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BSP seen keeping key rates on prevailing low inflation www.businessmirror.com.ph n TfridayNovember 18, 2014 Vol. 10 No. 40 P25.00 nationwide | 8 sections 36 pages | 7 DAYS A WEEK n Tuesday, February 10, 2015 Vol. 10 No. 124 A broader look at today’s business BusinessMirror THREE-TIME ROTARY CLUB OF MANILA JOURNALISM AWARDEE 2006, 2010, 2012 U.N. MEDIA AWARD 2008 PESO EXCHANGE RATES n US 44.1630 n JAPAN 0.3713 n UK 67.3221 n HK 5.6973 n CHINA 7.0721 n SINGAPORE 32.6529 n AUSTRALIA 34.4593 n EU 50.0146 n SAUDI ARABIA 11.7699 Source: BSP (9 February 2015) By Lenie Lectura T HE energy specialist of the International Finance Corp. (IFC) is not in favor of amending the Electric Power Industry Re- form Act (Epira), saying that the law “has delivered what it was asked to do.” IFC chief energy specialist Tonci Bakovic, in his pre- pared speech during a recent forum on “Benchmarking Regulation: Exploring an Efficient Regulatory Frame- work for a Competitive Power Industry,” said the law has been successful in attracting investors, as well as fostering competition in the industry. “Close to 11,300 megawatts [MW] of new genera- tion have been built, attracting close to $17 billion in private investments to the generation sector. Fourteen new players have been introduced to the sector to com- pete among each other. Not many countries that have undergone reform have achieved the introduction of such number of new players,” Bakovic said. But Bacovic said his statements do not neces- sarily reflect the views of the IFC, a unit of the World Bank. The IFC official also noted that generation prices have been kept almost at par with inflation in a country that has been growing lately at close to 7 percent per annum from 2010 to 2014. “That is quite an achieve- ment in a country that grows fast,” he said. Continued on A2 ‘Epira delivers, why amend it?’ Mining revenues up 37 percent in 2014 By Jonathan L. Mayuga  M INING revenues increased by P27.65 bil- lion, or 37 percent, last year, according to the Mines and Geosciences Bureau (MGB), in spite of conditions that tend to adversely affect the industry’s growth. MGB Director Leo Jasareno said nickel production was again the main driver of growth last year. The growth in mining revenues came amid questions raised by the industry’s big players on the inconsistency of national and local policies on mining, as well as the push for higher taxes by the government. Jasareno attributed what he described as “upbeat showing” of the metallic sector to the performances of nickel, gold and copper projects, namely, the Cag- dianao Nickel Project of Platinum Group Metals Corp. in Region 13, with P9.94 billion; Didipio Copper-Gold Project of OceanaGold Philippines Inc. in Region 2, P9.76 billion; Padcal Copper-Gold Project of Philex Mining Corp. in the Cordillera Administrative Re- gion, P8.16 billion; Toledo Copper Operations of Carmen Copper Corp. in Region 7, P8.13 billion; and Taganito Nickel Project of Taganito Mining Corp. in Region 13, P7.84 billion. I.F.C. ENERGY SPECIALIST SAYS LAW EFFECTIVE IN ATTRACTING INVESTORS, FOSTERING COMPETITION GLOBAL GROWTH SCARE NOW SEEMS OVERBLOWN T HE global growth scare that’s gripped financial markets is looking overblown to some economists. Even as bond yields plumb record lows alongside sliding inflation, the world economy is set to strengthen with the US expansion plowing ahead and cheaper oil, cash and currencies providing lift elsewhere. Signs of a healthier outlook—bolstered by central banks rushing to ease monetary policy to prop up prices‚would comfort investors and Group of 20 (G-20) finance chiefs meeting on Monday in Istanbul, even amid the distractions of Greece and Russia. Bank of America Corp. is predicting stocks will outperform bonds this year as reflation takes hold. “G-20 policy-makers are concerned inflation won’t turn around, but what’s in the pipeline does look more promising in terms of the growth and inflation outlook,” said Torsten Slok, chief international economist at Deutsche Bank AG in New York and a former International Monetary Fund (IMF) forecaster. Slok estimates the world economy will grow 3.6 percent this year, the fastest pace since 2011 and a bit quicker than the 3.5 percent envisaged by the IMF last month when it cut its outlook by the most in three years. At hedge fund SLJ Macro Partners Llp. in London, cofounder Stephen Jen is among those betting on a “converge up” scenario in which a resurgent US buoys expansions internationally. ISRAELI AMBASSADOR AT A.L.C. MEDIA GROUP Israeli Ambassador Effie Ben Matityau (left) visits the office of the ALC Media Group in Makati City for a discussion with editors and publishers. Matityau underscores the critical role of the agriculture sector in developing rural areas in the Philippines. In its bid to help young Filipino farmers learn innovative agricultural technologies, the Israeli government will tap 500 Filipino agriculture students to study in Israel. Following the discussion, BUSINESSMIRROR Publisher T. Anthony Cabangon hands over a framed caricature of Matityau as a token of the ALC Media Group’s appreciation. ALYSA SALEN By Bianca Cuaresma T HE sharp moderation of inflation seen in the last quarter of 2014 and again in January this year has helped prevent the central bank from raising the policy rates, thus far this year, analysts at DBS Bank said. But the Bangko Sentral ng Pilipinas (BSP) remains wary of such events as a sud- den reversal of oil prices, as some experts predict, and, as a result, the monetary au- thorities were not seen to favor cutting in- terest rates so soon this year, the regional lender said. In a research note, DBS said the central bank will likely keep its monetary- policy stance as the monetary authorities train a keen eye on how oil prices behave in the international market. “The rather sharp moderation in the consumer price index [CPI] inflation is the reason the BSP is reluctant to raise its key policy rates for now,” DBS Bank said. Inflation has trended downward since its peak in mid-2014, at 4.9 percent. Starting last September inflation has effectively been managed and brought down by the central bank, in large part because oil prices have retreated in the interna- tional markets. The Philippine Statistics Authority only recently reported that infla- tion, or the rate of change in prices, aver- aged 2.4 percent in January. Unlike other central banks in the region, however, the BSP was not seen to cut the policy rates just yet, according to such other analysts as those at JPMorgan, for instance. “Indeed, we remain of the view that the central bank may actually prefer to tighten its policy further in the coming sessions,” the DBS Bank said. “The recent uptick in global crude- oil price may lift CPI inflation slightly higher in the coming months,” accord- ing to DBS Bank, quickly adding that the country is still “definitely far” from the 4.5-percent trend seen in mid- 2014, when the BSP stepped up on its monetary-policy normalization. The central bank adopted a low infla- tion target for this year of 2 percent to 4 percent, from year ago of 3 percent to 5 percent, in recognition of the moderating pressure on prices as a whole. See “Mining,” A2 See “Global growth,” A2 GREEK PREMIER PROCLAIMS END TO AUSTERITY IN POLICY STATEMENT INSIDE Life Tuesday, February 10, 2015 D1 BusinessMirror Editor: Gerard S. Ramos • [email protected] F Surrounded with goodness RETHINKING THE DÉCOR OF YOUR CHILD’S ROOM »D4 B P S Pittsburgh Post-Gazette E VERY year dozens of beautifully rendered design and style books hit the shelves. They are often perused for the pictures or used to create a tableau in a reading nook, but the real value is between the covers. There you will find inspiration, encouragement and a sense of what is possible in any space with some imagination and desire. Here are a few worth owning: ■Decorating in the Grand Manorby Carleton Varney, Rooster Books for Shannongrove Press Nobody understands heritage like Carleton Varney. He owns the oldest design firm in the country, Dorothy Draper & Co. Inc. He has been with the firm since 1962 working with Draper on numerous projects. The first room he did from top to bottom at the Greenbrier in White Sulphur Springs, West Virginia, was the Crystal Room. It remains today as it was then. He continues the legacy of Draper at the Greenbrier, at The Grand on Mackinac Island, and at The Colony in Palm Beach, where he has incorporated a blend of his style and hers. The author of 27 books on decorating, plus several others, including the official biography of Dorothy Draper, this book is a design memoir taking the reader on a colorful journey through his public and personal spaces. ■Robert Couturier: Designing Paradisesby Robert Couturier, Rizzoli Many try, but not all succeed when it comes to blending eras in a sophisticated not stagey manner. This is an arena where French-born Robert Couturier is king. In Designing Paradises, he shows off his love of luxury and expertise as an architect and interior designer. He offers readers a look at his country home in Connecticut complete with early American guesthouses as well as properties he has designed here and abroad. His work translates well from England to Mexico to the US and beyond. It’s the language of elegance and it is evident in the 250 color illustrations. He established his design firm in 1987 the same year he was commissioned by Sir James Goldsmith to transform his 20,000-acre Mexican estate. From neutral whites to a room with Hermes orange paneling, this timeless tome can be enjoyed for the contrasts and fabulous photos, as well as the way it will stir your own creativity. ■Artfully Modernby Richard Mishaan, Monacelli Press The essential role art combined with design play in today’s environments is explored in the projects taken on by Richard Mishaam. From the living room he did for the 2011 Kips Bay Decorator Show House to the presidential suite at the Saint Regis Hotel in New York City. It’s a compilation of his best work since 2009. His interiors are described as “sumptuous style mash-ups” because of his fearless pairings of seemingly incongruent periods with art from a variety of eras and styles. However, his first order of business when doing a residential space is to understand how his clients live and what their lifestyles will accommodate. ■Decorating the Way I See Itby Markham Roberts, Vendome Press This is a book of beautiful diverse interiors that actually seem attainable partly because the book is divided into informational style chapters, such as Floor Plan, Background, Scheme, Furniture, etc. Readers can actually learn something from Roberts, who worked for the renowned decorator Mark Hampton before branching out on his own. Like others of his ilk, he meshes traditional and contemporary in seamless ways. He says in the book, “I’m happy when clients come to me with great art.” He enjoys the challenge of working existing art and photographs into a new design scheme. Unlike other books, he includes a section on architecture. This is a tome you will want to revisit again and again as a reference tool for your own projects. ■Rowing Blazersby Jack Carlson, Vendome Not exactly an interior design book, nevertheless Boston native Jack Carlson manages to demonstrate the importance of heritage, a hallmark of great style, whether in decor or fashion. This author, a former member of Georgetown University’s eight-man crew team, also illustrates how passion can be translated into beauty. It’s old school style at its best, something Carlson has embraced, having won in 2013 at one of rowing’s most prestigious venues, the Royal Regatta at Henley, England. He is currently a Clarendon Scholar at Oxford University. His book goes beyond the story of the iconic blazer to what these particular jackets signify. If you have a preppy bent, you will love this book. If you row, you will love this book. If you are a fan of all things classic, you will want to own this book. ■Heart and Home: Rooms That Tell Stories by Linda O’Keeffe, Rizzoli As a writer involved in the design world it was only natural for Linda O’Keeffe to observe that rooms, like people, have a story to tell. She chooses rooms from the most complex to playful and refined to emotionally charged. The book offers a peek into the space occupied by connoisseurs in the worlds of art, design, fashion and more. Among them are renowned interior designer Kelly Wearstler, fashion designer Wolfgang Joop and architect Lee Ledbetter. Heart and Home circles the globe going from a New York loft all the way to a haveli in Udaipur, India. As O’Keeffe notes in the introduction, “A home is much more than a dwelling, place of birth, or primary residence. It’s wherever we feel creative or relaxed enough to permanently loosen our stays.” It’s the kind of book that should give readers the courage to make their home tell their story. ■Beyond Chic: Great Fashion Designers at HomeChristian Louboutin and Giorgio Armani are only two of the fashion icons whose homes Terestchenko explores. Getting a look at the environments great designers choose to live in offers a kind of voyeuristic thrill as the reader is taken on a journey from lovers of minimal to champions of maximum embellishment. The private personas of the occupants are evident in the photo essays that unveil one designer’s Moroccan riad and another’s Swiss chalet. Although the book was published a while ago, it is worth a mention since lovers of fashion and decor can experience a rare glimpse at both in this well done compilation. ■ Style books to inspire décor BusinessMirror World Companies Tuesday, February 10, 2015 B2-3 Editor: Dionisio L. Pelayo•[email protected] C HARLOTTE, North Caro- lina—Electrolux announced on Thursday it will buy Shang- hai Veetsan Commercial Machinery, one of the largest manufacturers of professional dishwashers in China. The acquisition is aimed at grow- ing the Swedish appliance maker’s professional segment, which in- cludes food service and laundry equipment, and expansion into China and the Asia-Pacific region, according to Electrolux. The deal is expected to close in the first half of 2015. “Professional dishwashing rep- resents one of the most promising product categories as its penetra- tion rate in China is still consider- ably lower than other categories, such as cooking or refrigerated storage,” Alberto Zanata, head of Electrolux Professional Products, said in a statement. Veetsan was established in 2003 and has annual sales of about 115 million Swedish kronor (about $13.9 million). Charlotte has been home to the Electrolux North American head- quarters since 2010. The company employs 925 people in Charlotte and has said it plans to increase that number to 1,600 by the end of 2017. Company management has credited strength of Electrolux’s North American business to prod- uct innovation, such as development of a premium dishwasher that can wash and dry a load of dishes in 30 minutes. TNS “Debt-service requirements may induce continued physical produc- tion of oil to maintain cash flows, delaying the reduction in supply in the market,” the Basel, Switzerland- based institution said in a report. Energy companies’ outstanding debt rose to more than $800 billion this year from less than $200 billion in 2003, said BIS, which is owned by central banks. Sinking oil prices weakened the value of assets used as collateral by producers and compelled them to sell more of their output on futures mar- kets, it said. Oil’s role as a financial as- set may have contributed to the price drop and the most volatile swings in prices in more than six years. Brent crude oil, a global bench- mark, has tumbled as members of the Organization of Petroleum Ex- porting Countries refused to cut oil production in response to the highest US output in three decades. Lower prices increases the risk of companies failing to meet interest payments, the BIS said. Borrowing costs TUMBLING oil prices have in- creased borrowing costs among energy companies, with spreads on high-yield bonds issued by energy companies soaring to 800 basis points, or 8 percentage points, as of January, from 330 points in June, according to the BIS. The spread measures the additional interest costs paid by a borrower compared above a benchmark rate. Brent for March settlement in- creased $1.23, or 2.2 percent, to $57.80 a barrel on the London-based ICE Futures Europe exchange, up 9.1 percent for the week ended February 6. Even after the recent rally, Brent has still fallen about 50 percent from its June 19 high of $115.71. The expansion in borrowing by energy firms outpaced total debt is- suance since 2003, which has tripled in the period to about $6 trillion, according to the report. This encouraged energy compa- nies to both lock in forward prices, adding to the selling pressure, and to keep production levels elevated to sustain revenues, prolonging an oversupply, the BIS said. Supply will exceed demand by 2 million barrels a day in the first half of 2015, ac- cording to Iranian Oil Minister Bijan Namdar Zanganeh. Oil production US oil production is up 8.7 percent since the end of June, even amid tumbling prices. Production reached 9.213 million barrels a day the week of January 23, the highest level in weekly Energy Information Admin- istration data going back to 1983. The level of borrowing in dollars by energy companies outside the US may also push prices lower, as a strengthening dollar makes it harder for firms based in emerging nations to pay off their debt, the BIS said. Oil’s role as a financial asset may have played a role in the price drop. West Texas Intermediate and Brent futures contracts representing near- ly 2 billion barrels of oil traded hands on Friday on the New York Mercantile Exchange and ICE Futures Europe exchange in London. The world con- sumes a little more than 90 million barrels of physical oil a day. WTI has seen price swings of more than 5 percent in three of the past six trading days. The CBOE Crude Oil Volatility Index, which measures price fluctuations using options of the US Oil Fund, rose to the highest level since 2009 on Thursday. The US Oil Fund, the biggest US-listed oil exchange-traded fund, holds WTI futures. “The steepness of the price decline and the very large day-to-day price swings are reminiscent of a financial asset,” the BIS said. “As with other financial assets, movements in the price of oil are driven by changes in expectations about future market conditions.” Bloomberg News O REGON, Ohio— Workers in northwest Ohio have joined the first nationwide strike at US oil refineries since 1980. The Bladenewspaper of To- ledo reported that some 100 BP- Husky Toledo refinery workers began picketing at midnight outside the plant in Oregon, Ohio. A local union official said on Saturday night that some 350 workers would be on strike and planned to have picketing around the clock. “They’re discouraged that the strike is happening, bu they understand why it has to happen,” said Bryan Sidel, fi- nancial secretary of the local. The United Steelworkers union earlier notified BP Plc. that workers at refineries in Ohio and Indiana would join a walkout that began Febru- ary 1 at nine other refineries. A BP spokesman said the company expects to continue operating with replacement workers and does not expect a significant effect on production. The strike began after steelworkers said that nego- tiations with Shell Oil Co. had broken down. Shell is negotiating the na- tional contract for other oil companies. The union has said workers want better health-care ben- efits and limits on the use of contractors to replace union members in maintenance jobs. She said wages are not an issue. “BP is disappointed that USW leadership decided to call a strike at both the Whiting Refinery and BP-Husky Toledo Refinery,” said BP Spokesman Scott Dean by e-mail. He said BP remained at the negotiating table and wanted a deal that “provides good wages while giving manage- ment the flexibility it needs” to remain competitive. BP’s plant in Whiting, In- diana, has about 1,860 em- ployees, more than 1,000 rep- resented by the steelworkers. BP’s Toledo refinery in Ohio, which it owns 50-50 with Canada’s Husky Energy, has some 600 workers total. The plants will be staffed by