Rules eased to boost MSME lending

May 6, 2020 | 12:33 am

THE Bangko Sentral ng Pilipinas (BSP) is implementing measures that will allow banks to continue providing credit for micro, small, and medium-sized enterprises (MSMEs) that are struggling amid the coronavirus disease 2019 (COVID-19) pandemic.

In a statement on Tuesday, the BSP said the Monetary Board gave the go signal for “prudential measures to assist the (MSME) sector carry on with its business during the (COVID-19) crisis, as well as hasten recovery and sustainability of MSME operations in the post-crisis period.”

“To enable stand-alone thrift banks, rural banks and cooperative banks to continue to support their MSME- and rural community-based clients, the BSP deferred the implementation of the revised risk-based capital framework applicable to these banks under Circular No. 1079 dated Mar. 9, 2020,” the BSP said.

The effectivity of the revised capital adequacy framework has been moved to January 2023, instead of January 2022. The observation period for this framework was pushed back to Dec. 31, 2022 from the initial date of Dec. 31, 2021.

“The observation period provides these banks with enough time to meet the new minimum capital ratios through reasonable measures without disrupting their banking activities,” the BSP said.

The framework, which was based on Basel III standards, mandates smaller lenders to have a common equity Tier 1 (CET1) ratio of at least six percent of its risk weighted assets. It also requires these lenders to have Tier 1 ratio and capital adequacy ratio of at least 7.5% and 10%, respectively.

Moreover, the circular requires smaller lenders to have a capital conservation buffer of 2.5%, which will comprise CET1 capital.

The BSP also approved the assignment of a zero risk weight for MSME loans guaranteed by the Philippine Guarantee Corp., Agricultural Guarantee Fund Pool and the Agricultural Credit Policy Council.

“The revision in the credit risk weight complements programs of the National Government that support financing to MSMEs as well as small farmers and fisherfolk,” the central bank said.

Earlier, the BSP approved the temporary reduction in the credit risk weights of loans granted to MSMEs that are current in status. This will be reviewed again by the BSP by end-2021.

The central bank described the MSME sector as a “vital component of the Philippine economy.”

Based on government data, MSMEs make up 99.5% of business establishments in the country and have created 5.7 million jobs equivalent to about 63.2% of total employment.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the new measures rolled out by the central bank would “incentivize banks to increase lending and to cater more to MSMEs in the rural areas,” such as farmers and fisherfolk.

The new set of relief measures was announced on Tuesday, following a memorandum on Monday which allowed financial firms to utilize their Basel III-mandated capital and liquidity buffers to cushion the impact of the pandemic. — Luz Wendy T. Noble

Inflation slows to 5-month low in April

May 6, 2020 | 12:32 am

INFLATION slowed to a five-month low in April, as the decline in transport and the deceleration in other nonfood commodities offset the faster price adjustments in the heavily weighted food and non-alcoholic beverages, data from the Philippine Statistics Authority (PSA) showed.

April inflation eased to 2.2%, slower than 2.5% annual rate in March, and three percent in April 2019. This was also the lowest since November 2019’s 1.3%.

The April print was within the 1.9%-2.7% forecast range given by the Bangko Sentral ng Pilipinas (BSP) Department of Economic Research for the month. A BusinessWorld poll of 13 economists yielded a 2.1% median estimate for last month’s inflation.

Year to date, inflation settled at 2.6%, still within the BSP’s 2%-4% target band and above the revised two-percent forecast for the entire 2020.

Core inflation, which excludes volatile food and energy prices, likewise slowed to 2.8% from three percent in March. So far, it averaged 3.1% for the year.

The slowdown in headline inflation was brought by a further decrease in the transport index at 6.1% from the decline of 1.8% in March. According to the PSA, this was the lowest inflation recorded for the index since October 2015.

The PSA also noted slower annual increases in alcoholic beverages and tobacco (17.9% from 18% in March); clothing and footwear (2.6% from 2.7%); housing, water, electricity, gas, and other fuels (0.3% from 1.1%); health (2.8% from 2.9%); communication (0.3% from 0.5%); and restaurant and miscellaneous goods and services (2.4% from 2.6%).

“Obviously, the slowdown in the inflation rate for April can be traced to the slowdown in practically all business and economic activities,” University of Asia and the Pacific (UA&P) School of Economics Dean Cid L. Terosa said in an e-mail.

Meanwhile, the PSA reported preliminary figures for inflation as experienced by low-income households for March. That month, inflation for the bottom 30% of income households grew by 2.9%, faster than the 2.4% in March, but slower than 3.1% in April 2019.

The consumer price index (CPI) for the bottom 30% reconfigures the model basket of goods, putting a heavier weight on necessities such as food in order to reflect the spending patterns of the poor. This compared to the headline CPI which measures inflation as experienced by the average household.

The increase for this income segment may be explained by the food and non-alcoholic beverages index, which accelerated to 3.4% in April from 2.6% in March. The food alone index showed a similar trend.

In an e-mail, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said inflation in May could continue its downward trend, but noted price adjustments in succeeding months may be higher as firms gradually resume operations and that “local and international supply of essential goods and services… may face supply challenges.”

