Businessmirror 10 21 2014

BusinessMirror

three-time rotary club of manila journalism awardee 2006, 2010, 2012

U.N. Media Award 2008

www.businessmirror.com.ph

THE STUDIO: ONE ROOM FITS ALL

Life

D

ear God, inspire us to live love as we go on our journey on earth.

Live love because it is giving with no thought of getting. Live love because it is tenderness enfolding with strength to protect. Live love because it is forgiveness without further thought of the thing forgiven. Live love because it is understanding of the thing forgiven. Live love because it is understanding of human weakness, with knowledge of the true man shining through; it is quiet in the midst of turmoil; it is trust in You with no thought of self. amen!

LOVING QUOTES OAKLAND N.J. USA AND LOUIE M. LAcSON Word&Life Publications • teacherlouie1965@yahoo.com

‘Fury’ pushes ‘Gone Girl’ From top spot

BusinessMirror

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

❶

n

Tuesday, October 21, 2014 Vol. 10 No. 13

P25.00 nationwide | 7 sections 32 pages | 7 days a week

B.S.P. MOVES TO ENSURE LENDERS GIRD THEMSELVES FOR tougher competition

INSIDE

live love

A broader look at today’s business

>> d3

Tuesday, October 21, 2014 D1

❷

Banks ordered to hike capital A

By Bianca Cuaresma

The studio: One room fits all

By Samito Jalbuena | the.beast@zoho.com

W

HAT’S better than a one-bedroom apartment? A twobedroom apartment, of course.

But for the lives of some studio dwellers, they will never give up their “one room fits all” for anything bigger.

Style-wise, a studio apartment forces the homeowner to make gratifying, often startling juxtapositions in the small space. Where else can one find a kitchen right next to the bed? Or home office equipment incorporated with the living room?

The studio, also known as the studio flat or bachelor apartment, is a small

apartment which combines living room, bedroom and kitchen in a single room. Studio apartments are generally for single occupancy as these spaces typically have no room to spare. if there’s one thing that gets a bad rap in interior design, it’s the studio apartment. often a rental with very little in the way of space,

studios must do it all in that limited space.

While that is a tall order, it isn’t impossible.

There are many examples of studios that have evolved into a room suitable for sleeping, living, working and entertaining. That said, getting creative with space proves that size isn’t everything.

The hardest thing about setting up a studio apartment is figuring out the most effective layout. With so little available space, every decision influences others and makes a huge impact.

Some studios make use of custom-made or pre-fab “pods” where a loft bed and the underlying bunk defines the space. inside and out, the pod contains shelving. inside, there’s a home office and closet. outside, the “pod” holds the media center, with the bed above. The rest of the space is arranged with storage flanking each side of the room, a sofa in the middle, and a couple of chairs for guests. other studios create divisions using curtains to separate private from the more public area. Lightweight chairs can be moved around and between divisions to create instant settees. Meanwhile, the entire space is kept uncluttered by choosing just a few furnishings like a bed, dresser, side tables and a set of other fixtures.

Another variant in layout design can put a sleeper sofa in the center of the room. The sofa folds out into a bed. Behind that, a dining table

and bookshelves create a small study that, in turn, may be used for dining and entertaining. of course, other twists to the same story exist. A studio may also have the bed as the central hangout spot. During the day, it can double as a sofa with two armchairs facing it, creating a conversation area. A small dining space can separate the bed-and-living room from the kitchen. Vertical storage pieces can be positioned to flank either end of the room. The symmetry and order of the arrangement can be anchored with the use of playful prints and colors.

But of all the examples we’ve encountered, perhaps nothing can beat one particular studio located in the Soho neighborhood of New York City, where living space is both expensive and limited. Here, a studio apartment has been gutted and remodeled with convertible walls and furniture that transform it into six different living spaces. “i wanted it all,” says project proponent Graham Hill in his TED talk from a while back. “Home office, sit-down dinner for 10, room for guests, and all my kite surfing gear.” indeed his studio design incorporates walls that unlock and flip open to reveal his many pursuits. Michael Hession ties it all up in a neat little paragraph in tech web site Gizmodo.com: “it is the project of Graham Hill, entrepreneur and treehugger.com founder, to come up with an ideal New York apartment—one with a small

footprint, both physically and environmentally, and one that offers just as much beauty and functionality as a pad multiple times its size....

When you walk in, you encounter what is, at first glance, a small studio apartment. Within that cube are actually eight functional spaces.

The living room and office become the bedroom with a tug of a bookshelf. open one of the closets and you’ll find 10 stackable chairs that go around a telescopic dining table for large dinner parties. An entire guest room with bunk-beds and a closet is revealed behind a wall that slides out on tracks. And of course, a wellequipped kitchen and bathroom await.” in a studio, compact efficiency and effectiveness is all.

❶

A studio is an apartment where one finds it all—a bedroom, living room, kitchen, home office and storage space combined in a single room. Furnishings by iKEA

❷

some studios make use of custom-made or pre-fab “pods” where a loft bed and the underlying bunk defines the space.

Search for young Filipino design talents

N

interior design judges idr. michael Pizarro (from left), founder of michael Pizarro interior design (mPid) and Acanthus Home Furniture and Furnishing; dr. Lilia de Jesus, president, Council of interior design educators; and idr. Vincent Louie tan, chairperson of the department of interior design of de La salle-College of saint Benilde

GLAdys GoH (from left), group general manager, nippon Paint malaysia Group; Architect rogelio Caringal, national president, Philippine institute of interior designers; and Architect Beth regala, national president, united Architects of the Philippines

ippoN paint (Coatings) philippines opens a new world of opportunities to Filipino architecture and interior design students with the prestigious Nippon paint Young Designer Award (NYpDA) in the philippines. The program, recently launched at the Shangri-La Hotel Makati, is a regional competition that began in 2008 and covers 10 Asiapacific countries that now includes the philippines. Among its prizes is a trip to osaka, Japan, for the Japan Learning program in March 2015, a priceless opportunity where students will be mentored by the region’s top architects and interior designers, as well as meet the fellow winners from other countries.

No less than the group general manager of Nippon paint Malaysia Group, Gladys Goh, welcomed guests to

the whole-day event which began with a media launch in the morning and a briefing session with architecture and interior design associations, educators and students in the afternoon.

“With the Nippon paint Young Designer Award, we want to utilize our resources and give young Filipino students one-of-a-kind opportunities that promote creativity and innovation which they can use to build their communities,” Goh said.

The NpYDA is supported by highly respected architecture and interior design organizations in the country: philippine institute of interior Designers (piiD), Council of interior Design Educators, United Architects of the philippines (UAp), United Architects of the philippines Student Auxiliary, and Council of Deans and Heads in Architecture Schools in the philippines.

For their part, UAp National president Architect Beth Regala and piiD National president Architect Rogelio Caringal gave thanks to Nippon paint for launching the regional competition here. They were later joined by their peers and Nippon paint executives in a MoA signing. open to students who are at least on their third year, NYpDA dares them to design 800 square feet of living space for the interior design category; and 10 acres of land, focusing on one structure, for the architecture category. Gold awardees will win p50,000 cash prize, a six-month internship at Lor Calma & partners, plus a fully-paid trip to Japan for a learning program with world-class experts.

For more information about the competition, visit www. youngdesigneraward.ph.

LIFE

D1

WIDODO INAUGURATED AS INDONESIAN PRESIDENT BusinessMirror

World The

B3-1 | Tuesday, October 21, 2014 • Editor: Lyn Resurreccion

IndonesIan President Joko Widodo (foreground) shouts “freedom” while raising his fist as he delivers his speech during his inauguration ceremony as the country’s seventh president at the parliament building in Jakarta, Indonesia, on Monday. AP/DitA AlAngkArA

Widodo inaugurated as Indonesian president

J

AKARTA, Indonesia‑Joko Widodo was inaugurated as Indonesia’s new president on Monday, facing the challenges of rebooting a slowing economy and working with a potentially hostile opposition that has already landed some early blows against his administration.

Widodo, the first Indonesian president not to come from the ranks of the country’s established political, business and military elite, took the oath of office in a ceremony at parliament in the capital, Jakarta, attended by regional leaders and US Secretary of State John Kerry.

“To the fishermen, the workers, the farmers, the merchants, the meatball soup sellers, the hawkers, the drivers, the academics, the la-

borers, the soldiers, the police, the entrepreneurs and the professionals, I say let us all work hard, together, shoulder to shoulder, because this is a historic moment,” Widodo, popularly known as “Jokowi,” said in his inauguration address.

He ended his speech with a shout of “merdeka!” or “freedom,” the independence-era rallying cry associated with the country’s founding president, Sukarno.

A former furniture salesman, the 53-year-old Widodo rose from humble beginnings to become Jakarta’s governor before winning July’s presidential election with 53 percent of the vote.

Polls showed most of his support came from lower-income, non-urban Indonesians attracted by his simple demeanor and record of honest, hard work.

Indonesia is the biggest economy in Southeast Asia, and about 90 percent of its 250 million people are Muslims, more than any other nation. After years of dictatorship, the country was convulsed by political, ethnic and religious unrest in the late 1990s and early 2000s.

Since then, it has consolidated its democratic transition. While most of the country remains poor, it is home to a rapidly expanding middle class.

Outgoing President Susilo Bambang Yudhoyono’s two terms in office saw democratic consolidation and a focused fight against Islamist militancy.

But economic growth on the back of a commodities boom has slowed, and a recovery is being hampered by weak infrastructure, rampant corruption and red tape.

Economic growth is currently around 5 percent, barely allowing enough jobs to be created.

Widodo is targeting 7 percent growth in the coming years. To get close to that, he will need bold reforms to attract foreign investment and favorable external conditions. A looming problem is expected hikes next year in what are record-low US interest rates, which could suck funds from the country, pressurizing the rupiah and spooking the markets.

Economists say Widodo must soon make a decision on how much to cut subsidies on fuel that, unless trimmed, will cost the government a budget-busting $30 billion-plus this year.

The move will likely stoke protests from political opponents and could trigger street demonstrations. AP

HK leader: ‘External forces’ involved in protests

H

ONG KONG—Hong Kong’s leader has claimed that “external forces” are participating in student-led pro-democracy protests that have occupied parts of this financial capital for more than three weeks, but provided no evidence to back his accusation.

Chief Executive Leung Chunying’s statement in a televised interview on Sunday was the first time he has alleged foreign involvement in the unrest, echoing accusations by China’s central government, which also has not backed them with any evidence.

Leung’s statement comes just before his government is scheduled to hold talks with student leaders on Tuesday.

When asked on the Newsline program about a Chinese official’s comments on outside involvement,

Leung said, “There is obviously participation by people, organizations from outside of Hong Kong.”

Leung added that the foreign actors came from “different countries in different parts of the world,” but didn’t specify which countries. The Hong Kong Federation of Students immediately rejected the accusations, with Secretary General Alex Chow saying Leung was “just making it up.”

“He’s the chief executive, he’s an accountable official,” Chow told reporters. “If he’s putting forward these accusations, then we hope he also puts forward the evidence.

But he shouldn’t just say that foreign powers are meddling without evidence.” Protesters, mostly young college students, are pressing for a greater say in choosing the semiautonomous Chinese city’s leader in an inaugural direct election,

promised by Beijing for 2017. They oppose Beijing’s ruling that a committee stacked with pro-Beijing elites should screen candidates in the election.

That effectively means that Beijing can vet candidates before they go to a public vote.

In what has become a daily pattern, the police have driven away the students from some streets during the night, only to see them regroup and occupy the areas and resume their sit-ins.

The protests stretched into their fourth week on Monday, with thousands of demonstrators camped out in downtown Hong Kong and two other sites in this city of 7.2 million.

After two nights of violent clashes, protesters and police settled into an uneasy peace in the densely commercial Mong Kok district after two pro-democracy legislators, Fer-

nando Chiu and Claudia Mo, arrived late Sunday night and helped calm tensions. Earlier on Sunday, police spokesman Steve Hui said an unnamed 23-year-old was arrested on the charge of accessing a computer “with criminal or dishonest intent” and unlawful assembly.

Hui said the suspect had “incited others on an online forum to join the unlawful assembly in Mong Kok, to charge at police and to paralyze the railways.” It was the first arrest for online protest activity since the demonstrations began.

Police also said Sunday that 33 people had been arrested during the protests on common assault, criminal damage and other charges.

Nearly 300 people have been taken to hospital emergency rooms with injuries related to the protests since September 28, the city’s Hospital Authority reported Monday. AP

China gives $6 million for food in Ebola countries

B

EIJING—China has contributed $6 million to the World Food Program (WFP) to help stave off food shortages in countries worst affected by the Ebola virus.

The WFP announced on Monday

that the money will go to Guinea, Liberia and Sierra Leone, where the Ebola outbreak has led to widespread transport disruptions and higher food prices and caused some farmers to abandon their crops and livestock.

The donation will provide emergency rations for 300,000 people for one month, mainly rice, lentils and yellow peas. It follows the dispatch of several planeloads of medical materials and aid teams from China to the three

countries. With the world’s secondlargest economy, China is beginning to make larger contributions to international aid efforts. Chinese companies are also among the largest investors in Africa. AP

ChrIstIne Wade, a registered nurse at the University of texas Medical Branch, greets Carnival Magic passengers disembarking in Galveston, texas, on sunday.

AP/the gAlveston County DAily news, Jennifer reynolDs

Ebola fear, monitoring ease for some in Dallas

D

ALLAS—Ebola fears began to ease for some in the US on Monday as a monitoring period passed for those who had close contact with a victim of the disease and after a cruise-ship scare ended with the boat returning to port and a lab worker on board testing negative for the virus.

Federal officials meanwhile ramped up readiness to deal with future cases. A top government official said revised guidance instructs health workers treating Ebola patients to wear protective gear “with no skin showing.”

The Pentagon said it is forming a team to support civilian medical staff in the US. In Dallas, Louise Troh and several friends and family members were set on Monday to leave a stranger’s home where they have been confined under armed guard for 21 days—the maximum incubation period for Ebola. They had close contact with Thomas Eric Duncan, a Liberian man who died of the disease at Texas Health Presbyterian Hospital on October 8.

“I want to breathe, I want to really grieve, I want privacy with my family,” Troh told the Associated Press.

The incubation period also has passed for about a dozen health workers who encountered Duncan when he went to the Dallas hospital for the first time, on September 25.

Duncan was sent home but returned by ambulance on Sep-

tember 28 and was admitted.

Two nurses who treated him during that second visit—Nina Pham and Amber Vinson—are now hospitalized with Ebola.

Vinson’s family issued a statement on Sunday saying they have hired a lawyer and are troubled by comments and media coverage that “mischaracterize” Vinson, who is being treated at Emory University in Atlanta.

Vinson “has not and would not knowingly expose herself or anyone else,” the statement says. Dallas County and federal Centers for Disease Control and Prevention officials cleared her to fly last week to Dallas from Ohio, and “suggestions that she ignored any of the physician and government-provided protocols recommended to her are patently untrue and hurtful,” the family says.

On Sunday, a Carnival Cruise Lines ship returned to Galveston, Texas, from a seven-day trip marred by worries over a health worker on board who was being monitored for Ebola.

The lab supervisor had handled a specimen from Duncan and isolated herself on the ship as a precaution.

About 4,000 passengers on the cruise had to miss a stop in Cozumel, Mexico, where the boat was not allowed to dock because of the scare. Carnival said it was informed by US health authorities on Sunday morning that the worker tested negative for Ebola. AP and MCT

World

B3-1

DATA BREACHES THREATEN TO SHAkE CONSUMER CONFIDENCE BusinessMirror

corp@businessmirror.com.ph

Hyundai sales up 34 percent in Sept

Tuesday, October 21, 2014 B4-3

By James Niedzinski | The Eagle-Tribune

ATA breaches are becoming commonplace, and banking and retail industry experts are at odds about how to deal with the threat while working with law-enforcement officials and regulators to try to protect consumers from predators.

