BusinessMirror December 23, 2014

BusinessMirror

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

U.N. Media Award 2008

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WHAT THE HOLIDAY GIFTS YOU BUY REVEAL ABOUT YOU jo a. saldana and louie M. lacson Word&Life Publications • teacherlouie1965@yahoo.com

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

By Georgea Kovanis Detroit Free Press

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HoPPING can be many things—fun, therapeutic, frustrating and merry—but more than anything it can be enlightening and educational.

For example, shopping has improved my math skills to the point that my brain (which for many years wasn’t especially good with numbers) is practically a calculator—40-percent off a $69 sweater, no problem! That’s $27.60, which brings the sweater down to $41.40. I’ll take two, please.

Shopping, specifically years of trying on clothes, has made me realize that if something doesn’t fit in the dressing room, it’s still not going to fit when I get home—unless I lose 20 pounds in the car. In other words, shopping taught me to accept my body as it is in real life, not as it is in the fantasy world I constructed for myself.

And as unlikely as it may seem, shopping for good quality underwear caused me to have an epiphany about men: The qualities women look for in good underwear are the same qualities we should look for in a good man! Like a good bra, the man in our life should uplift us and make us feel perky and pretty.

He shouldn’t fall down on the job like loose bra straps or gouge our shoulders like straps that are too tight. And like good underpants, he shouldn’t come unraveled at the first sign of trouble. Plus, he shouldn’t be cheap—no good comes from cheap underwear or a cheap man. Ugh. I bring up the notion of shopping as an educational experience because we are in the midst of the holiday season. More of us than at any other time of year are spending our days and nights (some Target stores are open until midnight!) rushing from store to store, stalking door busters, finagling extra coupons for even bigger discounts, making our lists and checking and rechecking them.

Which means more than any other time of year we are in a position to learn something while shopping—to emerge from the holiday season smarter about buying, about relationships, about ourselves, others and maybe about what’s really important this time of year.

Shopping requires us to make decisions—small ones, large ones—and if we think about those decisions, they say a great deal about who we are and what we value.

We decide where to shop—local independent or national chain stores, online or brick and mortar, mall or downtown.

We decide how we will handle our money—cash or charge? Will we make a budget and if so will we stick to it? Will we look for discounts and free shipping to maximize our shopping money? Will we splurge on something special for someone special?

We decide for whom we will shop—parents, siblings, friends, spouse, boyfriend of two weeks (don’t do it), next door neighbor, hair dresser (he really wants cash). And perhaps most important, we decide the spirit with which we shop.

Are we shopping because we genuinely want to give something special to people we like, or are we shopping out of obligation. A frenemy announces she’s gotten you something festive and even though you’d rather eat mistletoe than get her a gift, you head back to the store.

Are we shopping for gifts that recipients really want, or are we giving them gifts we want—in other words, are you giving your husband a diamond bracelet or buying your wife a La-Z-Boy? Several years ago I was friends with a woman who prided herself on being an excellent shopper, finishing her holiday shopping early in the

Life

The brighTesT sTar This season

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BusinessMirror

In its latest Market Call, FMIC and UA&P Capital Markets Research said inflation will fall below 4 percent in November and below, or at 3 percent in the first two months of 2015.

The peso, on the other hand, will continue to weaken against the dollar to around 45.161 by February 2015.

“Besides, inflation that is likely to fall below 4 percent by November and below 3 percent as early as the first quarter of 2015 should provide firepower to consumers with more purchasing power to spend more in the fourth quarter,” Market Call stated.

She made her decisions based almost exclusively on price. An orange hoodie marked down to $18? Bingo! She’d buy it for her sister-in-law—even though she’d never known her to be a fan of orange hoodies and even though she could have found something else for $18 that would have been better and more thoughtful.

I went home disappointed knowing someone I had respected and liked a great deal put no effort into the gifts she bought. As much as I tried to tell

myself that it’s the thought that counts, I felt sad for the people on her list.

Did they know she didn’t really care?

And that’s when I realized probably the most important shopping lesson of all.

It’s not the thought that counts. It’s how much thought we put into the thought. otherwise, it’s not a gift. It’s just stuff.

Rustan’s Beauty addict Fan, yours for every single receipt purchase worth P10,000 of all cosmetics, perfumeries, toiletries products and services.

an aRTFul eVeninG oF Fun and coloR

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or its second season, rustan’s The Beauty Source upped the ante with the Beauty Addict Masterpiece. The city’s most glamorous women—including Phoemela Barranda, Mika Lagdameo-Martinez, Iya Villania, Bubbles Paraiso, ruffa Gutierrez, CJ Jaravata, Alyanna Martinez, Maggie Wilson-Consunji, rissa Mananquil-Trillo and Mariana Henud—gathered for an interactive evening with their favorite beauty brands: Chanel, Clarins, La Prairie, Sisley, Nars, Diptyque, Annick Goutal, Estee Lauder, Clinique, La Mer, Benefit, Bobbi Brown, Guerlain, Hermes, Murad, Perricone, Lancôme, Mac, L’occitane and Acca Kappa, among others.

Inspired by modern art, the event was dressed in intricate origami patterns and awash in bright pops of color—and the activities were just as creative. Makeup, skin care and fragrance counters allowed guests to get creative in expressing their love for all things beauty, regaling them with generous freebies, fabulous makeup sessions and relaxing treatments.

At Chanel, guests made their own palettes using yummy chocolate balls designed to look like the brand’s iconic pearl-shaped eyeshadows.

Chanel’s chocolate bar

Nail polish brands oPI and Deborah Lippmann gave out free manicures and notepads, which they painted with their favorite shades. At L’occitane, guests satisfied their sweet tooth with free cotton candy designed like artwork. Free makeovers were aplenty courtesy of Benefit and Estee Lauder, and quick brow fixes at Bobbi Brown.

As a treat to beauty junkies, the event also launched The Beauty Addict card, so that customers can further indulge in their favorite brands through exclusive discounts, complementary products and spa services. Beauty Addict cardholders are entitled to one entry for this season’s raffle for every purchase amounting P1,000. Prizes range from a two-night stay in a Grand Deluxe room with breakfast for two at The Peninsula New York (Cathay Pacific will also offer a special discounted rate for business class tickets to New York), business class round-trip tickets to Hong Kong from Cathay Pacific, and a twonight stay in a Premier Suite with daily buffet breakfast for two and lunch or dinner buffet for two at Escolta at the The Peninsula Manila.

Last rustan’s The Beauty Source Casa Mercedes promotion is back. For

lameR’s free hand and arm indulgence

every single-receipt purchase worth P10,000 of all cosmetics, perfumeries, toiletries products and services, customers will be gifted with the Beauty Addict Fan—a 13-inch Bayanihan Classic fan emblazoned with a unique pink-and-white paint stroke design with “I am a Beauty Addict” print and finished with matching silk tassels. For those stepping up to a P20,000 singlereceipt purchase, they will be entitled to an exclusive, specially designed Fishtail Fan done in blood satin, accented with a titanium grey accent leaf.

For P30,000 single-receipt purchases, they take home an exclusive limitednumbered Abanico de Hojas Fan—hand-loomed abaca is dyed in sangria, accented with a beige leaf and a unique hoop set in rhodium plated silver, with a ruby colored crystal to enhance the holiday spirit.

The Beauty Addict card is valid at all rustan’s Department Stores until January 31, 2015. The card can be purchased for P299, or get it for free with a purchase of at least P2,500 from the cosmetics department.

The Casa Mercedes promotion valid at all rustan’s Department Stores until January 15, 2015.

Phoemela BaRRanda (left) and Rissa mananquil-trillo with their #BeautyBands

RuFFa GutieRRez at the Chanel booth mika laGdameo-maRtinez

life

iya Villania at the signed with love wall

ssi’s michael t. huang and Rustan’s marketing and Communication manager sevrine d. miailhe

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CAVS VS GRIZZ C

LEVELAND—Cleveland’s LeBron James had 25 points and 11 assists and put in a strong second-half performance to guide the Cavaliers to a 105-91 home victory over National Basketball Association Southwest Conference leader Memphis on Sunday.

Among other games, Washington missed a chance to build a lead in the Southeast when it was beaten at home by Phoenix, New Orleans took a tight victory at Oklahoma City, and Toronto downed New York to open a 10-game lead in the Atlantic Division.

Cleveland’s James scored 16 points in the second half and Dion Waiters scored 13 points in the fourth quarter to make it 21 for the game as the Cavaliers shot a season-best 61 percent from the field.

The Cavaliers have won eight of their past nine home games to move within one game of Chicago for the Central Division lead.

Marc Gasol had 23 points and 11 rebounds for the Grizzlies, who played without forward Zach Randolph due to a knee injury.

Phoenix won 104-92 at Washington, ending the Wizards’ six-game winning streak.

Eric Bledsoe and Markieff Morris each scored 17 points for the Suns, who completed a perfect three-game road trip, having lost their previous six games.

Rasual Butler’s 17 points led the Wizards, who dropped into a tie with Atlanta atop the Southeast.

New Orleans’s Anthony Davis scored 38 points to lead the Pelicans to a 101-99 win at Oklahoma City.

It was the third-highest point total of Davis’s career. He made 16 of 22 shots and had 12 rebounds.

Jrue Holiday had 11 points and matched a career high with 15 assists for the Pelicans.

Russell Westbrook scored 29 points for the Thunder, but he missed a three-pointer that could have given Oklahoma City the lead in the closing seconds.

Oklahoma City forward Kevin Durant missed his second-straight game because of a sprained ankle.

Toronto pushed its winning streak to six with a 118-108 home win over New York.

Lou Williams and Kyle Lowry each scored 22 points for the Raptors, who led from start to finish and are already a yawning 18 games above the Knicks in the Atlantic, after having only played 28 games.

Carmelo Anthony scored 28 points for New York, which has lost 15 of its past 16 games.

Miami ended a run of fivesuccessive home-court defeats by downing Boston 100-84.

