MANILA, Philippines – National flag carrier Philippine Airlines (PAL) continues its domestic expansion with the announcement of 8 new routes for the 1st quarter of the year.

The 8 new routes are:

• Clark-Cebu
• Clark-Davao
• Clark-Puerto Princesa
• Clark-Coron (Busuanga)
• Cebu-Puerto Princesa
• Cebu-General Santos
• Cebu-Surigao
• Cebu-Coron (Busuanga)

"We are introducing new domestic routes to allow travelers to reach their desired destinations without the need to transit in Manila. Passengers get to experience the unique PAL brand of service even on short flights," said PAL president Jaime Bautista in a statement on Monday, January 30.

The airline began using the Clark International Airport as a hub last December, with the inauguration of a new route from Clark to Caticlan as well as a new international route to Incheon, South Korea that started this month.

The new routes also bring the number of domestic destinations served by PAL directly from Cebu to 12.

Clark flights

The 4 times a week Clark to Cebu service started Monday, January 30, departing Clark at 7 am. Flights will increase to daily on March 26.

The 3 times weekly Clark to Davao flight begins Wednesday, February 1, leaving Clark 10:50 am. The service will increase to 4 times weekly on March 26.

The 3 times weekly Clark to Puerto Princesa service starts March 26, departing Clark also at 10:50 am.

The daily Clark to Coron flights, using the 56-seater Q300 airplane, will begin also on March 26.

The other new routes out of Clark will use the 199-seater Airbus A321 jet.

Cebu flights

Meanwhile, PAL announced that the 4 new routes out of Cebu will begin on March 26.

Cebu-Puerto Princesa flights will be 4 times a week; Cebu-General Santos 3 times a week; Cebu-Surigao 3 times a week; and Cebu-Coron daily.

Flights to Puerto Princesa and General Santos will use the 156-seater A320 aircraft, flights to Surigao will use the 76-seater Q400, and those to Coron will use the 56-seater Q300. – Rappler.com 

MANILA, Philippines – Local and foreign investors swarmed BDO Unibank Incorporated's largest stock rights offering, an indication of business "optimism" in the Philippine economy, the chief of the country's largest lender said.

BDO, the Philippines' largest lender, concluded its rights offering on Tuesday, January 31, raising P60 billion ($1.2 billion) through the sale of 716.4 million rights share at P83.75 each. It is the largest common equity capital raising event in the Philippine market.

"I don't know what they are thinking, but I can share what we’ve seen. They are borrowing more and investing more, so they are quite optimistic [about the Philippine economy]," BDO President Nestor Tan told reporters in a briefing in Makati City.

The BDO president said the offer was "fully subscribed" and led by major shareholder SM Group. "It saw strong participation from BDO's domestic and international investors."

In effect, this increases BDO's Common Equity Tier 1 Capital, putting it in a better position to fulfill its medium-term growth objectives and making the most of the positive outlook on the country's economy, which grew by 6.8% in 2016.

"This issue will likewise provide a comfortable buffer over higher capital requirements with the imposition of the Domestic Systemically Important Bank (DSIB) surcharge," Tan said.

After the offering, the total issued and outstanding common shares of BDO is now at 4.37 million.

BDO Capital & Investment Corporation served as issue manager and domestic underwriter for the offering, while Credit Suisse, UBS, and BDO Capital served as joint global coordinators.

Indicative of expectations in infra activity

According to Tan, the size of the stock rights offering is "indicative" of BDO's expectations in terms of infrastructure activity in the Philippines.

"If a project will be financed through ODA (official development assistance), there is nothing for us to lend to. It will be government to government. But that doesn’t mean banks will be out of the picture," Tan said.

This was the BDO chief's response when asked if the country's inclination to ODA funding will temper banks' financial growth.

"You have the project itself, you have contractors. It creates employment, then these people will require loans. While the project itself will be financed by other means, the banks are still there. There will be exports of steel, of cement, and others," he added.

The Philippines had earlier submitted a total of 40 "large and small" infrastructure projects to China for possible loan financing and assistance in conducting feasibility studies.

Asked if it is open to partnering with Chinese banks in the future, Tan replied: "We are open with any bank to forge an MOU (memorandum of understanding) for the benefit of profitability. We are not limiting ourselves. It is an open market anyway."

After the Sy-led bank's stock rights offering, Tan said BDO's single borrower's limit is at P60 billion. "We can now lend up to P60 billion to a single entity."

BDO saw its net income surge to P19.3 billion in the first 9 months of 2016, from the P17.6-billion in the same period in 2015, thanks to higher customer loans and deposits.

To keep up with demand, Tan said BDO is looking at opening as much as 70 branches this 2017, mostly outside Metro Manila.

BDO shares opened at P113.00 each on Tuesday, down from the close of P114.80 on Monday, January 30. – Rappler.com

MANILA, Philippines – Aboitiz Power Corporation has withdrawn plans to explore and develop a greenfield geothermal plant in Indonesia, to re-allocate its resources for other ongoing and pipeline projects.

Aboitiz said it will step aside to allow its partner, PT Medco Power Indonesia, to proceed with the exploration and development of a potential 2x55-megawatt (MW) geothermal power plant in Ijen, East Java Province.

Aboitiz told the Philippine Stock Exchange on Tuesday, January 31, that it has decided to exit from the greenfield geothermal exploration and development project of its wholly-owned Singapore-based subsidiary, AboitizPower International Private Limited.

"AboitizPower has decided that it will focus and allocate its resources for other ongoing and pipeline projects," Aboitiz assistant corporate secretary Mailene de la Torre said in the disclosure.

In September 2015, AboitizPower entered into an agreement with PT Medco Power Indonesia to participate in the exploration and development of a geothermal power plant.

Other than its exploration project in Indonesia, AboitizPower had also shelved plans to expand its 300-MW coal-fired power plant, the first new power plant to operate in Mindanao in the last 10 years.

Early this month, two units of AboitizPower passed a surveillance audit, ensuring the Philippine government that it conforms to the standards of its ISO 9001 certifications.

The audit for its units Therma Luzon Incorporated (TLI) and Therma South Incorporated (TSI) was conducted by an affiliate of German technical services provider TUV Rheinland Group.

TLI owns the 700-MW Pagbilao thermal power plant in Quezon, while TSI owns and operates the two-unit thermal power plant each with a capacity of 150 MW in Davao City and Davao del Sur.

AboitizPower is the power arm of Aboitiz Equity Ventures Incorporated – the listed holding firm of Aboitiz-owned businesses, which also include real estate, food, and banking. – Rappler.com

MANILA, Philippines – BDO Unibank Incorporated will impose a P10-service charge on online and mobile banking fund transfers to unenrolled BDO accounts beginning mid-March.

