Businessmirror february 13, 2018

WHY SHOULD YOU HAVE A GOOD LOOK AT GDPR?

By Henry J. Schumacher

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The new regulations offer EU citizens sweeping new powers over how their data can be collected, used and stored, presenting global leaders outside the 28-country block with a stark choice: bring their domestic laws in line with the European Union’s

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new rules, or risk being shut out of a market of 500 million well-heeled consumers.

For many countries, the choice is a nobrainer. Breaking commercial ties with the world’s largest trading bloc is unthinkable, Continued on A12

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A broader look at today’s business n

Tuesday, February 13, 2018 Vol. 13 No. 125

Higher palay-buying price eyed to steady rice market

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By Jasper Emmanuel Y. Arcalas @jearcalas & Bernadette D. Nicolas @BNicolasBM

abinet Secretary Leoncio B. Evasco Jr. and Agriculture Secretary Emmanuel F. Piñol are in agreement that the best way to stabilize the supply and cost of rice in the market—instead of importing—is to increase the government’s buying price for palay despite its impact on inflation.

San Miguel has not lost theft case vs Indonesian partners yet–CA

By Joel R. San Juan

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UTHISA KAEWKAJANG | DREAMSTIME.COM

hen the European Union (EU) regulators roll out the tougher privacy rules— known as the General Data Protection Regulation (GDPR)—on May 25, it will represent the biggest overhaul of the world’s privacy rules in more than 20 years.

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EVASCO: “The moment you increase the buying price of palay, it opens the floodgate for inflation on all commodities. That was the contention of the economic team.”

With this, Evasco called on his fellow Cabinet officials at the policy-making the National Food Authority Council (NFAC) to reconsider the proposal of the National Food Authority (NFA) to increase the government palay-buying price, from the current P17 per kilogram (kg).

Love in the time of apps: Filipinos grapple with old, new dating quirks

he Court of Appeals (CA) has sustained its order suspending a lower court’s acquittal of Indonesian businessman Shadik Wahono and several others in the qualified theft case filed by San Miguel Holdings Corp. (SMHC) and Citra Metro Manila Tollways Corp. (CMMTC).

In a five-page decision penned

by Associate Justice Sesinando Villon, the CA’s Former Ninth Division junked the motion for reconsideration filed by Wahono and his co-accused challenging the appellate court’s November 16, 2017, resolution.

In that decision, the CA granted SMHC and CMMTC’s prayer for a temporary restraining order (TRO) against the order of Marikina Regional Trial Court Branch 193 Presiding Judge Alice Gutierrez dismissing the complaint against their Indonesian partners.

The CA pointed out that Gutierrez’s order has yet to attain finality, thus a TRO may still be issued.

“Moreover, the court’s order, dated October 25, 2017, dismissing the complaint against private respondents Shadik Wahono and Nadiya W. Stamboel, who are still at large, and acquitting private respondents Fema Christina Piramide-Sayson and Alvin

HETHER in the times of new or old, dating is always fun for young couples, now called millennials.

According to the people the BusinessMirror talked to for this story— some of who spoke on the condition of anonymity—they are able to meet new people, hear new stories and explore different personalities.

They are interacting online and offline. Most have found a common interest: a sense of adventure and experience something unique.

“I like it when my girlfriend goes with me on an adventure,” Josh Albelda said. “[You see, I have this] love for cars. I usually go on trail on weekends, and I am glad when she supports me in the things I love to do.”

Couples who travel together usually have more time to know each other, according to Albeda.

This is the time when we get to know each other’s real attitude because we are outside the comfort of our homes, he added. “We adjust depending on the place or community that we will stay in.”

“My girlfriend and I have been

Continued on A12

Continued on A2

By Faye Pablo & Natasha Pangilinan

Special to the BusinessMirror

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Honeymoon is over for new BSP governor Manny B. Villar

THE ENTREPRENEUR

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or Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla Jr., the honeymoon is over. President Duterte appointed Espenilla to replace Governor Amando M. Tetangco Jr., who stepped down in July 2017 after serving the maximum two terms as head of the BSP. Espenilla came at the helm of the monetary authority at a time when the Philippine economy was being hailed as a growth leader in Asia. The 6.7-percent increase in GDP, which was achieved without the election-spending boost in the previous year, affirmed the capability of the economy to sustain robust growth.

See “Palay-buying,” A2

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Continued on A10

‘Big boys’ causing delays in conclusion of RCEP

By Elijah Felice E. Rosales

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RODOLFO: “If it is just us [Asean countries], we have no problem concluding the RCEP because we have existing FTAs with the other six negotiating countries.”

@alyasjah

he Philippines is demanding its fellow negotiatingcountries in the Regional Comprehensive Economic Partnership (RCEP) to seriously commit to a speedy conclusion of their trade deal, as the latest round of talks still failed to progress beyond trade in goods modalities.

The trade deal that was branded as the strong counterpart of the Trans-Pacific Partnership (TPP) is facing yet another year of tough negotiations, with the “big boys” mostly causing the delays.

“From what I know, the range that Asean [Association of Southeast Asian Nations] countries can commit under zero-tariff rate is between 88 percent and 92 percent.

That is easy to understand because

we are implementing that already in the Asean,” Trade Undersecretary Ceferino S. Rodolfo Jr. said on Monday.

However, complications arise when the other six negotiating countries—Australia, China, India, Japan, New Zealand and South Korea—enter the picture. Rodolfo said some of these countries do not have existing bilateral free-trade agreements (FTAs) with each other yet, and this slows down the whole process of finalizing the RCEP. Continued on A12

Pre-need industry sees low-income segment as top growth driver this year

By Rea Cu

@ReaCuBM

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A couple is buoyed by a parachute as they ride above the waters of Boracay Island. Young couples today, especially those belonging to Generation Y and Generation Z, agree to go on dates that offer a sense of adventure and bring them to places outside the metropolis. ALYSSA SALEN

re-need providers will rely on micro pre-need products to improve their bottom line amid the challenges confronting the industry, an official of the Philippine Federation of Pre-Need Plan Cos. Inc. (Pre-Need Federation) said.

According to Pre-Need Federation President Elmer M. Lorica, a minimal decrease in the preneed industry’s net

worth last year was reported by the Insurance Commission, (IC) but the industry is hopeful that it would be able to regain the confidence of consumers in pre-need products.

“There’s minimal growth according to the IC, but there is a decrease in net worth because you have to pay all the claims, but it might be negligible. We have to tackle the idea of really pushing the eroded confidence of the buying public; we have to revive the old Continued on A2

n japan 0.4747 n UK 71.3455 n HK 6.6068 n CHINA 8.2026 n singapore 38.8645 n australia 40.3291 n EU 63.2673 n SAUDI arabia 13.7728

Source: BSP (12 February 2018 )

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A2 Tuesday, February 13, 2018

Love in the time of apps: Filipinos grapple with old, new dating quirks Continued from A1

together for three years and we both love going out of town almost every weekend,” said 23-year-old Raul Perez, a Web developer. According to Perez, that wasn’t that easy at first “because we have different takes on traveling.”

“I am the practical one who likes to have an immersion type of travel, while my girlfriend wants a relaxation and a ‘breathtakingbreakfast-view’ kind of travel,” he told the BusinessMirror. “What we do is we always give each other a chance to decide. It may not be always what I want but, at least, I get to also let her experience what I want once in a while.”

Going on adventure and letting your partner see the beauty of the country is really something special, according to Perez.

“It is sweeter than the bouquet of flowers and chocolates given,” he said. “It’s like giving a treasure no one could ever find but you.”

Museum dates

STILL, there are couples who prefer to stay within the city’s confines.

They argue that because of changing landscapes vis-à-vis consumer taste, they still find s o me t h i n g ne w a nd u n iq u e within Metro Manila. The hippest destination among dating couples are museums.

This trend has helped the National Museum regain popularity, especially among young couples.

Some said this is due to the National Museum’s status as one of the best places to have Instagramworthy photos.

Allowing free entry also boosted

Palay-buying. . .

Continued from A1

Economic managers—particularly the heads of National Economic and Development Authority (Neda), Department of Finance and Central Bank—within thet NFAC earlier thumbed down the proposal to increase the NFA’s buying price of palay, as it would result in faster inflation, Evasco revealed. The NFAC is the highest policymaking body of the NFA. “The moment you increase the buying price of palay, it opens the floodgate for inflation on all commodities. That was the contention of the economic team within the council, who would go against the advice of the economic [team]?” he told reporters in a news briefing in Manila on Monday.

“At any rate, We ask Neda to again review, the meat, the substance, of the study of the research done before so that we can come up with adjustments if there is really a need to adjust the buying price of palay from the local farmers,” Evasco added.

The NFA said it was unable to meet its paddy procurement target last year as traders bought rice from local farmers at P18 to P20 per kg, higher than its buying price of P17 per kg. The food agency had

the National Museum’s popularity.

Another location that shares the National Museum’s Instagrammable role is the UpsideDown Museum (UDM) in Pasay City. Inspired from similar museums in Malaysia, Thailand and the US, the UDM got a buzz as the go-to place after it opened in 2016. The entrance fee, however, can setback dating couples’ budget to P450 each.

Another dating place is the Pinto Art Museum in Antipolo, Rizal, which charges P200 for each guest.

A 1.2-hectare museum inside a subdivision, Pinto (door or portal in English) is also one of the most popular museums visited by dating couples. Aside from the works of art of young and old Filipino artists, Pinto also offers greenery, breathtaking view of Manila’s urban spread and chic eating nooks.

Pinto has always been fully booked for Valentine’s Day dinners.

The newest attraction in the south part of Manila is the Dessert Museum, which opened only on February 5. The entrance fee is P799 per head for walk-in and P699 for online booking. It is the perfect place to spend the coming Valentine’s Day because, aside from seeing large interpretations of favorite desserts, guests are also allowed to sample the sweets offered around the museum.

some freebies to entice customers to book reservations at your place,” the company advised restaurants.

“A wine-tasting dinner can also pass as a unique promotion.”

Citing a 2017 National Retail Federation (NRF) survey, M2O Communications said that nearly 4 out of 10 people who celebrate Valentine’s Day will treat their dates on a dinner.

The NRF also predicted that 38.3 percent of holiday spenders will cash out a total of $4.5 billion (P228.24 billion) for a dinner at a restaurant or another experience— the highest record since NRF began tracking spending in 2010.

A BusinessMirror random poll revealed a dinner for two at food parks in the metropolis would cost around P1,000 to P1,500. This would give the couple a set of meal with drinks and dessert.

Going to movies before dinner would add between P400 to P800.

Getting around also adds to the cost, so some couples prefer a onestop destination.

Dutch treat

ACCORDING to public relations firm M2O Communications Inc., Valentine’s Day is a big money maker for restaurants.

“For this season, consider introducing a new menu or offering

TRADITIONALLY, men are expected to pay for a date in a heterogeneous relationship.

When a man pays the bill, it shows how interested he really is to the woman she’s dating, according to 21-year-old Christian Regala (not his real name).

However, he said sometimes they go Dutch and split the bill.

Regala, a fresh graduate who recently got a job in sales at an Alabang-based firm, said his girlfriend insists on paying half of the bill.

“Sometimes I even let her pay for the whole dinner.

earlier asked the NFAC to increase it to P22 per kg.

The food agency gives an additional incentive of P0.20 to 0.50 per kg for delivery, P0.20 per kg for drying and P0.30 for cooperative development incentive fund for farmers’ organizations.

“If the palay that is produced by farmers are good enough to meet the needs of the Filipino people, why don’t we buy it here? I would go for it, no doubt about it,”Evasco said.“But unfortunately, the hands of NFA management is tied by a very low buying price set by the Council in previous years. It is only P17 per kg.”

Piñol told the B usiness M irror that hiking the government’s buying price would enable the food agency to buy more paddy from farmers.

“It [higher buying price] would stabilize farmgate prices and ensure that the NFA would have sufficient buffer stock sourced locally.”

Last year the chief of the Department of Agriculture pushed for an increase of P3 per kg in the support price of the NFA so more farmers would be encouraged to sell their crop to the government.

Grains Retailers’ Confederation of the Philippines Inc. (Grecon) National President Jaime O. Magbanua agreed with Piñol that the government’s buying price for palay should go up to at least P20 per kg so the NFA could “ maintain its market intervention powers.”

“The famers have been clamoring for [an increase in buying price] for so long. I hope they can act on that as soon as possible,” Magbanua told the BusinessMirror. “We support the increase in the NFA’s buying price. I think the reasonable price level would be around P20 to P22 for clean and dry paddy.”

Given its current buying price, Magbanua said the NFA may not be able to beef up its buffer stock through local palay procurement, as the average farm-gate price remains higher than P17 per kg.

“Today the buying price of traders for fresh palay from the farm is around P19 to P19.50 per kg. And if it is clean and dry, it is more than P20, around P20 to P24 per kg,” he added.

Southern Leyte Rep. Roger G. Mercado also threw his support behind the increase in the buying price of palay.

Mercado said NFA should be allowed to buy paddy at P20 to P25 per kg. He added the NFA should also increase its rice incentives, so local farmers “would immediately and directly benefit” in the form of higher earnings.

“Instead of importing rice, the NFA should buy its buffer stocks from Mindanao or the Visayas to augment NFA inventories in its warehouses in Mindanao and the Visayas,” Mercado added.

Gastronomic night

“We’re starters and, sometimes, I do pay. But, for a fresh graduate like me, money is sometimes a struggle,” he said.

Some men prefer to shoulder expenses every now and then because they believe they are man enough to take the responsibility of paying.

Mark de la Cruz, 25, a team leader of a project of an informationtechnology company in Taguig, said he believes men should always be responsible for the tab.

“It would be awkward if people see my date handing me a P500 bill,” de la Cruz (not his real name) said.

Once, a professor told me if women wish to share money for the payment, it must be handed to the guy under the table, he added.

With the evolving gender roles and women tending to be more outspoken, some things have changed, Alice Reyes (not her real name) said.

The 21-year-old account executive for a company in Makati City said it’s okay to split the bill and have a share, too, on a date.

“I am now working. I am earning money and that means I am capable of paying the bill or when I’m the one who invited him, I really should shoulder the expenses,” she said.

But it’s not necessary to have an expensive date, Reyes said adding that doing so is relative to the couple’s lifestyle.

Some couples are satisfied with a lunch date while others watching a movie is it, she said. Reyes said she prefers having a “deep talk.”

As long as the couple can afford to pay and as long they are comfortable with their date, there won’t be a problem, she said.

