Businessmirror december 12, 2014 by BusinessMirror

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By Bianca Cuaresma

oody’s Investors Service elevated the country’s credit stature yet again on Thursday, effectively lifting the $270-billion Southeast Asian economy two notches above the speculative or junk bond-issuer status.

33 DAYS INSIDE

The country’s “strong economic growth” and “limited vulnerability to risks” were highlighted in the upgrade to “Baa2” rating, its outlook rated “stable”. Just last year, all three major credit watchers upgraded the country’s credit standing to investment grade on the back of solid macroeconomic fundamentals. In a parallel development, the policy space made possible by well-behaved inflation numbers from year to date allowed the Bangko Sentral ng Pilipinas (BSP) to keep the rate at which it borrows from or lends to banks steady on Thursday, its final rate-setting meeting for the year. The Monetary Board (MB) decision was based on its assessment that the inflation environment continues to be manageable, with the risks to inflation remaining broadly balanced over the 18- to 24-month-long policy horizon. In its postmeeting news briefing, the central bank also announced a further cut in forecast inflation over the next three years.

and… they’re off

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FINDING CHRISTMAS SANITY IN YOUR CROCK-POT »D3

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

Friday, December 12, 2014

AND... THEY’RE OFF

SAG AWARDS 2015: COMPLETE LIST OF NOMINEES

HERE is the complete list of nominees for the SAG Awards 2015: Performance by a Cast in a Motion Picture Birdman Boyhood The Grand Budapest Hotel The Imitation Game The Theory of Everything Performance by a Male Actor in a Leading Role Michael Keaton, Birdman Benedict Cumberbatch, The Imitation Game Eddie Redmayne, The Theory of Everything Jake Gyllenhaal, Nightcrawler Steve Carell, Foxcatcher Performance by a Female Actor in a Leading Role Julianne Moore, Still Alice Reese Witherspoon, Wild Felicity Jones, The Theory of Everything Rosamund Pike, Gone Girl Jennifer Aniston, Cake Performance by a Female Actor in a Supporting Role Patricia Arquette, Boyhood Keira Knightley, The Imitation Game Emma Stone, Birdman Meryl Streep, Into The Woods Naomi Watts, St. Vincent

THE HOLIDAYS ARE FAR FROM OVER BUT THE AWARDS SEASON IN HOLLYWOOD HAS ALREADY BEGUN

Performance by a Male Actor in a Supporting Role Robert Duvall, The Judge Ethan Hawke, Boyhood Edward Norton, Birdman Mark Ruffalo, Foxcatcher J.K. Simmons, Whiplash Performance by an Ensemble in a Drama Series Boardwalk Empire Downton Abbey Game of Thrones Homeland House of Cards Performance by an Ensemble in a Comedy Series The Big Bang Theory Modern Family Brooklyn Nine-Nine Orange Is the New Black Veep Performance by a Male Actor in a Television Movie or Miniseries Adrien Brody, Houdini Benedict Cumberbatch, Sherlock: His Last Vow Richard Jenkins, Olive Kitteridge Mark Ruffalo, The Normal Heart Billy Bob Thornton, Fargo Performance by a Female Actor in a Television Movie or Miniseries Ellen Burstyn, Flowers In The Attic Maggie Gyllenhaal, The Honorable Woman Frances Mcdormand, Olive Kitteridge Julia Roberts, The Normal Heart Cicely Tyson, The Trip To Bountiful

B S K  R L Los Angeles Times

OLLYWOOD’S awards season is shaping up to be a declaration of independence. The big studios got shut out as Boyhood, Birdman, The Grand Budapest Hotel, The Imitation Game and The Theory of Everything earned the top movie nominations on Wednesday for the 21st annual Screen Actors Guild (SAG) Awards. They’re competing in the category for best ensemble in a motion picture award—SAG’s equivalent of the best picture of the year. Though some awards have already been handed out by critics groups this season, the SAG nominations kicks off the highprofile series of honors that will culminate with the Academy Awards in February. Next up: The Golden Globe nominations on Thursday morning, which will help bring the race for Oscar gold into focus. Birdman—its full title is Birdman or (The Unexpected Virtue of Ignorance)—dominated the nominations on Wednesday, with four. Besides best ensemble, the film about a washed-up movie star who seeks redemption earned a nomination for male lead actor for Michael Keaton. Costars Edward Norton and Emma Stone received nominations in the supporting categories. But to date, Boyhood has been the critics’ darling. It has won several top honors from the Los Angeles Film Critics Association and the New York Film Critics Circle, as well as the British Independent Film Awards. On Wednesday, the coming-of-age story shot over a 12-year-period picked up three SAG nominations. Besides best ensemble, Ethan Hawke and Patricia Arquette earned nods in the supporting categories.

Also earning three nominations apiece were The Imitation Game—about a British genius who breaks the Nazi’s military codes—and The Theory of Everything— about the groundbreaking scientist, Stephen Hawking. The best-ensemble honor was the only nomination for the quirky comedy The Grand Budapest Hotel. Although that film has done well with critics groups, its nomination on Wednesday caught some by surprise. (Not only is it lighter in tone than the four other nominees, but the film was also released in March, making it a distant memory for some awards-season voters.) Also receiving nominations for male lead actor were Steve Carell (Foxcatcher), Jake Gyllenhaal (Nightcrawler), Benedict Cumberbatch (The Imitation Game) and Eddie Redmayne (The Theory of Everything). Vying with Norton and Hawke for male actor in a supporting role are Robert Duvall (The Judge), Mark Ruffalo (Foxcatcher) and J.K. Simmons (Whiplash). Joining Julianne Moore (Still Alice) and Reese Witherspoon (Wild) in the female lead actor race are Jennifer Aniston (Cake), Felicity Jones (The Theory of Everything) and Rosamund Pike (Gone Girl). Besides Stone and Arquette, supporting female actor nominations went to Keira Knightley (The Imitation Game), Meryl Streep (Into The Woods) and Naomi Watts (St. Vincent). There were some snubs, surprises and awards-season oddities in the nominations. ■ Noticeably overlooked were such films as Selma, Unbroken and American Sniper. The absence of Selma underscored the lack of diversity in Wednesday’s nominations. It was especially disappointing to some who had hoped that last year’s strong showing of such films as 12 Years a Slave and Lee Daniels’s The Butler would herald a new era of diversity in Hollywood films.

■ Playing against type paid off well—as it often does—for Carell and Aniston. Best known for their comedic roles on TV and in movies, they dramatically changed their appearances for more serious turns this awards season. In the dark, brooding Foxcatcher, Carell donned prosthetics to play a vastly wealthy man who embarks on a quixotic financial sponsorship of US wrestling. Aniston, meanwhile, deglammed for her portrayal of a woman who becomes fascinated by the suicide of a member of her chronicpain support group in Cake. ■ Cumberbatch and Ruffalo earned nominations in both movie and TV categories. In addition to their movie nods, they’re going headto-head for the lead actor in a TV movie or miniseries award, with Cumberbatch also nominated for Sherlock: His Last Vow and Ruffalo for The Normal Heart. On the TV side, nominations were given out in a variety of categories, including drama and comedy ensembles. Boardwalk Empire, Downton Abbey, Game of Thrones, Homeland and House of Cards were nominated for drama ensemble. The Big Bang Theory, Brooklyn Nine-Nine, Veep, Modern Family and Orange Is the New Black received nods for top comedy series. The SAG Awards have become one of the leading bellwethers for the Academy Awards. Earlier this year the winners of SAG’s four top acting awards—Matthew McConaughey (Dallas Buyers Club), Cate Blanchett (Blue Jasmine), Jared Leto (Dallas Buyers Club) and Lupita Nyong’o (12 Years a Slave)—all went on to receive the Academy Award for their performances. The SAG Awards will air live on January 25 at 5 pm PST on TBS and TNT from the Shrine Exposition Hall in Los Angeles. Debbie Reynolds will be honored during the ceremony with a life achievement award. ■

