BusinessMirror July 30, 2015

BusinessMirror

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A broader look at today’s business Saturday 18, July 201430, Vol.2015 10 No. 40 Thursday, Vol. 10 No. 294

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MRTH READY TO DROP COURT CASE VERSUS GOV’T IF…

Sobrepeña: P-Noy’s MRT 3 rant twisted

INSIDE

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HE owner of the Metro Rail Transit (MRT) Line 3 lashed back at President Aquino on Wednesday, calling him a “misinformed” man whose statements about the train system were “twisted.”

‘HALO EFFECT’ DIMS AS INDONESIA CONSUMER CONFIDENCE TAILSPINS

Asean

BusinessMirror Editor: Max V. de Leon • Thursday, July 30, 2015 B3-1

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AEC–the need for the PHL to open the door wider for competition Asean-EU Perspective

HENRY J. SCHUMACHER

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T is important to get ready for the Asean Economic Community (AEC) which is scheduled to start on January 1, 2016. Association of Southeast Asian Nations (Asean) has achieved worldwide recognition for being one of the most dynamic and integrated regions. The growing purchasing power of the 600 million consumer market, and the ongoing progress of the regional community offer an integrated market and production base for both business and consumers.

Foreign direct investment (FDI) is a key component of resource flows to Asean countries. Over the last decade, FDI flows into Asean members grew at an annual average rate of 19 percent.

While the Philippines is debating whether fiscal incentives should be offered to investors, Vietnam is taking a much more aggressive approach.

The release of the 10th Foreign Investments Negative List (FINL) in May went some ways toward moderating the Philippines’s less than flattering reputation as one of the countries most unwelcoming to FDI in Asia. But the most formidable impediment to sustained, investmentbased growth—the 1987 Constitution—remains unaltered.

The new FINL replaced Executive Order 98, or the Ninth FINL issued in 2013, that dismayed foreign investors by expanding the list of investment areas and economic activities reserved for Filipinos. In response to this expanded list, the Joint Foreign Chambers (JFC) urged the government to review the Ninth FINL to make it less negative for foreign investors. That request has now been granted to some degree.

JFC, however, initially asked the entire practice of professions be removed from the FINL, because professions have nothing to do with investments.

JFC and many leaders in the local business community have long urged the government to remove legal and Constitutional impediments that discourage the entry of FDI and hinder beneficial competition.

Their arguments make sense, both from the aspect of sustaining economic growth and mitigating poverty.

A key aim of moves to amend the restrictive provisions of the Constitution, especially Article XII, is to create jobs in abundance and reignite competition in protected industries. A burst in job creation that will result from the entry of foreign firms should significantly reduce the persistent labor surplus that contributes to the country’s stubborn poverty.

Economist Bernardo Villegas, chairman of the Center for Research and Communication, noted the concept of “Filipinization” (a.k.a. economic nationalism), reinforced in both the 1972 and 1987 Constitutions, “has just worsened the feudal and monopolistic character of our society.”

“Unwittingly, well-intentioned ‘nationalists’ and ‘activists’ have handed the control of the national economy to an elite in whose hands the wealth of the country is concentrated. There has been very little evidence that Filipinization has liberated the masses from poverty,” he wrote. He also pointed out “the idea of having Filipinos control the vital sectors of the economy has worked against the majority of the Filipinos who belong to the lower income groups.”

“There has been very little evidence that the Filipino nationals, who have managed to control the economy have a greater interest in the common good, especially of the underprivileged, than individuals who are not citizens of the Philippines.”

Villegas reasoned “…the Philippine Constitution that was ratified in 1987 was riddled through and through with provisions that make it very difficult for foreigners to freely invest in public utilities and other strategic sectors of the economy, which are the most capital intensive and in direct need for long-term capital, which can come only from FDI.” Instead of economic nationalism, the focus today should be on “economic patriotism,” Villegas said. He defined economic patriotism as “a true love of country whose main concern is…‘inclusive growth,’ i.e., economic growth that liberates the masses from the bondage of poverty, a growth that truly trickles down to the poorest of the poor.”

“With an honest and efficient government, the nationality of private investments should not matter,” Villegas said.

While more jobs won’t be the magic bullet that erases poverty, it should go a long way toward entrenching inclusive growth and effectively combating poverty. Gerardo Sicat, who in 1973 was the first National Economic and Development Authority director general, now repeatedly argues Philippine growth is a long-standing story of sustained labor surplus that creates a high incidence of income inequality.

Sicat believes “misguided economic nationalism gave rise to rentseeking, corruption, cronyism and uncompetitive behavior dependent on state patronage.”

The government policy of import substitution and protection also corrupted the process of industrialization because it was based on patronage. And Sicat concludes that “all these outcomes are inherently linked to the restrictive provisions of the Constitution.”

The continuing drag imposed on the economy by the FDI trickle was the object of serious concern by foreign businessmen, who urged the government to make the changes necessary to improve FDI inflows.

This concern was sparked by the sharp 48-percent plunge in FDI to only $1.2 billion from January to April. In contrast, FDI in 2014 grew to $6 billion, a total unlikely to be surpassed this year.

The European Chamber of Commerce of the Philippines (ECCP) again renewed its call to further open the economy to boost FDI. ECCP is optimistic of the passage of House Resolution 1 that seeks to ease the economic restrictions in the Constitution before the end of the Aquino administration. It noted the principal author of the bill, House Speaker Feliciano Belmonte Jr., remains intent on getting the bill passed.

‘Halo effect’ dims as Indonesia consumer confidence tailspins

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NDONESIA’S consumer confidence faced an “extreme deterioration” in the first half, falling the most in Asia as the outlook for the economy and stock market worsen, according to a MasterCard Inc. survey.

The 25.8-point slide from the second half last year to 64.3 on the MasterCard index was the steepest among 17 markets in the region, the credit card company said. Three other Southeast Asian nations— Thailand, Myanmar and Malaysia —are also among the top 5 decliners, according to the survey that also tracks employment, income and quality of life.

While expectations were perhaps unrealistically high, Indonesians and foreign investors have been disappointed with the slow pace of change following President Joko Widodo’s election victory last year. Weak government spending has contributed to an economic slowdown, as a stifling bureaucracy and conflicting regulations remain

impediments to doing business.

There was “a significant halo effect” with the elections, Matthew Driver, who heads global products and solutions in Asia Pacific at MasterCard, said in an interview on Tuesday. “But all of the commentary has shown a little bit of a frustration with trying to make that administration work.”

The survey showed consumer confidence for Indonesia fell to the weakest in three years, undermining moves to increase domestic spending in a country with Asia’s fastest inflation rate.

‘Cyclical downturn’

SOUTHEAST Asia’s largest economy is growing at its slowest pace in more than five years amid a

commodities slump, China’s slowdown and uneven recoveries in the US and Europe. Much-needed government infrastructure spending to offset external influence is still trickling in slowly as Widodo, also known as Jokowi, works to cut through the bureaucracy and acquire land for projects.

“We are in a cyclical downturn,” Jokowi said in a speech in Singapore on Tuesday. “It is true we still have a lot of work to do in Indonesia,” he said, adding that the country needs to be business-friendly by simplifying permits and cutting bureaucracy and corruption.

Reduced imports by China also left the commodity exporter searching for alternative markets as supplies expanded following an investment boom from 2008 through 2011.

“Export recovery has been elusive,” said Chua Hak Bin, an economist at Bank of America Merrill Lynch in Singapore. “China has become a lot more important than 15 to 20 years ago.”

Less optimistic

THE MasterCard report showed the outlook for Indonesia remains in the “optimistic” range compared with other Asian markets even as

the outlook deteriorated. It’s just “significantly less optimistic” than it was last year, Driver said.

Consumer spending, which accounts for more than half of the economy, remains moderate. The country’s motorbike sales posted a 22-percent month-on-month gain in June ahead of the Eid al- Fitr holiday, after falling to the lowest in almost three years.

Consumption has been gradually increasing as a component of Indonesia’s gross domestic product, said Gundy Cahyadi, an economist from DBS Group Holdings Ltd. “This means that they’re shouldering more of the burden to lift growth in Indonesia.”

The survey also showed the outlook for the Indonesian stock-market plunged to the lowest since the 2008 and 2009 global financial crisis.

Indonesia’s benchmark Jakarta Composite Index slumped 9.8 percent this year, the biggest decline in Asia, while the rupiah lost 8 percent, the region’s worst-performing currency after the Malaysian ringgit.

Chua expects the rupiah and the ringgit to continue to “remain vulnerable” as prospects of US interestrate increases draw near.

Bloomberg News

Singapore junk bonds gain most in Asean

BRITISH Prime Minister David Cameron (left) and Singaporean Prime Minister Lee Hsien Loong hold a joint news conference on Wednesday at the Istana, or Presidential Palace, in Singapore. Cameron is in the city-state for two days as part of his tour of Southeast Asia that will take him to Indonesia, Malaysia and Vietnam. AP

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UNK bond investors earned twice as much in Singapore as they did in Indonesia this year as private banks sought haven in more developed markets.

US dollar notes from the island have gained 7.9 percent so far this year, the best among regional peers, according to a Bank of America Merrill Lynch index. In Indonesia, Southeast Asia’s largest high-yield market, they gained just 3.2 percent, as PT Berau Coal Energy this month took the nation’s default tally to more than $3 billion over the past seven years.

Singapore speculative-grade notes are poised for their best year since 2012 as debt profiles improve and local millionaires prefer the comfort of a home market that boasts a “AAA” sovereign rating. The debt has proved resilient to wider turmoil in the region, as missed obligations rise in Indonesia and Malaysia’s prime minister is caught in a state investment fund scandal.

“The high-yield market has been supported by strong institutional demand, such as the private banks

which have recently set up offices here,” said Dexter Tan, an analyst at the National University of Singapore’s Credit Research Initiative unit.

“Credit profiles of local junk-rated listed companies have improved at a faster rate” than Asean peers.

The winners

CHIPMAKERS have led the charge.

Stats ChipPac Ltd.’s $611 million of notes due 2018 have returned 4 percent since December 31, rebounding from a December selloff after Moody’s Investors Service cut their rating twice. China’s Jiangsu Changjiang Electronics Technology Co. proceeded with a S$1.025- billion ($750-million) takeover in June and that triggered two bond redemptions.

In the same period, Global A&T Electronics Ltd.’s $625 million of notes maturing in 2019 have gained 9.1 percent. The company won a US lawsuit against some bondholders this month regarding a debt exchange transaction, after Moody’s lowered its rating three times since the action started in 2013, to the

ninth-lowest junk score.

“Special events drove those bonds higher due to potential takeovers and initial public offerings,” Clement Chong, a senior credit analyst in Singapore at NN Investment Partners, said. Concerns about Indonesia and Malaysia also aided Singapore’s debt market, he said.

Island of calm

THE island’s economy is showing weak spots. It shrank 4.6 percent in the second quarter on an annualized basis, the most since the third quarter of 2012, as manufacturing contracted. Still, it offers relative calm for investors making bets on speculative-grade assets, Tan at NUS said.

“There’s a lot of downside risk priced for Southeast Asian currencies in the context of a Federal Reserve rate hike later this year,” Tan said. The Singapore dollar has been partially protected by a stronger link with the US currency via the exchange rate mechanism, he said.

The local dollar has weakened 3.3 percent this year to S$1.37

versus the greenback, while the rupiah and ringgit were the biggest losers with a more than 8.1-percent slump, Bloomberg data show.

The average one-year probability of default for Singapore junk-equivalent companies slid by about 52 basis points, according to Tan at NUS. For other Asean firms, the gauge dropped by only about 30 basis points.

Investors in Singapore have prospered amid the 1Malaysia Development Bhd. financial fiasco and the Thai government’s fall to a military coup. The Philippines is electing a new president in May and Indonesia’s Berau needs to restructure $950 million of bonds after coal prices slumped. While domestic dramas in some Asian countries are unlikely to affect sovereign ratings in the next one to two years, they do reduce the likelihood of new structural reforms, Standard & Poor’s said earlier this month.

“They could also hurt the responsiveness of the governments to unexpected shocks,” the ratings company said. Bloomberg News

ASEAN

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LIBYA COURT SENTENCES QADDAFI SON TO DEATH B3-6 Thursday, July 30, 2015

The World BusinessMirror

Pollard to be freed; US analyst spied for Israel

IN this May 15, 1998, file photo, Jonathan Pollard speaks during an interview in a conference room at the Federal Correction Institution in Butner, North Carolina. Lawyers for the convicted spy Pollard say the US has granted his parole and he will be released in November. Pollard, sentenced to life in prison, has served 30 years for spying for Israel. AP

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ASHINGTON—Jonathan Pollard, the former US Naval intelligence analyst whose conviction of spying for Israel stoked fierce international passions, has been granted parole and will be released from prison in November after nearly 30 years.

