Nation at a Glance — (11/19/19)
News stories from across the nation. Visit www.bworldonline.com (section: The Nation) to read more national and regional news from the Philippines.
Bankers cite lure of PHL growth story
THE PHILIPPINES’ relatively fast economic growth remains a compelling proposition for investors notwithstanding the recent slowdown, bankers said in a forum late last week, citing particularly the lure of the government’s infrastructure push.
“Some of our economies are growing at less than three to four percent compared to the Philippines’ economy growing at 6.2[%], so clearly there are opportunities for us to get involved,” Asian Bankers Association President Antonio Jonathan Alles, managing director and chief executive officer (CEO) of Hatton National Bank in Sri Lanka, said in an interview at the sidelines of the 36th Asian Bankers Association (ABA) Conference at the Makati Shangri-La hotel on Friday.
Daniel Wu, president and CEO of CTBC Financial Holding Company Ltd., said at the ABA press conference: “We think that given the last five years, the average GDP (gross domestic product) growth was more than six percent, is really phenomenal…”, adding that Southeast Asian countries have “definitely become much more important than before.”
Mr. Alles particularly cited interest stoked by the infrastructure development drive of the government of President Rodrigo R. Duterte, saying: “I know that there’s a lot of infrastructure that is taking place here.”
“… [T]he good thing is that development is moving away from consumption into development and growth… those areas which would have sustainable long-term cash flows,” he said, adding that “there is opportunity to promote tourism…” as well.
Philippine gross domestic product growth picked up to 6.2% in the third quarter after last semester’s muted 5.5% expansion that was a slowdown from the year-ago 6.3%. Much of the blame was laid on late enactment of the 2019 national budget and the public works ban 45 days ahead of the May 13 midterm elections that led to subdued infrastructure work for six months. The latest clip fueled year-to-date growth to 5.8% against the government’s 6-7% full-year goal for 2019.
The International Monetary Fund now projects Philippine GDP growth this year to clock in at 5.7%, while the World Bank and Moody’s Investors Service have a 5.8% projection. The Asian Development Bank, the ASEAN+3 Macroeconomic Research Office, S&P Global Ratings and Fitch Solutions project Philippine economic growth this year at six percent, while Fitch Ratings — a sister firm of Fitch Solutions — puts it at 6.1%.
Under the government’s latest assessment, more than half of its 100 flagship infrastructure projects will be completed by 2022 — the year Mr. Duterte ends his six-year term. — Luz Wendy T. Noble
Megawide takes interest in building commercial airport at Sangley Point
By Denise A. Valdez
Reporter
MEGAWIDE Construction Corp. is taking interest in the Cavite government’s plan to build a commercial airport at Sangley Point at the former US Navy station in the province, company officials said last week.
Jaime Raphael C. Feliciano, chief business development officer of the listed engineering firm, told reporters on Friday the company is evaluating prospects of the airport project.
If it participates in the auction, this would be the third airport project in Megawide’s portfolio.
“We’ve accessed the bidding documents. We’re now looking at the terms. We’re also looking at potential partnerships,” he said.
Megawide is the operator of the Mactan-Cebu International Airport through subsidiary GMR-Megawide Cebu Airport Corp. (GMCAC).
It is also building Clark International Airport’s new passenger terminal with GMR Infrastructure Ltd.
“We’re still reviewing the terms, but definitely we’re interested because we’re already in Cebu,” GMCAC President Manuel Louie B. Ferrer said when asked about plans for the prospective Cavite airport.
He said the project is especially appealing because it will help decongest Ninoy Aquino International Airport (NAIA), the country’s premier air gateway.
Cavite’s government plans to build a $10-billion airport out of the former US naval facility that now houses the Philippine Airforce’s Danilo Atienza Airbase. It previously said it was considering tapping Chinese partners for the project.
