October 15, 2015 by BusinessMirror

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A broader look at today’s business Thursday 18,October 2014 Vol.15, 10 No. 40 Vol. 11 No. 7 Thursday, 2015

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INSIDE

HE Makati Business Club (MBC) has joined the groups that aired their opposition to the proposal to revive the preshipment inspection (PSI) scheme.

‘AMAZING GRACE’ Sports BusinessMirror

| THURSDAY, OCTOBER CTOBER 15, 2015 mirror_sports@yahoo.com.ph sports@businessmirror.com.ph Editor: Jun Lomibao

TESTING THE COURSE Jenny Rissveds of Sweden competes in the International Mountain Bike Challenge at the Deodoro Sports Complex in Rio de Janeiro, Brazil, over the weekend. Some of the world’s leading mountain bike riders competed on the track that will be used for next year’s Olympic Games. AP

‘AMAZING GRACE’ The 27-year-old sparkplug from South Africa, Branden Grace, was at his best for the International team all week at the Jack Nicklaus Golf Club Korea. B D F The Associated Press

APA, California— Those traveling, songloving “fanatics” at the Presidents Cup had no trouble finding the right tune for Branden Grace, with a slight change of lyrics. “Amazing Grace, how sweet the sound, that saved his best for me.” That he did. The 27-year-old sparkplug from South Africa was at his best for the International team all week at the Jack Nicklaus Golf Club Korea. Not only did he become only the second International player to go 5-0 for the week—Shigeki Maruyama was the other in 1998—only one of those matches reached the 18th hole. And that might have been his defining moment. With partner Louis Oosthuizen having put his shot in the water, and the sky so dark that Grace could barely see the flag, he ripped a 3-wood into the wind and onto the edge of the green to secure a crucial point. “He just showed that he’s a world-class player, and there’s no moment too big for him,” Oosthuizen gushed that day. “He’s going to be a really great player.” Grace already showed he has the goods, even if not everyone was paying attention. He nearly crashed the Jordan Spieth-Dustin Johnson party at Chambers Bay, playing just as well as both of them. He was tied for the lead until one bad swing— his tee shot on the 16th that went over the railroad tracks and out of bounds—cost him. Grace also finished third at the Professonal Golfers’ Association (PGA) Championship, which is easy to overlook because Jason Day really didn’t give anyone a chance at Whistling Straits. Also forgotten is how Grace first arrived on the golfing scene in 2012 by winning back-to-back weeks in South Africa, including a

INTERNATIONAL team player Branden Grace of South Africa watches his chip shot on the 16th hole during his singles match against the United States’s Matt Kuchar at the Presidents Cup. AP

playoff victory over Ernie Els and Retief Goosen in the Volvo Golf Champions at Fancourt. Even so, there’s something about a Presidents Cup or a Ryder Cup that allows for the appearance of a breakout moment. It just doesn’t always work out that way. Jamie Donaldson contributed three points in Europe’s victory last year at Gleneagles, and he delivered the signature moment with a 9-iron to tap-in range that was the clinching point. Donaldson has finished in the top 5 only twice since, though the Welshman was 38, and somewhat of a late bloomer in the first place. A better example might be Graham DeLaet. The Canadian had one of his best weeks of golf at the Presidents Cup two years ago at Muirfield Village. DeLaet and Jason Day earned the most points for the International team, and DeLaet finished his week by holing a bunker shot to beat Jordan Spieth on the 18th hole. As well as he strikes the ball, and as much as he stepped up his game on a big stage, DeLaet was a feature story in golf magazines and a player to watch for years to come. Expectations got even higher when he finished one shot behind in consecutive weeks at Torrey Pines and Phoenix. He reached as high as No. 28 in the world that week, but he still hasn’t won on the PGA Tour and has fallen out of the top 100. Remember Nicolas Colsaerts, the Belgium bomber? He made a name for himself in one match at Medinah during the 2012 Ryder Cup by making eight birdies and an eagle and singlehandedly beating Tiger Woods and Steve Stricker in fourballs. Given his length and surfer-cool attitude, he looked to be a star in the making. And maybe that day will come. But since then, Colsaerts has rarely come close to winning and dropped to No. 233 in the world. What should set Grace apart

from those examples is what he already has done—this year with two victories and the strong showing at Chambers Bay and Whistling Straits, his five-win season in 2012, ending last year with a seven-shot win over Oosthuizen. If anything has held him back, or kept him from getting more attention, it’s his lack of consistency. That’s a problem for just about anyone (see Billy Horschel). “I think I get a bit streaky out there,” Grace said. “The same happened in 2012. Got the one win and it led to another and five wins that season. I think the year where I didn’t win, a couple of bad habits came back into my golf game, a little bit of struggling with the putting and things like that. But I’ve got that under control now. I think that’s been the big turnaround for me so far this season.” That will determine where his game goes from here more than anything he did in a team uniform.

Reed has clubs and will travel

APA, California—The Presidents Cup followed the end of a long season for Patrick Reed, and he still has a long way to go. Reed took up European Tour membership this year, and even with the Presidents Cup counting toward the minimum 13 events he must play, he is four short. That’s why he is headed back to Asia next week to finish off his schedule. It starts with the Hong Kong Open. He also will be in Shanghai for two weeks (HSBC Champions, BMW Masters) ahead of the DP World Tour Championship in Dubai. But then he’s still not done. Reed also said he would play the Hero World Challenge that Tiger Woods hosts in the Bahamas and the Franklin Templeton Shootout that Greg Norman hosts in Florida. “It’s tough,” Reed said. “After I play Tiger’s and Shark Shootout, I’ll be at 35 or 37 weeks of the year I’ll be gone. It’s a lot.” It might have been easier except that Reed chose to withdraw from two European Tour events—the BMW Professional Golfers’ Association (PGA) Championship at Wentworth and the Irish Open— in May when his wife’s cousin died. Reed is the only American-born player who had his PGA Tour card first and chose to play both tours, and he said he still hasn’t decided whether he would try it next year when the schedule will be even more packed because of the Olympics. But he had no intention of skipping the European Tour events in Asia. What does he get out of playing both tours? “Learning how to travel a little bit better, especially with time-zone changes,” Reed said. “In the United States, it’s very easy. But when you’re starting to fly to different countries, it becomes tough. Even though we had a direct flight here, a 14-hour flight, flying to Hong Kong is a long flight. Hong Kong to Malaysia is still a five-hour trip. Then Malaysia to China is not bad, but then China to Dubai is a long trip. “You get in Monday afternoon, and it seems like the weeks become a little shorter and you need to learn the golf course a lot quicker.”

SPIETH’S PUTTING

ACCORDING to the PGA Tour, Jordan Spieth led six putting categories (some of them are repetitive), including the tradition putts per round and overall putts. But one statistic remains hard to believe. Spieth made 27 percent of his putts between 15 feet and 25 feet. That’s the highest percent since

the tour began using lasers for its ShotLink scoring system.

MICKELSON’S WEEK

PHIL MICKELSON wasn’t kidding when he said how much he enjoyed the team events. He sat out on Saturday morning and was on the course early despite the threat of rain. Standing on the tee at the par-3 third hole, Lefty made sure every American player who walked by rubbed his belly for good luck. On the golf course, he turned in an unbeaten record (3-0-1) for the third time in the Presidents Cup. He also went 4-0-1 at Harding Park in 2009 and 3-0-2 at the Robert Trent Jones Golf Club in 2005. At the start of the week Mickelson bit his tongue when asked if he wondered how many more times he would play in a Presidents Cup or Ryder Cup. This was his 21st consecutive team. “Not yet,” he said. “I’m excited about the way the last few months have gone, which makes me very excited for the coming year and coming years.” When the reporter mentioned it was a negative question, Mickelson seamlessly interrupted by saying, “with a very positive answer.” Mickelson headed home for what amounts to a three-month break before starting out in 2016. He is No. 5 in the Ryder Cup standings, mainly on the strength of his runner-up finish at the Masters, though the team effectively is decided by 2016 performances. “I’m certainly looking forward to next year’s Ryder Cup, as well, and I hope that I don’t put the captain in a position where he has to pick me this time,” Mickelson said. “I hope that I will be able to make it on my own.” Still, the question leaving South Korea was whether Mickelson did enough to warrant a captain’s pick for the Ryder Cup if he is 30th in the standings as he was for this one?

SAWGRASS CHANGE?

