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PERIENCE FROM the corridors of the men in black suits at the stock market building in Ortigas to the old-fashioned retailers in the venerable business district of Binondo, our consummate team of business editors, writers and columnists deliver the most essential information in business and economy. Be it on land to talk about the current trends in property, or at sea to explore sources of energy, it’s business as usual for our journalists even in face of the most challenging task of news gathering. With years of experience under their belt, our business journalists have built their credibility and expertise and eventually earned high respect from the biggest names in the business community. It has been our paper’s credo for the last three decades to verify and confirm first before
putting out the story on print. We don’t exaggerate for we go for accuracy in facts and numbers. Numbers are king in our business page and we make sure to deal with these numbers and provide the most insightful analysis courtesy of our columnists. Critical business decisions are a big thing in our business section and we make sure our columnists will dissect those decisions with surgical precision. Thirty years and still going, we have not deviated a bit from what we have originally wanted to stand out for – a credible business page that helps drive a robust economy. As we continue our journey into the digital revolution, our business section is getting a facelift, stuffed with more engaging, visualrich content. Manila Standard Business will continue
to serve as a valuable connection between the business leaders and consumers, especially the growing millennial market even as
we opt to stay relevant and keep pace with the modern way of doing business—mobile, quick and easy and on the dot.
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Heading towards the light By Alena Mae S. Flores
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HE Philippines’ energy sector underwent a significant evolution from being purely state-owned into an investor-led industry in the past three decades.
Thirty years ago beset by hourlong brownouts that almost crippled the economy. Officials blamed the brownouts on the shutdown of the Bataan nuclear power plant amid safety concerns. With country on the brink of
economic collapse due to lack of power, the government rushed to sign power purchase agreement or PPAs with independent power producers. This was seen as the first wave of large power investments.
Topnotch Filipino & international acts come together this February at RWM BY AILEEN MARTIN
R
esorts World Manila (RWM) lines up a string of topnotch performances as it presents world-class Filipino and international shows at its award-winning Newport Performing Arts Theater (NPAT) this February. On February 10 at 8:00 p.m., Missouri tribute band The Golden Sounds of The Platters takes the stage for a night of the most beloved songs from the iconic American vocal group. The multi-awarded group consisting of premier singers Eddie Stovall Sr., Mose Edward Stovall Jr., Kim Leo Green, Frederick Berry, and Deneen Davis, will bring audiences back in time when songs such as Only You, Smoke Gets In Your Eyes, and The Great Pretender dominated the charts. After bringing their outstanding act all over
Europe and Asia, The Golden Sounds of The Platters joins MTV USA and Las Vegas number 1 Elvis Presley tribute artist Johnny “Elvis” Thompson onstage for the blast from the past concert. Thompson has likewise made the rounds in the worldwide entertainment circuit having performed in Las Vegas for 15 years before going on tour all over the world including countries such as the Dominican Republic, Mexico, China, France, Finland, and Belgium. Tickets to The Golden Sounds of The Platters with Johnny “ Elvis” Thomson are now available at the RWM Box Office and all TicketWorld outlets. Senior citizens and persons with disabilities get a 20% discount on ticket purchases. Meanwhile, three of the country’s top comedians join forces for one laugh-out-loud post Valentine show entitled
(L-R): EJK Director Joaquin Pedro Valdes with cast Kakai Bautista, Jon Santos and Rex Navarrete.
Legends live on through the Golden Sounds of The Platters and Johnny “Elvis” Thomson
Extra Judicial Kidding or EJK on February 15 at 8:00 p.m. Top funnyman and impersonator Jon Santos is set to reveal his latest personas onstage as he tackles the hottest topics in both the local and international fronts. Jon’s wit and spot-
on impersonations continue to endear him to audiences not to mention his witty anecdotes about the most serious issues of today. Joining Jon is versatile comedienne Kakai Bautista who has shown her flair in theater, television, film,
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and stand-up comedy. Her breakthrough performance as Mercy in the musical Rak of Aegis makes Kakai the newest powerhouse triple threat in local entertainment today. Completing the trio is veteran Filipino stand-up comedian Rex Navarrete who made waves with his Hella Pinoy peformance and his SBC Packers and Maritess versus the Superfriends. This time, Rex comes up with new material that is 100% Pinoy. Together, these hilarious heavyweights are sure to send audiences rolling on the floor laughing. EJK is presented by RWM in cooperation with Ultimate Shows, Inc., with writing by Rody Vera and direction by Joaquin Pedro Valdes. Tickets are now available at the RWM Box Office and all TicketWorld outlets. More world-class shows are slated at the NPAT this February including Gino Padilla and Juan Miguel Salvador in Tell It Like 80s on February 11 and Dan Hill & J. Michaels on Valentines Day, February 14. For more upcoming shows at RWM, visit www.rwmanila. com or call the Tourist/ Visitor Hotline at (632) 9088833 or TicketWorld at (632) 891-9999.
