September 30, 2015

MOREGOVERNMENTSREACT TOVWMESS

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apan’s transport ministry has ordered carmakers to investigate whether their diesel vehicles meet the country’s emission norms after Volkswagen AG’s (VW) admitted to rigging some cars to cheat on US tests.

The ministry has asked carmakers, including Toyota Motor Corp., Mazda Motor Corp. and Volkswagen, to submit reports of their probes by the end of this week, Transport Minister Akihiro Ohta told reporters in Tokyo on Tuesday. The government is considering changing the method it uses to test diesel engines, Ohta said, without being more specific.

Japan joins South Korea, France and the United Kingdom among countries investigating compliance by carmakers, after Volkswagen’s revelation that it used software that obfuscates how much its diesel-engine cars pollute. It led to the carmaker’s former CEO Martin Winterkorn stepping down and the

company’s market value plunging €27 billion ($30.4 billion).

The German automaker doesn’t sell diesel cars through its official dealer networks in Japan, but individual buyers have imported about 230 Volkswagen and Audi cars since 2008, according to Ohta. The ministry is checking whether these vehicles need to be recalled and fixed.

Volkswagen, the best-selling foreign brand in Japan last year, is working with authorities and is monitoring the impact on its brand image and sales, Hiromu Hatanaka, a Tokyo-based spokesman of the company, said by phone.

Volkswagen AG’s emissions scandal may trigger a separate investigation in Sweden.

The Swedish Prosecution Authority’s National Anti-Corruption Unit is evaluating whether to start a probe into Volkswagen, after the German carmaker admitted it cheated on emissions tests in some of its diesel cars.

It will start by evaluating whether an investigation can be conducted under Swedish jurisdiction, Alf Johansson, a chief prosecutor at the corruption unit, said in an e-mailed response to questions on Tuesday.

“A case was initiated by the unit head on Friday and was put on my table,” Johansson said. “I have not yet decided if an investigation will be started. Whether the case will remain at the corruption unit after my evaluation is also one of the questions I’m looking at.”

Sweden’s evaluation of a potential investigation into Volkswagen follows a revelation by Europe’s biggest car manufacturer that it used software to obfuscate how much its diesel-engine cars pollute. It triggered the resignation of the carmaker’s CEO Martin Winterkorn; he has since been replaced by Matthias Mueller. VW’s market value has plunged €27 billion ($30.4 billion) since the scandal was revealed. Bloomberg News

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DOT targets 5M tourists from new markets in ’16

By Ma. Stella F. Arnaldo

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INSIDE

HE Department of Tourism (DOT) has proposed a P2.93-billion budget for 2016 for the Office of the Secretary/ Central office alone, higher by some 28 percent from what it is getting this year.

‘social’ community BusinessMirror

E2 Wednesday, September 30, 2015

Fostering a sense of community through the science of ‘social’

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EYOND shopping, weekend markets today are transforming into community hubs for people to eat, gather, socialize and learn. Real-estate developers are realizing this growing appreciation for “social gettogethers” as people seem to always be on the lookout for places to cultivate relations.

Weekend markets not only nourish appetites and satisfy cravings; they also feed the public’s growing desire for connectivity. To keep things inclusive and interesting to the younger crowds, markets have now evolved to a point where they feature multidimensional leisure experiences.

Cultivating a unique sense of place

Thailand has Chatuchak, Morocco has the Jemaa el Fnaa, Melbourne has Queen Victoria and istanbul has the Grand Bazaar—street markets among some of the world’s emerging residential and cultural hubs have also helped shape tourism by being sought-after attractions. in the Metro Manila food scene, for example, weekend markets became a hit as it appealed to a growing number of Filipinos in search of a place that fosters connection inasmuch as it sells quality food. Pop-ups and seasonal night markets have become part of every property developers’ key tactics in engaging their respective markets, allowing visitors and would-be buyers to relax with live music and refreshments in hand.

The legazpi and Salcedo market revolutionized the residential and leisure stage in

Makati City and had since become synonymous to the perfect weekend brunch place.

Meanwhile, the Mercato Centrale Group, with weekend markets from Metro Manila to Tagaytay and Cagayan de Oro, has also emerged as the Philippines’s premier food and lifestyle market with its success in redefining the Filipino food-trip experience.

Other known markets include Quezon City’s aani and Sidcor SundayMarket.

While Mandaluyong’s more commercial and highly urbanized residential communities have the Greenfield Weekend Market and Maker’s Market at Estancia at Capitol Commons, its residential flank in Shaw now houses a market of a new kind.

Nurturing a sense of community

TraCEaBiliTy gained local traction the moment Filipinos developed concern over where our food came from. With communes following shifts in the public’s eating preferences, markets have now advanced into integral cogs of local food systems, making it a growing food distribution channel. By giving local businesses space to sell and showcase their wares, weekend markets serve to foster deeper ties in its locale, breeding social connections between entrepreneurs

LiTToN Knitting Mills

and consumers, and vice versa. i have the privilege of working with the men and women of litton, a homegrown company known for its pioneering role in the Philippine textile industry, who have shifted their sights toward revitalizing emerging residential communities. They recently held the first run of its weekend market series at Mandala Park, a place formerly known as liberty Center. a venue for Mandaluyong small and medium enterprises to blossom, the weekend market series serves as a platform for local start-ups and oneoffs to showcase what they offer.

Featuring a selection of mostly Mandaluyong-based merchants curated by JJ yulo and jazz performances by Basti artadi, the recent Mandala Park weekend market gave visitors a laid-back afternoon of soothing music and good food. With the next one slated to happen this October 17, the Mandala Park weekend market series solidifies the community’s intent to deliver a kind of placemaking that’s built on a genuine desire to contribute to people’s health, happiness and wellbeing.

Wellness and sustainability: Two different concepts

STraTEGiCally located at the center of urban and economic vibrancy, Mandaluyong continues to celebrate its stature as a foundation of progress. a refreshing new take on the Mandaluyong narrative, Mandala Park is the result of litton & Co. lending its legacy and expertise to the city’s regentrification.

Chef Miko Aspiras and Chef Kristine Lotilla at the first salvo of the Mandala Park weekend market series

litton President and CEO Jojo litton shared that the weekend market is an offshoot of Mandala Park’s vision. “People want to live well, there’s no argument in that. The question is: how do you concretize living well? how can you live well if you don’t have the facilities to support that ideal?” Jojo shared. “What we did with our planned community is to purposely create an environment that lets people live well by design,” he added. he also stated that, “wellness and sustainability are totally different concepts, but by combining them and making it into a community,” what his company is doing makes for a better place for future generations to live in.

“What makes the Mandala Park unique

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is the open space,” Jojo narrated. “in a typical development, they pack up the density because that’s what makes money. But as you look around Mandala Park, it’s not all about that. With lots of greens and open spaces, and landscaping made right, i believe we’re actually making a difference.”

The burgeoning city of Mandaluyong rises up to the green challenge with last year’s passing of its Green Building Ordinance—a set of standards that help lower energy and water costs and reduce greenhouse-gas emissions.

“This green thing is not a fad. This is something that’s going stay. This is the future, and as i say, a lot of people are just waiting for the right place to make it available,” he ended.

Home

The Travel Team design with Mediterranean as its theme under the Perfect Pairing category

property

Second, the “Man Caves” for men with active lifestyle which include the Refined Gentleman, with Art Deco as its theme; Mechanic, Industrial High-Tech; Young Urban Professional, 40s & 50s Vintage; Sports Buff, Bowl House; Backpackers, Modern Egyptian; Anime Aficionado, Modern Japanese; Goth, Neo Gothic; and the Old Collector, with Filipino Colonial.

And last, the “Perfect Pairings” for duos with varied interests including the Retirees with Island Tropical as its theme; Power Couple, Modern Chinese; Newlyweds, Asian Contemporary; Travel Team, Mediterranean; Brothers in Arms, Modern Contemporary; Spinster Sisters, English Country; Gay Bestfriends, Italian Renaissance; and the College Buddies, with Deconstructivism.

Celebrating its 48th this year, PSID continues to pro-

mote interior design in the country with its advocacy of tapping Filipino talent and creativity and, at the same time, providing excellent education.

For her part, Julie Gil, the batch 2015 president, expressed her optimism with the future of interior design in the country, saying, “For us who have taken this as a profession, we are excited because interior design component is a competitive edge, if not compelling factor, for buyers to consider aside from the price. Now we only don’t buy a condo unit because of the price, we also see the potential to fix it.” Founded in 1967 and with its first exhibit held at the basement of the Makati Cinema Square in 1969 with only nine graduates, Pambid shared that PSID has gone a long way now with its 111 graduating students composed of diverse age bracket and personalities.

E2

xi pledges in billion of dollars

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BusinessMirror

World The

B2-1 | Wednesday, September 30, 2015 • Editor: Lyn Resurreccion

World leaders at U.N. give differeNt vieWs oN syria

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NITED NATIONS—Vladimir Putin played it cool, Barack Obama was earnest but firm and Iran’s president walked in smiling. World leaders glided through the opening day of a UN gathering on Monday that aims to wrestle with the globe’s biggest crises—a historic flood of refugees, the rise of threats like the Islamic State (IS) group and the conflict in Syria.

