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Residential sector leads decline in construction starts

CONSTRUCTION starts, as measured by approved building permits, fell 3.1% year-on-year in the third quarter, dampened by reduced applications to build residences, the Philippine Statistics Authority (PSA) said Friday.

Citing preliminary result, the PSA said building permits issued during the period totaled 40,795, down from 42,111 a year earlier.

The approved projects cover 9.849 million square meters valued at P114.9 billion, up 9.6% from a year earlier.

Approved applications to build residences, which accounted for 71% of total building permits issued, fell 5.4% year-on-year to 28,975 permits in the three months to September, from 30,638 a year earlier.

Among the various residential categories, declines were recorded in apartments/accessorias (-21.6%); “other residential” construction (-8.8%); residential condominiums (-8.5%); and single-type houses (-5.6%). Approved permits for duplexes/quadruplexes rose 153.7% to 1,243 permits.

Permits for non-residential construction rose 10.1% to 6,586.

Permits issued to build commercial structures grew 12.3% to 4,077, followed by institutional buildings (11.9% to 1,488); industrial buildings (5.4% to 645); and “other non-residential” buildings (0.6% to 163).

Permits for agricultural buildings totaled 213, down 14.5% from a year earlier.

Permits for residential construction were valued at P49.2 billion while non-residential projects were worth P57.6 billion.

Permits for additions to existing structures grew 6.2% to 1,537, valued at P1.4 billion. The number of permits for alterations and repairs of existing structures dropped 8.6% to 3,697, worth a combined P6.7 billion.

Permits issued in the National Capital Region (NCR) amounted to P33.5 billion or 29.2% of the total value. Region IV-A (CALABARZON) accounted for P19.6 billion.

CALABARZON accounted for the most construction starts with 10,212 permits or 25% of the total. Central Luzon had 5,614 permits or 13.8% followed by Central Visayas (11.5%), the NCR (7.8%), and the Ilocos Region (6.5%). — Marissa Mae M. Ramos

PEZA considering ITH extensions for disaster-affected locators

Philippine Economic Zone Authority Director General Charito B. Plaza. — PHILSTAR.COM FILE PHOTO

THE Philippine Economic Zone Authority (PEZA) may push back the expiration date for income tax holiday (ITH) incentives enjoyed by locators in areas affected by the Taal Volcano eruption.

In a news conference in Taguig City Friday, PEZA Director-General Charito B. Plaza announced an upcoming meeting with industry associations and economic zone developers of the Cavite-Laguna-Batangas-Rizal-Quezon (Calabarzon) region to discuss disaster response measures.

“One action, for example, of PEZA to support our locators is we allow the tax and duty- free importation of face masks, and then we will adjust the running time of those who are still enjoying the income tax holiday (ITH). In other words, mai-extend ‘yung kanilang ITH (the ITH period will be extended) if they are still… enjoying it,” Ms. Plaza told reporters.

Asked how long the extension will be, she said it will vary because various locators granted pioneer product status enjoy the incentive for eight years. “If it’s not a pioneer (product), four to six years. So those affected industries in Calabarzon, once they are still in the period of ITH, we will adjust in counting the running time or the running period.”

“Parang dadagdagan namin. Halimbawa, how many days affected ‘yung kanilang operations, so e-suspend, not running and counted (We will effectively add time to the ITH period, for example we may not count the days when their operations were affected),” she added.

Ms. Plaza said that for now the proposal covers the Taal eruption-affected locators only. “But we have to make it a policy during disasters,” she added.

There are 60 ecozones in Calabarzon. Ms. Plaza said that the closest ones to Taal Volcano are Laguna Technopark, Lima Technology Center, and First Philippine Industrial Park.

“No damage reported, 90% of the locators are now operational,” she said. “In summary, majority, if not all, of our locators in Calabarzon are safe, so they are now resuming their operations. But we still have to be alert.”

Ms. Plaza said further that PEZA will now require ecozone developer applicants to get a new hazard clearance.

