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Reserves climb further in April

GROSS international reserves (GIR) in the country climbed further in April for the fifth straight month on higher inflows from the central bank’s foreign exchange operations, the Bangko Sentral ng Pilipinas (BSP) reported on Tuesday.

Dollar reserves increased to $83.956 billion in April from the upward-revised $83.613 billion in March, the central bank said. Last month’s total was also higher than the $79.608 billion logged in April 2018.

April’s total is likewise the highest reserve level since October 2016, when the country’s GIR stood at $85.11 billion.

In a statement, the BSP attributed the rise in dollar reserves to its foreign exchange operations and income from its investments overseas, as well as inflows from the national government’s (NG) net foreign currency deposits.

“However, the increase in reserves was tempered partially by payments made by the NG for servicing its foreign exchange obligations as well as revaluation losses from the BSP’s gold holdings, resulting from the decrease in the price of gold in the international market,” the central bank said.

Income from the BSP’s offshore investments increased to $71.936 billion in April from $71.409 billion the previous month and the $64.519 billion posted in April 2018. This accounted for bulk of the reserves.

Meanwhile, the country’s foreign currency stash dropped to $2.189 billion last month from $2.283 billion in March and $5.197 billion in April last year. A stronger peso usually means losses for the BSP while a weaker peso pads the GIR.

The central bank uses the reserve money to temper sharp swings in the exchange rate. The peso strengthened slightly in April from the previous month, with the average logging at P52.112 versus the dollar against March’s P52.413.

The BSP’s gold holdings also decreased to $8.124 billion in April from $8.214 billion in March and $8.251 billion in the same month last year, reflecting lower gold valuations in the international market.

Reserves maintained under the International Monetary Fund (IMF) were mostly steady at $524.3 million versus $524.6 million the prior month. Special drawing rights — or the amount which the Philippines can tap under the IMF’s reserve currency basket — were also steady at $1.183 billion.

The end-April GIR settled above the BSP’s $77-billion projection for the year and the end-2018 level of $79.193 billion.

The current level, which the BSP said “serves as an ample external liquidity buffer,” can cover up to 7.4 months’ worth of import duties and is equivalent to five times the country’s short-term external debt based on original maturity and 3.5 times based on residual maturity.

The GIR has consistently been cited as a source of strength for the Philippines as it serves as a buffer against external shocks. — RJNI

Petron Q1 profit plunges 78%

PETRON CORP. reported a 78% fall in consolidated first-quarter net income to P1.3 billion from P5.8 billion in the same period last year after a decline in revenues brought about largely by the tax reform, it told the stock exchange on Tuesday.

Malaysian operations significantly propped up the company’s bottom line as these accounted for P1.2 billion of the consolidated net profit.

Consolidated revenues during the quarter dropped by 4% to P124.6 billion after a 5% decline in sales volume for the Philippine operations with the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Law.

“Despite lower margins, efforts to manage risks and strengthen our presence in key areas were implemented to mitigate its impact. We remain focused on completing major expansion projects that will further cement our leadership in the industry,” said Ramon S. Ang, Petron president and chief executive officer, in a statement.

“We fully understand that long-term growth will always be threatened by inherent risks, and these investments will ensure our continued growth and profitability in the future,” he added.

Petron said by now, a total of around P4.50 per liter in excise tax plus value-added tax (VAT) are included in fuel prices, translating to an increase of around P8 billion in excise taxes and P1 billion in VAT on a quarterly basis.

The company said the TRAIN Law also created a price advantage for importers since refiners maintain higher inventory in crude form, which is immediately taxed upon production. Importers maintain inventories as finished products that give them the advantage for at least 30 days, it added.

“Compounding this challenge is the declining refining margins in the region, which penalized Philippine operations by P3.3 billion in the first quarter,” the listed oil company said.

It said the impact of the second phase of tax reform and the rising crude prices reduced consolidated income from operations by 45% to P4.9 billion.

