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Senate body nearly adopts House mining tax version

THE SENATE Committee on Ways and Means on Tuesday minimized differences with the House of Representatives’ version of a proposal to increase the government’s share in mining revenues in a bid to fast-track final legislative approval.

Committee Chairman Senator Juan Edgardo M. Angara sponsored Senate Bill No. 2235, or “An Act Establishing the Fiscal Regime for the Mining Industry,” which proposed to reduce the royalty fee on large-scale mining within mineral reserves to three percent of gross output from five percent currently and introduce a 1-5% margin-based royalty on those outside mineral reserves.

“Our version is similar to the House of Representatives’ version except that the committee chose to remove the inclusion of the non-metallic mining operations,” Senator Angara said in his sponsorship speech, Tuesday.

“Throughout our hearings it became apparent that a majority of non-metallic mining in the country is in cement production. Stakeholders explained that any imposition of taxes on cement could result in higher prices which… could impair the government’s ‘Build, Build, Build’ program.”

The House version, which bagged final approval in November 2018, will impose a 1-10% margin-based windfall profit tax on income before corporate income tax as well as a provision discouraging excessive debt funding by disallowing deduction of interest expense once a company records a 3:1 debt-to-equity ratio.

The bill defined margin as the “ratio of income from mining operations before corporate income tax on gross output,” while gross output is “the actual market value of minerals or mineral products from each mine or mineral land operated as a separate entity, without any deduction for mining, processing, refining, transporting, handling, marketing or any other expenses.”

The royalty will be imposed on top of other taxes like corporate income tax, excise tax which Republic Act No. 10963 doubled to four percent, the royalty to indigenous people and local business tax.

TOBACCO TAX APPEAL
Meanwhile, Senate Majority Leader Juan Miguel F. Zubiri said he hopes the House will adopt the Senate’s version of the proposal to raise tobacco excise tax as the 17th Congress’s days are numbered.

“We do not have any more material time for a bicam[eral conference committee]… dahil (because)… it’s Eid al-Fitr (holiday) on Wednesday; so meaning last day na namin ‘yung (it will be our last day next) Tuesday,” Mr. Zubiri told reporters on Tuesday.

Any measure that fails to secure ratification in the current Congress will have to be refiled in the 18th Congress that opens on July 22.

“Kung ma-approve namin s’ya (If the Senate approves the bill) latest Monday, we’ll transmit immediately to the House, so that they can adopt our version or come up with a quick bicam[eral conference committee] for ratification on Tuesday the latest.”

The Senate proposed under SB 2233 to increase excise tax on tobacco products to P45 per pack from P37.50 in Jan. 2020; and by P5 annually until it reaches P60 in 2023. It will then be increased by five percent every year thereafter.

In comparison, House Bill No. 8677, which was approved in December last year, proposed rates of P37.50-45 by 2022 and a four percent increase annually thereafter.

At present, a P35 rate per pack is imposed on cigarettes, after RA 10963 raised it to P32.50 per pack from P30 in January 2018 and to P35 beginning July 2018. It is scheduled to go up to P37.50 in January 2020.

Asked on chances of the House adopting SB 2233, House Majority Leader and Capiz 2nd district Rep. Fredenil H. Castro said in mobile phone message, Tuesday, there is “no harm”, while Nueva Ecija 1st District Rep. Estrellita B. Suansing, chairperson of the House Ways and Means Committee, said in a separate text message that her committee has received “no instructions yet from SPGMA (Speaker Gloria M. Arroyo).” — Charmaine A. Tadalan

First Gen, Tokyo Gas start LNG work in race to beat Malampaya depletion

FIRST GEN Corp. broke ground on Tuesday at the site of its liquified natural gas (LNG) terminal in its Clean Energy Complex in Batangas City, which it hopes to get operational before the Malampaya gas field is depleted in 2024.

The project, which is being pursued by the Lopez-led firm through its unit FGEN LNG Corp. in partnership with Japan’s Tokyo Gas Co., Ltd., is expected to be completed in about three years.

