BusinessMirror July 13, 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 Saturday 18,July 201413,Vol.2015 10 No. Vol. 40 10 No. 277 Monday,

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P.  |     | 7 DAYS A WEEK

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PNOY QUESTIONS PERSONNEL LAYOFFS, WHILE DE LIMA NOTES LACK OF BSP, PDIC APPROVAL

LandBank-DBP merger faces delay INSIDE

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RESIDENT Aquino hates the idea of putting a number of bank employees out of work, and has refused to sign the proposed executive order (EO) merging the Land Bank of the Philippines with the smaller Development Bank of the Philippines (DBP) on this basis, executives said on Sunday.

MARRIOTT TURNS ROMANTIC Forevermore

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EAR Father in Heaven, at the altar, the groom declares, “Forevermore I will love you till the end of time.” How thrilling! I heard it on May 4, 1972, and after 38 years of living and nurturing our marriage together, my husband passed away. I had him all for 38 years, but he has to go to God’s Kingdom earlier. Life must go on after our five children finished their studies and knotting the knot themselves in God’s mercy and grace. Now is the question, will Mr. Right come along and proclaim too “ I love you forevemore?” But one thing is for sure, I will be safer to say to You, Father, “ I love You, forevemore.” Amen.

LOUIE M. LACSON, TEMPLETON DRIVE, CARMICHAEL CA, USA Word&Life Publications • teacherlouie1965@yahoo.com

Editor: Gerard S. Ramos • lifestylebusinessmirror@gmail.com

Life

ALL ACCESS:

BorN out of Love & PassioN

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BusinessMirror

Monday, July 13, 2015 D1

Marriott turns romantic

JUN ESCARIO on Kris Tiffany Janson Jonas Yu

JC BUENDIA on Emerald Villahermosa Ash Reginald Evasco

RANDY ORTIZ on Kylie Versoza Bruce Casanova

ITH its grandiose claim that it holds the country’s biggest ballroom, the Marriott Hotel Manila in Resorts World Manila mounted the most romantic showcase of wedding finery so far this year. Called Marry Me at Marriot, top bridal designers unleashed a sumptuous selection of gowns, suits, accents and accessories that promise any exchange of “I Do’s” to be memorable.

Randy Ortiz opened the regal proceedings with a collection he called Inamorata, followed

by JC Buendia’s Edelweiss, Jun Escario’s Venus Rising-inspired suite, Rhett Eala’s dainty parade, Rajo Laurel’s Bridal Codes, and closing with Frederick Peralta’s Masquerade of Love.

“I don’t think there’s a name for the collection,” Escario said. “I do prefer classic, wearable pieces for real people, but I guess I had this photograph in my mind of the Venus Rising painting [by Boticelli]. My collection is romantic, ethereal and soft in hues of bone, champagne, cream and white. No crazy, experimental shapes. Just real pieces.”

Ortiz, who said that his peak months for weddings are from December to March, used layers and layers of silk tulle and silk organdy embellished with different patterns and incarnations of intricate embroideries

and subtle beadings. “Inamorata is inspired by a woman who loves and who has loved.

Like her, my collection is romantic, dramatic, fragile and so full of love,” shared the seemingly lovelorn designer.

A menswear master, Ortiz showed suits that offer “contemporary and classic options for grooms: well-fitted, dapper, bespoke tailoring that ranges from black to ivory jackets with waistcoats and cummerbunds, bow ties and pocket squares inspired by The Great Gatsby.”

The always lovestruck Buendia, who limits himself to one wedding a month (“I avoid getting stressed and getting the bride stressed.”), did an all-new collection for the Marriott show, the theme of which was Secret Garden, concocted by director Robby Carmona complete with a beautiful set design. “I made use of pale rose, honeysuckle and lily-white silk gazar, organza and petit fleurs. I purposely sent my first model Emerald Villahermosa in a white gazar pantsuit to sort of announce it’s my portion already,” Buendia declared, “since I’m associated with good tailoring, and I was thinking the audience’s eyes would need a little break from embroidery and bouffant skirts.”

Pantsuits are having a moment this fashion cycle, perhaps owing to the recent marriage equality triumph of the LGBT community in the US. Women who are getting married are now more emboldened to wear pants. It could be what spurred Karl Lagerfeld to send Kendall Jenner down his casino-set runway in a double-breasted, satin trouser suit with flowing shoulder veil for his Chanel show. Not particularly lovely, though, but a positively gay statement nonetheless. For a reversal of roles, see

FREDERICK PERALTA on Ana Buquid Evasco

RAJO LAUREL on Melanie Angeles Evasco

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RHETT EALA on Grace Tagle Evasco

Thom Browne’s 2015 Paris menswear gender-bending macabre collection which includes veils and skirts.

“I’ve done two gay male weddings in the past six months. I haven’t done a lesbian wedding yet, but I’ve often made pantsuits for gay women who are part of the entourage.

Sometimes there are women who are really more comfortable in pants, like mothers who would go for soft, flowing pants and tops,” Buendia said. “I’d say these women, the lesbians and mothers, are…how do you say it? Nagpapakatoo! [Living their truth!] They go for comfort and wouldn’t want to suffer in corsets and petticoats.”

Laurel, society and celebutante favorite, hasn’t had “the pleasure of doing a lesbian bride, and perhaps one day this will happen and I’m excited for the blessed day. It is very rare that I get requests for brides to wear pants. My clients are still quite conservative in the way they would like to get married and have remained classic in their choices.”

One of his models, Melanie Angeles, wore a silk damask brocade in bisque and wedge wood blue enhanced by matte-gold thread.

It was a jumpsuit featuring a square neckline and full-length cathedral train.

Laurel averages six wedding gowns a month, with his peak season between September through February. “The collection really is a collective of my current state of bridal mind. I wanted to play with certain ‘bridal codes’ and propose a new way of looking at weddings. I’m suggesting various renditions of wedding-gown premises, and perhaps see this in a new light. The codes are the princess bride, the midcentury bride, the partygoer bride, and the bride who would like to really wear her wedding gown again by

suggesting separates,” Laurel said.

Frederick Peralta, hopeless romantic that he is, believes in forever. His collection, in collaboration with Gerry Sunga for the accessories and Teddy Manuel for the floral crowns, was a “whimsical journey to forever.”

He sent down Kim Ross in a silk tasseled, sleeveless gown, with a potpourri bouquet headdress, which reminded me of an image of Jean Shrimpton bedecked in a similarly gorgeous flower arrangement in her hair.

THOM BROWNE Getty Images

Peralta also had Ana Buquid in a pair of pants—lace scalloped with dangling Osmeña pearls—and the top, a baroque off-shoulder gown, with cascading cape. “A designer helps a bride’s dreams come alive, but sometimes my designs need a woman who knows what she wants and who can carry the clothes with confidence,” he said. “Some brides are bored with classic designs.

They want to have fun on their wedding day, so they end up ordering a different design from what they originally had their heart set to.”

LIFE

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Monday, July 13, 2015 E 1

HOW LEADERS KI KILL

CREATIVITY B D B

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HERE are a lot of myths and misconceptions about how to nurture and grow creativity. If your team is in the midst of solving a problem or generating a new idea, you might be killing their creativity without even realizing it. Three common mistakes:

1. Spending too much time on brainstorming. Brainstorming rep-

resents just one step in the creative process, a step often referred to as divergent thinking. Before such thinking can be beneficial, your team needs to research the problem thoroughly to be sure that their brainstorming answers the right question.

The next step is convergent thinking, where ideas are combined and sorted out to find the best answers to be prototyped, tested and refined.

2. Fostering too much cohesion in the creative process. The best

teams fight a little (or even a lot).

Structured, task-oriented conflict can signal that truly new ideas are being submitted. Too much agreement might suggest that people are self-censoring their ideas, or worse, not generating new ideas at all. As a leader, don’t be afraid to act as a referee —allowing the fight over ideas to unfold, but making sure that it stays fair and doesn’t get personal.

3. Judging ideas before they’ve been tested. How new ideas are treated can dramatically affect creativity. Research shows that we tend to favor ideas that reinforce the status quo and that managers often reject ideas that customers say they want. Once an idea is rejected, the likelihood that an individual or team will continue to think creatively is diminished. The result is the safe, stale ideas that our biases favor. The best leaders find ways to test ideas in the marketplace first and defer judgment until they have early results.

A growing body of research suggests that these accidental creativ it y k il lers are causing more harm than good. So try the inverse and see how it affects your team’s creativity.

David Burkus is founder of LDRLB and assistant professor of management at Oral Roberts University, and author of The Myths of Creativity: The Truth About How Innovative Companies and People Generate Great Ideas.

The risks of changing your prices too often B U M. D

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ODAY’ A S technologies allow digiAY’ tal businesses (as well as a growing roster of traditional companies) to change prices frequently, even minute-by-minute. It is not unusual for prices to change on sites like Amazon, Expedia and Priceline several times a day. But how often should companies change their prices?

Historically, price changes were expensive and time-consuming. Price lists had to be recalculated and mailed to distributors and customers; new catalogs, labels and signs had to be printed.

Throughout the 2000s, even as the Internet continued to grow, prices remained the same for months at a time.

Technology has drastically changed the economics of price changes. In digital businesses, for example, price-change costs are virtually zero. Pricing optimization software now helps companies link cost, customer and sales-performance data. And dynamic pricing methods

allow firms to respond immediately to market factors, competitor actions and customer responses.

In industry after industry, this capability puts pressure on managers to change prices frequently. Many marketers use short-lived price promotions, flash sales and daily deals to lure customers to their store or sites. Constant price shifts seem to be a good way to offer discounts selectively and to protect margins.

But frequent price changes are destabilizing. Many airlines and supermarkets end up in bruising price wars as they match each others’ cuts and get caught in fast-moving downward price spirals.

For many customers, fluctuating prices are confusing, frustrating and annoying. It makes the buying decision infinitely more complex. When customers don’t have clear reference prices, they don’t know when to pull the trigger. Research shows that when decisions become complex, many people delay making decisions or avoid them alto-

gether. Another problem: When prices fluctuate constantly (and other features don’t), customers turn their attention away from the product’s virtues—the very qualities that make a strong brand and allow the company to enjoy a price premium—and focus on price.

Of course, there are legitimate reasons to change prices. A company may want to get rid of its inventory and introduce new versions of its products. Many products are seasonal: It makes sense to mark down sweaters in April and linen suits in October. And sale prices can encourage customers to try something new, or reward loyalty.

But customer reactions to cavalier pricing shifts may inflict lasting damage to a company’s bottom line. Prices should change only as often as a company’s tactical objectives and overarching goals dictate.

That EO was due for signing this week under a timetable set by an interagency technical working group, headed by the Department of Finance, with the Bureau of the Treasury and the Bangko Sentral ng Pilipinas working closely with supporters in Congress.

Executives said President Aquino understands the need to fuse the resources of the state-owned lenders for reasons of efficiency and economies of scale, but questioned the wisdom of downsizing by laying off bank staff.

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Forecasting demand and setting a mark markdown level or price for each store. This is no easy task when the closures involve hundreds or thousands of stores.

Choosing where to sell the liquidated inventory. Some stores generate much higher revenues during liquidation than during the same period the prior year. Since inventory transferred to such a high-multiplier store may sell at a higher price, retailers should anticipate which stores will be most profitable during the liquidation.

Deciding when to close a store. While legal restrictions set an upper limit on the length of a liquidation, managers may close stores early to save operating expenses.

During liquidation, retailers can reach new demographics and markets by using bold signage and unconventional advertising methods. Stores often earn more revenue during liquidation than during Black Friday weekend or other high-demand periods.

We have identified numerous ways in which net recovery rate (the store’s revenue

to enjoy GSP privileges until 2017.

The law also provides for a retroactive reimbursement of all duties paid by US importers of Philippine goods, as the previous GSP program expired in July 2013.

“The renewal of the GSP will enhance our exporters’ competitiveness. I’m confident that we’ll be able to see double-digit growth in exports to the US,” Export Manage-

ment Bureau (EMB) Director Senen M. Perlada told the BM in a telephone interview.

The GSP is a program rolled out by the US in 1976 to promote economic growth in the developing world. It provides preferential dutyfree treatment for more than 5,000 products from designated beneficiary countries and least-developed

B P K, S M, H S  J T

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HANGE is the status quo. Companies realize that success depends on their ability to respond to new opportunities and threats, and to keep rethinking their strategies, structures and tactics to gain competitive advantages.

As a result, companies must set up and oversee change initiatives more systematically than before. They must periodically evaluate projects against each other to ensure that they have deployed the right amounts of resources, people and attention across competing efforts.

Executives must also find ways to catalyze the discussions that will result in reprioritizing or retiring change efforts that no longer serve the organization’s objectives.

Many business leaders tell us that they lack tools to check whether their change initiatives are likely to work, or to identify the drivers of success and failure. That’s why we decided to

reintroduce a change management tool called the DICE assessment.

With the DICE tool, companies can assess the probability of success of change initiatives early.

By evaluating projects with a standard scoring mechanism and monitoring those scores over time, the assessment helps managers preserve the odds of success.

The DICE assessment measures four elements that, according to our research, determine the fate of every change initiative: n Duration. The overall project time of the change initiative, or the time between learning milestones. The shorter, the better. n Integrity of team performance. An indicator of the team’s ability to complete the initiative on time based on members’ skills, traits and experience, as well as the leaders’ competencies. n Commitment. The support for the initiative at the senior management level and among the affected employees. n Effort. The additional workload that affected employees must bear because of the change initiative. The project team must score

each of those elements on a scale from one to four and combine the weighted scores; performance integrity and senior executive commitment have a larger weight than the other parameters.

Having assessed literally thousands of projects, we find that every project will fall in one of three zones, indicating its likely outcome.

1. If the score is lower than 14, it indicates that the initiative has a high likelihood of success; welcome to the Win Zone.

2. A score in the middle (between 14 and 17) shows that there’s concern over the outcome’s likelihood; the initiative is in the Worry Zone.

3. Scores above 17 indicate that it’s unlikely that initiative will be successful; that’s the Woe Zone. By using the DICE tool to score change efforts that are under way, leaders can prioritize efforts, identify trouble spots and modify resource deployments to improve the odds of success.

