three-time rotary club of manila journalism awardee 2006, 2010, 2012
U.N. Media Award 2008
BusinessMirror
www.businessmirror.com.ph
A broader look at today’s business
n Sunday, June 21, 2015 Vol. 10 No. 255
Govt seen to bid out five regional airport deals piecemeal By Lorenz S. Marasigan
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HE government is not keen on bidding all five of the regional airport contracts into one multibillion-peso deal, an official from the transport department said. Transportation Undersecretary for Planning Rene K. Limcaoco said the government is sticking with its terms for the auction for the the regional airports under the Public-Private Partnership (PPP) Program. In saying this, the depart-
ment effectively denied the request of Metro Pacific Investments Corp. (MPIC) of bundling the two-package deal into one, as it will be more attractive to foreign investors. The Department of Transportation and Communications has also revised the
guidelines of the bidding, allowing a group to win the two bundles. It also allowed the winning groups to participate in the bidding for other airportdevelopment projects, such as the redevelopment of the Ninoy Aquino International Airport (Naia) and the Clark International Airport. “Participants or winning bidders in the regional airports projects will not be disqualified from participating in the Naia and Clark airports projects on the ground of such participation in or winning in the regional airports projects,” Limcaoco said. There are six groups interested to vie for the two-package deal. They are San Miguel Corp., Aboitiz Equity Ventures See “Airport Deals,” A2
Study: Retailers must adapt to changes By Roderick L. Abad
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HE global retail scene is forecast to be different in the next 10 years, and brands need to adapt to business changes and the digital ecosystem to survive the competition, according to a study. TNS and Kantar Retail conducted a research to better understand the buying habits, behavior and decision-making process of shoppers the world over.
Their work indicates that retailers and brands need to start preparing for massive technology, demography and urbanization-led disruption to know how shoppers purchase and the business of retailing. “The future of retailing and shopping is going to change in 2015. There are six areas in which retailers and manufacturers need to build competencies,” said Tara Prabhakar, managing director for Retail & Shopper at TNS and Kantar Retail Asia Pacific, while citing these to include gathering, connecting, delivering, paying, trading and helping.
PESO exchange rates n US 45.0170
In addition, she noted the three key elements of the business of retailing that must be considered: the “who,” or the people doing the shopping; the “how,” or the activities involved in reaching and connecting with them; and the “what,” or the actual transaction that takes place. “These elements will evolve dramatically in the future, so brands need to make sure they are on the front foot to avoid extinction,” she explained. To become more successful in the new retail environment, Kantar Retail has developed See “Retailers,” A2
P25.00 nationwide | 8 sections 36 pages | 7 days a week
Economists: China killing U.S. factory jobs
week ahead
ECONOMIC DATA PREVIEW n Previous week: The peso continued to depreciate on average for the week, putting a positive sentiment on the US dollar. The peso hit 45.2 to a dollar on Monday, to slightly strengthen on Tuesday at 45.14 to a dollar. The peso then reverted back to 45.18 to a dollar on Wednesday—moved by market sentiment over the then upcoming Federal Reserve meeting. The peso regained value and went back to trading in the 44 territory on Thursday at 44.95 to a dollar, but slumped back to 45.11 to a dollar at week’s close. The average value of the peso is at 45.116 to a dollar, weaker than the average in the previous week at 45.019 to a dollar. The total traded volume is also larger at $3.119 billion compared to the previous week’s $2.595 billion. n Week ahead: The local currency is expected to be affected by developments abroad next week. A trader told the BusinessMirror that the peso is bound to range at 45.3 to 44.85 to a dollar in the coming week.
June 25 Thursday
Monetary-policy stance
n Previous monetary-policy decision: In its third monetary-policy meeting, the Monetary Board decided to retain interest rates and the settings of its other monetary-policy tools for the fifth consecutive meeting this May. In particular, interest rates were unchanged at 4 percent for the overnight borrowing, or reverse repurchase facility, and 6 percent for the overnight lending, or repurchase facility. The rates on the Bangko Sentral’s reserve requirement ratios and special deposits account interest rate were also kept steady in May’s meeting. This move, which was widely anticipated by the markets, is amid the changing economic landscape both in
See “Outlook,” A8
W
ASHINGTON—A generation of economists trained to believe that trade had little to do with the long decline in high-paying US factory jobs is changing its mind.
Their findings are likely to fuel the opposition within President Barack Obama’s own Democratic Party to his proposed 12-nation Trans-Pacific Partnership and similar pacts lowering barriers to international commerce. Because manufacturing employment as a share of the work force has been dropping for more than 40 years and the same trend has affected other developed nations, including Japan, with far less liberal trade policies than the US, many economists had concluded that automation was the primary culprit. But studies examining the effect of China’s entry to the World Trade Organization in late 2001 have made the case that between 1 million and more
than 2 million of the 5 million American factory jobs lost since 2000 are traceable to low-cost imports. “The ‘aha’ moment,” said Massachusetts Institute of Technology economist David Autor, “was when we traced through the industries in which China had surging exports to the local addresses of their US competitors and saw the powerful correspondence between where China had surged and where US manufacturing employment had collapsed.” Democrats earlier blocked fasttrack trade-negotiating authority for Obama, though House Republicans passed alternative legislation to try to revive it. Continued on A2
n japan 0.3662 n UK 71.5140 n HK 5.8070 n CHINA 7.2520 n singapore 33.7459 n australia 35.2853 n EU 51.1888 n SAUDI arabia 12.0049 Source: BSP (19 June 2015)
NewsSunday BusinessMirror
A2 Sunday, June 21, 2015
Retailers...
continued from A1
the Future Winners model highlighting the core competencies that businesses need to build on. According to Prabhakar, the traditional notion that “if you build it they will come” no longer stands. For instance, grocery items can now be delivered right at the consumer’s doorstep, as movies and books can be bought online and downloaded to digital devices. “So we need to move from thinking about retail as a point of transaction to thinking about retail as one component of where gathering can take place [for more than buying],” she explained. In the coming years, mixed-use development will become the norm, thus, allowing people to gather for work, education, travel, health-care services and grocery shopping. “The retailers of tomorrow will not be the retailers of today—those who facilitate gathering and monetize it will be the real retailers of tomorrow, such as WeChat,” she said. Creating an emotional connection keeps gathering in a certain physical or social space relevant and sustainable. Prabhakar said that people prefer businesses that understand them better and know what they really want. She added that they also like entities that allow them to feel this connection to win their “patronage, loyalty and evangelism.” What’s challenging the future of shopping and retailing is the process of delivery given the massive shopper polarization across markets. The “haves” and the “havenots” will have various delivery needs and be willing to pay for different delivery options. “Shoppers will soon expect to shop anywhere, anytime and receive the product with minimum time lag. Winning in emerging markets is all about winning in distribution. And technology and crowd-sourced models allow businesses the ability to do this
profitably,” Prabhakar said.
