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Not enough dairy animals to reach milk self sufficiency

DESPITE the reported increase in the number of dairy animals, this is not enough to reach the desired local milk sufficiency level, the Commission on Audit (COA) said.

“Per Philippine Statistics Authority (PSA) data, the number of dairy animals increased by an average of 3% annually from 39,069 in CY (calendar year) 2012 to 47,600 in CY 2018… However, these accomplishments are still below the desired projections under the DRM (Dairy Road Map),” said the report stated which was released on Jan. 23.

The Philippines’ DRM was designed to serve as the “blueprint of achieving the vision of a vibrant local dairy industry providing wholesome, affordable milk to delighted consumers, building a nation of healthier children and wealthier farmers, while contributing to agribusiness expansion and job generation in agriculture,” said the Department of Agriculture (DA).

According to the COA, the number of dairy animals is 76% short of the 198,977 target, while milk production is 54% short of its 2.8% sufficiency level target.

“Furthermore, historical data show that local milk production remained at the same level of 1.2% for CYs 2013-2016 and slightly increased to 1.3% for CYs 2017-2018,” COA said.

This means that the Philippine Dairy Industry has been dominated by dairy importers.

Lack of coordination among key agencies, the lack of well-defined roles and responsibilities for the dairy industry’s stakeholders, lack of funding, operational issues, and significant cattle and buffalo mortality rates are the factors cited by COA which led to the non-attainment of DRM targets.

The COA said that the Philippine Carabao Center (PCC) did not adopt the 2010-2016 DRM and instead crafted its own Strategic Plan 2011-2025 which was also not implemented.

“What PCC did was set substantially lower targets than the DRM and its Strategic Plan. PCC explained that the adjustments were based on the budget available to them,” COA said.

The Commission also said that the “vagueness” of the DRM made it difficult to hold implementing agencies, such as the Bureau of Animal Industry (BAI) and the Dairy Training and Research Institute (DTRI), accountable for their supposed roles in the program.

It also added that the contribution of the private sector was not elaborated in the DRM.

Meanwhile, the National Dairy Authority (NDA) and the PCC also encountered difficulty in importing dairy animals due to the lack of funding, the COA said.

“For example, out of the 11,880 target for CYs 2013-2018 under the DRM, the NDA was only able to import 3,060 dairy animals. Similarly, the PCC was not able to import dairy buffaloes as planned due to lack of funding support from the DA,” it said.

The COA also noted that the NDA and the PCC failed to fully implement and monitor other herd build-up strategies due to operational issues. As a result, targets under these strategies were also not met.

“For example, the NDA’s Artificial Insemination (AI) and breeding services strategy only achieved a calf drop rate of 42% of the total animals bred and inseminated, instead of 60%. Also, the harvest rate under the NDA’s animal buy-back strategy was only at 11%, which is below the target of 20%,” it said.

High mortality rates of dairy animals also contributed to the non-attainment of DRM targets. This was caused by “problems with herd management, inadequate provision of proper animal healthcare services, and non-provision of housing facilities for the animals,” the COA said

“For CYs 2013-2018, the NDA registered 2,614 cattle mortalities or 10% of the total dairy cattle population; which cost the government a total of P346.35 million. Meanwhile, the PCC registered 3,284 buffalo mortalities, which costs P471.42 million,” the COA reported.

To address the issues in the dairy industry, the COA recommended that the DA should “strengthen coordination and cooperation among key stakeholders to unify efforts and ensure funding support aimed at attaining the desired local milk sufficiency level.”

It also recommended that the roles and commitments of concerned government agencies and the private sector should be clearly defined “to ensure their respective contributions in the attainment of its targets.”

Meanwhile, in the absence of fund requirements for importation, the COA said that the NDA and PCC “should focus on massive upgrading through AI and bull breeding, buy-back program, intensified monitoring and efficient collection of animal repayments to increase the inventory of dairy animals.”

Lastly, the COA also recommended that the NDA and PCC “should strengthen their controls in program administration in line with the principles of efficiency, economy and effectiveness.”