The UN secretary-general for the first time called for the civil war in Syria to be referred to the International Criminal Court, while Iranian President Hassan Rouhani said Iran’s recent nuclear deal with world powers had a broader goal: “We want to suggest a new and constructive way to recreate the international order.”

Chinese President Xi Jinping made a $1-billion pledge for UN peace efforts.

And Jordan’s King Abdullah II made a heartfelt defense of the kinder side of the Muslim world in the face of “the outlaws of Islam that operate globally today.”

“When and how did fear and intimidation creep so insidiously into our conversation when there is so much more to be said about the love of God?” he asked, also quoting the Quran on mercy.

The king has called the rise of extremist groups like the IS, and the crises they have caused, “a third world war, and I believe we must respond with equal intensity.” Jordan borders both Syria and Iraq, and Syrian refugees now make up 20 percent of Jordan’s population.

Iraq and Turkey also groan under the strain of millions of refugees.

In his state of the world address to leaders from the UN’s 193 member-states, Ban Ki-moon called for a political solution to the conflict in Syria, now well into its fifth year with more than a quarter of a million people killed.

Ban said five countries “hold the key” to a political solution to Syria: Russia, the US, Saudi Arabia, Turkey and Iran.

Obama and Putin, hours ahead of their first face-to-face meeting in nearly a year, gave no sign of closing their deep divide on the Syrian crisis.

Obama said of Syrian President Bashar Assad, “when a dictator slaughters tens of thousands of his own people, that is not a matter of a nation’s internal affairs.”

The US is prepared to work with any country, including Russia and

Iran, to resolve Syria’s conflict, Obama said.

The US president also took jabs at Russia and China, without naming names. “The strong men of today become the spark of revolution tomorrow,” Obama warned. And he added in a critique of restrictions on speech, “You can control access to information...but you cannot turn a lie into truth.”

Putin, who showed up at the UN gathering for the first time in a decade and was not at Russia’s seat in the chamber when Obama spoke, called for the creation of a broad international coalition against terror, following his country’s surprising moves in recent weeks to increase its military presence in Syria and to share intelligence on the IS group with Iran, Iraq and Syria.

The Russian leader dismissed the West’s concerns about his country’s ambitions in Syria and called it “an enormous mistake to refuse to cooperate” with the Syrian government.

Ukraine’s table just in front of the speaker’s stand was empty as Putin spoke. The country struggles against pro-Russia separatists in its east, while Russia denies supporting them.

Rouhani appeared to align with Putin’s call for a UN Security Council resolution consolidating the fight against terror, saying “we propose that the fight against terrorism be incorporated into a binding international document and no country be allowed to use terrorism for the purpose of intervention in the affairs of other countries.”

Meanwhile, Obama announced that more than 40,000 new troops and police have been pledged to UN peacekeeping missions from more than 50 countries. He spoke at a high-level meeting chaired by the US to strengthen and modernize peacekeeping, which increasingly faces threats from extremist groups while being severely stretched in personnel and equipment.

Other issues at the center of this week’s discussions include the refugee and migrant crisis, the largest since the upheaval of World War II. Ban warned that resources to address them are dangerously low.

“The global humanitarian system is not broken; it is broke,” he said. The UN has just half of what it needs to help people in Iraq, South Sudan and Yemen, and just a third of what’s needed for Syria. AP

United nations Secretary-General Ban Ki-moon speaks during the 70th session of the United nations General Assembly at Un headquarters on Monday. AP/Seth Wenig

Xi pledges in billions of dollars underpin Chinese diplomacy

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NITED NATIONS—Call it checkbook diplomacy, Chinese style. On visits to Washington and the United Nations, President Xi Jinping has pledged billions of dollars for peacekeeping, economic development and climate change, winning audience applause and plaudits from the world body.

However, while many countries trade aid for specific advantages, Xi’s approach is more ambitious.

He’s using the power of the purse to cast China as a responsible contributor to international peace and stability and to dilute international criticism of Beijing.

The approach seems to be a success so far, helping Xi override condemnation in the West about the authoritarian Communist government’s strict limits on human rights and relentless persecution of anyone considered an opponent of one-party rule.

He’s also been able to drown out

some concerns over China’s aggressive moves to assert its territorial claims in the South China Sea, where it has lately been creating artificial islands by piling sand atop reefs and atolls, then topping them with airstrips and other infrastructure.

It also has the added bonus of making China look good alongside its chief international rivals, Japan and the US, who have long maintained the biggest foreign-aid programs. Unlike China, though, that aid often comes with political or economic conditions attached.

In his first-ever appearance at the UN General Assembly, Xi on

Monday committed $1.1 billion to support UN and African Union peacekeeping efforts.

The day before, Xi had pledged an initial $2 billion for meeting post2015 global development goals, saying that could grow to $12 billion by 2030. Another $10 million was pledged to the UN agency promoting women’s rights.

Even earlier during his state visit to Washington, Xi pledged $3.1 billion to help developing countries combat climate change, bringing the total for all potential pledges over the four days to more than $18.2 billion—still a drop in the budget for a nation with a $10-trillion economy.

Outside of monetary pledges, Xi didn’t have a lot to contribute to the debate at the UN. His 20-minute address on Saturday to the UN development summit was notable only for the aid pledges within. Otherwise, it was dominated by bland statements, greeting card-worthy platitudes and assorted jargon: the phrase “win-win” was deployed no less than five times.

Xi, who, in early September presided over a massive military parade in Beijing, said on Monday that China would never seek to become a hegemonic power that would dominate others or put its interests above international justice—despite the doubts of its Asia-Pacific rivals.

“Let the vision of a world free of war and with lasting peace take root

in our hearts,” Xi told the assembly.

Consistent with China’s avowed neutrality, Xi also stayed outside the key debates over the civil war in Syria and its resulting refugee crisis, the rise of the Islamic State and the war in Ukraine. China’s principle of noninterference in other countries’ internal affairs plays especially well among other developing nations, many of whose governments are similarly autocratic.

And despite skepticism in Washington, Xi used his post-summit White House news conference with Obama on Friday to focus on progress in the overall relationship, while taking a mild approach to the South China Sea and asserting China’s opposition to cyber espionage, another issue of increasing concern to Washington which Obama said China must stop.

The strategy has largely shielded both him and China from criticism, at least on this trip, the one exception being Xi’s cochairing of a UN meeting on women’s issues on Sunday.

That drew fire from critics, including Democratic presidential candidate Hillary Rodham Clinton, who said China’s detention and harassment of women’s rights activists ought to disqualify Xi from such a role.

In the face of such criticism, Xi may have an ally in his glamorous wife, former army folksinger Peng Liyuan, who kept up her own busy schedule during the trip that ended Tuesday. AP

Thailand’s ousted PM files criminal case vs opponents

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ANGKOK—Thailand’s ousted Prime Minister Yingluck Shinawatra, who was pushed from office more than a year ago, impeached and faces criminal charges, hit back at her opponents on Tuesday with her own lawsuit.

Yingluck filed a case at Bangkok’s Criminal Court to countersue the country’s attorney general over the handling of her prosecution in connection with a subsidy scheme for rice farmers, which ran up huge losses.

Yingluck was Thailand’s prime minister from 2011 until a controversial court decision forced her out from office in May 2014, just a few days before the military staged a coup to overthrow her government.

She was impeached earlier this year

in connection with the money-losing rice subsidy scheme and barred her from office for five years. The attorney general then pressed criminal charges against her over the same matter.

In her court filing on Tuesday Yingluck said the attorney general and others were guilty of negligence of duty and a concerted effort to damage her, citing three alleged legal violations punishable by a range of six months to 10 years in prison.

The court will decide whether to let the case proceed or throw it out.

“I’ve come here to exercise my rights in accordance with the legal process,” Yingluck told reporters. “I submitted the lawsuit against the attorney general and team members.”

The rice-subsidy scheme was a key feature of Yingluck’s 2011 election campaign and helped win her huge support in rural areas. It bought rice from farmers at well above market price, but the program racked up losses of at least $4.46 billion.

Yingluck’s opponents said the scheme was riddled with corruption and she did nothing to stop it. She denies any wrongdoing.

Yingluck was accompanied by her brother-in-law, Somchai Wongsawat, himself a former prime minister who was also ousted by the courts in a 2008 decision.

Both Yingluck and Somchai are political allies and relatives of Thaksin Shinawatra, who was ousted by a 2006 military coup.

Yingluck is Thaksin’s sister and Somchai is

married to another of Thaksin’s sisters.

Thaksin fled into exile in 2008 to avoid a prison sentence on a corruption-related charge he says was engineered by his political foes, jealous of his popularity.

The courts and the military, two pillars of the conservative Thai establishment, have consistently acted to put pressure on Thaksin’s political machine, which has delivered convincing victories in all national elections since 2001.

The anti-Thaksin efforts have eased recently as the army consolidates its rule over the country, seeking to achieve a measure of reconciliation while putting in safeguards against a comeback by Thaksin and his allies. The junta says a new election won’t take place in Thailand until 2017. AP

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See “DOT,” A2

Epira amendment no panacea for power crisis, rate increases

B2-1

By Lenie Lectura

Conclusion

ome non-governmental organizations and militant groups want the Electric Power Industry Reform Act (Epira) abolished.

But, in the eyes of the private sector, the law is working, and there is no need to amend it.

Various business groups even expressed concern over the move to amend the Epira, saying that it might send the wrong signal to investors and lending institutions.

