Home Blog Page 9050

Nationwide round-up

DA to implement ‘zoning’ to contain ASF spread

Department of Agriculture (DA) logoTHE Department of Agriculture (DA) is now finalizing a nationwide zoning plan that will control the movement of pork products to contain the spread of the African Swine Fever (ASF).

As early as August, several local governments, particularly those in the Visayas and Mindanao which remain ASF-free, have already imposed bans on pork meat and processed products from Luzon.

“The Department of Agriculture is making a national zoning plan with regards to ASF,” Reildrin G. Morales, ASF Task Force head, said during a press briefing on Monday in Quezon City.

He added that this option was not immediately implemented because of its impact not only to hog raisers but also to the market.

According to the World Organization for Animal Health, zoning or compartmentalization and movement of controls is one of the prevention and control methods to contain the virus.

Agriculture Secretary William D. Dar said it is time to implement such measure because there have been hog raisers and traders who do not cooperate and are among the causes of the spread of the virus.

“The zoning started being discussed a month ago, now zones have been identified,” he said.

The plan will be discussed in a Cabinet meeting, and its implementation is targeted within the year.

Under the proposed zoning plan, the country will be divided into five zones: free zone, containment zone, protected zone, surveillance zone, and infected zone.

The free zone will cover Visayas, Mindanao, and Region IV-B — MIMAROPA, composed of Mindoro, Marinduque, Romblon, and Palawan — since these are not yet infected with the virus.

Areas in the free zone can freely transport their pork and products to any point in the country.

The whole Luzon area, where several outbreaks have been recorded, will be considered the containment zone.

Within Luzon, the protected zones will include Regions I (Ilocos), II (Cagayan Valley), Cordillera Administrative Region (CAR), and V (Bicol).

Regions III (Central Luzon) and IV-A (CALABARZON, composed of Cavite, Laguna, Batangas, Rizal, and Quezon) will be classified as surveillance zones since there is a high chance of ASF occurrence within these regions. Areas infected within these regions will be classified under the infected zone.

Those in the infected zone can only trade with their area and in the National Capital Region provided there is proper documentation.

Bureau of Animal Industry (BAI) Director Ronnie D. Domingo said there are reported cases of pig mortality in areas within the infected zone, but samples are still being tested to confirm if these are ASF-related. — Vincent Mariel P. Galang

Gov’t to test all processors’ pork products

THE GOVERNMENT is now aiming to test the pork products of all licensed meat processors in the country, as those from a Pampanga-based firm seized last month were found positive of African Swine Fever (ASF).

Food and Drug Administration (FDA) Director General Rolando Enrique D. Domingo, in an interview after a press briefing in Quezon City, Monday, said they will be meeting with the National Meat Inspection Service for joint inspections, during which they will also be collecting samples for testing.

During the briefing, the Department of Agriculture (DA) confirmed that samples of skinless longganisa and Picnic hotdog from Mekeni Food Corp. were positive of ASF after a series of tests.

DA also confirmed that the two cargo containers containing pork products from China seized recently in the Port of Manila were also positive of the virus.

On October 6, branded and unbranded processed pork products were confiscated at Capalan Port in Oriental Mindoro, which were tested positive for ASF. There were unconfirmed reports during that time that the branded processed pork products came from Mekeni.

On October 26, Mekeni voluntarily recalled all its pork-based products prior to the confirmation that its goods had ASF-infected ingredients.

The FDA has so far inspected the facilities and permits of 63 out of 178 licensed meat processing firms in the country, which were all found compliant, including Mekeni.

A composite investigation will be undertaken done to determine where the pork used for ASF-positive products came from.

“After the investigation, depending on the findings, if we see some wrongdoing then… [they will face sanctions] including possible revocation of their license to operate,” Mr. Domingo said during the briefing.

The company said in a statement, “We assure government that we will continue to cooperate in its ongoing investigation to determine the source of ASF. We will also actively support the review of current protocols on issuing certifications for both local and imported raw meats.” — Vincent Mariel P. Galang

Senate eyes passage of bill on disaster resilience department within the year

SENATE LEADERS on Monday said the passage of the bill creating the Department of Disaster Resilience (DDR), a priority legislation of the Duterte administration, is possible ahead of the month-long adjournment beginning Dec. 20.

Senate President Vicente C. Sotto III said the chamber will prioritize the DDR over other proposed new departments, which are the Department of Water and Department of Overseas Filipino Workers, following a series of strong quakes in central Mindanao.

Hindi ito pwedeng maghintay (This cannot wait),” Mr. Sotto said in a radio interview with DzMM, Monday.

When asked if the bill can be passed by year-end, Mr. Sotto said there is “a very big chance.”

The three new departments were among the proposals made by President Rodrigo R. Duterte in his fourth State of the Nation Address last July.

House Speaker Alan Peter S. Cayetano last week committed to pass these measures within the first regular session of the 18th Congress.

