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LTFRB sets formula for fare adjustments

THE public land transport regulator has set a formula for changes in jeepney, bus, taxi and UV Express fares that takes into account fuel pump price movements, in order to remove the need for operators to seek regulatory approval for each adjustment.

The Land Transportation Franchising and Regulatory Board (LTFRB) published Memorandum Circular No. 2019-035 in a newspaper on Sunday which outlined the formula for base fare adjustments using inputs such as fuel pump price data from the Energy department and the share of fuel expenses in a transport operator’s costs, as verified by the LTFRB.

For example, a regular jeepney ride now costs P9 for the first 4 kilometers plus P1.40 per succeeding kilometer. The LTFRB estimates that fuel accounts for 35% of a jeepney operator’s total cost. If the pump price of fuel were to rise to P55 per liter from P50 per liter, the adjusted fare would be P9.315 plus P1.449 per succeeding kilometer under the formula, according to the memorandum circular.

“This is the fare matrix formula the (LTFRB) Board will adopt whenever there are fuel price adjustments, principally,” LTFRB Chairman Martin B. Delgra said in a mobile phone message when asked for an explanation on Sunday.

“The principle behind [the circular] being that when the fuel adjustment — downward or upward — reaches a threshold, a change in fare will take place.”

Asked if the formula will do away with the need for public utility vehicle operators to apply for fare adjustments, Mr. Delgra replied: “That is the essence.”

The memorandum circular states that the LTFRB will establish a fare matrix that public transport operators will use as guide for automatic fare adjustments.

This removes the need for public hearings that frequently result in delayed implementation of fare adjustments when price conditions have already changed.

Transportation Secretary Arthur P. Tugade had said last year that he wanted a predetermined matrix for public utility vehicle fares to enable automatic adjustments that promptly address fuel price changes. — Denise A. Valdez

Finance dep’t checks effect of lotto stoppage on funding of universal health care

THE FINANCE DEPARTMENT (DoF) is now assessing the impact on implementation of Republic Act (RA) No. 11223, or the Universal Health Care (UHC) Act, of the closure order which President Rodrigo R. Duterte issued Friday night on all Philippine Charity Sweepstakes Office (PCSO)-sanctioned lottery operations, senior officials of the department said last weekend.

Mr. Duterte’s order came a day after he signed into law Republic Act (RA) No. 11346, which further increased the excise tax rate for tobacco products to P60 per pack by 2023 from P35 currently. RA 11346 will help bankroll the UHC program, which would require P257 billion in its first year of implementation, the department said in a July 27 press release. RA 11346 is projected to raise annually P74 billion, P77.8 billion, P81.2 billion, P84 billion and P85.6 billion from next year to 2024.

The UHC law, enacted last February, aims to expand Philippine Health Insurance Corp. coverage for primary care to 120 drugs. Under this law, among others, there will be no limit to primary care treatment conditions.

RA 11223, or the UHC Act, provides that 40% of PCSO’s Charity Fund will help fund implementation of this law, besides half of the national government’s share in Philippine Amusement Gaming Corp. income and total incremental collections of higher tobacco and alcohol excise tax collections under RA 10351.

Malacañang announced near midnight on Friday that Mr. Duterte “ordered the closure, the stoppage of all gaming schemes… that got the franchises… from the PCSO,” explaining that “[t]he ground is massive corruption.”

Finance Secretary Carlos G. Dominguez III told reporters in a mobile phone message the following day: “We are evaluating the immediate effects of the ban,” while DoF Undersecretary Bayani H. Agabin said in a separate text message on Sunday: “We are still assessing the potential impact,” when asked on the effect of the sudden stoppage of PCSO-sanctioned lottery activities on UHC law implementation.

The Philippine National Police announced in a press release on Sunday that it had already closed 5,187 lotto, 13,320 small town lottery, 2,194 Peryahan ng Bayan and 472 Keno Lotto Express outlets, and called on “all other similar establishments that have not been visited yet by police to… voluntarily close down their business.”