The decision to free Pollard from his life sentence, announced on Tuesday by his lawyers and then confirmed by the Justice Department, caps an extraordinary espionage case after decades of legal and diplomatic wrangling. Critics have condemned the American as a traitor who betrayed his country for money and disclosed damaging secrets, while supporters have

argued that he was punished excessively given that he spied for a US ally.

Pollard is due to be released on November 21, three decades after he was arrested while trying to gain asylum at the Israeli Embassy in Washington. Though the Jewish American community has wrestled with how much leniency he should get, Israelis have long campaigned for his freedom. The government there has recognized him as an Israeli agent and granted him citizenship.

“We are looking forward to his release,” Prime Minister Benjamin Netanyahu said in a statement on Tuesday. White House officials strongly denied that the release was in any way tied to the nuclear deal recently reached with Iran, or that it was intended as a concession to Israel. Secretary of State John F. Kerry, who testified before Congress on the nuclear deal on Tuesday, told reporters Pollard’s parole was “not at all” connected. And Israeli officials have said that while they would welcome the release, it would not ease their opposition to the Iran agreement.

Though parolees are required for five years after their release to get government permission for foreign travel, Pollard’s lawyers say they intend to ask President Barack Obama to grant him clemency, as well as authority to leave the US and move to Israel immediately. AP

B L S. M

MRT Holdings Inc. (MRTH) Chairman Robert John L. Sobrepeña said his camp will not bow out without a fight, especially when the government blames his company for its supposed negligence in providing quality transport infrastructure to about half-amillion passengers per day.

“It is very clear that he is

misinformed. Everything he said is all twisted around,” he said in a phone interview, belying one by one Mr. Aquino’s public accusations.

In his last State of the Nation Address on Monday, President Aquino called on the public to blame the camp of Sobrepeña for mismanaging the assets of the MRT line, causing

numerous problems today.

Mr. Aquino said the private company failed to implement a general overhaul in 2008, and that the firm merely “painted” the trains to make them look new.

However, according to Sobrepeña, the company initiated such a venture. Sumitomo Corp., the MRT’s maintenance provider back then, was the contractor for the project.

“This was started in 2007 and fully completed in 2009. A General Overhaul Acceptance Report for each of the 73 light-rail vehicles was accepted and approved by the Department of Transportation and Communications [DOTC],” he said.

“The DOTC’s consultant, Systra Philippines, conducted an audit report in 2010 on the maintenance practices of Sumitomo.”

Not a news item

THER E A FTER , the transport agency favorably recommended

BANKS KEEP NPLs BELOW 2% OF TOTAL LOAN PORTFOLIO T B B C

HE local banking system continued to show consistency in the quality of their assets and loans, as their nonperforming loans (NPLs) remained low at the end of April.

In a report released on Wednesday, the Bangko Sentral ng Pilipinas (BSP) said the gross NPLs of universal and commercial banks represented only 1.96 percent of banks’ total loan portfolio in end-April.

NPLs are also popularly known as “bad” or “soured” loans, as these are the loans that borrowers have not repaid for more than 90 days after their original due date.

A lower NPL ratio is favorable, as it means that a bank is less susceptible to loan-quality erosion and most of its loan assets are healthy, with only a small percentage of bad loans.

The April print was practi-

cally unchanged, although a tad higher than the previous month’s 1.95 percent.

The loan-quality indicator has been below 2 percent since November last year.

In absolute terms, NPLs increased, mirroring the increase in the volume of total loan portfolio of big banks during the period.

In particular, the gross NPLs for the period was at P97.87 billion out of the total P5-trillion loans during the period.

Both of these indicators were higher in April compared to the gross NPL in March at P97.36 billion, with the total loan portfolio at P4.99 trillion.

“Across economic sectors, the NPL ratio also remained manageable. This was seen in financial and insurance activities; real estate; manufacturing; wholesale and retail trade; and electricity, gas, steam and air-conditioning supply, which C  A

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Libya court sentences Qaddafi son to death for 2011 killings

IN this image made from Associated Press video, former Libyan officials who served during Moammar Qaddafi’s era sit in the defendants’ cage during their trial for crimes committed during Libya’s 2011 uprising in a courtroom in Tripoli, Libya, on July 28. The court sentenced Qaddafi’s son, Seif al-Islam Qaddafi, who was not present inside the courtroom, to death by firing squad after convicting him of murder and inciting genocide during the 2011 civil war. AP

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RIPOLI, Libya—Moammar Qaddafi’s son and onetime heir apparent was convicted and sentenced to death on Tuesday by a court in the Libyan capital, Tripoli, on charges of murder and inciting genocide during the country’s 2011 uprising.

But Seif al-Islam Qaddafi is unlikely to face the firing squad anytime soon. The sentence was handed down in absentia because he remains in the hands of a militia in western Libya that has refused to hand him over for the past four years—yet another sign of the country’s bitter fragmentation since his father’s fall from power.

The uncertainty surrounding Seif al-Islam’s fate underlines both the weakness of the courts and the general chaos this North African nation has descended into, split between rival militias and governments while being threatened by an affiliate of the extremist Islamic State group, which has

benefited from the turmoil and captured some areas in Libya.

The same Tripoli court on Tuesday also sentenced to death eight other former regime officials, including former Libyan spy chief, Abdullah al-Senoussi, who is in custody in the Libyan capital, as well as foreign intelligence chief Abuzed Omar-Dorda and Qaddafi’s former prime minister, Baghdadi al-Mahmoudi.

The rulings can be appealed, and a defense lawyer in the case, Ali Aldaa, said he would challenge it before the Libyan Supreme Court. Another lawyer, Hussien Al-Sherif, described the verdicts as “very harsh.”

“We did not expect the sentences to be like this for the defendants, and there will be an appeal to the Supreme Court,” he said.

In London, al-Senoussi’s wife, Fatma Farkash, asserted that the Tripoli court didn’t have the authority to hand down the death sentence. “It was a big shock for me and my children. We were not expecting this. It was an ugly verdict,” she said. “Libya doesn’t have a functioning state, and it was a closed hearing.”

US-based Human Rights Watch said the trial was “undermined by serious due process violations,” and called on the Libyan Supreme Court to independently review the verdict.

“This trial has been plagued by persistent, credible allegations of fair trial breaches that warrant independent and impartial judicial review,” said Joe Stork, Human Rights Watch’s deputy Middle East and North Africa director.

“The victims of the serious crimes committed during the 2011 uprising deserve justice, but that can only be delivered through fair and transparent proceedings,” Stork said. AP

Villagers bulldoze 18th century Mexican chapel M

EXICO CITY—Mexican officials said on Tuesday they have filed a criminal complaint after villagers in the central state of Tlaxcala bulldozed a chapel from the 1700s. Arturo Balandrano, the head of the historical monuments for the National Institute of Anthropology and History, said he doesn’t know why people in the township of San Pablo del Monte tore down the Chapel of Holy Christ late Saturday and early Sunday.

“We don’t understand how a community that is eminently Catholic, that traditionally follows the rites of the Catholic Church, could have committed this barbaric act,” Balandrano said. Calls seeking comment were not answered at the diocese of Tlaxcala, the local parish in San Pablo del Monte or the municipal

government. Local media quoted villagers as saying the chapel was falling apart and describing it as not that old. The church building, like most in Mexico, is actually state property and is ceded temporarily to the Catholic Church to use for religious celebrations.

Destroying it, or any other historic monument, is punishable by prison terms of three to 11 years, Balandrano noted.

With 110,000 historic monuments and buildings to look after, authorities didn’t discover what had happened until it was too late, and the chapel had been bulldozed flat and the rubble cleared, he said.

The one-story Chapel of Holy Christ was originally built during colonial times by the Franciscan order and added on to in the 19th and 20th centuries.

It had a simply facade, two

squat bell towers, an arched nave and a small dome and its walls were almost a yard thick. Painted bright blue and yellow, the chapel stood in front a much larger, newer church that residents built about a decade ago in an exuberant mix of styles.

Balandrano said the chapel was not big enough for the community’s religious needs, but he denied it was falling down. “It was a solid building that wasn’t at risk. It had some small cracks, as all historic buildings have, but it wasn’t structurally at risk.”

Raul Delgado, who heads historic site protection for the National Arts Council, expressed dismay at the chapel’s destruction. Mexican towns and villages typically protect such simple but stately old historic structures fiercely, he said. “This is unheard of.” AP

WORLD

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EXERCISE NOT ONLY MAKES US FITTER, IT CHANGES OUR DNA, TOO

A DECADE OF GO NEGOSYO Go Negosyo Founder Joey Concepcion (center) and other advocates of entrepreneurship celebrate the 10th anniversary of the movement in a hotel in Makati City.

ALYSA SALEN

PHL eyes $300M from fuel-smuggling crackdown

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HEALTH&FITNESS

H E Ph i l ip pi ne s i s cracking down on fuel smuggling to help recover up to $300 million in lost revenue a year, money that the government has pledged to spend more efficiently ahead of the presidential election.

T he c u s tom s bu re au plans to revive this quarter a

PESO EXCHANGE RATES n US 45.5040

system to mark fuel products that have been taxed so as to identify smuggled goods, Commissioner Alberto Lina said. Separately, the government seeks to release this year P278.4 billion ($6.1 billion) of funds not spent in 2013 and 2014, Budget Secretary Florencio B. Abad said.

“We are doing whatever we can to curb smuggling,” Lina, 67, said in an interview in Manila on Tuesday. “It’s like we are in the fourth quarter of a basketball game. We’ll shoot and shoot” to get the score up, said Lina, whose term is set to end next June.

Will Luzon dams withstand a 7.2 magnitude quake?

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he Philippines is one of the countries in the world that are heavily dependent on dams for various purposes, such as irrigation, power generation, and the continuous supply of potable water to communities.

There are currently more than 20 dams all over the country. Most of these were

built more than 30 years ago, without the aid of modern engineering and technology.

“Ang kinakailangan natin ngayon ay comprehensive assessment para makuha natin iyong stability ng mga structures na matatanda. Kapag sinabi nating matatanda, more than 20 years old... [U]nfortunately, walang benefit ng geohazard

yung infrastructure natin—yung mga dams,” said Engr. Leo Jasarno, Director of the Mines and Geosciences Bureau.

The Angat, Mout Ipo, Bustos, and Pantabangan Dams are the four major dams in Central Luzon. The first three are located in Bulacan, while the latter is in Nueva Ecija.

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n JAPAN 0.3684 n UK 71.0454 n HK 5.8710 n CHINA 7.3282 n SINGAPORE 33.3730 n AUSTRALIA 33.3192 n EU 50.3229 n SAUDI ARABIA 12.1347 Source: BSP (29 July 2015)

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Thursday, July 30, 2015

Sobrepeña: P-Noy’s MRT 3 rant twisted Continued from A1

all of the extensions for Sumitomo’s maintenance contract for four times since its expiration in July 2010 up to October 2012.

During that time, the MRT Corp.

(MRTC) was handling the technical maintenance of the train system through the Japanese firm.

“The MRT 3 system was hardly a news item because of maintenance and train problems and had 20 trains running,” Sobrepeña recalled. “During the course of the maintenance of the MRT 3 system from 2000 to October 2012, MRTC dutifully maintained the entire MRT 3.”

According to Mr. Aquino, the government was “forced” to take over the upkeep component of the railway system in 2012 due to the company’s negligence in maintaining the line.

But this was denied by Sobrepeña.

It was his group that was forced to let go of the control of the train’s maintenance as the nominees from Land Bank of the Philippines and the Development Bank of the Philippines decided to entrust the upkeep of the line to the government.

The two government-owned banks have a combined 80-percent economic interest in the MRT.

Sumitomo’s contract was extended until October 19, 2012. But 12 days before the expiration of the contract, former MRT General Manager Al S. Vitangcol III informed the MRTC board that the government will no longer renew the contract of the Japanese firm, and instead took in PH Trams CB&T as the new provider.

“This is the same contract that is now the subject of the case filed by the Ombudsman indicting Vitangcol and the PH Trams officers,” Sobrepeña said.

When the government took over the maintenance of the train line, Sumitomo turned over $15 million worth of spare parts, which are enough to cover the MRT’s requirements for half a year.

“Since then, DOTC-appointed maintenance providers not only exhausted the six-month inventory but also did not purchase spare parts as required in their maintenance contracts. During Sumitomo’s time, they used 60 percent of their maintenance budget to purchase spare parts,” Sobrepeña said.

The 15-year-old mass-transit system, which ferries more than half-amillion passengers daily, has been in a state of decay. Passengers frequently complain of long queues caused by the

lack of light-rail vehicles. The public was also outraged by the MRT’s inefficient ticketing system, humid train cars, faulty elevators and escalators, and rude tellers.