In the first quarter, Petron said it continued to expand its network of stations as it opened 40 new stations. It currently has the largest network in the country and in Malaysia, where it has more than 650 stations, bringing Petron’s combined count to over 3,000.

Petron will soon commission its new lube oil blending plant, which will have a capacity twice that of its current Pandacan plant. The new plant will improve the lubes business while improving operating efficiencies and margins, it added.

“With the continued growth of its polypropylene business, the homegrown oil giant is also nearing completion of its polypropylene plant expansion, which will give it better margins,” the company said.

Petron earlier announced that its 180,000 barrel-per-day refinery in Limay, Bataan was forced to go into an emergency shutdown after the April 22 earthquake. It assured the public that the shutdown would not affect local supply as it has ample inventory to supply domestic market requirements.

Petron disclosed its quarterly income after the market closed on Tuesday. Its shares ended the trading day lower by 0.48% at P6.25 each. — Victor V. Saulon

If Art is a Hammer: Portraits of Filipino artists as working stiffs

By Menchu Aquino Sarmiento

LIKE THE gag reflex, the 1st of May gives rise to the usual public clamor for living wages and the end of contractualization. Artists are also vulnerable to such “precarity,” as these deplorable working conditions are politely termed. The so-called creative industries — from the performing artists in resorts to the piece-work crafters of fashion accessories — are generally unregulated. What does it behoove an unemployed, part-time jobber or the artist who may not even have a written contract for an occasional project, to register with the BIR and invest in stacks of official receipts which s/he will likely use once in a blue moon? A renowned writer, himself an independent contractor, was lumped with dance instructors when he registered with the BIR because professional writers were a nonentity on the BIR roster. He had to issue ORs to his many corporate clients, but his case is rare. Most Filipino artists do not have formal contracts or such a surfeit of projects. Many simply fall through the cracks, without the safety nets of SSS, PhilHealth, or Pag-Ibig.

On the Sunday before Labor Day, at the Concerned Artists of the Philippines’s public forum “If Art is a Hammer,” it was noted that artists can do manual work or service jobs, even get by as call center and sales agents, but not every cog in the endo machine can be an artist (“endo” is short for “end-of-contract” meaning contracts of less than six months). The forum’s theme came from Bertolt Brecht’s statement that “Art is not a mirror held up to reality but a hammer with which to shape it.”

Easier said than done. In reality, the creative industries mirror the prevailing inequities, oppression and exploitation of the real world. Just as the top 1% control our economy, hogging wealth and resources, there is also a 1% of superstar artists. The gap is perceptibly widest in movies and TV. E.g., a respected multi-awarded character actor like Eddie Garcia commands P250,000 per shooting day (he does freebies for the indies). That’s still far below the seven figures daily for the most popular love teams. Experienced professionals like Joel Saracho, who shared these numbers, get paid in the low thousands for a day’s work. The thick broad bottom consists of the extras and production crew making minimum wage or a bit over.

Artists hired on a per project basis don’t get overtime pay. An award-winning indie filmmaker who shoots teleserye (soap operas) for a living told of how the major TV stations require six episodes per week at 52 sequences per episode. It’s impossible to complete these within the standard eight hour work day. If the superstar whose popularity carries the show comes late, or worse, is absent, the daily wage earners don’t get paid for showing up or waiting around. The little folks at the bottom must suck it in if they want to keep getting hired.

Roland Tolentino of the UP College of Mass Communications points out how the myth of the individual genius-artist redounds to the benefit of the top 1% who deliberately cultivate the artificial aura of scarcity, uniqueness, elite exclusivity, by which they manipulate the markets in their favor. The stratospheric auction house prices for works by a handful of visual artists, and of even fewer sculptors, epitomize this reality.

Dr. Tolentino estimates around 20% of creatives can live decently by their practice, but the vast majority of 80% must have other paid work to survive. Which brings up the plight of teachers, a common go-to job. The Department of Education does not provide for Humanities teachers. A Polytechnic University of the Philippines (PUP) instructor/poet revealed that a starting instructor gets just P186.75 per hour and must fight for every hour of a teaching load. The Philippine National Police conducts random drug tests on students, faculty and other employees on the PUP campus. Red-tagging deters attempts at organizing.