Senate Majority Leader Juan Miguel F. Zubiri on Monday said around seven or eight Senators have already filed their own versions, which may be tackled in the plenary after the 2020 national budget’s approval.

Mr. Zubiri said the DDR proposal could possibly be included in the bicameral sessions in the last week of November.

“We’re looking at possibly having the bicam by Nov. 25 to Nov. 30… pwede naman tayo mag-insert ng (we can insert) priority measures like that, Department of Disaster Resilience.” — Charmaine A. Tadalan

Nation at a Glance — (11/05/19)

News stories from across the nation. Visit www.bworldonline.com (section: The Nation) to read more national and regional news from the Philippines.

Nation at a Glance — (11/05/19)

Growing a budding startup community through bayanihan

Bayanihan, or the spirit of communal unity and collaboration, is a core essence of the Filipino culture. This ancient local custom lives on among Filipinos even in the modern age as they work hand-in-hand to achieve a common, ultimate goal. In a similar way, such kind of spirit is what the local startup community needs — collective action from the government, the academe, and private institutions across the spectrum — to sustain rapid development.

With the aim of fostering unity among every member of the Filipino startup ecosystem, SparkUp, BusinessWorld’s multimedia platform for the next generation of businessmen and the growing startup community, staged the second SparkUp Summit at ABS-CBN Vertis Tent, Quezon City last October 19 that gathered more than 450 delegates, who are mostly students and entrepreneurs.

This year’s SparkUp Summit, with the theme “The Bayanihan Ecosystem: Cultivating Philippine Startups,” brought together founders, incubators, accelerators, venture capitalists, mentors, and members of the national government to converse on various points and help forge vital connections among the different stakeholders of the startup community.

SparkUp Editor Santiago J. Arnaiz opened the summit with a welcome remarks, highlighting the support that the Philippine startup community needs to continuously grow. “It needs people shining light on the initiatives happening locally, the talents that exist locally,” he said.

Meanwhile, Butch Meily, president of IdeaSpace Foundation and the Philippine Disaster Resilience Foundation, and head of QBO Innovation Hub, gave the summit’s keynote address where he underscored the importance of startups to the Philippine economy and the support needed from different sectors to help them grow.

Although the Philippine startup community is relatively small compared to other countries, Mr. Meily said that it is now on its right track. To further its growth, more mentorship, networking and funding are necessary, he said.

“The key message is we need to do this together. If one of you succeeds, we all succeed. So walang (there’s no) crab mentality because if one startup becomes a unicorn, it attracts more dollars, more pesos, more investments, more interests in this area of the economy. So we want you to succeed and we can only do it if we work together, if you collaborate with each other, if you exchange ideas and support,” Mr. Meily said.

The whole-day conference went on with six sessions and two panel discussions. In the first session titled “So You Want to Be a Founder?: The Trials and Triumphs of Launching a Startup,” Carmina Bayombong, co-founder and chief executive officer (CEO) of InvestEd; and Spark Perreras, co-founder and CEO of Pearlpay, shared their respective entrepreneurial journeys and how they overcame challenges along their ways, especially in the early stages of a business.

In starting a company, Ms. Bayombong said that it’s important to focus on the mission. “It’s not about you and your ego,” she said, adding that criticisms must be taken constructively. For his part, Mr. Perreras highlighted the need for the kind of co-founder, mentor and early team members to look for in starting a business, who is somebody that a certain entrepreneur can grow old with.

During the second session, “From Seed to E: Founder’s Guide to Funding,” Patch Dulay, founder and CEO of The Spark Project, discussed the basics of crowdfunding and the things to keep in mind to crowdfund the right way. Mica F. Tan, CEO of MTF Group, also spoke during the session and discussed the guide to funding and how to get investors to say “yes.”

Meanwhile, the third session, “A Public-Private Effort: The Key Role of Governments in Empowering Startups,” centered on the government initiatives and legislation that empower the startup ecosystem. Speakers of the session include Agnes Legaspi, assistant director of the Department of Trade and Industry – Export Marketing Bureau (DTI-EMB); Emmy Lou V. Delfin, director of the Department of Information and Communications Technology (DICT) – ICT Industry Development Bureau; and Dr. Enrico Paringit, executive director of Department of Science and Technology – Philippine Council for Industry, Energy and Emerging Technology Research and Development (DOST-PCIEERD).

Andrew Rothgaber of drone-based delivery startup Zipline also joined the session and discussed how startups can complement the public sector in improving people’s lives.

The first part of the summit closed with a panel discussion about the challenges and opportunities of running a startup. Mr. Perreras, Mr. Dulay and Mr. Rothgaber sat as the panelists, with Ronster Baetiong of Podcast Network Asia as moderator.

The conference continued in the afternoon with a session titled “Stronger Together: Community Building Through Collaborative Entrepreneurship.” Sharing their insights about the topic were Diane Eustaquio, executive director of IdeaSpace Foundation; Richard Prodigalidad, founder of LEENTech Network Solutions; and Kat Chan, director of QBO Innovation Hub.

