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Student Loans 2.0

Filipinos are known the world over for being meticulous, diligent workers. Unfortunately, the lack of education prevents many of our countrymen from realizing their full potential. Studies from the Commission on Higher Education and Technical Education and Skills Development Authority show that for every three Filipinos, one is unable to complete their college education primarily due to financial reasons.

I recently reconnected with an old friend from Madrid, Ana Pastor, who is now based in Manila. Ana casually told me that she is now working for a Philippine company that provides collateral-free student loans to deserving Filipinos. The company, EduCredit (www.educredit.ph), operates in full compliance with the Financing Act of 1998.

I was immediately interested in Ana’s company since keeping children in school is how we can improve our Country Human Capital Index (the global measurement of education and skills of a workforce). As we all know, the country is the midst of a demographic sweet spot where the majority of the population are in their prime working age. This sweet spot will last for 50 years beginning 2025. However, a study conducted by the National Economic Development Authority asserts that while the country is poised to reap the benefits of its demographic profile, it is hindered by its relatively low human capital index. Providing education to as many unschooled youth as possible will address this.

The founders of EduCredit are both foreigners — Vasyl Davydko and Daniel Jose Georges. Vasyl was born in the Ukraine but was raised in Spain. Before setting up EduCredit, he worked for First Circle, the largest technology-powered SME lending platform in the Philippines. Daniel, on the other hand, is a Spaniard who worked at Amazon, Rocket Internet, Arthur D. Little, and other tech start-ups in Spain. The duo set up shop in the Philippines not only to take advantage of the business opportunity in the local financing space, but more so because of the vibrancy of the economy and imminent explosion of tech-based businesses. EduCredit is funded by big names in the venture capital field such as Atler of Singapore and iGlobal Financing Services.

What is interesting about EduCredit is that they only provide loans to students in the information technology field, whether in traditional universities or online courses. They only accept applicants in the college and post-graduate level. Vasyl and Daniel believe that the shortage of qualified IT professionals will become more acute in the future given the rapid pace in which technology is changing how we live, work, and enjoy our leisure. Even today, one out of every five jobs that are in demand in the US is for an IT professional. Most sought after are those who know how to write code and those who can navigate cloud-computing platforms. These jobs command a salary of more than $100,000 a year, allowing a steep rise in income for talented Filipino graduates. In fact, the demand is so great that EduCredit can place outstanding students in jobs as soon as they graduate. The job can be on a remote basis so they don’t have to live abroad and deal with the high cost of living.

Loan applications at EduCredit are done online. There are only three qualifications needed for a loan. One must be a Filipino; must use the proceeds solely for tuition fees; and be credit worthy. The applicant can be a working student or a full-time student with a guardian or co-maker.

Interest rates can vary from one to three percent per month, depending on the applicant’s credit score. There is no limit to how much EduCredit can lend so long as the monthly installments do not exceed 25% of the borrower’s (or co-maker’s) salary. Payments can be on a lump sum basis or in monthly installments of up to 12 months.

How are EduCredit’s terms different from traditional banks?

Student loans fall under the personal loan category in traditional banks. They also grant collateral-free personal loans on the back of a certificate of employment and proof of income through one’s income tax return. As a rule of thumb, banks can lend up to 170% of a borrowers monthly salary if the credit term is 12 months and up to 200% of salary for terms of 24 or longer. Interest rates range from 0.99 percent to 1.4% per month.

Traditional banks offer lower interest rates than EduCredit, the latter being at par with interest rates of credit cards. However, the rates of EduCredit are still lower than that of pawnshops and private lenders.

EduCredit’s key advantage is that they can process a loan in as short as two days, compared to banks which could take weeks, if not months. In addition, traditional banks sometimes require that the borrower maintain an account in their bank with a specified average daily balance. EduCredit has no such requirement.

EduCredit also claims to be more flexible. While banks can freeze accounts or demand full payment of the loan should a borrower default, the online lender says they “understand that there are various reasons for a non-payment, so are always in touch with our clients and will work with them to help them repay the loan.” In other words, EduCredit claims a personalized approach to lending as opposed to some banks which can be impersonal and inflexible.

