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Fitch blames slow credit growth on trade issues

THE SLOWDOWN in credit growth despite the rounds of monetary easing by the central bank could be blamed on a decline in loans to the manufacturing sector, according to Fitch Ratings.

Aside from this, the ratings agency also attributed the credit growth slowdown to a lag in the effects of the rate cuts done by the central bank earlier this year.

“We believe that the slowdown could be partly attributed to a generally weaker external environment, amid the global trade tensions,” Fitch Ratings’ Asia Pacific Banks’ team said in an e-mail to BusinessWorld on Wednesday.

Latest data from the Bangko Sentral ng Pilipinas showed loans disbursed by big banks in October expanded by 9.3%, a slower pace compared to the 10.5% in September. Inclusive of reverse repurchase agreements, bank lending rose 9.1% in October, also a slower pickup compared to the 10.1% seen in the previous month.

Lending to the manufacturing sector slipped by 1.6% year on year to P1.037 billion from P1.054 billion. It also dipped by 0.8% on a monthly basis from the P1.041 billion worth of loans disbursed in September.

The ongoing trade rift between the world’s two biggest economy has long dented the manufacturing industries of countries, including our Asian neighbors such as Singapore, Malaysia, Japan, and Korea.

Meanwhile, analysts pointed out that the Philippines has been insulated from the trade war due to being a less export-oriented state and its limited exposure to the manufacturing sector.

“Consumer and business sentiment indicators have been strengthening in recent months which should bode well for loan growth if it translates into economic activity,” Fitch Ratings said.

Loans disbursed for household consumption by universal and commercial banks grew 26.7% year on year in October to P805.934 million from P635.997 million. This is a pickup from a pace of 26.2% expansion in September, BSP data showed.

Fitch also said the recent rate cuts have yet to be felt by the financial markets.

“The effect of recent rate cuts could also be lagging, as businesses have been waiting for rates to bottom before taking on credit to expand,” the credit rater said.

Earlier, BSP Governor Benjamin E. Diokno said it could take time before the market fully feels the effect of its easing moves, considering the aggressive 175-basis-point (bp) hike in 2018 amid a high inflation environment.

“’Yung growth kasi siguro partly ’yung tightening nung 2018 (Slow loan growth could be partly due to the tightening in 2018 totaling 175 bps)… As I said, monetary policy works with a lag. So may impact talaga ’yun, kaya nga we started unwinding (It really has an impact, that’s why we started unwinding),” Mr. Diokno told reporters on the sidelines of the BSP’s Christmas lighting ceremony on Monday evening.

Following 75 bps of rate reductions this year, key interest rates stand at four percent for the overnight reverse repurchase facility, 3.5% for overnight deposit, and 4.5% for overnight lending. — L.W.T. Noble

AC Energy plans to focus on renewables, peaking plants

By Victor V. Saulon, Sub-editor

AC Energy Philippines, Inc. targets to build around 1,300 megawatts (MW) of power generation plants by end-2020, or about three times the size of the company’s installed capacity before the Ayalas’ energy arm bought the former Phinma Energy Corp. last year.

“We’ll be focusing a lot on renewables and peaking plants,” Eric T. Francia, president and chief executive officer of AC Energy Philippines said in a briefing at the company’s head office in Makati City.

The Ayalas’ energy arm in the country previously announced greenfield or new power plant projects in Alaminos, Laguna at 120 MW, and 60 MW in Palauig, Zambales. An affiliate property company has land in Alaminos where a solar farm can be put up.

The target capacity is apart from that of the company’s parent firm — Ayala Corp. subsidiary AC Energy, Inc. — which has a unit for power development projects outside the Philippines.

“We are going to issue the ‘notice to proceed’ very soon but we’ve already disclosed the board approval for the investment in these two solar projects and one peaking project in Pililia, the 150 MW peaking plant,” he said.

In October, the company disclosed that it was looking at term loan facilities for up to P15 billion and that its board of directors were studying a number of projects. These are investments in greenfield power development, namely: a solar farm in Alaminos, Laguna, and a diesel power project in Pililla, Rizal.

“We’ll start with the 150 MW [and] 300 MW eventually,” Mr. Francia said about the Pililia diesel-powered plant.

He said the project started its construction phase and is expected to be completed by end-2020.

“Before we acquired Phinma Energy, [it] had 430 MW of attributable capacity,” he said, referring to the acquired company’s share in megawatts in the projects it had partnered with other investors.

In November, AC Energy Philippines said its board had ratified the executive committee’s plan to enter into a share purchase agreement with the Philippine Investment Alliance for Infrastructure (PINAI) fund for the acquisition of the latter’s ownership interest in Philippine Wind Holdings Corp., the parent company of North Luzon Renewables Energy Corp.

North Luzon Renewables owns and operates an 81-MW wind farm in Pagudpud, Ilocos Norte. PINAI is a fund composed of Macquarie Infrastructure Holdings (Philippines) Pte. Ltd., Langoer Investments Holding B.V., and the Government Service Insurance System.

The board also approved the purchase of up to 100% of PINAI fund’s ownership interest in San Carlos Solar Energy, Inc. (Sacasol), which owns and operates a 45-megawatt (MW) solar farm in San Carlos City, Negros Occidental. The solar farm is operating under the feed-in-tariff (FiT) regime.

