CABINET APPROVES CASH-BASED P3.76-TRILLION BUDGET FOR 2019
Workers are busy at a portion of the Metro Manila Skyway Stage 3 Project (MMSS3) on Araneta Avenue in Quezon City on Monday. The Skyway Stage 3 is a 17.54-km elevated expressway from Buendia, Makati City to Balintawak, Quezon City, and will connect the South and North Luzon Expressways. The Duterte administration, which is rushing to have key infrastructure projects— whether public or private—completed on schedule to boost growth, has approved a cashbased budget for 2019 of P3.757 trillion, fueling an aggressive spending strategy for its “Build, Build, Build” centerpiece. NONIE REYES
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By Bernadette D. Nicolas @BNicolasBM
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HE Cabinet approved at its meeting on Monday night the P3.757-trillion cash-based budget for 2019 proposed by the Department of Budget and Management. In a message to the BusinessMirror, Budget Secretary Benjamin E. Diokno confirmed that the 2019 budget was approved by President Duterte and the Cabinet as presented. The DBM chief earlier said that
the proposed budget, equivalent to 19.8 percent of GDP, will be submitted to Congress during the President’s State of the Nation Address on July 23. Although the proposed national budget is technically lower than the P3.767-trillion budget for 2018, Diokno said in a briefing of the Development Budget Coordination Committee (DBCC) last week that the cash-based appropriation for 2019 is still up by 18.3 percent compared to the cash-based program in 2018.
The shift to cash-based budgeting is also projected to enhance the efficiency of national government disbursements, which are programmed to hit P3.833 trillion in 2019, equivalent to 19.8 percent of GDP, rising up to P5.362 trillion in 2022, or 20.7 percent of GDP. Personnel services still received the biggest budget allotment among major expense items, at 31.5 percent of the budget. Capital outlays came in second with 20 percent of the pie. See “Budget,” A8
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A broader look at today’s business n
Wednesday, July 11, 2018 Vol. 13 No. 270
FDI dip slightly in April but 4-month total rises F
By Bianca Cuaresma
@BcuaresmaBM
OREIGN investors put in fewer dollars to bet on the Philippine economy for long-term yields in April this year, compared to the volume of their investments in the same month last year.
The Bangko Sentral ng Pilipinas (BSP) on Tuesday reported a 3.2-percent decline in the net inflow of foreign direct investments (FDI) to the Philippines in April.
FDI is the type of investment that is often more coveted, as it stays longer in the economy and creates job opportunities for locals.
“We find ourselves looking down the barrel of a future without privacy as we have historically known it. By removing the layers of abstraction between our online presence and our daily lives, we make it easier for others to exploit and manipulate us, steal our identities and, possibly the scariest of all, intellectually isolate us.”—Henry Schumacher, writing in Integrity Initiative. Page A3.
Damn proud of our people Teddy Locsin Jr.
free fire
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his Friday, the text of the Global Compact on Safe and Orderly Migration will go to the General Assembly for adoption before it is submitted for approval at the huge conference in Marrakech in Morocco. There are still sticking points but adoption seems certain. Mexico and Switzerland are co-facilitators and they have done a superb job. One Permanent Representative remarked that the text is exemplary for its clarity compared to the first draft, which was dense, sophisticated, filled with terms of art that are loaded with precedent to be sure but unfamiliar to most.
See “FDI,” A8
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HE National Economic and Development Authority (Neda) said on Tuesday the favorable impact of a weak peso on the country’s exports, and consequently, on the trade balance, will take some more time. On Tuesday data released by the Philippine Statistics Authority (PSA) showed the country’s trade deficit widened further to $3.7 billion in May 2018, or 47.41 percent higher than the $2.5-billion deficit in May 2017. This placed the country’s trade deficit at $15.77 billion in the Januaryto-May period in 2018. This was 55.12 percent higher than the $10.16-billion
deficit in the same period in 2017. “Goods Trade in May was up but imports grew faster than exports, thereby widening the current account deficit,” Socioeconomic Planning Secretary Ernesto M. Pernia told the BusinessM irror on Tuesday. See “Trade deficit,” A8
PESO exchange rates n US 53.3590
Continued on A6
PHL nickel ore exports seen down by a quarter
“Goods Trade in May was up but imports grew faster than exports, thereby widening the current account deficit. In any case, there’s typically a lag before currency depreciation favors exports.”—Pernia
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TRADE DEFICIT WIDENS BY 47% TO $3.7B IN MAY By Cai U. Ordinario
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Trucks carrying container vans in North Harbor, Manila, are lined up prior to deployment. Latest government data showed the trade deficit widening further in May, and the Neda said there’s usually a lag before exporters can feel the favorable impact of a weak peso. NONOY LACZA
HILIPPINE nickel ore shipments this year could dec line by a four th to at least 30 million wet metric tons from last year’s 40 million WMT owing to lower global prices and tighter competition posed by Indonesian exports. Philippine Nickel Industry Association (PNIA) President Dante R. Bravo said his group projects total ore exports for the mineral this year settling at between 30 million WMT and 35 million WMT, Continued on A2
n japan 0.4814 n UK 70.7594 n HK 6.7989 n CHINA 8.0704 n singapore 39.3329 n australia 39.8378 n EU 62.7128 n SAUDI arabia 14.2279
Source: BSP (10 July 2018 )
A4 Wednesday, July 11, 2018 • Editor: Vittorio V. Vitug A2
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Charter-change debate rages
Police foil try to ‘kill’ Cebu Catholic prelate
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By Butch Fernandez @butchfBM & Jovee Marie N. dela Cruz @joveemarie
en. Panfilo M. Lacson Sr. asserted on Tuesday Congress must decide on Charter-change issues in favor of public interest, and not on personalities. “The proposed draft Charter is not about one person, or for those opposing and supporting it,” Lacson said. “Neither is it about us in this present generation.” The senator issued the reminder, amid brewing debates on renewed efforts to tinker with the 1987 Constitution, following the Duterte administration’s signal favoring a shift to a federal form of government. The Palace endorsement readily gained support among incumbent pro-administration lawmakers, triggering speculations that Charter changes will also open the door to other amendments intended to lift existing term limits, among others. “Therefore, when it is transmitted to Congress, we must base our decision on what should serve best the interest of future generations of Filipinos,” Lacson stated. In fact, he added, that “should be our first and only consideration.” Asked if he would support Charter changes endorsed by the Palaceappointed Constitutional Commis-
sion (Con-com), Sen. Juan Edgardo M. Angara admitted he has yet to read the draft of proposed amendments, but added that he was “open to changes in the Constitution.” Angara admitted, however, he anticipates “there will be a lot of debates because my impression is the proposed draft involves an overhaul of the present system of government.” For his part, Sen. Francis N. Pangilinan pointed out the draft Charter will serve as “additional inputs” that will guide the upcoming Senate committee hearings on the issue. But Pangilinan promptly clarified that senators “will not be rushed into adopting any proposal en toto,” adding most recent polls indicated that “a significant majority” of the voters oppose Charter change with only 3 percent considering it as urgent. “Clearly, at this stage, only administration politicians are interested in Charter change [that] shows the glaring disconnect between those pushing for it and the citizenry,” the opposition Liberal Party senator said,
warning that “it would be unwise and unacceptable to force Charter change on an unwilling citizenry.” Pangilinan, however, assured that he and other senators will not be “rushed into adopting any proposal en toto, nor will we agree to any self-serving push to amend the Constitution.” FormerSenatePresidentAquilinoL. Pimentel III, for his part, affirmed that an “informed citizenry is the key” to wider public acceptance of the Duterte administration-backed efforts to shift to a federal form of government. Pimentel said upcoming regional consultations to be conducted by the Con-com is expected to result in a “better understanding of federalism and result in greater public acceptance” of the proposed shift to a federal form of government. Pimentel, concurrent party president of the ruling PDP-Laban, said he was encouraged by surveys that showed over half of respondents that were aware of federalism and had previously heard of this system of government were more supportive of the adoption of federalism. He cited a recent survey conducted from March 23 to 27, which showed 57 percent of respondents had knowledge about federalism and agree with the adoption of a federal system of government, while only 22 percent did not support its adoption, and 23 percent were undecided.
No timetable yet
A House leader, meanwhile, said the
lower chamber is yet to set a timetable for Charter change deliberations. House Majority Leader Rodolfo C. Fariñas Sr. of Ilocos Norte said the lower chamber can not set for now the timeline, as it has yet to receive the complete draft of the Federal Constitution from the Palace. “[The] timetable is too far the table as such draft has not even been officially transmitted to the House, if so,” Fariñas said. The draft constitution was submitted to President Duterte for review on July 9. It was completed after several months of work by the 22-member Con-com handpicked by the President. Meanwhile, Speaker Pantaleon D. Alvarez and head of the Concom retired Chief Justice Reynato Puno are expected to discuss the draft federal constitution in a meeting today (Wednesday) at the House of Representatives.
