By Cai U. Ordinario

The Philippines—being a net oil importer—could see faster growth

of up to 7.5 percent this year, with the economic gains from the cheaper fuel likely to contribute 1.2 percentage points to the gross domestic product (GDP) expansion, an economist said.

In a briefing on Wednesday, FMIC-UA&P Capital Markets Research economist Victor A. Abola said low oil prices can boost growth by enabling the country to save about $3.25 billion, or around P220 billion, from fuel importations—already equivalent to 1.2 percent-age points of GDP. “This [low oil prices] is the new normal that we can expect in the next couple of years,” Abola told reporters.  This means that, if the economy can grow at 6 percent, an addition of 1.2 percentage points from the oil windfall would result in a growth of 7.2 percent for the full year.  Abola cited US oil forecasts that point to West

www.businessmirror.com.ph n Tuesday, November 18, 2014 Vol. 10 No. 40 P25.00 nationwide | 6 sections 30 pages | 7 days a weekn Thursday, January 8, 2015 Vol. 10 No. 91

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 44.9800 n jaPan 0.3795 n uK 68.1762 n hK 5.8017 n china 7.2397 n singaPore 33.7662 n australia 36.5097 n eu 53.4992 n saudi arabia 11.9835 Source: BSP (07 January 2015)

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15 destinations to set sights on in 2015

shell to Pay $83.5m for worst oil sPill in nigeria

‘BONIFACIO—ANG UNANG

PANGULO’:THE SLOW, BORING

LIFE OF A HERO »D3

D1

Life � ursday, January 8, 2015BusinessMirrorEditor: Gerard S. Ramos • lifestylebusinessmirror@gmail.com

DEAR Lord, I wish to pay homage and full respect to Saint John Bosco, the “father and teacher of youth.” Another great event this year is the celebration of the Bicentenary of the

Birth (August 16, 2015) of Saint John Bosco, who had a special love of predilection for the youth who are poor and in danger. Although Saint John Bosco’s birthday will be celebrated on August 16, the preparation for that great day and subsequent activities will last several months. Don Bosco Makati School was where my first formative years of teaching took place, which lasted for 48 years, including my stint at Lasallians Institutions. To Saint Bosco and Saint La Salle, I gave my all in the service of Evangelization in Education. Amen!

Father and teacher of youth

WORD AND LIFE, FR. SAL PUTZU, SDBAND LOUIE M. LACSON

Word&Life Publications • teacherlouie1965@yahoo.com

B C RLos Angeles Times

AS 2014 has slipped into history, these 15 destinations look better and better.

Some are nations, some are stations, some are cities and one is a mere neighborhood.

But in just about every case, there’s something particularly compelling about them right now. Maybe it’s because hurricane recovery is marching along (Los Cabos, Mexico) or the French government has the tides figured out (Mont-St.-Michel) or perhaps (in the case of Choquequirao, Peru) because an aerial tram might change everything. Here are my picks for the new year:

LOS CABOS, MEXICOIN September Hurricane Odile tore up huge chunks of Cabo San Lucas and San Jose del Cabo, closing more than half the area’s lodgings, along with scores of restaurants and other businesses and the airport.

But these twin towns at the tip of Baja have too much at stake to lie still. The airport and more than two dozen hotels reopened in October and November.

By the end of December, tourism officials expected to have 10,000 of the area’s 16,000 hotel rooms in service, along with its 12 existing golf courses and two new ones. Several more of the best-known resorts (including One&Only Palmilla; Esperanza; and the Westin Resort & Spa, Los Cabos) expect to reopen by the end of March.

Whenever you get to Los Cabos in 2015, odds are good you’ll get a warm welcome and lower rates than last year’s.

Info: For a status list of hotels—and real-time webcam views of 11 resorts—check www.unstoppable.cabo.com. Info: www.visitloscabos.travel. Info: www.visitloscabos.travel.

CUBALONG known for its beaches and culture, Cuba became mostly forbidden territory for American travelers soon after Fidel Castro seized control in 1959.

But relations have gradually thawed in recent years, leading to a watershed agreement announced last December 17 by President Barack Obama and Cuban leader Raul Castro (who took over from brother Fidel in 2008). These normalized relations could mean a rush of US tourists to Cuba. Under restrictions on the books, Americans can travel to Cuba on “people-to-people” educational trips operated by companies licensed by the Treasury Department.

Thousands of Americans have visited already; Cuban authorities counted 92,348 American tourists in 2013,

a slight dip from 2012, but much more than the 73,566 in 2011.

Info: Among US companies licensed to run tours to Cuba: InsightCuba (www.insightcuba.com), Road Scholar (www.roadscholaradventures.org) and Grand Circle Foundation (www.grandcirclefoundation.org). Info: www.state.gov/p/wha/ci/cu/., Road Scholar (www.roadsholaradventures.org) and Grand Circle Foundation (www.grandcirclefoundation.org). Info: www.state.gov/p/wha/ci/cu/. and Grand Circle Foundation (www.grandcirclefoundation.org). Info: www.state.gov/p/wha/ci/cu/. Info: www.stage.gov/p/wha/ci/cu/.