In a mobile phone message on Sunday, Cavite Gov. Juanito Victor C. Remulla confirmed that seven groups have bought bid documents for the project, including listed conglomerate Metro Pacific Investments Corp.; MacroAsia Properties Development Corp.; Prime Asset Ventures, Inc. and Philippine Airport Ground Support Solutions, Inc. Other buyers of bid documents for the Sangley airport are Langham Properties, Inc.; Chinese Communications Construction Co. and Mosveldtt Law Offices. Mr. Ferrer hinted that one of the groups that bought bid documents also represented Megawide.
Companies that will join the auction must submit their tenders on Nov. 25. The city government intends to decide on who will build the project by the end of the month.
The Cavite government plans to build an airport with four runways — double NAIA’s two runways — and a terminal than can handle 100 million passengers annually.
Mr. Remulla has said groundbreaking for the project is scheduled on Jan. 15 and that the airport will be operational by 2023. The fourth runway, he added, will be opened after six years.
Megawide previously planned to submit an unsolicited proposal for the rehabilitation of NAIA, but the government chose a consortium of seven big companies. It had also expressed interest in the auction for the operation and maintenance of Clark International Airport, but ended up not submitting a bid.
The engineering firm saw its attributable net income cut to P649.72 million in the nine months to September, which it attributed to a 13% rise in operating expenses to P125 million and a 44% jump in financing costs to P1.12 billion.
Energy dep’t releases draft rules for law that will slash electricity rates
THE ENERGY DEPARTMENT has released the draft implementing rules and regulations (IRR) for the Murang Kuryente Act, the law that allowed the use of the existing and future government share in the Malampaya gas-to-power project as payment for government debt now shouldered by consumers.
“The Department of Energy (DoE) is hereby requesting all interested parties to submit their comments on the working Draft Implementing Rules and Regulations to Republic Act No. 11371, An Act Reducing Electricity Rates by Allocating a Portion of the Net National Government Share from the Malampaya Natural Gas Project for the Payment of the Stranded Contract Costs and Stranded Debts,” the agency said.
The DoE said it was accepting comments until Nov. 22 through Mario C. Marasigan, director and officer-in-charge of the DoE’s Electric Power Industry Management Bureau. A public consultation is also scheduled that day.
The IRR of R.A. 11371, which was approved on Aug. 8, is expected to bring down the cost of power after its signing by the secretaries of the Energy and the Finance departments.
Senator Sherwin T. Gatchalian, chairman of the Senate energy committee, had said that he expected the law to remove the P0.09 per kilowatt-hour being paid by consumers as “universal charges” to pay the stranded debts and stranded contract costs when the government built energy-related projects to avoid power crises in the past.
He had said in the next six years, the universal charges that consumers find in their monthly electricity bill could go as high as P0.90/kWh.
The charges being collected from consumers are remitted to state-led Power Sector Assets and Liabilities Management Corp. (PSALM), which previously expected the universal charges to rise to P0.86/kWh.
For PSALM, the law meant savings from incurring additional borrowing costs in order to settle the maturing obligations of the National Power Corp. (Napocor), the government company that led the construction of the energy-related projects of the past.
PSALM said for families consuming an average of 200 kWh per month, the law meant about P172 of monthly savings from reduced electricity cost or about P2,064 of savings per year.
The Malampaya funds would cover PSALM’s shortfalls on a yearly basis and it would not have to seek additional universal charge impositions on electricity consumers.
Under the IRR, the Murang Kuryente Fund will be set up to fund the payment of all anticipated shortfalls after applying PSALM’s collections from the privatization of Napocor’s assets, independent power producer contracts, and proceeds from operations of existing assets.
Annual allocations from the Murang Kuryente Fund as intended in the act will be included in the General Appropriations Act starting with fiscal year 2021 until the exhaustion of the allocated amount.
Originally, the Malampaya fund was intended to be used for exploration and development, but with the new law, its use has been expanded to include the payment of the loans incurred by Napocor. The law says that after these loans had been paid, the fund will go back to its previous coverage, which is for oil exploration and development.
Murang Kuryente Fund refers to the amount of P208 billion taken from the Malampaya fund that has been allocated specifically for R.A. 11371.
“In the event that Anticipated Shortfalls are fully paid before the exhaustion of the Murang Kuryente Fund, the remainder of the amount allocated shall be utilized to finance energy resource development and exploitation programs pursuant to Presidential Decree No. 910,” the draft IRR reads.
