media partner of the year
BusinessMirror
United nations
2015 environmental Media Award leadership award 2008
A broader look at today’s business
www.businessmirror.com.ph
n
Wednesday, July 6, 2016 Vol. 11 No. 270
DIOKNO SAYS ALVAREZ TO COLLATE REQUESTS FOR solons’ ‘PET PROJECTS’
The speech
Lawmakers to get ‘pork’-like funding D ₧3.3T L
INSIDE
By David Cagahastian
Versailles: A true paradise in the South
@davecaga
awmAkers will continue to get funding for their “pet projects” in their districts during the Duterte administration.
But this allocation is in no way a revival of the infamous pork- barrel scheme, Budget Secretary Benjamin E. Diokno said.
Diokno added that the new administration will be collating the requests for funding for pet projects of congressmen throughout
The proposed national budget for 2017
the country, although he assured this will not go against the Supreme Continued on A2
BMReports
property
P25.00 nationwide | 5 sections 28 pages | 7 days a week
Digital technology and the new agriculture
E1
Amaia launches commercial stores at Steps
Free Fire Teddy Locsin Jr.
UTERTE’s inaugural speech gets better with each rereading, but was the inaugural messaging clear, as PR people say? It was, as Marines under fire say, “crystal.” But it bears rereading. The message is condensed and baffling. Coming from an unconventional president, it is oddly old-fashioned in expression. In that respect the inaugural captured Duterte’s old-fashioned, lawyerly way of speaking—his fondness for the passive voice; which, in a weak mouth, will fail but, from a strong mouth, imparts a quiet and enduring strength. The contrast between the civility of his language and the threats it conveys to criminals—as well as the assurances it gives their victims—brings out all the more the passion behind Duterte’s words. Continued on A11
EL NIÑO PUSHED INFLATION higher in june 1.9 PERCENT By Bianca Cuaresma @BcuaresmaBM
& Catherine N. Pillas
E1
Making libraries meaningful again
T
photo by Celso Espaldon
property
By Psyche Roxas-Mendoza
@PsycheRoxas Exclusive to the BusinessMirror
D property
E2
Conclusion
ESPITE being an agricultural country, the Philippines is among the top rice importers in the world. Government figures show that agriculture accounts for only 11 percent of the nation’s GDP as of 2014, even as it employs 30 percent of the country’s total work force. About two out of three farmers live below the poverty line. Their average age is 57 and their
PESO exchange rates n US 46.8330
Between the scientist and the technopreneur—in the borderless age of information technology—the agriculture landscape has become a brave, new world for the Filipino farmer. average income is P2,000 a month. Hard facts like these, combined with the latest developments in social media, have led to the emergence of Cropital.com—a crowdfunding platform that sources funds for farmers
via the Internet from people and investors who want to lend money to farmers’ groups in return for a modest return on investment for the money they lent. Continued on A2
@c_pillas29
he lingering effects of El Niño caused inflation rate in June to accelerate to its quickest monthly pace in 14 months at 1.9 percent, according to the National Economic and Development Authority (Neda). Socioeconomic Planning Secretary Ernesto M. Pernia said increases in food and oil prices were major factors behind the uptick in the June inflation rate. “The hike in inflation can be attributed to the residual effects of the weakening El Niño and the slight recovery of oil prices,” Pernia said in a statement. “But the inflation trend in the first six months of 2016 was manageable. This is expected to continue for the rest of the year, against a backdrop of expanding productive capacity of the domestic economy and persistently low
The inflation trend in the first six months of 2016 was manageable.” —Pernia oil prices,” he added. Data from the Philippine Statistics Authority (PSA) showed that rising prices in housing, water, electricity, gas and other fuels drove inflation in the nonfood group to 0.9 percent. Inflation in June also adjusted to the rise of oil prices for 2016. “International oil prices have yet to recover, but as global demand improves alongside the pressures brought by the Canada wild fires and the political unrest in Nigeria, the biggest oil See “El Niño,” A2
n japan 0.4567 n UK 62.2457 n HK 6.0369 n CHINA 7.0265 n singapore 34.8123 n australia 35.2840 n EU 52.2563 n SAUDI arabia 12.4878
Source: BSP (5 July 2016 )
A2 Wednesday, July 6, 2016
BMReports BusinessMirror
www.businessmirror.com.ph
Digital technology and the new agriculture Continued from A1
Cropital.com
ONE of the start-up companies that exhibited during the University of the Philippines (UP) Knowledge Festival in April in Tagaytay City, Cropital.com is composed of aspiring technopreneurs helped by the Department of Science and Technology (DOST)-UP Enterprise Center for Technopreneurship. The DOST mentioned on its web site that in 2011 it provided funding of P6.7 million to the Enterprise Center as part of its support program for Technology Business Incubation. The Philippine Economic Zone Authority and UP contributed P2.5 million and P2.2 million, respectively. “Help” to these newbie technopreneurs also comes in the form of identifying target markets; developing and packaging their technology product, fine-tuning their business plan; and increasing investment and marketing opportunities. Enterprise Center Manager Jacinto Asuncion Jr. said “Currently, they [Cropital.com] have
covered farmers from Bulacan, Quezon, Laguna and Benguet. They are now rolling around P2 million to P3 million of funds for the farmers. They have finished already, some cycles of borrowing, some of the farmers have, finished paying already and they have just launched their new farmers’ funding in Benguet, where high-value crops are coming from.” In explaining how successful Cropital.com has been, Asuncion related in a message to the BusinessMirror that on June 10 “after one day, all farms are now fully funded.” “More than 10 farmers from Bulacan, Quezon and Benguet will now be provided with the support they need to move forward this cropping season,” Asuncion said. He added that in total, Cropital. com has received more than P1.5 million in one day and got 696 farm pledges. “More farms will be posted soon! Sign-up at www.cropital.com to be updated! #SupportFarmers #Cropital #Agriculture #Philippines,” Asuncion said. The crowdfunding for farmers’ platform has step-by-step proce-
dures for those who want to invest in Cropital.com
Funding farmers
AS mentioned on their beta web site: Choose farm to invest on. Sign up and register to be able to view and invest on the selection of farms curated for this beta run. Once the farm has been fully funded, farmers will be provided with the resources they need to start farming. Farmers will next be empowered to improve their produce. The funds and resources will then be utilized to improve production. We are the ones managing the fund for the farmer, making sure it goes to the right resources and making sure you’ll get your return on investment. After the harvest and once the produce have been sold, the capital will return to the investor’s wallet together with the profit shared. It is made clear on their web site that all farmers participating in the program have been verified and selected through the assistance of the local government unit. Farmers are
required to submit an application form and barangay clearance, and have to undergo an interview with Cropital.com. Only those who will pass the process will be allowed to join the program. Farmers are also provided with access to crop insurance. According to Cropital, the crop insurance under Philippine Crop Insurance Corp. has already been integrated in the amount of capital raised to these farmers. Farmers are also provided with access to agriculturists to infuse best practices in pest prevention/ mitigation of crop pests. Crop insurance also covers damages from pests. Cropital said it sets a cap on the amount of money you can invest on a farm. This is to encourage spreading out money to different farms, so as to lessen the risk to the user in case of unfortunate events. Perhaps, the best guarantee that Cropital.com is legit is its affiliation to UP and the DOST. Cropital holds office on the third floor of the UP National Engineering Center in UP Diliman, Quezon City.
Still, as in all businesses, there are always risks.
Ready
MEANWHILE, in UP Los Baños the scientists of Project Sarai (Smarter Approaches to Reinvigorate Agriculture as an Industry in the Philippines) are now wrapping up their three-year project, packaging the results, making presentations and training. “We have a line of products that we have developed together with the International Plant Nutrition Institute,” Sarai Program Leader Vicky Espaldon. “We have ‘Ready,’ a computer calculator or mobile-phone calculator for rice or corn crops.” Ready gets information from the farmer about the size of his farm lot, activities the farmer is undertaking, variety of the crop the farmer is planting, fertilizer and pesticide he uses. When the farmer has provided all that input, he will see at the lower portion of the calculator how much he will earn. Thus, the very start, he will
Lawmakers to get ‘pork’-like funding Continued from A1
Court’s decision against porkbarrel funds. Diokno said the requests for funding will be coursed through the office of Rep. Pantaleon D. Alvarez of Davao del Norte, who is poised to be elected as the new Speaker of the House in the 17th Congress. Alvarez would then turn over the requests to the Department of Budget and Management, which is undertaking a review of the budget proposal to be presented to Congress by the Duterte administration for deliberations starting August 15.
“But these proposals are not automatic. They would have to be in line with the development agenda; so schoolbuildings are okay. But if you request for a basketball court, then that’s not going to be approved,” Diokno told the BusinessMirror and GMA7 television network in an interview. Diokno said this practice of identifying projects for funding does not go against the Supreme Court’s decision in 2014, which declared as unconstitutional the inclusion of pork-barrel funds in the national budget. He explained that factoring into the national budget the re-
quests for funding of congressmen is not a post-enactment intervention by the individual members of Congress in the spending process of the government. “I think that the congressmen are more competent in knowing which projects are needed in their areas,” Diokno said. Ideally, Congress exercises its power of the purse by scrutinizing the budget proposal of the Executive branch during the budget deliberations. Funding for the pet projects of congressmen may not necessarily increase the national budget proposal, which for 2017, will amount to
some P3.3 trillion. Diokno said what the Supreme Court prohibited was the practice of the previous administrations of appropriating a lump sum, from which representatives and senators are able to draw funds for their pet projects during the current fiscal year, even though those projects were not previously identified during the budgetcreation process. The budget deficit will probably reach 2.5 percent of GDP this year and 3 percent in 2017, mainly because of revenue shortfalls, Diokno said. The government will continue to meet 80 percent of its
borrowing needs from the domestic market and fund 20 percent abroad, he added. Next year’s growth target was lowered marginally to 6.5 percent to 7.5 percent from 6.6 percent to 7.6 percent set by the previous administration. Growth is set to range between 7 percent and 8 percent from 2018 to 2022, Diokno said. The currency will probably remain stable and competitive, with officials keeping the peso forecast at 45 to 48 per dollar in its economic projections through 2022, central bank Deputy Governor Diwa C. Guinigundo said at the briefing. With Bloomberg News
see that if he does this, then this will be his income potential. If he chooses this other one, this will be his income potential. He always has a choice. “You can even consult Ready if you want to change your organic fertilizer,” Espaldon said. “Our hope, really, is to set up, in the future, an electronic farmer’s clinic at the local government level.” Between the scientist and the technopreneur—in the borderless age of information technology— the agriculture landscape has become a brave, new world for the Filipino farmer. And for the children of this marginalized sector, organizations that address their education needs are gaining local and international recognition for their efforts. To date, French-Filipino Henry Motte-Muñoz, founder of Edukasyon.ph, has received the following awards: Forbes’ List of 30 Under 30 (2016), Asia 21 Young Leader, Mega Pinoy Pride awardee, top 5 at the Harvard Business School Club of France New Venture Competition.
El Niño. . .
Continued from A1
exporter in Africa, oil prices have reached its highest level in 2016,” Pernia said. Food inflation also rose by 3 percent in June. The lingering, though waning, effects of the El Niño, caused the uptick in prices of vegetables and livestock, among other food commodities. Rice registered a year-on-year deflation of -0.5 percent in June, but prices picked up slightly by 0.2 percent from the previous month as El Niño-related droughts continued to negatively affect production. Pernia said the government should start preparing for the upcoming La Niña, while farmers recover from the impact of El Niño. “We need to improve the agriculture logistics chain by constructing more bridges to connect farming areas separated from markets by rivers that are nontraversable during the rainy days,” he said. The June inflation rate is within the Bangko Sentral ng Pilipinas’s (BSP) forecast of 1.5 percent to 2.4 percent. It is also higher than the 1.6 percent registered in May and the 1.2 percent seen in June 2015. Average inflation in January to June reached 1.3 percent. This means that for inflation to graze the lower end of the government’s 2 percent-to-4 percent target for 2016, average inflation for the second half of the year must hit 2.7 percent. “This turnout is consistent with our assessment that over the policy horizon, monthly inflation will move to within target, although for 2016 we still see full year average to be just below or around the low end of the national government target range,” Tetangco said. Monthly inflation has been missing the target range since May last year, causing the central bank to break its streak of within-target inflation average for six consecutive years. Last year, inflation averaged 1.4 percent, below the government’s target of 2 percent to 4 percent. However, the BSP said it is not bothered by the below-target inflation outturn, adding that it does not see the need to tweak the country’s monetary policy. “We see no need to change the stance of monetary policy for now,” BSP Governor Amando M. Tetangco Jr. said. “But we will continue to monitor develops, particularly the policy actions of advanced economies including the Federal Reserve, in light of Brexit. The market will also continue to monitor how the economic team will implement the government’s policy agenda,” Tetangco added. In its June meeting, the central bank’s monetary board decided to maintain the interest rate on the BSP’s overnight reverse repurchase facility at 3 percent. The corresponding interest rates on the overnight lending and deposit facilities were also kept steady. The reserve requirement ratios were likewise left unchanged.
