BusinessMirror May 18, 2015

BusinessMirror

THREETIME ROTARY CLUB OF MANILA JOURNALISM AWARDEE 2006, 2010, 2012

U.N. MEDIA AWARD 2008

A broader look at today’s business TfridayNovember 18,2015 2014Vol.Vol.1010No.No.22140 Monday, May 18,

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OFFICIAL SAYS LAWMAKERS WILL NOT ALLOW D.T.I., D.O.F. DISAGREEMENT TO HINDER PASSAGE OF INCENTIVES BILL

‘Congress bent on passing Timta’ INSIDE

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DIANA VREELAND

Life

The chief shepherd

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EAR Lord, after Your resurrection, You did not forget Your little flock of disciples.

Knowing that You would not be visibly among them any longer, You entrusted them all to the care of Peter, the chief shepherd and of all the other apostles and their successors.

They were to watch over the whole flock as the Holy Spirit had entrusted to their care. They were to shepherd “the Church of God which He has acquired at the price of His own blood.” We can do our share by being a good flock till the end of time. Amen.

EXPLORING GOD’S WORD, FR. SAL PUTZU, SDB AND LOUIE M. LACSON ACSON Word&Life Publications • teacherlouie1965@yahoo.com

BusinessMirror

Editor: Gerard S. Ramos

ONGRESS intends to pass the contentious Tax Incentives Management and Transparency Act (Timta) before the end of President Aquino’s term with or without a consolidated position from the Department of Trade and Industry (DTI) and the Department of Finance (DOF), which continue to struggle on the measure’s salient points.

‘MADDING CROWD’S MATTHIAS SCHOENAERTS TALKS LOVE, LOYALTY AND SHEEP

»D3

lifestylebusinessmirror@gmail.com • Monday, May 18, 2015 D1

Making scents of Diana Vreeland B B M Los Angeles Times

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HE “discovered” actress Lauren Bacall, recognized the bikini as “the most important thing since the atom bomb,” advised Jackie Kennedy on matters of style, and helped women navigate nearly 40 years of change in the 20th century by giving them a powerful point of view in her magazine pages.

And now, 26 years after her death, the legacy of fashion editor Diana Vreeland is still very much alive, thanks in no small part to her family.

In 2012 she was the subject of the documentary film, The Eye Has to Travel, directed by granddaughterin-law Lisa Immordino Vreeland. In 2013 her spicy words were published in Diana Vreeland Memos: The Vogue Years, with a forward by grandson Alexander Vreeland, who administers her estate. And last year, great-granddaughter Caroline Vreeland emerged as a new It girl on the fashion and party scene, an LA-based singer-songwriter with a sultry online music video who is poised to take the family name into the 21st century.

Diana Vreeland also remains a touchstone in fashion, cited by Marc Jacobs as inspiration for his hyper-fab fall 2015 collection and runway set, a reproduction of the famous living room she called “a garden in hell.” And during the Academy Awards in February, fashion illustrator Donald Robertson brought Vreeland back to life in a series of drawings for Harper’s Bazaar, where he imagined her hobnobbing with present-day stars on the red carpet.

Vreeland’s cult of personality also lives on in a collection of fragrances. Diana Vreeland Parfums launched last September with six scents, and a recently added seventh for spring, an iris oud named Daringly Different.

“My grandmother changed history,” says Alexander Vreeland over ice tea at Neiman Marcus Beverly Hills earlier this month, when he was in town

earlier to launch the new scent and talk to customers about the fragrance brand, which he established after 12 years of working in the luxury business at Giorgio Armani. “The documentary my wife did was a turning point. We could see the resonance of my grandmother was far broader than we thought and more international.… The question for me then was, ‘Is there a product we could do that could be right for this brand, and could this be a brand?’

“We chose fragrance because my grandmother had legitimacy in it. A lot of stories about her talk about fragrance. When she was at Vogue, for example, you’d get off the elevator and you could smell her candles all the way down the hallway. And she used to pipe fragrance through the air conditioning ducts at the Metropolitan Museum of Art.” (Diana Vreeland was a special consultant at the Met’s Costume Institute from 1972 until her death in 1989. She helped create several memorable exhibitions there, including The Glory of Russian Costume and Romantic and Glamorous Hollywood Design.)

Alexander Vreeland spent two years developing the brand with the French firms IFF and France Labs, including storyboarding ideas and smelling hundreds of samples. The resulting fragrances play on Diana Vreeland’s passion for color (who can forget her famous saying, “Pink is the navy blue of India”?) and her play with words (“a little bad taste is like a nice splash of paprika” is another notable zinger).

Perfectly Marvelous is a heady jasmine and Absolutely Vital an earthy sandalwood. “My grandmother had this pot of sandalwood oil on her makeup table, and she would dab it behind her ears before she went out,” he says.

Extravagance Russe is an Oriental that pays homage to the Russian exhibition at the Met. “She wanted the czar and czarina’s clothes, but the Russians refused to lend them. So she and Jackie [Onassis] flew to Moscow to sit down with the ministry of culture,” he explains.

“They ended up getting everything they wanted.”

VINTAGE Diana Vreeland, whose legacy as an editor of Vogue and Harper’s Bazaar Bazaar, is very much alive 26 years after her death.

VREELAND’S cult of personality also lives on in a collection of fragrances, bearing such names as Perfectly Marvelous and Extravagance Russe.

Outrageously Vibrant is a gourmand fragrance, meaning you can actually eat it. (“I can spray some in your ice tea,” he offers. I decline.) It’s a combination of cassis and patchouli that Vreeland says is a top seller in Europe at Colette and 10 Corso Como.

Simply Divine is a tuberose that also uses the stem of the rose, and Smashingly Brilliant a sporty citrus with lemon and bergamot that’s inspired by Vreeland’s love of Capri.

The fragrances come in vibrantly colorful bottles designed by Fabien Baron, embellished with silk tassels and the initials D.V. Boxes are lined with some of her memorable quotes. Also available: a body cream and candles.

Next up for the Vreeland canon is a book about her 26 years at Harper’s Bazaar, Diana Vreeland: The Bazaar Years, 1936-1962, out in October. “It will show a different facet of her legacy, how she was so

B C N. P  J M  C

respectful of women.… Even though there was a lot of nudity, it was never inappropriate,” her grandson says of her imagery in the magazine.

“Fashion moved from ball gowns to streetwear and she was right in the middle of it. Women were comfortable in their bodies for the first time, and that evolving role is very important.… Moving women into bathing suits and caftans, it’s a major body of work.”

Another fragrance will launch for fall, and possibly bath products after that, Vreeland says.

But there is a limit to his vision. “I don’t see this being an apparel collection,” he says. “We’ve only been in stores eight months. The goal is to be good at certain things, and to get people seeing what we’re doing.”

Diane Keaton, a skin-cancer survivor, talks sunscreen, beauty B M M Los Angeles Times

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IANE KEATON is standing in front of a floor-to-ceiling window, backlighted by Los Angeles’s late afternoon sun. Even appearing as just a shadowy silhouette blown out by the light, Keaton’s shape is an iconic one.

There are the distinct lines of a charcoal gray hat with a grosgrain band, small rectangular eyeglasses and a nipped-waist, men’s style coat that is well balanced with the full skirt and stiletto sandals that fall below it.

It’s classic Keaton—neatly tailored, a little eccentric, covered up and conservative in a kooky sort of way. Even her nails have the menswear-inspired look she has been known for since her Academy Award-winning turn as Annie Hall in 1977.

“Stickers!” the 69-year-old actress exclaims of the ivory and black houndstooth-

check decals she has plastered to her neatly trimmed nails. Keaton prefers the nail stickers to polish for practical reasons: because they won’t chip.

Perhaps more important than sticking to the nail decals as a dedicated part of her beauty regimen, Keaton is adamant about wearing sunscreen. After being diagnosed with basal cell carcinoma at age 21 and more recently with squamous cell cancer, which was removed through two surgeries, Keaton is a vocal proponent of proper sun care.

She has been a L’Oreal Paris spokesman since 2006 and counts the brand’s sunblock as something she is never found without.

“It’s a family history,” says Keaton of skin cancer. “I remember my Auntie Martha had skin cancer so bad they removed her nose. My father had basal skin cancer and my brother had it.

It’s tricky with this skin cancer. That’s why you’ve got to put the sunblock on.”

She pauses to dig into the deep pocket of her full skirt and pulls out a small bottle of L’Oreal’s Silky Sheer Face Lotion with SPF 50.

“That’s what I do, I just keep it in my pocket,” she says, adding that she likes a lightweight silky formula and reapplies it a few times during the course of a day.

“Back in my 20s I didn’t pay attention much,” Keaton says of protecting her skin.

“I didn’t research and didn’t really care and that was stupid because it’s dogged me my entire adult life, even recently. I didn’t start sun care until my 40s.”

She says that her ever-present hats also help protect her face from the sun, and she still has the area where the squamous cell cancer was removed checked often.

Besides her dedicated use of sunscreen, Keaton says that the rest of her beauty routine is quite simple. She has always been diligent about using a face cream day and night and swears by eyeliner and lipstick for her everyday makeup look.

“I like to accentuate the shape of my eyes,” she says, “They go down, and I like that they go down. It happens more as you get older. My dad had eyes like that. He’s passed on and I like to think we’re sharing the same eyes, that I’m taking his eyes with me.”

As for lipstick, Keaton would like to wear red, but says the shade doesn’t suit her coloring. Coral and warm rose-brown tones are more her speed.

But other than wearing sunscreen and avoiding red, this woman who has come to redefine traditional style and beauty ideals stays flexible.

“Beauty is like the word ‘love,’ it’s humongous, it encompasses everything,” she says.

“I see it differently than I used to and it keeps changing and evolving, and that’s what beauty needs to do, it needs to keep changing and evolving because that’s how powerful it is. It’s important.”

SUNBLOCK

POWDERED Sunshine

SESSAME Sun Tan 250g SE

We know, you love the sun but...

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the country—has joined the army of sun warriors to help protect you from the harmful effects of sun exposure while keeping you feeling and looking fabulous.

Protect and nourish your skin with Lush’s innovative Sun Care range, which is packed with the most beautiful fresh ingredients that will soothe your body—with the additional advantage that these products are made with industry-standard synthetic sunscreens, giving each one both an SPF (sun protection factor) and UV UVAPF (UV (UVA protection factor).

Get bronzed not burned with Sesame Suntan Lotion, a light, sumptuous cream with fresh ingredients like sesame oil and walnut leaf infusion to help increase the skin’s melanin production—its natural reaction to sun exposure—which means it will actually help you to tan. Fair Trade Organic Colombian cocoa butter and aloe extract will soothe and nourish the skin, with three broad-spectrum sunscreens to ensure that your skin stays protected, as well as smelling irresistible.

HE question is: Does it love you right back? While the sun does have health and beauty benefits, unprotected sun worship—like unprotected sex—can get you into plenty of trouble.

Or haven’t you read the story on Oscar winner Diane Keaton on this page?

Sunscreens are a must if you want to protect your skin while you’re out in the sun.

Everyone’s skin is different and paler skins are more sensitive to sunlight, so even if you’re wearing sunscreen you might still be susceptible to the damage that UV UVA and UVB rays can inflict on the skin. In order to stay safe, you just need to take some care and think about your skin. UV rays can be really harmful and sometimes the damage isn’t something you’ll notice straight away.

It only takes a few simple precautions to enjoy the sun and keep your skin healthy and happy, and British cosmetics brand Lush—exclusively distributed by SSI Group Inc., and with stores throughout

Dust on some powdered sunscreen Powdered Sunshine, a loose, light powder that’s so simple to use—just sprinkle onto your skin and let it protect you from the sun. This revolution in sun care is easy to carry around with you and very handy for topping up your sun protection throughout the day. With plenty of calamine powder—which is rich in the natural sunscreen zinc oxide—plus sesame oil, lemon, lime and patchouli oils for a fresh, earthy and citrusy fragrance.

Finally, there is the Sunblock to shower on your sun care—a solid wash-on sun protection with calamine powder, cocoa butter and rose absolute which calms and heals the skin, while leaving a floral scent on the skin. One third of this bar will be enough to protect your whole body, simply glide the bar over damp skin in the bath or shower, rinse off and gently pat your skin dry with a towel. This is made with three broadspectrum sunscreens, as well as soothing, nourishing ingredients to benefit your skin.

LIFE

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TECHNOLOGY TRENDS BusinessMirror

www.businessmirror.com.ph

According to a BM source, the heads of the DTI, the DOF and the Bureau of Internal Revenue (BIR) will be meeting on Monday for a final discussion with Timta House author, Rep. Ma. Leonor Gerona-Robredo, on points of disagreement on the bill.

After the meeting, a last hearing on the bill will take place on Wednesday. And regardless of a consensus between the DTI and the DOF, the proposed legislation will move on to plenary debates in the House of Representatives, the source said.

C  A

Monday, May 18, 2015 E 1

TECHNOLOGY TRENDS THAT MATTER TO SALES TEAMS B A A. Z, P.K. S  S E. L

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HE convergence of mobile, analytics, context-rich systems and the cloud is transforming the sales process and enabling buyers and salespeople to engage with each other more effectively. Recently, Gartner, an information-technology research and advisory company, listed 10 top strategic technology trends.

Some have significant implications for sales forces, including: 1. Computing everywhere:

The evolution of pyramiding and the ‘unwitting’ partners

The data and technology enabled the sales force to better match products with customers, driving stronger uptake of new product lines and improving the opportunities for cross-selling and up-selling.

A company in the financial services industry examined millions of phone records and listened to dozens of calls to identify how to improve the sales process. Using advanced analytics, the company produced simple but groundbreaking insights.

First, by focusing on just seven of the 14 target industries, salespeople could increase profits by 16 percent.

Second, by shifting calls to the right time of day, salespeople could triple the probability of a sale and increase profits by 20 percent. Third, by adopting the sales techniques used by top performers, salespeople could enhance their results.

As new trends emerge, sales forces must constantly and creatively adopt and adapt new technologies to improve sales processes and better serve customers.

Through the proliferation of mobile devices, buyers and salespeople can reach each other anywhere, anytime.

2. Advanced, pervasive and in-

visible analytics: By layering analytics seamlessly on top of linked data on customers, sales activities and salespeople, companies can deliver the right assistance to salespeople and customers at the right time.

3. Context-rich systems: Data and analytical insights can be tailored for specific situations faced by customers and company personnel. The customization aligns perfectly with how salespeople think and work.

4. Cloud computing and soft soft-

ware-defined infrastructure: These enable fast deployment and scaling of systems to keep up with the changing needs of the business, the customers and the sales force.

Consider these examples: A telecom company developed a filtering model that used advanced analytics to recommend to account salespeople which products and services to offer to each customer based not only on past purchases within that account but also on purchases in other accounts with a similar profile (i.e., “data doubles”). The model also forecasted the size of the opportunity and the likelihood of purchase at each account.

Andris A. Zoltners is a professor emeritus of marketing at Northwestern University’s Kellogg School of Management. He and P.K. Sinha are co-founders of ZS Associates. Together with Sally Lorimer, they are co-authors of Building a Winning Sales Management Team: The Force Behind the Sales Force.

