MANILA, Philippines – It took the Sy family almost 60 years to get to where they are now. Starting off with 10 centavos in his pocket, Henry Sy Sr is now the Philippines' richest man with an estimated $12.7-billion personal fortune as of end-2016.

But it was not an easy feat for the Chinese migrant. The Sy family's businesses underwent difficult economic and political upheavals over the years, from World War II up to the global financial crisis in 2008.

Classic rags-to-riches story

SM group founder Henry Sy Sr was only 12 years old with 10 centavos in his pocket and no knowledge of English when he followed his father to the Philippines. Sy thought his father, a migrant from China, was well-off. But it turned out his father just owned a sari-sari store along Echague St in Manila's bustling Quiapo district.

During World War II, the Sy family's sari-sari stores were burned. His father went back to China, while Sy started looking for other business ventures. 

It was in 1958 when Sy first ventured into the shoe business, selling surplus GI boots and eventually opening his first shoe store in Carriedo.

With no more local shoes to sell, Sy started to look overseas for broken sizes, mainly for Filipino women. This made Shoe Mart the most efficient shoe business at the time.

In 1967, Sy bought Acme Savings Bank, which he then renamed to Banco de Oro. He ventured into banking to provide cash management to suppliers. He was competing versus Good Earth, COD, Remson, and Isetann back then. With a bank in his portfolio, he was able to outgrow all of them and became the last man standing.

Married to a vendor of lace, Sy thought of branching out and selling other products like children's wear. It was in 1972 when he transformed Shoe Mart to SM Department Store. 

In 1983, Sy opened his first shopping mall after he saw the emergence of the mall business in the United States. SM City North EDSA, then a 125,000-square-meter mall, opened at a time when the country was plunged into one of the most turbulent periods in political history. Interest rates were at 50%. Today, SM City North EDSA is now over 400,000 square meters (sqm).

From malls and banking, the SM group has since branched out to property, gaming, and mining.

As of 2016, the 92-year-old Sy has $12.7 billion in assets, making him the richest person in Southeast Asia, according to US magazine Forbes. His conglomerate, SM Investments Corporation, ended 2016 with P31.2 billion in net income.

From retail to education

Most, if not all, Filipino consumers are familiar with malls and condominiums developed by the SM group. Its 63rd mall, SM Cherry Antipolo, is the latest addition to its malls all over the Philippines. As of end-2016, it also has 7 malls in China, 43 residential projects, 6 office buildings, and 6 hotels.

In addition to that, SM Investments owns 44.3% of the largest domestic bank in terms of assets – BDO Unibank Incorporated. It also owns 19.9% of China Banking Corporation.

Aside from banking, the group has investments in gaming through Belle Corporation (28%). Belle controls 78.74% of Premium Leisure Corporation, which in turn owns 100% of Premium Leisure and Amusement Incorporated – owner of the license for Entertainment City.

This year, SM Investments acquired a 34.5% stake in Negros Navigation Company Incorporated, the parent company of 2GO Group Incorporated. This marked the conglomerate's entry into the logistics sector.

The group also has a 29.3% stake in Atlas Consolidated Mining and Development Corporation. Its major project is the Toledo copper mine in Cebu province, which is operated by Carmen Copper Corporation. The Toledo copper mine started production in 1955 and grew to become the 3rd largest copper producer in the world. 

The Sys also have a 34% stake in CityMall, a subsidiary of DoubleDragon Properties, which runs a chain of community shopping malls across the Philippines.

In education, SM Investments owns a 51.8% stake in the company behind Asia Pacific College. 

Who's who in the Sy family

The SM empire has been run by the Sy family for the past 59 years. The family started out with surplus GI boots, then diversified into almost everything from mining to logistics. Their conglomerate and two of their core businesses have been listed on the Philippine Stock Exchange and placed in the hands of professional chief executive officers, but the family remains at the heart of these firms. (READ: SM Investments shakes up management, prepares 3rd generation)

Data from SM Investments' 2016 annual report showed Teresita, Elizabeth, Henry Jr, Hans, Herbert, and Harley have direct stakes totaling about 44% in SM Investments. The remainder of the family's share in the SM group is being held directly by the 92-year-old Sy and his wife through his family-owned companies.

Since the start of 2017, the 92-year-old Sy has been serving as the chairman emeritus of SM Prime Holdings and BDO Unibank as well as the honorary chairman of China Bank.

His eldest daughter, Teresita, serves as the chairperson of BDO, while his eldest son Henry Jr serves as the chairperson of SM Prime and SM Development Corporation. Henry Jr is also the president of the National Grid Corporation of the Philippines.

Elizabeth, 64, has been in charge of the family's hotels and convention centers and currently serves as an adviser to the board of SM Investments.

Although Hans, 61, retired as SM Prime president in July 2016, he still serves as chairman of the company's Executive Committee and member of the board.

Herbert, 60, has been a director of SM Investments since 1994. He is also an adviser to the board of SM Investments and is the vice chairman of Supervalue Incorporated, Super Shopping Market Incorporated, and Sanford Marketing Corporation. He also holds board positions in several companies within the SM group.

The youngest son, Harley, serves as a director of SM Investments. He is also a director of China Bank and other companies within the SM group as well as adviser to the board of BDO Private Bank. Harley also serves as the vice chairman of SM Retail.

Jose Sio, the chairman of SM Investments, said the group is also preparing the 3rd generation of the Sy family to take leadership positions in the near future.

"We are preparing the 3rd generation. They are more or less immersed with the SM group. We are preparing them to take leadership positions in the near future," Sio had told reporters and analysts.

Harley had said there are 7 of the 3rd generation of the Sys "spread throughout the core businesses."

A glance at the SM group's finances

In 2016, SM Investments' net income grew to P31.2 billion, fueled by strong revenues in its property and banking units. Its property unit accounted for 39% of total earnings, while banks comprised 37% and retail 24%.

SM Retail, which consists of non-food and food stores, saw its net income grow by 7% to P10.6 billion in 2016, from P9.9 billion in 2015.

SM Prime Holdings' recurring net income also increased by 14% in 2016 to P23.8 billion. Revenues of its mall business rose by 9% to P48.6 billion in 2016 due to added retail spaces in the last two years. 

The residential group – which consists of SM Development Corporation, Highlands Prime, and Costa del Hamilo, among others – had a 13% growth in consolidated revenues, reaching P25.4 billion in 2016.

SM Prime's hotels and convention centers marked a 32% growth in revenues to P3.2 billion in 2016, largely due to improved occupancy rates and the opening of Park Inn Clark in December 2015 and Conrad Manila in June 2016. 

For banking, BDO Unibank posted a net income of P26.1 billion in 2016. China Bank, meanwhile, reported net income growth of 15% to P6.4 billion in 2016 on the back of sustained growth in core and fee-based businesses.

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The main driver of the group's revenue, SM Prime, is now on its 4th year of a 5-year roadmap to double its net income in 2013, which ended at P16.3 billion. Last year, SM Prime's net income grew to P23.8 billion. It needs an increase of P8.8 billion in net income by 2018 to achieve its 5-year target.