replacements including re- tirees and former front-line workers who now hold salaried jobs, Dean said. AP W ASHINGTON—Automak- ers are cramming cars with wireless technology, but they have failed to adequately protect those features against the real possibility that hackers could take control of vehicles or steal per- sonal data, according to an analysis of information that manufacturers provided to a senator. Democratic Sen. Edward Markey of Massachusetts asked automak- ers a series of questions about the technologies and any safeguards against hackers built into their ve- hicles. He also asked about how the information that vehicle computers gather and often transmit wirelessly is protected. Markey posed his questions after researchers showed how hackers can get into the controls of some popu- lar cars and sports-utility vehicles, causing them suddenly to accelerate, turn, sound the horn, turn head- lights off or on and modify speed- ometer and gas-gauge readings. The responses from 16 manufac- turers “reveal there is a clear lack of appropriate security measures to protect drivers against hackers who may be able to take control of a ve- hicle or against those who may wish to collect and use personal driver information,” a report by Markey’s staff concludes. Today’s cars and light trucks typically contain more than 50 elec- tronic control units—effectively small computers—that are part of a network in the car. At the same time, nearly all new cars on the market today include at least some wireless entry points to these com- puters, such as tire pressure moni- toring systems, Bluetooth, Internet access, keyless entry, remote start, navigation systems, WiFi, anti-theft systems and cellular-telematics, the report said. Only three automakers said they still have some models without wireless entry, but those models are a small and declining share of their fleets. “Drivers have come to rely on these new technologies, but unfor- tunately, the automakers haven’t done their part to protect us from cyberattacks or privacy invasions,” Markey said in a statement. Among the report’s findings: the introduction of new technology in very different ways, and for the most part these actions are insuf- ficient to ensure security. Hackers can get around most security pro- tections cited by manufacturers, according to the security experts Markey consulted. Only one manufacturer appeared able to detect a hacking attempt while it was happening and only two de- scribed credible means of responding to such intrusions in real time. Information from most auto- makers indicated they wouldn’t know about a hacking attempt un- less data from the vehicle’s comput- ers was downloaded by a dealer or at a service center. AP A TLANTA—Coca-Cola has settled a National Labor Relations Board com- plaint with a former employee who claimed the beverage giant fired him in retaliation for his role in trying to organize a union at a metro Atlanta bottling plant. Greg Guice, a bulk delivery driver, will receive $42,500 in ending his complaint against the company that dates back to his dismissal in 2012. Guice’s grievance was to go be- fore an administrative law judge on February 12. Coca-Cola denied that it had done anything wrong in settling the dispute. “Coke knew that they were violating my rights when they discriminated against me for organizing a union in Atlanta,” Guice said in a statement. “Now I have a piece of justice. I hope that Coke employees see this settlement as a victory for us all in our efforts to win a voice on the job and a Teamsters contract.” Guice, who helped to spear- head an unsuccessful effort to organize a union at an Atlanta- area facility in 2010, alleges that the company two years later used his absence from work to take his ill father to the hospital as an excuse to fire him. He said the company termed the absence “unexcused,” even though he had earned appropri- ate time off for his time away. discussions. TNS Oil firms may keep output up–BIS Report: Automakers fail to fully protect vs hacking E NERGY companies may be slow to cut oil production after a 50-percent price drop because they need to service debt that has risen fourfold since 2003, according to the Bank for International Settlements (BIS). Electrolux to buy Chinese dishwasher manufacturer Ohio workers join oil refineries strike Coke settles labor dispute with dismissed employee World BusinessMirror The MARDI GRAS IN TEXASAlisha Wells waves from a Krewe of Aquarius float as the Mystic Krewe of Aquarius Mardi Gras Parade winds its way through downtown Galveston, Texas on the first weekend Mardi Gras festivities on February 7. B3-1 | Tuesday, February 10, 2015 • Editor: Lyn Resurreccion Tsipras presented his govern- ment’s policy statement to Greek lawmakers, which included, as he had forewarned, all the prom- ises made by his radical-left party, Syriza, in its manifesto before last month’s election. e government “has taken the irrevocable decision to stick fully to its preelection commitments,” Tsip- ras said, indicating that he would not compromise on his party’s positions. By demanding a “bridge agree- ment” that would give Greece and its creditors time to negotiate a new debt deal much more favorable to the country by June, Tsipras appeared to stick to an approach that got short shrift from European Union partners in a series of meetings that Tsipras and his finance minister had with European officials this past week. “If our [EU] partners are willing, we can agree [on a bridge agreement] tomorrow morning,” Tsipras said. But this would mean the rest of the EU abandoning its declared policies and giving in to Syriza’s demands. “e [bailout deal] has been abol- ished by popular mandate,” Tsipras said, referring to the two deals that have kept debt-ridden-Greece solvent and provided a historically unprecedented €240 billion ($271.4 billion) in assistance. is aid also went with austerity policies that shrank Greece’s econ- omy by a quarter and resulted in re- cord unemployment, with more than a quarter of the workforce jobless. Having come to power as a result of a popular backlash against these measures, Tsipras geared his speech completely toward a domestic audi- ence, insisting that it is the EU that must return to its “founding prin- ciples of solidarity, social cohesion, growth and democracy.” “We declare categorically, we will not negotiate our history. We will not negotiate this people’s pride and dignity,” said an emotional Tsipras as he concluded his speech. e current bailout deal runs until the end of February, but Tsip- ras said the government is “not en- titled to ask for an extension,” while blasting the previous government for purposely rejecting an EU pro- posal to extend the deal to June, so that a Syriza-led government would face tight deadlines. “ey burned the crops and blew the bridges,” Tsipras said of the pre- vious conservative-socialist coali- tion government. Syriza’s own program includes measures to provide relief for the poor, such as free meals, free elec- tricity and free health care; relief for the middle class by abolishing an un- popular property tax and replacing it with a tax on very large property; and sops to his supporters, such as the abolition of university reform and a reestablishment of the state TV and radio broadcaster that was shut down in 2013 and replaced by a slimmed- down version. But a pledge to raise the minimum wage to pre-crisis levels, once promised as the first measure to be implemented by the government, will be done in two stages and not realized until 2016. Tsipras insisted that his govern- ment's budgets would be balanced, save for the debt servicing needs. On the debt, while his original demand for a minimum 60-percent “haircut,” or write-off, has been rejected by Greece’s creditors, he has presented other proposals, such as issuance of low-interest “perpetual bonds,” ma- turity extensions and deferrals of payments that would have the same effect. He said the EU should have no problem accepting his pledges to tackle corruption and tax evasion and reform the state administration. Greek lawmakers will debate the policy statement and hold a confi- dence vote at midnight on Tuesday. Greece faces three crucial EU meetings in the coming days: An emergency meeting of Eurozone finance ministers on Wednesday, a summit of EU leaders ursday, and another euro-zone finance minis- ters meeting on February 16. It has been given a virtual ultimatum to present a program compatible with the bailout deal by that latter meet- ing; the European Central Bank has applied additional pressure by refusing to accept Greek bonds as collateral after February 11, forcing Greek banks to seek funds from a more expensive emergency liquid- ity mechanism. AP Greek premier proclaims end to austerity in policy statement G REECE’S new Prime Minister Alexis Tsipras set his leftist government on a collision course with Greece’s creditors on Sunday, proclaiming an end to the era of austerity and “five years of bailout barbarity.” V VENEZUELA TO INCORPORATE OCCUPIED GROCERY INTO STATE SYSTEM A USTRALIAN Prime Minister Tony Abbott’s diminished mandate after a leadership challenge risks making it tougher for him to address the weakest economy in a generation. With gains in tax revenues slumping, Abbott already faced a challenging job to prepare the an- nual budget for the fiscal year be- ginning July 1. Now he’ll have to craft it under a political cloud with almost 40 percent of his parliamen- tary colleagues voting Monday to unseat him. e scale of the party rebellion suggests political instabil- ity will persist. “Ongoing uncertainty over lead- ership and policy direction is likely to remain a negative for business confidence, which is already languish- ing below its long-run average, with implications for business expenditure on both capital and labor,” said Su-Lin Ong, the head of Australian economic and fixed-income strategy at Royal Bank of Canada in Sydney. at is likely to pressure the central bank to cut interest rates further to support the economy, she said. Here’s what the economic environ- ment that Abbott faces looks like: ■e longest stretch of weak ex- pansion since the 1991 recession Gross domestic product (GDP) growth is on track to be below its 30- year average rate for six of the past seven years. e Reserve Bank of Aus- tralia on February 6 lowered its forecast average expansion for 2015 to be- tween 1.75 percent and 2.75 percent. ■Government debt as a propor- tion of GDP is highest since 1996 Abbott’s conservative predeces- sor, John Howard, elected in 1996, paid offAustralia’s debt before em- barking on tax cuts and middle- class welfare payments financed by the mining boom. Following the 2008 global financial crisis, as reve- nue failed to meet expectations, the then-ruling Labor party borrowed to continue financing expenditure. Abbott now confronts the crunch of tax increases or welfare cuts, a task bordering on impossible in the cur- rent political environment. e rul- ing coalition lacks a majority in the Senate, which has blocked proposed policy changes. Popular support for the government fell 3 points to 43 percent, while that for Labor rose 3 points to 57 percent, according to the latest Newspoll published in the Australian newspaper Monday. Net debt as a proportion of GDP is forecast to rise to 15.2 percent in 2014-15, the highest since 1996-97. ■ Business confidence at its weakest since the end of the Rudd- Gillard-Rudd government Corporate sentiment surged with the election of the Abbott’s Liberal- National coalition after three years of minority government and lead- ership chaos. It has since trended lower as frustration with the new administration grows. “Political instability dramatical- ly affects business confidence,” said John Osborn, director of economic and industry policy at the Austra- lian Chamber of Commerce and Industry in Canberra. “Business is ■stretch since 2003 e RBA said the economy is set to grow slower than previously forecast, and joblessness is likely to ■PEOPLE line up outside the Dia a Dia supermarket after it was taken over by the government in the Propatria neighborhood of Caracas, Venezuela on February 3. The government is temporarily taking over the supermarket chain as part of a crackdown on private businesses it blames for worsening shortages and long lines. Popular items with government fixed prices that have been running short are coffee, cooking oil, precooked corn flour, sugar, milk, toilet paper, disposable diapers, detergent and fabric softener, among other items. Abbott holds less sway to fix worst Australian economy in 24 years WORLD B3-1 WHERE SOCCER IS TRULY RELIGION C| T, F , [email protected] [email protected] Editor: Jun Lomibao Sports BusinessMirror B K B Los Angeles Times T HE Clericus Cup rule book is the Bible of soccer at the Vatican. And just like that other Good Book, it contains certain commandments. The first commandment is thou shalt not foul an opponent who has a free path to the goal. Disobey and the punishment is not a red or yellow card but a blue one that leads to soccer’s version of purgatory: a five-minute trip to the sidelines for spiritual reflection. “I have only heard about the blue card,” said Lewi Barakat, an Australian seminary student who has not sinned in three previous Vatican soccer tournaments. “I never saw it used.” But Barakat, like the more than 350 priests, deacons and seminarians from the Vatican who play in the annual event, has faith the blue card exists. And at the Vatican, faith—and soccer—are both considered essential. Just ask the guy in charge. “It’s beautiful when a parish has a sports club. Something is missing without one,” said Pope Francis, a dues-paying member of the supporters group for Argentine soccer team San Lorenzo— which, not insignificantly, was named after a saint. The pope doesn’t have a favorite among the 16 teams that will kick off in March for the two- month-long event in the ninth edition of the Clericus Cup, the soccer tournament that takes its name from the Latin word for clergy. But that doesn’t mean he won’t be watching. Because in less than a decade the annual intercollegiate competition among Rome’s Pontifical seminaries has grown from a series of intramural scrimmages into a regulation 11-on-11 tournament that has drawn attention from Fédération Internationale de Football Association (Fifa), the sport’s world governing body, and praise from Union of European Football Associations, European soccer’s ruling organization. team that has won two of the last three Clericus Cup titles. “It literally is like the World Cup to us.” And though the competition remains limited to priests or those studying for the priesthood, it draws players—including some former pros—from more than 60 countries, most of them African or South American. “It’s no walk in the park,” said Barakat, 30, who was a top-flight amateur player in Sydney. “The Clericus Cup deserves to be taken with some seriousness and played competitively.” It’s not the highest level of soccer played in the Vatican, though. Vatican City, the world’s smallest country, also has an international team composed primarily of the Swiss Guard and other staffers, making the Vatican one of only nine recognized sovereign states whose national team is not a Fifa member. Another is tiny Monaco, which beat Vatican City, 2-0, in its most recent game last May. But whatever the Clericus Cup lacks in talent it more than makes up for in passion. Teams in the tournament have their own supporter groups, composed mainly of other seminarians, who have unique chants for both their teams and individual players. Holy Martyrs—whose uniforms are a patriotic blend of red, white and blue—may have the most impassioned fans, some of whom have shown up costumed as Super Mario, Spider-Man, Uncle Sam and Captain America while waving American flags. Some have even come dressed as priests. “The atmosphere the fans produce is impressive,” Barakat said. “They make noise from start to finish.” Sometimes too much noise. In the tournament’s early years, supporters brought drums, tambourines, megaphones and boomboxes that played reggae music at ear-splitting levels. Neighbors complained, and though the Vatican didn’t institute a vow of silence, it did ask the seminarians to turn down the volume. The seeds for the tournament were planted in idea didn’t win the Vatican’s blessing until four years later. That’s when the church’s No. 2 official, Cardinal Secretary of State Tarcisio Bertone, a fan of Italian club Juventus and a soccer commentator during his time as Archbishop of Genoa, doubled the number of teams and modeled the tournament after the World Cup, adding group play and a knockout round. The tournament is played on a hilltop within Vatican City at Columbus Pius XI Field, an artificial-turf venue with a tiny grandstand and a breathtaking image of Saint Peter’s Basilica, which won three of the first four titles, all by 1-0 scores. Last year they lost by that same score to the African Lions of Collegio Urbano, whose players—with the exception of one Indian and one Indonesian—all came from Africa. There are few breaks in the school calendar for seminary students in Rome, so Clericus Cup games, as well as the twice-weekly practices that began last month, must be squeezed in around class and church commitments. But for Greg Gerhart, a seminarian and former all-state high-school player from Austin, Texas, the two activities complement one another. “There are several connections between the demands of priesthood—or Christianity in general—and soccer,” Gerhart, 27, who also plays for the North American Martyrs, wrote in an e-mail. “For that reason I have thought about putting on summer camps at the parish to show how the fun and discipline that soccer brings about are consistent with the Christian life.” The players bless themselves before taking the field, where both teams meet at the center circle for a pregame prayer. There are no requests for favorable results, though, because the tournament is more about camaraderie and personal growth than it is about winning. WHERE SOCCER IS TRULY RELIGION POPE FRANCIS DOESN’T HAVE A FAVORITE AMONG THE 16 TEAMS THAT WILL KICK OFF IN MARCH FOR THE TWO-MONTH-LONG EVENT IN THE NINTH EDITION OF THE CLERICUS CUP, THE SOCCER TOURNAMENT THAT TAKES ITS NAME FROM THE LATIN WORD FOR CLERGY, BUT THAT DOESN’T MEAN HE WON’T BE WATCHING. SPORTS C1 LIFE D1 WORLD COMPANIES B2-3 STYLE BOOKS TO INSPIRE DÉCOR OIL FIRMS MAY KEEP OUTPUT UP–B.I.S. MEGAWORLD TO DEVELOP 5 NEW TOWNSHIPS By VG Cabuag M EGAWORLD Corp. on Monday said it will launch five new mixed-development projects this year with combined land area of 400 hectares, bringing the company’s town- ship portfolio to 20. The company, in its disclosure to the Philippine Stock Ex- change, did not mention the specific locations and details of the projects, but said two will be in Luzon, two in the Visayas and one in Mindanao. It will use the landholdings of its units Suntrust Properties Inc., Empire East Land Holdings Inc. and Global-Estate Resorts Inc. It did not specify what these units will develop. This will bring Megaworld’s total township land area to 3,100 hectares by the end of the year, the company said. “With our adequate land bank and landholdings, the Megaworld is growing its townships to even more cities all over the Philippines. This means more exciting destinations, more homes to be built, more office buildings to be offered and more jobs for Filipinos. Our vision is to build more world-class townships in every major city in the Philippines year after year,” Andrew Tan, Megaworld chairman and CEO, said in a statement. “We still have more lands to develop in our portfolio. Our vari- ous groups are working hard to come up with unique concepts and ideas on how we will create more sustainable communities across the country,” Tan said. Megaworld has around 4,000 hectares of land in its portfolio. Around 80 percent have been dedicated for its townships or mixed-use communities, the concept of property development that Megaworld claims it pioneered in the country back in the 1990s, when it developed Eastwood City in Libis, Quezon City. The townships combine the residential, office, commercial and retail components to form integrated communities. See “Megaworld,” A2 TAN