Luol Deng had 23 points and James Ennis scored 10 of his 16 in the fourth quarter for the Heat, who for the first time in 154 games, played without any of its former Big Three. Dwyane Wade and Chris Bosh were injured, while LeBron James has returned to Cleveland.

Tyler Zeller scored 22 points for the Celtics, who had won their previous three games.

Sacramento’s DeMarcus Cousins had 29 points and 14 rebounds in his second start since returning from a serious illness, helping the Kings to a 108-101 victory over the Los Angeles Lakers.

Brooklyn’s Mason Plumlee scored 10 of his 21 points in the fourth quarter and had 12 rebounds to guide the Nets to a 110105 win against Detroit.

Indiana’s C.J. Miles scored 28 points and David West bulled his way to the basket for two big points with 34 seconds to play to help the Pacers hold off Minnesota 100-96.

Philadelphia recorded only its third win of the season, rallying in the second half to win 96-88 at Orlando, with Michael Carter-Williams scoring 21 points. AP

Cleveland Cavaliers’ leBron James (23) drives between memphis Grizzlies’ Courtney lee (5) and tayshaun prince (21). AP

SAUDI OIL CHIEF: NO CONSPIRACY BEHIND PLUMMETING OIL PRICES

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Sports

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| Tuesday, deCember 23, 2014 mirror_sports@yahoo.com.ph sports@businessmirror.com.ph Editor: Jun Lomibao

BusinessMirror

Chris paul needs help for the los angeles Clippers to advance deep in the playoffs, while kobe Bryant (inset) needs more than for the spiraling los angeles lakers. AP

Clippers need playoff help, lakers need more than that

TALES OF 2 LAs E

Continued on A2

Ben Bolch

Los Angeles Times

VERYONE knows market size rarely matters in the National Basketball Association (NBA).

The San Antonio Spurs won their fifth title last season, while the Lakers and New York Knicks combined for roughly 12 million in population and zero-playoff games.

Who could have seen that coming?

Oh, right. Almost everybody.

The year 2015 doesn’t figure to be too different. The Lakers and Knicks will vie for the wrong kind of franchise records and the Spurs’ Tim Duncan could catch Michael Jordan in championships before Kobe Bryant. (How crazy do you think that would drive the hyper-competitive Bryant, who admitted during All-Star weekend in 2013 how pleased he was that he had more championship patches than Duncan on his warmup jacket?)

Things are looking up for the Clippers, who already ditched the most notorious owner in professional sports in favor of a lively billionaire who acts as though he’s perpetually in the midst of a “Saturday Night Live” skit. Now all they need to do to complete their turnaround is to win their first championship.

LeBron James might have something to say about that if his Cleveland Cavaliers meet the Clippers in the Finals.

“Not two, not three, not four,” James could declare, tweaking his famous line for effect, “but ZERO!” Here’s a look at what to expect around the league in the new year: What’s the best-case scenario for the Lakers the rest of this season?

Losses. Lots of them. Topping last season’s 27-55 record shouldn’t be viewed as progress but regression.

The Lakers need to finish with one of the top 5 picks after the draft lottery to retain a selection that otherwise goes to Phoenix as part of the Steve Nash trade. (As if the Lakers needed another reminder of what may go down as one of the worst trades in NBA history.)

The Lakers are bad enough to lose plenty of games on their own, but if they are not solidly in possession of one of the league’s worst records by the end of March then some crisis management will be needed. Nick Young should develop a mysterious case of general soreness and Coach Byron Scott should replace all of his starters with their counterparts from the D-Fenders, the Lakers’ Development League affiliate.

Pairing another top draft pick with a healthy Julius Randle could be the foundation for the next championship era. The Lakers could be on the way to becoming the Lakers again by the 2016-2017 season.

Will the Clippers break through and make at least the Western Conference finals?

Depends on their playoff draw. The Clippers match up well with Houston, Portland and Dallas; not so much with San Antonio (too disciplined), Golden State (too splashy) and Memphis (too gritty).

The Clippers will also want to avoid Oklahoma City, a potential first-round matchup because of an injury-plagued start that will probably leave the Thunder with an artificially low seeding.

At some point, though, the Clippers are going to have to beat a team with a better playoff pedigree than their own.

For the Clippers to boldly go past the conference semifinals, Chris Paul must show he can win more than the Battle of LA sand DeAndre Jordan must stop fading in and out of series as he did last season against the Thunder. Jordan had single-digit rebounding games three times, grabbing only four rebounds in the Clippers’ Game 5 collapse. That won’t get it done against Andrew Bogut or Marc Gasol.

Has Anthony Davis become the NBA’s best player?

Pretty much. The New Orleans Pelicans power forward plays like the creation of a Caltech engineer. Davis combines size, speed and power into a 6-foot-10 package of pure athleticism.

All this, and Davis doesn’t even turn 22 until March.

At one point earlier this season, Davis was projected to be worth 8.1 victories to his team at a time when the No. 2 player on the list, Houston’s James Harden, was worth 6.2 victories.

Davis could become the first player in NBA history to average 25 points, 10 rebounds, two blocks and two steals per game.

Sculptors can start perfecting their unibrows for the statue that will one day reside outside New Orleans’s Smoothie King Center.

Can James and the Cavaliers win it all in their first year (back) together?

It’s like Capt. Ed Hocken told Lt. Frank Drebin in “The Naked Gun,” assessing the survival odds of one of their colleagues: “Doctors say Nordberg has a 50-50 chance of living, though there’s only a 10-percent chance of that.”

In other words, anything can happen.

Big Threes that are thrown together can pay off immediately (see 2008 Boston Celtics) or not (see 2011 Miami Heat). Here’s guessing that this Cavaliers trio won’t quite go all the way in its first go-around.

Will the Philadelphia 76ers finish with the worst record in NBA history?

Hmm. How many times do the 76ers play the Lakers the rest of the season? Just kidding. Sort of.

Philadelphia needs nine victories to surpass the winning percentage of the 2011-2012 Charlotte Bobcats, who went 7-59 to win 10.6 percent of their games during the last lockout-condensed season.

The 76ers need 10 victories to beat their namesakes from the 1972-1973 season, who went 9-73 for the worst record in a full season.

The fate of this team will probably come down to the season’s final three weeks, when the 76ers play two games each against the Lakers and New York Knicks and one against the Milwaukee Bucks.

Do notoriously nasty Philly fans dare dream their team can win all five of those games?

Who will be the biggest winners in free agency this summer?

Proponents of the status quo.

LaMarcus Aldridge has essentially committed to staying in Portland with his comment about becoming “the best Blazer ever.”

James and Kevin Love won’t give up the opportunity to keep playing with each other, even if they fall short of a title this season.

Marc Gasol went from Pau Gasol’s chubby little brother to a full-grown force in Memphis, meaning he’s unlikely to leave his adopted hometown.

The inertia among top free agents could leave the legendary Lakers and Knicks holding onto a small-time feel for years to come.

SPORTS

POPE CALENDAR Amang Geronimo shows his 2015 calendar series bearing the photos of Pope Francis—who is set to visit the Philippines next month—sold for P75 apiece at his shop on Commonwealth Avenue in Quezon City. NONOY LACZA

TALES OF 2 LAs LEBRON GUIDES

By Cai U. Ordinario

Tuesday, December 23, 2014 D1

What the holiday gifts you buy reveal about you season and entertaining the rest of us with great stories of the great bargains she’d managed to snag.

Then one day I went shopping with her. And I decided that despite her knack for finding good stuff on sale, she wasn’t a good shopper—mainly because she put very little thought into the gifts she bought. Never once did I hear her pick up an item and exclaim that it was just the right thing for someone because he or she would love it.

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

ow inflation and the weakening peso are seen to have boosted consumption beginning October, according to First Metro Investment Corp. (FMIC) and University of Asia and the Pacific (UA&P) Capital Markets Research.

INSIDE

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Tuesday, Tuesday,November December 18, 23, 2014 Vol. Vol.10 10No. No.40 75

Consumption gets boost in Q4

22 DAYS

ear Lord, we respect the order established in nature, combining appropriate periods of work and rest. We order our life on the truth that God has created us, that He loves us, that He wants us to live in communion with Him with our whole heart, soul, mind and strength. We live a life of order consistent with who we are, our position and the resources we possess. There is no lack of order in any aspect of our life right now because we so anchored with God. He won’t let us down. May God continue to put order in our life. amen!

nn

THINK TANK SAYS LOW INFLATION, WEAKER PESO PROVIDING CONSUMERS ADDITIONAL FIREPOWER

PAPAL VISIT 2015

Order

A broader look at today’s business

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audi Arabia’s oil chief on Sunday dismissed allegations that his kingdom conspired to bring down oil prices in order to harm other countries and told a summit of Arab energy leaders that he was confident the market would stabilize.

The kingdom, which is dependent on oil revenues, is able to weather lower oil prices due to large reserves built up over the years. Non-Organization of Petroleum Exporting Countries member Russia and other nations like Iraq, Iran and Venezuela need prices substantially above present levels to meet budget goals and want to drive prices up.

Saudi Arabia maintains it is opposed to cutting production because of fears its market share could erode.

“The best thing for everybody is to let the most efficient produce,”Saudi Petroleum Minister Ali Naimi said in the United Arab Emirates capital of Abu Dhabi. He was addressing the

PESO exchange rates n US 44.7530

See “Saudi oil,” A2

Palace endorses ₧1.8-B export-promo fund

By Catherine N. Pillas

A

n ex port-development fund amounting to around P1.8 billion has been endorsed by Malacañang to the Department of Budget and Management (DBM) this month as requested by exporters, a senior industry official said.

While the Philippine Export Development Plan (PEDP) 2014-2016 is still awaiting the President’s approval, the source said the budget component has already been endorsed by the Office of the Executive Secretary to the DBM to be included in the government’s budget for 2016.

“This budget would probably be lodged in the Department of Trade and Industry’s

[DTI] budget,” said the source privy to the plan’s progress. The budget, said the source, would be used for general exports promotion and development.