Since owning a computer is an necessity for anyone studying an IT course, EduCredit grants separate loans to its borrowers to acquire a computer. The loan can come in the form of a lease-to-own scheme or a direct loan, payable by installments.

Bad loans are the main pitfall of EduCredit’s business model given that all the loans are uncolateralized. When asked how they minimize the risk of defaults, they said that they use a program with a special algorithm to ascertain an applicant’s credit worthiness. They did not expound on the technology but I am familiar with a Ukrainian program that correlates data obtained from an applicant’s smartphone to his/her paying behavior.

Evidently, applicants with bad paying habits have similar patterns, and vice versa. For instance, if an applicant has a record of not answering calls, frequently changes his/her e-mail address, has other delinquent payers in his/her address book and frequently plays games (Candy Crush in particular), that applicant is probably of high risk. Applications filled-up at night for an extraordinarily long period also raises red flags.

On the other hand, those who stick to one e-mail addresses, those with bank apps, sports apps (eg. Fitbit), travel apps, and food delivery apps are indications of a good payer.

There are hundreds of other data points put into consideration but these examples should give you an idea of how certain finance companies determine credit worthiness.

While EduCredit’s loan offerings may not be the cheapest in the market, it remains to be the easiest to obtain. It serves as another option for financially challenged students who would otherwise drop out of school. Keeping children in school is key towards increasing our Human Capital Index and consequently, maximizing our demographic dividends. For this, EduCredit serves a good purpose.

 

Andrew J. Masigan is an economist.

Mitsubishi goes Black

By Manny N. de los Reyes

MITSUBISHI adds a new eye-candy dimension to the best-selling Montero Sport with the introduction of the Montero Sport Black Series. The limited edition Black Series comes with GLS 2WD specs and with an automatic transmission only.

The Black Series, as the name implies, is fitted with a host of genuine accessories all laid in black. Upgrades and accessories fitted on the exterior are a black grille, black front and rear bumper under garnish, black roof rails and a body color rear spoiler.

Headlamps are upgraded from halogen to LED with LED Daytime Running Lamp (DRL). Tail lamps are also now LED. For an added stance and sporty look, a hood emblem that spells Montero Sport is added. Inside this limited edition Montero Sport, illuminated scuff plates with emblems are added.

Vaunted Mitsubishi power and performance is expected from the Montero Sport Black Series with its 2.4-liter inline-4 16-valve DOHC Clean Diesel (4N15) with Variable Geometry Turbo and Mitsubishi Innovative Valve timing Electronic Control (MIVEC) system. This motor produces 181ps and 430Nm of torque and is mated to a class-leading 8-speed automatic transmission with Sports mode.

The Montero Sport Black series comes in two colors, Jet Black Mica and White Pearl and has an SRP of P1,800,000 (additional P15,000 for White Pearl).

PAL eyes synergies, outsourcing as costs rise

WITH a new president at the helm, Philippine Airlines (PAL) is focusing on improving its finances to return to profitability, starting with possible cost synergies and outsourcing.

Following the appointment of new PAL President and Chief Operating Officer Gilbert F. Santa Maria last week, PAL Vice Chairman Lucio “Bong” K. Tan, Jr. said the company is exerting efforts to address internal problems amid rising costs.

“Revenue is actually going up. We just have to look into the cost. The cost is also going up,” he told reporters after the company’s board meeting last week.

He noted there may be a lot of inefficiencies within the company that would need to be addressed as operations have been “very administration-heavy.”

In a regulatory filing, listed parent of the company PAL Holdings, Inc. said it had a total of 8,217 employees around the world as of end-2018: 6,689 employees in PAL and 1,528 employees in Air Philippines Corp. (APC), a 99.97%-owned subsidiary of the company.

This pool can further be broken down into 3,043 ground employees and 3,646 flight crew for PAL, and 834 ground employees and 694 flight crew for APC.

Mr. Tan said with the increasing costs of the company — up 17.8% to P155.68 billion as of end-2018 — PAL is inclined to “maybe start doing synergies and maybe outsourcing.”