Ignore or accept
Meanwhile, Magdalo Rep. Gary Alejano said the draft federal constitution submitted to Duterte by Con-com is, as its name connotes, just a draft, which a Constitutional convention or a Constituent assembly later may adopt, ignore or accept only some of its provisions. “The draft provides [President] Duterte enormous power if he heads the Federal Transition Commission [FTC], which, he said, he is willing to do. Aside from appointing members of FTC, he will have a sweeping power
of practically appointing all officials in government, including Independent Constitutional Bodies. With the way how [President] Duterte appoints unqualified people in government [except for some], and how these people support his murderous policies, this is a dangerous proposition,” Alejano stated. The lawmaker also questioned one of the transition provisions, which states that regional states will be required to come up with a plan on how to raise their revenues.
Powers
Moreover, with this draft constitution finally complete, Bayan Muna Chairman and former Rep. Neri J. Colmenares expressed concerns that the President will be given massive martial law powers and that these powers will be used against those who merely disagree with the Duterte administration. “Under this federal constitution President Duterte can call the ongoing wave of killings of mayors, priests, lawyers, the media, as well as suspected drug addicts, lawless violence and declare martial law nationwide using this ground. This attempt to expand President Duterte’s martial law powers is very dangerous considering that he is intolerant of dissent, and has long been threatening to declare martial law or establish a revolutionary government as his solution to the country’s problem,” he said. With Kezhia Maglasang and Jose Oscar Magpusao
By Rene Acosta
he Philippine National Police reported on Tuesday that Cebu policemen thwarted a plan by a would-be assassin to kill the head of the Roman Catholic Church in the city. A spot report reaching Camp Crame said the shooter, whose identity is still being verified, was killed during a brief shootout at the Archbishop’s Palace in Cebu City on Tuesday. According to Chief Insp. Ma. Theresa Macatangay, commander of the Police Station 2 of the Cebu City Provincial Office, the suspect arrived at around 10:40 a.m. at the Archbishop Compound for an audience with Bishop Dennis Villarojo, the auxillary bishop of Cebu. Maria Rowela Cerojano, secretary of the Archbishop’s Palace, first talked with the assassin since she was at the front door of the building. “She asked for his intent with Bishop Dennis but, sensing that the suspect/shooter was unclear of his intent, she called for police assistance,” a police report said. Cerojano left the suspect for the police to continue their interrogation on the man. However, when the policemen came, Cerojano and fellow staff, identified as Rodilla Torrecampo, reportedly saw the suspect drew his “firearms to the direction of the responding policemen from the CCPO [Cebu City Provincial Office] Mobile Patrol Group.”
PHL nickel ore exports seen down by a quarter. . . from the recorded 35 million WMT to 40 million WMT last year. “I think we will be exporting lower [volume this year] due to lower prices, especially for lowgrade [ores],” Bravo, who is also the president of Global Ferronickel Holdings Inc., said in a news briefing in Quezon City on Tuesday. “A lot of local nickel companies are exporting low-grade ores, so that could result in lower total volume of exports this year,” Bravo added. Global nickel prices have been declining for the past month due to trade tensions between Beijing, top consumer of the metal and Washington, according to Bravo. Furthermore, the situation is worsened by higher shipments being made by Jakarta outpacing Manila’s nickel ore exports, Bravo added. “Hopefully, [prices] would recover next month,” he said. “But it depends on how much Indonesia is exporting. So, far they are exporting more than us.”
Higher demand by China
Furthermore, Bravo said nickel
miners remain optimistic that global prices would recover on the back of higher demand for the metal by China and world markets due to declining inventories. Nickel prices at benchmark London Metal Exchange on July 9 closed at $13,970 per MT, recovering 1.52 percent, from a $13,760 per MT settlement offer on July 6. However, on a monthly basis, the July 9 settlement offer was 8.33 percent lower than the $15,240 per MT recorded on June 8 at LME. Data from the Mines and Geosciences Bureau (MGB) of the Department of Environment and Natural Resources showed that the country in 2017 exported 23.351 million dry MT or nearly 36 million WMT of nickel ore, which was 6 percent lower than the 24.951 million DMT recorded volume in 2016. MGB data also showed total ore shipment last year translated into a total nickel ore content of about 315,428 MT, or 5 percent higher than the 300,506 MT recorded in 2016. Philippine nickel mine output this year could rise by 17.14 percent
@reneacostaBM
continued from a1
to a three-year high of 410,000 MT driven by favorable weather conditions, according to London-based brokerage Sucden Financial Ltd. (Sucden Financial). Sucden Financial Head of Research Geordie Wilkes said they forecast a 60,000-MT increase in the Philippines’s total nickel mine output this year from 2017’s 350,000 MT. The brokerage firm’s figures represent how much ore could be mined in the country without any bans on the industry, according to Wilkes. “Mine output was lower in 2017 predominantly due to weather in the Philippines. While the ban had an impact, there is evidence to suggest that the prevailing reason for the decline was the poor weather and technical issues,” he told the BusinessMirror in an e-mail exchange. “Therefore, with better weather we would expect to see an improved mine output. This is because the ban only impacts new projects,” he added. The Philippines produces nickel in the form of nickel ore or nickelin-intermediate, according to Wilkes. Jasper Emmanuel Y. Arcalas
BBL bicam: 5% of national revenue for Bangsamoro. . . continued from a8 “It’s like a law created a province and imposed a dynasty prohibition only to a certain elective position to the exclusion of the others in that province, in particular, and to the whole country, in general,” he said. Meanwhile, the bicameral conference committee decided to create several subcommittees to handle remaining conflicting provisions, including powers of the government, taxes and fiscal matters, public order and national security, justice system-Sharia, territory and plebiscite, and the parliament. The two chambers plan to submit to President Duterte for signature a “constitutional” BBL before the third State of the Nation Address on July 23. Fariñas said they could ratify the proposed law when Congress opens its third regular session morning of July 23. The proposed BBL seeks to abolish the ARMM and create the Autonomous Region of Bangsamoro.
AOP open letter
Meanwhile, in an open letter, following their peace rally for the BBL, advocates from All-Out Peace (AOP) network expressed concern on the “possible enactment of a watered-down
BBL” that will not fully realize the aspirations of the Bangsamoro people and other inhabitants of Mindanao. “For us, a diluted BBL could trigger more problems than provide solutions to the Bangsamoro question. If our lawmakers act as peace architects through the legislative process, they should know that they cannot build peace in Mindanao by having a substandard BBL,” the group added. AOP is a network and convergence of various peace and civil-society organizations based in Mindanao and Manila. “It is in this context that we humbly urge the government, particularly members of this Bicameral Conference Committee, to once and for all do what is right and deliver the kind of BBL that reflects the core principles of previous and current peace negotiations to the Bangsamoro,” it said. “The status quo of the Autonomous Region of Muslim Mindanao, at this point, is clearly insufficient to address the Bangsamoro problem. It is therefore unacceptable to enact a new law that is dramatically less than what is already available,” it said. The group asked lawmakers to consider these demands: enact a BBL that is consistent and compliant with the spirit, vision and principles of the Framework Agreement
on the Bangsamoro, Comprehensive Agreement on the Bangsamoro and all previously signed peace agreements; entrench in the BBL meaningful autonomy and genuine self-governance of the Bangsamoro, recognizing the diverse and distinct identities, culture and faith traditions, and historical antecedents defining the Bangsamoro Question; and retain and build upon the rights and powers of the ARMM toward the creating a more vibrant and progressive Bangsamoro region. It also asked the lawmakers to grant genuine and efficient fiscal autonomy for the Bangsamoro; provide the Bangsamoro effective management and control over and benefits of the natural resources in the Bangsamoro territory; full Inclusion of the indigenous people’s rights in the BBL to ensure the recognition and protection of their rights and to correct historical marginalization and exclusion; institutionalize a transitional justice and reconciliation process for the Bangsamoro; embed this as a pillar in the Marawi normalization; and heed previous recommendations to establish a National Transitional Justice and Reconciliation Commission on the Bangsamoro. Jovee Marie N. dela Cruz with Mark Joseph Fernandez
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Editor: Vittorio V. Vitug • Wednesday, July 11, 2018 A3
DICT and NEA craft framework to expand natl broadband access
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By Lenie Lectura
@llectura
he National Electrification Administration (NEA) and the Department of Information and Communications Technology (DICT) have agreed to create a technical working group (TWG) that will craft a framework agreement on expanding broadband access to households across the country.