Philippine Exporters Confederation President and Philippine Chamber of Commerce and Industry Honorary Chairman Sergio Ortiz-Luis Jr., in an earlier report, said more government support should be given to enhance the competitiveness of the country’s export sector, given that the budget of the DTI has been reduced by 14 percent for the incoming year.

Exporters have said earlier that the International Trade Group under the DTI, which is tasked to promote Philippine exports, only has a P500-million budget, with 80 percent of the funding going to

employee salaries and administrative costs.

The PEDP 2014-2016 is the exportsector component of the Philippine Development Plan 2011-2016, the government’s primary economic and socialdevelopment program.

It outlines the export targets and product and market strategies to boost export growth within the three-year period, taking into consideration the problems affecting local and international markets.

The proposed PEDP set a growth target of 8 percent to 9 percent for total exports this year, from last year’s $78.5 billion.

For 2015, exports are targeted to grow from 9 percent to 10 percent, while a growth range of 10 percent to 11 percent was projected in 2016.

n japan 0.3748 n UK 69.9624 n HK 5.7716 n CHINA 7.1948 n singapore 34.0457 n australia 36.4112 n EU 54.7642 n SAUDI arabia 11.9221 Source: BSP (22 December 2014)

News BusinessMirror

Tuesday, December 23, 2014

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news@businessmirror.com.ph

Consumption gets boost in Q4 Continued from A1

“The stronger US economy should boost capital flows into the US and keep the US dollar stronger against the euro, yen and other currencies.

The peso will not be able to resist the strong tide,” it added.

FMIC and UA&P Capital Markets Research said inflation may average 3.4 percent in December 2014, as well as 2.9 percent and 3 percent in January and February 2015, respectively.

The peso, meanwhile, may average 44.85 to the dollar this month before sliding to around 45.189 to the greenback in January and 45.161 in February 2015.

Meanwhile, FMIC and UA&P Capital Markets Research revised its growth forecast for the Philippine economy this year to 6 percent.

This is consistent with the expectation of the National Economic and Development Authority that the Philippine economy’s growth will have difficulty meeting the lower end of the target for 2014 at 6.5 percent.

Socioeconomic Planning Secretary Arsenio M. Balisacan said it would be “very challenging” to meet even the 6.5 percent considering the economy needs to grow by over 8 percent to attain this growth rate.

“The Philippine economy’s slowdown to a 5.3 percent gross domestic product [GDP] in the third quarter, from 6.4 percent in second quarter took both government drumbeaters and analysts by surprise. It certainly presented a grim reminder to all and sundry that rapid economic growth

is not a walk in the park, nor is it inevitable, given favorable economic conditions. Underspending by the national government, poor agricultural performance and containers stuck in the Manila port due to a truck ban all combined to pull down the Philippine economy,” the Market Call stated.

“Falling crude oil prices and conditions that stifled the economy in the third quarter turning favorable, we still expect a strong fourth quarter.

However, this may not be enough to bring the full-year growth even at the lower end of the government’s target,” it added.

The government failed to deliver on its promise to increase public spending at the start of the second semester, causing the economy to

Saudi oil. . . Continued from A1 Arab Energy Conference, a gathering held every four years. The price of US crude has dipped below $60 a barrel, its lowest in five years. Naimi said he was certain that the oil market would recover with the improvement of the global economy.

An Opec meeting last month failed to agree on production cuts, mainly because of Saudi opposition to

Pope. . . Continued from A8

Philippines and member-schools of the Association of Catholic Universities of the Philippines, as well as participants in the Second Philippine Conference on New Evangelization will occupy the UST football field and grandstand. She said the event is open to the public and no ticket will be distributed for the gathering “The event is open to the public…. We would like to provide them with that wonderful opportunity of see-

curb its own exports. Opec controls about 40 percent of the world oil market and Saudi Arabia is the cartel’s largest producer.

Naimi said “a lack of cooperation by non-Opec production nations, along with the spread of misinformation and speculator’s greed” have contributed to the drop in prices. AP

ing him [Pope Francis],” she reiterated during a media briefing for the papal visit. She said that as early as 6 a.m., the pre-program activities will start.

Around 10:30 a.m the program proper will start, wherein Pope Francis will give his message to the youth, followed by prayers and intercessions to be given by seven youth delegates speaking in different Philippine dialects. Claudeth Mocon-Ciriaco

lose the much-needed momentum to meet the government’s growth targets this year.

Other factors, such as the contraction in the agriculture sector and financial intermediation, contributed to the slowdown of the Philippine economy to a growth rate of only 5.3 percent in the third quarter, the slowest since the third quarter of 2011, when the economy grew 3.2 percent.

Balisacan said the chilling effect created by the unfavorable decision of the Supreme Court on the Disbursement Acceleration Program and the recent issuances of disallowance by the Commission on Audit were among the major factors that caused public spending to contract by 2.6 percent in the third quarter.

Nickel. . . Continued from A8

are seeking permits, said Leo Jasareno, director of the Manila-based Mines & Geosciences Bureau.

The office authorized two more nickel mines this year, including one for TVI Pacific Inc. pending for about 15 years, he said.

“If Indonesia’s ban goes on we’ll see more new mines in five years,” Jasareno said.

“Nickel will be the darling of mining in the next 10 years.”

Each of the four new mines may produce about 2 million tons of ore a year, Defensor said. Its Tawi Tawi project in the Mindanao region may provide as much as 3 million tons, he said. It can operate year-round, whereas mines in some other areas have to halt for months during the annual rainy season.

“Ore is in demand and there are many aggressive buyers,” Defensor said. “We’ll keep the machine efficient, so when the ban ends and prices correct, we can still operate.” Bloomberg News

3-DAY EXTENDED FORECAST DECEMBER 23, 2014 | TUESDAY

TODAY’S WEATHER

TAIL-END OF A COLD FRONT AFFECTING SOUTHERN LUZON. NORTHEAST MONSOON AFFECTING NORTHERN AND CENTRAL LUZON.

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.

DEC 24

WEDNESDAY

DEC 25

THURSDAY

THE QUEEN OF CYBERPORN AND HER TOWN’S INDUSTRY OF CHILD ABUSE Continued from A8

after midnight in the Philippines, so Ontong had trouble rounding up children to join in; the more participants, the higher the payout. She settled on two members of her extended family and a boy from the neighborhood, all underage, police say.

NBI agent Dimaporo followed the chat on a laptop as he made his way from Cebu to Ibabao in his Toyota sedan, part of a convoy of eight unmarked cars and vans. The NBI had to observe the negotiations taking place from the laptop in order to secure a search warrant, Dimaporo said.

“When we saw the children flash on the screen, it was all we needed to swoop in,” he said.

Wilfredo Ontong, standing guard at a basketball court near the house, spotted the agents as they arrived and took off running to warn Eileen, Dimaporo said. He was too late; from the chat, police had all the evidence they needed. The three children were pulled from the house just as two of them were about to have sex in front of the camera, and were handed over to local social-welfare counselors.

Dimaporo said Eileen showed little remorse, while her husband said he’d warned her to stop the shows for fear of arrest. Both were handcuffed and hustled off to jail.

Marine busted

NBI agents have identified 35 children from the material found at Ontong’s house. Dimaporo said 13 have been taken from their parents and

DEC 26 FRIDAY

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TACLOBAN

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CAGAYAN DE ORO

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METRO DAVAO

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PHILIPPINE AREA OF RESPONSIBILITY (PAR)

LEGAZPI

PUERTO PRINCESA CITY 24 – 31°C

METRO CEBU 24 – 31°C

ZAMBOANGA CITY 25 – 34°C

PUERTO PRINCESA

ILOILO/ BACOLOD CAGAYAN DE ORO CITY 24 – 30°C METRO DAVAO 25 – 33°C

24 – 33°C

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TAGAYTAY

TACLOBAN CITY 23 – 29°C

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TUGUEGARAO

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ZAMBOANGA

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SUNSET

MOONSET

MOONRISE

6:17 AM

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NEW MOON HALF MOON

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DEC 29

CELEBES SEA

6:09 AM

-0. 32METER

2:31 AM 9:36 AM Partly cloudy to cloudy skies with isolated rain showers and/or thunderstorms

Light rains

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placed in state facilities or shelters run by nonprofit organizations. Evidence from the case has helped police find at least 10 neighbors involved with online pornography, the NBI says. Charges of child pornography and child abuse are pending against three people, including one of the parents of the second girl rescued during the Ontong raid.

Police have also identified at least 20 people in the US, the UK and Australia, who, they say, purchased images or live shows from her. One man, an American Marine, paid Ontong some $40,000 over the years, according to Homeland Security. The Naval Criminal Investigative Service arrested the man in Okinawa, Japan, though he can’t be named until he enters a plea, expected in January.

In the wake of the Ontongs’ arrest, local officials have stepped up efforts in schools, churches and community centers to educate children and their parents about the dangers of the trade. And social workers seek out children on the streets and at Internet cafés to help steer them away from cybersex, said Guusje Havenaar, a psychologist at Terre des Hommes, a nonprofit that combats child exploitation.

Children who engage in such acts start to “see their bodies as a tool; they become separated from themselves,” Havenaar said. “Cybersex, especially when parents are involving their children, is damaging much more than the parents suspect. Family ties are strong in the Philippines, but that doesn’t mean they are healthy.”

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Economy

A4 Tuesday, December 23, 2014 • Editors: Vittorio V. Vitug and Max V. de Leon

BusinessMirror

Sevilla: P456-B Customs revenue collection goal for 2015 ‘unrealistic’

E

By Joel R. San Juan

VEN as the year 2015 has yet to start, Customs Commissioner John Sevilla has conceded that the agency would unlikely reach its P456 billion revenue target set by the Department of Finance (DOF) and the Development Budget Coordination Committee (DBCC) for next year.

At a news briefing on Monday, Sevilla branded as “impractical and unrealistic” the very high revenue target set by the DOF and the DBCC.

Sevilla said he has appealed for the lowering of the target but was ignored, thus, he has no option but to comply with the target.

