Ailing Warriors

June 6, 2019 | 6:57 pm

For the first time in the Finals, the Warriors managed to have a significant advantage in shot attempts yesterday. After taking just 78 and 81 stabs at the basket in their stints at Scotiabank Arena, they came away with a whopping 91 in Game Three. If nothing else, it was indicative of their conscious effort to dictate the pace to their liking. Unfortunately, they couldn’t translate it to actual production; with Klay Thompson joining Kevin Durant in the sidelines, they had only Steph Curry to rely on for points. And as much as they moved the ball and strive to find open shots, their depleted lineup told on their capacity to make the most of their opportunities.

Injuries are part of competition in the National Basketball Association, to be sure, and the Warriors can’t complain about their handicaps in this regard. Even the Raptors are ailing, albeit clearly not enough to compel the absence of vital cogs. That said, Thompson’s unavailability told on the hosts’ competitiveness. He could have been a critical release valve in the face of the extra attention Curry received as their lone shot creator. And, yes, his exertions on the other end of the court were missed at least as much; not for nothing did the visitors wind up canning 17 of 38 three-point attempts and shooting 52.4% from the field overall.

Needless to say, the Warriors will have to do much, much better tomorrow (June 8). Should Durant continue to be decommissioned and Thompson require more time to convalesce from his hamstring injury, they will need to find others to backstop Curry’s production and, at the same time, come up with schemes that limit his failings on defense. Having lost homecourt advantage in Game Three, the next match is simply about setting up the chance to reclaim it in Game Five.

True, the Warriors are in a position of weakness for the first time since they began their dynastic trek half a decade ago. It isn’t simply because they’re down one to two against the determined Raptors. It’s because they have to climb out of the hole at less than full strength. En route to the best-of-Seven series, one of the points of discussion making the rounds in hoops circles involved Curry’s failure to be named Finals Most Valuable Player in any of their three previous runs to the title. He now has occasion to stake a claim to the honor — by default, perhaps, but no less momentous. And if they do go on to wrap their arms around their fourth Larry O’Brien Trophy in five years, he will be the reason, and he will have earned it.

Anthony L. Cuaycong has been writing Courtside since BusinessWorld introduced a Sports section in 1994.

Startup founder shares how he’s bridging healthcare gaps with drones

June 6, 2019 | 12:55 pm

Rapid advancements in healthcare mean those with the resources to live in global centers are often able to live longer, healthier lives. But seldom to life-saving medicines and materials make it to the world’s most remote communities. That’s why Keller Rinaudo founded Zipline in 2014.

Zipline is the world’s first drone delivery service providing life-saving medicines to isolated communities otherwise considered unreachable. To date, they’ve made over 14,000 deliveries in areas across Rwanda and Ghana.

And now, Zipline hopes to expand operations into the Philippines, connecting those most in need with instant access to vital medical supplies.

Join Keller and SparkUp Editor Santiago Arnaiz in an Asia Society fireside chat about the future of healthcare services and building a more inclusive world with emerging technologies.

The event, “Future Forward: Drones and the Future of the Tech Revolution”, will take place on June 7, from 12:00 p.m. to 2:00 p.m. at Common Ground, Arthaland Tower, 5th Avenue, Taguig.

Future Forward: Drones and the Future of Tech Revolution is co-presented by Asia Society Philippines and SparkUp, supported by Common Ground Coworking Space.

Pre-register here on or before June 5.

Headline inflation rates in the Philippines (May 2019)

June 6, 2019 | 12:33 am

AGAINST EXPECTATIONS, inflation accelerated in May following six consecutive months of slowdown, the Philippine Statistics Authority (PSA) reported yesterday. Read the full story.

Price hikes bigger than expected in May

June 6, 2019 | 12:33 am

AGAINST EXPECTATIONS, inflation accelerated in May following six consecutive months of slowdown, the Philippine Statistics Authority (PSA) reported yesterday.

Preliminary data from the PSA showed headline inflation at 3.2% last month, up from the three percent in April but still slower than the 4.6% recorded in May 2018.

The preliminary result fell within the Bangko Sentral ng Pilipinas’ (BSP) 2.8-3.6% inflation estimate range for that month. It was, however, higher than the three-percent median estimate in a poll of 11 economists which BusinessWorld conducted late last week.

Year to date, the average rate of overall increase in the prices of widely used goods and services settled at 3.6%, past the midpoint of the BSP’s 2-4% target range though still above the 2.9% full-year forecast average.

Discounting for commodities with volatile price swings such as food and energy, core inflation inched up to 3.5% in May from 3.4% in April.