UA&P’s Mr. Terosa said he expects “prices to accelerate faster towards the end of the first semester, pushing inflation between 2.8%-3%.”

“In the second semester, a wave of spending and bottled up demand can buoy inflation beyond three percent by the end of the year,” he added, provided that the ECQ will be lifted and the spread of the coronavirus will be contained.

In a note to reporters, ING-Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said he does not expect the BSP to cut policy rates further in the near term despite April’s slower inflation print.

“BSP has offloaded a hefty 125 bps (basis points) worth of rate cuts for 2020 and Governor [Benjamin E.] Diokno did hint at pausing momentarily to gauge the impact of previous rate cuts before acting further. We expect only a 25 bps policy cut if ever BSP opts to ease further as the policy rate edges closer to BSP’s own inflation forecast of 2.2% for the year,” he said.

On the other hand, Nomura economists Euben Paracuelles and Rangga Cipta expect a “still-significant monetary easing ahead,” saying that the central bank still has policy space to respond to the deterioration in the Philippine economy’s growth outlook brought by the pandemic.

“We still see a 200-bp cut in the reserve requirement ratio to 10% as BSP’s next move, in line with its efforts to ensure sufficient liquidity conditions in the banking system and support the sectors hardest hit by the outbreak and the resultant suspension of economic activity,” they said in a research note.

“We also continue to forecast an additional 75-bp of policy rate cuts, which would take the policy rate to 2%, possibly all delivered within [the second quarter.],” they added.

JPMorgan Chase Bank NA Singapore Branch Economist Nur Raisah Rasid also expects the BSP to carry out rate cuts.

“Amid rising growth concerns, the slower underlying inflationary trajectory opens room for further easing. Thus, we recently added a 25-bp policy cut, beyond the 25-bp penciled in for this quarter, bringing the end-2Q20 RRP rate to 2.25%,” she said in a separate note.

The BSP cut rates to record lows in an off-cycle meeting on April 16 in a bid to cushion the adverse effects of COVID-19 on the economy. Following this, the BSP’s Monetary Board canceled its scheduled policy meeting on May 21.

Its next rate-setting meeting is on June 25.

In a mobile phone message, BSP’s Mr. Diokno reiterated the central bank’s support for “urgent and carefully coordinated measure” with other government agencies to mitigate the spillover effects of the pandemic on people and businesses.

“In addition to the monetary policy actions that have been announced, the BSP stands ready to deploy any available measures in its toolkit as we continue to assess the impact of coronavirus pandemic on the domestic economy,” he said. — Jobo E. Hernandez

Headline inflation rates in the Philippines (April 2020)

May 6, 2020 | 12:32 am

Small firms seek support as lockdown continues

May 6, 2020 | 12:31 am

By Jenina P. Ibañez
Reporter

SOME small businesses are seeking more government assistance, such as utility subsidies and lower rental rates as they struggle to stay afloat amid the extended enhanced community quarantine (ECQ).

Juan Miguel G. Eslava, owner of Cafe Juan Miguel, said in an online interview that his coffee shop in Imus, Cavite has lost 90% of its customers.

None of his employees are able to go to work as public transportation is suspended and coronavirus disease 2019 (COVID-19) cases continue to rise in the area.

Mr. Eslava and his girlfriend still run the café for loyal customers, sometimes making deliveries to nearby homes themselves and selling coffee beans directly to augment income. The Imus City government has also sponsored them to deliver food packs for frontliners.

The Department of Trade and Industry (DTI) earlier allocated P1 billion for a loan program for micro, small, and medium-sized enterprises (MSMEs) affected by the ECQ, and commercial rent can be deferred for 30 days from the last due date within the ECQ. DTI had also requested state banks for a P30-billion loan fund for MSMEs.

As the ECQ has been extended until May 15 for areas including Metro Manila and Calabarzon, MSMEs like Cafe Juan Miguel are struggling.

While he doesn’t have to pay rent, Mr. Eslava wished the government could provide some utility subsidies for MSMEs and transport assistance for workers.

Almost one million MSMEs were recorded in 2018 — accounting for 99.52% of businesses and 63% of the country’s total employment with 5.7 million jobs, government statistics showed.

The Department of Finance (DoF) has set aside a P51-billion wage subsidy for employees of small businesses, and is proposing an extension of the net operating loss carry-over to lower tax payments for small firms by two years.

DoF said small firms may lose P465.3 billion after they temporarily halted operations or reduced their work force during the ECQ.

Calixto Chikiamco, Foundation for Economic Freedom president, said in a BusinessWorld online forum that many MSMEs can afford to stop operations for only a month.

“In two months, they’re already out of working capital and I think facing bankruptcy,” he said.

Mahalia Joy Anne V. Agapito, co-owner and operations manager of Al Jograts Persian Grill in Sampaloc, Manila, said in an e-mailed response to questions that the store has been closed for a month to ensure the safety of employees.