CLEVELANDIN the last five years, the city has added eight hotels (with a ninth, a Kimpton, coming in 2015) and built a convention center, an aquarium and the new Museum of Contemporary Art Cleveland.

The Rock and Roll Hall of Fame (www.rockhall.com) will hold an induction ceremony on April 18.

The city’s Playhouse Square—which includes five grand old venues dating to the 1920s—in May added a 20-foot-tall outdoor chandelier at Euclid Avenue and East 14th Street.

By summer, the Cleveland Institute of Art (a.k.a. the CIA) is due to complete a $75-million, 80,000-square-foot expansion (including new gallery space and an auditorium).

You can expect more prettification around town; the city will host the Republican National Convention in 2016. Info: www.thisiscleveland.com.

CHARLESTON, SOUTH CAROLINABUILDINGS and food, people. This architecture-rich city, born in the late 17th century, is where the Civil War began (in 1861 when Confederate troops attacked Fort Sumter at the mouth of Charleston Harbor).

Scores of historically important buildings survived the war, an earthquake (1886) and hurricane (1989) and are listed on the National Register of Historic Places. Since 1977, the Spoleto Festival USA (May 22 to June 7, www.spoletousa.org) has been filling the city with opera, dance, theater, jazz and chamber music.

In recent years, the city has won wide attention for its cuisine. (To catch Charleston at its foodiest, visit from March 4 to 8 for the city’s 10th Wine + Food festival (www.charlestonwineandfood.com).

Or come on your own timetable to sample old favorites such as McCrady’s Restaurant (where President George Washington is said to have convened a 30-course dinner in 1791) or newcomers such as Brasserie Gigi (opened in April near the 19th-century Charleston City Market) or Prohibition Charleston (a restaurant and bar with live music most nights).

Keep an eye out, too, for proliferating distilleries, including Charleston Distilling Co. and Striped Pig Distillery, which make spirits from local ingredients and offer tasting and tours.

Info: www.charlestoncvb.com.

MONT-ST.-MICHEL FRANCETHIS site in Normandy—a tiny island at the mouth of the Couesnon River, subject to dramatic tidal surges and home to a 1,000-year-old abbey and hamlet—has been seducing visitors for generations.

Mont-St.-Michel, with a population of less than 50, ranks as France’s third most popular tourist attraction. But over the decades, silt has been accumulating around the island, as have parking lots and a causeway used by countless tourists.

As a result, it was often surrounded by mud flats instead of water. To bring back the water, French officials have spent years building a dam, moving sand and devising a shuttle system.

In 2012 they closed the parking lot. In 2014 came a new bridge. In 2015, to mark the project’s completion, workers will destroy the old causeway (which, dating to 1879, is older than the Eiffel Tower).

Nowadays, when the tides are right, visitors can follow a boardwalk 1.2 miles from the mainland to the island, or take a shuttle. Gradually, officials say, the surrounding silt will disperse and the island’s maritime character will return.

Info: www.lat.ms/1x5Vgw0.

JAPANMORE trains, more hotels, more visitors and Olympics on the horizon—that’s Japan in 2015.

With Tokyo’s 2020 Olympics in mind, officials say they want to double foreign tourism in the next six years. New bullet-train service will shorten travel times from four hours to two hours and 30 minutes from Tokyo to Kanazawa, which is known for its Kenrokuen Garden and Chaya (teahouse) districts.

Also, trips from Tokyo to Toyama Prefecture, known for its mountain scenery and traditional villages, will be shortened from about three hours to about two. And, of course, there’s plenty to see and do in Tokyo. The 30-story Hotel Gracery Shinjuku is due to open in April near the city’s busiest rail station.

The Aman Tokyo, which was due to open in December, is the first city hotel from a global hotel chain known for ultra-luxe properties in remote settings. It is occupying the top six floors of Tokyo’s Otemachi Tower.

Info: www.foreign.info-toyama.com/en, www.jnto.go.jp or www.jnto.go.jp/.

■ Next week: more must-visit destinations for 2015.

15 destinations for travelersto set their sights on in 2015

IT’S all systems go for the first-ever all-Bohol travel fair in Glorietta Mall, Makati City, ongoing until January 11.

The province of Bohol gives more reasons to celebrate, as it opens the new year with irresistible deals of up to 70-percent discount on accommodations, tours and other travel essentials in one of the country’s favorite destinations.

The travel fair kicks off Bohol’s year-round tourism campaign, dubbed Visit Bohol 2015.

According to Gov. Edgar Chatto, the province has lined up an exciting slew of activities in 2015 as it moves to become the must-go destination in the Philippines. This is in line with the Department of Tourism’s (DOT) Visit Philippines 2015 campaign.