“It is acknowledged that actions and measures have been adopted and/or initiated to address gaps in the implementation of the programs. It is expected that improvement will be seen in the attainment of program and DRM objectives with the observance of the foregoing recommendations,” COA said. — Genshen L. Espedido

IC issues show cause order vs Prime Care Kaagapay Life Plan

THE INSURANCE Commission (IC) has issued a show cause order against pre-need company Prime Care Kaagapay Life Plan, Inc. (Prime Care Kaagapay) on questions of fraud after bank records did not match the company’s claims.

In a statement on Friday, IC said they found the bank records that Prime Care Kaagapay submitted when it applied to renew its license and prove that it complied with the P100-million capitalization requirement were “spurious” or fake.

“Upon verification with the depository bank of Prime Care Kaagapay, it was revealed that the bank certification, which was supposed to prove that it has the required P100 million minimum capitalization under the Pre-Need Code, was spurious,” Insurance Commission Dennis B. Funa was quoted as saying.

Mr. Funa said it was during their investigation that they found the company’s bank certifications submitted bore the same serial number of the same account “but with different amount of available balances.”

Upon further investigation, it found that the bank account has already been closed and only contains an outstanding balance below P100 million, or the minimum paid-up capital for pre-need firms.

With this, the IC is set to place the Prime Care Kaagapay under conservatorship for it to take over the assets and management of the company, a preventive measure to ensure that its assets will only be used for legitimate business purposes.

“While we cannot disclose the details of the ongoing investigation until its completion, we assure the public that we are carefully looking into all possible violations of the responsible officers and hold them liable,” Mr. Funa said. — BML

Banks shun BSP’s rediscount window

BANKS did not tap the rediscount window of the Bangko Sentral ng Pilipinas for the whole month of January.

“There were no availments under the Peso Rediscount Facility and the EDYRF (Exporters Dollar and Yen Rediscount Facility) for the period covering 01 to 31 January 2020,” the BSP said in a statement on Friday.

Analysts said that the additional liquidity stemming from the reserve requirement ratio cuts in 2019 may have given flexibility to banks.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the reduction in banks’ reserve requirements last year infused more than P450 billion in liquidity into the financial system.

“Thus, more peso funds with banks due to the RRR cuts reduced the need to tap banks’ rediscounting facility with the BSP, given the banks’ greater flexibility to lend more to their clients,” Mr. Ricafort said in a text message.

This was echoed by UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion.

“In theory, growing liquidity (financing source and money) helps financial institutions fund economic activities. Thus, additional financing from the rediscount facility is secondary at this point,” Mr. Asuncion said in a text message.

The BSP enables lenders to tap additional money supply by posting their collectibles from clients as collateral through the rediscount window.

This gives banks the chance to use fresh cash — which could be in peso, dollar, or yen — to disburse more loans for corporate or retail clients and service unexpected withdrawals.

FEBRUARY RATES
Meanwhile, for this month, rediscount rates stand at 5.1965% for peso loans maturing in 90 days or less, while those with a tenor of 91- to 180-day are priced at 6.143%.

Based on the rules set by the BSP, the yield on the peso rediscount facility is the overnight lending rate, which has been reduced to 4.25% on Thursday, to be added to a spread depending on the term of the loan.

On the other hand, dollar credit lines come with a lower rate of 4.69763% those maturing from one day to three months; 5.64413% for 91- to 180-day loans; and 7.53713% for 181- to 360-day credits.

As for yen loans, rates were placed at 2.88983% for one to 90-day loans; 3.83633% for 91- to 180-day loans; and 5.72933% for 181- to 360-day loans.

Computation for the EDYRF is based on the 90-day London Inter-Bank Offered Rate plus the spread depending on the tenor of the credits. — L.W.T. Noble

Peso rises further on rate cut bets

THE PESO strengthened on Friday on prospects of another rate cut this year and amid developments in the trade talks between the world’s two biggest economies.

The local unit finished trading at P50.755 on Friday, appreciating by 2.50 centavos from the Thursday close of P50.78 against the dollar, according to data from the website of the Bankers’ Association of the Philippines.

Week-on-week, it also strengthened by 7.50 centavos from the P50.83 close on Jan. 31.

The peso opened at P50.85 versus the greenback. Its weakest showing for the day was at P50.86, while its intraday best was at P50.74 per dollar.

