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$20B ADB power bonds investment

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The Asian Development Bank (ADB) has invested $20 million in the maiden climate bond issuance of AC Energy, a wholly-owned subsidiary of Ayala Corporation in the Philippines. This landmark public listing will be the first Climate Bond Initiative (CBI) certified US dollar climate bond in Southeast Asia listed on the Singapore Stock Exchange.

ADB is an anchor investor in the 10-year tranche, contributing to a total issue volume of $410 million. Proceeds of the bonds will finance renewable energy projects in the Asia and Pacific region, including Vietmam, the Philippines, and Indonesia. This climate bond will be used to support AC Energy’s plans to establish and expand a regional presence in the development of clean energy projects in accordance with environmental best practice.

“We believe that this green bond issuance offers investors a compelling alternative to traditional investments and will help promote financing of clean energy projects by the private sector across the region,” said AC Energy president and chief executive officer Eric Francia. “ADB’s support was invaluable to ensure that the bonds comply with CBI standards and we believe that this will demonstrate our commitment to meeting the highest environmental and safeguard standards.”

“This climate bond will help the Association of Southeast Asian Nations meet its target of drawing 23 percent of the region’s energy mix from modern, clean and sustainable renewable sources by 2025,” said director general of ADB’s Private Sector Operations Department Michael Barrow. “AC Energy aspires to be a regional leader in renewable energy, and ADB is delighted to support the Ayala Group in this effort by anchoring this investment and crowding in other institutional investors.”

AC Energy has over 1.8 gigawatts (GW) of attributable capacity (in operation and under construction) as of the end of 2018. The climate bond proceeds will contribute towards AC Energy’s target of 5 GW of attributable renewable energy capacity by 2025 across the region. In 2018, AC Energy generated 2,800 GW hours of attributable energy, 48 percent of which was drawn from renewable sources.

This is ADB’s third climate bond project and its first publicly listed climate bond. In December 2018, ADB invested 5 billion Thai baht in B. Grimm Power Public Company Limited’s maiden 5-year and 7-year climate bonds — the country’s first certified climate bond. In 2016, ADB also extended a guarantee to support an issuance for the Tiwi and Makban geothermal power projects in the Philippines — the first climate bond in Asia.

This investment is in line with ADB’s new Strategy 2030, which mandates that at least 75 percent of the number of ADB’s committed operations support climate change mitigation and adaptation by 2030, with climate finance from its own resources reaching $80 billion over 2019–2030.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 67 members — 48 of which are from the region.

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Exporters, MSME on survival mode

Enterprises and businesses from the top 10 exporting regions are asking for swift government measures and initiatives to address the mounting trade and economic difficulties they encounter amid the COVID-19 pandemic.

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Stakeholders in the country’s business sector, including direct and indirect exporters and micro, small and medium enterprises, aired their collective appeal to the government for urgent assistance, saying their focus has been reduced to ensuring day-to-day survival due to the coronavirus pandemic. / Photograph courtesy of airspeed

Stakeholders in the country, including direct and indirect exporters and micro, small and medium enterprises (MSME), aired their collective appeal to the government for urgent help, saying their focus has been reduced to ensuring day-to-day survival.

The appeal was presented during a series of regional online consultations conducted by the Export Development Council (EDC) over the implementation of the updated Philippine Export Development Plan (PEDP) 2018-2022.

Enterprises and businesses from the top 10 exporting regions are asking for swift government measures and initiatives to address the mounting trade and economic difficulties they encounter amid the COVID-19 pandemic.

The stakeholders enumerated the growing wish list of interventions needed to enable exporters and MSME to recover from the unprecedented setbacks due to the pandemic, travel restrictions, and lockdowns.

The consultation was held in collaboration with the Department of Trade and Industry-Export Marketing Bureau and Philippine Exporters Confederation, Inc.

