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Thursday, October 9, 2014 Vol. 9 No. 362

P25.00 nationwide | 17 sections 80 pages | 7 days a week

B.S.P. MAY PAUSE MONETARY ADJUSTMENTS AS INFLATION TARGET NOW APPEARS SAFE

Sept inflation provides breather

INSIDE

7 TIPS TO HELP TRAVELERS FLY LIKE A PRO Do them now

ear Lord, one day we will wake up and find out there won’t be anymore time to do what we always wanted to do. Please allow and inspire us to do them now. Like saying, “ I love you” to those who you think would happily wish to hear it from you. “Take this amount, it might help in some way.” To anyone who you think need cash now. “I can give You a lift if there is no way to get there” to anyone wanting to be assisted. “I am listening, You may pour out to me what is bothering you so much and we can pray over your burdens.” Oh, Lord, help us to continue do some acts of mercy for the love of You. amen! rick warren and louie m. lacson Word&Life Publications • teacherlouie1965@yahoo.com

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

Life

auTumn shOws ITs True cOLOrs

BusinessMirror

7 tips

to help travelers fly like a pro

St. Louis Post-Dispatch

urely, there are people out there who love to fly. I’m not one of them. I tolerate flying. If it gets me from point A to point B quickly, then it’s a good thing. But it’s not fun. SmarterTravel.com just released a list of tips to help travelers fly like the pros. Some of them are more like reminders, but good ones to have as we head into fall and the coming holiday travel season. 1. When traveling with a companion, book the window and aisle seats. When you’re flying with someone else, book one window seat and one aisle seat in the same row. The middle seat is usually the last one that passengers want, so if it remains empty, you’ll end up with lots of extra room. This won’t work if the flight is full or almost full, but you could always offer your window or aisle seat to the person who takes the middle seat, and end up sitting next to your travel buddy. 2. Ask the gate attendant to check your carryon. If you don’t mind waiting for your bags at baggage claim, ask the gate attendant to check your carry-on bag, especially if the flight is full or nearly full. That way, you won’t have to fight for space in the overhead bins, and when you navigate through the airport after you land, you’ll have fewer things to lug around with you. 3. use a few different browsers and/or devices when searching for flights. It’s been said that sites deposit “cookies” on your device that can track your interest in a particular flight. Try deleting your

ell-behaved consumer goods prices in September allowed the central monetary authority a level of confidence the country’s inflation will fall securely within the target for the year, enough to warrant a pause in its growth-boosting drive to push local output, measured as the gross domestic product (GDP), still higher or within the projected path this year.

>> D2

Thursday, October 9, 2014

By Amy Bertrand

cookies or even using a couple different browsers or devices when searching for flights to ensure you’re finding the most accurate price. 4. Order one of the airline’s “special” meals. When you want to get as much sleep as possible on a flight, consider ordering one of the airline’s “special” meals, which are usually served and cleared first. 5. Keep your belongings with you. In-flight theft is more common than most people realize. If you put your things in an overhead bin, keep the most important items—your wallet, passport and any highly valuable items—with you, even if you take a quick trip to the bathroom. Also check on your stored items right before the plane lands. If you do find that something of yours has gone missing, you can alert the flight attendants and handle it before any other passengers have left the plane. 6. Book a seat a few rows back from the bulkhead seats. Mothers of small children usually book bulkhead seats, so book yours further away to avoid a screaming, unhappy baby. 7. Be the last person to board the plane. If you don’t care about having to check your carry-on bag at the gate, try boarding the plane last. There might not be an abundance of space available in the overhead bins, but you’ll be able to spot any empty rows or side-by-side empty seats to give yourself more space. If you have carry-on luggage but don’t want to risk losing space overhead, wait until 10 minutes before boarding starts and ask the gate attendant if there are any seats with empty ones next to them. Those seats probably won’t fill up at that point, so you could move to one of the open ones.

life

PATIENtLY WAITING Sports BusinessMirror

| Thursday, OCTOber 9, 2014 mirror_sports@yahoo.com.ph sports@businessmirror.com.ph Editor: Jun Lomibao

PATIENTLY WAITING Oscar de la Hoya is still optimistic Floyd Mayweather Jr.Manny Pacquiao will eventually happen, especially now that he has “ended boxing’s cold war” and made up with his former promoter and nemesis Bob Arum, chairman of Top Rank Promotions, which handles Pacquiao.

By Bob Velin

USA Today

CLEAN, Virginia—The fight the world has begged for since they were, well, much younger— Floyd Mayweather vs. Manny Pacquiao—remains faintly on Oscar de la Hoya’s radar. The Hall of Fame boxer and founder of Golden Boy Promotions (GBP), who runs the day-to-day operations of the company named for the former Olympic gold medalist, has handled most of Mayweather’s fights since the two fought in 2007. That fight, won by Mayweather by split decision, sits in de la Hoya’s craw. He’s never wavered from the belief that he won. He’s still optimistic Mayweather-Pacquiao will eventually happen, especially now that he has “ended boxing’s cold war” and made up with his former promoter and nemesis Bob Arum, chairman of Top Rank Promotions, which handles Pacquiao. “Like every fan out there, I’m waiting patiently,” de la Hoya told USA TODAY Sports. “But my patience is starting to run out and now I’m smiling over Cotto-Canelo, which I know can fill that void.” Cotto-Canelo is a matchup de la Hoya and Arum are working to put together for next year— middleweight champion Miguel Cotto (39-4, 32 KOs) versus former junior-middleweight champ Canelo Alvarez (44-1-1, 32 KOs). Maybe the biggest chapter in the rich Puerto Rico vesus Mexico rivalry. “When Cotto-Canelo gets made, I see no reason why it can’t come close to the 2 million mark in pay-per-view buys,” de la Hoya said. “Yes, you have to give credit to Miguel Cotto, he’s a great fighter. But you bring in the Canelo factor and it brings pay-per-view fights to a whole new level.” Alvarez, Golden Boy’s meal ticket, recently signed with HBO, a major move for the promotion, which had been all but banned from the network and had worked almost exclusively with

Showtime in recent years. Alvarez, whose loss to Mayweather last year was the highest-grossing fight of all time at more than a $150 million, wants to fight on Cinco de Mayo and Mexican Independence weekend. As long as Mayweather is fighting for Showtime, those dates are reserved for him. Canelo asked to move to HBO, and de la Hoya made it happen, assuring his 24-year-old star remains happy. De la Hoya isn’t sure his company will handle Mayweather’s last two fights with Showtime, even though he says it would be great. “But if we never promote Mayweather again, well, you live another day,” de la Hoya said. “We are proud to be promoting the present and future of boxing, and that’s Canelo Alvarez.” De la Hoya touched on a number of issues during a wide-ranging interview: On ending boxing’s cold war: “There’s exciting fights to be made and we have a lot of work to do. But the fact that we’ve knocked on the door, and the door has opened, with HBO, with Bob Arum, there’s no more cold war going on. We’re now on speaking terms with Bob. It’s a great start. Rome wasn’t built in one night, but I’m confident and optimistic we can start making these big fights and finally granting the fans’ wishes for these mega-fights.” On Deontay Wilder (32-0, 32 KOs), one of Golden Boy’s top fighters, on getting a title fight with heavyweight champion Bermane Stiverne: “[The fans] want to see a guy who knows the value of being heavyweight champion. We know he can fight. The thing is, heis a nice guy. That’s what America wants to see, nice guys succeed.” On working with legendary Don King, who promotes Stiverne: “I remember calling him to start negotiations with Stiverne. I called him and said, ‘Hello Don?’ I didn’t speak for the next 20 minutes. He talked about Emiliano Zapata, he talked about different regions of Mexico, he mentioned how much he loves tortillas. That’s Don for you. It’s been a fun struggle to get things

done. But I’m very optimistic we can get this done first. That’s the most important thing.” because it’s very important for boxing. Don wants On how he’s feeling since going through rehab to see this fight happen, we want to see this fight for his addictions, comparing it to athletes who happen, so I think we can make it happen.” have been injured and go through a rehab process: On light-heavyweight champion Bernard “I’m telling you the best thing that ever happened Hopkins, who stood by de la Hoya after former GBP to me in my life was going get that help. The best CEO and Hopkins friend Richard Schaefer resigned thing I could ever do in my life was to admit that earlier this year: “Bernard Hopkins is my partner I am hurt, that, yes, my ankle does hurt and my 100 percent. He’s in my corner, I’m in his corner. elbow was in pain. Let me go and make sure it’s We understand the game. We not only understand strong, and wow, my life today is just amazing. what it takes to be a fighter, but how to deal with I feel great, I feel strong, I feel motivated, I feel change in boxing. And change in boxing can be very as if I’m training for the Olympics once again, scary.... We understand the goals we have set for for that gold medal. That was the ultimate. And each other. If you take care of the fighter and get for me to have that experience once again, I feel him the fights he wants, everybody wins.” like nothing can stop me...I feel happy, I feel that On welterweight Amir Khan’s chances of passion once again for the sport. This is my life, securing a fight with Mayweather: “I believe it this is what I love doing.” will happen. I’ve been talking to Amir. He wants On Hall of Fame hopes a second time, as a the fight. He believes he has the style, the ability promoter: “This is what I love doing, being involved to surprise Mayweather. Amir is a guy who is in boxing and being part of the growth of the sport. already an icon in the UK. He throws a lot of fast My ultimate goal today is to become a hall of famer combinations and he moves. He’s quick, he has as a promoter. And the way I’m going to get youth behind him, we feel it could be a very good there is by making the fights the fight. It’s a matter of when and where.” fans want to see.” On Schaefer leaving the company earlier this year and the court battle over that departure: “Look, he resigned on me several months back. I have a binding contract that runs until 2018. So there’s a little dispute, but things can be worked out. I’m not going to keep anyone from making a living, but at the same time, I’m going to protect what I believe is right.” On the rumored move of Schaefer to Mayweather Promotions: “My sole focus is on Golden Boy Promotions and the fans. As long as we can focus on our business, it doesn’t matter what Bob Arum is doing, or Don King is doing, or what Mayweather Promotions is doing. As long as we make the fights that fans want to see, we’re going to be OK. My business philosophy OSCAR DE LA HOYA: But my patience is is to focus on the work at hand and don’t starting to run out and now I’m smiling worry about anyone else. I wish them all the over Miguel Cotto-Canelo Alvarez, best—whoever wants to make the best which I know can fill that void. AP fights. Just make sure you put the fans

sports

By Bianca Cuaresma & Cai Ordinario

the days of big rains

On Wednesday the Philippine Statistics Authority (PSA) reported inflation having significantly slowed in September to only 4.4 percent, from 4.9 percent in July and August. Compared against year-ago data, this represented an acceleration from 2.7 percent. This also brought the ninemonth inflation rate to 4.4 percent, higher than the 2.76 percent seen in the same period last year. While arguably at the higher end of the government’s 3-percent to 5-percent target, this was clearly within the target for the year. “Inflation for September, at

4.4 percent, falls squarely within our forecast of 4.1 percent to 4.9 percent. This puts the year-todate average at 4.4 percent, giving us more confidence that the 2014 full-year average will be within target,” Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. said in a text message to reporters on Wednesday.

