BusinessMirror March 4, 2015 by BusinessMirror

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TfridayNovember 18,4,2014 Wednesday, March 2015Vol.Vol.1010No.No.40146

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I.N.G. GROUP SAYS CHEAPER OIL COULD INCREASE CURRENT ACCOUNT TO $9B THIS YEAR TO BEAT FORECASTS

‘Current account to keep surplus streak’

By Bianca Cuaresma

he surplus state of the country’s current account, a key component of the balance of payments (BOP), could prove unbroken yet again this year and totaling as much as $9 billion, according to the Manila unit of the Dutch financial services giant ING Group.

The projected current-account surplus, indicative of an economy that has become a net lender to the rest of the world, was based on anticipated lower oil-imports bill aggregating $13 billion last year alone.

The price of Dubai crude, representing Asia’s oil-import benchmark, has fallen significantly lower thus far this year. As a result, the current-account Continued on A2

GATES AGAIN WORLD’S RICHEST; JORDAN ON LIST OF BILLIONAIRES

he world’s richest person got even richer this year. And a basketball superstar-turned- owner made the list for the first time. Forbes said on Monday that Bill Gates’s net worth rose to $79.2 billion in 2015, from $76 billion last year. That put him at the top of the magazine’s list of the world’s billionaires for the second consecutive year. The cofounder of Microsoft Corp. has topped the list for 16 of the last 21 years. In second place is Mexican tele-communications mogul Carlos Slim Helu, with a net worth of $77.1 billion. He had topped the list in 2013.

Next is investor Warren Buffett, Continued on A8

PESO exchange rates n US 44.1290

MERALCO’S SERVICE IMPROVEMENT A lineman from Manila Electric Co. (Meralco) installs new electric wiring in Las Piñas City to improve the company’s service. Reports said power supply could go down during the summer months, which could cause brownouts and affect consumers’ electric bills. NONIE REYES

Alveo Land to launch ₧25B worth of projects By VG Cabuag

lveo Land Corp. on Tuesday said it will launch some P25 billion worth of projects in the first half of the year, and add some 5,000 office and residential units. The Ayala Land Inc. unit also said it expects some P40 billion in sales this year. Robert Lao, Alveo president, said this year’s sales target exceeds last

year’s P36 billion, a record high for the company. It also launched a total of P33 billion worth of projects. “We offer a wide range of residential, office and leisure developments across the country to satisfy the needs of our growing market. This puts us in the best position to take full advantage of the country’s economic growth, as we continue to be present in all key CBDs [central business districts] in Metro Manila,”

Lao said in a briefing. Alveo, the Ayala Land unit that develops projects for the upper- and middle- income segment, may grow about 20 percent every year in the long term, Lao said. “Our base right now is big, so we can’t expect to reach our previous growth rate of between 50 percent [and] 60 percent,” Lao said. Alveo, he said, will be aggressive in introducing more key developments throughout the country, averaging

about 10 project launches per year. For the first half of 2015 alone, launches would amount to at least P25 billion worth of new inventory in Makati City, Bonifacio Global City (BGC) in Taguig and in Quezon City. “We have a growing middle class exercising their spending power, boosted by higher consumer confidence; so we are sharpening our Continued on A2

n japan 0.3673 n UK 67.8130 n HK 5.6907 n CHINA 7.0347 n singapore 32.3289 n australia 34.4785 n EU 49.3406 n SAUDI arabia 11.7677 Source: BSP (3 March 2015)

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‘Tax perks transparency bill will not diminish incentives’

he Senate has assured foreign businessmen that a proposed measure that seeks to set annual allocations for tax incentives in the national budget will not hurt the country’s business competitiveness. Senate President Franklin M. Drilon said the proposed Tax Incentive Management and Transparency Act (Timta) is simply a “reporting requirement for the purpose of transparency.” “There will be a tax-incentive information section in the annual budget of the Budget for Expenditures and Sources of Financing and it will not be included in the General Appropriations Act, so

the grant of incentives will not be affected at all,” Drilon told local and foreign businessmen during the Fourth Arangkada Anniversary Forum in Makati City. He issued the statement after the Joint Foreign Chambers (JFC) had thrown its support to the Department of Trade and Industry (DTI), which opposed Timta. “We are not aware of any country in the world that includes

the amount of fiscal incentives granted in its annual appropriations law. Incentives are granted for private purposes, and not for public purposes, as intended by the amounts in the appropriations law,” JFC said in its letter to Second District Rep. Romero Quimbo of Marikina City, chairman of the House Committee on Ways and Means. The JFC said requirements being proposed by the measure would cause additional burden to foreign investors and will not be good for the country’s competitiveness. The DTI had also come out with a position paper outlining its reasons for opposing the measure. For one, the DTI said it could violate a World Trade Organization agreement on subsidies, as incentives coursed through the national budget can be considered a subsidy. If enacted, the depart-

ment also said the measure could put the country’s competitiveness in limbo, as Congress would have the power to thumb down the provision of incentives. Drilon clarified that an account for tax incentives will not be established. Instead, the Timta will set up a tax-incentive tracking program for perks granted by investment promotion agencies. He said, however, that Timta will require the submission of reports to Congress and the President. “Under the proposed measure, a tax-incentive information will be published annually indicating actual and reflected incentives granted to registered business enterprises and qualified individuals. Nothing in this law will be construed to diminish the incentives to investment promotion agencies pursuant to their mandate,” Drilon said.

Earlier, the World Bank had said the Philippine government is losing P200 billion annually by giving out various fiscal incentives that seek to entice local and foreign investors to do business in the Philippines. World Bank senior country economist Karl Kendrick Chua said these incentives are often extended to firms that do not deserve them. This, he said, only reflects the inequality of the country’s tax system. “What we are proposing here is that, in terms of tax policy, we need to shift into a system wherein the rates are lower but, then, we broaden the base, meaning, we exempt as few people as possible,” Chua said. The Washington-based lender is encouraging the government to make fiscal incentives more targeted, transparent, performancedriven and temporary. Catherine N. Pillas

Continued from A8

‘FLAGWASH’ Woman protesters wash a mock US flag during a rally in front of the US Embassy in Manila on Tuesday, suspecting whitewash in the probe on the alleged US involvement in a recent operation against Southeast Asia’s top terrorist suspect Malaysian Zulkifli bin Hir, also known as Marwan, that resulted in the death of 44 police commandos. They are also asking President Aquino to be held accountable for the incident. AP/Aaron Favila

Oil. . .

Continued from A8

The nation’s oil boom has been driven by a combination of horizontal drilling and hydraulic fracturing, which has unlocked shale formations from Texas to North Dakota. The US pumped 9.29 million barrels a day through February 20, the highest level in weekly data from the EIA since January 1983. WTI may fall as low as $32 a barrel because support from heating-oil demand will fade as winter ends, Bank of America Corp. said in a note on Monday. Prices climbed in February for the first monthly gain since June, amid unseasonably cold weather even as US crude stockpiles and production rose to records. Bloomberg News

‘Current account to keep surplus streak’ Continued from A1

surplus this year was likely to exceed the year-ago level by $1 billion to $2 billion, Joey Kuyegkeng, ING Bank economist in Manila, said. The Philippines posted a current account surplus totaling $1.28 billion in the first nine months last year, based on latest numbers. Cuyegkeng said the likelihood of a modest growth in imports this year

was “high at best,” as imports decline in value, following the steep slump of oil prices in the international market. “This year’s oil-import bill could be 30 percent lower than last year’s $13 billion—which would mean a narrower trade deficit at worst, or a $2-billion surplus this year. This assumes a $60 per barrel of Dubai oil and a 6-percent increase in oil demand,” Cuyegkeng explained. “Such a development could bring

the current account back up to around $8 billion to $9 billion this year,” he quickly added. Based on recent government forecasts, the current account could end the year in surplus totaling $6.8 billion, or equal to 2 percent of the country’s local output measured as the gross domestic product. An earlier forecast projected the current account excess up to only $6.6 billion.

