Business
B3
TUESDAY, JULY 18, 2017 extrastory2000@gmail.com
PLDT Capital planning new investment deals By Darwin G. Amojelar
CMAP INDUCTION. Bangko Sentral ng Pilipinas Governor Nestor Espenilla Jr. (left) inducts the new officers of the Credit Management Association
of the Philippines led by president Luis Arriola (second from left), president of St. Jude Media Organization Inc., at Fairmont Hotel at Makati City. Other officers are (from left) Jun Bacabac of Orix Leasing, Lhen Maneja of Puregold Finance Inc.; Tina Maullon of Directories Philippines Corp.; Efren Collado of Maybank Philippines Inc.; Jennifer Tan of Neltex; Melinda Alvarez of Phinma Property Holdings Corp.; Jezreel Pimentel of China Bank Savings Inc.; Ayette de Leon of Bahay Financial Services; and Gilbert Benedict of Unicapital.
THE investment arm of PLDT Inc. is looking at more investment deals next year to expand its portfolio. PLDT chairman and president Manuel Pangilinan said the mother firm would revisit the portfolio of PLDT Capital next year. Pangilinan said he expects some acquisition for PLDT Capital by next year. “It’s not big (acquisition), some interesting opportunities,” he added. PLDT Capital was formed in 2015 with an initial budget $50 million to support PLDT business units, which include Smart, ePLDT, Digital5 and Voyager to expand their portfolio of digital services in the Philippines, the rest of Southeast Asia and other developing economies in the world.
PLDT Capital is an important pillar for the PLDT Group to sustain its digital pivot. Last year, PLDT Capital invested $5 million in Matrixx Software, a California-based provider of real-time, integrated infrastructure for the business of digital service providers. Matrixx provides a real-time digital commerce platform for creating and monetizing content and services. In 2015,PLDT Capital invested $10 million in Phunware, a US-based mobile devices and application company; $5 million in Singapore’s Paywhere; and $5 million in AppCard. PLDT, partly owned by Hong Kong’s First Pacific Co. Ltd. and Japan’s NTT group, earlier reported a net income of P4.95 billion in January to March, down 20 percent from P6.21 billon in the same period last year.
Peso drops to new low of 50.70:$1 $379 million Friday. Bangko Sentral ng Pilipinas Governor Nestor Espenilla Jr. HE peso fell to a fresh low against the earlier said he was not alarmed greenback Monday, its weakest level since by the latest movement of the peso against the US dollar, more than 10 years ago. saying its weakness is “not The peso lost five centavos since the 50.755 average on Sept. unusual.” to close at 50.70 from 50.65 on 4, 2006. Total volume traded “It’s actually just reflecting Friday. It was its weakest level reached $256 million, down from market conditions and underlying fundamentals. We’ve seen nothing particularly unusual about this, it’s the nature of the exchange rate to fluctuate,” he said at the sidelines of an event at Bangko Sentral. He said the Bangko Sentral would let the exchange rate reflect underlying market THERE is a word so antiquated and conditions. so out of favor that I thought I would “What we look at isn’t much not have much exposure to it during the exchange rate but the the rest of my life. That word is
By Julito G. Rada
T
Donald Trump, 21st century mercantilist
mercantilism. And there is a word so much in favor and so prominent in the present world that I find myself confronted by it at almost every turn. That word is globalization. Mercantilist theory is all about what economists call the balance of trade. A country that practices mercantilism is focused on exporting more goods and services to other countries than it imports from them and employs all the tools at its disposal—economic as well as political— to achieve a surplus in that two-way traffic. Diplomacy as well as such economic means as biased tariffs, skewed incentives and currency manipulation are deployed to ensure a positive trade balance. In contrast, globalization theory rests on the principle that the operations of producers are optimized, and the welfare of consumers is maximized, when the world economic environment is a level playing field and world trade is conducted with minimal restraint. This is the exact opposite of the protect-our-producers, beggar-our-neighbor environment fostered by mercantilism. With the spirit of globalization guiding world trade, the producers of all nations fiercely compete with one another, in the process giving rise to efficiencies that translate into declining consumer prices and stable living conditions for people all over the world. Since its early days as a British colony the US has been a staunch practitioner of good old-fashioned trading, trying to sell to the world market at least as much of its products as it bought from it. Records show that since its early years the young North American republic maintained trade relations not only with the Western Hemisphere and European countries of Africa and the Asia-Pacific region, including Japan after the opening up of that country to the world in the 1850s. Realizing that trade disputes