Also approved was the acquisition of up to 100% of PINAI fund’s ownership interest in Negros Island Solar Power, Inc. (Islasol), which owns and operates an 80-MW solar farm in Negros Occidental.

On Monday, AC Energy Philippines signed a share purchase agreement with PINAI to buy its full ownership interest in Islasol.

Mr. Francia said the company is in the process of signing a similar agreement for the other energy projects.

Day6: Defying Gravity

By Cecille Santillan-Visto

Concert Review
Day 6 World Tour: Gravity in Manila
Araneta Coliseum, Nov. 23, 2019

HIGH FLYING Jae during the Day6 Gravity concert in Manila

WITH AT least two of Korea’s rock bands currently on hiatus, there is a clamor for musicians to fill the void. The members of CNBLUE and FTIsland are serving the military and audiences worldwide are craving for more talents to step up to the plate and provide the kind of music that these two established bands are known for.

Day6 of JYP Entertainment has certainly risen to the occasion, and proved that they can hold their own in a field that was once dominated by more experienced bands. It already has two world tours under its belt between 2018 and 2019, and rounded up Japan in a series of concerts last year.

Leader Sungjin, lead guitarist Jae, bassist Young K, keyboardist Wonpil and drummer Dowoon certainly made a huge splash during their first concert, Day6 First World Tour: Youth in Manila on Oct. 6, 2018 (see related article: https://www.bworldonline.com/the-dawning-of-day6/), so much so that they returned to the country a year later for a second serving of spectacular live music.

Day6 World Tour: Gravity in Manila quickly sold out shortly after producer Pulp Live World began ticket sales. On show day, the Araneta Coliseum was virtually a white ocean, with spectators wearing the group’s official light band. From a relatively small venue that was the New Frontier Theater only a year ago, the Big Dome, which has welcomed some of the biggest names in the entertainment world, hosted Day6. The 10,000-seat coliseum was filled to the brim.

Day6 ensured that the show would be worth the while of MyDays, their fandom. They dished out 24 songs, not counting the musical solo of each member and a delightful mash-up of their originals with those of established singers.’ For the mash-up portion, they sang Ed Sheeran’s “Shape of You” with “Like That Sun,” “Treasure” by Bruno Mars with their own “Days Gone By,” and Daft Punk’s “Get Lucky” and “Blood.”

From the first chord played in “Best Part,” a track from their latest album, The Book of Us: Gravity, to the last synth sweep in “Freely,” the Manila concert was fun-filled, memorable, and definitely makes the audience realize that Day6 is such an underrated band.

The fans also helped set the dazzling concert mood by the synchronized waving of their white handkerchiefs during the opening song, a project that visibly pleased the boys.

The curtain raiser was followed by “Sing Me” and “I Wish,” before the band members moved to play “Somehow,” “Time of Our Life,” and “So Cool.”

For most of the concert, the crowd sang along with the band but the virtual videoke session was more pronounced in “I’m Serious” where the fans sang the chorus, and in “Congratulations,” where Day6 allowed the spectators to sing the first few stanzas of the song.

It was amazing, to say the least, to see the whole Araneta at one with the band by clearly singing the Korean verses.

Especially for the Manila leg, Day6 performed on an extended stage, bringing along their instruments to be closer to the fans. They said it was the first time that they did it during the Gravity world tour outside Seoul. The viewers reciprocated the gesture by their fantastic reaction, cheering on the boys in every number.

The group whipped up “How To Love,” “For Me,” “Wanna Go Back” on the extended stage before returning to the main platform for the mash-ups.

During the concert, the Korean boy band admitted that their journey as a group since their launch in September 2015 was never easy. Jae was so touched by a video prepared by the fans, that the lead vocalist and guitarist unabashedly cried on stage.

The last few songs to close the show were equally impressive, including “Warning,” “Shoot Me,” “Cover,” “You Were Beautiful,” and “Dance, Dance.”

Day6 connected with their Filipino fans more this time than in their first Philippine concert last year. Despite the loud instruments and the boisterous interaction between sets, Gravity in Manila was intimate, personal, and undeniably struck a chord with the audience. With that kind of performance, Day6 will continue to defy gravity as there is nowhere for the group to go but up.

Negative rates starting to worry ECB

FIVE WEEKS since Mario Draghi retired from running the European Central Bank (ECB), finding an outright fan of his legacy of negative interest rates has become a lot harder.

Governing Council members, who collectively lowered the key rate to minus 0.5% shortly before Mr. Draghi’s term ended, are increasingly portraying it as a necessary evil that shouldn’t be compounded. Sparse communication on monetary matters by his successor as president, Christine Lagarde, hasn’t dispelled that impression.

Banks have picked up on the mood change, dropping predictions that Ms. Lagarde — under the guidance of Chief Economist Philip Lane, the intellectual standard-bearer who proposed the latest cut as part of a stimulus package — would ease again at her first policy meeting on Dec. 12.

It’s a striking development for an institution whose credibility hangs on the promise that it can always do more if needed to revive inflation, and whose policy guidance explicitly states that rates can still fall further. It suggests that a strategy review planned by the new chief will need a thoughtful scrutiny of the toolkit.

“We don’t expect they’ll cut rates further,” said Sarah Hewin, chief economist for Americas and Europe at Standard Chartered Bank. “I’m not sure there is a consensus that negative rates are bad, but I’m wondering whether with this transition from Mr. Draghi to Ms. Lagarde — a new broom at the helm — there’s an opportunity to vocalize their concerns.”