Future of shopping in PHL
Both the conventional and new retail formats will continue to flourish in the Philippines, yet innovation should come into play to secure their continuous existence in the near future. Prabhakar said traditional trade is consolidating, while online shopping will be the next big thing for retailing. “I think those are the two big things waiting to happen, and those are the opportunities waiting to be leveraged on,” she said. For conventional trade to stay, she suggested that importance of adopting the modern format of retailing. “So if modern format and the manufacturers and retailers start leveraging the scale at the reach of traditional trade, and walk with them as allies or partners rather than think about them as competition, then I think you will find a huge shift in the retail landscape in the Philippines,” she explained. Since the country is a big exporter of competent workers abroad, she sees its big potential once infrastructural issues are addressed and values around online shopping are taken cared of. Prabhakar said that it is not only the responsibility of the government but the private sector, as well. “If you want to sell online, you have to create an ecosystem that people trust. You have to ensure that you have enhanced security processes, and you have to find a way that is based around people’s fear of spending money or sharing card details online,” she said. “There are markets like Vietnam that are growing faster than the Philippines. If they are able to take care of the infrastructural values associated with shopping online, then it’s not long before that will happen here, as well. That’s the only way to go,” she added.
news@businessmirror.com.ph
Economists: China killing US factory jobs continued from a1
Democrats and their allies in organized labor argue that trade deals kill jobs supporting a strong blue-collar middle class without providing offsetting benefits. Democrat Sen. Sherrod Brown of Ohio said such agreements have “cost millions of jobs.” Democrat Sen. t Warren of Massachusetts said trade accords have “let subsidized manufacturers around the globe sell here in America, while good American jobs get shipped overseas.” Their Exhibit A has been the North American Free Trade Agreement, which they say caused the exodus of hundreds of thousands of US factory jobs to Mexico. But government statistics show that US manufacturing employment actually rose during the five years after Nafta took effect in 1994, temporarily reversing the
long-term decline. An April 16 study by the nonpartisan Congressional Research Service concluded that Nafta “did not cause the huge job losses feared by the critics.” China is another matter. In an April paper, economists Justin Pierce of the Federal Reserve (the Fed) and Peter Schott of Yale University found that the biggest US manufacturing employment declines, and largest surges in imports were in products for which China permanently locked in the greatest reductions in tariffs as part of its entry to the WTO. Industries such as apparel, leather goods, plastic plumbing fixtures, and surgical and medical equipment sustained substantial hits, they concluded. “Something big happens” around the time China entered the WTO, Schott said. “In fact, in the industries that were more affected,
Airport deals...
Inc., Philippine Skylanders Inc., the partnership between MPIC and JG Summit Holdings Inc., the joint venture between Megawide Construction Corp. and GMR Infrastructures Ltd. and Japanese firm Sojitz Corp. The submission of qualification documents for the deals is on July 27. The government launched the bidding of the aviation hubs late last year with the intention of addressing the growing demand for air connectivity around tourist spots and business hubs. The government decided to bundle the contracts into two to make it more enticing to investors. The first package consists of the Bacolod-Silay Airport (P20.26 billion) and Iloilo Airport (P30.40 billion), while the second bundle is composed of the New Bohol or Panglao Airport (P2.34 billion); Laguin
continued from A1
dingan Airport (P14.62 billion); and Davao Airport (P40.57 billion). The Bacolod Airport also known as Bacolod-Silay Airport started operations in 2008 and is one of the recently completed airports in the Philippines with modern facilities. The airport is located in Silay City, Negros Occidental, and generally caters to traffic for Negros Island—including Bacolod City— which is one of the most populous cities in Western Visayas. Tourism is one of the main industries in Negros Occidental and is fast growing, with domestic tourists reaching 1.33 million in 2013. The Iloilo Airport, on the other hand, is in Cabatuan, Iloilo, and is among the top 5 airports in the Philippines in terms of traffic data. It started commercial operations in 2007, providing
that’s where you see the job loss occurring. That’s the smoking gun for the link with the policy,” he said. Autor and two coauthors wrote a 2013 paper estimating that between 2000 and 2007, the US lost 982,000 manufacturing jobs because of Chinese import competition. Autor and his colleagues said imports from China and other countries caused one-quarter of all US manufacturing job losses during the period. He said in an interview that the estimate was conservative and that trade might be responsible for half the effect. Despite his findings, Autor supports the Pacific-rim trade deal. He cowrote an op-ed column in The Washington Post saying that the lost factory jobs are not coming back and that the deal would help the US in areas such as intellectual property, where it enjoys a competitive advantage.
The column said the agreement would also put pressure on China to stop gaming the global trade system. Before the recent studies, most economists had concluded that something besides trade must be at work in the job losses. They settled on the growing role of automation. They argued that what is happening in manufacturing in the US and other developed nations is similar to what occurred in agriculture, where industrial techniques allowed farmers to produce much more with a fraction of the workers. Fed data back up the critical role of automation in long-run trends: Output per factory worker more than quadrupled from 1970 to 2010, a phenomenon driven by everything from the replacement of people with machines to making work processes more efficient. Bloomberg News
both domestic and international connectivity with seven domestic destinations and two international destinations. The airport served roughly 1.87 million passengers in 2013. Seen to start its commercial operations by 2017, the P3.36-billion New Bohol Airport in Panglao is designed to accommodate 1 million passengers annually. The contract to construct new aviation hub in Bohol was awarded to Japanese joint venture of Chiyoda Corp. and Mitsubishi Corp. last month. Found on the northern tip of Misamis Oriental, the Laguindi ngan Airport was designed to accommodate 1.6 million passengers annually. It started its operations in 2013. It replaced the Lumbia Airport in Cagayan de Oro, which was among the five busiest airports in the Philippines in terms of passenger traffic. Also known as Francisco Bangoy International Airport, the Davao airport is the third-busiest
airport in the Philippines after the Ninoy Aquino International Airport (Naia) and the MactanCebu International Airport. Located in Catitipan, Davao City, the airport has been operational for more than 15 years, currently serving both domestic and international travelers. Davao region is one of the fastest growing tourism destinations in the country, with passenger traffic settling at 2.79 million in 2013. Overall, the private-sector partners will be tasked to improve the services at the regional airports. These include concessioning the operations and maintenance to the proponents, including required enhancement of airside and landside facilities at the airports. The government has awarded 10 contracts since the Private-Public Parnership Program’s inception in 2010, namely: n The P2.2-billion Daang HariSee “Airport Deals,” A8
Father’s Day A BusinessMirror Special Feature
www.businessmirror.com.ph
Sunday, June 21, 2015
A3
A FATHER’S DAY AFFAIR AT THE BODY SHOP
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REAT Dad to special pampering with great grooming products from the Body Shop. These will not only help make him look good, but also feel good. Made of natural ingredients, these products support Community Fair Trade principles globally.
Introduce him to T he Body Shop’s White Musk for Men Gift Trio reinvented for men. The iconic White Musk for Men fragrance is pure, 100% cruelty-free musk with notes of lavender, geranium, synthetic crueltyfree musk and sandalwood. This gift set comes with Aftershave Balm, Hair & Body Wash and Eau De Toilette. The Body Shop’s White Musk Sport Gift Set is perfect for the sporty Dad. A head-to-toe kit for men with the invigorating scent of zesty graprefruit, lemon, vetiver and sensual musk, the gift set includes Hair and Body Wash, an Anti-perspirant Deodorant and an Eau De Toilette that’s perfect for his
The White Musk Sport gift set is a head-to-toe kit for men with the invigorating scent of zesty graprefruit, lemon, vetiver and sensual musk. It includes a Hair and Body Wash, Anti-perspirant Deodorant and Eu De Toilette for the sporty Dad
active lifestyle. Other gift ideas for DAD: the Maca Root Shave Cream, Maca Root Face Wash, Maca Root Energetic Face Protector; as well as Kistna Hair & Body Wash, all with organic and cruelty-free ingredients. Dad deserves nothing but the best. Get these perfect treats for him from The Body Shop and take advantage of the 50% off offer on select Men’s gifts from June 4 to July 1, 2015. The Body Shop now accepts SM Advantage Cards for points earning and redemption, as well as SM and Sodexo premium passes in all their stores nationwide.
