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ABS-CBN teams up with US production firm for Hollywood TV show

ABS-CBN Corp. is teaming up with a United States production firm to create its first Hollywood content that will be aired in television network WGN America.

The Lopez-led company said it is partnering with Electric Entertainment, founded by Filipino-American producer Dean Devlin, to produce a crime series set in Cebu entitled “Off Tropic.”

Electric Entertainment is known for its films such as “Bad Samaritan,” “Independence Day: Resurgence” and “Flyboys,” and television shows like “The Librarians” and “Leverage.” Mr. Devlin is its chief executive officer.

“This is a first of many strategic partnerships and collaborations with partners from all over the world and we are very thrilled that we are partnering with a formidable team, Electric Entertainment, to line produce the US series for them,” ABS-CBN Head of International Production and Co-Production Ruel S. Bayani said in a statement.

The partnership signals the first time ABS-CBN is venturing into Hollywood television production. Prior to this, the international co-production division of the company had forged partnerships and collaborations with producers from Southeast Asia, US and Europe.

“We chose to partner with ABS-CBN because they have been so instrumental in the development of talent here both in front and behind the camera. I think they have the most experience and they have just been amazing partners,” Mr. Devlin was quoted as saying in the statement.

The production of the show is scheduled to start in November. ABS-CBN said majority of the show’s cast will be from the Philippines, such as the lead who will be a Filipina actress paired with American actor Christian Kane.

Mr. Devlin—who is known for writing and producing films like “Godzilla” and “Stargate” and directing “Geostorm” and “Bad Samaritan”—will be writing the first two episodes of the show and directing its finale.

“This is going to change the way people perceive the entertainment business in the Philippines,” Mr. Devlin said.

ABS-CBN recorded an attributable net income of P1.55 billion in the first half of the year, higher by 83% from last year due to strong revenues from advertising sales. — Denise A. Valdez

Government expenditures (less interest payments)

Government expenditures (less interest payments)

How PSEi member stocks performed — September 24, 2019

Here’s a quick glance at how PSEi stocks fared on Tuesday, September 24, 2019.

 

Diokno says market anticipation of rate cut reduces guesswork

BANGKO Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno acknowledged market expectations of further policy easing as “good,” because it means it takes the guesswork out of the bank’s policy action Thursday.

Mr. Diokno said on the sidelines of the Euromoney Philippine Investment Forum in Makati in response to a question about market expectations: “That’s good. That’s good. You don’t have to keep guessing. There will be an announcement on Thursday after the Monetary Board policy meeting.”

Asked whether the monetary board will also move on bank reserve requirement ratio (RRR), he said, “Hindi siguro (Maybe not)… pero yung RRR naman is always in the agenda (but he RRR is always on the agenda). Pwede naming i-announce ‘yun (We can announce it) anytime. Yung RRR walang definite schedule yan. (The RRR has no definite schedule),” he told reporters Tuesday.

An analyst said the central bank has adopted a new approach to signalling rate action in response to flagging growth.

In a note, ING Bank NV Manila economist Nicholas Antonio T. Mapa said the BSP’s new communication policy “puts primacy on transparency as Diokno looks to restore credibility and establish trust with the market through forward guidance.”

“Thus even as BSP embarks on a heroic gambit to boost flagging growth via easing, market reaction has been positive and the peso has been stable. Thursday will see another 25 bps rate cut to the RRP (reverse repurchasing rate) to bolster growth and BSP will announce the fourth quarter RRR reduction schedule, with a pair of 50 bps reductions at the end of October and November,” he said.

According to a BusinessWorld poll, seven out of eight analysts are calling another 25-basis point cut by the Monetary Board, similar to its actions on May 9 and Aug. 8. Those moves reduced RRP, overnight deposit and overnight lending rates to 4.25%, 3.75% and 4.75%, respectively. — Luz Wendy T. Noble

BSP touts PHL resiliency after economic reforms

REFORMS have made the Philippine economy more resilient in the face of external shocks, presenting investors with untapped opportunities, the central bank governor said.

In his keynote address at the Euromoney Philippine Investment Forum Tuesday at the Fairmont Makati, Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno said the reforms have transformed the Philippines into “one of the most resilient economies in the region in the world.”

