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DoJ says request to suspend Acosta up to Ombudsman

THE REQUEST of public lawyers to suspend Public Attorney’s Office (PAO) chief Persida V. Acosta will be decided on by the Office of the Ombudsman, according to the Department of Justice. Justice Secretary Menardo I. Guevarra said aside from the request of the PAO lawyers, there is also a complaint filed against Ms. Acosta pending before the Ombudsman. “We will leave that to the Ombudsman,” he said. PAO lawyers submitted an anonymous statement to the Office of the Ombudsman asking for the suspension of Ms. Acosta and forensics team chief Erwin Erfe for allegedly defrauding the government. The statement was an intervention to the complaint filed in May by Wilfredo M. Garrido, Jr. against the two for falsification of public documents, malversation of public funds, illegal use of public funds, grave misconduct, serious dishonesty, and grave abuse of authority. Among the grounds cited by Mr. Garrido is the illegality of the creation of the PAO Forensic Laboratory, claiming it does not have any mandate from Congress. Mr. Guevarra said he cannot comment on the allegation in the complaint, but noted that Ms. Acosta mentioned that the creation of the laboratory was approved by the Department of Budget and Management. “(T)hat’s all I can say… the matter is under investigation,” he said. — Vann Marlo M. Villegas

Motorboat economy: People cheer the resumption of services after 3-vessel mishap

By Emme Rose S. Santiagudo, Correspondent

WHEN AUTHORITIES lifted the suspension of motorboat operations between Iloilo City and the island province of Guimaras last Tuesday, they cited “passengers” as the main consideration for the decision.

They were referring mainly to about 10,000 people from Guimaras who cross every morning to Iloilo City and back later in the day, based on data from the Philippine Coast Guard (PCG).

“I am really thankful because the operation is finally back,” said 42-year old Richard G. Galvez, who lives in San Lorenzo, Guimaras and works in Iloilo City.

Mr. Galvez, in an interview last Tuesday, said the long line — reaching up to a kilometer at certain times of the day — for the roll on-roll off (RoRo) boats that were the only option during the more than one-week motorboat suspension forced him to just spend a straight week in Iloilo.

The suspension was implemented following the Aug. 3 sea mishap at the Iloilo Strait wherein three motorboats capsized and 31 people died.

But regular commuters are not the only ones who heaved a big sigh of relief when pump boat operations resumed.

The boat operators, ambulant vendors, and traders were also glad to have their livelihood back.

Pump boat crew member Edlin F. Sambon said they have been stuck at the Parola Wharf in Iloilo City since the suspension.

“We have been grounded on the wharf since last week and now that the operations are back, we are really thankful,” the 40-year old Mr. Sambon said in Hiligaynon.

Based on data from the Guimaras Provincial Tourism Office, there are 104 pump boats registered in Guimaras, grouped into four cooperatives: Buenavista Development Cooperative, Buenavista Motorbanca Owners and Sailors Association, Association of Buenavista Ferry Service Providers Incorporated , and the Jordan Motor Banca Cooperative.

The Buenavista local government and the Department of Social Welfare and Development distributed food assistance to affected boat owners and workers last week.

Ambulant vendor Ricarido L. Paz, meanwhile, said his income from selling peanuts to motorboat passengers on the Iloilo side is enough to cover daily needs.

“We had no income for one week since the trips were suspended. My income in my small business is already enough to cope with our daily needs,” said the 34-year old.

SMART ENGINEERS
A Guimaras-based trader, who asked not to be named, said “pump boats are absolutely convenient.”

“Many of them running simultaneously back and forth. They are the best answer to solve the transportation problem without undue burden (to commuters). Cost is good, frequency is good,” said the businessman who makes the Iloilo-Guimaras trip three to four times a week.

Motorboats make the crossing for about 15 (Jordan wharf) to 25 (Buenavista) minutes, and the fare is P15 per person. In comparison, passengers taking the RoRo pay P35 each.

“However, there needs to be smart engineers who can understand it’s economic impact,” he added.

Transportation Secretary Arthur P. Tugade, during his visit to the island last Aug. 7, discussed possible immediate and long-term changes in the sector with local officials.

