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A year of recovering lost momentum

Yearend review: Motoring perspectives

Vehicle sales are often taken as an effective indicator of a country’s economic health. This is because new car sales are a sign of consumer economic confidence, that more Filipinos are willing to commit to lease or loan payments for years into the future.

For most of the decade, it was going well for the Philippine automotive industry. Things hit a speedbump in 2018, however, when vehicle sales dropped for the first time in seven years as the industry reeled amid imposition of higher automobile taxes under the Tax Reform for Acceleration and Inclusion law, and the acceleration of headline inflation to the highest in recent history.

A joint report of the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and the Truck Manufacturers Association (TMA) showed that total sales last year fell 16% to 357,410 units last year from 425,673 vehicles in 2017, the first drop for the country since 2011 when vehicle sales also dropped by 16% to 141,616 units.

So 2019 is shaping up to be a critical year to see whether the country’s automotive sector can pick its momentum back up, or whether it is seeing the start of a downtrend.

Looking back on 2019

Credit and market intelligence experts Fitch Solutions predicted that 2019 would see a mild recovery, as it forecast sales to rise by 3.2% to 120,000 units in a report published in December 2018.

“While we expect households and businesses will have adjusted to the higher vehicle excise taxes imposed under the Philippines’ Tax Reform for Acceleration and Inclusion (TRAIN) law in 2019, we believe that unfavorable economic conditions in the form of high interest rates, elevated inflation, and a still weak peso will see car sales remain under pressure,” Fitch had said.

The firm added that over the full 2019-2027 forecast period, passenger car sales in the Philippines will average annual growth of 6.5%, to around 205,000 units by the end of 2027.

It did not get off to a great start, as vehicle sales slid 15% in January from 2018 due to industry-wide reductions across different categories, according to CAMPI and TMA’s joint data. Total sales for the first month of this year fell to 26,888 units from 31,645 sold in January 2018, and all segments from passenger cars to commercial vehicles saw double-digit drops in sales.

However, automotive sales have been steadily growing since then, except for a seasonal dip in August. In October, based on the latest available data released by CAMPI and TMA, the industry saw continued recovery and recorded its “highest monthly sales” so far this year.

Data jointly released by the groups showed that overall sales rose 3.8% to 34,397 units in October from 33,150 vehicles in the same month last year, and by 8.1% from 31,820 units sold in September.

CAMPI President Rommel R. Gutierrez described the latest growth clip as a “much-needed boost” for the industry to hit its target for the year. “The current market demand for vehicles along with creative and aggressive sales promotion efforts give us a positive outlook as we aim to sustain the growth trend for the remaining months of the year,” he said in a statement. “We remain positive that our industry target for the end of the year will be achieved as all brands remain committed to providing innovative mobility solutions to the Filipino people.”

Mr. Gutierrez last year projected a 10% sales growth for full-year 2019. Year-to-date, both groups have so far sold 301,761 units, 2.53% more than the 294,311 vehicles sold in 2018.

Broken down, this year’s October sales of passenger cars saw a 6.8% bump to 10,083 vehicles from 9,444 a year earlier. Commercial vehicles — which accounted for 70.69% of the total — went up by 2.6% to 24,314 units from 23,706 a year earlier. Asian Utility Vehicle sales jumped 40.2% to 4,780 vehicles from 3,409 units, while light commercial vehicle sales slipped 3.3% to 18,271 vehicles from 18,896 units.

Year-to-date, commercial vehicle sales went up 3.8% to 211,361 units, while passenger car sales dropped 0.2% to 90,400 units.

Toyota Motors Philippines Corp. (TMP) remained the industry’s biggest player with 47.69% of market share, selling 16,403 vehicles in October or 9.9% more than the 14,927 units sold a year ago. Mitsubishi Motors Philippines Corp. followed with a 16.01% market share, even as sales dropped by 8.3% to 5,508 units from 6,004 a year ago.

Nissan Philippines held the third spot with 10.75% market share as vehicle slipped 0.2% to 3,697 in October from 3,703, while Suzuki Philippines, Inc. followed with a 6.41% market share, growing sales by 11.8% to 2,206 units from 1,974.

Ford Motor Company Phils., Inc. followed with 4.78% market share, with sales up 1.1% to 1,643 from 1,625.

However, even as TMP retained the top spot, the company revealed that it was not confident it will achieve its annual sales target of 165,000 units.

A month earlier in September, TMP President Satoru Suzuki told the media that he is not confident about reaching the annual car sales target due to challenges still present in the country’s economic environment.

TMP First Vice-President Rommel Gutierrez, however, added that sales might pick up in the tail end of the year, as this is usually when consumers are most confident about spending.

The same positive outlook seems to gain some bearing among other players in the industry.

Hyundai Asia Resources, Inc. (HARI), the official distributor of Hyundai vehicles in the Philippines, while it reported a six percent drop in sales in the first 10 months of 2019, remains confident in the company’s performance in the coming months.

“While we don’t compete in some segments of the market (e.g. pickups), our volumes remain strong, underpinned by the quality of our vehicles and our focus on excellent after-sales services. Our models per segment remain competitive and this bodes well for the Hyundai brand in the Philippines,” HARI President and CEO Ma. Fe Perez-Agudo said.

Most of the company’s commercial vehicle sales are led by Hyundai buses such as Hyundai County, but after the recent rollout of its Class 2 Modern Jeepney, HARI is optimistic.

“With the transport department’s support and high demand from transport cooperatives, our modern jeepneys will contribute to our growth over the medium term. We are excited to give Filipino commuters the new King of the Road,” Ms. Agudo said.