Justice Secretary Menardo I. Guevarra told reporters in a text message on Sunday that “[t]he president has the authority to order the suspension, even the termination, of PCSO-licensed gaming operations upon prima facie proof that licensees are not faithfully complying with their legal obligation to remit the correct amount of the government’s share in revenues, or that their operations are tainted by fraud, deceit, or corruption.”

“It should be emphasized that a gaming license is not a contractual right but a mere privilege that may be revoked at any time by the state,” Mr. Guevarra said, adding that he has ordered the National Bureau of Investigation to probe the non-remittance of lottery proceeds to the government. — BML, VMMV and GMC

Global economic growth rut at risk of deepening despite rate cuts — poll

BENGALURU — A global economic growth rut risks deepening, despite expectations that major central banks will cut rates or ease policy further, according to Reuters polls of over 500 economists who remain worried about the US-China trade war.

Major sovereign bond yields have tumbled as recent economic data have mostly underscored those concerns on growth, which appears to be slowing across most industrialized and important developing economies.

But at the same time, stock markets have rallied on hopes of easier monetary policy, despite clear signs that trade conflict and geopolitical uncertainty are undercutting investment and activity.

Increasing pessimism is clear from the latest Reuters polls taken July 1-24, which show the growth outlook for nearly 90% of over 45 economies polled was either downgraded or left unchanged. That applied not just to this year but also 2020.

“As uncertainty around trade policy is unresolved, the impact on the growth outlook is becoming more pronounced. We project global growth to slow even further, and any sustained escalation from here raises recession risks,” said Chetan Ahya, global head of economics at Morgan Stanley.

“While we believe that the easing cycle will be back in full swing, the drag from elevated uncertainty should still weigh on the macro outlook.”

With the broad shift away by the world’s two biggest economies from freer trade toward tariffs, over 70% of around 250 economists who answered an additional question said a deeper global economic downturn is more likely than previously expected.

While the remaining respondents still expect a global rebound from the current rut, economists were split nearly 50-50 on that question only three months ago.

Lowered growth expectations came despite almost universal expectations of a Federal Reserve rate cut this week and more to follow, and renewed easing from the European Central Bank (ECB) soon.

ECB President Mario Draghi, worried about inflation stuck well below target, said on Thursday, “This outlook is getting worse and worse” and hinted strongly that more easing is coming.

Peter Dixon, economist at Commerzbank, said, “But it is questionable whether monetary easing will actually achieve much. We are running out of monetary options and perhaps governments need to think about their fiscal alternatives.”

Nearly two-thirds of economists predicted trade tensions between the United States and its trading partners would intensify this year, and over 80% of respondents say this is the start of a global easing cycle.

While global growth forecast to average 3.2% this year lines up with the International Monetary Fund’s latest projection, it marks the lowest since polling began two years ago for the period.

“Even without another acceleration of the trade war between the US and China or the re-opening of another front in Europe or elsewhere, the global economy is already slowing down further,” said Stefan Koopman, senior market economist at Rabobank.

“This was highlighted in recent (purchasing managers’) surveys, which painted a pretty consistent picture, regardless of whether one looks at Asia, the US or Europe. With growth likely to lose momentum further… there is also more uncertainty about whether core inflation will ever pick up again.”

Indeed, the other most striking finding from Reuters polls this month was the inflation outlook, which most major central banks target to base their monetary policy framework.

Inflation across most countries is forecast to remain below central banks’ mandated targets, or in some cases not expected to rise significantly.

Most major central banks turned to a holding pattern earlier in the year from some form of tightening path expected beforehand. Now expectations have moved to a series of interest rate cuts and/or launch of other policy easing measures.

The chances have increased that the next policy move by the Bank of Japan is likely to be easing further.

While the Bank of Canada is predicted to diverge from the path of its peers, it is likely to follow the Fed at some point.

Central banks in most major emerging market economies from Asia to Africa and Latin America have also turned dovish. The Reserve Bank of India, which has already cut rates three times this year, is set to do so again next month.