BDO said in an advisory on Tuesday, January 3, that this will be effective March 15, 2017.

"Customers may enjoy Send Money to any unenrolled BDO account and Send Money to a Paycode for free until March 14, 2017, after which a minimal fee of P10 per transaction will be charged," BDO said.

Fund transfers to enrolled accounts will not be subject to fees.

"The Bank designed this option to give its customers a new level of online banking experience – that instead of going out, sending money can be done via electronic devices such as laptops, smartphones or tablets, allowing the recipient to get the money immediately," the advisory said.

According to BDO's website, users can "enroll up to 20 accounts belonging to another person or third party accounts." BDO added users can enroll their own or another person's BDO account for fund transfer transactions by logging in to online banking, adding the account number details, and activating the enrollment via the ATM. 

The daily limit for these fund transfers will also be increased to P50,000 from P10,000. – Rappler.com

MANILA, Philippines – Megaworld Corporation is targetting P20 billion in rental income by 2020, as the developer owned by billionaire Andrew Tan aggressively beefs up its portfolio of leasing projects within its townships.

This means the urban township developer projects to more than double its P9-billion rental income in 2015.

To achieve this, Megaworld told the local bourse on Wednesday, February 1, that it will add close to 1 million square meters of leasable space in its portfolio.

"While we remain strong in our residential condominium business, it is also imperative for us to also fortify our rental portfolio," Megaworld senior vice president Jericho Go said in the disclosure.

Megaworld said the additional rental inventory will be completed over the next 3 years, coming mostly from office, lifestyle malls, and commercial spaces to be built within its 22 townships and integrated lifestyle communities across the country.

Once completed, Megaworld's total rental space inventory will jump to more than 2.5 million square meters (sqm).

"This direction will not only allow us to become a stronger and more sustainable company, but at the same time, we address the increasing demand for these spaces in our various townships," Go said.

Of the 2.5 million-sqm leasable space by 2020, around 1.5 million sqm will come from office space, while 1 million sqm will be from malls and commercial centers.

"By the end of this year, we will breach the 1-million square meters of office space inventory, as we continue to experience a demand for office spaces," Go said,

Megaworld currently has over 130 companies in its office rental portfolio, occupying around 850,000 sqm of offices space.

BPOs still fuel office space demand

This makes Megaworld the biggest lessor of office space in the Philippines.

Its office tenants include some of the world's largest business process outsourcing (BPO) firms like Accenture, Wells Fargo, HP, IBM, and the United Health Group.

The Tan-led developer said areas for offices enjoy a "very high occupancy rate of 99%," while pre-leasing rates of its office buildings that are still under construction stand at an average of 80%.

On the retail side, Megaworld said it plans to add 18 malls and commercial centers by 2020, covering close to 390,400 sqm of fresh retail space.

For 2017 alone, the company will complete 200,000 sqm of mall and retail space from different township projects. (READ: Alliance Global's 2020 goal: Be the largest PH hotel developer)

According to Colliers International, continued demand for office space in the country will be supported by strong pre-leasing from both BPO and knowledge process outsourcing firms, as well as growing interest from offshore gaming companies.

Colliers has observed that pre-leasing is particularly strong in Fort Bonifacio. Offshore gaming companies occupied over 80,000 sqm of office space in the country last year.

In the last 3 months of 2016, Colliers said there was a surge in inquiries from offshore gaming firms, each with a minimum requirement of 10,000 sqm of office space.

Megaworld is part of Alliance Global Group Incorporated, the holding firm for Tan's real estate, liquor, gaming, and quick-service restaurant businesses.– Rappler.com

NEW DELHI, India (UPDATED) – India is to halve the basic rate of income tax to 5%, Finance Minister Arun Jaitley announced on Wednesday, February 1, in his annual budget.

Jaitley said the move would ease the burden of the government's shock decision last year to ban high-value banknotes to combat widespread corruption. It would also encourage more people to pay tax.

"The present burden of taxation is mainly on the taxpayer and the salaried employees who are showing their income correctly," he told parliament.

"Therefore post-demonetization, there is a legitimate expectation of this class of people to reduce their burden of taxation.

"Also an argument is made that if nominal rate of taxation is kept at a lower slab, more people will prefer to come in the tax rate."

The basic rate applies to those with annual incomes of between 250,000 rupees ($3,701) and 500,000 rupees and will fall from 10% to 5% from April, he said.

Prime Minister Narendra Modi's surprise currency decision removed around 86% of India's available cash at one stroke, triggering massive queues outside banks as the authorities struggled to print enough new notes.

The abrupt shortage of high-value notes hit businesses across the country, especially in cash-intensive sectors like agriculture, real estate and jewellery. – Rappler.com

MANILA, Philippines – Metro Pacific Hospital Holdings Incorporated, the healthcare investments arm of conglomerate Metro Pacific Investments Corporation (MPIC), is taking over Dr. Jesus C. Delgado Memorial Hospital in Quezon City.

This was after Metro Pacific infused additional P133.5 million into Delgado Clinic Incorporated via subscription to preferred shares.

Delgado Clinic owns and operates the Delgado hospital in Quezon City. 

Metro Pacific told the local bourse that its subscription to preferred shares represents approximately 65% of the total expanded capital stock of Delgado Clinic.

Metro Pacific said the cash infusion will enable the 68-year-old Delgado hospital to upgrade its equipment and facilities and expand its capacity. (READ: Pangilinan-led MPIC now largest hospital operator in PH)

"We welcome the investment of Metro Pacific, the largest private hospital group in the country, into our hospital," Violeta Delgado Cojuangco, a representative of the Delgado family, said in a statement.

"The Delgado family will stay as a significant shareholder of the company and will continue to participate in its growth and strategic plans through our directorships in the board of Delgado Clinic," Cojuangco added.

Metro Pacific Hospital president and chief executive Augusto Palisoc Jr thanked the Delgado family for allowing the company to invest additional capital in their hospital.

"We hope to continue the fine services that JDMH has provided its patients and their families, and further expand its capacity and capabilities, building from its traditional roots into the best Women’s Health facility serving Quezon City and surrounding areas, always bearing in mind that we will try to live up to, and preserve, the legacy of Dr Jesus C Delgado," Palisoc said.

Delgado Clinic also has appointed Rolando Balburias as president and general manager of Delgado hospital starting February 1, 2017. 

Balburias earned his medical degree from the University of the East and a masters in business administration-health degree from the Ateneo de Manila Graduate School of Business. 

