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JFC to 2016 bets: Assure us of key reforms now
The BusinessMirror chose the theme “When I Was 25” for our 10th anniversary supplement today. The supplement features leaders in various industries and fields based on their own narration of how they were doing when they were 25, the environment they were in and the kind of nurturing they had. We hope to make models out of these personalities for the Millennials, our next generation of leaders.
bloc initiated by the US. But the source, who asked not to be named, said that, with the TPP being a highly ambitious trade pact, it is uncertain if that flexibility will be allowed. “From what has been leaked, we know there may be an ISDS part [in the TPP]. This means multinational companies can sue the state where they invested in. But in our Constitution, it says that the State cannot be sued without its consent,” the source told the BusinessMirror. The Philippines has always applied for exemption on
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o ease the apprehension of foreign investors over the change in leadership next year, foreign business groups on Wednesday urged presidential candidates to support policies that will modernize infrastructure, open up the Philippine economy, and eliminate red tape and corruption. Continued on A2
social shopping journey Andréanne Leclerc, Social@Ogilvy regional director, Asia Pacific, leads the discussions with the attendees of the “Winning Throughout The Shopper Journey” held at the Discovery Primea in Makati City. Social@Ogilvy is a global, cross-discipline team of social experts from across all of Ogilvy’s businesses delivering solutions relevant in each local market. ALYSA SALEN
Manila to use constitutional shield in TPP
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he Philippines, while still not a negotiating member of the Trans-Pacific Partnership (TPP), has already made known its intention of using its “constitutional entitlement” to evade legal actions from foreign corporations should the country become part of the new trade bloc. Trade Undersecretary Adrian S. Cristobal Jr. said this is the “template” that the Philippines will use in arguing for exemption to the TPP Investor-State Dispute Settlement (ISDS) provision. “As of today, we’ve been following a template in investment treaties
PESO exchange rates n US 46.4050
CRISTOBAL: “As of today, we’ve been following a template in investment treaties and trade negotiations which has been in place over the past several years, and we’re sticking to that template.”
and trade negotiations which has been in place over the past several years, and we’re sticking to that template. That is our position now,” Cristobal said in a chance interview with reporters on Tuesday.
According to a source privy to the matter, the template refers to the immunity of the state from suit under the 1987 Philippine Constitution. The country has always used this clause to justify exemption from similar, intergovernment arbitration controls that are sometimes part of free-trade agreements (FTAs). Cristobal said the country has always used its constitutional entitlement as protection from legal actions taken by foreign corporations. This will remain as the position of the country in the event it becomes part of the by-invitation-only trade
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he global economy is slowing down. The International Monetary Fund (IMF) has lowered its forecast for worldwide growth, as a deceleration in China and other emerging markets is offsetting modest gains in the United States and developed nations. The global economy will expand 3.1 percent this year, down from 3.4 percent last year, the IMF said. Growth is projected to improve to 3.6 percent in 2016. Both figures in the group’s quarterly world economic outlook are down 0.2 percentage points from July estimates. “Six years after the world economy emerged from its broadest and deepest postwar recession, the holy grail of robust and synchronized global expansion remains elusive,” said Maurice Obstfeld, the IMF economic counselor. The IMF slightly upgraded its forecast for US economic growth this year to 2.6 percent, a 0.1-percentage-point increase from the July estimate. Growth will improve to 2.8 percent next year. But that estimate is down 0.2 percentage points from the earlier forecast. The recovery is expected to pick up a bit in advanced economies to 2 percent this year. But emerging-market growth is projected to decrease to 4 percent this year, from 4.6 percent last year. It would be the fifth straight year that economic growth has slowed in those nations, the IMF said. The Chinese economy will expand by 6.8 percent this year, down from 7.3 percent last year. China’s transition from an export-focused manufacturing economy to one driven by domestic consumption and services is among three powerful forces slowing global growth, Obstfeld said. The other factors are the steep drop in prices for commodities, particularly oil, and a possible interestrate hike by the Federal Reserve. As part of China’s transition, the nation in August changed the way it calculated the value of its currency. The move led to a devaluation that, along with fears of slowing global growth,
By Catherine N. Pillas
INSIDE
IMF: GLOBAL GROWTH MAY SLOW TO 3.1% THIS YEAR
n japan 0.3861 n UK 70.6980 n HK 5.9877 n CHINA 7.2923 n singapore 32.7187 n australia 33.1701 n EU 52.3402 n SAUDI arabia 12.3813 Source: BSP (7 October 2015)
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Thursday, October 8, 2015
GIR swells to $80.31B T By Bianca Cuaresma
he country’s gross international reserves (GIR), which act as buffer against global financial stresses, inched up in September, driven higher by proceeds from the central bank’s foreign-exchange operations and income from its overseas investments.
In a report on Wednesday, the Bangko Sentral ng Pilipinas (BSP) said the GIR aggregated $80.31 billion. This represented a $50-million increase from GIR data in August
totaling only $80.26 billion. The September GIR was also $750 million higher than the year -ago GIR of only $79.56 billion. This also helped snap the down-
trend in foreign-currency reserve holdings noted the past two months in a series. The central bank attributed the higher GIR “mainly to the BSP’s foreign-exchange operations and its income from investments abroad, as well as the national government’s net foreign-currency deposits.” The GIR could have been higher were it not partially offset by payments made by the national government for maturing foreignexchange obligations and revaluation adjustments on the BSP’s gold holdings and foreign currency-denominated reserves. The central bank manages the GIR as buffer against maturing foreign obligations. It also serves as a cushion against external sector imbalances and pressure. Gold re-
serves, a basket of currencies known as special drawing rights, foreign investments and foreign-exchange reserves make up any country’s foreign-currency reserves. Reserve levels tell a country’s capacity to meet trade commitme nt s or m at u r i n g fore i g n currency obligations. Data from the central bank show the BSP’s gold holdings aggregated $7.015 billion in September, down from $7.15 billion the previous month. BSP said the GIR should be sufficient to finance 10.3 months worth of imports of goods and payments of services and income. It is also equivalent to 6.1 times the country’s shortterm external debt based on original maturity, or 4.4 times based on residual maturity.
JFC to 2016 bets: Assure us of key reforms now Continued from A1
The Joint Foreign Chambers of the Philippines (JFC) said this and other key reforms would improve investor confidence and reverse the decline in net foreign direct investments (FDI) recorded in the first half of the year. “The challenge is to increase FDI in the second half of the year and thereafter to even higher levels important for high, sustained and inclusive growth,” JFC said in a statement. The JFC said among the actions that can be taken in the months ahead that will improve investors’ confidence include the “support by major presidential candidates for policies that will increase investor confidence to invest, including modernization of infrastructure, proposals to open the economy including mining, reduce business costs and unburden
the private sector of red tape and corruption.” JFC said enacting a number of legislative measures such as Apprenticeship Act amendments, BuildOperate-Transfer Act amendments, Customs Modernization and Tariffs Act and Foreign Investment Negative List amendments would help boost investor confidence. Foreign businessmen also urged the government to accelerate the implementation of public-private partnership projects, reduce traffic congestion in Metro Manila, avoid the recurrence of port congestion, avoid brownouts during the 2016 dry season, and reduce flight delays at the Ninoy Aquino International Airport. Investor confidence, they said, would be maintained via the timely processing of value-added tax refunds for eligible companies. “[The Philippines must also] show progress toward entering
into major new foreign trade and investment treaties with the European Union and the Trans-Pacific Partnership, which together comprise 60 percent of global gross domestic product with markets of some 1.3 billion people,” JFC said. Citing data from the Bangko Sentral ng Pilipinas, JFC noted that net FDI inflow for the first half was $2 billion, 40 percent lower than the $3.4 billion recorded in the same period last year. “The Philippine Economic Zone Authority reported new investment approvals for the first half of 2015 was $1.8 billion, down from $2.4 billion in the comparable period in 2014, or a 33-percent decline,” JFC said. Foreign businessmen said the downturn in the first semester of 2015 followed a record year in 2014 when total net FDI reached $6.2 billion, up 479 percent from $1.1
billion in 2010. “Although 2014 was a record year for FDI flowing into the Philippines, many commentators have observed the inflow was much less than Singapore ($67.4 billion), Indonesia ($25.7 billion), Thailand ($11.8 billion), Malaysia ($10.5 billion), and Vietnam ($6.6 billion),” JFC said. JFC also said FDI in January to June was only 4.6 percent of total investments that flowed into Southeast Asian countries during the period. The JFC is a coalition of the American, Australian-New Zealand, Canadian, European, Japanese, Korean chambers and the Philippine Association of Multinational Companies Headquarters, Inc. The group represents over 3,000 member-companies engaged in over $230 billion worth of trade and some $30 billion worth of investments in the Philippines.
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Volkswagen stock chart is looking like BP’s after oil spill A n ominous chart pattern that formed in shares of BP Plc. after its 2010 oil spill is now appearing in Volkswagen AG—and that’s bad news for bulls. It’s known in the jargon of technical analysis as a breakaway gap, a price swing that happens so fast that it fractures the orderly progress of trading and disrupts an existing range. In VW, it happened at the open on September 21, when the carmaker plummeted from €162.40 to €139.95 without ever touching any of the price points in between. It may take years before the shares recover, if they ever do, according to technical analysts at Day by Day SAS and FXCM Inc. BP never returned to its prespill price. VW lost as much as $33 billion in market value since admitting cheating on emissions tests last month. The company is facing lawsuits and criminal probes in countries including France, Germany and America, with fines that could reach $7.4 billion in the US alone, according to analysts from Sanford C. Bernstein Ltd. CEO Matthias Mueller said on Tuesday the company will delay or cancel nonessential projects in a bid to slash spending. “A lot of people have piled out of Volkswagen,” said Anthony Peters, a strategist at Swiss Investment Corp. in London. “You’re going to have, as BP still has, long-cycle private litigation. Volkswagen’s share price is going nowhere in a hurry.”
€80
VW will fall to €80 in the short term, according to FXCM analyst Vincent Ganne. The size of the breakaway gap on the chart
signals that a number of long-term VW investors who had built positions over years dumped the stock on September 21, Ganne said. Valerie Gastaldy, a technical strategist and partner at Day by Day, sees the shares falling to around €83 in the short term, with the negative momentum prevailing for months before a potential rebound. VW closed at €97.09 on Tuesday. It jumped 8 percent at 12 p.m. in Frankfurt. Andreas Lampersbach, a VW representative, didn’t immediately return calls and an e-mail seeking comment on the stock trading. BP formed its breakaway gap on June 1, 2010, after efforts to plug the company’s leaking Gulf of Mexico well failed. It took seven months for the stock to rise back to the price before the gap was formed and has rarely climbed above it since then. While the slump in oil hasn’t helped, this year’s 8-percent decline in BP shares is more than that of energy companies in the Stoxx Europe 600 Index. Even as VW has rebounded for two days, it’s still near a fouryear low. The company is seeking to regain credibility and fix the 11 million vehicles affected. It’s exploring options from a simple software upgrade to outright replacing cars, people familiar with the matter have said. “There is too much uncertainty in terms of how they will fix the cars, how long it will take and what the potential fines could be in the US and globally,” said Klaus Breitenbach, an analyst of automotive equities at Baader Bank AG in Frankfurt. “This is all unknown and is weighing on shares.” Bloomberg News
Manila to use constitutional shield in TPP. . . Continued from A1
the ISDS clause in other negotiated FTAs because of the constitutional provision. But the TPP agreement may not allow the same flexibility, putting the Philippines to a “take it or leave it” situation. The ISDS has been a contentious topic since talks of its inclusion in the TPP has taken shape, as critics believe this is an unusually invasive tool that will allow foreign investors to challenge governments outside of the host country’s courts. Other challenging chapters include government procurement and intellectual protection. But Cristobal said these are areas that are not unique to the TPP. The Department of Trade and Industry (DTI) still aims to undergo technical consultations with the 12 members of the TPP, as it maintains interest in joining the trade pact once an accession protocol for new members has materialized. “As far as the TPP is concerned, there was an announcement of an agreement of talks last night, but that will take some time to conclude, because each of those countries has to go through each of their processes of approval. So the TPP will still take time. But the Philippines has indicated very clearly that we want to join the TPP,” Trade Secretary Gregory L. Domingo said. While Domingo clarified that the accession protocol for new members is still far from being fleshed out by TPP members, the Philippines is “right at the door” of the TPP. “We’re waiting for it to open, and as soon as it opens, we’ll start discussions,” the trade secretary added. As a way of preparing for the possible entry, the Philippines already had technical consultations with six of the 12 TPP members, including the US. The Philippines has so far held technical consultations with Malaysia, Australia, the US, New Zealand, Mexico and Canada. The Philippines has also expressed interest in forging freetrade agreements with Canada, Peru and Chile—seen as “building blocks” toward the TPP.