PGA Tour Commissioner Tim Finchem said it might not be long before The Players Championship has a reachable par—the 12th hole. But it wouldn’t be a matter of just playing from a forward tee. “If we move the tee up, we probably have more guys taking a shot at it,” Finchem said. “What we want is a combination of it being riskreward and the way it’s structured is it entices you to take a shot at it. If there’s no downside to it, that raises the question, ‘Do you really want to spend the energy?’” AP

SPORTS

PHL NEEDS BLOCK FARMS, LESS FARMERS —EXPERTS

The influential business group instead advised the Bureau of Customs (BOC) to iron out kinks in its procedures first before considering any new inspection scheme. “While we understand the intent and purpose of putting a PSI system in place, such should not run counter to the ultimate objective of facilitating trade. Absent a fully modernized and clearly streamlined customs procedures, the PSI may just be another hurdle for the S “MBC,” A

BSP: Peso can sustain levels after rebound

BusinessMirror

HE rebound in the Philippine peso to near the strongest level in two months can be sustained, Bangko Sentral ng Pilipinas (BSP) Deputy Governor for the Monetary Stability Sector Diwa C. Guinigundo said, citing ample reserves and surpluses in the current account and balance of payments. “If we consider domestic factors, we have scope for the peso to be generally stable, and exchange rates at these levels can be sustainable over a longer period,” Guinigundo, 61, said in an interview in his office in Manila on Tuesday. “Pressures in the peso may be considered more manageable because of healthy

PHL NEEDS BLOCK FARMS,

LESS FARMERS–EXPERTS B M G P

NCREASING food production to feed more than 100 million Filipinos has become more challenging due to changing weather patterns, as well as the continuous conversion of farm lands. The Philippine Rice Research Institute (PhilRice) said it doesn’t help that farmers also have to deal with the “inherent disadvantages” of the Philippines. As rice is the staple food of Filipinos, farmers are under pressure to expand rice output every year. Paddy-rice output needs to keep pace with population growth, pegged at nearly 2 percent annually. According to the Philippine Statistics Authority (PSA), the country’s population increased at the rate of 1.9 percent annually, on the average, during the period 2000 to 2010. This means that there were two persons added per year for every 100 persons in the population. Meanwhile, annual per-capita consumption of rice was pegged by the PSA at 114.27 kilograms. This means that each Filipino consumes about 2.2 kg of rice per week. Because of the importance of rice to the Filipinos’ diet, the Philippines has 2.6 million hectares of land devoted to rice. The average farm size is at 1.04 hectares, while harvest area is at 4.7 million hectares. Dr. Santiago R. Obien, senior technical adviser of the Department of Agriculture’s (DA) National Rice Program, said farmers’ adoption of technological innovations would help them become more productive. One such technology is hybrid-rice seeds, which would al-

Rodham Clinton, former Maryland Gov. Martin O’Malley and former Rhode Island Gov. Lincoln Chafee take the stage before the CNN Democratic presidential debate on Tuesday in Las Vegas. AP/DAVID BECKER

TheBroaderLook

A4 Thursday, October 15, 2015

DEMOCRATS DEBATE Democratic presidential candidates (from left) former Virginia Sen. Jim Webb, Sen. Bernie Sanders of Vermont, Hillary

low farmers to grow more rice and consequently earn more. The country’s hybrid-rice varieties, Obien said, are the best outside of China, as yield could average 8 to 10 tons per hectare, and can reach up to 12 tons. “As a farmer’s yield increases, his cost of production decreases. This would allow farmers to increase their profits,” Obien told reporters and editors during a forum, dubbed as the BM Coffee Club, held recently in Makati City.

Economies of scale

PHILRICE Executive Director Calixto M. Protacio and Obien both agree that there should be farm areas consolidated and managed by fewer farmers to again make farming a “financially appealing and viable venture.” In economically advanced countries, Obien said only about 3 percent of the total population are farmers. Korean farmers in 1960 used to make up 53 percent of their population. Now, there are only 16 percent of these farmers, and they are rich. Obien also noted that the number of farmers in Th ailand is also declining, as many of them

are being recruited by factories. Some of these farmers ask their neighbors to take care of their farms. “If one farmer has 4 hectares of land and two of his friends who also have 4 hectares each go into other industries and ask him to cultivate their land, that farmer now has 12 hectares to harvest. With bigger land, that farmer can now buy a tractor and a [vehicle]. It just shows that we need less farmers to be rich,” Obien said. For his part, Protacio said there is a need to achieve economies of scale for farmers to make them more productive and competitive. He said farmers with a small land cannot afford to adopt innovations to make farming efficient and increase their output. “Clustering, or land consolidation, is good. You have to establish economies of scale. In a way, the idea is to go back to the concept of landlords. We are looking at this as a rural-transformation idea. We found that to be able to become a millionaire, a farmer has to have at least 20 hectares of land,” he said. In their study, “The Size Distribution of Farms and International Productivity Differences” published

in 2011, Tasso Adamopoulos and Diego Restuccia focused on the differences in average farm sizes among countries. They found that the average farm size for poor countries is 1.6 hectares, while rich countries have an average farm size of 54.1 hectares. “Richer countries have fewer small farms and more large farms than poorer countries. In the poorest countries, over 90 percent of farms are small and almost none of the farms are large; whereas in the richest countries, small farms account for about 30 percent of farms and large farms for nearly 40 percent,” the study read. A recent study by Krishna H. Koirala and Ashok K. Mishra of the Louisiana State University and Samarendy Mohanty of the International Rice Research Institute, titled “Impact of Land Ownership on Productivity and Efficiency of Rice Farmers: A Simulated Maximum Likelihood Approach,” revealed that a 1-percent increase in farm size could result in an increase in the value of rice production by about 0.4 percent.

CARP’s woes

THE Philippine government, nonetheless, still has a commitment to grant landless farmers and farm workers ownership of agricultural lands by the end of the Aquino administration. Farm lands are becoming more fragmented into smaller areas as they are being turned over to small farmers. Republic Act (RA) 6657, or the Comprehensive Agrarian Reform Law, was enacted by President Corazon Aquino in 1988, authorizing the Department of Agrarian Reform (DAR) to undertake the distribution of an estimated 7.8 million hectares of agricultural lands. The law was aimed to promote social justice and to establish

“owner cultivatorship” of economic-size farms as the basis of Philippine agriculture. “To this end, a more equitable distribution and ownership of land, with due regard to the rights of landowners to just compensation and to the ecological needs of the nation, shall be undertaken to provide farmers and farm workers with the opportunity to enhance their dignity and improve the quality of their lives through greater productivity of agricultural lands,” RA 6657 stated. However, Obien said the government has failed to follow the distribution of land with the provision of farm inputs and machineries. He said the Comprehensive Agrarian Reform Program (CARP) of the government has not served as a plan for productivity. “It [CARP] was simply a socialjustice system. That’s the problem. It should not have been that way. It should have been a systematic program so that farmers can become more productive,” Obien said. “The government, upon the release of the land, should have also provided the farmers with machineries, facilities, inputs and electricity, among others, so that they can be progressive. The Japanese call it land reformation, not land reform. However, nothing was given to our farmers,” he added. Protacio said the initial idea for the CARP was for cooperatives to take over the farmlands and consolidate them into large units. He said, however, that because of the individualistic nature of Filipinos, it did not work. In 1996 the Philippine Institute for Development Studies (PIDS) also published a study, titled “Issues in Revitalizing the Philippine Sugar Industry.” The study revealed that the sugar industry had to contend with declining productivity.

“Implementing the land-transfer scheme of CARP had been slow due to the government’s administrative and financial constraints. And then there is the strong opposition from the landowners. Nonland-transfer schemes, which include land lease or rental, profit sharing and corporate stock distribution, have proven to be unattractive to landowners,” the study read. “Such delay and uncertainties discourage CARP farmer-owners to invest in farm improvements, lower collateral value of agricultural land, and reduce credit flow to agriculture. In the end, low productivity becomes inevitable,” it added. A study published by the International Society for Southeast Asian Agricultural Sciences (ISSAAS), titled “Farm Size and Its Effect on the Productive Efficiency of Sugarcane Farms in Central Negros,” showed that average optimum land size should be around 41 hectares, which is lower than the optimum size (50 hectares) stated in the report of the Presidential Task Force on the Sugar Industry. “[Big farms] are also the more favored in terms of technology and access to information and extension services. Modernization of farm practices can improve productive efficiency, however, this is difficult to achieve at present due to the limited financial capability of the farmers,” the report read. To boost the productivity of sugarcane farms, the Sugar Regulatory Administration (SRA) rolled out a program, which sought to consolidate small farms into larger areas while still preserving individual ownership of the land, in 2012. “Block farming is the consolidation of the management of small farms of less than 5 hectares, into a bigger but contiguous unit of at least 30 hectares for purposes of

BROADER LOOK

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GUINIGUNDO: “If we consider domestic factors, we have scope for the peso to be generally stable, and exchange rates at these levels can be sustainable over a longer period.”

macroeconomic fundamentals.” The impending increase in US interest rates is putting pressure on emerging markets, complicating monetary policy, as central banks seek to support growth while guarding against capital outflows.

Singapore on Wednesday eased monetary policy for the second time this year, as the economy narrowly avoided a technical recession, saying that it will reduce “slightly” the pace of appreciation in the local dollar. “While there is pressure for the dollar to strengthen, the peso will be among the least affected, because we have constant inflows from remittances, outsourcing,” said Antonio Espedido, treasurer at China Banking Corp. in Manila. “Structurally, our outflows are more controlled, giving us surpluses every year.”