The American Chamber of Commerce of the Philippines, Employers Confederation of the Philippines, European Chamber of Commerce of the Philippines, Financial Executives Institute of the Philippines, Japanese Chamber of Commerce and Industry of the Philippines Inc. and the Korean Chamber of Commerce of the Philippines earlier urged the Department of Energy

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PESO exchange rates n US 46.8180

Continued on A2

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The Goth design with Neo Gothic as its theme under the Man Cave category

Story and photos by Marianne Grace Sarmiento

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WENTY-FOUR was the number of the day in September when the Philippine School of Interior Design (PSID) unveiled to the media its latest exhibit showcasing the designs of this year’s graduating batch.

Located at the Ronac Lifestyle Center in Paseo de Magallanes, Makati City, which will run from October 3 to 31, is the Studio24 exhibit. It presents 24 booths illustrating studio units with 24 square meters of space each, featuring 24 design styles of 24 different archetypes.

With the growing trend among developers of building high-rise condominiums offering units with little space for lesser cost, PSID challenges its students to demonstrate how a regular studio unit can be turned into a very exciting and more “personalized” space with practical applications.

“We want to show that our budding designers can not only adapt to the new norm of micro-condos, they can use ingenious, imaginative and innovative design solutions that not only showcase their talent but also show dwellers how to transform their space,” said Pojie Pambid, dean of PSID. The exhibit features three categories. First, the “Ladies’ Lairs” that target independent women with eight designs including the Pastry Chef with French Provincial as its theme; Socialite, Neo Baroque; Romantic Writer, Modern Victorian; Female Artist, Filipino Indigenous; Classy Dame, Deco Roman; Bachelorette, Art Nouveau; Shy Violet, French Rococo; and the Comic Geek, with Pop Art as its theme.

attract 5 million foreign visitors in its assigned markets. These are the traditional markets, such as the United States, Japan and South Korea, etc.

The rest of the 5 million foreign visitors are projected to come from the new markets being developed by the DOT Tourism Development group. Among these new markets being developed are Russia, India, Israel, Vietnam and Saudi Arabia, to name a few.

Of the P2.93-billion budget the DOT is asking Congress to approve,

special report

Where size doesn’t matter

The Comic Geek design with Pop Art as its theme under the Ladies’ Lair category

Data provided by the Department of Budget and Management (DBM) also show that the Tourism Promotions Board (TPB), the marketing arm of the DOT, has a proposed P1.64-billion budget, slightly higher than its P1.63-billion allocation in 2015.

Tourism Secretary Ramon R. Jimenez Jr. said the agency is still sticking to its target of attracting 10 million foreign visitors for 2016, up 21 percent from its 8.2 million target this year.

Of that number, he told the BusinessMirror, the TPB is supposed to

OSG ASKS SC TO CUT PIATCO’S PAYMENT T

HE government has asked the Supreme Court (SC) to reconsider the $326.93-million just compensation it awarded to the Philippine International Air Terminals Co. Inc. (Piatco) for the construction of the Ninoy Aquino International Airport-International Passenger Terminal (Naia-IPT) 3.

In a 28-page motion for reconsideration, Solicitor General Florin Hilbay asked the SC to delete the award of interests to Piatco in the amount of $242,810,918.54 and deduct another $113,944,044, representing noncompliance with contract specifications by Piatco, from the principal amount of compensation due.

It also prays to fix the just compensation for Piatco at $163,959,441, less the $59,438,604 already paid to the company.

“This is not an expropriation of land, but of a depreciating improvement on land. Thus, in fixing just compensation, the Honorable Court must take into account the fact that the government is taking property that is losing value over time,” the Office of the Solicitor General (OSG) said.

It added that to impose a 12-percent interest would be tantamount to allowing Piatco to profit by its own misdeeds.

“If Piatco had not violated the laws, the government would have had a guaranteed return of P17.75 billion, and the public would not have been severely inconvenienced for more than 10 years with an unfinished airport,” the OSG stressed.

Hilbay noted that, while the government is willing to pay just compensation, the SC should not overlook that there are other claimants who are interested in a portion of just compensation.

Among these claimants are Fraport, an equity investor of Piatco for the Naia-IPT 3 project, and Takenaka and Asahikosan, the project’s subcontractors.

Fraport has sued the government several times before the international arbitral tribunal, while the dispute between Piatco and Takenaka and Asahikosan is still pending before the SC. Thus, the OSG said, the SC should declare that any claim by Fraport, Takenaka and Asahikosan is enforceable only against the money to be paid by the government to Piatco. It added that upon payment of just compensation, the Court should also award full ownership of the airport facility to the government free from any obligations to any of the claimants.

Joel R. San Juan

n japan 0.3904 n UK 71.0510 n HK 6.0410 n CHINA 7.3509 n singapore 32.7811 n australia 32.7857 n EU 52.6281 n SAUDI arabia 12.4845 Source: BSP (29 September 2015)

A2 Wednesday, September 30, 2015

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Epira amendment no panacea for power crisis, rate increases Continued from A1

(DOE) to hold a joint stakeholders meeting to, once and for all, permanently address all issues in the power sector.

“What the government should do now is declare that Epira will not be amended, and conduct more dialogues with industry participants to reduce key uncertainties or change material rules midstream,” the associations stressed.

Epira works

Aboitiz Power Corp., a power firm engaged in power generation and distribution, said the Epira is “working just fine.”

“I am a big fan of the Epira. It promised to bring down the cost of electricity. It already has,” Aboitiz Power Corp. President and COO Antonio R. Moraza said in an interview.

Aboitiz Power is the holding company for the Aboitiz Group’s investments in power generation, distribution and retail-electricity services. The company is one of the largest power producers in the Philippines.

To date, Aboitiz Power and its partners produce a total of 3,044 megawatts of power.

The company also owns distribution utilities nationwide.

If there is a need to further improve Epira, Moraza said that amending the law is not necessary. “We’re of opinion that Epira does not need an amendment, and that any improvement and tweaking of Epira can be done without having to open the law. Rather, it can be done through rules and regulations,” he said.

Besides, amending the law could not be done overnight. “It takes a very long time with the deliberation, etc. I think you’re just going to introduce a period of uncertainty, which could very well scare some investors, which we don’t want,” the Aboitiz Power

official said. Also, he said stable power supply and a level playing field are proof enough that the Epira works.

“The ERC [Energy Regulatory Commission] chairman spoke recently of a level playing field. There are quite a number of players.

There’s a lot of power plants scheduled for commercial operation in the future. I think, we are good until mid-2025. So, you see, power isn’t going to be an issue. Again, Epira is working,” he said.

ERC Commissioner Jose Vicente B. Salazar said there are 68 power generators, 14 private distribution utilities, 71 electric cooperatives, 79 bulk users and seven wholesale aggregators registered in the Wholesale Electricity Spot Market (WESM).

In addition, there are 16 retail electric suppliers (RES), 12 local RES and 371 contestable customers. “The numbers speak highly of that level playing field,” Salazar said. “With a level playing field, we all win.”

Salazar, a former undersecretary of the Department of Justice, stressed that his job is to make sure that the level playing field created by the reforms in the power sector is, likewise, protected.

But if there is really a need to improve Epira, the newly appointed ERC chairman, in a text message, proposed the following: ■ Fiscal autonomy of the ERC. ■ Expanded organizational structure of the ERC by providing additional technical and legal positions.

■ Creation of a Consumer Advocacy Office.

■ Revisit the provision on cross-ownership and market share restriction under Section 45 of the Epira.

“The fourth proposal is meant to prevent anticompetitive behavior and market abuse by certain companies,” Salazar explained.

The other three proposals, meanwhile, are meant to strengthen the commission to al-

low it to successfully carry out its mandate.

The cross-ownership provision in the Epira allows power generators and distributors to be owned by the same interests.

The Management Association of the Philippines has been vocal in saying that amending Republic Act 9136 will not solve any problem, because the Epira is not the problem; it is the failure to implement the legislation properly.

“Our position is still the same—no amendments to Epira at this time,” MAP Energy Committee Chairman Ernesto Pantangco said, when sought for comment over the weekend.

An energy specialist of the International Finance Corp. (IFC) commented that the law “has delivered what it was asked to do.”

IFC chief energy specialist Tonci Bakovic earlier said in a forum held that the law has been successful in attracting investors, as well as in fostering competition in the industry.

The IFC official also noted that generation prices have been kept almost on a par with inflation in a country that has been growing lately at close to 7 percent per annum from 2010 to 2014. “That is quite an achievement in a country that grows fast.”

But, if there is a need to do so, Bakovic said the Epira should only be fine-tuned, similar to what Chile, Columbia and Brazil did.

“These countries, at some time during the implementation of their competitive electricity markets, considered changing their electricity laws, faced with volatility and high prices,” he said.

Bacovic said his statements do not necessarily reflect the views of the IFC, a unit of the World Bank.

Give it a try

Department of Energy (DOE) Officer in

Charge Zenaida Monsada, in an interview, said the DOE regularly issues a report on Epira implementation. “This is to show what has been done and what still needs to be done. The law is the law. We must all cooperate to achieve success,” she said.

Based on the latest status report on the Epira issued by the DOE, the agency said the law embodies significant achievements in the government’s effort to ensuring adequacy, affordability and reliability of electricity services to all electricity end-users in the Philippines.