IMF. . .
Continued from A1
roiled the financial markets. As a result, the currencies of other emerging-market nations weakened and there was “an increase in global risk aversion,” the IMF said. The global problems led Fed policy-makers to hold off on a small increase in a key interest rate in September. And a hike in the so-called federal funds rate, which has been near zero since late 2008, is looking less likely this month after a disappointing US jobs report last week. The IMF and World Bank have warned the Fed not to raise the rate this year. MCT
Economy
A4 Thursday, October 8, 2015
BusinessMirror
Editors: Vittorio V. Vitug and Max V. de Leon
Palace set to certify urgent passage of P3.1-trillion 2016 budget proposal
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By Butch Fernandez
alacañang is poised to certify the need for Congress to urgently pass the P3.1trillion 2016 national budget bill, even as Congress is set to go on a threeweek recess in the midst of budget deliberations starting this weekend. Under the approved congressional calendar, members of the Senate and the House of Representatives are scheduled to take a break from October 10 to November 2 and will only resume regular sessions to tackle the budget bill and other pending
matters on November 3 until they adjourn anew on December 18, when lawmakers go on traditional Christmas vacation. “I know we’ve always certified the NEP,” Palace Deputy Spokesman Abigail Valte said, referring to
the proposed National Expenditure Program, also known as the 2016 budget bill. Asked if the Palace was ready to issue the certification as requested by the House before the upcoming congessional recess, Valte asked for time to first consult Budget Secretary Florencio B. Abad, even as she recalled that the Palace usually does this in previous budget bills. She also could not say if the Palace would issue the certification before Congress goes on recess this weekend. Such a Palace certification on the urgency of passing a pending bill allows the measure to be approved on second and third reading in one sitting, or on the same session day.
Lawmaker says Aquino administration has not done enough to improve workers’ lot
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By Recto Mercene
he Aquino administration has not done enough to help the country’s work force keep up with the rising costs of essential goods and services, Sen. Francis G. Escudero said on Tuesday. Escudero pointed out that “the salaries of an estimated 1.4 million government workers remained stagnant in the last three years despite the ever-increasing cost of basic commodities.” Meanwhile, private-sector employees have received minimal pay increases in the last five years. In April the National Wages and Productivity Commission—the key policy-making body on wages, incomes and productivity in the private sector—implemented a P15 adjustment in the daily minimum wage in Metro Manila, raising the minimum pay to P481 for workers
in the nonagriculture sector. It was the fifth wage adjustment since President Aquino assumed office in 2010, when the minimum daily salary in the nation’s capital region was P404. “Despite the low inflation rates, we have not seen a significant decrease in the cost of goods and services, and there has been no significant increase in wages both in the public and private sectors in recent years,” Escudero pointed out. “This is precisely the reason I support the proposal to reduce the personal income-tax rate, which at 32 percent is the highest in Southeast Asia,” he said. “Hindi na nga tumataas ang sweldo ng mga ordinaryong manggagawa, masyado pa ring mataas ang binabayaran nilang buwis. Hindi naman siguro makatwiran ’yun.” Escudero urged the government to make up for its failure to give workers a decent wage
increase by supporting moves in Congress for lower personal income-tax rates, which at least would increase workers’ take-home pay. “Since workers have not received a muchneeded pay raise and are not likely to get a salary increase in the near future, I think it is high time we give them relief from paying unjust taxes,” he said. Escudero had earlier called on Congress to tackle immediately the proposed legislation to lower income taxes after Malacañang expressed willingness to take a second look at the proposal that had united labor and business groups. The technical working group of the Committee on Ways and Means of the House of Representatives has come up with a proposal that exempts individuals earning below P180,000 annually from paying income tax and imposes a 30-percent income tax on individuals earning more than P1.1 million a year.
DOLE readies P649.81-million El Niño fund
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abor Secretary Rosalinda Dimapilis-Baldoz has assured agriculture sector workers of the Department of Labor and Employment’s (DOLE) assistance as El Niño threatens the farming industry in the country. Baldoz made the DOLE’s assurance of assistance after the Department of Science and TechnologyPhilippine Atmospheric, Geophysical and Astronomical Services Administration (DOST-Pagasa) reported that a “mature strong El Niño is now present in the tropical Pacific Ocean, which is likely to strengthen further before the end of 2015, and may last until May 2016.” According to Pagasa, this event will potentially be among the four strongest since 1950, and is expected to affect 67 provinces that will experience either dry condition, dry spell or drought. “The DOLE’s main intervention is to provide emergency employment to affected workers. We have a budget of P649.81 million for this intervention,” Baldoz said, adding that the amount will be dispensed with in the remainder of 2015 and in the first quarter of 2016. She said P316.86 million of the total budget is readied for allocation in the fourth quarter of 2015, while another P332.95 million is available for disbursement in the first quarter of 2016. “With this emergency employment budget, we expect to assist 69,804 farmers across the regions,” the labor secretary added. Among the priority beneficiaries of the DOLE’s emergency employment program are workers in the informal sector, such as farm laborers, and workers in the formal sector, comprised of agricultural and agribusiness workers, specifically plantation workers; hired workers in farms, workers in agribusiness
whose inputs are primarily agricultural products; and farmworkers not involved in rice production. Baldoz said the nature of the DOLE’s assistance is temporary wage employment, and the beneficiaries, aside from receiving the prevailing minimum wage in their respective areas, will be provided with group accident insurance, appropriate personal protective equipment (PPEs), and orientation on safety and health prior to engagement to work. Possible work for emergency employment includes clearing activities, and repairs of infrastructure and irrigation projects. The DOLE convened early in September its concerned central office agencies, together with the representatives of Pagasa and the National Economic and Development Authority, to draw up interventions that will address the needs of the affected workers. Baldoz, citing a report from the DOLE’s Bureau of Workers with Special Concerns (BWSC) Director Ahmma Charisma L. Satumba, added that the DOLE is pursuing its partnership with the National Irrigation Administration (NIA), which will identify the affected farmworkers who will receive the package of services from the DOLE. The BWSC has drafted a memorandum of agreement for this undertaking, subject for review by the NIA. “We have discussed with the NIA about possible complementation of the DOLE’s emergency employment program with that of NIA’s farmproduction projects,” Baldoz said. Other interventions that the DOLE may offer include the provision of livelihood assistance, skills training from Technical Education and Skills Development Authority, and employment-facilitation services. PNA
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Economy BusinessMirror
Thursday, October 8, 2015 A5
Transportation dept assures lesser MRT 3 breakdown
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By Lorenz S. Marasigan
XPECT lesser “operational disruptions” at the Metro Rail Transit (MRT) Line 3, the Department of Transportation and Communications (DOTC) assured on Wednesday, after the department awarded a P160million contract for the supply of a new rail-grinding machine to a private joint venture.
The supply of the machine, awarded to the joint venture between Kempal Construction & Supply Corp. and TPE Share Sales Inc., will improve the condition of the rails of the train system by ensuring better track upkeep, the transport agency said in a news statement. The machine, along with operations and maintenance manuals, repair tools and a five-year supply of spares, will be delivered within 360 calendar days from issuance of the notice to proceed. “This will put an end to the classification of systematic rail grinding as special repair works—which entails additional costs—and instead characterize it as an ordinary preventive maintenance undertaking. With its own rail-grinding machine, the MRT 3 management can minimize costs, as similar equipment will no longer be leased from other firms, the transport agency said. The contract is part of a P9.7-billion program that aims to fix the ailing railway line. The government is also spending P4.25 billion for the three-year maintenance and the general overhaul of existing train coaches, and the replacement of the system’s signaling system. The agency is targeting to award the contract within the fourth quarter this year, to enable the latter to take over from the seven multidiscipline contractors currently maintaining the rail line by January 2016. This long-term maintenance provider will not only undertake the regular maintenance requirements of the system over the next three years, it will also conduct the general overhaul of existing MRT 3 coaches, as well as the replacement of the signaling system. The general overhaul is needed in order to improve the condition of the 16-year-old coaches, and the signaling system replace-
Meralco cuts October power rates By Lenie Lectura
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P0.14-per-kilowatt-hour (kWh) drop in generation charge led to an overall decline in Manila Electric Co. (Meralco) October bills by P0.13 per kWh, the utility firm announced on Wednesday. For a typical household consuming 200 kWh, the P0.13- per-kWh reduction is equivalent to a P26 decline in overall electricity bills this month. At P8.42 per kWh, this month’s overall rate is lower by P2.05 compared to October 2014’s P10.47 per kWh. Meralco said this month’s rate is the lowest in more than five years, or since January 2010. Meralco said power rates have declined for the past six consecutive months with a total reduction of P2.26 per kWh. The reduction in the overall rates was primarily due to the generation charge, which decreased by P0.14 per kWh from last month. At P3.996 per kWh, this month’s generation charge is also the lowest since January 2010. Charges from the Wholesale Electricity Spot Market (WESM) registered a reduction of P3.71 per kWh. This was due to higher plant availability in September as compared to August. The average rate of the plants under the Independent Power Producers (IPPs), meanwhile, increased by P0.08 per kWh. Plants under the Power Supply Agreements (PSAs) also registered an increase of P0.18 per kWh due to the lower dispatch of some power plants, such as Ilijan. Contributing also to the increase in IPP and PSA rates was their unusually low rates in the August supply month, as they included adjustments from prior months. The share of PSAs, IPPs and WESM to Meralco’s total power requirements stood at 47, 47 and 6 percent, respectively. In addition to the generation charge, other charges, such as system loss and subsidies, decreased by P0.01 per kWh following the decrease in generation charge. Transmission charge, on the other hand, registered an increase of P0.01 per kWh due to the higher ancillary service charges. There was also a slight increase of P0.01 per kWh in taxes. Meralco’s distribution, supply and metering charges remain unchanged after it registered a reduction in July. Meralco reiterated that it does not earn from the passthrough charges, such as the generation and transmission charges. Payment for the generation charge goes to the power suppliers, while payment for the transmission charge goes to the National Grid Corp. of the Philippines.
ment will ensure safer operations throughout the line. The mass-transit system, which ferries more than half-a-million passengers daily, may be characterized to be in a state of decay. Every day passengers complain of
long queues caused by the lack of light-rail vehicles, its humid train cars, and faulty elevators and escalators. These are all caused by the lack of proper maintenance, rehabilitation and upgrades.