Stable reserves

THE peso, which climbed to a two-

month high on Monday, was little changed on Wednesday at 46.08 per dollar. It is still the best-performing Southeast Asian currency tracked by Bloomberg this year, and the nation’s reserves have remained stable at more than $80 billion, in contrast to others, including Indonesia and Malaysia, where they have declined. ING Groep NV on October 12 said it is reviewing its year-end forecasts of P46.8 per dollar for 2015, and P47 for 2016. “Recent external developments have been favorable and could extend to the end of the year and in 2016, S “BSP,” A

‘PHL NEEDS ABOVE 6% GROWTH ANNUALLY’ B C U. O

F the Philippines were to reach First World status in 25 years as projected, economic growth should average more than 6 percent annually over the next three to five years. Economic Planning Secretary Arsenio M. Balisacan told reporters that, with growth averaging only 6 percent in the next few years, the Southeast Asian nation could achieve First World status around 2050 or even later to 2055. Achieving First World status within that period should also delay the creation of more jobs and improving the incomes of Filipinos. Such could also mean the country will again be a laggard among its peers in the Asean. “You have to grow faster, otherwise even Vietnam would pass us by. You need to grow close to 7 [percent]. [It’s] better to have 7 [percent] rather than 8 [percent], as long as we sustain that. An uneven growth path should also prove very costly,” he said. Balisacan earlier said sustained GDP growth of about 7 percent a year should help lift the Philippines higher to middleincome economy status, with a gross national income (GNI) per capita of $4,125 by the time the next Chief Executive sits in Malacañang. He added that should growth is sustained for three more presidencies, such could push the Philippines closer to highincome economy status, with a GNI per capita estimated at $12,746 by 2040. Former Philippine Economics Society President Alvin P. Ang said an added benefit to be derived from this development is greater reduction in the incidence of poverty in the country. University of Asia and the Pacific School of Economics Vice Dean Cid L. Terosa also said maintaining growth of 7 percent should make the country a more attractive investment destination. “Sustained growth at 7 percent means higher standard of living due to more jobs and higher income for many people. This can lead to a robust business and economic environment for investments and domestic production,” Terosa said. However, because of the government’s underspending and weak global demand, the $285-billion Southeast Asian economy was seen to post growth of just maybe 6 percent this year.

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PESO EXCHANGE RATES n US 45.9830

n JAPAN 0.3839 n UK 70.1241 n HK 5.9333 n CHINA 7.2495 n SINGAPORE 32.7888 n AUSTRALIA 33.5446 n EU 52.3424 n SAUDI ARABIA 12.2670

Source: BSP (14 October 2015)

Thursday, October 15, 2015

News

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Vista Land buying back shares

anuel B. Villar Jr., chairman of property developer Vista Land & Lifescapes Inc. (VLL), said the company intends to buy back its shares from the market now that prices are still low.

BSP. . .

“We’re not aggressive in our buyback. But I think, the prices are low. You may not have this opportunity again and people who do not buy at these prices will, of course, I believe, regret having done so,” Villar said at the sidelines of a forum held in Solaire Resort and Casino. Vista Land, best known for its development of low-cost housing in subdivisions under the brand

Continued from A1

especially if the Fed guidance for normalization is extremely more modest than currently expected and that China’s economy grows at 6 percent to 7 percent, reducing emerging-market risks,” Joey Cuyegkeng, an economist at ING Groep NV in Manila, said in a note. Refraining from joining a global round of monetary easing this year gives the Philippine central bank room to confront shocks through 2016, Guinigundo said.

‘Monetary space’

“With a policy rate of 4 percent, and inflation forecast to be much lower than that next year, the BSP continues to have monetary space to handle domestic and external shocks,” Guinigundo said. “It is very difficult to be definite about the future. Will the uncertainty of the timing and magnitude of US interest-rate normalization be resolved? Will China show better output numbers moving ahead? You have too many balls in the air.” While inflation eased in September to the lowest since at least 1997, the central bank forecasts price gains will accelerate in 2016 and 2017 yet remains within target. The pick- up in inflation will be gradual and risks include the El Niño weather pattern, weakness in the peso, and power rate increases, Guinigundo said. Bloomberg News

MBC. . .

Continued from A1

ease of doing business,” said Peter V. Perfecto, MBC executive director. The Philippine Exporters Confederation (Philexport) early this week sounded the alarm that there are moves to insert the mandatory PSI scheme in the ongoing legislative deliberations on the Customs Modernization and Tariff Act (CMTA). This, the exporters said, will spell additional costs and delays on traders, thus, hurting their competitiveness further at a time when export receipts are dwindling. Philexport President Sergio Ortiz-Luis Jr., in a previous phone interview, said should the BOC opt to revive the PSI scheme, it should be on a voluntary basis only. In separate text messages on Tuesday, Rep. Romero S. Quimbo of the Second District of Marikina and Sen. Juan Edgardo M. Angara, chairmen of the Ways and Means committees of the House of

name Camella and Palmera Homes, has budgeted some P1.5 billion for the buyback activities. Villar, however, said the company may only spend some P1 billion. “Also, we don’t want the investors to think that we are not concerned with them,” Villar said. Companies normally repurchase their outstanding shares in the market to increase the value of shares still available, among other reasons. Since June, or before the current volatility in the market, the company has been repurchasing its shares. Its last buyback was on October 13 and purchased the shares at an average of P5.50 per share. The company was last traded at P5.46. Vista Land has so far bought back 141.42 million shares and spent some P881.51 million, or just more than half of its budget. Broker Regina Capital and Development Corp. said in its research note that Vista Land is trading at 47 percent below its book value. It estimated that Vista Land should be traded at

P8.55 per share. “We previously placed a ‘long-term buy’ tag on VLL last July 2014, and the stock gained as much as 44 percent when it peaked eight months later. The stock is back to levels before our buy recommendation. We reiterate our long-term buy tag on VLL. We estimate a fair value of P8.55 per share,” Regina Capital said in its note to investors. The broker said despite an annual increase of 17 percent in its earnings per share from 2011 to 2014, return on equity remains flat. Profit margin, however, is steady at above 20 percent. Vista Land said both its income and revenues rose 10 percent during the first half of the year as the company said it can continue the growth path throughout the year. Manuel Paolo Villar, Vista Land president and CEO, said the income was in line with expectations, as these were from the development projects that started to churn out profits for the company. VG Cabuag

Representatives and the Senate, respectively, agreed that the scheme should be a matter of choice. The Ways and Means committees of both chambers are in charge of moving the amendments to the CMTA. “I don’t agree that pre-shipment inspection should be made a requirement, more so be made legally mandatory. Pre-shipment inspection is potentially in conflict with the Kyoto Convention, which the Senate ratified in 2010. What we need in the BOC is trade facilitation, not more inspection,” Quimbo said in a text message. For Angara, the implementation of the PSI scheme should not be any different from when it was being implemented before the expiration of the government’s contract with its former contractor, SGS, for this service. “The PSI is something that is left open, meaning as a matter of choice, to a country’s administrators. As in the past, we had the Customs working with the SGS, but past administrations terminated this. So, at the end of the day, that type of

inspection boils down to an administrative choice rather than a legislative injunction,” Angara said in a text message. The proposed CMTA, among other objectives, aims to adjust the de minimis value, or the ceiling for duty-free imports, from P10 to at least P5,000. Moreover, to curb corrupt practices in the BOC operations, the CMTA seeks to institutionalize the use of an electronic system and the use of information and communication technology. It also aims to strengthen the Philippine National Single Window and simplify procedures on the seizure, forfeiture and disposition of contraband goods. Taking the stance of lawmakers, Perfecto stressed the need for trade facilitation. “As in other government reform measures, regulatory procedures should be carefully balanced with ease of doing busines. Of course, this is without prejudice to the need to address corruption,” Perfecto added.

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Editor: Dionisio L. Pelayo • Thursday, October 15, 2015 A3

Law experts: Filing of charges vs Binay ill-advised

By Joel R. San Juan

AW experts on Wednesday questioned the approval by Ombudsman Conchita Carpio-Morales of the filing of criminal charges against Vice President Jejomar C. Binay before the Sandiganbayan.

Vicente Joyas, former Integrated Bar of the Philippines national president; former University of the East Law Dean Amado Valdez; and Far Easter University Law Dean Melencio Santa Maria even said the timing of the filing of the case could be misconstrued by some as politically motivated, especially since it was issued on the same day Binay, the United Nationalist Alliance’s standard bearer, filed his certificate of candidacy (COC) for the presidency, together with his running mate Sen. Gregorio B. Honasan II. “There is a concentration on the Binay cases and it seems that a timeline was set that the resolution be done before the filing of the certificate of candidacy,” Joyas said. The latest Ombudsman resolution recommended charges against Binay, his son Junjun Binay and 22 others over the construction of the Makati City Hall Building II. On the other hand, Valdez said: “The timing definitely adds fuel to the narrative about VP Binay’s integrity, intended or not. The Ombudsman put herself here under public scrutiny.” Valdez, who is also president of the Philippine As-

sociation of Law Schools, expressed hopes that the Ombudsman’s moves would not “erode the public confidence in the institution.” “The agency is bigger than any of the players in this drama,” Valdez reminded the Ombudsman. Santa Maria agreed that filing cases against candidates around this time could indeed raise suspicion as to its motive. “Hindi maiiwasan iyong motibo ng pag-iisip sa timing kasi malapit na ang eleksyon at bago pa ito mag-file ng COC ng mga kandidato,” he said. Meanwhile, Joyas accused Morales of “selective prosecution” after it found probable cause to file charges of graft, malversation and falsification of public documents against Binay, while cases against administration allies gather dust in her office. “I am just surprised why the other cases involving some Cabinet members and for plunder filed before the Binay cases are not investigated yet,” Joyas said. “Selective prosecution is obvious and manifest,” Joyas added.

