BusinessMirror September 3, 2015

BusinessMirror

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AUDREY HEPBURN

by Antony Beauchamp, 1955 (clockwise); Ai Weiwei’s Coloured Vases, 2015, one of the artist’s works featured at the Royal Academy of Arts; this image of Yuri Gagarin before the first space flight on April 12, 1961, is part of the London Science Museum exhibit Cosmonauts: Birth of the Space Age; Ushio Shinohara’s Doll Festival 1966 from The World Goes Pop exhibit at the Tate Modern; and this Jack the Ripper appeal for information poster issued by Metropolitan Police in 1888 is part of The Crime Museum Uncovered at the Museum of London.

Life

he International Monetary Fund (IMF) looks to recast the country’s forecast growth path after subpar gross domestic product (GDP) results in the first and second quarters of the year.

REELING: THE ALLURE OF ‘THE VATICAN TAPES’ AND ‘TITANS’ »D3

BusinessMirror

Thursday, September 3, 2015

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IMF Resident Representative to the Philippines Shanaka Jayanath Peiris said local output growth could prove lower than the government forecast for this year and the next.

Cultural London: Top events and exhibits this autumn B G H | Tribune News Service

■ www.museumoflondon.org.uk

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THE TATE MODERN THE World Goes Pop, on view from September 17 to January 24, 2016, won’t be your typical Pop Art exhibit. Over 200 works from the 1960s and 1970s will feature lesser-known artists, many from behind the Iron Curtain, Iran, Cuba, Peru, Japan and Europe, with a decidedly political and anticonsumer theme.

From November 11 to April 3, 2016, “Alexander Calder: Performing Sculpture” will be the UK’s largest ever exhibition of the artist’s work.

■ www.tate.org.uk

HICH of the world’s museums is the most Googled? It’s London’s Science Museum.

I recently spent an hour in the museum’s permanent exhibit of information technology through the ages and I can see why. I don’t think a full day would have done it justice, let alone the whole museum, which would probably take a full week to go through properly.

But London’s Museum of Science is just one of over 200 museums in the British capital, one reason London’s cultural institutions—museums, theaters, performance venues—received 18 million overseas visitors last year. And this autumn there’s a staggering number of blockbuster exhibits and performances in the city, part of London’s Autumn Season of Culture.

In fact, the season is so full I hardly know where to start or to end. But here are some highlights, in no particular order:

THE SCIENCE MUSEUM ANYONE interested in the extraterrestrial will want to visit Cosmonauts: Birth of the Space Age, on view through March 13, 2016. Visitors can view a lunar lander, rockets, landing modules, and a MIR space station shower among scores of other full-size and model artifacts from the Russian space program.

■ www.sciencemuseum.org.uk

THE MUSEUM OF LONDON THE big draw this season will be “The Crime Museum Uncovered.” Over the past 140 years London’s Metropolitan Police has maintained a private “museum” of crime artifacts, used to assist and train detectives in past and future investigations. This exhibit explores the darker side of London’s underworld from Jack the Ripper to the Great Train Robbery; but don’t be alarmed, London is now a very safe city!

THE NATIONAL PORTRAIT GALLERY AUDREY Hepburn: Portraits of an Icon, which closes on October 18, celebrates the actor’s career with 70 seldom-seen photographs along with showings of her films. Whether you like art, visit the museum’s Portrait Restaurant; it’s one of those rare places that offers gorgeous views of a city with gorgeous food.

■ www.npg.org.uk

THE BARBICAN THE big event this season, if you haven’t already heard, is Benedict Cumberbatch starring in Hamlet.

Most seats, not surprisingly, are sold-out, but for each performance 100 seats at $15 are available on the day of each performance. Just be prepared to queue up overnight (or over a couple of nights; bring your sleeping bag) to nab them. If you don’t feel like camping out, there’s much more going on, including performances by the Royal Shakespeare Company and the London Symphony Orchestra. Another upcoming highlight: a terrific exhibit heralding the careers of designers Charles and Ray Eames at the Barbican Art Gallery.

■ www.barbican.org.uk THE DESIGN MUSEUM BICYCLE culture, anyone? Everything from bikes of all stripes, safety, clothing, equipment and more will be displayed in “Cycle Revolution” from November 18 to June 30, 2016. The theme is where bicycling has been and where it’s going from a design point of view.

■ www.designmuseum.org THE ROYAL ACADEMY OF ARTS THE first major institutional survey of Chinese artist Ai Weiwei’s work in the UK runs from September 19 to December 13. From January 30 to April 20, 2016, Painting the Modern Garden: Monet to Matisse will be on view, with over 120 works, including 35 Monets and other masterpieces by Klee, Klimt, and Kandinsky.

■ www.royalacademy.co.uk

SOME PRACTICAL TIPS: DOWNLOAD the London Official City Guide on iTunes (goo.gl/9zOxXw) or the Android version (goo. gl/1ddVzL). Locate the Tutorial to plan your day in London step by step by adding locations and things you want to visit; the app will guide you from place to place with travel times and offline directions. Very handy, it’s part of the VisitLondon.com web site.

Another hugely helpful resource for London’s vibrant cultural scene is CultureWhisper.com. The site alerts you to upcoming events far in advance, provides reviews, and lets you plan and book. There’s a free 10day trial or you can join for £7 (about $11) per month.

Although almost all of London’s museums are free, special exhibits require a separate admission, generally ranging from $20 to $25.

If you’re a frequent visitor and avid culture maven, consider signing up for memberships to your favorite museums and performance venues.

That way you’ll get priority ticket reservations and admission to special exhibits that might, otherwise, be sold-out on your visit.

In addition you’ll get a discount (usually 10 percent) in gift shops and restaurants. Try to avoid October 17 to 25, and other periods when English schools go on term break; museums and other venues will be especially crowded with school groups and parents with children.

Most important, plan ahead. Don’t just expect to show up and get into exhibits with timed entries or prime seats (or any seats in some cases) to top shows and concerts. ■

Free flight rewards experience for Backpacker Challenge GETGO, the newest lifestyle rewards program in the country, brings its concept of providing free flights to exciting travel destinations closer to young and fun-loving adventure-seekers by copresenting this year’s Cebu Pacific Juan For Fun Backpacker Challenge.

The ultimate backpacking adventure, which happened from June 23 to July 1, challenged five teams of daring students to explore enchanting destinations in the country and abroad for eight straight days.

Each group was tasked to have as many thrilling experiences and discoveries within their given travel allowance. The team with the most number of fun activities out of their budget, and ranked highest in special fun challenges, was named the Juan for Fun Ultimate Backpackers and won awesome prizes that they could use

for more adventures.

Similar to the Juan For Fun Challenge, GetGo also enables its members to discover new adventures and enjoy free flights to the best local and international destinations by simply flying with Cebu Pacific.

GetGo members can earn one GetGo point for every P5 spent on base fare and add-on products such as reserved seats, additional baggage and meals.

GetGo (www.GetGo.com.ph) also is in partnership with various establishments and brands to make it easier to earn points through everyday spending.

Convert credit-card points from Citibank, RCBC Bankard, Security Bank, Metrobank and BDO to GetGo points and start flying for free. Points can also be earned through ZAP and RingRob Concierge.

life

JUAN for Fun 2015 Day 1 in Manila kicked off with GetGo Special Fun Challenge.

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canada in recession; pm harper refuses to admit it as poLl looms The World BusinessMirror

news@businessmirror.com.ph

Thursday, September 3, 2015 b2-5

Prime minister Stephen Harper speaks during a campaign stop at a steel manufacturer in Burlington, Ontario, Canada, on September 1. Harper, campaigning for a fourth term on a record of economic growth, has refused to recognize that Canada is in a recession, despite new data to the contrary. AdriAn Wyld/The CAnAdiAn Press viA AP

Canada in recession; PM Harper refuses to admit it as poll looms ORONTO—Canada has fallen into a recession, dragged down by falling energy prices and economic troubles in China.

The Canadian economy retreated at an annual pace of 0.5 percent from April through June after sliding 0.8 percent the first three months of the year, Statistics Canada reported on Tuesday. Two consecutive negative quarters are the technical definition of a recession. Canada is the world’s 11th-biggest economy and the United States’s biggest trading partner. The Canadian economy suffered far less damage from the financial crisis and Great Recession than its southern neighbor.

The economic news could spell trouble for Prime Minister Stephen Harper during the October 19

election. Analysts call the threeway race a toss-up. Harper, campaigning for a fourth term on a record of economic growth, refused on Tuesday to recognize that Canada is in a recession. But, the data shows that business investment and commercial construction fell sharply in Canada, reflecting cutbacks by energy companies responding to lower oil prices.

Economists, however, expressed confidence the Canadian economy will rebound. Mark Zandi, chief economist at Moody’s Analytics, said the Canadian slowdown can be at least partially traced to the prob-

lems in China and said the weakness is largely confined to energy sector: “The rest of the Canadian economy is doing OK.” Moreover, the economy grew at 0.5-percent pace in June, first monthly gain in six months. “The economy is contracting through the first half of the year, but the solid gain in June suggests that we’ll at least get a breather with a return to growth in the third quarter,” said CIBC chief economist Avery Shenfeld. Harper said the economy was bouncing back after a brief bump. He pointed to 0.5 percent growth in June.

“I think it’s more important to describe the reality of the situation rather than to have labels,” Harper said.

Harper called Canada an “island of stability” amid rough financial waters. The country avoided the worst of the 2008 global financial crash and fared better than most

nations. Unlike the US, it avoided a real-estate market implosion or credit crisis. That was before oil prices plunged, dragging down Canada’s economy. Now Harper’s bid to become the first Canadian leader to win four consecutive terms in over a century is far from assured. Harper reminded Canadians of their recent prosperity on Tuesday. The Conservatives have run small deficits and are promising balanced budgets.

“We’ve had a couple of weak months, but the fact of the matter is over the long haul, post the global financial crisis, Canadians know there is no better place to be,” Harper said. Since coming to power in 2006, Harper has managed to pull a traditionally centerleft country to the right. He has lowered taxes and supported the oil industry, but has failed to win approval for new pipelines that would get the oil to market.

Analysts say the left-of-center opposition New Democrats, led by Tom Mulcair, has a chance to gain power for the first time. Mulcair has moved his party to the center and vowed to balance the budget.

The opposition Liberals, who governed Canada for most of last century, said they would stimulate the economy with deficit spending on infrastructure.

Opposition Liberal leader Justin Trudeau, the 43-year-old son of late Prime Minister Pierre Trudeau, said Harper refused to acknowledge the economy was in trouble and his plan was failing. “Today it has been officially recognized what Canadians have known for a long time, that there is a need for investment,” Trudeau said.

Mulcair said Harper just won’t acknowledge that his plan is failing. “All the objective measures prove that Stephen Harper’s plan has failed,” Mulcair said. AP

You think the stock market is crazy? Look at oil prices.

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E W YOR K— Com modity markets are renowned for their booms and busts but the last four days in the crude oil market have even experienced traders wide-eyed. The price of oil plunged 8 percent on Tuesday, following a three-day ascent of 27 percent, the biggest such jump in 25 years. “It’s wild!” said Phil Flynn, energy analyst at the Price Futures Group. “Buckle up.”

The stock market has been volatile too, but nothing like oil. The Standard & Poor 500 has moved up or down by 6 percent or more only once since 2008. Oil has moved by at least 6 percent each of the last four trading days.

Big moves—mostly down—have been a hallmark of the oil market over the past year. Starting last sum-

mer oil began to fall, sliding from near $100 to under $45 in March.

US oil production was booming, Organization of the Petroleum Exporting Countries (Opec) nations kept oil flowing and even rising demand wasn’t enough to absorb the flood of oil.

Then oil’s moves became more sudden in the spring and summer.

Oil rose 25 percent in April. It fell 21 percent in July. It sunk to a low of $38.24 last Monday, the lowest price since the depths of the recession in 2009.