WHAT A TESLAA AND APPLE BOTH KNOW AT ABOUT ENTERING NEW W MARKETS B R A

It’s easy to forget that MP3 players and mobile phones were once regarded as separate market opportunities. So, too, were electric cars and home-energy management. For Tesla, the ability to pursue an ecosystem carryover strategy is twofold: The company’s position with Tesla car owners—a customer base characterized by loyalty and high disposable income. The power of Elon Musk, Tesla’s founder and chairman of SolarCity, the leader in home-based solar-power installation, to convince its distribution channels that Powerwall can win big.

If Tesla can skillfully leverage these relationships, it should be able to build a compelling competitive advantage that won’t erode through product imitation.

Consider the performance of Apple’s highly respected rivals in the smartphone market: Even though they’ve delivered products nearly identical to Apple’s, they’ve only been able to capture slivers of the profit pie. Tesla’s move into the battery storage arena offers a great lesson in ecosystem strategy. The next test is its execution.

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LECTRIC carmaker Tesla recently made headlines when it announced plans to enter the market for battery-based, power-backup systems for homes, businesses and utilities. With its elegantly designed, cleverly branded Powerwall, Tesla has the potential to deploy a true ecosystem strategy to jump-start what has so far been a product-based market.

The battery-based business has been a decadelong disappointment for both incumbents and start-ups. But Tesla could succeed—and transform the market. Tesla could leverage what I call “ecosystem carryover”: using positions in existing market spaces to create a new market-space position.

Ecosystem carryover was Apple’s secret sauce in entering the then-established market for smartphones— and changing the game. It wasn’t the iPhone’s uniqueness that persuaded mobile operators to break from previous industry norms; rather, it was the assured support of iPod buyers happy to upgrade to this next-generation device.

Ecosystem carryover is the key to successful market convergence. This mechanism links initially separate markets into what looks like—after the fact—a single coherent opportunity.

Turn digital overload to your advantage B A S

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ES, you receive more e-mails than you can reply to or even read. Yes, the same goes blog posts, articles and newsletters. And yes, the number of your LinkedIn connections, Twitter contacts and Facebook friends feels overwhelming. But digital overload is also a professional asset that challenges us to make constant, systematic choices about where we’ll invest our time and attention.

Thus we develop habits that make it easier to manage all the

distractions and requests—not just the digital ones—that can blow us off course. Digital overload helps you hone your ability to focus. As author Daniel Goleman has noted, the ability to effectively focus and direct attention is a core competency of effective leaders.

Digital overload forces us to choose: Will I answer that e-mail, or finish my PowerPoint deck? Will I catch up on professional news on LinkedIn, or browse Twitter?

To make these decisions efficiently, we need to develop guidelines that help us consistently

(and over time, instinctively) determine what information merits our attention.

Setting up digital systems makes us more efficient across the board. Creating e-mail rules and filters, Google news alerts and Twitter lists helps translate our priorities into automated systems: Once configured, they manage those constant decisions about which messages, news stories and people are a priority.

By creating a digital notebook system for projects, you’ll get adept at digital note-taking and

retrieval so that all your work is more accessible and collaborative.

And by focusing your LinkedIn network on the people that matter most, you can find a valuable new connection whenever you need it.

So let’s stop treating this digital overload as a problem and instead recognize it for what it is: an opportunity to strengthen our focus and get smarter about how we use digital tools.

Algorithms can make your organization self-tuning B M R

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EVER let an MBA near a marketplace that can run itself .” So said Ming Zeng, chief strategy officer of Alibaba, when I interviewed him.

We realized that, independently of one another, we had both been thinking about what we came to call the “self-tuning enterprise.”

In essence, what Ming meant was: Don’t try to manage what is better left to market mechanisms.

As a young enterprise in a fastchanging environment, Alibaba had tried not only to institutionalize change in the company but also to bring the marketplace into the organization.

Many Internet-native companies were already adapting to change through managed experimentation. But Alibaba was taking it a step further by trying to continuously update its product offering, as well as elements of its business that are often fixed: the vision, business model, organization and information systems.

Georg Wittenberg and I at Boston Consulting Group had also been modeling the effectiveness of different approaches to strategy and execution in different environments. Coincidentally, we were using a so-called multiarmed bandit algorithm—the same sort of algorithm that Alibaba and other digital market players use to recommend

products to customers. These algorithms are extraordinarily good at tracking and stretching customer needs and tuning themselves into changing circumstances. So we decided to marry the two streams of thought and codify what Alibaba had been trying to do for some time: build an enterprise that could tune itself to changing circumstances at all levels. We tried to derive a set of principles and actions that any organization could use to create a self-tuning process.

The basic idea is to replace elements of a company’s business system—those that are fixed or specified in a top-down fashion—with self-directed mechanisms that continuously evolve, guided by as well

as shaping the marketplace.

Algorithmic competition is an increasingly important aspect of business. This new type of algorithmic thinking can help update business concepts like vision, organization, business model and information systems that evolved in simpler, more stable times.

Who needs self-tuning? Any enterprise that, like Alibaba, faces a dynamic environment requiring readjustment at all levels. And that’s an increasing number of companies facing disruption from new technologies or competitors.

MONDAY MORNING

Ron Adner is a professor of strategy and entrepreneurship at Dartmouth College’s Tuck School of Business and author of The Wide Lens: What Successful Innovators See that Others Miss.

B C N. P

Alexandra Samuel is an expert in online engagement and the author of Work Smarter with Social Media.

Martin Reeves is a senior partner and managing director at the Boston Consulting Group and is the director of the Strategy Institute.

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© 2013 Harvard Business School Publishing Corp. (Distributed by The New York Times Syndicate)

RAIL SUPERHIGHWAY Perspective BusinessMirror

E4 Monday, May 18, 2015

AMERICA’S PREMIER RAIL SUPERHIGHWAY IS SLOWLY

FALLING APART N

B D B. C | The Associated Press

EW YORK—The trains that link global centers of learning, finance and power on the East Coast lumber through tunnels dug just after the Civil War, and cross centuryold bridges that sometimes jam when they swing open to let tugboats pass.

Hundreds of miles of overhead wires that deliver power to locomotives were hung during the Great Depression.

Amtrak derailment

after the accident, the House Appropriations Committee voted to cut Amtrak’s federal subsidy for next year by $251 million, to $1.1 billion.

“There just isn’t enough money to go around,” said Rebecca Reyes-AlWashington D.C. icea of the Federal Railroad AdminCherry Hill 1 PA. istration. In her 5 km job as the agency’s r Delawa 5 miles N.J. Northeast Corri295 42 dor program manDEL. 95 Amtrak to Trenton ager, Reyes-Alicea .

Ave & New York has been helping ton sing Wilming ilmingtton states pool their Ken clout and push for federal money all From along the corridor, Washington D.C. Frankford Junction rather than com.

The area where the Site of Ave derailment occurred is peting with one derailment ord known as Frankford nkf another.

Fra Junction and has a big Amtrak’s ridercurve. It’s not far from Port Richmond where one of the ship on the cornation’s deadliest train accidents occurred: the 1943 derailment of ridor is up 50 perThe Congressional Limited, from Washington to New York, which cent since 1998, killed 79 people.

Source: AP, Amtrak Graphic: Staff, Tribune News Service thanks mostly to the introduction The rails of the Northeast Corof high-speed trains now favored ridor are decaying, increasingly by travelers who used to fly bestrained—and moving more peotween New York, Washington and ple than ever around the nation’s Boston. Amtrak carried a record most densely populated region.

11.6 million riders on the corridor The railroad’s importance bein fiscal year 2014. came all the more apparent after Commuter railroads that rely Amtrak Train 188 derailed on Tuesheavily on the rail corridor, like the day as it sped around a curve in PhilMetro-North Railroad serving New adelphia, killing eight passengers York and Connecticut, also have and injuring more than 200. been breaking ridership records.

The wreck closed part of the Reyes-Alicea ticks off a list of corridor all week. On a normal needs, from a bigger station in Bosweekday, 2,000 trains run by Amton at the northern terminus to obtrak and eight other passenger rail solete bridges along many of the 450 systems carry 750,000 riders on miles that end next to Capitol Hill. railway between Washington and Half of the route’s 1,000 bridgBoston, making it a vital link for es are around a century old. Not both intercity travelers and suburall are at the end of their useful ban commuters. lives, but at current funding levFederal investigators will take els, it would take 300 years to remonths to determine the cause of place all of them, according to the the crash. Speed, not equipment Northeast Corridor Commission of failure, has emerged as a key factor. transportation officials.

Still, the crash refocused atA 105-year-old bridge over tention on the slow-motion deteNew Jersey’s Hackensack River, rioration of vital infrastructure the Portal Bridge, wouldn’t close with a seemingly endless to-do list. for 45 minutes in February after it By one estimate, it would take $21 opened for a tugboat. Plans call for billion just to replace parts still in a pair of replacement bridges. The use beyond their intended lives. first one will cost $940 million.

“The stakes are enormous,” There are 10 such “historic moveAmtrak’s president, Joseph Boardable bridges” along the corridor. man, warned in his 2015 request to In Connecticut, officials are Congress for funding. He said the working on a plan to replace a corridor was experiencing a “crisis swinging bridge over the Norwalk brought on by decades of chronic River. It was built in 1896. underfunding.”

“As a piece of engineering, it’s Some federal lawmakers want just amazing,” said John Bernick, to give Amtrak less, not more. A day assistant rail administrator for Train 188, was headed to New York from Washington, D.C., when it derailed shortly after 9 p.m. Tuesday. Amtrak said the train was carrying 238 passengers and five crew members. Seven carriages including the engine derailed. Investigators have determined the train was traveling at 106 mph before it ran off the rails, where the speed 276 limit was 50 mph.

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New York

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Site of crash

Philadelphia

THIS circa 1968 photo made available by the Library of Congress shows the Dock Bridge over the Passaic River in Newark, New Jersey, along the Northeast Railroad Corridor. LIBRARY OF CONGRESS VIA AP

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ler

But

THIS circa 1968 photo made available by the Library of Congress shows the Norwalk River Railroad Bridge in Norwalk, Connecticut, along the Northeast Corridor. Officials are working on a plan to replace the swinging bridge which was built in 1896. “As a piece of engineering, it's just amazing,” said John Bernick, assistant rail administrator for the Connecticut Department of Transportation. “But, it’s certainly reached its retirement age.”

LIBRARY OF CONGRESS VIA AP

the Connecticut Department of Transportation. “But, it’s certainly reached its retirement age.”

Last year, after some needed equipment changes, the bridge got jammed, twice, at rush hour while trying to close. The computer that operates the bridge is from the 1980s.

Replacing the bridge, he said, could cost $650 million.

Connecticut has three other bridges built in 1904 and 1905 that the state would like to replace soon, Bernick said.

“They are all turn-of-thecentury vintage structures that

No bottleneck on the Northeast Corridor is more potentially problematic, in the long haul, than where the tracks connect New Jersey and New York City under the Hudson River.

About 170,000 rail passengers make the crossing each weekday in a two-tube tunnel built in 1910.

Some travel Amtrak; more take New Jersey Transit.

A few years ago, officials had a plan funded to relieve chronic backups at the crossing by building two more tubes in a second tunnel, but New Jersey Gov. Chris Christie pulled the plug, citing concerns about his state’s share of the project’s massive cost.

Then, the existing tubes flooded when Superstorm Sandy struck the city in 2012. The tunnel survived, but corrosive salt water did its damage. Now, Amtrak says both tubes will have to be taken out of service and overhauled, one at a time, sometime within the next 15 to 20 years.

Each tube could be offline for a year, a loss of capacity that Amtrak has warned could lead to “profound disruption” of existing service.

That’s not a project that can be delayed indefinitely, said Tom Wright, president of the Regional Plan Association, an urban policy group that studies transportation issues.

“Someday, an engineer is going to go down and say, ‘You know what? We can’t run the trains today. That leak looks too serious,’” Wright said.

Now, Amtrak is pushing another plan for two new tunnels, called the Gateway Program, but cost estimates have topped $16 billion, which would make the project bigger than anything Amtrak has pulled off previously.

“These problems are not going away,” US Secretary of Transportation Anthony Foxx said of the nation’s most important rail corridor.

“They’re going to be there and we’ve got to own up to it and figure out a way forward as a country.”

PERSPECTIVE

require a lot of maintenance to keep going, and the challenge is to say you need to replace them all at once,” Bernick said. “You’re talking about billions of dollars. And can you operationally pull that off with an operating railroad?”

In Baltimore, trains pass through a 1.4-mile tunnel built in 1873—one so narrow, decrepit and leak-prone that speeds are limited to 30 mph.

With such chokepoints, the journey between Boston and Washington takes at least seven hours.

Trains connecting major cities in France can cover a longer distance

in less than half the time.

In its five-year financial plan, released in February, Amtrak warned that its passenger cars also were older than at any previous point in its history.

Amtrak’s Train 188 was going 106 mph just before it derailed on a curve with a speed limit of 50 mph, according to federal accident investigators. “We should be saying that was half as fast as it should have been going, not twice as fast,” said Phineas Baxandall, a transportation analyst for US PIRG, a nonprofit which advocates more transit funding.

E4

S

First of three parts

OME have remained too brazen, while others have chosen to evolve to escape state scrutiny. But to the trained eye, it is still too easy to unmask pyramiding sales schemes disguised as direct selling, even if they make use of established companies as “unwitting” partners to gain legitimacy.

This is why when you mention “network marketing”—or just “networking”—to any group of people, eyebrows would surely be raised; and for good reason.

It’s been almost a decade since illegal-pyramiding schemes were unveiled to the public. And while the hype has died down, the spread of the dubious operations persistS; and so do the misconceptions.

People often associate the terms

PESO EXCHANGE RATES n US 44.5690

networking, network marketing and “multilevel marketing” with pyramiding—a business practice usually employed by fraudulent firms.

Direct selling, network marketing and multilevel marketing, which are all generally person-to-person selling, are legitimate strategies to sell products, according to both Trade Undersecretary for Consumer Protection Victorio Mario A. Dimagiba and Direct Selling Association of the Philippines (DSAP) President Joey Sarmiento.

The method is used by organizations to distribute relatively unknown brands, be they beauty- care or health-and-wellness goods—directly from a manufacturer to the consumer—without the additional costs incurred through additional channels, such as distributors, retailers and wholesalers.

C  A

DIGUISIT ROCK FORMATION One is confronted by a humongous piece of rock on the beaches of Diguisit town in Aurora province, providing instant scenic relief to weary urban tourists, especially at sundown. The place is six hours away from Manila and has attracted tourists both local and foreign. NONIE REYES

MVP REVEALS INVESTMENT PLANS OF PLDT B L S. M

P

HILIPPINE Long Distance Telephone Co. (PLDT) Chairman Manuel V. Pangilinan simply smiled when asked to comment on Globe Telecom Inc.’s stellar performance in the first quarter of 2015.

During that period, the secondlargest telecommunications company in the country reported net income totaling P4.2 billion, or a 43-percent surge from P2.95 billion the year prior.