“… [W]e want to get (the LNG terminal) finished before Malampaya expires. We’re hoping to get the project finished in 2023,” First Gen Executive Vice-President and Chief Commercial Officer Jonathan C. Russel told reporters after the groundbreaking ceremony at the project site on Tuesday, adding that the company is looking to expand the capacity of its facility in Batangas by building two additional power plants.

“Next to the San Gabriel site, we have two additional vacant lots which can take two more units,” Mr. Russel explained.

“We need to build them by 2023, so ideally we would start them in 2020.”

First Gen operates four gas-fired power plants in Luzon, namely: the 1,000-MW Santa Rita power plant, the 500-MW San Lorenzo power plant, the 414-MW San Gabriel power plant and the 97-MW Avion power plant.

The company said it is talking to several financial institutions to secure financing for the LNG terminal project, which is priced at around $700 million-1 billion.

“We’re in discussion with a number of financial institutions. But I think we anticipate that we may proceed on the basis of balance sheet financing initially and then look at some kind of take-out financing later on,” Mr. Russel said.

NOT THE ONLY ONE
First Gen’s LNG terminal is the first to move forward to construction stage after the government expressed support for LNG as a key to secure the country’s energy resource.

It will occupy approximately 21 hectares of land within the Clean Energy Complex of First Gen in Batangas City, and will include facilities for unloading LNG carriers and an LNG storage tank.

Aside from First Gen, Dennis A. Uy’s Phoenix Petroleum Philippines, Inc. and partner China National Offshore Oil Corp. (CNOOC) also have a notice to proceed from the Department of Energy (DoE) to pursue an LNG terminal in Batangas.

Energy Secretary Alfonso G. Cusi said the First Gen-Tokyo Gas project is “putting the Philippines in the value chain of LNG.”

“We are acting as a de facto transshipment point for gas that is going to China… Now, we are closer to the realization of this project… the country now will become part of the LNG value chain because we can receive and export gas.”

First Gen President and Chief Operating Officer Francis Giles B. Puno noted that once the company’s LNG terminal is completed, it will be open to other users.

“We want to make it clear: we’re not building a terminal just for our purpose… Essentially, this terminal is meant to be able to expand gas usage not only for First Gen but for other users,” Mr. Puno told reporters.

First Gen Chairman and Chief Executive Officer Federico R. Lopez told reporters separately: “We’d like to keep moving ahead… to really make sure natural gas, which is really the best option for us in the transition to a decarbonized world, [is available]…” — Denise A. Valdez

SMB mulls new Vietnam brewery

SAN MIGUEL Brewery, Inc. (SMB) plans to spend about $70 million (about P3.5 billion) for the construction of a new brewery in Vietnam to address the demand for the company’s products in the Southeast Asian country.

SMB Chairman Ramon S. Ang said the company is currently conducting a market study for the facility.

“Kung magtatayo kami, at least two million hectoliters na planta. Pag-aaralan pa namin ’yun (If we’re going to build, it will have to produce at least two million hectoliters. We’re still going to study that project,” Mr. Ang told reporters after the company’s annual shareholders’ meeting in Mandaluyong on Tuesday.

SMB President Roberto N. Huang noted that the company’s capacity in Vietnam is only at 200,000 hectoliters, while it experiences an oversupply in other international markets.

“The per capita kasi in Vietnam is higher than the Philippines. Dito nasa 19 (liters). Sa Vietnam, umaabot na ng 44 liters per capita. Mataas. Kaya there is a good market there (Per capital here is around 19 liters. In Vietnam, they reach about 44 liters. That’s high. So the market is good there),” Mr. Huang said.

In its 2018 annual report, SMB said volume and profit weakened last year due to a significant decline in its W1n Bia brand and flat San Miguel volumes. It looks to “aggressively grow” San Miguel volumes this year by targeting to increase distribution in bars, hostels, karaoke, wedding sites, and modern trade outlets.