Today, the rail line’s average daily ridership is already over 560,000, and its highest single-day passenger count is 620,000. It has a rated capacity of 350,000 passengers per day.
News
BusinessMirror
A6 Thursday, October 8, 2015
news@businessmirror.com.ph
Bangsamoro bill to showcase PHL’s resolve to end conflict at Apec meet
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By Jovee Marie N. dela Cruz
he country’s chief peace negotiator on Wednesday said the passage of the proposed Basic Law on Bangsamoro Autonomous Region (BLBar) before the Asia-Pacific Economic Cooperation (Apec) Leaders’ Meeting in November will send a strong message to the international community that the government is really bent on ending the long-standing strife in the southern part of the Philippines.
“The [passage of the BLBar] is going to be our message to the Apec community that we will not squander a lost opportunity provided for by the passage of the law that will provide that kind of environment to really jump-start peace, security and development in the region,” Government Peace Panel Chairman Miriam Coronel-Ferrer said in a news confer-
ence at the House of Representatives. The Apec is a regional economic forum established to leverage the growing interdependence of the Asia Pacific. The Apec Economic Leaders’ Meeting will be attended by 21 world leaders. The Palace declared November 18 and 19 as special nonworking holidays in the National Capital Region for the Apec Leaders’ Meeting.
Ferrer said failing to pass the BLBar would not be a good sign for the Apec meet. “The whole world is watching this process. Kung mangyari ang Apec at ang message na lumalabas sa buong mundo, hindi natin masosolusyon ang kaguluhan natin dito sa Mindanao, that is not going to be a good sign to them who are really pushing for economic integration that is grounded on a very secure society of the Asia Pacific that is able to address different security challenges and economic challenges the world is facing,” Ferrer said.
Certify as urgent
Meanwhile, Ferrer and Moro Islamic Liberation Front (MILF) Peace Panel Chairman Mohagher Iqbal asked President Aquino to certify as urgent the BLBar so the lawmakers can approve the bill on second and third reading on the same day. Iqbal, in the same news conference, urged the leadership of the 16th Congress to pass the BLBar in November or December. “The only window of opportunity is the next deadline, if I may call it as such, which will be in November to December. After that, it is all politics
that will fill the air,” Iqbal said. “I appeal to the honorable members of both chambers of Congress to rise up to the occasion and be statesmen even for one moment in the history of this country. The fate of the BBL [Bangsamoro basic law] is in your hands, and history will judge you on how you dispense with the BBL,” Iqbal said. Earlier, the leadership of the House of Representatives said the lawmakers’ “conscience votes” would decide the fate of the proposed BLBar at the lower chamber. Speaker Feliciano Belmonte Jr. admitted that the lower chamber may not approve the proposed BLBar before its December 16 deadline, saying he will not do a campaign to force his collogues to pass it. “I’m not going to talk to everybody for you to vote this way or that way; let everybody vote the way he wants to have it voted,” Belmonte said. Earlier, Belmonte also said the chamber is running out of time to pass the proposed BLBar. The lawmaker said the long line of lawmakers who want to interpellate has stretched the legislative process for the BLBar.
BERLIN WALL AT NATIONAL MUSEUM
Brigitte Zypries (rear), Germany’s Parliamentary State secretary and Federal Government Coordinator of German Aerospace Policy, and Jeremy Barns, director of the National Museum of the Philippines, shake hands by the segment of the Berlin Wall during the soft opening of an exhibition on Wednesday. The particular portion of the Wall, the 22nd section out of a total of 40 sections and was formerly erected in the Potsdamerplatz, was donated by the city of Berlin to the “city and people of Manila.” AP
DENR sticking to its reforestation goals despite El Niño
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espite the threats of El Niño, the government is confident of achieving its reforestation target this year, owing to localized rainfalls and lowpressure area (LPA) affecting the country, an official of the Department of Environment and Natural Resources (DENR) said. Director Leo Calderon of the DENR’s Forest Management Bureau, also the national coordinator of the National Greening Program (NGP), said as of October 5, over 210,000 hectares nationwide have been successfully reforested. This represents 70 percent of the 300,000-hectare NGP target for 2015. A flagship reforestation program of the Aquino administration, the NGP aims to plant 1.5 billion trees in 1.5 million hectares of open, degraded and denuded forests from 2010 to 2016. Now on its fifth year of implementation, the NGP is threatened by the El Niño, which, the country’s weather bureau said, is expected to affect the country starting this month up to March next year. “The localized rainfall and lowpressure area have been very helpful,” he said. The rainfalls and LPAs, he said, allowed the DENR and its various partners to continue tree-planting activities as scheduled. However, he
maintained that the El Niño remains a big threat to the program. The DENR’s regional offices, he said, have been asked to submit their respective contingency plans to mitigate the impact of El Niño. “We are also preparing for forest fires, which has a big impact to our forests,” he added. Calderon earlier said that treeplanting activities under the program may be suspended this month because of El Niño. According to Calderon, the DENR’s “greening” activities will continue as long as localized rainfall and LPAs that induce rain would allow it “on a case-to-case basis.” “Like in the Caraga region, the wet season starts in October,” he said, which means that tree-planting activities will naturally be massive in the next few weeks. Caraga region reported the lowest accomplishment, as far as NGP tree-planting activities is concerned, among DENR regional offices with just 39 percent of the target having been accomplished so far. He explained that this is because massive tree planting in the region is only expected to start this month. The DENR central office is still waiting for the contingency plans from the regional offices, he said. Part of the plan, he added, is the
repositioning of small water-impounding areas to be constructed in upland areas, as part of the longterm solution to drought during the summer period. The DENR has a budget of P300 million for the construction of Small Water Impounding Structures (SWIS) in various parts of the country under the 2015 General Appropriations Act. Some of the SWIS sites earlier identified, may need be repositioned, he said. A brainchild of Environment Secretary Ramon J.P. Paje, the construction of SWIS targets the storage of water during rainy days and water coming from natural spring in upland areas during summer. The structures to be constructed must be capable of storing at least 5 cubic meters of water. The SWIS, he said, will be very useful for farmers living in upland communities that are also the protectors or caretakers of the forest. Once constructed, the SWIS—or mini dams—will help ensure high survival rate of trees planted in various NGP sites nationwide, as well as help upland dwellers in their foodproduction activities. “The mini dams will help maintain our forests healthy and help upland dwellers and farmers maintain their farms,” he said. Jonathan L. Mayuga
Chicken trade looms as first TPP test for US, Vietnam
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ietnamese chicken farmers plan to file a rare anti-dumping lawsuit accusing US producers of selling poultry below cost, highlighting the challenges facing the Communist nation as the historic TransPacific Partnership (TPP) trade deal is set to open its markets. The first-of-its-kind complaint, to be filed next month with the Vietnam Competition Authority, will seek tariffs against imported dark-meat chicken that American consumers typically avoid. Vietnam’s Southeastern Livestock Association asserts the poultry is sold at prices lower than those in the US. Vietnam stands to be the biggest beneficiary of the 12-nation TPP accord, which will boost exports with tariff reductions on a range of products, including shoes, seafood and clothes. The chicken flap highlights how some Vietnamese sectors will experience painful lessons in global trade as businesses face strong foreign competition on their turf. “The low-cost imported chicken from the US is demonstrating to Vietnam the impact of tough competition in global trade,” Murray Hiebert, a Washington-based senior fellow at the Center for Strategic and International
Studies, said in an e-mail. “Vietnam is learning that, while some of its products, like garment manufacturers, are big winners on the global stage, others, particularly in some agricultural sectors, could end up losing to markets whose big producers have huge advantages of scale.”
Domestic chicken
The Vietnamese producers say prices of imported US chicken sold in Vietnam are just one-third of the cost of similar chicken consumed in the US. “We need to save our industry from dying,” said Au Thanh Long, vice chairman of the livestock association, who just returned from a fact-finding trip to the US. The breeders in his group produce 90 percent of Vietnam’s domestic chicken. “Our members are exhausted from tolerating the losses.” Inexpensive frozen US chicken imports have caused 2.7 trillion dong ($120 million) in losses for Vietnamese chicken breeders over the last 16 months, said Long, whose members produce 2.4 million chickens a week. US producers say the price comparisons are flawed. The livestock association is comparing premium-priced free-range, antibiotic-free, USDA process-verified chicken sold in US super-
markets to commodity-type frozen leg quarters exported in bulk, said James Sumner, president of the USA Poultry and Egg Export Council. “They are comparing the most expensive products in the US to the lowest-cost products we export to Vietnam,” Sumner said. “It’s like comparing the price of filet mignon in the the US to the price of hamburger in Vietnam. There is no justification whatsoever for a dumping case.”
Frozen chicken
U.S. chicken producers also rely on economies of scale and access to cheap feed, which accounts for about 70 percent of production costs, to drive prices down, Sumner said. “We are the lowest-cost producers of chicken in the world,” he said. Vietnam imported 54,036 metric tons of US chicken, mostly thighs, in the first seven months of 2015, according to the USA Poultry and Egg Export Council. That’s a 57-percent increase from the same period a year ago. Vietnam’s animal health department rejected earlier charges by Vietnamese farmers that imported US chicken was poor quality meat sold beyond expiration dates. Bloomberg News
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Former Sen. Joker Arroyo dies at 88
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ORMER Sen. Joker P. Arroyo, who gained fame by defying the martial law government, has died.
He was 88. Arroyo ended his stint in the Senate in 2013 after serving 12 years. He was rarely been seen in public since his retirement from politics. Arroyo was last seen in the Senate to help Makati City Mayor Junjun Binay who was ordered by Senate Blue Ribbon Subcommittee members Antonio Trillanes IV and Aquilino Pimentel III. Arroyo reportedly died of heart ailment in an undisclosed hospital in the US. Some reports said he died following an unsucessful heart operation. His family requested media outlets to respect their privacy, noting that the late senator had insisted on being merely a “Citizen Joker” until the day he died. As a pillar of the Free Legal Assistance Group during the Marcos administration, Arroyo defended then-opposition Sen. Benigno Aquino Jr. before a military tribunal that sentenced the latter to death by musketry. In the aftermath of the 1986 People Power Revolt that catapulted Aquino’s widow Corazon to the presidency three years after Aquino’s airport assassination as he returned from exile, Arroyo served as the neophyte political leader’s executive secretary, helping her face down coup attempts as she steered the country on the difficult transition from two decades of authoritarian rule to democracy. He later became a Makati City representative for three terms, before
arroyo
being elected senator. He was one of only three senators who voted against convicting Chief Justice Renato C. Corona in May 2012, saying the proceedings and evidence used against the magistrate violated due process and rule of law on many counts.
