BusinessMirror June 29, 2015 by BusinessMirror

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THREETIME ROTARY CLUB OF MANILA JOURNALISM AWARDEE 2006, 2010, 2012

U.N. MEDIA AWARD 2008

A broader look at today’s business Saturday 18,June 201429, Vol.2015 10 No. 40 Monday, Vol. 10 No. 263

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P.  |     | 7 DAYS A WEEK

FISCAL SUPPORT UNDER AUTOINCENTIVE PROGRAM NOT ENOUGH TO BRIDGE PHL’S PRODUCTIONCOST GAP VS ASEAN NEIGHBORS

CARS incentive only $1,000/unit INSIDE

HE government is only ready to give up to $1,000 in fiscal support to each vehicle produced locally under the Comprehensive Automotive Resurgence Strategy (CARS) Program, which is not enough to bridge the cost difference that assemblers in other Asean countries are enjoying versus their Philippine counterparts.

PAT SANTOS A radical change

EAR Lord, we know that the new creation and the new people of God started with the handful of some 120 disciples of Yours. It effected in them a radical change, both as individuals and as a group. The bystanders were struck by the fact that those unschooled Galileans could express themselves in foreign languages. But what mattered most was the inner transformation that had taken place in those simple folks: from fearful, they had turned daring and brave. We, too, can be brave as defenders of our faith. Amen. WORD AND LIFE, FR. SAL PUTZU, SDB B AND LOUIE M. LACSON Word&Life Publications • teacherlouie1965@yahoo.com

Editor: Gerard S. Ramos • lifestylebusinessmirror@gmail.com

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A Pat on your back

AT SANTOS transports us to Sicily, the Mediterranean’s most alluring destination. Once settled since ancient times by the Phoenicians, Carthaginians, Romans and Greeks, the stunning island is the inspiration for the designer’s irresistible Philippine Fashion Week Holiday 2015 collection, called “Modern Sicily”. It’s no coincidence that Santos’s creations are splashed with Marsala, the Pantone color of the year inspired by the Marsala wine famously produced by its namesake town in the Trapani District in the westernmost part of Sicily. “[Marsala bridges] the spicy flair of Sicily and the soft sensuality of the Filipino woman. The naturally robust and earthy shade of wine red, combined with black, red, white and carnation pink, is perfect for the Filipino woman’s complexion,” Santos says in the press kit given at the show at SM Aura, which was directed by Cata Figueroa Jr. and beautified by Jingky Ilusorio. But it is not the Sicily as conjured so ornately by Dolce and Gabbana, as dangerously by The Godfather trilogy, nor as depressingly as in Stromboli, the neorealistic film directed by Roberto Rossellini and starring Ingrid Bergman that ignited their scandalous affair. “I love the Sicilian way of dressing. It enhances the opulent feel of the clothes in my collection. I dream of dressing up the likes of Martina Stella of Ocean’s Twelve [which was partly shot in Sicily] and [Polish actress] Kasia Smutniak of From Paris With Love. Their classic beauty and elegance make me feel inspired,” Santos says. “My collection projects a different vibe, because I incorporated sporty looks and jackets. The colors and patterns, on the other hand, were inspired by Sicilian aesthetics.” Santos might, as well, be enthralled with such Italian beauties as Elisa Sednaoui (model, actress, philanthropist and film director of Italian, Egyptian and French descent); Eva Riccobono (model, actress and television presenter); model/actresses Valentina Lodovini and Bianca Balti; and Sicilian-born Maria Grazia Cucinotta (The World Is Not Enough, Il Postino: The Postman and The Rite), as he was crafting his collection made of mesh net, net lace, lace panels, sequined lamé, lace cenefa, silk two-way stretch jersey and satin georgette crepe. “I am now into a sporty look that can be converted to club wear. My clothes need not choose any occasion, and they are wearable day and night. And every woman will feel her confidence getting stronger just by wearing my clothes,” Santos says. Santos is one of a talented few who can straddle ready-to-wear (via his Blanc et Noir line at The SM Stores) and couture (with eponymous ateliers in Las Piñas and Quezon City) quite effortlessly. “RTW and couture, for me, entail a similar way of creating a collection. There are many things to consider during the conceptualization process. Among others are the following: the target market, the theme and inspiration; what are the best-selling and the new designs; the colors that will complement the women of today; and what is my message to my audience; and how can I inspire them to adapt to the global way of dressing,” Santos says.

ANASTASIA FROLOVA

PHOTOS BY CELWYN ABASOLO AVON PARAISO

JUSTINE GABIONZA

SAMANTHA GOMEZ

MONIKA STA. MARIA

JASMINE MAIERHOFER

RIA BOLIVAR

MANUELA BASILIO

The voting season is on

S a brand originating from Japan, Bobson epitomizes the aesthetic and discipline of the Japanese in all of its denim and apparel offers. Since it was introduced in the country last year as the pure Japanese denim brand, it has given Filipinos quality, comfort and style, and this year it intends to rack it up with a partnership with one of Japan’s top fashion schools: the Marronnier College of Fashion and Design. The apparel brand’s partnership with the Osaka-based school has birthed the Bobson x Marronnier T-shirt Graphic Design Contest, which aims to surface new shirt designs for men and women crafted by some of Japan’s most talented, up-and-coming designers. With

designs revolving around the theme “Perfect Circle: The Rising Sun,” which makes use of the prominent red dot Bobson logo, the winners of the competition will get their works produced as part of the label’s offers at its stores in the Philippines. Voters can simply visit the Bobson Facebook page (facebook.com/BOBSONJapan) and look for the competition album to view the finalists. A like and a comment on why they chose the T-shirt design will count as one vote for that design. Voting period is from July 3 to 9. Every day during the voting period, Bobson will give away gift certificates worth P3,000 to one lucky voter.

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B C C

Cameron Conaway is a 2015 fellow of the International Reporting Project and the author of Malaria, Poems.

Why start-ups are more successful than ever at unbundling incumbents

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CALE isn’t what it used to be. It’s never been easier to start a company, and as a result, new entrants are unbundling incumbents’ businesses and chipping away at their advantage.

Upstarts like The Honest Company (consumer products), Warby Parker (eyeglasses) and Airbnb (lodgings) can quickly win market

share from leading businesses by breaking down markets into highly customized niches so that the incumbents can’t compete on

scale alone. The playing field is leveling out across a variety of industries: Tesla is a pioneering automaker; SolarCity is taking share from electric utilities; Uber is reorganizing the taxi industry; and companies like Blue Apron and Casper are chipping away at various retail segments. Companies in almost every industry are redefining customer experiences. Two core factors are driving this economy-wide unbundling. First, these companies are essentially product design teams focused on iterating fast to find the right product-market fit. They can offer better products

and services than the incumbents because their management teams are so product-centric. They usually focus product development on a subsegment of the millennial demographic because millennials are willing to try new brands and share their experiences openly with each other through rankings and reviews. Second, these companies rent all aspects of operational scale from partners, thus reducing capital expenditures or operational inertia. They are lean and designed for growth. Third-party services enable them to scale up with customer demand as quickly as necessary.

Since scale isn’t a moat any more, today’s innovative companies need to focus persistently on product and customer success. The monopolistic advantages of scale are shifting to platform companies like Amazon, Facebook, Apple Pay and YouTube, which are becoming essential to how the economy functions. The lessons for businesses are simple. For incumbents: You can’t count on scale like you used to. For entrepreneurs: Rent scale where you can, and focus on product design above all else.

When cross-functional teams are dysfunctional

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hearing aids and dental implants. Using a combination of 3-D scanning and printing, implants can be customized in a way that wasn’t feasible before. However, 99 percent of all manufactured parts are standard and don’t require customization. In these cases, 3-D printing has to compete with scaledriven manufacturing processes and efficient logistics operations. So when customization isn’t important, 3-D printing isn’t competitive. For example, printing just one part raises unit cost considerably, so economies of scale do matter. A second point is the labor cost. Counter to common perception, 3-D printing doesn’t happen “at the touch of a button.” It involves considerable pre- and post-processing, which incur labor costs. Three-D printing technology undoubtedly has great potential. For now, we should see it as a complement, a new tool in the box, and exploit its unique capabilities—both in making existing products better as well as making entirely new ones.

B T

N researching why crossfunctional teams succeeded, I also found why many of them failed.For example, a huge multinational informationaltechnology company had invested $100 million in the project, which involved three divisions. Most of the team, and even some executives, knew the project was a dead end two years before the company finally pulled the plug. As one middle manager told me, “No one was willing to go to management and say, ‘Let’s redeploy everyone, including myself, and do something else because this project isn’t working.’” In fact, in a detailed study of 95 teams in 25 corporations, I found that nearly 75 percent of cross-functional teams are dysfunctional. They fail on at least three of five criteria: meeting

a planned budget; staying on schedule; adhering to specifications; meeting customer expectations; and aligning with the company’s corporate goals. Cross-functional teams are hurt by unclear governance, a lack of accountability, goals that lack specificity and organizations’ failure to prioritize the success of such projects. Projects that had strong governance support had a success rate of 76 percent, according to our research; those with moderate governance support, Another key factor: Siloes tend to perpetuate themselves: For example, engineers don’t work well with designers, and so on. The solution is to establish a “Portfolio Governance Team” (PGT), where leaders come together to make decisions on the various projects in their portfolio. We’ve identified some golden

rules of governance for PGTs:

1. Every project should have an

end-to-end accountable leader. If the PGT includes vice presidents of engineering, design, marketing and product, a project team could include managers and directors from those functions. But one end-to-end accountable leader should oversee each function, and one end-to-end accountable leader should oversee it all.

2. Every project should have clearly established goals, resources and deadlines. An approved bud-

4. Every project should be con-

stantly reevaluated. PGTs should cut projects that aren’t working or don’t align with business goals. A PGT that is not routinely canceling some projects simply isn’t doing its job. Cross-functional teams have become ubiquitous because companies need to speed innovations to market. The teams are like arteries, connecting parts of the body, enabling the whole organism to renew itself. When the teams don’t function, the organization’s arteries harden. When they do, goals are met and the organization is ultimately more successful.

MONDAY MORNING

Matthias Holweg is a professor of operations management at the University of Oxford’s Saïd Business School.

get and a charter should define priorities, desired outcomes and time frames. Establishing those early on is a PGT’s key role.

3. Teams should have the project’s success as their main objec objec-

tive. It’s crucial to include the success—or failure—of crossfunctional projects in compensation and performance reviews of the people working on the teams.

B L S. M

Hemant Taneja is a managing director at General Catalyst.

THEE LIMITTS OF 3D PRINTING ONTRARY to what some say, 3-D printing is not going to revolutionize the manufacturing sector and render traditional factories obsolete anytime soon. For the foreseeable future, the economics of 3-D printing make it an unfeasible way to produce the vast majority of parts manufactured today. So we should look to new areas where 3-D printing can exploit its unique capabilities to complement traditional manufacturing. Additive manufacturing, or “3D printing” as it is known, has captured the popular imagination. Exciting applications have already been demonstrated across all sectors. Some predict that eventually we’ll be able to make any part at the push of a button. But early findings from a research project by the Additive Manufacturing and 3-D Printing Research Group at the University of Nottingham and Saïd Business School at the University of Oxford show that significant scale and learning challenges are inherent in the 3-D printing process. Three-D printing works best in areas where customization is key—like printing

Behnam Tabrizi is the managing director of Rapid Transformation Llc., and teaches at Stanford University’s department of management science and engineering.

U.S.IRAN TALKS Perspective BusinessMirror

E4 Monday, June 29, 2015

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ONCE UNHEARD OF, U.S.-IRAN TALKS BECOME

THE NEW NORMAL

IN this June 12 file photo, delegates sit around a table prior to a bilateral meeting as part of the closed-door nuclear talks with Iran at a hotel in Vienna, Austria. Iran and six powers are still apart on all main elements of a nuclear deal with less than two weeks to go to their June 30 target date and will likely have to extend their negotiations. AP/RONALD ZAK

B B K | The Associated Press

IENNA—The top American and Iranian diplomats faced each other across a square table in a 19th-century Viennese palace, the room austerely decorated and the atmosphere calm as they started the final push for a generation-defining nuclear agreement on Saturday.