The strike remains organized labor’s most potent weapon in the essential industries. It rarely works that way for artists who are generally not organized. Also, for one artist who goes down, many more are waiting to take her place. Locally, two high points were the proposed Original Pilipino Music (OPM) Development Act of 2014 and the Artists Welfare and Protection Bill. But where are they now?

A dancer-choreographer described how socialist countries are more supportive of contractual workers. In France, if workers do not exceed a certain number of work hours, they may collect unemployment benefits. Some international residencies provide for child care. A lighting designer spoke wistfully of how in Germany, theater technicians get a food subsidy and free cab rides after 9 p.m. On May 1, artists joined the rest of labor in their demand for “Lupa, Sahod, Trabaho at Karapatan (Land, Wages, Work and Justice),” shorthand for: Land to the Tillers; a Living Wage; End Contractualization; Uphold Human Rights.

The same lighting designer revealed that the original name of the Cultural Center of the Philippines was supposed to include “Theater for the Performing Arts,” but in reality, its theater production crew is so little valued that they wait weeks, even months after a project’s end to get paid. Thus, many Filipino performing artists and production crew have joined the overseas exodus to work in Disneyland, casinos, or on cruise ships.

A disappointed veteran animator warned against falling for the TESDA-accredited animation courses which only train students in the Japanese animé-style when Disney or Pixar style are more in demand. He claimed that studios like Imee Marcos’s CreaM (Creative Media and Film Society of the Philippines) could collect P25,000 per student from TESDA to train each new student, or from those like him who merely sought to upgrade their skills. Part of their training was having to make free animated shorts for the Revilla, Legarda, and Marcos campaigns. Truly some are smarter than others.

Metrobank net profit up

METROPOLITAN Bank & Trust Co. booked higher net income in the first quarter. — BW FILE PHOTO

METROPOLITAN BANK & Trust Co. (Metrobank) saw higher net income in the first quarter driven by consistent lending and margin expansion as well as higher fee-based income.

In a disclosure to the local bourse Tuesday, the Ty-led lender said it posted net earnings amounting to P6.8 billion in the first three months of the year, up 15% from P5.9 billion in the same period last year.

Net interest income grew 12% year-on-year to P18.1 billion, accounting for 74% of the bank’s total revenues of P24.6 billion.

Net loans and receivables stood at P1.4 trillion as of end-March, 8.5% higher than the P1.3 trillion booked in the comparative year-ago period, driven by its commercial loan segment comprised of top corporate accounts, middle market, as well as small and medium enterprises.

Even as it expanded lending, asset quality remained healthy, with its non-performing loan (NPL) ratio slightly up at 1.5%.

On the other hand, Metrobank’s total deposits were at P1.6 trillion, flat from the year-ago level. Its current and savings account ratio was stable at 61% to total deposits.

Net interest margin improved by nine basis points to 3.84% compared to last year.

Meanwhile, non-interest income rose by 8% year-on-year to P6.5 billion in the first quarter. This was driven by a 9% increase in service fees and commissions to P3.1 billion, P1.5 billion in net trading and foreign exchange gains, as well as P1.6 billion in miscellaneous income.

“Fee-related revenues as well as trading income continue to benefit from increased customer business in fixed income and foreign exchange,” Metrobank said.

Operational expenditures grew 10% year-on-year to P13.5 billion. Manpower-related costs accounted for P5.4 billion of the total, while the balance was spent on systems and process improvements and continuous investments in information technology.

Metrobank also set aside P2.4 billion in provisions for credit and impairment losses.

Overall, the lender’s assets stood at P2.3 trillion as of end-March, up 9.5% from the P2.1 trillion recorded last year. Equity was at P288.7 billion.

