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US flags growing deficit in goods trade with PHL

THE United States’ goods trade deficit with the Philippines widened by more than a fifth last year, according to the US 2019 National Trade Estimates (NTE) report which largely reiterated concerns raised by Washington on trade barriers put up by the Philippine government.

Published March 29 on the US Trade Representative’s website, the 2019 NTE report said Washington’s goods trade deficit with Manila grew 22.5% to $3.9 billion last year from $3.18 billion in 2017.

US goods exports to the Philippines rose 3% to $8.7 billion while imports grew 8.4% to $12.6 billion.

In 2018, the Philippines was the 32nd largest source of goods for the US, after placing 31st in the previous NTE report.

The annual report, which identifies barriers to trade, investment, and services that US businesses encounter around the world to help set the work agenda for the US government, noted issues with Philippine import policy; technical barriers to trade; subsidies; government procurement; intellectual property rights protection; and barriers to services, digital trade and investment.

The number of identified barriers to services declined to eight in 2018 from the previous year’s 10, with banking and advertising dropped from the list.

The NTE 2019 report noted, however, that the omission of certain barriers “does not imply that they are not of concern” to the US.

The current report said affected industries are audiovisual, express delivery, financial, insurance, public utilities, professional services, retail and telecommunications.

Although the report noted the full participation of foreigners allowed under the Foreign Investment Negative List, it noted that the definition of Internet businesses covers only providers that serve as carriers for transmitting messages and are not engaged in information creation.

“While US cloud service providers (CSP) Amazon Web Services (AWS), Google, IBM, and Microsoft are active in the Philippine market, they continue to face constraints that limit their participation, particularly in competing for government projects. The Philippines requires government agencies to procure cloud computing services from the Government Cloud (GovCloud), a cloud infrastructure set up by the Department of Information and Communications Technology (DICT). These restrictions could prevent Philippine government agencies from accessing best-in-class cloud services,” the report read.

In agriculture, the US continued to express concern about the Philippines’ high in-quota tariffs on corn, coffee, potatoes, pork, and poultry products.

“Since 2005, the Philippines has usually maintained (minimum access volume) levels at its Uruguay Round commitments despite dramatically increasing demand in the Philippine market for products subject to the MAV. The Philippine government increases in-quota volumes of affected MAV commodities in times of shortages, but because of its lack of predictability, the practice does not serve to relax the Philippines’ restrictive agricultural import regime,” it said.

On non-tariff barriers, the US noted legislative moves to convert its rice quotas into a tariff scheme and reiterated its call for the Philippines to retain its 2014 table of tariffs for agriculture products, granted as a concession for the final extension of the use of the quantitative restriction on rice.

Washington, however, did not acknowledge Manila’s decision to maintain the 2014 tariffs and lower tariffs for mechanically deboned meat (MDM) from poultry and said it continues to monitor the situation.

The Board of Investments’ fiscal incentives for Philippine-owned exporting firms; corruption at the Bureau of Customs and discriminatory government procurement rules against foreign-made goods were likewise tagged as persistent barriers.

The report also cited US rights holders’ concerns of increasing online piracy, counterfeit drugs and fake goods.

Last year, the interagency National Committee on Intellectual Property Rights seized a record P23.6 billion worth of fake goods and pharmaceutical products, surging from 2017’s P8.2 billion haul.

TIFA PROGRESS
The 2019 NTE noted areas where the US sees further improvement following a resolution between the two sides in the Trade and Investment Framework Agreement (TIFA).

Of the points resolved in the TIFA, it said Manila acknowledged Washington’s’ interest in extending certain tariff rates on agricultural products including MDM poultry meat; Manila’s discriminatory treatment in the storage of imported meat in wet markets; and the Philippines’ commitment to ensure proper valuation of agricultural imports consistent with the World Trade Organization rules.

The report also noted the Philippines’ commitment to respecting prior trademark rights and not restricting the use of common names, while also not providing automatic protection to geographic indications. — Janina C. Lim

ILO urges employers to adapt to growing automation

THE International Labor Organization (ILO) said employers need to update their business models to adapt to growing technological innovation, with the Association of Southeast Asian Nations (ASEAN) identified as a potential hot spot for adopting more automated processes.

In its Changing Business and Opportunities for Employer and Business Organizations study, the ILO said both establishments and Employer and Business Membership Organizations (EBMOs) have to adjust to rapid changes driven by technological innovation or digitization/automation.

“Technology is the most impactful of the global trends shaping the workplace and business globally. According to our survey, 56% of the 500 respondents named technological innovation as the global trend with the greatest overall impact on the way businesses need to be conducted,” ILO said.

ILO said the main impact of technological innovation at the strategic level for businesses is facilitating access to new markets, according to 76% of respondents. Some 56% of respondents see advances in technology as avenues for the creation of new products and services.