To discuss more about innovations and how to leverage on them, Jay Fajardo, founder and CEO of Launchgarage; and Ibba Bernardo, CEO of I Am Cardboard PH, shared the stage during the fifth session, “The Next Frontier: Identifying Opportunities for Innovation in the Philippines.”

The last session of the summit, “Future-proofing Through Learning: The Forces Shaping the Future, and How We Can Stay Ahead,” centered on the forces that will shape the future and the ways to keep ahead of the game. Speakers of the session include Henry Motte-Muñoz, CEO and founder of Edukasyon; Lope Doromal, Jr., chief technology officer of IBM Philippines; and Carlo Calimon, director of StartUp Village.

According to Mr. Doromal, the only way to future-proof the company and ourselves is to continue learning new things. Mr. Calimon during his presentation shared the same sentiment, adding the importance of sharing these learnings to others.

An insightful panel discussion on how to spot business opportunities concluded the summit. It was moderated by SparkUp Editor Mr. Arnaiz, with Mr. Bernardo, Mr. Prodigalidad and Mr. Calimon as the panelists.

The SparkUp Summit 2019 is made possible by sponsors EastWest Bank, De La Salle University, and Philippine Business Bank, with organization partners Asia Society Philippines, Business Economics Association, IdeaSpace Foundation, Launchgarage, QBO Innovation Hub, StartUp Village and The Spark Project; media partners The Philippine Star, One News, Ambidextr, Benildean Press Corp, DZUP, The Varsitarian, and UP Maroon FM; podcast partner Hustleshare; venue partner ABS-CBN Vertis Tent; event partner Fiera de Manila, Inc.; and featured brands 1Export, Cawil.Ai, Chub Chaser, COCOTEL, ECFulfill, Tipsy Pig, and iRentmo. 

EdTech startup Edukasyon.ph poised for growth after securing Series A funding

Edukasyon.ph, the leading education technology platform in the Philippines, today announced the initial close of its Series A financing round, joined by Asian and European investors including EduLab Capital Partners, Obunsha Ventures, Alternate Ventures, Foxmont Capital Partners, Lorinet Foundation, French Partners, First Asia Venture Capital and KSR Ventures. The undisclosed amount raised in Series A comes on the heels of Edukasyon.ph’s pre-Series A round closed in May 2018 and an investment from the Gobi-Core Philippine Fund in early 2019.

Edukasyon.ph, which launched in 2015, now draws 10 million annual visitors to its platforms by offering access to senior high schools, colleges and universities, scholarships, online courses and other resources that enable successful education to employment pathways. In partnership with more than 500 educational institutions and 50 corporations and foundations, Edukasyon.ph aims to empower Filipino Gen Z youth to make self-aware education decisions that lead to a fulfilling career and life. This year, the Manila-based startup also solidified its nationwide presence by launching its offices in Cebu and Davao.

“We are grateful for partners who believe in our mission and the critical role technology can play in improving education to employment outcomes for the Filipino youth,” said Edukasyon.ph CEO and Founder Henry Motte-Muñoz. “This opportunity allows us to deepen our focus on product development, to not only broaden the platform’s reach but more importantly, to create more meaningful and measurable engagement with each user.”

Edukasyon.ph is supported in part by impact investors, family offices and angel investors across Asia and Europe, including Mustard Seed, Villgro Philippines, French Partners, KSR Ventures, Gobi-Core Philippine Fund, EduLab Capital Partners, Obunsha Ventures, Alternate Ventures, Foxmont Capital Partners, Lorinet Foundation and First Asia Venture Capital.

They’ve received several recognitions for its work, including the 2017 Financial Times / IFC Transformational Business Award for Achievement in Sustainable Development, with a focus on Education, Knowledge and Skills, as well as the 2017 ASEAN Youth Social Entrepreneurship Awards. Edukasyon.ph was also included in the 2016 World Innovation Summit for Education (WISE) Accelerator Program.

Koji Takahashi of EduLab Capital Partners, a new investor in Edukasyon.ph, stated, “We are thrilled to be joining Edukasyon.ph in creating value for the youth and various educators in the Philippines. This marks EduLab Capital Partners’ first investment in the Asia Pacific region, and we are excited to extend our global presence and network to aid successful startups in transforming education through innovation.”

Michael Dargani, President and CEO of IceDream Inc., who also invested through the Series A round, added, “I am very pleased with the progress Edukasyon.ph has made in such a short period of time, which is a real testament to the vision, hard work and competence of the team. I am certain that with this funding round, they will reach even greater heights.”

In the Philippines, out of 2 million who turn 18 each year, up to 80 percent are left behind between higher education to employment, resulting in poor life outcomes. Edukasyon.ph was created as a solution to centralize resources and facilitate inquiries and applications to various schools, so that students can take control of their options and be equipped for better decision-making. Building on its comprehensive search-and-apply platform for schools and scholarships, Edukasyon.ph has introduced new verticals, connecting students to online courses, technical-vocational programs and internships.