No pork
The PhilStar report cited his reputation as “the most frugal member of Congress,” something that earned him the moniker “Scrooge of Congress.” It noted how Arroyo never used his P200-million annual Priority Development Assistance Fund (PDAF), or pork-barrel allocation, saving taxpayers P2.4 billion over his
12-year stint in the Senate. He was one of only two senators who did not use their PDAF allocations, the other being Panfilo Lacson. Reporters who covered him recalled he had only three people on his staff: a driver, a secretary and a legislative assistant. Journalists covering the House of Representatives and the Senate thus good-naturedly complained often about having to decipher, then encode, his occasional press statements on weekends, in his handwriting. They grumbled aloud to him, but with obvious affection, why he couldn’t hire a staffer to encode and e-mail his consistently sharp and brilliant insights on a wide range of issues, especially on law and governance. Journalists who covered the Cory Aquino presidency held many fond memories of him, and were pleasantly surprised when he obliged them and went to the reunion of the Malacañang “Brat Pack” several months ago Arroyo’s legal mettle was put to a test in two impeachment trials: that of President Joseph Estrada in late 2000 and of in 2012. As a House member, Arroyo was one of the lawmakers who signed the endorsement of Estrada’s impeachment, later becoming lead prosecutor for the impeachment trial that, however, was abruptly aborted with the prosecutors’ walkout in January 2001. In the Corona trial, on the other hand, Arroyo showed his independence in consistently calling out what he considered serious breaches of due process and rule of law, and which could set bad precedents. On May 29, 2012, at least 20 senators voted to
convict Corona, except for three: Arroyo, Sen.Miriam Defensor-Santiago and, ironically, the son and namesake of his martial law adversary, Sen. Ferdinand Marcos Jr. Upon learning of Arroyo’s death, former Sen. Manuel Villar said, “I lost a dear friend and mentor.” Villar said: “Joker Arroyo loved a good fight—and never runs away from it. “He served his country right. And he deserved a big thank you from all of us. He rose to the occasion when standing up to what is right and just was becoming a hazardous job. He always chose his country over friendship and personal ties. But sometimes, Joker Arroyo could be a loyal friend to a fault. “But this is where the magnificence of the man lies. He will stick by your side no matter what. “He would be leaving behind a nation that still suffers from the same problems that he liked to rant about with fierce dedication. “And now that he left us to face all these. Perhaps, the joke is now on us.” Vice President Jejomar C. Binay, a fellow human-rights lawyer of Arroyo, said: “The death of Joker leaves me with a deep sense of personal loss. The nation has lost a patriot and a true Filipino. I have lost a dear friend, a mentor and a brother. Joker played a big role in rebuilding the nation from the ashes of the dictatorship. And he also helped rebuild Makati from a debtridden municipality to a model of public service and pro-poor governance. “The people of Makati will always be grateful to Joker. The Filipino people will always remember his battles to defend democracy and human rights. I will always keep his memories close to my heart.” Recto Mercene
Thursday, October 8, 2015 A7
Australian Navy ships in Subic for 5-day visit
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OYA L Austra lian Nav y ships HMAS Arunta and HMAS Sirius arrived in Subic, Zambales, for a five-day visit on Wednesday. The warships will be in the country until October 11. The short break from sea will give the ships’ officers and ratings an opportunity to continue their association with Filipino colleagues and experience Philippine culture and sights. “Australia values the deepening engagement with the Philippine Navy,” said Australian Ambassador Bill Tweddell, who welcomed the officers and crews of Arunta and Sirius at Subic, where the ships are docked. Tweddell was accompanied by Defense Attaché Col. Bruce Murray. Australia and the Philippines have a long-standing Defense Cooperation Program on counterterrorism, maritime security and assistance to the Philippine military’s modernization program. Recently, Australia gave the Philippines two operation-ready Landing Craft Heavy from the Royal Australian Navy to help improve the Humanitarian Assistance Disaster Relief capacity of the Philippine Armed Forces. The Royal Australian Navy played a vital part in the Australian Defense Force’s humanitarian efforts in the Philippines in 2013, carrying emergency supplies, water purifiers, generators, earth-moving equipment
and vehicles to areas affected by Supertyphoon Yolanda. HMAS Arunta is an Anzac class frigate, while HMAS Sirius is a fleetreplenishment ship. The two ships have just completed successful exercises in the Indian Ocean. HMAS Arunta is the second Royal Australian Navy ship to bear the name, and has historical ties to the Philippines. The first HMAS Arunta took part in the liberation of the Philippines in 1944, including prelanding bombardments at Leyte Gulf and the Battle of Surigao Strait. In January 1945 the ship was also hit by a kamikaze at Lingayen Gulf. In July 1946 the first HMAS Arunta carried Commo. John Collins to Manila for the inauguration of the Philippine Republic. The current HMAS Arunta has another link to the Philippines. Two Filipino-Australian sailors are currently serving as members of the ship’s crew. Able Seaman Electronics Technician Aaron Scott and Able Seaman Boatswains Mate Matthew Parry will be taking some time off to visit with family in the Philippines. “This deployment is especially important to me as I am able to visit the Philippines again, and I feel proud that my family will get to see me doing my job. It will also be a good opportunity to embrace, explore and remember what my background culture is all about,” Scott said. Rene Acosta
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A10 Thursday, October 8, 2015
Comelec accredits 8 political parties, groups in AES source-code review
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By Joel R. San Juan
HE Commission on Elections (Comelec) on Wednesday announced that it has accredited eight groups, mostly political parties, to participate in the source-code review of the automated election system (AES) that will be used in the conduct of the May 2016 elections. The eight are Liberal Party, United Nationalist Alliance, Nationalist People’s Coalition, Unang Sigaw (Nueva Ecija local party), Bagong Bayan Party, and Lakas–CMD, as well as Parish Pastoral Council for Responsible Voting and Center for People Empowerment in Governance. Elections Commissioner Luie F. Guia said that, while they are already
satisfied with the participation of eight groups, the poll body is still hoping that more groups will signify their intention to participate. “In principle, we want to be as inclusive as we possibly can. We were hoping that there will be more,” Guia said. The local source-code review will start on October 12 at the De
Income-tax rates, government workers’ pay in Pacquiao’s mind By Jovee Marie N. dela Cruz
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OXING champion-turnedl aw m a k e r Em m a nue l “Manny” Pacquiao of Sarangani vowed to push for a measure lowering income-tax rates in the Senate, as he confirmed that he would run for senator next year. In an interview with reporters late Tuesday, Pacquiao said that should he win a Senate seat next year, he would also push to increase the pay of government workers. “Iyan ang focus natin ’pag tayo nalagay sa Senado: Ang pagbaba ng individual income tax at increase ng salary ng government employees,” Pacquiao said. He said lowering the income tax rates will be beneficial for the ordinary Filipino people. “Lowering the tax rate is good because you’re basically returning the money to the people,” he added. Earlier, Speaker Feliciano “Sonny” Belmonte Jr. admitted that the House of Representatives has no more time to pass the tax-reform proposal, as lawmakers are now focusing on the deliberations of the proposed 2016 P3.002-trillion national budget and on the coming 2016 national elections. On September 14, Malacañang,
PACQUIAO: “Lowering the tax rate is good because you’re basically returning the money to the people.”
taking the cue from the Department of Finance (DOF), also rejected the passage in Congress of a long-pending bill mandating adjustments in individual and corporate income-tax rates, saying, the government “cannot put our fiscal sustainability and credit rating at risk by doing piecemeal revenue-reducing legislation.” The DOF has warned lawmakers that reducing the individual income and corporate tax rates may cause the government to lose revenues totaling as much as 1.5 percent of the country’s GDP or P30 billion. The Philippines has the second highest individual income-tax rate in the region at 32 percent next to Thailand and Vietnam’s 35 percent, and the highest value-added tax at 12 percent, as the country’s current individual income-tax bracket has remained unchanged since 1997.
Contractor to expand Skyway construction on A. Bonifacio
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FTER Maynilad Water Services Inc. completed its repair and restoration work on Saturday evening on A. Bonifacio Street in Quezon City parallel to the Stage 3 work site, Engineering Equipment Inc. (EEI), will expand its work site between Seventh Avenue and Balintawak anytime soon. EEI’s work site currently occupies the road median and intends to use the inner travel lane on both sides of the road. Citra Central Expressway Corp. (CCEC), the proponent of the Skyway project, expects slower traffic flow on A. Bonifacio, where the existing three standard lanes have to be narrowed or tapered during the Skyway construction. Motorists are advised to avoid said stretch of A. Bonifacio during peak traffic hours and use the alternate routes posted on signboards around the
Skyway worksite. To ensure the safety of the motorists and the public in general, CCEC and EEI are closely coordinating with the traffic and safety authorities of Quezon City and the Metropolitan Manila Development Authority. They appeal for public understanding and cooperation. Traffic and safety devices are installed and adequate number of traffic enforcers are deployed around the construction area to keep the public safe and traffic flow manageable. The Skyway Stage 3 project is a 14.8-kilometer elevated expressway that will connect South Luzon Expressway with North Luzon Expressway from Buendia in Makati City to Balintawak in Quezon City. The project aims to decongest traffic on Metro Manila’s major thoroughfares like Epifanio de los Santos Avenue, C5 and Central Manila.
La Salle University in Manila with the first phase involving the baseline source codes. The second phase will involve review of the customized and configured source code of the AES. The review will involve the source codes of the vote counting machines; consolidated canvassing system; and election management system. Section 12 of the Republic Act 9369, or the Election Automation law mandates that the commission shall “promptly make the source code available and open to any interested party or group, which may conduct their own review.” The source code is the human readable instructions that dictate what the AES will do. This developed as the Comelec said it is ready to operate for 12 hours daily for the last 15 days of the registration period as part of the “Huling Hirit” campaign of the poll body. “We want to maintain a 12-hour shift. We are looking at 9 a.m. to 9
p.m. every day from October 17 to 31...puwede naman 8 a.m. to 8 p.m. or 10 a.m. to 10 p.m. Basta gusto namin ay 12 hours,” Bautista said. Currently, the voter registration is being conducted nationwide from 8 a.m. to 5 p.m. from Monday to Saturday. Aside from extending their office hours, the poll chief said they have also directed their local election officers to identify two to three venues in every city or province that are capable of hosting satellite registration centers for those with high number of applicants. “These are malls, schools, auditoriums, gymnasiums, etc., that will host the registration for two weeks. We are looking to close election offices that are small, cramped, and are inconvenient,” he said. On the other hand, local election offices that are already capable of handling the number of voters will remain at the offices of election officers.
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HPG effort to clear Edsa of gridlocks gets boost
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By Rene Acosta
FFORTS of the National Police’s Highway Patrol Group (HPG) to ease traffic flow on the Epifanio de los Santos Avenue (Edsa) got a boost with the donation by a local app developer, in partnership with a telecommunications provider, Android tablets that would enable HPG personnel to significantly reduce the time to clear the highway after accidents. Galileo Software Services Inc., which developed the smartphone application called Parak, or Police Accident Report Kit, and partnered with a telecom service provider, donated eight Android tablets embedded with the 3Genabled application. The tablets with the Parak app were officially handed to the HPG commander, Chief Supt. Arnold Gunnacao, by Galileo President Jun Lozada. Six of the tablets would be given to HPG traffic enforcers assigned at the six choke points along Edsa, while the remaining two would be used by roving HPG patrols. “We are grateful to Galileo who came up with this brilliant application to help us manage traffic condition, especially in clearing minor accidents,” Gunnacao said. Lozada said the donation of the tablets should help the HPG in its determined efforts to rid Edsa of the daily traffic gridlock. “We acknowledge the dedication and sacrifice of the HPG in helping solve our traffic problem; we are one with them in finding solution to address
congestions on our roads,” Lozada added. Parak application automates the creation of an accident police report, including all the necessary photos that insurance companies require, using the gadget. Statistics shows that on average, about 25 to 60 vehicular traffic accidents occur daily on Edsa. This inevitably slows down traffic to a crawl, and contributes greatly to the congestion of this crucial urban artery especially during peak hours. Lozada, said that one of the reasons accidents take longer to be “resolved and reported is that the law requires a police investigator to be at the scene of the accident to write down the report, draw sketches before the involved vehicles can be moved out of traffic.” The police report and a photo of the incident are basic requirements of insurance companies for insured vehicle owner to file claims should lawsuits involved be pursued. Lozada, an information-technology engineer, added that it takes about four hours to complete the whole reporting process using the traditional way. Parak application digitizes the creation of the accident police report. These include generating the photos that insurance companies require, as well as signatures on documents, which can be done on the spot. The HPG can then use the 3Genabled tablets, which are connected to a central database, to upload all information garnered at the accident site immediately.