The 26th status report on the Epira implementation covering the period of November 2014 to April 2015 highlights the following: ■ Updates on the privatization of the remaining assets, in particular Power Barges (PBs) 101 to 104, and transfer of contract to an independent power producer administrator of Unified Leyte Geothermal Power Plant for the bulk energy; ■ Continuing turnover to qualified distribution utilities (DUs) of the subtransmission assets (STAs) of the TransCo, which has signed 112 sale contracts with 80 DUs/ECs/consortia amounting to about P5.9 billion; ■ Updates on electricity rates to include average electricity rates, such as the summary of Manila Electric Co. residential unbundled power rates, and list of ERC decisions on DUs’ rate applications, updates on universal charge, loan condonation, lifeline rates and mandatory rate reduction; ■ Updates on WESM operations and governance to include operational highlights on price, supply demand and governance aspects; ■ Monitoring of compliance to installedcapacity limitation under Section 45 of the Epira highlighting the approval of the ERC relative to the Installed Generating

DOT. . .

SOUTHWEST MONSOON AFFECTING WESTERN SECTION OF LUZON (SEPTEMBER 29, 5:00 PM)

Capacity per Grid and National Grid, the Market Share Limitation per Regional Grids and the National Grid applicable for the year 2015; ■ Updates on the implementation of retail competition and open access (RCOA), which highlights the summary of RCOA registration and retail market transaction status; ■ Power supply-demand situation/outlook, including reports on the significant incidents in the power system, outages for 2014, and various initiatives of the DOE pursuant to Section 71 of the Epira; and ■ Electrification status to include the household-electrification level of the country estimated at 79.9 percent, which corresponds to 17.4 million energized households out of the estimated total household population of 21.8 million.

During this report period, the government faced major challenges in implementing measures to address the foreseen tight power supply during the summer months of 2015, covering the period March to July 2015. Specifically, the DOE recommended to the President of the Philippines to trigger Section 71 of the Epira on Electric Power Crises Provision, the report said.

It turns out that there was no need for President Aquino to be granted emergency powers to avert a possible energy crisis because, as Monsada pointed out, everyone cooperated.

“From the government to the private sector, everyone was willing to help. Supply was available. Power rates didn’t shoot up. The law is working,” she said.

The saying “why fix it if it ain’t broken” could probably best describe what the DOE official wants to convey. It remains to be seen, however, if the situation will change after next year’s elections.

Continued from A1

P2.47 billion will be allocated to the Central Office, while the rest, at P468 million, will go to the various regional offices for their personnel, maintenance and operations expenses, and financial expenses, among other administrative and agency support services. The DOT has proposed that Region 7 (Central Visayas) get the largest chunk of the regional funds, at P44.92 million. Cebu and Bohol, major tourist attractions in the country, are located in Central Visayas.

Other regions with the largest allocations include the National Capital Region (Metro Manila), where the DOT’s head office is located, at P43.43 million; followed by Region 13 (Caraga), P39.39 million; Region 6 (Western Visayas), P37.46 million; Region 3 (Central Luzon), P37.32 million; and Region 8 (Eastern Visayas), P32.78 million.

For the 2016 budget it submitted to Congress for approval, the DOT is committed to increase the tourism sector’s gross value added by 17 percent to P1.15 trillion.

The agency also committed to raise the number of people employed in tourism by 17 percent to 7.4 million. The agency, likewise, promised an 8.5-percent increase in domestic tourism to 56.1 million.

The proposed Aquino administration budget is currently under scrutiny by both houses of Congress.

Meanwhile, for its allocation for 2016, the TPB is focusing on using new media, i.e., bloggers, Twitter accounts holders and other online media, “to take a greater role in reaching the target audience more effectively,” according to documents published by the DBM. Included in the TPB’s proposed budget is a P475.67-million allocation for “tourism-promotion services.”

As per Republic Act 9353, otherwise known as the Tourism Act of 2009, the TPB’s activities will be funded with an annual appropriation from the national government of P500 million, as well as a percentage of income by Duty Free Philippines Corp., shares from the Philippine Amusement and Gaming Corp., and shares from fees collected by the country’s airports and seaports. The TPB’s budget falls under allocations for government-owned and controlled corporations.

The TPB’s assigned target of 5 million for 2016 is 19.3 percent higher from the 4.19 million baseline figure for 2014. No target was included for 2015.

Along with the DOT’s budget for the central office, Jimenez has also asked both houses of Congress to approve the 2016 budgets for the Intramuros Administration (P444.21 million) and the National Parks Development Committee (P209.19 million), for a total agency budget of P3.61 billion. The proposed agency budget is 44 percent higher than this year’s budget of P2.5 billion. (See “Tourist arrivals up 8% to 2.33 million in H1,” BusinessMirror, August 25, 2015.)

Jimenez and other DOT officials defended the DOT budget at the House of Representatives on August 17, and at the Senate on September 28. Another budget hearing is scheduled at the lower house on Friday.

The Nation

Editor: Dionisio L. Pelayo

BusinessMirror

Wednesday, September 30, 2015 A3

Adopt-an-Estero campaign cleans 153 water bodies in Metro Manila

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total of 153 water bodies in Metro Manila have shown improvement in terms of water quality, owing to the continuing public-private partnership effort under the Adopt-an-Estero Program of the Department of Environment and Natural Resources (DENR).

These water bodies showed improvements in terms of dissolved oxygen and biochemical oxygen-demand levels, says Environment Assistant Secretary and concurrent Environmental Management Bureau (EMB) Director Juan Miguel Cuna.

“Both of these parameters being monitored by the EMB are very essential in maintaining the quality of our waters and sustaining aquatic life,” Cuna added.

Nationwide, there are 346 water bodies “adopted” by the private sector under the program.

The DENR-EMB is stepping up rehabilitation efforts of the country’s major rivers and other water bodies, and has launched in 2011 the Adopt-an-Estero Program, under

which the private sector-partners conduct regular cleanup of a particular segment of an estero or a river tributary they adopted.

Activities under the program may include community mobilization, dredging of the creeks, regular cleanup drive, training and seminars, information and education campaigns, and livelihood programs.

Cuna issued the statement, as hundreds of barangay officials, community leaders, representatives from national and local governments, academe, civil society and private-sector partners gather at the Sulô Riviera Hotel in Quezon City on Tuesday for the 2015 Metro Manila Adopt-an-Estero Partners Forum to share experiences and discuss plans on the rehabilitation of Metro Manila’s waterways.

Since the program was launched, the DENR has been convening partners from all over Metro Manila to continuously engage them in the cleanup and rehabilitation of the adopted estero.

Every September, as part of the National Cleanup Month celebration, all the other EMB Regional Offices are, likewise, convening their respective regional partners’ fora, under the Adopt-an-Estero/Water Body Program.

The forum seeks to assess the multistakeholder program of the previous year and to firm up their action plans for the coming year.

Topics for the two-day forum include the Status Report of the Adopted Water Bodies in Metro Manila and, nationally, an overview of the quality of water in our esteros; presentations of promising initiatives from various private sector and local government unit partners; and programs relating to estero rehabilitation by selected national government agencies, such as the Department of the Interior and Local Government, Department of Public Works and Highways, Laguna Lake Development Authority, Pasig River Rehabilitation Commission, Metropolitan Manila Development Authority and the Manila Bay Coordinating Office of the DENR. Jonathan L. Mayuga

Senator wants CCT beneficiaries to clean mosquito-breeding places

A

By Recto Mercene

legislator yesterday asked why not include the spotting and cleaning of mosquito breeding places as one of the “conditions” in the government’s Conditional-Cash Transfer (CCT) Program.

Sen. Ralph G. Recto said that “merely tweaking” the conditions of the P62-billion Pantawid Pamilyang Pilipino Program or 4Ps could transform its 4,436,732 million beneficiary-families into a “big dengue prevention army.”

“After all, health officials are saying that the best way to eradicate dengue is to destroy its source. And that requires no complicated process, nor sophisticated equipment. Walis lang at

tanggalan ng tubig ang pinamamahayan ng lamok,” Recto said.

“Can we not send out this simple directive to the big CCT nation? It is also for their protection,” Recto told Department of Social Welfare and Development (Dswd) officials, who appeared before a Senate finance subcommittee to defend their proposed P104.1-billion budget for 2016.

In describing the “breadth and reach” of the CCT, Recto said about 1 in 5 Filipinos today are covered by the program.

“The Dswd oversees a payroll four times bigger than the national government work force. And that’s just on CCT alone.

It also provides monthly pension to almost 1 million senior citizens, a number eight times bigger than the Armed Forces personnel,” he said.

Economy

A4 Wednesday, September 30, 2015 • Editors: Vittorio V. Vitug and Max V. de Leon

Bill raises tax exemption of ‘balikbayan’ boxes from $500 to $2,000

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he chairman of the House Committee on Overseas

LINA: “We Workers Affairs has reestimate revenue cently filed a bill seeking to raise losses from the tax and customs duties exsmuggling activities emption of balikbayan boxes from riding through $500 to $2,000. balikbayan boxes Under House Bill 6156 or the to be at P50 million proposed “OFW Balikbayan Box a month. That’s law,” Chairman of the House a conservative Committee on Overseas Workestimate.” ers Affairs and Party-list Rep. Nicanor M. Briones of Agap said that the measure is in recognition of the immense contribution of overseas Filipino workers (OFWs) to the country’s economy through their remittances, which last year alone reached $24.3 billion.