More wannabes file Certificates

EVERAL more names were added to the growing list of presidential, vice presidential and senatorial wannabes after the third day of the five-day period alloted by the Commission on Elections (Comelec) for the filing of certificates of candidacy (COC). However, no familiar faces in politics filed a certificate of candidacy for president on Wednesday. The Comelec said as of 3:50 p.m. yesterday, a total of 55 individuals have filed their COCs for president, 10 for vice president and 53 for senator since Monday. Among those who filed their certificates of candidacy for VP were Sen. Antonio F. Trillanes IV, a certain Jesus Paredes Jr. and Neil Aldea. Among the prominent personalities who filed COCs for senator were former senator Juan Miguel F. Zubiri, who said he is running as independent.; Nationalist People’s Coalition Rep. Sherwin Gatchalian of Valenzuela City; Liberal Party (LP) Rep. Roman Romulo

of Pasig City and two-time losing senatorial candidate Risa Hontiveros Baraquel. Others who filed filing their COCs for senator were actress-turned-politician Councilor Alma Moreno and

SUITABLE REPLACEMENT

Princess Jacel Kiram as members of the United Nationalist Alliance; retired police general Romeo Maganto of the Lakas Party; and former tourism official Mark Lapid of the LP. Joel R. San Juan and Jovee Marie N. dela Cruz

Las Piñas First Lady Imelda Tobias Aguilar (right) shows her certificate of candidacy for mayor of the city as her husband, incumbent Mayor Vergel “Nene” Aguilar is serving his last term in office. The candidate vows to ensure unhampered social services, environment protection and good governance, particularly empowering women and providing free and quality education for all. She is running under the banner of the Nacionalista Party. NONIE REYES

TheBroa

Business

A4 Thursday, October 15, 2015

PHL needs blo

less farmer I

By Mary Grace Padin

ncreasing food production to feed more than 100 million Filipinos has become more challenging due to changing weather patterns, as well as the continuous conversion of farm lands. The Philippine Rice Research Institute (PhilRice) said it doesn’t help that farmers also have to deal with the “inherent disadvantages” of the Philippines. As rice is the staple food of Filipinos, farmers are under pressure to expand rice output every year. Paddy-rice output needs to keep pace with population growth, pegged at nearly 2 percent annually. According to the Philippine Statistics Authority (PSA), the country’s population increased at the rate of 1.9 percent annually, on the average, during the period 2000 to 2010. This means that there were two persons added per year for every 100 persons in the population. Meanwhile, annual per-capita consumption of rice was pegged by the PSA at 114.27 kilograms. This means that each Filipino consumes about 2.2 kg of rice per week. Because of the importance of rice to the Filipinos’ diet, the Philippines has 2.6 million hectares of land devoted to rice. The average farm size is at 1.04 hectares, while harvest area is at 4.7 million hectares. Dr. Santiago R. Obien, senior technical adviser of the Department of Agriculture’s (DA) National Rice Program, said farmers’ adoption of technological innovations would help them become more productive. One such technology is hybrid-rice seeds, which would al-

Economies of scale

PhilRice Executive Director Calixto M. Protacio and Obien both agree that there should be farm areas consolidated and managed by fewer farmers to again make farming a “financially appealing and viable venture.” In economically advanced countries, Obien said only about 3 percent of the total population are farmers. Korean farmers in 1960 used to make up 53 percent of their population. Now, there are only 16 percent of these farmers, and they are rich. Obien also noted that the number of farmers in Thailand is also declining, as many of them

CARP’s woes

The Philippine government, nonetheless, still has a commitment to grant landless farmers and farm workers ownership of agricultural lands by the end of the Aquino administration. Farm lands are becoming more fragmented into smaller areas as they are being turned over to small farmers. Republic Act (RA) 6657, or the Comprehensive Agrarian Reform Law, was enacted by President Corazon Aquino in 1988, authorizing the Department of Agrarian Reform (DAR) to undertake the distribution of an estimated 7.8 million hectares of agricultural lands. The law was aimed to promote social justice and to establish

aderLook

sMirror

www.businessmirror.com.ph | Thursday, October 15, 2015

lock farms,

ers–experts Annual Palay Production Volume (Metric Tons) 1987 8,539,852.00 1988 8,971,030.00 1989 9,458,772.00 1990 9,319,276.00 1991 9,673,262.00 1992 9,128,940.00 1993 9,434,208.00 1994 10,538,054.00 1995 10,540,649.00 1996 11,283,568.00 1997 11,268,963.00 1998 8,554,824.00 1999 11,786,625.00 2000 12,389,412.00 2001 12,954,870.00 2002 13,270,653.00 2003 13,499,884.00 2004 14,496,784.00 2005 14,603,005.00 2006 15,326,706.00 2007 16,240,194.00 2008 16,815,548.00 2009 16,266,416.50 2010 15,772,319.00 2011 16,684,062.00 2012 18,032,525.47 2013 18,439,419.73 2014 18,967,826.17

Source: Philippine Statistics Authority

improving farm productivity, while individual ownership is preserved,” SRA Administrator Ma. Regina Martin said in a statement. Data from the SRA showed that about 85 percent of the sugarcane farms in the country have areas of 5 hectares or below. The SRA said this is due to the natural course of land subdivision by inheritance, sale and the CARP. According to the SRA, sugarcane is a plantation crop and its cost efficiency is best achieved through bigger farm sizes of at least 30 hectares. However, with the implementation of the CARP,

farm sizes were fragmented into small land holdings of less than 5 hectares, wherein farm owners could no longer take advantage of economies of scale. Present land owners also do not have the financial capability to provide farm inputs, which results in low productivity, the SR A said. Since its implementation in 2012, SRA said the 19 pilot block farms have registered an average increase of 29 percent in farm productivity in crop year 2013 and 2014. Sugar production in the pilot farms in that crop year reached

Manuel Chase M. CastaÑo III, science research analyst, Be Riceponsible Campaign; Dr. Calixto M. Protacio, executive director, DA- PhilRice; Jaime Manalo, head, Development Communications Division; and Dr. Santiago Obien, special technical assistant to the National Rice Program, during the BM Coffee Club Forum. NONOY LACZA

65.29 tons cane per hectare, as compared to 50.78 tons cane per hectare recorded in 2012. This increase in productivity translated to an estimated average increase of farmers’ income by P39,815 per hectare, at 1.96 50-kilogram per tons cane (LKG/TC) and a composite price of P1,400 per LKG-bag of raw sugar. Aside from consolidating small farms into an aggregate of at least 30 hectares—through agrarian re-

form beneficiaries organizations— the SRA also offers coached and guided farm management, technical assistance and capacity building for the farmers in a block farm. The DA also provides irrigation systems, farm-to-market roads and farm inputs necessary for the production of sugarcane. The program has now become one of the main programs under RA 10659, or the Sugar Industry Act of 2015. The SRA said there are

130 block farms that have enrolled for accreditation to date, with a total area of about 7,000 hectares. Protacio said the SRA’s block farming scheme could also be adopted by other sectors. Agriculture Secretary Proceso J. Alcala, for his part, said the DA has also put up block farms for the rice sector. He said, however, that it has not been as successful as the program rolled out for sugarcane farmers.

“What’s important is we integrate our palay farmers. We have partnered with the DAR in implementing block farming in some areas,” Alcala said. “Agrarian-reform communities should have been created long ago. They should have started block farming long ago. Block farms have the advantage because they have all these tools and resources to use so that they can be progressive,” Obien said.

A6 Thursday, October 15, 2015 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

The mining industry and the Zambales mess

he Philippines is a land of rich mineral resources. It is estimated that we could extract more than $1.4 trillion worth of gold, copper, iron, chromite, nickel, cobalt and platinum from our identified mining areas. Our nonmetallic resources include marble, limestone, clay, gravel and sand, and other quarry materials.

