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BusinessWorld economic forum tackles next-wave disruptions, opportunities

BUSINESSWORLD Economic Forum 2019 takes place on May 30 at the Grand Ballroom of Grand Hyatt Manila in Bonifacio Global City, Taguig City with the theme “The Future of Business: Next-wave Disruptions & Opportunities” and Jaime Augusto Zobel de Ayala, chairman and chief executive officer (CEO) of Ayala Corp., as keynote speaker.

Mr. Zobel will share how Ayala Corp. — one of the oldest and biggest conglomerates in the Philippines with interests in real estate, banking, telecommunications, water, power, industrial technologies, infrastructure, health care and education — has been embracing disruptions and seizing opportunities brought about by emerging technologies.

The whole-day forum will bring together thought leaders, industry experts, business executives, government policy makers, innovators, academicians, technology providers and other leading figures in the public and private sectors to share their insights on the promises and risks of technology and how they could impact businesses over the next 10 years.

The first session on “Automation & Artificial Intelligence and How They Will Impact People, Skills, and Management” will discuss benefits and adverse effects of job automation and artificial intelligence adoption. The session also aims to answer questions on the implications of Generation Z to the workforce.

To share their knowledge on the topic are McKinsey & Company Managing Partner for the Philippines Kristine Romano, Management Association of the Philippines President Rizalina G. Mantaring, Degreed vice-president for Global Business Solutions Susie M. Lee and Acumen Strategic Consulting, Inc. Managing Director Pauline G. Fermin. Panel discussion will be moderated by BusinessWorld Editor-in-Chief Roby Alampay.

The second session — “Digital Commerce and How Big Data & Mobile Technology Will Shape the Future of Retail” — will tackle the continuing expansion of e-commerce that is projected to become a multi-billion peso industry in a few years. Speakers for this session are Boston Consulting Group Singapore Partner and Managing Director Shiv Choudhury, Globe Telecom, Inc. Senior Vice-President for Globe Business Peter D. Maquera, Lazada Philippines CEO Raymond N. Alimurung, and Entrego President Constantin Robertz. Panel discussion will be moderated by One News Anchor RJ Ledesma.

The third session, “Financial Technology & The Future of Money,” will discuss financial sector developments such as financial technology (fintech), blockchain, cryptocurrency and cashless economy, and how these trends will reshape various industries. Frost & Sullivan Asia Pacific Managing Director and Partner Shivaji Das, Bank of the Philippine Islands (BPI) Chief Digital Officer Noel A. Santiago, FinTechAlliance.ph Founding Chairman Lito M. Villanueva, and Bangko Sentral ng Pilipinas Senior Director and Officer-in-Charge for Fintech Sub-Sector Vicente T. De Villa III will share their thoughts about the topic. Panel discussion will be moderated by One News Anchor Daniela Laurel.

The last session — on “Next-Generation Technology and The Future of Economy” — will tackle emerging technologies and their potential contribution to economic growth. To lead discussions are Alliance Global Group, Inc. CEO Kevin Andrew L. Tan, Microsoft Philippines Country General Manager Andrés Ortola, MFT Group of Companies CEO Maria Francesca F. Tan, and IBM Philippines President and Country General Manager Aileen Judan-Jiao. Panel discussion will be moderated by BusinessWorld SparkUp Editor Santiago J. Arnaiz.

BusinessWorld Economic Forum has been held annually since 2016. It serves as a platform for industry leaders and key figures in the society to discuss key challenges that affect the country.

BusinessWorld Economic Forum 2019 is presented by LT Group, Inc., Entrego and GT Capital Holdings, Inc. with sponsors: (Platinum) Megaworld Corp.; PLDT, Inc.; Toyota Motor Philippines Corp. and Lexus; (Gold) Ayala; BDO Unibank, Inc.; Federal Land, Inc.; MFT Group; Metro Pacific Investments Corp.; San Miguel Corp., SM Investments Corp. and Turkish Airlines; (Silver) Aseana City; FWD; Globe, Manila Electric Co. and Rizal Commercial Banking Corp.; as well as (Bronze) Aboitiz Equity Ventures, Inc.; BPI; Double Dragon Properties Corp.; First Gen Corp.; National Home Mortgage Finance Corp.; Pag-IBIG; SGV; Viventis and Degreed; Wilcon Depot and Cross; with partners Grab (mobility), The Philippine Star (print), One News (broadcast), and Fiera De Manila, Inc. (event).

To register and for more information, please visit www.bworldonline.com/businessworld-economic-forum-2019 or call BusinessWorld’s marketing department at 535-9901 local 707. Registration is open until May 28.

Maynilad allots P16.8 billion for expansion projects this year

MAYNILAD Water Services, Inc. is setting aside P16.8 billion for capital expenditures this year, focusing mainly on wastewater projects in the west zone concession area.

“Maynilad is dedicating a bigger share of this year’s capital investment toward wastewater projects, as we seek to facilitate sewerage coverage expansion in the West Zone,” Maynilad President and Chief Executive Officer Ramoncito S. Fernandez said in a statement yesterday.