The bill seeks to amend the National Internal Revenue Code (NIRC) and the Tariff and Customs Code of the Philippines to raise the exemption of OFW balikbayan boxes and personal effects from tax and custom duties.

The proposal provides that the value of the contents of balikbayan boxes shall be exempted from customs and duties if their value does not exceed $2,000.

Also, the bill said that personal effects of OFWs and other returning Filipino migrants or residents abroad whose value does not exceed P100,000 shall also be exempted from tax and customs duties.

Every six years after the effectivity of the Act, the bill provides that the values herein stated shall be adjusted to their present values using the Consumer Price Index as published by the Philippine Statistics Authority.

The bill, now pending at the Committee on Ways and Means, of which Briones is a vice chairman, provides it shall be the declared state policy to afford full protection to labor, local and overseas, organized and unorganized, and to promote full employment and equality of employment opportunities for all.

The measure also provides that the state shall affirm labor as a primary social, economic force and shall protect the rights of workers and promote their welfare. Hence, the state shall assist to uplift the socioeconomic status of OFWs by providing adequate benefits and privileges.

It mandates the Department of Finance, Bureau of Customs (BOC) and Bureau of Internal Revenue to promulgate the necessary rules and regulations within 60 days from the approval of the Act. In filing the bill, Briones said Filipinos abroad slowly and patiently fill their balikbayan boxes that will travel many miles across countries and continents to bring joy and a piece of themselves to their families, relatives and friends.

“These boxes, symbolic of their love, do not contain gold, guns and riches. They are packed with clothes, simple household items, books, soap, toothpaste and other things the OFWs have lovingly collected in the course of the year,” Briones said.

But now, the lawmakers said even this small, simple gesture of affection of OFWs has come under the radar of the BOC, with the aim of collecting taxes from the OFW balikbayan boxes.

Earlier, Customs Commissioner Alberto D. Lina said that the bureau’s policy to randomly open balikbayan boxes and impose taxes on it will be implemented.

Lina added it was not targeting the OFWs, but smugglers who are abusing the overseas workers’ rights through consolidated shipments of contraband.

“We estimate revenue losses from smuggling activities riding through balikbayan boxes to be at P50 million a month. That’s a conservative estimate,” Lina added.

According to the BOC, it has estimated an average of 1,000 containers of balikbayan boxes (400 boxes per container) arrive each month in Philippine ports.

After a public outcry, President Aquino, however, stopped the BOC from conducting physical inspections of balikbayan boxes.

Jovee Marie N. dela Cruz

BusinessMirror

news@businessmirror.com.ph

GBPC eyes to build coal-fired plant to augment power supply in Luzon

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By Lenie Lectura

lobal Business Power Corp.

(GBPC) of the Metrobank Group has revealed plans to put up a coal-fired power plant in Luzon next year, a company official said.

“Yes, we’re looking at Luzon,” said GBPC Executive Vice President Jaime Azurin when asked it the power firm is expanding outside the Visayas.

“But it has to be bigger in size to be able to lower the cost,” the official said, referring to the capacity size of the planned power facility. He did not provide other details. “I cannot tell you because a lot of people are looking for a safe spot.”

He added, “A lot has been said on Luzon but nobody has started. The

lowest price you have is a Chinese technology, which, unfortunately, is not doing good. How do you now convince the biggest buyer at the price competitive as the Chinese but with a better technology? The more sophisticated technology, the safer but a little more costlier.”

The output of the planned power facility will be disposed of via bilateral agreements with off-takers, probably the Manila Electric Co. (Meralco).

Meralco, through its powerdevelopment arm, already has a 20-percent stake in GBPC, the largest independent power producer in the Visayas. It was sold for P7.15 billion.

The utility firm is interested to acquire another 2-percent stake in GBPC. “Yes. We’re working on 22 percent of Meralco,” Azurin said.

Initially, the plan is to put up a reliable and cost-effective power facility in Luzon.

“If it’s the least cost, I don’t know how reliable it will be. We may have the least cost, but it’s not reliable. Reliability has a cost also. How can you force a big user like Meralco that you have to buy this technology. We’re all trying to find ways on how to compete,” Azurin added.

GBPC is a member of the GT Capital Group of Companies, of which Metrobank is the leading company.

It owns a 92-megawatt (MW) die-

sel-fired power plant in La Paz and is being operated by Panay Power Corp.

Other power plants of GBPC are in Cebu, Aklan and Oriental Mindoro.

The company is also on track with the construction and commercial operation of its two power projects in Panay Island and Negros Occidental.

GBPC’s subsidiary, Panay Energy Development Corp., is adding 150 MW of additional power-generation capacity in the Visayas next year.

“We have 150 MW that’s being constructed in Iloilo City. That’s on schedule, it will be completed by June of 2016,” Azurin said.

Another power project in the pipeline is the 40-MW biomass power plant in La Carlota City, Negros Occidental. The biomass power plant will be within the premises of Roxas Holdings Inc.’s Central Azucarera de la Carlota. It is targeted for completion by 2017.

House panel OKs airline passengers briefs bill of rights for 2nd plenary reading bcda awards p45.9-m road-rehab project

By Jovee Marie N. dela Cruz

T

he House Committee on Transportation on Tuesday approved a measure strengthening the Air Passenger Bill of Rights.

House Committee on Transportation and Liberal Party Rep. Cesar V. Sarmiento of Catanduanes said the committee report of the consolidated measure is now being prepared to be presented in the plenary for second reading. The consolidated bill seeks to remedy the abuse of airlines of passengers who suffer delay and cancellation.

The bill also provides for a 20-percent discount on airfares to senior citizens, persons with disabilities (PWD) and students.

It requires airlines to reimburse 75 percent of the fare as long as the passenger cancels the flight at least 24 hours before departure.

The measure also requires airlines to provide refreshment for a two-hour delay, including free phone calls or Internet and hotel for canceled flights.

The bill, likewise, provides the right to receive the full value of the service purchased, right to mandatory fare discount, right to refund, right to cancel a flight, right to rebook a flight, right to be processed for check-in, right to board aircraft for the purpose of the flight, right to equal protection, right to be respected, access to emergency measures, medical assistance, safety devices and essential services.

It provides the right to bring action, satisfaction or relief of a wrong or injury, rights of a passenger for delayed flights, rights of a passengers for canceled flights or flights deemed canceled, rights of passengers denied boarding, priority in filling up of empty seats in the air carrier’s next flight, compensation for lost, damaged or delayed baggage and compensation for death and bodily injuries.

The bill also mandates the right, duties and obligations of the air carriers, such as prevention of harm to passengers and maintenance

of aircraft; designation of an “all flight” or “per route” counters; special accommodations of PWDs, persons with special needs, senior citizens, pregnant women and unaccompanied children; responsibility of the air carrier when the number of passengers is beyond the capacity of the aircraft; duty of the carrier in the event of flight deviation; provision of assistance desk, operational spare; and immediate reporting of off-loaded checked baggage; availability of check-in counters; assignment of technical personnel in airports; and complaint desk.

It said that the passenger and air carrier shall exhaust all efforts toward setting their disputes amicably in accordance to the provisions set forth in this Act and if no amicable settlement reached, the government, through the Civil Aeronautics Board (CAB), may take cognizance of the case.

Any violation of this Act shall be penalized in accordance with the provisions stipulated under CAB, and the Consumer Act of the Philippines.

“Failure on the part of the air carrier to comply with any of the obligations stated in this Act upon the order of CAB shall, after due hearing, be a ground for suspension of its franchise or license to operate. Grave and repetitive violations after the lifting of the suspension of franchise or license to operate shall be a ground for revocation of such franchise or license to operate,” the bill said.

Party-list Rep. Francisco Ashley Acedillo of Magdalo, one of the authors of the bill, admitted that the panel approved the measure following the series of complaints against inconveniences by airline passengers to their clients.

“We simply could not ignore the mounting complaints of our airline passengers. Otherwise, we, in Congress, would be called deaf to their clamor,” Acedillo said.

The Air Passenger Bill of Rights is being pursued by the departments of Transportation and Communications and Trade and Industry under a joint administrative order.

The state-owned Bases Conversion and Development Authority (BCDA) has awarded the rehabilitation contract of roads leading to and within Clark Green City to the 4B Construction Corp. with the project cost pegged at P45.9 million.

4B Construction Corp.’s bid was declared the lowest calculated and responsive bid. The approved budget for the contract was P78.3 million, translating to savings for the government.

“We look forward to having a long-standing partnership with 4B Construction Corp. as we build the roads to and within Clark Green City. The sooner we achieve this, the faster we can proceed in developing the country’s first smart, green and disaster-resilient metropolis,” BCDA President and Chief Executive Officer Arnel Paciano D. Casanova said in a statement released on Tuesday.

Eight other firms tendered their respective bids, namely, D.K. Jocson Construction, Haidee Construction, IPM Construction Corp., Leadway Construction, New Kanlaon Construction, Subiccon Corp., Tokwing Construction and WERR Corp.

The improved roads will service the development of Clark Green City’s Phase 1, which covers 288 hectares, as well as the future site of University of the Philippines campus and other institutional areas the BCDA has forged with other government agencies.

