BusinessMirror February 11, 2015 by BusinessMirror

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Wednesday, February 11, 2015 D1

‘Entertainment for all’ from Smart

APPLE RIVAL TO WATCH

HETHER it’s movies or music that you like, wireless services leader Smart Communications Inc. (Smart) is bringing you an “entertainment for all” package that powers your mobile lifestyle needs with the help of mobile entertainment apps Deezer and Blink. If you’re one of those who often mishears the lyrics of your favorite songs, global musicstreaming service Deezer has good news for you: now you can sing along to your favorite tracks with lyrics baked right into Deezer’s mobile and Web apps. And to make things even sweeter, Smart is throwing in an added treat for users who subscribe to its Deezer music packs by way of a free movie through Blink, the country’s premier movie and TV series-streaming app. Simply subscribe to the Deezer 250 Flexibundle as an add-on to your current postpaid plan and enjoy full and unlimited access to Deezer’s 35 million tracks, thousands of playlists, free 250 of all-network texts and now one free movie via Blink accessible via its Web, Android and iOS apps. This promo is valid until March 31. “Smart is bringing entertainment for all to its subscribers so they can have fun and fulfill their enjoyment needs anytime, be it music from Deezer or movies from Blink,” said Kathryn Carag, postpaid marketing head at Smart. “This latest promo from Smart (tinyurl.com/lps4fru) will surely give users a worry-free way to enjoy the hottest tracks and the latest flicks powered by the country’s largest network.”

ZHANG JIN/XINHUA/ZUMA PRESS/TNS

LEI JUN, CEO of China’s smartphone manufacturer Xiaomi, introduces the research and development process of Xiaomi products during its annual new product release conference on July 22, 2014, in Beijing, China.

B A C  J M Los Angeles Times

T wasn’t long ago that everybody wondered whether Apple Inc. could effectively compete against a tough bunch of homegrown smartphone makers in China. Then came the company’s blowout earnings report last week, which included a stunning 70 percent year-over-year increase in its China region revenue, driven by its new iPhones. That answered the question in the affirmative—but it doesn’t mean Apple can breathe easy. Chinese smartphone makers are growing fast, led by an aggressive company hardly anyone in the US had heard of until recently: Xiaomi. Based in Beijing, Xiaomi is fast emerging as the Apple rival to watch—not just in China, but around the world. Last year it sold 61 million smartphones, more than three times its 2013 total. A few weeks ago, the five-year-old company raised $1.1 billion in new funding at a valuation of $45 billion. “The trend over the last couple of years has been for local vendors, plus Samsung, to dominate the market and make it hard for others,” said Chris Jones, principal analyst on the mobile team at research firm Canalys. “They’ve been driving down the prices of smartphones and driving up the screen sizes and quality.”

Xiaomi sells smartphones at about half the cost of the iPhone. That’s a big deal in a country such as China, where average incomes are a fraction of those in the US. Besides selling relatively inexpensive phones, Xiaomi’s strategy has been to primarily sell its phones online, which boosts profit margins by taking expensive real estate out of the equation. It also uses a savvy “preorder” system, manufacturing the phone after an order is placed and paid for by the user; with the price of smartphone components constantly declining, Xiaomi ends up benefiting because the cost to produce the phone ends up being cheaper than when the phone first went on sale, said Wang Jun of Analysys International in Beijing. Xiaomi’s chief executive, Lei Jun, has often been called “China’s Steve Jobs,” although he protests the comparison. The company has won over millions of Chinese consumers, and, like Apple, enjoys strong brand loyalty among its fans. “I have three Xiaomi phones,” said Hao Ran, a sales manager at a Beijing theater. “The iPhone is just too expensive and isn’t worth the money.” In a way, that serves both companies well, because each appeals to a different segment of the market: premium shoppers for Apple and price-conscious ones for Xiaomi. “Xiaomi’s user base doesn’t really overlap with iPhone users that much, especially with loyal Xiaomi and Apple fans who would never buy a smartphone from a different brand,” Wang Jun said.

For some Chinese consumers, there’s more than just the price consideration. Ran, 27, also said he worried about his privacy being compromised by Apple and Samsung. “I trust Chinese smartphone makers more,” he said. In recent months, the Chinese government has been ramping up its restrictions on foreign hardware and software makers, as well as Internet giants. US companies have complained of a protectionist regime, saying such rules stifle innovation and make it increasingly difficult to do business in China. So far, that hasn’t seemed to hamper Apple. Revenue in the company’s “Greater China” region—encompassing China, Taiwan and Hong Kong—totaled $16.1 billion for the OctoberDecember quarter. The 70-percent increase was, by far, the biggest percentage jump by region for Apple; in comparison, its Americas revenue rose 23 percent compared with a year earlier. Apple’s success in China was largely due to the iPhone 6 and 6 Plus, which finally gave Chinese consumers what they know and love: large-screen smartphones. Many Chinese consumers use their phones as their primary—and oftentimes only— Internet-connected device, so big screen sizes are a huge draw. There are also socioeconomic factors in play. As millions of Chinese become more affluent and join the swelling middle class, status and brands have become more important—and

Apple fits right into that, said Murillo Campello, a professor of management and finance at Cornell University. “You get a cachet: Made in California,” he said. “With Xiaomi, you get the functionality of having a smartphone, but it’s just not as impressive.” By mid-2016, Apple plans to more than double its number of greater China retail locations, to 40 in all. It already opened two stores in the region this month. To get the stores up and running, Apple has reportedly been wooing store employees to relocate to China. Apple may be on top right now, but China is a volatile, relatively young market. To stay ahead, the company will have to constantly innovate while maintaining its status as the desirable “it” brand— not only in China, but in other emerging markets where price is a strong consideration. In the meantime, other major tech players will continue to jostle for position, and analysts say they expect big fluctuations in the months to come. “The market share between the top vendors is pretty close, so if the winds blow in the right direction, any one of them can move into the leadership position,” Canalys’s Jones said. “Xiaomi, Samsung, Lenovo, Huawei, Apple— they’re all in there.”

MOVIES, MUSIC AND LYRICS WITH over 5 million Google searches performed for song lyrics every day, music fans’ thirst for getting the words right is bigger than ever. Deezer’s unique Lyrics feature now makes access to lyrics much simpler—and much more fun. Deezer partnered with LyricFind, the world’s leader in legal lyrics solutions to offer the firstever implementation of synchronized lyrics from a major streaming service. “Our team of transcribers has been capturing and time-stamping lyrics literally for years,” LyricFind CEO Darryl Ballantine said. “We are excited to be launching this with a brand that is as international as we are. This is a huge day for music fans.” To instantly enjoy the latest feature of Deezer, simply download the app on your iOS or Android phones or visit www.deezer.com. Using your Smart Postpaid account, subscribe to the Deezer 250 Flexibundle by dialing *121# to avail. Subscribers can enjoy music anytime, anywhere with no additional data charges when they subscribe to Deezer Flexibundles. Blink is a new and innovative mobile app that lets them watch Hollywood blockbusters and TV shows on their mobile phones, with access to the latest movies. To enjoy your free Blink movie, log in or create an account on www.blinknow.com and watch your movies via the Blink iOS or Android apps.

■ Chang reported from Los Angeles and Makinen from Beijing. Tommy Yang in the Los Angeles Times’s Beijing bureau contributed to this report.

Twitter’s user growth lags even as sales grow B Q W San Jose Mercury News

AN FRANCISCO—When it comes to attracting more users, Twitter still has a lot to prove. About 288 million people logged into the service at least once a month in the fourth quarter, a slight uptick from 284 million users in the third quarter, the social network said last Thursday as it released earnings. Analysts and investors have been watching Twitter’s user growth rate closely as an important measure of the company’s financial health and future. “The question was whether they could attract and retain new users. They’ve pretty much failed to do that,” said Nate Elliott, an

TWITTER CEO Dick Cosotolo AP

analyst for Forrester Research. But Twitter also reported sales of $479 million in the fourth quarter, compared to $242 million during the same period last year. That beat the $453 million in sales analysts on average surveyed by Thomas Reuters expected the company to report on Thursday and Twitter’s shares were up in early after-hours trading. “We closed out the year with our business advancing at a great pace,” Twitter CEO Dick Costolo said in a statement. The social network hasn’t made a profit yet, reporting a net loss of $125 million, or 20 cents a share in the fourth quarter. Excluding certain onetime expenses such as stock-based compensation, Twitter reported a profit of 12 cents per share, beating Wall Street’s expectations. Twitter has been trying to convince

investors that its audience is much larger than the monthly user numbers and they can make money from users who are logged off of the microblogging site. People see tweets when they’re embedded in web sites, mobile apps or Web searches. The social network said on Tuesday it is teaming up with the news-reading app Flipboard and Yahoo! Japan, allowing them to show tweets paid for by advertisers on those two services. It also struck a deal with Google that would make tweets more searchable on the Web browser. Meanwhile, Twitter has been rolling out new features in the last month including direct group messaging, mobile videos and making tweaks to its timeline. Twitter’s shares were up 1.41 percent to $41.29 when the market closed on Thursday.

life

vista residences offers valuable property investment BusinessMirror

E1 Wednesday, February 11, 2015

Editor: Tet Andolong

VALUABLE PROPERTY INVESTMENT

S the demand for clean and secure student-housing options continues to grow year after year, Vista Residences is at the forefront of developing homes away from home for the evergrowing student population—giving them the advantage of unmatched accessibility by being near their schools while enjoying a kind of accommodation one cannot find in a typical dormitory in the city.

