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ALI to invest P8B in QC estate

AYALA LAND, Inc. (ALI) is investing P8 billion in a new mixed-use district in Novaliches, Quezon City.

Stephen S. Comia, senior division manager for ALI’s strategic landbank management group, said The Junction Place is a 11-hectare “pocket urban development” located in Barangay Talipapa between Quirino Highway and Tandang Sora Avenue.

“Total investment is about P8 billion. Since we are doing the projects at the same time, it is also our five-year plan,” he said during a press briefing in Makati City, Wednesday.

The Junction Place will feature residential, commercial and recreational components.

Of the total investment, ALI is spending P500 million for land development, including the construction of a four-lane road connecting Quirino Highway and Tandang Sora.

“The site is located in between two major thoroughfares… So we plan to construct a spine road called Junction Place Boulevard, and open up that connection from Tandang Sora you don’t have to go to the intersection of Tandang Sora and Quirino, you can go through the spine road and exit to Quirino,” Mr. Comia said.

ALI has already sold around 8,000 sq.m. of commercial lots facing the spine road, as it hopes this will spur economic activity in the area.

At the same time, ALI is building a transport hub and UV Express terminal to boost the estate’s connectivity to other parts of Quezon City and Metro Manila.

“We will also benefit greatly from the Metro Manila Subway Project, and there will be two stations 800 meters from the project. The first three stations will be operational by 2022,” Mr. Comia said.

The Junction Place will be anchored by an Amaia Land residential development. Amaia Land is planning a five-tower development on a 1.7-hectare lot near the estate’s Tandang Sora Avenue exit.

“(Amaia Land) fits the market in the area. Amaia is known for affordable, reliable and quality homes… Initial plan is five towers in total, mid-rise (towers),” the ALI executive said.

WalterMart is also set to start construction on a 5,000-square meter (sq.m.) mall in The Junction Place by December.

“Waltermart is located on the side of Quirino. They will be constructing a mall with 5,000 sq.m. of leasable space. We partnered with them because it fits the market of the area… Anchor tenants include Waltermart, W Department Store, Abenson, Homeplus, and Food Choices,” Mr. Comia said. — Cathy Rose A. Garcia

Today’s wedding venue was originally an anniversary gift

IT WOULD HAVE been easier for the Liamzon family to sell Villa Milagros, the one-hectare property their grandparents built up at the foothills of the Sierra Madre by Rizal province.

Isidoro Liamzon, a banker from the 1960s, had the house built between 1965-69 as a 35th wedding anniversary gift to his wife, Milagros.

It is a grand house, for sure: think a port-cochere with a separate portico, multiple staircases, marble flooring in two stories, and grand chandeliers made with porcelain flowers that the late Mr. Liamzon chose with his wife during a trip in Europe.

The house, which had served as a weekend home for the senior Liamzons, had been abandoned for 45 years, with Andrea Liamzon describing it as a white elephant.

“He died when my dad was 13,” said Ms. Liamzon. “His lifetime goal was to build 11 banks for all of his kids — it didn’t happen. He passed away after building the 7th one.” Ms. Liamzon is Isidro’s granddaughter, and Managing Director of Villa Milagros.

The younger Ms. Liamzon quit her corporate job, set up a company to formally manage the house, and spent two years cleaning, rewiring, and renovating. The house opened in 2017 as an events venue, and has had the honor of hosting events for people such as Francis Libiran, Bangs Garcia, and Mike Tan, and will probably be remembered as the venue of the wedding between Aljur Abrenica and Kylie Padilla.

Ms. Liamzon took BusinessWorld and other guests on a tour of the house last month. It’s about a 30-minute drive from Commonwealth’s Sandiganbayan, and the sound of trickling water from fountains, as well as the very obvious view of the house’s tower greeted us and set expectations.

Ms. Liamzon showed us the bridal suite, which was the house’s former library, done up in pale colors and dominated by a bed. Photographs of the family were up on the shelves in silver frames. “We just wanted to remind people that this used to be a family home,” she said.