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DOE, PRIVATE SECTOR JOIN FORCES TO AUDIT COUNTRY’S POWER SYSTEM. The Department of Energy (DOE) signed a Memorandum of Agreement (MOA) with the Institute of Integrated Electrical Engineers
of the Philippines (IIEE) on 8 August 2016. The parties agreed to organize Task Forces consisting of DOE personnel and IIEE members that will conduct the technical audit of the generation, transmission and distribution facilities in the country. Present during the signing ceremony were (L-R) IIEE National President Larry C. Cruz and DOE Secretary Alfonso G. Cusi, along with Atty. Felix Wimpy Fuentebella, DOE Spokesperson; Mr. Ramon P. Ayaton, Executive Director; Engr. Rogelio M. Avenido, 1986 National President; Engr. Alex C. Cabugao, 2014 National President; Engr. Florigo C. Varona, VP for External Affairs; Pete L. Ilagan, DOE Spokesperson; Engr. Florencio D. Berenguel, National Auditor; Engr. Ariel P. Duran, Former Metro Manila Regional Governor; Engr. Hipolito A. Leoncio, 2008 National President; Atty. Gerardo D. Erguiza Jr.; Engr. Arwin L. Ardon, PNOC-RC President and Dir. Arthus T. Tenazas, DOE Legal Services.
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The government, learning from the lessons of the 1990s, saw that there was a need to implement significant reforms in the power sector. Thus the Electric Power Industry Reform Act of 2001 was born and heralded a new phase in the power industry. The EPIRA called for privatization of government assets which paved the way for the entry of billions of dollars worth of private sector investments. The Power Sector Assets and Liabilities Man-
agement Corp. was created under the EPIRA to manage the assets and liabilities of state-owned National Power Corp., whose debts have ballooned as a result of government subsidies. PSALM sold off Napocor’s assets, dissolving its monopoly in the industry and gave birth to new investor faces in the power industry. Proceeds from the privatization were used to pay for Napocor’s debts. The government also privatized the country’s transmission network, allowing for a more ef- SPOT TRADING. Higher electricity bills await despite the promise of cheaper power through WESM. ficient and more respon- (Screengrab from a WESM report.)
sive power grid. The EPIRA also created the Energy Regulatory Commission, giving it stronger powers as regulator of the power industry. It also created the Wholesale Electricity Spots Market or WESM, operated by the Philippine Electricity Market Corp. The WESM acts as the country’s trading floor of electricity. Other significant reforms of the EPIRA include the implementation of retail competition and open access or RCOA, which gives consumers the power to choose its Turn to F3 own supplier.
Congratulations
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The passage of the Renewable Energy Law in 2008 also ushered in more investments in the power sector. It gave incentives to the renewable energy players through the feed-in tariff scheme which provides for a fixed rate per technology source over a 20-year period. Today, the Philippines has a robust power sector but demand continues to grow thus there is a need for continuing investments to ensure longterm supply. The new administration is now bent on implementing pro-consumer reforms that would eventually bring down power rates. Downstream Oil Industry More than 30 years ago, the Philippines subsidized the downstream oil industry to shield consumers from the high oil prices due to the Oil Price Stabilization Fund. Faced with a depleting fund the lawmakers passed the Oil Deregulation Law of 1998, to avoid further losses. This saw the entry of new players in the oil industry. It also mandated oil refiners to lost their shares on the stock market.
The Bataan Nuclear Power Plant was built four decades ago at more than $2 billion but never used.
The passage of the law was meant to foster market competition and government from interfering at the same time preventing with pricing. In 2006, government recognized the need to pass a law that would reduce the country’s dependence on imported fuels while protecting public health and the environment. Diesel blended with
coco-methyl ester was introduced while gasoline was blended with ethanol. At present, the country is enjoying the fruits of a deregulated oil industry as market competition has made pump prices more transparent and reflective of world oil prices, while giving consumers the power of choice. Oil and gas exploration In 1990, Service Con-
tract 38 was signed. Two years later, the consortium found substantial gas and oil in the Malampaya structure in northwest Palawan. Like many other industries, the oil and gas exploration industry suffered during the 1997 financial crisis as there was less funding available. The Malampaya deepwater-to-power project commenced operations
in 2001, providing for 2,700 megawatts of additional capacity to the Luzon grid fueled by natural gas. There has been no significant petroleum discovery after the Malampaya gas project although the Galoc oil field—also in northwest Palawan— remains in production. The oil and gas industry’s growth is anchored largely on the movement
of world oil prices, As oil prices go up, more companies explore for oil and gas. Today, the search is on for the next Malampaya, but this has been hampered by the ongoing territorial dispute with China. There are high hopes for the Recto Bank under service contract 72, but the project remains under suspension pending a resolution of the dispute.
