Ho Chi Minh faces extreme risk from floods by 2050

May 19, 2020 | 12:02 am

HO CHI MINH City, Vietnam’s biggest metropolis, faces an increasing risk of flood disasters given rapid infrastructure expansion driven by economic growth, according to McKinsey Global Institute.

The chance of such events could increase five to 10 times by 2050, resulting in economic and infrastructural damage that could cost billions of dollars, according to a McKinsey report, dated April.

The analysis is based on hydrological simulations, land-use maps, infrastructure databases and damage curves.

Ho Chi Minh City, a historic flood area located some 1,000 miles south of the capital Hanoi, contributes about a quarter of the Vietnam’s gross domestic product.

While the metropolis can cope with flood risks today that could hit 23% of its area, further urbanization is raising the potential for land subsidence and an increase in sea levels.

Those could cause about $8.4 billion of real-estate damage from flooding by 2050, six times the current estimated impact, McKinsey said.

The city still has time to adapt to avoid such risks by having better plans in place, including relocating homes and infrastructure assets away from flood-prone areas, McKinsey said. Investments and fundraising are also needed to reduce exposure for roads and other critical utilities, according to the report.

Vietnam is forecast to become the world’s 20^th-largest economy by 2050, given an annual economic growth rate of 5.1% estimated by PricewaterhouseCoopers. — Bloomberg

Around the world in seven years… and counting

May 19, 2020 | 12:02 am

WHEN Danish traveler Torbjorn “Thor” Pedersen set out to travel the world and visit more than 200 countries without getting on any airplanes in 2013, he never thought he’d be on the last leg of his journey and stranded in Hong Kong while a pandemic raged worldwide.

“When COVID-19 turned into a pandemic then I knew for a fact that it was out of my hands and that I had no chance to find a solution,” Mr. Pedersen told BusinessWorld in an e-mail on May 15.

And so he found himself stranded for months in Hong Kong, which was largely successful in containing the spread of the virus, and he realized that staying in the city was the better option.

But hunkering down was frustrating for Mr. Pedersen, who is nine countries away from completing his plan of visiting 203 countries without using planes.

“It frustrates me that a project which is already well overdue keeps getting postponed,” he said but he counted himself fortunate to be in Hong Kong while waiting for the pandemic to end.

“I could have gotten stuck on a small Pacific island or on a ship. So in regards to how I am, I can just repeat: some days are better than others,” he explained.

But really, how did this ambitious idea of going around the world without resorting to air travel happen?

While the idea may strike some as rather outre these days, people were, of course, traveling the world long before airplanes were invented 117 years ago (counted from the first successful flight of the Wright Brothers in 1903). Magellan’s famous attempt to circumnavigate the world by ship 500 years ago was a success (though Magellan himself and many of his crew did not survive the trip). Famed journalist Nellie Bly — inspired by Jules Verne’s 1872 novel, Around the World in 80 Days — went around the world in 72 days in 1888 to prove it could be done, though she only visited a handful of countries because of the time crunch. She unknowingly was on a race against the society editor of a competing publication, Elizabeth Bisland. Ms. Bisland completed her own journey in a little over 76 days.

In 2013, Mr. Pedersen got the idea of visiting 203 countries around the world without air travel after he realized “nobody had been to every country completely without flying,” and that his would be an unbroken journey, meaning he hasn’t been home in seven years.

His journey, called “Once Upon a Saga,” is documented on a blog of the same name. The original plan was to finish the journey and be back home in Denmark after visiting the Maldives in October 2020 — but the pandemic has thrown a wrench into his plans.

Mr. Pedersen visited the Philippines in August 2019 and went to Marinduque and Siquijor.

“And here I am now. On a small picturesque island which would otherwise be perfect for a holiday. However, I’m not on a holiday and a forced holiday does not taste sweet to a man on a schedule which is already running late,” he wrote on his blog post when he missed his ferry.

And that’s how he has traveled: via local transportation, ferries, and container ships, usually from Pacific International Lines and Swire Shipping.

“It’s hard reaching an island if there are no ferries. It is complicated to navigate a conflicted country without flying. And while most visas come relatively easy, there are simply some which are nearly impossible to obtain when traveling overland. However, if I want to cross the land border into Iran then I need to approach an embassy and apply for a visa,” he said of his challenges.