Performance by a Male Actor in a Drama Series Steve Buscemi, Boardwalk Empire Peter Dinklage, Game of Thrones Woody Harrelson, True Detective Matthew Mcconaughey, True Detective Kevin Spacey, House of Cards Performance by a Female Actor in a Drama Series Claire Danes, Homeland Viola Davis, How To Get Away With Murder Julianna Margulies, The Good Wife Tatiana Maslany, Orphan Black Maggie Smith, Downton Abbey Robin Wright, House of Cards Performance by a Male Actor in a Comedy Series Ty Burrell, Modern Family Louis C.K., Louie William H. Macy, Shameless Jim Parsons, The Big Bang Theory Eric Stonestreet, Modern Family Performance by a Female Actor in a Comedy Series Uzo Aduba, Orange Is The New Black Julie Bowen, Modern Family Edie Falco, Nurse Jackie Julia Louis-Dreyfus, Veep Amy Poehler, Parks And Recreation Action Performance by a Stunt Ensemble in a Motion Picture Fury Get On Up The Hobbit: The Battle Of The Five Armies Unbroken X-men: Days of Future Past Action Performance by a Stunt Ensemble in a Comedy or Drama Series 24: Live Another Day Boardwalk Empire Game of Thrones Homeland Sons of Anarchy The Walking Dead

life

Motoring

LOWER FUEL COST, COMPETITION SEEN CUTTING AIRFARES

BusinessMirror

Editor: Tet Andolong

ith fuel prices dropping and airline profits soaring, travelers could reap the benefits with a 5-percent drop in fares next year, according to a trade group for the world’s airlines. The International Air Transport Association in Geneva reported that the world’s airlines were on pace to post a combined net profit of $19.9 billion this year, rising to $25 billion next year. The prediction is a dramatic turnaround for an industry that was beset with bankruptcies and mergers in its effort to stay afloat for more than

Friday, December 12, 2014 E1

Track aTTack

a unique driving experience wiTh porsche and audi

Audi A3 sedan

By Kris C. Lim

ET’S face it. It’s not every day that we have the opportunity to drive the best cars in the world.

Imagine sitting inside one of them, smelling its leather seats, pushing the start button and pressing the accelerator pedal to the floor. As the engine revs up and the car hits a surprising speed, a level

Audi A1 hatchback

of excitement sets in that makes you want more. This was precisely what I went through during the recent PGA Cars track day held at the Clark International Speedway in Pampanga, where customers and

select motoring media were given a unique driving experience with the new Audi and Porsche cars. To facilitate the track day, PGA Cars hired top-caliber race drivers and instructors—George, Louis and Stefan Ramirez—who guided participants through two sets of exercises that demonstrated the cars’ performance and capabilities. In the first activity, the Gymkhana, the group took the diminutive Audi A1 hatchback and the A3 sedan, which showed their maneuverability, acceleration and braking efficiency around an especially designed course. The Audi A1 seemed endowed with lots of power as the car could easily get up to a full sprint even in the tight makeshift track laid out with U-turns demarcated by a small box lined with pylons that simulated a drive in the Metropolis. While the A1 showed remarkable agility, the new Audi A3 sedan displayed a nice balance between athletic handling and excellent braking. This was shown when the participants launched the Audi A3 along a 500-meter stretch before executing an emergency braking maneuver at the end. The A3 allowed its driver to retain control

PorscHe Boxster

despite the unsettling procedure it was put through. As we ended the activities, PGA Cars made sure that everyone had a memorable weekend drive by allowing us to take all their cars, such as the three Audi A3 variants, Q3, Porsche Macan and the stunningly powerful Porsche Boxster on hot laps around the track.

With their German engineering and sophisticated designs, it was hard to determine which among the cars was the best. If it’s about hitting full speed on the racetrack, one car stood out during the session—the Porsche Boxster, which is fitted with the same engine found in the Cayman. With an engine note that is

simply to die for, the 2.7-liter flatsix engine with direct fuel injection cranks out 265 hp of power and 280 Nm of torque, thanks to VarioCam Plus, technology that widens the power band and improves low-end torque. To know more about the Audi and Porsche cars, visit PGA Cars at 201 Edsa, Mandaluyong City.

motoring

Continued on A2

track attack: porsche and audi Henry Ford Awards Best Motoring Section 2007, 2008, 2009, 2010 2011 Hall of Fame

P25.00 nationwide | 8 sections 36 pages | 7 days a week

Moody’s ups PHL rating to ‘Baa2’ M

SKING You, dear God, with the filial trust of children for their daily nourishment, which is necessary for us all we recognize how good You are beyond all goodness. We ask also for the grace to know how to act so that justice and solidarity may allow the abundance of some to remedy the needs of others. Give us this day our daily bread. Amen.

Tuesday, November12, 18,2014 2014Vol. Vol.1010No. No.6440 Friday, December

M.B.’s DECISION TO KEEP POLICY RATES MAGNIFIES ECONOMIC IMPACT OF UPGRADED CREDIT STANDING

PAPAL VISIT 2015

A broader look at today’s business

PESO exchange rates n US 44.5760

Continued on A2

ASEAN SUMMIT President Aquino and South Korean President Park Geun-hye pose for photos before their meeting at the Asean-Republic of Korea Commemorative Summit in Busan, South Korea, on Thursday. AP/Jung Yeon-je

ALI buying part of Ramos share in TriNoma By VG Cabuag

yala Land Inc. (ALI), the country’s second-largest property developer, said it is buying part of the Ramos family’s 15.79-percent stake in North Triangle Depot Commercial Corp., the operator of TriNoma, for P738 million. The company, which already owns the majority of North Triangle, said it is buying 539,249 common shares and 2.26 million preferred shares being held by Anglo Philippine Corp. (APC). The transaction will increase ALI’s

stake in the operator of TriNoma— short for Triangle North of Manila— to 58.53 percent from the previous 49.29 percent. “What we purchased is only a portion of the 15.79 percent. We are still waiting if the partners are interested to buy the remaining [shares]. If not, we are open to purchase the entire 15.79 percent,” ALI said, adding that the acquisition is part of the company’s thrust of expanding its leasing business. The entire APC stake is worth P1.26 billion. Other stakeholders of North Triangle

include Ramcar Inc., with 14.26 percent; Lafayette Holdings Inc., 12.5 percent; Allante Realty and Development Corp., 4.08 percent; and DBH Inc., 4.08 percent. The actual site of TriNoma used to be the location of a flea market built by former Quezon City Mayor Brigido R. Simon Jr. as a livelihood project for the informal settlers of Quezon City. It was closed by Mayor Ismael Mathay Jr., who succeeded Simon, to give way for the construction of the Metro Rail Transit (MRT) depot in 1995.  See “ALI,” A2

n japan 0.3779 n UK 70.0556 n HK 5.7497 n CHINA 7.2167 n singapore 34.0145 n australia 37.1994 n EU 55.4748 n SAUDI arabia 11.8796 Source: BSP (11 December 2014)

News BusinessMirror

Friday, December 12, 2014

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Campi reports 34% jump in Nov sales

By Catherine N. Pillas

ales of local vehicle assemblers registered a 34-percent growth in November to 21,422 units on the back of continued robust consumer demand, which is seen to spike further this month.

Subsidy. . . continued from a8

This represented an increase of 8.7 percent from 762 establishments reported in the 2010 Annual Survey of Philippine Business and Industry. Among the industries, water collection, treatment and supply recorded the largest number of establishments with 720, or 87 percent of the total. Materials recovery ranked a far second with 53 establishments, or 6.4-percent share to total. Collection of hazardous and nonhazardous waste followed with 24 establishments, or 2.9 percent of the total count.

According to the report of the joint marketing committee of the Chamber of Automotive Manufacturers of the Philippines Inc. (Campi) and the Truck Manufacturers Association, the November volume is over 34 percent higher than the 15,917 units sold in the same month in 2013. Both the passenger car and commercial vehicle (CV) categories’ sales increased compared with the November 2013 results. The PC segment sold 8,040

units, a significant 46.7-percent growth year-on-year. On the other hand, the CV segment posted sales of 13,382 units for a 28.2percent increment. “For the month of December, we are expecting to have stable to higher sales, with anticipated high demand coming from the Christmas season,” Campi President Rommel Gutierrez said. With the strong performance in November, the 2014 year-to-date

ALI. . .

continued from a1

sales reached 213,427 units, or a growth of 30.1 percent. Toyota Motor Philippines Corp. remains the market leader with a 45.4-percent market share, an increase from 41.1 percent year on year. In the second spot is Mitsubishi Motor Philippines Corp., with a share of 21.4 percent, followed by Ford Motor Philippines, 8.6 percent; Isuzu Philippines Corp., 5.9 percent; and Honda Cars Philippines Inc., 5.6 percent.

The MRT 3 consortium, previously composed of Fil-Estate Holdings and Ayala Land, decided to construct the depot underground rather than a regular depot similar to the Light Rail Transit 1, due to its commercial viability as a shopping mall as it sits right in front of SM City North Edsa, one of the country’s biggest malls. The North Triangle Depot Commercial Corp. was incorporated in 2001, with Fil-Estate as the developer and Ayala Land as minority stockholder. The Ayala family then bought out FilEstate’s stake.

