three-time rotary club of manila journalism awardee 2006, 2010, 2012
U.N. Media Award 2008
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A broader look at today’s business Saturday 18, 2014 No. 40 Wednesday, June Vol. 24,102015 Vol. 10 No. 258
nn
FITCH RATINGS KEEPS BELOW-TARGET PHL GROWTH FORECAST
Fitch not convinced govt spending to rise T
By Bianca Cuaresma
here are serious impediments to the country’s continued expansion targeted to hit at least 7 percent in terms of the gross domestic product (GDP) this year, such as the unresolved bottlenecks in the implementation of President Aquino’s public investment program, the London-headquartered sovereign credit watcher Fitch Ratings said on Tuesday.
Failure could prevent the Philippines from bouncing back from a disappointing 5.2-percent expansion in the first-quarter, as the government failed to deliver public-consumption activities designed to optimize the country’s growth potential, the credit watcher said. In its second-quarter review of Asia Pacific sovereigns, Fitch Ratings warned the country of the effects of the administration’s behind-the-curve spending, even as the $272-billion economy is flush with liquidity and enjoys domestic, as well as global, investor support. See “Fitch,” A8
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PHL seen becoming BPO hub in integrated Asean By Catherine N. Pillas
T
he Asean economic integration happening at the start of 2016 will be a boon for the local business-process outsourcing (BPO) industry, with regional firms likely to make the country their outsourcing hub, the head of the Information
Technology and Business Process Association of the Philippines (Ibpap) said. At the sidelines of the launch of French BPO firm Teleperformance’s 16th recruitment center, Ibpap President Jose Mari P. Mercado said that, given the country’s competitiveness and talent pool, the Continued on A8
special report
Another administration, another failure for economic Cha-cha ‘choreographers’ By Catherine N. Pillas & Jovee Marie N. dela Cruz
Conclusion or both foreign and local business groups, the failure of Resolution of Both Houses (RBH) 1 to pass anew—after gaining traction at the House of Representatives—is again another big blow to the efforts to make the country more competitive as an investment hub in the region. The Management Association of the Philippines and the Makati Business
F
Club predict a more difficult road ahead as the Asean integration nears, coupled with the region’s commitment to liberalize investment regulations through the Asean Comprehensive Investment Agreement (ACIA). The ACIA, which has been in force since 2012, mostly focuses on attracting more intra-Asean investment. However, with the Philippines submitting various “reservations” on equal treatment of Asean investors in the ACIA Reservation Schedule (based on the restrictions on the Constitution),
PESO exchange rates n US 45.0260
only a little improvement is seen in terms of attracting either intra- or extraregional investments. “More foreign investments will come in if invited and made welcome. Last year the Philippines had $6.2 billion, and that is better than the $1 billion to $1.5 billion we had before. But that is still small, compared to our neighbors. While the country is growing and is in a [demographic] sweet spot, it should be allowed to grow to its full potential,” said Michael Raeuber, president of the European Chamber Continued on A2
n japan 0.3649 n UK 71.2581 n HK 5.8089 n CHINA 7.2512 n singapore 33.7021 n australia 34.8849 n EU 51.0685 n SAUDI arabia 12.0069 Source: BSP (23 June 2015)
A2 Wednesday, June 24, 2015
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news@businessmirror.com.ph
Another administration, another failure for economic Cha-cha ‘choreographers’ Continued from A1
of Commerce in the Philippines (Eccp) in a text message. According to the state think tank Philippine Institute for Development Studies (PIDS), economic Charter change (Cha-cha) is an ideal recourse for the Philippines if it wants to benefit from the establishment of the Asean Economic Community (AEC) in 2015. “The country needs to be competitive in order to take advantage of the growing marketplace of opportunities, especially for small and medium enterprises,” the PIDS said. “Platforms like the AEC and other free-trade agreements are gaining more success in terms of reducing or removing market entry and access issues.” Under the AEC, market-access opportunities for Filipino firms can expand as they can sell to 600 million people in the booming region and own majority of their Asean operations. The integration also provides that Asean companies can own 100 percent of companies in countries in the region and should be able to own at least 70 percent of services companies. The Asean is composed of Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. “The regional experience indicates that where countries have relaxed restrictions, FDI have increased, providing significant economic benefits to the receiving country,” the PIDS said. “Countries that have relaxed foreign-ownership restrictions have enhanced their competitiveness and achieved a higher trajectory of eco-
nomic growth.” That’s why the Joint Foreign Chamber of Commerce and Philippine business groups have also expressed support for the passage of the economic Cha-cha. Businessman Manuel V. Pangilinan said that to promote inclusive growth in the country, Congress should pass the resolution amending the economic provisions of the 1987 Constitution. Pangilinan added that Cha-cha is needed for the country’s economic development. Makati Business Club Chairman Ramon del Rosario Jr. also showed his support for the amendments of the Constitution, particularly the economic provisions to attract FDI, as the unemployment rate in the country is increasing. Also, Former President Fidel V. Ramos has expressed support to efforts to change the economic provisions of the Constitution to attract more foreign investments and spur economic growth. American Chamber of Commerce in the Philippines Senior Adviser John Forbes still have high hopes for the measures. “I hope the Speaker’s assessment proves too conservative. We were quite shocked by some of the public statements by Filipinos opposed to the resolution.” Other groups backing the economic Cha-cha are the Philippine Exporters Confederation, Employers Confederation of the Philippines, the Philippine Chamber of Commerce and Industry and the various foreign chambers of commerce in the country. But while the economic Cha-cha enjoys the support of the business
AYALA Avenue, which cuts through the country’s financial district of Makati City, is shown on Sunday. Makati Business Club Chairman Ramon del Rosario Jr. showed his support for the amendments of the Constitution, particularly the economic provisions to attract foreign direct investments, as the unemployment rate in the country is increasing. nonie reyes
sector and some government entities, it also has its share of oppositors. University of the Philippines Economics professor Solita Collas-Monsod, in her commentaries, argued that FDI’s role in economic growth in high-performing Asian economies has been minimal at best. Moreover, income distribution, a significant indicator of the “inclusive growth” agenda of the administration, is not directly linked with an increase in FDI, according to Monsod. Other opponents of the proposed resolution said improvements in infrastructure, bureaucracy and redtape regulations are the main concerns of foreign business groups, which could be remedied without
touching the Constitution. On the part of civil society, Kilusang Magbubukid ng Pilipinas, Gabriela, Bagong Alyansang Makabayan, Anakpawis, and League of Filipino Students have actively campaigned against the measure on the basis of economic nationalism. Fear among these groups stem from the expectation that opening up more sectors to foreign control will widen the development gap between the high- and low-income segments of society. The Coalition for a Citizens’ Constitution, another civil-society group, maintained that the political system of the country should be the focus of reform efforts, not
the Constitution. Another advocacy group, the Ibon Foundation, states that economic sovereignty is needed for emerging economies like the Philippines, and that opening up land ownership to foreign control will lead to exploitation of natural resources. Aside from the fear of unmitigated use of land by foreign investors, another worry is that opening up particular restricted professions will be snapped up by foreigners, and divert employment from local workers. Perhaps one of the more unspoken fears of civil society is, with the insertion of the phrase “unless otherwise provided by law,” business groups, industry heads and investors would
make Congress pass laws that will liberalize specific sectors that they have interest in. This would vest Congress with considerable power. No voice of opposition has been louder than that of Malacanang’s, which reiterated that opening up sectors restricted in the Constitution is not a guarantee of future economic growth or higher FDI levels. This stance is vastly different from previous administration. The economic Cha-cha, in general, has been pushed by former Chief Executives Fidel Ramos, Joseph Estrada and Gloria Macapagal-Arroyo. Estrada and Arroyo particularly included changes in the economic provisions in the Constitution, in their advocacy. Attempts by the previous leaders similarly failed as these were suspected to be driven by a desire to extend their terms of office, an unpopular notion that quickly roused opposition among the public, especially during Arroyo’s term. The push for Cha-cha under Arroyo and Estrada were also overshadowed by their own share of political scandals and corruption controversies. And yet oddly enough, even with President Aquino’s reluctance to support economic Cha-cha, it gained considerable traction in the present administration due to the initial unity of supporters in Congress. Still, it appears that is not enough. Another administration is about to close, and the economic Cha-cha again lacked the choreography to earn everyone’s nod.