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Has 30 years of growth benefited Filipinos? cation of business process outsourcing companies in the country. Tourism, though strong, was not even enough to compensate for the lost values in agriculture and the disappearance of manufacturing. Economic managers—and the strong will to put in place bitter financial reforms (like the value added tax during Gloria MacapagalArroyo’s time)—also cushioned the impact of the Asian crisis on the economy. Were it not for the prudence on housing investments and the cap on loan exposures to the property sector, the country could have gone the way of Thailand and other Southeast Asian economies which tumbled when the (housing) bubble burst in the late nineties. Previous reforms beginning with the political reform initiated by Corazon Aquino—
By Rose de la Cruz
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NDISPUTABLY the Philippine economy has grown to enviable international reputability. Yet, the gap between the rich and poor has become more pronounced both in the rural and urban centers, making planners and various stakeholders question whether the growth has failed to impact the marginalized sectors of society. Since the oppressive Martial Law era was aborted with the exile of the dictator to Hawaii 30 years ago, the Philippines was reported to have transformed dramatically from the ‘sick man of Asia’ to one of the fastest growing economies in the region. From a very strong agricultural and industrial push during the Marcos years, the economy took a complete turn to services (both here and
abroad) and electronics manufacturing (for exports) to compensate for the revenues lost in agriculture (that now shifted to importing food products). What propelled the economy in recent years—despite the Asian financial crisis of 19971998 and the recent global recession—were domestic construction and consumer demand; a robust labor export (and remittances) plus the lo-
A tourist sunbathing on the fabled beach of Boracay.
Filipino call center personnel attending to US clients at a new business process outsourcing office in Manila.
THE DIRECTOR GENERAL’S MESSAGE We congratulate the Manila Standard on celebrating its 30th anniversary. Thirty years of consistently delivering journalistic distinction is an achievement certainly worth commemorating. And as you venture into a new decade focusing on providing news and information in the digital communication age, it is most comforting to know that your institution remains as a reliable source of quick, accurate and responsible reportage. The Civil Aviation Authority of the Philippines recognizes the need to embrace new technology for a more efficient service delivery. To further improve the timely arrival and departure of flights, we have already upgraded at least nineteen airports nationwide for night operations allowing airlines to launch additional flight schedules. With the improved air traffic system, CAAP has also cited a significant reduction in fuel burns and carbon emissions in compliance with its commitment towards providing “greener” and cleaner civil aviation operations. And with the introduction of new Communication, Navigation Surveillance/Air Traffic Management (CNS/ATM) system to be placed on line this year, 2017 is also a banner year for our organization.
from Marcos’ martial rule to a revolutionary government— plunged the country into literal darkness when, after closing down the Bataan nuclear plant no investment was made in the energy sector except to allow business to get into generator sets instead of real power systems. Fidel Ramos solved the power crisis by liberalizing the power sector and allowing new players to get in. He also tried to liberalize the telecommunications sector. He institutionalized the build operate transfer (BOT) scheme in areas where government could least afford to invest in.
When Arroyo took over, economic globalization (which she started as a senator with the entry of the country into the World Trade Organization and the trade liberalization era) forced industries to compete with foreign peers. During GMA’s term, the Asian crisis tested the grit of financial and structural reforms that her economic team put in place. Luckily, these reforms helped the Philippines weather those rough times. Benigno C. Aquino was lucky to inherit the positive effects of such economic growths arising from these reforms, which continued until after
his term—since he maintained the same economic team (led by Bangko Sentral Gov. Amando Tetangco Jr.) in steering the economy. His staunch advocacy against corruption attracted foreign investors in the country. Rodrigo Duterte’s first six months showed the growth tract being maintained but doubts are now being raised about its sustainability considering his ambivalent pronouncements and apparent distaste for an old ally, the U.S. and the country pivoting towards China (with whom it has a territorial spat in the West Philippine Sea) and Russia. Turn to F5
As CAAP and the Manila Standard continue to chart our respective courses into the digital age, we are confident that we will be steadfast in the resolve to always seek ways to enhance our capabilities to maintain safety, security, efficiency and regularity in our respective fields. Maraming salamat po at, mabuhay po tayong lahat!
CAPT. JIM C. SYNDIONGCO Director General
Overseas Filipino Workers from Libya wave inside a bus after they arrive at the Manila International Airport.
