Facebook Instagram Linkedin Twitter Youtube
Home Blog Page 9718

Get more holiday promos this December with Honda

HONDA CARS Philippines, Inc. (HCPI), Honda’s automobile business unit in the Philippines, announces extension of its early Christmas promotion entitled Cheers for Deals. The promo covers the City, BR-V, CR-V, Brio and Civic with the following cash discounts and low down payment offers:

The City 1.5 VX Navi CVT, New BR-V 1.5 S CVT, New BR-V 1.5 Prestige CVT, All-New Brio 1.2 S MT, and All-New Brio 1.2 RS CVT are all available through a 10% special all-in cash-out with 36 up to 60 months payment term through BPI Family Savings Bank, RCBC, Security Bank Corp., China Bank Savings, and Bank of Commerce only.

On the other hand, the CR-V Touring Diesel 9AT and New Civic 1.8 S CVT are available through 15% or 20% low net cash out with 36 up to 60 months payment term through BPI Family Savings Bank, RCBC, Security Bank Corp., East West Banking Corp., PNB Savings Bank, Philippine Savings Bank, China Bank Savings, Bank of Commerce, Sterling Bank of Asia, Maybank Philippines, Inc., BDO Unibank, Inc., United Coconut Planters Bank, and Robinsons Bank only.

Moreover, other financing promo option offers are the Free One Month Amortization, available for 60 months payment term only and the Low Monthly Amortization, available for 15% and 20% all-in down payment for 36 to 60 months payment term.

All offers include three-year LTO registration and Chattel Mortgage. Free one-year Comprehensive Insurance with Acts of Nature is also available through select bank partners.

To learn more about the other special sale and promos, visit your nearest Honda dealership, or Honda Cars Philippines, Inc.’s official website at www.hondaphil.com. Offers are available until Dec. 31, 2019 only.

The resurgence of a 1990s staple

IF YOU WERE someone with a smidgen of fashion sense in the 1990s and the very early 2000s, you had at least three pieces in your closet from Marithé et François Girbaud. The name was too long for most people to bother saying so they would just call the brand by the last names of the French founders: Girbaud.

The brand has been very quiet for some time: WWD reports that it filed for bankruptcy in 2012. In 2015, however, it bounced back with Mad Lane, a pop-up concept selling clothes retailing for hundreds of euros. With the company’s resurgence comes a resurrection for its Philippine market as well, with more than 30 stores of the brand at present. A party to celebrate 25 years of Girbaud in the country, was held in Makati last month and revealed new stock and new plans for the brand.

BusinessWorld talked with Obee Ham, Business Development Head for Retail Dynamics, Inc., the group behind the Manila revival of Girbaud. “The Philippines is one of their biggest markets,” she noted, saying that in Asia, only the Philippines still has physical Girbaud stores. Retail Dynamics Inc., under Trimark, acquired the brand late last year, but people might still remember MFG Manille Inc., which held the franchise in 1993.

“It was true that for a time, Girbaud had been very much quiet. It was plateauing. It’s the same with a lot of brands — they go through a cycle, especially in fashion,” said Ms. Ham. “That’s why we had to do this, because we want to relaunch the brand.”

She continued, “Part of our relaunch and part of our redevelopment is actually to bring back the apparel,” she said, noting that previously, accessories had become more famous than the jeans the brand was known for.

The brand was born in 1972, set up by French stylists Marithé Bachellerie and François Girbaud. They hit some global fame by designing the costumes for the leads of 1980s hit movie Flashdance, and were known for commercializing the production of stonewashed jeans (before that the jeans used to be “destroyed” at home).

Now, since the brand’s resurgence in Europe, the pair have been experimenting with creating jeans using heat adhesion, laser blading, and ultrasound. (We asked to see samples, but those were unavailable during the launch).

“Our DNA is denim,” said Ms. Ham.

Items from Girbaud could cost up to the reasonable thousands, but the things we saw at Girbaud’s European website cost hundreds of euros. We asked Ms. Ham about that, who said that the expensive Mad Lane items will be made available at select stores.

Next year will also see more store openings, store renovations, and a new look for items: Ms. Ham noted a more streetsyle aesthetic to respond to trends for a younger market.

Some of the brand’s items would be from licensing deals (presumably bringing the price down), but a lot would still come from abroad. “They pretty much approve everything,” she said about the founding pair.

The pair already made their names, and already have a signature. Apparently, the signature this whole time was not stonewash, or baggy, or skintight, or anything you could see in the store. It’s the spirit of innovation that created those jeans in the first place. “It’s really how they continuously innovate, especially since they’re known for denim.” — JLG

Sarangani seeks declaration of Mt. Busa as protected landscape

THE SARANGANI provincial government is pushing for the declaration of Mt. Busa as a protected landscape as another Philippine eagle was rescued in the area over the weekend. In a press statement, Ryan Jay R. Ramos, chief of staff of Sarangani Rep. Rogelio D. Pacquiao, said their office has been discussing with the Department of Environment and Natural Resources (DENR) to declare the “mountain range as a protected landscape” under the Expanded National Protected Areas System law to protect the eagle and their habitat. Mt. Busa covers about 114,000 hectares, straddling the towns of Kiamba, Maitum and Maasim. Last Friday, a family in Lumatil, Maasim rescued a female Philippine Eagle weighing 5.185 kilograms from the shoreline of the village. The bird was immediately turned over to the Philippine Eagle Foundation based in Davao City for observation. The DENR-Region 12 (SOCCSKSARGEN) office said the eagle was “found weak and exhausted.” In January 2017, another eagle was rescued at another part of the mountain range which has already been declared as a key biodiversity area. — Carmelito Q. Francisco

How PSEi member stocks performed — December 13, 2019

Here’s a quick glance at how PSEi stocks fared on Friday, December 13, 2019.