Filipinos are literally sitting on top of a mountain of wealth beneath the earth’s surface. Mining experts describe the country’s mineral potential as one of the best in the world on a per-hectare basis. We have about 9 million hectares of high-potential mining areas. What’s stopping us from extracting our natural wealth? Industry pundits point an accusing finger to the national government’s lack of interest to pursue investments in minerals development. In 2012, for example, mining was excluded from the government’s Investment Priorities Plan, and all incentives, save for those under the Mining Act and the National Internal Revenue Code, have been removed. To top it all, no new mining agreement was approved. The policy change was premised on the notion that the government was not getting its right share in mining revenues, while the country bears the cost of the environmental degradation brought about by mining activities. Industry data, however, debunks these assumptions. Not only is the industry heavily regulated; it is also heavily taxed: corporate, excise, withholding, customs duties, value added and mineral-reservation royalty, among others. Mining companies are currently giving the government a substantial share in a project’s net cash flows, averaged over its entire mine life. More important, they have set up social-development and environmental-protection funds to ensure the development of host communities. In 2012, for example, mining firms spent over P673 million for environmental protection and enhancement programs, and an additional P498 million for social-development programs. If their problems with the national government are daunting enough, mining companies are also at the mercy of misguided and corrupt local government officials. Take the case of the closure of some mining firms in Zambales. The operations of Benguet Corp., Nickel Mines Inc., LnL Archipelago Minerals Inc. and Eramen Minerals Inc. were stopped because of alleged “leakages” from these firms, which reportedly contaminated the rivers in the municipalities of Santa Cruz and Candelaria, because “the color of the water turned into reddish brown” after a heavy rain. In a recent Senate hearing, however, officials of the Mines and Geosciences Bureau (MGB) testified that there was no contamination of the rivers, echoing the findings of geologists that it is only natural for the soil in the mining areas to cascade downstream during heavy rains. They added that the area is rich with nickel laterite, making the soil incapable of harboring trees, which could have helped mitigate soil erosion. The MGB testified that even without mining, the rivers will always turn reddish brown when it rains. That should have absolved the mining firms. But no, the provincial government has a better idea: The mining companies can resume operations if they help build the so-called haul roads in the province. What fueled speculations of a shakedown of mining companies in Zambales is the appearance of one Antonio Marfori, who was the one who made the rounds in the name of the governor, convincing the mining firms “to chip in in building the haul roads.” What is happening in Zambales is not an isolated case. In other mining areas, as well, local executives have arrogated to themselves the power to regulate mining operations in their respective communities. This is not the best way to help a trillion-dollar industry grow to its full economic potential. Since 2005

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Sell the stock market or not John Mangun

OUTSIDE THE BOX

aybe the Chinese government is right. Maybe once you buy a stock, you should not be allowed to sell it. Yes, I’m serious. Think about it. Granted, not being able to sell your shares sort of takes away the instant liquidity thing. But then again, the experts tell you that you should always have patience and hold for the long—or even longer—term to guarantee to make money. There are some definite advantages for the stock market to be a one-way investment proposition. We are told that the Philippine Stock Exchange (PSE) is manipulated by the “Big Boys” or the “Old Boys,” or maybe the “Bulacan Rice Farmers Association.” But the point is that there could not be any instances of “pump-and-dump” if pumping could not be followed by selling and dumping. But the biggest advantage of not allowing selling on the stock exchange is the mental health of stock-market investors. There are several newspaper columns and television shows giving free stock-market advice. Most of the time they are the market equivalent of what you find in the Lifestyle sections of some newspapers. They

answer questions like, “I am in love with my boss who is married with five kids. How do I tell him or her?” If you notice, the number of investing questions when the market is going down is about 10 times as many as when stock prices are going up. Every one is a stock-market genius going up and a “helpless victim” on the downside, desperately seeking advice. The problem with free stock-market advice is that it is about the same as free lifestyle advice; no one really wants to tell the truth and, therefore, hurt someone’s feelings. The answer to the person in love with the boss should probably be, “Quit your job today. Move to a faraway province. Grow camote or kangkong.” I do not think I have ever seen any stock advice in a falling market,

like “Sell all your shares today. Prices are going lower. Put the money in a bank account”. Instead, we are always told that the country’s economic fundamentals are good and logically, share prices should go higher eventually. Of course, the advice never mentions that San Miguel Corp. (SMC) shares were P180 in 2011 and are now trading at P45. Or that Resorts World Manila (Travellers International Hotel Group) traded at P10 in January 2014, and is now at P4. If you own SMC at P180, ignore it; watch the economy, instead. You will feel better. Also ignore the fact that SMC shares need to go up 400 percent for you to break even. Besides, you were investing for your retirement 20 years from now, right? I was watching one of our stockmarket experts the other night respond to question from an investor, whose investment in a stock fund is down 12 percent since February and wants to know whether to sell and wait for the PSE index to go to 6,800, or hold for a move back up to 8,000. The host commented that the investor had hit his or her “maximum stock-market tolerance” with a 12-percent loss. I guess that means you have reached the point where you need free market advice from a television show. Maybe at a 20-percent loss, you should go talk to a priest.

Then comes the “investing for the long term” mantra. Further, “Why did you invest?,” “What are your investment goals?” and “What is the purpose for investing?” I thought the reason for investing was simple: make money, preferably as fast as possible. Who ever took a job and said, “I’m here for the long term. Hold my salary until next year”? The conclusion was to hold on to losing positions as long as there is “No fundamental shift in the market.” That makes sense, I suppose. But I am trying to figure out when the “fundamental shift” came in Resorts World, since it has been down almost continuously since it first started trading. And is a 14-percent fall in the PSE index a fundamental shift or not? The advice used to be that a losing investor should “Sell until you can sleep at night.” Now it is “Take a sleeping pill and keep taking them until prices go back up.” But the most important thing to remember from all the stock-market wisdom is that if you never sell your shares, you will never take a loss. Just ask the Chinese investors. E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis tools provided by the COL Financial Group Inc.

Jeb Bush shows how to replace Obamacare Ramesh Ponnuru

BLOOMBERG

eb Bush’s new health-care plan looks a lot like the plan Scott Walker embraced two months ago, which, in turn, looks a lot like the one Marco Rubio sketched in an op-ed article and the one touted by Sens. Orrin Hatch and Richard Burr and Rep. Fred Upton. That’s a good thing. It means that Republicans are finally reaching a consensus on what to do about health policy that draws on the best conservative thinking on the subject. Bush (for whose campaign my wife works) is helping to ratify that consensus.

All these plans aim to change federal tax, spending and regulatory policy to enable almost everyone to get insurance that covers, at a minimum, catastrophic health expenses. People who don’t have access to employer-provided plans would receive a tax credit that they could use to buy coverage—and that coverage would no longer have to comply with all the mandates in President Barack Obama’s Affordable Care Act. In Bush’s version of the plan, older people would get a larger credit. The tax break for employer-provided coverage, meanwhile, would be capped, both to keep the tax code from rewarding the most expensive plans and to

raise some of the money needed for the credits. People with preexisting conditions would be protected by a regulation that requires insurers to offer coverage on the same terms to sick people and healthy people, so long as they had maintained coverage. That proviso is there to keep people from waiting until they’re sick to get insurance. Meeting that condition would be easier than it has been in the past, thanks to the tax credit. Bush would also reform federal aid to state health-care programs for poor people, to give them much more flexibility. States could, for example, pass along much of their funding to the

recipients so that they could purchase private coverage. Not all Republicans have accepted this consensus. Louisiana Gov. Bobby Jindal, for example, agrees that Republicans need a plan to replace Obamacare and thinks it should involve changing the way the tax code treats health insurance. But he disagrees with the other Republicans on two points. He would offer a tax deduction, not a credit, which would save the federal government money, but enable far fewer people to buy insurance. And he would let people who have access to employer plans use the credit to leave those plans for the individual market —a step that would run the risk of destabilizing the employer market. Jindal denounces plans that offer a tax credit as a betrayal of conservatism, although he backed them before running for president. Most Republicans who have taken up the issue, however, have concluded that a viable replacement for Obamacare has to largely leave employer coverage alone and enable people who now get coverage through Obamacare to buy new plans. The trade-offs in this sort of proposal depend a lot on the details, and Bush is not yet saying how large his tax credits would be. If he ends up in the same ballpark as other plans, a lot of middle-class families would get larger tax credits than Obamacare gives them. But the near-elderly, in

particular, would get smaller ones. If Republicans run on this sort of plan—whether with Bush as the nominee, or someone else—they’ll be able to say that they’d cover almost as many people as Obamacare does for less money, and without ordering people to buy insurance. That insurance won’t cover everything that Obamacare-compliant policies cover, but in many cases it will offer more protection against catastrophic expenses. Republicans would also be able to say that they offer something to the poor: health coverage that’s better than Medicaid. Before Obamacare, tax policy favored those who had expensive employer-provided coverage, but offered little help for middle-class people who weren’t so fortunate. During the debate over Obamacare, congressional Republicans put forward a bill that left that policy alone and, thus, wouldn’t have done much to expand coverage. Mitt Romney ran against Obama in 2012 promising to replace the Affordable Care Act, but was fuzzy about what he’d replace it with. Bush and an increasing number of other Republicans are offering voters something better. The lack of a Republican alternative on health care, and especially of an alternative that would enable almost everyone to get coverage, has been the great Democratic talking point in this debate. It’s one they may soon have to retire.

Opinion BusinessMirror

opinion@businessmirror.com.ph

Good corporate governance and the bottom line Ariel Nepomuceno

DECISION TIME

ecent scandals and reputation nightmares have led to the fall of big and renowned companies like Enron, Tyco, One Tel. No one could ever imagine that companies of this stature could collapse because of the misdeeds, unethical or negligent behavior of its directors and corporate officers. Typically, companies fail because of adverse external market conditions, wrong strategic choices or just bad business judgment and not because a director or executive breached the trust of the shareholders or failed to properly discharge his duties. In the case of Enron, for instance, it appears that lack of independent monitoring and supervision by Enron’s board coupled with patent conflicts of interest led to its downfall. Subsequent debacles occurred in other companies and one commonality emerged: directors amassing profits for themselves by engaging in fraudulent or criminal activity in tandem with the companies’ employees, contractors and service providers to the detriment of its shareholders. The lack of moral compass on the part of these firms’ decision makers became the buzz in the global corporate world. Suddenly, the stock market reacts when companies get involved in breaches of ethics and compliance principles. Share prices fall and the investors retreat.