The last nine countries on his list are all island nations, from New Zealand to the Maldives, which in his estimation, would take him another 10 months to do. He was supposed to wait for a few days after arriving in Hong Kong before heading to Palau. This has turned into months.

After an almost-decade-long journey, what Mr. Pedersen looks forward to is sleeping for an entire month and marrying his fiance.

“I will see all my friends and family as soon as possible… and all the children they have had while I’ve been away. I plan to write at least one book and pursue a life as a motivational speaker. Regarding social media, I hope to keep them alive and grow them,” he said.

He also documents his travel via Instagram (@onceuponasaga).

As for how travel will change after the pandemic, Mr. Pedersen was optimistic that aside from health checks and frequent cleaning of vehicles, travel will not change much.

“I don’t think we will see a lot of change. It’s likely that temperature checks and fumigation will become standard. Terminals will probably have more frequent cleaning and then that is about it,” he said before adding that having a vaccine will have everything returning to normal in a few years’ time. — Zsarlene B. Chua

EastWest Bank income climbs 75% in 1st quarter

May 19, 2020 | 12:02 am

EAST WEST Banking Corp. posted a higher income. — *BW FILE PHOTO*

EAST WEST Banking Corp. (EastWest Bank) booked a 75% increase in net profit in the first three months of the year, supported by better margins from its core businesses as well as higher trading income.

The bank’s net income in the January to March period hit P2.3 billion, surging by 75% from the comparable year-ago period.

Its return on equity stood at 18% during the quarter.

“The higher income in the first three months of 2020 was driven by better margins from its core lending and deposit-taking business and higher trading gains,” EastWest Bank said in a filing with the local bourse.

EastWest allotted P2.4 billion for loan provisions, 2.8 times higher than what it set aside last year, as it factored in the impact of the coronavirus disease 2019 (COVID-19).

“The lockdown, the only viable response to stem the spread of the virus until a vaccine is found, has shuttered the economy and is expected to make it difficult for some businesses and consumers to service loans,” it said.

Meanwhile, net revenues expanded by 45% to P9.6 billion from the P6.6 billion posted in the first quarter of 2019.

During the first three months of the year, the bank’s net interest income, which made up 69% of its revenues, climbed 42%.

Net interest margin was at 8.1%, 173 basis points higher from a year ago, boosted by market liquidity and normalizing deposit rates. EastWest Bank said deposit costs were substantially higher and pushed its margins lower in the early part of 2019.

Non-interest income also jumped by 52% backed by securities trading gains.

Meanwhile, EastWest Bank’s operating expenses, excluding provisions for losses, rose by 14% to P4.6 billion due to higher compensation costs.

Its cost-to-income ratio settled at 48%, improving from the 60% seen a year ago.

Total loans increased by 6% to P261.4 billion. Meanwhile, total assets grew 3% to P384.1 billion.

The bank’s deposits rose 3% to P294.3 billion as it had just replaced its time deposits with low-cost funds, which partly accounted for the improvement in margins.

“EastWest Bank’s asset and loan growth for the quarter were among its lowest in years, partly due to less aggressive lending in consideration of the virus,” the bank said.

“We were looking forward to another record year, at least P8.0 billion in income for 2020 — until COVID-19 struck. Now, we have to be ready that profits could be lower this year. We have to book ‘anticipative provisions’ for loan losses and may need to continue doing so in the coming months as the economic damage to households and businesses from the virus-induced disruption unfolds,” EastWest Bank President and Chief Executive Officer Antonio C. Moncupa, Jr. was quoted as saying.

“This pandemic is unprecedented and is still playing out. With no historical guide to anchor on, it is difficult to estimate bad debts. A lot now depends on government policy interventions,” Mr. Moncupa added.

EastWest Bank’s shares closed at P7.01 apiece on Monday, down by 29 centavos or by 3.97% from its previous finish. — Luz Wendy T. Noble

Smart starts to reopen stores in select areas

May 19, 2020 | 12:01 am

SMART Communications, Inc. on Monday said it would reopen its stores in select areas under the more relaxed general community quarantine.