With this plan, Mr. Santa Maria fits well in PAL’s strategy as his business process outsourcing background had exposed him to a large team when he was chief operating officer of DC-based IBEX Global Solutions PLC. IBEX said in its website it has nearly 13,000 agents in its global network.

Aside from cost synergies, Mr. Tan also mentioned beefing up the company’s IT department and taking off from other airlines’ success in digital integration for ticket sales.

“I heard other airlines are doing half of their ticket sales from website. Ours is still under 20%,” he said, noting the immediate improvement of PAL’s online platform is seen to address “a lot of low-hanging fruits” to boost the company’s revenue.

Mr. Tan added PAL’s new partner, Japanese carrier ANA Holdings, Inc., may help in sharing best practices to improve its operations.

The assistance of Lufthansa Group, which handles renowned aviation consultant Lufthansa Consulting GmbH, is also being sought by the company.

“We are engaging Lufthansa consultants. This group has been doing a lot of successful turning around of airlines… So give us probably six to eight months, we might find good results,” Mr. Tan said.

PAL has been recording losses since 2017 due to higher expenses on jet fuel, the expansion of its fleet, increased flight frequencies and mounting of new routes.

As of end-March, the company’s attributable net loss stood at P838.17 million, narrowing by 24.3% from P1.11 billion a year ago.

“So far, it’s not that promising. But hopefully (net loss) will be less than last year,” Mr. Tan said on whether PAL would return to profit by end-2019. — Denise A. Valdez

India summer crop planting down 6.6% due to weak monsoon

NEW DELHI — Indian farmers have planted 78.8 million hectares with summer-sown crops so far, farm ministry data showed on Friday, down 6.6% from last year mainly due to a weak start to the monsoon.

The outlook is better, however, as monsoon rains are expected to be plentiful in August and September.

Farmers generally start planting rice, corn, cotton, soybeans, sugarcane and peanuts, among other crops, from June 1, when monsoon rains typically arrive in India. Sowing usually lasts until July.

Monsoon rains play a crucial role in agriculture — which employs 50% of India’s workforce — as nearly half of the country’s farmland lacks irrigation.

The Ministry of Agriculture & Farmers’ Welfare will keep updating the provisional sowing figures as it gathers more information from state governments. The planting figures are also subject to revision depending on progress of the June-September monsoon season.

Planting of rice, the key summer crop, was at 22.3 million hectares on Friday, against 25.5 million hectares at the same time last year, the ministry said. Corn planting was at 6.9 million hectares, unchanged from the same period last year.

The area planted with cotton totaled 11.5 million hectares, up from 11 million hectares a year earlier.

Sowing of soybeans, the main summer oilseed crop, stood at 10.7 million hectares, compared with 10.9 million hectares at the same time in 2018.

Other crop plantings, such as pulses and sugar cane, were down year on year.

Seasonal rains in the week that ended on Wednesday were above average for the second time since the start of the season on June 1.

The weather office said on Thursday that monsoon rains were expected to be 100% of a long-term average in August and September, making up for a shortfall in the first two months of the season that began in June. That would boost prospects for the agricultural sector.

India’s weather office defines average, or normal, rainfall as between 96% and 104% of a 50-year average of 89 centimeters for the entire four-month season beginning June.

Water levels in India’s main reservoirs were at 33% of their storage capacity, against 45% at the same time last year, the latest government data shows. The average for the past 10 years is 42%. — Reuters

CTA dismisses Petron tax refund claim; rules alkalyte not exempt

THE Court of Tax Appeals (CTA) has denied for lack of merit a P67.8 million tax refund claim of Petron Corp. on its imports of alkalyte in 2013.

In a 15-page decision on July 19, the CTA, sitting en banc, affirmed the decision and resolution of the court’s second division which ruled that alkalyte imports are subject to excise tax.

Petron claimed that alkalyte is not subject to excise tax as it is not among the products listed as taxable under Section 148 of the Tax Code, the provision which lists manufactured oils and fuels among those subject to excise tax.