Participants coming from the National Capital Region, Region 3 and 4-A in Luzon, Regions 6, 7 and 8 in the Visayas, and Regions 10, 11, 12 and CARAGA in Mindanao called for specific and detailed measures centered on enhancing trade facilitation, productivity and competitiveness, market access and promotion, financial assistance, innovative capacity, and information dissemination.

NCR attendees pushed for, among others, intensified training on Halal and major international certifications, export requirements and procedures; modern facilities to support production; incentives for identified priority sectors; and export financing assistance. They also sought help on the more-than-usual requirements from financial institutions because of the pandemic.

Region 3 representative commented on the higher prices of their products compared to other ASEAN suppliers due to higher cost of operations, where they also noted the unstable supply chain for wood-based products due to government policies which they claimed are causing prices of raw materials to increase.

They also observed how local government units implement their own policies that are not aligned to that of the national government rules. In addition, MSME are at a disadvantage because they have weak links with freeports and economic zones in terms of transit arrangements, information and technology sharing.

Participants asked for aid to medium sized enterprises, which are also hard hit by the pandemic, through an SB Cares facility similar to the one available to micro and small enterprises.
Region 4-A likewise underscored the lack of information on and access to virtual/online marketing and promotion of local products. There should be a government agency that will help MSME exporters digitalize, the participants said.

In the Visayas, a major issue for Region 6 is poor logistics, which hampers and delays the transport of raw materials and finished products. Regional stakeholders also highlighted the lack of international flights flying in and out of Western Visayas, as well as the lack of export capability of the regional ports that could help in reducing export costs.

They also called on the Food and Drug Administration (FDA) to allow the e-submission of documents and assign more personnel.

Another suggestion is to have post-COVID updates on export markets and trends, particularly in the ASEAN, US., Europe and Latin America. A dialogue with concerned government agencies on reopening of international flights to allow entry of imported raw materials into the country was also proposed.

Region 7 exporters said they will benefit from the removal of unnecessary regulatory impediments, access to interest-free trade credit and stimulus package, and help in taking advantage of preferential status programs such as the GSP and GSP+.

Region 8, stressing the short shelf life of agricultural products, asked for the streamlining of export processing, utilizing of updated technology in product development, farm mechanization and clustering of farmer groups, and enhancement of the one-stop laboratory and shared service facility for longer shelf life and increased production.

Meanwhile, stakeholders in Mindanao pointed to the continuing struggles of both big and small exporters as a consequence of COVID-19, and discussed how their attention is now focused on day-to-day survival. They cited the permanent shutdown of South Bukidnon Fresh Trading Inc., an exporter of fresh pineapple, as one of the casualties of the pandemic in the region.

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Phoenix powers Balesin Island

The pilot run will effectively provide cleaner power to the entire island resort.

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Phoenix Pilipinas Gas and Power Inc., in cooperation with US-based Mesa Natural Gas Solutions LLC, started the pilot run of its gas-fired gensets at the Balesin Island Club in Polillo, Quezon on 31 August 2020, providing baseload power for the exclusive resort.

The three gensets, with a maximum capacity of 350 kilowatts each, are powered by propane-rich LPG provided by Phoenix as part of its energy diversification campaign.

Master-planned by EcoPlan of Miami in Florida, Balesin was designed with the environment in mind and to be in harmony with its natural surroundings. Sustainable initiatives such as water harvesting, 80 percent water recycling, on-site eco-friendly transportation, organic farming and switching to glass bottled water and paper straws, as well as programs for community empowerment, have resulted in Balesin being the first and only Philippine resort awarded by the United Nations World Tourism Organization for innovative tourism and sustainability.

“With Balesin’s gradual return to full operations from the current community quarantine measures, the pilot run will effectively provide cleaner power to the entire island resort. The aim is to ultimately replicate such solutions later on in industries that are generating and using their own power in the fields of manufacturing, hospitality and leisure, construction, telecommunications and mining,” said Phoenix president Henry Albert “Bong” Fadullon. “The gensets can run on LPG — not only a cleaner source, but also a viable component in the energy mix of the country, which we aim to help diversify,” he added.