The PSA attributed inflation’s May pickup primarily to faster annual increases in the heavily weighted subindices of food and non-alcoholic beverages index (3.4% in May from 3% in April) as well as housing, water, electricity, gas and other fuels (3.3% from 3.2%).

On the other hand, the PSA noted slower annual increments were observed in alcoholic beverages and tobacco (9.5% in May from 9.9% in April); transport (3.5% from 3.8%); as well as restaurant and miscellaneous goods and services (3.3% from 3.5%).

The rest of the commodity groups sustained their annual rates from the preceding month.

The National Economic and Development Authority (NEDA) said in a statement that the slight inflation uptick was caused by the El Niño phenomenon.

“Faster price adjustments in food and non-alcoholic beverages drove the uptick in headline inflation as weak El Niño conditions persisted, and brought significant damage to the agriculture sector in the midst of the election period’s strong consumption demand,” NEDA’s statement quoted its director-general, Socioeconomic Planning Secretary Ernesto M. Pernia, as saying.

HSBC Global Research Economist Noelan C. Arbis shared the assessment, noting in a press statement that “[f]ood prices contributed 1.4 percentage points to headline CPI (consumer price index) growth as a result of El Niño, which has driven vegetable, fruit, and meat prices higher over the past few months”, adding that “stricter import measures to prevent the entry of African Swine Fever has likely led to a faster rise in pork prices.”

The food-alone index accelerated to an 3.2% in May from 2.9% in April. Specifically, upticks were observed in the indices of corn (-2.8% in May from -3% in April); other cereals, flour, cereal preparation, bread, pasta, and other bakery products (3.7% from 3.6%); fish (4.2% from 3.3%); fruits (4.6% from 2.4%); vegetables (12.5% from 7.6%); food products “not elsewhere classified” (6.8% from 5.3%).

Rizal Commercial Banking Corp. (RCBC) economist Michael L. Ricafort also attributed the May result to food prices, noting in an e-mail: “However, these were offset by increased rice imports with the rice tariffication law and non-monetary measures to increase rice supply to lower prices and better manage inflation since the latter part of 2018.”

In May, the index for rice dipped 0.7% compared to zero percent in April.

HSBC’s Mr. Arbis also noted that “higher fuel costs” contributed to May inflation, although he said these are “likely to pull back in June given a recent decline in global oil prices.”

“The other components of the CPI basket largely moved within their historical trend, suggesting benign demand-side pressures.”

BSP officials said that the May reading should be taken with a grain of salt.

“One should not read too much on the uptick. One data point does not constitute a trend. That’s elementary,” BSP Governor Benjamin E. Diokno told reporters in a mobile phone message, noting that the May reading fell within BSP’s estimate for the month.

BSP Deputy Governor, Diwa C. Guinigundo shared this view, saying: “Basically, the drivers of inflation remain on the supply side and, therefore, generally temporary.”

“The only risk is when the uptick gets prolonged and starts generating second-round effects and higher inflationary expectations especially in the face of the heavy catch up on public spending on infrastructure in the second half,” he told reporters via text message.

MONETARY POLICY EXPECTATIONS
Notwithstanding the May result, economists still expect the BSP to continue its monetary policy normalization.

“The slight uptick in inflation may be considered a healthy upward correction amid the bigger trend of continuous easing of the inflation rate that may again resume the slower year-on-year inflation starting June 2019 until the end of 2019,” said RCBC’s Mr. Ricafort.

“Further easing in local monetary policy by way of another cut in policy rates remains possible as early as the next rate-setting meeting in June 20 (or in subsequent months).”

Similarly, HSBC’s Mr. Arbis said that generally benign inflation and slower economic growth — at a four-year-low 5.6% last quarter — “provide additional scope for the BSP to further ease monetary policy” through cuts in the policy rates and reserve requirement ratio (RRR), which is now undergoing a phased 200 basis point (bp) cut.

“We expect another 100-bp RRR cut, bringing it down to 15%, and another 25-bp cut to the policy rate (both in the fourth quarter), bringing the reverse [repurchase] rate down to 4.25% by year end,” he said.

INFLATION OUTLOOK
Mr. Pernia flagged the threat of the African Swine Fever, the increase of rice prices in the international market and volatility of global oil prices as risks to inflation.

Mr. Diokno said monetary authorities “expect inflation to be in the neighborhood of two percent in the third quarter of 2019” and that “[w]ith world oil prices easing, we expect the annual inflation rate to be in the vicinity of three percent in 2019 and 2020.”