 

The Class of ’69

The year 2019 marked the golden year of our grade school class. In 1969, we graduated from elementary school, perhaps unaware then that we would be caught up in the vortex of turbulence all around us.

What happened in 1969? The US escalated the war in Indochina, despite reducing its troops in Vietnam. Investigative journalism exposed the savagery and devilry of the 1968 My Lai massacre. Student protests and other forms of civil unrest shook the world. Hundreds of thousands of mainly young people participated in manifestations that demanded an end to the war. “Give peace a chance” was the call of the times.

Woodstock and similar music festivals became anti-establishment emblems. Progressive and psychedelic music ruled, with Led Zeppelin, the Beatles, the Rolling Stones, and Pink Floyd launching albums that became among the finest in the discography. And Miles Davis popularized jazz among the youth.

In the Philippines, 1969 was an election year, with Ferdinand Marcos getting re-elected as President. But it was a dirty election that Marcos won through guns, goons, and gold. The worse was yet to come as Marcos was planting the seeds of dictatorship. Radical opposition was mounting. The exploitative conditions of farmers and workers and the brutality of the police and soldiers made armed struggle a tempting option for the activists. Indeed, the New People’s Army was founded on March 29, 1969.

In the cities, the students had Molotovs and manifestoes, Mandrax and marijuana. The Kabataang Makabayan militants and the hippies cohabited. The hippies joined the demos despite the violent clashes and the activists smoked weed to calm their assertiveness. Almost everyone wanted the system to fall. The rules were crumbling, and the youth were creating their own utopias.

This was a rough period that shaped our adolescence. We graduated from grade school unscathed. High school, however, turned out to be turbulent and thrilling. For the administrators and disciplinarians, this batch was a challenge, if not a nightmare.

Eight sections made up our batch that entered high school. By the time we enrolled in fourth year, the number of sections was reduced to six, and the average number of students per class diminished. The most devastating was the transition from third year to fourth year, the period just before the declaration of Martial Law. One whole section was wiped out. Jun Dalandan, who serves as our attentive, single-malt-loving spiritual leader, estimates that 25% of our cohort did not graduate as scheduled — they repeated, they were dismissed, they left, or they simply vanished.

Classmates were punished — flunked or expelled — for the wrong reasons. It was preposterous to give a failing mark in Pilipino and Religion to bright classmates — they who spoke Tagalog in daily conversation and they who believed in Father the Almighty and obeyed the commandment “Thou shall not kill.” Flunking Pilipino or Religion meant repeating the whole year.

Others didn’t fare well in Math not because they were lousy at numbers and in abstraction, but because they were terrorized and verbally abused by a foul-mouthed Jesuit teacher.

A bigger number of classmates repeated the year or dropped out because of circumstances associated with drug use. It was likewise preposterous that possession or use of hallucinogens was subject to dismissal. Then, the approach of harm reduction was still far out. The ironic part was that while taking cannabis or LSD was prohibited, smoking cigarettes, which has caused greater harm to individuals and society, was permitted so long as the high school student obtained parental consent.

Drug use, then and now, is considered deviant behavior. But how could have it been a deviant behavior when drug use was accepted as part of the social norms by our batch and arguably by the entire high school? Almost everyone was using or experimenting with mind-altering substances. The guy who abstained from drugs was the weird one.

Call it counterculture. But embracing a counterculture is far different from being socially deviant.

Perhaps our batch was even ahead of the iconic Steve Jobs in discovering the wonders — and the profundity — of mind-altering substances. Here is what Jobs said about LSD: “Taking LSD was a profound experience, one of the most important things in my life. LSD shows you that there’s another side to this coin, and you can’t remember it when it wears off, but you know it. It reinforced my sense of what was important — creating great things instead of making money, putting things back into the stream of history and of human consciousness as much as I could.”

It is okay to have a homecoming, reminisce about surviving those tumultuous times, and wax poetic about the marvelous experiences. But all this has a higher purpose of learning lessons that can be applied today and tomorrow.

From the experience of the class of 1969, I draw a few insights that our society can think about.

First, practice tolerance. Give space to the non-conformists and the rebellious. Allow counterculture to flourish. They do not cause serious harm to society. On the contrary, their existence builds the mosaic of a vibrant, discursive and enlightened society.

Second, have rules that do not create further harm. A school policy of having a student repeat one whole year because of poor performance in non-core subjects that are taught through rote learning makes the student worse off. Similarly, a policy imposing severe punishment on students using drugs does more harm than good. The Jesuits of 50 years ago could be pardoned, for they had no inkling of the harm reduction approach.

But the adverse effect of the drug policy during our high school days would be a thousand times less severe than the outcome of President Rodrigo Duterte’s war on drugs, which has resulted in thousands mercilessly being killed.

Third — and here the Jesuits deserve the credit — basic education is not just about making the young literate and numerate and giving them the comprehension and analytical skills; equally important is imparting the values that will make them good individuals and citizens. This got somewhat lost in the country’s educational system, as we became preoccupied with addressing our technical deficiencies.

Our basic education in grade school and high school inculcated in us the values of discernment, of being a man for others, and of being constantly true.

Our batch consists of respected and renowned men in different fields — music and fine arts, judiciary and law, health and medicine, manufacturing and services, finance and banking, public service and civil society, journalism, athletics, entrepreneurship, and the academe.