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Fragmentation Interestingly, a report on the “State of Fragmentation” published by Focus on the Global South and Friedrich Ebert Siftung in 2014 showed that the fixation (part of structural reforms imposed by multilateral funders) towards debt servicing and Aquino’s prudence in spending in infrastructure for fear of crowding out private investors proved fallacious and worsened the growth fallout. The Philippines continued to lag behind its dynamic neighbors in foreign investment inflows well into the recent Aquino period, despite positive commentary in the foreign press about the president’s
anti- corruption reforms. At $1 billion, foreign direct investment in 2012 was half its level in 2007 and was well below the $1.5 billion in remittances that flowed in every month, it added. This country is now one of the great labor exporters of the world with 11 percent of its total population and 22 percent of its working age population now migrant workers in other countries, remitting $20 billion a year. The Philippines ranks fourth as recipient of remittances after China, India and Mexico, it noted. Even as the Philippine lower classes have adapted to becoming a labor force for the world, the Philippine economic elites have transformed their sources of capital accumulation
Residents watch as a demolition team tries to persuade informal settlers to leave their homes and avoid violence.
from agriculture and manufacturing to urban real estate, made very profitable by demand coming from foreign investment and by the massive remittances to the families of migrant workers. Sadly, urban and rural centers
are thickly populated by informal settlers that have occupied roads, bridges and danger zones of the cities in search of the elusive greener pastures which they hardly feel in the provinces and remote coastal communities, de-
spite palliatives like conditional cash transfer and other pro-poor initiatives. Thus, the economic divide, though unmentioned in official pronouncements, continues to hound the economy.
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THE MEN AND WOMEN BEHIND MS
CENTRAL DESK. (From left) Boy Baustista, Bobby Cabrera, Adelle Chua, Joyce Pañares, Roderick dela Cruz, Rollie G. Estabillo (Publisher), Mon Tomeldan (Managing Editor), Chin Wong, Jimbo Gulle, Cesar Barrioquinto, Honor Cabie, Ray Eñano (Business Editor).
DIGITAL TEAM. (From left) Randy Caluag, Gianna Maniego, Annie Grefal (OIC Operations), Feriel Agustines, Sonny Alanguilan, Lea Basbas, Jun Buscas (OIC-Digital Head), Jeremiah Guance.
Harbour Centre Port Terminal Inc. Congratulates The Manila Standard for its 30 years of publication.
Progress
is no longer a dream. It has come to our doors. TREASURY GROUP. (From left) Renante Bravante, Mark Seño, Annie Grefal, Chito Torrejos, Phey Ortega, Robert Puno (Cashier).
We work to propel our clients' business to greater heights. Sound business advantage starts here making industries flourish. We serve at our best to help the country move forward.
The Gateway to Progress Manila Harbour Centre R-10 Vitas, Tondo, Manila, Philippines 1013 Tel. No. (02) 516-7888 www.harbourcentre.com.ph
TREASURY. Laurenz Araullo, Alfie Payumo.
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ADVERTISING DEPARTMENT. (Standing, from left) Annaflor Guzman, Aaron Tolosa, Baldwin Felipe (OIC-Ad Sales), Edelyn Elamparo, Eric Jutic, Albert Legaspi, Gianna Maniego (Supplements Editor) Joan Velasco. (Seated, from left) Edith Angeles, Ching Onella, Paula Reynoso (Supplements Manager), Annie Grefal, Sheila Suarez (Deskman)
LIFESTYLE AND ENTERTAINMENT SECTION. (From left)
Bernadette Lunas, Isah Red (OIC-Editor), Nikki Wang.
EDITORIAL STAFF. (From left) Josie de Vera, Rey Cabiling, Judy May
Parcotilo.
KAGITINGAN PRINTING PRESS. (From left) Reynaldo Belarmino, Joselito Delos Reyes, James Segovia, Rackly Dazo, Billy Empeño, Randy Lumacang (Production Superintendent), Arnold Edradan, Roberto Elle, Benito Beron and Limuel Samosino.
Production Staff
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LAYOUT SECTION. (From left) Linda Apalisok, Alice Estrella, Vicky Ayeng, Romel Mendez (Art Director), Jove Atienza (Layout Supervisor), Rex Sardiña.
CIRCULATION DEPARTMENT.
(Seated) Edgar Valmorida (Circulation Manager). (Standing from left) Bryan Briones, Reggie Laurenciana, Precious Atriginio, Manuel Bungay, Krisna Zurbano, Elvin Clarete, Girlie Zabala, Ferdinand Cubinar
FINANCE DEPARTMENT. (From left) Annie Rose Lucero, Mario Policarcpio, William Valerio, Joy
Pacete.
This artwork was the winning piece in the Elementary Category of the Philex 60th Anniversary Poster-Making Contest held in Padcal, Benguet. It was rendered by Devon Paleng, a 9-year-old Grade 4 student of Lab-ang Community School, Brgy. Ampucao, Itogon, Benguet. In explaining his artwork along the contest theme “Marching on with a Humanized Responsible Mining”, Devon said that he “just illustrated my understanding of Philex as a responsible miner that has helped us build classrooms, a church, and roads.” He added, “Philex Mining has also been taking care of our mountains by planting various tree species. I think and feel that we, at Lab-ang, are part of the Philex community.”
SPORTS DEPARTMENT. (From left) Randy Caluag, Reuel Vidal, Peter Atencio, Riera Mallari (Sports Editor), Arman Armera.
PHILEX MINING CORPORATION
More than just Responsible Mining 1/4 Page Ad [5col.x24cm.] new.indd 1
31/01/2017 5:47 PM
HR & ADMIN. (From left) Mara Krista Borja, June Dulay, Roy Dumalag, Reah Pacheco, Susan
Laguna.
