BusinessMirror January 8, 2014

CHINA IN $1.1-T INFRA BINGE TO FEND OFF GROWTH RISKS C

photo from 7-themes.com

hina is accelerating 300 infrastructure projects valued at 7 trillion yuan ($1.1 trillion) this year, as policymakers seek to shore up growth that’s in danger of slipping below 7 percent.

Premier Li Keqiang’s government approved the projects as part of a broader 400-venture, 10-trillion-yuan plan to run from late 2014 through 2016, said people familiar with the matter who asked not to be identified as the decision wasn’t public. The National Development and Reform Commission, which will oversee the projects, didn’t respond to a faxed request for comment.

The move illustrates concern among offi-

cials that China’s planned shift to a domesticconsumption driven economy has yet to produce enough growth momentum. The yuan rose, halting a two- day decline, and Australia’s dollar— a proxy for China due to its shipments of iron ore and other commodities used in construction—climbed after the news.

“It’s part of China’s efforts to stabilize growth, and the news will help to boost market confidence,” said Julia Wang, a Hong Kong-based economist with HSBC Holdings Plc. “Infrastructure investment will continue to be a major driver for China’s economic growth.”

Continued on A8

BusinessMirror

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

U.N. Media Award 2008

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A broader look at today’s business

nn

Tuesday, November Wednesday, January18, 7, 2014 2015 Vol. Vol.10 10No. No.40 90

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

N.E.D.A. CALLS FOR PROACTIVE PROGRAMS TO ENSURE DISASTERS WILL NOT CAUSE PRICES TO SPIRAL THIS YEAR

PAPAL VISIT 2015

2014 inflation well within target W

By Cai U. Ordinario

hile inflation slowed for the fourth straight month in December to average within target in 2014, Filipino consumers remain under threat of seeing spiraling prices this year—particularly for food items—on various risks, including natural disasters, the National Economic and Development Authority (Neda) said.

8 DAYS INSIDE

CHEAPER 3D PRINTERS, ULTRA-HD TVs AT CES The safety of Pope Francis

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EAR Lord, an important long-awaited event is the pastoral visit of Pope Francis to the Philippines.

He will come to us “on a mission of mercy and compassion” to show his special love not only for the region that was victimized by Supertyphoon Yolanda, but also for the entire Filipino nation. It is, indeed, remarkable that the whole world will give full attention to Pope Francis being the representative of the first pope, Saint Peter and the Son of God, Jesus Christ. We pray, therefore, for the pope’s safety in our country. Amen!

WORD AND LIFE, FR. SAL PUTZU, SDB AND LOUIE M. LACSON Word&Life Publications • teacherlouie1965@yahoo.com

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

Life

EXACTLY WHERE DID THE SELFIE STICK COME FROM »D2

BusinessMirror

Cheaper 3D printers, ultra-HD TVs at CES

Wednesday, January 7, 2015

The Philippine Statistics Authority (PSA) disclosed on Tuesday that full-year inflation in 2014 was at 4.1 percent, well within the government’s 3-percent to 5-percent target. However, it was higher than the average inflation of 3 percent posted in 2013.

December inflation—at 2.7 percent—was the lowest since August 2013, when inflation was at 2.1 percent. Inflation averaged 4.1 percent in December 2013.

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THE new Sony Bravia Ultra HD TVs are super thin

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THE Sony SmartWatch3 gets its polish on with stainless steel

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FROM ex HTC employees come the first battery-operated scooter, the Gogoro

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THE LG G Flex 2 refines the curve

❶ B A C  T L Los Angeles Times

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HIS year’s International Consumer Electronics Show (CES) focuses less on the new and more on the improved.

The advancements include better integrated and more fashionable wearable devices; cheaper 3D printers and ultra-high-definition televisions; upgraded phablets (phone-tablet hybrids); new uses for virtual reality; and self-driving cars that will seamlessly connect with your smartphone.

Every January tens of thousands of attendees descend upon Las Vegas for the annual trade show, one of the world’s largest technology events, known as a premier showcase for innovative products.

This year’s event officially runs from January 6 to 9, with media previews having started on Sunday. With an estimated 150,000 attendees and 3,500 exhibitors, plenty of stories and hype will emerge from CES. Here are some of the big trends to watch.

MORE CONNECTED THINGS THE so-called Internet of Things—tech industry jargon for just about any object connected to the Web—is the buzzword of the moment as tech developers scramble to connect nearly every household and lifestyle item.

Toys, sports equipment, smoke alarms, light bulbs, appliances—even pacifiers and earplugs—are among the newly connected things on display at CES. “The Internet of Things is coalescing, and it’s really happening around devices in both traditional and nontraditional high-tech industries,” said John Curran, managing director for Accenture’s communications, media and technology group and a long-time CES attendee.

“This year we expect to see that go even further.”

CES organizers say this year’s show will feature the largest-ever showcase of products, services and technologies that make up the Internet of Things, with more than 900 exhibitors planning to share such innovations.

It will be years, if ever, before the Internet of Things

begins to operate in a seamless way. Some critics believe that people already have too many gadgets, and more connected things will add to the overload.

WEARABLES GO HIGH FASHION WEARABLES was last year’s buzzword, but the buzz hasn’t disappeared.

Wearables include items such as fitness trackers and watches that count how many steps you’ve taken.

As the devices become more mainstream, developers know wearables have to be as fashionable as they are functional, and many companies have taken steps to make them more attractive.

Apple Inc., which will not be exhibiting at CES, helped kick off that trend when it introduced the Apple Watch in September; the device has been touted as not just a high-tech watch but also one that trendy consumers feel comfortable wearing with a sharp business suit or out for a night on the town. It’s expected to begin selling soon.

SECURITY, FRONT AND CENTER THE drive to connect everything has consumers worried about devices collecting and storing growing amounts of sensitive personal information.

In the wake of the Sony Pictures hack and other high-profile security breaches, such as the release of celebrities’ nude photos, security experts say consumers demand greater safety and security.

“Companies across all of CES are taking that very seriously,” Curran said.

Paul Madsen, an executive at Ping Identity Corp., said that passwords are no longer enough, and that companies at CES will be capitalizing on this with new devices used for authentication.

“Where we’re headed is a much more passive and seamless authentication model where the explicit log-in becomes less common,” he said.

3D PRINTERS: SMALLER, BETTER CES doubled the amount of space for 3D printing technology this year. More than 30 3D printing companies will cover more than 14,000 square feet

of exhibit space. According to a recent report by the Consumer Electronics Association, which puts on CES, sales of desktop 3D printers are projected to reach 67,000 units in 2014, netting $76 million in revenue, an increase of 43 percent over 2013.

“3D printers are moving toward more compact units that are more suitable for consumers and capable of printing a variety of consumer goods, from toys and electronics to clothing, shoes and even food,” said Karen Chupka, senior vice president of International CES. She foresees 3D printers as a “major disrupter in the global economy.”

Artyom Yukhin, CEO of 3D scanning company Artec Group, says the technology won’t gain mass appeal in 2015 but predicts consumers will be hearing a lot more about it and will become more comfortable with the idea. Artec plans to get more of its Shapify Booths into department stores where families can print 3D models of themselves.

SCREENS: BIGGER, SHARPER ON SMARTPHONES AND TVS ULTRAHD television screens, known as 4K, have garnered a lot of attention in the last couple of years. But 4K hasn’t gotten off the ground because of high prices and the lack of 4K content from entertainment studios.

A Samsung 50-inch 4K TV will cost you $1,000 to $1,800 at Best Buy, for example.

That’s slowly beginning to change. New models on display at CES will be larger and more wallet-friendly.

Smartphone screens keep getting bigger too. Apple, as usual, won’t be at CES in an official capacity (the tech company is known to send fleets of employees to scope out the show in secret) but the popularity of the company’s 5.5-inch iPhone 6 Plus will loom large.

Extra-large smartphones, dubbed phablets, will be on display from big brands, as well as smaller Chinese manufacturers. The jumbo screens are a hit with mobile users who say they’re great for watching videos and reading. But bigger phones have cut into the market share of traditional tablets, so exhibitors are sure to tout new tablet features that they hope will set the category apart from big phones.

VIRTUAL REALITY: NOT JUST FOR GAMES VIRTUAL reality had a big year in 2014. By acquiring virtual reality headset maker Oculus VR for about $2 billion, Facebook Inc. drew more public attention to the technology.

Technologists working in the VR industry don’t expect 2015 to bring about significant leaps in VR headsets, but they do expect growth in different use cases. No great leaps in hardware technology are expected at CES, but more ways to use VR will be introduced. VR is still mostly about games. But at CES, a number of companies are expected to demonstrate software that enables consumers to use VR for nongaming purposes. AltspaceVR will show off software that enables users to host movie viewing parties, work meetings and conferences, all in the virtual world.

Other exhibitors will demonstrate ways to meld virtual reality with movie and TV content.

CAR CONNECTIONS THIS year’s CES will also bring more automakers and their suppliers, eager to talk about the future of both mobility and efficiency.

The head of Mercedes-Benz, Dieter Zetsche, will be one of the keynote speakers at the event. He’s expected to discuss self-driving cars and their potential effect on society as his company rolls out a self-driving concept car for a world debut. The unnamed model disregards current regulatory hurdles for autonomous cars; it’s a vision of what a Mercedes might look like in a decade or so. Audi, for its part, is aiming at the near future. The automaker’s prototype A7 autonomous car will drive itself from San Francisco to the event to highlight what the industry can do now. BMW will show off a version of its tidy i3 electric car that can autonomously park itself in a parking garage.

Ford Motor Co. will continue its significant presence at CES. This year, recently appointed CEO Mark Fields will be another keynote speaker and is expected to lay out Ford’s strategy for mobility on a global scale, especially in dense urban areas. Toyota Motor Corp., meanwhile, promises significant news in the world of hydrogen fuel-cell vehicles. ■

Continued on A2

OLX Philippines draws more Filipinos to buy and sell online OLX Philippines continues to turn more Filipinos into sellers and advocates of online buying and selling in the country.

In a recent press event with the Manila and Cebu media, OLX revealed that the number of consumer-toconsumer (C2C) sellers on their web site more than doubled than what was recorded in 2013. This, despite their rebranding early in 2014, has encouraged more Filipinos to sell their unused but functional items as well as buy preloved items online.

As a global brand, OLX is among

the most used online platforms in the world. It has surpassed the 200 million active monthly users worldwide, with the users generating more than 11 billion monthly page views or 360 million page views each day. Locally, OLX Philippines has 129 million page views monthly, or 4.3 million page views daily.

OLX’s parent company, Naspers, brought the Philippines onboard as part of an ongoing initiative to transform OLX into the world’s largest C2C platform.

“Few Internet companies have experienced anything like OLX’s growth,” OLX co-founder and Americas CEO Alec Oxenford said. “Our success is clear evidence of the enormous opportunities for smart Internet companies in emerging markets. OLX recognized these opportunities early on and, as a result, we have successfully introduced the basic concepts of online classifieds, e-commerce and the value of used goods to hundreds of millions of consumers in developing markets around the world.”