“We need to revisit, amend, and get rid of the policies that are not applicable on today’s weather and sea worthiness. We are looking now at the possible changes of the design and ergonomic of the motorboats,” Mr. Tugade said.

Several survivors of the accidents have said that weather was good when they left port, but were suddenly hit by strong rain and wind.

Cecilia Fenis, mother of 18-year old Maria Rycille who was among the 31 casualties, said her daughter’s last text message to her was: “Huo. Wala naman ah. Indi man gid mabalod (Yes, the waves seemed calm).”

The text was in response to the mother’s message asking: “Wala gabalod? (Is the sea calm?).”

Ms. Fenis was expecting her daughter to be on her way home to Guimaras from a school-related activity at the University of San Agustin, where she was studying.

Commodore Allan T. Dela Vega, PCG commander for Western Visayas, said they are strictly implementing the new policies imposed by the Maritime Industry Authority (MARINA) on motorboats.

“In PCG, our role is to enforce these guidelines. We will make sure that all the guidelines will be met,” said.

MARINA-Western Visayas Regional Director Jose A. Venancio Jr., for his part, said they have already suspended a few motorboats that refused to follow the new protocols.

These conditions include: wearing of life jackets by passengers throughout the trip, loading of only 75% of the approved carrying capacity of the vessel, overhead tarpaulins/canvass should be rolled up or removed, and fitting the vessels with distress signal equipment. Trips will also be allowed only “from sunrise to sunset” and subject to weather conditions.

Meanwhile, vessels of FF Cruz Shipping Corp. will continue to ferry passengers alongside Montenegro Lines, and the Ocean Jet fast craft, for those who would rather not be part of the motorboat economy.

Mr. Tugade said moving forward from the tragedy, “There are a lot of things that need to be considered, from the idea of bringing RoRo vessels or fast crafts, phasing out the wooden hull, the improvement of ports, and the needed finances. As we feel sad about what happened, we have to look forward and learn our lesson, so that a situation like this will not happen again.”

Nation at a Glance — (08/16/19)

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 — (08/16/19)

House committee OK’s corporate tax cut

A SECOND key tax reform — which slashes corporate income tax rates but also streamlines investors’ perks — hurdled a committee of the House of Representatives a day after another measure, which raises alcohol products’ excise tax rates, bagged approval from the same body.

The proposed alcohol tax hike was approved in plenary session on second reading on Wednesday evening.

The House Ways and Means committee on Wednesday approved House Bill No. 313, or the proposed “Corporate Income Tax and Incentives Reform Act,” or CITIRA, (in the past Congress, called the “Tax Reform for Attracting Better and High-quality Opportunities” or TRABAHO), invoking Rule 10 Section 48 of House rules that allows priority bills that bagged third- and final-reading approval in the preceding Congress to “be disposed of” sans public hearings.

“Since this is a priority bill of the House and of President Rodrigo Roa Duterte, I invoke the Rule 10 Section 48 of the House Rules… I hereby move that this be disposed,” said Nueva Ecija 1st district Rep. Estrellita B. Suansing, who is the committee’s vice-chairperson.

By law, tax measures originate in the House, although Senate leaders have said they will hold parallel hearings in order to expedite action on bills deemed priorities.

The head of the Senate Ways and Means committee said the panel on Thursday will start consideration of remaining tax reforms.

TRABAHO was among those identified as priority by President Rodrigo R. Duterte in his fourth State of the Nation Address (SONA) on July 22 and was one of 28 measures identified as key to improving the country’s business climate by 14 local and foreign chambers on July 30, eight days after the 18th Congress convened for its first of three regular sessions.

Principally authored by Albay 2nd District Rep. Jose Ma. Clemente S. Salceda, who heads the Ways and Means committee as chairman, HB 313 seeks to cut the current 30% corporate income tax rate — described as the highest among major Asian markets — by two percentage points every other year to 20% in 2029, “provided… that the President may advance the scheduled reduction… when adequate savings are realized from the rationalization of fiscal incentives…”

In his explanatory note, Mr. Salceda said the bill aims to attract more foreign direct investments by bringing down the corporate income tax rate to lower levels enforced by the Philippines’ closest competitors in Southeast Asia, and ensure that such perks lure investments that create jobs, transfer technology and benefit less developed areas of the country.