Breathing room

The DBS Bank, in a note to clients, said lower inflation in September helped provide “breathing room” for the central bank to maneuver, when the policy-making Monetary Continued on A16

Emperador Brandy soon made in Tan’s vineyard in Spain By VG Cabuag

health&fitness

mperador brandy, the flagship liquor brand of billionaire Andrew L. Tan, will soon be produced in the company’s vineyard in Spain. Emperador Inc. said in its disclosure to the Philippine Stock Exchange that its brandy, which it claimed to be one of the world’s best sellers, will be produced in Toledo, Spain, and will employ the most-advanced technology in Span. The brandy is currently being produced in the Philippines. “With its modern and technologically advanced design, Emperador’s vineyard in See “Emperador,” A2

PESO exchange rates n US 44.6980

East Gallery Place Ayala Land Premier Head Jose Juan Jugo points at the scale model of the East Gallery Place in Bonifacio Global City. It is scheduled for turnover by 2019. NONIE REYES

IMF TRIMS FORECAST FOR GLOBAL GROWTH

he International Monetary Fund (IMF) slightly lowered its outlook for global economic growth this year and next, mostly because of weaker expansions in Japan, Latin America and Europe. The IMF said on Tuesday that the global economy will grow 3.3 percent this year, one-tenth of a point below what it forecast in July. World growth should then pick up to 3.8 percent in 2015, two-tenths of a point lower than its previous estimate, the IMF said in the latest installment of its World Economic Outlook. The global lending organization has a more optimistic view of the US economy, which it expects will See “IMF,” A2

PAL ordered far too many planes–Bautista By Lorenz S. Marasigan

LAG carrier Philippine Airlines (PAL) is revisiting its $9.5-billion massive fleet-modernization program, as the company “ordered far too many planes” when it was under the management of San Miguel Corp. (SMC), a ranking official said. Jaime G. Bautista, the legacy carrier’s general manager, said part of his company’s considerations to rationalize the deal is to defer the delivery of a number of planes from

BAUTISTA: “We have to accept the fact that the previous management ordered far too many planes, and we have to see how we can use them efficiently.”

French aircraft maker Airbus. “We have to accept the fact that the previous management ordered far too many planes, and we have to see how we can use them efficiently. Our planes are far too many, that’s Continued on A2

n japan 0.4138 n UK 71.9504 n HK 5.7646 n CHINA 7.2804 n singapore 35.0710 n australia 39.4093 n EU 56.6100 n SAUDI arabia 11.9156 Source: BSP (8 October 2014)

News BusinessMirror

Thursday, October 9, 2014

Emperador. . . continued from a1

Toledo is expected to yield approximately 30,000 kilos of grapes per hectare. This is equivalent to five times the average yield of a typical Spanish vineyard,” José Ramón Lissarrague, a Universidad Politécnica de Madrid professor with over three decades of agricultural engineering expertise. Lissarrague is part of a team tapped to develop the best implementation strategies for the vineyard. He has worked for many years with González Byass, one of the largest sherry, wine and brandy producers in Spain. “Unlike traditional Spanish vineyards, Emperador’s Toledo vineyard features state-of-the- art technology called Precision Viticulture, which is focused on promoting the high production of grapes while reducing production cost per kilogram,” the company said. Economies of scale are essential to Precision Viticulture, which means large quantities of land and water

IMF. . . continued from a1 grow 2.2 percent this year, up from an earlier forecast of 1.7 percent. Its forecast for a 3.1-percent growth in the US next year was unchanged. Still, the global lending organization warned that the US, Europe and Japan could face years of sluggish growth unless governments take steps to accelerate activity. It acknowledged that it has frequently cut its forecasts in the past several years, and said that was partly

are required. Emperador’s vineyard is approximately 500 hectares in size. The water necessary to the vineyard is amply supplied by the Tajo River, the longest river in the Iberian Peninsula stretching across Spain all the way to Portugal. “Aside from advanced technology, location plays a vital part in the success of the vineyard. Toledo, the medieval capital of Spain, is located in La Mancha, the biggest wine- producing region in the world. Its weather conditions are ideal, with the hot and dry climate helping ensure plant vigor,” tthe company said. Since 2013, Emperador has acquired over a thousand hectares of prime vineyard land in Spain. Emperador is looking at doubling its net income in three years from last year’s P5.8 billion in profit. “This will be made possible with the planned expansion of Emperador domestically and globally. The expansion is in line with

Emperador’s strategy of diversifying and strengthening its liquor-product portfolio, as well as its ‘premiumization’ strategy in the liquor industry,” the company said. The company, famous for its namesa ke Emperador brandy product, said it wants to corner at least a third of global brandy sales in about five years, while further expanding its lead in the domestic liquor market. At home, Emperador sells seven of 10 liquor bottles in Metro Manila, but it still has to expand its market to other parts of the country, such as in the Visayas and Mindanao, where its brandy is not recognizable as in Metro Manila. For the first half of the year, the company’s net income dropped to P3.06 billion, from last year’s P3.17 billion, as sales of goods were down by 2 percent. Revenues totaled P13.25 billion this year from last year’s P13.99 billion.

because of slower long-run growth in advanced economies. “The recovery continues, but it is weak and it is uneven,” Olivier Blanchard, chief economist at the IMF, said in a news conference. Blanchard warned that low interest rates have made inves tors “too complacent” in the advanced economies, particularly about the uncertainty around interest rates in the US. That could

trigger sharp falls in financial markets, especially if rates rise faster than expected. US Treasury Secretary Jacob Lew had stronger words for the rest of the world. While the US took decisive steps after the 2008 financial crisis to bolster its economy, other nations haven’t been as aggressive to solve their own economic problems, he said on Tuesday. AP

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PAL ordered far too many planes–Bautista Continued on A1

why we really have to check whether the market requires all these planes,” he told reporters on late Tuesday. He noted that the Tan-led carrier will come up with a firm business plan within the month, to outline what steps the new management would take to overhaul its competitive strategy. “We will have to discuss with Airbus. We can defer the delivery, but of course, there will be costs if we do that,” Bautista added. When the most-diversified conglomerate in the Philippines entered into the legacy carrier, it ventured into a $9.5-billion fleet-modernization program that involved the delivery of 84 airplanes from Airbus, comprising of a mix of A330s, A321s and A320s. “The challenge for us now is how to fully utilize these planes, that is why we have to look for markets and new destinations,” the executive, who is set to be reinstated as the president of the airline, Bautista said. The next biggest destination for PAL, he noted, is the East Coast in the US. Plans to fly to other European destinations, such as Amsterdam and Rome, are shelved at the moment. “We want to focus on profitable routes, and the US is a very promising route for PAL, especially now that we are out of Category 2 and we are operating our new Boeing 777-300ER, which will result in very efficient

operations in terms of fuel consumption and maintenance,” Bautista said. The Lucio Tan-led carrier will start flying out of Manila to New York via Vancouver in March. Earlier PAL President and COO Ramon S. Ang said the airline will expand its European destinations to include Amsterdam and Rome this year. Ang, who also sits as the president and CEO of SMC, will bid good-bye to the carrier’s management sometime this month, after he agreed to sell his 49-percent stake in the airline to Tan, the majority shareholder. PAL Holdings successfully dished out an income backflip, after it posted a net profit of P1.49 billion in the second quarter of 2014, from a net loss of P1.08 billion in the same three-month period in 2013. In the same comparative periods, revenues of the airline operator rose by 47.4 percent, to P27.30 billion from P18.52 billion, while operating expenses climbed by a slower P31 percent, to P6.04 billion from P19.47 billion. The firm attributed the growth in earnings last quarter to the favorable passenger revenue performance during the said period, driven mainly by the introduction of new routes such as London, Abu Dhabi, Damman, Riyadh, Canton and Haneda in Japan. As of end-June its fleet is composed of 85 aircraft composed of six Boeing 777-300ER, four Boeing 747400, five Bombardier DHC 8-400,

four Bombardier DHC 8-300, 10 Airbus A340-300, 18 Airbus A330-300, 7 A321-231, 28 Airbus A320-200, and three Airbus A319-100. “We’re taking delivery of the 30th aircraft this November, another 10 next year and 10 more in 2016,we really have to check the market environment,” Bautista said on Tuesday night after the arrival at the Ninoy Aquino International Airport Terminal 3 of the Emirates superjumbo jet A380. “We are focused on the old routes. When you talk of operations, we talk of long-, medium- and shortrange operations. Of course, we always want to operate the profitable routes,” Bautista added. He admitted that PAL needs more strategic partners to be more competitive, saying they have already signed an alliance with Etihad Airways, while a partnership with All Nippon Airways would be made effective on October 26. “That’s the trend now in the airline industry instead of flying more routes,” Bautista said. “We hope we can be profitable this year. For the last two years, PAL has been losing, and even for first quarter, PAL also reported losses.” “Of course we have to look at the market, demand, competition, and also the resources of the company, today we have to accept the fact that we have many airplanes on order and our plan is to see how we can use this efficiently.”

THE Veranda from Canyon Park Artist’s Perspective

THE VERANDA AT ARCA SOUTH SELLS OVER P1B IN FIRST TOWER LAUNCH

LVEO Land marks another successful milestone with the launch of its flagship development The Veranda in Arca South, the latest central business district (CDB) development of Ayala Land. The Veranda’s first tower launch recently sold over 70% of its inventory worth approx. P1.17 billion in one day. “The remarkable success of The Veranda firmly sets Alveo’s strong foothold in the much anticipated ARCA South CBD of Ayala Land,” said Alveo Land president Robert Lao. “Most importantly, we are pleased with the affirmation that today’s homeseekers continue to support and believe in our vision for innovative city living.” added Lao.

Visionary urban destination

ARCA South is the P80-billion township project of renowned real estate developer Ayala Land in the former Food Terminal Inc. (FTI) property. Its strategic location in Taguig City makes ARCA South a vital crossroads of two of the biggest and most important CBDs in Metro Manila also developed by Ayala Land— Makati via the South Luzon Expressway, and Bonifacio Global City via the C5 highway. ARCA South encompasses 74 hectares, with its holistic mixed-use masterplan including retail and commercial establishments, apart from residential and office property developments. Living at working at ARCA South will be characterized with efficiency and fluidity, brought about mainly by intuitively planned environments, efficiency energy use, pedestrianization, refreshing streetscapes and generous urban gardens, and a highly networked intermodal transport system.

Shifting focus to innovation by Alveo Land

The Veranda provides the perfect opportunity for today’s breed of upwardly mobile professionals and urban dwellers to enjoy an innovative, modern work-life environment in ARCA South. The residential condominium development, which is planned to have four towers, will rise in one of

the most advantageous areas of the upcoming masterplanned district, located in the burgeoning city of Taguig. Tucked in the quiet side of ARCA South, residents will enjoy a daily retreat nestled within a twoblock parcel of property, fronting Canyon Park. The condominium project is also mid-rise and low-density, with a choice of efficiently designed studio, one- and two-bedroom unit configurations. Intimate-scaled amenities and landscaping comprising up to 40 percent of the land area, further adding to the sense of intimacy and community. Most importantly, The Veranda is the first Alveo development to introduce a proprietary design and building technology known as the Aeroflux System. From the Latin words aero (air), flux (fluidity), and lux (light), the system revolutionizes condo living in the city as it creates breathable and naturally illuminated spaces by maximizing air circulation and natural light dispersion. With the iconic bifurcated building design of Aeroflux, The Veranda is able to create an atrium and a central landscaped garden that will bring natural illumination and ventilation throughout the development. Shared green spaces complement the atmosphere, as well as prized park views. “With Alveo being the standard-bearer of innovation in Philippine real estate under the expertise and reach of Ayala Land, The Veranda is a glimpse of the modern city lifestyle distinct to ARCA South.” concluded Lao. For more information, visit www.alveoland.com.ph, email info@ alveosales.com.ph, or call (632) 8485100 (Metro Manila) and 1-800-108485100 (outside Metro Manila). Model units are available for viewing at the G/F ALVEO Corporate Center, 728 28th Street, BGC, Taguig City.

ARCA South Artist’s Perspective

THE Veranda 2-Bedroom Living and Dining Area Artist’s Perspective

THE Veranda Master Bedroom Artist’s Perspective

The Nation

A4 Thursday, October 9, 2014 • Editor: Dionisio L. Pelayo

BusinessMirror

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‘Bangsamoro to control power, Manila ports back to normal water resources in Mindanao’ I

By Jovee Marie N. dela Cruz

ZAMBOANGA City lawmaker on Wednesday urged the government peace panel and the House of Representatives’ ad hoc committee on the Bangsamoro basic law (BBL) to address the issue of control of water and power resources in the soonto-be established Bangsamoro region.

Laban ng Demokratikong Pilipino Rep. Celso Lobregat of Zamboanga City, during a House hearing on BBL, said the proposed law does not provide clear guidelines on which agency will control the water and electricity sources from hydropower plants in Lake Lanao.