Consumers, banks and retail businesses all feel the hit each time personal banking, credit or other information is stolen. And no company or industry seems to be safe from data breaches.

Earlier this month, JPMorgan Chase announced as many as 76 million households and 7 million small businesses were exposed in a data breach, according to Forbes.com, which tracks such breaches. And in August, about 400 Dairy Queen locations were hit by hackers.

In 2012 a data breach at Women & Infants Hospital in Rhode Island affected some 12,000 Massachusetts patients, according to the state Attorney General’s Office.

Preying on consumers

WHEN an individual’s personal information is stolen from a bank, a retail store or even a hospital, it can be used in a variety of illicit ways, James Boffetti, the senior assistant attorney general for New Hampshire, said.

“There is an international market for this kind of information,” said Boffetti, who is also the chief of the New Hampshire Consumer Protection Bureau under the Attorney General’s Office.

Under a state law enacted in 2007, he said, businesses in New Hampshire must notify the AG’s office when there is a data breach.

This year the AG’s office received 16 notifications from different businesses, according to the Attorney General’s web site.

Massachusetts has a similar notification law. From 2008 to 2013 there

were 4,684 data breach notifications that affected more than 4.75 million people, according to the Massachusetts Attorney General’s web site.

In the first half of 2014, another 674 notifications were reported in Massachusetts. Once personal information is stolen, it can be sold to another party to make purchases fraudulently Boffetti said that stolen data is also commonly used to obtain phone numbers, e-mail addresses and other contact information for phone or e-mail scams.

National problem

THERE have been 606 security breaches nationwide in 2014, with about 77.6 million records exposed, according to the Identity Theft Resource Center. In 2013 there were 614 breaches and nearly 92 million records exposed, according to the center.

“It happens literally by the second around world,” said Jon Hurst, president of the Retailers Association of Massachusetts. “These are very sophisticated thieves.”

When data is stolen, banks have to put time and money into correcting the problems for the account holder, he said. Credit-card companies recoup their losses by charging banks or retailers a fee for using the cards, Hurst said. Boffetti said credit cards offer more fraud protection than debit cards, which are directly tied to a checking account.

When a card is lost, stolen, or data is compromised, a replacement credit card is the answer for the victim.

“The other thing that they should be doing—that everyone should be

H

PresIdenT Barack Obama smiles as he arrives to deliver remarks at the Consumer Financial Protection Bureau on October 17 in Washington. saying more must be done to stop data breaches affecting consumers, Obama announced on Friday a government plan to tighten security for the debit cards that transmit federal benefits like social security to millions of americans. AP

doing—is scrutinizing their statements,” Boffetti said.

Tracking down hackers, Boffetti said is extraordinarily difficult.

Many of these breaches originate overseas, so it’s even more difficult to trace them, “which is why we focus on educating people to protect themselves,” he said.

Signing up for alerts from a bank or credit-card company and reviewing every statement are key security measures, according to Richard Arcand, a spokesman for the New Hampshire Banking Department.

The department examines banks in the state about every 18 months, he said. Ensuring banks have the right security and are following regulations is apart of the process, he said.

“I can say the banks and credit unions are actively updating their IT and security systems,” he said, Federal laws protect people who notify banks or credit-card companies when they notice a fraudulent charge, so the first step is spotting such a charge.

“The important take away is to monitor your accounts of unauthorized charges, alert your bank if fraud is suspected and keep records,” he said.

Bankers vs retailers

ONCE discrepancies are reported, it

takes time and money for banks to replace cards and correct accounts, something that does not sit well with the banking industry, Bruce Spitzer, spokesman for the Massachusetts Bankers Association, said.

Bankers are putting pressure on retailers and other industries to increase their security because banks have to pay out the losses related to data theft and fraudulent charges, he said.

“The fact that retailers have no stake in the game makes our banking industry very angry,” he said.

The association is pushing the Legislature in Massachusetts to make retailers more liable when breaches happen, he said.

Banks have their own complex algorithms to help spot fraud or breaches, he said.

“Does the industry catch it all?

No. But we are trying to catch more of it all the time,” Spitzer said. It’s a never-ending battle.”

The retail industry says it is taking steps to curb the problem.

One big problem, Nancy Kyle, president and CEO of the New Hampshire Retail Association, said is oudated technology.

“It’s 1960s technology that is on credit cards,” she said.

One solution, she said, is adopting technology that puts microchips

in credit cards and links them to personal identification numbers, or PIN’s, rather than relying on magnetic swipe strips.

The technology is nothing new, Kyle said—it’s used across the globe by many other countries.

Hurst, her counterpart in Massachusetts, said chip and PIN equipment costs more, which is one reason the United States lags behind Europe in introducing it.

From 2008 to 2011, chip and PIN technology cut credit-card fraud cases in half in the United Kingdom, she said. Advanced technology, like Apple Pay, is even more secure because it uses fingerprint technology to verify a purchaser’s identity, Kyle said.

On Friday President Obama announced a plan to tighten security for the debit cards that transmit federal benefits like Social Security to millions of Americans by applying security chips and PIN’s to new cards.

The government will also apply security chips to all government credit cards, Obama said. Payment terminals at federal government facilities will be equipped to handle cards with the new technology.

The White House says the idea of the government program is to lead by example, to nudge the broader

financial industry and retailers toward more secure standards.

Obama noted that Home Depot, Target, Walgreen and Wal-Mart stores plan to install payment terminals in their stores equipped to handle cards with digital security chips and personal identification numbers called PINS that replace signatures.

‘Huge issue’

DATA breaches ultimately result in higher consumer prices and affect buying habits.

“It’s a huge issue,” said Peter Guffin, a partner with the firm Pierce Atwood who specializes in in security law and technology for the past 15 years. Payment innovations may be the answer. “You’re seeing more and more interest in innovation to come up with better, more secure methods of payment,” Guffin said.

Data breaches erodes consumer confidence in the banking system and hurts the reputations of businesses as well.

Eventually, Guffin said, this could impact the way people act and make many fearful of handing out any personal information.

“I think if we lose confidence in the ability of institutions and being able to secure our information, that may ultimately lead to behavior we don’t want.”

Online drug deals flourish, protected by encryption DuNkiN’ DoNuts to go moBile

By Kevin Deutsch Newsday

O

NLINE marketplaces for illegal drugs are growing rapidly, with the amount of narcotics and illicit earnings up for grabs on the encrypted dark Web more than doubling over the past year, a Newsday examination has found.

The number of for-sale listings for illegal drugs on 10 of the largest online drug markets has risen to more than 40,000, compared with fewer than 20,000 listings on drug marketplace sites in 2013, online records show. The number of those digital markets has also more than doubled over the past year, records show.

The drug listings—similar to those found for legal products on eBay and Amazon—include photographs, descriptions, user reviews and asking prices for dozens of different narcotics, from heroin and cocaine to MDMA and anabolic steroids.

As the markets have proliferated, so has the potential for illicit revenue. Newsday’s examination found current listings for more than $4 billion worth of illegal drugs on digital drug marketplaces, compared with nearly $2 billion worth of drugs listed for sale in October 2013.

The growth of the sites shows that efforts by law enforcement to curb online drug dealing have failed to deter thousands of sellers, who tout their illegal wares using encryption technology on marketplace sites such as Agora, White Rabbit Anonymous Marketplace, Silk Road 2.0, Outlaw Market and Evolution, critics of the sites say.

‘We’ve really lost control’ “THE fact that the list of places to buy these drugs online is getting bigger, and the total amount of available drugs on

Federal Bureau of Investigation director James Comey speaks about the impact of technology on law enforcement, on October 16, at Brookings Institution in Washington. Comey gave a stark warning on Thursday against smartphone data encryption on homicide cases. a Newsday examination has found that online drug deals are flourishing on encrypted digital marketplace sites. AP the dark Web is also bigger, means we’ve really lost control of this problem,” said anti-drug activist Alex Rice, 39, of Massapequa, who routinely speaks to college students about the dangers of drugs sold on the dark Web and whose son, Aaron, narrowly survived an overdose in 2011 from heroin he had purchased from a user on the original Silk Road site, which was shut down by the Federal Bureau of Investigation (FBI) in October. “I really thought the takedown of Silk Road was kind of a death knell for this industry, but it keeps getting worse.”

The ability of local and federal law enforcement to track and identify users of drug marketplaces is made difficult by those sites’ inclusion in the dark Web —a collection of web sites that are neither indexed nor accessible through regular browsers and search engines, authorities say.

Law-enforcement officials have said those sites, some of them offering illegal products such as unlicensed guns in addition to drugs, are accessed using encryption software called Tor, which hides computers’

IP addresses and allows users to surf the Web anonymously. Tor’s administrators did not respond to a message for comment.

Before its closure, the original Silk Road site was the largest of the Internet’s digital drug markets. It facilitated $1.2 billion in sales during a two and a half-year period using the digital currency Bitcoin, which is difficult to trace back to its users.

Officials at the time said the site’s closure and the arrest of its alleged founder, Ross Ulbricht, who has pleaded not guilty to charges that include narcotics trafficking conspiracy and money-laundering conspiracy, would serve as a message to people selling illegal drugs online.

online narcotics to stay

knowledge of encryption methods used by criminal networks.

The sites, he said, are frequented by tech-savvy drug buyers looking for highquality narcotics from reliable sellers— rather than seeking out street dealers for a product whose quality is unknown.

“They figure the risks inherent in buying drugs on the street is greater than the risk of law enforcement figuring out they’re buying drugs online,” said the official, who spoke anonymously because he was not authorized to publicly discuss the issue. “A dealer can’t pull a gun on you on the Internet.”

Some digital drug buyers and sellers are believed to be living on Long Island and in New York City, the official said. Those local users are thought to be sending and receiving drugs in the region, often at post office boxes, the source said.

The growth of online drug markets has caused alarm among anti-drug-abuse activists and local law-enforcement agencies, who say authorities need a way to better track dark Web drug sales in order to prevent overdose deaths and drug-related crimes. Heroin alone killed a record-high 144 people on Long Island in 2013, according to government records.

Suffolk Police Deputy Chief of Detectives Mark Griffiths has said the department’s cybercrime and drug investigators keep tabs on drug-trafficking sites, and Nassau police say they have an entire intelligence operation devoted to identifying criminals who try to stay anonymous—often with the aid of technology.

The issue of encryption—and the obstacle it poses to authorities pursuing criminals—was brought to the forefront on Thursday when FBI Director James Comey gave a speech on the controversial technology in Washington.

By Donna Goodison Boston Herald

D

UNKIN’ Donuts customers will be able to skip the lines when the Canton coffee-and-doughnut chain starts piloting mobile ordering by year’s end, in advance of a planned United States rollout next year.

“We are planning to test mobile ordering in the fourth quarter, and we anticipate adding the ordering feature to our existing mobile app in 2015,” Scott Hudler, vice president of global consumer engagement, said in a statement.

“For the consumer, there is a huge benefit to skip the line, and improve order accuracy and speed.”

Dunkin’ would not provide details on test locations for mobile ordering.

Its rival, Seattle’s Starbucks, this week announced that it would debut its own mobile ordering application in Portland,

Oregon, this year, with a US rollout also planned for 2015. Dunkin’ customers likely will have to place their mobile orders once they get to a Dunkin’ location or close to one, rather than an hour before pickup, for example —at least for the initial rollout— to ensure items such as coffees and breakfast sandwiches remain hot.

“Our products are amazing, but they don’t age particularly well if they’re sitting in a bag,” Hudler said at a Dunkin’ investor and analyst conference in Dallas last month.

“We want to crawl before we run in this area, so it’ll be more of the guests will let us know that they’re on the premises, and then we’ll trigger the order, because we think our speed-of-service is so fast that that’s probably the best way to deliver a great product.” The Dunkin’ mobile app for payments and gifting was launched in August 2012, and has had more than 8.5 million downloads.

moBile aPP Detects Wells, maNHoles

J

EDDAH—The tragic death of a 6-yearold girl who fell into an open artesian well in Tabuk almost a year ago has inspired innovation of a different kind. A new, up and coming company has come up with an app that detects open wells in an unprecedented bid to avert tragedy and create awareness.

Users can then capture a snapshot of the open well and add it to the app’s database for other users and authorities to take note of.

The app was “aptly” named after little Lama Al-Rouqi, who had been out picnicking with her family when she fell more than 30 meters into the 100-meter-deep and half-a-meterwide well. The dream team behind the app

has even upgraded systems to include sewage tanks after a young boy and his father perished as the latter tried to rescue his son, who had fallen into an open manhole. With the new addition, the number of users has increased by over 1,000 within merely a week.

The company behind the invention, which is just shy of its first anniversary, was created through the support of a technological entrepreneurship program under the King Abdulaziz City for Science and Technology.

A team of four highly skilled employees at Waqood Tech will manage the mobile app, available for download on both the iOS and Android systems. MCT

DIGITAL LIFE

BUT the fact that dark Web drug listings —coupled with encryption on new devices such as the iPhone 6— have only increased suggests the multibillion-dollar online narcotics industry is unlikely to fade anytime soon, authorities say.

“This, unfortunately, is where the more sophisticated drug dealers seem to be headed,” said a federal official with

b4-3

finding the right combination

Sports FINDING THE RIGHT BusinessMirror

C1

| Tuesday, OCTOber 21, 2014 mirror_sports@yahoo.com.ph sports@businessmirror.com.ph Editor: Jun Lomibao

T

By Jonathan Feigen Houston Chronicle

HROUGH much of the playing time in the Houston Rockets’ remaining preseason games will be to help get starters sharp and determine who takes the final rotation and roster spots, Coach Kevin McHale said beginning with Sunday’s 90-83 win over the Warriors, he planned to use players in combinations that seemed most likely in the regular season.

“These last four games, we are going to try to get some of our combinations in, try to look at that,” McHale said. “We’ve got, for the most part, everybody healthy. So we get a chance to look at everybody together a little bit.”

In a possible glimpse of where the rotation stood midway through the preseason schedule, Tarik Black was the backup center, and Ish Smith continued to work as the backup point guard.

Small forward Kostas Papanikolaou received his longest stretch as a four late in the first half, returning to the court each time Dwight Howard checked in.

Jason Terry received his first playing time of the preseason, working as a backup shooting guard.

Kerr advocatesp reseason twist AS with all coaches managing the preseason schedule, Warriors first-year Coach Steve Kerr gave key players the night off with a mind on the games ahead.

With the Warriors’ first home game of the preseason on Tuesday, guards Stephen Curry and Klay Thompson sat out Sunday’s 90-83 loss to the Rockets, with Kerr joining the coaches who say that while they can make use of the four weeks of preseason, they do not need eight games.

“Probably six (preseason games)

COMBINATION

tHe Memphis Grizzlies’ Zach randolph (left) tries to slow down the Houston rockets’ james Harden as jeff adrien looks on in a recent exhibition game in Houston. AP

would make more sense,” Kerr said. “Probably 60 (regular-season games) would make more sense than 82. But then everybody would be taking a big pay cut, too. I understand how it all works. It’s a machine that has to operate. We just do what they tell us to do.

“The ideal schedule would be two weeks with no [preseason] games and then play six games in the two weeks before the opener. It’s hard to get in and play a game with six days of practice.

Everybody does the same thing, but the off days, the non-game days, you get a lot more in for sure.”