“In the Philippines, it is our responsibility to continuously educate Filipinos on how to do proper online buying and selling. Our Yesss, Yaman! campaign not only teaches our users on how to declutter their homes, but it also demonstrates how they can easily use our platform to earn additional income and find the most affordable items,” OLX Philippines Managing Director RJ David added.

Other countries that were rebranded to OLX include Switzerland, Thailand, Poland, Hungary, Bulgaria, Romania,

Ukraine, Belarus, Kazakhstan, and Indonesia.

With the increase of available smartphones and data usage in the country, mobile users have fueled a significant portion of OLX’s growth. OLX invested early and heavily in mobile, building a highly rated app (4.2 stars in the Google Play store). The OLX mobile app, also available on iOS, has been downloaded over 35 million times worldwide and ranks as the No. 1 or No. 2 e-commerce app in the Google Play store in many markets.

life

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MARSALA IS THE COLOR OF THE YEAR BusinessMirror

E1 Wednesday, January 7, 2015

By Bianca Cuaresma

W

Editor: Tet Andolong

Megaworld’s Tuscany Private estate in McKinley Hill makes use of marsala to enliven its look and ambiance.

Marsala is the color of the year

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By Tet Andolong

T’S always good to know that there’s a color of the year, which one can use as a basis for the home, furniture, beddings, kitchen, appliances and everything else.

For 15 years, Pantone’s color of the year has influenced product development and purchasing decisions in multiple industries, including fashion, home and industrial design, as well as product packaging and graphic design. Last year’s color was Radiant Orchid.

The Color of the Year selection requires careful consideration and, to arrive at the selection, Pantone combs the world looking for color influences. This can include the fashion and entertainment industries, including films that are in production, the world

THe Pantone Color Institute has announced that the 2015 color of the year is marsala—a naturally robust and earthy wine red that is said to enrich the mind, body and soul.

Marsala’s red hues are thought to stimulate senses and appetites. The white ceiling and wall of windows join forces with the yellow walls to keep the space light, happy and bright.

of art, popular travel destinations and other socioeconomic conditions. Influences may also stem from technology, the availability of new textures and effects that impact color, and even upcoming sports events that capture worldwide attention.

If you’re considering a major renovation at home or simply intent on changing the look of your abode, you might be interested to know that Pantone’s 2015 color of the year is marsala—a naturally robust and earthy wine red that is said to enrich the mind, body and soul.

The impactful, full-bodied qualities of marsala make for an elegant, grounded statement color when used on its own or as a strong accent to many other colors. “Marsala is a subtly seductive shade, one that draws us in to its embracing warmth,” Pantone Color Institute Executive Director Leatrice Eiseman said.

Marsala is a tasteful hue—much like the fortified wine that gives marsala its name, this embodies the satisfying richness of a fulfilling meal, while its grounding redbrown roots emanate a sophisticated, natural earthiness.

“Nurturing and fulfilling, marsala is a natural fit for the kitchen and dining room—making it ideal for tabletops, small appliances and linens throughout the home,” Eiseman said.

One can add elegance to any

room by incorporating this rich and welcoming hue in accent pieces, accessories and paint. Marsala’s plush characteristics are enhanced when the color is applied to textured surfaces, making it an ideal choice for rugs and upholstered living room furniture.

“This hearty, yet stylish tone is universally appealing and translates easily to fashion, beauty, industrial design, home furnishings and interiors,” Eiseman added.

“The hue will be especially prominent in striping and floral patterns found in printed placemats, dinnerware, bedding and throws.” According to House designer Jennifer Ott, “Marsala color is to stimulate senses and appetites, so it’s a good choice for a dining area.” If your furniture has a lot of red hues, you should have a white or yellow ceiling and walls, to keep the space light, happy and bright.

If you have more rust in it, which is so deep, dark and a bit muddy then, your space would need lots of white and natural light to keep it upbeat.

“Use marsala color in small amounts, for niches, nooks and built-in cabinetry.

“The less you use of it, the more versatile the color will be. By that I mean, you can more easily work in other hues you love without going overboard on color. And small amounts of color are much easier to change in the future should you desire a different look,” Ott said.

Building every step of the way

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ITH its modern architecture and advanced construction practices, Datem Inc. has created, over the past 30 years, some of Metro Manila’s most iconic structures.

From Discovery Shores, Saint Luke’s Medical Center Global City, and to the recently established The Mind Museum, Datem Inc. continues to bring timeless marvels to the Manila skyline. Backed by such track record, Datem Inc. stands by the quality of its projects. With a no-compromise approach, all of its developments have made use of its unique and specialized construction technologies and practices and have delivered on-time project completion. All these are being brought to their new real-estate development subsidiary—Datem Homes, a company very much involved in every step of the building process from groundbreaking to long after the clients have moved in.

Only the Best for Your Home Coming from its years of expertise and success in construction, Datem Inc., through Datem Homes, offers a worry-free and convenient living experience.

Datem Homes’s properties are built using seven unique technologies, which are also used in Datem Inc.’s high-rise buildings. Known for being an industry leader and for pioneering Precast technologies– precast slabs, beams, and external walls—Wallcrete, Specialized Formwork System and Stampcrete, Datem Homes gives customers higher quality output and safe and strong structures, efficiently built in record time.

Even down to the water being used, Datem Homes’s properties will use Datem Water’s Bulk Water Filtration System, which allows homeowners to drink directly from the tap and Waste Water Treatment System which cleans the water homeowners dispose before it is released back into the environment. Datem Homes will also make use of Solar Panels that will power common areas of the property, such as the lobby and amenities area.

These help reduce costs for both the property and homeowners, and provide them with sustainable and renewable energy that decreases carbon footprint due to less-coal consumption.

“We, at Datem, know where our strengths lie. Our seven unique technologies have helped us build high quality structures and eliminate costs common to

BSP GIVEN AMPLE SPACE TO FREEZE INTEREST RATES

conventional construction methods, allowing high quality living standards for upwardly mobile individuals and start up families,” Architect and Datem Homes President Arnold de Asis said.

Built with its Consumers Needs in Mind Part of the company’s success has always come from their passion and malasakit, which has helped them build respected and long term relationships with their employees, partners and clients. When living in a Datem Homes unit, future homeowners are assured that they are cared for from the moment of interest until well after they have moved in.

For upwardly mobile individuals and start-up families, costs and affordability are important factors when finding a home. To make your new home easier to avail, Datem Homes offers several payment options for buyers. Clients can choose from spot cash, cash over construction that allows payment of unit’s total contract price throughout the construction period, and low down and payment schemes with an option of bank or in-house financing.

Datem Homes will also have Pag-IBIG financial options available to their clients. Maintenance is another concern of perspective homeowners. With the busy lifestyle of young professionals and couples taking care of their new family, they want to be able to come home to a clean, well maintained, and respectful community. Datem Homes will be providing dedicated Property Management Groups for its different developments, where unit owners can voice their concerns. These dedicated groups will also be in charge of supervising the shared amenities and assure maintenance of the building and its facilities.

“We use our skilled workers and our innovative technologies backed by our 30 years of experience to provide a relaxing and enjoyable lifestyle to our residents. We want them to know that they are part of our Datem family, and they are in our minds every step of the way—from conception of the design to living in a Datem Homes property. With Datem Homes, and our first development Datem Horizons at East Ortigas, we make sure the quality of living for our residents is always at a high standard,” de Asis said.

PROPERTY

E1

ithin-target inflation in 2014, averaging 4.1 percent, permits the monetary authorities to keep the monetary settings frozen where they are at present, the Bangko Sentral ng Pilipinas (BSP) said on Tuesday.

This will not only ensure support for local output, measured as the growth domestic product, is optimized down the line but also underscores the high degree of accuracy the central bank has achieved in setting and actually achieving within-target inflation for six years in a row.

Not all central banks achieve a degree of accuracy in plotting the path of inflation in any given year, such failure translating to more difficult planning for businesses and governments to execute growth or expansion plans.

See “BSP,” A2

PESO exchange rates n US 44.9710

phl crocs in london Two six-month-old Philippine crocodiles, two of six that were the first of their kind to hatch in the United Kingdom, are shown during the annual stock take at London Zoo on January 5. Caring for more than 750 different species, London Zoo keepers started the new year with the task of counting every single animal. With three Sumatran tiger cubs adding vital numbers to the European conservation breeding program, the birth of six critically endangered Philippine crocodiles and the arrival of nine Humboldt penguin chicks, all of the new additions will be added to the records. AP

OIL TRADES BELOW $50/BARREL

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he price of oil plunged again on Monday and fell below $50 a barrel for the first time since April 2009, as evidence mounted that the world will be oversupplied with oil this year.

Benchmark US oil dipped to $49.77 before closing down $2.65, or 5 percent, to $50.04 a barrel. Brent crude, a global benchmark used to price oil used by many US refineries, sank $3.31, or 5.9 percent, to $53.11.

In June of last year oil traded above $107 a barrel. But rising production outside of the Organization of Petroleum Exporting Countries (Opec), especially in the US, boosted supplies just as weakness in

the global economy slowed the growth in oil demand. Opec’s decision in November to maintain existing production levels accelerated the rout in oil prices.

Slower growth in China’s economy, a driver of oil demand in recent years, and a strong dollar, which makes oil more expensive for holders of foreign currencies, have also pressured oil prices.

On Monday Citigroup cut its forecast for 2015 global oil prices as a result of high supplies. Citigroup analyst Ed Morse wrote in the report that the first half of this year will bring “a step-up in oversupply, more volatility and turmoil.”

See “Oil,” A8

‘Gun-shy’govt hurts spending

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he Philippines ended 2014 with its weakest economic report in almost three years, as moves to curb graft and check abuse of power at all levels of government deterred public spending.

President Aquino now faces the challenge of convincing officials to unclog the logjam.

China’s anticorruption crackdown led officials to slash luxury spending and entertainment. In the Philippines, a similar drive saw civil servants delaying projects as varied as rail lines, fishing ports and free chickens for the poor, according to budget officers.

About $1.85 billion, or 15 percent of planned state spending, went unused in the third quarter, governSee “Gun-shy,” A2 ment data show.

n japan 0.3761 n UK 68.6078 n HK 5.7985 n CHINA 7.2301 n singapore 33.6836 n australia 36.4315 n EU 53.6774 n SAUDI arabia 11.9795 Source: BSP (06 January 2015)

News BusinessMirror

Wednesday, January 7, 2015

A2

BSP. . . Continued from A1

That difficulty is made more apparent by legislation requiring the monetary authorities to explain to Malacañang why its forecast inflation strayed too far up the projected path, as had in fact happened a few times in the early days of inflation targeting.

The current monetary settings should remain unchanged a while longer as a result, with the BSP saying the within-target inflation number allowed the central bank scope to focus on “maintaining supportive conditions” for domestic demand.

The Philippine Statistics Authority (PSA) also reported on Tuesday that inflation in December averaged 2.7 percent—the lowest inflation rate in 15 months or since September 2013. This was also the fourth consecutive month when inflation moved down instead of up.

The deceleration was attributed to annual decreases in the indices for housing, water, electricity and other fuels and transport. Lower prices on food and nonalcoholic beverages, alcoholic beverages and tobacco, furnishing, household equipment and routine maintenance on houses, health and recreation and cultural items decelerated during the period, according to the PSA. This brought the year’s inflation to 4.1 percent, which was higher than 2013’s average of 3 percent, but still within the government target ranging from 3 percent to 5 percent for 2014.