China’s 9-dash line claim threatens rule of law–Carpio
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ILL the world community allow a single state to rewrite the Law of the Sea, so this single state can exercise indisputable sovereignty to almost an entire sea, subject the high seas to its sovereign jurisdiction, and seize large areas of other coastal states’ EEZs [exclusive economic zone], which are their legal maritime entitlements under both customary international law and Unclos [United Nations Convention on the Law of the Sea]?” This was the question posed by SC Senior Associate Justice Antonio T. Carpio in his lecture on China’s nine-dash line claim and the South China Sea (West Philippine Sea) dispute at the Center for Strategic and International Studies (CSIS) on Monday. “Maritime security and the South China Sea will continue to impact USChina relations and China’s relations with its neighbors. We are pleased Justice Carpio’s speaking tour in the US kicks off today at CSIS. His thoughts will certainly enrich the discourse on what has been characterized by Prof. Michael Tkacik of Stephen Austin State University as possibly the single most important dispute in the world today,” Philippine Ambassador to the US Jose L. Cuisia Jr. said in his remarks. During his talk, Carpio discussed China’s nine-dash line claim as the root cause of the South China Sea disputes and as having no historical basis. He said China’s national boundaries under the nine-dash line effect not only on the Philippines but also on other countries in the region and the world. “The Philippines loses about 80 percent of its EEZs facing the West Philippine Sea, including the entire Reed Bank and part of the Malampaya gas field. Malaysia loses about 80 percent of its EEZ in Sabah and Sarawak facing the South China Sea, as well as most of its active oil fields in the same area. Vietnam loses about 50 percent of its total EEZ. Brunei Darussalam loses about 90 percent of its total EEZ. Indonesia loses about 30 percent of its EEZ facing the South China Sea in Natuna Islands, whose surrounding waters comprise the largest gas field in Southeast Asia,” Carpio said. Through the nine-dash line, China claims the high seas which, under international law, are considered global commons. According to Carpio, because any country in the world, including those that are landlocked, can exploit national resources in high seas, the entire world is affected by China’s expansive claim. Carpio reiterated that activities
SENIOR Associate Justice Antonio T. Carpio of the Supreme Court discusses the nine-dash line and the South China Sea dispute during the Banyan Tree Leadership Forum on Monday at the Center for Strategic and International Studies.
by China to enforce the nine-dash claim violate the 1982 Unclos and the 2002 Association of Southeast Asian Nations-China Declaration on the Conduct of Parties in the South China Sea. Such activities threaten peace, security and stability in the region. In 2002, China, along with Asean member-countries agreed that the South China Sea dispute shall be resolved “in accordance with universally recognized principles of international law, including the 1982 Unclos.” Eleven years later, China has begun insisting that historical facts be accepted as additional basis of its claim. “After the Philippines filed in January 2013 its arbitration case against China under Unclos, Chinese’s Foreign Minister Wang Yi declared that the South China Sea dispute should be resolved in accordance with historical facts and international law,” Carpio said. However, he said the nine-dash line has no historical basis. Official and unofficial maps of China, from 1136 during the Song Dynasty until the end of the Qing Dynasty in 1912, show that the southernmost territory of China has always been Hainan Island. Hua Yi Tu, a Chinese stone map
from the 12th century, excludes disputed islands in the South China Sea from China’s territory. The 1986 “Huang Chan Zhi Sheng Yu Di Quan Tu,” or The Qing Empire’s Complete Map of All Provinces shows that Hainan Island was a part of Guangdong Province and became a separate province only in 1988. Official and unofficial maps of the Philippines from 1636 until 1933 show that Scarborough Shoal has always been part of the Philippines. The 1734 Murillo Velarde Map shows Scarborough Shoal and some features in the Spratly Group of Islands as part of the Philippines. The Islas Filipinas, Mapa General Observatorio de Manila, published in Washington, D.C., in 1899 by the US Coast and Geodetic Survey, shows Bajo Masinloc, which also refers to Scarborough Shoal, as Philippine territory. According to Carpio, the Philippines has not only historical basis for its claim to Scarborough Shoal, but also legal basis. “The 1898 Treaty of Paris between Spain and the United States drew a rectangular line wherein Spain ceded to the US all of Spain’s territories found within treaty lines. Scarborough Shoal lies outside of the treaty lines. However, two years later, in the 1900 Treaty of Washington, Spain
clarified that it had also relinquished to the US all title and claim, which Spain may have had at the time of the conclusion of the Treaty of Paris, to any and all islands belonging to the Philippine archipelago, lying outside the lines of the Treaty of Paris. Thus, Spain ceded Scarborough Shoal to the US under the 1900 Treaty of Washington,” Carpio said. He ended his lecture by reiterating that the Philippines will stand by Unclos and the ruling of the Arbitral Tribunal with regard to the maritime dispute. “If Unclos does not apply to the South China Sea dispute, as when China’s nine-dashed lines are allowed to gobble up the EEZs of coastal states as well as the high seas, then Unclos, the constitution for the oceans and seas, cannot also apply to any maritime dispute in the rest of the oceans and seas of our planet. It will be the beginning of the end for Unclos. The rule of the naval cannon will prevail in the oceans and seas of our planet, no longer the rule of law. There will be a naval arms race among coastal countries,” Carpio said. Washington, D.C., is the first stop of Carpio’s US tour to conduct lectures on the West Philippine Sea dispute. He will bring the lecture to New York City and San Francisco in the next few days. Recto Mercene
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Editor: Dionisio L. Pelayo • Thursday, October 8, 2015 A11
DOH fails to complete ₧909-M health projects
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By Recto Mercene
HE Department of Health (DOH) has failed to start or complete P909 million worth of infrastructure projects, thus, depriving many Filipinos access to better health care. T he Commission on Aud it (COA) reported that the DOH was unable to begin or finish the construction of health facilities in the Cordillera Administrative Region (CAR), Region 6 (Western Visayas), Region 9 (Zamboanga Peninsula), Region 10 (Northern Mindanao), Region 12 (Central Mindanao) and Region 13 (Caraga), the camp of Vice President Jejomar C. Binay said in a statement. The COA said this was due mostly to the failure of contractors to meet the construction deadline of said projects or to structural defects that were identified by inspectors. Joey Salgado, head of the Vice President’s Media Affairs Office, said, “The DOH should have done something about this. Its officials should have monitored the projects and ensured the completion of these projects con-
sidering that government funds are involved.” Salgado also noted that a COA 2014 report on the DOH showed t h at i n f ra st r uc t u re projec t s worth P836,038,564.68 of eight DOH regional offices were not completed or even started within the specified contract time as of December 31, 2014. The COA also said eight health facilities with worth a total of
P72.983 million were not utilized despite their completion. Salgado said the Vice President has always upheld that health programs for the Filipinos should be given priority, thus, projects for health benefits must be facilitated and made available to as many Filipinos as possible. Binay noted in his True State of the Nation Address on August 3 that six of 10 Filipinos died without getting the medical attention they deserved. “It is sad that while the budget has been allotted, the health facilities in eight regions were not completed, were not even started or were not used at all,” Salgado added. The COA said, “The causes of delay were mostly on the fault of the contractors, which could have been immediately resolved had management [DOH] properly monitored and supervised the implementation of these infrastructure projects.” The provinces where construction of facilities has not started are Palawan, Agusan del Sur and Dinagat Island. The regions with infrastructure projects that have not been completed within the contract time include CAR, Region 6, Region 9, Region 10, and Region 12 and Region 13. T he regions that have completed facilities that remain unused are Region 4B (Mima-
ropa), Region 6 and Region 7 (Central Visayas). The COA said in its 2014 report that, “The primary consideration of the government for entering into a contract is the timely completion of the infrastructure projects so that the intended benefits may be achieved. The contracting parties are bound to adhere faithfully to agreed terms and conditions of the contract.” The COA cited DOH Department Order 2008- 0162 dated July 7, 2008, which provides the guidelines and procedures for the implementation of the Government Hospital Upgrading Project under CY 2008 Health Facilities Enhancement Program (HFEP) Funds of the DOH. The HFEP is aimed at supporting one of the DOH’s strategic approaches to improve “delivery of basic, essential, as well as specialized health services through the rationalization and critical upgrading of health facilities nationwide.” This includes “parallel revitalization of primary health-care facilities and the rationalization of the various levels of hospitals” to decongest hospitals, ensure primary health-care delivery and strengthen capabilities and potentials of health facilities to make basic and essential health care accessible and available to as many Filipinos as possible.