IRANIAN Foreign Minister Mohammad Javad Zarif (right) talks to reporters during a meeting with US Secretary of State John Kerry at a hotel in Vienna, Austria, on Saturday. CARLOS BARRIA/POOL PHOTO VIA AP

U.S. Secretary of State John Kerry (left) talks to reporters alongside US Undersecretary for Political Affairs Wendy Sherman as they meet with the Iranian delegation in Vienna, Austria, on Saturday. CARLOS BARRIA/POOL PHOTO VIA AP

Running up against a Tuesday deadline for a deal, their declarations of optimism and pledges of diligence sounded routine. After two years of high-pressure gatherings, a sense of predictability has emerged in the negotiations between US Secretary of State John Kerry and Iranian Foreign Minister Mohammad Javad Zarif. Neither is letting the pressure show even as they and other global powers are at the cusp of an agreement that could redefine security in the Middle East and beyond for decades to come. Just a short while ago, a snapshot alone of these two enemies engaged in discussions on nuclear and other matters would have been a bombshell felt in capitals around the world. Now, whether or not the US and its negotiating powers can clinch a pact in Austria’s capital over the next several days, it’s hard to imagine the tentative US-Iranian rapprochement ending anytime soon. It’s become the new normal. The US and Iran are locked in ideological confl ict and regional wars, from Syria’s seemingly intractable cycle of violence and instability in Lebanon and Yemen to Iran’s support for enemies of Israel. But the US and Iran also have found common cause: aiding

US-Iranian ties have in some ways “normalized.” The official goal of the nuclear talks is an exchange of decade-long curbs on Iran’s nuclear program for tens of billions of dollars in relief from international economic sanctions. Participants say the talks could well drag on past Tuesday’s deadline. Iran says its activity is solely designed for energy, medical and research purposes; much of the world fears it harbors nuclear weapons ambitions. The US-Iranian engagement started a couple of years ago in much more tentative fashion, with lower-level negotiators meeting in secret in the Gulf kingdom of Oman and elsewhere amid mutual suspicion. The discussions gained steam after Hassan Rouhani’s election as Iran’s president behind promises to take his country on a more moderate course and end its isolation. But the outreach in each direction grew slowly, and both sides closely guarded preparations for a historic telephone call in September 2013 between Rouhani and President Barack Obama. Two months later, world powers and Iran reached the first of two interim nuclear agreements. Since then, the interactions between Kerry and Zarif, and the

to Rouhani after his mother died and wished the Iranians a happy Persian New Year with the traditional declaration of “Nowruz Mubarak.” Later, he approached Rouhani’s brother, a member of the Iranian negotiating team in Lausanne, Switzerland, and hugged him. On some occasions, the perceived coziness that has emerged has had repercussions for the Iranians. When Zarif was photographed walking across a Geneva bridge with Kerry, hard-liners accused him of catering to the enemy. Shortly afterward, stories appeared in Iran’s press with anonymous officials talking about Zarif losing his temper with Kerry in private meetings, as if to make amends. They also have spoken about bike riding—a regular pursuit of Kerry’s during the nuclear talks until a crash last month in France that broke his leg. Zarif, who was then dealing with a recurring back issue, called Kerry to commiserate. And the good will has spread to others in the negotiating team. For example, US Energy Secretary Ernest Moniz and Iran’s atomic energy chief Ali Akbar Salehi, both MIT-trained physicists, have struck up their own understanding and, by all accounts, a well-functioning relationship. Salehi isn’t in Vienna because of illness.

Iraq’s government and Kurdish militia against the Islamic State group, and committing, at least publicly, to an accord that would remove the threat of a nucleararmed Iran while ending the Islamic Republic’s international isolation. “I think it’s fair to say that we’re hopeful,” Kerry said as talks began at Vienna’s Palais Coburg. “We’ve a lot of hard work to do. There are some very tough issues and I think we all look forward to getting down to the final efforts here to see whether or not a deal is possible. I think everybody would like to see an agreement. But we have to work through some difficult issues.” Zarif said he agreed. “We need to work really hard in order to be able to make progress and move forward. We are determined to do everything we can to be able to make this effort possible. Of course, that depends on a lot of things and we’re going to work on it.” For a relationship that was frozen after the 1979 Islamic revolution and subsequent US Embassy hostage crisis, the long hours spent in nuclear negotiations clearly have helped each side build a grudging understanding of one another. Although neither will use the word trust, for the first time in decades,

two countries’ other negotiators, have expanded dramatically. They regularly chat in hotel breakfast halls before their daily discussions, hold regular calls and coordinate schedules. Beyond nuclear matters, the top officials have included in their discussions matters related to Syria, Iraq, Yemen and other regional hot spots. The status of Americans detained or missing in Iran is another frequent topic of conversation. At their previous meeting in May, Kerry and Zarif even bantered in front of reporters about democratic progress in Nigeria, another country engulfed by insurgency but one far removed from the battlegrounds of the Middle East. Kerry, having just arrived in Geneva from the African nation, called the inauguration of a popularly elected president in Nigeria “very good historically for democracy.” Zarif, whose government is routinely criticized by other countries and humanrights groups for its democracy failings, offered his verdict: “They have serious difficulties.” But the limited snippets of public conversation often have been more personal in nature. In March, Kerry began a meeting by offering condolences

US allies also aren’t entirely pleased as the warming to Iran has coincided with a fraying of some of America’s long-standing partnerships in the region. Washington clearly remains light years closer to Middle East allies such as Saudi Arabia and Israel, but their coolness or outright hostility to the Iran talks has taken a toll. For the Obama administration, it has created the strange dynamic of sometimes finding it easier to discuss nuclear matters with Tehran. Great tension remains between the US and Iran. Only last week, many Iranian parliamentarians chanted “Death to America” as they passed legislation that would bar nuclear inspectors from visiting military sites—a key US and international demand. Iran’s supreme leader, Ayatollah Ali Khamenei, has delivered a series of speeches sharply denouncing US intentions and tactics in the nuclear talks and on broader geopolitical matters. In recent days, the State Department has issued reports that included condemnations of Iran for its “undiminished” support of terrorist groups and for human-rights violations at home, including hanging people without due process and systematic repression.

PERSPECTIVE

The Chamber of Automotive Manufacturers of the Philippines Inc. (Campi) has long complained that the cost of producing a vehicle in the country is higher by $1,200 to $2,000, if compared to Thailand and other Asean economies. This makes the Philippines less

competitive in attracting investments in auto manufacturing. There is also a production-volume hurdle set in the CARS Program, as Assistant Secretary for Trade Policy and Industry Development Dr. Rafaelita M. Aldaba said carmakers can S “CARS,” A

Overflight part of PHL, Russia air talks in July

Solving social problems through collaboration ENEVA VA Global, a small but VA mighty philanthropic consulting firm that specializes in international development, is helping to change the world. With just 52 staff members, the company is quietly igniting social good on a global scale through the repetitive flexing of an approach called “dumbbell collaboration.” “On one side of the dumbbell are donors, either private philanthropists or foundations, and on the other are nonprofits,” explains Ava Lala, a Geneva Global director. “Both want to solve complex social problems, but the ambition of the donors often outweighs their resources, and the nonprofits often spend precious time trying to connect with donors. The solution, as we see it, is to group each of these ends together, to be the handle in the middle that connects the two.” When creating philanthropic initiatives for its clients, Geneva Global first gathers insights. Does the client want to address a pressing global health issue like Ebola or tackle an educational problem? Geneva then typically seeks out partners in developing countries— innovative indigenous nonprofits with a strong track record who are willing to work together to build a program. The benefit of finding such partners is that the program can be tailored to the local context, encouraging buy-in from the community and local stakeholders, and ultimately reaching more people. For example, in 2011, Geneva partnered w ith the Legatum Foundation to create the End Fund, which brought together a collaborative donor set that has since raised more than $50 million. The money has supported tropical disease-control initiatives run by various nonprofits and government ministries of health in more than 15 countries. “Over 75 million people have been reached through mass drug administrations. That kind of impact and scale can only be achieved when donors are willing to collaborate, learn from one another and use their collective voice to spark change,” says Doug Balfour, Geneva Global CEO. The concept of dumbbell collaboration has allowed Geneva to execute a style of collaboration that, especially when applied to the social sector, can bring about sustainable social change and increase the bang that comes from philanthropic bucks.

SPECIAL REPORT

B C N. P

HILIPPINE and Russian air panels will meet in July to discuss the possibility of modernizing the two countries’ air-services agreement to stimulate their two-way air traffic. Civil Aeronautics Board (CAB) Executive Director Carmelo L. Arcilla said the Philippine panel will also negotiate for the sweetening of the overflight policy of Russia for local carriers. “The air talks with Moscow are set on July 22 and 23. We did air talks with them six years ago, but we don’t have capacity. We will modernize the airservices agreement, and we hope to be able to negotiate overflight,” he said. An overflight is the passage of an aircraft over a certain territory to get to its destination. “We are a signatory to the so-called International Air Services Transit Agreement, or IASTA. It is a protocol under the International Civil Aviation Organization

PESO EXCHANGE RATES n US 45.1430

that allows overflight of airlines over its territory,” Arcilla said. But Russia is not a signatory to the IASTA. “So the overflight fee has to be negotiated with the Russian government. We hope to be able to settle this matter,” the official said. Currently, flag carrier Philippine Airlines (PAL) is operating under provisional overflight agreement for its Manila-London operations. “If they don’t overflight to Russia, they will incur two to three hours additional flight time. Flight time plus fuel means cost,” Arcilla said. The meeting between the air panels of the Philippines and Russia was originally scheduled in November 2013. It was postponed because of Moscow’s request due to internal issues. “We hope to have capacity also. While Russia is encountering difficulties, it’s still a very strong market, and people are traveling. It’s a very lucrative market,” Arcilla said.

BANKING SECTOR STILL BEYOND THE REACH OF FILIPINO MASSES B B C

First of three parts

HE Philippine banking system, no matter its stated goal of achieving widespread financial inclusion, remains an elitist system in which the greater number of Filipinos with the greatest need for financial services remains effectively excluded. This was not an easy conclusion to reach, because the macroeconomic numbers seem innocent enough, wherein, for example, the system under which the P14.12trillion industry operates won acclaim from some of the more reputable analysts for helping the $272-billion economy expand at a time when domestic- and external-sector headwinds hound the Philippines no end. In particular, the country’s high growth and overall stability were recognized by third-party credit watchers, and had been the main reason behind the country’s elevation to investment-grade status the past few years. Parallel to this, the sovereign credit watchers remained optimistic of the country’s banking sector, with Moody’s Investors Service recognizing the banks as the only one of 69 other rated banking systems around the world with a positiverating outlook. But, just like the country’s inability to distribute its strong economic performance down to the grassroots, the banking sector has also been slow to transmit its position of strength to benefit the Filipino masses.

World Bank data show that the Philippines has the lowest gross domestic product (GDP) per capita compared to neighbors in the Asean—a development most glaringly seen in terms of the rate of bank penetration, where the country also comes in last. As of 2014, the Philippines’s GDP per capita stood at $2,7651, lower than the $3475.1 of Indonesia, $5,779 of Thailand, $10,538.1 of Malaysia and $55,182.5 of Singapore. The country’s low GDP per capita, essentially GDP divided by the total population, was recently cited by Fitch Ratings as proof of the economy’s many ills, as the aggregate has persistently been below that of similarly rated peers in recent years. Mirroring the lag in the country’s GDP per capita is the Philippines’s level of banking penetration as of end-2014.

The World Bank data also show in its Global Findex Database 2014, which was just published by the World Bank Development Research Group in April this year, that the Philippines also ranked last in banking penetration among the five original members of the Asean. In the Philippines about 31 percent of all adults own a bank account. But this pales in comparison with the 36-percent bank-penetration rate in Indonesia, 78 percent in Thailand, 81 percent in Malaysia and 96 percent in Singapore. Given the problematic level of bank penetration in the country, the Philippines is said to have missed out on the benefits that come with a high bankpenetration rate, benefits needed to sustain growth and the much-needed trickle-down impact on the masses. C  A

n JAPAN 0.3653 n UK 71.0777 n HK 5.8238 n CHINA 7.2701 n SINGAPORE 33.6261 n AUSTRALIA 34.9892 n EU 50.5827 n SAUDI ARABIA 12.0385 Source: BSP (26 June 2015)

A2 Monday, June 29, 2015

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CARS. . .