A LIVING-LEARNING community that integrates learning and fun in one conducive environment.

erties prove to be valuable investments to parents as they give them peace of mind to know that their children are in safe environments, while still being able to give them the freedom to live on their own. What’s more, any investmentsavvy individual who’s considering an investment in real estate can find the perfect property venture with Vista GL Taft and Vista Heights. With the ever-growing student population, the rise of the business-process outsourcing sector and start-up families all looking for a place to nest in, there is a continued demand for residential homes in the city now more than ever. Nothing but a smart choice for a property investment, Vista Residences’s university projects do not only provide a secure and accessible living condition. They also afford its residents building amenities that one doesn’t normally get in a typical condo residence in Manila. CTUB, 878 España, Vista Taft, Vista 309 Katipunan, Vista GL Taft and Vista Heights are all equipped with modern-day

VISTA Heights architect’s perspective

facilities like a swimming pool, a function room, a game room, a gym and a sky garden—all are perfect avenues for play, fitness and leisure, all of which are done in a single environment without having to exit the comfort of your home. As for students who want to clock in some serious study time, they can with the study lounges provided in every Vista Residences’s university development. These study rooms provide an ambient learning environment to students swamped with homeworks, as well as to those who simply want to have a quiet reading time. These rooms come with a Wi-Fi connection and electrical sockets for them to plug their laptops and devices. “The greatest benefit of living near your school is that it gives you time to focus more on your studies. Since transportation is not a problem, it gives you an ample amount of rest time and the right amount of

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EING a country with a huge coastline next only to the US, the Philippines has a big potential in coastline-development projects that could generate a wide variety of economic activities. Arch. Felino Palafox Jr. said it is logical for the Philippines to develop its coastal resources since it has more than 7,000 islands. “Property development has a big potential, especially in tourism projects,” said Palafox in a recent briefi ng on SEA-EX, the country’s leading boat show and nautical lifestyle expo organized by Headsail Inc. and the European Chamber of Commerce of the Philippines (ECCP). He cited his firm’s project in Dubai, where they only reclaimed 70 hectares that has generated millions of dollars in revenues as tourist sites. Palafox, an active advocate of sustainable and adaptive architecture, said he drafted rehabilitation plan on Leyte to make it the Ca-

ribbean of Asia and the Pacific. The proposal did not push through because of the so-called bureaucratic roadblocks. “However, we have a lot of obsolete laws that hamper our development,” he pointed out. Martial Beck, ECCP vice president and general manager, said marine-development programs around the world benefited the countries that pursued it. With the proper support from the concerned stakeholders, he said marine-based tourism can be a major contributor to economic growth. He cited the US, where marinas generate an average of 0.3 jobs per berth—meaning that a 200-berth marina could provide 60 jobs and a payroll in excess of $1 million. A size of a country does not matter in pursuing marine development. Belgium, a country with only 12 marinas and 3,500 boats along the North Sea coast, generated $6.75 million annually directly, plus $3 million indirectly. In order to promote marine development in the country, Headsail and ECCP are orga-

energy to keep up with your school activities without having to worry about curfew or the availability of vehicles for

you to get home,” Vista Residences Division Head Elizabeth M. Kalaw said. www.vistaresidences.com.ph.

THE e-library is complete with Wi-Fi access and charging stations for the benefit of the residents.

PHL PROPERTY SECTOR A SWEET SPOT

Philippines urged to pursue coastal development nizing the SEA-EX expo, which will be participated in by businesses engaged in manufacture and distribution of yachts, sail boats, boating accessories, water-sports equipment, summer apparel and resort gateways. “The goal of this conference, like the show, is to bring together key people with great ideas and projects all related to the marine industry and start a discussion about applying different strategies and concepts to make the Philippines what it should be, the next Mediterranean of Asia,” said Angelo Olondriz, president of Headsail. Topics to be discussed are promoting the Philippines as a mecca for marine tourism; developing the country’s boat-manufacturing industry and sustainable development and protecting the Philippines’s marine biodiversity for ecotourism. The three-day event is scheduled from February 20 to 22 at the SMX Convention Center in Pasay City.

UST like 2014, it will be another flourishing year for the Philippine property sector as the country’s major developers will continue to invest on new projects to carry on the growth momentum last year. “The property market in the Philippines is still in a sweet spot. This year we have seen some big investments rise from the ground, with local developers and foreign investors creating a new landscape, doing their best to deliver to the increasing demand and activity in the market. Metro Manila’s central business districts (CBDs) and other prime locations in the city have become home to new residential communities and have been the hot spots for expanding office developments and booming retail markets,” said Antton Nordberg, manager of research and consultancy, KMC MAG Group Inc., in his blog posted on the company’s web site (http://kmcmaggroup. com/blog/2014/12/19/2015-economic-andindustry-outlook-philippines). Nordberg said the performance of the property market in the third quarter indicated a bullish attitude of the investors in the country. He said the office market remains the most popular of all the assets and property types.

Although residential real estate remains a popular item on investors, Nordberg said there is an indication the market is shifting toward the lower segment. “The steady flow of OFW [overseas Filipino workers] remittances, booming IT-BPO [information technology-business-process outsourcing] industry, increasing domestic demand, and growth in tourist arrivals over the next few years drive growth in the property market. With the Philippines’s fast-growing economy, it is suited to become a top realestate market in the coming years,” he said. In the office market space, Nordberg said demand in the leasing market in serviced offices will be sustained in 2015, which would be boosted with the expansion of the IT-BPO, knowledge-process outsourcing industry, and small and medium enterprises that want to test the market. “Investors and developers should explore the idea of developing new CBDs, as BGC, Makati and Ortigas start to fill to the brim and become saturated. Great locations would be Quezon City and Bay City. CBDs can also be developed in other parts of the country, with the rise of Next Wave Cities that have turned into promising investment destinations,” he said.

Nordberg said middle-income market will contribute in sustaining demand for residential units. He urged developers and investors to take advantage of the trend as more people in the middle segment continue to invest in property units. “The high demand in the residential market will be sustained, with global businesses, international brands and foreign investors infiltrating the local market because of the generally positive business sentiment,” he said. As far as tourism is concerned, Nordberg said the developers’ move of extending the developments outside Metro Manila and into other prime tourist spots, such as Cebu and Palawan, is a good move to enable to distribute the growth around the country. “But while a good number of hotel and leisure developments in the country are up to par with world-class facilities, there’s much to be desired when it comes to providing vital infrastructure and improving accessibility to the country. We’re talking about renovating the airports, transport links and other access, beyond cosmetic enhancements. The country can make great strides by building an airport city and other top-class facilities,” he said. Rizal Raoul Reyes

property

B S A | USA Today

When Popovich agreed to chat with USA Today Sports recently, it was only because his favorite big man was the topic du jour. Duncan is days away from making his 15th All-Star appearance, his selection as a reserve considered controversial to some, but certainly not to his gray-haired and grizzled coach known as “Pop.” He wanted to help people understand what they might be missing, how the basic statistics—14.6 points, 10.1 rebounds and 1.9 blocks a game—don’t come anywhere close to explaining the incredible impact Duncan has had on the reigning champion’s challenging season. Popovich is always the first to tell you that he owes almost everything to Duncan, the 38-year-old who has been his partner through nearly two decades of historic success. And this season, one in which his team has won 10 of its past 13 games to improve to 33-19 (seventh in the Western Conference), is like any other in that respect. “I’m not amazed [by Duncan] because I know what he does in the summertime, what he puts in his body with his little routines, whether he’s swimming or boxing or just using his knee brace on his knee to try to keep his extension as much as he can because one leg doesn’t work well,” said Popovich, the five-time champion whose overall record is 1,000-462 and whose winning percentage (0.684) trails only Phil Jackson (0.704) among 1,000-win coaches. “So I know all that, but still, he’s a human. He’s made up of the same stuff you and I are, and here he comes out [in a game] and I’ll think he was just Joe Blow on the court

and there it is—13 points, 11 rebounds or something like that.” In terms of two-way impact, no player at Duncan’s age or older has produced like this. It’s special stuff, the kind of play that Popovich wants the fans to appreciate like he does. Even with Popovich recently predicting that Duncan will play one more season if he keeps producing at this level, and considering his own admission that he wasn’t likely to complete the five-year contract he signed last summer, he’s well aware that their time together is nearing an end. “I think about [Duncan retiring] every week or so, just because I try to imagine practice without Timmy walking out on the court,” Popovich said. “We have this marriage kind of relationship, where we don’t have to speak, or I’ll stick him one time or another with something [verbally] and he’ll give it right back to me. Nobody else on the team will even know what the hell we’re doing, and they’re like, ‘Those guys are weird. What the hell was that about?’ That sort of thing. But we understand it, and I’m going to miss that. He is a really intelligent—a highly intelligent—young man. And on top of that, he’s a wise-ass, which nobody really knows. He’s got a good sense of humor. I’m going to miss that dearly whenever he stops, or if I stop before him.... This year, it has come up in my mind quite often.” That reality hangs over them in every arena, during every game, with Popovich always reminding Duncan to take it all in. “There have been a couple times at games where I’ll say, ‘Hey Timmy, look around. What if this is the last time you’re in [that

Sports BusinessMirror

C | W, F ,  • Editor: Jun Lomibao mirror_sports@yahoo.com.ph • sports@businessmirror.com.ph

SAN Antonio Coach Greg Popovich joins the 1,000-win club. AP

arena]?’” Popovich said. “Then he goes, ‘I’m there. I’m with you. I’m enjoying it. I’m trying to enjoy it.’ “When you’re in a season, it’s like a roller coaster. You just go and you don’t stop. I’m in a place with him where I’m saying, ‘Now remember, we did this [in the respective arena], or we did this there. Every one of these games, enjoy it. If we win by 20 or we get our ass kicked by 20, who cares? Enjoy that you were here and you were able to compete and play, because you’re going to miss it when you’re done.” Popovich, like so many others, thought Duncan may have been done after the last season. As his Spurs made their march to the NBA Finals rematch against the Miami Heat, the pain of their 2013 ending so prevalent through-

out, their leader quietly wondered whether Duncan might retire when the summer arrived. “I kept thinking, ‘You know, whether we get it done or not, is this going to be it?’” he said. “And it would pop through my mind maybe once a month or once every three weeks or so. We didn’t dwell on it. He and I didn’t talk about it. The only time we talked about it was during the summer, after the championship.” True to form, the Spurs’ oneof-a-kind core—Popovich, Duncan, Tony Parker and Manu Ginobili— met at the team’s practice facility to discuss whether their memorable tour had run its course. “We said, ‘Are we gonna? Are we gonna do this?’” Popovich recalled. “And I’d say, ‘Well, let’s take

some time. You give me a call. I’ll give you a call.’ We went back and forth trying to decide what we felt like, and we came to the conclusion that it would almost be rude not to come back and go another year. You just have to do that. I sort of have a commitment with Manu and Tony and we all met together.... We talked about it, and I told them that I was starting to think about what I might want to do.” To that end, Popovich can even see a scenario when he’s out of the game before Duncan. It’s unlikely, but the pull of his non-basketball interests gets stronger every year. The 66-year-old man with the Air Force Academy upbringing, a voracious appetite for reading and a well-chronicled affinity for wine has always been the worldly and cul-

tured sort. He’s a family man, too, a father of two who has been married to his wife, Erin, for 39 years. “There are a lot of things that I enjoy in the world, and basketball is probably not the No. 1 thing,” Popovich revealed. “It’s my job, but I don’t bleed it like a lot of people. I don’t think I’m a lifer. [ESPN analyst and former coach] Hubie Brown is a lifer. He’s a real basketball guy. For me, it’s my job. I try to do it well. I love basketball. I’m from Indiana, but I’m just not a lifer. “There’s a nuance there, but...I can win a game and be fine, [and] I can lose a game and be fine. And I move on. I don’t get excited for the win, or deflated because of the loss. I just move on to the next day.” While trying to enjoy every last one.