BMReports BusinessMirror
news@businessmirror.com.ph
Wednesday, July 6, 2016 A3
PSALM seeks NPC okay to charge ₧27.67-B stranded debt to consumers as power rates rise By Lenie Lectura
T
@llectura
HE Power Sector Assets and Liabilities Management Corp. (PSALM) is seeking regulatory approval to pass on to end-users the stranded debt of the National Power Corp. (NPC) amounting to P27.67 billion through the universal charge (UC).
This developed as power rates in areas being served by the Manila Electric Co. (Meralco) are expected to go up by P0.29 per kilowatt-hour (kWh) this month, mainly on account of higher generation charge. The rate increase is roughly equivalent to P58 for residential consumers with an average consumption of 200 kWh a month.
Plea
PSALM, in a 21-page petition filed before the Energy Regulatory Commission (ERC), proposed to collect P0.0283 per kWh for nineand-a-half years to mitigate the impact on consumers.
It said the 2015 UC-stranded debt (UC-SD) adjustment was calculated based on the projected energy sales of 977,206 gigawatthours (GWh) for January 2017 to June 2026. As provided under Section 34 of the Electric Power Industry Reform Act (Epira), UC will be imposed on all electricity consumers to cover payment of NPC’s stranded debt and stranded contract costs. Stranded contract costs refer to the excess of NPC’s contracted cost of electricity with independent power producers over the actual selling price of the output.
Stranded debt refers to NPC’s unpaid obligations that were not liquidated by proceeds from the sale of its assets. The UC, which is a separate line item in consumers’ electric bills, has different subcomponents, depending on the utilization of the funds as specified in the UC collection. “As PSALM has vigorously pursued its mandate of privatizing the generation assets and the power facilities, revenues from the sale of electricity of the remaining assets are not enough to cover its operations and provide funds for the payment of NPC debts and obligations,” the PSALM said.
Stop-gap measure
To address the funding gap, PSALM is forced to resort to temporary solution by borrowing that entails borrowing costs, which, in turn, will form part of the UC-SD, effectively increasing the UC burden of all electricity users. But if PSALM would be allowed to immediately recover the UC-SD under its petition through provisional approval, new loans and refinancing to service maturing debts and lease obligations would lessen. “This would redound to the benefit of electricity end-users
₧0.29/kWh The expected hike in Meralco rates this month
due to reduced borrowing costs, effectively reducing the UC burden,” PSALM said. PSALM, the state agency tasked to privatize NPC’s power assets to help generate funds to pay off NPC’s debts, is authorized to impose UC from all end-users to compensate for any remaining deficit. It is also mandated by law to calculate the amount of the stranded debts and stranded contract costs of NPC, which shall be the basis for the ERC in determining the universal charge.
The culprit
The increase in the rates was primarily due to the generation charge, which increased by P0.34 per kWh from last month’s level of P3.72 per kWh, which was the lowest since October 2004. Generation charge now stands at P4.06 per kWh. The upward adjustment in generation charge was primarily due to the higher charges from the Wholesale Electricity Spot Market ( W ESM), which went up by P4.49 per kWh after dipping to P3.97 per kWh
last month. This was the result of higher generation capacity on outage during the June supply month compared to the previous month, resulting in five instances of yellow alerts in June (June 13, 14, 17, 21 and 22). It w i l l be rec a l led t h at several power plants went offline in June. Those that went on scheduled outage were Pagbilao-2, San Lorenzo Mod 50 and 60, Santa Rita Mod 40 and iPower. Meanwhile, those that went on forced outage include Sual-1, San Gabriel, Calaca 1 and 2, GN Power 1 and 2, Limay A and B, Santa Rita Mod 10 and 30, SLPGC 1, SLTEC 1 and 2, San Roque 2, Pagbilao 1 and Ambuklao 2. In contrast, the Luzon grid did not experience any yellow or red alert in May, when peak demand reached the record-high mark of 9,727 MW. Due to the increased incidence of plant outages, too, Malaya 2 was dispatched for around half of the June supply month, when peak demand in Luzon dropped to 9,260 MW. The Malaya plants are “must-run units” and are typically instructed by the National Grid Corp. of the Philippines (NGCP) to be dispatched when reserve levels in the grid are very low. Costs of energy sourced from
New Manila airport chief Monreal starts decongesting Naia By Recto Mercene @rectomercene
T
O ease ground and air congestion at the Ninoy Aquino International Airport (Naia), newly appointed airport manager Ed Monreal, has banned overnight aircraft parking on all four passenger-terminal parking bays. Monreal said he will revive an existing memorandum that bans aircraft from parking overnight. “All terminal bays should be used for loading and unloading of passengers only,” he said. He added that airlines should utilize the designated aircraftparking space. Monreal explained that this policy is a standard international practice to ensure that passengers, especially the elderly, persons with disability, or passengers who need special assistance, will be attended to with utmost concern and will not be burdened by transferring to a bus from a remote parking area. “Safety and convenience of passengers is our utmost concern, that is why all aircraft loading and unloading passengers will be given the priority to use the airport terminal bay,” Monreal added. Coordination and adv isor y with all airlines concerned will be done by the Manila International Airport Authority (Miaa) to fully implement the policy, he said. When asked to comment, legacy carrier Philippine Airlines (PAL) and Cebu Pacific (CEB) said they have their own hangar and parking bays that they privately financed. Although PAL airplanes are parked at its headquarters in Villamor Air Base, it recently built its own tarmac at a portion of the former Nayong Pilipino, adjacent to Terminal 2. Meanwhile, a former airline executive has assumed office as director general of the Civil Avia-
tion Authority of the Philippines (Caap), replacing William K. Hotchkiss III, who led the agency for four years. Antonio Buendia, who served as president of Asian Spirit and the Philippine Aerospace Development Corp., will be the fifth Caap director general since the aviationregulatory body was crearted by law in 2008. Hotchkiss is confident that Buendia will be able to sustain and move forward with what he has done for the agency, which he anchored on the “Future is in the Skies” principle. “Coming from the aviation industry, Director General Buendia knows what is needed to sustain and even to propel the industry forward and farther,” Hotchkiss said. In his almost half a decade stint as Caap head, Hotchkiss, through his “geese-formation type of leadership,” was able to unite the agency’s employees toward the goal of being a center of aviation excellence in Southeast Asia. Transportation Undersecretary for Aviation and Airports Roberto C. Lim said joining Buendia are former airline executives and topclass pilots. Jim C. Sydiongco, former vice president of Cebu Pacific, was also named deputy director general for operations. Manuel Antonio L. Tamayo, who led the entourage in Pope Francis’s trip to Tacloban last year, was appointed deputy director general for administration, while former Cebu Pacific Director for Quality Assurance Donaldo A. Mendoza is assistant director general II. Completing the new executive board are Maria Aurora Carandang-Gloria, the first commercial Filipino female pilot of the country, as head executive assistant; and Gil M. Macapagal as chief of staff. With Dale Calanog
independent power producers (IPPs) also registered a slight increase of P0.03, mainly due to the lower dispatch of QPPL. Cost of power f rom pl a nts u nder the power supply agreements (PSAs), meanwhile, decreased by P0.02 per kW h. T his was driven primarily by the higher dispatch of Ilijan. The share of PSAs and IPPs to Meralco’s total power requirements stood at 49.2 percent and 42 percent, respectively. Meanwhile, the share of WESM went down from 12.8 percent the previous month to 7.8 percent in June. Me a nw h i l e , t r a n s m i s s io n charge registered a decrease of P0.08 per kWh, mainly due to lower ancillary charges. Taxes and other charges increased by P0.01 and P0.02 per kWh, respectively, following the increase in generation charge. Meralco’s distribution, supply and metering charges remain unchanged, after it registered a reduction a year ago. Meralco reiterated that it does not earn from the pass-through charges, such as the generation and transmission charges. Payment for the generation charge goes to the power suppliers, while payment for the transmission charge goes to the NGCP.
Pernia: PPP Center chief Palacios to keep his post By David Cagahastian @ davecaga
P
ANTIDRUGS CAMPAIGN Filipino policemen secure an area, as drug addicts and dealers voluntarily surrender at a police station in
Manila on Monday. National Police chief Director General Ronald dela Rosa said more than 100 armed drug dealers have been killed in gun battles with the police since last month, and thousands of drug users have surrendered to authorities amid the intensified antidrugs campaign. AP
Solaire, City of Dreams hike Parañaque’s tax take
T
he opening of two multibillion-peso casino resort at the Philippine Amusement and Gaming Corp. (Pagcor) Entertainment City has considerably increased the Parañaque City government’s revenue collection. Parañaque City Mayor Edwin L. Olivarez, in his fourth State of the City Address, repor ted that Belle Corp., developer of the City of Dreams, and Solaire Resort and Casino of port mogul Enrique K. Razon Jr., paid realproperty taxes amounting to P191 million in 2015. City of Dreams, which had a soft opening in December 2014 and had a grand launch in February 2015, paid P135.9 million, while Bloomberry, developer of Solaire, which gained an auspicious head start over other private gaming operators in the Entertainment City, paid P55 million in real-property tax last year. City of Dreams covers about 2 hectares of gaming space, more than 900 hotel rooms operated under three hotel brands (namely, Crown, Hyatt and Nobu), the DreamPlay indoor amusement park, and approximately 2 hectares of
restaurant and retail space. Other top business taxpayers were D.M. Wenceslao and Associates Inc. (DMWAI), project developer of Entertainment City; and Manila Bay Development Corp. (MBDC), a construction consultancy and management firm. DMWAI contributed P46.6 million to the city coffers in 2015, while MBDC added P34.9 million in real-property tax payment. The leisure and entertainment enclave is situated along Manila Bay, within the jurisdiction of Parañaque’s Barangay Don Galo, which is expected to become the richestincome earner among the city’s 16 barangays in two years. Olivarez said it was the third year in a row that the city broke the P1-billion mark in business-tax collection, the highest in terms of value and annual percentage increase. The reelected mayor said the increasing number of businesses in Parañaque reflected investor confidence in the city, which was adjudged the country’s most competitive city in terms of economic dynamism for two consecutive years. In his address, Olivarez reported that registered and renewed licenses
in 2014 totaled 19,477, which was an increase of 14 percent in the previous year. In 2015, he said, a total of 20, 679 registered their businesses. In the first six months of this year, a big majority, or 19,547 businesses, were registered at the local business permits and licensing office, making the city confident of posting a 21-percent increase this year, according to the mayor. “This is a clear affirmation of the soundness of our policy. We don’t need new taxes in Parañaque,” Olivarez said. The city, he said, has increased its annual income to P5 billion last year. Olivarez added that the expected opening next year of the 600,000-square-meter Ayala Mall, bigger than the 406,000-sq-m SM Mall of Asia in the neighboring Pasay City, would add P500 million to P700 million annually to the city’s coffers. Ayala Land’s planned shopping mall, once completed, would become the country’s largest commercial complex. The company will develop a business-process outsourcing building and a 12-story hotel with at least 325 rooms.
ublic-Private Partnership (PPP) Center Executive Director Andre C. Palacios will keep his post, according to National Economic and Development Authority Director General Ernesto M. Pernia. However, Pernia is grooming another prospective appointee for the position who will be appointed, in the meantime, as deputy executive director. “PPP Center Executive Director Andre Palacios will be retained in order not to disrupt the flow of projects. He’s doing a good job actually,” Pernia said in a news conference on Tuesday. He said another unnamed appointee, who is a mechanical engineering graduate from the University of the Philippines and also has some foreign education, will be appointed as Palacios’s deputy. “The idea is to keep him for a while and phase in the new guy so there would be no disruptions,” Pernia said. The Duterte administration seeks to speed up and increase spending in infrastructure, at the rate of more than 5 percent of the GDP. Budget Secretar y Benjamin E. Diokno said the increase in s p e nd i ng wou ld b e e f fe c te d through the removal of some bottlenecks in procurement and disbursement, which were prevalent in the previous administration, resulting in underspending. Diokno said the Aquino administration left behind some 55 percent of the total national budget unspent for 2016. The increase in spending will result in a bigger budget deficit, which may hit a ceiling of 2.5 percent of GDP. But economic officials said the faster spending of money is needed to address pressing issues, such as traffic congestion.
BMReports BusinessMirror
A4 Wednesday, July 6, 2016
news@businessmirror.com.ph
DBCC lowers GDP growth goal for 2016
T
By David Cagahastian
& Bianca Cuaresma
@davecaga @BcuaresmaBM
he Development Budget Coordination Committee (DBCC) on Tuesday lowered the GDP growth target this year to a range of 6 percent to 7 percent, from the previous year’s 6.8 percent to 7.8 percent. In a news briefing after its meeting, DBCC said it lowered targets despite the expected surge in economic growth during an election year. Budget Secretary and DBCC Chairman Benjamin E. Diokno said the GDP target was scaled down, as growth could slow in the second half of the year. “We expect growth in the second half to be slow, because election spending is waning and there are still issues on agriculture and exports,” Diokno told reporters. He said risks to agriculture, such as El Niño, have already caused the sector’s output to contract by 4.4 percent in the first quarter of the year. Diokno also said the economic cluster of the Duterte administration wants to be “more conservative” and “realistic” in its growth targets. For 2017, the GDP growth tar-
get is set at a range of 6.5 percent to 7.5 percent. For 2018 up to the end of Mr. Duterte’s term, the government is aiming to increase GDP by 7 percent to 8 percent.