Economy
A4 Wednesday, June 24, 2015 • Editors: Vittorio V. Vitug and Max V. de Leon
briefs house panel head favors freeze on mandatory replacement of old plates
The chairman of the House Committee on Metro Manila Development on Tuesday said that the panel will recommend soon to the Land Transportation Office (LTO) to stop the mandatory replacement of car plates. Liberal Party Rep. Winston Castelo of Quezon City, chairman of the committee, at a news conference, said the Department of Transportation and Communications (DOTC) and the LTO should stop the ongoing replacement of all motor vehicles license plates amid questionable replacement of old car plates and massive complaints from the motoring public. “We conducted one [hearing on the issuance of new car plates] last week and very surprising that [the new car plates] were sourced out from the Netherlands. There are several companies that could produce that kind of plate number. Wala talagang value ang new car plates,” he said, adding, “The committee intends to recommend to LTO to stop the issuance of new car plates.” He said that millions of cars, trucks, and motorcycles have still usable car plates. Under the DOTC plan, car owners will have to shell out P450 for a pair of new plates. Of this amount, P380 will be the manufacturer’s share, while P70 will be the DOTC’s “administration fee.” Jovee Marie N. dela Cruz
DTI OFFICIALS CHARGED FOR ALLEGED FAILURE TO ENFORCE CLEAN AIR ACT Top officials of the Department of Trade and Industry (DTI) are now facing charges before the Office of the Ombudsman for their alleged failure to strictly implement key provisions of the Clear Air Act (RA 8749). Coalition of Clean Air Advocates of the Philippines (CCAAP) President Herminio Buerano Jr. said Trade Secretary Gregory L. Domingo and Undersecretary Victorio Mario A. Dimagiba are liable for dereliction of duty “because for 16 years, they have not done their part in upholding Section 21-D of RA 8749.” Buerano said the DTI officials refused to create the Bureau of Automotive Maintenance, which is supposed to strictly oversee the enforcement motor-vehicle standards. Dimagiba, however, said the enforcement of standards have been met through the adoption of the Philippine National Standards. “We did not violate the Clean Air Act. It’s a selfserving conclusion of the CCAAP; and advocacy in any sector cannot be solved in the courts. The DTI has met with them several times, but they can only hear their own voice.” Catherine N. Pillas
kids at cardinal sin village treated to free meals
Some 300 children from Cardinal Sin Village in Punta, Santa Ana, Manila, were treated to a day of free meals and community bonding to commemorate the first death anniversary of noted realtor Ramon Cuervo III. Clinica Manila and the Manila Board of Realtors, together with Cuervo’s friends and relatives, initiated the feeding program to honor the advocacies left behind by the late real-estate pioneer. A former member of the Professional Regulation Commission’s Board of Real Estate Service, Cuervo was known for his generosity and religiosity, as well as the positive influence that he wielded among his colleagues in the real-estate industry. Dr. Kirby Salvador, one of the project’s prime movers, said the June 13 commemoration was just one of several activities she and close associates have laid out as a tribute to Cuervo’s works. “We hope to propagate not only his name but the good he had done especially for the marginalized sectors of society,” she added. Cuervo passed away on June 15 last year due to complications from lupus. His autobiography entitled Playing Fields was launched last October during the national convention of the Philippine Association of Real Estate Boards of which he was an active proponent.
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Palace assures funding for AFP modernization T
DBM to LGUs: Strengthen fiscal management to avail of BuB ‘perk’
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By Butch Fernandez
alacañang assured on Tuesday that the government was moving to address reports about the Armed Forces of the Philippines’s (AFP) “limited equipment and facilities” to defend the country’s boundaries amid China’s creeping expansion putting up artificial islands to legitimize claims to disputed territories in the region. According to Palace Deputy Spokesman Abigail Valte, the government has set aside adequate funding for equipment and other needs
of AFP troops tasked to guard the country’s borders. “The AFP has a modernization plan and the Aquino administra-
tion has consistently made sure that is funded,” Valte added, but did not say how much was allocated for it in the 2016 AFP budget. Still, Valte indicated that the AFP is in the process of procuring additional military equipment to upgrade AFP’s defense capability. “We continue to acquire equipment that would serve the needs of our soldiers, as well as engaging with other countries to continue training and learning best practices,” she said without going into specifics. Valte was fielded with queries about Palace plans following reports citing the AFP’s “limited equipment, bases and facilities” to defend Philippine territory as China steps up reclamation projects building artificial islands in contested remote areas of the region said to have untapped natural resources.
