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PHL human capital index score slightly worsens

CHILDREN born in the Philippines today will “fail to achieve almost half their potential” productivity as future workers, according to a World Bank report.

The Washington-based multilateral lender’s Human Capital Index (HCI) 2020 Update report showed the Philippines’ HCI fell to 0.52 in 2020,  from 0.55 in 2018, partially reversing the gains it had when it improved from 0.49 in 2012.

“The country’s HCI score of 0.52 means that children born in the country today will fail to achieve almost half their potential,” the report released Thursday read.

The index, which measures the human capital potential of children today, ranges from 0 to 1, with scores closer to 1 indicating better human capital status.

Despite the slight decline in its HCI, the World Bank noted the Philippines is among the countries with notable improvements over the last decade, along with Singapore, Morocco and Ghana.

Enrolment in the country significantly increased as seen in primary and secondary gross enrollment rates hitting 100% and nearing 90%, respectively in  2017.

However, quality of education still remains an issue despite the expanded access. The World Bank noted sores of 15-year-old students from the Philippines were lower compared with nearly all other participating countries in the 2018 Programme for International Student Assessment (PISA).

“In the Philippines, although several successive political administrations have adopted and sustained robust strategies to build the human capital of the population, they have not succeeded in growing sufficiently the capacity and good governance needed to implement these efforts on the ground,” the World Bank said.

The report noted the Philippines’ expenditures on health and education programs at 4.4% and 3.5% of gross domestic product (GDP), respectively, were relatively lower than what an average country at the same income level would spend: 6.5% of GDP for health programs and 4.5% on education.

“Widespread fraud in the distribution of textbooks, theft of funds or supplies, and ghost workers (workers who are paid but do not carry out their jobs) in municipal health facilities are all reflected in the country’s outcomes. In the PISA 2018 exam, about four-fifths of students (81%) achieved lower than a minimum level of proficiency in reading, while a similarly high percentage of students performed below the minimum level of proficiency in mathematics,” the World Bank said.

Among Asian countries, Singapore had the highest HCI score with 0.88, followed by Hong Kong (0.81), Japan (0.80), South Korea (0.80). and Macao (0.80).

The review process for the HCI data was conducted between February and July. The HCI was measured through five index components: enrollment data, child mortality, harmonized test scores, stunting rates, and adult mortality.

The latest edition updated the index to include expanded data for the components measured. It also added 17 new countries from its previous report in 2018, bringing the total to 174 countries.

The World Bank noted that many countries have made a huge progress in improving human capital over the last 10 years but the impact of the coronavirus pandemic threatens to reverse many of those gains. — Beatrice M. Laforga

Filipinos born today ‘will fail to achieve almost half’ their potential productivity as future workers — World Bank

Nationwide round-up

Medical experts support reduced distancing in public transport with ‘7 commandments’

MEDICAL EXPERTS supported the reduction of physical distancing in public transportation and recommended rules on avoiding the spread of coronavirus while opening the economy.

In a statement on Wednesday, the experts said they presented to the inter-agency task force on Monday the “Seven Commandments” that have to be observed in public vehicles.

These are: wearing of proper face masks, wearing of face shields, no talking and no eating, adequate ventilation, frequent and proper disinfection, no symptomatic passengers, and appropriate social distancing.

“These 7 Commandments need to be strictly enforced and independently monitored in their implementation,” said the group composed of doctors with background on public health, epidemiology and infectious diseases.

“By imposing these strict measures, we believe we can gradually relax social distancing rules, in order to double or even triple our current public transport capacity, without compromising public health,” they added.

The doctors also acknowledged that the country “cannot build back the economy” without increasing public transport capacity.

“Based on our review of the scientific literature and the policies and experiences of neighboring countries, we believe the evidence shows physical distancing can be maintained below 1 meter, so long as other health measures are also implemented,” they said.

The one-meter policy is recommended by the World Health organization (WHO).

The group is composed of former health secretaries Manuel M. Dayrit and Esperanza I. Cabral, UP Manila College of Public Health Dean Vicente Y. Belizario Jr., UP Manila Environmental and Occupational Health chair Michael R. Hernandez, and National task Force against COVID-19 special advisor Teodoro J. Herbosa.

They are also joined by Philippine College of Surgeons Cancer Commission Director Manuel Francisco T. Roxas, Eye Bank Foundation of the Philippines founder and CEO Ma. Dominga B. Padilla, and Rontgene Solante Infectious Disease Specialist Rontgene M. Solante.

The Department of Transportation, with approval from the national task force, started reducing the distance between passengers to 0.75 meters on Monday.

This will be further decreased to 0.5 meters by September 28 and 0.3 on October 12.

The new policy has been criticized by various sectors, including Interior and Government Secretary Eduardo M. Año, citing public health risks.

Palace Spokesperson Harry L. Roque said President Rodrigo R. Duterte is already evaluating the policy and will make a decision by Thursday.

“We had a six-hour meeting yesterday to reassess the policy… and it would be the President who will ultimately decide,” he said in an interview with CNN Philippines. — Vann Marlo M. Villegas and Gillian M. Cortez

Task force recommendation: Let health workers with overseas contracts as of Aug. 31 to leave

THE INTER-AGENCY task force handling the coronavirus response has recommended to extend the coverage of exempted health workers for deployment abroad to those with contracts as of Aug. 31.

In an online briefing on Wednesday, Labor Secretary Silvestre H. Bello III said their proposal is up for review by President Rodrigo R. Duterte.

Mr. Duterte ordered the deployment ban in March following the lockdown imposed to contain the coronavirus outbreak.

An exemption was later made for health workers with contracts as of March 8.

Mr. Bello said he will still not recommend a total lifting of the deployment ban, citing country’s need for more medical manpower amid the pandemic.