MONDAY MORNING Nate Craig is an assistant professor of management sciences at Ohio State University. Ananth Raman is a professor of business logistics at Harvard Business School.

Perry Keena, Stéphanie Mingardon, Harold Sirkin and Jennifer Tankersley are all colleagues at The Boston Consulting Group.

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

FAKES & GREEN CARDS Perspective BusinessMirror

E4 Monday, July 13, 2015

www.businessmirror.com.ph

FAKES&GREEN CARDS

A VISITOR takes a photo of a hand bag displayed at the flagship store of French luxury brand Louis Vuitton in Beijing.

Counterfeiting is a big business, by one estimate, the global market for fakes will hit $1.7 trillion this year. AP/NG HAN GUAN

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B E K | The Associated Press

HANGHAI—This could be the story of an American dream. An immigrant family builds a successful business and buys a four-bedroom house in a quiet neighborhood with good schools for their young son. But not all is as it seems on the steep, curving streets of San Diego’s Rancho Penasquitos.

A 45-year-old Chinese woman, Xu Ting, lives in a brown shingle house with a weedy driveway. She has been sued for counterfeiting by eight luxury brands, including Gucci and Louis Vuitton, and owes Chanel Inc. $6.9 million in damages. None of this has stopped her from becoming a legal permanent resident of the United States and achieving a comfortable suburban life.

China is not the only country with a counterfeiting problem. Most fakes are made in China, but they are sold in America. Counterfeiting is not a priority on par with drug smuggling or money laundering, and is rarely prosecuted as a crime. The lack of legal cooperation with China makes it easy for counterfeiters to move their money beyond the reach of Western law enforcement—and hard to root out counterfeiting kingpins. As long as counterfeiters can stay out of jail and hold on to their profits—and consumers continue to buy—the trade in fakes will likely thrive.

Despite spending millions on brand protection, companies often end up playing whack-a-mole, shutting down producers and distributors of fakes, only to see them pop up again. Xu Ting simply refused to show up in court over the years. Instead, doing graduate studies in statistics at San Diego State University, helped her family amass at least $890,000 in bank accounts back in China, and bought the $585,000 Rancho Penasquitos house with her husband, who has also been involved in selling counterfeit luxury goods, public records and court cases in China and the US show.

“There’s a million ways to game the system,” said Dan Plane, an intellectual property lawyer at Simone IP Services in Hong Kong, who is not involved in litigation against Xu Ting. “Probably the only thing that’s going to stop her is when she passes away—probably on an island resort somewhere—or if she gets arrested.”

FINDING XU TING

IN the web of lies that counterfeiters weave— fake names, fake addresses, fake Internet domain registrations—one thing is always true: their bank account information.

The need to get paid is the counterfeiter’s fatal flaw, and Xu Ting’s bank accounts were the first crack in her armor of misdirection.

Her legal troubles began in 2008, when a federal judge in California ordered Xu Ting—who declined multiple requests for comment for this story—to pay Chanel Inc. $6.9 million in damages for selling counterfeits online. She still hasn’t paid the damages, according to Chanel spokeswoman Kathrin Schurrer.

“The essential point for Chanel is really shutting down the counterfeiting operations, which we did successfully,” Schurrer wrote in an e-mail.

But after the lawsuit, Xu Ting’s business continued to grow.

In 2009, a Florida judge ruled against Xu Ting and shut down seven websites she was accused of helping run that sold fake Louis Vuitton, Marc Jacobs and Celine. She did not show up in court.

That case didn’t stop her either.

The next year, Gucci, Balenciaga, Bottega Veneta and Yves Saint Laurent—all brands belonging to France’s Kering group— filed a lawsuit in New York federal court against Xu Ting, her future husband, her younger brother, her mother and six others who the companies said sold more than $2 million worth of fake handbags and wallets online to US customers. Gucci alleges that the group shipped merchandise from China to a house in San Diego, where it was repackaged and passed off as genuine.

Four days after the suit was filed, Xu Ting married a Chinese man, Xu Lijun, a civil engineer licensed in California who is six years her junior, according to her marriage license issued in the San Diego

A STREET vendor hawks counterfeit branded items to tourists on the streets of Beijing. AP/NG HAN GUAN

suburb of El Cajon.

Gucci subpoenaed banking records. JP Morgan Chase handed over account records with a wealth of information about the couple: addresses, dates of birth, driver’s license, Social Security and passport numbers and a student identification card.

In November 2010, Xu Lijun reached a settlement with Gucci—the only defendant to do so. He denied wrongdoing but agreed to let Gucci keep $400,000 in counterfeiting proceeds seized from accounts outside China. He also agreed to pay a $7,500 fine, according to a copy of the judge’s order.

Eric Siegle, a New York City lawyer who represented Xu Lijun, said he was “a smalltime nobody,” and that Gucci’s lawsuit, like many others, failed to tackle the real powers behind the operation.

“The people they are arresting or suing here in the United States are low-level people,” Siegle said. “If you can find where the money is going, you can get to the heart of the problem. It’s like the drug wars. Why are we arresting all these kids on street corners?”

But Gucci, which is seeking $12 million in damages, couldn’t find where the money was going because Chinese banks, including the state-run Bank of China, refused to disclose transaction details about the counterfeiters’ accounts in China.

“BOC cannot comply with such orders without violating Chinese law,” the Bank of China said in an e-mail.

Kering declined to comment on pending litigation, but spokeswoman Charlotte Judet said in an e-mail that Gucci would “vigorously enforce any judgment eventually entered against individuals who seek to tarnish its worldwide reputation for excel-

lence no matter where they are located.”

Meanwhile, in 2013, Xu Lijun bought the house in Rancho Penasquitos, according to property records. Two weeks after the sale, Xu Ting transferred her stake in the property to her husband. Immigration authorities have the Rancho Penasquitos address on record as her residence, said a person with access to immigration records who spoke on condition of anonymity because the information is not public.

A slight man in wire-rimmed glasses who answered the door at the Rancho Penasquitos house identified himself as Xu Lijun. Behind him, in a two-story foyer, there were voices of a woman and young child. Xu Lijun asked an Associated Press reporter why he had come, then said, “I don’t want to talk to you.”

At a sprawling company compound in Beijing, no one answered the door at Xu Ting’s family apartment.

“After your colleague’s visit, we communicated and she still did not want to do the interview,” the family’s lawyer in Beijing, Chen Peng, said. He declined to comment in detail on the US court cases against Xu Ting and her family, but said they were not the prime culprits.

“My client also thinks making counterfeits is illegal, but they did not make them,” Chen said. “She is exercising her rights when choosing not to appear in court, which shouldn’t merit any moral or legal judgment.”

dent by virtue of being married to someone with an advanced degree or “extraordinary ability,” according to the person familiar with the matter.

US Citizenship and Immigration Services spokesman Christopher Bentley declined to comment, citing privacy concerns.

Dan Kowalski, an immigration attorney and editor of Bender’s Immigration Bulletin, said immigration officials may not have known about Xu Ting’s legal problems but, more likely, didn’t consider them disqualifying. Grounds for denying a green card range from committing a serious crime to having communicable disease, but there’s nothing about civil liabilities. A vaguer requirement for “good moral character” is more commonly applied for citizenship, not legal residence.

In the US, most counterfeiting prosecutions are civil cases brought by companies seeking to shut down websites selling fakes and get financial compensation.

Criminal cases, which lawyers say are a far more effective deterrent, are rare.

“A person is more likely to be struck by lightning than imprisoned for counterfeiting,” said Geoffrey Potter, an intellectual property lawyer at New York’s Patterson Belknap Webb & Tyler.

In an e-mail, Justice Department spokesman Peter Carr said, “Large-scale commercial counterfeiting is one of the top enforcement priorities of the department’s Intellectual Property Task Force, which continues to have a number of significant prosecutions.”

The Department of Homeland Security seized $1.2 billion worth of fakes at US borders last year, but the Justice Department filed just 91 criminal cases for selling counterfeit goods and services in fiscal year 2014. By comparison, the Justice Department filed 22,530 cases for immigration violations, 12,184 cases for drug-related offenses and 12,509 violent crime cases during the same period.

The National Intellectual Property Rights Coordination Center, a multiagency group led by Immigration and Customs Enforcement, reports slightly more counterfeit-related crime—683 arrests, 454 indictments, 461 convictions in the 2014 fiscal year—because its tally includes local prosecutions and counterfeit-related activity, like wire fraud.

Decisions about whether to prosecute criminally typically start with a US attorney’s office, whose priorities vary by district, said Bruce Foucart, director of the multiagency group. Some may give weight to the volume of faked goods, others to the suspect’s history. If the US attorney’s office declines a case, investigators try to persuade local prosecutors.

China is the largest source country for seized counterfeit goods, and apparel and accessories are the largest category of merchandise. Foucart, who didn’t know about Xu Ting, said luxury goods are typically made in Guangzhou and sent by container or courier like FedEx to the US. They may be sold in stores or flea markets but are usually hawked online.

“Unfortunately, once you shut one [website] down, they have 10 more ready to open up in a different name,” said Foucart.

Brand owners also bear responsibility.

Government agencies often rely on them for tips and investigative legwork.

US law gives companies broad powers to enforce court judgments. Unpaid judgments accrue interest and last for 20 years, said Potter, the intellectual property lawyer. Even a bankruptcy won’t erase the debt. “The counterfeiter can’t own a business, buy a house, have a bank account or borrow money from a bank,” Potter said.

“If the counterfeiter takes a regular job, the judgment holder can garnish her wages.”

But doing the kind of work required to root out debtors like Xu Ting—public records searches to see whether they own real estate, subpoenaing credit-card bills to track spending habits, hiring investigators to determine whether they have jobs— takes relentless commitment, and money.

Schurrer, the Chanel spokeswoman, declined to comment in detail on Xu Ting but said California law prohibits seizure of a primary residence in civil litigation.

“The biggest game changer for me would be if foreign companies took a more aggressive attitude toward enforcing their rights,” said Mark Cohen, former intellectual property attaché at the US embassy in Beijing. “We need to close the loops. I think there are a lot of companies that care a great deal about counterfeiting but, at the end of the day, there may be an economic calculation about how much money it’s worth to pursue these people.”

PERSPECTIVE GREEN CARD? NO PROBLEM

XU TING’S legal troubles did not prevent her from getting a green card. In February 2014, she became a legal permanent resi-

SALES MILESTONE Toyota Motor Philippines Corp. (TMP) executives celebrate its 1-millionth-sales milestone. (From left) Executive Vice E4

B L L

C  A

Utpal M. Dholakia is a professor of marketing at Rice University’s Jesse H. Jones graduate school of business.

minus its operating expenses) can be improved by around 5 percent—a big number, given that billions of dollars of retail inventory are liquidated annually in the US. We found that: n Retailers frequently did not discount deeply enough early in a liquidation. n Managers discount too deeply toward the end of the liquidation to sell off the entire inventories. They would be better off retaining the product to sell in another market or donating it to charity. n Managers often don’t transfer enough inventory from low-multiplier stores to more profitable stores. n Managers should shut stores sooner than they typically do.

Excelling at managing liquidation allows retail firms to renew themselves and ultimately thrive.

THE FEARED POWER SHORTAGE: WHY IT DID NOT HAPPEN

C  A

SHUTTING DOWN STORES NEEDN’T HURT BUSINESS A way to assess and prioritize your change efforts HEN The Gap recently announced plans to close 175 of its 675 stores in North America, it joined a number of other retail chains—including Staples, Office Depot, Target and Radio Shack—that have shuttered a slew of outlets. Managing the closures in a way that maximizes revenues and profits can be a major challenge.

Our research shows that retailers could handle closures far better than they do. In retailing, most products, stores, business units and even companies go through a life cycle of birth, midlife and death. Managing the death stage more effectively can boost profits, lower the cost of capital and reduce complexity in operations, which can also improve the performance of ideas that are in the early and midlife stages.

When retailers liquidate stores, managers must quickly make a series of decisions, including:

SPECIAL REPORT

PHL goods get duty-free access to US till 2017 HE Philippines will be able to export many of its products to the United States duty-free until 2017 under the Generalized System of Preferences (GSP) scheme.

US President Barack Obama signed on June 29 the Trade Preferences Extension Act of 2015, which allowed beneficiary developing countries, such as the Philippines,

CREATIVITY www.businessmirror.com.ph

B G F

President, Manufacturing Division, TMP, Tomohiro Iwamoto; Mitsui & Co. Ltd. -Japan Operating Officer, Integrated Transportation Systems Business Unit, Kunio Watanabe; TMP President Michinobu Sugata; Sen. Juan Edgardo M. Angara; Finance Secretary Cesar V. Purisima; TMP Chairman Dr. George S.K. Ty; Japanese Ambassador Kazuhide Ishikawa; Managing Officer, Toyota Motor Corp. and CEO of Asia, Middle East and North Africa Regions, Kyoichi Tanada; TMP Executive Vice President, Marketing Division, Yohei Murase; TMP Senior Vice President, Marketing Division, Jose Ariel T. Arias; and TMP Senior Executive Vice President Dr. David Go.

PESO EXCHANGE RATES n US 45.1700

First of three parts

T was in July last year when resigned Energy Secretary Carlos Jericho L. Petilla said he had recommended to Malacañang that President Aquino invoke Section 71 of the Electric Power Industry Reform Act (Epira) to address a looming power shortage in Luzon that was anticipated to happen during the summer months of 2015.

Petilla’s pronouncement did cause quite a stir because, for one, there were controversies hounding the Executive branch on the Disbursement Acceleration Program that time. Many were worried that there could be abuse of power if the President was granted emergency powers by Congress to address the tightness in power supply.

Former President Fidel V. Ramos also exercised emergency powers during his term to buy more power-generating capacity, albeit on a take-or-pay basis, which led to higher power rates because consumers had to pay even for electricity that was not consumed.

So the debate in the Senate and the House of Representatives on whether to grant President Aquino such authority lingered for several months.

Sen. Sergio R. Osmeña III, chairman of the House Committee on Energy, said the Aquino administration should not let Petilla—whom he earlier called on to quit—handle the country’s power woes. Instead, he said, experts should deal with it.

