Businessmirror july 26, 2015

BusinessMirror Ayala to bid for more infrastructure projects

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

U.N. Media Award 2008

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week ahead

ECONOMIC DATA PREVIEW Week ahead: Peso

n Previous week: The peso hit a downtrend in the previous week as it continuously fell in value against the dollar during the period. In particular, the peso started the week at 45.23 to a dollar, to further shed value on Tuesday at 45.28 to a dollar. The local currency slightly gained to close at 45.24 to a dollar on Wednesday, only to erase its gains on Thursday at 45.38 to a dollar and end the week on Friday at 45.49 to a dollar. The total traded volume during the week is at $2.4 billion, and the average of the peso is at 45.324 to a dollar during the week.

n Week ahead: The peso is still expected to tread the middle range of the 45 territory as market players await the results of the Federal Open Market Committee’s most recent decision, as well as preparing to take cues on the earnings season.

M3 (June) July 31, Friday

n May M3: The growth of the amount of cash circulating in the local economy slightly climbed faster at the end in May, but the Bangko Sentral said the growth level is “adequate” for the growing economy. The central bank said domestic liquidity—as broadly measured by M3— rose to P7.6 trillion in May this year, registering a growth of 9.3 percent.

May’s liquidity growth was faster

See “Outlook,” A2

T

A broader look at today’s business

n Sunday, July 26, 2015 Vol. 10 No. 290

By Lorenz S. Marasigan

HE country’s oldest business conglomerate has vowed to aid the government—the current administration and the ones to follow— in eradicating the infrastructure constraints that limit the Philippines from sustaining higher economic gains.

Ayala Corp. Chairman Jaime Augusto Zobel de Ayala II said his company will continue working hand in hand with the government to further drive growth to the economy by supporting the state’s drive in developing infrastructure around the country.

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Oil Explorers Expand Drilling Rigs Amid Crude Bear Market

“We have thrown our hat in the ring for some projects...sometimes we don’t. But the whole concept of private-sector participation in building the infrastructure needs of the country is something that we are excited about.

Continued on A2

‘Asean integration opens trade opportunities for EU’

By Roderick L. Abad

T

HE European Union (EU) is seeing more trade opportunities in Southeast Asia, as the region’s economies begin to integrate before the end of the year, the European Chamber of Commerce of the Philippines (ECCP) said.

“Although the ambition level [of the regional economic unification] is less than the EU—with common currency and all that—it is an important first step to start trading

PESO exchange rates n US 45.3490

more with newer markets [in Europe and in other parts of the world],” ECCP Vice President Erik Moller Nielsen told the BusinessMirror.

“It is already a very powerful region. If the economic growth of the Asean [Association of Southeast Asian Nations] countries continues like now, it will overtake the European Union as an economic block in the next few years,” he added.

Under the unification of economies of all the 10 Asean memberstates, which will start in December, there will be free flow of goods, services, investment capital and skilled labor.

See “Asean,” A2

U

S oil explorers put rigs back to work for the third time in four weeks, as the industry began a tentative climb out of its retreat from shale drilling amid a bear market for crude.

Rigs targeting oil in the US rose 21 to 659, Baker Hughes Inc. said on its web site on Friday. The rig count declined by

seven last week. Natural-gas rigs fell by 2 to 216, and miscellaneous rigs were unchanged at 1, bringing the total up 19 rigs to 876. Each of the four major plays expanded, with the Permian Basin of West Texas up 3 rigs to 244, and the Eagle Ford Shale adding 2 for a total of 79 in the South Texas formation.

“It’s not hard to bounce off

the bottom like this,” Luke Lemoine, an analyst at Capital One Southcoast in New Orleans, said in a phone interview. “With oil sub-$50, I definitely don’t think this is an upward trend.”

America’s oil drillers have sidelined more than half the country’s rigs since October, as the world’s largest suppliers See “Oil explorers,” A2

n japan 0.3661 n UK 70.3680 n HK 5.8510 n CHINA 7.3032 n singapore 33.1450 n australia 33.4679 n EU 49.8431 n SAUDI arabia 12.0924 Source: BSP (24 July 2015)

NewsSunday BusinessMirror

A2 Sunday, July 26, 2015

Ayala to bid for more infrastructure projects continued from A1

Certainly, we want to continue bidding as projects come online,” he said.

The conglomerate has been supportive of the Aquino administration’s Public-Private Partnership (PPP) Program. It bagged the first key infrastructure deal that was auctioned off in 2010, the Muntinlupa-Cavite Expressway.

It has partnered with prominent names in the industry to bid for other projects that will help solve the infrastructure constraints, at least in Metro Manila.

Some of these projects were won with rival Metro Pacific Investments Corp.

“We are happy with the ones that we won, and we will continue to be looking for projects in the pipeline. As long as they get built and as long as there are other players bidding, as well, it only benefits the country,” he said.

Ayala Corp. Managing Director John Eric T. Francia said the projects that his company is interested in are those under the energy, toll road and rail sectors.

He listed them as: the P287billion North-South Railway System; the P24.4-billion Bulacan Bulk Water Supply; the P122.8billion Laguna Lakeshore Expressway-Dike; and the operations and maintenance of the Light Rail Transit (LRT) Line 2.

“We will continue to selectively participate in the auction of PPP projects,” Francia said.

AYALA: “We want to continue bidding as projects come online.”

‘Good momentum’

THE conglomerate, which has significant investments in power, telecommunications, tollways and property sectors, also hopes that the PPP thrust of the Aquino administration will be continued by the next set of government officials.

“We hope that the whole idea of using PPP structure to allow private capital to contribute to infrastructure will continue, but that depends on future leadership, I guess. It’s a formula that is working. People have seen the benefits of it, so I see no reason for it to stop,” Ayala said.

He added: “There’s good momentum now, it’s peaking up. We hope that the next administration will continue the program.”

This, despite the fact that the group has been hurt by the decision of President Aquino to rebid a tollways-development project that Ayala won in 2014.

To recall, the President decided to place the P35.42-billion CaviteLaguna Expressway (Calax) deal under a fresh tender, after San Miguel Corp. petitioned to win the project.

Ayala, with partner Aboitiz Equity Ventures Inc., would have won the deal through its P11.66-billion premium offer. But disqualified bidder San Miguel tried its chances, and asked President Aquino for help as it allegedly placed a P20.1billion bid for the deal.

Despite calls from the business community, the President decided to call the auction a failed one, and ordered the project to be placed under a fresh tender.

The reauction, which required parties to submit higher premium offers, saw Metro Pacific winning the much-coveted Calax deal.

The oldest conglomerate in the Philippines has, as of March, infused P9 billion in Manila’s PPP thrust.

Outlook... continued from A1

than the 9-percent acceleration recorded in the previous month, but significantly tamer than the double-digit growth seen in the previous year.

n June M3: While the liquidity growth is not expected to shoot past to a double-digit growth, the central bank said in its most recent quarterly inflation report that liquidity is expected to continue to be “ample” to support the growing economy.

“Ample domestic liquidity and planned higher public spending are expected to further support domestic economic activity and sustain the economy’s momentum in the months ahead,” the central bank said. Bianca Cuaresma

news@businessmirror.com.ph

Asean...

continued from A1

Expecting tariff reductions and streamlining of certain administrative procedures in a single regional common market, the chamber’s official said the Asean block will be as important as China, as the latter is becoming “more expensive” in terms of doing business.

“We see some [companies] being less interested in China now and moving here,” he noted.

Recent reports revealed that foreign businesses have begun pulling out their investments in this communist country, and move to emerging economies, like the Philippines.

“Of course, with the Asean Economic Community [or AEC, happening later] this year, it is a very interesting place to be and to sell locally with no import tariffs in the region,” Nielsen said.

This is because the AEC will become a single large market with over 600 million people, comprised by the populations of Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

“So we see that as a big opportunity, for example, on our food export as there are more and more

European food that can be exported here,” he explained.

While the euro zone is poised to benefit from the ease of trade under the economic integration of Asean, the latter is, likewise, seen at the advantage with stronger ties with the former.

Nielsen cited the Philippines, for instance, which can consider now the EU as a potential market for export, since it is now part of the so-called Generalized Scheme of Preferences (GSP) Plus regime.

This status, he said, is likely to increase the country’s access to the EU market through duty-free imports of GSP-eligible products.

“It means that it does not have to pay import duty in the EU. So Philippine products are now more competitive in the EU,” he said, while citing that both Thailand and Malaysia are now out of the GSP Plus. “Hence, they do not enjoy favorable tariff treatment anymore as you do. Filipino companies should really discover that [the EU] is an export market, as well.”