“Under the present situation, I am not confident that the clamor for the total lifting of the deployment ban will be favorably acted upon. I, for one, will not recommend because we will have to think of our country,” he said. — Gillian M. Cortez

Quarantine violator Sinas should not be promoted — solons

THE FREEMAN

THE MAKABAYAN bloc in the House of Representatives slammed the police chief’s announcement that Metro Manila police chief Maj. Gen. Debold M. Sinas, who drew flak for his birthday “mananita” during the community quarantine period, will likely get promoted.

In a statement on Wednesday, Bayan Muna Party-list, one of the bloc members, said the promotion of Mr. Sinas would be a big “slap” to the Filipino people who have been subjected to unfair treatments and “draconian” measures.

“He should not be promoted. A promotion for a quarantine violator like Debold Sinas is a big slap to the Filipinos,” the group said.

In May, Mr. Sinas made headlines after his own police office posted photos of his birthday celebration where not everyone were wearing masks, physical distancing was not observed, and alcoholic drinks were evident — all in violation of the quarantine protocols imposed by the government. Social gatherings were also still prohibited at that time.

Despite the public outrage and calls to sack Mr. Sinas, President Rodrigo R. Duterte defended him saying that he will “not order his transfer.”

The Philippine National Police (PNP) Internal Affairs Service reportedly filed charges against Mr. Sinas and other police officials involved in the incident, but there has so far been no announcement of the result of the cases.

BayanMuna challenged the Duterte administration to show some “delicadeza” and order the resignation of Mr. Sinas. “Where is the delicadeza the PNP and the whole government? This government is a big circus, but one that is not funny,” the progressive group said.

“No one is above the law. They should set an example.”

PNP chief General Camilo Pancratius P. Cascolan said in an interview on ANC on Wednesday morning that Mr. Sinas “deserves” a promotion, hinting that he might be given a directorial staff position.   

Mr. Cascolan said Mr. Sinas “has done good things” as commander of the National Capital Region (NCR) police office.

“We have to evaluate him properly. The guy deserves also an evaluation and of course, a promotion, too,” Mr. Cascolan said. — Kyle Aristophere T. Atienza and Emmanuel Tupas/PHILSTAR

Local governments wary of resuming provincial bus services from Metro Manila

MOST LOCAL governments are hesitant to open their borders for buses from Metro Manila as the government eyes resuming provincial bus operations this month.

In a briefing on Wednesday, Land Transportation Franchising and Regulatory Board (LTFRB) Chair Martin B. Delgra, III said only four out of 81 provinces nationwide agreed to reopen their borders following a consultation with local leaders.

“Out of 81 provinces, the only response we got among the provinces who would be willing to open their borders to admit passengers from Metro Manila are just four. So because of that, we will have to prepare nevertheless to open provincial bus routes on a limited capacity,” he said in mixed Filipino and English.

Last Monday, the Department of Transportation said the LTFRB will be releasing its guidelines on the resumption of provincial bus operations this week.

“Hopefully, we are looking at a timeline of within the month, we will be opening the provincial bus routes coming from Metro Manila or ending in Metro Manila,” Mr. Delgra said.

Metro Manila, the nation’s capital, has been the epicenter of the coronavirus outbreak, accounting for over half of the total cases.

Meanwhile, Overseas Workers Welfare Administration head Hans Leo J. Cacdac reported during the same briefing that over 200,000 overseas Filipino workers  have been transported to their hometowns from Metro Manila as of September 16.

“As of today… 202,000 na po ang napauwi (have been sent home),” he said. — Gillian M. Cortez

Infrastructure spending falls in July

Public infrastructure projects have gradually restarted as lockdown restrictions eased. — PHILIPPINE STAR/MICHAEL VARCAS

STATE SPENDING on infrastructure declined once again in July, due to the slow resumption of construction work and bad weather in some areas, the Department of Budget and Management (DBM) said.

Latest DBM data showed infrastructure and other capital outlays dropped 30.4% to P52.3 billion in July from P75.2 billion logged in the same month last year. This was also 16% lower than the P62.8 billion spent for infrastructure in June.

“Infrastructure and capital outlays were lower by P22.9 billion year on year ending up at P52.3 billion mainly on account of the one-off expenditure in July last year with the advance payment made by the DND for the projects under the Revised AFP Modernization Program (RAFPMP),” the Budget department said.

The DBM also noted the disbursements to the Department of Public Works and Highways (DPWH) were lower year on year, as projects were gradually restarted with health and safety protocols. It also said some areas experienced inclement weather, which also affected construction work.

Lockdown restrictions in Metro Manila and nearby provinces were eased since June, but health and safety protocols continue to be implemented to curb the spread of coronavirus disease 2019 (COVID-19).

Infrastructure expenditures were down 9.4% to P350.3 billion in the January to August period, largely due to the impact of the enhanced community quarantine (ECQ) on business activity in Metro Manila and nearby provinces. Construction activities were only allowed to resume in mid-May.

“Infrastructure spending was lower year on year due to the base effect of high infrastructure expenditures in the same period last year brought about by the payment of prior years’ accounts payables, and the temporary suspension of public works due to the implementation of the ECQ measure in Luzon and other areas nationwide starting mid-March up to late May,” the DBM said.

Overall spending of the government reached P2.388 trillion at the end of July, up 24% from a year ago.

Infrastructure spending is likely to pick up following the July slump after the DBM released P38.3 billion to the DPWH, the country’s biggest infrastructure-implementing agency, in August it said.

“Infrastructure spending has substantial multiplier effects on output, employment, and household income. Hence, a contraction in government spending on infrastructure can deprive the economy of potential boosters of economic recovery,” University of Asia and the Pacific (UA&P) School of Economics Senior Economist Cid L. Terosa said in an e-mail.