To be concluded

www.businessmirror.com.ph

Rising inflation already cut workers’ purchasing power by 30%–labor group Continued from A12

However, in the long run, the Bangko Sentral ng Pilipinas said TRAIN and higher global oil prices will affect the country’s inflation rate. Last week it raised its average inflation-rate projection for the year from 3.4 percent to 4.3 percent because of the said factors.

But, instead of raising its usual wage-hike petition, ALU-TUCP reiterated its call on the government to implement its P500 proposed subsidy for the estimated 4 million minimum-wage earners nationwide “to help them cope with rising cost of living.”

Despite the government’s economic advisers having already expressed their opposition against the subsidy, the proposal will be reviewed by a small working group comprised of four representatives

San Miguel. . .

Continued from A12

Indeed, it is necessary to maintain the status quo to avoid miscarriage of justice should we later find merit in the instant petition,” the CA added. Concurring with the ruling were Associate Justices Manuel Barrios and Renato Francisco.

Wahono and Stamboel were charged with qualified theft before the RTC in Marikina for allegedly causing CMMTC, which was jointly owned then by the SMHC and Wahono, to make an unauthorized disbursement, which was then used to incorporate another

Imports

Evasco announced on Monday that the NFAC has green lighted the NFA’s purchase of 250,000 metric tons (MT) of imported rice via the “governmentto-private” (G2P) scheme.

The government’s purchase of rice through the G2P scheme is covered by Republic Act 9184, or the Government Procurement Reform Act, which provides that the lowest bidder would be named as supplier. The volume is expected to arrive in the country by June, to avoid coinciding with the harvest of rice as this could cause farm-gate prices to fall drastically.

Magbanua said his group hopes that the imports could arrive sooner than June. “Filipino consumers are already looking for governmentsubsidized rice. We wish that there is already an available supply of [NFA] rice, particularly in urban areas.”

Economist Pablito M. Villegas said the decision of the NFAC to opt for the G2P procurement scheme could hurt millions of Filipinos who depend on government-subsidized rice.

“The [NFAC] should have opted for a government-to-government scheme. The government is employing a regular procurement scheme for an emergency situation,” Villegas said.

Evasco, however, said there is no urgent need for the government to buy imported rice as the national inventory is currently at 3.8 million metric tons (MMT), which could last for 121 days.

“Again, we would like to assure the public that the NFAC is on top of this situation. We will ensure the continued supply of affordable rice and continue to champion for the best interest of the Filipino people,” he said.

Evasco called on the NFA to inspect all the warehouses of private rice traders to prevent them from hoarding and creating an artificial shortage of the staple. “NFA should be proactive in monitoring the warehouses of private traders, because you know private traders will always go for high prices at the expense of the buying public. So the NFA should be proactive in monitoring these warehouses,” he said.

“Part of the NFA’s job is to inspect rice warehouses. And if traders are found to be hoarding rice, then they should prosecute and arrest them,” Evasco added. With Jovee Marie N. dela Cruz

company called Citra Central Expressway Corp. (CCEC). The SMHC accused Wahono for the alleged u n aut hor i z e d d i s b u r s e me nt of P50 million in funds of CMMTC, where both SMHC and Wahono were both major shareholders.

In dismissing the qualified-theft complaint, the RTC in Marikina held that “SMHC cannot claim the amount belongs to it, considering that there are other stockholders of the corporation and that the court finds no probable cause for the issuance of warrant of arrest for qualified theft on the ground that they merely performed corporate acts when they transferred the amount from CMMTC to CCEC.”

Pre-need industry sees low-income segment as top growth driver this year Continued from A1

The NFA, an agency attached to the Office of the President, is mandated to ensure national food security and stabilize supply and prices of staple cereals both in the farm and consumer levels. The food agency buys paddy from farmers not only to stabilize farm-gate prices but also to boost its stockpile. The NFA also imports rice if local procurement fails to augment its buffer stock.

from the Cabinet and four representatives from the ALU-TUCP next month.

“During a dialogue with labor groups last Wednesday, the President ordered the creation of a small working group,” Tanjusay said.

The representatives from the government in the working group will come from the departments of Finance, Energy, Labor and Employment and the Budget and Management.

Aside from the subsidy, the group will also discuss the possibility of lowering electricity costs during its meeting scheduled on March 15.

Tanjusay said the recent inflation reports should compel the government to fast-track the assessment of their proposal so it could serve as a safety net for workers vulnerable to the impact of TRAIN.

confidence, we will be able to work it out,” Lorica told the BusinessMirror on the sidelines of the 17th Pre-Need Consciousness Week at the Edsa Shangri-La hotel in Mandaluyong City last Friday.

Lorica, who is also the president and COO of Eternal Plans Inc. (EPI), added that the pre-need industry can strengthen its growth for this year by including the sale of micro-pre-need products apart from selling life, pension and education plans.

“So far, I’ve known two [companies] that would like to go into [selling] micro,” he added.

Currently, only EPI was issued a license to sell micro-pre-need products by the IC. “We are the only pre-need company with an approved micro-preneed product,” he said.

Under Circular Letter 2015-27, issued by former IC Commissioner Emmanuel F. Dooc, pre-need companies are mandated to enlist as members of the Pre-Need Federation to help strengthen the industry and promote cooperation and discipline among the members.

Membership in the Pre-Need Federation was made a requirement for the issuance or renewal of a certificate of authority to do business and issued only by the IC. “We continue to face challenges and the challenges continue to evolve. Without a doubt pre-need products are very desirable, this has been proven during the industry’s initial years,” Insurance Commissioner Dennis B. Funa said.

Based on data from the IC, the preneed industry reported a net loss of P831.54 million in the first quarter of 2017, reversing the P314.95-million profit providers registered in the same period of 2016.

The net premium income of the industry for the period rose by 6.1 percent amounting to P4.1 billion, from the P3.855 billion in the first quarter of 2016. Its total net worth for the period reached P15.8 billion, 15.2 percent lower than the P18.7 billion recorded in the same period of 2016.

Total assets amounted to P120.6 billion, a slight uptick of 1.3 percent from the P119 billion recorded during the first quarter of 2016.

The number of plans sold for the period rose by 0.06 percent totaling 183,837, from 183,729 a year ago.

Broken down, 180,148 were life plans, 3,511 were pension plans and 178 were education plans.

“The bright spot of the pre-need industry is the memorial plans, it continues to be bright. But again, as what was stated earlier, the number of preneed companies continues to go down,” Funa told the BusinessMirror.

Under the Pre-Need Code of the Philippines, new pre-need providers wanting to go into business in the country must have a minimum paidup capital of P100 million.

“With this forum, I hope that we can come up with effective solutions to the current industry challenges.

We need to send across the message that the Philippine pre-need industry has been reinvented, that sufficient regulatory measures are now in place in order to ensure delivery of contract obligations,” he said.

Last month the IC reported continued growth in microinsurance in September last year, when the industry expanded by 30 percent, primarily on the basis of premium sales generated from mutual benefit associations.

According to Funa, the continued growth of the microinsurance segment as measured by premium and contributions amounted to P5.17 billion in the first nine months of 2017, representing a growth of 30.06 percent compared to only P3.97 billion in the same period in 2016.

The number of individuals covered by microinsurance as of endSeptember last year increased by 21.66 percent to 32.03 million, from only 26.33 million in the same period in 2016.

“We are going to push for that [micro-pre-need]. We are seeing that it can add to the good figures of the micro industry,” he added.

Microinsurance products are affordable insurance products that aim to protect low-income earners from contingent events in exchange for premium payments.

The Nation BusinessMirror

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Back to square one for govt’s chopper program

By Rene Acosta @reneacostaBM

T

he Department of National Defense (DND) is cancelling its acquisition of 16 pieces of combat utility helicopter (CUH) from Bell and C a n ad i a n Com merc i a l Cor p.

(CCC), and the government will instead scout for another contractor from other countr ies that could supply its requirement for medium-lift choppers.

The scuttling of the project with the world-renowned helicopter company and its manufacturer—t he t hird-big gest modernization for the Armed Forces of the Philippines—is being made in compliance with President Duterte’s order for the DND to look elsewhere for sources of the helicopters outside Canada.

“The formal letter cancelling the contract is being prepared and I will sign it this week. We are looking at Korea, Russia, China and Turkey and other countries for our medium lift helicopters in lieu of the Bell 412,” Defense Secretary Delfin N. Lorenzana said on Monday.

T h e c o nt r a c t c o v e r e d 16 pieces of Bell 412 EPI choppers worth P12 billion, the thirdbiggest modernization project of the military after the acquisition of a squadron of South Korean FA-50 fighter jets worth P18.9 billion and the procurement of two brand-new frigates with a total worth of P15.7 billion.

However, Lorenzana admitted that the scuttling of the project with Bell and CCC, which was signed in 2014 but was formalized last week, will revert the helicopter acquisition program to “square one.”

The military has already acquired eight CUH in an older and separate contract with the Canadian company.

Immediately after the contract for the 16 Bell 412 was formalized, the Canadian government announced that it will rev iew the dea l after A r med Forces Deputy of Staff for Plans and Programs Maj. Gen. Restituto Padilla said that the choppers would be used in internal security operations.

“The AFP deal for the acquisition of the Canadian Bell 412 as a combat utility helicopter is a very transparent one. From the very onset, the contract has specified that we are acquiring a combat utility helicopter (CUH),” he explained.

“It’s intended use as combat utility helicopter is for the transport of troops, especially combat casualties and for troop sustainment. It is not an offensive platform and not armed as such. We have dedicated attack helicopters as offensive platforms for such operations,” he added.

His statement prompted Canadian lawmakers to declare that the helicopters would be used to “kill” Filipinos, noting the Philippine government’s allegedly blurr y human- rights record, which is principally associated with the ongoing war on illegal drugs.

Canada maintains strict standards for human rights.

Despite C a n ad a’s dec ision to review the deal, Lorenzana worked to save the project until the last minute, saying that it should be exempted from partisan political processes, but Canada’s pronouncement got the goat of Duterte and ordered that the DND should just instead look for another country supplier.

Had the contract with Bell and CCC pushes through, the first delivery of the helicopters should be made next year.

Editor: Vittorio V. Vitug • Tuesday, February 13, 2018 A3

Groups file charges vs Aquino, Abad Garin, others in dengue vaccine mess

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By Joel R. San Juan

@jrsanjuan1573

RAFT and other criminal charges were formally filed on Monday before the Department of Justice (DOJ) against former President Benigno S. Aquino III, his budget and health secretaries and several former and incumbent health officials, among others, who were believed to be responsible for the bungled P3.5-billion anti-dengue vaccine program of the government.

Also named as respondents in the complaint were the officials and employees of pharmaceutical company Zuellig, which supplied the controversial Dengvaxia vaccine and Sanofi Pasteur, manufacturer of the vaccine.

The case stemmed from the controversial advisory issued by Sanofi, saying new clinical analysis has found the Dengvaxia vaccine is effective for people who have had dengue prior to immunization, but citing a risk of a “severe” case of dengue for people who have not.

Over 830,000 children—aged 9 and above—from public schools in Metro Manila, Central Luzon, Cala-

barzon and Cebu were reportedly vaccinated with Dengvaxia since it was launched in April 2016.

This prompted the Department of Health (DOH) to suspend its dengue-immunization program last December 1.

The complaint against Aquino and the other respondents was filed by the Volunteers Against Crime and Corruption (VACC) represented by lawyer Manuelito Luna; Vanguard of the Philippine Constitution through its president, lawyer Eligio Mallari; and Dr. Francisco Cruz and lawyer Nasser Marohomsalic.

In their 17-page complaint, the groups specifically accused of

violation Section 3(e) of Republic Act (RA) 3019, which prohibits a public officer from giving a private party unwarranted benefits in the discharge of his administrative or judicial functions; Section 65(3) of RA 9184, or the Government Procurement Reform Act (GPRA); and Article 220 (technical malversation) of the Revised Penal Code (RPC); and Article 365 (criminal negligence) of the RPC. Besides Aquino, the other former top officials of the government named in the complaint were former Budget Secretary Florencio B. Abad, former Health Secretary Janette L. Garin; health undersecretaries Dr. Carol Tanio, Gerardo Bayugo, Lilibeth David, Mario Villaverde; assistant secretaries Lyndon Lee Suy and Nestor Santiago; DOH Financial Management Service Director Laureano Cruz; DOH directors Dr. Joyce Ducusin, Dr. May Wynn Belo, Dr. Leonila Gorgolon, Dr. Rio Magpantay, Dr. Ariel Valencia and Dr. Julius Lecciones; retired DOH undersecretaries Dr. Nemesio Gako, Dr. Vicente Belizario Jr., Dr. Kenneth Hartigan-Go; and Dr. Yolanda Oliveros, who served as head executive assistant to Garin.

The groups said they filed the complaint based on the testimonies of the resource persons invited to shed light on the issue by the House Committee on Health and the Senate Committee on Accountability of Public Officers and Investigation (Blue Ribbon) in conjuction with

other concerned committees which substantiated their claim that the respondents were “directly and proximately” responsible for the Dengvaxia vaccine mess.

They said Aquino and the other respondents should be held responsible for “ill-advisedly, thoughtlessly and imprudently” implementing the anti-dengue vaccination program.

The complaint alleged that Aquino and his fellow respondents “anomalously and illegally funded and procured the Dengvaxia vaccine and used 830,000 schoolchildren as “guinea pigs” just to bolster the candidacy of Liberal Party presidential bet Manuel A. Roxas II as well as the other candidates of the party.

“Bluntly, the respondents had failed to comply with World Health Organization (WHO) standards on the licensing and post-licensing monitoring of Dengvaxia, as well as failed

to promptly disclose any adverse events associated with the mass vaccination, contrary to law and existing regulations,” the complaint read.

They pointed out that the purchase of the Dengvaxia vaccine was approved by Aquino and Abad, even if the program had no allocation in the 2016 national budget.

“They should be held to account for the natural and probable consequences of their acts.… Irrefutably, some deaths and dengue shocks are linked to Dengvaxia,” the complaint read.

“Clearly, the deaths and dengue shock or adverse events noted [that] following [the] inoculation of Dengvaxia are correlated or linked. The causal relationship between [the] vaccine and deaths, dengue shock or adverse events, under the circumstances, could hardly be ignored,” it added.

Clearly, the deaths and dengue shock or adverse events noted [that] following [the] inoculation of Dengvaxia are correlated or linked.