MPIC currently has 12 hospitals under its portfolio. These are the Delgado hospital in Quezon City, Makati Medical Center, Cardinal Santos Medical Center, Our Lady of Lourdes Hospital, Asian Hospital, De Los Santos Medical Center, Manila Doctors Hospital, Davao Doctors Hospital, Riverside Medical Center in Bacolod, Central Luzon Doctors Hospital in Tarlac, West Metro Medical Center in Zamboanga, and Sacred Heart Hospital of Malolos in Bulacan. 

The conglomerate ventured into the hospital business in 2007.

To date, Metro Pacific has poured in more than P12 billion of capital expenditures into the hospital industry, with approximately 2,700 beds throughout the country.

MPIC has received offers from local and foreign banks to underwrite the maiden offering of its hospital subsidiary. If the plan pushes through, this would the first subsidiary of MPIC to be listed with the stock exchange.

MPIC's tollway group, Metro Pacific Tollways Corporation, was previously listed with the Philippine Stock Exchange but was delisted in 2013 due to failure to comply with the 10% minimum public ownership requirement. – Chrisee dela Paz/Rappler.com

MANILA, Philippines – Tony Tan Caktiong, the person behind Asia's largest food service firm Jollibee Foods Corporation (JFC), foresees a gap in agricultural workforce in the Philippines: a new generation that will replace the current farmers.

Citing recent studies, STI Education Services Group Incorporated said the average age of farmers in the Philippines is 57 years old.

This raises alarm over the possible future gap in human resource requirements for agriculture and poses a threat to food security and sustainability.

For STI chairman Eusebio Tanco, persuading young Filipinos and their parents to consider the agriculture track is a tough sell, thinking there is no viable career in the industry.

STI said the condition of farmers in agricultural areas also dissuades the youth from pursuing higher education in related courses.

"Even a typical farmer would not encourage his children to get into agriculture as a career," the institution said.

Faced with a possible human resource gap, companies are working with colleges and universities to provide young Filipinos the academic education needed to succeed in the industry.

Biggest poultry buyer ties up with STI

The latest is the partnership between Jollibee, the country's biggest buyer of chicken deals, and STI.

Jollibee buys 80% of chicken supplies directly from local poultry farmers. It is only during Christmas that Jollibee imports from the US.

It has partnered with STI to "reinvent agricultural education" in the country.

Jollibee founder Tan Caktiong said in a statement that it recently signed an agreement with STI, involving the establishment of an academic institution with programs in agro-entrepreneurship, agricultural technology, logistics, and quick-service restaurants, among others.

"My experience in [Jollibee] has given me unique perspectives on the challenges and importance of having a consistent and reliable supply of high-quality agricultural products," Tan Caktiong said.

Tan Caktiong said they will transform STI College in Tanauan, Batangas to be the initial vehicle for this collaboration.

"I am excited with this collaboration as it will help to uplift the agricultural and related sectors through education, another potential means for us to contribute to nation-building," he added. (READ: A Filipino farmer's plea: 'Support us, love us')

The new school will house "state-of-the-art agriculture facilities and equipment" such as greenhouses, field laboratories, livestock and poultry farms, as well as a rainwater harvesting system.

It will also be equipped with industry-grade simulation laboratories, air-conditioned classrooms with flat screen TVs, student activity centers with internet connection, a covered basketball court, and multimedia centers.

For STI and Tan Caktiong, agriculture sector is indispensable in the Philippines' strategy for inclusive growth.

"While there are many multifaceted factors that affect food security and sustainable development in agriculture, education plays a critical role in changing mindsets and remains to be a key element in addressing these threats and challenges," STI's Tanco said.

Visioning a farm-to-table school, Tanco said STI will also offer courses on managing quick-service restaurants focused on developing the technical and entrepreneurial skills of its students.

These new courses will effectively contribute to improved food security, sustainable agricultural production, and rural development, STI said. – Rappler.com

MANILA, Philippines – Share prices of mining and oil stocks on the Philippine Stock Exchange (PSE) dipped on Thursday, February 2, after Environment Secretary Gina Lopez ordered the suspension and closure of several mining operations across the country.

Mining and oil stocks plunged by 1.65% or 200.73 points, closing at 11,951.84 on Thursday.

The sector's performance dragged main PSE index's share prices, which inched down by 0.02%, ending at 7,225.91.

Earlier that day, Lopez ordered the closure of 23 mining operations and the suspension of 6 operations. Among them are those of listed Lepanto Consolidated Mining Corporation and Marcventures Mining and Development Corporation.

Share prices of Lepanto Consolidated Mining went down by 9.31% to P0.185 apiece, after it was named as one of those mining companies whose operations were suspended.

"[O]ur mining operations continue. We maintain that Lepanto has not violated any environmental laws," the listed mining firm told the local bourse, saying it has not yet received any order of suspension from the DENR.

Meanwhile, Marcventures Mining's shares plunged by 11.11% to P1.84 each on Thursday. (READ: Investors in mining panic over Gina Lopez appointment)

The listed mining company assured the Department of Environment and Natural Resources (DENR) that is compliant to laws and regulations, and is ready to respond to any closure order as soon as received.

"We emphasize the law recognizes [Marcventures Mining's] prior legal right to operate in the area. More importantly, we attest that our operations are done in a responsible manner and can be inspected at any time to show the clean waters," the company said in a disclosure. 

A unit of Nickel Asia Corporation, Hinatuan Mining, was also ordered closed. But its parent firm said it has yet to receive the order. Its shares also declined by 0.58%, closing at P6.81 on Thursday.

For other listed mining firms, the DENR's clampdown on mining did not impact their financial performance and operations.

Atok Big-Wedge Company Incorporated, Manila Mining Corporation, Philex Mining Corporation, and Zeus Holdings Incorporated told the local bourse that the DENR audit had "no effect" on their business, operations, or financial conditions as they were not among the firms whose operations were suspended or closed.

Mining and oil sector saw its lowest growth rate since August 2015 last June 2016, as investors panicked over anti-mining advocate Lopez's appointment as head of the DENR. – Rappler.com

MANILA, Philippines – A firm embroiled in an airport terminal case for almost 2 decades now has just been ordered by the Court of Appeals (CA) to pay the Philippine government a total of $6 million or almost P300 million for the costs of arbitration proceedings before the International Chamber of Commerce (ICC) in Singapore.

In a 23-page decision, the CA’s 17th division has ordered the Philippine International Air Terminals Company Incorporated (Piatco), builder of the Ninoy Aquino International Airport Terminal 3 (NAIA 3), to immediately pay the government for the costs incurred during the ICC proceedings in Singapore.