The plan is for the government to piggyback on electric cooperatives (ECs) infrastructure in order to provide Internet service in their assigned areas. This is similar to the tripartite agreement signed among the DICT, National Transmission Corp. (Transco) and National Grid
Corp. of the Philippines (NGCP). NEA Administrator Edgardo Masongsong met on July 6 with the key officials of the DICT headed by Acting Secretary Eliseo Rio Jr. and Undersecretary Denis Villorente to explore possible arrangements of bringing broadband con-
121 The total number of ECs whose infrastructure will be tapped to deliver broadband connectivity to rural households across the country
nectivity into rural areas by tapping the infrastructure of 121 ECs. The planned framework will also include the financial arrangement with the ECs that have existing fiber-optic cables in their distribution lines and possible funding for power utilities, which do not have fiber on their grid. Some ECs, particularly those in Mindanao, already have fiber-optic infrastructure in place so it would be
You don’t care about privacy? You better do! By Henry J. Schumacher
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rivacy is the reason you shut your bedroom curtains to the street at night, close the door behind you at a doctor’s appointment and use a change room at the department store. What happens when you go to the toilet isn’t a secret, but you still close the door. However, in the online context, privacy is often confused with secrecy due to a lack of understanding and awareness about what is at risk. For more than a decade, we’ve been posting our every thought, activity and interpersonal interaction online with increasing frequency. We perceive value and efficiency through connecting and integrating as many different apps and services as we can. To do this, we click “OK” to grant each app read/write permissions to the personal data stored in the other apps. We don’t read Terms & Conditions or Privacy Policies. We just accept them. In doing so, we agree to trade all our personal information for unpaid access to e-mail and social networks. We implicitly trust app developers and service providers. We naively assume ethical and moral behavior because so many other people are using the same apps and networks. We think the provider couldn’t get away with questionable actions because we expect someone else, or the system, would hold them to account. Behind the scenes, corporations and governments are converging technologies, building ever-morecapable networks, retaining and analyzing metadata and sharing information. We find ourselves looking down the barrel of a future without privacy as we have historically known it. By removing the layers of abstraction between our online presence and our daily lives, we make it easier for others to exploit and manipulate us, steal our identities and, possibly the scariest of all, intellectually isolate us. We live in a world where we expect information on demand and in context; based on where we are and what we are doing. To offer this functionality, the apps and services we expect this from depend on the collection, recording, storage, analysis and application of data and information about individuals and groups. All of the data that is tracked is paired with Personally Identifiable Information (PII), such as your name, date of birth, address, phone number, job, tax file number/social security number, your face and even details about your partner/spouse and children, to build a very comprehensive profile of exactly who you are, what you do, what you like and who you interact with. All of this data can be used effectively and with good intention to improve our lives. But, it can also be used to exploit you! Data has an extremely high value. Your profile, once collected (legitimately or otherwise), is often sold. There is an entire industry of data brokerages who collect, crunch, analyze and sell data about you without you being aware. Those buying the data will use it for a range of purposes, including (but not limited to) serving specific advertising to you, performing risk assessments (for example, credit or insurance risk assessment) and directly targeting you for marketing campaigns.
WhentheInternetwasfirstcreated,itwas “open” and “free.” Indeed, these are the very principles we seek to protect with Net Neutrality, but it costs money to provide “free” services and the services and networks that have become part of your daily routine cost a lot to run. Let’s use Facebook as an example: According to Statista, in the fourth quarter of 2017 Facebook had 2.2 billion active users monthly. The cost of the compute and storage required to run the social network for this many users is astronomical. (Compute is required to ensure the service is available and loads no matter how many people connect to it at the same time. Storage is very expensive and it is forever expanding with all the photos and videos that users upload). No one could afford to run Facebook without a business model to cover costs, pay employees and, ideally, profit. Advertising is the original business model of the Internet. Today, your personal data informs advertising. The logic is simple, the more tailored an advertisement is to your interests the less annoying the advert is to you and the more likely it is that you will click it. “Everyone wins.” Facebook is not free. You and your personal information (who you are, what you like, who you know, what you are doing, what you are buying, who you vote for, where you holiday, who you bank with, what brands you wear, what toys your kids play with etc. etc.) are the primary asset Facebook has to profit from. In fact, Facebook collect 98 data points on you to sell to advertisers. Facebook sells your data and the ability to target advertising specifically at you for serious coin; earning over $6 billion in advertising revenue in Q2, 2016. Statista predicts that, in general, social network advertising will account for $51.3 billion in 2018. Those are mind-boggling numbers and the implications are concerning. Targeted advertising is intrusive and a little bit creepy. You would call the police to report someone as a stalker if you discovered that they were following you everywhere you go; collecting, monitoring and recording your every movement and interpersonal interaction, and rifling through your trash to keep snippets of your correspondence. Yet, this is exactly what is happening online. But, when it comes to privacy, your concerns are not limited to this. The more information that is available about you online, the more you can be exploited or manipulated through social engineering, identity theft, stalking and/or harassment. Data brokers sell PII databases online, both legitimately and illegitimately. There have been numerous documented cases, where an attacker has taken over an individual’s e-mail address by using personally identifiable information sourced online to trick password reset tools. Your e-mail is your identity; it is the gateway to all networks and services that you use online. Once an attacker has access to your e-mail, they can take control of most of your life. The moment an attacker has locked you out of your e-mail, they can audit your mail directories at their leisure to identify which banks and financial institutions you use, which social networks you are active on and any other accounts that may be of interest and then, using your e-mail for password recovery, it is a simple task for them to click “forgot password” on each site to reset the passwords for those accounts and make a real impact on your credit line, your life savings and your reputation. If they need to, a hacker won’t shy away from social engineering to impersonate you to get around extra levels of security that financial institutions might impose. You now agree that you should care about privacy? Comments are welcome, please contact me at Schumacher@eitsc.com.
easier for them to provide Internet services to communities they serve. “This is very important because the NEA has already access to 95 percent of households, especially in rural areas,” Rio said, adding that the ECs supervised by the NEA can be Internet-service providers (ISPs) in their respective coverage areas. “We’ll give you the Internet access, and you can bring it to your
client. Then, they can now enjoy their electricity, and they have Internet access [too]. This is also an added income,” the DICT chief said. Masongsong said the NEA will support the government’s National Broadband Plan (NBP). “We will work hand-in-hand [with the government] and we will take care of the electric cooperatives,” he said. On June 8 the DICT signed a
tripartite agreement with NGCP and the Transco for the utilization of spare optical fiber to accelerate the implementation of the NBP. Under the agreement, the DICT is given the right to use and/or access certain spare fiber-optic cores (FOCs), vacant lots, tower spaces and related facilities of the NGCP, the current concessionaire of the Transco-owned grid.
A BusinessMirr
PHILIPPINE POR A4 Wednesday, July 11, 2018 | www.businessmirror.com.ph
PPA sets sights on infra build-up as it mar
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ARKING its 44th anniversary today, the Philippine Ports Authority (PPA) is making a big investment in terms of port infrastructure in its bid to achieve its vision by 2020. It is also in line with the current thrust of the Duterte administration to realize the golden age of infrastructure and be on a par with our international partners. Incidentally, the move is also parallel to one of the major programs of the International Maritime Organization (IMO) of building better ports for the future. PPA General Manager Jay Daniel R. Santiago said the focus of the infrastructure projects include full containerization of Philippine ports and the provision of larger backup areas; safe and convenient Passenger Terminal
Buildings (PTBs); upgrade and construction of cruise terminals in key areas nationwide. “The President’s and Sec. Arthur P. Tugade’s marching orders are to heavily invest on port infrastructure in order to provide port services of global standards by 2020,” Santiago said. “Since the start of the year, almost all of our resources have been directed to our port projects. We have already required all our contractors and suppliers to increase their productivity in order to finish the projects, particularly the locally-funded projects (LFPs),
on time if not ahead of time,” Santiago stressed. “This year, we have earmarked close to P6 billion to carry out our LFPs, which run to around 109 port projects, wherein, 46 are from Luzon, 23 in the Visayas and 40 projects in Mindanao,” Santiago said. For the Luzon port projects, a total of 9 have already been completed while 18 are ongoing and 19 projects are under procurement. In the Visayas, 6 have already been completed, 10 are ongoing while 5 projects are under procurement. Mindanao, meanwhile, registered the biggest number of completed projects with 21 while 49 projects are ongoing. The region also has 35 projects under procurement. Currently, PPA is also carrying out several infrastructure projects in key areas to support the booming cruise industry aimed at developing international hubs for cruise liners like Surigao, Ilocos Norte, Bohol, Boracay, Metro Manila and Palawan. These make up the nation’s major nautical cruise arteries. It has also lined up various port programs for the development of cruise terminals in the above areas.