Mr. Lane has defended negative rates as a complement to other measures that aim to spur economic activity. In one speech last month, he said they aren’t “super loose” — citing the absence of a price surge as a demonstration of that. In another, he said the policy forces banks to chase higher investment returns.

Aline Schuiling, an economist at ABN Amro Bank NV, reckons the weakness of the economy means the ECB will cut again, probably in March. There is “some recovery in growth, but not very spectacular,” she said.

Yet the lack of a broad public defense for negative rates has let a chorus of criticism from bankers fill the void. Among them is Deutsche Bank AG President Karl von Rohr, who last month described them as “the biggest challenge facing the European financial industry.” Even the ECB’s own financial stability review flagged the risks of ultra-loose money.

Two of the ECB’s prospective new board members took a similarly cautious view when quizzed by the European Parliament this week. Italy’s Fabio Panetta said officials need to be alert to the “unintended consequences of monetary policy.” His German colleague, Isabel Schnabel, said the institution should listen carefully to voters’ concerns on sub-zero rates.

Such discontent is vocal in some euro-zone countries, notably Germany and the Netherlands. Reflecting that, ECB officials are also privately encountering pushback from some finance ministers, according to people familiar with the matter.

Bundesbank President Jens Weidmann and Dutch central bank Governor Klaas Knot, already skeptics of loose policy, look unlikely to back another rate cut unless the economy worsens significantly. So far, it seems to be stabilizing. At Mr. Draghi’s final meeting in October, one participant made a plea for “patience” to allow current easing to work.

Bank of Spain Governor Pablo Hernandez de Cos said this week he couldn’t rule out that sub-zero policy could eventually harm monetary-policy transmission.

The chief worry is that policy is close to the so-called reversal rate, where the harmful effects outweigh the good. Mr. Lane’s denial that such a situation is near may be valid, but it’s also unsurprising that the chief economist wants to dispel any impression of monetary impotence.

He and many of his colleagues, including Ms. Lagarde, do make the point that more government spending could speed up the path to normalization. Germany, the prime candidate to do that, isn’t rushing to respond though, and a newly created euro-area fiscal capacity is tiny. — Bloomberg

SMC plans fundraising for infrastructure projects

SAN MIGUEL Corp. (SMC) is planning to raise funds from the overseas and local debt markets for its major infrastructure projects and investments.

In a disclosure, the listed conglomerate said its board of directors gave the go-signal for the establishment of a medium-term note program of $3 billion (around P153 billion). From the program, SMC will initially issue $500 million worth of perpetual securities. It will be registered at the Singapore Exchange.

SMC said this will allow the company to “tap the financial market for funding through the issuance of securities, including but not limited to corporate notes, bonds, and perpetual securities and other similar instruments at different currencies (other than Philippine pesos), whether considered debt or equity for accounting purposes.“

“The establishment of the program will give the company ready access to funding and give the company the flexibility to fund its contemplated investments and projects… as well as the refinancing of its existing obligations and for other general purposes,” SMC said.

Among SMC’s projects include the P62.7-billion Metro Rail Transit Line 7 and the P734-billion Bulacan airport project, which is being undertaken with the government.

Meanwhile, SMC, in a separate disclosure, said its board also approved the filing of a shelf registration with the Securities and Exchange Commission (SEC) for P60 billion worth of short-term commercial papers. The initial issuance of commercial papers will be P15 billion, which may be oversubscribed by up to P5 billion.

Shares of the conglomerate at the stock exchange were flat on Thursday at P160 each. — Denise A. Valdez

Strange fruit

By Carmen Aquino Sarmiento

Movie Review
Metamorphosis
Written and directed by Jose Tiglao

WITH THE contentious SOGIE (Sexual Orientation and Gender Identity Expression) Equality bill pending in congress, a film that purports to tackle the obscure and oft-misunderstood matter of intersexuality raises expectations. To make sure that even the thickest audience member understands what he’s getting at, the writer-director Jose Tiglao repeats every heavy-handed metaphor at least twice. For example, the opening lines about a legendary mango tree in the Bonifacio family’s orchard which bore an atis comes up every so often. In case you didn’t get it, the atis is supposed to stand for the protagonist: 14-year-old Adam Bonifacio (Gold Azeron).

To make sure we get the obvious implications of the film’s title, young Adam has a small glass jar on his desk, crowded with cocoons. He is also “artistic,” a recognizably gay stereotype. Thus, he is charged with rendering the stiff, hard-edged illustrations for the lame school projects their teacher assigns. His class partner is his high school’s oldest student: the 20-something town prostitute Angel (Iana Bermudez). She turns up at Adam’s house at 10:30 p.m., in pek-pek shorts and a tight tank top, ostensibly to do homework, and is promptly ushered into Adam’s bedroom by his unusually accommodating mother Aling Elena (Yayo Aguila). Although he has a writing desk in his bedroom, Adam lies prone on his bed, and sets the picture which Angel brought for him to copy, behind him, so that he has to keep contorting his body, twisting and straining his neck, just to look at it.