The country’s current account is a component of the Philippines’s balance of payments (BOP) and had been in a state of excess since 2005. The current account is the most stable and largest surplus-yielding component of the BOP. According to BSP data, the current account surplus was widest at $1.73 billion in October 2013, but stood as a deficit totaling $1.18 billion in July 2008.

Alveo Land to launch ₧25B worth of projects. . .

focus on providing genuine, consumer-relevant, real-estate innovations that will truly make a mark in the industry.” Jenylle Tupaz, Alveo project development head, said some 15 percent of its revenues will come from horizontal projects, 24 percent from office space and 55 percent from vertical projects. “There will be higher contribution from horizontal and office sales in the future,” Tupaz said. Alveo was able to post a 21-percent average

growth rate during the last three years. Lao said the market that can buy its products—sold between P150,000 and P200,000 per square meter—has been expanding. “Actually, that’s one of the beneficiaries of economic growth. They are the SMEs [small and medium enterprises], entrepreneurs. So on an economic growth of 6 percent to 7 percent per year, they’re the first to benefit. And it will continue [in the coming years], I don’t see any reason for

Continued from A1

that growth to taper,” Lao said. Last year the company launched nine projects. In the BGC, it launched the Park Triangle Corporate Plaza and Verve Residences Tower Two. It also launched projects in Arca South in the former site of FTI complex in Taguig; Circuit Makati in the former Santa Ana racetrack in Makati; Cavite; and Quezon City. Outside Metro Manila, Alveo has also built residential, commercial, leisure and office developments in Laguna, Cavite, Pampanga, Cebu and Davao, among others.

Filipina head has big plans for Aseanta as AEC nears By Ma. Stella F. Arnaldo

Special to the BusinessMirror

SEANTA, an umbrella group of national tourism associations in the Asean, will be pursuing more public-private partnerships to boost the potential of the region as a tourism destination, and ensure the sustainability of the integrated Asean economic community (AEC). In an interview with the BusinessMirror, newly elected Aseanta President Aileen Clemente said that, while the group has been around for some 30 years, “its importance now, more than ever, comes in the wake of the AEC, where we want to increase private-public partnership in the tourism industry.” Clemente is president of Rajah Travel Corp., one of the leading inbound travel agencies in the country, and a BusinessM irror columnist. Clemente added that Aseanta will be working closely with national tourism organizations (NTOs) to help promote Asean to foreign visitors markets. In 2013 some 54 million foreign visitors traveled to Asean, majority of whom went to Thailand (20 million), with the Philippines receiving only 4.3 million, according to data from the Asean.org. She said the Philippines would benefit from these promotions of Asean as a tourism destination, and that Aseanta “will be supporting the effort to all issues and challenges around air connectivity, which is one of the those being aligned under the AEC.” This includes an “openskies policy” within Asean, she said. The Philippines currently has only one direct connection to Europe, via the Manila-London route of Philippine Airlines. Other European connections are served by international carriers, which stop over in their respective hubs before making the flight to Manila. She also said Aseanta is supportive of a one-visa policy, where only one visa is needed by foreign visitors to travel to all Asean member nations. To strengthen public-private partnerships, Clemente said Aseanta could be invited to the meetings of the Asean NTOs to “align efforts” on tourism issues; Asean NTOs could attend Aseanta meetings again; and that both parties jointly host the Asean Tourism Forum (ATF) and Asean Tourism Conference (ATC). NTOs are government agencies that oversee their home country’s tourism industry. “We believe that, with these, we are not only continuously building the fabric of trust, but, that together, we can accelerate the process of change that needs to be undertaken to ensure that we have a strong, sustainable and resilient Asean Economic Community, or even at least, Asean Tourism Industry,” she stressed in a recent speech to the 41st Asean NTOs Meeting at Nay Pyi Taw, Myanmar. Last year Aseanta organized the Travex of ATC and ATF, for the first time in many years, and was able to attract “more than 600 buyers from 68 countries, a recorded booth sales of 449, and 155 registered media representatives coming from Europe, US/Canada, Australia, South and Central America, Asia, and Asean. Travex is a venue for buyers and suppliers of Asean tourism product to network and conduct business with each other. Also, Clemente said, Aseanta, with the Malaysian government,“were also able to contribute to the Asean NTO fund of more than 300,000 ringgit, or around $100,000.” Among her plans for Aseanta include the amendment of the organization’s constitution and by-laws to boost membership by including meetings and event-management companies, schools, among others. “Aseanta will also be adopting new policies and plans that it intends to carry out to seize the upside potential of the Asean integration. This includes having a media plan to ensure that Aseanta documents and provides information on the role that it plays and shows a credible demonstration of international cooperation and unity with the predominant priority of promoting the Asean,” she added. Aside from pursuing efforts to promote Asean as regional tourism destination to foreign travelers, Aseanta is also boosting its efforts to promote the region itself among its member-nations, “as there are so many favorable conditions that we can capitalize on, including affordability, improved, and increased connectivity.” She said Aseanta strongly supports the creation of the Asean Pass, which was recently launched by Malaysian low-cost carrier Air Asia. The Asean Pass “is a travel pass, which allows guests to lock down low base fares with credit, and redeem flights with the credit to travel across 10 Asean countries - Malaysia, Brunei, Singapore, Indonesia, Myanmar, Thailand, Vietnam, Laos, Cambodia and Philippines,” according to Air Asia’s web site.

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Editor: Dionisio L. Pelayo • Wednesday, March 4, 2015 A3

Army foils ASG plot to bomb Lamitan City

rmy Special Forces have thwarted a plot by the local terrorist group Abu Sayyaf Group (ASG) to bomb Lamitan City in Basilan, and seized a hand grenade and bomb components following a firefight with four suspected terrorists on Tuesday.