Mr. Diokno cited the Philippines’ recovery from the 2018 inflation crisis, when the indicator peaked at 6.7% late in the year. Price growth has since “reverted to within the target range of 2-4%.”

He said the 5.5% growth in gross domestic product (GDP) in the second quarter, while slower than recent quarters, represents “the 82nd consecutive quarter of uninterrupted economic growth. This shows we have managed to sail through even the toughest external challenges, from the Asian financial crisis to the global financial crisis.”

“Our projection is for the Philippines to continue growing. This is consistent with the lofty goal of becoming a high-income economy in about two decades,” he added.

“We are currently rated one notch above the minimum investment grade by Fitch and Moody’s, while we are just a step away from securing a Single-A rating from S&P Global. We are keen on hitting the minimum rating within the A territory over the next two years or so,” he said.

Mr. Diokno said improved credit ratings are not just “end goals” but translate directly to concrete benefits “economic growth” and “actual poverty reduction.”

“With higher credit ratings, interest rates on government borrowings drop, which leads to savings on interest payments and, therefore, more fiscal space to fund infrastructure projects and social services,” Mr. Diokno said.

“As such, aiming for A ratings goes hand in hand with the goal for the Philippines to graduate into an upper middle-income economy over the short term and to a high-income economy over the long haul,” he said. — Luz Wendy T. Noble

Rice import duty hike not certain to benefit farmers

RAISING tariffs on imported rice will benefit importers that have already shipped in rice while discouraging future importers, potentially leaving consumers with more expensive rice, a government researcher said.

Roehlano M. Briones, a research fellow with the Philippine Institute for Development Studies (PIDS), told BusinessWorld in a phone interview: “It’s a win for your earlier importers, it’s a loss for your future importers. It’s a loss for the consumer, and I don’t even know if the farmers will win. It’s uncertain whether the farmers will win in this scenario.”

He added that it is unclear whether higher tariffs will improve the situation for domestic farmers, after imports softened the market for their palay, or unmilled rice. Private traders have reportedly been offering as little as P6 per kilo for palay because of competition from imports of cheap grain from elsewhere in Southeast Asia.

“I don’t really see kung magi-improve yung palay prices (whether palay prices will improve) even with the doubling of the tariff,” Mr. Briones said. “Regardless, whether you double, increase it, the fact that you are raising tariffs in the middle of the game adds to the uncertainty and prevents the beneficial effects of the law from taking effect.”

University of the Philippines School of Economics Professor Ramon L. Clarete also said that imposing safeguard measures, which the government is authorized to impose under Republic Act 8800, or the Safeguards Measures Act, if domestic industries are found to be harmed by imports, may take some time since this would involve hearings by the Tariff Commission.

“The safeguards are a very different animal. It involves another agency which is the Tariff Commission and a hearing,” he said in a separate phone interview.

Agriculture Secretary William D. Dar said that the Department of Agriculture (DA) is looking into the implementation of extra duties on rice imports by mid or early October. This is expected to curb rice imports which have been pressuring the prices obtained by farmers for their produce.

“We are now starting the process of looking at implementing the safeguard duty on imported items, particularly rice,” Mr. Dar said in a news conference on Monday.

He noted that rice imports from March to August have totaled 2.4 million metric tons (MMT), well above the estimated demand for imports of about 1.5 MMT to 2 MMT, based on a 93% rice self-sufficiency rate.

“Sa pananaw namin sumobra na yung volume ng ating import requirement (In our view imports have exceeded the required volume to meet demand) and so further imports will now be looked at differently. This is part of the law anyway,” he said.

The DA is still determining how much to increase duties. Mr. Dar said reports of a doubling in the rice import tariff to 70% is one of the scenarios being considered.

The law allows such safeguard measures to be enforced for 200 days. — Vincent Mariel P. Galang

Open-pit mining ultimately a ‘political’ decision — regulators

THE RESUMPTION of open-pit mining will ultimately require a “political” decision with the government weighing the need to protect the environment against the desire of mining companies to operate as efficiently as possible, mining regulators said.