The big decline in price was easy to explain. Against a backdrop of rising global supplies came mounting evidence from around the world that demand for oil would be far less than expected. The plummeting stock markets in China and the

government’s decision to devalue its currency led to fears that economic growth there was slowing sharply.

Japan, the world’s third largest oil consumer, revealed that its economy contracted in the second quarter.

And economic growth in Europe appeared to be in peril as the Greek debt crisis worsened.

At the same time, the US and Iran reached an agreement that could lift sanctions against the Opec nation, paving the way for more Iranian oil to return to the market, adding to already high supplies.

But the market was clearly uncomfortable with oil under $40, traders say. And at any sign that perhaps supply and demand weren’t quite so out of whack, they were ready to buy. China’s stock market soared last week, a possible signal

that the worst was over. On Monday the US Energy Department changed how it estimates domestic oil production and revised its numbers significantly lower. A bulletin from Opec suggested the cartel might be ready to work with other nations to restrict production.

Traders bought, and bought, and bought, leading to the nearly 30 percent jump in prices over the span of a few days.

Stiil, some traders weren’t impressed. Citibank’s Ed Morse wrote on Monday that the surge was a “false start” brought on by trading technicalities, a “gross misrepresentation” of Opec’s intentions and confusion about the Energy Department’s new methodologies.

He predicted oil would head lower.

That call looked prescient on

Tuesday when oil plunged $3.79 a barrel, or 7.7 percent, to close at $45.41 as weak manufacturing data out of China raised concerns— again—about economic growth there. In other energy trading, Brent Crude, a benchmark for international oil used by many US refineries, fell $4.59 to close at $49.56.

Wholesale gasoline fell 10.3 cents to close at $1.396 a gallon.

That will help push retail gasoline prices lower in the coming weeks.

The national average retail price of gasoline has been sliding steadily since mid-June and fell a little more than a penny on Tuesday to $2.46 a gallon, according to AAA. Heating oil fell 12.3 cents to close at $1.578 a gallon while natural gas rose 1.3 cents to close at $2.702 per 1,000 cubic feet. AP

World

“The downward revision to the first-quarter GDP and somewhat weaker global environment may result in a slightly lower forecast than our original 6.2 percent and 6.5 per-

cent for 2015 and 2016,” Peiris told reporters on Wednesday.

At present, the official stance of the Development Budget Coordination Committee (DBCC) projects growth this year averaging 7 percent to 8 percent. However, Economic Planning Secretary Arsenio M. Balisacan more recently told reporters that the “realistic scenario” was for the country to grow at 6 percent to 6.5 percent this year instead.

“Philippine fundamental is strong. It has a [current account] surplus, high [foreign currency] reserves, low debt. We feel the Philippines is one of the most resilient economies in the region. The Philippines do better than the rest” in Asia,

Peiris said in another interview at the sidelines of the Asean Venture Capital Journal Private Equity and Venture forum.

Depending on the magnitude of the IMF local output growth revision, continued economic expansion was seen at the low end of the multilateral lender’s 6.2-percent target.

Peiris said the revised forecast will be announced in October, as part of the IMF’s World Economic Outlook report.

Just last week the Philippine Statistics Authority (PSA) revised the first-quarter GDP report to only 5 percent from 5.2 percent originally.

They also announced second-quarter See “IMF,” A2

Ayala Land allots ₧70B for Cavite township

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yala Land Inc. said on Wednesday it is investing P70 billion for its third biggest integrated estate development spanning two towns in Cavite.

Anna Ma. Margarita Dy, the company’s senior vice president, said the company will initially spend some P23 billion in about five years for its development called Vermosa, a 700-hectare area that spans the towns of Dasmariñas and Imus in Cavite.

The rest of the amount will be spent during Vermosa’s completion in the next 12 to 15 years. The company did not provide the timetable Continued on A2

Wind-power producers find profits too elusive

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ower producers who invested billions in turbines are finding that making money off the wind can be as unpredictable as the energy source itself.

NextEra Energy Inc., NRG Yield Inc. and Duke Energy Corp. all said a lack of sufficiently windy days cut into second-quarter sales. And neither power generators nor forecasters seem to know exactly why.

“There was a definite trend with several utilities talking about weak wind resources,” said Shahriar Pourreza, a New York- based analyst for Guggenheim Partners Llc. “This isn’t something that has been major in the past so definitely a phenomena worth following to see if it’s sustainable or an anomaly.”

Wind, once a marginal resource for power suppliers, has begun to matter. Installations surged sevenfold in the US last year, making it the largest market for the technology worldwide after China, according to Bloomberg New Energy Finance.

Spurred by tax incentives and state clean-energy standards, wind accounted for 4.4 percent of US power generation in 2014, up from 1.9 percent five years ago, the energy department said.

Tax credits

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By VG Cabuag

US auto market a bright spot as China pulls back

ETROIT—As China’s auto market recoils, the US remains a bright spot as it rolls on toward its best performance in more than a decade.

China is still the No. 1 market, but sales there are slowing as the economy cools and cities impose car ownership limits to curb smog and congestion. At the same time, US sales remain on pace to top 17 million this year for the first time since 2001.

It’s a reversal from six years ago, when US vehicle sales plunged during the recession and China easily surpassed the US as the world’s largest car market. At least temporarily, automakers are left to rely on the US—and a recovering Western Europe auto market—for sales growth.

Sales figures for August released on Tuesday by Sweden’s Volvo Cars tell the story: Volvo’s US vehicle sales jumped 18.3 percent as the new XC90 sport-utility vehicle went on sale, and they rose 6.5 percent in Europe. But its sales in China plunged 10 percent. One of every five vehicles Volvo sells globally is sold in China.

All major automakers released US sales figures on Tuesday. Total sales fell less than 1 percent to 1.58 million, but primarily because sales for a late-arriving Labor Day weekend will be included in September figures. Labor Day is typically a big sales weekend as dealers hold model year-end clearance sales. Last year the holiday was counted as part of August sales.

Global figures for August will be released later this month.

Increasingly confident US consumers are being lured to dealerships by low interest rates, low gas prices and enticing new small SUVs, like the Jeep Renegade and Honda HR-V, despite some angst in the stock market caused by fears of the economic slowdown in China.

For Aug ust, Ford repor ted a 5-percent gain as sales of its new F-150 gained steam, and Fiat Chrysler’s sales rose 2 percent, thanks to strong demand for Jeep SUVs. Hyundai ’s sales were up 3 percent, thanks to its new Santa Fe SUV. General Motors’s US sales were f lat last month; it saw strong demand for the Chevrolet Silverado pickup, but Cadillac sales declined.

Toyota’s US sales fell 9 percent and Honda’s sales fell 7 percent, hurt by their car-heavy lineups in a market where buyers want SUVs. Volkswagen’s sales dropped 8 percent. Nissan’s sales were flat.

In Western Europe, car sales have risen for 22 months in a row, coming off a trough caused by the global recession and the debt and financial crisis in the countries that use the euro currency. Sales were up 7 percent through July, according to LMC Automotive.

Lower European oil prices have put more money in consumer’s pockets, and governments have eased austerity cutbacks aimed at reducing debt. But sales in Eastern Europe tumbled 11 percent because of the deteriorating economy in Russia.

Now there is concern about China, where new vehicle sales fell by unexpectedly wide margins of 3.3 percent in June and 6.6 percent in July. August sales figures should reflect Chinese consumers’ reaction to a further 12.5-percent drop in the Shanghai Composite Index.

Chinese sales growth peaked at 45 percent in 2009, the same year US sales sank to a 30-year low of 10.4 million vehicles. But growth has steadily declined since then.

Forecasters who had expected sales to grow 8 percent in China this year recently slashed that to as low as 1.7 percent.

Slumping sales are likely to force German automakers, which are unusually dependent on sales to China, to issue profit warnings, said Bernstein analyst Max Warburton in an August 27 report. AP

Thursday 18, 2014 Vol. 3, 10 No. 40 Thursday, September 2015 Vol. 10 No. 329

By Bianca Cuaresma & Genivi Factao

Cultural london: top events and exhibits this autumn EAR God, may You connect us with those who inspire us and not those who drain us.

Let us not force others to love us but let love force itself into our life. Those who inspire us are our source of joy, comfort and contentment, let us do, likewise. But, loving Father, You are the prime source of our happiness and hope and love. May You live in us forever. Amen.

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IMF may downgrade PHL growth forecast T

INSIDE

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A broader look at today’s business

chatting with mickey and minnie SM Prime Holdings Inc. President Hans Sy (second from right) and The Walt Disney Co. Asia President Paul Candland chat with Disney characters during the formal announcement of the collaboration of the two companies on Tuesday night.

Story on B1. NONIE REYES

Tax credits for wind production are expected to more than double to $2.4 billion in the fiscal year ending September 30, according to an August 2014 estimate, the latest available from Congress’s Joint Committee on Taxation. Wind credits may reach $3.6 billion annually by the fiscal year ending in 2018, the committee reported.

Developers have been installing turbines in the gusty plains of the Midwest and Texas, as well along mountain passes in California and other western states. Wind provided nearly 10 percent of electricity production in Texas and 7 percent in California last year.

Modern turbines range in size from 80-foot structures that power a single home to utility-scale units that stand up to 325 feet tall.

Continued on A2

Apec’s connectivity blueprint tabled

By Lorenz S. Marasigan

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enior officials of the Asia-Pacific Economic Cooperation (Apec) are set to meet today, Thursday, to flesh out the details of the implementation of the blueprint for regional connectivity.

In the so-called Friends of the Chair on Connectivity, regional officials will discuss the member-economies’ progress on the first-

PESO exchange rates n US 46.6960

year implementation of the Apec Connectivity Blueprint for 2015-2025.

The blueprint—launched in 2014—was developed to guide the region’s cross-cutting and inclusive efforts toward a vision for a “seamlessly and comprehensively connected and integrated Asia Pacific balanced on three pillars—physical connectivity, institutional connectivity and people-topeople connectivity.”

The action plan maps out initiatives that make it easier to do business across and within borders, such as improved transportation and telecommunications infrastructure, as well as modernized customs regimes that are responsive to market and technological demands.

Similarly, the blueprint calls for Apec economies to make it easier for students, businessmen and tourists to travel around the See “Apec,” A2

n japan 0.3901 n UK 71.4869 n HK 6.0253 n CHINA 7.337 n singapore 33.0685 n australia 32.8822 n EU 52.7665 n SAUDI arabia 12.4513 Source: BSP (2 September 2015)

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Wednesday, September 2, 2015

Apec’s connectivity blueprint tabled Continued from A1

region. During the special meeting on connectivity, senior officials are expected to welcome the progress made by Apec sub-fora and members on their respective initiatives and projects toward the shared vision of Apec Connectivity by 2025.

Using a comprehensive approach, all Apec stakeholders are encouraged to apply the blueprint to their respective initiatives.

Such initiatives include the Boracay Action Agenda for Globalizing micro, small and medium enterprises that enable them to join the global supply chains; the Apec Business Travel Card, which has been extended from

IMF. . .

three years to a five-year validity; and Apec’s Education Portal on study and career-development exchanges offered by universities and companies in Apec member-economies.

The discussion on connectivity will continue at the Apec High-Level Meeting on Health and the Economy, and the Ministerial Meetings on Finance, Transportation and Energy to be held subsequently.

The said meetings will focus on connectivity measures related to safety and disease prevention related to the movement of people across borders;infrastructure investment; enhanced land, air and water transportation; and resilient energy infrastructure.

Continued from A1

GDP averaging 5.6 percent.

The IMF resident representative also said they “still expect” growth to gradually pick up in the second half until 2016, supported by an acceleration in public spending, a recovery in exports and continued accommodative monetary condition.

“Improving infrastructures requires a public investment push supported by higher revenues and public-private partnership. We see fiscal stimulus will come in and spending will increase throughout the year,” Peiris also said.