Armed Forces Public Affairs Of f ice C hief Lt. Col. Ha rold Cabunoc said the operation also unearthed the existence of the Urban Terrorist Group (UTG), t he u rba n ter ror ism u n it of the ASG. According to Cabunoc, elements of the 4th Special Forces Battalion received a report on Monday that the ASG was planning to lay and set off a bomb in Lamitan City as part

of its of intensified terrorism campaign. The report prompted the 19th Special Forces Company based at Barangay Kulay Bato in the city to conduct security patrol. At around 3 a.m. on Tuesday, the operating troops located the hideout of the UTG and encountered four of its members under Edris Sampang, whose group operates in the areas of Tuburan, Akbar and Lamitan City.

to bomb L a m it a n a nd c a r r y out similar activities in other parts of Basilan was to stave off the ongoing military operations against their comrades in Sulu and the Bangsamoro Islamic Freedom Fighters (BIFF) in Maguindanao. Earlier, Armed Forces Chief of Staff Gen. Gregorio Pio Catapang Jr. ordered soldiers to pursue the BIFF in Central Mindanao and the ASG in Sulu. Rene Acosta

The four terrorists escaped during the firefight, but left a hand grenade and bomb components, including a soldering iron, diodes, wire cable and even drugs paraphernalia. “This is the same group that is behind the bombing in Basilan last week,” said Cabunoc of the Sampang group. “We have foiled another bombing attempt,” he added. Cabunoc said the ASG’s plan

Palace open to amending BBL but insists it should not be ‘diluted’ By Butch Fernandez & Jovee Marie N. dela Cruz

alacañang indicated on Tuesday it is ready to abide by the congressional prerogative to amend perceived infirmities in the proposed Bangsamoro basic law (BBL), despite the strong reluctance of Moro Islamic Liberation Front (MILF) leaders to subject the original BBL—which grants greater autonomy to Muslim communities in Mindanao—to any substantive changes. Communications Secretary Herminio B. Coloma Jr., however, hastened to clarify that the Palace is also appealing to lawmakers to ensure that the congressional amendments to be introduced and voted upon by the two chambers should not result in the BBL’s dilution.

All about the money

“The appeal is: Do not dilute,” Coloma told reporters at a news briefing on Tuesday. Asked if the Palace was open to amending the BBL amid mounting misgivings aired by lawmakers following the January 25 “massacre” of 44 Special Action Force commandos who were ordered by President Aquino to go after high-value terrorist targets in Mamasapano, Maguindanao, Coloma assured that the Executive “respects” the legislators’ prerogatives. “Introducing amendments is part of the legislative process which we respect,” the Palace official said, even as he held out hopes that the support of senators and congressmen who signaled intent to amend the BBL in the wake of the Mamasapano incident, could still be won over by the administration.

This developed as two members of the House Ad Hoc Committee on the BBL raised concerns over the annual lump-sum appropriations for the proposed Bangsamoro government. Liberal Party Rep. Karlo Alexei Nograles of Davao and Laban ng Demokratikong Pilipino Rep. Celso Lobregat of Zamboanga City, members of the panel, at a news conference, said the automatic appropriation to the Bangsamoro region under the country’s national budget will not undergo a congressional scrutiny. “That’s [annual appropriations for Bangsamoro region] one of the concerns being shared by a lot of congressmen, in fact, one of the issues being raised with regard to the money is it will give the Bangsamoro entity a lot more funds

than many other LGUs [local government units] are receiving and, therefore, that will give them an undue advantage over many LGUs so there is a question about equal treatment, equality of the law and that can also be raised as something that might be strap-down as unconstitutional by the Supreme Court,” Nograles said. Earlier, Bangsamoro Transition Commission Chairman and MILF chief negotiator Mohagher Iqbal, said that the expected source of funds for the Bangsamoro are block grant (P35 billion), special development fund (P10 billion), the internal revenue allotment of LGUs (P18 billion), and funds from national agencies awarded to regional departments (P12 billion). Moreover, Nograles said that big allocation for Bangsamoro

3-DAY EXTENDED FORECAST MARCH 4, 2015 | WEDNESDAY

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region would only be enticing for other localities to join the new entity. “Remember the provision in the Bangsamoro draft is that there is an opt-in clause so any LGU that would want to opt-in can via the 10-percent [of the population] rule and then after the plebiscite they will join the Bangsamoro so meaning to say if you give as much as P70 to P75 billion per year to the Bangsamoro, then it would be very enticing for other localities, LGUs to join the Bangsamoro especially the poorer ones,” he said.

Final vote

Coloma conceded that lawmakers have the right to introduce amendments, but added these would still be subjected to a final vote by majority of the members of both cham-

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bers, to be adopted. He explained that concerned lawmakers “just need to understand” the necessity, validity and importance of the provisions being questioned. “The critics of the BBL should study the provisions being questioned because it would show that all of these provisions comply with the Constitution,” Coloma said. For instance, he cited a BBL provision creating a Bangsamoro police force that, Coloma noted, would still be part of the Philippine National Police. He added that other constitutional bodies envisioned in the BBL for the new Bangsamoro entity that will replace the soon to be abolished Autonomous Region in Muslim Mindanao would still be “part of the national framework.”

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Econ

Business

A4 Wednesday, March 4, 2015 • Editors: Vittorio V. Vitug and Max V. de Leon

briefs d.o.e. opens bidding for 3k e-trikes

The Department of Energy (DOE) has started soliciting bids for the supply and delivery of 3,000 units of energyefficient electric tricycles (e-trike). “We are inviting interested bidders to join the renewed bidding process for the benefit, not only of the electric transport industry, but of the ordinary Filipino citizens and tricycle drivers to enjoy an alternative mode of public transport,” Energy Undersecretary Donato Marcos said. The Asian Development Bankfunded project, under the Market Transformation through the Introduction of Energy-Efficient Electric Vehicles Project, targets local government units nationwide with initial roll out of 3,000 units in the National Capital Region and the provinces in Region 4. The e-trike project aims to promote sustainable transport, address the increasing carbon emissions in major cities, and reduce oil dependence of the local transport sector. The project also aims in transforming the public tricycle sector and jump-starting a new industry in the transport sector. The DOE has scheduled a prebid conference on March 11, while closing the date for the bidding process and opening of bids is on April 14. Lenie Lectura

bill seeks to expand ppp

IN a bid to hasten infrastructure development in the country, Sen. Juan Edgardo “Sonny” Angara has a filed a bill that seeks to promote and authorize public-private partnerships (PPPs) of infrastructure

facilities and services. “For the country to build on its recent economic gains and to ensure the proper investment environment in our country, the private sector must be further encouraged to make investments through a modernized and enhanced PPP law,” Angara said, chairman of the Senate ways and means committee. The lawmaker noted that the government has traditionally been in charge of providing and financing infrastructure in the country, but investment requirements had exceeded the capacities of the government, prompting the public sector to enable private participation in infrastructure development. Recto Mercene

PHL PROPERTY AWARDS 2015 LAUNCHED

Asia’s luxury real-estate magazine Ensign Media, in partnership with ABS-CBN Publishing Inc., launched on Tuesday the Philippine Property Awards (PPA) 2015 to recognize the best property developers, projects, and innovations in the local property industry. “Since its debut in 2013, PPA is one of the regional awards show of the Asia Property Awards, which showcases outstanding developers and industry professionals. We would urge any company with an outstanding development that hasn’t done so already to ensure that they get their entry on time,” Ensign Media CEO Terry Blackburn said. Blackburn, at a news briefing on Tuesday, said nominations for the PPA 2015 will close in two weeks time. PNA