DBCC is an interagency body that determines the revenue target of the bureaus of Customs (BOC) and Revenue.

“They already know our opinion, we don’t decide our targets.

They do. We said it is an unrealistic target, they [merely] said ‘noted,’” Sevilla added.

He said the revenue target for 2015 is about 27 percent higher than what the bureau expects to collect this year,” Sevilla told reporters in a yearend briefing at his BOC office in Manila.

“I have said this before: It is a kind of provocative statement. Whatever the target of Customs is, we will do our best. I like the others to judge us as to how well we are performing,” Sevilla added.

The P456-billion revenue tar-

get, which includes case collection and Tax Expenditure Fund (TEF) is higher by P48 billion than its target for 2014, which was pegged at P408 billion.

TEF is the noncash collections recorded on paper for government importations.

This year’s target, according to Sevilla, is also unlikely to be achieved, considering that there are only six collection days left before 2014 ends.

“I doubt very much we are going to meet it,” he said.

However, as of last week, Sevilla said the BOC’s total revenue collections has reached P350 billion and that the agency has recorded an 18-percent growth in revenue from January to November of this year.

Filinvest, Megawide unit submit bids for P2.5-B ITS southwest terminal project

By Lorenz S. Marasigan

T

he Department of Transportation and Communications (DOTC) received low investor participation on Monday’s bid submission for the P2.5-billion Integrated Transport System (ITS) Southwest Terminal deal, as only two out of a dozen potential parties joined the long-delayed auction.

The two firms that submitted their offers were Filinvest Land Inc., and MWM Terminals of Megawide Construction Corp., a mainstay in the public-private partnership arena.

“Although we would have preferred to have more groups participating in the bid, we are nevertheless satisfied to have two established and reputable companies competing for the project.

We are hopeful that they put in good proposals so that we may obtain the best deal for the government,” DOTC Spokesman Michael Arthur C. Sagcal told reporters.

The bids and awards committee of the transportation department will review the qualification documents of the two groups for 10 days.

The technical offer of those who passed the qualification stage will then be evaluated, after which the financial proposals of technically qualified firms will be opened.

The top offer will then be evaluated for 15 days.

The following groups bought bid documents to compete for the project, but did not submit their offers on Monday—D.M. Wenceslao and Associates Inc.; Ayala Land Inc. and Ayala Corp.; Metro Pacific Tollways Corp.

(MPTC); San Miguel Corp.; Vicente T. Lao Construction; Egis Projects Philippines; Robinsons Land Corp.; States Properties Corp.; Expedition Construction Corp.; and Altus San Nicolas Corp.

MPTC President Ramoncito S. Fernandez said his group decided not to bid for the deal, as his company did not see any business case in the contract.

“Together with potential part-

Baclaran Christmas rush

People from different walks of life rush to Baclaran, a bargain mecca, to do their Christmas shopping for clothes and apparel, three days before Christmas Day on Thursday. Shoppers say commodity prices in Baclaran are lower compared to shopping malls. NONIE REYES

ners, we didn’t see business case,” he said in a brief text message.

The tender was initially scheduled on May 15, but was rescheduled to June 16 to give ample time to bidders to finalize their bids. But changes were made in the contract to increase investor appetite, thus forcing the agency to postpone the bidding to August 30.

It was then moved to September 29, but another round of revision on the project structure was made, hence an indefinite postponement.

The government then decided to

set the bid submission to December 1, almost a year after the deal was put to the auction block in 2013. The last round of postponement was made earlier this month, with the agency setting December 22 as the bid submission deadline.

The Southwest Terminal project, which will be constructed in 2.9-hectare area near the ManilaCavite Toll Expressway (Cavitex), will connect passengers coming from Cavite to urban transport systems in Metro Manila.

It will include a passenger terminal building, arrival and de-

parture bays, public information systems, ticketing and baggage handling facilities and park-ride facilities.

The government has awarded eight contracts since the infrastructure program’s inception in 2010.

It aims to sign at least 15 contracts by the time President Aquino steps down from office in 2016.

The state intends to plug the gap in the country’s transportation infrastructure in the next decade by rolling out massive infrastructure projects that are seen to spur economic growth.

Bill exempting marginal earners from income tax, VAT payments pushed

A

bill seeking to grant tax exemption to marginal income earners, such as small business owners, tricycle drivers and farmers, has been filed in the House of Representatives.

House Bill (HB) 5213, authored by Nacionalista Party Rep. Mark Villar of Las Pinas, seeks to amend National Internal Revenue Code exempting marginal income earners from the payment of income tax, value-added tax and the annual registration fee.

The bill defines marginal income earners as individuals who are selfemployed and do not earn income

from an employer-employee relationship and whose sales do not exceed P140,000.

The measure also cites Bureau of Internal Revenue Memorandum Circular 7-2014, which requires marginal income earners to comply with registration requirements in order to obtain a certificate of registration.

According to Villar, these requirements are costly and burdensome and would cause lost income opportunities for individuals, who earn their income on a daily basis.

He said exempting individuals, who are self-employed, from income

taxes will give them the same tax treatment as minimum wage earners.

Villar said individuals earning not more than P140,000 annually should not be burdened with the payment of certain taxes.

“Our law exempts minimum wage earners from the payment of income taxes, and, yet, it does not exempt individuals, who earn even less than the minimum wage. This clearly violates the Constitutional right to equal protection of self-employed individuals,” Villar added.

The lawmaker said self-employed individuals and small business own-

ers should not be burdened with taxes, considering that it is already hard enough for them to earn a daily living.

Villar said that while it is commendable for the Bureau of Internal Revenue to take steps in the collection of taxes, its issuance violates the basic principles of social justice.

“This measure will help small businesses cope with the harsh business environment and give them a better chance to succeed,” said Villar, the chairman of the House Committee on Trade and Industry.

Jovee Marie N. dela Cruz

news@businessmirror.com.ph

Solons reject MRT 3, LRT 1 and 2 fare hike

gatchalian

poe

By Jovee Marie N. dela Cruz

L

awma k ers on Monday raised their opposition to the anticipated fare increase in Light Rail Transit (LRT) Lines 1 and 2 and the Metro Railway Transit (LRT), which, the transportation department said over the weekend, will be implemented on January 4.

Nationalist People’s Coalition (NPC) Rep. Sherwin T. Gatchalian of Valenzuela City, senior vice chairman of House Committee on Metro Manila Development, said the government should solve first the frequent breakdowns due to mismanagement before the implementation of the fare increases ranging from 50 percent to 87 percent.

“Instead of raising MRT and LRT fares, the government should first improve the services of the mass transport system amid frequent glitches and a serious accident last August, where 40 passengers were injured after a wayward MRT train rammed through metal railings and a lamp post at Taft Avenue station,” Gatchalian said.

According to the Department of Transportation and Communications (DOTC), the fare increases are aimed at reducing the P12 billion in annual subsidies by about P2 billion, saying the P2 billion was equivalent to 8,240 classrooms, or 11,440 hectares of irrigated farmlands.

The DOTC said the government was subsidizing about 60 percent of the fares for LRT 1 and 2, and about 75 percent of the fares for MRT 3.

The LRT1 fares were last increased in 2003, while LRT 2’s fares have not been adjusted. MRT 3 fares were lowered from P17 to P34 in 1999 to P12 to P20 in 2000. The current fares range from P10 to P15.

Moreover, Gatchalian said the impending MRT and LRT fare hike will wipe out whatever benefits ordinary Filipinos were able to reap with the continuous drop in prices of gasoline and petroleum products and the recent rollback in electricity rates.

“The government did not even wait for the holiday season to pass before announcing the planned increase for MRT and LRT fares,” he said.

“This will definitely neutralize the positive effects of the recent jeepney-fare rollback, as well as the impending rollback in taxi and bus fares,” Gatchalian added.

Unnecessary and untimely

A neophyte lawmaker on Monday called on the DOTC to defer the unnecessary and untimely LRT and MRT fare increase next month.

This came amid unmet public expectations to improve even the basic facilities of the train system.

“We must remember that a mass transport system, such as the MRT, is an essential government service.

The fare increase is an added insult and an injustice to the suffering riding public, whose very lives are put on the line everyday,” Sen. Grace Poe said in a news statement.

“The sorry state of the MRT brought about to a large extent by government mismanagement and ineptness cannot justify an increase. The government is obligated to maintain the subsidy until the system’s services and safety are upgraded,” she said.

Based on the new fare matrices issued by the DOTC on Saturday, rates for end-to-end trips in MRT 3 will increase to P28 from P15 (from North Avenue to Taft Avenue

ridon

and vice versa); P30 from P20 in LRT 1 (from Baclaran to Roosevelt and vice versa); and P25 from P15 in LRT 2 (from Recto to Santolan and vice versa).

The announcement came at a time when the MRT 3 and LRT Lines 1 and 2 are accorded substantial government assistance in the soon-to-be signed General Appropriations Act, which includes the amounts of P4.65 billion in subsidy—P7.94 billion for MRT rehabilitation and P4.67 in unpaid MRT taxes.

The newly approved bicameral version of the supplemental budget, which will be immediately carried out in 2015, has the following items: P1.21 billion for MRT rehabilitation and capacity extension and P728 million rehabilitation fund for LRT 1 and 2.

“While the MRT and LRT is in Metro Manila, the riders of these trains are mostly wage earners, whose contribution to the national economy is far reaching and impacts productivity,” Poe said.

Poe led a public hearing of the Senate public services subcommittee on transportation on the pressing need to rehabilitate MRT’s rail system, calling on officials and stakeholders to lose no time to discuss solutions to the MRT challenges that imperil commuters’ safety.

“The sub-committee in the last four months conducted three public hearings on the MRT issues. Almost all issues from the basic maintenance concerns to ownership of the kind of trains that we will procure in the coming years were all discussed,” she said.

“Considering that they have a date already to implement a new fare system, they should have volunteered it in the last hearing. But they did not. How could they be so insensitive to the millions of commuters and MRT, LRT riders?”

“When was the last time they conducted a consultation”? she asked.