The Bonifacio family is certainly atypical. We are to believe that his parents never thought that his having two sets of human genitalia was odd, and that Adam was never examined by a medical doctor throughout his 14 years. (During the Q&A after the screening, the director said he also wanted to show how the government has been remiss in responding to its citizen’s health needs.) Adam’s parents got him quality art materials and a Discman but they never took him to a doctor. To bolster the plausibility of such an unlikely scenario, one of the film’s producers, a youngish woman, further claimed that although her own parents were both government employees, they never took her for a check-up or treatment with a medical professional through her growing years. Thank you, Mom and Dad.

Much is attributed to Aling Elena’s being illiterate. For example, she sticks a serving spoon in a bowl of rice, then uses her bare, saliva-coated fingers to scoop up clumpfuls, and dump these on her family’s plates. Her husband, Adam’s father (Ricky Davao), is a Christian pastor, obnoxiously spewing Bible verses. He holds praise and worship services on their tiled, balustraded terrace. A medical doctor is among his regular congregants. The family certainly appears middle-class. They live in a concrete two story house in a town with cement roads, and even a motel which Angel frequents.

Angel takes a liking to Adam. They are together when he gets his first period, somewhat late at age 14. So, the drama of having a clueless Adam bleed into a pristine stream while cavorting with a pok-pok in a wet T-shirt was the reason for setting up his parents as negligent to the point of abuse? This calls for more clunky symbolism, with several scenes afterwards of Adam, wrapped up in sheer nylon mosquito netting and agitatedly rolling about his bed, while blood seeps through his shorts. Remember those grade school natural science lessons about the pupa and the chrysalis, dummy. Perhaps impelled by concern over their stained bedsheets, his oblivious parents finally decide to consult their swishy congregant Dr. Mortiz (Bodgie Pascua). He refers Adam to the Manila-based endocrinologist Dr. Tolentino (Ivan Padilla) whom he repeatedly stresses is a wealthy, gorgeous hunk, hence a catch, an obvious object of desire.

Disturbingly, mere days later, upon receiving Adam’s test results, Dr. Tolentino pressures the Bonifacio’s to immediately decide on sexual reassignment surgery for their son. The Philippine Medical Association should take notice of this extremely ill-considered and unprofessional behavior which is portrayed as being entirely normal and usual among members of their profession. Weirdly, Dr. Tolentino, who is an endocrinologist and not a family medicine physician, turns up at Adam’s very urban home town to conduct a half-assed “medical mission” out in an open field: just a desultory handful of patients queued in a single line, and without any medical support staff such as nurses to take their vital signs or keep records, not even a pharmacy station. The film is set in the late 1990s when Barangay Health Centers existed. But this pathetic excuse for a medical mission becomes the unlikely opportunity for Dr. Tolentino to get stranded in Adam’s hometown due to a sudden rainstorm. His only recourse is to seek shelter in the Bonifacio home, although he is a customer of the local motel, which he and Angel use for their short time trysts.

The ever-accommodating Aling Elena does not put up the young virile Dr. Tolentino in a spare room or on their living room sofa. She has him bunk with Adam, whom she realizes possesses a penis, a vagina and also a rectum for that matter — or all the equipment for a pedophile’s delight. The Bonifacio’s do not take their only child into their bedroom either, but complacently leave him alone with an almost total stranger whom they have met, perhaps twice at best. It is a restless night of more raging hormones for poor Adam. This inspires him to do a languorously sensuous head-and-shoulder-rolling dance which is uncannily similar to that of Arthur Fleck in the public toilet (The Joker, 2019) after his subway killing spree. Tiglao declared though that even if parts of this film were re-shot just three weeks before its premiere (in order to get the original X-rating mitigated to an R-16), or after The Joker had become a Philippine box office hit, Adam’s little interpretative dance antedates Joaquin Phoenix’s.

Over-stimulated by his night with the hunky Dr. Tolentino, Adam engages in self-exploration, probing himself with a cold white plastic ballpoint pen — not with his natural God-given fingers — while lying supine in his bed. His mother suddenly calls him to dinner, startling him so that he falls out of bed and lands with a thud, flat on his back on the floor. Miraculously, the plastic ballpoint pen does not perforate or bruise his tender lady parts. He does get to reply, “Coming!” which may be the only intentionally humorous line in this ostentatiously sincere film. A coming-of-age moment is when Adam decides to attend his junior-senior prom stag. Unfortunately, his sense of style is severely limited by the selections from his mother’s wardrobe. Say no to his dress: he turns up in a dowdy long-sleeved button-down polo shirt and a prim, non-descript A-line skirt, with no accessories or make-up, except for a Dinky Soliman streak in his hair. The Queer Eye guys would have a field day making him over.

Because of its au courant topic and politically correct, though ham-fisted, good intentions, Metamorphosis was well-received by the wannabe indie crowd culturati. The scenes which merited its original X-rating have been revised though its ending has what may be considered its money shot: buck-naked Adam sprawled on a rock, basking in the sun at his and Angel’s favorite swimming hole. There is no visible prosthetic female vulva, but the camera lovingly lingers on his flaccid penis, which is the color of tocino.

AMA Online Education to offer students data analytics courses

AMA Online Education (AMA OEd) said it hopes to graduate over a hundred thousand data analytics-ready students beginning 2021 as part of a partnership with technology firm SAS, which will help develop basic and advanced courses for both IT and business students.

“We have 150,000 students, both in online and blended programs. Majority of our students are enrolled in IT and Business programs, so about 80% of them will be SAS-trained by 2021,” Christopher P. Satulan, chief operating officer of AMA OEd, said at a media briefing in San Juan City last week.