“With softer growth, limited inflation pressures globally, and with advanced markets’ central banks… having signaled monetary easing ahead, emerging markets’ central banks are largely following the same script,” noted Sudeep Sarma, head of Asia-Pacific research at Barclays. — Reuters

Comparative daily minimum wages of select Asian economies

Comparative daily minimum wages of select Asian economies

A ‘presidential’ SUV with presence and status

Text and photos by Kap Maceda Aguila

ITS PULSE-QUICKENING price tag of P9.29 million helps assure exclusivity, and that’s justifiable for a vehicle that’s nicknamed “The President.”

Superlatives abound for the first-ever X7, which now also takes its place as the flagship SAV (sports activity vehicle, BMW parlance for SUV) for the Munich-headquartered premium automaker. It’s the largest, most luxurious, most well-appointed of its all-terrain portfolio.

Launched recently in Makati City by SMC Asia Car Distributors Corp. (SMCACDC), official importer and distributor of BMW, the X7 “brings a fresh sensation of space to the luxury segment, thanks to the impressive open expanses and top-class design of its interior and its state-of-the-art equipment features. At the same time, the advanced powertrain and chassis technology of the X7 ensures it offers all the off-road prowess, excellent ride comfort and agile on-road handling for which SAVs are renowned,” according to a company release.

In a speech, SMCACDC President Spencer Yu said the vehicle is “set to shake up the full-size premium sport utility segment (and) marks the culmination of creating the biggest and most luxurious BMW sports activity vehicle to date.” He revealed that the X7 will “come standard with a five-year, 200,000-kilometer bumper-to-bumper warranty,” an offering which is becoming a key component in the company’s local onslaught.

BMW appears to be exceptionally bullish about its X line. Group Asia Managing Director Christopher Wehner reported H1 2019 sales growth for key SAV models. X2 sales hiked by 19%, the X3 by 67%, and the X4 by 71%. Even the X7 already moved 13,555 units by the end of June — less than three months after its global launch. All told, BMW sold more than 467,000 SAVs. For the first time ever, Mr. Wehner continued in his speech, BMW vehicle sales breached the one-million mark for half a year (1,075,959).

He admitted to Velocity that he sees the market preference for X models carrying over into the rest of the year. “Yes I think this will be a stable trend because for many customers, the SAV has a lot of advantages. You have lots of space, lots of functionality, a high seating position which is comfortable. You don’t have disadvantages. We offer the latest technologies — the kind we have in our sedans,” Mr. Wehner said. “It’s now a worldwide trend (that) started in the US. Nowadays, in nearly all countries in Europe and Asia, you’ll see a shift from sedans to SAVs. This is why the SAV segment is as strong as it is with 43% of our total sales.”

Mr. Wehner said that X7 “is proof that BMW continues to push boundaries.” It stretches 5,151mm, is 2,000mm wide, and stands 1,805mm, with a wheelbase of 3,105mm.

An exceptionally large kidney grille dominates the front of the X7 to give it a formidable presence, not to mention easy identifiability as a BMW vehicle. Illumination is provided by LED fog lights and BMW Laserlight headlight technology, “offering a high-beam range of up to 600 meters and can be easily identified by the blue X-shaped elements inside the headlights.”

The vehicle is marked by large windows, high ground clearance, and roofline. On its rear are horizontal lines, slim LED lights and a two-section split tailgate for easier loading and unloading.

Hefty 21-inch light-alloy wheels are fitted with run-flat tires.

The large SUV is a roomy, three-row seven-seater, affording even third-row passengers comfort and convenience. They can settle into full-size seats complete with armrests, cupholders and USB ports. All seats can be adjusted electronically. Cargo capacity can range from 326 to a voluminous 2,120 liters.

On the lone trim of the X7 here are BMW Individual Extended Leather Trim “Merino” Upholstery, five-zone automatic climate control, an Ambient Air package, Panorama glass roof Sky Lounge, CraftedClarity glass applications, a Harman Kardon surround sound system, Rear-seat Entertainment Professional system, Luggage-compartment Package, and ambient lighting including the Welcome Light Carpet.

The BMW X7 xDrive30d is motivated by a robust 3.0-liter TwinPower Turbo in-line six-cylinder diesel serving up 265hp and 620Nm. It is mated to an eight-speed Steptronic transmission with BMW xDrive — BMW’s intelligent all-wheel-drive system for “optimized efficiency and rear-biased setup.”