Capital ratios of Metrobank remained above minimum requirements, with its total capital adequacy ratio and common equity Tier 1 ratio at 17.4% and 15%, respectively.

Metrobank President Fabian S. Dee said the lender delivered “favorable” results in the firs three months of 2019.

“The year is starting on the right track, with performance metrics showing expansion in existing income streams, improving productivity, and most importantly, quality growth,” Mr. Dee was quoted as saying in the statement.

“We remain optimistic on the prospects of the economy, which should be supportive of the thriving banking industry. Against this backdrop, we will continue to focus on key initiatives that will impact customer experience, efficiency, governance, and sustain profitability for the bank.”

The lender announced last March that it will absorb its wholly owned subsidiary Metrobank Card Corp. to improve synergy and increase profitability.

Metrobank shares ended at P73.85 apiece on Tuesday, gaining P1 or 1.37% from the previous day’s close. — Karl Angelo N. Vidal

Nickel Asia income slides 68% in 1st quarter

NICKEL ASIA Corp. (NAC) reported a 68% decrease in attributable net income for the first quarter, as the peso strengthened against the US dollar.

In a disclosure on Tuesday, the listed miner said earnings slid to P147.6 million during the January to March period, from the P456.7 million recorded during the same period last year.

At the same time, earnings before interest, tax, depreciation, and amortization (EBITDA) slipped by 11% to P613.8 million from P686.3 million, quarter-on-quarter

“The lower earnings during the first quarter was due primarily to the impact of a strengthening Peso relative to the US Dollar resulting to a net foreign exchange loss of P6.7 million, a turnaround from a gain of P344.0 million recognized last year,” Nickel Asia said.

The mining company reported a P25.3-million net loss from its equity investments in Coral Bay Nickel Corp. and Taganito HPAL Nickel Corp. (THPAL), against the P194.7 million earned during the same period last year.

NAC’s share of earnings from Coral Bay HPAL dropped 53% to P53 million in the first quarter, due to falling nickel and cobalt prices. The drop in prices also affected the THPAL plant, which likewise saw a P78.3-million loss. The plant also had to undergo a three-week maintenance shutdown last March.

NAC said it sold around 2.89 million wet metric tons (WMT) of nickel ore during the first quarter of the year, 6% lower than the 3.09 million WMT sold in the same period the previous year.

“Ore deliveries to the two processing plants, which increased from 2.0 million WMT in 2018 to 2.14 million WMT this year did not sufficiently offset the decline in ore export volumes, which fell to 749,000 WMT from 1.09 million WMT last year,” the company said.

NAC said it realized an average of $5.56 per pound of payable nickel on its shipments of ore to the two plants, 8% lower than the average of $6.02 per pound of payable nickel during the same period in 2018.

In terms of export sales, Nickel Asia said it realized an average price of $19.01 per WMT, 7% higher than the $17.82 per WMT in 2018.

On a combined basis, the average price for sales of ore exports and ore deliveries to the two plants stood at $10.63 per WMT, 10% lower than the $11.85 in 2018.

“Nickel ore shipments from Indonesia are expected to increase further for a third successive year and will continue to put pressure on ore export prices this year,” Martin Antonio G. Zamora, president of NickelAsia.

“On the other hand, the medium-term outlook for London Metal Exchange-linked nickel is likely to improve. We anticipate this segment of our market to account for 46% of total shipments for the year, much higher compared to 40% in 2018,” Mr. Zamora added. — VMPG

Filipino faith and artistry at the Museo de Intramuros

TOWARDS the end of Spanish colonial rule, architect Felix Roxas, Sr. designed the San Ignacio Church in Intramuros, Manila for the Jesuits. The structure was completed in 1899 but it, along with the other seven churches of the walled city, were devastated in the Battle of Manila at the close of World War II. When the smoke cleared, only the centuries old San Agustin Church still stood. San Ignacio was reduced to rubble.

It was in 1979 that the Intramuros Administration (IA) came with the idea of reconstructing San Ignacio Church and its attached Mission House of the Society of Jesus with the intention of turning it into a museum.