In operational terms, ILO said: “With advances in collaborative and networking tools, the physical location of the workplace is less important… With advances in collaborative and networking tools, the physical location of the workplace is less important.”

Within ASEAN, ILO said economies are more likely to turn to automation because of the high labor content of the manufacturing and service industries. Artificial intelligence and 3D printing might lead to diminishing demand for some low-skilled jobs but ILO said: “(I)ncreased demand for advanced materials and robotics that are not seen as labour-replacing, but labour enhancing, will create jobs.”

Citing a 2017 Harvard Business Review study, ILO listed ASEAN countries where the potential for automation is the highest: Thailand (54.6%), Indonesia (51.8%), Malaysia (51.4%), Philippines (47.9%), and Singapore (44.2%).

ILO recommends that employers and businesses evaluate the need to incorporate technology in their businesses especially since manual labor might be the better option for now.

“Employers and businesses must consider the costs of developing and deploying hardware and software, the supply and demand from providers and customers, and current labour costs: cheap manual labour is still perceived to be readily available around the world and may remain the more economical option,” the study said.

EBMOs should also participate in expanding their workers’ technical skills since “increased investment in human resources will complement investment in automation and technology.”

ILO said EBMOs need to play an active role in assisting their members by establishing policies that specifically cater to each member instead of adapting strategies that are uniform for all. Tailored policies will be beneficial especially to members who are operating under new business models in which there is yet a clear regulatory framework. — Gillian M. Cortez

DoE soliciting comment on grid-services procurement rules

THE Department of Energy (DoE) is asking industry stakeholders to comment on a draft circular that will regulate the provision of ancillary services in the country’s power grid.

The DoE said there is a need to issue a circular that will “harmonize ancillary service-related issuances and address various issues through a general framework.”

Ancillary services are necessary to support the transmission of power capacity and energy from resources to loads, while maintaining reliable operation of the transmission system in line with good utility practice and the Philippine Grid Code.

The draft has set forth the process of procuring ancillary services, which is the task of system operator National Grid Corporation of the Philippines (NGCP).

All reserve energy categories — primary, secondary and tertiary reserves — are to be procured through contracts provided that a competitive selection process is undertaken for this purpose.

Reactive power support and black start ancillary services are to be procured only through contracts. Black start is the process of restoring a power system to recover from shutdown.

Once the reserve market starts operating, the procurement of ancillary services is to be done through contracts or through the market. Reactive power support and black start ancillary services are still to be procured only through contracts. All reserve categories are subject to the central scheduling and dispatch of the market operator.

The DoE said the circular will ensure the reliability, quality and security of the supply of electricity by adhering to principles that will provide the safe and reliable operation of the grid by taking into account the entry of emerging technologies and the intermittency of variable renewable energy generating resources.

It said the circular will also provide proper accountability among concerned entities in the efficient and transparent operation of the grid. It will also ensure compliance to reserve requirements of each grid.

The circular also lays down the responsibilities of power generation companies, including testing for ancillary service capability when they apply for a certificate of compliance and during the annual validity process.

The DoE is accepting proposals and comments until May 3. — Victor V. Saulon

Government borrowing rises 4.15% in February

GOVERNMENT borrowing grew slightly in February driven by the issue of bonds and bills, the Bureau of the Treasury said.

The Philippines borrowed P56.74 billion in February, up 4.15% from a year earlier.

This brings year-to-date borrowing to P273.85 billion, from P99.14 billion in the first two months of 2018.

State borrowing in February was driven by net domestic lending amounting to P59.44 billion, a reversal from the P1.47 billion in net redemptions of debt owed to domestic lenders a year earlier.

The government borrowed P29.44 billion via Treasury bills offered weekly. Some P30 billion was also raised in February via a Treasury bond auction.

Government borrowing in that month was offset by redemptions of debt from foreign creditors amounting to P3.59 billion.

Deducting project loans captured in February at P894.82 million, net redemptions of external debt amounted to P2.7 billion.

This year, economic managers set a 75-25% borrowing mix in favor of domestic sources to raise P1.189 trillion, with the share of foreign debt declining from 35% in 2018.

Finance Secretary Carlos G. Dominguez III said in a speech Friday that a “significant portion” of the country’s financing is sourced from the domestic debt market “to minimize exposure from external developments.”

“We are also very careful about our debt structure as we do not want to borrow without putting in our own capital as well,” he said.

Meanwhile, according to a separate BTr data, the Philippines made P99.76 billion worth of debt payments in February, compared with P80.49 billion a year earlier.

This brings total payments made by the Philippines so far this year to P177.38 billion.

Principal payments accounted for roughly 75% of total at P74.46 billion in February, up 36.9%.

The national government paid P70.88 billion worth of outstanding domestic liabilities, from zero in 2018. The Philippines also paid P3.59 billion it foreign debt, compared with P54.39 billion a year earlier.