In promoting the province as the newest must-go tourist destination, the travel fair also features popular Boholano products, along with musical numbers from popular performers such as the world-renowned and Boholano’s pride, the Loboc Children’s Choir.

The three-day event signals the first time ever that the tourism sector in Bohol has come together in a massive campaign to entice tourists to visit. It is part of the Bohol Tourism Action Plan developed in collaboration with the United States Agency for International Development through its Advancing Philippine Competitiveness Project, the DOT, the United Nations World Tourism Organization and the Pacific Asia Travel Association, as well as local tourism stakeholders.

Budget-carrier AirAsia is the exclusive airline partner for the campaign and offers seat sale.

Bohol extends holiday treatsat travel fair

MexicoFranceCuba

Japan

BusinessMirror

World CompaniesThursday, January 8, 2015 B2-3Editor: Dionisio L. Pelayo• corp@businessmirror.com.ph

Wednesday’s  agreement ends a three-year legal battle in Britain over two spills in 2008 that de-stroyed thousands of hectares of mangroves and the fish and shell-fish that sustained villagers of the Bodo community in Nigeria’s south-ern Niger Delta.

It “is thought to be one of the larg-est payouts to an entire community following environmental damage,” the claimants’ London lawyer, Leigh Day, said.

Shell said it is paying £35 million

($53.1 million) to 15,600 fishermen and farmers and £20 million ($30.4 million) to their Bodo community.

“We’ve always wanted to com-pensate the community fairly,” said Mutiu Sunmonu, managing director of Shell Nigeria, which is 55-percent owned by the Nigerian government.

Shell originally offered £4,000 ($6,000) to the entire community, Leigh Day said.

Sunmonu said Shell also has agreed and is “fully committed” to a cleanup.

Chief Sylvester Kogbara, chair-man of the Bodo Council of Chiefs and Elders, said he hoped “that Shell will take their host communities seriously now” and embark on a cleanup of all of Ogoniland.

A United Nations Environment Program report has estimated it could take up to 30 years to fully rehabilitate Ogoniland, an area where villagers have been in con-flict with Shell for decades.

Kogbara said the community money will be used to provide need-ed basic services. “We have no health facilities, our schools are very basic, there’s no clean water supply,” he told the Associated Press.

Individually, he said villagers are discussing setting up as petty traders and other small businesses until their environment is restored. Each person gets £2,200 ($3,340) in a country where the minimum monthly wage is less than $100.

Shell’s Sunmonu insisted that

oil theft and illegal refining remain “the real tragedy of the Niger Delta” and “areas that are cleaned up will simply become reimpacted.”

Amnesty International said Shell continues to blame oil theft for spills—which means it does not have to pay compensation—when the company’s own documents state its aging oil pipelines present a “major risk and hazard.”

Shell had argued that only 4,000 barrels of oil were spilled in Bodo, while Amnesty International used an independent assessor who put it at over 100,000 barrels—con-sidered the largest ever oil spill in mangroves.

Oil pollution in the Niger Delta is one of the biggest corporate scan-dals of our time, Audrey Gaughran of Amnesty International said. She said thousands more people remain at risk because of Shell’s failure to fix aging and dilapidated pipelines. AP

SAN FRANCISCO — Rapper Dr. Dre and record producer Jim-my Iovine are being vilified as

scam artists in a lawsuit that alleges the duo duped one of their former partners in Beat Electronics before selling the trendy headphone maker to Apple for $3 billion last year.

The complaint filed on Tuesday in San Mateo Superior Court accuses Dre and Iovine of double crossing Noel Lee, the founder of video and audio cable maker Monster Llc.

Lee once held a 5-percent stake in Beats as part of a partnership between the headphone maker and Monster that ended in 2012. The lawsuit alleges Dre and Iovine or-chestrated a “sham” deal with smart-phone maker HTC in 2011 that led to the termination of the Monster alliance. The suit alleges the shady maneuvering prompted Lee to pare his stake in Beats to 1.25 percent before selling his remaining hold-ings for $5.5 million in the autumn of 2013 after being assured by Beats executives that there were no plans to sell the company for at least sev-eral years. Beats announced its sale to Apple in May, opening the door for Dre and Iovine to become executives at the iPhone and iPad maker. Had he held on to his 1.25-percent stake, Lee would have received more than $30 million in the Apple deal. His original 5 percent stake would have been worth roughly $150 million.

Both Dre, whose real name is An-dre Young, and Iovine, a longtime recording industry executive, reaped the biggest jackpots in the Apple deal, though the precise size of their windfalls has not been disclosed.

Lee’s lawsuit says Dre and Iovine each owned 15-percent stakes in the early stages of the Beats partnership.