Ready to drop the case

It is also not true that the temporary restraining order (TRO) issued by a Makati City court against the procurement of new train cars delayed the ex pansion project, Sobrepeña emphasized.

“There is no delay caused either by the TRO or the injunction order. The injunction was denied. It was paid, being constructed, so where is the delay there? There is nothing that hinders them,” he said.

Sobrepeña noted that he is willing to drop the case against the transportation agency that seeks to stop the government from adding 48 new train cars to the aging system—if and only if the state allows MRTH to conduct an audit of the train coaches.

“All we have been asking for is to be informed. In the agreement, we own the system. All we want is for them to consult us to make sure that the trains are compatible with the system. It can cause damage to the entire system; and even close it. As owners, we should know this,” he said.

The businessman clarified that his group will not be asking the government to fund the inspection trip.

“I would gladly drop the case immediately; all they have to do is agree and allow us to expect the trains,” Sobrepeña said. “We simply wanted our tech people to simply look at the trains and make sure that they are compatible. They are denying us that right.”

The case is now pending before the Court of Appeals.

His group wants to inspect the trains because of the questionable track record of Dalian Locomotive and Rolling Stock Co. “Dalian has never manufactured such trains. There are so many manufacturers who have made these kinds of train. Giving it to Dalian makes us a guinea pig,” the executive said. “Our fears are being confirmed because I heard that the prototype coming in are knocked down, or by parts. They are bringing in the bogies from Germany, the body from who knows where, other parts from who knows where.”

“All we want to do is to assure safety and compatibility,” Sobrepeña added.

Today, the rail line’s average daily ridership is already over 560,000, and its highest single-day passenger count is now at 620,000.

Banks keep Npls below 2% of total loan portfolio. . . accounted for 68.8 percent of the industry’s total loan portfolio in April,” the central bank noted.

Also, for smaller banks, NPL ratio was deemed to be “manageable” by the central bank, although noticably higher from the previous month.

Latest data from the BSP showed that the total NPL of thrift banks stood at 4.54 percent of the total thrift banks’ loan portfolio. Thrift banks recorded a 4.4-percent NPL ratio a quarter earlier.

The banks’ NPL rose by 7.56

percent to P27.29 billion in March from P25.37 billion recorded in end2014. Meanwhile, the industry’s total loan portfolio grew by 4.33 percent from P576.06 billion posted in endDecember last year.

The BSP noted that both banking

Continued from A1

segments were prudent enough to set aside “substantial” reserves for potential credit losses. The big banks’ reserves cover 139 percent of their gross NPLs in April, while thrift banks’ reserve can cover 74.96 percent of their total NPLs during the period.

news@businessmirror.com.ph

Vista Land. . .

Cuervo said in its study published late last year that property prices in the area may double in five years, with high-end residential lots reaching about P100,000 per square meter by 2019.

Based on data from the Bureau of Internal Revenue, the firm said land values in select high-end villages increased from as low as P14,000 per sq m in 2009 to as high as P62,000 per sq m in 2014.

The study noted the various infrastructure projects that would boost accessibility and connectivity between the Southern Manila West Growth Area and Metro Manila. These include the ManilaCavite Expressway, Slex-Daang Hari Road, Muntinlupa-Cavite Expressway and the CaviteLaguna Expressway.

One of the components of the Vista City include the Ecohub, which will have several office towers that will be devoted to commerce and the businessprocess outsourcing industry, and is expected to generate employment for residents of Las Piñas, Muntinlupa and nearby areas like Cavite and Laguna.

Located along Daang Hari South, the first phase of Ecohub, which covers 10 hectares, is already under way, while the University Town will be the future location of colleges in the south of the Metro.

The company still has to announce which school will transfer to its location, aside from the existing ones. Vista City’s commercial, retail and entertainment complex, called Evia, is also being expanded to cater to the needs of the office build-

Continued from A8

ings that it will construct.

Vista Land said it will launch new vertical and horizontal residential projects, which will cater to various income segments.

These are in addition to the company’s existing and ongoing projects for the high-end market.

Vista Land Chairman Manuel Villar earlier said the company will go into operating its own chain of hospitals, schools and memorial parks to serve the needs of its communities. These ventures will all start in Vista City and will then be recreated to its other developments.

“I want us to be sort of a one-stop shop. But there are still many components missing.

Eventually, we will have the full line of products,” Villar said.

The company has already started their hospital business in Vista City in Daang Hari, called VitaMed. “ We are starting small.

About 150 beds but expandable to 300 beds. It actually has unlimited expansion possibilities since we have a large property in Daang Hari,” he said. Villar added that they have partnered with doctors for the hospital business and they will be providing the medical services.

The hospital business will be under a holding company of the Villar family, which will also own the school business so that it will be distinct from Vista Land and All Value Holdings Corp., which owns their retail businesses.

The family’s school business, called Georgia School, is starting as a primary school, but Villar said they will keep growing it until they can start offering college courses.

The Nation BusinessMirror

news@businessmirror.com.ph

Editor: Dionisio L. Pelayo • Thursday, July 30, 2015 A3

Shabu price drops as competition among drug gangs intensifies—PNP exclusive

By Oliver Samson Correspondent

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HE price of shabu in the Philippines has dropped sharply due to the competition among the Chinese, African and Mexican drug rings, according to an AntiIllegal Drugs Special Task Force (Aid-STF) officer.

The Chinese drug cartel used to dictate its price, selling as high as P9 million a kilo, or P9, 000 per

gram, in recent years, until competition came, Philippine National Police (PNP) Chief Inspector Roque Merdegia Jr. said in an exclusive interview on July 29.

Its price, however, dropped by over half its previous rate, Merdegia added.

Citing intelligence reports, Merdegia said a kilo of shabu sells today at P1 million, or P1,000 per gram.

West African drug syndicate’s drugs were first detected by authorities moving around the country in 2010, according to the Aid-STF legal officer.

“It competes with its Chinese counterpart in terms of quality since laboratories had been set up in Africa.”

The smuggled Mexican’s Senaloan shabu, on the other hand, intensified the competition, according to Merdegia.

Its presence in the country was detected by authorities in 2012, competing in price as low as P750,000 a kilo, according to data gathered by the BusinessMirror. In December of 2013, a total of 84 kilos of Senaloan shabu were seized during a raid in Lipa, Batangas.

But, the Chinese drug syndicate smuggles the largest volume of shabu into the country, according to Merdegia.

“Based on intelligence reports, China remains the main producer of shabu in Southeast Asia. The size of smuggled drugs is still bigger than the locally produce since manufacturing it in the Philippines is more expensive.”

Dispatching the raw materials from sources overseas can be costly, aside from being risky of getting caught. Pirating it into the country as finished product does not only

the middle of the sea, according to Merdiega adding that contact fishing vessels come to raise the containers and haul them ashore.

A PNP survey in 2012 showed the number of Filipinos who use illegal drugs was 1.3 million. The number one choice remains shabu, followed by marijuana, and ecstasy. The competition among drug rings threatens to hook more young people to shabu as it becomes affordable, he said.

Meanwhile, the Chinese drug ring is honing individuals from an ethnic group to become producers of drugs in the Philippines, Merdiega added.

Court chides Catholic school for spoiling student’s dreams

China has grand domination plan on West PHL Sea –Justice Carpio

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HINA’S ongoing reclamation activities and its encroachment into the maritime territories of countries that lies within the South China Sea (West Philippine Sea) has been planned many years ago under a grand design of dominating Southeast Asia’s most important navigational waters, Supreme Court (SC) Associate Justice Antonio Carpio said on Wednesday.

Speaking at the forum for employees of the Department of National Defense, Carpio said the nine-dash line, which delineated Beijing’s maritime boundaries, spawned this expansive claims and encroached into the territories of Malaysia, Brunei Darussalam, Taiwan, Vietnam and the Philippines.

Carpio, who was among the legal minds behind the arbitral case brought by the country against China, said the nine-dash line eats up 85.7 percent of the whole South China Sea and threatened to rob the Philippines of about 80 percent of its exclusive economic zone.

“China does not need to explain the ninedash line, you just have to see what it is doing in the South China Sea: reclaiming,” he said, referring to the ongoing massive-reclamation activities in the seven reefs that it occupies, but falls within what is considered by Manila as part of its maritime territory.

In its reclamation, China is not only destroying seven reefs, but a total of 17 reefs as it has made 10 other reefs as sources of filling materials for its reclamation.

“China has damaged 10 other reefs for filling materials for the seven reefs that China occupies,” Carpio said.

The SC senior magistrate said the nine-dash line moved the boundary of China to 64 km away from Balabac in Palawan, 40 km away from the shoreline of Batanes and 70 km away from Burgos in Ilocos Norte.

He said bringing China to arbitration is the only available means to challenge Beijing’s expanded boundary, as past diplomatic efforts to bring the issue to “satisfactory results proved fruitless.”

The country cannot also challenge China militarily and cannot rely on its existing Mutual Defense Treaty with the US. “The country cannot invoke Mutual Defense Treaty, because disputed territory is out of scope,” Carpio said.

Carpio said the South China Sea was too important and very strategic for China, both economically and militarily.

“China want South China Sea as a sanctuary for its nuclear submarines free from the submarine-hunting Poseidon and US attack submarines,” justice said.

Beijing also wanted the international water for its fishing fleet, the largest in the world, and for its gas needs, being the largest importer of petroleum in the world.

Meanwhile, Navy spokesman Col. Edgard Arevalo said the government is closely watching China’s reclamation in the seven reefs, including Subi Reef, which has been identified as the “source of air challenges” against Philippine patrols in the West Philippine Sea. Rene Acosta

give the drug syndicates a chance to generate bigger profits, but also makes it easy to distribute.

However, a number of kitchentype laboratories in the country still manufactures shabu, Merdiega said, noting that its warehouse counterpart had been decommissioned by operators years ago.

Despite interceptions at air and sea ports, drugs can still penetrate through the porous shorelines in the country. Drug syndicates can transport them in cargo ships “legally from the point of origin.”

They unload the containers in

‘BEAUFIE’

This July 29 photo shows a fan (center) taking a selfie with (from left) Miss GLobal 2014 Fourth Runner-up Benazir Thaha of Sri Lanka, Second Runner-up Catherine Almirante of the Philippines, Reigning Miss Global Ela Mina of Canada and Third Runner-up Aizhan Lighg of Kazakhstan. The beauty queens were present at a news conference announcing the hosting of the Philippines of the Miss Global 2015 pageant on October 24 at the City of Dreams in Pasay City.

The pageant will gather candidates from across the world to compete in the search that highlights women’s individuality, poise, grace and wit. NONIE REYES

Comelec to decide on poll machines’ fate mid-August

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HE Commission on Elections (Comelec) will finalize the fate of equipment for the 2016 elections in mid-August, Comelec Chairman Andres D. Bautista said.

In a chance interview at the sidelines of a forum by the Management Association of the Philippines, Bautista said the Comelec will open the financial bids for the refurbishment of the Precinct Count Optical Scan (PCOS) machines on August 1.

“After that, we have to weigh options because we are also having the the lease of new OMR [optical mark reader] machines at the same time.

Time is of the essence; we need to make a decision by August 15,” Bautista said.

The Comelec has been in a state of indecision on these options: to lease the new 70,977 OMR machines, or refurbish 6-year-old 81,896 units of the PCOS machines. The agency has been mulling factors, such as costefficiency and voter usability of the two automated-voting systems.

The delay in Comelec’s preparations was due to an earlier petition in the Supreme Court (SC) by civic groups, questioning the legality of the PCOS repair deal.

The deal had already been awarded by the Comelec to Smartmatic Total Information Management Corp. under the watch of former Comelec Chairman Sixto Brillantes Jr. The deal was later nullified by the SC. The timeline was further derailed after the Comelec started bidding anew the refurbishment of PCOS machines. The first round of bidding failed after the contract bid was reduced by the Comelec from P2.8 billion to P2.0 billion.

The budget was then jacked up to P3.1 billion for the second round of bidding.

Both options are undergoing their own bidding process. The leasing of the OMR machines are undergoing post-qualification analysis, while the financial bids for the repair of the PCOS machines will be opened on Saturday.

With the new timeline, Bautista hopes the preparations can now gain headway.

Only two prospective bidders, Smartmatic and Korean firm Miru Data Systems Inc., have bought bid documents for the PCOS machines repair deal, according to Bautista.

But there is “plenty of time”—two days—for interested parties to join in, he added. Only Smartmatic is bidding for the lease of the 70,000 OMR machines deal.

“There were six who bought bid documents, two who submitted financial bids and one was disqualified. So only Smartmatic is left.

They’re undergoing post qualification for the technical aspect of the bid,” Bautista said.