Typifying the character of the class is Rogie Tangco, who received the 2019 Golden Jubilarian Lifetime Award. The Award cites Rogie “for cultivating his Ignatian roots towards being a healer for others, as exemplified by his selfless dedication to provide pacemakers to the indigent via the establishment of a pacemaker bank.” Rogie humbly says that the award is for his classmates, from basic education to medical school. One way or another, each one has served to be a man for others or a healer for others.

This is the class of Joey Ayala and Bogie Tence Ruiz, artists who have made protest art sublime yet accessible; the class of Andy Soriano, the fiercely independent judge who ruled that strongman Duterte’s Proclamation on the issuance of a warrant of arrest against then Senator Antonio Trillanes IV had no factual basis; the class of Eddie Dorotan, a doctor like Rogie, who champions good local governance through Galing Pook; the class of Jun Dalandan and the late Joey Pengson, who gave purpose to the alumni by initiating socially and politically relevant programs.

This is the class that popped acid and smoked pot; the class that boycotted classes and joined protest actions denouncing Marcos, the imperialists and the cleric-fascists; the class that went through the harrowing early period of martial law. For all that, this is a class that has served our country and our people — Ad Majorem Dei Gloriam.

 

Filomeno S. Sta. Ana III coordinates the Action for Economic Reforms.

www.aer.ph

Water woes — just the facts

First of two parts

The President unleashed a torrent of expletives on the two Metro Manila water concessionaires for supposedly “onerous” contracts. I tried to understand why. After all, this major privatization, undertaken in 1997 during the Ramos administration to respond to a water crisis, was a celebrated case of a working public private partnership and was awarded multiple times for the transparency and design of the bid process and for its success in addressing the core problem of poor water services provision, especially its inclusive business model of connecting millions of poor communities. The concession agreements were subsequently extended during the Arroyo term in recognition of this success and in order to enable more investments in water and sewerage services to be done, pursuant to the Clean Water Act.

So indeed, why? The best I can come up with is this: the President felt he was dealt a bad hand through no fault of his and has not been properly briefed on the background and history of this water PPP.

More specifically, the missteps and inactions of the last administration that have led to:

a) non-investment in raw water that resulted in the water shortage last summer and;

b) non-adjustment in tariff rates in accordance with the contract based on a flawed re-interpretation of the treatment of corporate income taxes (which deviated from the practice over the past 17 years) that has resulted in government losing in international arbitration, which now this administration has to pay.

(See my column: Never waste a good crisis, April 2019, BusinessWorld. https://www.bworldonline.com/never-waste-a-good-crisis-2/).

On top of this frustration for being in the hot seat, the President’s anger may have been driven by certain mis-appreciation of the facts about the water service business.

1) Is water free?

Yes, in its natural state. But to deliver safe drinking water to the taps in our homes require investments in storage and treatment facilities and underground distribution networks. These investments that yield high economic and social returns are not free.

Ask the 3.7 million mostly poor informal settlers who were unconnected to the pre-privatization water distribution system. They had to either take a whole morning going to a natural water source or buy their water by the pail at 10 times the cost of what they are now paying under the multi-awarded “Tubig Para sa Barangay” in the east zone where they were organized by Manila Water Co., Inc. into communities and connected to its network. Add to this, the medicine bills and lost hours of work and missed classes when they’s get sick from dysentery due to poor water quality pre-1997.

The reality is that it takes billions of pesos of investments to bring clean potable water to our homes. And, unlike businesses that have declining costs with volume, water is the opposite. As the concessionaires try to connect farther communities in hilly areas with sparser populations, unit costs go up, especially with increased demand for sewerage service which, incidentally, costs three times that of fresh water to put in place.

What is the score card of the two concessionaires in connecting people and in reducing the wastage from leakages and theft (non-revenue water or NRW)?

Here it is. (See the Table. — Ed.)

To achieve all these, the Manila Water and Maynilad have had to invest P166 billion and P208 billion respectively. Critics like giving out profit numbers of these companies without reference to the huge amounts of their investments. When that is done, the average Return on Invested Capital (ROIC) is around eight to 10 percent annually during the past five years, which is comparable to water concessions in other emerging market countries.

And by reducing the NRW through these massive investments and more efficient management, they have prevented a water shortage despite the failure of past administrations to put up a single new water source. Indeed, not a single stone was turned or shovel lifted, after tying the hands of the concessionaires from making such investments.

The amount of incremental water provided by the two concessionaires by reducing NRW is equivalent to the water output of three Kaliwa dams. The one Kaliwa dam that the last administration has talked about for six years and this one for three, but which has yet to be started, will cost P 12.2 billion using Chinese ODA.

2) Contracts were “onerous”?

The facts are that these contracts were diligently prepared and carefully reviewed by various agencies and professionals in government and expert consultants.

Preparing, reviewing, approving, and signing authorities for the original contract included: then MWSS (Metropolitan Waterworks and Sewerage System) management led by Dr. Angel Lazaro III, the entire MWSS Board led by Department of Public Works and Highways (DPWH) Secretary Gregorio Vigilar and his Chief of Staff Mark Dumol, Dept of Finance Secretary Roberto de Ocampo and undersecretaries, the Cabinet Level Privatization Committee, the National Economic and Development Authority (NEDA) Board whose secretariat was headed by Planning Secretary Cielito Habito, Justice Secretary Teofisto Guingona and his Usec Presbyterio Velasco, Chief Presidential Legal Counsel Rene Cayetano, Corporate Legal Counsel Oscar Garcia, Executive Secretary Ruben Torres, and, finally President Ramos himself (who is known for demanding CSW — complete staff work). A similar though less lengthy process was followed on the contract extension which was signed by President Gloria Arroyo and Finance Secretary Gary Teves. Additionally, consultants were engaged — the key ones were International Finance Corporation/World Bank (as the principal adviser for privatization), which in turn engaged NERA from the UK (as economic advisers), Sogreah, a French engineering firm (as process consultants), audit firm Punongbayan and Araullo, and lawyers ACCRALAW (led by attorney Eusebio Tan) and Cleary Gottlieb (led by Lee Buccheit) over a period of a year.