Economic ties and business relations between the Philippines and Europe remain strong and stable, as far as the ECCP is concerned, according to Nielsen.

In fact, he said that there is a

Oil explorers...

continued from A1

battle for market share. The crude being pumped out of US shale formations has helped create a global glut that drove prices down 49 percent in the second half of 2014.

Executives for Halliburton Co., the largest provider of oilfield services in the US and Canada, told analysts and investors on a July 20 conference call that the North American onshore market

is scraping along the bottom, but said there might be a slight pickup in work this year and a more meaningful increase next year.

“This is a damn tough market, one of the toughest ones that I’ve ever been through,” Halliburton CEO Dave Lesar, a 62-year-old accountant who’s run Halliburton since 2000, said on the call.

Oil’s rebound from a six-year low

growing interest from European companies in the consumer goods, manufacturing, infrastructure and construction sectors here.

“While it is still not a big market [for the EU], it is there already on the radar screen, which is also why you see some embassies now coming back here,” he said, referring to the reopening of the Danish Embassy in Manila in January of this year. “You also see more investments and more companies discovering this country.”

Without revealing the total amount of direct investments coming from the euro block at present, he revealed, though, that “they are at record-high.”

“I know that we’re talking about a two-digit percentage increase over last year. And that we see more and more companies coming in, particularly in Peza zones, because the conditions there are favorable. So if you look at the EU as a block, it is the main investor in the Philippines,” he added.

The ECCP is a membership organization, which currently has more than 750 member-companies. This service-oriented organization provides a wide range of business services and creates linkages between companies, organizations and individuals with existing or potential business interests in Europe and the Philippines. in March has faltered on signs a global surplus will persist. West Texas Intermediate crude closed on Thursday more than 20 percent below the peak reached in June, meeting the common definition of a bear market. WTI, the US benchmark, settled down 31 cents at $48.14 a barrel on the New York Mercantile Exchange.

Traders have been tracking the rig counts as they try to determine when US oil production will fall enough to ease oversupplies.

Bloomberg News

NewsSunday

A6 Sunday, July 26, 2015 • Editor: Vittorio V. Vitug

BusinessMirror

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Group files plunder, graft raps vs PEA execs, others

A

By Jovee Marie N. dela Cruz

N antigraft group has filed plunder and graft charges against incumbent and former executives of the erstwhile Public Estates Authority (PEA) for allegedly conspiring to defraud the government in the sale of a 4-hectare property at the reclamation area on Roxas Boulevard in Parañaque City in 1988 worth P41 billion for just P472 million.

In the complaint filed before the Ombudsman, the Crusaders against Graft and Corrupt Practices in the Philippines (CGCPP) alleged that the PEA defrauded the government and the Filipino people in “the biggest scam of [state] asset disposition.”

The PEA is now the Philippine Reclamation Authority.

Respondents in the plunder and graft complaint filed by CGCPP are the staterun company’s incumbent Chairman Roberto Muldong, incumbent General Manager Peter Anthony Abaya and incumbent members of its board of directors; former general manager Eduardo Zialcita, as well as the chairman and members of the PEA Board in 1988 when the sale was consummated; and the succeeding executives and board directors before the current set of officers.

The group also charged members of the Manila Bay Development Corp.

(MBDC) board of directors and its president, George Chua.

The company have failed to turn the 4-hectare property into a business hub over the past 27 years, in violation of the original sale agreement requiring its development by the buyer within five years of its acquisition.

Lead convener of CGCPP lawyer Fernando Perito, citing Section 9 of the AntiPlunder law—Republic Act 7080—empowering the State to recover unlawfully

acquired public properties without any regard for prescription, laches or estoppel, urged the government to forfeit or take back this prime lot at what is now MBDC’s Central Business Park II along Roxas Boulevard in Parañaque City.

This is the second plunder and graft complaint against PEA and MBDC officials in connection with this P41billion reclamation deal as the United Filipino Consumers and Commuters, led by its convenor Rodolfo Javellana Jr., recently filed a similar case before the Ombudsman.

Javellana said that this highly irregular deal between PEA and MBDC officers surfaced only last year when the Uniwide Sales Realty & Resources Corp., as part of its ongoing legal battle with MBDC, came with a newspaper advertisement appealing to PEA to take back this property.

Moreover, Perito said that at the prevailing market rate of P40,000 per square meter in 1988, the reclamation property totaling 410,467 sq m was easily worth P41 billion, but PEA surprisingly sold it for a mere P1,100 per sq m—or only P472,037,050—on condition that MBDC would develop it in five years’ time.

“What is outrageously detrimental to the Philippine government and to the Filipino People is that the Philippine government sold this property to MBDC only in the amount of P472,037,050 in

exchange for a highly commercialized place originally intended to benefit the government in the form of tax revenues, but remained unfulfilled,” he said.

But MBDC has failed to develop the reclamation property up to now in violation of the terms of the 1988 sale agreement, Perito said.

He added that the former and current PEA executives are guilty of “gross inexcusable negligence and evident bad faith that warrant the filing of plunder and graft charges against them, for failing to cancel the contract, confiscate the property, and take punitive action against these erring PEA and MBDC officers for defrauding the state and the Filipino people of an estimated P41 billion.”

“As of this date, the only vertical structure found within the subject property is the Uniwide Mall,” Perito said, “and all other portions remain undeveloped, save for the construction of the Macapagal Boulevard, which somehow ate up portions of the subject property.”

Perito added that PEA officers from 1988 to the present “clearly exhibited gross inexcusable negligence and evident bad faith when they omitted to perform their obligation to enforce the rights of the government under the said Deed of Sale, thereby giving undue preference to MBDC to gain billions of pesos just by sitting on the property subject of the sale.”

Pig talk

A shipment of newly slaughtered pigs coming straight from the abbatoir is unloaded in front of a public wet market in Guadalupe, Makati City. Price of pork as of Saturday range between P170 and P220, but there are speculations of a price rise with the onset of seasonal rains. Stephanie Tumampos

DOJ ruling on Kentex blaze ‘obviously politicized’–Hicap

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PARTY-LIST lawmaker on Saturday criticized the “obviously politicized” recommendation of the Department of Justice (DOJ) on the Kentex fire.

Party-list Rep. Fernando L. Hicap of Anakpawis said that DOJ recommendation has excluded the Department of Labor and Employment (Dole), the Bureau of Fire Protection (BFP) and Department of the Interior and Local Government (DILG) from accountability.

“The DOJ is acquitting agencies under the Aquino administration, though, it is clear that if only they properly did their mandate, the deaths of many workers could be avoided,” Hicap said.

Earlier, a special panel of the DOJ has recommended the filing of criminal charges against Valenzuela City Mayor Rex Gatchalian, the owner of Kentex Manufacturing Corp. and other local officials following the Kentex fire that left 72 people dead.

However, Justice Secretary Leila de Lima said that the panel recommendations would still undergo a preliminary investigation by the department.

Moreover, Hicap, who filed House Resolution 2099

that called on the House to investigate the tragedy, said that during the congressional inquiry in May, the labor law compliance officer from the Dole admitted issuance of Certificate of Compliance to Kentex Manufacturing in September 2014 amid obvious fire and safety hazard existed at its factory in Valenzuela.

The lawmaker, quoting a statement of the Justice For Kentex Victims, a group of the victims’ families and the Kilusang Mayo Uno, said that the BFP, which is under the DILG did not issue a Fire Safety Inspection Certificate for 2014 and 2015, but did nothing to close down or close the operation of the factory.

Hicap, meanwhile, slammed the Dole for allowing the subcontractor operations of CJC Manpower Agency that is not registered with the Securities and Exchange Commission and the Dole, saying that the labor department recorded only 46 workers, while it actually has 200 workers.

“The twin criminal negligence of the Dole and the BFP led to the deaths of Kentex workers, the DOJ should include them on the list of those to be charged,” Hicap said. Jovee Marie N. dela Cruz

Bill requires TV networks to place subtitles during broadcast for deaf, hearing impaired

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lacement of subtitles during television broadcast is one of the features of a bill filed in the House of Representatives seeking to provide Filipinos with hearing impairment an access to all forms Party-list of communications in government and private sectors.

Party-list Rep. Leah S. Paquiz of ANG NARS and author of House Bill 5673, said television stations will be required to place subtitles or signed communication for the deaf and hard of hearing during their broadcast.

Paquiz said the National Telecommunications Commission shall require closed captioning and interpreter insets in news and public affairs programs.

According to Paquiz, communication accessibility is a legal right of people with hearing impairment to equal access to goods, services and facilities in the community, schools, public transactions in health systems, courts, quasijudicial agencies and other tribunals, broadcast media and workplaces.

