Arts & Culture (07/10/19)

July 10, 2019 | 12:01 am

Sophia Chizuco at Globe

FOR NEW YORK-based Japanese artist Sophia Chizuco, “the circle is the most peaceful shape.” Thus her new exhibit at the Globe Art Gallery, features works that are filled with circles. Dreamscapes by Sophia Chizuco is organized by Hiraya Gallery in partnership with Globe Art Gallery. The opening reception will be on July 11, and will run until July 30, at the Globe Tower, 32^nd St. corner 7^th Ave., Bonifacio Global City, Taguig.

Jonathan Ching at Silverlens

SILVERLENS presents They Might Be Giants, an exhibition of six new large-scale paintings by Jonathan Ching. His third exhibition with the gallery, the elements seen in the streets of Manila where Ching grew up are the starting point of this suite of paintings, with the eponymous piece They Might Be Giants as one of the largest works the artist has made to date. Previous exhibitions in Silverlens were Sputnik Dreams (2013) and elsewhere (2015). The exhibit opens on July 13. Also opening that day is Saturation Imbalance, an exhibit of works by Luis Lorenzana. Both exhibits run until Aug. 10 at Silverlens, 2263 Don Chino Roces Ave. Ext., Makati City.

Gov’t infrastructure spending declines in first five months after budget delay, despite recovery in May

July 10, 2019 | 12:00 am

How PSEi member stocks performed — July 9, 2019

July 10, 2019 | 12:00 am

Here’s a quick glance at how PSEi stocks fared on Tuesday, July 9, 2019.

CoA finds San Juan business tax undercollection of P736-M

July 9, 2019 | 10:04 pm

THE Commission on Audit (CoA) said San Juan City failed to inspect the books of eight top taxpayers in 2017 and 2018, resulting in the undercollection of business taxes worth about P736 million.

According to CoA’s 2018 audit report, the eight taxpayers were identified as Puregold Price Club, Inc.; Ortigas & Co. LP; Motor Image Pilipinas, Inc.; Motor Image Manila, Inc., Techtron Systems Corp.; Colinas Verdes Hospital Managers Corp.; Unimart, Inc.; and Integrated Computer Systems, Inc.

“The City could have collected more business tax had the City Treasury Department (CTD) prioritized conducting examination of books of account of those large businesses,” CoA said.

CoA added that a CTD official cited difficulties in obtaining audited financial statements, “especially of those large business taxpayers, in the ‘I View’ Program of the SEC (Securities and Exchange Commission).”

It added that the city was only able to inspect accounts of “mid-range business taxpayers.”

CoA recommended that the city’s treasury department seek assistance from the SEC and Bureau of Internal Revenue in gathering financial information to determine gross sales levels being declared by business owners.

In the report, CoA noted that the city treasurer said during the exit conference that the CTD examination team has gained access to the SEC I-View facility, but “the data available therein are those covering (calendar year) 2017 and prior years only.” — Vince Angelo C. Ferreras

Monetary Board 2018 foreign loan approvals up 111% at 7.3B

July 9, 2019 | 10:03 pm

THE Bangko Sentral ng Pilipinas (BSP)’ Monetary Board approved a total of $7.355 billion worth of public sector loans to fund development projects in 2018, up 111% from a year earlier, the central bank said Tuesday.

“These public sector borrowings will fund projects on transport connectivity (roads, railways, port and airport infrastructure), irrigation and agriculture development, flood management, and the reconstruction and development of Marawi City,” the BSP said in a statement.

The public sector loans included $3.602 billion worth of bonds, $2.853 billion for 12 projects and $900 million for three programs.

According to BSP, out of the total approved public sector loans for 2018, 18% or $1.36 billion will go to five infrastructure projects under the Build, Build, Build Program — the Metro Manila Subway Project Phase 1 ($941.92 million), Chico River Pump Irrigation Project ($62.09 million), New Cebu International Container Port Project ($172.64 million), New Bohol Airport Construction and Sustainable Environment Protection Project Phase 2 ($39.43 million, and the Cavite Industrial Area Flood Risk Management Project ($143.53 million).

“While public sector loans increased year-on-year, the country’s external debt position remains at prudent levels,” the central bank said.

The BSP noted that outstanding foreign debt stood at $80.4 billion at the end of March, an increase of 1.9% from the previous quarter.

“Despite the rise in external debt, the country’s debt service ratio (DSR) has consistently remained at single-digit levels,” the BSP said, noting that DSR stood at 5.1% in the first quarter, well below the international benchmark of 20-25%.