The Maca Root Shave Cream is a bestselling shaving cream that softens bristles and improves razor glide for a close, comfortable shave. It contains Peruvian Maca Root with Community Fair Trade Brazil nut oil that actually comes from Peru
Activist EDT is an eau de toilette for men that has a warm and spicy heart and woody base notes, giving Dad a fresh spicy scent
For Men Maca Root Energetic Face Protector is a daily moisturizer with SPF 15 that hydrates and protects skin. Contains Peruvian maca root
The Maca Root Face Wash effectively cleanses skin without over-drying. It contains Peruvian maca root with Community Fair Trade Brazil nut oil
Kistna Hair & Body Wash is a head-to-toe body wash for men with a fresh green scent. It leaves skin and hair clean and fresh. It has 100% organic aloe vera from the Body Shop’s Community Fair Trade
SundayV
Busine
A4 Sunday, June 21, 2015
editorial
Avoiding the bane of underspending
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NCE again, we are hearing that the growth of the national economy is under threat by government underspending. In fact, the growth rate of the gross domestic product during the first quarter is down to 5.2 percent, as compared to the 5.6 percent of the same quarter a year ago. The reason: government underspending. A careful examination of the details of the national budget is necessary, in order to establish the exact amounts of money not spent and the departments responsible for the underspending. Nonetheless, one can arrive at some broad conclusions on the matter on the basis of theoretical considerations about budgeting. Government expenditures can be divided into two major components (ignoring maintenance and depreciation): Personnel expenditures, which consist of salaries, wages and other forms of personnel compensation; and capital outlay, which consists of cost of materials, equipment, vehicles and tools in the construction and completion of social overhead facilities, like schools, hospitals, public parks and infrastructure, like roads, highways, bridges, airports, seaports and telecommunications networks, among others. Now, underspending could not have come from the salaries and wages component; otherwise, the entire army of government personnel would have risen in revolt against the government, perhaps overthrowing it for nonpayment of salaries, etc. It could have come only from capital outlay. We have been reminded repeatedly, ad nauseum, about the virtues of the Public-Private Partnership (PPP) Program, a derivative of the good old BuildOperate-Transfer program. This is where the problem lies, exposing the bankruptcy of the administration in terms of plans and programs for new undertakings and initiatives. The PPP Program liberates billions upon billions of pesos of the government budget from the costs of construction of tremendous infrastructure projects, because these costs are now shouldered by the private sector. What to do with the billions of pesos in the budget so liberated? In the normal state of affairs, the government will have a massive plan of social development for the utilization of these funds: new and expanded schools; scholarship programs; extensive livelihood projects; health-delivery programs for the underserved; and massive urban-renewal programs, etc. Apparently, not this administration. It has the imagination for the allocation of billions of pesos for bribery and other unconstitutional means, but it does not have the competence to come up with a sensible plan of social development. The Department of Budget and Management is saying that it will see to it that all departments carry out their expenditure programs faithfully and efficiently, in order to avert any possible underspending. It does not tell us what these programs consist of, for the reason that they consist of nothing. God bless us. It looks like we just have to wait for June 2016 for deliverance.
Obama tinkers with failed Islamic State strategy By Trudy Rubin
The Philadelphia Inquirer (TNS)
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NE of the most frustrating aspects of President Obama’s “strategy” to degrade and destroy Islamic State (IS) in Iraq is that he seems to grasp why it isn’t working. Yet, he refuses to take the obvious steps needed to fix it (and I don’t mean sending thousands of American ground troops). Instead, he only tinkers with a strategy that has failed. US officials rightly want the Iraqis to do the fighting against IS, helped by US trainers and coalition air strikes. Last week the president decided to send 450 more US military trainers and support troops to a new base in Anbar province, an IS stronghold. There are already 3,100 US troops in Iraq involved in retraining the Iraqi army, which collapsed a year ago when the jihadis overran Iraq’s second-largest city, Mosul. Despite intense efforts by US trainers, however, the Iraqi army is incapable of defeating IS now or in the foreseeable future. There are Iraqis, however—Kurdish peshmerga and Sunni tribal fighters—who are eager and able to fight IS. US officials are now working closely with the Kurds. But they are giving Iraqi Sunni leaders far too little help. Instead, the White House has been focused on rebuilding the Iraqi army, which is a very dubious proposition at best. That’s because Iraq’s armed forces have been effectively destroyed three times in a little over a decade. The first time was in 2003 by the Bush administration, which dismissed the entire army wholesale, driving many angered officers to join the jihadis; the second by former Prime Minister Nouri al-Maliki, who packed the officer corps with corrupt and sectarian Shiites. And Iran is now destroying the remnants of Iraq’s security forces by arming and training Iraqi Shiite militias that are gobbling up the army from
Gospel
Sunday, June 21, 2015
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the inside. The obvious problems with the army are a prime reason the administration now stresses that driving IS from Iraq will take a long time. “We have conceived a three-year plan, and we’re nine months into it,” said Deputy Secretary of State Anthony Blinken in early June. For Iraq, three years might as well be a lifetime. Sunni sheikhs in Anbar and around Mosul, under heavy assault from IS, can’t wait three years for the weapons and air support they so desperately need. “We don’t need the training. We have no time; we need to act now,” said one retired Iraqi army officer with close connections to tribal leaders. “When it takes so long, it will be really hard to take back the territory from ISIS, and we will pay much more.” So the administration needs a Sunni strategy, and quickly. US officials seem to get this, but have yet to act on what they know. Earlier this month, Obama stressed that “a big part of the answer is our outreach to Sunni tribes.... We’ve seen Sunni tribes who are not only willing...to fight [IS] but have been successful. But it has not been happening as fast as it needs to.” The president said he hoped the Iraqi parliament would pass a muchawaited National Guard law that would permit the Sunnis to set up provincial fighting forces under the loose umbrella of the Iraqi army. He referred back to how Sunni tribes helped defeat al-Qaeda in Iraq in Anbar (the precursor to IS) during the last decade. “Without that kind of local participation,” the president added, “it’s very hard to hold those areas.” On this, Obama is correct. There is very little chance, however, that the National Guard law will be passed in Baghdad, because Iran opposes it and has pressed its allies in the Iraqi parliament to freeze it. In the meantime, the administration insists on funneling all arms
N that day, when evening had come, He said to them, “Let us go across to the other side.” And leaving the crowd, they took Him with them in the boat, just as He was. And other boats were with Him. And a great storm of wind arose, and the waves beat into the boat, so that the boat was already filling. But He was in the stern, asleep on the cushion; and they woke Him and said
for Sunni tribes through Baghdad, where Iran’s Shiite proxies ensure that the Sunnis never receive them. US officials have encouraged Sunnis to join the army or even work with certain Shiite militias. But, said Richard Welch, a retired Special Forces colonel who spent more than six years working with Sunni tribal leaders in Iraq, the Sunnis will only “work with people they trust. They want to defend their own areas.” Tribal leaders also want reassurance they won’t be mistreated by Shiite militias that have brutally cleansed Sunni civilians from areas where they have fought. This has driven many in Anbar to support the jihadis. So how can Washington convince Sunnis to battle IS? I asked Welch, and also the retired Iraqi officer. They made three points: First, lean on Prime Minister Haider al-Abadi to rein in Shiite militias. Second, if parliament blocks a National Guard law, work out a system by which Abadi can funnel needed arms to Sunni tribal fighters. Third, if Washington is sending military advisers, don’t keep them behind the wire, as at present. They should “be closer to the action,” where they can call in air strikes, which are now only 25-percent effective. They can also check on intelligence and monitor use of US weapons. “If we want to build trust,” said Welch, “we need to have nodes of advisers in each group—Iraqi army, peshmerga and with Sunni leaders so we can build relations,” and help prevent conflicts among them. The alternative is to get sucked in step by step to an Iraq fight where there are no Iraqis on the ground who can defeat IS. “We’re dribbling in there,” said Welch, “while atrocities are going on and Iran is sending a steady stream” of advisers and weapons to Shiite militias. “No one is taking us seriously. No one believes we really want to stop what’s going on there.” Do we? If so, the strategy must change.