he Department of Budget and Management (DBM) urged leaders of local government units (LGU) to strengthen the capacity of budget and procurement officers on fiscal management to take advantage of the new bottom-up budgeting (BuB) scheme that allows local communities to directly handle spending. Budget Secretary Florencio B. Abad said that among the measures of the Aquino administration to address underspending include “direct release of funds to LGUs for location-specific projects.” But the complete release of funds to LGUs, according to Abad, remains dependent on their compliance to their capacity to manage funds efficiently. He added that the DBM is coordinating with various key spending agencies and LGUs to improve public financial management. “Public Finance Management Capacity is a condition for bottom-up budgeting,” said Abad, citing direct release of funds to LGUs will include allocation for road projects. The DBM, Abad said, has spear-
headed a thorough review of the implementing rules and regulations of the country’s procurement law that would enable agencies, departments and LGUs to utilize allocation through efficient biddings and awarding of contracts. Among the measures to address underspending include training of procurement officers in agencies and LGUs on the new systems in public procurement. Abad earlier said more than 95 percent of the budget allocation for 2015 have been released by May 31 this year to allow agencies and LGUs to speed up procurement procedures. He said enough measures have been enacted to make budget execution more efficient to help ramp up public disbursements. “When government departments and agencies don’t spend efficiently, we won’t just be looking at slower economic growth. We’re also looking at potential delays in the delivery of public goods and services,” Abad said. Estrella Torres
Time to switch to e-vehicles, Evap reminds transport groups PPA reports
modest growth in passenger, cargo traffic
By Lenie Lectura
T
he Electric Vehicle Association of the Philippines (Evap) strongly encourages various transport groups to replace dilapidated public-utility vehicles with electric vehicles (EVs). According to Evap President Rommel Juan, there are 350,000 old jeepneys nationwide averaging 20 years of age. Moreover, there are millions of tricycles equipped with smoke-belching, two-stroke engines that have been banned by the Clean Air Act. “The EV industry is now ready to cater to the local public-transport market. Its members now have the technology and facilities to supply the local public-transport sector with cleaner and more modern versions of the jeepneys and tricycles, known as the e-jeepneys and the e-trikes,” Juan said. The Evap official said e-jeepneys have been plying within Makati City since 2008, under the local government’s Makati Green Route project, at the Filinvest City in Alabang, Ateneo, La Salle and within Meralco Compound. E-trikes, on the other hand, are now visible in Bacoor, Cavite, Boracay, Quezon City, Mandaluyong and on UP Diliman campus. “Our main vision is to promote the use of EVs in the Philippines, since we believe that this is possibly one of the better ways to modernize our public-transport system. It is cheaper for operators to use EVs than regular internalcombustion- engine vehicles because of the lower power cost and
By Regina Coeli T. Aquino Special to the BusinessMirror
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A father and his daughter gawk at some of the e-trikes delivered to the University of the Philippines campus during the recent anniversary commemoration of the state-run university. The Electric Vehicle Association of the Philippines, through its president Rommel Juan, has called on transport groups and operators to replace their old dilapidated units with new e-vehicles. Nonoy Lacza
less maintenance,” Evap Executive Director Bodie Pulido said. “However, f und ing is now a major impediment. We need funders to come in to fund the initial equity needed by the bank to finance a fleet of EVs. And we also need fund managers to help us make creative schemes to get funding for these EV projects,” Pulido added. A s such, Pu lido urged the
Bicol RDC backs K to 12 Program implementation
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EGAZPI CITY—The Bicol Regional Development Council (RDC), chaired by Albay Gov. Joey Salceda, has endorsed the immediate implementation of the Department of Education’s K to 12 Program which is designed and expected to improve the country’s education system, and produce world-competitive and employable graduates. The Bicol RDC, a government-private multidisciplinary policy development body, made the endorsement during its recent full council meeting in Virac, Catanduanes. Its members include multisectoral representatives from the Bicol provinces of Albay, Camarines Norte, Camarines Sur, Catanduanes, Masbate and Sorsogon. Salceda said the K to 12 Program will produce globally competitive graduates who will immediately be employable after their free basic education. The Philippines has fallen behind other countries in Asia in terms of competitive learning. In a recent media interview, Salceda echoed President Aquino’s statement that the government “can no longer afford to delay the implementation of the K to 12 Program as the country’s educational system has long been left behind in the international community.” The K to 12 Program covers Kindergarten and 12 years of basic education (six years of
elementary education, four years of Junior High School, and two years of Senior High School) to provide sufficient time for mastery of concepts and skills, develop lifelong learners, and prepare graduates for tertiary education, middle-level skills development, employment and entrepreneurship. The program, Salceda said, will strengthen early childhood education with its “universal Kindergarten”; make school curriculum relevant to learners’ needs; develop language proficiency; and equip its graduates with the necessary skills. He stressed the need for Filipinos to be globally competitive, and the K to 12 is a vital requirement of the country’s socioeconomic development. He said the country needs to upgrade its education system to be at par with countries in the Pacific region, especially now with the looming Asean integration as one common market. Citing figures from independent think tank Ibon Foundation, which show that of the 553,706 college graduates in 2014, only 518,000 found jobs and there are currently 11.2 million jobless Filipinos, he said such thing can be expected because the present educational system has failed to fully prepare graduates to handle technical work responsibilities. PNA
government to support the use of e-vehicles. “We urge the government to pass the Alternative Fuel Vehicles Incentives bill into law. With the fiscal and nonfiscal incentives, this will make EV players more competitive in the region.” Meanwhile, Juan believes that the future of the Philippine masstransport system lies in e-vehicles. “Electric vehicles are cleaner,
more efficient, perfect for the Philippine road conditions, and are good for the economy. It is expected to spur local auto industry with the development of local EV assembly and manufacturing. So, again, we call on all the transport groups and the government, both local and national, to look into EVs as possibly the most viable replacement for our ailing publictransport vehicles,” Juan said.
‘Dismantle Torre de Manila’
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he chairman of the House Committee on Metro Manila Development and two other lawmakers on Tuesday urged property developer D.M. Consunji Inc. (DMCI) to voluntarily remove the so-called Rizal monument photobomber, the Torre de Manila. Liberal Party Rep. Winston Castelo of Quezon City, the panel chairman, at a news conference, said the DMCI should remove the building as it is affecting the beauty of the Rizal monument at the Luneta Park. “The nightmare of DMCI will continue if they would not totally remove it. I advise them to voluntarily dismantle it. After all, it would be a big contribution to preserve our cultural heritage and national patrimony," Castelo said, adding, “they [DMCI] should accept that [the construction of the building was] a gross mistake.” According to Castelo, “It’s very important for DMCI to know that the preservation of national culture is more important than profit. This is not just about commercialism but the important issue here is about patrimony, preservation of
our heritage and our culture.” Akbayan Party-list Rep. Ibarra Gutierrez, for his par, said the Supreme Court should order the demolition of Torre de Manila. He said that the DMCI Holdings Inc. still proceeded on building the condominium despite the National Commission on Culture and the Arts (NCCA) suspension early last year through a cease and desist order. “When the cease and desist order was issued, the Torre de Manila only had nine floors. Now, it has 46 floors. The scope of the TRO was the construction, but the Supreme Court could later issue an order for the demolition because it is in the prayer of the petitioners and the DMCI only had permit from the local government, not a clearance to build such from the NCCA as provided for by law,” Gutierrez said. Gutierrez was referring to the National Cultural Heritage law or the Act Providing for the Protection and Conservation of the National Cultural Heritage and strengthening the NCAA and its affiliated cultural agencies. Jovee Marie N. dela Cruz
ARGO and passenger traffic at the country’s seaports grew modestly in the first four months of the year, thanks to the healthier foreign container throughput and stronger domestic cargo volume. Data from the Philippine Ports Authority (PPA) showed that cargo volume from January to April this year totaled 66.6 million metric tons (MT), 6.34 percent higher than the 62.63 million MT registered in the same period last year. PPA General Manager Juan C. Sta. Ana said the growth came from “the 6.87-percent boost in domestic-cargo throughput, equivalent to 27.75 million MT of goods.” Meanwhile, foreign cargo volume increased by 5.97 percent to 38.85 million MT, with 33.55-percent more imports at 22.21 million MT, over exports at 16.63 percent. Container volume also grew by 9.45 percent this year to 1.9 million twenty-foot equivalent units (TEUs), from the 1.73 million TEUs posted in January to April 2014. Sta. Ana said foreign container traffic also contributed to the rise in overall cargo volume by registering a strong record of 1.14 million TEUs. Ex port boxes recorded the highest growth, with a 15.78-percent improvement, from 510,798 TEUs to 591,410, in the same comparat ive per iods. Impor t boxes increased by 5.56 percent to 554,849 TEUs. On the other hand, domestic boxes jumped up by 7.76 percent to 757,065 TEUs, from 702,531 TEUs last year. Private ports continue to outperform government ports, with the former handling 41.21 million MT, or 57.38 percent, of the nationwide cargo throughput, and the latter shipping the remaining 42.62 percent, or 25.39 million MT. The improvement in the handling of cargoes happened in light of the Palace’s declaration in March that the issue of port congestion had been completely resolved. Aside from the increase in volume of goods, the period under review saw a 6.84-percent rise in passenger traffic, with 19.67 million people patronizing fluvial travel. However, shipcalls inched down by a percentage point to 115,880 vessels in the first four months of the year.