To prevent abuse, the House of Representatives proposed C  A

n JAPAN 0.3724 n UK 69.5076 n HK 5.8276 n CHINA 7.2752 n SINGAPORE 33.4692 n AUSTRALIA 33.5937 n EU 49.8315 n SAUDI ARABIA 12.0453 Source: BSP (10 July 2015)

A2 Monday, July 13, 2015

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The feared power shortage: Why it did not happen Continued from A1

that “the authority granted to the President shall be valid from effectivity of this joint resolution until July 31, 2015.”

Wit h t his, Rep. Rey na ldo Umali of Oriental Mindoro expected bigger support and less resistance from politicians, business groups and other sectors in the passage of measures granting the President special powers.

Umali added that the President had requested for a “fast-track solution” to stop the expected power crisis from hitting Luzon.

Meantime, industry stakeholders scrambled for solutions to a potentially inconvenient and power-short summer this year. Filipinos in Luzon waited in suspense for months until summer came and passed, but the feared two- to seven-hour rotating brownouts did not occur.

Tight supply

Petilla’s anticipation of a possible power shortage was based on an outlook prepared by his competent undersecretaries, directors and trusted staff.

“I am uncomfortable with our supply for 2015. Our outlook is we have very thin reserve supply as against demand, so thin that we can go on

red alert,” the energy chief said then.

A red alert means insufficient power supply.

In particular, the DOE projected that in Week 14 of 2015 (approximately from March 29 to April 4), a maximum projected shortfall of 1,004 megawatts (MW) is likely.

Of this, 600 MW are needed to meet the dispatchable reserve and 404 MW to meet the required contingency reserve.

Moreover, the DOE said a total of four weeks of yellow alert is projected in the critical period.

A yellow alert means thin power reserves. This is issued when power reserves dwindle and fall below 647 MW, which is the largest running power-generating unit.

“We can live on yellow alert but on red, we cannot,” Petilla said.

While some power projects are expected to fire up by 2015, these may not be enough to avert a red alert, since they will not be operational at the same time. Further, the Malampaya natural-gas facility, which is fueling three gas power plants, was expected to go offline for maintenance checkup from March 15 to April 14.

“There is an admission that by 2015, our supply is not enough.

There are projects that we feel may not push through,” he said.

The Manila Electric Co. (Meralco) echoed Petilla’s pronouncement. “We do need more power plants in the country. The margin of [supply] safety in Luzon is very tight,” Meralco Chairman Manuel V. Pangilinan had said.

Meralco President Oscar Reyes also anticipated that there would be “increasing tightness until new power-generating plants come in.”

The country’s largest utility firm recently warned that Luzon will continue to have a power-supply problem until 2018 and they believe that 2015 is going to be the tightest year, insofar as power supply is concerned.

“This year would be the tightest year. There is some degree of continued tightness even up to next year, in 2016 and in 2018,” Reyes said.

He added: “The country’s economic growth has also put pressure on the aging and inadequate powergeneration infrastructure in the Luzon grid, resulting in increasing forced outages and longer scheduled shutdowns of power plants.”

Meralco recorded 83 forced power-plant outages and 52 scheduled power-plant shutdowns last year.

Most of the power plants are very old, that’s why they conk out. “What has not been evident before, which now has come to light, is really the effect

of aging power plants.... We are in a tight situation right now. Recently, there have been renewed warnings of potential brownouts,” Reyes said.

Moreover, growth in peak demand in 2014 of 3.3 percent in the Meralco franchise area to 6,121 MW and 5 percent in the Luzon grid to 8,717 MW has not matched with the entry of new generating capacity, adding pressure on power supply and reserves in 2015.

Meralco’s own way to address an increasing demand in its franchise area is to enter into additional nterim power supply agreements with power producers.

ILP

In the onset of summer this year, it was very clear that President Aquino would not be granted emergency powers. There was so little time left.

The only viable solution identified then was the Interruptible Load Program (ILP), which seeks to encourage heavy users of electricity to run their own generator sets during peak-demand periods, instead of getting their supply from the Luzon grid.

The electricity that would not be taken from the grid would be available to household and small users, preventing a rotating blackout.

Mera lco t h re w i n it s f u l l

IFC asked to study DOE circular on supply deals. . .

In the power industry, it is a known fact that Meralco has a power arm engaged in the generation business, while AboitizPower is also involved in the distribution

business via Visayan Electric Co., Subic Enerzone Lima Enerzone, and Davao Light.

Petilla said the DUs should not worry about the possible financial implications of the CSP when it is

implemented. “It will not affect the financials of DUs and ECs, because on their books generation is a passthrough cost.” Aside from transparency, Petilla earlier said it is also worthy to note that this policy will

Continued from A12

encourage investments in the power sector because it will not be monopolized by any of the big firms.

The circular states that “the DOE recognizes the adoption of competitive selection as a policy

support by constantly encouraging its large customers to sign up with the program.

As of March, Meralco said it was able to gather enough commitment for up to 667.29 MW of committed interruptible load for the summer.

With ILP, power supply from the grid that will not be consumed by participating customers will be available for use by other customers within our franchise area. Through this, the aggregate demand for power from the system will be reduced to a more manageable level, helping ensure the availability of supply during the anticipated power crisis this summer.

At that time, the ILP was the government’s only card left.

Umali said the success of the ILP would largely depend on the cooperation of the malls, factories and other private establishments to use their own generator sets when the National Grid Corp. of the Philippines expects the supply of electricity to fall short of demand.

The only problem, however, is that the ILP is voluntary.

“The important thing here is for [ILP participants] to respond when called. If they do, rolling brownouts could hopefully be minimized.

We don’t have compulsory powers.

We don’t want to give them the impression that there will be no brownouts,” Pangilinan had said.

As early as January 2013, Meralco officials had warned of tight power supply in the Luzon grid by summer of 2015. Shortly after that warning, the DOE disputed this by saying that there is enough supply of about 800 MW. Later on, the DOE said it anticipates a power-supply problem that will occur in the summer months of 2015.

Philippine Independent Power Producers Association President Luis Miguel Aboitiz said the period April 5 to 15 was supposed to be a critical period in terms of power situation in Luzon, because high demand anticipated during summer would coincide with the onemonth maintenance shutdown of the Malampaya gas field.

The Malampaya facility supplies natural gas to Kepco Philippines’s 1,200-MW Ilijan combined-cycle plant and the 1,000-MW Santa Rita and 500-MW San Lorenzo natural-gas plants of First Gas, a subsidiary of the Lopezes’ First Gen Corp. These gas plants, in turn, supply about 45 percent of Meralco’s power requirement.

The Malampaya gas facility accounts for 40 percent of Luzon grid’s requirements. To be continued

that will encourage investments in the power-generation business, thereby ensuring electric powersupply availability in a regime of transparent process in securing PSAs, which is an integral part of the power-sector reform agenda.”

Petilla said foreign firms with existing investments in the country’s

power sector, say, AES Corp. and GN Power, will be inspired to do more business in the country. This also goes to other foreign investors that may want to enter in the power business.

“They don’t have strong connections with anybody, so it will be a level playing field because there are rules to follow,” he said.

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The Nation BusinessMirror

Editor: Dionisio L. Pelayo • Monday, July 13, 2015 A3

Bishops reelect Villegas, Valles into top CBCP posts

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ISHOPS reelected Archbishop Socrates Villegas and Archbishop Romulo Valles as president and vice president, respectively, of the Catholic Bishops’ Conference of the Philippines (CBCP) during its plenary assembly on Saturday.

Ten of the total 95 bishops composing CBCP’s highest decision-making body did not vote for the second term of the Lingayen-Dagupan prelate, documents given by the CBCP said. The CBCP, however, neither named those who voted for Villegas nor for Valles, the prelate of Davao.

Also reelected were Palo Archbishop John Du as CBCP treasurer and Fr.

Marvin Mejia as secretary-general.

CBCP officials are given two years of tenure in office. They will serve the conference from December 1, 2015 to November 30, 2017.

The bishops also elected members of the CBCP Permanent Council composed of representatives of the country’s major island grouping. Representing Luzon are Bishops Rodolfo Beltran

of San Fernando, La Union; Ruperto Santos of Balanga; Gilbert Garcera of Daet; Bernardino Cortez of Infanta; and Reynaldo Evangelista of Imus.

For the Visayas, the representatives are Bishops Crispin Varquez of Borongan and Narciso Abellana of Romblon.

Representatives for Mindanao include Bishops Jose Cabantan of Malaybalay and Angelito Lampon of Jolo.

Except for Santos, Evangelista and Abellana who will be serving their first term, most of the representatives are current members of the council.

Villegas, 54, is a protégé and former personal secretary of the late Manila Archbishop Jaime Cardinal Sin, who helped topple dictator Ferdinand Marcos during the People Power of 1986. Claudeth Mocon-Ciriaco

Economy

A4 Monday, July 13, 2015 • Editors: Vittorio V. Vitug and Max V. de Leon

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AEC necessitates hike in port capacity–PPA

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By Lorenz S. Marasigan

he Philippine Ports Authority (PPA) admitted that the existing crane capacity of the three main ports in the Visayas and Mindanao is no longer enough to handle the projected increase in the volume of cargo that will be brought about by the Association of Southeast Asian Nations (Asean) Economic Community (AEC) happening in January 2016.

Port chief Juan C. Sta. Ana, without providing absolute figures, said the influx of cargo from the Asean will push both the government and the private sector to improve the handling capacity of the three gateways, namely, Iloilo, Zamboanga and General Santos.

He added that the government will roll out various projects to address the need. The projects, he noted, are set to be implemented in the next couple of weeks at the three ports.

“These gateway ports handle a considerable volume of containerized cargoes, hence, require efficient quay-crane operations in preparation for the AEC implementation,” Sta. Ana explained.

The port chief added that his

group has commissioned a study to determine the structural soundness of the existing facilities of the three ports to accommodate the wheel load of shore cranes.

“This was the basis of the development requirement of each port upgrade,” Sta. Ana said. “The breaking down of trade barriers, brought about by the AEC, will definitely increase volume handled to and from these ports, thereby justifying the need for the development.”

Sta. Ana also explained that the other seven Philippine gateway ports, like the Manila International Container Terminal, the Manila South Harbor, the Manila North Harbor and Batangas in Luzon are ready in terms of cargo-handling capacity for the AEC, while Cagayan

de Oro, Davao and Ozamiz in Mindanao are also getting ready for the Asean integration.

The projects, the government official said, will be funded by internally generated fund.

As early as the start of last year, the PPA has step up its efforts to improve other port facilities in preparation for the AEC, taking into consideration the repercussion of noncompliance.

“This year we are expected to introduce breakthrough changes in our policies, particularly in the streamlining of our requirements, more deployment of technologydriven processes to improve the delivery of our services and reform in the modality of adjusting cargohandling tariff and other charges and fees,” Sta. Ana said.

The AEC is the goal of regional economic integration by end-2015.

The community envisages key characteristics, such as a single market and production base; a highly competitive economic region; a region of equitable economic development and a region fully integrated into the global economy.

“It is not also the AEC that we are preparing for. Volume from our regular foreign and domestic cargoes continue to climb and we have to equip our ports with the needed cargohandling muscle to accommodate all these demands,” Sta. Ana said.

The port body’s net income rose by 22.41 percent to P2.54 billion in the first four months of the year, from P2.08 billion in the same period the year prior.

ROBERTS’S PLANT LAGUNA

A machine is putting the finishing touches on a muffler assembled for motorcycles and cars at the Roberts Automotive and Industrial Parts Manufacturing in Canlubang, Laguna. The company produces radiators, leaf springs, mufflers, U-Volt and steel tubes for all types of vehicles for the domestic and export markets. ROY DOMINGO

Gross revenues, on the other hand, hiked by 20 percent to P4.45 billion from P3.70 billion, while total expenses grew by a slower 17.66 percent to P1.90 billion from P1.61 billion.

The port regulator remained in the “billionaires club” for dividends for the fiscal year 2014,

when it remitted about P1.817 billion to the national coffers.

The PPA ranked fifth in the club behind the Bases Conversion Development Authority; the Development Bank of the Philippines; the Food Terminal Inc.; and the Philippine Deposit Insurance Corp.

Palace orders concerned agencies to strictly enforce food-safety laws

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alacañang directed relevant agencies to strictly enforce food-safety laws that govern the manufacture, packaging, sale and distribution of food products, in the aftermath of suspected food poisoning of over a thousand people, mostly schoolchildren, by tainted candy in Surigao del Sur. Communications Secretary Herminio B. Coloma Jr. confirmed on Sunday that authorities are verifying the source of mass-food poisoning that downed over a thousand people in six Surigao del Sur towns and at least one city to pinpoint and hold liable those responsible for what happened.

He said the Office of Civil Defense and Regional Disaster Risk Reduction Management Council are now looking into the matter.

Coloma added that according to latest reports reaching the Palace, Surigao del Sur police have taken into custody some of the traders alleged to have sold the toxic Durian-flavored candies to the victims.

The Secretary added that Surigao provincial officials have already ordered a thorough inspection of facilities of all food manufacturers in the province to double check compliance with food-safety regulations. At the same time, the Palace official assured that concerned authorities are duty-bound to strictly enforce regulations at all times to protect consumers by regularly checking compliance by food traders with existing laws.

“The government is strictly implementing Republic Act 10611, or the Food Safety Act of 2013, and other regulations on food safety,” Coloma said.

He stressed that authorities concerned, including the Food and Drug Administration and the Department of Health, are duty bound to ensure full implementation of safeguard provisions in the Food Safety Act of 2013 from manufacturing, packaging, distribution and actual sale of all food products sold in the markets. Butch Fernandez

briefs safeguards needed to ensure proper use of philhealth funds

The Senate will see to it that safeguard mechanisms are in place at the Philippine Health Insurance Corp. (PhilHealth) in the midst of allegations of corruption against some doctors.

Sen. Francis Escudero said he wants to ensure that government allocation for the health coverage of the poor would not go to scammers.

“We will look at the check and balance of the PhilHealth safeguard mechanism because it seems this is also going on in other countries),” Escudero told reporters. “Even in America, they have been doing it for so long in Medicare, but some of them are able to evade prosecution.