Over the past year, Edukasyon.ph has also significantly expanded its content offering, through multimedia channels that provide students guidance for navigating student life and career preparation. These offerings have cultivated campaign partnerships with leading corporations, which seek new targeted approaches to engage with Gen Z at scale.

“Our hope is to continue building a holistic education ecosystem online, so that together we can eliminate job-skills mismatch and help the youth rise above industry demands,” said Judge Calimbahin, Chief Strategy Officer at Edukasyon.ph. “With continued investment from our partners, we will be able to leverage insights to refine products and services that address the ecosystem’s various needs.”

In the coming months, Edukasyon.ph will unveil new platform features as it strengthens its network of partners from all sectors across the country and beyond.

“For emerging markets across Asia-Pacific, especially within a dynamic economy like the Philippines, the youth represent hope for sustained and responsible growth,” said Franco Verona, Managing Partner at Foxmont Capital Partners. “We are happy to be supporting Edukasyon.ph as it takes on new initiatives to support the next generation of leaders.”

Economists see pickup in GDP growth

THE COUNTRY’s economic growth should have recovered in the third quarter on the back of household consumption and improved government spending, according to economists asked by BusinessWorld late last week, but hitting the government’s full-year target will likely still be a challenge.

A poll of 13 economists yielded a gross domestic product (GDP) growth estimate median of six percent for the third quarter, edging up from the second quarter’s 5.5% and January-March’s 5.6%.

If realized, the third-quarter estimate would match the actual reading the past year and will put the nine-month average at 5.7% — after last semester’s 5.5% average — against a 6-7% official target for the entire year.

Official third-quarter GDP data will be released on Thursday by the Philippine Statistics Authority. It will also report data on October inflation and September factory output on Nov. 5, as well as September trade in goods and third-quarter farm performance on Nov. 6.

Socioeconomic Planning Secretary Ernesto M. Pernia was quoted in earlier reports as saying that third-quarter GDP should bare “higher performance” compared to growth in the entire first half.

Mr. Pernia had said it would take a second-half growth of 6.4% — doable according to state economic managers — to enable the economy to hit the lower end of that government’s target range for full-year 2019.

In a mobile phone message early last week, Finance Undersecretary Gil S. Beltran, the department’s chief economist, said he expected third-quarter GDP expansion to have accelerated from the first half and even be “higher” than the downward-revised six percent in 2018’s third quarter.

The Bangko Sentral ng Pilipinas (BSP) last Oct. 25 gave a 5.8-6% estimate for third-quarter GDP growth and “closer to the midpoint of the 6-7% target for the fourth quarter” on account of accelerated government spending as well as the uptick in consumer spending ahead of Christmas.

Analysts polled last week likewise pointed to the household-government spending combo as the economy’s main growth drivers going into the second half.

However, their views on capital formation’s contribution to economic growth were mixed.

“The improvement in government spending is the critical driver for the quarter. Third-quarter economic growth is expected to have been driven by robust remittances, improving employment and a benign inflation,” said UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion, who expects 6.1% GDP growth for the third quarter.

ING Bank N.V.-Manila Senior Economist Nicholas Antonio T. Mapa gave a 6.3% estimate for the third-quarter, saying: “On the expenditure side, we forecast household final consumption to deliver a sizeable contribution to growth, due largely to the fact that inflation has plunged to less than one percent in September, which should help entice an accelerated pace of spending.”

He added that capital formation “may finally show early signs of recovery and show marginal growth” after BSP has moved to partially unwind last year’s tightening cycle with a cumulative 75- basis-point reduction in benchmark interest rates this year that left a 100-bp hike still intact.

“All in all, a herculean effort from household spending accompanied by revitalized government outlays will more than make up for tepid capital formation numbers in [the third-quarter] to lift growth to 6.3%,” Mr. Mapa said.

Rizal Commercial Banking Corp. economist Michael L. Ricafort gave a 6.3% GDP growth forecast for the third quarter, saying: “Relatively low inflation… partly encouraged by the series of cuts in local policy rates and in banks’ reserve requirement ratios (RRR), could have already helped increased growth in consumer incomes and spending [and] spurred greater demand in loans that led to faster growth in investments, thereby leading to greater economic activities and faster GDP growth.”

Emilio S. Neri, Jr., lead economist at the Bank of the Philippine Islands, was also upbeat on government spending and household consumption, placing economic growth in the third quarter at six percent. “On the production side, the rebound in the services sectors may have outweighed the drag from agriculture and manufacturing,” said Mr. Neri.

On the other hand, Security Bank Corp. chief economist Robert Dan J. Roces gave a 5.8% growth forecast, saying: “The plunge by private investments in the second quarter could likely remain a source of weakness as external uncertainties provide a drag to growth.”

“In addition, the delayed passage of the 2019 budget continues to bite back as public spending was derailed and only begun to recover late in the third quarter,” he explained.

“However, the slowdown in inflation lifted household consumption, [which is] the main growth driver.”