The concessionaires were asked to bid on this contract competitively in both 1996 (there were four highly qualified consortia involving the best names locally, and the leading global water companies which bid) and then again in 2007 when the original west zone concessionaire, the Benpres-Lyonnaise des Eaux consortium, went bankrupt and the contract for Maynilad had to be re-bid. The fact that 50% of the original proponents failed is the best demonstration that there was absolutely no guarantee of returns, no sweetheart deal as contended.

Moreover, government tends to review Public-Private Partnership (PPP) contracts with today’s lenses without reference to the context at the time the contracts were entered into. This was done, I suspect by the Department of Justice in the review reported in the news without consulting the many people then who were involved in drafting, reviewing, and approving the contract.

Had they reached out, they would have appreciated the dramatically different situation then versus now in the conditions of the country and the MWSS. Contract terms offered needed to be appropriate to these conditions and global standards and requirements to attract the best qualified bidders.

Let me just cite a few facts:

1.) PPP then was very new. There were only a handful of contracts to serve as precedents in water or even other sectors, and thus the structure was perceived to be high risk considering especially regulatory uncertainty. The Philippines did not have a clear regulatory regime on water and thus had to develop an innovative “regulation by contract” scheme. A big part of the risk mitigation aspects of this depended on a performance undertaking by the Republic as represented by the Finance Secretary, and the provision of international arbitration for dispute resolution.

2.) The Philippines’ credit rating was below investment grade, interest rates on treasury bills were at double digits, our government debt to GDP and budget deficits to GDP were much higher, as was the external debt to GDP, the current account in deficit, while foreign reserve coverage was only two months’ worth of goods and services versus eight today.

3.) The MWSS then was a mess, very inefficient, there was intermittent water supply, very high water leakage and theft (NRW over 60%). It was over-staffed but had low productivity, was highly indebted, and with high technical risks — nobody knew the condition of the pipes, so this added to the risk premium.

Insofar as “onerous” provisions, let me try to respond to some of the points reported in the newspapers.

1.) The contention that “government interference” was not allowed under the contracts. This is completely false. The facts are that at every step, government is involved in rate setting in what is, after all, a public private partnership.

These steps include: a.) in setting the parameters in the concession agreements, b.) setting the service levels for both piped water and sewerage, c.) determining and auditing which expenditures are prudent and efficient, d.) determining the cost of capital that the concessionaires will receive, adjusted to market every five years, and, finally, e.) approval of the tariffs schedules after proper public hearings that derive from steps a.) through d.). The Republic simply undertook in the Performance Undertaking to respect this procedure.

This is Part One of this column. The second and concluding part will cover other supposed “onerous conditions” relating to recoverability of the corporate income taxes from tariffs, the extension of the contract, and the possible consequences of government terminating the contract unilaterally.

For those who wish to understand the subject more fully, I would refer you to:

1. “The Manila water concession: a key government official’s diary of the world’s largest privatization,” by Mark Dumol

http://documents.worldbank.org/curated/en/118971468776361965/The-Manila-water-concession-a-key-government-officials-diary-of-the-worlds-largest-water-privatization

2. Built on Dreams, Grounded in Reality: Economic Policy Reform in the Philippines by National Scientist and Prof. Emeritus Raul Fabella, https://asiafoundation.org/resources/pdfs/BuiltonDreamsGroundedinReality.pdf

3. Tap Secrets: The Manila Water Story by Virgilio C. Rivera, Jr.,

https://www.gwp.org/globalassets/global/toolbox/case-studies/asia-and-caucasus/cs_450_tap_-manila.pdf

4. The video tape of the Senate Hearings of Dec. 11, Chaired by Senator Grace Poe. In this link: https://www.facebook.com/sengracepoe/videos/845201489268434/

 

Romeo L. Bernardo is Vice-Chairman of the Foundation for Economic Freedom and GlobalSource Partners Philippine Advisor. He was Finance Undersecretary during the Corazon Aquino and Fidel Ramos administrations and was a Trustee of the MWSS from 1995 to June 1996, six months before award of the concessions.

romeo.lopez.bernardo@gmail.com

Philippine tourism positioned for take off

The year 2019 will be a banner year for Philippine tourism. If we are to go by the trends from January to September, the Philippines is poised to surpass its 8.2 million visitor target, clocking in a growth rate of 14.37%. At this pace, we are likely to supersede the 12.5 million arrival target by 2022.

Philippine tourism is finally positioned to take off in a massive way with all the pillars for robust growth slowly falling into place. In the last two years, several new domestic airports have become operational, nearly a thousand kilometers of roads were built to connect ports to tourism sites, new destinations have been developed (e.g. Romblon, Camiguin, and Siquijor) to complement established ones, and thousands of new lodging options have been integrated to the grid.

It took many years of hard work to get here and government will do well to capitalize on our position today. The objective is to accelerate growth to 20% or more. This was the growth rate of Thailand in the 1990s. Growing at this rate will generate an additional 1 million jobs per year and will allow us to double our tourism revenues in five years to $15 billion.

At this point, the name of the game is to achieve seamless travel in and out of the Philippines. It is all about making the end-to-end journey of the travelers as smooth and stress-free as possible. Doing so opens the way for the creation of fond memories and favorable endorsements, not horror stories and bad feedback.