The Murang Kuryente Fund will cover the anticipated shortfalls for the years 2020 up to the end of PSALM’s corporate life.
Mr. Gatchalian previously said that the outstanding Napocor loans that consumers were paying was about P450 billion and it is staggered over the next six years. — Victor V. Saulon
Tourism, power, agriculture front and center in business forum
FOREIGN BUSINESS CHAMBERS are looking to help boost “big winner sectors” tourism, agriculture and power through discussions in their annual forum this year.
The Joint Foreign Chambers of the Philippines (JFC) also expects to tackle the role of business in the government’s infrastructure drive as it updates its policy briefs at its eighth annual Arangkada Philippines Forum titled “Turning on the T.A.P.” — referring to tourism, agriculture and power — at the Manila Marriott Hotel on Nov. 21.
At the forum, one panel, will be addressing the government’s decision to include more public-private partnerships (PPP) on its revised Build, Build, Build flagship infrastructure list.
The government announced earlier this month that it is increasing infrastructure projects to 100 from 75, and PPP projects on that list to 26 from nine.
“The three sectors are included in what the JFC has identified as the ‘seven big winner sectors’ for investments and inclusive growth,” JFC Senior Adviser John D. Forbes said in a mobile phone message on Friday. “We also haven’t done policy briefs on these sectors. Last year we released three on infrastructure and one on creative industries.”
JFC’s seven “big winner” sectors are manufacturing and logistics, business process management, infrastructure, mining, agribusiness, creative industries and tourism.
European Chamber of Commerce of the Philippines (ECCP) President Nabil Francis said in a text message that “the ECCP seeks to address and ensure proper implementation of ecological standards for the promotion of responsible tourism.”
He added that “the timely implementation of the Build, Build, Build program as well as other projects related to tourism and agriculture infrastructure becomes increasingly crucial to the competitiveness and growth of the said sectors.”
The ECCP is also looking to help improve agriculture’s resilience and financing, as well as enhance regulatory governance.
“The Chamber also seeks to promote the use of cleaner and more sustainable energy sources to meet the increasing power demand of the Filipino population. This is through the promotion of energy efficiency and conservation, as well as further development of the renewable energy sector,” Mr. Francis said.
The program will begin with remarks from American Chamber of Commerce of the Philippines President James Wilkins, followed by speeches from Mr. Forbes and Management Association of the Philippines president Rizalina G. Mantaring.
Transportation Secretary Arthur P. Tugade will then present the department’s key reforms and projects.
Each of the three sectors will have presentations and panel discussions.
Tourism Undersecretary Benito C. Bengzon, Jr. will lead discussions on tourism, Agriculture Secretary William D. Dar will lead the panel on agribusiness, Energy Secretary Alfonso G. Cusi on power and Public-Private Partnership Center Executive Director Ferdinand A. Pecson on PPPs.
House Speaker Alan Peter S. Cayyetano will deliver the forum’s closing keynote.
JFC last year discussed water policy, roads and railways, seaports and shipping, and creative industries.
JFC offered 18 policy recommendations for roads and railways, including improvement of right of way acquisition; restructuring regulatory agencies and providing adequate resources; maintaining high levels of public and private sector investment in needed infrastructure; and conducting robust public-private partnership and privatization programs, among others.
On water policy, the JFC called the government to appoint a water czar; finalize and implement a unified financing framework for water supply and sanitation works; and expand wastewater treatment coverage through adoption of new technologies, among others.
For seaports and shipping, the JFC recommended building strategic regional clusters around several ports and airports; reducing domestic shipping costs and tapping the potential of cruise tourism, among others.
JFC also encouraged government to incentivize creative hubs as places for incubation, production, education, and research and development, declare creativity as a national priority, and promote new models of creative tourism, among others. — Jenina P. Ibañez
Malaysian firm eyes waste-to-energy PHL projects
By Victor V. Saulon
Sub-Editor
A MALAYSIAN company has pledged to invest up to $2 billion to put up 12 waste-to-energy (WTE) facilities in the Philippines in partnership with Filipino company Integrated Green Technology, Inc. (IGT) and a French technology provider.