Meanwhile, Mr. Huang said the company is also waiting for confirmation on whether it can push through with the construction of a beer brewery in the United States. The company earlier said it had plans to set up a facility in Los Angeles, California to meet the demand for its products in North America.

“We have to wait for their confirmation. It’s not just a matter of capacity. We also have to talk to some people there if a brewery can really be put up kung walang reklamo ’yung (if there are no complaints from the) community and everything,” Mr. Huang said, adding that SMB has already acquired the site.

The top executive said that planning for the US brewery will take about six months, but may take longer since it is an overseas project.

“But we will see if we can already set groundbreaking. Pag ka nag-groundbreak na kami, e tuloy tuloy na (Once we break ground, it will push through), just like what we were doing in the Philippines,” Mr. Huang said.

RICE IMPORTS
Meanwhile, Mr. Ang, who is also president and chief operating officer of San Miguel Corp. (SMC), said the company is already preparing to import rice, following the approval of the Rice Tariffication Law.

“Merong ilang site na may port na hinahanda, para in case meron na talagang implementing guideline para makatulong kami to stabilize the price of rice (There are a number of sites that we’re preparing, in case there are already implementing guidelines so we can help stabilize rice prices),” Mr. Ang said.

Rice trading will be handled by SMB’s parent, SMC.

Mr. Ang said the company could potentially import rice from Cambodia, Vietnam, and Thailand. He also noted that the company will age the rice, the by-product of which can then be used for its feed mills and breweries.

“Broken rice dun, na walang halaga, nagagamit ng brewery ’yun to produce alcohol. Kaya napakabagay sa amin ’yun. At the same time, makakatulong kami na maging stable ’yung pricing (That’s broken rice that has no value, and can be used by the brewery to produce alcohol. It is a match with our business. At the same time, we can help stabilize prices). So farmers can also have a very stable income,” he explained. — Arra B. Francia

Avida eyes P2.8B in sales from Imus subdivision

AVIDA LAND Corp. expects to generate P2.8 billion in sales from its newest subdivision in Imus, Cavite, as it looks to take advantage of the rising real estate prices in the province.

The property developer unveiled on Tuesday Avida Verra Settings Vermosa, a 10-hectare subdivision that sits inside parent Ayala Land, Inc.’s 700-hectare mixed-use estate Vermosa.

Avida Verra Settings will offer a total of 370 units consisting of lot-only, house-and-lot, and combined units. Combined units are a combination of house-and-lot with an adjacent lot, to give owners room for expansion.

The property is divided into three sectors, with the first two sectors covering a total of 245 units already 57% sold out.

The third and last sector, containing 125 units, will be available for sale next month. Only house-and-lot, and combined units will be made available for this portion.

Avida Verra Settings commands land prices of P38,000 per square meter (sq.m.). With this, lot only units are priced starting from P5.7 million, house-and-lots are sized from 125-138 sq.m with prices from P9-9.5 million, while combined units are priced from P12.5-14 million.

Amenities include adult and kiddie pools, a basketball court, children’s park and playground, and a clubhouse.

The company looks to attract the upper market segment with a monthly income of at least P150,000 for this project.

“The target market will be families from Cavite or within nearby areas who want to upgrade and live in a complete community, and also Metro Manila residents who are willing to relocate in a more suburban location,” Avida Land South Luzon Project Strategic Management Group Head Anne B. Jara said in press briefing in Makati yesterday.

Based on the current pace of sales, Ms. Jara said they could sell out the entire project within the year or by the first quarter of 2020.

Avida Land expects to complete land development by May 2021, with turnover scheduled for the second half of that year.

“By the time we turn over, Vermosa is already a thriving community. The mall, there’s already a school, and other additional components,” Ms. Jara said.

Vermosa’s residential components will include projects by ALI’s other brands, namely Ayala Land Premier, Alveo, and Amaia. The mixed-use estate will also house two central business districts, with Vermosa Midtown for the first phase and University Town for the second phase.