On the other hand, interest payments were at P25.3 billion in February, with P14.81 billion going to domestic creditors and P10.49 billion to external sources.

The budget deficit is projected to widen to as much as 3.2% of gross domestic product in 2019, compared with a programmed 3% share and the actual level of 3.2% in 2018, to accommodate increased government spending particularly on infrastructure. — Karl Angelo N. Vidal

Arroyo says China offers alternative development model

SPEAKER Gloria Macapagal-Arroyo said China provides a development model that offers an alternative to Western approaches, which has served China well in the past few decades.

“China has given us the lesson that there is just not one path for development,” the Speaker was quoted as saying in a statement Sunday, following her meeting with Chinese Premier Li Keqiang.

“Prior to China’s experience, it was thought that the only way to development is the Western-Style model of Jeffersonian democracy coupled with a free market,” she also said.

On her second year as a Board member, Ms. Arroyo attended the Boao Forum for Asia Annual Convention in Hainan, China, on March 26 -29. Boao brings together leaders in government, business and academic institutions in Asia.

She said there is no universal development model and that each nation can pursue its own path according to its historical context.

“But China has shown the world that you can have your own model of development using your own historical experience,” the Speaker said.

“Since the opening of China 40 years ago, it has transformed itself, it is the world’s leader in growth, unmatched in history. 400 million people were lifted out from poverty. China is on the verge of becoming the largest economy in the world,” she said.

During her visit, she also commended China’s leadership for the Belt and Road Initiative hoping to link China along its ancient trading routes to Russia, Europe, and the rest of Asia.

Ms. Arroyo said last week in Boao that the Philippines should treat China as a partner, rather than a threat, amid fears of Chinese participation in key government projects and Philippine dependence on Chinese debt. — Charmaine A. Tadalan

New lease accounting standard: the road to adoption

The new lease standard under Philippine Financial Reporting Standard (PFRS) 16 has been effective for annual periods beginning on or after January 1, 2019.

One of the significant changes brought about by PFRS 16 is in lessee accounting, as it requires most leases to be recognized on the lessee’s balance sheet by recording a right-of-use asset and a corresponding lease liability.

For many entities, the effects are not limited to the accounting implications but also encompass areas such as lease procurement and negotiation, contract administration, financial statement processes and controls.

Entities have embarked on activities to assess the impact of PFRS 16 on their businesses and implement the requisite changes. We share below what many of the financial statement preparers have gone through in their PFRS 16 voyage.

ESTABLISHING PROJECT STEERING COMMITTEES AND WORKING GROUPS
As part of the governance and implementation processes, entities have established project steering committees and working groups. The steering committee generally provides overall direction and guidance, resolves issues, and monitors the status of the project and approves project deliverables. The working group on the other hand performs overall project management and coordinates with working teams, business units, advisors and other project stakeholders.

UNDERSTANDING THE LEASE ACCOUNTING CHANGES AND CURRENT STATE
As one of the critical initial steps, entities have acquired an understanding of PFRS 16 either through formal training, discussions with advisors, or knowledge transfer sessions. Aided by this knowledge, entities then conduct current state assessments vis-à-vis the changes brought about by PFRS 16 around identification of leasing activities, distinguishing lease arrangements (including relevant contract terms) and understanding lease administration tasks. The current state assessment allows entities to determine the degree of impact on the areas affected by the lease arrangements.

REVIEWING LEASE ARRANGEMENTS
The project working groups review the agreements based on the requirements of PFRS 16 and considered any required changes. Many entities have depended on spreadsheets, particularly for the following:

Lease arrangement database — Entities develop spreadsheets which document, at a minimum, the counterparty, lease term (considering the impact of lease renewal options and termination clauses where present), lease amount (considering variable lease payments that are in substance fixed where applicable) and other relevant data that were needed for the lease computation.

Computation of lease income expense — Entities develop macro enabled spreadsheets to compute for the requirement of the new lease standard especially the impact for lessee accounting.

While spreadsheets might be helpful to some, there are also electronic or automated solutions that are more responsive to processing voluminous contracts, such as for those with many leased branches like quick service restaurants, banks and those in retail. As this process is manual in nature, administratively burdensome and prone to errors, it exposes the entities’ operational process and financial reporting risks. To address these, some entities have turned to better solutions using web-based tools, computer programs or artificial intelligence (AI).

One example of a tool that uses AI to support entities lease accounting approach is the EY Lease Reviewer. The EY Lease Reviewer uses AI or machine learning, which can help improve the assessment of a large number of lease arrangements. It helps entities to identify and extract relevant contract clauses in adopting PFRS 16 such as the lease amounts, and terms including renewal options and termination options.

In finding the right tool in reviewing the contracts, entities check whether the tools supported adequate internal controls and processes applicable to their businesses.