“Accelerating our wastewater projects will require a lot of resources but we are committed to do our part in protecting the health of our customers and the environment,” he added.

This year’s P16.8-billion capex is 87% higher than the P9 billion earmarked for expenditures last year. Maynilad earlier announced it is allotting P100 billion for capex until 2022, most of which will be dedicated to building new sewage treatment plants (STPs).

Maynilad said around P11.4 billion of this year’s budget will be spent on wastewater management projects, such as the construction of a new STP in Central Manila. It is also upgrading old STPs to have nutrient-removal processes and installing new sewer service connections including about 30 kilometers of sewer lines in Las Piñas City.

Some P3 billion of the capex will go to non-revenue water management program, or Maynilad’s water loss recovery system, which includes services such as leak detection and repair, meter management, pipe replacements and network diagnostics.

About P1.9 billion will be allocated for water operations support like the construction of additional pumping stations and reservoir, service expansion programs and water source projects. These are all investments geared towards improving the water supply and pressure in the west zone concession area.

The remaining funds will be dedicated to customer service and information program improvement.

Maynilad said it will source its capex from internally generated funds and bank loans both in and out of the country.

Metro Pacific Investments Corp., which has majority stake in Maynilad, is one of three Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT, Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has interest in BusinessWorld through the Philippine Star Group, which it controls. — Denise A. Valdez

Investors snap up Globe shares as telco stands by Huawei amid US trade blacklist

By Marissa Mae M. Ramos
Researcher

INVESTORS bought Globe Telecom, Inc. shares last week following the company’s announcement it will continue to partner with Huawei Technologies Co. Ltd. despite the United States placing the Chinese tech giant on a trade blacklist.

The Ayala-led company was the ninth most actively traded stock in terms of value turnover with a total of 429,740 shares worth P898.4 million having exchanged hands on the trading floor from May 20 to May 24, according to data from the Philippine Stock Exchange (PSE).

The stock price closed on Friday at P2,088 per share, down 0.57% from the previous day. It was, however, up 4.5% from its closing price of P1,999 on Friday the week before. Year to date, it is up 9.9%.

Unicapital Securities, Inc. Technical Analyst Cristopher Adrian T. San Pedro attributed Globe’s stock movement to two things: net foreign buying and the company’s statement on reaffirming its partnership with Huawei amid the United States and other countries cutting ties with Huawei and other Chinese technology companies due to security concerns.

Data from the PSE showed net foreign buying for Globe stood at P403.1 million last week, 308.1% more than its recorded P98.8 million the previous week.

“Globe stands by Huawei and will continue to sell handsets and (buy) network gear from the Chinese firm despite the ongoing trade blacklisting by the US government,” Mr. San Pedro said in an e-mail.

“The company also reassured investors that their P63-billion capital spending on network rollout and 5G launch will not be disrupted by the ongoing trade war,” he added.

Globe President and Chief Executive Officer Ernest L. Cu said on Thursday that it affirmed its tie-up with Huawei, noting the 5G network is scheduled to launch next month.

Earlier last Monday, telco giants Globe and PLDT, Inc. announced they are working with Huawei to address customer concerns as Alphabet, Inc.’s Google is suspending ties with the Chinese tech firm amid the US-China trade war.

Reuters had reported on Tuesday that the US Commerce department granted Huawei a license to buy US goods until Aug. 19 to keep its existing telecoms networks and provide software updates to Huawei smartphones.

Google’s withdrawal of Huawei’s license to use its Android operating system means that Google services relating to the transfer of hardware, software, and technical services will no longer be available on Huawei devices, except those available through Android’s open source license. It also means future Huawei devices powered by Android will lose access to Google applications such as Google Play Store, Gmail, and YouTube. It will still, however, be available on existing Huawei devices.

Earlier this year, Globe had already partnered with Huawei in the development of the local company’s 5G network intended to accelerate its broadband speed from 50 Megabits per second (Mbps) to 100 Mbps.

The high-speed network is targeted to be launched by next month to locations with a high density of cell sites such as Metro Manila and other urban areas.

The telco company’s net income attributable to parent surged 43.74% to P6.73 billion in the first quarter of 2019 from P4.68 billion at the same time last year.

“As the company continues to upgrade its network infrastructure (4G LTE and 5G), the margins are expected to remain flat this year but will recover starting 2020,” said Unicapital’s Mr. San Pedro.

“I expect the net income for this year to hit at least P20 billion to be driven by mobile data and fixed home broadband revenues as the company continues to expand its market share in the Philippine market.”

In the coming weeks, Mr. San Pedro sees Globe trading sideways with support at P2,000 and resistance at P2,152 “with the possibility of testing P2,200 and P2,280 if it stays above P2,000 in the short term.”

For Timson Securities, Inc. trader Jervin S. de Celis: “Globe might struggle going beyond P2,150 as this area served as a previous resistance level in 2017 and 2018. For the support, the stock may experience a pullback to its nearest support at P2,000. It should hold above that level before retesting the 2,150.”

NFA to stop selling rice at a loss to relief agencies

THE National Food Authority Council (NFA) has approved the sale of rice to institutional buyers, including local government units (LGUs), at P37 per kilo, in order to make the NFA’s operations more self-sustaining, the Department of Agriculture said.