It will also have an Ayala mall with a gross leasable area of 65,000 sq.m scheduled to open by the fourth quarter of 2020; a senior high school campus operated by the De La Salle Santiago Zobel School; commercial lots, and a church. — Arra B. Francia

Meralco willing to undergo competitive selection process to allow Atimonan construction to start

MANILA Electric Company (Meralco) is willing to undertake the competitive selection process (CSP) in order to allow the construction of the Atimonan coal-fired power plant to start.

“If we want to pursue Atimonan, we have to go through competitive selection process. Once things become more clear as to the CSP, then we would obviously act as fast as we can,” newly appointed Meralco President and Chief Executive Officer Ray C. Espinosa said in a briefing after the company’s annual shareholders’ meeting in Pasig Tuesday.

The Supreme Court earlier this month ruled that all power supply agreements (PSA) submitted by distribution utilities to the Energy Regulatory Commission (ERC) on or after June 30, 2015 must undergo CSP.

CSP requires contracts between power generation companies and distribution utilities to be subjected to price challengers, a process that is aimed at lowering electricity cost.

Mr. Espinosa said that the company will respect the SC’s decision even as it will delay the construction of the power plant.

“We will heed the direction as well as follow the competitive selection process and we would build as quickly as we can in coordination with and the approval of the DoE (Department of Energy),” he added.

Meralco currently has PSAs with two of its subsidiaries, including Meralco Powergen Corp. (MGen) which is building a power plant under Atimonan One Energy, Inc. The PSA for Atimonan was filed in 2016.

The Atimonan project consists of two ultra supercritical coal-fired power plants with a capacity of 600 megawatts each. It was originally expected to be completed by 2021, but has since faced several regulatory issues. The company now looks to complete the project by the fourth quarter of 2025.

The company said the project will cost about P135 billion, but noted late last year that this has increased by about P15 billion due to the delays.

Aside from Atimonan, Meralco is also building other coal-fired power plants, including the 455-MW facility in Mauban, Quezon by subsidiary San Buenaventura Power Ltd. Co., which is set to be completed in the middle of 2019.

Its third such project is being constructed by unit Redondo Peninsula Energy, Inc., with two units carrying 300 MW each using the circulating fluidized bed technology.

Mr. Espinosa said the company is also continuing to look for projects that will help improve power sources.

“As part of our drive to ensure that the consumers within our franchise area will have stable and reliable power, we are actively looking for power projects where we through MGen can invest in,” Mr. Espinosa said.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by 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. — Arra B. Francia

Smart to expand LTE coverage in Palawan

THE wireless unit of PLDT, Inc., Smart Communications Inc., is ramping up its long term-evolution (LTE) network in Palawan as it sees increased tourism in the island.

The telecommunications network said in a statement Tuesday it is rolling out more cell sites and is expanding its LTE coverage in Puerto Princesa, El Nido, San Vicente and Coron this year.

“Since Smart began connecting the islands with LTE last year, and as more customers shift to mobile data and upgrade their devices to LTE, the telco recorded an increase in the number of LTE users in the province,” the company said.

The expansion of Smart in Palawan is part of the company’s bigger plan to bring its LTE technology to more locations in the Philippines.

The improved LTE network in Palawan is also expected to help businesses in the island by allowing them to bring their offers online.

“These upgrades also benefit residents, resort operators and tour operators, whose businesses continue to flourish as more tourists come to Palawan amid the improvement of connectivity and mobile data experience,” Gia C. Palafox, PLDT-Smart vice-president and head of Customer Development for the National Capital Region and Palawan, was quoted as saying.

PLDT is allocating a record P78.4 billion for capital expenditures in 2019, a huge chunk of which will be dedicated to improving its network and information technology platforms.

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

Max’s sells stake in QC hotel operator

MAX’S Group, Inc. (MGI) has completely divested from its hotel venture as part of efforts to focus on its core restaurant business.