The causal relationship between [the] vaccine and deaths, dengue shock or adverse events, under the circumstances, could hardly be ignored.”—case complaint

‘Sereno failed to submit SALN to JBC during 2012 CJ vetting’

By Jovee Marie N. dela Cruz @joveemarie

T

wo Supreme Court (SC) justices on Monday said Chief Justice Maria Lourdes A. Sereno should have been disqualified to assume her post from day one for her alleged failure to submit her Statement of Assets, Liabilities and Net Worth (SALN) to the Judicial and Bar Council (JBC).

At the resumption of the hearing of the House Committee on Justice, Senior SC Justices Diosdado Peralta and Teresita Leonardo de Castro also said Sereno’s application for the top judiciary post in 2012 should have been rejected when she failed to submit her SALN. De Castro, who also applied for the position of chief justice, said the JBC committed “grave injustice” to the candidates for chief justice when Sereno was included in the nominees, despite failing to comply with the SALN submission.

“There was a grave injustice done to the applicants because of what they did to Sereno at that time,” de Castro said.

She added they were not informed that Sereno had allegedly failed to submit her most recent SALNs for the past 10 years as required of all candidates for the position.

“The submission of the SALN is very important. Why is it the JBC allowed the inclusion of then-Associate Justice Sereno in the applicants to be interviewed? She should have been excluded in the interview but she was interviewed,” de Castro said.

“A great injustice was done to us—the other candidates or the other applicants—for the position of chief justice,” de Castro added.

During the previous impeachment proceedings, it was discovered that Sereno allegedly only filed SALNs for the years 1998, 2002 and 2006 during her tenure as law professor at the University of the Philippines (UP) College of Law from 1986 up to 2006. Sereno allegedly failed to submit her SALNs 17 times.

De Castro, however, admitted Sereno sent a letter to the JBC, stating that she cannot submit any of her SALNs when she was a professor at the UP. Moreover, Peralta, who presided over the JBC proceedings for the nominees for the posi-

Weekend flight A young girl takes a kite to flight at the sprawling open grounds of the Rizal Park in Manila over the weekend. PNA/Avito Dalan tion vacated by impeached Chief Justice Renato Corona, said the July 20, 2012, letter of Sereno asking for exemption to the submission of SALN was not presented to the council en banc.

“The letter of Chief Justice Maria Lourdes A. Sereno dated July 23, 2012, was never presented to the Judicial [and Bar Council] en banc for discussion. I think the minutes will bear that out.

Likewise, the certificate of clearance attached to the said letter was not also included for deliberation in the JBC en banc when we considered the candidates for voting,” Peralta said.

“If the requirements are not complete then the application should not have been admitted or accepted,” Peralta added.

Peralta said that had he known about the letter he would object against the selection of Sereno as chief justice because that is a clear deviation from the rules requiring all applicants to the position to submit their SALNs to the JBC. “In this particular case, the chief justice was

requesting for her inclusion from that requirement,” Peralta said.

De Castro also said the opening for the position of chief justice came about because Corona was impeached for failure to include his dollar account in his SALN and so the JBC became strict with its requirements.

For his part, Rep. Vicente S.E. Veloso of the Third District of Leyte opined that Sereno’s appointment is invalid from the start for her failure to comply with the JBC requirements.

“Lumalabas talaga ngayon that the appointment of Sereno was void from the beginning [It now appears that Sereno’s appointment as chief justice is void from the start],” he said. He added it may not even be necessary to impeach Sereno to remove her from office.

Initially, the JBC required candidates for the position to submit all their SALNs, but later trimmed the requirement for only 10 years from those who came from government service.

Lawyer Annaliza Capacite, regular member of JBC, confirmed that four other senior SC members who applied for the seat vacated by Corona complied with the JBC requirement: Justice Antonio Carpio submitted 14 SALNs; Justice de Castro, 15; Justice Presbitero Velasco Jr., 19; and Justice Arturo Brion, 10.

Another SC justice who applied for the post, Justice Roberto Abad, submitted only his SALN for seven years because he left government service for almost a decade before he was appointed to the SC. Capacite admitted that it was the JBC executive committee, composed of the regular members, that recommended to the council en banc some 20 candidate, including Sereno, to be considered for the then vacant post of chief justice.

She said that one of the JBC members, Sen. Francis G. Escudero, suggested that the rules on SALN be relaxed and that an “attempt to comply” could be considered substantial compliance.

Economy

A4 Tuesday, February 13, 2018 • Editors: Vittorio V. Vitug and Max V. de Leon

Devanadera hails CA order to freeze suspension of 4 ERC commissioners

By Lenie Lectura

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@llectura

HE Energy Regulatory Commission (ERC) can now fully resume to fulfill its mandate following the Court of Appeals’s (CA) decision last week that froze the suspension of four commissioners.

“With the TRO [temporary restraining order] issued by the Court of Appeals, the ERC can now resume with the regular performance of our duties and functions and act on petitions with urgency,” ERC Chairman Agnes VST Devanadera said.

The ERC is the electric-power industry regulator composed of four commissioners and a chairman.

The Office of the Ombudsman earlier suspended for one year ERC commissioners Alfredo Non, Gloria Victoria Yap-Taruc, Josefina Patricia Asirit and Geronimo Sta. Ana. They were found administratively liable for “conduct prejudicial to the best interest of the service aggravated by simple misconduct and simple neglect of duty.”

The absence of four of its members left the agency “powerless in making decisions critical to the energy sector.”

According to the Ombudsman, there was sufficient evidence that the ERC gave unwarranted benefits to Manila Electric Co. (Meralco) and other companies by exempting them from the coverage of competitive selection process requirement, which was already in effect after November 6, 2015, read the Ombudsman resolution. The CSP process is meant to elicit the best price for consumers.

However, the CA issued a 60-day TRO on February 9 against the suspension order issued by the Office of the Ombudsman in December 2017.

“Wherefore, in view of the foregoing, and to avoid serious and irreparable disruption in the operation of the ERC and to prevent adverse repercussions on the power industry as a whole, let a 60-day temporary restraining order be issued enjoining public respondent Office of the Ombudsman and/or any of its authorized agents or representatives from implementing/ executing its September 29, 2017, decision, conditioned upon the petitioners’ posting of a bond in the amount equivalent to three months of their respective salaries.”

“I’m glad that the CA gave weight on the impact of the vacuum of leadership caused by the Ombudsman’s suspension of the ERC commissioners and considered the welfare of the electric-power industry stakeholders, most especially the consuming public, who will eventually suffer

the consequences of the ERC’s inability to perform its mandate,” Devanadera said.

The Office of the Ombudsman was directed to file their opposition/ objection to the application for the issuance of a writ of preliminary injunction within ten days from receipt of the CA’s resolution. The CA also partially granted the Office of the Ombudsman and the Office of the President’s motion for extension of time to file comment by giving them an additional 15-day period within which to file their comment on the petition for review.

“The Office of the Ombudsman’s suspension basically jeopardized the ERC per se, and the industry that the ERC regulates, which is the electricpower industry and the consuming public. The ERC commissioners were suspended for restating the effectivity of its resolution on the CSP, but the CSP is still pending with the Supreme Court and the ERC commissioners must be accorded with substantial due process. By substantive due process, it means that the suspension should be based on a just or authorized cause,” Devanadera, quoting the CA resolution, added.

The CA resolution further argued that: “Given the circumstances of the instant case, this Court must look at the big picture and consider the interest of the public, the irreparable injury that it may suffer if a TRO is not issued. This is because, as pointed out earlier, petitioners are public officials performing important duties and functions pertaining to the power sector.”

“We hasten to add that what we give importance to and is of utmost concern is not the petitioners themselves but their office, and the public service that would be and currently is being jeopardized by reason of their present predicament. Here lies the real exigency and urgent necessity, which this Court must consider in determining the efficacy of the issuance of the TRO,” the resolution stated.

Meanwhile, the nationwide Power for People (P4P) Coalition expressed dismay over the TRO issued by the CA. “After the ERC commissioners were found to have colluded with Meralco so that their ‘sweetheart deals’ with their sister coal-generation companies will push through, the CA cited ‘grave and irreparable injury’ for the part of the four commissioners suspended as a reason to issue a TRO in their favor,” recounted Sanlakas Secretary-General lawyer Aaron Pedrosa, convener of the P4P Coalition.

BusinessMirror

www.businessmirror.com.ph

Kuwait OFW-deployment ban leaves 25,000 HSWs stranded

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By Recto Mercene

@rectomercene

ome 25,000 household service workers (HSW) were left stranded in the country following government’s order to ban the deployment of overseas Filipino workers (OFW) to Kuwait.

Their HSWs’ contracts have been approved in Kuwait by the Philippine Overseas Labor Office (Polo) and have already taken medical examinations paid for by recruitment agencies, according to recruitment consultant Manny Geslani.

“And, while they are waiting, the agencies continue to pay for their housing accommodation, waiting for the go signal to proceed to Kuwait,” he said.

As this developed, the Department of Foreign Affairs (DFA) vowed to strictly carry out President Duterte’s directive to prevent more workers from reaching the Gulf state.

Foreign Secretary Alan Peter S. Cayetano and Labor Secretary Silvestre H. Bello III said both the DFA and the Department of Labor and Employment (DOLE) will implement the President’s instructions “to ensure the protection of the rights and the promotion of the welfare of overseas Filipino workers, not just in Kuwait but also in other parts of the world.”

Cayetano, who cochairs the government Cluster on OFWs with Bello, said the DFA and the DOLE are also coordinating with other government agencies in taking steps to strictly implement the ban on the deployment of new workers to the Gulf state.

“Our efforts to protect our kababayans will not end with the imposition of deployment bans or the repatriation of our workers in countries where they are prone to maltreatment,” Cayetano said. “We will also go after illegal recruiters, human traffickers and other modern-day slave traders who continue to victimize our people.”

Bello, for his part, assured Filipino workers who would be repatriated from Kuwait, as well as those who would be affected by the ban that they will be assisted in finding alternative employment in the Philippines or abroad.

The DFA and the DOLE officials led by DFA Undersecretary for Migrant Workers Affairs Sarah Lou Y. Arriola received on Monday, the first batch of 377 workers who were repatriated on three commercial flights that left Kuwait on Sunday afternoon.

According to Arriola, the Philippine Embassy and the Polo office in Kuwait are now rushing to repatriate as many as 10,000 overstaying Filipinos, who are expected to avail themselves of an amnesty program arranged with the Kuwaiti government.

“The embassy and Philippine Overseas Labor Office in Kuwait expect that more than 10,000 Filipinos who have overstayed their visas are qualified for repatriation,” Arriola said.

According to Bello, hundreds of Filipinos have been coming to the Philippine Embassy in Kuwait daily to register and initiate the process for their repatriation since the first day of the amnesty on January 29.

“To date, some 2,229 Filipinos have been issued travel documents, and 1,754 of already have been granted immigration clearances,” Bello said.

He added both the DFA and the DOLE have made arrangements with Philippine Airlines (PAL) and Cebu Pacific for the repatriation of those already issued travel documents and all those who want to return to the country.

Bello said that, aside from shouldering the cost of the airfare, the Philippine government shall also settle the immigration penalties of overstaying Filipinos.

The DFA conveyed to Kuwaiti Ambassador Saleh Ahmad Althwaikh its strongest protest over the abuses and maltreatment, labor violations and the failure of Kuwaiti authorities to provide

protection to Filipino nationals.

Cayetano said the DFA also reiterated its request for concrete action from the Kuwaiti government to address the maltreatment and other abuses inflicted on Filipinos in Kuwait.

He said the DFA also requested the full cooperation of Kuwaiti officials with the Philippine Embassy to promote the well-being of Filipino workers and facilitating the early conclusion of a bilateral labor agreement to protect the rights of Filipino HSWs there.

An average of 5,000 HSWs were deployed weekly in 2017, and the total number is expected to surpass the 2016 figure.

In 2016 around 105,000 OFWs were deployed to Kuwait with 57,061 comprising, the HSWs the second largest destination of housemaids in 2016.

Saudi Arabia has the highest number of HSWs at 105,000, and 275,000 were deployed in 2016, the highest for the past years.

Citing figures from the DOLE, Cayetano said HSWs now comprise 60 percent of the total new hires, with another 40 percent comprising the skilled and professional workers.

“A temporary stoppage of sending HSWs to Kuwait will decrease the number of Filipino workers being deployed to the Middle East,” Geslani said.

He said that, if the ban to Kuwait continues, “there will be a dramatic drop in dollar remittances amounting to over $1.3 billion because of the over 270,000 documented workers now in Kuwait.”

He added a permanent deployment ban will also harm our friendly relations with the Gulf Countries of Saudi Arabia, Bah-

Our efforts to protect our kababayans will not end with the imposition of deployment bans or the repatriation of our workers in countries where they are prone to maltreatment. We will also go after illegal recruiters, human traffickers and other modern-day slave traders who continue to victimize our people.”—Cayetano

First for 2018: Oil firms roll back gas, diesel, kerosene pump prices

BOI incentives aligned with CTRP Package 2

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T

HE first oil price rollback for the year takes effect on Tuesday, February 13.

Oil companies on Monday announced that prices of gasoline products would be reduced by P1.00 per liter, diesel by P1.30 per liter and kerosene by P0.85 per liter.

Seaoil, Pilipinas Shell, Phoenix Petroleum, and Eastern Petroleum said they will implement their respective price adjustments starting 6 a.m. on Tuesday, they announced on Monday, citing movements in the international petroleum market as the reason for the rollback.

Local pump prices were on the rise for the past six consecutive weeks brought about by higher imported fuel prices and excise tax.

The Department of Energy said last week that the year-to-date total adjustments increased to P2.30 per liter for gasoline, P3.10 per liter for diesel and P3.20 per liter for kerosene. The said prices are exclusive of the impact of the Tax Reform for Acceleration and Inclusion Act, which resulted in an increase on gasoline by P2.97 per liter, diesel by P2.80 per liter and kerosene by P3.336 per liter.

Adjustments on petroleum products are implemented every Tuesday of the week. Lenie Lectura

rain, United Arab Emirates, Qatar and Yemen.

“These countries are host to an estimated 1.5 million Filipinos that bring in the bulk of our dollar remittances yearly to almost $28 billion,” Geslani said.

He added China cannot absorb all the displaced workers in Kuwait that easily although it is estimated that from 15,000 to 20,000 HSWs can be deployed to China “once both governments agree on the recruitment process and salary scales.”

Filipinos in China work mostly for multinational companies, including diplomats stationed in Beijing and other cities, including executive officers of large Chinese companies and ranking government officials.