Perks now offered to economic zone locators consist of a four- to eight-year income tax holiday; a special tax rate of five percent on gross income after the ITH period expires; tax- and duty-free importation of capital equipment, spare parts and supplies; exemption from wharfage dues as well as export tax, duty, impost and fees; and eased restrictions on employment of foreign nationals.

The Finance department estimates that such incentives cost the government about P1.2 trillion between 2015 and 2017 — P301.2 billion in 2015, P380.7 billion in 2016 and P441.1 billion in 2017. The Philippine Economic Zone Authority (PEZA) — which last year had the second-biggest value of committed projects after the Board of Investments — accounted for P879.1 billion, or 78%, of the P1.2-trillion total.

Among others, HB 313 removes the option for investors to avail of the five percent gross income tax, caps the ITH at five years and will subject those who enjoy preferential rates to the regular corporate income tax rate. It also provides a schedule of amount of interest paid or incurred that may be allowed as deduction from computation of gross income.

It also grants fiscal incentives only to exporters and industries listed in the Strategic Investments Priority Plan, taking into account substantial amount of investments, employment generation, use of new technologies, adequate environmental protection systems, promotion of competitiveness, addressing of gaps in the supply or value chain and value-added production of micro, small and medium enterprises.

The measure also authorizes the President to grant incentives to a project that has a “comprehensive sustainable development plan” and brings in “at least $200 million.”

The House ways and means committee on Tuesday approved HB 1026, which proposed to increase the excise tax rate on alcohol products, also invoking House Rule 10 of Section 48.

The bill will increase to 22% from 20% the ad valorem tax on the net retail price per proof of distilled spirits, and the specific tax to P30 per liter from P23.40 currently. The specific tax rate will rise by P5 every year until it reaches P45 in 2022, after which it will increase by seven percent annually beginning 2023.

Sparkling wines, meanwhile, will be levied with a 15% ad valorem tax per liter, which is not imposed under the present system; in addition to a P650 specific tax per liter in 2020, which will likewise increase by seven percent annually.

The House in the 17th Congress that ended in June had approved all tax reform packages, but many of them failed to bag Senate approval.

The government has so far enacted Republic Act No. 10963, which slashed personal income tax and increased or added levies on several goods and services; RA 11213, which offers estate tax amnesty and amnesty for delinquent accounts that remained unpaid even after being given final assessment; and RA 11346, which will gradually increase excise tax on tobacco products to P60 per pack by 2023 from the current P35.

In his latest SONA, Mr. Duterte also asked the 18th Congress to approve proposals to increase excise tax rates for alcohol products and e-cigarettes, centralize real property valuation and assessment, and simplify the tax structure for financial investment instruments.

THE SENATE MAKES ITS MOVE
Senator Pia S. Cayetano, Ways and Means committee chairperson in the Senate, said in a statement on Wednesday that an Aug. 15 “meeting will focus on the Comprehensive Tax Reform Program” and has invited the Department of Finance, which will be represented by Undersecretary Karl Kendrick T. Chua who will brief lawmakers on tax reforms Mr. Duterte mentioned in his SONA.

Finance Secretary Carlos G. Dominguez III had said that tax measures should be approved by Congress within 15-18 months, since lawmakers are expected to be distracted by preparations for the May 2022 national, legislative and local elections starting in 2021.

Moody’s Investors Service said last Friday that while “[t]he strong pro-administration majority in both houses of the legislature enhances the prospects for further reform… the government has a comparatively short window of about two years to pursue its legislative agenda.”

“We expect campaigning to detract attention away from reform in the year prior to the next general election scheduled for 2022,” Moody’s had said.

Business groups and state investment promotion agencies like PEZA have warned of the negative effect any move to change incentives could have both on prospective investors and expansion plans of those already operating in the country.

The central bank reported on Tuesday that foreign direct investment (FDI) net inflow reached $3.145 billion as of May, dropping 37.1% from $5.002 billion in last year’s first five months. That compares to the central bank’s $10.2 billion projection for this year.

From a record high of $10.256 billion in 2017, FDI net inflows dropped 4.4% to settle at $9.802 billion last year.