“Combined with the acceleration of the government’s infrastructure projects, our CV business is poised to expand and provide fresh avenues of growth,” she said. — Bjorn Biel M. Beltran

2019’s notable rides

There was a pretty good mix of vehicles introduced in the country this year. There are some that exude sophisticated styling with superb exterior, spectacular cabin quality, and excellent ride comfort. There are also newly arrived autos that are more likely performance-oriented, delivering strong performance numbers, great turbocharged engines, and sharp handling, among others. Some of the vehicles, otherwise, are a combination of these impressive qualities.

Despite some uncertainties in the local automotive market this year, one thing is for sure, there is a handful of worthwhile automotive arrivals in the country to choose from. Here, in alphabetical order, are some of them:

Ford Everest

Last August, Ford Philippines launched a new and refreshed version of its popular mid-sized sport utility vehicle (SUV) Everest, coming up with improved capability, safety, and efficiency, as well as notable enhancements to its engine, transmission, and driver-assist technologies.

This Ford Everest is powered by the new-generation 2.0L Bi-Turbo diesel engine that delivers 213PS and 500 Nm of torque, and 2.0L Turbo diesel engine that delivers 180PS and 420 Nm of torque. It offers better fuel efficiency and acceleration with the advanced 10-speed automatic transmission.

Engineered with the driver and passengers in mind, the new Everest offers smarter and safer features. Among others, it has a smart keyless entry and push-start button that gives users quicker engine starts, improved convenience and ease of entry and exit from the vehicle; a hands-free liftgate feature that automatically opens and closes the liftgate; and an Active Park Assist feature that helps drivers find parallel parking spaces and steers the vehicle to a parking slot, with the driver’s hands off the steering wheel.

Honda Accord

The all-new 10th Generation Honda Accord was also unveiled in the local market this year. This Honda’s luxury sedan offers a premium and bolder design, a more powerful engine, and the advanced Honda SENSING safety technology.

Powering the Honda Accord is a new 1.5L VTEC Turbo engine developed under Earth Dreams Technology. This new engine puts out a maximum power output of 190PS at 5,500 rpm and 243 Nm of torque from 1,500-5,500 rpm. Its power is transmitted through a Continuously Variable Transmission (CVT) developed based on Honda’s Earth Dreams Technology. Combining these features under the hood of Honda Accord results in responsive performance, acceleration and efficient fuel economy.

The new Honda Accord now also sports a new eight-inch display audio system, which is one of the most advanced systems offered by Honda to date. Aside from a simplified menu structure and customizable shortcuts for commonly used features and applications, this intuitive and easy-to-use system also comes with navigation and supports Apple CarPlay and Android Auto for a more intuitive smartphone connectivity.

Hyundai Palisade

Competing with the likes of the Ford Explorer, Mazda CX-9, and GAC GS8, Hyundai Palisade is a strikingly styled premium SUV recognized for its refined visual design breakthroughs, state-of-the-art technology and safety features.

A quiet ride, powerful driving performance, and excellent fuel efficiency are guaranteed with Palisade’s R2.2 diesel engine and Atkinson-cycle 3.8L gasoline engine. The eight-speed automatic transmission also delivers a smooth and seamless driving experience, according to its website.

The Hyundai Palisade is engineered with a nine airbag system and active safety system equipped with intelligent driving safety technology. It also comes with advanced features from the backseat conversation and sleep functions to the rearview monitor and active noise-cancelling function. Moreover, it is equipped with blind view monitor, USB ports for second- and third-row passengers, and three-zone independent-control fully automatic air conditioning.

Kia Stinger

Kia Philippines also debuted this year one of its most powerful offerings — the all-new Stinger. This visionary product of the Kia GT Concept showcases a perfect balance of ride, handling, comfort, and impressive powertrain.

The all-new Stinger is powered by a 3.3L V6 Twin Turbocharged Gasoline Engine Direct Injection Dual CVVT. Its maximum power output is 370PS at 6,000 rpm, while its maximum torque is 510 Nm at 1,300-4,500 rpm. Acceleration from 0-100 kilometers per hour (kph) is at 4.9 seconds with a top speed of 270 kph. It is available in RWD drivetrain and mated to an eight-speed automatic transmission.

The Kia Stinger doesn’t fall short on advanced technology features. It has electronically controlled Dynamic Suspension integrated with Drive Mode Select, which adjusts steering boost, shift points, throttle and suspension mapping. Braking is powered by 4-Piston Brembo Caliper Discs on the Front and Rear. Moreover, Dynamic Torque Vectoring system comes standard.

Mitsubishi Strada

As early as January, Mitsubishi Motors Philippines Corp. (MMPC) introduced in the country the heavily revised version of the Strada, which is considered as a key model of Mitsubishi Motors in the competitive pickup truck market. It is designed not only to be more durable, reliable and capable, but also to deliver a more comfortable ride.

The new Strada is refined to deliver an unmatched performance with its 2.4L 4 In-line 16 Valve DOHC Clean Diesel with Variable Geometry Turbo and MIVEC (Mitsubishi Innovative Valve timing Electronic Control System) 4N15 that gives a maximum output of 181PS at 3,500 rpm and a maximum torque of 430 Nm at 2,500 rpm.

As far as safety is concern, the new Strada hosts an array of passive and advanced active safety features. It carries the proprietary Mitsubishi Motors’ RISE body (Reinforced Impact Safety Evolution) that absorbs the impact of collision, and retains the current model high durability, high reliability ladder-type frame, and high-impact safety cabin structure. The Active Stability Traction Control (ASTC), Hill Start Assist (HSA) and Trailer Stability Assist (TSA) are now standard in all variants.