IDENTIFYING GAPS AND QUANTIFICATION OF IMPACT
Entities identify the gaps between PFRS 16 and PAS 17 which was the legacy standard. They then prepare a gap report that show the results of their implementation. This report summarizes their assessments of the impact and the key items that the entities have to change on their processes and policies. The gap report also serve as the basis of the entities’ results of their quantification.

UPDATING PROCESSES AND INTERNAL CONTROLS
Some entities took the adoption of PFRS 16 as an opportunity for them to modify their current processes and controls. One example is the centralization of the lease arrangements into one repository. Since most of the lease liabilities under PAS 17 were recognized off books by the lessee and thus, might not be centrally monitored, lease arrangements might often be stored in different locations and handled by different persons or departments. The transition to PFRS 16 is not only beneficial to the accounting and finance functions. Other departments such as procurement, general administration or treasury might also benefit from the centralization — since the critical information would have become readily available (e.g., renewal terms, critical payment dates, etc.).

Furthermore, entities would have updated the documentation of the related processes and internal controls that were affected by PFRS 16 to aid in its business as usual.

LESSONS LEARNED
Success in adopting an accounting change depends on the entity’s state of readiness. Entities must proactively consider their current state, the steps needed for compliance and the processes by which they need to transition to any new accounting standard. This demonstrates the importance of not being resistant to change; but instead, embracing and learning from it.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the authors and do not necessarily represent the views of SGV & Co.

 

Anna Maria Rubi B. Diaz is a Financial Accounting Advisory Services Senior Director of SGV & Co.

Alaska not giving up on PHL Cup playoff chances

By Michael Angelo S. Murillo
Senior Reporter

DEALT a big loss last time around that could potentially derail their chances of advancing to the quarterfinal phase of the PBA Philippine Cup, the Alaska Aces are still not giving up hope even if technically their fate is no longer in their hands.

Following a 94-84 loss to the Northport Batang Pier on their final elimination game of the season-opening Philippine Basketball Association tournament on March 27, the Aces (4-7), currently outside of the playoff picture at ninth place, are hoping to catch a break when the league returns from the All-Star break for the final playdate of the classification phase on Wednesday.

Alaska needs either Northport and the NLEX Road Warriors, tied at seventh with 4-6 records, to lose in their final game of the eliminations to get a shot at progressing via a one-game playoff for the last quarterfinal seat.

The Batang Pier face off with the already-qualified Barangay Ginebra San Miguel Kings (7-3) while the Road Warriors meet up with the Magnolia Hotshots Pambansang Manok (5-5).

If the Batang Pier and Road Warriors win though, the Aces are automatically eliminated.

The Aces lost to both Northport and NLEX in their earlier games.

“I hope we get a chance,” said Alaska coach Alex Compton after their tough loss in their last game.

“We’re going to practice and make the most of that sliver of hope that we have. I know some of the guys will be away for the All-Star but we’re going to practice and cheer for teams we don’t always cheer for — Ginebra and Magnolia — on Wednesday,” he added.

Against Northport, the Aces found themselves struggling to keep in step with the former in the middle quarters, allowing the Batang Pier to gain momentum and control which they never relinquished the rest of the way en route to dealing the loss to Alaska while padding their cause.

Carl Bryan Cruz led the Aces with 23 points followed by Sonny Thoss with 14 points and Simon Enciso with 11.

As of the moment, only six teams are already assured of a seat in the quarterfinals, namely the Phoenix Pulse Fuel Masters (9-2) and Rain or Shine Elasto Painters (8-3), the top two teams which will enjoy a twice-to-beat advantage in the next round; Barangay Ginebra, TNT KaTropa (7-4), defending champions San Miguel Beermen (7-4), and Magnolia.

Out of the running are Columbian Dyip (4-7), Meralco Bolts (3-8) and Blackwater Elite (2-9).

SKILLS CHALLENGE WINNERS
Meanwhile, Beau Belga of Rain or Shine and Rey Guevarra of Phoenix Pulse retained their respective PBA All-Star Skills Challenge titles while veteran Peter June Simon won the three-point contest.

Mr. Belga is still the Obstacle Course king after besting fellow big men Russell Escoto (Columbian) and Yousif Taha (TNT) in the finals on the first day of the All-Star festivities on Friday in Calasiao, Pangasinan.

The burly Rain or Shine player recorded a time of 21 seconds on the full course in the finals, three-tenths of a second better than Escoto (21.3 seconds) with Mr. Taha at third (26.3 seconds).

Mr. Guevarra, for his part, was the Slam Dunk winner for the fifth straight year, defeating Renz Palma of Blackwater in the finals off a dunk-off, punctuated by a perfect 50 points after soaring for a one-hander through a sea of his teammates who assisted him.

Magnolia’s Simon, meanwhile, won the Three-Point Shootout contest at the age of 38.