This is one thing that PhilHealth should have an open eye; where they should be conscious).”

In 2014 the government earmarked P35 billion for PhilHealth premiums to cover 15 million indigents in the Philippines. It was a 179-percent increase in government health subsidy for the poor. The program got P36 billion this year. Recto Mercene

mmda to add 16 more pumping stations

The Metropolitan Manila Development Authority (MMDA) on Sunday revealed its plan to set up about 16 pumping stations on top of 54 it currently has to help mitigate flooding in the metropolis.

Emma Quiambao, MMDA flood control head, said the existing pumping stations are located in flood-prone areas in Metro Manila.

During the massive flooding caused by the inclement weather last week, the MMDA also deployed its mobile pumps in critical or flood-prone areas. Claudeth Mocon-Ciriaco

4 more PPPs up for approval

By Cai U. Ordinario

A

round six public-private partnership (PPP) projects are now awaiting approval of the Investment Coordination Committee Cabinet Committee (ICC-Cabcom) and the National Economic and Development Authority (Neda) Board.

Data from the PPP Center showed that four of these projects are at the ICC-Cabcom and the other two at the Neda Board.

The four projects that are up for ICC-Cabcom approval and with combined worth of P142.77 billion are the C-5 Modern Bus Transit System Project, Ninoy Aquino International Airport (Naia) Development Project, Batangas-Manila 1 Natural Gas Pipeline Project and the Ortigas-Taytay Light Rail Transit (LRT) Line 4 Project.

The remaining two projects, worth P65.59 billion, are the LRT Line 6 Project Construction, Operation and Maintenance, and the Civil Registry System-Information Technology Project (Phase II).

The largest project up for ICCCabcom approval is the P74.56-billion Naia Development Project. The project aims to improve and upgrade the existing terminals.

The project covers landside and airside works. The improvement and upgrade of the facilities are being undertaken to meet the International Civil Aviation Organization standards.

Another big-ticket government project up for ICC-Cabcom approval is the P50.15-billion Ortigas-Taytay LRT Line 4 Project, which seeks to link Metro Manila to the large and growing population in and around Taytay, Rizal.

The project is an 11-kilometer rail line running west from the SM City in Taytay to the intersection of Ortigas Avenue and Edsa in Ortigas.

The proposed alignment is along Taytay Diversion Road and Ortigas Avenue. It will have six stations, Edsa (transfer station with the Metro Rail Transit); Meralco Avenue; Pasig; Bonifacio Avenue; L Wood Road; and SM Taytay.

“The area is currently underserved in terms of transport options, with Ortigas Avenue the only main thoroughfare linking the region to Metro Manila,” the PPP Center said. “As a result Ortigas Avenue is highly congested, with over 4,000 public transport passengers every hour and travel speeds during peak hour of around 12km/hour—much lower than the average for Metro Manila.”

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Monday, July 13, 2015 A5

‘Timta revisions to create more practical problems’

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By Catherine N. Pillas & Jovee Marie N. dela Cruz

emoving the provision on cost-benefit analysis in the proposed Tax Incentives Management and Transparency Act (Timta) could trigger further disagreement between the Department of Trade and Industry (DTI) and the Department of Finance (DOF) on the grant of incentives in the future, a DTI official warned.

“A debate will ensue again if that [provision] is removed. The DOF will continue to question the effectiveness of incentives, so we maintain that we need to have that cost-benefit analysis,” the ranking trade official, who declined to be named, told the BusinessMirror.

After more than a year of back-and-forth parrying mainly on how the incentives reporting will be carried out, the DTI and the DOF were able to give their nods to a consolidated bill, which hurdled both houses of Congress in June.

At the onset of the bicameral conference committee, the two departments, along with the Department of Budget and Management (DBM) and the National Economic and Development Authority (Neda), opposed the removal of a salient point in the bill: a cost-benefit analysis to be conducted by the Neda annually to assess the amount and impact of the incentives granted for a given year.

According to the source, reinstating the cost-benefit analysis will provide basis in justifying the current incentives scheme, without which the DOF may continue to question the effectivity, and prompt it to initiate further streamlining.

“That kind of reporting will show that even, for example, we give P 40 billion in tax incentives every year, it can be recovered in terms of how much investments would come in and the trickledown effect in terms of employment,” the source added.

Before the removal, the provision states that all heads of investment-promotion agencies (IPAs) must submit to the Neda investment-related data, which will include the list of registered business entities, investment projects, investment cost, actual employment and export earnings.

For the tax-incentives data, the DOF will furnish the Neda a copy of the reports submitted by the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC).

The four departments, in a joint position paper, also objected the “automatic approval” clause in the proposed bill.

The clause provides that applications for incentives of firms are “deemed approved” if the BIR does not act upon the applications within six months of receipt from the IPAs. On this, the DTI source only said that “the issue is the BIR’s concern, it’s their mandate.”

However, for the chairman of the House Ways and Means Committee, Rep. Romero S. Quimbo of Marikina City, the problem leading to prolonged incentives approval lies with both the BIR and the DTI. “I am in favor of completely removing the validation power of the BOI; that way we do not affect the prescriptive period of the BIR. But we also need to shorten the three-year review period of the BIR, as it is no longer fair to the taxpayer. They should shorten the three-year period, as it puts the company under the gun for an extraordinary long period.

That’s not fair,” Quimbo said via text message, reasoning that the BIR can now audit reports quicker through an online system.

Earlier, the lawmaker said he

plans to introduce the changes to the proposed bill when the bicameral conference committee convenes in August.

The Board of Investments (BOI), an attached agency of the DTI, remains opposed to the proposal to remove its authority to validate incentives.

Quimbo assured that the measure, if passed into law, will promote transparency and accountability in the grant and administration of tax incentives to business entities, private individuals and corporations.

“The legislature will pass a bill that will seek to provide a solution to the lack of transparency in the Executive. The problem is purely the doing of the Executive,” he added.

Under the proposed law, the BIR is now only given 180 days, instead of the original three-year period, within which to inform the BOI or the concerned IPA and the taxpayer of the BIR’s findings on whether the tax incentive should be granted.

Also, in the position paper released a month after the lower house approved the proposed Timta, these agencies said the two amendments contained major policy and administrative deviations from the original intent for which the DOF and the DTI are pushing the passage of Timta.

But according to Quimbo, a law was not even needed to enact transparency, "but unfortunately, both the DOF and the DTI could not get their act together over the last five years [of the administration].”

“While President [Aquino] has had great success with his transparency program as seen from the open budgeting process of the DBM to the full disclosure of bids that take place in the different departments, the DOF and the DTI have not made the President's transparency program a success as far as tax incentives are concerned. For the record, it took Congress to make the two departments finally sit down and follow the President’s edict,” the lawmaker said.

“If not for Congress and the push made by Speaker [Feliciano] Belmonte [Jr.] and Senate President [Franklin] M. Drilon, there would be no Timta to speak of, and these departments would continue to bicker against each other,” Quimbo said.

The proposed Timta is included in the priority bills of the 16th Congress.

Quimbo said the congressional bicameral committee will start to reconcile the two chambers’ different versions of the measure in August, saying that the transparency bill will be signed into law before 2015 ends.

“However, there’s still bicameral [conference committee] to settle brewing issues. We will take them up extensively,” Quimbo said.

The consolidated bill of the House of Representatives on Timta, House Bill 5831, principally authored by Liberal Party Rep. Maria Leonor Gerona-Robredo of Camarines Sur, will be merged with the Senate version prepared by the Senate Committee on Ways and Means with Drilon, Sens.

Ralph Recto and Juan Edgardo Angara as authors.

Under the House version of

the bill, all registered business entities are required to file their returns and pay their tax liabilities using the electronic system of the BIR. It added that application for income-tax holiday (ITH) and/ or other income-tax-based incentive availment with the BOI and other relevant IPAs shall be made within six months from the statutatory deadline (April 15) for filing of tax returns and only be accepted upon proof of filing of tax returns using the BIR electronic system. Failure to make a valid application within the period would result in forfeiture of incentives for the taxable period concerned.

T he bi l l a l so g ra nt s t he BOI a period of one year from filing of the application for availment of ITH and/or other income-based-tax incentives to conduct validation of application and make a recommendation to the BIR. It mandates that the threeyear prescriptive period of the BIR to make any assessment be toiled to 18 months for business entities registered with the BOI, beginning from the filing of tax returns up to the end of one-year period of validation by the BOI of applications for availment of income-tax holiday.

T he presc r ipt ive per iod , hence, runs not upon the filing of tax returns but upon the end of the one-year period for the BOI to make a validation of applications for availment of ITH and other income-basedtax incentives.

The measure mandates the DOF to maintain a single database for tax-incentives data submitted by the BIR and the BOC for purposes of monitoring and analyzing tax incentives granted.

The bill also directs the DOF to submit to the DBM the actual, estimate, programmed and projected tax incentives, which shall thereafter be reflected by the latter in a section in the annual Budget Expenditure and Sources of Financing (BESF), which will be known as the Tax Incentives Information section.

The BESF shall be sent to the President and Congress.

The bill also said repeated violations of the act shall cause the cancellation of the registration of the registered business entity.

“A ny government official or employee who fails without justifiable reason to provide or furnish data or information as required under this act shall be punished by a fine equivalent to that official’s or employee’s basic salary for a period of one month to six months, or by suspension from government service for not more than one year, or both, in addition to any criminal and administrative penalties imposable under existing laws,” it said.

Earlier, in a position paper, 14 local and foreign business groups, representing 35,000 businesses in the country, identified the provisions they want to scrap in the House’s version of the contentious Timta.

Among these provisions are the electronic-filing (e-filing) requirement of the BIR; the penalties for nonsubmission of incentive claims during the prescribed period; and an extension of the BIR’s assessment period.

Megaworld wins major awards in 2015 Philippines Property Awards

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he Philippines’s largest developer of integrated urban townships, Megaworld, bagged two major awards and garnered the most number of highly commended projects at the 2015 Philippines Property Awards held in Makati City.

Topping the list of major awards that Megaworld received were “Best Residential Interior Design” for Three Central and “Best Luxury De-

Quimbo said he sees no reason “some of them [businessmen] oppose it [the e-filing].“ “You know it is experiential... none of the businessmen are against transparency. In fact, many of these [businessmen] are supportive and

velopment (Resort)” for Oceanway Residences in Boracay Newcoast.

Five Megaworld projects have also been recognized as “highly commended” for various categories: Uptown Ritz for Best Luxury Condo Development (Metro Manila); 8 Newtown Boulevard for Best Residential Architectural Design; The Venice Grand Canal Mall for Best Retail Architectural Design; and Belmont Hotel Newport and Rich-

are pushing for it, but I think they are hesitant only on anything that empowers or adds to the powers and discretion of the BIR and the DOF; so it emanates from that,” he said.

He added, “It is also experiential because of their experience with the

monde Hotel Iloilo for Best Hotel Interior Design.

Receiving the awards were (from left) Lourdes Gutierrez-Alfonso, COO, Megaworld; Eugene Lozano, vice president for sales and marketing for Makati CBD, Megaworld; Monica Salomon, president, GlobalEstate Resorts Inc.; and Saki Mirabueno, head of sales and marketing for Boracay Newcoast, GlobalEstate Resorts Inc.

BIR, they are scared [that] it will effectively put their incentives at the mercy of the BIR, which is not the case, which we clearly spelled out.

The repository is the Neda. The Neda will conduct the cost-benefit analysis so its unfounded.”

Tourism

A6 Monday, July 13, 2015 • Editor: Carla Mortel-Baricaua

Discovering Compo

LAKE Leonard

S  P  H D. T

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OMPOSTELA Valley is the country’s 78th province. With a total land area of 4,666.93 square kilometers, it is often touted as “rough, rugged and mostly undeveloped,” so much so that its tourism tagline is: “Conquering Compostela Valley.”

LUNOD Island

MAINIT Hot Spring ENTRANCE to Haven’s Peak

Here are the province’s points of interest: n Kopiat Island. This 95-hectare island of powdery white sands can be reached via a motorized banca. Its unspoiled reef areas with rare beds serve as sanctuary for exotic tropical fish and endangered marine turtles, particularly hawksbill and leatherback. n Lunod Island. Lush mangrove forests cover almost the whole island’s 17-hectare area, which is not far from Kopiat Island. Locals say that at night, the place turns into a magical wonder, as the whole area is lighted with fireflies. Also known as Saint Anthony Island, it is a 15-minute banca ride from the coast of Beach View Resort. n Beach View Resort. This resort, in Pindasan, Mabini, has the widest vacant space for outdoor events among all beach resorts in the province. It

also has the most modern cosmopolitan bar. n Welborn’s Beach Resort Hidden Paradise.

Located in Baybay, Magnanga in Pantukan, it has a wide stretch of sand in the beach for children and adults to walk and play. The sea bed is flat and there are no stones or corals that make bare walking dangerous. n Bern Berioso Beach Resorts I and II. Situated in Manaklay, Pindasan in Mabini, these two resorts—not far from each other—boast of clear and calm waters ideal for a range of water sports. It has a function hall that looks like a ship.

There is also a zip line which brings the rider into the sea water. n Mainit Sulfuric Hot Waterfall. A mustsee in Barangay Mainit in Mawab is the Mainit Sulfuric Hot Waterfall. If you have not seen a steaming fall in your life, then this is the area to visit.

I tried to walk in the steaming water below the waterfall and indeed it was hot! n Lake Leonard. In the highland barangay of New Leyte in Maco, visitors can be mesmerized by this lake, a caldera of Mount Leonard Kniasseff, one of the 22 active volcanoes in the country whose last eruption was reported in the second century A.D. The 200-hectare lake was used before as a dumping ground for mining wastes until the mining company ceased operation in the early 1990s. Today, the lake is teemed with tilapia. n Aguakan Cold Spring Resort. Located in Maragusan, it has an Olympic-size swimming pool, whose water comes from nearby springs. The water is touted to be “as cold as ice.” n Kanlawig Hot Springs Resort. If cold is not your thing, then go to this resort which is not far from the Aguakan Cold Spring Resort. Here, you can enjoy swimming at the steaming hot water.

m&Entertainment

tourism@businessmirror.com.ph • Monday, July 13, 2015 A7

ostela Valley HHOTEL JEN MANILA OFFERS MIDYEAR HOT SALE otel Jen launches its midyear sale offering great savings of up to 30-percent off the best available rate and up to 25-percent off at Hotel Jen Manila for stays of two nights or more, subject to availability.