Toyota GR Supra

Toyota Motor Philippines (TMP) Corp. also marked another history in the local automotive scene as it brought the all-new Toyota GR Supra in the Philippine shores. This first-ever Toyota Supra to be retailed in the county is the modern evolution of its predecessors. It inherits key styling features from both the Supra A80 and the Toyota 2000 GT.

The local variant of the Toyota GR Supra is powered by a twin-scroll turbocharged, in-line six-cylinder engine that produces a maximum output of 335 hp and 500 Nm of torque. It comes exclusively in 3.0L displacement and eight-speed automatic transmission.

The chassis and body frame of the all-new Toyota GR Supra are masterfully crafted to enjoy a 50:50 front-rear weight distribution, which is crucial in achieving optimum cornering performance. Its front wheels are equipped with double-joint type MacPherson Strut, while its rear wheels come with Multi-Link suspension. It also features a limited slip differential and ventilated disc brakes. — Mark Louis F. Ferrolino

Steady progress in the automotive industry

Yearend review: Motoring perspectives

As the automotive industry recovered from the challenges of the previous year and have reached stable growth with new and upgraded releases this 2019, insights have further shed light on the activity of car makers and the choices of the driving public.

Consolidating figures from distributor groups Association of Vehicle Importers and Distributors (AVID), Chamber of Automotive Manufacturers of the Philippines (CAMPI), and Truck Manufacturers Association (TMA), AutoIndustriya.com reported last July that the Philippine automotive industry accumulated a total of 195,057 units sold for the first half of the year.

This meant an improved performance by 1.87% compared to the same period last year, which tallied 191,470 units.

Commercial vehicles — which include car types like sport utility vehicles, light trucks, and bus trucks — still took the large share of the market with 131,708 units. Passenger vehicles, on the other hand, had 63,349 units.

Among the leading players in the market, AutoIndustriya continued, Toyota Motor Philippines remained the top manufacturer with 37.49% of total units sold in the January-to-May period. This was followed by Mitsubishi Motors with 15.68% of the units; Nissan Philippines, Inc. with a 10.8% share; Hyundai Philippines with 9.05%; and Ford Motor Company Philippines, Inc. at 5.76%.

Meanwhile, as the year nearly wraps up, auto sales kept on a positive trend albeit a momentary decline. The sales have been growing since February. However, after recovering in June with a year-on-year increase of 8.7%, the data jointly gathered by CAMPI and TMA recorded a “seasonal” drop of 2.4% (29,599) last August, as reported by BusinessWorld. Sales recovered the following month with a 2.3% y-o-y growth to 31,820 units, as well as a 7.5% increase from total sales in August.

So far, the data continue to reflect a steady growth as overall sales rose by 8.1% to 34,397 units last October.

CAMPI President Rommel R. Gutierrez is optimistic about this sustained growth. “We remain positive that our industry target for the end of the year will be achieved as all brands remain committed to provide innovative mobility solutions to the Filipino people,” he was quoted as saying in a statement.

In relation to innovative solutions, it must have been apparent that connected cars — vehicles that are connected to the internet through a mobile data stream — have started appealing to the driving market.

“Connectivity has been a key enabler for automakers like Ford to offer greater level of comfort, convenience and safety to car owners,” said Linus Mattson, infotainment supervisor of Ford Asia Pacific, in a report by Newsbytes.ph.

These connected automobiles have expanded their capacities to the point of giving access right at the fingertips of motorists holding their smartphones. And such advancements have come just in time, as recent research by Euromonitor International suggests.

“Strong economic prospects and government policies seeking to boost the performance of the automobile industry have created a positive platform for the further development of in-car entertainment in the Philippines,” the global market research company wrote. “The domestic economy is projected to grow substantially in the coming years thanks to investment from foreign companies and rising government and consumer spending.”

Online shopping and auto loans

Aside from the monthly stream of data on car sales, there were further insights regarding the automotive industry mined by local online automotive marketplace AutoDeal in its quarterly Philippine Automotive Industry Report.

The latest release of the report noted the consumers’ “heightened interest in several Chinese brands such as MG, Foton, BAIC, GAC, and JAC.”

“This has been particularly evident in the subcompact crossover segment where models like the MG ZS and the JAC S2 have given more established household brands a run for their money,” Christopher Franks, chief operating officer of AutoDeal, wrote in the report. “With competitive price points, these nameplates have struck at the heart of a segment that is still recovering from a substantial drop in consumer interest following last year’s increase in excise taxes.”

Furthermore, he noted the prominence of online marketplaces as “one of the most valuable research commodities for consumers.”

Analyzing the volume of pages on AutoDeal visited by consumers before making a purchase, the report found out that “consumers with a single interest only navigated to three pages before making a purchase whereby in comparison, consumers who were interested in multiple brands visited 60”.

In terms of leads, the Asian Utility Vehicle & Multi-Purpose Vehicle, subcompact car, and light pick up truck are the leading market segments. Among automakers, Toyota remains the most inquired brand with more than 30% of total inquiries. This was followed by Honda, Mitsubishi, Suzuki, Nissan, Ford, Isuzu, and Hyundai.

Another interesting trend within the year was a finding by India-based market intelligence analysis firm Ken Research about auto loans. The research stated that “it is expected that by the end of 2023, outstanding auto loans in the Philippines could reach P4.7 trillion.”

What makes this spike in loans possible are a mix of factors. An easy access to vehicles through loans offered by banks and dealers have been observed, with streamlined processes in applying for such. Add to that an increase in the middle-class sector who have “higher purchasing power.”