LOWER FUEL COST, COMPETITION SEEN CUTTING AIRFARES The top 3 regions in terms of the number of establishments and accounting for about two-fifths (40.1 percent) of the total were all in the Luzon area. Central Luzon led the region with 131 establishments, or 15.8 percent of the total. Calabarzon followed closely with 128 establishments (15.5 percent), while NCR, with 73 establishments (8.8 percent), placed third. The Autonomous Region in Muslim Mindanao (ARMM) recorded the least count with only six establishments, or 0.7 percent of the total.

Continued from A1

a decade after the September 11, 2002, terrorist attacks and the more recent global recession. But the picture now has improved; global fuel prices have dropped 33 percent over the past year and domestic travel demand has jumped nearly 4 percent in the same period, according to the IATA. The trade group predicted that tough competition and stronger profit margins should result in fare drops of 5.1 percent

in 2015 compared with this year. “Stronger industry performance is good news for all,” said Tony Tyler, director general and chief executive of the IATA. “It’s a highly competitive industry and consumers—travelers, as well as shippers—will see lower costs in 2015 as the impact of lower oil prices kicks in.” So far, airlines have not passed their financial windfall on to passengers because demand for air travel remains

steady and airline executives worry that fuel prices could shoot up again because of war, bad weather or other calamities that can disrupt oil production, according to industry experts. In the US, the average domestic airfare rose 2.5 percent, to $396 in the second quarter, compared with the average fare of $386 in the comparable quarter in 2013, according to the latest statistics from the US Department of Transportation. MCT

Moody’s ups PHL rating to ‘Baa2’ Continued from A1

For this year, the BSP sees inflation falling to 4.2 percent from earlier forecast of 4.4 percent in October. This means forecast inflation falling within target for the sixth consecutive time. The target inflation this year was seen ranging from 3 percent to 5 percent. For 2015, forecast inflation was seen averaging lower to just 3 percent from 3.7 percent and in 2016 inflation were to similarly moderate to just 2.6 percent instead of 2.8 percent. Tetangco said the lower inflation—which gave the central bank more breathing room to pause and keep the rates where they are —reflected in large part the subdues outlook for global commodity prices. The governor also said the Monetary Board took into consideration the moderation of local output, measured as the gross domestic product (GDP) in the third quarter, on the back of contracted agricultural production and lower public spending. BSP Deputy Governor for the Monetary Stability Sector Diwa Guinigundo said the resolution of supply issues, as well as lower prices of oil contributed to the decline in projected inflation. “Port congestion is mitigated in the last months, rice imports provide additional supply so rice prices have come down especially in areas outside metro manila,” Guinigundo said. “Oil prices also started to decline beginning July 2014. There is a big decline of oil prices and we know that the impact of oil prices is quite pervasive. It impacts not only on transport but also on food and other related items in the consumer basket,” he added. The baseline forecasts, according to Guinigundo, do not include the P1 rollback in jeepney prices effective immediately as announced by the Land Transportation Franchising and Regulatory Board (LTFRB). “We would expect that, while there will be some marginal impact on December inflation, the entire year will not have any perceivable effect,”Guinigundo said. But for 2015, the central bank sees jeepney fares moderating inflation by approximately 0.003 percentage points. The deputy governor also said the

lower-than-expected global growth is another downside to inflation coming into next year. In a statement, BSP Governor Amando M. Tetangco Jr. said the current monetary policy settings remain appropriate. “On balance, the Monetary Board is of the view that prevailing monetary policy settings remain appropriate given the manageable inflation outlook and favorable domestic growth prospects,” Tetangco said. “Going forward, the BSP will continue to monitor evolving price and output developments and remains prepared to take appropriate measures as necessary to ensure that the monetary policy stance continues to support an environment characterized by price and financial stability,” he added. Earlier this year, Standard and Poor’s Ratings Services upgraded the country’s standing a notch above investment grade, the first among the three major sovereign credit watchers to do so after the milestone was achieved for the first time in March last year, courtesy of Fitch Ratings. Moody’s said the ongoing debt reduction, the improvements in fiscal management, continued favorable prospects for strong economic growth, and limited vulnerability to the common risks currently affecting emerging markets were key ingredients to the upgrade. “The first driver of the upgrade is the decline in the Philippines’s debt burden, which has coincided with structural improvements in fiscal management. Administrative reforms in the key revenue-collecting agencies—most recently in the Bureau of Customs—have led to revenue growth in excess of nominal GDP growth for a fourth consecutive year,” Moody’s said. “At the same time, budget transparency has been enhanced, in part by a mix of courtmandated reforms and procedural changes, although these developments have temporarily weighed on public spending… coupled with relatively robust economic growth, the Philippines’s fiscal performance has led to the convergence of general government debt as a share of GDP to the corresponding peer medians,” the international credit watcher added.

GOVT BUDGET FOR AQUINO’S TRIP TO R.O.K. ONLY P11.2M Continued from A8

A Palace statement, quoting the Department of Foreign Affairs (DFA), said Mr. Aquino will deliver his country’s statement for this year’s summit theme, “Building Trust, Bringing Happiness.” It added that President Aquino is also scheduled to have a bilateral meeting with South Ko-

rean President Park Geun-hye, who is hosting a welcome dinner and cultural performance to officially welcome the Asean leaders. The Palace noted that Republic of Korea (ROK) was formerly a sectoral dialogue partner of the Asean, but later became a full dialogue partner in 1991. The dialogue relations between the Asean and ROK were upgraded into a strategic partnership in 2010, it added.

Economy

A4 Friday, December 12, 2014 • Editors: Vittorio V. Vitug and Max V. de Leon

Expo presents business opportunities to OFWs

LL roads lead to the SMX Convention Center, Mall of Asia Complex in Pasay City for the opening of the 11th MegaBalikbayan Overseas Foreign Workers Expo (MBOX) from December 18 to 20, the longest-running business expo targeting overseas Filipino workers (OFWs) and balikbayan and encouraging them to go into business. Coinciding with the OFW Expo is the Second International Travel Festival, an event that offers travel sales and incentives from different participating tour operators, hotels, resorts and venues. “It’s the best time of the year to invite our balikbayan because this is the time when they come home for the holidays. Maybe they would want to consider going into business,” said Orly Ballesteros, COO of Exlink Corp., at the prelaunch of the OFW expo and travel festival at the Podium in Mandaluyong City on December 2. Last year some 8,000 OFWs were successfully converted into businessmen. This year MBOX is targeting some 15,000 OFW converts. There are 4 million registered OFWs around the world, statistics show. “The majority of them go into food business. For OFWs who want to venture into business, we are ready to assist them. Perhaps, they would want to spend part of their hard-earned cash into opening up their own business,” Ballesteros said. Billed as the grandest gathering of OFWs, seafarers, mariners and families, the event is also in preparation for the Asean integration, in which local businesses will have more opportunities for regional expansion and productivity enhancement, he added. “With the Asean integration to go full blast in 2016, the business sector can now engage more in trade within and outside Asean to expand their production volume,” Ballesteros added. The event is produced and organized by Exlink Events, one of the top professional exhibition organizers in the Philippines. For more information, visit www.exlinkevents.com.