Congress bicam panel approves SK reform bill
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HE bicameral conference committee of Congress has approved the measure seeking to reform the Sangguniang Kabataan (SK) by insulating it from too much politics. The panel approved the bill late Tuesday after reconciling the conflicting provisions of the House and Senate versions and voted for an SK overhaul that will change the rules of SK processes and eligibility of leaders. Among the bill’s key provisions include a higher age limit, financial independence, mandatory training and skills development of SK leaders and banning of political dynasties. The consolidated reform measure sought to increase the age bracket for youths eligible to assume a post, from the 15- to 17-year-old age bracket to 18 to 24 years old. The proposed measure will also render SK financial independence, thus, giving the SK officials greater freedom in its operations, disbursements and encashment of their fund, income and expenditures. To ensure there is adequate safeguards on the use, and against potential abuse of fiscal autonomy, the bill also provided for a mandatory training and seminar on leadership,
program development and youth advocacy. The consolidated bill has also adopted an antidynasty provision requiring that an SK official “must not be related within the second civil degree of consanguinity or affinity to any incumbent elected national official or to any incumbent elected regional, provincial, city, municipal or barangay official, in the locality where he or she seeks to be elected.” Members of the bicameral panel from the House of Representatives present include: National People’s Coalition Rep. Pedro Acharon Jr. of South Cotabato; Liberal Party (LP) Rep. Raul del Mar of Cebu City; LP Rep. Anthony del Rosario of Davao del Norte; LP Rep. Kaka Bag-ao of Dinagat Island; and Party-list Rep. Barry Gutierrez of Akbayan. The senators present were JV Ejercito, Aquilino Pimentel III and Bam Aquino, who was the presiding officer. Gutierrez, one of the principal authors of the bill at the House of Representatives, said the new rules will shut out political dynasties and traditional politicians from overextending into the SK system, and coopting its mandate as tool for youth representation by turning it into a mere rubber stamp. PNA
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Pork, chicken supply remains ample–DA
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By Manuel T. Cayon | Mindanao Bureau Chief & Mary Grace Padin
espite the onslaught of El Niño, a senior official of the Department of Agriculture (DA) said the country’s supply of pork and chicken is enough to fill domestic demand, especially during the holidays. Agriculture Undersecretar y Jose C. Reaño said the dry spell has yet to affect hogs and chicken in farms. “We have sufficient supply of pork and chicken to last until the Christmas season. The hot weather has no effect on the animals yet. All housings use tunnel vents,” Reaño said in a text message. The Bureau of Animal Industry (BAI), an attached agency of the DA, earlier warned that extreme heat caused by El Niño could harm the country’s livestock. The BAI said chickens and ducks are the most vulnerable to extreme heat. As of last week, he said the country’s inventory of chicken has reached 12,000 metric tons (MT). Of this volume, 8,000 MT were locally produced. Meanwhile, pork inventory as of last week amounted to 13,000 MT. “The prices of pork and chicken are stable due to the increase in local output,” Reaño said. Based on DA figures, the farmgate price of chicken is currently
at P73 to P75 per kilogram, while pork is at P97 to P98 per kg. According to the daily price monitoring report of the Agribusiness and Marketing Assistance of the DA, the prevailing price of chicken in local markets reached P130 per kg, while pork liempo was priced at P200 per kg as of October 7. Data from the Philippine Statistics Authority showed that the country’s chicken production in January to June grew by 5.18 percent to 817,560 MT, as compared to 777,300 MT in the same period last year. Hog production rose by 4.69 percent to 1.01 million MT from 966,000 MT. As of August 13, figures from the DA showed that the damage caused by El Niño to the livestock and poultry sector amounted to only P11,000. Meanwhile, the Regional Development Council has endorsed the inclusion of Davao region’s drought-mitigation plan in the National Roadmap to Address the Impact of El Niño (RAIN). The
regional office of National Economic and Development Authority (Neda) said RAIN is the proposed national road map to address the impact of El Niño. Among the measures proposed were the P95-million El Niño Mitigation Plan of the regional DA “which covers effective water management, provision of open-source pumps, small farm reservoirs and spring development, cloud seeding, distribution of seeds/planting materials, and conduct of information and education campaign.” The Neda said the regional action plan includes the “inputs provided by the local governments of Davao City and Davao del Norte on interventions for irrigation in affected areas and countermeasures to lessen the impact of the expected dry spell.” The crafting of RAIN was entrusted to the Cabinet-level El Niño Task Force headed by Economic Planning Secretary and Neda Director General Arsenio M. Balisacan. Its members include representatives from the DA and the Department of Public Works and Highways, National Irrigation Administration, and the Office of the Presidential Assistant on Food Security and Agricultural Modernization. The road map would focus on food security, energy security and health and public safety. The El Niño Task Force Secretariat has already requested the action plans of local government units and regional line agencies to mitigate the impact of El Niño.
PSA report: PHL cassava output up 7% in Jan-June T
he country’s cassava production in the first half of the year rose by 7 percent to 1.35 million metric tons (MMT) from 1.26 MMT posted in the same period last year, according to latest data from the Philippine Statistics Authority (PSA). In the second quarter alone, cassava output reached 811,018 metric tons (MT), or 5.4 percent higher than the 769,137 MT produced in April to June 2014. The PSA said in its report that increasing demand for feeds encouraged farmers in Bukidnon, Misamis Oriental, Isabela and Negros Oriental to plant more cassava. The local feed-milling industry uses cassava to substitute a certain percentage of corn in manufacturing animal feeds. “Compared with the five-year annual average production record, about 30 percent was harvested in the April-to-June 2015 period,” the report read. Northern Mindanao produced 333,829 MT of cassava, accounting for 41 percent of national output in the April-to-June period. The volume was 13.6 percent higher than last year’s 293,882 MT. The Autonomous Region in
Muslim Mindanao was the second-biggest cassava producer in the second quarter, contributing 224,307 MT to national output. This, however, is 10 percent lower than the 249,308 MT produced in 2014. Earlier, the Bureau of Plant Industry (BPI) warned that the witches’ broom disease could reduce cassava yield, particularly in Mindanao. In June the government banned the movement of infected cassava from Bukidnon. Witches’ broom disease is caused by a bacteria-like organism called phytoplasma. According to the BPI, infected plants exhibit short nodes with dense clumping of stunted leaves, resembling a witch’s broom. The disease reduces cassava root starch content, hence, reducing y ield va lue and farmers’ income. A BPI scientist explained that when a disease is systemic, it does not only affect a single part or some parts of a plant but the whole plant system. According to the BPI’s cropprotection division, the symptoms of the witches’ broom disease may not be immediately noticeable as the infection starts in
the innermost bark of the plant. It is only when the clumping of leaves, as well as discoloration, are observed can farmers conclude that their plants are infected. “The danger of this disease’s asymptomatic characteristic is that infected planting materials may be unknowingly sourced from infected plantations and will be transferred to other plantations, spreading the disease to a wider geographic cover,” the BPI said. The BPI added that even using contaminated farm implements may cause the spread of the disease. The attached agency of the Department of Agriculture warned cassava farmers that visual observation cannot guarantee the cleanliness of planting materials. Agriculture Undersecretary Jose C. Reaño earlier said more farmers are shifting to planting cassava due to its potential to increase the income of farmers. “There are a lot of farmers who are now planting cassava because of a new variety from Thailand, which can yield 60 tons per hectare. They choose to plant cassava because the income is higher and it only takes one year to grow,” Reaño said. Mary Grace Padin
News BusinessMirror
news@businessmirror.com.ph
Thursday, October 8, 2015 A13
PHL biz needs to create brand presence online
R
By Catherine N. Pillas
ETAIL brands looking to leverage the digital space to shore up sales shouldn’t limit themselves to digital marketplaces to establish their online presence but should create their own brand presence.
“The e-commerce platforms that have emerged so far are doing well, they’re growing very quickly in terms of brands partnering with them, it’s great with one caveat: Brands that partner with existing platforms don’t have access to the data. I think that in markets like the Philippines, it’s best to have a mixed model, have a partner with an existing platform but you also need to have your own brand proposition, otherwise, you’re too dependent on someone else,” said Giulia Lina
Callegari, head of E-Commerce and Luxury Asia Pacific, at OgilvyOne. Ogilvy and Geometry Global, in a knowledge session on Wednesday, revealed insights on capitalizing on the increasing influence of digital channels on retail sales. The session focused on the Purchase Decision Journey that every social shopper—customers that use the digital space as an avenue to purchase things—goes through. How retail brands approach e-commerce as an avenue to sell to consumers is key in
influencing the decision journey of the customers, Callegari said. What takes priority, Callegari added, is for brands to use e-commerce to understand and target a specific set of consumers, whether online and offline, instead of amassing just a number of followers in social media. In the Philippines, known online marketplaces include Lazada and Zalora. This is significant, said Isa Garcia-Sicam, general manager of OgilvyOne, as the Philippines is seen as second-fastest growing e-
commerce market in Southeast Asia, second only to Vietnam. “We are going at a fast rate. We know from a category perspective that’s driving this growth: its electronics and fashion. There’s some food and beverage, and also financial services,” Garcia-Sicam said. Coupled with this trend is the proliferation of cheaper smartphones in the Philippines, which may expand the base of online customers for brands that are establishing their presence online.
MMDA chief says sorry to Liberal Party, women for Playgirls birthday show
M
etropolitan Manila Development Authority (MMDA) Chairman Francis N. Tolentino on Wednesday apologized for the Playgirls incident and asked the Liberal Party (LP) to remove him from its senator ia l l ineup for t he 2016 elections. Tolentino, who also tendered his resignation on Wednesday afternoon, also apologized to LP standard-bearer Manuel A. Roxas II and all the women who were offended by the lewd dance number of the Playgirls during the 58th birthday celebration of Rep. Benjie Agarao of Laguna. “Muli po pinaaabot ko po ang paghingi ng pag unawa, paghingi ng kapatawaran dun sa mga nasaktang grupo ng kababaihan dahil doon sa
sitwasyon na nangyari sa Santa Cruz, Laguna. Naging kamalian ko at tinatanggap ko ang hindi pagpigil doon sa naging performance ng mga mananayaw dahil ako ang pinakamataas na opisyal ng pamahalaan sa naturang lugar,” Tolentino said during the inaugural trip of the new fiber ferry boat in Guadalupe station in Makati City, where he also apologized to the family of Agarao. “Humihingi ako ng paumanhin sa Partido Liberal, kay Secretary Mar Roxas na hindi dapat na madamay ang kanyang pangalan. Muli sinasabi ko, hindi ko nakontrol, hindi ko napigilan ang naturang insidente,” he added. Despite the uproar over the incident, Tolentino said he will still seek higher office next year. Tolentino also gave a short message at the MMDA grounds, where
he publicly signed his resignation letter to President Aquino before it was brought to Malacañang. He also thanked Mr. Aquino for entrusting the MMDA to him and asked employees of the agency to continue to do their job. A f ter g iv ing his message, Tolentino signed the Collective Negotiation Agreement, which is expected to benefit the agency’s union group, Kamayan. Meanwhile, labor groups on Wednesday filed before the Office of the Ombudsman a criminal complaint against Tolentino in connection with the dance performance of Playgirls. In a 10-page complaint, the groups accused Tolentino of violating Republic Act (RA) 6713, or the Code of Conduct and Ethical
TOLENTINO
Standards for Public Officials and Employees and RA 9710, or the Magna Carta for Women. The labor groups include Public Services Labor Independent Confederation, Sentro, Partido Manggagawa, Confederation of Independent Union in the Public Sector, Federation of Free Workers,
Association Labor Unions-TUCPNagkaisa, Trade Union Congress of the Philippines, Alliance of Filipino Workers, Philippine Independent Public Sector Employees Association, Association of Genuine Labor Organizations, Council of Retirees-PSLINK, and Sigaw ng Kabataan Coalition. The groups said, “Women, in the persons of the Playgirls were completely discriminated by allowing them to portray obscene show in public, which is scandalous, contrary to good morals, good customs, public policy and public interest.” “Public officials and employees behaving with decency and in pursuing good morals, good customs and sensitivity, should not incite, encourage or tolerate acts that appeal to prurient interest or those
that are deemed dirty and intended to arouse sexual cravings more particularly in public event and setting,” they added. Reports indicated that the dance performance of Playgirls was a “surprise gift” of Tolentino for Agarao and not for the LP oath-taking event. But labor groups said the act of giving and receiving “undue patronage” is also prohibited under RA 6713. “The act of giving and consequently accepting the surprise gift in the form of the Playgirls by Tolentino et al. is clearly a case of giving and accepting, directly or indirectly a gift, seemingly motivated by impure motives,” they said. Claudeth Mocon-Ciriaco and Jovee
Marie N. de la Cruz
Opinion BusinessMirror
A14 Thursday, October 8, 2015
editorial
BusinessMirror@10
T
HE BusinessMirror celebrates its 10th birthday anniversary today. As we mark this milestone, we keep a firm pledge to work tirelessly to make the paper more relevant and attuned to the times in line with the vision of its founder, Ambassador Antonio L. Cabangon Chua. Times are changing fast, and given the growing dominance of the Internet, some pundits are asking how newspapers, which have been around far longer than radio and television, will continue to remain relevant in the digital world of the 21st century. We realize that the old methods that newspapers employed in the past may be obsolete today. Innovation in the news industry will involve radical changes. Survival will depend on quick business decisions and the willingness to adopt new business methods. We don’t presume to know all the answers, but we are doing our best to make the BusinessMirror remain relevant and useful to its audience. We try to evolve as best we could, embracing new platforms and technologies in the process. We are the first to offer comprehensive news stories, special reports and feature articles that dig deeper into the substance of a news story. We are the leader in giving a broader look at burning issues. To serve its audience well, the BusinessMirror has diversified and divided its news and features offering into more than 30 categories: Top News (or the biggest and hottest news); Nation (news about policies and decisions that impact on businesses); Regions (news that impact regional businesses and local government units); Economy; World News; Corporate News; Banking & Finance; Agriculture & Commodities; Entrepreneur; Sports; Opinion; Life (Lifestyle); Tourism; Digital Life; Art; Show; Perspective (featuring the views of analysts and industry leaders); Our Times (a section for the elderly); Education; Biodiversity; Marketing; Green; Science; Faith; Motoring; Property (to serve the real-estate industry); and Special Reports. The other sections that complete our comprehensive offering: Asean Economic Community (to guide and help Philippine businesses to prepare for the regional economic integration); Envoys & Expats (to serve the diplomatic community and the expats in the country); and The Millennials (to cater to the digital natives, the future leaders of the Philippines). We know that industry captains and policy-makers are reading the BusinessMirror. We know that we don’t only serve the country’s top 5,000 corporations, that we have 3.6 million online readers, some of whom are overseas Filipino workers (OFWs). We are happy that our millions of OFWs also follow us on Facebook. Here’s where our top 20 Facebook followers come from: the US, Singapore, the United Arab Emirates, Saudi Arabia, India, Australia, Canada, Qatar, Hong Kong, Malaysia, Japan, Bangladesh, Thailand, South Korea, the United Kingdom, Germany, Italy, Taiwan, Israel and Indonesia. Thankfully, our efforts and hard work are paying dividends. The BusinessMirror has won three Rotary Club of Manila Journalism Awards (2006, 2010 and 2012), and it is the only Philippine newspaper that bagged the prestigious United Nations Media Award. Just recently, the BusinessMirror was named the official media partner of the Asia-Pacific Economic Cooperation 2015 CEO Summit. Like other industry players, the BusinessMirror is working tirelessly to keep Philippine journalism alive and relevant. With a publisher like T. Anthony C. Cabangon, who believes that excellent journalism is good business, it is fascinating to watch how the BusinessMirror continues to evolve and grow. Thad, as friends call him, is leadership by example personified. No wonder the country’s No. 1 one business daily continues to gain stature and currency. Since 2005
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The rule of law: A magnet for foreign investment with the predicament of how he can be compensated fairly and equitably.