The dominant telecommunications and multimedia provider, on the other hand, reported flattish profits of P9.4 billion in the first three months of 2015.

PLDT,” A

LTG reports ₧1.6-B net income in Jan-March

L

UCIO C. TAN’S LT Group Inc. (LTG) reported net income of P1.59 billion in the first three months this year, relatively flat profits compared to year-ago income of P1.61 billion.

The Philippine National Bank’s (PNB) income contribution to LTG amounted to P645 million, or 41 percent of the total. The group’s tobacco business contributed P409 million, or 26 percent of the total, followed by Asia Brewery Inc. (ABI), at P301 million, or 19 percent. Tanduay Distillers Inc. (TDI) accounted for P75 million, or 5 percent, while Eton added P51 million, or 3 percent. Equity in net earnings from LTG’s 20.17-percent stake in Victo-

rias Milling Co. provided P93 million, or 6 percent of the total.

LTG’s balance sheet remained strong, with the parent company’s cash balance at P4.2 billion as of end-March 2015. Debt-to-equity ratio was at 3.15:1 as of end-March 2015 with the bank, and at 0.13:1 without the bank.

PNB

THE PNB reported an income of P1.39 billion in the first quarter, 2 percent higher than the P1.36 billion in the comparable period. This is largely due to higher other income, which amounted to P1.37 billion in the January-to-March period S “LTG ,” A

n JAPAN 0.3740 n UK 70.3254 n HK 5.7506 n CHINA 7.1872 n SINGAPORE 33.7849 n AUSTRALIA 35.9747 n EU 50.8711 n SAUDI ARABIA 11.8851 Source: BSP (15 May 2015)

A2

Monday, May 18, 2015

News

BusinessMirror

‘Congress bent on passing Timta’. . .

Rodel Batocabe, who co-sponsored the Resolution of Both Houses 1, or the economic Charter change (Cha-cha), said the lower chamber already completed the period of interpellation for the measure and is ready to approve it this week.

“We already finished the plenary debates for economic Cha-cha last Wednesday. We may approve the measure on second reading this week,” Batocabe said in a text message.

Speaker Feliciano Belmonte Jr., in an interview late last week, said once the interpellations are completed, the

PLDT. . .

news@businessmirror.com.ph

Continued from A12

measure will likely be approved on second reading. “The moment they finish the interpellations, then it will probably be approved on second reading,” Belmonte said. The resolution, filed

by Belmonte and Sen. Ralph Recto, aims to amend the so-called 60-40 rule that limits foreign ownership on certain activities in the Philippines.

The resolution will include the phrase “unless provided by law” in the foreign-ownership provisions of the Constitution, particularly on land ownership, public utilities, natural resources, media and advertising

industries. Under Article XII of the Constitution, ratified during the term of then-President Corazon Aquino, foreign investors are prohibited from owning more than 40 percent of real properties and businesses. Foreigners are, likewise, prohibited from exploiting the country’s natural resources and from owning any company in the media industry.

Quimbo, chairman of the House Committee on Ways and Means, said the Joint Foreign Chambers (JFC) and

Philippine business groups have reiterated their support for the passage of several economic measures.

“We discussed updates on a number of bills pending before the ways and means committee and the lower chamber, they expressed support to most of the measures particularly on the proposed Customs Modernization and Tariff Act, proposed amendments to Cabotage law, the proposed Timta, and the measure lowering income and corporate taxes,” said Quimbo, who met with the JFC and the Philippine business groups last Monday.

participate or engage in any one or more of three ways,” he explained. The three ways the businessman alluded to include, first, partnering with overthe-top content providers such as Facebook, Twitter and Viber, among others.

“Second is to make investments in Internet companies like what we did in Rocket Internet and iflix,” he said. “Third is to develop our own apps like SafeZone, PayMaya, which are indigenous, native apps developed by the group.”

The company has a 6.1-percent share in Berlin-based Rocket Internet. Despite being diluted from 10 percent, the value of the shares now stands at €443.3 million, some 33 percent more than PLDT’s original €333million investment.

The partnership enables both companies to venture into partnerships in the e-commerce arena.

The Filipino telecommunications giant and the German Internet company are also partners at the Philippines Internet Group, a firm that focuses

on creating and developing online businesses in the Philippines.

PLDT invested €30 million to own a third of the company. Under the terms of the transaction, Voyager Innovations Inc., a unit of the largest telecommunication firm in the Philippines, has the option to hike its 33.3-percent stake in the company to 50 percent.

The telecommunications giant also infused an initial $15 million in iflix, a Malaysian entertainment company which aims to launch an Internet television service in Southeast Asia throughout 2015.

The amount represents half of the total investment needed by iflix, a partnership between disruptive Malaysian entrepreneurs and Hollywood heavyweights that plans to be Southeast Asia’s leading Internet TV service.

Aiming to stimulate Internet usage in the Philippines and across the Asean, the Malaysian entertainment company will offer subscribers

with unlimited access to thousands of hours of entertainment at a very affordable price.

Launching in key Southeast Asian markets, including Malaysia, Thailand, the Philippines, Indonesia, and Vietnam throughout 2015, iflix will offer consumers more than 10,000 hours of top US, Asian regional, and localTV shows and movies. Each subscription will allow a user to access the service on five devices, as well as download content to their mobile, tablet, computer, or television set, for viewing anywhere, anytime.

All these, Pangilinan said, would hopefully translate to higher gains and better services.

After all, the telecommunications giant still has the most robust and most advanced network in the Philippines.

It has set a core income guidance of P35 billion for 2015, a bit lower than the one booked in 2014 due to lower earnings and higher financial costs.

Shares of PLDT settled at P2,850 apiece on Friday.

JFC on economic measures

Continued from A1

Instead of feeling bad for playing second fiddle to its No.1 competitor, Pangilinan seemed even excited about it.

What is not to be excited about if one’s firm expanding its businesses through the acquisition of shares from roughly 10 multinational peers?

PLDT, its chairman said, has laid out a multiyear investment plan in the Internet space.

“We have a list of investment of opportunities in the Internet. It’s a whole range of Internet possibilities from IT countries such as the US, Europe, and some part of Asia,” Pangilinan said.

The strategy, he said, will help the telecommunications titan get back on its feet and rightfully claim its place in the sector, which is now shifting from the so-called legacy to the digital space.

“Clearly, any telco has got to engage in the Internet now, they cannot not participate in the Internet space beyond providing the connectivity or access. So we’ve determined that we will

news@businessmirror.com.ph

The Nation BusinessMirror

Probe sought on ‘entry for a fee, fly for a fee’ racket at BI

C

ONCERNED employees of the Bureau of Immigration (BI) have asked Justice Secretary Leila M. de Lima to conduct an investigation into persistent allegations on the multimillion-peso “entry for a fee, fly for a fee” racket in the bureau.

The said racket allows undesirable aliens to enter or leave the country without fear of being arrested in exchange for a fee or bribe money.

The employees have also filed graft charges, among others, against Immigration Commissioner Siegfred B. Mison and several other immigration officials and personnel before the Ombudsman in relation to the anomaly.

“The justice department, through the National Bureau of Investigation, should look deeper into the anomaly even as graft charges have already been filed against Mison before the Office of the Ombudsman,” the employees said in a statement.

At the same time, the group also called on Mison to go on leave for delicadeza, pending results of the investigation.

Aside from the graft charges, Mison was also charged with violation of Republic Act (RA) 6713, or the Code of Conduct and Ethical Standards for Public Officials and Employees, violation of the Administrative Code of 1987; and violation of Commonwealth Act (CA) 613, or the Philippine Immigration Act

of 1940.

Charged a lon g w it h Mison were two BI personnel identified only as Intelligence Officer Lunas and mison Travel Control and Enforcement Unit de Leon, a certain supervisor Ms. Mariano, a certain Border Management and Security Unit Flores, a certain Cayetano, Office of the Commissioner technical assistant Norman G. Tansingco and several other John and Jane Does.

The case against Mison and company stemmed from the illegal lifting from the bureau’s “blacklist order” of Yuan Jian Chua, alias Wilson Ong Cheng, a Chinese. The complaint was filed before the Ombudsman on April 21, by Immigration Intelligence Officer Ricardo D.L. Cabochan.

In his 14-page complaint-affidavit, Cabochan claimed that Yuan was arrested by immigration officials on November 6, 2013, in Cebu City and deported on January 22, 2014, for being an undocumented alien and “ fraudulently representing himself to be Philippine citizens” to evade the requirements of immigration laws.

As a consequence, the Chinese’s

name was also included on the immigration’s blacklist, which barred him from reentering the country for at least one year.

On March 11 Yuan arrived at the Ninoy Aquino Internatioal Airport (Naia) 1 but was denied entry and excluded for reasons that his name was on the BI’s blacklist.

But an hour later, after Yuan arrived, he was allowed entry allegedly upon instruction by a certain “SBM.” “…Records from the Centralized Query Supports System [CQSS] confirm that he was allowed only on the sole basis that the terminal head, in the person of Maria Rhodora T. Abrazaldo, were verbally instructed by a certain ‘SBM’ through a certain ‘Atty. Tansinco,’” the document said. “‘SBM’ is the customary and official designation-appellation clearly referring to Commissioner Siegfried B. Mison, while the name ‘Atty.

Tansingco’ refers to Atty. Norman G. Tansingco, technical staffmember of the Office of the Commissioner,” the complaint added.

The complainant further alleged that a verification made with the CQSS on March 19, or eight days from the time the Chinese was allowed entry on March 11, showed that the blacklist order issued against the said subject remains “active,” which means that it has not yet been lifted or canceled. Joel R. San Juan

Editor: Dionisio L. Pelayo • Monday, May 18, 2015 A3

Poll watchdog: No option for Comelec but to perpetually disqualify Smartmatic

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By Joel R. San Juan

N election watchdog said on Sunday there is no other option for the Commission on Elections (Comelec) but to perpetually disqualify technology provider Smartmatic-Total Information Managament in order to have credible and honest elections next year.

The Citizens for Clean and Credible Elections (C3E), in a statement, said it would move anew for the blacklisting of Smartmatic from any poll-related activities under the new Comelec leadership considering recent disqualification of the company and the Supreme Court (SC) decision junking the refurbishment contract with Smartmatic.

The poll body’s Bids and Awards Committee (Comelec-BAC) last week finally disqualified Smartmatic from its bid to bag the P2.5-billion contract for the lease of 23,000 Optical Mark Reader (OMR) machines, which will

be used in next year’s elections. The Comelec-BAC announced Smartmatic’s disqualifiction following a postqualification evaluation conducted by the Special Technical Working Group (STWG).

The STWG recommended the disqualification of Smartmatic for its failure to submit valid articles of incorporation and the demo unit failed to meet the requirement that the system shall have at least two storage devices, and shall be capable of writing to the same all data or files, audit log, statistics and ballot images simultaneously.

Last month the SC also struck down

the P268.8-miilion contract entered into by the Comele andd Smartmatic for being illegal.

The SC ruled that the Comelec failed to justify its resort to direct contracting with Smartmatic-TIM under Section 50, Article XVI of the Government Procurement Reform Act. But, C3E cautioned, that the disqualification could be a moro-moro to give Smartmatic ample time to cure the infirmities in the corporate documents it submitted to the poll body.

“We have raised the issue of infirm articles of incorporation of Smartmatic from the very beginning of the bidding process, but the BAC simply swept the issue under the rug. This time, perhaps, the disqualification will give Smartmatic sufficient time to cure its corporate papers and become ‘spotless’ for the next bidding,” C3E co-convener Alain Pascua said.

However, the election watchdog is confident that the new Comelec chairman would consider its appeal to blacklist Smartmatic. “We are optimistic in the openness shown by Chairman Andres Bautista, and we hope that he finds merit in our cause. Smartmatic should not be allowed to participate any further, given its numerous violations, deficiencies, and sins of omission,” Pascua said.

Economy

A4 Monday, May 18, 2015 • Editors: Vittorio V. Vitug and Max V. de Leon

BusinessMirror

news@businessmirror.com.ph

El Niño to hurt farm jobs–Neda

Logistics indicators need improvement

S

he Philippines can become a major growth market for logistics services providers in the coming years if the government would take steps to enhance trade flows and invest heavily in the archipelago’s obsolete infrastructure, international research outfit Transport Intelligence (TI) said.

In the study “Philippines Transport and Logistics 2015,” TI said if policy reforms are done to entice manufacturers to come in, alongside the support of more investments, especially from the private sector, in infrastructure, there will be a rise in demand for contract logistics and forwarding here.

Right now, it said despite the country’s thriving consumer market driven by its growing middle class, remittances and the offshoring of back-office functions by many knowledge and financial institutions, it still lags behind its peers in Southeast Asia logistics-wise.

By addressing the infrastructure challenges at its sea ports and airports, as well as Luzon’s clogged highways, more manufacturers would be enticed to invest here, according to TI Head of Operations in Asia Michael King.

“By removing existing logistics-performance issues and the many obstacles to doing business in the country, TI believes it is well placed to become a growing market across the various logistics sectors,” he said.

But since the current administration of President Aquino is ending in about a year, he stressed a lot will depend on the determination of the winner in the upcoming presidential elections next year to

By Cai U. Ordinario

evere drought brought about by the El Niño phenomenon could increase the country’s unemployment rate this year, according to the National Economic and Development Authority (Neda).

Neda Director General and Economic Planning Secretary Arsenio M. Balisacan recently told reporters that while the dry spell may have minimal effect on the country’s growth, it may cost jobs in the process.

Balisacan said the government has yet to give an official estimate on the agriculture sector’s losses due to the dry spell, although he believes this would be minimal, as the share of the farm sector in the economy has already declined.

“The share of agriculture is relatively small, but the problem is with the employment because its share is 32 percent of the labor force,” Balisacan said.

Data from the Philippine Statistics Authority (PSA) showed that in January 2015, around 29.5 percent, or 11.049 million, of the country’s 37.455 million total employed Filipinos are in the farm sector.

Despite this, 2.77 million, or 42.3 percent, of the underemployed were in the agriculture sector in January 2015.

The PSA estimated that a total of 6.548 million Filipinos were underemployed in the country during the period.

The Neda chief said the government is intensifying its

efforts to continue the development of new crop varieties that would be resistant to extreme weather conditions, such as the El Niño phenomenon.

Balisacan added that the government is also investing in irrigation and postharvest facilities to assist farmers in increasing their production.

“For so long, as the rest of the economy keeps on going [the economy can weather the ill effects of El Niño]. What we’re also working on is making agriculture more resilient to drought and too much water,” Balisacan assured.

Previously, PSA Interim Deputy National Statistician Sectoral Statistics Romeo Recide said the impact of a severe El Niño on agriculture growth could reach up to a reduction of 10 percentage points.

Recide said this is what happened in the 1997-1998 El Niño phenomenon, when the dry spell not only affected crops, such as palay, but also livestock.

However, Recide added that there are crops that thrive during El Niño, like mangoes, which could offset the slack in production experienced by other crops such as palay.

By Roderick L. Abad

T

continue the policy reform.

“TI believes that if the next Philippine government embraces policy change to address its current LPI [Logistics Performance Indicator] performance, then it will become a major regional growth engine for both contract logistics and forwarding,” King said.