In a statement issued Tuesday, the listed casual dining restaurant operator said it has sold its entire equity interest in Room Ventures Corp. (RVC), the owner and operator of Meranti Hotel in Quezon City.

Meranti Hotel opened in 2015 with a total of 59 rooms. The 12-storey hotel was MGI’s only venture in the hospitality business.

“Our decision to divest from Room Ventures Corp. represents another step in our efforts to make MGI more streamlined, cost effective, and focused on its core business,” MGI President and Chief Executive Officer Robert F. Trota said in a statement.

MGI has been enhancing efficiencies in its operations to improve its profitability. It is also focusing on growing its store network with the addition of 80 stores this year. The company currently has 706 branches, 59 of which are located in North America, the Middle East, and Asia.

The group’s portfolio includes Max’s Restaurant, Yellow Cab Pizza, Pancake House, Krispy Kreme and Jamba Juice, among others.

The company is also constructing a P1-billion manufacturing and distribution center in Cavite to support its future expansion.

MGI grew its net income by 17.6% in the first quarter of 2019, as the company benefited from its strategic shift to franchising and other cost stabilization efforts. Net income reached P146 million in the first three months of the year following a 4.2% rise in revenues to P3.4 billion. — Arra B. Francia

Gov’t raises P20B from 10-year Treasury bonds

THE GOVERNMENT made a full award of reissued 10-year Treasury bonds (T-bond) on offer on Tuesday amid overwhelming demand as investors positioned ahead of the first tranche of cuts in banks’ reserve requirement ratios (RRR).

The Bureau of the Treasury (BTr) raised P20 billion as planned from its T-bond offer yesterday after receiving tenders amounting to P65.84 billion, more than thrice the amount it wanted to offer.

The 10-year debt notes, which carry a coupon of 6.875%, fetched an average rate of 5.644%, 31 basis points lower than the 5.954% fetched when the bonds were last offered on April 11.

At the secondary market, the 10-year IOUs were quoted at 5.65% yesterday, based on the PHP Bloomberg Valuation Service Reference Rates.

Following the auction, Deputy Treasurer Erwin D. Sta. Ana said the BTr saw “great” results as the bond offering was thrice oversubscribed, with the rate also declining.

“This is basically positioning, I think, in anticipation of the first cut by the end of the week, so obviously there is ample liquidity in the system,” Mr. Sta. Ana told reporters yesterday.

The Bangko Sentral ng Pilipinas (BSP) will slash the RRR 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.

The central bank has said that a percentage point cut in big banks’ RRR will 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.

“They are opting to park funds in government securities. Of course we cannot deny the fact that the inflation environment is very much contained at this point. That’s where the demand is coming from,” Mr. Sta. Ana added.

Looking ahead, he added that there is “strong case” for further reductions in interest rates.

“That is what Treasurer Lea (Rosalia V. De Leon) has been saying all along, because of easing inflation, there’s injection of liquidity, so there could be some further decline in rates,” Mr. Sta. Ana noted.

Sought for comment, Robinsons Bank Corp. trader Kevin S. Palma said the market continued to show appetite for bonds as reflected in the very strong subscription.

“The strong turnout and lower average yield may be attributed to how the BSP acted with conviction with regards to the RRR and policy rates,” he said.

“The local bond market continued to shadow US Treasury yields which dropped to lowest levels since 2017 amidst the US and China dispute.”

The government plans to borrow P315 billion from the domestic market this quarter, broken down into P195 billion in Treasury bills and P120 billion in T-bonds.

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

Bayer Crop Science partners with DA office to boost hybrid rice production

BAYER CROP Science partnered with the Department of Agriculture Regional Office XII (DA-RFO XII) to implement a pilot project aimed at boosting the hybrid rice production of farmers in North Cotabato, South Cotabato, Sarangani, and Sultan Kudarat.

Under the memorandum of agreement (MoA), Bayer Crop Science and DA-RFO XII will implement the project that will use Arize Hybrid Rice seeds in over 10,000 hectares of rice farms in Mindanao.

