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Gatchalian pushes for competitive gov’t salary rates

Sherwin T. Gatchalian
PHILSTAR

AS THE Senate discussed the proposed fifth round of the Salary Standardization Law (SSL) on Tuesday, Senator Sherwin T. Gatchalian stressed the need to make government workers’ salaries at par with rates in the private sector to retain talent. If approved, the new government rates would take effect January 2020. “I think we should understand where we are….We’re not only competing with the private sector in the Philippines but we’re also competing with the private sector outside the Philippines,” Mr. Gatchalian said during the hearing of the senate committee on civil service, government reorganization and professional regulation. The Department of Budget and Management (DBM) has allocated P31.1 billion under the miscellaneous personal funds to finance the first tranche of the SSL. Currently, there are 1.4 million civil service workers in the Philippines. DBM Undersecretary Lloyd Christopher A. Lao said they are now finalizing a study comparing public and private sector salary rates, which will be submitted by the end of September to the Office of the President for approval. “The study is a comparative analysis between the private and public sector,” he said during the hearing. — Gillian M. Cortez

CHED to reduce scholarship beneficiaries with 2020 budget cuts

THE COMMISSION on Higher Education (CHED) on Tuesday said it will be reducing the number of beneficiaries for various scholarship and subsidy programs due to cuts in its 2020 budget allocation. CHED has a P40.8 billion allocation under the proposed 2020 national expenditure program. CHED Chairperson Prospero E. De Vera III noted during the budget hearing that there is no appropriation next year for its Tulong Dunong Program, which provides financial assistance of up to P12,000 per student per academic year. The program is covered by the Tertiary Education Subsidy (TES). “The 2019 GAA (General Appropriations Act) requires CHED to move the Tulong Dunong scholars to the TES, that means about P2 billion of new scholars will be now be paid for using the TES funding,” he said. “But there is no allocation for new Tulong Dunong scholars. So that is the biggest change in the budget,” he added. Mr. De Vera also said that the number of beneficiaries for TES will most likely be reduced after funding for the Universal Access to Quality Tertiary Education under Republic Act 10931 was also cut by P7.1 billion to P35.4 billion from P42.5 billion this year. The budget for the K-12 Transition program was also slashed. “This means we will not be able to get new scholars for our faculty members. I don’t know if we will be able to sustain those who are already enrolled,” he said. Subsidy for medical students in state universities and colleges, which has a P167 million funding this year, has no appropriation for 2020. Mr. De Vera did not explain why the national government decided to make these cuts. The education sector has the highest allocation in the 2020 national budget with P68.5 billion for state universities and colleges, P35.4 billion for the Universal Access to Quality Tertiary Education, and P31.2 billion for educational assistance and subsidies. — Vince Angelo C. Ferreras

PhilHealth says Malasakit Centers should compliment UHC

THE PHILIPPINE Health Insurance Corp. (PhilHealth) said the Malasakit Centers, a pet project of Senator Christopher Lawrence “Bong” T. Go that was launched in 2018 before he ran for office, should be aligned with the Universal Health Care (UHC) Act that is set to be implemented next year. “The Malasakit centers should be complimentary to the Universal Health Care… If this will be a law,” PhilHealth Senior Vice President Israel Francis A. Pargas said during a Senate hearing Tuesday. Mr. Go passed a bill last July that will institutionalize these centers. For his part, Health Secretary Francisco T. Duque III expressed “support for the spirit and rationale of Malasakit Centers which seek to make health services more responsive and accessible to the indigent poor and vulnerable patients.” To achieve this, Mr. Duque added, the centers’ management should have the capability to monitor patients to avoid an abuse of the program. — Gillian M. Cortez