THUNDER CLOBBER NUGGETS O KLAHOMA City’s Kevin Durant scored 40 points and Russell Westbrook had 26 as the Thunder beat the Nuggets, 124-114, to hand Denver its sixth loss in a row on Monday in the National Basketball Association (NBA). Durant matched a career best by hitting seven three-pointers and finished 13 of 19 from the floor. Mitch McGary added 17 points and 10 rebounds for the Thunder. The Nuggets, who have lost 13 of 14, were led by Wilson Chandler’s 23 points. Stephen Curry scored 20 points for Golden State and Leandro Barbosa had 16 off the bench as the Warriors ended the Philadelphia 76ers’ four-game home winning streak. Klay Thompson and former Sixer Andre Iguodala added 13

points apiece for the Warriors (419), who have won four of five and two straight after opening their four-game road trip with a loss to the Hawks on Friday. In Minneapolis, Al Horford scored a season-high 28 points and grabbed eight rebounds, and DeMarre Carroll added a career-best 26 points to lift the Atlanta Hawks over the Minnesota Timberwolves, 117-105. Paul Millsap had 19 points, nine rebounds and seven assists for the Hawks (43-10), who bounced back from a loss to Memphis the previous night. The NBA-leading Hawks still have not lost back-toback games since November 18. They shot 51 percent and outscored Minnesota 58-44 in the paint. Kevin Martin scored 21 points and Shabazz Muhammad had 18 points and eight rebounds

for Minnesota. The Washington Wizards downed the Orlando Magic 96-80 after John Wall fell one point short of his first triple-double of the season, and Marcin Gortat had 14 points and 14 rebounds. Wall hit a three-pointer early in the third quarter—the fi rst shot made from beyond the arc by either team—to open an 11-0 run that put Washington in control. He wound up with nine points, 10 assists and 10 rebounds after missing a floater with about 50 seconds left. In other games, Chris Bosh scored 32 points and Mario Chalmers added 18 as the Miami Heat defeated the New York Knicks 109-95, the Milwaukee Bucks beat the Brooklyn Nets 103-97 and the Utah Jazz were 100-96 winners over the New Orleans Pelicans.

OKLAHOMA City Thunder forward Kevin Durant regains control of the ball, after it was knocked out of his hands by the Nuggets’ Danilo Gallinari. AP

Continued on A8

MAMASAPANO PROBE Philippine National Police-Special Action Force (SAF) Director Getulio Pascual Napeñas and his assistants review documents on the second day of hearing on the Mamasapano clash, where 44 SAF members were killed on January 25. ROY DOMINGO

OIL POISED FOR SWIFT RECOVERY, BUT NOT TO $110

A THOUSAND FOR ‘POP’ Even as the legendary coach of the San Antonio Spurs approached his latest milestone—the 1,000-win club of which Greg Popovich became the ninth member with Monday night’s 95-93 win over the Indiana Pacers—the focus was on Tim Duncan.

VERYTHING about the state’s planned multibillion-peso takeover of the Metro Rail Transit (MRT) Line 3 is flawed, so a government buyout, at this time, would not address the persistent woes of the mass transit line, the chief honcho of the company that holds the concession for the train system said.

A THOUSAND FOR ‘POP’ HIS is how Gregg Popovich wanted it. Even as the legendary coach of the San Antonio Spurs approached his latest milestone—the 1,000-win club of which Popovich became the ninth member with Monday night’s 95-93 win over the Indiana Pacers—the focus was on Tim Duncan. Just as he always liked it.

By Lorenz S. Marasigan

Instead, MRT Holdings II Inc. Chairman Robert John L. Sobrepeña said the government must open its ears, and listen to the private sector to correct the mistakes of the past and improve the train facility. Sobrepeña said his company, for instance, has been submitting proposals to augment the capacity of the line and upgrade its facilities since the early part of the new century. However, three administrations had passed and the proposals were left untouched, causing chronic congestion at the train system. “We have been trying to improve the train system, proposing several times, in different modes of implementation, to upgrade the MRT’s facilities and augment its capacity. But they ignored them,” the businessman

VISTA RESIDENCES OFFERS

Vista Residences is the high-rise property development arm of the Philippines’s largest home builder, Vista Land. Its portfolio boasts of 16 condominium developments either under way or ready for occupancy. Vista Residences’s university projects, namely, Crown Tower University Belt, 878 España, Vista Taft, Vista 309 Katipunan, and now the latest additions to the list, Vista GL Taft and Vista Heights-Legarda, are all conveniently located near the Philippines’s most premier institutions of learning. Crown Tower University Belt (CTUB) and 878 España are both in the university belt area in Manila. Aimed at providing the collegiate population in the Metro the homes they deserve, Vista GL Taft and Vista Heights, like their other Vista Residences’s university project counterparts, are vertical developments that will be well-maintained, boasting of round-the-clock security and easy accessibility to schools, offices, churches, transportation and other necessary conveniences. These prop-

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‘MRT 3 buyout plan flawed’

U.P. TRAINS THE SPOTLIGHT ON HISTORY AS ART D4

Beijing-based Xiaomi is fast emerging as the

TfridayNovember 18,11, 2014 Vol. 10 Wednesday, February 2015 Vol.No. 1040 No. 125

SOBREPEÑA SAYS PURSUING THE P54-B GOV’T TAKEOVER WILL ONLY DELAY THE RAIL SYSTEM’S REHAB

xiaomi is apple rival to watch EAR Lord, how important we are then, that we are worth the life of the Son of God? It’s a mystery we cannot fathom: the mystery of Your love. Teach us never again to doubt how precious we are, that nothing we do is useless or unimportant. It is Christ who lives in us. All we do is an act of Christ. Amen!

A broader look at today’s business

he price of oil is poised for a “relatively swift” recovery following the recent collapse to under $50 a barrel, but it will not come close to returning to the highs of past years, the International Energy Agency (IEA) predicted on Tuesday. In a report, the Paris-based organization of 29 major oil-importing nations said the rebound in recent days of the oil price “will be comparatively limited in scope, with prices stabilizing at levels higher than recent lows but substantially below the highs of the last three years.” The US benchmark oil contract

PESO exchange rates n US 44.3150

fell from nearly $110 a barrel last summer to under $45 this year, before a recovery to around $53 in recent days. The IEA says the current price recovery is unlike those of the past, because of the sharp increase in production by nonmembers of the Organization of Petroleum Exporting Countries, especially in the US, as well as slowing demand in China and slimmeddown fuel intensiveness in the developed world. The agency also said that, unlike past cycles, the low oil price is not expected to greatly boost economic

output, because low demand was, itself, part of the reason for the recent price collapse. “The fact that lackluster demand was part of the reason for the recent price collapse suggests that the selloff will only go so far in boosting economic growth and lifting oil demand,” the agency said. The IEA now forecasts global oil demand to reach 93.3 million barrels a day in 2015, well below the 94.2 million barrels forecast in its last report. “Unlike earlier price drops, this one is both supply- and demanddriven,” the IEA said. AP

US growth story to give exports needed push By Cai U. Ordinario

he National Economic and D e v e l o p m e nt A ut ho r i ty (Neda) warned that the weaker Chinese economy and the deflation in Europe could temper exports growth in 2015. Neda Director General and Socioeconomic Planning Secretary Arsenio M. Balisacan, however, said that the recovery in the US, a major trading partner of the Philippines, will be a plus factor.

“What could provide an upside support to exports is the continuing US recovery and possibly some respite from Japan, which may realize economic expansion toward end-2015,” Balisacan said. Balisacan shared this outlook on the heels of the Philippine Statistics Authority’s (PSA) release of the preliminary export data for 2014 on Tuesday. Data showed that exports growth grew 9 percent in 2014 to $61.810 See “US growth,” A2

n japan 0.3737 n UK 67.4253 n HK 5.7158 n CHINA 7.0936 n singapore 32.7507 n australia 34.6861 n EU 50.1912 n SAUDI arabia 11.8104 Source: BSP (10 February 2015)

News BusinessMirror

Wednesday, February 11, 2015

news@businessmirror.com.ph

‘MRT 3 buyout plan flawed’ Continued from A8

In response, Sobrepeña said the government is only cutting reserves in the $270-billion economy. “It is unbelievable that they would do such a thing. Imagine spending P54 billion to buy something that they practically owned,”he said with utter disbelief. “The only thing that this initiative will accomplish is delaying the solution.” The amount for the takeover, the businessman said, could already translate to over 100 brand-new light-rail vehicles for the train system, plus a complete overhaul of the line. “Yet they want to spend it to nothing,” he lamented, explaining that the government practically controls the mass-transit system through government appointees in the MRTC’s board. The solution to the chronic problems of the MRT, Sobrepeña said, lies on mutual cooperation. He said the government must be open to the proposals of the private concessionaire to improve the line. “We submitted a new proposal to improve the MRT last month. It involves

the procurement of a total of 96 new train cars, the rehabilitation of the existing 73 coaches, and extend the MRT all the the way to Caloocan. We want to fix the whole line,” he said. The P6.75-billion proposal, he said, would also free the government from paying billions of equity rental payments to MRTC annually. “The proposal is at no cost to the government. We’ll bring back Sumitomo Corp. for the rehab and maintenance and bring back the single point of responsibility for the line. Instead of spending billions of pesos to buy out the private partner, we urge the government to consider our proposal,” Sobrepeña said. He said the current set up of rehabilitating the MRT 3 is, likewise, flawed. Chopping off a P9.7-billion rehab deal to different contractors slows down the process, while increasing the possibility of pointing fingers should one system bog down after another. “The objective is to fix the trains but in the fastest way,” he said. The Filipino company’s proposal with Japanese firm Sumitomo would

also augment the capacity of the line, increasing it fourfold to 1.2 million daily passengers. He allayed fears that the company would increase the fares sharply should its proposal be adopted by the government. “We will not increase the fares sharply. It will be done staggeringly, and will only be equal to bus fares,” the businessman said, adding that he was not in favor of the fare adjustment that took effect on January 4 this year. “I am not in favor of the increase because the service is not good. The increase should only come when the system is fixed and improved,”Sobrepeña said. Aside from the proposal with Sumitomo, the railway company also has a separate offer with Metro Pacific Investments Corp. The local flagship of Hong Kongbased conglomerate First Pacific Co. Ltd. is proposing to shoulder the upgrade costs of the train system and free the government from paying billions of pesos in equity rental payments. The group of businessman Manuel V. Pangilinan, which earlier entered into a partnership agreement with the