Another plea before SC backs call to stop MRT 3, LRT 1, 2 fare hike

By Butch Fernandez

nother petition was filed by several lawmakers and labor groups before the Supreme Court (SC) on Tuesday seeking to stop the implementation of the fare increase at the Metro Rail Transit (MRT) Line 3 and Light Rail Transit (LRT) Lines 1 and 2. LRT 1 runs from Baclaran, Parañaque City, to Roosevelt, Quezon City, MRT Line 2 travels from Recto, Manila, to Santolan, Pasig City, while MRT 3 traverses from North Avenue, Quezon City, to Edsa Taft Avenue, Pasay City. The petitioners are Parañaque City Second District Rep. Gustavo Tambunting; Ang Nars Party-list Rep. Leah Paquiz; Buhay Party-list Reps. Lito Atienza, Irwin Tieng and Mariano Michael Velarde; former Cavite (Third District) Rep. Jesus Crispin “Boying” Remulla; Allan Tanjusay of the Trade Union Congress of the Philippines; Allan Montano of the Federation of Free Workers; Leody de Guzman of the Bukluran ng Manggagawang Pilipino; Rene Magtubo of the Partido Manggagawa; Annie Geron of Public

atienza

ejercito

Services Labor Independent Confederation; and Sen. Joseph Victor “JV” G. Ejercito. Named respondents are the Land Transportation Franchising and Regulatory Board (LTFRB), the Department of Transportation and Communications (DOTC), Light Rail Transit Authority, Metro Rail Transit Corp. and Light Rail Management Corp. In a petition for certiorari and

prohibition with prayer for issuance of temporary restraining order, the petitioners argued that the DOTC failed to coordinate and/or direct the LTFRB to comply with the publication, notice and hearing requirements for the fare hike. Invoking Executive Order (EO) 202, the petitioners said the LTFRB has the “adjudicatory power to determine, prescribe, approve, and periodically review and adjust, reasonable fares, rates and other related charges, relative to the operation of public landtransportation services provided by government vehicles.” They added that such function of LTFRB is also in relation to the 2011 LTFRB Rules of Procedure. The petitioners also argued that instead, the DOTC unilaterally proposed, approved and implemented the fare adjustments. “Hence, DOTC has no authority to issue the assailed department order [DO]. It is, therefore, null and void,” they said. T he y f u r t her a rg ued t h at Transportation Secretary Joseph Emilio Abaya issued on December 18 last year the assailed DO 2014-014 which provides for an adjusted fare scheme that substantially increased its base fare from P10 to P11 effective January 4, 2015, despite the fact that

it violates several provisions of the 1987 Philippine Constitution such as the following: Section 1 of Article III on due process for lack of notice and hearing; Article XIII on Social Justice; Section 28 of Article II on Policy on Full Public Disclosure; Section 7, Article III on People’s Right to Public Information; and Section 18 of Article II, which states that, “The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare.” The petitioners, likewise, argued that public respondents LTFRB Chairman Winston Ginez and Abaya committed “grave abuse of discretion amounting to lack or excess of jurisdiction” in respectively approving and issuing the assailed DO 2014-014 despite the fact that it violates the mandate of EO 202 and 215A, Commonwealth Act 146 or the “Public Service law,” and the 2011 Rules on Practice and Procedures of the LTFRB. EO 125-A gives the DOTC the authority to direct the supervision and control over its regional offices, and to formulate, develop and implement its policies, plans and programs. PNA

nomy

sMirror

briefs davao del norte approves incentives code’s irr

DAVAO CITY—The provincial government of Davao del Norte approved recently the implementing rules and guidelines of its Investments and Incentives Code to rev up its aggressive thrust to attract investments and provide jobs to its residents. The province’s Investments and Incentives Board approved the IRR and other documents on February 11. In his message to the members of the Board, Gov. Rodolfo del Rosario said the approved Local Investments and Incentives Code (LIIC) would be a major factor “in generating investment, employment and revenue of the province.”“The LIIC of the province would serve as the policy support to the regional economic development and the Asean Economic Cooperation Integration,” he said. Manuel Cayon

solon slams mmda over worsening metro traffic

A Party-list lawmaker on Tuesday scored the Metropolitan Manila Development Authority (MMDA) for its continued failure to improve the traffic situation in the National Capital Region. Buhay Party-list Rep. Lito Atienza said the MMDA should find a measure to address the worsening traffic situation in the metropolis, especially along major thoroughfares like Edsa. “The MMDA is failing in its traffic management,”Atienza said after the recent meeting of the House Committee on Metro Manila Development tackling Edsa Traffic Management. Jovee Marie N. dela Cruz

news@businessmirror.com.ph A5

Forum Energy bags Recto Bank service contract by force majeure

HE Department of Energy (DOE) has awarded Service Contract 72 (Recto Bank) on force majeure to Forum Energy, Philex Petroleum Corp. affiliate, mainly due to the territorial dispute between the Philippines and China in the West Philippine Sea.

“The Philippine Department of Energy has granted a force majeure on Service Contract 72 [SC 72] because this contract area falls within the territorial disputed area of the West Philippine Sea, which is the subject of a United Nations arbitration process between the Republic of the Philippines and the People’s Republic of China,” Philex Petroleum Corp. said in a disclosure on Tuesday. All exploration work at the Recto Bank/SC 72 has been suspended be-

ginning December 15. Thus, the second subphase of SC 72 is postponed until further notice. With the force majeure, terms of the second subphase and all subsequent subphases will be extended. Last month Energy Secretary Carlos Jericho L. Petilla said this was initially sought by the Department of Foreign Affairs and other agencies. Also, Forum Energy Plc. Chairman Manuel V. Pangilinan said it would not give up the service contract, adding he believed the area

falls under the Philippine territory. However, he cited reports that China was already building a base near SC 72. Forum formerly set to conduct the seismic survey in April or May 2015, with the appraisal of drilling scheduled next year. Philex Petroleum Corp. owns 60.49 percent of Forum Energy, a UK-based upstream oil and gas company. Meanwhile, Forum Energy holds a 70-percent stake in SC 72, with the remaining share held by Monte Oro Resources and Energy Inc. PNA

Lawyer: BCDA must honor 3rd-party interest in Camp John Hay dispute

LAWYER on Tuesday said that third-party interest should not be prejudiced by the recent outcome of the arbitration proceedings between the Bases Conversion and Development Authority (BCDA) and Camp John Hay developer Camp John Hay Development Corp. (CJHDevCo). Lawyer Gilbert Reyes of Poblador, Bautista and Reyes Law Offices said during a media forum that the BCDA shoud also honor contracts with third parties for properties and businesses within Camp John Hay.

The Philippine Dispute Resolution Center Inc. (PDRCI) recently ordered the BCDA to pay CJHDevCo the amount of P1.5 billion, representing rental payments made by it to the BCDA since 1998. The arbitration body also held that the BCDA is not entitled to the P3.3 billion that it is claiming against CJHDevCo allegedly representing unpaid rentals to the BCDA. The BCDA, on the other hand, claimed victory and said that the arbitration committee ordered CJHDevCo to vacate Camp John Hay in Baguio City and return the

property to the BCDA. However, after the decision on the arbitration case was released on February 11, there were confirmed reports that the BCDA had attempted to forcibly take over Camp John Hay again, just as it has attempted in the past without a valid court order. It was reported that this incident required the intervention of the mayor of Baguio, Mauricio G. Domogan, to prevent what could have otherwise been an unnecessary incident. “The [arbitration] decision does not affect third

parties,” Reyes explained. “An arbitration case is not like a court case; it is a case between parties alone and affects only the parties involved. We trust that even with the issuance of the award, the parties will act in ‘good faith’ and with due regard for the rights and interests of innocent third parties who are not involved in the dispute between CJHDevCo and the BCDA,” he added. The arbitration case was filed by CJHDevCo against the BCDA, after the latter refused to accept CJHDevCo’s offer of payments

and instead insisted on a payment from CJHDevCo of an alleged obligation of P3.3 billion for rental back payments. The arbitration court ruled that the BCDA breached the contract between the BCDA and CJHDevCo when it failed to set up an agreedupon One Stop Action Center that was supposed to speed up the processing of permits for the development of Camp John Hay. The PDRCI decision also calls for undeveloped portions within Camp John Hay to be returned to the BCDA. Joel R. San Juan