On the recent financial market turmoil, Peiris expressed confidence on the country’s strong macroeco-

nomic fundamentals, saying this will “help cushion the economy from global financial market volatility with exchange-rate flexibility serving as a shock absorber and supporting growth.”

Immediately after the PSA announced the country’s second-quarter performance, several private economists promptly scaled back their growth projections.

These include, but are not limited to, Metrobank research, now down to 6 percent; Barclays Capital, from 6.5 percent to 5.5 percent; Capital Economics, from 6 percent to 5.7 percent; and Bank of the Philippine Islands, from 6 to 6.2 percent.

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Wind-power producers find profits too elusive. . .

Continued from A1

While conventional power plants produce electricity continually, wind power is intermittent, dependent on air flows.

While utilities have gotten better at predicting when the wind will blow, it’s not yet an exact science. One theory is that El Niño is responsible. That’s a condition when the surface of the equatorial Pacific Ocean warms and the atmosphere reacts, changing weather patterns around the world.

NextEra, the biggest wind-power producer in North America, agrees El Niño may be playing a role. While posting a profit of $1.59 a share in the second quarter, light winds cost the company

14 cents a share.

“Although we cannot draw any firm numerical conclusions, we do know the strong El Niño cycle that we are now in tends to be correlated with below-average continental windresource,” NextEra Chief Financial Officer Moray Dewhurst said on an August 3 earnings call.

Todd Crawford, a meteorologist with WSI in Andover, Massachusetts, said he can see evidence for that in the lack of wind.

“The anomalies are pretty small,” Crawford said.“But the pattern of anomalies does have the fingerprints of an El Niño signal.”

High pressure

There may be more at play than just El Niño, said Matt Rogers, president of Commodity Weather Group Llc. in Bethesda, Maryland.

High pressure dominated the weather maps from April through June, which meant fewer cold fronts and less variability in pressure, Rogers said. Such conditions mean less wind.

Whatever the reason, turbines aren’t turning as much as their owners would like. Companies that own wind get federal tax credits based on power production, so lower speeds mean reduced benefits.

For NRG Yield, formed by NRG Energy Inc. to hold renewable and conventional power plants, light breezes were one reason that it cut the forecast for 2015 earnings before interest, taxes, depreciation and amortization by $30 million.

“The majority of the wind resources west of the Mississippi were less than 80 percent of what would be deemed normal conditions,”NRG Chief Executive Officer David Crane said on the company’s August 4 earnings call. “We never anticipated a drop off in the wind resource as we have witnessed over the past six months.” Bloomberg News

Ayala Land allots ₧70B for Cavite township. . .

for the rest of its investment.

Ayala Land has been working on the area since last year, when it launched its project with upscale brand Ayala Land Premier that has been marketing its Courtyards residential development.

Dy said the company timed the launch of the entire project on the completion of the MuntinlupaCavite Expressway (MCX), the 4-kilometer Daang Hari publicprivate partnership (PPP) project bagged by Ayala Corp. some four years ago. It was the first PPP project of the Aquino administration.

“Vermosa shall offer diverse mix of elements, including 124 hectares

allocated for a future central business district that will house various business and commercial establishments, hotels, shopping, entertainment, dining, as well as medium- to high-density residential developments. It will also have institutional uses such as schools,” she said.

At full development, it will have some 3.5 million square meters of gross floor area with 30,000 residents and about half-a-million workers. A total of 165 hectares , or about a quarter of the entire development, have been devoted to parks and gardens.

Using the South Luzon Expressway through MCX, Dy said Vermosa is about 55 minutes away from

Makati City during peak hours.

“Soon, Manila will also be a few minutes away via the upcoming Cavite-Laguna Expressway,” she said.

Vermosa is Ayala Land’s thirdlargest development following Nuvali in Laguna, which has about 2,200 hectares, and the 1,125-hectare Alviera in Pampanga.

Dy said the company will soon launch its Avida and Alveo brands in the development, which also features a sports and lifestyle complex since the area is being frequented by training triathletes.

It will have an Olympic-size pool, 400-meter track and field and a sports science laboratory. The devel-

Continued from A1

opment will have a motocross track and the first purpose-built mountain bike skills track in the Philippines.

The sports science laboratory, to be opened in the fourth quarter of 2016, offers facilities to athletes and the public to raise the level of their performance using a scientific and technology-based approach.

Completing its health and lifestyle amenities is a 10,000-squaremeter sports-themed retail that will feature various athletic and sport shops, as well as an array of healthy dining options.

“All these amenities will be managed by industry professionals and is open to the public,” the company said.

The Nation BusinessMirror

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Editor: Dionisio L. Pelayo • Thursday, September 3, 2015 A3

Graft, plunder charges filed vs present, former PEA officials

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By Jovee Marie N. dela Cruz

ix non-governmental organizations (NGOs) recently filed plunder and graft charges before the Office of the Ombudsman against incumbent and former officials of the erstwhile Public Estates Authority or PEA (now the Public Reclamation Authority, or PRA) for allegedly conspiring with property developer Manila Bay Development Corp. (MBDC) to defraud the government in the sale of a 40-hectare reclamation property along Roxas Boulevard in Parañaque City in 1988 worth P41 billion for just P472 million.

In their complaint, Sagip Buhay, Cluster Inc., Keepers of Heart Organization, Samar Women’s Group, Tinio Women’s Group from Leyte-Samar and the Silcas Women’s Welfare of Biñan City said the PEA defrauded the government and the Filipino

people in “the biggest scam of [state] asset disposition.”

The NGOs told the Ombudsman that succeeding officials of the PEA should have rescinded the “onerous” contract—and then sold or leased the seaside estate at the correct market

value—more so because of MBDC’s failure to develop it into a Greenhills-style commercial center within five years’ time, as required in the 1988 Deed of Sale.

Facing the plunder and graft charges are PEA Chairman Roberto Muldong and General Manager Peter Anthony Abaya, and Directors Virgilio Ambion, Manuel Medina, Edilberto de Jesus, Reyaldo Robles and Rene Enrique Silos; then-General Manager Eduardo Zialcita, plus the chairman and board directors of PEA in 1988 along with their respective successors.

The rest of the respondents in these plunder and graft raps are the incumbent and former MBDC officials and board directors, led by the company’s President George Chua, who signed the allegedly onerous Deed of Absolute Sale with Zialcita in 1988, the complainant said.

The groups also cited violations of Republic Act (RA) 7080, or the Anti-plunder law, and RA 3019, or the Antigraft and Corrupt Practices Act, arising from the “deliberate shortchangings, deceptions and conspiracies by our public officials in connivance with private persons against the welfare of the common folk and the interest of our country when they entered into a contract so disadvantageous to our government and eventually affecting the lives of every Filipino.”

They also accused the above-mentioned incumbent and former PEA and MBDC executives of “defrauding” the government and the Filipino people of

billions of pesos in potential revenues, as this prime property along Roxas Boulevard in Parañaque City was sold 27 years ago for a mere P1,100 per square meter (sq m) when the prevailing market price back then was P40,000 per sq m.

At that prevailing market price in 1988, this prime seaside property totaling 410,467 sq m—MBDC eventually named it the Central Business Park II—was easily worth P20 billion, but it was sold by the PEA for only P472 million, the complainants said.

They also urged the government to seize this MBDC property based on Section 9 of RA 7080, which empowers the state to recover unlawfully acquired public properties without any regard for prescription, laches or estoppel.

The NGOs’ recent complaint raised to eight the number of plunder and graft cases that have been filed against these incumbent and former PEA and MBDC officials in connection with the highly irregular 1988 sale of this Roxas Boulevard reclamation site.

Earlier, two separate plunder and graft charges were filed against the same incumbent and former PEA and MBDC executives by Crusaders against Graft and Corrupt Practices in the Philippines lead convenor Fernando Perito and by United Filipino Consumers and Commuters convenor Rodolfo Javellana Jr. The complainants in these eight cases all pointed out that even though it hap-

pened way back in 1988, this anomalous deal is not covered by the mandatory 10-year prescription period for the filing of plunder charges against guilty parties and the 20-year prescription period covering graft complaints, because prescription must be reckoned from the date of discovery.

TheBroa THINKING OUTSIDE TH A4

Business

Thursday, September 3, 2015

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B J R. S J, J M N.   C  R M

OR the millions of Filipinos working and living abroad, the balikbayan box they send to their loved ones here in the country is not just a box full of canned goods, apparel or toys for their kids to enjoy.

The balikbayan box, according to Mario Ares, a Filipino working in Saudi Arabia, is a symbol of his hardship and perseverance, of his love for his family and, most important, of his being a Filipino. Thus, it should be treated with utmost respect and handled with care.

But, what if opened, instead of finding goods and other items that are intended to somehow bring a smile on the faces of an overseas Filipino worker’s (OFW) loved ones, what would be discovered are guns, drugs and other items that are not only prohibited but are also considered potential threats to the state’s security or the well-being of other people?

Would it be proper and just for the Bureau of Customs (BOC) to fully implement the law that allows a 100-percent physical examination of such boxes?

The law

CHAPTER VII of Republic Act 1937, or the Tariff and Customs Code of the Philippines, describes balikbayan boxes as packages of personal effects and/or pasalubong sent by Filipinos residing or working abroad to their families or relatives in the Philippines to enhance Philippine tradition and culture for the promotion and preservation of strong family ties through love and caring expressed in gift-giving.

Under the law, the contents of a balikbayan box must not exceed P10,000 in value and that only the importation of personal and household effects belonging to residents of the Philippines returning from abroad are exempt from duties, provided they are accompanied by the returning resident.

Also banned and/or regulated are firearms and ammunition, prohibited dugs, pornographic materials and gambling materials/apparatus.

The law prescribes a 100-percent examination of the consolidated shipments.

Consolidated shipments are two or more balikbayan boxes from two or more individual senders abroad, assembled and consolidated at one point of origin/exportation and shipped together under a single master ocean bill of lading or master airway bill by a freight forwarder to its consolidator-agent in the Philippines.

The inspection is necessary, according to the BOC, to protect the legitimate interests of senders and their consignees, in particular, and the transacting public, in general; to protect the interests of the government; and to prevent and suppress smuggling and other fraud.

Canned goods, grocery items and other household effects must not exceed a dozen of a kind, while apparel, whether used or new, must not exceed three yards per cut.

Only one consignment per sender during a one-month period is allowed.

Based on the data provided by the BOC, a total of 1,500 containers arrive in the country every month, or 18,000 containers every year, with each container carrying a maximum of 440 standard-sized balikbayan boxes.

Pandora’s box

INSTEAD of containing pasalubong or gifts for their loved ones, some unscrupulous individuals have managed to turn these balikbayan boxes into a Pandora’s box full of contraband.

Early this year, combined elements of the BOC, the Philippine Drug Enforcement Agency and the Philippine National Police arrested a Filipino for using container vans carrying balikbayan boxes to smuggle into the country some 38.65 kilograms of methamphetamine hydrochloride—locally known as shabu—concealed in a water tank.

Authorities also intercepted 1,360 pieces of methylenedioxymethamphetamine, or Ecstasy, at the Philippine Postal Corp., and the consignee was arrested.

Some two kilos of liquid cocaine were found concealed in a balikbayan box at the Ninoy Aquino International Aiport (Naia), as well as items declared as food supplement but were later found to be date-rape drugs (Alprazolam).

Aside from illegal drugs and medicines, balikbayan boxes are also being used to smuggle into the country firearms, ammunition and accessories such Rainer Arms (.56) and Kreiger (5.56).223 Wylde, armalite magazine, rifle scope and steel-frame gun parts that were also seized.

Balikbayan boxes are also being used to bring into the country commercial goods or goods in commercial quantity, such as wristwatches and bags of various brands, and laptops.