“Credit disbursement will increase as more people become part of the banking system. Both banks and nonbanking institutions are targeting these segments in the most untapped areas, which will result in a steady increase in auto loan disbursements for these segments,” Ken Research was quoted as stating in a report by Visor. — Adrian Paul B. Conoza

SMHCC President Elizabeth T. Sy: Driven by passion and an enterprising vision

By Mark Louis F. Ferrolino, Special Features Writer

In the local business scene, the name Elizabeth T. Sy, together with her other five siblings, is often associated with their late father Henry T. Sy, Sr. Over the years, however, Ms. Sy has proven that she is more than just an heir of the well-loved SM founder. She has carved her own path to success with her burning passion and an enterprising vision.

From being an assistant at her father’s first hotel business, the Manila Royal Hotel in Quiapo, Manila, Ms. Sy now sits at the helm of SM Hotels and Conventions Corp. (SMHCC), the hotel and convention arm of the SM Group.

Under Ms. Sy’s leadership, SMHCC has grown tremendously with a combined inventory of 1,960 rooms and over 38,000 square meters of leasable convention space. From only two hotels and one convention center since its inception in 2008, the SMHCC has now a total of eight hotels and five convention centers, spread across the archipelago.

The list of hotels in its portfolio include the 261-room Taal Vista Hotel, a heritage hotel located in Tagaytay City; the 400-room upper upscale Radisson Blu Hotel in Cebu; the 154-room Pico Sands Hotel in Hamilo Coast; the 204-room Park Inn by Radisson in Davao; the 155-room Park Inn by Radisson in Clark in Pampanga; the 200-room Park Inn by Radisson in Iloilo; the 238-room Park Inn by Radisson in North EDSA; and the 348-guestroom deluxe 5-star hotel Conrad Manila in the Mall of Asia Complex.

The SMHCC has also set the bar in upscale convention facilities with its SMX Convention Centers and trade halls located in Manila, Davao, Taguig, Bacolod and Olongapo. These facilities are ideal for large-scale institutional events, town hall meetings, weddings, exhibits, and concerts.

As the chairperson and president of SMHCC, Ms. Sy adopts an empathetic approach in leadership. She lends a listening ear, an open mind, and a wide understanding toward her subordinates, guiding them to realize their purpose and value in the workplace while inspiring them to be better.

Ms. Sy’s intent as the head of his team is clear — unite and not divide, find remedies and not faults, and influence one another in a positive way. With such kind of leadership, Ms. Sy’s subordinates remain empowered and continuously contribute to the success of SMHCC as a whole.

By helping shape the country’s tourism and hospitality industry, it is not surprising that Ms. Sy, along with the properties under SMHCC, has been recognized repeatedly by different institutions and award-giving bodies.

Last August, Ms. Sy received the SKAL International Tourism Personality Award for the Hotel Category. SKAL is a professional organization composed of tourism leaders around the world whose aim is to promote global tourism and camaraderie. The awards are given to individuals who unselfishly offered their services to further promote and develop the tourism industry.   

The Conrad Manila, on the other hand, was awarded the Hotel Suite Asia Pacific 2019 winner at the International Hotel and Property Awards for its majestic Presidential Suite. This recent accolade is only one of the many affirmations to SMHCC’s unquestionable integrity, foresight, and quest for success.

In fact, Ms. Sy meticulously scrutinized every detail of this Presidential Suite that turned into such masterpiece. She, in particular, ensured that only the best team would be behind the development of the stately suite, especially its designer who was interior architect Michael Fiebrich.

As an avid art enthusiast, Ms. Sy also commissioned no less than former Cultural Center of the Philippines President Nestor Jardin to curate art pieces, including the works of Filipino artists Sam Penaso, Nestor Vinluan, Jonathan Olazo, and Alain Hablo. The presence of this tasteful collection exudes Filipino luxury at its finest.

Meanwhile, aside from being the pillar behind SMHCC’s robust growth, Ms. Sy is also instrumental to the development of other institutions. She is a member of the Executive Committee and Trust Committee of the Board of Directors of BDO Private Bank, Inc.; the chairman of Nazareth School of National University; and advisor to the board of SM Investments Corporation. Moreover, she is an active board of trustee of the World Wildlife Fund, and the designated Honorary Consul General of Iceland in the Philippines.

In the next five years, the SMHCC, under Ms. Sy’s leadership, aims to double its portfolio across the country by building and operating hotels and convention centers that take pride in Filipino warmth and hospitality.

Embracing innovation and helping others

MPCTI President and CEO Derrick Ang Tan shares his secrets to success

By Bjorn Biel M. Beltran, Special Features Writer

Since he was young, Derrick Ang Tan had a knack for finding problems. He had an inquisitive, entrepreneurial mind, and he had always wanted to seek solutions for the everyday problems he encountered throughout his life.

At the time, the news was dominated by titan industrialists such as the late John Gokongwei and business magnate Lucio Tan. As an aspiring entrepreneur, Mr. Tan wanted to emulate them.

“When I was younger, my focus really was more on profit. So the reason I started this business was profit and so it was more of me, me, me,” he told BusinessWorld in an interview.

Mr. Tan started his business in 2001 as more of a distributor of various goods and products, working with that notion of success.

Years later, Mr. Tan is now the president and chief executive officer of Magna Prime Chemical Technologies, Inc. (MPCTI)  along with various leadership roles in Philippine manufacturing and construction industry groups like the Philippine Dry Mix Mortar Association and the Philippine Association of Paint Manufacturers.

Mr. Tan admitted that he would never have gotten this far if he had never changed his mind-set. Starting out as a selfish businessman who was determined to make his wealth, he realized there was more to business than the selfish drive to make money.