Hotel Jen offers Golden Circle (GC) members who stay between July 1 and September 30 earnings of double award points and double qualifying nights to fast track to Jade or Diamond membership with this “Midyear Hot Sale.” GC members will also earn an additional 1,000 bonus award points for stays at three to four ho-

tagbibinta Falls

Kopiat Island n Haven’s Peak. Also in Maragusan, it is a resort nestled on Tarago Hills facing the town. It takes more than 200 steps just to reach the top. Once you’re there, you get to see the whole town and the forest that surround it. n Tagbibinta Falls. Maragusan is blessed with several waterfalls but this is the most famous among them. It has a series of seven falls, the first one measuring approximately 70 feet in height. “The falls was named as such because the place used to be the business center,” said Dennis B. Radin, the town’s tourism officer. n Bulawan Junction. This provincial landmark reflects the province’s position as one of the biggest sources of gold and other valuable minerals in the Philippines. It is in Barangay Olaycon, about seven kilometers from the town of Monkayo. n Laak Caves. Unofficial information puts the number of caves at more than

100. Most of them can be found in Barangay Sisimon and Barangay Andap. n Mt. Tagub, Mt. Manurigao, Mt. Kandalanga Range. Visit an unexplored pristine world of nature. The three peaks are sites of national, regional, and local annual mountain climbs and nature watching during the Holy Week and the month of October.

How to get there: Compostela Valley is accessible by air, land, and sea transportation. Davao City, 979 kilometers from Manila, is the gateway to the province. On arriving at the airport, take a taxi or a bus ride to Davao City Overland Transport Terminal at Ecoland to board a bus to Nabunturan, the capital town, 90 kilometers away and a two-hour ride. Once you’re there, you can transfer to any public utility vehicle for another ride to any destination in the province.

tels within the Shangri-La Group, or 5,000 award points for five or more hotels. Nonmembers can enroll online now and take advantage of all the benefits that Golden Circle has to offer, including 500 GC award points credited as a welcome bonus to new member who enroll online and make a qualifying stay.

“The ‘Midyear Hot Sale’ is a great way for travelers to extend business travel or enjoy a vacation in one of our ten hotels in nine cities in Asia Pacific, while making a great saving on room costs, as well as being rewarded for the stay,” said Vice Presi-

dent of Sales & Marketing Marisa Aranha.

Money in the pocket saved through this offer makes travel more affordable and provides an opportunity for guests to enjoy the summer season in Asia for short and long stays, weekends away, staycations or midweek adventures when combined with summer airfare deals. It also gives southern hemisphere travelers hot destinations and even hotter deals to escape the southern winter to warmer climes.

Hotel Jen, inspired by the virtual persona Jen, a professional hotelier who loves life, travel and the adventure of discovering

new places, will deliver what matters to her guests. Developed for the new ‘Jeneration’ of business and leisure travelers who seek fussfree independent travel experiences, Hotel Jen delivers the important things done well: quality, comfort, convenience and value; honest, authentic service; efficiency without fuss; and cultural insights and interesting experiences. Jen’s dream is for every stay to start with anticipation and end on a high.

Embracing the concept of ‘staying with a friend,’ guests will notice extra touches to make their travel experience more enjoyable.

TheElderly

A8 Monday, July 13, 2015 • Editor: Efleda P. Campos

BusinessMirror

news@businessmirror.com.ph

Osca-QC warns violators of senior-discount UP professor inspires privileges on consumer goods and services students to keep

Q

healthy mind, body

By Oliver Samson | Correspondent

UEZON City’s Office for Senior Citizens Affairs (Osca) warned violators of discount privileges for senior citizens that they can be charged and penalized if they continue to refuse to honor said benefits.

Osca has been receiving complaints from displeased senior citizens in the city in the past months, Rene Altuna, Osca legal officer, told the BusinessMirror.

About every day the office receives a phone call from irate seniors who report particular establishments that do not honor their discount benefits and privileges, he said.

Others personally come to the office bearing purchase receipts and incensed over the refusal of some business outfits to honor their discount privilege, he said.

Most of the complaints involve pharmacies, restaurants and medicalexamination laboratories, Altuna said.

Under Republic Act (RA) 9994, known as the Expanded Senior Citizens Act of 2010, the seniors are entitled to a 20-percent discount on dining, hotel accommodation, medicine, hospitalization and medical services.

Older citizens can use their Philip-

pine Health Insurance Corp., alongside their 20-percent discount and 12-percent value-added-tax (VAT) exemption.

The law also requires establishments to give seniors a 5-percent discount on prime commodities and basic necessities, which are usually given by supermarket chains and bigger grocery stores.

RA 9994 also seeks to give seniors a 20-percent discount on grocery items.

The Department of Trade and Industry and the Department of Agriculture, however, set the discount on prime commodities and basic necessities at 5 percent and the maximum discountable value of goods purchased per week should not exceed P1,300.

Goods and services covered by discount privileges is also exempted from the 12-percent VAT, Altuna said.

RA 9994 also gives seniors 5-percent discount on power and water bills if the account is in their name, provided that the monthly electricity

By Amanda Isabelle Lingao Special to the BusinessMirror

N

CLIENTS await their turn to be served at the Office for Senior Citizens Affairs in Quezon City. OLIVER SAMSON

consumption does not exceed 100 kilowatt per power and the water utility not more than 30 cubic meters.

The law also provides seniors with a 20-percent discount on public-utility vehicles, like jeepney, bus, taxi, train and airplanes for domestic flights.

Establishments in the city honor the discount privileges on said goods and services, otherwise they are violating the law, Altuna said.

Violators can be imprisoned for not less than two years, but not more than six years, and fined for not less than P50, 000, but not more than P100,000, he added.

Altuna also warned senior citizens who abuse their benefits and privileges. Seniors who use their discount privileges for other people can be charged, imprisoned and fined, he said.

South Africa’s Desmond Tutu renews vows after 60 years in wedlock

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OH A N N E SBU RG —R et i red Archbishop Desmond Tutu, affectionately known to many South Africans as “Arch,” kissed his bride of 60 years, Leah.

The lovebirds, as one clergyman described them, renewed their 1955 wedding vows this weekend in a buoyant ceremony, in which 83-year-old Tutu, slower of step and speech than during his years as an impassioned opponent of apartheid, sashayed stiffly near the altar. Arms outstretched, he bent low, as choristers belted out song in the Holy Cross Anglican Church in the Soweto area of Johannesburg.

The three-hour celebration on Saturday was a kind of homecoming for Tutu, who used to live near the church in a district that became a crucible for resistance to the white minority rule that ended in 1994. It was also a contemplation of love, marriage and family that ended with the Tutus’ four children and other relatives surrounding the elderly couple.

“You can see that we followed the biblical injunction: We multiplied and we’re fruitful,” Tutu told the congregation. “But all of us here want to say thank you.... We knew that without you, we are nothing.”

T he humor and humi l it y were Tutu trademarks. For decades, he has charmed, cajoled and beseeched on matters of unity, forgiveness and good and evil, comparable to the moral stature of the late Nelson Mandela, a prisoner during white rule, a fellow Nobel Peace Prize laureate and South Africa’s first black president. Tutu still speaks up even though he announced his retirement from public life in 2011.

“He’s one of the people now who represent the conscience of the nation,” Thabo Mbeki, a former South African president who attended the Tutu ceremony, told the Associated Press (AP). “It comes from the track record he’s established in terms of bringing about the change that the country needed.”

Mandela’s widow, Graca Machel, sat beside Mbeki, who chuckled as she gently chided an AP reporter asking for comment while congregants received Holy Communion.

IN this photo taken on July 4, retired Anglican Archbishop Desmond Tutu (center) breaks into dance after renewing his wedding vows to his wife of 60 years, Leah (right) during a service in the Holy Cross Anglican Church in Soweto, Johannesburg. AP

“I don’t think we should be giving interviews in church. The service is going on,” she said.

Tutu was awarded the Nobel prize in 1984 for campaigning against apartheid, chaired the post-apartheid Truth and Reconciliation Commission that investigated past atrocities and became a critic of South Africa’s current government. He befriended the Dalai Lama, dived into global challenges, such as poverty and climate change and joined efforts to solve conflicts in Sudan and elsewhere. His blunt remarks sometimes angered partisans who accused him of being biased or out of touch.

The church event resembled a stage musical, starring the Tutu clan with backup from the Soweto Gospel Choir.

Gowned clergy swayed to the rhythm.

Singers twirled in the pews.

Desmond Tutu was dressed in black and had a crucifix around his neck. Clad in a traditional headdress, Leah Tutu walked with a crutch. The couple also renewed their vows on

July 2, their wedding anniversary, in Saint George’s Cathedral in Cape Town, where they live.

Tutu, a former teacher, got to know his wife-to-be through her friendship with his sister Gloria, and Leah also attended a school where Tutu’s father was the headmaster.

“Leah is the glue that holds it all together,” says the web site of a foundation carrying the couple’s names.

Like any family, the Tutus have struggled. Desmond Tutu has been treated for prostate cancer for many years. In May South African police said they were investigating a case of property damage in what appeared to be a family dispute involving a Tutu granddaughter.

In a ser mon, daughter Naomi Tutu compared her parents’ love to that of Romeo and Juliet, or Mark Antony and Cleopatra—except with a “better ending.”

“My parents refused to be separated,” she said. “Their primary loyalty was to one another. We, who came after, were gifts given to them.”

Cebu City to distribute cash aid to seniors, PWDs

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EBU CITY—Cebu City Mayor Michael L. Rama has announced the distribution next week of the next tranche of the city government’s financial assistance to some 60,000 senior citizens and 12,000 persons with disabilities (PWDs) in the city.

Rama did not specify the amount to be released.

The city grants a financial assistance of P12,000 a year to each senior citizen and P5,000 a year to each PWD in the city.

Rama made the announcement toward the end of his more than two-hour State of the City Address on Saturday at the city’s Plaza Independencia.

Rama said the cash aid for the PWDs will be released on Tuesday, while the financial aid for the senior citizens will be released on Wednesday. PNA

ILO Ocampo is a man always on the move. An athlete, author and well-loved teacher, the 62-year-old exudes the energy of men half his age.

An adventurer with a perpetual love for the outdoors, Ocampo likes to spend his days out and about. His hobbies include jogging, climbing mountains and cycling around the city—proof that growing old does not mean slowing down.

This drive to stay fit extends not just to him, but to PHOTO COURTESY OF NIKKO CARLO CAYAGA his students, as well. When OCAMPO he’s not busy checking exams or making students laugh, the University of the Philippines (UP) professor always urges them to be on the move, hoping his passion for staying active will rub off them in the process.

Born in Sampaloc, Manila, to a family of five, Ocampo said he has always enjoyed engaging in physical activities and the outdoors. Like most children during his time, Ocampo loved running outside and spending the day in the fields during his summers in the province.

It was from his childhood, in fact, that Ocampo traced the beginning of two of his great loves—mountain climbing and cycling.

“Passion ko bisikleta. Ever since bata pa ako, talagang gusto ko magka bisikleta,” he said.

However, with five siblings, Ocampo said it was difficult for his parents to get him his own bike. He remembered saving to buy his own bike, only to have it stolen later, much to his dismay.

“Nag-ipon ako para magkaroon ako ng bisikleta. Pagkatapos ninakaw sa akin. Bata pa kami ng kapatid ko noon. Naloko ako maya-maya kinuha na,” he said.

Despite this, his love for cycling did not diminish. Today Ocampo takes his bike around, at least once a week. No place is too far for Ocampo, who regularly cycles around Luzon or trails the Sierra Madre with his friends. At one point, he even biked from La Union to visit his son who was studying in UP Baguio.

Mountain climbing, he said, was a fascination borne out of his days staying in the province. He said he had always been curious about mountains as a child, but was unable to explore them as his province in Pampanga only had plains.

“Gustong-gusto ko noong mamundok,” he said. His curiosity was sated when he started joining climbs as he got older. Eventually, Ocampo became a member the UP Mountaineers, where he was able to explore new terrain and meet fellow mountain climbers.

He contrasts the convenience of mountaineering to the actual difficulty of living in the mountains, something he says is often romanticized.

“In reality, ang hirap mamundok. Sa mountaineering weekend lang, kaya doon na lang,” he joked; a subtle throwback to his days as an activist, when some of his companions had to hide in the mountains to avoid capture.

Despite his love for physical activity, Ocampo notes that not everyone shares the same enthusiasm for it. The desire to keep active and moving is something Ocampo said many people do not have today. “[Ang mga tao] ngayon, laging nakaupo,” he lamented, “kailangan active.”

Because of this, he tries to get his students moving, even if only in his class.

Although “The Life and Works of Jose Rizal” is not a Physical Education course, Ocampo makes sure his class gets some physical and mental exercises during the semester, employing several unconventional teaching methods along the way.

Take, for example, the first day of school, when he gives students physical exercises not far from that of The Amazing Race. This goes on throughout the semester, when students can expect costume changes, presentations and some dancing on the part of latecomers.

One of his most popular activities is the mountain-climbing field trip his students experienced in Mount Banahaw; which he has done for more than 30 years. During the field trip, students climb and spend a night on the mountain, witnessing him don multiple costumes as he guides them around Banahaw.

Ocampo said he organizes these things because, in addition to teaching students concepts and theories, he wants to remind them to be on the move. Ocampo admitted that he dislikes being stagnant and thinks this generation could stand to do more physical activity.

“Dapat pag alas kwatro, alas cinco, tatakbo ka na, mag bibisikleta ka.”

However, he also admits that it is harder to remain active given people’s workload and lifestyle nowadays.

He said activities like the field trip give his students a chance to get some physical activity while learning about the people who live near the area. His multifaceted approach to learning has caught the attention of students and many rave about their tutelage under the popular professor. Ocampo, however, said what he does is all part of the job.

“Kung magtuturo ka kasi parang, teatro iyan,” he said.