The court, however, said alkalyte possesses properties and characteristics similar to gasoline and is formed through distillation. It also said that alkalyte can be used as a blending component or as a raw material for the production of gasoline.

“Thus, we find that alkylate falls within the category of naphtha, regular gasoline and other similar products of distillation under Sec. 148 (e) of the 1997 NIRC (National Internal Revenue Code),” the court ruled.

According to Section 148 (e), naphtha, a raw material used in making petrochemical products, regular gasoline, and other similar products of distillation, and as well as the by-products of the processing of naphtha, are subject to excise tax as soon as they are created.

The CTA also ruled that double taxation does not exist in Petron’s case as imported alkalytes are taxed only upon importation and is not explicitly exempted from excise when used as a raw material.

“In sum, there is no compelling reason to disturb the findings and conclusion of the Court in Division on record supported by jurisprudence and evidence on record,” the court said.

The decision was written by Associate Justice Cielito N. Mindaro-Grulla. — Vann Marlo M. Villegas

Market volatility seen ahead of BSP policy meet

By Arra B. Francia
Senior Reporter

VOLATILITY may prevail in the week ahead for local shares amid fresh trade tensions between the US and China, while investors may also look at the results of the Bangko Sentral ng Pilipinas’ (BSP) upcoming policy meeting.

The 30-member Philippine Stock Exchange index (PSEi) climbed 0.39% or 31.77 points to close at 8,129.93 last Friday. It was down by 0.66% or 54 points on a weekly basis, weighed down by the 1.2% decline in holding firms despite a 2.9% surge at the mining and oil counter.

Turnover averaged at P6.2 billion, amid average daily net foreign buying of P59 million.

“With all this negative pressure from external concerns like the trade war, the general sentiment remains very cautious. The continued decrease in inflation which was a major worry last year, and better corporate earnings have done very little for the stock market as a whole,” AAA Southeast Equities, Inc. Research Head Christopher John Mangun said in a market report.

US President Donald J. Trump last week called for a 10% increase in tariffs on $300 billion worth of Chinese imports starting next month, prompting a sell-off in markets across the world and affecting sentiment in the local bourse.

For online brokerage 2TradeAsia.com, investors will heed for China’s response to Mr. Trump, which could better guide markets.

“Investors are also wary as we enter the “ghost month.” According to tradition, you should not make any major investments during this time. All these factors will keep the market from going higher and with a lack of buyers, we may potentially see it go lower,” Mr. Mangun added.

The Chinese ghost month is said to last from Aug. 1 to 29.

Investors will also look at the BSP’s policy meeting this Thursday.

“Having completed the third phase of its reserve requirement cut to 16% from 18%, local monetary authorities may have more leeway in retaining present benchmark rates during their policy meeting,” 2TradeAsia.com said.

The company, however, noted that the BSP may consider another rate cut in the second half, depending on improvements in fiscal spending, especially toward the fourth quarter.

This week will also see the release of several listed firms’ second-quarter earnings reports, including Globe Telecom, Inc.; Ayala Land, Inc.; SM Investments Corp.; Eagle Cement Corp.; Security Bank Corp.; PLDT, Inc.; Petron Corp.; San Miguel Corp.; and Robinsons Land, Corp., among others.

2TradeAsia.com noted that 10 companies which are part of the PSEi with disclosed first-half results yielded a weighted average earnings per share growth of 5.35%, slower than the first quarter’s 9.7%.

AAA Equities’ Mr. Mangun placed the PSEi’s support from 7,920 to 8,000, with resistance from 8,140 to 8,270.

Smart makes 1st 5G standalone video call in SE Asia

SMART Communications, Inc. is continuing preparations for its fifth-generation (5G) rollout with the testing of standalone use cases of the network with technology partner Nokia Corp.

The wireless unit of PLDT, Inc. said in a statement over the weekend it recently made the first 5G standalone (5G SA) video call — or a connection relying solely on “pure 5G” for data transmission — in Southeast Asia using Nokia’s equipment.

“This is the first 5G implementation which is completely standalone. We don’t need LTE (long-term evolution network) for it,” Joachim Horn, chief information and technical advisor of PLDT and Smart, said in the statement.