The SM group aims to have developed 10.96 million sqm of shopping malls; 139,000 residential units; 2,500 leisure homes; 460,000 sqm of leasable space; and 2,187 hotel rooms by 2018. – Rappler.com

STOCKHOLM, Sweden – Danish shipping mammoth Maersk said Wednesday, June 28, it had shut down some of its computer systems after a global cyberattack disrupted operations at its terminals and hindered it from taking new orders.

A number of Maersk's 76 container terminals were affected and were forced to run on manual systems, AP Moller Maersk chief operating officer Vincent Clerc told AFP, refusing to specify which terminals were impacted because of the "fluidity of the situation."

"Some terminals that were down this morning are now up and running," Clerc said.

Maersk's two terminals in Rotterdam, Europe's biggest port, were however "still affected" on Wednesday, Clerc said.

The port, one of the top 10 in the world, handles more than 461 million tonnes of cargo a year, and welcomes the largest container ships in the world.

APM Terminals, part of the AP Moller Maersk conglomerate, runs the two terminals at the sprawling port which stretches across 42 kilometres (26 miles).

India's shipping ministry said meanwhile a terminal run by Maersk at the Mumbai port, the largest in India, was also affected.

While the systems are down, "we have to manage on a manual basis... It's difficult for people in the terminals to tell the people on the ground – the longshoremen – which containers to unload," Clerc said.

A spokesman for APM Terminals in Rotterdam, Tom Boyd, said the manual process was tough work.

"Today we are handling 4,500 containers. It's more labour extensive, but we are making it work. We are communicating with our customers through gmail and other things because the IT system is down," he told AFP.

No new orders

Maersk said meanwhile that all new orders were also on hold.

"Today we have not taken any new orders to our platforms. Customers are booking through third parties but not through our platforms as a precaution," Clerc said.

"We are working on being able to open up for new orders from tomorrow, probably through alternate processes," he added.

The series of cyberattacks began in Russia and Ukraine on Tuesday, hitting government and corporate computer systems across the world as the virus spread to western Europe and across the Atlantic.

Several other multinational companies said they were targeted, including US pharmaceutical giant Merck, Russian state oil giant Rosneft, British advertising giant WPP and the French industrial group Saint-Gobain.

Clerc said the cyberattack was "still ongoing" at Maersk on Wednesday at 1300 GMT, and that there had been a ransom demanded for the release of data but the Danish group had refused to pay.

"We have it contained ... by proactively shutting down systems and computers to prevent it from further contaminating our systems."

He said Maersk had not yet estimated the losses caused by the attack.

"A lot of it will depend on how quickly we can put in place our recovery plan... The longer we are affected the more the price tag will increase." – Rappler.com

MANILA, Philippines – Jollibee Foods Corporation (JFC) will open the 1000th branch of its flagship brand Jollibee on Tuesday, July 4, in Bonifacio Global City in Taguig, a business district largely dominated by rival McDonald's.

"[A]ll roads now lead to Bonifacio Global City Triangle Drive in Taguig for the opening of Jollibee's 1000th store in the Philippines. Celebrate this milestone with us during our grand opening on July 4, 2017," the business empire of Tony Tan Caktiong announced on its official website.

Bonifacio Global City is largely dominated by McDonald's, which has more outlets in the area than Jollibee. (READ: Jollibee to continue stinging McDonald's despite labor issues)

Golden Arches Development Corporation (GADC), which holds the exclusive franchise to operate McDonald's in the Philippines, ended 2016 with 7 branches in Bonifacio Global City, compared  to Jollibee's 3 stores in the business district as of end-2016.

Although the Andrew Tan-led company blocks Jollibee in BGC, Jollibee remains in the lead in terms of the entire Taguig City, closing 2016 with 9 stores. McDonald's has  8 branches in the city as of 2016.

Jollibee's story began in 1975 when Tan Caktiong opened an ice cream parlor in Cubao, Quezon City. He then moved to expand into more types of food like hamburgers, fried chicken, and sweet spaghetti.

In 1984 or less than a decade, Jollibee reached the P500-million sales milestone. By 1989, Jollibee breached the P1-billion sales mark. 

In 36 years, Jollibee was able to increase its branches to 1,000 from 10 in 1981.

To sustain the company's continued growth, Jollibee said it allotted P14 billion for capital expenditures in 2017.

Of the P14-billion programmed spending, P7.6 billion will be for store expansion and renovation, while P5.6 billion will be for commissary investment.

In 2016, JFC saw its net income in 2016 surge by 24.6% to P6.14 billion, from P4.93 billion in 2015, after it registered its highest number of new stores last year.

JFC also owns Chowking, Greenwich, Red Ribbon, Mang Inasal, and Burger King. The Tan Caktiong-led company also maintains interest in the following joint ventures: Highlands Coffee, Pho 24, 12 Hotpot, and Smashburger.

On July 13, 1993, JFC was listed in the Philippine Stock Exchange with an initial offering of P9 per share. On June 29, 2017, JFC shares are priced at P209 each. – Chrisee Dela Paz/Rappler.com

MANILA, Philippines – President Rodrigo Duterte appointed Peter Favila, a former banker and trade secretary, and Antonio Abacan Jr, a former president of Metrobank, as the new members of the 7-seat Monetary Board.

Duterte on Wednesday, June 28, also retained former socioeconomic planning secretary Felipe Medalla as part of the board, giving him a fresh fixed term of 6 years.

Chaired by incoming Bangko Sentral ng Pilipinas (BSP) Governor Nestor Espenilla Jr, the Monetary Board is composed of 7 members appointed by the President. It determines the purchasing power of Filipinos as well as protects the fast-growing economy from risks like capital outflows and higher US interest rates.

By law, the 7 Monetary Board members should be the BSP Governor, a member of the Cabinet, and 5 others who shall come from the private sector, all of whom should serve full-time for 6 years.

Abacan and Favila replaced Armando Suratos and former Development Bank of the Philippines (DBP) chairman Alfredo Antonio whose terms are ending this year.

The newly announced appointments complete the membership of the board, which includes Finance Secretary Carlos Dominguez III, Juan de Zuniga Jr, and Valentin Araneta, and its would-be chairman, Espenilla, who will take the helm of the BSP on July 3.

Ex-UP dean Medalla retained

Medalla, who first served in the Monetary Board in 2011, was the director-general of the National Economic and Development Authority (NEDA) from July 1998 to January 2001. He also served as director of the Philippine National Oil Company-Exploration Corporation, and as independent director of the Metro Pacific Tollways Corporation – a tollways unit led by tycoon Manuel Pangilinan.

A professor and former dean at the School of Economics of the University of the Philippines (UP), Medalla also served as president of the Philippine Economics Society and as chairman of the Foundation for Economic Freedom.  He was also a director of the Asia United Bank Corporation.

Medalla has undergraduate degrees in Economics and Accounting from De La Salle University, a masteral degree in Economics from UP, and a doctorate in Economics from Northwestern University.

Former DTI chief Favila returns

Meanwhile, Favila returns after 3 years to the Monetary Board, where he served as its member from 2008 to 2014. 