US growth. . . Continued from A1 billion, from $56.698 billion in the same period of 2013. This is within the government’s 7-percent to 11-percent target this year. This, despite the 3.2-percent contraction in export growth in December 2014—the lowest since the 3-percent drop recorded in January 2014. Compared to other economies in the region, the Philippines’s full-year exports growth performance was relatively strong despite the challenging external environment. This is a good indication of the growing resiliency of our sectors given that economies in the euro area, Japan and

China remain sluggish, causing regional trade flows to soften,” Balisacan said. Last December, PSA data showed that the decline in the country’s export revenues was largely due to the 52.8-percent drop in revenues from shipments of other manufactures. Revenues from the export of other manufactures, the country’s second top export with a 14.1-percent share, in December only reached $330.51 million from $699.82 million in December 2013. The country’s top export, Electronic Products, kept December exports afloat

corporate owner of the MRT, intends to spend $524 million to overhaul the line. The agreement would allow the firm to invest roughly $600 million to improve the services of the train system. 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 multimillion-dollar 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. “They are planning to submit the proposal within a week or two,” Sobrepeña said. “I’m open to any of the proposals from the private sector. What we intend to do is to upgrade the system.” The government has been struggling to improve the train line. It even failed to procure a maintenance provider twice. The two auctions for the P2.38billion MRT maintenance contract were snubbed by railway companies despite a sweeter deal.

as it accounted for 49.5 percent of total export earnings. Revenues from the export of Electronic Products grew 9.9 percent to $2.377 billion in December 2014 from $2.162 billion registered in December 2013. Among the major groups of electronic products, Components/Devices (Semiconductors), comprised 35.7 percent of the total exports and shared the biggest with export earnings worth $1.712 billion and accelerated by 12.9 percent from $1.517 billion recorded in December 2013. Balisacan further said the sluggish outturns

3-DAY EXTENDED FORECAST FEBRUARY 11, 2015 | WEDNESDAY

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Multinational and local companies like Busan Transport Corp., Mosan-Inekon Phils Ltd. Co., SMRT International Pte. Ltd., Miescorrail Inc., and D.M. Consunji Inc. backed out from the first tender, while none of them even expressed their interest in a much better upkeep deal. Investors were spooked by the glaring defects of the train system, a rail expert said. The government is now looking for other ways on how to successfully procure a reputable maintenance provider for the MRT 3. “No maintenance provider, who, in his right mind, would take the contract, no matter how they sweeten the deal. No one would want to maintain a broken train system,” Sobrepeña said. Government officials were sought for comment on the businessman’s comments and suggestions, but no one replied to the BusinessMirror’s queries. MRT Line 3 has been operating at overcapacity since 2004. Currently, the line serves nearly 550,000 passengers per day. It even reached, at one point last year, the 650,000-daily passenger mark. It has a rated capacity of 350,000 daily passengers.

in coconut products and sugar products pulled down revenues from total agro-based products by 24.9 percent from $388.7 million in December 2013 to $291.8 million in December 2014. “While outward sales of other agro-based products reached $81.7 million, higher by 10.2 percent compared to $74.2 million in December 2013, decline in coconut oil exports drove outward shipments from coconut products to drop from $145.1 million in December 2013 to $79.5 million in the same month of 2014,” Balisacan said.

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assistance to countries fighting against terrorism, like the $200-million nonmilitary contribution Abe pledged last month to six Middle Eastern countries fighting against Islamic State militants. Days later, the militant group demanded Japan pay the same amount in ransom for two Japanese citizens in a hostage crisis that ended with the beheading of both. Abe’s Cabinet last year eased a self-imposed ban on military exports, and adopted a new interpretation of Japan’s war-renouncing Constitution to allow Japan to defend its top ally US or other nations in case of a foreign attack. Parliamentary approval of necessary legislation is still needed for the change to take effect. Japan currently can use force only for its own self-defense. With regional and global security environments turning more severe, the guidelines said no single nation can defend its own peace and stability by itself. “Development assistance is one of most effective tools [in diplomacy] and is significant as ‘an investment for the future,’” the guidelines said. Last year Japan signed deals with the Philippines and Vietnam to provide coast guard vessels to help their patrolling in waters disputed with China. Japan’s official development assistance budget peaked in 1997 at ¥1.17 trillion ($10 billion), but dropped to ¥550 billion ($4.7 billion) by last year, according to government figures. AP

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NORTHEAST MONSOON AFFECTING LUZON. TAIL-END OF A COLD FRONT AFFECTING EASTERN VISAYAS. (AS OF FEBRUARY 10, 5:00 PM)

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Economy

A4 Wednesday, February 11, 2015 • Editors: Vittorio V. Vitug and Max V. de Leon

BusinessMirror

NGCP gets ERC nod to hike revenue ceiling to P43.079B

By Lenie Lectura

he National Grid Corp. of the Philippines (NGCP) has received the nod of the Energy Regulatory Commission (ERC) to raise its maximum allowable revenues (MAR) to P43.079 billion, from P42.507 billion last year. NGCP’s approved maximum revenue translates to an indicative transmission charge of P0.6161 per kilowatt-hour (kWh), down from P0.6416 per kWh last year. “Compared to the MAR 2014, the

effective MAR for 2015 increased by P575.27 million. However, the actual rate impact to the customers is projected to be a decrease, since the percentage increase in billing determinant is higher than the per-

centage increase in the MAR. This is because the higher [is] the billing determinant, the lower [will be] the resulting rate per unit,” the ERC in its 12-page decision. NGCP’s MAR for 2015 will be implemented in its January 2015 billing, the ERC added. The ERC’s order was docketed on January 23, 2015, but was released only on Monday. In the same order, the ERC did not include the performance incentive scheme (PIS) of NGCP, “considering that NGCP has yet to substantiate the same.” NGCP is claiming a PIS of P923.08 million. The PIS provides for rewards or penalties based on certain performance standards. NGCP’s application for MAR and PIS forms part of an annual verification and adjustment of

tariffs allowed under the Electric Power Industry Reform Act of 2001. NGCP is responsible for dispatching electricity from the power plants via its transmission facilities all the way to the distribution utilities (DUs) and electric cooperatives (ECs), which, in turn, distribute power to end-consumers. NGCP earns by charging transmission fees from the DUs and ECs, which are collected from end-users of electricity. NGCP’s transmission charges are for power-delivery service, system operations and metering services. These charges recover the cost of conveying electricity to or from the grid, the cost of system operation services and the cost metering facilities, respectively.

news@businessmirror.com.ph

MRP seen to boost PHL manufacturing growth By Cai U. Ordinario

he government expects the country’s manufacturing sector to post higher growth once the Manufacturing Resurgence Program (MRP) is implemented by various line agencies. National Economic and Development Authority and Socioeconomic Planning Secretary Arsenio M. Balisacan said the MRP will help improve the competitiveness of local manufacturers. “The MRP is expected to rebuild the domestic production base and improve competitiveness through innovation in order to compete in the export market. In addition, the government needs to be mindful of infrastructure bottlenecks, and stability of energy supply, likewise, needs be ensured in order to foster a stable business environment,” Balisacan said. The Philippine Statistics Authority’s (PSA) Monthly Integrated Survey of Selected Industries report showed that the country’s manufacturing out-

put or the Volume of Production Index grew 7.5 percent, while the Value of Production Index grew 4.2 percent in December 2014. Balisacan said this was due to the robust domestic and sustained exports demands for certain products and services, such as printing, beverages, basic metals, wood and wood products. “The Philippine manufacturing sector is on a catch-up phase. Reforms undertaken thus far have helped the manufacturing sector get back on track to a higher-growth trajectory,” Balisacan said. “Moreover, expectations remain high in the first quarter of 2015 due to brighter job prospects, stable prices of commodities, and higher household incomes,” he added. The PSA also said that average capacity utilization in December 2014 for total manufacturing was recorded at 83.6 percent. More than 50 percent, or 11 of the 20 major industries, operated at 80 percent and above capacity utilization rates.

Group pushes for strict oversight on campaign spending in 2016 polls By Catherine N. Pillas

N advocacy group is pushing for the strict oversight of campaign spending in the 2016 national elections, and urged presidential and vice-presidential candidates to open their books for scrutiny.

Gov’t Watch Chairman Raul T. Concepcion warned political hopefuls in a news statement that overspending contributes to corruption because of the need to recover what politicians spent. Moreover, the advocacy group said it is imperative for those running for public office, especially presidential and vice-

presidential bets, to submit a list of their campaign expenditures—specifically their source of funds and campaign donors—in the interest of transparency. The group, likewise, aired doubts on the integrity of the Precinct Count Optical Scan (PCOS) machines, which is now the subject of a petition before the Supreme Court.

The Court last week ordered the Commission on Elections (Comelec) and Smartmatic-Total Information Management Corp. to respond to petitions from citizen-advocacy groups to stop the repair of the 80,000 PCOS units for the 2016 polls. The repair deal, said to cost some P300 million, has been dubbed by the petition-

ers as a “midnight deal,” as it allegedly did not undergo the legal process of public and competitive bidding, among other claims. The group said explanations from the Comelec and the Aquino administration continue to fall short of convincing a huge sector of the voting public.