“Most 5G implementations today actually need LTE — in fact they’re actually only fast LTE. What we’re seeing here — this is real 5G,” he added.

Countries that have so far launched 5G mostly use 5G non-standalone connection; meaning while the network rides on 5G frequencies, it still uses fourth-generation (4G) or LTE infrastructure.

Smart said with the testing of 5G SA, it explores new use cases for the network that would require ultra-low latency such as video analytics, industrial robotics control, remote crane or tractor operations and tactile sensors for real-time gaming.

“For the first time, we are experiencing the true capabilities of 5G. For example, 5G’s real low latency can only be achieved in this configuration. This is just the first milestone to show what is possible…,” Mr. Horn said.

The company is targeting to make its 5G network commercially available by early next year, initially for its Home and Enterprise customers.

Smart has also started the deployment of 5G-capable equipment as well as the rollout of LTE and LTE-Advanced equipment to its base stations.

Parent PLDT allocated P78.4 billion for capital investments this year.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group. — Denise A. Valdez

Tax court upholds Ayala Corp. creditable withholding tax

THE Court of Tax Appeals (CTA) has upheld a tax credit certificate granted to Ayala Corp. worth P127.3 million over its excess creditable withholding tax (CWT) for 2012 and 2013.

In a three-page resolution on July 18, the CTA special first division denied the motion for partial reconsideration of the Bureau of Internal Revenue (BIR) which claimed that the court had mistakenly ruled on Ayala Corp.’s refund entitlement despite lack of evidence of actual remittance of taxes to the bureau.

“The Court finds that the arguments posited by respondent in the instant motion are mere repetition of his previous arguments in his Motion for Partial Reconsideration (re: Decision promulgated on 13 February 2018) which have been duly considered and adequately discussed in the assailed Amended Decision,” the court said.

“Accordingly, the Court maintains its ruling that the certificate of creditable tax withheld at source is the competent proof to establish the fact that the taxes are withheld,” it added.

The court also cited a Supreme Court decision that proof of actual remittance is not needed in order to prove the withholding and remittance of taxes.

It said Ayala Corp. established the fact of withholding by submitting Schedule of Creditable Taxes Withheld for 2012 and 2013 and relevant Certificates of Creditable Tax Withheld at Source.

“Based on the foregoing, this Court finds no compelling reason to reverse or modify the assailed Amended Decision,” it said.

In the Feb. 13, 2018 decision, the court partially granted the tax refund claim of Ayala Corp., allowing only P81.7 million in tax credit certificates out of an initial P128.7 million claim, due to discrepancies in income payments corresponding to the CWT.

However, after submissions of motions for reconsideration, the court, in its amended decision on March 25, 2019 partially granted Ayala Corp.’s appeal and increased the grant to P127.3 million as it is the amount “which corresponds to the income payments which were verified to have been included in petitioner’s taxable gross income” in its Annual Income Tax Returns for both years.

The resolution was written by Associate Justice Cielito N. Mindaro-Grulla and concurred in by Presiding Judge Roman G. Del Rosario and Associate Justice Erlinda P. Uy. — Vann Marlo M. Villegas

Fed rate-cut dissenters cite solid data, financial risks

TWO Federal Reserve regional bank presidents said they dissented against cutting interest rates this week because US economic data remain solid and risks from a global slowdown and trade tensions hadn’t yet altered that outlook.

Federal Reserve Bank of Boston President Eric Rosengren said Friday the case for cutting interest rates had not been “compelling” at the July 30-31 meeting. Kansas City Fed chief Esther George said no change was needed “with moderate growth, record low unemployment, and a benign inflation outlook,” though she acknowledged risks from trade uncertainty.

“Should incoming data point to a weakening economy, I would be prepared to adjust policy,” she said in a statement.

Rosengren didn’t mention the trade tensions in his statement issued earlier on Friday that also highlighted financial stability concerns “given near-record equity prices and corporate leverage.”

Investors expect another quarter-point cut in September after President Donald Trump on Thursday escalated his trade war with China and Beijing vowed to retaliate.