Economic managers said massive spending on infrastructure will help the economy recover faster as it creates more jobs.

However, this year’s budget for infrastructure projects was cut to P785.5 billion, or 4.2% of gross domestic product (GDP), from the initial program of P989 billion as the government redirected funds to fund the pandemic response.

Mr. Terosa noted the reduced infrastructure spending may hurt economic growth over the longer term.

“Infrastructure spending contributes to capital formation, which is a vital cog of long run economic growth. The weakened state of infrastructure spending cuts capital formation and therefore, to a certain extent, jeopardizes long run economic growth potential of the country,” he said.

The National Economic and Development Authority (NEDA) Board, chaired by President Rodrigo R. Duterte, last month approved the revised list of 104 flagship infrastructure projects. The new list includes 12 new projects that are deemed crucial for the post-pandemic recovery.

The government has set a P1.107-trillion infrastructure spending plan for next year, 41% higher than this year’s allocation. — Beatrice M. Laforga

Pandemic leaves local shipbuilders high and dry

By Arjay L. Balinbin, Senior Reporter

THE PHILIPPINE shipbuilding industry is feeling the pain as new orders have dried up amid the recession.

“New orders are very seriously hit,” Meneleo G. Carlos III, chairman of the Shipyard Association of the Philippines (ShAP), said in a phone interview.

“Our road to recovery is simply meeting the requirements of our customers and hopefully our customers becoming more financially stable or have predictable requirements, and more regular settlement of obligations,” he added.

With the economic slowdown, many marine service providers like Chelsea Logistics & Infrastructure Holdings Corp. have put expansion plans on hold.

“Shipowners may really reconsider if investing in new vessels now is an option. Maybe we will revisit (our plans) after a couple of years or so,” Chelsea Logistics President and Chief Executive Officer Chryss Alfonsus V. Damuy said in a phone message.

Archipelago Philippines Ferries Corp. Chief Executive Officer Christopher S. Pastrana said in a phone interview: “We are deferring the newer orders that are supposed to start this year. We will start next year.”

Philippine Liner Shipping Association (PLSA) President Mark Matthew F. Parco said the local domestic shipping industry, like other industries, was “taken by surprise by the speed and breadth” of the impact of the coronavirus pandemic.

“The reduction in cargo and continuing restrictions in passenger travel have significantly affected the profitability and liquidity of the lines. The tight liquidity position is affecting the PLSA members’ decision to modernize and expand,” he said in an e-mailed reply to questions.

Mr. Pastrana, who is also the president of the Philippine Inter-island Shipping Association, noted the Bayanihan to Recover as One Act (Bayanihan II) signed by President Rodrigo R. Duterte on Sept. 11 “should have a positive impact on the economy, and goods should continue to be moved to support the islands,” as these are necessary for the industry’s recovery.

For now, shipbuilders are focusing on repair works for survival.

“With this pandemic, we shifted our focus from private (sector) to government. Survival is our priority, so we are having so many repair works for government-owned vessels,” Josefa Slipways, Inc. Vice-President for Marketing and Operations Arturo S. Balajadia said in a phone interview.

Before the coronavirus pandemic started, Josefa Slipways was preparing to construct more ferries, as the Maritime Industry Authority (MARINA) ordered the phase out of wooden-hulled passenger vessels.

Mr. Balajadia said the MARINA’s directive would have been a big opportunity for the local shipyards and contractors to secure more orders for passenger vessels.

STIMULUS
As the industry reels from the economic fallout of the pandemic, MARINA had proposed that P1.6 billion be allocated to the shipbuilding industry under the Bayanihan II.

A copy of MARINA’s position paper obtained by BusinessWorld said: “For the shipyard industry, to help sustain the business operation of shipyards until the economy recovers (payment for payroll cost, interest on mortgage obligations, rent, utilities, raw materials etc.), the National Government is proposed to provide a loan through the Development Bank of the Philippines with the following mechanics: payable in five years with low interest rate; no collateral; and lending decision approval of loan should be made within 30 days from date of application.”

It said the approved amount of loan will be “based on the paying capacity and size of business operation” of both shipyards and boatyards.

But under the newly signed Bayanihan II, of the P9.5 billion allotted for the Transportation department, only P2.6 billion will be used to assist the critically impacted businesses in the air, land, and sea sectors. Most of these funds will be used to provide temporary livelihood to displaced workers in the transportation industry and the construction of sidewalks and bicycle lanes.

MARINA Administrator Robert A. Empedrad did not immediately respond to a request for comment.

The law directs the Transportation department to “provide direct cash or loan interest rate subsidy” and “grants for applicable regulatory fees.” The department is likewise directed to “allow substitution of refund option to travel vouchers, provide grants for fuel subsidy and/or digital fare vouchers, as may be necessary.”

SURVIVAL
MARINA said the Philippines is the 5th largest shipbuilder globally after China, South Korea, Japan, and Germany in terms of the total gross tonnage order book for ship construction in 2018.

Philippine shipbuilders had manufactured 2,161 ships in 2017, 61% higher from 1,354 ships built in 2011, it added.

There are 117 registered shipbuilding and ship repair entities in the Philippines as of Dec. 2019, according to MARINA’s website. Only 6% are capable of building and repairing big ships with a minimum length of 130 meters. Majority or 79% build and repair ships with a maximum length of 80 meters.

According to a study by the Duke University Center on Globalization, Governance and Competitiveness (Duke CGGC), revenue of domestic shipyards as of 2016 ranged from about $50,000 to $8.8 million, 90% came from repair rather than shipbuilding.

ShAP’s Mr. Carlos said local shipyards have had difficulty in penetrating the export market.