The ratio measures the adequacy of foreign exchange earnings to meet maturing obligations.

Earlier, the BSP said that the increase in borrowing from overseas was mainly due to the national government’s raising of $1.5 billion from global bonds issues with net availments amounting to $1.8 billion to fund general financing requirements and positive audit adjustments, tempered by the increase in residents’ investments in Philippine debt paper including government bonds issued overseas.

According to the BSP, borrowing from the government amounted to $40.2 billion, up 1.26% from the previous quarter, while external debt by the private sector totaled $40.3 billion, up 2.5% from a quarter earlier.

Major creditors were Japan, which accounted for $14.4 billion; the US with $3.7 billion; the Netherlands with $3.7 billion; and the UK with $3.4 billion.

The BSP also said that the external debt ratio as a proportion of gross national income rose to 20% in the first quarter from 19.9% a quarter earlier.

“The ratio indicates the country’s sustained strong position to service foreign borrowings in the medium to long-term,” the BSP said.

Section 20, Article VII of the 1987 Constitution requires that all foreign loans to be contracted or guaranteed by the government obtain prior approval from the Monetary Board.

All foreign borrowing proposals by the national government, government agencies, and government financial institutions should also be submitted for approval-in-principle by the Monetary Board before actual negotiations start, according to Letter of Instruction No. 158 dated Jan. 21, 1974. — Reicelene Joy N. Ignacio

Health dep’t to require FDA licensing for e-cigarette industry

July 9, 2019 | 10:03 pm

The Department of Health’s Administrative Order 2019-0007 will require a license from the Food and Drug Administration (FDA) to participate in the business. — *BW FILE PHOTO*

THE Department of Health (DoH) said it will require licensing for all makers, sellers and distributors of e-cigarettes and vaporizers (vapes) under the new guidelines covering the sector.

Published Tuesday, DoH Administrative Order (AO) 2019-0007 will require a license from the Food and Drug Administration (FDA) to participate in the business.

The AO calls the sector the Electronic Nicotine and Non-nicotine Delivery Systems (ENDS/ENNDS) industry.

“All establishments engaged in the manufacture, distribution, importation, exportation, sale including online sale, offering for sale, and transfer of ENDS/ENNDS products shall first secure a License to Operate (LTO),” according to the AO.

The AO, signed by Health Secretary Francisco T. Duque III on June 14, also gave the FDA the authority to inspect establishments before and after the issuance of the license.

DoH also added that licensed establishments can subsequently apply for “a product marketing authorization, such as Certificate of Product Registration (CPR) or FDA Electronic Regulation Number (FERN).”

Securing marketing authorizations is also needed before an establishment can manufacture, distribute, import, and export ENDS/ENNDS products.

The FDA said it hopes to ban refills formulated to appeal to young users and will require tamper-resistant packaging and health warnings for refills and devices.

Users are also prohibited from vaping in public, which is allowed only in designated vaping areas.

Trade and Industry Secretary Ramon M. Lopez meanwhile called for more consultation with the industry, which he said has the potential to generate jobs.

“It’s a potential industry that we can consider,” he said, adding that the Department of Trade and Industry (DTI) is interested to hear out the concerns of the sector.

“We are asking (the DoH and FDA to) conduct consultations para ma-address nila (so they can address) the needs of stakeholders,” he said, adding that he has received position papers from tobacco and e-cigarette groups regarding this matter.

“But we are pro health,” Mr. Lopez added, adding: “The industry is a job generator but we are considering (whether or not) if it is a healthy industry.” — Gillian M. Cortez

ERC halves caseload of power co-ops late in paying fees

July 9, 2019 | 10:02 pm

THE Energy Regulatory Commission (ERC) has closed more than two dozen pending cases against electric cooperatives for late or non-payment of supervision and regulation fees.

The commission’s caseload of such violations has thereby been reduced by half.

The ERC’s Item IV of Resolution No. 21, Series of 2007, calls for the payment of supervision and regulation fees by cooperatives.

The fees represent the annual reimbursement of the expenses incurred by the ERC in the supervision of electric utilities, transmission companies and/or in the regulation or fixing of their rates.

“The said fees shall be paid on or before September 30^th of each year with a penalty of fifty per centum in cases of delinquency. Provided, further, that if the fees or any balance thereof are not paid within sixty days from the said date, the penalty shall be increased one per centum for each month of delinquency thereafter,” Item IV states.