He also expressed concern that Mindanao will be at the “mercy” of Bangsamoro, saying the matter may result in chaos in the new juridical entity that will replace the present Autonomous Region in Muslim Mindanao (ARMM). “The proposed law talks about

certain exclusive powers of the Bangsamoro government, such as over power generation, transmission and distribution. That’s why I think many of the congressmen inside and outside the [proposed] Bangsamoro [area] are now taking a closer look at the BBL because it will not only affect the people and residents of the Bangsamoro, but also people outside of the Bangsamoro, the entire Mindanao,” Lobregat said. Lake Lanao is the source of Agus hydroelectric plants, where Agus 1 in Marawi City has a generating capacity of 80 megawatts, while Agus 2 in Saguiran, Lanao del Sur, has a capacity of 200 MW. Under House Bill 4994, or the proposed BBL, the so-called intergovernmental relations is the one that will decide during a crisis situation in Bangsamoro region. “I could not help…historically,

Mindanao enjoys low power rates, and we will depend on intergovernmental relations. Who will decide? The entire Mindanao will be at the mercy of Bangsamoro. DOE [Department of Energy] was not consulted, not on Lake Lanao and not on electricity? What is the government agency that will regulate?” Lobregat asked. He said Mindanao, which is enjoying cheaper power rates because of Agus-Pulangi hydropower complex, will be affected if the new government will establish new power plants and take control of the operations of existing and new plants. Under the bill, the Bangsamoro government shall have authority to regulate power generation, transmission and distribution operating exclusively in the Bangsamoro and not connected to the national transmission grid.

Old cars to get new license plates in 2015

HE Land Transportation Office (LTO) will start issuing new license plates to vehicles that are already registered next year, LTO chief Alfonso Tan Jr. said on Wednesday. Tan said motor vehicles due for renewal until the end of the year will be registered with their old car plates, which will be re-

placed after three years. “Meaning, in three years or by 2018, all vehicles are expected to have new [license] plates,” Tan told the Philippines News Agency in a chance interview after the budget hearing of the Department of Transportation and Communications at the Senate.

The LTO chief reminded that the registration of motor vehicles is good for three years. Tan said the LTO started issuing new license plates middle of this year, but to brandnew cars only. Meanwhile, Tan told the Senate Committee on Finance, chaired by Sen. Chiz Escudero, that

electronic bikes (e-bikes] need not be registered with the LTO these have no motor engines. “We are still studying the possibility of asking e-bike owners to register their vehicles, Mr. Chairman, and we might come up with the recommendation within the month,” Tan told the committee. PNA

By Recto Mercene

nternational Container Services Inc. (ICTSI) and Asian Terminals Inc. (ATI) were models of efficiency and orderliness when government representatives visited the two sites on Tuesday in an attempt to determine whether the country’s major ports are prepared to deal with the onrush of arriving goods during the holiday season. The government observation team was led by Sen. Bam Aquino, who went to the ports along with Trade Secretary Gregory L. Domingo and Secretary to the Cabinet Jose Rene D. Almendras. On September 13 Manila Mayor Joseph Estrada issued an order lifting a truck ban in the city, which he had earlier imposed in February to solve the traffic and vehicular congestion in the metropolis. P res ide nt A qu i no e a rl i er blamed the truck ban for port congestion, which led to monster traffic jams and caused the government to incur billions or pesos in economic losses. The government officials, accompanied by port executives, made a three-and-a-half-hour tour of the two sites, and found thousands of cargo containers neatly stacked. There were no speeding trucks or vehicles to be found, although ICTSI and ATI officials said Tuesdays are “slow” days, coupled by the fact that the business activity had

just gone through a long, three-day vacation. Hector E. Miole, assistant general manager for special projects of the Philippine Ports Authority (PPA), said that they are imposing a booking system that would be offered to importers to choose the ideal time for them to bring in their trucks to withdraw their imports. He said this will spread the time that trucks spend in the ports and hopefully, reduce congestion. “You have seen this morning during our tour, all systems are moving at clockwork efficiency, there are no delays, the processes are moving and there is a wider window for truck bans, and we expect a continuing volume coming in and out of the ports.” Miole added that the port activity had slowed down following the truck ban and that most of the imports had remained at their ports of origin and would be shipped to Manila eventually, when everything had returned to normal. Cris Lozano, commercial director of Ictsi said that the Manila Port, at 90 hectares, is capable of handling 2.5 million to 2.6 million twenty-foot equivalent units. He said that if the current flow is maintained, the ports would be back to normal by February next year. Lozano said the idea of sending out some cargo containers to Subic and Batangas ports is not really ideal, because some 70 percent of the cargoes are destined in Manila.

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Thursday, October 9, 2014

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Integration to boost growth of property industry

HE Philippine real-estate industry is expected to grow further next year as the looming Asean economic integration continues to attract foreign investors.

The region is also increasing role and importance in the global economy, according to Noel Cariño, president of the Chamber of Real Estate

and Builders Association (Creba), the country’s largest organization of key players in the domestic realestate industry.

He said the Asean integration in end-2015 will change the economic landscape of the whole region, particularly the real-estate market. “The elimination of tariffs on goods and services by a single Asean economy would drive consumer spending higher. “The demand for residential spaces adjacent to malls, retail complexes and other recreational spaces would go up and will likely increase the already-healthy real-estate market,” Cariño explains. The influx of investment and elimination of trade barriers will

allow each country in Asean to enjoy unimpeded and free flow of goods, services, labor and capital. The potential impact of the integration would require more commercial and residential infrastructure for highly urbanized cities within the region, including key cities of the Philippines. “Residential, commercial and retail developers, which will be exposed to international market will expand their operations and acquire properties inside and outside the country. While foreign investors and corporate executives with local

SC revives case vs SLI exec in MV ‘Princess of the Stars’ sinking B J R. S J

HE Supreme Court has reinstated the petition seeking the criminal indictment of Sulpicio Lines Inc. (SLI) executive Edgar Go in connection with the sinking of MV Princess of the Stars in 2008 that left 227 people dead and more than 500 others missing. In a resolution, the Court’s Second Division granted the motion for reconsideration of the victims’ relatives filed through the Office of the Solicitor General (OSG) seeking the reversal of the High Court’s previous decision dismissing their petition. “Acting on the Office of the Solicitor General’s motion for reconsideration

of the Resolution dated July 2, 2014, ,which denied the petition for review on certiorari, the Court resolved to grant the motion for reconsideration,” the resolution reads. The five-man tribunal chaired by Associate Justice Antonio Carpio also ordered that the petition be reinstated. Go was also ordered to lodge his comment within a period of 10 days from notice. The Second Division, however, turned down the request of the petitioners that the case be elevated to the court en banc for review. The victims’ relatives sought the elevation of the case to the Court en banc where it shall be decided by the 15-man tribunal and not just five

magistrates of the Second Division. The OSG stressed that Go’s failure to implead an indispensable party— that is the government—as a partyrespondent in his petition for certiorari renders all decisions favoring him null and void. “Considering the glaring fact that the people, an indispensable party, was not impleaded in the petition for certiorari filed before the [Court of Appeals], the latter should not have taken cognizance of the case nor granted the same,” the OSG said. The OSG insisted there is no proof that the Department of Justice erred in finding probable cause to indict Go since their findings were based on records and evidence submitted by the parties

as well as those elicited during clarificatory hearings. The OSG said the CA erred when it interfered with the discretion of the prosecutors in the determination of probable cause, reversing its findings against Go. In their motion for reconsideration, the victims’ families argued that Go’s failure to order the master of the MV Princess of the Stars to stop MV Princess of the Orient from sailing and take shelter during the storm would fall under Article 365 of the Revised Penal Code, which punishes any person for reckless imprudence and negligence. They insisted that Go had active control and supervision in the operations of SLI vessels. The MV Princess of the Stars sailed from Manila at 8 a.m. on June 20, 2008, bound for Cebu City but sank off Sibuyan Island, Romblon, on June 22 after being battered by strong winds and big waves brought about by Typhoon Frank.

operations in the country will look for residential spaces for a place to stay,” Cariño added. Creba, however, reiterated the country must continue to pursue relevant market reforms in order to remain competitive. Charlie Gorayeb, national chairman of Creba, said: “Foreign ownership restrictions enshrined in the Philippine constitution will hinder the growth of foreign direct investments, so we need to continue to improve the business environment in the country in order to attract more investors.”

Creba has been pushing for the passage of a bill that will consolidate the function and powers of major housing and urban agencies of the government to address effectively the needs of both consumers and developers. Meanwhile, Iloilo is set to host Creba’s 23rd National Convention from October 15 to 18. Sen. JV Ejercito, who chairs the senate committee on urban development, housing and resettlement, is expected to address a separate keynote speech on the legislative agenda of the real industry in the 16th Congress.

Elderly below 77 deprived of P500 monthly pension by DSWD–solon

EN. Pia Cayetano on Wednesday sought for an explanation on why are indigent elderly citizens under the age of 77 are reportedly being deprived of the P500 monthly pension which they are supposed to receive under the Expanded Senior Citizens Act of 2010z , or Republic Act (RA) 9994. Cayetano filed Senate Resolution 945, which seeks to probe on why the Department of Social Welfare and Development (DSWD) is not fully implementing the social pension provision of the landmark law. She stressed that under Section 5, Paragraph H, Line 1 of RA 9994, all indigent senior citizens shall be entitled to a monthly stipend of P500 to augment their daily subsistence and other medical needs, the senator said. An “indigent” elderly citizen is defined under Section 3 of the law as an elderly aged 60 and above who is frail, sickly or with disability, and without pension or

permanent source of income, compensation or financial assistance from relatives to support basic needs. “The law does not distinguish nor provide a classification by age of indigent senior citizens. This is a clear deviation from RA 9994. The DSWD rules should not distinguish where the law does not,” stressed the senator, who was also one of the law’s principal sponsors. “Five hundred pesos is a fairly small amount and yet many of our indigent seniors do not receive it because of a series of administrative orders issued by the Department of Social Welfare and Development, which prioritized only those who are 77 years old and above,” she added. The senator said that under the proposed P2.6-trillion national budget for 2015, P78 billion is allotted for the Conditional Cash Transfer (CCT) Program of DSWD, a P15.4-billion increase from this year’s P62.6-billion budget for CCT.

Economy

A8 Thursday, October 9, 2014

BusinessMirror news@businessmirror.com.ph

FEF tells Aquino administration: No ‘quick fixes’ to resolve power shortage

By Lenie Lectura

he Foundation for Economic Freedom (FEF) slammed the Aquino administration on on Wednesday for coming up with “quick fixes” to address the power shortage in the summer of next year, saying these are expensive and will only burden consumers for a long period. “We caution the government against quick fixes with lasting cost consequences that some participants in the power industry, including government, have put forward,” FEF said. For one, FEF pointed out that the proposed contracting of additional capacity for summer months over two years should be reviewed. “A short-term problem requires a short-term solution, and any government contracting should be limited just to the period where they hope to guard against blackouts. If the problem is projected to persist, then other long-term solutions must be found,” it said. FEF said it is premature for administration to consider acquiring “strategic” generation assets when it has not even completed the privatization process and still owns, among others, the CBK and Malaya power plants. “The argument is made that outright purchase is not much more expensive than leasing for two to three years, because of saving demobilization costs, but government may recall how little they received when they sold assets like the Limay and Dingle plants,” FEF added. The group also stressed the

costly take-or-pay 20-year contracts for intermittent unreliable power from solar—an additional 450 megawatt (MW) and 300 MW from wind—at high feed-in tariff (FIT) rates of P9.68 per kilowatthour (kWh) and P8.53 per kWh. “These are two-year-old rates in a segment of industry where costs change very quickly, being touted as incentives to solve the tight power supply instead of the blatant rent seeking they really are. At these rates and volumes, the incremental cost to the public by way of a higher power bill amounts to almost P5 billion annually. This will add at least another seven centavos per kWh to the four centavos initially applied for to cover the cost differential.” Solar and wind energy forms part of renewable-energy (RE) sources. FEF alleged that the RE proponents are trying to take advantage of this temporary supply situation to lock in their 20-year windfalls. The rate for wind energy is P8.53 per kWh, cheaper than diesel at P13 per kWh diesel. “What they have not said is you pay the P13 to run the diesels only when needed while you pay P8.53 whenever the wind produces electricity whether you need it or not,

and there are no guarantees they will operate when you actually need them, so you will still need the diesels for those times,” FEF said. These quick fixes, FEF said, will ultimately hurt not only the industrial sector but the household sector in particular. Instead, FEF said the government should continue to implement the following initiatives already being implemented in a partnership between government and the private sectors to address the immediate shortages. These include the Interruptible Load Program, lifting of the secondary-price cap, a fuller utilization of government generation assets especially the Malaya power plant, better scheduling of maintenance of plants, demand side bidding in the Wholesale Electricity Spot Market (WESM), ancillary services procurement and energy conservation. The energy department has raised the alarm on an impending electric power shortage in the Luzon grid in the summer of 2015, projecting a reserve deficiency of 400 MW to 500 MW in the March to May months, translating into two or three hour rotating outage during that period. The agency has proposed, and President Aquino has written a letter asking Congress to pass a “Joint Resolution authorizing the President to establish additional generating capacity.” Additionally, the Department of Energy has proposed the additional contracting of 450 MW of solar power, and 200 MW to 300 MW of wind. “In requesting for emergency power, the secretary of energy said the more grievous sin is not to do anything. We disagree. We think the greater sin is to do something costly but ineffective, or worse, harmful while leaving unattended fundamental long-term constraints,” FEF said.