Hontiveros files bill to protect interns

A MEASURE that will strengthen the accreditation process of host training establishment (HTEs) to protect interns has been filed in the Senate. Under Senate Bill No. 994, or the Interns’ Rights and Welfare bill, Senator Risa N. Hontiveros-Baraquel is proposing to strengthen schools’ vetting process for HTEs. “Internship is for students and young people to learn more about the workplace and to deepen their craft. Internship is not an excuse for employers to take advantage of cheap or free labor,” Ms. Hontiveros said in a statement, Tuesday. Among the provisions of the bill are limiting internship in government offices to not more than 300 hours or not more than six months, providing subsidy to government agencies to accept interns and encourage public service, and internship in other industries with a more technical nature should not exceed 660 hours per semester. The proposed measure also protects all interns from any form of workplace abuse and harassment. — Charmaine A. Tadalan

Nation at a Glance — (09/11/19)

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 — (09/11/19)

African Swine Fever outbreak confirmed

By Vincent Mariel P. Galang, Reporter

THE DEPARTMENT of Agriculture (DA) on Monday confirmed the first outbreak of African Swine Fever (ASF) in the Philippines, adding that quarantine measures have been tightened to prevent the spread of the virus.

“We received late last week the result of the Polymerase chain reaction (PCR test). We submitted 20 samples… and the result that we received is that 14 samples are positive with African Swine Fever,” Agriculture Secretary William D. Dar said in a press conference on Monday, adding that more tests are needed to determine virulence of the strain.

Affected areas are in Guiguinto, Bulacan as well as in Rodriguez and Antipolo in Rizal where 7,416 hogs have so far been culled since Aug. 18 as a preventive measure prior to yesterday’s announcement. Mr. Dar said subsequent tests have shown that these areas have been cleared of the disease, although the department is now checking more incident reports.

“We have never been in an epidemic state. We are responding to increased number of deaths of pigs,” he said, referring to the unusually high number of pig deaths in backyard farms in Rizal province just south of Metro Manila that had alerted authorities to a possible outbreak.

Mr. Dar said the department suspects widespread use of swill — leftovers especially from hotels — had caused the outbreak.

The World Organization for Animal Health has said there is no vaccine for the virus, although both the DA and the Health department have said it is harmless to humans.

“We want to allay the fears of the public by saying that, as long as pork is bought from reliable sources and it is cooked thoroughly, pork is safe to eat,” Health Secretary Francisco T. Duque III said in a statement on Monday.

“We want to reiterate to the public that ASF is not a threat to human health.”

Latest government data put the country’s swine stock at 12.7 million heads — consisting of 8 million pigs in backyard farms and 4.7 million in commercial farms — as of July 1.

Philippine Statistics Authority data showed that growth of hog production — which has the second-biggest contribution to total value of farm output after rice at more than a tenth — picked up in volume terms to 2.42% last year from 1.49% in 2017, though these were still slower than 2015’s 4.33% and 2016’s 5.25%.

The government has so far banned port and pork-based products from Belgium, Bulgaria, China, Czech Republic, Germany, Hungary, Laos, Latvia, Mongolia, Poland, Romania, Russia, South Africa, Ukraine, Vietnam and Zambia.

Edwin Chen, president of the Pork Producers Federation of the Philippines, Inc., said in a mobile phone message: “Leaders of the hog industry are united with DA in ensuring safe and ample supply of… pork in the upcoming Christmas season.”

“Strict biosecurity measures are also being enforced in the backyard and commercial farms.”

National Federation of Hog Farmers, Inc. Chairman and President Chester Warren Y. Tan downplayed the situation, noting by phone: “Ang culling naman natin ay maliit na percentage lang ng total population so hindi sya makakaapekto. Kaya syang punuan ng commercial industry. Whatever ’yung sinasabi nating virus na mayroon tayo… hindi naman sya nakakaapekto.”(Pigs killed were just a small percentage of total population, so this situation will not affect the entire industry. Commercial hograisers scan plug the gap left by backyard raisers. So whatever this disease is is not affecting us.)”

Samahang Industriya ng Agrikultura Rosendo O. So, who is a member of the crisis management team formed by DA together with the private sector, told reporters after the press conference that the 7,416 culled hogs were just 0.06% of the 12.7 million nationwide supply.