Regardless of whether the PCOS machines or the OMR machines will be the chosen option for voters, either option will have to be supplemented with an additional 23,000 OMRs, which may also be awarded to Smartmatic by the end of the month.

The additional OMR machines deal is facing a motion for reconsideration, so no notice of award has been signed yet. Bautista said they may tentatively award the contract by the end of July.

According to Bautista, the difference between the two options is about P2.5 to P3 billion, with the more expensive option being the lease of the new OMR.

N its decision on July 28, the Court of Appeals (CA) chided the Santo Niño Parochial School (SNPS) for denying the request of its alumna for a Certificate of Good Moral Character.

“Krisel [Mallari], just like any other child, commits transgressions and therefore, must be disciplined. However, the manner by which she is disciplined should not go to the extent of spoiling or destroying her dreams and aspirations,” the CA pointed out.

“Certainly, the unreasonable nonissuance of the Certificate of Good Moral Character, which apparently appears to be an act of vengeance, adversely affects the bright future awaiting Krisel,” it added.

In an eight-page resolution penned by Associate Justice Socorro B. Inting, the CA’s Second Division granted on Tuesday the plea of Mallari for the issuance of a writ of preliminary mandatory injunction to compel SNPS to release the certificate. Mallari needs that document to be able to qualify for admission in the University of Santo Tomas’s (UST) accountancy program, where she already has a reserved slot.

The appellate court noted that UST will start its classes next month, thus, it is necessary for the school to immediately release Mallari’s Certificate of Good Moral Character.

In her petition filed before the CA, through Public Attorney’s Office chief lawyer Persida

Acosta, Mallari and her father Ernesto said the continued refusal by SNPS to release her Certificate of Good Moral Character is “unjustified.”

The CA, in siding with Mallari, said SNPS’s nonissuance of Mallari’s Certificate of Good Moral Character is “unreasonable” and shows the school’s “chronic lack of concern to a child who it has reared for 11 years under its care.”

“Krisel’s welfare is of paramount interest and of primordial consideration, and the State is mandated to act on her behalf to ensure that her rights are protected, and her dreams and hopes are not put to waste,” the CA added.

The Court did acknowledge that Mallari’s actuations during the graduation rites on March 21 has created doubts on the credibility and integrity of the school.

However, it stressed that it is sufficient to justify the withholding from Mallari the certificate.

“Krisel is entitled to the fundamental freedom to express one’s views and opinions without undue restraint. Krisel should not be punished arbitrarily for exercising her right to freedom of expression,” the CA explained.

Mallari became controversial after a video of her graduation speech showing her criticizing the school “for its dirty and dubious” system went viral in social media.

School officials cut short her speech and forced her to leave the stage. Joel R. San Juan

With warrant, suspect in Olongapo lass’s murder faces arrest in Alaska

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LONGAPO CITY—Jonathan Dewayne Ciocon Viane, one of two suspects in the abduction and gruesome killing of a 23-year-old girl from this city, faces arrest in Alaska where he fled on Monday.

In a news conference on Tuesday morning, Mayor Rolen Paulino said law enforcers in the United States who have been monitoring Viane’s movement, would need a warrant of arrest “so they can pounce on the suspect and have him extradited to the Philippines.”

He added that he has been coordinating with back channel contacts from the US Fugitive Services, but the said cooperation was strictly informal without a warrant of arrest.

Presiding Judge Consuelo AmogBocar of the Regional Trial Court Branch 71 in Iba, Zambales, issued the warrant for the arrest of Viane, a 29-year-old Filipino-American and resident of Subic, Zambales. The warrant also covered his alleged accomplice Niño de la Cruz, reportedly a former worker at the Hanjin shipyard in Subic.

Viane and de la Cruz are wanted for the murder of Karieces Mojica, who was found dead in San Felipe, Zambales, early Saturday morning.

But, according to Paulino, Viane fled on Monday by taking EVA Air Flight BR 272 to Taipei with a connecting flight to the US.

“He’s now headed to Alaska,” Paulino said on Tuesday.

Paulino earlier expressed frustration over procedural bottlenecks that he said has allowed Viane, the primary suspect in the murder, to slip out of the country two days after allegedly committing the crime.

Police reports said initial investigations showed Viane met with Mojica at a gasoline station in Olongapo on the night of July 24 to resolve a spat. Viane reportedly suspected Mojica of feeding information to Viane’s US-based wife, who was Mojica’s friend, regarding his treatment of their four-year-old son in his custody.

The following day, two farmers from San Narciso town in Zambales, found Mojica’s body at the Santo Tomas river dike in San Felipe, Zambales, about an hour’s drive away north of Olongapo.

The police said the victim bore three gunshot wound on the head, and that her torso was partly burned. Her hands were bound with black plastic strap and a bonnet covered her face.

Investigators also recovered three spent shells and two slugs from a 9-mm hand gun at the crime scene.

Paulino also announced on Tuesday that he has put up a P50,000 ($1,098.19 at current exchange rate) reward money for any information leading to the arrest of de la Cruz, who is believed to be hiding. Henry Empeño

Senator welcomes relaxation of deadline for errant firms S EN. Bam Aquino, chairman of the Committee on Trade, Commerce and Entrepreneurship, welcomes the decision of the Securities and Exchange Commission (SEC) lifting the deadline for delinquent corporations to appeal its orders of revocation or suspension.

The policy change of the SEC is

attributed to the proposal of the SEC to amend the Corporation Code and allow perpetual term for corporations, among others.

Aquino, principal sponsor of the bill amending the Corporation Code, however, stressed that the SEC should likewise include in the relaxation of its rules to those cor-

porations which have pending and decided cases in their favor to extend its corporate terms, as this is also part of the proposed amendments spearheaded by the SEC. “In fact, in the last Technical Working Group, all the stakeholders have agreed to this proposal by the SEC,” he said.

Aquino said he also agrees with SEC Chairman Teresita Herbosa when she stated that this move of the SEC is in line with the government’s goal of easing requirements of doing business in the country.

But “the SEC should be able to relax its rules, as it has previously done in other cases, to en-

able business to thrive instead of singling out companies with huge investments,” Aquino said in a statement.

Additionally the nephew of President Benigno Aquino III has called on the SEC to be extra vigilant in monitoring investment schemes that has recently hit the news.

“The SEC as part of its regulatory function should focus its resources in running after those who are doing illegal activities targeting the masses, who not only has limited resources to spare, but are heavily hit economically by these schemes instead of aiming on legitimate businesses.”

Economy

A4 Thursday, July 30, 2015 • Editors: Vittorio V. Vitug and Max V. de Leon

ERC to implement CSP in phases, Monsada assures

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epartment of Energy (DOE) Officer in Charge Secretary Zenaida Monsada stressed on Wednesday that the Energy Regulatory Commission (ERC) will implement the Competitive Selection Process (CSP) on a phase-byphase basis.

“Basically [it’s] a policy directive, the implementor is the ERC. The allowable middle ground is mandatory, but there was no said effective [date]. It’s up to ERC when to make it mandatory.... A lot of the [policies] will be implemented in phases,” Monsada said on Wednesday at the sidelines of the National Geothermal Association of the Philippines Conference held at the Marco Polo Hotel in Pasig City.

Under the CSP, distribution utilities or electric cooperatives are no longer allowed to enter into bilateral negotiations, which forces them to contract power through trading at the Wholesale Electricity Spot Market or the aggregation of power demand.

She said the ERC was already discussing the implementation timeline for the policies in CSP, while the guidelines would likely be completed this year.

However, Monsada noted that it would still depend on the result of consultations conducted by the ERC, which is also scheduled the submission for comments on the policy until the end of the month.

She also said some generation companies were glad with the CSP circular.

Monsada further stressed the policy should be pushed, since the tight power supply situation was only temporary and would likely end with the many generation companies building power plants.

Meanwhile, she said some electric cooperatives might not fully list its full capacity under CSP yet, as they are awaiting the guidelines from the ERC. PNA

DPWH sweetens procurement, award processes

By Lorenz S. Marasigan

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XPECT faster procurement process for projects under the Department of Public Works and Highways (DPWH), the agency’s chief said, as it moves to sweeten its bidding rules.

Public Works Secretary Rogelio L. Singson said he has ordered the Bids and Awards Committee (BAC) in all regional and district engineering offices to no longer compel bidders to submit at least three requirements during the opening of bids for eligibility processing.

He listed the three as: the Contractor Registration Certificate, Contractor’s Information, and Class “A” documents enumerated in Section 23.1 of the Implementing Rules and Regulations of Republic Act 9184, or the Government Procurement Reform Act, as part of the technical envelope.

“This development was a result of the updates in the DPWH Civil Works Registry, or CWR, which provides a computerized database of contractors being used for objective, standardized, transparent and efficient processing of interested contractors for the DPWH civil works contracts during the eligibility process conforming to existing laws and regulations,” Singson said.

The database is being used to register contractors and determine their eligibility to bid for a project they intend to participate in.

In the updated CWR, the DPWH BAC can now view the contractor’s authorized liaison officer through the CWR’s contact person verification function. This will prevent unauthorized submission of bids by some unscrupulous individuals posing as contractor’s representatives or liaison officers.

BusinessMirror

news@businessmirror.com.ph

Agencies commit to fast-track RE project applications in Mindanao

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N a bid to push for cleaner and greener energy sources in Mindanao, key regional government agencies involved in the grant of permits to renewable-energy (RE) projects have expressed commitment to accelerate processing and updating of RE project applications in the region.

This commitment was obtained during a recent regional rounds made by the Mindanao Development Authority (MinDA) to provide operational updates on the implementation of the One Stop Facilitation and Monitoring Center (OSFMC), a Web-based portal for tracking RE applications in Mindanao.

Desktop computer sets with built-in software that will allow for effective monitoring of all pending RE project applications in Mindanao were turned over to the Department of Environmental and Natural Resources-Environment Management Bureau (DENR-EMB) Regions 10 and 12, and the National Commission on Indigenous Peoples (NCIP) Regions 9, 10 and 12 in simple ceremonies

from July 14 to 23 at their respective offices.

“Through these computer units provided by the USAID B-LEADERS Project for this initial batch of regional agencies, there would be a dedicated facility with access to the OSFMC Web portal that consolidates the data of all RE applications in Mindanao,” said Romeo Montenegro, director of the investment promotions and public affairs office of MinDA. Launched in October last year, the OSFMC Web portal was designed to effectively monitor and update the status, as well as facilitate the speedy processing of pending RE project applications in Mindanao.

As part of the government response to the 2012 Mindanao Power Sum-

mit recommendations, the portal was established through MinDA in partnership with the Department of Energy (DOE) and the US Agency for International Development (USAID)’s B-LEADERS or Building Low Emission Alternatives to Develop Economic Resilience and Sustainability Project.

“OSFMC’s Web portal will help track the RE project applications though a monitoring system that includes real-time status updates for partner government agencies and project stakeholders,” Montenegro explained.

Created through the Mindanao Power Monitoring Committee (MPMC), the OSFMC was a mechanism established to speed up the approval of application permits for RE power projects in Mindanao. Its operations hub was opened to public in May this year and is currently housed at the MinDA office.

Last year MinDA, DOE, DENR, NCIP, the Department of Agriculture, the Department of Agrarian Reform and the National Water Resources Board entered into an agreement for the implementation of the OSFMC. The MPMC, on the other hand, was created in July 2012 through Executive Order 81, as a committee tasked to coordinate the efforts of the national, regional, and local

governments and power industry stakeholders to improve Mindanao’s power industry.

MinDA and DOE co-chair the MPMC composed of the Energy Regulatory Commission, the National Electrification Administration, the National Power Corp., the Power Sector Assets and Liabilities Management Corp., the Mindanao Electric Power Alliance, the Association of Mindanao Rural Electric Cooperatives, National Transmission Corp. and the National Grid Corp. of the Philippines (NGCP).

Currently, there are 290 pending RE power project applications in Mindanao with a potential combined capacity of 2,998.09 megawatts (MW). Out of the total power-project applications are 242 hydropower projects with a combined potential capacity of 2,147.71 MW. Also in the pipeline are 28 solar-energy projects with a combined potential capacity of 427.25 MW; 12 biomass energy power projects with a combined potential capacity of 144.65 MW; and eight geothermal energy power projects with a combined potential capacity of 278.48 MW. “Once these projects are completed and start generating power, we can expect a more diversified and balanced energy mix in Mindanao in the coming years,” Montenegro said. PNA

25,000 sign up for Meralco’s prepaid electricity billing service

By Lenie Lectura

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he Prepaid Retail Electric Service (PRES) of the Manila Electric Co. (Meralco) has so far signed up 25,000 interested users and the utility firm vowed to activate a total of 10,000 prepaid meters by end of this month.

“As of July 26, we have a total of 25,000 applications. We have already activated 8,017 customers and the target is to breach the 10,000 mark by end of July,” said Alfredo S. Panlilio, Meralco senior vice president.