Both parties will deploy field technicians to help the rice farmers. The farmers will also undergo rice production training through the Bayer Agri-Academy.

“This is the first-of-its-kind among our projects with the Department of Agriculture. By formalizing our partnership, we convey our commitment to join hands with the government to improve the region’s rice productivity,” Iiinas Ivan Lao, Bayer Crop Science country commercial lead, said in a statement.

According to Bayer Crop Science, the average yield of inbred rice farmers is around four metric tons, while hybrid rice seeds can potentially increase yield by six to eight metric tons. The adoption rate for hybrid rice remains low in the region.

“More than ever, we need to collaborate with the Department of Agriculture to ensure the project’s success. The support of DA-RFO XII and the local government units of the provinces involved will create a significant impact to the farming communities in the region,” Recher Ondap, head of seeds at Bayer Crop Science, said.

Mr. Ondap said the project will allow farmers to increase their yield by 20%.

Planting season will start in May or June and will end by September. At the end of the season, farmers who have harvested more than five metric tons of hybrid rice will be honored as top yielders in their areas. This would allow them to qualify for the DA’s annual Gawad Saka Awards.

Security Bank names Vohra as new president

SECURITY BANK Corp. has named its new president and chief executive officer effective next semester after its current head announced his retirement.

In a statement on Tuesday, Security Bank said its board of directors named Sanjiv Vohra as the new president and CEO of the bank effective July 1, subject to regulatory approvals.

Mr. Vohra was designated as the new bank chief as Security Bank’s current head Alfonso L. Salcedo, Jr. will be retiring from his post.

“With the appointment of Sanjiv Vohra, the bank is manifesting the institution’s commitment to professionalism and to bringing in leaders who not only understand the Philippine market but the global markets as well,” Security Bank Chairman Alberto S. Villarosa was quoted as saying in the statement.

“The banking business is truly becoming globalized and cross-border transactions, partnerships and alliances are now becoming the new normal.”

Prior to his new post, Mr. Vohra served as the managing director, head of global corporate banking (Asia and Oceania) and co-head of investment banking (Asia and Oceania) of MUFG Bank, Ltd., Security Bank’s strategic partner.

Before his MUFG stint, he also held senior leadership positions at Citibank Philippines and was its country head for eight years.

“The bank has made all the right moves in these last few years,” Mr. Vohra said. “I believe that Security Bank is in a very good position to take advantage of the growing domestic market while making the most out of the synergies available through its strategic alliances, including the partnership with MUFG.”

Incumbent president and CEO Mr. Salcedo will step down from his post after taking the helm of Security Bank from 2015 to 2019. He will remain as director of the bank and will chair its executive committee.

Sought for comment on the appointment of Mr. Vohra, Mr. Salcedo said in a text message: “Excellent choice.”

Meanwhile, Security Bank Director Rafael F. Simpao will also be retiring from his post effective June 30 and will become a senior adviser to the board. Mr. Simpao served as the company’s president and CEO from 1995 to 2004, and as its director since 1995.

Security Bank posted a net income of P2.38 billion in the first quarter of the year, up 1.5% versus year-ago level.

The bank’s shares closed at P171.10 apiece on Tuesday, dropping P2.70 or 1.55% from the previous day’s finish. — Karl Angelo N. Vidal

CAAP turns over P3.5 billion in dividends to national government

By Denise A. Valdez, Reporter

THE Civil Aviation Authority of the Philippines (CAAP) said it turned over to the national government its highest dividend in history in 2018, as it increased its net income after the installation of a Communications, Navigation, Surveillance / Air Traffic Management (CNS/ATM) system last year.

In a statement Tuesday, the airport regulator said it remitted P3.5 billion in dividends to the national government in 2018, 8% higher than the P3.2 billion dividends it remitted in 2017.