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SC: Robredo circulars promoting LGU accountability constitutional

By Joel R. San Juan

HE Supreme Court (SC) has affirmed the constitutionality of three circulars issued by the late interior secretary, Jesse Robredo, that promote transparency and accountability among the different local government units (LGUs). SC Spokesman Theodore Te, in a news briefing, announced that the Court en banc, during its regular session on Tuesday, voted unanimously to junk the petition filed by former Camarines Sur Gov. Luis Raymond Villafuerte Jr., questioning the legality of Memorandum Circulars (MCs) 2010-83, 2010-138 and 201108 for “lack of merit.” The circulars were issued by Robredo during his term at the Department of the Interior and Local Government (DILG) between 2010 and 2011. Robredo’s stint at the DILG was cut short when a twin-engine, four-seater plane carrying him en route to Naga City from Cebu City crashed off Mas-

bate due to engine trouble on August 19, 2012. His body was found two days later inside the plane wreckage. MC 2010-83, issued by Robredo in August 2010, pertains to the full disclosure of local budgets and finances and bids and public offering, while MC 2010-138, issued in December 2010, governs the use of the 20-percent component of the annual internal-revenue allotment shares. On the other hand, MC 2011-08, issued in January 2011, pertains to the strict adherence by LGUs to Section 90 of Republic Act 10147, or the General Appropriations Act of 2011. “The assailed issuances of the respondent...are but implementation of

this avowed policy of the State to make public officials accountable to the people. They are amalgamations of existing laws, rules and regulation designed to give teeth to the constitutional mandate of transparency and accountability,” the SC ruled. In filing his petition, Villafuerte claimed that the issuances are unconstitutional for having been issued in grave abuse of discretion amounting to lack or excess of jurisdiction. Villafuerte said the issuances violate the principles of local and fiscal autonomy as enshrined in the Constitution and Republic Act 7690, or the Local Government Code. He added that Robredo went beyond the confines of his supervisory power as an alter ego of the President when he issued MC 201083; and that the mandatory nature of the circular, with the threat of the imposition of sanctions for noncompliance, evinces a desire to control LGUs. However, the Court did not give merit to Villafuerte’s contentions that the issuances have infringed on the local fiscal autonomy of LGUs. It noted that the issuances do not interfere with the discretion of the

LGUs in the specification of their priority projects and the allocation of their budgets. “It is inconceivable, however, how the publication of budgets, expenditures, contracts and loans, and procurement plans of local government units required in the assailed issuances could have infringed on the local fiscal autonomy of local government units,” the SC stressed. “The posting requirement are mere transparency measures, which do not at all hurt the manner by which local government units decide the utilization and allocation of their funds,” it added. Likewise, the High Tribunal said even the Local Government Code, particularly Section 352, which Villafuerte invoked in his petition, does not exclude the requirement for the posting of additional documents on budgets, expenditures, contracts, loans and procurement plans. Last, the SC said it believes the supervisory powers of the President are broad enough to embrace the power to require the publication of certain documents as a mechanism of transparency.

LTFRB cuts minimum fare in NCR by P1 By Lorenz S. Marasigan

OMMUTERS in the National Capital Region (NCR) received an early gift from the government, as it ordered jeepney operators to reduce the minimum fare by P1 due to the series of rollbacks in fuel prices. Land Transportation Franchising and Regulatory Board (LTFRB) Chairman Winston M. Ginez said the provisional reduction would reduce the current minimum fare to P7.50 from P8.50. Fares exceeding the minimum would also be reduced by a peso, to wit: a passenger from Cubao in Quezon City en route to Marikina Sports Center would only have to pay P9 instead of P10. Discounted fares for students, senior citizens and disabled passengers were also reduced further to P6 for the minimum fare. The decision for a rollback was in response to the petition of Rep. Manuel M. Iway of the First District of Negros Oriental, who sought the reduction in minimum fare in October. “Dahil sa patuloy na pagbaba ng presyo ng langis sa pandaigdigang merkado, minarapat ng board na magpatupad ng provisional na pagbawas sa minimum fare ng mga pampasaherong jeepney sa NCR,” Ginez said. “Malaking ruling na katipiran sa publiko ang P1 bawas sa pamasahe lalo na ngayong kapaskuhan.” The fluctuating diesel prices over the last five years dictated the minimum fare for public-utility jeepneys. In 2009 diesel price was pegged at P23 per liter. Two years later, the price went up to P37.75 per liter, resulting in fare hike from P7 to P8. In 2012 diesel prices went up to P48 per liter, resulting in another minimum fare hike of P0.50 to P8.50 for the first 4 kilometers.

A JEEPNEY passes along Ayala Bridge, which is under repair due to the sagging of the old structure. The government announced that minimum fare for jeepneys will be cut by P1 in Metro Manila after the series of rollback in oil prices. The Ayala Bridge was built over the Pasig River in 1872 by Don Jacobo Zobel de Ayala of the Ayala-Roxas family. It links San Miguel and Arroceros districts in Manila. KEVIN DELA CRUZ

With the series of diesel-price reduction recently, the average price of diesel per liter is now at P33, prompting the LTFRB to decide to reduce the minimum fare to P7.50. Ginez said his office has directed regional LTFRB directors to assess the prevailing condition in their areas and make recommendations if a minimumfare rollback is also feasible in their

respective jurisdiction. Pagkakaisa ng mga Samahan ng Tsuper at Opereytor Nationwide (Piston) National President George F. San Mateo said his group welcomes the rollback. “Panawagan din namin na ibaba din ang passenger at freight rates ng mga malalaking kumpanya sa transport gaya ng MRT/LRT, shipping lines at airline fares sa

halip na ang pinagdiskitahan lang ng gobyerno na ibaba ay ang pasahe sa mga jeep na pawang minamaneho ng mga mahihirap na tsuper na kumikita lang ng P300 to P400 per day, which are way below sa P466 minimum wage ng workers sa Metro Manila at way below din sa government mandated daily family living wage na P1,063 per day for a family of six katao,” San Mateo stressed.

Senators push inquiry into ‘sin’ tax collection By Recto Mercene

HERE are calls from many sectors to pursue a full-blown congressional investigation into the alleged illicit trading practices of a local cigarette manufacturer. One of them is that of Sen. Antonio Trillanes IV, who backed on Thursday the move of House Speaker Feliciano Belmonte to inquire into the status of Bureau of Internal Revenue’s (BIR) inquiry into the alleged tax evasion

of Mighty Corp. “We welcome the proposal to conduct a congressional investigation on this matter since the BIR has long been sitting on the issue of alleged tax evasion of Mighty Corp.,” Trillanes told the media in a text message. Earlier Belmonte questioned what he described as deafening silence of BIR on the tax case of Bulacan-based tobacco company despite findings reached by the Senate Tax Study Research Office (STSRO), indicating

that Mighty appears to be engaged in smuggling activities. “Many are waiting for the full report of the investigation conducted by the BIR,” Sen. Juan Edgardo “Sonny” Angara, co-chairman of the Congressional Oversight Committee on Comprehensive Tax Reform Program, said. Even before Belmonte raised his concern on the issue, Angara said the committee has not been remiss in its duties, saying they had already called

the attention of the BIR in light of the report made by the STSRO. Angara said they plan to reconvene the oversight committee next year after the Christmas break, adding that they just had a meeting on the “sin” tax law. “I’m sure Chairman [Miro] Quimbo can give him [Belmonte] a full report of what transpired in the tax oversight committee when we met to tackle the implementation of the sin-tax law,” Angara said.

Economy

BusinessMirror Friday, December 12, 2014 A5

Govt may snip from 2015 budget for Ruby relief ops

UDGET Secretary Florencio B. Abad said the government can use up to P21.5 billion of the proposed P2.606-trillion national budget for next year to meet relief and rehabilitation needs after Typhoon Ruby (international code name Hagupit) hit the country. Abad said the government can readily tap P5.34 billion allocated as Quick Response Funds (QRFs) under the current budget for rehabilitation and reconstruction of areas affected by Hagupit. Additional funds shall be made available for relief and rehabilitation efforts once the proposed 2015 national expenditure program is approved in Congress and signed by President Aquino, Abad said in a statement. The bicameral conference committee has recently approved the 2015 General Appropriations bill, which is expected to be signed by Mr. Aquino before Christmas. He said there are fund sources to sustain the rehabilitation and reconstruction programs for Ruby-devastated areas, including the contingent fund, worth P2 billion and the National Disaster Risk Reduction and Management fund worth P 13 Billion fund. The QRFs allocated in respective departments for 2015 include P1.33 billion for the Department of Social Welfare and Development; P1 billion for the Depart-

ment of Education; and P1 billion for the Department of Transportation and Communications. Meanwhile, the Department of National Defense has also P353 million as QRF to address needs under national calamities and disasters, according to Abad. On the other hand, he said there’s also an available P530 million under the Office of Civil Defense for the same purpose. Abad added that the Department of Public Works and Highways has a total of P800 million as QRF allocation, while the departments of Agriculture and Health each has P500 million at their disposal for disaster response. Abad said the National Irrigation Administration has a total allocation of P500 million for QRFs for 2015. The QRFs are released at the start of the year as part of the GAA-as-release document regime. Such measure, Abad said, allows government agencies to make immediate use of funds for emergency-response functions. Estrella Torres

BCDA revenue from expressway use above P1B

BIG STARS

Workers resume production of a giant parol (bamboo lantern) in this small factory in Las Piñas City after Typhoon Ruby (international code name Hagupit) hobbled Filipinos’ preparations for Christmas. The parol symbolizes the star the Three Kings followed and led them to where Jesus Christ was born, according to biblical stories of Christmas. The Philippines, a country populated by many Christians, has also seen commercial trade of Christmas symbols, with the parol traded from P50 to P2,000 each. Nonie Reyes