PPA GENERAL MANAGER JAY DANIEL R. SANTIAGO
Financial Performance
AS a result of its aggressive infrastructure push, the PPA registered lower net income in the first five months of the year as its expenses soared, as expected, to finance the said projects. PPA’s total revenues for the first five months of 2018 went up by 13% to P6.84 billion from P6.04 billion a year earlier. Expenses, however, went up 44% to P3.01 billion from P2.08 billion in 2017 primarily due to the huge infra spending particularly on repair and maintenance and Land improvements that increased more than 139%, resulting in a net income of P3.83 billion or some 3.24% lower than the P3.96 billion posted in the same period in 2017. Nonetheless, despite the huge financial requirements, the PPA remains very liquid and financially stable with a net worth of P187.57 billion.
Operational Highlights
PHILIPPINE cargo throughput for the first 5 months of the year slightly increased by 0.44% due to the high activity in domestic consumption and positive business climate nationwide. Total throughput reached 98.89 million metric tons (mmt) for the period compared to the 2017 figure of 98.46 mmt wherein
domestic cargo volume went up almost 4% to 42.36 mmt. Foreign cargo traffic decreased by 1.85% to 56.524 mmt wherein imported products inched up by 4% to 37.99 mmt while export volume declined by 12.12% to 18.52 mmt. In terms of container traffic, volume soared by 8.6% to 3.02 million twenty-foot equivalent units (TEUs) as against the 2017 same period volume of 2.78 million TEUs. Domestic boxes registered an increase of 9.4% to 1.23 million TEUs compared to the 1.12 million TEUs handled last year while foreign boxes registered an increase of 8% to 1.79 million TEUs from 1.65 million TEUs in 2017. Passenger volume continued to expand as of end May as it increased by 9.3% to 36.76 million versus the 33.63 million handled in the same period last year due to the increase in reliance by the seatraveling public on Ro-Ro vessels, fastcrafts, and motorized bancas for inter-island travel particularly in the ports of Bohol, Masbate, Mindoro, Negros Oriental and Siquijor and Negros OccidentalBacolod-Banago area. The positive stream in passenger traffic is also due to the favorable response of the public to the government’s domestic eco-tourism programs encouraging interisland leisure travel through Ro-Ro vessels. The soaring international
cruise tourism industry has also positively contributed to the overall performance of the country’s passage industry as it soared by more than 184.76% from a mere 43,820 international cruise passengers last year to 124,779 passengers this year. The concentration of cruise ship passengers is at the ports of Manila, Panay/Guimaras, Batangas and Palawan. There is also no sign of port congestion in any of the major gateway ports of the Philippines particularly the Manila ports as productivity remains stable with a combined average productivity of 23 moves an hour. In terms of yard utilization, the average is at 60% while berth occupancy rate at the three ports is at 59%.
2017 Accomplishments nDividends PPA posted a record high last year in terms of dividends remitted to the national coffers after remitting more than P3 billion, its highest contribution to the National coffers since 1986. The state-owned agency’s dividend for 2017 also eclipsed by at least 30% all the dividends it remitted to the government at least in the last decade, including its erstwhile record of P2.158 billion remitted in 2015. PPA is mandated to remit 50% of its annual net income to the Na-
ATI joins Batangas City community clean-up
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SIAN Terminals Inc.’s (ATI) Batangas Port employees recently took time off from usual duties to join hands with the local community, particularly in cleaning and greening public spaces in Batangas City in commemoration of the city’s 49th founding anniversary. Momentarily trading port and office equipment for brooms and cleaning kits, ATI volunteers cleared flotsam along streets adjacent the Batangas Port in support of Batangas City’s “Sama-Samang Pagkilos para sa Luntiang Lungsod” community activity. As a responsible corporate citizen, ATI spearheads and joins community undertaking to promote safety, health and environmental protection under ATI CARES (Corporate Advocacies and Responses for the Environment and Society), its dynamic Corporate Sustainability Program.
ror Special Feature
RTS AUTHORITY 44th Anniversary
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rks its 44th Founding Anniversary tional Government after it was granted fiscal autonomy during the term of President Corazon C. Aquino. In the last couple of years, the PPA has been a regular member of the ‘Billionaires Club’ of Government Owned and Controlled Corporations contributing billions of pesos in dividends. With this all-time high dividend by PPA, it is expected to maintain its inclusion in the elite list of GOCCs. nCruise Tourism Philippine cruise ship arrivals posted unprecedented figures capped by the simultaneous docking of cruise ships at Manila’s South Harbor recently. Manila South Harbor, managed and operated by Asian Terminals, Inc., registered the biggest number of cruise ships docked at the ports with four, namely, SuperStar Virgo of Star Cruises, Costa Atlantica of Costa Cruises, Amsterdam of Holland America Lines, and Silver Shadow of Silversea Cruises. The continuous hike in cruise ship arrivals is a testament to the initiatives put into place by different government agencies like the PPA, the Department of Tourism, the Department of Transportation, among others. PPA has been injecting great effort to improve the cruise facilities of our ports particularly the areas like Puerto Princesa in Palawan, South Harbor and North Harbor in Manila, Bohol in the Visayas, and Currimao in Northern Luzon. The more than 1000% increase in the number of cruise tourism passengers suggests that we are slowly reaping the benefits of those initiatives. nNew PPA Logo The Philippine Ports Authority (PPA) also unveiled its new logo in its bid to transform the agency into a more transparent, reliable and model corporate organization. The new PPA logo got the nod of the Office of the President through the National Historical Commission of the Philippines in December of 2017. The new logo embodies the vision of the PPA, which is to provide port services of global standards encompassing the three major islands of the country as well as underpins the commitment of the PPA to maintain the highest standards with vessel operators, cargo owners, port stakeholders, safety, environmental protection, among others. The color is Pantone Opaque Couche; a sharp element of the logo is the North Star, which is a symbol not only of guidance and direction but also of stability and leadership. It denotes the Authority’s firm stand in the achievement of its Vision and Mission. This element also stands for the letter “P” in the PPA/Philippine Ports Authority while creating the image of a bollard; the Sun symbolizes economic improvement and progress of the country; the three waves stand for the waters of the 3 island groups in the country – Luzon, Visayas and Mindanao. It has always been the government’s thrust, through the PPA, to ensure interconnectivity between the Philippine islands through port development; the blue and red circle within the star symbolizes the globe which depicts PPA’s Vision “to have provided port services of global standards; the cargoes represent one of the basic functions of the PPA which is port operations.” nFOI Compliance The Philippine Ports Authority (PPA) is also fully-compliant with the requirements of the Freedom of Information (FOI) reinforcing its earlier commitment to be fully transparent to the public.The PPA has likewise received a recognition from the Presidential Communications Operations Office (PCOO), one of only three Government Owned and Controlled Corporations recognized by the PCOO along with the Authority of the Freeport Area of Bataan (AFAB) and the National Housing Authority (NHA). In order to be fully responsive to all requests, PPA has its FOI internal database monitoring system and has included in the preparation of its programs the following initiatives to provide a more efficient FOI requests’ management: the introduction of enhancements to its internal FOI monitoring system compliant with the required FOI registry format; provision of an FOI kiosk to cater to walkin requesting parties; and PPA-wide orientation seminar to fully inform the employees and document custodians on the Freedom of Information and the PPA FOI Agency Manual. nStrong international performance The Port of Manila leaped 4 notches higher finishing at 32nd spot in the list of the 2016 top 100 container ports worldwide and jumped one step higher to 22 in the list of Asian ports included in the top 100 container ports, according to the list released by the Lloyd’s List in 2017. Manila was able to post very positive performance in 2016 due to the Philippines’ booming national economy that increased 6.8% from 5.9% a year earlier. It also added that the higher volume handled at the Manila Port’s international terminals, composed of the Manila International Container Terminal (MICT) and the Manila South Harbor, was due to the Terminal Appointment Booking System put in place
sometime in 2015. The country bested other notable international ports in terms of container volume like the ports of Felixtowe (36), Seattle/Tacoma (41), Vancouver (52), Kobe (55), Incheon (58), Nagoya (59), Melbourne (62), London (66), among others. In Asia, Manila was able to outperform the ports of Jawaharlal Nehru in India, Tanjung Perak (Surabaya) in Indonesia, Kobe, Yokohama and Nagoya in Japan as well as Incheon in South Korea. In the 2016 edition, 53 Asian ports made the list while 47 Asian ports were included in the 2015 list.
Anniversary 2018
THIS year’s anniversary, meanwhile, will be celebrated in an austere manner and will instead infuse the fund to the port projects and to several corporate social responsibility programs. With the theme: “44 years of building better ports for a better future”, it will only be highlighted by a Thanksgiving mass on 11 July to be held at the PPA Corporate Office Building to be followed by a recognition of several PPA employees for their exemplary performance for the past year. Winners from the different sports events in the
first ever PPA National Sportsfest will also be feted. To give some entertainment, the offices under the Office of the General Manager, the Office of the Assistant General Manager for Operations, the Office of the Assistant General Manager for Finance and Administration and the Office of the General Manager for Engineering are tasked to come up with a number each to be presented during the celebration. “Celebrating the anniversary is not about bonuses and raffle items. It is about the service we give to the public, which will guarantee the continued relevant existence of the agency,” Santiago said.
