ABS-CBN diversifies into food, cosmetics, e-market

Media and entertainment giant ABS-CBN Corp. is diversifying in new businesses outside the media space in a move seen as a possible preparation in case its franchise will not be renewed next year.

ABS-CBN announced through separate disclosures to the Philippine Stock Exchange yesterday three major investments that would see the company venture into the food and beverage, customer and merchant e-wallet services, and cosmetics production sectors.

The company said it is investing in a wholly owned subsidiary, The Chosen Bun Inc., to raise, process, manufacture and package all kinds of food products, as well as establish, operate, manage and maintain restaurants, coffee shops, and refreshments parlors, and serve, arrange and cater refreshments and other food or commodities.

The Chosen Bun will initially have an authorized capital stock of P1 million, of which P250,000 will be subscribed by ABS-CBN.

“ABS-CBN Corp. aims to provide consumers with new food products that are healthy and affordable,” the company said.

Aside from its food and beverage venture, ABS-CBN is also making an investment in the customer and merchant e-wallet/e-market services business through a joint venture with information technology services company iBayad Online Ventures Inc.

The media giant and IBayad Online Ventures will organize, invest in, and operate a joint venture corporation for purposes of engaging in the business of customer and merchant e-wallet/e-money services and other related services, as well as advertising, producing, distributing, and marketing products and services that are connected to the operations of said business.

The joint venture company will initially have an authorized capital stock of P100 million, of which P51 million will be subscribed by ABS-CBN.

“The joint venture will enable the provision to customers and merchants of e-wallet and e-money services and other related services,” the listed firm said.

ABS-CBN is also teaming up with Ever Bilena Cosmetics Inc. to invest in a joint venture firm that will engage in the business of manufacturing, production, trading and sale, on wholesale or retail cosmetics, including purchase and importation of raw materials, finished goods, packaging materials and machinery and equipment necessary for said business.

The joint venture corporation will initially have an authorized capital stock of P10 million, of which P1.25 million will be subscribed by ABS-CBN.

The joint venture corporation will have its own management, with Ever Bilena providing support in product development, logistics and retail distribution.

From conceptualization to commercial launch, the parties have agreed to complete and execute all agreed milestones from a period of 54 to 76 weeks.

“The two industry leaders aim to provide consumers with cosmetic products that are affordable and with good quality. Leveraging the strengths and resources of both companies where expertise of Ever Bilena on production development, logistics and distribution and expertise of ABS-CBN on marketing promotions and talent development are utilized to launch a cosmetics brand,” ABS-CBN said.

ABS-CBN, home to the Philippines’ top-rating TV programs, box-office films, and best-selling books and music, is rapidly transitioning into an agile digital company with a growing list of digital properties.

The company, however, is in danger of not having its franchise renewed when it expires next year following repeated threats from President Duterte himself.

Duterte has said several times that he is personally against the renewal of franchise of  the media and entertainment giant.

Eagle Equities Inc. head of research Chris Mangun said it is possible that these new investments being undertaken by ABS-CBN are in preparation should it fail to have its franchise renewed.

“It is quite surprising that they are starting to venture into other business outside of the media space. Food, beverage and cosmetics are highly profitable sectors and the e-market services sector is starting to take off,” Mangun told The STAR.

“So yes they may be covering their bases in case their franchise is not renewed,” he said.

https://www.philstar.com/business/2019/03/30/1905644/abs-cbn-diversifies-food-cosmetics-e-market

Deficit posted despite ‘forced underspending’

The government’s budget balance reverted to a deficit in February despite continued delays in the passage of this year’s outlay.

The month’s P76.4-billion gap was a reversal of the P44.5-billion surplus posted in January, Treasury bureau data released on Friday showed. It was also wider than the P51.7-billion deficit recorded a year earlier.

Government revenues rose by 13 percent to P202.1 billion, from P178.5 billion last year, while expenditures grew by 21 percent to P278.5 billion from P230.2 billion. A month earlier, revenues rose by 7 percent while expenditures fell by 7 percent.

The latest deficit resulted in a year-to-date shortfall of P31.8 billion, 23 percent lower compared to the P41.5 billion posted in the comparable 2018 period.