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Wednesday, June 24, 2015 A5
Delivery of new MRT 3 LRVs moved back by at least 3 more months–Abaya
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By Lorenz S. Marasigan
ELIEF for the more than half a million daily passengers of the Metro Rail Transit (MRT) Line 3 will take just a little bit longer than expected, after the transportation chief reported on Tuesday that the delivery of the system’s new light-rail vehicles will be delayed by a few more months. Passengers will have to continue riding the old and dilapidated coaches of the railway system until the first quarter next year, as the new train cars must undergo a more stringent examination before being deployed. Transportation Secretary Joseph Emilio A. Abaya said the new delivery schedule of the new coaches has been set for January, a quarter-period delay from the original October target. A team from the train line’s management and the Department of Transportation and Communications went to China last week to check on the progress of its multibillion-peso train-car order from Dalian Locomotive and Rolling Stock Co. “The prototype is on schedule for delivery in mid-August. The dynamic testing phase will start in November, which is when the prototype’s bogies
will arrive,” the transport chief said. The prototype, he explained, will undergo dynamic and static testing and debugging to ensure the new coaches will function at their optimal level. This, according to Transportation Spokesman Michael Arthur C. Sagcal, will involve the utilization of bogies, devices that support the rail vehicle of the body. “The bogies needed for dynamic testing will arrive in November. The bogies were subcontracted by Dalian out to an established German manufacturer. Although we will wait for their delivery until November, we are well-assured of the quality of these components,” he explained. A bogie is used to ensure the train car’s stability both on curved and straight tracks. It also absorbs vibration and minimizes the generation of track irregularities and rail abrasion.
“In the meantime, we will assemble the prototype and check its components ahead of the dynamic testing. The monthly delivery of three train cars should start in late January 2016,” Abaya added. The Cabinet official noted that the project implementation team that went to Dalian in China indicated that the prototype appears to be of good and reliable quality. “Better traction motors to incorporate alternating current or AC technology was used, instead of direct current or DC system presently being used, which means less maintenance needs in the future,” he said. This postponement again places the common commuter at the losing end. The project has already been long delayed due to issues with the line's corporate owner. “What is important to us is that the train cars, once delivered, will be safe and reliable. So we prefer to be thorough with the manufacture, assembly, checking and testing of the prototype,” Abaya said. Commuters from the north and south of Manila patronize the MRT 3, as it is a cheaper and faster option to riding buses and taxis. But some are now adamant to ride the once-mighty train system because of safety purposes. The train system saw itself bogging down multiple times this year already, once even forcing passengers to walk beside the rails along the station in Guadalupe in Makati City.
There are also fewer trains running due to the lack of spare parts, and a reputable maintenance provider. But once the 48 new trains come in, MRT 3’s trips per hour will increase from 20 to 24, which will translate to a 60-percent rise in the number of passengers per hour, per direction. This means that there will be 37,824 passengers who can avail themselves of the rail service every hour heading toward one direction. Currently, only about 23,640 people ride an MRT service per way every hour. But that number still depends on how many trains are running on a particular day. Today the rail line’s average daily ridership is already over 560,000, and its highest single-day passenger count is 620,000. The project is aimed at easing the gridlock on Edsa, and “make the MRT 3 experience much more bearable for its riders.” The government also plans to modify the structure of its trains from three coaches to four in the third quarter this year. But this also seems to be affected by the delay. A change in platforms at the stations is not necessary, as they are already designed to carry an additional train coach for each set. It will effectively cut the waiting gap per train to three minutes from five. Aside from adding new coaches to the current MRT 3 fleet, the government is also rolling out P9.7
billion worth of projects to improve the train line. The state also wants to buy out the corporate owner of the line. But several private groups are proposing a different scheme to modernize the train system, which has been under fire for years now for its mediocre services. The group of businessman Robert John L. Sobrepeña is proposing to do a “quick fix” solution to make the train system safe for public transport. Together with foreign firms Sumitomo Corp. of Japan and Globalvia Infrastructuras of Spain, Metro Global Holdings Inc. is proposing to “fix” the ailing system through a $150-million investment that involves the procurement of a total of 96 new train cars, and the rehabilitation of the existing 73 coaches, increasing its capacity by fourfold to 1.2 million daily passengers. Under the proposal, a single point of responsibility will be implemented: meaning the rehabilitation and the maintenance of the line will be handled by a single company. Separately, Metro Pacific Investments Corp. is proposing to shoulder the upgrade costs of the train system, and release the government from the bondage of paying billions of pesos in equity rental payments. The group of businessman Manuel V. Pangilinan, which earlier entered into a partnership agreement with the corporate owner of the
MRT, intends to spend $524 million to overhaul the line. The venture would effectively expand the capacity of the railway system by adding more coaches to each train, allowing it to carry more cars at faster intervals. The multimillion-dollar expansion plan would double the capacity of the line to 700,000 passengers a day, from the current 350,000 passengers daily. It was submitted in 2011, but the transportation agency’s chief back then rejected the proposal. On the other hand, German firms Schunk Bahn -und Industrietechnik GmbH and HEAG Mobilo GmbH are seeking to place the whole train system under a massive transformation program to augment its capacity and to provide a safe and comfortable travel to commuters from the northern and southern corridors of Metro Manila. The P4.64-billion proposal, submitted in February with Filipino partner Comm Builders and Technology Phils. Corp., calls for the complete overhaul of the 73 light-rail vehicles of the MRT, the replacement of the rails, the upgrading of the line’s ancillary system, the upgrade of the track circuit and signaling systems, the modernization of the conveyance system, and a three-year maintenance contract. For now, Juan de la Cruz will have to wait before these projects come to fruition.
Opinion BusinessMirror
A6 Wednesday, June 24, 2015
editorial
National debt for growth and development
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he national debt is in the news again, arising from the favorable decline of the foreign debt component over the last one-year period. The national debt consists not just of foreign debt but of domestic debt, as well. The national debt (in Philippine million pesos): Total Domestic External
February 2014 5,591,534 3,644,286 1,947,248
February 2015 5,756,805 3,827,569 1,929,236
Per capita share of Filipinos in the national debt as of March 2015: P62,675. As can be seen, the external component of the national debt fell by some P18 billion from 2014 to 2015. Although most welcome this fall is not all that critical, the amount involved being only a negligible fraction of our gross domestic product and its servicing requirement being only a microscopic portion of our total export earnings. More relevant for comment is the share of every Filipino in the national debt as of the end of this year’s first quarter: P62,675. This share is almost always declared a burden on those Filipinos who did not themselves incur the debt. It is said that these people—the younger generations or those that are yet to come—are being made to suffer the consequences of decisions they had no participation in making. Before that way of thinking becomes legend, it must be corrected. It is true that these generations had no participation in the making of the decisions that led to the construction of the expressway, the airport, the bridge, or whatever public facility is in question, but it is also true that they are benefiting from these facilities. These generations have expressways, airports and seaports that make their travels easy and comfortable; they have irrigation systems that raise their productivity; health and education facilities that enhance the quality of their lives. On the user-pays principle alone, these people must pay for their use of the facilities and the payment must apply not just to the variable component of the cost but to the amortization of principal, as well. But equally important, the fear of a transfer of payment from one generation to another has no basis in theory and in fact. Each generation pays for its use of the facilities. If there is such transfer at all, it is from the older generation that planned the projects and implemented them in real life, to the younger generation that enjoys the benefits of these projects. Loans by the government, whether from domestic or from foreign sources, are anathema to the national interest when they are used for consumption rather than for investment, as when they are utilized to cover budgetary deficits. But to the extent that these loans are mobilized for the improvement of our economy’s productive capacity, they are well taken, for they raise our capacity for higher growth and accelerated development in the future. Let us be sure that loans are used for development purposes. They will more than pay for themselves.