A6 Wednesday, July 11, 2018 • Editor: Angel R. Calso
Opinion BusinessMirror
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editorial
Science and human progress
T
YPHOONS and earthquakes are destructive natural phenomena but they help ordinary Filipinos remember the importance of science and technology in their lives. It is during these unfortunate circumstances that the Department of Science and Technology (DOST), particularly its two attached agencies, are thrust into the consciousness of Filipinos. For Science Secretary Fortunato T. de la Peña, this is lamentable considering the importance of science and technology in the lives of Filipinos and its role in hastening economic progress. In April 1993 then-President Fidel V. Ramos signed Proclamation 169 declaring the third week of July as National Science and Technology Week. The goal of the NSTW, according to de la Peña, is to highlight the accomplishments of the DOST in terms of research projects that have been completed or technologies transferred and in terms of communities that the department has assisted. With the theme, “Science for the People: Innovation for Collective Prosperity,” this year’s NSTW will be held from July 17 to 21. The kick off of the NSTW is usually held in Manila but regional celebrations are also staged. This is in line with the government efforts to bring science to the grassroots and highlight the importance of encouraging innovations in the regions to hasten their development. To drive home this point, the DOST advanced the regional celebration of the NSTW in Mindanao, which was attended by President Duterte, on July 6. Cognizant of the need to popularize science, exhibits in this year’s NSTW will not just focus on the usual research and development (R&D) activities of the government. The DOST categorized the exhibits into research projects related to the home, school, workplace and marketplace. In the science and technology in the workplace exhibit, for instance, the DOST will feature some of the local applications of software that it has developed. The government will also display innovative products from small and medium enterprises that benefited from the DOST’s innovation centers. More than three decades after former President Corazon C. Aquino reorganized the National Science and Technology Authority, the Philippines has come a long way in terms of innovation. Surveys may not place the country as one of the frontrunners in science but the Philippines has made significant strides in biotechnology and genomics. For one, the Philippines leads the way in terms of propagating Bacillus thurigiensis (Bt) corn, a genetically modified crop. The commercialization of Bt corn and its propagation has helped the Philippines achieve sufficiency in corn, one of the country’s staple crops. The DOST’s R&D activities have also boosted the electronics and semiconductor industry, which account for a huge part of the country’s export revenues. From merely assembling parts and components, the R&D efforts of the DOST have been able to help some Filipino electronic firms do their own product design. The attached agency of the DOST—the Philippine Council for Agriculture, Aquatic and Natural Resources Research and Development—continues to find ways to assist food manufacturers and producers in expanding their product line. The DOST was able to do all these things despite its meager budget and the apparent disinterest of the national government in allocating more funds to R&D. In its report, titled “Compendium of Science and Technology,” the DOST said the R&D expenditures of both the private and the public sectors is equivalent to only 0.14 percent of GDP. The National Economic and Development Authority earlier said investments in science and technology, including R&D, must expand to around 2 percent of GDP annually if the government wants the Philippines to achieve First-World status. Former Socioeconomic Planning Secretary Arsenio M. Balisacan said 2 percent of GDP would translate to around P240 billion annually. This year’s NSTW theme was inspired by the pronouncement of President Duterte during the Boao Forum for Asia Annual Conference held in China in April. Duterte spoke during the forum and underscored the importance of innovation for collective prosperity in the region. It would serve the President well if he starts in his own backyard and raise the budget for R&D expenditures. He can start with the budget of the DOST, which got only P21.2 billion this year. This would not only help improve the country’s ranking in terms of technological readiness but also increase the capacity of the DOST to roll out innovations that would enable industries and economic sectors to boost GDP.
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exico expressed thanks but added that it was a pleasure to work with the experts of the various delegations and watch the incomparably erudite first draft morph into comprehensible yet elegant text at the hands of those experts with negligible loss in substance and much gain in clarity. Others had quibbles still. Asked to comment, I said: “We have the most implicit trust in Mexico and Switzerland who have taken this as far as it can go. If this fails adoption in Marrakech we won’t be back where we started but farther back in a far worse place. It sends the signal that there cannot be an international consensus on morality and that every country can treat migrants as they please.”
This was followed by a working lunch hosted by Morocco. The food was fabulous. What seemed like the Spanish cocido was served but infinitely enhanced in every quality of presentation and taste. My turn to speak, I said: “My wife called me from Belgium and said, ‘I don’t care if you have nothing to say; attend; the food and
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he filing of certificate of candidacy for the 2019 midterm elections is in October and some traditional politicians who depend on illegal gambling activities—such as jueteng—to fund their election campaign are out to vilify the Small Town Lottery of the Philippine Charity Sweepstakes Office (PCSO). They have intensified their vilification campaign as the lottery game is earning monthly revenues close to P2 billion, with 83 authorized agent corporations (AACs) actively playing STL nationwide. According to my source, these politicians include two retired generals who allegedly tried but failed to convince President Duterte that STL is a front of jueteng and that STL players are the same as jueteng lords. Illegal gambling such as jueteng in Luzon, swertres and masiao in the Visayas and Mindanao, and other forms of illegal number games such as pares, jai-alai, saklahan, color games, and peryahan are all nemesis of STL because the PCSO lottery game was created precisely to eradicate all these corrupt-laden lamanglupa vices. Anyway, the President said it loud
and clear that he would never allow jueteng, and of course all forms of illegal gambling, to thrive. Otherwise, he has to repeal his Executive Order (EO) 13. Last week I was informed that PCSO General Manager Alexander “Mandirigma” Balutan and representatives from the PCSO board led by Chairman Anselmo Simeon Pinili had a meeting with all AACs, who reaffirmed their commitment to cleanup their ranks and intensify revenue collection efforts to generate more funds for the Duterte administration’s medical services to the less fortunate Filipinos. I was told some of the STL agents
“We have the most implicit trust in Mexico and Switzerland who have taken this as far as it can go. If this fails adoption in Marrakech we won’t be back where we started but farther back in a far worse place. It sends the signal that there cannot be an international consensus on morality and that every country can treat migrants as they please.” hospitality are fabulous in the Morocco mission.’” That out of the way and addressing misgivings of shortcomings in the text arising from the current ultraright situation in Europe, the anger at migration, the scapegoating, and also, let’s be fair, the unbearable burden of a sudden deluge of migrants thanks to self-serving reckless and heartless moves in the Middle East, Asia and the Americas, I said: “Doing this Global Compact on Migration now, at this time, in far from ideal conditions—indeed in a climate hostile to migration with
were dismayed by the calumny of some vested-interest individuals and groups, but what is important is they believe in the efficient and transparent leadership of Mandirigma as their chief operating officer or general manager. However, it’s true that the majority of the AACs are former illegal gambling financiers. How Mandirigma succeeded to convert them to change their ways, to go legal, and migrate to the STL is a solid testament to his management skills. His charisma to convince people to change is really admirable. Imagine, for example, there were only 18 AACs before he was appointed general manager of the PCSO. Now, there are 83 of them. This means Mandirigma has convinced at least 65 illegal gambling financiers to go legal. AACs are extension offices of PCSO’s branches. The daily allocation for the Individual Medical Assistance Program, the agency’s flagship project, of a PCSO branch in a particular province and/or city depends on the revenues collected by an AAC or STL player. For example, the Batangas Enhanced Technology Systems Inc. has been remitting a presumptive monthly retail receipt of P124 million. BETS contributes about P800,000 for the Imap of the Batangas PCSO branch based in Lipa City. This Imap allocation
anti-immigrant ideologies in ascendancy—gives us the best possible outcome in a worse situation and, therefore a document adopted with the fewest illusions, the utmost sincerity and the least purpose of evasion—and, therefore, a document the most likely to endure and to work. Thank you to the two facilitators, Mexico and Switzerland.” This is landmark. And I am proud to say that it is widely acknowledged that our Philippine mission experts here, including those who have since been recalled, contributed tremendously to the work that will erase the distorted ideas of migration and reinstate its attribute as the ineradicable human impulse to meet challenges anywhere, to test resolve, and prove endurance by forswearing the comfort and safety of the familiar—not to mention the fatally dangerous circumstances in countries with evil and incompetent governments— for the new, to the mutual benefit of migrants and host peoples. Damn proud of our people.