A6 Wednesday, March 4, 2015

Opinion BusinessMirror

editorial

An authentic alternative to the Bangsamoro basic law

mid the spin to divert the people’s attention away from the high-level irresponsibility surrounding the Mamasapano encounter, we find the news that a Bangsamoro Transformation Council (BTC) is offering an alternative to the Bangsamoro basic law (BBL) hopeful and encouraging. It is reported that Eid Kabalu, former spokesman of the Moro Islamic Liberation Front (MILF), representing the BTC, with the support of Mindanao professionals, finds the BBL unacceptable, because it was forged by the government only with a single minority group in Mindanao, the MILF. The BBL is, therefore, noninclusive. On the other hand, the BTC represents all the people of Mindanao, Muslims and non-Muslims alike. For another reason, the BTC proposal is achievable through the ways of peace, not through threats of war. Kabalu is quoted as saying that “they are not into war,” that “they will take action through peaceful means with the involvement of all sectors,” ...and that “they are proposing amendments to the Constitution” to make the necessary devolution of power possible. This is the way the majority of Filipinos want to proceed in the search for peace in Mindanao. Unfortunately, this is not the way followed in the formation of the BBL. The government, indeed, as the BTC charges, dealt unilaterally with the MILF, to the exclusion of everybody else. The result is dubious. As credible analysts and commentators say, the BBL is riddled with constitutional infirmities. It reduces the national government to a powerless spectator to whatever the MILF pleases to do once it takes over. It lays down bases for secession, the dismemberment of the Republic. In the wake of the investigations into the loss of the SAF 44, many of our legislators lost enthusiasm for the BBL. There is now mounting conviction that the MILF knew of the presence in its midst of the international terrorist Zulkifli bin Hir, alias Marwan, but made no effort to inform the authorities about it. Also, that the MILF allowed its members to waylay the policemen, after these had served the purpose of their mission. After the event, that it refuses to surrender to the justice system those of its members who participated in the criminal act. With all these issues, problems and questions swirling around the BBL, Malacañang is pressuring Congress to pass it. Why this insistence in the face of what is clearly hostile sentiment from the national public, only Malacañang knows. We hope that Congress resists the intimidation. If it succumbs, we hope sincerely that the Supreme Court declares the BBL unconstitutional. The government peace panel counseled those angered by the Mamasapano brutality “to give peace a chance.” That was the beginning of the spin. Now they have been shown up: They were negotiating for the MILF, never for the government, from the very beginning. The way to peace offered by the BTC represents a fair and square treatment of our brothers and sisters in Mindanao. It is respectful of their culture, religion, language and traditions, while keeping all of us bound together as one nation. Let’s give peace a chance. Let’s explore this alternative.

My.SSS: An online service portal Susie G. Bugante

All About Social Security

o you know that you can access your own membership record with the Social Security System (SSS) through the Internet? You don’t have to wait in long lines at SSS counters or be put on hold over the telephone in order to get information about your contribution history or benefit application. You simply need to register at the My.SSS, an online service portal of the enhanced SSS web site (www.sss.gov.ph) to gain access to your social-security records and to submit transactions online either as an individual or employer (company) member.

Registration is needed to ensure information security and to prevent identity theft. For individual members, they must designate their preferred user ID and password upon registration. However, only those who have at least one month of posted contribution can register at My.SSS. Employers, meanwhile, must designate their user ID upon registration but a system-generated password will be sent to them via email upon successful registration. To register, visit the SSS web site, and click on the registration button found at the upper right

frame of the Web page. Supply the information needed in the online registration form, including a valid e-mail address. Submit the page and wait for the e-mail reply from the SSS. Upon receipt of the e-mail from the SSS, click the given link to proceed with the next phase of the registration process. Again, supply all the required information in the online member user-ID registration form and accept the Terms of Service. Submit the page, then wait for the e-mail reply regarding the outcome of your registration. If you’re an individual member, you

Is Chinese QE next? William Pesek

BLOOMBERG VIEW

ver the weekend, China’s second rate move in three months made clear how concerned leaders in Beijing are about sliding growth. And Saturday’s quarter-percentage-point cut is probably only the beginning. As data on manufacturing, property and consumer prices take a dramatic turn toward contraction, there’s every reason to think China’s one-year deposit and lending rates—now 2.5 percent and 5.35 percent—could head toward zero, just as in neighboring Japan. After that, can quantitative easing (QE) with Chinese characteristics be far off?

“QE would be one alternative,” says economist Louis Kuijs of Royal Bank of Scotland in Hong Kong. As Kuijs points out, the People’s Bank of China (PBOC) has “already taken some small-scale QE-type measures last year in the form of direct lending.” It’s used short-term lending facilities to cash up China Development Bank, so that the nation’s so-called superbank could support local governments and their countless infrastructure vehicles. So far, though, the PBOC has done more “qualitative easing” than QE. This phrase, widely attributed to Citigroup chief economist Willem Buiter, refers to how the PBOC is more concerned with the composition of its balance sheet than the size.

It may be time to focus more on the latter. As downside risks accelerate, the national and regional governments are under pressure to ramp up stimulus efforts. That will exacerbate the ticking time bomb that is local government debt. While good numbers are notoriously hard to come by, local authorities’ borrowings may have already reached $4 trillion, bigger than Germany’s economy, Mizuho Securities Asia says. Regional financing schemes are increasing the opacity of China’s already murky debt profile—and with diminishing returns. Thanks to overlapping levels of overcapacity, new borrowing will only put a floor under things, not power a sizable acceleration in gross

are now all set to access your own SSS record. If you’re an employermember, your servicing branch will have to validate the information you submitted for the registration process to be completed. An e-mail will be sent to you containing your user ID and password. As a member who is registered in the My.SSS portal, you can inquire about your contributions, membership information, benefits and loan records. You can also do transactions online, such as submit a salary-loan application and, for self-employed and voluntary members (such as overseas Filipino workers and nonworking spouse), submit maternity notifications. In the case of employed members, the employers are the ones who will submit the maternity notification, online. For companies or employers (including household employers) registered at My.SSS, transacting with the SSS is right at your fingertips! You will be able to view your membership details, contribution payments, loan repayments remitted for your employees, and sickness and maternity reimbursement claims. You can also submit online your contribution-collection list (SS Form R3), employment report form (SS Form R-1A) and loans collection

list (Form ML-2). You can, likewise, certify salary-loan applications and submit maternity notifications for your employees, online! There is no need for you to leave the convenience of your office just to submit the above-mentioned reports to the SSS. While you can view your record as an employer-member, you are not allowed access to the individual records of your employees in accordance with the provisions of the Social Security Law on the confidentiality of member’s records. My.SSS provides you greater convenience and enables you to transact with SSS even beyond regular office hours. You can download and print your social-security records, set appointment with your servicing branch and submit transactions online. If you’re not yet registered in this service portal, isn’t it about time that you do?