The Word Economic Forum has identified 16 steps in a traveler’s journey, from pre-trip planning to post-trip assessment. Among them, five were identified as the cause of the most stress. They are: 1.) Visa Application; 2.) Airline booking; 3.) Airport departure gate and exit security controls; 4.) Immigration clearance; and, 5.) Customs screening.

Clearly, the airport experience is the most stressful part of the journey, which is why progressive governments spend billions to make these processes as painless as possible. Singapore’s Changi Airport started the trend of on-line check-in and bag drops to make the check-in experience less burdensome. The Dubai airport was the first to introduce facial biometrics for outbound immigration clearance. Qatar Airport was the pioneer in body scanning as well as facial and fingerprint biometrics. Vancouver airport was the first to utilize electronic immigration kiosks to make inbound immigration less intimidating.

In the Philippines, certain measures have been put in place to simplify airport procedures. Among them is the integration of travel tax and terminal fees to the ticket price (unless the traveler opts for a ticket that does not include these fees); on-line check-in, seat selection, and bag drops are now available in all airports; electronic generation of boarding passes are offered by some airlines; and electronic immigration kiosks are now installed in NAIA, Clark, Mactan, and Davao, although limited to Filipino passport holders only. While Philippine airports still have a long way to go in terms of technology adoption, authorities maintain that they are all in the plan and will be rolled-out in due course.

Liberalizing visa requirements not only relieves travel stress but also contributes towards boosting inbound travelers. Between 2013 and 2018, a wave of Asian countries, notably Japan, liberalized their visa policies by introducing visa-on-arrival and electronic-visa options. They have also increased the period of visa validity and expanded the list of visa-free nationalities.

The Philippines grants visa-free entry to 157 nationalities for a maximum of 30 days. China is our second largest inbound market while India is the 10th — both nationalities are required visas for security and immigration reasons. However, Indians have recently been granted visa-free entry if they have a valid Schengen, Japanese, American, or Canadian visa.

The Philippines is a part of the ASEAN Common Visa Scheme whereby an ASEAN visa holder can gain access to all 10 nations in Southeast Asia. It is similar in form and intent to the Schengen visa. The scheme is scheduled to come on-line by 2025, if not sooner.

Achieving seamless travel means having the appropriate infrastructure to give tourists a pleasant airport experience and to get them to their final destination (and back to the airport) in the fastest way possible.

In 2017, 99% of arrivals to the Philippines came by air. This decreased to 95% in 2018 due to the increase of cruise passenger arrivals.

Airport development is a priority of both the Departments of Transportation and Tourism

Last year, the opening and/or expansion of the international airports in Mactan, Panglao, Clark, Iloilo, Kalibo, and Davao resulted in 40 new inbound flights from Australia as well as various parts of Asia and the Middle East. This translated to an addition of 1.6 million in-bound air seats. The Philippines posted a 10% increase in inbound air-seats, 4% more than ASEAN’s average.

In the first semester of 2020, Terminal 2 of Clark International Airport will be opened and will boost its capacity from 4 million to 12.2 million passengers per year. Meanwhile, the upgrade, rehabilitation, and expansion of the NAIA complex just merited NEDA approval and is now on the Swiss challenge stage. Given the slow pace in which the process is moving, the project proponents will likely receive their Notice to Proceed by 2022.

As for the much awaited Bulacan Airport, Finance Sonny Secretary seems to be throwing one monkey wrench at the project after another. Despite having settled all terms and conditions for the PPP deal, the Finance Secretary continues to ask for more concessions, in effect putting the project in limbo. The good Secretary must realize that we, the citizens, want this project to push through simply because the country needs it. Clark will not be enough now and in the future. We resent the fact that he is standing in its way of this project. As for seaport infrastructure, we can look forward to a proper cruise ship terminal to be built on reclaimed land behind Solaire Hotel at Entertainment City. Constructed by Bloomberry Cruise Terminals Inc. at the cost of $308 million, the luxurious Solaire Cruise Center will be inaugurated by 2021.

To compliment the Manila port, the Philippine Ports Authority will further develop the seaports of Boracay and Puerto Princessa. The three ports, taken collectively, are known as the “Turquoise Triangle.” Also in the pipeline is the expansion of the ports in Coron, Curmimao, Iloilo, Salomague, and Tagbilaran.

As far as land transport is concerned, the public works department has constructed 962 kilometers of new roads to link ports to tourist hotspots. For 2018 and 2019, it is spending an additional P49 billion to build even more roads. All these should translate to reduced travel time, better mobility, and greater convenience for our visitors.

Achieving seamless travel is the silver bullet that will take us from 8.2 million visitors to 15 million and beyond. Lets hope government keeps its eye on the ball and does not lose the momentum.

 

Andrew J. Masigan is an economist.

Water: How the story is told

The story starts with Martial Law President Ferdinand Marcos. When he became president in 1965, the total external debt was $600 million; by the time he was ousted in 1986, it had ballooned to $26 billion — a 4,300% rise, according to the Ibon Databank, cited in an article in the Philippine Daily Inquirer of Nov. 24, 2016.

When Senator Benigno “Ninoy” Aquino, Jr. was assassinated on Aug. 21, 1983, foreign banks worried about the Marcos autocracy and withheld their credit facilities. Marcos declared bankruptcy in October 1983 and sought a 90-day moratorium on principal debt payments. The World Bank had to lend him some more to avert a default but “with painful conditions like cutting the government budget, peso devaluation, tariff dismantling, and ending subsidies,” the same Ibon report related.