“Communication and information accessibility of the deaf and people hard of hearing must be protected, in order for them to exercise their right to choose the mode and form of communication that will best suit them and serve them both in their formal learning and professional advancement,” Paquiz said.

The bill mandates the Department of Education (DepEd), Commission on Higher Education (CHED), Technical Education and Skills Development Authority, Early Childhood and Development Council and all other national and local government agencies involved to develop systems of communication, that meet the needs and potentials of Filipino deaf and hard of hearing.

A ll educational institutions shall provide augmentative and alternative communication like computer-aided transcription services, telephone handset amplifiers, assistive listening devices, hearing aids, open and closed captioning, video text displays, properly trained and qualified oral and signed interpreters.

The DepEd, CHED, National Council on Disability Affairs, together with concerned non-governmental organizations, shall develop a competitive and globally accessible standards for oral, sign language and deaf- relay interpreting, involving deaf individuals, teachers with experience in the education of the deaf and parents of the deaf, establishing a system of accreditation for interpreting.

Paquiz: “Communication and information accessibility of the deaf and people hard of hearing must be protected in order for them to exercise their right to choose the mode and form of communication that will best suit them and serve them both in their formal learning and professional advancement.”

The Basic Education institutions that enroll deaf and hard-of- hearing students are urged to use oral or signed communication or both with appropriate alternative and augmentative communication depending on their needs and potentials.

State Universities and Colleges are directed to undertake research on education and communication access for the deaf and hard of hearing and to include courses on different forms of communication in their inclusive education curriculum.

All courts, quasijudicial bodies, agencies and government institutions conducting investigations and hearings shall ensure the availability of oral and sign language interpreters in all proceedings involving deaf and hard-of-hearing persons.

Every office, company, institution and establishment shall take all reasonable measures that would provide an environment sensitive and responsive to the communication needs of the Filipino deaf and hard of hearing, including the conduct of deaf awareness and sensitivity training seminars.

Hospitals and other health facilities shall take steps to ensure access of the Filipino deaf and hard of hearing to health services, including the provision of interpreters for deaf and hard of hearing patients.

Oral, sign language and deaf-relay interpreting shall be provided whenever necessary or requested in all government offices and during forums, conferences, meetings, cultural events, sports competitions, community affairs and activities conducted by government agencies.

The Department of Labor and Employment shall ensure that workplaces and other institutions that employ deaf and hard-of-hearing persons provide for their communication and information access. PNA

SundayV

Busine

A4 Sunday, July 26, 2015

editorial

Remove tariff and nontariff barriers to trade

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ONG before regional integration entered the agenda of the Association of Southeast Asian Nations, tariffs and other barriers to trade among countries in the region have been going down. The purpose of this downward movement was to increase the trade and other forms of economic interaction among the region’s countries. Exports accelerated the development of South Korea, Taiwan, Hong Kong, Singapore and, more recently, China.

The Philippines itself has recognized the importance of exports as a means not just for stimulating growth, but for promoting employment, surely the most effective means for poverty reduction.

Now comes the news that the Philippine Exporters Confederation (Philexport) is complaining that local government units (LGUs) are setting up roadblocks to export development. The Philexport president, Sergio R. Ortiz-Luis Jr., is quoted as saying that local laws on trade and agriculture are limiting production for export.

This view was reinforced by the president of the Pilipino Banana Growers and Exporters Association (PBGEA), Stephen Antig, who has been reported as saying that his sector’s expansion has been impeded by some local governments that prohibit land and crop conversion. Ferdinand Y. Maranon, regional president of Philexport, corroborated the PBGEA claim, saying that, in Compostela Valley, there is a move to impose a fee of P5,000 for each production area exceeding 200 hectares in size.

Exporters’ organizations also point out that domestic transport regulations contribute to export constriction. There is the decades-old cabotage law that shields inefficient local shipping companies from competition by more efficient transporters, raising the transport costs of goods from Mindanao and the Visayas to the National Capital Region, often preventing them from reaching international markets. There are also LGUs that exact taxes on the transport of goods.

Clearly, there is a need for a uniform pursuit of policy by the national government and LGUs. LGUs must be informed of the national policy of encouraging and promoting exports be made supportive of the policy, and be given all necessary assistance to facilitate compliance with it.

If LGUs, in exercising the practically unbounded freedom of action given them by the Local Government Code, are pursuing their agenda to the point of ignoring or subverting national policies, then, we have a bigger problem than we think we have.

It is the duty and responsibility of the national government to align all subordinate levels of government to national policies. If additional laws must be passed to make this course of action happen, then such laws must be passed and implemented without delay.

Incidentally, it is not only with regard to exports that many LGUs seem to have an agenda of their own. They also seem bent on pursuing their own program with respect to mining. Here, too, is need for a realignment.

One thing that we must not tolerate if we are to have a government worthy of our respect one level of the state machinery going one way and another level going another way. There is need for LGUs to adapt barangay concerns to national priorities.

European federalism and missed opportunities

By Emma Bonino Inter Press Service

R

OME—“A serious political and social crisis will sweep through the euro countries if they do not decide to strengthen the integration of their economies. The euro-zone crisis did not begin with the Greek crisis, but was manifested much earlier, when a monetary union was created without economic and fiscal union in the context of a financial sector drugged on debt and speculation.”

These words, which are completely relevant today, were written by a group of federalists, including Romano Prodi, Giuliano Amato, Jacques Attali, Daniel Cohn-Bendit and this author, in May 2012. Those with a federalist vision are not surprised that the crisis in Greece has dragged on for so many years, because they know that a really integrated Europe with a truly central bank would have been able to solve it in a relatively short time and at a much lower cost.

In this region of 500 million people, another example of the inability to solve European problems was the recent great challenge of distributing 60,000 refugees among the 28 member-countries of the European Union (EU). Leaders spent all night exchanging insults without reaching a solution.

Unless the federalist program— namely, the gradual conversion of the present EU into the United States of Europe—is adopted, the region will not really be able to solve crises like those of Greece and migration.

It can be stated that European federalism—which would complete Europe’s unity and integration—is now more necessary than ever, because it is the appropriate vehicle for overcoming regional crises and starting a new phase of growth, without which Europe will be left behind and subordinated not only to the United States but also

Gospel

Sunday, July 26, 2015

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to the major emerging powers.

Furthermore, its serious and growing social problems—such as poverty, inequality and high unemployment, especially among young people—will not be solved. Within the federalist framework there is, at present, only the euro, while all the other institutions or sectoral policies (like defense, foreign policy and so on) are lacking.

Excluding such large items of public spending as health care and social security, there are, however, other government functions, which, according to the theory of fiscal federalism (the principle of subsidiarity and common sense), should be allocated to a higher level, that of the European central government.

Among them are, in particular, defense and security, diplomacy and foreign policy (including development and humanitarian aid), border control, large research and development projects, and social and regional redistribution.

Defense and foreign policy are, perhaps, considered the ultimate bastions of state sovereignty, and so are still taboo. However, the progressive loss of influence in international affairs among even the most important European countries is increasingly evident.

To take, for instance, the defense sector, as Nick Witney, former chief executive of the European Defense Agency, has noted: “Most European armies are still geared toward all-out warfare on the inner-German border rather than keeping the peace in Chad or supporting security and development in Afghanistan.

“This failure to modernize means that much of the €200 billion that Europe spends on defense each year is simply wasted,” and “the EU’s individual member-states, even France and Britain, have lost and will never regain the ability to finance all the necessary new capabilities by themselves.”

FTER this, Jesus went to the other side of the Sea of Galilee, which is the Sea of Tiber’i-as. And a multitude followed Him, because they saw the signs which He did on those who were diseased.

Jesus went up on the mountain, and there sat down with His disciples. Now the Passover, the feast of the Jews, was at hand. Lifting up His eyes then and seeing that a multitude was coming to Him, Jesus said to Philip, “How are we to buy bread so that these people may eat?”

This He said to test him, for He Himself knew what He would do. Philip answered Him, “Two hundred denarii would not buy enough bread for each of them to get a little.”

One of His disciples, Andrew, Simon Peter’s brother, said to Him, “There is a lad here who has five barley loaves and two fish; but what are they among so many?”

It should be noted that precisely because the mission of European military forces has changed so radically, it is nowadays much easier, in principle, to create new armed forces from scratch (personnel, armaments, doctrines and all), instead of persisting in the futile attempt to reconvert existing forces to new missions, while, at the same time, seeking to improve cooperation between them.

Why should it be possible to create a new currency and a new central bank from scratch, and not a new army?

Common defense spending by the 28 EU countries amounts to 1.55 percent of European gross domestic product (GDP). Hence, a hypothetical EU defense budget of 1 percent of GDP appears relatively modest.