“Export is a challenging market nowadays unless you have a niche… or a specific client base where you are able to exercise some kind of a competitive advantage. There’s a particular pattern worldwide that seems to push for domestically grown or domestically produced products,” he explained.

Josefa Slipways’ Mr. Balajadia said local shipbuilders should partner with foreign shipyards if they want to secure overseas orders.

But with the ongoing pandemic, it doesn’t matter anymore whether the vessels are for local or export, as domestic shipbuilders are only interested in surviving, Mr. Carlos said.

“I think it’s important for us to look at the domestic requirements of both the Navy, the Coast Guard, the fishing industry, the transport industry, and even the private pleasure vessel or private work vessel industry,” he added.

Gov’t may reduce borrowings once tax collections improve

The Bureau of Internal Revenue is targeting to collect P1.686 trillion this year. — PHILIPPINE STAR/KRIZ JOHN ROSALES

GOVERNMENT BORROWINGS may be less than initially estimated this year, after the main revenue-generating agencies beat their lowered targets two months in a row, Finance Secretary Carlos G. Dominguez III said.

The Bureau of Internal Revenue (BIR) and Bureau of Customs (BoC) had surpassed their revised collection goals in July and August, as economic activity picked up with the easing of lockdown restrictions.

For the first eight months of the year, the combined collections of the BIR and BoC reached P1.6 trillion, exceeding the downward revised P1.527-trillion target. However, the amount was still down by 12% compared with the same period last year.

“We are still short of what we would like ideally, however, the revenue agencies have shown that they are still very active and that they are taking their job very seriously and have, in fact, exceeded the revised targets. But, again, I like to emphasize we are still 12% below last year,” Mr. Dominguez said in a press conference Tuesday.

“So our borrowing program will be informed by these new developments. And these new developments are positive and we may not need to borrow as much as we did. But again we are waiting to see how the rest of the year goes by,” he added.

National Treasurer Rosalia V. de Leon said the government continues to assess its borrowing plan based on the inflows from revenues generated and on how fast state agencies will use the budget.

“Our borrowing is calibrated on revenue collections and pace of spending to ensure a healthy cash buffer for emerging requirements,” Ms. De Leon said in a Viber message Wednesday.

The economic team has set a P3-trillion borrowing program this year to plug a budget deficit seen to balloon to 9.6% of gross domestic product (GDP) as revenues fall and spending rises on pandemic expenses.

The government had already raised P1.857 trillion in the seven months to July, already exceeding the P1.02 trillion borrowed for the entire 2020.

The BIR’s target for the year was lowered by 3% to P1.686 trillion in May, while the BoC is now tasked to collect P506.15 billion, down 6.6% from the previous goal.

Mr. Dominguez said the reduced collection targets were the economic team’s “realistic” projections as weak consumer demand pulled down collections of value-added and excise taxes.

The National Government’s debt stock is expected to reach P10.16 trillion by year’s end amid increased borrowings. So far, its outstanding debt rose 18.5% to P9.16 trillion as of end July from the P7.73-trillion level recorded at the start of the year.

The outstanding debt stock is projected to reach 53.9% of GDP by year’s end, 58.1% next year and 59.9% by 2022.

For next year, the government is set to borrow another P3 trillion as revenues are expected to remain sluggish while the national budget was increased to P4.5 trillion to support economic recovery. — Beatrice M. Laforga

SC upholds Razon takeover of Iloilo power firm

THE Supreme Court upheld the validity of the provisions of the law allowing Razon-led MORE Electric and Power Corp. to take over the power distribution assets in Iloilo City.

Brian Keith F. Hosaka, the court’s public information chief, told reporters the justices voted 8-6 in favor of MORE.

“In granting the petitions, the Supreme Court reversed the Judgment of the Regional Trial Court of Mandaluyong City Branch 209 in Civil Case No. R-MND-19-00571, and declared Section 10 and 17 of RA No. 11212 constitutional,” he told reporters via Viber.

The six justices who dissented were Justices Marvic Mario Victor F. Leonen, Amy C. Lazaro-Javier, Henri Jean Paul B. Inting, Rodil V. Zalameda, Mario V. Lopez, and Samuel H. Gearlan. Justice Priscilla J. Baltazar-Padilla did not take part.

MORE, led by businessman Enrique K. Razon Jr., in February 2019 was granted a 25-year franchise to provide electricity to Iloilo City, replacing Panay Electric Co., Inc. (PECO).

PECO was the electric provider of Iloilo for more than 90 years, but its legislative franchise expired in January 2019.

Estrella C. Elamparo, PECO’s legal counsel, said the side of the city’s previous electricity distributor was “saddened” by the decision of the Supreme Court.

“It was a close vote on a novel issue that had never been raised before our Highest Court, but will certainly have reverberating consequences that open the power of expropriation to abuse. The tight vote lends support to our position that the takeover of PECO’s properties is not the exercise of eminent domain contemplated by our laws, but a violation of constitutional rights,” she said in a statement.

“The ponente proceeded with the decision just days before his retirement from the judiciary. Although this is a massive hurdle, we will not give up on our fight and we will continue to pursue the available legal remedies to defend PECO’s constitutional rights. Despite this temporary setback, we remain optimistic that we will ultimately be vindicated not just for PECO but for the people of Iloilo,” Ms. Elamparo added.

The Mandaluyong court last year declared as unconstitutional the two provisions in the legislative franchise of MORE following a petition from PECO.

Section 10 of Republic Act 11212 authorizes MORE to exercise the power of eminent domain as necessary for the efficient establishment, improvement, and maintenance of its services and acquire private property “as is actually necessary for the realization of the purpose for which the franchise is granted.”