is disbursed to patients on a daily basis. So, you can just imagine the number of patients assisted daily for their hospitalization, chemotherapy and dialysis treatments, implant and transplant operations, among others, all because of the revenues derived from STL. Does jueteng, swertres, masiao, jai-alai, pares, peryahan, and all forms of illegal gambling contribute to the medical needs of patients like what the AACs are doing? Never! Illegal gambling only fattens the pockets of gambling lords and their protectors in the government. Jueteng lords are tax evaders unlike STL agents who contribute to the national coffers. And before I forget, the Philippine National Police now under the leadership of Director General Oscar D. Albayalde has yet to renew its commitment to aggressively implement EO 13. The PNP remains silent, as if everything is under control. The PCSO and PNP signed a memorandum of agreement in 2016 that tasked the latter as the main law-enforcement agency to implement EO 13 and other related laws against all forms of illegal gambling. The MOA particularly underscores the need for the PNP to defend and protect STL from all forms of illegalgambling activities. E-mail: fetad@yahoo.com
Opinion BusinessMirror
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Playing fair to court investors
Clearing up the smoke on the South China Sea dispute Michael Makabenta Alunan
Arsenio M. Balisacan
Competition Matters
F
oreign direct investment (FDI) is key to sustaining the rapid growth of the Philippine economy and, more important, to the generation of higher-paying, better-quality jobs for Filipinos. As rapid growth of employment opportunities is fundamental to poverty reduction, making the country attractive to FDI, especially in manufacturing and tourism, is part and parcel of the country’s strategy to winning the war against poverty. The country has made impressive strides in attracting FDI during the current decade. While the Philippines was Southeast Asia’s laggard at the start of the decade, with only $1.07 billion in 2010, the country’s net FDI has grown to $10.05 billionby 2017, surpassing those of Malaysia ($9.51 billion) and Thailand ($9.10 billion). The country’s FDI, though, is still far lower than those of Vietnam ($14.10 billion), Indonesia ($22.08 billion) and Singapore ($63.63 billion). Much remains to be done to sustain the inflow of FDI, especially as the government embarks on a massive infrastructure buildup. The challenge is to promote the Philippines as an attractive investment destination where foreign capital can expect to receive reasonable returns. To be sure, a country’s appeal to investors hinges on a host of factors, most notably the quality of its infrastructure, the skills and competitiveness of its labor force, the effectiveness of its enforcement agencies (or the transparency and consistency of rules, regulations, and policies), and local peace and order. In short, for long-term investors, what counts is the ease of doing business in the country and the prospect for durable, competitive returns to capital. Anticompetitive conducts, agreements or practices by monopolies, cartels or dominant market players exercising market power contribute to high cost of doing business, stifle economic growth, and reduce consumer and overall welfare. In some cases, a captive regulatory agency perpetuates the burden faced by investors and consumers alike. As the enforcer of the Philippine Competition Act (PCA), the Philippine Competition Commission (PCC) polices market conduct by prohibiting anticompetitive practices, such as price fixing, bid rigging, dividing markets between suppliers, or foreclosing of inputs or customers by a dominant market player. By ensuring that anti-competitive conduct is caught or deterred, the PCC is, in effect, upholding the principle of fairness (through the rule of law) for anyone who chooses to set up shop in the country, foreign investors included. The PCC assures current and prospective investors that the Philippines offers a level playing field, one where companies are expected to increase their market shares or attain dominance through merit and innovation alone—not through underhanded deals or unscrupulous business practices. Because of vigorous competition enforcement and advocacy, investors can also expect lower costs, as the improvement of market efficiency entails having both consumers and businesses pay competitive prices for the goods and services they need. Investors do consider the rule of law in their decision to locate in a particular country. Perceptions matter, because the expected returns are weighted by risks and uncertainties. If a foreign entrant intends to pour in millions or billions of dollars to the local economy, it would want to know whether the company will receive the same treatment under the law as market incumbents. Similarly, start-ups in the fast-growing and data-driven
Much remains to be done to sustain the inflow of FDI, especially as the government embarks on a massive infrastructure buildup. The challenge is to promote the Philippines as an attractive investment destination where foreign capital can expect to receive reasonable returns. “disruptive sectors” would only consider locating themselves in the Philippines if they knew that incumbents are prevented from abusing their dominance by engaging in input or customer foreclosure. The point is especially important, considering that many large companies who are potential investors may already be familiar with, and comply to, competition or antitrust regulation in their home countries. Indeed, the Philippines is a latecomer to the group of countries with a working competition regime—some countries like the US have had an antitrust law for more than a century already. Yet, even after investments have been locked in and foreign competitors have entered, the PCC still has its work cut out for it. It must ensure that the entrants also abide by the rules of free and fair market competition. Reinforcing the rule of law will allow all incumbent market players to benefit from the entry of a foreign competitor, especially if it brings in new technology that results in more efficient production processes, as well as cheaper and higher-quality products. These, in turn, can make the entire market more attractive to future investors. A virtuous cycle is born. Of course, it is one thing to talk about the role of competition policy in helping to drive economic growth by improving the country’s attractiveness to potential investors. It is another thing altogether to achieve this through vigorous competition enforcement and advocacy. In this regard, we are making significant progress. The PCC takes pride in ensuring that its rules are transparent and accessible to all stakeholders. In holding various discussions with our stakeholders in the private sector, we are constantly reinforcing our message that all businesses must observe strict compliance with the PCA. This is complemented by conducting trainings with our partners in government and providing critical inputs to legislation, both of which ensure that competition policy becomes part and parcel of our country’s development framework. If we want to make the Philippines more attractive to investors, we need to make sure that the market is fair. If we build a level playing field—they will come. No sensible player would want to join a high-stakes game that is rigged against them. Dr. Arsenio M. Balisacan is the chairman of the Philippine Competition Commission and a professor of Economics (on secondment) at the University of the Philippines (UP). Prior to his appointment to the commission, he served as socioeconomic planning secretary and, concurrently, director general of the National Economic and Development Authority. He also served as dean of the School of Economics in UP Diliman.
Wednesday, July 11, 2018 A7
on the contrary
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et’s attempt to clear up the smoke on the China-Philippine conflict over territorial waters and atolls in the West Philippine Sea (South China Sea) by adding more conflicting arguments because it is, ironically, only when we juxtapose opposing sides of an issue that we see the truth.
n No other side but our side. The conflict over territorial waters has been blown out of proportion, dragging the public to opposite extremes of the political divide by taking sides—America’s side or China’s side. At the Pandesal Forum organized by Wilson Lee Flores and George Siy of the Institute of Development Studies Center (IDSC), former Ambassador Alberto Encomienda was quoted in a paper as saying, “We must take a side, and that is our side. Neither pro-America nor pro-China, but proFilipino.” IDSC also quoted former Transportation Undersecretary Art Valdez as saying, “The sea is not meant to divide but to unite” China and the Philippines, which have been using the same waters in trade for many centuries, dating back to 1417 when the Sultan of Sulu visited China. n China’s Kra-tical dilemma? There are trillions of reasons that
pushed China to encroach into our waters. About $7 trillion of global trade pass through these waters, the bulk of which belongs to China. For 30 years now, China has been pushing for the building of the Kra Canal in southern Thailand that will cut down travel distance by 1,200 kilometers from South China Sea to the Indian Ocean. In fact, the Kra Canal project was envisioned a century ago along with the Suez Canal and Panama Canal, but was blocked by certain interest groups, forcing China to secure its trade routes by encroaching in our waters. If the Kra Canal finally gets completed under China’s “Belt and Road” Initiative and as part of its “Maritime New Silk Road,” perhaps China will change its hegemonic expansionist tendencies. But now that the sleeping giant has awakened, an opposing tendency is China’s temptation to encroach on other territories as a natural consequence of its
growing imperial economic might. As we cannot fight and win militarily, diplomacy is our only recourse. n America’s conflicting agenda. Meanwhile, Janus-faced America has conflicting agenda. On one hand are the interests of the “militaryindustrial complex.” This means the “war industry” indirectly supports governments warring on its people and building their defense capabilities, while funding indirectly and remotely the opposite side—like rebellions, insurgencies, Islamic fundamentalism, terrorism, etc. On the other hand is hot-tempered and impulsive President Donald J. Trump, notorious for his Islamophobic, misogynist and racist remarks, causing discomfort to the military-industrial establishment and its tentacles of influence in deep state, factions in Pentagon, Congress, academe and mainstream media as Trump wants to stop regime changes, calls the Cold War Nato obsolete, wants defense spending cuts and, above all, wants to do business with China and Russia. He also hit the “color revolutions” backed by George Soros and similar groups, like the 2004 Orange revolution in Ukraine; 2003 Rose Revolution in Georgia; 2005 Tulip revolution in Kyrgyzstan, 2005 Cedar revolution in Lebanon, Yellow Umbrella Revolution in Hong Kong; Arab Spring in the Middle East, and the failed White Revolution in Russia. Much “ado about nothing?” Meanwhile, the Permanent Court of
Arbitration decision two years ago in our favor against China appears to be “a fluke” and a “monumental swindle” pulled by President Benigno S. Aquino III and Foreign Affairs Secretary Albert del Rosario by “verbally engineering the word arbitration to involve only one party,” which negates the essence of an arbitration of two parties mediated by a third party, said Ado Paglinawan. Moreover, the ruling is not enforceable and is not backed by the United Nations, thus making it useless and inutile, he added. Butch Valdez of the Citizens National Movement asserts, “why have they not raised issues about Itu Aba [occupied by Taiwan], an island within the Philippine 200 Exclusive Economic Zone, and not merely reefs that emerge and submerge depending on tides?” The same goes for Sabah. America should have helped the Philippines in the Sultanate of Sulu’s ownership claims. Don’t worry, but be wary? Beyond national interests, “there is no other interest more primordial than world peace,” which is the interest of humanity, Valdez said. We must not worry much if we allow people and our leaders to see the dynamics of these contradictions and see the truth through the metaphors and ironies of reality, and be tolerant and patient to engage in peaceful dialogs and not resort to the arrogance of power or the power of the gun. E-mail: mikealunan@yahoo.com
BJMP Mutual Benefit Association Inc.–an MBA profile Dennis B. Funa
INSURANCE FORUM
A
mong the mutual benefit associations (MBAs) regulated by the Insurance Commission is the Bureau of Jail Management and Penology Mutual Benefit Association Inc. (BJMP MBAI), which was founded on September 28, 2001. It was first issued a license by the Insurance Commission on December 16, 2002. It is an MBA for BJMP personnel. The BJMP is a line bureau under the Department of the Interior and Local Government. Primarily, the clients of BJMP are detainees accused before a court who are temporarily confined in such jails while undergoing investigation, waiting final judgement and those who are serving sentence promulgated by the court three years and below. As provided for under Republic Act
6975, the Jail Bureau is mandated to take operational and administrative control over all city, district and municipal jails. The BJMP MBAI assists its members by offering insurance, health care, educational, medical and financial aid (loans), pension plans, and investment services. Indeed, the primordial motivation for MBAs is mutual assistance in times of need.