Cebu Pacific and PAL have joined the government’s call to repatriate OFWs in Kuwait and mounted special charter flights for those who wish to come home.

Migrante International, for its part, welcomed the latest attempt of the government to flex its diplomatic muscles to protect the rights of OFWs. “The total ban will shock and awe the Kuwaiti government. It is a strong message to the host country that they should respect our OFWs,” Migrante International Spokesman Arman Hernando said in a text message.

While they also support the deployment to further improve the protection of OFWs in Kuwait, Coalition of Licensed Agencies for Domestic and Service Workers president Lucy D. Sermonia told the BusinessMirror the recent development will lead to lost employment opportunities for some Kuwait-bound Filipinos workers. With Samuel P. Medenilla

Bird flight

A craftsman applies finishing touches to a set of wooden flamingo and seagull birds at a handicrafts factory cum warehouse in San Jose, Santo Tomas, Batangas. The finished products are then sold to the export market. ROY DOMINGO

he Board of Investments (BOI) said its fiscal incentives are already aligned with the second package of the Comprehensive Tax Reform Program (CTRP) of the Duterte administration.

The CTRP Package 2, which follows the Tax Reform for Acceleration and Inclusion Act, is pushing for reforms in corporate income tax and fiscal incentives.

It involves rationalizing the fiscal incentives given by the country’s investment promotion agencies (IPAs), such as the BOI. At a news conference on Monday, Trade Undersecretary and BOI managing head Ceferino S. Rodolfo Jr. said perks provided by the agency to the investors are already timebound, focused and performance-based.

Rodolfo said the BOI only provides registered investors four years of income tax holiday (ITH), which can be extended to a maximum of two years.

Its incentives are also focused on industries identified under the Investment Priority Plan, a list of preference investment activities, which may be given tax perks.

The trade official said the BOI evaluates every project registered with the IPA to ensure that the company is complying with its commitments before further endorsing for tax perks to the Bureau of Internal Revenue. “We already talked with the Department of Finance [DOF] about the second package of CTRP,” Rodolfo said in Filipino.

“We are in alignment within the parameters that [the] DOF set.”

Moreover, Rodolfo said the BOI remains fiscal positive, which means, for every incentive it gives out, the government still has higher gains in terms of taxes—withholding tax, value-added tax and property tax, among others. PNA

www.businessmirror.com.ph

BusinessMirror

Tuesday, February 13, 2018

A5

United Stand of STL Operators Prompted by the unceasing slander of a known gambling lord and his cohorts against our integrity as legal Authorized Agent Corporations (AACs) of Small Town Lottery (STL), here is our statement: WE CONDEMN ALL PLANNED AND SYSTEMATIC DEFAMATION AGAINST US BY A NOTORIOUS GAMBLING LORD, TEN OF HIS ALLIES IN POLITICS, AND OTHER PRIVATE INDIVIDUALS AND GROUPS! We are saddened by how this gambling lord takes advantage of some officials of the Philippine Charity Sweepstakes Office (PCSO) to pursue their mutual personal interest. We need not memorize their motive as they go against us STL operators.

The 2019 elections is drawing near, and we, STL operators, uphold that we will not be exploited by anyone. Even more so, we will not be manipulated by anyone whose aim is to regain his jueteng operations and manipulate the STL to revert to its old ways.

STL IS THE ONLY LEGAL NUMBERS GAME IN THE COUNTRY! We divulge to the public that the plan to destroy us STL operators has begun.

WHATEVER YOUR PLAN AGAINST US WILL NOT SUCCEED! WE WILL FIGHT YOU! With the support of President Rodrigo Roa Duterte, we will fortify the campaign to fulfill his Executive Order No. 13 declaring an all-out war vs. illegal gambling.

The accusation that STL is a jueteng front has no basis. If one of us may be violating the Implementing Rules and Regulations (IRR) of STL, we will not tolerate them.

We admit that some of us operators were former illegal numbers game operators but when President Duterte made the call for us to go legal, we heeded that call. We migrated into the PCSO’s STL to help the government produce revenues to fund free medicines and hospitalization for the Filipino people, especially the indigents.

We hold immense support and confidence toward the current leadership of PCSO for we know that they rightfully work to ensure the growth of earnings from lottery games such as Lotto, Keno, Sweepstakes, and STL where we belong to.

The P15.7 billion earnings of the Duterte administration in 2017, compared to only P4.7 billion annually under the past two administrations, is the product of our employees’ hard work.

It is not true that earnings from STL every month should have been greater. This is a false claim because 2017 served as a “test-run” for STL and many of the patrons still have yet to grasp the system of the numbers game.

This 2018, in our second year of operations, we vow to the government of President Duterte and to the Filipino people that we will surpass the P60 billion target of PCSO so that charity funds will grow and we can provide a bigger contribution for the procurement of free medicine and the hospitalization of the sick, especially our poor countrymen.

Again, we assure those who seek to tarnish our name, YOU WILL NOT SUCCEED! WE ARE LEGAL! WE WILL FIGHT THIS SCAM! Currently, our 81 STL operators have created a total of 280,772 jobs – at least 12,097 organic employees; 19,874 kabos; and 248,000 kubradores.

We appeal to the public to strengthen its support for STL because: EVERY BET IS FOR CHARITY! SERBISYO. TRABAHO. LARO!

PAID ADVERTISEMENT

Suntrust

A BusinessMirror Special Feature

www.businessmirror.com.ph

Tuesday, February 13, 2018

A7

SUNTRUST ECOTOWN TANZA

A HAPPY COMMUNITY FROM AN INSPIRED COMPANY

Site entrance marker

Administration Office in Suntrust Ecotown Tanza

A

General Manager of Suntrust Ecotown Tanza, Atty. Basilio C. Almazan Jr.

By Leony R. Garcia

LL roads lead to Cavite as more and more foreign investors from around the globe visit Suntrust Ecotown Tanza (SET) in search of a perfect haven to expand their thriving businesses.

Suntrust Ecotown Tanza is envisioned to be a 350-hectare township development located in Brgy. Sahud Ulan, Tanza, Cavite, Philippines. It is one of the newest Philippine Economic Zone Authority (PEZA) accredited private industrial parks which is eight kilometers away from Cavite Economic Zone (CEZ) Rosario and nearest to Manila’s major airports and seaports.

Suntrust Ecotown Tanza is Megaworld Group of Companies’ first industrial park project which will envelop commercial, institutional, and residential developments. Strategically located, it is 28 kilometers from the Ninoy Aquino International Airports and 46 kilometers from the Manila Port.

Barely five years since Suntrust Properties, Inc. (SPI) started development this side of Cavite, this private industrial park has now become the investors’ and locators’ most preferred location for their business expansions and relocations outside of Metro Manila. At least 111 hectares of SET is now in full operation with electricity, water, STP (sewage treatment plant)), MRF (materials recovery facility), telecommunications (telephone and internet) and PEZA/Customs offices.

Currently, SET’s locators include, among others, Philippine Toei Chemicals and Oakwave Philippines both former lessees of Cavite Export Processing Zone Authority (CEPZA) in Rosario, Cavite; N.T. Phils., established in 1989 as Nampow Philippines Co., Ltd. providing ceramic fil-

ter assembly service and inspection to the semiconductor producers in Japan; Korean company Dyco Young Jeong Realty, Inc. a holding company that will bring in Seung Yeun Technology Industries Corp.; and Fumaco Incorporated, one of the Philippines’ leading manufacturers, importers and distributors of quality lighting products for commercial, industrial and outdoor purposes, among others. Other locators (which are under manufacturing) include: Ecopack Industrial Packaging Corp, Rosario Fasteners, Corp., Lexan Industrial Corp., House Technology Industries Pte Ltd., Daegyoung Apparel Inc.; and our sister company, Eastwood Cyber One, Corp. as facilities provider. The ecotown is also home to the biggest PEZA facilities providers such as Orient Goldcrest, Centerreach, Panorama Ventures, CCMC, Ironcon Builders Devt. & Corp., among others.

“Last year we were very busy.

We got so many investors,” Atty.

Basilio C. Almazan, Jr. shared.

Almazan is the General Manager of Suntrust Ecotown Tanza and con-currently the First Vice President for Legal of SPI. “The park will, later on, have a residential subdivision, office and commercial spaces, institutional establishments including government offices, hospital, and school. It’s 350 hectares which is approximately 20 times bigger than the great Eastwood City of Quezon City, he continued.

“For 2018, Suntrust is pushing for the immediate expansion of SET. “It has already been approved

by PEZA and the next step is the proclamation by President Rodrigo

Duterte. This will help us gain and find more investors who could enjoy the incentives under PEZA law and, at the same time, help provide thousands of jobs. We are also hoping that the Department of Public Works and Highways (DPWH) will be very helpful in delivering the additional infrastructures we need especially on additional roads, road widening, and bridges to make it more accessible for investors,” Almazan explained.

Almazan calls the Ecotown a very special project because it’s the first of its kind “which will be contributing a lot to nation-building especially in terms of job generation with around 700,000 direct and indirect employees.” However, he said, the residential component will come a little bit later as the primary market will be coming from the Industrial Park itself.

We are looking at one or two years more for us to start the residential development.

“Of course, the commercial component will have to start soon too as we get more and more workers in the industrial park. The commercial lots had been sold much earlier. But once set, everything will be there. In fact, we are now talking also to some schools. Some hospital owners have actually approached us because they now see the potential of the area to put up a hospital there also. Soon, we expect the municipality and even the provincial government to put up some satellite government offices there to complement the residential, institutional, commercial and of course the industrial park development to complete the township.

For residential development, Suntrust is the most trusted brand for affordable to middle market not just for its vertical projects but equally so for its horizontal projects.

“I think, that’s why we’re the logical choice for the industrial park because it is a horizontal development. Suntrust is the one heavily engaged in horizontal development among the companies of the Megaworld group, thus we were the ones given the opportunity to start it off. And I was fortunate enough to be trusted by our Chairman, Andrew L. Tan, and Suntrust President, Atty. Harrison

M. Paltongan, to lead this team for Suntrust Ecotown. It’s really very exciting. I was in fact asking myself in the beginning, “what will I do here? I’m just a lawyer.” But then things changed and I realized that selling is so sweet. Especially once you’re able to close the deal and you start closing more and bigger deals. So I started becoming more and more well versed about PEZA and incentives, as well as the Philippine economy and its current situation as these are things that are being asked usually by the investors, especially foreigners.

“As time passed, I realized that selling can also be for lawyers. Of course, we don’t just do ordinary selling. The difference perhaps is that with what we do, we actually deal more with CEOs, the owners, the senior executives, general managers of different companies, the decision makers. More, the investment amounts involved are really huge. So it’s selling on a different and higher level. But it really feels great when you close a deal because you are able to entice these people who are investing and in doing so, you are taking part directly in the country’s economic growth. The selling also feels good because of the social component and impact we are able to make on a lot of families. We are aware that when deals are closed, we are able to help both the local economy and the national economy in terms of job generation because of the investments that we work on. It really feels good to know we somehow help put food on the table.”

Obviously, Almazan is immensely enjoying his work with Suntrust whose lean team is in charge directly of marketing and selling SET which includes himself, an Investor Relations Director, and two Investor Relations Officers.

“For now, we are four but we are actually a very big Team because in everything that we do, we coordinate with the whole Suntrust Family. The direct team is four but if you take a wholistic view of everything, we are actually very big because we have the whole Suntrust and Megaworld backing us up. We are sure the men and women of Suntrust are behind us, and that’s simply how we do things. We know that everyone is

Suntrust Ecotown Tanza’s Investor Relations Team (left to right), Mia Anne Margarette P. Gatdula, Fritziegay Daquipil (Investor Relations Officers), Atty. Basilio C. Almazan Jr. (General Manager), Ms. Theresa F. Tomas (Investor Relations Director)

Suntrust Ecotown Tanza

supporting us.

Aside from the economic component, the ecotown is also big on issues on ecology. “It is called Ecotown because we want it to be an environment-friendly park. We will have a lot of trees and plants, ecology and green parks and amenities, jogging spot, and all our buildings are expected to be environment-friendly as well. We will employ green technology as much as possible. In fact, we allow only electronic public vehicles within the park. We will also encourage the use of solar technology.

Above all, Suntrust aims to make Ecotown a complete place to live, work, play and relax—everything for the convenience of the community by providing amenities like golf driving range, mini golf and putting greens, jogging, biking, walking strips, swimming pool, basketball court; and more greens. So much so that if you are living there you don’t need to travel anywhere else because everything is within the community.

“Suntrust Ecotown is a happy

community coming from a happy and very inspired company. We, at Suntrust, are inspired to aspire for more, both for our company and ourselves as employees. We also want people to know that while we have grown to be a very big company, we remain to be the same company with a heart for its workers. We know the company can’t go anywhere with success unless with the support of its workers. We continue to spend time talking to our employees to know their dreams and aspirations and how we can help them grow in the company. We love opening up the hearts of everyone to know what their hearts’ desire. Every year, we gather and bring our families to celebrate together. Most of all, we share. We always find ways to share not just to our immediate and extended families but also to those outside the confines of our homes, offices, and projects. I have been privileged to have worked in some of the country’s biggest companies.

By far, my stay with Suntrust is the happiest!” Almazan concluded.

Banking&Finance

A8 Tuesday, February 13, 2018 • Editor: Jun B. Vallecera

BusinessMirror

www.businessmirror.com.ph

Pira cites laundry list making microinsurance a costly undertaking

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By Rea Cu

@ReaCuBM

he nonlife insurance players are deterred from exploiting opportunities in the microinsurance space for a number of reasons, chief among them the punitive minimum capital requirement, the Philippine Insurers and Reinsurers Association (Pira) said.

Pira trustee Michael F. Rellosa said industry members are open to the idea of selling microinsurance, but pursuing the business is difficult due to a number of factors.

“Pira members at present are going through difficult times. The main reason for this is the high capitalization they need to comply with among others,” Rellosa said.

This pertains to the Amended Insurance Code of the Philippines requiring new insurance firms to have P1 billion in paid-up capital, while existing insurers need at least P250 million by June 2013, P550

million by December 2016, P900 million by December 2019 and P1.3 billion by December 2022.

Rellosa said raising P1.2 billion is no longer feasible because industry appetite for risk is not that big.

He pointed out that an addendum to the National Regulatory Framework for Microinsurance is in order, placing a provision of reduced capital requirement proportional to the the size of microinsurance business of the insurance companies may work.