The idea remained on paper for decades until, finally, in 2011, a grant of P100 million between IA and the National Commission for Culture and the Arts (NCCA) was executed. The reconstruction of the church began in 2013 followed by the restoration of the mission house in 2016.

“It was originally a program of the Intramuros Administration to construct two museums” in the walled city, Museo de Intramuros curator Dino Carlo Santos told BusinessWorld during a visit to the museum on May 2. The first museum was Casa Manila across San Agustin Church, which features a reconstructed bahay na bato filled with the furniture, knick knacks, and equipment found in a rich person’s house at the later part of the Spanish colonial era.

“The National Museum undertook the archaeological excavations and then a team of architectural consultants helped reconstruct the whole structure,” he said of the San Ignacio complex.

WHAT’S INSIDE?
As part of the celebration of the Intramuros Administration’s 40th anniversary as an institution, the Museo de Intramuros officially opened to the public on May 2.

“What we want is for Intramuros to be a creative urban heritage district. More than the heritage structures, we want Intramuros to have a new relevance to the society in general,” Sheena Anjeli M. Botiwey, IA technical assistant to the administrator and sales and promotions supervisor, told BusinessWorld.

Curated by Dr. Esperanza Gatbonton, Gino Gonzales, Dr. Cecilia dela Paz, Santiago Pilar, and Martin Tinio, the museum’s exhibition “presents the story of the evangelization of the Philippines from the perspective of Filipinos,” the museum brochure says, with the aim to “highlight the resulting Filipino artistry and craftsmanship in the merging of the indigenous and the foreign…”

The three-story former mission house is the main museum and its exhibit has six components: The Immaculate Conception, The Religious Order, The Patronato Real and Establishment of Parishes on the first floor; The Establishment of a Parish and Sacred Vessels, The Indio Response, and Religious Colonial Paintings on the second floor; and an exhibition on the history and rebirth of Intramuros on the third floor.

Meanwhile, the restored church structure has been hosting changing exhibitions on contemporary art (the first was during the Manila Biennale in 2018 where it housed a work by the late Roberto Chabet called Onethingafteranother and Fr. Jason Dy’s Procesion de los Camareros). It is currently inaccessible since it is changing exhibits.

The ecclesiastical art, furniture, vestments, textiles, and other artifacts on view at the museum are part of the Intramuros Administration’s own collection which, according to Mr. Santos, were acquired by the institution from auctions and dealers of antiques.

“The significance (of the exhibit) lies in the collections themselves. The collection is actually a reflection of Filipino craftsmanship during the Spanish period. You don’t see them as expressions of colonial art, but as expressions of Filipino artistry,” IA administrator Guiller B. Asido told BusinessWorld in a phone interview.

FUTURE PLANS
Both Messrs. Asido and Santos noted that the current displays in the museum is made up of only 30% of the IA collection. Mr. Santos said that there are plans “to construct more galleries in order to accommodate more of the collection.” The museum will also be used for educational programs, workshops, and group tours.

In addition, the IA is working on the full ventilation of the place (the second floor is currently the only air-conditioned space) and installation of elevators for accessibility.

Admission to the museum is free for the first six months. After that, there will be a fee to raise funds for the structure’s maintenance.

As part of the efforts to promote arts and culture in the walled city, Mr. Asido looks forward to the completion of the Maestranza creative quarter — a 44 chambered, 270-meter section of the city walls on the Pasig River side. He described it as “the first creative hub within an urban heritage district.” It is targeted for completion in the first quarter of 2020.

Museo de Intramuros is located at Arzobispo St., Intramuros, Manila. It is open Tuesdays to Fridays (except holidays) from 9 a.m. to 5 p.m. For more information, visit, www.facebook.com/OfficialIntramurosAdministration/Michelle Anne P. Soliman

How PSEi member stocks performed — May 7, 2019

Here’s a quick glance at how PSEi stocks fared on Tuesday, May 7, 2019.