He topped the elimination round with 20 points before defeating Robert Bolick (Northport) and Philip Paniamogan (NLEX) in the finals.

Mr. Simon had 17 in the championship round, narrowly beating Mr. Bolick’s 16 points. Mr. Paniamogan had 14.

Also a big winner was the rookies-sophomores team, which defeated the juniors selection, 141-140, in their revived All-Star offering.

Rain or Shine rookie Javee Mocon tipped in the game-winner as the buzzer sounded for his team to secure the win. It was top overall pick CJ Perez of Columbian, however, who was named game most valuable player after scoring 32 points, 18 coming in the fourth period, to lead his team’s comeback win over the juniors.

Later yesterday the main feature North All-Stars versus the South All-Stars was to be played at the Calasiao Sports Center.

Harden’s 50-point triple-double lifts Houston over Sacramento

LOS ANGELES — James Harden recorded a 50-point triple-double, and the Houston Rockets fended off the hot-shooting Sacramento Kings for a 119-108 victory on Saturday at Toyota Center.

Harden posted his ninth 50-point game on the season while producing 50 points, 11 rebounds and 10 assists. With the Rockets clinging to a 101-100 lead midway through the fourth quarter, Harden sank three free throws, converted back-to-back floaters, and added a 3-pointer to extend the advantage to 111-102. Harden reached 50 points with two free throws with 48.8 seconds remaining. The 50-point triple-double was the fifth of his career.

Clint Capela added 24 points and 15 rebounds, while Chris Paul chipped in 22 points and five assists for the Rockets. The Kings were officially eliminated from playoff contention after going 0 for 5 from behind the arc in the fourth quarter. The Kings entered the period 15 of 24 on 3s.

Bogdan Bogdanovic paced the Kings with 24 points off the bench, while Buddy Hield added 21 points and De’Aaron Fox paired 18 points with 10 assists.

MAGIC 121, PACERS 116
Khem Birch gave visiting Orlando the lead for good with a dunk in the second minute of the fourth quarter en route to a win over Indiana in an important game for both teams.

A seventh win in their past eight games allowed the Magic (38-39) to move within one game of .500 in a tightly bunched group of five teams vying for the final three playoff spots in the Eastern Conference.

Aaron Gordon led the Magic with 23 points, 10 rebounds and seven assists, with more than half his points coming on four 3-pointers. Darren Collison led Indiana with 24 points to go with nine assists, and Bojan Bogdanovic had 22 points.

76ERS 118, T-WOLVES 109
Tobias Harris scored 25 points, and Ben Simmons had 20 points, 11 rebounds and nine assists to lift visiting Philadelphia over Minnesota.

Jonah Bolden scored a career-high 19 points, JJ Redick added 16 and Jimmy Butler had 12 points and 13 rebounds. Mike Scott also had 10 points off the bench. All-Star center Joel Embiid sat out for the Sixers for load management, but they managed to win their second in a row.

Andrew Wiggins paced the Timberwolves with 24 points, while Karl-Anthony Towns added 21. Gorgui Dieng chipped in 13.

PISTONS 99, TRAILBLAZERS 90
Suddenly short-handed Detroit snapped Portland’s win streak at six with a home victory.

The Pistons, who improved to 39-37, have won 11 in a row at home. Detroit won in an unlikely way, losing star forward Blake Griffin shortly before tipoff and catching fire only after a woeful first half of shooting and offense. Reggie Jackson scored a game-high 28 points, and Andre Drummond added 22, to lead Detroit.

The Blazers fell to 48-28, including 19-19 on the road. Enes Kanter, who has been starting at center for Portland, had 20 points and a team-high 15 rebounds.

NETS 110, CELTICS 96
D’Angelo Russell scored 20 of his 29 points in the third quarter to lead host Brooklyn over short-handed Boston.

Russell added 10 assists, Caris LeVert scored 15 points and DeMarre Carroll and Joe Harris chipped in 13 each as the Nets put a 2-5 road trip behind them in their first home game since March 11. Brooklyn (39-38) remained in seventh place in the Eastern Conference.

Gordon Hayward had 19 points, and Marcus Morris and Daniel Theis added 16 apiece for the Celtics, who lost to the Nets for just the second time in their last 13 meetings.

HEAT 100, KNICKS 92
Dion Waiters had a season-high 28 points and added six assists as Miami defeated host New York.

The Heat (38-38), who have a tenuous hold on the eighth and final playoff spot in the Eastern Conference, won their second straight game and reached .500 for the first time since Jan. 27.

Miami got double-doubles from Goran Dragic (10 points, 10 assists), Kelly Olynyk (12 points, 11 rebounds) and Hassan Whiteside (17 points, 13 rebounds). New York’s leading scorers were Emmanuel Mudiay (24 points), Luke Kornet (17) and Kevin Knox (16).