Budget deficit
Diokno said the budget deficit is expected to hit 2.5 percent of GDP by the end of the year, and the Duterte administration is expected to maintain this rate for the next six years. However, he attributed the bigger budget deficit to the lower collection of the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC), and not to the underspending of the previous administration, which limited it to less than 1 percent of GDP. Finance Secretary Carlos G. Dominguez III said the bigger budget deficit also took into consideration the plan of the government to increase infrastructure
spending in the next six years. “We’re playing catch-up here. If you look at the number of car sales in the past five years against the number of streets constructed, you would realize that we have to make more roads, fix the roads, make them wider,” Dominguez said. Diokno said construction of major road and other infrastructure projects in Metro Manila will likely be undertaken 24 hours a day, seven days a week, “to get things done.” “So don’t be surprised if there is construction happening at night,” he said. “You don’t need a law for that, but I am surprised we don’t pay attention. In other countries, it is really 24/7. Here, after six months, the construction stops,” Diokno added. As to when this new scheme will be implemented, Diokno said the plan has already been mentioned to the President, and he approves of it. But Public Works Secretary Mark A. Villar said the plan requires careful study prior to implementation. “We also have to take into account the capability of our contractors. It’s going to take some coordination but we will do our best. We will try our best but most probably it could be implemented within the year,” Villar said. “We want to speed up the projects. It’s a matter of coordination, we will finish these projects as
soon as possible,” he added. Aside from improving infrastructure, Diokno said the 24/7 construction scheme would also increase the number of available jobs, as this would entail having three work shifts. Bank of the Philippine Islands (BPI) research officer Nicholas Antonio Mapa said this is a “welcome” strategy for the Philippines. “The short-term gains would be the direct increase in government spending in the GDP accounting numbers, increase in job creation, growth of the sectors that have both forward [consumer related goods as construction workers will have income] and backward [construction materials] linkages to construction,” Mapa told the BusinessMirror. “In the long term, it could prove to be integral in bringing in foreign investments into the Philippines, as we improve our logistics rankings and ease of doing business improves,” he added.
Revenue collection
Dominguez said the economic cluster of the Duterte administration wants to increase revenues through better tax collection and through a tax-reform package to be proposed to Congress. The tax-reform package primarily involves the adjustment of the tax brackets to take into consideration the hike in consumer prices since 1997. To offset the expected foregone
revenues from such readjustment, the government will propose to increase taxes on fuel products, and to remove some exemptions from the value-added tax. Dom i ng uez sa id t h i s t a xreform package could increase revenues to P2.975 trillion, from the projected P2.573 trillion, or approximately P400 billion. “We are committed to increase government revenues through proposed legislated measures, which the administration is expected to pass within the first year,” said a statement from the DBCC after its first meeting.
Other targets
The DBCC’s target range for inflation is set at 2 percent to 4 percent from 2016 to 2018, and the forecast of inflation during the entire Duterte administration is also at a range of 2 percent to 4 percent. The foreign-exchange rate is projected to be around P45 to P48 per US dollar in the medium term. Dubai crude-oil price could hit
$35 to $50 per barrel this year; $40 to $55 per barrel in 2017; $45 to $60, 2018; and $50 to $65 in 2019 to 2022. The DBCC said these prices were based on prevailing futures prices and forecasts made by multilateral institutions. For 2016, the 364-day Treasu r y bi l l rates were adju sted downward to 2 percent to 4 percent, from the 2.5-percent-to 4 percent range based on the latest 2016 year-to-date average of 1.8 percent. These rates are projected to trend slightly higher at a slower pace over the medium term, wherein it will range at 2.5 percent to 4 percent from 2017 to 2022. Foreign interest rates are expected to trend slightly higher but at a more moderate pace, the DBCC said. The DBCC said it will also maintain the debt borrowing mix of around 80 percent from domestic sources and 20 percent from foreign lenders.
We’re playing catch-up here. If you look at the number of car sales in the past five years against the number of streets constructed, you would realize that we have to make more roads.”— Dominguez
House members renew push to impose soft-drink levy, slash income-tax rates By Jovee Marie N. dela Cruz @joveemarie
L
awmakers are pushing for the passage of a bill that imposes a P10 excise tax on sugar-sweetened beverages (SSBs), and a separate measure proposing the reduction of individual income-tax rates. In House Bill (HB) 292, Partido Demokratiko Pilipino-Laban Reps. Horacio Suansing Jr. of Sultan Kudarat and Estrellita Suansing of Nueva Ecija said their bill seeks to impose an excise tax of P10 on SSB per liter of volume capacity to generate additional revenues for the government, and promote public health and wellness. HB 292 seeks to impose an excise tax on SSBs by inserting Section 150-A in the National Internal Revenue Code of 1997, as amended. The new section, titled Sugar Sweetened Beverages, provides that “there shall be [a levy] assessed and collected on sugarsweetened beverages per liter of volume capacity an excise tax of P10. The rate of tax imposed under this section shall be increased by 4 percent every year thereafter, effective on January 1, 2017, through revenue regulations issued by the secretary of finance.” The bill defines SSB as “a nonalcoholic beverage that contains caloric sweeteners/added sugar or artificial/noncaloric sweetener. It may be in liquid or solid mixture, syrup or concentrates that are added to water or other liquids to make a drink.” Sugar-sweetened beverages include: a) soft drinks, soda, pop and soda pop, which are all nonalcoholic, flavored, carbonated or noncarbonated beverages; b) fruit drinks, punches or ades, which are sweetened beverages consisting of diluted fruit juice; c) sports drinks, which are beverages designed to help athletes rehydrate, as well as replenish electrolytes, sugar and other nutrients; d) sweetened tea and coffee drinks, which are teas and coffees to which caloric and noncaloric sweeteners have been added; e) energy drinks, which are carbonated drinks that contain large amounts of caffeine, sugar and other ingredients,
₧10 The excise tax proposed by lawmakers for every liter of sugar-sweetened beverage
such as vitamins, amino acids and herbal stimulants; and f) all nonalcoholic beverages that are readyto-drink and in powder form with added natural or artificial sugar. The bill excludes the following from the scope of the act, which are 100-percent natural fruit juices; 100-percent natural vegetable juices; yogurt and fruit-flavored yogurt beverages with pure fruit and vegetable juice or concentrate; meal-replacement beverages (medical food), as well as weight loss; and all milk products; infant formula and milk alternatives, such as soy milk or almond milk, including flavored milk, such as chocolate milk. During the 16th Congress, the House Committee on Ways and Means, chaired by Liberal Party Rep. Romero S. Quimbo of Marikina City, approved the proposal then embodied in House Bill (HB) 3365—also filed by Suansing—but the House ran out of time for plenary consideration. Moreover, authors of the bill said President Duterte, Health Secretary Dr. Paulyn Ubial and health organizations, like the Philippine Heart Association, have already expressed support for “sin” taxes on SSBs. They said SSBs and junk foods are among the main culprits in the increasing cases of obesity, diabetes, heart disease, high-blood pressure, stroke and gallstones. “Studies have shown that consumption of sugar-sweetened beverages increases the risk of developing health problems, such as blood-sugar disorders, obesity, diabetes and other related diseases, like bone fractures, hyperacidity, tooth decay and heart problems,” the lawmakers said.
Quoting the health department, the representatives added that the government has spent P50 billion for diabetes-related diseases from 2009 and 2012, based on Philippine Health Insurance Corp. claims. For diabetes alone, they said the Department of Health (DOH) estimates the government spends about P5 billion annually.
Offset
According to Suansing, the bill is, likewise, timely, since one of the Duterte administration’s planned policies is to pursue reforms in income-tax rates. “Additional revenues raised from the P10 excise tax on SSB would offset any revenue loss resulting from the implementation of income-tax reforms,” the lawmakers said. The bill provides that 50 percent of the tax collection shall accrue to the government’s general fund. Under the bill, the remaining 50 percent shall be allocated to the following: 20 percent to the DOH for the provision of medicine and medical assistance for diabetes and other noncommunicable diseases through provincial or district hospitals, as well as for health and wellness promotion; and 20 percent to the Department of Education to provide public schools and sports facilities access to potable water and for the community-based prevention programs or campaigns against obesity, diabetes, dental caries and other diet-related health-awareness programs using educational, environmental, policy and other publichealth approaches. The measure also said that 3 percent of excise-tax collection will be allotted to the Department of the Interior and Local Government for the provision of potable-water supply under its Sagana at Ligtas Na Tubig Sa Lahat Program and Grassroots Participatory Planning and Budgeting Priority local government units; 2 percent to the Food and Nutrition Research Institute for research and development program; 2 percent to the Bureau of Internal Revenue for tax administration; and 3 percent to the Food and Drug Administration.
news@businessmirror.com.ph
Vietnam protests against Chinese drills in South China Sea
V
ietnam has protested against a Chinese military drill in the contested South China Sea and has demanded that China stop the actions it says are a threat to security and maritime safety. China announced that it will carry out the weeklong military drills on and around the Paracel islands starting on Tuesday. They will finish on the eve of a ruling by an international tribunal in a case filed by the Philippines challenging China’s claims to most of the South China Sea. Foreign Ministry Spokesman Le Hai Binh said in a statement posted late on Monday on the ministry’s web site that China’s moves seriously violate Vietnamese sovereignty and demanded that China stop the drills. “Vietnam strongly protests and demanded that China respect Vietnam’s sovereignty, behave responsibly, immediately stop and do not take actions that threaten security, maritime safety in the East Sea or escalate tension in this region,” Binh said, referring to the South China Sea. China’s military exercise comes as the Permanent Court of Arbitration in The Hague is expected to issue a ruling on July 12 on a case brought by the Philippines in 2013 contesting China’s claims in the South China Sea. Vietnam, China and Taiwan all claim the Paracel islands, which are occupied by China, and those three, along with the Philippines, Malaysia and Brunei Darussalam, claim all or parts of the Spratly islands, which are believed to be rich in natural resources and occupy one of the world’s busiest sea lanes. China’s massive land reclamation projects and increased militarization of the seven reefs and atolls in the Spratlys over the past two years have raised serious concerns in the region. AP
AseanWednesday BusinessMirror
Editor: Max V. de Leon • Wednesday, July 6, 2016 A5
Beer drinkers in Thailand power Singapore’s best stock in 2016
T
he biggest gainer among Singapore’s stocks this year is a foreigner.
Thai Beverage Pcl. has jumped 36 percent to a record in 2016, benefiting from rising consumption in Thailand, where stimulus and low interest rates have driven the benchmark index to the highest level in almost a year. Singapore’s equities market, by contrast, is a laggard in Southeast Asia, suffering from lackluster growth at banks, developers and oilrig builders. Thai Beverage’s return this year is almost triple that for the second-best stock in the Straits Times Index. Malaysia’s Affin Hwang Asset Management Bhd. and London’s J O Hambro Capital Management Ltd. are buying Thai Beverage shares, convinced the stock has further to climb despite record valuations, as it offers a haven from market turmoil around the world and may benefit from any restructuring plans. “With slowing global growth, whatever shows potential or sustainable growth attracts a premium,” Kar Tzen Chow, Kuala Lumpur-based fund manager at Affin Hwang Asset, which oversees about $7.6 billion, said by phone. “ThaiBev’s spirits business continues to be stable and the beer business has shown a recovery.” Thailand is betting on more than $18 billion in stimulus measures to help boost local demand and offset an export slump. The nation’s central bank has forecast economic expansion at 3.1 percent this year, compared with growth of 1 percent to 3 percent for Singapore, whose economy is among the most vulnerable in Asia to swings in global demand. More than 90 percent of Thai Beverage’s revenue came from Thailand
36%
The jump of Thai Beverage Pcl.’s shares this year
in 2015, data by Bloomberg show. “The fundamentals for Thai Beverage are very strong, with earnings supported by increasing domestic consumption in Thailand,” Nicholas Teo, a trading strategist at KGI Fraser Securities Pte. in Singapore, said by phone. “In contrast, profits at traditional Singapore industries, such as banks, shipyards and real estate, are deteriorating.” Billionaire Charoen Sirivadhanabhakdi, who expanded his property business amid government measures to curb alcohol consumption in Buddhist Thailand, was forced to list his Thai beverage unit in Singapore in 2006 after activists and monks held protests to block a local share sale by the company. Thai Beverage, which sells Chang beer, Blend 285 Whiskey and SangSom rum, has grown to become Southeast Asia’s largest beverage stock by market value.
Boosting estimates
The surge in Thai Beverage will continue as analysts raise their earnings estimates to reflect greater contribution from its beer business, according to Samir Mehta,
Another busy day at a Thai Beverage plant.
who helps oversee about $1.2 billion at J O Hambro in Singapore. Analysts increased their average profit forecasts for 2016 by 7.4 percent to 26 billion baht ($741 million) after its first-quarter net income jumped 30 percent from a year earlier. Beer sales volumes soared 61 percent, lifting the brewery operation’s contributions to group revenue to 33 percent, from 23 percent. The spirits business remained its cash cow. Some see the stock rally as overdone.