to Him, “Teacher, do You not care if we perish?” And He awoke and rebuked the wind, and said to the sea, “Peace! Be still!” And the wind ceased, and there was a great calm. He said to them, “Why are you afraid? Have you no faith?” And they were filled with awe, and said to one another, “Who then is this, that even wind and sea obey Him?”—Mark 4:35-41
Voices
essMirror
opinion@businessmirror.com.ph • Sunday, June 21, 2015 A5
Canticle of the Earth A Free Fire
By Teddy Locsin Jr.
DRAFT of Pope Francis’s encyclical, Laudato Si— fearfully awaited by capitalists, hopefully anticipated by humanity—was leaked to an Italian magazine named after a small cup of coffee. Other Italian newspapers ignored the leak out of respect for the Vatican embargo. The New York Times and The Wall Street Journal have gone to town with it. The leaked document is clearly a first draft. It lacks the facility of expression that characterizes past polished papal pronouncements. But the cat is out of the bag. Here, with some editing for style, are quotes from the leaked draft courtesy of Huffington Post. “Soil, water, mountains—everything is a stroke of God.” A striking image of God as Michelangelo and
a pithy summary of Genesis. This is followed by: “The earth is protesting the wrong we are doing to her because of the irresponsible use”—yup, even use is condemned—“and abuse of the goods that God placed on her.” This reaffirms the stewardship of nature conferred on man by God. The next quote is steeped in Augustine. Predisposed to evil by original sin, unredeemed human hands tarnish everything they touch. Thus: “The violence that exists in the human heart that is infected with sin [a superior translation] is also manifest in the symptoms of illness that we see in the earth, in the water, in the air and in living things.” And the following is totally original: “The material universe is God’s language of love; expressive of His
boundless affection for us.” Imagine the stars and planets as words, the constellations as stanzas. That is Francis’s take on the Genesis account that at the end of each day of Creation, God was pleased with what He had made for man whom then He proceeded to make out of clay unblemished by plastic and oil which did not then exist. Into the clean clay He breathed, as He had not done in making other living things, His very own breath; that man might share in God’s caring regard for all that God made for him. Then comes the warning, also from Genesis, of the consequences of human overreaching: Like the Tower of Babbling (e.g., Palace press releases); the violent, power- and money-mad world before the flood. “If we destroy creation, it will destroy us.”
Francis explains the moral meaning of abandoning our stewardship: “To destroy creation is to say to God: I don’t care.” A student of Rawls might add, “and I don’t care if I leave to my children and grandchildren an uninhabitable earth. I shall be the last to enjoy her.” Intergenerational injustice. A last quote offers a note of hope. “Humanity still has the ability to work together to build our common home.” But—and I don’t know who said it, I heard it in a spoof on the forthcoming encyclical viral in the Internet: “To change everything, we need everybody.” Fat chance of that. Francis, however, is silent, lest it lead to complacency, about God’s promise that whatever damage evil men inflict on the earth, she will be restored to her pristine beauty
after The Last Day; presumably to be enjoyed only by men and women—living and dead and reborn in glory—who had worked, though in vain, to save the earth from moneygrubbers who shall be condemned to the fires of hell, starting, I suppose, with Wall Street. Francis will read Laudato Si, which is only his second encyclical this Thursday. The title comes from Saint Francis of Assisi’s song, “Canticle of the Sun,” whose refrain is: Praise to You Lord, through Your creation… Brother Sun, Sister Moon In other words, only the beauty of His creation can render fitting praise to God. Destroy creation, soil it, and we are speechless to praise Him. Who can argue with that?
Campus political correctness ‘ridiculous’ By Thomas Sowell Sun Sentinel (TNS)
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HE political left has come up with a new buzzword: “microaggression.” Professors at the University of California, Berkeley, have been officially warned against saying such things as “America is the land of opportunity.” Why? Because this is considered to be an act of micro-aggression against minorities and women. Supposedly it shows that you don’t take their grievances seriously and are, therefore, guilty of being aggressive toward them, even if only on a micro scale. You might think that this is just another crazy idea from Berkeley. But the same concept appears in a report from the flagship campus of the University of Illinois at Urbana. If you just sit in a room where all the people are white, you are considered to be guilty of micro-
aggression against people who are not white, who will supposedly feel uncomfortable when they enter such a room. At University of California, Los Angeles (UCLA), a professor who changed the capitalization of the word “indigenous” to lower case in a student’s dissertation was accused of micro-aggression, apparently because he preferred to follow the University of Chicago Manual of Style, rather than the student’s attempt to enhance the importance of being indigenous. When a group of UCLA law students came to class wearing T-shirts with a picture of one of their professors who had organized an intramural softball game, those T-shirts were protested as a manifestation of “white privilege.” Why? Because that professor had written a book critical of affirmative action. Micro-aggression protests have spread to campuses from coast to coast—
that is, from California’s Berkeley and UCLA to Harvard and Fordham on the east coast, and including Oberlin and Illinois in the Midwest. Academic administrators have all too often taken the well-worn path of least resistance, by regarding the most trivial, or even silly, claims of victimhood with great seriousness, even when that involved undermining faculty members held in high esteem by most of their students and by their professional colleagues on campus and beyond. The concept of micro-aggression is just one of many tactics used to stifle differences of opinion by declaring some opinions to be “hate speech,” instead of debating those differences in a marketplace of ideas. To accuse people of aggression for not marching in lock step with political correctness is to set the stage for justifying real aggression against them. This tactic reaches far beyond academia
and far beyond the United States. France’s Jean-Paul Sartre has been credited—if that is the word—with calling social conditions he didn’t like “violence,” as a prelude to justifying real violence as a response to those conditions. Sartre’s American imitators have used the same verbal tactic to justify ghetto riots. Word games are just one of the ways of silencing politically incorrect ideas, instead of debating them. Demands that various conservative organizations be forced to reveal the names of their donors are another way of silencing ideas by intimidating people who facilitate the spread of those ideas. Whatever the rationale for wanting those names, the implicit threat is retaliation. This same tactic was used, decades ago, by Southern segregationists who tried to force black civil-rights organizations to reveal the names of their donors, in a situation where retali-
ation might have included violence, as well as economic losses. In a sense, the political left’s attempts to silence ideas they cannot, or will not, debate are a confession of intellectual bankruptcy. But this is just one of the left’s ever-increasing restrictions on other people’s freedom to live their lives as they see fit, rather than as their betters tell them. Current attempts by the Obama administration to force low-income housing to be built in middle class and upscale communities are on a par with forcing people to buy the kind of health insurance the government wants them to buy—Obamacare—rather than leaving them free to buy whatever suits their own situation and preferences. The left is not necessarily aiming at totalitarianism. But their know-it-all mind-set leads repeatedly and pervasively in that direction, even if by small steps, each of which might be called “micro-totalitarianism.”