domestic product. As Bank of Japan (BOJ) Governor Haruhiko Kuroda has shown, supporting growth in a heavily indebted economy is better left to monetary policy. By radically increasing China’s domestic liquidity, PBOC Governor Zhou Xiaochuan would stabilize China’s price environment without adding to national debt. With both consumer and producer prices falling to a five-year low in January, China’s lending environment is becoming more restrictive, says economist Wang Tao of UBS in Hong Kong. Even after the PBOC’s November rate cut, she says, real rates have moved up by 100 basis points since the fourth quarter. That, Wang says, “means a tightening of monetary conditions, which stands in sharp contrast with softening real activity.” By deploying its own monetary bazooka, the central bank could support growth and ease pressure on borrowers, untold numbers of which could be nearing default. Zhou might also want to consider another of Kuroda’s unspoken innovations—the stealthy nationalization of debt. This may seem like an odd suggestion: The BOJ is an independent central bank overseeing the economy of a democracy, while the PBOC is an arm of China’s Communist Party. But Kuroda has blurred the lines considerably as he buys up more and more debt and does, what, with those bonds? Only his inner circle knows whether the IOUs the BOJ

is hoarding are being stuffed into file cabinets or burned. Zhou might consider similarly drastic measures in China, directly assuming more of China’s fast-growing debt problems. Why not begin pulling large blocks of potentially distressed assets onto its balance sheet? It could start with the most fragile of local governments and their off-balance-sheet lending facilities. A major reason President Xi Jinping is so reluctant to let growth fall below 7 percent is fear of defaults on municipal debt, which might set off a chain reaction in markets. Zhou can counter that threat by assuming debts, thus giving Beijing greater confidence to tolerate slower growth and to retool the economy. The government should augment the process by creating a US-style Resolution Trust Corp. to handle bad loans. But the PBOC can begin the deleveraging now, while also attacking deflation. There are plenty of risks, including a run on the yuan and the chance that too much liquidity will fuel new asset bubbles. Still, anything Zhou can do to give Xi breathing space to pull off one of history’s biggest and riskiest debt restructurings will leave the global economy better off. Chinese leaders generally have little interest in taking advice from Japan, particularly on the economy. In this particular case, though, they could do a lot worse than to follow Kuroda’s lead.

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.

Opinion BusinessMirror

opinion@businessmirror.com.ph

War on wildlife crime: Time to enlist the ordinary citizen

The Insurance Fund Dennis B. Funa

Bradnee Chambers

Inter press service

ONN—It is no exaggeration to say that we are facing a “wildlife crisis,” and it is a crisis exacerbated by human activities, not least criminal ones.

Whatever our definition of wildlife crime, it is big business. In terms of annual turn-over it is up there with narcotics, arms and human trafficking—and the proceeds run into billions of dollars each year, helping to finance criminal gangs and rebel organizations waging civil wars. With 7 billion people on the planet, it is tempting to shrug one’s shoulders and ask “What difference can any one individual make?” Such an attitude means that we are in danger of repeating the “tragedy of the commons”—everyone making seemingly rational decisions in their own immediate interests— but this is a short-sighted approach that undermines the common good and ultimately sows the seeds of its own downfall. With 7 billion people on the planet, it is also tempting to say that people’s need for food, shelter and well-being should take precedence over nature conservation, but the two are not necessarily irreconcilable. In fact far from it—the two often go hand in hand and are totally compatible—nonconsumptive use of wildlife, such as whale-watching and safaris, provide sustainable livelihoods for thousands of people. Extinction has been an everpresent phenomenon, with a few species losing their specialized niche or being edged out to a more aggressive competitor or, in the case of dinosaurs, being wiped out by a meteorite strike. The number of species going extinct is increasing fast, at a rate that cannot be attributed to natural causes and it is clear that there is a human foot pressing down heavily on the accelerator pedal. South Africa reports record numbers of rhinos killed for their horn; demand for ivory is pushing the elephant to the brink; tiger numbers might have risen in India of late but the wild population and the range occupied by the cats are a fraction of what they were at the beginning of the 20th century. And we are not just losing vital pieces in the elaborate jigsaw puzzle of ecosystems; we are losing elements of our natural heritage that contribute to human culture and society, and the lifeblood of sustainable activities that create employment in the tourism sector, generating foreign exchange and significant tax revenues. Wildlife crime is not an abstract. It affects us all and there is more that individuals can do to make a difference than they perhaps imagine. Understanding the consequences of killing the animals and highlighting the connection between the increased poaching and organized

Extinction has been an everpresent phenomenon, with a few species losing their specialized niche or being edged out to a more aggressive competitor or, in the case of dinosaurs, being wiped out by a meteorite strike. The number of species going extinct is increasing fast, at a rate that cannot be attributed to natural causes and it is clear that there is a human foot pressing down heavily on the accelerator pedal. criminal gangs and terrorists have been extremely helpful in strengthening political messages and in persuading the public to demand that more be done. The gangs care little about the fate of the animals—either the individuals they kill or the survival of the species. They think nothing of shooting the rangers who stand in their way. They do care about their profits and high demand for ivory in East Asian markets has sent the price through the roof—not that the poacher in the field or the craftsman in the backstreet workshop receive much of a share. If demand evaporates, the price will fall and killing elephants for their ivory will no longer be a viable business. The gangs will have to find some other source of income, but they would have to do this soon anyway, as current levels of poaching mean that there will not be any elephants left in 30 years. The maxim “get them while they are young” applies to many things, not least the environment and junior members of the household often influence the family’s behavior with regard to recycling, saving energy and water, food purchases and a range of other “green issues.” So raising awareness among the younger generation of the need to tackle wildlife crime is crucial. The fight against wildlife crime has to be conducted on several fronts. It does register on governments’ radar and pressure from civil society can help keep it high on the agenda. The public has a vital role to play in keeping pressure on governments, either individually or through local pressure groups and nongovernmental organizations. People can also modify their own behavior by minimizing their footprint on the planet. We should not underestimate the seriousness of wildlife crime, but nor should we dismiss the potential impact of the actions of individuals as consumers, customers or voters.

INSURANCE FORUM

ection 2 of Republic Act (RA) 275 (approved on June 15, 1948), generally known as the law that converted the Bureau of Banking into the Office of the Insurance Commissioner, authorized the Insurance Commissioner to assess the excess of expenses of the office over the fees collected “pro rata upon all domestic and foreign insurance companies operating in the Philippines in proportion to the gross premiums and other considerations written or received by them during the period for which the assessment is made on policies or contracts of insurance or reinsurance.”