CLIPPERS 132, CAVS 108
Montrezl Harrell scored 23 points off the bench as host Los Angeles recorded its 12th win in 14 outings by defeating Cleveland.

Harrell shot 10 of 13 from the floor, and rookie Shai Gilgeous-Alexander went 9 of 12 to finish with 22 points for the Clippers (46-31), who also posted a 110-108 victory over Cleveland on March 22.

Jordan Clarkson scored 26 points on 11-of-16 shooting from the floor, and rookie Collin Sexton added 21 for the Cavaliers (19-58), who fell to 6-32 on the road.

RAPTORS 124, BULLS 101
Serge Ibaka scored 23 points and grabbed 12 rebounds, and visiting Toronto defeated Chicago.

Fred VanVleet also scored 23 points for the Raptors, who have won nine in a row over the Bulls, including all four meetings between the teams this season. The teams were meeting for the second time in five days.

Marc Gasol finished with 17 points, eight rebounds and six assists for Toronto. Timothe Luwawu-Cabarrot scored 18 points and added 10 rebounds for the Bulls. — Reuters

Kingad hurdles first test in ONE flyweight grand prix; Alvarez falls, Johnson wins

TOKYO – Filipino mixed martial arts fighter Danny “The King” Kingad passed his first test in ONE Championship’s Flyweight Grand Prix, hacking out an impressive unanimous decision win over hometown bet Senzo Ikeda at “ONE: A New Era” at the Ryogoku Kokugikan here on Sunday.

Dominated for much of the full three rounds, Mr. Kingad of Team Lakay did not leave any doubt with his consistent activity in the cage, eventually getting the nod of all three judges when the battle smoke cleared to begin his ONE grand prix campaign on the right foot.

The contest got off to a slow start as both fighters gauged each other.

Mr. Kingad then connected a solid leg kick midway into the first round, sending Mr. Ikeda to the canvas.

But the Japanese would recover only to find Mr. Kingad on the attack with a flying knee and a takedown.

Mr. Ikeda managed to get on the back of the Filipino after, going for a rear-naked choke.

It was to no avail, however, as Mr. Kingad extricated himself and the two slugged it out for the rest of the round.

The Team Lakay stalwart began the second round strong, connecting on solid strikes that rocked his opponent.

The Japanese regrouped and landed some counter, forcing Mr. Kingad to take him down to the mat.

For the remainder of the round Mr. Ikeda would hold his own to set up a tightly scored third and final round.

With the outcome of the contest still open, the two men angled for early control.

They had their moments but Mr. Kingad picked it up, connecting on a solid three-punch combination.

He then went for a takedown but gave some window of opportunity for Mr. Ikeda for another rear-naked choke.

Mr. Kingad survived it and the two fighters got back on their feet and went at it on stand-up.

It was a flurry of a finish for the two with Mr. Ikeda making a last-ditch effort to salvage the win, locking Mr. Kingad on a rear-naked choke that proved to be too late as the bell sounded.

Moments later as the two fighters stood side by side for the decision, it was Mr. KIngad’s hand that was raised as winner.

“I’m happy that we won. Looking forward to the next challenge in the grand prix,” said Mr. Kingad post-fight.

“I just stuck to my game plan which was to do strikes and takedowns. He was a tough opponent. But I’m happy with the win,” added Mr. Kingad, who also shared that in the last moments of the third round he felt in danger especially when Mr. Ikeda got hold of him in a choke.

The win improved Mr. Kingad to 10 wins and a loss and set him up for a semifinal encounter in the flyweight grand prix with Kazakhstan’s Kairat Akhmetov, who beat Australian Reece McLaren in an earlier match by way of unanimous decision as well.

ALVAREZ FALLS, JOHNSON WINS
Meanwhile, it was a mixed bag of results for MMA legends “The Underground King” Eddie Alvarez and Demetrious “Mighty Mouse” Johnson in their ONE Championship debuts.

Mr. Alvarez fell to Russian Timofey Nastyukhin by way of technical knockout in the first round of their lightweight grand prix quarterfinal match while Mr. Johnson was made to work but nonetheless won over Yuya Wakamatsu of Japan by second-round submission due to guillotine choke in their flyweight grand prix encounter.

Mr. Nastyukhin was in control right from the get-go, getting former Ultimate Fighting Championship lightweight champion Alvarez on the defensive.

He would get Mr. Alvarez with a barrage of strikes that forced the American to the cage and drop, from which that latter could not recover from, forcing the referee to stop the fight at the 4:05 mark of the round.

Mr. Johnson, for his part, had a rousing ONE debut but not after being made to work by the younger Wakamatsu.

The Japanese made early in-roads against the former UFC flyweight champion Johnson.

But the American eventually got his footing and started humming, putting the pressure on his opponent with takedowns and grappling.

Mr. Johnson would fail to finish his opponent in the first round though.

In the second round Mr. Johnson continued to put on the pressure on Mr. Wakamatsu.