She took us to three more bedrooms, which could serve as bedrooms for the bride’s entourage, noting that the furniture is a mix between her own family’s collection of antiques, as well as a few new pieces. “They really feel like they’re at home. That’s kind of what we were going for,” she said.

Ms. Liamzon then took us to the gardens, with covered walkways and such, with the tour ending at the former poolhouse, now called the North Wing. Measuring 400 sqm., with a ceiling six meters high, it serves as the banquet hall.

In practical terms, this is where the magic of Villa Milagros is: at the base price of about P150,000 (it can go up, depending on the season), a family gets three amenities: the bedrooms, the gardens, and the banquet hall, which would have taken three separate bookings in other venues. Moreover, the events place only accepts one booking per day, lending exclusivity to a special day. One can even have the house and grounds hired for photoshoots, at about P20,000 for six hours.

Of course, we wouldn’t call it magic if it were simply about the prose of practicality.

“It’s really about the feeling. Weddings are very sentimental events. It’s like they come here, they fall in love,” she said. Perhaps it also goes back to the story of love that built the house in the first place: “You can feel that my grandparents really wanted to build something that would last.”

More than the promises of romantic love, however, the house’s revival as a padlocked property is a story of family and heritage. “We unlocked it, and made it accessible to people for it to be enjoyed,” she said.

Reflecting on the two years of renovation and the continuing work that it takes to keep the place, BusinessWorld asked if selling the house was ever an option. “It would have been easier… but then we would have lost our heritage.” — Joseph L. Garcia

Part of Cavite-Laguna expressway now open

MOTORISTS can now use the first 10 kilometers of the Laguna segment of the Cavite-Laguna Expressway (CALAX) from the Mamplasan Toll Barrier to the Santa Rosa-Tagaytay Interchange, the Department of Public Works and Highways (DPWH) said on Wednesday.

“We all know that (All Saints’ Day) is a time we all pay respects to family and friends who have passed on, and with November 1 falling on a Friday, I’m sure many of our kababayans will take advantage of the time to do some family bonding and go on a road trip. I only see benefits in opening CALAX even on a single lane basis to decongest Laguna Boulevard, Aguinaldo Highway,” Public Works Secretary Mark A. Villar said in a statement on Wednesday.

“We are at 90% completion, the remaining 10% of the works are being fast- tracked while in operations, we hope to fully open before December steps in.”

Mr. Villar said around 10,000 vehicles are expected to enter and exit through the two access points — Mamplasan and Sta. Rosa-Tagaytay Interchange.

“This section will take 10 minutes to drive. A big cut on travel time compared to the 45 minutes it currently takes to travel Mamplasan to Sta. Rosa-Tagaytay road,” he added.

The single lane on the CALAX opened on Wednesday (Oct. 30), but only until 10 p.m.

In a statement, MPCALA Holdings Inc. (MPHI) President and General Manager Roberto V. Bontia said the lane will also be open from 6 a.m. to 10 p.m. from Oct. 31 to Nov. 2.

“For the daily access time starting November 3, we agreed with (Department of Public Works and Highways) that it will be Sunday to Thursday 6:00 a.m. to 6:00 p.m. and giving extended time on weekends, Friday to Saturday 6:00 a.m. to 10:00 p.m. This will only be temporary, until the remaining works for these first subsections are completed,” he said.

Mr. Bontia reminded motorists to drive safely and observe traffic rules while using the partially opened lane.

“Upon issuance of the relevant certifications and permits from DPWH and Toll Regulatory Board (TRB), full access to the completed lanes and other interchanges and 24-hour commercial operations shall be possible,” he added.

The entire length of CALAX project will connect the Manila-Cavite Expressway (CAVITEx) from Kawit, Cavite to the South Luzon Expressway (SLEx) at the Mamplasan Interchange in Biñan, Laguna.

MPCALA Holdings is a subsidiary of Metro Pacific Tollways Corp., the tollways unit of Metro Pacific Investments Corp. (MPIC). MPIC is one of three key Philippine units of Hong-Kong based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT, Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Arjay L. Balinbin

Term deposits fall after reserve requirement cut

By Luz Wendy T. Noble

YIELDS on the central bank’s term deposits mostly fell on Wednesday after another reserve requirement ratio (RRR) cut last week.