State economic managers like Socioeconomic Planning Secretary Ernesto M. Pernia have asked Congress for laws that will ease restrictions on foreign ownership and participation in various sectors, deemed the steepest in Southeast Asia. — Charmaine A. Tadalan with input from V. A. C. Ferreras

Lawmakers to minimize risk of 2020 budget delay

LAWMAKERS of both chambers of Congress are moving to avoid another delay in enactment of the national budget, which has put the government’s economic growth target this year at risk.

Davao City 3rd district Rep. Isidro T. Ungab, who heads the House of Representatives Appropriations committee, said in a text message on Wednesday that his panel on Aug. 22 will start deliberations on the proposed P4.1-trillion national budget for next year that will be submitted by the Executive branch before the Aug. 21 deadline to do so.

In a statement on Wednesday, House Majority Leader Ferdinand Martin G. Romualdez of Leyte’s 1st District said the chamber will “continue to hold budget briefings so that our colleagues will have enough time to raise their concerns” with state economic managers, as well as heads of departments and agencies.

“We also appeal to our colleagues to avoid repetitive questions during formal budget deliberations.”

Senate Finance committee chairman Senator Juan Edgardo M. Angara — who had said that the target is to have the 2020 national budget ready for signing into law by Dec. 15, ahead of Dec. 21-Jan. 19 Christmas-New Year break — said separately in a mobile phone message: “We’ll work closely with the Senate and House leaders and my counterpart in the House, Rep. Sid Ungab, to make sure we do everything humanly possible to pass the budget in a responsible and timely manner…”

President Rodrigo R. Duterte and his Cabinet approved the 2020 national budget on Aug. 5.

In its July 18 meeting, the Development Budget Coordination Committee retained a budget deficit ceiling equivalent to 3.2% of gross domestic product for next year, with targeted P3.536-trillion revenues — consisting largely of P3.332-trillion tax collections — helping to cover P4.214 trillion in programmed expenditures.

The government had operated on a reenacted 2018 budget from January to April 15, when Mr. Duterte signed this year’s national budget into law but vetoed P95.3 billion in funds that were not in sync with state priorities, slashing the total to P3.662 trillion.

Resistance among House leaders to the Budget department’s shift to a “cash-based budget” that took into consideration state offices’ limited capacity to spend, and later accusations of irregular fund insertions legislative chambers hurled against each other caused the 2019 budget to miss its end-2018 enactment deadline.

The impact could be seen in official infrastructure and other capital outlays data showing that disbursements fell by 11.7% year-on-year to P311.4 billion last semester, missing a P392.9-billion program for that period by a fifth.

State economic managers and private economists blamed the delay in budget enactment — which left new projects unfunded — for the 5.5% economic growth last semester that compares to a reduced 6-7% target for 2019. — V. A. C. Ferreras with CAT

Death creeps at door of error-plagued Philippine justice system

By Arjay L. Balinbin
Reporter

IN A FEW DAYS, 49-year-old Jun Allego will walk free after spending more than half of his life in jail.

Convicted of robbery with homicide, his 40-year sentence came down to 26 years for good conduct — while in prison, he became a student and teacher, taught karate and was a leader to his fellow inmates.

“His mother and father died while he was in jail and he never got to visit the wake of his brother,” Nene, his 57-year-old wife, said in a July 3 interview.

“He wants to come home on his own so he wants me to give him the key to the house,” she said, trying to hide her excitement.

“He wants to surprise me and our two daughters — they were both ‘made’ in jail — so I told him ‘It’s up to you, but remember that the dogs don’t know you.’”

While the Philippines, which is predominantly Catholic, had the death penalty back then, a moratorium on state killings had been put in place so Mr. Allego didn’t have to worry about dying.

Capital punishment was revived for about a year starting in 1999, only to be suspended again by then President Joseph E. Estrada.

His successor, Gloria Macapagal Arroyo, continued the practice, and in 2006 the country abolished the death penalty through a law. Before that, she cut the death sentences of 1,230 inmates to life imprisonment, which Amnesty International said was the “largest ever commutation of death sentences.”

That’s about to change if President Rodrigo R. Duterte will have his way.

The tough-talking leader has asked Congress to revive capital punishment for drug trafficking, plunder and other heinous crimes.

Several bills in both houses of Congress will soon be tabled for hearings.