In other words, any shortfall in fees may be collected from the insurance companies themselves to help fund the operations of the Office of the Insurance Commissioner. This was the rule until Presidential Decree (PD) 612, otherwise known as The Insurance Code, which was approved on December 18, 1974, impliedly repealed RA 275 by providing, under Section 418, that, henceforth, the shortfall “shall be charged against the Insurance Fund” to be “created out of the proceeds of taxes on insurance premiums mentioned in Section 255 of the National Internal Revenue Code.” Thus, the Insurance Fund was first created by PD 612 in 1974. Note, however, that what may be utilized from the Insurance Fund was only the shortfall. Under PD 1158, dated June 3, 1977, otherwise known as the National Internal Revenue Code of 1977, a specific portion was carved out from the premium tax collected. Thus, Section 285 (Disposition of Proceeds of Insurance Premium Tax), under Chapter II (Special Disposition of Certain National Internal

Revenue Taxes), provided that: “(t) wenty-five per centum of the premium tax collected under Section two hundred and twenty-three (now 121) of this Code shall accrue to the Insurance Fund (as contemplated in Section four hundred and eighteen of Presidential Decree numbered six hundred and twelve) which shall be used for the purpose of defraying the expenses of the Insurance Commission. The Commissioner of Internal Revenue shall turn over and deliver the said Insurance Funds to the Insurance Commissioner as soon as the collection is made.” This provision in the 1977 NIRC was retained in the 1997 NIRC, as amended. The 1977 NIRC provided under Section 1231 (Tax on Life Insurance Premiums) the collection of “a tax of 5 percent of the total premiums collected.” On October 10, 1984, Presidential Decree 1959 (“Amending Certain Section of the National Internal Revenue Code, As Amended”) amended the premium tax to 6 percent. This was subsequently reduced to 2 percent by RA 10001 (An Act Reducing the Taxes on Life

Ukraine’s next battle zone is its economy

ven as it struggles to maintain a fragile peace along its eastern border, Ukraine’s government must tackle another problem: rescuing its economy. This is going to take an epic debt-relief deal that may prove no less challenging than containing the Russia-backed insurgency. But there is a way to make it work. A brutal combination of war and currency devaluation has pushed Ukraine to the brink of insolvency. Its debts, denominated largely in dollars, hover around 100 percent of gross domestic product, up from about 40 percent a year ago and well above the 70 percent level that the International

Monetary Fund (IMF) considers excessive for an emerging-market country. Principal and interest due over the next three years exceed $27 billion, equivalent to more than a quarter of government expenditure. Only swift and radical debt relief can help the country out of its economic quagmire. Output has been plummeting, down 15 percent in the fourth quarter of 2014 from a year earlier. If the government tries to cut spending or raise taxes enough to pay its debts, it will all but guarantee collapse. This awful scenario—a complete write-off—is what creditors will have to consider

as their best alternative to a negotiated agreement. Reaching a deal won’t be easy. The first obstacle is Russia. In late 2013, President Vladimir Putin lent $3 billion to support Viktor Yanukovich, the much-hated Ukrainian leader who fled during the Maidan revolution. And when the debt comes due in December, Putin expects to be paid in full. As the instigator of the Ukrainian conflict, Russia has only a weak moral argument for getting paid. Unfortunately, it has an airtight economic and military case—which rests on its crucial natural gas

supplies to Ukraine and its ability to rekindle the conflict there. Ukraine might have no choice but to pay up. A second obstacle is lasting uncertainty about Ukraine’s economic prospects. The country’s private creditors, among the largest of which is US Asset Manager Franklin Templeton, have no way to assess what portion of its debts the government can actually pay. Early indications are that Ukraine’s new leaders may be no less corrupt than their predecessors. The country lacks the stability and trust required for a comprehensive and final debt-relief deal. Hence, the best solution would be

Wednesday, March 4, 2015

Insurance Policies, Amending for this Purpose Sections 123 and 183 of the National Internal Revenue Code of 1997, as Amended”), dated July 27, 2009, which was signed by the President on February 23, 2010. Section 4 of the consolidated enrolled bill, House Bill 6017 and Senate Bill 3502, which would later become RA 10001, contained a “sunset” provision which provided that “(f)ive (5) years after the effectivity of this Code, no tax on life insurance premium shall be collected.” However, President Gloria Macapagal Arroyo, on February 23, 2010, vetoed this proposed Section 4. According to the President, the provision violates “Section 28 (1), Article VI of the Constitution, which provides: ‘The rule of taxation shall be uniform and equitable. The Congress shall evolve a progressive system of taxation.’ Exempting life insurance premiums from tax, as the subject Section 4 provides, will result in inequity since other similar financial instruments will continue to be taxable. It may even set a precedent for other players in the financial sector to clamor for the same treatment that will further put to risk government revenues. Further, exempting life insurance premiums from tax will only benefit the life insurance providers. Furthermore, it will deprive government of revenues that can be spent on services that benefit most the poor, not to mention that insurance is consumed more by the middle- to high-income earners.” It is noted that Section 255 (Disposition of Proceeds of Insurance Premium Tax), Chapter II (Taxes on Receipts of Insurance Companies) of Commonwealth Act 466, otherwise known as the National Internal Revenue Code of 1939, had imposed “a tax of one per centum of the total premiums collected during the first

ten years of his or its operation and one and one-half per centum of the total premiums collected thereafter.” This was later amended by RA 1504, which took effect on June 16, 1956, increasing the premium tax from 1 percent to 3 percent of the total premiums collected. On July 1, 1975, PD 739 amended Section 255 of the NIRC to increase the tax on premium to 4 percent. Hence, the premium tax went from 1 percent (1939) to 3 percent (1956) to 4 percent (1975) to 5 percent (1977) to 6 percent (1984), then to 2 percent (2013). The term “Insurance Fund,” as used herein, is not used in the same context as the term used by the Department of Budget and Management (DBM) which, in that case, refers to all collections made by the Insurance Commission in carrying out its functions, such as the collection of fees and the imposition of penalties. It is commonly referred to by the DBM as Fund “151”, meaning Special Account in the General Fund numbered 151. Under the Amended Insurance Code, Section 441 provides that the Insurance Fund, together with the “retained amount of the fees, charges, penalties and other income from the regulation of insurance companies and other covered persons and entities,” shall be the source of funds to pay “the salary, allowances and other expenses” of the Insurance Commission. It is, likewise reiterated, that the Insurance Fund “is created out of the proceeds of taxes on insurance premiums mentioned in Section 255 of the National Internal Revenue Code, as amended.”

a two-step process. First, the government’s private creditors would agree to a several-year moratorium on debt payments, covering the period of the $17.5-billion lending program that the IMF is considering for Ukraine. This would give Ukraine’s leaders the time and resources they need to right the economy and build a track record of sound financial management. Then, assuming the country emerges intact, all sides would be in a better position to assess the government’s ability to pay and reach a conclusive deal. For this to work, the IMF and the Western nations offering financial

support would have to be extraordinarily pragmatic, flexible and vigilant. They would have to watch a big chunk of their money go out the door to pay off Russia. They would have to allow Ukraine’s government to provide economic stimulus, which could involve running budget deficits inconsistent with stabilizing its debt burden. They would have to demand transparency and closely monitor government expenditures, ensuring that the money isn’t stolen. Such a plan could go wrong in many different ways. But if Ukraine is to stand a chance of recovery, it’s the best path forward. Bloomberg

Atty. Dennis B. Funa is the Insurance Commission’s deputy commissioner for legal services. Send comments to dennisfuna@yahoo.com.

