporation” to enable “contactless and paperless” access for financial institutions to the Philippines’ sole credit registry.

It said applicants can register, update and submit documents online through the web-based application Covered Entity Portal, as well as manage their own user accounts.

Applicants can also access and upload the system-generated memorandum of agreement and the Accessing Entity Information Sheet (AEIS) on the portal.

The entities that can access the credit data are banks, quasi-banks, trust entities, investment houses, financing firms, cooperatives, non-governmental and micro-financing organizations, credit card and insurance companies, as well as state lending institutions.

Mr. Garchitorena said the CIC database serves as a “valuable tool” for enhanced risk assessment for financial institutions regarding a borrower’s capacity to pay, especially now that more small businesses are expected to avail of financial support programs and restructuring of loans.

“But even as these are designed to help borrowers and MSMEs (micro, small, and medium enterprises) in a state of credit distress, lenders still need to approach this from a data-driven, risk-based perspective,” he said.

Financial entities can access CIC’s credit reports at P10 per inquiry until December.

At the end of March, the credit registry’s database had records on 11.3 million unique individuals and around 83,000 firms.

CIC was created by Republic Act No. 9510 or the Credit Information System Act. — Beatrice M. Laforga