Working toward perpetuity Susie G. Bugante
All About Social Security
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n the past week, talks about the fund life of the Social Security System (SSS) hogged the business news. Some started computing their age as against the life of the pension fund, which is projected to last until 2042. This means that SSS can pay all its obligations up to 27 years from today.
Some would think that 27 years is a long time. But international standards dictate that pension funds must aim for a life of 70 years or perpetuity. Why aim for perpetuity? Social-security institutions like the SSS is a long-term proposition. It deals with commitments that extend many decades into the future. All 32.1 million members need to be assured that the SSS is implementing a solid financial plan to back up all its commitments for both short-term and long-term benefits. At the forefront of the implementation of financial safeguards is the SSS chief actuary. Any proposed changes, say, in the benefit structure,
or in the amount of pensions, perhaps, is carefully evaluated by the chief actuary as to its financial impact. Recently, the SSS said that structural reforms, such as a contributionrate hike or an increase in the statutory cap for SSS contributions, are required to improve its fund life. Based on latest actuarial valuation, the social-security fund regained a life of four years from the previous valuation of 2039 as a result of the increase in contribution rate and monthly salary credit ceiling that took effect in January 2014. Shortly after the new contribution rate was adopted, SSS pensions were raised by 5 percent in June that same year, causing a one-year decrease in the
fund life, which is now projected to last until 2042. SSS Chief Actuary George Ongkeko Jr. explained that while SSS investments are performing significantly well, the pension fund could only invest and earn so much. So, if the contribution rate remains unchanged while benefit payments continue to swell, he said that the SSS’s reserve fund will be exhausted by 2042. It took SSS three years to inform and make employers and workers understand the importance of increasing contributions to lower the unfunded liability or the amount of future benefit obligations that requires funding given the present value of contributions and assets. Prior to the contribution hike in January 2014, the unfunded liability was reported at P1.1 trillion. It went down by 16 percent to P908 billion with the increase in the contribution rate and salary ceiling. But the figure will still add up overtime as SSS membership grows, the top official explained. To illustrate, a member who has paid the minimum contribution for 10 years and will receive his monthly pension for 10 years would have a return of P156,000 from his P13,200
paid contributions. Obviously, his contributions redounded much to his benefit. The SSS needs to close the wide gap between benefit and contribution payments in order to support the guaranteed benefits of all members. The SSS disburses about P7 billion in pensions monthly for retirement, death and disability under the SSS regular program. To date, the SSS has 1.9 million pensioners, and reported P444 billion in total assets as of March 2015. Social-security schemes are dynamic. Safeguarding the solvency and long-term viability of the fund while remaining sensitive to the needs of its members is a tough balancing act for the SSS. Some relationships may not have “forever,” but some are committed to “forevermore” just like the SSS is. For more information about the SSS and its programs, call our 24-hour call center at (632) 920-6446 to 55, Monday to Friday, or send an e-mail to member_relations@sss.gov.ph. Susie G. Bugante is the vice president for public affairs and special events of the Social Security System. Send comments about this column to susiebugante.bmirror@gmail.com.
A film-noir trope is now unconstitutional Noah Feldman
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BLOOMBERG
emme see your register.” Can’t you just hear the tough cop asking the hotel desk clerk that question in every noir film you’ve ever seen? As of Monday, the question is now unconstitutional, and the hotel doesn’t have to show its list of guests unless the police have a warrant. The case even came out of Los Angeles, home of the film-noir tradition.
The LA ordinance before the US Supreme Court is a policeman’s dream. It requires hotels in the city to get guests’ names and addresses, their means of payment, their car registrations (this is LA, after all) and the number of guests, and keep that information on file for 90 days. My favorite part of the law says that if you walk in without a reservation, pay cash or rent the room for less than 12 hours, you need to show photo ID—which the hotel has to record. The seediness is almost too wonderful. Drug deals, prostitution, the spontaneous drifter—the law is out to target them all. The provision of the law that was challenged in this case, City of Los Angeles v. Patel, wasn’t any of these. It was the provision that says the police can automatically see any part of the register just by asking. It’s a misdemeanor—that is, a crime—for the hotel proprietor to refuse. I wish the case had included facts as sordid as the law itself—but, in
truth, that would’ve been less legally interesting than what actually happened. In the real world, a group of hotel operators in conjunction with a lodging association brought a collective lawsuit in federal court challenging the ordinance as unconstitutional on its face. Their argument was that, as written, the law violated the Fourth Amendment right to privacy from unreasonable searches and seizures—in all cases whatsoever. A facial challenge, as it’s called in the con-law biz, is a rare bird. Most constitutional cases arise from particular facts, and involve someone claiming that his or her constitutional rights have been specifically violated. A facial challenge is brought without any facts at all. To win, the plaintiff has to show (at least in theory) that the law would be unconstitutional in every conceivable case. In other words, for a facial challenge to succeed, it must be impossible
to imagine conditions where applying the law would be permissible under the Constitution. Given that the Fourth Amendment is written so that it bars “unreasonable” searches and seizures, you’d think it would be a bad fit for a facial challenge. After all, surely it would sometimes be reasonable for the police to see a hotel register without a warrant. That was the view of Justice Antonin Scalia in dissent. He thought that the law is “constitutional in most, if not all, of its applications.” And in a 1968 case called Sibron v. New York, the court said the “constitutional validity of a warrantless search is preeminently the sort of question which can only be decided in the concrete factual context of the individual case.” But Justice Sonia Sotomayor, writing for five justices, including swing voter Justice Anthony Kennedy, thought otherwise. The 1968 case, she noted, involved a highly flexible law that allowed New York police to stop anyone whom they suspected of having committed a felony or being about to commit one. In contrast, Sotomayor said, the LA law is categorical, rather than flexible—and so could be subjected to a facial challenge. Turning to the actual constitutional right, Sotomayor said the hotel operator who refused to turn over the register must be given the opportunity to make his or her case before a neutral decisionmaker like a judge. In her vision, police officers wanting to see a register could issue an on-the-spot subpoena, which could then be challenged by the hotel operator before an administrative judge.
This, Sotomayor insisted, wouldn’t be unworkable. Interestingly, Sotomayor went on to hold that hotel owners have a constitutional privacy interest in the records required by the ordinance. Scalia in dissent would’ve held that because hotels are a closely regulated industry, their proprietors have no privacy right in their registration logs. And the city of Los Angeles, in litigating the case, spoke of a “centuries-old” tradition of warrantless searches in hotels, where privacy rights weren’t thought to apply. Sotomayor said the historical record wasn’t as clear as all that. The disagreement between the hardcore liberals and the true-blue conservatives here about the constitutional rights of proprietors amounted to a nearcomplete reversal of those eight justices’ opinions in the big-ticket cases of Citizens United and Hobby Lobby, which involved corporations’ First Amendment rights and statutory religious liberty rights, respectively. In those cases, the four conservatives plus Kennedy thought that free speech and religious liberty applied to corporations. The four liberals strongly disagreed. Apparently, when it comes to hotels’ privacy under the Fourth Amendment, all eight see things the other way around. Liberals think the hotel proprietors have privacy rights; the conservatives think these are businesses without them. Only Kennedy consistently favored the extension of constitutional rights to both corporations and hotels in all these cases. Round up the usual suspects.