To recall, Piatco and its German partner Fraport AG filed a case against the Philippine government in the ICC after the latter rescinded its contract with both parties in 2002.

The government said the NAIA 3 project, which was bagged by Piatco in 1997, was "onerous."

The ICC then ruled in favor of the Philippine government in 2010. (READ: Despite NAIA-3 saga, Fraport eyes PH deals)

In November 2011, the High Court of Singapore junked a Piatco petition seeking the reversal of the ICC’s ruling that favored the Philippine government.

'Beneficial to the public'

For Associate Justice Marlene Gonzales Sison, the latest development in the NAIA 3 battle will be beneficial to the public. (READ: Germany, PH want to move on from NAIA 3 row)

"Assuming arguendo that the government violated all the pertinent laws regarding public bidding, procurement and disbursement, will the recovery of the government of US$6,009,351.66 result in any injury to the public or is against the public good? We answer in the negative," Sison said in the ruling.

"Definitely, any amount that goes to the government coffers is not detrimental, but on the contrary, beneficial to the public," she added.

The CA decision said that by the time the government filed a petition with the trial court seeking the enforcement of the Arbitral Tribunal award, it had already spent a lot.

"Having adjudged as the losing party, Piatco cannot escape its liability towards the government by invoking a frivolous defense of 'contrary to public policy'," the CA said.

The latest court decision added that the Office of the Solicitor General (OSG), which represented the government in the Arbitral Tribunal, is given a leeway in hiring co-counsels to defend the interest of the government abroad.

The CA also did not give merit to the claim of Piatco that its obligation has been extinguished by virtue of legal compensation considering that the government still owed it P293.5 million, representing its annual guaranteed payments which were never returned by the government.

The CA said Piatco's claim is "just a claim since no court has ever ruled that indeed the government owed the former such amount."

Concurring with the ruling were Associate Justices Ramon Cruz and Henri Jean Paul Inting.

Previous rulings

In April 2016, the Supreme Court affirmed its decision, ordering the government to compensate Piatco for the expropriation of NAIA 3 in the amount of over $510 million as of December 2014.

The Court denied Piatco's partial motion for reconsideration seeking an additional compensation in the amount of $107 million from the government.

However, it partly granted the motion for reconsideration filed by the government, declaring that the full ownership of NAIA 3 will be transferred to the government once it pays Piatco the said compensation.

Other than partially granting the government's motion on NAIA 3's full ownership, the SC also denied last year the appeal filed by Piatco, demanding a bigger principal of $470.45 million plus 12% interest per year.

The High Court also denied the motion for reconsideration filed by Piatco's Japanese contractors, Takenaka Corporation and Asahikosan Corporation, demanding compensation for building the facility. 

Initially, the Pasay City Regional Trial Court decided on $116.3 million in net compensation.

In August 2013, the CA then raised this to $300.2 million plus 6% interest per year from September 11, 2006 onwards.

Aside from the ICC proceedings, the government also faced an arbitration case filed by Fraport in the International Center for Settlement of Investment Disputes (ICSID), the arbitration arm of the World Bank based in Washington.

In 2014, the ICSID ordered Fraport to pay the government $5 million in damages for violating the Anti-Dummy Law.

The NAIA 3 contract was awarded to Piatco in 1997 during the Ramos administration.

But it was declared irregular by the Arroyo government in 2002, due to allegations that the consortium violated the Anti-Dummy Law. 

The SC voided the deal in 2003 and the government moved to take over the NAIA 3 in 2014 as compensation talks broke down. NAIA 3 finally became operational in 2008.

The Anti-Dummy Law provides that only Filipinos should operate, manage and control public utilities such as an airport terminal. – with a report from Chrisee Dela Paz/Rappler.com

MANILA, Philippines – About 1.2 million workers' livelihoods will be affected by the closure of half of the country's mines, said Finance Secretary Carlos Dominguez III and the Chamber of Mines of the Philippines (COMP) – an organization of local miners –with the latter arguing that the regulator's audit was "one-sided" and "compromised."

COMP on Friday, February 3, decried the closure of 23 mines, the suspension of 5 others, and the risk of more actions to come.

"We are looking at 67,000 jobs. If you use a multiplier effect of at least 4 members in a family, we have a total of 1.2 million people affected," COMP Chairman Artemio Disini said in a televised press briefing.

His remarks were echoed by Finance Secretary Carlos Dominguez III, who expressed concern over the workers who will be displaced once the closrure and suspension orders are implemented. (READ: IN NUMBERS: Economic promise of mining in PH)

{source}

<blockquote class="twitter-tweet" data-lang="en"><p lang="en" dir="ltr">I am deeply concerned over the welfare of the 1.2 million people affected by the closure of the 23 PH mines. This will result in joblessness</p>&mdash; Carlos Dominguez III (@SecSonnySays) <a href="https://twitter.com/SecSonnySays/status/827428206353342464">February 3, 2017</a></blockquote>
<script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script>{/source}

Disini said that the Department of Environment and Natural Resources' (DENR) audit was a shock, with the department announcing those found deficient even before these individual companies were formally notified.

DENR Secretary Gina Lopez ordered the closure of 23 mining operations and the suspension of 5 operations. Among them are COMP members like Marcventures Mining and Development Corporation as well as Benguet Corporation.

"DENR cannot just shutdown mines without due process...The results of the audit was not released, saying that it was too complicated. The executive branch has been advocating transparency in its policies and programs and on this basis, we feel we have the right to know the process in this audit and the persons involved," Disini said.

Appeal to the president

He added that Lopez even declined to provide details of the recommendations given to her by the Mines and Geosciences Bureau (MGB)-led technical review committee on the months-long audit. (READ: Final DENR list: PGMC's mine in Surigao also faces closure)

"They (MGB) made a mistake, and if they made a mistake, I'm not going to continue it….I have my own principles and my own understanding of the Constitution, and if somebody has made a mistake in the past, I'm not going to follow that mistake, I would rather rectify it," Lopez said in a press conference on Thursday, February 2.

On that day, mining and oil stocks were the biggest loser in the Philippine Stock Exchange (PSE), plunging by 1.65% or 200.73 points, closing at 11,951.84. It dragged PSE index's performance that day, which has been already brought down by US President Donald Trump's protectionist policies.

Before filing a legal complaint, COMP said it will "appeal" to President Rodrigo Duterte first.

Nickel prices have fluctuated since Duterte announced a crackdown on mines deemed irresponsible to the environment. The Philippines is the world's biggest nickel exporter, supplying 95% of China's nickel ore imports in the first half of 2016. – Rappler.com

MANILA, Philippines – A lack of policy continuity and a "subpar" business environment for infrastructure could dissuade investors from participating in the country's public-private partnership (PPP) projects, even with a robust framework, said the research unit of Fitch Ratings.