“The NFA also approved a resolution which sets the price for the rice that we will sell to LGUs and even private NGOs. We will not sell at P27 (per kilo), we will sell at P37 (per kilo),” Agriculture Secretary Emmanuel F. Piñol told reporters at a news conference.

To be affected are institutional buyers like the Department of Social Welfare and Development (DSWD), LGUs, Non-Government Organizations, the Philippine National Red Cross (PNRC), and the National Disaster and Risk Reduction Management Council (NDRRMC).

He said the old selling price of P27 produces losses for the NFA, though that price will still apply to areas suffering from shortages.

The NFA has had to pay out significant incentives to attract sellers of palay, or unmilled rice, ever since its mandate shifted primarily to procuring rice from domestic farmers in order to maintain a buffer stock.

The NFA procures palay at P20.70.

Mr. Piñol said that under the new pricing, he expects the NFA to earn at least P1 per kilo.

“The NFA will now conduct surgical marketing operations. Ibig sabihin [This means]… we will not operate in areas where there is a surplus of rice stocks. Ang focus namin [Our focus] will be Metro Manila and net importing provinces,” he said.

He also said that the council has identified 40 areas with high poverty incidence for targeted sales, which will start in September, when the distribution of domestically-procured rice to the market will start, coinciding with the lean months for rice supply.

The NFA is still running down its last inventories of foreign rice after its importing function was taken away from it this year. The Rice Tariffication Law liberalizes rice imports by private entities, leaving the NFA to maintain a buffer stock from domestic rice.

As of May 20, the NFA has procured a total of 4.025 million bags of palay from farmers.

Meanwhile, Mr. Piñol said the price of rice has stabilized, while the buying price of palay has increased, addressing the concerns of both consumers and farmers.

Inflation spiked in 2018, while the threat of competition from cheap foreign grain, which will be imported more freely, also pressured palay farmgate prices, threatening farmer incomes.

In the first week of May, the average farmgate price of palay rose 0.3% week-on-week to P18.45 per kg, the Philippine Statistics Authority said.

The average wholesale price of well-milled rice decreased 0.4% to P39.55 compared with the previous week. At retail, the price fell 0.5% to P43.30 per kg.

The average price of regular-milled rice at wholesale fell 0.5% to P36 during the period. At retail, the price of regular-milled rice fell 0.5% to P38.97. — Vincent Mariel P. Galang

TW Steel, Simeon Panda collaborate on The Crunch Time Collection

INSPIRED BY the philosophy of “Seizing the moment,” Dutch watch maker TW Steel and influential British fitness instructor Simeon Panda teamed up for the limited-edition The Crunch Time Collection.

A seven-watch collection, The Crunch Time timepieces are built around the shared belief of TW Steel and Mr. Panda of living the carpe diem life — seeing your goal, reaching out and taking it right here, right now.

TW Steel said the collaboration with Mr. Panda was a fitting one and saw the two parties truly working together to come up with a collection that embodies the “Crunch Time” mentality that they are pushing for and watches that they could be proud of and confident with.

“[Crunch Time] is not so much what the person does but about the mindset. When I met Simeon I knew that even if he was not doing fitness he would still be successful doing other things because his mind is about reaching his full potential. He is always about doing his best and going for it. It is the same with TW Steel. We are never satisfied. We always look for the next thing to prove ourselves. And we connected immediately,” said Jordy Cobelens, CEO of TW Steel, at the media launch of the collection on May 23 at Kerry Sports at the Shangri-la at the Fort in Bonifacio Global City.

“The design process was really a partnership. Simeon had a lot of say in it and was very involved so that when he wears the watches he can feel that this is him in a watch,” added Mr. Cobelens.

It was a setup that suited Mr. Panda well, saying it was a privilege to be asked to collaborate with TW Steel.

“It was a privilege to be a partner with TW Steel for this collection. It’s a nod to what I am doing and I’m very thankful for that. And the collection is amazing,” said the noted fitness instructor and owner of the Just Fit and SP Aesthetics Sportswear, at the launch.

THE WATCHES
The collection, which is composed of the TW985, TW986, TS9, TS10, TS11, TS12 and TS13 models, boasts of the juggernaut 6S20 Chrono Movement from Miyota.

TW Steel’s The Crunch Time Collection timepieces are already available.

The cases are 48mm and crafted from rugged 316L, high-grade steel.

Every watch features a screwed crown, an ultra-durable sapphire coated crystal, and is waterproof up to a depth of 10ATM.

The seven unique designs are inspired by Mr. Panda’s personal fitness brand Just Lift, in clean and mean combinations of dark grey, black, and white.

Apart from the TS13, every model features a characteristic Panda or reverse Panda dial.

The straps come in black silicon with a selection of details such as the Just Lift logo.

The watches are limited to 1,000 pieces each and retail for P20,000, P27,000, and P30,000.

They are available at TW Steel Boutiques at Alabang Town Center, Century Mall, SM Clark, SM Makati, SM Megamall, and SM Seaside Cebu as well as Chronos Boutiques at Shangri-La Plaza and SM North Edsa.