Specifically, financial protection. As of December 2017, its membership has grown to 14,361 with total assets of P1.446 billion. For the year 2017, it has released low-interest loans to its members totaling P753.82 million. The interest charge on salary loans has been reduced to 10 percent per annum, waiving the 2-percent service charge usually collected. For emergency loans, interest rate has been reduced to 8 percent. For calamity loans, it has been reduced to 5 percent per annum. The amount of educational loan that can be availed has been increased from P50,000 to P100,000 with the payment period extended from one year to two years. Indeed, the bulk of its profitability is generated from extending loans. P748 million of its assets is in the form of loans receivables. In terms of insurance benefits, for the year 2017, the beneficiaries of 59 deceased members were paid P19.27 million. For members’ equities, P4.543 million was paid. Much of the members’ contri-
bution to the MBA is for the member’s benefit. With BJMP MBAI, 50 percent of the contribution goes to his equity and 42.5 percent goes to the insurance where the death and endowment benefits will be taken. The remaining 7.5 percent goes for the loading or operational expenses. More than extending benefits to its members, BJMP MBAI also engages in outreach programs as part of its corporate social responsibility. It is engaged in giving gifts to the less-fortunate children and relief assistance to orphanages and pregnant mothers. Other than its main office at BJMP Building along Mindanao Avenue in Quezon City, it has 14 branch offices throughout the country. BJMP MBAI has gone a long way in extending much-needed services to its members and their families. Dennis B. Funa is the current insurance commissioner. Funa was appointed by President Duterte as the new insurance commissioner in December 2016. E-mail: dennisfuna@yahoo.com
The good and the bad of retirement saving By Barry Ritholtz Bloomberg Opinion
E
ach year, Vanguard Group releases its annual review of the state of retirement savings in America, focusing on the 401(k)s, 403(b)s and other definedcontribution plans that allow people to set money aside for retirement, and in many cases defer taxes in the process. The report, “How America Saves 2018,” is full of data, charts and interesting analytics. What I want to do is highlight a few specifics in the report, but I suggest you download it and spend some time working through all of its geeky goodness. First, the positive news: Vanguard points out five changes that are plusses for savers and investors: Participation rates: More people are enrolled in defined-contribution plans; Portfolio composition: This has improved, as plans have moved away from random fund selection and toward either target-date funds or balanced funds; Automatic enrollment: Up 300 percent since 2003;
Automatic annual deferralrate increases: Two-thirds of participants do this; Account balances: Most have increased substantially. It also is worth noting the substantial improvement in investor behavior during the past five years. Plan participants trade much less, own less stock in the companies where they work and borrow less against their retirement assets. How much of this is a function of the robust economy during that period, or genuine improvement in how investors conduct themselves is up for debate. But it is indisputably a good thing for these savers. All of these positives, plus a very cooperative stock market since the end of the financial crisis in 2009, have led to a big uptick in total assets in retirement-plan accounts. The average account balance, which is skewed by a relatively small number of very large accounts, was $103,866 in 2017, up from $56,030 in 2008. I calculate the total gains during that period at 85.4 percent, or 5.8 percent annually. Compare that with inflation as measured by the consumer price index, which was about 23 percent during that period, and the real increase was about 62 percent.
The picture for the median— meaning the halfway point—is less rosy. In 2017 it was $26,331, up from $17,399 in 2008. That represents total gains of 51.3 percent, (about 28 percent adjusted for inflation), or 3.8 percent annually. Keep in mind that a lot of the smaller accounts tend to belong to younger employees and investors who are in the early stages of saving for retirement. These savers have not had as much time to contribute, and their accounts have yet to reap the reward of years of compounding. Fortunately, the investment time horizons of these savers are measured in decades. Now for the bad news: Total savings: It’s still not enough, and it suggests a large swath of the public either doesn’t save enough or can’t save. You can blame some of it on lack of wage gains during the past few decades. The huge increase in the cost of health care, housing and education certainly doesn’t help. Nor does our profligate, consumption-driven lifestyle. But no matter the reason, the conclusion is inescapable: Many Americans are not financially prepared to retire. Perhaps that’s why so many of them are working well into their 80s. More nudges are needed: Savings for many people are not
keeping pace with their pay increases. There is a tendency to set and forget 401(k) contributions, and not revisit the issue ever again. The solution is to have automatic increases for retirement-savings contributions as pay increases. Target-date funds: These funds automatically adjust the balance of stocks and bonds over time, shifting more heavily toward bonds as the participant gets closer to retirement. The problem is that given increasing modern lifespans, these funds may end up being too conservative in the final decade or two of work for many participants. To have and to have not: To paraphrase Hemingway, the rich are different: They not only have more money, they also have more retirement savings. The advantages of being wealthy are manifest versus middleand lower-income savers. Although most of the investment industry targets the wealthy, the underfunded retirement plans of the rest of America continue to be a serious issue. That’s my quick read of the report. Reading it not only is a good investment in your own understanding of your retirement-savings plan, but also those of the rest of the nation.
2nd Front Page BusinessMirror
A8 Wednesday, July 11, 2018
BBL bicam: 5% of national revenue for Bangsamoro
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EMBERS of the bicameral conference committee tackling the proposed Bangsamoro Basic Law (BBL) have agreed to allocate automatically 5 percent of the national revenue as block grant and dropped the antipolitical dynasty provision in the BBL.
Senate Majority Leader Juan Miguel F. Zubiri, who is the cochairman of the bicameral committee, said members of the panel from both chambers of Congress have agreed on the automatic appropriation of the block grant for the Bangsamoro region, which is similar to the Internal Revenue Allotment for local government units. “We now have automatic appropriation of the block grant. We will keep the block grant similar to the IRA, wherein it is automatically appropriated,” Zubiri said. According to the senator, the Bangsamoro parliament is the one
FDI. . .
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It is also not easily pulled out of the market unlike its shorter-term counterpart, the foreign portfolio investments. In April total FDI hit $1.027 billion in net inflows, slightly lower than the $1.062 billion seen in the same month in 2017. Still, the BSP remain optimis-
TYPHOON “GARDO” 585 KM NORTHEAST OF BASCO, BATANES SOUTHWEST MONSOON AFFECTING LUZON AND VISAYAS as of 4:00 pm - July 10, 2018
that will craft the budget of the new autonomous region. It will not be required to report its plans and programs to the national government. “Previously, there was a reportorial requirement. You have to report the plans and programs first to this intergovernmental body, financial or fiscal body, before the release can actually be made,” Zubiri said. However, he said the central government will still implement necessary measures for transparency and accountability. “We will release the fund with the colatilla that the parliament tic of FDI inflows for the rest of the year, especially given that FDI exceeded the $1-billion mark for the month. Despite the slight decline from last year’s volume, the April FDI net inflow is the highest in monthly volume in the first four months of 2018. “FDI inflows were boosted by continued favorable investor sentiment on the back of the country’s solid macroeconomic fundamentals
must pass the budget and the f u nd s w i l l b e ap pro pr i at e d through the approved budget of the parliament, similar to the approved budget of local government units,” Zubiri said. “That’s where the Commission on Audit comes in, the submission of reports and accounting procedures required by the DBM [Department of Budget and Management] and other government agencies like the Department of Finance,” he added. Members of the Senate and House of Representatives on Monday started their weeklong bicameral conference meetings to reconcile the differences between the two chambers’ versions of the proposed BBL.