Chassis technology is standard, featuring Adaptive Suspension with electronically controlled dampers, and air springs at both axles. The vehicle’s ground clearance can be varied by up to 80mm with either the press of a button or by using the BMW Display Key.

BMW says the X7 bears a “comprehensive array of driver assistance systems” in aid of comfort and safety: six air bags, anti-lock brakes, dynamic stability control, dynamic traction control, hill descent control, and Active Protection. The last feature closes windows and tightens seat belts when the system detects an accident about to happen. Meantime, “integral active steering helps improve road safety and comfort by turning the rear wheels slightly when needed, and adjusts the weight of the steering feel for optimum maneuverability.” Cruise control with a braking function is standard, as well as Parking Assistant Plus, which “offers a range of functions including Park Distance Control (PDC) front and rear, together with rear view camera and surround view.”

Also standard in the X7 is the BMW Live Cockpit Professional — comprised of a fully digital cluster and a control display, both with a diagonal measurement of 12.3 inches with Navigation fitted as standard. Apple CarPlay is supported, together with Bluetooth and USB connectivity.

The BMW is manufactured and assembled in Spartanburg, Orlando. When asked to compare it with the X5, Mr. Wehner replied, “The X5 is more compact, even if you can get it with seven seats, too. The X5 is easier to handle, but not as comfortable in space. The X7 also gets air suspension for a more comfortable ride… It has a lot more presence and status.”

The Seltos revealed — Kia’s last unboxing of the year

By Ulysses Ang

AFTER MUCH speculation, it’s now confirmed: the last Kia model to be unboxed this 2019 is not the Stonic, but the Seltos subcompact crossover. Named after “Celtos,” the son of Hercules in Greek mythology, the Seltos is Kia’s new global response in the ever-growing small crossover segment.

Slotting in-between the Soul and Sportage in terms of size and positioning, the Seltos is characterized by being sporty yet sophisticated. Outside, it gains a strong, yet delicate appearance characterized by its wide tiger nose grille (it’s so wide Kia now terms it, “tiger face”) and diamond-like pattern on the grille surrounds.

Sitting on a platform made of 49% Advanced High Strength Steel, the Seltos’s body is lighter than the Honda HR-V (322 kilograms versus 301 kilograms) yet is larger in every dimension. Moreover, it has generous ground clearance ranging from 170 to 179mm depending on the exact wheel diameter installed (16 to 18 inches).

The larger body contributes to a much roomier cabin that’s every bit bigger than the Honda HR-V as well. The rear occupants, in particular, will revel in the standard rear air-conditioning vents and reclining rear seats. Moreover, the luggage compartment is the largest in its class at 498 liters.

Although the Philippine market model is yet to be finalized, the Seltos features two impressive 4-cylinder engines. The normally aspirated 2.0-liter motor has 149hp and 180Nm of torque mated to an intelligent continuously-variable transmission (IVT), while the turbocharged 1.6-liter motor makes a healthy 177hp and 265Nm of torque. Paired to a 7-speed dual clutch automatic, this combination makes it an unassuming pocket rocket: 0-100 km/h in eight seconds, and 80 to 120 km/h in just 5.3 seconds.

The Seltos is fitted with a MacPherson strut front suspension and a torsion beam rear axle. The suspension and steering are tuned to provide a comfortable and confidence-inspiring high-speed drive. The electric power-steering system is tuned to deliver rapid and linear response.

A further feature to maximize driving confidence, the Seltos is equipped with large disc brakes on all four corners, with brakes ranging from 280 to 305mm on the front axle (depending on specification) and 262 to 28 mm discs on the rear. In all instances, the brakes provide ample stopping power at all speeds.

The Kia Seltos will start its sale in Korea by the third quarter of 2019. The Philippines will be sourcing its units from the car maker’s Gwangju, Korea production facility and will be launched in the country towards the end of 2019. Local specifications and pricing will be announced at a later time.

Davao firm starts shipping fresh young coconut to China

DAVAO-BASED Eng Seng Food Products has started exporting fresh young coconut to China and wants to tap more farmers to meet the demand.