 

DTI urged to check foreign compliance with capital rules

THE Philippine Retailers Association (PRA) has called on the Department of Trade and Industry (DTI) to look into whether foreign retailers are violating the rules on minimum investment levels to operate in the Philippines.

“I recommend that DTI review the registrations of all these Chinese, Korean, etc restaurants, groceries, tiangge stalls, etc. to check if there are violations,” Roberto S. Claudio, vice-chair of the business group, said in a mobile message on Monday.

Mr. Claudio said, however, that it may be difficult to get a clear picture of the situation as some use dummies or joint ventures to dodge Republic Act No. 8762, or the Retail Trade Liberalization Act of 2000, which requires foreigners seeking to fully own a retail business to have $2.5 million in minimum paid-up capital.

Under the law, full foreign ownership is only valid in the first two years while the maximum stake is capped at 60% thereafter. Meanwhile, a $7.5-million capital investment entitles the foreign party to retain full ownership indefinitely.

Trade Secretary Ramon M. Lopez said the DTI has regional offices to ensure that retailers are operating within the bounds of the law.

Nevertheless, Mr. Lopez said “the general policy is toward liberalization to encourage more investments and job creation for Filipinos.”

The DTI, along with other economic departments, proposed a $200,000 capitalization level to operate here, which is reflected in House Bill No. 9057, which has so far made it to second-reading approval.

Meanwhile, the counterpart measure at the Senate, Senate Bill 1639, which aims to eradicate all investment thresholds, is encountering opposition from small and medium-sized local retailers.

The PRA warned that the removal or the lowering of the minimum investment to the proposed level will further ease out domestic retailers.

Instead, the PRA proposes the encouragement of local-foreign joint ventures as a win-win situation to encourage more foreign investment at the same time protecting our Filipino entrepreneurs.

Meanwhile, DTI’s Mr. Lopez said he supports Senator Panfilo M. Lacson’s call to shut businesses that provide services exclusively to certain nationalities like the Chinese.

Bawal ang (It is illegal to have) a Chinese-only policy in any store. Or catering to a specific nationality,” Mr. Lopez said in a mobile message to reporters on Tuesday, adding businesses should put up signage in various languages to adapt to their new customers. — Janina C. Lim

Law signed exempting first-time jobseekers from document fees

PRESIDENT Rodrigo R. Duterte has signed into a law a measure waiving fees and charges for government documents typically issued to first-time jobseekers, the Palace said.

Mr. Duterte signed on April 10 Republic Act No. 11261, also known as the “First Time Jobseekers Assistance Act.” Malacañang released copies of the law Tuesday.

The law directs all government agencies and instrumentalities, including government-owned and -controlled corporations (GOCCs), local government units (LGUs), and government hospitals not to collect fees or charges from a first-time jobseeker provided that such payments are in connection with the application for and the granting of documents or identification cards usually required in the course of local or overseas employment. This benefit can only be “availed of once.”

Documents covered by the law are the police clearance certificate, National Bureau of Investigation clearance, barangay clearance, medical certificates from a public hospital (with the exception of laboratory tests and other medical procedures), birth certificates, marriage certificates, transcripts of academic records issued by state colleges and universities, tax identification numbers, Unified Multi-Purpose ID cards, and other documentary requirements issued by the government that may be required by employers from applicants.

Section 6 of the law states: “The concerned government agencies shall maintain and update a roster of all individuals who have been issued documents under this Act. This roster shall be regularly submitted to the Department of Information and Communications Technology (DICT), which shall compile a database of all beneficiaries of this Act to be made accessible to all relevant agencies.”

First time jobseekers will be assisted by the Public Employment Service Office (PESO) in securing required pre-employment documents from various government agencies.

The labor secretary, in consultation with the DICT and other agencies, is tasked to issue within 60 days from the effectivity of the law the implementing rules and regulations (IRR).