Continued from A1

Banking sector still beyond the reach of Filipino masses Continued from A1

“[Increasing the provision of banking services] can help to reduce poverty and support broad-based growth in various ways: by facilitating consumption smoothing in response to shocks; encouraging investment and entrepreneurship by micro, small and medium enterprises; and reducing the incidence of informal lending at punitively high interest rates,”International Monetary Fund (IMF) Resident Representative to the Philippines Shanaka Jayanath Peiris told the BusinessMirror. “These are all highly relevant is-

sues in the context of the Philippines,” he added. Similarly, Fitch Ratings said the level of bank penetration in any economy reflects the level of financial development in that country. “Greater banking penetration can also help raise economic growth through more efficient allocation of capital from savers and investors to borrowers,” Fitch Ratings Director for Financial Institutions Elaine Koh told the BusinessMirror. Daling Celso, 48, is a vendor at a local market of the City of San Fernando, Pampanga. Celso said she earns about

P800 a day from her vegetable stand, and about 10 percent of her earnings go to her savings, totaling more or less P2,500 a month. The cash savings, she said, are kept in a “secret place” in her room. Celsotoldthe BusinessMirror that,whileshe is aware that her savings are enough to open a bank account, she shies away from doing just that because she is in awe of the banks’ “complicated” processes and terminologies. She added that she never completed her elementary education, and does not understand the English language much. Celso shared the sentiment of about a sixth, or 16.8 percent, of Filipinos who do

not own a bank account, who claim that the main hindrance for them in opening a bank account, is the complete lack or limited knowledge of opening and managing a bank account. Data provided by the Bangko Sentral ng Pilipinas (BSP) from its National Baseline Survey on Financial Inclusion (NBSFI) show other reasons cited by respondents, including the lack of a need for a bank account, at 16.9 percent. Another 11.2 percent claimed it is expensive to own a bank account, while 9.8 percent said the minimum balance the banks require is too high, even as another 7.6 percent said the bank is often too far away for them to bother maintaining an account. The lack of a valid identification card, consistent with the banks’ mandate to know their client, proved to be another deterrent and accounted for 4.6 percent for those who do not have an account. Puny interest rates on deposits accounted for 3.3 percent of those who turn their back on the banks, while another 2.5 percent cited the general lack of trust in banks as a whole. But, of course, the mother of all reasons for those Filipinos who do not have deposit accounts is the sore lack of money, period. In particular, 65.1 percent of the respondents in the BSP-funded survey indicated the lack of funds as the main hindrance to opening an account. While most of the unbanked population in the country come from the low-income group, the data show that a significant chunk of middle-class savers, or some 30 percent, also do not have bank accounts. “Lack of enough money is still seen as the main barrier in having a bank account, and this is true even for those adults who have savings, including the middle class. People may still view that their money is not enough to open and maintain a deposit account,” BSP Governor Amando M. Tetangco Jr. told the BusinessMirror. “There is a perception that having a bank account is for the well-off only,” he added. Meanwhile, in terms of credit, the central bank governor also said Filipinos often hesitate to borrow from banks and other financial institutions. In particular, of the total number of Filipinos who indicated that they have outstanding loans, 62 percent of them borrow from family, friends and relatives, while another 10 percent borrow from informal lenders. The World Bank said in its most recent Global Findex report that less than 5 percent of all adults around the world reported having borrowed from private informal lenders. In the Philippines twice as much Filipinos borrowed money from the informal lenders, at 10 percent of those surveyed.

Other countries whose citizens would rather borrow money from usurious private lenders include Myanmar, Panama, South Africa and Saudi Arabia, where 10 percent or more of adult borrowers turn to the informal lenders. Tetangco said the primary considerations local borrowers factor when taking a loan elsewhere include the interest rate, loan amount, period to pay for the loans, ease of loan application, reputation of the lender, amortization, collateral, fees and the processing time. “However, when all these factors come into play, we know that Filipinos would consider the expediency or quickness of obtaining funds, despite higher cost of borrowing.This is often the case during times of emergency, when there is ºno other way but to pawn an item or borrow from informal sources, such as family, friends, relatives or the 5-6 money lenders,” Tetangco said. So-called bank entrenchment in the Philippines, more particularly in the rural patches of the country, is quite a challenge to policy-makers due to the country’s archipelagic makeup, a challenge not lost on the International Monetary Fund (IMF) and the Asian Development Bank (ADB). Latest data from the central bank show that the number of bank branches in the country totals 10,456 as of end-March this year. Also, the number of automated teller machines (ATMs) serving consumers totals 16,068, also as of end-March this year. Despite this, the BSP acknowledged that a “significant” percentage of areas in the country remains unbanked. In particular, there are still 595 municipalities across the country’s enumerable islands still without access to banks and the financial services they provide. Nevertheless, this was an improvement from the 611 unbanked municipalities reported in 2012. While current data represent an improvement from the situation decades earlier, several financial international organizations agree that the Philippines still needs to ramp up the effort to improve its bank-penetration rate. “Increasing the provision of financial services [including banking services] has been a key priority for the Philippine authorities. Progress has been made, but there is still much to do,”the IMF’s Peiris said. “Although the Philippines has made some progress in promoting an inclusive financial system over the years, increasing access to financial services remains challenging,”the ADB also said in a recent report. “The Philippines is a recognized leader in mobile banking, yet bank-penetration access is still low, particularly in remote areas. Similarly, the Philippine microfinance sector ranks as one of the top in the world, yet a large unmet demand for microfinance services still exists,” it added. To be continued

only start enjoying the production volume incentive (PVI) after they’ve produced 100,000 units. Trade Undersecretary Adrian S. Cristobal confirmed the per-unit fiscal support. Under the CARS Program, automakers could qualify as participants if they commit to produce at least 200,000 units of an enrolled model during the six-year run of the incentives scheme. With the PVI, however, they can begin enjoying the prorated fiscal support even if the overall 200,000unit goal has not been met yet. Each carmaker stands to enjoy P4.5 billion if it manages to produce the 100,000 remaining units. The total tax-incentive support has been set at $600 million, or P27 billion, for three enrolled models, translating to P9 billion worth of fiscal support per model. Moreover, the program provided that 60 percent of the P27 billion would be granted under the PVI package, while the remaining 40 percent would be given under the fixed investment support (FIS) incentive scheme. The FIS would depend on the investments made for parts manufacturing and/or setting up of a sharedtesting facility. Details have yet to be released on the requirements to avail of the FIS. The Campi earlier said the cost gap in producing a vehicle in the Philippines versus those of the competing nations such as Thailand stands at $1,200 to $2,000 per unit. The fiscal support is supposed to bridge the cost gap and encourage car manufacturers to invest more in local assembly, given the strong backward and forward linkages of the auto industry to other related industries. The IRR will be released this month. Despite the meager amount of incentives, the Federation of Automotive Industries in the Philippines (FAIP) welcomes the signing of the CARS Program, expecting the scheme to boost the country’s chances of becoming an automotive hub in the region. Vicente T. Mills, president of FAIP, expressed optimism that with the Asean economic integration happening at the start of 2016, the CARS Program will give the local automotive industry a much-needed shot in the arm to attract new players. “The CARS Program envisions the Auto Brand Principals as expanding their country production capabilities and electing to make the Philippine the base manufacturing location. In the CARS Program, substantially higher local value-added level will be attained, as full-body stamping, large injection moldings and other parts not currently available will now be produced under its rules,” Mills said. “This localization level will bring the local auto industr y closer to becoming one of the “automotive production hubs of the region,” he added. Executive Order 182, or the CARS Program, will be giving tax breaks amounting to P27 billion for six years, to qualified automakers, to improve the competitiveness of local producers. A Cabinet interagency committee, led by the Department of Trade and Industry, will spearhead the program. Qualified car makers must commit to produce at least 200,000 units of an enrolled vehicle program by the end of the program, and invest a substantial amount in the manufacture of parts. Brand principals and parts makers alike can qualify as participants in the program. FAIP is the successor-organization of the Philippine Automotive Federation. Its expanded membership includes car, and commercial vehicle producers, four- and two-wheel parts manufacturers; motorcycle producers; truck and bus body builders; and Electric vehicle manufacturers.

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The Nation BusinessMirror

Antismoking group worried on entry of cheap cigarettes By Claudeth Mocon-Ciriaco | Correspondent

AYING that it will be counterproductive to the goals of the sin-tax reform law, the New Vois Association of the Philippines (NVAP) on Sunday expressed concerns over the possibility of cheaper cigarettes being introduced in the market. NVAP President Emer Rojas said that having cheaper brands of cigarette products will only give the public a window to splurge on their smoking vice without the worry of spending much. “It is sin-tax law’s goal to make cigarette products inaccessible to the people, especially to the poor and the youth. How can having cheaper brands prove to be helpful to the people’s health?” Rojas said. He noted how a big tobacco company is already planning to produce a cigarette brand that will be sold at P2 per stick, P1 lower than other brands. “We are worried that having a legal way to sell cheaper cigarette will render the health objectives of the sin-tax law almost useless,” Rojas said. Based on a survey by the Social Weather Stations last year after the sin-tax law was passed, the prevalence of smoking for those belonging to socioeconomic Class E or the very poor dropped from 38 percent in December 2012 to 25 percent in March 2014. The survey commissioned by the Department of Health (DOH) also showed that smoking among those belonging to the 18- to 24-year-old age group was also reduced from 35 percent in December 2012 to 18 percent in March 2014. Aside from making cigarettes accessible to the public anew, Rojas also warned that allowing more smokers to fan their vice will result to more

government resources needed to spend for the health care of those who will develop smokingrelated illnesses. “Allowing more to smoke will be counterproductive since more can develop diseases from smoking and more will need to get treatment that will be shouldered by the government,” said Rojas, a former smoker who is a cancer survivor. He said it would be better if such funds will just be utilized for health promotion instead, as the people will avoid getting sick if properly informed and educated. It should be noted that most of the revenues from the sin products are being allocated by the DOH to fund universal health care, upgrade medical facilities, and train doctors and nurses, he added. In January 2013 the government began imposing higher tax rates on tobacco products, which resulted in higher cigarette prices. Rojas called on the Department of Trade and Industry (DTI) to evaluate the looming entry of cheaper cigarette products since the agency is the chairman of the Inter-Agency Committee on Tobacco. “We hope that the DTI will spearhead efforts to look into this matter if we are to prevent a relapse in the pre-sin-tax Law days with the introduction of cheaper cigarettes to the market,” Rojas said. Section 2 of Republic Act 9211, or the Tobacco Regulation Act of 2003, states that the government shall “institute a balanced policy whereby the use, sale, and advertisements of tobacco products shall be regulated in order to promote a healthful environment and protect the citizens from the hazards of tobacco smoke.”

Editor: Dionisio L. Pelayo • Monday, June 29, 2015 A3

Palace firm on Family Code vs LGBT unions

By Butch Fernandez

ALACAÑANG stood firm on enforcing the Family Code of the Philippines and would not recognize same-sex marriages by Filipinos abroad amid a clamor from local lesbiangay-bisexual-transgender (LGBT) groups for the government to follow the US Supreme Court which upheld same-sex unions in all 50 states of the US.

Communications Secretary Herminio B. Coloma Jr. on Sunday said the prevailing law is clear. “Ang umiiral na batas po natin ay malinaw. Doon po sa Family Code of the Philippines, ang kinikilala lamang na kasal ay sa pagitan ng a man and a woman.” He pointed out a specific provision of the Family Code which, he said, recognizes only weddings between a man and a woman. “Nakalagay po doon ‘marriage is a special contract of permanent union between a man and a woman entered into in accordance with law for the establishment

COLOMA: “Nakalagay po doon ‘marriage is a special contract of permanent union between a man and a woman entered into in accordance with law for the establishment of conjugal and family life.’”

of conjugal and family life,’” Coloma said. He explained that this is why same-sex marriage contracted by Filipinos abroad are not recognized here. “Kaya po lahat ng mga same-sex marriage ng mga Filipino na contracted sa foreign country ay hindi kinikilala sa ating bansa,” Coloma said. He also noted that according to the nationality principle of the Civil Code of the Philippines, all Filipino citizens, even those living abroad are covered by this. “Lahat ng mga batas patungkol sa family rights, status, condition at legal capacity ng mga Filipino citizens pati po iyong nakatira sa ibang bansa ay sinasakop ng Article XV ng Civil Code of the Philippines na nagsasaad—and I quote—‘Laws relating to family rights and duties or to the status, condition, and legal capacity of persons are binding upon citizens of the Philippines even though living abroad,’” he added. Coloma clarified that the existing national policy on same-sex unions have not been changed. He suggested that those calling for such amendments should go to Congress instead. “Wala pong pagbabago sa pambansang patakaran hing gil diyan. Kung mayroon pong nagpapanukala dapat po idaan nila iyon sa Kongreso,” Coloma said.