Meanwhile, Section 17 provides that PECO is to operate the existing distribution system in the franchise area until MORE completes its own distribution system within two years.

MORE raised to the Supreme Court the ruling of the trial court and secured a temporary restraining order in December 2019.

Early this year, an Iloilo court issued a writ of possession, allowing MORE to take over PECO’s assets.

PECO last week said it had filed an anti-competition complaint against MORE for allegedly prohibiting competition in electricity distribution in Iloilo city. — Vann Marlo M. Villegas with Adam J. Ang

Jollibee expects demand growth in North America, Europe

JOLLIBEE Foods Corp. (JFC) continues its expansion in North America and Europe as it sees growing demand for its Jollibee brand overseas.

In a statement Wednesday, the company said it recently opened its first Jollibee store in Liverpool, UK and West Plano, Texas, USA, where initial sales from the stores exceeded forecasts.

JFC noted a double-digit growth for Jollibee in North America, and a plan to open 50 stores in Europe for the next three to five years.

“Jollibee continues to grow in both North America and Europe,” JFC President and CEO Ernesto Tanmantiong said in the statement. “In North America, the Jollibee brand is seeing double-digit growth, with our Chowking and Red Ribbon brands also performing well… In Europe, our expansion plans are ongoing.”

The opening of a new Jollibee store in the Greater Dallas area of Texas marks JFC’s 45th store in North America. Before the year ends, it targets to open more stores in California and Canada.

In Europe, the Liverpool store increased JFC’s network to three stores, with the other two located in Milan, Italy and Earl’s Court, London. Another Jollibee store is lined up to open in Leicester, England before the end of 2020, putting JFC on track to open 50 restaurants in Europe in the next three to five years.

“Our customer base around the world continues to grow as we tap local consumers within each market – expanding it from Filipinos living abroad to a wider, more mainstream market,” Mr. Tanmantiong said.

The company noted its non-dine-in services help lift sales amid the coronavirus pandemic, offering continued access to its products despite limited mobility.

“The digital pivot happening has driven off-premise channels like delivery, drive-thru, and take-out to a higher level, enabling our brands to outperform the QSR (quick service restaurant) industry in the US,” Mr. Tanmantiong said.

Aside from Jollibee, JFC said company-owned Smashburger stores in the US have also been recording double-digit growth in the past four months.

The company is expecting a bad financial performance throughout the year due to the coronavirus pandemic. It posted an attributable net loss of P12.99 billion in the first semester, reversing P2.18 billion attributable profits in the same period last year.

But it expects sales and income to significantly rebound in 2021, with Smashburger and The Coffee Bean and Tea Leaf, which JFC recently acquired, beginning to be profitable.

The company is allocating P5.2 billion for capital spending this year.

Shares in JFC at the stock exchange dropped P1.60 or 1.19% to P133.30 each on Wednesday. — Denise A. Valdez

Meralco settles fines, plans P200-M discount to poor customers in Oct.

MANILA Electric Co. (Meralco) has settled its fines for allegedly breaching billing directives from the Energy Regulatory Commission (ERC), while it plans to cover the distribution charges of its poor customers in October.

In the last week of August, the regulator imposed a P19-million fine on the utility giant for supposedly failing to clearly communicate to customers their bills during the height of the strict lockdown and for breaking its compliance with the mandated installment payment scheme.

The said fine “was already settled last Friday as a gesture of goodwill, with a short manifestation that the amount should be less, considering ERC’s guidelines,” Meralco Utility Economics Head Lawrence S. Fernandez told BusinessWorld on Wednesday.

Meralco was also directed to shoulder around P200 million in distribution, supply, and metering charges of its more than two million poor customers.

“On the implementation of zero distribution charges for lifeline customers, the target is to reflect this in October bills,” Mr. Fernandez said.

The power company incurred a penalty of P100,000 each day from May 5 to July 9, before it issued personalized letters explaining to customers their electricity bills between March and June, according to the ERC. The commission has based its decision on its evaluation of various billing statements.

“Our advisories were issued to aid the electricity consumers in light of the ongoing pandemic. It was supposed to provide a respite from the various financial woes of the consumers,” ERC Chairperson and Chief Executive Officer Agnes VST Devanadera said in a previous statement.

The issue stemmed from bill shocks reported in May when the electricity distributor started delivering consumer bills, which were based on estimates. Later, all power providers in the country were tasked to charge households based on actual electricity usage during the lockdown months.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a stake in BusinessWorld through the Philippine Star Group, which it controls. — Adam J. Ang

When times are hard, bake some cake

By Joseph L. Garcia Reporter

THE COMMUNITY quarantine has left us all to bake: we’ve all been under pressure and heat either to rise, fall, or settle. Two twenty-somethings have taken up the challenge and instead of being baked themselves, went on to bake cake.

DONE WELL BAKERY
The name Miro Capili would ring a bell in literary and development circles: Before she turned 18, Ms. Capili already had three Palanca Awards under her belt. Today, she works from home as a Data and Analytics Manager for the International Committee of the Red Cross in Geneva — also, she bakes. Ms. Capili is behind Done Well Bakery (@donewell.ph on Facebook), a home-based operation specializing in those trendy Burnt Basque Cheesecakes.

When one says something is trendy, it’s easy to dismiss the product as one of many; mindlessly following another that has come before. Not quite the case for this one. BusinessWorld ordered the Dark Chocolate Chip Burnt Cheesecake (6” for P975) — and it was worth every penny, and then some. For starters, we asked Ms. Capili how long it would last in the fridge, and she said that it would last about a week, and doubts that it would not all be eaten long before that. We proved her wrong on both counts: the cake was so dense that a slice a day proved more than sufficient, and it lasted in the fridge beyond a week (though for safety concerns, we would not recommend this). However, Ms. Capili did say that the cake would turn better as it would age. “Pfah,” this reporter would say, but this time, it was her turn to put egg (or in this case, cake) on our face.