Economy BusinessMirror

news@businessmirror.com.ph

Wednesday, February 11, 2015 A5

P47.3B allotted Double whammy for consumers for flood-control projects–DBM

Meralco hikes power rates as oil firms raise gas prices

ith the country’s lingering problem on perennial flooding, the Department of Budget and Management (DBM) said it has allocated P47.3 billion for this year to establish flood-control infrastructures that will cover 18 major river basins and areas that are situated below sea level. Budget Secretary Florencio B. Abad said the funds were allocated to the Department of Public Works and Highways as part of the projects that will be included in the overall “Build Back Better” program to make the country resilient amid harsh typhoons and natural calamities. The budget chief also said that a total of P276.9 million was allocated this year to the Metropolitan Manila Development Authority for the flood control and sewerage-management program in Metro Manila. Some projects, Abad said, were funded under the Build Back Better program to protect the environment, as well as neutralize possible environmental issues. These include the Forest Protection Program of the Department of Environment and Natural Resources (DENR) that seeks to neutralize 31 hotspots areas and protect not only the existing forest cover of 6,839,718 hectares but also establish plantations in lands covering 1,005,013 hectares. “To intensify the construction of DPWH’s flood control and drainage projects, a P 47.3 billion budget is allocated. This is among the investments that support the shift to proactive approach rooted on prevention and preparedness,” said Abad in a statement on budget for 2015. He said the Department of Budget Management (DBM) allocated P14 billion to the National Disaster Risk Reduction and Management Fund (NDRMMF), formerly known as the Calamity Fund, to address needs during natural calamities. Abad also said the DBM has released P7.02 billion for the DENR’s National Greening Program to improve carbon sequestration and reduce flooding by planting 225 million seedlings in 300,000 hectare area across the country. The DBM also released P398 million for 2015 to the National Mapping and Resource Information Authority (NAMRIA) for the Unified Mapping Project to produce 1,500 image maps covering 360,000 hectares, including 18 river basins. This project will provide up-to-date geospatial information for zoning and development. He said the government’s total allocation for the Build Back Better Program worth P21.7 billion is an offshoot of lessons learned from the Supertyphoon Yolanda’s devastation in November 2013 that caused massive devastation across the Visayas region. Estrella Torres

By Lenie Lectura

N upward adjustment in power rates was announced by the Manila Electric Co. (Meralco) on Tuesday, the same day when oil firms implemented a hefty price hike in gasoline products.

Electricity bills are going up this month by P0.84 per kilowatt-hour (kWh), or by P168, for Meralco customers with a monthly consumption of 200 kWh. Meralco said all bill components for February will shoot up to P10.51 per kWh. The upward adjustment also translates to an increase in overall power rates by P252 for consumers with a monthly consumption of 300 kWh; P336 for 400 kWh; and P420 for 500 kWh. Still, the overall P10.51-perkWh rate is still lower compared to rates in February 2014, which was at P11.04 per kWh. This month’s rates are, likewise, lower than the average for 2014, which was P10.72 per kWh, Meralco said. A Meralco bill is made up of many charges. The largest component is the generation charge, or the portion of the bill that goes to the generation companies or power producers. This went up by P0.52 per kWh to P5.24 per kWh. The increase in generation charge was mainly due to a P1-per-kWh increase in the rates of generation companies under the Power Supply Agreement (PSA), as capacity fees normalized from a low level in the preceding month. For the year 2014, SPPC-Ilijan, SMEC-Sual and TLI-Pagbilao had not fully utilized their respective outage allowances. Thus, they were able to operate more days resulting in accelerated collection of their fixed annual capacity fees. The remaining unpaid amount of the fixed fees by the December supply month, was thus, greatly reduced. Generation costs also went up due to the lower dispatch of most generation companies. This could, in part, be attributed to the lower demand

in the January supply month, which covered the Christmas holidays and the five-day holiday at the National Capital Region. The January 2015 supply month was, likewise, cooler compared to the December 2014 supply month. Contributing also to the lower dispatch levels were the scheduled outages of Masinloc and Quezon Power, and the forced de-rating of Ilijan. The effects of the lower dispatch levels was partly mitigated by lower fuel prices, so that the fuel component from both PSAs and independent power producers (IPPs) went down. IPP charge registered a net reduction of P0.08 per kWh. Higher incidence of scheduled and forced outages of generating plants during the January supply month, likewise, had an upward pressure on Wholesale Electricity Spot Market (WESM) prices. However, t he higher trad ing prices in the WESM were offset by a reduction of billing adjustments from prior months, so that WESM charges registered a net reduction of P1.15 per kWh. The PSA, WESM and IPP share Meralco’s power requirements, pegged between 47 percent and 49. 4 percent. In addition to the generation charge, the transmission charge also went up by P 0.12 per kWh to P0.99 per kWh. This was brought about by the increase in both the wheeling and ancillary charge components of the National Grid Corp. of the Philippines’s (NGCP) billing. Taxes also went up by around P0.08 per kWh to P1 per kWh, while other charges such as system loss charge and lifeline subsidy increased by P 0.08 per

Downtown handicraft shopping Assorted handicrafts showcasing the Filipino artistry, creativity and culture from all over the

country are showcased the whole year round at stalls under the Quezon Bridge in Quiapo, Manila. The spot is equally famous among bargain hunters and balikbayan alike. Kevin de la Cruz

kWh to P0.55 per kWh and P0.14 per kWh, respectively. The February 2015 billing will also reflect the new FiT-All (Feedin Tariff) charge of P 0.04 per kWh, a uniform charge that will be billed to all on-grid electricity consumers nationwide in support of the Feedin-Tariff Program. This charge will form part of the fund which the National Transmission Corp. will use to pay the FiTeligible renewable-energy developers for the energy they will produce. The FiT Program is a mandate under Section 7 of the Renewable Energy Act of 2008. Meralco reiterated that it does not earn from the pass-through charges, such as the generation and transmission charges. Payment for the generation charge goes to the power suppliers such as the plants selling to Meralco through the WESM and under the PSAs, as well as the IPPs. Payment for the transmission charge, mean-

while, goes to the NGCP. Of the total bill, only the distribution, supply and metering charges accrue to Meralco. Distribution charge remained at P2.20 per kWh. Meanwhile, oil firms separately announced a P2.40-per-liter increase in gasoline products, P2.15 per liter for kerosene, and P1.9 per liter for diesel. The price hike took effect at 6 a.m. of February 10. Oil firms said the upward adjustment reflects movements in the international oil market. Asian benchmark Dubai crude rose by an average of $7.50 per barrel last week over the previous week. The surge can be attributed to weak US economic data and the announcement of oil majors that they will cut capital expenditures for 2015. For February, Dubai crude is averaging $52 per barrel versus the January average of $45.50 per barrel, a 14-percent increase. Moreover, MOPS (Mean of Platts

Singapore) gasoline increased by $8.50 per barrel last week versus the previous week’s average. Gasoline is averaging nearly $66 per barrel in February versus January’s full-month average of just over $57 per barrel. Asian diesel prices, meanwhile, increased by an average of $6 per barrel last week versus the previous week. The increase was supported by lower stockpiles in Japan and demand from other Asian countries ahead of maintenance turnarounds at several refineries. Since the start of the second semester of 2014 when international oil prices started to drop until the first week of February 2015, gasoline and diesel have decreased between P18 and P19 per liter. And since the year started, gasoline prices have decreased four times totaling P3.60 per liter, while diesel has been rolled back five times amounting to a total rollback over P4 per liter.

CA junks bid to halt seizure, auction of MRTC real estate in Mandaluyong By Joel R. San Juan

HE Court of Appeals (CA) has denied the bid of the government to stop the Mandaluyong City government from taking over the properties of Metro Rail Transit Corp. (MRTC) for its failure to pay real-property taxes, amounting to P2.4 billion, covering the period between 2003 and 2005. In an eight-page ruling penned by Associate Justice Noel Tijam, the CA’s Sixth Division held that it has no jurisdiction to decide on the petition filed

caged hearts

by the Department of Transportation and Communications (DOTC) and MRTC, seeking to set aside the orders issued by the Regional Trial Court of Mandaluyong City on September 15, 2006, and March 9, 2007. The trial court, in the said orders, junked the petition filed by the DOTC, seeking the issuance of a writ of preliminary injunction to enjoin the Mandaluyong City government from auctioning off the MRTC properties. The CA pointed out that the Supreme Court ruled in the case of City of Manila v Grecia-Cuerdo that the

Colorful heart-shaped balloons fill the makeshift wall of a flower shop in Dangwa, Manila, known as Metro Manila’s flower capital. The stall owner says balloons and stuffed toys are best sellers, especially during Valentine season in February. ALYSA SALEN

Court of Tax Appeals (CTA) has jurisdiction over petitions for certiorari questioning interlocutory orders of courts or administrative agencies in cases falling within its exclusive jurisdiction. In the said case, the SC held that the CA was correct when it dismissed the petition for certiorari questioning the order of the trial court granting the private respondents’ plea for a writ of preliminary injunction in a local tax case. The CA noted that, under Republic Act 9282, which pertains to the CTA’s jurisdiction, the appellate tax court has jurisdiction to review decisions of the Central Board of Assessment Appeals in the exercise of it appellate jurisdiction over cases involving the assessment and taxation of real property originally decided by the provincial board of assessment appeals. “Indeed, the instant controversy sprung from the city government’s assessment of real-property tax over the trains of Edsa Metro Railway Transit [3.] In our minds, judicial respect to a coequal court and broader interests of justice are served by deferring the resolution of the instant issue to the CTA,” the CA ruled. “In other words, since the appellate jurisdiction over cases involving assessment and taxation of real-properties lies with the CTA, it follows that petitions for certiorari seeking the nullification of intelocutory orders issued in such tax cases should, likewise, be filed before said appellate court,” it added. Concurring with the ruling were As-

sociate Justices Mario Lopez and Myra Carcia-Fernandez. In its complaint for declaration of nullity of real-property tax assessment and writ of preliminary injunction filed against the Mandaluyong city government, the DOTC argued that, since the actual use, possession and operation is with the DOTC, the respondent cannot impose taxes upon it. The case involves real properties in Mandaluyong City that form part of the Metro Rail Transit System, consisting of buildings that serve as MRT 3 stations, railways and carriageways, as well as improvements of the stations. The DOTC added that the issuance of the warrant of levy and the eventual conduct of public auction, and the consequent annotation of any of the proceedings on the tax declaration and or title covering the Edsa MRT 3 properties would be prejudicial to public purpose, thus, should be struck down. On the other hand, the Mandaluyong City government claimed that the provisions of the build, lease and transfer agreement, where the DOTC assumed MRTC’s liability for payment of real-estate taxes is null and void, as it is contrary to law and public policy. It further argued that the Executive department, or any of its agencies, cannot grant tax exemption privileges to a private entity by merely assuming the responsibility for the payment of real-estate tax due on an otherwise taxable property.