The issue for resolution by the commission involve whether or not the electric utilities should be held administratively liable under the guidelines to govern the imposition of administrative sanctions in the form of fines and penalties pursuant to Section 46 of Republic Act No. 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA), as amended.

Also at issue is whether criminal action should be instituted against the utilities’ directors and officers for the non-payment of penalties.

In many of the cases, ERC records showed the utilities paid their remaining penalties before the issuance of their show-cause orders.

In some, the ERC noted that while strict application of its rule holds an electric cooperative administratively liable, the commission, employing its full discretion, found it just and fair to exercise leniency in its judgment.

For instance, compliance within a month from receipt of the show-cause order or merely two days from the lapse of the 15-day period to explain, was taken to mean that the electric utility did not intend to defy the rules and regulations of the ERC.

In some cases, the regulator warned that similar acts in the future “shall be dealt with more severely.”

The termination of the cases was signed by Agnes VST Devanadera, ERC chairperson and chief executive officer. — Victor V. Saulon

Philippines wins seat in UN marine science commission

July 9, 2019 | 10:02 pm

THE PHILIPPINES has been re-appointed to the executive council of a United Nations organization for marine science, the Department of Foreign Affairs (DFA) said.

The Philippines secured by acclamation a seat for a third year in the 40-member International Oceanographic Commission (IOC) Executive Council, which is under the UN Education, Scientific and Cultural Organization (UNESCO).

“As a maritime and archipelagic state located at the center of the world’s marine biodiversity, the Philippines shall continue to contribute to the Commission’s unique role in fostering international cooperation in ocean science and in achieving the 2030 Sustainable Development Agenda, particularly Goal 14 on Life Below Water,” the DFA said in a statement Tuesday.

Goal 14 of the SDG is geared towards the conservation and sustainable use of the oceans, seas and other marine resources.

The term runs to 2021. The election of the Council’s new officers was held on July 3 at the 30^th session of the IOC Assembly at UNESCO Headquarters in Paris.

“Its purpose is to promote international cooperation and to coordinate programmes in research, services and capacity-building, in order to learn more about the nature and resources of the ocean and coastal areas and to apply that knowledge for the improvement of management, sustainable development, the protection of the marine environment, and the decision-making processes of its Member States,” the DFA also said.

The IOC elected as its chair Argentina’s Ariel Hernán Troisi and as its Vice Chairpersons Monika Breuch-Moritz (Germany), Alexander Frolov (Russian Federation), Frederico Antonio Saraiva Nogueira (Brazil), Satheesh Chandra Shenoi (India), and Karim Hilmi (Morocco).

UNESCO, in a statement on July 3 said the Council meets every year to review issues and items from on-going work plans as well as prepare for the IOC Assembly.

Countries that also won a seat in the Council include Canada, France, Greece, Italy, Portugal, Spain, Sweden, Turkey, and the UK. — Charmaine A. Tadalan

BoI sees P414M worth of investment from Cotabato chicken contract-growing deals

July 9, 2019 | 10:01 pm

THE Board of Investments (BoI) said it expects nine procurement tie-ups to generate P414 million in investment after San Miguel Foods, Inc. (SMFI) participated in a business matching exercise in Cotabato Province.

In a statement Tuesday, the BoI said the Procurement Matching Activity and Financing Forum organized in Kidapawan City, Cotabato in May generated opportunities for micro, small and medium enterprise (MSME) poultry raisers to collaborate with SMFI on technology upgrades, marketing and financing.

“During the matching session, nine participants agreed to partner with SMFI. Among the nine, four individuals who are already into poultry growing have expressed their intention to upgrade their poultry facilities. Five other individuals intend to venture into new poultry projects,” it said.

The BoI said SMFI is looking for more partners for its poultry business by tapping cooperatives and overseas Filipino workers, aside from MSMEs, for its “growership program.”

The growership program requires partners to provide SMFI with land, buildings, equipment, water and electricity, security, labor, and farm management while the company provides day-old chicks, feed, vaccines, medicine, technical assistance, laboratory services and payment schemes.

“By partnering with BoI and tapping the MSMEs, the procurement process could ramp up the SMFI dressing plant requirements and improve its efficiency utilization. Meanwhile, the Development Bank of the Philippines (DBP) has also committed to back the financing needs of the MSMEs,” it said.