Economy

A4 Monday, June 29, 2015 • Editors: Vittorio V. Vitug and Max V. de Leon

BusinessMirror

Investments in hotel business rising–DOT

By Ma. Stella F. Arnaldo | Special to the BusinessMirror

HE rising influx of foreign travelers in the Philippines, as well as a boom in domestic tourism, is attracting more entrepreneurs to invest in the hotel and resort business.

In a presentation at the AIM Conference Center on Friday, Benito Bengzon Jr., the Department of Tourism’s (DOT) undersecretary for tourism development, said the agency endorsed 16 tourism-development projects to the Board of Investments (BOI) and the Philippine Economic Zone Authority (Peza) in 2014, with a total project cost of $750 million (P33.75 billion). “This includes Hilton Manila [388 rooms], Hotel Specialists Manila Inc. [347 rooms], Solaire Resort and Casino Manila [312 rooms] and Bai Hotel Mandaue [638 rooms],” he said, adding that these new hotels are projected to generate 2,533 new jobs. The BusinessMirror research shows about P40 billion in tourismrelated investments have been registered with the BOI from 2010 to the first four months of 2013. In terms of total project costs, P3.7 billion in investments were registered in 2010, P12.8 billion in 2011, P12.6 billion in 2012 and P7 billion from January to April 2013. No data was readily available for Peza.

Hotels and resorts registered with the BOI and Peza are entitled to tax holidays, duty-free importation of capital equipment and a host of other businessfriendly incentives. Bengzon also underscored that “a lot of Filipinos who made their money in other industries are now into hotels.” Grand Benedicto, 43, is probably one of the best examples of the new breed of hotel investors in the country. Born and raised in Cebu, Benedicto’s entrepreneurial spirit was honed in his father’s hardware, plywood and lumber business. After he successfully turned the latter into a thriving furniture company exporting to Europe and the United States, he has expanded into the booming hospitality industry. “I think it’s a dynamic business,” he said of the competitive industry. “I would always compare it to the fashion industry. You have to keep catching up on the next trend. It’s never stagnant. You have to be one step ahead of the pack,” Benedicto,

president of Enrison Land Inc., told the BusinessMirror. As owner and developer of the Be Resorts brand, Enrison Land is now close to launching its second property—Be Resorts in Panglao, Bohol (205 rooms), seven years after the opening of its first boutique resort in Mactan (161 rooms). “This is something to watch out for as we have combined the latest hotel-design trends, our vast experience in furniture manufacturing coupled with our hotelmanagement experience, all this set against the rugged beauty of Bohol,” Benedicto stressed. “We are also in the planning stage for a third resort. Each resort is independently envisioned and provides different experiences with emphasis on the beauty of its location,” he added. The company announced Malapascua Island and Olango Island as possible sites of its new resorts. From January to April 2015, foreign visitor arrivals increased by 7 percent to 1.7 million, from the same period in 2014. Total foreign visitor arrivals grew by 3.25 percent to 4.8 million in the full year 2014. While the final numbers have yet to be released, domestic travelers were projected to have reached 48 million in 2014, up 9 percent from 44 million in 2013. “We see a wider distribution of [hotel] investments around the country and the development of integrated resort complexes,”

Bengzon pointed out, citing Solaire Resort, City of Dreams Manila and Resorts World Manila. He also noted the entry of international hotel brands in the country—Hilton, Hyatt, Conrad, etc.—which have come in as management partners. In the past, he said, international hotel brands “shied away from the Philippines for whatever reason,” but their entry today shows “the rise in competitiveness of the Philippines. The world is now taking a closer look at the Philippines.” He attributed this to the highly successful “It’s more fun in the Philippines” brand campaign launched in January 2012. Now on its second phase, the brand campaign is now focused on major tourism destinations like Manila, Boracay, Cebu and Davao. As per the National Tourism Development Plan (NTDP) for 2011 to 2016, about 70,000 in additional hotel rooms are required to be constructed to meet the DOT’s visitor arrivals target of 10 million and 56 million domestic tourists by 2016. This should bring the total hotel rooms in the country close to 184,000 by the end of 2016. A s per DOT record, about 17,000 new hotel rooms were in the pipeline from 2011 to 2014 at the time of the NTDP’s release in 2012. The NTDP is the Aquino administration’s blueprint for improving the tourism sector and making it a top contributor for economic growth.

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briefs DTI submits official complaint against millers, bakers to NBI The investigation into the alleged collusion and profiteering committed by bakers and millers is now in the hands of the National Bureau of Investigation (NBI), the Department of Trade and Industry (DTI) said. The DTI turned over the documents containing flour and bread data to the Anti-Graft Division of the NBI on Friday, in line with the agency’s recommendation to conduct an investigation into the alleged profiteering and collusion between the flour milling and bakery industries. Two weeks ago, the DTI announced its probe on flour and bread costs when it monitored that retail prices of local brands of flour and bread do not reflect the declining trend in world market price of wheat that was observed since June 2011. DTI-Consumer Protection Group Undersecretary Victorio Mario A. Dimagiba said he expects the NBI to issue a subpoena to flour millers and bakers who have failed to respond to the DTI‘s letters requesting for pricing, sales invoices and other documents. Documents that were turned over include correspondences between the DTI, local flour millers and bakers; import documents of flour millers provided by the Bureau of Customs; and DTI computations based on the submissions from the flour millers and bakers. Catherine N. Pillas

House panel finishes drafting of occupation-safety measure TO avert deadly accidents such as the tragic Kentex factory fire that killed 72 workers, the chairman of the House Committee on Labor on Sunday said the panel’s technical working group has already completed a consolidated measure punishing violators of occupational safety and health standards (OSH). Liberal Party Rep. Karlo Alexei B. Nograles of Davao City, the panel chairman, said the proposed Occupation Safety and Health Standard Act, if passed into law, will enforce stricter mechanisms to ensure a safe and healthy environment for all workers and impose stiffer penalties for noncompliance with said law. Nograles said the consolidated OSH bill has outlined the responsibilities of both the employers and workers and has mandated the creation of workplace OSH structures. Under Section 5 of the proposed OSH law, each employer, contractor and subcontractor, and any person who manages, controls or supervises the work being undertaken, is mandated to provide workers a working area that is free from hazardous conditions that are likely to cause death, illness or physical harm. Jovee Marie N. dela Cruz

Economic managers woo US investors

he country’s investments in people, infrastructure and reforms have transformed the Philippines into a prime destination for foreign capital in recent years. Finance Secretary Cesar V. Purisima made this statemenet at the Economic Briefing and Investment Conference held on June 26 at Goldman Sachs in New York City. Titled “Invest in the Philippines: Asia’s Bright Spot,” the New York conference underscored the significant improvements the country has made in terms of macroeconomic governance, promotion of transparency, ease of doing business and infrastructure development. These factors, combined with a competent, hardworking and growing work force, and a central location in an economically dynamic region, have increased the attrac-

tiveness of the Philippines in the eyes of foreign investors. “The Philippines is not perfect, nor is it completely efficient, but to investors like you, it is an opportunity. In fact, many companies are already silently making money,” Purisima said. BPI Capital Corp. President Dennis Montecillo agreed with the bullish assessment, saying there has been a noticeable shift in the demand for foreign private equity. Montecillo, who previously worked for Morgan Stanley in Hong Kong, recounted how private-equity clients have now developed a keen interest on the Philippines—with some calling the Philippines their core market—from demonstrating a very low level of interest in the 2000 to 2007 period. Recto Mercene

Over 30 retail experts to address APRCE

VER 30 international retailers and marketing experts will share their experiences and insights on the latest trends and developments in the global retailing industry during the 2015 Asia Pacific Retailers Convention and Exhibition (APRCE) hosted by the Philippine Retailers As- formoso sociation (PRA), from October 28 to 30, at the SMX Convention Center in Pasay City. PRA President Lorenzo C. Formoso said the lineup of distinguished foreign speakers and panelists makes the 2015 APRCE a compelling event for players in the retail space and allied industries. “Both quantity- and quality-wise, we want to make sure our list of international experts will go down in the history of APRCE as probably one of the best-assembled batch of speakers and panelists,” Formoso, COO of Duty Free Philippines, emphasized. Vittorio Radice, vice chairman of La Rinascente (Italy) and former CEO of Selfridges Plc. (the UK), will deliver the keynote speech on October 29, the first day of the conference. Other confirmed international speakers include Singapore’s Asia Pacific Travel Retail Association (APTRA) President Jaya Singh, China’s Beijing Capital Retailing Group Chairman Fu Yuehong, Japan’s Isetan Mitsukoshi Holdings Ltd. President and CEO Hiroshi Ohnishi and South Korea’s Lotte Corp.’s Business Headquarter/Senior Managing Director Hyun-chul Park. They will share with international retail players their knowledge and incisive insights on topics that are vital to retailers and their success during the first day of the APRCE 2015. The lineup of speakers on the second day of the convention includes The Walt Disney Co. Southeast Asia Chief Strategist Raju Venkatamaran from Singapore, Shook Kelley Design USA Principal and Cofounder Kevin Kelley of the USA; IGD-The Global Food & Consumer Goods Experts Chief Executive Joanne Denney-Finch of the UK, AS Louken Founder and CEO Luke Lim from Singapore and Family Mart Co. Ltd. President Isamu Nakayama of Japan. The 2015 APRCE is spearheaded by PRA Chairman Frederick Go, president and COO of Robinsons Land

Corp., as the overall chairman. It is copresented by the Tourism Promotions Board, The SM Store and Wyeth Nutrition, with Bench, Flight 001 and Penshoppe as platinum sponsors; Robinsons Malls and Ayala Malls, PLDT Alpha, Megaworld, Unilab and Mercury Drug as gold sponsors; Duty Free Philippines, HP, Wilcon Depot, Kojie-San, Celine and MET Tathione, Unilab as silver sponsors; Araneta Center as bronze sponsor; Philippine Airlines as official carrier; Sportshouse as sponsor; Solaire Resort & Casino Hotel as official partner hotel; Shook Kelley and IGD as special session sponsors; Media Blitz Group as official PR partner and convention organizer; Retail Asia as official international publication; Asia Pacific Travel Retail Association as partner organization: Fascin8 as official digital advertising partner; Official Newspaper—Philippine Star; Official Media Partner—Business World; Retail Customer Experience, Asia Briefing and Oxford Business Group as digital media partners of APRCE. “We thank the companies that have already signed up for the event and we hope more groups will help us in ensuring the success of APRCE 2015. We need greater private-sector participation as this will showcase the country to the rest of the world,” Formoso stressed. The PRA won the bid to host the prestigious biennial event during the 2013 APRCE in Istanbul, Turkey. The APRCE is organized by the Federation of Asia Pacific Retailers Association (Fapra), the regional organization of 17 recognized national retail associations in the Asia Pacific. The PRA said those interested to hear the international experts can e-mail aprce2015@philretailers.com, ebbs@philretailers.com, asecgen@philretailers.com, or visit its web site www.2015APRCEMANILA.com.ph and www.philretailers.com for more details. The APRCE is a major activity of Fapra. Every two years, Fapra members choose a member-association to host the grand gala for retailers in the Asia-Pacific region. The event has become Asia’s largest and longestrunning retail convention and exhibition since it was first held in 1983. The APRCE aims to discover new approaches to issues facing the region’s retailers and highlight innovative solutions that can help retailers differentiate themselves from competitors, and to deliver greater value to consumers.

Economy BusinessMirror

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$5-B Clark development dispute settled

lobal Gateway Development Corp. (GGDC), proponent of the $5-billion Sabah Al-Ahmad Global Gateway Logistics City project in Clark, Pampanga, and Peregrine Development International Inc. (PDII), the prime contractor who had worked on the project, jointly announced that they have amicably resolved their differences regarding the end of their engagement. Mark Williams, president of GGDC, and Dennis Wright, president of PDII, said they are happy that all issues between the parties have been settled and will be separately moving forward. Peregrine, an A mericanowned company that has been operating in the Philippines since 2006, said it will continue its design, engineering and construction work in support of its US government contracts, as well as its other commercial, residential, hotel, restaurant and related interior fit-out projects in Manila and Region 3. GGDC has invested over $100 million in the project to date, with another $150 million in planned investments by the end of 2016.