PRES is being offered on a voluntary basis. To avail, a customer may go to any of Meralco’s business centers and pay an initial consumable load of P200.

PRES customers may purchase load in denominations of P100, P200, P300, P500 and P1,000. The customer will receive a top-up confirmation from their mobile phones.

If existing Meralco subscribers want to shift to prepaid electricity, no meter charge will be collected from them.

On a daily basis, PRES customers will receive a free SMS informing them of their remaining prepaid amount. The customer will also receive a warning via SMS three days before estimated depletion of load and disconnection.

Based on PRES rules, customers will be allowed to experience PRES on a trial basis for six months.

Thereafter, they may continue to avail themselves of the PRES or revert to postpaid.

“The customer behavior of the first 8,000 customers that we saw is that they load four to five times a month. Fifty percent of them reload in the denomination of P100,” said Panlilio, adding that 70 percent of the load transaction was done through e-load via their mobile phones.

The service is initially available in some parts of Manila, Cainta, Quezon City, San Juan, Caloocan, Pasig and Cavite.

The utility firm was given the green light to roll out 40,000 electricity meters, which Meralco had wanted to finish by end of the year,

Boom area in QC An overhead crane raises a block of concrete as workers install steel bars to serve as concrete posts of an emerging highrise building under construction along Epifanio de los Santos Avenue near North Avenue in Quezon City. PNA

at the latest.

Anticipating a huge demand for prepaid electricity service, Meralco asked the Energy Regulatory Commission (ERC) to authorize another 100,000 meters for households interested in the service.

Its application, however, is still pending with the agency. Meralco needs to file for approval of meter purchase and installation before it can roll out the service across its franchise area.

“We filed for another 100,000 meters with the ERC. That forms part of our capex [capital expenditures] filing for this year,” Panlilio had said. The utility allotted $7 million in 2012 for the deployment of the service, covering technical and commercial tests, as well as the commercial rollout for the 40,000 meters.

It tapped General Electric Co. as the system integrator for the advanced metering structure of the service; Orga Systems for billing operations, and Ecologic Analytics for the meter data-management system.

The prepaid service offering will enable customers to budget their electricity consumption. The system also informs consumers if they need to reload immediately to avoid disconnection.

Lawmaker urges DOTC to probe burning of Comet e-jeep in QC CASTELO: “The riding public has the right to know the reasons behind the burning of the vehicle.”

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ep. Winston Castelo of the Second District of Quezon City has urged the Department of Transportation and Communications (DOTC) and the Land Transportation and Franchising Regulatory Board (LTFRB) to investigate the recent burning of a Comet e-jeep along Katipunan Avenue in Quezon City.

In House Resolution 2109, Castelo said there is a need to temporarily suspend the operation of the e-jeep until the cause of burning is determined.

Castelo said the DOTC and LTFRB should determine the real cause why the e-jeep blew up in flames while traversing Katipunan Avenue on May 12.

“The riding public has the right to know the reasons behind the burning of the vehicle,” Castelo said.

Castelo added that the probe should focus on e-jeep’s promise of environmental safety and the safety of the passengers and the determination of the real cause of the incident.

The Global Electric Transport (GET), the company that owns the Comet e-jeep fleet now plying Quezon City streets, said the driver and the payment-system operator tried to put out the fire with the vehicle’s fire extinguisher but the flames continued to engulf the e-jeepney.

“The statement of an unnamed GET officer that the e-jeep caught fire on its own poses alarm and concern,” Castelo said.

Castelo said GET should conduct an inspection of its fleet to determine why one of its units caught fire and exploded. The US-based Pangea Motors, the manufacturer of the e-jeep, should send its engineers to help in the investigation, Castelo said.

The 16-passenger Comet ejeepney is powered by a 30-kilowatt, 150Nm motor that makes use of lithium-iron phosphate batteries. This electric vehicle is said to have the ability to travel up to 100 kilometers on a four-hour electric charge with top speed of 60 km per hour.

briefs no disruption of mrt, lrt operations on thursday’s earthquake drill

Railway operations will not be affected by the Metro Manila Earthquake Drill on Thursday although personnel of the Metro Rail Transit Line 3 (MRT 3) and the Light Rail Transit (LRT ) Lines 1 and 2 will participate in the drill, the Department of Transportation and Communications (DOTC) said in a news statement release.

The LRT 2 Depot in Santolan will also serve as one of the evacuation camps for the East quadrant, where mock exercises will be held, the department added.

Apart from observing the 45-second “duck, cover and hold” procedure once sirens sound off tomorrow, the DOTC employees and its attached agencies will be implementing measures to ensure the safety and welfare of passengers, if and when the “Big One” strikes.

For the past weeks, airport personnel have been conducting tabletop exercises for earthquake protocols.

The DOTC said the Manila International Airport Authority will distribute information-campaign materials to passengers at all the Ninoy Aquino International Airport terminals although airline operations will not be interrupted.

The Philippine Coast Guard (PCG) Manila Team will deploy one search-and-rescue vessel, 50 rescue personnel, five rubber boats, medical teams and divers during the drill exercises. The Philippine Ports Authority Offices and Manila Port Operators will also participate in the drill and assure passengers that minimal interruption in port operations will be felt. PNA

MGB ENGINEERS LEARN FROM AUSTRALIAN EXPERTS

Filipino mining engineers from the Mines and Geosciences Bureau (MGB) recently completed a nineday training on design monitoring and closure of tailing storage facilities (TSFs).

The training, held from June 15 to 24 at the Central and Regional Offices of the MGB, was facilitated by the International Mining for Development Centre, an agency established by The University of Western Australia and The University of Queensland, in partnership with the Australian government through the Australian Aid initiative.

The MGB is the government’s main regulatory agency in mining. It conducts assessment of TSFs used by mining companies in their operation. The MGB grants permit to mining companies, including the use of constructed TSFs and has the power to issue stop order upon assessment of the integrity of such facilities.

According to the MGB’s Mine Safety, Environment and Social Development Division, the training aims to enhance the capacities of MGB technical personnel in assessing the stability, monitoring and performance, management of environmental impacts and closure plans of tailing storage facilities.

During the training, participants learned and had a basic understanding of the dam types, foundation and construction, geotechnical investigations, laboratory testing, design process for new and existing dams and associated upgrades, as well as operational issues, monitoring and decommissioning. Jonathan L. Mayuga

Economy BusinessMirror

news@businessmirror.com.ph

Thursday, July 30, 2015 A5

Palace expects passage of P3-T 2016 budget bill even without pork

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By Butch Fernandez & Jovee Marie N. dela Cruz

alacañang expressed confidence on Wednesday that Congress can pass the Palace-proposed P3-trillion budget bill for next year even without the pork barrel, as professed by Budget Secretary Florencio B. Abad, when most lawmakers need to tap available funding for public projects seen to boost their campaigns for various posts at stake in the 2016 elections.

Communications Secretary Herminio B. Coloma Jr. pointed out that the annual budget bill sailed through Congress the past four years sans the pork barrel, also known as the abolished Priority Development Assistance Fund (PDAF) for senators and congressmen, that critics claim had only been renamed.

According to Coloma, there was an earlier agreement between the Executive branch and Congress leadership “on the imperative of need to enact the 2016 national budget in a timely manner, just as it had been enacted for the past four years.”

“We trust that our lawmakers are responsive to the public clamor for timely budget approval,” Coloma added.

Not pork-free

A party-list lawmaker, meanwhile, said President Aquino will still be given a wide latitude to force the accumulation of “savings” in a manner similar to the unconstitutional Disbursement Acceleration Program (DAP) under the 2016 national budget.

Rep. Terry L. Ridon of Kabataan Party-list, citing the proposed 2016 P3.002-trillion national budget submitted by the Department of Budget and Management (DBM), scored Abad’s assurance that the administration’s final budget proposal is “pork-free.”

“A cursory reading of the P3.002-trillion national budget proposal reveals that the provisions on the redefinition of savings and augmentation that have been first inserted in the 2015 General Appropriations Act have all been carried over to the 2016 budget proposal,” Ridon said.

According to the 2016 National Expenditure Program, the DBM estimates that the government will be able to generate some P67.5 billion in savings next year.

The lawmaker said that in Section 63 of the General Provisions of the 2016 proposed budget, it is stated that “savings may be declared when there are balances of any programmed appropriations” resulting from the following:

Discontinuance or abandonment of a PAP (program, activity or project) by the head of agency concerned for justifiable causes not attributable to the fault or negligence of the agency and which will render it impossible to implement said PAP in FY 2016;

Noncommencement or the inability of an agency to obligate an allotment for justifiable causes not attributable to the fault or negligence of the agency and which will render it impossible to implement said PAP in FY 2016;

Improved systems and efficiencies in the implementation of the PAPs and delivery

German traders: Now is right time to invest in Philippines

By Catherine N. Pillas

G

erman businesses in the Philippines perceive the economic environment in the country as optimistic, but cites hurdles hampering competitiveness.

This is according to the Asean Business Climate Survey conducted by the network of German Chambers of Commerce in the region.

The German-Philippine Chamber of Commerce Inc. (GPCCI) recently conducted the local edition of the survey, and found that 46.67 percent of the 60 respondents rated the overall economic environment of the Philippines as “good.”

This tied with an equal number of respondents rating the economy as “satisfactory,” while only four respondents perceive the overall economic climate as “bad.”

The survey measured German companies’ business confidence, growth expectations, and investment sentiment in the Philippines.

A separate part of the survey queried companies on specific indicators of their performance.

According to GPCCI, respondents are mostly from the manufacturing sector, mainly from the machinery, automotive, electrical equipment, chemical and food industries, as well as some sectors in the services sector (health, logistics and engineering).

Another notable feature is that half of the respondents, or 50.85 percent, see the economic setting as progressively getting better since the last survey in 2014.

Certain areas of concern, however, was raised in the survey.

“Now is the right time for German companies to… invest in the Philippines or extend their business. There are still bureaucratic hurdles and tax burdens making it difficult at the moment to decide for the Philippines. However, the European companies trust in the Philippine government to level the playing field with regards to the other Asean member countries,” said Dr. Bodo Goerlich, GPCCI president, in a statement.

Aside from the tax burdens, the GPCCI head also said that in terms of policies and regulations, trade barriers to imports are also hurdles for German companies.

The outlook of German companies in the Philippines mirror that of the region as a whole, as German businesses in the Asean region judge the current overall economic situation also satisfactory.

Only 17.0 percent of the respondents rated the overall economic situation as bad and 27.0 percent of the respondents rated it as good.

Compared to 2014, the percentage of respondents rating the economic situation as bad has increased by 4 percentage points and respondents that rated it as good decreased from 32.6 percent in 2014.

These numbers also indicate that the overall economy situation is seen weaker compared to 2014.

A common concern to Asean nations in view of the upcoming economic integration at the end of the year is labor mobility, according to the survey conducted by the seven German Chambers of Commerce and Industry in the Asean region who have formed the German Asean Chamber Network (Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam).

of services which are consistent with their performance targets;

A lower contract cost than that provided in the approved budget for the contract;

Unused personnel services costs pertaining to (i) unfilled, vacant or abolished positions; (ii) nonentitlement to allowances and benefits; (iii) leaves of absence without pay; and (iv) death of pensioners, decrease in the number of retirees, or other related causes.

The lawmaker also said that Section 64 of the 2016 budget proposal states that augmentation refers to “the act of the constitutional officers authorized to use savings in their respective appropriations to cover a deficiency in any existing PAP within their respective offices.”

A deficiency in a PAP may result from unforeseen modifications or adjustments in the PAP; or Reassessment in the use, prioritization and/or distribution of resources, he said.

At a Palace briefing, Palace Spokesman Edwin Lacierda also sought to play down former Sen. Panfilo Lacson’s disclosure that some administration allies in Congress were allowed to identify pet projects for funding in the 2016 national budget even before it was submitted for legislative approval, in what was seen as a revival of the discredited pork-barrel system.

“I have no information on that point,” Lacierda told reporters. “Secretary Abad mentioned that there is no pork in the 2016 proposed budget.”

Lacierda noted that the entire P3-trillion 2016 budget is not going to be spent only by the Aquino administration, explaining that half of that will be inherited by the next administration that will assume office on June 30.

“So, hindi lang ito budget ng gobyernong ito. Ilalatag na po natin ang budget para sa susunod na administrasyon, at doon sa susunod na administrasyon may magbabago ring mga kongresista dahil magbabago lahat po ’yan e, so hindi po ’yan ano... ito.… This is really a budget to ensure good governance beyond 2016,” Lacierda insisted.