At the same time, he cited the need to educate consumers that pork in the market is fit for human consumption.

While authorities are also watching any effect on the corn sector, which supplies feed partly to livestock, PhilMaize Federation, Inc. President Roger V. Navarro said members of his group are not alarmed by the current situation since they also provide feed for poultry, as well as supply for industrial and human consumption.

“Sa ngayon scare lang talaga ito, wala talagang translation… kasi hindi naman lahat ng corn is going to hogs… (This is just a scare for now; there is no big effect on our industry… because not all of corn output goes to hogs),” Mr. Navarro said. — with Reuters

Meralco rates down for fifth month

HOUSEHOLDS in Metro Manila will see lower electricity bills for the fifth straight month in September, according to the Manila Electric Co. (Meralco).

The country’s largest electricity distributor said in a statement on Monday that overall electricity rates will drop by 52.6 centavos per kilowatt-hour (kWh) to P9.0414/kWh in September from last month’s P9.5674/kWh due to lower overall generation charges.

This means that households consuming 200 kWh — who make up the biggest residential customer segment — will see their power bills decrease by P105 this month. This marks the fifth consecutive month of electricity rate drop since April, with the total decline now almost at P1.52/kWh.

Meralco saw generation charges dip by 44.29 centavos/kWh to P4.5191/kWh this month, mainly due to lower charges at the Wholesale Electricity Spot Market (WESM).

Improved supply conditions in the Luzon grid prompted a P3.6503/kWh decrease in WESM charges. WESM’s supplied 17% of Meralco’s needs in the August supply month, whose charges are reflected in September bills.

The cost of power from power supply agreements fell by 15.22 centavos/kWh because of lower fuel prices. PSAs accounted for 44% of Meralco’s supply.

This offset the higher cost of power sourced from independent power producers (IPPs), which gained 48.44 centavos/kWh due to lower average plant dispatch and a weaker peso, since about 95% of IPPs’s costs are dollar-denominated. IPPs contributed 39% of Meralco’s supply needs.

The transmission charge for residential customers inched up 0.56 centavos, but was offset by the decrease in taxes and other charges by 8.86 centavos/kWh.

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

Three economic reforms bag House approval

THREE ECONOMIC REFORMS gained ground in the House of Representatives on Monday evening, with the measure removing restrictions on foreigners from practicing their professions in the Philippines and another simplifying taxes on financial instruments both bagging final approval.

Meanwhile, the tax reform which slashes corporate income tax rates but also removes redundant perks was approved on second reading.

FOREIGN PROFESSIONALS, SMES
With 201 affirmative votes, six negative votes and seven abstentions, House Bill No. 300, which proposes to amend Republic Act No. 7042, or the “Foreign Investments Act (FIA) of 1991”, was passed by the chamber on third and final reading.

The measure — authored principally by Tarlac 2nd District Rep. Victor A. Yap — will allow foreigners to practice their professions in the Philippines in order to facilitate transfer of knowledge and technologies to locals. It “aims to exclude the ‘practice of professions’ from the coverage of the Foreign Investments Act so as to attract foreign professionals to practice in the Philippines wherein they would be able to bring in technology and know-how from abroad and attract foreign direct investments, and help generate more employment opportunities in the country.”

The bill also reduces to 15 from 50 currently the minimum number of direct local hires required of foreign investors setting up small- and medium-sized enterprises (SMEs) with minimum paid-in capital of $100,000.

Counterpart bills — Senate Bill No. 418 and 419 — have been filed anew in the Senate by Senators Francis N. Pangilinan and Sherwin T. Gatchalian, respectively.

FOURTH TAX REFORM
With 186 affirmative votes, six negatives and two abstentions, HB 304, or the proposed Passive Income and Financial Intermediary Tax Act (PIFITA), which makes up the fourth package of the government’s comprehensive tax reform program (CTRP) also bagged the chamber’s final approval.

The bill, introduced by Albay 2nd district Rep. Jose Ma. S. Salceda, proposes a unified 15% income tax rate on interest, dividend, and capital gains from the current range of zero to 30%.