Brazil’s all business with its bad neighbors By Mac Margolis Bloomberg Views
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HEN a group of senior Brazilian lawmakers deplaned Thursday in Caracas to a wall of hostile, stick-throwing protesters chanting odes to the late Hugo Chavez, they did what any sensible foreign officials might do: Cancel the trip and demand a sharp diplomatic rebuke. “I hope the Brazilian government condemns these barbarous and irrational acts, and stops coddling Venezuela,” Aloysio Nunes Ferreira, president of the Senate Foreign Relations Committee, and one of the besieged, told me. Good luck with that. Brazil’s foreign ministry duly called the aggression against the legislators—who had intended to visit jailed opponents of the Venezuelan regime— “unacceptable” and asked President Nicolas Maduro for “explanations.”
But don’t expect President Dilma Rousseff to recall her ambassador. Latin America’s biggest nation has long played a complicated game with its testiest neighbors, tiptoeing when they trample liberties at home—a tendency that once provoked former Mexican Foreign Minister Jorge Castañeda to call Brazil “a giant that acts like a diplomatic dwarf.” The fact is, Brazil has long looked to its hemisphere as a community not just of allies but clients. With world-beating builders like Odebrecht, Andrade Gutierrez and Camargo Correa, it has made a bundle selling big-ticket infrastructure—a hydroelectric dam in Ecuador, a cross-country highway in Bolivia, a deepwater port in Cuba—across the developing world. Brazilian engineers are as ubiquitous in the Americas as the country’s flying campaign strategists. Venezuela alone has parlayed that neighborly largesse into dozens of projects, including a new
metro line and an overhaul at the international airport. Whether Brazilians are better off for these deals is another story. For one thing, Venezuela’s gathering economic disarray has led Maduro to stiff overseas contractors. For another, the Brazilian taxpayer foots the bill for the generous, even lavish, terms of project financing often bundled into big foreign infrastructure deals. Brazil’s national development bank, known by its Portuguese acronym, BNDES, has loaned nearly $12 billion abroad since 2007. And because the BNDES gives loans at father-to-son rates, and under terms that have been less than transparent, the whole practice of bankrolling foreign oeuvres has come under increasing scrutiny. (In a separate development, top executives at Odebrecht and Andrade Gutierrez were among those detained on Friday as part of the widening probe into inflated contracts at Petrobras.) Recently, the Su-
preme Court ordered the bank to unseal its books, where national auditors have found some anomalies. To name just one: Many soft loans have gone to companies run by Brazilian billionaires, who happened to be major donors to Rousseff’s 2014 presidential campaign. The government defends its neighborly lending on the argument that foreign deals reap domestic jobs and returns for Brazilian companies. Sergio Lazzarini, who teaches at Insper, a São Paulo business school, isn’t so sure. Many of the jobs and services bankrolled by the Brazilian government are generated abroad, he said. “The government bank needs to prove that the benefits compensate the considerable subsidies offered by the treasury,” he told me. “There could be more productive alternatives for using this money.” In a recent study, he found that Brazilian taxpayers shell out as much for
soft loans to big companies ($8 billion) every year as the country spends on its headline poverty-busting program, Bolsa Familia. Another problem is that the BNDES lends money on the cheap but finances its loans dearly, on the international market. The Brazilian treasury picks up the difference, to the tune of about $352 million a year on foreign contracts, Lazzarini found. The two biggest foreign benefactors of Brazilian easy money: the Dominican Republic and Venezuela. But the beat of the pile drivers goes on. In early June, former Brazilian President Luiz Inacio Lula da Silva, Rousseff’s political mentor, warmly greeted Venezuelan strongman Diosdado Cabello, head of his country’s National Assembly, on a recent visit to São Paulo. No matter that Cabello had earlier been named by US investigators as a suspect in a global drug trafficking ring. A client is still a client.
Reverence and faith in trip to Medjugorje By Lewis W. Diuguid The Kansas City Star (TNS)
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VACATION cruise last month on the Adriatic and Aegean seas made it possible for me to revisit part of my past. The trip included flights to Moscow and Venice, Italy, and then boarding the Norwegian Jade with stops in Dubrovnik, Croatia; Athens, Greece; Kusadasi and Ephesus, Turkey; and Split, Croatia. It wasn’t one of the stops, but Martina Huljev with Jade guest services made it possible for a nearly two-hour drive from Split to Medjugorje, BosniaHerzegovina. I had written a column about this place 25 years ago from talking with John and Vicki Halloran. The south Kansas City, Missouri, couple’s children
had sent them to the then-quaint, Yugoslavian farming community as a 40th wedding-anniversary gift. Medjugorje has attracted millions of people worldwide as the place the Mother of Jesus appeared to young visionaries and where miracles are said to have occurred. I wrote in a December 20, 1990, column, “What’s occurring is like when the Madonna, or Queen of Peace, appeared to a girl in 1858 in Lourdes, France, and then to three children in 1917 in Fatima, Portugal.” The visionaries who’ve repeatedly seen the Madonna at Medjugorje were ages 10 to 17 when they first saw her in June 1981. Martina, who’s from Croatia, had been there, and because of the spiritual power people feel, she understood why others wanted to go. I was with my partner Bette, her 83-year-old
mother, LaFrancine and her 78-year-old aunt, Bette. Making this trip was my only request in our travels. But we had just five hours to leave the boat, board the van and make the drive. Fortunately, the roads were better than most US interstates. The driver dropped us off at Saint James Church. From there, we walked to the Stations of the Cross and to the Medjugorje Risen Christ Statue. People line up to stand on a step-stool to touch the knee of the more than 20foot- tall bronze statue, which since 2001 as emitted a tear-like liquid just above the lower thigh. Many people carried pieces of cloth to absorb the fluid as they prayed, touching the statue. We then got directions for a 2-mile hike to the hillside where the apparitions occurred. We had
to hurry to get there and back to the van, then to the boat before the ship sailed. We made it, and with many other visitors we experienced the solemn, spiritual power and reverence of Medjugorje. It was unlike being in any church. It was a baptism in the purest waters of faith. Science and the Vatican have investigated Medjugorje. Pope Francis after recent travels to Sarajevo dismissed the apparitions at Medjugorje as mere “novelty-seeking” for the faithful. He said, however, that the Vatican would soon formally decide whether the visions are authentic. It has not been approved as an official shrine site, and dioceses have been told not to organize official pilgrimages there. Yet, 30 million people have flocked to Medjugorje in the last 34 years, fi-
nancially transforming the village into a tourist attraction with a new church, housing and many shops selling items to visitors. I always wondered how this place had fared during the 1990s breakup of Yugoslavia, the civil war, Nato bombings and ethnic cleansing that left thousands dead and millions displaced. I wrote in the 1990 column: “The visionaries said the Madonna told them that materialism and a lack of morality were ruining us. She had come to warn us, particularly our youths.... They are troubled by broken homes, alcoholism, drugs, sex, violence and a lack of purity and direction. The Queen of Peace warns of a great catastrophe and calls for prayer, reconciliation and fasting to try to turn around our troubled future, the Hallorans said.”