In a statement, Smart said all its staff “will be required to wear masks and to have their temperatures checked prior to entry” to ensure the safety of customers and employees.

All its stores will have sanitation areas, distance markers, and other features that reduce physical interaction, it said.

“High traffic areas will also undergo regular disinfection,” it added.

Jane J. Basas, senior vice president and head of consumer wireless business at Smart, said: “We are continuously looking for innovative ways to adapt to the new normal in order to serve our customers better.”

“By opening our stores, we hope not only to address customer concerns but also to help stir economic activity to help our country recover from the effects of COVID-19,” she added.

Last month, Smart said it would implement beginning May 1 a six-month installment payment scheme for the outstanding monthly bills of its postpaid customers. The objective of the six-month installment program is to ease the financial burden of customers affected by the coronavirus disease 2019 (COVID-19) crisis, it said.

All postpaid accounts will be automatically enrolled for the six-month installment scheme. Those who do not want to avail of the deferred payment scheme can pay their bills in full. — Arjay L. Balinbin

Shirt brand reminds people to breathe with short film

May 19, 2020 | 12:01 am

IN a world full of fear and uncertainties, shirt company Linya-Linya reminds people to take a moment to breathe in its new short film Kalmahan Mo Lang.

“Linya-Linya is not just a shirt brand — we’re content creators aiming to connect to fellow Filipinos, bring joy, and provide inspiration and hope. Especially now. We want to tell our countrymen that they are not alone in being alone. We are together in all adversities and together we will get through this,” Ali Sangalang, the company’s creative director, told BusinessWorld in an e-mail on May 17.

The brand is known for its distinctly Filipino designs incorporating Filipino snacks and witty colloquialisms like a shirt that read “Babangon ako. At matutulog muli” (I will rise. Then go back to sleep).

(Mr. Sangalang wrote his responses in both English and Filipino and this article translated all his Filipino answers to English.)

The four-minute film was released on May 16 and contains breathing exercises for people who need to calm down and a reminder that they need to rest and breathe.

“We started the project [in] early April, and it took us over a month to complete everything and launch the film. The completion and editing of the script took time, since we knew that we are all in a very sensitive situation, and we must be mindful of the words that we’ll use, and the content that we’ll release. The illustration, animation, and overall production also took time since we wanted to produce the best material we could possibly create in this collaboration,” Mr. Sangalang said.

The film was created with Highball Studios, Studio V, and Hit Productions. It took 27 people working from home to complete the project.

And because the response was “overwhelming” — Mr. Sangalang said that there’s a clamor from their “community” to create more animations — they are “considering turning this to a series, and create more videos, along with the daily content from our social media pages.”

As of this writing, the video has had more than 41,800 views and thousands of shares. Mr. Sangalang said that in less than a day, “the film had already reached 120,000 people on Facebook.”

The message of the film also resonated with the company as he admitted that the past few months have been “really tough for a small brand and business like us.”

“Due to ECQ (enhanced community quarantine), we’re unable to sell products as our physical stores are still closed. Work for our operations and sales staff has been postponed, while maintaining a skeleton workforce for our online store and social media pages,” he said before adding they were also “exhausting all efforts” to provide cash assistance to their affected employees.

All seven physical stores were closed and the quarantine measures stalled the brand’s plans to open two more this year.

“For the first few weeks of the lockdown where transportation was prohibited, we had zero sales. It hurt. Thankfully, when select areas became serviceable for deliveries, we were able to generate a good amount of sales. Our very loyal customers and fanbase are really helping us keep the business afloat,” Mr. Sangalang said, adding that they had to rely mostly on online sales via the linyalinya.ph store.

The pandemic has made him and his partner Jim Bacarro think about how to move forward with the business.

“For now, we’re rethinking our move to open more physical stores. We’ll continue to develop our website and improve our e-commerce. Our very talented creatives team will continue to create relevant and quality Filipino content. We believe that connecting to more Filipinos — making them smile, sparking hope, and inspiring them amidst the pandemic — will keep the brand and the business alive,” he said.

But in the end, he said, the most important question is “who will you be when this ends?”