Restoring capital punishment is certain given the sheer number of Mr. Duterte’s political allies in both the Senate and House of Representatives, Louie C. Montemar, a sociology professor from the Polytechnic University of the Philippines, said in an e-mail.

“Let us remember that the death penalty used to be with us despite opposition by the Catholic Church,” he said.

There is also strong public opinion for its return so “I really do not see anything beyond a massive civil society movement against it that could turn the tide.”

International rights groups warned that restoring capital punishment might tarnish the Philippines’ global image and affect trade and investments.

The European Union is reluctant to engage in deeper trade talks with the Philippines because it does not want to be associated with Mr. Duterte’s bloody war on drugs, said Phil Robertson, deputy director at Human Rights Watch Asia.

He also said Filipinos criticize the judicial system for its failures “so it’s hard to see why anyone would want to place issues of life and death in that system’s hands.”

“Research from all over the world shows that the death penalty does not serve as an effective deterrent to crime but it does undermine whatever remaining confidence exists in the Judiciary,” he added.

The Supreme Court in a 2004 decision admitted that out of 907 capital punishment appeals elevated to it for automatic review, 72% or 651 people in death row were saved from lethal injection after their wrongful conviction.

Amnesty International said the risks of judicial error are “almost certain” especially with reports of police planting evidence and using torture to get confessions from suspected criminals.

The death penalty continues to be applied inconsistently, with the poor suffering the most, AI human rights officer Wilnor Papa said. “This includes limited access to legal representation or being at a greater disadvantage in their experience of the criminal justice system.”

But Dante L. Jimenez, who heads the Volunteers Against Crime and Corruption, argued that capital punishment would deter politicians from stealing money and common people from committing heinous crimes.

“Capital punishment is the solution so that people will not take the law into their own hands,” Mr. Jimenez, whose brother was murdered in 1990, said. “What will you do as a parent if your daughter was raped and thrown like garbage?”

“My message to the church is focus on spiritual advice and do not meddle in state initiatives because that is wrong,” he said.

Nene, mentioned at the outset, thanks the government for giving her husband a second chance. “I am deeply thankful that there was no death penalty back then,” she said. “Jun will have a chance to see the light and will be turning over a new leaf. He’s a better person now since he came to know God.”

JG Summit doubles profit in 2nd quarter

JG SUMMIT Holdings, Inc. doubled its earnings in the second quarter as its airline, real estate and banking units registered double-digit growth.

In a regulatory filing, the Gokongwei-led holding firm said its attributable profit soared 99% to P9.96 billion in the three months ending June from P5 billion during the same period in 2018.

Consolidated revenues jumped 11% to P82.18 billion in the second quarter, coming mostly from its food business.

The food business, through Universal Robina Corp. (URC), generated P33.72 billion in revenues, up 3% — driven by the sustained growth of its branded consumer foods and agro-industrial segments.

The airline segment, represented by budget carrier Cebu Air, Inc., contributed P23.53 billion in revenues. The 20% increase was attributed to larger passenger volume and an increase in average fares.

The company’s real estate and hotel business, through Robinsons Land Corp. (RLC) added P7.98 billion in revenues, 19% higher than a year ago as it opened new malls.

Revenues from the banking segment, under Robinsons Bank Corp., surged 45% to P2 billion during the quarter due to higher interest income from finance receivables, commission income and trading gains.

The petrochemicals group, however, recorded a 16% decline to P9.01 billion in the three-month period. This represents the earnings of JG Summit Petrochemicals Corp. and JG Summit Olefins Corp., which were impacted by lower selling prices and volumes sold during the period.

For the first half, JG Summit posted an attributable net income of P17.4 billion, 77% up year on year.

“Increase is mainly due to the double-digit income growth in our airline and real estate businesses coupled by the foreign exchange translation gains and increase in equity in net earnings of associates particularly from United Industrial Corporation Limited (UIC),” the company said.

Consolidated revenues stood at P158.44 billion, a 10% increase from a year ago.

URC posted a 6% revenue growth to P67.04 billion, while Cebu Air’s revenues increased 18% to P44.7 billion.

Revenues of RLC added P14.74 billion in the six-month period, up 13% from last year, while Robinsons Bank chipped in P3.89 billion to rise 43%.