Package 4 of the CTRP also proposes the reduction of the stock transaction tax from 0.6% to 0.1% and imposition of a 0.1% transaction tax on debt instruments listed and traded on the Philippine Dealing Exchange. It will also remove the initial public offer tax.

The measure will also impose a uniform five percent gross receipt tax on banks and other financial intermediaries, and will reduce the 12% value added tax (VAT) to a two percent premium tax on health insurance organizations, pension and pre-need insurance.

Amendments to the original version of the bill so far include:

• dividends received by a domestic corporation from another domestic firm will not be subject to tax;

• exemption from document stamp tax of non-monetary documents like diplomas, transcripts of records and other school certifications; oath of office for barangays, good standing certification from the Professional Regulation Commission, affidavits, certificates of no marriage record, baptismal certificates and marriage license certificates.

CORPORATE INCOME TAX
HB 4157, or the proposed “Corporate Income Tax and Incentives Reform Act” CITIRA (in the past Congress, called the “Tax Reform for Attracting Better and High-quality Opportunities” or TRABAHO), was approved on second reading.

The bill seeks to cut the current 30% corporate income tax rate — described as the highest among major Asian markets — by one percentage points every other year to 20% in 2029.

Amendments to the original version so far include a provisionthat businesses in areas beside Metro Manila will have four years of income tax holiday and three years of reduced corporate income tax, while those farther away will benefit from six years of income tax holiday and four years of reduced corporate income tax.

It also gives fiscal incentives only to exporters and industries listed in the Strategic Investments Priority Plan, taking into account amount of investments, employment generation, use of new technologies, adequate environmental protection systems, promotion of competitiveness, and added SME output, among others. — V. A. C. Ferreras

BoC grows collections as of August

THE BUREAU of Customs (BoC) grew collections further in August, according to preliminary figures released on Monday.

BoC, the second biggest tax-collecting agency which accounts for a fifth of overall revenues, collected P55.744 billion in August, 7.2% more than its P52.012-billion take a year ago. That brought year-to-date collections to P413.399 billion, about 7.8% more than the year-ago P383.544 billion.

“There’s increase in volume but, more than that, I think we attribute it to the increase in the rate of assessment in the revenue efforts of the bureau… of proper assessment of commodities especially those with high volume and high value,”BoC Assistant Commissioner of the Post Clearance Audit Group Vincent Philip C. Maronilla said by phone on Monday.

Asked on the bureau’s P661-billion collection target for this year, Mr. Maronilla said: “We’re pretty confident to be able to meet it kasi… these three critical months — September, October and November — usually post record collections, especially the months of September and November.” — Beatrice M. Laforga

Forum highlights need for FIRe preparation

THE FOURTH Industrial Revolution (FIRe) is bound to hit more and more sectors in the Philippines, and the challenge now is to prepare them to take advantage of opportunities from this development, speakers said in BusinessWorld’s Industry 4.0 Summit at Shangri-La at the Fort, Taguig City on Monday.

“The world has changed and it will continue to do so in a fast-paced manner… However, this is not yet the overall experience in most parts of the country,” Secretary Gregorio Honasan II of the Department of Information and Communications Technology (DICT) said in his opening speech. “Our fellow Filipinos in many areas still cannot tap into the wonders of ICT due to the lack of resources and connectivity, thus slowing down our transformation and leapfrogging to a digital society.”

Anthony Oundjian, managing director and senior partner at the Boston Consulting Group, said that while there will always be winners and losers in any revolution, it’s important to stay on the “right side” of the narrative by treating technology as an enabler than a threat.

Close coordination between the private and public sectors is also key in benefiting from FIRe, Jose Ramon G. Albert, senior research fellow at the Philippine Institute for Development Studies, said.

He cited the need for government support by improving support for research and development, both in financial terms and by removing regulatory and anti-competition barriers.