Besides serving as former Department of Trade and Industry chief from 2005 to 2010, Favila was once president of the Allied Banking Corporation as well as president and chief executive officer of the Philippine National Bank.

Favila was also a consultant to the BSP and CDC Holdings Incorporated, and was chairman and president of the Philippine Stock Exchange from 2001 to 2005.

Favila obtained his Commerce degree, major in Banking and Finance, from the University of Santo Tomas and is a graduate of the Advanced Management Program of the Wharton School, University of Pennsylvania.

Ex-Metrobank chief welcomed

Another new member, Abacan, also held several high-level positions in the banking industry. He was the president of Metropolitan Bank & Trust Company (Metrobank) of George Ty from 1993 to April 2006.

Before his stint in Metrobank, Abacan served as chief of the Philippine Savings Bank and Unibancard Corporation from 1988 to 1991. He is currently the group vice chairman of the Metrobank Group. 

He also served as president of the then-Philippine Drug Abuse Resistance Education (Phildare). Abacan was also an adviser at Thomas Cook (Philippines) Incorporated, Philippine AXA Life Insurance Corporation, Metropolitan Bank (Bahamas) Limited, and GT Capital Holdings Incorporated.

Abacan is also a senior adviser at the First Metro Investment Corporation, Federal Land, and Toyota Manila Bay Corporation. He also served as chairman of the board of Toyota Financial Services (Philippines) Incorporated.

Abacan earned his Business Administration degree, major in Banking and Finance and in Accounting from the Mapua Institute of Technology and Far Eastern University, respectively.

He received a Doctorate in Business Administration (honoris causa) from the Philippine Women's University and is a graduate of the Executive Program of the Stanford University Graduate School of Business in 1991.– Rappler.com

MANILA, Philippines – Resorts World Manila announced Thursday, June 29, it was resuming its gaming operations.

In a statement, the hotel-casino said the Philippine Amusement and Gaming Corporation (Pagcor) has lifted the June 9 suspension order on the company's provisional license to operate casinos and gaming facilities.

Pagcor had issued the order following the June 2 attack on Resorts World Manila by lone gunman Jessie Carlos, a former Department of Finance (DOF) employee who was deep in debt due to gambling. The attack left 37 people dead, most of them suffocating due to fires triggered by Carlos, who committed suicide in a hotel room. (READ: Resorts World Manila: Jessie's Got a Gun)

The resumption of the hotel-casino's services follows the company's presentation of its Casino Security Protective Action Plans. Resorts World Manila also passed an inspection from Pagcor, which checked improvements to its various protocols.

"With Pagcor's assistance and guidance, we can now start the difficult task of rebuilding as it is also our responsibility to take care of our 6,000 staff and personnel," said Resorts World Manila president and chief executive officer Kingson Sian.

"We are bringing back the gaming operations on the ground and third floors of our integrated resort. The second floor will no longer be used for casino operations and will be utilized for other non-gaming purposes instead," he also said.

In a hearing at the House of Representatives last June 7, Resorts World Manila chief operating officer Stephen Reilly had admitted that there were "lapses in security" during the deadly attack.

Resorts World Manila then reviewed its external and internal security protocols for the premises, with the help of international security outfit Blackpanda.

Sian added that the hotel-casino will constantly check and upgrade these protocols as new technology and developments require. (READ: Police, casino guard had 'misencounter' during Resorts World attack)

Resorts World Manila also said it will improve its coordination and joint drills with the Philippine National Police (PNP) and Bureau of Fire Protection (BFP) for various emergency situations. (READ: PNP: Security guards in Resorts World attack lacked training) – Rappler.com

MANILA, Philippines – After having made its name as a developer of high-end high-rises, Antonio-led Century Properties Group Incorporated is now diving headfirst into the affordable housing market.

"The income recognition cycle of affordable housing is much faster than [high-end developments] so in the next few years we hope to produce 20,000 units every year. We're ramping up our production and we will stabilize at 20,000 affordable homes annually by 2020," said Century Properties chairman Jose EB Antonio at the firm's annual stockholders' meeting on Thursday, June 29.

"It's a big number but if you look at the big picture for housing in the Philippines for that segment, there's a big gap between demand and supply. Looking forward, we want affordable housing to be 35% of our total income," he added.

Citing government figures, Antonio said there is currently a backlog of 5 million new homes. "The whole industry ... doesn't even approach 500,000 houses in the affordable segment per year. So the industry has a lot of upside," he explained.

Antonio also noted that the "increasing purchasing power" of the middle class is key.

The sweet spot that Century Properties is aiming for is between P1.1 million and P1.8 million, with an average house and lot size of 45 square meters (sqm).

The firm already started down that path earlier this year with the launch of the first phase of its P4.5-billion Phirst Park Homes housing project, in partnership with Mitsubishi Corporation.The first phase entails approximately 2,877 homes in a 26-hectare community in Tanza, Cavite.

Beyond this, Antonio said Century Properties is building up its land bank, targeting areas outside Metro Manila such as Batangas, Laguna, and other parts of Cavite.

The houses to be built on these lands will be a mix of prefabricated and conventional houses, also to be developed in partnership with Mitsubishi Corporation, which is providing technology and technical know-how.

Century Properties also won't necessarily have to set up in-house financing in order to bring in customers.

"At the present moment there is ample credit being provided by the banking system and one of the sectors they want to increase loans to is the affordable housing market. If you think about it, it's stable because owning a house is something people really save for. The Pag-IBIG Fund will also help," Antonio said.

Part of a larger plan

Century Properties' move into the affordable housing space is part of its larger plan to transform itself into a multiplatform real estate company.

Last year, the firm turned cashflow positive for the first time since its 2012 initial public offering, while net cash provided by operations improved by P1.26 billion in 2016 from 2015.

Total revenues amounted to P7.38 billion from P10.38 billion in 2015 while real estate sales amounted to P4.97 billion from P7.75 billion as revenues have already been recognized in prior years from project completions, and there were fewer launches of new condominium projects in 2016.

Leasing revenues amounted to P337.85 million, 8% higher than the previous year, with net income coming in at P726.93 million.

Century Properties has also launched 33 buildings with gross floor area totaling 1.43 million sqm, to go along with its 16 buildings already completed with a gross floor area of 792,000 sqm as of end-2016.

For 2017, the firm plans to spend around P5 billion for condominium projects with an additional P1 billion set aside for leasing assets.

Besides the launch of its housing project in Cavite, Century Properties also partnered with Indonesian conglomerate Bakrie in May, which will see it provide land and develop 3 mixed-use themed developments. – Rappler.com

STOCKHOLM, Sweden – Maersk, the Danish container and shipping giant crippled by a global cyberattack this week, said Thursday, June 29, most of its operations were now up and running again.

"We are able to accept bookings again," the company said on its website.

In addition, "the majority of our terminals are now operational. Some of these terminals are operating slower than usual or with limited functionality."

Maersk said on Wednesday, June 28, that a number of its 76 container terminals were affected by the cyberattack and were forced to run on manual systems, but would not specify which sites.

"We continue to assess the situation. Until this analysis is complete, we cannot be specific about how many sites and locations are affected or when normal business operations are restored," Thursday's statement said.