This, he added, could be improved further by the free-trade options as the economies of the 10 memberstates of the Asean begin to integrate in end-2015.

“All of these should boost economic growth and transport demand. But the Philippines will only see the benefits if it takes steps to improve trade flows,” the executive said.

In analyzing the local market’s size, TI looks at every key logistics sector using three growth scenarios— low, medium or high—from 2013 to 2020, depending on the Philippines’s LPI reaching a certain threshold.

Many differences in growth rates are predicted when LPI scores differ.

At the upper range of LPI improvement, the provider of global logistics analysis believes the size of the domestic contract logistics market will expand from €478 million in 2013 to €1.412 billion by 2020.

The latter estimate will represent a compounded annual growth rate (CAGR) of 16.7 percent over the periods in review.

But if political leaders will not make businessfriendly reforms, the CAGR will increase only by 10.5 percent to a total of €962 million.

Some of the contract logistics market’s growth drivers will, likewise, determine expansion rates for forwarding.

‘Avoiding middle-income trap requires transparent regulations’

T

he National Economic and D e v e l o p m e nt A ut ho r it y (Neda) said that in order for the country to avoid the middle-income trap, more transparent regulations that promote a level playing

field must be implemented.

Neda Assistant Director General Rosemarie G. Edillon said transparent regulations encourage the growth and development of small and medium enterprises (SMEs).

SMEs have the capability to generate the much-needed jobs that would provide employment and stable incomes to Filipinos, preventing them from falling into poverty.

“It is necessary to offer a level play-

ing field to ensure inclusivity. This we can achieve by providing for transparency of regulations and credibility of institutions, investing in human capital and ensuring mobility to equalize opportunities,” Edillon said.

Edillon also noted that as a middle-income economy, it is crucial for the country to upgrade its products and processes in the global value chains.

This could be done through focused interventions on SMEs, and through provisions for regulatory efficiency and greater incentives for skills upgrade.

Edillon also said the country needs to undertake reforms in

structural policies and regulations, infrastructure, education, and institutions should be prioritized.

These reforms will open the doors for the poor to participate and benefit from the country’s economic growth.

“Escaping the so-called middle- income trap requires governments and the private sector— both firms and individuals—to do things differently and to continuously innovate to keep up with the growing demand associated with globalization,” Edillon said.

These were discussed in the seminar on the middle-income trap, which will serve as an input

to future work of the Asia-Pacific Economic Cooperation’s (Apec) work on the area, especially to the Structural Reform Ministerial Meeting in September.

The Neda-hosted seminar, led by Apec Economic Committee Chairman Rory McLeod and Apec Secretariat Policy Support Unit Director Dr. Denis Hew, was organized to gather experts to reflect on current research on the middle-income trap.

It was also intended to serve as a venue to discuss the challenges of middle-income economies in sustaining economic growth to become high-income economies. Cai U. Ordinario

Lawmaker wants VAT exemption for raw cane sugar

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lawmaker is seeking an amendment of the National Internal Revenue Code (NIRC) of 1997, as amended, by providing for the technical meaning of “raw cane sugar” to reflect the true intent of Congress in exempting it from the 12-percent value-added tax (VAT).

Rep. Jeffrey P. Ferrer of the Fourth District of Negros Occidental said that while Section 109 of the NIRC is clear about the VAT-exemption transactions involving the sale of raw cane sugar in its original state, the Bureau of Internal Revenue (BIR) issued regulations that effectively revoked its VAT-free status.

“In what was a clear case of flipflopping, the BIR initially said ‘raw cane sugar’ can only be muscovado.

Subsequent to that erroneous definition, the BIR revised its own definition, and has now come up with an equally erroneous definition saying that ‘raw cane sugar’ is now the one which should be referred to as ‘muscovado,’” said Ferrer, chairman of the House Committee on Public Order and Safety.

In Revenue Regulation (RR) 132013, the BIR provided that “raw sugar refers to sugar produced by simple process of conversion of sugarcane without need of any mechanical or similar device such as muscovado.

For this purpose, raw sugar refers only to muscovado sugar. Centrifugal process of producing sugar is not in itself a simple process. Therefore, any type of sugar produced therefrom is not exempt from VAT.” Meanwhile, RR 4-2015 draws a distinction between “raw sugar,” which was the term the BIR originally used in RR 13-2013, and “raw cane sugar.” “It is quite apparent from these languages that the BIR focuses on the process involved in the production of raw cane sugar or raw sugar. The BIR’s misinterpretation stems from its incorrect understanding of the processes involved in such production,” Ferrer said. PNA

USPSI a ‘game-changer’ in US-PHL bilateral ties

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he US-Philippines Strategic Initiative (USPSI), a high-level policy dialogue project launched recently in Washington, promises to be a gamechanger as global attention shifts to Asia, Philippines Inc. Chairman Antonio Cojuangco said.

Launched on May 12, the initiative is a partnership among Manila-based think tank Stratbase ADR Institute (ADRi), the Philippines Inc., Eminent Persons Group and Washington-based Center for Strategic and International Studies (CSIS).

The event was led by Foreign Secretary Albert F. del Rosario and former US Senator and Defense Secretary William Cohen.

Members of the US and Philippine diplomatic corps, the Filipino-American community in Washington and former US ambassadors to the Philippines also attended the launch, which was followed by a dinner reception at the residence of current Philippine Ambassador to the US Jose Cuisia.

Also present at the dinner reception were key US government officials, including Defense Assistant Secretary David Shear, State Assistant Secretary Danny Russel and National Security Council Senior Director Evan Medeiros.

From the Philippines’s end, USPSI is supported by a delegation headed by Cojuangco, Vice Chairman Justo A. Ortiz and Philip Romualdez. Other supporters of the USPSI are Babes Romualdez, Beth Lee, Jeffrey Ng,

Tony Lopa, Injap Sia, Felix Ang, Jun Bella, Raymond Garcia, Opap Villonco and Dindo Manhit.

The Eminent Persons Group stayed in the American capital for further meetings with Washington-based think tanks, namely, the East West Center, Center for American Progress, Brookings Institution and American Enterprise Institute.

The group will also be meeting officials from the Commerce Department.

They will also have meetings at the US Senate and Capitol Hill.

ADRi President Dindo Manhit said the USPSI is a three-year project, designed to add depth, creativity and a greater sense of urgency in modernizing the USPhilippine alliance in the context of Southeast Asia and the Indo-Pacific region.

In the initiative’s first year, CSIS will author a study on US-Philippines relations to be published in July. The report will provide concrete recommendations to boost all aspects of the US-Philippine relationship ahead of US President Barack Obama’s Manila visit for the November Asia-Pacific Economic Cooperation Leaders’ Meeting and the upcoming presidential polls for both countries in 2016.

Additional activities of the USPSI will include the Philippines Forum Speaker Series, a visiting Philippines fellow resident at CSIS, and sustained research on the US-Philippines relations.

news@businessmirror.com.ph

BMReports BusinessMirror

Monday, May 18, 2015 A5

The evolution of pyramiding and the ‘unwitting’ partners. . .

Sarmiento said direct-selling and network marketing are essentially the same in that the product is sold directly to the customer. The only difference is the commission schemes employed by the two selling strategies.

He said the focus of the two strategies is on sales, and not on recruitment of members.

The Department of Trade and Industry makes the same distinction between a legitimate multilevel marketing firm and an illegal pyramiding company: the source of earning must come from the sales of the product and not from recruitment.

The Consumer Act defines a “pyramid sales scheme” as “any sales device or business scheme where participants invest in the right or the chance to get compensation or gifts based on the introduction of more participants into a program.”

If a company earns from the mere act of recruitment, added Sarmiento, participants in the business should be wary, as this is a sign of pyramiding. He said any earnings should be derived from commissions. Should there be registration fees, these should be minimal.

Pyramid schemes, which are focused more on recruiting members to make a profit rather than through sales, are deceptive because the system will inevitably collapse due to market saturation.

If a company requires a distributor to recruit five people to earn his commission, at the depth level of 8, the number of people under the distributor would reach 400,000. A particular product being sold could only be attractive for so long in the market, and people down the line—or at the base— will find themselves unable to find new buyers or recruits and recover their investment.

The pyramid will eventually collapse, and the only ones who have benefited are the ones on top, who have already profited from the recruitment fees.

The Securities and Exchange Commission (SEC), one of the primary agencies cracking down on dubious firms, tests the “earnings-through-recruitment versus earnings-throughsales” scheme by examining the business model of a firm to determine if “investment contracts” exist.

Investment contracts

IN the early 2000, the SEC played a hand in investigating First Quadrant, a widely known firm then that was associated with the illegal pyramid sales schemes. The firm was found to be selling investment contracts through its operations, without registration from the SEC. As stated in the amended implementing rules and regulations of the SEC’s Securities Regulation Code, an investment contract is a “contract, transaction, or scheme, whereby a person invests his money in a common enterprise and is led to expect profits primarily from the efforts of others.”

Determining when an investment contract exists between a company and an investor is significant because this zeroes in on what makes pyramiding illegal—making profits not through the investor’s own effort of selling products, but through the introduction of new members into the scheme.

In the Supreme Court decision on Powerhomes Unlimited Corp. v SEC and Noel Manero (a private individual) promulgated in 2008, a transaction is considered to be an investment contract if it meets all four elements of the “Howey Test”: A person (1) makes an investment of money, (2) in a common enterprise, (3) with the expectation of profits, (4) to be derived primarily from the efforts of others.

Powerhomes, in this case, submitted a petition to the Supreme Court to review and reverse an earlier Court of Appeals (CA) decision. The CA decision upheld the SEC’s cease-anddesist order (CDO) to Powerhomes in selling securities.

In explaining the decision in Powerhomes v SEC and Manero, the Supreme Court likened the case to a US case: SEC v Glenn W. Turner Enterprises Inc. et al.

In the Turner case, the firm is not really selling the product (in this case, self-improvement courses) but the possibility of deriving money from the sale of plans to individuals.

The Philippine Supreme Court, in its decision quoted an American lower court: “The promotional aspects of the plan, such as seminars, films and records, are aimed at interesting others to the plans. Their value for any other purpose, is, to put it mildly, minimal.”

The SC, connecting the US case to Powerhomes v SEC and Manero, said “the business scheme of the petitioner [Powerhomes] is essentially similar—an investor enrolls in petitioner’s program by paying $234. This entitles him to recruit two investors who pay $234 each, out of which he receives $92. A minimum recruitment of four investors by these two recruits, who get at least two each, entitles the principal investor to $184 and so the pyramid goes on.”

“The investor enrolls under the scheme of the petitioner to be entitled to recruit others and to receive commissions from the investments of those directly recruited by him. Under the scheme, the accumulated amount received by the investor comes primarily from the efforts of his own recruits,” the ruling further said.

The Supreme Court affirmed the CA’s ruling siding with SEC, and denied Powerhomes’s appeal.

The illegal sale of investment contracts, as a broad violation, is not limited to multilevel marketing firms, but also companies engaged in other trade, such as real-estate developers and franchisors.

A more recent case of unregistered sales of investment contracts is that of One Lightning Corp., a firm reportedly trading and distributing health and beauty products and beverages.

The SEC issued a CDO against the firm late in March, warning consumers that it has not issued a secondary license to the company to publicly offer and sell investment

contracts to, or solicit investments from, the public.

A second advisory was released two days after, revealing that per the investigation of the SEC, One Lightning Corp. was offering various product packages for which the firm will give investor referral rewards for sponsoring new investors, and other bonuses for each level of referrals.

The Grand Alliance of Business Lead-

ers Association, a known marketing company, was similarly issued a CDO in January for the same violation and has been tagged as operating an investment scam.

Another company that was allegedly into pyramiding is TVI Express Holidays Philippines Inc . The company owners, who are based in Cagayan de Oro, convinced a group of teachers to invest between P13,000 to P66,000

each, with a promise of doubling their investment in six months. The said company has been issued a CDO by the SEC in 2013 to stop selling unregistered securities.

Other known multilevel marketing firms in the Philippines are Royale Business Club, Unlimited Networking Opportunities International Corp., FrontRow Enterprise Inc. and AIM Global Inc.

continued from a1

Companies offering investment contracts unregistered with the SEC may be fined between P50,000 and P5 million and imprisonment of seven to 21 years, depending on the case.

But even as the SEC continues to root out fraudulent businesses, more and more new ones are taking their place, as these sly operators simply change their business names but not their modus. To be continued

Tourism&En A6 Monday, May 18, 2015 • Editor: Gerard Ramos

Busines

SAMAR GEARS UP AS

PRIME TOURIST

A BREATHTAKING sight of the Purupud-an islets at Marabut

B L R. G | Photos by Gerry Ruiz & Butz Eguia

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USH greens, stirring mountains and virgin forests, majestic natural caves and rock formations, breathtaking views of the seas and islands and islets, vast body of inland fresh water, rare birds and other species—this is Samar.

THE exhilarating torpedo boat ride

A short visit to Samar in midApril gave this writer these impressions—and the hope that it would be promoted as avidly as the country’s popular destinations.

Good thing, the provincial government of Samar has poised it to become the Visayas region’s prime tourist destination. Taking advantage of the Department of Tourism’s “Visit Philippines 2015” campaign, as well, the province recently launched its own tourism campaign.

The launch of the ambitious tourism initiative, dubbed “Spark Samar,” brought together celebrities, the media and government officials together at the Capitol Park of Catbalogan City on April 18 with a thanksgiving Mass, followed by a cultural presentation of the songs and dances of the Samarnons with different contingents from the 23 towns and two cities.

A grand fireworks display ensued, as Gov. Sharee Ann Tan officially declared the “Summer sa Samar” kick– off followed by a neon street party. It was the first-ever spectacle held in Samar spearheaded by celebrity VJ and host Tom Taus.

Tan admits to shelling out an initial

investment of P10 million for the project, which also includes huge billboards featuring the tourist attractions of three Samar towns the provincial government is promoting, and the upbeat music videos featuring Samar tourist destinations.

“Typhoon Yolanda may have destroyed some parts of the province.

But it also created some spark that there is a place called Samar,” the lady governor said.

She recalled during her days in congress, she overheard seasoned and veterans congressmen talking about her as the youngest representative in 1987. One colleague asked: Where is Samar? Is Samar in Leyte? Tan said she had to introduce herself and explain that Samar is a different province from Leyte. Since then, the young solon has been determined in putting Samar on tourism map.

During the Spark launch, Tourism Regional Director Karen Tiopes appealed for Samarnons to take great pride in its rich history, abundant nature destinations, delectable cuisine and the inherent hospitality of the residents.

“You have all the nature’s wonders

—falls, rivers, lush forest, caves, pristine beaches, Samarnons’ own cuisine —you name it, Samar has it,” she said.

She also reminded her fellow Warays to be tourist-friendly, to know the different sites so that when tourists come, they would be able to give correct information.

■ THIRD LARGEST IN THE PHILIPPINES. Samar is the third-largest island in the Philippines. It is subdivided into three provinces covering Northern, Eastern and Western Samar (or simply Samar).