“After a month of quarantine, we were forced to open our store to continue supporting our employees. Half of our employees were forced to stay home and were just given an allowance from us for their daily needs,” she said.

With the restaurant’s sales cut by 75%, Ms. Agapito said they now rely on orders made via food delivery services. While payments for rent and utilities have been deferred, she noted “daily sales are only enough to support our employees and their families.”

While the government has already extended the 30-day grace period for the collection of commercial and residential rents, Ms. Agapito said landlords should be required to cut rental fees by at least 50% during the crisis.

“They can also provide loans which do not require much document requirements to give a leeway for the daily cash flow concerns of small businesses. And making sure cash assistance is provided to MSME employees and their families,” she said.

Ms. Agapito said her business had reached out to the Labor department for the P5,000 financial aid for workers displaced by the ECQ, but has not yet received a response.

Philippine Chamber of Commerce and Industry — Quezon City President Sarah P. Deloraya-Mateo in a phone interview welcomed the loans for MSMEs offered by the government.

She noted there is a big gap between larger companies and MSMEs, as the former has bigger reserve funds.

“Mga SMEs, wala ’yang masyadong savings. May mga utang ’yan kaya malaki ang effect. (SMEs don’t have as much savings. They have debts so the effect is big),” she said.

Many employees have not yet received subsidies.

“Maraming no work, no pay ngayon although most of the employers nagbigay ng mga financial assistance. Pero alam naman natin na hindi siya enough for the employees. Inaasahan sana natin itong mga ma-re-receive from the government. (There are plenty of people under “no work, no pay” schemes now although most employers give financial assistance. But we know that’s not enough for employees. We are hoping for what we will receive from the government),” Ms. Deloraya-Mateo said.

GOING ONLINE
While brick-and-mortar companies struggle with utility and rent payments, online food delivery services are doing well.

Raul Raphael P. Tesoro started Farm2Table in December, a company that delivers produce to consumers while cutting several middlemen.

He said in a phone interview on Saturday that the lockdown has improved demand.

“We’re currently expanding — a proper distribution center, proper storage,” he said, noting that recent events have leveled the playing field and allowed new players to come in.

“Normal forms of distribution and acquiring everything is gone,” he said, referring to centralized distribution and brick-and-mortar shopping.

The company encountered logistics challenges at local government checkpoints, adding that there has been some recent improvement in the movement of goods.

Mr. Tesoro plans to expand the company further and hire more employees.

But the rapid shutdown of business operations for manufacturing materials supply has slowed down e-commerce.

Handmade crafts company B&B Crafts lost online sales because they are unable to deliver goods during the lockdown.

“All of our sewers have a sew-from-home arrangement. We did not anticipate the ECQ so we were not able to stock up on the accessories needed for manufacturing the products,” B&B Crafts owner Leigh M. Tugot said in a mobile message.

She said operations will continue to be at a standstill during the extended quarantine. They plan to conceptualize new product lines and resume online delivery after the lockdown is lifted.

“Support of the government could be in the form of tax holidays for the year to make up for loss in the first semester of the year,” she said.

Meanwhile, Cafe Juan Miguel’s Mr. Eslava said he is working on plans to improve their online presence and expand their logistics services.

Ms. Agapito of Al Jograts Persian Grill also said that they will continue to fulfill orders through delivery apps and make more efforts to sell online.

“COVID-19 has really made an enormous impact on our business plans but as individuals we also understand the threat of it to humans thus, we’d rather struggle to survive this pandemic than to risk the lives of our employees,” she said.

Factory production contracts in March

May 6, 2020 | 12:30 am

By Mark T. Amoguis
Assistant Research Head

FACTORY OUTPUT contracted in March, dropping to its lowest reading in three months as the enhanced community quarantine (ECQ) implemented in mid-March halted economic activity in Luzon, the Philippine Statistics Authority (PSA) reported on Tuesday.

Preliminary results of the PSA’s Monthly Integrated Survey of Selected Industries (MISSI) showed factory output — as measured by the Volume of Production Index (VoPI) — declined by 6.3% annually that month, compared to the revised four-percent growth in February and 8.8% contraction recorded in March last year.

Snapping the two-month growth streak for the year, the March reading was the lowest since the 7.2% decline in December 2019.

Year to date, factory output shrank by 0.5% compared to the 7.4% contraction in last year’s comparable three months.

In comparison, the IHS Markit Philippine Manufacturing Purchasing Managers’ Index — a leading indicator of manufacturing activity — slumped to a record low of 39.7 in March from 52.3 in February, marking a deterioration in operating conditions. A reading above 50 signals expected improvement in purchasing activity, while a score below 50 indicates deterioration.

The PSA MISSI reported year-on-year VoPI declines in 15 out of 20 industry groups, of which 10 were in double digits. The largest contractions were noted in petroleum products (-34.3%), tobacco products (-33.9%), and miscellaneous manufactures (-29%).

Capacity utilization rate, which indicates how much factory capacity is in use, averaged 84.5%. Twelve out of the 20 sectors posted capacity utilization rates of at least 80%.