Nonlife insurers are also taxed at 27.5 percent even as life insurers

are levied only 5 percent. This dampens the incentive to offer microinsurance products, according to Rellosa. He argued nonlife and life insurers should be taxed the same.

The f lat premium rate imposed on microsinsurance products should also be reviewed, with the government keen to a sharing scheme with the private sector, providing subsidies for high-risk areas in the country, “Premiums are regulated by the government [for microinsurance].

Thus, insurance companies cannot charge higher premiums on clients who face higher risks. This is not sustainable,” Rellosa said.

Rellosa, who is also president and COO of Fortune General Insurance, said the Philippines could learn from the rice-farming scheme in Thailand, where premiums are low because the government shoulders half of the rate. Insurance claims in Thailand are also partially subsidized.

Pira helps its members by holding consultations with its

stakeholders and the Insurance Commission (IC).

The IC has acknowledged local insurers have some of the highest capital requirements in the Asean, and agreed to reevaluate the capital buildup mandate as a result.

The agency previously reported the microinsurance industry expanded primarily on the basis of premium sales generated by mutual benefit associations as at the end September 2017.

According to Insurance Commissioner Dennis B. Funa, the continued growth of the microinsurance segment as measured by premium and contributions totaled P5.17 billion in the first nine months of 2017, representing growth of 30 percent compared to only P3.97 billion in the same period in 2016.

The life-insurance sector reported P1.73 billion in premium generated as of end September 2017, up 27.84 percent compared to only P1.36 billion in the same period in 2016. The premium production of the nonlife sector also increased by

25.8 percent to P52 million, from P41 million in 2016.

According to Microinsurance Acting Division Manager Juan Paolo P. Roxas, the IC is optimistic of the growth in microinsurance this year as Filipinos have more disposable income set aside for insurance due to the recent passage of the Tax Reform for Acceleration

Case clippings

By Justice S J Ranada Jr. NOTARY PUBLIC—reduced penalty for violation The penalty imposed upon notary public for notarizing a document without requiring the physical presence of the affiant should be reduced from six months suspension, to two months only, where: There is no bad faith in the notarization; the civil case wherein the flawed SPA was used ended in a compromise agreement; and this is the first time administrative case of the notary, who is already 71 years old.

Almario v. Atty. Agno A. C. No 10689 08 Jan. 2018 Del Castillo, J

P&A Grant Thornton’s Playbook: 5 ways to win the war for talent

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hen it opened on February 15, 1988, Punongbayan & Araullo (P&A) was a small start-up that dared challenge the country’s single dominant player in the auditing field. It only had eight people at the time, yet its office was built to accommodate more than a hundred.

Benjamin R. Punongbayan already loomed large in the public accounting profession then, but was the David going against the Goliath in the industry when he cofounded the company with veteran banker Jose Araullo.

“The way we looked at it, we were going to be successful, so why lease a small space?”

Punongbayan said.

From a “small firm with big dreams,” P&A Grant Thornton is now in the big league, particularly after becoming a member-firm of Grant Thornton International, one of the world’s most prestigious accounting firms and one of the largest global accounting networks, in 2003. From a firm of eight, P&A Grant Thornton has grown to more than 900-strong with 21 partners across its nationwide network. It has kept its solid footing as one of the top 5 auditing firms in the country, providing audit, outsourcing and high-level advisory services.

Like many auditing firms here and abroad, P&A Grant Thornton has also been waging a war for talent. The growing slew of financial reporting standards, coupled with swelling volumes of data in business practices, are making the competition for accounting professionals tougher than ever.

Not only do accountants need to be good number crunchers, they must also possess the sharp business acumen, data analytics and leadership skills, as well as the “soft skills” like critical thinking and problem solving, to provide strategic advice.

P&A Grant Thornton has so far been successful in staving off intense competition, not just within the auditing industry, but also from others, such as the high-paying business-process outsourcing sector. Here are five ways the firm is recruiting, retaining and integrating millennial talent in its workplace:

gave her a full scholarship. Eunice obtained an accountancy degree from the Polytechnic University of the Philippines-Cavite campus and joined P&A Grant Thornton after passing the board.

“I have run out of words to express my gratitude. I can’t imagine where I would be right now if it weren’t for the opportunity,” Eunice said. Now a junior auditor at the firm, she financially supports her siblings and father who is undergoing kidney dialysis three times a week.

Eunice’s Cinderella story is commonplace in the company, said Rhia Girmendonk Dee, human resources director at P&A Grant Thornton. Many of the young talents—whom they recruit from the academe, organizations, such as the Junior Philippine Institute of Accountants, and online channels, such as LinkedIn —come from lower socioeconomic levels and pin their hopes on the profession for a better life. “They feel they are giving justice to the world by joining the accounting profession,” Dee added.

1. Find diamonds in the rough —then polish them Since high school, Eunice Seralbo had always wanted to be an accountant to help her family of six siblings, not one of whom had a college education. Luckily, she met Punongbayan who found out about her financial need and

2. Build a culture of learning P&A Grant Thornton has built a culture of training and development, with highly visual targets on employees’ individual performance development, a “buddy system” in coaching, and a more deliberate succession plan.

The firm grooms its future

promoting work-life integration.

Mailene Sigue-Bisnar, a partner at Audit & Assurance and head of the Markets Group, breaks away from the stereotype of auditors being boring people who do not sleep, especially during tax season. The mother of five knows how to strike a fine balance between her duties at work and in her family.

“When my children were very young, I used to bring them with me to work. There was a small room at the office where we’d put up a tent so they could sleep while I worked overnight,” Bisnar said.

“I am fortunate that the firm is supportive, understanding and that the corporate value and my own value are the same.”

leaders through an exchange program, where it sends future leaders to attend graduate degree programs at the Asian Institute of Management, and partners to senior executive development programs. P&A Grant Thornton also sends audit and tax professionals for a 1.5 to two-year assignment at Grant Thornton International’s various offices abroad.

“New hires in an auditing firm would be on equal footing prior to training. During the training, the top performers would naturally increase their chances of getting the opportunity to handle the big-ticket accounts for obvious reasons,” said Ramil Nanola, a partner at the Audit & Assurance division and one of the pioneering audit junior staff members of P&A Davao branch nearly 30 years ago.

and manual processes involving paperwork, inventory keeping and audit reporting. General accounting professionals like Angeles had to retool, rescale and attend training for new software and computer programs.

Accountants are considered most at risk from automation in the next 20 years, as computer learning systems are seen to be more equipped to perform simple and repetitive tasks faster and more accurately. Seasoned HR professionals, such as Dee, however, remain optimistic.

“Artificial intelligence can never replicate a person’s sense of grit, passion and persistence.

T he profession is preparing for those changes and making sure our talent supply will be able to adapt and follow suit,” she added.

3. Automate systems and processes, but retool people Esmeralda Angeles, finance director at the Practice Support Services Department of P&A Grant Thornton, has been part of the company since 1994.

There were only seven employees in the accounting department at the time, so they would pull all-nighters to manually get financial and budget reports out.

Then technology changed the way they do things when P&A Grant Thornton made major investments in automating tedious

4. Promote work-life integration Auditing is a naturally highstress work environment, so it could be a challenge to balance life and work. P&A Grant Thornton founder Ben Punongbayan admitted that he doesn’t regret enjoying a good time with drinking buddies even when the firm was just starting as “this was the only way for me to keep my sanity in check” because of the stress at work.

This is one of the reasons P&A Grant Thornton is known for

and Inclusion (TRAIN) Act. “We are optimistic that [the growth in microinsurance] will be stable [this year]. There is a possibility that the purchasing power of the public could increase because of TRAIN. It’s just a manner of informing the public on how to use their money,” Roxas told the BusinessMirror.

5. Create an inclusive environment Millennials make up 80 percent of P&A Grant Thornton’s work force. This diversity fuels efficiency and success in such a cutthroat industry. Baby boomers (the decision-makers and upper management) can supply security and tribal knowledge, Gen-Xers can contribute by being process-oriented and calculating in their approach to decision-making, and millennials can offer technological adeptness and creativity.

“I love that this job allows me to help others, manage people and, no matter how lofty it sounds, take part in nation building,” said Yusoph Maute, one of P&A Grant Thornton’s millennial managers at age 27.

T he magna cum laude from Baliuag University has already been promoted twice since starting as a junior auditor in 2011 and has been sent by abroad for training and conferences. “Your job becomes your dream job when you sacrifice and build a strong foundation of hard work and learning.”

For P&A Grant Thornton to continue winning the war for talent, one of the firm’s founders said it must always put people at the heart of the organization.

“Auditing is not something easy to sell like soda. You have to know the person and the company you’re selling to. Your client has to have trust in you and needs to be comfortable with you. You have to develop a relationship—and that’s why machines cannot replace what we do,” said Ben Punongbayan, who at 80 years old, still reports to work almost everyday, sustained by his passion for the firm he has always envisioned to “live for a very long time.”

Maybank Phl reports profits nearly fourfold over six months

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aybank Philippines Inc., the local unit of Malaysia’s largest lender, posted profits averaging far more than that generated by the country’s universal and commercial banks totaling P830.9 million in the first six months last year, from only P213.7 million in 2016.

This was almost four times more profits made over six months in 2016, and testament to the upside potential of consumer banking in the Philippines whose continued growth was second only to China last year.

In foreign currency terms, Maybank Philippines’s profits nearly quadrupled to $16.46 million in the first half last year, from only $4.54 million a year earlier.

Gross profits for the period stood significantly higher to P765.4 million or more than twice the previous year when this amounted to only P377.2 million.

Officials said these numbers were pushed higher by sustained growth in core business boosted in part by better cost and asset quality management.

Maybank Philippines’s six-month profits last year redound to a return on average equity (ROE) of 10.6 percent, nearly triple the previous year’s 3.6 percent. This compares with ROE averaging only 9.6 percent for universal and regular commercial lenders in the country.

The lender also reported a 10percent expansion in loans to P63.8 billion even as its deposits grew at an even faster pace of 20 percent to P79.9 billion.

“Loan growth was driven primarily by higher-yielding consumer loans, which expanded at a double-digit pace of 23 percent.

This, coupled with a strong pricing discipline, enabled the bank to mitigate pressures on interest spread as its net interest margin further improved to 5.2 percent, from 4.9 percent a year earlier.

The lender recently announced the appointment of Choong Wai Hong as president and CEO, whose goal is to make its Philippine operations a major contributor to the Maybank Group that operates multiple units in the Asean.

Wai Hong previously vowed to boost fee income, pursue digital banking in earnest and exploit relationships across investment banking and the insurance business in the Philippines.

Wai Hong said the so-called insurance penetration rate in the Philippines is still very low and, in this sense, presents a large potential upside in the years forward.

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Global Eye BusinessMirror

Bank misconduct under scrutiny as Australia inquiry starts in March

By Emily Cadman & Peter Vercoe Bloomberg

A

ustralia’s banks, rocked by years of scandals and wrongdoing, risk having further misconduct exposed as a powerful government-appointed inquiry into the nation’s financial industry starts.

The yearlong Royal Commission will examine the nation’s banks, insurers, financial-services providers and pension funds, and consider whether regulators have enough power to tackle misconduct. The first public hearings will focus on allegations of “inappropriate or unsuitable” consumer lending, counsel assisting Kenneth Hayne, a former High Court judge appointed to run the inquiry, said in Melbourne on Monday.

The hearings, expected to begin in March, will look specifically at lending practices in the big profit centers of mortgages, car loans and credit cards and whether consumers have been treated “honestly and fairly.”

Anger over bank conduct has grown as evidence of wrongdoing mounts—from rigging interest rates and ripping off customers, to allegations Commonwealth Bank of Australia breached anti-money laundering and terrorism financing laws more than 50,000 times—even as lenders rack up record profits.

“There is an endless buffet of complaints that people can raise,” said Andrew Schmulow, a law lecturer at the University of Western Australia who argues the banking system has failed and needs radical reform. “Unless the Royal Commission finds that there is nothing wrong, which is inconceivable, it will hand down recommendations, and it would be a brave government that ignores them.”

The cost to the banks won’t only be to their reputation. Commonwealth

Bank last week took a A$200-million provision to cover the expense of regulatory probes—including the Royal Commission—and compensating customers. The inquiry is also set to focus on bank profitability. In a background paper published on February 9, the commission said the big banks have posted fatter profit margins and higher return-on-equity than smaller lenders, and Australian banks are comparatively more profitable than peers in Canada, Sweden, Switzerland and the United Kingdom.

“The cornerstone of the banks’ strong profits has been their ability to change prices for customer products, like interest rates on home loans or deposits, as they see fit,” David Ellis, banking analyst at Morningstar Inc., told Bloomberg Television, noting that any new restrictions on repricing would dent profitability.

“The drums are clearly beating louder that the profitability of Australian banking is under threat and can’t be sustained,” Citigroup Inc. analysts Craig Williams and Brendan Sproules wrote in a note last week.

“Given the industry has fallen out of favor with its political and regulatory masters, it seems likely that there will be a material recasting of the economics of the industry.”

Potential repercussions from the inquiry include “financial penalties for mis-selling, refunds to customers, higher operational risk capital and a multitude of compliance expenses,” they said.

A Royal Commission is one of the most powerful independent judicial inquiries that can be held in Australia. It has the power to summon witnesses to produce documents or testify under oath. The recently completed commission into child sex abuse ran for almost five years, heard from nearly 8,000 witnesses, and produced a 17-volume final report containing 409 recommendations.

A man walks up a flight of stairs at Martin Place in Sydney, Australia, on August 17, 2017. Australian employers added more jobs than forecast last July, underscoring the central bank’s confidence in an improving labor market. Bloomberg

Editor: Angel R. Calso • Tuesday, February 13, 2018 A9

Traders bloodied by global stock wipeout seek clues

Traders work on the floor of the New York Stock Exchange in New York, USA, on February 9. The convulsions rocking United States equity markets continued last Friday, with major indexes headed for the worst week in almost seven years after falling back from early gains. Treasury declines eased as investors sought havens from gold to the yen. Bloomberg

W

By Lu Wang | Bloomberg

hen will it finally stop?

After a jarring week that rattled financial centers from New York to Hong Kong, and wiped out almost $5 trillion from stock markets, it’s the question everyone is trying to figure out.

Despite the rebound last Friday, United States equities closed out their worst week in two years. The Standard & Poor’s (S&P) 500 Index, which roared from one record to the next in recent months on strong earnings and a big corporate windfall from the Trump tax rewrite, is down almost 9 percent from its high late-January.