GGDC’s investments to date include the development of worldclass horizontal infrastructure, including over 30 hectares of fully developed lot inventory and The Medical City, Clark, a world-class 20,000-square-meter hospital that provides state-of-the-art medical services for the region. GGDC said the master-planned mixed-use Logistics City and Business Center will break ground on five office towers having a gross floor area of 142,000 sq m, in addition to a retail and gas plaza by the end of 2015. These complexes will create great employment opportunities for thousands of Filipinos from the region. The whole GGDC project will provide direct employment to well over 3,000 construction and trade workers at the peak of the project’s development. Once completed, the project will generate employment opportunities to over 300,000 workers, with $600 million in annual payroll for entry-level employees alone. “We thank PDII for the services they have rendered and wish them the best and more power in their projects in the Philippines and overseas,” Williams said.

Monday, June 29, 2015 A5

2-day forum to quantify benefits of clean-air law

arious stakeholders will hold a two-day forum starting Tuesday in an attempt to quantify the economic benefits of Republic Act 8749, or the Philippine Clean Air Act.

The annual forum for clean air, now on its seventh year, is being held to assess the progress of the implementation of the law. With this year’s theme “Towards Identifying the Economic Benefits of Clean Air: A Call to Action,” the event will be attended by officials and representatives from the Department of Environment and Natural Resources (DENR), the Department of Transportation and Communications, Land Transportation Office (LTO), Metropolitan Manila Development Authority and the private sector. A joint undertaking of the DENR and the Partnership for Clean Air Inc., a multisectoral coalition of clean-air advocates, the event will be

held at the Bulwagang Romeo Edu of the LTO in Quezon City. The event will be highlighted by a presentation of Dr. Serafin Talisayon of “Proposed Framework on Economic Benefits of Air Pollution Regulation,” which will show the methodology for valuation of impacts on the economy from exposure to air pollutants and for quantifying the benefits of air-pollution regulation in terms of their contribution to the country’s economy. The forum also aims to look for ways on how the clean-air sector can help create opportunities for new jobs and spur interest from the private sector to invest in cleaner technologies.

Other topics and speakers at the forum are the Project on Improving the Air Quality by Energy Undersecretary Loreta Ayson; Productivity Loss in Traffic by Dr. Regin Regidor, director of the University of the Philippines (UP)-National Center for Transportation Studies; Assessment of Health Impacts of Air Pollutions by Dr. Daphne Bate of the Lung Center of the Philippines; Indoor Air Pollution in Car Parks and Malls by Engr. Nelia Granadillos of the Occupational Safety and Health Center; and Mobile Emission Inventory of Metro Manila by Dr. Noriel Tiglao, director of the UP-National College of Public Administration and Governance. The DENR, as part of its campaign for cleaner air, has issued an order requiring the use of cleaner fuel and imposing stricter emission standards starting July 1. In effect, the order requires all gasoline stations to sell fuel complying with Euro-4 standards, effectively phasing out the current Euro-2 standard fuels.

The order also requires oil companies that process diesel and gasoline to retrofit their plant to produce Euro-4 fuels. Under the order, all new vehicles entering the country will have to be Euro-4 compliant starting on January 1, 2016. Under the Euro-4 fuel, the sulphur content of diesel is already 50 parts per million (ppm), much lower than the 500 ppm for Euro-4 fuel, which is 1,000-percent reduction. For benzene in gasoline, the mandate is 1 percent by volume in Euro 4, compared to 5 percent for Euro-2 fuel. For aromatics, Euro-4 fuel contains only 35 percent by volume compared to Eruo-2 fuel, which prescribes no limit. With the effective implementation of the new emission standard under the order, the DENR expects a 20-percent reduction in total suspended particulates, which will allow the country to achieve the international air-quality standard of 90 total suspended particles.

Tourism&E

Busines

A6 Monday, June 29, 2015 • Editor: Carla Mortel-Baricaua

HENANN LAGOON RESORT

EXPANDING TO GREATER HEIGHTS H

ENANN Lagoon Resort, a triple Arated resort owned and managed by the Henann Group of Resorts under the helm of visionary Chairman Dr. Henry Chusuey, has achieved a new milestone with the recent inauguration of its New Wing. The said wing has 102 magnificent, beautifully designed rooms, a state-of-the-art swimming pool and a VIP Lounge. With rooms exuding sophistication and elegance, guests are guaranteed to have the ultimate pampering experience during their stay. Meanwhile, indulge in comfort and extravagance as the new wing also features a new room category located at the second floor—suite with private plunge pool—perfect for guests who value privacy and luxury. Taking a refreshing dip gets more fun and exciting with the state-of-the-art swimming pool while guests checked in at any of the New Wings suites can enjoy a buffet of light snacks, complimentary coffee and cocktails at the VIP Lounge plus get topnotch service from the hardworking resort staffs. “All the rooms in the New Wing have an impeccable, exquisite design different from the main building, thus, ensuring

splendid accommodations for our guests,” said Karl Chusuey, vice president for Marketing of the Henann Group of Resorts. “These splendid accommodations plus great facilities, efficient service and reasonable rates make Henann Lagoon Resort the best place for an unforgettable Boracay experience,” Karl added. With the opening of its New Wing, Henann Lagoon Resort now has a total of 222 world-class, luxurious rooms. Located at Station 2 along Boracay’s main road, the triple A-rated resort is home

to biggest swimming pool among the resorts of the Henann Group in Boracay, measuring 1,200 square meters. Meanwhile, guests are able to enjoy access to the longest beachfront area on the island’s famous white beach via complimentary shuttle to its sister resorts, Boracay Regency Beach Resort and Spa. Take pleasure on private escape and experience Boracay in luxury and comfort only at Henann Lagoon Resort. For inquiries and reservations visit www.henann. com/boracay/henannlagoon.

Century Properties and AccorHotels launch Novotel Suites Manila at Acqua

OP Philippine developer and listed firm Century Properties Group Inc., through its subsidiary Century Limitless Corp., has announced a partnership with AccorHotels, one of the world’s most renowned hotel groups, for the management of the first Novotel Suites Manila. Novotel Suites Manila at Acqua is a four star, 310-unit all-suite hotel and residential mixed-used property in the sixth tower of Acqua Private Residences in Mandaluyong City, Metro Manila. Century’s first hotel development is estimated to be completed in 2019. The launch is in line with Century’s portfolio diversification into the allied real-estate segments of leisure and tourism, which the company has identified as a structural growth area for the Philippine economy. Novotel is a four-star international brand for business and leisure travelers, with 414 hotels and 79,220 rooms located in major international cities, business districts and tourist destinations in 61 countries worldwide. As a member of the Novotel family brand, Novotel Suites offer suite-type rooms that are spacious and can

be adapted into a working area or reception room. The rooms come with a kitchenette, separate toilet and washbasin from the bathroom, high-speed Internet access, and amenities that cater to all types of guests and for all lengths of stays. Present at the launch of Novotel Suites Manila are (from left) Adam Laker, area general manager Philippines and general

manager of Sofitel Philippine Plaza Manila; Marco R. Antonio, COO of Century Properties Group Inc.; Paul Stevens, AccorHotels vice president for Operations for AccorHotels Thailand, Vietnam, Cambodia, Laos, Myanmar and the Philippines; and Venessa Koo, AccorHotels director for development—Singapore, Vietnam and the Philippines.

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tourism@businessmirror.com.ph • Monday, June 29, 2015 A7

A DIAMOND IN THE ROUGH

SURFING in Puraran’s majestic waves

SUNSET at Amenia Beach

CALM waters of Puraran Beach

BALSA ride at Bato River

S   B L P

ANY seasoned travelers and true-blue adventurers who have been to the island province of Catanduanes have likened it a diamond in the rough— it has crude edges, but its true beauty will sparkle once polished. Once known as the path of destructive storms, today it is a tourism frontier that beckons travelers looking for well-kept secrets off the beaten path. Located off the eastern seaboard of mainland Bicol, Catanduanes used to be part of Albay and was carved out as an independent province in 1945. While typhoons still pass through its corridor and still a point of reference because of the Philippine Atmospheric, Geophysical and Astronomical Services Administration (Pag-asa) Observatory, folks say that the more destructive ones are now as rare as a blue moon. According to Catanduanes Gov. Araceli Wong, the province is slowly shedding its typhoon-belt image by gearing up for ecotourism and adventure special events. Among these, she said, are the Enduro Challenge where mountain bikers braved the off-the-beaten paths of Virac; the Viga Photo Adventure Camp; the Reef Break surfing tourney; and the province’s One Tourist, One Tree program which requires visitors to plant seedlings in identified reforestation areas. Wong said that with this thrust, the province hopes to increase its share of the Bicol region’s booming tourist arrivals with its adventure, nature and culture attractions. The “Majestic Waves” in Puraran, Baras, is the province’s main draw, and is so-called because of its long magnificent barrel, which lures the top surfers both here and abroad. But those averse to the waves can frolic in its powdery cream sand

ANTIQUE jars at Catanduanes Museum

beaches and unspoiled clear waters. Mother Nature has gifted Catanduanes with fine beaches, breathtaking capes and idyllic isles all over the province, which takes one back to the island getaway minus the madding crowd. In the capital town of Virac, there are the beaches of Igang, Amenia and Batag, a coral-strewn beach whose charm is enhanced by a rock archway. Igang is home to Twin Rocks Beach Resort, which takes pride with its adventure facilities—a zipline, outdoor wall and accommodation amenities that are among the best locally. It is so-called because of the two awesome rock formations, which are among the province’s tourist icons. Amenia Beach, situated on Virac’s western coast, is the best place for sunset gazing with its calm waters and the perfect-coned Mayon Volcano in the horizon. It also has good lodging facilities and kayaks so guests can explore the vast expanse of water. Because of its rugged terrain, the province also abounds with waterfalls, whose enchanting cascades and refreshing waters cast a spell on nature lovers. Maribina Falls in Bato is the most frequented because of its shallow multilayered basins. Up north in Bagamanoc is Paday Falls, which boasts of a tall drop which empties into the sea, and is a sight to behold. A short boat ride away from the town is Loran Beach on Panay Island, which has its own patch of fine beach and tranquil environs. Deriving its name from Long Range Aid to

Navigation, it was a former American outpost in the 1950s to guide ships in the Pacific. The ruins of its barracks still proudly stand atop a hill with a commanding view of the ocean. Bagamanoc is a trekker’s haven with its hiking trails across hilly pasture lands and ends in pockets of beaches. The town’s most recognizable natural feature is Ilihan islet, which is more popularly known as “Boto ni Kurakog” because of its phallic-shaped rock formation. The subject of many old wives’ tales, it is said that Kurakog was a giant whose body was washed away by the waves after a deep slumber and it was only the protruding 5-meter rock column that remained. Across it is a limestone rock which has a shapely crevice dubbed as “Buri ni Kalarab” and whose origin is as intriguing as Kurakog’s legend. Meanwhile, Panganiban town is another best-kept secret with its picturesque cape of Lolong Point where an imposing lighthouse proudly stands on a hill beside a placid beachfront where time seems to stop. Catandunganons display their faith in their religious spots such as the postcard-pretty Spanish-era Virac Cathedral, Saint John the Baptist Church and the Batalay Shrine, both located in Bato town. The latter is the Diocesan Shrine of the Holy Cross, the burial place of Augustinian Fr. Diego de Herrera who died there in the 1576. The priest, who journeyed with Spanish conquistadors Legazpi and Urdaneta, is the first Catholic missionary to the province. Another must-see is the Luyang Cave Park in San Andres where scores of natives were choked to death in the 17th century by Moro pirates by burning red pepper. A dry cave, Luyang is often used for adventure races as it leads into a clearing on the other side of the mountain, en route to a trail to the town proper. For a glimpse of local heritage, swing by at the Catanduanes Museum, a repository of historical and archaeological implements attesting to the province’s rich past. On the third floor of the restored Old Capitol Building, it is on the same spot of the Provincial Tourism Office which is a first stop for every visitor for registration and information gathering.

ILIHAN islet with phallic-shaped rock formation

TheElderly BusinessMirror

A8 Monday, June 29, 2015 • Editor: Efleda P. Campos

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Seniors play ‘angklung’ for the sheer joy of making music

By Oliver Samson | Correspondent

N all-senior, bamboo-organ ensemble gets people who transact business at the Quezon City Hall drawn every Tuesday afternoon to its rendition of old but immortal songs.