The introduction of the gas-powered gensets strengthens the thrust of Phoenix to expand the LPG market in the Philippines and contribute to a more diversified energy mix.

The gensets can run on different types of fuel. Aside from propane-rich LPG, these can be powered using natural gas, LNG, compressed gas and wellhead gas.

With the use of such technology, LPG is positioned as a transition fuel to bring cleaner and more efficient fuel such as LNG, making this type of gensets a viable alternative to coal, diesel, and bunker fuel-fed power generation units.

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DoST pursues digitized farming

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DoST Secretary Fortunato de la Peña says the SARAI system can provide accurate information on pest epidemics and crop disease outbreaks through remote sensing, including crop water and nutrient requirements by using a multi-spectral drone, which can enhance the productivity and income of the farmers. / PHOTOGRAPH COURTESY OF DOST

The Department of Science and Technology (DoST) said at least 250 farmers working in over 150 hectares of land planted to cacao and coffee in Zamboanga del Sur will directly benefit from its digitized agriculture value chain for cacao and coffee production.

DoST secretary Fortunato de la Peña yesterday said this became possible through the agency’s Smarter Approaches to Reinvigorate Agriculture as an Industry (SARAI) System.

Through the SARAI project, the DoST Region-9 office, in partnership with the University of the Philippines-Los Baños, enabled an easier and more efficient monitoring of farmlands, he said.

“The system can deliver accurate information on pest epidemics and crop disease outbreaks through remote sensing, as well as crop water and nutrient requirements through a multi-spectral drone,” the DoST chief added.

It also uses Geographic Information System, Remote Sensing, and Normalized Difference Vegetation Index for assessing and monitoring crop growth, crop health, crop loss, and extent of crop damage due to typhoons and extreme weather phenomenon like the El Niño and La Niña.

According to the DoST chief, the one-million-peso project is a more proactive, near real-time and site-specific monitoring of cropping areas.

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Narrow deficit posts CA surplus

Joshua Lao

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The country’s current account (CA) posted a surplus for the first half of 2020, following the narrower deficit in trade in goods account, latest data from the Bangko Sentral ng Pilipinas (BSP) shows.

“The current account registered a surplus of $4.4 billion in the first six months of 2020, a reversal from the $2.6 billion deficit in the same period a year ago,” the BSP said.

“This development was on account of the decline in trade in goods deficit to $15.7 billion (from $24.4 billion), which more than offset the lower net receipts recorded in trade in services of $5.2 billion (from $5.9 billion),” it added.

The lower primary income and secondary income of $2.1 billion and $12.8 billion versus the previously listed $2.5 billion and $13.3 billion contributed to the CA surplus.

According to the Central Bank, the narrowing of the trade deficit could be traced to disruptions in the global demand and supply chains as countries impose restrictions to contain the health crisis.

For the second quarter 2020, current account also registered a surplus of $4.4 billion, a reversal from the $931 million deficit in the same quarter year-ago owing to the same factors.

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Global auto sales to fall 20%

This new forecast follows a first-half 2020 sales slump of 25 percent, an unprecedented shock for the global industry.

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Automakers and suppliers are likely to operate at suboptimal capacity and at less efficient levels for the remainder of 2020 following the global effect of the coronavirus disease pandemic, forcing stakeholders to maintain a negative outlook despite some evidence of recovery. / Photograph courtesy of Autodeal

Global sales for light vehicles are seen to fall by 20 percent this year compared with 2019 following disruptions on sales and production due to the COVID-19 pandemic, says S&P Global Ratings in a report.

“This new forecast follows a first-half 2020 sales slump of 25 percent, an unprecedented shock for the global industry,” says S&P Global Ratings analyst Vittoria Ferraris.

The report projects global vehicle sales to expand seven to nine percent in 2021 and 2022, which means that light vehicle sales two years from now will still be six percent below the 2019 volume.