Revamp seen
There is “limited upside” at current levels following the stock’s recent price run-up, according to Jodie Foo, an analyst at OCBC Investment Research, who cut the stock to hold in a June report.
Thai Beverage is trading at the highest level ever relative to the broader MSCI All Country World Index. The stock is valued at 22 times its 12-month projected earnings, above its average of 16 in the past five years and almost double the multiple for the Straits Times Index, data compiled by Bloomberg show. The shares retreated 1.1 percent as of 12:38 p.m. in Singapore. Speculation that Charoen will further revamp his beverage businesses in Thailand and Singapore may spur more rallies in the stock, said Religare Capital Markets in a May note. The company’s founder and chairman may consolidate his drinks businesses held through Singapore-based Fraser & Neave Ltd. and Oishi Group Pcl. into Thai Beverage, according to the report. Company officials couldn’t be
reached for comment. The company’s strategic road map toward having 50-percent revenue contribution from countries outside Thailand as well as from nonalcoholic beverage by 2020, may be sped up via acquisitions and restructurings, according to OCBC’s Foo in her report. Charoen controls Fraser & Neave through TCC Assets Ltd., which owns 59 percent of the Singapore company and Thai Beverage, which holds another 29 percent, according to data compiled by Bloomberg. “We bought the shares because their cash flows are decent,” J O Hambro’s Mehta said. “The upside could come from the restructuring that the group might undertake. They could simplify the structure and that’s going to be beneficial for the minority shareholders.” Bloomberg News
Suspected militant dies Palm-oil stockpiles in Malaysia seen climbing as demand weakens in Indonesia bombing
I
ndonesian police said the militant who died in a suicide bombing on Tuesday outside police headquarters in the city of Solo was linked to a leading figure among the Indonesian radicals with the Islamic State (IS) group in Syria. One policeman sustained minor injuries in the attack that unfolded about 7:30 a.m. local time as the attacker, provisionally identified by the police as 30-year-old Nur Rohman, tried to enter the police complex on his motorbike. National Police Chief Gen. Badrodin Haiti said Rohman evaded arrest in a police counterterrorism operation in late 2015 and belonged to a militant group whose members included Bahrun Naim, an Indonesian in Syria who the police say coordinated the January 14 attack in the Indonesian capital Jakarta that killed eight people, including four militants. An official with the police’s antiterror squad said Naim and Rohman had been neighbors in Solo. Both were influenced by the radical cleric Abu Bakar Bashir, who was the spiritual leader of the Jemaah Islamiyah militants responsible for the 2002 bombings on the tourist island of Bali that killed 202 people. Indonesia has carried out a sustained crackdown on Islamic militants since the Bali tragedy. Militant networks have been weakened and recent attacks have been small in scale, but ideological inspiration from the IS group has provided the impetus for some local radicals to regroup. The Solo attack occurred a day before predominantly Muslim Indonesia, and Muslims worldwide, celebrate Eid al-Fitr, the end of the fasting month. “This was done by terrorism networks that continue to regenerate,” said Maj. Gen. Condro Kirono, chief of Central Java Police. “Whether it is an old or new network will be revealed by the investigation,” he said. TV footage showed a limited amount of damage on the street and the attacker’s partially destroyed motorcycle. Solo, the hometown of President Joko “Jokowi” Widodo, is known as a hotbed of Islamic radicalism in Java, one of Indonesia’s main islands. The city is home to the fundamentalist Al Mukmin Islamic boarding school founded by Bashir, which produced a generation of violent militants. Kirono said a bomb squad combed the area around police headquarters for explosives and extra security precautions will be taken for Wednesday’s Eid al-Fitr prayers in the city. Jokowi condemned the violence and called on Indonesians to be calm but vigilant during Eid. AP
P
alm-oil inventories in Malaysia probably expanded for the first time since November, as demand for the world’s most-used vegetable oil slackened and production rebounded from the impact of a drought triggered by El Niño. Stockpiles climbed 4.2 percent to 1.72 million metric tons by the end of June from a month earlier, according to the median of eight estimates in a Bloomberg survey of planters, traders and analysts. Production of crude palm oil jumped 10 percent to 1.49 million tons, picking up pace from a 4.9 percent rise a month earlier. Exports dropped 5.5 percent to 1.21 million tons, the weakest for June since 2008. The Malaysian Palm Oil Board will release official data by July 12. Stockpiles are set to swell further as plantations enter peak-production season and may weigh on futures, which tumbled 14 percent in the second quarter, the biggest decline since September 2012. Weaker export demand alongside higher output will be negative for prices, which are seen trading between 2,300 ringgit and 2,600 ringgit in July, Ivy Ng, regional head of plantations at CIMB Investment Bank Bhd., wrote in a July 1 note. Exports from Malaysia fell in June from a month earlier, as the Muslim fasting month of Ramadan failed to stoke demand and importers led by India bought less, according to data from cargo surveyors. Indian purchases slumped 46 percent to 195,105 tons in June, data from Societe Generale de Surveillance showed. Higher crude palm-oil production may also signal that “the worst of the El Niño impact on yields may be over,” Ng said. Lingering effects from the weather phenomenon showed that, while higher than May, June’s output may still be 15 percent lower than June 2015. Sime Darby, the world’s biggest palm-oil grower by acreage,
expects Asian production may be slow to recover even with wetter weather as ongoing tree stress from El Niño may last for 15 months. The contract for September delivery on Bursa Malaysia Derivatives closed the morning session on Tuesday down 1.8 percent at 2,359 ringgit ($589).
China
Demand for Malaysia’s exports in coming months largely depends on China, said Phang Loy Fatt, a trader at Malaysian planter Kuala Lumpur Kepong Bhd.’s marketing division. “Their palm-oil stocks at ports have dwindled below 400,000 tons in recent weeks, below one month’s consumption of about 600,000 tons,” Phang said. “There are signs that China has begun replenishing stocks, which would support prices.” China National Grain and Oils Information Center said Chinese companies bought vegetable oils on June 30 after
prices fell, including around 100,000 tons of palm oil for July shipment. Palm oil’s recent price slump has made it more competitive and may help it regain market share from rival edible oils, according to Alan Lim, plantations and property analyst at MIDF Amanah Investment Bank Bhd. Malaysian imports jumped to 30,000 tons in June from 20,024 tons in May, while estimates for domestic consumption ranged between 220,000 tons and 290,000 tons, according to the survey. Bloomberg News
The World A6
BusinessMirror
Wednesday, July 6, 2016
news@businessmirror.com.ph
Saudi Arabia names Pakistani as suicide bomber in Medina
D
UBAI, United Arab Emirates—Saudi Arabia on Tuesday identified the suicide bomber, who struck outside one of Islam’s holiest sites the day before, as a Pakistani resident of the kingdom who arrived 12 years ago to work as a driver. The suicide bombing on Monday outside the sprawling mosque grounds, where the Prophet Muhammad is buried, in the western city of Medina killed four Saudi security troops and wounded five. Millions of Muslims from around the world visit the mosque every year as part of their pilgrimage to Mecca. The governor of Mecca, Prince Faisal bin Salman, who is a son of King Salman, was shown on state television visiting security officers wounded in the blast and the site of the explosion, within hours of the blast. No group has yet claimed responsibility for the Medina attack or two other attacks in the kingdom on the same day—one near the US Consulate in Jiddah and the other at a Shiite mosque in the east of the country. The nature of the attacks and their apparently coordinated timing suggested the Islamic State group could be to blame. An Interior Ministry statement issued on Tuesday identified the man as 34-yearold Abdullah Qalzar Khan. It said he lived in the nearby Red Sea port city of Jiddah with “his wife and her parents.” The statement didn’t elaborate. There was no immediate comment from Islamabad. There are around 9 million foreigners living in Saudi Arabia, which has a total population of 30 million. Among all foreigners living in the kingdom, Pakistanis represent one of the largest groups. The Saudi ministry said the attacker set off the bomb in a parking lot after security officers raised suspicions about him. Several cars caught fire and thick plumes of black smoke were seen rising from the site of the explosion, as thousands of worshipers crowded the streets around the mosque. Worshipers expressed shock that such a prominent holy site could be targeted. “That’s not an act that represents Islam,” said Altayeb Osama, a 25-year-old Sudanese visitor to Medina and resident of Abu Dhabi who heard two large booms about a minute apart as he was heading toward the mosque for sunset prayers on Monday. “People never imagined that this could happen here.” The Prophet Muhammad’s mosque was packed on Monday evening with worshipers during the final days of the Muslim holy month of Ramadan, which ends in the kingdom on Tuesday. Local media say the attacker was intending to strike the mosque when it was crowded with thousands of worshipers gathered for the sunset prayer. Qari Ziyaad Patel, 36, from Johannesburg, South Africa, was at the mosque when he heard a blast just as people were
HOME FROM DHAKA
breaking their fast with dates. Many at first thought it was the sound of traditional, celebratory cannon fire, he said. “I actually felt the ground shake,” he said. “The vibrations were very strong.... It sounded like a building imploded.” State-run news channel al-Ekhbariya aired live video of the mosque filled with worshipers praying hours after the explosion. The ruling Al Saud family derives enormous prestige and legitimacy from being the caretakers of the hajj pilgrimage and Islam’s holiest sites in Mecca and Medina. The attack may have been an attempt to undermine the Saudi monarchy’s claim of guardianship. Saudi Arabia is part of the US-led coalition fighting the Islamic State (IS) group in Iraq and Syria, and the militant group views its ruling monarchy as an enemy. The kingdom has been the target of multiple attacks by the group that have killed dozens of people. In June the Interior Ministry reported 26 terror attacks in the last two years. In 1979 extremists took over Mecca’s Grand Mosque, home to the cube-shaped Kaaba, for two weeks as they demanded the royal family abdicate the throne. Last year, the Saudi government was accused of gross negligence by regional foes, primarily Iran, after a crush of pilgrims during the annual hajj killed at least 2,426 people and a crane collapse over the Grand Mosque killed 111 worshipers. Also Monday evening, at least one suicide bomber and a car bomb exploded near a Shiite mosque in eastern Saudi Arabia, several hours after a suicide bomber carried out an attack near the US Consulate in the western city of Jiddah. The attack in the eastern region of Qatif did not appear to cause any injuries, said resident Mohammed al-Nimr. His brother, prominent Saudi Shiite cleric Nimr al-Nimr, was executed in January after a court found him guilty of sedition and inciting violence for his role in antigovernment protests—charges his supporters reject. Qatif is home to many Shiites, a minority in the Sunni-dominated kingdom. The Interior Ministry said it was working to identify the remains of three bodies at the site of blast, suggesting there may have been three attackers. IS and other Sunni extremists consider Shiites to be apostates deserving of death, and have previously attacked Shiite places of worship, including a suicide bombing on a Shiite mosque in Qatif in May 2015 that killed 21 people. AP
Japanese Foreign Minister Fumio Kishida, (left) lays flowers on the coffins of the victims who were killed in last weekend’s attack on a restaurant in Bangladeshi capital Dhaka, at Haneda Airport in Tokyo, on July 5. The bodies of the Japanese victims arrived on Tuesday morning in Tokyo on a Japanese government airplane. AP
The World BusinessMirror
news@businessmirror.com.ph
Wednesday, July 6, 2016 A7
Darling no more: Hollywood flees Louisiana for sweeter taxes
N
EW ORLEANS—It’s the middle of a recent work day inside a Hollywood-style movie studio in downtown New Orleans, and Trey Burvant turns off the lights on an empty Stage 1.
He heads over to stages 2 and 3, and they’re empty, too. “Not much going on,” Burvant says inside Second Line Stages studio. “Nothing going on.” He’s a Louisiana-raised actor and producer who came back from the East Coast when the movie industry started to take off a decade ago in his home state, thanks to generous tax breaks for moviemakers. But now the slick $32-million state-of-the-art studio Burvant runs—with its air-conditioning turned off, its stages dark and its empty parking lot—is a forlorn window into the volatile business of America’s race to attract
$1.4B
The tax credits Louisiana dished out in the past eight years moviemakers with tax breaks.