She said the new requirement will ensure that ecozone locations are away from danger and disaster-prone areas.

Taal Volcano continued to spew ash, the Philippine Institute of Volcanology and Seismology (Phivolcs) said in its 8 a.m. report on Thursday.

Alert level 4 remains in place, which means the government is preparing for an imminent explosive eruption. — Arjay L. Balinbin

New ADB president assumes office

THE Asian and Development Bank (ADB) said its new President Masatsugu Asakawa assumed office on Friday.

In a statement, the multilateral lender said Mr. Asakawa, special advisor to Japan’s Prime Minister Shinzo Abe, succeeded Takehiko Nakao, who stepped down on Thursday.

Mr. Asakawa will sit as the 10th President of ADB through November 2021 and finish Mr. Nakao’s unexpired term. Mr. Nakao served beginning April 2013, having been re-elected in 2016 to another five-year term.

“I am honored to assume the role of ADB President and to begin working in close cooperation with our 68 member-countries. ADB has been a trusted partner of the region for more than half a century, supporting strong growth that has improved the lives of people across Asia and the Pacific. I will strive to ensure ADB remains the preferred choice of its clients and partners,” Mr. Asakawa was qutoted as saying.

ADB said Mr. Asakawa held various senior positions at Japan’s Ministry of Finance and has specialized in development policy, foreign exchange markets and international tax policy.

The Manila-based ADB said Mr. Asakawa also served as Finance Deputy for the 2019 G20 Osaka Summit and the G20 Finance Ministers and Central Bank Governors meeting and was also a participant during the first G20 Leaders’ Summit Meeting as the executive assistant to Japan’s former Prime Minister Taro Aso.

He also served as the Organization for Economic Co-operation and Development’s (OECD) chair of the committee on fiscal affairs from 2011 to 2016.

“I am thrilled to be in Manila, where I will dedicate myself to ADB members in the region and beyond, while listening carefully to their voices. With the expertise of ADB staff, and by further enhancing its effectiveness and efficiency, I am confident that ADB can stand up to the challenges that the region faces. I pledge to do my best to achieve a more prosperous, inclusive, resilient, and sustainable Asia and the Pacific,” Mr. Asakawa added.

During the farewell ceremony for Mr. Nakao Thursday, Finance Secretary Carlos G. Dominguez III said ADB’s funding commitment to the Philippines grew to $15 billion during Mr. Nakao’s seven-year term.

He said it was during Mr. Nakao’s term that ADB’s single largest infrastructure investment commitment was approved — the $2.75 billion multi-tranche loan facility for the Malolos-Clark Railway project.

“On behalf of the Philippine government, I express extreme gratitude to President Nakao for the nearly seven fruitful years he has served as head of the ADB. I am grateful to know that you consider our country as the ADB’s home. You have been a great asset for Asia’s development and an effective leader of this institution,” said Mr. Dominguez at the farewell ceremony for Mr. Nakao on Thursday.

He cited Mr. Nakao’s responsiveness to a Philippne request for closer coordination within multilateral institutions, including ADB.

“When I broached this suggestion to President Nakao, he did not just welcome the proposal but reaffirmed his strong commitment for coordination with the World Bank and the AIIB (Asian Infrastructure Investment Bank) to ensure a more efficient delivery of development assistance to client countries. At present, the World Bank and the ADB are holding dialogues to ensure non-duplication and complementarity of activities,” he said.

President Rodrigo R. Duterte earlier conferred the Order of Sikatuna with the rank of Grand Cross or Datu, Gold Distinction to Mr. Nakao.

The award is the highest civilian recognition that the government gives to individuals who have rendered “exceptional and meritorious services” to the country’s developments.

The new President, Mr. Asakawa, was elected on Dec. 2 by ADB’s board of governors

Mr. Nakao announced his intent to resign in September, two years ahead of schedule. — Beatrice M. Laforga

DPWH announces completion of projects in Isabela, Leyte, Zamboanga

THE Department of Public Works and Highways (DPWH) said Friday that it completed a P122-million flood control structure in Isabela, a P34-million river wall in Leyte, and a P6-million farm-to-market road in Zamboanga del Norte.