‘Palace has nothing to do with tax-on-text plan’ By Butch Fernandez

alacañang distanced itself from a revived plan to impose taxes on text messages among other schemes being eyed in a bid to recoup between P40 billion and P60 billion in estimated foregone revenue expected to result from proposed higher tax-exemption caps on workers’ year-end bonuses. Asked if the Palace was backing the tax-on-text plan Palace Secretary Edwin Lacierda clarified that the Palace has nothing to do with it. “I spoke to Finance Secretary Cesar Purisima, we are not behind it,” Lacierda told the BusinessMirror. In a text message, he added that

LACIERDA: “No policy decision yet, according to Secretary Purisima.”

President Aquino and his Cabinet have not even decided the matter. “No policy decision yet, according to Secretary Purisima,” Lacierda said. Earlier reports, however, quoted Finance Undersecretary Jeremias Paul as citing the need for the government to find alternative revenue sources to recover loses from projected lower income-tax collection once Congress approves

a bill raising tax-exemption caps on 13th-month bonuses. He confirmed that one of the options is the revival of previous plans to tax text messages sent daily by millions of cell-phone users all over the country. The Undersecretary confirmed the tax-on-text plan “is in the pipeline” but admitted the government agencies concerned still has to figure out “how to implement” and that the matter has yet to be discussed with Congress, as well as the telcos and their customers. Still, he asserted that the government is firm in its position “that any measure that results in losses for the government must be replaced with an alternative revenue measure.”

PCCI, Kazakhstan chamber to sign cooperation pact on trade, investments By Catherine N. Pillas

he Philippine Chamber of Commerce and Industry (PCCI) and its counterpart in Kazakhstan are set to sign a cooperation agreement that may lead to greater trade exchange and investments in particular sectors. A news statement released on Wednesday said a cooperation agreement is now being negotiated between the PCCI and the National Chamber of Entrepreneurs of Kazakhstan that is aimed

at identifying opportunities for trade and investments between the two countries. Deputy Foreign Minister of the Republic of Kazakhstan Askar Mussinvo led a four-man delegation to the Philippines last week to engage the PCCI in a dialogue on the salient points of the accord. PCCI Chairman Miguel B. Varela said the cooperation agreement could be the basis for exchange visits, business matching and sharing information, leading to trade and investment deals in sectors such as

manufacturing, agro-industry, tourism, information technology, logistics and construction. Last year the Philippines exported $483,922 worth of goods, and imported $123,585 from Kazakhstan. Exports from the Philippines include pneumatic rubber tires for vehicles, vegetable fat and oil, laminated glass and other articles of plastics. The trade department said Kazakhstan is a rich source of fossil fuel reserves and minerals, and metals such as copper and zinc.

news@businessmirror.com.ph

Economy

BusinessMirror Editors: Vittorio V. Vitug and Max V. de Leon • Thursday, October 9, 2014 A9

Meralco rate slightly up in October billing period

By Lenie Lectura

LECTRICITY bills for October will slightly go up by P0.10 per kilowatthour (kWh) as against a reduction of P0.58 per kWh in the previous month, the Manila Electric Co. (Meralco) confirmed on Wednesday. For a typical household consuming 200 kWh, this month’s adjustment is equivalent to an increase of around P20. The increase was mainly due to the P0.159-per-kWh upward adjustment in generation charge, the biggest component of a Meralco bill, from P5.19 per kWh to P5.35 per kWh. Meralco said generation charge for the supply month of September and reflected in October bills went up because of the five-day Malampaya restriction, from September 8 to 11 and September 21 to 23, which forced the Santa Rita and San Lorenzo power plants to use more expensive liquid fuel in lieu of natural gas. This resulted in higher generation costs from these plants. Also, the Malampaya restriction reduced dispatch of the Ilijan power plant during the September supply month. The deterioration of the peso against the dollar from 43.590 to 44.875 this month contributed further to the increase in generation charge. The use of alternative fuel by the naturalgas plants accounted for P0.13 per kWh of the increase in the generation charge, while the higher foreign-exchange rate added another P0.08 per kWh. If not for these upward adjustments, the generation charge would

have gone down by P0.05 per kWh. Meralco sources its power requirements from power supply agreements (PSAs), independent power producers (IPPs) and the Wholesale Electricity Spot Market (WESM). The utility firm said it sourced 53 percent, 46[percent] and 1 percent of its total power requirements for the September supply month from PSAs, IPPs and WESM, respectively. IPPs registered a P0.44-per-kWh average increase. Meanwhile, plants under the PSAs, as a whole, went down by P0.01 per kWh. The spot market, likewise, registered a reduction of P7.45 per kWh. Meralco said the presence of the secondary WESM price cap helped moderate WESM charges and protected customers in spite of the successive restrictions of Malampaya and the outage of some power plants. Contributing also to the overall upward adjustment in the bills to households is the P0.007-per-kWh increase in taxes. Transmission charge, meanwhile, registered a P0.054 decrease per kWh. There was also a cumulative decrease of P0.008 per kWh in subsidies and the system-loss charge. 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, meanwhile, goes to the National Grid Corp. of the Philippines. Of the total bill, only the distribution, supply and metering charges accrue to Meralco.

NREB mulls over hike in wind-energy targets to boost summer power supply

HE National Renewable Energy Board (NREB) is looking at raising installation targets for wind energy projects by 300 megawatts (MW) more from the current 200 MW.

“As NREB, we are proposing an increase in wind allocation. It’s 300 MW. So, it’s going to be 500 MW. It’s a proposal but many are interested in this,” said NREB member Ernesto B. Pantangco on Wednesday. He added that “any additional megawatt is good for the grid,” particularly at a time when supply deficiency is anticipated next year. Increasing the installation targets for renewable energy (RE) is meant to entice RE developers to put up more RE projects in order to boost supply during the summer months. “There’s a lot of people lined up for wind projects. You have Ayala, Trans-Asia and then you have the one in Nabas. Then, clearly, Burgos is ahead. We’ll come in this year. If you increase, it will benefit the people who are racing now. If they find out ahead, they will follow,” Pantangco added. Energy Development Corp. (EDC) of the Lopez group is currently constructing the 87-MW Burgos Wind Project in Ilocos Norte. Pantangco is also the executive vice president of EDC. Trans-Asia Petroluem of the Phinma group, meanwhile, is developing a 54-MW

wind power project in Guimaras. Ayala-controlled NorthWind Power Development Corp. is pursuing the third-phase expansion of the Bangui Bay wind farm in Ilocos Norte by adding 18 MW, from the existing 33 MW. NorthWind operates the 33-MW Bangui Bay wind project in Ilocos Norte, the largest wind farm in Southeast Asia. NREB is the body tasked by the Renewable Energy Act of 2008 to recommend policies, rules and standards to govern the implementation of the law, which granted fiscal and nonfiscal incentives to RE projects. NREB Chairman Pedro H. Maniego Jr. said separately that the wind installation target of 200 MW is expected to be exceeded by December this year. “The total wind projects on the pipeline exceed 700 MW and can be finished by 2015. The cost per kWh is lower than mid-merit and spot market rates. Wind installation will help alleviate power shortage in 2015 and 2016 at lower costs versus gensets and ILP [Interruptible Load Program],” Maniego said. Pantangco said the NREB proposal would still have to be presented to the Department

of Energy (DOE). “Two weeks before we had an NREB board meeting, we regularized the endorsement for additional 300 MW for wind. We’re trying to set up meeting with the Energy secretary. In principle, [Energy Secretary Carlos Jericho L. Petilla] is open to it,” Pantangco added. The DOE initially set the installation cap at 750 MW divided among run-of-river hydro with 250 MW; biomass, 250 MW; wind, 200 MW; and solar, 50 MW. The installation target for solar was already adjusted to 500 MW. These targets, which are necessary for each type of renewable energy that will qualify for FIT (feed-in tariff) incentives, ensure the security of the power grid and electricity rates, given the intermittent and high cost of power generation from such sources compared with conventional plants. The FIT, meanwhile, is the per kilowatthour rate that will be guaranteed to renewable energy developers to ensure the viability of their projects. Consumers will shoulder the tariff through a new line item in their electricity bills. The FIT regime is a form of incentives for renewable energy players. It offers cost-based compensation to renewable energy players, among other perks. The FIT rate approved by the Energy Regulatory Commission, the power regulator, are as follows: P9.68 per kilowatt-hour for solar; P8.53 per kwh (kWh) for wind, P6.63 per kWh for biomass and P5.90 per kwh for hydropower projects.

A10

Thursday, October 9, 2014

News BusinessMirror

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Report names probable losers and gainers in AEC

Llanto: “The government is ready; it’s gearing up. It’s a process. You cannot just say you’re ready. Even as we speak, I think the government, the [Cabinet] secretaries, have been doing the rounds speaking to their counterparts, comparing regulations, comparing standards.”

Africa: “The country’s manufacturing sector is still weak and the agriculture sector is also on the decline. The services sector, despite being the main driver of economic growth, has low value adding.”

By Cai U. Ordinario

hile the Philippines may lose its competitiveness in some agricultural products, a report stated that the agriculture sector could see an increase in employment under the Asean Economic Community (AEC). In the report titled “Asean Community 2015: Managing Integration for Better Jobs and Shared Prosperity,” the International Labor Organization (ILO) and Asian Development Bank used a computable general equilibrium model to compute for the share of a sector on total employment under the AEC. Data showed that the Philippine agriculture sector accounts for 28.6 percent of total employment under the baseline scenario for 2025. But with the AEC, this will increase by 0.4 percentage points to 29 percent. “Agriculture, on the other hand, accounts for the largest share of the job gains in Lao PDR, the Philippines and Thailand,” the report stated. “In Thailand and the Philippines, the share of agricultural employment declines between 2010 and 2025; but the implementation of the AEC trade measures is simulated to slow the pace of decline,” it added. The industry sector, on the other hand, is expected to account for 17.5 percent of total employment under the 2025 AEC scenario, higher by 0.2 percentage points than the 2025 baseline scenario of 17.3 percent. The construction and vehicles sectors also posted higher shares of total employment in the 2025 AEC scenario by 0.3 and 0.1 percentage points, respectively. The construction sector increased to 7.1 percent in the 2025 AEC scenario, higher than the 6.8-percent baseline for 2025. The vehicles sector is projected to increase its share of total employment under the AEC 2025 scenario by 0.1 percentage point to 0.6 percent from the baseline of 0.5 percent. The services sector, on the other hand, is projected to see a decline in total employment share under the 2025 AEC scenario to 53.5 percent, a 0.6-percentage-point decline from the 2025 baseline of 54 percent. The largest decline in services will be felt in government services, which will see a contraction

of 0.5 percentage points in total employment share to 10.8 percent under the 2025 AEC scenario from 11.3 percent in the 2025 baseline scenario. “Taken together, these models highlight the potential rise and decline of specific sectors as a result of trade measures. But it is important to emphasize that Asean member-states also have at their disposal a wide range of policies to influence patterns of structural change, including industrial policies aimed at supporting the growth of specific sectors,” the report stated. Recently Philippine Institute for Development Studies President Gilbert Llanto said locally made cocoa, furniture and plywood are just among the few products that could lose the battle against imported products once the AEC takes effect on January 1, 2016. Llanto said products that are losing competitiveness include forest products such as veneers and plywood, as well as tropical agriculture products such as sugars, molasses, honey and cocoa. The list also included animal products such as fish (fresh, chilled, frozen) and animal and vegetable fats, as well as labor-intensive products such as pottery, furniture, bags, clothing accessories, footwear and toys. However, there are products that have potentials to become competitive. The list includes animal products such as milk and cream; cereal preparations and manufactured tobacco; labor-intensive products such as glass; and chemicals such as metal salts, inorganic acid, soap, cleaners and polish. The potentially competitive list of products also include machinery, such as electric power machinery and parts, electric machinery apparatus, parts for tractors and motor vehicles, ship, boat, float structures, motorcycles, medical instruments, firearms and ammunition. Llanto said to boost the competitiveness of these products, the government should invest

CAINGLET: “As it is right now, we’re not ready but our resilience will help us survive.”

in measures that would increase productivity in agriculture. He said, for one, the government’s budget in the Department of Agriculture (DA) must not all be used to produce rice in a bid to attain self-sufficiency in the staple. Llanto said while investing in rice is necessary since it is the country’s food staple, the DA must also invest in high-value crops and in the growth and development of more agribusinesses that produce final goods. “I think the government, especially the DA, has to also work with the private sector in making investments in so-called highvalue crops. If you look at the experience of Thai agriculture, they really made a killing, substantial net profits, from agribusiness,” Llanto said.