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The Philippine Stock Exchange:
One hell of a rollercoaster ride
By Jenniffer B. Austria
T
he Philippine Stock Exchange Index, a major stock market index which tracks the performance of the most representative companies listed on Philippine Stock Exchange has come along way from 1987 to 2017.
Brisk trading on the floor
After becoming one of the best performing stocks market in the world after the 1986 Edsa Revolution, the Philippine stock market’s run was halted by a series of military coup attempts. What follows is a series of ups and downs due to developments both here and abroad. Despite the market’s volatility the stock market has remained strong. Over this 33-year period of 1983 to 2015, the Philippine stock market had a compounded annual growth rate of 12.37 percent. Unification and demutualization The PSE traces its roots to 1927 when a group of American and Filipino businessmen formed the Manila Stock Exchange in the financial district of Binondo. In 1963, a second bourse, the Makati Stock Exchange was established in the newly developed financial area in Makati.
But in early 1990s, investor saw the unification of two exchanges to form the Philippine Stock Then in early 2000, investors saw the demutualisation of the PSE, transforming the local bourse into a publicly-held corporation with diverse ownership governed by a majority of brokers and non-brokers. The demutualisation aimed to eliminate the perception that the Exchange is an “old boys club”, to broaden ownership base, professionalize management and to improve corporate governance. And while these changes are happening with the PSE, the stock market during the past two decades saw the market’s steep rise and steep decline. How could forget the 1997 Asian financial crisis which severely affected every nation in the region as Asian stocks and currencies all dropped by more than 50
Philippine Stock Exhange Building along Ayala Avenue.
percent. Many companies that have aggressively borrowed US dollars to finance their expansion plans found themselves in default as the rapid depreciation of the peso against the dollar has made it very difficult for them to pay their dollar debts. And just about when com-
panies were slowly recovering from the Asian financial turmoil, another crisis hit global markets including the Philippines. The financial crisis of 2007– 2008, also known as the global financial crisis, is considered by many economists to have been the worst financial crisis since the Great Depression of the 1930.
Prospects for the stock market
BDO Unibank, Inc. (BDO) concluded its 1:5.095 stock rights offering with a bell ringing ceremony at the Philippine Stock Exchange on Tuesday, January 31, 2017. BDO raised P60 billion from the capital raising activity. Present from left are: PSE COO Roel A. Refran, PSE Director Alejandro T. Yu; SM Investments Corporation President Harley T. Sy; BDO President and CEO Nestor V. Tan; BDO Chairperson Teresita T. Sy; PSE Chairman Jose T. Pardo; PSE President and CEO Hans B. Sicat; PSE Directors Ma. Vivian Yuchengco and Eddie Gobing; PSE Treasurer Omelita J. Tiangco and BDO Capital & Investment Corp. President Eduardo V. Francisco.
OUTLOOK for the stock market over the near to medium term period remains positive as the domestic economy is looking to sustain its upward momentum. Analysts are expecting the economy to continue to grow at its current pace as sustained by continued inflow of dollar remittances from overseas filipinos, the strength of the business process outsourcing industry as well as improving infrastructure and expected influx of tourists in the country. At the same time the local bourse has undertake steps to improve liquidity in the market by offering new products that will encourage local investors to participate in the market and lure companies to list with the PSE. For this year, the PSE is looking to introduce three new products, namely the dollar-denominated trading, the PPP listing, and Personal Equity and Retirement Account (PERA). With the DDT companies will be given opportunity to raise capital at the exchange without incurring foreign exchange risks. At the same time, the
product can also minimize the currency risk exposure of foreign investors who trade PSE-listed securities. Sicat believes that there is demand both from issuer perspective and from a funding perspective for this type of product. Fruit canner Del Monte Pacific Limited earlier raised its intent to issue the first DDS in the first quarter. For the PPP listing, PSE is giving companies that will be able to bag major infrastructure projects of the national government to raise funds through the stock market. However there are several requirements, that the local bourse has before an applicant may qualify for listing. For instance an applicant company may qualify for listing if it has been awarded a contract under the PPP scheme of the government with project cost of not less than P5 billion. At the same time an applicant company should first complete a phase of the project before it can apply for a PPP listing to protect investors from risks arising from
It was on October 27, 2008 when the PSEi registered its biggest one day loss of -12.27 percent. But it was after the global markets started to bottomed out in 2009, that emerging markets like the Philippines benefitted from the strong inflow of foreign funds. Many foreign investors shifted
delays in the PPP processes. A company or concessionaire may raise funds from the capital market only when it is already realizing cash flow and revenues. So far major conglomerates, like Ayala Corp., Metro Pacific Investments Corp. and San Miguel Corp., have won major PPP projects that the government has bid out. For the recently, enacted PERA Law, the PSE is now working closely with the SEC to widen the “investible product list,” which details the allowable investments or security products where PERA account holders may invest in. PSE chief operating office Roel Refran said the 30-company Philippine Stock Exchange Index will make a good batch of investible products for the voluntary retirement fund Under Republic Act No. 9505, PERA is a voluntary saving scheme that serves as an individual’s fund pool that can also have 5 percent tax breaks aside from the investments made from the account. For instance an employee may place as much as P100,000 a year in five PERA accounts at once. The cap in higher at P200,000 for overseas Filipino workers. The account holder can then enjoy
their investments in emerging markets while economies of developed countries are still implementing measures to get their economies back on track. Because of strong foreign inflow coupled to the domestic economy’s sustained growth, the PSEi notched an all-time high of 8,127.48 on April 10, 2015.