Revenues up

For February alone, the Bureau of Internal Revenue (BIR) accounted for the bulk of revenues with P135.7 billion, 16 percent higher compared to the year-earlier P116.6 billion. The growth was faster compared to January’s 5 percent.

The Bureau of Customs (BoC) netted P44.2 billion — a 1-percent gain from last year’s P43.7 billion — while other offices contributed P2.7 billion, bringing total tax revenues for the month to P182.6 billion. Tax revenue growth was faster at 12 percent from the 8 percent a month earlier.

Non-tax earnings, meanwhile, totaled P19.5 billion with the Treasury contributing P9.2 billion — up 56 percent — “mainly due to the P4.0 billion dividend from the Bangko Sentral ng Pilipinas and P2.9 billion national government share in Pagcor (Philippine Amusement and Gaming Corp.) income.”

Other offices contributed P10.3 billion, 6 percent higher from last year.

Spending

The bulk of government spending or P253.2 billion was for primary expenditures, which rose by 24 percent from P204.1 billion a year ago.

The Treasury bureau said this was “due to payments of accounts payable by National Government Agencies and the release of January internal revenue allotment for local government units that slid to February.”

Interest payments of P25.3 billion, meanwhile, accounted for the rest of state spending. It dropped by 3 percent year-on-year “due to the coupon on bonds which matured in 2018.”

Netting out interest payments, the government recorded a P51.1-billion primary deficit in February, wider than the P25.6-billion shortfall posted last year.

Year to date, the primary balance hit a surplus of P39.4 billion, wider than last year’s P28.1 billion.

YTD tally

Reckoned from the start of 2019, revenues were up 10 percent year on year to P458.8 billion as of end-February.

The BIR’s two-month tally of P320.8 billion was 10 percent higher compared to a year earlier while the BoC’s year-to-date take of P92.6 billion was 9 percent better.

Primary expenditures rose 8 percent to P419.4 billion during the period while interest payments recorded 2 percent growth to P71.2 billion.

This resulted in lower-than-programmed state spending in the first two months of the year, the Finance department said in a statement.

January-February expenditures totalled P490.7 billion, 7 percent higher than a year ago but P43.7 billion less than estimated programmed funds of P534.4 billion.

In a statement, the Finance department said this was equivalent to P740.7 million in available funds that the government was not able to utilize per day because of the delay in the implementation of the 2019 national budget.

‘Forced underspending’

The government has been operating on last year’s P3.767-trillion budget since the start of the year. This means agencies can only spend for items detailed in the 2018 outlay and cannot embark on programs and projects supposed to be implemented this year.

“The No. 1 casualty of this forced under-spending is President [Rodrigo] Duterte’s signature ‘Build Build Build’ program,” Finance Assistant Secretary Antonio Lambino 2nd said.

“[I]t has barred the government from frontloading investments in big-ticket infrastructure projects during the best time of the year to do construction, and for projects that have the highest multiplier effect on the domestic economy,” he added.

Earlier this week, Senate President Vicente Sotto 3rd ended the budget impasse by signing the 2019 General Appropriations Act. However, he signed the document with “strong reservations” given the Senate’s claims that the House of Representatives made post-bicameral conference committee changes.

The National Economic and Development Authority has warned that Philippine economic growth could decelerate sharply to 4.2-4.9 percent under a full-year reenacted budget.

Economic managers have also cut their growth targets for 2019 and 2020, citing the reenacted budget, an ongoing El Niño and the US-China trade war.

The interagency Development Budget Coordination Committee is now aiming for 6.0-7.0 percent growth this year and 6.7-7.5 percent next year, down from 7.0-8.0 percent previously.

Apprehensions validated

“Given that it would take weeks for Malacañang to review the Congress-submitted GAB (General Appropriations Bill), for the President to sign it, and for the concerned agencies to implement their respective projects, we can expect the 2019 GAA to be fully on stream on or before the middle of this year yet,” Lambino said.

ING Bank Manila senior economist Nicholas Antonio Mapa stressed that the latest budget balance data “validates government officials’ initial apprehensions about the budget delay.”

“Budget delayed is growth denied. Hopefully the GAB can be signed to get government spending back on track but it may be difficult to ‘catch up’ given they’ll be attempting to spend funds allotted for 12 months in only seven months time,” he added.

https://www.manilatimes.net/deficit-posted-despite-forced-underspending/532779/