“We want to target 60 containers weekly, but due to lack of supply, we decreased it to only 15 containers,” Eng Seng Food Products President John Tan said in a statement released by the Department of Agriculture-Region 11 (DA-11).

The company, in coordination with DA-11 and the Bureau of Plant Industry, shipped 48 tons or 36,000 pieces of young aromatic coconut to Guangzhou and Xiamen in southern China last week.

“The shipment was made possible after the signing of a contract with a China-based company, the China Artex Corp.” of Fujian province, Mr. Tan said.

The shipments complies with the Chinese government’s import protocols, which allow the entry of Philippine coconut from Mindanao and Leyte.

In April, President Rodrigo R. Duterte witnessed the contract signing between the two parties during the 2nd Belt and Road Forum in Beijing. The contract covers a one-year supply of 64.5 million metric tons of young coconut.

Mr. Tan said DA-11 will help establish links with coconut farmers, and his company is interested in forging long-term marketing agreements with them.

The Philippine Coconut Authority has also committed to provide seedlings and technical assistance to interested farmers.

Provincial Agriculturist Rotchie M. Ravelo of Davao Oriental, the biggest coconut producer in the Davao Region, said in an interview last month that farmers there are awaiting the specifics of the Department of Agriculture’s (DA’s) new policy of opening up foreign markets for young coconut, which is used in juice production. Older coconut is reserved for oil extraction.

He said coconut farmers are eager to diversify into young coconut exports, especially with the decline in the price of copra, the main ingredient in coconut oil. — with Maya M. Padillo

5 reasons why the new Ford Expedition is the ideal road trip vehicle

By Manny N. de los Reyes

WITH ITS formidable size, you won’t miss the all-new Ford Expedition on the road. Having debuted at the Manila International Auto Show last year, the new Expedition ups the ante among full-size SUVs with its commanding style, more powerful yet more fuel-efficient engine, and a host of luxury features.

The most newsworthy upgrades of Ford’s P4,479,000 behemoth include a 3.5-liter EcoBoost engine and innovative changes in its transmission, fuel consumption, chassis, body, and driver-assist technologies.

Here are five aspects that make the new Expedition the ideal ride for those long road trips with family and friends.

1. It’s the most powerful Expedition yet.

The new Expedition is powered by a 3.5-liter EcoBoost V6 engine, producing 375 hp and 470 lb-ft of torque. This powerful engine is mated to a 10-speed SelectShift automatic transmission, which offers quicker shift times along with a wide ratio span that optimizes gear spacing for greater responsiveness and fuel economy.

2. It’s more fuel-efficient.

The Expedition achieves greater fuel efficiency and vehicle tailpipe emissions during city driving through its Auto Start-Stop Technology. This programs the engine to switch off while keeping the air-conditioning, audio system, and exterior lighting functioning as the vehicle comes to a stop in traffic.

3. It sports a bolder and more distinctive look.

The all-new Expedition has been redesigned with a fully boxed high-strength steel frame and all-aluminum alloy body. It comes with a raised power dome hood, which adds to the muscular stance of the vehicle. At the rear, the Expedition features an accent trim indicating “Expedition,” followed by new LED taillamps.

4. It offers the most spacious and most comfortable cabin yet.

The new Expedition supports a spacious cabin with room for up to eight passengers and their gear, with power folding seats that allow second-row seats to tip and slide forward for easy third-row access. It also offers a bucket seat option.

5. It makes every drive more convenient.

Boosting convenience when driving the all-new Expedition is a collection of intuitive features, which include SYNC 3 with built-in navigation. It also has more options to charge devices with power outlets on every row. On the road, drivers can also use natural light for more scenic drives through its panoramic moonroof, which brightens the vehicle interior and gives passengers their own skylight.

From Greenhills to the world

THIRTY signature pieces from 15 prominent fashion designers and photographers in the country were gathered together in one collection to celebrate the 25th anniversary of local fashion brand, Plains & Prints.

“We didn’t give them any restrictions on prompts on the designs [they made for the anniversary collection]. We wanted them to do what they’re known for. I love the collection because when you see [the pieces] you know it’s perfect for [that designer’s] style,” Roxanne A. Farillas, co-founder and vice-president of Plains & Prints, told BusinessWorld during the collection’s launch on July 23 at the Green Sun Hotel in Makati City.