Maersk's two terminals in Rotterdam, Europe's biggest port, were affected on Wednesday, as was a terminal run by Maersk at the Mumbai port, the largest in India.

When the systems are down, "we have to manage on a manual basis... It's difficult for people in the terminals to tell the people on the ground – the longshoremen – which containers to unload," Maersk chief operating officer Vincent Clerc said Wednesday.

Maersk's statement Thursday stressed that all of its vessels "continue to be under control, employees are safe and communication to crew and management onboard is functioning."

The series of cyberattacks began in Russia and Ukraine on Tuesday, June 27, hitting government and corporate computer systems across the world as the virus spread to western Europe and across the Atlantic.

Several other multinational companies said they were targeted, including US pharmaceutical giant Merck, Russian state oil giant Rosneft, British advertising giant WPP and the French industrial group Saint-Gobain. – Rappler.com

When McDonald’s announced plans to enter the Philippines in 1981, the fledgling Jollibee could have thrown in the towel. Instead, Tony Tan Caktiong says he visited McDonald’s stores abroad, adopted their best practices and produced food Filipinos preferred.

When Starbucks did the same in the mid-1990s, Bo’s Coffee could have closed. Instead, Cebuano Steve Benitez built his “stronghold” in the Visayas before going full blast in Manila and Luzon and is now betting that a lot of people – especially those pesky millennials – would embrace a Filipino brand. He thinks that gives him room to grow despite the lead of Starbucks and Coffee Bean & Tea Leaf and the entry of Costa Coffee. (And despite the fact that two of those are backed by two of the country’s best known conglomerates – the Rustan’s group for Starbucks and the Gokongwei group for Costa – and the CBTL group has strong backers too and a risk-taking leader. All of which must be factors in Benitez taking in an investment fund partner last year.)

Benitez moved himself, his family and the company to Manila in 2003, based in eventually cramped quarters in Pasong Tamo, Makati. They recently moved to a converted warehouse in Pasig, with test, training and manufacturing facilities on the ground floor, and an open-floor office on the second floor. It’s buzzing with young staff and a representative of his new partners, who is now CFO. Benitez sits in a small, glassed office at the center of this, where he makes me try a cup of their new coffee while talking about his start and his plans. (WATCH: What's the big idea? Bo's Coffee competes with global players)

I don’t know if Bo’s can beat the foreign brands the way Jollibee has done with McDonald’s. I’m not sure even Benitez thinks so. When I press him about competing with the giants he says “I think we complement each other.” (Fun fact: this month Bo’s will open its 100th store while Jollibee will open its 1000th Philippine outlet. Of course Jollibee’s other brands and overseas stores push its total over 3,000, each of which brings in more money than a coffee shop.)

We’ve all heard too much about those millennials (even those of you who are that young). How they support brands that support a cause. Bo’s cause is Philippine coffee. “Homegrown” is the tagline. Benitez says he is getting the best local coffee and marketing them as such, as Sagada beans and Benguet beans and Mount Apo beans and more. He talks about supporting social and local entrepreneurs, whether it’s the weaves you see on his merchandise and furniture or the chocolate bars at the counter. 

“I don’t expect to convert Starbucks drinkers to Bo’s,” he says. “But there’s a market that appreciates local coffee and companies.”

Benitez says he got the coffee habit to stay awake for law school at night after a day job at Amex. He says he got into business because when he left law school, “I was looking for that stress.”

There was another route Benitez could have taken, that might have saved him some stress. He could have gotten the franchise of one of the global brands and converted his stores. He says he didn’t because he couldn’t afford it. But also because that route “stifles Filipino creativity.” 

Everywhere, especially in retail and food, you see global brands take more and more of the market. There’s an inevitability about it. They have the wherewithal to innovate and invest. And partnering with them is a good route for a local businessman to take for fast growth, which of course means more jobs. And while a local partner is bound by many parameters of the global brand, there is more than enough room for him to exercise his management and entrepreneurial chops.

But building one’s own brand, with everything relying on you, in competition with giants is a different order of skill and success. And probably makes up for the stress. – Rappler.com

Coco Alcuaz, host of Rappler’s What’s The Big Idea interview show, is a former Bloomberg News bureau chief and ANC business news head. Chat or follow him on twitter @cocoalcuaz

MANILA, Philippines— The Filipino burger will soon be served in Toronto, Manhattan and even Japan.

Jollibee Foods Corporation (JFC), the firm behind the country’s leading fast food giant, is aggressively expanding overseas and has identified the next cities it wants to open franchises

“An area we are focusing on aggressively is the opening up of the Jollibee brand outside the Philippines. We opened a store recently in Skokie, Illinois, and the line to get in had a wait time of 7 hours. And we also had a very successful opening in Jacksonville, Florida. It excited a lot of Filipinos there, [where] they bring their non-Filipino friends with them,” JFC chairman Tony Tan Caktiong said at the firm’s 2017 annual stockholders meeting on Friday, June 30.

“The next Jollibee store will be in Toronto, Canada, hopefully by this year or early next year. Then we’re going to open in Manhattan, New York within the same timeframe. We are also planning Jollibee stores in Soho and the island of Guam,” he added.

Jollibee currently has a store in Queens, another borough of New York, but not in Manhattan. It is planning a re-entry into the US American territory of Guam in the Pacific for the second time, having closed a store there previously.

The Jollibee chairman also pointed towards Japan as potentially the next big market for Jollibee.

“We were told that Japan is welcoming Filipinos now, particularly caregivers, as it has about 45 million citizens that need special care. So they’ll need caregivers and nurses to work there. I was told that the government is training Filipino nurses to bring them to Japan,” Tan Caktiong said.

The Japanese government is considering relaxing the requirement for Filipino caregivers in a bid to attract more people to care for its aging population. The Filipino population in Japan numbered 206,103 in 2016, making it the third largest foreign group in the East Asian nation.

“If that happens, Japan can be a big market for the Jollibee brand,” Tan Caktiong said, adding that while a specific Japanese city hasn’t been identified yet, a store there could be established by 2019.

In October last year, JFC also signed an agreement with Japan’s top egg producer the ISE Group to produce a $38.7-million worth poultry farm in the Philippines.

More stores, more sales

JFC currently has 3, 555 stores (3,994 including Smashburger and the Superfoods Group brands) across 12 brand in 17 countries. The firm is aiming to hit 4,000 by this year.

The firm will open its 1000^th Jollibee store in the Philippines on Monday, July 3, while it plans to build about 250 stores across all its brands in the country  and 100 stores overseas by the end of the year.

Last year, the JFC opened 244 stores in the country and 58 overseas, marking the biggest expansion in the firm’s history.

The opening of all these new stores contributed to total system-wide sales of P149.1 billion, up 14.1% from 2015, its best performance in 5 years which helped grow its net income by 24.6% to P6.14 billion.

The firm's net income in Q1 this year hit  P1.47 billion, up 2.9% compared to last year on higher revenues. This was driven by growth in revenues of 12.2% to P29.29 billion as systemwide retail sales also grew 12.2% to P38.53 billion for the quarter.