UP has expressed its plans to break ground in the first quarter of 2016 for its 70-hectare Clark Green City Campus. Catherine N. Pillas

dost launches solar-powered ice plant in leyte

HINDANG, Leyte—The government on Monday launched an ice plant in this town powered by an off-grid solar-power system.

The Department of Science and Technology-Southern Leyte Provincial Director Dominador Clavejo disclosed that the modern ice plant is powered by 20 solar panels, paired with 20 batteries that stored solar energy during daytime.

Clavejo claimed that each solar panel, installed atop a galvanized iron roof of the ice plant building, costs P13,000, while each of the battery is worth P25,000.

“Each solar battery can provide power for 21 days and its charging and switching off is automatic,” he said. “In good weather the peak of strong charging is at 9 a.m. up to 3 p.m. The automatic charging is slow at 4 p.m., but will continue as long as the sun shines until sunset.”

Clavejo also divulged that the total power output release during the day’s ice-plant operation exceeded its needs and use the extra power for the electricity requirement of nearby houses. PNA

Legislators slam possible 3-year delay of Bicol airport project

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awmakers from the so-called Bicol bloc has scored the Department of Transportation and Communications (DOTC) anew for its projected three-year delay in the completion of the Bicol International Airport (BIA) project.

Claiming that Bicol region has lagged behind its neighbors in terms of airport development, Reps. Fernando Gonzalez of the Third District of Albay; Al Francis Bichara of the Second District of Albay; Cesar Sarmiento of the Lone District of Catanduanes; and Rodel Batocabe of AKO Bicol party-list demanded quick and decisive action from DOTC’s Bids and Awards Committee (BAC).

The lawmakers blew their top upon learning that the BIA project—whose completion was promised by President Aquino by 2016—would be delayed by two to three years as the bidding and award of contracts hit a snag.

During a recent hearing of the House transportation committee chaired by Sarmiento, DOTC project

engineer Raul Basalote admitted that the Bicol airport’s Package 2A, which covers the construction of landside facilities, has been bidded out in January, and is targeted for completion within 24 months.

To date, however, the project has not been awarded by the DOTC citing the disqualification of the winning bidder during the post-qualification stage. The case is under reconsideration.

On the other hand, Package 2B covers the construction of the passenger terminal building and runway extension to 2,500 meters. It has a project duration of three years, Basalote said.

“Is the DOTC telling us that the international airport of Daraga is going to be completed on 2018 or 2019?

Is that the new estimated completion of this airport when the President promised that it would be completed next year?” Gonzalez asked.

“So why was the completion date revised? Is it because of lack of funding, lack of interest on the part of the

DOTC to finish the project, or Bicolanos are not important enough that the DOTC can just delay the project by three years when all other airports in the country have been completed? We want answers because we have to explain to our constituents. We need the report urgently,” Gonzalez stressed.

Responding to mounting complaints, Transportation Undersecretary Jose Perpetuo Lotilla, who chairs the agency’s BAC, assured lawmakers that he will reconvene the technical working group to review the motion for reconsideration submitted by a disqualified bidder. “We will resolve the motion for reconsideration tomorrow,” he said during the hearing.

Sarmiento said the committee is relying on Lotilla’s assurance that the resolution of the post-qualification issue would be resolved at the soonest possible time. “Para naman matuloy na ang project [So the project can finally proceed],” Sarmiento stressed.

Earlier, Bichara criticized the DOTC

for “chronic delays” in the airport project. He said that due to the DOTC’s delays in resolving the motion for reconsideration of the winning bidder, there is grave danger that the project would be further delayed by the forthcoming election ban.

Meanwhile, Batocabe said the DOTC cannot simply proceed with the bidding for Package 2B without first resolving the issues confronting Package 2A. “I pointed out to Undersecretary Lotilla that the DOTC can’t immediately proceed with the next phase [Package 2B] because part of Package 2A includes land clearing operations in areas where the passenger terminal building would be built. In other words, we first need to finish Package 2A before the DOTC can proceed with Package 2B. Assuming that the DOTC can’t decide on Package 2A and it will award Package 2B, the DOTC is opening itself to possible lawsuits from contractors who have been placed on indefinite standby,” he stressed.

A6 Wednesday, September 30, 2015

Opinion BusinessMirror

editorial

Reiterating unqualified support for MSMEs

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or the third time in the last few months we are devoting this space to MSMEs—the micro, small and medium enterprises—for the central role they play in the solution of the country’s most serious socioeconomic problem: unemployment. More jobs are created per unit of capital invested in MSMEs than in large-scale enterprises.

We have always admired the spirit that leads to the establishment of MSMEs—the Schumpeterian creative spirit. The enterprise creates employment not just for the creator himself but for other people, as well. In addition, it contributes to the production of commodities and the generation of services that constitute the vital components of our gross domestic product.

The latest news on this topic comes from the recently concluded meetings of the Asia-Pacific Economic Cooperation country trade ministers held in Iloilo City. The ministers adopted the Iloilo Initiative that will, first, deal with problems that block MSME growth, like underdeveloped infrastructure, inadequate information on market opportunities across borders, lack of facilities to comply with border requirements, lack of access to financing; and, second, open up opportunities for growth, like linking up MSMEs through the digital economy and e-commerce with the value chains of the global economy by making it easy for MSMEs to gain access to markets across borders.

In the Philippines we are proud to say that we have influential organizations that are associated with the development and nurturing of MSMEs. Organizations like Go Negosyo of Joey Concepcion, the Villar Foundation and the Philippine Long Distance Telephone Co.’s SME Nation that has been awarding the MVP Bossing Award to outstanding entrepreneurs in the last several years. In the last celebration of Global Entrepreneurship Week, the British ambassador was a prominent guest.

Our words of support for financing MSMEs are not being given as an empty lip service. There is a Credit Survey Fund created by the Bangko Sentral ng Pilipinas (BSP) that extends no-collateral loans to MSMEs. We do not have the latest report, but the BSP’s target was to give out some P1.5-billion loans from this fund to MSMEs by the end of 2014.

The most important contribution of the Iloilo Initiative to MSME development is less the solutions it offers to MSME problems, rather old-hat solutions if you ask us, but more its opening up of new vistas of rapid growth for MSMEs in the global economy. Indeed, e-commerce offers a tremendous potential for accelerated growth. Online buying and selling, the linking up with huge enterprises here and abroad, selling and buying products and services of mindboggling diversity would be challenging, to put it mildly. In these activities MSMEs must employ the services of computer-savvy assistants. No problem.

We have many of these talented young people in the Philippines.

As they have responded with confidence and determination to myriad issues of the past, so will Philippine MSMEs, we are certain, respond with even greater confidence and determination to face the new challenges of doing business in the 21st century.

Preparing for retirement Susie G. Bugante

All About Social Security

W

hen is the best time to plan for retirement?

Financial advisers agree that it is never too early or too late to start preparing for one’s retirement. Many of those who are about to retire often wished that they had started saving much earlier.

Why is there a need to prepare for retirement? Obviously, for financial security, which does not happen overnight but is something that everyone must plan for and commit to. Financial experts say that the key to a secure retirement is to plan ahead. Determine how much is needed for one’s retirement, start saving, keep saving and stick to one’s goal.

According to news reports on the East Asia Retirement Survey, conducted by Richard Jackson and Tobias Peter of the Global Aging Institute—which included China, Hong Kong, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam— “only two-thirds of today’s Filipino

workers expect to receive pension benefits when they retire.” The survey also showed that Filipinos worry about their retirement security. They are worried about being destitute during retirement, using up their savings and being a burden to their children. Despite these fears, the survey said, not too many Filipino workers are taking steps to secure their future. “...just 12 percent report that they are saving more for retirement now than they were three years ago, fewer than any other country surveyed.”

Well, here’s good news to Social Security System (SSS) members who are among those expecting to receive pension benefits when they retire. They now have a way

to save more for their retirement years through the SSS PESO (Personal Equity and Savings Option) Fund. The SSS PESO Fund is a voluntary provident fund offered to SSS members on top of the regular Social Security program. Members can save their excess earnings and build a more comfortable retirement through tax-free earnings and benefits, sovereign guaranteed investments and guaranteed earnings.

This program is open to all employees, self-employed, voluntary and overseas Filipino workers (OFWs) who: a) are below 55 years old; b) have paid contributions in the regular SSS program for at least six consecutive months within the 12-month period immediately prior to the month of enrollment; c) if selfemployed, voluntary and OFW members, should be paying the maximum amount of contributions under the regular SSS program; and d) have not filed any final claim under the regular program.

Each member will be allowed a maximum contribution of P100,000 per year and a minimum of P1,000 per contribution.

The contributions and earnings of a member will be allocated to three types of accounts, namely, 1) retirement or total disability (65 percent,

with guaranteed earnings based on 5-year T-bond rates; 2) medical (25 percent, with guaranteed earnings based on 364-day T-bill rates); and 3) general purpose (10 percent, with guaranteed earnings based on 364day T-bill rates). No withdrawals are allowed from the retirement or total disability account.

If one starts saving P100,000 a year at age 40, he would have contributed a total of P2 million by the time he reaches age 60. Assuming that the fund growth rates are 3.75 percent, 1.85 percent and 1.85 percent per annum (may be higher or lower) for retirement account, medical account and generalpurpose account, respectively, the member will earn P500,000 in 20 years, giving him a total of P2.5 million upon retirement.