S&P 500 futures rose 0.6 percent in the Asian session on Monday.

Whether the downdraft goes down in history as a mere hiccup, or spells the end to one of the longest bull markets in recent memory is, of course, anyone’s guess. But, in just a few short days, the breathtaking volatility that shattered the market

calm has investors scrambling to make sense of it all.

Across Wall Street, analysts are nearly unanimous: the US economy is humming along, and corporate profits look robust, so equities, regardless of the near-term correction, are a buy.

Yet, valuations paint a more somber picture, and one that suggests there’s still room to fall before stocks find their footing.

“There is a ‘macro floor’—in that the run of macro data is still strong,” said Inigo Fraser-Jenkins, who leads Sanford C. Bernstein’s global quantitative strategy team. “What we do not have is a valuation floor.”

One such indicator is called the

Fed model. It compares the relative value of equities to fixed income. Going by that, the message isn’t reassuring. Even after the rout, the math shows the S&P 500 remains less attractive than it has been 82 percent of the time since the index bottomed in 2009 when compared with yields on US Treasuries.

Currently, the S&P 500’s earnings yield is around 6 percent, 3.1 percentage points more than the 10year note. The postcrisis average has been 4 points.

It’s part of the reason the pain has been so pronounced.

Whatever ultimately triggered the selloff—and just about everything from worries about inflation to forced selling by funds involved in arcane volatility trades has been implicated—stocks were sailing along at extreme levels of optimism before it all fell apart. Sure, earnings, hiring and consumer confidence were rising —but stock prices had risen more.

So far, the S&P 500 has tumbled in seven of the 10 past days, and plunged into a correction (loosely defined as a 10-percent drop) faster than any time since 1950. In doing so, the index has blown through three round-number milestones, as well as technical-support levels indicated by its 50-, 100- and (briefly) 200-day

moving averages. The sheer speed of the selloff has challenged the buythe-dip advice offered by firms from JPMorgan to Goldman Sachs.

There’s no obvious reason to assume one correction will be like another. But judging by recent experience, this one may have further to go.

At 16.8 times forecast earnings, the S&P 500’s valuation multiple is now down from a high of 20 lateDecember. That’s one of the fastest declines since 2009, but it has yet to bring P/Es in line with the average ratio of 15.5 that marked the bottom of the last two corrections. To get there, the S&P 500 would have to fall to 2,417. That’s roughly 8 percent below last Friday’s closing level.

To Barry Bannister, chief equity strategist at Stifel Nicolaus & Co., the haywire market is a product of investors repricing the risks of higher bond yields and inflation. Those have largely been missing in the past nine years, which let the S&P 500’s valuation reach levels not seen since the dot-com bubble.

Now that 10-year Treasury yields have started to rise, equity P/E ratios need to come down to stay attractive.

“The entire edifice of the centralbank bubble is built on repressed bond yields and artificially low cost of capital with a government race to the bottom for global corporate tax rates, all of which has inflated EPS and artificially supported P/E,” he said. “That is early in the process of ending.”

Stocks still look cheap to Treasuries when viewed from a wider lens.

The current yield spread is more than double the average since 1990 and compares with 2.66 percentage points since 2000. But a rise in 10-year yields to just 3.65 percent (from about 2.85 percent now) would reduce the equity advantage to the 20-year average.

Other indicators also suggest stocks offer decent value. Thanks to analyst-earnings upgrades, a measure known as the PEG ratio—which takes into account future growth— just fell below its historic average for the first time since 2012, according to Yardeni Research data that goes back to 1985. That’s not enough to convince James Investment Research’s Brian Culpepper to warm up to stocks. His funds have been cutting holdings this year.

“Stocks are extremely expensive,” he said.

European Central Bank told it must do better as soured loans crisis rumbles on

By Nicholas Comfort Bloomberg

E

uropean banks are generally safer and stronger than they were when the European Central Bank (ECB) stepped in as the pan-continental financial supervisor three years ago.

Don’t wait for the applause.

Instead, financial professionals describe the watchdog as murky, beholden to national interests and late to the party in its first stretch on the job. A Bloomberg survey of 39 academics, analysts and fund managers give the regulator little more than a passing grade for its work so far.

The ECB’s efforts so far are seen by many as too little too late given that Italy’s biggest bank nationalizations since the 1930s happened on its watch. As the central bank prepares to take on more responsibility, with firms shifting operations from the United Kingdom after Brexit, its track record suggests the ride could be bumpy, and investors won’t always get the clarity they want.

“The ECB should have tackled problems like bad loans far sooner; the issue has been clear for all to see for a decade,” said Lutz Roehmeyer, who helps manage €13 billion ($16.1

billion), including European bank stocks and bonds at LBB Invest. “The fact that they didn’t is rooted in the national approach that we can’t quite shake in Europe.”

Daniele Nouy, who leads the ECB’s supervisory board, rejects the perception of the Single Supervisory Mechanism, the watchdog’s official name, as being “burdened or prevented from acting” by national interests. European banks have more capital and less bad debt than when the central bank started to oversee them, she said. A spokesman for the SSM declined to comment for this article.

The numbers back Nouy up. A key measure of financial strength, the common equity Tier 1 ratios of the euro area’s 21 biggest publicly traded banks rose to 12.9 percent on average at the end of September from 10.8 percent three years earlier, data compiled by Bloomberg Intelligence show. Nonperforming loan (NPL) ratios have also fallen, especially in Italy where the bad debt was weighing on the entire economy.

Respondents to the Bloomberg survey agreed that the ECB has made European banks safer, although many also credited stricter global

capital rules put in place after the financial crisis.

“Tackling NPLs is a journey, a journey that started in 2014” and has seen the ECB take further action, Nouy told reporters in Frankfurt on Wednesday. It’s human nature that the hardest-hit banks and countries are the most vocal critics, she said.

Last October the supervisor followed up guidelines on how banks should tackle NPLs with suggested provisioning deadlines for bad debt.

The proposal sparked a barrage of criticism, especially from Italy, and the ECB was forced to postpone it to assess the feedback. The so-called addendum is due to be finalized next month and could take effect as soon as the start of April, Nouy said.

European leaders agreed to use a wide-ranging asset quality review in 2014 to ensure their country’s banks entered ECB supervision in good health. Jutta Urpilainen, a former Finnish finance minister who helped establish the supervisor, said she doesn’t know if that worked.

“The aim was to truly X-ray the banks,” said Urpilainen, who is still a member of the Finnish parliament.

“The starting point had to be that the problems were genuinely dealt with. It’s hard to assess whether we

were perfectly successful in our aims or whether uncertainty over the nonperforming loans remains.”

they would be tempted to skirt European rules if one of the country’s top banks needed a bailout.

Monte Paschi

National priorities

The poster child of Europe’s badloan problem is Italy’s Banca Monte dei Paschi di Siena SpA, which was rescued for a third time after the Italian government used a loophole in European law to inject taxpayer funds last year.

ECB President Mario Draghi led the Rome-based central bank from the end of 2005 until 2011, a period during which troubles started to build up at the lenders.

Monte Paschi’s latest rescue was only possible because the ECB declared the bank solvent, even after a drop in deposits raised concerns about its short-term funding. That hurt the supervisor’s reputation, said Klaus Fleischer, a professor of finance at the University of Applied Sciences in Munich.

The ECB could also have done a better job explaining why Banco Popular Español SA’s funding dried up in 2017, said Jean Dermine, a professor of banking and finance at INSEAD business school.

The Italians aren’t alone. German officials acknowledge in private that

National interests also show in Europe’s treatment of smaller banks, where direct supervision is up to domestic authorities. Germany, home to Europe’s largest number of small banks, has long suffered from comparatively low profitability in a fragmented market that has been exacerbated by low—and sometimes negative—interest rates. Almost 5 percent of small and medium-sized German banks missed regulatory capital requirements in a stress test conducted by Germany’s two top financial watchdogs.

Nouy’s colleagues also rejected their portrayal as a divided board and said that different backgrounds improve the quality of oversight.

“You have really experienced supervisors at the table,” said Madis Muller, a member of the board and a deputy governor of the Estonian central bank. “They have different views and would probably treat something differently in a national decision. But, being at the SSM, we have to agree and treat banks the same way.”

Crisis response

IN 2013 European leaders sought to respond to the financial and sovereign debt crises that shook confidence in banks, regulators and states alike. The ECB’s credibility and legal authority meant it was best-placed to step in and oversee euro area lenders.

That doesn’t mean banking supervision has to stay at the ECB, said Joerg Asmussen, a former ECB executive board member who is now a managing director at Lazard Ltd. “If there is a time for treaty change, we could set up a separate agency,” he said. “It works, there’s no operational risk if you split it now.”

If that happens, it probably won’t be on Nouy’s watch. Her fiveyear, nonrenewable term, ends this year. Does she have advice for her successor?

“To strongly adhere to the European mandate and European ideals,” she said. “To have enough vigor to handle banks and criticisms that go with the job. What else? Persistence to make sure that what is decided is implemented.”

The ECB is also pushing banks to think about other threats from the possibility of cyber attacks to the disruption of their business models by financial-technology start-ups.

A10 Tuesday, February 13, 2018 • Editor: Angel R. Calso

Opinion BusinessMirror

www.businessmirror.com.ph

editorial

Homecoming

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E are glad to know the government has come up with some kind of contingency plan so that the overseas Filipino workers (OFWs) who might be displaced from Qatar and the Kingdom of Saudi Arabia are provided income-generating options to fall back on when they get home.

Perhaps many of these OFWs are still in debt from payments made to their placement agencies. There are certainly no easy solutions for giving all of them jobs outright. Nevertheless, solutions are urgently required.

Labor Secretary Silvestre H. Bello III said the Department of Labor and Employment (DOLE) has around 20,000 jobs in the country that can be offered to Filipinos coming home from Qatar and Saudi Arabia.

He said the DOLE will conduct a one-week job fair to workers in these countries showcasing different employment opportunities in the Philippines.

Bello added that the 20,000 new jobs would be provided by former Sen. Manny Villar, who is in need of 18,000 skilled workers, and another 2,000 from the Department of Education, which needs teachers. The reintegration program of the Overseas Workers Welfare Association also provides livelihood assistance.

While there has been no sudden mass return migration of our OFWs in the Middle East (at least not yet), the DOLE said over 600 OFWs in Qatar have already lost their jobs and more may suffer the same fate due to a prevailing diplomatic crisis between Qatar and other Middle East countries.

Some displacement of Filipino workers in Saudi Arabia could also happen because of the oil crisis and the Saudization policy, which the Saudi government started implementing in 2011 to boost employment among Saudi nationals by curbing the hiring of foreign workers by Saudi companies.

In line with the kingdom’s Vision 2030, the Saudi Ministry of Labor and Social Development would no longer allow foreign workers in 12 retail or sales sectors, including car dealerships, garments and clothes, furniture and appliances stores by September 11; electronics, watches and optic stores by November 9; and medical equipment and supplies, hardware, auto spare parts, carpet stores and sweet shops by January 2019.

The Saudi government will prioritize the employment of their nationals in these sectors, which could affect 9 million foreign workers in the kingdom, including our OFWs. We urge the government to strengthen its contingency program for return migration. Anyway, our OFWs who might go or be sent home are productive citizens, workers with tangible skills and who are qualified for jobs in various local sectors and industries. It is not like they have nothing to offer and no one is hiring.

For instance, the business-process outsourcing (BPO) industry is still the biggest generator of jobs, according to the DOLE. The automotive, coconut and tourism sectors could also readily employ people.

With manufacturing costs in China becoming higher, the country could lure investments in certain manufacturing activities, like garments assembly, which could also be a source of jobs. The Philippines has the potential to become a production hub of middle and high-end goods for huge markets if we could provide a competitive manufacturing capacity and lower the cost of electricity.

Demand for electronic and electrical engineers, as well as other workers in the electronics sector, is expected to remain high in upcoming years as the industry continues to grow.

Because of our vast natural resources, sustainable mining could be one of the top recipients of foreign investments and also a main job generator.

In a nutshell, the government has options, many rays of light to brighten the cloudy forecast on return migration, if it could get its act together and work well with the private sector. It just needs to implement policy reforms that could strengthen the economy and the domestic labor market, and more important, rouse itself from its complacency and overreliance on OFW remittances.

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THE Entrepreneur Continued from A1

T

he economy has been thriving on a low-interest environment, as the Monetary Board, the BSP’s policy-making body, has kept policy rates unchanged since 2014.

The stock market posted impressive gains last year, with the main index (Philippine stock index) closing at a record high of 8,558.42 points on December 29, the last trading day of 2017, reflecting an annual growth of 25.1 percent year-on-year. Yearto-date (up to January 26), the PSEi had gained 5.6 percent.

The domestic market’s performance was mirroring the performance of global markets, particularly the United States.

In the first month of 2018, the US stock market was “on fire,” with the Dow Jones Industrial Average hitting a historical high of 26,000 in the morning of January 16. According to reports, the rush among investors to buy stocks had driven up average prices by almost 8,000 points since the election of President Donald J. Trump in 2016.

And then, the ax fell. The Dow

plummeted 1,175 points at the close, down 4.6 percent, to 24,346 points, which reports noted as its biggest drop since the European debt crisis in August 2011.

The drop in the US market sent ripples around the world, including the Philippines. On February 5 the PSEi plunged 194.75 points (2.2 percent) and ended the trading day at 8,616 points.

Local share prices also reflected the recovery in Wall Street in the days following the rout.

Analysts say the stock market drop was not totally unexpected, because the improving US economy, coupled with prospects of high corporate earnings, have been attracting investments in the equities. In other words, the high share prices were bound to come down at one point or another.

Some factors cited as the trigger

Stock market chaos John Mangun

Lorenzo M. Lomibao Jr., Gerard S. Ramos Lyn B. Resurreccion, Efleda P. Campos Dennis D. Estopace

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Honeymoon is over for new BSP governor

OUTSIDE THE BOX

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hilosophers have been trying for centuries to qualify and quantify what elevates humans from the rest of the animal kingdom. If you have ever had a pet dog or cat, maybe the philosophical answer is easy. Humans are easily bewildered by things that are in a state of disorder or chaos. Further, we absolutely must make sense out of that state of confusion.

If the family pet comes upon a new piece of furniture or a pile of clothes on the floor of the kids’ bedroom, you can see the animal’s surprise at this new situation. But that soon turns to “What can I do with this thing?”