Dollars traded dropped to $771.92 million from $917.8 million on Thursday.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso’s strength came after the central bank’s continued dovish stance.

“Peso exchange rate closed stronger after BSP Governor [Benjamin E. Diokno] signalled another rate cut possible by mid-2020, after yesterday’s cut in local policy rates, improving sentiment on the local financial markets,” he said in a text message.

Mr. Diokno told Bloomberg TV in an interview on Friday that another rate cut may be possible by the middle of the year.

On Thursday, the BSP reduced key policy rates by 25 basis points, trimming the reverse repurchase, overnight lending and deposit rates to 3.75%, 4.25%, and 3.25%, respectively.

Meanwhile, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion cited developments in the US-China trade deal as a driver.

“Market perception has slightly improved and more confident because of the reaffirmation to the commitment by both US and China to their phase 1 deal,” Mr. Asuncion said in a text message.

Reuters reported that White House spokesperson Judd Deere said that US President Donald J. Trump and Chinese President Xi Jinping have reaffirmed their commitment to implementing the phase one of their trade deal through a conversation held on Thursday.

Aside from this, Mr. Trump has also expressed confidence in China’s strength and resilience as it battles through the coronavirus outbreak that has sickened around 30,000 in Asia’s biggest economy. — L.W.T. Noble with Reuters

Pag-IBIG Fund books higher profit

THE HOME Development Mutual Fund (Pag-IBIG Fund) booked a higher income in 2019 on the back of loan payment collections.

In his 2019 accomplishment report released in Pasay City on Friday, Pag-IBIG Fund Board of Trustees Chairman Eduardo D. del Rosario said Pag-IBIG’s net income stood at P34.37 billion in 2019, up by 4% compared to the P33.17 billion booked in the preceding year.

Assets held by the fund also jumped by 13% to a record high P603.39 billion from P533.72 billion.

Mr. Del Rosario said 90% or P31.07 billion of their fund’s income will be given back to its members in the form of dividends. He noted that dividend rates for regular savings and MP2 (Modified Pag-IBIG 2) are at 6.73% and 7.23%, respectively.

In terms of cash loans, he said P53.83 billion was released from the fund to over 2.5 million members.

“In the delivery of home financing, Pag-IBIG released P86.74 billion in housing loan takeouts in 2019. This is the highest ever housing loan takeout and this is 15% higher than last year’s P75.31 billion,” Mr. Del Rosario said.

Of these funds, P10.64 billion were disbursed for socialized housing meant for more than 27,000 borrowers that belong to minimum wage and low-income sectors.

He added that member savings collected from 14.69 million active members climbed by 25% year-on-year to P50.38 from P40.27 billion in 2018.

“What is noteworthy is the trust that our members have shown in our MP2 savings program. The MP2 is a purely voluntarily savings program. This year, our members collectively saved P12.01 billion [through MP2], a 169% from the previous year[‘s P4.47 billion],” Mr. Del Rosario said.

Mr. Del Rosario added that they are now involved in the local bond market.

“I reported that we are engaged in services of local equity fund managers…We awarded P1 billion each to the following: BPI (Bank of the Philippines Islands) Asset Management and Trust Corp., BDO [Unibank, Inc.], Philippine Equity and Management, Inc., Metro[politan] Bank & Trust Co.,, and ATRAM Trust Corp.,” he said.

Mr. Del Rosario also noted some of their initiatives towards digitalization, including the Virtual Pag-IBIG app where members can access some of their services as well as their partnership with PayMaya Philippines, Inc. where members can pay their contributions. — L.W.T. Noble

PSEi closes flat as BSP cuts key rates

THE MAIN INDEX maintained its 7,500 support level at the close of the trading week amid a flat turnout after Friday’s session.

The benchmark Philippine Stock Exchange index (PSEi) added 0.69 point to close at 7,507.20 on Friday. Meanwhile, the broader all shares index dipped 0.08 point to 4,422.64.

“Philippine shares closed flat on the BSP’s (Bangko Sentral ng Pilipinas) decision to cut interest rates by 25 basis points yesterday, more updates from the Coronavirus and China’s statement that it will cut tariff on US goods by as much as 50%,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a mobile message on Friday.