The rates also dipped as the market waits for economic data releases and another Monetary Board policy meeting in November.

Bids for the Bangko Sentral ng Pilipinas’ (BSP) term deposit facility — a tool to shore up excess liquidity in the financial system and to better guide market interest rates — reached P82.093 billion, higher than the P80 billion in auction, central bank data showed.

The bids were still lower than the P100.489 billion worth of tenders the central bank received on Oct. 30 for the P90 billion it sold.

Tenders from banks for the seven-day notes amounted to P30.189 billion, slightly higher than P30 billion on offer but lower than last week’s P32.563 billion bids against the P20 billion in auction.

Accepted yields for the tenor ranged from 4.15% to 4.225%, compared with last week’s 4.138% to 4.225%.

This resulted in an average rate of 4.2053%, 0.02 basis point lower than last week’s 4.2055%.

Meanwhile, the 14-day paper attracted bids worth P22.925 billion, higher than the P20 billion on offer. This was lower than the P30.24 billion in tenders for a $30 billion offer volume last week.

Lenders went for returns of 4.15% to 4.283%, thinner than 4.15% to 4.3% a week earlier, data showed. The average rate for the two-week notes slipped to 4.2451% which was 0.29 basis point short of last week’s 4.248%.

On the other hand, 28-day term deposits got tenders worth P28.979 billion, lower than the P30 billion on offer. This was also lower than the P37.686 billion in tenders last week.

Accepted yields for the tenor ranged from 4.21% to 4.5%, increasing from the previous auction’s yields of 4.18 to 4.45%. This brought the one-month paper’s average rate to 4.2886%, 4.06 bps higher than last week’s 4.248%.

The lower yields in the seven- and 14-day debt paper come ahead of data releases and the policy meeting this November.

“The decline in the seven- and 14-day tenors was caused by participants preferring the shorter deposit tenors ahead of major local economic releases next week and the Monetary Board meeting by mid-November, which has also eased off some demand toward the longer 28-day tenor,” a trader said in an email.

Rizal Commercial Banking Corp. chief economist Michael L. Ricafort traced the mostly marginal lower auction yields to last week’s surprise reserve requirement ratio cut.

“BSP TDF auction yields were mostly marginally lower after the surprise 1-percentage point cut in larger banks’ reserve requirement ratio on Oct. 24 effective December 2019 that would result in additional peso liquidity,” he said.

“More peso funds would still lead to some easing of short-term interest rates,” he added.

The policy-making Monetary Board cut the ratio for the fourth time this year by another 100 basis points, which will be effective by December.

This will bring the reserve ratio of universal and commercial lenders as well as nonbank financial institutions to 14%, while that of thrift banks will be at 4%. The 3% reserve requirement ratio for rural banks was kept.

The central bank earlier said the cut was in line with its reform agenda to promote a more efficient financial system by lowering financial intermediation costs. It would also ensure sufficient domestic liquidity in support of economic activity, it said.

The Monetary Board has two more policy meetings left for the year, scheduled for Nov. 14 and Dec. 6.

The Philippine Statistics Authority (PSA) is set to release October inflation data and third-quarter gross domestic product (GDP) figures on Nov. 5 and Nov. 7, respectively.

New World vs. Old World wine, style vs. substance

THERE ARE two important Judgments of Paris, both of which changed the world, depending on what you’re reading. First, there’s the Judgment of Paris of Greek mythology, where the lost prince of Troy, Paris, had to choose who the fairest was between goddesses Hera, Aphrodite, and Athena, and the consequences of that launched the Trojan War. Secondly, there’s the Paris Tasting of 1976, a competition by a British wine merchant, where California wines flushed out their French counterparts in a blind tasting by French judges. This competition paved the way for New World wines to be taken more seriously.

BusinessWorld took a walkthrough earlier this month at Discover California Wines, an event featuring 40 wineries and more than 60 labels, organized by the US Department of Agriculture and the California Wine Institute. While walking among the numerous wine labels, and sipping and sniffing about, we asked a stakeholder if the dichotomy between Old World and New World wines still exist.