had been one of the principal causes of the wars between the European Powers in the 18th, 19th and 20th centuries, the now-powerful US made the maintenance of order and stability in world trade—no more tariff wars, no more trade embargoes—one of the cornerstones of its post-World War II international agenda. At the Bretton Woods conference that set up the United Nations system the US proposed the establishment of three international institutions: an International Monetary Fund (IMF) to function as a central bank of central banks, an International Bank for Reconstruction and Development (IBRD, or World Bank) to provide the underdeveloped countries with long-term financing for economic development and a World Trade Organization (WTO) to regulate and police world trade. The proposals to create the IMF and the World Bank were universally accepted, but certain provisions of the General Agreement on Tariffs and Trade (GATT) were objected to by some of the major powers. As a stopgap solution, a world trade organization was brought into being but bearing the name GATT and not WTO. Only in the 1990s did the UN General Assembly agree to replace GATT with WTO. All the efforts that the US has exerted during the last seven decades to prevent a reversion to the bad trade practices of the pre-World War II era are currently under threat from the policies and actions of the administration of newly elected President Donald J. Trump. These policies and actions have turned the world’s most powerful country from being the poster-boy of globalization to its leading purveyor of mercantilism. During the Presidential campaign Mr. Trump made so secret of what he called “trade deals that are bad for America.” He set his sights on two of the most important regional trade groupings in world history: the Trans-Pacific Partnership (TPP) involving around a dozen countries in the Asia-Pacific area and NAFTA (North American Free Trade Area), which comprises Canada, Mexico and the US. True to his word, upon entering the White House Donald Trump issued an executive order withdrawing the US from TPT and announced his administration’s intention to seek a renegotiation of NAFTA’s terms. The NAFTA renegotiation has yet to start. Labeling those two countries “unfair” traders, Mr. Trump has denounced China and Germany for running trade surpluses with the US—selling more to the US than buying from the US—and thereby “taking jobs away from American workers.” He declared that those counties achieved their surpluses with the US through unfair trade practices: currency manipulation, in the case of China, and aggressive marketing in the case of Germany. Germany has protested the accusation, and Mr. Trump lately has had to withdraw his currency-manipulation charge against the Chinese. Clearly, when it comes to international economic relations—as with international relations generally—Mr. Trump is in over his head. He needs a crash International Trade 101 course, from which he will learn that the US was one of the prime movers for the establishment of WTO and is one of its principal supporters and enforcers. Hopefully the US will change its trade course as a result. In the meantime, say hello to Donald J. Trump, 21st century mercantilist. E-mail: rudy.romero@gmail.com
underlying conditions. Today, the underlying conditions are quite healthy, as a result prices reflect those condition... Our focus is keeping inflation low and banking system strong. These are still existing today,” Espenilla said. He said volatility continued to exist because of policy uncertainties and political tensions and it was “very difficult to say what’s affecting it on a daily basis.” University of Asia & the Pacific economist Victor Abola last week said the weakness of the peso could also be traced to the expected stronger imports in the third quarter which is further putting pressure on the local currency.
Earlier, Business Monitor International, a unit of Fitch Group, said the peso might close the year at 50.50 to a greenback, a downward revision of its previous estimate of 50.00. It said the fragile political outlook in the Philippines and the expected additional rate hikes by the US Federal Reserve would put more pressure on the local currency. He said also weighing down on the peso was the Trump administration’s threat to go ahead with more protectionist policies, which could negatively affect the Philippine economy and its external position. BMI considered the Philippine peso one of the worst-performing currencies in Asia year-to-date,
having broken support at around 50 against the dollar in mid-June. But it said while there was scope for further spot weakness over the coming months given rising real rates in developed markets, the peso was not expected to weaken excessively. The peso closed at 49.72 to a dollar on the last trading day of 2016. The Cabinetlevel Development Budget Coordination Committee just recently kept the peso-dollar exchange rate this year at 48 to 50, although admitting that global economic and political developments have been affecting the trend in emerging market currencies, including the peso.