Need to improve the rules

AS a result, various stakeholders called for reforms and initiatives in the practice of good corporate governance. And today, the drive to instill good corporate governance is now an urgent imperative. It is demanded by the law, government regulators and the international investment and financial community. Clearly, it makes good business sense to just do it. Just this year, Group of 20 Finance Ministers have endorsed a new set of G20-Organization for Economic Co-operation and Development corporate governance principles as part of continuing efforts to promote market confidence and business integrity. These principles provide recommendations for national policy-makers on shareholder rights, executive remuneration, financial disclosure, the behavior of institutional investors and how stock markets should function. They essentially raised the need for signatory countries to promote transparent and efficient markets, compliance with the rule of law and ensure equitable treatment to all shareholders, including minority owners. At the heart of this is the requirement of transparency and disclosure. A good corporate governance system should put primacy on the provision of fair, accurate and seasonable data about a company’s financial state of affairs, its ownership structure and performance. There is absolutely no room for fabricated accounting reports, bloated regulatory disclosures and feigned corporate transactions.

Government intervention

On the other hand, the Philippine Securities and Exchange Commission (SEC) Memorandum Circular 2 clearly prescribes that the Board of Directors is responsible for the companies’ success and sustained competitiveness; vision and mission; and purpose, value and strategies. The SEC even requires public companies to have a Manual of Corporate Governance and monitors compliance therewith. Moreover, the passage of the Securities Regulation Code of 2000 and the revised Philippine Stock Exchange listing rules all contributed to the

protection of small local investors. It prevents concentration of decision making to stockholders who own big chunks of shares. And it attempts to address numerous and familiar situations where the minority does not have any voice at all. These reforms address issues relating to interlocking directors, self dealing practices and conflict of interest situations that proliferate in traditionally structured and led Philippine corporations.

Accountability of the top brass

Specifically, good corporate governance focuses on the Board of Directors’ direct responsibility over the success of the company. They are bound to conduct fair business activities and their personal interests must not cloud the decisions of the board. The board should take the lead in decision making. It should cease from being a rubber stamp of the executive managers and must take the center stage in exercising corporate powers and duties and must lead by example in the ethics and integrity space. A very interesting development is the increasing need to include independent directors to traditional boards. It is widely observed that independent directors’ value lies in their ability to challenge the usual thought processes of the board by bringing new ideas, contributing their specialist skills, and adding the spice of check and balance to board discussions. More and more, we see independent, nonexecutive directors playing a crucial role in today’s company boards. They help the chief executive officer and the management team generate lasting economic value for its stockholders and stakeholders. And it appears that good corporate governance practices positively impact on the companies’ bottom line. Since it helps prevent fraudulent and unethical activities of companies and clarifies the real role of the board of directors, aforementioned practices promote the reputation and image of the company and stabilizes shareholder sentiments and issues. In turn, it inspires investors’ confidence, facilitates easy access to capital, improves stock valuations and delivers financial success.

Best for the bottom line

The above conclusions are supported by studies and research work in this field. There is substantial evidence that there is a correlation between corporate governance and performance of companies. Some results show that those which do not practice good corporate governance have lower net profit margin and earnings per share. Companies that require the highest standards of governance minimize risks that are associated with its business operations on a daily basis. More important, it was revealed that in making investment decisions, investors now have observance of corporate governance principles as part of the checklist. Undoubtedly, it increasingly unlatches investment and paves the way for sustainable and long-term economic prosperity. Without good governance, corporate greed shall remain unfettered. It is, thus, befitting to mention Mahatma Gandhi’s valuable reminder that “There is a sufficiency in the world for man’s need but not for man’s greed.”

Thursday, October 15, 2015

To give one’s life for the many Msgr. Sabino A. Vengco Jr.

Alálaong Bagá

he kindness of God fills the earth; He is our help and our shield (Psalm33:4-5, 18-19, 20, 22). Jesus came to serve and to offer His life for the many; as His followers we need to learn to be the servant of all (Mark 10:35-45).

Let Your mercy be on us Psalm 33 is a hymn of praise. The verses selected for our liturgy give the reasons for Israel’s faith in God and why He should be praised: God’s word is upright, His works are faithful, His covenant is just and righteous, and His loving kindness is steadfast. These attributes demonstrate the magnanimity of God’s love in relating with others and, therefore, encourage the people to place their trust in Him. They, in fact, owe their lives to God’s help, who has His eyes on those who fear Him and are committed to Him, on those who hope in His steadfast love. These people live their lives faithfully before the constant gaze of God. And He delights in them and looks after them and delivers them from death and famine and any dangers threatening them. The people who fear the Lord turn to Him in their distress and they are helped and rescued. Those who lack faith look elsewhere for assistance,

and their problems are confounded. So, we wait for the Lord who comes to us in His own time; He is our true help in our needs and our shield protecting us from all perils. With a final appeal, the psalmist prays that God’s loving-kindness be upon them who have put their hope in Him. God’s covenant commitment is what we need and what we want, even as we put our trust in Him.

Can you drink the cup that I drink?

A person’s desires uncover his heart. The two brothers, James and John, together with Peter, form the inner circle of Jesus. They seem to have forgotten so soon the previous emphatic order of Jesus to get behind Him and follow Him and not to tell Him how to carry out His mission: they need to think “as God does,” not as people of the world do (Mark 8:33). The two’s desire makes it clear they are thinking primarily of themselves, wanting to flank

Jesus in glory. Were they inspired by the transfiguration vision of Elijah and Moses on both sides of Jesus (Mark 9:4)? They who have given up everything in following Jesus (Mark 10:28), they wish in return prestige and power in Jesus’ kingdom. The response of Jesus to the two reveals once more His own heart, His own consciousness. Jesus thinks of a cup of sorrow that becomes a cup of salvation, of a baptism that means both death and resurrection in a package, not merely bearing with bad times in order to be rewarded with good times. What Jesus stands for is the whole way of life: denying oneself, taking up the cross, and losing one’s life for the sake of the Gospel and in the service of others (Mark 8:34-35). Jesus’ pattern of life must be the standard for anyone wanting to follow Him. The two agree without hesitation to drink the cup and undergo the baptism—in their plunge of faith in Jesus, without fully comprehending as yet the implications of Jesus’ ignominious passion and death.

friends will be somehow prominent in the glory of God. But talking of the kingdom of God means that it is God’s reign and everything happens according to God’s own design and loving-kindness; certainly it is not according to some human ranking or method. Jesus Himself follows the will of God in all things and trusts that everything will be fulfilled as God so desires. As God is one who loves and gives of His divine goodness, as God sends out His own to share to all His mercy and compassion, so is Jesus (and consequently His companions) come “not to be served but to serve, and to give His life as a ransom for many.” To be great in the eyes of God is different from the way the rulers of the world lord it over in tyranny. In the new humanity Jesus is bringing to birth, believers experience greatness when they serve: healing, exorcising, teaching, suffering with and for others, so that all may be liberated from what imprisons and debases God’s children.

To serve and to give one’s life

Alálaong bagá, as Jesus is the servant who suffers that other may live, His followers must not fancy themselves as rulers over others but willing servants who give all that God may be all in all.

The 10 were angry at the two when they heard of their grab for glory. Social climbers always upset other social climbers; when some become first, others feel last. This gives Jesus another opportunity to show them all His way and thinking. Identifying Himself as the Son of Man who will come on the clouds, He will, indeed, be seated in glory and His

Join me in meditating on the Word of God every Sunday, 5 to 6 a.m. on DWIZ 882, or by audio-streaming on www.dwiz882.com.

New acceptable IDs to avail yourself of senior citizen privileges Atty. Ayesha Hania B. Matanog

Tax Law for Business

O less than our Constitution recognizes the importance of protecting the rights of the senior citizens. As mandated under the Constitution, the State shall adopt an integrated and comprehensive approach to national development which shall endeavor to make essential goods, health and other social services available to all people at affordable cost which prioritizes, among others, the needs of the elderly. In compliance this mandate, Republic Act (RA) 7432, as amended by RA 9994, was enacted to provide certain tax privileges to senior citizens, such as exemption from income tax on compensation, provided he qualifies as a minimumwage earner or if the aggregate amount of gross income earned by the senior citizen during the taxable year does not exceed the amount of personal exemptions. They are also given a 5-percent discount from their monthly consumption of electricity and water. But the most common and most enjoyed privilege is the 20-percent discount on purchases of certain goods and services and the exemption from the 12-percent valueadded tax on these purchases, except on electricity and water.