“Di lang simple lecture, di ba? Di lang visual, all senses.”

Throughout all this, one thing rings true: Whether he’s climbing mountains, cycling around the city or imparting knowledge to his students, Ocampo never fails to keep both his mind and body running and inspiring others to follow suit.

news@businessmirror.com.ph

The Regions BusinessMirror

Monday, July 13, 2015 • Editor: Dionisio L. Pelayo A9

PSALM slated to sell ULGPP supply contracts next month GT COSMETICS FOUNDER RECEIVES COUNTRYSIDE ENTREPRENEUR OF THE YEAR AWARD

Leonora Salvane was recently named the Grand Chamber Countryside Entrepreneur of the Year by the Cebu Chamber of Commerce and Industry (CCCI). Salvane also received the Outstanding Professional Award given by the Philippine Institute of chemical engineers, in cooperation with the Professional Regulation Commission (PRC), for her exemplary professional and social civic contributions to society and the chemical engineering profession recently. Salvane, founder of GT Cosmetics, said, “I owe all my success to God.” In 1995, with only P500 as initial capital, she produced 50 bars of soap daily that she sold to family and friends. Gradually, the GT Cosmetics brand gained recognition in Cebu and in the Visayas region. In May 2012 GT Cosmetics opened its plant in Marilao, Bulacan, to cater to the Luzon market. GT products are now available in major commercial establishments nationwide. In preparation for future expansion, GT established a bigger plant in Liloan for the Association of Southeast Asian Nations economic integration. GT Cosmetics’s initial foray into the foreign market was in late 2011, when it shipped over 1,000 units of its top-selling soaps to Finland. Present during the CCCI Grand Chamber Awards Fellowship Night in Cebu City are (from left) Cebu City Mayor Mike Rama, Salvane, GT Cosmetics President and CEO Rogelio Salvane Sr., CCCI President Tess Chan and Cebu Gov. Hilario Davide III.

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B L L

HE Power Sector Assets and Liabilities Management (PSALM) Corp. is pushing through with the sale of supply contracts for the output of the Unified Leyte Geothermal Power Plants (ULGPP) next month, its top official said.

“The privatization will proceed,” said PSALM Officer in Charge Lourdes Alzona, who was

referring to the August 12 bid opening for the selection and appointment of an independent

power producer administrator (IPPA) for ULGPP’s bulk output.

The investor groups eyeing the ULGPP Bulk IPPA are SPC Power Corp.; Therma Central Visayas Inc.; Trans-Asia Oil and Energy Development Corp.; and Unified Leyte Geothermal Energy Inc. The ULGPP is composed of the 125-megawatt (MW) Upper Mahiao, 232.5-MW Malitbog, 180MW Mahanagdong power plants and the 51-MW optimization plants. The ULGPP is covered by power purchase agreements bet ween t he Nat iona l Power Cor p. and the Energ y Development Cor p. Unified Leyte Geothermal owned by the Lopez Group,

IDB: Decommissioned MILF weapons ‘under lock and key’ B M T. C

Mindanao Bureau Chief

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AVAO CITY—A member of the foreign-backed Independent Decommissioning Body (IDB) belied as incompetent the claim of Sen. Ferdinand Marcos Jr. that the weapons turned in by the demobilized armed followers of the Moro Islamic Liberation Front were manufactured for ceremonial purposes only and that the MILF continued to manufacture its weapons.

Had Marcos attended the ceremonial decommissioning of the MILF forces and turning in of the weapons on June 16, “he could have seen the weapons firsthand,” said retired Armed Forces of the Philippines (AFP) Lt. Gen. Rey Ardo, to rebut the suspicion cast by Marcos on the decommissioning of the MILF forces. Ardo said the IDB “sent out invitations to members of the Philippine government, including all senators, civil-society organizations, and other stakeholders to witness the ceremonial decommissioning event.”

“Unfortunately, Senator Marcos was unable to attend due to unspecified reasons,” he said.

“Under the watch of the IDB, the decommissioned weapons of the MILF have been placed in secure storage facilities and will remain there until they are finally put beyond use.”

The MILF turned in 20 “crewserve” and 55 high-powered firearms in a ceremonial decommissioning of 145 MILF fighters and their weapons in June in Sultan Kudarat town, Maguindanao.

Ardo said the decommissioned weapons “are kept under lock and key.”

“The weapons will remain where they are in the interim period and there is no danger that they will fall in the hands of lawless elements or will be sold in the black market,” he said, reiterating the integrity of the IDB as the body trusted by both sides as the thirdparty entity. The IDB is chaired by Turkey Ambassador Haydar Berk, and joined by representatives from

Brunei Darussalam and Norway.

The Office of the Presidential Adviser on the Peace Process (Opapp) said the decommissioning process “is guided by the Comprehensive Agreement on the Bangsamoro (CAB), the peace accord signed by the government and the MILF in March 2014.

The CAB stipulates that the MILF weaponry will be put beyond use, while the combatants will transition to civilian lives in a gradual and phased process.”

Ardo was quoted in the Opapp statement to belie the claim of Marcos who “made public allegations that 28 of the decommissioned MILF weapons contained paltiks or homemade weapons.

He also speculated that the rebel group was still able to manufacture armaments through its ‘weapons factory.’”

Ardo said a seven-person decommissioning body “inspected all 75 weapons prior to the ceremonial decommissioning held on June 16 at the old Maguindanao Provincial Capitol. President Aquino, Cabinet officials, regional and provincial government officials, and members of the diplomatic community attended the event.”

Ardo commented that “based on my experience and competency as a retired general of the AFP, these are the original weapons used by the MILF in their fight against the government.” He also stated that the weapons “were clearly not manufactured for the sake of the ceremonial decommissioning.”

The government chief peace negotiator, Miriam Coronel-Ferrer, also appealed to reporters “to those with proof regarding claims that the MILF are manufacturing firearms and weaponry should immediately coordinate with the security sector or the government cease-fire committee.”

“With regard to the allegation that the MILF is manufacturing arms, we also do not want this to happen, so those with information should report to the AFP and the PNP or cease-fire committee so that we can take action,” Ferrer said.

S&R Membership Shopping Club to break ground in CdO in August

C FEEDING THE CHILDREN OF TARLAC The Tarlac Heritage Foundation, through its chairman Dr. Isa Cojuangco Suntay (kneeling at

left), donates groceries and foodstuff to Gabaldon Elementary School, one of the 27 school-benefeciaries of the foundation’s feeding program called “Bayanihan: Kalusugan Tungo sa Kaunlaran.” Through the foundation’s feeding program, over 1,000 children ages 4 to 8 in the province are given food three times weekly. Suntay was assisted by newly retired Armed Forces of the Philippines Chief of Staff Gen. Gregorio Pio Catapang (standing, third from right). STEPHANIE TUMAMPOS

Tagum confirms construction plan of MPIC’s waste-to-energy venture

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AVAO CITY—The Tagum City government confirmed plans of the Manuel V. Pangilinan’s Metro Pacific Investment Corp. (MPIC) to proceed with its first waste-to-energy venture in the country, saying that its executive has explained the delay in the original plan contained in their memorandum of agreement (MOA) last year.

MPIC President and CEO Jose Ma. K. Lim said the waste-to-energy facility would be scheduled “to operate by the first half of 2016 after the initial test runs,” a statement released by the City Information Office said. Lim attended the groundbreaking ceremony on July 9 at Barangay San Agustin in Tagum City, 55 kilometers north of here. He explained the delay in the original plan to their “finalizing the technical details of the plant and that they ran into a few issues involving their engineers and designers, which caused a little bit of delay.”

But he assured the crowd at the groundbreaking that the issues “have been resolved and that they will pursue the project as was originally conceived.”

“Financial arrangements with the banks are just being finalized. It’s just a timing issue with the banks when we’ll really get the facility, but as soon as we have that, we will be ordering within a month the equipment that will come into this project,” he said.

“If all goes well, by the first quarter of 2016, this plant will be built, with the equipment installed,” he said. The MPIC signed an agreement with the Tagum City government in October 2014, which was one year after the 2013 MOA signing between the city and the Global Green International Energy Philippines Inc. for the construction of the facility. MPIC tapped technology provider Global Green International Energy Philippines Inc. to construct the plant here.

The latter is an affiliate of a US entity that has built numerous wasteto-energy plants in South Korea and smaller countries in Southern Pacific. The Global Green web site said it has been into plant designs and solutions to waste problems and turning them into energy during the last 10 years. It said it has partners and projects in Australia,

the Americas, Malaysia, Singapore, Indonesia, Japan and South Korea.

The City Information Office said Global Green’s head, Alan Matthews, also made a statement during the groundbreaking and said that “aside from providing the city of Tagum and its residents with cheaper and more efficient energy, the project also aims to clear up the environment by diminishing the volume of waste being dumped at Barangay San Agustin’s landfill site.”

The Tagum City project would be MPIC’s first venture into renewable energy through a wasteto-energy project to tap into the problems of solid-waste management, while producing electricity from processing waste. In earlier statements to the press, the MPIC said the conglomerate would like to generate 300 megawatts (MW) in the future through a string of waste-to-energy facilities. It said it would invest up to P700 million for its first plant in Tagum City that would produce 2 MW of power and 10,000 liters of biodiesel per day. It has an option to expand to 6 MW. Manuel T. Cayon

Cebu lawmaker issues warning vs sellers of fake drugs

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L AW M A K ER on Su n day urged the public to become vigilant against counterfeit medicine, following the seizure of fake prescription and over-the-counter drugs from five pharmacies in Cebu.

House Assistant Majority Leader and Nacionalista Party Rep. Gerald Anthony Gullas Jr. of the First District of Cebu, citing the Bureau of Food and Drugs (BFAD), said counterfeit medicine may be con-

taminated or contain the wrong or no active ingredient.

“They could have the right active ingredient but at the wrong dose. Counterfeit drugs are illegal,” he said, adding, “Law-enforcement agencies should spare no effort in running after syndicates engaged in the illicit manufacture and distribution of fake medicine.”

“Counterfeit drugs defraud consumers and may be harmful to the health of patrons. In some cases,

tendered a bid of P215 million for the bulk energy and emerged as the highest bidder but decided to withdraw citing damage of the plants from Supertyphoon Yolanda in November 2013. “Despite the setback due to Yolanda almost two years ago, you have shown the importance and high prospects of this particular bid.

“You may seem small in number, but you are among those who been seriously and actively pursuing our privatization program, with some of you already prevailing as winners of government’s power assets,” Alzona said earlier during the ULGPP Bulk prebid conference. Lenie Lectura

they are likely to put at risk the lives of seriously ill patients,” Gullas said.

Gullas made the statement after the National Bureau of Investigation confiscated several boxes of imitation medicine during simultaneous raids on five pharmacies in the cities of Cebu, Mandaue, Talisay and Naga on July 9.

Gullas said the pharmacies were found selling bogus versions of popular branded medicines, such as Amoclav, Calcibloc, Alaxan FR,

Inoflux, Solmux, Solmux Broncho, Aspilets, Biogesic, Diatabs, Tuseran, Neozep, Medicol Advance, Decolgen, Dolfenal, Bioflu, Skelan, Kremil S, Qinolon, Disudrin, Decilone, NeoPyrazon, Ceelin, Enervon-C, Revicon and Myra-E. The spurious remedies and their packaging looked exactly like their genuine versions, he said.

“Besides ripping off consumers, the criminals behind these fake drugs also cheat the government of

tax income. “They should be apprehended, prosecuted and put behind bars,” Gullas said.

The BFAD should take administrative action against pharmacies found selling fake medicine, regardless of their excuse, he said.

“We support small business owners, including licensed pharmacies.

But it goes without saying they are supposed to guarantee the authenticity of every product they dispense,” Gullas said. Jovee Marie N. de la Cruz

AGAYAN DE ORO CITY— S&R Membership Shopping Club, modeled after the warehouse membership-shopping chains in the US, will break ground in this trade capital of Northern Mindanao next month. Mayor Oscar S. Moreno revealed this on Saturday during the launch of the second batch of the Leadership Communities (Leadcom 2015) program of the Ayala Foundation Inc. at the Balay Mindanaw Peace Center.

“Business opportunities lie ahead of us. S&R will hold its groundbreaking in August somewhere in Bulua,” Moreno said. S&R Cagayan de Oro will be the company’s second branch in Mindanao. The first and biggest in the country in terms of size is in Matina, Davao, which opened in May 2013.

All its branches in the Philippines—Bonifacio Global City in Taguig, Congressional in Quezon City, Alabang in Muntinlupa City, Aseana in Baclaran, Cebu and Pampanga—were built according to US standards. This is in accordance with its core concept of delivering world-class merchandize, greatvalue offers, specialty services and exciting membership privileges.

S&R offers high-quality products on local and international brand names that guarantee satisfaction, unmatched savings and value for membership.

There are two ways to become a member, through business membership, which is open to owner or manager of licensed business; and gold membership, which can be availed of by individuals aged 18 and above. Each member has the following benefits and perks: first picks of imported name-brand merchandise; exclusive deals and discounts; unmatched everyday savings; access to specialty services; and shopping privileges at all S&R branches.

S&R offers a wide array of local and imported merchandise, such as baked goods, grocery items, wellness and beauty products, home furnishings, and tire services exclusive to members. S&R boasts of its “Everyday Fresh Section” that carries local and imported fresh, chilled meat products, such as Australian and New Zealand beef, local pork and poultry that are sourced from only one accredited supplier to prevent cross contamination, which usually happens when dealing with multiple suppliers.

This section also offers fruits and vegetables that are gardenfresh-quality produce delivered daily from the country’s premiergrowing regions. Its “Food Service Station” also offers piping-hot New York-style pizzas, calzones, churros, hot dogs, cheeseburgers, Blue Bunny ice creams, clam chowder, rotisserie chicken rice and coffee, among others.

Opinion BusinessMirror

A10 Monday, July 13, 2015

editorial

Ending with a whimper

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S President Aquino prepares for his last State of the Nation Address, we are entering the final stretch for this administration. The President is expected to say that he is “firmly determined to further improve the delivery of essential public services and strengthen public institutions so that we can build even stronger foundations for sustainable and inclusive growth and progress.”