It is home to the Philippine Eagle, where it was first sighted in the 18th century. Samar is also host to one of the largest caves in Southeast Asia, the Calbiga Caves in the town of Calbiga.

Also in Calbiga is the Lulugayan Falls, a Niagara-like waterfalls.

The list of beautiful destinations in Samar is endless. Guests can try the traditional art of mat-weaving, which Basey is known for, at the Saob Cave just along the highway in the village of Basiao.

They can also allow themselves to be mesmerized by the beauty of San Juanico Bridge from the Samar side and view the Yolanda memorial at the Santa Rita municipality.

Catbalogan City is the trade center of Samar province and is an hour and a half hour ride from Tacloban City, the regional hub of Eastern Visayas.

■ #SPARKSAMAR #SUMMERSASAMAR. Samar’s tourism campaign highlights three towns of the province for tourists to visit.

These are Marabut, Paranas and Basey, where the destinations are tourism-ready aside from their proximity to Tacloban, the regional capital where an international airport and some tourism infrastructures, like hotels and food establishments are located.

■ SOHOTON CAVES AND NATURAL BRIDGE NATIONAL PARK, BASEY, SAMAR. Familiarization tour members, including the BusinessMirror, couldn’t help but marvel at the 841-hectare Sohoton Natural Bridge and National Park in the municipality of Basey, with its rich flora and fauna, geological wonders at the Panhulugan Caves I and II, and the natural stone bridge that connects two mountain ridges.

Sohoton is about 45 minutes away from Tacloban City by land transportation; plus a two-hour pumpboat

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S EASTERN VISAYAS’S

T DESTINATION

ALVIERA BRIGHTSCAPE CAMPFEST OFFERS STARLIT WEEKEND ADVENTURE

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AN awesome sight of Sohoton natural stone bridge that connects two mountain ridges.

ride to the cave. It was established as a national park on July 19, 1935, by virtue of Proclamation 831, primarily to preserve its geological features and natural wonders.

Traces of early habitation dating as far back as the Iron Age and Stone Age have been found in the different caves. These caves are also believed to have been used as burial sites for the natives, and a mecca for medicine men who hunt and prepare their potions.

The caves were also used as hideouts of Filipino rebels during the SpanishAmerican War. From the Sohoton cave, we reached the Natural Bridge, the magnificent stone bridge connecting two mountain ridges through kayaking. Underneath the bridge flows the Sohoton River, which allows one to go swimming, spelunking, nature-tripping, and boating, indulge in bird-watching

and photography, and immerse in scientific researches and studies.

■ TORPEDO BOAT EXTREME RIDE AT ULOT RIVER IN PARANAS, SAMAR. The latest ecotourism adventure product of Samar is called Torpedo Boat Extreme Ride. The boat is a dug-out motorized banca that has no outriggers and it looks like a torpedo.

When it traverses the river, its motion through the downstream and upstream rides resembles a torpedo.

It is manned by experts—a boatman and a pointman who take one through the Ulot River, the longest river in Samar Island with a total length of 90 kilometers. Counting its numerous tributaries, its total length has been estimated to reach over 500 km.

The river is inside the protected area covered by the Samar Island Natural Park (SINP), created by Presidential Decree 442 (August 13, 2003)—

an area considered one of the country’s top botanical diversity centers.

SINP’s total land area is 330,300 hectares with a buffer zone of 125,400 hectares for a total of 455,700 hectares encompassing 36 municipalities in the three Samar provinces.

The maneuvering skills of the boatmen are amazing and their familiarity with the river terrain is reassuring.

Morever, they have trained for years for their swimming and lifesaving capabilities. (The torpedo ride was launched in November 2010). The boat ride upstream is even more thrilling and challenging as the boatmen push the boat in between big boulders.

The group took on a “roller-coaster ride” that lasted just under two hours and had boodle lunch at Deni Point, a huge rock formation which is about 20 km from the jump-off point at Sitio Campo Uno of Barangay Tenani.

It took another hour and a half going back to Sitio Campo Uno to complete the exhilarating ride, the toughest boat ride most of us ever experienced.

Another morsel of information: Torpedo also stands for Tour Guides and Boat Operators for River Protection and Environmental Development Organization, whose members are partners in the community development efforts of the Department of Environment and Natural Resources (DENR)-Samar Island Biodiversity Project and SINP. More than the ride, Torpedo is the heart and soul of the island’s effort to protect its environment. Kudos to the boatmen and pointmen for their dedication to protect SINP and for making the challenging, unforgettable boat ride safe and enjoyable.

■ PRISTINE BEACHES, ISLANDS AND ROCK ISLETS AT MARABUT. For those who are faint at heart and don’t fancy extreme adventures in Samar, they can enjoy the pristine beaches of Marabut, explore rock islets and swim in its undisturbed seas.

Marabut is a coastal area which was wiped out during the past two strong typhoons. Residents reportedly hid and found solace in one of the caves in Marubut during Typhoon Ruby.

For more information on Samar destinations, visit the DOT Regional Office No. 8 at Barangay 25 Kanhuraw Hill, Magsaysay Boulevard, Tacloban City; or call (053) 832-0901 or +63998-8889715.

XPERIENCE the height of summer through the best and possibly most fun-tastic event of the season. Arts, music and adventure come together in an unforgettable event at the Alviera Brightscape Campfest on May 30 and 31 at SandBox in Alviera, Porac, Pampanga.

Alviera, home of the great outdoor play park SandBox, hosts its first summer campout on a weekend jampacked with activities you can enjoy with friends and family.

This unique camping experience provides guests with their own tents in an outdoor campsite, campfire treats, stargazing sessions with telescopes, comfort amenities, and fun field day events and activities at the SandBox. Evenings in Alviera are breezy and cool, marked by a beautiful night sky.

To cap the night, the Brightscape Music Jam features a concert under the stars from some of the hottest names in music.

Packages to the Alviera Brightscape Campfest come in Day Adventurer and Weekend Camper variants. Day Adventurer, at P1,990 per person, comes with roundtrip transportation from Manila to Alviera (with travel insurance), free use of all SandBox thrills and attractions, access to all Brightscape Field Day Events, passes to the Brightscape Music Jam, as well as an event kit filled with surprise Brightscape Campfest freebies.

Weekend Camper tickets at P2,990 per person entitle participants to all Day Adventurer inclusions, plus overnight campsite stay, access to campsite-exclusive activities, free use of Coleman tents, exclusive use of

SandBox and a hearty buffet breakfast on Sunday morning, May 31.

The Brightscape Field Day events start with kite-flying, drumming, basic survival skills, flow arts movement and a lot of SandBox action. Watch the skies for amazing kites, then learn to make them and fly your own. Kite-flying and kite design are featured in Art in the Sky sessions. Wildernecessities takes you on a walk on the wild side to learn basic nature skills from local experts. Learn to drink water from bamboo stalks, kindle a small camp fire or pick out edibles from available plants around you.

It’s fun field survival 101.

Ever marched to the beat of your own drum? Here’s a chance to find your rhythm and feel the beat at Pulses & Artbeats. Led by the high-energy Adinkra Lumads Djembe Community, join this community drum circle to experience pulsing drumbeats like no other. If you’re into moving with the beat, learn the basics of flow arts movement from the experts at Flow Arts Philippines. Swing and sway using poi, hoops and other props.

There’s a whole day to enjoy all of SandBox’s attractions. Take on the Adventure Tower, the Avatar One rollercoaster zipline, Giant Swing, Aerial Walk and the 9-km Alviera-Columbia Bike Trail. Plus, there’s minigolf, archery, children’s playground and ATV/UTV rides.

As the sun sets, the outdoor stage show opens with Ring of Fire, a sunset spin jam featuring the flow artists and Djembe musicians. Shadowtales follows suit, a silhouette puppet theater performance written and

performed exclusively for the event. The evening culminates with the soundtrack to a sizzling summer with the Brightscape Music Jam starring Barbie Almalbis, Imago, Quest, The Ransom Collective, Chocolate Factory, Brisom, Absolute Play, and the Adinkra Lumads.

Simultaneously, Weekend Campers will be treated to exclusive Camper Field Day Events, such as tent-pitching 101 from Coleman’s camping pros, a bonfire session with s’mores treats provided, and stargazing and star-mapping sessions.

“Brightscape Campfest is an exclusive summer experience that only Alviera can provide. It’s a unique and great way to celebrate and crown the summer,” said John Estacio, Alviera general manager. “Visitors will even have a choice between staying the whole day and taking in the breezy plains of Porac, or they can go weekend camping with us overnight. We welcome everyone to enjoy the outdoors with us here.”

Brightscape Campfest packages are available at www.travelfactor.org/brightscape. Tickets only with prices of P1,000 for Day Adventurer and P1,500 for Weekend Camper can be purchased via www.ticketnet.com.ph.

Alviera Brightscape Campfest is an event presented by Ayala Land and Leonio Land in partnership with Travel Factor, Coleman, Alveo, Avida and Avida Settings Alviera, and Philippine Star. This is also brought to you by The North Face, Philippine Daily Inquirer, the BUSINESSMIRROR, Widus Hotel, and Marquee Mall.

TheElderly

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Monday, May 18, 2015 • Editor: Efleda P. Campos

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‘Kanlungan’ OIC certified world’s 1st magnesium-advocate priest

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By Oliver Samson | Correspondent

FTER personally experiencing the healing powers of magnesium in January 2014, a Filipino became the world’s first certified magnesium-advocate priest.

Dr. Carolyn Dean, the world’s leading magnesium advocate and a medical and naturopathic doctor, confirmed in an e-mail on March 12 that Rev. Fr. Uldarico “Dari” D. Dioquino, priest in charge of home for the aged Kalungan ni Maria in Antipolo, Rizal, is the only Catholic priest with that stature.

“I don’t know of anyone else,” she said. “So, he is likely the only magnesium-advocate priest.”

Father Dari used to complain of back pain and Charley Horse, until he met the country’s leading magnesium advocate, Mary Jean Netario Cruz, a naturopath and certified well-being coach.

On January 29, 2014, Dioquino was visited by Netario Cruz at Kanlungan ni Maria’s former home in Antipolo. Driven by an intense passion to evangelize the mineral’s natural and safe healing power, she took the opportunity to introduce it to the priest.

Kanlungan ni Maria, which relies on the generosity of charitable people and organizations to shelter, clad and feed its residents, was the perfect ground to sow the seeds

of magnesium apostolate.

Most of the body pains in seniors are related to magnesium deficiency, Netario Cruz said. The resident seniors complained of muscle cramp, back pain, frozen shoulder, stiff fingers, gout, arthritis and other health conditions.

On the same day, Netario Cruz, who addresses various body pains by transdermal therapy, applied the mineral, in its liquid state, on the painful areas of the seniors.

Dioquino, 59, who spent the last 12 years sleeping in a cramped room in Kanlungan on a poorly furnished wood bench, said he slept in the room that served to store goods and medicine and received the therapy for his back.

The residents reported ease, and Dioquino himself was amazed at the relief he felt.

Dioquino, from Sorsogon, became interested in magnesium and the unfolding wonders it was capable of performing outside the home for the aged. Hew has been in charge of Kanlungan for the past 13 years.

In mid-2014, he created the

posion of well-being director in the Kanlungan for Netario Cruz, which she accepted with pleasure.

They worked together for the health of residents.

As she consistently and generously shared the richness of her treasure trove of magnesium knowledge, Father Dari gradually became well-versed about this mineral.

Dioquino, who finished Theology at the University of Santo Tomas and became a priest in 1990, learned that the typical Filipino diet is poor in magnesium, and that caffeine, alcohol, stress, strenuous activities, and some pharmaceutical drugs exacerbate the body’s deficiency for this mineral.

“When the body becomes deficient in magnesium, a particular part becomes painful,” he said.

“The pain, however, can be addressed by repletion either transdermally or orally.”

Kanlungan ni Maria residents, over 20 elderly men and women in their new home in Antipolo, are well-provided for and taken cared of. Gradually, Dioquino thought about sharing the residents’ bounty, across remote areas, where seniors grimace in pain due to lack of knowledge and poverty.

Together with Netario Cruz and Victoria Baterina-Solis, who is the special project director for Kanlungan, the priest organized a pain-healing team last year.

Last September he rolled out the apostolate in Jalajala, a peninsula town in Rizal, where over 100 lessfortunate seniors were relieved of

REV. Fr. Uldarico “Dari” D. Dioquino stands behind resident seniors at the Kanlungan ni Maria, a home for the aged in Antipolo, Rizal. OLIVER SAMSON

Charley Horse, stiff fingers, migraine, painful shoulders, chronic arthritis and other body pains.

He pushed across Rizal, conducting free magnesium therapy and giving away free magnesium to the less fortunate, especially the elderly, in the towns of Pililia, Cainta, Malaya and the indigenous community of Dumagats in a mountainous section of Tanay in the following months.

In February this year, Dioquino flew his apostolate to Bohol, where his team conducted free

therapy and provided magnesium to 150 seniors.

“With Father Dari’s desire to liberate the sick from pain, he tirelessly reaches far-flung areas,” Baterina-Solis said. “I see very clearly that his desire is deeply ingrained in his heart.”

At present, about 1,000 people, most of them poor, have received free magnesium therapy. In this way, Dioquino has brought the church closer to the people.

“He wa l ks the ta l k of the church,” Netario Cruz said. “He

House committee approves a more inclusive definition of ‘indigent senior citizen’

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he House Committee on Population and Family Relations has approved recently a proposal to amend Republic Act (RA) 9994, otherwise known as the “Expanded Senior Citizens Act of 2010,” for a more inclusive definition of “indigent senior citizen.”

The panel chaired by Rep. Rogelio J. Espina, M.D. (Lone District, Biliran) approved the proposal embodied in House Bill (HB) 3172 filed by Rep. Angelina “Helen” D.L. Tan (Fourth District, Quezon).

Tan, a medical doctor, said the present definition of indigent senior citizen under RA 9994 excludes senior citizens who are not sick or disabled and who have pension or other sources of income but who are, nonetheless, in dire need of additional government assistance in the face of steep price of basic commodities and medical services.

Specifically, the law refers to an indigent senior citizen as “any elderly who is frail, sickly or with disability, and without pension or permanent source of income, compensation, or financial assis-

tance from his or her relatives to support his or her basic needs, as determined by the Department of Social Welfare and Development (DSWD) in consultation with the National Coordinating and Monitoring Board.”

Tan said her proposal is to make a more inclusive definition of indigent senior citizen by removing the physical requirements and requiring that financial assistance by a senior citizen’s relatives should be adequate and regular.

“Hence, more senior citizens will feel more secure during the remaining years of their lives because of the guarantee that they will have the ready access to financial assistance and health services,” Tan said.

Tan, a vice chairman of the Committees on Labor and Employment, and on Social Services, said RA 9994 provides an array of benefits, privileges and assistance to senior citizens such as a 20-percent discount and exemption from the value-added tax (VAT ), if applicable, on the sale of some goods and services; death benefit assistance; educational assistance; free medi-

resu sc it ates t he dy i ng fa it h among Christians.”