Malacañang scrambles to correct Sona ‘omissions’

M

oving to correct what was criticized as major “omissions” in the President’s State of the Nation Address before Congress on Monday, President Aquino made up for it by including the longpending Freedom of Information (FOI) bill among priority measures he wants passed in the budget message he sent on Wednesday to Senate President Franklin M. Drilon and Speaker Feliciano Belmonte Jr. reminding Congress leaders about the long-pending FOI bill.

Seen as a linchpin that will boost the Aquino administration’s anti-corruption campaign, the Palace came under fire following Mr. Aquino’s failure to cite the FOI among the administration’s priority bills in his final Sona.

“Doon po sa budget message na sinubmit kahapon at nakaaddress din po sa buong Kongreso, specifically mentioned po ni Pangulo iyong Freedom of Information bill,” Coloma said in a radio interview with former Sen. Orlando Mercado.

Coloma recalled that when the current session of the 16th Congress convened, the FOI was already included in the priority list that the Aquino administration submitted to the Senate and the House of Representatives for early approval.

“Si Speaker Belmonte po, doon sa kanyang talumpati sa pagbubukas ng session ng Kamara, sinabi po din niya na ito ay kasama sa priority agenda ng House of Representatives,” Coloma said. “Kapag Speaker na po mismo ang nagsabi ibig sabihin ay may prayoridad iyan sa pag-i-schedule kung kailan tatalakayin at iyon din naman po ang pakay ng pagsa-submit ng priority list—para i-call attention.”

He added: “Kung iyon pong kino-call attention ginawa na nga po iyong kanilang dapat gawin na ang pagpapahalaga, dapat naman po maunawaan ng ating mga kababayan na sumusunod lang tayo sa proseso ng pagsasabatas at iyong palagi po nating pinapaalala din habang inaantay pa po natin iyong pagbuo ng Kongreso ng isang batas, tinutupad na po at isina-kongkreto na ng ating pamahalaan ang mga manipestasyon ng Freedom of Information.”

Coloma noted that the Aquino administration, while awaiting approval of the FOI, had earlier made sure it would be easier for the public to obtain information on government transactions from open web sites put up by the government itself.

“Siguro po masasabi natin na ngayon po ay mas mabilis na makakuha ng impormasyon sa pamamagitan ng iba’t-ibang web site, meron po tayong patakaran tungkol sa open, transparent and accountable government at iyon pagiging transparent po kasama na sa performance-based incentives ng ating mga kawani sa pamahalaan. Hindi pupuwedeng ng insentibo kung hindi po tumatalima sa mga norms of transparency,” he said. Butch Fernandez

Opinion BusinessMirror

A6 Thursday, July 30, 2015

editorial

Erdogan’s wars

A

bove all else, collective security requires solidarity. So North Atlantic Treaty Organization (Nato) ambassadors were correct to keep the focus of Tuesday’s extraordinary meeting about Turkey squarely on the need to fight terrorism “in all its forms and manifestations.” It’s doubtful, however, that prosecuting members of Turkey’s parliament is what they had in mind.

No sooner had the Nato issued its statement of support for Turkey than Turkish President Recep Tayyip Erdogan demanded that immunity from prosecution be revoked for members of the pro-Kurdish Peoples’ Democratic Party. This followed the ban of a scheduled “peace march” in Istanbul by the same pro-Kurdish party, and the blocking of several Kurdish and opposition news web sites.

The conclusion is hard to avoid: Erdogan’s war on terror is ensnaring not just Islamic State (IS) militants but also an opposition party he’s eager to see returned to the fringes of Turkish politics.

The June elections—the first time a Kurdish party has crossed the 10-percent threshold necessary to enter parliament—represented an opportunity for Erdogan to consolidate multiparty democracy with Kurdish representation and to end the conflict with Kurdish separatists that has been simmering since a 2011 cease-fire. It also reflected voters’ growing intolerance of corruption, the erosion of civil rights and a slowing economy. Erdogan may be betting that a war footing will push voters into a more conservative mind-set, knocking the Kurds out of parliament altogether and, via snap elections, delivering him the majority he was denied the first time around.

The danger of this strategy is that it will hurt Turkey’s democracy and economy more than IS. Markets may not like the nastiness across Turkey’s borders, but they hate the prospect of domestic political upheaval and violence. The Turkish lira is near its all-time low, while 10year bond yields reflect high levels of uncertainty.

All of this puts Turkey’s allies in an uncomfortable spot. Turkish air power in Syria provides a welcome, and overdue, fillip to efforts to defeat IS—as does Turkey’s decision last week to allow US forces to use its air bases. And despite continued differences between the US and Turkey over aims in Syria, the agreement to create a de facto “safe zone” along a 60mile stretch of the Turkish border with Syria is progress. Such a strategy could help thwart IS recruitment efforts and disrupt a key channel through which newly trained terrorists are dispatched to Europe.

If Erdogan wants the world to think of him as a reliable partner, this is the kind of thing he should be doing. He might also want to work more closely with Egypt, Jordan and Israel in fighting IS. But world leaders must walk a fine line. Erdogan has made clear that he views the Kurdish terrorist organization PKK as serious a threat as IS. Domestically, he seems to view Kurdish parties as the political extension of the PKK. This is a mistake.

Erdogan may be betting that his usefulness to Nato and the US will damp criticism of what amounts to a sweeping crackdown on Kurdish interests. The allies were right to stand behind Turkey in the war on terror. But Erdogan must know that his gambit risks not only a sectarian war within Turkey, but also the country’s democratic progress. Bloomberg editorial Since 2005

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Resetting the stock market to normal John Mangun

OUTSIDE THE BOX

I

f you were in hibernation since early 2009 and just woke up, you might be pleasantly surprised.

Crude oil prices have not changed much since you dozed off.

The US unemployment rate is below what it was when you crawled into your bed. The US dollar is stronger today than in 2009.

Most of the major global economies are actually doing better today than when you started sleeping, and global stock markets have gone through the roof.

If so, then why do we see so many worried faces, and hear so much gloom and doom talk? That’s because stock prices are supposedly too high.

It does not matter if a person puts all his or her money into $25,000 icecream sundaes at a New York City restaurant, P20 Philippine lotto tickets, or the stock markets. It does not matter if millions of Chinese lose their life savings, and much more are buying into a government-sanctioned and funded stock-market rally.

The problem is not the price of the stock markets, or even that governments are doing all they can to manipulate the markets for political gain, as in China

and the West. The problem is that people have very short memories and quickly become accustomed to current developments. Thus, they base their actions on the “new normal.”

Some of us are old enough to remember the time when we could smoke cigarettes on an airplane. The prohibition against smoking on commercial airplanes is a relatively new “normal.”

The US ban on smoking began with domestic flights of two hours or less in April 1988. It was only in 2000 that US Federal law banned smoking on all carriers, and other countries passed similar laws on planes flying through their airspace. I had been flying for 45 years before the smoking ban took place.

But for people who are currently around 30 years old, the smoking ban seems normal to them. They may even assume that it has been in place since

the invention of airplanes.

It is the same way with the stock markets. Most of the experts, like many investors, did not experience the 1989, 1997, or 2000 Philippine stockmarket crashes, or even the 50-percent drop in 2008. They have no idea how to operate in an environment where global and local stock prices move independent of government intervention and manipulation.

The “old normal” was that money flows in and out of the various stock markets, and did bear some relation to each other. But that depended on stock prices being free moving and determined by real investors using their own real money.

We are in a period of global financial market chaos. Looking back at history, every period of economic chaos eventually ended and the rebuilding process started once more. The “bubblemaniacs” are worried about a return to the “old normal” and stock price “bubbles” bursting. But before that will be extreme volatility, and almost all investors are unprepared for this.

We talk about the millions of new Chinese investors who bought at the top. Yet, there are millions more who did not buy at the top and did not know how to handle the recent wild stock- market gyrations. From Reuters: “Investors who bought before midMarch are still in the black thanks to previous gains.”

One longtime investor, Mrs. Xu, said

Japan’s banks look to buy abroad William Pesek

I

BLOOMBERG VIEW

t’s ironic that one of the first big Japan stories to run in the Financial Times (FT) after its $1.3-billion purchase by Nikkei Inc. was a scoop about Mitsubishi UFJ, the country’s biggest bank, and its overseas ambitions. In an interview, CEO Nobuyuki Hirano revealed plans to spend at least $2.5 billion in the US alone to beef up the bank’s asset-management business. As the FT reported, that puts Bill Gross’s Janus Capital, AllianceBernstein, Evercore and WisdomTree within his price range. And Hirano says he’ll spend more for the right opportunity.

This is good news for Japan—a headline-grabbing admission from one of the country’s most respected companies that future prosperity will require tapping wealth abroad and deemphasizing a rapidly aging consumer base at home. It will also be a test of whether Japan Inc.’s cautious, topdown management style can coexist with faster-paced, more profit-driven Western investment houses. Will buyouts produce internal clashes instead of hoped-for synergies?

The record isn’t promising. Fellow megabank Nomura is still picking up the pieces from its disastrous 2008 purchase of Lehman’s Asia and Europe operations. At the time, the deal was seen as a coup, vaulting Nomura to

the top tier of global investment powers. But the bank’s rigid management structure could not accommodate the freewheeling “Lehmanites.” Internal tensions quickly doomed any chance Nomura and Lehman might morph into something greater than the sum of their individual parts.

Mitsubishi UFJ has generally fared better with its own external forays. A Morgan Stanley stake (about 22 percent) bought in 2008 has buttressed the bank’s global clout. So has the 2013 decision to buy Thailand’s Bank of Ayudhya, the largest banking takeover the Southeast Asian nation had ever seen.

Mitsubishi UFJ now gets a sizable, and growing, amount of its profit from overseas businesses.

Nomura wrongly thought it could indoctrinate Lehman employees into a staid culture almost 90 years in the making. By contrast, Mitsubishi UFJ let the Morgan Stanley crowd do its thing, even dispatching staff to learn from the newcomers. Ventures haven’t been without tensions, but the home office has savvily won mergers and acquisitions deals (including the Thai bank acquisition) by harnessing Morgan Stanley’s advisory clout to Mitsubishi UFJ’s financing strength. Such openmindedness and flexibility is crucial if this next wave of acquisitions is going to enhance Japan Inc.’s global standing. Why buy a foreign company like Gross’s Janus if management thinks it has nothing to learn?

Hirano isn’t alone in his overseas ambitions. Japan’s nine major financial institutions loaned over $490 billion through overseas branches last fiscal year, double the amount five years ago, says analyst Francis Chan of Bloomberg Industries. The search for higher yields is pushing megabanks such as Sumitomo Mitsui and Mizuho to expand foreign client bases through loan transactions with global peers. Mizuho, Japan’s third-biggest bank by market value, made headlines this year when it bought $3.5 billion of North American loans from Royal Bank of Scotland.

These investments bear little resemblance to the high-profile overseas buyouts Japanese businesses embraced in the 1980s. Back then, bankers and investors cared more about physical assets—golf courses,

she has been holding shares in China Life since 2007 when it traded for around 75 yuan per share. The stock gained a bit during the recent rally, at one point crossing over 42 yuan per share, but then fell back to around 28, and Xu is still holding on. She plans to sell as soon as they break even.

Many issues on the Philippine exchange have price fluctuations of 20 percent and much more, up or down in one day. Most investors are not involved. But are you ready for 10 percent or greater moves in blue chip issues that are household names?

That type of volatility will come long before the markets return to normal levels. While the local market is not manipulated, it will be subject to the same reset process.

The largest one-day movement in recent memory on the Philippine Stock Exchange Composite Index came in 2010 with a 6.75-percent fall.

The biggest gain was over 5 percent.

Philippine Long Distance Telephone Co. dropped 8 percent also in 2010.

Are you prepared for moves of double that figure? That is the kind of volatility we will see before we return to the “old normal.”

E-mail me at mangun@gmail.com.

Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis tools provided by the COL Financial Group Inc.

skyscrapers, amusement parks, any Van Gogh or Picasso on auction. Now, with wages barely growing at home and more than 26 percent of Japan’s 127 million people becoming senior citizens, bankers are looking for clients, not trophies. It’s healthy to see today’s megabanks “measure the success of overseas acquisitions by the ratio of non-Japanese customers acquired,” Chan says.

Importantly, though, they’re also looking to buy expertise. After 20 years of obsessive cost-cutting, Japanese banks boast higher levels of efficiency, lower costs and overseas strategies with longer-term profit horizons. But, says economist Martin Schulz of Fujitsu Research Institute in Tokyo, “I doubt that low costs and determination will be enough. A low-cost strategy requires tremendous applied management skills. So, what’s lacking is global management expertise, which can only be bought effectively when it can readily be integrated into existing structures.”