BMI Research said in a February 1 report that since President Rodrigo Duterte took office in June 2016, his administration has "expressed frustration on the prolonged implementation of PPP projects and cast doubt on the appropriateness of PPPs for certain infrastructure projects."

Finance Secretary Carlos Dominguez III had said that the Duterte administration will avoid the PPP route in certain infrastructure projects to fast-track completion and save on costs. (READ: PH's PPP thrust: Work in progress)

Even the new PPP Center executive director, Ferdinand Pecson, said the Philippines could see fewer PPP projects than before, as the government seeks new methods best suited for each public infrastructure deal.

"We are looking at this in its totality, from financing to operations and maintenance. If it turns out that the government is better off constructing the infrastructure using financing from soft loans with lower interest rates, we would pursue this," Pecson added.

During Duterte's visit to Beijing, he and Chinese President Xi Jinping signed 13 cooperation deals, including a memorandum of understanding on the lists of transportation and infrastructure projects.

The unit of Fitch Ratings noted that with the Philippines' friendlier ties with China, the Duterte administration is more likely to shift to a "government-centered investment approach." 

Other modes sought

BMI Research said it expects fewer public infrastructure projects to be open to private bidders and subsequently greater demand for government budgets to fund infrastructure developments.

The Duterte administration has rolled out two PPP deals thus far: the operations, maintenance, and development of 5 regional airports as well as the P1.47-billion New Nayong Pilipino.

This is in comparison with former president Benigno Aquino III's reliance on PPPs to fund sizable infrastructure development plans.

"[This] lack of policy continuity in the Philippines is also a growing risk that could dissuade investors," BMI Research said in its report. (READ: Ties with China to fill infra spending gap, pose risk to PPP)

The government is pushing for a new "hybrid" funding system consisting of a mix of PPP and official development assistance (ODA) funds.

'Subpar business environment'

Even with the Philippines' robust PPP framework, BMI Research flagged the country's struggle with implementing projects on time and generating enough interest in proposed undertakings.

Since the PPP program started in the 3rd quarter of 2010 under Aquino, 56 projects have been launched. Of these, 4 were completed as of end-2016.

Most PPP deals have been repeatedly delayed by issues relating to financing, land acquisition, or contract renegotiations. (READ: 5 failed, shelved PPP projects under Aquino admin)

For instance, the construction of the P69.3-billion Metro Rail Transit Line 7 project only started in April 2016, following a 7-year delay due to the original concessionaire's difficulty in securing a financial guarantee.

BMI Research also cited delays in the P64.9-billion Light Rail Transit Cavite extension, saying that it was "awarded efficiently" but suffered delays due to stalled right-of-way acquisition by the government.

The BMI report said projects also appear to be generating "insufficient interest from investors and contractors."

"Two-thirds of the contracts awarded have had fewer than 3 bidders, while several other projects have been retracted and placed under review after they initially failed to receive any bids," the report read.

"These difficulties highlight that, despite the Philippines' strong PPP regulations, the country's subpar business environment continues to hold back key infrastructure projects."

The World Bank has ranked the Philippines' PPP regulations as among the best in the world, recognizing its clear and well-defined laws, transparency requirements, and an independent dedicated agency.

"We believe that good PPP regulations are important in bringing private finance and expertise into the infrastructure sector, but the case of the Philippines shows that improvements in a country's fundamental operating environment are also essential," BMI Research said.

The Department of Budget and Management said the government plans to spend as much as P9 trillion on infrastructure over the next 6 years.

For 2017, the government has earmarked P847.2 billion for public infrastructure, amounting to 5.3% of the country's gross domestic product. – Rappler.com

MANILA, Philippines – For a luxury furniture maker, there can be no higher honor than having your creations used by heads of state.

That is exactly what Cebu-born Kenneth Cobonpue achieved at the Asia-Pacific Economic Cooperation (APEC) Summit in 2015, where he served as the creative director of the Welcome Dinner and designed the nature-inspired "Yoda chairs" used by Barack Obama, Xi Jinping, and other leaders of APEC nations.

Having hit that unique milestone and making his mark locally, Cobonpue is now intent on conquering the world with his eponymous firm, KC, and he's doing this with the help of the business leaders at Endeavor.

A global non-profit organization, Endeavor aims to transform emerging economies by providing support to high-impact entrepreneurs who in turn help other entrepreneurs in a process that creates exponential growth. The goal is to create a robust ecosystem similar to how Silicon Valley was developed.

Cobonpue, along with his business partner Christopher Reiter, were both chosen as Endeavor high-impact entrepreneurs by the Bali International Selection Panel last year, giving them access to mentoring from over 4,000 business leaders across the globe.

The organization put together an advisory board to help the two focus on building a luxury brand targeted for a developed market like the US, and also to focus on building the systems and processes needed for a global business.

While KC is already distributing its creations in over 60 countries through more than a hundred retail showrooms, it is now focused on expanding globally by opening its own stores.

Besides KC's flagship store in Makati, it also runs one in Cebu and one in New York. Cobonpue said they plan to open showrooms in Germany and Portugal next year, and possibly in Hong Kong.

"Endeavor has really helped us look at the company and asked us questions which we should have asked when we started. And so, we're looking at the company and trying to see what's our purpose, why are we here basically and what can we offer to the world," said Cobonpue at Endeavor Philippines' 2nd anniversary party held last week.

"It also allows us to take very bold decisions on where we are going – to see what our target is, who is our market, and really things that just got sidetracked in the course of growing," he added.

Creative multiplier

"Cobonpue is a force multiplier in the design industry," said Endeavor Philippines managing director Manny Ayala. "There have been a a number of up and coming designers, people like Vito Selma who he has taken under his wing, many of whom have begun to make a name for themselves on their own."

"I have no doubt that if we draw an influence map for the design industry, Kenneth will be at the center of it," Ayala added.

Cobonpue's influence is not limited to the design industry either, as he has teamed up with other creative forces such as Nestlé creative director Paolo Mercado and Adobo Magazine founder Angel Guerrero to set up a council that would devise a national strategy.

Cobonpue believes that creative industries, including design, food, music, film, and art, present unique opportunities for the Philippines to make a mark.

"It's similar to what Korea did where they developed their own creative roadmap," he said, noting that this is the main reason why Korean movies and pop music have become so popular around the world.

The council is also pushing for the strengthening of intellectual property rights to allow creativity to flourish.