AMA OEd and SAS, an analytics software firm based in North carolina, signed a partnership Friday for courses which will be compulsory for third and fourth-year IT and business students beginning next year.

“There is a scarcity of data analysts in the country, and we are in the Industry 4.0 wherein most industries need them. Our students, trained by SAS, will be helping these industries. We can provide them our graduates,” Mr. Satulan said.

Under the partnership, SAS will be providing AMA OEd’s data analytics students with “localized” content.

Data analysis, according to Mr. Satulan, will be integrated in the school’s research program.

The partnership will be carried out in cooperation with Singapore consulting and technology services company Thakral One.

“It was SAS and Thakral One that trained the professors within AMA, and then they should be able to deliver the whole course,” SAS Philippines Country Manager Ryan C. Guadalquiver said.

Thakral One Philippines Country Head Melissa M. Egasani said it took only a “few days” to train AMA OEd’s mentors on data analytics “because of their technical background.”

She noted that the limited number of data science experts in the country encourage practitioners to teach at colleges and universities.

“We actually encourage our senior consultants to teach at schools. We also have partner clients and organizations that do the same, so there’s that thrust to give back to the academe among our practitioners,” Ms. Egasani said.

SAS, which has at least 50 industry partners in the Philippines, will also be assisting students during their internships.

“We will partner with our client companies (for) internships; and from there, they could be evaluated for possible employment,” Mr. Guadalquiver said.

He added that many of SAS partners have been looking for data analytics-trained workers.

“Our partners have been asking for them. Even us at SAS, we have a problem also in terms of talent scarcity,” he said.

AMA OEd said the partnership includes a three-month boot camp, which is designed for new graduates to deepen their analytics knowledge and skills.

“After finishing the boot camp, graduates will be given preferred employment referral among SAS partner organizations in the fields of data science, computer analytics, and AI,” the school said in a statement.

Mr. Satulan said the data analytics program will eventually be offered at AMA’s 200 campuses nationwide. — Arjay L. Balinbin

Reserve Bank of India unexpectedly holds benchmark interest rate as inflation spikes

THE RESERVE Bank of India kept its benchmark rate unchanged. — COMMONS.WIKIMEDIA.ORG

INDIA’S CENTRAL BANK unexpectedly kept its benchmark interest rate unchanged as headline inflation breached its medium-term target for the first time in more than a year.

The repurchase rate was left at 5.15% in a unanimous decision, the Reserve Bank of India (RBI) said in a statement on Thursday. None of the 43 economists surveyed by Bloomberg predicted the move, with all expecting a cut. The Monetary Policy Committee (MPC) retained its accommodative policy stance, signaling rate increases continue to be off the table.

“The MPC recognizes that there is monetary policy space for future action,” the RBI said. “However, given the evolving growth-inflation dynamics, the MPC felt it appropriate to take a pause at this juncture.”

“This signals that RBI’s appetite for easing has nearly sapped as aggressive easing earlier in the year bore no fruits, while rising inflation has also been reducing the policy space,” said Prakash Sakpal, an economist at ING Groep NV economist. “Still, we don’t think inflation is going to be any hurdle to further RBI easing if needed.”

While central banks around the world have been loosening monetary policy to offset a growth slowdown, the RBI opted to pause and address bottlenecks that impede the transmission of previous rate cuts. It has so far delivered 135 basis points of easing in five moves this year, while banks have passed on much less to borrowers.

“The need at this juncture is to address impediments, which are holding back investments,” the RBI said.

Latest gross domestic product data showed growth slipped to a six-year low of 4.5% in the quarter to September, amid rising unemployment and a crisis in the shadow banking sector.

The RBI cut its full-year growth forecast for the fiscal year through March to 5% from 6.1%, while adding the inflation print in October was “much higher than expected.”

Inflation of 4.6% in October was higher than the RBI’s medium-term target of 4%, the first breach in more than a year. The central bank raised its inflation forecast for the second-half of the fiscal year to 4.7%-5.1% from 3.5%-3.7% seen previously.

The pickup in prices of vegetables is likely to continue in the coming months, the RBI said, alluding to the recent soaring costs of onions and tomatoes.

“Although industry continues to struggle, gauges of services activity, consumption and credit growth have all improved a little,” said Darren Aw, an Asia economist at Capital Economics Ltd. “And the effect of past monetary and fiscal stimulus should be felt soon. Our base case for now is that the easing cycle will come to an end in February.” — Bloomberg

PECO hits back at ERC over ‘heavily worded’ notice

PANAY Electric Co., Inc. (PECO) said the “heavily worded” notice of the Energy Regulatory Commission (ERC) on the power distribution company’s alleged operational lapses omitted the valid points in its favor.

“Regarding ERC’s claim that PECO’s protective devices were not properly rated and designed, we assure everyone that PECO has multiple protective devices that have proper ratings and designs for each of its feeder lines and down to its secondary lines,” it said in a statement on Thursday.

“Moreover, the fires that happened didn’t involve PECO’s lines as most of them are attributed to the improper bundling of telecom and cable lines which oftentimes short out,” it added.

PECO was responding to a directive issued by the ERC dated Nov. 26 and released to reporters on Wednesday.