Even as Mr. Diokno “has been quite categorical” on the goal to reduce the RRR to lower levels, BSP’s Mr. Guinigundo said the “pace of the reduction will be governed by both data and evidence” as monetary policy makers continue to monitor key developments and indicators.

For HSBC’s Mr. Arbis, “[h]eadline prices are likely to decline below three percent in the second half of the year, given favorable base effects and benign demand-side pressures.”

For RCBC’s Mr. Ricafort, inflation “may likely resume” its decline “largely due to bigger inflation base effects” following its spike in the latter part of 2018. — Marissa Mae M. Ramos with R. J. N. Ignacio

April finds fewer Filipinos jobless, looking for more work

June 6, 2019 | 12:32 am

LATEST DATA show improvements in the country’s labor market with the number of jobless Filipinos, decreasing and those wanting more work dropping to an all-time low in April, the Philippine Statistics Authority (PSA) reported yesterday.

Preliminary results of the PSA’s April 2019 round of the Labor Force Survey (LFS) put the unemployment rate at 5.1%, down from the 5.5% in the same survey round last year. This is equivalent to some 2.29 million jobless Filipinos, down from 2.36 million in April 2018.

Underemployment rate — the proportion of those working but looking for more work or longer working hours in order to increase income — improved to 13.5% from 17%. That amounted to 5.71 million Filipinos in April, down from 6.94 million the past year.

Among the April LFS rounds, both the unemployment and underemployment rates in April 2019 were the lowest since 2005, the year the government adopted new definitions for the LFS.

The size of the labor force was approximately 44.53 million out of an estimated 72.54 million Filipinos aged at least 15 years old, yielding a labor force participation rate (LFPR) of 61.4%. This was higher than last year’s 60.9%.

The employment rate, which is the proportion of the employed to the total labor force, edged up to 94.9% in April from 94.5% in the past year’s round.

In a statement, the National Economic and Development Authority (NEDA) said that around 1.3 million jobs were generated during the period, “more than double” the 625,000 generated in April 2018.

“The April 2019 round of the LFS reflected an upbeat labor market, where unemployment rate was at a low 5.1% and underemployment rate at 13.5%; these, even with the slight uptick in labor force participation,” Socioeconomic Planning Secretary Ernesto M. Pernia said in a statement.

Commenting on the results, Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, Inc. (UnionBank), said that the improvement in the labor market “speaks of the Philippines’ robust economic growth.”

“Although economic growth softened last year and first-quarter growth was below average at 5.6%, economic expansion, in general, can still be considered solid and respectable,” he said.

ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa described the latest labor data as “an encouraging sign as an increase in participation rate could mean more people remain or are now more hopeful of finding employment.”

“Given solid growth prospects, job seekers are now returning,”he said.

Mr. Mapa likewise cited improvement in unemployment rate, with job creation driven by services, particularly wholesale and retail trade. “This largely reflects the first-quarter rebound in gross domestic product for this sector with lower inflation helping drive a recovery in sales,” Mr. Mapa added.

By major economic sector, the proportion of those employed in services to total employment improved to 58.5% in April 2019 from 56.4% in April 2018. “The expansion [in services] may be attributed to increased business activities in line with the campaign period for the Philippine mid-term elections. Adding to this is the increase in consumer demand during summer and harvest seasons,” Mr. Pernia said.

Employment in industry and agriculture made up 19.2% and 22.3% of the total number of employed persons, respectively, down from the past year’s 19.7% and 23.9%.

Full-time workers — those who worked for at least 40 hours in a week — accounted for 67.6%, down from 68% in April 2018.

Part-time workers accounted for 31.3% of employed persons, up from 31%.

The April 2019 LFS round also showed that working hours per week averaged 41.7 hours, down from 42 hours a year ago.

OUTLOOK
“With inflation still expected to remain well within target, we can expect the services sector to help continue generating employment opportunities while we hope agriculture can see marked improvement now that the dry spell is over,” ING Bank’s Mr. Mapa said.

“Meanwhile, the recovering PMI (Purchasing Managers’ Index) manufacturing data could also mean that employment opportunities remain in the manufacturing sector and we hope this growth in economic activity can absorb the rest of the workforce after graduation.”

For UnionBank’s Mr. Asuncion, “[t]he second half of 2019 and early 2020 is expected to be better as inflation levels decline further.”

“Lower price levels impact domestic demand encouraging economic expansion and, thus, employment generation. Furthermore, with corresponding unwinding of monetary policy by the BSP (Bangko Sentral ng Pilipinas), economic growth can continue and stronger employment growth may result.”