The group’s music draws people, men and women, young and old alike, to a full stop at the city legislative building, with ears and eyes glued at performances of songs of yesteryears, like “Wooden Heart, Que Sera Sera” and “Paper Roses.” The performances seem to be a therapy to the members of this ensemble. They enjoy performing and the music that they create together. The delight that the audience displays in response to their music is flattering. The coordination of over 30 angklung players, a guitarist, a bass guitarist and one marimba to create harmony demonstrates unity, cooperation, discipline and talent. Angklung Philippines Manunugtog Kawayan Inc. was founded in 1998 by Suzie Narzo, who is turning 90, who is the group’s trainer, a retired music teacher. Its early members were seniors who tried to delay aging by keeping fit with tai chi workouts, she said.

In 2009 Narzo and a few members flew to Indonesia to look for and purchase angklung to replace ones wornout by use. Angklungs, which are made of bamboo tubes, were on sale in Indonesia at the time, so they took the opportunity, Narzo said. They used the money collected from Christmas caroling as subsidy for the purchase of the instruments, she said. The members assumed half of the price. These musical instruments are also made in the Philippines, but are highly priced, she added. Aside from drawing out the smiles of people at the City Hall its therapeutic rendition of old songs, Angklung Philippines had also performed at the Concert at the Park three times—2012, 2014 and, just recently, this year. The group has also enthralled the audience at the Paco Park last year. “Our members are happy,” Narzo said. “They find fulfill-

ANGKLUNG Philippines Manunugtog Kawayan Inc. members in their casual attire during a regular performance at the Quezon City Hall. OLIVER SAMSON

ment in what we do.” Performing has been keeping them active, Carmelita Cortez said, 68, a member of Angklung Philippines. “We also go outing,” she added. At present, Angklung Philippines has over 50 members, who are retired professionals, entrepreneurs, government employees and plain housewives, whose ages range from 60 to 90, Narzo said. Last week the group performed at

the birthday party of one of its members at the Imperial Palace. Aside from Concert at the Park and the Paco Park, the group has also performed at the GSIS Hall, Golden Acres, Philippine Normal University and SM North Edsa. The members can also play contemporary songs, but they find them noisy and stressful. “Music for us should be soothing to the senses,” Narzo said.

The group raises its own fund. No individual or group subsidizes the group. The group bought the marimba and the big bass guitar from the honorarium it received for performing, Narzo said. The group said it is entitled to claim half of the annual 1 percent internal revenue-allotment for seniors. “It could be a big amount for

us,” Narzo said. They need drums, she said. The group will highly appreciate anyone who can help them acquire the instruments. These seniors have been cheering people who drop by the City Hall. They hope that the city government would support them, Narzo said. They are also open to invitations to perform.

On her third try, Carol Colborn became a wife at 65 By Vernon Gabrielle Velasco

HE went stateside to look for a husband. She was the CEO of the Information and Communication Technology titanic BayanTrade, and had everything we thought we could ever equate “the life” to. But something was amiss, and there was a gaping void in her life. “I felt burned out because I didn’t have someone at home to comfort me, to go home to, someone to enjoy life with,” she said. “I didn’t have someone to whom to tell, ‘Uy, this is what happened to me this morning.’ I was just sleeping and managing, day in and day out. I wasn’t happy.” Carol Colborn had separated from her husband and was single for 21 years before going to America. All that time she was dating and had suitors, whom she described as either “philandering husbands or young hopefuls or unconfirmed bachelors,” who were camping at her doorstep. “But in the Philippines,” said Carol, “it was difficult to find [an ideal partner], especially because, at my age, all the good ones were already taken.” Carol had two previous marriages, one with whom she had children and another a whirlwind romance she described as a huge two-year misstep. In the US more than 50 percent of people are d ivorced, and es tranged couples either renew their ways of partnership or they find new partners. “So in America there will always be available men my age,” she said, and she found ways of meeting and mingling. (The Internet is the place to go, where “you don’t have to be restrained by the people you meet.)” Really, how many people do you meet in a day? On the Internet, it is limitless, at least as far as Carol is concerned, and before she knew it, she was clicking away and lost in volumes of single men’s online profiles and more profiles. “In fact, there is a dating site called Ourtime.com, which is for seniors, 55 plus. And it has so many successes. I feel that, right now—and this is going to be a part of my talk in the international ICT Summit—dating sites are more narrowly focused, so that the

“TRAVELING is where you experience both extremes of a relationship, especially on a recreational vehicle. They say there’s no room for disagreement because it’s too small. But that’s not true; there is a lot of room for disagreement because it’s too small,” said Carol Colborn, 67, who has traveled North America with husband Bill.

rate of success is better because the compatibility is built-in,” she said. In Carol’s case, her sister uploaded her profile onto a virtual-chat roulette and was matched to an American businessman, Bill Colborn, as “86-percent compatible.” “[Bill] was my second try. I divorced my first American husband because we’re not compatible. When Bill and I met and married, he sold his business so that we can travel.” Carol and Bil l ’s first idea was to travel the world teaching English. T hey tested the waters in Taiwan, where Bi l l has a f r iend. But to have a work ing v isa, say, in Taiwan teaching English, they had to work four days a week, which was not good, because it meant being left w ith only three days a week to travel. “So, on the long way home to America from Taiwan, we discussed what we’re going to do. And he gave the idea of an RV [recreational vehicle]. Because RV-ing is the American dream for A mer icans,” she said. “ Their dreams are to be free and to have untethered and mobile

lives—to be free from all ties and just roam the land because America is a ver y big land.” Thus, her first book Carolina: Cruising to an American Dream (iUniverse, 2015, 178 pp.), where the Filipino recounted a story of “retirement,” immigration, love and an in-between extensive bucket list of having crisscrossed the breadth and length of North America four times in a cruising lifestyle—on an RV. “Traveling is where you experience both extremes of a relationship. Especially on the RV; maliit kasi ang RV. People say there’s no room for disagreement because it’s too small. But that’s not true; there is a lot of room for disagreement because it’s too small,” she said. Sometimes, it’s so easy to leave each other well enough alone, to lock herself in one room and he in the other, “but you can’t do that when traveling, because you should maximize the time looking around at places and you have to be together.” Or, perhaps, because now she knows what being a wife means. “Being a wife means—and I finally learned it only after the third tr y—that you and your par tner should meet in the middle. There are things you can let go and things that you cannot. I read in a book that 69 percent of your problems as partners cannot be resolved because you’re different. But it’s a matter of living together.” When, once, she found that Bill was chatting online with his former college sweetheart, “Before, I was like: ‘Ah, ganyan ka? Iwan kita!’” But Carol stuck. She had marooned her previous two husbands on petty things, she was feisty and the type you cannot push around, “ but Bill made me stay.” “We learned how to get over such things. And I learned that at what age? 65!” she enthused. But Carol is going to live to 90 or 100 or maybe forever. After all, at 67, there are more bucket lists to fulfill, books to write; Bill said they still can have their 30th anniversary as people get married at 80 in America anyway. “Bill is not a perfect husband,” Carol said. “But I made a choice, finally, that I am a wife.”

STILL SELLING HIGHLAND VEGETABLES AT AGE 75 Manang Loring is 75 years old, and continues to sell Chinese pechay

and other highland vegetables in the Baguio City public market. She said that to keep strong and healthy, she prefers to walk around the Baguio business district instead of sitting around at home. MAU VICTA

Dapitan City honors oldest living resident

APITAN CITY, Zamboanga del Norte—The local government has feted the oldest living resident on the culmination day, last Monday, of the city’s 52nd Charter Day celebration. The honoree was Gertrudes Jamolod Insong, who received a Mabuhay Ka plaque of recognition personally handed over by Mayor Rosalina Jalosjos. Vicky Cad-Bangara, city information officer, said the simple yet fitting ceremony was held at the residence of Insong, who is wheelchair-bound. Bangara said Insong is 102 years old and blessed with nine children—five males and four females— and 67 grandchildren and 35 great-grandchildren. Bangara said Insong’s husband was a tailor. Her husband, Jose, died at the age of 82.

Bernardo, Insong’s sixth child, said her mother used to cook salbero (locally made bread) and bibingka (rice cake), and sell it at her sari-sari store to augment the income of the family in sending the children to school. Bernardo is a retired enlisted Philippine Air Force soldier. In behalf of his family, he expressed gratitude to the city government for giving recognition to their mother. Bangara said Insong manifested a good, happy and healthy living, making her a living treasure that every Dapitanon must be proud of. Bangara disclosed this year is the first time the local government honored the oldest living person in celebrating the city’s 52nd founding anniversary. PNA

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The Regions BusinessMirror

Palace moves to boost trade linkages in BIMP-Eaga By Butch Fernandez

RESIDENT Aquino embarks on a twin mission on Monday to check on progress of Brunei, Indonesia, Malaysia, Philippines-East Asean Growth Area (BIMP-Eega) trade linkages and the status of air-defense alert facilities of the Armed Forces in Palawan, ground zero of a maritime row with China. Malacañang confirmed over the weekend that Mr. Aquino, accompanied by select Cabinet officials, is set to inspect the P5.23-billion Puerto Princesa Airport Development Project, funded by the Export-Import Bank of Korea (Kexim) under the Economic Development Cooperation Fund (EDCF) of South Korea. According to a Palace briefer,

the project covers improvement of facilities in the existing Puerto Princesa Airport, as well as enhance quality of airport service and the safety of air transport to comply with the International Civil Organization standards. It also aims to “expand the airport capacity brought by the increasing air-traffic demand” and “revitalize the transport and trade linkages under the BIMP-Eaga,” the Palace said. President Aquino, after getting updates on the Puerto Princesa airport project, is scheduled to also visit the Air Defense Alert Center Western Command in San Miguel, Puerto Princesa City. From there, the President will fly to Cebu for groundbreaking rites of Mactan International Airport’s

new passenger-terminal building in Lapu-Lapu City, before flying back to Manila. The Palace reported that among those in the reception party at the Puerto Princesa event are South Korean Ambassador Kim Jaeshin; Director General William K. Hotchkiss of the Civil Aeronautics Authority of the Philippines; Undersecretary for Project Implementation Julianito G. Bucayan; Palawan Gov. Jose Alvarez; Puerto Princesa Mayor Lucilo Bayron; and Palawan Reps. Douglas Hagedorn, Frederick Abueg, Franz Joseph George Alvarez; and Yongkeun Oh, chief representative-country director of the Manila Representative Office, Economic Development Cooperation Fund of the Kexim.