Apple Inc. declined to comment on the lawsuit. The Cupertino com-pany is not named in the complaint. Besides Dre and Iovine, the lawsuit targets HTC America Holding Ltd. and Paul Wachter, a Beats investor and board member.

The bitterness seeping through Lee’s lawsuit contradicts how Lee described the ending of the Beats partnership in a late 2013 inter-view with the Associated Press. At

that time, Lee called it an “amicable” parting and said he was paid “very generously” in royalties.

This is not the first time that a former Beats partner has lashed out at Dre and Iovine in court. David Hyman, who sold his music stream-ing service MOG to Beats in 2012, is suing the two men for bad faith. That action, filed shortly before the Apple deal was sealed, is unfolding in Los Angeles Superior Court.

Lee appears to be interested in re-covering the money that he believes he lost through the alleged miscon-duct of Dre and Iovine. The lawsuit also depicts Lee as the brains behind the Beats By Dre headphones, while casting Dre and Iovine as little more than figureheads. One section of the lawsuit likens Lee to two more fa-mous innovators, Apple cofounder Steve Wozniak and sound-system pioneer Ray Dolby. AP

GERMAN luxury automo-bile maker Mercedes-Benz said on Tuesday that it was

moving its US headquarters from New Jersey to Atlanta, in part to be closer to its manufacturing facility in Alabama.

Georgia Gov. Nathan Deal said the company accepted an incentive package from the state, but said he could not discuss the details yet. The Fulton County Development Authority met briefly on Tuesday to discuss its own incentive package for Mercedes’s estimated $93 mil-lion facility but provided no details.

The decision comes after weeks of lobbying—some of it public—by New Jersey officials who sought to keep the company in Montvale, at a campus that is about a five-minute drive from BMW’s North American headquarters.

About 1,000 jobs are to be moved starting July. The company said it will move first to a temporary facil-ity in Atlanta before moving into a new space in about two years. Deal and Georgia economic develop-ment officials would not discuss the location Mercedes is pursuing in metro Atlanta. Mercedes said it would announce more details later this month

Mercedes-Benz USA President and CEO Stephen Cannon said in a statement that the company will benefit by being closer to its growing base of customers in the Southeast, as well as its port in Brunswick, Geor-gia, and its manufacturing facility in Alabama.

Cannon praised New Jersey and the company said some operation-al areas will remain in Montvale and Robbinsville

“The state has worked tirelessly with us as we evaluated our op-

tions,” he said in a statement. “Ul-timately, though, it became appar-ent that to achieve the sustained, profitable growth and efficiencies we require for the decades ahead, our headquarters would have to be located elsewhere.”

He also said the quality of life, schools and cultural options in At-lanta were reasons to move there.

Other recent Georgia projects in the automotive industry include the construction of a new US head-quarters for Porsche near Hartsfield-Jackson Airport and Kia’s first US manufacturing facility about 75 miles southwest of Atlanta.

Executives have cited access to the world’s busiest airport for em-ployee travel and to the state’s ports for shipping.

Deal credited the state’s access to that infrastructure and an in-sistence on cooperation between economic development, utility and education officials for the results.

Deal said the most memorable portion of the state’s pursuit was being told that the automaker was seriously considering Georgia for its US headquarters.

Deal said Mercedes-Benz ap-proached Georgia officials several months ago.

“The prestige associated with that name is exciting to me,” Deal said.

New Jersey Gov. Chris Christie had a series of meetings and calls with Cannon to try to keep the company in New Jersey, said Mi-chael Drewniak, a spokesman for the governor.

In each conversation Mercedes USA made one thing very clear about its decision to leave: The cost of doing business and the tax environment is just too high here to be competitive with a state like Georgia, he said. AP

SAN DIEGO—A US Navy of-ficer pleaded guilty on Tues-day  in a massive bribery

scheme involving a longtime mili-tary contractor in Asia who alleg-edly offered luxury travel, prosti-tutes and other bribes to navy of-ficers in exchange for confidential information.

Cdr. Jose Luis Sanchez, 42, is the highest-ranking officer to plead the guilty in the case, which rocked the navy when the first charges were filed in 2013. He faces a maximum penalty of 20 years in prison when he is sentenced on March 27.

Sanchez, who lives in San Diego and remains on active duty, was asked to silently read four passages of a 24-page plea agreement and

say if the wrongdoing described was accurate.

“Yes, sir,” he told Judge David Bartick each time.

Robert Huie, an assistant US at-torney, told reporters that Sanchez admitted taking bribes of cash, prostitutes and hotel stays over four years. Sanchez was charged with accepting bribes for steering Navy ships to Leonard Glenn Fran-cis, chief executive of a Singapore-based company that provided ser-vices to vessels at ports.

Francis, known in military circles as “Fat Leonard,” and his company Glenn Defense Marine Asia Ltd., or GDMA, serviced Navy ships for 25 years.