Michael C. Jimenez, chief executive officer and president of IGT, identified the Malaysian firm as PhilSar Renewable Energy Sdn Bhd. and the French group as CNIM Martin Pte Ltd. (CMPL), his partner in at least three WTE projects in the Philippines that have forged contracts with local government units in Pangasinan and Cebu.
“We’re excited about this,” he said in an interview after a conference on Friday to announce that company’s three WTE projects, two of which are in Cebu and one in Pangasinan.
The initial projects will cost about $230 million and will be funded by Allied Project Services Ltd. of London. The WTE projects earn from the fees collected from local government units, which have difficulty managing their waste disposal.
Mr. Jimenez said the projects in Cebu will be on Mactan island and on the main island itself, while another one in Cebu City is being finalized. Another project is also in the pipeline in Pangasinan.
Dolores S. Rivera, chief finance officer of PhilSar, said the partners will form a local company for the 12 projects, which are targeted for completion in about five years.
“[PhilSar] is investing $2 billion to fund the said projects,” she said on Friday.
“We’re going to enter into a memorandum of agreement and right after [that], we’re going to sit down with the foreign EPC (engineering, procurement and construction) contractors, then after that we’re going to enter into a joint venture,” she said in an interview.
She said the funds will be invested in 12 different cities in the Philippines for the construction of WTE facilities. She described PhilSar as owned by Filipinos and Malaysian-Chinese.
“We will be entrusting that to IGT,” she said when asked about the capacity of each facility. She estimated the power output of the 12 projects at 480 megawatts.
She said the joint venture partners will be participating in the ongoing projects of IGT in Cebu and Pangasinan, while a fourth one in Bulacan is set to follow after the acquisition of a property in San Jose Del Monte. Baguio is also a possible location for a WTE facility, she said.
“It depends on the trash, it depends on the hauling, it depends on the municipality waste kung gaano kadami,” she said. “Kung saan pinakamarami, doon pupunta.”
Asked about the timeline for completing the $2-billion WTE projects, she said: “I think about five, six [years].”
Denis Bauer, director and chief executive officer of CMPL, said what differentiates the French technology provider from other builders of WTE facilities is its paced approach in constructing its plants.
“Our approach is straightforward incineration,” he said. “With us, we take the waste, almost everything which has come, we can burn it.”
He said the business plan is more “compact” and requires a smaller loan than projects that include other segments such as waste recycling.
“So it’s much more simple. What we have decided with IGT is ‘let’s go first with waste-to-energy,’” he said, adding that the project will gain acceptance by showing that it works and is not polluting the environment.
DoF proposes sugar miller incentives as alternative to liberalized imports
THE Department of Finance (DoF) has proposed to raise the share of the sugar crop retained by sugar millers to give them more incentive to raise their efficiency levels, floating the restructuring of the planter-miller relationship as a possible alternative to liberalizing sugar imports.
Finance Secretary Carlos G. Dominguez III told reporters last week that he proposed that Senate Majority Leader Juan Miguel F. Zubiri consult the industry on increasing the millers’ take to encourage them to upgrade their machinery and improve their sugar-extraction yields.
Mr. Dominguez said the industry could look into a “new kind of relationship between a mill and the planter” since under the law, the mills get 30-40% of the crop while 60-70% goes to the planter, depending on the area.
Senators recently passed a resolution opposing the liberalization of sugar imports proposed by the DoF as a means of bringing down prices and making the food industry more competitive. The resolution cited the possible impact of liberalization on sugar industry jobs and the livelihood of small farmers.
“I also told Senator Zubiri that the other problem is the legislation that regulates the relationship between the planter and the mill.. Because of that, the mills have no incentive to invest capital to improve the efficiency of their mill,” he said.
Millers extract syrup from cane, producing raw sugar crystals for refining.
With more capital, Mr. Dominguez said the mills can upgrade their technology and raise yields.