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Page 1: BusinessMirror February 10, 2015

BSP seen keeping key rates on prevailing low inflation

www.businessmirror.com.ph n TfridayNovember 18, 2014 Vol. 10 No. 40 P25.00 nationwide | 8 sections 36 pages | 7 days a weekn Tuesday, February 10, 2015 Vol. 10 No. 124

A broader look at today’s businessBusinessMirrorthree-time

rotary club of manila journalism awardee2006, 2010, 2012u.n. media award 2008

Peso exchange rates n us 44.1630 n jaPan 0.3713 n uK 67.3221 n hK 5.6973 n china 7.0721 n singaPore 32.6529 n australia 34.4593 n eu 50.0146 n saudi arabia 11.7699 Source: BSP (9 February 2015)

By Lenie Lectura

The energy specialist of the International Finance Corp. (IFC) is

not in favor of amending the electric Power Industry Re-form Act (epira), saying that the law “has delivered what it was asked to do.” IFC chief energy specialist Tonci Bakovic, in his pre-pared speech during a recent forum on “Benchmarking Regulation: Exploring an Efficient Regulatory Frame-work for a Competitive Power Industry,” said the law has been successful in attracting investors, as well as fostering competition in the industry. “Close to 11,300 megawatts [MW] of new genera-tion have been built, attracting close to $17 billion in private investments to the generation sector. Fourteen new players have been introduced to the sector to com-pete among each other. Not many countries that have undergone reform have achieved the introduction of such number of new players,” Bakovic said. But Bacovic said his statements do not neces-sarily reflect the views of the IFC, a unit of the World Bank. The IFC official also noted that generation prices have been kept almost at par with inflation in a country that has been growing lately at close to 7 percent per annum from 2010 to 2014. “That is quite an achieve-ment in a country that grows fast,” he said.

Continued on A2

‘Epira delivers, why amend it?’

mining revenues up 37 percent in 2014

By Jonathan L. Mayuga 

MININg revenues increased by P27.65 bil-lion, or 37 percent, last year, according to the Mines and geosciences Bureau (MgB),

in spite of conditions that tend to adversely affect the industry’s growth. MgB Director Leo Jasareno said nickel production was again the main driver of growth last year. The growth in mining revenues came amid questions raised by the industry’s big players on the inconsistency of national and local policies on mining, as well as the push for higher taxes by the government. Jasareno attributed what he described as “upbeat showing” of the metallic sector to the performances of nickel, gold and copper projects, namely, the Cag-dianao Nickel Project of Platinum group Metals Corp. in Region 13, with P9.94 billion; Didipio Copper-gold Project of Oceanagold Philippines Inc. in Region 2, P9.76 billion; Padcal Copper-gold Project of Philex Mining Corp. in the Cordillera Administrative Re-gion, P8.16 billion; Toledo Copper Operations of Carmen Copper Corp. in Region 7, P8.13 billion; and Taganito Nickel Project of Taganito Mining Corp. in Region 13, P7.84 billion.

i.f.c. energy sPecialist says law effectiVe in attracting inVestors, fostering comPetition

global growth scarenow seems oVerblown

The global growth scare that’s gripped financial markets is looking overblown to some economists.

even as bond yields plumb record lows alongside sliding inflation, the world economy is set to strengthen with the US expansion plowing ahead and cheaper oil, cash and currencies providing lift elsewhere. Signs of a healthier outlook—bolstered by central banks rushing to ease monetary policy to prop up prices‚would comfort investors and Group of 20 (G-20) finance chiefs meeting on Monday in Istanbul, even amid the distractions of Greece and Russia. Bank of America Corp. is predicting stocks will outperform bonds this year as reflation takes hold. “G-20 policy-makers are concerned inflation won’t turn around, but what’s in the pipeline does look more promising in terms of the growth and inflation outlook,” said Torsten Slok, chief international economist at Deutsche Bank AG in New York and a former International Monetary Fund (IMF) forecaster. Slok estimates the world economy will grow 3.6 percent this year, the fastest pace since 2011 and a bit quicker than the 3.5 percent envisaged by the IMF last month when it cut its outlook by the most in three years. At hedge fund SLJ Macro Partners Llp. in London, cofounder Stephen Jen is among those betting on a “converge up” scenario in which a resurgent US buoys expansions internationally.

IsRaeLI aMBassadOR aT a.L.C. MedIa GROUP Israeli ambassador effie Ben Matityau (left) visits the office of the aLC Media Group in Makati City for a discussion with editors and publishers. Matityau underscores the critical role of the agriculture sector in developing rural areas in the Philippines. In its bid to help young Filipino farmers learn innovative agricultural technologies, the Israeli government will tap 500 Filipino agriculture students to study in Israel. Following the discussion, BusinessMirror Publisher T. anthony Cabangon hands over a framed caricature of Matityau as a token of the aLC Media Group’s appreciation. ALYSA SALEN

By Bianca Cuaresma 

The sharp moderation of inflation seen in the last quarter of 2014 and again in January this year has

helped prevent the central bank from raising the policy rates, thus far this year, analysts at DBS Bank said. But the Bangko Sentral ng Pilipinas (BSP) remains wary of such events as a sud-den reversal of oil prices, as some experts predict, and, as a result, the monetary au-thorities were not seen to favor cutting in-terest rates so soon this year, the regional lender said. In a research note, DBS said the central bank will likely keep its monetary-policy stance as the monetary authorities train a keen eye on how oil prices behave in the international market. “The rather sharp moderation in the consumer price index [CPI] inflation is the reason the BSP is reluctant to raise its key policy rates for now,” DBS Bank said. Inflation has trended downward since its peak in mid-2014, at 4.9 percent. Starting last September inflation has effectively been managed and brought down by

the central bank, in large part because oil prices have retreated in the interna-tional markets. The Philippine Statistics Authority only recently reported that infla-tion, or the rate of change in prices, aver-aged 2.4 percent in January. Unlike other central banks in the region, however, the BSP was not seen to cut the policy rates just yet, according to such other analysts as those at JPMorgan, for instance. “Indeed, we remain of the view that the central bank may actually prefer to tighten its policy further in the coming sessions,” the DBS Bank said. “The recent uptick in global crude-oil price may lift CPI inflation slightly higher in the coming months,” accord-ing to DBS Bank, quickly adding that the country is still “definitely far” from the 4.5-percent trend seen in mid-2014, when the BSP stepped up on its monetary-policy normalization. The central bank adopted a low infla-tion target for this year of 2 percent to 4 percent, from year ago of 3 percent to 5 percent, in recognition of the moderating pressure on prices as a whole.See “Mining,” A2

See “Global growth,” A2

greek premierproclaims endto austerity in policy statement

inside

Life Tuesday, February 10, 2015 D1BusinessMirrorEditor: Gerard S. Ramos • [email protected]

F ORGIVE us, Father, for how can we give in to such negative thoughts and feelings when we are alive and surrounded with goodness?

You have blessed us with family, friends, livelihood, lively conversations and laughter. With what beauty You have adorned the world in which we live in: The sun, the clouds and the blue sky, the moon and the stars, the rain and the dew, the trees and flowers, the birds and the butterflies. How grateful we are for being surrounded with goodness. Amen!

Surrounded with goodness

VIRGIE SALAZAR AND LOUIE M. LACSONWord&Life Publications • [email protected]

RETHINKINGTHE DÉCOR OF YOUR CHILD’S

ROOM »D4

B P SPittsburgh Post-Gazette

EVERY year dozens of beautifully rendered design and style books hit the shelves. They are often perused for the pictures or used to create a tableau in a reading nook, but the real value is between the covers. There

you will find inspiration, encouragement and a sense of what is possible in any space with some imagination and desire.

Here are a few worth owning:■ Decorating in the Grand Manor by Carleton

Varney, Rooster Books for Shannongrove PressNobody understands heritage like Carleton

Varney. He owns the oldest design firm in the country, Dorothy Draper & Co. Inc. He has been with the firm since 1962 working with Draper on numerous projects. The first room he did from top to bottom at the Greenbrier in White Sulphur Springs, West Virginia, was the Crystal Room. It remains today as it was then. He continues the legacy of Draper at the Greenbrier, at The Grand on Mackinac Island, and at The Colony in Palm Beach, where he has incorporated a blend of his style and hers.

The author of 27 books on decorating, plus several others, including the official biography of Dorothy Draper, this book is a design memoir taking the reader on a colorful journey through his public and personal spaces.

■ Robert Couturier: Designing Paradises by Robert Couturier, Rizzoli

Many try, but not all succeed when it comes to blending eras in a sophisticated not stagey manner. This is an arena where French-born Robert Couturier is king. In Designing Paradises, he shows off his love of luxury and expertise as an architect and interior designer.

He offers readers a look at his country home in Connecticut complete with early American guesthouses as well as properties he has designed here and abroad. His work translates well from England to Mexico to the US and beyond.

It’s the language of elegance and it is evident in the 250 color illustrations. He established his design firm in 1987 the same year he was commissioned by Sir James Goldsmith to transform his 20,000-acre Mexican estate. From neutral whites to a room with Hermes orange paneling, this timeless tome can be enjoyed for the contrasts and fabulous photos, as well as the way it will stir your own creativity.

■ Artfully Modern by Richard Mishaan, Monacelli Press

The essential role art combined with design play in today’s environments is explored in the projects taken on by Richard Mishaam. From the living room he did for the 2011 Kips Bay Decorator Show House to the presidential suite at the Saint Regis Hotel in New York City. It’s a compilation of his best work since 2009. His interiors are described as “sumptuous style mash-ups” because of his fearless pairings of seemingly incongruent periods with art from a variety of eras and

styles. However, his first order of business when doing a residential space is to understand how his clients live and what their lifestyles will accommodate.

■ Decorating the Way I See It by Markham Roberts, Vendome Press

This is a book of beautiful diverse interiors that actually seem attainable partly because the book is divided into informational style chapters, such as Floor Plan, Background, Scheme, Furniture, etc. Readers can actually learn something from Roberts, who worked for the renowned decorator Mark Hampton before branching out on his own. Like others of his ilk, he meshes traditional and contemporary in seamless ways. He says in the book, “I’m happy when clients come to me with great art.” He enjoys the challenge of working existing art and photographs into a new design scheme. Unlike other books, he includes a section on architecture. This is a tome you will want to revisit again and again as a reference tool for your own projects.

■ Rowing Blazers by Jack Carlson, VendomeNot exactly an interior design book, nevertheless

Boston native Jack Carlson manages to demonstrate the importance of heritage, a hallmark of great style, whether in decor or fashion.

This author, a former member of Georgetown University’s eight-man crew team, also illustrates how passion can be translated into beauty. It’s old school style at its best, something Carlson has embraced, having won in 2013 at one of rowing’s most prestigious venues, the Royal Regatta at Henley, England.

He is currently a Clarendon Scholar at Oxford University. His book goes beyond the story of the iconic blazer to what these particular jackets signify. If you have a preppy bent, you will love this book. If you row,

you will love this book. If you are a fan of all things classic, you will want to own this book.

■ Heart and Home: Rooms That Tell Stories by Linda O’Keeffe, Rizzoli

As a writer involved in the design world it was only natural for Linda O’Keeffe to observe that rooms, like people, have a story to tell. She chooses rooms from the most complex to playful and refined to emotionally charged. The book offers a peek into the space occupied by connoisseurs in the worlds of art, design, fashion and more. Among them are renowned interior designer Kelly Wearstler, fashion designer Wolfgang Joop and architect Lee Ledbetter. Heart and Home circles the globe going from a New York loft all the way to a haveli in Udaipur, India. As O’Keeffe notes in the introduction, “A home is much more than a dwelling, place of birth, or primary residence. It’s wherever we feel creative or relaxed enough to permanently loosen our stays.” It’s the kind of book that should give readers the courage to make their home tell their story.

■ Beyond Chic: Great Fashion Designers at Home by Ivan Terestchenko, Vendome Press

Christian Louboutin and Giorgio Armani are only two of the fashion icons whose homes Terestchenko explores. Getting a look at the environments great designers choose to live in offers a kind of voyeuristic thrill as the reader is taken on a journey from lovers of minimal to champions of maximum embellishment. The private personas of the occupants are evident in the photo essays that unveil one designer’s Moroccan riad and another’s Swiss chalet. Although the book was published a while ago, it is worth a mention since lovers of fashion and decor can experience a rare glimpse at both in this well done compilation. ■

Style books to inspire décorBEAUTY pared down to the soul, as featured in Heart and Home: Rooms That Tell Stories by Linda O’Keeffe. BOLD colors and a sublime eye in Decorating the Way I See It by Markham Roberts

ONE of the exquisite spaces featured in Decorating in the Grand Manor by Carleton Varney.

BusinessMirror

World CompaniesTuesday, February 10, 2015 B2-3Editor: Dionisio L. Pelayo• [email protected]

CHARLOTTE, North Caro-lina—Electrolux announced on Thursday it will buy Shang-

hai Veetsan Commercial Machinery, one of the largest manufacturers of professional dishwashers in China.

The acquisition is aimed at grow-ing the Swedish appliance maker’s professional segment, which in-cludes food service and laundry equipment, and expansion into China and the Asia-Pacific region, according to Electrolux.

The deal is expected to close in the first half of 2015.

“Professional dishwashing rep-resents one of the most promising product categories as its penetra-tion rate in China is still consider-ably lower than other categories, such as cooking or refrigerated storage,” Alberto Zanata, head of Electrolux Professional Products, said in a statement.

Veetsan was established in 2003 and has annual sales of about 115 million Swedish kronor (about $13.9 million).