LOCKDOWN BLAMED
Analysts attributed the factory output contraction in March to the ECQ in Luzon and select areas in the Visayas and Mindanao since mid-March.

“The ECQ on Luzon in the final two weeks of March was the main drag on local manufacturing, as well as on the broader economic growth as this resulted in lost production, income, and jobs for the most vulnerable sectors of society,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in an e-mail response to questions.

In an attempt to arrest the growing number of coronavirus disease 2019 cases in the country, President Rodrigo R. Duterte ordered a Luzon-wide lockdown on March 16. Originally set to last until April 12, the quarantine has been extended twice since then — up to April 30 for the entire Luzon island and until May 15 for Metro Manila, Central Luzon, and Calabarzon Region.

Under the ECQ, select business establishments remained opened such as supermarkets, drugstores, and banks, while cargo transporting basic goods would be allowed to freely cross various checkpoints in the island.

Mr. Ricafort said the economy “could slow down to low single-digit levels partly due to the contraction in manufacturing,” as the sector accounts for about a fifth of the gross domestic product annually.

Philippine Exporters Confederation, Inc. (Philexport) President and Chief Executive Officer Sergio R. Ortiz-Luis, Jr. said the decline in the manufacturing sector will be not as much as that in services, which contribute more than half of the country’s economy.

“The hardest hit would be services, especially the tourism sector. For the manufacturers, I think 30% of them are operating because there are exempted sectors like exporters and food processors. So, I guess the contribution on the negative side will not be as much as that for services,” he said in a phone interview.

Mr. Ortiz-Luis said that the manufacturing sector’s rebound will “depend on how fast we get out of the lockdown.”

“It would take about six months for them to get into full operation…,” he said.

For RCBC’s Mr. Ricafort, he said that manufacturing could contract further in April, but could start to improve starting May if the lockdown in Metro Manila and some parts of Luzon will be lifted gradually after May 15.

Duterte’s apology boosts Ayala, MPIC stocks

May 6, 2020 | 12:10 am

By Denise A. Valdez, Reporter

STOCKS in firms led by the Zobel brothers and Manuel V. Pangilinan surged on Tuesday after President Rodrigo R. Duterte’s apology for the “hurting words” he gave the companies in recent months.

Shares in Ayala Corp. (AC), Metro Pacific Investments Corp. (MPIC) and Manila Water Co., Inc. emerged as top gainers in the stock market yesterday, growing 14.73%, 13.55% and 12.05%, respectively.

This was after Mr. Duterte softened his stance towards the Zobel brothers and Mr. Pangilinan in a speech on Monday, which he said was triggered by the businessmen’s assistance to the government and communities during the coronavirus disease 2019 (COVID-19) crisis.

The Ayala group’s total contributions have reached P5.5 billion as of mid-April, which went to employee support, business operations waivers and monetary and in-kind donations to communities and frontliners.

Members of the so-called “MVP Group” have partnered with the government in building a quarantine site, and have supported frontline workers by providing personal protective equipment, alcohol, hygiene kits, vitamins, and relief packs, cooked food, water bottles, transportation, computers and monetary donations.

Mr. Duterte said the support from the companies made him realize he might need these businessmen someday. “Naubos na ‘yung pagkasuplado ko [My rudeness has run dry]… The COVID humbled me,” he said.

AC’s Manila Water and MPIC’s Maynilad Water Services, Inc. have been recipients of the president’s ire since late 2019 because of alleged onerous contracts for water concession in Metro Manila. The government has since started drafting a new water contract for the companies.

“Maybe there will be a lot of legal issues but we can talk. I am ready to talk and I’d be reasonable,” Mr. Duterte said in his speech Monday night.

Mr. Pangilinan and the Zobel brothers — AC Chairman and Chief Executive Officer Jaime Augusto Zobel de Ayala and President and Chief Operating Officer Fernando Zobel de Ayala — welcomed the president’s changing of tone.

“I wish to assure him that our group is fully committed to being a partner of (the government) in addressing the heartbreaking moments of COVID-19 on our people…,” Mr. Pangilinan said in a tweet after the speech.

The Zobels, in a statement on Tuesday, said they are “committed to help the President” throughout the COVID-19 crisis.

“We have always believed in building a strong partnership between the private and public sectors in addressing our country’s problems… We appreciate the recognition of the Ayala Group’s efforts…,” they said.

Presidential Spokesperson Harry L. Roque also said in a separate briefing on Tuesday that an out-of-court agreement is possible for the water contracts.

“The legal studies and legal examination will proceed, but we’re expecting that mas malakas ngayon ang partnership ng gobyerno at ng pribadong sector sa mga bagay na importante ngayong panahon ng COVID-19 (the partnership between the government and the private sector will be stronger especially in this period of COVID-19),” he said.

Investors similarly took the government’s renewed approach to the companies with glee, evidenced by the gains of stocks in AC, MPIC and Manila Water.

“The President’s apologies to the Ayalas and to Mr. Pangilinan have sparked optimism as it trimmed the regulatory risks that have been hounding the market…,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a text message.