“When architects are your end-customers, they will ask you for a product like this or that. So we came in and adjusted, we started hearing them out and listening to their needs. It was only when we did this that we experienced a kind of a multiplier effect, where we saw exponential growth,” he said.

“It was a hard realization for me that I had it all wrong. When doing business, it was never about myself,” Mr. Tan said.

Necessity is the mother of all invention

Listening to their customers and end-users, Mr. Tan found a use for his talent for seeking solutions to everyday problems. Magna Prime transitioned into the construction chemicals business and has since built a reputation of innovation and a customer-centric strategy for growth.

Mr. Tan with his MPCTI Technical team

The company, Mr. Tan said, had four core pillars of innovation. The first was to have a listening ear for all of the problems of their customers and find opportunities providing solutions to those problems. When there are no obvious problems, the second part of Magna Prime’s strategy is to send in technical experts to examine how their products are used in the workplace and find the areas where things might be improved.

Another method of keeping in touch with the issues of the industry is through monitoring innovations abroad and find ways to incorporate new discoveries into the Philippine setting. Lastly, Magna Prime invests into research and development to find new opportunities.

“What I say to our employees is if you’re not helping our customers, then we’re not going to sell anything. Selling is just the byproduct of us helping others,” Mr. Tan said.

“If you want to be successful, you have to help others. If you’re a salesman or saleswoman, you have to help your customers. If you are an employee, you have to help your boss and your company for you to get promoted. In short, it is always about others. So if your business is not about helping others, if it’s not about providing for the needs of others, then it doesn’t really have meaning,” he shared.

“Because construction chemicals as an industry is dominated mostly by multinational companies, we’re happy to say that we’re one local company that is now competing with these big multinationals,” he added.

The vision and mission for Mr. Tan is to bridge the innovation gap between the Philippines and more developed countries like the United States and China, and spark a new era of innovation and discovery in the country.

Mr. Tan with his wife Sabrina and their two sons Jacob and Noah

Magna Prime is pursuing this through strengthening its foundation on which the company reaches out and communicates with its customers through digital platforms, social media, through training workshops and the technical hubs it has established all over the country.

Currently, Magna Prime has technical hubs in CW Home Ortigas Pasig, CW Home Commonwealth QC, CW Home Sta. Rosa, Laguna, CW Home Balintawak, QC, CW Home Alabang, Muntinlupa, Trust Hardware Buhangin, Cebu Home Banilad, Mandaue, MC Home Ortigas, Pasig, MC Home The Fort Taguig, MC Home San Fernando, Pampanga, and Olivan Hardware, Naga City.

“In this sense, if you’re able to set up all these channels in educating people, then it would be easy for us to teach them about new innovations in the space,” Mr. Tan said.

“Our core mission really is helping educate Filipinos on what construction chemicals are and what are the advantages of using them to construct more resilient buildings.”

Looking forward, Mr. Tan identified the current demand for more sustainable cities and green buildings as areas for further innovation. He hopes that a generation of future innovators can find the most significant problems in the future, and find their own opportunities in coming up with new solutions.

“Filipinos are very creative. They have to focus on new unique products that solve new problems. Invention will never end. There’s always a need for it,” he said.

“To be a good inventor, you need to be a good listener and have an eye for opportunities. Every problem is a gold mine,” Mr. Tan said.

 

Changing perks could halve jobs — SEIPI

ELECTRONICS MANUFACTURERS — whose products make up more than half of the country’s goods sold abroad — expect 50% job loss by 2026 if the current version of the bill that overhauls tax incentives was passed, Semiconductor and Electronics Industries in the Philippines, Inc. (SEIPI) President Danilo C. Lachica said.

Mr. Lachica told reporters on the sidelines of a forum on Tuesday that the industry projects 38,000 annual employment losses between 2022 to 2026 — totaling some 190,000 positions — cutting down half of the 380,000 direct jobs in electronics.

He said these job losses are probable “if the version of CITIRA that will be passed doesn’t address the concerns of the industry.”

SEIPI in a position paper last October offered recommendations for the proposed Corporate Income Tax and Incentives Rationalization Act (CITIRA), including retention of five percent tax on gross income earned (GIE) in lieu of national and local taxes, after expiration of the income tax holiday for existing investors who meet performance criteria.

The group also recommended the increase of GIE tax to seven percent from five percent for new and expansion projects, as well as to remove the five-year cap on import duty exemption of equipment, parts and materials.

SEIPI as well as the Philippine Economic Zone Authority have pressed for a longer 10- to 15-year period for companies now enjoying tax perks to shift to the new incentive scheme, compared to the two to five years in the CITIRA bill approved on Sept. 13 by the House of Representatives.

The same measure also removes the five percent GIE tax that kicks in after the income tax holiday expires.

It also slashes the regular corporate income tax to 20% in 10 years from 30% currently, which is the highest among major Asian economies.

Mr. Lachica explained that job losses begin in 2022 due to the nature of the industry. “The way our industry works, we will continue to run the products until they are obsoleted. But if we don’t have expansions, if the multinationals decide to locate elsewhere, then once the products are obsoleted the factory will shut down,” he said.

The industry provides employment, including indirectly, for at least three million people.

CITIRA’s principal author, Albay 2nd District Rep. Jose Maria Clemente S. Salceda who heads the House Ways and Means Committee, in a mobile message on Sunday said he wants to see the basis for SEIPI’s job-loss claim.

Asked on SEIPI’s proposed revisions for the bill, Mr. Salceda replied: “I will wait for the Senate version. I stand by the House version. No GIE as we know it.”

“GIE as we know, it is pure fiscal evil, mother of all transfer pricing — P560 [billion revenues foregone] in 10 [years] and most unfair to 1 [million] firms paying 30% with more employment and value contribution to the economy.”