The regulator told PECO’s directors and officers to explain violations of provisions of the following: Philippine Distribution Code (PDC) 2017 Edition; Amended Distribution Services and Open Access Rules (DSOAR); Amended Elevated Metering Center (EMC) Rules; and ERC Resolution No. 12, Series of 2009, or the Guidelines for the Accreditation of Satellite Laboratories of Meter Shops.

“We would like to point out that with our current protective devices in place, the lives and properties of our valued consumers were never affected in all the fire incidents related to this matter not unless the fire comes from within the consumers’ structure already,” PECO said.

“Regarding failed voltage tests in certain locations, the areas visited by the ERC ocular inspection team that had low voltage levels were actually in areas that had electrical pilferage present which resulted in the dropping of the voltage level due to the unregistered loads in the areas,” it added.

PECO also gave its side on the issue of leaning poles and those that are in unsafe positions, which were raised by the ERC.

“We would like to stress that PECO has a regular pole replacement and relocation program in place every year in order to cope up with the DPWH (Department of Public Works and Highways) projects being implemented around Iloilo City. We also have maintenance activities in order to straighten certain poles that tend to lean after some time. This is a year-to-year activity since coordinating with telco and cable companies take time,” it said.

The company also clarified that it had filed for 40 elevated metering center (EMC) sites during the last regulatory period, contrary to the ERC’s findings.

It added that contrary to the ERC report, PECO had been constantly coordinating with the ERC Visayas head office on its documentary requirements on the renewal of its meter shop certificate of authority.

“Suffice it to say that, through it all, PECO has been trying its best to abide by the rules and regulations of the ERC despite multiple external factors beyond our control. We communicated to the ERC that should they need further clarification on certain matters, we are very much willing to cooperate as we have been doing so consistently,” the company said.

“We in PECO are surprised by the seeming slant that the ERC is taking and we just hope that the ERC will not allow itself to be manipulated by the propaganda of economic saboteurs and give PECO a fair assessment,” it added. — Victor V. Saulon

Employers call for ‘balanced’ NCR wage for domestic workers

THE EMPLOYERS Confederation of the Philippines (ECoP) said the Metro Manila wage board needs to come up with a “balanced” wage ruling for domestic workers, adding not all household employers can afford higher pay.

In a Dec. 2 statement, ECoP said it participated in a public wage hearing lead by the Regional Tripartite Wage and Productivity Board — National Capital Region (RTWPB-NCR) which is hearing evidence to set new wages for domestic workers. ECoP added that it called for a fair salary hike that will consider the needs of the domestic workers and the ability of household employers to pay.

“ECoP said not all household employers are business owners. A large majority are middle-income and minimum wage earners who, like the domestic workers, are trying to make both ends meet,” ECoP said.

ECoP added that the board has yet to officially release the exact amount that it has set for its new wage order.

Last week, Labor Secretary Silvestre H. Bello III said that the NCR wage board has decided on a P5,000 minimum wage for domestic workers. This is subject to review by the National Wages and Productivity Commission (NWPC).

Mr. Bello added that he personally prefers a higher wage hike but granting a wage higher than P5,000 is beyond his mandate.

ECoP said: “Any excessive increase will impact the household employers’ ability to hire a domestic worker and maintain a family with two income earners.”

The last NCR wage order was issued on Dec. 16, 2017 and set the domestic minimum monthly wage at P3,500.00. — Gillian M. Cortez

I heard you make movies

The Irishman
Directed by Martin Scorsese
Netflix

IN The Irishman (2019) someone puts a question to Frank Sheeran (Robert De Niro), the same question that is title of Charles Brandt’s 2004 book (I Heard You Paint Houses) — the same question one might ask of Martin Scorsese with the same innocuousness, and just the hint of something more.

Arguably the question is bullshit — Bill Tonelli in a Slate piece pokes holes in Sheeran’s story and on the surface the very premise of the film sounds implausible: an armed Forrest Gump wandering the margins of mob history, delivering boxloads of Browning M2 machine guns for the Bay of Pigs invasion; walking into Umberto’s Clam House to shoot “Crazy” Joe Gallo; walking into an anonymous house in suburban Detroit with gun in hand, right behind Jimmy Hoffa (in Brandt’s book Sheehan goes further to claim he delivered three rifles to a pilot days before the Kennedy assassination, and half a million dollars to US Attorney General John Mitchell).

Tonelli even makes fun of the book’s title: “In all of mob literature” he asks, “fictional and factual, has anyone ever uttered such expressions about painting and carpentry?” I wouldn’t know, not familiar with mob literature, and what mob cinema I’ve seen — no.

But it’s a hell of a phrase: “I hear you paint houses.” “I hear you make movies” — and I remember a scene in Resident Evil: Retribution where Milla Jovovich hands Michelle Rodriguez a pistol and ties film and violence together with a single throwaway statement: “It’s just like a camera: point and shoot.”

The film’s themes also rope in one of Scorsese’s pantheon figures, John Ford, whose late masterwork The Man Who Shot Liberty Valance turned on the phrase: “When the legend becomes fact, print the legend.” Ford had a way of making historical accuracy seem irrelevant or at least dull; someone once pointed out that the climactic chase in Stagecoach would have ended sooner if the Apaches had shot the horses. Have no real response to that, save the thought probably doesn’t occur when one is actually watching the film.