Charlotte has been home to the Electrolux North American head-quarters since 2010. The company employs 925 people in Charlotte and has said it plans to increase that number to 1,600 by the end of 2017. Company management has credited strength of Electrolux’s North American business to prod-uct innovation, such as development of a premium dishwasher that can wash and dry a load of dishes in 30 minutes. TNS

“Debt-service requirements may induce continued physical produc-tion of oil to maintain cash flows, delaying the reduction in supply in the market,” the Basel, Switzerland-based institution said in a report.

Energy companies’ outstanding debt rose to more than $800 billion this year from less than $200 billion in 2003, said BIS, which is owned by central banks.

Sinking oil prices weakened the value of assets used as collateral by

producers and compelled them to sell more of their output on futures mar-kets, it said. Oil’s role as a financial as-set may have contributed to the price drop and the most volatile swings in prices in more than six years.

Brent crude oil, a global bench-mark, has tumbled as members of the Organization of Petroleum Ex-porting Countries refused to cut oil production in response to the highest US output in three decades. Lower prices increases the risk of

companies failing to meet interest payments, the BIS said.

Borrowing costsTUMBLING oil prices have in-creased borrowing costs among energy companies, with spreads on high-yield bonds issued by energy companies soaring to 800 basis points, or 8 percentage points, as of January, from 330 points in June, according to the BIS. The spread measures the additional interest costs paid by a borrower compared above a benchmark rate.

Brent for March settlement in-creased $1.23, or 2.2 percent, to $57.80 a barrel on the London-based ICE Futures Europe exchange, up 9.1 percent for the week ended February 6. Even after the recent rally, Brent has still fallen about 50 percent from its June 19 high of $115.71.

The expansion in borrowing by energy firms outpaced total debt is-suance since 2003, which has tripled in the period to about $6 trillion,

according to the report.This encouraged energy compa-

nies to both lock in forward prices, adding to the selling pressure, and to keep production levels elevated to sustain revenues, prolonging an oversupply, the BIS said. Supply will exceed demand by 2 million barrels a day in the first half of 2015, ac-cording to Iranian Oil Minister Bijan Namdar Zanganeh.

Oil productionUS oil production is up 8.7 percent since the end of June, even amid tumbling prices. Production reached 9.213 million barrels a day the week of January 23, the highest level in weekly Energy Information Admin-istration data going back to 1983.

The level of borrowing in dollars by energy companies outside the US may also push prices lower, as a strengthening dollar makes it harder for firms based in emerging nations to pay off their debt, the BIS said.

Oil’s role as a financial asset may

have played a role in the price drop. West Texas Intermediate and Brent futures contracts representing near-ly 2 billion barrels of oil traded hands on Friday on the New York Mercantile Exchange and ICE Futures Europe exchange in London. The world con-sumes a little more than 90 million barrels of physical oil a day.

WTI has seen price swings of more than 5 percent in three of the past six trading days. The CBOE Crude Oil Volatility Index, which measures price fluctuations using options of the US Oil Fund, rose to the highest level since 2009 on Thursday. The US Oil Fund, the biggest US-listed oil exchange-traded fund, holds WTI futures.

“The steepness of the price decline and the very large day-to-day price swings are reminiscent of a financial asset,” the BIS said. “As with other financial assets, movements in the price of oil are driven by changes in expectations about future market conditions.” Bloomberg News

OR E G O N , O h i o —Workers in northwest Ohio have joined the

first nationwide strike at US oil refineries since 1980.

The Blade newspaper of To-ledo reported that some 100 BP-Husky Toledo refinery workers began picketing at midnight outside the plant in Oregon, Ohio. A local union official said on Saturday night that some 350 workers would be on strike and planned to have picketing around the clock.

“They’re discouraged that the strike is happening, bu they understand why it has to happen,” said Bryan Sidel, fi-nancial secretary of the local.

The United Steelworkers union earlier notified BP Plc. that workers at refineries in Ohio and Indiana would join a walkout that began Febru-ary 1 at nine other refineries.

A BP spokesman said the company expects to continue operating with replacement workers and does not expect a significant effect on production.

The str ike began after steelworkers said that nego-tiations with Shell Oil Co. had broken down.

Shell is negotiating the na-tional contract for other oil companies.

The union has said workers want better health-care ben-efits and limits on the use of contractors to replace union members in maintenance jobs. She said wages are not an issue.

“BP is disappointed that USW leadership decided to call a strike at both the Whiting Refinery and BP-Husky Toledo Refinery,” said BP Spokesman Scott Dean by e-mail.

He said BP remained at the negotiating table and wanted a deal that “provides good wages while giving manage-ment the flexibility it needs” to remain competitive.

BP’s plant in Whiting, In-diana, has about 1,860 em-ployees, more than 1,000 rep-resented by the steelworkers. BP’s Toledo refinery in Ohio, which it owns 50-50 with Canada’s Husky Energy, has some 600 workers total.

The plants will be staffed by replacements including re-tirees and former front-line workers who now hold salaried jobs, Dean said. AP

WASHINGTON—Automak-ers are cramming cars with wireless technology,

but they have failed to adequately protect those features against the real possibility that hackers could take control of vehicles or steal per-sonal data, according to an analysis of information that manufacturers provided to a senator.

Democratic Sen. Edward Markey of Massachusetts asked automak-ers a series of questions about the technologies and any safeguards against hackers built into their ve-hicles. He also asked about how the information that vehicle computers gather and often transmit wirelessly is protected.

Markey posed his questions after researchers showed how hackers can get into the controls of some popu-lar cars and sports-utility vehicles, causing them suddenly to accelerate, turn, sound the horn, turn head-lights off or on and modify speed-ometer and gas-gauge readings.

The responses from 16 manufac-turers “reveal there is a clear lack of appropriate security measures to protect drivers against hackers who may be able to take control of a ve-hicle or against those who may wish to collect and use personal driver information,” a report by Markey’s staff concludes.

Today’s cars and light trucks typically contain more than 50 elec-tronic control units—effectively small computers—that are part of a network in the car. At the same time, nearly all new cars on the market today include at least some wireless entry points to these com-puters, such as tire pressure moni-toring systems, Bluetooth, Internet access, keyless entry, remote start, navigation systems, WiFi, anti-theft systems and cellular-telematics, the report said. Only three automakers said they still have some models without wireless entry, but those models are a small and declining share of their fleets.

“Drivers have come to rely on these new technologies, but unfor-tunately, the automakers haven’t done their part to protect us from cyberattacks or privacy invasions,” Markey said in a statement.

Among the report’s findings:n Most manufacturers said they

were unaware of or unable to report on past hacking incidents. Three automakers declined to answer the question. One automaker described an app designed by an outside com-pany and released for Android de-vices that could access a vehicle’s computer network through the Bluetooth connection. A security analysis didn’t indicate any ability to introduce malicious code or steal data, but the automaker had the app removed from the Google Play store as a precautionary measure.

n Each manufacturer is handling the introduction of new technology

in very different ways, and for the most part these actions are insuf-ficient to ensure security. Hackers can get around most security pro-tections cited by manufacturers, according to the security experts Markey consulted.

n Only one manufacturer appeared able to detect a hacking attempt while

it was happening and only two de-scribed credible means of responding to such intrusions in real time.

Information from most auto-makers indicated they wouldn’t know about a hacking attempt un-less data from the vehicle’s comput-ers was downloaded by a dealer or at a service center. AP

ATLANTA—Coca-Cola has settled a National Labor Relat ions Board com-

plaint with a former employee who claimed the beverage giant fired him in retaliation for his role in trying to organize a union at a metro Atlanta bottling plant.

Greg Guice, a bulk delivery driver, will receive $42,500 in ending his complaint against the company that dates back to his dismissal in 2012.

Guice’s grievance was to go be-fore an administrative law judge on February 12.

Coca-Cola denied that it had done anything wrong in settling the dispute.

“Coke knew that they were violating my rights when they discriminated against me for organizing a union in Atlanta,” Guice said in a statement.

“Now I have a piece of justice. I hope that Coke employees see this settlement as a victory for us all in our efforts to win a voice on the job and a Teamsters contract.”

Guice, who helped to spear-head an unsuccessful effort to organize a union at an Atlanta-area facility in 2010, alleges that the company two years later used his absence from work to take his ill father to the hospital as an excuse to fire him.

He said the company termed the absence “unexcused,” even though he had earned appropri-ate time off for his time away.

In a complaint to the National Labor Relations Board alleging “anti-union discr imination,” Guice alleged he had been under the company’s scrutiny since the 2010 organizing effort, including speaking out on the subject that year at Coke’s annual sharehold-er’s meeting.

He said also he was instruct-ed by management to remove a union insignia from his uniform and in 2012 was issued a “disci-plinary warning” from a plant supervisor after further ques-tions arose about organizing discussions. TNS

Oil firms may keep output up–BIS

Report: Automakers fail to fully protect vs hacking

ENERGY companies may be slow to cut oil production after a 50-percent price drop because

they need to service debt that has risen fourfold since 2003, according to the Bank for International Settlements (BIS).

Electrolux to buy Chinese dishwasher manufacturer

Ohio workers join oil refineries strike

Coke settles labor dispute with dismissed employee

WorldBusinessMirror

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MARDI GRAS IN TEXAS Alisha Wells waves from a Krewe of Aquarius � oat as the Mystic Krewe of Aquarius Mardi Gras Parade winds its way through downtown Galveston, Texas on the first weekend Mardi Gras festivities on February 7. AP/THE GALVESTON COUNTY DAILY NEWS, STUART VILLANUEVA

WorldWorldB3-1 | Tuesday, February 10, 2015 • Editor: Lyn Resurreccion

Tsipras presented his govern-ment’s policy statement to Greek lawmakers, which included, as he had forewarned, all the prom-ises made by his radical-left party, Syriza, in its manifesto before last month’s election.

� e government “has taken the irrevocable decision to stick fully to its preelection commitments,” Tsip-ras said, indicating that he would not compromise on his party’s positions.

By demanding a “bridge agree-ment” that would give Greece and its creditors time to negotiate a new debt deal much more favorable to the country by June, Tsipras appeared to stick to an approach that got short shrift from European Union partners in a series of meetings that Tsipras and his � nance minister had with European o� cials this past week.

“If our [EU] partners are willing, we can agree [on a bridge agreement] tomorrow morning,” Tsipras said.

But this would mean the rest of the EU abandoning its declared policies and giving in to Syriza’s demands.

“� e [bailout deal] has been abol-ished by popular mandate,” Tsipras said, referring to the two deals that have kept debt-ridden-Greece solvent and provided a historically unprecedented €240 billion ($271.4 billion) in assistance.

� is aid also went with austerity policies that shrank Greece’s econ-omy by a quarter and resulted in re-cord unemployment, with more than a quarter of the workforce jobless.

Having come to power as a result of a popular backlash against these measures, Tsipras geared his speech

completely toward a domestic audi-ence, insisting that it is the EU that must return to its “founding prin-ciples of solidarity, social cohesion, growth and democracy.”

“We declare categorically, we will not negotiate our history. We will not negotiate this people’s pride and dignity,” said an emotional Tsipras as he concluded his speech.

� e current bailout deal runs until the end of February, but Tsip-ras said the government is “not en-titled to ask for an extension,” while blasting the previous government for purposely rejecting an EU pro-posal to extend the deal to June, so that a Syriza-led government would face tight deadlines.

“� ey burned the crops and blew the bridges,” Tsipras said of the pre-vious conservative-socialist coali-tion government.

Syriza’s own program includes measures to provide relief for the poor, such as free meals, free elec-tricity and free health care; relief for the middle class by abolishing an un-popular property tax and replacing it with a tax on very large property; and sops to his supporters, such as the abolition of university reform and a reestablishment of the state TV and radio broadcaster that was shut down in 2013 and replaced by a slimmed-down version. But a pledge to raise the minimum wage to pre-crisis levels, once promised as the � rst

measure to be implemented by the government, will be done in two stages and not realized until 2016.

Tsipras insisted that his govern-ment's budgets would be balanced, save for the debt servicing needs. On the debt, while his original demand for a minimum 60-percent “haircut,” or write-o� , has been rejected by Greece’s creditors, he has presented other proposals, such as issuance of low-interest “perpetual bonds,” ma-turity extensions and deferrals of payments that would have the same e� ect. He said the EU should have no problem accepting his pledges to tackle corruption and tax evasion and reform the state administration.

Greek lawmakers will debate the policy statement and hold a con� -dence vote at midnight on Tuesday.

Greece faces three crucial EU meetings in the coming days: An emergency meeting of Eurozone � nance ministers on Wednesday, a summit of EU leaders � ursday, and another euro-zone � nance minis-ters meeting on February 16. It has been given a virtual ultimatum to present a program compatible with the bailout deal by that latter meet-ing; the European Central Bank has applied additional pressure by refusing to accept Greek bonds as collateral after February 11, forcing Greek banks to seek funds from a more expensive emergency liquid-ity mechanism. AP

Greek premier proclaims end to austerity in policy statementGREECE’S new Prime

Minister Alexis Tsipras set his leftist government on

a collision course with Greece’s creditors on Sunday, proclaiming an end to the era of austerity and “fi ve years of bailout barbarity.”

VENEZUELAN President Nicolas Maduro on Friday announced that an oc-cupied supermarket chain o� cials accused of hoarding products will be folded into the state food distribution system.

Maduro said the 35 locations of the Dia a Dia grocery chain will be assimi-lated into the state grocery agency starting this weekend. He did not say if the change would be permanent, and stopped short of calling it an expropriation.

He accused the chain of “carrying out a war against the people,” referring to the government’s assertion that right-wing business owners are purposely mak-ing shopping a nightmare by hoarding goods to cause the shortages and long lineups that are plaguing Venezuela.

Soldiers had occupied the Dia a Dia chain earlier this week, and on Friday, the attorney general’s o� ce announced the continued detention of Dia a Dia’s director.

Earlier, two executives of Venezuela’s largest drugstore chain, Farmatodo, were detained as part of an investigation by price-control authorities.

Many economists blame price and currency controls for causing the eco-nomic distortions plaguing Venezuela at a time when falling oil prices are bat-tering its revenues.

The Caracas Chamber of Commerce, Industry and Services rejected govern-ment accusations that the private sector is the cause of the severe economic crisis, shortages and soaring in� ation in Venezuela. AP

VENEZUELA TO INCORPORATE OCCUPIED GROCERY INTO STATE SYSTEM

AUSTRALIAN Prime Minister Tony Abbott’s diminished mandate after a leadership

challenge risks making it tougher for him to address the weakest economy in a generation.

With gains in tax revenues slumping, Abbott already faced a challenging job to prepare the an-nual budget for the � scal year be-ginning July 1. Now he’ll have to craft it under a political cloud with almost 40 percent of his parliamen-tary colleagues voting Monday to unseat him. � e scale of the party rebellion suggests political instabil-ity will persist.

“Ongoing uncertainty over lead-ership and policy direction is likely to remain a negative for business

con� dence, which is already languish-ing below its long-run average, with implications for business expenditure on both capital and labor,” said Su-Lin Ong, the head of Australian economic and � xed-income strategy at Royal Bank of Canada in Sydney. � at is likely to pressure the central bank to cut interest rates further to support the economy, she said.

Here’s what the economic environ-ment that Abbott faces looks like:

■ � e longest stretch of weak ex-pansion since the 1991 recession

Gross domestic product (GDP) growth is on track to be below its 30-year average rate for six of the past seven years. � e Reserve Bank of Aus-tralia on February 6 lowered its forecast average expansion for 2015 to be-

tween 1.75 percent and 2.75 percent.■ Government debt as a propor-

tion of GDP is highest since 1996Abbott’s conservative predeces-

sor, John Howard, elected in 1996, paid o� Australia’s debt before em-barking on tax cuts and middle-class welfare payments � nanced by the mining boom. Following the 2008 global � nancial crisis, as reve-nue failed to meet expectations, the then-ruling Labor party borrowed to continue � nancing expenditure. Abbott now confronts the crunch of tax increases or welfare cuts, a task bordering on impossible in the cur-rent political environment. � e rul-ing coalition lacks a majority in the Senate, which has blocked proposed policy changes. Popular support for

the government fell 3 points to 43 percent, while that for Labor rose 3 points to 57 percent, according to the latest Newspoll published in the Australian newspaper Monday.