Tetangco said the inflation path this year should prove similarly stable when the rate of change in prices

2014 inflation well within target

were to prove broadly within forecast range of 2 percent to 4 percent.

“The risks to inflation are broadly balanced, and the outlook is for inflation over the policy horizon to be within the national government target range of 2 percent to 4 percent,” Tetangco said. “Lower international oil prices should continue to counterbalance pending hikes on transport fares and utility charges,” he added.

With low actual inflation numbers in 2014 and expectations of a repeat performance this year, the central bank should not have a difficult time keeping the monetary settings where they are to support continued economic expansion down the line.

“Given the manageable inflation outlook over the policy horizon, there may be greater scope in the months ahead for policy-makers to focus on facilitating and maintaining supportive conditions for domestic demand,” Tetangco said in a separate speaking engagement on Tuesday.

He also reiterated the current monetary policy stance remains “appropriate” for the time being—which is a language Tetangco has not used for quite a while.

“Our assessment for the time being is that the stance of policy is appropriate, but we are ready to make adjustments as needed to ensure our inflation objectives are met,” Tetangco said. Among the developments the central bank keeps a keen eye on include the policy responses of advanced economy central banks and their potential impact on risk appetite.

Continued from A1

“Given the lingering possibility of El Niño occurrence in the first quarter of 2015, we should intensify efforts to implement programs that will help the areas that are highly and moderately vulnerable to the adverse impact of a dry spell,” Socioeconomic Planning Secretary and Neda Director General Arsenio M. Balisacan Jr. said.

Balisacan added that typhoons may also affect logistics by increasing transportation cost. When transportation cost increases, the adjustment is passed on to consumers in the form of higher prices.

“While the easing of the truck regulation in Manila’s ports may have possibly contributed to the moderate inflation outturn, it is critical to continue exploring a more-lasting solution to the congestion problem to avoid future disruptions in the domestic-supply chain that could result in higher transportation costs,” Balisacan explained.

The Neda said the slowdown in

December inflation was due to cutbacks in petroleum and electricity prices that caused a slowdown in the price increase of most food items.

The Neda also noted that the slowdown in inflation in December was the fourth consecutive month in 2014 that inf lation posted slower increases.

Inflation started slowing down in September at 4.4 percent from 4.9 percent in August. This was followed by slower rates of 4.3 percent in October and 3.7 percent in November.

“The lower inflation outturn in December bodes well for consumption growth in the fourth quarter of 2014. Also, this shows that government policies remain supportive of a manageable inflation rate,” Balisacan said.

Data showed that petroleum electricity, gas and other fuels contracted to 8.3 percent. The PSA also said operation of personal transport equipment contracted 6 percent.

The Neda said this is largely due to the decline in Manila Electric Co.

Gun-shy. . . Continued from A1 “Officials are now gun-shy,” Budget Secretary Florencio B. Abad said in an interview last month. “They take a while before they sign papers, and if there are issues, they would prefer not to proceed.

There is an air of uncertainty hanging

over our heads.”

The challenge is preventing the fallout from spreading to other sectors of the Southeast Asian nation, as President Aquino cleans up the bureaucracy to boost investment and propel expansion beyond the end of his term

3-DAY EXTENDED FORECAST JANUARY 7, 2015 | WEDNESDAY

TODAY’S WEATHER

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

JAN 8 THURSDAY

JAN 9 FRIDAY

METRO MANILA

20 – 30°C

19 – 30°C

TUGUEGARAO

18 – 30°C

18 – 29°C

(Meralco) charges in December 2014.

Meralco rates declined by 13 percent, equivalent to a reduction of P0.73 per kilowatt-hour.

Further, there was a sharp decline in Dubai oil prices, which fell to its lowest levels since 2010, translating to lower domestic petroleum costs.

Neda said because of this, price reductions were recorded in December 2014. Unleaded gasoline prices declined 19 percent; diesel contracted 26 percent; kerosene contracted 23 percent; and liquefied petroleum gas declined 32 percent.

The low pump prices helped keep high food prices at bay despite the higher demand during the holiday season. Year-on-year food inflation in December 2014 slowed to 5.5 percent from 6.5 percent in the previous month.

Neda said this is mainly due to high food prices in the same period in 2013, partly arising from the effects of Supertyphoon Yolanda (international code name Haiyan), which hit the country in early November.

“The absence of new major economic shocks, which could considerably affect food supply, as well as the normalization of supply chain of other food products in part resulting from the augmentation of rice stocks from imports and the lifting of the expanded truck ban in September 2014, may have also contributed to the decline in inflation in December 2014,” Balisacan explained.

The PSA said inflation in the National Capital Region (NCR), likewise, further decelerated to 1.6 percent in December. It was 2.4 percent in November and 2.6 percent in December 2013. The annual average inflation in Metro Manila was at 3.2 percent in 2014. Last year it was 1.6 percent.

Inflation in Areas Outside NCR (AONCR) slowed to 3 percent in December 2014, lower than the 4 percent posted in November 2014 and 4.6 percent in December 2013.

The average inflation for 2014 in AONCR went up to 4.5 percent from its 2013 rate of 3.3 percent.

next year. While the president has turned the Philippines into one of the region’s fastest-rising economies in recent years, growth will probably slow to about 6 percent in 2014 and this year, from more than 7 percent in 2013, Bloomberg surveys show.

“The government is becoming cautious with spending on all fronts,” said Vaninder Singh, an economist at Royal Bank of Scotland Group Plc. in Singapore. “We’re seeing a pretty significant impact on the economy.”

JAN 10 SATURDAY

BAGUIO

LAOAG CITY 19 – 30°C

TUGUEGARAO CITY 19 – 30°C

SBMA/ CLARK

BAGUIO CITY 13 – 23°C SBMA/CLARK 22 – 30°C TAGAYTAY CITY 19 – 28°C

TAGAYTAY

LEGAZPI

PHILIPPINE AREA OF RESPONSIBILITY (PAR)

JAN 8 THURSDAY

JAN 9 FRIDAY

JAN 10 SATURDAY

19 – 30°C

METRO CEBU

23 – 29°C

23 – 30°C

23 – 30°C

18 – 29°C

TACLOBAN

22 – 29°C

22 – 30°C

22 – 30°C

19 – 29°C

CAGAYAN DE ORO

19 – 29°C

13 – 23°C

21 – 30°C

18 – 28°C

18 – 29°C

23 – 30°C

22 – 29°C

22 – 29°C

METRO DAVAO

12 – 22°C

24 – 32°C

23 – 31°C

20 – 30°C

24 – 33°C

24 – 33°C

18 – 27°C

12 – 22°C

20 – 30°C

ILOILO/ BACOLOD 23 – 30°C

TACLOBAN CITY 23 – 30°C

METRO CEBU 24 – 30°C

ZAMBOANGA CITY 25 – 32°C

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Economy

A4 Wednesday, January 7, 2015 • Editors: Vittorio V. Vitug and Max V. de Leon

BusinessMirror

SC asked to stop Transco’s P0.04/kWh power-rate hike

A

By Joel R. San Juan

LAWYER has asked the Supreme Court (SC) to stop the Energy Regulatory Commission (ERC) from implementing its order allowing state-owned National Transmission Corp.

(Transco) to charge consumers an additional P0.04 per kilowatt-hour (kWh) in their electric bills starting this month to pay for the cost of renewable energy (RE) used under the feed-in tariff (FIT) scheme.

In a 32-page petition, lawyer Remigio Michael Ancheta also asked the Court to declare as unconstitutional the FIT Rules and Guidelines in the implementation of the FIT Allowance (FIT-All) of P0.0406 per kWh and the ERC order dated October 7, 2014, that granted Transco’s application for a provisional FIT-All. The provisional authority will allow Transco to perform its duties as a fund administrator and pay the RE developers on time their entitled FIT rate, thereby allowing continued production of RE electricity.

The FIT-All is a uniform charge akin to the universal charge that is imposed on all on-grid electricity consumers who are supplied with

electricity through the distribution or transmission network.

The FIT-All is essential to the implementation of the FIT system as established under Section 7 of Republic Act 9513, otherwise known as the Renewable Energy Act of 2008, or RE law.

Ancheta argued that the FIT Rules and Guideline wrongly provided for the advance collection of the payment to FIT-eligible RE developers, which advance collection is not provided or contemplated in the law, through the creation of the FIT-All Fund.

As a consequence, distribution utilities like the Manila Electric Co., are mandated to adopt the necessary

modification in their billing and collection systems in order to enforce the Fit-All as a separate line item in the billing of consumers and remit the same in accordance with the FITAll Guidelines.

Ancheta said a typucal residential Meralco customer consuming 200 kWh in a month should expect an additional charge of P8.12 under the FIT system.

The petitioner stressed that under RE Act of 2008, the establishment of FIT System is for electricity produced from wind, solar, ocean, run-of-river hydropower and biomass.

However, Ancheta said the ERC committed grave abuse of discretion when it issued the FIT Rules and FIT Guidelines as it expanded the unduly expanded the implementation of the RE law.

With the ERC’s order, the petitioner noted that the consumers are being compelled to pay in advance of the production of electricity considering that the plants covered by the FIT program have yet to operate or has yet to be constructed.

“Otherwise stated, the public would be made to pay for electricity that has yet to be generated,” he said.

Using the year 2015 forecast national sales of 68,016,055,191 kWh submitted in the application of Transco to ERC, Ancheta said the FIT-All will translate to P230.12 million per month, or P2.7 billion for the whole 2015.

“Unless this Honorable Court strikes down this unreasonable and oppressive attempt to collect from the public an amount that they can

otherwise use for basic necessities, the consumers will be required to bear the burden by the start of the year 2015,” the petitioner said.

Named respondents in the petitioner were the ERC, the Department of Energy (DOE), Transco, National Renewable Energy Board and Meralco.

Ancheta also argued that the implementation of the FIT-All is an invalid exercise of police power by the ERC as it deprives consumers of their property without due process of law.

“The DOE and ERC chosen means that are beyond what is necessary to achieve the purpose of the law to the prejudice of the public i.e., by mandating the advance collection of the portion of the payment to the FITeligible RE developers even before actual electrical energy is produced by them and transmitted to the grid,” the petitioner said.

It can be recalled that on July 27, 2012, the ERC approved four kinds of initial FIT rates under ERC Case 2011-006 RM and Resolution 10, Series of 2012, entitled “Resolution Approving the Feed-in-Tariff Rates.”

The initial FIT rates were P8.53/ kWh on wind technology; P6.63/kWh for biomass; P9.68/kWh for solar; and for hydropower at P5.90/kWh. On November 19, 2012, the ERC issued Resolution 15, Series of 2012, designating Transco as the FIT-All fund administrator tasked with the establishment, management, administration, disbursement and settlement (through a government trustee bank) of the FIT-All Fund.

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MMDA’s Tolentino sees bright prospects for proposed Mega Manila subway project

By Claudeth Mocon-Ciriaco Correspondent

M

etropolitan Manila Development Authority (MMDA) Chairman Francis N. Tolentino on Tuesday said he is waiting for the recommendations of an ongoing feasibility study being conducted by the Japan International Cooperation Agency (Jica) to be able to push through with a proposed 75-kilometer subway system in the country, which he said, will help ease traffic congestion in the metropolis.