CITIRA now awaits Senate action, but the Trade department said last week it would propose a new version to the Senate by yearend that would incorporate the longer transition period.

The Finance department supports the two- to five-year transition period in the bill approved by the House, while the Trade department has backed a five- to seven-year transition period in general and a seven- to 10-year transition for companies that employ over 3,000 people.

A SEIPI member company employing about 300 people will shut its Philippine operations by yearend, Mr. Lachica said, and more firms drafting exit plans for the next few years.

Companies exiting the country, however, “will not say it’s because of the tax reform,” he said, but noted it’s part of what companies consider.

“Some companies have exit plans. I don’t know if they’re gonna be triggering them once they see the final version [of the bill]. I don’t want to be a bearer of doom and gloom but multinationals — they always have contingency plans,” he said.

“I think it’s premature at this point to say the sky is falling, but there’s always the risk.”

Latest available data from the Philippine Statistics Authority show electronics products made up 56.4% of total merchandise exports at $29.654 billion as of September, growing 2.2%% from $29.029 billion in 2018’s comparable 10 months.

Semiconductors alone, which made up 73.14% of Philippine electronics products sold abroad and 41.27% of total merchandise exports as of September, edged up by a percent to $21.688 billion from $21.464 billion, the same data show.

SEIPI has 346 members, with over 100 in manufacturing. — Jenina P. Ibañez

Proposed 2020 budget approved by Tuesday, then ratified

THE PROPOSED P4.1-trillion national budget for 2020 will be approved on Tuesday, instead of Monday as initially planned, as senators sought more time to study the version produced by the Bicameral Conference Committee, Senate Finance Committee Chairman Senator Juan Edgardo M. Angara said on Sunday.

Albay 2nd District Rep. Jose Ma. Clemente S. Salceda, House of Representatives Appropriations Committee vice-chairman, had earlier said that the budget would be up for Bicameral Conference Committee approval and ratification of both chambers on Monday.

But Senator Juan Edgardo M. Angara said in a mobile phone message, “Moving naman ’yung discussions but senators asked for a one-day period to review the reconciled Bicam[eral Conference Committee] version of the budget.”

“So to give that, we will likely meet Tuesday for approval.”

In a separate message to reporters, Mr. Angara said that the two versions of the proposed 2020 national budget have been “approximately 90-95% reconciled” by the bicameral body.

He also noted that the proposals made by Senator Panfilo M. Lacson had been incorporated in the budget. “Senator Lacson’s proposals like placing some limits on administrative costs and having the possibility of greater local projects have also been adopted in some form in the budget’s general and special provisions.”

Mr. Lacson had proposed to realign funds for implementation of the Universal Health Care Act, Universal Access to Quality Tertiary Education Act and the Philippine Identification System Act.

He also moved to slash the budgets of the Department of Transportation and the Department of Public Works and Highways, particularly funds allocated for right-of-way acquisition.

Mr. Salceda said postponement of the meeting scheduled for Monday did not result from any problem between the House and the Senate, telling reporters via text: “Wala… ’yun naman talaga.”

The Bicameral Conference Committee, led by Mr. Angara and House Appropriations Chairman Isidro T. Ungab of Davao City’s 2nd District, began its work on Nov. 29, during which both chambers submitted their respective proposed amendments.

The House approved House Bill No. 4228, or the General Appropriations Act for Fiscal Year 2020, on Sept. 20, while the Senate passed its version on Nov. 27.

The 18th Congress is targeting to have the 2020 spending plan approved and ratified within the week — ahead of its Dec. 21, 2019-Jan. 19, 2020 Christmas-New Year break — in time for submission to President Rodrigo R. Duterte for signing into law before the year ends.

The Department of Budget and Management began 2021 national budget preparations on Nov. 29 as it released the national budget call asking government agencies to draft their proposed budgets.

The government is working to prevent a repeat of the nearly four-month delay in 2019 budget enactment. President Duterte signed the 2019 budget on April 15, but vetoed some P95.3 billion appropriations deemed unconstitutional.

The delay stemmed from an impasse between the House and the DBM over a stricter spending framework. It was further delayed after the Senate found post-ratification realignments made by some House members.

That delay plus a ban on new public works 45 days ahead of the May 13 midterm elections — which left planned new infrastructure projects unfunded last semester — made overall economic growth slow to 5.8% in the first three quarters from 6.2% a year ago and against a 6-7% government target for 2019. — Charmaine A. Tadalan

DBM drafting simpler bill that forces punctual state spending

THE DEPARTMENT of Budget and Management (DBM) is drafting a simpler version of the proposed budget reform bill and plans to submit it to Congress in 2020’s “first quarter.”

“What we’re planning to do is institutionalize the cash budgeting system, so we’re simplifying the bill,” Undersecretary Laura B. Pascua said in an interview on Thursday.

“’Yung things na pwedeng magawa administratively inaalis na namin (We will remove budget reforms that can be done administratively by the Executive branch which is faster).”

Ms. Pascua said the department plans to ask House of Representatives Appropriations Committee Chairman Rep. Isidro T. Ungab of Davao City’s 3rd District and Senate counterpart Senator Juan Edgardo M. Angara to sponsor the measure.

She said the department hopes Congress will approve the reform before the first regular session ends on June 5 next year. “It usually takes more than a year… palagay ko dapat before the Congress ends for this session,” Ms. Pascua said.

The measure will institutionalize a cash-based budgeting system, which forces government offices to spend allocations within the fiscal year. It grants a three-month extended payment period for goods and services that will have been delivered by Dec. 31.