“Even through struggles, I believe we can learn a lot of things from this: the Filipino will grow stronger and tougher. This will push us to be smarter, more creative, and hopefully, more compassionate towards ourselves, each other, and the country,” he said. — Zsarlene B. Chua

Davao hotels tweak operations to ride out crisis

May 19, 2020 | 12:01 am

DAVAO CITY — Some big hotels have managed to keep operations going despite the lockdown, thanks to the demand from business process outsourcing (BPO) firms and food delivery.

Hotels now have to explore new revenue streams as the tourism industry is expected to remain limited as the coronavirus crisis continues.

“In general, all are hit in a very big way. Most of the businesses are closed, while some are partially open. Some hotels opened to cater the BPOs and frontliners. At least they are able to open just to recover from their costs,” Philippine Chamber of Commerce and Industry (PCCI) Regional Governor Arturo M. Milan said in a phone interview.

Waterfront Insular Hotel Davao, one of the oldest in the city, is “bleeding” despite being able to stay open, said Jennifer R. Romero, head of sales and marketing department.

“We will try to lower down the cost and will see if we can hit the break even figures,” Ms. Romero told BusinessWorld in a private message.

CHMI Land, Inc.’s Acacia Hotel Davao, which just opened late last year, has also managed to maintain operations for BPO workers and its Luk Foo Palace restaurant.

While quarantine rules are being eased except for tourism and leisure sites, Mr. Milan said hotels and other facilities can start looking for new income sources.

He said among the recommendations made during a recent business sector virtual meeting are the possible reconfiguration of some hotels into office spaces and promoting inter-province tourism for families and small groups. — Maya M. Padillo and Carmelito Q. Francisco

ADB funding commitments for PHL among region’s largest

May 19, 2020 | 12:01 am

THE ASIAN Development Bank’s (ADB) funding commitments for the Philippines reached $4.57 billion in 2019, second highest among the bank’s developing member countries (DMCs) in Asia and the Pacific.

According to ADB’s Annual Report 2019 published Monday, ADB’s commitments to the country last year was the second largest across the region, following the $5.68 billion for India and ahead of Pakistan’s $3.192 billion.

Broken down, ADB’s loans, grants and other financing approved for the Philippines totaled $2.553 billion, technical assistance stood at $2.3 million, project cofinancing amounted to $2.011 billion while technical assistance cofinancing was at $3 million.

The ADB has said it is planning to extend $2.5 to $3 billion to the Philippines until 2022.

The multilateral lender in April said its $3 billion pre-existing lending program for the country this year will push through on top of the $1.5 billion it approved last month to support the government’s response efforts for coronavirus pandemic.

In Asia and the Pacific, in 2019, the Manila-based multilateral lender had a total of $33.74 billion worth of funding commitments to its DMCs, lower than the $35.464 billion it approved in 2018.

Of the total commitments last year, the bulk or $21.64 billion were loans, grants, equity investments and guarantees from the bank’s own resources, with disbursements, “a key indicator of successful project implementation,” hit a record $16.47 billion.

Some $11.86 billion were cofinanced, including trust funds, while the remaining $237 million involve other technical assistance.

“ADB’s private sector operations in 2019 reached the $3-billion mark for the second consecutive year, reflecting plans to expand private sector investments into new sectors and frontier markets,” the ADB said in a statement yesterday.

By region, the Manila-based multilateral lender extended 31% of its commitments to its member countries in South Asia, 30% to Southeast Asia, 24% to Central and West Asia, 12% in East Asia, two percent in the Pacific region, while the rest were labelled regional.

Some 35% of the total commitments last year went to transport projects, 14% to fund public sector management programs, 12% to energy, 10% to agriculture, natural resources and rural development, 10% to finance, six percent to water and other urban infrastructure, five percent to education and three percent each to health; industry and trade; and information and communication technology sector.

“I am encouraged by our efforts in 2019. I am heartened by what we have achieved so far in 2020. We will build on these achievements to ensure we remain relevant and responsive to our members’ needs as they take action to combat and recover from the novel coronavirus disease (COVID-19) pandemic,” ADB President Masatsugu Asakawa was quoted as saying.