“There is a lot of pressure (because) business people have a lot of influence… it’s a political decision. Ultimately, (the) impact will be environmental and social,” Antonio N. Apostol, a head of division at the Mines and Geosciences Bureau (MGB) told reporters on the sidelines of a bureau news conference.

The ban on open-pit mining was imposed by former Environment Secretary Regina Paz L. Lopez, an environmental advocate, in April 2017. She was supported by President Rodrigo R. Duterte, who rejected a proposal by the Mining Industry Coordinating Council (MICC) to lift the ban in November 2017.

Another mining regulator the lifting of the ban will also depend on the recommendation of the current environment secretary, Roy A. Cimatu.

“It depends on the DENR (Department of Environment and Natural Resources) Secretary to convince the President kung ili-lift (if it will be lifted) or not) based on the scientific evidence,” Rodolfo L. Velasco, head of the MGB’s Mine Safety, Environment, and Social Development division.

Mr. Cimatu was asked to comment but had not replied at deadline time.

At the news conference proper in Quezon City, another mining regulator, Teodorico A. Sandoval, described open-pit mining as “economical” from the point of view of miners.

Mr. Sandoval is the MGB’s head of division for mining technology.

Mr. Apostol added that open-pit mining is safer than underground mining, and that the government can easily regulate mining companies since this method is very visible. The visibility of open pits is also a disadvantage because people can see that it is “destroying” the environment.

Mr. Velasco noted that the ban has had a significant impact on the attractiveness of the country for mining investors.

He noted that the most significant project that was put on hold is the $5.9-billion Tampakan project in South Cotabato, touted as one of the largest gold prospects in the world.

The project was rejected by Ms. Lopez in 2016.

Its operator is Sagittarius Mines, Inc. (SMI) which was able to secure declaration of mining feasibility and was steps away from starting operations. — Vincent Mariel P. Galang

PHL is on Singapore firms’ investment radar — DoF

THE Philippines is in the top 10 of potential investment destinations for Singapore businesses, the Department of Finance said.

In a statement Tuesday, the DoF said the Philippines emerged as a top pick of respondents to the Singapore Business Federation’s (SBF) National Business Survey.

Singapore was the second largest foreign investor in the Philippines last year and its largest export market in the region, SBF Chairman Teo Siong Seng said at a meeting with Finance Secretary Carlos G. Dominguez III along with a 21-member delegation from Singapore.

Mr. Teo said that Singapore firms see “untapped opportunities” in the digital and information technology sector of the Philippines that they can service.

“While many Singapore companies have established operations in the Philippines in industries such as manufacturing and infrastructure, there are untapped opportunities in areas such as information technology and digital solutions, which our companies with the capabilities will be able to take up,” he was quoted as saying.

Keppel Corp. CEO Loh Chin Hua said his company is exploring options to expand its investment in the country, citing the flagship “Build, Build, Build” infrastructure program of the government.

“For Keppel, we have operated two shipyards in the Philippines, and we are now looking to see how we can do more here,” Mr. Loh was quoted as saying.

Mr. Dominguez told the delegation the Philippines will not completely eliminate investment incentives in the course of reforming the tax system and will only make incentives them performance-based, timebound, targeted and transparent.

“So that is what we are willing to give incentives to. We are willing to give incentives to engineering companies, we are willing to give incentives to companies for large data analysis, robotics,” he said.

He was referring to the proposed Corporate Income Tax Incentives Reform Act (CITIRA) which bagged third and final reading at the House of Representatives on Sept. 13. The counterpart bill is now going through the Senate.

Mr. Teo said that the Philippines’ economic and social progress make it more “attractive and compelling” for Singapore investors.

“Singapore and the Philippines have always enjoyed close economic ties. As we celebrate 50 years of bilateral relations with the Philippines, we look forward to more great years ahead of getting our business communities to collaborate more closely so we can ride the ASEAN growth story together,” he added. — Beatrice M. Laforga

Agus-Pulangi rehab timetable now seen at ‘beyond 2025’

THE rehabilitation of the Agus-Pulangi hydroelectric complex could take place beyond 2025, the National Power Corp. (Napocor or NPC) told a House committee.

A Napocor engineer briefing the Committee on Energy, Rene B. Barruela, operations planning department manager wit Napocor’s Strategic Power Utilities Group, said studies on the proposed rehabilitation are scheduled or the fourth quarter of 2020, while the rehab itself “could go beyond 2025.”