Borrow to complacency, that is what Marcos and other “third world” (developing) countries did at that time. It was in this situation that the concept of privatization was gaining popularity, in the thinking of economist F. A. Hayek that governments should devolve commercial activities to the private sector and just regulate these, while concentrating on social development. Privatization seemed a convenient way to unload government-run enterprises and services (and produce cash therefrom), as then British Prime Minister Margaret Thatcher had tested in the UK.

And Marcos took notice of this “panacea” to his financial problems. He issued PD 2032 to prepare for the privatization of some of his collection of sequestered companies, called Government-Owned and -Controlled Corporations (GOCCs). But the February 1986 EDSA People Power Revolution soon ousted Marcos and installed Ninoy’s widow, Corazon “Cory” Aquino, as president, and she returned most of the sequestered corporations to their rightful owners. Cory instead implemented the Build, Operate and Transfer (BOT) scheme for self-financing of new projects.

It was President Fidel Ramos who maximized the privatization scheme for boosting the economy. He sold government assets totaling to about P70 billion, the most massive “fire sale” among all administrations. From this Ramos, and only he among all presidents, had budget surpluses for four of the six years of his term. He was able to contain and resolve the power crisis in his time, with emergency powers to fast-track the construction of power projects on BOT and BOO (Build, Operate and Own) — bases, the latter a sort of “prepaid” privatization to the contractor.

The water crisis in the early 1990s became the justification for the privatization of the water sector, the Water for the People Network Asia (WPNA) declared to the UN Office of the High Commissioner on Human Rights (ohchr.org). The National Water Crisis Act of 1995 (RA 8041) gave President Ramos emergency power for one year to manage the projected 75% increase in national demand for water. The Metropolitan Waterworks and Sewerage System (MWSS) had incurred a debt of $307 million by 1995, $204 million of which were debts from World Bank (WB) and the Asian Development Bank (ADB). To ensure repayment of debts, the WB proposed privatization as the solution to the problem, according to the WPNA report.

“The World Bank became the Ramos administration’s consultant on the privatization through the International Finance Corporation, even designing the bidding process and drawing up the Concession Agreement,” the WPNA said.

Is that the Concession Agreement that turned President Duterte livid, as he lashed out at water concessionaires Manila Water and Maynilad on live television? The President threatened to sue officials of the two companies and former government officials who had been part of the concession agreement, following the ruling of the Permanent Court of Arbitration (PCA) ordering the national government to pay P7.39 billion in “foregone revenues” to the Ayala-owned Manila Water. Maynilad won its own case in 2017 in the arbitration court, which directed the government to pay P3.4 billion.

“I will file plunder. Ang plunder Mr. Ayala, no bail ’yan,” Mr. Duterte seethed through gritted teeth (CNN Philippines, Dec. 5). Presidential Spokesman Salvador Panelo called certain provisions being reviewed by the Department of Justice as “onerous” and said these will be removed, as all those who had anything to do with the Concession Agreement will be charged in court — possibly including Presidents Fidel Ramos and Gloria Arroyo and those who let those onerous provisions go through — all up to the administration of Benigno S.C. Aquino III.

President Ramos publicly reacted immediately, saying that “any agreement (must be honored), be it between governments and/or the government and the private sector… our word must be our bond. With privatization, the private sector mobilized funding from both foreign and local sources depending on the word of the Philippine government that the essential conditions of adherence to the sanctity of contracts and rule of law must be observed.

“The MWSS concession agreement, as with all projects and agreements entered into by government during my administration, was anchored on complete staff work, review and consultation with various government agencies, organizations and the concerned public, which resulted in complete transparency all the while negotiating terms most favorable to government.” President Ramos said in a statement quoted in the Philippine Daily Inquirer of Dec. 14.

What President Ramos did not say was that the government was probably under the gun by the IMF/World Bank at the time of the Water Concession Agreement. Remember that the World Bank was hot on collecting the $307 million in MWSS debt, during the world financial crisis when other countries who owed the IMF/WB were boldly talking of debt repudiation. In separate Concession Agreements that MWSS signed, Maynilad would shoulder 90% of MWSS debts while Manila Water would shoulder 10% through payments of concession fees.

And so, the WPNA bewailed to the UNCHR, “The architects behind the privatization of MWSS ensured that the ‘commercial viability’ of firms operating the water system through a pricing scheme that automatically generates profits.”

The Rate Rebasing every five years allows the concessionaires to recover historical capital, operating and investment expenditures, and review future capital, operating, and investment plans. The foreign currency differential adjustments (FCDA) every quarter and the accelerated extraordinary price adjustment (AEPA) also cover foreign currency exchange and other risks.

“Manila Water’s net income from 2015 to 2018 totaled P25 billion… its average annual earnings was P6.2 billion, increasing from P5.6 billion in 2011 to 2014” (Manila Times, Dec. 6). And the two concessionaires, both profitable all these years, do not pay income taxes, President Duterte boomed on national television, as he threatened to charge them with economic sabotage.

Maynilad Chief Executive Officer Ramoncito Fernandez said at the joint House Committees on Good Government and on Public Accountability on Dec. 10: “We are not losing money… (but) everything that we have spent, including capital expenditure, operating expenses… averaged P20 billion in income but we have spent P33 billion.”

To cut a long story short, both “Maynilad and Manila Water announced they decided to abandon their arbitral claim of a combined P10.8 billion supposedly for lost revenues from an unenforced rate hike,” as the Philippine Star of Dec. 11 reported. The two concessionaires also declared there will be no water rate hike in January 2020 for consumers.