Political dynasty
Meanwhile, House Majority Leader Rodolfo C. Fariñas Sr. confirmed that the bicameral committee has removed the anti-political dynasty provision in the BBL. The Senate version of the BBL said “no party representative should be related within the second and growth prospects,” the BSP said in a statement.
4-month aggregate
The Apr il inf low br ings the 4-month aggregate FDI inflow to $3.2 billion, 24.3 percent higher than the $2.6 billion seen in the same January-to-April period in 2017. By component, the bulk of the net inflows in April was in the form of debt instruments—or
civil degree of consanguinity or affinity to a district representative or another party representative in the same parliament.” “We did not even object but just called the Senate’s attention to the constitutional infirmity of the prohibition as crafted. The Senate panel decided to remove it from their bill; hence, there was no conflicting provision that we had to reconcile on the matter,” Fariñas said. According to Fariñas, the provision violates the equal protection clause of the Constitution as it applies only to a Party Representative (PR) but not to a District Representative (DR), and applies only to elective officials of the proposed region to the exclusion of all other elective officials of the country. “[The Senate version] would [also] disqualify the second civil degree relatives by affinity [Muslims are allowed to have four spouses] of a PR but not the same people with whom such PR is cohabiting or living in without the benefit of marriage,” Fariñas added. Continued on A2
lending by foreign companies abroad to their local affiliates to fund existing operations and business expansion. This amounted to $705 million. Meanwhile, net investments in equity capital amounted to $247 million in April. These placements emanated largely from Singapore, Hong Kong, the Netherlands; the United States and Japan, and were mainly invested in manufacturing; arts, entertainment and recreation; real estate; financial and insurance; and wholesale and retail trade activities. Reinvestment of earnings by foreign investors, on the other hand, amounted to $75 million during the period. For 2018 the BSP projected $8.2 billion in FDI net inflows. This means that the country must at least be able to attract about $600 million in FDI per month from May to December.
Trade deficit. . .
“In any case, there’s typically a lag before currency depreciation favors exports.” In May the PSA said exports posted a contraction of 3.8 percent to $5.76 billion in May 2018, from $5.99 billion in May 2017. The country’s exports have not posted any growth this year with the highest decline of 6.8 percent posted in March 2018. Imports, meanwhile, increased 11.4 percent to $9.46 billion in May 2018 from $8.49 billion in the same month of previous year. The President’s economic team said the depreciation of the peso will have a positive impact on the country’s exports. Based on data from the Central Bank, the peso has averaged 50 to 53 to the dollar since July 2017. Pernia said, however, it would be hard to predict how long the lag time would be with regard to the benefits of a weak peso on the country’s exports. “[It] depends on many factors,” Pernia said. “[These factors are] mostly exogenous—protectionist policies, trade war.”
Forest product exports The “silver lining” in the latest PSA data, Pernia said, is that the month-onmonth growth of the country’s exports is improving. The Neda said the contraction in merchandise exports slowed to 3.8
www.businessmirror.com.ph
TAX PERKS, INFRA SPREE PUSH E-VEHICLE DEMAND By Lenie Lectura @llectura
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HE Electric Vehicle Association of the Philippines (EVAP) sees a continuing momentum for EV sales driven by the many ongoing public and private initiatives. During the 2-day EV summit, EVAP President and spokesman Rommel T. Juan expressed optimism that the recently enacted Tax Reform for Acceleration and Inclusion (TRAIN) law exempting EVs from the excise tax would pave the way for more affordable EV models, and increased investments in supporting infrastructure, which will help sustain the momentum for electric mobility. The Department of Transportation’s Public Utility Vehicle Modernization Program (PUVMP), he said, is in full swing. The program is targeting to upgrade some 200,000 public utility jeepneys (PUJs) during the next six years, about 10% of which will be electric.
Budget. . .
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This was followed by allotment to local government units at 17.1 percent, maintenance expenditures at 15 percent, debt burden at 11 percent, support to government-owned and -controlled corporations at 5 percent and tax expenditures at 0.4 percent. Diokno said in the same message that the Department of Education continues to be the top recipient of the national budget followed by the Department of Public Works and Highways. The next top recipients include the Department of the Interior and Local Government, including the Philippine National Police, Department of National Defense, Department of Social Welfare and Development, Department of Health, Department of Transportation, Department of Agriculture, Department of Justice and the Autonomous Region in Muslim Mindanao. In an annual cash-based budget, contracts that should be implemented for the fiscal year should be fully delivered by the end of the year. But in a multiyear obligation-based budgeting, which was practiced prior to the shift, it is enough for the government to enter into a contract or “obligate funds” without requiring the actual delivery
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percent in May 2018, from 4.9 percent in April, partly supported by sustained growth in exports of forest products. Pernia said in a Neda statement that addressing cumbersome regulations, enhancing trade facilitation,and ensuring better access to trade finance will help improve the country’s business climate for exports. “The recent passage of the Ease of Doing Business Act of 2018 should promote trade as it aims to reduce bureaucracy and corruption, factors which weigh down on economic activity. Its timely implementation is needed to improve trade facilitation,” he said.
Free-trade agreements He added that opportunities from free-trade agreements (FTAs) should also be maximized by facilitating programs that will increase awareness of industry players on the benefits of these agreements. The recent ratification of the Philippines-European Free Trade Association would boost exports to member-states, such as Iceland, Liechtenstein, Norway and Sweden. “Successful negotiations for the PH-EU FTA are expected to secure more permanent preferential duties for Philippine export products compared with the EU Generalized System of Preferences [EU GSP+], thus fur ther expanding market
“In support of this program, the Department of Trade and Industry (DTI) and the Board of Investments (BOI) are putting in place an Eco-PUV Program to provide the vehicle solution to the PUVMP by giving incentives to both EV platform suppliers and body builders,” Juan said. Also, the LandBank and Development Bank of the Philippines (DBP) now have loans available for the modern PUV. Meanwhile, the Technical Education and Skills Development Authority (Tesda) is working on a technical regulation that would allow it to offer EV maintenance, servicing and repairs in all Tesda learning centers nationwide which will help facilitate EV sales outside of Metro Manila. “In the private sector front, Nissan Philippines, Inc., Mitsubishi Motors Philippines Corp., Hyundai, BYD and Minghong Vehicles are bringing in their electric cars and SUVs,” he added.
of goods and services within the year. To maintain the aggressive spending strategy to sustain the momentum of the “Build, Build, Build” (BBB) program, the DBCC has also raised its 2019 deficit ceiling to 3.2 percent of GDP, from 3 percent. This is equivalent to P624.3 billion in 2019 and is projected to reach P774.4 billion in 2022. The debt-to-GDP ratio is also seen to decline from 42.8 percent in 2018 to 38.8 percent in 2022. The government is also confident that the country’s GDP would expand by 7 percent to 8 percent in the medium term. The DBCC is one of seven interagency committees that make recommendations to the National Economic and Development Authority (Neda) Board that is chaired by the President. The committee advises the President on the level of annual government expenditures and the ceiling of government spending for economic and social development, national defense and government debt service. It also helps the Neda Board on the proper allocation of expenditures for each development activity between current operating expenditures and capital outlays, and sets the amounts to be allocated for capital outlays broken down into the various capital or infrastructure projects.
base,” Pernia said. Also, vehicle auto parts, coconut, bananas, travel goods and handbags, tuna, carrageenan and activated carbon should be given better exposure as these could potentially become major drivers of exports growth. The PSA said total merchandise trade grew by 5.1 percent to reach $15.2 billion in May 2018, backed by imports that picked up 11.4 percent that month—after a strong performance of 23.1-percent growth in April 2018. This was driven by increased inbound purchases of mineral fuels, lubricants and related materials, capital goods, consumer goods, and raw materials and intermediate goods.
Top export markets The country’s top 10 total exports in May 2018 amounted to $4.68 billion or 81.2-percent share to the total exports, while the top 10 import sources for imports in May 2018 amounted to $7.37 billion, or 77.8 percent of the total imports. The Philippines’s top 3 export markets in May were the US with $840.15 million or a share of 14.6 percent of total exports; Hong Kong, $796.47 million or 13.8 percent; and China, $761.40 million or 13.2 percent. The top import sources of the country were China with $1.92 billion or 20.3-percent share of the import payments; Korea, 10.3 percent or an import value of $978.61 million; and Japan, $901.27 million or a share of 9.5 percent.