Prosecutors say he bought infor-mation that allowed his company

to overbill the Navy for port ser-vices in Asia by at least $20 million since 2009.

Francis was arrested in Septem-ber 2013 and has pleaded not guilty.

Sanchez, one of four navy per-sonnel charged in the case, held key positions in Singapore and Japan before he was reassigned to Tampa, Florida, in 2013.

Prosecutors alleged that he took $100,000 in cash, plane tickets and prostitutes for information on Navy shipping schedules and other information, some of it classified.

The judge agreed to let Sanchez remove a GPS monitor, while free on bond and allowed him to back the bond with assets of his mother and sister, instead of his own property.

Sanchez’s lawyer, Vincent Ward,

said his client needed his own money to pay legal fees and assured the judge that Sanchez would not betray his family by failing to ap-pear for sentencing. His mother and sister sat in the front row.

“He’s closer to his mom and sis-ter than anyone,” Ward said.

Sanchez and his lawyer declined to speak with reporters as they left the courtroom.

He is the fifth person to plead guilty in the case and the second navy official. Daniel Layug, a petty officer who admitted providing clas-sified shipping schedules and other internal Navy information to Fran-cis, pleaded guilty in May.

Navy Cdr. Michael Vannak Khem Misiewicz has pleaded not guilty. AP

Shell to pay $83.5 millionfor worst oil spill in Nigeria OHANNESBURG—Oil giant Shell

has agreed to pay a Nigerian fishing community £55 million (about $83.5

million) for the worst oil spill ever suf-fered in Nigeria.

NEW YORK—Safra Group and Brazil ’s Cutrale com-pleted their acquisition

of Chiquita Brands International Inc. on Tuesday, taking the ba-nana producer private.

Chiquita, based in Charlotte, North Carolina, agreed in October to be acquired by investment firm Safra Group and juice company Cutrale Group for about $681 mil-lion, or $14.50 per share.

The companies had put the transaction’s value at about $1.3 billion, including the assumption of Chiquita’s debt.

Safra and Cutra le sa id on Tuesday that affiliate Cavendish Acquisition Corp. completed the

tender offer for all of Chiquita’s outstanding stock. The tender offer expired on Monday. About 84.5 percent of Chiquita’s out-standing shares were validly ten-dered in the offer.

With the tender offer complet-ed, the remaining shares not ten-dered were canceled and Chiquita stock is being delisted from the New York Stock Exchange.

Chiquita, now a subsidiary of the Cutrale-Safra Group, said two executives would be leaving the company—CEO Ed Lonergan and Chief Financial Officer Rick Frier.

The company named its oper-ating chief, Brian Kocher, as in-terim CEO. AP

WASHINGTON—Plunging oil prices have hurt Ameri-can companies in the short

run, but increased US production means that the country is on the path to become a global leader in oil production, the head of the US oil and gas industry’s top lobbying arm said on Tuesday.

Falling oil prices have empowered the US and weakened the Organiza-tion of Petroleum Exporting Coun-tries (Opec) and Russia, said Jack Gerard, the chief of the American Pe-troleum Institute. The result is that increased US production has “fun-damentally reordered the world’s energy markets,” he said.

Stocks in energy companies have tumbled as oil prices have dropped in recent weeks. But Gerard, speak-ing on Tuesday at an annual State of American Energy event in Washing-ton, said price fluctuations have not affected the long-term prospects for oil demand.

“The price today has some im-pacts...but longer term you will see the demand for our product continue to grow,” he said. “I can’t predict the price. But what it clearly shows is what we’re doing in the United States

has implications for the global mar-ket and the US market.”

Gerard used a speech to oil and gas officials and others to lay out the industries’ top goals for 2015. Among the goals he outlined: ending a ban on exporting US oil abroad, eliminat-ing a renewable fuel standard that requires a certain amount of gas be made with biofuels, and rolling back proposed Environmental Protection Agency action on emissions.

He said a US ban on exporting oil was a “relic of America’s era of energy scarcity” and did not account for rapid growth in energy produc-tion. The Renewable Fuel Standard has “outlived its usefulness,” he said. And increased regulations create un-certainty in the market.

“Multibillion-dollar industries cannot operate on government guesswork,” he said. Gerard was bullish about America’s energy fu-ture, saying that if the right ener-gy policies are pursued the US can eliminate its dependence on other countries for energy.

He said he sees “the opportunity to permanently diminish what have been our nation’s biggest economic and geopolitical vulnerabilities.” AP

Lawsuit alleges Dr. Dre, Jimmy Iovine swindled Beats partner

GDMA scandal: USN officer pleads guilty

High cost of doing business, taxes driveMercedes-Benz away from New Jersey

Cutrale-Safra completes takeover of Chiquita

Oil group chief: Amid price drop, US set to be global leader

Jimmy iovine (left) and Dr. Dre

J

GIR recovered in December to hit $79.8 billionBy Bianca Cuaresma

 

The Bangko Sentral ng Pilipinas (BSP) on Wednesday reported that the country’s gross international reserves

(GIR)—serving as the frontline defense against potential risks in the global front—hit $79.8 billion as of end-December 2014. This represented a four-month high since August last year, when the foreign-currency reserves aggregated $80.9 billion. This also marked the first time when the reserves actually grew from a series of declines over three months, starting September last year.  Compared, however, to the same month in the previous year, the December GIR still paled in comparison with reserves aggregat-ing $83.2 billion in December 2013.