The mineral, by which Dean, who is based in the US, addresses anxiety and panic attack among executives and athletes, is to Dioquino a gift to address pain as the divine power to heal is to God. “Christ has the divine power to heal afflictions,” he said. “I, who possess no divine power, but do the apostolate to wipe men of banes as He expects me to do, invoke the natural power of this mineral to help my sick brethren.”

MRT 3, LRT common-ticket scheme ‘ready for installation’

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playing checkers in the park Elderly men spend time playing checkers in the Baguio City People’s Park. Dama, often with an improvised board, is a popular game among older people nationwide. MAU VICTA

cal and dental services; and exemption from training fees for socioeconomic programs, among others.

The law also grants indigent senior citizens additional privileges such as free vaccines, social pension and mandatory Phil-

ippine Health Insurance Corp. coverage, according to the lawmaker.

HB 3172 seeks the amendment of Section 2, sub-paragraph (h) of RA 9994 so that an indigent senior citizen refers to “any elderly who is without pension or permanent

source of income, compensation, or regular and appropriate financial assistance from his or her relatives to support his or her basic needs, as determined by the DSWD in consultation with the National Coordinating and Monitoring Board.” PNA

H E com mon t ic k et i ng schemes for the Metro Rail Transit (MRT) 3, and the Light Rail Transit (LRT) Lines 1 and 2, are ready for installation, a transport official said.

LRT Spokesman Hernando Cabrera on Twitter posted a photo of a sample beep (stored value) “tap and go” unified ticket, as well as a sample single-journey (blue) ticket, for the rail systems.

Cabrera said the new ticket can be personalized for senior citizens and persons with disability (PWDs) to allow more convenience and efficiently implement fare discount for them.

The new tap and go system, which will make purchasing singlejourney tickets more convenient for passengers, is meant to replace the old ones. Also known as the Automatic Fare Collection System (AFCS), this system is expected to lessen queuing time and allow for seamless transfer between each line.

The AFCS is only one of the major upgrades set to be implemented for the year. Repairs in the LRT 1, LRT 2 and MRT 3 are also set to be done within the year. PNA

DSWD’s Haven for the Elderly, a place to nurture abandoned elderly

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ANAY, Rizal—The state-operated Haven for the Elderly (HE) here is a “loving and caring mother” that always extends love and care to the aged.

This care-giving institution, being maintained in this hilly town by the Department of Social Welfare and Development (DSWD), plays such role of a true mother since it nurtures the needy and unfortunate senior citizens of the country, who are homeless, abandoned, sick and no family to take care of them.

HE, which turned five years old on April 29, is a symbol of the gov-

ernment’s concern, respect and compassion for the least fortunate elderly who, once in their life, had contributed to the country.

Inaugurated in April 2010 in Sampaloc, Tanay, Rizal, the sanctuary is part of the mission of the DSWD to provide social protection and promote the welfare of the poor, vulnerable and disadvantaged sectors of society.

At present, HE’s house parents take care of 239 older persons, 151 of whom are females while 88 are males.

Long before its transfer to Tanay, Rizal, the haven was formerly called

Golden Acres Home for Aged, which was in Santo Cristo, Bago Bantay, Quezon City. Seeing the need for the institution to provide a more conducive environment for the elderly where they can be healthier and productive, came the decision to transfer it to a bigger facility here in Tanay where the elderly can breathe fresh air.

Now, the facility left in Santo Cristo was renamed Geriatric Reception Action Center for Elderly and Special Cases (Graces), which also caters to the needs of disadvantaged elders.

Graces serves as an assessment center for elderly being referred and

admitted by DSWD-National Capital Region from various local government units (LGUs) that found them astray or roaming around their cities.

Similar to HE, Graces also serves the needy seniors but on a “temporary basis” since some of them would be returned to their original homes once social workers found their respective families, who might be searching for them.

Those who were not claimed by their families for several months or were assessed to be homeless, abandoned and neglected and just loitering in the streets were the

ones brought to the HE facility in Tanay, Rizal.

HE does multiple tasks or provides various services for the elders including medical, spiritual, dietary, home-life, psychological and social, and enhancement of their productivity.

Social Welfare Secretary Corazon J. Soliman said the operational cost in maintaining institution for the elders is higher than in maintaining an orphanage for children.

“The needs of the elderly are far more costly than the children. But through the growing and healthy

partnerships of HE with different sectors and donors, some of them were successfully addressed as a way also of giving back to their contributions in the country,” Soliman said.

Soliman added that through the help and cooperation of the generous donors of the HE, the institution was able to expand itself in a short span of time.

Ricky Bunao, center manager of HE, said the secret formula of their success lies in building of friendship and confidence with HE partners and visitors coming to HE every year and visiting the seniors there. PNA

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The Regions BusinessMirror

‘Delay in commissioning of TSI power plant not due to blackout’ B L L

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HE Department of Energy (DOE) is certain that the Mindanao-wide blackout that occurred on Easter Sunday last month was not the reason for the delay of the commissioning of Unit 2 of Therma South Inc.’s (TSI) coalfired power plant in Davao City.

Energy Secretary Carlos Jericho L. Petilla said that, based on the results of an investigation by a task force headed by the National Transmission Corp. (Transco), the grid-wide power outage should not be made as an excuse for the delay of the commissioning of the new power facility. “I received the formal investigation. We will ask TSI to comment on the findings.

Before we accused them of anything, we want to hear their side,” Petilla said.

When asked of the findings on TSI, which initially reported that the disruption unfortunately caused damage to the auxiliary components, particularly the air-preheater (APH) and electrostatic precipitator (EP), to the boiler of its Unit 2, Petilla said, “It’s definitely not caused by the brownout.”

An earlier statement issued by TSI’s parent firm, Aboitiz Power, stated that the property damage will delay the commercial operations of Unit 2 by approximately 10 months, or until February 2016. The commissioning of Unit 1 remains on schedule and should reach commercial operation by the end of June 2015.

“Therma South is also concerned about the incident, and we are also conducting our own investigation, assisted by a third-party consultant, to determine the root cause of the incident,” TSI President and COO Benjie Cariaso Jr. had said. Petilla said a copy of the report will be sent to TSI. “If they will not respond in several days, I’ll just publish it,” said the energy chief. Transco President Rolando Bacani had said that the

main cause of the grid-wide brownout was traced to a “corroded suspension insulator shank that gave way, causing the transmission line to fall and hitting the other line conductors and tower parts.”

This, he added, resulted in a short circuit, which was not isolated on time. The power outage started at 7:50 a.m. Power was restored after seven hours. According to the Transco report, TSI’s emergency diesel generator failed to cut in when power from the grid was cut off. “The lost of power supply to the APH stopped its rotation, thereby the APH elements were subjected to excessive heat of the flue gas coming from the boiler.

Consequently, the APH burned together with the EP, as fire and heat excited through the chimney,” Bacani said.

For Petilla, the incident could have been prevented. “There was a minor fire that occurred, and it has nothing to do with the Mindanao brownout. They did not put out the fire immediately. My question to them is simple.

Where is their circuit breaker?

Why are they the only ones affected?

They can say all they want but they are a party of interest,” the energy chief said.

The DOE could not penalize TSI for the delay of the power-plant commissioning. It, however, will forward a copy of the report to the Energy Regulatory Commission (ERC), which is authorize to do so.

“There was no penalty indicated in the contract between a genco [generation company] and the electric cooperative.

The ERC should realize that those who contract for power would need to include a penalty clause in the contract when delay occurs,” Petilla said.

T he energ y chief proposed that one form of penalty could be replacement power.

“A modular genset will do. All the parties should realize the importance of such.”

Monday, May 18, 2015

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200 LGUs asked to submit solid waste-management plan

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OME 200 local government units (LGUs) have until the end of June to submit their 10-year solid waste management plan (SWM), according to the National Solid Waste Management Commission (NSWMC).

LGUs that fail to submit the SWM plans may face charges under Republic Act (RA) 9003 or the National Solid waste-management Act of 2003, and RA 7160, or the Local Government Code.

These LGUs had earlier promised to comply and requested for more time to be able to submit

their respective SWM plans, as mandated by the garbage law. The 10-year SWM plans should be supported by a resolution by the LGU’s respective Sanggunian and submitted to the Environmental Management Bureau Regional Offices, which has jurisdiction in the LGUs geographic location not

later than June 30. The garbage law calls for the formulation of a 10-year SWM plans by LGUs. T he 10 -year SW M plan of LGUs should promote programs such as reusing, recycling and composting biodgradables, while identifying the amount of landfill and transformation capacit y that w il l be needed for solid waste which cannot be reused, recycled or composted.

A ll SWM plans will be approved by the NSWMC before implementation. According to the NSWMC, compliance by LGUs to submit their respective garbage plans increased significantly over the years upon granting of conditional approval to plans of LGUs that submitted until January 15,

2015, and issuance of the final notice in July 2014 to all LGUs with no submission.

From a total of 563 LGUs that submitted the 10-year plnas from 2003 to September 2014, the EMB Central and Regional Offices have received additional 51 plans.

Between October 2013 and March 2015, a total of 1,073 LGUs have already submitted their respective SWM plans, representing a 71 percent compliance.

In March the NSW MC approved the SWM plans of Valenzuela City; Municipality of Solana in Cagayan; San Jose City, Nueva Ecija; Municipality of Malvar, Batangas; Municipality of Luisiana, Laguna; and Municipality of Carmona, Cavite.

Bohol ready for cloud seeding

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AGBILAR AN CITY—Cloud seeding in Bohol would be the ultimate recourse of the provincial government to arrest the impact of the looming mild El Niño based on the forecast of the Philippine Atmospheric, Geophysical and Astronomical Services Administration (Pagasa).

Larry Pamugas, officer in charge of the Office of the Provincial Agriculturist, confirmed that the provincial government already complied with all the requirements for the cloud seeding operations to be conducted starting July until August.

Pamugas said this is based on the Pagasa forecast that the mild El Niño will hit the province again by July and might extend up to the latter part of the year. As of now, Pagasa forecast rain showers in the remaining days this month and in June.

The dry spell already affected both rain-fed and irrigated farm lands in the province.

On this, Pamugas advised the rice farmers to await the rain before proceeding with land preparation for the next cropping season, considering that

the National Irrigation Administration only supplies water for maintenance of the rice fields and the land preparation has to rely on abundant rainfall. The provincial government, with the technical teams from the Department of Agriculture will conduct rounds of cloud-seeding operations costing P2.3 million when the cumulunimbus clouds form.

The Technical Working Group (TWG) of the province, noted on climate change as the rainy days moved earlier sometime in April and May, which are supposedly the dry season and the dry season already start in June which used to be the start of the rainy days. The TWG also start preparing for the dry spell that might continue to prevail even after August, according to Pamugas.

However, the farmers also have to brace for the string of typhoons in November and December that might still cause damage on some crops at an extreme pattern. Planting patterns might also have to be adapted with the “new normal” in the light of climate change. PNA

DAVAO T-SHIRT BUSINESS Local Davao

workers print T-shirts with “I Love Davao,” which would be sold to tourists for P150 apiece. Selling shirts gives residents an additional source of income. NONIE REYES

Davao City cops ordered to round up truants B M T. C

D

AVAO CITY—Police here have been directed to round up truants and gangsters once school opens in June. Mayor Rodrigo Duterte said he would soon give the orders immediately, after he appeared on the regular Sunday television public-affairs program, where he warned the gangsters and school truants that he would “personally have

a hand in the implementation of this directive.”

“I would ask the police to deliver these people to me, and I would hammer down their feet,” he said. During the television program, he asked the female host, also a lawyer by profession, if she agreed to his punishment.

The host said she disagreed with the hammering of the feet of those who would be arrested and suggested to divert the punishment instead to the parents.

“To these gangsters and truants who are even boasting and lording it over outside the schools, I promise you I would hammer down your feet,” he warned. He said he would personally “see to it that the pupils and students would not be intimidated or influenced by these people who are not interested to go to school anymore”.

Duterte said the directive would take effect immediately, and the rounding up would go up to the

night. The city has become the first place in the country to have also filed cases against parents whose children were recently caught by the police after the curfew on minors. The cases were early this year.

The City Social Services and Development Office chief, Malou Bermudo, disclosed, however, that the cases did not progress owing to the “propensity of the courts to relegate the child-minding duty back to the parents.”

Palace backs jail term for occupational safety rules violators B B F

M

A L AC A ÑA NG backed moves to impose stiff prison terms against violators of existing laws and regulations on occupational safety and public health, in the wake of the deadly fire that killed over 70 trapped workers in a Valenzuela factory last week.

“We reiterate the strong stand taken by the government through the Department of Labor and Employment [DOLE] on the need to

criminalize noncompliance with laws and regulations pertaining to occupational safety and health,” Communications Secretary Herminio B. Coloma Jr. said on Sunday. Coloma said stiffer sanctions “have become imperative in the light of the disastrous fire in a factory in Valenzuela City” that claimed the lives of at least 72 workers last Wednesday.

“According to Labor Secretary Rosalinda Baldoz, there is a need to put more teeth to existing regulations that were promulgated in 1978

and contain no criminal penalties,” he added. Coloma said Baldoz was prodding the Senate and the House of Representatives to “seriously see our plea for the enactment of these measures in a positive light, and that is for the ultimate welfare and protection of our workers, and the delivery of labor justice by punishing heartless employers.”

He noted that an interagency task force made up of the Department of the Interior and Local Government and the Bureau of Fire Protection, the Department

of Justice and the National Bureau of Investigation, the DOLE and the Department of Health had also been directed to conduct a thorough investigation of the recent fire inside the Valenzuela slippers factory.

The Palace official said the interagency probe was also given marching orders to “determine security and safety lapses and to recommend the filing of appropriate charges based on its findings.”

“We note also that Baldoz has summoned officials of Kentex

Manufactur ing Cor p. and its subcontractor, CJC Manpower Ser vices, to a special meeting with the DOLE on Monday [May 18],” Coloma said. He said Initial DOLE findings showed that CJC is an unregistered subcontractor and that recourse to such malpractice is done by unscrupulous employers to avoid complying with minimum-wage laws and ot her gover n ment-m a nd ated compensation and benefits.

At the same time, Coloma disclosed that the DOLE and the

Employees Compensation Commission are already looking into the needs of the families of the victims of the fire.

He cited Baldoz’s assurance that the government will provide assistance to families of workers who perished in the Valenzuela factory fire and help facilitate their claims for benefits, including loss of income benefit, funeral and death benefits. Those who were injured can also claim medical reimbursements under existing labor laws.

A10 Monday, May 18, 2015

Opinion BusinessMirror

editorial

The first Asian pope?

T

he leadership of the Roman Catholic Church has been changing significantly since the election of John Paul II as pope in 1978. As John Paul II was the second-longest-serving pontiff in modern times, his tenure allowed the Church to expand internal control out of the hands of the Italian cardinals who traditionally had the greatest power in the Vatican and held the papacy since 1523.

John Paul II was succeeded by another non-Italian, German-born Pope Benedict XVI. The break with European Catholic control was finally made with the succession of Pope Francis of Argentina. Pope Francis is the first non-European since the year 731 and the first from the New World.