However, it translates into nearly €130 billion, which would automatically make the EU armed forces an effective military organization, surpassed only by that of the United States, and with resources three to five times greater than those available to powers like Russia, China or Japan.

It would also mean saving an estimate €60 billion to €70 billion, or more than half a percentage point of European GDP, compared with the present situation.

Transferring certain government functions from national to European level should not give rise to a net increase in public spending in the whole of the EU, and could well lead to a net decrease because of economies of scale.

Taking the example of defense, for the same outlay a single organization is certainly more efficient than 28 separate ones. Moreover, as demonstrated by experiences with the North Atlantic Treaty Organization during the Cold War, efforts to coordinate independent military forces always produced disappointing results and parasitic reliance on the wealthier providers of this common good.

Jesus said, “Make the people sit down.”

Now there was much grass in the place so the men sat down, numbering about 5,000.

Jesus then took the loaves and when He had given thanks, He distributed them to those who were seated; so also the fish, as much as they wanted. And when they had eaten their fill, He told His disciples, “Gather up the fragments left over, that nothing may be lost.”

So they gathered them up and filled 12 baskets with fragments from the five barley loaves, left by those who had eaten.

When the people saw the sign which He had done, they said, “This is indeed the prophet who is to come into the world!”

Perceiving then that they were about to come and take Him by force to make Him king, Jesus withdrew again to the mountain by Himself.—John 6:1-15

Voices

essMirror

opinion@businessmirror.com.ph • Sunday, July 26, 2015 A5

Unpleasant truth in advertising D

Free Fire

By Teddy Locsin Jr.

ANNY Hakim in New York Times International writes that Kalles Kaviar is sadly a uniquely Swedish taste, like Marmite is uniquely English and peanut butter is universal. By the way, our native peanut butter led to the discovery of a major antibiotic because it killed scores of children. When a famous Nobel Prize American biologist looked into the matter, he discovered that we use old and fungal peanuts to make peanut butter which generates a poison. Taking off from this led him to the discovery of a major antibiotic. Philippine science is Nobel grade.

Anyway, all three are eaten out of habit. In Marmite’s case, the habit is

hard to acquire, so it advertises its nutritional value. But Kaviar unashamedly advertises itself as something only Swedes can manage to swallow.

One of its commercials has a genial Swede behind a kiosk trying to serve bread with Kalles spread on it. One man shakes his head disgustedly. A woman shoos him off. An old surfer tells him bluntly, “You don’t want to serve that to people, dude.” At the end, the Swede is showing sitting on the sand in the sunset, eating the pink goo at peace with himself and the tagline appears, “A very uniquely Swedish taste.”

Another commercial shows a taste test in Switzerland. A man says, looking up, saying “Hmmmm, it tastes…it

tastes…” Fantastic? A voice-over suggests. “No,” he answers emphatically.

In Budapest a woman politely says yes, but the look on her face says no.

Costa Ricans are shown laughing at it, while a Japanese woman tastes it and bows as she backs way and then gags discreetly into her hands.

Kalles is sold in a toothpaste tube, one million of which was sold in its first year. Today, 3,300 tons are sold every year. The TV ad campaign is genius. It sells the product as what it is something only Swedes have learned to like and most others find not to their taste.

But the underlying message is, but what if the Swedes are on to something? Why not give it a try? And it

works, people buy at least once and with 5 billion people on the planet it is safe to say the Swedish product has a bright future locked in.

My wife says that the Kalles Kaviar campaign can sell a candidate on the basis of their good if not so popular qualities, like having a functioning brain, using words to make sense and not just sounds, speaking straight and not in circles, being circumspect and not quick on the draw, suspecting what is popular could be wrong, and never patronizing common folk who don’t understand the issues because they turn to media to explain the issues to them.

As we all know, journalism is not a professional course, like medicine,

accounting and law. It is pretty much something you learn or pretend to as you go along. Then, there is speaking truth not to power, which is easy, but to popularity opens the socially awkward but otherwise superior candidate to the charge of envy. Never presuming one is attractive because media says so although no one wants to imagine you naked. We’re talking about a candidate who is ugly here, but who wins which immediately has media fawning on his looks even if he hasn’t any to speak of.

Maybe, if we treat the public with respect, they might reciprocate by voting the same way in the public interest. And then the tagline appears, “A uniquely intelligent choice.”

How terror attacks weaken Islamic State T

Bloomberg View

By Noah Feldman

URKEY’S air strikes against Islamic State (IS) and its decision to allow US warplanes to operate from its air bases are in direct response to terrorist attacks in the Turkish town of Suruc earlier in the week. The cause-and-effect relationship highlights what’s becoming a central strategic dilemma for IS. Ideologically, the organization embraces the jihadi techniques developed by al-Qaeda, which call for suicide bombings against civilians within regimes deemed to be the enemy. Practically, however, IS’s best chance of survival as a quasisovereign entity is to leave its Sunni neighbors alone in the hopes they won’t provide the ground troops that would be necessary to defeat the militant group.

The contradiction provides a glimmer of hope for the US, which knows that IS can’t be defeated unless its neighbors devote themselves to the fight: Maybe, just maybe, IS will be so foolish as to provoke the very response that the US has been unable to elicit using the logic of persuasion.

The Turkey attack is only the latest example of the dynamic. The horrific burning of a Jordanian pilot downed in December drew

an angry and aggressive response from King Abdullah. IS was certainly testing Jordanian resolve— and getting the answer that the kingdom would take a much more aggressive stance toward IS if its subjects were so tortured.

The bombing of a mosque in Kuwait at the end of June reflected a similar phenomenon. Although the attack was against Shiites, it nonetheless represented a direct threat to Kuwait’s Sunni emir. So far he’s been more cautious than King Abdullah in forming any military response.

The killing of dozens of mostly British tourists in Tunisia on the same day as the Kuwait bombing highlighted the same issues, albeit in a slightly more attenuated way.

The Tunisian government now has no doubt that IS is its enemy—but for the moment, Tunisia is far from the group’s heartland, and isn’t a credible candidate to send more than a token force against it. The UK, for its part, is already a strong IS opponent, and Prime Minister David Cameron used the opportunity to emphasize British support for operations against the group.

Yet, like the US, the UK has been chastened by the Western failures of Iraq and Afghanistan, and won’t

be part of a ground initiative in the foreseeable future.

On the surface, IS stands only to lose from provoking Turkey, Jordan, Kuwait and even Tunisia. So why are these attacks happening?

There are several possible answers, which are distinct yet interrelated.

Perhaps, the most intuitive is that IS has never rejected the alQaeda ideology of suicide attacks.

True, IS focuses on conquering and holding territory, in contradistinction to al-Qaeda’s strategy of confronting the enemy at its strongest point. That difference has made IS a much more formidable opponent than al-Qaeda thus far. But, many IS followers were previously al-Qaeda members or supporters.

There’s no clear ideological dividing line between the two organizations; the difference is mainly in strategy.

So it would be extremely difficult as an ideological matter for IS to reject suicide attacks.

A related possibility is that IS’s central command, to the extent one exists, can’t really direct or prohibit the efforts of suicide attackers acting in the name of the organization. At least, some recent terrorist attacks seem to have been made by al-Qaeda trained actors who simply announced that they

were now representing IS—like the perpetrator of the attack on the kosher supermarket in Paris in the same week of the Charlie Hebdo attacks. In general, IS benefits from spontaneous decisions by actors around the world to identify with the organization. It may be that IS simply can’t avoid the associated costs of attacks on parties that the group would be wiser to leave alone.

A third and final explanation is that IS is under a powerful strategic imperative to remain defiantly on the front pages of the world’s newspapers—and can’t always rely on territorial expansion to make news. At the moment, the group isn’t making spectacular territorial expansions. Holding territory and establishing governance is strategically wise. And some headlines can be garnered by acting like a state, collecting taxes, suppressing bribery and the like.

But terrorist attacks are nevertheless an important part of the public-relations strategy, to bring new supporters and streams of sympathetic funding. Recall that IS helped establish its global reputation by the beheadings of Western journalists. These acts served no immediate military strategic advantage. To the contrary,

they pushed the US to focus on IS much more than it otherwise might’ve done.

Nonetheless, to IS they made a certain sort of strategic sense: They showed that the group wasn’t afraid of the US and the West; they generated vast and lasting publicity; and they became a symbol of a certain utopian/dystopian approach to establishing an idealized IS. The terrorist attacks on the periphery possess some of the same virtues, albeit to a lesser degree.

All this leads to a very slim ray of sunshine on the otherwise bleak horizon of possibilities for defeating IS. In the end, it can only be defeated by a combination of US air support and willing local ground forces. Shiite militias in Iraq, and sometimes Kurdish peshmerga, are so far the only effective ground forces to have been deployed against it.