SMFI is hoping to tap contract growers for its P2.2-billion integrated feed mill plant in Sta. Cruz, Davao del Sur and P1.3-billion dressing plant, which is projected to require around 40,000 chickens per day. — Denise A. Valdez

TESDA, DepEd to harmonize policy for Senior High School technical-vocational program

July 9, 2019 | 10:00 pm

THE Technical Education and Skills Development Authority (TESDA) said it has signed an agreement with the Department of Education (DepEd) to harmonize programs and standards for the technical-vocational education and training program of K-to-12 basic education system.

TESDA and DepEd signed a Memorandum of Understanding (MoU) which will establish a Joint Working Group to ensure that TVET policy is harmonized.

“TESDA and DepEd have assembled a Joint Working Group on Technical-Vocational Education and Training (TVET), comprising five members each from both parties, who will be primarily in charge of the harmonization and complementarity of strategies, policies and programs, consistency and quality assurance of Training Regulations (TRs) and standards, and discussion and resolution of concerns as may be raised by either party concerning TVET,” TESDA said in a statement Tuesday.

TESDA Director-General Isidro S. Lapeña said in a statement that the partnership with the DepEd to strengthen TVET will empower Senior High School (SHS) students in the Technical-Vocational-Livelihood (TVL) track.

“We look forward to working with the Department of Education in building up the TVL track in senior high school from this year onward. We hope that this continuing partnership will result in positive outcomes and will benefit also the future generations of SHS students,” he said.

The group will also be tasked to produce research and data relevant to TVET. — Gillian M. Cortez

FDA orders withdrawal from market of gin brand on high methanol levels

July 9, 2019 | 9:59 pm

THE Food and Drug Administration (FDA) has ordered the recall of all Cosmic Carabao Gin products from the market, after finding that the product contains high levels of methanol.

The FDA issued Advisory 2019-188 on Tuesday which that all Cosmic Carabao Gin still on store shelves are subject to confiscation, and banned further sales.

“In the interest of public protection, the Field Regulatory Operations Office inspectors and Regulatory Enforcement Unit Officers of FDA shall seize and/or confiscate all Cosmic Carabao Gin products in the market. All Local Government Units and Law Enforcement Agencies are requested to ensure that this product is not sold or made available in their localities or areas of jurisdiction,” according to the advisory.

The order follows reports of two women who were hospitalized for alleged methanol poisoning after consuming the drink, which resulted in the death of one of them.

According to the FDA, non-toxic levels of methanol are usually found in both alcoholic and non-alcoholic fermented drinks as a result of natural fermentation. Methanol is also used in household products and gasoline.

“Higher concentrations of methanol in alcoholic drinks can happen when methanol is deliberately added to alcoholic drinks. Signs and symptoms of methanol poisoning include headaches, vomiting, abdominal pain, hyperventilation, and a feeling of breathlessness. Blindness can also happen in severe cases,” according to the advisory, which was signed by FDA Officer-in-Charge Rolando Enrique D. Domingo.

The brand does not have an FDA registration. The FDA warned consumers to avoid purchasing food and drink products that are not FDA approved. — Gillian M. Cortez

Hedge funds chart course through ‘IMO 2020’ storm

July 9, 2019 | 9:59 pm

LONDON — Shipping companies, refineries, freight derivatives or diesel cracks? Investment funds are placing their bets as the shipping sector prepares for new rules limiting sulphur emissions from ocean-going vessels.

Ever since the International Maritime Organization (IMO) said the maximum sulphur content in marine fuel must drop to 0.5% from 3.5% from 2020, shipping companies have been wrestling with how to comply without driving up costs at an uncertain time for global trade.

Some shipowners are installing exhaust cleaning systems known as scrubbers so they can continue to use high-sulphur fuel and some are switching to low-sulphur marine diesel, but all expect a period of turbulence when the “IMO 2020” rules come in.

Investors in turn are coming up with strategies and launching funds with exposure to parts of the oil and shipping industries they expect to benefit from the new emissions caps.

John Kartsonas, managing partner of Breakwave Advisors, said while broader concerns about trade have dented investors’ views on shipping, IMO 2020 was likely to drive freight rates higher.

Breakwave launched an exchange-traded fund last year to invest in dry bulk freight derivatives, hoping to benefit from IMO 2020.

“Rarely you see such a potentially massive disruption,” said Kartsonas. “Delays, a reduced active fleet supply, slow steaming and port congestion can push freight rates to decade highs, and beyond.”