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A6 Sunday, June 21, 2015 • Editor: Vittorio V. Vitug
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Govt urged to take over, overhaul MRT
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HE dire conditions of the Metro Rail Transit (MRT) call for a major overhaul and rehabilitation under direct government control, scientist group Alyansa ng mga Grupong Haligi ng Agham at Teknolohiya para sa Mamamayan (Agham) said on Saturday. The group, a network of experts in various fields, said the government’s abandonment of its responsibility over the MRT system is to be blamed for the frequent breakdowns that burden its passengers as service interruptions occur regularly. In a statement, Agham said, based on data provided by the Department of Transportation and Communications (DOTC), the frequency of service interruptions has been getting worse. In 2013 an interruption can be expected to occur every 11 days compared to the present, when it can occur every week, the group said.
The DOTC has announced a new maintenance setup, with different components of the MRT system being given to different contractors. The DOTC has, so far, awarded contractors for four of the seven components but this early, Agham doubts that it will help improve the system. One of the new contractors, Global Epcom Services, has the same incorporators as Global APT, the MRT’s current maintenance provider, Agham said. “The dire condition of the MRT necessitates a major overhaul and rehabilitation under direct
government control. It should be nationalized immediately,”said Agham’s Miguel Aljibe, a mechanical engineer. Among its neighbors, the Philippines lags behind in terms of rail quality, ranking 80 out of 143 countries in the World Economic Forum’s global survey. In contrast, Malaysia ranked 12th; Indonesia, 21st; Vietnam, 52nd; and Thailand 74th, the group said. The MRT stands in sharp contrast to the Light Rail Transit (LRT), which, under state ownership and management, has performed better. Although the Light Rail Transit Authority, the government corporation in charge of the LRT, subcontracts maintenance work, it nevertheless possesses in-house expertise and equipment. Agham has counted only 11 major injuries resulting in LRT Line 1 malfunctions in the past 12 years. Agham’s own calculation has revealed that the MRT experiences 3.48 injuries for every 100 million passenger-miles, compared to US trains, with 0.7 injuries. In other
words, MRT passengers are five times more likely to get injured than US passengers. This, in spite of the fact that both MRT coaches and US light trains are roughly of the same age. These numbers, however, do not take into account the slow, subtle and systemic harm inflicted on passengers in the form of long lines, broken elevators and delayed trains. Six hundred thousand passengers depend on the MRT every day. In addition, the government’s disregard for the commuter can be seen clearly by how much it invests in mass transport. Agham noted that the rail transport gets only 7.33 percent, or P16.9 billion, of the 2015 transportation budget, translating to about 0.12 percent of the country’s gross domestic product (GDP). Meanwhile, Malaysia plans to put in at least 2.7 percent of its GDP on rail investments for this year. Spain, Russia and France spend at least 0.20 percent of their GDP on rail investment, the group added.
Security Bank targets strong growth for 2015
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ECURITY Bank Corp. expects a faster-than-the industry growth rate this year, on the back of a growing economy. Security Bank President Alfonso “Yogi” Salcedo Jr. said the economic outlook remains positive, with an expected gross domestic product growth of 6 percent to 6.4 percent, but not 7 percent to 8 percent at the end of the year. “We will continue to grow, not because of low oil prices...but it’s really the demographic that is pushing it. We have a young population that is growing. Spending and con-
sumption will continue to drive the economy,” he said. A large population with the right proportion of young and functiondriven work force will drive the growth of retail banking. “We aim to grow faster on key business. Faster than the industry growth,” he said. He saw a strong bancassurance business with partner FWD Life Insurance Corp., as a lot of Filipinos are getting insurance protection. Security Bank launched the bancassurance product in February this year.
“Our bancassurance business is incredible. Surprisingly, it is growing fast. I’m really impressed. Fees from it [bancassurance] could exceed nine digits for the first year of operation,” Salcedo told reporters. He lauded the systematic system in their branch banking, in which half of the 257 branches nationwide already offer insurance products. The bank aims to open 10 to 15 branches this year and bring up its branch network to 300 in 2016. Security Bank also has leasing business in partnership with Marubeni Corp.
He said the leasing business will be challenged because of low loan rates across the industry. “The loan books of banks have grown much faster than leasing portfolios,” he said. The bank’s loan portfolio already reached P200 billion. Genevi Factao
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briefs
philexport backs d.o.t.c.’s push for expanded roro services
The Philippine Exporters Confederation Inc. (Philexport) supports the endorsement of the Department of Transportation and Communications (DOTC) to expand services of roll-on/roll-off (Roro) to container on Chassis Roro (Charo) that can cut logistics costs, which is significant to exporters. “Philexport welcomed the recent endorsement by the DOTC of the draft executive order expanding the Roro service to include Charo,” the export group stated noting the recent letter of the department to the Office of the President for an executive order for Charo. Philexport President Sergio R.Ortiz-Luis Jr. stressed that the Charo will enhance the competitiveness of the country’s export industry with lower logistics costs. According to the Asian Development Bank, a Roro shipping operator, under Charo, can provide the service of pulling on and off the containers on chassis in and out of a Roro ship with service charged as part of the freight though cargohandling fee is still separate. PNA
phl aims to attract more investments in u.s. road show next week
The Philippines targets to attract investments from the US as the government sets trade and investment mission to the US next week. Finance Secretary Cesar V. Purisima and Trade Secretary Gregory L. Domingo will bring a high-level trade and investment delegation from June 24 to 29 in Washington, D.C., New York and San Francisco. The Philippine government aims to update business stakeholders in the US of the economic development of the country, as well as potentials available for US firms in the Philippines. The business mission also targets to bring in US investments to the country’s priority infrastructure projects. PNA
edc to expand leyte geothermal field to 14,506 hectares
The Energy Development Corp. (EDC) will expand the Leyte Geothermal Project (LGP) to 14,506 hectares. At a public consultation on June 17, the company explained the need to expand its steam field production by adding 7,106 hectares from the current 7,400 hectares. At present, LGP covers Ormoc City and the adjacent town of Kananga on the western part of Leyte along with Jaro town on the eastern side. EDC will expand northward to Capoocan and Carigara towns. Once realized, LGP will cover 19 villages in four towns and one city. EDC stated that the Leyte geothermal field is experiencing substantial steam decline after 30 years of operation, the reason it had to develop the makeup and replacement drilling program to maximize the power generation to 700 megawatts. PNA
PNR trial run Sen. Cynthia Villar (right) joins Philippine National Railways (PNR) officials on Friday at the trial run of the commuter line
from the Tutuban station in Manila to Santa Rosa City, Laguna. Villar, chairman of the Senate Committee on Government Corporations and Public Enterprises and principal sponsor of the law extending the corporate life of the PNR by another 50 years, says she has high hopes that the PNR will be able to deliver on its promise of an improved and safe train service when the commuter line becomes fully operational. Roy Domingo
Cebu Pacific starts flight rationalization at Naia