While anticipation of the BSP’s rate cut announcement pushed the PSEi up on Thursday, it was dampened by the Health department’s report on Friday that one of the patients it is investigating for infection to the novel coronavirus died due to pneumonia on Thursday.

In China, the center of the novel coronavirus, the death toll reached 636 people and confirmed cases jumped to 31,161 as of Friday, Reuters reported.

Unlike the local bourse, other Asian markets were not able to maintain their growth trajectory on Friday. Japan’s Nikkei 225 and Topix indices shed 0.19% and 0.28% respectively, as Hong Kong’s Hang Seng index declined 0.33% and South Korea’s Kospi index gave up 0.72%.

Sectoral indices at the PSE were mostly up. Financials rose 6.71 points or 0.37% to 1,791.09; property gained 9.80 points or 0.24% to 4,036.80; mining and oil added 14.02 points or 0.19% to 7,383.47; and industrials climbed 6.70 points or 0.07% to 9,391.68.

The losers were services, which fell 7.71 points or 0.51% to 1,502.87, and holding firms, which lost 26.03 points or 0.36% to 7,146.01.

Some 2.86 billion issues worth P5.33 billion switched hands on Friday, lower from Thursday’s 6.22 billion issues worth P7.04 billion.

Decliners outpaced advancers, 105 against 71, while 54 names ended unchanged.

Foreign investors remained buyers but their net purchases were cut to P288.47 million from P1.43 billion the previous day. — Denise A. Valdez

Leading accelerator Plug and Play Indonesia onboards local fintech startup PearlPay

Last December 13, 2019, local fintech startup PearlPay was selected to join the sixth batch of prestigious global accelerator Plug and Play’s program in Indonesia.

PearlPay works towards assisting financial institutions, particularly rural banks, with their digital transformation efforts to help them serve and reach more underserved Filipinos living in underserved communities, all with the end goal of connecting our nation’s unbanked.

This new collaboration with Plug and Play will see that same mission expand to service the unbanked of Indonesia.

According to Think Google, 66 percent of the Indnonesia’s 260 million citizens is unbanked. Due to the country’s sheer size and geographical fragmentation, larger financial institutions are unable to reach them, while rural banks simply do not have the means to service them.

And even though Fintech has been on the rise, already penetrating urban and suburban areas, they have yet to penetrate rural areas in the country.

Noting PearlPay’s rising success in reaching parallel communities in the Philippines, Plug and Play Indonesia saw the opportunity to extend the digital toolkit PearlPay provides to Indonesia’s over 1,000 rural banks.

What is Plug and Play’s Startup Accelerator Program?

In the sea of startup enablers in Indonesia, Plug and Play is the only accelerator endorsed by President Joko Widodo, who’s acknowledged the global firm as a partner in fueling Indonesia’s continued development. Through its last five batches, Plug and Play Indonesia has already helped 53 startups in the country.

As part of Plug and Play Indonesia’s accelerator, PearlPay will engage in a three-month program of fine-tuning their platform to better service the local market, while gaining access to:

  • Opportunities to collaborate with corporations and conglomerates
  • Seed funding
  • Direct mentorship and workshops from successful entrepreneurs and industry leaders
  • Up to $60,000 value of free tools, services, and startup programs
  • Opportunity to network with local and international investors
  • Three months of co-working space in Kuningan
  • Access to Silicon Valley partners and the global technology community
  • And a chance to present to investors, corporate partners, government and media upon completion of the program

“Getting help from one of the most successful startup accelerators such as Plug and Play increases the probabilities of our success in achieving exponential growth,” said PearlPay CEO Spark Perreras. “Helping empower Indonesian rural banks is a step forward in truly making financial services universally accessible.”

Garuda Digital Alliance: Beyond Startups Partnership, A Story of Friendship

Photo: A village in West Java (captured from a train in Jakarta to Bandung, Indonesia)

Any technology that becomes Digitized (our first “D”) enters a period of Deceptive growth. During the early period of exponentials, the doubling of small numbers (0.01, 0.02, 0.04, 0.08) all basically look like zero. But once it hits the knee of the curve, you are only ten doublings away from 1,000x, twenty doublings get you to 1,000,000x, and thirty doublings get you a 1,000,000,000x¹. Let us focus on the first “D” because Digitization serves as the solid rock foundation of all exponential growth.