For Ateneo de Manila University economist Alvin P. Ang, third-quarter growth can be expected to have clocked in at 5.7%.

“We expect some push from extending government spending,” Mr. Ang said.

“However, we still see lower investment growth due to the global and local environments,” he said, adding that growth in agriculture and allied sectors could have improved to 1.5% from the 0.7% and 0.6% growth rates in the first two quarters of the year.

Budget department data show the government spent about 17% more at P1.04 trillion in the third quarter from P886.2 billion a year earlier, a marked improvement from the 2.3% contraction in the second quarter and 0.8% in the first quarter. However, this increase was smaller than the 29.6% growth a year ago.

Moreover, infrastructure spending reached P234.8 billion in the third quarter, 7.7% more than the P218.1 billion recorded in July-September last year.

A closer look at the data showed infrastructure and other capital outlays reaching P100.3 billion in September, picking up from August’s P59.3 billion and the P65.2 billion spent in September last year.

These improvements reflected the government’s catch-up spending following the three-and-a-half month delay in enactment of the 2019 budget that sent new projects unfunded for the first four months of the year. In the first-half, government spending grew by 7.1%, slower than 12.6% in 2018’s comparable six months.

Meanwhile, capital formation declined by 0.1% last semester, a sharp reversal from a 14.9% expansion a year ago.

Of the 5.5% first-half growth, government spending chipped in just 0.86 percentage point (ppt), less than the 1.43 ppt it contributed in the first half of 2018. Capital formation similarly disappointed as it contributed a 0.04 ppt-decline versus its year-ago growth contribution of 4.24 ppt.

While economists on the whole agreed that overall economic growth has been picking up this semester, they remained cautious about chances it would hit the government’s 2019 target.

“[Fourth-quarter growth] is expected to again be over six percent, but overall 2019 GDP may fall short of the government’s target of 6-7%,” UnionBank’s Mr. Asuncion said.

For De La Salle University economist Mitzie Irene P. Conchada, “Given the rate that the economy is doing, it might be difficult to reach even the six percent growth target by end of the year.”

“Export performance has been sluggish and the economy is still recovering from the impact of high inflation the previous year,” said Ms. Conchada, who gave a 5.8% third-quarter GDP estimate.

For ING’s Mr. Mapa, “With the domestically induced speed bump in the rear view, we can expect growth to zoom to past six percent in the next few quarters for as long as government outlays continue (contingent on the 2020 budget passed on time), capital formation continues to heal (with BSP expected to ease rates further) and with consumption completing the growth story as inflation remains well within target.” — Jobo E. Hernandez

Analyst Estimates

Poll bares outlook of even slower inflation in Oct.

By Luz Wendy T. Noble

INFLATION likely slowed further in October as a continued easing of prices of rice and fuel offset any upside pressure from pork substitutes amid the onslaught of African swine fever (ASF), according to a poll of 14 economists conducted late last week.

The analysts also noted that base effects from the nine-year-high 6.7% headline inflation recorded in September and sustained in October last year also pushed inflation lower last month.

At the same time, they expect price pressures to pick up in this year’s remaining two months as base effects subside and consumption picks up ahead of Christmas.

Last week’s poll bared an estimate median of 0.8% for October inflation that, if realized, would mark October as the fifth consecutive month of cooling inflation, the second month that the pace clocked in below one percent, and the slowest clip in nearly three-and-a-half years or since April 2016’s 0.7%.

It is also within the lower half of the 0.5-1.3% October estimate which the Bangko Sentral ng Pilipinas Department of Economic Research gave on Thursday last week.

For the whole of 2019 and 2020, the central bank targets inflation to clock in 2-4%, with a trimmed 2.5% forecast for this year.

The Philippine Statistics Authority is scheduled to report October inflation data on Nov. 5.

The overall rise in the prices of widely used goods clocked in at 0.9% in September, matching the pace in May 2016 and the slowest also since April that year.

Rice accounts for 9.59% of the theoretical basket of goods used by a typical household that is the basis for computing year-on-year overall price changes, while liquid fuel, solid fuel, gasoline and electricity contribute 0.13%, 1.22%, 1.28% and 4.8%, respectively.

Romeo L. Bernardo, economist at GlobalSource Partners, said that the ASF could have caused an uptick in prices of substitute products. “Demand for pork continued to decline and consumers may have substituted pork with other meat products, causing an uptick in the price of these particular alternatives. This could, however, be offset by the decline in rice prices and the recent roll back in fuel prices,” Mr. Bernardo said in an e-mail.

“Inflationary pressures should strengthen towards moving towards year end and in 2020. Food prices could temporarily be affected by the ASF outbreak,” BDO Unibank, Inc. Chief Market Strategist Jonathan Ravelas said in a mobile phone message.