Nikkei’s FT purchase is part of this story. While it may seem a petty point, for instance, Nomura CEO Kenichi Watanabe’s poor English skills alienated him from Lehman employees (he was forced out in 2012). Many pundits were struck, too, by the confused looks on the faces of Nikkei executives last week when they faced questions by nonJapanese journalists. However familiar these lost-in-translation moments may be, Japan Inc. has got to find a way to move beyond them if its overseas push is to succeed.

Opinion BusinessMirror

opinion@businessmirror.com.ph

True bread from heaven Amending the Retail Trade Liberalization Act

Msgr. Sabino A. Vengco Jr.

Atty. Roselle U. Casiguran

Tax law for business

S

enate Bill (SB) 2121, or “An Act Amending Republic Act 8762, otherwise known as the Retail Trade Liberalization Act and For Other Purposes,” was filed last year in order to increase investments by foreign entities in the Philippines. The bill will stand to eliminate the capital and equity requirement of foreign capitalists who will engage in the retail business in the country.

A decade and a half ago, the Retail Trade Liberalization Act of 2000 was enacted in order to attract and promote consumer welfare by bringing in productive investment. To this end, it was forecasted that the enactment of the law will result to a decrease in consumer prices, creation of more jobs, promote tourism, assist small manufacturers, stimulate economic growth, and enable Philippine goods and services to become globally competitive through the liberalization of the retail-trade sector.

However, the intended substantial foreign investment was nowhere achieved. Foreign investors have found the requirements to engage in retail trade to be very restrictive. For instance, in order for a foreign entity to be able to wholly own a retail store, it must have a paid-up capital of at least $2.5 million to $7.5 million, while those that will be engaging in selling high-end or luxury goods must have a paid-up capital of $250,000 per store.

There are also other conditions that the foreign investors must meet: First, a minimum of $200-million net worth in its parent corporation for Categories B and C, and $50-million net worth in its parent corporation for Category D; second, five retailing branches or franchises in operation anywhere around the world, unless such retailer has at least one store capitalized at a minimum of $25 million; third, a five-year track record in retailing; and fourth, that they must be nationals from or juridical entities formed or incorporated in countries that allow the entry of Filipino retailers.

Due to these constraints, Sen. Sergio R. Osmeña III introduced SB 2121 on February 12, 2014. The said bill proposes to do away with the barriers of foreign investment by removing the equity and capitalization requirements in the Retail Trade Liberalization law. As stated in the proposed bill, by allowing the entry of foreign investment, it will result in the creation of more jobs and providing the Filipino consumers with better choices and higher quality of goods at lower prices.

On the other hand, Rep. Giorgidi B. Aggabao of the Fourth District of Isabela, filed House Bill (HB) 4403 on May 13, 2014. The house bill contains the same goal, that is, to address the perceived loopholes in the existing law, particularly the capital requirement before a foreign entity may completely own a retail establishment.

Other than eliminating the equity and capitalization requirements, the SB also seeks to expound the requirement of maintenance of the capital.

It mandates foreign investor to maintain in the Philippines the full amount of its capital, or in any case, any part of the capital is sold to a citizen of the Philippines, or to a partnership, association or corporation owned and controlled by citizens of the Philippines, the unsold amount of its capital, unless the foreign investor has notified the Securities and Exchange Commission and the Department of Trade and Industry of its intention to repatriate its capital and cease operations in the Philippines.

The said bill also seeks to remove the requirement of public offerings of shares of stock in retail-trade enterprises under Categories B and C in which a foreign ownership that exceeds 80 percent needs to offer a maximum of 30 percent of the equity to the public through any stock exchange in the Philippines within eight years from the start of operations.

Last, it proposes to reduce the need for local procurement of the aggregate cost of the stock inventory of foreign retailers from 30 percent to 10 percent. These proposed amendments will definitely encourage foreign investors to explore the Philippine market. The elimination of the equity and the capitalization requirement will provide them with the appeasement on their investments where both they (investors/foreign entities) and the Philippine market will be able to grow from this venture.

SB 2121 is pending with the Committee on Trade, Commerce and Entrepreneurship, while HB 4403 is with the Committee on Trade and Industry.

The author is a junior associate of Du-Baladad and Associates Law Offices (BDB Law), a member firm of World Tax Services (WTS) Alliance.

The article is for general information only and is not intended, nor should be construed as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported therefore by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at roselle.casiguran@bdblaw.com.ph or call 403-2001 local 370.

Greece isn’t a morality tale Mark Buchanan

BLOOMBERG VIEW

O

ne of the more troubling elements of the recent drama over Greece’s debt was the urge by many to see a deficiency of national character, rather than euro-zone economics, as the problem. Right-leaning opinion, not only in Germany, but around the world, put the trouble down to Greek corruption and, worse, laziness: The bad people of Greece retire too early and produce less per capita than the European average, despite working longer hours.

We shouldn’t conclude much of anything from such comparisons.

It’s a complete myth that economic productivity somehow reflects the average ability of people to work hard. It has far more to do with the nature of industries in

different nations, and how technology has changed their productivity over time.

Nearly 20 percent of Greek economic output comes from tourism, which is natural enough, given the nation’s surpassing beauty. Aside

Alálaong Bagá

G

od’s care for His people was proven by the manna He rained upon them for food and the heavenly bread He gave them (Psalm 78:3-4, 23-24, 25, 54). It is the Son of Man who gives to the people the food that endures for eternal life (John 6:24-35).

He gave them heavenly bread The psalmist recalls the wonderful things God did at the time of the Exodus, which mighty deeds have been proclaimed from generation to generation, heard from one’s father and retold to one’s children. This tradition is a way of ensuring that faith in God is passed on from one generation to the next. Of particular interest to us is how God manifested His power and mercy from the heavens; how He responded to the people’s persistent doubting of His power. God sent them manna to eat (Exodus 16:14-16).

God’s sovereignty was undeniable as He exercised authority over the heavens, and ordered the doors of heaven to open and rain down manna upon the Israelites for food.

And man ate the grain of heaven, the bread of angels, in abundance.

This recital of God’s glorious deed is capped with the establishment of the people in the promised land.

The “bread of angels,” “the bread of

the strong,” strengthened the Israelites to finish the passage to God’s holy land, to the mountain of Zion upon which God’s holy temple would be built. The recitation of what God had done for the people is to remind them of who they are by these divine acts, and to challenge them to live up to God’s love and care for them.

The living memory of God’s loving kindness defines the consciousness of God’s people.

Work for the food that endures for eternal life

The people in the gospel narrative trailing Jesus and His disciples were curious about when and how He arrived. They were hungry for the miraculous, in search of a wonder worker: Did they miss another wonder by Him? Jesus tried to refocus them: They seek Him because they ate to the full of the loaves, but they have to understand that the bread they have eaten are signs of God’s

Thursday, July 30, 2015

loving care for people. They are very familiar with their physical hunger, but not enough about their spiritual hunger. The people need to work not only “for food that perishes, but for the food that endures for eternal life.”

The people heard Jesus’ concern with eternal food, but their consciousness was not on the same page with Jesus. They thought principally about the traditional emphasis on performing the works of God, to do as God does. So they asked, “What can we do to accomplish the works of God?” Jesus again redirected them: God’s work is about “the one He sent.”

They have to connect with and believe in Him whom God has sent. The works of God (as in the law through Moses) must tie up with God’s one work of “grace and truth...through Jesus Christ” (John 1:17). Well, the people said, if Jesus is the work of God, what validating sign does He perform to lead people to believe in Him? Their ancestors ate manna in the desert, and so validated Moses and the law.

I am the bread of life

Jesus tried to correct the mind of the people the third time. It was not Moses who gave their ancestors manna; it is God who gives “the true bread from heaven,” and this “gives life to the world” beyond the history and people of Israel. The crowd did not completely follow Jesus’ restructuring of their thinking: They only heard the possibility of Jesus’ Father

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giving bread continuously and so they promptly asked Jesus to give them this bread always—a repeat of the crowd’s earlier wish to make Jesus king who would constantly provide them with bread (John 6:15).

For the fourth time Jesus redirected the people’s consciousness: He returned to what He was saying at the beginning that they must work for the food that endures for eternal life, which will be given them by the Son of Man on whom God, the Father, has set His seal. In claiming to be the Son of Man anointed by the Father, Jesus claims to be “the bread of life” who gives spiritual nourishment to all who comes to Him and believes in Him. He is the life that comes from God into the world, establishing communion with the eternal, and satisfying all spiritual thirst and hunger.

Alálaong bagá, Jesus is the final sign that leads to God, “the true bread from heaven” that gives eternal life.

His coming among us is God’s definitive and most marvelous deed of loving kindness. Doubting no more the divine power and mercy, man needs to work beyond material nourishment and temporary wonders, and aim at finding what satisfies our inner, deeper hunger.

Join me in meditating on the Word of God every Sunday, 5 to 6 a.m. on DWIZ 882, or by audio-streaming on www.dwiz882.com.

Climate-change management: The time is now Ariel Nepomuceno

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DECISION TIME

limate change is a daunting reality that poses the biggest threat to the survival of our planet and our people. Rapid economic gains and substantial population growth are increasing global demand for energy. Traditional fossil fuels will still be our main source of energy, but in the meantime, the painful truth is that carbon-dioxide emissions are rising so quickly and the warming of our world is escalating to levels that science could not have reasonably predicted.

In the Philippines several scientific and policy studies reveal that the effects of climate change are slowly manifesting themselves in our midst. While not considered to be a major contributor to global climate-change statistics, the country’s greenhouse emissions rank in the top 25 percent among low- and middle-income nations. Recent studies show a big rise in sea levels and temperature. Weather-related incidents, like cyclones or typhoons, intense flooding and droughts in certain areas, are clear indications that global warming poses a real threat to the nation’s life. One need not calculate the loss of lives and economic opportunities wrought by the aforementioned natural calamities

to realize that a concrete road map to address climate change should be given utmost priority.

from the Internet making it easier to book and advertise trips, however, tourism remains a labor-intensive activity not that different from 30 years ago. People take planes and taxis, stay in hotels, eat meals, listen to music and take excursions on boats. All of that requires a large number of people to cook and serve, entertain, clean rooms and drive taxis for long hours. The amount of these things that can be produced per hour and per person hasn’t changed a lot with time.

Compare that with, say, the German automobile industry. According to Eurostat data, the total output of the European motor-vehicle industry—German companies account for about half of it—grew in the decade before the financial crisis by about 4.4 percent a year. That corresponds to a doubling of output in 15 years. Much of this increase came from gains in manufacturing

productivity—value created per hour of work —which in Germany, according to Organization for Economic Co-operation and Development numbers, grew by 40 percent over the same period.

In other words, rapid economic growth in Germany and other fastgrowing, developed nations has come mostly from improvements in industrial efficiency, not from some morally superior character of the workers in those nations.

All this links up with a notion that economists call Baumol’s cost disease, originally proposed by William Baumol and William Bowen in the 1960s. Why, they wondered, do some things like education, medical care and live musical performances get more expensive with time, while so many other things, like manufactured goods, get cheaper?

The answer is simply that productivity improves faster in some

International obligation

The Kyoto protocol, which required governments to reduce their carbon emissions, shall soon be expiring and the world is looking forward to the signing of a landmark agreement in the United Nations Climate Change Conference in Paris in December.

Climate change is such a technically difficult, complex and oftentimes, politically sensitive issue that requires immense sovereign support from all players and stakeholders.

Most often, it is forgotten that the basic challenge that our political leaders must confront is to halt the

Fighting global warming is not the task of government alone.

The role of private industry is extremely crucial to the success of our climate-change journey.

Government and industry must work hand in hand to support an international agreement that puts a price on greenhouse emissions and exhorts companies to have carbon-dioxide reductionmanagement programs.

The Philippine legislature passed the Climate Change Act in 2009, which created the Climate Change Commission. The role of the latter is to develop an action plan to integrate national, local and private initiatives on climate change. A welcome development is the fact that funding for climate-change programs have been

increasing by more than 20 percent every year since 2009. Likewise, significant laws, such as the Philippine Clean Air Act, Bio Fuels Act and the Renewable Energy Act provide a regulatory framework for the achievement of said goals. Government agencies must also embark on energy-efficiency projects, actively advocate and promote less dependency on fossil fuels and incentivize carbon-emission reduction actions of private companies.

But fighting global warming is not the task of government alone.

The role of private industry is extremely crucial to the success of our climate-change journey. Government and industry must work hand in hand to support an international agreement that puts a price on greenhouse emissions and exhorts companies to have carbon-dioxide reduction-management programs.

These programs should be able to track current emissions, forecast future ones, develop technologies and processes like carbon capture and storage, and demonstrate commitment to invest in other sustainable-energy sources like renewables, natural gas and biofuels.