The Rockets went with their usual rotation, though for fewer minutes than it would play in the regular season. Injuries had kept Dwight Howard out of three games and James Harden out of the previous two.

warriors enjoy early road trips AFTER playing two games in Staples Center, the Warriors have spent their preseason removed from National Basketball Association (NBA) cities, playing preseason games in Ontario, California, Kansas City, Des Moines and Hidalgo. They had no complaints.

“We were in LA [Los Angeles] for three games,” Coach Steve Kerr said of a week of games and practices while the team stayed in Santa Monica. “A lot of guys enjoyed that. I know I did. But this is all part of it. You go everywhere, and it helps promote the game.

People in a town like here, Hidalgo, or Des Moines, they’re excited, really excited to see the players. It helps promote the NBA.” aMBitioUs Goals For Mavs’ deFense ON a quick trip that took the Dallas Mavericks to one of the Eastern Conference’s best teams, and another one in a state of flux, Coach Rick Carlisle unveiled this year’s version of the zone defense.

It didn’t look all that much different from the zones the Mavericks have employed in past seasons.

What was different, at least against Cleveland on Friday night when the Mavericks treated the game like a dress rehearsal for the regular season, was that the Mavericks used the zone for virtually the entire game. It was met with good reviews from none other than LeBron James.

It also was what Dirk Nowitzki wanted to see out of the Mavericks.

“That’s been a good weapon for us over the years, so it’s a great game-changer,” he told reporters after the game in Cleveland. “We made some mistakes, especially when we threw our smaller lineup out there. LeBron picked us apart a bit. But overall, it was a game where it felt like we played hard, competed and tried to get better.”

The Mavericks don’t want to rely exclusively on the zone, but it’s something they use in every game to some extent. It was a necessity the last couple of seasons when their defense was not good enough in man-to-man mode.

“We know, to be as good a team as we want to be, we’ve got to get into the top 10 in defense,” Coach Rick Carlisle said. “And that’s going to be challenging. On paper right now, we’re somewhere in the middle of the pack if you go on individual analytics. I don’t see it happening overnight, but I believe we can do it. We got pieces that fit.”

James gave the Mavericks some credit for disrupting the Cavaliers’ offensive flow. But he wasn’t sure it was good defense as much as it was Cleveland’s inability to adjust to the scheme.

“It makes you stagnant and it gets you out of rhythm,” James said of the zone. “It slows down dribble penetration and makes you shoot a lot of contested jump shots. I’ve seen a lot of it. When you’re not ready, it is definitely challenging. But we found a way to kind of break it down, we got shots we wanted and it was great to get some work against it in a preseason game.”

While the Mavericks’ starters played extensively against the Cavaliers, they sat against Indiana, which won against the secondand third-unit Mavs on Saturday.

GolovKin’s rise »toGennady popularity in the United states has only been stalled by his lack of fights in the country. AP

Kevin McHale is experimenting with player pairings. AP

BABY-FACED ASSASIN FROM KAZAKHSTAN

By Bill Dwyre

R

Los Angeles Times

ISING star Gennady Golovkin, the baby-faced assassin from Kazakhstan, continued his tour to boxing super-stardom on Saturday night at StubHub Center.

Golovkin is the middleweight champion of the world and his opponent, probably showing a decent degree of intelligence, lasted for one round and one minute 19 seconds of another. Marco Antonio Rubio of Mexico took a huge uppercut, then a left-handed overhand shot. He went down, appeared to consider getting up and then appeared to say, ah, the heck with it.

He did get up just before the 10-count ended, but the referee waved him out.

Rubio, who lost any title aspirations on Friday when he weighed in at 161.8 pounds, or 1.68 over the limit, said on Saturday that “he’s a great champion. He hit me hard, but not the hardest I’ve been hit. I got up, but the referee decided to stop it.”

It might have been the first time that a referee, in this case Jack Reiss, stopped a fight based more on perceived lack of interest by the downed fighter than on degree of injury.

Golovkin is 32 and his rise to popularity in the US has only been stalled by his lack of fights in the country. He is

31-0, with 28 of those victories coming by knockout. The last 18 times he has stepped into the ring, he has knocked out his opponent.

Now, he has a plan to showcase his skills in the lucrative US market. His first effort west of the Mississippi drew a sold-out 9,323.

After the fight, he thanked his California fans and called Los Angeles his home. That’s only slightly premature. He plans to buy a home here, his first choice is the Santa Monica area. He and his wife and 5-year-old son would spend the bulk of their time here, as well as some in their current residence in Germany.

“My son starts school next year,” Golovkin said. “I want him here.”

This victory, as light as it was on the competitive side, set up Golovkin perfectly for his first huge fight and huge payday. That would likely come in late spring or summer. He will fight once before that, probably in February in Europe.

The US biggie after that could pit him against Miguel Cotto or Saul “Canelo” Alvarez. Golovkin’s victory over Rubio positioned him as a mandatory opponent after the expected Cotto-Alvarez match in May. Pressed immediately afterward for indications of his future, Golovkin said what he always does. Only unlike most boxers, he means it.

“I will fight anybody,” Golovkin said.

He entered the ring to chants of “Triple G,” his nickname.

He was clearly the fan favorite, even though he was fighting a Mexican in Los Angeles. He was also clearly the subject of fan curiosity, which is exactly what his promoters, K2, wanted.

Right now, like the venue in which he fought Saturday night, there appears to be no ceiling to Golovkin’s future.

Just in case Golovkin and Rubio didn’t provide enough excitement in the main event, the semi-main between Nonito Donaire and Nicholas Walters had plenty.

Donaire, a veteran from the Philippines and as popular a boxer as there is today, took an overhand right to the back of his head in the last second of the sixth round and was finished.

Donaire, already down once in the third round, tried to get up this time, but wobbled and was called out by the referee when he started to collapse against the ropes.

These were featherweights—a World Boxing Association super-featherweight title match—who fought like 160-pounders.

Afterward, it was a surprising love-in.

Donaire, who is 31 and been fighting pro fights since age 17, and who refused to confirm afterward that he will continue fighting, called Walters “an amazing fighter, an amazing champion.”

Donaire (33-3) said he had never tried harder.

“I was at my best, but he was too big, too strong,”

SPORTS

Donaire said, “and he beat the...out of me.”

Walters, 27, is 25-0 with 21 knockouts. He is from Jamaica and carries the nickname “Axe Man,” because that is the weapon he is appearing to use on his opponents as they fall to the canvas. All he needs now is a deep-throated “Timber.”

He called Donaire a great champion—”a super, super fighter”—and thanked him for the fight.

He added later, “I took a really bad shot in the second round. But I’m bigger, stronger, faster and more intelligent.

That’s why I won the fight.”

The new regulatory capital schedule requires the big universal lenders with minimum capital of only P4.95 billion at present to observe a tiered capital schedule based on the number of branches, starting with P6 billion for unibanks with up to 10 branches; P15 billion for those with 11 up to 100 branches; and P20 billion for lending networks exceeding 100 branches.

The expanded capital schedule applies to all types of banks and recognizes the expanded risk attendant to an environment marked by growing complexity and asset holdings, heightened competition from within and without, as well as a recognition of the opportunities and risks the local lenders face as financial See “Banks,” A2

Data breaches threaten to shake consumer confidence

D

new mandate is out, increasing the banks’ regulatory capital up to four times where they are at present and comes on the heels of a capital buildup scheme, where the size of any lender’s capital is linked to the type and volume of risk it is taking.

C1

yundai Asia Resources Inc. (Hari), the official distributor of South Korean auto brand Hyundai, reported a 34-percent surge in sales in September on the back of the continued solid performance of its passenger cars.

“Just for September, we have sold 2,017 units, a 34-percent increase over last year. But year-to-date, the sales, so far, of 17,694 units, that’s a 9-percent growth,” Hari President and CEO Ma. Fe PerezAgudo said in an interview at the launch of the Grand Starex variants under its Gold series, the Gold Premium and Platinum.

Hari’s sales of 2,017 units in September made it the third top-selling auto brand in the country, behind Mitsubishi, which sold 4,155 units, and Toyota, with 9,572 units.

Hari’s passenger-car segment led the growth, selling 1,490 units in September for a 45-percent year-onyear growth. Pushing the growth of the segment are the Eon, i-10 and the Accent, which remained Hari’s top-selling models.

Year-to-date, Hari sold 12,323 units of passenger cars, a 25-percent increase from the same period last year.

Hari’s light commercial vehicles (LCV) posted a 10-percent growth in September, with 507 units sold led by the Grand Starex, whose sales jumped 38 percent compared to the same month in 2013. Total LCV sales as of September, however, is 15 percent below its performance in the comparable period last year, due Continued on A2

PESO exchange rates n US 44.9270

President Aquino, joined by Leyte Gov. Leopoldo Dominico Petilla (second from left), Palo, Leyte Municipal Mayor Remedios Petilla (left) and US Ambassador to the Philippines Philip Goldberg, for a snapshot during the 70th Anniversary of the Leyte Gulf Landing at the MacArthur Landing Memorial National Park in Candahug, Palo, Leyte, on Monday. With the theme “Leyte 1944, Leyte 2014: Yesterday’s Heroes, Today’s Inspiration on the Road to Recovery.” Malacañang Photo

JAPAN TRADE, JUSTICE MINISTERS QUIT AMID CAMPAIGN-FUND MESS

J

apan’s trade and justice ministers resigned on Monday, after accusations they misused campaign funds in the biggest setback so far for Prime Minister Shinzo Abe’s conservative administration.

The two ministers were among the five women Abe named to his Cabinet in a reshuffle early last month, part of an effort to promote women in politics and business that is a key pillar of his government’s economic-revival policies.

Yuko Obuchi, daughter of a former prime minister and a rising star in the ruling Liberal Democratic Party (LDP), resigned early Monday as trade minister, saying she needed to focus on an investigation into discrepancies in accounting for election funds. She did not acknowledge any wrongdoing.

Justice Minister Midori Matsushima resigned after the opposition Democratic Party of Japan (DPJ) filed a criminal complaint against her over the distribution of handheld fans, or uchiwa. Matsushima is also facing complaints over using parliament-provided housing, while keeping security guards at her private residence in downtown Tokyo.

Speaking with reporters shortly after he accepted Matsushima’s resignation, a somber Abe told reporters he also was responsible because he appointed the two women to his Cabinet.

“I deeply apologize to the public,” Abe said.

Political funding scandals are a chronic problem in Japan, where gifts to constituents were banned to prevent vote-buying. AP

US, PHL alliance stronger 70 years after ‘I shall return’ vow

S

By Recto Mercene

eventy years after Gen. Douglas MacArthur waded ashore in Leyte to fulfill his “I shall return” promise to the Filipino people, the alliance between the Philippines and the US continues to go stronger, Ambassador Jose L. Cuisia Jr. said.

“The commitment shown by the United States through the actions of General MacArthur in 1944 still remains up to the present,”Cuisia said during the ceremonies commemorating the 70th anniversary of the Americans’ landing in Leyte at the MacArthur Memorial.

“The shared Filipino-American experience in the Philippines during the Second World War continues to permeate Philippine-US bilateral relations and to nurture the alliance,” Cuisia told Filipinos and Americans, who attended the commemoration of the landings that signaled the start of the liberation of the Philippines after three years of Japanese occupation.

MacArthur, feeling the pressure of advancing Japanese forces in 1942, left Corregidor island on a patrol torpedo boat and reached Mindanao after two days, evading Japanese warships and traveling in stormy seas.

From Mindanao, MacArthur’s party flew to Australia, arriving in Melbourne on March 21, 1942, where he made his famous speech, in which he declared, “I came through and I shall return.”

Cuisia said American commitment to the Philippines was concretely manifested during the return of US forces to Leyte in November last year, 69 years after the return of MacArthur. “This time, however, they came to help liberate the people of Leyte from an emerging humanitarian crisis caused by one of the most devastating storms in human history—Typhoon Haiyan [local code name Yolanda].”

Cuisia said US troops were among the first on the ground, helped clear the way for the massive US-led international relief effort that preempted what could have been a major humanitarian disaster. At the height of the international response, the US committed, more than a thousand troops and 50 aircraft and ships, including the USS George Washington, as part of Operation Damayan. US forces assisted in search and rescue operations and provided close to 2,500 tons of relief supplies to affected communities and evacuated over 21,000 people.

See “I shall return,” A8

n japan 0.4204 n UK 72.3010 n HK 5.7908 n CHINA 7.3362 n singapore 35.2507 n australia 39.3096 n EU 57.3358 n SAUDI arabia 11.9770 Source: BSP (20 October 2014)

A2

News BusinessMirror

Tuesday, October 21, 2014

news@businessmirror.com.ph

Hotels have reasons to remain bullish

R

By Roderick L. Abad

EAL-estate industry players, especially in the hotel and gaming sector, have more reasons to gamble on their growth potential given the bullish prospects for the country’s tourism industry.

By end-2014, tourist arrivals are expected to hit around 5 million, according to Jones Lang Lasalle (JLL) COO Lindsay Orr. “In 2013 the Philippines experienced one of the highest international growth rates in terms of tourism receipts [up 19.6 percent] and tourist arrivals [up 11.2 percent].

Further increases are anticipated in 2014,” he said.

The JLL executive noted that such expectations are now being matched by almost 4,000 additional rooms this year, and a further 2,000-plus expected in 2015, the bulk of which would be coming from the Macaulike development called The Entertainment City of the Philippine Gaming and Amusement Corp. (Pagcor) in Pasay City.

In fact, it will account for

around 1,624 rooms set for completion by end of 2014, said CBRE Philippines Senior Director for Global Research and Consultancy Jan Paul Custodio.

These include the Belle GrandCity of Dreams, which is expected to open any time soon with 920 rooms, as well as the Radisson Hotel with an inventory of 500 rooms.

Tune Hotel of Ma laysia is also set to open next month its newest facility in Aseana City with 200 rooms, bringing its network of branches in the country to 10 with total investment of $220 million over the last two years.

Pinnacle said the gaming industry has been very active in attracting visitors to fill up their casinos for next year.

The real-estate consulting firm

noted that Kazuo Okada’s Tiger Resort Leisure & Entertainment Inc. will have the biggest hotel-room inventory in Pagcor Entertainment City once it opens the first phase of its $2-billion Manila Bay Resorts by the end of 2015.

The first two phases of the 44-hectare integrated casino and resort project will offer a total of 2,000 hotel rooms in the market.

R ate-w ise, five-star hotels charge above $300 per night, especially for the bigger suites, according to Pinnacle.

Likewise, four-star hotels still offer rates over $200 per room on the average amid the dollar appreciation.

“Existing hotels have seen increasing rates due to record-breaking tourist arrivals the past years” Pinnacle said.

Pinnacle Real Estate Consulting Services Inc. said the recordbreaking visitor arrivals for the first seven months are expected to push up the occupancy and room rates of hotels for the rest of the year.

Of late, figures from the Department of Tourism have shown that the number of tourists visiting the country from January to July aggregated 2.862 million, 2.24 percent higher than the same period last year.

DOTC. . .

KERRY SEEKS ASIA’S HELP IN ANTI-ISLAMIC STATE PUSH

The government is also venturing into the redevelopment of the Naia, as well as the expansion of the Clark International Airport.

Currently, the transportation agency is auctioning off the P2.5billion Integrated Transport System (ITS) Southwest Terminal and the P4.5-billion ITS South, and the Light Rail Transit (LRT) Line 2 Operation and Maintenance deals.

American Chamber of Commerce Senior Adviser John D. Forbes called the transportation agency’s target “ambitious,” yet feasible.