Over at the Robert Mondavi booth, we tasted the Bourbon Barrel-Aged Cabernet Sauvignon, an innovation from the winery’s Private Selection line. (The wine was so fragrant that this reporter had to let go of the glass for a moment. The scent reminds one of a boudoir from the 1930s, with the scent of blond wood and Guerlain, and after you get used to the first whiff, there’s a bit of a temptation to dab the wine on yourself. It had a rounded taste with little sharpness, a silky mouthfeel, but a well-nuanced flavor with a peppery endnote.)

Eric G. Kahn, Marketing Director for Wines for Future Trade International (which distributes Robert Mondavi in the Philippines), had a few things to say about the dichotomy between Old World and New World wines. For example, one might think that French wines still reign supreme when it comes to price, but he says, “Not necessarily anymore.”

Of course, a lot of what makes wine has taken place well outside the bottle: the sun, the soil, and the climate have all touched the grape well before its juicing. “The soils differ. The plants around differ. They have their own unique taste,” said Mr. Kahn.

“When you say Old World wines, you’re talking more of style. The New World style is more fruit-forward. The Old World style is more subtle.”

Meanwhile, Michael William Reyes, General Manager of The Wine Club, which distributes wines from Vintage Wine Estates in the Philippines, shared the same point. “At the end of the day, it all comes down to the fruit. Fruit grown in California has a different profile than a fruit grown in France,” said Mr. Reyes. “You see a lot more fruit-forwardness.”

Furthermore, Mr. Reyes points out differences in industry practices in New World wines and Old World wines: labels in French wines, for example, would display the region where the wine was made, while labels of New World wines display the varietal that went into the bottle. “A lot of [the difference] is [in] the traditions,” he said.

A changing buying climate, however, is changing the business. Mr. Kahn says, “The thing is now, because of the growing acceptance of wine around the world, all the countries now try to capture each flavor profile of each race, culture, and country. So now, you have French [brands] that make fruit-forward wines, only because they want to capture a certain market.” — Joseph L. Garcia

Google owner Alphabet in bid to buy Fitbit, eyes wearables

GOOGLE owner Alphabet Inc. has made an offer to acquire US wearable device maker Fitbit Inc., as it eyes a slice of the crowded market for fitness trackers and smartwatches, people familiar with the matter said on Monday.

While Google has joined other major technology companies such as Apple Inc. and Samsung Electronics Co. Ltd. in developing smart phones, it has yet to develop any wearable offerings.

There is no certainty that the negotiations between Google and Fitbit will lead to any deal, the sources said, asking not to be identified because the matter is confidential. The exact price that Google has offered for Fitbit could not be learned.

Google and Fitbit declined to comment.

Fitbit shares rose 27% on the news, giving the company a market capitalization of $1.4 billion. Alphabet shares rose 2% to $1,293.49.

A deal for Fitbit would come as its dominant share of the fitness tracking sector continues to be chipped away by cheaper offerings from companies such as China’s Huawei Technologies Co. Ltd. and Xiaomi Corp.

Fitbit’s fitness trackers monitor users’ daily steps, calories burned and distance traveled. They also measure floors climbed, sleep duration and quality, and heart rate.

Fitbit, which helped pioneer the wearable devices craze, has been partnering with health insurers and has been making tuck-in acquisitions in the healthcare market, as part of efforts to diversify its revenue stream. Analysts have said that much of the company’s value may now lie in its health data.

Fitbit cut its 2019 revenue forecast in July, blaming disappointing sales of its newly launched cheapest smartwatch Versa Lite. The watch is priced at $160, compared with $200 for the full version. It can track workouts and heart rate but lacks features such as the ability to store music directly.

In August, Fitbit said it had signed a contract with the Singapore government to provide fitness trackers and services in a health program it said could reach up to 1 million users.

Fitbit in August also launched its latest smartwatch, Versa 2, adding Amazon.com Inc.’s voice assistant Alexa, online payments and music storage to the device’s capabilities.