BOC takes action

FULLY aware of the situation, Customs Commissioner Alberto Lina promptly ordered the strict implementation of the law governing the inspection of balikbayan boxes to prevent the entry of undervalued items and underdeclared contents reaching the country’s ports.

“Our spot checks from several warehouses show how misconstrued the rules may have become. People are sending in used clothing, home appliances and items of the same kind that can well may be used for commercial purposes. Nagkamali ba ang sender o nagkulang ang freight forwarder?

Is there misinformation to drive their businesses?” Lina asked.

To protect the legitimate interests of the transacting public, the commissioner said the examination of these consolidated shipments should be made mandatory.

P600M lost annually

THE BOC also lamented that the government is losing about P600 million a year in revenues from technical-smuggling activities using balikbayan boxes.

“We really do not have an exact figure on the losses, but we are estimating that it is a P50,000 underpayment for every container van [filled with balikbayan boxes].

So if there are 1,000 container vans coming in every month, that means that a rough estimate of P50 million is lost in government coffers,” Deputy Commissioner for Assessment and Operations Coordinating Group Agaton Teodoro Uvero said.

Revenue losses, he said, are expected to double—or even triple— as the number of container vans carrying balikbayan boxes could increase to 2,000 or 3,000 during Christmas season.

“It is okay if it would be for the personal use of the OFW’s family. But what if it is being used for businesses such as several watches, bags, perfumes and other imported goods,” he pointed out.

He recalled that a spot check on balikbayan boxes recently con-

ducted yielded 11 brand-new LED television sets, some were 55-inches and 32 inches in size, that were placed inside a custom-size box.

BOC’s intelligence head Jessie Dellosa also did not discount the possibility that the packages might be used by smugglers in their illegal trade, although his office has received only a little information about it.

“That is a possibility. Based on our information, we act only if there is a reliable information. We cannot just open everything. How about the innocent, how about the legal [shipments]? Many would be inconvenienced, so we would act on intelligence information,” he explained.

Revised rules

HOWEVER, due to the strong opposition to the random and manual inspections, the BOC has acceded to the directive of President Aquino to abandon the idea and instead rely on x-ray machines in scrutinizing balikbayan boxes.

Lina said shipments containing balikbayan boxes will undergo mandatory X-ray examination from now on.

Lina noted that the use of xray machines to check balikbayan boxes is common all over the world as part of procedures to eliminate manual inspection.

At the same time, it will also be easier for customs personnel assigned to check balikbayan boxes as it will save time and energy.

“If Customs finds derogatory findings in the x-ray examination, then the container van will be opened so boxes can be individually scanned through smaller x-rays.

Only then will a physical inspection be considered,” he said.

Aside from the x-ray machines, the hiring of dogs that are trained to detect explosives and illegal drugs will also be utilized, as well as the more than 200 closedcircuit television (CCTV) cameras that the agency recently procured to stop the illegal activities.

BOC Deputy Commissioner for Revenue Collection Monitoring Group (RCMG) Arturo Lachica also said new rules have been issued for a uniform handling of balikbayan boxes by all concerned personnel.

Under Customs Memorandum Order 27-2015, which was signed last Tuesday, balikbayan boxes of OFWs shall not be subjected to random or arbitrary physical inspection and only undergo mandatory x-ray scanning.

The x-ray scanning shall be conducted at the X-Ray Inspection Project (XIP) Designated Examination Area (DEA) for preliminary examination of noncommercial inbound consolidated shipment.

In cases of noncommercial inbound consolidated shipment tagged “suspect” after x-ray scanning, the XIP image-analysis inspector shall identify the balikbayan boxes with possible violation and recommend the issuance of an alert order.

For balikbayan boxes without violation, they will be segregated and provisionally released to allow continuous processing.

For balikbayan boxes alerted, they will be subjected to 100-percent physical examination at the authorized examination area to be conducted by a customs examiner in the presence of the apprehending officers, freight-forwarder consolidator, representatives of the Overseas Workers Welfare Administration (OWWA) and/or a designated officer of an OFW association.

Failure on the part of the responsible customs official or personnel to comply with the directives will result in administrative sanctions.

Win-win solution

“WE are not oblivious to the concerns of the stakeholders, and what we are trying to do is we try to do our part in implementing the rules.

If, in the course of implementing the rules, we hear some grievances, we try to adjust,” Lachica said. “If there is an alternative solution, if it will result in a win-win solution, we will welcome it with open arms.”

When asked if subjecting all balikbayan boxes to x-ray scanning—instead of a random and manual inspection—can be considered a win-win solution for the BOC and OFWs, Lachica replied: “We can call it a win-win solution.”

BOC mandate

AMID the swirling issues on balikbayan boxes, several lawmakers on Wednesday asked the BOC to pursue its antismuggling measures while protecting the rights of OFWs. House Committee on Ways and Means head and Liberal Party

Rep. Romero Quimbo of Marikina, National Unity Party Rep. Elpidio Barzaga Jr. of Cavite and LP Rep. Mel Senen Sarmiento of Samar admitted that there is a law mandating the BOC to inspect balikbayan boxes, not only to raise revenue from them through taxes, but also to address alleged smuggling activities using the balikbayan boxes.

“There’s nothing wrong with these inspections because that is part of the BOC mandate [to address smuggling],” Sarmiento said.

However, he said that the bureau should conduct inspections on arriving balikbayan boxes with all the necessary measures put in place to ensure that no parcel is lost or damaged in the process.

Quimbo said the BOC is allowed to open balikbayan boxes.

“However, the BOC should inspect them in line with the bureau’s standard operating procedure, meaning by using its computer system.”

Lina earlier said the bureau will implement its policy to randomly open balikbayan boxes and impose taxes on taxable items.

Lina said they are not targeting the OFWs but the smugglers who are abusing the overseas work-

ers’ rights through consolidated shipments of contraband stashed inside balikbayan boxes.

“We estimate revenue losses from smuggling activities riding through balikbayan boxes at P50 million a month. That’s a conservative estimate,” Lina said.

However, President Aquino last week stopped the BOC from conducting physical inspections of balikbayan boxes in reaction to a public outcry.

Amend the law

MEANWHILE, Sarmiento urged Congress to amend the 37-yearold Presidential Decree (PD) 1464, or the Tariff and Customs Code of 1978, which imposes taxes on balikbayan boxes.

Sarmiento said the P10,000and-below threshold for tax exemption on balikbayan boxes is already obsolete and should no longer be applied until new tax amendments are introduced.

The BOC said Filipinos returning from abroad are only exempt from paying taxes and duties for bringing with them goods with an aggregate value of P10,000 under existing regulations.

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HE (BALIKBAYAN) BOX mas season. Considering that it is election period, their actions will be subjected to scrutiny and adverse criticism,” he said.

“Also, I am sure that their decision is based on old law and many people are questioning why the inspections are done only now, why the BOC wants to impose the old law only now?” said Barzaga.

X-ray machines

“There’s nothing wrong with these inspections because that is part of the mandate of the BOC. I’m afraid, however, that our kababayan who are sending balikbayan boxes to their relatives and friends here in the Philippines are also correct in their claim that the threshold for taxable parcel, which is P10, 000, is already too unrealistic and outdated. This is something that the BOC should consider for humanitarian grounds until Congress makes the necessary correction on our present Tariff and Customs Law,” Sarmiento said.

“Commissioner Lina should realize that P10,000 today is only worth two pairs of shoes or just 100 cans of Spam. Using the taxable threshold set by a 37-year-old law is definitely unacceptable and outrageous to overseas Filipinos whose remittances have been the country’s lifeblood,” Sarmiento added.

At present, the lawmaker said the international threshold for tax-free overseas parcel is $1,000 and below, or P44,000 and below.

Since the threshold amount is the only provision in the entire PD 1464 that requires amendment, Sarmiento said Congress can just

pass a joint resolution increasing the P10,000 tax-free threshold to P50,000 and below to avoid a longdrawn legislative process.

“If there’s one thing positive that came out of this controversy, it is the realization that we already have an obsolete Tariff and Customs Law. We should quickly amend this. But in the meantime, I think that the BOC should be more considerate as far as these balikbayan boxes are concerned. We can skip the normal process of legislating laws by simply passing a joint resolution amending the threshold for tax exemptions,” Sarmiento said.

Sarmiento, meanwhile, expressed support for President Aquino’s decision to order BOC to stop opening balikbayan boxes unless x-ray and K-9 examinations indicate possible contraband items.

On his part, Barzaga questioned the untimely decision of the BOC to conduct inspections on balikbayan boxes.

“Yes, it is a mandate of the BOC, but the perception of the people is that the BOC has x-ray machines so why the need to open the boxes? It is also very untimely because of the forthcoming Christ-

LIBERAL Party Rep. Roman Romulo of Pasig City said the BOC should run after syndicated smugglers, instead of “nickel and diming” the balikbayan boxes of OFWs. “It is embarrassing for the government to resort to a nickel-anddime operation targeting our OFWs, ostensibly to fight smuggling, when in truth we have countless well-entrenched smugglers—of rice, fuel, sugar, pork, cigarettes, liquor and so on—roaming free,” Romulo said.

Romulo has filed House Resolution 2311 seeking an inquiry into the BOC’s use of its “intelligence funds” meant to detect, identify and apprehend big smugglers and their coddlers.

He said the bureau has plenty of intelligence funds, which could be spent to pin down smugglers and interdict their contraband.

“We want the [House] Ways and Means Committee to ascertain the manner by which the bureau has been spending its intelligence funds to run after these tax evaders and economic saboteurs,” Romulo said.

LP Rep. Winston Castelo of Quezon City, chairman of the House Committee on Metro Manila Development, meanwhile, asked the BOC to use the modern x-rays that the bureau has purchased recently.

“Also, the use of CCTV on suspicious packages will eliminate pilferage and smuggling. There are ways to deter crimes without tampering on the hard-earned gifts that OFWs send to their loved ones,” Castelo said.

For Liberal Party Rep. Edcel Lagman of Albay, the BOC should subject all containers carrying balikbayan boxes to x-ray examination at every port of the country in lieu of random inspections.

Nationalist People’s Coalition Rep. Sherwin Gatchalian of Valenzuela said, “The BOC should use technology such as x-ray machines to detect smuggling. The unscrupulous importers should be penalized, too.”

Deputy Majority Leader and National Unity Party Rep. Magtanggol T. Gunigundo of Valenzuela also noted the importance of x-ray screening complemented by K-9 units.

“The President’s instructions stand as a general policy. It goes without saying that in case of derogatory information, the BOC can still require specific importations to undergo x-ray and K-9 unit screening,” Gunigundo said.

“If the concern is drug smuggling, PDEA expertise can be used to build country profiles of ports of origin so that the BOC can be more exacting in validating derogatory information,” he added.

Tighten control

LIBERAL Party Rep. Jerry Treñas of Iloilo said the BOC should tighten control on its Interline Baggage Release (IBR) in Naia if the bureau wants a successful crackdown against smuggling using balikbayan boxes.

Treñas said that, based on tips he received, it is in the IBR that balikbayan boxes containing smuggled items are being processed through an elaborate scheme and a network of collaborators to avoid detection by the BOC Intelligence and Enforcement Group.

Treñas added that, based on his information, smugglers would send balikbayan boxes from other countries as baggage and not cargo using their contacts in airline com-

panies and using fictitious names and addresses.

“The scheme is very complex.

The baggage are checked in without any accompanying passengers.

These smugglers have their contacts and insiders in airline companies so that it becomes possible for them to transport their contraband without the person whose name is in the baggage,” Treñas said.

Upon reaching Naia, the baggage naturally would not have any claimant and, therefore, diverted to the IBR, which is basically an extension for the baggage-claim conveyor belt to accommodate “unclaimed” baggage, the lawmaker said.

On any given day, Treñas said, there are at least 500 to 1,000 kilos of these “unclaimed baggage” that end up in the IBR. “You can just imagine the extent of their operation. Three pieces of expensive iPhone 6 barely weigh one kilo, and we are talking about a ton of these small articles being smuggled into the country every single day,” Treñas said.