“It is an ambitious target, but is doable. Success will establish the Philippines as a global leader in PPP deals,” he pointed out. Just recently, the PPP Center called on European, Japanese and North American companies to invest in the Philippines’s key infrastructure thrust.

“I believe that most of the DOTC projects are ready to be bid out after having been carefully reviewed and prepared. The PPP Center has already been including these transport infrastructure projects in their road shows and there seems to be keen interest from foreign investors,” Makati Business Club Executive Director Peter Angelo V. Perfecto noted.

“Hence, it may in fact be doable to have them all bid out before the President steps down in 2016,” he added.

The program went off to a slow start, with the Philippines seeing only a few projects being rolled out when the key infrastructure thrust was launched in 2010. To date, eight projects have been awarded amounting to P128 billion in investments.

“It has been a slow start and I assume that most of the kinks in the PPP process has been largely addressed. It’s about time to fast track and roll out all these DOTC projects,” Management Association of the Philippines President Greg S. Navarro said.

He noted that the transport projects would plug the holes in the country’s infrastructure.

“These will all contribute to overall sustainability of the economic gains so far achieved by the Aquino administration,” Navarro pointed out.

Most of the projects being undertaken by transportation department forms part of the P4.76-trillion infrastructure dream plan that was laid out by the Japan International Cooperation Agency.

These investments, the agency said, will translate to a reduction in transport fares and reduced travel time, resulting in gains and savings.

If the measures laid out by the Japanese consultants were not realized, the country is set to lose some P6 billion a day in productivity losses.

Currently, the Philippines is said to be losing some P2.4 billion daily due to the gridlock around the country’s major arteries.

The government also intends to lower the cost of transportation by 2016 through the construction of the much-needed infrastructure to ease the traffic congestion in key arteries to facilitate faster exchange of goods and services.

nited States Secretary of State John Kerry is in Indonesia for a brief visit aimed at building Asian support for the fights against Islamic State (IS) extremists and the deadly Ebola virus.

Highlighting the Obama administration’s commitment to the Asia-Pacific region, Kerry led the US delegation to the inauguration of new Indonesian President Joko “Jokowi” Widodo, a reformer who won hotly contested elections in July.

Kerry arrived in the capital, Jakarta, on Monday after more than 26 hours of trans-oceanic flights that began on Saturday in his hometown of Boston, where he held two days of talks with Chinese State Councillor Yang Jiechi.

In addition to attending Widodo’s inauguration, Kerry plans separate meetings in Jakarta with senior officials from Australia, Brunei Darussalam, Malaysia, the Philippines and Singapore before leaving Indonesia for Germany on Tuesday.

The US has high hopes that Indonesia, the world’s most populous Muslim-majority country, as well as its predominantly Muslim neighbors Malaysia and Brunei can play a significant role in combating Islamist extremism and blunting propaganda from the militants now threatening Syria and Iraq.

Officials traveling with Kerry said preventing extremist recruitment in Southeast Asia is a main nonmilitary priority of the coalition the US is assembling to combat the IS group.

The US is looking for these countries “to do more and cooperate more”to keep extremist proselytizing out of their territories, rebut extremist ideologies, prevent the flow of foreign fighters and crack down on terrorist financing, the officials said. AP

continued from a8

U

U.S. Secretary of State John Kerry arrives at the airport in Jakarta, Indonesia, on Monday, for the inauguration of new Indonesian President Joko “Jokowi” Widodo and meetings with other regional leaders. AP

Megaworld Foundation extends CSR works to Mario victims

M

egaworld Foundation, the corporate social responsibility (CSR) arm of real-estate giant Megaworld Corp., extended time and effort to serve 500 affected families that were evacuated to H. Bautista Elementary School in Barangay Concepcion, Marikina City. The foundation has provided the evacuees with relief goods after Typhoon Mario hit the country on September 19.

“Megaworld Foundation remains firm on its commitment of giving an immediate response to the needs of our fellow kababayan in their time of need,” explained Francisco C. Canuto, Megaworld Foundation president.

Megaworld Foundation helped the school as well by donating clean-

ing materials for its comfort rooms.

“H. Bautista Elementary School was the first evacuation site the foundation was able to communicate with, and it is one of the sites with the most number of evacuees in Marikina,” Canuto said.

“Marikina is one of the cities which was badly hit, and was declared in state of calamity.”

Megaworld’s CSR programs are channeled through the company’s sociocivic arm, Megaworld Foundation. Since its establishment in 1997, Megaworld Foundation has placed socio-economic development and the empowerment of the less privileged at the core of its endeavors.

Megaworld Foundation Inc. is a

nonstock, nonprofit organization that aims to contribute to the country’s development, primarily by promoting education through scholarship programs for financially handicapped, but deserving students.

It also empowers people through community projects, conserves the environment through tree-planting activities, and promotes a culture of volunteerism and community involvement among its ranks by organizing activities where thousands of individuals participated and totaling more than nine thousand volunteer hours in various projects, ranging from relief operations, feeding projects, medical missions, hospital repainting and also environmental advocacies.

Hyundai sales up 34 percent in September Continued from A1

to supply constraint in the segment.

But Perez-Agudo said supply is already stable and expressed confidence growth is possible with the diversity of offerings for its family van bid, the Hyundai Starex.

“We do not have supply problems anymore with the Eon and i-10, and because of the new demand of the two new models, that’s why we are experiencing growth,” Agudo added, but maintained that 100-percent “normalization” of supply has not yet been realized, specifically for the diesel variant of the Hyundai Accent.

“If we’ve come from a 50-percent shortage and now it’s a 20-percent shortage, that’s already a success and it’s a good indicator that the demand is really still strong,” Agudo said.

Further, the introduction of the premium variants of the Grand Starex—the Gold Premium and the Platinum—is expected to drive the Korean brand’s bid to reach its fullyear growth in sales of 9 percent over 2013’s 22,033 units, or to sell around 24,000 units.

The combined monthly sales expected from the two variants are 150 units to 200 units.

“We’re till on target with the 9 percent growth compv ared to last year so we’re sure until the end of the year to achieve the forecast,” Agudo said.

The target for the two variants, Agudo said, is in consideration of the capacity of local parts assemblers, as the Gold Premium and Platinum Premium marked the auto firm’s first foray into customization using locally sourced parts.

“We want to support the local auto parts assemblers. We want to buy the some of the accessories here for customization, also to generate employment. The unit itself is a completely built-up unit but without the [customized] seats,” Agudo clarified adding that the other parts of the two variants that are locally sourced include the dashboard, chrome grilles, 16inch alloy wheels, as well as the 22-inch LED TV. Catherine N. Pillas

Banks. . . continued from a1 integration happens just a few short years away. In a statement, the Bangko Sentral ng Pilipinas (BSP) said the policy-making monetary board decided to increase the minimum capital requirement for all bank categories—including universal, commercial, thrift, rural and cooperative banks to “further strengthen the banking system.”

The increase in minimum capitalization will be based on network size and their classification as lender. The revised minimum capital is a separate requirement from the recent Basel 3 regulatory mandates, which were risk-based and illustrated the most by the capital adequacy ratio.

Under the new regulation, universal banks with more than 10 branches should have minimum capital of P6 billion. Universal banks with 11 to 100 branches should have minimum capital of P15 billion, while those with 100 branches— such as the top banks in the country—need to quadruple their capital base to P20 billion.

For regular commercial banks, from the existing P2.4-billion minimum capital requirement, they need to double the amount if they have up to 10 branches.

For commercial banks with 11 to 100 branches, they must increase their capital base to P10 billion. For commercial banks with more than a hundred branches, they need to increase to P15 billion.

For the small lenders, the increase will depend on the type of bank, the number of branches and the location of their head office.

Thrift and rural banks whose head offices are in the National Capital Region (NCR) will have to increase their capital more than those with head offices outside NCR. Banks that cannot immediately meet the new minimum capital requirement, may avail itself of a fiveyear transition period to fully comply, according to the BSP. These banks must submit an “acceptable’”capital build-up program.

“Banks that fail to propose an acceptable capital build-up or otherwise fail to comply with the minimum capital requirements face curtailment of future expansion plans,” the central bank said.

The central bank said this was a prudent move to continuously update domestic regulatory standards given the ever-changing risks in the banking sector.

Likewise, the infusion of additional capital should help position the various lenders for when the Asean Banking Integration Framework is implemented in a few years.

“The Monetary Board adjusted the level of required minimum capital to ensure that banks stand on a strong capital base to support a threshold scale of operations to operate viable and service effectively the needs of their clients,” the BSP said.

This marked the first time that the central bank raised the minimum capital requirement for universal and commercial banks. The thrift banks’ minimum capital requirement was last increased in 2010, while that of the rural banks’ were last increased in 2011.

The Nation BusinessMirror

news@businessmirror.com.ph

Public Works, Skyway advice motorists: Expect heavy traffic

By Lorenz S. Marasigan

T

HE Department of Public Works and Highways (DPWH) is advising motorists to consider alternative routes to avoid traffic build-up at the Magallanes area in Makati City, owing to ongoing road-repair works.

“While the Magallanes Interchange is undergoing repair, we encourage private motorists to voluntarily take alternate routes to reduce vehicles in the area,” Public Works Secretary Rogelio L. Singson said.

Repair works are being implemented between 11 p.m. to 5 a.m. on weekdays, and a 24-hour scheme during Saturdays and Sundays with only one lane closure at a given time.

The repair works include asphalt overlay of the third-level flyover along Edsa and second-level flyovers, repair of expansion joints, retrofitting of deck slab of the second-level and the inner lane of the third-level Pasay-bound flyover. It carries a price tag of P167 million.

To date, about 58 percent of the overall rehabilitation activities was already accomplished, with most of the retrofitting works on bottom slab completed.

Remaining work for each segment are replacement of expansion joint for Stage 1 (Osmeña-Alabang), retrofitting on top slab for Stage 2 (Ayala to Roxas Boulevard) and asphalt overlay and replacement of expansion joint for Stage 3 (Alabang to Ayala).

“This is the first time that the interchange is being repaired since its construction in 1975,” Singson noted.

Skyway construction

STARING at 11 p.m. on Friday, October 24, until 5 a.m. the next day, motorists are advised to avoid Osmeña Highway, particularly the 200-meter highway portion between Zobel Roxas and Fahr-

enheit streets and to use alternate routes.

All three northbound lanes and four lanes of the six southbound lanes on Osmeña Highway between the above-mentioned streets will be closed to traffic to give way to the demolition of the Manila-Makati boundary marker.

The two remaining open southbound lanes may be used alternately by both northbound and southbound motorists on a stop-and-go traffic scheme. Additional traffic enforcers and flagmen will be deployed jointly by the Metropolitan Manila Development Authority (MMDA), Manila Parking and Traffic Bureau, Manila District Traffic Enforcement Unit, Makati Public Safety Authority and Skyway Stage 3 traffic management group.

In coordination with the MMDA, the Manila and Makati traffic units and the affected barangays, Team Skyway Stage 3 have also designated alternate routes to address the need to manage a big vehicle turnout. All necessary traffic advisory and directional signboards pointing to alternate routes will be put up in strategic locations starting on Tuesday.

The boundary marker has to be demolished to allow the construction of the Skyway columns and pierheads in its place. This activity was closely coordinated with and was given the green light

by MMDA, the Toll Regulatory Board and the concerned local government units (i.e., the city governments of Manila and Makati).

Skyway Stage 3 is the 14.8-kilometer 2x3 elevated tollway with eight access points that will connect South Luzon Expressway with North Luzon Expressway from Buendia in Makati City to Balintawak in Quezon City. The project aims to decongest traffic in Metro Manila’s major thoroughfares like Edsa, C5 and Central Manila. Todate, 20 massive columns are already up along Osmeña Highway and construction of pierhead has started.

Aquino rejects calls to junk VFA over slay

P

By Butch Fernandez

“Why do we want to abrogate the VFA?,” Aquino asked reporters during a brief interview at the sidelines of the 70th anniversary of Gen. Douglas MacArthur-led US Forces landing at Leyte Gulf in World War II. Aquino added: “I mean, name me any place that doesn’t have crime.

And the sin of one person should be ref lective of the entire country? I don’t think so.”

“What is important here,” he pointed out, is that “a crime has been committed.

Let us get all the evidence that would prove the suspect committed the crime, that he [Pemberton] was the one who really did it and we will have justice,” Aquino said.

On the appeal of Laude’s family to place Pemberton in Philippine custody

OCTOBER 21, 2014 | TUESDAY

Easterlies are winds coming from the east passing over the Pacific Ocean. These are warm and moist in nature; causing hot weather and generating thunderstorms.

OCT 22

WEDNESDAY

while undergoing trial in a court in Olongapo City, where the crime was committed, Aquino indicated that officials of both the Philippines and US government are already in talks to resolve the custody issue.

Under the VFA, any crime committed by a US soldier here will fall under the jurisdiction of the Philippine courts even as the US retains custody, of the errant soldier while the case is being tried, but the Philippine government can request custody which the US is required to “take into account.”

“So far, under terms of the VFA, pinag-uusapan na rin iyong custody [in connection with the Laude case],” Aquino confirmed but added that Foreign Secretary Albert del Rosario, who is handling the custody issue, was pres-

OCT 23

THURSDAY

METRO MANILA

23 – 32°C

23 – 32°C

TUGUEGARAO

23 – 32°C

22 – 32°C

OCT 24 FRIDAY

(AS OF OCTOBER 20, 5:00 PM)

LAOAG CITY 23 – 33°C

OCT 22

WEDNESDAY

OCT 23

THURSDAY

OCT 24 FRIDAY

22 – 32°C

METRO CEBU

24 – 30°C

23 – 30°C

23 – 30°C

22 – 32°C

TACLOBAN

23 – 30°C

23 – 30°C

23 – 31°C

22 – 32°C

CAGAYAN DE ORO

BAGUIO CITY 15 – 25°C

METRO MANILA 23 – 32°C

TAGAYTAY CITY 22° – 29°C

22 – 33°C

22 – 32°C

23 – 32°C

23 – 32°C

22 – 31°C

26 – 33°C

26 – 33°C

26 – 33°C

25 – 34°C

25 – 34°C

26 – 34°C

BAGUIO

15– 24°C

14 – 24°C

14 – 23°C

METRO DAVAO

SBMA/ CLARK

24 – 32°C

24 – 32°C

24 – 33°C

ZAMBOANGA

TUGUEGARAO CITY 23 – 32°C

SBMA/CLARK 24 – 31°C

TAGAYTAY

23 – 29°C

23 – 29°C

LEGAZPI ILOILO/ BACOLOD 24 – 30°C

TACLOBAN CITY 24 – 31°C

PUERTO PRINCESA

23 – 30°C

24 – 31°C

SUNRISE

SUNSET

MOONSET

MOONRISE

5:48 AM

5:33 PM

3:46 PM

3:25 AM

22 – 29°C

LEGAZPI CITY 24 – 31°C

PHILIPPINE AREA OF RESPONSIBILITY (PAR)

3-DAY EXTENDED FORECAST

EASTERLIES AFFECTING LUZON AND VISAYAS.

LAOAG

PUERTO PRINCESA CITY 25 – 31°C

ently in Jakarta as his representative at the oath-taking of new Indonesian President Joko Widodo.

Aquino assured, however, that del Rosario, Defense Secretary Voltaire Gazmin and and US A mbassador Philip Goldberg were already working on it.

“Swearing in nang ating counterpart, si President Widodo; siya [del Rosario] ang pinadala kong representative. So, I’m sure between him, Secretary of National Defense Voltire Gazmin and Ambassador Goldberg, they are working on resolving this custody issue,” the President said.

He added that, “at the very least, [we are] making sure, based on the treaty again, that he [Pemberton] is available or the suspects are available for both investigation in any and all judicial processes.”