For her part, Senator Grace Poe-Llamanzares said the government is reviewing laws that pose barriers to FIRe preparations. She specifically mentioned the Ease of Doing Business Law, amendment of the 80-year-old Public Service Act in order to open telecommunications and transport to foreign capital, Freedom of Information bill and Transport Network Vehicle Service bill among legislative moves to create an environment for technological advancements to thrive.

“We can only be ready if you will be able to put the FIRe in the government’s (agenda). With this, we hope that we could create a more vibrant and equitable economy and eradicate intergenerational poverty,” she said.

As FIRe is powered largely by the Internet, Emmanuel Estrada, network strategy head of Globe Telecom, Inc., cited the need for the telcos and the government to form a new National Telecommunications Development Plan, while PLDT, Inc. Vice-President and Head of Enterprise Digital Solutions John R. Gonzales said the government and the private sector should cooperate on an environment that will encourage innovation.

Jeremiah B. Belgica, director general of the Anti-Red Tape Authority, cited the need for the government to solve bureaucratic inefficiencies which could frustrate the benefits of automating government operations.

DICT Undersecretary Eliseo M. Rio, Jr. said more infrastructure needs to be built if the country is to maximize FIRe’s opportunities. For instance, he said, “For the past decades, telecommunication services have been a private venture. Almost zero government investment on this. But in this administration, we are going to put in more investments from the government.”

Properly and adequately anticipated, FIRe can be expected to benefit micro, small and medium enterprises; the financial and banking sector; as well as logistics and manufacturing and transportation.

“Industrial Revolution 4.0 is here, but we still have a lot of work to do, including making ‘Digital Philippines’ an experience for every Filipino,” Mr. Honasan said. — Denise A. Valdez

Fruitas targets to raise up to P1.2 billion from IPO

FRUITAS Holdings, Inc. looks to raise up to P1.2 billion from a maiden share sale by December, joining the roster of companies seeking to go public in 2019.

In a statement issued Monday, the food and beverage kiosk operator said it has filed a registration statement with the Securities and Exchange Commission (SEC) for the sale of up to 533.66 million common shares, plus an over-allotment option of up to 68.34 million common shares, at a maximum of P1.99 each.

This is equivalent to around 28.2% of the company’s total issued shares.

Fruitas expects to net up to P1.06 billion from the offering, which is set to finance its store expansion.

“The proceeds will be used to fund our store network expansion across the Philippines and expand our commissary to serve more customers,” Fruitas President and Chief Executive Officer Lester C. Yu said in a statement.

“New capital will also be used towards acquisition of food service businesses and introduction of new concepts which have a strategic fit with our operations.”

The company earlier said it wants to double its store network within the next five years.

Fruitas scheduled the offer period from Nov. 18 to 22, with listing at the Philippine Stock Exchange (PSE) before the year ends. However, this will depend on the company securing approvals from the SEC and PSE.

The company hired BDO Capital & Investment Corp. and First Metro Investment Corp. as joint issue managers, joint bookrunners, and joint lead underwriters for the offering.

Founded in 2002 from a single food car in Manila, Fruitas already has a total of 949 stores by end-June. The company owns more than 20 brands such as Fruitas Fresh From Babot’s Farm, Buko Loco, Juice Avenue, Buko ni Fruitas, Johnn Lemon, and Black Pearl.

It also operates food parks in Quezon City, namely Uno Cinquenta in Maginhawa Street and Le Village The Lifestyle Park in E. Rodriguez Sr. Avenue.

Fruitas’ expansion over the years also led to the acquisition of Negril Trading, the company behind brands De Original Jamaican Pattie Shop and Juice Bar in 2015. It further bought the assets of Sabroso Lechon in 2018.

The company saw its consolidated revenues jump 37% to P1.58 billion in 2018, boosted by the performance of its stores.

Fruitas could be the sixth company to go public this year, following the IPO of real estate management firm Kepwealth Property Phils, Inc. in August. Axelum Resources Corp. (P7.695 billion) and AllHome Corp (P20.7 billion) will follow with their respective maiden offerings this October.