Being so much higher on the evolutionary ladder, we immediately seek to know who, why and how. We have this need to create order out of chaos. If no reasonable answers can be found to our questions, we start reaching for solutions. “No one could have possibly built the ancient

pyramids so it must have been the ancient aliens.”

Last week I wrote that the “crash” of the US stock market was a result of investors fearing that an increase in interest rates would stop them from buying back their own stock to support the price. We all know that, based on my decades of experience and incredibly brilliant intuitive knowledge, that is the only possible correct answer.

However, we also know that that is total nonsense.

For Gov. Espenilla, the current volatility in the global markets and challenges in the domestic front will test his mettle for the first time. I am convinced that the governor will handle it well. It is very comforting to know that we have a very competent man at the top of the BSP.

to the drop include anticipation that the Federal Reserve would raise interest rates, as well as increasing average wages, which could fuel inflation.

For the Philippines, the scenario has changed rather quickly—from a stable economic environment and prospects for a steady growth—to one mixed with a certain degree of volatility. The nationwide inflation rate ended at 3.3 percent last December, bringing the average for 2017 to 3.2 percent, well below the 4-percent ceiling set by the BSP. In January 2018, however, inflation increased to 4.0 percent, the high end of the 3-percent to 4-percent target for this year. The increase was attributed mainly to higher prices of food, alcoholic and nonalcoholic beverages, tobacco and petroleum products.

During its first rate-setting meeting for this year on February 8, the Monetary Board raised its inflation

Answers to a complex question usually have a successful shelf life of about 15 minutes. The cat is absolutely convinced that the clothes grew like a flower from the floor until Junior drops another tshirt on the pile. Then the answer must change.

In the past 10 market days, the Philippine Stock Exchange Index (PSEi) has been in a state of chaos.

We have had six daily trading gaps.

A trading gap occurs when “there is a break between prices on a chart that happens when the price makes a move up or down with no trading occurring in between.” For example, the PSEi closed at 8,810. The next day the high was 8,680, meaning there is a “gap” between 8,810 and 8,680.

This happens frequently but to have it happen six times in 10 days is nearly unprecedented. The last time anything like this happened was in March 2009, but not as many times or with such large gaps.

These gaps, both up and down, are like a cat chasing the light of a laser pointer around the room. So do not expect any kind of sensible explanation from me. But maybe

forecast to 4.3 percent for 2018 (from 3.4 percent) and to 3.5 percent (from 3.2 percent) for 2019.

The volatility in the foreign markets, higher inflation in the domestic economy and other challenges will require the government, particularly the monetary authorities, to stay alert and prepared to cope with the challenges coming our way.

For Espenilla, the current volatility in the global markets and challenges in the domestic front will test his mettle for the first time.

I am convinced that the governor will handle it well. It is very comforting to know that we have a very competent man at the top of the BSP, a career central banker who had been exposed to global and domestic challenges long before he was appointed governor.

The new governor clearly expressed his stance during a speech last month, when he said the BSP’s strategic direction under his watch would be “about being proactive, staying on top of developments and continuing building additional buttresses and buffers on already strong foundations, so that our economy would be able to prosper and withstand potential shocks.”

Under the current situation, that is exactly what we need—to preserve our gains and sustain our growth.

For comments, e-mail mbv.secretariat@gmail. com or visit www.mannyvillar.com.ph.

ancient aliens are in control of our stock market. Actually, that probably does make sense.

Remember that sellers cannot create a transaction. Even if a seller is willing to sell at one peso for a P1,000 stock, they cannot force a buyer to buy. Buyers, on the other hand, can “make an offer” with a price bid so high that the seller “can’t refuse.” Therefore, buyers are now like the cat chasing the laser light trying to figure out where it is going to land next.

My lovely wife Ada likes to rearrange the furniture in the sala every couple of months. I have given up trying to figure out why. Now I only have to locate where she placed my favorite chair and sit down. The reality is that after the chaos of rearranging usually comes a more favorable outcome. The same will soon be true of our stock market. Wait, watch and be prepared.

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

Opinion BusinessMirror

www.businessmirror.com.ph

Addressing the housing shortage

Where China can and can’t innovate

Ernesto M. Hilario

ABOUT TOWN

Adam Minter

BLOOMBERG

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hina’s biggest tech companies are emblems of national pride. When the government decides upon a priority, Tencent Holdings Ltd., Alibaba Group Holding Ltd. and Baidu Inc. are often asked to help devise the technology to achieve it. The companies are generally spared from official criticism, let alone interference with their commercial operations.

Those privileges aren’t absolute, however, as Tencent—the company behind the WeChat messaging app— recently learned. Late last month, China’s central bank shut down Tencent’s fledgling credit-scoring agency after only a day. The decision was particularly surprising, given that the government had authorized the project in 2015 and had actively encouraged the company to proceed. At the same time, it’s a good indication of what kinds of innovations will and won’t be allowed to thrive in China’s private sector.

The need for a system like Tencent’s hasn’t diminished. It’s long been easy for Chinese state-owned companies to borrow money from banks. Consumers and small entrepreneurs without connections, and even many private companies, face far greater hurdles. As a result, they’ve opted for informal and shadow banking.

To begin remedying this state of affairs, in 2014 the government proposed setting up a “social-credit system” that could flesh out whatever financial records existed with additional “social” data—ranging from school to criminal records. Companies could, in theory, process that mass of data to devise a credit score. “In the future, perhaps there will be a ranking system for morality,” Tencent Chairman Pony Ma told an audience in 2013. “If your friends have high morality, then your credit should be good, too. Otherwise, they naturally wouldn’t become friends with you.” In other words, if you’re a good citizen, you’re probably a good risk for a loan.

Thanks to China’s mass adoption of mobile phones, online shopping and social media—and the development of artificial intelligence to process all the data thereby generated—such systems are more viable than ever. In 2015, the government authorized eight companies to launch social-credit pilot programs while it prepared its own national system for launch in 2020.

Tencent was one of the companies selected, and—along with Alibaba—it was widely expected to become a leader in the industry.

Since then, however, the notion of social credit has become complicated.

The different pilot programs all have different standards. The government’s own program—which hasn’t been released yet—is incorporating some of them, and local governments are adding their own requirements. For example, in Zhejiang Province, which just passed a local social-credit regulation, failure to recycle can hurt your credit. In Shenzhen, jaywalking can have the same impact. Meanwhile, Alibaba’s social-credit program reportedly weighs financial information heavily, while Tencent’s ill-starred experiment naturally emphasized social criteria.

That diversity may have worried China’s ruling Communist Party. Already, Tencent and Alibaba are among

the most powerful entities in China, commanding the attention and loyalties of hundreds of millions of Chinese. At least some in the government probably feared that allowing multiple, independent standards of socially acceptable behavior could undermine the government’s own program and standards.

More directly, the government is concerned about potential conflicts of interest. In theory, for example, Tencent could use the promise of better ratings to lure borrowers to its financial products, undermining the point of a socialcredit system altogether. The risk isn’t just financial, either: In recent years, the government has been extremely mindful of ensuring that online frauds don’t lead to social unrest. No innovation is worth potential instability.

As recently as January, Alibaba had to apologize for causing a public uproar after its affiliate Zhima Credit was accused of misleading users into disclosing private information. Though Chinese Internet users have long adopted a relatively lax attitude toward online privacy, at least by Western standards, the incident prompted an unusually fierce pushback. That clearly unnerved a Chinese government accustomed to having seamless access to citizen data.

Going forward, if private innovations undermine the public’s easygoing attitude toward data privacy, they’re likely to be curbed.

Of course, this isn’t the end of either Tencent or China’s social-credit system. Even China’s biggest state-owned companies occasionally clash with the government, and social credit is far too important a political priority to cast aside. Indeed, in early-January, the government announced that its national social credit initiative would move forward under the auspices of a state-owned company, with Tencent and other tech firms as minority shareholders.

Meanwhile, Tencent will, no doubt, continue to innovate in other areas using its cutting-edge WeChat app. There are real questions, however, over the degree to which features nurtured in an environment where official dictates take precedence over the desires of shareholders and customers can succeed globally. Some innovations may not be pursued for fear of offending government sensibilities. Those that are might be viewed as lacking the robustness of features found in similar products abroad. (WeChat has so far struggled to find overseas users.)

And, even if all else is equal, there will be inevitable reputational challenges overseas for companies viewed as working closely with an authoritarian government—an issue that firms, such as Chinese electronics manufacturer Huawei Technologies Co. Ltd., are already facing in the United States. In different ways, China’s tech giants may find themselves limited abroad, as well as at home.

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ill the creation of a full-fledged Department of Human Settlements and Urban Development (DHSUD) help solve the acute housing shortage in the country?

That’s the rationale behind the filing of two bills in the legislature.

The Senate version consolidates six similar bills that wanted to address the nation’s housing needs in a rational way. The proposed bill seeks to deal with the problems of overcrowding, restrictions in unlocking land for human settlements, lack of an efficient transport system and the rising number of squatter communities.

Senate Bill 1578 consolidates the administrative functions of the Housing and Urban Development Coordinating Council and the planning and regulatory functions of the Housing and Land Use Regulatory Board. The department will act as the sole and main planning and policymaking, regulatory, program-coordination and performance-monitoring entity for all housing and urbandevelopment concerns.

The creation of one housing department with one board is seen to pave the way for a comprehensive road map for housing and urban development.

Over at the House of Representatives, the Committee on Housing and Urban Development believes that Republic Act 7279, or the Urban Development Housing Act, has failed

to solve the housing backlog in the country, which stood at 3 million in 1992. It estimates the housing needs of Filipinos to increase to 6.8 million before the Duterte administration bows out of office in 2022.

House Bill 677, therefore, seeks to establish the DHSUD that will adopt and implement a comprehensive and integrated national and local housing and urban-development program. It will also rationalize and coordinate the functions and powers of the National Home Mortgage Finance Corp., Home Guaranty Corp., Home Development Mutual Fund and the National Housing Authority.

The DHSUD will not only provide for housing but also “focus on building communities and habitats in both rural and urban areas.”

The new department shall act as the primary national government entity responsible for the management of housing, human settlement and urban development. It will not only deal with the physical element of housing but, likewise, provide the necessary link to community services and components, such as education, health, culture, welfare, recreation, food and nutrition.

First on the agenda of the DHSUD is to craft and adopt a

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is likely to get worse.

The Pentagon’s main response thus far has been to spend more. Last summer, it offered retention bonuses of up to $455,000 over 13 years to eligible officers. Monthly “flight pay” for pilots also increased, while drone pilots were rewarded with a $35,000 raise annually if they re-upped for five years.

The air force also graduated its first class of noncommissioned officers from drone-flight school, which had previously been limited to officers with cockpit experience.

national strategy to immediately address the provision of adequate and affordable housing to all Filipinos.

As the sole entity for all housing, human-settlement and urban-development concerns, primarily focusing on the access to and the affordability of basic human needs, the DHSUD is an idea whose time has come.

While we’re glad that the first step in solving the housing problem will be taken with the creation of a separate department for housing, we don’t expect anything dramatic to happen in the next several years, or perhaps even until the end of the Duterte administration in 2022.

The Department of Information and Communications Technology, for instance, has been in existence for nearly two years now, and we haven’t seen a big leap in our Information and communication technology infrastructure, with our Internet connection still the most expensive and the slowest in this part of the world. The DHSUD will need time to set up shop once the law is in place, but we doubt if it will be able to gain headway in convincing the national government to give up public land for affordable socialized housing.

Support for MSMEs

DO we have a conducive business environment that gives local investors enough incentive to keep their money at home?

The World Bank, for instance, comes up with an annual ease of doing business report where “getting credit” is one of the indicators. And analysts are saying that our ranking in this single indicator could jump by as much as 100 places if the legislature immediately passes the secured transactions systems bill.

This bill seeks to encourage more

lending to micro, small and medium enterprises (MSMEs) and agriculture, since it offers entrepreneurs opportunity to use movable collateral, such as inventory, receivables, crops, livestock and equipment, to back up their loan applications.

At present, lenders accept only real estate as collateral. Thus, production by family household businesses is constrained by lack of funding.

The bill, once enacted into law, will develop a professional, regulated warehousing industry, which issues receipts that can be used as collateral by lenders and can be traded by investors and industry players.

It will also develop an automated movable collateral registry wherein announcements and information on transfers and pledges of collateral can be made and accessed by participants.

Moreover, it will develop the backbone of an efficient commodities market that will stabilize prices and expand transactions.

The Department of Finance is pushing for the immediate passage of the bill, as it believes that it would lead to a dramatic increase in the number of MSMEs. In China, for instance, lending to MSMEs increased by 50 percent to 100 percent, with $3.58 trillion in funds lent out in four years after the reform. Movable collateral is now also accepted for commercial lending in Vietnam.

The important thing now is for the legislature to approve the bill. If signed into law by President Duterte, we could similarly give a big boost to MSMEs and the agricultural sector and surpass our current GDP growth levels to as much as 7 percent to 8 percent, or even more.

E-mail: ernhil@yahoo.com

The Marcos trilogy Cecilio T. Arillo

database Part Three

Meeting with foreign ministers

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N compliance with an agreement reached after my first meeting with the foreign ministers of Saudi Arabia, Libya, Senegal and Somalia who visited the Philippines in late-1973, we have appointed Muslim officers to positions of high responsibility in the armed forces and the civil government. The local governments have been strengthened. Infrastructure projects are injecting new life into the economy of the region.

The institution of social reforms, to benefit the broad masses of our people, formed a complimentary concern to the restoration of order and the securing of the Republic.

The priority program had to be land reform. For decades the necessity of agrarian reform had been stressed to our politicians but not until the “September 21 Movement” could this reform be carried out realistically.

Land-reform program

On September 26, 1972, five days after the proclamation of martial law, I signed Presidential Decree (PD) 2 proclaiming “the whole country as land-reform area” in the belief that the objectives of the agrarian-reform program set forth in Republic Act

(RA) 3844 would be realized sooner through this decree.

The following month, on October 2, I signed PD 27, emancipating the tenants from the bondage of the soil, transferring to them the ownership of the land they till and providing the instrument and “mechanism” for such emancipation. With these two decrees, the government set into motion the massive overhaul of the system of landownership in the Philippines and, at last, land reform ceased to be an unrealized dream in our society.

There were nagging problems, to be sure. The small landowners must be given just treatment. They could not be treated exactly as the big landowners or inheritors of large states.

Empty cockpits are a problem for the US Air Force

n late-2016 the air force realized it was facing a shortage of about 700 fighter pilots. The service, to its credit, pushed ahead with several initiatives to avert the looming crisis.