Rosengren and George’s votes in favor of keeping rates on hold dealt Chairman Jerome Powell his the first double dissent since he took the Fed’s helm in February 2018.

Both George and Rosengren are former bank regulators who have been worried about asset price bubbles, which led to the past two U.S. recessions. Rosengren’s statement included charts showing stock prices and corporate leverage near all-time highs. — Bloomberg

Face-off with cryptocurrency

Call it an in-your-face taunt that Facebook, the social media platform for some 2.38 billion worldwide users — while beleaguered by seemingly never-ending privacy issues with the US Federal Trade Commission in its 15 years of existence — has launched its own cryptocurrency, much to the Federal Reserve Bank’s dismay. It is probably the ultimate face-off between today’s 10-year-old high-tech cryptocurrency and traditional money as first recorded in Sumerian cuneiform tablets of 4,000 BCE.

US Fed Chairman Jerome Powell at a Senate Banking Committee in July acknowledged that a systematic scale of cryptocurrency use could fundamentally change the global financial system. Writing in The Conversation (theconversation.com), Bhaskar Chakravorti, Dean of Global Business at Tufts University, cautioned on the power and reach of Facebook: “Though the Trade Commission has issued its largest-ever fine of $5 billion for violating a 2011 privacy settlement in late July, the amount is only about a month’s worth of the company’s revenue, suggesting that the fine, while seeming large, is, in fact, rather modest.” Facebook is so big that it is worrying President Donald Trump, who, according to a Washington Post story in July, suggested that the federal government should take Facebook (and Google) to court, potentially on antitrust grounds.

But Facebook assuages all, saying that it will not be running the cryptocurrency “Libra” directly, rather it will be run by the non-profit corporation called the Libra Association, made up of 27 members including PayPal, Uber, Spotify, Visa, and Mastercard, to be headquartered in Geneva, and to be regulated by Swiss financial authorities. But of course, a subsidiary, Calibra, will provide free digital wallets to allow people, including those without a Facebook account, to buy, send, and use Libra (starting 2020) on two of Facebook’s core messaging apps, WhatsApp and Messenger, explained Facebook executive David Marcus during a CNBC interview on June 18.

Libra will be different, Marcus said, because its value will be pegged to a basket of established currencies such as the US dollar, the euro, the yen, and others. Each purchase of Libra will be backed by a reserve fund of equal value held in real-world currencies to stabilize Libra’s value, he explained. For a hedge against volatility, Libra will be a “stablecoin” since it is backed by the reserve fund, unlike volatile cryptocurrencies like Bitcoin which has caused loss of capital for speculative investors, according to a Bloomberg story on June 18. Facebook wants its cryptocurrency to one day rival the Greenback.

“The announcement was met immediately with political opposition in Europe, with calls for tighter regulation of the company. French Finance Minister Bruno Le Maire said Libra shouldn’t be seen as a replacement for traditional currencies and called on the Group of Seven central bank governors to prepare a report in their July meeting,” said Bloomberg. “The Bank for International Settlements (BIS) in Switzerland, the central bank for all central banks, had expressed fears that initiatives like Libra pose a long-term threat to central banks’ control of money,” said The Philippine Star in a July 5 story.

“There cannot be a total disregard for a central bank or a third party that provides lender of last resort facility,” Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo was quoted in an msn.com story on June 9. Cryptocurrency, the story explains, “is a type of virtual currency that uses cryptography — a method of storing and transmitting data in unreadable form so that only the intended recipients can read and process it… Guinigundo said blockchain and general forms of distributed ledger technology can be useful for payment and settlements for peer-to-peer transactions and therefore could potentially bypass the banks and banking system in general.”

According to the msn.com story, the BSP’s Technology Risk and Innovation Supervision Department reported that transactions in the Philippines involving virtual currencies “almost doubled to $390.37 million in 2018 from $189.18 million in 2017,” for payments and remittances. “BSP Circular 944 dated Feb. 6, 2017… required virtual currency exchanges to register with the BSP as remittance and transfer companies and were required to put in place adequate safeguards to address the risks associated with virtual currencies, including control measures to counter money laundering/ terrorist financing, technology risk management systems, and consumer protection mechanisms.”