Fitbit is scheduled to report third-quarter earnings on Nov. 6. Alphabet is scheduled to report third-quarter earnings later on Monday.

Fitbit would not be the first deal that Google would be carrying out in the wearables space. Fossil Group Inc. said in January it would sell its intellectual property related to smartwatch technology under development to Google for $40 million. Google’s plans for these assets are not clear.

Reuters had reported last month that Fitbit was speaking to investment bank Qatalyst Partners about exploring a sale. — Reuters

Electric cooperatives reduce system losses in 1st half

ELECTRIC cooperatives managed to cut their system losses during the first half, allowing them to post a 13% increase in energy sales, the National Electrification Administration (NEA) said on Wednesday.

“This is a clear indicator that electric cooperatives are fully committed and ready to compete with other power distribution utilities in the country. Lower system losses contribute to a reduction in power rates,” said NEA Administrator Edgardo R. Masongsong in a statement.

System loss, or electricity lost during transmission, improved by 1.19 percentage points to 10.38% in the first six months from 11.57%, according to a report by NEA’s information technology and communication services department.

The reduction further placed the national system loss of electric cooperatives (ECs) under the 12% system loss cap set by the Energy Regulatory Commission (ERC). The cap is what limit that can be passed on to the monthly electricity bills of consumers.

NEA said based on its data, 96 ECs posted a system loss that is within the cap. Of these cooperatives, 39 recorded single-digit system loss. Up to 15 ECs reported a double-digit system loss of 13% to 20%. The number is lower than the 31 in the previous year.

“I hope they will strive to sustain the gains they have made, and do their utmost to further improve their services to their member-consumer-owners and other stakeholders,” Mr. Masongsong said.

NEA said the ECs that posted the lowest system losses were Aurora Electric Cooperative, Inc. at 2.03%; Batanes Electric Cooperative, Inc. at 2.79%; Leyte II Electric Cooperative, Inc. at 2.91%; South Cotabato II Electric Cooperative, Inc. at 2.91%; and Misamis Oriental I Rural Electric Service Cooperative, Inc. at 2.99%.

Completing the top 10 are: Dinagat Island Electric Cooperative, Inc. with 3.74%; Cebu III Electric Cooperative, Inc. at 3.88%; Bohol I Electric Cooperative, Inc. at 6.20%; Iloilo III Electric Cooperative, Inc. at 6.27%; and Surigao del Sur I Electric Cooperative, Inc. at 6.38%.

NEA said 14 regions recorded a reduction in their system losses and contributed to the decline in the overall level. This resulted to increased energy sales by 13% and revenues by 14%.

During the period, the total energy sales of the ECs reached 11,397 gigawatthours (GWh), up 13.3% from 10,060 GWh in the same period last year. National gross revenue of the ECs grew 13.6%% to P112.12 billion from P98.74 billion.

The agency said the higher sales were also driven by the increased consumption of residential sector at 5,951 GWh followed by commercial sector at 2,515 GWh, industrial sector at 1,634 GWh, public building at 588 GWh, and other consumers at 709 GWh. — Victor V. Saulon

SC stands by 2007 decision on PNB

THE Supreme Court (SC) has stood by its 2007 decision favoring Philippine National Bank (PNB), which had refused to issue a $4.4-million letter of credit to an alleged dummy of the late dictator Ferdinand E. Marcos.

In a 15-page resolution dated Sept. 25 and released to media yesterday, the high court’s First Division said no account with PNB was created from which funds may be drawn for the benefit of Marcos crony and businessman Vicente B. Chuidian.

The letter of credit provided that at least a week before the date of each drawdown, borrower Dynetics, Inc. must deposit to the bank the peso equivalent of the amount of the drawdown.

But the court said no account was created from which funds may be drawn and Dynetics did not surrender assets unconditionally to the custody of PNB.

“The letter of credit is for Chuidian’s benefit, but PNB relied upon Dynetics, Inc. primarily to meet the obligations of the letter of credit,” the tribunal said.