These laws, RAs 7432 and 9994, awoke the consciousness of the government, especially the local government units, on their duty to provide assistance and enjoyment for the senior citizens. Suddenly, you would see priority lanes for senior citizens in government service centers and grocery stores, parking lanes devoted to senior citizens and the like. We hear of free movies for senior citizens and in one locality, we hear of cakes being given out on their birthdays. Availing themselves these privileges, however, was a nightmare for the tax administration. There were complaints of abuses, especially in the purchases of food and medicine. Thus, in 2010, the Bureau of Internal Revenue (BIR) issued Revenue Regulations (RR) 07-10

prescribing the guidelines for the availment of these privileges. Under this regulation, a senior citizen may avail herself of the privileges only if she is able to present her senior citizens’ identification card issued by the Office of the Senior Citizens’ Affairs (Osca) in the city or municipality where the elderly resides. Absent this senior citizen ID the senior citizen cannot avail herself of the privileges under the law. No other identification cards were accepted as substitute to prove that she is a resident of the Philippines and that she is 60 years old or above. Recently, with the issuance of RR 11-2015 by the BIR, the availment of the privileges is not anymore limited to the presentation of the senior citizens ID issued by Osca. RR 11-2015 expanded the definition of “identification document” to include the following: 1. senior citizen ID issued by the OSCA, 2. Philippine passport, 3. Government-issued IDs such as Digitized Social Security Services ID, Government Service Insurance System ID, Professional Regulation Commission ID, IBP ID, Unified Multi-Purpose ID and Driver’s License. All these government IDs require the submission of birth certificate prior to issuance. Hence, it is a reliable identification for purposes of availing the privileges.

By expanding the identification cards allowed to show entitlement to these privileges, RR 11-2015 is just in keeping with the spirit of the law. Give the senior citizens what is due them without so much restrictions tied to the presentation of a single document. With the issuance of this regulation, senior citizens need not worry anymore of leaving behind their Osca ID since there are alternative IDs that are equally acceptable in order that she may avail herself of the privileges granted to her under the law. Indeed, life begins at 60. It is something to look forward to and start enjoying the benefits of working so hard and paying so much taxes to the government during your prime years. The author is a junior associate of Du-Baladad and Associates Law Offices (BDB Law), a member-firm of World Tax Services Alliance. The article is for general information only and is not intended, nor should be construed as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported, therefore, by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at ayesha. matanog@bdblaw.com.ph or call 403-2001 local 170.

How to challenge China’s new islands? Carefully

fter months of debate and accusations of fecklessness, the US appears ready to challenge China’s island-building in the South China Sea. The question is how. At issue are new islands the Chinese have created by dredging thousands of tons of sand to expand various reefs and rocks in the Spratly archipelago. China claims nearly 80 percent of the South China Sea, based on a “nine-dash line” map that isn’t recognized by any other nation. The US takes no position on competing territorial claims, but insists that they be resolved peacefully and in accordance with international law. The fear is that China plans to use its newly created islands as beachheads from which to assert control over a swath of ocean far from its shores. The voices calling for action want the US Navy to sail warships within

12 nautical miles of the new islands, challenging the notion that China can conjure up sovereign territory out of nothing. It’s not a bad idea. A high-profile challenge might pressure the Chinese government to clarify just what it’s claiming and under what legal justification. For the gesture to be effective, however, the US (which hasn’t ratified the United Nations’ Convention on the Law of the Sea but largely adheres to its principles) must be sure of its legal footing. Reclaiming land isn’t in itself illegal; countries such as Vietnam have done their own dredging, although none on the same scale and at the same speed as China. The question is more technical: whether, before reclamation, whatever maritime feature existed was visible at high tide. Submerged bodies aren’t entitled to territorial waters. So US warships should chart their

course carefully, targeting only islands, such as Mischief Reef, which indisputably used to be underwater. Washington also has to make clear that the ships are conducting so-called freedom of navigation operations—for instance, by engaging in surveillance during the journey or flying planes into the island’s airspace. Otherwise the Chinese could simply claim the operation represented an “innocent passage” past its islands, something that is allowed within territorial waters. Other publicity, however, should be measured. Inviting along a CNN crew, as the US Navy has in the past, might back the Chinese into responding more forcefully. Thus far Chinese leaders appear to be downplaying the issue in the domestic media, which may indicate they want to keep their options open. The goal is to reassert the need

for all claimants to adhere to internationally accepted rules. To underscore the point, the US could give thought to conducting similar freedom of navigation operations near other once-submerged features, including those claimed by Vietnam, Malaysia and the Philippines. All of those countries welcome the US presence in the Pacific and rely on international law to buttress their claims, so the move would highlight just how out of step China is with its Southeast Asian neighbors. The White House has a strong hand to play after successfully concluding talks over the Trans-Pacific Partnership trade deal. President Barack Obama should be able to build on that success at next month’s Apec summit and lead a renewed push for a code of conduct to guide behavior in the South China Sea. Bloomberg View

2nd Front Page BusinessMirror

A8 Thursday, October 15, 2015

www.businessmirror.com.ph

US Navy readies sea patrols near man-made DTI PUSHES ROLLBACK OF FLOUR, BREAD PRICES Chinese islands in West Philippine Sea By David S. Cloud | Tribune Washington Bureau

ASHINGTON—The Obama administration will soon order Navy warships to patrol near man-made islands constructed by China in the South China Sea (West Philippine Sea to the Philippines), a US warning that it will not accept Beijing’s vast territorial claims in the heavily traveled waters, officials said.

But a decision to escalate the tit-for-tat jockeying with Beijing carries risks: Depending on how the planned display of US power unfolds, it could be seen by Beijing and American allies in the region as a sign of US strength—or of a reluctance to confront China.

Protection of freedom of navigation

Malacañang, meanwhile, has enlisted support of more countries eager to protect freedom of navigation in the West Philippine Sea (WPS), as the United States justifies plan to sail near China’s artificial isles straddling vital sea-lanes in the region. “Many countries have already indicated their support for the Philippines’s position on a rulesbased, peaceful dispute settlement, and on upholding freedom of navigation long before this most recent development,” Communications Secretary Herminio B. Coloma Jr. said on Wednesday. Coloma did not identify the foreign governments that manifested backing for the Philippine position but earlier reports named several countries belonging to the Asean and the European Union (EU) that signaled encouragement for Philippine officials to pursue arbitration proceedings in international tribunal, as provided in the United Nations Convention on the Law of the Sea (Unclos). President Aquino’s Chief Spokes-

man Edwin Lacierda, who was asked if the Palace intends to boost international backing for the government’s case against China’s encroachments in the West Philippine Sea, opted to pass the matter to the Department of Foreign Affairs. “I have deferred questions on the West Philippine Sea (WPS) to the DFA,” Lacierda said in a text message. This developed as ranking officials of the United States and Australia on Wednesday reaffirmed their governments commitment “to sustain and renew an Asia-Pacific regional security architecture, where everyone rises and everyone prospers.”

Options

The Pentagon has given President Barack Obama a menu of options that range from sending a lone, lightly armed vessel within the 12-mile territorial waters claimed by China around its dredged islands or a more formidable force of multiple warships and surveillance flights, an official familiar with the discussions said. While US patrols within 12 miles of the islands in the Spratly archipelago are likely, officials say, Obama has not decided on how large a show of force he wants to make against China, a country with which the US is keen to maintain smooth relations, even as it seeks to counter Beijing’s growing assertiveness. “Make no mistake, the US will fly, sail or operate wherever international law allows, as we do

around the world—and the South China Sea is not and will not be an exception,” Defense Secretary Ash Carter told reporters on Tuesday, after he and Secretary of State John F. Kerry met with senior Australian officials in Boston. Carter cited the “rising tensions” in the South China Sea and he called for an end to reclamation projects in the area, but he avoided criticizing China directly, and gave no indication when the Pentagon might challenge Beijing’s territorial claims. Adm. Harry Harris, the commander of the United States Pacific Command, told reporters last Friday that he had laid out multiple options for sending ships near the islands claimed by China. “ I ’m comfor t able k now i ng those options are being considered, and we’ll execute as directed” by Obama, Harris said, refusing to provide details.

Militarization

After talks with Chinese President Xi Jinping at the White House last month, Obama vowed that the “US will continue to sail, fly and operate anywhere international law allows.” Xi, for his part, insisted that China had no plans to militarize islands in the South China Sea. Other Chinese officials have warned the country would not tolerate intrusions in its territorial waters. “We will never allow any country to violate China’s territorial waters and airspace in the Spratly Islands, in the name of protecting freedom of navigation and overflight,” Chinese Foreign Ministry Spokesman Hua Chinying told reporters on Friday at a news briefing, according to Reuters.

Dredging

The US has long refused to take sides in territorial disputes in the South China Sea, where, along with China, the Philippines, Vietnam, Taiwan, Malaysia and others have multiple, sometimes overlapping claims. Dredging by China in the past two years has built thousands of acres of new land on five coral outcrops in the Spratlys. On one, the Fiery Cross

Reef, China is building a 10,000foot runway potentially usable by military warplanes. But US officials emphasize that man-made islands do not constitute sovereign territory under international law and, therefore, cannot be used to assert claims to territorial waters. It’s rare for the Pentagon to telegraph in advance such a sensitive military move. The Navy conducts dozens of so-called freedom of navigation operations around the world every year, sending ships into disputed maritime areas, usually with no notice, to underscore US claims that they are international waters.