For more information on The Crunch Time Collection, check out www.twsteel.com / @TWSteel. — Michael Angelo S. Murillo

Dennis Uy still open to PXP Energy tie-up

BUSINESSMAN Dennis A. Uy is open to revisiting plans with PXP Energy Corp. for a potential oil exploration venture once government relations with China improve.

“We both agreed to not pursue it because of the uncertainty of the government to government. But we agreed to revisit it once there’s an opportunity,” Mr. Uy told reporters last week after the stockholders’ meeting of another company he leads.

PXP Energy and Mr. Uy’s Dennison Holdings Corp. entered into a subscription agreement in October 2018 where the former will issue 340 million common shares priced at P11.85 each to the latter for a total of P4.029 billion.

In exchange, Dennison Holdings was to give PXP Energy or any of its affiliate companies preferential rights to acquire up to 49% in Phoenix Petroleum Philippines Corp.’s share in its joint venture with China National Offshore Oil Corp. (CNOOC) for the development of a liquefied natural gas project.

Both parties, however, announced the termination of the deal last March, highlighting that the decision was mutual. Dennison Holdings withdrew its P40-million downpayment for the deal following its suspension.

Mr. Uy noted that PXP Energy Chairman Manuel V. Pangilinan has committed to invite the company once government relations progress.

Prior to the termination of the deal, Phoenix Petroleum and CNOOC Gas and Power Group Co. Ltd. signed a memorandum of understanding with state-owned Philippine National Oil Co. for their equity investment in Tanglawan Philippine LNG, Inc.

The Tanglawan project is set to break ground within the year in time for its completion in 2023. It is seen to have an annual capacity of 2.2 metric tons of the regasification and receiving terminal.

On the other hand, Mr. Uy said there are plans to pursue the follow-on offering for his holding firm Udenna Corp. within a year’s time.

“We’re working on it. Baka in a year’s time, depende sa regulator (Maybe in a year’s time, depending on the regulator),” Mr. Uy said.

Udenna is in the process of conducting a share swap with listed firm ISM Communications Corp., which will involve the issuance of 24.058 million ISM shares to shareholders of Udenna in exchange for two billion Udenna shares.

ISM’s public float will fall to about 10% after the share swap. The company earlier said the target would be to increase public ownership to 15-20% during the secondary offering.

At the same time, ISM has proposed to increase its authorized capital stock to P75 billion from P2.8 billion to support Udenna’s entry. ISM’s name will then be changed to Udenna Holdings Corp.

The transaction is still pending approval from the Securities and Exchange Commission.

Udenna’s business interests include fuel and oil, telecommunications, logistics, hospitality, education, and convenience stores. — Arra B. Francia

Farm insurance coverage at record 2.27 million in 2018

THE insurance rate among farmers and fisherfolk has increased to 33.52% in 2018, hitting a record 2.27 million, the Philippine Crop Insurance Corp. (PCIC) said.

In a statement, the company said the number of insured rose from 1.7 million in 2017, and more than twice the 1.09 million in 2016.

“The assets covered included for the most part rice, corn and high-value crop farms totaling 1.845 million hectares in 2018, which is 39.04% greater than the 1.327 million insured in 2017,” PCIC said in the statement.

“In terms of indemnity payments, the PCIC paid out P3.397 billion in 2018, 75.37% more than the P1.937 billion paid in 2017. Most insured farmers and fisherfolk numbering 442,035 received the payments in 20 days or less according to PCIC’s improved and ISO-certified systems,” it said.

PCIC was given a top rating in the corporate governance scorecard issued by the Governance Commission for GOCCs (GCG).

It scored 100.5 in corporate governance. GCG uses this evaluation to assess government firms’ observance of best practices and international standards of corporate governance.

The PCIC is the only GOCC that provides agricultural insurance. It insures rice and corn, as well as high-value crops, livestock, fisheries, non-crop agricultural assets, and credit and life insurance.

The Department of Finance (DoF) said it plans to convert the PCIC into a reinsurer in order not to compete with private insurance providers.

House Bill 6923, An Act Strengthening the PCIC written by Representative Arthur C. Yao, which authorizes the PCIC to engage in index-based insurance and reinsurance, was approved on third and final reading in April.

The DoF is awaiting the counterpart bill to be filed by Senator Cynthia A. Villar, who heads the chamber’s Committee on Food and Agriculture.

An option to privatize the PCIC is also on the table, but this will depend on legislation. — Vincent Mariel P. Galang

For a touch of Grace Kelly, here are pearls from Monaco

HAS IT really been that long since Grace Kelly was said to have uttered, “I favor pearls on screen and in my private life”? The famous American actress wed Prince Rainier III of the small principality of Monaco, becoming Princess Consort, lending her image to the small nation. During her husband’s reign, reforms to the constitution changed the country’s economic gambling base to its current role as a tax haven for the rich. This then gave the country a reputation of expensive living. In any case, the princess died in 1982, leaving behind a legacy of quiet elegance.

The name of Monaco is important to jewelry brand Misaki Monaco’s image, as it is this legacy that they wish to tap.