Are we ready for AEC?

The ILO and Llanto agreed that while the Philippines still has ways to go to fully comply with the AEC Blueprint by December 2015, efforts are under way. “The government is ready; it’s gearing up. It’s a process. You cannot just say you’re ready. Even as we speak, I think the government, the [Cabinet] secretaries, have been doing the rounds speaking to their counterparts, comparing regulations, comparing standards,” Llanto said. Employers Confederation Assistant Treasurer Lucy Tarriela said the private sector is also gearing up and is in the process of completing their respective road maps to compete in a single Asean market by January 1, 2016. Meanwhile, Ibon Foundation Inc. Executive Director Sonny Africa and Federation of Free Workers Assistant Vice President for Research and Communication Julius Cainglet share the view that the Philippines is not ready for the AEC. Africa said the country’s manufacturing sector is still weak and the agriculture sector is also on the decline. He added that the services sector, despite being the main driver of economic growth, has low value adding. Cainglet, who spoke on behalf of workers, said the labor sector is also not ready for the AEC. He said many unions were dissolved in the 1990s and workers have been given the shorter end of the stick since then. However, Cainglet stressed that while the labor sector is not ready, Filipino workers, in general, are resilient and this will allow the labor force and local industries to survive in the Asean single market. “As it is right now, we’re not ready but our resilience will help us survive,” Cainglet said.

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A12 Thursday, October 9, 2014

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CA stops Miaa from awarding MBC to govt: Address shadow economies in Mindanao ad contract to winning bidder T By Joel R. San Juan

HE Court of Appeals (CA) has affirmed the order issued by the Regional Trial Court (RTC) in Pasig City enjoining the Manila International Airport Authority (Miaa) from awarding the multimillionpeso contract for advertising concessions for the Ninoy Aquino International Airport Terminal 2 to its highest bidder. In a 26-page decision penned by Associate Justice Leoncia RealDimagiba, the CA’s Third Division denied the petition filed by R.S. Concepts Inc. (RSCI), seeking to declare as valid the decision of the Miaa to award the contract to it for having the highest proposed lease rate of P126.88 million. The CA held that the RTC in Pasig City did not commit grave abuse of discretion when it decided to issue a writ of preliminary injunction stopping the Miaa from awarding the contract to RSCI. “There is a need to preserve the status quo in the case at bar pending trial on the merits to ensure that eventual award of the advertising concession to the deserving party would be free from suspicion of partiality, favoritism, unfairness and violation of the bidding rules and requirements to the

prejudice of the government and the next qualified bidder,” the CA said. The appellate court agreed with the trial court that RSCI’s opponent Digichive Philippines Corp. would suffer irreparable injury if it were ousted from Naia Terminal 2 pending the determination of the validity of the award to RSCI. In its order dated January 3, 2013, the RTC in Pasig City issued a writ of preliminary injunction enjoining Miaa, Miaa Board of Directors and Miaa Bids and Awards Committee from awarding the concession to RSCI. The case stemmed from the complaint filed by Digichive, which claimed that Miaa committed grave absue of discretion when it resolved to award the concession to RCSI desptie being a disqualified for failing to submit its tax clearance at the prescribed time. Digichive, the original lessee for advertising spaces at Ninoy Aquino International Airport Terminal 2, also bidded for the project in the amount of P101.59 million. It pointed out that the Miaa Awards Committee initially gave RSCI an extension of one month from the bid opening on August 13, 2012, to submit its tax clearance, but failed to do so. RSCI was given the final extension of until September 2012, otherwise it will be disqualified. However, RSCI was not automatically disqualified but again given another chance to submit its tax clearance until October 6, 2012, but it still failed to meet the deadling. This prompted the Miaa Awards Committee to disqualify the latter for violation of the bidding rules. Thus, on November 14, 2012, the Miaa Awards Committee came out with a resolution awarding the advertising concession to Digichive. However, Digichive said it was surprised when the Miaa awarded the concession to RSCI, after the latter furnished the Miaa copies of its tax clearance issued by the Bureau of Internal Revenue. Because of this turn of events, Digichive said it was forced to seek relief from the court. “The assailed order speaks for itself with clarity. It is backed up with factual and legal basis. Hence, the public respondent RTC has not committed any grave abuse of discretion when it decided to issue the questioned writ,” the CA ruled. Concurring with the ruling were Associate Justices Rebecca de Guia-Salvador and Ricardo Rosario.

3-DAY EXTENDED FORECAST

TODAY’S WEATHER

OCTOBER 9, 2014 | THURSDAY

Typhoon is a cyclone category with wind strength of up to 181 kph while, Intertropical Convergence Zone (ITCZ) is the result of the Northern and Southern Hemisphere tradewind convergence; widespread cloudiness, occasional thunderstorms, precipitation and moderate to strong surface winds are associated weather conditions.

TYPHOON “OMPONG” (VONGFONG) WAS LOCATED AT 995 KM EAST OF TUGUEGARAO CITY. MEANWHILE, ITCZ AFFECTING VISAYAS AND MINDANAO. (AS OF OCTOBER 8, 5:00 PM)

LAOAG CITY 24 – 30°C

SBMA/CLARK 24 – 31°C METRO MANILA 23 – 30°C

TAGAYTAY CITY 20 – 28°C

HE Department of Justice has junked the plea of the alleged lover of the widow of international car-racing champion Ferdinand “Enzo” Pastor to be given more time to answer the murder charges filed against him. It also rejected Domingo “Sandy” de Guzman’s request for the investigating prosecutor to subpoena first the director of the National Bureau of Investigation and the investigator on the case before he should be compelled to submit his counteraffidavit. “The power to issue subpoena ad testificandum et

OCT 10 FRIDAY

OCT 11

SATURDAY

23 – 29°C

24 – 30°C

TUGUEGARAO

23 – 30°C

24 – 31°C

24 – 30°C

24 – 31°C

OCT 12 SUNDAY

TACLOBAN

24 – 30°C

23 – 30°C

24 – 30°C

24 – 32°C

CAGAYAN DE ORO

24 – 31°C

24 – 32°C

25 – 33°C

24 – 32°C

24 – 33°C

24 – 29°C

24 – 30°C

24 – 31°C

24 – 32°C

24 – 31°C

ZAMBOANGA

PHILIPPINE AREA OF RESPONSIBILITY (PAR)

PUERTO PRINCESA CITY 24 – 32°C

METRO CEBU 23 – 30°C CAGAYAN DE ORO CITY 23 – 31°C ZAMBOANGA CITY 24 – 29°C

PUERTO PRINCESA

ILOILO/ BACOLOD

23 – 29°C

SUNRISE

SUNSET

MOONSET

MOONRISE

5:46 AM

5:40 PM

6:16 AM

6:24 PM

LOW TIDE

HIGH TIDE

21 – 29°C

24 – 29°C

FULL MOON HALF MOON

MANILA BAY

OCT 08

6:51 PM

24 – 31°C

23 – 30°C

23 – 31°C

23 – 29°C

23 – 30°C

23 – 29°C

OCT 16

3:12 PM

Cloudy skies with rainshowers and/or thunderstorms

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SABAH CELEBES SEA

4:17 AM

0.13 METER

10:34 PM

0.94 METER

Partly cloudy to cloudy skies with isolated rainshowers and/or thunderstorms

Watch PANAHON.TV everyday at 5:00 AM on PTV (Channel 4).

METRO DAVAO 26 – 33°C

SUNDAY

24 – 32°C

SBMA/ CLARK

23 – 28°C

OCT 12

24 – 30°C

17 – 23°C

LEGAZPI

OCT 11

SATURDAY

24 – 29°C

17 – 22°C

21 – 28°C

FRIDAY

23 – 29°C

16 – 22°C

20 – 28°C

OCT 10

24 – 31°C

BAGUIO

TAGAYTAY

TACLOBAN CITY 24 – 31°C

3-DAY EXTENDED FORECAST METRO CEBU

LEGAZPI CITY 24 – 28°C

ILOILO/ BACOLOD 24 – 30°C

duces tecum is lodged with the courts, and the officer or body authorized by law to do so in connection with the investigations conducted by said officer or host. Under Republic Act 10071, otherwise known as the Prosecution Service Act of 2010, there is no provision providing for such power of the investigating prosecution in the Department of Justice,” Assistant State Prosecutor Susan Villanueva said in denying de Guzman’s motion. Subpoena ad testificandum et duces tecum is a court summon for an individual to appear and give oral testimony for use at hearing or trial of a case. Joel San Juan

METRO DAVAO

TUGUEGARAO CITY 23 – 31°C BAGUIO CITY 16 – 23°C

DOJ denies plea of ‘brains’ in Pastor killing

METRO MANILA

LAOAG

ployment. It said the informal economy in the region has proven remarkably resilient during the last two decades, whereas the relative size of the informal economy has gradually declined in the other parts of the Philippines. The group, however, added that shadow economies in the ARMM are potential sources of wealth, power and conflict. “[The problem is] they [shadows economies] provide local elites with economic powerbase to advance their political ambitions. Revenues from shadow economies can also be converted into political power. This occurs, for instance, when drug money is used to fund political campaigns,” the organization said. “Subsequent control over political office by rent-seeking elites helps consolidate their access to the proceeds from the lucrative ventures. Shadow economies can be a source of conflict, precisely because they embody a significant amount of economic and political capital for local strongmen, armed insurgents and powerful clans…so the peacebuilding community must not ignore shadow economies,” the group added. It said engaging with Mindanao’s shadow economies is a strategic imperative for peace building to be established in the Bangsamoro region. Jovee Marie N. dela Cruz

HE Mindanao Business Council on Wednesday urged the government to address the problem of the shadow economies on the island, particularly in the Autonomous Region in Muslim Mindanao (ARMM), for lasting peace in the area. MBC Chairman Vicente Lao, at the sideline of the hearing of the House ad hoc committee on the Bangsamoro basic law (BBL), said the area has a potential to become a multifunction hub, but without the so-called shadow economies or informal economies.“The potential of the area is very, very big, that’s why we really have to make it war-free because once we open that up, I think that will be good for the whole island and for the whole country for that matter,” he said. “But the national government still need to address the problem of the shadow economy in that area. For as long as the shadow economies persist in Mindanao, we will have a problem,” he said. These so-called shadow economies include the proliferation of illegal firearms, kidnapping for ransom, informal land markets, cross-boarder trade, loan sharking and illegal-drug markets. According to the non-governmental organization International Alert, which was working in the Philippines since 1988 to help people find peaceful solutions to conflict among the 17 regions of the Philippines, the ARMM has by far the highest shares of informal income and em-

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News BusinessMirror

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Thursday, October 9, 2014

A13

Palace cold to Metro Rail proposal from MetroPac CEO

ALACAÑANG is not rushing to take up a solon’s suggestion for the Aquino administration to have businessman Manuel V. Pangilinan take over the Metro Rail Transit (MRT) Corp. instead of using public money.