Meanwhile, Laude’s German boyfriend flew in on Monday from Germany.

“I cannot say much,” Marc Sueselbeck, a financial accountant, said upon arrival aboard Malaysia Airlines Flight MH-806 at 1:30 p.m.

Sueselbeck said that Laude usually fetched him up at the airport whenever he arrives in Manila.

“But everything is a little bit different now,” he said, referring to the absence of someone who welcomes him and brought him home, everytime he flew in from Germany. With Recto Mercene

RESIDENT Aquino on Monday firmly rejected calls to abrogate the RP-US Visiting Forces Agreement (VFA) in the wake of the murder of transgender Jeffry Laude allegedly by US Marine Pfc. Joseph Scott Pemberton while on shore leave in Olongapo City last week.

3-DAY EXTENDED FORECAST

TODAY’S WEATHER

Editor: Dionisio L. Pelayo • Tuesday, October 21, 2014 A3

24 – 32°C

HALF MOON NEW MOON

OCT 16

3:12 PM

25 – 32°C

25 – 32°C

OCT 24

5:57 AM

LOW TIDE

HIGH TIDE

MANILA BAY

2:45 PM

0.21 METER

8:20 AM

0.69 METER

25 – 33°C Partly cloudy to cloudy skies with isolated rain showers and/or thunderstorms

METRO CEBU 25 – 31°C CAGAYAN DE ORO CITY 23 – 31°C ZAMBOANGA CITY 25 – 34°C

ILOILO/ BACOLOD

Cloudy skies with rain showers and/or thunderstorms.

24 – 30°C

23 – 30°C

24 – 31°C

Partly cloudy to at times cloudy with rain showers.

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

METRO DAVAO 25 – 33°C

Weekday hourly updates: 6:00 AM on Balitaan, 7:00 AM & 8:00 AM on Good Morning Boss!, 9:00 AM, 10:00 AM, 11:00 AM, 12:00 PM, 1:00 PM on News@1, 3:00 PM, 4:30 PM, and 6:00 PM on News@6

www.panahon.tv

SABAH CELEBES SEA

@PanahonTV

Economy

A4 Tuesday, October 21, 2014 • Editors: Vittorio V. Vitug and Max V. de Leon

briefs DAR BRIDGES GET P2.1-B BOOST THE Department of Budget and Management (DBM) has released P2.1 billion to the Department of Agrarian Reform (DAR) to pay for bridging materials and services to be used in the Tulay ng Pangulo para sa Kaunlarang Pang-Agraryo (TPKP) project.

Sourced from the 2014 budget of the Department of Public Works Highways (DPWH), the amount will pay Matiere SAS, a French company that supplied the DPWH with the materiel to be used for the construction, installation, and establishment of the girder-type universal bridges (unibridges).

The TPKP unibridges will connect agrarian-reform communities and the Comprehensive Agrarian Reform Program (CARP)-covered areas and road networks to main markets nationwide under the DAR’s Program Beneficiaries Development (PBD) support services delivery component.

Budget Secretary Florencio B. Abad said, “This release will jumpstart the construction of these unibridges, so that we can link our farmers to commercial areas where they can sell their produce.

The goal is to allow our farmers to become more active participants in the local economy, and ultimately, to expand the reach and development of the country’s agriculture industry.”

The DAR will be the executing agency for the TPKP project while the DPWH will be building the prefabricated modular steel bridges as supplied by the Matiere SASEiffel Consortium. Of the 418 bridges to be constructed, the DAR has already endorsed 287, of which 15 have been completed and one is undergoing construction.

“The Program Beneficiaries Development is an important component of DAR’s mandate to help achieve agrarian reform. At the same time, the infrastructure developed by the TPKP will help our agrarian-reform beneficiaries as they make themselves more competitive in the agribusiness sector,” Abad said.

The DAR and the DPWH also agreed to replace the damaged Desamparados and Tultugan bridges beside the Bohol circumferential road. However, this is subject to the assessment that the replacement bridges will help develop agrarian- reform communities and CARP-covered areas within the region. PNA

pangasinan legislative body seeks probe, audit of electric co-op

The Sangguniang Panlalawigan (SP) on Monday passed a resolution asking the National Electrification Administration and the Cooperative Development Authority to conduct an investigation and audit of the Pangasinan III Electric Cooperative (Panelco III), distributor of electricity in eastern Pangasinan.

This, after the SP noted that Panelco III has incurred a P400million unpaid tax obligation with the Bureau of Internal Revenue (BIR) since 2009, and it suspects that it might no longer be in the pink of health as it was before some few years ago.

The BIR, in fact, garnished a P29-million deposit of Panelco III deposited in a local bank which had effected the financial capacity and operations of the electric cooperative.

The resolution seeking the investigation of Panelco III was proposed jointly by Provincial Board Members Alfonso Bince Jr., Ranjit Shahani and Danilo Sison, all from eastern Pangasinan and memberconsumers of Panelco III. Allan Casem, general manager officer in charge of Panelco III, admitted the huge obligation of the cooperative with the BIR which was in the form of unpaid value-added taxes in generation and transmission costs which it questioned since 2009. PNA

BusinessMirror

news@businessmirror.com.ph

Calaca coal plant to deliver 150 MW in summer of 2015, says DOE’s Petilla

D

By Lenie Lectura

MCI Holdings of the Consunji group has committed to the Department of Energy (DOE) last week that it will be able to fire up the first 150 megawatts (MW) of its Calaca coal-fired power plant-expansion project in the summer of 2015.

“DMCI formally submitted document that their new plant will now be online on April 1,” Energy Secretary Carlos Jericho L. Petilla said in a text message. “The other 150 MW will be online on July 1.”

DMCI, according to Petilla, had said that the power facility’s commercial operation was originally targeted in December 2014 but was moved to March 2015 and again to June 2015.

The government was banking on DMCI’s power plant-expansion proj-

ect to help ease the supply deficiency anticipated in Luzon during the summer months next year. Petilla said it’s the biggest power plant, in terms of capacity, expected to come online in the second quarter of next year.

The DOE had projected a shortfall of 900 MW next year, up from earlier estimates of 600 MW to 700 MW, owing to the delay of the DMCI’s Calaca power-plant expansion project, among others.

Petilla said the 900 MW projected supply deficiency won’t be

adjusted just because DMCI had committed to run its 150-MW power facility by April next year. “It’s still the same. It will be difficult to move the target just because of a one-month delay. This is where more ILP [Interruptible Load Program] can come in,” Petilla said.

Under the ILP, customers with large loads, like commercial establishments, will be asked to operate their own generator sets if the grid operator projects a need to augment generation capacity in the Luzon grid. Through this, the aggregate demand for power from the system will be reduced to a more manageable level, helping ensure the availability of supply during the season.

With the ILP, power supply from the grid that will not be consumed by participating customers will be available for use by other customers within the franchise area.

Targeted ILP participants are those with large embedded generation capacities, such as malls, large business establishments and factories.

DMCI is undertaking an expan-

sion of the 600-MW power plant that it acquired from the government through the privatization efforts of the Power Sector Assets and Liabilities Management Corp. in 2009 for $361.7 million.

It intends to expand the power facility by 1,000 MW more to be done in three phases. If completed, this will raise the power plant’s capacity to a total of 1,600 MW. The first phase consists of putting up an additional capacity of 300 MW (2x150 MW).

The second phase will expand the Calaca power plant’s capacity by 350 MW more. The third phase also involves another 350 MW. “DMCI’s 2x150 MW is the biggest plant coming in before summer of 2015. Trans Asia’s 135 MW is on track by end of 2014 so far,” Petilla said.

The energy chief said there are no penalties imposed on power producers if they fail to meet their original target schedule. “As it is, they would have already suffered or financial bled for every delay.

They do not want that happening of course,” Petilla said.

Smart gets CA TRO on refund of P7B+ overpriced text rates to users

By Joel R. San Juan

T

HE Court of Apppeals (CA) has granted the plea of telecom giant Smart Communications Inc. for the issuance of a temporary restraining order (TRO) enjoining the National Telecommunications Commission (NTC) from enforcing its order to refund its subscribers amounting to more than P7 billion for overpriced text-message rates.

In a five-page resolution penned

by Associate Justice Priscilla Baltazar-Padilla, the CA’s Sixth Division held that Smart is entitled to a TRO under the equal protection of laws doctrine.

The CA noted that the appellate court has already issued the same in favor of Digitel Philippines Inc. and Globe Telecom Inc., which are also questioning the NTC order.

“We find that Smart, which is similarly situated as the two other telecommunications companies, is also entitled to such injunctive writ,” the CA ruled.

Like in its ruling in the case of Digitel, the CA said the recovery of the amount to be disbursed by Smart in favor of its subscribers might be impossible in the event that the NTC decision and resolution are set aside.

“To our minds, justice would be better served if the implementation of the NTC decision is restrained at this stage of the proceeding, especially that those who recently intervened in the case, had already moved for the issuance of a writ of execution,” the CA said.

“To prevent any irreparable injury that Smart may sustain in view of the enforcement of the impugned decision, it is more judicious to preserve

Cold season collection

Uniqlo announces the launch of its kids and babies wear collection for the 2014 fall winter season at a Uniqlo store in SM Aura, Taguig City, with Katsumi Kubota, chief operating officer of Fast Retailing Philippines Inc. and General Manager Geraldine Sia.

the status quo, pending determination of the propriety of the issuance of the questioned judgment,” it added.

It agreed with the contention of Smart that there is no means to efficiently implement the order since it would be very difficult to determine the identities of the prepaid users.

In seeking the issuance of a TRO, Smart argued that it would suffer a considerable loss if the NTC order is not enjoined as it has to refund billions of pesos directly to its million subscribers.

It added that it will also take some time to produce the data and record for its SMS services, citing the volume of data going through the network.

The process, according to Smart, will compel it to make individual computations of every amount due per subscriber based on the number of regular SMS they sent to other networks starting December 1, 2011, up to present, including the determination of whether or not they availed

of existing promos or bucket rates.

The TRO, will be in effect for a period of 60 days and upon payment of the amount of P500,000 cash bond.

Earlier, the appellate court granted the same relief in favor of Globe and Digitel.

It can be recalled that the NTC issued separate orders on November 20, 2012, directing mobile phone companies to immediately refund and cut text-messaging charges to P0.80 from P1.

Covered by the order were Globe Telecom, Smart Communications Inc. and Digitel Philippines Inc., which operates Sun Cellular.

The NTC also ordered the three telco companies to refund or reimburse their subscribers these excess charge of P0.20 per off-net SMS from the effectivity of the memorandum circular until fully settled, by crediting the load of prepaid subscribers or effecting the refund through the respective bills for post-

ROY DOMINGO

paid subscribers.

In its petition, Globe questioned how the NTC order can be effectively implemented.

“To whom will the P0.20 refund per text be given, when the identities of the prepaid users are unknown, and the great overwhelming majority of the prepaid market have long been using and continue to use unlimited [instead of piso-per-text] services?”

Globe asked.

It added that the company is also uncertain on how much should be given to each prepaid subscriber considering that neither Globe nor the other cellular mobile telephone service providers have any way of knowing how much each of the million subscribers had consumed in prepaid loads in the past.

Globe added that the NTC’s order is putting into jeopardy the financial viabilitty of the entire telecommunications industry and the public will likely suffer if it is not enjoined.

Move to redefine ‘savings’ in 2015 budget bill alarms civil-society groups

BRIONES: “Not only are lump-sum appropriations in the form of special purpose funds still present in this budget, but more significantly, the term ‘savings’ has been redefined such that it now subverts the collective will of the people.”

By Estrella Torres

A

network of civil-society organizations is urging lawmakers to scrutinize Malacañang’s move to redefine “savings” in the proposed P2.606trillion budget next year as they expressed fears that some of these funds could be siphoned off to bankroll the candidacy of certain politicians in the 2016 polls.

The groups said that lawmakers “should not approve on third and final reading the 2015 General Appropriations Bill [GAB] which will legalize and perpetuate not only the practices of the Disbursement Acceleration Program but the pork-barrel system, itself,” said the Pera Ibalik Sa Tao (Piso) coalition at a news forum on Monday in Quezon City.

Former National Treasurer and Social Watch convener Leonor Briones said the proposed budget contains a bloated lump-sum allocation amounting to P140.5 billion under the special purpose funds that is prone to misuse since these are not subject to congressional scrutiny and auditing.

“Not only are lump-sum appropriations in the form of special purpose funds still present in this budget, but more significantly, the term ‘savings’ has been redefined such that it now subverts the collective will of the people,” Briones said in a news statement issued by the Piso coalition.

She said, “If this budget is passed with this redefinition of savings, then ‘savings’ can now be declared at any time of the year by the Executive for so-called justifiable causes.”

Briones said giving the Executive branch the free hand to “redefining savings” in the national budget violates local and international standards of accounting and auditing.

“With this new definition of savings, all the debates, hearings and consultations with the general public will be rendered moot and useless, because the Executive branch is now given a free hand in handling the people’s money,” she said.

The former government chief treasurer also said that lawmakers should not surrender their mandate for budget oversight function and power of appropriation.

“We call on the people to make our legislators accountable. Let us demand from our representatives to truly represent our interests,” said the Piso coalition.

Escudero: DOTC proposal for P54-B buyout of MRT 3 carries a ‘very high’ price tag

By Recto Mercene

T

he Department of Transportation and Communications’s (DOTC) plan to buy out the Metro Rail Transit Line 3 (MRT 3) for almost P54 billion is unprogrammed and is not reflected in the 2015 General Appropriations Act, Sen. Chiz Escudero said on Monday.

Escudero, chairman of the Senate Committee on Finance, said the P54 billion, which the DOTC has set aside for the takeover of the MRT 3, will be

sourced from a loan, and not from the national treasury.

“That amount which was authorized by the DOF [Department of Finance] Secretary Cesar V. Purisima to effect the MRT 3 buyout is actually a loan. Thus, although it is unprogrammed, once the loan has been signed, it will reflect in the GAA and the DOTC…to push through with the buyout,” Escudero said. He added that the amount is most likely to be slashed from the GAA or realign it to more essential services for the general public,

like the much-needed infrastructure to ease traffic congestion and disasterpreparedness programs.

“While it is true that we need to improve our mass-transport system, I have not been convinced by the DOTC that a takeover with a very high price tag is what we need at this time. One, that P54 billion is not enough as MRTH [Metro Rail Transit Holdings] said the equity value buyout amounts to P112 billion.

Where did the DOTC get that figure?

Who did they talk to?” Escudero said.

The senator said the amount

DOTC is appropriating, as opposed to MRTH’s asking price, is worthless and might just go to waste.

“Even DOTC Secretary [Joseph Emilion] Abaya said in the hearings that even after they take over MRT 3, the only upshot is better terms for the government when it bids out the operation and maintenance. The DOTC can bid that out now without shelling out P54 billion of taxpayer’s money,” Escudero pointed out.

He is also wary that the bulk of the takeover appropriation will just be used

to pay for the bonds held by state-owned Land Bank of the Philippines and Development Bank of the Philippines.

“Granting we pay the bonds in LandBank and DBP, which are technically government anyway, why scrape Juan dela Cruz’s tight resources? The remaining balance is too miniscule to really own back MRT 3, why force the issue then?” Escudero said.

The DOF will go on an executive session with the Senate on Monday to discuss the issues srrounding the breakdown-prone and congested MRT 3.

Economy BusinessMirror

news@businessmirror.com.ph

Lawmakers not yet done with CJ Sereno on JDF

By Jovee Marie N. dela Cruz

T

he chairman of the House Committee on Justice on Monday said that the lower chamber will “invite” again Chief Justice Ma. Lourdes Sereno or her duly authorized representatives in its hearings on two bills repealing and amending the law creating the Judiciary Development Fund (JDF).