Petrochemicals revenues slipped 12% to P18.58 billion in the first half of the year.

JG Summit is allocating P87.5 billion for capital expenditures this year, a bulk of which will be dedicated to the expansion of its petrochemical business. — Denise A. Valdez

DMCI income falls in 2nd quarter

EARNINGS of DMCI Holdings, Inc. fell by a fifth in the second quarter of 2019, weighed down by lower coal prices and higher replacement power costs.

In a statement issued Wednesday, the diversified engineering conglomerate said net income dropped 20% to P3.8 billion in the April to June period, after flattish growth in revenues to P24 billion.

For the first half, net income was down 22% to P6.7 billion on the back of P44 billion in revenues.

“We had a tough first half because of lower average selling price of coal, higher replacement power costs, provisions for project cost overruns, and lower average price for our lower grade nickel,” DMCI Holdings Chairman and President Isidro A. Consunji said in a statement.

Mr. Consunji said in a press briefing late Tuesday that the company incurred about P2.3 billion in replacement power costs for the first half, following the shutdown of Unit 1 of Sem-Calaca Power Corp. for rehabilitation works since December 2018. This is 213% higher than the P742 million in replacement power costs in the same period last year.

The company was further affected by an 18% decline in average selling prices of coal to P2,227 per metric ton (MT) versus P2,710 per MT last year.

“The redeeming factor was the volume of coal, which hit 7.9 million tons, the highest ever so it’s a historic high. The operational efficiencies increased,” Mr. Consunji said.

With the lower coal prices and higher replacement power costs, Semirara Mining and Power Corp. (SMPC) delivered a 26% decline in net income contribution to P3.4 billion. Without non-recurring items, SMPC’s core net income contribution was still down by 26% to P3.6 billion.

SMPC recognized one-time losses worth P334 million for the accelerated depreciation of Calaca Units 1 and 2 in 2018 and the net effect of the share in non-recurring items in 2019, as well as P156 million from a financial contract with Southwest Luzon Power Generation Corp.

It likewise realized a one-time gain of P102 million from money claim of Sem-Calaca against the Power Sector Assets and Liabilities Management Corp. as approved by the Commission on Audit.

Meanwhile, property unit DMCI Homes also reported a 36% drop in net earnings contribution to P1.2 billion due to the absence of the P715-million gain from the sale of land in 2018. Without this, core net income contributions from the unit rose 5% to P1.2 billion thanks to lower project development costs.

Construction firm D.M. Consunji, Inc.’s income share also shed 35% to P440 million to account for cost overruns.

Income share from off-grid energy supplier DMCI Power Corp. improved by 9% to P233 million on the back of higher energy sales to power cooperatives in Masbate, Palawan, and Oriental Mindoro.

For DMCI Mining, net income contribution went down by 22% to P173 million after it sold more lower-grade nickel at lower average selling price.

On the other hand, affiliate Maynilad Water Services, Inc contributed P1.1 billion, 16% higher year on year, due to higher billed volumes and tariff increases. — Arra B. Francia

Vista Land Q2 profit rises 10%

VISTA LAND & Lifescapes, Inc., the property firm led by the country’s richest man Manuel B. Villar, Jr., reported a 10% increase in earnings in the second quarter, thanks to sustained sales of its residential projects and higher leasing revenues.

In a regulatory filing on Wednesday, Vista Land said its net income attributable to equity holders of the parent company stood at P2.81 billion for the April to June period, up 10% from the P2.55 billion it posted a year ago.

Second-quarter revenues jumped 8% to P11.95 billion, driven by a 4% rise in real estate sales to P9.23 billion and a 14% increase in rental income to P1.81 billion.

At the same time, costs and expenses increased by 11% to P7.2 billion during the April to June period.

For the first half, Vista Land said its attributable profit jumped 11% to P5.7 billion, on the back of an 11% rise in consolidated revenues to P23.4 billion.

Real estate revenues went up 8% to P18 billion during the first six months of 2019, “primarily attributable to the increase in the overall completion rate of sold inventories of all its business units.”