“The feasibility study is being conducted by the Japan International Cooperation Agency and they were asked to finish it by June and submit [the study] to [the] DOTC [Department of Transportation and Communications] and Neda [National Economic and Development Authority] for approval,” Tolentino said as he expressed optimism that the project will materialize.

Tolentino said that under the proposal, the system will connect the northern and southern part of Metro Manila from Calamba City in Laguna and San Jose del Monte in Bulacan and would pass through Epifanio de los Santos Avenue.

“This is a 75-kilometer-long modernized transport system and it will take you only 45 minutes from Laguna to Bulacan,” Tolentino said.

Public Works Undersecretary Rafael Yabut said the government, under the administration of President Aquino, is “very serious

for us to have a subway system.”

Tolentino said the project forms part of the more than P2-trillion transportation plan for the National Capital Region presented to the Philippine government by Jica.

Last year Jica released a video presentation of the “Roadmap for Transport Infrastructure Development for Metro Manila and Its Surrounding Areas” (Infra Roadmap for Mega Manila).

The road map study was conducted in response to the request by Neda in order to formulate a comprehensive transport road map toward 2030.

The road map defines “Mega Manila” as Metro Manila, Bulacan, Rizal, Cavite and Laguna, which are the main focus in the Jica study.

The transport road map emphasizes the need to establish better northsouth connectivity and appropriate hierarchy of different transportation modes such as roads, railways and other mass transits.

This forms the Dream Plan to have a modern, affordable and a well-coordinated and integrated transport system for Mega Manila by 2030.

Jica Philippines Chief Representative Noriaki Niwa emphasized that the road map is important to make Metro Manila a globally competitive and environmentally sustainable city.

Program officer Patrick San Juan said the road map study was conducted in close coordination with Jica, Neda, MMDA, the DOTC, the Department of Public Works and Highways, and relevant stakeholders and other related agencies.

Palace moves to avert port-business disruption ahead of Black Nazarene feast and papal visit

By Butch Fernandez

M

alacañang on Tuesday made a strong appeal to businessmen to pull out cargo from Manila’s ports for three weekdays this week, and on through the weekend, and three more weekdays next week, as it aired warnings of severe security and traffic restrictions on account of the Feast of the Black Nazarene on Friday, and the upcoming papal visit from January 15 to 19.

Cabinet Secretary Rene Almendras, at a Palace news briefing on Tuesday, assured them that all relevant government agencies will have offices through this weekend in order to process the goods brought out of the ports.

He noted that the two days—Saturday and Sunday—are crucial to their operations, pointing out that by next week, they will only have Monday to Wednesday to move their goods out of the port area before all the security and traffic barriers are put up for the pope’s arrival.

Almendras added that while the feared pileup of holiday cargo did not happen owing to the extended operations through weekends, the businessmen have apparently slackened, so much so that from 2,000 containers moved during the holiday weekends, only a few hundreds were moved last weekend.

At the same time, Almendras appealed to those with refrigerated vans or so-called “reefers” to pull these out quickly, noting an increase in their volume the past weeks even though he stressed there is limited space within the ports for such refrigerated vans for perishable goods.

“We expect that as early as Friday there will again be a disruption on the flow of traffic and goods. So we’re here this afternoon to air an appeal. We are appealing to the private sector, we are appealing to the importers, to all the cargo handlers: Can you please pull out as much of your cargos now while we are able to? What do we mean by now? That’s today, tomorrow and Thursday. Bakit po? Sa Friday wala naman. And then, sa Sabado po, everything will be normal. All the operations will be normal in the ports,” Almendras said.

He added: “So nakikiusap po kami sa lahat ng negosyante: Pwede ho bang i-wthdraw ninyo ’yung mga goods ninyo, especially the containers, on Saturday and Sunday? ’Nung na-solve na po natin ‘yung congestion sa port, nag-zero out na naman po ‘yung withdrawals ‘pag Sabado—Saturday and Sunday. ‘Nung una po, ‘di ba, napaabot na natin sa almost 2,000 ‘yon? Last Saturday and Sunday, we barely

had a hundred. So nakikiusap po kami, this is a good time for you to withdraw, to pull out all the cargo—Saturday and Sunday—dahil next week we only have Monday, Tuesday and Wednesday.”

By Thursday he warned that all the activities will be starting already on securing the routes of the pope and all the facilities and the barriers will be up. “There will be restriction to traffic flows by that time. So, naturally, the flow of goods from the port will also be affected.”

According to Almendras, all government offices are open to make sure that those doing business at the port will have the opportunity to pull out their cargoes. “We also are thinking of keeping.... Operations will be normal up to Thursday po. And if Saturday will allow, we will try to for the north routes—those that will not be passing through Luneta or not coming into Metro Manila but going north.”

The Cabinet secretary said that by Monday (January 19) “we expect full operation again.

By that time, as you know, the pope will be leaving. He’ll be traveling, going to the airport areas, so we will be clearing most of the areas near the port.”

Almendras, meanwhile, assured the owners of refrigerated vans that relevant government agencies will also do weekend duty to assist them, in order to encourage them to pull these out as quickly as possible.

“There is another urgent request that I would like to do. What we have noticed is... although goods have been moving out of the port quite well, ’yung mga refrigerated vans po—they’re called ‘reefers’—we have noted a significant increase in the refrigerated vans na hindi pinu-pull out. Ang problema po ‘non, there is not enough space in the port for refrigerated vans of the volume that we are now seeing. As a matter of fact, we have double the number of refrigerated vans in our Port of Manila today than normal. So we are appealing through media to all those importers, all those businesses who have these refrigerated vans inside the port, kung pwede lang po please pull them out as fast as you can,” Almendras said.

He assured that the Bureau of Quarantine, the Bureau of Plant Industry and all of those that are required to give clearances so that these refrigerated vans can be pulled out would remain open to process their papers. “Again, please take advantage: Tuesday, Wednesday, Thursday, because Friday wala po tayo again; and then Saturday, Sunday we resume, all the way until Wednesday next week.”

Japanese trade delegation sets Manila visit in February

T

Termination Public Works personnel use a giant hydraulic crane to demolish the giant egg-like steel structure dubbed as the Layag Islas at the center

of the Circulo del Mundo near the Ninoy Aquino International Airport (Naia) Terminal 3. Reportedly built at a cost of P450 million, the structure will be removed to give way to the ongoing construction of the Naia expressway project. Roy Domingo

Sharp reductions in oil price should lower commodity costs–lawmaker

By Jovee Marie N. dela Cruz

A

party-list lawmaker on Tuesday asked the government, particularly the Department of Trade and Industry (DTI), to explain to the public the reason the prices of basic commodities remain high despite the successive oil-price rollbacks in the past weeks caused by falling oil-prices in the global market.

Kabataan Party-list Rep. Terry Ridon said the huge drop in oil prices should directly translate to lower prices of basic commodities, particularly food items.

“Many consumers will tell you that the price of even the most basic

food items have not moved at all,” Ridon said.

On Tuesday major oil companies again implemented a P0.95- and P0.80-per-liter rollback in gasoline and diesel prices, respectively. According to the Department of Energy, gasoline prices have dropped a total of P13 in 2014, while diesel prices have dropped by a total of P15 in the past year.

At present, gasoline prices range from P38 to P40, far from the more than P50-per-liter cost recorded in recent years. Diesel prices, meanwhile, now only stand between P27 and P29.

“When the cost of fuel in the world market spikes, manufacturers and producers here in the country are quick to adjust their prices. Yet why is

it that when a historical drop in fuel prices is observed, the price of basic commodities remain unchanged?”

Ridon asked.

He said the President, the National Economic and Development Authority, and officials of the DTI should immediately work to ensure that the prices of basic commodities would correspondingly decrease.

“If fuel prices are going down and food prices are not, then one can sense that something has gone awry,” the legislator added.

“We’re talking about an issue close to everyone’s heart: food prices. Consumers are waiting. This is not an issue that the government should bungle,” Ridon said. With Marvyn Benaning

he newly installed Japanese ambassador to the Philippines has renewed Japan’s commitment to strengthen economic relations between Manila and Tokyo, citing the Japanese business community’s enthusiasm to trade and invest in the country.

“We’d like to strengthen our economic relations much much further... and we discussed other measures that can be taken to increase Japanese investments to the Philippines,” said Kazuhide Ishikawa, who took the helm of the Japanese embassy office in the Philippines in November last year.

Ishikawa paid a courtesy call to trade department officials on Tuesday, according to Trade Undersecretary Adrian S. Cristobal Jr. “This is the first major business mission we will have for the first quarter. I think it is the largest Japanese mission we’ve welcomed in three years,” Cristobal told reporters on Tuesday, adding that a 40-member Japanese trade delegation is expected to visit the country in February.

The Philippine Chamber of Commerce and Industry affirmed that the members of the group are players in the manufacturing industry.

“The Japanese business community is very much enthusiastic in this country’s future. There is a very strong interest prevailing in the business community,” Ishikawa said.

According to preliminary external trade data from the Philippine Statistics Authority, Japan was the second biggest source of imports for October 2014 with 8.6-percent share to the total import bill amounting to $448.13 million. Catherine N. Pillas

Economy BusinessMirror

news@businessmirror.com.ph

Wednesday, January 7, 2015 A5

Petitions vs MRT, LRT fare increases flood SC

T

By Joel R. San Juan

well, the Secretary said even as he conceded that Metro Manila’s MRT commuters maybe “unhappy with the decision to raise the the fare.”

Headded:“Someofthepassengers, especially the MRT riding passengers may perhaps be unhappy with it.

But we can assure the MRT riding passengers that rehabilitation is forthcoming; rehabilitation has been planned this year. We’re going to improve the services of the MRT.”

WO more petitions were filed before the Supreme Court (SC) on Tuesday seeking to stop the Aquino administration from enforcing its order allowing new fare increases for the Light Rail Transit (LRT) Lines 1 and 2, and Metro Rail Transit (MRT) Line 3 that took effect on Sunday.

Party-list Rep. Neri Colmenares of Bayan Muna sought the issuance of a temporary restraining order (TRO) to immediately stop the implementation of Department Order 2014-014, issued by the Transportation Secretary Joseph Emilio A. Abaya imposing higher rates for users of the said railway commuter transport system.

“Malacañang is taking the people for a ride because there is no need to increase fares. Annual MRT and LRT revenues outstrip operation expense, so it is deceptive for the government to insist that it is losing,” Colmenares said.

Colmenares claimed that the MRT earned P2.2 billion ticket sales and only spent P1.8 billion in operation expense last year, while LRT earned P2.5 billion but only spent P1.03 billion for operation expense.

“Even if it is losing, it is the government’s task to fund mass transport. The fare hike is, beyond doubt, unjustifiable because up till now, the Department of Transportation and Communications [DOTC] has yet to account for the more than P120.7 billion it has spent on the MRT for the pass 10 years,” Colmenares said.

“Worse, with all the funds spent, the MRT service is very dismal and still deteriorating,” he added.

Aside from Bayan Muna, the

United Filipino Consumers and Commutters (UFCC) also filed a similar petition before the High Tribunal.