On the first day after receiving the cake, Ms. Capili told us to eat a slice. Rich enough, and the cheese portion, we thought, lacked drive, and was easily subsumed by the dark chocolate chips. By the third day, following her advice — well, the cheese portion had come into its own, becoming more than a backdrop for the chocolate, and becoming its true partner. In transferring their flavors to each other with maturity, it achieved a taste both foreign and familiar, one I would liken to a cup of warm Ovaltine, a familiar childhood flavor given sophistication and a new texture. This was a cake that one should get to know, approach with some care, and one that rewards for the effort of waiting.

“I guess that’s a happy accident, that our cheesecake gets better as it ages in the fridge. We only have chemistry to thank for that. Especially with our dark chocolate chip version, the flavors and textures develop over a week. The cake peaks after four or five days. There are so many factors you can’t control with baking, and in this case, that’s to our advantage. But who knows, maybe there is a parallel to be drawn here with work, skill, and craftsmanship. It certainly helps to start with a great product, but incubation gives rise to texture, new ideas, and the discipline to know when to stop. Experience is the currency of skill,” she said in an e-mail after we raved about the product to her.

PRESSURE MAKES THE CAKE
Pressure builds character, and the conditions under which Ms. Capili’s cake was made might prove this. “‘Beaten up, is a good way to put it, in the sense that making a Basque burnt cheesecake is more forgiving to make than a classic baked cheesecake,” she said in an e-mail. “No water bath needed, and you can throw everything into a smoothie blender (though I don’t recommend it). I think a burnt cheesecake is the tangible expression of my personality and approach to baking. I’m a sucker for classics and things that work — things that appear, at first glance, to be unimprovable. Chocolate chip cookies, focaccia, laing, kulawo. And I’m also pensive, introspective to the point of neurosis. I take one bite and think, how can we rework this without messing with the blueprint? Marginally, of course, I’m not looking to reinvent the wheel. So you take something that has worked for decades — a baked cheesecake — and make it less cloying, then nearly burn the top to introduce caramelization and flavor compounds that can only come from high temperatures. You get an entirely new cake that’s easy to understand but thoughtfully layered, complex. The logic of the blueprint is intact but the condition of possibility is alive and throbbing. It’s a nearly perfect invention.”

The chocolate chips that Ms. Capili uses are sourced locally, from Auro, a homegrown brand. Explaining her choice, she said, “The Philippines has some of the best chocolate in the world, and I’m glad more people are noticing. I choose local ingredients and packaging materials whenever I can to support local businesses during this tough time. But even if it weren’t from a local brand, I’d still use the single origin chocolate we use. It’s so good it makes me dizzy. The toasty, winey notes introduce a heady depth to the burnt top that I didn’t even think was necessary. It was a quick favorite among customers, so the advantage was clear taste-wise. But most importantly, I believe in this local company’s business model. They upskill farmers and cooperatives in chocolate production and provide a sustainable market for their products. We’re also developing a line specifically using local flavors, so I’m very excited about that.”

During the quarantine, people took up gardening, or else cooking, or sewing. Asked why she chose to bake, she said, “Baking cheesecakes wasn’t a conscious decision just as starting a business wasn’t a conscious decision. I have a full-time job and was preoccupied. I baked my tita (aunt) a burnt cheesecake for her birthday and posted it on Instagram stories. Then my best friend asked how much I’d charge for a cheesecake for her boyfriend’s birthday, and I posted again, and more people asked. I focused on these cheesecakes because this is my favorite type of cheesecake, and I got obsessed with getting it right. It was an intellectually satisfying process but also an excuse to eat my favorite thing over and over,” she said.

“I started this business at a point in my life where I’m quite secure about who I am, what I want to contribute, and whether any of it matters. I think that’s important in business, knowing what you want. It certainly enabled me to stand by my product, choosing which constructive comments to implement and which parts were nonnegotiable. My work in the development sector also taught me to be creative with solutions and constantly innovating, which is useful to weather setbacks in business especially when ingredients aren’t available due to the lockdowns. And growing up, I loved experimenting with flavors, but based on a certain blueprint of how certain flavors and chemical interactions work with each other. It couldn’t be like ketchup and mustard ice cream — it still had to have some internal logic to it. I also disliked following recipes, opting instead to understand the general proportions of ingredients and why they were mixed in a certain arrangement. All of this to say, it took me all but 27 years to develop the creativity, maturity, and sensibility that I (hope to) bring to Done Well now,” she continued.

For many who have been affected by the pandemic, life freezes. One might find it hard to slog through the days because of a death of a loved one, or the death of a way of life. As a consequence, a lot of people picked up new skills or polished old ones. “I’m amazed by how resilient and enterprising people have been. This could be our generation’s Great Depression,” said Ms. Capili. “Only this time, you have social media as a digital marketplace and a closely-knit network of relationships as a market. I’m not saying it’s easier to succeed in business in this climate, but there are certain advantages given where we are in mainstream technology. People my age have been filling their homes with plants, knitting, baking for fun or profit, selling all sorts of things. There’s a lot of hopelessness around, but we have insisted on hope.”