The change in leadership somewhat reflects the global growth of the Catholic Church. While the numbers would indicate that the Church is losing members, the actual data seem to be biased by whoever is taking the surveys. In the US the number of Catholic parishes is in decline— from 19,705 in 1998 to the current 17,483—yet, there is growth in those groups from countries that have been traditionally Catholic. In some cases, there are fewer parishes in a diocese serving more people. Hispanic Catholics now comprise 41 percent of the US church.

The problem, though, in both the United States and Europe is that more and more people do not consider themselves to be a member of any religion. However, the actual growth of the Catholic Church exceeds the percentage growth of the global population.

As in any organization, the core membership must be both protected and nurtured. In terms of total numbers, the countries with the most Catholics are Brazil, Mexico, the Philippines, the US and Italy.

While the overall percentage of Catholics in the Philippines is lower than in the other Top 5, there were more Catholic baptisms in the Philippines than in France, Spain, Italy and Poland combined. The Catholic population in South Korea has doubled in the last 10 years, and similar growth is being counted in India.

The election of Luis Antonio Cardinal Tagle, the archbishop of Manila, as president of Caritas Internationalis, the confederation of the 130 member-organizations around the world, has long-term implications.

This is the sixth important position given to Cardinal Tagle since Pope Francis assumed office. Even now, the archbishop of Manila is the betting favorite to be the next pope.

While being the president of Caritas is not a powerful Vatican position, it is a high-viability role, with expected trips to every major disaster scene.

We offer our heartfelt congratulations to Cardinal Tagle on his new appointment, and we know that he will admirably represent the Church through Caritas. Of course, we are also proud that Cardinal Tagle is a Filipino who will unavoidably represent the Philippines in his work, as well.

PCSO donates ambulance to Candaba hospital nnn

Atty. Jose Ferdinand M. Rojas II

RISING SUN

T

he residents of Candaba, Pampanga, now have an ambulance that will serve them during times of medical emergencies.

Last Thursday I turned over to the Candaba Community Hospital an ambulance which it had requested from the Philippine Charity Sweepstakes Office (PCSO), under the agency’s Ambulance Donation Program.

The turnover coincided with the blessing of the facility, graced by Interior Secretary Manuel Roxas II. Also present were Candaba Mayor Rene Maglangque, Bulacan Rep. Joselito “Jonjon” Mendoza, Presidential Legislative Liaison Office chief Manuel “Manny” Mamba and other officials, including those from the local government and the PCSO. To avail themselves of other PCSO services, such as individual medical assistance, Pampanga residents may visit the branch office, headed

by Branch Manager Maria Lourdes Soliman, in Dau, Mabalacat City.

Other ambulances have been donated by the PCSO to other cities recently. On March 19, on our visit to the PCSO Cebu branch office, we turned over five ambu-

lances, one each to Sogod (Mayor Lissa Marie Durano-Streegan), San Francisco (Mayor Aly Arquillano); Borbon (Mayor Bernard Sepulveda), Dalaguete (Mayor Ronald Allan Cesante); and Lilo-an (Municipal Health Office Head Dr. Francisco de la Cuesa Jr.).

On April 24, while in Davao, we turned over two ambulances, one to Mayor Rodrigo Duterte, for the City of Davao; and the other to Mayor Jenny de Asis, for the municipality of San Francisco, Agusan del Sur. Under its Ambulance Donation Program, the PCSO gives ambulances to fourth- to sixth-class municipalities for free and to first- to third-class municipalities under a 60/40 cost-sharing scheme.

Congratulations to President Aquino on the successful completion of his three-day mission to Canada in early May. He and Canadian Prime Minister Stephen Harper “witnessed the signing of bilateral agreements on labor cooperation, development assistance and, infrastructure, development,” and, afterward, held a joint news conference, according to the Palace’s communications office.

Mr. Aquino also “attended an Asia-Pacific Foundation of Canada (APFC) business meeting, with top Canadian CEOs,” to discuss “the Philippines’s economic developments” and drum up investor interest in the country. The APFC is “a nonprofit organization dedicated to enhancing Canada’s relationship with Asia.”

The President also met with members of the Filipino community in Vancouver and Toronto.

The Aquino administration, since it came into office in the second half of 2010, has notched many accomplishments in delivering better and faster services to the public.

The increasing economic health of the country, founded on reforms and good governance, is just one indicator pointing the way to our country’s sustainable and inclusive growth.

As the President explained to

our kababayan in Toronto, the average gross domestic product growth since 2010 is 6.3 percent, the fastest economic growth in the past 40 years.

The government’s target is to expand that figure to 7 percent or 8 percent this year. If the target is reached, the resulting six-year average will be the fastest the economy has grown in the past 60 years, he said.

In addition, we hit an all-time high of $6.2 billion in foreign direct investments (FDI) last year. In February this year net FDI inflows rose 17.9 percent to $359 million, from $305 million last year. The figure for February is also a 37-percent increase over January’s net inflow of $263 million. Most of these capital investments are from the United States, Spain, the United Kingdom, Japan and Singapore.

Further, the unemployment rate of 6 percent in October 2014 was the lowest in 10 years.

“We have been on the daang matuwid for only five years,” the President said in Filipino, “yet, we can already see the transformation in our society. We are making possible what was once deemed impossible.

We aim our service not to self nor to questionable actions, but to the good of the many.”

Atty. Rojas is vice chairman and general manager of the Philippine Charity Sweepstakes Office.

Does Picasso sale signal a top for stocks?

By Barry Ritholtz Bloomberg

T

he headlines screamed across the Web recently: “Picasso’s ‘Women of Algiers’ smashes auction record.” “Two artworks top $100 million each at Christie’s sale.” “Picasso painting sells for $179.4 million; sets auction record.”

The record for paintings was joined by a record for a sculpture, when Alberto Giacometti’s Pointing Man was purchased by an anonymous bidder for $141.3 million.

Some people like to point to these auctions as proof of a financial market unmoored from reality.

Like the “unicorns”—those tech start-ups valued at more than $1 billion—many see it is yet another piece of evidence that the top is here, that we’re are in the midst of a huge bubble that is destined to collapse.

Whether we’re in a bubble or even an overvalued market is a worthy debate. But these examples are not proof of overvaluation or really much of anything else. They are anecdotal observations, one-off transactions in a ludicrously small market dominated by a ludicrously wealthy clientele. Given the choice between quantifiable data or anecdotal tidbits, you should always choose the data. So no, these sales are not proof of anything other

than the simple truth that some people have very large bank accounts that they are unable to exhaust through normal profligacy or by paying insane prices for a handful of unique objects of art.

There are many ways to understand why these stunning ninefigure transactions are not investment-sentiment indicators.

Anecdotes can tell you about a small subset of investors or even individuals, but they don’t measure the crowd. This is important, because sentiment is a yardstick of the crowd’s emotional state.

Collectively, what are the masses thinking, saying and most important, doing with their money?

There are many ways to measure sentiment, and the best of these avoid anecdotes.

Some traders rely on sentiment surveys, especially the American Association of Individual Investors’ (AAII) bull-bear readings. I have yet to find a whole lot of value in this metric, aside from those rare

Anecdotes can tell you about a small subset of investors or even individuals, but they don’t measure the crowd.

This is important, because sentiment is a yardstick of the crowd’s emotional state.

Collectively, what are the masses thinking, saying and most important, doing with their money? There are many ways to measure sentiment, and the best of these avoid anecdotes.

times when the readings are at extremes. Survey responses tend to swing wildly in response to what just happened, and they typically lag behind market cycles.

If you are going to use AAII survey data, I prefer the asset allocation survey. During the past 23 years, individual investors on average have held a portfolio made up of 60-percent stocks. As of April, stocks and stock mutual funds made up 67.9 percent of individual portfolios, according to AAII. That is a somewhat higher than the average, but below the extremes seen in the past.

In 1999 and 2000 equity hold-

ings were 17 percent higher than the mean, while in 2005 to 2007 they were 10 percent more.

There are lots of other ways to measure sentiment: the VIX (sometimes known as the fear index); mutual-fund flows; put-call ratios; the Arms Index (a technical measure of advancing and declining shares); the percentage of stocks reaching new highs and lows; the percentage of New York Stock Exchange shares trading below their (choose one) 50or 200-day moving averages; and so forth. For the most part, these kinds of sentiment readings tend to be quite noisy while offering no definitive insight much of the time.

Back to the artwork: There are more than 7 billion people in the world. There are almost 320 million people in the US. How many folks can afford to spend almost $200 million on a Picasso or $150 million on a Giacometti? There are about 2,300 billionaires in the world. That pretty much defines the size of the market for these sorts of collectibles.

That means these record-breaking art auctions may say something about the rarefied world occupied by the superrich, but their informational value is of little importance to market sentiment. So stay calm and don’t panic just yet.

Opinion BusinessMirror

opinion@businessmirror.com.ph

Monday, May 18, 2015 A11

California’s future is in Australia

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alifornia’s worst-in-a-century drought is forcing the state to impose strict limits on water use and to consider increasingly elaborate and expensive proposals to move water from here to there. Those steps may be necessary, but they should be accompanied by something more rational and efficient.

That mechanism, of course, is the market. When it comes to California’s water, however—especially the 80 percent of it used in agriculture—the market is woefully inefficient. And making it work is no easy process. But the sooner California can work this out, the easier it will be for the state to adapt to a world of scarce supply. California can also show the way for other drought-endangered states in the Southwest to do the same.

Like many other places, California has traditionally insulated its water from market forces—by preventing its sale outright or by imposing steep transaction costs and other barriers. Its underused water market operates without transparent pricing or simple and consistent rules.

This market could be made more efficient, though. That’s the lesson from Australia, which started using water markets in the 1980s and has since become a model for other countries. The system sets an annual cap on the amount of water that can be used without threatening future supply, then breaks that amount into entitlements for different users, which they can trade, temporarily or permanently.

When droughts hit, the volume of water that’s trading in Australia increases, as farmers who grow waterintensive crops such as rice or cotton sell their rights to farmers who grow crops that can’t be fallowed because they grow on vines or trees, such as grapes or almonds. Australia’s system aims to make those transfers as smooth as possible; you can view real-time prices or trade water rights online. What’s more, all the other data needed to set rational prices— including up-to-the-minute water usage and records of water rights— are publicly at hand.

The system has been a success: During droughts, water trading has

helped agricultural production stay mostly constant and helped individual farmers survive financially.

California, like most other US states, also lets farmers buy and sell their water rights, to each other or to cities. But the transactions are not supported by a transparent online marketplace (though laws passed last year will help track water use).

And they’re bogged down by red tape and other costs. The volume of trading shows it. From 2006 to 2010, agricultural districts or urban water utilities bought only about 3 percent of the water used in California’s San Joaquin Valley, according to the Public Policy Institute of California. In Australia’s prime agricultural zone, more than 30 percent of available water is traded.

Transaction costs on the water market aren’t always monetary. In Nevada, for example, a farmer who wants to sell his or her water rights must go through so many reviews and approvals that the process lasts years. Even a one-year transfer can take months.

Sweeping away such obstacles is best done at the state level, because communities too often oppose water markets as economically harmful.

After all, even if the farmers who sell their water rights get compensated, other businesses that depend on farming do not. In California, communities have used local ordinances and other steps to block sales in order to protect the local economy and their own water supply. A more efficient market needs standardized rules—statewide and from state to state—that encourage water trading.

Building efficient water markets takes time, and communities will still need to keep some control over their supplies. But making it easier to buy and sell water is the best way to adapt to living with less of it. Bloomberg News

Can’t be more emphatic Teddy Locsin Jr.

K

Free fire

IM JONG UN took his defense chief to a firing range, put him in front of an anti-aircraft gun and fired away.

US satellites spotted the anti-aircraft gun, which has a range of 8,000 meters, positioned 30 meters from a target. His defense chief’s crime? He fell asleep during an event where Kim was present. This is as strong a case as can be made for taking Benzedrine, Dexedrine and whatever speed we took in school to cram for exams.

Around 70 North Korean officials have been shot since Kim came to power; several in the same emphatic fashion.

Indeed, if you don’t like somebody, and you have the power to let him know it, be unequivocal; say it

in the most direct way. This is what Kim is showing us. No ifs or buts, just fire away.

This is useful advice to journalists who hem and haw, give ifs and buts, on the one hand this, on the other that, about officials

P-Noy himself might think doing a Kim when he get four speech drafts on paper instead of the finished speech in the teleprompter; although his mother once opened the folder usually containing her speech and found there nothing. The speech I had written had dropped out when her aide handed the folder to her. So she just winged it before Mahathir, Suharto and Lee Kuan Yew who told her not to sweat it. their editors and publishers don’t want to offend.

P-Noy himself might think doing a Kim when he get four speech drafts on paper instead of the fin-

Venture capitalist made some pretty good deals for himself

By Matt Levine Bloomberg

L

et’s say someone has a thing that he wants to sell, and someone else wants to buy that thing, and they don’t know each other, but you happen to know both of them. What should you do?

One very tempting option would be: Go to the seller and say, hey, I found someone who wants to buy your thing; she’s willing to pay $1.5 million.

Go to the buyer and say, hey, I found someone who has a thing to sell you; he wants $3.5 million.

Buy from the seller for $1.5 million, sell to the buyer for $3.5 million and pocket the difference.

When I say that this option is tempting, I don’t just mean for me. A lot of people succumb to temptation!

There is the case of Jesse Litvak, the former Jefferies mortgage-bond trader who was convicted of fraud for conducting negotiations in that vein. There is the case of Yves Bouvier, an art dealer arrested in Monaco for allegedly doing something like this with a Modigliani painting. If you are a middleman in opaque markets, your whole value-add is knowing the buyer and seller and their respective reservation prices. And one way to measure and be compensated for your value-add is to just take the difference between those prices for yourself. If the seller’s reservation price is $1.5 million, and the buyer’s is $3.5 million, then there’s $2 million of value to be gained in the transaction. By someone. Why not you?

Well, one reason would be that this sort of thing can stray perilously close to fraud, as, you know, those fraud cases suggest. Different markets have evolved different norms about what you can and can’t say or do in your efforts to capture that spread, but none of them seem all that clear. Generally speaking it’s a bad idea to outright lie: You can maybe insinuate that you’ve got a seller at $3.5 million and a buyer at $1.5 million, or be strategically vague about who your seller is and

where exactly you’re sourcing your thing, but you shouldn’t literally say the words, “I have a seller who’s demanding $3.5 million,” if you don’t.

At least don’t put it in writing. But I emphasize that this is not legal or ethical advice and that the exact rules applicable to bond traders, or art dealers for that matter, are very much contested territory these days.

On the other hand, if you’re on the board of directors of the seller, and an investment adviser to the buyer, then all of this is right out.

Definitely don’t do this: Ahmed arranged for one of Oak’s funds to purchase shares of a Chinese e-commerce company at a price that was significantly higher than the price the sellers actually agreed to sell their shares. Ahmed then diverted the excess funds to an account that he controlled. Specifically, in August 2014, Ahmed negotiated for one of the Oak funds to purchase shares of the Chinese e-commerce company from a British Virgin Islands Co. (the “BVI Co.”) that held those shares. Although Ahmed knew that the third-party seller was willing to sell these shares for $1.5 million, Ahmed recommended that the Oak fund purchase the same shares for approximately $3.5-million. Based on Ahmed’s recommendation, which also included false representations about the finances of the Chinese e-commerce company, the Oak fund made the purported $3.5 million investment. Oak wired the purchase price to an account that Ahmed claimed was held by the BVI Co., but was in fact controlled by Ahmed.