2nd Front Page BusinessMirror

A8 Wednesday, March 4, 2015

www.businessmirror.com.ph

Low-inflation regime to end soon

By Bianca Cuaresma

he period of slowing inflation when the rate of change in prices has fallen from a high of 4.9 percent in 2014 to a low of 2.4 percent only this January may already be bottoming out and soon begin climbing back up again, according to a price data analysis by the Manila unit of ING Bank. Joey Cuyegkeng, the lender’s lead economist in Manila, said the pool of reserves from the various power-generating units in the main island of Luzon has begun to thin, a

development he feared could lead to a tightness in supply and consequently to significantly higher energy prices. Cuyegkeng said, while inflation consistently fell the past few months,

the downtrend may have already hit a nadir in February as the economy slowly feeling the effects of the dry season ahead. “Absent of another major downturn in oil prices for Asia, Philippine inflation could be at a bottoming-out process. We are now at a situation considered to be the start of tightening power reserves. Power outages during the dry season, which starts this month mean higher power costs,” Cuyegkeng said. The country’s inflation rate has trended down for five consecutive months already since its peak in July and August last year when this averaged 4.9 percent. In just five months, inflation fell from 4.9 percent to only 2.4 percent last January.

the International Monetary Fund. Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. said the February inflation report should range from 2.2 percent up to 3 percent, or still within the target range of 2 percent to 4 percent. Aside from the rising costs of energy due to forecast tightness of supply, Cuyegkeng observed that oil prices in the international market have started to rise again, providing further upward risks to the growth of commodity prices down the line. However, he said, the easing of congestion at the ports and more favorable food prices over the near term, also provide downside risks to inflation in the months ahead.

The deceleration was traced in part to regulatory intervention by the central bank, when the monetary authorities adopted several liquidity-sapping measures, such as higher policy rates and soaking on so-called excess liquidity in the system via higher special deposits account (SDA) rates and the banks’ deposit reserve ratios. Toward the close of 2014, the decelerating inflation was boosted further by the steep decline in oil prices in the international market all the way to February this year. The price data on February should be released on Thursday, March 5, in accordance with the country’s commitments to such global data crunchers as the World Bank and

Japan negotiator: Trade deal with US doable by spring

deal between Japan and the US, which is needed to move ahead with a Pacific Rim trade pact, is possible by this spring, a top Japanese trade negotiator said on Tuesday. Top negotiators for the US-led Trans-Pacific Partnership meet in Hawaii next week. Wendy Cutler, acting deputy US trade rep-

resentative, will visit Japan for talks beginning Thursday on the politically sensitive issue of dismantling protections for Japan’s farm products and for US autos and auto parts. But Hiroshi Oe, a deputy chief trade negotiator for Japan, said this week’s talks were unlikely to produce a breakthrough that would allow an

earlier agreement. “I am not sure we are really ready to close the negotiations this week,” Oe told reporters. However, he said an agreement was possible by “this spring.” “We really have to wrap up the negotiations in spring. Now, we are discussing, what is the end of spring? Is the end of May the end of spring?

Or early June, which is summer?” The US and Japan must set a deal before a final agreement among all the countries can be reached. But deadlines for that have been pushed back so often that suggesting the summer is the deadline would be like “crying wolf,” Oe said. While supporters of the TPP initiative recently have voiced op-

timism over reaching a deal soon, a final trade pact still faces many obstacles, including approval by the US Congress of so-called Trade Promotion Authority that would give President Barack Obama the authority to “fast-track” a trade agreement. That would limit Congress to a yes or no vote with no opportunity to amend the deal. AP

Urbasolar, SunAsia plan 100-MW solar plants

rbasolar of France and SunAsia Energy will invest P9 billion ($204 million) to build 100 megawatts (MW) of solar-power plants in the Philippines. The first phase is a 30-MW plant in Negros Occidental province, construction of which will start in June for completion before the end of the year, SunAsia Energy President Theresa Cruz-Capellan said in an interview. Seventy percent of the project cost will be borrowed from state-owned Development Bank of the Philippines. Electricity consumption in the Philippines, expected to be the world’s second-fastest-growing economy this year, jumped 50 percent in 10 years to 2012, outpacing a 16-percent increase in generating capacity. Renewable energy, which includes solar and wind power, accounts for less than 1 percent of installed capacity, according to government data. “Twelve hours of sunshine is an enormous energy resource to tap,” Capellan said by phone. “It’s our version of Saudi Arabia’s oil fields. You just need to build the plants to harness it.”

OIL TRADING BELOW $50 ON RECORD STOCKPILES

il traded below $50 a barrel before US government data forecast to show crude inventories expanded from a record high. Futures advanced as much as 0.9 percent in New York. Stockpiles probably expanded by 3.95 million barrels last week, according to a Bloomberg News survey before an Energy Information Administration (EIA) report on Wednesday. They rose over the prior seven weeks to 434.1 million, the most in data compiled by the Energy Department’s statistical arm starting August 1982. Prices have dropped 6.4 this year, after plunging almost 50 percent in 2014, as global supply outpaces demand amid increased US output. Data on Monday showed US manufacturing expanded at a slower pace in February, as weaker overseas growth limited orders. Central banks outside the US are boosting stimulus to revive their economies, with the euro area’s asset-purchase program set to begin as early as this week. “The fundamental picture still has questions about how much supply is coming on,” Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, said by phone. “There

is mixed economic data from the US, but overall the confidence is there, compared with what’s happening in Europe. That’s created a balanced environment for oil.” West Texas Intermediate (WTI) for April delivery rose as much as 42 cents to $50.01 a barrel in electronic trading on the New York Mercantile Exchange and was at $49.86 at 1:44 p.m. Sydney time. The contract slid 17 cents to $49.59 on Monday. The volume of all futures traded was about 63 percent below the 100-day average.

Crude supplies

Brent for April settlement was 67 cents higher at $60.21 a barrel on the Londonbased ICE Futures Europe exchange. The contract fell $3.04, or 4.9 percent, to $59.54 on Monday. The European benchmark crude was at a premium of $10.34 to WTI. It closed at $12.82 on February 27, the widest gap since January 2014. US crude stockpiles have surged above the five-year average level for this time of the year, according to the EIA. Supplies probably increased to 438 million through February 27, the median estimate of six analysts surveyed by Bloomberg showed. See “Oil,” A2

Gates again world’s richest; Jordan on list of billionaires Continued from A1

who moved up one slot this year with a net worth of $72.7 billion. In fourth place was Amancio Ortega, the Spanish cofounder of clothing retail chain Zara, with a net worth of $64.5 billion. Rounding out the top 5 was Larry Ellison, founder of technology company Oracle Corp., with $54.3 billion. Forbes said there were 1,826 billionaires on its list this year, up from 1,645 in 2014. Added together, they were worth a combined $7.05 trillion, up from $6.4 trillion last year. Most of those on the list were men. But there were 197 women, up from 172 a year ago. The highest-ranking woman was Christy Walton, the widow of John Walton, a son of the founder of Wal-Mart Stores Inc. She has a net worth of $41.7 billion, according to Forbes.

The world’s youngest billionaire was 24-year-old Evan Spiegel, the CEO and cofounder of mobile messaging company Snapchat, with a net worth of $1.5 billion. Snapchat’s other cofounder, 25-year-old Bobby Murphy, had the same net worth as Spiegel. Other tech billionaire newcomers were two cofounders of taxi-ordering app Uber and one of its executives. Three cofounders of Airbnb, the vacation-home rental web site, also made the list. Basketball legend Michael Jordan joined the list for the first time this year, thanks to his ownership in basketball team Charlotte Hornets and payouts form his Nike brand. Jordan had a net worth of $1 billion, the magazine said. This is the 29th year that Forbes has released its billionaires list. The magazine said it calculated each person’s wealth based on stock prices and exchange rates on February 13, 2015. AP