“Apart from highly sought gadgets and mobile-phone brands such as iPhone and Samsung, these baggage would contain small but expensive articles like signature bags, clothing, perfume, shoes, jewelry and even precious stones,” he added.

Treñas said that through their contacts in the airline companies, the smugglers would be given the necessary claim stubs to be able to secure without any question the baggage that end up in the IBR, paying taxes on a “per kilo” basis and not on the appraised value of their contents.

“This elaborate smuggling scheme does not just involve corrupt BOC personnel but it also involves some employees of carriers such as Philippine Airlines, Cebu Pacific, Cathay Pacific and China Southern,” he said.

“I think that the BOC should really put a stop to this practice and remove the IBR system. If a baggage is unclaimed, it should be immediately secured by the BOC and checked for possible contraband content,” Treñas added.

The furor

THE furor over the planned opening of balikbayan boxes refused to die down even though President Aquino had already ordered Lina to desist from going on with his plan.

The latest group to oppose Lina’s design is a coalition of OFW Party List and the Federation of Filipina Women in Italy. They have started a signature campaign in Rome and in key cities in Italy to signify their vehement opposition to the BOC’s plan to inspect the balikbayan boxes.

Despite the President’s order to stop balikbayan box inspections, the OFWs in Italy are still wary about the BOC plan. They are also protesting Lina’s announcement for additional taxes on their boxes, sent through door-to-door delivery by consolidated freight forwarders.

Several legislators have latched on the bandwagon to denounce the BOC, and one of them, Sen. Ferdinand “Bongbong” Marcos, had to remind Lina that the origin of the balikbayan box can be traced to the time of President Ferdinand Marcos when Section 105 of the Tariff and Customs Code of the Philippines was amended to provide duty- and tax-free privileges to OFWs so they can send personal effects, including gift items, to their families.

“To the BOC, I ask: Have you no shame? For every OFW, a balikbayan box is the equivalent of his or her love letter to a spouse and the rest of the family. Every item inside that box was bought with a specific person and purpose in mind, bought for with the hardearned money of our modern-day heroes. So if a single item there gets lost, can you imagine how that feels to an OFW who invested so

much emotion and money just to get those goods home?”

Not content with the “initial victory” over President Aquino’s order to stop the random inspection of balikbayan boxes, Migrante party list has called for a “Zero Remittance Day” to press the government to junk its P600-million revenue target from packages sent home by overseas Filipinos.

While saying they were “pleased” by Aquino’s order, Connie Bragas-Regalado, chairman of the party list that advocates the rights of OFWs, noted that the BOC had earlier blamed monthly losses of P50 million, or P600 million annually, from “smuggled goods” or “nondeclared goods” in balikbayan boxes for the controversial decision to subject the boxes to random inspections.

What is the real score behind this planned rummaging of the poor man’s Louis Vuitton that has reached cult status? A balikbayan box, measuring roughly one square meter, and invented in the 1980s to take advantage of the B747’s cavernous belly, combined with cheap fuel then, had sparked a revolution in the cargo-forwarding business.

At the airport

THE BusinessMirror asked an official of the BOC at the Naia, Belinda C. Copioso, acting assistant chief of arrival, Operations Division. Her explanation is clear.

Nothing is being violated by the BOC order and despite Lina’s or the President’s directives, the law on balikbayan boxes remains unequivocal: “The BOC is legally allowed by law to subject not only balikbayan boxes but any piece of luggage that could potentially contain highly dutiable goods or drugs or any of the various illegal items that could be brought into the country.”

“All persons and baggage are subject to search anytime,” according to Section 2210 and 2212 of the Tariff and Customs Code of the Philippines, as amended.

Section 100: “All articles, when imported from any foreign country into the Philippines, shall be subject to duty upon their importation, even though previously, exported from the Philippines, except as otherwise specifically provided for in this Code or in other laws.”

Passengers coming into the country should read this fine print in the Customs Declaration. This piece of document is given to each passenger to fill out, and includes not only the person’s identity but five questions such as bringing live animals and plants, legal tender in excess of P10,000, prohibited materials, regulated items such as CD, DVD, VCD; jewelry and electronic items; and articles that could be in violation of copyright laws.

At the Naia arrival area, Copioso said there are booths that are marked “Red” and “Green.” The booth marked green means that any passenger or OFW or balikbayan who has nothing to declare could go through without inspection.

The booth marked red means that those who have dutiable items should allow themselves to be subjected to inspection.

But there is a caveat. According to Copioso, not all of those who go through the green booths are scot-free. “We still have the right to subject those boxes or pieces of luggage to random inspection, based on risk-management technique.”

She said this is a worldwide practice, a kind of standard that applies to every passenger.

Section 105 of the Tariff and Customs Code says a balikbayan or OFW is entitled to bring in P10,000 worth of goods, with the exception of personal effects and used articles.

Copioso added that an additional privilege of P10,000 is given to those who bring in used appliances, provided it is “one of its kind.” If the amount exceeds P10,000, the passenger will pay

ad valorem duty of 50 percent across the board.” This means if a passenger brought in items worth P20,000, the amount of P10,000 would be subtracted and the remaining P10,000 is subject to taxation, which would be P10,000 multiplied by 50 percent. The tax would amount to P5,000.

She said the law defines a balikbayan as someone who stayed abroad continuously for six months or more.

She said those who went abroad to visit relatives and come back after less than six months must pay taxes for the items they bring in.

Profiling technique

ACCORDING to Copioso, there are countries considered high risk because they are the sources of either taxable goods or drugs, so that passengers coming from these countries could expect to be subjected to examination at the Naia.

The high-risk countries are Hong Kong, Japan, the United States, Singapore, Bangkok, South Korea and China. From Hong Kong, South Korea and Singapore come expensive, highly taxable items, while the US is the source of guns, ammunition and related hot items.

China and Bangkok are sources of illegal drugs.

The Middle East and Europe are low-risk countries.

The other profiling techniques Copioso revealed are derogatory information received from abroad.

This pertains not only to passengers but also to cargoes, which could contain illegal items and therefore subject to scrutiny.

She said the BOC at the Naia opens balikbayan boxes that come through bonded warehouses only in the presence of the consignee or relatives of the consignee or duly appointed representatives such as licensed brokers.

“The BOC will never open a balikbayan box without the presence of those mentioned above,” Copioso said.

On the other hand, balikbayan boxes sent through door-to-door delivery by freight forwarders, or consolidators, are usually destined to major ports. Here they undergo examination in bulk.

At the sea port

BALIKBAYAN boxes sent through freight forwarders pay from $50 to $60 per box, and the law says the content shall not be more than $500.

Beyond this amount, the articles within are subject to taxation.

There are now bills in Congress calling to increase the tax exemption to $2,000.

The BOC reported that some 7.2 million balikbayan boxes arrive at the Manila International Container Port (MICP) and the Port of Manila every year. The sheer number of boxes, along with other cargoes, would pose a logistical problem by physically examining each box.

That is why the MICP and the Port of Manila resort to the use of huge x-rays and scanners to examine whole containers.

To speed things up, the consolidators and freight forwarders reportedly make arrangements of paying something like P200,000 to P300,000 per cargo container.

This is where smuggling occurs. Some unscrupulous importers, consolidators or freight forwarders allegedly would include highly taxable goods in the cargo containers.

These are the probable targets of Lina’s ire.

Observers say the public needs to bear with the BOC because it needs to think outside the box to safeguard revenues and public safety. So, while the inspection of balikbayan boxes sees to put the modern-day heroes at a disadvantage, it may just be one of those bitter pills that the country needs to swallow to be in a better shape.

Opinion BusinessMirror

A6 Thursday, September 3, 2015

editorial

Rising to the summit of incompetence

T

here are instances where the government can be more helpful when it steps aside and tempers the urge to overregulate.

Excessive regulation has a negative effect when it imposes additional cost, delays project rollout, or stunts the growth of an industry. To burden businesses with excessive rules and regulation is, to use an old saw, to kill the goose that lays the golden egg.

Unfortunately, this is what the Housing and Land Use Regulatory Board (HLURB) is doing to the country’s property developers. The HLURB is pressing the heavy foot of the government on the windpipes of those who create jobs and wealth for the nation. Unmindful of the consequences of its action on the lives of almost 6 million Filipinos employed in the construction industry, the agency has deployed a controversial policy that was unilaterally adopted and which could ruin an economic pillar.

Just to show that might makes right in the name of consumer protection is wrong. And the HLURB is showing to all and sundry that the Peter Principle also applies to government offices. To be fair, the agency has been doing its regulatory duties exceptionally well until it arrogated unto itself, through Resolution 921, the job of screening property advertisements. This new job is beyond its competence. The clearance of advertising content requires a certain discipline and level of expertise that the agency sorely lacks.

Resolution 921 is pure anti-business and runs counter to the government’s investment-promotion drive. Since February this year, when the new policy took effect, property developers have seen a steady decline in sales. This additional requirement imposed by the HLURB is slowly killing an industry that contributed P367 billion to the economy in 2014. If that is not bad enough, it has put consumers at a disadvantage as they are effectively kept in the dark about property developments from reputable companies.

It is no secret that more government involvement is not healthy for any industry because bureaucrats will always look after themselves first. That’s the wisdom behind the saying, “Imperfect markets are better than imperfect bureaucracies.” This is also the reason the United Print Media Group (UPMG) has been calling on the HLURB to scrap its policy requiring property developers to secure the agency’s approval for all print and television advertisements.

The UPMG is taking the cudgels for real-estate companies who are hesitant to push their complaint further for fear of encountering future problems with the HLURB, particularly in securing permits and licenses.

For more than 30 years real-estate developers and the UPMG have been working with the Advertising Standards Council (ASC) in the screening of property advertisements. This kind of partnership exists in other industries. The ASC has signed formal pacts with the Food and Drug Administration, Department of Health, and the Department of Trade and Industry.

For almost four decades the real-estate industry has shown that it can police its own ranks against deceptive property advertisements. Why change a perfectly working system? If the HLURB is truly intent on protecting property buyers from fraudulent advertisers, it is barking up the wrong tree. The agency must focus its sight on where the real problem exists—property ads on the Internet. There’s a growing concern among buyers here and abroad about deceptive online property advertisements.

With the Asean economic integration, the government would do well to promote self-regulation, especially among major industries such as the real-estate industry. Our housing developers do not need additional barriers to growth. If the government wants economic prosperity, it must see to it that markets are free.

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Stock-market armageddon or opportunity?

John Mangun

OUTSIDE THE BOX

T

he Philippine Stock Exchange Composite Index (PSEi) racked up its fifth consecutive negative month in August. The PSEi has dropped about 14 percent since President Aquino rang the opening bell “in optimism” and said, “I expect to ring the bell in celebration of the index breaching the 9,000 and 10,000 levels hopefully before I step down from office.”

The President’s speech writer forgot to include the No. 1 rule in the investment world: “Past performance is no guarantee of future success.”

If there is a chance that scenario could come to fruition, then buying opportunities abound and those who subscribe to the stock market equivalent of “Shop ‘til you drop” will be in great financial shape a year from now.

On the other hand are those that are just as convinced that global market and economic armageddon is waiting to fall at any time and are probably hoarding cans of Ma-ling and packages of Lucky Me noodles.

The belief in near-term stock-market armageddon depends on the fact of general economic conditions deteriorating at a rate not seen for many years. There is no question that this is true. China is an economic disaster area. Brazil is rap-

idly turning into a “basket-case” from being the former darling of the emerging markets. Canada is now officially in a recession...again. But real life is not like an episode of the television show The Walking Dead. In real life, people have to answer the call of nature, zombies or no zombies.