Actually, the character of Sheeran himself doesn’t exactly pop out of the screen: this is one of De Niro’s more introverted performances, where he plays a lump that if allowed would rather blend into the background — someone who treads lightly but carries a loud .38 Special.

Or so Sheeran says — again we need to take his word with a chunk of salt (Tonelli scoffed at the idea that he ever took a life, though I wonder if the writer ever considered Sheeran’s war record). It helps that Scorsese does away with Brandt as a character and has Sheeran face the lens directly as an old man (the camera wandering in from outside past wizened figures tottering on canes and walkers, to come upon our protagonist in a wheelchair, lost in his memories).

That image (an old man and his memories) starts and ends the film; the old man experiences two kinds of flashbacks — one being a trip from Philly to Detroit, the other the various memories prodded along the way, like the swarm of birds provoked in a forest by the passage of a rhino. One kind the narrative spine, the other the narrative meat, the retirement home scenes framing the whole.

Gradually an image forms: of truck driver Sheeran and his chance meeting with Russell Bufalino (Joe Pesci, reportedly coaxed out of retirement after being asked 50 times, and terrific), of his later meeting with James Riddle Hoffa (Al Pacino) and their growing brotherly bond.

Sheeran’s troubled relationship with Hoffa recalls Scorsese’s earlier autobiographical Mean Streets with Hoffa as Johnny Boy, playing irrepressible Id to De Niro’s Sheeran playing the dutiful Charlie (who — following Mean Streets schema — also plays the director’s cringing conscious-stricken self). De Niro was the original Johnny Boy and lit up the screen with his unpredictably hilarious-yet-horrifying antics; as this film’s Charlie, he’s if anything better, the heroically staunch spear-bearer of first Russell and later Jimmy Hoffa. Call Sheeran a man of faith, a faith established by an ancient organization with laws and secrecy and wide-reaching influence; call the film a test of Sheeran’s faith versus his family (with his daughter Peggy [Anna Paquin as an adult, the haunting Lucy Gallina as a child]* standing as witness), versus his friend Hoffa.

* As for the whole brouhaha about Paquin’s character’s relative silence — there’s some point to the Bechdel test, but the impact of Peggy depends mainly on the idea that she stands aside watching what’s going on and keeping everything to herself, only speaking up (as an adult at least) when it most mattered. Like her father she sees but is silent; like her father she remembers, feels, judges.**

** As for Peggy’s judgment I’m guessing she keeps arms’ distance from her father and Russell because they’re killers; Hoffa while egotistical and corrupt is not — at least not directly, as far as we know. It’s the stink of blood that makes the difference.

The latter half of the film plays out like The Last Temptation of Frank (or, going back even further, Mean Streets: Detroit) — the power figure rising, hitting his plateau, striving for higher, being betrayed by his Judas. Frank/De Niro as Judas/Charlie/Scorsese registers the journey as near imperceptible tics on the face, fissures on what is supposed to be a professional mask, and a grim line of a mouth that warps gradually into a grimace.

Is Scorsese replaying his greatest hits? I’d say he’s reviewing them, slowed down and distorted, turning them over in his head in the hope, possibly vain, of making sense of what he had wrought, wrote, rote. His usually operatic rhetoric has been dialed down to a whisper, his visual brio reduced to a simmer; he seems subdued, confronting what may be his, Frank’s, Jesus’, Charlie’s final adversary. If, as detractors say, this is yet another of Scorsese’s gangster flicks it has the look and feel of a final Scorsese gangster flick — his last word on the subject.

Saying “dialed down” doesn’t mean “totally absent.” The opening tracking shot and barber shop hit show Scorsese still has the spark, just isn’t putting it front and center; the Joe Gallo hit is a marvel of blinking bright reds and whitewashed walls drenched in sickly green neons. He’s also taken to perching the camera from on high to look down on a street corner or intersection of hallways, suggesting that the protagonist or character is approaching a dramatic turning point.

Sound may be the film’s most innovative feature: Sheeran’s offscreen narration opens the picture and suddenly his voice speaks up, continuing his train of thought; the scoring is relatively subdued, with long stretches of quotidian life punctuated mostly by the clink of silverware or traffic noise or occasional bird call; Sheeran on the phone mutters painfully hypocritical words of reassurance to a distressed Jo Hoffa (Welker White, her voice muffled so that emotion and not specific words are more audible).

Not a perfect picture: the digital de-aging looks grotesque, actually looked even more grotesque on the big screen with De Niro’s and Pesci’s faces looking boiled lobster red, their hunched bodies walking slowly, carefully as if they were in their frail seventies (which they are) — watching the film on Netflix streaming I see that they have apparently corrected the offputting red, though the old-man movements remain. I remember how in Once Upon a Time in America Scott Tiler’s performance as the young Noodles dovetailed so lyrically into De Niro’s adult figure and wonder why Scorsese couldn’t cast accordingly. Also wonder if Scorsese couldn’t have inserted a little more skepticism about the veracity of Sheeran’s claims, or at least suggest more that the man’s memory is unreliable — possibly De Niro (who produced) and Scorsese did buy Sheeran’s story hook line and sinker, only pivoting in interviews (emotional truth takes precedence over historical) in response to Tonelli’s article.

Oh and the titles that give us the various mobsters’ varied fates (“shot in the head, 1980”; “killed, 1979”): what was it about the period of 1979 to 1980 that nearly everyone was bumped off? One of the film’s biggest laughs happens when we learn that “Tony Jack” was well-liked by all and died of natural causes in 2001.