Opinion BusinessMirror
opinion@businessmirror.com.ph
Wednesday, June 24, 2015
Greece and Germany Insurance agents in good standing agree the euro can’t work Atty. Jose Marie F. Tolentino
Clive Crook
BLOOMBERG view
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head of Monday’s European Union (EU) summit, the only thing you can rule out is a happy ending. Whatever happens at the leaders’ meeting—even if a deal of some sort emerges—the EU has suffered lasting and perhaps irreparable damage. The available choices run from bad to terrible. The costs to Greece and to the EU of a default followed by Greece’s ejection from the euro system could be huge. But even if the worst doesn’t happen, Europe has suffered a total breakdown of trust and goodwill. That can’t easily be undone—and it’s a dagger pointed at the heart of the entire project. Two things, I believe, will strike historians as they look back on this collapse of European solidarity. The first is that the principals were able to draw such a poisonous dispute out of such an easily solvable problem. The second helps to explain why that was possible: Greece and its partners fell out thanks to a delusion they have in common—the idea that sharing a currency can leave fiscal sovereignty intact. On the eve of the summit, the economic distance between Greece and its creditors is small. Differences over fiscal targets have narrowed down to timing—what happens next year rather than the year after—and fractions of a percentage point of gross domestic product. There’s even tacit agreement that further debt relief will be needed as part of a successor bailout program, though the creditors won’t discuss the details until the current program is completed. That’s a procedural rather than substantive issue, and it simply shouldn’t matter. The problem is that the creditors don’t trust Alexis Tsipras and his Syriza ministers to hit the targets they might sign up to. The creditors don’t even trust them to try. They want firm commitments to specific policy changes—tax increases and new retirement rules to cut pension spending—that Tsipras has promised not to accept. Again, the revenue these policies would generate is small in relation to the fiscal adjustment Greece has already achieved and to the forecasting errors involved in all such calculations. It isn’t the numbers that separate the two sides. Greece and the creditors are standing on principle, and oddly enough it’s essentially the same principle—that of sovereignty. Greece has had enough of being dictated to by the rest of the EU. Of course, its government wants debt relief and a milder profile of fiscal adjustment—and that’s justified, because without them the Greek economy will recover too slowly, if at all. But more than debt relief and softer fiscal targets, Greece wants to be back in charge of its own policy. Its years under the creditors’ supervision
have been terrible. Being force-fed any more of their medicine is what the country rejected when it voted for Syriza. The creditors believe in sovereignty just as much. They don’t think their taxpayers should be on the hook for Greece’s failure to balance its books. They too have a point. The sovereignty Greece demands shouldn’t come at others’ expense. Responsible sovereign governments recognize a budget constraint: They see there’s a limit to how much they can safely borrow. And if they exceed it, they, not their neighbors, suffer the consequences. What neither side will acknowledge is that monetary union, if it’s going to work, has to infringe the sovereignty of creditors and borrowers alike. Without national currencies and interest rates to act as shock absorbers, fiscal flows across borders are necessary to help smooth out economic fluctuations. This needn’t mean a permanent flow of subsidy in one direction; it does mean temporary reversible flows from countries with low unemployment to countries in recession. In the particular case of Greece, it requires from the creditors further patience and fiscal support. If this is what Germany and other creditors are ruling out when they say they will have no part of a “transfer union,” the euro system will be permanently biased toward stagnation. But the essential quid pro quo is that borrowers must accept limits on their fiscal freedom as well—or else the consequences of reckless borrowing are borne by other members of the currency area. There’s the deal: To make monetary union work, some limited sacrifice of fiscal sovereignty is necessary on both sides. The EU’s efforts to address this problem with mechanical fiscal rules have failed at every step. Now, by stirring so much mutual contempt, the Greek crisis may have put the solution permanently out of reach. Pooling of fiscal sovereignty—an expression of political solidarity— is what both sides in this quarrel have set their faces against, and with steadily mounting fervor. Greece isn’t willing to do what it takes. Nor is Germany. Nor, after four months of being called pillagers and criminals by Tsipras, are the other creditors. Yet don’t say they disagree. All through this crisis, there has been more agreement than meets the eye: They have agreed, it seems to me, on the impossibility of making this system work.
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INSURANCE FORUM
he Insurance Code, as amended by Republic Act (RA) 10607, defines an insurance agent as “any person who, for compensation, solicits or obtains insurance on behalf of any insurance company or transmits to a person other than himself an application for a policy or contract of insurance to or from such company or offers or assumes to act in the negotiating of such insurance.” From the foregoing statutory definition, insurance agents play a vital role in the insurance business. They represent the companies and the products the insurer sell and are the ones who come in contact with the prospective policyholders, the insuring public. They present, explain and recommend insurance policies upon which the public rely for the purpose of securing themselves from certain risks.
Indeed, insurance agents must conduct their business with honesty, fairness, integrity and professionalism. It is, therefore, the responsibility of the government to ensure that only those qualified and who maintain good standing are allowed to act as insurance agents. The Insurance Commission (IC) regularly conducts Insurance Agents’ Examinations for qualified applicants. Successful examinees are then issued Certificates of Authority, or license to solicit and sell insurance. While the applicant had already hurdled the qualifying examinations and was accordingly issued a license, maintaining the agent’s good standing is of equal importance. All insurance agents are enjoined to maintain the highest standards of professional
excellence and ethical conduct. The basic requirements are as follows: First, an insurance agent must possess all of the qualifications and none of the disqualifications provided under Sections 312-314 of RA 10607. Second, an insurance agent must be “actively engaged” as such. The term means that the agent shall have earned commission amounting to at least P3,600 during the year following the issuance of the certificate of authority or license as provided in Insurance Memorandum Circular 3-93. Third, insurance agents must abide by the 2013 Market Conduct Guidelines (MCG) adopted and implemented by the IC through its Circular Letter 2013-33 dated November 4, 2013. The MCG is a com-
Pope Francis’s timely call to action on climate change By Tomás Insua Inter Press Service
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OSTON—On June 18 Pope Francis issued Laudato Si, the first-ever encyclical about ecology, which promises to be a highly influential document for years to come. The encyclical, which is the most authoritative teaching document a pope can issue, delivered a strong message addressing the moral dimension of the severe ecological crisis we have caused with our “throwaway culture” and general disregard for our common home, the Earth. One of the most important points of this document is that it connects the dots between social justice and environmental justice. As a parishioner from Buenos Aires I have seen firsthand how Jorge Bergoglio cared deeply about both issues, and it is beautiful to see how he is
bringing them together in this historical encyclical. The most prominent example of this connection is how our role in causing climate change is hurting those who had nothing to do with this crisis, namely the poor and future generations. Although the encyclical will have an impact on Catholic teaching for generations to come, its timing at this particular juncture is no accident. As the pope himself stated, “the important thing is that there be a bit of time between the issuing of the encyclical and the meeting in Paris, so that it can make a contribution.” The Paris meeting he referred to is the crucial COP21 summit that the United Nations will convene in December, where the world’s governments are expected to sign a new treaty to tackle human-made climate change and avoid its worst impacts.