Opinion BusinessMirror

A6 Wednesday, February 11, 2015

editorial

A tax-assessment framework applicable to all

government agency going by the rather ponderous name of Philippine Extractive Industries Transparency Initiative (PH-EITI) is doing an important job, and deserves commendation for a task recently completed. The PH-EITI collects, assembles and analyzes tax-payment records of Philippine mining industries, on the one hand, and tax-collection records of relevant government agencies, on the other. It then reconciles these records to produce comprehensive reports on actual taxes paid and collected, with any discrepancy, called unreconciled amounts, identified for future adjudication and settlement.

As conveyed by the news, the PH-EITIs latest report, contained in two volumes launched recently, found that the mining industry in the Philippines paid and the government received taxes amounting to P52.7 billion for the year 2012, with a discrepancy of P52.4 million (less than one-tenth of total collected) for future resolution. That, the P52.7-billion tax collection, is no small amount, but it is not the point of this discussion. The data gathered and reconciled came from 52 gold-, nickel- and copper-mining companies in Mindanao and Luzon, seven national tax-collecting agencies, and 32 local government units’ tax-collecting offices. Aside from imparting transparency to the taxpaying efforts of the mining companies and the tax-collecting activities of relevant government agencies, the PH-EITI information provides solidity to proclamations of good citizenship by the mining companies. At this point in time, when the mining sector in the Philippines is under siege by environmentalists (and by the government salivating for higher taxes), it can use the PH-EITI data as indication of its importance in the development of our economy and the uplift of the welfare of our population. As far as the government is concerned, it can refer to the reconciled information as proof of its efficiency and dedication. Of greater importance, however, is the significance of the work procedure of PH-EITI to the tax-collection system as a whole of the government. Inferred from its description, the PH-EITI’s work procedure is a partial replication of a closed Leontief input-output system, where payments are on the columns and receipts are on the rows. In this system, the cell distribution of collected data shows not just payments made and collected, including conflicting ones, but empty cells, as well, indicating a no-payment, no-receipt situation. The cells immediately suggest the course of action to be taken if the deficiency is to be corrected. Incidentally, the value-added tax (VAT) becomes easily comprehensible when it is cast in an I-O framework. We assume that the Department of Finance uses this framework in its administration of the VAT. Sometimes we doubt it does, because of the nature of some of the issues that crop up every now and then in the course of the VAT’s collection. We suggest that the PH-EITI framework be adopted in the other sectors of the economy. This will not only make life more bearable to the producing entities of our economy, but also convert tax administration into a systematic readily comprehensible enterprise transparent to all interested parties. Since 2005

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Cutting the red tape through ARTA compliance Susie G. Bugante

All About Social Security

epublic Act 9485, also known as the Anti-Red Tape Act (ARTA) of 2007, was enacted to “improve the efficiency in the delivery of government service to the public by reducing bureaucratic red tape, preventing graft and corruption, and providing penalties therefore….” Eight years after, the Civil Service Commission (CSC)—the agency tasked to ensure the proper implementation of and monitor compliance to this law—has gone a long way in carrying out its task. The concept of “red tape” is used today as a noun to describe excessive and complicated regulations in the bureaucracy. The concept connotes complex and time-consuming processes required to get government approval for something. The exact origins of the term “red tape” is not clear but there are stories that, during the 16th century, the Holy Roman Empire of Spanish King Charles V began to use red tapes to bind important documents of government to help them identify them from less important documents. The practice spread to other governments and, eventually, became a symbol of bureaucratic resistance to public access to such documents. Today governments across the world are looking for ways to “cut the red tape,” as it is often seen as a barrier to doing business and en-

trepreneurial competitiveness. Reducing red tape is also demanded by citizens availing themselves of public services. At the home front, the fight against red tape continues but with brighter prospects of winning the battle, when the CSC introduced the ARTA Watch. As the personnel agency of the government, the CSC included compliance with ARTA in the annual performance assessment of government agencies. Simply put, a government agency will not be granted its performance-based bonus if it fails the ARTA Watch. Five core areas were checked in the ARTA Survey of CSC—frontline service, service quality, physical working condition and overall client satisfaction. Two phases of validation were done by the CSC employees, including representatives from

the private sector with some coming from non-governmental organizations. As one of the agencies of the government with the most number of clients (31 million members), the ARTA Watch has been setting its sights on the Social Security System (SSS) for some time now. Last year out of 139 SSS offices surveyed by the CSC ARTA Watch, 138, or 99.2 percent, passed the test. Not bad, considering that the SSS serves different clients across all social strata, with varying standards for customer service. Out of the 138 offices, 27, or about 20 percent, were rated “Excellent.” Obviously, not all SSS offices were surveyed last year, since there are 262 local branches and service offices nationwide as of end-December 2014. Some would argue the results of the CSC ARTA Watch survey, especially those who experienced bad service with the SSS. But with random visits and surprise spot checks done by the CSC and its mystery clients, the ARTA survey results are regarded as credible. Furthermore, a public assistance and complaints counter is a standard setup in SSS branches for clients who were less than happy with the services they received. A Member Relations Department at the head office monitors and addresses complaints filed by members so that improvements can be made and lapses in service delivery can be corrected. Members can also e-mail their concerns to member_relations@sss.gov.ph.

Is Greece Europe’s first domino? By Mark Gilbert Bloomberg View

HAT you make of Greece’s predicament depends on how you think it happened. Greece was either a drug addict whose wealthy friend and enabler loaned it money to buy recreational pharmaceuticals; now, the friend is demanding its money back even though Greece is broke, jobless and trying to kick its bad habits through cold turkey. Or, Greece was a spendthrift who cheated its way into membership in a club where it couldn’t afford the dues, sponged off its friends for years, promised repeatedly to mend its ways and now wants to renege on the accumulated IOUs. Both metaphors have merits, distortions and exaggerations, and the truth has always probably been somewhere in the middle. What’s not ambiguous, however, is that the risk that Greece ends up exiting the euro—an outcome that would have dangerously unpredictable repercussions for all of Europe—has risen exponentially in the past few days. The somewhat schizophrenic nature of the European Union’s (EU) response to Greece’s overtures was reflected in weekend comments from Austrian Chancellor Werner Faymann. “I am not in favor of handing over money to the Greeks,” he said in a newspaper interview. “I do, however, support negotiations over technical credit conditions so that the country will have more room to maneuver to exit the crisis.”

Other officials offered similarly mixed messaging. So even as Eurogroup Jeroen Dijsselbloem said on Friday “we don’t do” bridge loans, French Finance Minister Michel Sapin acknowledged on Tuesday that “we must safeguard the funding, without which Greece will be at the mercy of whatever state of the markets’ panic.” Investors are definitely beginning to panic. Greece’s three-year yield blew past 20 percent this morning with barely a pause as it made its way above 21.5 percent. Just four short months ago, that yield was about 4 percent. EU officials are likely to find themselves castigated at today’s Group of 20 gathering in Istanbul for allowing the risk of a Greek collapse to endanger the global economy. US Treasury Secretary

Jack Lew, tamping down the rhetoric, said on Tuesday that there needs to be a “pragmatic” solution. There seems to be a worrying lack of willingness to compromise—on both sides. Apart from dropping his demand for debt forgiveness, Greek Prime Minister Alexis Tsipras isn’t doing enough to endear himself to his creditors. His speech on Sunday promising to raise the minimum wage and restore previous tax thresholds amounts to writing domestic checks that he can’t afford to cash; demanding World War II reparations from Germany shows a lack of judgment unbecoming of the head of a European government, no matter how new he is to the job. Nobel laureate Joseph Stiglitz, writing for Project Syndicate last week, argued that ignoring the mandate voters have given the new Greek government would seal the EU’s reputation as an undemocratic institution: “Every [advanced] country has realized that making capitalism work requires giving individuals a fresh start. The debtors’ prisons of the 19th century were a failure—inhumane and not exactly helping to ensure repayment. What did help was to provide better incentives for good lending, by making creditors more responsible for the consequences of their decisions. If Europe

Admittedly, there is still plenty of room for improvement in the delivery of service. Serving 31 million members and their beneficiaries is no mean feat. Serving them with excellence is a very big challenge! It is for this reason that the pension fund has been expanding its service network to bring its services closer to its members. Last year 25 new branches were opened across the country, aside from the 13 service offices located in malls and municipal halls, while three new representative offices were opened overseas, bringing the total SSS office network here and abroad to 283. Aside from the physical bricks and mortar, the SSS is also improving its electronic points of service to clients. Members who want to know their contribution record or payment history have the option to enroll in the My.SSS online facility found on the SSS web site, www.sss.gov.ph. More innovations making use of new technology are under way to give members greater convenience and easier access to services. For more information about the SSS and its programs, call our 24-hour call center at (632) 920-6446 to 55, Monday to Friday, or send an e-mail to member_relations@sss.gov.ph. Susie G. Bugante is the vice president for public affairs and special events of the Social Security System. Send comments about this column to susiebugante.bmirror@gmail.com.

has allowed these debts to move from the private sector to the public sector— a well-established pattern over the past half-century—it is Europe, not Greece, that should bear the consequences. Indeed, Greece’s current plight, including the massive run-up in the debt ratio, is largely the fault of the misguided troika programs foisted on it.” He’s right. Greece needs breathing space, and its suggestion to swap existing debt for loans that are tied to its economic performance has merit and deserves consideration. On Wednesday, Greek Finance Minister Yanis Varoufakis meets his peers at an emergency meeting in Brussels. They need to recognize that it’s impossible to predict whether losing a euro member would be a controlled explosion, or a nuclear strike that risks destroying the entire common currency project. The EU needs to take the initiative. It should ignore Greek rhetoric aimed at the domestic political audience, and instead address the very real crisis that Greece is facing. It could run out of money this month without some form of continued assistance that’s both palatable to the new administration, and compatible with the expressed wish of the nation’s voters. Otherwise, the first country to exit the euro may not be the last.