Data from the central bank show the recovery resulted from higher revalua-tion of the central bank’s gold holdings, as well as from an increase in its foreign investments and gains from its foreign-exchange operations. The BSP’s foreign investments went up by $784 million during the month, from $69.39 billion in November, to $71.18 bil-lion in December. Foreign investments remain the single largest component of the GIR. So-called revaluation of the central bank’s gold holdings contributed $253 mil-lion to the rise in GIR, as the gold holdings rose to $7.48 billion in December from $7.23 billion in November. The BSP’s foreign-exchange operations,

meanwhile, resulted in a $99.1-billion in-crease from $235.9 billion in November, to $335 billion in December 2014. All GIR component values in December, however, proved lower compared to values seen in December 2013. The increase during the month could have been larger, according to the BSP, if this was not partially offset by payments made by the national government for maturing foreign-exchange obligations. At this level, the central bank said the GIR amply covers 10.2 months’ worth of imports of goods, and payments of services and in-come. It is also equivalent to 8.4 times the country’s short-term external debt based on original maturity, or six times based on residual maturity. 

crude slumP oPening door for deals–ang

San Miguel Corp. (SMC), the Philippines’s biggest company by revenue, is ready to take advantage of falling valuations for energy assets as oil prices

slump to a five-year low, President Ramon S. ang said in an interview. any acquisition would be in addition to the com-pany’s P360-billion ($8-billion) investment program planned across all its units through 2017, ang, 60, said in his office in Mandaluyong City on Tuesday. That fig-ure includes $2 billion to be spent on its existing oil business in Malaysia, as the company accelerates its expansion into energy. SMC has been chasing energy-producing assets since at least 2012, when ang said the company was considering a $5-billion purchase in the gas industry. In July last year, he said, the company had $10 billion

‘7.5% growth for 2015 doable’abola says oil windfall could contribute 1.2 Percentage Points to gdP exPansion

papal merchaNdise a street vendor sells T-shirts with images of pope Francis for p150 each ($3) outside a church in downtown manila on sunday. pope-related merchandise—from calendars to mugs, shirts and statuettes—are starting to flood the market, barely a week before the arrival of the pope in the country. pope Francis will visit this predominantly catholic country from January 15 to 19. AP/AAroN FAVilA

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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

JANUARY 8, 2015 | THURSDAY

HIGH TIDEMANILA

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7:18 AM-0.13 METER

TUGUEGARAO CITY 19 – 31°C

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23 – 30°C

11:49 PM1.00 METER

JAN 9FRIDAY

JAN 10SATURDAY

JAN 11SUNDAY

JAN 9FRIDAY

JAN 10SATURDAY

JAN 11SUNDAY

Partly cloudy to at times cloudywith rainshowers

NORTHEAST MONSOON AFFECTING LUZON.(AS OF JANUARY 7, 5:00 PM)

METRO MANILA20 – 29°C

Northeast Monsoon locally known as “Amihan”. It a�ects the eastern portions of the country. It is cold and dry; characterized by widespread cloudiness

with rain showers.

HALF MOON

5:46 PMJAN 13

Meralco’s Jan billing to drop by ₧0.19/kWh. . . Continued from A8

Oil. . . Continued from A8

BusinessMirror news@businessmirror.com.ph Thursday, January 8, 2015A2

NewsContinued from A1

Texas Intermediate (WTI) crude to average $62.75 per barrel this year, or a reduction of 33.1 percent from last year. In 2014 Abola said WTI crude aver-aged around $93.82 per barrel, repre-senting a decline of 4.1 percent. Likewise, Abola said the US expects Brent crude to average $68.08 per bar-rel in 2015. This represents a reduction of 31.6 percent from last year. Last year Brent crude averaged $99.54 per barrel, or an 8.4-percent decline over 2013 value.  However, Abola acknowledged that this could negatively impact on the govern-ment’s excise-tax collections.  The Bureau of Internal Revenue collects excise taxes from oil im-porters. An excise tax is a tax on the production, sale or consumption of a commodity in a country.  The highest excise tax on petroleum products that is collected by the gov-ernment is for lead premium gasoline at P5.35 per liter. Unleaded premium gasoline, on the other hand, is slapped with a P4.35-per-liter excise tax. Nonetheless, Abola assured that