Certainly, cryptocurrency is not illegal in the country, but clearly, regulations only cover remittances or money changing businesses and not direct issuance as practiced by some groups into investment schemes. BSP Financial Supervision Sector Managing Director, Arifa A. Ala was quoted by the Mindanao Times on July 19 as said, “if the business of cryptocurrency is about remittance or similar to remittance business, we register them.” The BSP has not authorized any cryptocurrency ATMs in any location in the Philippines. A separate approval may be required from the Securities and Exchange Commission (SEC) for the issuance of initial coin offerings and operation of crypto trading platforms, noted news.bitcoin.com.

“The BSP has registered 11 cryptocurrency exchanges, allowing them to operate in the country, according to the most recent list of Remittance and Transfer Companies with Money Changing or Foreign Exchange Dealing and Virtual Currency (VC) Exchange Service,” news.bitcoin.com noted in its June 24 story, “48 Crypto Exchanges Approved in the Philippines.”

Separately from the BSP-registered, there are 37 other VC exchanges registered under the Cagayan Economic Zone Authority (CEZA), a freeport offering foreign companies incentives and advantages to registering their businesses there. According to the news.bitcoin.com story, the CEZA’s “Financial Technology Solutions and Offshore Virtual Currency Exchange (OVCE) Business Rules and Regulations of 2018” there are two types of licenses: 24 companies have the OVCE Principal license which allows offshore fintech business and crypto exchange activities and 13 have the OVCE Regular license which allows only offshore crypto exchange activities.”

The CEZA, together with property developer Northern Star Gaming and Resorts, is building what is called the Crypto Valley of Asia in a 54,119-hectare area at the northeastern tip of the country. It is meant for the operation of 10 blockchain and crypto companies — with a 25-shop housing development and a world-class internet data center, crypto-mining firms, self-contained power production facilities, and a state-of-the-art cyber security and risk assessment facility. It will be a POGO (Philippine offshore gaming operators) hub, like the two other POGO hubs approved by The Philippine Amusement and Gaming Corp. (PAGCOR) in the Clark and Cavite freeports.

PAGCOR Chairman Andrea Domingo said the POGO industry is “here to stay,” according to a Philippine Star story (July 13), emphasizing that the industry is now well-regulated. She said PAGCOR is expecting to generate P8 billion in gaming revenues from POGO this year, on top of the P11.9 billion already collected by the regulator from 2016 to 2018.

But how would PAGCOR regulate the POGO virtual hub at CEZA, with its cryptocurrency and its ethereal idiosyncrasies? What would the Bureau of Internal Revenue expect to collect? General Counsel and Senior Assistant Governor Elmore Capule was quoted by the Mindanao Times as saying the BSP does not regulate the buying and selling of the currency because, “what is the value? You cannot see the underlying value, essentially it’s just speculation, the price can go up and down within a day so what’s our control on that?” Capule verbalized what many fear — that cryptocurrency investing can be “some kind of pyramiding.”

It is an in-your-face assertion of the virtual into our socio-economic realities. Face up to the New Now, but make haste slowly.

 

Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.

ahcylagan@yahoo.com

Liliw, Laguna: Home of export quality footwear

Manila FAME October 2019 will feature the stories of two rags-to-riches shoemakers from one of the shoe capitals of the country.

At the quaint town of Liliw, Laguna, rows and rows of footwear makers and distributors line Gat Tayaw St., offering different styles of export quality shoes that have become the main reason tourists are attracted to the town.

Determined to make it big in the shoe industry, two homegrown shoemakers heeded the call of the Department of Trade and Industry (DTI) to join trade exhibits, not only to widen their market but to hone their entrepreneurial skills.

AI-SHE FOOTWEAR
In its very first year in business, Ai-She Footwear already joined Manila FAME. Owner Corazon Coligado’s focus was to actively join DTI’s regional and national trade fairs. This paved the way for opportunities she never imagined.