The P122-million Magat River Flood Control Project will benefit the residents of Barangay San Roque, San Mateo, Isabela, the DPWH said in a statement.

The flood control structure, which will minimize the overflow of water during heavy rains, was started in June 2019 and completed in December.

Of the P34.7 million flood control project along the Bangon River in Barangay Arado, Palo, Leyte, DPWH Region 8 Regional Director Nerie D. Bueno said: “The 323.90-meter river wall was constructed by DPWH Leyte First District Engineering Office (DEO) to prevent the overflowing of Bangon River especially during typhoon season.”

“With the newly-completed 6.75 meter-high embankment, residents will no longer have to worry (about) any threatening events when heavy rains occur as this structure was constructed in accordance to the department’s standard specifications for flood mitigating structures,” Ms. Bueno added.

The DPWH noted that the flood control project was funded under the 2019 General Appropriations Act (GAA) of the Leyte First District Office.

The DPWH also completed a P6-million farm-to-market road project in Barangay Canupong, Gutalac, Zamboanga del Norte.

The project, according to DPWH Zamboanga del Norte 2nd District Engineer Romeo A. Sadalaga, “involves the construction of a 380-meter road with 5-meter wide carriageway and 20-centimeter thick concrete pavement.”

DPWH Secretary Mark A. Villar said: “This road hastens the mobilization and transportation of farm produce to market centers in the city, thus improving socio-economic activities in the area.”

“We hope to provide more farm-to-market roads in Zamboanga del Norte which has devoted most of their lands for planting agricultural products such as banana, corn, coconut, sugarcane, and palay,” he added. — Arjay L. Balinbin

Palay farmgate prices slightly higher in late December

THE average farmgate price of palay, or unmilled rice, rose 0.1% week-on-week in the third week of December to P15.66 per kilogram (kg), the Philippine Statistics Authority (PSA) said.

According to PSA’s weekly palay and corn price update, the average wholesale price of well-milled rice rose 0.1%, week-on-week to P37.22 per kg, while retail prices rose 0.1% to P41.51.

The average wholesale price of regular-milled rice fell 0.2%, week-on-week to P33 per kg, while the retail price rose 0.03% to P36.56.

The price of palay, the form in which most farmers sell their crop, has been on a downward trend in 2019. Year-on-year, the palay price was down 22.2%.

Domestic rice has been crowded out of the market by large volumes of imports after the Rice Tariffication Law took effect in March, pressuring prices and depressing farm incomes.

The average farmgate price of yellow corn grain increased 0.3% week-on-week to P12.20 per kg. The average wholesale price rose 0.4% to P21.44. The retail price increased 0.5% to P25.99.

The farmgate price of white corn grain rose 0.5% week-on-week to P13.28 per kg. The average wholesale price fell 0.3% to P16.85, while the average retail price was stable at P26.70. — Vincent Mariel P. Galang

Southern Capital partners with The Table Group

THE Philippine operator of California-based Coffee Bean & Tea Leaf (CBTL) has partnered with Singaporean firm Southern Capital the details of which have yet to be disclosed by the partners.

“We are incredibly fortunate to be partnering with some of the brightest minds in the region, but more importantly, our collaboration is forged out of common values most important to us that are anchored in faith, resilience and humility,” Table Group, Inc. Chief Executive Officer Walden Chu said in a statement.

“Alongside the Jollibee (Foods Corp.)’s recent acquisition of the global brand, we are truly excited for what we can accomplish together to shape the future of the industry,” he added.

The deal between JFC and CBTL was closed September 2019.

Details of the investment were not yet disclosed, but this is considered to be Southern Capital’s first venture in the Philippines, which also includes the distribution of consumer packed goods under the CBTL brand.