“We cannot ascertain, but the humility that the government has shown and the welcoming response of the Ayalas and Mr. Pangilinan are pointing towards a favorable contract,” he added.

Regina Capital Development Corp. Head of Sales Luis A. Limlingan shared the same observation, saying in a mobile message: “Investors probably must view the statement of the administration a step in the right direction for the businesses to work more closely together moving forward.”

ABS-CBN goes off the air after NTC order

May 6, 2020 | 12:09 am

ABS-CBN Corp. on Tuesday evening halted its broadcast operations, after the National Telecommunications Commission (NTC) issued a cease-and-desist order against the media giant.

In compliance with the NTC directive, ABS-CBN shuttered all of its radio and television stations, including ABS-CBN Channel 2, DZMM and MOR.

News program TV Patrol was the last show aired on ABS-CBN Channel 2, before it officially signed off a few minutes before 8 p.m.

In a video statement aired on TV Patrol, ABS-CBN President and CEO Carlo L. Katigbak maintained that the company has complied with the requirements for the renewal of its legislative franchise, and that it did not violate any laws.

He also urged Congress to renew its franchise that expired on Monday (May 4). ABS-CBN had continued to operate Channel 2 and DZMM on Tuesday.

“Ipadama, isaad at ipadinig po natin ang ating nararamdaman sa pagsasara ng ating ABS-CBN. Sa oras na ito, kami naman po ang humihingi ng inyong pagdamay. Maraming salamat po, mga Kapamilya,” Mr. Katigbak said.

The NTC order dated May 5 directed the media giant to “immediately cease and desist” from operating its various television and radio broadcasting stations nationwide.

It also gave ABS-CBN 10 days from the receipt of the order to explain why the frequencies assigned to it “should not be recalled for lack of the necessary Congressional Franchise as required by law.”

Ordered closed are five AM radio stations, which include DZMM-AM in Obando, Bulacan; 18 FM radio stations; 42 TV stations; and 10 DTTB stations for implementation.

ABS-CBN clarified that its cable news channel ANC, online websites and video streaming service iWant are not affected by the order.

“Failure to file an answer within the period herein granted shall be considered respondents’ waiver of its rights to be heard, and the commission shall render such judgment as the law and evidence may warrant,” the NTC’s order also said.

President Rodrigo R. Duterte has not hidden his anger against ABS-CBN, repeatedly threatening to block the renewal of its legislative franchise. He accused the network of refusing to air some of his political ads.

Meanwhile, Justice Secretary Menardo I. Guevarra said on Tuesday that the NTC had requested his department’s opinion on the matter and that it had given an advice “in accordance with law and equity.”

“[T]he Congress expressed essentially the same view as that of the [Department of Justice] and further enjoined the NTC to issue a provisional authority to [ABS-CBN],” he said, adding that the NTC issued a cease-and-desist order instead.
“[I]t must have a very good reason for doing so. [L]et’s wait for its explanation,” Mr. Guevarra said in a mobile phone message.

He added that the order “is immediately executory but still appealable to the courts.”

House Committee on Legislative Franchises Chairperson Rep. Franz E. Alvarez of the 1st District of Palawan said in a statement on Tuesday that his committee “will not be dictated upon by any individual or agency as to the manner, schedule, and conduct of its official business.”

He was referring to Solicitor General Jose C. Calida.
The lawmaker said lawmakers had been “made aware of efforts” by Mr. Calida “to pressure the NTC to go against the ruling of the Department of Justice, which states that ABS-CBN may continue to broadcast while Congress deliberates on the renewal of its franchise.”

“With the legal opinion of the Department of Justice and the authority given by the House of Representatives, there is no reason for ABS-CBN to discontinue or stop their operations until we make a final decision,” Mr. Alvarez added.

ABS-CBN said in a statement that millions of Filipinos will lose their source of news and entertainment as it goes off-air “when people need crucial and timely information as the nation deals with the COVID-19 (coronavirus diseases 2019) pandemic.”

ABS-CBN said it had been providing “comprehensive news coverage on the public health crisis and working with local governments and the private sector in providing food and basic goods for those in need.” It said it had delivered more than P300 million worth of goods for at least 600,000 families during the enhanced community quarantine.

“We trust that the government will decide on our franchise with the best interest of the Filipino people in mind, recognizing ABS-CBN’s role and efforts in providing the latest news and information during these challenging times,” the company said.

“ABS-CBN remains committed to being in the service of the Filipino and we will find ways to continue providing meaningful service to them,” it added. — Arjay L. Balinbin and Vann Marlo Villegas

Pilipinas Shell to shut Batangas oil refinery for a month

May 6, 2020 | 12:08 am

PILIPINAS Shell Petroleum Corp. (PSPC) will suspend the operations of its Batangas oil refinery for a month starting May 15, citing the decline in demand for fuel products and falling refining margins during the lockdown.

In a disclosure sent to the stock exchange on Tuesday, the Philippine unit of Royal Dutch Shell said it is set to switch from local refining production to fully sourcing petroleum products abroad to continue supplying cost-effective fuel in the country.