The anniversary collection, which hits all 90 Plains & Print branches in the country and various online shopping portals on July 31, brings together designers who had previously worked with the brand as well as “new ones in the brand’s growing list of partners,” said a press release.

Designers returning to the Plains & Prints fold include Mark Bumgarner who first worked with the brand in 2015 alongside photographers Marc Nicdao and Wig Tysman to create the brand’s 20th anniversary collection; Rhett Eala, Rajo Laurel, Randy Ortiz, Maureen Disini, and Vania Romoff, all of whom worked with the brand in 2016 for a charity collection; while Amina Aranaz and Mr. Bumgarner featured in back-to-back collections in 2018.

The other designers who presented their works in this collection are Patty Ang, Rosanna Ocampo, Anthony Ramirez, Cheetah Rivera, Martin Bautista, and Charina Sarte.

While Ms. Farillas noted that the collection featured each designer’s distinct styles, it was apparent that each designer played with plains and prints in homage to the brand’s name for the anniversary. For instance, Ms. Sarte’s flowy ruffled dress came in two versions: a plain mustard version called Manila and the polka-dotted Paris.

Likewise, Mr. Bumgarner’s pieces featured two outfits — a plain dark-colored Daphne pantsuit and a printed off-shoulder Camilla dress.

Both Mr. Nicdao and Mr. Tysman lent their digital prints to the collection: Mr. Nicdao’s cityscapes were printed on a dress called New York and a two-piece set called Manhattan, while Mr. Tysman’s landscapes made their way onto a dress called Tanya and a pantsuit called Nashtassia.

There were several designers that preferred to stick to either plains or prints like Mr. Ramirez who was loyal to his “penchant for solid colors” with the blue Kiarra and black Catalina dresses and Ms. Rivera’s ribbon printed dresses (in white and mint versions).

Plains & Prints started in 1994 in Shoppesville in the Greenhills Shopping Center in order to “make timeless, elegant style accessible to Filipinas,” said the release. A quarter of a century later, the brand is planning to go global by entering more “online marketplaces and e-commerce sites,” said Ms. Farillas.

The brand is currently available on several online shopping sites like Zalora, Lazada, Zilingo, and their own e-commerce portal. — Zsarlene B. Chua

Treasury bonds to fetch lower rates ahead of Fed

THE GOVERNMENT will likely fetch lower yields for reissued 20-year bonds to be auctioned off tomorrow as market participants await the policy decision of local and US central banks.

The Bureau of the Treasury (BTr) is offering on Tuesday P20 billion worth of reissued 20-year bonds with a remaining life of 19 years and six months.

“Yield on the 20-year (bonds) for reissue will be lower from its last auction, with its average yield seen at 4.95-5.05% area,” Robinsons Bank Corp. peso debt trader Kevin S. Palma said in a message on Sunday.

The government made a full award of the 20-year T-bonds when they were last offered on June 11, borrowing P20 billion as planned versus bids totalling P27.3 billion.

The bonds fetched an average rate of 5.17%, 154.6 basis points lower than the 6.716% quoted when the debt papers were issued in January and also below the 6.75% coupon.

At the secondary market on Friday, the 20-year bonds were quoted at 4.98%, according to the PHP Bloomberg Valuation (BVAL) Service Reference Rates published on the Philippine Dealing System’s website.

Another trader said market players are pricing in a possible cut in interest rates by the US Federal Reserve.

The US central bank is widely expected to trim rates when its policy-making Federal Open Market Committee meets on July 30-31. Economists see this as a move to counter headwinds brought by trade tensions as well as the slowing global growth.

Fed chair Jerome Powell earlier said the Fed will “act as appropriate” to sustain expansion as “crosscurrents” are weighing on the economy.

“There’s a possibility of a 25-basis-point cut in interest rates from the Fed. Market players will probably price in that,” the second trader said

The trader expects the 20-year bonds to fetch a rate between 4.9% and 5.1%.