It argued that the respondent DOTC acted with grave abuse of discretion amounting to lack or excess of jurisdiction, when it approved the imposition of the new fare increases, which it branded as “arbitrary, unreasonable and unconstitutional” having been issued in excess of its authority.

Aside from the DOTC, the petitioners named the Light Rail Transit Authority and Metro Rail Trasit Authority as respondents in the case.

For LRT 1, the current maximum fare is P20 for stored-value tickets.

Under the new fare matrices, the new maximum fare would be P29 for stored-value and P30 for single-entry tickets, a 50-percent increase from the current maximum fare.

For LRT 2, the new maximum fare would be P24 for stored-value tickets and P25 for single-entry tickets, an increase of 66 percent from the current maximum fare of P15.

On the other hand, for MRT 3, the maximum fare will go up from P15 to P28 for single-entry and for storedvalue tickets, or an 87-percent increase from the current maximum fare.

The minimum fare also goes up from P10 to P 13.

‘Aquino pushing students out of school’

Hordes of Metro Railway Transit (MRT) Line 3 commuters queue to catch a ride at the MRT 3 station in Pasay City on Tuesday. Despite a twofold increase in MRT 3 and Light Railway Transit Lines 1 and 2 fares, urban commuters continue to crowd and patronize the railway systems out of necessity. Nonie Reyes

“Not a single public hearing or proper discussion was made by herein respondents that would show the justification, reasoning or proper computation for such abrupt and huge fare increase,” the petitioners said.

“Respondents did not even bother to explain to the riding public the rationale and the basis as to why they should pay such amount for creaking dangerous trains, that recently derailed, causing injuries and moral shock to several passengers,” they added. The petitioners added that it is also irregular for the DOTC to grant the private concessionaires a fare hike even without the necessary public hearings and even without the private consortium applying for a fare increase.

“It is, likewise, highly improper for the DOTC to approve the fare hike even without the consortium applying for such fare increase and

also without a hearing where private operators presenting and explaining to the public why they deserve an increase,” the petitioners argued.

On Monday two petitions were filed before the SC also questioning the new fare increases for LRT 1 and LRT 2, and MRT Line 3.

The petitions were filed by militant group Bagong Alyansang Makabayan (Bayan), other concerned individuals and former Iloilo Rep. Augusto Syjuco.

They are seeking an immediate relief through the issuance of a status quo ante order and/or TRO to stop the implementation of the fare increases.

No more subsidy

Malacañang remained firm in cutting the P10-billion annual subsidy for MRT 3 operations, shrugging off mounting protests denouncing the new year imposition

MWSS Appeals Panel upholds Maynilad’s water-rate adjustment

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By Jonathan L. Mayuga and Jovee Marie N. dela Cruz

he Appeals Panel of the Metropolitan Waterworks and Sewerage System (MWSS) has upheld the proposed alternative rebasing adjustment of Maynilad Water Services Inc. for 2013 to 2017.

The rebasing rate adjustment won by Maynilad, which will be subject to the approval of the MWSS board of directors, will result in a 9.8-percent increase in the 2013 average basic water charge of P31.28/cubic meter (cu.m.), inclusive of P1 currency exchange-rate adjustment, which the MWSS has now incorporated into the basic charge.

This translates to an average increase of P3.06/cu. m.

Upon the approval of the MWSS board of directors, the new rate adjustment will have to be published in major newspapers before it is implemented.

For a household that consumes less than 10 cu.m., monthly bills will go up by P7 or from an average of P120.15 to P127.17, or up by 5.84 percent.

For those consuming an average of 20 cu. m., the monthly bill will go up by 11.86 percent, or from an average of P426.25 to P476.79.

But for a household that consumes 30 cu. m., the monthly bill can go up by 13.81 percent, or from a monthly cost of P855.39 to P973.53.

Maynilad CFO Randolph T. Estrellado told reporters at a news conference on Tuesday that Maynilad is willing to charge consumers on a staggered basis to cushion the impact of the increase.

“We will discuss our options with the MWSS. With the approval of the MWSS, we are willing to implement the new rates, no matter how delayed it has been, on a staggered basis, so that it will have less impact to consumers,” he said.

He said the rate adjustment can be implemented in a span of three years, equally dividing the increase into three.

This, even as the concession agreement between the MWSS and Maynilad provides for a one-time implementation of a positive rebasing adjustment, Estrellado said.

Moreover, he said except for a few major projects, such as the Kaliwa Dam, the company remains committed to fulfill its obligations under the concessions agreement with the MWSS. Maynilad President Ricky Vargas said in a news statement that the decision confirms that the concession agreement works and that it restores investor confidence in the PublicPrivate Partnership Program of the government.

“This also ensures the continued implementation of Maynilad’s capital-expenditure projects that are intended to

benefit further our customers,” he said.

The decision of the Appeals Panel of the MWSS was hit by the group Water for the People Network as “a big injustice to consumers.” The group, a broad network of over 100 organizations that campaigns for people’s control over water services and resources, hit the Appeals Panel’s bias in favor of Maynilad.

The group said the arbitration shows how the privatization of the MWSS favors the private water concessionaires at the expense of consumers.

It says the consumers have not been properly represented in the arbitration even if they will be the ones to pay for increase.

“The arbitration process totally lacked transparency, leaving consumers in the dark even when what is at stake is clearly a matter of public interest,” the group said in a statement.

Maynilad is the MWSS’s contractor for the West Zone, which covers certain areas in the cities of Manila, Quezon City and Makati City, Caloocan, Pasay, Parañaque, Las Piñas, Muntinlupa, Valenzuela, Navotas and Malabon— all in Metro Manila; and the cities of Cavite, Bacoor and Imus, and the towns of Kawit, Noveleta and Rosario in the province of Cavite.

Maynilad’s customer base has expanded to 1,176,010 service connections, covering a total of 8.8 million people.

Moratorium

Following the recent implementation of water-rate increase, a party-list lawmaker on Tuesday urged the House of Representatives to hear a measure calling for a moratorium on water rate.

Party-list Rep. Luzviminda Ilagan of Gabriela said that in July 2013, she and fellow Gabriela Rep. Emmi de Jesus filed House Resolution 96 calling for a moratorium on any water-rate rebasing until such time that a comprehensive review of concession agreements entered into by the MWSS with Maynilad and Manila Water has been conducted.

“The resolution is still pending [at] the Committee on Government Enterprises and Privatization. No hearing yet [on the said measure since the filing in July 2013],” she said.

The lawmaker also said the resolution will also determine whether the agreement between the MWSS and Maynilad and Manila Water has been beneficial or disadvantageous to the public.

Ilagan, meanwhile, scored the decision to increase water rates by as much as 9.8 percent as yet another burden that Filipino women and their families will have to contend with as we enter the new year.

“After more than one year of delaying the implementation of lower water rates, higher rates will now be implemented to the detriment of consumers, especially poor Filipino families,” Ilagan said.

“After shortchanging consumers by denying them of lower water rates since September 2013, the arbitration panel now rules in favor of water concessionaires. The arbitration panel practically reversed the decision of the MWSS Regulatory Office and ruled for the implementation of a water- rate increase by 9.8 percent,” she added.

The lawmaker recalled that in September 2013, the MWSS Regulatory Office had ruled against the ratehike applications of Maynilad (P8.58 per cubic meter) and Manila Water (P5.83 per cubic meter). They also ruled against the inclusion of income taxes, advertising expenses, donations and cost of future projects, among others, to be included in the water tariffs that consumers will pay.

Furthermore, the MWSS Regulatory Office also ruled that Maynilad reduce its basic charge by P0.29 per cubic meter every year until 2017, and for Manila Water to reduce its basic charge

by P1.45 per cubic meter.

“The implementation of these decisions that could have granted much-needed relief for water consumers has been effectively prevented by Maynilad and Manila Water by pursuing this bogus process of arbitration,” she said.

According to Ilagan, “The arbitration process provided for in the concession agreements gives big businesses the advantage of reversing decisions made by government entities, clearly undermining government processes and consumer rights. All these prove that privatization—the incursion of big business interests in people’s basic needs, like water, as grossly disadvantageous to the public. The water-concession agreements and the Aquino government’s privatization policy should all be scrapped.”

Earlier, Nationalist People’s Coalition Rep. Sherwin Gatchalian of Valenzuela also questioned the reason and the timing of the proposed water-rate hike by the Manila Water and Maynilad, which took effect on Monday.

Gatchalian said the proposed increase in water rates was based on the foreign currency differential adjustment to be implemented by the two utility firms at a time when the peso is still strong and oil prices continue to drop in the international market.

“Manila Water and Maynilad should be made to explain their reason for increasing water rates. I think a congressional inquiry should be conducted to determine whether a rate hike is justified or not,” added Gatchalian, who is also a vice chairman of the Committee on Trade and Industry.

of fare increases for MRT commuters.

At a news briefing on Monday, President Aquino’s Chief Spokesman Secretary Edwin Lacierda pointed out that the public indignation over the MRT fare hike is confined only in Metro Manila. “ This is an issue, which is Metro Manila-centric. Certainly, there is unhappy, displeasure or dissatisfaction with the riding passengers,” Lacierda said even as he sought to justify the fare increase, while clarifying it would not really reach up to P28 additional fare for a one-way trip.

Lacierda explained that the government, in cutting the subsidy for Metro Manila’s MRT riders, meant to “allocate resources to the other regions of the country.”

“We are also allocating resources to other projects, which would better the condition of our countrymen as

The National Union of Students of the Philippines (NUSP) has accused President Aquino of pushing students out of their schools by his insistence on increasing train fare from 50 percent to 87 percent.

“Amid skyrocketing tuition and other school fee increases, price hikes of commodities, oil, water and energy, among others, the fare hikes for LRT and MRT will have a big impact on the students and the people,” NUSP said.

“Wala na o halos wala na kaming baon dahil napunta na lahat sa tuition at other school fees. Tapos nagtataas ng pamasahe sa LRT/MRT. Ayaw na talaga kaming papasukin sa eskwelahan ng gobyernong ito! [“We have none or we have almost no allowance left. Every centavo has been paid for the high cost of our tuition and other school fees.

Then here comes the LRT/MRT fare hikes. The government really doesn’t want us to go to school anymore!],” NUSP exclaimed.

The fare increases translate to around P30 more for round trip.

As such, a student riding the LRT/MRT with an average daily allowance of P100 must allot at least 60 percent of the allowance for maximum round-trip train fare, leaving a student with only P40 for other expenses (food, school materials, photocopying expenses, cellphone-load, among others).

With Butch Fernandez, Marvyn N. Benaning

MNTC awaiting BCDA go signal to proceed with expressway integration

By Lorenz S. Marasigan

T

he toll-road unit of conglomerate Metro Pacific Investments Corp. is willing to shell out P600 million to integrate the North Luzon and the Subic-Clark-Tarlac expressways despite the ongoing dispute on the latter’s concession.

Manila North Tollways Corp.

(MNTC) President Rodrigo E. Franco said his company is just waiting for the go signal from the Bases Conversion and Development Authority (BCDA) before his company could start the integration works at the two expressways.

“We will start immediately after the BCDA approves the integration agreement,” he said in a phone interview.