“When you put in capital expenditure, you only are able to recover 30-40% of the revenue of the mill because the balance goes to the sugar planter. Why should they put 100% of the capital expenditure and only reap 30-40% of that,” he said.
He said that the sugar shortages and high domestic prices should be addressed immediately as the population grows and other producers become more competitive.
“If you look worldwide, the mills and the farmers do not share. The mill buys the cane. So if they own the whole cane then they can extract, they have every incentive to extract the most amount of sugar so I don’t really know what will come out but the current system has to be changed,” he said.
The DoF formally proposed to lift the quantitative restrictions on sugar imports in a process likened to the liberalization of rice imports, a prospect that led the politically well-connected sugar industry to mobilize opposition.
“We will respect the desire of the Senate to discuss this at length and I think it’s the right move,” he said.
In an economic bulletin, the DoF said that quantitative restrictions on sugar imports need to be replaced with tariffs in order to make prices more competitive for the food industry competitive prices.
A month later, the recommendation was opposed by the legislators after the Senate unanimously passed a resolution claiming that liberalizing imports will not make the industry.
Mr. Zubiri has said that instead of opening up the market to cheaper sugar imports, the economic team should instead focus on the full implementation of the Republic Act. No. 10659 or the Sugar Industry Development Act (SIDA) of 2015.
A component of the law is a productivity enhancement programs, infrastructure support such as farm-to-mill roads, research programs as well as financial support to small farmers.
“We will discuss it with them but I said we’re not only going to be talking about liberalization (but) also about improving the efficiency of the mills, how to incentivize that. Of course on the cane production side, it’s a long discussion,” Mr. Dominguez said. — Beatrice M. Laforga
Isuzu launches Traviz light-duty truck
Text and photos by Ulysses Ang
ISUZU PHILIPPINES CORPORATION recently launched a “last-mile” transportation solution with its all-new Traviz light-duty truck. Based on the D-Max pickup platform, the Traviz boasts of durability, big cargo capacity, a fuel-efficient powertrain, and modern design.
Named after a combination of “Transport, Trading, Transcend” and “Business,” the new Traviz is available in two wheelbase configurations: the short-wheelbase Traviz S and the long-wheelbase Traviz L. While both versions have a 1.6-ton payload capacity, the long wheelbase version can readily accept a 10-foot-long body.
“The all-new Isuzu Traviz continues our tradition of providing not just reliable products, but business solutions — reasons why, in the Philippines, Isuzu has been at the number one spot in the truck segment for more than 19 years,” says Isuzu Philippines President Hajime Koso. “The Traviz answers the most pressing and current customer needs, based on detailed market survey and IPC’s extensive on-the-ground experience,” he adds.
Powering the Traviz is a Euro 4 version of the 4JA1. This 2.5-liter common-rail direct-injection engine makes 78 horsepower at 3,900rpm and 176Nm of torque at 1,800rpm. Mated to Isuzu’s MUA-5S 5-speed manual, the Traviz does up to 23.4 km/L based on a test conducted with the Automobile Association of the Philippines or AAP.
Boasting a 4.5-meter turning radius, the Traviz is made to negotiate tight urban confines, yet it has the largest cabin in its class for the maximum comfort of its three occupants. Power steering is standard equipment as is a Deceleration Sensing Proportioning Valve or DSPV to help keep it stable even during heavy braking.
For comfort and convenience, the Traviz comes with a four-way adjustable driver seat for the driver, and a standard built-in tuner/USB sound system with two speakers. A reverse warning buzzer is standard, while air-conditioning is optional.
The Traviz will also form the basis of Isuzu’s entry into the Class 1 Modern PUV, completing the car maker’s triumvirate of offerings in the government’s PUV Modernization program. More details about this version will be announced at a later time.
The pricing for the Traviz starts at P962,000 for the short-wheelbase version and P992,000 for the long-wheelbase version. These prices reflect the cab & chassis configuration only. Made in Isuzu’s assembly plant in Indonesia (where it enjoys a 46% market share), it comes with a standard 3-year/100,000-km warranty.