“Onshore, there’s also a possibility of further monetary easing as soon as Aug. 8 meeting,” Mr. Palma added, as Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno hinted on more interest rate cuts.

Earlier, Mr. Diokno expressed commitment to cutting benchmark rates amid expectations of a rate cut from the Fed.

“Even before the position of the Fed, we are already committed to cutting,” the central bank chief said last July 12. “So that’s an additional input to our decision.”

Mr. Diokno also noted that the BSP will likely cut policy rates in the second semester before moving to reduce banks’ reserve requirement ratios (RRR) anew.

“All these possible developments coupled with infused liquidity from the RRR cut last week will drive demand for this auction,” Mr. Palma added.

After a 100-bp RRR cut across all banks on May 31, the BSP trimmed the reserve ratios of universal and commercial lenders and thrift banks by another 50 bps last June 28 to 16.5% and 6.5%, respectively.

Another 50-bp reduction was implemented last Friday, bringing the reserve ratios of big banks to 16% and thrift banks to 6% and completing the phased cuts the BSP announced in May.

The government is set to borrow P230 billion from the domestic market this quarter through Treasury bills and T-bonds.

It is looking to raise P1.189 trillion this year from local and foreign sources to fund its budget deficit, which is expected to widen to as much as 3.2% of gross domestic product. — Karl Angelo N. Vidal

RFM targets double-digit profit growth this year

By Arra B. Francia
Senior Reporter

FOOD and beverage manufacturer RFM Corp. expects at least a 10% growth in its net income for full year 2019, counting on lower inflation, stabilizing crude oil prices, and the stronger peso in the second semester.

RFM Chief Financial Officer Enrique Oliver I. Rey-Matias cited improvements in the business environment that can help the company achieve its target.

“Last year 6% lang. Maybe this year we might hit double-digit growth. Oil seems to be stabilizing at $60, $59 level. Inflation is low, there’s more consumption, and raw material prices. And then forex is depreciating,” Mr. Rey-Matias told reporters after the company’s annual shareholders’ meeting in Mandaluyong last week.

The Concepcion-led firm also projects its topline to grow by 10-12% this year, given the strong performance of its milk business since the second quarter.

“We’re at 10% already, maybe hopefully up to 12%, that’s what’s normal for us. But with strong milk growth, maybe we’ll go over 12%,” Mr. Rey-Matias said.

Mr. Rey-Matias added that the milk business could help stabilize its topline throughout the year, noting how revenues usually swing due to the seasonality of their products. For instance, the ice cream business strengthens in the first half due to the summer season, while the pasta segment sees higher demand in the second semester due to the Christmas holiday.

RFM’s brands include Selecta for ice cream and milk, Fiesta and Royal for pasta, and White King for mixes.

Ice cream currently accounts for 40% of revenues, followed by pasta and milk at 20-25% and 10%, respectively.

“Milk is growing fast. From 10%, it could go to between 10 to 15%, so pasta and ice cream will get smaller. Somehow, we’ve been fortunate to have that strong growth,” Mr. Rey-Matias said.

The company plans to launch more variants of existing products within the year to take advantage of this growing demand.

The robust performance of its milk business has prompted the company to go into toll production in the first half. It now plans to expand capacity by 30% for P320 million to accommodate further demand.

This expansion is part of the RFM’s capital expenditures worth over P400 million this year. The balance will be used to expand the pasta business production lines.

RFM’s net income attributable to the parent climbed 14.3% to P359 million in the second quarter of 2019, after a 9.8% increase in net revenues to P3.85 billion.

This brought attributable profit 10.5% higher to P580 million in the first six months of the year, with net revenues up 10.3% to P6.96 billion in the same period.

Luxe for the MPV class

Text and photos by Kap Maceda Aguila

BY ITS MONIKER alone, the multi-purpose vehicle or MPV segment lends itself more to practicality rather than luxury.

But Auto Nation Group, the official Philippine distributor of Mercedes-Benz, says you can have your cake and eat it, too, via the all-new B-Class. Imported from Rastatt, Germany, the small MPV seeks to refine and redefine expectations in the segment.