The final 50-plus minutes (skip this and the next paragraph if you haven’t seen the film!) recalls Father Rodrigues’ odyssey as a changed man moving through a changed more accommodating Japan, in Silence — what to do with yourself when you’ve won the one thing you desire above all (the cessation of others’ suffering) at the price of the one thing you value above all (your faith). Rodrigues’ struggle is frightening in its way — he can’t utter even a whisper of dissent — but Sheeran, in total freedom and with only passing interest from law enforcers (a pair of federal agents, asking him to come clean), learns an additional lesson: with the passage of enough time no one cares. People die, people forget, things change irrevocably. Rodrigues faced the absolute terror of totalitarian repression for the rest of his long life: Sheeran faces the absolute invincibility of indifference.

As for Tonelli’s points, I find them believable, including one that even Tonelli concedes: Sheeran must have been in the car that drove Hoffa to his death otherwise Hoffa would have never climbed in. Sheeran was involved, however tangentially, and likely knew what’s going on. All this — Sheeran shooting Hoffa, shooting Gallo, all the other killings, even delivering guns for the Bay of Pigs — is his way of blowing up his reputation and improving his stature that his fall might be all the greater, confessing crimes to give substance and scope to his real central sin: betraying the friend who trusted him. As with Willem Dafoe’s Jesus, much of the whole three hours might just be taking place inside Sheeran’s guilt-wracked head — the ultimate jail cell and torture chamber.

John Ford once appeared before the Director’s Guild to say “My name’s John Ford. I make Westerns.” The matter-of-fact statement nicely sums up what the man was about, the way this film pretty much sums up what Scorsese’s about (and, as I say that titles come to mind contradicting the assertion: Alice Doesn’t Live Here Anymore; Kundun; Hugo). He did do this film, that much is clear, and I think it’s terrific, the best American production of the year — which I think is true even if you didn’t like the picture.

Life insurers in Japan are taking more dollar risks

AS THE DECADE that welcomed unprecedented quantitative easing (QE) comes to a close one thing is clear: Japan life insurers are taking more and more risk with their investments.

A combination of ever lower bond yields and elevated costs have seen Japanese life insurers cut their hedges on dollar investments to the lowest in at least 10 years, according to calculations by Bloomberg. Despite holding $354 billion in dollar-denominated assets, nine of the biggest insurers had hedged just $164 billion of them against a decline in the greenback, the data as of the end of September showed.

The steady reduction of protective bets against adverse dollar moves comes as elevated hedging costs turned Treasuries into negative-yielding debt for Japanese investors. The slump in foreign-exchange volatility has enhanced the allure of unhedged dollar positions, yet leaves insurers increasingly at risk of a sudden surge in the yen.

The reduction in hedging suggests “life insurers expect any strength in the yen to be limited,” said Shinichiro Kadota, a senior foreign-exchange and yen-rates strategist at Barclays Plc in Tokyo. “Given caution has receded toward a stronger yen, a sharp gain could see an undue impact” on hedging activity, he said.

Four life insurance companies, including the biggest players Nippon Life Insurance Co. and Japan Post Insurance Co., said in October that they plan to increase holdings of unhedged foreign debt in the second half of the fiscal year ending in March.

The yen is on track for its fourth straight year of modest gains against the greenback and has been trading in the smallest range on record this year. A combination of factors such as the unhedged outflows and the steady growth in Japanese acquisitions abroad have all helped keep a lid on yen strength.

Strategists are expecting a mild appreciation of just 3% to the 105 level by the end of 2020, according to data compiled by Bloomberg.

Meanwhile, buying protection against a stronger yen for six months costs Japanese investors 2.14% on an annualized basis, according to Bloomberg data. That compares with the 1.76% yield available from benchmark 10-year Treasuries, and the 2.21% an investor would get from its 30-year equivalent.

“There is little demand for Treasuries from Japanese investors because hedging eats up their yields,” said Hiroshi Yokotani, managing director and portfolio strategist for fixed income and currencies at State Street Global Advisors.

Almost seven years of unprecedented Bank of Japan stimulus has driven much of the domestic yield curve into negative territory, sending the country’s investors abroad in search of returns and adopting riskier strategies such as unhedged positions. The top life insurers are now turning to equities and corporate bonds to safeguard returns, according to recent strategy presentations.

The nine insurers studied are hedging 46.3% of their dollar-denominated assets as of September, down from 73.2% a decade ago, according to a Bloomberg analysis. As an industry, they own 100 trillion yen ($919 billion) in foreign securities

With hedging euro positions actually returning a premium for yen investors, European securities have proven popular in the Asian nation. After adjusting for exchange-rate fluctuations, life insurers’ holdings of euro assets increased 14% during the six months ended Sept. 30, compared with a gain of 8.6% in dollar-denominated securities.

“Hedge costs are still too high,” said Minori Uchida, Tokyo-based head of global market research at MUFG Bank Ltd. “Because the yen’s volatility remains low, investors are taking a wait-and-see stance for hedging.”

The yen has appreciated against all its major peers so far this fiscal year, underscoring the risk of unprotected overseas investment. Life insurers held a higher hedge ratio for the Australian dollar at 62.7%, compared with 43.7% for the Canadian dollar. — Bloomberg