Vista Land pegs rates of P5-b bonds Ayala to offer P5b more in notes HOUSE and lot developer Vista Land and Lifescapes Inc. has set the coupon rates for its sevenyear and 10-year bond offerings worth P5 billion. Vista Land said in a disclosure to the stock exchange the sevenyear bonds due will carry an interest rate of 5.7512 percent a year, while 10-year bonds due 2007 will have an interest rate of 6.2255 annually. The offering period will start from July 18 to July 27, with the issue date set on August 4. Credit Rating and Investors Services Philippines Inc. (“CRISP”) has rated the bonds AAA, the highest rating its assigned.
The bonds, which have a principal amount of P3 billion with an oversubscription option of up to P2 billion, will be the first tranche to be issued out of the P20-billion bond shelf registration of the company approved by the Securities and Exchange Commission. Vista Land plans to use proceeds from the initial tranche to finance the company’s planned commercial developments, including the completion of the Evia Lifestyle Center in Daang Hari, Las Piñas and the development and of Vistamall Malolos in Bulacan. The property firm has tapped Chinabank Capital as issue
manager and underwriter for the fund raising activity. The bonds will be listed at Philippine Dealing & Exchange Corp. Vista Land is one of the leading integrated property developers in the Philippines and the largest homebuilder in the country. It provides a wide range of residential products to customers across all income segments, and has recently expanded into the mass market retail mall and BPO segments through the acquisition of Starmalls. Vista Land since starting operations in 1977 has built over 300,000 homes. Jenniffer B. Austria
CHILE TRADE. Ambassador Jose Miguel Capdevila of Chile (center) makes a courtesy call on George Barcelon, president of the Philippine Chamber of Commerce and Industry (right), to discuss how a free trade agreement will improve trade value and volumes between the Philippines and Chile. Jesus Varela (left), chairman of the PCCI intellectual property rights committee, joins Barcelon in welcoming Ambassador Capdevila.
By Jenniffer B. Austria PROPERTY giant Ayala Land Inc. plans to raise another P3 billion to P5 billion in short dated-debts after successfully generating P4.3 billion from the issuance of the pioneering short term financial instrument. Ayala Land chief finance officer Augusto Bengzon said in an interview at the sidelines of the listing of P4.3 billion worth of short-dated notes due 2019 the company planned to issue similar offerings as early as next month. Bengzon noted a strong take-up of Ayala Land’s notes offering, the first short-dated securities to be listed or enrolled under Philippine Dealing and Exchange Corp.’s Qualified Buyers (QB) Board. Bengzon said the company because of the strong demand instructed underwriters to come up with a follow-up offering to be issued as early as next month, with the size ranging from P3 billion to P5 billion. “This is actually more costeffective. It’s longer at 21 months versus commercial papers. The coupon is 2.75 percent versus short term loans of anywhere between 2.6 to 3.25 percent. I believe the cheapest short term loans are in the vicinity of 6 percent if you do a survey of all the banks. So Ayala Land gets very preferential short term rates, but this one is even more preferential, given that it’s quite cheap,” Bengzon said.
Energy commits to roll out 3,000 e-trikes this year By Alena Mae S. Flores THE Energy Department has committed to roll out 3,000 units of electric tricycles within the year as it finalizes changes in the loan agreement with the Asian Development Bank. Energy Department director Patrick Aquino said the agency planned to come out with amendments to the ADB loan to finance the electric tricycle program, which was scaled down to P1.73
billion from the original project cost of P21.672 billion. “We’ve rebranded it, it’s now the tricycle modernization program to align it with the overall transport modernization program of government. We are already in the advanced stages for the amendment of the loan agreement,” Aquino said. The ADB loan, which sought to roll out 100,000 e-trikes, falls under the agency’s Market Transformation through Introduction of Energy-Efficient
Electric Vehicles Project. “Major change (in the ADB loan agreement) is to open it up to other channels for distribution. We’ve come out with a business model wherein we separated physical unit from the charging infra and the battery, which we feel is a viable model for duplication and sustainability,” the official said. He said the Finance and Energy departments and the ADB planned to have the amendments in place before the end of July and complete
rollout of units within the year. “The (local government unit) guarantee, we’ve worked to have a language that softens it to be more in line with what you’re seeing in the PUJ modernization program of the (Department of Transportation) wherein we offer low financing, no cash out, no down payment,” Aquino said. He said the department also strengthened or highlighted the vehicle useful life program component and continued push for solar charging station.