BPOs in provinces to reverse urban migration—legislator

MEMBER of the House of Representatives’ Committee on Poverty Alleviation on Sunday said that the rise of call-center business districts in the provinces will reverse the urbanmigration problem, particularly in Metro Manila. Liberal Party Rep. Reynaldo V. Umali of Oriental Mindoro, also House Committee on Energy chairman, said that the strategic placement of call centers and businessprocess outsourcing (BPO) hot spots in rural areas will decongest Metro Manila and Metro Cebu, and reverse the process of rural-to-urban migration. “Call centers are relatively easy to put up. And Filipinos in rural areas are also well-educated and speak English well. They could very

well match any of the needs of the call-center industry,” Umali said. “When we are able to provide employment in the countryside, even Manileños will want to go back to their provinces and continue living there. By doing so, we can reverse urban migration,” he added. Currently, Metro Manila is second only to India’s Bangalore on the Tholons Top 100 Outsourcing Destinations list. Meanwhile, Cebu City is ranked 8th in the same list. BPO hot spots have started to rise in Bacolod, Baguio, Cagayan de Oro, Davao, Lipa, Iloilo, Naga, Clark, Dagupan, Olongapo, Dumaguete, Urdaneta and even disaster-hit Tacloban. Umali said an estimated 170,000 jobs in the industry will be gained before the end of this year—many

of which will be in these regional economic zones. Danilo Sebastian L. Reyes, chairman of the Information Technology and Business Process Association of the Philippines, said that the industry is expected to reach $25 billion in revenue and 1.3 million in employment level by 2016. The IT industry’s growth is buoyed by growing demand not just in call centers but also in nonvoice sectors, gaming and animation, and healthcare information management. Within the decade, the main source of dollar income will come from the BPO industry. Forecasts from the Bangko Sentral show that income from BPO companies will soon overtake overseas remittances as the country’s main economic driver. Jovee Marie N. dela Cruz

Monday, June 29, 2015 • Editor: Dionisio L. Pelayo

Transmission-line problems hound Subic power firm

By Lenie Lectura

EDONDO Peninsula Energy (RP Energy) may consider the initial construction of only half of the 600-megawatt (MW) coal-fired power plant in Subic while certain issues are still being ironed out. “We might change the project parameters. We may drop it to around 300 MW, but we still don’t know. Maybe, do the first 300 MW first,” said Manuel V. Pangilinan, chairman of the Manila Electric Co. (Meralco). RP Energy is a consortium composed of MGen Power, Aboitiz Power Corp. and Taiwan Cogeneration International Corp. MGen is Meralco’s power-generation arm. The Subic project has been on the backburner since 2010 owing to a number of legal challenges hurled by those who are against coal-fired power plants. It was originally supposed to come on line in 2015, but it just recently sought a favorable decision from the Supreme Court to proceed with the construction. Last week Pangilinan said transmission-line problems hound

the project. “The issue is really the areas where the transmission line passes through from the power plant to the grid. We will have to review these areas. “Apparently, these are reserved areas. We can’t build on top of that. It’s prohibited,” Pangilinan explained. But he hopes that the problem will be addressed “in the next few months.” Meralco legal head William Pamintuan said the matter is carefully being studied and that a recommendation to initially work on the first 300 MW was raised. “One option is to go ahead with the first 300 MW. Second, push through with the construction of the full 600 MW. But it’s more prudent to do the first 300 MW first. However, this will have to be cleared by the RP Board. Everybody will have to agree

first,” he said. The transmission line is a vital component of any power project, because without this the power facility will not be able to deliver power. RP Energy has already sought approval from the Energy Regulatory Commission to connect its 600 MW. Subic power project to the transmission system of the National Grid Corp. of the Philippines via a dedicated transmission line. The line will be called RPECastillejos transmission line, a 23-kilometer, 230-kilovolt doubletransmission line. RPE is currently in discussions with banks for the project financing of the power facility, as well at the RPE-Castillejos transmission line. For the transmission line, funding will be sourced through RPE’s equity and loan. RPE said the contract for the supply of materials will be assigned to qualified suppliers and contractors following a competitive bidding and selection process. For the construction of the plant, MGen said it will raise “higher than P40 billion” to partly fund the coal plant. The plant is slated to start commercial operations in early 2019. It is composed of two 300MW generating units. The target commencement of construction is in the latter part of this year.

Opinion BusinessMirror

A10 Monday, June 29, 2015

editorial What PHL can learn from Greece

N case you have not spent any of your valuable time following the telenovela negotiations over the debt disaster in Greece for the last several months, the final episodes are now showing.

There has been little attention here in the Philippines paid to this unfolding financial drama. Perhaps, the best that our local commentators could come up with was a review of their own personal travel diary to Greece. “The country has friendly people, great food, beautiful beaches, and it’s really a shame their economy is going to collapse.” Given a reversal of fortune, perhaps, that is what Greek commentators would be saying about the Philippines if our banking system was on the brink of failure. The current situation is nothing more than a continuation of the tribal warfare than has been “Europe” since they first crawled out of their caves and began throwing rocks and spears at each other for economic conquest. The 1992 Maastricht Treaty created the European Union (EU), and led a few years later to the euro currency. Germany, because of its size, became wealthy, in part, by exporting nearly 60 percent of its goods to the “Little Europeans”: Greece, Italy, Spain, Portugal and Ireland. Those nations essentially exported all their cash to Germany. When they ran out of money, the EU loaned them more cash to buy more and to finance their ineffective and inefficient governments and economies. But Greece is a particular case, and its experiences do offer some lessons for the Philippines. Greece owes an amount equal to 180 percent of its economic output that, to ever be repaid, would require continuous economic growth of 3 percent to 5 percent. But the Greek annual growth rate has been negative for 26 of the last 30 quarters, and the economy has shrunk by nearly 30 percent. The Economist magazine puts it all together very clearly. The problems in Greece are: “The structural impediments to growth—rampant clientelism; hopeless public administration; comically bad regulations; a lethargic and unreliable justice system; nationalized assets and oligopolies; and inflexible markets for goods and services and labor.” The specifics are uncomfortably close to what we have in the Philippines. One economist, John Mauldin, broke it all down this way. “Government bureaucracies tend to favor businesses already in place and create unnecessary rules for new competition. [Think Philippine mining and retail.] The bureaucracy is heavily geared toward patronage and employing family and friends. The rules are such that many of the most important industries have only two actual providers of goods or services, neither of which is incentivized to compete on price. It is extremely difficult to create a new business to compete with these oligopolies. [Philippine telecoms?] The justice system is notoriously fickle, and subject to pressure and bribes and crony capitalism. Many of the state-owned businesses, like the railroads, are hopelessly mired in losses and inefficiencies.” It is easy to look at others and shake your head at their failures. It is much harder to carefully examine yourself and make changes to avoid the same mistakes.

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PCSO opens branch in Ozamiz, donates ambulances Atty. Jose Ferdinand M. Rojas II

RISING SUN

HE Philippine Charity Sweepstakes Office (PCSO) opened its 45th branch office on June 22 in Ozamiz City, Misamis Occidental, as part of the charity agency’s commitment to widen public access to its services and products. With me to inaugurate the new office were PCSO directors Betty B. Nantes, Mabel V. Mamba and Francisco G. Joaquin III, along with Assistant General Manager for Branch Operations Remeliza M. Gabuyo and other PCSO personnel. We were welcomed to Ozamiz City by Mayor Reynaldo O. Parojinog Sr., Vice Mayor Nova Princess E. Parojinog-Echavez and other local government unit (LGU) officials and employees. The new branch office, headed by Pilarcita Florentes, is at the bus terminal in Barangay Aguada, and is very accessible to people from all over the province and nearby areas. When my fellow PCSO directors and I came into the agency in 2010 at the start of the Aquino administration, there were only 25 branches nationwide. After a careful needs-analysis and resources assessment, we determined we could feasibly set ourselves a mediumto long-term goal of setting up a branch in every province.

We began expanding the branch network in 2012 and, in just three years, we are close to doubling the original number of branches. More are scheduled to open in the coming months, because we are committed to opening seven new branches this year as part of our 2015 operational targets as negotiated with the Governance Commission for government-owned and -controlled corporations. We have already formally opened four so far this year and soft-opened one in San Jose, Mindoro Occidental, last week. While in Ozamiz, we also turned over 15 ambulances to three provinces in the area: seven to Misamis Occidental (Ozamiz City and the municipalities of Bonifacio, Clarin, Concepcion, Lopez Jaena, Panaon and Sapang Dalaga); six to Misamis Oriental (Claveria, JR Borja, Libertad, Naawan, Talisayan and Villanueva); and two to Bukidnon (Cabanglasan and Valencia City). The ambulances were donated to the LGUs under the PCSO’s

Ambulance Donation Program, which provides that LGUs and institutions may request ambulances from the PCSO every five years under either a cost-sharing or outright-donation scheme, depending on the class of the municipality or city. Ambulance conductions of patients using PCSO-donated ambulances are supposed to be free of charge, and it is up to the donee LGU or institution (hospital, clinic or other) to maintain, service, fuel and operate the vehicle for the benefit of the area’s residents. nnn

WE gave more ambulances away last Friday (June 26), this time in San Fernando, Pampanga, where we were met at the Bren Z. Guiao Convention Center by Gov. Lilia G. Pineda. Pineda led the turnover ceremony, which was well-attended by the province’s barangay health workers and other employees, who were there also for a Department of Health DOH seminar on infectious diseases held right after the turnover. PCSO directors Nantes, Mamba and Joaquin were also with me on this occasion to donate eight ambulances to district hospitals: Domingo B. Flores District Hospital in Macabebe; San Luis District Hospital in San Luis; Ricardo P. Rodriguez Memorial Hospital in San Fernando City; Romana Pangan District Hospital in Floridablanca; Jose Songco Lapid District Hospital in Porac; Escolastica Romero District Hospital in Lubao; Diosdado P. Macapagal Memorial Hospital in Guagua; and

Ricardo P. Rodriguez Annex Specialty Hospital in Bacolor. On June 19 PCSO Director Bem Noel, with Leyte Gov. Leopoldo Dominico L. Petilla, also presided over an ambulance turnover ceremony at the Leyte Provincial Capitol in Tacloban City. On that occasion, the PCSO gave 39 ambulances to 37 municipalities, one city and one association in that region (Region 8) that was badly devastated by Supertyphoon Yolanda (international code name Haiyan) in November 2013. Not only that, the PCSO lent two weeks ago to the DOH 36 ambulances for the 2015 Asia-Pacific Economic Cooperation (Apec) summit. There are forthcoming Apec events to be held in Manila in July, August and September, and elsewhere in the Philippines in the coming months. From November 4 to 19, Manila will host nine major Apec events, including the CEO Summit that will be attended by dignitaries from around the world. The PCSO ambulances will serve as standby emergency vehicles for these occasions. The PCSO’s Ambulance Donation Program is benefiting our kababayan around the country and this is because the agency implements good governance, prudent stewardship of resources, and reform initiatives as it walks the matuwid na daan. nnn

Atty. Jose Ferdinand M. Rojas II is vice chairman and general manager of the Philippine Charity Sweepstakes Office.

Is graft crackdown hurting Swiss watchmakers?

By Leonid Bershidsky | Bloomberg

T’S almost a knee-jerk reaction to say that the 8.9-percent drop in Swiss watch exports in May was connected to the introduction of Apple Watch. Yet, the Chinese attack on corruption may be more to blame. Early indications are that Apple Watch isn’t one of the company’s runaway successes. The research firm Slice Intelligence says the company has sold about 2.8 million of the devices since April. If that’s true, they are going at the rate of about 1.5 million a month. That’s not many compared with the iPhone—61.2 million smartphones were sold in the first three months of this year—and even with the iPad (12.6 million units sold in January through March). Of course, it’s still a lot compared to the Swiss watch industry, which exports a little more than 2 million timepieces a month, but then China makes 175 million watches a month and Swiss factories are still humming. The underperformance of the industry is just as easy to explain by pointing out that May 2015 had two fewer working days than May 2014, and the shortfall is roughly equivalent to two days’ exports. In Europe, de-

spite the calendar factor, Swiss watch exports grew 3 percent in May and 9 percent in the year to date as a weakening euro-boosted tourist numbers. That growth hasn’t been hampered by the Apple Watch or even the strong Swiss franc. Yet, globally, the Swiss watch business isn’t growing. That’s due to a steep drop in sales in Hong Kong, its biggest export market. Exports to the Special Administrative Region dropped 33.6 percent in May, after a 30-percent decline in April. That kind of catastrophe can’t be explained by exchange-rate vagaries or even the general slump in Hong Kong retail, caused by the declining number of tourists from mainland China. The best explanation probably has to do with the role Swiss watches play in corruption. In 2013 Xiaohuan Lan and Wei Li, of China’s Cheung Kong Graduate School of Business, discovered

that luxury-watch imports have increased dramatically every time China had its regular, once-in-five years power transition: “During leadership transitions,” Xiaohuan and Wei wrote, “officials who are eligible for promotions have incentives to send gifts or money to officials who have influence over official appointments. When a new leadership team is expected to be installed, businesspeople and officials also need to establish new connections and to form new official-business ventures.” There’s even a Chinese expression for this transition-related corruption: huan jie fu bai. Watches play a big role in these exchanges because they are small (and, therefore, easy to hand over inconspicuously) but expensive—the median price of a luxury watch in China is $5,000—and easy to resell if necessary. Xiaohuan and Wei wrote about the Swiss timepieces: “Because of their brand cachet, they are often counterfeited. While it may be counterintuitive, the apparent availability of counterfeits may actually increase the desirability of the genuine watches as a medium of corruption exchanges. One scheme discussed on

Internet forums is to give two watches, one genuine and one counterfeit, as gifts. If such an exchange were ever investigated, the receiver can hand over the counterfeit, which usually costs less than 200 yuan.” Under President Xi Jinping, a relentless anticorruption campaign— which even includes a ban on advertising watches as gifts to leaders— has hurt sales of many luxury items. Luxury-watch sellers, however, are suffering more than anyone else. Earlier this month, John Idol, the CEO of Michael Kors, said the iPhone and other smartphones, not Apple Watch, were driving down watch sales in the US: “There’s clearly a younger customer, in particular, in America who is wearing watches less because they view the iPhone as something that they tell time with.” Swiss watchmakers should worry about corruption fighters at least as much as they worry about Apple. Crackdowns on graft in some of the industry’s big markets, such as Italy, Spain or the United Arab Emirates, could be painful. In fact, Apple itself may be suffering: Think of all the $17,000 gold smartwatches it’s not selling.