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he country’s largest budget carrier has started to rationalize its operations at the Ninoy Aquino International Airport (Naia), in response to the Manila International Airport Authority’s (Miaa) advisory calling for the optimization of the aviation hub’s runway. Cebu Pacific, in an advisory late Friday, said its flights utilizing turboprop or ATR aircraft—such as those from Manila to Caticlan, Busuanga, Laoag and Naga—will start operating out of Naia Terminal 4 on August 15. Flights of Cebgo—formerly Tigerair Philippines— will operate out of Naia Terminal 3, beginning the same day. All Cebgo flights utilize jet or Airbus A320 aircraft. “This is in line with the Manila International Airport Authority advisory, dated May 28, 2015, to maximize runway space at Naia. Cebu Pacific fully supports this government effort to improve air traffic conditions in Manila,” the advisory read. It added: “The Cebu Pacific group advises its passengers of the following terminal changes for those
departing from and arriving in Manila. Flight times remain the same.” The Gokongwei-led airline’s flights to smaller airports around the Philippines are expected to increase next year, after it ordered P30.31 billion worth of turboprops from European airplane manufacturer ATR. The transaction involves the delivery of 16 ATR 72600—with the option to acquire 10 more of the same kind of plane—by the third quarter of 2016. This effectively doubles Cebu Pacific’s turboprop fleet size, subject to the execution of final purchase documentation. The order is part of Cebu Pacific’s fleet renewal program. Cebu Pacific currently operates a fleet of eight ATR 72-500 aircraft, which will be retired as the new aircraft enter service. The entry into service of the ATR 72-600 will see Cebu Pacific with new generation aircraft to meet growing demand in the Philippines for interisland services. Lorenz S. Marasigan
No ‘sacred cows’ in Duterte’s Davao City turf
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HERE are no sacred cows in Davao City when it comes to enforcement of laws and ordinances. No less than the prime mover and organizer of a group pushing for the presidential bid of Mayor Rodrigo Duterte was arrested for smoking in a nondesignated smoking area. Jimmy Cabrera is one of the prime movers of the Musicians and Artists for Duterte (MAD for Change), along with Popong Landero and Pete Lavina. MAD, which is one of the groups prodding Duterte to heed the growing clamor to run for president, launched its campaign on June 12 at the Matina Town Square (MTS). In his Facebook page, Cabrera playfully posted the photo of his actual arrest. The photo showed the responding policeman writing down his violation with the obviously amused Cabrera smiling in front of
the camera while two onlookers smiled approvingly. The photo, first posted from the Facebook account of one Boy Viet Cong, carried the title “DDS-Disciplined Davaoeño Smokers.” It carried the tagline “paying the price @ pryce plaza.” Davao City’s antismoking ordinance is on its 13th year and is considered the most successful in the country. “MAD organizer Jimmy Cabrera smiles and willingly submits himself as a police officer books him for violating Davao City’s antismoking ordinance in a vacant lot outside the venue during the Musicians & Artists for Duterte’s gig at the Reggae Grill. Jimmy and five other guests were in a place adjacent to the bar which they mistook as the smoking area. The cops thought otherwise,” the caption said.
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Sunday, June 21, 2015
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Illegal wildlife trading rampant in Palawan
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UERTO PRINCESA CITY— The Biodiversity Management Bureau (BMB) of the Department of Environment and Natural Resources expressed concern over rampant illegal wildlife trading in Palawan.
BMB Director Theresa Mundita S. Lim said at the first meeting of the proposed Scientific Advisory Board of the Palawan Council for Sustainable Development (PCSD) that one of the centers of assessment in the province should be the actual population of the endemic and critically endangered Philippine forest turtle (bakoko) and sea turtles (pawikan) that have been the subjects of illegal wildlife trading recently. “This should, maybe, be one of the focuses of assessments. What is the actual population? But, since the reach is limited, you can only see it [bakoko]
here in Palawan; then the classification will always be endangered because, if it disappears here, you will not see it anywhere anymore,” Lim said. She said that, whenever cases of confiscation of Philippine forest turtles come to their attention, their treatment would always be “sensitive,” since it is one of the island’s endemics. “It is alarming for us to find out that one illegal trader can get that many Philippine forest turtles and sea turtles. Where did they come from? We need to investigate further how that
happened, and where the sources are because they [illegal wildlife traders] seem to know,” she said. Lim was appalled by the report that more than 4,400 Philippine forest turtles were confiscated in southern Palawan, and more than 525 hawksbill and green sea turtles are in a privately owned resort in Roxas town in the north. “They are apparently getting them from different sources, and that is something we need to confirm, and, hopefully, stop completely. That is why we are very much concerned in the na-
tional government,” she said. She also lauded the PCSD for efforts to make confiscations in Palawan rather than doing it last-minute because, in the past, the illegal wildlife traders would succeed in bringing them outside Palawan to Manila, and even in Hong Kong, in the case of the Philippine forest turtles. “Actually, efforts have improved in a way that confiscations are made here, not outside like before. In the past, they would reach Manila, and we would confiscate, or in Batangas. Sometimes, in Hong Kong; it’s difficult to return them,” she said. PNA
2nd Front Page BusinessMirror
A8 Sunday, June 21, 2015
BSP likely to keep current monetary policy–BM poll
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CONOMISTS see the Bangko Sentral keeping its current monetary-policy stance in their next monetary-policy meeting, as inflation and growth expectations remain anchored and as developments from external drivers—like the Federal Reserve’s (the Fed) most recent comment on its own monetary policy—warrant such.
In a poll conducted by the BusinessMirror, local and international economists expect another no-change from the seven-man policy-making board of the central bank on Thursday, citing several reasons. Among the reasons cited by the economists are the low but rising inflation rate; the expectation of a pickup in growth this year; and the latest statement of the Fed that favors a more gradual interest-rate normalization in the US economy. “We expect the Bangko Sentral to remain watchful of upside risks to inflation and keep the policy rate on hold at the June 25 meeting,” Standard
Chartered economist Jeff Ng said. The onset of the El Niño and its effect on agricultural production have been mostly the largest risks to inflation in the country—coupled with the volatility in oil prices in the international market. “No change; concerns over risk to inflation that the El Niño may bring and volatility in the financial markets, which may come from normalization of US monetary policy and which may affect the stability of the financial sector,” ING Bank Manila economist Joey Cuyegkeng said. Also exploring the possibility of rate movements in both the upward
and downward bias, the economy has been found to bear the still-appropriate monetary policy—a setting that has been on since September last year. “Average CPI [consumer price index] inflation for this year is likely to be in the lower half of the central bank’s 2-percent to 4-percent target. Coupled with a moderation in loan growth, the central bank is unlikely to further tighten its policy this year. But, no strong reason for the BSP to loosen its policy in the near term either. The government’s 7-percent GDP [gross domestic product] growth target was always a long stretch to begin with. We reckon that the BSP is fairly comfortable with GDP growth staying circa 6 percent,” Singapore-based DBS Bank economist Gundy Cahyadi said. Aside from the setting of the local economy, external factors are also telling that the BSP will stand pat on Thursday. “Latest Fed decision to hold rates and to downgrade growth rate only reinforces a no-action from the BSP on the policy front,” Security Bank economist Patrick Ella said. Adding to that, economists and market players have read the central bank officials’ forward guidance as unbiased toward hiking or cutting rates this month.