“Southern Capital is committed to supporting The Coffee Bean & Tea Leaf’s strong management team in its goals for sustainable expansion in the Philippines,” Eugene Lai, managing director and co-managing partner of Southern Capital, said.

“We see significant growth potential in the market and a tremendous opportunity to capitalize on the strength of our brand position, especially in CPG channels,” he noted.

Southern Capital has a track record of developing businesses with enterprise value ranging between $50 million to $200 million.

CBTL is a Southern California-coffee shop brand, which was founded in 1963. It operates 1,200 units across 20 countries. As of end-2019, it has 158 retail units across the country, making it the second country with the most number of franchise, following South Korea with more than 300 units. Its net unit growth rate is at a minimum of 15% this year due to robust growth of its stores sales in the last quarter of 2019.

Its local operator, Table Group, has a diversified portfolio of food and beverage brands, which include home-grown brands like Nono’s and The Blue Kitchen. — Vincent Mariel P. Galang

Pilipinas Shell says Batangas oil refinery operating safely after Taal eruption

PILIPINAS Shell Petroleum Corp. (PSPC) said on Friday that its oil refinery in Batangas province continues to operate safely while its retail stations serve as emergency response sites while Taal Volcano is erupting.

The listed company told the stock exchange that its staff and business partners in its Tabangao refinery “are safe and all accounted for.” It said while air quality had been assessed as good in the area of the refinery, “staff have been issued with appropriate face masks and safety glasses as a precautionary measure.”

“The Taal situation is being constantly monitored and business protocols are in place to respond to any potential change in circumstances,” it said.

The Tabangao refinery is one of the key facilities of the company in the Philippines. PSPC distributes the refined products produced at the facility and imported petroleum products, including lubricants and bitumen, through its 25 fuel distribution terminals and supply points, 10 lubricants warehouses and 2 bitumen production and import facilities spread throughout the Philippines.

On Aug. 29, 2019, the company launched a hydrogen manufacturing facility at the refinery in Batangas City in partnership with Air Liquide Philippines, Inc. The facility will be the first of its kind in the country and is targeted to improve the efficiency and competitiveness of the refinery.

PSPC said that it is also providing, along with the Shell companies in the Philippines, in providing disaster response support to the affected communities.

It said 46 Shell retail stations surrounding the affected municipalities had been designated as emergency response sites to the public.

“These sites are open 24/7 to provide first aid, toilet facilities, hydration, free mobile charging, and windshield cleaning service. These sites also serve as drop off points for in-kind donations,” it said.

PSPC said relief operations had been mobilized in two major evacuation centers in Batangas City through the Pilipinas Shell Foundation, Inc. and the Malampaya Foundation Inc.

On Jan. 12, the Philippine Institute of Volcanic and Seismology raised an Alert Level 4 on Taal Volcano. The warning meant possible hazardous explosive eruption remains. It remains in effect as of Friday. –

On Friday, shares in PSPC slipped by P0.05 or 0.15% to close at P32.95 each. — Victor V. Saulon

Reduced interest rate reporting for banks take effect this month

THE Bangko Sentral ng Pilipinas (BSP) said the reduced reporting requirements for banks on their interest rates on loans and deposits (IRLD), eliminating daily reports from the industry’s regulatory obligations, take effect this month.

The new rules, first issued in October, require only weekly and monthly IRLD reports, according to a notice to banks issued by the BSP’s Department of Economic Statistics and provided to reporters.

“The Bangko Sentral is continuously reviewing the prudential reports required from BSP-supervised financial institutions (BSFIs) to ensure that information being gathered remain relevant to the surveillance and supervisory functions of the Bangko Sentral,” BSP Governor Benjamin E. Diokno said in the circular, dated Oct. 28, 2019.

The reports covern interest-bearing peso-denominated loans, including both secured and unsecured credit disbursed to resident borrowers, as well as peso and dollar deposits of resident depositors.

The BSP requires banks to disclose interest rates on loans and deposits by product type, tenor, and size.