The US badly needs a Sunni Arab force on the ground to win.

It’s pretty clear by now that the US lacks the capacity to convince IS’s neighbors, including Saudi Arabia, to provide it. Here’s hoping Islamic State does the persuading on its own. That way, at least, some of the victims of its terrorist attacks may not have died in vain.

US Congress alarmed by Iran pact’s secret understandings

By Eli Lake and Josh Rogin Bloomberg View

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S the White House campaign to persuade Congress about the wisdom of its Iran nuclear deal moves into its second week, important components of the complex agreement are emerging that will be shrouded from the public, and in some cases, from the US government itself.

The existence of these secret clauses and interpretations could undermine the public’s trust in the Barack Obama administration’s presentations about the nuclear pact.

Already, Republicans and other critics of the deal have seized on the side agreements between Iran and the International Atomic Energy Agency (IAEA) as a weakness in the deal closed last week in Vienna.

T he controversy began on Wednesday when Secretary of State John Kerry told House lawmakers behind closed doors that he neither possessed nor had read a copy of two secret side deals between the IAEA and Iran, according to Rep. Mike Pompeo, a Republican member of the House Intelligence Committee, who was inside the session.

Congress hasn’t seen those side

agreements either.

“Kerry told me directly that he has not read the secret side deals,” Pompeo told us in an interview. “He told us that the state department does not have possession of these documents.”

In other cases, secret understandings were provided to legislators.

Congress on Monday was given a set of nonpublic interpretations of the Iran deal, according to House and Senate staffers who have seen the documents. These were part of 18 documents the White House provided to Congress as required under legislation passed this spring that gives Congress 60 days to review the Iran deal.

Of the 18 documents, six are classified or confidential, the staffers told us. These include secret letters of understanding between the US and France, Germany and the United Kingdom, that spell out some of the more ambiguous parts of the agreement, and classified explanations of the Iran deal’s provisions that commit other countries to provide Iran with research and development assistance on its nuclear program. There is also a draft of the US statement to be made public on the day the Iran agreement formally goes into effect.

Those are the secret understandings Congress and the administra-

tion have put on paper. But in the case of the side agreements with the IAEA, Congress and the executive branch may not have all the facts. In Wednesday’s closed session, Kerry sparred with Pompeo, who traveled with Republican Sen. Tom Cotton to Vienna last weekend to meet with IAEA officials.

Those agency representatives told the lawmakers that two secret side deals covered how the IAEA would be able to inspect the Parchin military complex and how the IAEA and Iran would resolve concerns about the possible military dimensions of Iran’s nuclear program.

The briefing for lawmakers was classified, but the Kerry-Pompeo exchange was not. Pompeo pressed Kerry on the details of the side agreements between the IAEA and Iran.

Kerry acknowledged he didn’t know all of the specifics.

A statement distributed by the state department on Friday disputed the characterization that the agreements between Iran and the IAEA were “secret.” Instead, it described them as “technical arrangements” and said US experts were “comfortable with the contents,” which the state department would brief to Congress if asked.

“It is standard practice for the IAEA and member-states to treat bilateral documents as ‘safeguards confidential,’ “ the state department statement said. “This is a principal the US has championed throughout the IAEA’s existence to protect both proprietary and proliferation sensitive information. We must be able to ensure that information given to the IAEA does not leak out and become a how-to guide for producing nuclear materials that can be used in nuclear weapons, and that countries know their patented or proprietary information won’t be stolen because they are released in IAEA documents.”

But while these agreements may be standard operating procedure in the case of other IAEA nuclear inspections, with Iran it’s potentially more serious. On Thursday, during an open session before the Senate Foreign Relations Committee, Republican Sen. James Risch said his understanding was that one of the IAEA-Iran side agreements would allow Iran to take its own environmental samples at Parchin. Speaking around the specifics, Sen. Bob Corker, the Republican chairman of the committee, compared this arrangement to the National Football League’s allowing athletes suspected of taking steroids

to mail in their own urine samples.

Kerry and others have told Congress that the agreement about Parchin and the understandings about IAEA inspections in general are largely technical and do not weaken a strong agreement. Needless to say, Pompeo disagrees. “Kerry gave no indications they are seeking these documents and there is no indication he is the least bit worried he doesn’t have access to this. The Ayatollah knows what’s in the deal but we don’t,” he told us, referring to Iranian Supreme Leader Ali Khamenei.

For the Obama administration, not having copies of the side agreements between Iran and the IAEA is convenient. The law requires it to give Congress all the documents it possesses and only those documents. If the side agreements are outside the reach of Kerry, they are outside the reach of Congress and the American people.

That fact undermines Obama’s argument that the overall deal can be verified and is transparent. Already, Iranian leaders have publicly spoken about the Iran deal in terms vastly different from their American counterparts. The existence of secret understandings of that deal will only exacerbate this tension over time.

EconomySunday

www.businessmirror.com.ph • Editor: Vittorio V. Vitug

BusinessMirror

Lawmaker to SEC: Strike hard vs firms linked to pyramiding

By Jovee Marie N. dela Cruz

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LAWMAKER on Saturday urged the Securities and Exchange Commission (SEC) to be more proactive in cracking down on so-called investment companies that are actually engaged in pyramiding scams.

Nationalist People’s Coalition Rep. Sherwin T. Gatchalian of Valenzuela, member of House Committee on Trade and Industry, issued a statement following reports that hundreds of ordinary people have been lured by the promise of high returns for their investments with One Dream Global Marketing Incorporated.

One Dream officers are now the subject of syndicated estafa complaints filed by their victims.

News reports said that One Dream enticed investors under a profit scheme, with a promised payout of P1,300 after four days for an P888 investment. But the entity, which only started in May this year, has no permit to engage in selling and marketing investment products.

“It is the job of the SEC to scrutinize entities registering as investment companies and deny them the much-needed SEC registration which legitimizes firms engaged in pyramiding scams like One Dream Global Marketing Inc.,” Gatchalian said.

Gatchalian said that the complainants who are mostly from Lipa, Batangas, are ordinary Filipinos who just wanted to double their money in a short period of time.

“This has got to stop and the SEC has a vital role in this,” Gatchalian said.

However, Gatchalian said that unfortunately, the SEC has not been proactive in detecting SECregistered firms engaged in pyramiding scams.

“What the SEC does is to appeal to those

who have information about unauthorized investment-taking activities to report it to the Enforcement and Investor Protection Department,” he said.

The lawmaker said that over the years, thousands of investors lost their savings from the pyramid scams of companies, such as the Grupo Mateo Pilipinas Investors Association Inc. (Mateo Group), headed by Ervin Mateo, and Multinational Telecoms Corp. (Multitel), led by businesswoman Rosario Baladjay.

“Mateo and Baladjay were arrested in 2003, but the status of their respective cases filed by the National Bureau of Investigation remains unclear. Among the victims of the Mateo Group and Multitel were active and retired generals who invested their millions worth of savings hoping to double their money,” he said.

More recently in 2012, complaints were filed over the P12-billion pyramid scam of Aman Futures boss Emmanuel Amalilio, alias Mohammad Kamal Sa’aid, who is said to be a Malaysian.

In 2012 he said that the Grand Alliance of Business Leaders Association Inc. (Gabai), reported to be the marketing arm of the South Luzon Multipurpose Cooperative, allegedly duped its investors into paying as high as P175,000 weekly for a 40-percent return.

Gatchalian said there are often “red flags” that can be observed from scam operators providing false information when they register their companies with the SEC. “The SEC can create a team who will check on these questionable investment firms applying for SEC registration. The same team can review the list of registered firms suspected to be engaged in pyramiding and move for the revocation of their registration papers,” Gatchalian added.

Solar, wind projects cap won’t benefit renewable energy players–RE exec

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N official of a leading renewable-energy (RE) developer said over the weekend that the proposal to limit the capacity of solar and wind power projects is disadvantageous to all RE players.

National Renewable Energy Board (NREB) Chairman Pedro H. Maniego Jr. earlier proposed a cap of 50 megawatts (MW) for every solar project that will be built and 100 MW for every wind project so the feed-in tariff (FIT) scheme could accommodate as many projects as it can.

Bronzeoak Philippines Inc. Director Don Mario Dia said RE developers would have to undergo a tedious process of scouting for a land where the project will be built, as well as securing the necessary permits and clearances from local governments.

“If my proposed project is more than the cap proposed by NREB, say double the cap, then I have to do all these processes all over again.

Imagine the time, effort and money that could be saved if no such cap will exists,” he said.