The measure is among the administration’s priority legislative measures, along with the proposed fifth round of government salary standardization and the Freedom of Information bill.

The government shifted to cash-based budgeting in 2019 from a multi-year obligation-based system. The previous system allowed agencies to spend past the fiscal year, which resulted in underspending.

President Rodrigo R. Duterte on Sept. 9 issued Executive Order No. 91, s. 2019, to reiterate the government’s policy to adopt the new budget framework, despite late enactment of the P3.662-trillion national budget for 2019.

The DBM said the obligation rate of agencies has improved since 2017 when the national budget provided a two-year validity for appropriations.

The DBM reported that obligation rates in 2017 and 2018 were recorded at 95.6% and 93.1%, respectively; higher than 85.4% in 2015 and 84.6% in 2016.

“We’re doing the system now. We plan to show Congress that the system works,” Ms. Pascua said.

The 2020 budget will adopt the tighter spending deadline. The proposed P4.1-trillion national budget awaits approval this week at the Bicameral Conference Committee.

Congress plans to submit the 2020 spending plan to Mr. Duterte ahead of its Dec. 21, 2019-January 19, 2020 Christmas-New Year break.

Cagayan de Oro 2nd District Rep. Rufus B. Rodriguez has filed a measure proposing to institutionalize the new budget framework, while Senator Emmanuel Joel J. Villanueva had earlier said he is drafting his own version.

The proposal nearly made it out of the 17th Congress after it secured third-reading approval at the House in March 2018, but failed to hurdle the Senate before it adjourned on June 3. — Charmaine A. Tadalan

Domestic market capitalization of select stock exchanges in Asia Pacific

Domestic market capitalization of select stock exchanges in Asia Pacific

Mazda showcases ‘premium experience’ with new CX-30, CX-8

By Manny N. De los Reyes

MAZDA PHILIPPINES’ two all-new crossovers made their public debut over the weekend at the Bonifacio High Street Big Bear Oval. The 2020 Mazda CX-30 compact crossover and the all-new 2020 Mazda CX-8 three-row crossover headed the Hiroshima-based car maker’s expanded CX family lineup of upscale, stylish and fun-to-drive crossovers in a display and test drive activity designed to let customers discover and experience the next-generation Mazda Premium.

Bigger than the CX-5 but smaller than the flagship 7-seater CX-9 (but with the same wheelbase as the latter), the CX-8 is Mazda’s newest three-row sport utility vehicle (SUV). Its key feature is its availability as a luxurious 6-seater in a 2-2-2 seating configuration. For those with more traditional passenger-carrying needs, a more traditional 2-3-2 setup is also available.

The CX-8, which comes in front- or all-wheel drive models, is powered by a 190hp/252Nm normally aspirated 2.5-liter Skyactiv-G engine mated to a 6-speed automatic. It comes with adaptive LED headlamps, 19-inch wheels with 225/55R19 tires, power tailgate, and rain-sensing wipers.

Mazda’s new midsize SUV offers standard Nappa leather seats in a very upmarket deep red color, power adjustment for the front occupants (10-way with memory for the driver, 6-way for the passenger), tri-zone automatic climate control, heads-up display, power sunroof, and an 8-inch Mazda Connect infotainment system with a 10 Bose speakers.

The CX-8 boasts six airbags, ABS with EBD, front and rear parking sensors, a 360-degree camera, blind spot monitoring with rear-cross traffic alert, and lane departure warning with lane keep assist. The AWD variant comes with i-Activ Sense which bundles adaptive radar-based cruise control, smart brake support, and driver-attention alert.

The 2020 Mazda CX-8 starts at P2,290,000 for the 4×2 Signature and P2,450,000 for the 4×4 Exclusive.

Mazda seems to be plugging in all the gaps in its crossover-SUV line. While the CX-8 slots in between the CX-5 and CX-9, the curiously named CX-30 (why not CX-4?) squeezes in between the subcompact CX-3 and compact CX-5. The CX-30 is designed for those who adore the tiny but lovable CX-3, but want a little more space (it’s four inches longer and a little over an inch wider) and higher ground clearance (by 15mm). The CX-30’s 2,655mm wheelbase is closer to the CX-5’s generous 2,700mm, though, effectively addressing one of the CX-3’s weaker points — limited rear legroom.

Like the CX-3, the base variant of the CX-30 rides on 16-inch wheels (215/65R16 tires) while the mid- and top-of-the-line variants roll on 18-inch wheels with 215/55R18 tires. LED lighting, rain-sensing wipers, and power folding mirrors are standard, but only the mid- and high-trim models benefit from adaptive front lighting, with the range-topper getting a power tailgate.

And while the CX-3 shares its platform with the Mazda2, the CX-30 shares its chassis with the new Mazda3. All three Mazdas (CX-3, Mazda3 and CX-30) come with the same engine: a 155hp/200Nm 2.0-liter Skyactiv-G mated to a 6-speed automatic. And like the CX-3, the flagship model gets all-wheel drive.

All CX-30 variants have two-tone black-and-dark brown interior, with leather seats on the two higher models and power-adjustable driver’s seat for the flagship. All models also sport a 7-inch LCD instrument panel in tandem with Mazda’s Connect infotainment system with an 8.8-inch display and 8-speaker Mazda Harmonic Acoustics audio system.

The mid-range variant gets cruise control, dual-zone climate control with rear vents and an auto-dimming rearview mirror while the range-topper gets adaptive cruise control, heads-up display, and no less than 12 Bose speakers.