IPO applications pending with the SEC include Taiwanese firm Cal-Comp Technology (Philippines), Inc. and Metro Pacific Hospital Holdings, Inc., which target to raise up to P10.68 billion and P83.3 billion, respectively, before the end of the year. — Arra B. Francia

Joker wins Venice Golden Lion

VENICE, Italy — Dark drama Joker about the origins of the villainous character won the Golden Lion award at the Venice Film Festival on Saturday, while Roman Polanski’s military drama about France’s notorious Dreyfus affair took the runner-up prize.

Joaquin Phoenix, who won rave reviews at the festival, plays DC Comics superhero Batman’s nemesis, and the story follows his transformation from vulnerable loner to confident villain.

Joker distances itself from typical superhero films, with somber lighting and dark music throughout.

“I want to thank Warner Bros and DC for stepping out of their comfort zone and taking such a bold swing on me and this movie,” director Todd Phillips said in his acceptance speech, also thanking Phoenix for trusting him with his “insane talent.”

“There is no movie without Joaquin Phoenix… Joaquin is the fiercest and bravest and most open-minded lion that I know.”

The film was generating awards buzz even before Venice. The festival is considered a launch pad for the awards season, having premiered Oscar winners like Roma and Birdman.

In a surprise move, Polanski’s An Officer and a Spy took the Silver Lion Grand Jury Prize.

At a time of #MeToo and with only two female directors out of 21 in the competition lineup, festival organizers had faced criticism for including Polanski’s work in the program due to renewed controversy over his conviction for a sex crime.

They defended the move, saying it was the film, not the man, being judged. Jury member Paolo Virzi told a news conference the judges had solely focused on the movie in their discussions.

Polanski pleaded guilty in 1977 to having unlawful sex with a 13-year-old girl in Los Angeles. He fled the United States in 1978 for fear a deal for leniency with prosecutors would be overruled and he would get a lengthy prison term. Aged 86, he now lives in Europe.

The French-Polish director, who was expelled from the Academy of Motion Picture Arts and Sciences last year, did not travel to Venice. His wife Emmanuelle Seigner, who stars in the film, collected the award on his behalf.

“He is very happy and I am convinced this is a very important movie for him, it will give him a lot,” she told reporters.

Asked how she felt about those critical of the film’s festival inclusion, Seigner told Reuters: “We won, that’s the most important thing.”

MIGRANT CRISIS
Italian actor Luca Marinelli won best actor for his portrayal of a poor, aspiring writer in Martin Eden. France’s Ariane Ascaride won best actress for Gloria Mundi in which she plays a mother desperate to help her cash-strapped family.

Both referenced the migrant crisis in their speeches.

“This prize is for all who sleep for eternity at the bottom of the Mediterranean Sea,” Ascaride said.

Marinelli dedicated his to “the incredible people who are at sea rescuing other humans fleeing unimaginable situations.”

Best director went to Sweden’s Roy Andersson for About Endlessness, a mix of short stories of kindness and cruelty.

Italian director Franco Maresca won the Special Jury Prize for satirical documentary film Mafia Is No Longer What It Used to Be.

Best screenplay went to Chinese filmmaker Yonfan for the animation No. 7 Cherry Lane, a romance set in 1960s Hong Kong.

“I am really excited… people always complain that my movies (have a) lack of drama and the writing is not good. Today I got the best script (award),” he said.

American Skin by Nate Parker, whose inclusion in the festival was also a talking point, triumphed outside the official competition, taking the Filming Italy Award for Best Film of the Sconfini Section.

Parker’s 2016 movie Birth of a Nation, stumbled after renewed public interest in a 1999 rape charge against the filmmaker, of which he was acquitted. — Reuters

Citigroup bets on credit cards even as US economy softens

NEW YORK — Despite signs that the US economy is slowing, New York-based Citigroup, Inc. is betting big on credit cards.

Citigroup, the third-largest US card issuer, according to payments industry publication The Nilson Report, has been among the most aggressive promoters of zero-interest balance transfers.