We read, for example, that the Shanghai stock market lost a trillion dollars in value as it crashed. While that might represent genuine monetary value based on the share price, they are actually numbers on a spreadsheet. If sellers sold a few billion dollars worth of stocks, what they actually did was convert their equity investment into cash and are now holding that cash. If those former investors intend to head to the mountains with truckloads of luncheon meat and noodles, then, theoretically, the share prices of those companies might increase.

If money is taken out of the stock markets, it has to go someplace and with economic conditions going negative, it is unlikely there would be a rush to build millions of new fast-food restaurants and convenience stores. The first alternative would be to buy government and corporate debt.

With interest rates already at or near zero, trillions of dollars of bond buying would push interest rates even lower.

Do the gloom and doomers really see interest rates going to negative 10 percent or 20 percent?

The 1929 market crash and depression created governments and central banks that believed they could control economies and the markets, and that has been proven wrong. Now the shift will be back to the private sector as I have been saying. And the private sector is the stock market. Governments have pumped the markets and that “pumping bubble” money will be taken out but only temporarily.

What we are seeing and will continue to see are the birth pangs of a new era, but the government will not give up its power without a fight. Stock markets, including here in the Philippines, will continue with extreme volatility and a negative trend. This is because investors are extremely cautious to invest new money as they wait to see if and how governments react to losing their control over the markets.

It is possible that we will see an interest-rate increase. It is also possible we will see a new round of quantitative

easing and money-printing stimulus.

Either move will have a negative effect on the stock markets as both carry high economic risk.

But this is the important thing to remember. The markets and the people are completely unable and unwilling to continue with this government control because it has failed. Therefore, we are not in a time of armageddon or buying opportunity. We are in a transition period and transition is always difficult.

The PSEi could fall another 10 percent to 15 percent, testing the 2014 low. That would not surprise me. The potential damage would be a Double Top chart pattern as we saw in 1995/1996 and in 2007 and lead to a longer-term decline.

It would still not be armageddon or a buying opportunity.

The more likely scenario is much less frightening and would be a buying opportunity. But, in the current environment, genuine and highly profitable buying opportunities will not come until more people are convinced that it’s armageddon time.

When the local PSEi “experts” throw in the towel and say “sell the market” rather than “avoid the stock market,” then it will be time to sell your cache of noodles to buy stocks.

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.

Alibaba is the canary in China’s coal mine William Pesek

BLOOMBERG VIEW

I

t turns out investors were right about Alibaba: No company is more on the front lines of China’s economic shifts than Jack Ma’s juggernaut. And that’s just where the problems begin.

Alibaba’s shares slide with each new report of middle-class Chinese who are dumping apartments to raise cash, delaying weddings, canceling vacations, terminating automobile orders and cutting up credit cards. A social-media app called “Guide on Safe Passage Through the Economic Crisis” is all the rage as hundreds of millions of mainlanders encounter their first bear market. All that most Chinese younger than 50 know is annual growth of more than 10 percent.

Crashing stocks and recession are Western maladies, not China’s.

Ma has hitched the fortunes of his e-commerce behemoth to these people, and the value of his company is falling in sync with them. After surging as much as 75 percent from their initial offering price of $68 each last September, the company’s American depositary receipts plunged 16 percent in August, to $66.12, the third consecutive monthly decline in New York. Anyone who doubts that China won’t experience a negative

wealth effect as Shanghai cracks hasn’t looked at Alibaba’s numbers. Skeptical investors have shaved $65 billion from its market value since last year’s euphoric initial public offering.

Things are about to get worse—both for the economy and Ma’s investors. Five interest-rate cuts since November aren’t boosting factory activity, which is the weakest in at least three years. The 49.7 reading on the August Purchasing Managers’ Index confirmed the worst fears of China bulls: Domestic and external demand is sliding with the Shanghai Composite Index.

The conventional wisdom is that, for all the angst over stocks, few mainlanders own them. But this view assumes rationality in a wholly irrational setting.

Pundits said the same about Americans in the late 1990s. But the so-called wealth effect from a surging Dow Jones industrial average significantly buttressed household sentiment. Confidence plummeted when the tech-stock bubble burst.

This dynamic could be doubly true of China. After months of putting the entire weight of the government behind saving the market, Beijing appears to have given up. The fallout from that realization will have unpredictable effects on 1.3 billion people indoctrinated to believe Beijing can control any crisis or narrative. As markets swoon and gross domestic product slides, consumers are delaying nonessential purchases.

Baby diapers and groceries, yes; a new smartphone, handbag or movie tickets, no. Mass austerity has only just begun.

Policy-makers are bracing for the fallout. In a July report, UBS economist Wang Tao said it would be interesting to see how the government responds to “large and widespread investment losses that could lead to a notable negative wealth effect which could weaken consumption, as well as grievances against the authorities.” Since then, we’ve learned how: directing banks to buy shares, turning off half the market, loosening curbs on margin trading, suspending IPOs, letting stock speculators put up houses as collateral. You can call it a powerful government effort to stabilize markets, or what it really is: desperation.

But as September begins, it was all for naught, psychologically speaking.

“Risks are biased toward downside despite policy efforts,” Tao said on Monday.

China is skilled at scrubbing phrases like “Tiananmen Square” and “Tianjin explosion” from Internet and chat apps, but there’s no hiding the stock crash, especially considering a government

campaign, started in August 2014, that encouraged the masses to buy shares.

President Xi Jinping’s team figured an equities rally would help companies reduce debt loads. What it got instead was a lesson in the evils of asset bubbles and the folly of trying to manage them. As more and more mainlanders sense that the economy’s troubles are beyond Xi’s team and that Beijing is no match for Shanghai, sentiment is sure to plunge.

The same goes for neighboring economies. Macau’s GDP plummeted 26.4 percent last quarter as Chinese gamblers stayed home. South Korean exports tumbled 14.7 percent in August, the most since 2009, while Morgan Stanley downgraded its forecast for 2015 Japanese growth to an anemic 0.5 percent from 1 percent. Reserve Bank of Australia Governor Glenn Stevens on Monday warned of downside risks “associated with developments in China.”

Asia could do worse than keep an eye on Alibaba, whose $166-billion market capitalization tops the annual output of many countries. Ma could almost buy Vietnam or New Zealand. Until now, investors reveled in Alibaba’s scale and breadth—a Chinese amalgam of Amazon, PayPal, eBay, brokerage services, travel agencies and real-estate operations. By creating a one-stop shop for 650 million mainland Internet users, extending into virtually every industry imaginable, Ma created a better quarterly GDP report than Beijing. And at the moment, it’s flashing warning signs.

Opinion BusinessMirror

opinion@businessmirror.com.ph

Improperly accumulated The Lord who cares earnings tax

Msgr. Sabino A. Vengco Jr.

Alálaong Bagá

Atty. Rodel C. Unciano

Tax Law for Business

S

ection 29 of the National Internal Revenue Code (NIRC) of 1997, as amended, imposes Improperly Accumulated Earnings Tax (IAET) on corporations for each taxable year on the improperly accumulated taxable income of such corporations. It is equal to 10 percent of the improperly accumulated taxable income.

This tax applies to every corporation which is formed or availed of for the purpose of avoiding the imposition of income tax on the income received by shareholders of the corporation, by permitting its earnings or profits to accumulate, instead of being divided or distributed. Based on Section 6 of Revenue Regulations (RR) 2-2001, the dividends must be declared and paid or issued not later than one year following the close of the taxable year, otherwise, the IAET, if any, should be paid within 15 days thereafter.

The IAET is imposed to discourage tax avoidance through corporate surplus accumulation. When corporations do not declare dividends, income taxes are not paid on the undeclared dividends received by the shareholders. The tax on improper accumulation of surplus is essentially a penalty tax designed to compel corporations to distribute earnings so that the said earnings by shareholders could, in turn, be taxed (GR 108067. January 20, 2000).

There are instances when IAET does not apply despite accumulation of earnings and profits of a corporation. The IAET does not apply to (a) Publicly held corporations, (b) Banks and other nonbank financial intermediaries, and (c) Insurance companies. RR 2-2001 likewise included taxable partnerships, general professional partnerships, nontaxable joint ventures and enterprises duly registered under special economic zones as exempt from the coverage of IAET. Further, if the failure to pay dividends is due to some other causes, such as the use of undistributed earnings and profits for the reasonable needs of the business, such purpose would not generally make the accumulated or undistributed earnings subject to IAET. However, if there is a determination that a corporation has accumulated income beyond the reasonable needs of the business, the 10-percent improperly accumulated earnings tax shall be imposed.

While there appears to be no clearcut definition of the phrase “reasonable needs of the business,” Section 29(E) of the Tax Code defines it to include the reasonably anticipated needs of the business. RR 2-2001 defines the same as the immediate needs of the business, including reasonably anticipated needs. In either case, the corporation should be able to prove an immediate need for the accumulation of the earnings and

profits, or the direct correlation of anticipated needs to such accumulation of profits. The computation of the improperly accumulated earnings under Section 29 of the Tax Code, as amended, excludes the earnings and profits of a corporation set aside for the reasonable needs of the business (CTA Case 8295, May 15, 2015).

Under Section 3 of RR 2-2001, the following constitute accumulation of earnings for the reasonable needs of the business: a) Allowance for the increase in the accumulation of earnings up to 100 percent of the paid-up capital of the corporation as of Balance Sheet date, inclusive of accumulations taken from other years; b) Earnings reserved for definite corporate expansion projects or programs requiring considerable capital expenditure as approved by the Board of Directors or equivalent body; c) Earnings reserved for building, plants or equipment acquisition as approved by the Board of Directors or equivalent body; d) Earnings reserved for compliance with any loan covenant or preexisting obligation established under a legitimate business agreement; e) Earnings required by law or applicable regulations to be retained by the corporation or in respect of which there is legal prohibition against its distribution; f) In the case of subsidiaries of foreign corporations in the Philippines, all undistributed earnings intended or reserved for investments within the Philippines as can be proven by corporate records and/or relevant documentary evidence.

Thus, if a company can justify the accumulation of its earnings as within the reasonable needs of business, it is exempt from the imposition of IAET. The author is a senior 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 rodel.unciano@bdblaw.com.ph or call 403-2001 local 140.

T

he Lord keeps faith forever and cares for those who trust in Him—Praise Him! (Psalm 146:7, 8-9, 9-10). Jesus heals a deaf-mute, and the people see the promised regeneration in the coming of the reign of God (Mark 7:31-37).

Praise the Lord for He cares

Bloomberg View

I

F oil prices take another dramatic slide, as I believe they will, who wins and who loses? And could plummeting oil prices sow the seeds of the next recession?

Oil-importing countries are obvious winners from falling crude prices.

That includes the US, where—despite a surge in domestic production—imports still account for nearly 50 percent of petroleum consumption. The net oilimporting countries of western Europe and Asia also benefit from falling crude prices. India and Egypt, which subsidize domestic energy use, will surely benefit.

Some of that, however, will be offset because crude oil is priced in US dollars, and those countries’ currencies have grown weaker against the greenback.

The windfall for US consumers is

considerable, with average gasoline prices down 24 percent to $2.47 a gallon from $3.77 in June 2014. No doubt, prices will fall even more when the summer driving season ends after Labor Day. Most forecasters believe consumers will spend the windfall, and, thus, boost the economy. But almost all of the savings from lower pump prices so far have been used to rebuild household assets and reduce debt. Consumers tend to increase their savings in tough times; they’ve been doing so during the six-year recovery, even as real wages and median household incomes remain flat.