For this year, JFC plans to spend P14.7 billion, P9 billion of which is earmarked for expansion and renovation. — Rappler.com

WASHINGTON DC, USA – US President Donald Trump may accuse Qatar of sponsoring terrorism, but that did not stop the wealthy emirate this week from lighting up the Empire State building in the national colors of the Middle Eastern nation.

Trump – who himself once tried to acquire the Manhattan skyscraper – has sided with Saudi Arabia in its increasingly bitter dispute with Qatar, but Doha has adopted a tactic long used by its more powerful Saudi neighbor to get its own way, buying up substantial shares in the US economy as a bulwark against shifting political sands.   

The iconic 102-story Empire State building was bathed in the burgundy and white of Qatar Airways, the state flag carrier of Qatar, ostensibly to celebrate 10 years of flights into the United States.

Less obvious was the fact that almost a year ago, the oil and gas-rich emirate purchased a 10%, $622 million stake in the all-American building.

Trump once tried unsuccessfully to seize control of the building during his heyday as a New York property mogul, when he still owned the land that the skyscraper stands on. 

Last month, Qatar stunned American Airlines with plans to acquire a 10% stake in the world's largest commercial air carrier.

At the same time, it signed a $12 billion contract to buy 36 F-15 fighter jets from Boeing: a fraction of the $110-billion arms deal inked when Mr Trump visited Riyadh in May, but still enough to make US business leaders sit up and listen.

"They have tentacles everywhere, they are amazing," said Randa Slim, a scholar at the Middle East Institute.

'A listening ear'

Qatar's greatest international asset, of course, is hosting the forward headquarters of US Central Command on its soil, putting the country squarely at the heart of the global US military footprint.

Doha is also home to shiny outposts of Georgetown University and the Brookings Institution, among Washington's most prestigious think tanks, which Qatari officials said should promote the "bright image" of Qatar to the international media, "especially the American ones."

Like Trump, a property tycoon turned president, Qatari investors have dived into real estate on four continents, bankrolling and buying into major developments in Washington, Chicago and London, where they bought a stake in Heathrow Airport.

Slim said that US concern for Qatar's Al-Udeid Air Base – which the Americans use to stage operations in Syria, Afghanistan, Iraq and Yemen – guaranteed that Washington would give Qatar's position in the crisis considerable weight.

While the president Tweeted about alleged Qatari backing for Syrian jihadists, his own Defense Department assured Qatar of continuing US support, while the State Department rebuked the Saudi coalition for its treatment of the country, seen by other Gulf states as too close to Iran.

"Definitely, the White House does not seem to be on their side but you have other powerful agencies that are standing on their side, at least until now," Slim said.

"Even if you have groups who are arguing for a balanced position in this administration, I don't see anyone siding with Qatar 100%," she added. 

"Qatar does not have 100% support. Qatar has a listening ear."

Saudi's heavyweight checkbook

Whatever inroads Doha may have made, Saudi Arabia, their larger and richer adversary in the crisis, retains a formidable position.

That kingdom is the second-largest foreign supplier of crude oil to the United States, a long-standing linchpin of US foreign policy and a major backer of large US corporations.

As Trump prepared to tour the Middle East in May, Riyadh pledged to pour $20 billion into an infrastructure fund managed by the investment firm Blackstone, whose billionaire chairman Stephen Schwarzman is a prominent Trump backer.

This came on the heels of $110 billion in arms sales as well as billions more in deals for General Electric and Lockheed Martin.

On the campaign trail, Trump also praised Saudi investors for buying his apartments, and he has reportedly incorporated companies in the kingdom.

Meanwhile, the Qataris have few established business links with the Trump clan if any – but not for want of effort by the real estate mogul.

"By virtue of their relative size (both geographic and financial), Qatar will always be weaker," said Robert Blecher, acting director of the Middle East program at the International Crisis Group.

"But not weak enough to make finances and business deals the decisive factor in this contretemps."

According to James Jeffrey of the Washington Institute for Near East Policy, under normal circumstances investments would not factor into geopolitical considerations.

"When you have a huge strategic problem such as this, the American position is traditionally, 'We don't care who's bought shares,'" Jeffrey, a long serving US diplomat in the Middle East and a former deputy national security advisor to President George W. Bush, told Agence France-Presse.

But he said this particular White House may be sending the signal that business ties do count for a great deal. "This administration has given plenty of indications that that's the way it works," he said. – Rappler.com

MANILA, Philippines – Civil society organizations called on the Energy Regulatory Commission (ERC) to reject applications filed by the Manila Electric Company (Meralco) for power supply agreements (PSAs) on 7 coal-fired power plants across the country, which they tagged as "costly" and "dirty."

The Center for Energy, Ecology, and Development (CEED); Sanlakas; Philippine Movement for Climate Justice (PMCJ); Freedom from Debt Coalition (FDC); Koalisyong Pabahay ng Pilipinas; as well as other member-organizations of the Power for People Coalition, on Thursday, June 29, filed a petition questioning alleged "irregularities" in the process of application as well as negative consequences if Meralco gets its way.

"The approval of Meralco's PSAs would lead to 3,551 megawatts (MW) of coal entering the pipeline, which would pose great harm to the people's health and livelihood, as well as the environment," CEED convenor Gerry Arances said in front of the ERC office in Pasig City.

"On top of this, Filipinos will end up paying more for electricity if Meralco would have their way," he added.

Arances also claimed the PSAs would force the country to rely on coal for the next two decades. (READ: Meralco's profit flat due to impact of temperature, currency, inflation)

"[This] means that regardless of the trend of decreasing costs for renewable energy technology like solar and wind, the Philippines will be stuck with operating and paying for costlier and dirtier energy from coal," he said.

Coal-fired power plants account for nearly 34.6% of the country's 7,419-MW installed capacity, and about 38.6% of the 6,979-MW dependable capacity as of end-2016, data from the Department of Energy showed.

Becoming coal-dependent?

"About 70% of power projects to go online in 2019 will be from coal. This means by 2021, coal supply will be at least 50% of our energy needs," Arances said.

It was in April 2016 when Meralco sought regulatory approval to source 3,551 MW of its power requirements from 7 companies, including two that are under its subsidiaries. These 7 are:

1. Redondo Peninsula Energy Incorporated (225 MW)
2. Atimonan One Energy Incorporated (1,200 MW)
3. St Raphael Power Generation Corporation (400 MW)
4. Central Luzon Premiere Power Corporation (528 MW)
5. Mariveles Power Generation Corporation (528 MW)
6. Panay Energy Development Corporation (70 MW)
7. Global Luzon Energy Development Corporation (600 MW)

FDC's Butch Junia said Meralco's projects should be subjected to the competitive selection process (CSP) to determine if "it is the best and least cost supply for consumers."

"Conveniently for Meralco, ERC had previously reset the CSP's effectivity date last year from November 6, 2016 to April 30, 2016. This would exempt the PSAs from undergoing the transparent and public bidding ordained in the CSP," Junia claimed.

Meralco chairman Manuel Pangilinan on Thursday said his camp has yet to receive a copy of the petition. "We haven't received it yet. No comment."