Figure 1–6D’s of Exponential Growth

Before an industry can harness the benefits of The Fourth Industrial Revolution’s technologies, such as artificial intelligence, augmented reality, robotics, and 3-D printing, etc., data must be digitized, which is the result of the Third Industrial or Digital Revolution fueled by the cloud technologies. Exponential growth is in developing countries like the Philippines and Indonesia, where industries such as rural banks, schools, and socialized housing, in which almost all of its data are still not digitized. Take, for example, the problems that  PearlPay and JetSchool are solving.

Figure 2–The Four (4) Industrial Revolutions²

“From passbook banking to digital banking.”

The bigger the problem, the bigger the opportunity. Let’s examine what problem is PearlPay solving. There are more than 1,600 BPR (Bank Perkreditan Rakyat or rural banks) in Indonesia, with more than 4,500 branches and more than 10 million existing bank customers. Almost all rural banks were trapped using the passbooks, which is a paper-based technology. As aforementioned, digitization is the solid rock foundation of exponential growth, and what an impeccable timing would be to digitize the rural banks today in conjunction with the high mobile internet penetration rates.

“If PearlPay were for the rural banks, then JetSchool will be for the schools.”

Jetschool is a school management app that manages online tests, attendance, finance, scores, library, etc.

Jetschool was elected as Top 10 Tech Startup to Watch in Indonesia by Tech In Asia in 2017.

“Great industries are never made from single companies. There is room in space for a lot of winners.” Jeff Bezos
Garuda Digital Alliance Ceremonial Signing (Jan 20, 2020) at Bandung City, Indonesia — Photo (from left to right): Najib Yusuf (Founder and CEO, JetSchool), Hafizh Mulia (1001Teras), Kenny Dewi Kaniasari (Head of Culture and Tourism Office, City Government of Bandung, Indonesia), Spark Perreras (Group CEO, PearlPay), Atty. Jay Masangcay (Director and Chief Legal Counsel, Pil-Chi Telecoms Inc.), and Shadman Sadab (CEO, Future City Summit)

Life as a startup, especially those with less than three (3) years, is about survival. One of the keys to surviving is to ally and to help each other through stormy weather. But life itself is not all about survival, but having a sense of purpose and develop a friendship with the people that we can grow with, people that will help us become a better version of ourselves.

I am pleased to share some of the initiatives of the Garuda Digital Alliance.

    1. PearlPay shall be the payment technology engine and provider to the digital payment service and product of JetSchool (JetPay).
    2. Future City Summit (in partnership with the City Government of Bandung, Indonesia “Urban Data Lab”) will be providing a FREE co-working space for two (2) years for the members of the Garuda Digital Alliance.

Future City Summit Stakeholders at the Musem of Bandung, Indonesia

The Garuda Digital Alliance sees a world of digital inclusivity, where all communities are participating and thriving in the digital economy. The challenge of digital inclusion is enormous, but it is also a blessing to have this rare opportunity.

Panagbenga 2020: Staying in bloom

AS SUNFLOWERS, petunias, bonsai plants, and rose cacti decorate the public spaces in the city of Baguio at this time of the year when it holds the Panagbenga Festival, visitors learn that neither earthquakes nor viruses can keep a good city down.

6 passengers with coronavirus-infected couple show symptoms

SIX FILIPINO passengers who were on the two domestic flights taken by the Chinese couple who tested positive for the novel coronavirus have shown symptoms of the infection, according to the police unit assisting in the contact tracing. Col. Rhoderick C. Armamento, deputy director for operations of the Criminal Investigation and Detection Group (CIDG), said they have already communicated with 23 of the 61 passengers who flew with the Chinese couple on a Cebu Pacific flight from Cebu to Dumaguete City on Jan. 21. Of the 23, three have manifested symptoms. The other three were among the 25 traced out of the 132 passengers of a Philippine Airlines flight from Dumaguete to Manila. Mr. Armamento said one of the passengers with symptoms has been quarantined in a provincial hospital while the rest are in their respective homes. “All passengers who have been contacted by the CIDG were advised to avoid unnecessary contact with people and stay at home as much as possible,” he said in a press briefing. Of the 48 contacted passengers on the two flights, seven of are foreigners. Mr. Armamento admitted they are having difficulty tracing the remaining passengers, some of whom gave mobile numbers that are not working. — Emmanuel Tupas, PHILSTAR