Unaffordable
LOUISIANA’S once-booming film industry—dubbed “Hollywood South”—was off by as much as 90 percent this past year, according to the Louisiana Film Entertainment
Association. The drop is all attributed to the state’s decision to wind down its generous incentives last July, scaring off moviemakers. Show biz in the state was booming as late as last year, thanks to a generous incentive program that offered productions tax credits equal to 30 percent of their costs. Between 2008 and mid-2015, more than 1,100 productions were filmed in the state, among them box-office and Oscar-winning hits like 12 Years A Slave and Django Unchained. The tax-incentive program had become so successful that Louisiana’s budding film industry even outpaced California’s in the number of major studio productions—18 to 15—in 2013, according to FilmL.A. Inc., a Los Angeles nonprofit. On the flip side, success did not come cheaply: Louisiana alaso dished out about $1.4 billion in tax credits in the past eight years. “We were the dog that caught the Cadillac,” said Jan Moller, the director of the Louisiana Budget Project, a nonpartisan group that monitors
Too dangerous to talk? Cities explore 911 texting
IN this June 17 photo, law-enforcement officials stand outside the Pulse nightclub following Sunday’s mass shooting, in Orlando, Florida. More police departments are exploring technology that would allow 911 emergency dispatchers to receive text messaages from people who need help. When gunshots rang out at the Pulse nightclub in Orlando last month, patrons hid from the gunman and frantically texted relatives to call 911 because Orlando doesn’t have 911 texting. AP
N
EW YORK—With gunshots ringing out just feet away, Eddie Justice hid in a bathroom in the Pulse nightclub in Orlando, Florida, and frantically texted his mother for help. “Call police,” he wrote. “I’m gonna die.” Moments later, he texted again: “Call them mommy. Now. He’s coming.” Justice, who would later be confirmed among the 49 people killed in last month’s attack, was among several victims who texted relatives to call 911, fearing they would draw too much attention by making voice calls. None of them could text 911 directly because Orlando is among the vast majority of US cities that don’t have that capability. But as active-shooter and hostage situations become more common, police departments are exploring technology that would allow dispatchers to receive texts, photos and videos in real time.
Upgrade
OUT of more than 6,000 dispatch centers nationwide, a little more than 650 can accept text messages, with more than 150 making the text-to-911 upgrade this year, the Federal Communications Commission said. Democratic US Sen. Charles Schumer of New York has been pushing for text-to-911 in New York City, which has been studying it for nearly a year. Such a system, he said, can “save lives by informing 911 dispatchers of critical details that can guide first responders.” Emergency officials stress, however, that a voice 911 call is preferred when possible because a dispatcher can elicit details more quickly than texting back and forth. The major concern for many cities, including some of the nation’s largest, is that overuse of texting when it’s not absolutely necessary could slow response times and cost lives. In Los Angeles, which doesn’t have 911 texting,
a police dispatch official last year cautioned that response times for text 911 could be triple that for voice calls.
Helpful
NEARLY every municipality with textto-911 service has sought to address that concern by promoting the slogan: “Call if you can, text if you can’t.” Officials also warn that with text messages your approximate location isn’t automatically sent to emergency responders, like it is with voice calls. Instead, they encourage people to give 911 call takers an accurate address or location as quickly as possible. Supporters of such systems say their use would go beyond active-shooter and hostage situations to scenarios in which a battered spouse, for example, could surreptitiously message police without alerting the attacker. “If someone could snap a photo or a quick video showing the perpetrator that’d be enormously helpful to law enforcement,” said Joseph Giacalone, a criminal justice professor at John Jay College of Criminal Justice and a retired police detective.
Abused
SAN Bernardino, California, rolled out its text-to-911 service in December about two weeks after an attack at a social services center where a man and his wife killed 14 people at a holiday gathering. In New Hampshire, where text-to-911 service is available statewide, Democratic Gov. Maggie Hassan said it was a “common-sense initiative that will help save lives.” Text-to-911 service also has been used by deaf and hard-of-hearing people to get in touch with police. A deaf woman in Alpharetta, Georgia, texted police to report there were two children locked in a car in a shopping mall parking lot, and police rescued them. Authorities say 911 texting, like its phone counterpart, has also been abused. AP
state spending. “It was unaffordable.”
Largesse
AND catastrophic budget news—a drop in oil prices that contributed to a state budget shortfall of $1.6 billion last year—put an end to the largesse. Louisiana’s politicians decided that halting tax breaks to Hollywood actors and film crews was better than firing teachers and closing hospitals. So they capped tax-credit payments at $180 million a year. And just like that, film crews went elsewhere: To Georgia, Kentucky and Canada, among other hot spots. “The producers just run the numbers. If it pays off, then they’re in Louisiana or they’re in Vancouver. It’s purely a bottom-line kind of thing to Hollywood,” said Jonathan Kuntz, a film historian at UCLA. Hollywood has a history of going wherever it’s cheapest to make a movie. In the early 20th century Los Angeles was an escape from the hefty costs of New York City and its unions, high prices and bad weather. Then
there was a wave of movie making in Europe and elsewhere around the world after World War II.
Brakes
SINCE the early 2000s, Hollywood has been lured by tax breaks from one place to another—from New Mexico to Michigan to Louisiana. At least 36 states now offer some kind of tax incentive—but that number is down from a few years ago, according to Entertainment Partners, a financial services company for the entertainment industry. Other states besides Louisiana have put the brakes on. Last year Michigan and Alaska chose to end the tax breaks because they were deemed too expensive. North Carolina has put a $30-million cap on how much it spends a year. Programs in New Jersey, Arizona and Iowa have also ended recently, according to Entertainment Partners. Florida’s program ends in July. Louisiana’s film industry is hopeful still. The $180-million cap is still very generous, and could be lifted in
2018; also, a backlog of credits owed by the state, which has held up new productions, may be cleared sooner than first feared. But, for now, movie makers have been leaving Louisiana.
Shedding
WILL Greenfield, a 38-year-old line producer, is part of the shedding of camera assistants, grips, electricians, actors and producers moving from Louisiana to Georgia and elsewhere—chasing work wherever it’s popping up. “Had the incentives not changed, we would not have left,” Greenfield said in a telephone interview, as he stood in a sound stage in Atlanta. He and his wife sold their home in New Orleans in January and moved to Atlanta after a decade of film work in Louisiana. Shortly after they moved to Atlanta, he said four industry friends were staying at their house—all of them from Louisiana and looking for work. “And they found work right away,” he said. “It’s an exodus.” AP
A8
Wednesday, July 6, 2016
The World BusinessMirror
Uncertainty awaits migrants on Serbia-Hungary border
Azada Sayed (left), 23, and her husband, Hameed, 28, sit in their tent at a makeshift camp for migrants and refugees situated meters away from the Serbian border with Hungary, in Horgos, Serbia, on July 4. Waiting in the summer heat with limited running water, hundreds of refugees camping out on the SerbianHungarian border are facing uncertain prospects as European Union nation Hungary prepares to implement new, tighter asylum rules on Tuesday. AP
H
By Jovana Gec | The Associated Press
ORGOS, Serbia—The snakes come out at night, and so do the mosquitoes.
There’s only one tap with running water in the makeshift refugee camp on Serbia’s border with Hungary, where hundreds fleeing war and poverty wait daily to cross over into the European Union (EU). No toilets, no showers, but plenty of uncertainty and desperation.
The refugees are from Syria, Afghanistan, Iraq and other war-torn states who have decided to use the traditional Balkan migration route despite its closure in March, rather than trying the hazardous Mediterranean Sea crossing between Libya and Italy, where thousands daily risk their lives. On the no man’s land between Serbia and Hungary, there’s little to fend off the scorching summer heat. A boy cries loudly as cold water is splashed on him and his mother rubs him with soap. Another small child and several other migrants stand by patiently, holding plastic water bottles or clothes they want to wash, as the runoff washes down a filthy gutter. Small tents are grouped in a dusty field, many with blankets spread over them to protect from the sun. Some lucky migrants are camped out under the rare trees on the field’s edge.
Harsher
THE migrants have been camping outside the Hungarian barbed-wire fence—many for days or weeks— waiting for Hungarian authorities to allow them in. It’s a gamble: Hungary has been letting in only about 15 people a day from this camp—mostly families with small children. Starting on Tuesday, Hungarian authorities will apply even harsher rules designed to reduce the number of people seeking asylum in the EU nation to a minimum. Migrants and refugees detained within 8 kilometers of the border will be taken to the Serbian side of the fence—the one visited by an Associated Press crew on Monday—where they will wait to make their requests for asylum with Hungarian authorities. Few are expected to get in. The tighter rules are likely to increase the pileup of people on the border between Serbia and Hungary, where authorities said on Monday they have caught 17,062 migrants trying to illegally cross the border, so far, this year.
Curbs
ONE Afghan couple has been at the Horgos camp for a week. They said they had fled their home more than a month ago because they both had worked for international organizations and received threats from the Taliban. Now they have no idea when or even if they will be allowed into Hungary. “We don’t have the facilities, no shower, no toilets,” said Hameed Sayed, 28. “I didn’t take any shower for four days.” His wife Azada, 23, complained that “during the days it’s so hot, during the night it’s so cold.” She said the migrants have had to cope with mosquitoes, other biting insects and even snakes. The couple said they had applied for entry into Hungary, but haven’t had any feedback. Sayed wanted to enter the EU legally and seek asylum, rather than try his luck with the surge of people-smugglers plying their trade along the Balkans. More than 1 million people entered Europe last year and nations have been closing their borders since March to curb the influx.
Dusty
ON Monday Serbian police said they arrested eight suspected peoplesmugglers as part of efforts to curb the illegal transfer of migrants toward Western Europe. The police said the smugglers were charging up to €1,200 ($1,340) to deliver each migrant from Serbia to Austria, via Hungary. Ahmad Shahim arrived on Monday at the camp along with 11 family members, including his children, his sister’s children and their mother. The family had spent four months in Greece, and Shahim expressed hope they will not wait longer than 15 days to enter Hungary. AP
news@businessmirror.com.ph
Japan, US agree to narrow definition of workers on American military bases
T
OKYO—Japan and the US announced on Tuesday that they will narrow the number of civilians working on American military bases who get immunity from Japanese prosecution, a step toward addressing outrage on Okinawa over a recent murder case on the island involving a Marine-turnedcontractor. The two sides said civilians covered by the Status of Forces Agreement (Sofa), will be limited to those who meet more specific criteria than under the current definition. Education and monitoring of American troops and the base workers will be enhanced to try to cut back on crimes. The arrest in May of a Kadena Air Base contractor, accused of murdering and raping a 20-year-old local woman, sparked renewed anger on Okinawa, where resentment has been simmering over a heavy US troop presence and crime linked to the bases. A number of drunken driving arrests of American servicemen and contractors in the weeks since, even when disciplinary measures were in place, have aggravated the sense of frustration among Okinawans. On Monday Okinawan police arrested a technical sergeant at Kadena Air Base for alleged drunken driving. The announcement on Tuesday was made in Tokyo during talks among Foreign and Defense Ministers Fumio Kishida and Gen
Nakatani, and US Ambassador Caroline Kennedy and Lt. Gen. John Dolan, commander of the US military in Japan. Under the changes, base contractors, now stated vaguely as “civilian component,” will be classified in more specific terms, to exclude from preferential treatment those without skills or and those who are residents in Japan, like the murder suspect Kenneth Shinzato, who is a resident of Okinawa and married to a Japanese. The largely symbolic change, however, does not involve a formal revision to the agreement. The current Sofa, signed in 1960, gives US military personnel and civilians employed at American bases in Japan immunity from Japanese criminal procedures in accidents or crime while on duty or on base. That allows the US military to hold suspects on base until formal indictment by Japan. Okinawan authorities say the rule denies them proper access to investigate a crime under Japanese law. Following protests, the US military today usually hands its servicemen to the Japanese side in serious crimes, though that is not compulsory. There are about 50,000 American troops stationed in Japan under a bilateral security agreement and about half are based on Okinawa. AP
Women’s opinions differ on Clinton leading the US
O
N the day Cheryl Lawson Walker graduated from college, she hadn’t thought very much about the future and her place in it—or the obstacles she might face as a woman. The place was Wellesley; the year was 1969, and the women’s movement was just emerging as a force in America. But on that day, for the first time, a student had been selected to address the commencement at the women’s school: Hillary Rodham, the student government president. The two women lived in the same dorm, where they’d chatted over their salads at communal meals. Rodham’s speech sent a jolt through the class. “We were just thrilled that she felt empowered enough and articulate enough” to speak so boldly, rebutting the remarks of the US senator who spoke before her, which many had found condescending, Walker recalled. Rodham was “much more forward-looking” than many of her classmates, she said, and it would be some years before they, too, really recognized the obstacles they would have to overcome.
Glass ceiling
THE speaker that day—now known as Hillary Clinton—is edging closer to breaking the ultimate glass ceiling as the presumptive Democratic nominee for president of the United States. Her election would surely be a major milestone for women. But her fellow alumnae don’t all feel the same way about its significance. To be sure, for some, the election of the first female president would be a thrilling moment they’ve been waiting for years to see, the culmination of a struggle that lasted much too long. “I can’t even articulate all the reasons it’s important,” said Sarah Schlesinger Hirschfeld, 56, a New York doctor. “I think it’s tremendously important for all women, whether they know it, to see a woman in the most important leadership role in the country—and for men to see it, too.”
Feeling the same
BUT to others, the milestone has been eclipsed by other advances—seeing women achieve positions of power in different arenas, or witnessing the election of the first African-American president. Walker, now 68, supports Clinton, but falls into the latter camp. “I know some people are hugely excited by it, see it as symbolically an enormous step, but I don’t happen to be among them,” she said. “I just think it’s a good next step. Certainly, not a milestone like it was when Barack Obama was elected.” And the recently retired literature professor said her young female students, many of whom supported Sen. Bernie Sanders (as have her own children,
ages 32 and 35), feel the same way: “For them, the idea of electing a woman is nowhere near as significant as electing the first African-American president was.”