Ultimately, one is responsible for his financial future.

For more information about the SSS and its programs, call our 24-hour call center at (632) 920-6446 to 55, Monday to Friday, or send an e-mail to member_relations@sss.gov.ph.

Susie G. Bugante is the vice president for public affairs and special events of the Social Security System.

Send comments about this column to susiebugante.bmirror@gmail.com.

Rubio goads Trump into sharing the spotlight Margaret Carlson

BLOOMBERG VIEW

A

pparently, Americans like duopolies in politics, and we may have a new one this week.

Gone is Scott Walker vs. Donald Trump. The real-estate mogul pounded away at the Wisconsin governor’s record on jobs and revenue, and away he went.

Down—we have learned by now never to say “out” in this most unconventional Republican nomination race—is Carly Fiorina vs. Trump.

Yes, she got a lift from his misogynistic attacks and from her unflappable parries in the September 16 debate. Since then, however, her checkered record as chief executive of Hewlett-Packard has caught up with her, including suggestions the company violated sanctions by selling computer parts to Iran and the fact that she pocketed millions after her dismissal by the board. Even though she got the Donald to taste crow on national television, her ascension in the polls has been fleeting.

So make way for Trump vs. Marco Rubio. One of the reasons the Florida senator is getting his turn in the ring is that he reversed a vow not to play into Trump’s hands by rising to his provocations. The CNN debate taught him that substance and gravi-

tas just wouldn’t cut it: The more serious the topic, the better Rubio did, while Trump took a pass when attention turned to weighty subjects. So it was Fiorina who got the big bounce for putting down Trump, and Rubio’s impressive performance got lost.

Fortunately for Rubio, Trump, with his unerring instinct for directing the media spotlight to its next shiny object, is more than up for the fight. Here’s someone who isn’t named Jeb Bush to taunt with schoolyard insults. Trump and his codependent press corps have grown bored of a fading Bush, whose campaign was washed out this weekend by the news of the resignation of another establishment figure, House Speaker John Boehner. When Boehner’s surprise move was announced on Friday at a Washington gathering of Value Voters, the party’s most conservative members, the audience cheered, another signal, if any was

needed, that the base of the Republican Party really wants to throw out the bums . As Trump would say, why waste time with losers?

To earn his 15 minutes, all Rubio had to do was to man up and follow the trail blazed by Fiorina. Perhaps, the only pattern to have emerged from this prediction-defying campaign is that the trickle-down coverage from engaging Trump is a candidate’s best hope of getting covered.

Shun the real estate salesman and you find yourself talking to a sprinkling of retirees in a coffee shop in New Hampshire while he’s filling a stadium in Dallas. So Rubio came down from his high-minded Trumpfree zone, and began to dis the mogul. He warmed up with a few exploratory jabs: Trump, he said on Fox News, “had a really bad debate. Carly Fiorina really embarrassed him.”

Rubio hit his stride in a September 24 radio interview, calling Trump “touchy” and “insecure,” a lightweight who “can’t have more than a 10-second sound bite on any key issue.” Then he went for what he thought would be the tycoon’s glass jaw, mocking the low turnout at one of the Donald’s events in South Carolina. On Monday on NPR, Rubio said he did not want to be part of Trump’s “freak show,” protesting just enough to be sure he would.

It has worked like a charm: Trump didn’t turn the other cheek, but instead wheeled around his full persona to take on Rubio, calling him

a “clown,” and an ingrate (“I’ve been so nice to him.”)

Pausing only to put out a tax plan that seems to have something for everyone and doesn’t gore any oxen, Trump has fired salvo after salvo at Rubio—about his on-again, off-again support for immigration reform, his high credit-card debt (“he’s worth zero!”). He has brushed off suggestions the senator could be trouble.

He’s “not a threat. He’s a baby.”

Ouch. That round, innocent face that belies his age and experience is held up as a liability by those such as Trump who like to criticize President Barack Obama for his youth.

But Rubio isn’t crying: He’s getting a bump in the polls, pulling ahead of Bush among the so-called establishment candidates. But Trump’s attempts to paint him as a novice could save Rubio from the broad brush tainting all the bums to be tossed out. It’s good to look fresh and new in a race in which a reality-TV producer/real-estate developer is leaving veteran governors in the dust. Being a baby means Rubio is not guilty of the sin of being around too long. Old or young, unlike governors, senators don’t get anything done anyway.

Standing up to Trump isn’t going to lead Rubio to the promised land, any more than it saved Fiorina. But the reflected klieg lights of the Trump show is where the action is for those who need to demonstrate that they have the goods that Republican primary voters appear to want.

Opinion BusinessMirror

opinion@businessmirror.com.ph

The bancassurance regulatory framework INSURANCE FORUM Part 1

BSP Circular No. 357, dated November 8, 2002

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he first regulatory framework on bancassurance was established under Section 20 of Republic Act (RA) 8791, otherwise known as the General Banking Law of 2000. Under Section 20, a bank may allow the presentation and/or sales of the financial products of its allied undertaking or of its investment house units.

In the Manual of Regulations for Banks (MORB), no explicit reference was made to the term bancassurance, instead, the term “cross-selling” was used (subsec. 1631.4). Pursuant to Section 20 of RA 8791, Monetary Board Resolution (MBR) 1511, dated October 17, 2002, amended the MORB, by providing under Section 1631 the provision on “Financial Products of Allied Undertakings or Investment House Units of Banks.”

Universal and commercial banks were allowed to sell certain “financial products” which included limited insurance products, to wit: a) life insurance products—1) term insurance (including mortgageredemption insurance); 2) whole life insurance; 3) endowment; 4) health and accident policies; 5) variable life insurance contracts; 6) life annuities; b) Nonlife insurance—1) fire insurance; 2) marine cargo policies; 3) homeowners’ policies; and 4) Directors/ officers liability insurance.

Among the concerns at that time was the need to distinguish the financial products offered by the banks from those offered by the “allied undertakings.” Thus, subsections 1631.1 and 1631.2 required that “a clear and explicit distinction between financial products offered by a bank and those of its allied undertakings or investment house units must be made in the presentation and sale of these products, whether through written or verbal communications.” This is to dispel “the impression that these products are covered by the deposit insurance system or guaranteed by the parent bank.” It also required that the “public should also be able to distinguish personnel marketing nonbank products from regular bank personnel.”

Under subsection 1631.2, such presentation and sale shall only be “upon prior approval of the Monetary Board.” Subsection 1631.3 enumerated the documentary requirements before such presentation and selling can be allowed. Subsection 1631.4 provided for the financial capability requirements for banks before cross-selling can be allowed. Among the several requirements, the bank must have a capital adequacy, asset quality, management, earnings, liquidity and sensitivity (Camels) composite rating of at least “3” in the last regular examination of the Bangko Sentral ng Pilipinas (BSP).

Note that the highest Camels rating is a “5.” No local bank as yet has received a rating of “5.” Subsection 1631.5 regulated the promotional materials to be used. Subsection 1631.7 required the training of personnel. MBR 1511 was disseminated through BSP Circular 357.

2012 Manual of Regulations for Banks

The provisions on cross-selling would be transferred to Section 1172 of the 2012 MORB. Under Section 1172, in “case of sale of insurance products of insurance company affiliates, said affiliates must be accredited or precleared by the Insurance Commission to ensure that only stable and reputable insurance companies can sell their products through banks.” Under the statement of principles in Section 1172.1, to “enable the public to understand fully the attendant risks involved in these transactions, a clear and

explicit distinction between financial products offered by a bank and those of its allied undertakings or investment house units must be made in the presentation and sale of these products, whether through written or verbal communications.” Again, under Section 1172.2 such presentation and sale shall only be “upon prior approval of the Monetary Board.”

BSP Circular No. 801, dated June 27, 2013

Pursuant to MBR 849 and 907, dated May 23 and 30, 2013, respectively, Section 1172 of the MORB was amended and renumbered. Section 1172 was renumbered as Section X172 providing for the revised cross-selling framework. Under Section X172, Statement of Principles: “The Bangko Sentral ng Pilipinas recognizes that bank premises may serve as the point for the presentation and distribution of a range of financial products. However, this distribution mechanism can give an understanding that these financial products are directly supported by the bank, and thus, could lead to an impression that the bank ultimately bears the risks inherent to these financial products. As such, appropriate disclosures and relevant controls are necessary to mitigate the reputational risks to which banks are exposed to and to ensure that the public is aware of the implications of these transactions and is better positioned to make financial decisions.”

Two important terms are defined in subsection X172.1. Cross-selling is defined as the “presentation and sale of a financial product to a bank client inside bank premises through written or verbal communications.”

Financial conglomerate is defined as “a group of entities whose exclusive or predominant activities consist of providing significant services in at least two different financial sectors (banking, securities and insurance).

Subsection X172.3 provided for the role of the board of directors of banks in governance of cross-selling activities. As such, the boards of directors have been tasked to be “responsible in the approval and oversight of policies relating to cross-selling arrangements.” More important, banks have been tasked to “ensure that a mechanism is in place to address any complaints that may arise from cross-selling transactions” which “mechanism shall form part of the agreement between the bank and the financial product provider,” in this case the insurance companies.