Meralco earlier said electricity sales in its service area are seen to rise by a compounded average rate of 3.6% to 3.7%, based on the company's long-term projections. – Chrisee Dela Paz / Rappler.com

LEGAZPI CITY, Philippines – The state-owned Development Bank of the Philippines (DBP) is willing to help rebuild Marawi City, currently being ravaged due to the war against the Maute Group, the bank's chief executive officer said.

“We’re open to help rebuild Marawi if the Marawi City local government unit opts to borrow to rebuild the city,” DBP CEO Cecilia Borromeo said, in an interview during the bank's Business Roadshow event in Legazpi City on Friday, June 30.

Though the national government will be at the forefront of rebuilding Marawi, Borromeo said their agency is willing to help the city devastated by the still-ongoing crisis.   

As to government’s program to lessen the country's carbon footprint, the agency allocated P37.44 billion in loans as of March 2017 under its green financing program, which was established in 2011 and enhanced in 2014.

The approved loans, according to her, are for a variety of environmental projects including pollution prevention and control; sanitation; resource conservation and efficiency; renewable energy; climate change adaptation and mitigation; and disaster risk reduction.

“DBP provides financing as well as technical assistance to projects that are ecologically-sound. We try to play an active role in encouraging our clients and other partners to always include green considerations in their businesses and thrusts,” the DBP executive said.    

Following the climate change adaptation program of the government, Borromeo said that the agency is helping to make the community resilient as numerous local government units across the country borrowed money to construct evacuation shelters that can withstand very strong winds.

The state-owned financial banking institution, according to Borromeo, continues to grow the financial muscle it needs to achieve its development mandate.

For the first quarter of this year, DBP posted a net income of P1.29 billion in the first quarter of the year, a 30.4% increase from the P989 million posted in the same period of 2016. 

This increase in income is attributable to the sustained growth of its loan portfolio. DBP’s gross loan portfolio grew to P232.1 billion in the first quarter of 2017, from only P177.7 billion in the same period a year ago.

"Our improved financial performance assures that DBP can continue to support the strategic development thrusts of the national government," she said.

“Our purpose and mission remain focused on our development mandate of improving the lives and well being of our countrymen and ensuring that development is broad-based, inclusive and sustainable,” she said.

Development thrusts

This year, DBP according to Borromeo has 4 major development thrusts to respond to the strategic needs of the economy. These thrusts are to build up the country’s infrastructure; promote entrepreneurship; environmental management; and community development for all Filipinos across the country.

The DBP is a financial institution dubbed as infrastructure bank appointed to help usher in the golden age for infrastructure in the country.

With the Department of Finance eyeing to make the DBP the country's "infrastructure bank," Borromeo said they are "looking forward to helping bridge the country’s infrastructure gap, and help fund ongoing and proposed major infrastructure projects which are vital for sustaining high and inclusive growth so the Philippines can be at par with our neighbours.” 

“We are looking forward to building more road networks, railway systems, bus rapid systems, power generation facilities as well as airport and seaport modernization projects,” the DBP official said.

In Bicol region, the DBP have partnered with various municipalities such as Bulusan and Casiguran in Sorsogon, and Mercedes in Camarines Norte to build farm to market roads, public markets, municipal, barangay buildings and even evacuation centers, the official said.

As to tourism development, the state-owned banking institution has partnered with the provincial government of Camarines Sur to develop tourism facilities.

Other projects in Bicol supported by the agency are the electric cooperatives in Camarines Norte and Camarines Sur towards improving and more efficient distribution of electricity and lower power rates; supporting the Legazpi City and Casiguran Water districts to expand water service coverage and improve health and sanitation.

As for health services, they supported the provincial hospital in Camarines Sur, and the Catanduanes Doctors Hospital where DBP funds helped provide more affordable health facilities and services.

As the country’s infrastructure bank, Borromeo said that DBP will be a major player not just in resource generation and deployment but in making sure the gains of economic development is better felt by the majority.

“We have tailored our programs to make us more relevant in the national government’s scheme of things especially here in Bicol, we are building on our gains to do more for the region,” she said. – Rappler.com

MANILA, Philippines – The World Bank lowered its growth forecast for the Philippine economy in 2017 to 6.8%, after it saw signs of slow public spending in the first 3 months of the year.

The bank, however, pointed out the high base in the first quarter of 2016, when large election-related spending boosted growth.

The latest edition of the World Bank Philippine Economic Update showed its trimmed outlook for the country, down from the 6.9% forecast released last April.

The bank's forecast for 2018 remains unchanged at 6.9%.

Brigit Hansl, World Bank lead economist for the Philippines, said higher investment levels are important to sustain the economy's growth momentum in the medium term.

"The government's ability to realize its infrastructure spending agenda will determine if the Philippines can achieve the growth target of 6.5% to 7.5% for 2017," Hansl added.

Despite a recovery in agriculture and robust growth in exports, the country's gross domestic product (GDP) grew slower to 6.4% in the first 3 months of 2017, a decline from the 6.6% growth during the 4th quarter of 2016 and 6.8% in the 1st quarter of 2016, data from the Philippine Statistics Authority (PSA) showed.

Maintaining consumption growth

"The prospect of maintaining consumption growth at current levels over the medium term is supported by robust remittance flows. Remittances increased by 8% in the first quarter of 2017, compared to 3% in the first quarter of 2016," the World Bank said.

For the World Bank, continued economic growth is seen to lead to more jobs and increased revenues across income groups.

"Between 2012 and 2015, household income among the bottom 40% of the income distribution rose by an average annual rate of 7.6%," it added.

The World Bank's June 2017 Global Economic Prospects showed global economic activity and trade are gradually improving, as robust growth among the country's main trading partners is expected to boost demand for Philippine exports.

Meanwhile, Moody's Investors Service recently affirmed the country's Baa2 long-term issuer and senior unsecured debt ratings and maintained the outlook at stable as it expects that the "Philippines' economic performance will remain strong." – Rappler.com

SHANGHAI, China – China on Monday, July 3, opened up its $10 trillion bond market to foreign investors, in the latest liberalization move by Beijing as it seeks to draw in more fund flows as it battles slowing economic growth.

The new conduit comes via Hong Kong, where "qualified investors" will be able to buy debt in China – the world's third-largest bond market after the United States and Japan.

Qualified investors include central banks, sovereign wealth funds, and other major financial institutions, according to the People's Bank of China (PBoC) and the Hong Kong Monetary Authority, who jointly announced the platform on Sunday, July 2.

Their statement said the "bond connect" arrangement between the Hong Kong and mainland Chinese markets went into "experimental operation" from Monday.

The announcement came on a weekend in which Hong Kong and China marked the 20th anniversary of Britain's handover of the southern Chinese financial center back to Beijing in 1997.

"The bond connect is an important move for the central government to support Hong Kong’s development and promote cooperation between the mainland and Hong Kong," the PBoC said Monday. 

It will "promote Hong Kong’s long-term prosperity and stability and provide a more convenient investment channel for overseas investors. It will also steadily push forward the opening up of China’s financial market". 

The growing Chinese bond market has been virtually out of reach for foreign investors, who currently hold less than 1.5% of bonds issued in China, according to estimates by Bloomberg.