“In response to the drastic decline in local product demand and the significant deterioration of regional refining margins brought about [by] the COVID-19 [coronavirus disease 2019] pandemic, the Company will temporarily shut down its Refinery operations for approximately one month starting mid-May 2020,” PSPC said.

The pandemic crisis has caused global demand for oil to drop as oil-dependent industries closed, leading to a supply glut that brought down prices in the world market.

Lately, Energy Secretary Alfonso G. Cusi noted that around 10% of oil retailers in the country had temporarily shut down their fueling stations in areas under the enhanced community quarantine (ECQ).

PSPC said it had enforced cash conservation measures to stay afloat until the local economy recovers.

“The temporary shutdown will help insulate the Company from further potential drops in refining margins and will also aid in its cash conservation initiatives,” it claimed.

According to Mr. Cusi, oil prices will remain volatile up to the end of the third quarter, along with lower demand, as the mobility of people will still be restricted.

“I don’t think the price of oil will immediately change after the ECQ because of what is happening abroad,” he also said.

Oil demand is projected to decline by 9.3 million barrels per day in 2020 due to lockdowns, based on the outlook of the International Energy Agency.

PSPC will conduct maintenance activities at its 110,000-barrel-per-day Tabangao refinery during its temporary shutdown.

“Nonetheless, the refinery will retain the flexibility to do a start-up immediately should market and demand conditions improve and stabilize,” it added.

Meanwhile, the company’s North Mindanao Import Facility, which can house 90 million liters of fuel products, will continue to operate.

On Tuesday, shares in PSPC went up 1.19% to close at P18.74 each. — Adam J. Ang

D&L Industries earnings fall 31% as demand slips

May 6, 2020 | 12:07 am

LISTED company D&L Industries, Inc. posted a 31% decline in net income for the first quarter as demand for its high margin specialty products slid with the implementation of lockdown measures due to the coronavirus pandemic.

The Lao-led manufacturer of plastics, food ingredients and specialty chemicals reported a net income of P515 million in the first quarter, down from P748 million in the same period last year.

Sales slipped 3% to P5.67 billion as its sales mix tilted towards commodities against high margin specialty products.

“It’s really a buyer’s market at the moment for most of our commodity businesses, especially food ingredients,” D&L President and Chief Executive Officer Alvin D. Lao said in an online briefing. “Wala masyadong bumibili ng mga (There aren’t many customers for) high margin food ingredients. It’s focusing mostly on the basics.”

For the past quarters, D&L has been focusing on getting more revenues from its high margin business and lower revenues from commodities or low margin products, as it said this would help improve the risk management of the company.

Its sales mix in the first quarter was 64% against 36% in favor of high margin specialty products, skewing the ratio from 69%-31% in 2019 and 63%-37% in 2018.

“We only have two weeks of ECQ (enhanced community quarantine) in the first quarter. In the second quarter, we’re going to have at least six weeks of ECQ. Because of that, it is likely this 36% will expand,” Mr. Lao said.

Food ingredients comprised the bulk of D&L’s sales in the first quarter with a total volume growth of 22% year-on-year. Volume of aerosols also increased 12%, while oleochemicals and specialty plastics dropped 26% and 8%, respectively.

But in terms of net income, only the aerosols business posted a growth of 44%. Food ingredients, oleochemicals and specialty products fell 34%, 36% and 28%, respectively.

An added effect of the ECQ to D&L is the suspension of construction works at its 26-hectare facility in Batangas. The plant was originally scheduled for completion in the first half of 2021, but Mr. Lao said this may be moved to the third or fourth quarter next year.

“Even after ECQ is lifted…it will take time for the mobilization to start again. We’re looking at the minimum probably three months of delay. But we don’t want to delay this any further,” he said, noting the facility’s long-term benefits to the company’s operations.

D&L maintains a P6-billion budget for capital expenditures through 2021, which might spill over mostly to next year, Mr. Lao said.

Mr. Lao also said the company expects the worst is over for the pandemic, as port congestion has started to ease and businesses are gradually resuming operations.

However, given the lack of an anti-viral drug for coronavirus disease 2019 (COVID-19), he said it was difficult to provide an outlook for the company in the months to come. “I’m not able to give a projection but what I can tell you is mukhang (it seems) the worst is over,” he said.

“[COVID-19] is nowhere near as bad as the Spanish Flu. So I think from that you can see that recovery, at worst, [would take] two years, then things should be back to normal after,” Mr. Lao added.

Shares in D&L at the stock exchange slipped four centavos or 0.76% to P5.19 each on Tuesday. — Denise A. Valdez

CCP reinvents ways of engaging audiences during hard times

May 6, 2020 | 12:06 am

THE Cultural Center of the Philippines (CCP) has been transitioning to the digital platform as live shows and programs have been suspended until the end of the year thanks to the COVID-19 pandemic.

“The unique quality of our art form is its liveness,… and the way it interacts with live audiences. But until we find a way to contain the virus, then we really have to be actively creative about how we engage with the audiences,” CCP Vice-President and Artistic Director Chris B. Millado said in a Zoom press conference on April 30.