Across Southeast Asia, ADB committed a total of $5.26 billion in 2019, disbursed $1.63 billion, cofinanced $2.88 billion worth of projects and extended technical assistance worth $35.6 million.

Some 34% of the total commitments last year went to finance transport projects, 26% to fund public sector management programs, 14% for finance, nine percent for education sector and eight percent on agriculture and rural development.

“ADB is helping its DMCs in Southeast Asia reduce poverty, expand access to employment and other economic opportunities, and deliver the education and skills training needed to help the disadvantaged acquire better jobs,” it said.

The ADB noted that countries in the region should invest around $184 billion per year on infrastructure to “support inclusive and sustainable growth.”

“ADB devotes more than half of its portfolio for Southeast Asia to infrastructure development (transport, energy, water and urban services, and agriculture and natural resources). By doing so, it is providing significant support for improved economic productivity and resilience to climate change in the region’s DMCs.” — Beatrice M. Laforga

Philippines improves in ranking on readiness for clean energy transition

May 19, 2020 | 12:00 am

How PSEi member stocks performed — May 18, 2020

May 19, 2020 | 12:00 am

Here’s a quick glance at how PSEi stocks fared on Monday, May 18, 2020.

Rent grace period applied to areas under modified, general ECQ

May 18, 2020 | 9:35 pm

THE GRACE period for rent payments will be applied to areas where more relaxed quarantine rules are in force, the Department of Trade and Industry (DTI) said.

A 30-day deferral for residential and commercial rents was first applied during the enhanced community quarantine (ECQ) imposed on Luzon, counting from the due dates falling within the lockdown period.

Trade Secretary Ramon M. Lopez in a message to reporters Monday said the rent deferral applies to areas under modified enhanced community quarantine (MECQ) and general community quarantine (GCQ).

“The rent grace period applies during the ECQ, MECQ, and GCQ,” he said.

The DTI in a memorandum on April 4 said residential rents and commercial rents for micro, small and medium enterprises (MSMEs) falling due within the ECQ will have a grace period of 30 days. The cumulative rent due within the quarantine may be amortized over a six-month period after the lifting of the lockdown.

Lessors who do not observe the 30-day grace period face imprisonment of at least two months and/or a fine of at least P10,000.

Malls that have voluntarily waived rent during the ECQ have not announced if their waivers will be extended for stores that are not yet able to open under MECQ.

The Philippine Retailers Association (PRA) said mall operators have been taking various positions on rents.

“Some have given 50% off, some 75% off, and some (charged rent based on) percentage of sales. This is something that we will have to observe in the coming weeks and work with the different mall operators to see how both parties can cooperate and find a win-win formula to help each other in this precarious situation,” PRA Vice Chair Roberto S. Claudio said in an email Monday.

Metro Manila, Laguna, Bataan, Bulacan, Nueva Ecija, Pampanga, Zambales, and Angeles City are on MECQ until the end of the month. Under MECQ, some businesses, including non-leisure stores in malls, may have partial operations. The cities of Cebu and Mandaue are still on ECQ.

Some Metro Manila malls have restarted partial operations since the start of the MECQ, including those operated by Megaworld Corp., Robinsons Malls, Ayala Malls, and Vista Malls.

Metro Retail Stores Group Inc. announced in a statement Monday that it will be reopening some Luzon and Visayas branches, within limited schedules and with social distancing and public health measures,

Mr. Lopez also disputed reports of overcrowding at malls after Metro Manila transitioned to MECQ over the weekend.

The trade department, including Mr. Lopez, visited two malls on Sunday — SM Megamall and Robinsons Galleria.

“Aside from supermarkets and drugstores, only (about) 20% of stores opened. Crowd is estimated also about less than 30% than pre-COVID days. Malls ensure social distancing and people wearing mask,” he said, responding to photos of crowds at malls circulating online.

Health department Spokesperson Maria Rosario S. Vergeire said Sunday that mall operators and local government should follow social distancing guidelines to ensure that there is no crowding, noting that a spike in coronavirus disease 2019 (COVID-19) infections could result in a return of strict lockdowns. — Jenina P. Ibañez

SB Corp. starts taking loan applications from small firms in GCQ areas

May 18, 2020 | 9:34 pm

THE SMALL Business Corp. (SB Corp.) has started accepting loan applications from micro and small enterprises in areas that have shifted to general community quarantine (GCQ).