Palace Spokesman Edwin Lacierda said Transportation Secretary Joseph Emilio A. Abaya indicated he isn’t keen on Sen. Sergio Osmeña’s proposal for the government to deal with Pangilinan, chairman of Metro Pacific Investments Corp. (MetroPac). Osmeña also asked the government to consider allowing Pangilinan to take over the city’s train operations instead of shelling out money to buy bonds. In a text message to the B, Lacierda said Abaya con-

firmed hearing about Pangilinan’s alternative proposal to improve MRT operations but said the Department of Transportation and Communications (DOTC) would opt to do it in “open competitive biddings.” “We’ve heard that in the news,” Lacierda quoted Abaya as saying. “As a policy DOTC and the government have a bias toward open transparent competitive bids,” Lacierda said, quoting Abaya. Although unsolicited proposals are not prohibited, the latter was

SEC to establish satellite offices in shopping malls B VG C

HE Securities and Exchange Commission (SEC) would put up “satellite offices” in the top shopping malls in the country in a move expected to de-clog its main office in Greenhills in Mandaluyong. “We noticed we don’t anymore need to require them [the public] to

come to the office and get full compliment of the SEC [services],” SEC Chairman Teresita Herbosa said. Herbosa said the first SEC branch will be in Ali Mall in Cubao, Quezon City, followed by SM Manila. Other offices, she said, will be in SM malls in Metro Manila. She said a total of six SEC branches will be opened before year-end. The

agency is targeting up to 10 branches. “Because of online connection, we can already find the history of the company that we need to look at.” According to Herbosa, they are looking at commissioning one or two people in the satellite offices. “We’re already looking at online payment of everything,” Herbosa said adding: “Right now, people

still pay us manager’s check. It’s so tedious because they have to come to the office.” The project called SEC Express System mandates a third-party provider to deploy an alternative mode of dealing with the public seeking to get copies of company-related documents filed with the private sector regulator.

quoted as saying “recent experience from DOTC public-private partnership bids have shown the country and people are better off with open transparent and competitive bids.” Lacierda said Abaya also noted “if the proposal referred to [by Osmeña] is the one previously submitted to DOTC, we have already formally rejected the proposal right before the award of the AFCS project.” The DOTC chief was referring to the Automatic Fare Collection System project that was envisioned to

adopt a single-ticket system similar to the “Octopus Card” used by Hong Kong’s rail commuters for both the MRT and the Light Rail Transit lines. In a television interview, Osmeña was apparently not referring to just the ticketing system of the MRT. Osmeña was speaking in the context of the public’s “deepening disgust” with the way transportation officials have allowed the MRT to deteriorate, resulting in nearly daily breakdowns that compound the daily misery of half a million commuters.

‘Noche Buena’ product-price standard issued

HE Department of Trade and Industry (DTI) has issued thesuggested retail prices (SRPs) of Noche Buena products to guide consumers during the holiday season. “The SRPs are provided by manufacturers to set retail prices of products. With the published SRPs, consumers are guided on whether the goods sold are overpriced or above the profit margin,” DTI Consumer Protection Group Undersecretary Victorio Mario A. Dimagiba said.

In a statement released on Wednesday, Dimagiba said the trade office is increasing vigilance in market-monitoring activities, especially for Noche Buena items to keep prices and supplies within the SRPs as the Christmas season nears. Anecdotal evidence point to the Philippines as having the longest celebration of the Christmas season beginning September and paused only during the first two days of November. Catherine Pillas

Opinion BusinessMirror

A14 Thursday, October 9, 2014

Editor: Alvin I. Dacanay

editorial

Without a clue

REPORT published in this paper on Tuesday said the Philippine real-estate sector, according to the East Asia Pacific Economic Update of the World Bank, “may suffer from a decline in demand in the near term,” adding that the “likely major source of the projected decline was weak overseas Filipino worker [OFW] remittance inflows.”

We think this is a fair assessment. We all know that remittances are an important part of our economy. But the problem is, we have been hearing this for the last 15 years and, yet, remittances have not declined at all. In fact, they continue to increase at the steady rate of about 6 percent per annum, year after year. In the report, the World Bank said, “This source of demand could decrease if a slow global recovery were associated with weak remittance inflows.” Yet, here we are, six years into the worst global economic growth in 50 years, and remittances have not decreased. So, when exactly is this gloom-and-doom scenario expected to happen? But it is not just the never-ending tale of despair over the potential decline in remittances. “The Philippines’s weak spot in real estate, the bank said, is that about 40 percent of new housing units in the country are financed by OFWs,” the report said. Apparently, the World Bank never looks at its previous reports. About five years ago—when about 60 percent of new housing units were financed by OFWs—it said the same thing. It appears, therefore, that the real-estate sector is less dependent on OFW remittances than it was before. Foreign experts really like comparing the Philippines with other countries. If China has a real-estate bubble, then shouldn’t the Philippines have it, too? Maybe the difference is that our government has not pumped tens of billions of dollars in artificially supporting the local property sector, which is what Beijing officials did with theirs. Maybe we do not have any “ghost cities” or “ghost shopping malls,” but there are a number of them in China. “In the Philippines there is also evidence of significantly higher investment in housing among remittance-receiving households,” the report quoted the World Bank as saying. There is a good reason for that. There is a decades-old housing shortage in the Philippines. That’s why it is common for three generations of a family to live under one roof, even in middle-class neighborhoods. Furthermore, buying a house and lot secures a better future for OFW families, rather than investing in the stock market, a new car or the latest electronic gadgets. Rick M. Santos and his team at real-estate services and advisory firm CBRE Philippines said it best: “The resiliency of the Philippine economy and the realestate sector is expected to continue beyond 2016.” Perhaps, the World Bank should listen to them.

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How free is the Philippines? John Mangun

OUTSIDE THE BOX

OMETIMES it is easy to be fed up with the Philippines. The political atmosphere seems to come down to “our crooked politicians are not as bad as yours.” There is a huge divide between the priorities of the national government and those of local governments. A lot of people, from big-time smugglers to sellers and collectors of “three for P100” pirated movies, often have little respect for the rule of law. We too easily accept the imbalance between the rich and the poor. We teach our children that who you know is as important as what you know. Yet, we are constantly looking at other countries and saying how we wish we could be like them while doing little to imitate the behavior that made them supposedly better. However, we also know that these same countries look at the Philippines and, perhaps, ask how did the so-called basket case beat them. After 10 years, India is still scratching its head, trying to figure out how it lost most of their call-center business. Thailand has never reached the same level of economic growth that the Philippines reached in the 21st century. Philippine business and consumer confidence about the future has consistently run much higher than in

Malaysia since the 2008 financial crisis started. With the exception of 2009, Indonesia’s inflation rate has been nearly double that of ours since 2000. Of course, these are unfair companions, as every nation overpowers another in some category. That is why we say not to compare yourself with others, as you will always find somebody better and somebody worse than you. But for all of the deficiencies of the Philippines, there is one category where it truly stands out and actually far apart from its regional neighbors. We are comparable to Spain, Belgium, Israel and France, according to 2014 Economic Freedom of the World Report of the American Cato Institute

Beijing’s soft-power fail Adam Minter

BLOOMBERG VIEW

N September 1 the Toronto District School Board became the latest high-profile North American educational institution to sever ties with the Confucius Institutes, a Chinese government-funded language and culture program. It was quite the spectacle: Large crowds of competing protesters squared off outside after security guards locked them out of the hearing. “If the Chinese government is attempting to infiltrate us,” said Pamela Gough, a school-board trustee who argued in favor of terminating the relationship, “we have to resist with all our might.” This was not the reception that the Chinese government had in mind in 2004, when it inaugurated the Confucius Institute program as a means of improving its image abroad and projecting “soft power.” The program offers educational institutions ranging from primary schools to universities a range of free resources: instructors, teaching materials, cultural programs, even rent for office space. Currently, the Chinese government sponsors 1,086 programs worldwide, including 458 in the United States and 31 in Canada. What does China get in return for this largesse? In 2009 Li Changchun, then a member of China’s ruling Politburo, explained: “The establishment of Confucius Institutes quickens the

international popularization of the Chinese language and strengthens cultural exchanges with various peoples of the world, benefiting China’s move toward the world and the world’s better understanding of China.” That sounds benign enough. Yet, the Confucius Institutes haven’t always behaved in such a high-minded manner. In August, for example, program head Xu Lin ordered her staff to remove materials “contrary to Chinese regulations” from the published program for the European Association for Chinese Studies conference in Portugal. Meanwhile, many academics, and the American Association of University Professors, have expressed concern that some institutions have self-censored on issues of concern

and Canada’s Fraser Institute. The first Economic Freedom of the World Report was published in 1996 and used 42 separate variables to arrive at a measure of economic freedom. The index quantifies the size of a government and a country’s legal structure that protects the security of property rights. How sound a nation’s money is, and if there is a smooth international trade flow of goods and services, both in and out of the nation, is part of the index. Finally, government regulation of credit, labor and businesses in general is included in economic freedom. The Philippines ranks 51st out of 152 nations. Hong Kong is No. 1, while Venezuela holds the last spot. The United States comes in at No. 12. Our neighbors mentioned earlier hold the following places: Malaysia at 74th; Indonesia, 80th; Thailand, 102nd; and India, 110th. Many have criticized the index. The report’s authors contend that higher economic freedom equates with higher and more equally distributed economic growth. However, China, for example, does not score highly at No. 115. But nations with higher scores have fared better during the continuing global economic problems. More economic freedom, as measured by the index, may not be the solution to these problems, such as unequal wealth and income distribution, but it may be a positive factor when times get tough. What may be important, though, is to look at where the Philippines has

improved in and where the index says we are going down. Since 2010 the score on the Philippine government’s financial participation in the economy has remained constant, with government consumption actually growing worse. That fact is not surprising. There has been no improvement in international trade flow, as evidenced by the lack of foreign direct investment. But the domestic regulatory environment is slightly better. The Philippines may have made a substantial improvement in business regulations, but we still have one of the worst scores on the planet. So where are we doing well? Since 2010 our “sound money” score has improved from 9.29 to 9.42, with the biggest jump (7.94 to 9.29) between 2005 and 2010, as the government put its fiscal house in order. The conclusion of the index is very clear. Less government regulation means more local and foreign investment, which creates better and more equal economic growth. On personal note, if you like to get a signed copy of my book Outside the Box: Mangun’s Broader Look at Today’s Business you may order directly through my website, www.mangunonmarkets.com.

to the Chinese government in order to maintain their financing. This is a particularly acute concern for smaller schools, where Chinese funding might play an outsized role. Several academic institutions— including not only the Toronto District School Board, but also the University of Chicago and Pennsylvania State University—have all severed ties with the Confucius Institutes over the last two weeks due to concerns about academic freedom. If the institutes are meant to be insidious vehicles of Chinese soft-power indoctrination, they’re doing a terrible job. In fact, they appear to be causing more damage than good to China’s image abroad. Part of the problem is that individuals tasked with running Confucius Institutes have, indeed, engaged in petty, often politically motivated behavior. In 2009, for example, the director of the Confucius Institute at North Carolina State University told Warwick Arden, the university’s provost, that a planned visit by the Dalai Lama would disrupt “some of the strong relationships we were developing with China.” The event was canceled—an action that Arden conceded to Bloomberg was partly spurred by concern over a Chinese backlash. In other cases, students have felt pressure to avoid controversial topics in class. In a forthcoming paper, the anthropologist Jennifer Huppert recounts this exchange from her fieldwork studying the institutes: “A particularly telling example was a

discussion with two sophomores [who] referred to a lack of discussion about the much-publicized 1989 Tiananmen crackdown on public dissent as representative of the censorship they perceived also taking place in the classroom.… ‘If you ever get into these issues in the class, it gets steered away.’ ‘Wait, there’s no Tiananmen Square. Let’s talk about fluffy bunnies.’” Legitimate concerns are heightened by more generalized nervousness about China’s soft-power ambitions. Politburo member Li Changchun has openly referred to the importance of the institutes to China’s propaganda efforts, while no less an eminence than Xi Jinping has advocated a full-on, global multimedia effort focused on “disseminating Chinese values.” This reflects an impatience among Chinese officials who see that they’ve achieved political and economic “hard power,” and simply can’t understand why they aren’t able to command sway over the world’s hearts and minds. If Chinese officials really want to improve their country’s image, they should heed their own rhetoric: The best way to improve foreigners’ feelings about China is, indeed, to bring them into direct contact with the country’s language and culture. The Confucius Institutes would be more effective—and inspire less fear—if they modeled themselves after institutions like the French government-supported Alliance Francaise: places where language and culture are taught, not ideology. Otherwise, Toronto’s schools won’t be the last to ask them to leave.