“The obligation of PNB to Chuidian was also far from being unequivocal and was, in fact, wholly contingent as the latter could not have collected from PNB unless he presented the documents required under the letter of credit,” it added.

The court also noted that the Presidential Commission on Good Governance (PCGG) had sequestered the letter of credit and had stopped any drawings against the credit letter.

“All the foregoing show that there can be no proceeds to speak of,” the court said.

The high court corrected decisions it issued in 2001 and 2006 ordering the bank to remit proceeds of the letter of credit. — Vann Marlo M. Villegas

Chivas Regal: Blending into a success

THE BLENDED Scotch whisky brand, Chivas Regal, launched its new campaign last week called “Success is a Blend.”

The brand’s new tagline goes back to its roots in the 1800s. Brothers James and John Chivas were operating a grocery store in Aberdeen, and they had the honor of supplying provisions to Queen Victoria’s family during their holidays in their Scottish retreat, Balmoral. According to Bonnar Fulton, Chivas Brothers Brand Ambassador, the whisky started as a response to customer demands to make a smoother whisky. The brothers responded by blending their single malts to soften and smoothen the taste.

It has since been billed as “the original luxury Scotch,” owing to its 25-year-old blend being sold to New York’s upper crust in 1909. Its reputation was further bolstered by singer Frank Sinatra’s fondness for it.

The Chivas range includes the flagship Chivas 12, Chivas Extra, Chivas XV, Chivas Mizunara, Chivas 18, Chivas Ultis, Chivas 25, Chivas Regal The Icon, and the Global Travel Retail exclusive Chivas Brothers Blend.

During the event last week, booths were set up for guests to try to make their own blend. On the stage, celebrity twins Richard and Raymond Gutierrez were launched as the brand’s newest brand ambassadors.

Mr. Fulton told BusinessWorld what a Chivas drinker was like. One would think it’s a man who always sounds like Frank Sinatra, but then he said, “A Chivas drinker can be absolutely anyone. For a long time, we believed Chivas has been seen as intimidating, a drink that should only be drunk neat or on the rocks. That’s not the case,” he said, gesturing to a booth where cocktails with Chivas were being mixed.

Asked about the brand’s long history, and if the history extends to product integrity, he says, “Things do change, but we try and keep the products for as long as we can as consistent as possible.” — JLG

iPhone 11, Apple Watch Series 5 now available at Power Mac Center

THE LATEST Apple products, the iPhone 11 and the Apple Watch Series 5, are now available at Power Mac Center (PMC).

In a statement, premier Apple partner PMC said the iPhone 11, iPhone 11 Pro, iPhone 11 Pro Max and the Apple Watch Series 5 were released in on Tuesday in a midnight launch party at the PMC flagship store in Greenbelt 3, Makati.

PMC held interactive activities where participants got the chance to win Powerbeats Pro, AirPods, BeatsX, and P5,000 worth of PMC gift cheques.

“We are grateful to our patrons who have spent several hours in queue to be among the first owners of iPhone 11 in the country. Every year, Power Mac Center launches new iPhone and Apple Watch models and we are always met with loyal customers, so we strive to reward them with only the best deals and service every time, in return for their unwavering support,” Joey Alvarez, Power Mac Center Director of Product Management, Marketing, and Space Planning, was quoted as saying.

Up to P25,000 worth of premium accessory bundles awaited each of the first 200 customers in line during the launch.

The bundles include freebies from partner brands like Adam Elements, Aukey, Belkin, Bose, Cygnett, Defunc, Just Mobile, Lifeproof, Moshi, Otter, PanzerGlass, Philips, PopSockets, SanDisk, Speck, Sudio and UAG.

The latest iPhone models feature a triple-camera system with wide and ultra-wide lenses, longer battery life, tougher glass screen, and water resistance of up to four meters submersion for 30 minutes.

All three models of the iPhone 11 feature the A13 Bionic chip, an Apple-designed 64-bit ARM-based system on a chip that delivers faster performance and reduced power consumption.

When purchased, the iPhone comes with EarPods with Lightning connector, Lightning cable or a USB-C to Lightning cable, and a power adaptor.