Opening up

The new platform mirrors previously established link-ups between the share markets of Hong Kong and mainland China that now allow foreign and Chinese investors to buy shares in the each other's markets.

Those links give foreigners some access to China-listed shares, while also allowing Chinese firms to buy Hong Kong-traded stocks.

The new bond connect scheme, however, currently only allows foreign investors to buy Chinese debt.

HSBC said it completed its first deal under the new arrangement as underwriter for a bond issue by Agricultural Development Bank of China.

"The enhanced ease of investment under Bond Connect will attract more overseas funds, creating a more diversified investor base and further enhancing the market’s size and depth," Helen Wong, HSBC Greater China Chief Executive, said in a statement.

"This will help pave the way for China bonds to be included in major global bond indices in the future."

China has for years faced foreign complaints about restricted access to its markets, but has recently made a series of liberalization pledges partly to expand its global market influence.

Last month, leading index compiler MSCI said it would include Chinese shares in its global emerging-market indices, citing loosening restrictions on foreign ownership of Chinese stocks.

After years of runaway growth, China is grappling with slowing economic expansion, and has moved to stanch massive capital flight by Chinese funds seeking better returns overseas while trying to lure more foreign investment.

Utilization of the new bond connect platform, however, could hinge on fears of mounting Chinese debt levels which have prompted warnings of a looming crisis and possible defaults. China has moved aggressively in recent months to rein in runaway credit. – Rappler.com

MANILA, Philippines – After more than two decades and several feasibility studies, construction of the 830-kilometer Mindanao Railway Network will finally begin in 2018.

The administration of President Rodrigo Duterte – who is the first president from Mindanao – will start off with the commuter line from Tagum City in Davao del Norte to Digos City in Davao del Sur.

The big-ticket infrastructure project has seen 4 presidents come and go. Since its conceptualization in 1992, the much-needed railway network was either delayed or discontinued by the country's former chief executives.

Former president Gloria Macapagal-Arroyo had even created the Mindanao Railways Office under the transportation department, but it was abolished by her successor Benigno Aquino III.

When Duterte assumed the presidency a year ago, he announced the Mindanao Railway Network would be his first big project. (READ: Duterte: My first major project is a railway)

The National Economic and Development Authority (NEDA) Board on June 28 approved the P35.26-billion Mindanao Railway Project (MRP) Phase 1 Tagum-Davao-Digos Segment. The NEDA Board green light is the last hurdle before a government agency can implement an over P1-billion project.

"By 2nd quarter of 2018, we will finally start with the construction of the first leg of the Mindanao Railway," Transportation Undersecretary for Rails Cesar Chavez said on the sidelines of the Philippine Transport Forum in Pasig City on Monday, July 3.

This first phase of the 830-kilometer Mindanao Railway Project loop will be implemented by the Department of Transportation (DOTr) through local financing. This phase involves the establishment of a 102.28-kilometer commuter railway from Tagum City in Davao del Norte to Digos City in Davao del Sur.

"Between now and December, we are organizing the project management office. Former president Arroyo created it during her time for the Mindanao Railway and Davao and Cebu. We want to unbundle that and we are doing that right now," Chavez said.

He added that the government has readied the P6.5-billion budget for land acquisition and engineering for the Tagum-Davao-Digos segment.

"Now, we are doing the land acquisition. We need 340 hectares of property to cover the 103 kilometers. Mostly agricultural land. Substantially, it is clear how much this is. By 1st quarter of 2018, we will buy the land because the budget is [allocated] for next year," Chavez told reporters.

The railway project will connect key Mindanao cities including Davao, Zamboanga, Butuan, Surigao, Cagayan de Oro, Iligan, and General Santos.

Meanwhile, Transportation Secretary Arthur Tugade said the government is creating a Philippine Railway Institute, which will serve as a training center for staff of all public railways.

Tugade said his department is in talks with the Japan International Cooperation Agency (JICA) to put up the institute.

"We are now trying to formulate the curriculum as we are trying to formulate the structures that will be in that institute," Tugade told reporters. – Rappler.com

MANILA, Philippines – Aboitiz-led Union Bank of the Philippines (UnionBank) is conducting its own investigation into an alleged P17-million fraud incident involving one of its employees.

UnionBank, during its routine checking, found out that a bank officer made an unauthorized cash transfer last Friday, June 30, amounting to P17.03 million from its cash center in Ortigas, Pasig City to its cash center in Caloocan City.

The bank officer under investigation was identified as Mariebel Osorio, 41, a cash unit head at a UnionBank branch in Ortigas.

"To mitigate the situation, the bank has already handed the case to the proper authorities for a more thorough investigation. Along with this, the bank is also conducting a rigorous internal probe to know the extent of the issue," UnionBank said in a statement on Monday, July 3.

"Importantly, this incident is not involved in any way with cyber security or cyber crime," the bank added.

Osorio was arrested in Barangay San Antonio, Pasig City.

"UnionBank always follows the highest level of security, audit, and transparency standards. Rest assured that we will share as much information as we can after this is verified from our end," the bank said in the statement.

With customer loans rising faster than deposits, the Aboitiz-led bank saw its net income register an all-time high of P10.1 billion in 2016.

The bank's total loans also jumped by 31% to P235.4 billion, resulting in total assets breaching the half-trillion-peso mark, to close 2016 at P524.4 billion.

UnionBank's total deposits grew by 21% to P376.5 billion, with low-cost CASA increasing by 18%. – Rappler.com

SEOUL, South Korea – Samsung Electronics will invest nearly $18 billion in its chip business, the South Korean firm said Tuesday, July 4, as it seeks to expand its lead in the global memory chip and smartphone markets. 

The world's top maker of smartphones and memory chips will invest 20.4 trillion won ($17.7 billion) by 2021 to expand and upgrade its chip plants in the South Korean cities of Pyeongtaek and Hwaseong, it said in a statement. 

The factory in Pyeongtaek, 70 kilometers (44 miles) south of Seoul, is the world's biggest and has recently started production after Samsung Electronics spent 15.6 trillion won over the past two years to build it. 

The company also plans to expand its NAND chip plant in the Chinese city of Xian to meet booming demand for the chips used in high-end storage products, it said. 

It did not elaborate on when and how much money it plans to invest there. 

In smartphones, Samsung has been increasingly sandwiched by smaller Chinese rivals in the low and mid-end markets, and by Apple's iPhone in the high-end segment.

It also suffered a blow to its reputation after a humiliating mass recall last year of its Galaxy Note 7 smartphone over faulty, exploding batteries.  

But the firm managed to post stellar profits partly thanks to the robust chip business, which supplies not only to its own handset unit but also other electronics giants including Apple.  

Samsung – which accounted for more than 40% of global memory chip sales in the first quarter of this year – posted in April its biggest quarterly net profit in more than three years. 

"Our clients are having difficulty securing enough semiconductor chips due to growing global demand for high-tech gadgets," it said. 

"We plan to actively respond to those demands by making aggressive investments on our production lines at home and abroad," it said. 

Analysts say a global shortage of chips may persist throughout 2017, driving prices higher and benefiting major suppliers such as Samsung and another South Korean chipmaker, SK Hynix.