“It’s glamor, it’s luxury — it’s a nice love story,” said Stephane Alech, President of Misaki Monaco, alluding to the publicity-rich marriage of the prince and the Hollywood star. “We’re really proud to come from Monaco.”

Misaki itself was born of a love story between its founders, a French photographer and a Japanese illustrator. The brand was founded in 1987, but was acquired by the Alech couple about five years ago. The brand may ring a bell: it frequently sells on airlines and airports, specializing in cultured pearls and “handmade” (read: faux) pearls.

Mr. Alech points to the brands accessibility as in-flight purchases due to their duty-free status. However, he says that they have begun expanding to domestic locations: “We want to extend the market and touch more customers.” The brand has a store in the country at Shangri-La Plaza. It also has stores in over 40 countries and is stocked in more than 30 airlines.

The pearls are cultured, meaning it’s through a process of nature ushered along by man, or else completely handmade by a worker. It might be easy to sniff at the idea, but then remember that the well-worshipped Gabrielle “Coco” Chanel started a fad for wearing veritable mounds of fake pearls. She defended her choice, reportedly saying, “It’s disgusting to walk around with millions of dollars around the neck because one happens to be rich. I only like fake jewelry… because it’s provocative.”

In any case, the pearls are cultured with a special process that lends to them a brighter sheen than the real thing (a nucleus made of quartz, the first step of the process, might be the key).

Lots of pearls are farmed and sold in the Philippines, but Mr. Alech also says about the product that their edge rests on design: “We kept the emblematic and timeless spirit of the pearl,” he said, but, “We really tried to put more modernity and more design.”

He also points to the brand’s anchoring in its headquarters of Monaco (the pieces are designed in Monaco, but made in Japan): “It’s a guarantee of quality and security.” — Joseph L. Garcia

Fab fun with the Forester

Words and photos by Manny N. de los Reyes

WHEN YOU want to go trekking through mud and sand and driving over rocks and even across a river, you’d normally bring a dedicated 4×4 like a tricked out old Land Cruiser, Defender, or Wrangler — not a shiny, luxurious crossover.

But we did just that — all of that — with a brand spanking new Subaru Forester.

Why?

Because it can do it. All of it.

Like most crossovers, the Forester shares its platform with its sedan sibling — in the Forester’s case, the Impreza.

But that’s as far as the Forester’s similarities with most other crossovers go. And that’s because the Forester is made by a company that has practically been synonymous with all-wheel drive.

And which is also why Subaru was daring enough to take their popular SUV and have more than 20 members of the Philippine motoring media take a crack behind the wheel, not just on the high-speed expressways of NLEX and TPLEX, not just on a spirited blast on the northern provinces’ national roads, but also for some playtime on rough dirt roads and a couple of river crossings.

You don’t do this with your everyday crossover.

While most compact and subcompact SUVs and crossovers are front-wheel drive and send their torque only to the rear wheels when needed, Subarus send power to all four wheels — all the time. Subaru’s Symmetrical All-Wheel Drive gives the cars that extra traction at all speeds and in all road conditions — giving its driver and passengers that extra capability and margin of safety.

The 2019 Forester has been reengineered to include a host of enhanced features, resulting in a balance of easy, confident handling and a spacious, comfortable interior — attributes we all appreciated on our extensive on- and off-road experiences over two days.

Safety, technology, and performance continue to be top priorities with the inclusion of a strong suite of active safety features that comprise Subaru’s core technologies: Subaru Global Platform, Symmetrical All-Wheel Drive, Boxer Engine, and the new — and very effective — EyeSight Driver Assist technology.

The Forester is powered by a 2.0-liter normally aspirated (no Turbo version in the current model) direct-injection boxer engine. Gear shifts are now done via new seven-speed (in manual mode) continuously variable transmission (CVT).

The new Forester rests on the Subaru Global Platform, which delivers a safer, smoother driving experience by having less shake and body roll while reducing road noise. True enough, it was a pleasure sitting in the back seat of the Forester and relishing the smooth and silent ride and the generous increased legroom — much like being in an executive sedan (but with much better outward visibility).

The Forester comes with X-MODE function, which enhances driving performance on challenging terrain through optimized integrated control of the engine, all-wheel drive, brakes and other functions. Drivers can activate X-MODE via a new dial switch to transition from Normal to Dirt to Snow and Mud. This feature made it almost a no-brainer when we traversed the rock and pebble-strewn sandy riverbed. The generous 220mm ground clearance made short work of the river. We just had to look out for the small boulders — made easy by the excellent visibility. Even with riding comfort-oriented all-terrain tires, the Symmetrical AWD gripped the sandy bed like a crab grabbing its prey with its claws. Even with two carmates having no experience driving on soft sand, let alone through a river, our Forester went straight through the two knee-deep rivers we crossed without breaking a sweat.

The cool, new feature on the 2019 Forester is EyeSight, an advanced driver assist technology that includes Automatic Pre-collision Braking, Pre-Collision Throttle Management, Adaptive Cruise Control, Lead Vehicle Start Alert, Lane Departure and Lane Sway Warning. EyeSight proved its worth, when on one occasion, the vehicle in front of us braked hard suddenly, the system braked even before our driver could react. Fabulous!