For a small fee, customers can move debt from a rival card onto Citi’s plastic and pay no interest for 21 months. That is currently the longest 0% deal in the industry, according to consumer finance company Bankrate LLC. Rivals offer 15 interest-free months with no fee.

The card business now accounts for nearly one-third of Citigroup’s overall revenue and is one of the biggest potential drivers of future earnings growth.

But some analysts and investors worry this portfolio could become a liability if the economy goes south. The bank continues to advertise zero-interest deals on popular personal finance websites and through mailers, even as competitors have scaled back.

“Just recognizing where we are in the credit cycle, it’s interesting to see Citigroup doubling down and pushing forward,” said Moody’s analyst Warren Kornfeld.

Credit card customers who use balance transfers are considered higher risk because they often use the easy financing to accumulate more debt, according to bank analysts and credit underwriters.

Wall Street’s worst fears lie with borrowers such as Jacqueline Alvarado, a Pennsylvania truck driver who now owes $12,000. Over the past five years, Alvarado says she has moved balances around on 19 cards, including one from Citigroup, to avoid finance charges. If the promotional offers dry up, she said, so do her hopes of paying off that debt.

Zero interest is “the only way I can stay afloat,” said Ms. Alvarado, 40.

In interviews with Reuters, Citigroup executives defended their card strategy and tough underwriting standards they say will protect the bank from major losses in the event of a downturn.

Citigroup’s card business has reported delinquency rates far below the industry average in recent years, according to federal data and filings. In addition, 83% of consumers in its American credit card business, excluding its retail partnership cards, have credit scores of 680, which is considered a good score, according to credit rating firm Experian.

TEMPTING BORROWERS
Citigroup counts on customers sticking around after the promotional period expires. With annual percentage rates of up to 27% on its cards, the profits on borrowers who carry balances can be juicy.

The strategy so far is paying off. Interest-bearing balances rose 10% in the second quarter versus the year-ago period. That growth helped boost overall profits on consumer lending by 9%.

Anand Selva, the bank’s head of consumer strategy, said he expects the business to continue picking up steam.

Citigroup shares have rallied more than 20% so far this year. The KBW Banking Index, the benchmark stock index for the US banking sector, rose 6% over the same period.

Selva says Citigroup has taken other steps to encourage cardholders to do more than transfer balances. For example, it has sweetened its reward program by offering a new credit card that rounds up to the nearest 10 reward points on every new purchase. And it has introduced installment loans linked to credit lines for large purchases.

Major card rivals, meanwhile, are proceeding more cautiously.

Discover Financial Services, known for flooding mailboxes with promotions, has said on analyst calls that it is paring those offers and tightening personal loan underwriting over concerns the economy is slowing. Capital One Financial Corp., which pioneered balance transfers in the early 1990s, similarly told analysts and investors it has become more conservative in extending credit lines while targeting wealthier clients who typically do not carry balances.

Bank of America Corp. and JPMorgan Chase & Co., two of the biggest card lenders, have grown their businesses by prioritizing affluent consumers over people already carrying credit card debt, according to analysts.

CARD CRUTCH
Citigroup has leaned more on its card business since the 2007-2009 financial crisis. The bank required three government bailouts when its US subprime mortgage business turned toxic and caused it to shrink its portfolio to stem losses.

It sold its retail wealth management unit to Morgan Stanley, and it no longer engages in traditional mortgage and auto lending. Citigroup now has one-fifth the number of US branches as its primary competitors.

So it has turned to its card business to drive growth and lure deposits.

The bank now earns more than half of its consumer profit and revenue from cards. And it markets online checking and savings accounts to its 28 million cardholders. Doing so helped Citigroup add $2 billion in consumer deposits during the first half of 2019. That is more than double what it gathered all of last year.

Analysts said the business will be a bright spot for Citigroup — as long as the economy remains healthy. US banks suffered $87 billion in losses on credit card loans from 2009-2010 in the wake of the financial crisis, according to a Federal Reserve report.

Alvarado, the truck driver, said she has been slowly chipping away at her balance thanks to 0% financing.