“Puede naman pala (so it can be done, after all),” former Vice-President Noli de Castro said in his TV news program Kabayan the morning after. But, perhaps riding the crest of public delight at the staying of water rates, President Duterte has been titillating his audience with “coming-soon” trailers of killing off Manila Water and Maynilad with the cancellation of the “onerous” Concession Agreement.

Let’s see how the story goes from there.

 

Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.

ahcylagan@yahoo.com

GCash partners with MultiSys, Bayad Center to upgrade its bills payment services

The country’s#1 mobile wallet app, GCash, partners leading software solutions company Multisys Technologies Corporation to integrate systems with Bayad Center’s bills payment services. This will allow GCash app to access thousands of billers nationwide.

“This system integration is one to look forward to, as it will allow GCash users to transact with thousands of billers nationwide—all in one app,” MultiSys founder and CEO David Almirol Jr. said. “MultiSys will help GCash achieve a streamlined and seamless business process, which is crucial in a digitally driven world.”

Under the partnership, MultiSys will integrate Bayad Center’s billers for GCash’s in-app Pay Bills service, and enable GCash payments in more platforms and websites through Web Pay.

Anthony Thomas, CEO of Mynt, the company behind GCash, said, “We are confident that this partnership with MultiSys and Bayad Center will not only fortify our existing linked systems but also pave the way for more institutional connections with our mobile platform. GCash aims to link with more government agencies and businesses, which will allow us to provide convenience to more Filipinos who wish to transact conveniently online, wherever they may be.”

Bayad Center CEO and President Manuel Tuason also expressed excitement on the system integration. “With this integration of GCash and Bayad Center through the technological know-how of MultiSys, Filipinos will be able to enjoy bills payment and convenience for other transactions via online and mobile, better than ever,” Tuason said.

 

Diokno eyes around 50bps rate cuts in 2020

THE Bangko Sentral ng Pilipinas (BSP) may consider cutting rates by about 50 basis points (bps) in 2020, according to Governor Benjamin E. Diokno.

“Maybe we’ll be considering 50 basis points (bps) next year and we have more time on the reserve requirement because my promise is that we will cut the reserve requirement to single digit by the end of my term which is 2023…,” he said in an interview with Bloomberg TV on Friday.

If realized, a total of 125 bps will have been unwound by 2020 from the 175-bps rate hike barrage in 2018 that the BSP fired in the midst of soaring inflation.

Fitch Solutions on Friday also said that they are predicting another rate cut from the BSP in 2020.

“…we maintain our view that the BSP will opt to cut its key policy rate once again in 2020. Our view is supported by the fact that external conditions are likely to remain challenging for the Philippine economy over the coming quarters,” Fitch Solutions said in a report titled “Economic Analysis — Philippine Monetary Policy To Maintain Dovish Tilt in 2020”.

On Thursday, the Monetary Board decided to hold key interest rates for its eighth and final meeting in 2019.

Before this, the policy-setting body has trimmed rates by a total of 75 bps this year through 25-bps cuts that were done in May, August, and September.

This has brought overnight reverse repurchase to four percent, while overnight deposit and lending facilities are at 3.5% and 4.5%, respectively.

Mr. Diokno that their decision was supported by the continued benign inflation environment.

“The bank’s statement indicated a strong sense that monetary conditions remained sufficient given its current outlook for the economy and inflation, with little need for a further easing of conditions,” Fitch Solutions said in its report.

Headline inflation in November was at 1.3%, which, although a pickup from the 0.8% logged in October, is still well within the BSP’s range of 2-4%.

Mitsubishi UFJ Financial Group ASEAN head of global markets Research Leong Sook Mei also thinks there is room for further easing in 2020 based on BSP’s remarks on Thursday.

“A sign that a rate cut is still in the offing despite not moving yesterday, and the last meeting was BSP’s remark that the likely 2020 rate hold by the [US] Fed[eral Reserve] will help to ‘add boost to the further downward trend in the interest rate path’ and accords ‘greater flexibility’ for the BSP to conduct monetary policy,” she said in a note sent to reporters on Friday.

Union Bank of the Philippines, Inc. chief economist Ruben Carlo O. Asuncion has likewise told BusinessWorld on Thursday that he sees a 50 bps rate cut could be on the table as early as the first half of 2020.

“Major factors would be inflation expectations, global oil price movements, and the impact, so far, of 2019’s easing on market liquidity and credit growth,” he said in a text message.

BSP data showed that loan growth of universal banks was at 10.5% in October, slower than the 10.5% expansion in September.

Mr. Diokno has previously said that monetary easing works with a lag and that it may take up to nine months before it could fully set into the financial system. — Luz Wendy T. Noble

PHL, ADB ink loan deals worth $623M

THE Philippine government, through the Department of Finance (DoF), and the Asian Development Bank (ADB) on Friday signed a total of $623 million worth of loans to finance feasibility studies for infrastructure projects, to further boost the competitive market and to provide more employment opportunities for the youth.

The three loan packages included the $400-million funding for the Facilitating Youth School-to-Work Transition program — subprogram 2; the $200-million additional financing for the Infrastructure Preparation and Innovation Facility; and $23.3-million Capacity Building to Foster Competition project.

After the signing ceremony, Finance Secretary Carlos G. Dominguez III said that the $200 million loan was the second one that they availed from the ADB, following the $100 million they borrowed in 2017.

“We realized that in order to come up with a robust pipeline, we needed to finance the project studies for projects (to be implemented).. in the future. (After the first loan program), we see that there is still a long list of feasibility studies that we have to make so we applied for this facility of $200 million and I think this will develop a very good pipeline for future administrations to implement,” Mr. Dominguez said.