PMC said the iPhone 11, iPhone 11 Pro, iPhone 11 Pro Max, and Apple Watch Series 5 are now available at select PMC branches nationwide, including its online store.

The iPhone 11 is priced at P48,990 for the 64GB model, P51,990 for 128GB, and P57,990 for 256 GB, while the iPhone 11 Pro is sold for P68,990 (64GB), P78,990 (256GB) and P91,990 (512GB). As for the iPhone 11 Pro Max, the prices range at P75,990 (64GB), P84,990 (256GB) and P97,990 (512GB).

On the other hand, the Apple Watch Series 5’s 40 millimeter (mm) model is sold for P24,990, while the 44mm model is priced at P26,990.

Israeli firm proposes solar-powered irrigation system

ISRAELI agro-industrial company LR Group is set to present its proposed Solar-Powered Irrigation System (SPIS) to the Department of Finance (DoF) next week.

Agriculture Secretary William D. Dar said representatives of LR Group will meet with the DoF on Tuesday to discuss funding for the project.

“What they (LR Group) will discuss with the Department of Finance next week is that there is a group that can support them in terms of bringing $200 million investment, and they will give at one percent loan interest, so sabi ko (I said) let’s do it. I’ll strongly support, and this is again showcasing that yes, water is needed in agriculture,” he told reporters.

LR Group’s affiliate Innovative Agro Industry Ltd. (IAI) is said to help raise the initial investment of $200 million, or P10 billion, to start the project.

The government has been pursuing projects to ensure that there is water supply in farms around the country.

LR Group previously submitted a P44-billion proposal to then Agriculture Secretary Emmanuel F. Piñol for the establishment of 6,200 SPIS, which can cover about 500,000 hectares of rice and high-value crop farms.

President Rodrigo R. Duterte gave his approval for the project during the initial negotiations, which involved the Philippines and IAI.

However, Mr. Dar said he discussed a new model for SPIS with the Israeli company, which is more cost-efficient than its initial proposed model.

“Ang (The) cost of LR (Group), ’yung (their) first model nila [is] good for eight hectares ay P1.2 million, including installation. The other model they have is good for 32 hectares, and that is P5.8 million, including installation,” he explained.

“This time around, mas madali ma-install (It’s easier to install). In two weeks, ’yung (the unit) good for 32 hectares, it can be operational, and it’s simple. It also has fertigation. You can apply fertilizers through this system. This is much more cost-effective,” he added. — Vincent Mariel P. Galang

Higher capital triggers insurance mergers

LOCAL INSURERS have been consolidating amid a continued increase in capital requirements.

Only 85 insurance companies were left as of end-2018 after 15 direct insurers shut down in the past five years, according to the National Reinsurance Corp. of the Philippines (NRCP).

The minimum net worth requirement for insurance companies will increase from P550 million to P900 million by year-end.

Despite fewer players, the higher capital requirement has led to stiffer competition especially for non-life insurers, NRCP President and Chief Executive Officer Allan R. Santos said in an article published in Singapore and filed with the Philippine Stock Exchange.

“The average profit margin of non-life direct insurers has been slowly decreasing annually since 2015, dipping to 6.9% in 2018,” he said. “While this is a vast improvement from the 3.2% average in 2013, it is just half of the life profit margin of 12.6%,” he added, noting that taxes on non-life insurance products were also among the highest in the region.

“Such high taxes make non-life insurance products less affordable,” Mr. Santos said. “Coupled with low awareness and cultural attitudes towards insurance, this makes increasing insurance penetration more challenging.”

Meanwhile, Mr. Santos said the Insurance Commission and the industry have formed a task force to look into possible changes to the Insurance Code. These include changing the minimum net worth requirements hard-coded in the law and the proposed fourth package of the Tax Reform for Acceleration and Inclusion Act.

The local insurance industry’s total premium income jumped 11.67% to P290.15 billion as of end-2018 from P259.82 billion, according to data from the commission.

The bulk of the industry’s premium income came from the life insurance industry at P228.61 billion, 12.89% higher than a year earlier. — Luz Wendy T. Noble

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