this would not curb government spending and could even increase regular tax collection.  “If the economy is doing well and its growing 7.5 percent, and in current terms, 10 percent, you can expect tax collections [to increase],” Abola said.  “Normally tax collections grow fast-er, so even if you remove the [impact of low oil prices on] government rev-enues, because of the faster growth, you collect more. It will be offset by the faster growth,” he explained.  Apart from low fuel prices, Abola also said various public-private part-nership (PPP) projects that will be awarded and implemented this year

will contribute to the growth in gov-ernment and investment spending.  He cited data from the PPP Center showing around P127.4 billion worth of projects have been awarded and are in the process of construction.  Abola said around P44.3 billion worth of projects will add another 0.3 percent to 0.4 percent to the country’s GDP growth this year.  Further, domestic demand is ex-pected to post a higher growth of 7.5 percent in 2015. This will provide a significant boost to the country’s GDP because the Philippine economy is primarily driven by consumption.  Domestic demand averaged

4.7 percent in the first semester of last year and may have averaged 6.5 percent in the second semester of 2014. However, domestic demand was still stronger in 2013 as it averaged 10.4 percent.  As a result of the expected increase in domestic demand in 2015, household, govern-ment and investment spending are expected to be strong this year.  Consumer spending is expected to post a growth of 6.5 percent, while investment spending is expected to re-turn to double-digit growth of around 14 percent.  With the 2016 elections just around the corner, Abola said gov-ernment spending is expected to grow by 6.6 percent in 2015.  In December 2014 Socioeconomic Planning Secretary Arsenio M. Bali-sacan said the public should expect “overspending” on the part of the gov-ernment to make up for the lackluster growth of public spending last year.  Balisacan said while election spending is a “bonus,” the govern-ment’s reconstruction and rehabilita-tion in the Yolanda corridor, as well as the implementation of various public works, will boost government spend-ing this year.

‘7.5% growth for 2015 doable’

the power facilities under the power supply agreements (PSAs), which registered a reduction of P0.73 per kWh due to the normal operations of the power plants during the De-cember supply month and the lower cost of fuel. Coal prices of some suppliers went down by almost $2 per metric ton.

The lower PSA charges more than offset increased charges from in-dependent power producers (IPPs) and the Wholesale Electricity Spot Market (WESM), which increased by P0.24 and P1.68 per kWh, respec-tively. The higher WESM charges were primarily due to the additional payment and compensation to power

generators affected by the adminis-tered and secondary price-cap imple-mentation for the February to July 2014 supply months. In terms of share to Meralco’s total power requirements for the Decem-ber supply month, PSAs, IPPs and WESM accounted for 52 percent, 45 percent and 3 percent, respectively.

Meralco, however, said these strong drops in generation charges over the past few months may be difficult to sustain, especially as warmer temperatures set in that will also coincide with the shut-down of the Malampaya gas facility from March to April this year. Add to this the upward adjustment and

longer threshold-reference period before the secondary price cap in the WESM is triggered. Contributing also to the overall downward ad-justment in the bills of households is the P0.026 decrease in taxes and P0.011 cumulative decrease in the system-loss charge and subsidies. Transmission charge, on the

other hand, increased by P0.062 per kWh. Meralco reiterated that it does not earn from the pass-through charges, such as the generation and transmission charges. Payment for the generation charge goes to the pow-er suppliers such as the plants selling to Meralco through the WESM and under the PSAs, as well as the IPPs.

to global gross domestic prod-uct, they estimate.

Political tensionsEvEN as cheaper fuel stimulates the global economy, it could aggra-vate political tension by squeezing government revenue and social benefits, Citigroup Inc. analysts said in a January 5 report. Either way, previously unthink-able events now look more likely. Byron Wien, a Blackstone Group Lp. vice chairman, predicting that Russian President vladimir Putin will resign in 2015 and Iran will agree to stop its nuclear program. Iran is already missing tens of billions of dollars in oil rev-enue due to Western sanctions and years of economic misman-agement under former President Mahmoud Ahmadinejad. President Hassan Rouhani, elected on a pledge of prosperity to be achieved by ending Iran’s global isolation, is facing a falling stock market and weakening cur-rency. Iranian officials are warning of spending and investment cuts in next year’s budget, which will be based on $72-a-barrel crude. Even that forecast is proving too optimistic.

Falling stocks“IRAN will stumble along with less growth and development,” said Djavad Salehi-Isfahani, a profes-sor of economics at virginia Tech in Blacksburg, virginia, who spe-cializes in Iran’s economy. “The oil price fall is not reason enough for Iran to compromise.” The Russian economy may shrink 4.7 percent this year if oil averages $60 a barrel under a “stress scenario,” the central bank said in December. The plunge in crude prices prompted a selloff in the ruble with the Rus-sian currency falling to a record low against the dollar last month and tumbling 46 percent last year, its worst performance since 1998, when Russia defaulted on local debt.