Nation at a Glance — (02/07/20)

News stories from across the nation. Visit www.bworldonline.com (section: The Nation) to read more national and regional news from the Philippines.

Nation at a Glance — (02/07/20)

BSP cuts key rate on virus outbreak

By Luz Wendy T. Noble and Beatrice M. Laforga
Reporter

THE Philippine central bank cut benchmark interest rates on Thursday to take advantage of slower price increases and shield the economy from the effects of a deadly coronavirus outbreak.

The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) cut the key rate by 25 basis points (bps) to 3.75% at its first policy meeting for the year, in line with market expectations.

“Prospects for global economic growth have weakened further amid geopolitical tensions,” BSP Governor Benjamin E. Diokno said at a briefing after the policy ruling.

“The spread of the 2019 novel coronavirus could have an adverse impact on economic activity and market sentiment in the coming months,” he added.

The manageable inflation environment “allowed room for a preemptive reduction in the policy rate to support market confidence,” the governor said.

BSP “would be watchful over emerging price and output conditions “to ensure that monetary policy settings remain consistent with price stability while supporting sustained noninflationary growth over the medium term,” he said.

The interest rates on the overnight lending and deposit facilities were also cut to 4.25% and 3.25%, respectively.

The decision follows 75 bps of rate cuts last year and 175 bps of rate increases in 2018 amid a high inflation environment. It matched the forecast of 10 out of 13 analysts in a BusinessWorld poll last week.

Inflation expectations continued “to be firmly anchored within the target over the policy horizon” for 2020 and 2021, Mr. Diokno said.

Upside risks to inflation include rising food prices because of the African Swine Fever outbreak and tighter global rice supply, and risks from Taal Volcano’s eruption and Typhoon Tisoy.

On the other hand, trade and economic policy uncertainties have been easing upward price pressures, Mr. Diokno said.

January inflation picked up more than expected to an eight-month peak of 2.9%, but it was still within the central bank’s comfort range.

The rate was faster than 2.5% in December but slower than 4.4% in January 2019, according to data from the Philippine Statistics Authority.

It was still within the central bank’s 2-4% target for the year.

INFLATION OUTLOOK
Also yesterday, BSP Deputy Governor Francisco G. Dakila, Jr. said the inflation outlook for this year had been raised to 3% from 2.9%, while the view for 2021 was kept at 2.9%.

Both forecasts still fall within the central bank’s 2-4% target.

Meanwhile, the Department of Finance said the novel coronavirus could slow global economic activity and oil demand, tempering inflationary pressures.

“The downtrend in crude oil prices starting January could slow down inflation going forward,” it said in an economic bulletin yesterday.

Slower global economic growth because of the virus outbreak could further cut petroleum demand and damp price pressures, it added.

The outbreak has infected thousands and killed almost 500 people, mostly in China.

Agriculture Secretary William D. Dar had agreed to adopt measures to boost food supply to further cut price pressures during a phone call with Finance Secretary Carlos G. Dominguez III, the Finance department said.

Meat, fish and vegetable price increases were faster than the average, contributing 1.09 points to the price hike, it said.

Alex Holmes, Asia economist at Capital Economics, said the central bank was likely to cut rates again this year amid a “poor outlook for the economy.”

“The Philippines is likely to be more insulated from the economic fallout of the coronavirus than most other countries in the region,” he said in a note.

“But the disruption to the tourism sector and industry will still add to the headwinds the economy faces from slowing consumption growth and weak exports,” he added.

UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said another rate cut could come sooner.

“I was expecting the next 25 bps in the second half of 2020 initially, but this coronavirus outbreak has pushed a critical economic decision moving forward,” he said in a text message.

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