The latest monthly survey IHS Markit conducted for Nikkei, Inc. showed the seasonally adjusted Nikkei Philippines Manufacturing PMI increasing to 51.2 in May from 50.9 in April, signaling a “modest, but stronger improvement in the health of the manufacturing sector.”

It was the first time in six months that the country’s headline PMI increased.

On the other hand, inflation clocked in at 3.2% in May, faster than April’s three percent, but slower than May 2018’s 4.6%. Prior to this uptick, inflation had decelerated for six straight months following the nine-year-high 6.7% in September and October 2018.

Mr. Pernia said that these gains made in reducing unemployment and underemployment should be sustained, citing the need to lower both indicators to successfully meet the Philippine Development Plan (PDP) targets by 2022.

“Both quality and quantity of work need to be addressed. At the same time that employment opportunities are being increased, workers and jobseekers must be enabled to improve their knowledge and skills through training and education,” Mr. Pernia said.

The PDP targets unemployment to decrease to 3-5% by 2022, equivalent to 950,000-1.1 million new jobs generated each year “assuming a slight increase in the [LFPR] to 64.1%.” — Christine Joyce S. Castañeda

Labor force survey (April 2019)

June 6, 2019 | 12:32 am

Tobacco tax bill tweaks to cover health care law’s funding gap

June 6, 2019 | 12:31 am

By Charmaine A. Tadalan
Reporter

LAST-MINUTE CHANGES to the measure further increasing tobacco product excise tax rates that partly tap collections of sugar-sweetened beverage and alcohol product levies should help fully fund implementation of Republic Act No. 11223, or the Universal Health Care Act, a senior official of the Department of Finance (DoF) said on Wednesday.

Senate Bill No. 2233, approved on Tuesday evening by both chambers of the 17^th Congress, is now expected to yield P130 billion in revenues in 2020 which is more than enough to cover an estimated P63-billion funding gap expected in RA 11223’s first year of implementation.

Of the estimated total projected revenues, P74 billion will be from the increase in excise tax rates on cigarettes; while the balance will be a combination of revenues earmarked from the currently imposed tax on alcohol products and sugar-sweetened beverages, as well as the new excise tax on e-cigarettes.

‘ADDITIONAL COMPONENT’
“There’s additional component that were not included in the initial estimates. ‘Yung total, kasi nag-earmark na din sila sa previously enacted taxes (For the total, the senators also earmarked funds from previously enacted taxes),” Finance Assistant Secretary Antonio Joselito G. Lambino II said in a telephone interview.

The Finance department had initially expected the measure, in its previous form, to yield just P15 billion next year.

The measure, which now just awaits President Rodrigo R. Duterte’s signature, will increase the excise tax on tobacco products to P45 per pack in 2020 and by P5 each year until reaches P60 in 2023, then by five percent annually thereafter.

Cigarettes are currently levied P35 rate per pack, after Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion Act, increased it to P32.50 in January last year from P30 and then to P35 in July 2018. It is scheduled to go up to P37.50 in January next year.

The new measure that was approved last Tuesday also introduced a P10 excise tax per pack of heated tobacco products beginning 2020 and an annual increase of five percent thereafter.

Vapor products will also carry a P10 excise tax for 0-10 milliliters, P20 for 10.01-20ML, P30 for 20.01-30 ML, P40 for 30.01-40 ML, P50 for 40.01-50 ML, and P50 for more than 50 ML with P10 increase for every additional 10 ML. Heated tobacco products and vapor products are currently untaxed.

The measure also amended RA 10963 (2017) and 10351 (2012) which had restructured the excise taxes on alcohol and tobacco products, by earmarking to the health sector 50% of tax collections from sugar-sweetened beverages and from alcohol.

This amendment was introduced during SB 2233 plenary deliberations on Tuesday evening.

“We have the alcohol and the sweetened beverages, earmarked 50%, dati pa napasa ‘yun, ‘di lang naka-earmark (these laws were enacted but funds from collections were not earmarked),” Mr. Lambino explained.

The new measure is now expected to generate about P136 billion in 2021, P142 billion in 2022, P147 billion in 2023 and P151 billion in 2024.

Of this, P77.8 billion will be sourced from tobacco excise tax alone in 2021, growing to P81.2 billion in 2022, P84 billion in 2023 and P85.6 billion in 2024.

The measure bagged final approval after the House of Representatives — in order to do away with the need for a bicameral conference committee to harmonize conflicting provisions and for ratification — adopted the version of the Senate, which had to make last-minute changes in the face of opposition from congressmen representing tobacco-producing areas. The Senate’s initially approved bill provided 50-50 sharing between governments of tobacco-producing provinces on the one hand and cities and municipalities on the other. The Senate changed the ratio to give cities and municipalities 70%.