In addition, features such as Auto Vehicle Hold and Subaru Rear Vehicle Detection (SRVD) are also available on the new model. Auto Vehicle Hold works to reduce driver fatigue by keeping the vehicle still when the driver’s foot is removed from the brake pedal while the vehicle is stopped. SRVD uses radar sensors installed on the rear of the vehicle to detect objects and vehicles behind and alerts the driver with its three main functions: Blind Spot Detection, Lane Change Assist and Rear Cross-Traffic Alert.

The new Forester also introduces redefined interior features such as divided seatback pockets, USB charging ports and air-conditioning vents behind center console, bringing a more luxurious riding experience for the passengers. Aside from the added rear legroom, the latest Forester also boasts increased cargo room with a wider rear tailgate opening. There is also an available power rear tailgate.

The new Forester uses extensive high-strength steel that delivers durability and rigidity. The ruggedness of the SUV is further underscored with the raised body, claddings and underguard, coupled with well-defined fenders with prominent protrusions. The updated design pays homage to the model’s earlier predecessor — hence the resemblance — with subtle updates on the grille, headlights and tail lights. It’s almost as if Subaru does not want us to forget its legendary go-anywhere heritage.

All things considered, ninety-nine percent of all crossovers can do what the Forester does. But this Subaru is the one percent that can do more. Much more.

Onboarding the un(der)banked

With the emergence of the Internet in the 1990s and the improvement in broadband in the early 2000s, online banking has started becoming the norm.

Fast forward a decade later, the adoption of smartphones has further accelerated the use of doing financial transactions online. This decade saw the development of financial technology (fintech) companies and other online-based platforms as they offer alternatives to doing business over the counter.

Authorities such as the Bangko Sentral ng Pilipinas (BSP) are aware of this as they incorporate the trend of digitalization in their financial inclusion efforts, recognizing that there are more people that have mobile phones than they are with bank accounts.

The BSP’s latest Financial Inclusion Survey published in July 2018 found that as of 2017, 52.8 million or around 77.4% of Filipinos do not have formal bank accounts, with 60% having insufficient money to maintain one.

“Over the past three years, the BSP issued key regulations that form the foundational elements of digital financial inclusion: democratized access to a transactional account; ubiquitous cash-in and cash-out points; and an account-to-any account electronic fund transfer schemes,” BSP Deputy Governor Chuchi G. Fonacier said in an e-mail to BusinessWorld.

According to the BSP’s “Financial Inclusion in the Philippines” (FIP) publication (Issue No. 8, series of 2018), digital financial inclusion — which is the “digital access to and use of formal financial services by the underserved population” — has five key components: the presence of new providers and new combination of providers; digital technology; the use of third-party agents that will offer financial services on a provider’s behalf; new products and services; and the presence of financially unserved and underserved customers.

“An account is a first step into digital financial inclusion [as it is] a gateway to access the whole range of welfare-enhancing financial products and services,” Ms. Fonacier said.

“To promote ownership of account, we need to address two key things: (1) make it easy and affordable for anyone to open an account; and (2) make an account useful not only as a store of value but also as a practical tool for various financial transactions, particularly payments and remittances which are most relevant to the low-income segment,” she added.

Ms. Fonacier cited some of the BSP’s initiatives in fostering digital inclusion, among them Circular No. 992, which provides “no-frill, low-cost, and easy to open” basic deposit accounts that enable the unbanked population to make payments via an electronic device; Circular No. 940 that enables banks to tap third-party cash agents; and Circular No. 987 that allows banks to set up “branch-lite” offices geared towards extending full banking services to the underbanked and underserved areas.

“These regulatory initiatives facilitate both accessibility and utility of a financial account — which can significantly boost account penetration. As we move forward, the BSP will intensify coordination with various stakeholders to further promote compelling use cases for transaction accounts and digital payments. These include electronic bills and government payments platforms, and a wide base of merchant accepting QR-code enabled payments,” Ms. Fonacier said.

Ms. Fonacier likewise cited the passage of Republic Act No. 11127 or the National Payments Systems Act wherein it gave the BSP oversight power over payment systems. For regulatory purposes, payment system operators such as banks and electronic money issuers are required by law to register with the BSP.

The central bank official also mentioned the BSP’s support of the government’s Philippine Identification System (PhilSys) ID, which is seen to “boost account ownership and further enable innovations in digital finance.”

Under the national ID system, each resident will be assigned a 12-digit PhilSys Number that can serve as their digital identity across multiple platforms. This reform is expected to help improve access to credit especially for the unbanked as many are currently not able to open accounts due to lack of valid IDs.

The government is hoping to start registrations soon for the national ID, targeting to sign up at least seven million Filipinos this year. By 2023, authorities are expected to complete the registration of Filipinos and resident aliens to accelerate authentication procedures in delivering access to government and financial services.

‘FOOT IN THE DOOR’
According to the BSP’s FIP publication, digital financial inclusion is “closely associated” with being “cash-lite,” a state where electronic fund transfers and payments dominate cash transfers.