"It's really a strategy to conquer the world through creativity," Cobonpue said. "In other industries such as tech, we are so far behind that playing catch up will be difficult. In a field like creativity which requires not capital, just brainpower, I think our multilingual culture will make it perfect for us."

Elevating coffee farmers and artisans

Another entrepreneur paving the road for fellow Filipino self-starters is Steve Benitez.

Having fallen in love with the process of creating coffee during long nights of studying law, Benitez dropped out of school to start Bo's Coffee in his hometown of Cebu in 1996. Bo's has since become the country's largest homegrown specialty chain.

Benitez was chosen as an Endeavor high-impact entrepreneur by the Madrid International Selection Panel also last year, in part because his firm focuses on supporting local coffee farmers.

Bo's sources its coffee from growers in Sagada, Benguet, Mt Kitanglad, Mt Matutum, and Mt Apo. It also works with the farmers to refine their techniques.

"Benitez has a soft spot for social entrepreneurship and has worked closely with social entrepreneurs and small business owners like Theo & Philo, Bayani Brew, Anthill Fabric Gallery, to level them up. They are available in all of his stores and he continues to act as a mentor to them," Ayala said.

It's the focus on local produce and creativity that has defined Bo's and helped it hold its own against large multinationals such as Starbucks, added Ayala.

Benitez's model has proven to be so successful that he was told by the Madrid panel that his ambition to double the number of stores was too low, and that he should aim for 400 in the next few years instead.

Ayala also mentioned that some months after the Madrid selection process, Benitez was able to raise a "significant amount of money in part from the Endeavor network and is well on his way, having opened another 100 stores already."

One of the Endeavor mentors, Paolo Mercado, helped Benitez solidify the brand's "homegrown" identity. Benitez also benefited from a new program that parachuted 1st year business school students to work on particular issues.

Impact 2.0

Cobonpue and Benitez are just two of the 8 high-impact entrepreneurs chosen by Endeavor Philippines so far, who operate in fields that range from technology to business process outsourcing, retail, and health care.

Now operating in its 3rd year in the country, Endeavor is looking to multiply its impact by adding 6 or more Filipino entrepreneurs to its network in 2017.

"One of the things we're trying to do is pump up the volume, so to speak, be a little more proactive with cultivating the message out there," Ayala said.

"We are living through the first inclines [in the Philippines], but if the history of Endeavor in other countries is anything to go by, as long as we focus on the true north of paying it forward, the multiplier effect will continue to ripple worth."

Endeavor, which is present in 25 other countries aside from the Philippines, has already created 600,000 high-quality jobs globally through its selection of 1,336 high-impact entrepreneurs whose firms total more than $8.2 billion in revenues.

The organization has also helped these entrepreneurs raise around $700 million in funding to boost their impact.

"[Virgin Group founder] Richard Branson once said that behind every successful entrepreneur is a supportive mentor propelling him or her to success. At Endeavor, we need to tweak that a bit to say that behind every entrepreneur is a group of generous souls who reinvested their knowledge, credibility, and resources to propel them to success," Ayala said. – Rappler.com

Editor's Note: Manny Ayala is part of Rappler's board.

MANILA, Philippines – The packaging unit of San Miguel Corporation (SMC) further expanded its presence in Australia with the acquisition of Portavin Holdings Proprietary Limited, the leading independent wine services supplier in the land down under.

SMC said in a statement on Monday, February 6, that its unit San Miguel Yamamura Packaging International Limited (SMYPIL) has bought 100% of shares in Portavin.

Portavin is a privately owned company involved in the bottling of wine, trading, and distribution of packaging products.

It has operations in 4 key regions in Australia – New South Wales, South Australia, Victoria, and Western Australia.

"These acquisitions will enable our packaging business to further expand in Australia and New Zealand. Portavin and Endeavour Glass will complement our current packaging operations, Cospak and Vinocor," SMC president and chief operating officer Ramon Ang said, without divulging details of the acquisition.

According to The Guardian, Australia's overall wine exports grew 7% to $2.2 billion in 2016. Momentum is expected to continue this year, driven by China's increasing thirst for premium wines.

Growth opportunities abroad

"Other than the Australasian region, we will continue to look for opportunities of growth for our packaging business in the Philippines and abroad," Ang added.

With 27 years experience, Portavin is bottling more than 80 million bottles annually for over 800 wineries.

Portavin said the acquisition is in line with the growing confidence of both companies in the Australian wine industry and related packaging businesses in both the domestic and overseas markets.

SMC's packaging unit has been making acquisitions in Australia and New Zealand over the past few years.

In 2016, the SMYPIL group acquired the assets of Endeavour Glass Packaging Limited (Endeavour Glass). (READ: San Miguel to spend $300M for brewery expansion in CDO, Laguna)

Located in New Zealand, Endeavour Glass specializes in providing packaging solutions to the wine, beverage, and food industries.

Other recent business acquisitions in the area include the purchase of the assets of Vinocor in 2015, a market leader in the supply of corks and closures for wine bottles in Australasia.

This was after SMC acquired Cospak, one of the largest packaging firms in the region.

SMYPIL is a joint venture between SMC and Japan's Nihon Yamamura Glass Company Limited.– Rappler.com

MANILA, Philippines – The operator of Light Rail Transit Line 1 (LRT1), Southeast Asia's first rail transport line, will break ground on the project to extend it from Baclaran to Cavite by late February this year.

"We will break ground in late February or early March. Under the contract, you can only issue notice to proceed once the right of way is totally cleared of informal settlers, utilities, etc. I said I don't need notice to proceed, I just need permit to enter," Rogelio Singson, Light Rail Manila Consortium (LRMC) president and chief executive officer, said on the sidelines of a briefing in Pasay City on Monday, February 6.

LRMC took over the operations, maintenance, and extension of LRT1 last September 2015, after bagging the P64.9-billion ($1.36-billion) LRT1 Cavite Extension deal. (READ: Engineers racing to fix LRT1)

LRMC is a consortium of Ayala Corporation, Metro Pacific Investments Corporation (MPIC), and the Macquarie group.

"With permit to enter, I can start fencing, clearing, and a lot of engineering works, buying us a year or more," Singson, who was a former chief of the Department of Public Works and Highways, added.

This was LRMC's strategy after delays due to unfinished right-of-way acquisition and stalled relocation of illegal settlers and utilities.

LRMC took on French companies Bouygues Travaux Publics and Alstom Transport Private Limited to help build the extension.

The 11.7-kilometer Cavite extension will link with the existing system immediately south of the Baclaran Station, and run in a generally southerly direction to Niog, Cavite. 

Eight new stations will be provided with 3 intermodal facilities across Pasay City, Paranaque City, Las Piñas City and Cavite. 