Opinion BusinessMirror

opinion@businessmirror.com.ph

Monday, June 29, 2015 A11

The expectation of privacy Atty. Lorna Patajo-Kapunan

legally speaking

NE of the most fundamental rights guaranteed under the Philippine Constitution is one’s right to privacy. The essence of privacy is the “right to be let alone.” The right to privacy, citing the revered Mr. Justice Brandeis in Ople v. Torres, is considered as “the most comprehensive of rights and the right most valued by civilized men.” In this day and age, because of the want of barriers in the sharing and availability of information across the various platforms of science and technology, it is truly challenging for anyone to expect, much more ensure, that one’s right to privacy is upheld. As held in Ople v. Torres, “x xx [a]ll the forces of a technological age—industrialization, urbanization and organization—operate to narrow the area of privacy and facilitate intrusion into it. In modern terms, the capacity to maintain and support this enclave of private life marks the difference between a democratic and a totalitarian society.” Notwithstanding this guarantee of protection by our laws, it begs the question—does one’s right to privacy hold the same fundamental protection in the context of business and work? To begin with, the constitutional guarantee (of the right to privacy) is not a prohibition of all searches and seizures but only of “unreasonable” searches and seizures. Clearly, the question of privacy must be considered in light of the factual circumstances of each case and the environment by which the expectation of privacy is present or absent. Hence, in Social Justice Society v. Dangerous Drugs Board, the Honorable Supreme Court held that, considering that the office or workplace serves as the backdrop for the analysis of the privacy expectation of the employees and the reasonableness of drug-testing requirement, the employees’ privacy interest in an office is, to a large extent, circumscribed by the company’s work policies; the collective bargaining agreement, if any, entered into by management and the bargaining unit; and the inherent right of the employer to maintain discipline and efficiency in the workplace. Their privacy expectation in a regulated office environment is, in fine, reduced; and a degree of impingement upon such privacy has been upheld. Taking into account the foregoing factors, i.e., the reduced expectation of privacy on the part of the employees, the compelling state concern likely to be met by the search, and the well-defined limits set forth in the law to properly guide authorities in the conduct of the random testing, the Honorable Supreme Court held that the challenged drug-test requirement is, under the limited context of the case, reasonable and, ergo, constitutional.

Considering that the office or workplace serves as the backdrop for the analysis of the privacy expectation of the employees and the reasonableness of drug-testing requirement, the employees’ privacy interest in an office is, to a large extent, circumscribed by the company’s work policies, the collective bargaining agreement, if any, entered into by management and the bargaining unit; and the inherent right of the employer to maintain discipline and efficiency in the workplace. Similarly, in Pollo v. Chairperson involving a government employee who alleges that his right to privacy was violated by the search and seizure of certain files in a computer officially assigned to him by reason of his office as Chief of Mamamayan Muna Hindi Mamaya Na division of the Civil Service Commission (CSC), the Honorable Supreme Court ruled that the relevant surrounding circumstances failed to prove that he had an actual expectation of privacy. Petitioner did not allege that he had a separate enclosed office, which he did not share with anyone, or that his office was always locked and not open to other employees or visitors. Neither did he allege that he used passwords or adopted any means to prevent other employees from accessing his computer files. The CSC, then, had implemented a policy that put its employees on notice that they have no expectation of privacy in anything they create, store, send or receive on the office computers, and that the CSC may monitor the use of the computer resources using both automated or human means. The Honorable Supreme Court voiced further that a search by a government employer of an employee’s office is justified when there are reasonable grounds for suspecting that it will turn up evidence that the employee is guilty of work-related misconduct. In fine, a person’s right to privacy is far from unbridled, much more absolute. It is always assessed and weighed against other rights of the different stakeholders in society.

How Jojo should have said it Teddy Locsin Jr.

Free fire

OJO Binay’S speech was met with brickbats. Here’s how Binay should have said it. “I have resigned from the Aquino Cabinet with a one-line resignation letter. I do not mince words or waste them. I am grateful for the privilege of serving in the Cabinet of a man of unquestioned sincerity. But I cannot go on working alongside colleagues of indisputable insincerity who work against me—sadly, with no electoral advantage to themselves. “I resigned because it is approaching that time when those of us in the Cabinet who intend to run in next year’s election must tell the electorate why we are running— on a level playing field and along a straight and narrow track by not taking advantage of Cabinet positions and the funding that goes with them. “I do not want what I will say in the coming campaign to be taken as criticism of an Aquino administration; in the first of which I served proudly as OIC mayor, in the second of which as a Cabinet member. “But the platform on which I will run might be taken as criticism of the President I served, even as I served his mother in a lesser capacity. I do not want that. His mother put him in my care when she was president. “I shall promise a swift resumption of light-rail operations by any means that work; and I shall implement a profound overhaul of the entire system so that

breakdowns are not repeated to the detriment of ordinary Filipinos—compounding the long hard work they do with the long hard walk they must take to and from work in the dark before dawn and in the darkness of midnight. Wherever urban centers have reached a point of irremediable congestion, I shall implement the same efficient transport system. “I promise justice, security and peace for our Muslim brothers and sisters, and for their Christian brothers and sisters. I promise ironclad security for their families and communities against armed elements seeking to take complete control of their lives by executive action rather than by democratic election, and to put peaceful communities at their mercy without the protection of our Constitution and the laws. All this in one indivisible republic, dedicated to freedom and justice for all regardless of religion. “I believe it is possible, nay, it is mandatory, to deliver good gov-

Racial politics will never be quite the same

By Francis Wilkinson | Bloomberg

ISTORY is being made almost willy-nilly this week. The effect is dizzying—and profound. Between the time I write this and the time it is published, another prominent Southern political leader may well take a symbolic step away from the Confederacy. Already, the Republican leadership of South Carolina has committed to taking down the Confederate battle flag outside the state capitol. (Strom Thurmond’s son, a state senator, endorsed the move.) The governor of Alabama had four Confederate flags unceremoniously removed from his state capitol grounds on Wednesday morning. Mississippi Sen. Roger Wicker echoed his state’s Speaker of the House in calling for Mississippi’s flag, which

prominently features a Confederate flag, to be retired. Some leading Kentucky politicians endorsed moving a statue of Jefferson Davis from the state capitol. A friend asked whether any sensible person wouldn’t prefer, say, better

education policies and less regressive taxation in Mississippi instead of a new flag. It’s a valid question. But it may be that better policies are impossible without a new political context, one in which the flag—and all the bloody, dishonest, subterranean vice it represents—is laid to rest. Symbols matter: That’s why we cherish them, wave them, flaunt them. Public symbols matter more. No conservative politician in the South can afford to fully acknowledge what is going on this week; the political constituency for what Sally Jenkins called the “self-lying sentimental tide” of the Lost Cause is still too potent a source of votes and

activism to be directly confronted. But across the South, the political context is changing before our eyes. In the 1960s the federal government forced Southern whites to grant blacks the right to vote, to serve in office, to participate in public life. But Southern whites never surrendered their symbols of domination. In the most charitable explanation, the Confederate battle flag enjoys its exalted place because white Southerners wish to honor the sacrifice of their ancestors. The sacrifice of Confederate soldiers was indeed immense. Confederate armies wasted their lives by the tens of thousands, along with hundreds of thousands of innocent

ernment without taking shortcuts that violate the rule of law. That is the challenge of a democratic presidency and the oath that presidents take to uphold the Constitution and the laws. “If government cannot govern well without bending the law, it may still achieve short-term reforms but the ultimate result is the long-term deformation of our democracy—against which Ninoy Aquino fought and for which his life was taken. “In foreign affairs where there are no permanent friends, I shall make no permanent enemies for our country. I will pick no fight that is not directly in defense of homeland security. “If at all possible, I will incur no deep enmity with a powerful neighbor and adhere to a course of peaceful dialogue but without the smallest infringement of our sovereignty or the tiniest loss of national territory—neither to a foreign power nor to domestic terrorists. “Other than what I have promised, I will promise nothing more in my campaign that I have not performed. I will attempt nothing I have not already achieved; so the work of government shall entail no waste and invite no disappointment. But this much I promise you, my government will not begin and end with a massacre. “I will not berate the Holy Father if he comes again to visit. “I will make mistakes; I am only human; but I will say sorry for them. Not to apologize is tantamount to threatening more of the same. “From first day to last, my ad-

ministration will be marked by the continuing and increasingly inclusive progress that was started by this administration; by the unbroken peace that this government threatens to lose through a unilateral and uninformed initiative prompted by foreign governments. “And always, ever and foremost, my administration will be marked by unrelenting devotion to the best interests of all our people, poor and rich, and the growing numbers in the middle for which we must credit this admin. “You have heard much against me. Please take the trouble to see what I have done for one city. “Look at what is there before you: every child in school, including the children of Taguig; every elderly person given attention and respect because people retire only from work and not from life itself— and we all…we all get old. “See for yourselves, rather than hear from my enemies, what I have done—and what I aim to do if, God willing, the people let me. “At a certain point in our lives we are confronted with the choice: their way or the highway. Well I’m on the road. I hope to see more of you there. It will be hard but who wants easy? It will be a fight but what else is worth doing? I will take questions now.” I am not saying that this and just this, word for word, is what Jojo should have said; but he should have been more reflective, taken the trouble to sound more thoughtful—and less baduy by peddling the opposition hook, line and sinker.

Union soldiers, in a singular quest: to keep blacks forever enslaved and subject to torture, rape and murder. That certainly speaks of commitment. But commitment to barbarism is difficult to defend, even after decades of practice in the art of obfuscation. You cannot venerate the Confederate soldier’s sacrifice without degrading the ideal of universal human dignity. You can only excuse and understand the Confederate soldier’s defense of savagery as a product of his own peculiar political and cultural context. This week Southern politicians have been discarding the fraudulent pretenses of neo-Confederacy, and

American businesses, such as Amazon, have been tacitly or explicitly refuting them. Whether they are bowing to a new moral consciousness brought on by the slaughter in Charleston or to the political realities of the nation’s changing demographics is ultimately not important. It’s the seismic shift in our political and cultural context that matters. Racism isn’t dead. Its roots stretch too deeply into American history and life to be so easily eradicated. (And if history is any guide, a backlash to this week’s actions is already brewing.) But racism is in the process of losing a prominent purchase on American life. That’s big.

2nd Front Page BusinessMirror

A12 Monday, June 29, 2015

Investors keep tabs on 2016 front-runners By Bianca Cuaresma

olitical movement in the country in the second half of the year up to the elections in 2016 will likely be the focal point of foreign investors’ decision-making in the coming months, as businessmen naturally give weight to the policy future of the country in the medium term, an international bank said. “National elections are due in the Philippines on May 9, 2016, and we expect the focus to shift rapidly in the second half of 2015 to the political outlook as the presidential candi-

dates are announced,” Barclays Bank said in its quarterly review of emerging- market economies. “The elections will be keenly watched by investors, as a primary issue is continuity of the improvement in recent years of the country’s growth and credit metrics,” the bank added. Barclays told its foreign clients that, while the list of candidates for presidency is fluid at this time, frontrunners have already emerged as early as the first half of 2015. “Vice President Jejomar Binay’s

campaign is likely to focus on poverty alleviation and improvements in public services, similar to his vice-presidential campaign in 2010. He is notably more supportive of closer ties with China, including potentially a joint oil and gas exploration in disputed territories, and amending the 1987 Constitution to change the rules on foreign ownership,” Barclays said. “Despite recently leading in polls, Grace Poe has yet to announce her candidacy…. Assuming Ms. Poe does an-

www.businessmirror.com.ph nounce her intention to run, she might campaign on issues similar to her 2013 senatorial run, which stressed poverty alleviation through good governance and increasing resources for the government,” the bank added. Aside from the shift of investor focus to the candidates, Barclays said the 2016 elections are set to push the economy’s growth due to brisk economic activity during the period. “One incentive to boost spending will be next May’s presidential election,” Barclays said.