Lower oil prices, however, could come with a downside. As they work their way through the system, deflation could follow. Already, 10 of the 34 largest economies in the world have seen year-overyear declines in consumer prices. The risk is that deflationary expectations could follow, encouraging consumers to withhold purchases in anticipation

A healer in gentile territory

Jesus was coming from the district of Tyre, where a Gentile mother begged him to cast the demon out of her little daughter. The woman had inspired Jesus: If one Gentile is ready for God’s reign, maybe others also are. Jesus made an extensive loop into the Gentile territory east of the Jordan River in the area of the Decapolis. Again, this time the people and not just a lone individual approached Jesus for help

in favor of a deaf man with speech impediment. They begged Him to lay His hand on him; they believed that He has the power to heal the poor victim. Jesus had been looking for faith and waiting for cooperation even as He was willing to heal those in need. In His own village of Nazareth, He was not able to perform any mighty deed there because of their lack of faith (Mark 6:5-6). Jesus himself was amazed at their lack of faith.

Jesus healed the man in a manner that may be described as standard.

The Gentile setting might explain some the interesting and dramatic details, but they also conform to the evangelist’s portrayal of Jesus.

Jesus oft lays His hand on people in misery to identify with them and to come to their assistance, as when He took the hand of the little girl of Jairus (Mark 5:41) and raised her up back to life. This was a way for Jesus to indicate the end as far as He was concerned of the purity prohibition against touching whatever is unclean and thereby becoming unclean oneself. His use of saliva reflects the common belief that a person’s saliva contains some of the person’s power. Groaning and looking up to heaven can signify prayer.

Be opened!

But it was the command of Jesus: “Ephphatha!” (“Be opened!) that brought about the miraculous healing. The people who witnessed the result of the intervention of Jesus could help themselves but be

Competition means good business

The PCL creates the Philippine Competition Commission, which will have regulatory responsibility over investigations and inquiries on abuse of dominant position, anticompetitive mergers and acquisitions and agreements. Violators of the law are liable for administrative penalties of a maximum fine of P100 million on the first offense and P250 million for the second offense for abuses of dominant position and anticompetitive agreements or transactions. A prison term of two to seven years is

of even lower prices.

If that happens, excess capacity and inventories would build, forcing prices down more. When buyers’ suspicions are confirmed, they further delay consumption, in a vicious downward cycle. The result is little if any economic growth, as deflation-prone Japan has seen over the last two decades.

The losers from declining oil prices obviously include producers and oilservices companies, especially those that are highly leveraged. US shale-oil frackers are taking a hit, and yet they stubbornly refuse to leave the business.

One reason is that well-drilling costs are also declining. Another is that oil prices are still above frackers’ marginal costs, which encourages them to increase output to make up for falling revenue.

Employees in the US oil- and gas-extraction industry make up just 0.14 percent of total payrolls, but they were paid an average of about $41 in July—almost

Alálaong bagá, “Be opened!” is a command to the heart to open up to the love and compassion of God—by being united to Jesus, the Beloved Son (Mark 1:10). If the heart is open, ears are unplugged and the tongue loosed in praise.

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 PCL, anticompetitive agreements include price fixing, dividing or sharing geographical markets in terms of sales volume, kinds of goods and services, limiting or

twice what other US workers are paid.

Since late last year, jobs are down only 4 percent in the sector and weekly pay has declined just 3 percent. With another big leg down in oil prices, vacancy signs may soon appear in the once-booming North Dakota fracking fields.

Further drops in oil prices will add to the woes of African exporters Ghana, Angola and Nigeria. Oil exports finance 70 percent of Nigeria’s budget. Ditto for economic basket case Venezuela, where the bolivar has collapsed from 103 per US dollar in November to 701 on the black market. (The official rate remains a fanciful 6.29 to the greenback.)

Russia depends heavily on oil exports to finance imports and government spending. With Western sanctions over Ukraine squeezing the economy and Russian banks unable to borrow abroad to service their foreign debts, another drop in oil prices could precipitate a rerun of the country’s 1998 default.

The ruble has dropped to 66 per dollar from 49 per dollar in May, inflation is running at a 16 percent annual rate, and the economy contracted by 4.6 percent in the second quarter versus a year earlier.

With no other meaningful source of foreign exchange, Russia no doubt will continue to produce and export oil even if prices fall below marginal costs. And who knows what President Vladimir Putin might do next to divert domestic attention from this miserable situation? According to Shakespeare, the dying King Henry advised his son, Prince Hal, to “busy giddy minds with foreign quarrels.”

Energy stocks are already down substantially on oil price weakness, with stalwart Royal Dutch Shell off 35 percent over the past year. Expect more punishment for speculators and investors who hold oil and related securities if prices drop toward my $10- to $20-abarrel target.

Persian Gulf stock markets have been hurt and will probably nosedive with further oil-price weakness, especially since they’re dominated by retail investors who have used cheap credit to rack up sizable margin debt. The Saudi bourse was the region’s top performer this year, partly in anticipation of its opening to foreigners in June. Still, it’s down 10 percent for the year so far. Oil provides 90 percent of the Saudi government’s revenue and 40 percent of gross domestic product.

The US Federal Reserve (the Fed) has put off raising short-term interest rates until labor markets and inflation data are more to its liking, but it now seems to many that it will take action before the end of 2015. I believe the Fed will hold off on a rate hike until next year, at the earliest. But if it does move this year, and commodity prices tumble, China slumps and deflation sets in, it could soon wish it hadn’t.

J

ust recently, our President signed the Philippine Competition law (PCL), or Republic Act 10667. It is considered a landmark legislation for a country that waited more than 20 years for its passage. This new legislation sends a clear and loud message to the international investment community that, indeed, the Philippines is more than ready to level the business playing field and is open for businesses who are eager to compete fairly and ethically.

Watchdog

exceedingly astonished. In an oral culture, one who cannot hear is at a great disadvantage and is painfully marginalized. Jesus opened the man not only to other people’s speech, but above all to God’s word.

Now he can deeply appreciate the divine graciousness to God’s people whose preeminent prayer is “Shema Israel” (“Hear, O Israel!”—Deuteronomy 6:4). Now, the man’s ears are unstopped to hear the Good News of Jesus, and his tongue untied to proclaim the praise of God. In a Gentile territory, the people seeing the manifestation of divine power related the miracle performed

by Jesus with the time of fulfillment, with the wonders that are associated with the coming of the reign of God (Isaiah 35:5-6). Their budding faith Jesus invited to silence for more reflection, to mature and go beyond the signs. But the more Jesus “ordered them not to, the more they proclaimed it”—as if it was their tongue loosed. It must have been true consolation for Jesus to encounter such openness of heart to Him.

on their toes, continuously innovating, improving their processes, methods and offering more favorable terms and conditions to its customers so that the latter will stay with them and not transfer to competitors. Thus, those companies that are poorly run or are driven by unfair and unethical business objectives normally fold up, while the honest and better run organizations flourish and grow. The market serves as the final arbiter on who stays and who goes.

DECISION TIME

The PCL applies not only to illegal acts committed locally but also to those done outside of our borders that have direct, substantial and reasonably foreseeable effects in the country.

A7

controlling production, markets or investment and bid rigging. Meanwhile, abuse of dominant position encompasses imposition of barriers to entry of new players or preventing current players from increasing their market share, making supply of goods dependent on the purchase of other goods and services, selling services or goods below market prices in order to stop competition and restricting sales or trading of goods in an anticompetitive manner.

The law is business-friendly because it does not prevent dominant players from increasing their share in the market because of top quality services or products, excellent research and development or superb marketing capabilities.

Neither does it prohibit exclusive distributorship agreements or other arrangements which are commonly used in this jurisdiction.

Like other antitrust laws, the PCL seeks to develop and protect the free and efficient play of market forces while checking on some of its abuses or excesses, operating under the fundamental economic principle that robust competition benefits society.

The intention is not to punish businesses just because they are big or because they are generating profits. It recognizes the basic postulate that healthy competition in every market is good as it keeps those engaged in commerce to be constantly

Ariel Nepomuceno

Will oil cause the next recession?

By A. Gary Shilling

and their life back. Strangers or aliens are sure of His protection as when He protected Israel when they themselves were aliens in Egypt. Widows and orphans are sustained by the Lord who cares for them against those who would take advantage of them. For the Lord thwarts the wicked in their evil ways, even as He loves the just. Surely, the Lord will reign forever, the eternal ruler in Jerusalem, the sovereign of the hill Zion at the center of the lives of His own people. Alleluia!

The Lord deserves our trust and our praise because of all He has done and is doing. The psalmist reminds himself to praise the Lord and offers a series of statements illustrating God’s indescribable goodness and graciousness. He is the “God of Jacob”—meaning He gave special protection to Jacob and to the entire people named after Him. God is faithful to His covenant promises.

He delivered the people from bondage in Egypt and took care of Jacob’s descendants during their sojourn in the desert. For anyone belonging to God’s people Israel, such faithfulness on God’s part is reason enough to praise Him. God’s mercy and compassion to those in every sort of need is extolled next. One can be bowed down in life due to many and different situations, like physical disability as in blindness, mental or emotional affliction, economic or social tribulation. But whatever it is, God is there to raise up the needy, giving them confidence

Thursday, September 3, 2015

also included. In order for the law to immediately produce its desired effect, the decisions of the Commission are immediately executory, unless otherwise restrained by the Court of Appeals or the Supreme Court.

Notably, the law does not prohibit dominance in the market or monopolies per se. What it prohibits are agreements between competitors and abuse of dominant position. The law presumes entities with at least 50-percent market share as dominant players.

Clear rules for healthy competition

Best for the consumers

Proper enforcement of competition rules results to lower prices, better quality products and services and more choices for consumers. Indeed, there is nothing better than market economics working efficiently, fairly and properly. At the end of the day, Juan de la Cruz benefits and the economy gets its much-needed boost.

Adam Smith sums it all up by saying that the baker does not ask himself whether you might wish to enjoy some of his excellent bread this evening with your meal. No, he wants you to give him money, and thus, he strives to make excellent bread so that you will be persuaded to purchase your bread from him and not from some other baker.

For comments and suggestions, send to: arielnepo.businessmirror@ gmail.com

2nd Front Page BusinessMirror

A8 Thursday, September 3, 2015

GPPB allows DOTC to close P4.2-billion negotiated contract for MRT 3 upkeep

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By Lorenz S. Marasigan

NE year has passed since the government launched the auction for the long-term maintenance contractor of Metro Rail Transit (MRT) Line 3, yet it has only achieved one thing: surpass a key hurdle for an emergency procurement.

Finally, the Government Procurement Policy Board (GPPB) has “unanimously approved” the negotiated procurement for the train system’s upkeep, Transportation Secretary Joseph Emilio A. Abaya said on Wednesday.

This allows the Department of Transportation and Communications (DOTC) to start the tender process for the said P4.2-billion deal.

“We were given the go signal by the GPPB…to pursue this mode of negotiated procurement,” the Cabinet official said. “We’re targeting to award the contract within the year, and to have the new maintenance provider begin its services in January next year.”

He explained that the policymaking body resorted to approve the proposal to conduct an emergency procurement for the train line’s upkeep provider, as it recognized the “urgent need to address the railway’s maintenance requirements.”

In its request for approval, the transport agency cited the immediate need for a three-year total maintenance provider, as well as the general overhaul of existing train coaches and the replacement of the system’s signaling system.

These are essential in order to address the core problems of obsolescence and complete wear-and-tear.

The ailing railway line has been eagerly waiting for an overhaul, as its facilities are now showing signs of obsolesce.

Lesser trains have been operating —almost half the supposed capacity of the railway system—and yet

more and more people are boarding the mass-transit line.

The department launched the bidding for the contract in early September last year, but no private company wanted to take the risk of maintaining a system so degraded it has been tagged by railway experts as a “danger” to the riding public.

In the hopes that companies would be enticed to vie for the muchneeded project, the department decided to sweeten the terms of the deal. But, despite the relaxing of rules and the improvement in cost, railway upkeep services companies still decided to evade a “potential risk.”

The risk, industry sources said, is obvious: the train system itself is already dilapidated. Hence, “maintaining” it, in the literal sense, would mean risking the lives of daily commuters coming from the northern and southern corridors of Metro Manila.

Currently, several different companies are maintaining the line, each focusing on a specific discipline.