“This works out for me for now, until they change it,” she said. — Reuters

ClC launches P100-million share buyback program

CONCEPCION Industrial Corp. (CIC) is buying back up to P100 million worth of common shares over the next three years.

In a disclosure to the stock exchange, CIC said its board of directors approved the share buyback program “to provide price support for its shares and enhance share value.”

The buyback program will start today (Sept. 10) and will end on Sept. 9, 2022.

“The company shall be authorized to repurchase up to One Hundred Million Pesos (P100,000,000.00) worth of common shares during the first year, and up to an aggregate of 12,000,000 common shares cumulatively over a three-year period, representing approximately 3% of the company’s current common market capitalization,” CIC said.

CIC said it will use internally generated funds for the share buyback program.

The company said the buyback program is not seen to negatively affect its ability to fund any of its planned and existing projects and investments. It will also “not involve active and widespread solicitation from stockholders in general.”

The share buyback program will be executed through the open market.

For the first six months of 2019, CIC reported its net income attributable to owners of the parent stood at P486.52 million, 14% lower than the P566.9 million recorded during the same period a year ago.

“(Second quarter) was a challenging quarter for growth in consolidated income coming off a high base in 2018 (2017-2018 was at 16.3% growth) but also affected by factors including overall pipeline slowdown in the commercial segment, aggressive competition, as well as supply chain and aftermarket cost challenges,” the company said.

“Operational challenges in logistics due to port congestion, excess inventory and warehouse demand, as well as in aftermarket from CRM transition issues and call center pricing are the key drivers for the decrease in profit in addition to lower commercial segment sales,” it added.

Incorporated in 1997, CIC is the company behind air-conditioners and refrigerators under the Carrier, Toshiba, Condura, and Kelvinator brands.

PHL film wins special jury prize at Venice Film Fest’s Orizzonti tilt

RAYMUND RIBAY GUTIERREZ’ feature debut about domestic violence won the Special Jury Prize at the 76th Venice Film Festival on Saturday.

Verdict, produced by festival veteran Brillante Ma. Mendoza, was the only Southeast Asian film that made it into the film festival.

It competed against 18 other movies in the Orizzonti New Horizon’s competition. The Best Film prize was given to Atlantis by Ukranian filmmaker, Valentyn Vasyanovych.

The festival was held at the Palazzo del Cinema in Lido, Italy. The Venice Film Festival is the oldest film festival in the world — its first run was in 1932 — and is considered one of the most prestigious film festivals in the world alongside Berlin International Film Festival in Germany and the Cannes International Film Festival in France.

The festival’s top prize — the Golden Lion — was given Todd Phillips’ Joker, beating out the controversial Roman Polanski’s film, An Officer and a Spy.

In 2016, Lav Diaz won the Golden Lion for Ang Babaeng Humayo (The Woman Who Left).

“With sharp-eyed empathy and a disciplined sense of pacing, writer-director Raymund Ribay Gutierrez defiantly sets out to confront this reality in a cramped corner of Manila, drawing attention to one such tragic incident in his reflective feature debut Verdict,” Tomris Laffly, who reviewed the film for Variety, wrote in an Aug. 29 post on the periodical’s website.

“Throughout this engrossing and sophisticated procedural with universal audience appeal, Gutierrez slowly dismantles his country’s imperfect justice system, where nightmarish bureaucracy gobbles up compassion and the urgent needs of the survivors take a backseat in a grueling Kafkaesque circus,” he added.

Mr. Gutierrez, whose film credits include the short films Judgment (2018) and Imago (2016) was nominated for the Palme d’Or Best Short Film in Cannes for both shorts. Imago additionally won Best Short Cuts at the Toronto International Film Festival, the Best Short Film Award at the Stockholm International Film Festival, and Best Short Film at the London Short Film Festival.

Verdict will be shown in selected Philippine cinemas from Sept. 13 to 19, during the third Pista ng Pelikulang Pilipino. — Zsarlene B. Chua

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