The BSP said the revised reporting requirement for bank interest rates is geared towards boosting “financial literacy, consumer protection, and market transparency in the banking industry”.

Covered banks will need to comply with the reporting template available on the central bank website, as well as the unique codes assigned to each financial institution.

In December, the BSP requred bigger lenders to report intraday liquidity positions to determine banks’ capacity to meet their day-to-day obligations. — Luz Wendy T. Noble

Peso weakens slightly on lack of clarity from US-China trade deal

THE peso moved sideways on Friday on the back of a “disappointing” US-China phase one trade deal and as big data releases next week pushed investors to the sidelines.

The peso closed at P50.891 against the dollar yesterday, weakening by 6.1 centavos from its Thursday finish, according to Bankers Association of the Philippines website.

It opened at P50.87, peaking at P50.81 per dollar. The intrasession low was P50.98.

Meanwhile, the total volume of dollars traded yesterday picked up to $1.300 billion from $1.224 billion recorded the previous day.

Asked to comment, a bond trader said this was mainly due to a “disappointing” phase one trade deal between US and China signed Wednesday.

“I think there’s a little bit more disappointment that there wasn’t more clarity to some parts of the deal. Moving forward now, that there are questions for the phase 2 deal.”

Reuters reported that the deal includes a reduction of US tariffs on Chinese goods in exchange for China’s commitent to buy more US farm, energy and manufactured goods and address complaints about intellectual property protections.

UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said the expected release of fourth quarter gross domestic product (GDP) data next week pushed investors to the sidelines.

“2019 Q4 GDP data release may strengthen the peso with expected robust results,” he said in a phone message.

The Philippine Statistics Authority (PSA) will report the official data fourth quarter GDP on January 23, Thursday, along with the full-year reading for 2019 and the revised third quarter GDP data.

Meanwhile, the first trader added that while the US central bank will likely hold interest rates steady this year, benchmark policy rates may still decline following Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno signalling a 50 basis point (bp) reduction within the year, which will likely push peso in an “upward direction.”

Reuters reported that Federal Reserve Board member Michelle Bowman said Thursday that the Fed’s current policy rates “remain appropriate this year” given that upcoming data will be “remain broadly consistent.”

Ms. Bowman said the US economy is still “in a good place.”

Mr. Diokno said in December last year that tmonetary authorities could consider a 50-bp reduction in 2020, which if realized, will partially reverse the 175-bp hike it effected in 2018 in response to high inflation levels. — Beatrice M. Laforga

Local stocks recover on positive foreign news

PHILIPPINE shares recovered on Friday due to favorable developments in the international scene.

The 30-member Philippine Stock Exchange index (PSEi) gained 69.40 points or 0.91% to close at 7,722.58, while the broader all-share index climbed 20.19 points or 0.32% to end 4,648.35.

“Philippine shares rallied today, along with regional benchmarks indexes closing at new records, following the signing of a trade truce between the U.S. and China on Wednesday and Senate approval of a new trade deal between the US, Mexico, and Canada,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a mobile message on Friday.

China agreed to buy $200 billion worth of US products and services over the next two years, which is part of the two countries “phase one” deal. In exchange, the US agreed to reduce the tariff on $120 billion Chinese products to 7.5% from 15%.

Meanwhile, the trade agreement of US, Mexico, and Canada was passed by the US Senate with a vote of 89 to 10, which gives US President Donald Trump an advantage, prior to his impeachment trial. This is just awaiting the signature of Mr. Trump.

This reflected both in the US and other Asian markets. On Wall Street, Dow Jones Industrial gained 267.42 points or 0.92% to 29,297.64, the S&P 500 index gained 27.52 points or 0.84% to 3,316.81, while the Nasdaq Composite increased 98.44 points or 1.06% to 9,357.13.

For Asian markets, Japan’s Nikkei 225 gained 108.13 points or 0.45% to 24,041.26; Kospi Index increased 2.52 points or 0.11% to 2,250.57; HongKong’s Hang Seng index gained 173.38 points or 0.60% to 29,056.42; and Shanghai Composite climbed 1.42 points or 0.05% to 3,075.50.