Liberal Party Rep. Niel Tupas Jr. of Iloilo said that the resumption of hearings on twin the bills will resume after the Congress’s All Saints Day break from November 1 to 16.

“The hearings on the bills regarding JDF will resume probably in November,” Tupas said.

He said that Sereno or her representatives should attend the Congressional hearing to promote transparency on the spending of the so-called judiciary pork-barrel.

Sereno has branded as “premature” and “inappropriate” the House inquiry on JDF. Tupas and Nacionalista Party Rep. Rodolfo Fariñas of Ilocos Norte have filed House Bill (HB) 4738 and HB 4690, respectively, to repeal, replace and reform the JDF by compelling the Supreme Court (SC) justices to open their pork barrel, stressing the constitutional grant of fiscal autonomy cannot and should not be used to frustrate the overriding constitutional principles of transparency, accountability and good governance.

Under Presidentia l Decree 1949—the law that created the JDF—the exclusive power and duty to approve and authorize disbursements and expenditures of the JDF is vested to the chief justice of the SC. In that sense alone, the JDF is considered discretionary funds as the same is administered by a particular public official and disbursed for public purpose.

Speaker Feliciano Belmonte Jr. said that the lower chamber will consider the request of Sereno for her and her representatives not to attend the House Committee on Justice hearing pending SC final ruling on the Disbursement Acceleration Program (DAP).

Impeachment

Meanwhile, Tupas said that his committee is set to defend in the plenary the committee report of his panel “junking the three impeachment complaints against President Aquino for “insufficiency in substance.”

According to Tupas, the committee report has already been submitted to Committee on Rules for plenary deliberations.

“Our decision can be reserved [in the plenary] but I think this [panel decision] is also [a] reflection of the voting sentiment of the entire lower chamber,” he added.

In September members of the House Committee on Justice have voted unanimously to junk separately the three impeachment complaints filed against Mr. Aquino.

In the first and second impeachment complaints, which was endorsed by Bayan Muna Reps. Neri Colmenares and Carlos Zarrate, Rep. Fernando Hicap of Anakpawis, and Rep. Terry Ridon of Kabataan are seeking President Aquino’s removal from office, accusing him of culpable violation of the Constitution and betrayal of public trust under Section 2, Article XI of the 1987 Constitution arising from his implementation of the DAP. The third complaint, which was endorsed by Reps. Antonio Tinio of ACT Teachers and Emmi de Jesus of Gabriela, was over the Enhanced Defense Cooperation Agreement between the Philippines and the US.

Tuesday, October 21, 2014 A5

2 RE firms keen on investing in $185-M geothermal project in Oriental Mindoro

T

By Lenie Lectura

wo firms are interested to invest in the $185-million geothermal facility of local renewable energy (RE) firm Emerging Power Inc. (EPI) in Oriental Mindoro following President Aquino’s call for more investments in the RE sector to address the country’s powershortage crisis.

EPI Chairman Martin Antonio G. Zamora said 30 percent of the total investment would be direct equity and 70 percent debt financing sourced from Philippine banks. He identified the interested firms as Mekong Brahmaputra Clean Development Fund (MBCDF), under the management of the Dragon Capital Group, and the Netherlands Development Finance Co. (FMO). Both are advocates of

sustainable development projects, who are looking to invest around 15 percent in equity.

“The entry of our pro-environment investors is in sync with the President’s call for renewable energy companies, like EPI, to help solve the power problem without harming the environment,” Zamora added.

He said EPI’s 40-megawatt (MW) geothermal project in Naujan, Ori-

ental Mindoro—which is set to start its drilling phase next month—will help stabilize power supply in the archipelago, bring down electricity costs; and uplift the economic conditions of the people in Mindoro without harming the ecological balance in the island province.

“The geothermal project is expected to result in as much as P2.1 billion in savings [or by 40 percent from P11 per kilowatt-hour to P6.58 per kWh] in electricity bills the people of Mindoro will pay in four years time,” according to Zamora.

He said that, with geothermal, the people of Mindoro could be assured of a sustained, low-priced power as opposed to the cost of power derived from fossil fuels, such as coal.

“The MBCDF is proud to be making its first investment in the Philippines with a highly reputable renewable energy company like EPI. The MBCDF engages in clean development investments that meet the ‘Triple Bottom Line’ principles of ‘People, Planet and Profit.’ These are

sustainability values that demand a specific, measurable criteria for every investment’s positive impact on the environment and society as a whole,” said Joseph Hoess, Dragon Capital director.

House Energy Committee Chairman and Rep. Reynaldo Umali of Oriental Mindoro welcomed EPI’s project, saying “We are happy that Dragon Capital and FMO share our vision of bringing in progress and development without disturbing the ecological balance that this virginforested island is known for.”

EPI, which is responsible for the exploration and development of the geothermal project, has tapped the expertise of the Geo-Survey Institute of Iceland and the Institut Teknologi Bandung of Indonesia.

FMO is an entrepreneurial development bank of the Netherlands. The bank invests risk capital in companies in developing countries. With a committed investment portfolio of €6.6 billion in 2013, FMO is among the largest public-private develop-

ment banks worldwide.

MBCDF is a limited partnership established in Guernsey, which is focused on the development and deployment of clean technology to promote economic growth in Asia. It is managed by Dragon Capital Clean Development Ltd., a subsidiary of the Dragon Capital Group, an integrated investment group centered in Vietnam with over $ 1.4 billion of assets under its management.

President Aquino earlier said more investments in clean and renewable energy would not only address the looming power shortage next year but would also make sure the economy would not lose momentum.

“It is of absolute importance that we continue exploring and investing in clean and renewable energy sources,” President Aquino said in his speech at the recently held Energy Smart Philippines 2014, which was organized by the European Chamber of Commerce in the Philippines and the World Bank’s International Finance Corp.

House panel moves back date on grant of emergency powers to Aquino

T

he chairman of the House Committee on Energy on Monday said it would take more time before the lower chamber could grant President Aquino’s request for emergency powers after the Department of Energy (DOE) said that the projected power shortfall maybe addressed with the help of privately owned generators.

Liberal Party Rep. Reynaldo Umali of Oriental Mindoro, chairman of the House Committee on Energy and co-Chairman of the Joint Congressional Power Commission, said his panel now wants the House to approve the joint resolution granting emergency powers to President Aquino before December 1, instead of October 29.

“We hope to approve the joint resolution in the House before December 1. We will still approve [the joint resolution], but the provision regarding the rental of generators sets will no longer be there,” Umali said.

Umali earlier said the lower chamber will pass the joint resolution, which will allow President Aquino to secure additional generating capacity to solve the looming crisis in summer of next year on October 29 to give the Executive branch ample time to lease or purchase generator sets ahead of the intervals when power supply is expected to be tight.

Moreover, the lawmaker said the government will encourage more businesses to sign up for the Interruptible Load Program (ILP) to raise the power reserves available next summer.

Based on established protocols, the ILP is implemented during a red-alert status (minimal power reserve) upon the notice of the National Grid Corp. of the Philippines (NGCP) and the distribution utilties informing ILP participants to deload from the grid.

The ILP is a voluntary program, where businesses, such as malls and

Light up the lanterns

Gilmore Avenue at the Greenhills district in San Juan City shines bright during the night as stalls selling Christmas lanterns and decorations entice customers to buy their yuletide merchandise. Nonoy Lacza

factories that have their own generators can be disconnected from the power grid in times of short supply, and can sell any excess power they generate to distributors.

Through the ILP, the aggregate demand for power from the system will be reduced to a more manageable level, helping ensure the availability of supply during the summer season, the lawmaker said.

According to Umali, some 847 megawatts (MW) have been committed to ILP that can be used in summer next year with a derated or usable capacity of 593 MW. Energy Undersecretary Raul B. Aguilos, at a House hearing on emergency powers, said ILP can solve the power deficit in Luzon next year.

“As long as we can get the assurance from private corporations and have them sign up for ILP, we’ll no longer have a problem,” he said.

The 2014 DOE outlook revealed that a reserve shortfall of 21 MW to 31 MW for the first two of April 2015.

This translates to one-hour rotating brownouts once a week based on the calculation of the NGCP. “The only reason we’re trying to rush [the approval of the joint resolution] is we’re trying to beat the deadline that will foreclose the options of leasing or purchasing additional generating capacity. If the [solution] will be purely ILP, then we can pass the joint resolution even in January or February,” he said.

Last month President Aquino has

asked Congress to grant him an emergency powers that will allow him to contract additional power capacity to avert the looming power crisis in summer next year.

The President cited the Section 71 of the Electric Power Industry Reform Act (Epira), which states that, “Upon determination by the President of the Philippines of an imminent shortage of the supply of electricity, Congress may authorize, through a joint resolution, the establishment of additional generating capacity.”

Welcome

Meanwhile, the People Opposed to unWarranted Electricity Rates (Power) Convener and former Rep.

Teddy Casino welcomed the decision of the committee to drop the proposal under the emergency powers to enter into negotiated contracts to rent or buy generating sets to address a projected power shortfall next year.

“It was clear from the presentation of the Department of Energy itself that the so-called shortage is actually just a thinning of the reserve requirement of 20 [MW] to 30 MW for two weeks in the summer of 2015. There is no need for drastic emergency powers to address this situation,” he said.

“What was apparent is that Secretary [Jericho] L. Petilla and the DOE [could be] imagining things by coming up with what they called ‘estimated forced outage’ for 2015 that basically presumes that the brownouts that happened in 2014 will happen at exactly the same time and magnitude next year, thus resulting in a supply shortage.

This is a ridiculous assumption to make, especially since they are proposing a solution that would cost taxpayers P6 [billion] to P10 billion,” Casiño added.

Casiño also said the proposal to allow the President to enter into P6 billion to P10 billion worth of negotiated power contracts under Section 71 of Epira is based only on Petilla’s insistence of a power shortage that is not supported by verifiable data.

Citing data from the Philippine Independent Power Producers Association, Casiño said there is a dependable capacity of 11,667 MW in the Luzon grid. But the DOE figure is lower at 11,349 MW. According to the NDCP, the projected peak summer demand for 2015 is at 8,480 MW in March and 9,011 MW in May. “This means that, strictly speaking, there is a buffer reserve of anywhere from 2,338 MW to 3,187 MW during the 2015 summer months,” Casiño said. Jovee Marie N. dela Cruz

Six groups join bidding for P24.4-B Bulacan bulk water-supply deal

By Lorenz S. Marasigan

H

ALF-a-dozen parties submitted on Wednesday prequalification documents for the P24.4-billion Bulacan Bulk Water Supply deal, the Public-Private Partnership (PPP) Center reported.

“Six bidders submitted prequalification documents for the MWSS [Metropolitan Waterworks and Sewerage System] Bulacan Bulk Water Supply Project,” the agency said.

The PPP Center identified the bidders as: Consortium of First Philippine Holdings Corp. and Abeinsa Infraestructuras Medio Ambiente SA, Filinvest Agua Consortium, SMCK-Water Consortium, Team PolarisManila Water, Prime-Alloy Water Consortium and Marubeni Corp.

Prospective bidders must first pass the prequalification stage of the bidding, based on legal, technical, and financial capability requirements, as required by a two-stage

auction. The agency will then invite those who passed the prequalification stage to submit their technical and financial offers for the deal.

The project aims to address the water-supply requirements of municipalities in the province of Bulacan, thus reducing groundwater extraction and the use of deep wells in the province which are currently being discouraged due to adverse environmental impact.

It involves several components,

including the construction of an interconnection structure to the MWSS’s existing Bigte-Novaliches raw water conveyance system, as a source for Phase 1.

Other components of the project are: the development of new water sources, including raw water conveyance system to the Water Treatment Plants (WTPs); the construction of WTPs and ancillary facilities; the construction of treated water reservoirs; and the construction of

pumping stations.

It also involves the construction of treated water transmission mains, including line appurtenances, from the WTPs to the agreed delivery/interconnection points of the municipalities; the installation of flow metering devices after the WTPs, pumping stations, transmission branch points, and at the agreed delivery/interconnection points; and the installation of appropriate measurement and monitoring stations.

Opinion BusinessMirror

A6 Tuesday, October 21, 2014

Editor: Alvin I. Dacanay

editorial

Render unto Caesar

S

UNDAY’S Gospel reading is one that makes many people feel uncomfortable. In it, Jesus tells a group of Pharisees that people should “give to Caesar the things that are Caesar’s.”

That one phrase opens up a big discussion about the obligation of people to pay taxes to the government, even if the government misuses them.

That phrase seems to imply that there is a moral necessity to pay taxes.

There are a couple of problems with our modern interpretation of what is written in the Gospel. The first problem is that the Pharisees and Jesus are not talking about taxes. They are talking about “tribute” (the word used in the Greek manuscripts), which was paid to show respect for and acknowledge the authority of the government, in this case the Roman occupiers. Taxes were completely different from tributes. Taxes were paid, then as now, to fund and in return for public services, like those rendered by the military and other government offices. This Biblical passage is about tribute paid by a conquered people, not a tax.

The Pharisees ask, “Is it lawful to give tribute to Caesar or not?”

Jesus ignores that question, as legality is never the issue when a people are facing an invader.

The second problem, which is never discussed, is this: What is meant by “the things that are Caesar’s”? Jesus asked for a Roman denarius, a low-value silver coin, to illustrate His point. As the Romans conquered all the lands around the Mediterranean Sea, the people in those lands were required to use Roman currency to facilitate trade within the Roman Empire more easily.

A similar situation existed here during the American colonial period, when the United States Congress passed the Philippine Coinage Act, which fixed the value of the Philippine peso to exactly half of the US dollar.

When the Japanese occupied the Philippines, they immediately issued their own currency, even as Filipinos continued to circulate what were called “guerrilla pesos” under penalty of imprisonment by the administration of then-President José P. Laurel. The Japanese government issued the Philippine fiat peso, which Filipinos called “Mickey Mouse money.”

The comment about the things that are Caesar’s would be the same as a World War II-era Filipino resistance leader telling the people to give back to the Japanese their own money.

There is a story about Jesus and taxes, but it is not about His talking to a taxpayer who did not pay the full amount. It’s about Him talking to a tax collector, specifically the chief of the publicans who collects the taxes, oversees the public-building projects and runs the customs department. After meeting with Jesus, the man promises never to cheat any citizen again.

Maybe Sunday’s reading was directed at the wrong people.

BusinessMirror A broader look at today’s business Ambassador Antonio L. Cabangon Chua Founder Publisher Editor in Chief

T. Anthony C. Cabangon Jun B. Vallecera

News Editor City & Assignments Editor Special Projects Editor

Dionisio L. Pelayo Vittorio V. Vitug Max V. de Leon

Online Editor

Ruben M. Cruz Jr.

Research Bureau Head Creative Director Chief Photographer Editorial Consultant Chairman of the Board & Ombudsman President VP-Finance VP-Corporate Affairs VP Advertising Sales Advertising Sales Manager Circulation Manager

Dennis D. Estopace Eduardo A. Davad Nonilon G. Reyes Romeo M. del Castillo

Publishing, Inc., with offices on the 3rd floor of Dominga Building III, 2113 Chino Roces Avenue corner De La Rosa Street, Makati City, Philippines.

Tel. Nos. (Editorial) 817-9467; 813-0725. Fax line: 813-7025.

(Advertising Sales) 893-2019; 817-1351, 817-2807.