The measure brings to three the tax reforms approved by the 17^th Congress, including RA 10963 and RA 11213 which provides a tax amnesty.

TAX REFORM PRIORITIES FOR 18^TH CONGRESS
Asked which of remaining tax reforms the DoF will push in the 18^th Congress, which opens on July 22, Mr. Lambino replied that the department will leave it to lawmakers.

“It’s a comprehensive tax reform program, the most difficult one to pass was our original package one,” he said.

“Since package one has already been passed, we’re open to supporting all the other packages, whichever, kung ano ‘yung unang umandar (whichever advances first),” he added.

“In fact, in the 17^th Congress, we were initially supporting our legislators in evaluating package two, pero moving forward it was passed in the House kaso sa senado hindi nabigyan ng hearing (but it did not progress in hearings in the Senate),” he recalled, referring to the package that sought to reduce corporate income tax rates, which senators backed, while rationalizing fiscal incentives by removing those deemed redundant, towards which senators were cautious due to opposition from existing economic zone investors who warned of job cuts.

“What was tackled after that was the ‘package 2-plus on the tobacco, so ‘yun ang sinuportahan namin (so that is what we supported).”

WB keeps 6.4% 2019 PHL growth forecast

June 6, 2019 | 12:30 am

THE WORLD BANK has maintained its 6.4% gross domestic product (GDP) growth projection for the Philippines this year which the global lender penciled in its economic update in April, even as the latest forecast is 0.1 percentage point less than its January estimate.

The June issue of its Global Economic Prospects, titled: “Heightened Tensions, Subdued Investments”, that was released on Wednesday also shows the World Bank maintaining the Philippines’ 2020 and 2021 GDP growth projections at the 6.5% penciled in April, though also down 0.1 percentage point from January forecasts.

The World Bank’s 2019 projection for the Philippines compares to the country’s 6.2% economic expansion last year and the government’s downward-revised 6-7% target for this year.

At that 2019 projection, the Philippines will outpace most major East Asia and Pacific countries — China’s 6.2%, Indonesia’s 5.2%, Malaysia’s 4.6% and Thailand’s 3.5% — except Vietnam, which is expected to expand by 6.6%.

“In the Philippines, private consumption is rebounding amid slowing inflation and improving employment conditions,” the report read.

“In addition, election-related spending in the first half of 2019 is giving the economy an additional boost and is partly mitigating the impact of weakening exports.”

The global lender expects East Asia and the Pacific to growth by 5.9% this year and next year, and by a slower 5.8% in 2021. The region’s 2019 and 2020 projections are down 0.1 point from January estimates, while the 2021 forecast was maintained. “In Asia, activity is gradually decelerating but remains robust, with output in may countries expanding at a rate of 6-7% despite moderating export growth,” the report read.

Global growth projection has also been slashed by 0.3 point to 2.6% this year, “reflecting weaker-than-expected international trade and investment at the start of the year”. The World Bank expects global growth to pick up gradually to 2.7% next year and then to 2.8% in 2021.

“There’s been a tumble in business confidence, a deepening slowdown in global trade and sluggish investment in emerging and developing economies,” World Bank President David Malpass said in a call with reporters.

“Momentum remains fragile.” — Reicelene Joy N. Ignacio with Bloomberg

Cebu Pacific to expand its hubs in Clark, Cebu

June 6, 2019 | 12:08 am

By Denise A. Valdez, Reporter

LANCE Y. GOKONGWEI, president of Cebu Pacific operator Cebu Air, Inc. — BW *FILE PHOTO*

CEBU PACIFIC said it is eyeing to expand its hubs in Clark and Cebu as it continues to boost its fleet with a target of 83 aircraft by end-2022.

Lance Y. Gokongwei, president of Cebu Pacific operator Cebu Air, Inc., said the budget carrier will be adding “a lot of frequency” in its hubs in Cebu and Clark.

“In Clark, we’re going to try to connect the dots so that a lot of North Asia will be able to fly into the south without having to connect through Manila… I think in the next two to three years, you’ll see a lot of flights into Japan, (South) Korea and China from Clark,” he told BusinessWorld on the sidelines of the JG Summit Holdings, Inc. stockholders’ meeting last week.

For Cebu, Mr. Gokongwei said they will ramp up the frequencies of its existing routes, which currently connect the city to both Japan and South Korea. Cebu is a popular destination for Japanese and Korean tourists.

“The (Airbus A321neos), we put them into Manila. Then we pull out the (Airbus A320s) and put them to Clark or to Cebu,” he said.