Who stands to benefit?

Only big business and banks will benefit from the approved fare increases in the country’s three major mass transport lines, Party-list Rep. Terry L. Ridon of Kabataan said on Monday.

“The Aquino [administration] is shameless in proceeding with this Mass Rail Transit-Light Rail Transit fare hike. It seems the periodic interest payments and increased financial viability are what motivates the Aquino administration to proceed with the fare hikes instead of public service,” he added.

“Had Mr. Aquino been listening to public opinion, it would have been easy for these government financial institutions [GFIs] to simply cut back on their earnings for the sake of the public,” he said.

Meanwhile, fare increases in the LRT are only meant to “cover for the profits of the private operator.”

“This has precisely been our warning even before the LRT 1 privatization was under way: There will most certainly be a fare increase to cover for the profits of the private operator. We should recall that, under the current LRT 1 tariff, LRT 1 is not losing money. In fact, its revenue is sufficient to proceed with operations,” he noted.

“The only logical reason for the fare increase is the adjustment in favor of private profit. This, without even releasing a single centavo yet for infrastructure,” Ridon said.

With Recto Mercene and Marvyn Benaning

Opinion BusinessMirror

A6 Tuesday, December 23, 2014

Editor: Alvin I. Dacanay

editorial

Balancing spending and debt

E

ACH time the Philippines economic growth numbers have been released for the past year, attention has been called to the amount of government spending. The complaint is that the country’s gross domestic product growth could have been larger if only the government would have spent more.

It is well and good to look at government spending growth and say we need more. We would assume the “spending” these commentators are speaking of is practical, feasible and actually adds something to economic growth. We could increase government spending overnight by simply doubling the number of government employees.

But we need spending that has a greater multiplier effect and, more important, supports the rest of the economy. No logical person, who advocates more spending, except maybe those leftist-elite thinkers, who believe bigger government is the solution to all problems, wants spending only for its own sake.

However, the bigger issue is the question of where the money is going to come from to support increased spending.

Every peso taken by the government in taxes is a peso that is not available to consumers and businesses to spend. While we consumers may like to splurge, most people are sensible about what they buy. Every successful business is successful because of prudent spending that adds to profits and growth.

Assuming economically beneficial government spending, the government can still only take so much money out in taxes before government taxing and spending becomes counterproductive. Without increased taxation, the alternative is for the government to borrow funds.

For two decades, Japan borrowed and spent the money to build massive infrastructure projects like bullet trains, subways and dams. It did not work to improve the economy. Now Japan’s debt is so great that it is mathematically impossible for the debt ever to be repaid.

Two underlying factors have kept the Philippine economy stable in the 21st century: a prudent banking system and responsible government and privatesector borrowing.

Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. has announced that, as of end-September 2014, outstanding Philippine external debt was $57.7 billion. External debt refers to all types of borrowings by Philippine entities from foreign entities that are approved/registered by the BSP. Gross international reserves of $79.6 billion as of September 2014 means the country has enough cash to be foreign debt-free if desired. Few nations can claim that condition.

Further, the external debt-service ratio or total principal and interest payments as a percentage of the exports of goods, services and other income improved from 8.2 percent a year ago to 6.4 percent today.

Increased government spending is fine but it must be balanced against the damage that taking on increased debt can cause. Just ask the person with a big credit-card balance about that idea.

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A merry Christmas despite slow growth Manny B. Villar

THE Entrepreneur

T

HE Philippine economy hit a historical high of 7.9 percent in the second quarter of 2013, up from 7.7 percent in the first quarter. However, it turned out to be the peak that preceded a slide, from 7 percent in the third quarter and to 6.2 percent in the fourth quarter.

The economy posted a 7.2-percent expansion for the whole of 2013 despite the massive earthquake in Bohol and the destructive Supertyphoon Yolanda (international code name Haiyan) in Eastern Visayas.

It was only the second year in the past 4 years that the country grew by 7 percent or higher. GDP growth was 3.7 percent in 2011 and 6.8 percent in 2012. With the continuing decline in quarterly growth–5.6 percent in the first quarter of 2014, 6.4 percent in the second quarter and 5.3 percent in the third quarter, it is unlikely that the economy will reach even the low end of the government’s growth target of 6.5 to 7.5 percent.

This, in turn, dims the prospects of achieving inclusive growth, which means spreading the benefits of economic gains down to the bottom of the pyramid, simply the poor majority.

Economists estimate that the economy must grow by at least 7 percent continuously for many years in order for its benefits to trickle down

Closing the books on 2014

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the poorest households.

Thus, while the economy continues to expand even amid crises in the global economy, millions are still unable to find jobs, and millions more are underemployed. The absence of the economic trickle-down effect also keeps a fourth of the 100-million population in the poverty trap.

On the other hand, growth—below or above 7 percent—still yields benefits for the rich, such as investors in the stock market, robust industries like real estate, as well as corporate executives.

It’s the normal course of development in a free-market economy like what we have in the Philippines.

This year, however, the dynamics of the law of supply and demand, also a basic feature of a free-market economy, will allow a direct flow of benefits to the poor households.

They don’t have to wait for a long period of sustained high-growth.

I refer to the continuing decline, which is substantial, of oil prices.

Last week, the major players in the

John Mangun

OUTSIDE THE BOX

F

OR the Philippine stock market, the year 2014 started on a sour note.

The composite index (Philippine Stock Exchange index) was at a low, having come down from its historic high near 7,400 in the middle of 2013 and beginning 2014 at the 5,900 level.

But by the middle of February, things started looking up. The 6,000 level of the PSEi fell behind and by the end of November, the market had been higher in nine out of the previous 11 months. However, as the market attempted to break to a new daily historic high closing, the market failed to progress above that level.

Overall though, the stock market performed well and once again it is at or near the top of the global list.

If you were paying attention well, 2014 was a year that provided a good educational experience for investors.

There were many lessons to be learned.

“You can’t fight ‘The Fed’ or China”

IF you were listening to the experts at the

beginning of 2014, you would have noticed that they had everything all figured out. The US Federal Reserve was going to stop its quantitative-easing program, interest rates would rise, and the global markets would tumble. The first item was true; the last two did not happen.

At every twist and turn of the Fed’s policy this past year, the markets supposedly had factored in future interest rate increases. Except, the rate increases never happened and, in fact, interest rates on US government debt are lower today than at the beginning of 2014, falling from 3 percent to 2.2 percent.

The “bubble experts” were predicting that 2014 would probably be the year China took a big hit. Sorry, maybe next

domestic oil industry announced a price rollback of at least P1.75 per liter for gasoline and P1.55 per liter for diesel, effective December 14.

The total reduction on the prices of gasoline and diesel in 2014, according to the Department of Energy, amounted to P10.74 per liter and P12.13 per liter, respectively.

We all know that gasoline, diesel and other oil products are a major component of almost all industries, and affect both the rich and the poor.

The rich are able to immediately enjoy the benefits of price reduction as they fill the tanks of their limousines and sports utility vehicles, or the vehicle fleets of their factories.

It is time for the poor to share in the benefit pie. I welcome the decision of the Land Transportation Franchising and Regulatory Board (LTFRB) to reduce the minimum jeepney fares in Metro Manila by a peso, or from P8.50 to P7.50, effective December 12. The LTFRB also instructed its regional and provincial offices to reduce fare rates based on the local diesel and gasoline prices in their respective areas.

Other sectors like food manufacturers should follow suit. The government should exert moral suasion to make sure that the positive impact of lower oil prices are shared with the poor.

For many people, inclusive growth and inflation are abstract terms, but prices of food and other goods and services (like transport fare) are the things that most people associate with the economy.

In closing, I wish to invite the

public to visit the distinctive Christmas exhibits in some of the projects of Vista Land & Lifescapes Inc. These exhibits should be a happy and memorable bonding experience for students, who are now on vacation, and their families. There are no entrance fees and the exhibits are open to the public.

At the Evia Lifestyle Center in Vista City in Daang Hari, Cavite, a 30-foot high Christmas tree is surrounded by lush landscaping, with a promenade that includes a grand arch, and a beautiful display of lights.

Visitors will also see an assortment of Christmas ornaments spread in the entire lifestyle center.

They will feel that they’re transported to The Americana at Brand in Glendale, California from where Vista Land took its inspiration in creating the wonderful showcase.

From the American Christmas scene, take a trip to a “Swiss Alps” winter land, the 100-hectare Crosswinds in Tagaytay, the only pine estate south of Metro Manila with over 20,000 pine trees. The comfortable cold temperature at this time of the year and the scent of pines at Crosswind rival the atmosphere in urbanized Baguio.

The 7-hectare exhibit, dubbed “Christmas Village,” includes Santa Claus’s house, which greets visitors at the gates of Deux Pointe. Visitors can lounge at sidewalk cafes and discover great finds at quaint shops.

Merry Christmas!

year. The Shanghai Stock Exchange Composite Index ends 2014 up 50 percent.

2014: “Money moves the markets, not events.” Too many stock market investors are obsessed with market analysis.

Everyone wants to know why the price moves before they accept the validity of that movement. Do you really understand how electricity works? Do you give any thought at all to Coulomb’s law or the concept of free electrons or do you just flip the light switch and enjoy the benefits of the electricity?

In the last year, major companies have reported bad earnings and the price has gone up. Companies have reported bad earnings and the price has gone down.

There were so many local stock exchange issues that came from nowhere to provide great profits this past year. What you may have learned is that while you are waiting to understand the reason, the smart money is getting wealthier.

Take advantage of the moves and then let the experts explain to you why you are richer.

Now that 2014 fades into history with some lessons learned, what can we look forward to in 2015?

“The market is always right”

THE stock price of Cebu Pacific was one of the worst performing issues in the last half of 2013 falling from P85 to P50. Now it is back to P85 and it is because of the collapse in the price of crude oil which will increase the company’s profits. But the price actually started climbing in April 2014, two months before the crude oil price topped out and started dropping.

When prices are going higher, buy.