The integration, which entails the removal of toll barriers and the subsequent construction of toll plazas, was included in the business and operating agreement (BOA) signed between the government and the toll-road operator in 2011.

“In March last year we suggested to them that we delink the integration from the BOA and start the construction immediately,” Franco said. “This integration should start even before the BOA begins to take effect.”

The company, he said, is willing to initially shoulder the cost for the integration, as this would be beneficial to the riding public.

“This will definitely benefit the motorists, as this would elevate the service quality level at our expressways,” Franco said.

Integrating the two toll roads would allow for a more seamless travel between the Northern and Central Luzon, as it

removes the additional burden of making stops at toll plazas between Quezon City and Tarlac.

The group of businessman Manuel V. Pangilinan earlier bagged the contract to operate and maintain the longest toll road in the Philippines under the Arroyo administration. However, President Aquino refused to sign the deal, ordering in December last year that the contract be subject to a price challenge.

The expressway operator offered to pay the government P3.5 billion for the deal. Half of the gross revenues, according to the terms laid out by the private-sector partner, will also go to the government’s disposition agency.

On Tuesday the interested parties met with the BCDA to openly discuss the terms of the price challenge. San Miguel Corp., which operates the South Luzon Expressway and the Skyway System, was present during the preselection conference.

The deadline for the submission of bids for the competitive challenge has been set for January 30.

The government’s move to subject the deal to a dispute has earned the ire of the Pangilinan-led toll company, warning that it may resolve to legal means to block the state from executing such deal.

Awarding the contract to the private partner would partially free the government from servicing its P31-billion debt to the Japan International Cooperation Agency, as the private partner would subsidize the liability payments.

In return, the concessionaire shall manage, operate and maintain the 94-kilometer toll road for 25 years. The concession period, under the terms of reference, could be extended by another eight years.

Opinion BusinessMirror

A6 Wednesday, January 7, 2015

editorial

PWU and National Education Policy

T

he Philippine Women’s University’s (PWU) possible takeover by the STI Eusebio Tanco Group is the latest demonstration of the adverse impact on higher educational institutions of the government’s policy on tertiary education. Earlier illustrations were the purchase of the National University by tycoon Henry Sy, the acquisition of the University of the East by another tycoon Lucio Tan, and the acquisition of other educational institutions in the provinces by the Phinma Group.

The takeover by one private group from another private group is no problem, especially where the new owner is better able to meet the institution’s demands for academic expansion. The problem is that the private institutions lost their student populations to state universities and colleges (SUCs) and local universities and colleges (LUCs) because these public institutions charged practically nothing in terms of tuition. The loss ensured that the private institutions could not sustain normal levels of operation or, as in the case of PWU, could not repay loans taken for the development and improvement of academic programs.

It used to be that tertiary education in the Philippines was private sector domain, marked only by the presence of a few public institutions, notable among them are the University of the Philippines and the Philippine Normal College in Manila, the Central Luzon State University in Nueva Ecija, and the Mindanao State University in Lanao. There certainly were problems, including the presence of so-called diploma mills, but these were appropriately dealt with by the Department of Education.

No longer. The government in the last 15 years has marched full-strength into the domain, supplanting private universities and colleges with SUCs and LUCs. There are now some 120 SUCs in the country’s 79 provinces and an even greater number of LUCs in the country’s cities and municipalities.

The loss of investments and employment in the private sector is only one aspect of the problem. Other, more troubling, aspects are that public money is being spent in an endeavor that used to be funded almost entirely by private money, i.e., at no expense to the government, and that the change has brought about not an improvement but a deterioration in the quality of education in our country.

There is clearly a need for a change in government policy on tertiary education. Instead of invading the tertiary sector at enormous cost without achieving any clear benefit, destroying the private sector that used to bear all those costs, let the government focus on encouraging excellence in tertiary education.

To do this, let the government phase out SUCs and LUCs, except only the outstanding among them, expand the Grants-in-Aid Scholarships Program to support all students wanting to acquire a college education, and promote excellence among tertiary level institutions through closer regulation.

The money saved after this change, which we estimate to be in the order of tens of billions of pesos, can be used to carry out other desirable programs of social uplift.

Tertiary education in the Philippines, as contemporary history has demonstrated, is basically a private good with a strong public character. The private sector can take the lead in its production with the public sector taking an active part in the effort.

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01072015

More branches to serve the public in 2015 Susie G. Bugante

All About Social Security

I

n my column last week, I mentioned that as of end-October 2014, the Social Security System (SSS) added eight new branches and 10 service offices to its nationwide network of frontline offices.

What a difference three months make! As of year-end 2014, SSS opened 38 new offices. Of these new offices, 25 are full-service branches while 13 are service offices located mostly in malls.

In a news report, SSS President and Chief Executive Emilio De Quiros Jr. said, bringing the pension fund’s services closer to its more than 31 million members is among the agency’s top priorities, hence, it is committed to establish more offices across the country. He hopes the increased access to and visibility of SSS will also encourage more people to join the system.

Of the 38 new offices, 14 new

branches and three service offices are in the National Capital Region (NCR), six branches and four service offices in Luzon, three branches and three service offices in the Visayas, and two branches and three service offices in Mindanao. By end-2014, SSS has 264 offices across the country located in the NCR (61); Luzon (119); the Visayas (41); and Mindanao (43).

Aside from more locations,

selected SSS branches are open on Saturdays to serve members who are unable to transact during weekdays. These include branches in Diliman (main office), MakatiAyala and Makati-Gil Puyat in the NCR; Cebu, Lapu-lapu, Bacolod and Iloilo in the Visayas; and Cagayan de Oro, Davao and Zamboanga City in Mindanao.

In 2015 SSS will continue to open new branches and service offices in strategically located areas where more members can be served. Aside from additional officials, some existing branches will be refurbished and upgraded to make them more comfortable and convenient for the transacting public.

What are some of the features of a full-service branch? Aside from online frontline counters, full-service branches have what is called an “e-center”, an area equipped with facilities that allow members to do self-service transactions. Such facilities include a number of information kiosks where members,

Give Kim the Castro treatment William Pesek

BLOOMBERG VIEW

B

y restoring diplomatic ties with Cuba, Barack Obama clearly admitted that Washington’s five-decade-old strategy of isolating the Caribbean nation had failed. So why is the White House doubling down on a similar policy toward North Korea?

On January 2 the US president levied additional sanctions on Pyongyang for the alleged hacking of Sony’s computer network. The new measures are largely symbolic, targeting 10 officials and three state organizations the US says played key roles in cyberattacks, weapons proliferation and other illicit activities. Yet there’s little reason to believe even stronger sanctions might unseat North Korean dictator Kim Jong Un—any more than they did his father Kim Jong Il or, for that matter, the Castro dynasty in Cuba.

As Obama himself has repeatedly said, there’s no point in doing the same thing over and over again and expecting a different result. Instead, this may be the moment for the US to take a chance on some quiet, deft diplomacy with the Kim regime.

Lost in all brouhaha over the Sony hack, Pyongyang has been dropping hints that it may be ready to bargain. On January 1 Kim even

raised the possibility of a one-onone meeting with South Korean President Park Geun-hye. It would be the first inter-Korean summit since Roh Moo-hyun visited Pyongyang in 2007 and dovetails with Park’s hopes for reunification of the Korean peninsula.

Of course, this may be another feint from Kim, whose regime continues to deny any involvement with the Sony hack. But as North Korea experts like Andrei Lankov of Kookmin University point out, the younger Kim has recently begun to pursue the path of Chinesestyle economic liberalization that his father doggedly avoided. While recent reforms in agriculture and industry are crucial, as Lankov wrote last December 23, “they cannot gather momentum without a large infusion of capital. Unlike during his father’s time, Kim Jong Un’s North Korea needs investment as a matter of economic and political survival.”

In a recent op-ed, Harvard University’s Kenneth Rogoff explained why embargoes rarely work. In the case of North Korea, he writes, “one of the major reasons economic sanctions have fallen short in the past is that not all countries have complied.” So, next, Obama should get Chinese President Xi Jinping on the phone.

The US should be able to exploit this need. Obama’s team has invested considerable time and diplomatic ingenuity in finding ways to slow Iran’s nuclear program, but relatively little on already nuclearcapable North Korea. Why not start by dropping, at least implicitly, preconditions to talks with Pyongyang? There’s zero chance Kim will agree to give up his nukes outright; it would be smarter to move on and work around the issue. Obama should empower US Secretary of State John Kerry to launch behindthe-scenes talks with Pyongyang, Cuba-style, holding out the possibility of a direct meeting with Kim as enticement.

In a recent op-ed, Harvard University’s Kenneth Rogoff explained why embargoes rarely work. In the case of North Korea, he writes,

using their SSS ID card, can access their own records with SSS and even print them; a work station with Internet access that members can use to enroll in the My.SSS online services found in the SSS website; and a telephone line for the automated telephone service or to call the SSS call center. These electronic services will be further enhanced in 2015 to make it more convenient for members and pensioners including those overseas to transact with SSS via toll-free calls.

SSS members can certainly look forward to more convenient and better service in 2015!

For more information about the SSS and its programs, call our 24-hour call center at (632) 920-6446 to 55, Monday to Friday, or send an e-mail to member_relations@sss.gov.ph.

Susie G. Bugante is the vice president for public affairs and special events of the Social Security System. Send comments about this column to susiebugante.bmirror@gmail.com.

“one of the major reasons economic sanctions have fallen short in the past is that not all countries have complied.” So, next, Obama should get Chinese President Xi Jinping on the phone.

China has long seen a divided Korea as a useful way to keep its geopolitical rivals off balance. But its patience is clearly wearing thin: As Lankov notes, projects all along the Sino-Korean border lie stalled, presumably because Beijing has decided to scale back investment in North Korea. Even if China doesn’t join hands with the US directly, Obama should encourage Xi to pressure the North to negotiate in good faith, in return for possible renewed Chinese investment and trade concessions. If Obama could cajole the Chinese leader into signing a carbon-emissions deal, there’s no reason the two sides can’t find room to cooperate here, too.

Obama’s team also should get Seoul and Tokyo closely involved with outreach efforts. Aside from deepening the diplomatic pool, that would give Park and Japanese Prime Minister Shinzo Abe good reason to work together for a change.

I’m not suggesting the world reward the brutal Kim dynasty for its bad behavior. But as in Cuba, openness is more likely to erode the foundations of the North Korean regime than isolation. That’s where US efforts should be focused, not on feel-good-but-futile sanctions.

Opinion BusinessMirror

opinion@businessmirror.com.ph

Wednesday, January 7, 2015

JFK’s secret negotiations Interest rate on refund of premiums with Fidel Castro Dennis B. Funa

Robert F. Kennedy Jr.

W

Inter press service

HITE PLAINS, New York—On the day of President John F. Kennedy’s assassination in November 1963, one of his emissaries was secretly meeting with Fidel Castro at Varadero Beach in Cuba to discuss terms for ending the US embargo against the island and beginning the process of détente between the two countries.

That was more than 50 years ago and now, finally, President Barack Obama is resuming the process of turning JFK’s dream into reality by reestablishing diplomatic relations between the two countries.