“Because of Manila FAME, we are now a long way from [having just] two employees and having a small nipa hut as a makeshift factory. Our first exhibit in the Manila FAME marked our very first export [of shoes] to Panama,” Ms. Coligado said.

After the success of her first participation in Manila FAME, it has become a yearly ritual for the Coligados. Her husband no longer needed to work as an Overseas Filipino Worker (OFW) and now helps manage a growing company which now has 60 workers.

Ai-She’s nipa hut is now a full-blown factory in a large plot of land where the Coligado family and their employees live.

“In Manila FAME, we meet new foreign clients every year. We were also able to join international exhibitions like the China-Asean Expo,” Ms. Coligado added.

Ai-She’s main raw material is abaca, a leaf fiber abundant in the Philippines. They use it for their most famous product, “espadrilles.”

“To keep the interest of our local and international clients, we keep on developing new designs. We also source from areas such as Zamboanga and Ilocos as they deliver high-grade raw materials perfect to maintain the quality of our products,” Ms. Coligado explained.

“Our shoes are specially handcrafted and fully Filipino. I think that is our edge in the global marketplace. But, having a platform like Manila FAME to showcase our products is really the secret to our success. That is why I am urging other aspiring SME’s to join Manila FAME,” she said.

JHAZ FOOTWEAR
“Shoe-making is already in my blood, that is why at the first test of fate, I came back to this industry that I love most,” said Nephtali Moneda, owner of Jhaz Footwear.

A teenaged couple, Nephtali and Elvira Moneda felt the heavy burden of supporting a family, so they started out getting shoes from friends and reselling them in provinces around the country. The income generated was used to support their growing family, but the couple made sure to save money, enabling them to open their own shoe stall.

In a place like Liliw which is filled with creative shoemakers, Mr. Moneda needed a venue to market his shoe designs and elevate his game. He found an opportunity when he was introduced to the Center for International Trade Expositions and Missions (CITEM) by the Department of Trade and Industry (DTI).

He first joined Manila FAME was back in 2011 where he introduced Jhaz to a Japanese buyer who has been their client since then.

“Manila FAME made a big impact to our little shoe business. My mind was opened to export possibilities and opportunities and we were obligated to further develop our factory and our products,” Mr. Moneda said.

Their success rippled through their community. Aside from employing 20 people in their factory, they also support 90 to 100 individuals who handle their abaca braiding, embroidery and other side jobs they offer.

“We met clients in Manila FAME that really appreciate and patronize Filipino products. That is really different from just waiting for clients to visit your store. It really pays to have a channel to present your products,” Mr. Moneda said.

The Manila FAME fair will be held on Oct. 17-19 at the World Trade Center Metro Manila in Pasay City. For details visit www.manilafame.com.

Ranger drives Ford Philippines Q2 sales with record performance

FORD PHILIPPINES recently announced second-quarter retail sales of 5,667 vehicles, driven by an all-time record quarterly performance of the segment-defining Ranger pickup.

Second-quarter retail sales for the Ranger rose 25% to a record 3,694 vehicles, driving its year-to-date total up 25% to 6,836 vehicles.

“The Ranger remains one of the country’s most preferred pickup trucks, and continues to set the benchmark for the segment with its versatility, capability, power, and class-leading driver assist technologies,” said PK Umashankar, managing director, Ford Philippines.

The “Built Ford Tough” Ranger lineup in the Philippines has grown to 11 variants, including the recent addition of the Ranger XLS Sport which features striking design enhancements for the XLS variant that further strengthen its rugged, visual appeal.

Second-quarter sales for the Everest midsize SUV totaled 1,274 units, pushing up year-to-date sales to 2,919 vehicles. The EcoSport subcompact crossover delivered second-quarter sales of 487 units, driving its year-to-dates sales to 1,020 vehicles.

The EcoSport boasts improved driving performance with either the 1.0L EcoBoost engine or the new and more powerful 1.5L TiVCT engine with 6-speed automatic transmission. It’s more street smart than the previous version, with a bolder look and design, refined interior, and more smart and safe features and driver-assist technologies.

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