When prices are falling, sell. Company and even macro fundamentals are almost useless. Mark Douglas is someone that few if any local investors have ever heard of, but like myself, believes the key to stock market analysis is understanding market psychology.

Mr. Douglas says this: “Fundamental analysis creates what I call a ‘reality gap’ between ‘what should be’ and ‘what is.’

The reality gap makes it extremely difficult to make anything but very longterm predictions that can be difficult to exploit, even if they are correct.”

“Intrinsic value” and “valuations” are terms used by “experts” to explain price movements after they have already occurred. The market is always right.

Follow the money.

That brings me to the last lesson of

For comments, e-mail mbv.secretariat@gmail.com or visit www. mannyvillar.com.ph.

E-mail me at mangun@gmail.com.

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

Opinion BusinessMirror

opinion@businessmirror.com.ph

Korea shows the way on ‘Womenomics’

ABOUT TOWN

William Pesek

BLOOMBERG VIEW

J

APANESE Prime Minister Shinzo Abe says he wants to put more women to work, to help make up for the country’s shrinking population. His Liberal Democratic Party seems to have other ideas. Of the 1,093 people who ran for office in recent snap elections, a mere 169 were women. Once the votes were counted, the lower house was 91-percent male. makers. The company, a finalist for this year’s Financial Times women-in-business award, recently pulled off history’s biggest initial public offering.

Park has cultivated female role models. In December 2013 she surprised Korea’s male-dominated business community by picking Kwon Seon-joo to helm the state-owned Industrial Bank of Korea, the country’s fourth-largest lender by assets. The country’s genderequality minister, Cho Yoon-sun, is pressuring publicly traded companies to disclose their ratio of executives by gender to shame them into doing better. Park herself has begun to call out companies that employ few women, as well as encourage more women to run for office in the most male-dominated voting districts. The government is also setting up a database of 100,000 skilled women in order to help improve their representation at senior levels in the public and private sectors.

Abe should be paying close attention to Park’s initiatives. Japan’s needs are just as great as Korea’s: While more women have joined the work force since he came to office two years ago, most remain stuck in low-end, often temporary jobs that pay 35 percent less than permanent, full-time positions and offer few benefits. Abe’s efforts to expand childcare programs, encourage flexible working hours and train mothers seeking to reenter the work force have yet to change perceptions in male-dominated Japanese boardrooms. He failed even to pass a bill requiring large employers to publish plans to advance female employees, a first step toward any progress.

To Abe’s credit, he did name a recordequaling five women to his Cabinet in a September reshuffle. Yet Abe didn’t stand by two of them after they were accused of oddly petty financing violations—the kind of scandals that would have tripped up few male Cabinet members. Like Park in Korea, if he wants Japan’s corporate chieftains to abandon their old ways, he’s going to have to show the way.

Think fracking isn’t safe? Make it safer

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O one doubts Governor Andrew Cuomo’s concern for the well-being of New Yorkers. It’s just not clear that a ban on fracking protects it—or how the ban can help make fracking safer and less destructive in states where it is practiced.

Cuomo announced last week that his administration won’t allow drilling for natural gas using the process called hydraulic fracturing, or fracking. The state’s Department of Health reported that “until the science provides sufficient information” to determine the risks involved, fracking shouldn’t be permitted.

Thus New York is essentially recusing itself from the national debate over how public policy should balance the risks and rewards of fracking, which is allowed in at least 32 states. Yes, the practice has costs—to public health, as well as to the environment. But it also has benefits—to local economies, to state coffers and (also) to the environment.

Fracking isn’t going away—nor should it, given that it makes accessible vast reserves of US natural gas, which emits less carbon than coal when burned to generate electricity.

And fracking is far less lethal than coal-fired plants, whose emissions are responsible for more than 7,500 deaths each year.

None of this is to say that fracking is without risks. It uses chemicals to extract gas or oil from underground rock formations, for

A7

Will increased train fares lead to better service?

Ernesto M. Hilario

That ratio falls a long way short of Abe’s goal for corporate Japan: to have women in 30 percent of leadership roles in all sectors by 2020. Such ambitious targets are laudable. Studies routinely show diversity at companies and in politics increases innovation and economic growth. The problem is that thus far, Abe’s policies have been too incremental and unimaginative to have much impact.

The prime minister might want to study neighboring South Korea, where President Park Geun-hye looks to be pioneering a smarter path. In her latest budget, Park has earmarked much of next year’s 5.5-percent increase in public expenditures to encourage companies to offer more flexible schedules—key for working mothers—and to subsidize the prohibitive cost of childcare.

For kids aged three to five, day care will now be free.

Park has set some ambitious goals of her own, including raising the number of women in the work force to 62 percent by 2017, from the current 56 percent. While she could go further—say, by setting quotas for female managers—Moody’s, for one, is impressed. The ratings agency has described Park’s pro-women policies as “credit positive.” As analysts Shirin Mohammadi and Tom Byrne wrote in a recent report: More women workers will help increase the labor supply and boost Korea’s potential growth rate. This would offset Korea’s shrinking labor force, a consequence of its graying population, which constrains its long-term prospects.

The private sector amply demonstrates the power of diversity, Bloomberg data show. Crunching the numbers, my Seoul-based colleague Esther Jang finds that the 24 Kospi 200 companies with at least one female board member outperform others in Korea by 22 percent. In Japan, the 180 companies in the Topix index that have a female board member (out of nearly 1,800) outperform by 33 percent. At Jack Ma’s Alibaba, one-third of 18 founding partners are women, as are nine of the company’s 30 top decision-

Tuesday, December 23, 2014

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TARTING January 4, riders will have to cough up more money to be able to take the Metro Rail Transit Line 3 (MRT 3), as well as Light Rail Transit Lines 1 and 2 (LRT).

The Department of Transportation and Communications (DOTC) has decided to adopt a uniform distance-based fare scheme for the mass-transport system.

Passengers of the 17-kilometer MRT 3 from North Avenue in Quezon City to Taft Avenue in Pasay City and vice versa would pay P28 for storedvalue and single-journey tickets from the current fare of P15.

Passengers on LRT 1 from Baclaran to Monumento would have to shell out P30 for single journey and P29 for stored-value tickets from the existing P20 fare.

Those taking the LRT 2 from Recto Avenue to Santolan would have to pay P24 for stored value and P25 for single-journey tickets from the current P15 fare.

The government last raised fares for LRT 1 to P15 in 2003, while fares of LRT 2 have remained unchanged.

But don’t expect the substantial fare hike to result in upgraded facilities, better maintenance and an end

Mexican roots of Philippine Christmas Edgardo J. Angara

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Y this time of the year, many Filipinos would have nearly completed their annual pledge to attend all nine of the early-morning masses or Simbang Gabi in anticipation of Christmas Day.

They would have had their share of the usual fare of salabat, tsokolate, puto bumbong and bibingka. They would also be continuing a long tradition that started in 1587, when Pope Sixtus V granted a petition from Fray Diego de Soria—head monk of

Bloomberg

the San Agustin Acolman convent in Mexico—for permission to hold outdoor masses to accommodate the large numbers of people who attended the Yuletide services.

As these Misa de Aguinaldo (Gift Masses) were held at 4 a .m.—to allow

the Filipino farmers to reach their fields before sunrise, the pope would later on decree that pre-Christmas Masses (and hence, festivities) in the Philippines were nine days long, starting December 16.

Mexico would also have a similar nine-day pre-Christmas period, but this time punctuated with the Las Posadas (“The Inns”), village-wide processions that would reenact Joseph and Mary’s journey to Bethlehem and their search for lodging.

This would reach the Philippines and become the Panunuluyan held on Christmas Eve. Spanish missionaries—a number of whom were actually Mexican-born creoles—introduced these practices to the Philippines. They were the ones who encouraged Filipino mass-

Unnecessary delay

OVER in Cebu, the national government’s much-vaunted Public-Private Partnership Program is taking another beating with the unnecessary delay in the construction of a new terminal for the Mactan-Cebu International Airport.

The airport-modernization project has been awarded by the DOTC to GMR Megawide Cebu Airport Corp., a joint venture between Megawide Construction Corp. and Indian infrastructure firm GMR. But even as the joint venture has already raised the needed funds and quashed rearguard action from a losing bidder, it must now face a new hurdle—the delay in the relocation of the Cebu office of the Philippine Air Force (PAF), which stands in the middle of the site where the new terminal should be built.

It appears that the PAF has already bidded out the office-relocation project three times, but no contractor has submitted a superior bid. So GMCAC is left twiddling its thumbs while the PAF takes its sweet time moving out of its Cebu office.

The project is expected to be delayed by at least half a year. Since the project was supposed to start early next year and completed in three years, Cebuanos will have to wait until mid-2018 before they can get a spanking new international airport.

E-mail: ernhil@yahoo.com.

goers to put up Christmas lanterns or parols fashioned like the Star of David that were similar to Mexican piñatas and luminarias—either papier-mâché or ceramic decorations that housed candles. They were also among the first ones throughout the archipelago to admire poinsettias— one of the many Mexican plants that found a home in the Philippines—as a Flor de la Noche Buena or a Christmas flower.

The Spanish Crown was mainly responsible for introducing Roman Catholicism to the Philippines but it was Mexican priests and missionaries who demonstrated how that faith is practiced and celebrated—such as during Christmas.

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

GDP and the unaccounted for 82 percent of national wealth

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example, and they may be able to seep into nearby drinking or surface water. But such problems can be addressed with stronger safety regulations and better enforcement.

That’s what Maryland has done. Last month the state proposed some of the country’s strongest rules on fracking, including requiring zero leakage of methane, a potent greenhouse gas. Critics say the rules will make drilling impossible, but that may underestimate the ingenuity of drillers. In the meantime, safety advocates elsewhere can challenge their own states to match Maryland’s approach.

The answer isn’t to ban fracking. It’s to regulate it more carefully and intelligently.

Stronger casing requirements for wells, for example, can prevent wastewater from escaping into the ground, and there must be strict rules about how to dispose of the wastewater that reaches the surface. Companies that don’t follow the rules should face meaningful fines.