Opinion BusinessMirror

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Why Jordan is Islamic State’s next target

China’s dangerous debt drag William Pesek

Noah Feldman

BLOOMBERG VIEW

ordan’s King Abdullah II was in battle gear last week, quoting Clint Eastwood and bombing Islamic State (IS) targets in retaliation for the horrific burning-alive of a Jordanian pilot. Is this a sign that Jordan is entering the war against the insurgent group in earnest, or is it a temporary show for a stunned Jordanian public? The complicated reality is that Jordan and IS are enmeshed in an extended, dynamic, repeat-play game in which the rules are just now being set. In fact, Abdullah was signaling to IS that if it engages in further public challenges to the Hashemite Kingdom, he’s prepared to devote real resources to the war against the militants. For its part, IS was testing Abdullah by publicizing the video, trying to figure out how vulnerable Jordan’s ever-cautious monarchy is, or thinks it is, to being undermined by an external threat that could easily become internal. The lesson of last week’s exchange of messages between Jordan and IS is that the struggle between them may just be getting started. To see how that struggle is likely to evolve, begin with IS’s strategic interests vis-à-vis Jordan. The shape-shifting entity now has forces within or near the borders of three weak states, one strong state and Jordan. The two weakest states are Syria and Iraq, from which Islamic State has carved out great swaths of territory. The third weak state is Lebanon, where IS could potentially find adherents among radical Sunnis, at the cost of finding itself in a pitched battle with Lebanese Hezbollah and Christian militias. So far, the group has held back from confrontation there. The strong state is Turkey, which IS has no realistic chance of confronting successfully; instead it has taken advantage of Turkey’s ambivalence about a spreading Kurdish state to fight Kurdish forces in the shadow of the Turkish border, as at Kobani. Then there’s Jordan. The state is much stronger than its Levantine neighbors, benefiting from a religiously heterogeneous Sunni Arab population. Its internal fault line has traditionally been between Jordanians of Palestinian origin, who by some accounts make up two-thirds of its population, and ur-Jordanians of tribal origin and (sometimes) continuing affiliation. To simplify a complex history, the Hashemite monarchy has owed its continued existence to a skillful and permanent juggling act between these constituencies. The tribes demand patronage and offer loyalty; the Palestinians offer entrepreneurship and seek influence in return. Without a reliable source of revenue such as petroleum to buy off its population, Jordan has been, and remains, vulnerable to fundamentalist challenges. Remember Abu Musab al-Zarqawi, the feared leader of Al-Qaeda in Mesopotamia, one of IS’s predecessor organizations? He was from Zarqa, a Jordanian town 15 miles northeast of Amman. This city of 700,000 produced not only Zarqawi, who took the town’s name as his nom de guerre, but also a number of other radical jihadis. To IS, then, Jordan offers a potential target of opportunity. The group wouldn’t challenge Jordanian sovereignty directly—for now. But over the medium to long term, it could plausibly strive to delegitimize the monarchy from without and within. It could do so with the mixed strategy of showing the regime’s weakness by killing Jordanians and promoting acts of terrorism within the kingdom. Even if efforts to weaken Abdullah

Abdullah understands perfectly well that he represents a target of opportunity to IS. That explains the aggressiveness of his public response to the pilot’s gruesome death. Abdullah is trying to communicate to IS leadership that there’s no percentage in humiliating him by killing his airmen. IS does not yet pose an existential threat to Abdullah—but if it chose to focus on his regime, it could. failed, IS would still be on the offensive against Jordan, which would be better than the defensive. Jordan is the most likely base from which to stage the efforts of any serious coalition to take on the insurgents. From Jordan’s perspective, IS is unquestionably bad news. The radical destabilization of neighboring Syria and Iraq is perhaps worse for Jordan than any other country. As happened during the birth of the Iraqi refugee crisis, early refugees from Syria came to Jordan with money—but they stayed after their money ran out, and were followed by penniless refugees whose presence further destabilizes Jordan. Some international financial aid has eased the burden, but a country whose population consists in no small part of Palestinian refugees will never take its eye off the refugee problem. A nd Abdullah understands perfectly well that he represents a target of opportunity to IS. That explains the aggressiveness of his public response to the pilot’s gruesome death. Abdullah is trying to communicate to IS leadership that there’s no percentage in humiliating him by killing his airmen. IS does not yet pose an existential threat to Abdullah—but if it chose to focus on his regime, it could. So long as the militants get the message and back down, Abdullah’s interest lies in helping anti-IS efforts without committing himself irrevocably to them and hurting his standing with Sunni Jordanians who may feel sympathy with their Syrian and Iraqi counterparts. Abdullah could have played it cool, hoping that anti-insurgent sentiment would eventually burn out any nascent support. But this would be an extremely risky strategy given the inherent vulnerability of the monarchy to delegitimation. Holding back could easily be construed as weakness, not wisdom. But escalation, even rhetorical escalation, has its own risks. IS may well escalate in return—which would require Jordan to commit more serious and long-term resources against it, possibly including ground troops. This would thrill the US and probably please Saudi Arabia, because both have a desire to fight IS without using their ground troops. IS, of course, knows all this, too—but it might welcome the chance for a limited ground war against Jordanian forces, calculating that survival would turn the group into a permanent, credible regional actor. This isn’t the beginning of the end or even the end of the beginning. As far as Jordan and IS are concerned, it’s the beginning of the beginning.

Wednesday, February 11, 2015

BLOOMBERG VIEW

EW buzz phrases scare economists more than “new paradigm.” If such things existed, Japan would still dominate the world economy, risk would have been eliminated from Wall Street, and the euro would have spread boundless prosperity from Berlin to Athens. So why do so many market observers continue to insist that basic principles of growth and stability don’t apply to China? News that exports fell 3.3 percent year on year in January, while imports fell 19.9 percent—the most in more than five years—don’t seem to have fazed many analysts. Bloomberg China economist Tom Orlik points out that the numbers may have been skewed by pre-Lunar New Year buying last year and a crackdown on misinvoicing of exports to Hong Kong. More broadly, though, optimists are simply convinced that President Xi Jinping will soon introduce more stimulus measures to keep growth ticking above 7 percent. The idea that China can borrow indefinitely, in order to prop up growth, simply doesn’t wash. In a new report on the world’s growing debt glut, McKinsey highlights three huge risks: unsustainably high government borrowing, households in over their heads and China. The

mainland earns its singular position because of another trio of concerns: too much debt concentrated in real estate; the scale and complexity of its shadow-banking entities; and rampant off-balance sheet borrowing by local governments. Driven by the vast shadow-banking sector (which contains at least $6.5 trillion of debt) and a construction boom fueled by local officials, China’s debt buildup accounted for a third of all borrowing globally since 2007. In that period, total Chinese debt quadrupled to $28 trillion by mid-2014, from $7 trillion. China’s public debt now stands at 282 percent of gross domestic product (GDP)— a far higher debt ratio than that of advanced economies like the US, Germany and Australia. Why does that matter? When investors scrutinize China’s balance sheet, they’re looking for immediate threats—what might trigger a true financial meltdown. One could

make the case that with almost $4 trillion of currency reserves, vast state wealth and a controlled financial system, China can head off any crisis by bailing out developers and propping up stocks. Yet, as McKinsey notes, high debt levels don’t just raise the risk of a dramatic crash: They “have historically placed a drag on growth.” The problem is diminishing returns. As Japan proved over the past two decades and Europe confirms, highly indebted nations require ever-bigger stimulus injections to lift GDP. Economists at the International Monetary Fund generally put the drag-on-growth threshold at about 96 percent of GDP—a line China long ago blew past. For an advanced economy like Japan, this poses a difficult problem. For China, which has yet to reach middle-income status and must still lift tens of millions of citizens out of poverty, it’s hard to distinguish from a crisis. Expanding public debt risks suffocating a private sector that’s still in its infancy. The cost of servicing that debt will hog resources that could otherwise be invested in education, health care and productivity-increasing technologies. New airports, six-lane highways and skyscrapers will produce more overcapacity than household demand. What’s the answer? The most obvious is to allow growth to decelerate to the 4 percent-to-5 percent range needed to wean China off excessive investment and debt. That would help purge Beijing’s excesses,

including the rampant corruption Xi has pledged to eliminate. It also would give the government room to rein in state-owned giants, which live off of easy credit. Barring such shock therapy, the government could develop, as McKinsey writes, “a broader range of tools to avoid excessive borrowing and efficiently restructure debt.” Half the loans made since 2007 are linked to the cooling real-estate sector. A wider range of financial products, a broader pool of intermediaries and tax incentives to issue nonproperty debt would reduce risks. Beijing should clamp down on nonbank lending, America’s downfall in the late 2000s. A broader array of debtrestructuring mechanisms—like stronger investor-rights clauses— would curb irresponsible borrowing. China should also employ more so-called macroprudential tools to deflate bubbles. The government could impose tight limits on loan-tovalue ratios and ban risky mortgages like interest-only loans. Finally, Beijing must get serious about improving transparency. Debt reporting is dangerously lax. The list of things we don’t know is daunting: the breadth of shadow-bank lending; how much local-government financing is off the books; the scale of intra-local-government borrowing; the state of unfunded pension and health-care liabilities and the fitness of household finances. The first step to fixing China’s problems is admitting just how bad they really are.

The outlook for the Philippine property market in 2015 By Rodolfo G. Valencia First of two parts

S 2014 drew to a close, I received many queries from friends and colleagues in the business sector and from local and foreign investors about the state of the Philippine property market.