All CX-30 variants get seven airbags, ABS with EBD, stability control, and rear parking camera, with the top-end model adding front and rear parking sensors, a 360-degree camera and Mazda’s i-Activsense, which combines smart brake support, front-cross traffic alert, and driver-attention alert along with blind-spot monitoring with rear cross-traffic alert.

The 2020 Mazda CX-30 comes in four variants: the entry-level 2WD Pro at P1,490,000, the mid-range 2WD Sport at P1,790,000, the flagship AWD Sport at P1,990,000 and the AWD Signature (with white leather seats, which add P15,000 to the AWD Sport’s price).

“Mazda simply has the best-looking vehicle lineup in the country today. And what better way for car buyers to see, feel and drive them in one go than at this weekend’s Mazda Premium Experience,” shared Mikko David, Senior Manager for Marketing and PR of Mazda Philippines, before the opening of the event.

“Mazda customers can experience and feel for themselves the premium difference in design, interior quality and driving feel of the Mazda car and crossover range,” he added.

Aside from test drives of the new Mazda around BGC, the three-day event gave an in-depth tour of the new Mazda design philosophy as well as showcased the craftsmanship and safety technologies that can be found in the brand’s latest models.

Aside from the new CX-30 and CX-8, Mazda also made available for test drive the all-new Mazda3, the Mazda6 Turbo executive sedan, the award-winning CX-5 premium 5-seat crossover, and the CX-9 premium executive 7-seat crossover.

Ayala energy unit to ramp up overseas expansion

AYALA-LED AC Energy, Inc. is setting aside the bulk of the $1.5 billion shored up from recent capital-raising activities for projects in the Philippines, Australia and Vietnam, while looking at India and Myanmar as new markets, its top official said.

Eric T. Francia, AC Energy president and chief executive officer, said 2020 would be a “massive investment year” for the company as it expands into foreign countries, in part because of the near-term supply adequacy in the country.

“This year we raised a lot of funds,” he told reporters last week. “We’ve effectively raised around $1.5 billion. Half a billion of that is already deployed, committed.”

Mr. Francia said AC Energy, which includes its listed local unit AC Energy Philippines, Inc., is looking at the five countries to invest the remaining $1 billion, with the Philippines, Vietnam, and Australia receiving a quarter of that amount or $250 million each. India, Myanmar and other markets will get the rest.

Included in the fund raising is the rough estimate of the proceeds from the upcoming stock rights offering of AC Energy Philippines, adding to the capital raised from two bond offerings and the selldown of AC Energy’s stake in AA Thermal, Inc.

“We’re looking to build over 1,500 megawatts (MW) of attributable capacity to AC Energy… for financial close by 2020,” Mr. Francia said. “That’s where we’ll deploy the billion dollars.”

He said the power plant projects would be “predominantly renewables.” The company’s overseas expansion is “partner-driven” or similar to what it had done in Vietnam and Australia.

AC Energy has two types of foreign partners — a “development” partner with experience in building power plants, and a “local” partner with knowledge of the regulatory landscape.

“They’re experts and they do the on-the-ground work, and we help on the management and governance, the financing … and the big decisions,” he said.

The Philippines, Australia and Vietnam will get the “critical mass” of next year’s investments each with an installed energy capacity of at least 400 MW. India, Myanmar and other markets are where AC Energy expects its partnership platforms to “gain traction,” Mr. Francia said.

He said completing power plant projects — many of which are a hybrid of solar, diesel and battery storage — would take about a year, except in Australia where labor restrictions might require a longer construction phase.

In the Philippines, AC Energy plans to build solar and diesel-fired power plants, and potentially expand its existing wind farms. In Australia, the company is looking at solar power and possibly, pumped hydroelectric plant, Mr. Francia said.

AC Energy has existing solar farms in Vietnam, but the capital expenditure next year is largely for wind farms as the company targets to avail of the guaranteed feed-in tariff that has a November 2020 deadline.

Mr. Francia said India provides the least cost in building energy projects, while Australia is the most expensive. No utility-scale project is planned in Myanmar.

“That’s why it’s [2020) a big year because we’ve never done 1,500 MW of new investments in one year,” he said. — Victor V. Saulon

Geely holds Coolray drive to Bataan

SOJITZ G Auto Philippines (SGAP), the local distributor of Geely, recently conducted an overnight media drive to the north in its striking new Coolray subcompact SUV. Geely is the Chinese automaker which owns Volvo, Lotus, and the London Electric Vehicle Co., which now makes the iconic black London taxicabs.

Officials from Geely Auto International Corporation and SGAP joined the media participants over the two-day Coolray drive from Manila to Anvaya Resort in Bataan and back the next day.

At least 15 attendees from various media outfits joined an 8-vehicle convoy and embarked on the over 360-kilometer round-trip drive.

Driving to the destination, Geely challenged the participants to beat the Coolray Sport’s 15.5 km/L average fuel consumption claim within the mix of city and highway driving. The winning car achieved a 16.4 km/L fuel mileage.

With this, SGAP vows to continuously offer value for money in its vehicles, making sure that customers would find more high-tech features in Geely vehicles, which are normally found on luxury European brands, but at an affordable price.

The Geely Coolray Sport retails for P1,198,000, which includes premium features like auto parking, state-of-the-art gasoline direct injection turbo engine and 7-speed dual-clutch automatic transmission, and a 360-degree camera view — high-end features normally found in luxury cars.

The Coolray Sport variant was formally launched to the Philippine market last September. The flagship model was followed by two more affordable Coolray variants — Comfort and Premium — that start at an affordable price of P970,000.

For 2020, Geely will be growing its nationwide dealership network as well as adding more models to complement the Coolray. The Geely showroom on 1016 EDSA in Quezon City is currently its sole showroom.

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