San Carlos Energy Inc. (SaCaSol), a joint venture between Bronzeoak and ThomasLloyd, has plans of putting up a 70-MW solar project on Negros Island next year. This is on top of its 22-MW solar facility that is already operational, while another solar project with a capacity of 23 MW will be operational in August.

Apart from these, SaCaSol is also involved in two more solar projects. A 32-MW solar farm in La Carlota City and a 48-MW plant in the municipality of Manlapa.

Dia said the company’s La Carlota project will be commissioned in January next year, while the Manlapa project will be finished

by February next year.

“The dilemma here is the land where the project will be built. The land is going to be an issue from the onset. It’s a question of whether to lease or purchase. Permitting and licensing are very crucial also,” said Dia, who added that the proposal needs further studied.

A 60-MW wind farm is also in the pipeline for Bronzeoak.

Earlier, the Philippine Solar Power Alliance (PSPA) thumbed down NREB’s proposal, saying this will only discourage investors.

“I have never seen any installation target in the whole world that caps a per project size.

We will have to find the commercial basis for such because sometimes your environment does not allow you to recover your cost at 50 MW because you have to understand that solar is resource based,” said Tetchi Cruz-Capellan, PSPA founder.

“So, if the resources are like, for example, the terrain, you have to cover more as much as possible to generate, and putting a cap per project is not really something that one should think about,” she added.

At present, there is no limit as to how big or small any of the RE projects should be. It is the sole discretion of the RE developers to develop as many RE projects as it can with no cap on capacity.

Aside from wind and solar, RE also includes biomass, geothermal, ocean and hydro.

Maniego said though that the cap proposal is only for solar and wind power projects.

“We want to spread the projects over a wide number and to also increase the people who can pursue the technology later on,” Maniego earlier said.

There is a 500-MW cap in capacity allocation in all solar projects and 400 MW in all wind power projects. “There is an existing allocation of 500-MW in solar. Now, if you put a 50-MW cap on per solar project then there will be 10 solar projects.

This is what other countries are doing. They don’t want to limit the participants to a small number,” Maniego said.

NREB is the body tasked by the Renewable Energy Act of 2008 to recommend policies, rules and standards to govern the implementation of the law, which granted fiscal and nonfiscal incentives to RE projects. Lenie Lectura

Sunday, July 26, 2015 A3

MVP sets Japan visit next month to possibly close $2-B LNG deal

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By Lenie Lectura

he top official of the country’s largest power-distribution firm, Manila Electric Co. (Meralco), will visit Japan next month to continue discussions with Osaka Gas Co. Ltd. in hopes to seal a partnership for an integrated LNG (liquefied natural gas) project.

“I will be meeting them in the first of August for further discussions,” Meralco Chairman Manuel V. Pangilinan said. A 60-40 venture, in favor of Meralco, is being eyed for the LNG project estimated to cost over $2 billion.

“Osaka Gas will have a 40-percent stake because it has the land and Meralco wants to do 60 percent,” the Meralco executive said. Meralco Powergen Corp., a unit of the utility

firm, will undertake the project on behalf of Meralco.

Initially, the two are planning to build a 1,500-megawatt (MW) gasfired power plant that will include a terminal for the LNG. Pangilinan said the plant is likely to be built in Luzon where the demand for power is expected to increase, adding that the ambitious project will be built in several phases.

However, the plan is dependent

on an ongoing feasibility study, the results of which would be released by end of this year.

“We’ll find out before the end of the year if it’s a go,” Pangilinan earlier said.

He also explained the need to partner with a gas expert overseas to “spread the risk,” citing the huge project cost involved.

LNG is a natural gas that has been converted into a liquid state for easier storage and transportation.

Upon reaching its destination, LNG is re-gasified so it can be distributed through pipelines as natural gas.

“You need a gasification plant because we need to import gas,” Pangilinan had added.

Aside from Meralco, other industry players harboring plans to built LNG facilities include Shell Philippines and First Gen Corp. of the Lopez group.

“We will pioneer the entry of imported LNG into the country by constructing the country’s first LNG regasification terminal adjacent to our power plants in Batangas,” First Gen President Francis Giles Puno had

said, adding that its planned LNG import terminal will cost $1 billion.

First Gen owns the Santa Rita and San Lorenzo power plants in Batangas. These are the two of three power plants fueled by the Malampaya facility. Together, they generate a combined 1,500 MW. The third is the 1,200-MW Ilijan power plant owned by Kepco Ilijan Corp. All three power plants generate a total of 2,700 MW, which accounts for about 40 percent of Luzon’s power requirements.

Shell is also planning to build an LNG import facility near its oil refinery in Batangas. However, this plan is still dependent on the final investment decision (FID) from its parent firm Royal Dutch Shell Plc. Shell Country Manager Edgar Chua said that the FID is dependent on whether it can secure contracts for off-takers of the gas. If successful, Shell can then proceed to securing the FID. “We are engaging different parties so we can finalize an off-take agreement,” Chua said.

DND optimistic in getting modernization budget

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HE Department of Nat ion a l Defe n se (DND) hopes that members of Congress will see the necessity of acquiring the a s s e t s a nd equ ipment ANDOLONG listed under its proposed P25-billion modernization budget for next year.

The modernization money is part of the P172-billion overall budget of the defense department next year, which some groups are questioning as it increased by P72 billion from the current year.

“We all know that we are not only addressing issues involving the West Philippine Sea, we also have our internal security operations. The earlier the budget is approved, the better,” DND Public Affairs Service Director Arsenio Andolong said.

Andolong said that, while they understand that next year’s allocation for the DND has to go through scrutiny by Congress, it should not affect the whole process, or even the procurement of the already itemized assets and equipment.

The P25 billion proposed for next year’s phase of the military modernization has been allotted for the acquisition of two frigates, two twin-engine long-range patrol aircraft and three aerial surveillance radars.

Part of the money has also been earmarked to pay for the amortization of 12 FA-50 lead-in fighters jets from South Korea, two of which are expected to be delivered in December.

Last year the DND started scouting for frigates, by initially setting its sights on the Italian-made Maestrale, but after a team of DND officials went to Italy, the department backed down.

Defense Secretary Voltaire T. Gazmin said that the Maestrale was expensive, and worse, second hand.

The amount alloted to acquire the frigate could already finance two brand new frigates, he said.

This prompted the DND to eye brand new frigates made in South Korea.

Andolong said the P25 billion will spell a lot in equipping the military, which lags behind its neighbors in terms of assets and equipment.

Meanwhile, Nationalist People’s

Ilonggo products showcase Micro, small and medium enterprises (MSMEs) in Iloilo City exhibit their quality local products during

the Asia-Pacific Economic Cooperation (Apec) meeting on Thursday and Friday. In cooperation with the Department of Trade and Industry, the Ilonggo MSMEs presented their products suited for distribution in global value chain. PNA

Coalition Rep. Rodolfo “Rodito” Albano III of Isabela supported the Aquino administration’s effort to modernize the military by providing substantial funds for the purchase of new and modern military equipment.

Albano, member of the House Committee on National Defense and Security, said President Aquino has set its priorities right by allocating

the P25 billion to modernize military equipment, facilities and logistical support for troops, which had been inadequately attended to in the past administrations.

“It is perfectly understandable that the Aquino administration would endeavor to fast-track the modernization program of the Armed Forces in light of internal and geopolitical security threats and

from the inability of past administrations to address the needs of the nation's militry,” he said.

Albano said the decision of the Aquino administration to acquire two frigates, two twin-engine longrange patrol aircraft, three aerial surveillance radars and equipment for front line troops provides a strategic and long term national security legacy of the president.

www.businessmirror.com.ph

RegionsSunday BusinessMirror

Mining company promises not to harm environment

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GERTON Gold Philippines Inc., whose proposed gold project in Lobo, Batangas, is being opposed by the local government and other groups, will continue to implement its environmental enhancement and social-development programs, a company official said.

Edsel Abrasaldo, president of Egerton Gold Philippines, remains optimistic that the gold project in Lobo will push through, even as the Sangguniang Bayan of Lobo had reportedly withdrawn support for the project.

“The programs are continuing, both environmental and social. Until we see the actual document [stopping the project], there is no reason for us to stop exploration,” he said.

The project is facing stiff opposition because of its potential adverse environmental impact that may cause irreversible damage to Lobo’s coastal and marine environment and threaten the Verde Island Passage, described by scientists as “the center of the center of the world’s shorefish biodiversity.”

The groups Alyansa Tigil Mina and Kalikasan-People’s Network for the Environment (Kalikasan-PNE) said the project is inching closer to starting commercial operation and people of Lobo were not properly consulted about the project.

Abrasaldo said there is no truth to the claim of some quarters that the communities were not properly consulted.