Low numbers
A RECENT poll found that, while threequarters of registered women voters felt America was ready for a female president, only about a third considered it very important to see one in their lifetime. (The poll was taken before Clinton clinched the nomination.) “The numbers aren’t high,” said Debbie Walsh, director of the Center for American Women and Politics at Rutgers University. She attributes it partly to a generational divide, with younger women having grown up accustomed to seeing women in positions of power. “It’s almost as if [some] people feel like it’s already happened, but it hasn’t,” she said of the milestone. You sense the divide when you talk to Wellesley women of various generations—from women in their 70s who left college years before feminism took hold, to contemporaries of Clinton, to women in their 20s now emerging into the work force. Though the women interviewed all said they planned to support Clinton over Donald J. Trump, some were vocal supporters of Sanders in the primaries. Even among those who supported Clinton all along, their views on the milestone aren’t necessarily what one might expect.
Sense of pride
IN May a group of Wellesley 1962 grads gathered for one of their frequent, informal reunion weekends, meeting for meals on campus and in nearby Boston and celebrating their 75th birthdays. They came from an accomplished class, including a former head of the US Tennis Association, the first African-American woman in the country to chair an academic pathology department and the late writer Nora Ephron. When conversation touched on the election, there was certainly a sense of pride at the prospect of a president from Wellesley, one attendee, Martha Bewick, said. But talk was more focused on issues than candidates, she said—on the economy, on terrorism, on the scourge of drugs. In fact, when the subject of a female president came up, Bewick said, “The general mood was that the question wasn’t pressing”—that it was more of an issue back in 2008, when Clinton faced Obama in the primaries. “When we elected a black American president, the issue sort of went away,” she said, summing up the mood of the discussion. “There are so many other urgent issues.” AP
news@businessmirror.com.ph
ExportUnlimited BusinessMirror
Editor: Efleda P. Campos • Wednesday, July 6, 2016 A9
DTI pushes for global marketing of the country’s design services
Improving access to trade finance
HE Export Marketing Bureau (EMB), in cooperation with the Philippine Trade and Investment Center (PTIC)-Tokyo, is pushing the global marketing of design services through the organization of one-onone business matching, market sensing and networking activities, as part of the outbound business mission (OBM)cum-Philippine Design Exhibition at Good Design Marunouchi, Tokyo, Japan, from June 11 to 30.
T
By Anthony Rivera | Assistant Director, DTI-EMB
T
The Exclusively by Hand Philippine Design Exhibition showcased Philippine-design capabilities at the exhibit area of Good Design Marunouchi, which is located in Japan’s most prestigious business and high-end
shopping district. The venue, which opened in October 2015, is a facility to promote the connection between people and design. The Philippine design exhibition was also made possible through the invitation of
Japan Institute of Design Promotion Foundation (JDP). Good Design is along the Marunouchi luxury shopping street, which houses high-end and global brand names, such as Hermes, Baccarat, Rimowa, Comme des Garcons, FollieFollie, La Maison du Chocolat, Kate Spade, Brooks Brothers, Jo Malone and Tiffany & Co., among other signature brands. This location is positioned to provide extremely high commercial value for Philippine design services. The objectives of the mission is to promote and highlight the Philippine design-services capabilities of Philippine designers and their respective designdriven products to the Japanese market. The one-on-one business matching, Philippine Design Exhibition and networking activities resulted in the maximum promotion and exposure of Philippine design capabilities to the Japanese mainstream market. The market-sensing activities allowed the Philippine participants to study the Japanese market through observed trends and
consumer behavior. The series of one-on-one business-matching activities successfully introduced the Philippine designers to the major fashion and lifestyle companies in Tokyo, Japan. The activity generated a total of 55 business meetings, estimated to generate direct-business prospects. Philippine participants were composed of young designers and manufacturers of high-end products with fine design and handcrafted components with international credentials and experience. These are consisted of Adante Leyesa Atelier, Aranaz Delujo Inc., CSM Philippines Inc., Happy Andrada, Ito Kish Home, Joanique Inc., John Herrera Couture, Marconoli Custodio Shoe Design and Leather Craft, Calli Handbags and Zacarias 1925. The Exclusively by Hand Philippine Design Exhibition at Good Design Marunouchi, Tokyo, Japan, was organized by PTIC-Tokyo as part of the trade-promotional events on the 60th nnniversary of diplomatic relations between the Philippines and Japan.
DTI looks to resolve ‘burdensome’ trade regulations By Alyssa Divina & Dale Calanog
Special to the BusinessMirror
T
HE Department of Trade and Industry (DTI) led the call to repeal “burdensome” nontariff measures (NTMs) identified in a study conducted by the International Trade Centre (ITC) in a roundtable held at the Peninsula Hotel on June 29. T he st udy, in col l aborat ion with the Export Marketing Bureau (EMB), aims to assess the Filipino business community’s perspectives on NTMs and identify what causes these to become regulatory and procedural trade obstacles. NTMs are policy measures other than ordinary custom tariffs that have the potential to affect the international trade in goods. ITC noted NTMs, such as sanitary and phytosanitary (SPS) and technical barriers to trade (TBT) regulations, should help increase the demand for import, as these policies exist to ensure the products entering a country are complying with international standards. NTMs, such as licenses and permits to import and quality requirements, can also lead to higher costs and, eventually, hinder trading transactions, especially for exporters. The study gathered more than 21,000 trade obstacles from more than 5,000 companies comprised mainly of small and medium enterprises (SMEs). ITC categorized these trade obstacles into three product requirements and conformity, customs clearance and control, and rules of origin and other trade rules. Bureau of Philippine Standards (BPS) Director Anne Claire Cabochan said NTMs, such as product requirements and conformity, become a hurdle because of the lack of infrastructure, such as laboratories, that can assess whether a product complies with a given regulation. However, despite the apparent inadequacy in testing and certification facilities, she reiterated the need to have these regulations, but added they should be better implemented. “We would like our procedure not to create barriers to trade, but we would also like to ensure that these products, when they come to the Philippines, are indeed safe for consumption,” she said. Other issues tied to product requirements and conformity include the private sector’s lack of capacity to comply with specific technical regulations, such as labeling and expensive fumigation requirements and high cost
PRESENT during the national roundtable of nontariff measures, sponsored by the International Trade Centre (ITC), are (from left) Trade Undersecretary Nora Z. Terrado, ITC Nontariff Program Manager Ursula Hermelink, and ITC Market and Reasearch Chief Mondher Mimouni. ALYSA SALEN
of local procedures that include informal payments in some cases. Victor Trinidad, a lawyer from the Bureau of Customs (BOC), vowed to push for the enforcement of the Authorized Economic Operator (AEO) program, which is expected to reduce processing periods, as well as “accelerate growth,” Trinidad said. Among the challenges in customs clearance and control are the lack of coordination between control points, lack of information dissemination on frequently changing procedures, as well as high fees and delays. Along with the AEO, Trinidad is pushing for advanced ruling and valuation, both required by the World Trade Organization (WTO). Trinidad said that, with these global standard procedures, companies can resolve “conflicts with the valuation and rules of origin way before their importation arrives.” Similar to the issues of the BOC, the issues surrounding trades rules— rules of origin, in particular—have something to do with lack of coordination between offices and also transparency in trade regulations. Denise Cheska Enriquez from the Bureau of International Trade Relations said the difficulty with acquiring certificates of origin is free-trade agreements (FTAs) entail particulars, because partnercompanies want different things. This reality, Enriquez added, is a challenge for smaller companies that have to go through the same process that big companies have to comply with
to pass trade regulations. “At the end of the day, small companies don’t have the time to transition because you do business now. Your importer will not wait for you to become better, to acquire the necessary certification,” Enriquez said. For the recommendations, the participants were divided into three groups, each concerning different issues: Product requirements and conformity, customs clearance and control, and rules on origin and trade. These were added aside from the preliminary recommendations set by the ITC. The group that discussed product requirements and conformity highlighted three main points, namely, fumigation, labeling, and testing and certification. They called for a benchmark of fumigation costs in the Philippines and in other countries, and also for its sensitization among the private sector. Transparency on fumigation was also recommended, as well as an increase in the number and presence of fumigators. “In some areas, in some sectors, in some markets, there is a competition among fumigators, which is good, because then you have competitive pricing. But for some products, for some sectors, there may not be enough offer[s] or none at all,” said Ursula Hermelink, ITC program manager on NTMs. The group urged for an increase in access to information regarding labeling in order to have a “single-entry point” and to harmonize with other Asean countries. E-labeling was also pushed, along with the translation into
local and business languages. In terms of testing and certification, the group recommended the finalization of mutual recognition agreements and the training and coaching of micro, small and medium enterprises. Additionally, the mapping of service offers was pushed, as well as the identification of gaps in certification offers. For customs clearance and control, there was a call to strengthen and support “project repeal” and the conduct of regulatory impact assessment in the national level. On the regional level, the group called for the continuation of technical assistance for the e-project funding. Regarding rules of origin and other trade rules (ROO), a review of regulations was pushed concerning the policies of relevant agencies. An overall review of trade policies was also recommended— in this matter, the DTI as component head “will take the lead”—as well as a review of certification procedures. Agencies were called to “laymanize” their regulations “for ease of understanding by end-users.” Also, the DTI was recommended to provide information on ROO, and other agencies were urged to strengthen the implementation of their citizens’ charters. The survey was conducted from August 2014 to April 2016. ITC plans to continue its collaboration with countries from across different continents to strengthen the understanding of the impact of NTMs to their respective business sectors, while ensuring that SMEs have a voice in the world market.
By Emmarita Z. Mijares Assistant Executive Director Export Development Countil
Business Beyond Borders
HE newly approved Philippine Export Development Plan (PEDP) includes improving access to trade finance as one of the strategies for export growth and development. Based on the country’s Global Competitiveness Index for 2015, access to finance remains one of the most problematic factors in doing business. The country is not lacking in financing facilities that extend credit to exporters. In fact, there are available government financing institutions that cater to the needs of exporters, like those offered by the Development Bank of the Philippines, Land Bank of thePhilippines, Small Business Corp. and some private banks. The real problem lies on the access of micro, small and medium enterprises (MSMEs) to trade finance. This could have been addressed had the banks and lending institutions faithfully complied with the 10-percent mandatory allocation of their loan portfolios to MSMEs as provided for in Republic Act 9501, or the Magna Carta for MSMEs. However, such provision was rendered ineffective by the reduced penalties imposed by the Bangko Sentral ng Pilipinas (BSP) on noncompliant banks. The urgent task now is to review and amend the pertinent BSP issuance to conform to the real intent of the law. Thus, the government and relevant stakeholders should work toward the full implementation of the Magna Carta for MSMEs. Since the law will expire in May 2018, the Export Development Council’s Networking Committee on Financing (EDC-NCF) has been working with both houses of Congress in amending the law’s implementing rules and regulations (IRR) and the law itself. Through the EDC-NCF’s efforts, House Resolution 2568 was issued by the Congressional Oversight Committee (COC) on MSME Development during the 16th Congress. The resolution aims to extend to another 10 years the mandatory lending provisions of the said law to ensure adequate financing for MSMEs. The EDC-NCF will continue to advocate this in the 17th Congress. Another intervention worth looking into is increasing the credit guarantees of PhilExim and SB Corp. for SME exporters. PhilExim and SB Corp. have an existing guarantee program for SMEs, including exporters. It is necessary they enhance their Portfolio Guarantee Program and engage more commercial banks into financing credit-guarantee loans for SMEs. SB Corp. went further by implementing the risk-based lending program, wherein 50 banks have been trained on how to lend to SMEs without going through tedious requirements. Risk-based lending approach to banking is a radical change in lending, from a heavy reliance on collateral to an assessment of borrower quality and ability to repay loans. Government financial institutions (GFIs), banks and other financing institutions and companies have developed their own innovative financing schemes and other alternative financial sources to assist our MSMEs in
accessing finance. Below are just two of the many innovative facilities made available to MSMEs. SB Corp. has introduced the following innovative financing facilities available to MSMEs: 1. Trade Fair and Inventory Buildup Loan Fund—to finance participation in local and international trade fairs, for inventory buildup, space/booth rental and shipment cost; 2. Food and Drug Administration (FDA) Licensing and Production Site Compliance Loan Fund— to finance the cost of licensing and physical assets or improvements that need to be acquired by the MSME in order to be granted the license; 3. Patents Licensing and Inventory Buildup Equity Fund—to finance patent-licensing cost and inventory buildup; 4. Commercialization of Innovation Awardee Equity Fund—to finance start-ups with outstanding product/ service concepts; 5. Halal and Kosher Certification Loan Fund—to finance MSMEs engaged in food processing and are seeking certification of products for export to Muslim and Jewish territories; 6. Loan Fund for Farm Development for Pocket Farmer Entrepreneurs—to finance the production requirement for long gestating and/ or nontraditional high-value crops by farmer entrepreneur and corporate employees; 7. Equity Financing for Corporatized Enterprises—to finance MSMEs operating in industry clusters with funding requirements from P50,000 to P200,000; and 8. Lending to MSME Clientele of DTIs SSF Program—to finance the working capital requirements of Department of Trade and Industry Shared Service Facility (SSF) beneficiaries. First Circle is a new financing company that leverages the use of technology to provide Philippine SMEs with world-class financial services. Their innovative and customer approach enables SMEs to avail themselves of growth finance within one to three working days for first-time applicants and 24 hours for refinancing. First Circle provides short-term working capital finance to businesses starting with a loan amount of P100,000 to P1 million for a term length of up to six months. Once a relationship with a client has been established and there is a track record of repayment, First Circle can increase the amount and extend the term length. The interest rate varies, depending on the amount, term length, type of product and risk profile of the business. With Grace T. Mirasol
n Send your feedbacks or comments
at exportunlimited@dti.gov.ph.