The subcontractors were engaged directly under a multidisciplinary approach to increase the efficiency of work per component until the long-term maintenance provider is procured.

Under the multidiscipline approach, Abaya claimed that the management of the MRT 3 has been “able to increase the number of operating coaches during peak hours to 45 as of the beginning of August, and aims to bring it back up to 60 by November.”

But once the new maintenance provider comes in, it will start man-

aging all of the maintenance components of the MRT. “In accordance with the GPPBapproved plan, the DOTC has invited several established, well-reputed international expert groups in the railway-maintenance industry. This will effectively eliminate the possibility of non- or underqualified firms from participating in the bid and eventually winning the contract,” Abaya said.

He said his office will disclose the names of participating groups “once an award has been made.”

Today, the rail line’s average daily ridership is already over 560,000, and its highest single-day passenger count is 620,000.

The government aims to augment the capacity of the railway system by adding new train cars. The prototype for the new coaches arrived last month, but delivery of the actual cars are scheduled for next year.

Once the 48 new train cars come in, the MRT 3’s trips per hour will increase from 20 to 24, which will translate to a 60-percent rise in the number of passengers per hour per direction.

This means that there will be 37,824 passengers who can avail themselves of the rail service every hour heading toward one direction. Currently, only about 23,640 people ride an MRT 3 service per way every hour. But that number still depends on how many trains are running that day.

Aside from adding new coaches to the current MRT 3 fleet, the government is also rolling out P9.7 billion worth of projects to improve the train line. The state also wants to buy out the corporate owner of the line.

But several private groups are proposing a different scheme to modernize the train system, which has been under fire for years now for its mediocre services.

The group of businessman Robert John L. Sobrepeña is proposing to do a “quick fix” solution to make the train system safe for public transport.

Together with foreign firms Sumitomo Corp. of Japan and Globalvia Infrastructuras of Spain, Metro

Global Holdings Inc. is proposing to “fix” the ailing system through a $150-million investment that involves the procurement of a total of 96 new train cars, and the rehabilitation of the existing 73 coaches, increasing its capacity by fourfold to 1.2 million daily passengers.

Under the proposal, a single point of responsibility will be implemented: meaning the rehabilitation and the maintenance of the line will be handled by a single company.

Separately, Metro Pacific Investments Corp. is proposing to shoulder the upgrade costs of the train system and release the government from the bondage of paying billions of pesos in equity rental payments.

The group of businessman Manuel V. Pangilinan, which earlier entered into a partnership agreement with the corporate owner of the MRT, intends to spend $524 million to overhaul the line.

The venture would effectively expand the capacity of the railway system by adding more coaches to each train, allowing it to carry more cars at faster intervals. The multimilliondollar expansion plan would double the capacity of the line to 700,000 passengers a day from the current 350,000 passengers daily.

It was submitted in 2011, but the transportation agency’s chief back then rejected the proposal.

On the other hand, German firms Schunk Bahn -und Industrietechnik GmbH and HEAG Mobilo GmbH are seeking to place whole train system under a massive transformation program to augment its capacity and to provide a safe and comfortable travel to commuters from the northern and southern corridors of Metro Manila.

The P4.64-billion proposal, submitted in February with Filipino partner Comm Builders and Technology Phils. Corp., calls for the complete overhaul of the 73 light rail vehicles of the MRT, the replacement of the rails, the upgrading of the line’s ancillary system, the upgrade of the track circuit and signaling systems, the modernization of the conveyance system, and a three-year maintenance contract.

Malacañang concedes Aquino could face same fate as GMA after losing immunity

A

By Butch Fernandez

fter asserting President Aquino’s immunity from suit while in office, Malacañang has conceded the “possibility” that Mr. Aquino could suffer the same fate that befell his predecessor, detained ex-President Gloria Macapagal-Arroyo, who is under hospital arrest facing charges involving alleged offenses committed during her incumbency.

“In the universe of possibilities, if anybody wants to question the President subsequent to his term, there will always be people who will attempt to do so,” Secretary Edwin Lacierda, President Aquino’s chief spokesman, said.

Fielding questions at a news briefing on Wednesday, Lacierda admitted to Palace reporters Mr. Aquino is aware of the strong likelihood that he could be facing the same charges lodged against his budget secretary, Florencio B. Abad, in foisting the Disbursement Acceleration Program and the Priority Development Assistance Fund that the Court declared as unconstitutional.

“The President has mentioned already that we have disturbed a number of ricebowls. Will there be people unhappy with the government? Will there be people unhappy with the President? In the universe of possibilities, yes, there are people who will be unhappy with how we went through daang matuwid,” Lacierda added.

Asked if Mr. Aquino is prepared to face charges when his immunity expires at the end of his term on June 30, 2016, Lacierda dodged the question, saying only that they recognize the Ombudsman’s independence.

“You know that the Office of the Ombudsman is an independent office.... Currently, it’s a pending investigation by the FIO [Field Investigation Office]. It’s an independent office, so I do not wish to preempt any statement for or

www.businessmirror.com.ph

Pinoy workers are ‘happiest’ employees in Asia, Jobstreet philippines survey shows

By Catherine N. Pillas

F

ilipinos are the happiest workers in their jobs compared to Asian counterparts, according to online jobs marketplace JobStreet.

JobStreet Philippines, in its nationwide Job Satisfaction Report conducted from June to July, found that 70 percent of the 7,586 workers surveyed rate themselves as “happy” with their jobs.

Of the 70 percent, 15 percent classify themselves as “very happy” while 55 percent rate their satisfaction as “quite happy.”

The 70 percent is the highest rating collated by JobStreet compared to counterpart JobStreet surveys conducted in Hong Kong, Singapore, Thailand and Indonesia.

“We are the happiest employees in Asia. Compared to Hong Kong whose satisfaction rating is at 37 percent, Singapore at 51 percent, Thailand with 59 percent, and Indonesian employees are most dissatisfied with a 28percent satisfaction rating,” said Yoda Buyco, marketing manager at JobStreet Philippines.

Buyco explained the factor driv-

ing the satisfaction rating in the Philippines is salary and benefits.

Hong Kong, Singapore and Thailand put a higher premium on work relationships such as relations with coworkers and their superiors.

Even with the country having the highest taxation rate and relatively low income levels, Filipinos are happy with their jobs because of the low cost of living in the country which translates to higher purchasing power.

“If you look at our cost of living, it’s very low compared to the other Asian countries. We’re happy even if our salaries are not comparable, but if we compare the cost of services and goods, ours is still lower,” Buyco explained.

But breaking down the 70 percent “satisfied” rating among employee position levels, JobStreet Philippines found out that the higher the position of employees, the more dissatisfied they are with their job.

Seventy-nine percent of fresh graduates surveyed were “happy” with their job, compared to 67 percent happiness levels for directors and managers.

briefs

pnp-hpg to field 96 personnel to ease metro traffic

Members of the Philippine National Police-Highway Patrol Group (PNP-HPG) will be deployed to six identified choke points along Edsa beginning on Monday to enforce traffic rules and discipline along the country’s busiest highway.

Chief Supt. Arnold Gunnacao, HPG director, said HPG elements will be visible in Pasay Rotonda, Guadalupe in Makati City, Shaw Boulevard in Mandaluyong City, Ortigas Avenue in Pasig City, Cubao and Balintawak.

“The HPG was directed by the President to enforce traffic rules along six choke points which cause heavy traffic…we were instructed to deploy HPG there to discipline drivers…we see this [lack of discipline] as one of the causes of heavy traffic,” he said.

The HPG director said policemen would focus initially in educating drivers and enforcing traffic rules.

Gunnacao said the HPG will initially dispatch 96 personnel to Edsa on Monday.

Aside from the organic HPG personnel, Gunnacao said the National Capital Region Police Office and the various police districts have committed to augment the HPG with their own members.

“Aside from the 96 HPG personnel, we will be receiving help from local police, those from the districts, to maintain visibility to the areas,” Gunnacao said. Rene Acosta

lrta revises lrt 2 traffic-management plan Changes have been made in the proposed traffic-management plan for the Light Rail Transit Line (LRT) 2 Masinag Extension project, a transport official said on Wednesday.

This was after the Metropolitan Manila Development Authority (MMDA) suspended the dry run of the plan due to heavy traffic in areas around the construction site.

The initial plan involved opening three intersections along Marcos Highway for motorists—Felix Avenue Extension, Amang Rodriguez Intersection and de La Paz Intersection.

For each U-turn slot that is closed for construction works, another U-turn slot will be opened nearby to ensure that traffic flow is not disrupted.

Six alternate routes have also been identified, in order to give motorists other options: Sumulong Highway, A. Rodriguez to J. Rizal, Felix Avenue to Fernando Avenue, Calle Industria, Kaginhawaan and Ortigas Avenue Extension.

LRT Authority (LRTA) Spokesman Hernando Cabrera said the authority met with MMDA officials and contractor D.M. Consunji Inc. on Tuesday to discuss changes in the plan.

tagle concerned over rising number of scam victims

Dry taps National Water Resources Board Executive Director Sevillo David Jr. (from left), Metropolitan Waterworks and Sewerage System Deputy

Administrator Nathaniel C. Santos and Manila Water Media Relations Manager Dittie Galang hold a news conference on the effects of the incoming El Niño at the National Irrigation Administration office in Quezon City. Water concessionaires Maynilad and Manila Water have issued notice to consumers that some areas in the East and West Zones may experience dry taps for at most 12 hours beginning this month or as early as next week. Kevin de la Cruz

against—or, rather, the status of the case that is being investigated right now by the Office of the Ombudsman,” he said, adding: ”We would rather respect the independence of the Ombudsman.” At the same time, Lacierda indicated that Mr. Aquino does not regret naming Chief Ombudsman Conchita Carpio-Morales, who is expected to pursue the case against President Aquino and Abad.

“When the President appointed Ombudsman Carpio-Morales, he stated very categorically that he wanted an independent individual to head that office. And does the President re-

gret? The President has mentioned Ombudsman Carpio-Morales, I think, thrice in the six times that he delivered the Sona [State of the Nation Address]—2011, 2012 and I believe [in] the last Sona, he also mentioned Ombudsman CarpioMorales. He wants someone who will look after integrity.... The President expects integrity in all branches of the government. And so, no, the President does not regret appointing Ombudsman Carpio-Morales,” he said.

Immunity shot

JUSTICE Secretary Leila de Lima on Wednes-

day reiterated that no other high government officials nor even religious leaders are immune from suit except the President.

De Lima made the statement in reaction to the Office of the Ombudsman’s disclosure that it is now investigating President Aquino and Abad for the alleged mishandling of government funds through the implementation of the DAP. But de Lima pointed out that the Ombudsman is not being prevented from investigating the President, and that it cannot subject the latter to a preliminary investigation without violating his immunity. With Joel R. San Juan

Manila Archbishop Luis Antonio Cardinal Tagle on Wednesday expressed serious concern over the increasing number of victims of networking scams.

Tagle said he is saddened why some people are taking advantage of their fellowmen by encouraging them to invest in a scam that promises high rates of return.

“To be able to improve their lives, they invest in these scams and they give all that they have…binigay nilang lahat, umuwi lang sa wala,” Tagle said over Radio Veritas.

Tagle expressed worries over reports that at least 200,00 people have been victimized by multilevel networking firm One Dream Global Marketing Inc. in an alleged P3-billion investment scam. One Dream has been operating for nearly three months in Lipa City before it ceased operations on July 11.

He stressed that such scheme is against the right of a person and it is against the will of God to fool other people.

“We should do things with honor...that will bring good to our family and the society,” Tagle said, urging those behind the scams and stop their evil means.

Besides One Dream Global Marketing, the Securities and Exchange Commission already posted a notice on its web site on some fraudulent companies or organizations, such as Emgoldex Philippines, Forward Direct Selling Corp. and One Lightning Corp. Claudeth Mocon-Ciriaco