We believe any upside to our sales scenario will stem mainly from the Chinese market, the most dynamic but least predictable among the main global auto markets. We think China may be the only market to catch up with 2019 volume by end of 2022, Ferraris shared.

“Our global auto sales forecast is more conservative than general market standards,” said Ferraris.

“But we deem it consistent with the pandemic-related dramatic squeeze on potential car-buyers’ finances across the globe, combined with pressure on affordability stemming from higher prices of new hybrid and electric vehicles that carmakers are trying to promote in Europe and China.”

Many plants of automakers and suppliers are likely to operate at suboptimal capacity and at less efficient levels for the remainder of 2020.

While a large proportion of rated issuers will end 2020 with a higher debt load than at the start of the year, she explained.

We therefore expect companies’ profitability and cash flow adequacy metrics to be weaker in 2021 than in 2019. This, combined with the enduring profitability pressure generated by the transition to electric mobility (unimpeded by COVID-19), and the sizable investments needed to upgrade existing and develop future technology, leads us to maintain a negative outlook for the auto industry despite some evidence of recovery,” Ferraris said.

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FIST gains more support

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The proposed Financial Institutions Strategic Transfer (FIST) bill received more backing as the Bureau of Internal Revenue (BIR) expressed its full support for such.

This, after BIR commissioner Caesar Dulay assured lawmakers of their agreement for the measure as it aims to allow banks to dispose its soured assets through would-be asset management firms.

“While we have stated that the tax incentives may affect our revenues in terms of foregone revenues, on the balance, we believe that the objectives of the bill will far outweigh the effect on our revenue collections,” Dulay said.

“We are one with the DoF (Department of Finance), Bureau of Treasury, Bangko Sentral ng Pilipinas (BSP) and other government agencies (in) calling for the immediate passage of the FIST bill,” he added.

The BIR chief expressed his confidence that the proposed measure will “greatly contribute” to the stabilization of the country’s financial system.

BSP governor Benjamin Diokno earlier said that FIST will help beef up the local banking industry and therefore, propel economic growth.

Non-performing loan of banks were estimated to double from 2.4 percent as of end-March 2020 to 4.6 percent by end-December 2020 while the deterioration in asset quality was eyed to reduce banks’ capital adequacy ratio from 15 percent to just 14.8 percent in the same period, he said.

Finance secretary Carlos Dominguez III also said that while FIST will result in foregone revenues of P3.3 billion to P13 billion every year for the next five years, such a move will enable banks to focus on their primary task of providing credit to various sectors.

“By keeping non-performing assets contained and managed, FIST will expand the amount of risk banks can take. This benefit cannot be understated in a crisis when lending to businesses is riskier but also more urgently needed,” Dominguez explained.

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Empowering Filipinos to fight the pandemic

The nationwide education campaign empowers every Filipino to be an instrument of change in the fight against COVID-19.

Joe Zaldarriaga

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Since the outbreak of the dreaded coronavirus in the country at the onset of 2020, the national government implemented various means to contain the virus through strict community quarantine measures. We are now on the sixth month of nationwide lockdown but the continuous increase of confirmed cases in the past weeks reinforces the importance of practicing healthy habits and preventive measures to curb the spread of the disease.

To help overcome this big challenge, the Department of Health (DoH) has come up with a campaign in collaboration with various government agencies and the private sector called BIDA Solusyon sa COVID-19. The nationwide education campaign empowers every Filipino to be an instrument of change in the fight against COVID-19, by encouraging them to change and practice preventive behaviors in stopping the spread of the virus.

One of the private corporations that readily extended its arm to support BIDA Solusyon is the Manuel V. Pangilinan (MVP) Group of Companies.

To show its commitment in participating in the campaign, more than 14 companies and foundations under the MVP Group, from all different industries, including utilities, investments, financial services, infrastructure, media and health care, pledged to closely work with the government to fight the pandemic.