E-mail me at mangun@gmail.com. Visit my website at www.mangunonmarkets.com. Follow me on Twitter at @mangunonmarkets. PSE stock-market information and technical analysis tools provided by the COL Financial Group Inc.

oped@businessmirror.com.ph

Opinion

Who’s afraid of BEPS?

The invitation notwithstanding

BusinessMirror

Atty. Reynaldo M. Prudenciado Jr.

Msgr. Sabino A. Vengco Jr.

Tax Law for Business

Alálaong Bagá

ASE erosion and profit shifting (BEPS) pertains to taxplanning strategies that exploit gaps and mismatches in tax rules in different jurisdictions to make profits artificially “disappear” for tax purposes or to move profits to locations where there is little or no real activity, as well as where the taxes are low, resulting in little or no overall corporate tax being paid. BEPS is a form of “tax avoidance”, in which multinational enterprises (MNEs) take advantage of gaps between different domestic tax systems in order to achieve double nontaxation, or an income not being taxed anywhere.

The Organization for Economic Cooperation and Development (OECD) said that, through BEPS, enterprises that operate crossborder may acquire a competitive advantage over those that operate domestically. It may also lead to the inefficient allocation of resources by distorting investment decisions toward activities that have lower pretax rates of return, but higher after-tax returns. Finally, it is an issue of fairness: when taxpayers see multinational corporations legally avoiding income tax, it undermines voluntary compliance by all taxpayers. The OECD does not see BEPS as a problem created by one or more specific companies. Apart from some cases of egregious abuses, the issue lies with the domestic tax rules themselves. Business cannot be faulted for using the rules that governments have put in place. It is, therefore, the governments’ responsibility to revise or introduce new rules. Thus, in 2013, OECD and the Group of 20 (G-20) countries, working together on an equal footing to address BEPS, adopted a 15-point Action Plan, namely: n Action 1: Address the tax challenges of the digital economy; n Action 2: Neutralize the effects of hybrid mismatch arrangements; n Action 3: Strengthen controlled foreign corporation rules; n Action 4: Limit base erosion via interest deductions and other financial payments; n Action 5: Counter harmful tax practices more effectively, taking transparency and substance into account; n Action 6: Prevent treaty abuse; n Action 7: Prevent the artificial avoidance of PE status; n Action 8: Transfer-pricing issues in the key area of intangibles; n Action 9: Assure that transferpricing outcomes are in line with value creation/risks and capital; n Action 10: Assure that these same outcomes are in line with value creation/other high-risk transactions; n Action 11: Establish methodologies to collect and analyze data on BEPS and the actions to address it; n Action 12: Require taxpayers to disclose their aggressive taxplanning arrangements; n Action 13: Transfer-pricing documentation and a template for country-by-country reporting; n Action 14: Make disputeresolution mechanisms more effective; and n Action 15: Feasibility of developing a multilateral instrument. On September 16 OECD issued its first set of BEPS deliverables. The 2014 BEPS deliverables consist of two final reports (Actions 1 and 15); one interim report (Action 5); and four reports containing draft recommendations (Actions 2, 6, 8 and 13), which are agreed upon and will be finalized with further work on implementation and interaction with the 2015 deliverables. Of these deliverables, it is the report on Action 13, or the “transfer-pr icing documentation and a template for country-by-country reporting,” that caused the biggest uproar among practitioners. The guidance on transfer-pricing documentation

Although the Philippines is not a member of the Group of 20/Organization for Economic Cooperation and Development (OECD), there is the likelihood that the base erosion and profit shifting measures may be adopted here. Recent manifestations of the country’s compliance with OECD rules are becoming clear. Recently, the country became the 68th signatory to the OECD Convention on Mutual Administrative Assistance in Tax Matters. Likewise, the Bureau of Internal Revenue adopted the OECD’s transfer-pricing guidelines. requires MNEs to maintain a “master file” through the countryby-country reporting, which gives tax administrations high-level global information regarding their global business operations and transfer-pricing policies, and that more transactional transfer-pricing documentation be provided in a “local file” in each country. The country-by-country report requires MNEs to report annually and for each tax jurisdiction in which they do business the amount of revenue, profit before income tax and income tax paid and accrued. It also requires MNEs to report their total employment, capital, retained earnings and tangible assets in each jurisdiction. Finally, it requires MNEs to identify each entity within the group doing business in a particular tax jurisdiction and to provide an indication of the business activities that each entity engages in. Companies have the impression that country-bycountry reporting appears to provide greater information that may impel fiscal authorities and other organization to pursue some “fishing trips/expedition”. Once finalized, BEPS can be implemented through bilateral tax treaties or in a multilateral agreement. Some may find its way as an amendment to domestic laws. Although the Philippines is not a member of the G-20/OECD, there is the likelihood that the BEPS measures may be adopted here. Recent manifestations of the country’s compliance with OECD rules are becoming clear. Recently, the country became the 68th signatory to the OECD Convention on Mutual Administrative Assistance in Tax Matters. Likewise, the Bureau of Internal Revenue adopted the OECD’s transfer-pricing guidelines. So, is BEPS something to be afraid of? The author is a senior tax specialist of Du-Baladad and Associates Law Offices, a member-firm of the World Tax Services Alliance. The article is for general information only, and is neither intended nor should be construed as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should, therefore, be supported by a professional study or advice. For comments or questions about the article, e-mail the author at reynaldo.prudenciado@bdblaw. com.ph or call 403-2001, local 380.

NDER the loving care of the shepherd, the sheep are led to green pastures and protected from all harm (Psalm 23:1–3a, 3b–4, 5, 6). But even if the king invites guests to a wedding feast, they still find reasons to decline, and in so doing, prove themselves to be unworthy, even as some who accept the invitation turn up without a wedding garment (Matthew 22:1–14).

The Lord cares for His flock ONE of the best-loved psalms, Psalm 23 pictures God as a shepherd who leads His flock to verdant pastures and to cool waters, and protects them from predators and from all harm while passing through difficult terrain. To characterize the Lord as a shepherd is to trust and be confident that He is looking after His people/ flock with tender compassion and attending to all their needs. Under His loving care, each sheep, like the psalmist, leads a peaceful existence; with ample grass for grazing and abundant, tranquil water to drink from, he is really nourished and refreshed in his deepest being. The shepherd’s relationship with his sheep is also moral; the psalmist is guided, for the sake of the Lord’s name, in the right path, in the way of righteousness. This way of the Lord is His enduring covenant kindness (hesed) that accompanies His

covenant partner all his life. That is why, even in passing through dark valleys, one fears no evil, because he or she knows that the Lord is there, true to His commitment. The psalmist speaks directly to God: “You are with me, and with Your shepherd’s staff You ward off dangers and steady the whole flock. You prepare nourishment for me. It is a testament to all my foes how much You love me. You anoint me and I will enjoy Your favor until I dwell in Your house for all time.”

Invited to a royal wedding banquet

IN the third consecutive confrontation with the religious leaders of the day, Jesus, in the Gospel, pictures them as the first set of guests invited to the wedding banquet of the king’s son. God is inviting His people to the fullness of joy at His son’s wedding. The point the parable makes focuses

Thursday, October 9, 2014 A15

on the response of those invited to the invitation. The prophets are the servants dispatched to summon the guests, and the invited guests are those respectable people who enjoy a special relationship with the king. This is a special celebration, and everything is ready. But those invited behaved as if there is nothing important happening. They refused to come, an unthinkable affront to the king. Preoccupied with their own affairs, some prioritized their farms and businesses, while others challenged the king by committing violence against the king’s servants. And their destructiveness rebounded on them. The offended king became enraged; troops were sent in and the murderers’ city was burned down. “Those who were invited didn’t deserve to come,” the king said.

But without a wedding garment

THE feast was ready, and the wedding must be celebrated. And the king wanted the hall filled with guests. The list of select guests was set aside and a general invitation was issued. From the streets, ordinary people who were gathered by the servants, and who have heard the invitation and accepted it, were led into the banquet hall. There were no particular initial requirements; the good and the bad alike were invited to the feast. However, a final judgment and selection took place at the feast in the presence of the king, who came in to meet the guests. He saw a man not

dressed in a wedding garment, unlike the others who were. The invitation was freely given, but still there was a requirement one must meet for the enjoyment of the wedding. Noncompliance would ultimately mean the darkness outside, instead of the light of the feast inside, and hands and feet bound, instead of eating with one’s hands and dancing with one’s feet. It meant the weeping and gnashing of teeth, instead of laughing and singing. The guests were not there simply to witness a wedding, but to participate in it. Alálaong bagá, putting on the required wedding garment means deciding to be united with the groom/ son: to accept and be wedded to the Gospel of the Son, to share in the joy and fullness of life of Christ Jesus. It is readiness to absorb, understand and live according to His teachings, to follow Him as one’s shepherd leading the flock to abundant pastures and tranquil water and safely through dark valleys. It is to entrust oneself in covenant to one’s Savior. Each Christian is called to a wedding with, and conversation into, Christ. Being inside the Church is not enough; being without a wedding garment is to be reduced to silent attendance and incomprehension and ultimate exclusion from the feast. Join me in meditating on the Word of God every Sunday, 5 to 6 a.m. on DWIZ 882, or by audio-streaming on www.dwiz882.com.

For China, first the Waldorf, then the world William Pesek

BLOOMBERG VIEW

AST month, while vacationing in New York City, I happened upon the glare of a dozen live television cameras while walking past the Waldorf Astoria. The fuss was over Alibaba’s investment road show, then unfolding inside the hotel’s famed ballroom. The chaotic scene now strikes me as ironic, given that the venue Jack Ma chose to stage China’s big coming-out party will soon be in Chinese hands. In a head-turning deal, the Anbang Insurance Group shelled out $1.95 billion for the 1,232-room Park Avenue landmark. The purchase immediately brings to mind Japan’s vanity shopping spree in the 1980s, which included California’s Pebble Beach golf course, New York’s Rockefeller Center, and loads of Renoirs and Picassos. The United States survived that round of acquisitions, and its economy is far more vibrant than Japan’s today. A Chinese wave of overseas investment, however, is likely to be far more disruptive and unsettling. Part of the problem involves America’s own China policies. For years the US has demanded that the mainland let its currency appreciate. Since the day Lehman Brothers collapsed in September 2008, the yuan has risen 11.4 percent.