Ms. Capili could have chosen to do a million other things to do during quarantine, but she chose to bake. “Baking gave me a sense of control during an intractable situation. COVID is our new leviathan and it crippled me, the mental load. My job requires me to handle global operations data on humanitarian aid. A few months ago, there was an outbreak in a refugee camp in Bangladesh. One million people I had to worry about in addition to the problems we had in our country. That night, I lay in bed, paralyzed by the growing sense that nothing could be done. A friend said it’s fine to feel that way, it means you’re human, but also don’t run your life into the ground over something you can’t control. Well, what could I control? My work, though I’m sure we help many, didn’t feel enough. Donating to frontliners and the needy didn’t feel enough. I realized what I needed wasn’t something to do, but an alternate headspace. Baking gave me that. I could disappear for hours in the realm of heat and salt and sweet, standing over my mixer and tweaking the batter. It appealed to a primal zone of the body, all that tasting, but also required a lot of thinking, or no thinking at all. The stakes were close to zero.”

Asked what baking did for her, she said, “It was the little piece of earth that was mine.”

FLUFFED
With a glossy surface that promised so much, it was easy to fall in love with the chocolate cake from Fluffed (P550 for an 8”x8” square). It was easy to understand: just a quick chocolate ganache over some dark chocolate cake. The dark chocolate ganache made one’s tongue move forward in anticipation, due to that rich, smoky cocoa taste. The friend who recommended Fluffed to me said it would take about three days to finish the cake — it’s been about a week, but there are still two slices in my fridge. The chocolate crinkles meanwhile, were aggressive. Dusted in powdered sugar, a bite bled beautifully dark gooey chocolate, a pleasant and messy surprise that makes one smile.

“The ingredients are pretty straightforward as for chocolate cakes. It really does not differ much, so we have to leverage on the quality of the ingredients used. We use Dutch processed cocoa powder and 100% dark Belgian chocolate. We chose these ingredients because it delivers the kind of rich flavor we are looking for,” said Gail Royeca in an e-mail interview with BusinessWorld. Asked why she concentrated on chocolate-based products, she said, “It started as a craving and most of the time when I buy myself chocolate cakes, it is often too sweet for my liking. So I decided to bake my own as I can control the kind and the amount of sugar I put.”

Of course, her’s isn’t the only chocolate cake on the market, and one can name several dozen at the drop of a hat. What sets her’s apart is the flavor. “Our goal is to make sure consumers enjoy the rich chocolate flavor in less sugar and less guilt. We believe that despite the larger market and competition, it is what makes us stand out. Although we will not stop with chocolates, we are exploring more options for sophisticated flavors that can also be our staple.”

We asked Ms. Royeca how the pandemic has changed hers, but also how an old life influenced the new: “I was a Business Consultant, and the nature of my job was to assess business concerns and offer solutions, primarily streamlining business operations. I finished my contract just few days ago, but I would say that it has been incredibly fulfilling and insightful. With this, I have a better understanding on SME business operations which I can apply to implement initiatives and activities to make our business better.”

As with Ms. Capili, we also asked Ms. Royeca about her thoughts about young people like her improving on old skills, or picking up new ones. “Before the pandemic struck, I have been giving myself a lot of excuses as to why I [could not] develop or practice new skills even if I wanted to, and [had] the most popular excuses of all: ‘I have no time’ or ‘I am too busy.’ When the pandemic prompted a lockdown, I realized the amount of time in my hands. I remember asking myself, ‘So what’s your excuse now?’ It’s when I decided to take advantage of it to develop and acquire new skills.”

She added, “I would like to emphasize that time is the most valuable commodity. Decide to use it well and decide not to waste it. Every single day is a decision whether we will slouch on the couch or get up and do something significant that can make up for our goals, dreams and future.”

Order from Done Well Bakery at https://web.facebook.com/donewell.ph/ on Facebook, and from Fluffed at https://web.facebook.com/Fluffeddesserts.ph/.

Ayala Land’s AREIT buys office building in Cebu

AREIT, Inc., the real estate investment trust (REIT) of Ayala Land, Inc., has bought an office building in Cebu City using P1.45 billion from the proceeds of its recent public offering.

In disclosures to the exchange on Wednesday, AREIT said it signed a deed of sale with ALO Prime Realty Corp., a wholly-owned subsidiary of Ayala Land, to buy Teleperformance Cebu.

Teleperformance Cebu is a 12-story building located at the Cebu I.T. Park, Cebu City. It has a total gross leasable area of 18,092 square meters that is 100% occupied.

“This maiden acquisition will increase AREIT’s dividend yield consistent with its growth strategy of acquiring prime real estate assets with stable occupancy,” it said.

AREIT is paying quarterly dividends starting this month, where the payout should be at least 90% of its income.

With the acquisition of Teleperformance Cebu, AREIT’s portfolio has expanded to a gross leasable area of 172,000 square meters from nearly 153,000 square meters before the deal.

“The acquisition in Cebu is strategic for AREIT,” Carol T. Mills, president of AREIT, said in the statement. “Most BPOs (business process outsourcing firms) in Metro Manila have expansion sites and operations in Cebu because of its strong talent pool. Like in Metro Manila, Ayala Land has a significant share in the Cebu office market.”

AREIT has paid an initial P290 million to ALO Prime Realty upon the signing of the deed of absolute sale. The balance of P1.16 billion will be paid after the transfer of the building’s Philippine Economic Zone Authority (PEZA) registration to AREIT.

AREIT did a P12.33-billion initial public offering in August to mark the country’s first REIT offering. Prior to the acquisition of Teleperformance Cebu, AREIT’s portfolio consisted of three Makati-based office buildings: 24-story commercial building Solaris One, two-tower mixed-use development Ayala North Exchange and five-story commercial office McKinley Exchange.

As required by REIT guidelines, proceeds from a REIT offering must be reinvested back to the country within a year. AREIT said then it is eyeing other real estate properties in Metro Manila and key regions.