In a statement, Senator Juan Edgardo M. Angara, who co-authored the law, said: “We express our sincerest gratitude to the President for signing into law this landmark legislation that would exempt an estimated 1.3 million first-time jobseekers annually from paying fees on government-issued documents that are inordinately expensive for people without regular jobs.”

“This is one classic example where the government prioritizes the welfare of its people over revenues. While the law would lead to millions of pesos in foregone government profits, it would provide financial relief to cash-strapped jobseekers,” he added. — Arjay L. Balinbin

Bangsamoro touted as major source of agricultural growth — DA

THE Department of Agriculture (DA) said it is expecting the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) to be a major food producer for the Philippines in five years.

“The potential for food production is immense. In five years the Bangsamoro area will definitely be a major food producer for the country,” Agriculture Secretary Emmanuel F. Piñol said in a text message in response to a BusinessWorld query.

Recently, the department committed to help the region formulate a 10-year Agriculture Master plan to help the area’s agriculture and fisheries industries. The region is thought to be rich in these resources but suffers from high levels of poverty incidence, which the 10-year plan hopes to moderate.

He noted that there are about 100,000 hectares of land suitable for high-value crops like Cavendish banana, pineapple, cacao, abaca, and hybrid coconut. He also said that there are emerging rice farms in the region in the Liguasan Marsh along the Mindanao River basin and Lake Lanao in Lanao del Sur.

“The region could be the major source of cultured fish, not to mention freshwater fish from Liguasan Marsh and Lake Lanao. For rice, the region has the potential of producing at least 3 million metric tons of paddy rice every year,” he said.

For the master plan, the DA and the BARMM agriculture ministry will be conducting a multi-sectoral workshop after the elections to draft the plan.

Since becoming an autonomous region, BARMM agriculture has been held back by corruption.

According to BARMM Agriculture Minister Mohammad Yacob, “We have to leave that behind us and do it right this time,” he was quoted as saying in a social media post by Mr. Piñol earlier this week.

BARMM is composed of Lanao del Sur, Sulu, Maguindanao, Basilan, and Tawi-Tawi and the City of Cotabato.

According to the Philippine Statistics Authority, in the first half of 2018, the income gap, which measures the average income required by the poor to get out of poverty compared with the poverty threshold, was 32.9% in the first five provinces, up 0.8% from three years earlier. — Vincent Mariel P. Galang

National government debt rises to record P7.8 trillion at end of March

OUTSTANDING government debt rose to record levels in March following the issuance of retail Treasury bonds during that month and amid a weaker peso, the Bureau of the Treasury (BTr) said.

National government debt was at a record P7.802 trillion at the end of the first quarter, up 4.7% from February and 13.4% from the same period last year.

Year to date, government debt increased by P509.76 billion or 7% from the end of 2018.

Two-thirds of the debt stock at the end of March came from domestic sources — P5.197 trillion, up 6.1% from the previous month.

The Treasury attributed this to the net issuance of government securities in March worth P298.21 billion as well as the revaluation of domestic dollar bonds to P430 million after the peso weakened.

At the end of March, the peso depreciated to P52.629 against the dollar from P51.769 at the end of the previous month.

The government raised a net P235.935 billion from its latest offering of five-year RTBs following a two-week offer period running to March 8.

The retail bonds are targeted at institutional and individual investors, with a yearly interest rate of 6.25%.

Year-to-date, domestically-sourced debt rose by P419.96 billion or 8.8% from P4.777 trillion at the end of 2018.

On the other hand, funds raised from foreign sources accounted for P2.605 trillion of the total, up 2% from end-February’s level of P2.553 trillion.

The rise in overseas debt was mainly due to the impact of a peso fluctuation against the dollar worth P42.42 billion as well as foreign loan availments worth P11 billion during that month.

This however was tempered by the net depreciation of third-currency debt, carving out P1.36 billion.

So far this year, external debt increased by P89.79 billion or 3.6% from its end-December level of P2.516 trillion.

Meanwhile, guaranteed obligations stood at P479.67 billion in March, up 1.3% or P6.3 billion month-on-month.