TATE-owned Bases Conversion and Development Authority (BCDA) reported on Thursday that traffic revenue in the Subic-Clark-Tarlac Expressway reached an all-time high of P1.074 billion in the first 11 months of the year. That is a 14.49-percent increase year on year, BCDA President and CEO Arnel Paciano D. Casanova said. The uptrend is expected to continue as motorists realize the convenience of driving along the limited access toll road compared to using national, municipal and other alternative roads, Casanova said in a statement. He added the “seamless” connection of the SCTEx with both the North Luzon Expressway and the Tarlac-PangasinanLa Union Expressway also played a significant role in the jump of revenue and traffic volume. He said that from January to November 2014, the number of vehicles using the toll road rose to 10,305,688. That is a 12.93-percent increase compared to the 9,125,480 vehicles that used the toll road for the same period last year, Casanova added. The P1.07-billion revenues collected as of November is a 14-percent improvement over the P938.6 million it registered in the same period last year. According to the BCDA, the expressway allows for the merging of Clark and Subic Bay Freeport zones into a single facility resulting in the convergence of land-, air- and sea-based transport. Catherine N. Pillas

IBON sees emergency powers to aid big firms

ESEARCH group IBON Foundation Inc. said giving emergency powers to President Aquino would only promote the interests of big power firms, whose projects have been delayed or mothballed because of regulatory and other issues. In a statement on Thursday, the group said Mr. Aquino’s allies in Congress and energy officials “are highlighting the Interruptible Load Program [ILP] as the government’s primary response to the supposed power shortage in Luzon next summer.” IBON noted that, while the ILP is gaining more prominence, tucked in House Joint Resolution 21 on the proposed emergency powers is the presidential authority to fast-track the construction of new power plants.” “To do this, JR 21 wants to suspend various laws and regulatory requirements, which will likely benefit power firms,” IBON said. The House of Representatives approved on Wednesday the resolution authorizing the President to secure additional generating capacity through the ILP. The scheme involves private businesses, such as malls and factories, to use their own generator sets when power supply becomes critical. In return, the government will reimburse them the cost of running their gensets.

According to IBON, one of the possible bigbusiness beneficiaries of emergency powers is the Aboitiz-Pangilinan group, which controls the planned 600-megawatt Subic coal-fired power plant. In 2012 the Supreme Court issued a writ of kalikasan against the coal plant, while the Court of Appeals eventually invalidated its environmental compliance certificate (ECC) in 2013. Under JR 21, compliance to the ECC and other requirements shall be deferred until the completion of the power project. As such, emergency powers could be used to revive the Subic coal-power plant, despite the Judiciary’s prior decisions, IBON warned. The research group also stressed that the ILP has already been implemented in the Visayas and Mindanao without requiring presidential emergency powers. “In fact, Energy Secretary Carlos Jericho L. Petilla was already broaching the idea of using ILP in Luzon as early as January this year.” IBON explained the idea then was to mitigate the impact of price spikes in the Wholesale Electricity Spot Market. “There was no mention of needing emergency powers for the President,” IBON said.

‘Piggy bank’ savings safe from proposed bill–Osmeña

BILL seeking to criminalize coin-hoarding does not cover “piggy bank” savings and businesses using coins to operate. Sen. Serge Osmeña said Senate Bill (SB) 2452, or the proposed AntiHoarding of Philippine Legal Tender Coins Act, will not penalize individuals, who save coins in piggy banks, jars, drawers and wallets. “People who save their coins and place them in piggy banks, or alkansya, will not be jailed because the volume is so small,” Osmeña explained. He stressed “the measure targets large-scale hoarders, who sell the coins abroad to be melted down because the intrinsic value of the metal is more than the face value of the coin.” Also, contrary to concerns raised by small and medium entrepreneurs, the

bill exempts retail businesses that use coins to operate, like vending machines. Charitable institutions, private banks, banking and financial institutions of the government and government agencies that keep coins in connection with their business functions or official duties are, likewise, not covered by the proposed measure. Osmeña said SB 2452 will penalize individuals or groups engaged in the large-scale hoarding and exportation of coins that criminal groups melt and convert for use as raw materials for industrial application. The Bangko Sentral ng Pilipinas (BSP) will formulate the rules and guidelines to implement the measure and determine the aggregate value, number of pieces and weight that would constitute as hoarding of coins, the lawmaker said.

All Philippine coins are made of various alloys of copper, brass, nickel, aluminum or steel. The rising value of such metals has encouraged syndicates to hoard and export coins, leading to a coin shortage, which, the BSP said, started in 2004. The senator noted that, despite efforts by the BSP to stop the illegal activity and to promote public awareness to stress the importance of coins and to encourage their use as a medium of exchange, “the coin shortage continues.” “We have to stop illegal coin hoarding, so we can promote and maintain price stability of our coins. We have been experiencing coin shortage for years now and, if this continues, it would result in a wider-reaching negative impact on the economy,” Osmeña warned. Recto Mercene

Opinion BusinessMirror

A6 Friday, December 12, 2014

Editor: Alvin I. Dacanay

editorial

Asean economic integration and a box of breakfast cereal

HE economic integration of members of the Association of Southeast Asian Nations (Asean) is rapidly approaching, and many Philippine companies are looking forward to it, to seeing the other members’ markets open up to the competition that they will provide.

If you examine public discussions on the subject around the region, you’ll see some interesting differences. Consider this: The Malaysian government is putting in place next year its Asean Business Travel Card, which offer privileges to Asean business travelers, like easier immigration clearance and the use of a special lane at airports. But public awareness of the economic integration in Malaysia is the lowest among the Asean members. In its 2015 Asean Business Outlook, the United States Chamber of Commerce reveals that many countries are not ready for the changes that economic integration will bring. Indonesia still has not ratified an agreement for the full liberalization of air-freight services, because it’s worried about competition from Singapore, Malaysia and Thailand. For its part, the Japan International Cooperation Agency warns that Metro Manila’s traffic congestion will get worse because of the expected surge in the exchange of goods and services. Meanwhile, Japanese real-estate company Leopalace 21 has opened an office in Phnom Penh to capitalize on Cambodia’s economic growth and the expected influx of investors once economic integration begins. Naturally, if you think you are going to benefit from economic integration, then you think it is a good idea. But if you are worried about the competition, then you can find many reasons economic integration will not be a success. The Europeans are very supportive of economic integration, as they want more access to Southeast Asian markets. The US, on the other hand, is pushing very hard for its Trans-Pacific Partnership (TPP), as it knows, as one Asian Development Bank official has pointed out, that this integration is more beneficial to the region than to the TPP. The truth is, the Asean has been moving toward integration for a long time. Grab a box of breakfast cereal sometime and look at the label. “Nestlé Corn Flakes” is a brand owned by Société des Produits Nestlé S.A., a Swiss company. The ingredients listed on the box are written in English, Bahasa Indonesia and Thai. About 85 percent of Southeast Asians can read that box, which is a good idea for an imported product. However, it is only an “imported” product if you are not in the Philippines. Printed in very small letters are the words “Product of the Philippines” and “Lipa, Batangas”. Members of the Asean have been “dating” for several years. In 2015 they will become officially engaged.

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Insider James Jimenez

spox

S a matter of sound—albeit unwritten—policy, the Commission on Elections (Comelec) has never officially weighed in on the question of who should be appointed commissioner. But where the commissioners remain understandably silent as we come closer to the day Comelec Chairman Sixto S. Brillantes Jr., Commissioner Lucenito N. Tagle and Commissioner Elias R. Yusoph retire, three groups of Comelec employees—the Comelec Employees’ Union, the Comelec Regional Election Directors Organization and the Provincial Election Supervisors Association of the Philippines—have chosen to go the opposite route. In a news conference held last week, these groups nominated an insider to be one of the poll body’s new commissioners. This raises an interesting question: Is an “insider” really an ideal candidate? Most would say yes, and there are certainly enough reasons to understand such a reply. An insider possesses a deep understanding of the organization. This presumably gives him or her the edge in terms of knowing how things fit together, which bits work and which parts can stand improvement or, if necessary, excision. In other words, an insider would know how to improve and streamline the organization in which he or she has

risen to the top. An insider would also be steeped in the culture of the organization, particularly if he or she has been a part of it for some time. This will likely mean that he or she has, at least, some rapport with his or her colleagues, making it more likely that—once he or she transitions to a leadership position—he or she will have an easier time rallying support internally. Most compelling of all, an insider would be well-versed with the tactics employed by stakeholders—more