The Baltic Exchange’s main sea freight index, which tracks rates for ships carrying dry bulk commodities, slumped after the financial crisis to 700 points from a record 11,793 points in 2008. It’s now about 1,500 points.

Dry bulk ships make up more than a fifth of the world’s ocean-going vessels and many are among the most polluting ships.

DERIVATIVE BY DESIGN
At hedge fund Svelland Capital in London, one strategy is to focus on petroleum products likely to be affected by the rules.

“IMO 2020, together with the ballast water treatment, will turn shipping upside down and create supply shock,” chief investment officer Tor Svelland said.

Svelland Capital is launching an “IMO direct exposure fund” in July aimed at investors who want to take positions based on IMO 2020, but are less familiar with oil derivatives.

“This is the largest regulatory change in the oil space ever and it will have a massive effect far outside of shipping,” said the fund’s portfolio manager Kenneth Tveter.

For now, there is no consensus on whether there will be enough low-sulphur fuel to meet demand come 2020. Of the roughly 60,000 vessels worldwide, industry consultants estimate only 3% to 5% are likely to have scrubbers by 2020.

It is also unclear what will happen to demand for high-sulphur fuel — all of which means the price gaps between different fuel grades, as well as the different types of crude used to make them, are likely to change.

“You can try and pick winners in the shipping segment of the equity markets, but to get a pure play you need the derivatives market,” Tveter said. “The new fund will look at all the parts of refining that will be affected by the new regulations.

In another sign of the impact of IMO 2020, China said on July 4 that it planned to launch a futures contract for low-sulphur fuel oil by the end of the year.

REFINING REFINING
Dutch asset manager Robeco is also focusing on fuel, but it’s investing in oil refineries that are well-placed to produce large quantities of low-sulphur diesel.

“We are invested in refiners since earlier this year and this has been one of the drivers for that investment,” said Fabiana Fedeli, global head of fundamental equities.

Robeco is selecting so-called complex refineries, plants with lots of units that can turn low-value fuel oil into higher-value products such as distillates, octane and low-sulphur fuel.

Fedeli said concerns about disruptions to global trade had weighed on refining margins and related stocks this year, but IMO 2020 could change that.

“We expect that the impact on refinery margins will become tangible from late Q3 2019 when ships are likely to begin shifting to compliant fuels,” she said. “Interestingly, this is still not reflected in diesel crack futures.”

Alistair Way, head of emerging market equities at UK asset manager Aviva Investors, said refineries that have invested to produce more compliant fuel would benefit.He said Asian refiners such as Thai Oil and S-Oil, were well placed as they produced a bigger than average proportion of middle distillates and had less exposure to high-sulphur fuels.

Hedge fund CF Partners in London is focusing on price gaps between different crudes. It expects sweet crude with higher levels of distillates such as Nigeria’s Bonny Light or U.S. shale to be more in vogue than heavier, sour crude.

SCRUB THAT
CF Partners is also getting exposure to US-flagged ships known as Jones Act carriers after a law requiring goods shipped between US ports to be transported in US vessels.

Elvis Pellumbi, manager at CF Partners, said it was buying stocks in shipping firms such as Overseas Shipholding Group. Pellumbi’s fund has $400 million under management, of which 30 percent is investments related to IMO 2020.

George Kaknis, portfolio manager at hedge fund LNG Capital, said he was looking at shipping firms such as American Shipping Company.

“The more shale is produced out of the US, the more these guys are kept busy and the more the day rates go up,” he said.

According to data from Symmetric, which tracks investment funds, hedge fund ownership of some shipping stocks rose in the first quarter. Their ownership of Nordic American Tanker rose to 12% from 8% in the fourth quarter last year, while hedge fund stakes in DryShip rose to 13% from 5%.

Other shipping firms investors said they were looking at with IMO 2020 in mind include Scorpio Tankers, Navios Maritime Acquisition, DHT, Frontline and Euronav.

While some shipowners have installed cleaning systems, others see them as potentially high risk as some ports have already banned or restricted scrubbers that pump waste water into the sea, and more may follow suit.

Some investors say the upfront cost of installing scrubbers — about $2 million to $3 million each — also means it would take longer for them to pay off, especially if the price gap between low and high-sulphur fuels narrows.

“We don’t believe that those who have invested in scrubbers will achieve the amazing returns they have been advertising,” said Pellumbi at CF Partners. “Refiners have/are adapting their production slates to produce more of the right product.” — Reuters