Back home, subsectors all gained, led by industrial, which gained 140.80 points or 1.51% to close 9,477.42; mining and oil gained 95.12 points or 1.18% to end at 8,143.53; property gained 38.65 points or 0.97% to 4,035.78; financials climbed 25.60 points or 1.41% to 1,846.91; holding firms gained 15.58 points or 0.21% to 7,475.59; and services gained 9.08 points or 0.58% to 1,564.02.

Some 1.216 billion issues valued at P6.271 billion switched hands on Friday, versus the previous session’s 1.04 billion issued worth P6.44 billion.

Net selling on Friday’s session was at P196.07 million, down from previous session’s outflows at P478.39 million.

Stocks that gained outnumbered those that fell, 99 to 77, while 53 issues were unchanged.

CCP’s Lizaso elected as NCCA chairperson

AFTER a mix up last year when Malacang said it had appointed him to the post even though it had no power to do so, the National Commission for Culture and the Arts (NCCA) elected Arsenio “Nick” Lizaso, the current president of the Cultural Center of the Philippines (CCP), as its new chairperson, replacing National Artist for Literature Virgilio S. Almario whose term in the post has ended.

The Board of Commissioners of the NCCA elected Mr. Lizaso to the post during a board meeting on Jan. 16.

On Dec. 23, 2019, Malacañang released a list of Presidential Appointees which included Mr. Lizaso as the newly appointed NCCA chairperson. The culture commission quickly clarified that the position is determined through an election, not appointment, and noted that the next election was scheduled in January 2020.

In a Dec. 27 post on its official Facebook page, the NCCA quoted Section 9 of Republic Act 7356, the Act which created the NCCA, that said that “The Chairman of the Commission shall be elected by the members from among themselves.”

According to his official bio, Mr. Lizaso has worked in theater, film, and television for more than 60 years. From 1983 to 1985, he served as president of the Director’s Guild of the Philippines. He had directed films such as Anak ng Dilim (1997) and Ulo ng Gapo (1985). Mr. Lizaso has been a member of the CCP Board of Trustees since 2010.

Mr. Lizaso will hold the position of NCCA Chairperson concurrently with his position as president of the CCP. He had been appointed to the CCP post by President Rodrigo Duterte in June 2017.

Mr. Lizaso noted that like his focus as CCP president, he “wants to bring art to the people.”

“People do not know because it was never brought to them,” he told BusinessWorld at the Hilton Manila on Jan. 17 after a CCP press conference of Lucia di Lammermoor.

Mr. Lizaso cited the example of previously bringing the CCP resident companies such as Philippine Philharmonic Orchestra and Philippine Madrigal Singers to perform in various regions in the country.

Likewise, as the new NCCA chairperson he aims to take the agency’s projects to various cities nationwide.

“I want them to see the visual arts, the meaning of culture and heritage,” Mr. Lizaso said. “You cannot go through life without arts and culture. It’s impossible.”

He also noted that the NCCA is a funding institution, while the CCP is a venue grant institution.

In the CCP, Mr. Lizaso said, “We have the theater. If you’re good, we can make you perform.”

Meanwhile, at the NCCA, “If you have something good in your region, in your cities, in your town, let us know about it, give us a proposal. We study it, and tell us how much you need for it. If it is worthwhile, we give you not only the money but the assistance,” Mr. Lizaso said.

Mr. Lizaso will serve as NCCA chairperson from 2020 to 2022.

As an agency focusing on the development of culture and arts, the NCCA mandates includes encouraging “the continuing and balanced development of a pluralistic culture by the people themselves” and ensuring “that standards of excellence are pursued in programs and activities” implementing its policies. “It shall encourage and support continuing discussion and debate through symposia, workshops, publications, etc., on the highest norms available in the matrix of Philippine culture.” — Michelle Anne P. Soliman

George Manzano on the impact of new trade deals on an already liberalized economy

 

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