specifically, politicians—to play with the system. Such intelligence would be of immeasurable value to the top leader of the organization when it crafts policy. And considering that the appointment comes a little over a year before the 2016 elections, an insider with that sort of insight from the very beginning would definitely have an advantage over someone who has to go through a necessarily steep learning curve. On the other hand, while all these things might be true of an insider, I cannot ignore the fact that these characteristics are not exclusive to individuals who have been serving in the Comelec prior to their appointment to the top leadership. In fact, it can be said that some insiders won’t even match this description of an “insider”. So it seems more productive to see these characteristics as hallmarks of a specific way of thinking— a frame of mind, if you will, that can be independent of a person’s professional background. If we were to approach the question in this way, we free ourselves from the dichotomy of insider-versus-outsider, and gain access to the wealth of expertise that can currently be found outside the Comelec. As with many things, perhaps, the best way to answer the question is to take the middle road. In the last analysis, the Comelec will

benefit the most from appointments that do not reduce the question of who ought to be appointed to a mere either-or-proposition, whether deliberately or unwittingly. This brings me back to the question: Is an “insider” really an ideal candidate? In true law-school fashion, the final answer should be: It depends. To be more precise, it depends on the candidate. To my mind, the best appointee is one who, like an insider, possesses a healthy respect for the complexities of the organization and its appointed tasks, but does not flinch at the prospect of doing things differently from the accustomed ways. He or she should also be one who, like someone from the outside, is able to bring new ideas, tools and methods to the Comelec, and accepts that introducing change can be a long and tedious process. There are many people in the Comelec who would fit the bill, like the employees’ nominee. But we must also accept that there are others outside the Comelec who would, as well. And in the final analysis, whether an insider or not, what really matters is that the new appointees should be motivated solely by the desire to improve the way the public is served. James Jimenez is the spokesman of the Commission on Elections.

Einstein shunned phones in favor of quiet reflection and solitude By Paul Halpern

The Philadelphia Inquirer (TNS)

ODAY’S amazing communication technologies owe much to some of Albert Einstein’s greatest discoveries. For example, the cameras in cellular phones and other electronic devices are based on the photoelectric effect, for which Einstein was awarded the Nobel Prize. Global-positioning systems take into account the stretching of time due to gravity, another of Einstein’s predictions in his magnificent general theory of relativity. Given that many scientists embrace technology, it is interesting to speculate what kind of phone or device Einstein would be using if he were alive today. Would Einstein be texting, tweeting, or video-chatting?

The surprising answer might be none of the above. By today’s standards, Einstein was a loner. He didn’t like any kind of phone, which, of course, in his time was a simple landline. Much of his day was spent in silent reflection, save for short breaks to discuss ideas with his assistants or to indulge in his passion for music (he loved playing the violin). Sure, he enjoyed fiddling with gadgets. He relished the gift of a compass as a child, and loved tinkering with a microscope given to him at his 50th birthday party. He even invented a kind of refrigerator. But in terms of communications devices, he liked them as far away as possible. He once declared that he could concentrate best and be most creative “away from the hor-

rible ringing of the telephone,” such as on ocean voyages. In the early 1930s Einstein spent each summer in a custom-built house in a lakeside village near Potsdam, Germany. The house had no phone. Visitors would write to him in advance or just stop by unannounced. He didn’t care if dignitaries surprised him when he was in his pajamas. He argued to his wife that they came to see him, not his clothes. Einstein loved going sailing, often solo, to be alone with his thoughts and free of intrusions. With the shoreline miles away, and only still waters as company, no one could interrupt his thinking as he pondered theories of nature. He couldn’t swim, so whenever he ran into trouble, such as his boat becoming

capsized, he waited patiently for a local seafarer to rescue him. When Einstein relocated to Princeton after the Nazi regime took power in Germany, he became, if anything, even more of a loner. He spent hours each day barricaded in the upstairs study of his house, working out equations for unified field theories. He gave strict instructions to his wife and secretary that disturbances be kept to a minimum. Sometimes he would feign being sick to ward off visitors. When he went out, he often took quiet walks with his assistants or his close friends, such as mathematician Kurt Godel. He loved tête-à-tête chats, and the laughter of children, just not the clamor of phones. There is a hallowed tradition of great thinkers seeking solitude, from Gautama Buddha, who meditated for many days near a tree until he found enlightenment, to Henry Thoreau, who practiced self-reliance in an isolated cabin on Walden Pond. Until recently, libraries were chapels of silence, permitting anyone to find a haven for reading and reflection (the strict rules seem to have eased up a bit in many libraries). Today we are in the midst of a global experiment with instantaneous interconnection. Save for isolated wilderness areas, now almost anywhere in the world solitude has

become a choice, not a necessity. Yet, to support creative thinkers who might sometimes need time for reflection, we need to maintain the option of periods of disconnection. Just as Walden Pond is now protected land, we need to preserve Waldens of the mind. Einstein began his career working at a patent office in Switzerland. He was so efficient that he had plenty of time to think about deep questions in physics, leading to his development of the special theory of relativity. Suppose he were working at such an office today and was deluged by e-mails, texts and calls from his superiors—not only on the job, but also after hours. What if they told him that if he didn’t respond promptly he could be fired? Where would he find the silent space needed for his creative efforts? Our society is fortunate today that it has so many opportunities for people connecting electronically. However, following Einstein’s lead, we need to offer space for solitude and self-reflection, as well. The off button must always be there as a choice. Paul Halpern is a professor of physics at the University of the Sciences in Philadelphia and the author of Einstein’s Dice and Schrodinger’s Cat: How Two Great Minds Battled Quantum Randomness to Create a Unified Theory of Physics.

Opinion BusinessMirror

opinion@businessmirror.com.ph

Examining the effect of govt output on GDP

Stormy weather Tito Genova Valiente

annotations

Dr. Luis F. Dumlao

EAGLE WATCH

N November 26, as the scheduled reporting of the national-income accounts approached, most economists forecasted the Philippine economy to have slowed down in the third quarter, relative to the second. They projected third-quarter growth to be slightly lower than the 6.4-percent expansion in the second quarter and to miss the government’s target of 6.5 percent to 7.5 percent. The common explanation given was government underspending and the contraction of the agricultural sector. As to the government’s diminished share in gross domestic product (GDP) growth, most economists turned out to be right. The output contributed by the public sector contracted by 2.9 percent as the economy slowed down much more than anticipated. The economy grew at only 5.3 percent, the slowest since the fourth quarter of 2011. While it is right to attribute the economic slowdown to the government’s reduced output, some clarifications need to be made. First, it is not government spending or output, per se, that causes the economy to accelerate. Yes, government output contracted in the third quarter, and this coincided with the economy’s slowest growth in almost three years. But government output also shrank in the fourth quarter of 2013, and this occurred alongside an economic expansion of 6.3 percent. Similarly, government spending slowed in the fourth quarter of 2010, but this happened when the economy grew by 6.1 percent. Of course, there are other factors that caused the economy to grow faster, despite a reduction in government spending. After all, the public sector’s contribution to the nation’s output is only about 4 percent. While that figure is an important contribution, the effect of the government’s output on economic growth seems subtler than one might expect. In our July 11 column, the trend path of the economy was discussed. In layman’s terms, the trend path is the normal growth of the economy. The updated trend path of the economy is about 5.6 percent. For the past 10 years the economy grew faster or slower than the average of 5.6 percent. If all agents in the economy show up for work every day without changing their routine, the economy will grow by the normal 5.6 percent. Similarly, government spending also has its normal trend path. In the past decade this growth path was about 3.4 percent. If all government employees just show up for work every day without changing their routine, public-sector spending will expand at the normal rate of 3.4 percent. If GDP grows higher than 5.6 percent, deviating from its normal mean, something that was beyond ordinary must have happened to the economy. This is probably due to what economists refer to as “technological progress”, a topic outside the scope of this article. But this beyond-ordinary expansion can also occur because of the improved governance of the economy. It can also materialize because government output increased by more than the normal 3.4 percent. But if the economy’s expansion is slower than 5.6 percent, then the economy must have been hit by an external factor. It could be because of a natural catastrophe, a negative technological shock or a global financial crisis. It could also be because of bad economic management or government output sliding below the normal 3.4 percent. To reiterate, it is not government output or spending, per se, that causes the economy to accelerate. Rather, it is government output expanding faster than the normal 3.4 percent that causes the economy to grow above the trend path of 5.6 percent. Second, it is important to highlight that it is not government output growing by more than 3.4 percent in a given quarter that causes the economy to grow higher (or lower) than the trend path of 5.6 percent in that same quarter. If one obtains the data on the quarterly (year-on-year) growth rates of GDP and government services from 2010 to the present from the Philippine Statistical Authority, deduct the trend path growth of 5.6 percent and 3.4 percent, respectively, from both and plot these numbers in a time-series line graph, he or she would discover that the lines are only slightly correlated. However, if one juxtaposes the growth of government services with the lagged GDP growth, one gets the graph below. An important observation here is that government output slowing by less than 3.4 percent in a given quarter causes the economy to grow slower than the trend path of 5.6 percent only in the succeeding quarter.