“The [CCP] management has decided that all venues are going to be close to the end of the year because we are very reliant on the lifting of the quarantine period. We would need at least three more [months] after [the] return to work order to formalize operations of any physical venue and normalizing operations that can also mean that we are allowed to organize large gatherings,” he added.

Mr. Millado noted in his presentation the impact of COVID-19 has had on the arts and culture sector and its impact on the CCP programs. He also discussed the upcoming programs the management has lined up in response to it.

Due to the enhanced community quarantine, there has been an enormous loss of livelihood in the arts and culture sector. In the CCP alone, at least 800 events including outreach programs and festivals have been canceled. At least 3,000 artists, cultural workers, and production staff have been affected. At least 800,000 potential audience members have been lost due to the cancellation or shows and programs throughout the country. And at least P90 million in potential revenue has been lost — box office and ticket sales, as well as the sale of the CCP Encyclopedia of Philippine Art (2018), and venue rentals.

Other businesses in the CCP complex have also been badly affected, including those at the Harbour Square strip mall. As Mr. Millado noted, “most of its traffic usually depends on the shows going on at the CCP.”

As implied by the Bayanihan: Heal as One Act, government institutions, which includes the CCP, are called to realign their budgets in response to the COVID-19 crisis.

PRIORITY AREAS AND GOING ONLINE
As a strategy, the CCP aims to use alternative modes of engagement, and protect the artists’ livelihoods through priority areas.

The first component is the Arts and Culture Online which includes video streaming HD recordings of shows online; creating virtual reality tours of CCP galleries, museums, and exhibits; and partnering with institutions, NGOs, and large scale communication networks for education fundraising.

The second is Live Arts on Lockdown which includes projects such as the 2020 Virgin Labfest online, and upcycling recorded programs by incorporating live interviews and annotations.

Third is Arts for Therapy with the Philippine Philharmonic Orchestra (PPO) collaborating with the Philippine General Hospital (PGH) where musicians play music for frontliners and patients through the use of digital tablets.

Lastly, there is Capacity Building in which they will formulate a module for the upskilling of artists and cultural workers in arts therapy, digital communications and technology.

As part of the CCP’s online engagement, the CCP Online YouTube channel (https://www.youtube.com/user/culturalcenterphils) is currently streaming Ballet Philippines’ Firebird and Other Ballets, while the play Kung Paano Ako Naging Leading Lady, written by Carlo Vergara and directed by Chris Martinez for Virgin Labfest 9, premieres on May 7, 3 p.m., and the concert Triple Threats: Everything in Bituin, featuring actress-singer Bituin Escalante, premieres on May 9, 3 p.m.

“We [have] now reached at least hundred 20,000 engagements online. So I think it shows how much demand there is in terms of online technologies,” Mr. Millado said.

Meanwhile, CCP resident company Tanghalang Pilipino launched #PansamanTanghalan on its official YouTube channel (https://www.youtube.com/tanghalangpilipino) which is currently streaming musical numbers from Balag at Angud, an original Filipino musical on the life of the revolutionary Filipino artist Junyee.

The 16^th edition of the Virgin Labfest theater festival, titled VLF 2020 KAPIT: Lab in the Time of Covid, will be streamed online and run from June 10 to 28. It will feature nine new plays, three revisited plays, and six staged readings, all streamed online.

“The Virgin Labfest is here, and it remains strong and able to adjust to new realities. The festival has a firm fan base which has filled the CCP theaters year in and year out. Let’s continue to tell our stories on the virtual stage,” VLF festival director JK Anicoche said in a press release.

CCP Sales and Promotions Manager Gemma Marco noted during the Zoom press conference that a “minimal [ticket] price” is being proposed for the upcoming festival.

The CCP’s online technical team has partnered with the CCP Film Division for the online staging of the plays.

“We see this as an opportunity to make the public aware of the presence of our digital online content,” Mr. Millado said. “Hopefully after the COVID-19 recovery period is over we can then focus on the worldwide web as a platform.” — Michelle Anne P. Soliman

IPO appetite seen dampened by pandemic worries

May 6, 2020 | 12:05 am

ANALYSTS believe initial public offerings (IPO) at this time are risky because of the volatility of the market and sensitivity of investor sentiments to the coronavirus disease 2019 (COVID-19) pandemic.

Grocery operator MerryMart Consumer Corp. of businessman Edgar “Injap” J. Sia II is reportedly planning to pursue its P1.6-billion IPO and will list on the small, medium and emerging (SME) board of the Philippine Stock Exchange (PSE).

However, analysts said IPO plans have to be carefully assessed as the market is not in prime condition at the moment. The PSE index has been trading within the 4,743-5,946 range since March 20, down from its 52-week high of 8,419.59.

“At this time in the market wherein the pandemic causes a lot of economic losses and demand for economic activity is down, it would not be a good move to go into IPO,” Diversified Securities, Inc. Equity Trader Aniceto K. Pangan said in a text message.

He added most investors are on the sidelines due to uncertainties and on recession fears, which may make it extra challenging for a company to launch a public offering.