The new stations are Aseana, MIA, Asia World, Ninoy Aquino, Dr Santos, Las Piñas, Zapote and Niog. The intermodal facilities will be located at Dr Santos, Zapote, and Niog.

The commercial speed of the Cavite extension will be 60 kilometers per hour (km/h).

The extension is targeted for completion in about 4 years or in 2021, Singson said.

Prepping for the future

The LRMC chief said the replacement of LRT1's 32-year-old rails is also underway, with a total of 10,583 meters or 40% already complete.

The rail replacement project runs a total of 26 kilometers from Baclaran to 5th Avenue stations, and is targeted to be finished by the end of 2017.

"Once completed, the new tracks are expected to allow trains to increase their speed from the current 40 km/h to 60 km/h. They will also decrease the wear and tear of light rail vehicles (LRVs) and improve the reliability of the whole system," Singson said.

He noted that all improvements are done with the future in mind.

"We are working on these improvements given our mandate to extend LRT1's service to commuters in Cavite. We want LRT1 to be ready and able to serve more passengers through the synergy of modern stations and a sound operation backbone," Singson said.

On Monday, February 6, LRMC launched inaugurated the new Doroteo Jose station in Sta. Cruz, Manila.

Doroteo Jose is the interconnecting station of LRT1 and LRT Line 2, serving an average of 27,000 passengers daily. (READ: LRTA fails to turn over 100 operational coaches)

"Doroteo Jose is just the beginning," Singson said. "We are now working on the rest of the project’s phases and, with the support of our commercial partners, we are hoping to see more enhancements at the other stations by the end of this year."

According to Singson, the next phase of the project covers United Nations, Gil Puyat, Abad Santos, Pedro Gil, and R. Papa, which will be accomplished in June.

By end 2017, LRMC said it will deliver a "wholly refurbished train line, featuring stations that have been renovated and equipped with structural upgrades and new facilities." – Rappler.com

MANILA, Philippines – BDO Unibank Incorporated said on Monday, February 6, that it had submitted its permit requirements to the Cebu City government to prevent the closure of its 26 branches in the city.

Despite its compliance, however, BDO said in a statement that "the city government has refused to accept payments for local taxes and fees, and issue the permits, contrary to what they did in the past."

This was after SunStar Cebu reported on Saturday, February 4, that the city government might close 26 BDO branches after finding out that these are operating without business permits.

"We would like to apologize for whatever inconvenience the recent threat of branch closures in Cebu City has created," BDO said in response to the news report. (READ: Investors swarm BDO's largest stock rights offering)

BDO said it had made the necessary arrangements for its clients in Cebu to be serviced in alternative locations.

"This is a local issue and has no bearing whatsoever on the operation of the bank as a whole," BDO said.

BDO saw its net income surge to P19.3 billion in the first 9 months of 2016, from the P17.6-billion in the same period in 2015, thanks to higher customer loans and deposits.

To keep up with demand, BDO president Nestor Tan said his firm is looking at opening as much as 70 branches in 2017, mostly outside Metro Manila.

BDO has one of the largest distribution networks, with more than 1,000 operating branches and over 3,000 ATMs nationwide.

It also has a branch in Hong Kong as well as 25 overseas remittance and representative offices in Asia, Europe, North America, and the Middle East.

BDO is the country's largest bank in terms of total assets, loans, deposits and trust funds under management based on published statements of condition as of June 30, 2016.

BDO shares closed at P114 each on Monday, February 6, 50 centavos lower from the close of P114.50 on Friday, February 3. – Rappler.com

MANILA, Philippines – The group of Metro Pacific Investments Corporation (MPIC) and Ayala Corporation is spending about half a billion pesos to rehabilitate and upgrade the 20 stations of Light Rail Transit Line 1 (LRT1). The first on the list is the Doroteo Jose Station in Sta. Cruz, Manila.

Light Rail Manila Corporation (LRMC) on Monday, February 6 launched the newly renovated Doroteo Jose Station, which interconnects LRT1 and LRT Line 2. It serves an average of 27,000 passengers daily. (READ: Engineers racing to fix LRT1)

"Doroteo Jose is just the beginning," LRMC president and CEO Rogelio Singson said in a briefing in Pasay City.

"We are now working on the rest of the project's phases and, with the support of our commercial partners, we are hoping to see more enhancements at the other stations by the end of this year," he added.

Entrance of Doroteo Jose Station (Before)

Entrance of Doroteo Jose Station (After)

According to Singson, the next phase of the project covers United Nations, Gil Puyat, Abad Santos, Pedro Gil, and R. Papa, which will be accomplished in June.

By end 2017, LRMC said it will deliver a wholly refurbished train line, featuring stations that have been renovated and equipped with structural upgrades and new facilities.

Concourse of Doroteo Jose Station (Before)

Concourse of Doroteo Jose Station (After)

LRMC said it is working to put LRT1 on par with global transport standards.

From the stations' entrance to the trains' platforms, LRMC said passengers' accessibility, safety, and security were addressed.

Platform of Doroteo Jose Station (Before)

Platform of Doroteo Jose Station (After)

Stations are now well lit, with the installation of LED light fixtures in and around the stations.

"Ceiling and painting works were also done to give the stations a facelift to contribute to a more pleasing environment," LRMC said.

Doroteo Jose Station roofing (before)

Doroteo Jose Station roofing (after)

"Better accessibility is provided with the complete restoration of all elevators and escalators, which now include PWD-friendly features," LRMC said.

LRMC is a consortium of Ayala Corporation, Metro Pacific Investments Corporation, and the Macquarie group.

Light Rail Manila's directive is to rehabilitate the 20 stations and train cars of LRT1 in 18 months and extend the line from Baclaran to Bacoor, Cavite. The group's aim is to fully operate the extended line by 2021. – Rappler.com

MANILA, Philippines – The administration of President Rodrigo Duterte wants to increase the number of the country's largest taxpayers, in a bid to achieve its over P1-trillion tax collection target for 2017, which will be used to fund the Philippines' ambitious infrastructure plans, among others.

Facing some 2,320 of the country's largest corporate taxpayers, Duterte reminded them to pay taxes correctly and promised that he will not tax them "unrealistically" in return.

"On taxes, just pay taxes correctly… I won't tax you to death if I know it is unrealistic," Duterte said in his speech at the Bureau of Internal Revenue (BIR) event in Pasay City on Monday, February 6.