Subsection X172.5 provided for the segregation of bank activities and the other financial product providers. Subsection X172.7 notably provides that the “BSP should be satisfied that the bank and the financial product provider belong to a common financial conglomerate before cross-selling arrangements may be allowed.” Finally, subsection X172.8 provided that “[o]nly those banks with Camels composite rating of at least “3” or its equivalent and without major supervisory concerns shall be given authority to engage in cross-selling activities.”

Dennis B. Funa is currently the Deputy Insurance Commissioner for Legal Services of the Insurance Commission.

E-mail: dennisfuna@yahoo.com.

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Clinton’s plan to mess up prescription economics Megan McArdle

Atty. Dennis B. Funa

Wednesday, September 30, 2015

BLOOMBERG VIEW

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illary Clinton thinks drug development should be riskier and less profitable. Also, your health insurance premiums should be higher. And there should be fewer drugs available.

This is not, of course, how the Clinton campaign would put it. The official line is that Americans are just paying too darn much for drugs, and she has a plan to stop that: n Regulate direct-to-consumer advertising more heavily and strip its tax deductibility. n Require drug companies to spend a certain percentage of revenue on research and development (R&D), or face penalty payments and the loss of their R&D tax credit (I am inferring that this is what she is talking about, since the actual language of the proposal is long on paeans to the importance of federal research funding and short on details). n Cap out-of-pocket costs for drugs. n Reduce the exclusivity period for biologic drugs. n Prohibit companies from making side payments to generic manufacturers to keep generic competition off the market. n Allow drug reimportation. n Require that new treatments be proved to be a substantial improvement over existing treatments—i.e., eliminate the dreaded “me too” drugs. n Allow Medicare to “negotiate” drug prices.

Eliminating the side payments seems eminently sensible. (Yes, yes, you can strip my libertarian card, but marketrigging contracts shouldn’t be enforced.)

It also seems reasonable to require

some sort of comparative effectiveness research. Other provisions will certainly drive down drug prices, at the risk of also driving down innovation.

Still, other provisions, however, are simply bad economics. In what other market do we worry about having a second product available that’s merely just as good as the first? Should we really only have one antidepressant, one statin, one blood pressure medication, and so forth? Might there be variation among patients so that drugs that are statistically about equally effective in large groups are, nonetheless, individually more or less effective for different people? Might one drug’s side effects be better tolerated by some patients than another’s? Might having two drugs in the category help keep prices down?

Then there is notion that we should force pharmaceutical companies to spend a set percentage of their revenues on R&D. This seems to me to be…what’s the word I am looking for? Ah, I’ve got it: “insane.” For one thing, compared to virtually any other industry, pharmaceutical companies already spend an enormous fraction of their revenues on R&D. Why assume that it ought to be higher? Or even more risibly, exactly the same at every company?

For another, as far as I am able to determine from the campaign’s somewhat sketchy outline, this metric could potentially create an utterly bizarre result:

a company that buys a smaller firm, or a drug invented at a smaller firm, and then takes that drug to market, would be forced to charge lower prices than a company that invents and markets its own drugs.

Why is this crazy? Well, consider what the acquiring company might pay for the drug. If you had a valuable drug under patent, what price would be needed to induce you to part with it? That price would probably be pretty close to...the profits you’d expect to get if you marketed the drug yourself, less any money you’d have to lay out to get the drug approved and produced, and maybe some discount because you get a guaranteed sum right now, and don’t have to wait, or take the risk that the market won’t be interested in your new drug.

In other words, as a way of funding the invention and production of new drugs, these two things are exactly economically equivalent; it’s irrelevant whether the drug was invented in-house, or acquired from another firm, because from the perspective of the folks investing in the R&D (which is what those profits are supposed to encourage), the expected return is roughly the same either way.

Yet, the government would be treating these situations as if they were completely different. Effectively, they’d be penalizing companies for buying drugs invented somewhere else. That’s bad for a number of reasons, starting with the fact that biotech start-ups often don’t have the necessary capacity to take a drug through trials and production and to market. It would also reduce the value of patents, because a patent sold to another company suddenly loses much of its value. And what normally happens when the government artificially sets the price of something at well below the current level? That’s right, boys and girls: You get less of it.

As Harvard’s Amitabh Chandra told the New York Times, this is “an astonishingly naïve approach,” that wouldn’t necessarily do much to control prescription prices, while potentially

Greek banks expose Europe’s flaws

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ow that Greece has survived a standoff with its European creditors and a snap general election, it faces another ordeal: reviving its paralyzed banking system. Flaws in Europe’s new banking union will make this job harder than it ought to have been.

Months of brinkmanship and economic free-fall have left Greece’s largest banks in a dire state. Losses are expected to wipe out much or all of their equity capital. Deposits are down about 25 percent since the beginning of the year. Lending to nonfinancial companies fell nearly 7 percent from January through July, the largest sixmonth decline since 2009.

Turning things around will require a thorough reckoning. Banks will have a hard time attracting deposits and lending unless their finances are repaired

beyond reproach. That’s why it’s crucial for the European Central Bank to be unsparing in writing down troubled assets and estimating capital needs. There must be no more smoke and mirrors.

The banks need capital in the form of equity—money from shareholders willing to bear risk.

The next question is who will supply the capital. Europe’s banking union has rules for full-scale bailouts, but following them could be disastrous. They require banks’ creditors (including depositors) to bear much of the loss, unless special exceptions are invoked.

That’s right in principle, but in Greece’s case such losses could hurt businesses severely and further damage the economy. The rules also limit the use of public money from the euro area to directly recapitalize banks. Yet, the Greek

government lacks the fiscal capacity to solve the problem by itself.

There’s a work around, and it ought to be deployed. The new bail-in rules don’t go into force until January 1.

This allows the government—with European creditors’ blessing—to avoid harming depositors as long as it acts quickly. Also, euro-area officials have devised a way to inject capital almost directly. The European Stability Mechanism has set aside as much as €25 billion that Greece can use to buy equity in banks, on the condition that the shares are deposited into a privatization fund supervised by European creditors and directed largely toward paying the government’s debts.

It’s good to see that European officials can be creative under pressure. Still, the maneuvering hardly reflects well on the

encouraging wasteful spending on lowvalue R&D projects in order to hit an arbitrary federal target. That’s obvious to anyone who knows anything about drug research and/or thinks about it for more than three seconds. But most voters don’t know anything about drug research and won’t think about it for more than three seconds.

The larger question is why Clinton is so focused on pharmaceutical prices. They’re not the bulk of healthcare spending. In fact, drugs often help patients avoid a much more expensive alternative. Years of pricey new statins are still cheaper than a coronary bypass.

I think there are a few answers to this.

First, the pharmaceutical companies’ story is hard to tell. We think they’re selling us pills. But as I once heard it explained, they’re not really selling the pills, because pills are trivially cheap to make. What they’re actually charging for is the little white piece of paper you get with the pill: the one that tells you how much to take, and what the side effects and possible drug interactions are. That’s what cost a billion dollars they’d like to get back. But since most of us don’t even look at the little piece of paper, this is a mite hard to explain to your average voter.

Second, consumers often pay a higher percentage of their drug costs than they do of their other health-care services, and if they’ve got a chronic condition, they pay those costs every month. So they’re more outraged about the bite this takes out of their wallet than doctor’s visits and hospital stays that are more rare and more covered.

And third, there’s a hospital and a doctor’s office in every district. Voters know health-care workers. They like those people. They don’t want their politicians bad-mouthing them. On the other hand, pharmaceutical research is concentrated in a few areas, and most people have never met anyone in the industry. That makes it much easier to think of them as faceless, terrible people who are robbing us.

banking union’s design.

There are two lessons. First, banks should have a lot more capital in the first place. That way, the question of who pays for bailouts will be much less likely to arise. Currently, the largest European banks have, on average, even thinner equity cushions than their US counterparts. Second, in cases where public money is nonetheless required, European authorities need the power to recapitalize banks directly without resorting to subterfuge.

Europe’s banking union was supposed to sever the link between big banks and national governments, so financial and sovereign-debt troubles won’t reinforce one another like they did during the region’s last crisis. Greece shows that this plan still has a long way to go.

Bloomberg View

Shopping

A BusinessMirror Special Feature

www.businessmirror.com.ph

Wednesday, September 30, 2015 A8

SMBABIES SALE AT THE SM STORE

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2 It’s baby’s day out at the smbabies sale

One’s never too young to be stylish at the smbabies sale

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OMS can’t miss the smbabies sale now ongoing until October 4 at all SM Stores! It’s the best time to shop for the little ones with up to 50% off on great clothes selections from 0 months to 4 years old.

Enjoy great bargains and fun gifts. There are free backpacks for every P1, 000 purchase on regular items; as well as medicine droppers for every P1, 000 purchase of sesame toddler items, and free nappy clamps for

every P500 purchase of sesame newborn items until September 30 2015.

Catch smbabies sale at the Infants Wear Department of all SM Stores nationwide. *Items on sale may vary by store.

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1. A PERFECT gift set for the little one 2. ROMPERS are not only stylish, but also very 3.

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convenient for the little ones GO ACTIVE – with this shirt and short set for boys GO SPORTY – with this shirt and short set for boys

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YOUR little bud statement tee WHATEVER mood your little girl is in you’ll never go wrong with a perfect tee A CLASSIC cardigan and ladylike dress in grey and red

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