This is significant because the international climate negotiations have been characterized by a consistent lack of ambition during the past two decades, allowing the climate-change crisis to exacerbate. Greenhouse gases emissions have grown 60 percent since world leaders first met in the Rio Earth Summit of 1992, and continue to accelerate setting the foundation for a severe disruption of the climate system. Scientists are shouting at us, urging humankind to change course immediately, but we are not listening. That is why strong moral voices such as the one of Pope Francis have the potential to change people’s hearts and overcome the current gridlock. Climate change is a moral issue, so the exasperating lack of ambition of our political leaders in the climate negotiations raises the urgency of mass
civic mobilization this year. Faced with the clear and present threat of climate change, governments have long used the supposed passivity of their citizens as an excuse for inaction. The climate movement is growing fast and is building up pressure at an increasing scale, but its growth rate needs to be boosted to meet the size of the challenge. Pope Francis’s encyclical has the potential to draw a huge amount of people to the climate movement by inspiring the world’s 1.2 billion Catholics, as well as non-Catholics who are open to his message, to mobilize in this important year. Catholics are already responding to the Holy Father’s call by scaling their mobilization, mainly through the recently founded Global Catholic Climate Movement. This is a coalition of over 100 Catholic organizations from all con-
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prehensive set of rules of conduct and behavior of all agents in the lifeinsurance industry to protect the policyholders and the insuring public. Although not an exhaustive list, the following are some important examples of unacceptable behavior by insurance agents: (1) nondisclosure of full information which could have enabled clients to make an informed choice or decision; (2) threatening prospects, clients, members of the public, company staff and officers, agents, or agency leaders; (3) using abusive language or behavior toward policyholders, the public, company staff or officers, agents, or agency leaders; (4) maligning the insurance industry, other insurers, their staff, agents, or products; (5) making disparaging remarks about other insurers, insurance distributors, policies, services, or methods of marketing, or making comparisons with the products of other insurers; (6) committing financial fraud such as unremitted premium collection, diverting premium collection; (7) poaching businesses of another agent or sulutan; (8) misrepresenting product features and benefits of any of its insurance or investment plans; and (9) using or modifying any proposal or illustration material without prior clearance. (The complete list is provided under the said IC Circular.) Last, agents must not be included in the “Negative List.” The IC, through Circular Letter 11-2008 and 17-2006, requires insurance companies to submit within the first 15 days following the end of every quarter a Negative List of Insurance Agents.
The negative list includes inactive, as well as active agents who may have been found guilty of, or with pending complaints filed against them before the company, any administrative body or court for committing any of the following: (1) willfully violating any provision of the Insurance Code; (2) intentionally making a material misstatement in his application to qualify as an insurance agent; (3) obtaining or attempting to obtain a license by fraud or misrepresentation; (4) fraudulent or dishonest practices; (5) misappropriating or converting to his own use or illegally withholding moneys required to be held in a fiduciary capacity; (6) not demonstrating trustworthiness and competence to transact business as an insurance agent in such a manner as to safeguard the public; or (7) materially misrepresenting the terms and conditions of policies of contracts of insurance which he seeks to sell or has sold. With all the aforementioned safeguards, the insuring public—as well as the insurance industry—can be assured that only able, qualified and agents in good standing are allowed to exercise the privilege of being recognized as agents. The Insurance Commission, through its Licensing Division, regularly conducts Insurance Agents’ Examinations for qualified applicants, Tuesdays to Fridays from 8:30 to 10:30 in the morning at the Insurance Commission Function Room.
tinents, aiming to raise awareness about the moral imperative of climate change and to amplify the encyclical’s message in the global climate debate by mobilizing the Church’s grassroots. The flagship campaign of the movement is its recently launched Catholic Climate Petition, which the pope himself endorsed a month ago when we met him in the Vatican, with the goal of collecting at least 1 million signatures for world leaders gathered in the COP21 summit in Paris. The task, to be delivered in coalition with other faith and secular organizations, is for governments to take bold action and keep the global temperature increase below the dangerous threshold of 1.5 degrees Celsius, relative to preindustrial levels. At the same time, people of all faiths are coming together with a strong moral call for action through initiatives such
as Fast for the Climate—whereby participants fast on a monthly basis to show solidarity with the victims of climate change—and the People’s Pilgrimage— a series of pilgrimages in the name of climate change led by Yeb Saño, former Philippine climate ambassador, and designed to culminate in a descent on Paris around COP21. Leaders of other faiths will furthermore join their Catholic counterparts in celebration of the encyclical on June 28, when the interfaith march “One Earth, One Human Family” will go to Saint Peter’s Square as a sign of gratitude to Pope Francis. Whatever happens, this year will go down in the history books. Be sure of that. The pope has made a massive contribution to making sure it’s remembered for all the right reasons. Now it’s our turn to step up and finish the job.
Atty. Jose Mari F. Tolentino is chief of Licensing Division at the Insurance Commission.
2nd Front Page BusinessMirror
A8 Wednesday, June 24, 2015
SC junks first petition vs BBL for premature filing
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By Joel R. San Juan
HE Supreme Court (SC) on Tuesday dismissed the first petition seeking to declare the controversial Bangsamoro basic law (BBL) unconstitutional. At a news briefing, SC Spokesman Theodore Te said the magistrates, during their regular en banc session, held that the petition filed by a certain Rolando Rojo Mijares was premature, thus warranting its dismissal. However, the court took cognizance of the petition filed by the Philippine Constitution Association (Philconsa), which sought to declare as unconstitutional the two agreements signed by the government with the Moro
Islamic Liberation Front (MILF) allowing the establishment of a Bangsamoro government in lieu of the Autonomous Region in Muslim Mindanao (ARMM). Philconsa, through its president Leyte Rep. Ferdinand Martin Romualdez, said the Framework Agreement on the Bangsamoro (FAB) dated October 12, 2012, and the Comprehensive Agreement on the Bangsamoro (CAB) dated March 27, 2014, grant “unconscionable” fi-
nancial, social, economic and political benefits to the MILF. The Court gave the respondents —former government peace panel chief and now Supreme Court Associate Justice Marvic Leonen, chief peace negotiator Miriam Coronel-Ferrer, MILF peace panel head Mohagher Iqbal, Budget Secretary Florencio B. Abad and the Commission on Audit—10 days to comment on the petition and the application for a temporary restraining order. Joining Philconsa as petitioners were former Sen. Francisco Tatad; Lipa, Batangas, Archbishop Ramon Arguelles; Archbishop Emeritus of Davao Fernando Capalla; Archbishop of Zamboanga Romulo de la Cruz; and former National Security Adviser Norberto Gonzales. The petitioners argued that the
conduct of the peace process with the MILF was in violation of Executive Order 125 issued by former President Fidel V. Ramos, which requires the presence of a panel of advisers composed of one each from the Senate, the House of Representatives and the Cabinet to be designated by the President. The SC also ordered the consolidation of the petition filed by former Negros First District Rep. Jacinto Paras and the Philconsa petition. The two petitions challenge the constitutionality of the two agreements. The court also announced that Justice Leonen has voluntarily inhibited himself from hearing the pending cases and any future cases involving the FAB, the CAB and the BBL, being the former chairman of the government panel that negotiated the FAB.
PHL seen becoming BPO hub in integrated Asean. . .