However, Ms. Fonacier said that even though having an enabling regulatory environment is critical and necessary in digital financial inclusion, it is not sufficient.

“Concerted and deliberate effort from the various government agencies and the private sector is needed to implement programs to develop compelling use cases for digital payments and transaction accounts. This is the focus of our digitization advocacy,” she said.

The private sector has taken note of the BSP’s initiatives.

“The BSP… has been very receptive of fintech developments, so much so that they have even led the charge in automating our clearing houses through InstaPay and PESONet (Philippine Electronic Fund Transfers System and Operations Network). We are positive that with developments such as this, we will be able to migrate most of financial transactions in the country to digital in the next several years,” said Orlando B. Vea, founder and chief executive officer (CEO) of Voyager Innovations, Inc. as well as president and CEO of PayMaya Philippines, in an e-mail.

Mr. Vea, who is also chairman of the Philippine eMoney Association, was referring to the two automated clearing houses already in operation. A third one (“PhPay”) that looks to process for government services and even the state’s fund releases to individuals is slated to be out within the year.

“PayMaya, as an e-wallet, has become the foot in the door for many unbanked and underserved Filipinos to be part of the financial mainstream. For local governments… our PayMaya Super ID has become their way to disburse cash benefits to their citizens and at the same time served as an identification card of their citizens. This move helped them make government services more efficient for LGUs (local government units) and convenient and transparent for citizens,” Mr. Vea said.

PayMaya, formerly known as Smart eMoney, is an online application that serves as a virtual prepaid card for online markets, bills payments, and money remittance.

Justin Leow, head of Business Operations at Coins.ph, noted an “accelerating adoption” in using the platform as they roll out more products and services.

“Coins.ph has found success in leveraging the widespread adoption of smartphones to enable millions to have access to financial services in a cheaper and more convenient manner that wasn’t possible before. Similarly, we have also been able to leverage blockchain technologies to lower the costs of remittances, and data to deliver more personalized services,” Mr. Leow said.

“Coins.ph and the BSP have shared a collaborative relationship over the last number of years as we work to promote financial inclusion in the Philippines. While we can’t speak directly for the BSP, our missions in this regard have been quite aligned and we have had productive discussions on how platforms like ours are working to improve financial access in the country,” he added.

WHAT ABOUT THE BANKS?
With their established presence in the financial system, banks are also looking to cash in on the digitalization game.

“Digitalization enables banks to efficiently and effectively reach out to and financially include the unbanked through products and initiatives such as mobile banking, cash cards, eKYC (“Know Your Customer” processes using digital channels),” Security Bank Corp. said in an e-mail.

“Security Bank’s main target market is the ‘mass affluent’ segment. Most of the banked only have one financial product so our approach to this segment in terms of digital financial inclusion is to address their pain points when it comes to availing bank products and services. For example, through the eKYC project, we were able to ease the process of opening a bank account. Customers can open a bank account anytime and anywhere just by using a smartphone,” according to Security Bank’s e-mail response that is attributed to its Vice President and Head of e-Commerce Mark Joseph A. Bantigue.

Security Bank also mentioned the introduction of its mobile-based Salary Advance (SALAD) loan facility. Launched in 2017, the lending scheme allowed employees of accredited companies to avail of short-term loans with affordable installments.

“SALAD has continued to allow us to close payroll arrangements with the top BPOs in the country and offer affordable financing solutions than the informal lenders,” said Security Bank Senior Vice-President and Head of Consumer Business and Operations Abigail Marie D. Casanova.

For Union Bank of the Philippines, Inc. (UnionBank) Executive Vice-President and Chief Mass Market and Financial Inclusion Executive Manuel G. Santiago, Jr., the bank has been a “solid and consistent proponent of digital financial inclusion,” citing its digital banking platform EON where customers can open accounts online instantly without any need for a maintaining balance or paying for fees and penalties.

“When we talk about financial inclusion, we mean access to financial services and access to credit. Our digital bank addresses both concerns. We are also creating synergy with the rural banks that we have purchased by providing the EON platform to these banks,” Mr. Santiago said.

He said that EON has partnered with PeraHub to bring financial services to rural areas.

Meanwhile, CitySavings Bank, Inc., UnionBank’s thift banking arm and known for its teachers’ loans, is expanding its offerings to include overseas workers and pensioners.

“With its acquisition and merger with [Philippine Resources Savings Banking Corp.], CitySavings has further diversified its business and has entered the motorcycle loan market,” he said.

For Bank of the Philippine Islands (BPI) President and CEO Cezar P. Consing, BPI’s programs of financial inclusion in the countryside is being addressed through building out their BPI and BPI Family Bank branches at “between 10-20 branches a year” as well as building out branches of BPI Direct BanKo, their microfinance arm that provides financing to self-employed micro-entrepreneurs.

“We are building out 100 BanKo branches a year. By the end of this year, we expect to have 300 BanKo branches,” he said.

Mr. Consing explained that with BanKo being fitted with full digital capabilities, it will serve as a “good example of two marriages” — that of between branch and digital and between digitalization and financial inclusion.

For Mr. Consing, BPI’s goals of being a leader in digital banking and being one of the most “financially inclusive” are tied.

