LT Group, Inc. (LTG), the flagship of taipan Lucio Tan, is almost doubling its capital expenditures budget in 2021 as it is optimistic that the local economy will improve this year.

During the firm’s annual stockholders’ meeting, LTG President and Chief Operating Officer Michael G. Tan said that “while 2021 will be tough, it will hopefully be better than 2020.”

He said LTG is allotting P9.7 billion for capex this year, almost double the P5 billion spent in 2020. The increase is mainly due to Philippine National Bank for its digitalization and construction expenses of Eton Properties Philippines Inc. as construction was halted during for some time last year.

PNB is allotting P4.5 billion for capex this year while Eton is spending P2 billion. Tanduay Distillers will have a capex budget of P1.5 billion, P1 billion for the Ayala Land-Eton joint venture, and P700 million for Asia Brewery Inc.

Tan said the enhanced community quarantine (ECQ) in Metro Manila starting late March which has since been downgraded to an MECQ will impact the Government’s projected GDP growth of between 6.5 percent to 7.5 percent for 2021, that was announced earlier this year. 

“But this is still a reversal from the 9.5 percent contraction of 2020,” he noted adding that “the country got off to a slow start in 2021, but with the vaccination program of the government underway and the private sector starting soon, hopefully, the economy can open up more as more people get inoculated, and businesses can operate at efficient levels and thereby provide more jobs.”

Tan said the slow opening-up of the economy in 2021 should bode well for all businesses in general and LTG expects the demand for consumer goods, those of Tanduay and Asia Brewery, to show some volume growth or at least remain steady.

But the volume of PMFTC Inc.’s products might still be impacted, as price increases are needed to pass on the annual increase in excise taxes, the last of which was in October 2020. PNB will see some more non-performing loans booked as Bayanihan 1 and 2 that provided a grace period for borrowers ended in 2020, but a better economy should pave the way for the need of more loans.