Those clandestine discussions at Castro’s summer presidential palace in Varadero Beach had been proceeding for several months, having evolved along with the improved relations with the Soviet Union following the 1962 Cuban missile crisis.

During that crisis, JFK and Soviet leader Nikita Khrushchev, both at odds with their own military hardliners, had developed a mutual respect, even warmth, toward each other. A secret bargain between them had paved the way for removing the Soviet missiles from Cuba—and US Jupiter missiles from Turkey—with each side saving face.

Fidel, on the other hand, was furious at the Russians for ordering the withdrawal of the missiles without consulting him. After the missile crisis, Khrushchev invited an embittered Fidel to Russia to smooth over the Cuban leader’s anger at the unilateral withdrawal of Soviet missiles.

Castro and Khrushchev spent six weeks together, with the Russian leader badgering Fidel to seek détente and pursue peace with Kennedy.

Khrushchev’s son Sergei would later write that “my father and Fidel developed a teacher-student relationship.” Khrushchev wanted to convince Castro that JFK was trustworthy.

Castro himself recalled how “for hours [Khrushchev] read many messages to me, messages from President Kennedy, messages sometimes delivered through Robert Kennedy [JFK’s brother]….” Castro returned to Cuba determined to seek a path toward rapprochement.

The Central Intelligence Agency (CIA) was spying on all parties. In a top secret January 5, 1963, memo to his fellow agents, Richard Helms (later to become Director of the CIA in 1966) warned that “at the request of Khrushchev, Castro was returning to Cuba with the intention of adopting with Fidel a conciliatory policy toward the Kennedy administration for the time being.”

JFK was open to such advances. In the autumn of 1962, he and his brother Robert had dispatched James Donovan, a New York attorney, and John Dolan, a friend and advisor to my father Robert Kennedy, to negotiate the release of Castro’s, 1,500 Cuban prisoners from the Bay of Pigs invasion.

Donovan and Nolan developed an amiable friendship with Castro. They traveled the country together. Fidel gave them a tour of the Bay of Pigs battlefield and then took them as his guests to so many baseball games that, Nolan told me, he vowed to never watch the sport again.

After he released the last 1,200 prisoners on Christmas Day 1962, Castro asked Donovan how to go about normalizing relations with the US. Donovan replied: “The way porcupines make love, very carefully.”

My father Robert and JFK were intensely curious about Castro and demanded detailed, highly personal, descriptions of the Cuban leader from both Donovan and Nolan.

The US press had variously caricatured Fidel as drunken, filthy, mercurial, violent and undisciplined. However, Nolan told them: “Our impression would not square with the commonly accepted image. Castro was never irritable, never drunk, never dirty.” He and Donovan described the Cuban leader as worldly, witty, curious, well-informed, impeccably groomed and an engaging conversationalist.

From their extensive travel with Castro and having witnessed the spontaneous ovations when he entered baseball stadiums with his small but professional security team, they confirmed the CIA’s internal reports of Castro’s overwhelming popularity with the Cuban people.

JFK was intuitively sympathetic toward the Cuban revolution. His special assistant and biographer Arthur Schlesinger wrote that “President Kennedy had a natural sympathy for Latin American underdogs and understood the source of the widespread resentment against the United States.”

He said that “the long history of abuse and exploitation had turned Fidel against the United States and toward the Soviets at a time when he might have turned toward the West. JFK’s objection was to Cuba’s role as a Soviet patsy and platform for expanding the Soviet sphere of influence

and fomenting revolution and Soviet expansion throughout Latin America.”

Castro had his own nationalistic reasons to bridle at Soviet dependency, particularly after the missile crisis. He made his desire for rapprochement clear during private talks with ABC newswoman Lisa Howard, who served as another informal emissary between JFK and Fidel.

Howard reported back to the White House that, “in our conversations [Fidel] made it quite clear that he was ready to discuss the Soviet personnel and military hardware on Cuban soil, compensation for expropriated American lands and investments, the question of Cuba as a base for communist subversion throughout the hemisphere.

Once the Cuban prisoners were free, JFK began seriously looking at rebooting relations with Castro. That impulse took him sailing into perilous waters. The very mention of détente with Fidel was political dynamite as the 1964 US presidential elections approached.

Barry Goldwater [the Republican Party’s nominee for president in the 1964 election], Richard Nixon [vice president under Eisenhower and JFK’s rival for the presidency in 1960] and Nelson Rockefeller [Goldwater’s competitor for nomination as Republican presidential candidate] all regarded Cuba as the Republican Party’s greatest asset.

Certain murderous and violent Cuban exiles and their CIA handlers saw talk of co-existence as hell bound treachery.

In September 1963 JFK secretly asked William Attwood, a former journalist and US diplomat attached to the United Nations, to open secret negotiations with Castro.

Atwood had known Castro since 1959 when he covered the Cuban Revolution for Look magazine before Castro turned against the US. Later that month, my father told Attwood to find a secure location to conduct a secret parlay with Fidel.

In October Castro began arranging for Atwood to fly surreptitiously to a remote airstrip in Cuba to begin negotiations on détente. On November 18, 1963, four days before JFK’s assassination in Dallas, Castro listened to his aide, Rene Vallejo, talk by phone with Attwood and agreed to an agenda for the meeting.

That same day, JFK prepared the path for rapprochement with a clear public message.

Speaking to the Inter American Press Association in the heart of Cuba’s exile community in Miami, he declared that US policy was not to “dictate to any nation how to organize its economic life.

Every nation is free to shape its own economic institution in accordance with its own national needs and will.”

A month earlier, JFK had opened another secret channel to Castro through French journalist Jean Daniel, editor of the socialist newspaper Le Nouvel Observateur. On his way to interview Fidel in Cuba on October 24, 1963, Daniel visited the White House where JFK talked to him about US-Cuba relations.

In a message meant for Castro’s ears, JFK criticized Castro sharply for precipitating the missile crisis. He then changed tone, expressing the same empathy toward Cuba that he had evinced for the Russian people in his June 10, 1963, American University speech announcing the nuclear test ban treaty with the Soviets.

Kennedy launched into a recitation of the long history of US relations with the corrupt and tyrannical regime of Fulgencio Batista. JFK told Daniel that he had supported that Castro’s Sierra Maestra Manifesto at the outset of the Cuban revolution.

Between November 19 and 22, 1963, Castro conducted his own series of interviews with Daniel. Castro carefully and meticulously debriefed the Frenchman about every nuance of his meeting with JFK, particularly JFK’s strong endorsement of the Cuban Revolution.

Then Castro sat in thoughtful silence, composing a careful reply that he knew JFK was awaiting.

Finally he spoke carefully, measuring every word.

“I believe Kennedy is sincere,” he began. “I also believe that today the expression of this sincerity could have political significance.”

He followed with a detailed critique of the Kennedy and Eisenhower administrations which had attacked his Cuban Revolution “long before there was the pretext and alibi of Communism.”

INSURANCE FORUM

S

ections 80 to 83 of the Amended Insurance Code cover the rules on return of premiums. However, the law is silent with respect to the payment of interest, if any, on such amount.

Therefore, we resort to the words of Philippine jurisprudence.

In Sun Life of Canada (Philippines) Inc. v Sandra Tan Kit et al. (G.R. No. 183272, October 15, 2014), the Supreme Court (SC) ruled that there is no factual and legal basis to impose compensatory interest in the refund of premiums absent the failure to comply with an obligation.

There are two kinds of interest— monetary and compensatory. Monetary interest refers to the compensation set by the parties for the use or forbearance of money. No such interest shall be due unless it has been expressly stipulated in writing. On the other hand, compensatory interest refers to the penalty or indemnity for damages imposed by law or by the courts. The interest mentioned in Articles 2209 and

2212 of the Civil Code applies to compensatory interest. As a form of damages, compensatory interest is due only when the obligor fails to comply with his obligation.

The court observed in Sandra Tan Kit that, simultaneous to its giving of notice to rescind the policy due to concealment, petitioner Sun Life tendered the refund of premium by attaching to the said notice a check representing the amount of refund.

As a consequence of the rescission of the insurance contract on account of the insured’s concealment of material information in his insurance application, Sun Life refunded the insurance premiums paid. In case of failure to properly refund, the court added that the refund may be con-

sidered as a forbearance of credit, in which case the interest rate will be 6 percent per annum.

In Great Pacific Life Insurance Corp. v Court of Appeals et al. (G.R. No. L-57308, April 23, 1990), the Court ruled that in view of “the serious delay the private respondent’s claim has suffered on account of the petitioner’s intransigence in refusing to pay its just debt, the petitioner is ordered to pay legal rate of interest of 6 percent per annum on the premium of P1,416.60 refundable to the private respondent from the filing of the complaint until the judgment is fully paid.”

Incidentally, the premiums returned shall be excluded from the computation of the recipient’s gross income and shall be exempted from income taxation pursuant to Section 32 (B) (2) of the National Internal Revenue Code, which specified as an exclusion: “Amount Received by Insured as Return of Premium. The amount received by the insured, as a return of premiums paid by him under life insurance, endowment, or annuity contracts, either during the term or at the maturity of the term mentioned in the contract or upon surrender of the contract.”

On the other hand, interest on

The Sony hackers and the blame game Leonid Bershidsky

BLOOMBERG VIEW

A

s cyberwars between countries, corporations and organized crime groups heat up, correctly attributing the attacks becomes a priority: responses, obviously, must be tailored to the attribution. The US government last year provided a good and a bad example of how attribution should be handled.

As Thomas Rid and Ben Buchanan of the Department of War Studies at King’s College London point out in a recent paper, attributing a cyberattack is “an art as much as a science,” requiring what Prussian King Friedrich the Great called military coup d’oeil.

It isn’t enough, to find traces of a certain human language in the malicious code or determine that it was developed during business hours in a certain time zone: Such telltale signs could be designed to misdirect.

Matching bits of malware to other attacks isn’t conclusive, either: Code is available for sharing among hackers, and hackers contract out to take part in attacks or help each other on principle.

That means a team of security experts working on attribution needs to tie in technical evidence with operational intelligence and even insights into geopolitics. When all these fac-

tors come into play, the outcome of an investigation can’t be certain, and it becomes difficult to release details on how the finger came to point at a particular suspect.

Still, in May 2014, the US Department of Justice released lots of details on how it concluded that it was certain Chinese army officers who had conducted cyberattacks on a number of US companies. It didn’t exactly publish the evidence, but at least it explained what it had to go by. “Releasing these details bolstered the government’s case and its overall credibility on attribution,” Rid and Buchanan wrote. The conclusions weren’t challenged by outside technical experts because they made sense.

The government’s communication strategy in the Sony hack was the exact opposite. The Federal Bureau of Investigation (FBI) accused North Korea of organizing the attack, saying that “the need to protect

sensitive sources and methods” precluded it from releasing the full details. Then it mentioned similarities to other attacks linked to North Korea, giving rise to suspicions that it had been the victim of a false decoy.

A Seattle cybersecurity expert even claimed the bad English used by the Sony hackers to communicate with the world pointed to native Russian, not Korean speakers.

The government said independent experts didn’t have access to the same classified information as the FBI. “Trust us on this,” the authorities told the cybersecurity community and the general public. The White House issued an executive order imposing additional sanctions on North Korea, which has denied involvement. The sanctions are largely symbolic, but they are a real-world response to a nebulous charge. Ever since US intelligence claimed it had found weapons of mass destruction in Saddam Hussein’s Iraq, the public has a right to be skeptical.