While it is good that the administration is keeping its resolve strong, we are reminded of “The Hollow Men,” a poem by British author T. S. Eliot. The poem ends with this line: “This is the way the world ends, not with a bang but a whimper.”

It is true, as Communications Secretary Herminio B. Coloma Jr. pointed out, that “for the past five years, the average GDP [gross domestic product] growth of 6.3 percent has been the highest attained by the country in the past four decades.” However, the economic data for 2015 and particularly the one released most recently may indicate that the upside trend has weakened.

The Philippine stock market peaked in April at an historic high, even as the President was forecasting even better times ahead. While the stock market is just one of the barometers, and not a particularly large indicator, of economic performance, it is a good measure of sentiment. Stock prices have been falling since that peak.

Unfortunately, it is not just the stock market that has turned down.

The Bangko Sentral ng Pilipinas (BSP) reported that foreign direct investments (FDI) in April amounted to $382 million, 43 percent lower than a year ago. For the first four months, FDI inflows stand at $1.2 billion against 2014’s $2.4 billion.

The Philippine Statistics Authority (PSA) reported that total export revenues in May contracted to $4.9 billion, from $5.9 billion in the same period last year. It was the largest drop among major trade-oriented economies in East and Southeast Asia. The PSA also said that the manufacturing sector’s volume of production shrank 3.1 percent in May, following an almost flat growth in April and a 12.7-percent growth a year ago.

These numbers, among others, may be showing a problem with the trend, which may be why the International Monetary Fund slashed its 2015 economicgrowth outlook for the Philippines to 6.2 percent from 6.7 percent Other economic indicators are below where they were in 2010, and are still trending lower. Several particularly stand out as showing weakness: industrial production, GDP annual growth rate, GDP month-on-month growth rate and retail sales year-on-year.

That is not to say that all or even a majority of indicators are looking worse.

However, those mentioned above show the broadest picture of where the economy may be headed.

Government agencies, like the BSP and the National Economic and Development Authority, reason out that this is all because of external factors, but that is not the point. Government economic planners are supposed to anticipate and adapt to those external changes.

The end of the current administration may conclude with an economic whimper and not a bang.

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PCSO brings ambulances to Quezon province Atty. Jose Ferdinand M. Rojas II

RISING SUN

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e are in Lucban, Quezon, today to turn over 24 ambulances to various municipalities and hospitals in Region 4-A under the Philippine Charity Sweepstakes Office’s (PCSO) Ambulance Donation Program.

Today’s recipients are the municipalities of Agdangan, Buenavista, Calauag, Canatanuan, Dolores, General Luna, Guinayangan, Infanta, Lucban, Macalelon, Mauban, Mulanay, Padre Burgos, Pagbilao, Perez, Pitogo, Real, Sampaloc, Unisan, and the Alabat Island District Hospital, Magsaysay Memorial District Hospital, Polillo Medicare Hospital, Quezon Medical Center and the United Candelaria Doctors Inc. We are also scheduled to distribute ambulances in Cavite province on Friday.

The third week of this month will see us members of the PCSO Board on Panay Island to turn over 45 ambulances to municipalities and hospitals in the provinces of Aklan, Antique, Capiz, Guimaras and Iloilo.

While on Panay Island next week, we will also be opening a branch office in Antique, the 47th belonging to the PCSO’s network.

nnn

We often receive queries on how a local government unit (LGU) or hospital may request for an ambulance from the PCSO. The requirements may be viewed in full on the PCSO’s web site, pcso.gov.ph.

Among the documents required are a justification for the request; a resolution from the LGU (Sangguniang Panlungsod, etc.) requesting for an ambulance; and, if the municipality falls under the 6040 percent cost-sharing scheme, a certificate of availability of funds from the LGU treasurer for the 40-percent counterpart.

In the case of hospitals, they should be able to show that they have funds for the vehicle’s operation and maintenance.

Beneficiaries may request for an ambulance every five years. Firstto third-class municipalities may obtain one under a 60-40 percent

cost-sharing scheme, while fourthto sixth-class municipalities receive them under an outright, or a 100-percent donation.

In addition to LGUs and hospitals, charitable institutions, associations, and state colleges and universities may also request for an ambulance from the PCSO. nnn

I mentioned in my previous column that several PCSO branch offices will be transferring their locations. These are the Albay branch, to an office at the Albay Capitol Annex, Legazpi City; the Laguna branch to Alonte Sports Arena, Biñan; and the Rizal branch to the Municipal Compound, Cainta. They will be moved to rent-free spaces offered by the provincial government or LGU concerned.

This is a policy that was adopted by the present PCSO board of directors, after it assumed office in 2010 under the Aquino administration.

At the time, there were only 25 branches, with much of the processing concentrated at the head office.

To better serve the people, we decided to expand the PCSO’s network of branches to provide those in underserved and remote areas with access to the PCSO’s services and products. After careful study, we started opening new branches in 2012.

With the opening of the new Antique branch next week, the

PCSO will now have 47 branches nationwide, with more to be added in time. The goal is to establish a branch in every province, as suitable or feasible.

For us to be able to reach our goal, we had to come up with strategies that would make our expansion successful, given our limited resources and manpower. So we sought to partner with LGUs for the office space, reaching out to some, others contacting us with offers.

We are pleased that most LGUs were accommodating and helpful, many of them going out of their way to provide the PCSO with spacious areas close to the people, if not at the provincial capitol itself or other government complex, then at locations easily accessible via public transport.

This partnership between government entities—“G to G”—and the synergy in the government that is the hallmark of the Aquino administration—allowed us to almost double the number of PCSO branches in three years.

As the PCSO enters the second half of its 81st year of existence as an agency, we look forward to further enhancing its services and products, for the welfare and benefit of the Filipino people.

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

Is Alexis Tsipras brilliant or just lucky?

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By Mohamed A. El-Erian | Bloomberg View

lexis Tsipras, Greece’s charismatic prime minister, has shown a fascinating talent for political maneuvering.

When an impressive electoral victory carried him to office in January, he inherited a horrid economic and financial situation. He initially struggled to gain control, and relations with creditors collapsed in an acrimonious mess. But as Greece teetered on the edge of an economic and institutional abyss, he repeatedly caught everyone off guard by taking charge of a narrative that was slipping away, both at home and abroad.

Now, he may be able to deliver what many (including me) thought improbable: a policy deal that is acceptable to the majority of Greeks, the country’s European partners and the International Monetary Fund (IMF). Yet, as brilliantly as he appears to have navigated the crisis so far, he still faces an uphill battle that will determine his political legacy.

Last month Tsipras surprised (and angered) Greece’s creditors by calling a snap referendum, asking Greeks whether the government should accept the tough terms of a bailout deal, with the understanding that a “No” vote could mean the country’s exit from the euro.

Surprising many, he secured an

impressive “No” victory; and he did so despite the burden imposed on Greeks by bank closures and capital controls. Then, on Thursday, he seemingly did a U-turn, proposing policy measures to his creditors that were similar to those rejected by his citizens in the referendum (and that don’t yet emphasize debt forgiveness, which is central to assuring a sustainable economic recovery for Greece).

Through it all, Tsipras obtained the support of other Greek political parties, strengthening his bargaining position both at home and abroad. In addition, he is now drawing some support from other peripheral European countries, which had been hos-

In the next few days, Tsipras needs to prevail with his creditors and obtain the resumption of European financing and greater emergency liquidity assistance from the European Central Bank.

tile to the idea that Greece could receive preferential treatment within the euro zone.

The net result is that Tsipras may be close to delivering a policy proposal that could be approved by the Greek Parliament and prove acceptable to European creditors and the IMF. That alone might secure Tsipras’s place in the history books.

But it is not yet clear whether his ultimate achievement will be to restore Greece as a fully functioning and viable member of the euro zone, or simply delay its exit until the government is in a better position to manage the disruption caused by a “Grexit.”

In the next few days, Tsipras needs to prevail with his creditors and obtain the resump-

tion of European financing and greater emergency liquidity assistance from the European Central Bank. At the same time, he needs to maintain calm in Athens now that a wing of his Syriza party (and some others) feel they have been betrayed. And he must move very quickly to reopen the banks, clear the debt arrears to the IMF and begin to reverse his country’s highly damaging economic implosion.

The Tsipras government then faces a much more difficult feat that has eluded all of its predecessors: the sustained implementation of an economic policy package that involves continued budgetary austerity (including higher taxes), progrowth structural reforms (yet to be clearly specified), as well as debt forgiveness from official European creditors (still opposed by some governments).

The prime minister has dazzled more than once by pulling a few rabbits out of his hat, but his grand finale lies ahead. His ability to pull it off will determine whether his reputation for political brilliance will be enduring.

Opinion BusinessMirror

opinion@businessmirror.com.ph

Monday, July 13, 2015 A11

No longer a waste of paper Atty. Lorna Patajo-Kapunan

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legally speaking

he right to a healthful and balanced ecology under Section 16, Article II of the 1987 Constitution provides that “the State shall protect and advance the right of the people to a balanced and healthful ecology in accord with the rhythm and harmony of nature.”

This policy of environmental protection, though, only explicitly stated in the 1987 Constitution, is surely the driving force of legislation as far back as 1929, where the Legislature passed an Act to Prohibit the Cutting of Tindalo, Akle or Molave trees—only one of the 25 laws mentioned in AM 09-6-8-SC, or the Rules of Procedure for Environmental Cases, circa 2010.

At least 25 laws. So much protection. So much potential. Yet, for the longest time, so much waste of paper.

Mother Nature has been raped so many times, in spite of all the protection, that she can scarcely recognize what is left of her. The legal front in the battle for nature was grossly underrepresented.

The Supreme Court (SC) has come up with rules that may allow us, as stewards of our environment, to finally mount an offensive in that front.

These rules in AM 09-6-8-SC, such as the rule on the writ of kalikasan, have borne fruit. We have seen the writ of kalikasan in action in the First Philippine Industrial Corp. (FPIC) Makati gas pipeline leak cases.

Just recently, another remedy in these SC rules bore fruit—the environmental citizen’s suit enshrined in Rule II, Section 5. That rule allows that “any Filipino citizen in representation of others, including minors or generations yet unborn, may file an action to enforce rights or obligations under environmental laws.”

In Resident Marine Mammals of the Protected Seascape Tanon Strait v. Reyes (G.R. No. 180771, April 21, 2015), on the basis of these rules, the SC allowed two groups of petitioners—the first composed of the resident marine mammals of Tanon Strait represented by two human “stewards,” and the other composed of subsistence fishermen.

The two groups filed petitions questioning a service contract granted in favor of Japex, a Japanese company that allegedly performed a survey of the Tanon Strait area, and later turned to oil-exploitation activities that were vehemently opposed by the petitioners.

The issue on standing in Resident

Marine Mammals would have been unremarkable, if not for the discussion on the first petitioner. It would certainly make an eye-catching headline.

The SC’s discussion centered not on the right of the animals, but on the duty of their human stewards.

The petitioners anchored their theory on Justice William Douglas’s dissent in Sierra Club v. Morton, where the Justice attempted to expand the rules of standing to consider valleys, meadows, and the like, as part of an ecological unit of life that may properly be represented by a person with a meaningful relationship to that unit.

Such could possibly make them real parties-in-interest or representatives thereof—a requirement in our procedural law.

The Court applied the environmental citizen’s suit, stressing that humans are stewards of nature. This effectively means that we need not represent anyone in particular—we can have an environmental suit as real parties ourselves. As long as we can pinpoint how certain activities can damage or destroy the environment, we will most likely be permitted to exercise our right—nay, fulfill our duty—as stewards of the environment.

The SC found the service contract so notoriously offensive that it offended not only laws, such as the National Integrated Protected Areas System Act, but no less than the fundamental law of the land—the Constitution.

While execution remains to be seen, the fact is that we are finally bestowed with a means to enforce the many protections our laws have given Mother Nature, and that it has resulted in a victory.

At least 25 laws. With our duty in hand. With evidence in tow (Rule 21, Section 1 allows authenticated photographs, videos and similar evidence of violative acts to be used as evidence).

For the sake of Mother Nature, we now have the means. The fight against laying waste our environment is no longer just a waste of so much paper.

Jimmy Choo shoes Teddy Locsin Jr.

I

Free fire

N retaliation for the unprovoked sinking of the Belgrano, the pride of the Argentine navy—in fact, its only battle cruiser— the Argentine air force hit and destroyed the HMS Sheffield with a single French Exocet missile, which sank with almost all hands. At the news, my Latin American classmates in Harvard Law leaped to their feet, clapping and cheering, and the rest of the class joined them in celebrating the Argentine…well, pretty short-lived victory. But it was clear to anyone afterward that the way to fight anyone bigger is with missiles.

Missiles are the great equalizer, aside from suicide bombing to which no Filipino will agree. If the fight is so desperate that the only way is to take your own life like a Palestinian, then for Filipinos it is less trouble to put up your hands.

And yet, when Israel offered, at the height of the South China Sea brouhaha—really, it is so childish to call it the West Philippine Sea this late in the day—indeed, when Israel offered a mere P6.5-billion shore-based missile system, the Philippine government ditched

it, after dragging talks over three years, for a list of gay apparel, as the Christmas song goes.

The list included 832 designated marksmen rifles, two lots of chemical, biological, radiological and nuclear protective gear, instead of missiles that can stop, and will deter, toxic attacks. Prevention is the best protection.

Gayest of all on the wish list was an order for 32 long-range sniper weapons, known in the trade as the Deadly Dildos.

And, yet, the Filipino soldier has beaten the crap out of any insurgency, even with World War II garands. My ABS-CBN camera crew and I saw this for ourselves when we joined the Philippine Marines blasting their way up to Abu Bakar.

For a government that’s thrown in the towel in a war we never lost and cannot lose, the new items overlap already budgeted items of pretty much the same stuff, according to the Philippine Daily

The China stocks syndrome: Welcome to capitalism, comrades

H

ere’s what some scorched investors in China are muttering as they tally their losses: That’s the last time I take stock market advice from People’s Daily.

Go ahead and chuckle at the irony of China’s official Communist Party newspaper masquerading as the Wall Street Journal. It does sound contradictory. Forget all that propaganda in Mao’s Little Red Book, buy blue-chips. Never mind the government’s five-year economic plan, who’s got a hot tip on a tech initial public offering (IPO)?