Is it overheating? Is there a glut in any of the market segments? Should we see cautionary signs in the economy? Are we ready for the Association of Southeast Asian Nations (Asean) economic integration? Can we compete with the more advanced real-estate markets? Which investment areas should we be looking at for real opportunities? And so on. The good news—and there is plenty—is that, by all accounts, the Philippine property market remains strong. While there has been a perceptible cooling of the market in the emerging economies, the Philippines has maintained its competitive position. Even the slight decline in the gross domestic product (GDP) in the first three quarters of last year has not dampened the optimism for the country among the

international funding institutions, credit agencies and fund managers. There is clear consensus that the Philippines can easily recover lost ground and resume its former pace of growth in 2015. The optimism is well founded. Take a look at what has been happening in the property market, particularly at the policy and regulatory levels, and at the development of new products and services. All the speculation about the bubble bursting anytime soon has been laid to rest by the timely and decisive action of the Bangko Sentral ng Pilipinas (BSP). To prevent overheating of the real-estate market, the BSP has devised a number of preemptive measures. It has mandated all commercial banks to provide adequate capital requirements in light of their increasing exposure

to real-estate loans—something like a real-estate stress test. The objective is to make sure the banks would be capable of absorbing risks in the event of a shock. The BSP has also proactively seen it fit to release its real-estate price index in 2015. This would enable it to better monitor prices, precisely to avoid possible bubble assets from forming. The demand for choice land in preparation for projects in the pipeline is driving the price of land in the growth areas beyond the 1997 levels. Land values today are breaching the peak prices of land 17 years ago, when the Asian financial crisis struck. But there are no signs of nervousness. Colliers International reports that two parcels of land, both 1,600 square meters (sq m) in Fort Bonifacio, owned by the Government Service Insurance System were sold at a record P500,000 and P458,000 per sq m. It is obvious that property developers have so much confidence in the local property market that they are prepared to bid high for the limited supply of suitable and large enough land in Metro Manila, even if this has the effect of pushing up skyrocketing prices of land in the

growth areas. Then, there is the boom in the retail market. In early 2013 some 170,000 sq m of new retail space entered the market. Of this, some 100,000 sq m is expected to have been completed before the end of 2014. Ours is obviously a consumptiondriven economy, and this is what is fueling the growth of the retail sector. Look at the new malls that opened in 2014—the Fisher Mall and Fairview Terraces in Quezon City; the Century Mall in Makati City; and The District and Unimart Capitol Commons in Pasig City. As more malls are put up, international brands are coming in from everywhere and fueling greater spending. In 2014 more than 250 international establishments—under coffee and restaurants, luxury and business and midrange fashion retailers—entered the Philippines. In mid-October Swedish retailer H&M unveiled its 3,000-sq-m flagship store in SM Megamall, with four more H&M branches set to open before year-end. We cannot help but notice the sudden proliferation of convenience stores all over the metropolis and into the secondary cities in the provinces. In 2012, according to a Wall Street Journal report, only 7-Eleven and Mini Stop controlled the convenience-store market. In recent months, they have been joined by FamilyMart, All Day, Circle K, Alfamart and Lawson. The current forecast is for the number of convenience stores to double, from 2,000 today to about 4,000, in four years. Thankfully, all these are not happening in Metro Manila alone. During my days in Congress and as chairman of the congressional Committee on Housing and Urban Development, we were already sounding the alarm that Metro Manila had breached its carrying capacity, and that it was time to push development to other areas. It now appears real-estate developers are making this happen. To be continued Rodolfo G. Valencia is national president of the Philippine Institute of Real Estate Service Practitioners Inc. and CEO of the RGV Real Estate Group of Cos. This is an abridged version of his speech delivered at the Philippine Association of Local Treasurers and Assessors Inc.’s 82nd Annual Convention and Seminar-workshop on February 3.

2nd Front Page BusinessMirror

A8 Wednesday, February 11, 2015

Retail lenders hike usage of rediscounting window of BSP By Bianca Cuaresma

he country’s thrift units took advantage of the central bank’s peso-liquidity mechanism, and sold P61 million worth of their receivables in January at the rediscounting window of the Bangko Sentral ng Pilipinas (BSP). The continued patronange of the peso rediscounting window of the central bank by the various retail-lending units of the banking system demonstrates yet again the highly liquid state of the financial system as a whole, and the continued refusal by the big universal and commercial lenders to tap the facility to their advantage. Data from the BSP show the rediscounting window having nearly doubled in January, as the small lenders endeavored to take advantage of the BSP facility for their own lending requirements during the period. The central bank on Tuesday said the total availment of thrift and rural banks from the rediscounting window hit P61 million in January. This was 69.4 percent higher than the P36 million the thrift units took from the centarl bank in the same period last year. The peso-rediscounting window helps the banks boost their capacity to lend and, by extension, their capacity to generate profits for their shareholders. This is made possible by allowing qualified banks to obtain loans or advances from the BSP using eligible papers of its borrowers as collateral. A low volume of availment by banks usually indicates an industry that has not much need for liquidity assistance, as they have enough of their own to underwrite their lending operations. An uptick in availment indicates the opposite.

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Taiwan’s Kinpo investing another ₧1.4B to expand Batangas facility

By Catherine N. Pillas

aiwanese electronics maker Kinpo Group, fresh from setting up a P1.4billion facility in Batangas province last year, is now looking at investing an additional P1.4 billion to expand factory operations within the year.

In a statement, Kinpo Group CEO Simon Shen said the company is eyeing to be the main production base of consumerelectronics goods, such as calculators, for a popular Japanese brand. The Taiwanese company already invested P1.4 billion in setting up a new factory in Batangas—to be operated by its subsidiary

Kinpo Electronics Inc.—which will begin operations in March. The investment this year will be used for factory expansion, and is said to account for a hefty 10 percent to 30 percent of the group’s total revenues in the future. The initial setup and the planned expansion are expected to employ 4,000 to

6,000 workers. “We are continuously bringing to fruition the government’s efforts to boost Philippine economic relations with Taiwan, as we welcome more inbound-trade missions from Taiwan and enable businesses like New Kinpo to flourish in the Philippines,” Trade Undersecretary Ponciano C. Manalo Jr. said. With the growth of companies like the Kinpo Electronics Group in the Philippines, Manalo noted that the country is taking part in Taiwan’s move to become a major supplychain source of industries in the region. Taiwan is currently one of the Philippines’s top trading partners, contributing 7.9 percent of the total import bill last October, with import value of $411.58 million. Export receipts from Taiwan for the same month reached $180.20 million, yielding a total trade value of $591.78 million and a trade deficit of $231.38 million.

The Kinpo Group’s previous investments in the Philippines include the project of its subsidiaries, such as AcBel Polytech Inc., for the manufacture of lightemitting diode lighting and smart grid solutions; and CalComp Electronics and Communications Co., for the production of handsets, printers and liquid-crystaldisplay televisions. Kinpo Electronics Inc. is a leading global original-design manufacturer and electronics-manufacturing services partner. At present, the group has a total of 96,000 employees worldwide and has 23 subsidiaries, seven of them publicly listed. New Kinpo Group Technology is one of the major subsidiaries of Kinpo Group. The group produces a wide range of consumer-electronics products , such as calculators, printers, 3D printers, external hard-disc drives, modems and motherboards for brands like HP, Toshiba, Western Digital and Casio.

Japan OKs new aid policy to gain more global clout

eeking more assertive diplomatic and national security role internationally, Japan’s Cabinet on Tuesday adopted new guidelines for international aid that, for the first time, clearly state that it will allow provisions for foreign armed forces, although limited to nonmilitary purposes. And the guidelines say Japan should prioritize aid to Southeast Asia to strengthen cooperation amid China’s growing presence

in the region. It says Japan should spend aid money more effectively to serve its national interests amid limited budgets and sporadic efforts to boost Japan’s economy. Japan, for instance, plans to continue assistance for Caribbean island-countries, many of them supporters of Japan’s campaign for commercial whaling, a Foreign Ministry official said on condition of anonymity, because he made

the comment before the official release of the guidelines. The changes, the first in 12 years, are in line with Prime Minister Shinzo Abe’s push to bolster Japan’s international role in diplomacy and national security. “Taking into consideration that armed forces are increasingly playing major roles in postconflict reconstruction and disasterrelief efforts, we specified our policy regard-

ing nonmilitary projects,” Foreign Minister Fumio Kishida told reporters. The guidelines say Japan’s pacifist aid policy remains unchanged and that each provision will be scrutinized carefully, although it raised concerns about whether Japan can ensure that the money is not funneled into military use. Japan will also expand humanitarian Continued on A2

Ilocos triathlon Trisports Inc. (TSI) formalizes its partnership with the BusinessMirror as its official media partner for its upcoming Tri Ilocos North 3 triathlon event on March 28. Leading the agreement signing are (from left) TSI Marketing Associate Bea Grabador, TSI Marketing Head Carlo Sampan, TSI President Mikey Chua, BusinessMirror Publisher T. Anthony Cabangon, BusinessMirror Advertising Sales VP Marvin Estigoy and BusinessMirror Events Officer Carlo Abalos. ALYSA SALEN

‘MRT 3 buyout plan flawed’ Continued from A1

lamented during an interview with the BusinessMirror. The 15-year-old mass-transit system, which ferries more than half a million passengers daily, has been in a state of decay. Passengers frequently complain of long queues caused by the lack of light-rail vehicles. The public was also outraged by the MRT’s inefficient ticketing system, humid train cars, faulty elevators, and escalators, and rude tellers. But what is more alarming, Sobrepeña said, is the overall state of the once-mighty train system. “The train system already poses security risks to passengers,” he said, citing the findings of the asset evaluation conducted by experts from Hong Kong’s MTR Corp. Ltd. Nine rail specialists concluded

that the line is already exhibiting signs of obsolesce, hence improvements must be made in order to address the risks posed to the lives of commuters. In order to address the persistent woes of the train system that connects the northern and southern corridors of Metro Manila, the Department of Transportation and Communications (DOTC) wants to buy the concessionaire out through a P54-billion takeover deal. But buying out the MRT Corp. (MRTC), Sobrepeña said, would never address the problems of the line. Instead, it only worsens the condition of the train system, as it delays the muchneeded upgrades that were supposed to be rolled out about a decade ago. “What they are doing will resut in loss of lives. I’m telling you, everything in the equity-value buyout is wrong. It is legally flawed,” he said.

The deal that the government is pursuing, he said, would only provide for the exchange of money from one government agency to another. “The P54-billion budget is only enough for the 80-percent economic interest held by the two governmentowned banks. It does not include the remaining 20 percent, and the equity in MRTC,” Sobrepeña explained. Congress took his word. The budget for the buyout was initially included in the P2.6-trillion appropriations this year. It was, however, slashed out, after lawmakers found the initiative as having no “economic value.” With no funding for the takeover deal, Transportation Undersecretary Jose Perpetuo M. Lotilla has said his agency is now considering tapping the local debt market to bankroll the multibillion-peso initiative. Continued on A2