“[The] market flirted with the idea of a rate cut, but Governor Amando M. Tetangco Jr. and Deputy Governor Diwa Guinigundo were quick to nip those rumors in the bud. The governor’s most recent statement on inflation remaining within target for the year despite the El Niño should allay fears of any surprises,” Bank of the Philippine Islands (BPI) research officer Nicholas Antonio Mapa said. The economists, meanwhile, shared mixed views on what the next move will be from the central bank in the future. “We’re not looking for any change, but I think there’s a chance the governor could tone down the hawkish rhetoric a bit given the recent fall in inflation,” Barclays economist Bill Diviney said. This view of the possibility of tightening is also on the cards of BPI’s Mapa, saying that the “BSP can afford to keep rate steady for the meantime and possibly tighten in the medium term, or the financial world post-Fed rate hike.” For Standard Charter’s Ng, meanwhile, the BSP is seen to be “more open to easing after risks to inflation from El Niño-related food inflation and potential Brent price increases pass.”
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Thrift banks to maintain stability, profitability–CTB
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HE Chamber of Thrift Banks (CTB) said the thrift banking industry is poised to continue its growth and will remain profitable this year, despite the challenging net interest margins. CTB President Rommel S. Latinazo said the thrift banking industry has maintained its stability, as shown by sustained growth in resources, lending and profitability as proven by increased deposit mobilization, adequate capitalization, as well as enhanced asset quality. “Growth is something that we continue to see from the thrift bank industry in terms of loan growth, portfolio quality and profits. I think the industry will remain profitable this year,” Latinazo, who is also the president of RCBC Savings Bank, said on the sidelines of the recent CTB general membership meeting. He added that the chamber sees upward pressure on interest rates right now, and the initial reaction is to make optimal decision on the cost side, and strengthen deposit base. Latinazo said there may be pressure on the margins, but thrift banks will remain strong because of their niche market. “Thrift banks are basically involved in consumer lending, including mortgage, to micro, small and medium enterprises [MSMEs], that’s the niche. The thrift banks’ advantage is their presence in the areas where they are needed and convenient to borrowers,” he said.
The member-thrift banks that are standalone, or do not belong to a conglomerate, have a strong presence in the provinces. He said that, in the first quarter, the industry sustained credit growth, as core lending rose by 14.3 percent year-on-year to P576.3 billion, from P504.3 billion reflecting sustained lending activity in the avowed niches of operation, such as MSMEs, housing and consumer financing. “But still, a lot has to be done. The thrift banking sector must remain dedicated to its mission of servicing the financial needs of the household, providing medium- and long-term credit to MSMEs and promoting development in nonurban areas,” he said. Confidence in the industry remained high as deposit liabilities rose 5.7 percent year-on-year to P675.91 billion, from 639.74 billion. Total capital reached P113.07 billion, up by 27 percent from P89.2 billion. The thrift bank industry’s total assets stood at P861.11 billion in the first quarter, higher by 8.9 percent than P791.01 billion in the same period last year. The industry has shown a marked improvement in its loan and asset quality, as measured by both non-performing loans (NPLs) and nonperforming assets (NPAs). As of end-March 2015, the industry’s NPL ratio stood at 4.54 percent, down from 4.96 percent a year ago, while the NPA ratio improved to 5.33 percent from 5.74 percent. Genivi Factao
San Miguel and Petron to refinance ₧50-B debt B C B C Y
San Miguel, the Philippines’s most acquisitive company, is also the most indebted. The century-old brewer, which has expanded into power generation and oil refining, has the equivalent of about $11.7 billion of debt and interest obligations, about three-fourths of which are in US dollars, according to data compiled by Bloomberg. “Refinancing is a positive move since it has a high cost of capital. The stock price is also cheap at this level,” Jomar Lacson, an analyst at Manila-based Campos Lanuza & Co., said in a telephone interview. San Miguel shares rose 6.3 percent at the close in Manila, their biggest gain since March 2014. Petron shares climbed 1.4 percent, the most this month. San Miguel may use its own cash to redeem the rest
Bloomberg
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AN Miguel Corp. and unit Petron Corp. are seeking to refinance debt exceeding $1 billion, as interest rates linger near record lows. Their shares surged on Friday. San Miguel, the Philippines’s largest company, may raise funds to partly redeem more than P50 billion ($1.1 billion) of preferred shares, President Ramon Ang said in a June 18 interview in Makati City, without giving a percentage. Petron, the nation’s largest oil company, will refinance a combined $965 million in loans due next year and in 2017, and plans to amend a loan agreement, according to people familiar with the matter.
Airport deals...
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South Luzon Expressway project, bagged by Ayala Corp. in 2011; ■ 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; ■ The P15.68-billion Ninoy Aquino International Airport expressway, given to San Miguel Corp. unit Vertex Tollways Development Inc. in 2013; ■ The P3.86-billion PSIP Phase II contract, partially awarded in 2013 to Megawide and the BSP & Co. Inc.-Vicente T. Lao Construction consortium; ■ The P5.69-billion Modernization of the Philippine Orthopedic Center project, which went to the Megawide-World Citi Inc. consortium also in 2013; ■ The P1.72-billion Automatic Fare Collection System contract, which was awarded to the AF Consortium of Ayala and MPIC in 2014; ■ The P17.5-billion Mactan Cebu International Airport New Passenger Terminal project, bagged in 2014 by Megawide Construction Corp. and GMR Infrastructures Ltd.; ■ The P64.9-billion Light Rail Transit Line 1 Cavite Extension deal, awarded in 2014 to Light Rail Manila Consortium of Ayala and MPIC; ■ 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; and ■ The P35.42-billion Cavite-Laguna Expressway bagged by MPCALA Holdings Inc. of MPIC in June.
of its preferred shares, which will pay a higher interest rate in two years if not repaid this year, Ang said. The average rate of fiveyear debt in the Philippines fell to 3.47 percent this year, from 4.37 percent in 2012, according to data compiled by Bloomberg. “We want to take advantage of lower interest rates to cut our borrowing costs,” Ang said. The company sold P80 billion of preferred shares in September 2012 of which shares worth P54 billion can be redeemed this year, according to data compiled by Bloomberg. If not, this series of preferred shares with a dividend of 7.5 percent a year will pay the 10year rate plus 3 percent in 2017. Shareholders on June 9 allowed San Miguel to sell preferred shares.
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the local and global scene—including the central bank’s slightly higher outlook for inflation this year. ■ Upcoming monetary-policy decision: Economists see the BSP delivering another no-change policy stance as local and economic data warrant a wait-and-see stance from the monetary authority of the country. See related story above.
June 25 Thursday
IMPORTS DATA FOR APRIL
■ March 2015 imports: Imports of the country contracted in March this year at 6.8 percent—registering an actual amount of $5.113 billion. The decline in total imports for this period was due to the negative performance of two out of the top 10 major commodities for the month. These were mineral fuels, lubricants and related materials; and plastics in primary and nonprimary forms. Of the major commodities that caused the decline in the country’s imports, inward shipments of mineral fuels, lubricants and related materials showed a remarkable 47.3-percent decrease (an equivalent of $611.86 million) in the same month of previous year’s level. ■ April imports: Economist from the Bank of the Philippine Islands Nicholas T. Mapa said the country is primed for another contraction in imports in April this year. “Offsetting the decreased dollar value of oil imports will be increased imports of electronic subcomponents given that we’ve drawn down on inventory of these raw materials over the past two years. With the electronics exports subsector rebounding sharply in 2015, we can expect these companies to be importing these raw materials to replenish their supplies,” Mapa said. Bianca Cuaresma/with a report from Couleen Conche