In fact, he said people in affected barangays gave their consent and approval for the project. He said the company has been supporting the local government of Lobo in providing important environmental and social services to the people for 12 years now, and will continue to do so until the company’s project receives social acceptance.

In a statement e-mailed to the BusinessMirror, Abrasaldo said local officials of Lobo are caught between two opposing forces. “We recognize that the local government officials are caught between outside vested interests, such as [environmentalist] Gina Lopez and their own community interests,” he said.

“We sympathize with them. They have been subjected to intimidation and intense pressure by outside

interests, and they are concerned about this. We will deal in a fair, professional and friendly way with the Municipal Council, as has been our practice for the past 12 years,” he added.

According to Abrasaldo, all 10 potentially affected barangay councils in Lobo had unanimously granted their consent for the project

by January 23, with the municipality council following suit on April 20, reflecting the social and economic interests of their constituencies.

He said that anti-development advocates have been pushing local officials to reverse their support, even though the development project will be beneficial to the people.

The project, he said, will generate approximately P600 million in taxes during its operation.

The company is allotting P270 million for its environmental enhancement and social-development programs in Lobo.

He added that the company will abide by international standards and mined out areas will be rehabilitated upon closure “to provide excellent amenities and landforms in consultation with local wishes.”

Such plan includes ecotourism facilities established during the life of the mine that will continue to enhance the tourism potential of the region both during and after the mine has operated, he said.

Allaying fears of the potential adverse environmental impact of the company’s operation, he said that under its two Mineral Production Sharing Agreements, which cover approximately 2,175 hectares, only less than 1.5 percent of that area, or 26 hectares, will actually contain mine pits. This comprises 0.137 percent of Lobo’s land area, he said.

According to the web site of Mindoro Resources Ltd. Inc. the company that funds Egerton Gold Philippines Inc. project in Lobo, the Lobo gold mine was operated between 1966 and 1969. Despite high-grade gold taken from the mine, gold was not a significant component at that time, owing to the $30 per ounce gold price.

The company hopes to exploit the remaining mining reserve of 90,700 tons at a high 20.5 grams per ton gold, or 60,000 ounces.

Mabini’s transcendence over his disability inspires Albay’s DRR-CCA programs

By Johnny C. Nunez Philippines News Agency

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EGAZPI CITY—Filipino hero Apolinario Mabini, otherwise known as “the Sublime Paralytic,” is Albay’s model in resilience, particularly in disaster risk reduction (DRR) and climate change adaptation (CCA), on which the province has excelled.

Albay Gov. Joey S. Salceda said his province’s DRR-CCA initiatives were inspired by Mabini’s transcendence over his disability during the Philippine Revolution in the 1890s which, he stressed, was a significant feat of survival toward greatness.

Albay held a special program commemorating Mabini’s 151st birth anniversary on July 23 at the provincial capitol here, where a life-size statue of the seated “Brains of the Revolution,” has been on display for over a year now.

The program’s theme was “Mabini: Talino at Paninindigan” (Mabini: Brilliance and Conviction).

Mabini’s statue here is a masterpiece of known sculptor Jukie Llutch, whom Albay commissioned for the job prior to the hero’s sesquicentennial anniversary celebration last year. His statue has since then symbolized Albay’s resilient spirit, and its successes in DRR and CCA. Salceda said he had always regarded Mabini as his personal model and national hero for disaster risk-reduction management and climate change adaptation within the context of the struggle by the disadvantaged and

disabled for social justice.

“Kahit vulnerable, lumaban siya at ginamit ang talino laban sa mapangaping kolonialismo, at sa ngayon marahil kung siya’y buhay pa, ay lalaban din siya sa climate change and social injustice [Despite being vulnerable, he fought against the colonial powers, using his intelligence, and perhaps, if he is still alive now, would still stand against climate change and social injustice],” he said.

Albay’s pioneering CCA and DRR programs have earned awards and recognitions from both national and international institutions. Among such honors are three Gawad Kalasag Awards from the National Disaster Risk Reduction and Management Council, and a Hall of Fame niche in the same state agency.

Salceda said Albay’s successes drew strength from various inspirations, among them the country’s heroes, especially Mabini, who had demonstrated that there was no limitation to the sincere goal of protecting and fighting for one’s country and countrymen.

The fight for survival in today’s world against clear and present dangers—DRR and CCA foremost among them—can be likened to Mabini’s fight against foreign oppressors during his time, which can only attain victory through the use of right planning and tact, he said.

The July 23 commemorative program for Mabini’s 151st birth anniversary here featured the reading of the hero’s famous “True Decalogue” and wreath laying at the foot of his statue.

Sunday, July 26, 2015 • Editor: Dionisio L. Pelayo A7

Lina tells Mindanao exporters to follow customs procedures

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By Manuel T. Cayon | Mindanao Bureau Chief

AVAO CITY—Customs Commissioner Alberto D. Lina appealed to Mindanao exporters to help curb corruption in the bureau by “educating your members” to follow trade and customs regulations.

“A s we intensif y our fight against corruption, please help us create an atmosphere of informed compliance by educating your members, your customers and the whole trading community to follow trade regulations and customs procedures, make proper declarations, and pay the correct duties and taxes,” Lina said in his speech before the Mindanao Exporters Congress held here on Thursday.

He said this may be “a very simple request from your organization,” but he said this self-education would “help us, as well, to clean our custom houses and rid ourselves of

NPA rebels gun down former Army man, military ‘informer’ in Bicol

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AMP GEN. SIMEON A. OLA, Legazpi City—New People’s A r my (NPA) members shot dead a former Army soldier who was walking alone on Saturday morning at Purok 4, Barangay Ramay, Oas, Albay.

The fatality, Pfc. Ramil Oray, 29, was a former member of the Second Infantry Battalion, Ninth Infantry “Spear” Division of the Philippine Army based in Barangay Tula-Tula Grande, Ligao City, and a resident of the village.

An initial police report said the incident happened at about 7 a.m. Oray was on his way home when the armed rebels blocked his way and gunned him down.

The assailants fled toward the mountainous portion of the village.

The former cosoldiers of Oray immediately responded to the crime scene where authorities recovered empty 5.56 millimeters shells from the M-16 rifle reportedly used by the rebels.

Police said the rebels suspected the former soldier to be giving information to the the military regarding their activity.

Meanwhile, another group of rebels shot dead a helper in a piggery farm, who they suspected of being a military informant on Friday night in Barangay Genorangan, Lagonoy, Camarines Sur. Police identified the victim as Mario Verdadero, 45, married, and resident of the village.

A police report said that at about 6:30 p.m., Verdadero was busy with his work in the farm when the suspects arrived, poked guns at him, tied his hands and shot him.

T he d issidents casu a l ly walked away after the execution.

The police said the NPA suspected Verdadero of being a military asset, giving information to the government forces about their activities in the area, which his relatives have vehemently denied. PNA

crooks in customs service.”

“Some people may say: ‘Comm, dapat po ay linisin nyo muna ang bakuran ng Customs bago po ang sa amin.’ I will agree with you on that, at eto po ay kasama sa ating mga priority action items sabureau,” he said.

Lina assured that agency cleansing would remain a major thrust of his management of the Bureau of Customs (BOC), but he said a lot of work would be done on refining the policies and simplifying procedures to remove avenues for corruption.

Internationally, for instance, the bureau would “ benchmark

w ith customs administration among member-countries of the Association of Southeast Asian Nations and the World Customs Organization, study their experiences and adopt best practices.”

Locally, he said, the bureau would have its hands full of making it easier for the flow of goods from the ports to their destination markets or clients.

“We would ensure the delivery of fair, speedy and hospitable services to everyone,” he said, citing measures to improve the use of digital and information technology, automation, as well as using the software applications in the Customs offices nationwide.

“Relevant information and data are available online in the Customs web site, which include FAQs [frequently asked questions] on impor t and ex por t transactions, tariff classification, basic duty computation and reference values, among others,” he added.

“We are now updating and will soon publish a BOC Code of Regulations and Manuals, a compilation of various regulations and processes of the bureau that will serve as a single reference for

all stakeholders. We have also integrated Google Apps in the bureau,” he added.

“We took our own steps and continue with the works of my predecessors in the bureau who have started many reforms so that customs authorities will no longer be perceived as the traditional gatekeepers, representing a barrier through which international trade must pass,” he said.

Lina said the agency should speed up operations, but would still take caution. “Time is of the essence for us and from day one, I emphasized to my whole team at the bureau to hit the ground running in order to institutionalize and implement many of these reforms.”