The BIR set a P1.152-trillion collection target this year for the country's largest taxpayers, who contribute at least 62.44% of the bureau's revenue collection. (READ: Top 100 corporations: Only 39 are on BIR taxpayers list)

This is a bit lower than the targeted collection of the BIR's Large Taxpayer Service (LTS), pegged at P1.230 trillion.

Last year, the LTS only collected P963 billion, which is still 12.13% higher than that of 2015.

Banks, tobacco, as well as wholesale and retail trade contributed the most to LTS collection in 2016.

For Finance Secretary Carlos Dominguez III, the number of registered large taxpayers is "rather small, considering the rapid expansion of the economy."

"If we are able to significantly add the number of large taxpayers, supervised by the LTS, I am sure that we can increase the tax effort equally significantly," Dominguez said during the event.

The LTS unit monitors and analyzes the payments of large taxpayers. They are those with a net worth of at least P300 million and pay an annual income tax and withholding tax of at least P1 million.

The LTS unit also covers the top 1,000 corporations in the Philippines.

Speaking in behalf of the large taxpayers community, Lance Gokongwei said they will ensure compliance with the country's tax laws.

"We immensely appreciate this approach you are taking and are only too happy to be your partners in this initiative to ensure and enhance compliance with our tax laws," said Gokongwei, the president of JG Summit Holdings Incorporated.

"When it comes to tax administration, our desire is simple. It should be streamlined [and] not too burdensome set of procedures and processes to make tax compliance straightforward and easy," he added.

The BIR has a total collection goal this year of P1.829 trillion, higher than last year's target of P1.62 trillion.

LTS Assistant Commissioner of Internal Revenue Teresita Angeles described the 2017 collection target of the LTS as "huge but achievable." – Rappler.com

MANILA, Philippines – The anti-graft court Sandiganbayan has convicted former Lemery mayor Raul Bendaña of Batangas of graft and sentenced him to 6 to 10 years' imprisonment over an anomalous P8.8-million procurement deal in 2004.

In its decision promulgated on January 27 and released to media on Tuesday, February 7, the Sandiganbayan's Fourth Division found Bendaña "guilty beyond reasonable doubt" for giving unwarranted benefits to a computer company that supplied units to the Lemery municipal hall's automated tax system.

Associate Justice Geraldine Faith Econg penned the decision, with concurring opinions from Associate Justices Alex Quiroz and Reynaldo Cruz.

The charges stemmed from 2004 procurement of the Lemery municipal government. Bendaña, then Lemery mayor, entered into a direct contract with Amellar Solutions for the purchase of computers worth P8,188,737, for the municipal government's tax revenue generation system.

Prosecutors found that there was no competitive bidding and that the direct contract violated the procurement law.

Bendaña was arraigned on February 8, 2010.

The court noted that the tax computerization program of the municipal government was, in fact, an “unsolicited project proposal” of Amellar Solutions. Amellar’s Manuel Tabunda pitched the project to Bendaña in 2002.

Vouching for the independence of the project, Bendaña argued then that the municipal government conducted its own feasibility study. However, the court noted, the first page of the study is similar to the first page of the project proposal submitted by Amellar Solutions.

Bendaña also created a Technical Evaluation Committee on Computerization (TECC) tasked to prepare cost estimates and assist in pre-qualification of suppliers. 

“But what is perplexing is that the TECC was able to submit on the same day that it was constituted the report required of it. The only conclusion that can be gathered is that the report was already prepared even before the establishment of the TECC,” the court said.

The timeline of the project also implies partiality, according to the decision.

It was also discovered that Bendaña entered into a contract with Amellar on September 10, 2004, but the Sangguniang Bayan passed the ordinance stating the appropriation cost one month after the contract, on October 6, 2004.

The Sangguniang Bayan’s ordinance is required under the procurement law. 

The court added that on October 4, 2004, or two days before the ordinance was passed, receipts showed that computers were already delivered.

“Partiality or bias is evident in the accused’s act of signing the agreement with Amellar Solutions even if the treasurer has not yet issued a certificate that the funds are available and even if there is yet no ordinance appropriating the project cost,” the anti-graft court said.

It added: “He had a dishonest purpose, ill will, or ulterior motive to favor Amellar Solutions and the compliance of the certificate of availability of funds and the appropriation ordinance are mere steps to lend a credence of legality in the transaction.”

Bendana is sentenced to a minimum of 6 years and one month and maximum of 10 years, and perpetual disqualification from holding public office. – Rappler.com

MANILA, Philippines – The economy kicked off the year with inflation higher than at any point last year despite food prices dropping overall, according to the National Economic and Development Authority (NEDA).

Data released by NEDA on Tuesday, February 7, showed that inflation for January 2017 hit 2.7%, a slight increase from the 2.6% recorded in December 2016. December also saw the fastest price increases recorded last year.

NEDA attributed the increase in overall inflation to higher oil prices, pending petitions for higher electricity rates and transport fares, and the continued strong domestic demand.

These factors, it said, all contributed to jumps in non-food items, particularly housing, electricity, and gas and other fuels which cumulatively rose by 1.8% in January compared to just 1.3% in December.

"The faster spike in transport and gas and other fuels' costs can be traced to the increase in petroleum prices as the oil market rebalances after the recent decision of the Organization of the Petroleum Exporting Countries (OPEC) to cut oil production by 1.2 million barrels per day," said Socioeconomic Planning Secretary Ernesto Pernia in a statement.

Slowdown in food inflation

In contrast, overall inflation in food prices slowed in January, hitting 3.4% from December's 3.6% due to slower price adjustments in fruits, vegetables, meat, corn, sugar, jam, honey, chocolate, and confectionery.

NEDA noted, however, that faster increases were seen in the food staple rice, which rose to 1.8% in January from 1.6% in December. Besides rice, higher price hikes were also recorded for fish, and oils and fats.

"The damage by typhoons Karen and Lando may have contributed to the lower supply of rice, which slightly raised rice prices. In some areas like Cagayan Valley and Central Visayas, the planting calendar was delayed, which resulted in lower production in the 4th quarter," Pernia explained.

NEDA warned that price pressures present through the beginning of the year include the shift to a unitary excise rate for cigarettes effective January, through the Sin Tax Reform Law which will raise the purchase price of cigarette packs.

Another issue is the 20-day maintenance shutdown of the Malampaya gas project that started last month, which NEDA noted may lead to an increase in the generation charge starting March.

But Pernia remains confident that inflation will remain stable, adding that "despite upside risks and pressures, the government expects inflation to be stable and remain consistent with the target of 2.0 to 4.0%."

NEDA also pointed out that compared to ASEAN neighbors, the Philippines' inflation rate in January was lower than Indonesia's 3.5% but higher than Thailand's 1.6%. – Rappler.com