Philippines has a good chance of becoming the regional center of existing BPO companies. “Asean integration will play a major role for the industry. We are already known as a call-center capi-
tal of the world. We already have the expertise so a lot of companies are saying, ‘we consolidated our North American operations, why don’t we do it in our Asian operations and consolidate in one location?’ Logi-
cally we can do it in the Philippines,” Mercado said in a news conference. With the free flow of labor among the chief objectives of the Asean integration, the IBPAP head said BPO firms with several Asian operations
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can bring their talent from their other regional sites to the Philippines should they opt to consolidate operations in the country. “That is the value of the Asean region: it’ll make it easier for companies, like Teleperformance, to bring in their talent from the other countries to work in the Philippines. What the clients want to take advantage of is the expertise, which we already have in running and operating contact centers,” Mercado added. Growth outlook remains rosy for the industry, as it is on track of meeting its 1.21-million employee target, the IBPAP chief said. The 1.21-million target is a 17-percent increase over the industry’s total employment of 1.03 million in 2014. The increase in work force is expected to be driven by the continued growth of the industry’s nonvoice subsectors, such as health care, knowledge-process outsourcing/ back-office operations, animation and game development. But the contact-center subsector is still the biggest contributor to the industry’s growth. The IBPAP growth targets and plans are enshrined in its current road map, which will expire in 2016. The industry is currently preparing its Vision 2020 Roadmap, but declined to name specific targets. “We are trying to look at the structure [of the road map] now, so we can’t say any assumptions yet. We are also looking for funding sources from the government and the private sector since this is a big project,” Mercado said. Mercado said the initial framework is expected to be out by the middle of the third quarter.
Fitch. . .
www.businessmirror.com.ph
Slowing global growth may lead to auto mergers
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slowing automotive market worldwide, combined with the costs of adapting to changes such as connected cars and self-driving vehicles, may push automakers to merge or form more joint ventures, AlixPartners Llp. said. Global auto sales will rise at a 2.6-percent annual rate during the next seven years, down from 3.1 percent from 2007 through 2014, the Southfield, Michigan-based advisory firm said in a study released on Tuesday. The companies also will have to deal with the changing technologies. “Significant, and incremental, investments will be required, likely coming at the same time growth is slowing,” AlixPartners said. Fiat Chrysler Automobiles NV Chief Executive Officer Sergio Marchionne is already advocating consolidation in the industry because of the difficulty earning adequate returns. The market for autonomous technology will grow to $42 billion by 2025 and self-driving cars may account for a quarter of global auto sales by 2035, according to a Boston Consulting Group report in April. The AlixPartners study projects that US sales may peak next year and that annual growth in China will slow to 5.2 percent from almost 17 percent in the 2005-to-2014 period. “When you take China out of the growth story, the global auto industry is hardly growing,” Mark Wakefield, a managing director at the firm, said in an interview. In the US, low oil prices and interest
rates have pushed back the coming dropoff in auto sales to the 2018-to2019 period, after a peak of 17.4 million in 2016, AlixPartners said. “Last year we thought the downturn would be sooner because of gas prices,” Wakefield said. “We thought the downturn would be 2017-2018.” AlixPartners identified four future challenges for the industry: connected cars, autonomous vehicles, car sharing, and electric cars and components. The connected-car market is forecast to increase to $40 billion worldwide by 2018, from $13 billion five years earlier, according to AlixPartners. The number of car-sharing users has climbed 39 percent since 2006 and is expected to increase an additional 32 percent through 2020, to 26 million. Electric autos are projected to reach 6.5 million annually by 2025, accounting for 6 percent of global sales, according to the study. As cars become more electrified, 48-volt systems may be in 14 million vehicles worldwide by 2023. AlixPartners said automakers face three choices in adapting to the changes: a “pick-your-spots” approach; forming partnerships short of combining; and mergers. “We expect a considerable wave of consolidation and partnerships in the auto industry,” Stefano Aversa, a vice chairman at the firm, said in a statement. That may begin with a merger of two automakers, “but will also encompass the suppliers and new entrants from the technology sector.”
Bloomberg News
FFCCCII to expand economic programs By Butch Fernandez
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ilipino-Chinese businessmen on Tuesday reaffirmed their commitment before President Aquino to “render greater support” to the Philippine government’s education, social welfare and economic programs. The reaffirmation was personally conveyed to Mr. Aquino by the new officers of the Federation of Filipino-Chinese Chambers of Commerce and Industry Inc. (FFCCCII) that took their oath before the President at simple rites held at the Rizal Hall of Malacañan Palace. Taking their oath with other members of the FFCCCII’s newly installed 2015-2017 officers were Chairman Emeritus Lucio Tan and Alfonso Siy, Ambassador Domingo Lee, Jimmy Tang, Vicente Yu Sr., Robin Sy, Francis Chua, Dr. John Tan, Alfonso Uy and Tan Ching as honorary vice presidents. Also formally sworn into office by Mr. Aquino were FFCCCII President Angel Ngu, Executive
Vice President Henry Lim Bon Liong, Vice Presidents Domingo Yap, David Chua, Alex Yap Cho Ty, William Gosiaco, Michael Tan, Victor Lim, Delfin Letran, Matry Go Ng, Cecilio Pedro, Charles Chante, George Hock Huy Chiu and William Yap Castro; Treasurer Jeffrey Ng; Auditor Tai Lian; and Corporate Secretary-General Fernando Gan. The Palace event was highlighted by the presentation to President Aquino of a scale model of a two-classroom school building that the FFCCCII will help build under the chamber’s “Operation Barrio Schools.” According to FFCCCII, “Operation Barrio Schools is the chamber’s longest-running and biggest private sector-led development program focused on educational infrastructure.” As of this month, it said at least 4,933 buildings housing 9,866 classrooms were already turned over to public schools all over the country, benefiting an estimated 1 million schoolchildren.
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“Real gross domestic product [GDP] growth in the first quarter of the year expanded at a slower pace of 5.2 percent year-on-year, compared with 5.6 percent a year ago, mainly due to weaker government spending,” Fitch analysts particularly said. “Fitch does not expect a significant pickup in public investment, as bottlenecks remain with respect to disbursement of public funds. Furthermore, a narrow revenue base is likely to prevent a material increase in public spending,” the credit watcher added. As a result, the credit watcher retained its below-target growth forecast for the Philippines at 6.3 percent this year and at 6.2 percent for 2016. Both forecasts are below the government’s target of 7-percent to 8-percent expansion this year and next. In a separate research note, Standard Chartered economist Jeff Ng said domestic
household consumption, as supported by improving labor-market fundamentals and steady remittance flows, should continue to support the economy in the second half of the year. However, Ng also warned that external sector challenges traced to volatile global growth prospects further limit the possibility of a strong rebound in local output growth. “The Philippine economy has become more reliant on exports to China and Japan, versus exports to the United States and European Union, in the past 15 years. Of the four markets, China currently accounts for almost half of Philippine exports, up from 5 percent in 2000,” the Standard Chartered economist said. Also, Fitch warned of other “negative sensitivities” in the Philippine market that could tamp down further the country’s potential output.
Among the negative sensitivities helping push the country’s growth or its credit standing include the country’s meager per capita GDP, an indicator of where the country stands relative to its nieghbors around the world, and its low score in governance indicators. In particular, the Philippines’s per capita GDP was estimated at only $2,836 in 2014 and clearly inferior to the average per capita GDP of similarly rated peers of $10,406 in 2014, according to Fitch. Likwise, the Philippines falls short of the average score of similarly rated peer countries in terms of governance indicators, a euphemism for the prevalence of corruption activities going on in a particular jurisdiction. Fitch analysts expressed their alarm over the possible deterioration of governance standards and/or reversal in reform measures that will be put in place after the 2016 presidential elections.