Recently, Meralco and PLDT-Smart donated hospital equipment to the East Avenue Medical Center (EAMC), the new COVID referral center, which will contribute in the campaign against the pandemic. As a result, the bed capacity of the center reached 250 allowing EAMC to accept more patients affected and infected with the virus. The new building of EAMC is now called the Center for Emerging and Reemerging Infectious Diseases.

IATF-EID chief implementer Secretary Carlito Galvez Jr. thanked the MVP Group: “This is a great service to our people, a quick call to action of the clarion call of the President to prepare and equip COVID-19 hospitals.”

Quezon City Mayor Joy Belmonte also expressed her gratitude, “We are grateful to the MVP Group’s generous donation of high-quality medical equipment to EAMC. These will greatly benefit the people of Quezon City, most particularly the underprivileged and vulnerable. These equipment will make EAMC more responsive to the needs of our people, a great contribution to our main goal of a higher level of service for the community.”

The Metro Pacific Hospital Holdings Inc. (MPHHI) likewise created a COVID crisis management team to ensure the health and safety of health care workers, so they could give continuous service to Filipinos, especially those directly affected by the pandemic.

The programs of these hospitals also continue to run full-force in the Group, including adding more hospital beds for COVID-19 patients, as well as supplying PPE and posting additional staff.
Among the hospitals under MPHHI are Makati Medical Center, Asian Hospital, Davao Doctors Hospital, Cardinal Santos Medical Center and Medical Center at Our Lady of Lourdes Hospital.

To help disseminate information about the BIDA Solusyon campaign, PLDT-Smart’s physical stores and business centers nationwide, and offices of Meralco, Bayad Center and Maynilad, displayed and distributed educational materials of the campaign.

Likewise, the Light Rail Manila Corp., operator of the LRT-1, is also promoting the campaign by distributing materials to more than 100,000 daily passengers.

To prevent the spread of the virus in our main expressways, the MVP Group is also rolling out contactless RFID payment in toll booths and in toll roads, including NLEX, CAVITEX and CALAX.

The PayMaya group is also promoting cashless transactions on its platform to ensure safety when customers pay or transfer their funds, protecting the health, safety and welfare of commuters, government and big and small businesses alike.

Maynilad has committed to provide continuous water supply for COVID-19 hospitals and centers, and also assured the immediate connection of water facilities to new mega quarantine facilities.

Maynilad will also put up contactless hand wash stations with liquid soap for more effective handwashing.

DoH Secretary Francisco Duque III also thanked the MVP Group for its contribution to the BIDA Solusyon campaign: “We want to thank the MVP Group for the substantial support they have been providing DoH in ramping up health system capacities; this is really crucial in the overall objective of the health sector in leading the effort to increase and enhance health system capacity.”

Secretary Duque called for continued synergy, unity and alignment among government agencies and the private sector, as well as a joint effort with the Filipino people to be COVID-19 warriors.

He emphasized that this is a fight of every Filipino, and that discipline is the most important value needed today, which must be ingrained to everyone.

The DoH head also highlighted how the BIDA Solusyon campaign is a very important and crucial behavior change campaign. The victory of the Philippines in this war against the pandemic rests on its success.

Manuel V. Pangilinan, MVP group’s chairman commented, “The gratitude is ours for giving us a chance to help the government and the people. We are privileged to be part of this initiative and be in the frontline in the battle against COVID-19.”

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Top tycoons star-crossed

While nearly 90 percent of his Jollibee eateries had reopened by the end of June, most were limited to delivery and takeout.

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The business world reeled under the coronavirus health crisis as fastfood giant, an engineering and construction conglomerate and a broadcasting network came out suffering the brunt of its effects.

Fast food billionaire Tony Tan Caktiong absorbed a pandemic-induced blow to his wealth this year, according to a Forbes’ review of the richest Filipinos this year.