He got Mr. Wakamatsu on tight hold early and started to wear him down. Mr. Johnson ended up with a guillotine choke and went for the finish.

The win sets up Mr. Johnson for a semifinal match between the winner of the grand prix bracket between Tatsumitsu Wada of Japan and Ivanildo Delfino of Brazil.

GT Capital allots P52B for capital expenditures

By Arra B. Francia
Reporter

GT CAPITAL Holdings, Inc. will be spending P51.7 billion in capital expenditures (capex) this year, primarily to fund the expansion of its automotive and property business units.

This year’s programmed capex brings the company back to its average annual spending of P50-60 billion, as compared to its 2018 budget which reached P112 billion. The elevated spending last year took into account GT Capital’s participation in the P60-billion stock rights offer of banking unit Metropolitan Bank & Trust Company.

The listed conglomerate said in a presentation last week that bulk of the capex will be spent at the parent level, as it will invest P27.8 billion for its partnership in used car auction house operations and other investments.

GT Capital’s unit, GT Mobility Ventures, Inc. has recently partnered with auction house operator Japan Bike Auction Co., Ltd. to form JBA Philippines. This will handle its business in used car auctions and is scheduled to start operations by the third quarter of this year.

“The idea is to have the auction in order for us to extend the value chain for financing, for parts and maintenance, for insurance, extending that product offering into the used car market,” GT Capital President Carmelo Maria Luza Bautista said in an analyst and media briefing in Taguig City last week.

Mr. Bautista said they may set up an online platform for the bidding process of used cars, which will pave the way for more transparency in pricing repossessed assets.

Asked if the capex at the parent level will include its entry into other sectors, Mr. Bautista said they are exploring opportunities.

“It’s more of a war chest, we’re in early discussions with parties looking for partners looking to invest in the Philippines,” Mr. Bautista told reporters after the briefing, although declining to specify which sector they will invest in.

Meanwhile, GT Capital has set a capex of P12 billion for Federal Land, Inc., to be used for land banking purposes and the construction of office buildings. This supports its plan to launch five to eight new projects this year, after unveiling eight projects in 2018 valued at about P30 billion.

Its other property unit, Property Company of Friends, will be allocating P2.3 billion as capex.

Mr. Bautista said they are looking to grow its property business to contribute to about 15-20% of its net income in the next five years, as it currently accounts for 10.5%.

“The aspiration is to grow it to 20% so that we’re not overly dependent on one sector…Ideally we are able to diversify the portfolio so we don’t have as many shocks,” Mr. Bautista said.

Toyota Motor Philippines has allotted P6.8 in capex this year for new models and logistics expansion. The company has recently acquired a 30-hectare property in Batangas for its logistics expansion in order to better manage the vehicles being shipped from abroad and going to dealerships.

Its dealership unit, Toyota Manila Bay Corp., will get about P300 million to expand and renovate its existing dealerships. The company currently has 70 dealerships, with one upcoming branch in Valenzuela and Lucena.

Metrobank will have a capex of P2 billion for IT system upgrades, expansion of electronic banking channels, ATM installation, and renovation or relocation of branches.

Insurance provider AXA Philippines will get about P200 million for computer and IT upgrade, as well as office equipment.

GT Capital’s net income stood at P13.4 billion in 2018, six percent lower year on year following a 10% decline in consolidated revenues to P215.8 billion.

High hopes for ONE Championship in Japan

TOKYO — The long-sought and awaited debut of ONE Championship in Japan came to fruition yesterday as its “A New Era” event was held at the Ryogoku Kokugikan here.

It was a realization of ONE officials’ dreams of sharing their kind of mixed martial arts brand in a country with a rich martial arts history and something they hope would complement the steady growth of the promotion the past few years.

“ONE: A New Era” was boasted by four world title fights, including that of the headlining fight of world lightweight champion Eduard Folayang of the Philippines and his teammate Kevin Belingon, the bantamweight champ, as well as the promotional debut of MMA legends Demetrious “Mighty Mouse” Johnson and “The Underground King” Eddie Alvarez.

“We have been lucky as an organization. We are now the world’s fastest-growing sports media property. If you look at our matrix on the last four years alone [you’ll see the steady growth],” said ONE Championship chairman and chief executive officer Chatri Sityodtong, touting growth in TV ratings, social media platforms, corporate partnerships they have inked and roster of athletes, among others.

“We believe that our first event in Japan will break our records and set a new high because of our heroes, their values and incredible stories,” he added.

It is tack that they hope to bank on as they build their brand in Japan.

“How we intend to build Japan is through values, heroes, and stories. Japan has some of the best martial arts and martial artists in the world. And we’re going to celebrate their values and their stories,” Mr. Sityodtong said.

The ONE chairman went on to say that for next year they plan to stage four events in the “Land of the Rising Sun” and eventually settle for 12 events per year.