Can’t go on There’s no sun up in the sky Stormy weather… Oh yeah, life is bad Gloom and misery everywhere Stormy weather, stormy weather. —from the song “Stormy Weather”

S sung by the inestimable Ethel Waters, “Stormy Weather” talks of a physical and emotional storm that brewed and blew in her life. When Lena Horne got to sing it in the film with the same title, rain and wind were visible in the background. With all the rules about melodrama and histrionics thrown to the four wild winds, Waters showed us all how to sing the blues in a torch song that blazes, even in the cold rain. Horne rendered the storm and song with style. Well, Waters and Horne were alive again for about three days, albeit in the networks and radios of this typhoon-battered land. They were there in the announcements that were basically inspired by endof-the-world reportage. Hysteria, bad grammar and depressing diction rained on us, who were still on dry land. When did radio become a cemetery of linguistic rules? It used to be that, when you wanted to learn how to speak—in my generation, at least—you listened to the radio. The men and women of radio then knew their tenses, and were not tense at all when calamities came. When the brownout came, I heard my sister-in-law muttering to herself how the radio station made her even more nervous. I listened and, indeed, the voice not only came across as lost, but also thoroughly lacking the luster of a speaker reaching out to thousands and thousands of listeners. When all the television networks are done because the electricity connections have been cut off, what are left standing or heard are the radio announcements. These voices are in the radio stations, tiny and nondescript offices that are both places of refuge and command centers, where winds are described in velocities and storms are bracketed by the signals they fall under. One expects no less than the voice of God or some godlike wisdom to come from these tiny units. Ours is slightly bigger than a pocketbook, and powered by two Dsize batteries. That is sheer power. It, thus, behooves us when such power is misused because the powers behind it are not aware of what

people expect from them. It must also be that they take their powers for granted, and that people have given these radio announcers the power that they do not fully apprehend. This brings me to the storm that raged between our more famous TV newscasters and irritated observers. Bloggers went ballistic with reports of the conversation between ABS-CBN news anchormen Korina Sanchez and Noli de Castro, in which the former wished

Friday, December 12, 2014

that Typhoon Ruby (international code name Hagupit) hit Japan instead of the Philippines, because the East Asian nation is rich and stable enough to withstand the storm. She expressed this wish after de Castro allegedly brought up the idea of Japan sharing the storm with our country. Viral was the people’s rage against Sanchez, who seems to have a documented tendency of putting her foot in her mouth. Remember the incident with Cable News Network program host Anderson Cooper? Anyway, I believe that there is really no love lost between the Filipino people and these newscasters. I, myself, am not surprised at all that those words came, like enlightened insight, from Sanchez. It seems natural that we wish other nations harm. Scattered all over the landscape of national discourse is the propensity to put the Philippines at the center of things. This is why I always shudder with shame when we declare ourselves world-class. This claim puts other ethnic groups into what category? This is my problem with prayers against storms. What happens when the storms continue to rage, despite the prayers? Are our prayers like the unanswered prayers discussed by Saint Teresa of Avila? I recall my first lesson in the study of that old social theory called functionalism. It states how elements in a society create a kind of glue to form a

China’s central-bank balancing act William Pesek

BLOOMBERG VIEW

Z In the third quarter of 2014 the economy slowed down to grow by only 5.3 percent and lower than the trend path, but not because government output contracted by 2.9 percent in the same quarter. Rather, the economy decelerated because government output grew by only 1.2 percent and lower than its trend path in the previous quarter. The economic growth of the fourth quarter of 2014 and the first quarter of 2015 are the ones to be affected by the third quarter’s 2.9-percent contraction in government output. Hopefully, there will be other factors that may mitigate this possibility and cause GDP to increase more rapidly, despite the downturn in government’s services and output. nnn

FOR more of our views on and forecasts for the Philippine economy and the financial markets in 2015 and beyond, we would like to invite you to attend the Eagle Watch Economic Briefing at the Justitia Room of the Ateneo Rockwell Campus in Makati City, from 9 to 11:30 a.m. on January 22, 2015. For inquiries, call (632) 263-3221 or send an e-mail to info@ifpmphilippines.org. Luis F. Dumlao, PhD, is the chairman of the Economics Department of the Ateneo de Manila University and a senior fellow of Eagle Watch, the school’s macroeconomic and forecasting unit.

HOU Xiaochuan can forget a vacation in 2015. The world is counting on the governor of the People’s Bank of China (PBOC) to fend off the deflation descending upon his country. There’s a real question whether he can do so without making matters worse, both at home and abroad.

Wednesday’s news that factorygate deflation deepened—with prices falling a record 33rd-straight month in November—leaves zero doubt about China’s trajectory. President Xi Jinping’s efforts to curb corruption and rebalance growth away from excessive borrowing and exports are set to drive output in China—and costs—markedly lower. To add to the mainland’s woes, says Callum Henderson of Standard Chartered in Singapore, “externally, with the currency wars continuing to rage, the euro area and Japan are exporting deflation to Asia ex-Japan, including China.” This rising threat “will push up real-interest rates and compel more

rate cuts,” says Wang Tao, chief China economist at UBS in Hong Kong. She expects at least two benchmark lending-rate cuts totaling 50 basis points next year to ease debt burdens for companies, improve corporate cash flow and slow the buildup of nonperforming loans. At what cost? China booming equity markets have long since decoupled from the economic realities; Andy Xie, a former World Bank economist, calls the current rally a “bubble” driven by leveraged traders. Chinese leaders are right to defer to the PBOC, rather than injecting new stimulus directly, which would raise the risk of a Japan-like debt crisis. But Zhou’s moves could just as easily

fuel another dangerous asset bubble alongside real estate. At the same time, Zhou is hemmed in by a rigid financial system that limits the potency of monetary maneuvers. His surprise November rate cut got the world’s attention. But the PBOC is shackled with a closed capital account and fears that the currency could fall prey to capital flight if Zhou eases too much. The central-bank governor will have to tread very carefully not to unsettle the economy even further. The delicacy of Zhou’s position only increases the need for the PBOC to start acting more like a normal central bank, embracing greater transparency and issuing clearer guidance. While Beijing’s November rate surprise delighted markets, this week’s abrupt change in collateral rules for local-government borrowing spooked them. The move to ban the use of lower-rated bonds in securing short-term loans should have been good news—a sign that China is working to halt risky borrowing. And the amount of debt affected—about $76 billion in debt sold by local government financing vehicles, or LGFVs—is tiny. But the haphazard way the policy was rolled out caused panic in markets. All governments—and their cen-

harmonious whole. A classic example of this is the rain dance of the Native Americans, which is a prayer asking for rain to come to a droughtstricken community. The anthropologist then asks the question: What happens if, after the dance, no rain comes? Then the dance must have been not enough. Then the Native Americans should continue to dance until the rain comes. This brings me back to the function of TV newscasters, whose celebrity has been made bigger than the news. We have created these beings. We buy their comments that are placed in between or after the reports. We love their smart-alecky remarks. We savor their sarcasm. We have given their actions the seal of approval. We are not happy with mere news; we want entertainment in them. If the news in this land are news that have been processed, edited and processed again for information and intellect, then we would not have stormy weather reported as if Waters and Horne were floating above the phrases and sentences of caution. When the next stormy weather comes, we will not be expecting music behind news items. We would not tolerate jokes among radio announcers laughing while reporting about landslides and deaths in lands we do not care about, because we are in the cool and dry confines of our stations. E-mail: titovaliente@yahoo.com.

tral banks—are driven by domestic considerations first. And, for China, there are almost too many to juggle. Beijing’s approach is encapsulated by the old proverb “crossing the river by feeling the stones.” The idea is to unveil reforms piecemeal, only when leaders judge the moment is right. But China must understand that, given its size and central role in the global economy, every policy twist and turn has the potential to roil markets. Beijing’s provocative actions over disputed territories in Asian seas damage its “soft power” enough. Routinely surprising the outside world with reform experiments isn’t going to help. It’s long past time to develop a better communication plan. Telegraphing policy shifts and explaining their utility better and more consistently would win China friends in both financial and diplomatic circles. Widely respected, Zhou is the perfect person to spearhead the process. This is China, of course: No one expects the kind of glasnost that Alan Greenspan introduced at the United States Federal Reserve in the 1990s. But, as the spotlight shines brighter and brighter on Beijing, it behooves officials there to think more globally when they act.