The biggest problem with blaming North Korea is that Kim Jong Un’s dictatorship gained nothing from the hack. Because of the phenomenon known as the Streisand effect, The Interview, the Sony comedy spoofing Kim, became a major hit on download and streaming services, pulling in $18 million in just a couple of days. All the free publicity the movie received is likely to make other filmmakers consider attacking Kim—of course, after taking measures to take

A7

the payment of insurance proceeds is expressly allowed by the Amended Insurance Code under certain conditions. In Tio Khe Chio v Court of Appeals (279 Phil. 127 [1999]), the SC pointed to Sections 243 and 244 of the Insurance Code (now Sections 249 and 250 of the Amended Insurance Code), which explicitly provide for payment of interest when there is unjustified refusal or withholding of payment of the claim by the insurer, meaning the payment of insurance proceeds; and, to Article 2209 of the New Civil Code which, likewise, provides for payment of interest when the debtor is in delay.

Thus, Section 249 of the Amended Insurance Code provides: “Refusal or failure to pay the loss or damage within the time prescribed herein will entitle the assured to collect interest on the proceeds of the policy for the duration of the delay at the rate of twice the ceiling prescribed by the Monetary Board, unless such failure or refusal to pay is based on the ground that the claim is fraudulent.”

Dennis B. Funa is presently the deputy insurance commissioner for Legal Services of the Insurance Commission.

E-mail: dennisfuna @yahoo.com.

their sensitive information offline.

Are North Korean spies so stupid that they couldn’t predict the explosion of interest in The Interview after the hack? I doubt it: no one should be so dumb. Certainly not the US government, which itself triggered a kind of Streisand effect by making a highly public accusation and then withholding the evidence on which it was based. Now, the hacking and anti-hacking communities will forever doubt the FBI’s judgment and alternative versions—especially the well-developed one from Norse, the reputable security firm, involving laid-off Sony employees— will circulate.

Whoever hacked Sony—and this point, it’s wise to reserve judgment—the lesson for governments and other hacker targets, is that there is no point in publishing ones’ suspicions unless a lot of detail can also be released.

Giving out as much information as possible is a good idea, Rid and Buchanan wrote. “When a case and its details are made public, the quality of attribution is likely to increase,” they pointed out, citing the example of “the more and more detailed reports on Chinese espionage campaigns, partly driven by competition among security companies.”

In security matters, it’s best to be quiet and go it alone or release a maximum amount of data and get a lot of outside help. There is no comfortable middle path.

2nd Front Page BusinessMirror

A8 Wednesday, January 7, 2015

MANUFACTURING TO DRIVE INVESTMENTS GROWTH–DTI

By Catherine N. Pillas

T

he Department of Trade and Industry (DTI) is bullish on the prospects of attracting more investments this year on the back of the resurgence of the local manufacturing sector.

“We saw triple-digit growth in different manufacturing subsectors last year and we expect that to continue,”Trade Undersecretary and Board of Investments (BOI) Managing Head Adrian S. Cristobal Jr. said. Figures from the BOI showed that investments in manufacturing jumped by 77.5 percent to P24.5 billion from P13.8 billion posted in 2013.

Manufacturing subsectors that recorded triple-digit increases were food products, beverages, basic metals, motor vehicles, refined petroleum products fabricated metal products, and wood.

Cristobal, however, declined to provide a specific growth target for investment approvals this year.

The government’s economic blueprint, the Philippine Development Plan, indicated that the BOI is targeting to increase investment approvals by 10 percent annually.

Total investment approvals in 2014, however, declined by 24 percent due to the slump in power

projects last year.The electricity, gas, steam and air-conditioning supply sector attracted investments of P174.7 billion last year, lower than the P331.1 billion recorded in 2013.

Cristobal said the decline in power projects last year indicates that the country already has sufficient capacity. He said this also means that investments in the sector could be redirected to other sectors such as manufacturing.

“We are competitive already as a destination for [manufacturing] investments,” he said.

Aside from manufacturing, Cristobal also sees bright prospects in construction and realestate sectors as the government ramps up projects under the public-private partnership scheme this year. He said the information technology and business-process outsourcing industry would boost the real-estate sector this year.

“We expect construction to pick up and real estate is still on the top three sectors because of the demand for housing,” Cristobal said.

The industry development and trade policy group headed by Cristobal spearheads the DTI’s manufacturing resurgence program which aims to make the Philippine manufacturing sector a vehicle for inclusive growth.

www.businessmirror.com.ph

Meralco rates seen to drop this month on cheaper fuel

T

By Lenie Lectura

he continued drop in fuel cost is expected to bring down the cost of power this month, the Manila Electric Co. (Meralco) said on Tuesday.

Meralco Spokesman Joe Zaldarriaga said generation charge, the big gest component of an electricity bill, is likely to decline this month.

“There is a possibility of lower generation cost based on our initial analysis and primarily this may be

due to lower effective price of fuel cost and lower incidence of plant outages,” Zaldarriaga said.

The utility firm will provide final figures within the week.

In December Meralco customers saw a P0.19-per-kilowatt-hour (kWh) drop in their electricity bills,

equivalent to roughly P38 for those with an average monthly consumption of 200 kWh. This as generation charge fell by P0.17 per kWh to P4.94 per kWh, the lowest level for 2014.

The reduction in the generation charge was mainly driven by lower charges from the Wholesale Electricity Spot Market (WESM), which registered a reduction of P1.70 per kWh due to the normal operations of the power plants during the November supply month. The supply situation in Luzon improved especially after Sual’s Unit 1, with 647 megawatts, came back online after a monthlong maintenance shutdown in October.

Also, WESM charges decreased due to the completion in October

of adjustments from prior months, which include additional Must-Run Unit compensation for Malaya and the secondary cap additional compensation for the supply months of May and June 2014. These account for around P0.09 of the P0.17-perkWh decrease in generation charge this month.

The lower WESM charges offset the P0.10-per-kWh and P0.03per-kWh increases in the average rates of the independent power producers (IPPs) and power plants covered by power supply agreements (PSAs), respectively.

In terms of share to Meralco’s total power requirements for the November supply month, WESM, IPPs, and PSAs accounted for 4 percent, 43 percent and 53 percent, respectively.

Tetangco lists 2015 economic challenges

By Bianca Cuaresma

U

neven and uncertain global growth prospects in markets around the world and the ability of the government to ramp

up spending constitute the main challenges the Philippines must hurdle to achieve a higher growth rate this year.

At the annual breakfast meeting with journalists and editors at the so-called Tuesday Club, Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. bared the economic challenges the central bank and its global colleagues face in 2015.

Tetangco said while last year was a “difficult market to call” due to so-called taper scares during the period, 2015 may not be “any easier to call” as well given recent developments around the world.

“For one, global growth prospects remain uneven. In particular, while a robust economic recovery is seen to be under way in the United States, economic activity in the Euro Area continues to struggle for some

traction,” Tetangco said.

“The Japanese economy has recently fallen into a technical recession. The outlook for emerging markets has become relatively more subdued as well, as key emerging markets such as China grapple with structural bottlenecks that make growth prospects more challenging,” he added.

Tetangco said that this unevenness forms the basis for the continued divergence in monetary policy in advanced economies this year.

He also cited continuing geopolitical concerns that can reverse the declining price of oil, such as those in the Middle East and in Russia.

These uncertainties, the central bank chief said, help trigger volatility in financial markets and add to the air of skittishness generated by what or when the US Federal Reserve will do next. “ This volatility can impact

valuation of assets and liabilities of banks, their corporate clients and also their households,” he said.

On the domestic front, Tetangco remains optimistic on continue robust growth for the Philippines but reiterated the need for the government to start spending more this year on projects that will benefit the country over the long haul.

“It remains critical that the government ramps up spending to provide the vital infrastructure projects that will sustain economic growth in the medium term,” Tetangco said.

“The latest Development and Budget Coordinating Committee projections see real gross domestic product growing at 7 percent to 8 percent in 2015. This target is above the long-run average of about 4.9 percent. To help ensure this target is achieved, the national government must increase its spending,” Tetangco said.

China in $1.1-T infra binge to fend off growth risks Continued from A1

The approvals contrast with past moves to boost growth via infrastructure in which the government gave the green-light to projects individually.

They are part of efforts to respond to weak output, according to the people.

Project funding

The projects will be funded by the central and local governments, stateowned firms, loans and the private sector, the people said. The investment will be in seven industries including oil and gas pipelines, health, clean energy, transportation and mining, according to the people. They said the NDRC is also studying projects in other industries in case the government needs to provide more support for growth.

The NDRC’s spokesman, Li Pumin, said last month China would encourage investment in those areas.

The Economic Observer newspaper reported last December 26 on its web site that an official from the NDRC’s

Oil. . . Continued from A1 Morse reduced his forecast for global crude to an average of $63 a barrel for 2015, down from $80 a barrel.

Drillers around the world have already begun to trim exploration budgets and delay new projects as a result of low prices, but production from existing fields will continue and

“It’s not 2008 again,” Zhao Xijun, a finance professor with Renmin University of China in Beijing, said in reference to a 4-trillion-yuan stimulus China unleashed at that time. “When China launched the big stimulus package in

2008 to deal with the global financial crisis, China wanted nothing but faster growth; now China is focusing more on quality, efficiency and sustainability.”

China’s total fixed-asset investment in the first 11 months of the year was 45.1 trillion yuan. Infrastructure spending totaled 9.8 trillion yuan in transportation; environment and water management; and the supply of heat, gas and water, according to National Bureau of Statistics data compiled by Bloomberg.

Deutsche Bank AG analysts on Monday cut their expansion projections for this quarter to 6.8 percent, reinforcing their call for the central bank to step up monetary stimulus.

“We expect growth to surprise to the downside in first quarter and policies to surprise on the loose side in 2015,” Deutsche Bank economists led

by Hong Kong-based Zhang Zhiwei wrote. China will be hit by a “double whammy” of slowing property investment and a sharp decline in land sales by local governments, the analysts wrote. Bloomberg News

keep supplies high.

The last time US oil traded below $50 was on April 29, 2009.

The low oil prices have led to sharply lower fuel prices for shippers, airlines and drivers. Morse equated the drop in global oil prices to a $1.6-trillion stimulus package for the world economy.

On Monday the US national average price of gasoline fell to $2.20 per gallon. That’s $1.12 cheaper than last year at this time and the lowest since May of 2009. The Energy Department estimates the drop in gasoline prices will save US households $550 this year. AP

Zhejiang provincial bureau said the government had approved more than 420 infrastructure projects needing investment of more than 10 trillion yuan.

Rail investments may exceed 1.1 trillion yuan this year as investments in the previous four years lagged behind the five- year plan for 2011 to 2015, Han Siyi, an analyst at Shenyin & Wanguo Securities, said at a conference in Shanghai on Tuesday.

China has sought ways to stimulate growth without resorting to full-blown stimulus as it seeks to keep a lid on total debt that is now more than 200 percent of gross domestic product. The central bank added liquidity into the banking system last year and announced an interest-rate cut last November 21.

Not 2008