“As a lifelong martial artist, I want the world to see the true beauty of martial arts. Our heroes, our world champions, they exemplify the very best of humanity. I am very excited to be here in Japan. It is not only a new era for Japan but also for martial arts in the whole world,” Mr. Sityodtong said.

Also part of ONE: New Era was the champion-versus-champion battle between women’s strawweight world champion Xiong Jing Nan of China and women’s atomweight champion Angela Lee of Singapore for the former’s belt as well as the middleweight world championship collision of champion Aung La N Sang of Myanmar against Ken Hasegawa of Japan.

Meanwhile Mr. Johnson was to see action in the ONE flyweight grand prix against Japanese Yuya Makatmatsu while Mr. Alvarez was to see action in the lightweight grand prix against Timofey Nastyukhin in an American-versus-Russia encounter.

Filipino flyweight Danny Kingad was also set to see action in one of the brackets in the flyweight grand prix. — Michael Angelo S. Murillo

El Niño crop damage estimate expanded to P4.35 billion

THE Department of Agriculture (DA) expanded its estimate for El Niño crop damage, mainly to rice and corn, to P4.35 billion as of March 31, from P1.33 billion on March 19.

On Sunday, the DA said in a report that the damage covers lost output of 233,007 MT, affecting 149,494 hectares and 138,859 farmers and fisherfolk.

Rice damage amounted to P2.69 billion on lost volume loss of 125,589 MT, affecting 111,851 hectares and 108,845 farmers.

Damage to the corn crop on the other hand was P1.65 billion, on volume of 107,416 MT, affecting 37,642 hectares and 30,014 farmers.

Areas declared to be under a state of calamity are Rizal, Occidental Mindoro, Zamboanga City, Zamboanga Sibugay, Cotabato, Maguindanao, and Negros Occidental.

Earlier in the week, Agriculture Secretary Emmanuel F. Piñol said pending validation of the damage estimates, particularly those from local government unit sources, the department will maintain the 2019 rice production estimate at P20.085 million metric tons (MMT).

“Still 20.085 million MT,” Mr. Piñol told reporters in Makati on Thursday evening. At the time, the DA’s rice loss estimate was just over half the Sunday total at around 120,000 MT.

“Babawiin natin sa wet season (We will try to make up for it in the wet season),” he said Thursday.

The National Disaster Risk Reduction and Management Council (NDRRMC) reported crop damage of P2.67 billion as of March 27, which the DA’s latest estimate has since surpassed.

“We have asked the field offices to validate the numbers because these came from Local Government Units. And we have to understand that (during elections), everybody wants to declare a state of calamity. It will give them access to calamity funds,” Mr. Piñol said

“We are not saying it’s inaccurate but we have to validate that because we will use the estimates (for insurance claims),” Mr. Piñol added.

Former Agriculture Secretary and current President of Inanglupa Movement William D. Dar said the rice output target is challenging but he is hoping for interventions that can be funded by the Rice Tariffication Law.

“It’s a big challenge and hoping that the interventions by government as per the rice tariffication law will help a lot,” Mr. Dar said in a mobile message.

Rolando T. Dy, Executive Director and Full Professor of the University of Asia and the Pacific (UA&P) Center for Food and Agribusiness added that much will depend on late-year planting decisions, which are influenced by perceptions of competition from liberalized rice imports.

“Mahihirapan. (It will be hard to meet the target). First semester is nearly here. So it will be dependent on main plantings mid-June onward for October to December harvest. The peak harvest comprises about 40% of annual [production],” Mr. Dy said in a mobile message.

“Baka bumaba ang plantings (Planting activity may fall) due to El Niño and lower palay prices (due to) cheaper imports,” Mr. Dy added.

Marites M. Tiongco, Dean of the De La Salle University (DLSU) School of Economics, said if farmers fail to produce 20 million MT this year, imported rice can cover demand.

“Any shortage will be covered by importation, more sources of cheaper rice. That is the purpose of the law,” she said in a text message.

The National Economic and Development Authority (NEDA) has said that the El Niño damage will have minimal impact on economic growth, and any rice lost to the dry spell will be made up for with imports.

“Timing of imports will be right on the dot especially as private importers are quite adept at responding to perceived shortages. They are better at estimating when it is profitable to import and when it is not,” Ernesto M. Pernia, NEDA Secretary, has said.

According to the Philippine Statistics Authority (PSA), rice production in 2018 declined by 1.1% to 19.07 million MT.

The PSA estimated that output of palay, or unmilled rice, was 4.62 million MT in the first quarter, below the 4.65 million MT estimated for the quarter in January.

The Global Agricultural Information Network (GAIN) of the US Department of Agriculture (USDA) estimates that rice imports by the Philippines are expected to hit 2.3 million MT annually between 2019 and 2020. — Reicelene Joy N. Ignacio

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