With a sticker price of P2.69 million for the lone B180 variant, the Merc is powered by a 1.3-liter, four-cylinder turbo engine mated to a seven-speed dual-clutch transmission. The system puts out 136hp and 200Nm.

The new B-Class joins the A-Class, CLA, and GLA as the more practical and affordable representatives of the Stuttgart-headquartered premium brand — part of its so-called New Generation Compact Car (NGCC) range.

In a Mercedes-Benz release, the B-Class is said to “(redefine) practicality, versatility and safety while putting emphasis on a sportier tourer identity.” The nameplate was first introduced more than 14 years ago for a generally younger market. Now it is seen to “appeal to a new generation of car owners who are drawn to more stylish, sporty, and technologically advanced vehicles — all new and fresh while maintaining the distinct Mercedes-Benz DNA.”

The B-Class banners a new design and improved room; it is a family car with “space, comfort, and safety yet sporting a compact vehicle profile — revolutionizing interior design while retaining cargo space.”

Compared to its predecessor, the new B-Class offers more headroom and elbow room. The seats have been raised for heightened comfort, and large windows boast increased all-around visibility for greater safety and ease in driving.

“The B-Class is more of a fun, easy-to-drive vehicle. It’s for a starting family, yuppies who have a certain budget level on their corporate (car plan), adventurers who want to go out, and mommies too who would like to go on errands and pick up their kids,” said Auto Nation Group Senior Product Manager for Mercedes-Benz Benjie Bautista, in an interview with Velocity. He added that the 1.3-liter turbocharged engine is perfectly suited for the size of the B-Class.

Cargo capacity is improved not just through generous cabin volume but via a 40-40-20 lay-fold rear seat capability. Mr. Bautista demonstrated the capacity, loading two full-size golf bags by collapsing the rear seatbacks, and showing there was still space for a piece of luggage.

The new B-Class also features an array of state-of-the-art active safety features which had been previously available only in more premium Mercs such as the S-Class. Standard on the vehicle is extended Active Brake Assist which “can effectively help to mitigate the consequences of rear-end collisions with slower-moving, stopping or stationary vehicles ahead, and even with crossing pedestrians and cyclists, or prevent them altogether.”

The technology does this by monitoring distance from other vehicles. Should they get closer than the safety threshold, the system issues a visual warning to the driver. If it detects a serious risk of collision, the driver receives an additional, audible warning, and the system ascertains the brake pressure required to prevent a collision, if still possible. If, having been warned, the driver then steps on the brake pedal, the feature is capable of boosting insufficient braking pressure in line with the needs of the situation. The system thus makes the best possible use of the remaining distance in order to leave the vehicles behind room to brake. If the driver fails to respond, Active Brake Assist can engage autonomously if the danger of collision persists, so as to mitigate the severity of the accident or even prevent it.

The vehicle also features Attention Assist with adjustable sensitivity, “which can warn the driver in a timely manner of inattentiveness and drowsiness.” The vehicle is equipped with air bags for the driver and front passenger, including windowbags and kneebag for the driver, as well as Isofix child-seat mounts and TopTether attachment points in the rear backrest, and other safety features.

As with the new A-Class, the newest iteration of the B-Class has been equipped with the Mercedes-Benz User Experience (MBUX), vastly improving and increasing connectivity. The MBUX system banners a “highly intelligent virtual assistant,” activated by pressing a button in the steering wheel or by simply saying, “Hey Mercedes.” It reacts to voice commands and allows the user to access infotainment functions such as destination input, phone call, music selection, climate control, and ambient lighting. The technology comes with a “natural speech recognition program” to enable it to “recognize and understand nearly all sentences from the fields of multimedia and vehicle operation.” It can also learn and customize itself to the user through artificial intelligence.

The MBUX feature is equipped with a 7.4-inch touchscreen, a touchpad on the center console, and touch-control buttons on the steering wheel for less driver distraction and stress. Five round aviation-inspired air ducts give character within, while Artico leather seats offer style and comfort even on long trips.

Mr. Bautista said that Auto Nation Group is confident in the B180 meeting and even surpassing buyer expectations, even as the company is currently looking at bringing in more trims/variants by next year.

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