“Digitalization will reduce our cost to serve. A digital transaction is much cheaper to execute than a transaction done over the counter. So digitalization will allow us to serve a much greater proportion of the population, including people who may not have the means to leave a lot of money in their deposit accounts,” Mr. Consing said.

“Digitalization will make financial inclusion truly sustainable,” he added. — Marissa Mae M. Ramos

T-bill, bond rates likely to drop

RATES OF THE government debt on offer this week will likely decline further amid healthy demand after the central bank trimmed the reserve requirement ratio (RRR) for both commercial and thrift banks.

The Bureau of the Treasury (BTr) is offering P15 billion worth of Treasury bills (T-bill) today, broken down into P4 billion and P5 billion for the three- and six-month instruments, respectively, and P6 billion in one-year papers.

The BTr will also offer on Tuesday reissued 10-year Treasury bonds (T-bond) amounting to P20 billion with a remaining life of nine years and seven months.

Two traders said the rates of the T-bills will move lower by five to 10 basis points (bp) across all tenors from the previous auction.

Last week, the Treasury borrowed P15 billion as planned at its T-bills auction. Total bids reached P50.3 billion, more than thrice the amount it wanted to raise. Yields on the 90-, 182- and 364-day papers slipped to 5.258%, 5.7% and 5.869%, respectively.

Based on the PHP Bloomberg Valuation Service Reference Rates, the three-month, six-month and one-year papers were quoted at 5.359%, 5.694% and 5.895% on Friday.

“Strong demand may persist across the offering as dealers and investors alike are expected to position ahead of the first tranche of the RRR cut effective May 31,” Robinsons Bank Corp. trader Kevin S. Palma said in a Viber message.

The Bangko Sentral ng Pilipinas will slash reserve requirements of lenders by a percentage point effective May 31 to 17% for universal and commercial banks, 7% for thrift banks, and 4% for rural and cooperative banks.

A percentage point cut in big banks’ RRR will likely unleash P90-100 billion into the financial system, while another P22 billion is seen to be released due to a 100-basis-point cut in the reserve ratios of smaller lenders.

“We expect that by next week, the market will price in the expectation of additional funds,” a bond trader said in a phone interview.

For the 10-year bonds, the trader said its rate will likely range between 5.65-5.7%, which if realized will be lower than the average rate fetched when the papers were last offered in April.

The government borrowed P15 billion as planned via reissued 10-year bonds on April 11, receiving bids totalling P46.468 billion. The 10-year debt notes, which carry a coupon rate of 6.875%, fetched an average yield of 5.954% at that auction.

At the secondary market on Friday, the 10-year papers were quoted at 5.709%.

“Average yield is expected to land within 5.675% to 5.725%,” Robinsons Bank’s Mr. Palma said.

“Market could track lower US Treasury yields which dipped to levels not seen since December 2017 after FOMC (Federal Open Market Committee) minutes reflected that the Fed (US Federal Reserve) is not so keen to be moving its rates in either direction amid the intensifying trade dispute between US and China,” he added.

The other bond trader noted that the market will flock to safer securities such as bonds as the trade spat between the world’s two largest economies intensifies. — Karl Angelo N. Vidal

SMPC remits P3.57 billion in royalties to government

SEMIRARA Mining and Power Corp. (SMPC) remitted lower royalties to the Department of Energy (DoE) in 2018 at P3.57 billion, as it recorded a drop in coal sales volume for the year.

In a statement over the weekend, the integrated energy company said the royalties — or the government’s share in its mining revenues — was 17% lower than the P4.3 billion it remitted in 2017. This came after an 11% decline in coal sales volume to 11.6 million metric tons (MMT) from 13.1 MMT.

About P1.43 billion of the royalties will be distributed to SMPC’s host communities: Barangay Semirara will get about P500 million, the municipality of Caluya will receive P642 million, while the province of Antique will get P285 million.

This brings SMPC’s remittances to the national government to more than P21 billion since it was acquired by Consunji-led DMCI Holdings, Inc. in 1997. The remittance is in line with Republic Act No. 7160, which mandates that local government units are entitled to a 40% share of royalty proceeds from petroleum, coal, geothermal, hydrothermal, and wind resources.

“Our partnership with DoE allows us contribute meaningfully to the economy of our host communities. Aside from royalties, we also generate employment in Semirara Island and nearby areas,” SMPC President and Chief Operating Officer Maria Cristina C. Gotianun said in a statement.

The company directly employs more than 3,300 people in its mine site, making it the biggest employer in Semirara Island and Caluya.

SMPC reported a 49% drop in earnings to P2.33 billion in the first quarter of 2019, weighed down by an 18% decline in coal prices to P2,272 per ton during the period from P2,786 per ton last year.

Despite its slower performance, SMPC remains to be the largest contributor to DMCI Holdings’ net income at P1.42 billion, 49% lower year on year.

Overall, DMCI Holdings saw its net income slump by 26% to P2.87 billion in the first quarter, from the P3.86 billion it posted in the same period a year ago. Revenues also slipped by 3.2% to P19.65 billion. — Arra B. Francia

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