Economic relief applications for businesses affected by the coronavirus disease 2019 (COVID-19) pandemic began on May 18, the Department of Trade and Industry (DTI) said Monday.

Under SB Corp’s COVID-19 Assistance to Restart Enterprises (CARES) program, micro and small enterprises that were operating for at least a year before March 16, with assets up to P15 million, and whose operations “suffered drastic reduction” due to the pandemic are eligible to apply.

SB Corp. President and Chief Executive Officer Ma. Luna E. Cacanando said last week that funding is expanding to P1.5 billion from P1 billion previously, due to excess funds from their Pondo sa Pagbabago at Pag-asenso (P3) program.

Micro enterprises with asset sizes not exceeding P3 million may borrow between P10,000 and P200,000 while small enterprises worth up to P15 million may borrow up to P500,000.

All provinces are on GCQ, a relaxed form of the lockdown, except for Metro Manila, Laguna, Bataan, Bulacan, Nueva Ecija, Pampanga, Zambales, and Angeles City which are on a modified enhanced community quarantine until the end of the month. Cebu and Mandaue cities are still on enhanced community quarantine (ECQ).

Businesses may take out loans to keep their amortizations up to date on vehicle loans and fixed-asset loans, replacing damaged perishable inventory, or acquire working capital to restart the business.

Loan interest rates are up to 0.5% and have a grace period of six months on principal payments.

Ms. Cacanando said 80% of earlier borrowers have said that they cannot continue with their current loan agreements due to the pandemic, which she said SB Corp. will address with a payment moratorium during the ECQ. She said those companies only need to pay interest for six months after the lockdown is lifted.

Applicants may visit the SB Corp. office or Negosyo Center in GCQ areas, where they are required to wear face masks.

SB Corp. is the financing arm of the DTI. — Jenina P. Ibañez

OFWs offered interest-free loans for agri ventures

May 18, 2020 | 9:33 pm

THE Department of Agriculture (DA) will offer interest-free loans to Overseas Filipino Workers (OFWs) to venture into agriculture-related businesses as part of efforts to boost the economic productivity of rural areas.

In a statement, Agriculture Secretary William D. Dar said that returning OFWs can serve as “agripreneurs” to revive the countryside.

“As we adopt the ‘whole-of-nation approach’ in creating more livelihood and employment opportunities in the countryside, we will also ensure that more small farmers and fishers… will benefit from agri-ventures spawned by our returning OFWs,” Mr. Dar said.

The lending program is a component of the government’s “Balik Probinsya, Bagong Pag-Asa” (BP2) program, intended to decongest the capital, where most of the country’s coronavirus disease 2019 (COVID-19) cases are concentrated.

Mr. Dar said the OFW loan programs will be coursed through the DA’s Agricultural Credit Policy Council (ACPC), including the Expanded SURE-Aid and Recovery Project (SURE COVID-19), the Kapital Access for Young Agripreneurs (KAYA) and the Agri-Negosyo (ANYO) program.

SURE COVID-19 extends to micro and small enterprises (MSEs) up to P10 million worth of working capital at zero interest, payable in five years. Individual farmers and fisherfolk affected by the enhanced community quarantine (ECQ) may borrow up to P25,000 at zero interest, payable in 10 years.

KAYA is intended for those aged 18 to 30 years, in order to encourage young entrepreneurs or agri-fishery graduates to set up agriculture-related businesses. The maximum loan is P500,000 at zero interest, payable over five years.

ANYO finances agri-ventures, working capital or fixed asset acquisition by individuals, sole proprietors, partnerships, corporations, and cooperatives whose members are marginal small farmers and fisherfolk. Loans range between P300,000 and P15 million at zero interest, payable over five years.

On the other hand, OFWs can also access free technical training from the DA’s Agricultural Training Institute (ATI).

“Now is the time to tap the OFW sector as they start to reintegrate themselves back to their respective homes, communities and provinces,” Mr. Dar said. — Revin Mikhael D. Ochave