Based on its application approved by the Securities and Exchange Commission in March, MerryMart is planning to do a primary offer of 1.59 billion shares priced P1 each.

Philstocks Financial, Inc. Research Associate Claire T. Alviar said unlike in usual times, investors might not be as interested in IPOs at the moment.

“I think some, particularly small investors, will consider staying on the sidelines — given the uncertainties on COVID-19 pandemic — or they could look for other bargain stocks in the market to position, instead of risking into something that is not yet fully evaluated,” she said in a text message.

Specifically for MerryMart, she said some investors may still be interested, but not as much as they would’ve been before the pandemic. “Interested investors could be those who want to diversify their portfolio,” Ms. Alviar said.

For Mr. Pangan, even though MerryMart’s business deals with essential retail, an IPO right now may not be the best move for the company.

“There are lots of competitors with no and not much differentiation in the business [of MerryMart],” he said. “With demand down due to lesser economic activity, the bottom line will definitely be down too due to increased layoffs.”

While MerryMart may not have a problem with sales, Ms. Alviar said the company could have an issue with its growth prospect, since almost all businesses are expected to have a difficult time expanding during the pandemic.

“They could face hurdles in construction and in finding people to work in their company. Aside from that, its employees are still at risk of getting infected,” she said.

But if anyone were to succeed in doing an IPO at this time, Ms. Alviar said it is likely to be those in the food retail and telecommunications sectors, as these companies are sustaining, if not growing, consumer demand during these unique times.

The Philippine Stock Exchange, Inc. was initially targeting six IPOs in 2020, an increase from the four listings it recorded in 2019. These are Kepwealth Property Phils, Inc.; Axelum Resources Corp.; AllHome Corp.; and Fruitas Holdings, Inc. — Denise A. Valdez

For Singapore’s T: >Works, the show must go on — online

May 6, 2020 | 12:05 am

THERE’S an adage in theater that no matter what, “the show must go on.” That is especially true — and challenging — in the time of a pandemic that prohibits any sort of gathering. For Singaporean theater company T:> Works, the focus is all about creating new works for the digital platform.

“Our priority is really to create new performances on the digitalized platform,” Ong Ken Sen, the group’s artistic director, said in a digital press conference on April 30.

Originally called TheatreWorks, T:> Works is a 35-year-old theater company that produced Singapore’s first musical, Beauty World, in 1988, among other original Singaporean productions. The group has so far done more than 200 productions, with more than 2,500 performances.

Mr. Ong has been the artistic director of T:> Works since 1988 — interrupted in 2010 when he took a hiatus to complete his doctorate degree in Performance Studies at Tisch School of the Arts at New York University.

In its long history, Mr. Ong admitted that the COVID-19 pandemic is the “first global disruption [he] experienced in the arts,” and that it forced theater to digitize performance.

“In a way, this is the early days of digitalization of performance… however [the new] visual identity also hints that digitalization still has to go back to the source (analog). It cannot be simply about the bleakness of technology,” he said, noting that the performance of the future is about integration.

The shift to digital also prompted the group to change its name from TheatreWorks to T:> Works.

But while the shift to digital is happening, Mr. Ong noted that the performing arts world should consider how far digital can go in terms of providing the experience.

“I think as a community of arts, audiences, and artists we have to ask: when is human intimacy necessary for us to make sense of our lives? When do we need to stand in front of a painting and not just information from the web. When is information from the web no longer sufficient experience?” he said.

Aside from creating new performances, the company will also be conducting curators training from May to June, as well as holding a virtual festival for women called Women NOW (Not Ordinary Work).

“We are always curating perspectives of the US and Europe. What would happen if curators were trained looking at the context of Southeast Asia specifically,” he said in an insert video explaining the establishment of Curators Academy in 2018.

The curators training course, titled Curating No-thing, consists of four lectures done via video-conferencing platform Zoom. There will also be virtual consultations for select participants.

“Many artists, writers, producers, and cultural workers are already curating in their daily work, but there is little reflection space for them to evaluate what curating is, how to curate and for whom they should be curating,” he said in the digital conference.

The lectures will cover topics including creating worlds, ethical generosity, rethinking value, and listening. They will run on May 19, 21, 26, and 28, while consultation sessions are on June 9, 11, 16, and 18.

Interested participants can register by contacting mervyn.TWorks@gmail.com. For more information, visit theatreworkssg.wordpress.com.

Women NOW is a virtual festival created and developed entirely by women and will be helmed by Singaporean arts educator and actress Noorlinah Mohamed. The festival will run from July 15 to Aug. 2, and more details will be released soon.

“Coming back during the COVID-19 pandemic is a special challenge. However, I believe it galvanizes our resolve to continue creating during these difficult times,” Mr. Ong said.

Because of the pandemic, he expects that the performing arts community will lose two out of 10 people who go and watch their performances but that the physical audience they may lose may be able to be brought back via digital performances.

“In this current urgency of the COVID-19 pandemic. It is a time to sustain a different gathering of arts, audiences, and artists,” he said. — Zsarlene B. Chua

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