The carrier is currently on fleet expansion mode and expects the delivery of 12 new aircraft this year, namely six Airbus A321neos (new engine option), five A320neos and one ATR 72-600.

Mr. Gokongwei said in the long term, what Cebu Pacific wants is to make its Clark operations as big as its Manila operations. “We have to complete the Bacolods, the Iloilos, the Taclobans, the CDOs. Whatever we have in Manila, we’ll replicate in Clark,” he said, but noted it may take about 15 years from now.

In a Tuesday e-mail to BusinessWorld, Cebu Pacific said its hubs in Clark and Cebu have already seen rapid growth since the start of the year, both in terms of new routes and frequency of flights.

For the Clark hub, the carrier already increased its capacity to and from Caticlan by 231% after shifting to use the bigger Airbus A320 starting March 31 from the 78-seater ATR 72-600.

It also noted it will be opening daily from its Clark hub going to and from Iloilo, Bacolod and Narita by Aug. 9, and daily flights to and from Puerto Princesa by Oct. 9.

For its Cebu hub, the airline noted it already added frequency to its flights going to Cagayan de Oro, Dumaguete, Siargao, Iloilo, Caticlan, Ozamiz and Zamboanga by an average of 63% since April 15.

“Flights between Manila and Cebu had likewise increased 24%. The increase in flights from its Cebu hub is on top of its six-times weekly Cebu-Shanghai and Shanghai-Cebu routes which began on April 15, 2019,” it added.

Cebu Pacific currently has flights from Clark to Cebu, Caticlan, Tagbilaran, Davao, Singapore, Macau and Hong Kong.

In its Cebu hub, the carrier flies to and from Bacolod, Caticlan, Butuan, Cagayan de Oro, Calbayog, Camiguin, Clark, Davao, Dumaguete, General Santos, Iloilo, Kalibo, Legazpi, Ozamis, Pagadian, Puerto Princesa, Siargao, Surigao, Tacloban, Zamboanga, Hong Kong, Macau, Tokyo (Narita), Singapore and Incheon.

Listed Cebu Air posted a net income of P3.43 billion in the first quarter, up 138.4% from the same period last year due to a growth in passenger volume and average fares.

20 years of making wine specifically for the Filipino palate

June 6, 2019 | 12:08 am

TWENTY years ago, Vicente “Nonoy” S. Quimbo, decided that it was time Filipinos had a wine of their own and he came up with Novellino, a brand of wines created especially for the Filipino palate.

“Around the world, many countries are known for their wines: France, Italy, etc., and so I thought, why not create a wine for Filipinos?” Mr. Quimbo, CEO and founder of Novellino wines, told the media during a plant tour on May 28 in Laguna.

Mr. Quimbo, who spent more than two decades working as a beverage company executive and had been to five continents of the seven continents, told a friend of his idea to manufacture Filipino wines — the friend said he was crazy.

But that didn’t stop him as he made it a mission “to build a wine drinking culture among typical Filipino households,” he was quoted as saying in a press release.

He admitted that it wasn’t easy because very few locations in the Philippines where grapes can be grown — grapes typically grow in temperate climates and can’t handle the country’s often humid weather — so they had to import grapes from other countries.

Another challenge was to create wines that Filipinos would like drinking (he noted that his countrymen like sweet wines better than dry wines) — so they manufacture their wines by arresting fermentation, which means many of Novalino’s wines have low alcohol content; the Rosso Classico blend, for example, is only 4.5% compared to the average of 11% ABV (“alcohol by volume,” meaning the volume percent of milliliters of pure ethanol present in 100 ml of the drink).

“We are a high intervention winery,” Mr. Quimbo said before explaining that because they do partial fermentation, they needed to invest a lot in the technology that would allow them to do so.

Grape juice is fermented in 13 fermentation tanks, each with a capacity of 30,000 liters. After partial fermentation, the liquid is brought to a centrifuge to separate solids from the liquids. The solids are then squeezed to get as much juice out before being brought to a wastewater treatment facility which uses coco coir. The solids and coco coir are eventually turned into fertilizer (“We’re very, very green that way,” Mr. Quimbo said).

The liquids then undergo other sifting methods to ensure that no impurities or solids are left behind. The processes use egg whites (“it helps sediments settle to the bottom”) and 24 layers of differently textured diatomaceous earth — from coarse to very fine — which traps remaining solids.

The company also injects carbon dioxide to some of the wines to make them “sparkling.”

“The entire process [from wine making to bottling] can take four-and-a-half weeks, while other varieties can take up to nine-and-a-half weeks,” Mr. Quimbo said.