Colegio de San Juan de Letran Graduate School Dean Emmanuel J. Lopez said muted inflation was supported by stable prices of many basic commodities, noting that “[p]rices of oil may have increased but it hardly gave pressure on prices of basic consumer products as proven by a slowdown in interest rates…”

“Better weather in 2019 coupled with the stable supply of rice after ‘tariffication’ will help keep food inflation negative again in October,” ING NV-Manila Senior Economist Nicholas Antonio T. Mapa said, referring to Republic Act No. 11203 which opened up rice importation when the law came into effect in March.

Analysts also said that inflation may have bottomed out in October, as base effects have begun to subside.

“It is very likely that this will be the bottom for 2019. We should see a more normal two percent print or higher by Jan[uary] 2020,” said Bank of the Philippine Islands Lead Economist Emilio S. Neri.

“Importantly, the low base effect will now begin to diminish so inflation in the last two months of the year should be slightly higher,” ANZ Research Economist Mustafa Arif said.

Analyst Estimates

The secret weapon that has made the peso so strong

SINGAPORE — The Philippine peso has a secret weapon that has made it one of Asia’s best-performing currencies this year: bumper real yields.

While the central bank has cut interest rates three times this year to spur growth — which typically saps demand for a currency — slowing inflation has ensured that real yields on the nation’s bonds have remained among the highest in Asia, drawing in overseas investors.

The country’s annual inflation rate dropped to 0.9% in September from 6.7% a year earlier as rice prices slumped after the government liberalized imports and the cost of alcohol, housing, water and electricity all declined.

The slowing inflation rate has pushed up the real yield on the nation’s 10-year bonds to 3.77% as of late last week, from as low as 0.33% in November 2018, according to data compiled by Bloomberg.

Inflation is forecast to have cooled even further in October, with a report due Tuesday expected to show the level slipped to 0.8% that month, the lowest since April 2016, according to the median estimate of economists surveyed by Bloomberg. That compares with most recent published figures of 3.13% for Indonesia, 3.99% for India and 1.1% for Malaysia.

The tailwind of high real yields has seen the peso strengthen 3.6% this year and reach 50.715 per dollar last week, the strongest since January 2018.

The Philippine currency has two other major factors supporting it too, said Divya Devesh, head of ASEAN and South-Asia currency research at Standard Chartered Plc in Singapore. The trade deficit has narrowed due to a delay in implementing the budget in the first half of the year, while the country has been largely insulated from the US-China trade dispute due to its low reliance on exports, he said.

The peso may also extend gains as money sent home by overseas workers tends to rise in the last four months of the year. December has been the peak month for remittances in each of the past 10 years.

It may end up being a profitable Christmas for peso bulls. — Bloomberg

Analyst Estimates

THE COUNTRY’s economic growth should have recovered in the third quarter on the back of household consumption and improved government spending, according to economists asked by BusinessWorld late last week, but hitting the government’s full-year target will likely still be a challenge. Read the full story.

Analyst Estimates

Max’s maps expansion as mid-income class grows

By Denise A. Valdez
Reporter

THE growing middle income class in the Philippines has made it the perfect time for Max’s Group, Inc. (MGI) to expand, and the company is putting all hands on the table to prepare for boodle fight.

The listed operator of casual dining restaurants said the increasing number of middle income earners is encouraging it to take a bigger chunk of the market through franchising.

“If you look at the consumer trends, it’s looking very optimistic. Data shows there’s an increasing middle income class. That alone is very attractive as a business,” MGI Chief Operating Officer (COO) Pyrus A. dela Cruz said in an interview last week.

“We’ve been targeting them (for years), and they’re the ones growing, so that becomes a bigger opportunity for us,” he added.

MGI, which handles brands such as Max’s Restaurant, Pancake House, Yellow Cab Pizza and Krispy Kreme, is targeting to have more franchises than company-owned stores across the country by 2020.

“We’re moving towards a 60-40 ratio, meaning 60% will be franchise and 40% will be company-owned,” John S. Amante, MGI COO handling Pancake House, said last week. MGI is looking to end the year with a 55-45 ratio for franchise to company-owned stores by the end of the year.

“It will be very hard to expand company-owned (stores) outside our homebase which is Metro Manila. I think local knowledge, especially in Visayas and Mindanao, will help us further develop the brands,” Mr. Amante added.

As of 2018, MGI has 695 stores across 10 brands, of which 411 are company-owned, 219 are franchises, six are joint ventures and 59 are international.

The 10 brands are Max’s Restaurant, Pancake House, Yellow Cab Pizza, Krispy Kreme, Teriyaki Boy, Dencio’s, Sizzlin’ Steak, Jamba Juice, Kabisera and Maple. MGI also owns Max’s Corner Bakery, which are attached to Max’s Restaurant branches.

Aside from expanding its geographic footprint, the company is also seeking to tap newer markets consumer-wise. Mr. Dela Cruz, who handles Yellow Cab Pizza and Krispy Kreme, said there is an active effort for the company to mainstream its products.

Among the strategies it is exploring is offering items for single customers at more affordable prices. For example, Yellow Cab has started offering pizza slices from only full-size pizzas previously. Max’s Restaurant also now offers rice bowls of its best-sellers that used to be only for sharing.