CAAP said its dividend payable for 2018 was supposed to be P958.6 million, but it “reported an excess cash of P2.55 billion, and deemed it appropriate to increase the dividend payment to P3.5 billion while still maintaining its economic viability.”

In a phone interview with BusinessWorld, CAAP Spokesperson Eric B. Apolonio said the higher remittance is largely due to an increase in fees and charges that the agency collected after installing a CNS/ATM system in January last year.

He said the CNS/ATM system allowed the CAAP to monitor all aircraft movement in Philippine airspace, therefore letting it charge airlines that fly over the country but do not necessarily land on Philippine grounds.

“Mag-i-increase talaga ’yung excess cash natin dahil ’yung overfly, nade-detect na ngayon lahat. May billing and charges ’yan lahat. Dumaan ka lang sa airspace ng Philippines, you have to be billed [Our excess cash increased because we can now detect overflies. There’s billing and charges for all of those. Just pass through the airspace of the Philippines, you have to be billed],” Mr. Apolonio said.

The CNS/ATM system aims to help reduce congestion in the country’s airspace and improve air traffic management safety.

Mr. Apolonio also noted CAAP also collected higher fees and charges last year such as filing fees, parking fees, and those related to aircraft touchdown and takeoff.

“Diba ’yung air travel nag-increase. It goes without saying na ’yung airport fees, ’yung travel terminal fees, (tataas dahil) magbabayad lahat ng pasahero [Since air travel increased, it goes without saying that airport fees, travel terminal fees also rise because all passengers pay],” he said.

Total passenger traffic in 2018 grew 10% to 54.14 million from 49.18 million the year prior.

“The flying public can be assured that while we remain keen on making our airspace safe, we shall continue to be honest and judicious in our fiscal functions,” CAAP Director General Jim C. Sydiongco said.

People’s Bank of China adds liquidity as regional bank seizure ratchets up stress

THE PEOPLE’S Bank of China injected 150 billion yuan on Monday and Tuesday. — WIKIPEDIA.ORG

THE PEOPLE’S Bank of China (PBoC) is acting to increase the supply of short-term funding to banks after the seizure of a regional lender rattled domestic markets.

China’s central bank injected a net amount of 150 billion yuan ($21.7 billion) through open-market operations on Monday and Tuesday, the most since the week ended March 8. Regulators announced Friday that they will take control of Baoshang Bank Co. citing “serious” credit risks, fueling worries of failures elsewhere and driving up funding costs.

The benchmark 7-day repo rate rose further Tuesday to the highest in more than a month, in spite of the central bank’s efforts to calm interbank markets. The jitters set off by the Baoshang case also focus scrutiny on whether the central bank will cut the amount of reserves lenders need to hold sooner rather than later, as tax season, bond sales and maturing policy operations drain cash from the banking system.

“The Baoshang incident has made investors question the quality of similar assets and tightened interbank funding,” said Liu Peiqian, Asia strategist at Natwest Markets Plc in Singapore.

About 2.9 trillion yuan are due to be drained from China’s banking system between June and August, according to Bloomberg-compiled data.

Without rising stress in the banking system, the PBoC’s preferred course of action would be to keep extra liquidity provision to a minimum, with the government’s debt campaign and the vulnerability of the yuan in mind. A broad cut to the reserve-ratio runs the risk of sending a stronger easing signal than is warranted, depressing the currency.

Nevertheless, if markets are still unstable into June then a cut in the amount of money that some banks have to park in reserves would become a more likely way for the central bank to ease liquidity fears, Liu said.

The PBoC has increased the amount and frequency of open market operations in the wake of the Baoshang case, and it’s likely to keep injecting short-term funding if money market liquidity remains tight, said David Qu, an economist at Bloomberg Economics in Hong Kong.

“The central bank shouldn’t and can’t try to wipe out market volatility entirely,” but what it can do is just make sure there won’t be any credit crunch, he said, adding he expects the central bank to cut reserve-requirement ratios as soon as the second quarter due to the slowing economy, trade tensions and rising loan maturities. — Bloomberg

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