Obviously, a stronger yuan means a cheaper America. Already, Americans living in cities, from Seattle to Queens, New York, have seen their neighborhoods transformed by Chinese demand (some of it from Communist Party officials stashing ill-gotten gains in overseas real estate, no doubt). In Hong Kong, Sydney and Vancouver, such housebuying sprees have led to rising prices and increasing resentment among locals. Exchange rates are hardly the only issue, however. Japan’s 1980s land grabs reflected little more than bubble-era hubris: high-profile transactions that led to more publicity than profit. China has even deeper pockets, as well as a Beijing-led desire to dominate new markets. The nation is brimming with $4 trillion of currency reserves, untold numbers of newly minted billionaires and a vast array of government-loyal entrepreneurs ready to sign checks for the good

Washington must resist the urge to indulge in the protectionism it abhors in less-developed nations. Nevertheless, it’s time to craft clearer laws on which companies can and can’t be bought and why. That includes more precise definitions of what constitutes “national interests” and “national security” concerns, to ensure legal certainty.

of the motherland. Any Chinese buying spree will almost surely involve more than cherry-picking this property or that one. Despite official rhetoric, Beijing shows little patience for building the country’s roster of global corporate powerhouses. China figures it’s easier to buy established overseas names—IBM’s personal-computer business, for example—than to build its own. No doubt Hewlett-Packard, which is spinning off its personal-computer division, will see the prefix “+86”—China’s country code—on some incoming calls soon. China hopes to buy its way into a dominating positions in markets, from technology to agriculture to aerospace to biotechnology to retail to entertainment to education. The

An upgrade for Pluto? The distant orbiter may reclaim planetary status

N 2006 the International Astronomical Union (IAU) downgraded Pluto from full planetary status to dwarf planet. From 1930, when it was discovered, until Pluto’s fall from grace 76 years later, earthlings were taught that their solar system consisted of nine planets. Suddenly, they faced a brave new world of only eight planets, plus dwarf Pluto 3.6 billion miles from the sun and innumerable others beyond. For those who despaired of what may have been a rush to judgment by the IAU regarding Pluto’s status, there is reason to take heart. News reports late last week said scientists from the

Harvard-Smithsonian Center for Astrophysics have begun pushing back on the notion that Pluto is a dwarf. It is generally agreed that there are three criteria to be considered for planetary status: A planet must orbit the sun, have sufficient mass to assume a round shape and “clear its neighborhood” of space rocks in its path as it continues to orbit. Scientists who argued for Pluto’s demotion noted that its strange interaction with nearby Neptune sometimes makes it act more like an eccentric moon than a stand-alone planet. Still, there is growing doubt about the decision to give Pluto second-rate

Scientists who argued for Pluto’s demotion noted that its strange interaction with nearby Neptune sometimes makes it act more like an eccentric moon than a stand-alone planet. Still, there is growing doubt about the decision to give Pluto second-rate status. A few prominent scientists argue that earthly politics and pettiness played too big a role in what happened in 2006.

breadth of Tokyo’s corporate assault had lawmakers buzzing about a Japan Inc. colonizing the US in the 1980s. China’s may feel like an all-out invasion to Wall Street and Main Street alike. Needless to say, this will not go down easily. Political concerns have scotched deals in the past, such as China National Offshore Oil Corp.’s attempted purchase of Unocal in 2005. But Washington couldn’t kill last year’s bid by Shuanghui International Holdings for hog producer Smithfield Foods on national-security grounds, and no one’s suggesting that there’s any reason to block the Waldorf sale. More and more of these deals are inevitably going to go through. Washington must resist the urge to indulge in the protectionism it abhors in less-developed nations. Nevertheless, it’s time to craft clearer laws on which companies can and can’t be bought and why. That includes more precise definitions of what constitutes “national interests” and “national security” concerns, to ensure legal certainty. The US also should demand greater detail on where funds are coming from. Part of the exercise, of course, will be discerning where balance sheets of state-connected Chinese companies begin and the Communist Party ends. Like it or not, China’s outward expansion could eventually reach all sectors and facets of Americana as we know it. Is the US ready? I see no evidence it is.

status. A few prominent scientists argue that earthly politics and pettiness played too big a role in what happened in 2006. Could be that most people who were taught in grade school that Pluto was the ninth planet want to see it get its swagger back, too. Next July the New Horizons spacecraft, launched in January 2006, will do the first flyby of Pluto, gathering unprecedented data and images of that distant world. The mission will travel a long distance, but go a longer way, we hope, in settling the debate over whether it is a planet or something less. Pittsburgh Post-Gazette/TNS

2nd Front Page BusinessMirror

A16 Thursday, October 9, 2014

i.l.o., adb study projects 6% increase in phl’s total employment

AEC to bring jobs to 3.1M Pinoys

By Cai U. Ordinario

ver 3 million Filipinos are expected to gain employment due to the Asean Economic Community (AEC), which takes effect on January 1, 2016. In a brief on the Philippines, the International Labor Organization (ILO) and the Asian Development Bank (ADB) said this represents a 6-percent increase in total employment in the country. However, the ILO and the ADB said around 38 percent of these workers would be vulnerable jobs; and women account for just 35 percent of expected job gains. “If decisive policy action is taken, the AEC has the potential to ensure sustained economic growth centered on decent and productive work, thus, help the Philippines achieve its goal of inclusive growth that creates jobs and reduces poverty,” ILO Country Office for the Philippines Director

Lawrence Jeff Johnson said. By the end of 2015, the AEC, a single common market and production base, will take shape, covering the 10 Asean member-states, including the Philippines. The freer flow of goods, services, investment and skilled labor will impact on the structure of the economy, as well as jobs, skills, wages and labor mobility in the region. Under the AEC, the ILO and the ADB said there will be an over 60-percent increase in demand for low-skilled work. Further, there will be a projected 60-percent increase in the demand for high-skilled employment, such as managers, professionals, techni-

cians and associate professionals. Medium-skilled employment could also grow by around 25 percent. This covers mainly clerks, craft and related trade workers, plant and machine operators and assemblers, and service and sales workers. “This highlights the need to improve the quality and relevance of education and technical and vocational education, and training in the Philippines to provide a smoother transition from the classroom to the workplace for Filipino youth,” the ILO and the ADB said. With the Philippines’s integration into the AEC, it is also expected that labor migration will continue to increase. Labor migration, particularly for low- and medium-skilled workers, requires collective regional action to safeguard the rights of migrant workers, extend the coverage and portability of social security, and expand mutual skills recognition. The study also urged the Philippine government to undertake specific measures to not only ensure that workers are up to par with their counterparts in the Asean but also protected. The ILO and the ADB said there is a need to create better jobs, including through industrial policies that

target agro-industry for high-value farming products and more investment in irrigation, infrastructure and transport in rural areas. There is also a need to enhance social-protection programs; improve implementation of existing schemes; and enforce better disaster-preparedness and response measures. The report also stated there is a need to upgrade skills to meet shifting demand, including the effective implementation of the K to 12 Program, increase enrol;ment, minimize dropouts and expand schools in remote areas. There should also be an improvement in the technical and vocational education and training, as well as a reform in the curricula for students. The ILO and the ADB also said there is a need to improve protection for migrant workers to provide legal and social protection and social-security coverage to overseas Filipino workers, while further enforcement is also needed to stop recruitment malpractice. The report also stated that there is a need to strengthen collective bargaining to improve the productivitywage link, since better mechanisms can help translate the benefits of closer economic integration into shared prosperity.

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WORLD BANK SEES END OF EXTREME POVERTY

he World Bank and the International Monetary Fund (IMF) projected that the number of extreme poor in East Asia and the Pacific region could drop to 2.5 million in less than two decades. In the Global Monitoring Report 2014-2015 titled “Ending Poverty and Sharing Prosperity,” the two multilateral institutions said extreme poverty in East Asia and the Pacific could decline to 0.11 percent of the population by 2030. The World Bank and IMF estimate that the number of extreme poor in East and the Asia-Pacific region will decline to 31.3 million, or to 1.5 percent of the population by 2020, from 86.4 million, or 4.1 percent, of the population, in 2015. “The world has made great progress in the last quarter-century in reducing extreme poverty—it was cut by a stunning two-thirds—and now we have the opportunity to end poverty in less than a generation,” World Bank Group President Jim Yong Kim said. “But we will not finish the job unless we find ways to reduce inequality, which stubbornly persists all over the world. This vision of a more equal world means we must find ways to spread wealth to the billions who have almost nothing,” Kim added. In 2011, around 160.8 million

are living in extreme poverty in East Asia and the Pacific. This accounts for 7.9 percent of the population of the region. Extreme poverty, as defined in the report, covers those living below $1.25 a day, or less than P53 daily (at an exchange rate of P43 to the dollar). “If it is shocking to have a poverty line as low as $1.25 per day, it is even more shocking that 1/7th of the world’s population lives below this line,” World Bank Group Senior Vice President and Chief Economist Kaushik Basu said. “The levels of inequality and poverty that prevail in the world today are totally unacceptable. This year’s Global Monitoring Report, which brings together in one volume a statistical picture of where the world stands in terms of these goals, is essential fodder for anyone wishing to take on these major challenges of our time,” he added. The report also detailed the World Bank Group’s twin goals of ending extreme poverty by 2030 and promoting shared prosperity, measured as income growth of the bottom 40 percent. The World Bank said this will be attained by giving special attention to the living standards of the poorer segments of the population. Cai U. Ordinario

Sept inflation provides breather Continued from A1

Board did not have to craft tools or policies to contain the sources of price inflation over the policy horizon. In total, the BSP already implemented two 1-percentage-point hikes in the banks’ deposit reserve requirement, two 25-basis-point hikes in the antiliquidity special deposit accounts (SDA) window and two 25-basis-point hikes in the country’s policy rates. Economists at the Dutch financial services giant ING Group also said the September inflation number, which was softer than a month earlier, argue for a pause in monetary-policy adjustments. In practical terms, this means domestic interest rates will remain where they are at the moment, as the monetary authorities look for added evidence that price pressures need to be contained via appropriate interest-rate adjustments. For Hongkong and Shanghai Banking Corp. economist Trinh

Nguyen, inflation will likely stay on a downward trajectory up until the opening months of 2015. “We believe headline inflation peaked in August at 4.9 percent year-on-year. The deceleration of prices to 4.4 percent in September was expected and will be sustained in October, unless a strong negative supply shock occurs. We believe that CPI will fall to 3.8 [percent] to 4.1 percent by December, allowing the central bank to pause at the upcoming meeting,” Nguyen said. Nicholas Mapa, associate economist at the Bank of the Philippine Islands (BPI), also said the BSP will pause at its last two meetings for the year and likely go ahead with a tightening in the first quarter next year. “Tetangco knows the importance of keeping the powder dry for a bit longer to enhance the efficacy of his interest-rate hike salvo, to keep inflation within target in 2015 in a time of higher global interest rates,”

Johnny Midnight

Mr. John William Joseph JR., known as Johnny Midnight, the former anchor of DWIZ’s The Midnight Connection, passed away peacefully last October 6, 2014. Open viewing of his remains is at Manila Memorial Park, Sucat, Parañaque until October 9, 2014. His friends and family requests for prayers for the eternal repose of his soul.

Mapa said in an e-mailed response to the BusinessMirror. He added that inflation should ease further toward the end of the year as the much-needed rice importation arrives just in time soon to help relieve the price pressure on the staple. “This, coupled with a favorable base effect, could tilt inflation on a downtrend toward December,” Mapa said. The slower increase in prices in September gave the government more confidence that the 3 percentto-5 percent inflation target for the year will no longer be breached. “Notwithstanding upward pressures on prices, the general market inflation expectations remain well-anchored, as policies remain supportive of manageable inflation rate,” National Economic and Development Authority (Neda) Officer in Charge Emmanuel F. Esguerra said. Data showed that in September, the country’s inflation rate slowed to 4.4 percent. This is higher than the 2.7 percent posted in September 2013 but was lower than the 4.9 percent posted in July and August. On a month-on-month basis, inflation eased to 0.1 percent in September from its August level. This is slower than the monthly increase of 0.3 percent posted in August 2013. The slower average increase in commodity prices was largely due to lower food, fuel and electricity costs in September. Data showed that the food and non-alcoholic beverages index slowed to 7.4 percent in September; the housing, water, electricity, gas and other fuels index to 2.2 percent; and transport index to 0.7 percent. The Philippine Statistics Authority (PSA) said the annual gain in the food alone index in the Philippines eased to 7.8 percent in September. Last month its annual rate was 8.7 percent and 2.5 percent in the same month a year ago. “Slower annual increases were noticed in the indices of rice, corn and vegetables. Meanwhile, the other food groups recorded higher annual rates except the meat and oils and fats indices, which retained their corresponding last month’s annual growths,” the PSA said. Further, Esguerra said Dubai crude oil’s international price also declined. This pulled down local petroleum prices in September 2014.