Villar’s VLL breaks ground for first COHO project in Davao
DAVAO CITY — Vista Land & Lifescapes, Inc. (VLL) broke ground on Saturday for The Terraces, the first of four Camella Condominium Homes (COHO) projects in Davao City.
COHO is the new medium-rise condominium brand of the Villar-owned VLL. A COHO project would include amenities such as a co-working space in a coffee shop, a one-stop home improvement store, and an entertainment room with a cinema.
“We are already done with the clearing and by January next year we will be in full blast when it comes to construction. The construction with mid-rise is quick… and our timeline for the completion of one building is usually three years, unlike when it comes to high-rise, it will take five years of construction for one building,” Carlo V. Refamonte, COHO Mindanao operations head, said in an interview during the ceremony.
The first building of The Terraces, located in a 1.6 hectare property in Barangay Ma-a, will have 15 floors.
Mr. Refamonte said they have allotted a frontage of about 400-500 square meters (sq.m.) for future commercial development.
“We allotted commercial space as well in the frontage facing the Ma-a road,” he said.
The COHO units, at 30 sq.m. for one bedroom, 40 sq.m. two bedrooms, will have a price range starting at P3 million.
The three other COHO projects planned in the city are: The Acropolis in Lanang; The Frontera in Tigatto, Buhangin; and The Evora in Communal, Buhangin, which is five minutes away from the Davao International Airport.
Mr. Refamonte said the recent earthquakes in parts of Mindanao, including Davao City, prompted a review of geographical and structural design considerations to ensure the safety of their buildings.
VLL’s existing projects in Davao City include the Camella Northpoint condominium complex and the Camella Cerritos, a horizontal development in Mintal. — Maya M. Padillo
Poultry industry maintains 2019 growth target
AN ASSOCIATION of poultry farmers has maintained its 2019 growth target at 5-10%, with prices rising due to a shift to chicken consumption prompted by the African Swine Fever (ASF) outbreak in the Luzon hog population.
United Broilers and Raisers Association (UBRA) President Elias Jose M. Inciong said in a phone interview that the main constraint is obtaining financing, which will determine the extent of any farmer’s expansion.
“Historically, the expansion potential is 5% to 10% depending on financing capability… Small and medium-sized players, because of limitations in financing, can achieve a maximum of 5%.”
According to the Philippine Statistics Authority (PSA), the chicken industry accounted for 14.72% of the total value of agriculture output, equivalent to P25.941 billion, in the third quarter.
In the third quarter of 2017 and 2018, the industry accounted for 13.27% and 13.96%, respectively.
Volume of production grew 8.48% to 465,150 metric tons (MT) during the third quarter of 2019.
The PSA noted that increased production was brought by increased demand as consumers shift from pork to chicken due to the ASF outbreak.
“There is an improvement in the price because of the shift in demand and also there is a increase in the volume of chicken… and that would account for the growth,” Mr. Inciong said.
However, he warned raisers to be cautious in expanding production since the shift in demand may later be reversed. A chicken glut is possible if high prices attract excessive expansion.
“My concern is because farmgate price of chicken is high… everybody will transfer to a (product) where prices are now high.. and there will be glut there,” he said.
“If there are new entrants who do not know what they are doing… and they will come in a major way, it will disrupt prices, prices will go down, because they think the broiler industry is a simple industry,” he added.
The average price of chicken has been above P100 per kilo as the ASF scare escalated in September. Based on the weekly price monitoring of UBRA, as of Nov. 8 the average price of regular-sized chicken was P111.50 per kilo, down 0.44%, week-on-week. The price of prime-sized chicken was P112.21 per kilo, down 0.7%, week-on-week.
He also warned of increased chicken imports because of government inflation-control policy that encourages keeping prices low.
“The government has decided that importation is a priority (over) production and therefore we expect because of this increase in prices, we expect the government to again help importers, supposedly to help the consumers,” he said.
According to the Bureau of Animal Industry (BAI), chicken meat imports rose 11.4% to 200.29 million kilos in the first eight months of the year. Imports peaked in January at 30.28 million kilos, followed by August, worth 28.58 million kilos. — Vincent Mariel P. Galang