ADB Vice President Ahmed Saeed said the loan will support the government in “high quality and innovative project preparation” for its priority infrastructure projects, including the Bataan–Cavite Interlink Bridge Project and the Metro Rail Transit Line 4 connecting Ortigas in Metro Manila and Taytay in eastern Rizal province.

ADB also said in a statement that the funding will support the staff of the country’s biggest infrastructure implementing bodies, the Department of Public Works annd Highways (DPWH) and the Department of Transportation (DoTr), in the preparation and implementation stages of the infrastructure projects.

Mr. Saeed said that the $400-million loan for the Facilitating Youth School-to-Work Transition Program will support reforms and programs by the Department of Labor and Employment.

“These reforms have translated into robust employment growth, with a net of 1.3 million new wage jobs created in the 12 months to October 2019… Labor market programs have also been fundamental to reducing poverty and household inequality,” he said.

In an earlier statement, ADB said that the loan will also support the government’s effort to reduce the number of out-of-school youth while enhancing skills of young Filipinos for employment through labor market programs and accessible on-the-job training systems.

“As the populations of some of the more mature economies in Asia begin to age, we are looking forward to the entry of millions of young Filipinos into the workforce. We must invest in them and ensure that they are globally competitive,” Mr. Dominguez said.

Meanwhile, the $23-million capacity building to foster competition project will help the government enforce the Philippine Competition Law and provide support to the Philippine Competition Commission (PCC).

PCC Chairman Arsenio M. Balisacan said that the competition policy regime in the country is relatively new, while individuals and institutions are not fully equipped to address the proliferation of anti-competitive practices.

“With this assistance, we will be able to build that human capacity, we will be able to send more people to pursue specialization in competition law and policy and we will be able to build in the Philippines a center of excellence that will produce a manpower for competition policy and reinforcement,” Mr. Balisacan told reporters during the same event.

The three recently signed loan agreements are part of the ADB’s $10.3 billion financing support it committed to the country over the medium term.

So far since 2009, the multilateral lender provided a total of $7.2 billion worth of loans to the Philippines and is looking to grow its portfolio with an additional $2.5 billion this year and another $7.8 billion next year until 2021.

“The proposed substantial increase in ADB’s loan assistance underscores the Bank’s strong support in translating the Duterte administration’s development objectives into concrete investments, particularly related to the country’s Build, Build, Build Program, human capital development, disaster preparedness, tourism, health care, and agriculture,” Mr. Dominguez added. — Beatrice M. Laforga

Local stocks get lift from trade talks

By Denise A. Valdez, Reporter

THE main index ended on a high note this week as investors turned bullish after positive developments on the Sino-US trade talks and the Philippine central bank’s decision to keep interest rates unchanged.

The 30-member Philippine Stock Exchange index (PSEi) picked up 136.56 points or 1.76% to close at 7,877.63 on Friday, while the broader all shares index added 63.32 points or 1.38% to end at 4,662.07.

“The market rebounded, recovering losses for the subdued trading for the past four days amid the external factors such as the US-China positive news on the trade deal,” Research Associate Piper Chaucer E. Tan of Philstocks Financial, Inc. said in a text message Friday.

Several foreign news outlets reported late Thursday US President Donald J. Trump has agreed to a trade agreement with China in principle, ahead of the Dec. 15 deadline for imposing tariffs on Chinese goods.

Citing people familiar with the talks, US supposedly agreed to roll back tariffs on Chinese consumer goods, while China committed to increase spending on US agricultural goods.

Wall Street rejoiced at the end of Thursday’s trading, as increases were recorded in the Dow Jones Industrial Average index (0.79%), the S&P 500 index (0.86%) and the Nasdaq Composite index (0.73%).

The rally was also felt in Asia Pacific on Friday, where Japan’s Nikkei 225 and Topix indices grew 2.55% and 1.59%, respectively. Australia’s S&P/ASX 200 index also gained 0.46%, China’s Shanghai SE Composite index increased 1.78% and South Korea’s Kospi index rose 1.54%.

Aside from external factors, Regina Capital Development Corp. Head of Sales Luis A. Limlingan said the Bangko Sentral ng Pilipinas’ decision to maintain interest rates also affected the market’s performance on Friday.

“Investors were also reacting when the Monetary Board of the central bank kept the key interest rates unchanged in yesterday’s meeting, citing the benign inflation environment and making the currency firm,” he said in a mobile message Friday.

The central bank decided during Thursday’s policy meeting to keep the interest rate on the overnight reverse repurchase facility at 4%, on the overnight deposit at 3.5% and on lending facilities at 4.5%.

All sectoral indices at the PSE ended in green territory. Leading were industrial which rose 132.16 points or 1.38% to 9,722.08, property which expanded 116.25 points or 2.85% to 4,193.94 and mining and oil which grew 102.98 points or 1.39% to 7,521.46.

Holding firms climbed 88.18 points or 1.17% to 7,633.31, services increased 27.69 points or 1.85% to 1,525.19 and financials gained 14.65 points or 0.78% to 1,903.17.

Value turnover on Friday stood at P7.49 billion with 714.47 million issues changing hands, up from P6.26 billion with 591.09 million issues on Thursday.

Advancers outnumbered decliners 123 against 61. A total of 55 names were unchanged.

Foreign investors turned bullish with a net buying of P309.55 million on Friday from Thursday’s net selling of P387.41 million.

1...9,7179,7189,719...13,845Page 9,718 of 13,845
© 2024 BusinessWorld Publishing.
All rights reserved.
Read our privacy guidelines
Facebook Instagram Linkedin Twitter Youtube