“While nearly 90 percent of his Jollibee eateries had reopened by the end of June, most were limited to delivery and takeout. The lack of dine-in services cut sales by nearly half and sent Jollibee’s shares down more than 40 percent, dropping Tan Caktiong’s net worth by 37 percent to $1.9 billion,” Forbes noted.

Not too jolly prospect
In 2018, Tan Caktiong was quoted as saying he wanted Jollibee to be the world’s largest food company.

While the company operates more than 3,300 outlets in the Philippines and over 2,500 overseas — including US-based chains Smashburger and Coffee Bean & Tea Leaf —, 70 outlets overseas have to be shuttered.

At home Jollibee is also suffering big. “Lockdowns significantly affected the Philippine business where the bulk of revenues still come from dine-in sales,” says DBP-Daiwa Capital Markets analyst Renzo Candano in Manila.

“We have a lukewarm view on Jollibee and other consumer companies that are dependent on discretionary spending and nonessential foot traffic,” Fortune quoted Philippine National Bank research head Alvin Joseph Arogo.

Direct hit on Lopez empire
Top TV network ABS-CBN being taken off the air also eroded the fortune of the network’s 90-year-old owner Oscar Lopez as his net worth fell 48 percent to $240 million this year.

The House of Representatives failed to renew ABS-CBN’s 25-year free-to-air broadcast license. The network stopped broadcasting May 5, the day after its license expired, sending its shares down as much as 57 percent.

The Consunji siblings, Isidro, Jorge, Josefa, Luz, Maria Cristina and Maria Edwina, also faced a serious challenge during the contagion as the family’s DM Consunji Inc. (DMCI) was badly affected in its construction, mining, property development and power generation businesses.

In first half results to June, released in August, DMCI said net profit fell almost 70 percent to P2 billion as property earnings fell by 97 percent and earnings from mining by almost two-thirds.
DMCI’s share price has dropped more than 50 percent over the past 12 months, bringing the family fortune down 35 percent to $1.3 billion.

Isidro, who at 72 is DMCI’s chairman and CEO, said in an August stock exchange filing that DMCI was “severely affected” by low market prices.

“We expect weak demand and low selling prices to affect most of our businesses,” he said.

To offset losses, the company has cut capital expenditures, including land purchases, says a DMCI spokesperson.

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Sumitomo factory rising in Pangasinan

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A wiring facility which recently broke ground in Binalonan, Pangasinan will support the Philippines’ push for greater innovation in its industries, according to Department of Trade and Industry (DTI) Secretary Ramon Lopez.

The factory is the result of one of the 26 business agreements signed by Lopez during the visit of President Rodrigo Duterte to Tokyo, Japan in May 2019, when Lopez spearheaded trade promotion in Tokyo, bringing in agreements valued at P289 billion that would facilitate new job opportunities for 82,000 workers.

He said the Sumitomo Wiring Systems Ltd., a subsidiary of Sumitomo Electric project will be located in the Northluzon Aero Industrial Park (NAIP).

The event was led by Japanese executives of Sumitomo Wiring and local officials of Binalonan.

“Not only will the Sumitomo factory generate more jobs and employment for communities in the area, it will boost the development of our wiring industry to become part of the global value chain,” Lopez said.

The DTI chief said among the agreements was a letter of intent (LoI) signed by Sumitomo Electric Industries Ltd. president and COO Osamu Inoue to build a new factory for wiring harness and related products in Northern Luzon, for export to Japan and North America.

Following this, Sumitomo Wiring System had set up a new subsidiary last September 2019, its 9th in the Philippines.

Busy with roadshows
The company was registered under the Security and Exchange Commission with the name of Sumi North-Philippines Wiring Systems Corp.

“With the introduction by Sumitomo Wiring of its patented technologies in high voltage wire harness product manufacturing operations in the country, DTI’s push for innovation and technology-driven value-added production for local industry development in the Philippines has borne fruit,” Lopez said.

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