“If you have import transactions, do not be sur prised if one of you may be the subject of Customs post entr y audit process, which is now under the Department of Finance-Fiscal Intelligence Unit. My advice to you then, conduct due diligence, and make sure that your company and your brokers are compliant with customs trade regulations and existing record-keeping requirement,” he said.

2nd Front Page BusinessMirror

A8 Sunday, July 26, 2015

DOTC to buy 120 train cars for LRT 1 this year

A

By Lorenz S. Marasigan

kevin dela cruz

S part of its last push to improve the state of the railway systems in the Philippines, the government will spend about P30 billion to procure 120 train cars for the Light Rail Transit (LRT) Line 1 this year.

Transportation Secretary Joseph Emilio A. Abaya said the Aquino administration will shell out billions of pesos to augment the capacity of the country’s oldest overhead train line, which runs from Roosevelt Avenue in Quezon City to Baclaran, Parañaque City through Rizal and Taft avenues in the cities of Caloocan, Manila and Pasay.

“We will acquire 30 four-car trains or 120 coaches, as part of the LRT Line 1 Cavite Extension Project, which will extend the current line from Baclaran to Niog in Bacoor, Cavite. This will be bid out

later this year,” Abaya said.

He was referring to the P65billion railway deal that Light Rail Manila Corp. (LRMC) of Metro Pacific Investments Corp. (MPIC) and Ayala Corp. bagged last year.

The contract mandates the company to extend, operate and maintain the oldest overhead railway system in the country under a 32-year concession agreement.

Under the contract, the consortium will operate and maintain the existing line, and construct an 11-kilometer extension from the present end point in Baclaran to

the Niog area in Bacoor, Cavite.

A total of eight new stations will be built along this route, which traverses the cities of Parañaque and Las Piñas up to Bacoor, Cavite.

The extension is expected to enhance commercial development around the rail stations.

LRMC will start operating and maintaining the LRT Line 1 by October this year, and the construction of the additional stations to Cavite will start thereafter. It will take five years from now for the extension to be commercially operational.

In addition, the government is also planning to further extend the train line all the way to Dasmariñas in Cavite.

It will cover 19 km of service line, running from Niog, Bacoor, to Dasmariñas City.

The proposed right-of-way alignment is along the Aguinaldo Highway with seven stations, namely, Niog, Tirona, Imus, Daang Hari, Salitran, Congressional Avenue and Governor’s Drive.

The project is expected to provide rapid and reliable access to and from the densely populated residential suburban communities south of Manila, and the various strategic commercial, industrial and educational districts in Metro Manila.

It aims to provide vital access to central Manila, offering a more efficient transport alternative than road-based services.

Ultimately, the infrastructure aims to enhance the competitiveness of both Metro Manila and the Cavite province, spurring economic development along the extension corridor.

The government has awarded 10 contracts since it launched the Public-Private Partnership (PPP) Program in late 2010, namely:

n the P2.2-billion Daang HariSouth Luzon Expressway project, bagged by Ayala Corp. in 2011;

n the P16.42-billion first phase of the PPP School Infrastructure Program (PSIP), which went in 2012 to the consortium formed by Megawide Construction Corp. and Citicore Holdings Investment Inc., as well as the BF Corp.-Riverbanks Development Corp. Consortium;

n the P15.68-billion Ninoy Aquino International Airport expressway, given to San Miguel Corp. unit Vertex Tollways Development Inc. in 2013;

n the P3.86-billion PSIP Phase II contract, partially awarded in 2013 to Megawide and the BSP & Co. Inc.-Vicente T. Lao Construction consortium

n the P5.69-billion Modernization of the Philippine Orthopedic Center project, which went to the Megawide-World Citi Inc. consortium, also in 2013.

n the P1.72-billion Automatic Fare Collection System contract, awarded to the AF Consortium of Ayala and MPIC in 2014;

n the P17.5-billion MactanCebu International Airport New Passenger Terminal project, bagged in 2014 by Megawide Construction Corp. and GMR Infrastructures Ltd.;

n the P64.9-billion LRT Line 1 Cavite Extension deal, awarded in 2014 to LRMC of Ayala and MPIC;

n the P2.5-billion Integrated Transport System Southwest Terminal, won by Megawide and partner Walter Mart Property Management Inc. of billionaire and retail magnate Henry Sy in January;

n the P35.42-billion CaviteLaguna Expressway, bagged by MPCALA Holdings Inc. of MPIC in June.

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

www.businessmirror.com.ph

BAP head says DBP, LandBank merger positive for Philippines

By Bianca Cuaresma

T

HE merger of two government-owned and -controlled banks will be good for the country amid opposing views expressed by some experts in the recent months, a local banker said.

Bankers’ Association of the Philippines (BAP) President Lorenzo V. Tan said, in response to the BusinessMirror’s query, that the merger of the Land Bank of the Philippines (LandBank) and the TAN: “The merger will be Development Bank of the Philipgood for the country.” pines (DBP) is beneficial not only for both banks but for the country, as well.

“If structured very well, [the] merger of LandBank and DBP will be good for the country. Our banks are small compared to banks in Thailand, Singapore and Malaysia. You need scale to lower unit costs and expand market reach,” Tan said.

Earlier, reports said President Aquino refused to approve the merger on the question of the future of bank employees.

“You wanted to make the bank bigger, but why are you laying off employees?” Mr. Aquino was quoted as having asked the banks’ officials in Malacañang last week.

The bill for the merger has also been getting pressure and opposition in Congress.

“I oppose the merger of LandBank and DBP, because it will create a monopoly for local government accounts, since they are the dominant government financial institutions that can lend money to local governments,” Nationalist People’s Coalition Rep. Sherwin T. Gatchalian of Valenzuela was quoted as saying.

Bangko Sentral Deputy Governor Nestor A. Espenilla Jr., who handles the Supervision and Examination Sector, earlier said that the central bank has not yet formally received the application for the merger.

Tan, meanwhile, said the key to the success of the merger would still depend on how much they invest in their people and on technology.

In May the House of Representatives approved House Bill 5755, authorizing the merger of DBP and LandBank, while the Senate version of the measure is still pending at the committee level.

The proposal designates LandBank as the surviving entity.

RCBC exec optimistic on SME loan growth D

ESPITE the administrative burden of granting loans to small and medium enterprise (SMEs), outlook on SME loan growth remains positive, on the back of business expansions under the Association of Southeast Asian Nations (Asean) integration.

Rizal Commercial Banking Corp. (RCBC) Senior Vice President for Commercial and SME Banking Segment Maria Angela V. Tinio said they have seen robust growth in lending to SMEs in the past years, and that will continue to happen in the coming years because of the Asean integration.

The bank targets to grow SME loans by 30 percent this year.

RCBC’s SME loan portfolio stood at P25 billion as of June. The bulk of the loan went to wholesale and retail; financing companies, like cooperatives; construction and real-estate sector.

Tinio said among the challenges that banks face is the availability of financial statements and collateral, especially in mom-and-pop businesses.

“We just look at their cash flow, as long as it’s strong and profitable and they are not divesting funds, we will lend to SMEs. We consider also the length of time, they are into that business; and if it’s long enough, there’s no need to come out with collateral,” she said in a news conference on Friday.

Since they deal with SMEs,

some of the small businesses lack technology and sophistication and, because they are small, they borrow in small amounts. These are factored in to the administrative costs of the bank.

“Lending to SMEs is administratively burdensome, too, that’s why we encourage them to use online channels,” she said.

RCBC First Vice President for Commercial and SME Segment National Corporate Banking Group Arlene Leyco explained: “If a company borrows P100 million, you only need one personnel to monitor that account; compared to small accounts, say, P10 million each for 10 borrowers, that would need 10 personnel. That’s why it is administratively burdensome.”

“We want to reduce transaction cost, so, instead of going over the counter, SMEs can go online,” she added.

Tinio said they support the SMEs because of their need to be competitive, especially when the Asean region is transformed into a single market.

“We want to guide the small enterprise, because we do not want them to be forever small. Eventually, the small enterprise will become medium, and the medium will become a large enterprise.

We’re hoping that we can be part of that transition. It’s a fulfillment on our part to see them start out small and, eventually, turned into a big corporation,” Tinio said.

She noted that top banks, like BDO Unibank Inc., Metrobank, Bank of the Philippine Islands, Security Bank and EastWest Bank were aggressively expanding their respective SME businesses.

“SME lending business is very competitive. We’re not the only banks that are running after SMEs. Under Asean integration, we will have foreign banks that are coming in. I don’t know how they will position themselves, but what I’m sure of is that there’s a lot of room to grow the SME lending. We want to make ourselves accessible, as more satellite offices will be put up this year. We want to make ourselves more reachable and visible in many provinces,” Tinio said. Genivi Factao