upcoming events Compiled by Louise Kaye G. Mendoza, DTI-EMB Knowledge Processing Division
JULY 5-8
Event: Negosyo, Konsyumer, Atbp. in the Cordillera Administrative Region Venue: Baguio City
July 12-15
Event: Negosyo, Konsyumer, Atbp. in Region 3 Venue: San Fernando, Pampanga
JULY 14
Event: Philippine Export Competitiveness Program Session 1: Overview of EMB Services and Export Procedures Session 2: How to Avoid Cybercrime in Export Transaction Venue: Penthouse, DTI International Building, 375 Sen. Gil Puyat Avenue, Makati City
A10 Wednesday, July 6, 2016 • Editor: Angel R. Calso
Opinion BusinessMirror
How Zika can save the Olympics
T
he Zika virus may be deadly serious, but is it really a potent enough reason to explain the withdrawal of Jason Day, Rory McIlroy and many other star golfers from the Olympics in Rio de Janeiro? There’s a more likely explanation: The Olympics simply are not a priority for them. Which is why golfers, along with stars from other already enriched sports, have no place in the Olympics. Think of it this way: If the Zika mosquito had descended upon Rae’s Creek at Augusta National in April, it strains credulity that any of these stars would have pulled out of the Masters field. That’s because a Masters green jacket is a more precious commodity for professional golfers than a bronze, silver or even a gold medal. Contrast that with the Big Three Olympic sports: track and field, swimming and gymnastics. No major athlete from those sports has publicly spoken of declining to show up in Rio due to the virus, or any of the other various maladies that may yet infect these Games. The stars of traditional Olympic sports would not miss a Summer Games for any reason other than injury. They plan their entire lives in four-year increments. Even though there are annual international events in these sports, national championships here and world championships there, the Olympics are the highest mountain, with everything else hills and rocks by comparison. The golfers’ stance on Rio would be unfortunate if it were not so instructive. The Olympics have swelled in size, adding additional costs for the host cities in everything from the size of athlete villages to new stadiums to additional security. Putting in a bid for an Olympics has arguably become ill-advised, if not irresponsible, for city leaders. The Zika pullouts serve as an advisory for the International Olympic Committee to begin eliminating sports and slimming down, making the Summer Games more economically sensible and manageable. Golf never should have been added to the Olympics because neither side truly needed the other. Golf has four annual majors on two continents, and a sterling international team competition held biennially, the Ryder Cup. An Olympic golf event sandwiched between the British Open and Professional Golfers’ Association Championship, staged in the midst of 27 other sports in Rio, is the definition of extraneous. Tennis is an even poorer fit than golf. What makes the Olympics romantic is the notion that the wide world of athletes comes together to compete in one location. Yet, this occurs nearly every week in tennis, where the same cast of global characters regularly show up for big tournaments, especially those staged in Melbourne, Paris, London and New York. It’s also time to review the future of Olympic basketball. Among the players choosing not to play for the US this summer are LeBron James, Stephen Curry, Anthony Davis, Chris Paul and Russell Westbrook—the best of the best—for reasons ranging from rest to injuries. But healthy players from other countries are also now tip-toeing away from Olympic competition in favor of preparing for their National Basketball Association (NBA) season, including the 2014-2015 NBA Rookie of the Year Andrew Wiggins of Canada. The specialness of the Dream Team has been lost. Bloomberg View
Since 2005
BusinessMirror A broader look at today’s business ✝ Ambassador Antonio L. Cabangon Chua Founder
Publisher Editor in Chief Managing Editor Associate Editor News Editor City & Assignments Editor Senior Editors
T. Anthony C. Cabangon Jun B. Vallecera Max V. de Leon Jennifer A. Ng Dionisio L. Pelayo Vittorio V. Vitug Lorenzo M. Lomibao Jr., Gerard S. Ramos Lyn B. Resurreccion, Efleda P. Campos
Online Editor Social Media Editor
Ruben M. Cruz Jr. Angel R. Calso
Creative Director Chief Photographer
Eduardo A. Davad Nonilon G. Reyes
Chairman of the Board & Ombudsman President VP-Finance VP-Corporate Affairs VP Advertising Sales Advertising Sales Manager Group Circulation Manager
Judge Pedro T. Santiago (Ret.) Benjamin V. Ramos Adebelo D. Gasmin Frederick M. Alegre Marvin Nisperos Estigoy Aldwin Maralit Tolosa Dante S. Castro
BusinessMirror is published daily by the Philippine Business Daily Mirror
HOM
Publishing, Inc., with offices on the 3rd floor of Dominga Building III 2113 Chino Roces Avenue corner De La Rosa Street, Makati City, Philippines. Tel. Nos. (Editorial) 817-9467; 813-0725. Fax line: 813-7025. (Advertising Sales) 893-2019; 817-1351, 817-2807. (Circulation) 893-1662; 814-0134 to 36. E-mail: news@businessmirror.com.ph.
www.businessmirror.com.ph
regional offices n DXQR -93dot5 HOME RADIO CAGAYAN DE ORO E-MAIL ADDRESS: homecdo@yahoo.com ADDRESS: Archbishop Hayes corner Velez Street, Cagayan de Oro City CONTACT NOs.: (088) 227-2104/ 857-9350/ 0922-811-3997 n DYQC -106dot7 HOME RADIO CEBU E-MAIL ADDRESS: homecebu@yahoo.com ADDRESS: Ground Floor, Fortune Life Building, Jones Avenue, Cebu City CONTACT NOs.: (032) 253-2973/ 234-4252/ 416-1067/ 0922-811-3994 n DWQT -89dot3 HOME RADIO DAGUPAN E-MAIL ADDRESS: homeradiodagupan@ yahoo.com ADDRESS: 4th Floor, Orchids Hotel Building,
Rizal Street, Dagupan City CONTACT NOs.: (075) 522-8209/ 515-4663/ 0922-811-4001 n DXQM – 98dot7 HOME RADIO DAVAO E-MAIL ADDRESS: home98dot7@gmail.com ADDRESS: 4D 3rd Floor, ATU Plaza, Duterte Street, Davao City CONTACT NOs.: (082) 222-2337/ 221-7537/ 0922-811-3996 n DXQS -98dot3 HOME RADIO GENERAL SANTOS E-MAIL ADDRESS: homegensan@yahoo.com ADDRESS: 2nd Floor, Penamante Clinic Tiongson Street, General Santos City CONTACT NO.: 0922-811-3998 n DYQN -89dot5 HOME RADIO ILOILO E-MAIL ADDRESS: homeiloilo@yahoo.com
ADDRESS: 3rd Floor, Eternal Plans Building, Ortiz Street, Iloilo City CONTACT NOs.: (033) 337-2698/ 508-8102/ 0922-811-3995 n DWQA -92dot3 HOME RADIO LEGAZPI E-MAIL ADDRESS: homeradiolegazpi@ yahoo.com ADDRESS: 4th Floor, Fortune Building, Rizal Street, Brgy. Pigcale, Legazpi City CONTACT NOs.: (052) 480-4858/ 820-6880/ 0922-811-3992 n DWQJ -95dot1 HOME RADIO NAGA E-MAIL ADDRESS: homenaga@yahoo.com ADDRESS: Eternal Garden Compound, Balatas Road, Naga City CONTACT NOs.: (054) 473-3818/ 811-2951/ 0922-811-3993
Printed by brown madonna Press, Inc.–San Valley Drive KM-15, South Superhighway, Parañaque, Metro Manila MeMBer of
Enhanced service delivery
ne of the marching orders of newly installed President Duterte is for government agencies to cut red tape in order to speed up service delivery to the public. For a service institution such as the Social Security System (SSS), which serves millions of members and their beneficiaries, providing delightful service is a constant challenge.
To provide more options for OFWs to reach the CSU, mobile calls and text—through Globe (63-977) 804-8668 and Smart (63-998) 847-4092—were introduced in 2015. Instant messaging or online chat with a contact service agent through popular apps Line, Viber and WeChat are also made available using these mobile numbers.
“table-and-chair” setups in a rentfree space in the city or municipal hall within the jurisdiction of the mother branch. Complementing the expansion of the local branch network is the growth of its overseas offices that also serve migrant Filipinos, such as pensioners who have decided to settle in other countries during their retirement. From only 14 locations in 2010, including the Philippine Overseas Employment Administration office, there are now a total of 22 foreign ROs as of 2015, with the addition of eight locations, namely, Kuala Lumpur (Malaysia) and Dubai in 2012; Macau and Bahrain in 2013; Muscat (Oman) and Toronto (Canada) in 2014; and Kaohsiung (Taiwan) and San Francisco (United States) in 2015. With more branches to serve its members, the SSS adopted a “file anywhere” policy in 2012. The following year, selected branches nationwide opened on Saturdays to allow members to do business with the SSS
without having to miss a day of work. Ten major branches all over the country were made to open on Saturdays, from 8 a.m. to 5 p.m. These selected branches are Diliman, Makati-Ayala, Makati-Gil Puyat, Cebu, Lapu-Lapu, Bacolod, Iloilo, Cagayan de Oro, Davao and Zamboanga. Furthermore, with the use of technology, members are now able to transact with the SSS anytime, anywhere at their convenience through the interactive SSS web site that allows members to access their own records or file retirementbenefit applications. Fresh graduates seeking employment can now apply for social-security numbers online. Members can also make use of text messaging to inquire about their contributions or benefit and loan applications. It is now easier to reach the SSS by phone. In 2012 it expanded its call-center hours to 24 hours a day, Monday to Friday, in order to accommodate calls averaging 1,600 a day. The SSS also opened a toll-free phone service to allow members
Susie G. Bugante
All About Social Security
O
Ever since it began operations, the SSS has been committed to give better customer service and it has not let up in its efforts to make its services more efficient and convenient for its members. In the past five years, for instance, it achieved unprecedented expansion of its branch network to better reach its clientele. Before September 2010, there were a total of 167 offices consisting of either a receiving branch or a processing branch, and smallerscale representative offices (ROs). Of these, 35 branches were in the National Capital Region, 70 in Luzon, 30 in the Visayas and 32 in Mindanao. By 2015, the local branch network has expanded by over a hundred offices to a total of 268, and all branches are now full-service branches. It also established service offices (SOs) and ROs nationwide. SOS are an extension of branches, and are larger, offer more services and have more facilities than ROs. By definition, ROs are basically
based outside Metro Manila to inquire on their contributions, benefits, loans, employment records and other concerns. With the round-theclock schedule, members can easily choose a time convenient for them to call the SSS through 1-800-102255777 (or 1-800-10-CALLSSS). To reach out to overseas Filipino workers (OFWs), a contact services unit (CSU) was established in 2014 to offer dedicated call services through local landline numbers, (63-2) 3647796 and (63-2) 364-7798; e-mail support using the designated e-mail address (ofw.relations@sss.gov.ph); and special desk assistance services at the SSS main office in Quezon City during regular office hours. To provide more options for OFWs to reach the CSU, mobile calls and text—through Globe (63-977) 804-8668 and Smart (63-998) 8474092—were introduced in 2015. Instant messaging or online chat with a contact service agent through popular apps Line, Viber and WeChat are also made available using these mobile numbers. With millions of members to attend to every day, the SSS continues to innovate and find ways to serve its members better, including the use of social media (Facebook, YouTube, etc.) and the mass media. For more details on SSS programs, members can drop by the nearest SSS branch, visit the SSS web site (www.sss.gov.ph), or contact the SSS call center at 920-6446 to 55, which accepts calls from 7 a.m. on Monday all the way to 7 a.m. on Saturday. Susie G. Bugante is the vice president for public affairs and special events of the SSS. Send comments about this column to susiebugante.bmirror@gmail.com.