“Everything is standardized here [so] we always have consistent years,” he said, before adding half-jokingly that with all the processes involved to turn the juice to wine, people who prefer sweet wine have “more sophisticated palates.”

And because wines are often “aspirational” and are only drunk on special occasions, it is very price-sensitive so the company takes measures to offer affordable wines: Rosso Classico (750 ml), for example, has a suggested retail price of P242.

The company currently produces 12 wine varieties including flavored wines (strawberry, blackberry, and peach), sangrias, and “light” varieties (less calories) with prices ranging from P242 to P297. They also import Italian wines — Merlot, Cabernet Sauvignon, and Rosso Del Azienda — for P440 for 750 ml.

“Novellino has helped grow the consumption per capita [of wine] from 0.1 liters to 0.2 liters per year,” said a company press release. This might be a considerable increase, but they believe that there is still a long way to go considering European countries consume “40 liters a year per capita.”

Mr. Quimbo said that he considers his wine career as “missionary work” as he tries to “spread the gospel of drinking wine” to the Filipino populace.

Novellino currently has a 1.3-hectare winemaking plant though only a portion is currently being used because they are “future-proofing” and anticipating a growing demand of wines in the country.

“At maximum capacity we can produce 20 million bottles per year. Currently, we produce less than 4 million a year. Maybe in five years [we’ll be at full capacity],” said Mr. Quimbo, though he acknowledged that many people think that P250 per wine bottle is still expensive so “there are limits to growth.”

Now that they are 20 years old, they are starting to look outside the Philippines, considering exporting to countries like Thailand, Cambodia, and Vietnam, and possibly encourage them to franchise Novellino in their own countries and produce their own wines. — Zsarlene B. Chua

Going to Tacloban? Here is where you can stay and what you can do

June 6, 2019 | 12:07 am

By Zsarlene B. Chua, Reporter

ROBINSONS Hotels and Resorts (RHR) has formally opened the fifth hotel under its full-service Summit Hotels umbrella — the 138-room Summit Hotels Tacloban which serves as the company’s vote of confidence in the provincial capital’s potential for growth especially in the tourism sector.

According to data provided by the Department of Tourism (DoT) Regional Office 8, Tacloban City welcomed 559,803 tourists in 2018, 8.51% more than the numbers recorded in 2017. In all, the entire Eastern Visayas Region welcomed 1.78 million overnight guests, up from 1.51 million from the previous year.

The bulk of the visitors — 1.72 million — were domestic tourists.

The increasing numbers and the equally increasing demand for a full-service hotel led to the entry of RHR in Tacloban City.

“For our traveling populace today, their expectations now are higher. Our standards have been raised as we become a prosperous nation,” Arthur G. Gindap, SVP and business unit general manager at RHR, told reporters during a media familiarization trip in early May.

RHR is a subsidiary of Robinsons Land Corp. which operates hotels like Summit, GoHotels, Dusit Thani in Mactan Cebu, Crowne Plaza Galleria, Holiday Inn Galleria, and the soon-to-open Westin in Ortigas.

Mr. Gindap noted that the Tacloban hotel will focus on local tourism and the MICE market (meetings, incentives, conferences and exhibitions), and as such Summit Tacloban has a grand ballroom (1,134 square meters) which can accommodate 600 guests, three function rooms (378 sqm each) which can handle up to 200 people, and three boardrooms which can seat 30-35 people.

The grand ballroom is said to be the largest in the city.

“Our future for Summit is to have a MICE component. So you will see in Tacloban, we [have] the largest facility for MICE for a hotel. We’re moving toward full-service and MICE and convention. We are even considering convention centers. Why only have one in the game?” Mr. Gindap said.

The hotel offers three room categories: the Deluxe and Premiere rooms (both 32 sqm) and themed rooms inspired by the region’s local festivals: the Sangyaw Suite which takes its name from the festival celebrated in June, features floral patterns and chrome accents; the Lubi-Lubi Suite which pays homage to the dance which uses coconuts and coco fronds with a room decorated with leaf patterns and metallic accents; and finally, the Pintados Suite, named after the Pintados Festival held in June, whose decor is inspired by the tattoos of the first inhabitants of Eastern Visayas.

The hotel has one all-day restaurant, Patron, which offers international and local fare, and a swimming pool.

Summit Tacloban is located right beside Robinsons Place Tacloban, a full-service shopping mall. Within the same complex stands Go Hotels Tacloban, a 98-room budget hotel. The entire complex is located five kilometers from the Daniel Z. Romualdez airport and 25 minutes from the San Juanico Bridge to Samar.