“Our reservations sales grew 8% during the period to P41 billion, which is still majority OFWs and over 90% end-users. We remain optimistic for the industry given the sustained demand in our residential business as well as the continued growth of our leasing business propelled by the steady growth in the disposable income, Overseas Filipino remittances, sound Philippine macroeconomic fundamentals and continued infrastructure development around the country especially in areas outside Metro Manila, where we have a competitive advantage given our geographic reach,” Mr. Villar, Vista Land chairman, said in a statement.

Camella generated P7.2 billion in real estate revenues, up 27%, while Communities Philippines increased its sales by 23% to P8.7 billion and Crown Asia posted an 8% rise in sales to P582 million.

Rental income rose 16% to P3.6 billion due to additional gross floor area leased out and higher rental rates at its malls.

“We remain confident about the company’s prospects for the rest of the year as we continue to expand our rental spaces which complements our existing core and stable end-user housing business. The strong performance of our leasing business came from the addition of gross floor area as well as growth in leasing revenue from our existing assets. Our leasable spaces are mostly retail malls which limits our POGO (Philippine offshore gaming operator) exposure to about 2% of the company’s overall leasing portfolio,” Manuel Paolo A. Villar, president and CEO of Vista Land, said.

Vista Land launched projects with an estimated value of P16 billion during the first half.

AGI income up 4% to P8B in 1st half

ALLIANCE Global Group, Inc. (AGI) reported its attributable income rose 4% to P8.1 billion in the first half, driven by double-digit growth in revenues.

In a statement, AGI said its consolidated revenues jumped 15% to P82.8 billion, as all its major subsidiaries contributed to the “robust topline growth.”

These include its real estate development arm Megaworld Corp., gaming and leisure operator Travellers International Hotel Group, Inc., liquor subsidiary Emperador, Inc. and quick-service restaurants unit Golden Arches Development Corp. (GADC).

Megaworld saw a 16% rise in attributable profit to P8.3 billion. Consolidated revenues increased 18% to P31.7 billion after “sharp increases” in the contributions of its core operating segments, AGI said.

Travellers International, owner and operator of Resorts World Manila (RWM), reported its attributable net income was halved to P844.71 million, even as gross revenues surged 50% to P16.57 billion.

Emperador posted a net income attributable to the parent of P3.25 billion in the first half, up 2% year on year, following higher sales from its international business.

GADC, which holds the exclusive franchise to operate restaurants in the Philippines under the McDonald’s brand, reported a 1% increase in attributable net income to P751 million during the first half.

GADC’s sales revenues increased by 14% to P15.4 billion, “supported by a healthy same-store sales growth of 5.5% and its ongoing new store additions.”

The number of McDonald’s stores stood at 642 by end-June from 620 stores in end-2018. Of these stores, 77 are in the NXTGEN format, which is equipped with a multi-point service system.

“We believe the Group’s strong topline performance was achieved on the back of a highly favorable domestic economy which cushioned the impact of some challenges in the global market,” said Kevin L. Tan, AGI chief executive officer, in a statement.

“However, we note increasing cost pressures, some brought about by the very competitive environment, which have impacted on our margins. Despite this, we remain confident that the collective growth strategies we have put in place — largely through product and market diversification, international pursuits for our spirits business and our ongoing expansion projects — are sound and will soon bear fruit,” he added.

AGI, the investment holding firm of billionaire Andrew L. Tan, has not submitted its financial report for the second quarter.

On Wednesday, shares in AGI fell by 5.81% to P13.30 each. — V.V.Saulon

Yields on term deposits decline following BSP’s policy rate cut

By Mark T. Amoguis, Senior Researcher

YIELDS ON term deposits dropped further on Wednesday as demand increased after the policy rate cuts implemented by the central bank last week.

Bids for the term deposit facility (TDF) reached P137.141 billion on Wednesday from the P123.414 billion received last week, above the P100 billion which the Bangko Sentral ng Pilipinas (BSP) wanted to sell.

Broken down, bids for the eight-day papers totaled P51.252 billion, more than the offered P40 billion and higher than the P37.187 billion recorded last week for a P30-billion auction volume.

Banks asked for yields ranging from 4.25% to 4.55%, a narrower margin compared to last week’s 4.5-4.75%. Bids settled at 4.4389%, lower by 14.55 basis points (bps) from last week’s 4.5844%.