“It’s our way of giving our consumers a taste of our brands without actually breaking the bank, and at the same time, their first entry and experience to our respective brands,” Mr. Dela Cruz said. “It’s not just an expansion as far as landscape is concerned. It’s also an expansion as far as target consumers are concerned.”

Paolo S. Serrano, MGI COO handling Max’s Restaurant, also noted how the digitalization of its operations helps the company craft its next move. He said the data they gather is able to help them analyze consumers, and from there come up with offers. “And it’s very mainstream already moving forward,” he said.

The company is targeting to open more multi-brand stores next year, which will feature various MGI restaurants under one roof. Mr. Serrano said having all these brands within its portfolio gives the company confidence in staying relevant despite the entry of several foreign restaurants. The group’s pool of menus of various cuisines helps it find consumers for every product, making multi-brand stores interesting for all types of market.

For this effort, Mr. Dela Cruz said it is helpful that the different COOs for different brands are able to come together to synergize operations. Externally this is seen through multi-brand stories, but internally this means a stronger backend support for its supply chain.

He also said having independent teams running the brands helps allow different ideas to flourish. “It gives us confidence even more as we move forward to the next year and the years forward, because coming from different backgrounds, we give each other different points of view on what we can do better,” Mr. Dela Cruz said.

With a loaded team paving the way for the company to grow, MGI is bracing itself for what Mr. Serrano calls the upscaling of the Filipino amid the turn of the decade.

“From our standpoint, it’s actually the best outlook that we can think of. It’s the perfect storm for us,” Mr. Dela Cruz said.

Earnings of MGI rose 10.4% to P366.45 million in the first semester on the back of improved margins. Its shares inched up 0.04 points or 0.30% on Thursday to close at P13.24 apiece.

Bling it on for Christmas

SANTA’S been meaning to ask if you’ve been naughty or nice, but either way, you get jewelry, and that’s always a good deal.

Swarovski launched its Fall/Winter 2019 collections, along with its Holiday Line last week at Rockwell. The collection is centered around the theme “Naughty or Nice,” and we’ll make it simple for you: the daintier pieces are under “Nice,” and the modern, edgier pieces are under “Naughty.”

The Naughty or Nice collection, which incorporates the costume gemstones in designs of feathers, is meant to evoke angels and their wings. The Nice line makes it in dainty white gold plating and white crystals, while Naughty takes a bolder tone with colored gold plating and black crystals.

Swarovski’s bestselling Remix bracelets are also decorated with the same feathers. Meanwhile, the Palace line, taking its cue from the Belle Epoque era of the late 1800s, uses blue and green crystals in feminine settings. The Louison collection does the same with teardrop-shaped crystals in red, while the Perfection line uses Swarovski pearls (mother-of-pearl spherical coating around a crystal core), both making for feminine yet bold statements. The Magic collection adds darling little angel motifs rendered in crystal.

On another wilder side of things, with the Polar Bestiary collection using crystals to create polar bears, fangs, and some elements of Nordic design, such as tree branches and antlers. Also seen in the presentation were designs used in tarot decks, or else lucky symbols: think Evil Eye protections, horseshoes, stars and moons, lending a touch of the mystical.

Swarovski’s Creative Director, Nathalie Colin, says of the collection in a release, “The holidays are a brilliant time of year to come together, to dress up and to give to others. It’s also the perfect excuse to treat yourself to those must-have items you’ve had on your wish list all year! This season, we want to celebrate in style with sparkling silhouettes that will dial up the glamour of the holidays and create brilliant moments for all.”

Founded in 1895 in Austria, the company designs, manufactures, and sells the world’s highest quality crystal and genuine gemstones. Swarovski creates finished products such as jewelry and accessories, as well as interior design and lighting solutions. The Swarovski Crystal Business is run by the fifth generation of the family and has a global reach with approximately 3,000 stores in around 170 countries, more than 29,000 employees, and revenue of about €2.7 billion in 2018.

Together with its sister companies Swarovski Optik (optical devices) and Tyrolit (abrasives), Swarovski Crystal Business forms the Swarovski Group. In 2018, the Group generated revenue of about €3.5 billion and employed more than 34,500 people.

A responsible relationship with people and the planet has always been an integral part of Swarovski’s heritage, and is embedded today in the company’s well-established sustainability agenda. For example, the company’s products has been lead-free since 2012. In addition, the global Swarovski Waterschool education program has reached 500,000 children on the world’s greatest rivers. The Swarovski Foundation was set up in 2013 to honor the philanthropic spirit of Daniel Swarovski, and works to support culture and creativity, promote human empowerment and conserve natural resources to achieve positive social impact.

