BIZ BUZZ: Bad timing
When prices of goods rise dramatically during a crisis, retailers big and small are usually accused of profiteering.
When this happens, the government, through the Department of Trade and Industry, is usually able to take immediate punitive action against the wholesalers and retailers who commit such an unconscionable act.
But what if it is the government itself that is the cause of the steep rise in the prices of consumer goods?
This is what has happened lately after the Philippine Ports Authority (PPA) raised the tariffs charged to businesses operating in the ports that transport their goods by sea. Those higher rates are passed on to the consumers, of course.
The PPA says it was implementing the “Port Terminal Management Regulatory Framework” where contracts for port operations are awarded to the highest bidders.
But any which way one looks at it, higher port tariffs affect all port businesses. The smaller ones may not survive, resulting in their workers being laid off.
To raise tariffs that result in higher prices of goods at the height of the pandemic is poor timing. Consumers already reeling from the effects of the crisis due to lost jobs, reduced income of their enterprises, and the uncertainty of when the situation will return to normal have to face the additional burden of higher prices of everything, from fruits and vegetables, canned goods, rice and corn, and all the necessities of life in the time of COVID-19, not due to inflation, but due to PPA’s policy.
Biz Buzz hears Congress has been looking at the PPA situation, notably the “overbidding” aspect where highest bidders win long-term deals, after which they may be allowed to renegotiate their contracts at a later date.
Specifically, Rep. Alfonso Umali of Oriental Mindoro sought a review of the PPA’s new rules and regulations, as well as the new winning bids of the port in his province, which he said was “marred by corruption.”
Sen. Risa Hontiveros, meanwhile, asked for a review of PPA Administrative Order No. 12-2018, which she alleges would displace thousands of port workers employed by existing concessionaires, who would all be displaced by firms that won bids to operate port services, which they could later revise.
For his part, Sen. Francis Pangilinan says he strongly opposed the new tariffs by a new port service contractor.
The fear is that the sudden rise in tariffs will eventually be replicated in all ports nationwide, causing an upward spiral of prices of food and other basic commodities.
Will this policy stand at the expense once more of the Filipino consumer or will policymakers be more sensitive to the current economic challenges and amend it? Abangan!
—Daxim L. Lucas
Best bond adviser
Speaking of the The Asset Triple A Country Awards 2021, Standard Chartered Bank (SCB) Philippines won “Best Bond Adviser (Global).”
This recognition “affirms the bank’s leading role in providing strategic and robust advisory services to both government and corporates on debt raising and financing structures,” said the first foreign bank to set up shop in the country.
The Asset also announced the Best Deal Awards including issuances led by SCB 015—Best Sustainability Bond, Best Sovereign Bond, Best Corporate Bond, Best Retail Bond and Best Syndicated loan.
SCB led RCBC’s P17.87-billion Asean sustainability bond, which won “Best Sustainability Bond.” The bank acted as sole lead arranger and bookrunner in the first Asean sustainability bond issuance out of the Philippines in 2021 and the only peso-denominated sustainability bond printed in 2021.
SCB was also book runner and lead manager for the “Best Sovereign Bond.” This was the largest euro bond transaction of the RoP and the country’s longest ever euro tenor.
The “Best Corporate Bond” citation went to Petron Corp.’s $550-million senior perpetual capital securities, where SCB acted as lead arranger and bookrunner. This was the first perpetual capital securities issuance out of the Philippines in 2021.
The award for “Best Retail Bond” went to UnionBank’s P9-billion pesos dual-tranche fixed rate bond, where SCB acted as bookrunner and lead arranger. This transaction was pioneering as it offered proof of concept that bonds can be tokenized using a blockchain platform.
“Best Syndicated Loan” was bagged by SM Prime Holdings for its $500-million syndicated term loan, where SCB was lead arranger and bookrunner. This was the largest syndication ever by the property giant and received a very enthusiastic response from the market.
—Doris Dumlao-Abadilla
From AECOM to ‘Ablr’
After five years as country CEO of infrastructure consulting firm AECOM, Arnel Casanova, former Bases Conversion Development Authority chief, recently bid the multinational firm adieu.
Casanova—a UP-educated lawyer who always maintained progressive views even when he joined the corporate world—had intended to run for senator under the slate of Vice President Leni Robrero alongside Chel Diokno. But later on, he withdrew his candidacy to focus on supporting the Kakampink slate.
Under Casanova’s leadership, AECOM bagged consultancy deals for the design of a number of big-ticket infrastructure projects: the country’s first subway Metro Manila Subway; the North-South Commuter Rail Project; the Philippine Senate building, BCDA’s smart and green metropolis-Clark Green City (now called New Clark City), the first waste to energy project in the country, the Laguna Lake rehabilitation masterplan and many iconic structures in the Philippines.
These are pioneering projects that cemented AECOM’s legacy in the Philippines in the next hundred years. At the same time, AECOM attained a record financial performance in 2019 prior to the pandemic and boosted the visibility of its brand in engineering and design consultancy.
Under Casanova’s term, AECOM also set up a Global Shared Services unit from scratch, and now employs over a thousand people.
But for now, Casanova said it’s time for a new adventure. He recently formed a Singapore-based international consulting firm, Ablr Pte., which will focus on infrastructure, utilities and real estate projects. He is the president and CEO of this new consultancy firm, envisioned to be an enabler of large-scale urban planning projects in the region. We heard that the new firm already has a good pipeline of projects.