International waters

Alerting Beijing that it is planning such an operation in the Spratlys, the US may be hoping to lessen the chance of an inadvertent confrontation, analysts said. But it also gives Beijing time to position its own naval and coastguard forces in the vicinity so that it can shadow or potentially harass US ships that cross the 12-mile line. The last time the US patrolled near South China Sea islands areas claimed by China was in 2012, before the reclamation projects began, officials said. In May a US Navy P-8A Poseidon surveillance aircraft flew near Fiery Cross Reef but stayed outside the 12-mile limit. Even so, a Chinese military dispatcher demanded repeatedly that the airplane leave the area, warning that it was approaching a “military alert zone.” The same month, a US warship sailed through the Spratlys but also remained more than 12 miles away from China’s man-made islands. It was tailed but not interfered with by a Chinese navy vessel. Last month China sent five military ships into the Bering Sea off the coast of Alaska. At one point, US officials said, the ships entered US territorial waters, invoking a provision in maritime law that allows a warship to cross into another country’s maritime territory legally as long as the ships moved “expeditiously and continuously.” With Butch Fernandez

Unctad report shows thriving maritime trade in developing nations

By Cai U. Ordinario

eaports in developing countries, like the Philippines, now account for majority of global goods loaded, according to the United Nations Conference on Trade and Development (Unctad). In its Review of Maritime Transport 2015, Unctad said seaports in developing countries account for 60 percent of global goods loaded in 2014. Unctad also said the import demand of developing countries, as measured by the volume of goods unloaded at their seaports, reached 61 percent. “Developing countries have incrementally shifted patterns of trade, as the distribution between the goods loaded and unloaded has changed significantly. No longer only sources of supply of raw materials, developing countries are also key players in globalized manufacturing processes now and a growing source of demand,” Unctad said. Data showed that the country is also 32nd out of the 35 economies with the largest registered fleets, as of January 1. The country has 646 vessels, or 0.72 percent, of the world's total vessels at 89,464. The top 5 economies with the largest registered fleets are Panama, with 8,351 vessels; Liberia, 3,143; Marshall Islands, 2,580; Hong Kong, China, 2,425; and Singapore with 3,689. Unctad data showed that the Philippines also built a total of 1,885 new vessels in 2014. Some 995 of these new vessels are container ships and the remaining 869 vessels are bulk carriers. Meanwhile, Unctad said developing countries’ share of global imports, measured by volume of unloaded goods grew, by 3 1/2

Beating the storm Coastal fishermen of Sabangan, Ilocos Sur, prepare their boats and nets on Wednesday for another fishing trip ahead of the weatherman’s warning that Typhoon Lando (international code name Koppu) has entered the Philippine Area of Responsibility, and may hit some parts of Northern Luzon. Mau Victa

times, to reach 61 percent in 2014, from just 18 percent in 1970. Asia continued to dominate as the main loading and unloading region in 2014, followed by continental America, Europe, Oceania and Africa. Unctad said global seaborne shipments increased by 3.4 percent in 2014. This represents an additional volume of more than 300 million tons, taking the total volume to 9.84 billion tons. In addition, Unctad said the report calculated that growth in ton–miles performed

by maritime transport was estimated to have increased by 4.4 percent in 2014, up from 3.1 percent in 2013. “The ton-mile unit, an accurate measure of demand for shipping services and tonnage, takes into account distance, which determines the transportation capacity of ships over time,” Unctad said. Data also showed that dry bulk commodities, namely, iron ore, coal, grain, bauxite and alumina, phosphate rock and minor bulk commodities

accounted for nearly half of the total 52,572 estimated billion ton-miles performed in 2014. The ton-miles of dry bulks expanded firmly, at 6.4 percent for major dry bulk commodities and 5.2 percent for minor bulk commodities. Unctad said that apart from China, iron ore and coal demand from other fast-growing economies, such as India and the Republic of Korea, is now on the rise, and iron ore and coal import demand in Asia has contributed significantly to the growth in dry bulk trade volumes over recent years.

he Department of Trade and Industr y (DTI) is pushing for another round of rollback in prices for both flour and bread, setting a possible P20 to P40 reduction per 25-kilogram bag for flour and P0.50 to P1 for bread by November. Market leader Gardenia Bakers Philippines Inc. (GBPI), however, is taking a cautious stance on the DTI’s call, saying that flour millers should initiate a reduction first before any price reduction should be implemented. “After meeting all flour millers and bakers, please be informed that another price rollback of flour, from a range of P20 to P40 per 25-kg bag in September, bread products will rollback prices from 50 centavos to P1 per loaf, all sizes, including the Pinoy Tasty and Pinoy pan de sal,” Undersecretary for Consumer Protection Group Victorio Mario A. Dimagiba said in a text message to reporters. If the DTI’s suggested reductions are followed, this would mean that Pinoy Tasty should go down to P35 to P35.50, while Pinoy pan de sal, per 10-piece bag, should be at P21 to P21.50 by mid-November. Community bakers, on the other hand, will be asked to add one piece per 10 pieces for the same price, the trade official added.

The DTI has initiated the second round of price rollback this year on the back of the declining price of wheat. The DTI noted that from January to April, global wheat prices have gone down by an average of 28 percent. This has already been reflected in bread prices in August. Simplicio Umali Jr., GPBI president, said that wheat prices have, indeed, gone down but the decline, must first be factored in by flour millers. “US wheat prices have gone down by 8 percent to 13 percent range from June to September. However, Philippine flour prices have remained at the current level of P830 to P850 per sack during the last three months. The current bread prices, which were recently reduced in August, already reflect the prevailing flour prices. Should the flour millers significantly reduce further their existing prices, bakers may be expected to pass on the savings to consumers,” Umali said. Asked when the possible reduction may be enjoyed by consumers if the DTI’s target of November is not met, Umali replied: “We remain hopeful that millers will respond to the plea of bakers to reduce flour prices in the coming weeks in time for the Christmas Holidays,” he said. Catherine N. Pillas

briefs

lawmaker seeks 2016 budget rechanneling

A party-list lawmaker on Wednesday filed a set of amendments to House Bill 6132, or the 2016 General Appropriations Bill. Party-list Rep. Terry L. Ridon of Kabataan, in a news statement, said that the amendments seek to “excise provisions that transform several agency budgets into pork” and rechannel funds allotted to questionable items to augment the budget of state universities and colleges (SUCs). Ridon said lower chamber leadership gave legislators until October 14 to file amendments. On October 9, in a vote of 230-20, the House of Representatives approved HB 6132 on third and final reading, “subject to such amendments as may be approved by the small committee,” headed by the House Committee on Appropriations, which is chaired by Liberal Party Rep. Isidro Ungab of Davao City. In his 17-page letter to Ungab, Ridon, citing the 27 legislators who have expressed support in the move, asked for the restoration of the P477.8 million slashed from the 2016 budget for maintenance and other operating expenses of 59 SUCs.

MSMEs SHOULD HAVE GREATER CREDIT ACCESS–POE Sen. Grace S. Poe wants micro, small and medium-scale enterprises (MSMEs) to have greater access to financial and banking assistance to help them achieve their full potential and pitch in the government’s drive for inclusive growth. Poe filed Senate Resolution 1486, urging the Senate Committees on Banks, Financial Institutions and Currencies, and Trade, Commerce and Entrepreneurship to conduct a study, in aid of legislation, on access to financial and banking assistance for MSMEs, including structural constraints to their full development as engines of development. “MSMEs have enormous potential to become sources of rapid, sustained and inclusive economic growth, as their linkages with local firms generate a ‘multiplier effect’, which creates and distributes value across sectors. Our MSMEs can also contribute to inclusive growth by expanding our market base, thereby creating new sources of wealth and opportunity for the benefit of the Filipino people,” Poe said. The sector is said to constitute the economy’s backbone, since MSMEs account for 99.6 percent of the total number of establishments in the country.   Institutional and operational constraints, such as low productivity, difficulties in accessing finance, technology, information, and product quality and marketing, however, have prevented MSMEs from realizing their potential as sources of inclusive growth, according to the lawmaker. Poe cited a report made by international organization Small Enterprise Assistance Fund, which studied the potential of MSMEs to contribute to inclusive growth. PNA

gsis bares new benefit package FOR centenarian pensioners BATANGAS CITY—Two centenarian pensioners received P100,000 each from Government Service Insurance System (GSIS) President and General Manager Robert G. Vergara during a stakeholders’ dialogue on Friday at the Batangas City Convention Center. Vergara handed checks to pensioners Cornelia Cabual and Socorro Podador, 101 and 100 years old, respectively, as part of the package of new milestone benefits for old-age and disability pensioners. Ninety-three-year-old Salvador Hornilla also received P20,000 from the pension fund chief. “We are introducing the milestone benefits for old-age and disability pensioners who are 90 years old and above, because they are the most vulnerable members of the GSIS,” he said. Some 6,000 pensioners, who are 90 to 94 years old as of September 1, will be granted P20,000, while over 1,100 pensioners, who are 95 to 99 years old, will receive P50,000. A total of 181 pensioners, who are 100 years old and above, will get P100,000. PNA