Ariel Nepomuceno
DECISION TIME
W
hat particular characteristics of a country does a foreign investor consider important in deciding whether to invest? Vital but not enough is a good financial and sociopolitical climate for such a major undertaking. Financials would pertain to a fair and reasonable rate of return on investment, current tax regimes and the ability to repatriate profits and other incentives being provided.
On the other hand, the political atmosphere focuses on the stability of a nation’s government, how the latter enables its institutions to assure the investor a level playing field, a competitive environment within which to operate. Multinational companies and enterprises, for instance, fear low security of their investment either in the areas of irrational state action, particularly in nationalization of assets, arbitrary acts of expropriation or total disrespect for sanctity of contracts. However, one other crucial factor is evident if one is to assess statistical data on what particular jurisdictions do foreign investors gravitate toward to. This is the rule of law. The Philippines Development Forum of which the Department of Justice is an active member of, defined the rule of law as “a principle of governance in which all persons, institutions and entities, public and private, including the state itself, are accountable to laws that are publicly promulgated, equally enforced and independently adjudicated, and which are consistent with international human-rights norms and standards. It requires, as well, measures to ensure adherence to the principles of supremacy of the law, equality before the law, accountability to the law, fairness in application of the law, separation of powers, participating in decision-making, legal certainty, avoidance of arbitrariness and legal/procedural transparency.” This rule of law framework includes the Constitution, a clear and consistent legal framework and implementation; strong institutions of justice, governance, security and human rights; transitional justice processes and mechanisms; and a public and civil society that contributes to strengthening the rule of law. Simply put, a judicial and legal system that is fiercely independent from the government decisionmakers, one which has forwardlooking legislation, interprets and enforces the law openly and fairly is a powerful enticement to foreign investors. The World Bank’s 1999 publication, entitled Initiatives in Legal and Judicial Reform, stressed
that the massive move by developing and transition countries toward market economies necessitated the adoption of strategies for the encouragement of private investment, domestic and foreign. Naturally, there was a general realization that such an objective could not be achieved without modifying, and sometimes, completely overhauling the legal and institutional framework and firmly establishing the rule of law, thereby creating the necessary climate of stability and predictability. In the July 16, 2015 editorial of the BusinessMirror, it was highlighted that the amount of foreign direct investment as a percentage of the GDP is smaller today than it was a decade ago and that the Philippines lags behind the rest of Southeast Asia. The causes? The ease of doing business and the rule of law, particularly the space of constitutional and legal restrictions on foreign capital.
General problems in the legal infrastructure: Contract stability
A key concern is the recognition of contract stability. In most developing or emerging nations, a contract duly entered into is changed in the middle of the game by local laws that either make it difficult for a particular phase of operation to occur due to some new tax, permit or license. Sometimes, the contract itself is interpreted differently by regulatory authorities or courts, although the terms are clear and the intentions behind why a contract was stipulated that way were precisely to attract the entry of such investor. The sanctity of contracts is pushed aside either due to sheer political positioning or to bring unfair monetary advantage to some people in the government or a particular economic class or family. This is a big problem in the oil, gas and mining industry where the risk of failure is extremely high because the success of a discovery is most uncertain. Worst of all, when the weight of political power results to nationalization of the investor’s assets, the latter is left suffering
Protection of property rights
ON the other hand, when the host country decides to illegally expropriate or confiscate property belonging to an investor, the latter suffers from a terrible disadvantage posed by “hometown” decisions rendered by domestic courts. Unfortunately, the recourse to international law remedies are limited when there are no investment treaties entered into by and between the domestic state and the investor’s country. As a result, the company just decides to pull out its investment and bear the consequences—its property rights denigrated. Net effect? A loss of reputation for the host country and a black mark in the international investment community. Sovereign immunity and economic sanctions are also issues that deter investment opportunities in countries that are in conflict due to contract disputes. More often, these disputes are not purely economic in flavor, but are greatly driven by political considerations. These political risks penalizes foreign investors in that it produces direct financial loss and impact on profit retention or repatriation. They are calculated, too, in order to arrive at an investment decision.
Laws and enforcement
The area of legislation is also of utmost concern. The absence of investment-friendly laws and the lack of governance in the way laws are interpreted or carried out turn off foreign investors. Where countries’ legal and judicial regimes are unstable, politicized and are heavily influenced by the state, companies shy away from it for pretty obvious reasons. Flip-flopping, inconsistent laws and implementing regulations make it extremely difficult for the foreign investor to make a sound economic planning, forecasting and decision-making.
The Judiciary
BY far, one of the most significant factors that discourages global companies from investing in a country is their perception about the independence of the judiciary, the efficiency of its processes and its ability to enforce decisions that impact foreign investors’ rights. Sadly, there are still lingering negative perceptions about the impartiality, quality and soundness of courts’ outcomes. A common observation is the influence of politics in the appointments to plum positions in the Judiciary. Despite the protective mechanisms provided in the Constitution, such as the role given to the Judicial and Bar Council in the appointment process, some
observers maintain that those who capture the highest posts reflect the economic interests of a few. The sheer length of the court processes in the Philippines—from filing, conduct of hearings, appellate procedures, issuance of a final decision from the Supreme Court (SC), together with enforcement activity—is a major disincentive. Because of the considerable time spent in litigation and dispute resolution together with the costs associated with it, a company would think more than twice to take its chances.
Way forward
However, the SC and all other agencies involved in judicial and enforcement activities are currently undertaking initiatives in modernizing and improving the judicial system. Well-meaning private organizations and non-governmental organizations, local and international bar associations and foreign chambers of commerce are all helping in making court processes more efficient and responsive by automation of case-management systems, strengthening contract enforcement and encouraging alternative dispute resolution. The overriding objective is to foster a healthy investment climate and to stimulate economic growth for our country.
Encouraging results
And we are somehow getting there. The recent 2015 results of the World Justice Project’s Index on the rule of law showed that from last year’s 60th out of 99 nations, the Philippines got the 51st spot. This index surveys how the rule of law is felt in day-to-day situations by ordinary people around the world. The rankings are based on indicators, such as constraints on government powers, corruption, fundamental rights, order and security, regulatory enforcement, civil and criminal justice, among others. The Philippines earned a relatively good score of 0.53 out of a perfect score of 1. Gladly, the Philippines is ninth out of 15 countries in the Asia-Pacific region, together with the likes of Singapore, Australia and New Zealand. Not bad, considering our very poor performance in the last 10 years. If we really want massive inflows of direct foreign investment in the Philippines, we need to begin with the basics and the obvious. We have to listen to global opinion and the international community’s call for creating a fair, stable and robust commercial environment for investors. This begins with transforming our legal and judicial system into one that is open, transparent, efficient and just. Oftentimes, the rule of law is the rule of who inspires more investors’ confidence.
Opinion BusinessMirror
opinion@businessmirror.com.ph
What is a stock’s fair value?
Incomprehensible generosity Msgr. Sabino A. Vengco Jr.
John Mangun
OUTSIDE THE BOX
A
S you gain more experience—I mean grow older—new ideas are emerging, and the meaning of former concepts change. It is part of life and the financial markets.
Back in the Dark Ages when I started, the idea of fair value (FV) related to the options and futures market where contracts for delivery at a latter date might or might not reflect a fair value based on the current price of the underlying stock or commodity. In accounting, FV meant the estimated value of all assets and liabilities of a company that was being bought out by another company. You figured out what the net hard-asset value of the company was as a base to determine the purchase price. But now fair value means something different, and has to do with the price of the stock. The current definition of fair value is supposed to mean an unbiased and rational estimate of the potential future market price. Taken into account are factors such as revenues, earnings and other variables that might affect profitability. That all sounds good. But even those promoting FV will acknowledge that the market price is still the price that counts. Can stock analysis ever be unbiased and rational and, perhaps, more importantly complete? Cebu Air Inc. (CEB) is a favorite of those that talk about FV. Probably the most important factor for an FV that is about 60 percent higher than the current market price is oil prices. That should make sense. But then the peso-dollar exchange rate, overall economic growth, Philippine consumer spending growth and habits, as well as a bunch of other variables, may cancel out lower oil prices—or they may not. While focusing on oil prices may be rational as it is a crucial airline expense, how much emphasis is put on the oil price is not unbiased analysis. In August 2012 the market price of CEB was P67, and the FV projection was P107. Note that the only time CEB traded at P107 was in January 2001 on the way down. A year later in August 2012, CEB was trading at P50. The FV then was put at P80, which the price did hit in December 2014. The FV was then raised to P150, which was the first FV above CEB’s initial listing price of P130. The latest FV for CEB is still around P150; the current price is P87. Understand that this is not in any way a criticism of any stockbrokerage firm’s forecasts or the idea of FV, in general. However, ultimately, all fundamental stock analysis—be it FV
which is compiled from many factors or something simpler—comes down to trying to predict what factor or factors investors will use to price a stock in the future. Fundamental stock analysis rests on the belief that we can peek into the future and conclude that investors will buy a stock at a certain price “because.” But look at the stock analysis from the experts that you often read in the newspapers. “Stock prices went up because the economic growth was good.” “Stock prices did not go up, because good economic growth was already factored into stock prices.” “Stock prices went down, because investors ignored good economic growth.” Every business that has to deal with and sell to the consuming public knows that trying to predict future buying trends and pricing is a difficult proposition. SM department stores have been doing business in the Philippines since 1958. They probably know the Filipino consumer better than you know your own buying habits. Yet, those three-day sales are primarily there because they tried to sell the wrong merchandise at the wrong price. Fundamental corporate variables may be constantly changing and, therefore, changing investors’ outlook at what a fair price for a stock should be in the future. That is why stockbrokers are always properly updating their analysis. But are we really going to believe that there is any sort of magic variable or set of variables that investors are always going to base their buying and selling decisions on? Of course, not. I do not have a clue why you are buying or selling CEB or any other stock, and I do not want to know. I don’t want to know, because then my personal bias comes into play as I judge your decision. What I do want to know is if you are buying, because buying sends the price higher. Then I want to buy, too. And if you are selling, then I will sell also, as the price will go down. You as an investor are the genuine stockmarket expert. You go look at FV. I will look at what you are doing when you decide to buy or sell. 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.