“This was due to the net issuance of domestic guarantees amounting to P2.79 billion and currency fluctuations on both local and third currencies, which increase the peso value of external guarantees amounting to P4.73 billion and P0.42 billion, respectively,” the BTr said.

Net repayments on external guarantees amounted to P1.64 billion.

The government plans to borrow up to P1.189 trillion in 2019 to help finance its spending. Of this year’s total, P891.7 billion will be sourced domestically and P297.2 billion from overseas.

The Development Budget Coordination Committee adjusted the borrowing ratio in favor of domestic sources to 75-25 for 2019, from the previous year’s 65-35 ratio.

The government borrows from domestic and foreign sources to fund its budget deficit, which for this year is projected at 3.2% of gross domestic product. — Karl Angelo N. Vidal

Shell hydrogen plant in Batangas seen raising processing flexibility

PILIPINAS Shell Petroleum Corp. (PSPC) will build a hydrogen manufacturing facility within its Tabangao, Batangas oil refinery, allowing the company to produce more grades of crude and increase its output by early 2021, its top official said.

“We are basically installing a hydrogen manufacturing unit because the availability of more hydrogen will allow us to process more advantaged crude, more exotic crudes. So, yes we are installing a facility in the refinery,” PSPC President and Chief Executive Officer Cesar G. Romero said in a briefing Tuesday ahead of its annual stockholders meeting on the same day.

He said the Tabangao expansion will account for about P2 billion to P3 billion of the company’s P6-billion in capital expenditure this year. The retail business will corner about P2 billion, with the remainder going into to the rest of its supply chain.

In the past year, the company’s P4.1-billion budget was allocated mainly to the retail business, taking up P2 billion, with refinery enhancements cornering P1 billion, and the remaining P1 billion going into the rest of the supply chain.

“It’s not primarily intended to be a main capacity-increasing option, but it will yield some improvements in capacity as well. But the primary intention is to increase the crude flexibility because we really need hydrogen to process more sour crude,” he added.

Sour crude has a higher sulfur content and is more difficult to process compared to light sweet crude, which yields more final product per unit of input. Sources of sour crude include Saudi Arabia, Kuwait, Iraq, Venezuela and Canada.

Mr. Romero said the commissioning of the hydrogen facility is targeted for around the fourth quarter of 2020.

“So for planning purposes, we’re hoping we will be able to operate that in Q1 (first quarter) 2021,” he said.

PSPC distributes the refined products produced at the Tabangao refinery and imported petroleum products, including lubricants and bitumen, through its 25 fuel distribution terminals and supply points, 10 lubricant warehouses and 2 bitumen production and import facilities spread throughout the Philippines.

“Our refinery will start investing in its hydrogen optimization project that will allow it to improve flexibility of its crude intake and product slate,” Jose Jerome R. Pascual III, PSPC chief financial officer, said in the same briefing.

He said the company’s growth target of opening 50 to 70 new retail sites, 15 to 20 Select Shops, 15 to 20 deli2go offerings, and 30 to 50 Shell Helix oil change plus, and Helix service centers will remain the same.

At the end of 2018, Pilipinas Shell had 1,084 service stations, with around 44% company-owned and 56% dealer-owned.

The company has produced the country’s first-ever batch of domestically-blended bitumen, a road paving material also known as asphalt. Pilipinas Shell remains the only bitumen supplier in the country with local manufacturing capability.

“Before we had the bitumen facility, we already have roughly 40-50% of the domestic market for bitumen,” Mr. Pascual said. “The new bitumen facility is sized larger than the domestic market, which means that we can supply both the domestic market as well as export.”

In the fourth quarter, the company made its first export of finished bitumen within the region, to Vietnam.

“This gives us a lot of opportunity with the hydrogen optimization that we’re doing that will allow us to produce more residue for bitumen production as well as more diesel. It will enable the bitumen plant to produce the bitumen required both domestically and the market that we see in the region,” he said. — Victor V. Saulon