The result: The air force is now short about 1,200 fighter pilots.

It’s not that the air force’s steps weren’t improvements. It’s that they were too small. With commercial airlines poaching the military ranks to replace a giant cohort of their own pilots now reaching mandatory retirement age, the air force’s predicament

Tuesday, February 13, 2018 A11

Still, these changes amount to little more than a Band-aid. And given the huge training costs involved—as much as $11 million per pilot for the new F-35 Lightning II—there isn’t enough in the budget to restock through recruitment.

What to do? Increasingly, the Pentagon is loosening its “up or out” promotion policy, under which officers follow a strict career path that includes desk jobs and other things less fun than flying a $100-million jet at Mach 1. It could offer a new

“pilot only” track for flyers who just want to fly and aren’t looking to rise to very top of the service. In addition, pilots are often made to move to new assignments and bases all over the world every few years; giving those with families more flexibility to stay put would improve their quality of life.

The air force should also consider a longer initial service commitment than the standard six or 10 years for those it sends to flight school, and a lengthened commitment from veteran pilots who receive additional training

An amendment to the provision of RA 3844 was made in PD 251; it created a new system of compensating the landowner.

As of the end of April 1974 the government had issued more than 25,000 land-transfer certificates covering an area of 360,000 hectares worked by 200,000 tenant-farmers.

These accomplishments, however, covered only rice or corn lands 50 hectares and above in size. Later, the land-transfer operation was brought down to the 24-hectare category. The targets are 1,000,000 tenant tillers and 350,000 landowners in a total of 1,767,000 hectares of tenanted rice and corn lands.

The rice crisis was an occasion — unlike in the past—for most resurgence on the part of the people. For the first time, the problem was treated as economic rather than as political.

Rice has to be produced or bought, in either case; its surplus depends on our effort. We must put the pressure on traders and dealers to ensure efficient distribution of rice supplies. But as I told our people in August 1973, the shortage cannot be met with anger and rioting and by damning anyone. If we want to eat, let us work. The people responded. Farms and gardens sprang up everywhere. We must realistically recognize one principle: It is far better to face problems, which arise out of reform measures, than to allow the old problems to grow and overwhelm us.

Solutions tend to beget further problems. We must meet the problems to

on more modern aircrafts.

The air force’s shortage is not limited to fighter pilots; it also has about 2,500 fewer ground-maintenance personnel than needed to keep its planes in the air. To stanch the bleeding of maintenance workers, it could bring back an entire class of airman: the warrant officer. Warrant officers, who still exist in the other three service branches, are specialized workers who rank above and receive better pay than, enlisted men and noncommissioned officers.

reform with vigor and enthusiasm, for we are bound to solve them.

Socioeconomic reforms

Social reforms also mean the increase of the minimum wage. Again, we must understand that, before we can talk of higher wages, we must first apply ourselves to production.

I sought the counsel of labor itself on this matter, and we agreed. Our rewards lie in our productive capacity.

However, this principle must never be allowed to justify exploitation of the working masses. This is the enduring basis not only in industrial peace but social progress.

As for the national economy, one of its basic features is the active “governmental participation and management in economic planning and implementation as laid down by a constitutional office, the National Economic and Development Authority.” One of the first steps taken by the government was the establishment of a “free flow” of foreign investors.

It can no longer be said that our economic-development efforts are anarchic, uncoordinated and unplanned. As a consequence, the two most important resources, human and natural, are being properly and efficiently mobilized for the development.

To be continued To reach the writer, e-mail cecilio.arillo@ gmail.com.

These steps, combined with expanding opportunities for non-officers to fly drones and transport aircraft— the air force is also short several hundred non-fighter pilots—could make a real difference. (So could raising the mandatory retirement age for commercial pilots, which would require the approval of the Federal Aviation Administration.) As the threat of great-power conflict rises, the capability and range of the United States Air Force is ever more vital to both US national security and global stability. Bloomberg View

2nd Front Page BusinessMirror

A12 Tuesday, February 13, 2018

Jan-Nov FDI exceeded BSP’s 2017 full-year goal

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By Bianca Cuaresma

@BcuaresmaBM

nternational investors showed optimism on the Philippine economy’s long-term prospects, as foreign direct investments (FDI) grew further in November 2017 to surpass the government’s full-year projection for 2017.

The Bangko Sentral ng Pilipinas (BSP) on Monday reported a 16.9-percent increase in the country’s FDI to reach $869 million last November.

FDI are the type of investments foreign players make to a country in search for a longterm yield. These investments are deemed more coveted than foreign portfolio investments, as these are usually tangible and job generating.

By specific component, the BSP said the rise in FDI during the month was due mainly to the 13.1-percent expansion in

nonresidents’ net placements in debt instruments issued by local affiliates—or the so-called intercompany borrowings—to reach $604 million during the month.

Net equity capital inflows— albeit with a lower share to the total inflows—grew during the month by 38.7 percent to hit $210 million. The $210-million net inflow came about as only $18 million were withdrawn in equity capital during the month, leaving the total inflows at $228 million, more than enough to cover for the outflows.

The BSP said bulk of gross

$8.7B The total foreign direct investments from January to November 2017

equity capital investments during the month came from Singapore, Hong Kong, Luxembourg, China and the United States.

Sectors that benefitted from these equity capital placements were manufacturing, real estate, electricity, gas, steam and air-conditioning supply, construction and wholesale and retail trade activities.

Reinvestment of ear nings, meanwhile, amounted to $56 million during the month, completing the total $869-million FDI for November.

The BSP expressed optimism w ith the development, especially after the strong November FDI performance of the country pushed the total FDI inflows for the first 11 months of the year above its earlier expectations for the entire 2017.

“The sustained FDI inflows reflected investor confidence given the Philippine economy’s solid macroeconomic fundamentals and growth prospects,” the BSP said.

FDI for January to November hit $8.7 billion, surpassing the $8-billion projection for 2017.

Net FDI rose by 20.1 percent year-on-year, which was attributed largely to the 9-percent growth in net placements in debt instruments to hit $5.2 billion.

Other FDI components also performed well during the period, with net investments in equity capital hitting $2.8 billion, from $1.8 billion in the comparable period in 2016.

The BSP said for the entire 11 months, the equity-capital infusions were sourced mainly from the Netherlands, the United States, Singapore, Japan and Hong Kong.

The placements were invested largely in gas, steam and air-conditioning supply; manufacturing; real estate; construction; and wholesale and retail trade activities.

Reinvestment of earnings, on the other hand, reached $717 million for January to November.

San Miguel has not lost theft case vs Indonesian partners yet–CA Continued from A1

Bugtas, did not necessarily render the actions taken by public respondent [Hon. Alice C. Gutierrez] fait accompli,” the CA noted. “As discussed in our November 16, 2017, resolution, the said order had not yet attained finality,” it added.

While the CA acknowledged that as a general rule, courts will not issue writs of prohibition or injunction to enjoin or restrain any criminal prosecution, it explained that there are extreme cases that warrant a relaxation of the said rule, one of which is when the acts of the judge are without or in excess of authority.

“Petitioners, in the case at bar, precisely alleged that public respondent, with bias or prejudice, acted with grave abuse of discretion amounting to lack or excess of jurisdiction in the issuance of its questioned orders.

See “San Miguel,” A2

MV ‘St. Leo the great’ 2GO celebrates the launch of its new vessel, christened MV St. Leo the Great, with (from left) Fil Cuevas, captain of MV St. Leo The Great; Lizanne Uychaco, 2Go Corporate Services head; Ricky Dybuncio, president of 2GO; Mark Matthew Parco, COO of 2GO Shipping; and Ruth Verceluz, chief engineer of MV St. Leo The Great leading the ceremonial toast during the ship’s blessing at Pier 4 Zaragoza Gate in Tondo, Manila. ROY DOMINGO

www.businessmirror.com.ph

RISING INFLATION ALREADY CUT WORKERS’ PURCHASING

POWER BY 30%–LABOR GROUP

By Samuel P. Medenilla

F

@sam_medenilla

ollowing the recent hikes in prices of basic commodities last month, workers in Metro Manila now have considerably less consuming power given their current salaries, according to a labor group.

Citing the result of its wage monitoring, the Associated Labor Unions-Trade Union Congress of the Philippines (ALU-TUCP) said the purchasing power of daily minimum wage in National Capital Region (NCR) fell by 30 percent, from P512 to P360.31 a day.

“In sum, workers lose a total of P3,943.94 a month to inflation. With this amount, a family

can buy additional food needed for them to stay healthy in our society and remain productive citizen in nation-building,” ALU-TUCP Spokesman Alan Tanjusay said in a statement.

ALU-TUCP attributed the price surge to the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law, which exempted more people from paying income taxes; imposed taxes on sugary drinks; and raised taxes for automobile, petroleum and other products.

The Department of Finance (DOF) said it is still too early to see the impact of TRAIN on inflation “unless merchants took advantage of the law.”

Continued on A2

‘Big boys’ causing delays in conclusion of RCEP Continued from A1

“If it is just us [Asean countries], we have no problem concluding the RCEP because we have existing FTAs with the other six negotiating countries. The problem is with China, New Zealand, Japan and India because they have no FTAs among them,” Rodolfo noted.

Lead negotiators who were in Yogyakarta last week tackled how many percent of their respective country’s tariff lines can be subjected to zero duty upon entry into force of the RCEP. They, however, failed to touch on the sensitive list of each country, which Trade Secretary Ramon M. Lopez and his counterparts in the region hoped would be discussed already in the Indonesia talks.

As much as Rodolfo is still optimistic the trade deal could be concluded this year, he said its fate lies on the determination of each country to finalize it. He added that he hopes the momentum gained in the RCEP negotiations in Manila last year “would really pressure the other RCEP partners to come forward” and level with the majority’s expectations.

“I think substantially [the RCEP will be concluded] this year in Singapore,” Rodolfo said. He clarified, though, that when he says “substantially,” he was referring to the objectives of the talks this year, one of which is the identification of products to be immediately placed under zero duty once the RCEP is implemented.

On top of this, Rodolfo confirmed the government will be pushing for the inclusion of agricultural products, mostly staple— such as rice, sugar and garlic—under the country’s sensitive list.

Products on the sensitive list will have its tariff reduction take effect in a much-longer period to allow the domestic industries to adjust.

A country considers a product sensitive if it cannot subject it to competition with imports. In the case of the Philippines, the government usually marks rice and sugar as sensitive products because their foreign counterparts are priced cheaper in the market.

“Between agricultural and industrial products, our country is more sensitive, like in any trade negotiation, on agricultural products. We are more sensitive on that,” Rodolfo admitted.

The RCEP is the free-trade agreement between Australia, China, India, Japan, New Zealand, South Korea and the 10 member-states of the Asean. It covers trade in goods, trade in services, investment, economic and technical cooperation, intellectual property, competition, e-commerce, dispute settlement and other trade issues.

The trade deal is positioned as the counterpart of the TransPacific Partnership (TPP), which gained significant headway in January even with the United States backing out. The amended version of the TPP is scheduled to be signed by its 11 negotiating countries in March.

WHY SHOULD YOU HAVE A GOOD LOOK AT GDPR? Continued from A1

and failing to comply brings the risk of hefty fines—up to €20 million, or 4 percent of global revenue, whichever is higher—for any company with European customers that mishandles data.

In response, legislators worldwide are scrambling to update their domestic legislation to bend to Europe’s privacy rules. The data revamp will allow European Union consumers to pull their data from a company at any time, force businesses to alert customers within three days if their data is hacked and let people move information to rival services at a drop of a hat.

The Philippines is in a good position, given the fact that it signed the “Data Privacy Act” into law in 2012 and is incorporating the tough provisions of the law through the National Privacy Commission

(NPC). Having said this, Philippine organizations have to make a more determined effort to implement the processes and procedures necessary to be fully compliant and avoid costly data breaches.

Since the mid-1990s, European Union policy-makers have rolled out a series of data-protection rules that quickly became the de facto global standards for most countries except for a few holdouts like China, Russia and the United States.

But, as companies like Google, Facebook and Amazon vacuumed up more of people’s private information, European lawmakers upped the ante, intent on setting a new bar for data protection worldwide.

Most multinational companies from Google to General Electric must comply with the new standards because of their existing activities in Europe. And smaller firms, even those

currently with no operations in the EU, face a tough decision to either comply with the region’s stance on privacy or risk potential sanctions if European customers eventually sign up to their services.

Israel and New Zealand are among a handful of international partners that have struck deals with the European Union certifying that their data-protection rules are equal to those of Europe. Only under those conditions can data— and billions of euros of trade—flow freely between the parties.

In Argentina, for instance, legal experts say that pending data-protection reforms will put the Latin American country mostly on a par with the EU’s new rules, including guarantees linked to the independence of the country’s privacy agency.

In Japan, which is still awaiting its own adequacy decision after

signing a free-trade agreement with the European Union last December, lawmakers also passed reforms last year that mirror many of Europe’s existing standards, such as imposing restrictions on international data transfers to countries whose own privacy rules do not offer equivalent protections.

Other countries, from Colombia to South Korea to the tiny island nation of Bermuda, are similarly rebooting domestic legislation. At times, that involves adopting European rules almost word for word.

While many countries’ dataprotection rules are primarily based on those of Europe, many countries, including the Philippines, have to take local circumstances into considerat ion— including not overly burdening local small businesses without the budgets or know-how to follow

complicated privacy rules.

US policy-makers argue that American data-protection standards, enshrined in the constitution and enforced aggressively by the Federal Trade Commission, do more to guard against misuse than European standards, which often can be more bark than bite.

But that didn’t stop Europe’s highest court from tearing up a 15-year-old data-transfer agreement in 2015 between the region and the US after judges ruled that American authorities did not fully protect EU citizens’ data when transferred across the Atlantic.

As Europe’s new privacy standards kick in over the coming months, Europe is expected to use its economic muscle to cajole others to follow suit.

As Philippine organizations have no choice but to comply with

data-privacy laws, allow me to conclude with highlighting four ways to do so: 1. You have to appoint a dataprotection officer (DPO) and form a Data Protection Committee. You, hopefully, have already informed the NPC of the DPO appointment in September last year. You have to identify privacy risks to your organization.

2. You need to develop good policies and practices for handling personal data.

3. You must communicate, monitor and audit internal policies and processes.

4. You have to learn how to handle queries or complaints and assist the NPC if necessary.

Should you need assistance in implementing the four ways, contact me under Schumacher@eitsc.com.