Sen. Joker Arroyo, thank you By Manny B. Villar
O
thers would surely say the country lost a genuine patriot, a fighter, a human-rights defender and a great Bicolano. They will say that you would be missed. They will say your contributions to the nation were invaluable. I will simply add that I just lost a dear friend and mentor. Joker Arroyo loved a good fight —and never runs away from it. He served his country right. And he deserved a big “Thank You” from all of us. He rose to the occasion when standing up to what is right and just was becoming a hazardous job. He always chose his country over friendship and personal ties. But sometimes, Joker Arroyo could be a loyal friend to a fault. This is where the magnificence of the man lies. He will stick by your side no matter what. Joker stood by his beliefs with
Alálaong Bagá
F
ill us with Your kindness, O Lord, prosper the work of our hands (Psalm 90:12-13, 14-15, 16-17). God demands so very much but gives us so much more (Mark 10:17-30).
Have pity on Your servants! The psalm presents petitions to God from a community in great distress. It asks that the people be given wisdom. Only God can provide the wisdom that lets anyone to make sense of human existence, short as it is and characterized by suffering and problems. “Counting well one’s days” means however short the number of those days and years may be, if marked by a blameless life, they spell a wise heart. The psalmist pleads with God to turn back to His people, and have compassion on His servants. How much longer must they suffer chastisement? In God-given wisdom, may the people reform their ways, then relief would surely come. Daybreak with its receding darkness naturally brings thoughts of hope and speaks of promise and well-being. May the Lord fill His people with kindness and gladness as in a new dawn that begins a new life for them. From now on may all their days be filled with joy in
exchange for the many days they have been afflicted by the Lord and for the many years they have suffered for their offenses. May this reversal of the people’s fortune reveal God in His glory to His servants and their children how He is faithful and merciful. Their deliverance will be seen as proof of God’s graciousness to them, blessing their work and bringing prosperity to them.
Sell what you have and give to the poor
The rich man who asks Jesus what he needs to do to inherit eternal life clearly believes that He can do something to deserve eternal life. Jesus first clarifies that He does not want the appellation “good” in the man’s salutation to Him. God alone is good, meaning the man must focus on the unique goodness of God, a graciousness unrivaled. The man himself is good and upright, and Jesus loves him for it, when the man admits in all honesty that he has from youth done all the commandments enumerated
Thinking long term Atty. Ron Erwin L. Esquivel
Tax law for business
S
ection 22(FF) of the National Internal Revenue Code (NIRC) of 1997, as amended, states that the term “long-term deposit or investment certificate” shall refer to certificate of time deposit or investment in the form of savings, common or individual trust funds, deposit substitutes, investmentmanagement accounts and other investments with a maturity period of not less than five years, the form of which shall be prescribed by the Bangko Sentral ng Pilipinas (BSP) and issued by banks only (not by nonbank financial intermediaries and finance companies) to individuals in denominations of P10,000 and other denominations as may be prescribed by the BSP. Interest income derived from long-term deposit or investment certificate mentioned above shall be exempt from tax subject to the requisites provided under Sections 24(B)(1) and 25(A)(2) of the NIRC of 1997, as amended. Said provisions stated that should the holder of the certificate preterminate the deposit or investment before the fifth year, a final tax of 5 percent, 12 percent, or 20 percent shall be imposed on the entire income, and shall be deducted and withheld by the depositary bank from the proceeds of the long-term deposit or investment certificate based on the remaining maturity. In other words, deposits or investments with maturity period below five years or preterminated before the fifth year shall be subjected to tax. Correspondingly, Revenue Memorandum Circular (RMC) 7-2015
reiterates the tax treatment of interest income derived from long-term deposits or investment certificates as defined under Section 22(FF) of the NIRC of 1997, as amended. According to RMC 7-2015, in order for the interest income from longterm deposit or investment in the form of savings, deposit substitute, individual trust fund (ITF), common trust fund (CTF), investment management accounts (IMA) and other investments evidenced by certificates in such form prescribed by the BSP to be exempted from income tax, the following characteristics or conditions must be present: First, the depositor or investor is an individual citizen (resident or nonresident) or resident alien or nonresident alien engaged in trade or business in the Philippines. Second, the long-term deposits or investment certificates should be
Abenomics is working
ARROYO
the tenacity of a wild bear. To understand Joker is to understand the wind and the mist. He was always the maverick. He would be leaving behind a nation that still suffers from the same problems that he liked to rant about with fierce dedication. And now he left us to face all these. Perhaps, the joke is now on us. My Wednesdays would never be the same again. Paalam, mahal kong kaibigan.
Thursday, October 8, 2015 A15
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apan is on the threshold of a new golden age—according to no less an authority than Prime Minister Shinzo Abe. Is that to be believed? Even discounting for patriotic zeal, Abe’s pride is justified: The prevailing gloom about Japan is overdone. Give Abe credit for wrenching the Japanese economy out of its long, deep rut of deflation and slow growth. The reforms he’s already undertaken are largely working, and now, he says, he’s pushing for “Abenomics 2.0.” Even if it only partially succeeds, it will be no exaggeration to say that Abe has
put Japan on a new course. For now, to be sure, the short-term indicators are poor. Industrial production fell in August, dragged down by weak domestic consumption and faltering demand in China. Deflation is back, as well. Prices fell by 0.1 percent in the year to August, despite the Bank of Japan’s (BOJ) efforts to push inflation up. Japan may well dip back into recession— which would be a serious political setback for Abe, who’s staked his reputation on restoring growth. These problems, though, say more about the strength of short-term cyclical pressures than about the rights
by Jesus as defining a particular way of life required of anyone desiring eternal life. But the man still lacks something. His consciousness is that of action and reward, of doing good in order to get the best. What Jesus next proposes to the man takes him to another level; from his achievements with the commandments, the rich man needs to concentrate in having “treasures in heaven”. It is how to value above all one’s relationship with God who alone is that good. To get to the path of this God-centeredness means following Jesus. And this spells concretely the necessity of being detached from all other treasures here on earth. This is achieved by relinquishing all possessions and giving them to the poor.
It is impossible, but not for God
Eternal life is a gift of God. To receive it, one needs first to be free and totally available for it, liberated from any other dominating masters. But the man could not renounce his many possessions; he sadly went away from Jesus whom he eagerly ran after only moments earlier. Even a righteous man like the rich man can find it very difficult to respond to the full and radical demands of becoming a follower of Jesus. Wealth is not bad; it can actually indicate divine favor and a reward for true piety. But it can be a distraction or a diversion from the real purpose and goal of life. That is why one must decisively downgrade wealth’s role in life.
Jesus escalates the issue for His disciples by pointing to the impossibility of the wealthy entering the kingdom of God. The image of a double-jointed camel passing through the eye of a needle more easily than for a rich man to enter God’s kingdom drove the astonished disciples to comment almost despairingly that nobody, therefore, can be saved. What is impossible for human beings is possible for God. Man’s good deeds cannot replace God’s grace. Only divine love and grace can enable man to enter the kingdom of God. Alálaong bagá, the center has to shift from the human to the divine. The choice has to be made. For which we need wisdom: The realization that only with God’s love filling us, can we sing for joy forever! For riches or power or even health, however good they are, cannot give us the security and happiness we long for. And there is a price to pay, a heavy cost the rich man found too much. But for His disciples’ commitment to follow Him giving up the security of family and property (and to face persecutions!), Jesus guarantees them a hundredfold return in their new family and identity in and with Him now and eternal life later. God comes across with incomprehensible generosity! 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.
under the name of the individual and not under the name of the corporation or the bank or the trust department or unit of the bank. Third, the long-term deposits or investments must be in the form of savings, deposit substitute, individual trust fund, common trust fund, investment-management account, and other investments evidenced by certificates in such form prescribed by the BSP. Fourth, the long-term deposits or investments must be issued by banks only and not by other entities or individuals. Fifth, the long-term deposits or investments must have a maturity period of not less than five years. Sixth, the long-term deposits or investments must be in denominations of P10,000 and other denominations as may be prescribed by the BSP. Seventh, the long-term deposits or investments should not be terminated by the original investor before the fifth year, otherwise they shall be subjected to the graduated rates of 5 percent, 12 percent, or 20 percent on interest income earnings. And eighth, except those specifically exempted by law or regulations, and other income, such as gains from trading, foreign-exchange gain shall not be covered by income-tax exemption. However, to make things more interesting, RMC 7-2015 provided that for interest income derived by individual investing in ITF, CTF, or IMA to be exempt from income tax, the following additional characteristics and conditions must all be present: First, the investment of the in-
dividual investor in the ITF, CTF, or IMA must be actually held and managed by the bank for the named individual at least five years without interruption. The term “bank” referred to herein are banks duly licensed as such by the BSP. Second, the underlying investments of the ITF, CTF and IMA must comply with the requirements of Section 22 (FF) of the NIRC of 1997, as amended, as well as the requirements mentioned above. And third, the ITF, CTF, or IMA must hold on to such underlying investment in continuous and uninterrupted period for at least five years. Meaning, for ITF, CTF and IMA, it is not enough that an investor places his investment therein for a period of five years for his interest income to be exempt from tax. The underlying investments made by said ITF, CTF and IMA must also be for a period of five years to comply with the requirements. Absence of said requirement will make an investor liable to tax.
and wrongs of Abenomics. Core inflation, despite the recent setback, has been responding to Abe’s treatment. That’s a notable achievement in an economy that stagnated for two decades. The BOJ’s quantitative easing is working. Years of vacillating, ineffective fiscal policy left Abe with another huge challenge: controlling an enormous accumulated burden of public debt without unduly squeezing demand. This isn’t getting any easier. Etsuro Honda, one of Abe’s main economic advisers, has proposed a new short-term stimulus package to shield low-income households from
the cyclical downturn, and Abe indicated he was open to the idea. In a phrase familiar in another context, he said he’d do “whatever it takes” to keep the economy growing. Beyond the short term, freeing up the supply side of Japan’s economy—the “third arrow” of Abenomics —matters at least as much as supporting demand. And here, too, Abe has made progress, resisting powerful interests to reform agricultural practices and cut corporate taxes. Corporate-governance reforms have begun to exert pressure on boards to strive for profit and invest more productively. Bloomberg View
The author is a junior associate of Du-Baladad and Associates Law Offices (BDB Law), a member-firm of World Tax Services (WTS) 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 erwin.esquivel@bdblaw.com.ph or call 403-2001, local 313.