Net debt as a proportion of GDP is forecast to rise to 15.2 percent in 2014-15, the highest since 1996-97.

■ Business con� dence at its weakest since the end of the Rudd-Gillard-Rudd government

Corporate sentiment surged with the election of the Abbott’s Liberal-National coalition after three years of minority government and lead-ership chaos. It has since trended lower as frustration with the new administration grows.

“Political instability dramatical-ly a� ects business con� dence,” said

John Osborn, director of economic and industry policy at the Austra-lian Chamber of Commerce and Industry in Canberra. “Business is looking for a unity of purpose from government to � x the problems with the budget and to get the econ-omy back on track.”

Echoing those sentiments, Saul Eslake, chief Australia economist at Bank of America Merrill Lynch, said: “Business put a lot of store by the change of government in 2013, and I think they have become either increasingly disenchanted with the performance of the government or increasingly frustrated with its in-ability to get its legislation through.”

■ Australian unemployment has held above 6 percent for the longest

stretch since 2003� e RBA said the economy is

set to grow slower than previously forecast, and joblessness is likely to rise higher and remain there longer than earlier seen.

■ Key commodities are at the weakest level in � ve years

� e price of iron ore, Austra-lia’s biggest export, has collapsed about 50 percent as China’s econ-omy slows, and the plunge in the oil price has hurt the prospects for the nation’s developing lique� ed natural gas industry, whose Asian contracts are linked to crude. � e Reserve Bank of Australia’s com-modity price index fell 19 percent in Australian dollar terms in January from a year earlier. Bloomberg News

PEOPLE line up outside the Dia a Dia supermarket after it was taken over by the government in the Propatria neighborhood of Caracas, Venezuela on February 3. The government is temporarily taking over the supermarket chain as part of a crackdown on private businesses it blames for worsening shortages and long lines. Popular items with government � xed prices that have been running short are co� ee, cooking oil, precooked corn � our, sugar, milk, toilet paper, disposable diapers, detergent and fabric softener, among other items. AP/ARIANA CUBILLOS

Abbott holds less sway to fi x worst Australian economy in 24 years

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WHere socceris truly religion

ALTHOUGH the competition remains limited to priests or those studying for the priesthood, it draws players—including some former pros—from more than 60 countries, most of them African or South American.

C | T, F , [email protected]@businessmirror.com.ph

Editor: Jun Lomibao

SportsBusinessMirror

B K BLos Angeles Times

THE Clericus Cup rule book is the Bible of soccer at the Vatican. And just like that other Good Book, it contains certain commandments.

The first commandment is thou shalt not foul an opponent who has a free path to the goal. Disobey and the punishment is not a red or yellow card but a blue one that leads to soccer’s version of purgatory: a five-minute trip to the sidelines for spiritual reflection.

“I have only heard about the blue card,” said Lewi Barakat, an Australian seminary student who has not sinned in three previous Vatican soccer tournaments. “I never saw it used.”

But Barakat, like the more than 350 priests, deacons and seminarians from the Vatican who play in the annual event, has faith the blue card exists. And at the Vatican, faith—and soccer—are both considered essential. Just ask the guy in charge. “It’s beautiful when a parish has a sports club. Something is missing without one,” said Pope Francis, a dues-paying member of the supporters group for Argentine soccer team San Lorenzo—which, not insignificantly, was named after a saint.

The pope doesn’t have a favorite among the 16 teams that will kick off in March for the two-month-long event in the ninth edition of the Clericus Cup, the soccer tournament that takes its name from the Latin word for clergy. But that doesn’t mean he won’t be watching. Because in less than a decade the annual intercollegiate competition among Rome’s Pontifical seminaries has grown from a series of intramural scrimmages into a regulation 11-on-11 tournament that has drawn attention from Fédération Internationale de Football Association (Fifa), the sport’s world governing body, and praise from Union of European Football Associations, European soccer’s ruling organization.

“It’s bigger than I ever thought it would be,” said Scott Gratton, a former teammate of Barakat’s on the North American Martyrs, the US seminary

team that has won two of the last three Clericus Cup titles. “It literally is like the World Cup to us.”

And though the competition remains limited to priests or those studying for the priesthood, it draws players—including some former pros—from more than 60 countries, most of them African or South American.

“It’s no walk in the park,” said Barakat, 30, who was a top-flight amateur player in Sydney. “The Clericus Cup deserves to be taken with some seriousness and played competitively.”

It’s not the highest level of soccer played in the Vatican, though. Vatican City, the world’s smallest country, also has an international team composed primarily of the Swiss Guard and other staffers, making the Vatican one of only nine recognized sovereign states whose national team is not a Fifa member. Another is tiny Monaco, which beat Vatican City, 2-0, in its most recent game last May.

But whatever the Clericus Cup lacks in talent it more than makes up for in passion. Teams in the tournament have their own supporter groups, composed mainly of other seminarians, who have unique chants for both their teams and individual players. Holy Martyrs—whose uniforms are a patriotic blend of red, white and blue—may have the most impassioned fans, some of whom have shown up costumed as Super Mario, Spider-Man, Uncle Sam and Captain America while waving American flags.

Some have even come dressed as priests.“The atmosphere the fans produce is

impressive,” Barakat said. “They make noise from start to finish.”

Sometimes too much noise. In the tournament’s early years, supporters brought drums, tambourines, megaphones and boomboxes that played reggae music at ear-splitting levels. Neighbors complained, and though the Vatican didn’t institute a vow of silence, it did ask the seminarians to turn down the volume.

The seeds for the tournament were planted in 2003 by Jim Mulligan, a seminarian at England’s College in Rome who organized an eight-team “friendly” event called the Rome Cup. But the

idea didn’t win the Vatican’s blessing until four years later. That’s when the church’s No. 2 official, Cardinal Secretary of State Tarcisio Bertone, a fan of Italian club Juventus and a soccer commentator during his time as Archbishop of Genoa, doubled the number of teams and modeled the tournament after the World Cup, adding group play and a knockout round.

The tournament is played on a hilltop within Vatican City at Columbus Pius XI Field, an artificial-turf venue with a tiny grandstand and a breathtaking image of Saint Peter’s Basilica, which fills the view between the two team benches.

The RedMats of Redemptoris Mater are the most successful team in the tournament, having

won three of the first four titles, all by 1-0 scores. Last year they lost by that same score to the African Lions of Collegio Urbano, whose players—with the exception of one Indian and one Indonesian—all came from Africa. There are few breaks in the school calendar for seminary students in Rome, so Clericus Cup games, as well as the twice-weekly practices that began last month, must be squeezed in around class and church commitments. But for Greg Gerhart, a seminarian and former all-state high-school player from Austin, Texas, the two activities complement one another.

“There are several connections between the demands of priesthood—or Christianity in general—and soccer,” Gerhart, 27, who also plays for the North American Martyrs, wrote in an e-mail. “For that reason I have thought about putting on summer camps at the parish to show how the fun and discipline that soccer brings about are consistent with the Christian life.”

The players bless themselves before taking the field, where both teams meet at the center circle for a pregame prayer. There are no requests for favorable results, though, because the tournament is more about camaraderie and personal growth than it is about winning.

“One of the satisfying aspects of playing for our seminary is seeing how the players come together as a team and how that bond strengthens throughout the tournament,” Barakat said.

“More than any other competition I have played in, the players look for the balance of playing hard but fair. There is something greater that the players are striving for that goes beyond the Clericus Cup.”

Sometimes the physical and the spiritual worlds collide, which is why the North American Martyrs will once again be without Gratton. The high-scoring forward sustained a knee injury and hasn’t played since helping his team to its second straight title in 2013—making the Clericus Cup one of the few international soccer events that has been dominated by North Americans.

“He wants to be able to genuflect when he is a priest one day,” Barakat said of Gratton. “So he decided to retire early for a greater good.”

WHERE SOCCERIS TRULY RELIGION

POPE FRANCIS DOESN’T HAVE A FAVORITE AMONG THE 16 TEAMS THAT WILL KICK OFF IN MARCH FOR THE TWO-MONTH-LONG EVENT IN THE NINTH EDITION OF THE CLERICUS CUP, THE SOCCER TOURNAMENT THAT TAKES ITS NAME FROM THE LATIN WORD FOR CLERGY, BUT THAT DOESN’T MEAN HE WON’T BE WATCHING.

sPORTs C1

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style books to inspiredÉcor

oil firms may keep outputup–b.i.s.

MEGAWORLD TO DEVELOP 5 NEW TOWNSHIPSBy VG Cabuag

MeGAwoRLD Corp. on Monday said it will launch five new mixed-development projects this year with combined land area of 400 hectares, bringing the company’s town-

ship portfolio to 20. The company, in its disclosure to the Philippine Stock ex-change, did not mention the specific locations and details of the projects, but said two will be in Luzon, two in the Visayas and one in Mindanao. It will use the landholdings of its units Suntrust Properties Inc., empire east Land holdings Inc. and Global-estate Resorts Inc. It did not specify what these units will develop. This will bring Megaworld’s total township land area to 3,100 hectares by the end of the year, the company said. “with our adequate land bank and landholdings, the Megaworld is growing its townships to even more cities all over the Philippines.

This means more exciting destinations, more homes to be built, more office buildings to be offered and more jobs for Filipinos. our vision is to build more world-class townships in every major city in the Philippines year after year,” Andrew Tan, Megaworld chairman and Ceo, said in a statement. “we still have more lands to develop in our portfolio. our vari-ous groups are working hard to come up with unique concepts and ideas on how we will create more sustainable communities across the country,” Tan said. Megaworld has around 4,000 hectares of land in its portfolio. Around 80 percent have been dedicated for its townships or mixed-use communities, the concept of property development that Megaworld claims it pioneered in the country back in the 1990s, when it developed eastwood City in Libis, Quezon City. The townships combine the residential, office, commercial and retail components to form integrated communities. See “Megaworld,” A2TaN

Page 2: BusinessMirror February 10, 2015

SUNRISE SUNSET

FULL MOON6:22 AM 5:58 PM

MOONRISEMOONSET

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TODAY’S WEATHERMETROMANILA

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LEGAZPI CITY23 – 29°C

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METRO DAVAO23 – 32°C

ZAMBOANGA CITY22 – 33°C

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Watch PANAHON.TV everyday at 5:00 AM on PTV (Channel 4).

Weekday hourly updates: 6:00 AM on Balitaan, 7:00 AM & 8:00 AM on Good Morning Boss!, 9:00 AM, 10:00 AM, 11:00 AM, 12:00 PM, 1:00 PM

on News@1, 3:00 PM, 4:30 PM, and 6:00 PM on News@6

www.panahon.tv

@PanahonTV

FEBRUARY 10, 2015 | TUESDAY

HIGH TIDEMANILA

SOUTH HARBOR

LOW TIDE

7:44 AM0.15 METER

TUGUEGARAO CITY 19 – 27°C

LAOAG CITY 19 – 29°C

TAGAYTAY CITY 18 – 27°C

SBMA/CLARK 21 – 31°C

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BAGUIO CITY11 – 22°C

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NORTHEAST MONSOON AFFECTING LUZON.(AS OF FEBRUARY 9, 5:00 PM)

METRO MANILA21 – 30°C

Northeast Monsoon locally known as “Amihan”. It affectsthe eastern portions of the country. It is cold and dry;

characterized by widespread cloudiness with rain showers.

BusinessMirror [email protected] Tuesday, February 10, 2015A2

News These new developments will bring the company’s township portfolio from 15 to 20 by the end of this year. Last year the company also introduced five townships in its portfolio, covering almost 1,000 hectares of land. These include Woodside City in Pasig City, with an area of 12.3 hectares; South-woods City in the boundaries of Cavite and Laguna, 561 hectares; Davao Park District in Lanang, Davao City, 11 hectares; Alabang West in Las Piñas City, 62 hect-ares; and Suntrust Ecotown in Tanza, Cavite, 350 hectares. Megaworld had earlier said it expects to exceed its 2014 per-formance this year, as it targets double-digit growth for its office revenues. It is still assessing if it can still grow its residential rev-enues, as it already has a wide base. “We are over optimistic that we should be able to match our achieve-ments for this year for the following year if not exceed it,” Jericho Go, the company’s senior vice president, had said earlier. “We are accelerating and in-creasing our buildup of township projects, starting with the offices. Again, with offices come retail and residential sales. So we’re very opti-mistic about 2015. I think the trajec-tory points to a substantial amount of growth for 2015,” he said. At the moment, 50 percent of rev-enues of Megaworld still comes from real-estate sales, and 40 percent from office rentals. That will change by 2018, when revenues from office rentals will increased to about 50 percent, and real-estate sales will have gone down between 40 percent and 45 percent, the company said.

Megaworld. . . Continued from A1

G-20 agendaThe global economy heads the agenda at the Istanbul meetings for G-20 officials. Finance ministers and central bank governors will discuss it at a dinner on Monday, and it was the first item in five sessions of talks by their deputies on Sunday, before they started work on drafting the official G-20 communique. That gathering follows a high note at the end of last week. US employers have taken on a million new workers since November, the biggest three-month increase in payrolls in 17 years, data released on Friday by the Labor Department showed. Wages rose, with average hourly earnings jumping 0.5 percent in January, the biggest monthly gain since November 2008.

“Three cheers for the US labor market,” Scott Anderson, chief economist at Bank of the West in San Francisco, said in a February 6 note. The jobs data “should ease fears” the US will be dragged down by weak growth elsewhere, he said.

Russia riskeveN so, those fears aren’t baseless. The euro area’s fragile recovery is clouded by trade-disrupting sanctions against President vladimir Putin’s Russia, and by the risk that Greece is on the edge of a financial crisis that will force it out of the currency bloc. Chinese vice Minister Zhu Guangyao said in Istanbul on Sunday that a Greek exit would be a “serious issue.” Bloomberg News

But, if there is a need to do so, Ba-kovic said the Epira should only be fine-tuned, similar to what Chile, Columbia and Brazil did. “These countries, at some time during the implementation of their com-petitive electricity markets, considered changing their electricity laws, faced with volatility and high prices,” he said. There is a clamor to amend Epira, following the spikes in electricity pric-es, particularly in the November and December 2014 power rates. House Bill 4479, which calls for Epira amendments, was filed in May last year by House Energy Committee Chairman Reynaldo Umali. The IFC official also urged the gov-ernment to introduce flexible liquefied natural gas (LNG). “The physical char-acteristics and fuel-supply constraints of the Philippine power system make necessary the introduction of flexible LNG to reduce price variability at the shoulder and peak,” Bakovic said. He stressed the need for LNG supply that allows flexibility of spot purchases

of LNG to avoid gas take-or-pay. “If gas with a large take-or-pay is reintroduced, we are back to square one and the sec-tor will keep on having the ‘physical’ or must-run problems that have nothing to do with the Epira law.” In June last year the Department of Energy (DOE) had laid down immedi-ate-to-long-term recommendations to address concerns raised by industry stakeholders, who are calling for the repeal or revision of Epira. Some non-governmental organiza-tions and militant groups want the law abolished, saying it has been a complete failure. The immediate concern raised by the business sector, meanwhile, is the uncertainty this move may lead to, saying it might send the wrong signals to investors and to lending institutions. The DOE’s recommendations in-clude the passage of a bill declaring power infrastructure as projects “of national interest;” creation of an inter-agency one-stop shop to accelerate the processing of permits and licenses for energy projects; undertake an in-depth study on Wholesale Electricity Spot Market design and revise accord-

ingly through a DOE policy issuance; streamlining of power-supply con-tracts; rationalizing tariff-setting and subsidies in off-grid areas to reduce universal charge; and amendment of relevant provisions of Epira and its implementing rules to ensure supply security at a reasonable price. Medium-to-long-term recommen-dations include the harmonization of Epira, with provisions governing open access in economic zones; exemption of the power industry from value-add-ed tax (VAT) to reduce power rates; and review of the roles of local govern-ment units to encourage investments in power development. When asked if the DOE is support-ing calls for an amendment or repeal of Epira, Energy Secretary Carlos Jericho L. Petilla said in a text message, “the post-ings in the site are merely compilation of the various insights on Epira by the various stakeholders, rather than the position of the DOE. The web site, hope-fully, will give our lawmakers informa-tion when they themselves decide on bills that will be filed or not filed.” In February last year the DOE spear-

headed a multisector consultative dia-logue on the review of the law. One of the most frequently raised comments was for the government to explore the possibility of exempting electricity sup-ply from the VAT. Also, the stakeholders called for a review of the imposition of Universal Charge to minimize the impact that adds to consumer burden. They also want modify or remove the must-offer rule at the spot market. Alongside the legislative reforms, the government was also urged to strengthen the roles of concerned im-plementing agencies like the DOE, and reinforce the regulatory powers of the Energy Regulatory Commission (ERC) to ensure that any amendment to the Epira will be completely enforced. Meanwhile, the Philippine Chamber of Commerce and Industry (PCCI) said it is supporting the grant of emergency powers to President Aquino to address the projected power-supply shortage this summer. “In order to make this emergency power [proposal] more effective and spe-cifically measurable, the grant should be ‘goals-specific and strictly time-bound’

and passed with dispatch and identifying the key responsible national government agency to pinpoint public accountability,” said Alfredo M. Yao, president of PCCI, in a news statement. The PCCI president suggested that the first “time-bound” goal is to identify and develop, not later than March 31, the aggregate available capacity to meet the over 700-megawatt anticipated power shortfall during the months of March, April and May of 2015 and 2016. “The authorization should specify availing of the ILP [Interruptible Load Program] as its first line of approach since there are over 2,000 MW of registered stand-by genera-tors with the ERC,” Yao added. Part of the first goal is the author-ity of the President to identify and develop funds sources as “subsidy” in order to shield the consumers and the business sectors from any cost related to the solution adopted. The PCCI president said the second time-bound goal is to develop, not later than June 30, concrete policies and procedures not otherwise stated in the Epira’s implementing rules without amending the law. With Catherine N. Pillas