(Circulation) 893-1662; 814-0134 to 36. E-mail: news@businessmirror.com.ph.

www.businessmirror.com.ph

regional offices

n DYQC - 106dot7 HOME RADIO CEBU STATION MANAGER: JULIUS A. MANAHAN E-MAIL ADDRESS: homecebu@yahoo.com ADDRESS: Ground Floor, Fortune Life Building, Jones Avenue, Cebu City CONTACT NOs.: (032) 253-2973/ 234-4252/ 416-1067/ 0922-811-3994 n DWQT - 89dot3 HOME RADIO DAGUPAN STATION MANAGER: RAMIR C. DE GUZMAN E-MAIL ADDRESS: homeradiodagupan@ yahoo.com ADDRESS: 4th Floor, Orchids Hotel Building, Rizal Street, Dagupan City

Manny B. Villar

THE Entrepreneur

A

T the rate controversies are sprouting like mushrooms and investigations are being launched by different government agencies as if the whole nation is in chaos, I must say I don’t envy our political leaders. I can even understand if some of them have stopped reading newspapers or watching the news just to get a few hours of sleep at night.

With this observation, I could not avoid looking back at the 2010 presidential elections, wherein I lost.

When I say my loss was good and that it turned out to be a blessing, some people may raise their eyebrows. I would, too, if I did not experience the positive change that followed the elections.

I am not one to dwell on defeat, or waste time trying to find out the reason or reasons for it. Instead, I turned to the values and discipline I acquired when I became an entrepreneur more than three decades ago.

Successful businessmen, for instance, see opportunities in times of crises, while others see only de-

CONTACT NOs.: (075) 522-8209/ 515-4663/ 0922-811-4001 n DXQM – 98dot7 HOME RADIO DAVAO STATION MANAGER: RYAN C. RODRIGUEZ E-MAIL ADDRESS: home98dot7@gmail.com ADDRESS: 4D 3rd Floor, ATU Plaza, Duterte Street, Davao City CONTACT NOs.: (082) 222-2337/ 221-7537/ 0922-811-3996 n DXQS - 98dot3 HOME RADIO GENERAL SANTOS STATION MANAGER: AILYM C. MATANGUIHAN E-MAIL ADDRESS: homegensan@yahoo.com ADDRESS: Ground Floor, Dimalanta Building, Pioneer Avenue, General Santos City CONTACT NOs.: (083) 301-2769/ 553-6137/ 0922-811-3998 n DYQN - 89dot5 HOME RADIO ILOILO STATION MANAGER: MARIPAZ U. SONG E-MAIL ADDRESS: homeiloilo@yahoo.com ADDRESS: 3rd Floor, Eternal Plans Building,

Ortiz Street, Iloilo City CONTACT NOs.: (033) 337-2698/ 508-8102/ 0922-811-3995 n DWQA - 92dot3 HOME RADIO LEGAZPI STATION MANAGER: CLETO PIO D. ABOGADO E-MAIL ADDRESS: homeradiolegazpi@ yahoo.com ADDRESS: 4th Floor, Fortune Building, Rizal St., Brgy. Pigcale, Legazpi City CONTACT NOs.: (052) 480-4858/ 820-6880/ 0922-811-3992 n DWQJ - 95dot1 HOME RADIO NAGA STATION MANAGER: JUSTO MANUEL P. VILLANTE JR. EMAIL ADDRESS: homenaga@yahoo.com ADDRESS: Eternal Garden Compound, Balatas Road, Naga City CONTACT NOs.: (054) 473-3818/ 811-2951/ 0922-811-3993

Printed by brown madonna Press, Inc.–San Valley Drive KM-15, South Superhighway, Parañaque, Metro Manila

spair. They know that liabilities can be turned into assets. For myself, I knew that my loss in the presidential elections paved the way for opportunities outside politics.

When I finally stepped down at the end of my term as senator, I made a 360-degree turn and went back to the world of business. My business is a lot bigger now than before I went into politics.

As I said in a previous column, this is the best time to be a businessman in the Philippines, which has attracted the world’s attention after receiving investment-grade ratings from all major international credit-rating agencies, and has been

recognized as the fastest-growing economy in Southeast Asia and the second-fastest in Asia.

The World Bank announced in August that it had lowered its 2014 growth forecast for the Philippines to 6.4 percent, in terms of gross domestic product, down from its June forecast of 6.6 percent, before recovering to 6.7 percent in 2015.

The Asian Development Bank also lowered its projection, from 6.4 percent to 6.2 percent in 2014, and 6.4 percent in 2015. Despite the downgrade, the Philippines is still expected to lead growth among the major economies of the Association of Southeast Asian Nations.

Many industries are expected to post higher growth rates than the Philippine economy. The real-estate industry is one of them because of continuing robust demand. In the officebuilding segment, demand is driven by the business-process outsourcing industry, for which the Philippines is recognized as one of the most desired destinations. In the housing business, the persistent backlog of about 4 million units (particularly in the low-income and affordable segments) sustains demand, which, in turn, is fueled, in large part, by remittances from overseas Filipino workers.

Too late to sell, too early to buy

Judge Pedro T. Santiago (Ret.) Benjamin V. Ramos Adebelo D. Gasmin Frederick M. Alegre Marvin Nisperos Estigoy Aldwin Maralit Tolosa Rolando M. Manangan

BusinessMirror is published daily by the Philippine Business Daily Mirror

n DXQR - 93dot5 HOME RADIO CAGAYAN DE ORO STATION MANAGER: JENNIFER B. YTING E-MAIL ADDRESS: homecdo@yahoo.com ADDRESS: Archbishop Hayes corner Velez Street, Cagayan de Oro City CONTACT NOs.: (088) 227-2104/ 857-9350/ 0922-811-3997

Blessings from defeat

John Mangun

OUTSIDE THE BOX

E

VERYONE is a stock-market genius when prices are decidedly going higher or obviously going lower.

There is absolutely no hesitation on their part when you ask them about their strategy. “Of course, I bought when XYZ was 10 percent lower three weeks ago,” one would reply. Alternatively, another would say, “I have been in all cash since, just before the market started down.”

You know that it is all nonsense, but people talk about their stockmarket investments the way they do about their love life, and that is just fine. Day-to-day reality is hard enough without having to be completely honest about your stockmarket investing. Besides, the truth about your market-portfolio performance is best left for the confessional, just as it is for your other “sins”.

But it is a stock market like we have been experiencing over the last six weeks that creates the most difficulty and keeps the experts very quiet. This has been, and is still, a “too late to sell, too early to buy” market.

The last time I looked, the Philippine composite index is down about 5 percent from its September high.

That is not much of a drop, although

there are individual issues that have gone down quite a bit.

The fall is actually too small to be classified as a correction, which is usually considered a 10-percent drop in price. While several important issues are down 10 percent, there are always going to be those stocks that move with the blue-chip index, but by a greater or lesser amount. The fact still remains that, over time, most stocks will follow the index, even if it gets ahead or lags the broad market movement.

At any given time, especially on the Philippine Stock Exchange (PSE), there are always high-flying trading issues that can go dramatically higher, even as the broad market is going sideways or down. But these issues are not for the ordinary investor who

has a real life outside of stock-market trading. It is the longer-term investors in issues like Globe Telecom, Metropolitan Bank and Trust Co. or Puregold Price Club Inc. who are the most concerned, as those stocks are “corrected”.

This type of market turns most of us experts, including me, into nearbabbling fools.

I wrote at the end of September that the local market was crossing its Rubicon River, in that it would soon make a decision to go substantially higher or lower. It is still trying to figure that out. Buyers do not want to come in yet, fearing that the market may have more downside action until it finds a bottom. Sellers are concerned that the market could decide to turn higher at any time. We are all caught in the middle.

One stock-market analyst whom I have great respect for says he believes the PSE index will be at 7,000 at year-end. But that is where we are pretty much at right now. The market is not going to trade at 7,000 for the next two months, so that means that the market will go either higher and then return to 7,000 or go lower and return to the current level.

That only adds more confusion for the investor.

To simply go and sit on a beach at Boracay and not watch the market for the next 60 days does not make any sense, either. You will either come

Thus, I can say that my return to private business could not have come at a better time. My flagship company, Vista Land & Lifescapes Inc., continues to sustain doubledigit increases in profits. For the first semester of 2014, the listed company’s net income grew by 12 percent to P2.8 billion, compared with P2.5 billion a year ago. Revenues reached P11 billion, up 14 percent from P9.7 billion year-on-year.

The company expects to sustain the double-digit growth rates for another record in 2014. In 2013 Vista Land reported a net income of P5.1 billion, the highest achieved in the company’s history. With a land bank of almost 2,000 hectares throughout the country, Vista Land is strategically positioned to take advantage of opportunities in the housing business. The company has the widest geographical reached among the major players in the business; its projects are spread out in 34 provinces and 74 cities and municipalities.

Based on these developments, I even dare say that I was lucky I lost in the 2010 presidential elections.

For comments, e-mail mbv.secretariat@gmail.com or visit villarsipag.org.

back to the market to find that you have missed a significant upside move or that your portfolio could be severely damaged. Then again, maybe my stock-market analystfriend is right and prices will be exactly where they are now. But that is too high a risk to take if you are invested in the market.

Therefore, current stock-market holders have three options: 1) Sell now and wait for the bottom, and wait to buy back in if prices start going higher; 2) do nothing for the moment, and wait and watch for signs of a break, one way or the other; or 3) buy more now to average the cost and hope that you have not bought too early.

I like to let the market tell me what to do. Right now, this market is telling me to wait and watch and be ready for the coming breakout.

On a personal note, a very happy birthday to my son Christopher, who is proving that there’s no real-estate bubble in the Philippines. Chris is a corporate-account officer of Brittany Corp., Vista Land’s high-end luxury development subsidiary.

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.

Opinion BusinessMirror

opinion@businessmirror.com.ph

Calax cancellation: Big Palace gamble

Nlex-Slex road project–sabotage?

Butch del Castillo

OMERTA

Ernesto M. Hilario

ABOUT TOWN

W

ITH many motorists and commuters already facing plenty of difficulties on a daily basis, it looks like the Office of the President is about to take a big gamble on a major infrastructure project. Unfortunately, that project is supposed to help alleviate the transportation crisis besetting the greater Metro Manila area.

That project is called the CaviteLaguna Expressway (Calax). Based on the Public-Private Partnership (PPP) Center’s description of it, the project is a four-lane highway that will provide a faster, more efficient alternative route connecting the southern part of Metro Manila to key areas in the provinces of Cavite and Laguna.

So, what’s the gamble that could torpedo the hope for faster travel in this part of the metropolis?

Well, there is persistent talk in the business sector that Malacañang might soon order the cancellation of this project. If the speculation is proven true, this will put the credibility of the government’s PPP program in question. Worse, it will dampen the public’s hope for some improvement in their commute from Cavite and Laguna to Metro Manila, and vice versa.

A little background: Some two years ago, the PPP Center made a big push for private-sector participation in the construction of Calax. The project attracted bids from some of the country’s biggest names in business: the Ayalas, the Aboitizes and Ramon Ang of San Miguel Corp.

The Aboitiz and Ayala groups formed a consortium that eventually bagged the project. The San Miguel group’s bid was disqualified, supposedly for “technical reasons.”

As everyone probably knows by now, the San Miguel group has gone to Malacañang to contest the decision of the Department of Public Works and Highways to award the project to the Ayala-Aboitiz group.

The awarding of the Calax project to the “highest complying bidder” has been stalled for about four months now.

At this point, the business community is waiting with bated breath for Malacañang’s next move.

And, as the awarding of the project is further delayed, the suspicion grows that the Palace is seriously contemplating the cancellation of the Calax project and just build the toll road itself. The guessing game now has been on how Malacañang might justify a cancellation.

According to media reports, the cancellation option was raised during a recent Cabinet meeting and was seriously being considered as a viable

option to break the Calax deadlock.

This is where the scenario begins to look grim, and here’s what’s worrying the business community.

To justify the cancellation, some bright minds in President Aquino’s circle will have to think of ways to cast doubt on the integrity of the original bidding process. Someone will have to make it appear that the process was flawed and that the original decision of Public Works Secretary Rogelio L. Singson to award the project to the winning consortium was either grossly mistaken or reeking of malice.

That would put in jeopardy the very reputation of Singson who, up to this day, is seen as one of the “cleanest” officials in the President’s official family.

There is no way to justify the cancellation of the project without damaging the reputation of the PPP program and Singson himself.

In effect, the Palace will have to junk Singson. Is that a good gamble to make? Only Malacañang can answer that.

The other way to justify the cancellation is to cast doubt on the winning bidder itself, to question their capability to deliver on their commitments. This presents an even bigger problem because the Ayalas and the Aboitizes are major players with credible track records in business.

To question their capability to deliver on Calax would be to question their capability to deliver on the other major infrastructure and power-related projects already awarded to them by the government.

Unfortunately, it looks like the negative fallout here will also be unimaginable. This will send signals to the local business community, as well as the international community, which the President is trying to woo, that the PPP processes are not airtight and could be subject to external influences.

It looks like, in these scenarios, every one loses.

Of course, the biggest loser would be the President’s “bosses”—the commuters and motorists who have long held on to the hope that, someday, somehow, their transportation woes would be solved at last.

E-mail: ernhil@yahoo.com.

First of two parts

F

ORMER Finance Secretary Margarito “Gary” B. Teves, who was acclaimed as Asia’s best finance minister during Gloria Macapagal-Arroyo’s (GMA) presidency, apparently could not take it anymore.

President Aquino’s repeated assertions that GMA’s term as president, which lasted from January 2001 to June 2010, was a “lost decade” for the Philippine economy, must have been too much to bear, so he had to break his silence to set the record straight.

Teves served as GMA’s finance chief from 2005 to 2010, during which he was cited as Asia’s best finance minister by The Banker, the highly regarded, London-based international-finance magazine.

During Joseph “Erap” Estrada’s presidency, he was appointed as president of the Land Bank of the Philippines and continued to serve as such when Mrs. Arroyo took over as president.

Before that, he was known as the House of Representatives’s undisputed “resident economist” as the multiple-term representative of Dumaguete City, Negros Oriental province.

Teves, a very low-key and affable man who would rather let his actions

do the talking than be involved in acrimonious debates, pointed out that it was, in fact, during GMA’s term that the foundation was laid for the country’s credit-rating ugrades.

He said that Fitch Ratings’s upgrade in March 2013 noted that it was Mrs. Arroyo’s “improvements in fiscal management…that made general government debt dynamics more resilient to shocks.”

Prudent management of the national debt and legislation in support of financial-market developments, like the reformed value-added tax, contributed to the strong fiscal performance of the country, which resulted in credit-outlook upgrades from negative to stable (during GMA’s term) and positive shortly after July 2010.

While Teves commended P-Noy for sustaining the economic growth started by his predecessor, he said there was a clear need for it to raise infrastructure spending from the current 3 percent to at least 5 percent

The proactive conductor Edgardo J. Angara

T

HE governments of South Korea and Australia have recognized that science-and-technology (S&T) innovations are essential to long-term national growth. Both are working to build collaborative ecosystems, where creativity and innovation can flourish.

To revitalize her country’s creative economy, South Korean President Park Geun-hye recently pledged that “innovation centers” would be established in key cities and provinces. In an innovation center, local startups tie up with large conglomerates to use new technologies in opening new businesses.

An innovation center linked to technology powerhouse Samsung Group was opened in Daegu City this month, which Samsung said was set up in partnership with the Daegsu local government. It also established a fund worth $19.2 million over the next five years as seed capital for promising local tech firms.

Last week Australian Prime

Minister Tony Abbott announced that his government will devote up to AUS$400 million to a plan that will boost his country’s national competitiveness by better linking academic research and development (R&D) to industry.