That’s from the Securities and Exchange Commission (SEC) action earlier this week against Iftikar Ahmed,

who was both a general partner at venture capital firm Oak Investment Partners and on the board of directors of the BVI Co. He allegedly conned his fellow board members into thinking he had a buyer at $1.5 million: On or about July 30, 2014, Ahmed corresponded with one of the other BVI Co. board members about the potential sale of its Company A shares.

Ahmed claimed he had negotiated a sale of the shares for $ 1.5 million, but that the third-party buyer was now skeptical of that price in light of Company A’s “declining revenues” and “significant loss” of business.

Ahmed suggested he believed he could convince the buyer to purchase the shares for approximately $1.3 million. The board member indicated that he was comfortable with a sale at that price.

On or about the morning of Monday, August 11, 2014, Ahmed e-mailed the two other BVI Co. board members claiming that the potential buyer “ke[pt] going back on price.” Ahmed proposed that the BVI Co. sell its shares of Company A to Oak rather than a third-party buyer. Ahmed claimed that “the fair price would be $1.5 million.”

And then conned his fellow Oak partners into thinking he had a seller at $3.544 million: In stark contrast to his statements to the other BVI Co. board members, Ahmed recommended that Oak XIII pay $3.544 million to purchase the BVI Co.’s stake in Company A. In making this recommendation, Ahmed misrepresented the financial condition of Company A. As noted above, in his August 10, 2014 e-mail recommending the investment to Oak, Ahmed claimed that Company A was “do[ing] quite well” financially, had more than $1 million in revenues in June 2014, and had “turned a little profit too.” In fact, on or about August 8, 2014, Ahmed had received information about Company A’s financials, which noted that estimated revenues for June 2014 were approximately $725,000, and the company

had a net loss of more than $200,000.

And then kept two sets of deal documents so that no one would figure out that he’d kept the spread: To conceal his fraud, however, Ahmed provided Oak with altered deal documents. On August 12, 2014, after Ahmed had received executed copies of the deal documents from both of the other BVI Co. board members, Ahmed e-mailed to Oak personnel executed deal documents that falsely depicted a purchase price of $3.544 million.

In addition to misrepresenting Company A’s finances and using altered deal documents that overstated the actual purchase price, Ahmed caused Oak XIII’s money to be wired to a bank account that he controlled.

Specifically, the wiring instructions Ahmed provided to Oak were not for an account held by the BVI Co., as Ahmed claimed in the wiring instructions, but rather were for the account held by Relief Defendant Ahmed Sole Prop.

According to the SEC, he did this sort of thing more than once, including one notable effort where he had a seller for $2 million and got an Oak fund to pay $20 million, pocketing the difference for a sweet sweet 90-percent finder’s fee.

In apparently unrelated news, he was also charged with insider trading last month, allegedly making $1.1 million on an insider tip about a proposed acquisition of Cooper Tire. I mean, that’s fine I guess, but why do that if you can make an order of magnitude more just having your VC fund wire you money? Not only is the wiring-yourself-money gig much more lucrative, but insider traders just get caught so often.

And it’s tempting to read the timing here—insider trading case a month ago, self-dealing case this week—as suggesting that calling attention to himself by insider trading is how Ahmed got caught on the other stuff.

But if the SEC is right about the other stuff, it’s way worse than insider trading. Not only did Ahmed allegedly lie to and rip off both sides of

those transactions, but he did it while being a fiduciary to both sides. The SEC points out that, “As an investment adviser, Ahmed owed fiduciary duties to the funds that he advised on Oak’s behalf,” but as a director of the BVI Co. he also had fiduciary duties to the seller. In a private market with no liquidity and little information about the value of the asset, both sides trusted Ahmed to get them a fair price. And he agreed to a role where he owed them both honesty and loyalty. And then he— allegedly—tricked both of them.

That’s very different from the Litvak and Matthew Katke cases shaking the bond markets. At least no one trusts bond traders: “We’ve always said in this business that there are lies and there are bond lies,” said one veteran mortgage-bond trader who now works at a moneymanagement firm. “They’re like white lies. You’re not transacting in a market with grandma…the guy on the other side is doing the same thing.”

But these scandals do seem to come up mostly in opaque, illiquid markets. Where nobody knows what a thing is worth, there are more opportunities to find buyers who are willing to pay way more than sellers want. When that happens, the value of making a deal can be really large, and the services of a middleman can be really valuable. And the temptation for that middleman to take all of the value for himself can be overwhelming.

Sometimes he’d make them even more imaginary: He’d already own the thing, but he’d go to a buyer and pretend he was negotiating with an imaginary seller who wanted more.

As we discussed the other day, Litvak’s conviction is up on appeal, and his chances of a reversal seem pretty decent.

This seems to be a thing in the art market; consider also Ronald Perelman’s lawsuit against Larry Gagosian, accusing him of doing something sort of similar with a Cy Twombly painting. That case was dismissed for lack

ished speech in the teleprompter; although his mother once opened the folder usually containing her speech and found there nothing.

The speech I had written had dropped out when her aide handed the folder to her. So she just winged it before Mahathir, Suharto and Lee Kuan Yew who told her not to sweat it. Mahathir looked scornful which is why she made no secret of her dislike for him (although one writer, Joe Studwell, in his famously penetrating book on the Asian Godfathers of corruption and development, mistook the object of her dislike to be Lee Kuan Yew, the farthest thing from the truth because she trusted the Singaporean strongman implicitly).

After her speech, she stepped down from the podium, turned to her aide as she walked passed him and said softly, “You’re fired.”

And he was.

of reasonable reliance, which might be of interest to the Litvak crowd.

That’s Iftikar Ali Ahmed Sole Prop, “a purported business with a bank account at a large national bank.” The SEC says that “the full name of the Ahmed Sole Prop bank account misleadingly suggested that Ahmed Sole Prop was ‘doing business as’ the BVI Co.,” which is funny because the abbreviated name sure makes it sound like it was an account solely for Iftikar Ahmed’s prop trading. (Or is “prop,” like, “theatrical prop”?) It’s a good trick, though. When I was a lawyer and banker setting up wire transfers I always fantasized about having people wire the money to me, but I never realized it was as easy as saying, “Oh wire the money to Matthew Levine d/b/a Goldman Sachs & Co.” or whatever.

Or 900 percent, depending how you count. The structure there is that the Oak fund bought shares in a joint venture from one party to the joint venture. The other party to the JV was the “BVI Co.” of which Ahmed was a director. According to the SEC, that company wasn’t involved in the transaction, but Ahmed convinced Oak to pay $18 million to what it thought was that company: Ahmed further told the Oak employee that the payment was structured the way it was at the joint venture parties’ request. In another e-mail sent on or about January 3, 2015, Ahmed stated: “Just so you are clear on the funding, the purchase of [Joint Venturee Party 1’s] shares was for the entire $20 million, but netted out for a $18 million obligation that [Joint Venture Party 1] had to [the BVI Co.]...and hence the fund flows were as we did. The gross purchase price from Oak was $20 million but the net amount to [Joint Venture Party 1] was $2 million.”

Of course phase 2 of this plan was allegedly getting Oak to wire the $18 million, not to the BVI Co., but rather to Ahmed’s prop account, “doing business as” that company.

2nd Front Page BusinessMirror

A12 Monday, May 18, 2015

www.businessmirror.com.ph

Palace weighs options Economists give diverse to stop reclamations views on next BSP move M

ALACAÑANG is weighing every option to stop unabated illegal Chinese reclamations in West Philippine Sea territories, including “back-channel talks” with Beijing, even as President Aquino pursues the country’s case against China at the International Tribunal in The Hague.

Communications Secretary Herminio B. Coloma Jr. clarified on Sunday that the back-channel strategy suggested by former President Fidel V. Ramos is not being ruled out as incompatible with the Aquino administration’s earlier decision to lodge a formal protest against China before the United Nations International Tribunal on the Law of the Sea. “All proposed options would have to be assessed vis-á-vis the stated guiding principles,” Coloma told the BusinessMirror. The Palace official was referring to reports over the weekend quoting Ramos as prodding the Aquino administration to also consider back-channel talks to resolve the territorial dispute between Manila and Beijing over new Chinese structures, including military facilities, being built on illegally reclaimed islands well within Philippine territory, the Kalayaan Islands Group (KIG) being part of the province

of Palawan. In suggesting the back-channel option, Ramos was reported to have voiced hope during a recent meeting with diplomats at the Department of Foreign Affairs that while the Beijing central government may not heed Philippine protests over the illegal Chinese structures, “its citizens will.”

Coloma did not readily close the door on Ramos’s recommendation, even as he assured that the Aquino administration will pursue all available options to protect national interests in resolving, through a “rules-based” approach, the brewing territorial conflict with China at the WPS. “We maintain our position on the imperative of adhering to a rules-based peaceful resolution of all claims in the WPS,” Coloma said.

The Palace official added: “We also affirm the principle of Asean centrality in accordance with the Declaration of Conduct [DOC] and the need to flesh out a legally binding Code of Conduct [COC].”

He was referring to the 2002 China-Asean agreement on the Conduct of Parties in the South China Sea, which despite repeated prodding by the Philippines, among others, has not resulted in a legally binding COC more than a decade after. Butch Fernandez

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By Bianca Cuaresma

he region’s economists proffer divergent views on what or where the Bangko Sentral ng Pilipinas (BSP) would do next as external developments remain fluid and uncertain.

Singapore’s DBS Bank, HSBC and JPMorgan gave widely divergent forecasts in separate research notes following the central bank’s decision to keep the monetary-policy settings unchanged for the fifth consecutive time.

For both the DBS Bank and HSBC, the central bank was likely to keep its policy rates unchanged the rest of the year.

“There is no strong push reason to lift interest rates higher for now, given the soft inflation outlook. Part of the reasons why

inflation, including the core reading, has been easing is a strong currency,” DBS Bank analysts said.

“External headwinds are intensifying, dragging down export performance and remittance growth. Given that domestic demand remains robust, the BSP may opt for more effective policy tools to counter the slump of the external sectors,” HSBC also said.

“A change in interest rate may not be appropriate at the moment, given flush liquid-

ity conditions and upside risks to inflation in the fourth quarter of 2015…. We expect rates to stay on hold for the rest of 2015,” the British-owned lender added.

Bucking the trend were analysts at JPMorgan, who said the central bank will likely raise rates in the third quarter this year instead.

“The JPMorgan view of a rate cut in late third quarter of 2015 hinges on modest price pressures, especially food,” its analysts said.

“Should food prices rise in the second half of 2015, this would reduce the probability of a rate cut,” they added.

On last Thursday’s rate-setting meeting of the Monetary Board, the seven-man body kept the rate at which the BSP borrows from or lends to banks, and its other tools intact for the fifth consecutive time.

In particular, interest rates were unchanged at 4 percent for the overnight borrowing or reverse-repurchase facility and 6 percent for the overnight lending or repurchase facility.

The rates on the BSP’s deposit-reserve ratios and on special deposits account were also kept steady.

The BSP will next meet on June 25.

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“The last hearing on the bill in the House of Representatives will be on Wednesday.

Rep. [Miro] Quimbo told us whether or not the DTI and DOF would agree, they will pass their own version. They’ll take a look at points of DTI and DOF that are still in conflict, and it’s up to them what will be included and not,” said the official, who asked for anonymity. Major points of disagreement between the two agencies continue to block the measure’s progress in Congress.

The DOF is refusing to loosen its grip on DTI’s incentive administration. It continues to insist that should the DTI submit to the BIR a tax-expenditure forecast report, or how much incentives investment-promotion agencies (IPAs) will grant in a given year, according to the source.

The requirement is being pushed by the BIR to get an estimate of what it deems are “revenue losses” in a year. The DTI has already agreed on submitting incentives information from a previous period, but refuses to predict the incentives to be given in the future.

The source said since the DOF has already agreed not to include a Tax Expenditure Account (TEA) in the budget bill—which will put a cap on the amount of incentives that IPAs can dispense—the requirement to predict prospectively serves no purpose.

Another point that raised a red flag is the demand of the DOF to make the trade chief legally accountable when submitting tax-incentive information to the BIR. “When a list of companies is submitted to the BIR for reporting, it should be under oath; they want [Trade] Secretary [Gregory]

LTG reports. . .

Economic Cha-cha

Meanwhile, AKO Bicol Party-list Rep. Continued on A2

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compared to P916 million a year ago. The higher other income was due to the sale of P509 million worth of ROPAs (real and other properties acquired).

Tobacco

LTG’s income from the tobacco business reached P411 million in the first three months of 2015, 29 percent lower than the P578 million reported in the same period in 2014, mainly due to a one-time gain from the sale of a property in the previous year.

Equity in net earnings from the 49.6-percent stake in PMFTC amounted to P415 million, slightly lower than the P480 million in the first quarter of 2014.

Prices for the low and super-low segments were increased in February.

Asia Brewery

L. Domingo to do that,” the source added.

The DOF is similarly insisting to get the power to forfeit the grant of incentives to an IPA-registered enterprise if it fails to electronically file its income-tax return.

“That can’t be absolute. When they shifted to e-filing of income-tax returns recently, they had problem with their computers; so it’s out of the hands of the company. There should be flexibility,” the source pointed out.

These are the problematic provisions, although an agreement has already been reached on the disaggregation of tax-incentive information on a per-sector level and in assigning the National Economic Development Authority (Neda) to be the main body to hold the information on incentives and make the incentives cost-benefit analysis.

Despite the remaining road blocks, it appears the passage of Timta in the 16th Congress will not encounter delays. The measure is already in the period of interpellation in the Senate, and the House of Representatives will be moving up to the same stage in a matter of weeks.

“There’s a strong sentiment that both chambers want to pass this in this Congress; so there’s a big chance,” the source said.

No progress, however, is being made on the rationalization of fiscal incentives bill (RFI), another tax-related legislation tagged as a priority economic bill by the chief executive. The said bill has failed to pass Congress for the past 16 years.

ABI’s income reached P301 million in the first three months of 2015, 14 percent more than the P263 million reported for the same period in 2014.

ABI’s brands Cobra (carbonated energy drink), and Absolute and Summit (water) continue to be market leaders. Tanduay Ice has over 90 percent of the alcopop market.

Tanduay Distillers

TDI reported an income of P75 million in the first quarter, a turnaround from the loss of P11 million in the same period last year.

Revenues and sales volume were relatively flat, mainly due to recent price increases in October 2014 and January 2015.

According to Nielsen, TDI’s market share stood at 24.5 percent as of the end-March 2015, slightly higher than the 23.1-percent market share as of end-March 2014.

Eton Properties

Eton’s income for January to March 2015 amounted to P51 million, an improvement over the P29 million reported in the same period the previous year.

Rental income from office and retail space accounted for a significant portion of earnings. Eton plans to construct more businessprocess outsourcing office buildings.