According to Jasareno, direct shipping of nickel ore and mixed nickel sulfides pushed total output value to a staggering 94-percent growth from P31.72 billion to P61.44 billion year on year.  “The total value of nickel escalated as nickel price remained above the $8-per-pound level.  During the review period, the metal recorded the highest price in May at $8.74 per pound,” he said. Gold production had a 23.15-percent share, or P23.73 billion, while cop-per came in third with a 15.78-percent contribution, or P16.17 billion, in total production value.  The remaining 1.11 percent, or P1.13 billion, came from the combined values of silver, zinc, iron ore and chromite.  Iron ore from small-scale mining operations amounted to about P0.393 billion.

‘Epira delivers, why amend it?’

Mining. . . Continued from A1 Global growth. . . Continued from A1

Continued from A1

Page 3: BusinessMirror February 10, 2015

[email protected] Editor: Dionisio L. Pelayo • Tuesday, February 10, 2015 A3BusinessMirrorThe Nation

By Jovee Marie N. dela Cruz

ALAWMAKER has urged the leadership of the House of Representatives to review

Republic Act (RA) 9335, or the Lat-eral Attrition Act in the light of the Bureau of Customs’s (BOC) failure to meet revenue targets last year. Nationalist People’s Coalition Rep. Rodolfo Albano III of Isabela, said in a statement the BOC’s fail-ure to meet its target collections in 2014 is “a serious matter that calls for immediate congressional action to determine how it could effectively and fully enforce the lateral attri-tion law that provides a reward and punishment scheme for government revenue agencies.” Albano, citing a BOC collection re-

port for 2014, said the bureau’s  total revenue collection was P366.87 bil-lion in 2014 or a shortfall of P41.13 billion, an amount way off of its full-year target of P408 billion. The BOC is the second largest revenue-generating agency next to the Bureau of Internal Revenue (BIR). The lawmaker said that it is time to review the revenue-generating measure to determine if there is anything wrong with the law that prevents BOC collectors from meet-ing their committed annual revenue targets. “It is really disappointing that despite RA 9335 being in place, BOC officials are sleeping on the job. Leg-islators should not allow important pieces of legislation like the lateral attrition law, to be halfheartedly, or

worse, miserably implemented,” Al-bano, member for the Minority Bloc of the House Committee on Ways and Means, said. He added that legislators need to know whether the revenue-gener-ating laws that Congress enact are sufficient or are the government  of-ficials who are responsible for the enforcement of such laws doing their job well. “Otherwise, if the problem is in the implementation of the law, then  heads should roll at the BOC for incompetence and inefficiency,” Albano said in pushing for the con-gressional review.  Under the lateral attrition law, BOC officials may be fired for re-peated failure to meet the agency’s collection goal, Albano said.

Legislator seeks review of attrition law

Related story on B3. “And yes, madams and sirs, you heard it right. Not less than 250 ca-sualties on the side of the combined forces of the MILF, BIFF and other

private armed groups,” Napeñas told the Senate inquiry into the bloody Mamasapano incident. Napeñas said he based his esti-mate from the statement of Supt.

‘MILF, BIFF suffer 250 casualties in Mamasapano encounter’By Jelly F. Musico | Philippines News Agency

THE sacked commander of the Philippine National Police-Special Action Force (SAF),

Director Getulio Pascual Napeñas said on Monday the combined forces of the Moro Islamic Liberation Front (MILF) and Bangsamo Islamic Freedom Fighters (BIFF) suffered at least 250 casualties during the encounter in Mamasapano, Maguindanao, on January 25.

Raymond Train and Police Officer 2 Christopher Lalan, two of the sur-vivors in the whole-day firefight be-tween the combined troopers of the 84th and 55th companies of the SAF and the MILF and BIFF elements. He said that Train, the overall commander of the 84th Special Ac-tion Company assault force, told him that he was able to shoot down 25 to 30 of the attackers. “According to him [Train], it is also safe to say that the entire as-sault force, the 84th Company, was able to shoot down at least 150 of the enemies,” Napeñas told the Sen-ate inquiry attended by at least 13 senators led by Senate President Franklin Drilon. Napeñas said Lalan, the lone sur-vivor of the 55th Company, also told him that at least 100 members of the combined MILF and BIFF forces were taken down by SAF troopers from his company. “The 84th and 55th companies, which took part in Oplan Exodus, also have two and six snipers, re-

spectively, under their helm. For sure, these highly trained snipers could have shot down on the average at least 20 each from the attackers,” Napeñas said. He said his estimate did not in-clude those taken down by other SAF commandos from the 45th, 42nd and 41st companies who were, likewise, engaged in the firefight. “In other words, had the artil-lery support we requested arrived on time, the situation would have been entirely different, though I admit, it may not have guaran-teed zero casualty on our part,” Napeñas said. The 392-member SAF contingent suffered 44 dead and 15 wounded in the firefight that took place when the SAF commandos executed Oplan Exodus that was aimed at capturing two high-value targets—terrorists Zulkifli bin Hir, alias Marwan, and Basit Usman. Marwan, prime suspect in the Bali bombing that killed 202 people and other bombings in Mindanao,

was killed in the operation while Usman, also a bomb-making ex-pert like Marwan and a BIFF com-mander, escaped. With the killing of Marwan, Napeñas called the operation “mis-sion accomplished.” “Only that it happened with a high price: The lives of 44 brave young men,” he said. Napeñas said he started working directly against Marwan and Usman as early as 2010. Napeñas said he supervised the operations against Marwan in July 2012 in Butig, Lanao del Sur, but the latter managed to escape just a few minutes before SAF troops arrived. He said retired Chief Supt. Noel de los Reyes, former National Police deputy director for intelligence, knew how Marwan managed to escape. Sen. Francis Escudero moved to invite de los Reyes in the next hearing. Napeñas said he again supervised the operation called “Oplan Wolver-ine” on April 25, 2014, to get Marwan

but it was unfortunately aborted af-ter the 6th Infantry “Kampilan” Divi-sion (6ID) of the Army withdrew its commitment to provide mechanized units to support the operation. On May 30, 2014, another opera-tion in coordination with the Armed Forces was launched but also aborted due to heavy armed groups’ activity in the target area. Barely 10 days later, the 6ID’s mechanized brigade conducted its own operation without coordina-tion from the SAF but they failed to neutralize Marwan and Usman. “These are just few of the reasons why in the succeeding operations, the coordination with the Armed Forces will be time-on-target of the arresting force, in order to avoid the possibility that our operation would be compromised,” Napeñas said. Napeñas, however, clarified that he was not blaming the Armed Forces why the information and prepara-tions of operations seemed to have been leaked whenever they went out against high-value targets.

By Joel R. San Juan

THE Court of Appeals (CA) has exonerated two more National Police officials,

who were earlier dismissed from the service  for their alleged in-volvement in the allegedly anom-alous procurement of helicopters for P105 million. In a 10-page decision written by Associate Justice Elihu Ybañez, the CA’s Tenth Division granted the petition filed by Supts. Ro-man Loreto and Emilando Villa-fuerte seeking the reversal of the Ombudsman’s joint order issued on May 30, 2012 and November 5, 2012, which found them guilty along with 12 others of serious dishonesty and conduct prejudicial to the best interest of the service. The appellate court held that the Ombudsman erred when it ruled that Loreto and Villafuerte

were part of the conspirary to dupe the government by pur-chasing second- hand helicopters contrary to the requirement of the force for the procurement of brand-new units. “In the present case, no records will show that petitioners took part in the alleged conspiracy. They were not signatories of any document pertaining to the procurement of the three helicopters,” the CA ruled. “The petitioners were neither part of the team that inspected the procured helicopters, nor were they signatories in the disbursement vouchers for the payment of the said helicopters. Hence, there is no direct evidence that will link them to the alleged conspiracy,” it added. The CA added that the alleged silence of the two police officials cannot be construed that they par-ticipated in the alleged anomaly.

The case stemmed from the Na-tional Police’s purchase from Ma-nila Aerospace Products Trading Inc. (Maptra) of one fully equipped Robinson R44 Raven 2 Light Police Operational Helicopter (LPOH) for P42,312,913.10 and three stan-dard Robinson R44 Raven I LPOHs for P62,672,086.90, or for a total amount of P104,985,000 from 2009 to 2010. An investigation conducted with regard to the procurement of the helicopters  found that the he-licopters that were subject of the procurement were not brand-new, contrary to the procurement rules. The investigation also showed that two of the three delivered Robinson Raven 1 LPOHs  were actually preowned by former President Gloria Macapagal-Arroyo’s husband, Jose Miguel “Mike” Arroyo. The CA noted that, based on the

CA exonerates two more police officials in helicopter messevidence submitted, Loreto was not present in the June 15, 2009, negotia-tion, which eventually led to the award-ing of the supply contract to Maptra. Although Villafuerte was present in the June 15, 2009 negotiation, the CA noted that there are no records to show that he has the power to recom-mend or decide on the negotiations that was conducted. The CA added that Villafuerte was

merely instructed to prepare the sup-ply contract. Furthermore, the CA noted that both officials were members of the bids and awards secretariat, whose duties exclude making decisions or review-ing any documents. “Their functions only consists of facilitating the bidding process, center of communication and custodian of procurement documents. This functions are well-nigh ministe-

rial in character, as their functions serve as adninistrative support for the BAC,” the CA pointed out.  The CA explained that only the members of the BAC are the only per-sons authorized and empowered to decide on matters pertaning to the bidding and procurement. Concurring with the ruling were Associate Justices Isaias Dicdican and Carmelita Manahan.

Page 4: BusinessMirror February 10, 2015

President Aquino and Indonesian President Joko Widodo, sitting down for expanded bilateral talks at Malacañang, firmed up on Monday a consensus to jointly push stepped-up trade and investment oppor-tunities, as well a defense and economic cooperation between Manila and Jakarta. Widodo, accompanied by Hj Iriana Joko Widodo and his official delega-tion, arrived early Sunday evening for his first state visit to the Philippines, and was to fly back to Jakarta on Monday night. Secretary Edwin Lacierda reported that, during their bilateral meeting at Malacañang’s Aguinaldo Room, Aquino and Widodo

BusinessMirror [email protected] A4

EconomyTuesday, February 10, 2015 • Editors: Vittorio V. Vitug and Max V. de Leon

tackled “a range of concerns that are of mutual interest to our nations—including trade and investment, defense and economic cooperation, as well as issues regarding migrant workers, among others.” After their bilateral talks, Mr. Aquino hosted a state dinner for Mr. and Mrs. Widodo at the President’s Hall, prior to the departure of the Indonesian delegation. “Since the formal establishment of ties between our countries, our bilateral relationship with Indonesia has continued to grow stronger, founded on shared principles and commitments relating to democracy, inclusive prosperity and the pursuit of peace,” Laci-erda said. He added that, with Widodo’s first state visit to the Philippines, “we begin a new chapter in our partnership, even as we continue our dialogue on fundamental issues geared toward the betterment of our peoples.” The secretary also pointed out that Indonesia has been “a valuable ally in our quest for national peace.” “The Aquino administration’s aim to achieve a just and lasting peace in Mindanao will foster widespread growth in the region, and, thereby, usher in an era of prosperity for our brothers and sisters in Mindanao,” Lacierda said. As the President said last Friday, toward this end, we will con-tinue to fight for peace. We honor the sacrifice of our Special Action Force heroes by fighting for a more secure future for succeeding generations.

Aquino-Widodo firm up Manila-Jakarta tiesBy Butch Fernandez

President Aquino and indonesian President Joko Widodo, sitting down

for expanded bilateral talks at Malacañang, firmed up on Monday a consensus to jointly push stepped up trade and investment opportunities, as well a defense and economic cooperation between Manila and Jakarta.

By Henry Empeño Correspondent

SUBIC BAY FREEPORT—Employ-ees of the Subic Bay Metropolitan Authority (SBMA) on Monday

wore black armbands with the words “SSL Now!” during the f lag-raising ceremony here to protest what they described as the “long overdue approv-al” of their salary increase which has been filed with the office of President Aquino in 2011. Employees said the wearing of black armbands kicked off a series of mass actions that they will undertake for the government to take action about their plight and implement the salary stan-dardization law (SSL) at the SBMA, a government-owned and -controlled cor-poration (GOCC). They also planned to hold a candle-light vigil on Monday night to further demonstrate their pressing need for sal-ary adjustment. Richard Tabangin, a member of the SBMA Employees Association (SEA) that coordinated the protest, said SBMA em-ployees have been seeking the approval of the Office of the President since 2011, to no avail. “The SBMA has complied with all the various documents that the national gov-ernment has been requiring for the past

four years, but until this day there is yet no action. In the meantime, the SBMA workers are having a hard time making ends meet and providing their families with even the basic needs. Our children are suffering, and some of us had to resort to doing extra work on weekends for ad-ditional income,” he added. “What the employees ask for is very basic: that the Office of the President grant the SBMA employees the govern-ment minimum wage enshrined in the salary standardization law,” Tabangin also said. According to a letter sent by SEA chairman Ted Peñaflor to President Aquino on January 26, SBMA employ-ees are seeking the implementation of Tranche 4 of the SSL, including its step increment as the base compensation plan for the SBMA. Peñaflor said the SBMA salary rates since 2008 were unreasonably pegged way below the standards prescribed by Executive Order (EO) 76. Mr. Aquino signed said order on April 30, 2012, to implement the fourth tranche of the modified salary schedule for civilian personnel and base pay schedule for military and uniformed personnel in the government. He lamented that the SBMA rank-and-file employees are poorly compen-sated in comparison to their counter-

parts in other GOCCs and local gov-ernment units, who receive salaries that are 55 percent higher. “We believe that laws apply [uni-formly] to all, and EO 76, which imple-ments a law, is applicable to all govern-ment employees and no one, much less the SBMA, cannot [ignore it] without violating the standard rates set by it,” Peñaflor added. Meanwhile, SBMA Chairman Ro-berto Garcia tried to quell the unrest by saying that there is no other way than to “follow the procedure” and wait for President Aquino’s action. “We have been fighting for this [salary adjustments] for three years now, but the question is, is the salary standardization law immediately ex-ecutory?” Garcia said during the flag-raising program. “I know that a lot of you are already impatient, but the bottom line is that we need the approval of the President before we can give the raise. H’wag nat-ing pangunahan ang Pangulo,” he added, pointing out that both the petition for the wage adjustments under the SSL and the 10-percent increase sought by the SBMA have been filed with the proper offices. Garcia further explained that the SBMA management had responded to the issue of salary increase by first improving the financial position of the agency. “When I took over in 2011, the SBMA had losses of P8 billion, so how could we have afforded the increase? But we have improved the finances so that we can improve the salary, and we have already allocated P400 million in the 2015 budget for the implementa-tion of the SSL,” he said. “I understand your needs, but we have to follow the law. Let us not de-stroy the agency; let us do this the right way,” Garcia added.