Shares in AREIT at the stock exchange climbed five centavos or 0.19% to P25.70 each on Wednesday. — Denise A. Valdez

Gaita Fores cooks Hokkien Mee and Chicken Claypot Rice as the 27th Singapore Food Festival goes virtual

IF 2020 were a normal year, the 27th Singapore Food Festival would have been like it has always been: a grand celebration of food and culture featuring many food and beverage partners showing off their dishes in front of a live audience. But 2020 is not a normal year and thus the grand food festival has migrated to a safer space — online — but still continued to dish out virtual food tours, live masterclasses, chef collaborations, food bundles, and limited edition food merchandise across two weekends in August.

“As we took the Singapore Food Festival online and virtual for the first time, we wanted foodies the world over to rediscover Singaporean cuisine from wherever they may be,” Ruby Liu, Singapore Tourism Board’s Philippines area director, said in a release before adding that this year’s programming had “something for everyone.”

While the festival is over — it ran from Aug. 21 to 23 and Aug. 28 to 30 — the various masterclasses and virtual tours can still be accessed through the festival’s website, https://www.singaporefoodfestival.sg/.

One of the masterclasses featured the Philippines’ own Margarita “Gaita” Fores and Singaporean chef Ming Tan as they prepared Hokkien Mee, a noodle dish using prawn stock; and Chicken Claypot Rice, a well-loved rice casserole, live from their respective countries.

Ms. Forés, ambassador of Filipino cuisine who was voted Asia’s Best Female Chef for 2016, is the owner of restaurants Cibo, Lusso, and Grace Park, and caterer Cibo di Marghi. Chef Ming Tan, meanwhile, has over 10 years in the hospitality industry and is presently the managing partner of the Slake Collective which includes homegrown brands like KIAP and Tokidon, and is as well the consultant chef for JAM at Siri House, and is the part of Channel News Asia’s top-rating series For Food’s Sake.

The masterclass, called “2Fast, 2Delicious,” showed off Slake Collective’s Damn Easy Hokkien Mee and On-the-Spot Claypot Chicken food kits and used these to make the dishes without all the fuss in 15 minutes — but of course, each chef added their own flair to elevate the experience. (View the masterclass at https://www.singaporefoodfestival.sg/virtual-cook-along.)

Ms. Fores, for her Hokkien Mee dish, added pork belly, chicharon (pork cracklings, crispy fish, river prawn, and aligue (crab fat) for that tangy Filipino touch, while for her Claypot rice, she added Filipino chorizo for a “distinct and delectable taste,” according to a press release.

Mr. Tan’s take on Hokkien Mee featured the Filipino native lime calamansi, and added blow-torched, soy-marinated pork shabu with crispy fish. For his Clay pot rice, he added goose liver sausage, lap cheong (a type of Chinese sausage), and aged chai poh (preserved radish).

“Filipino cuisine, like Singaporean cuisine, enjoys strong flavours and we like our sour things too,” Mr. Tan noted about the similarities between Filipino and Singaporean cuisines before adding that the two cultures “have similar taste preferences, use similar ingredients like herbs and spices.”

And Ms. Fores agrees as she said “the similarities are more evident with food with strong Malay influences from the South of the Philippines like curries and rendangs,” and that “the Chinese slant in Singaporean dishes is something you can find in both countries.”

GIR climbs to fresh record at end-August

THE COUNTRY’S dollar reserves hit a new record at end-August on the back of gains from the central bank’s investments abroad.

Gross international reserves (GIR) rose by 15% to $98.95 billion as of August from $86.03 billion a year earlier, data from the Bangko Sentral ng Pilipinas (BSP) released on Wednesday showed. GIR also climbed by 0.36% from the $98.6 billion logged at end-July.

The end-August tally is already above the central bank’s $90-billion projection for this year. BSP Governor Benjamin E. Diokno last week said the country’s dollar reserves could go beyond $100 billion by year-end.

Ample foreign exchange buffers protect the country from market volatility and ensure the country can pay its debts in the event of an economic downturn.

“The month-on-month increase in the GIR level reflected inflows mainly from the BSP’s foreign exchange operations and income from its investments abroad,” the BSP said in a statement. 

Meanwhile, the rise was partially offset by foreign currency withdrawals use to pay debt obligations of the national government as well as revaluation losses from the central bank’s gold holdings amid a decrease in prices of the metal.

The BSP said the end-August tally is equivalent to nine months of imports of goods and payments of services and primary income.

It is also about 7.6 times the country’s short-term external debt based on original maturity and 4.8 times based on residual maturity.

Broken down, gold reserves stood at $12.039 billion, 50.19% more than the $8.015 billion seen a year ago but down 4.41% from the $12.595 billion logged as of July.

Gains from investments abroad, which made up the bulk of the reserves, jumped 12.1% year on year to $82.446 billion from $73.522 billion and by 1.56% from the $81.177 billion logged the month before.

On the other hand, foreign currency deposits dropped by 9.27% to $2.505 billion from $2.761 billion in the same period last year. It also decreased by 12.62% from the end-end-July level of $2.867 billion.

The country’s reserve position with the International Monetary Fund (IMF) rose by 33.8% to $753.7 million from $563.3 million a year ago and by 0.41% from $750.6 million the prior month.

Special drawing rights — or the money the Philippines can tap from the IMF — stood at $1.209 billion, 3.51% higher than the $1.168 billion seen a year ago and up a tad from the end-July’ level of $1.168 billion.

The continued rise in the country’s dollar reserves will help boost the peso, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message.

“Stronger recovery of OFW remittances may also contribute to higher GIR to uncharted highs in the coming months,” Mr. Ricafort added.

Cash remittances rose 7.8% year on year to a seven-month high of $2.783 billion in July, mainly fuelled by inflows from land-based overseas Filipino workers. However, the seven-month level of $16.802 billion was still 2.4% lower year on year.

The BSP expects a 5% decline in cash remittances this year due to the coronavirus crisis. — L.W.T. Noble