2nd Front Page BusinessMirror

A8 Friday, December 12, 2014

GOVT BUDGET FOR AQUINO’S TRIP TO R.O.K. ONLY P11.2M By Butch Fernandez

alacañang on Thursday reported allocating over P11 mil lion for President Aquino and his 48-member delegation’s two-day trip to South Korea for the 25th Association of Southeast Asian NationsRepublic of Korea (Asean-ROK) Commemorative Summit on December 11 and 12. Executive Secretary Paquito N. Ochoa Jr. confirmed that President Aquino flew to Busan on Wednesday morning on a chartered flight, bringing along Finance Secretary Cesar V. Purisima, Trade Secretary Gregory L. Domingo, Cabinet Secretary Jose Rene Almendras, Communications Secretary Herminio B. Coloma, Presidential Management Staff Chief Julia Andrea Abad and Presidential Protocol Chief Celia Anna Feria. Ochoa said the P11.2-million allocation would be spent “for transportation, accommodation, food, equipment and other requirements” of Mr. Aquino and his entourage. According to Ochoa, “President Aquino’s attendance to the 25th Asean-ROK Commemorative Summit is an occasion to fortify our country’s relationship with South Korea in various areas of cooperation such as trade and investment, development, labor and migration, tourism, among others.” Continued on A2

‘EU-PHL investments, trade can easily double’

By Catherine N. Pillas

rade and investment between the European Union (EU) and the Philippines “can easily double” in the near term, according to the delegation of the EU to the Philippines.

“The EU and the Philippines enjoy strong commercial relationship. However, it is underutilized as far as the trade and investment agenda is concerned. My personal conviction is that we could easily double the amount of where we are today. Today the message we’re sending home is that this is a good time to invest in the Philippines,” said the head of the Economic and Trade Section of the EU Delegation, Walter van Hattum, during a trade and investment forum held on Thursday. Trade exchanges, as of 2013,

HATTUM said both trade and investments between the Philippines and the EU are dwarfed by the performance of other Asean countries.

reached €11 billion, with a 20-percent growth likely to be seen by year-end, according to the EU delegation. In terms of investment stock, roughly around 30 percent

of foreign investment f lowing into the country is of EU origin. Most investments of the EU in the Philippines are in energy, manufacturing and businessprocess outsourcing. However, van Hattum said both trade and investments between the Philippines and the EU are dwarfed by the performance of other Asean countries. This, van Hattum said, should be seen as motivation for the Philippines to seize opportunities of closer engagement with the EU. Opportunities for the Philippines specified by the economic and trade counselor include higher foreign direct investment (FDI) flows, more competition in the local market and buttressing of the export sector of the Philippines. For the EU, there is an opportunity in securing a foothold in the Philippines, given its strategic position in the Asean and its steady economic growth, van Hattum added. Steps are being taken in the right direction, according to the EU official, as Congress is working on economic reforms that can allow entry of more FDI to the country. European firms are keeping a close eye on the legislative progress of the reforms, “which, ulti-

3-DAY EXTENDED FORECAST DECEMBER 12, 2014 | FRIDAY .

TODAY’S WEATHER Northeast Monsoon locally known as “Amihan”. It affects the eastern portions of the country. It is cold and dry; characterized by widespread cloudiness with rains and showers.

SUNDAY

DEC 15

MONDAY

(AS OF DECEMBER 11, 5:00 PM)

DEC 13

DEC 14

DEC 15

24 – 31°C

23 – 30°C

23 – 31°C

SUNDAY

SATURDAY

MONDAY

23 – 30°C

TUGUEGARAO

22 – 29°C

21 –29°C

21 – 29°C

TACLOBAN

24 – 32°C

24– 32°C

24 – 31°C

21 – 30°C

CAGAYAN DE ORO

23 – 31°C

24 – 32°C

METRO DAVAO

25 – 34°C

24 – 34°C

23 – 34°C

25 – 34°C

25 – 35°C

TAGAYTAY CITY 21 – 29°C

TAGAYTAY

22 – 31°C

14 – 21°C

23 – 30°C

21 – 29°C

22 – 31°C

14 – 21°C

23 – 30°C

22 – 29°C

13 – 21°C

24 – 31°C

LEGAZPI TACLOBAN CITY 24 – 31°C

METRO CEBU 24 – 31°C

PUERTO PRINCESA

ILOILO/ BACOLOD CAGAYAN DE ORO CITY 22 – 31°C METRO DAVAO 25 – 34°C

23 – 31°C

23 – 30°C

ZAMBOANGA SUNRISE

SUNSET

MOONSET

MOONRISE

6:11 AM

5:28 PM

10:21 AM

10:24 PM

21 – 29°C

LEGAZPI CITY 24 – 30°C

PHILIPPINE AREA OF RESPONSIBILITY (PAR)

See “Subsidy,” A2

22 – 30°C

SBMA/ CLARK

SBMA/CLARK 23 – 31°C

ZAMBOANGA CITY 24 – 34 °C

3-DAY EXTENDED FORECAST

he national government cut its subsidies to firms in the Water Supply, Sewerage, Waste Management and Remediation sector by 42.8 percent in 2012, according to the 2012 Census of Philippine Business and Industry for the sector. Data released by the Philippine Statistics Authority (PSA) on Thursday showed that total subsidies received by the sector reached P129.9 million, lower than the P226.9 million registered in 2010. “Subsidies are all special grants in the form of financial assistance or tax exemption or tax privilege given by the government to aid and develop an industry,” the PSA said. The water collection, treatment and supply industry received most of the subsidies in 2012 valued at P129.1 million, or 99.4 percent of the subsidies extended to the entire sector. The sewerage industry, meanw h i l e, re ce i ve d t h e re m a i n i n g amount of P0.8 million, or 0.6 percent of the total. “The rest of the industries did not receive any subsidy from the government,” the PSA said. The PSA said in 2012 there were 828 establishments engaged in water supply; sewerage, waste management and remediation activities in the formal sector of the economy.

NORTHEAST MONSOON AFFECTING NORTHERN LUZON.

BAGUIO CITY 15 – 22°C

ILOILO/ BACOLOD 25 – 31°C

mately, can better the investment climate,” he added. “That’s an area in trade policy or agenda that has room for improvement: openness to FDI; Some of our colleagues in Congress are looking to change some of the current restrictions on foreign investments, and that will be the main driver of establishments of companies,” van Hattum said. Other areas for improvement include diversification of exports and value-added trade. Bilateral trade between the Philippines and the EU in the first six months reached over $7 billion, a 21-percent increase over the same period last year, EU Ambassador to the Philippines Guy Ledoux said. Top exports of the Philippines to the EU include electronics, appliances and photographic instruments, optical instruments and food. Imports of the Philippines from the EU include aircraft, machinery, pharmaceutical products, optical instruments, chemical and vehicles. In terms of investment, inflows to the Philippines from the EU went up by 150 percent in the first quarter of 2014. The Philippines, on the other hand, invested nearly €1.4 billion in the regional bloc.

23 – 31°C

TUGUEGARAO CITY 22 – 30°C

METRO MANILA 23 – 32°C

DEC 14

By Cai U. Ordinario

METRO CEBU

BAGUIO

LAOAG CITY 22 – 30°C

DEC 13

SATURDAY

STATE CUTS SUBSIDY FOR WATER, SEWERAGE

METRO MANILA

LAOAG

PUERTO PRINCESA CITY 24 – 31°C

www.businessmirror.com.ph

22 – 30°C

FULL MOON HALF MOON

SOUTH HARBOR

DEC 06 24 – 31°C

23 – 31°C

23 – 30°C

DEC 14

CELEBES SEA

8:19 AM

-0.14 METER 8:51 PM 8:27 PM Partly cloudy to cloudy skies with isolated rain showers and/or thunderstorms

Partly cloudy to cloudy skies with isolated rain showers

25 – 32°C

24 – 31°C

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

Cloudy skies with rain showers and/or thunderstorms. Light rains

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

LOW TIDEMANILA HIGH TIDE

@PanahonTV

8:54 AM

-0.08 METER