A total of AUS$188 million will be used to develop “industrygrowth centers,” where researchers and research institutions will be partnered with industry. Some AUS$60 million will be used as seed capital for select ideas with the highest commercial potential.

Australia’s new competitiveness agenda also includes the formation of the Commonwealth Science Council, which will discuss and chart the

Indonesia’s chance to avoid Obama’s mistakes

J

OKO WIDODO, who was inaugurated as Indonesia’s new president on Monday, has much in common with United States President Barack Obama: A winning smile, popularity among the young, a reputation as an outsider and an opposition bent on sabotaging his chances of success. To avoid the kind of political gridlock that has hamstrung his American counterpart in the past several years, Widodo will have to move quickly and, where possible, unilaterally.

The stakes are high. Gross domestic product growth in Indonesia has hit a five-year low of 5.1 percent—not nearly enough to accommodate the 15 million new workers who will join the labor force between now and 2020. And the looming end of the US Federal Reserve’s quantitative-easing program threatens to launch a worldwide retreat from emerging markets.

At the same time, with companies looking to move production out of increasingly expensive China, Indonesia has an opportunity to add

manufacturing jobs. If the country picked up just 7 percent of China’s 2012 market for labor-intensive exports, according to one recent estimate, Indonesia’s own sector could grow $110 billion in five years.

Widodo’s surprisingly weak campaign performance has led to legitimate worries over whether he has the strength to overcome a determined opposition. Ever since the July elections, rival parties have seized the initiative. They now control all key positions in the country’s parliament and have even rolled

Tuesday, October 21, 2014

As he did when he was governor of Jakarta, Indonesian President Joko Widodo can lower the costs of doing business immediately by reforming and rejuvenating the bureaucracy, making government processes more transparent and slashing the red tape that’s choking the country’s competitiveness. As much as jobs, voters want to see improved services, particularly in health care and education. If Widodo and the technocrat ministers he has pledged to appoint can deliver those, he could earn a store of public goodwill he can later tap in his battles with parliament. back the policy of electing local and provincial officials directly—the very system that allowed Widodo, a former furniture salesman, to rise. If those parties stay united, they could paralyze government decision-making.

Fortunately for Widodo, however, many reforms that could yield quick and tangible results don’t need parliamentary support.

As he did when he was governor

of Jakarta, he can lower the costs of doing business immediately by reforming and rejuvenating the bureaucracy, making government processes more transparent and slashing the red tape that’s choking Indonesia’s competitiveness.

As much as jobs, voters want to see improved services, particularly in health care and education. If Widodo and the technocrat ministers he has pledged to appoint can deliver

After laboring for four years, the current administration huffed, puffed and heaved to make its centerpiece Public-Private Partnership (PPP) Program take flight. Unfortunately, the throng of direct investors it tried to attract did not come as expected.

Now nearly at the end of its six-year term, the PPP Center tells us that only five infrastructure projects, out of the 55 projects in the PPP pipeline, would be finished or “deliverable” by the end of P-Noy’s current term. of gross domestic product, or GDP. He added that spending must also “focus investments on infrastructure bottlenecks that increase the cost of doing business.”

It was this part of his public statement that caught my eye, apart from his other suggestions that P-Noy should modernize agriculture, simplify the application process to build and operate power plants, and create a stable regulatory environment that honors contracts with investors, among others.

Huffed, puffed, heaved

IN previous columns, we have placed side by side the solid infrastructure accomplishment record of the Arroyo administration and that of P-Noy’s.

After laboring for four years, the current administration huffed, puffed and heaved to make its centerpiece Public-Private Partnership (PPP) Program take flight.

A7

Unfortunately, the throng of direct investors it tried to attract did not come as expected. Now nearly at the end of its six-year term, the PPP Center tells us that only five infrastructure projects, out of the 55 projects in the PPP pipeline, would be finished or “deliverable” by the end of P-Noy’s current term.

The problem, obviously, is not the availability of funds. Think of the billions in various outlays that were spent for other purposes. In fact, there was a surfeit of funds— billions in discretionary funds that were spent for political purposes.

The problem seems to boil down to one thing: The lack of a wellplanned and coordinated program that would have addressed the horrendous problems besetting our air and sea facilities, and inadequacies in our mass-transit systems. In Metro Manila alone, these problems have reached critical levels that are now causing the economy to lose billions of pesos a day.

As far as the building of new roads, highways, skyways, expressways, airports and seaports are concerned, there seems to be a total lack of coordination. The Department of Transportation and Communications, for example, doesn’t seem to see eye-to-eye with the Department of Public Works and Highways as to which infrastructure project already in the pipeline should be prioritized.

In short, they seem to be working at cross-purposes.

To be concluded on Wednesday E-mail: omerta_bdc@yahoo.com.

S&T priorities of the country. Council members will include the ministers of industry, education and health; the Australian chief scientist; five business leaders; and five top scientists and researchers.

Last month the Asian Development Bank and the Economist Intelligence Unit launched the Creative Productivity Index, a new system for rating a country’s capacity for innovation.

The report underscored how a supportive ecosystem for innovation and creativity is the foundation for longterm economic growth, while the lack of it consigns a country’s future to mediocrity.

The report ranked South Korea and Australia as third and eighth, respectively, out of 24 countries; the Philippines, meanwhile, was put at dismal 18th place. Where the South Korean and Australian governments are taking the lead, the Philippine government appears lethargic and laid back in the creativity and innovation game, despite our abundant talents in such fields.

Like an orchestra in an R&D concert, the government should play the proactive conductor. But because of a clueless government, Dr. Joel Cuello, a Filipino scholar based in

the University of Arizona, wrote that there is no such “orchestrated arrangement among public, private and academic partners.”

In 2011 the Congressional Commission on Science & Technology and Engineering I headed launched several “innovation clusters,” which the commission, led by Executive Director Dr. Greg Tangonan, put together and the Senate Finance Committee funded.

An innovation cluster is a tripartite consortium of government, industry and academe designed to come up with practical applications of R&D outputs, both national and international. In layman’s language, this is an effort to introduce public-private partnerships for S&T and R&D, two areas that are crucial to the country’s development and sustainability.

The pilot innovation clusters were on algae research and commercialization, remote sensing, informationand communications-technology development, disaster science and management, and responsible mining.

All these Philippine initiatives were even ahead those of South Korea and Australia. The big difference was that their governments took the lead.

those, he could earn a store of public goodwill he can later tap in his battles with parliament.

Widodo will also have to maintain the backing he has earned from markets. They rose on the news of his victory and plunged earlier this month as opposition gains raised the chances of partisan deadlock.

Whether that dip (and an estimated $576 million in capital flight in nine days) was to blame, some leading opposition figures have since adopted a more conciliatory tone.

Above all, Widodo needs to stick to his pledges to start trimming more than $20 billion in fuel subsidies—an easier job, now that oil prices are dropping—and to clear away obstacles to stalled infrastructure projects.

The new president is fortunate in one thing: His opposition is not nearly as ideologically united as US Republicans are. Most Indonesian

parties are based on personalities and patronage, not policy. The party of Widodo’s embittered opponent, former Suharto-era general Prabowo Subianto, isn’t likely to soften its antipathy toward the upstart president too much. But others, including the Democrat Party of outgoing President Susilo Bambang Yudhoyono, agree with many of the policies Widodo wants.

He should, thus, be able to garner enough support in parliament for his most important initiatives, given enough patience and negotiating skill—two things that Obama has, sometimes, seemed to lack in his dealings with Congress. Widodo, in contrast, managed to work with a recalcitrant legislature when he was Jakarta’s governor. For all the inspiring similarities between their new president and America’s, Indonesians should take just as much hope from the differences. Bloomberg

E-mail: angara.ed@gmail.com.

2nd Front Page BusinessMirror

A8 Tuesday, October 21, 2014

www.businessmirror.com.ph

DOTC auctioning off P457.11B worth of infra projects during P-Noy’s term

GOV’T WATCH WANTS 2016 POLL BETS TO SUBMIT SALN

T

By Lorenz S. Marasigan

he government aims to roll out all key infrastructure deals under the transportation agency, amounting to roughly half a trillion pesos before President Aquino bows out from office in 2016, a Cabinet official revealed.

Transportation Secretary Joseph Emilio A. Abaya said his office is bullish on the prospect of auctioning off roughly P457.11 billion worth of contracts that would effectively plug the leakage in the country’s infrastructure.

The cost does not include most of the larger deals, whose feasibility studies have yet to be completed.

“Yes, I am confident. In fact, during one of my conversations with the President, we agreed that, at the very least, we’ll make it easy for the guys who will replace us by getting necessary approvals for the projects,” the transport chief replied when asked about the rollout of all implemented projects under his office.

There are roughly 60 projects in

the public-private partnership (PPP) pipeline to date, bulk of which, or 27 projects, are under the Department of Transportation and Communications (DOTC). The status of these deals vary, some are in need of approval of the National Economic and Development Authority (Neda) Board, while others are still being studied for feasibility.

Just recently, the highest planning body of the government approved five gateway development deals, involving the upgrade of the airports in Iloilo, Bacolod, Davao, and Puerto Princesa. The Neda Board also approved the P18.99-billion Davao Sasa Port Modernization deal.

These recently approved projects will undergo bidding in the next

ABAYA: “We are really looking way forward for 2025. The airports are difficult to do, so we have to make our decisions now.”

$98-M B.O.P. SURPLUS POSTED IN SEPTEMBER

couple of months.

Included in the list of projects to be auctioned off on or before 2016 are the P135-billion Mass Transit Loop and the P166.33-billion North-South Commuter Rail. These railway projects will help decongest the roads in Metro Manila while easing the transport of goods and services from the provinces.

“Let us also look at our biggest project, which is the new gateway in Sangley,” Abaya said, referring to the $10-billion airport project envisioned to replace the Ninoy Aquino International Airport in Manila.

“We are really looking way forward to 2025. The airports are difficult to do, so we have to make our decisions now.

We have to get the necessary approvals to make it easy for the guys who will replace us,” he added.

See “DOTC,” A2

By Bianca Cuaresma

T

he country’s transactions against the rest of the world remained in a state of surplus in September, but proved lower compared to the previous month, the Bangko Sentral ng Pilipinas (BSP) said on Monday.

The balance of payments (BOP) position—essentially a broad measure of the country’s economic dealings with the rest of the world—registered a surplus of $98 million during the month.

While the BOP position did not revert to a deficit but has remained in surplus, which means that the Philippines generated far more foreign currency earnings than it spent, the level of surplus has, in fact, trended lower since August this year.

In comparison, the September BOP surplus was $24 million lower than surplus totaling $114 million in August.

This was also $367 million lower than the surplus reported in September last year when this totaled $465 million.

As a result, the surplus reported for the month was not enough to lift the continued shortfall in the BOP position

as the nine-month deficit stood wide at $3.4 billion.

The imbalance represents a turnaround from the year-ago surplus when the nine-month excess aggregated $3.8 billion.

The monetary authorities project the BOP to remain in surplus of at least $1.1 billion at the end of the year.

This means that for the country to reach the government’s assumption, it must at least incur a surplus of $1.5 billion consistently for the final three months of the year even as the country’s external sector has to contend with market volatilities around the world.

The last time the Philippines posted a surplus in the billion-dollar range was in July last year, when the surplus aggregated $1.1 billion.

Monetary officials earlier bared a plan to review the assumed BOP numbers this year as part of the biannual assessment of the country’s external sector.

BSP Deputy Governor for the Monetary Stability Sector Diwa C. Guinigundo said the central bank will submit to the Development Budget Coordination Committee the new assumed numbers for approval.

1,500 INC members attended Macalintal’s lecture on seniors’ right

By Catherine N. Pillas

A

government watchdog wants candidates in the 2016 elections to adhere to its transparency and accountability campaign by submitting their Statement of Assets, Liabilities, and Net worth (SALN).

Raul T. Concepcion of Gov’t Watch is also seeking the candidates’ commitment that they will continue the Aquino administration’s good-governance agenda.

Concepcion said the next set of leaders must have “resolve, integrity, love of country and willingness to serve, and, moreover, should make a commitment to continue the reforms began by President Aquino.”

The group added that the next leader “must also be progressive enough to recognize which of those reforms are in need of updating, improvement or abolition in order to conform to the ever-changing economic, political and societal landscape.”

The group urged would-be leaders of the country to promote transparency by submitting their SALN. The group, likewise, called on the voters to be more discerning in selecting their next leaders.

“As events currently unfold that may be seen as the beginning of jockeying for position in 2016, we appeal to the voting public to be more intelligent and demanding in making a choice.

Surveys can provide guidance in making a choice,” Concepcion said.

“We know that good governance is the solution and we know where it is wanting…. We must make the right choice in selecting who next to lead our country,” he added.

Another crucial point in electing future leaders, Concepcion said, is the election process itself. He, thus, called for a review of the automated election system.

Specifically, the Gov’t Watch urged the government to decide quickly if the Precinct Count Optical Scan machines will be used anew in 2016, or discarded.

“The ultimate foundation of good governance are we, the voters; for the election of our leadership is our responsibility. But, in order to properly elect our leadership, our choices must be made to count. And, for our choices to count, our automated election system must be reformed now,” the Gov’t Watch said.

‘I shall return’. . . continued from a1

A

n estimated 1,500 officers and members of the Iglesia ni Cristo (INC) Christian Family Organizations attended the one-and-a-half hour lecture on the rights of senior citizens delivered by Romulo Macalintal at the INC’s College of Evangelist Ministry Auditorium in its Central Office in Quezon City last Saturday.

The INC auditorium was filled to its capacity of more than 800 INC members and the 700 more who could no longer be accommodated had to contend themselves listening to a hook-up of Macalintal’s lecture at the various conference rooms immediately set up by the INC, in view of the overwhelming attendance by its members.

In his lecture and during the open-forum, Macalintal narrated

the various experiences he encountered in invoking his rights and privileges as a senior citizen under the law. He encouraged the INC senior citizens to, likewise, be more vigilant in fighting for their rights and assured them of his full support and assistance.

After the occasion, Macalintal was awarded a Plaque of Appreciation signed by INC Executive Minister Eduardo V. Manalo expressing INC’s appreciation to Macalintal for “devoting his precious time and sharing his invaluable insights on the rights and privileges of senior citizens.”

The lecture is part of Macalintal’s lecture-series in various parts of the country, where several organizations of senior citizens asked for his assistance to enlighten them on their rights and privileges under the law.

Cuisia said the Philippine-US alliance was further strengthened in April with the signing of the Enhanced Defense Cooperation Agreement (Edca).

“The Edca is intended to support the development of a minimum credible defense posture for the Philippines through capability building and combined activities and highimpact, high-value joint exercises focusing on maritime domain awareness, maritime security, humanitarian assistance and disaster response,” he said. “Today, we pay tribute to the great American patriot General Douglas MacArthur, who is still remembered by many not just as the liberator of the Philippines but also as a true friend of the Filipino people,” Cuisia said.

The envoy also paid tribute to Filipino veterans who served under MacArthur, including Maj. Jess Baltazar, 94, and Ray Cabacar, 87, who attended the commemoration. He also expressed his appreciation to the US-Philippines Society, the MacArthur Memorial and the General Douglas MacArthur Foundation.

Christopher Kolakowski, director of the MacArthur Memorial, said the liberation of the Philippines actually commenced on October 17, 1944, when elements of the 6th Ranger Battalion landed in Suluan, Dinagat and Homonhon islands. He said the three-day operation that resulted in the capture of the three islands paved the way for the safe passage to the Leyte Gulf of the largest invasion armada ever assembled in the Pacific—a force made up of 574 ships and 174,000 men.