In the Philippines, Swarovski is available in Rustan’s branches at Alabang, Makati, Shangri-La, and Ayala Cebu. Swarovski is also available through boutiques owned and operated by Stores Specialists, Inc. at Alabang Town Center, Glorietta, Newport Mall, Robinson’s Magnolia, TriNoma Mall, The Podium Mall, Power Plant Mall, and SM Mall of Asia. — Joseph L. Garcia

Cignal TV to offer more digital services to lure young viewers

By Arjay L. Balinbin
Reporter

LOCAL PAY TV provider Cignal TV is planning to offer more digital services to keep its young viewers and protect its market share, its top official said.

“Our goal is to make sure that we at least protect our market share. Our market share is roughly around 50%. The goal is also to come up with new initiatives that will allow us to remain relevant moving forward because there’s actually a change in viewing behavior,” Cignal TV President and Chief Executive Officer Jane J. Basas said told reporters on Oct.28.

She added: “There’s a particular segment of the market, particularly the more premium segment on the young who now have more access to more digital platforms. So we wanna make sure that Cignal pivots towards digital services.”

Ms. Basas said Cignal TV ended the third quarter with 2.2 million subscribers, making it “the biggest” in the country today.

Cignal TV’s market, she said, is growing “phenomenally especially with the introduction of our low-end brand satellite,” which is expected to contribute to “at least 70% to 80% of our growth.”

“At least with respect to Cignal, we do see it growing in the next three to five years. We we wanna make sure that we continue to innovate, because we are seeing the change,” she added.

Cignal TV launched One News in May 2018 with programs including Face the Chiefs and BusinessWorld Live and launched One Sports in January 2019 featuring programs such as WWE Smackdown and Philippine Superliga.

In August, Cignal TV introduced another channel under its One branding, One PH, a 24-hour Filipino-language news channel. The channel has partnered with the Star Group (Pilipino Star Ngayon, The Freeman) and Radyo 5 92.3 NewsFM and News5.

Cignal TV is a subsidiary of MediaQuest Holdings, the media arm of the PLDT Group. BusinessWorld is likewise a subsidiary of MediaQuest Holdings through the Star Group of Companies.

Mazda unveils 2020 CX-5

By Manny N. de los Reyes

MAZDA announced recently the entry of a new variant in the Mazda CX-5 model range as it formally introduced the 2020 model year lineup of its premium five-seat crossover. With the Mazda CX-5 2.0-liter Front-Wheel Drive Sport, customers may now enjoy “all options” specifications previously available only in the CX-5’s two all-wheel drive variants (the 2.5-liter All-Wheel Drive Sport Gas and the 2.2-liter All-Wheel Drive Sport Diesel).

“We are pleased to launch an all-new variant in the Mazda CX-5 range which will allow consumers to enjoy the model’s premium features at a more affordable price,” shares Steven Tan, president and CEO of Mazda Philippines. He adds, “Since its introduction in 2012, the Mazda CX-5 has been our third best-selling model with close to 5,600 units sold so far. We believe that by introducing more top-of-the-line features in front-wheel drive trim, we can provide a more luxurious and premium driving experience for an even wider market.”

The 2020 Mazda CX-5 Skyactiv-G lineup features enhancements in its suspension designed to deliver an even more supple and better-controlled ride. These include larger front dampers, improved rear suspension geometry, and new shock- and vibration-absorbing urethane material.

Interior design elements that elevate the premium feel of the cabin towards the brand’s next-generation direction were likewise introduced for the 2020 model year. Like the 2.5-liter AWD Sport variants, the 2.0-liter FWD Sport also features a new 7-inch TFT reconfigurable instrument cluster display to provide needed vehicle information as preferred by the driver.

Also new for 2020 are the updated air-conditioning system controls that are now similar to the latest Mazda6 and all-new Mazda3’s layout. The Mazda Connect infotainment system now comes with Apple Car Play and Android Auto smartphone mirroring across the 2020 Skyactiv-G range while the 2.0-liter FWD Sport now also features a 10-speaker Bose Premium Sound System, similar to what is standard in the CX-5 AWD Sport gas and diesel variants.

New black leather seats with orange trim in the AWD and FWD Sport enhance the dynamic luxury feel of both variants. Now also featuring a memory function, the FWD Sport is at par with its i-Activ All-Wheel Drive-equipped sibling in terms of convenience features. And for the first time in a 2.0-liter Mazda CX-5, the power tailgate now comes standard with the FWD Sport.

Both 2020 Mazda CX-5 AWD and FWD Sport variants are equipped with Adaptive Front-Lighting LED system and 360-degree view cameras. They also both come standard with front and rear parking sensors to aid in maneuvering in tight spaces, as well as Blind Spot Monitoring and Rear Cross-Traffic Alert.

For model year 2020, the Mazda CX-5 Skyactiv-G lineup will be made available with the following prices:

2.0-Liter FWD Pro — P1,730,000

2.0-Liter FWD Sport — P1,890,000

2.5-Liter AWD Sport — P1,990,000

The current Mazda CX-5 AWD Sport Diesel featuring Mazda’s advanced 2.2-Liter Skyactiv-Diesel engine, continues to be priced at P2,230,000.