Mindanao depends heavily on cheap power from Agus-Pulangi, whose facilities have deteriorated over time, leaving it well below its original rated capacity. Meanwhile, commercial power plants being built on Mindanao have been taking a greater share of power capacity, raising the prospect of higher rates on average.

Party-list Rep. Godofredo N. Guya, of Recoboda, a rural electric consumer group, had asked Napocor for its timetable in rehabilitating Agus-Pulangi.

The committee’s Vice Chair, Rep. Jericho Jonas B. Nograles, said that power agencies are pointing to the Republic Act No. 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA) for the delay in the rehabilitation.

“There was a point in the EPIRA stating that the EPIRA basically directs the agencies to sell government assets, specifically Napocor generation facilities and privatized the same. That’s why spending for a full rehabilitation runs counter to EPIRA,” Mr. Nograles said.

He also said that it is up to Congress to provide clarity on the direction that the energy agencies must take regarding EPIRA privatization and the rehabilitation of the government-owned complex.

Section 47 of the EPIRA Law states that “all assets of NPC shall be sold in an open and transparent manner through public bidding, and the same shall apply to the disposition of IPP (Independent Power Producer) contracts.”

The EPIRA law also calls for the sale of Agus-Pulangi to take place no earlier than 10 years from the effectivity of the law in 2001.

Power Sector Assets and Liabilities Management Corp. (PSALM) President and CEO Irene Joy Besido-Garcia said that in 2018, Agus-Pulangi generated net revenue of P9.86 billion, with operating expenses of P2.44 billion and net operating income of P7.4 billion.

Pio J. Benavidez, Napocor’s president and chief executive officer, said in March that the cost of rehabilitating the Agus complex will be between P37 billion and P40 billion. — Marc Wyxzel C. dela Paz

House panel calls for easing of requirements for bank accounts

THE House Committee on Banks and Financial Intermediaries on Tuesday called on the Bangko Sentral ng Pilipinas (BSP) to encourage banks to ease their requirements for opening accounts in order to include more rural residents and low-income people in the formal economy.

The committee’s vice chair and Navotas City Rep. John Reynald M. Tiangco said many agriculture sector workers and low-salary employes cannot as yet qualify for banking services.

“Hindi naman po magpapahiram kung walang record po, so kailangan i-ease po natin yung customer-base natin, hindi lang sa agri-sector, kundi pati rin sa mga may low salary. Marami kasing hindi nagbabangko (Banks cannot lend to those with no records, so the requirements for availing of banking services need to be eased, not just for the agriculture sector, but also for low-income workers, many of which are unbanked)” he said.

BSP Deputy Director Charina De Vera-Yap said the banking regulator has addressed the issue by encouraging banks to offer deposit accounts with low balance requirements.

“For access to deposit accounts, we issued a deposit account circular which encourages depositors to have (accounts) even with small amounts,” she said.

“We also encourage banks to be able to open branch-lite outlets… so they can expand to areas that are underserved and unserved.”

The BSP’s presentation also cited the upcoming National ID system which can serve as the one identity document for opening accounts.

The BSP also allows institutions to implement reduced Know-Your-Customer rules for certain low-risk customers and to use technology in lieu of face-to-face contact. — Vince Angelo C. Ferreras

Oil majors push carbon-capture efforts ahead of climate talks

NEW YORK — A group of 13 major oil companies charted out a plan on Monday to promote investments in carbon capture, use and storage (CCUS), ahead of a gathering in New York.

Oil chiefs grappling with growing demand for action to fight climate change have looked to invest in carbon-capture and sequestration techniques that some executives, including Occidental Petroleum Corp. CEO Vicki Hollub, say could make drilling carbon neutral.

With fossil fuel development growing worldwide, the oil and gas industry faces growing criticism from activists concerned about accelerating climate impacts from melting ice caps to sea-level rise and extreme weather. Scientists say the world needs to halve greenhouse gas emissions over the next decade to avoid catastrophic warming.

Carbon dioxide emissions hit a record 37 billion tons in 2018, with emissions from oil and gas reaching 12.8 billion tons that year, according to a United Nations Science Advisory Panel released Sunday.