Aside from Summit Tacloban, the Summit brand will welcome two more hotels within the year: Summit Hotel Naga and Summit Hotel Greenhills. Soon, RHR will also introduce Go Dorms, a “dormitel” concept “purpose-built for students and young professionals,” according to a company release.

Mr. Gindap also said that group currently has 56 properties currently in operation or under development as they are “set to release its significant expansion plans for the next five years.”

A TRIP IN TACLOBAN
Eastern Visayas offers a myriad of tourist attractions, one of which is Kalanggaman Island in Palompon, Leyte.

The island — 753 meters across — is named after the local word for bird (langgam) as it looks like a bird when seen from above. Some parts of the island are submerged during high tide. The local tourism office only allows 500 people per day to visit the island in order to preserve it. Each group is given two garbage bags for them to segregate their waste and bring it back for disposal in Palompon.

There are no resorts on the island though one can bring or rent a tent if one wishes to spend the night.

The island is about two to three hours away from Tacloban by van though several bus companies ply the road from Tacloban to Palompon. From Palompon, travellers have to journey for about an hour via boat to the island.

While the island offers white — though at times rough — sand and clear waters, tourism officers caution visitors from swimming at the ends of the sandbars as the strong currents might sweep them away.

Aside from Kalanggaman Island, Eastern Visayas also offers other “underrated destinations,” a lot of which are “raw, rustic and natural” where “a lot of hidden gems from reef to ridge await to be discovered,” according to a press release from the DoT Region 8.

Some of these destinations are the Biri Rock Formations in Biri, Northern Samar which has seven rock formations of various sizes created by the wind and waves of the Pacific Ocean; Uwan-Uwanan Gorge in Libagon, Southern Leyte where people trek, rappel, and climb bamboo ladders to reach the cascading waterfalls; and, for people who love historical and cultural tourism, they can stay in Tacloban and visit the MacArthur Leyte Landing Memorial.

SMC’s food and beverage unit bullish on growth

June 6, 2019 | 12:07 am

SAN MIGUEL Food and Beverage, Inc. (SMFB) is bullish on growth for the next few years, on back of the steady expansion of its food, beer, and spirits segments.

“SMFB will continue to grow. Wala kaming bad news na cyclical na biglang masama ang takbo. We are immune to economic shocks, or economic downturn,” SMFB President and Chief Executive Officer Ramon S. Ang told reporters after the company’s annual shareholders’ meeting on Wednesday.

The company is banking on the growing consumption of its beer, food, and liquor brands.

“We are investing in new strategically-located facilities to address robust demand. This also allows us to deliver our products to our consumers fresh and a lower cost,” SMFB said in a letter to shareholders.

For its food business, the company will be building new facilities for poultry and fresh meats processing, feed mills, flour milling. It is hiking the capacity for its prepared and packaged food segment for value-added meats, dairy, spreads, and biscuits.

Mr. Ang said the feed mills alone will have a capacity of one million tons each.

“For our beer business, we completed an additional bottling line in Sta. Rosa, Laguna in 2018 and with the brewing facilities already started in 2019, this will be a full-fledged brewery by 2020. We are also building a new brewery in Tagoloan, Misamis Oriental,” SMFB said.

Meanwhile, Mr. Ang said it will cooperate with the government on the proposed additional taxes on alcoholic products.

“We are going to cooperate with government in sin taxes, basta reasonable, basta kaya ng consumer (as long as it’s reasonable, as long as the consumer can take it),” he said.

He added that they will have to pass on the price increases to customers.

The Department of Finance earlier proposed a P40-per liter tax rate for fermented liquor, which is also reflected in Senate Bill No. 2197. Distilled spirits may face a 22% ad valorem tax on the net retail price as per House Bill No. 8618, which was approved on third reading last December.

On top of that, the House of Representatives moved to add a specific tax per proof liter of P30, while the Senate version provides for a specific tax rate of P40 per proof liter.

Mr. Ang noted that the increase should be similar to how additional taxes have been imposed on cigarette products.

The 17^th Congress approved on Tuesday the proposal to increase excise tax rates for tobacco products, which sought to increase the excise tax on tobacco products to P45 in 2020 and by P5 every year until it reaches P60 per pack in 2023. It will then increase by five percent every year thereafter.

SMFB’s net income attributable to the parent dropped 13% to P3.8 billion in the first quarter of 2019, compared to the P4.35 billion it posted in the same period a year ago. This came amid a 14% increase in gross revenues to P75.66 billion. — Arra B. Francia

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