More seriously, China is struggling through a crucial moment on its journey from communism to free market economics. We hope the government learns the right lesson: The Western-born system is designed to operate as a fair and open competition.

This creates winners, losers and, yes, sometimes chaos, but over the long haul, capitalism generates the most value for the most people. If you try to manipulate the results, you’ll destroy trust —and wealth.

The drama in China involves the incredible run-up of its stock market over the past year, and the crash that followed. We’re talking

a leap of 60 percent to as much as 150 percent for the Shanghai and Shenzhen exchanges. This was giddy stuff even for an economy that is changing the world. It was also unsustainable because China’s fundamentals don’t justify the numbers.

T he economy’s g row ing at maybe 7 percent, not the rocket ship-level 10-plus percent of past years, and the real-estate market is slumping. Local governments are awash in debt.

What happened? China needs a robust stock market to fund corporate investment and juice spending by consumers. Over the past year, the government cut interest rates to spark economic growth, and people were looking for better investments than real estate. So they plowed into the markets. Newbies were a big part of the trend, and many of them bought shares with borrowed money.

The government liked the results, encouraged them, maybe even guaranteed them. At least

The drama in China involves the incredible run-up of its stock market over the past year, and the crash that followed. We’re talking a leap of 60 percent to as much as 150 percent for the Shanghai and Shenzhen exchanges. This was giddy stuff even for an economy that is changing the world.

that’s how it looked to many investors who saw the state-run media’s cheerleading. In April Reuters translated a commentary from the People’s Daily web site that said the bull market “has just begun” because it “has support from China’s grand development strategy and economic reforms.”

When the party tells you the fun’s not over, what do you do?

Keep buying stocks.

Then, inevitably, the bubble burst. Shares tumbled by one-third over the last few weeks, wiping out trillions of dollars of wealth.

Markets are still up for the year, but nerves are frayed.

There’s also new concern about the government’s ability to manage economic growth. That’s because of the heavy-handed way officials reacted to the crash: They are doing everything they can to stop the slide, instead of permitting the correction to play out.

Companies have been allowed to suspend trading of their shares and IPOs are canceled.

Big shareholders, executives and directors are being told not to sell. Government funds are pouring money into the markets,

while banks have eased lending requirements to encourage sharebuying. Police are threatening to investigate short-selling.

Early signs are that the government may wrestle this panic to the ground. China has the money, and the party controls the levers of power. If the crisis subsides, that’s good for Chinese investors.

People outside of China have little or no exposure to Chinese stocks, limiting any contagion effect, so Americans are probably OK. Yes, the Chinese economy takes a hit,

Inquirer. Yet this is stuff this government has no intention of using, though, perhaps, fondling, yet it wants to have them because… aaahhh bastaaa. Indeed, one can never have enough of Jimmy Choo shoes.

The Inquirer says the realignment is for kickbacks, which you cannot get from the purchase of a missile system in a governmentto-government deal and with Israel at that. I don’t think so. The realignment is perfectly aligned with a government that thinks shooting at what cannot shoot back, like paper targets, is manly.

You k no w w h at ’s m a n l y ?

Missiles.

You know what’s not manly?

Dressing to the nines for a dance date with the presidential duty to protect and preserve every square inch of national territory—and then canceling for a one-night stand with the Bangsamoro basic law; with only a wad of ringgits on the night table to show for it in the morning.

but nothing catastrophic.

The future is more uncertain.

China won’t fulfill its destiny as a powerhouse contributor to globalization until it fully transitions from a closed, state-run economy to a n open-m a rket economy. Money needs to be put to its best use. Banks and corporations can’t be driven to make reck less decisions to support political aims. Investors have to trust what they see, and read, and not fear being manipulated by unseen hands.

Chinese President Xi Jinping understa nds t his. T he pa r t y vowed in 2013 to allow markets to play a “decisive” role in the economy by 2020. There weren’t many specifics attached, and to be fair, Western countries don’t always follow free market principles either: The recovery from 2008 was hardly perfectly executed.

In China’s case, the government seemed committed to reform but now stokes legitimate doubts about its resolve. If the party is willing to toy with market performance on the way up, and on the way down, where does the meddling stop? TNS

2nd Front Page BusinessMirror

A12 Monday, July 13, 2015

IFC asked to study DOE circular on supply deals

T

By Lenie Lectura

HE Department of Energy (DOE) has asked the International Finance Corp. (IFC), a member of the World Bank Group, to conduct a study on the agency’s latest circular that mandates all distribution utilities (DUs) and electric cooperatives (ECs) to undertake competitive selection process (CSP) in securing their power-supply agreements (PSAs).

Resigned Energy Secretary Carlos Jericho L. Petilla said shortly after he stepped down that the study would focus on “the rule drafting for CSP.” Petilla signed DOE Circular 2015-06-0008, which was released on June 30.

“I also asked the IFC to look into CSP’s effect in the WESM [Wholesale Electricity Spot Market], specifically how it will encourage merchant and peaking plants. The study will also look into this, not just on how the guidelines should be carried out,” explained Petilla,

PETILLA: “For me, this is just common sense.

Why is it good, and why is it not good? I am quite sure that the DOE will take into consideration any opposition they have, but the main reason we will have on CSP is transparency.”

when sought for comment.

The CSP circular basically requires all DUs and ECs to bid out their power requirements—instead

of entering into negotiate contracts with power producers—which, Petilla said, is a more transparent way to do it, because it involves passthrough cost, meaning consumers are paying for it.

“I remember IFC saying that this is a bold move to the point that Washington is interested, because this will be the first time that a market-driven industry will bid out its procurement. Other countries will watch out how this will be implemented,” Petilla said.

Petilla expects industry stakeholders to oppose this all the way to the courts. Still, he challenged them to do so. “For me, this is just common sense. Why is it good, and why is it not good? I am quite sure that the DOE will take into consideration any opposition they have, but the main reason we will have on CSP is transparency.”

“Why I am interested? To make sure that, as I leave the DOE, I did everything for the good of the consumers; and transparency is one of them. Now, if the DUs and ECs will raise other justifications, then I am quite sure the DOE will listen to them. Why object if you have nothing to hide?” he commented.

Under the CSP circular, the bidding will be conducted by a third party

duly recognized by the DOE and the Energey Regulatory Commission.

It is the ERC that will release the guidelines and procedures within 120 days from effectivity of the circular. “The IFC study will also be submitted to the ERC. The IFC does not want to be political, saying that it’s not their job to sell the CSP. Some people say that this plan to implement the CSP will fizzle out because it needs a strong political will; but I don’t think so, especially when the only objective here is transparency,” Petilla added.

The Manila Electric Co. (Meralco), the country’s largest DU, sources part of its power requirements via negotiated PSAs. The company has yet to comment on this.

AboitizPower, which also sources most of its power requirements via negotiated contracts, likewise, deferred comments, as it has yet to study the circular.

The Philippine Independent Power Producers Association Inc., meanwhile, is expected to issue a position paper on this.

Industry sources said the CSP is also meant “to eliminate self-dealing activities in cases when the DU has an affiliate or sister firms engaged in power generation.”

www.businessmirror.com.ph

briefs

➜CARDINAL TAGLE NOW A COR UNUM MEMBER

Manila Archbishop Luis Antonio Cardinal Tagle, president of Caritas Manila, has been appointed by Pope Francis as member of the Pontifical Council Cor Unum, the Catholic Bishops’ conference of the Philippines (CBCP) announced on Sunday.

The Pontifical Council Cor Unum for Human and Christian Development is a body that manages the Church’s worldwide charitable activities. Tagle’s appointment came almost two months after the Manila archbishop was elected president of Caritas Internationalis.Tagle is the first Asian to head the confederation of global charities.

Instituted by Pope Paul VI in 1971, Cor Unum is part of the Roman Curia and serves in the name of the pope for humanitarian initiatives in cases of disaster. The Cor Unum was among those which immediately sent aid after Supertyphoon Yolanda (international code name Haiyan) struck several provinces in the Visayas.

The agency also funded the construction of the Pope Francis Center, which is composed of an orphanage, home for the aged and a clinic in Palo, Leyte. Claudeth Mocon-Ciriaco

➜MARKET WEAKNESS MAY CONTINUE—TETANGCO Putting into consideration China’s projected slowdown, the talks in Greece and the timing of the normalization of interest rates in the US, central bank Governor Amando M. Tetangco Jr. said they are expecting weaknesses in the local market, but quickly added that the Philippines has enough tools to weather the developments.

“China is still forecast by many analysts to grow at 7 percent or the high 6’s. Thus, that should provide underlying support for trade in the region, including in the Philippines. The immediate impact is really on financial markets. The developments in China, plus talks in Greece and the timing of Federal Reserve liftoff all add to market uncertainty, and thus a tendency for portfolios to rebalance, or stay in the cash market,” Tetangco said. “What is important is to prevent an unraveling of market confidence.”

The governor, meanwhile, remained confident that the Philippines has the capabilities to ride out the volatilities without causing much damage or instability in local markets. “In the Philippines our monetary policy will continue to be driven by our outlook on inflation. We have other tools to contain volatilities in the financial markets,” Tetangco said. “We may still see some further weakness in the markets, but our macroeconomic fundamentals remain sound. We have both monetary and fiscal space to help support the economy, should such be required.” Bianca Cuaresma

Continued on A2

Greece deal on bailout unlikely for now, ministers say

E

uropean finance chiefs said they were unlikely to strike a deal on the outlines of a third Greek bailout, threatening to delay the cash infusion Prime Minister Alexis Tsipras desperately needs.

While a hardline group led by Germany resisted another rescue, the worst-case outcome was off the table for now. A Sunday meeting of the 28 European Union (EU) leaders was canceled; most of the procedures to push Greece out of the euro require their unanimity. A summit of the 19 euro-area leaders was still on, meaning they’ll decide whether

to start negotiations on aid.

“If this was a negotiation from one to 10, I think we’re still standing somewhere between three and four,” Finnish Finance Minister Alexander Stubb, who has opposed a bailout, said before the Sunday talks. “We’re very far away” from a deal.

The gathering of finance chiefs in Brussels deadlocked over Greece’s growing debt and the credibility of reforms that some said rely too heavily on taxes. Creditors concerned that Greece can’t be trusted want lawmakers in Athens to pass tax increases and spending cuts into law before negotia-

tions on a bailout package begins.

“If the Greek government commits to implement and vote now— without delay—strong reforms in the short term, there is the basis of negotiations,” EU Economic Affairs Commissioner Pierre Moscovici said.

Time and cash are running out for Tsipras, whose banks have been shut for the past two weeks. Bank withdrawals are limited to €60 ($67) a day, pensions have been rationed and commerce is grinding to a halt. The European Central Bank has frozen its emergency credit line to Greek lenders. Bloomberg News

LandBank-DBP merger faces delay. . .

“You wanted to make the bank bigger, but why are you laying off employees?” President Aquino was quoted as having quizzed the lenders’ executives in Malacañang just last week.

That EO had previously been drafted by the Government Commission for Governmentowned or -Controlled Corporations (GCG) mandating the on-again and off-again merger of the state-owned lenders calling for the elimination of so-called redundant positions.

As a result, the hoped for Malacañang approval around the third week of this month may have to be scuttled and, by extension, delay the merger timetable anticipating a functional merger at this time of year and a full merger by late October at the earliest and

by December at the latest.

It was also learned that Justice Secretary Leila de Lima also pointed out the apparent lack of approval of the proposed merger by the Bangko Sentral ng Pilipinas and the Philippine Deposit Insurance Corp. (PDIC). Regulators’ consent is of paramount importance in merger exercises of this scale, de Lima had said.

“Why have the banks do not have the consent yet from the BSP and PDIC?” the justice

secretary was quoted as asking President Aquino rhetorically. Deputy BSP Governor for the Supervision and Examination Sector Nestor A. Espenilla Jr. on Sunday confirmed the lack of prior central bank review of the proposed merger, saying that he has no knowledge such a document had been passed on to the regulators.

“I don’t think we have received a formal application,” said Espenilla, who heads the supervision and examination sector at the BSP. Rep. Nelson Collantes of the Third District of Batangas, chairman of Committee on Banks and Financial Intermediaries, previously vowed to push for the passage of the law merging the government-owned lenders, with Land Bank as the surviving entity.

House Bill 5755 directs the GCG to implement the merger within one year from the effectivity of the law, and to approve the reorganization plan of the merger and the socalled Compensation and Position Classification System for the merged entity.

Collantes said the consolidated entity should prove more efficient in carrying out their mandate, particularly in anticipation of the wave of foreign banks competing with

the locals this year and down the line. The merger should also improve the balance-sheet capabilities of the banks, leading to a stronger, more competitive lender relative to other banks.

Executives, likewise, said Sen. Sergio Osmeña III, chairman of the Senate Committee on Banks, reportedly favored enhancing the DBP charter.

If the merger will push through, the senator said,”DBP must be the surviving entity,” according to one government bank executive.

When merged, the DBP will focus on supporting priority development programs of the government, like infrastructure, tourism, agriculture, industrial enterprises, micro, small and medium enterprises, education, health care, socialized housing, environment and the financial requirements of the government.

The pursuit of these objectives will be undertaken under the context of a financially viable, globally competitive banking institution.

“The merged bank will secure substantial earnings and safeguard its liquidity position to sustain its developmental banking operations in support of the government’s national development agenda and sustainable economic growth,” the executives said. With Bianca Cuaresma

PHL goods get duty-free access to US till 2017. . . beneficiary developing countries.

The US is the second-largest export market of the Philippines, accounting for 14.1 percent of the country’s exports in 2014.

DTI officials expressed confidence that the inclusion of 20 to 30 specific categories of travel goods

could boost shipments to the US. “We already have travel goods makers here, but we can again become competitive and convince other brand owners to locate here to export,” Perlada said.

He said the Philippines is also targeting to ship out more processed

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agricultural products, including marine products, to the US. Perlada said, however, that “challenges,” such as the impact of the El Niño, must be immediately addressed so that the Philippines could immediately benefit from the trade scheme.

Catherine N. Pillas