Brexit might have cost banks $165 billion
F
By Mark Whitehouse | Bloomberg View
or those wondering about the repercussions of Britain’s vote to leave the European Union, here’s a data point: By one measure, the largest United States and European banks are about $165 billion worse off. A model set up by economists at New York University (NYU) regularly performs a sort of simplified stress test on the world’s largest financial institutions. It does so by asking the stock market what it thinks about the value and riskiness of the banks’ assets, then using that information to estimate what would happen to the banks in a severe crisis—and how much added equity capital they would need to avoid distress. Even before Brexit, the model suggested that banks were much more fragile than official stress tests indicated: As of May 31, it estimated that the largest banks in the US, the United Kingdom, Germany,
France and Italy (those with more than $500 billion in assets) would have a combined capital shortfall of $998 billion. After the Brexit vote, the shortfall rose significantly. As of June 28, it stood at $1.163 trillion, an increase of $165 billion. Here’s a breakdown by country, in billions of dollars: To give a sense of the potential burden on taxpayers in the event of government bailouts, here’s a breakdown showing the estimated capital shortfalls as a percentage of each country’s GDP: Why the pessimism? For UK banks, it’s pretty straightforward: Forecasters expect increased uncertainty and other Brexit-related
difficulties to undermine economic growth, which, in turn, will narrow profit opportunities and make it harder for people and companies to pay back loans. For French and Italian banks, it may reflect concerns both about European growth and the possibility that voters will follow Britain’s example. For US banks it’s harder to understand, though profits may suffer if worries about Brexit prompt the Federal Reserve
(the Fed) to keep interest rates lower than it otherwise would. To be sure, markets have rebounded a lot since June 28—and the share prices of US banks have done particularly well since they passed the Fed’s latest round of stress tests last week. So the next NYU exercise will probably show a smaller shortfall. That said, the market’s initial verdict is clear: Brexit is pretty bad for banks.
Opinion BusinessMirror
opinion@businessmirror.com.ph
Paean to Ambassador ALC By Judge Pedro T. Santiago (Ret.)
BusinessMirror Chairman of the Board and Ombudsman
Conlusion
H
is last days…In April 2013, I bid him good-bye. I wanted to have my own time at 84. Besides, traffic is getting unbearable going to Makati and back to Quezon City. In August 2015, when I was in the United States, I received an overseas call that informed me Amba was afflicted with cancer. I was dumbfounded! I could not sleep. I recalled that in April 2009, when he was yet in the best of health, he drew his “Living Will” appointing me as his health-care agent to make decisions in case he is terminally ill on the use of artificial life-sustaining procedures and the application of maximum pain reliever, even if it might hasten his death. I shuddered at this thought and I demurred. I wrote him, “This is your ultimate gesture of trust in me as a friend. While it is an honor and no word of thanks is enough, I pray that I will not live to see the day when I shall decide on the options.” How uncanny that he was able to foresee his kind of death—in pain. In June 2015, when he was discovered to have cancer, I was in the States. When I came back in August, he had me called by his son, his chosen “heir.” He asked me to visit him. When we met, his first words were, “Judge, bakit ninyo ako iniwan? Ano ang nagawa kong kasalanan sa inyo? Hindi ko kayo pinakisamahan ng may hypocrisy.” I could only mutter, “Hindi naman kita iniwan, lagi kitang kasama sa dasal ko.” Even when he was in pain, he would travel to Batangas to “put his footprints” on his last business venture. A sprawling 8-hectare palengke and parking. A business he knew by heart, which catered to the ordinary people. He was always at home with his kind. But he passed away with two dreams, yet—to build a hospital and a university. Not so much for business, as they are for the benefit of his employees and their children. He did not want his sick employees to be left unattended along the charity corridors of hospitals. He wanted all the children of his employees to finish a course. He often told his employees, “kung wala kayo, wala itong
kumpanya. Pakitain ninyo at kayo ang unang makikinabang.” Maybe he left his two dreams to be fulfilled by his children. On March 10, Thursday, Eli Bote, another close friend, called me that we should visit Amba who may pass away anytime. As it was my car’s coding day, I got a GrabCar. When we arrived at the hospital, Amba was in high spirits. I commented, “Listo pa ang mata mo, mukhang hindi ka pa madudukutan.” We talked about so many things. He was interested in the results of the elections. He was vying for Mr. Duterte. So was I. Much later, he told us that it’s time for us to go home, as the pain was beginning to set in! I was disturbed, though I did not see the “mask of death” on his face. I was unable to sleep the whole night and I became indisposed. The following day, Friday, March 11. Eli called me that Amba passed away. I immediately heard mass for his eternal repose at Quiapo Church, where we always go every Friday for the past 10 years. I realized that he had spared me from the options in his Living Will. Because of lack of sleep and the heat, I got a fever that day. I was unable to visit his wake on Friday, Saturday and Sunday at the Heritage Park. On Monday morning I awoke from a dream, with Amba in white, sweetly smiling at me. I said to myself, you visited me, I will come visit you. I went to his wake. His remains by then had been transferred to San Felipe Neri Church in Mandaluyong, where, as a child, he and his mother heard mass. But I could not bear to see him in death and I was so distraught to deliver a eulogy. On Wednesday, March 16, on the day he was to be interred, I finally decided to take a last glimpse of the Ambassador. I am glad I did. Never have I seen him so much at peace. Free from worries and pain. Ready to go back to his Creator and be by the side of his beloved mother, forever. In a public cemetery in Mandaluyong, where they once lived in poverty. A place that also saw the rise of the poor boy Tony to become a billionaire, to rub elbows with the powerful and be one among them. But he never changed. HE REMAINED A “taong lupa” TO BE WITH HIS KIND TO THE END. HE WAS HUMBLE IN LIFE AS HE REMAINED HUMBLE UNTO DEATH.
The speech Teddy Locsin Jr.
Free fire Continued from A1
T
he phrases ring from an old time when men of iron will and granite integrity moved slowly but inexorably in the service of the nation and never of self. Sure, there were infelicities of language and one mixed metaphor: you cannot say, “the ride will be rough” and also that “the first steps taken will be wobbly.” You are either riding or walking.
Most of the writing was quaint and revealed the lawyerly hand of the man speaking it. He used phrases
‘It’s the economists…stupid!’ Michael Makabenta Alunan
on the contrary
L
ife is a metaphor and reality can, indeed, make ironies of people, which I have discovered while interacting with jeepney-transport leaders and researching on Google on studies about traffic solutions that led me to statements from expert economists of the Philippine Institute of Development Studies (PIDS).
We need PhDs (Push Here Dummies)? Schooled in economics myself from University of the Philippines Diliman, the contrasting points of view jolted me to my wits, after less-schooled, but streetsmart jeepney-transport leaders expressed their commonsensical arguments, which turned out to make more sense than those of our university-bred economists, who tend to wear the letters “PhD” as appendages to their names. Jestingly, it made me think “PhD” meant “Push Here Dummies,” which is an appropriate description of the ubiquitous elevator boy or girl in almost every major government building, as if elevator passengers do not know how to push buttons to command the elevators for directions to specific floors, either up or down. I don’t know if this is any indication why our elevator-like economy
and society have been going up and down as manifested, for instance, by the euphoria over Edsa 1986, only to slide back like idiotic lemmings racing against each other to their deaths into the sea. Again and again, we have seen the same pattern throughout history. Like his mom, former President Benigno S. Aquino III was catapulted to the presidency, on a euphoric victory, capitalizing on the battle cries daang matuwid (straight path) and “kung walang corrupt, walang mahirap.” We hope, this time, the euphoric victory of President Duterte does not end in another ningas cogon, a flame that dies down in time. Who’s sane, who’s stupid? Our title alluding to our economists is a parody of US President Bill Clinton’s 1992 campaign statement, “It’s the economy, stupid!” Our PIDS economists, Sonny
Domingo, Roehlano Briones and Lovely Tolin, in their February 2, 2015, article published in a national daily, entitled “The cost of Metro Manila traffic congestion,” claimed “there are too many buses, or 12,595 buses, operating within Metro Manila, including provincial buses, that are run by 1,122 operators, a contrast to the four private bus consortia and the government Metro Manila Transit Corp. in the 1970s.” In blaming partly the buses for the traffic, they recommend that “the first necessary step is to limit the number of buses in franchised routes,” implicitly noting the proliferation of colorums in excess of passenger riding capacity. It is ironic that the same brand of economists recommended three decades back the liberalization of public transport that led to what they now blame as the anarchic traffic. In contrast, new transport leaders, like Ronald Baraoidan, chairman of the National Jeepney Federation for Environmental Sustainable Transport; Malet Lorenzo, chairman of the Luzviminda Transport Federation; and Reynaldo Campo, president of the Pasay Federation of Unified Transport Providers of SM Mall of Asia, argue in Tagalog, “why limit the franchises on public transport, but not limit the entry of private cars, given the limited road space.” These groups want to go green, but oppose “transport modernization” that translates to phase-out.
Wednesday, July 6, 2016 A11
In a short, and seemingly simple, speech, Mr. Duterte has risen higher than his predecessors. But by the same token, he has stepped closer to the edge of the high precipice from which he can fall farther than anyone before if he does not deliver. By setting a standard so high, so clear and fixed, he stands to be our greatest or our worst president.
not used in the past 50 years and they shined like a light from a long lost past illuminating the dark present.
Suddenly, we realized that political power is wasted on the inexperienced and health is wasted on the young. The old and wise put them to better use. The so-called youth, some past 50, must exit politics. President Duterte used old ways of speaking to express new truths and thereby gave to radical proposals a
For them, “it is more stupid to put more restrictions and moratorium on public-transport franchises, but no moratorium on private cars,” which carry an average load of only 1.2 passengers per car, based on the Japan International Cooperation Agency-funded Department of Transportation and Communications study. In contrast, jeepneys carry about 20 passengers and buses about 60 to 80 passengers. Effectively, one bus is equivalent to 60 cars of road space, which can even be more, considering the space needed in-between cars. In fact, “Colorums” are allowed to perpetuate corruption. When assumptions go wrong. Why many economists end up wrong, is mainly because they start with faulty assumptions, which lead them into a “groove thinking” that has its own logic, that, at times, end up wrong, not being grounded on reality. The PIDS economists were trapped in static assumptions, because they probably often see buses competing and clogging bus stops that cause traffic. On the contrary, if public transport is more efficient, motorists will be willing to leave their cars and take public transport that will trigger more demand for public buses. The Seoul experience is the perfect example. Gyeng Chul-kim, PhD, and former president of the Korea Transport Institute, says that the massive road-building and 106 overpasses that his father built to solve traffic, which was the
logical thing to do then, only worsened traffic, as car vehicles increased 50 times over time. When he took over, he dismantled more than half of the overpasses, and revived the rivers and creeks that were covered by these road bridges to accommodate more cars; and instead required more buses and trains that solved traffic. And yet, sales of cars continued to soar, as people bought cars because they could afford but simply leave their cars at car parks or bus and train stations. Our transport experts can also learn from inventor Francis Yuseco, who has innovative, but inclusive, solutions to traffic, which deserve a separate discussion altogether. Lost in the forest with a compass? Our PIDS experts, despite being guided by their economic compasses and sophisticated tools, can still get lost in the forest of reality. They admitted adapting the study of the CREW Diagnostic Country Report: Philippines, which was conducted with support from the Centre for Competition, Investment and Economic Regulation, Jaipur, India.” Even if you know where North is in the proverbial forest, you cannot go linear straight, as there are cultural humps, political quick sands, social heavy undergrowth and legal obstacles along the way. Worse, ivory-tower economists are waylaid into churning out sophisticated econometric models and quantitative analyses of counting
reassuring vintage. And he did not blame anyone for the problems he was elected to solve. Here, finally, is a gentleman of the old school again. If we learned anything from his speech, it is that we must look to the past for the best way to the future. And that the best test of a man’s fitness for the highest office is his willingness to lose it by standing steadfast with the men who obey his command, as he told the Philippine National Police. In a short, and seemingly simple, speech, Mr. Duterte has risen higher than his predecessors. But by the same token, he has stepped closer to the edge of the high precipice from which he can fall farther than anyone before if he does not deliver. By setting a standard so high, so clear and fixed, he stands to be our greatest or our worst president.
the trees figuratively, but not being able to see the forest. Another anecdote describing them is on how they count cattle moving in a ranch. They use sophisticated methods, like figuratively counting the legs and dividing them by four,” which is mathematically accurate, but also smacks of stupidity. Wisdom or More Dumb than Wish. Personally, I had my own follies of learning from the less learned. Many years back, a Higaonon tribal chieftain, in reaction to the impulsiveness of our youth, told me in their language: “If you are in a hurry, slow down.” This is similar to the quotation “haste makes waste.” They have “NUGGETS of wisdom na hindi ko agad na-GETS” (which I didn’t easily get). It dawned on me the wisdom I thought I had was more dumb than wish or wise. As Samuel Goldwin says, “Give me a smart idiot over a stupid genius.” Bertrand Russell says: “Men are born ignorant, not stupid. They are made stupid by education.” Perhaps, our technocrats need to also learn from President Duterte himself, who does not really come from the hoi polloi or the masses, but has imbibed their language, learned compassion with the heart, acquired the indigenous wisdom to become street smart and the balls to have the courage to make bold decisions. E-mail: mikealunan@yahoo.com
The Broader Look This Thursday
T
he country’s “last ecological frontier” is being threatened by destructive development projects.
Statistics don’t lie—Palawan’s ecosystem is under siege. There have been attempts by well-meaning groups and individuals to preserve Palawan’s rich biodiversity. These efforts have failed thus far. But there is hope for Palawan, with hard-line environmentalist Regina Paz L. Lopez now at the helm of the environment department.
We got the Broader Look on Palawan’s ecosystem under siege on Thursday. The Broader Look—a two-page detailed discussion of pressing issues—comes out every Thursday in the BusinessMirror ’s Main Section.
BusinessMirror www.businessmirror.com.ph