Average prices for DRAM chips used in PCs and servers, and NAND flash chips used in handsets are expected to jump 53% and 28% respectively this year, according to market researcher IC Insights. 

The announcement also came after newly elected South Korean President Moon Jae-In set tackling rising unemployment as his top priority.  

Samsung said its investment would eventually help create as many as 440,000 jobs through 2021, including indirectly, and help bolster Asia's fourth-largest economy. – Rappler.com

DOHA, Qatar – Energy-rich Qatar said Tuesday, July 4, it plans to increase natural gas production by 30% over the next several years, as it faces pressure from its neighbours in a diplomatic crisis.

Saad Sherida Al-Kaabi, the head of Qatar Petroleum, told a press conference that the emirate intends to raise production to 100 million tons of natural gas a year by 2024.

"This new project will strengthen Qatar's leading position," Kaabi told reporters.

"We will remain the leader of LNG for a very long time."

Qatar is the world's biggest producer of Liquefied Natural Gas (LNG).

Qatar's current production is up to 77 million tonnes per year. The expansion will increase output levels up to the equivalent of six million barrels of oil per day, Kaabi said.

The announcement comes as the Gulf faces its worst diplomatic crisis in years after Saudi Arabia and its allies imposed a sweeping embargo on Qatar last month.

Its timing is likely to be seen as as much political as economic.

On Monday, July 3, Qatar gave its response to a 13-point list of demands its neighbours made for lifting their sanctions.

Kaabi said Qatar wanted the production increase to be carried out through a joint venture with international companies.

But he added that the emirate would still go ahead with it even if Saudi Arabia and its allies made good on their threat to sanction any international firm working with Qatar if it failed to meet their demands.

"If there are no companies willing to work with us, we will do the 100 million tons," he said. – Rappler.com

MANILA, Philippines – The Manila Electric Company (Meralco) maintained there is nothing anomalous about its applications for power supply agreements (PSAs) on 7 coal-fired power plants, which were filed before the Energy Regulatory Commission (ERC).

Meralco first vice president Ivanna de la Peña made the statement as the House committee on good government and public accountability looked into the Meralco-ERC contracts on Tuesday, July 4.

"Meralco's 7 long-term PSAs filed before the ERC in April 2016 are not midnight deals. Discussions with power project proponents started as far back as 2012," said De La Peña.

She was referring to the PSA applications for the following:

• Redondo Peninsula Energy Incorporated (225 MW)
• Atimonan One Energy Incorporated (1,200 MW)
• St Raphael Power Generation Corporation (400 MW)
• Central Luzon Premiere Power Corporation (528 MW)
• Mariveles Power Generation Corporation (528 MW)
• Panay Energy Development Corporation (70 MW)
• Global Luzon Energy Development Corporation (600 MW)

According to De La Peña, the PSAs were executed to "ensure least cost of power for captive customers and to shield such customers from price spikes in the WESM (Wholesale Electricity Spot Market)."

"They represented the least cost among all offers received by Meralco," she added.

The investigation in aid of legislation was initiated by Bayan Muna Representative Carlos Zarate. Under House Resolution Number 566, Zarate pointed out that the Department of Energy and the ERC previously ordered distribution utilities to conduct a competitive selection process when entering into PSAs.

PSAs should be subjected to competitive bidding in order to stop the practice of self-negotiated generation rates.

The ERC, however, moved the implementation of the competitive bidding process from November 6, 2015 to April 30, 2016, allowing Meralco to apply for the PSAs without having to undergo the competitive selection process.

"The resulting damage to the consumers arising from the said midnight 20-year contracts would easily translate to P12.44 billion a year," said Zarate.

"Historically, Meralco data showed that it pays its sister generators up to 20% (P1 per kilowatt hour) higher rates compared to unrelated generators and the difference between the rates from competitive bidding and self-negotiated rates [is] at P0.50 per kWh," he added.

De La Peña argued, however, that there were valid reasons why the competitive selection process' implementation was moved. She said there were no clear guidelines for the implementation yet in October 2015.

"Distribution utilities and electric cooperatives would have been exposed to questionable or nuisance bids from less or non-qualified parties who would question the entire bidding process," De La Peña said.

"Numerous distribution utilities would have been wholly dependent on WESM, subjecting them to the vagaries and uncertainties of WESM prices," she added.

Civil society organizations have urged the ERC to reject the PSA applications for the 7 coal-fired power plants.

Coal-fired power plants account for nearly 34.6% of the country's 7,419-MW installed capacity, and about 38.6% of the 6,979-MW dependable capacity as of end-2016, data from the Department of Energy showed. – Rappler.com

MANILA, Philippines – With clashes still ongoing between terrorists and government forces in Marawi City, several business groups believe the decision of the Supreme Court (SC) to uphold the declaration of martial law in Mindanao is "necessary" to resolve the violence.

"It is a necessary move to resolve the grave threats posed by the ISIS-inspired attack on Marawi," Vicente Lao, chairperson of the Mindanao Business Council, told Rappler. (READ: 'Normal working day' for businesses amid martial law in Mindanao)

The battle broke out in downtown Marawi City, Lanao del Sur on May 23, leading to President Rodrigo Duterte's declaration of martial law in Mindanao and the suspension of the privilege of the writ of habeas corpus there.

On Tuesday, July 4, the 43rd day of the imposition of martial law in Mindanao, the SC voted 11-3-1 to uphold its constitutionality.

"The business sector in Mindanao supports the decision of the President to declare martial law because at that time it was the most effective response to the serious threat of an ISIS excursion into Mindanao," Lao said in a mobile phone reply.

"Aside from Marawi and maybe the nearby area of Iligan City, the rest of Mindanao does not feel any bad effects [stemming from] the declaration of martial law. The perceived dangers attributed to the declaration of martial law by some quarters are unfounded," he added.

Alfredo Yao, chief of Macay Holdings Incorporated and Zest-O Corporation, also said in a phone interview that the SC decision "actually eases worries among the local business guys regarding the unrest in Marawi."

"It's good for the country. Of course, there will be a temporary setback for tourism. But that setback is actually because of the Marawi unrest, not the martial law in Mindanao. As a whole, I think it is a positive decision," Yao told Rappler.

Since May 23, Marawi has witnessed numerous ground and air assaults, including gunfire exchanges, bomb explosions and air strikes, leaving large parts of the city destroyed and over 400 people, mostly terrorists, killed so far. (READ: Gov't retakes Maute stronghold, Dansalan College, in Marawi)

Over the last 6 years, Mindanao has been growing at an average gross regional domestic product of 7% to 7.5%, higher than the national average of 6.5%.

The region's average annual investment inflows have also grown tenfold. From P5 billion to P6 billion between 2001 and 2010, Mindanao jumped to P50 billion to P60 billion in annual investment inflows between 2011 and 2015, according to the Mindanao Development Authority.

Section 18, Article VII of the 1987 Philippine Constitution says that the President, as commander-in-chief, may "in case of invasion or rebellion, when the public safety requires it" suspend the privilege of the writ of habeas corpus or place the country under martial law. The writ safeguards individual freedom against arbitrary state action. – Rappler.com