Meanwhile, demand for the 14-day notes amounted to P40.747 billion, above the P30 billion on offer but lower than the P44.427 billion reached last week.

Lenders sought returns ranging from 4.25% to 4.59%, lower than the 4.5-4.71% range last week. The average yield for the tenor stood at 4.4905%, shedding 12.71 bps from the 4.6176% seen last week.

The 28-day deposits were likewise oversubscribed as bids totaled P45.142 billion versus the P30 billion placed on the auction block. This week’s tenders were also higher than P41.8 billion logged previously, although this was for a P20-billion offering.

Accepted yields ranged between 4.25% and 4.6%, below the 4.5%-4.7% margin in the previous auction. The average yield settled at 4.4961%, down 10.72 bps from last week’s 4.6033%.

The TDF is the central bank’s main instrument to mop up excess cash in the financial system and to better guide market interest rates.

The central bank’s Monetary Board last week slashed policy rates by 25 bps. Current interest rates now range from 3.75% to 4.75%.

Markets are still waiting for an additional 25-bp cut this year, as previously signaled by BSP Governor Benjamin E. Diokno.

Meanwhile, the Monetary Board decided not to cut reserve requirement ratio (RRR) of banks last week.

Reserve quotas now stand at 16% for big banks and 6% for thrift banks following the last round of the 200-bp multiphased reduction in all RRRs last July 26.

The BSP chief said on Tuesday that the policy setting body will “pre-announce” its plans to slash banks’ RRR on a quarterly basis.

Cebu Pacific pins growth hopes on cargo business

By Denise A. Valdez, Reporter

CEBU PACIFIC operator Cebu Air, Inc. is looking to ramp up the expansion of its cargo business, banking on the continued growth of the logistics industry.

“The business plan is for the cargo side to grow faster than the overall passenger side. If we succeed in that, then of course, by definition, we will grow (cargo) to a bigger portion of the total (revenue) pie,” Alex B. Reyes, vice-president of Cebu Pacific’s cargo division, told reporters in the launch of its first all-cargo freighter Wednesday.

“We’re just responding to the demand in the market place. If we can supply it, then we’ll grow along with the demand in the market place,” he added.

The Gokongwei-led budget carrier draws its profits from three business segments: passenger, cargo and ancillary services. In the first half, revenues from the passenger segment grew 18% to P33.35 billion, from ancillary services by 23.8% to P8.52 billion, and from cargo by 7% to P2.84 billion.

Mr. Reyes said Cebu Pacific is optimistic on its cargo business, noting that the 7% revenue increase in the past six months shows its growth potential in the region.

He said despite the 5.4% decline in Asia-Pacific demand for air freight as of June — based on data from the International Air Transport Association (IATA) — Cebu Pacific was able to maintain its growth momentum during the period.

The company’s cargo business is still largely supported by the belly capacity of its Airbus fleet, but it is now exploring more opportunities, starting with all-cargo planes.

Cebu Pacific took delivery of its first all-cargo aircraft, a reconfigured passenger ATR 72-500, which it will start deploying next month. The next one is expected to arrive before yearend.

“The ATRs are supposed to supplement the total capacity that we have. But they’re still relatively small compared to the total network capacity,” Mr. Reyes said.

“The freighter is brand new to us in terms of operations. We don’t have experience yet operating an all-cargo aircraft. But this is the first step in that direction,” he added.

The ATRs will initially operate domestically, but the company aims to fly them within the region someday.

Cebu Pacific Vice-President for Commercial Planning Alexander G. Lao said the arrival of more Airbus planes and the operational launch of the ATRs in the remainder of the year prepares the company well for cargo expansion.

“The main portion of our cargo revenue business continues to be driven from the Airbus fleet, because that’s really a higher capacity aircraft in terms of both weight (and) volume, and the associated revenue with it,” he said.

“We believe that by the second half, we’ll actually grow much faster in terms of total seats and total flights than we did in the first half,” he added.

The new ATR freighter will fly out of Manila when it starts operations in September, but will be moved to the Sangley air base once it opens in November.

Cebu Air booked a net income of P7.14 billion in the first half of the year, up 116% due to an increased passenger volume and higher average fares.

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