a 5mpercent tax credit that can be deducted in his or her annual tax liabilities. The contributions will then be invested in various investors products such as trust funds, mutual funds, insurance, pre-need, government bonds and listed equities. With these program, PSE is hoping the more investors will be encourage to invest in the stock market and at the same time improve the liquidity in the market. As of end 2016, the size of the Philippine stock market in terms of market capitalisation stood at P14.44 trillion while daily average value turnover for the year came in at P7.81 billion.
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LEVELING UP TO GLOBAL STANDARDS:
THE RISE
OF FILIPINO FRANCHISERS
By Othel V. Campos
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S MORE Filipino brands go global, local franchisers started leveling-up homegrown concepts for established brands, emerging concepts, franchise brands from the regions and Philippine franchise brands which are already operating in international markets or are ready to go international.
Philippine Franchise Association chairman Emeritus Sammy Lim said Filipino global franchise brands are proof that the Philippines has the potentil to cultivate more world-class brands. For example, among the Filipino brands that are now global is Max’s Group Inc. Max’s in 2016 had openings in Qatar, Yellow Cab in United Arab Emirates and soon in China. Plans are also underway to open five Pancake House restaurants in Qatar. The same can be said for its other franchises like Goldilocks, which has more than a dozen stores in US and Canada; Bibingkinitan, which recent-
ly opened in Dubai; Potato Corner, which is present not only in Asian markets like Indonesia but is also doing exceptionally well in the US, the birthplace of French fries. Also gaining international foothold are Oryspa, which started franchising in 2011 but already has stores in Singapore; and Figaro, whose growing global footprint include the Middle East and Oceania; and many more. The group is urging Philippine franchises to explore overseas expansion opportunities because of the benefits it will bring to the country’s export earnings.
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Sari-sari stores, or small variety outlets, can be found in almost all neighborhoods in the Philippines.
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Most of the local franchises have started as micro, small and medium enterprises (MSMEs). MSMEs’ comprise about 99 percent of businesses in the Philippines. “We have always been committed to do our part in empowering MSMEs,” said PFA president Alan Escalona. “In fact, the reason why Philippine franchising continues to grow robustly is because of PFA’s programs to grow MSMEs via franchising.” When PFA was founded in 1995, there were only about 50 franchises in the Philippines and most of these were foreign brands. But wanting to promote franchising as a tool for economic development and nationbuilding, PFA introduced franchising as a strategy for growth for MSMEs. Furthermore, it also positioned franchising as a more secure alternative to becoming an entrepreneur. “That is why, there is now an estimated 1,500 franchises in the Philippines creating about 140,000 franchise outlets and employing more than a million Filipinos,” Escalona said. Because of PFA’s thrust to promote franchising to MSMEs franchising became a powerful tool in creating thousands of businesses and millions of jobs, which is the mission of PFA. A key partner is PFA’s efforts to promote franchising as an enabling agent for MSMEs and for regionbased businesses is teh Trade Department. In fact, PFA has long partnered with the Trade Department in holding capacity-building and opportunity-creating franchise seminars in the regions through various Negosyo Centers and
the SME Roving Academy. The Department is also a keypartner in the Association’s regional franchise shows, which are organized to bring the benefits of franchising – as a tool to create businesses and jobs – in the regional areas. On a related note, PFA is firming up a partnership agreement with the Trade Department’s Bureau of Domestic Trade Promotion (BDTP) to help promote inclusive value chain by tapping on the beneficiaries of the said agency as potential suppliers for Philippine franchises. “This is all part of PFA’s commitment to promote franchising as an agent for inclusive growth,” said Escalona.