These principles haven’t always been applied in other states that allow fracking, which is why the practice has a mixed reputation. If Cuomo believes that current best practices in other states aren’t sufficient to protect public health, he would do more good by issuing rules that are—and then challenging drillers to meet them.

to the long queues at MRT 3 stations during rush hour.

In justifying the fare hike, Transportation Secretary Joseph Emilio A. Abaya said: “It is envisioned that this fare scheme will result in an equitable distribution of government funds currently dedicated to subsidizing the operations of the above rail lines in Metro Manila to muchneeded development projects and relief operations in other parts of Luzon, the Visayas and Mindanao.”

While higher operating costs make a fare hike timely and inevitable, what’s worrisome is that the revenues to be earned from higher fares will not necessarily be used for modernizing the system and ensuring the safety of riders.

The government currently subsidizes around 60 percent of the cost for each LRT 1 and LRT 2 passenger and around 75 percent for each MRT 3 passenger. On an annual basis, the government shells out around P10 billion to subsidize the operations of

MRT and LRT. With the fare increase, the government stands to earn an estimated P2 billion annually that would be used for infrastructure projects and rehabilitation and reconstruction in typhoon-damaged areas.

In other words, riders may still have to bear with long queues at MRT stations during rush hours or face the prospect of trains stopping dead in their tracks due to malfunctions and glitches.

While the savings in government subsidies for the MRT/LRT could be channeled to other uses, such as Yolanda reconstruction—a noteworthy endeavor, to be sure—making riders foot the bill for, say, construction of evacuation centers in Tacloban City, does not look right at all.

If MRT/LRT must increase fares, the revenues generated should be used to vastly improve facilities and ensure the comfort and safety of riders.

The DOTC estimates that the projected savings from cutting the MRT/LRT subsidies would mean savings that could be used to build 8,240 classrooms, 82 kilometers’ worth of farm-to-market roads or 11,440 hectares of irrigated farmlands.

But that argument is specious, as riders only want the trains to bring them to their destinations on time and in one piece.

Expect, therefore, widespread public outrage over the government’s move to increase MT/LRT fares without any guarantee of good service and improved facilities.

By Anantha Duraiappah

EW DELHI—Virtually all countries use gross domestic product (GDP) as their primary measurement of economic progress and overall societal progress. At the same time, countries express allegiance to the doctrine of sustainable development. This exposes an obvious disconnect.

GDP measures the value of all the goods and services a country produces. Thus, maximizing production is the best way of achieving high GDP. And increasing production is fine as long as it is within one’s means to maintain that production.

But relate this in terms of personal spending patterns: our list of desirables are seemingly infinite— the majority of us have insatiable appetites constrained only by personal budgets. You can increase your spending by taking on debt, but this too is determined by your ability to pay. We are constrained!

At the country level, the situation is no different. A nation can’t produce goods and services without the required assets. It can borrow or buy from other countries but again, consumption is constrained by an ability to pay, which in a wellbehaving market is determined by national assets.

Granted, the system of national accounts upon which GDP is computed tracks changes in capital assets such as infrastructure, transport and communications, among other types of national capital produced.

But the skills and education of people determine a country’s output.

So too do natural assets, like land, minerals, fossil fuels, and forests and the many other goods and services nature offers as direct production inputs.

Where are these assets accounted for in GDP? The Inclusive Wealth Report (IWR), first introduced at the Rio+20 summit and welcomed by The Economist magazine as an ambitious effort, provides fresh insights.

This year’s second edition, IWR2014, created in collaboration with the UN Environment Programme and the UN University, provides a comprehensive analysis of 140 countries, up from 20 two years ago. And the results are sobering, to say the least.

When climate change, oil price fluctuations and total factor productivity is included, less than 50 percent of the 140 countries assessed are on a sustainable trajectory; more than half are consuming beyond their means. A key factor, according to the report: a lack of effort in promoting creativity and innovation, primarily in developed countries.

As well, the 2014 report further substantiates an earlier finding: Human capital in a country’s asset base

Let’s build momentum to revise the system of national accounts, expanding it to include education and natural resources as part of the core accounts. While there has been some movement to develop satellite accounts for these categories, the scale of their contribution to the asset base of an economy makes it imperative that they be an integral part of core accounts. They can no longer be treated as externalities. is most highly valued by policymakers, followed by natural capital. Produced capital comes in third.

What does this mean?

Using a combination of market prices when appropriate, and social prices when no market prices are available or are imperfect, the data shows people in most countries place highest value on human capital, the key to which is education.

This is followed by natural capital—energy sources and timber, for example—but also the many ecosystem services nature provides to humankind. Using these values, the IWR2014 report finds that the produced capital our national accounts help to track and manage only represents 18 percent of the total value of a country’s asset base.

In other words, some 82 percent of a nation’s productive base—its “ inclusive” wealth—is not reflected in national accounts. This simply makes no economic sense.

And, as the popular saying goes, “you manage what you measure.”

The remedy?

Let’s build momentum to revise the system of national accounts, expanding it to include education and natural resources as part of the core accounts. While there has been some movement to develop satellite accounts for these categories, the scale of their contribution to the asset base of an economy makes it imperative that they be an integral part of core accounts. They can no longer be treated as externalities.

Developing inclusive wealth accounts is complex and challenging, involving some strong assumptions and projections of the future flows of existing asset bases for our offspring and theirs. Despite this degree of uncertainty, initial reactions from national statisticians have been positive.

The former prime minister of India, Manmohan Singh, a prominent economist, established a high-level panel under his national statistics office and the intellectual leadership of Cambridge economist Sir Partha Dasgupta to explore the development of inclusive wealth accounts.

The initial report was an innovative and intellectually robust national document identifying possible actions over the short, medium and long terms. If a country such as India with its myriad challenges can acknowledge such a need, every country can embrace the challenge and start to revise its system of national accounts.

2nd Front Page BusinessMirror

A8 Tuesday, December 23, 2014

Bank deposits jumped 16.3% to P6.4T in Q3 D

By Bianca Cuaresma

eposits continued to fuel the operations of local banks amounting to P6.4 trillion as of the third quarter, according to the Bangko Sentral ng Pilipinas (BSP).

The central bank said total deposits for the quarter amounted to P6.4 trillion. This was 16.3 percent higher than the year-ago level of only P5.5 trillion.

The central bank also said savings and time deposits remained the primary sources of funds for the banking system.

“The rapid growth could be attributed to the shift of investors’ funds from the BSP’s SDA [special deposit account] facility to bank deposits as a result of the fine-

tuning of access of trust departments or entities to the BSP SDA facility,” the central bank said.

Early in 2013 the central bank evicted so-called investment management accounts out of the BSP’s low-risk but high-yielding special deposits window.

The central bank also traced the higher deposits to steadily growing corporate profits and robust economic expansion.

In particular, savings deposits registered growth averaging 16 percent during the period. Savings operations account for nearly half of the funding base of the banks.

Demand deposits, meanwhile, expanded by 18.8 percent, while time deposits expanded by 14.7 percent from the level posted a year ago.

Pope’s interaction with Filipino youth set

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college student, an out-ofschool youth and a Supertyphoon Yolanda (international code name Haiyan) relief volunteer will have a chance to share their testimonies with Pope Francis during his scheduled interaction with the Filipino youth at the University of Santo Tomas (UST) in Manila on January 18.

Associate Prof. Giovanna Fontanilla,

UST’s director of the Office of Public Affairs, said some 24,000 young Filipinos are expected to meet the pope at the UST open field on January 18, when representatives of the Archdiocesan Commissions on the Youth, Catholic Bishops’ Conference of the Philippines Episcopal Commission on the Youth, Catholic Educational Association of the See “Pope,” A2

www.businessmirror.com.ph

Nickel shortage propels Philippine mining boom

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ichael Defensor is racing to mine and ship nickel from projects across the Philippines to plug the gap in global supplies left by Indonesia’s ore-export curbs.

“Indonesia’s ban affected us positively,” said Defensor, chairman of Pax Libera Mining Inc. and the nation’s environment secretary from 2004 to 2006. He’s preparing four new sites for next year after opening two in the past two years. “We will maximize this window and ship as much as we can.”

The Indonesian curbs, designed to promote local processing, started in January and were upheld in court this month. The ban initially drove prices to a two-year high in May, before larger- than-expected Philippine exports and slowing Chinese growth reversed the rally. Citigroup Inc. says

it’s still bullish on nickel because the country won’t be able to expand supply much more and a global shortage will emerge.

Futures on the London Metal Exchange (LME), the global benchmark for the metal used to make stainless steel, traded at $15,550 a metric ton on December 19, from this year’s high of $21,625 in May. The price is still 12 percent higher for the year, making nickel the best-performing industrial metal on the LME. “Everyone will try to max out their permit,” said Ramon Adviento, a mining analyst at Maybank ATR KimEng Securities in Manila. “The

low-hanging fruit has already been harvested even before the ban, so there is probability that the Philippines won’t meet the gap” left by Indonesia, he said.

Nickel content

While ore exports from the Philippines to China rose 24 percent to 31.2 million tons in the first 10 months, some of that came from stockpiles, Citigroup analysts wrote in a December 1 report. Volumes probably won’t expand much in 2015 even with more mining, they said. Ore from the Philippines typically has less nickel content than from Indonesia, which was the world’s largest mined producer before the ban.

The global market will swing to a deficit of 62,400 tons in 2015, from a 25,100-ton surplus in 2014, according to Citigroup, which expects prices to average $21,625 next year and $25,250 in 2016. Goldman Sachs Group Inc. has a 2015 forecast of $17,500, rising to $20,000 in 2016, and Morgan Stanley listed nickel this month as its top metals pick for 2015.

The forecasts for supply short-

ages contrast with gains in global inventories. Those tracked by the LME surged to a record this year, expanding 55 percent to 406,722 tons

by December 18.

Economic growth in China, the biggest buyer of ore from Southeast Asia and the largest nickel user, is slowing to the weakest since 1990.