Caring for the environment does not only make good business sense, but is most obviously basic common sense. And, indeed, we must stop believing that someone else will save the earth for us.

industries than in others. As auto manufacturers make ever more and better cars—faster and with fewer workers—they can sell them more cheaply and still afford to raise wages. In contrast, a live orchestral performance today takes as long and demands as much skilled labor as it did two centuries ago. Getting good musicians requires wages that rise as fast as elsewhere in the economy, and so prices in “stagnant” sectors of this sort go up relative to others.

This dynamic is a significant contributor to relentlessly rising medical costs around the world.

Medical technology certainly drives productivity improvements, but time-consuming individual interactions between doctors and patients remain necessary. Doctors can’t give high-quality health care to more patients in one hour today than they could a few decades ago.

Prices rise, but not because doctors

are getting lazy.

Getting back to Greece: It’s no surprise that the productivity per capita of its tourism-heavy economy hasn’t kept up with Germany’s industrial juggernaut. These are different economies supplying different kinds of goods. Before 2010, Greek productivity per-capita was stable at a level of about 93 percent of the European average. Productivity in Greece only plummeted after 2010, following the imposition of severe austerity.

Here’s the simple, amoral story of Greece and Germany: One economy thrives on rapidly advancing industrial technology, the other on valuable economic services that get created and delivered in ways that just don’t change a lot with time. The Greeks aren’t lazy, and the euro zone’s problems have nothing to do with anyone’s moral shortcomings.

fast pace of global temperature increase caused by carbon emissions, and to lay down strong and firm government responses to meet this and other related targets. It is hoped that the climate-change debates focus not on politics or power, but on core policies and action plans that deal with the findings of physics and chemistry, which have been known for more than 100 years.

Local response

2nd Front Page BusinessMirror

A8 Thursday, July 30, 2015

Dooc sees premium income hitting ₧250 billion this year

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B G F

NSURANCE Commissioner Emmanuel F. Dooc is confident that the industry will hit P240 billion to P250 billion in premium income by the end of the year.

He also vowed to foster an environment that will enable the industry to net P500 billion in total premium by 2019.

Speaking at the Philippine Life Insurance Association Inc.’s (PLIA) 65th anniversary, Dooc predicted a 30-percent growth in total premium income this year from last year’s P189 billion.

“We may post premium income of P240 billion to P250 billion this year, much better than the banner year in 2013, when we hit about P200 billion, the highest so far in the insurance industry,” he said during the PLIA’s 65th anniversary on Tuesday night.

Dooc stressed the growth and expansion of insurance business,

citing figures back in 2009, when it posted a premium income of only P80 billion. He said this is an important achievement for the industry.

When President Aquino steps down next year, Dooc expects the industry to record total premium of P300 billion at the end of 2016.

With three more years to go, “we will get half a trillion in total premium income,” he said.

“My fearless forecast is that by the time I leave the Insurance Commission—my tenure is until December 2019—we will be hitting total premium of half a trillion, based on a 20-percent to 25-percent compounded annual growth,” he added.

This year both life and nonlife sectors are driving the growth. But the life sector is showing more robust growth than the nonlife segment.

“It’s very achievable to meet the

PHL eyes $300M from fuel-smuggling crackdown. . .

When he took office in April, Lina vowed to battle corruption and decongest Manila’s ports. Customs’s ability to maintain an improved performance and good governance poses a test for President Aquino’s efforts to institutionalize reform in the country, Moody’s Investors Service said in June.

The program to add a chemical marker to identify fuel products may cost $25 million and could result in $200 million to $300 million of additional revenue a year, Lina said. The bureau is also

seeking at least 10 speedboats and 14 single-engine patrol planes to help curb smuggling along the coastline, and cooperating with the Navy and Coast Guard, he said.

The passage of a long-delayed Customs modernization bill that proposes raising salaries and simplifying procedures is also key to tackling corruption, he said. Lina, a businessman who headed Customs briefly in 2005, said last week he expects to miss this year’s collection goal because of lower oil prices. Philippine

half-a-trillion premium income, and hopefully our gross domestic product [GDP] growth will not outpace us, because at that growth rate, GDP may not be higher than our growth.

So our penetration rate will go up. At that rate, we’ll be hitting 3 percent in 2019 from 1.5 percent. The Asean average penetration rate is 3 percent,” he said. Should there be major catastrophe that will arise, basically, it will have an impact on the nonlife sector.

He also noted the rise in insurance business due to calamities, which require response from the insuring public. He added that the broadening of the industry’s portfolio, which enables insurers to compete with other financial institutions like investment-linked insurance products, is also driving the insurance industry’s growth

www.businessmirror.com.ph

‘VISTA LAND PROJECT TO SPUR DEVELOPMENT IN SOUTHERN METRO’ B VG C

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ISTA Land & Lifescapes Inc. said its township development in the southern part of Metro Manila, called Vista City, will help spur business activity in the area that is being transformed into an alternative central business district.

The company cited a paper from real-estate research firm Cuervo Far East that called southern Metro Manila as the Southern Manila West Growth Area, which covers

parts of Las Piñas, Muntinlupa and Cavite on the west section of the South Luzon Expressway (Slex).

The P50-billion Vista City is right in the middle of the said growth area.

“The new Daang Hari-South Luzon Expressway, or Muntinlupa-Cavite Exit, is right smack into Vista City. At the same time, the existing Slex exits in Alabang and Filinvest are also near Vista City, which provide alternate access exit points,” the company said.

S “V L,” A

Will Luzon dams withstand a 7.2 magnitude quake?

C  A

C  A

Pantabangan Dam

economic growth slowed to a three-year low in the first quarter as government spending and exports faltered. Customs collection made up about one-fifth of state revenue in 2014, with the agency meeting its goal last in 2008. President Aquino, who steps down next year, on Wednesday proposed a P3-trillion budget for 2016, double the amount in 2010 when he took office. Interest payments will account for 13.1 percent of the budget, with defense spending rising 11.5 percent. Bloomberg News

US vows to solve toughest TPP issues

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OP officials from 12 Asia-Pacific nations formally kicked off a four-day bid to hammer out a massive but so far elusive freetrade agreement that has been in the works for six years.

Speaking at the opening plenary of the Trans-Pacific Partnership (TPP) talks in Hawaii, USTrade Representative Michael Froman told his counterparts they need to resolve the “tough political issues” standing in the way of a deal.

“Each of us brings our own priorities and sensitivities to the table, and our goal here over the next couple of days is to find a path forward to resolve those issues,” Froman said.

Before the ceremonial opening on the island of Maui, staff from all 12 countries had gathered to sound out the complicated tradeoffs that a final agreement would require, an effort that trade ministers joined on Tuesday.

The negotiation could yet collapse over issues ranging from drug patents to dairy exports, and test the ability of the US and Japan—by far the two largest economies in the TPP—to jointly drive a resolution. Froman and Economy Minister Akira Amari huddled for almost two hours before the plenary got under way.

“There are still tough political issues that remain to be resolved,” Froman said. “And as anyone who’s ever been involved in a trade negotiation knows, those final decisions are always the most difficult.”

Positive words notwithstanding, regarding the talks as the “final” round is risky given the unsettled issues, said Timothy Brightbill, a partner at law firm Wiley Rein Llp. in Washington.

“Too early in the week for a wager,” Brightbill, an adviser to Froman’s office on the deal, said in an e-mail.

“Right now, I’d have to say 50-50.”

Bloomberg News

THE Pantabangan Dam — one of Asia’s biggest dams — became operational in 1973 and can produce two billion liters of water. Although it is 42 years old, it is reportedly designed to last a century.

“Matibay ang Patabangan Dam. Maayos ang pagkakagawa niya. Sa ngayon, wala siyang crack pa kahit nagkaroon tayo ng lindol noong July 1991...

Hindi siya naapektuhan,” remarked Engr.

Edgardo Puno, Operations Manager of the National Irrigation Administration – Upper Pampanga River Integrated Irrigation Systems (NIA-UPRIIS) district.

In 2014, however, the dam’s water level became critical because of siltation. The level fell to 200 meters from its maximum depth of 210 meters, thereby reducing by 30 hectares its irrigated land area to a total of 84 hectares in Central Luzon.

Bustos Dam The Bustos Dam, on the other hand, has one of the longest sector gates in the world.

It serves as a huge reservoir of the Angat Hydro-Electric Plant in Bulacan.

Bustos is primarily an irrigation dam.

According to Bulacan Governor Wilhelmino Alvarado, it is being rehabilitated by the NIA at a cost of around P1 billion.

“Yung replacement ng rubber check gate ng Bustos Dam, bini-bidding na rin — billion of pesos... mukhang yung billion of pesos na yun ay manggagaling sa savings na 5.7 allocation,” said Governor Alvarado.

But Governor Alvarado said that the billion-peso rubber coating for the Bustos Dam is only good for 15 years — an expensive remedy for a dam.

Ipo Dam Ipo Dam, on the other hand, is a diversion dam that channels water from the Angat and Ipo Rivers into tunnels that lead to the La Mesa Reservoir and the Balara Filtration areas in Quezon City.

Its watershed is also saddled with problems, such as illegal logging, the proliferation of illegal settlers, and alleged corruption in the implementation of environmental projects.

Angat Dam To Bulakeños, foremost to their safety concern is the Angat Dam. The dam in Norzagaray is an earth and rock-fill embankment made of sediment and a fortified core. It can produce 850 million cubic meters of water.

Angat Dam was constructed by a U.S. Company in 1961 at a cost of P315 million, and became operational in 1967. It has two water outlets — the main dam and the smaller main dike.

Since 1987, Angat dam has been beset with problems ranging from landslides to leaks, as revealed by studies and investigations conducted by various organizations such as the Japan International Cooperation Agency.

The discovery of the Marikina West Valley Fault, on the other hand, was mentioned in a 2002 report of Kaare Hoeg of the Norwegian Technical Institute.

More than a decade and after several studies, the Metropolitan Waterworks and Sewerage System finally commissioned the Engineering and Development Corp. of the Philippines and foreign consultancy firm Tonkin and Taylor to investigate further the Angat Dam. In the final draft report released and sent to government agencies, Tonkin and

Taylor identified three main structural problems that needed to be remedied immediately by the government.

The first is the shortfall of the present spillway discharge capacity. The firm recommended that an auxiliary spillway be constructed to increase the required discharge capacity of Angat Dam. Another observation revealed the steep slope of both the main dam and the main dike, and the splay found beneath the structure of the main dike. According to the Philippine Institute of Volcanology and Seismology (PHIVOLCS), the end tail of the West Valley Fault reaches up to the reservoir of the dam.

“Possibleng tumama sa reservoir kung saan merong tubig pero ang infrastuctrue mismo ng Angat ay hindi tinatamaan ng fault,” said PHIVOLCS Director Renato Solidum.

However, Solidum admitted that there could be a splay or branch of the main fault beneath the foundation of Angat Dam’s main dike, as reported by Tonkin and Taylor.

“Although doon sa main dike na-diskubre nila na mayroong isang fault na parang nasa baba ng main dike, dapat tingnan ng mabuti kung yung fault na yun ang main trace,” added Solidum.

Arturo Daag, Chief of PHIVOLCS’ Geology, Geophysics Research and Development Division said that the quake “will not directly rupture ang dam, siguro magse-shake, pero it will not rupture the structure itself, ang ano nga lang is ang integrity ng structure if it will withstand.”

PHIVOLCS’ opinion, according to Tonkin and Taylor, was “that rupture of the main fault could trigger movement on the splay beneath the dike of approximately one to two meters on horizontal and .5 meters vertical.”

There would be dislocation of the embankment and its internal drainage systems, specifically the internal core filter.

“Kung magnitude 7.2 ang mangyayari sa West Valley Fault, ang ground shaking intensity na ine-expect natin dito would be intensity 8... At kapag intensity 8, ito yung pakiramdam na nahihirapan kang tumayo, hindi ka na makatayo. Now, pag-ganoon ang intensity, posibleng maraming bahay, gusali ang masisira at depende na yan kung paano ginawa ang bahay at gusali, disenyo na ginamit, at workmanship,” said Solidum.

A map provided by the same study showed that flood levels can reach as high as 10 to 30 meters in some areas in Norzagaray, Bustos, and Baliuag in Bulacan, and five to 10 meters high in some areas of Pulilan, Plaridel, all the way to Calumpit and Malolos City.

It is also estimated that three to fivemeter high flooding will reach areas of Pampanga and the food plain all the way to Metro Manila.

In all, Tonkin and Taylor modeling indicates that the dam breakflood wave will affect 20 cities and municipalities in Bulacan, and seven cities and municipalities in Pampanga and Metro Manila.

If there is an issue or exposé you would like to disclose, contact jundelrosario@gmail.com or 09997720991/09063261921.

For more investigative reports, watch Headline News at 7 AM, Newsroom at 12 noon, Network News at 6 PM and Nightly News at 9 PM or visit cnnphilippines.com/investigative.