SBMA workers to Palace:Implement SSL pay raise

AN SBMA employee wear a black armband on Monday to press Malacañang to approve adjustments in their salary. Henry empeño

Page 5: BusinessMirror February 10, 2015

[email protected] Tuesday, February 10, 2015 A5BusinessMirrorEconomy

Project Data Sheets (PDS) data from the Manila-based multilateral development bank showed that the bank recently approved a $20,000 or P1 million worth of loan for the 150-megawatt (MW) Burgos Wind Farm Project in Ilocos Norte.  The project is being undertaken by the EDC Burgos Wind Power Corp. (EBWPC), an affiliate of the govern-ment-owned and -controlled corpora-tion Energy Development Corp. (EDC).  “The project involves the con-struction and operation of a 150- MW wind-farm project in the prov-

ince of Ilocos Norte, in the munici-pality of Burgos. The wind farm will cover an area of approximately 686 hectares across three barangays [Saoit, Poblacion and Nagsurot],” the project documents stated.  The PDS data showed that since the project is being developed under the renewable-energy law, and that it is entitled to priority connection to the transmission and distribution system, prior-ity purchase and transmission of, and payment for, electricity sold through the Luzon grid. 

ADB approves 2 private sector loans in Q1 2015

briefs

albay bags 2015 pata tourism mart hosting bidAlbAy has won the international bidding for the hosting of the 2015 Adventure Travel and Responsible Tourism Conference and Mart of the Pacific Asia Travel Association (Pata) in November this year.

Pata officials announced this development in a related travel mart conference in Thimpu, bhutan. The announcement was enthusiastically received and hailed by the various delegations.

Albay Gov. Joey Salceda said his province won the hosting over other giant bidders, another gainful global tourism event seen to bring more economic benefits and further boost Albay’s reputation as a leading Philippine travel and tourism growth area.

Pata has close to 1,000 associate groups, including education and hospitality, allied partner destinations, corporate, government and industrial links; and about 70 carriers and aviation partners.

The Pata event announcement came as Albay launched its three-year hosting of the world popular Xterra Off-Road Triathlon on Sunday which coincided with the first week of the month-long Cagsawa Festival in Daraga town. Dubbed Xterra Albay Triathlon, the event was participated in by popular names of international and national triathletes that reached 307, more than the initial target of 250 participants.

Salceda said the Pata travel mart hosting would add up to Albay’s year-round international events and an overload of 20 festivals—dubbed as Planet Festival—promising truly enjoyable experiences for both domestic and foreign visitors. PNA

d.o.t.c. orders marina to implement fare-rate adjustment amid cheaper fuel priceWITH fuel prices continuing its downward spiral Transportation Secretary Joseph Emilio A. Abaya has directed the Maritime Industry Authority (Marina) to implement strict monitoring of rates being charged by public- service operators in their respective jurisdictions.

In line with this, Marina Administrator Maximo Mejia issued Advisory 2014-30, enjoining all domestic shipping companies operating passenger and/or cargo ships in the liner service to reasonably adjust their passenger and cargo rates in response to the series of roll backs in the prices of petroleum products in the local and global markets.

It can recalled that passenger and cargo rates in the domestic liner shipping operations had been deregulated since 2004 by virtue of Republic Act 9295, but Marina has the reserved/plenary power to intervene in the rates in order to protect and safeguard the interests of the riding public by ensuring that the rates being charged remain just and equitable. PNA

FILIPINO and Singaporean aviation officials and stakeholders will meet this week to negotiate for more liberal air-traffic rights

between the two nations. Civil Aeronautics Board (CAB) Executive Direc-tor Carmelo L. Arcilla said the two parties will meet on Thursday and Friday in Manila for the possible expansion of their air-services agreement. “We will meet on Thursday and Friday here in Manila to negotiate for more seats. The mar-ket is big and it continues to grow,” he said in a phone interview. In 2013 the two Southeast Asian nations inked a new air-services pact expanding the seat entitle-ments by almost a fifth. Currently, the allocations for each nation stands at 17,600 weekly seats per country, relatively higher than the 13,800 seats per week the year prior.

Points outside Manila are unlimited in accordance with current Philippines policy and the Asean multilateral agreements on air liberalization. Aside from Singapore, the Philippine air panel will also meet this quarter its counterparts from Taiwan, Australia and Mexico to modernize their exist-ing air-services agreements. In 2014 the Philippine air panel was able to yield additional flight entitle-ments from the following countries: Malaysia, Hong Kong, Ethiopia, South Africa, Macau, Canada, Myanmar, New Zealand, Singapore and France. CAB aims to improve the situation of passenger traffic by increasing seat entitlements as part of its drive to ex-

pand air-traffic rights. The government aims to generate $4.6 billion in tourism revenues by the end of the Aquino ad-ministration. Lorenz S. Marasigan

Manila, Singapore set negotiations for expanded air-service agreement

By Cai U. Ordinario

The Asian Development Bank (ADB) has approved its second private loan for a Philippine-

based project halfway into the first quarter of 2015. 

Documents stated that the project may be eligible for a fixed-tariff under the governments feed in tariff system.  The project will be built in two phases. The components of Phase 1 covers the installation of 29 wind- turbine generators (WTGs) from Vestas with a generation capacity of 87 MW; construction of a wind-farm substation; and building an approximately 42-kilometer-long transmission line.  The PDS said Phase 2 consists of the installation of an additional 21 WTGs from Vestas with a generation capacity of 63 MW. Construction for both phases have commenced. Apart from the wind-farm proj-ect, the ADB disclosed previously that it has extended a $75 million worth private-sector loan for the expansion and renovation of Mac-tan Cebu Airport.  The financing for the project also includes debt of P20 billion, or $450 million, from a consortium of

Philippine banks. The consortium is made up of BDO Unibank Inc., Bank of the Philippine Islands, Development Bank of the Philip-pines, LandBank of the Philippines, Metropolitan Bank & Trust Co., and Philippine National Bank. The loan from ADB and cofinanc-ing from the consortium of private banks will be provided to GMR Mega-wide Cebu Airport Corp., a consor-tium of India’s GMR Infrastructure Ltd. and Philippine construction firm and Megawide Construction Corp. Under ADB’s Long-Term Strategic Framework (LTSF) 2008 to 2020 or Strategy 2020, unveiled in Madrid, Spain, in 2008, the Manila-based institution will increase its focus on the private sector.  Former ADB President Haruhiko Kuroda said the LTSF presents a clear vision for an Asia and the Pacific that is free from poverty. The five areas of focus are infrastructure, environ-ment, regional cooperation, financial development and education.

Page 6: BusinessMirror February 10, 2015

Tuesday, February 10, 2015

OpinionBusinessMirrorA6

Construction delay problems at Mactan airport

editorial

DURING the weekend, Rep. Gerald Anthony V. Gullas Jr., Assistant Majority Leader representing the First District of Cebu, released a statement regarding the delays of the new Mactan-Cebu airport terminal and related facilities. Rep. Gullas Jr. has called

for an inquiry into the almost year-long delay in the construction of a new terminal at Mactan-Cebu International Airport (MCIA).

While we are used to delays in the bidding out and the implementation of govern-ment infrastructure projects, this particular instance has some different twists.

Rep. Gullas reminds us that the original groundbreaking was scheduled for January 2015 but has since been pushed back about 10 months. Completion of the new termi-nal was set for February 2018, but now it is unlikely that this deadline will be met as construction now is planned to begin in early 2016.

Apparently there is a problem with the fact that the Philippine Air Force (PAF) has and is still using 17 structures in the middle of the site where the new terminal is sup-posed to be built. The 300-day contract to demolish, replicate and transfer the PAF structures to the nearby Mactan Benito Ebuen Airbase (MBEA) was given to private contractors only last month. However, similar to the situation at Ninoy Aquino Inter-national Airport which shares runways and some other infrastructure with the PAF’s Villamor Air Base, MCIA and MBEA also overlap.

Informal conversations with some at the PAF indicate that consultations with the PAF were not complete prior to the bidding out of the MCIA contracts. Further, this project may also involve some participation by the Bases Conversion and Develop-ment Authority (BCDA).

We can appreciate Rep. Gullas’s concern and desire to get answers about the reasons for the delay. However we also know that inquiries of this type usually turn into finger-pointing sessions with little accomplished to avoid the same situation in the future.

This is not the first and probably will not be the last time when inter-departmental ‘turf wars’ have delayed and hampered the building of vital infrastructure. While it is easy to believe that these instances are just a case of bureaucratic egos getting in the way of government’s goals being achieved, the problems are deeper than that.

Multiple departments and agencies are necessary and often will have separate responsibilities as a project comes to life. But as in any large organization, there must be coordination to facilitate the process running smoothly. A manufacturing company must insure that the group responsible for sourcing raw materials meets the needs of the production staff.

With many projects like the MCIA rehabilitation in the works, perhaps Rep. Gullas should be looking at establishing an independent coordinating agency specifically tasked to make sure all stakeholders and participants are on the same page and moving in the same direction. Whatever is currently in place is not working effectively or efficiently.

FOR most of Filipinos, the five-day State and Pastoral visit by Pope Francis to the Philippines last January 15 to 19 was a “once-in-a-lifetime” chance to see the charismatic leader of

the Catholic Church, which represent more than 80 percent of the country’s population.

THE most important economic and financial market story of the year is virtually being ignored by the Philippine press and media. That of course is the on-going negotiations between

the newly elected leftist Greek government and its creditors.

Looking back at Pope Francis’s visit

PHL and the Greek debt crisis

THE EnTrEprEnEurManny B. Villar

It was no exaggeration that Brit-ish Broadcasting Corp. described the mood of the tens of thousands that welcomed the Pope upon his arrival on the afternoon of January 15, and those that lined up the 22- kilometer route from Villamor Airbase to the Apostolic Nunciature, which lasted until the early evening hours, as “ec-static.” Other reports described the crowd as “exuberant.”

The mood did not change through-out the activity-packed papal visit, as tens of thousands also lined up the route back to Villamor Airbase to bid the Pope goodbye on January 19. This reminded me of the time when the late Pope John Paul II, whom I

met in his second visit to the Phil-ippines in January 1995, which also saw a record gathering of five million to attend mass at the Rizal Park.

The Pope, probably one of the most popular leaders in the history of the Catholic Church, did not dis-appoint his hosts. Displaying an as-tonishing stamina, the 87-year-old pontiff braved the blistering winds of typhoon Amang to say mass and visit the victims of typhoon Yolanda on January 17. He had to cut his visit short, upon the advice of flight crew, so he could return to Manila on the same day, just before the typhoon made landfall in Eastern Visayas.

A lot have been written about Pope

Francis–before, during and even weeks after the visit–but I would like to talk about it from a personal perspective. I did not have a special appointment to meet with Pope Francis, but I joined the thousands that gathered for his meeting with the families and for his mass at the Rizal Park, which set a new record with an estimated six million people packed in all the available spaces at the park as well as on the streets in its vicinity.

I usually avoid getting wet in the rain for health reasons, but I was not going to let the downpour brought by typhoon Amang prevent me from taking the once-in-a-lifetime chance to get close to Pope Francis.

At that moment, I was just one of the six million faithful who braved the rain to see the Pope during his final mass. The gathering itself was amazing–old people usually avoid the rain, but on January 18 they joined the youth, unmindful of the health risks, just to see Pope Francis.

I got as close to him as possible, and in that moment I felt his bless-ing. For me, it was a sudden change from an ordinary daily routine be-fore his arrival, to an indescribable impact within me as he walked and

shook hands with people at the park. I believe the change that his visit triggered was in each one of us, and it could not be quantified.

During his homilies, at the Manila Cathedral, the meeting with the fami-lies at the Mall of Asia, the mass in Ta-cloban, the meeting with the youth at the University of Santo Tomas, Pope Francis delivered the same key mes-sages: help the poor, take care of the children and fight corruption.

Personally, I think the visit gal-vanized us. Everybody who heard his messages started thinking about their respective lives in light of what he said. The Filipino people put their best foot forward to welcome Pope Francis. They also showed they can work together to achieve something within a short span of time, such as the preparations at the Rizal Park and in Tacloban.

I hope the Pope’s visit will be translated to something productive. Then his visit will not just be a record-setting event because of the number of people who saw him, but because it drove us to realize his messages.

For comments, e-mail [email protected]  or visit www.mannyvillar.com.ph.

Since the beginning of the global debt and economic crisis, Greece has been in a depression or recession. For six long years, the Greek economy has been shrinking. Twenty-five percent of Greek businesses have failed. The official Greek unemployment rate is over 25 percent and youth unemploy-ment is at 50 percent.

In 2010, Greece was extended a loan by the ‘Troika’–the Eurozone countries, European Central Bank (ECB) and International Monetary Fund (IMF)–of about $150 billion. This was conditional on a so-called austerity program that including mass government employee lay-offs, privatization of many Greek government assets, and other structural reforms including try-ing to get the Greeks to do some-thing somewhat uncommon; pay taxes. Further, government social/financial programs have been sub-stantially reduced.

By February 2012, the loan was increased to a total of about $275

billion. While those are staggering amounts of money, it is still not enough. In December 2012, the Troika agreed to loan Greece more money at the end of this February in the amount of about $10 billion. Now things get interesting.

The Greek economy has improved slightly. But that is about the same as telling a terminally ill patient how good they are looking today. In the long term, it means very little. The new Greek Finance Minister Yanis Varoufakis, when introducing him-self for a newspaper interview, start-ed with, “I’m the Finance Minister of a bankrupt country”.

It is impossible for Greece to repay its existing loans in spite of the fact that some mature decades from now unless a continuation of the auster-ity program involves Greek citizen eating tree bark and sending maids to the Philippines.

Therefore the new government of Prime Minister Alexis Tsiprashas has taken the stand that there will

not be any more debt taken on by the government and the austerity program will be significantly cur-tailed. Public sector employees will be rehired, privatization will stop, and the minimum wage will be in-creased. Further, existing debt must be subject to some ‘forgiveness’ and a renegotiation of terms.

At that news, heads all over the financial community of Europe are exploding.

The Troika has demanded that Greece take the new loan under the current terms of the previous loans. Greece will run out of money in three months or so.

How this will eventually play out is all speculation. Greece could back down, take the money, and maintain the status quo. The Troi-ka could blink first and agree to at least some of Tsiprashas’ proposals. Greece could leave the Eurocurrency regime and print its own currency and accept offers of new loans from Russia and China.

But whatever happens, things will never be the same again. Either, the Troika will prove its financial power to bend a sovereign nation in the European community to its will or Greece will reassert its sovereignty and forge a new path, bankrupt and broke. Neither alternative is very pleasant.

Two easy lessons can be learned from the Greek experience. The first is that there is no free lunch. Eventu-ally the bill must be paid. Greece fal-sified government financial data and

economic statistics to join the Euro-currency system thinking this was a ‘free’ way to get cheap loans to fund its budget deficit. The Greek people cheered the moved. The government taxes swimming pools and in Greater Athens, about 300 actually paid the tax. But aerial photographs showed about 17,000 swimming polls. Now the borrowings for years of govern-ment budget deficit have to be paid.

Secondly, lenders are unsym-pathetic when you cannot repay your loan. If you decide not to pay under the original loan agreement as Greece has demanded, there are consequences. While Greece does not want to be a ‘debt salve’ of Europe, they may opt to do the same for Rus-sia and China.