Global franchises swarm into Philippine retail market
On the local front, as much as 150 new international brands are seeking entry into the very versatile Philippine consumer market.. Some of the international brands that are interested to come in are Lawry’s Steakhouse, an American food chain, several pet and pet grooming companies. Lim said about Korean companies have also expressed interest to join the local competition with the intention to introduce a new take on Korean food. “A few of them have expressed interest to set up a new dining experience known as Korean Plaza. We notice that they’ve been introducing new concepts starting with the telenovelas, to music and fashion. And now they’re seriously marketing Korean food,” he said. Locally, the group noticed that very recently, there has been an increasing popularity of service franchising such as that of funeral homes, drug rehabilitation centers
and drug testing. At least two funeral homes have approached FPA for inquiries on franchising and several drug testing and drug rehabilitation centers. With the prospect of new brands coming in, the group is positive revenues of the entire franchising sector will increase 15 percent in 2016 and continue the trend for a 20 percent revenue hike in 2017. The group has had good years of combined inflows particularly in 2014 with $12 billion industry-wide revenues, as reported by about 1,500 to 2,000 brands. “We intend to strengthen the role of franchising as a tool for economic development and nation-building by building the capacities of the Philippine franchising sector to face the challenges of hyper-competition. With Mindanao now in the loop, it will be easier for us to target 30 percent growth in the next two years. We’ve visited Davao and our next stop is Cagayan de Oro,” Lim said.
Tax reforms benefit retailers and franchisers
Micro and small entreprises are bound to benefit from two measures that seek to make tax processes easier to understand and complied with micro and small entrepreners. FPA official Richard Sanz said the proposed measures will help small entreprenuers focus on their business more by eliminating repetitive and cumbersome processes. “Each franchise is a micro or small entreprise. The tax reform act will greatly enhance the competitiveness of these micro and small industries if they can spend more time developing their own businesses,” he said. The start-up act and the small business tax reform act filed by
Homegrown bakeshop and restaurant Goldilocks has more than a dozen stores in US and Canada.
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Many Korean products have entered the Philippine market
As much as 150 new international brands are seeking entry into our country’s versatile market.
Local and imported goods sold in Divisoria
Korean companies have expressed interest to set up a new dining experience called Korean Plaza.
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Max’s Group Inc. is now a global brand with presence in many countries across the globe.
A wide variety of apparel sold at a local bazaar
Consumers flock to bazaars
The rise... From F10 Senator Bam Aquino will ensure that micro and small businesses will get the boost and support tney need from the government. In aid of trade and entreprenuership, Aquino had authored and delivered several bills that are now shaping the country’s trade and investment regime. These include the Youth Entreprenuership and Financial Literacy Act, Microfinance NGOs Act, Credit Surety Fund Cooperative Act, Amendments to the Cabotage Policy, the Philippine Competition Act and the Go Negosyo Act. Sanz stressed the importance of supporting micro and small enterprises since these sector make up the backbone of Philipline economy, comprising about 98 percent of domestic business. PFA the biggest group of franchisers in the Phililpines, expects about 15 percent growth within the sector. The group sees growth projections doubling in 2017 to as much as 30 percent, owing to a robust economy and a stable retail sector. “Many Filipinos are getting educated with international brands. As the level of expectation grows, so does aspiration. Local brands are now forced to level up with international brands. It is nice to see competition doing its share to grow the economy,” he said. The franchise sector contributes an average of $12 billion yearly to Philippine economy or about 5 percent of the country’s GDP.
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Screencap of the new homepage of ManilaStandard.net
THE JOURNEY:
The story of ManilaStandard.net
W
HEN Globe announced that it had become more than just a telecom company and had now transformed itself into a full-blown entertainment media company, it was just being smart. No pun intended.
The world’s needs and wants are constantly changing in this age of digital evolution. Everybody in the industry has to ride the bandwagon and stay relevant with the fast-changing times. Turn to F14
Mondelez International augments school-based feeding program
METRO MANILA, Philippines.— As part of its commitment to protect the well-being of people through the promotion of healthy lifestyles and proper nutrition, Mondeléz International continues to support the school-based feeding programs by providing a whole array of kitchen utensils, including extra-large pots and pans to its adopted Joy Schools in the Philippines. Joy Schools is the social responsibility program of Mondeléz International in the Philippines, Malaysia, Indonesia and Thailand that is focused on nutrition and well-being. Implemented in the Philippines through the Philippine Business for Social
Progress, the Joy Schools program provides in-school feeding for 400 severely undernourished elementary students for the entire school year, as well as initiatives that help promote nutrition education and active play in its adopted public schools— Nangka Elementary School in Marikina, La Huerta Elementary School in Parañaque, Esteban Abada Elementary School in Quezon City and the Panalaron Central Elementary School in Tacloban City. Local officials of Parañaque City, led by Mayor Edwin Olivarez, Representative Eric Olivarez (1st and 2nd from left, respectively) and
Councilor Wahoo Sotto (right) join Mondeléz International representatives in the Philippines, led by Corporate and Government Affairs Head Shanahan Chua (2nd from right), in turning-over cooking utensils to the La Huerta Elementary School to help prepare meals for its daily supplemental feeding of its severely undernourished students. Since it was launched in 2013, Joy Schools has benefitted over 16,000 school children in nine adopted Joy Schools in ParaÒaque, Muntinlupa, Pasay, Manila, Pateros, Quezon City, Marikina and Tacloban City, with 85% of them showing improved nutritional status.