Bullish outlook

The Philippines undermined the bullish outlook for nickel, shipping more ore than expected, Credit Suisse Group AG analysts said in a December 15 report. They cut their 2015 forecast by 21 percent to $17,625, citing in part the “mighty influx” of metal into LMEmonitored warehouses.

Nickel Asia Corp., the Philippines’s biggest producer, is among those gaining from the ban. Ore sales rose 38 percent in the first nine months, boosting profit more than fourfold to a record. Shares of the company almost tripled this year as the Philippine Stock Exchange Index climbed 21 percent. More companies See “Nickel,” A2

THE QUEEN OF CYBERPORN AND HER TOWN’S INDUSTRY OF CHILD ABUSE

By Kristen Schweizer & Clarissa Batino Bloomberg News

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long the narrow roads leading into the Filipino village of Ibabao in Cebu, billboards highlight traditional crafts such as baking cassava cakes, rope making and seashell jewelry.

There’s no mention of a less salubrious trade that has swept the area in recent years: child porn.

The area has developed a reputation as a global center of the sexual exploitation of children largely due to Eileen Ontong, authorities say.

For at least seven years, Ontong— dubbed “the Queen of Cyberporn” by local media—abused children on demand in front of a webcam for cash delivered via international wire-transfer services, according to Philippines and United States police.

Investigators say as many as 35 children, some as young as five, passed through the door of Ontong’s concrete and plywood home, adorned with a crucifix and a picture of Jesus, and into a makeshift cyber-den. There, they were molested, had sex with each other, or exposed themselves in front of a camera. It didn’t take long for neighbors to offer their children for shows and set up similar operations at home, police say.

“This became a cottage industry in the area because they all saw Eileen Ontong making money,” said Abdul Jamal Dimaporo, an agent with the National Bureau of Investigation (NBI), the country’s equivalent of the Federal Bureau of Investigation (FBI). “It’s easier to earn a living doing this than working. They don’t think what they are doing is wrong.”

Police estimate Ontong netted about $200,000 over the years: Snapshots of naked children retailed for $50, nudity in front of the webcam cost $100, and a live sex show among children ran as high as $500. The children, or their parents, got $10 to $18 per show.

Members of Ontong’s extended family participated from age 11.

Her husband, Wilfredo, served as a watchman, police say.

The Ontongs today are being held

15 miles (24 kilometers) from their home, in the Cebu Provincial Detention and Rehabilitation Center, a hilltop prison designed for 1,400 inmates that houses 2,200. Charged with child pornography, child abuse and violating the country’s humantrafficking law, the Ontongs face life imprisonment, according to the NBI. They have pleaded not guilty, the NBI says. Their defense lawyer didn’t respond to numerous phone calls and text messages.

Cat and mouse

Away from the sandy beaches and blue waters that woo tourists to the Philippines, children have long been exploited in the sex trade. These days, though, instead of working as underage prostitutes on street corners or in hotels and discos, children from poor families in remote slums are being used for sex shows via online video-calling services.

“When the money flows easily through the Internet, there are new ways to exploit children,” said Mark Clookie, a former head of the Naval Criminal Investigative Service who oversees investigations at the International Justice Mission, a nonprofit group that is helping prosecute the Ontongs.

About four years ago Filipino police say they began receiving reports about online child porn streamed live from the Philippines to customers worldwide. Since then, underage sex shows have become the country’s No. 1 cybercrime. Though a 2009 law requires Internet-access providers to install software that can detect images and streams of pornography, those rules are often ignored because companies deem it too expensive to comply, said Ronald Aguto, head of the NBI’s cybercrime unit.

“It’s a cat-and-mouse kind of thing,” Aguto said. “Our Internet providers are mandated to be law enforcers, but it’s a big business and a lot of people are involved.”

Private rooms

Until 2006, Ontong, now 36, worked at a factory that made electronic equipment in the neighboring city of Lapu-Lapu. Wilfredo, now 38, had a motorized rickshaw that he used to ferry tourists

around resort areas, according to Wilfredo’s mother, Nenita Ontong, a slight woman of 56 who lives in a small stucco house with pink curtains and an air-conditioner—relative luxury in the warren of tumbledown shacks. Eileen and Wilfredo’s place, next door, was more humble.

“Look at their home,” Nenita Ontong said, gesturing toward a small concrete structure where her son and daughter-in- law lived. “It’s

and perhaps 10,000 of them have worked in online porn, according to the Preda Foundation, which runs a shelter for abused girls. In a country where 25 percent of the population lives below the poverty line, a webcam show can put food on the table or pay for a new roof.

“Of course, those who do it will always use poverty as an excuse,” said Adelino Sitoy, mayor of the Cordova municipality, which in-

“Cybersex, especially when parents are involving their children, is damaging much more than the parents suspect.

Family ties are strong in the Philippines, but that doesn’t mean they are healthy.” not the house of a queen.”

After a friend taught Eileen how to use computers, she began frequenting local Internet cafés that offer private rooms for less than $1 an hour, Nenita said. There, Eileen engaged in chat sessions with foreign men, and she soon earned enough to buy her own computer and a high-speed Internet connection to start working from home.

Several times a week, Eileen traveled to money-transfer outlets in Lapu-Lapu to pick up funds sent via Western Union or other services, police say—anywhere from $30 to $500 at a time.

“I knew Eileen was doing something using the Internet, and I advised her to stop but she ignored me,” Nenita said. “I think some of our neighbors asked Eileen for help” in setting up their own cyberporn operations. She didn’t say whether or not children were involved.

The NBI says it found thousands of images of child pornography on equipment seized from the house: scenes of Eileen Ontong sexually abusing a pre-teen member of her extended family, children having sex, a 5-year-old girl exposing herself, young boys performing oral sex on each other.

About 60,000 Filipino children enter the sex trade every year,

cludes Ibabao. “What attracts them is easy money. All you have to do is tell your children to undress.”

One child testified in the Ontong case on December 8, and the next hearing is expected in March, according to the International Justice Mission. One girl found at Ontong’s house during the arrests has also testified, but the other two children who were there that night fled and can’t be located, according to the NBI.

Holy child

Ibabao sits on Mactan Island in the shadow of the international airport serving the city of Cebu, where flights from points as distant as Singapore, Seoul and Tokyo disgorge sun-seeking tourists. Many of these end up at hotels such as the Shangri-La, Costabella and Plantation Bay on Mactan’s eastern beaches. Few ever make it to Ibabao.

To reach the settlement of about 8,000 people, you leave behind the resorts, malls and apartment towers near the shore and cross a low bridge spanning the Gabi River.

The road narrows to two lanes, and the sedans and sport-utility vehicles typical of wealthier districts give way to swarms of motorbikes and three-wheeled motorized rickshaws. Colorful posters depicting happy families urge children

to cherish and obey their parents.

The area is thick with pawnshops, bakeries, butchers and Internet cafes, many of which double as money-transfer services, with Western Union logos on prominent display. As in villages across the Philippines, women working as nannies in Hong Kong and men constructing skyscrapers in Dubai use these services to send funds back home.

From the barangay office—the local town hall—a sharp left onto an unmarked road leads to Sitio Sun-ok, a hardscrabble enclave of tiny homes thrown together from concrete, thin sheets of metal and plywood. They’re separated by dirt pathways, just wide enough for two people, that turn into rivers of mud in the rainy months of June through September. The Ontongs’ house lies up one of these lanes, a few steps from a yellow stucco Catholic chapel devoted to the Santo Niño, or Holy Child, that seats about 50 worshipers.

Police say the Ontongs were in the process of renovating their home with money from the business. In the past few years they had added a concrete foundation and replaced tarps that made up the walls with cement blocks and plywood. They hadn’t yet fixed broken windows or rebuilt the ceiling of banig—dried palm-leaf mats—with something more impermeable.

Other proceeds went toward private-school tuition for their daughter. And it wasn’t unusual for Eileen to take the family to a mall for lunch or one of the beach resorts for a day in the sun—sometimes with a “foreign friend” in tow— Nenita Ontong said.

Dockside encounter

One of Eileen’s foreign friends, at least via the Internet, was David Tallman. The 55-year-old retired US Navy enlisted man, who sent Ontong more than $7,300 over four years, is serving a 12-year sentence in Lexington, Kentucky, after pleading guilty to transportation of child pornography. His lawyer has retired and couldn’t be reached for comment.

On December 17, 2012, the

USNS Laramie—Tallman’s ship— pulled into Norfolk, Virginia, after sailing to ports across the Middle East and Africa. Waiting at the dock were four agents from the US Department of Homeland Security and the Customs and Border Protection service. Peers in Dallas, investigating a separate case, had alerted the agents that Tallman’s name had come up as someone who bought child porn. They boarded the ship and asked to search his computer equipment.

“He just stared at me like a deer in the headlights,” said Paul Wolpert, a Homeland Security agent who questioned Tallman in the ship’s staff lounge that day. “He sat in thought for a moment, put his head down, and admitted there would be child pornography on the laptop.”

Wolpert’s team seized Tallman’s two computers, three external hard drives and iPhone and took them to Homeland Security offices in downtown Norfolk. Forensic investigators found 4,000 child porn images as well as e-mails and Yahoo! Messenger logs in which Tallman had negotiated sex shows using the screen names “Ronin” and “tragic_prelude.” Among those communications were hundreds of messages and chats with Ontong, Wolpert said. Tallman also kept a meticulous folder of receipts from Western Union and credit-card companies that detailed his payment for pictures and live shows.

Stateroom arrest

On February 1, 2013, Wolpert went back to the port and arrested Tallman in his stateroom on the Laramie, where he was living. In exchange for a reduced sentence— he faced more than 20 years in prison—Tallman agreed to help investigators snare Ontong. He turned over his e-mail accounts and transcripts to Wolpert, who assumed Tallman’s online identity and kept in contact with her, while agents at the NBI prepared to raid Ontong’s house.

On Memorial Day weekend 2013, Wolpert logged on as Tallman from a laptop in his living room near Norfolk and negotiated a live sex show. It was Continued on A2