The lesson for the Philippines is simple. After decades of being the ‘Greece’ of Asia thanks to foolish and economy-killing borrowings to fund crushing government budget deficits, PHL put its fiscal house in order by 2009. As every personal fi-nance guru will tell you, never bor-row money for daily needs or to pay for unnecessary luxuries. The Philip-pine government learned its lesson. The Greek government is about to be educated.

E-mail me at [email protected]. Visit my web site at www.mangunon-markets.com. Follow me on Twitter @mangunonmarkets. PSE stock-mar-ket information and technical analysis tools provided by the COL Financial Group Inc.

OuTSIDE THE BOXJohn Mangun

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4 examples of PPP’s fits and starts

IN mid-2010, when it assumed office, the Aquino administration announced that it would roll out no less than 10 big-ticket projects under the Public-Private Partnership (PPP) program

to boost public infrastructure and ensure sustained economic growth. But four-and-a half-years later, only a handful of these have actually taken off, while others are mired in controversy and legal squabbles.

ABOUT TOWNErnesto M. Hilario

Take the case of the P35.42-billion Cavite-Laguna Expressway project of the Department of Public Works and Highways. While Team Orion–the con-sortium of Ayala Corp.’s AC Infrastruc-ture Holdings Corp. and Aboitiz Equity Venture’s Aboitiz Land Inc.–was already declared the winner in the first public auction, President Aquino ordered an-other auction despite Team Orion’s win-ning bid of P11.65 bidding because San Miguel Corp.’s Optimal Infrastructure Development Inc., which was disquali-fied because of a defective bid security, publicly claimed after the auction that its offer was higher at P20.105 billion.

Ramon del Rosario Jr., president and chief executive officer of property developer Philippine Investment Man-agement Inc., believes there is no legal basis for a rebid because the auction was “conducted above board, transparently and in full compliance with the Build Operate Transfer Law” and that it could have “a severe negative impact on inves-tor confidence in the PPP program.” Man-agement Association of the Philippines governor Peter Wallace warns that the rebidding could lead to a higher project price, which would mean that “we all have to pay higher tolls for the winner to recover (its) investments.”

In another case, Ayala Corp.’s AC In-

frastructure won in 2011 the contract for the four-kilometer Daang Hari-Slex (South Luzon Expressway) Connector Project, which was the first PPP project bid out by the Aquino government. It is designed to connect the expressway to Cavite from Daang Hari in Imus town up to the Susana Heights Interchange at Slex, and to serve as an access road to the province aside from the traffic-prone Alabang-Zapote Road. But this PPP venture has also been hobbled by delays owing to right-of-way issues and unexpected changes in project design.

Yet another example is the P18-bil-lion Nlex-Slex Connector Road, which is an unsolicited proposal by Metro Pacific Tollways Development Corp. (MPTDC) originally set for completion in 2016. However, it has yet to get off the ground, and its proponents predict that it could be completed by late 2017 or early 2018 at the soonest because the government has yet to make a final decision till now on whether this elevated road would be carried out through the Swiss Challenge or a Joint Venture with the Philippine National Construction Corp. (PNCC), which holds the franchise to both Nlex and Slex.

MPTDC was amenable to the Swiss Challenge, in which interested bidders should top the bid of MPTDC to win the

project, but the original proponent will implement this venture in case it decides to match the highest offer. It was later on told to scrap the Swiss Challenge and do the project instead via its existing JV with PNCC through a Supplemental Toll Operations Agreement (STOA). The STOA’s approval was then put on hold after the Department of Justice issued an opinion last July that the Connector Road could not be carried out through a JV without public bidding, and endorsed a return to the Swiss Challenge.

Meantime, the Department of Trans-portation and Communications (DOTC) faces a lengthy court battle after it uni-laterally decided to transfer the proposed P1.4-billion common station linking three railway transits to Ayala Land’s Trinoma Mall in Quezon City in place of the nearby SM City North Edsa.

This common station would connect the Metro Rail Transit Line 3 (MRT 3) with Light Rail Transit Line 1 (LRT 1) and the MRT 7 project of SMC.

It was originally proposed at SM North Edsa, and SM Prime Holdings Inc. (SMPHI) even paid a P200 million “naming rights” fee to the DOTC after the National Economic and Develop-ment Authority, which is chaired by the President, approved it as a priority infra-structure project in July 2009.

However, the DOTC unexpectedly announced in 2013 that the common station would be built instead at Trinoma as a component of the LRT 1 Cavite Ex-tension project, ostensibly to generate P1 billion in savings for the government.

SMPHI asked the Pasay court last June to stop the transfer of the common station to Trinoma Mall and to order the DOTC to abide by the Neda-approved plan to build it at SM City. MRT 7’s pro-ponents had also issued statements that it was not bound to accept the DOTC’s decision to relocate the common station.

The latest news is that the DOTC wants to build two common stations–one each at the SM City and Trinoma malls.

Still on the DOTC, it has been the object of relentless criticism from the public and Congress over the flurry of accidents and glitches at MRT3, which was capped by a train overrun at its Taft Avenue station last summer that injured dozens of passengers.

MRT3 service has worsened ever since the DOTC ditched long-time op-erations and maintenance contractor Sumitomo Corp. of Japan in favor of the consortium of Philippine Trans Rail Management and Services Corp. (PH Trams) and Comm Builders and Technology Philippines Corp. in 2012 and Autre Porte Technique Global Inc. (APT Global) in 2013.

PH Trams won the contract in 2012  just months after its incorporation with a paltry capitalization of P625,000, and apparently did so because its director-incorporators included an uncle-in-law of an MRT official and a Liberal Party functionary who campaigned in Pangasinan for then-DOTC Secretary Manuel Roxas II in the 2010 vice-pres-idential race.

DOTC handpicked PH Trams and, later, APT Global without first consulting its private partner MRT Corp. (MRTC), in violation of their original Build-Lease-Transfer (BLT) accord. It then picked Dalian Locomotive of China to supply light rail vehicles (LRVs) to MRT3, again without consulting MRTC in violation of their BLT.

In fact, MRTC had protested DOTC’s decision on passenger safety issues be-cause Dalian Locomotive has had no experience manufacturing electricity-powered LRVs, as it only builds diesel-powered coaches like those used by the Philippine National Railway.

If private investors are having sec-ond thoughts about the much-vaunted PPP program, it’s because there’s been too many obstacles and hitches along the way.

E-mail: [email protected].

Edgardo J. Angara

THERE’S been a lot of handwringing over whether President Barack Obama’s tone and message in the January State of the Union address and last week’s budget were too

confrontational, dashing hopes for legislative and legacy-bolstering achievements.

Obama’s legacy will be set by foreign policy

THE Asian Development Bank (ADB) and the Economist Intelligence Unit (EIU) recently revealed that the Philippines ranked 18th out of the 24 mostly Asian economies surveyed,

based on their Creative Productivity Index (CPI).

By Kenneth LinganGoogle Philippines Country Manager

THERE was a time when people didn’t need to look both ways before crossing the street and,

as cars poured down the road, a learn-ing period to do what now comes naturally to us.

In many ways we’re at a similar stage now with the internet. More and more Filipinos use the web to make their lives easier, to connect with family and friends, and com-plete daily tasks like banking and shopping. Yet they’re still not do-ing the digital equivalent of looking both ways before crossing.

According to the Philippine National Police’s Anti Cybercrime Group, our level of awareness of cybercrime is about three or four, on a scale of ten. Luckily, just as it’s

not hard for pedestrians to stay safe on the roads, the habits that keep us safe online are neither technical nor complicated. It’s just a matter of knowing the dangers and develop-ing good habits.

By far the most common cyber-crime is the theft of a password and other personal information. Phish-ing is when criminals send emails, text messages, or create websites pretending to be a genuine source such as your bank, but are really created to steal your usernames, passwords or credit card details.

This might seem less dramatic than the big publicized hacks on corporations, but phishing is actu-ally much more effective than you might think. According to research from our security engineers, some phishing scams fool up to 45 percent of their victims, and once hijackers

have your information, they can break into your account in as little as 30 minutes.

All of this may sound scary, but the good news is that companies like Google work hard to keep your information secure. At Google alone, we have hundreds of engineers working full-time on safety and se-curity. However, too often there is too much coverage of the risks of being online, without enough focus on how people can help themselves keep safe.

Understanding security can be hard, especially for less technical users. We don’t believe that it should be your full-time job to stay secure on the web, and that tips should be

easy to understand and put into practice.

That’s why we sup-port efforts like Safer Internet Day that raise awareness about online security, and help fami-lies keep safe on the web.

When it comes to phishing, some basic know-how can greatly reduce the chance you become a victim.

n Check the URL in the address bar. It might look right in the email, but it could take you to a scam site designed to steal your per-sonal details. Also check for “https” in the address bar which means the site is secure.

n Always check the sender’s email address. Does it look right to you? Phishing emails will often

contain spelling mistakes and other irregularities.

n Recognize scare tactics. Genu-ine sites never use scare tactics to get you to enter your username, password or credit card numbers. This is a red flag that the site may not be genuine.

n Always check the spelling. Even though phishing can be so-phisticated, hijackers are not always great spellers. Typos on a website or email could indicate that they are not the real deal.

Some other simple rules can also help keep you safer online. For example, don’t reuse the same password for important accounts. You may have a strong password, but if one account gets broken into, it greatly increases the chances of the others being compromised too. You don’t use the same key

for your house, car, office and post box, so don’t do the same for the keys to your bank, email and so-cial networks.

We’ve also long recommended people set up a second layer of se-curity on your most important ac-counts. The password is the first line of defense against outsiders who ac-cess your emails, photos and social accounts, but it doesn’t have to be the only one. Adding 2-step verification to your Google Account means you will get a special code sent to your phone each time you access your account from a new device. It’s like adding a second lock to your door, so even if someone has your first key, they still won’t be able to get in.

As we live more of our lives online, we believe that conve-nience and security shouldn’t be a contradiction.

Barriers to innovation

Building cyber-savvy to keep Filipinos safe on the Web

The reality: Congressional Re-publicans and the White House will score a few accomplishments this year because it’s in the interests of both sides, regardless of the tone or specific proposals they embrace now.

As for the history books, the final quarter of this presidency–like most of its predecessors–will be enhanced or tarnished by foreign policy, an area where Obama has limited control.

There are many opportunities and problems confronting the president, including the prospect of completing the Trans-Pacific Partnership trade pact, which could be central to US economic involvement with Asia. But the big three issues that might keep the president awake at night are Iran, the so-called Islamic State and Russia.

“The president faces geopolitical challenges greater than any in our lifetime,” says Fred Kempe, president of the Atlantic Council, an interna-tional affairs research organization.

It’s impossible to exaggerate the importance and implications of whether a deal is reached this spring to curb Iran’s nuclear weapons capac-ity. “It’s the core, centerpiece,” says Sandy Berger, the former national security advisor to President Bill Clinton.

If a deal is cut, it almost certainly will be opposed by the Israelis and many members of Congress, includ-ing some Democrats. The president will take the issue to the country, and warn that the alternative probably is war. In a private session with Senate Democrats last month, Obama point-edly said that if Congress undercut any agreement he would demand a vote on an “interdiction” of Iran. This president’s history of rallying the public isn’t very encouraging: Consider, for example, his lack of success on gun control.

There would be other grave con-sequences to the failure to reach an agreement. It’s questionable whether the US could keep together the co-alition imposing sanctions on Iran. Faced with the certainty that the Iranians would proceed with the de-velopment of nuclear weapons, the Israelis might want to strike if the US doesn’t. A war with Iran would make the Iraq conflict seem like a Little League game.

Regarding the Islamic State, there have been mildly encouraging devel-opments. Kurds retook the city of Kobani; the US airstrikes have taken a toll, and some funding from black market oil has been eliminated. But,

Richard Perle, a prominent neocon-servative national security expert, says the picture remains bleak.

“They still are running a terri-tory the size of England and France put together and with any victories they achieve, there may be Muslims all over the world wildly inspired by them and creating problems in as many as 30 countries,” he said.

With less than two years left in office, it would be virtually im-possible for the administration to achieve the objective, enunciated by Defense Secretary-designate Ashton Carter, of a “lasting defeat” of the Islamic State.

The best case is that by the end of this administration the few Arab nations in the anti-Islamic State coalition have held together, and aren’t torn apart by the Sunni-Shiite schism. In addition, the US could intensify the strikes, possibly with a small group of advisers on the ground. If the enemy is in retreat, that would be an accomplishment.

On Russia, President Vladimir Putin is showing no sign of back-ing down in Ukraine, despite bit-ing economic sanctions. And, he’s threatening to put pressure on Mol-dova and Azerbaijan. The need is to contain him on Ukraine and deter him elsewhere.

If oil prices remain at low levels, some American strategists specu-late that economic conditions will pinch Putin so hard that he’ll need to seek relief. But the pressure could also push him to be more bellicose. Moreover, Ukraine is an even worse economic basket case than Russia, probably requiring tens of billions in assistance.

There are two widely divergent views of how all this could play out. The American exceptionalists say Obama is too passive, and the next president, whether Hillary Clinton or a Republican, will have a bet-ter appreciation of the need for US global leadership and push a more assertive foreign policy.

The other view is that America’s days as a global empire are num-bered. In a new book, “America in the Shadow of Empires,” the political scientist David Coates argues that the US is overextended militarily, imposing an additional burden on a fraying domestic economy and that a “measured and moderate” rollback of foreign entanglements is essential.

Obama’s final two years will be about trying to find a path between those two positions.

The survey marked how our in-novation environment is unable to convert creativity inputs (i.e. knowl-edge base, skills, and infrastructure) into outputs (i.e. patents granted and studies published).

Why is it nearly impossible for Philippines to become an innova-tive state?

During the recent Newton Innova-tion Forum hosted by the British Em-bassy, Ma. Antonia Arroyo, founder of Hybridigm Consulting, identified key hurdles along the country’s road to achieving a conducive, sustainable innovative ecosystem.

Increasing research and develop-ment (R&D) budget is essential but apparently not integral. Studies have shown that increased government spending on R&D may not have a significant impact on per capita gross domestic product. Surprisingly, what is much needed is to overhaul policy and establish incentives for researchers.

Case in point: Mahar Lagmay who is the first Scientist in Asia to win the European Plinius medal, receives only P30,000 a month. The Magna Carta for Government Science and Technology has pay scales governed

by DBM and Commission on Audit (COA) rules. Unfortunately, there are no available incentives for non-government academics.

This is undeniably evident in the numbers—of the 380 Unesco rec-ommendation of R&D personnel per million population, Philippines only has 201.

Government should be able to provide an enabling environment. Existing laws mandate royalties that scare potential R&D stakehold-ers away.

Aside from corporate income tax due as a corporation, a company or an inventor selling a product which uses Philippine natural or genetic resources is mandated to pay a mini-mum 2 percent gross sales royalty. If a startup (or inventor) has DOST assistance, he must pay a minimum 10 percent gross sales royalty as pro-vided by the Inventor’s Act.

Technology transfer is also prob-lematic. While the Technology Trans-fer Act was passed as early as 2009, many are still either unaware or confused about its provisions and its incentives.

Dr. Mariana Mazzucato, a UK Pro-fessor of Economics specializing on Innovation and Science Policy, said “in countries that owe their growth to innovation, the state has histori-cally served not as a meddler in the private sector but as a key partner of it—and often a more daring one, willing to take the risks that busi-nesses won’t.”

In our case, the state seems unin-terested in taking the toll. The result is millions of Filipinos still suffer from poverty and social inequity. And this situation is worsened (also caused) by their lack basic amenities like roads and internet; drinkable water supply and stable electricity; or proper nutrition, and healthcare.

The world’s newest technologies could help alleviate such a plight. Our best and brightest ought to be trained and motivated to find the practical ways these modern technologies can be deployed across the country.

UK’s Newton Fund is launched precisely to do that—motivate our scientists and inspire innovation.

E-mail: [email protected].

LINGAN

BLOOMBERG VIEWAlbert R. Hunt

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