Carbon sequestration technology traps carbon in caverns or porous spaces underground. A number of oil and gas CEOs say the technology will be crucial to meeting goals set in the 2016 Paris agreement on climate change to reduce global emissions.

“A lot of people don’t even know what CCUS is. I think the world is going to hear more and more and more about it,” BP plc CEO Bob Dudley said. “I don’t think we can meet the Paris goals without CCUS.”

The group, known as the Oil and Gas Climate Initiative (OGCI), said it aims to double the amount of carbon dioxide stored globally by 2030. The group is also taking steps to reduce methane emissions and increase energy efficiency.

The group formed in 2014 to support efforts to reduce greenhouse gas emissions. Its gathering will be held on the sidelines of a climate summit, where United Nations Secretary-General Antonio Guterres says he is banking on new pledges from governments and businesses to abandon fossil fuels.

Last Friday, millions of young people flooded the streets of cities around the world to demand urgent steps to stop climate change. Many, including 16-year-old Swedish activist Greta Thunberg, have criticized governments and industries for not doing enough.

The OGCI group said in a statement that carbon-capture technologies could be expanded to more efficiently trap large amounts of carbon released by facilities such as power plants, which could then be used in oil recovery and, ultimately stored — thus, removing it from the atmosphere.

The group plans to work with others to put carbon-capture techniques into operation in the United States, United Kingdom, Norway, the Netherlands, and China. On Monday afternoon in New York, it will sign a declaration of collaboration with certain energy ministers and other stakeholders, to commit to efforts to expand carbon storage.

“High capital cost is currently a barrier to widespread deployment of carbon capture,” said Matthew Stevenson, CEO of Inventys, a company developing a lower-cost carbon capture technology. The company is among those that has received an investment from the OGCI’s investment arm.

The OGCI companies, which include Exxon Mobil Corp., Chevron Corp. and BP PLC , account for 32% of global oil and gas production. They have agreed to cooperate to accelerate reduction of greenhouse gas emissions.

Separately, almost 90 big companies in sectors from food to cement to telecommunications are pledging to slash greenhouse gas emissions, organizers said. — Reuters

Philippine IP protections lag as regional economies shift to higher-value businesses

THE Philippines is “way behind” on intellectual property (IP) rights protections, a crucial consideration for investors deciding to put money in the country, the Geneva Network said in a report released to journalists Tuesday.

“The Philippines is quite some way behind the global leaders like the US and Japan. It’s doing relatively okay compared to some neighbors like Vietnam and Indonesia and Thailand,” said Geneva Network’s Executive Director Philip Stevens.

Geneva Network is a public policy research organization.

He said that as ASEAN countries shift from manufacturing to higher-value knowledge businesses, intellectual property rights protection will be key.

The report noted that the Philippines has been strengthening its IP protection framework in recent years, but implementation is still a challenge.

“IP infringement is not considered to be a serious crime and is therefore often a low priority for the authorities and judiciary. Life science patents are becoming more difficult to obtain and there are concerns that compulsory licensing could become more widely used,” the report said.

Similar to other ASEAN countries, the Philippines has a backlog in patent applications. Mr. Stevens said that patents take around three to four years for approval in the Philippines.

He also pointed out the uneven patent treatment of medicines that are being repurposed from their original applications.

“In the Philippines, national law limits patentability of new formulations and new uses of existing medicines,” the report said.

Copyright infringement is also a challenge, including the online piracy of software and films. The Philippines is behind Singapore, Malaysia, Indonesia, and Thailand in copyright system strength of the 2019 International IP index.

Mr. Stevens noted that trademark protections are a consideration for foreign investment, with investors wary to operate where trademarks are routinely infringed in the form of counterfeit goods.

The Philippines is behind Singapore, Malaysia and Vietnam on trademark enforcement in the 2019 international IP index. It scores higher than Indonesia and Thailand.

“The Philippines has determined to pursue continuous improvement in fighting against counterfeiting as the biggest IP issue faced by the country,” the report said.

Mr. Stevens added that with better IP protections, the Philippines may have an opportunity to attract investment fleeing China during the trade war. — Jenina P. Ibañez

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