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ManilaStandard.net’s Opinion page
The Journey... From F12
Congratulations
to Manila standard on your
30th
anniversary
For 30 years, the Manila Standard has been providing its loyal readers with excellent news about national issues and international events, especially with thought-provoking pieces dished out by its award-winning opinion threaders. To keep up with the fast-paced digital landscape, the Manila Standard is now poised to embark on an ambitious and exciting journey that will fetch the millennials all the way up to the future generations, beginning with the launch of the new face and features of its digital platform—the manilastandard.net. When Manila Standard publisher Rollie Estabillo prodded everyone in the newsroom to “digitalize” their minds in an editorial meeting one afternoon, everyone, including the news and section editors, contributed to the contents planning and new design of the website. They worked and agreed on making sure of its user-friendly features even to loyal readers who have followed the Manila Standard through the years. Interesting stories for particular subjects are now easier to navigate and read. In accommodating the millen-
nials, who will become the more influential segment a few years from now, the manilastandard. net came up with a new look that is simple yet pleasing to the eyes. Although this is not of prime importance. We had to pay attention to aesthetics. After all, who wouldn’t go for beauty?
Digital Collaboration
In this age of powerful social media, everyone has become capable of playing the role of a “reporter”, able to dish out a story that could fetch viewers from thousands to millions of people. In this day and age, everybody has the opportunity to grab a piece of the action through the powerful social media. Enjoying more power and influence in just one click, people online can actively participate in just about any trending topic. Comments and reactions are the highlight features of the social media that almost everyone turns into an instant expert.
Digital collaboration is the operative word
One of the new features is the new category, COMMUTER’S CORNER, under the WHEELS & MORE section. This corner aims to protect and empower, not just car own-
ers, but the millions of commuters as well. This is a platform where they could be heard and take action. They can air their complaints against an erring driver or traffic enforcer or post something that aims to praise a particular driver for his good deeds to passenger. More than just publishing the post, COMMUTER’S CORNER is bringing it to the next level. It will also collaborate with volunteer groups, like the Lawyers for Commuters group and various government agencies like the Land Transportation Office, Metro Manila Development Authority and the Philippine National Police to work on some cases brought to the attention of this corner. It will also lead a campaign to honor honest public utility vehicle (PUV) drivers in a yearly awards ceremonies. To cite an instance when a simple post by a commuter could make a great difference, last year’s Viral Photo awarded by CBCP was of a passenger’s picture of a taxi driver he rode in who refused to receive a tip. The honest taxi driver insisted on giving the passenger the exact change. This story of a rare breed of taxi drivers, especially in Metro Manila, fetched millions of
viewers on the net.
Colorful contents and videos
When Forrest Gump, said “Mama always said life is like a box of chocolates. You never know what you’re gonna get,” he must have been talking about the digital highway. Who would have thought that time would come when hailing a taxicab is just as simple as touching either a digital application like Grab or Uber on smart phones? Coming very soon is Google’s digital travel service where its “client tourist” can travel around the world without actually leaving home. At the tap of a finger, one can fly over the skyscrapers of Manhattan or enjoy a 360-panoramic view of the majestic pyramids of Egypt using VR technology. We are not going to that extent...yet. But we’re investing in some things so simple yet powerful like infographics and videos. Digital publishing has arrived and is, at a point when it could rival what a television broadcast could offer. No need for a very expensive satellite dish to have a global broadcast. All we need is to click LIVE Turn to F15
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Samples of what ManilaStandard.net has in store
The Journey... From F14
been keeping interesting collections which can be good conversation pieces.
on Mark Zuckerberg’s Facebook and voila, you now have the world as your digital audience. Publishing companies or anybody with access to Facebook Live, can now broadcast an important event live to worldwide audience. Taking advantage of the video capability, the manilastandard.net will produce its own news videos and segments like STANDARD TALK and the RIDE & PICK. In STANDARD TALK, Manila Standard’s news editors will invite newsmakers and celebrities for a roundtable talk that will be broadcast live on Facebook. Questions can be posted by viewers on the Facebook page and may get instant answers. Other pertinent information missed by viewers will be posted on the website. RIDE & PICK is a travelogue with a touch of history. Hosts will go on road trips to look for people or celebrities who have
When Manila Standard treasury manager and OIC Annie Grefal and Estabillo held serious talks about going full blast on the digital platform, it signaled an idea whose time has come. There was actually no need to start from scratch as the digital platform has been there all along like a battery of long-range missiles waiting to be aimed to a particular target. Digital department head Jun Buscas spent weeks of constant nagging and coordinating with Leen Technologies and reorganizing the designs of the site, making sure all the technical features sought by the editors are present in the new website—symmetrical, colorful videos and graphics-laden. The product is finally out, but there is more work to be done. From the most critical issues to the less serious stuff, the digital journey ahead offers unbounded possibilities.
New and exciting prospects
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