Russian production“THE risk is that, as a badly wound-ed and cornered bear, Russia may turn more aggressive in its increas-ing desperation, threatening global peace and the European economic outlook,” said Holger Schmieding, Berenberg Bank’s London-based chief economist. However, “the mas-sive blow to Russia’s economic capa-bilities should—over time—make it less likely that Russia will wage another war.” Bloomberg News

By Rene Acosta

THE National Police will go on a full-alert status starting Monday as part of its security

preparations for the four-day visit of Pope Francis. Full alert is the police equivalent of the military’s red alert. It means that all personnel have to be on duty and all leave and furloughs are canceled. Deputy Director General Leonar-do Espina, National Police officer in charge, said the full alert will height-en the readiness of the 150,00-strong police force, which is already observ-ing a heightened alert. “We are [already] on heightened alert but we are going on full alert starting Monday,” Espina said on Wednesday, adding that at least 25,000 policemen will be tapped to ensure the security of the Su-preme Pontiff. The policemen will be backed by at least 7,000 ground military forces, as well as air cover that will be pro-vided by the Air Force. Espina said the police will be de-ploying “by sector, by responsibility, by work,” ensuring that all aspects for the pope’s visit will be covered. He sa id t h at gover n ment authorities are considering al l

possible scenar ios t hat may erupt during the event. Still, Espina said they have not monitored any specific threat against the pope. “We always have to assume. It’s better to assume that there is, in-stead of none and then you are not prepared,” he said Espina called on the public to fol-low the rules and regulations laid out during the activities of Pope Francis in various venues. “We should follow our policemen, marshals whatever are the ground rules…it’s for the good of the major-ity, just follow the rules and regula-tions…so that the activities will be proper and solemn,” he said. Meanwhile, Maj. Gen. Rey Leon-ardo Guerrero, commander of the Army’s Third Infantry “Spearhead” Division, said 266 soldiers from Iloilo have also been deployed to Leyte, which is among the areas that would be visited by Pope Francis. “These troops shall augment personnel of the Joint Task Force Pope created by the [Armed Forces] Central Command to conduct se-curity operations and assist in the maintenance of peace and order, to ensure the safety and successful visit of Pope Francis in Tacloban and Palo in Leyte,” Guerrero said.

By Marvyn N. Benaning Correspondent

THE Supreme Court (SC) de-serves praise for ordering the release of 286 people from

prisons after the minimum periods of their sentences. In a statement, Human Rights Watch (HRW) said that the action, while overdue, merits support from all quarters, particularly the families of the prisoners and officials of the Bureau of Corrections (BuCor), the agency that oversees the National Peni-tentiary at Muntinlupa City under the Department of Justice (DOJ). The problem of overstaying prison-ers, the late journalist, newspaper col-

umnist and former political prisoner Julius Fortuna said, was so serious in Muntinlupa that he had to help those in the minimum-security and medium-security areas to be released. Fortuna had to write letters on be-half of the prisoners addressed to the BuCor, the DOJ and even up to the Office of the President (OP) during the martial-law period to secure the freedom of the prisoners. A former leader of the Movement for a Democratic Philippines (MDP) who was arrested in the mid-1970s, Fortuna spent more than eight years in various prisons and in the National Penitentiary before he was finally re-leased. Another former prisoner, activist Alfonso Sabilano, who was convicted of

double murder in the early 1970s, said, “Those who should have been released continue to stay in the penitentiary sim-ply because their papers do not move.” “The court’s long-overdue action is designed to address the country’s serious problem of lengthy pretrial de-tention and is part of what the Court called its ‘Judgment Day’ program that, along with ‘Justice on Wheels’ and ‘Hustisyeah!,’ aims to decongest the Philippines’s notoriously overcrowded detention facilities,” HRW said. The releases of detainees and pris-oners got a push during the incum-bency of Chief Justice Reynato Puno, who supervised Justice on Wheels declogged dockets and freed inmates found to have served their sentences.

However, the HRW is mainly con-cerned about the detainees who are in the pretrial stage, claiming that up to 70,000 people belong to that category of inmates who should be in municipal, city or provincial jails, all because their cases are nonbailable or they could not raise bail at all. “The SC deserves credit for taking the initiative to address the problem of lengthy pretrial detention in the Philip-pines. But the release of these detainees is nothing more than a symbolic drop in the bucket in comparison to the more than 70,000 people currently in deten-tion awaiting trial for often extremely lengthy periods. Many spend decades in jail waiting for their case to go before a judge,” the group noted.

news@businessmirror.com.ph Editor: Dionisio L. Pelayo • Thursday, January 8, 2015 A3BusinessMirrorThe Nation

By Rene Acosta

FOUR of the AW-109E “Pow-er” helicopters ordered from Anglo-Ital ian helicopter

manufacturer AgustaWestland are already in the country and are awaiting delivery to the military, defense officials said on Monday. Fernando Manalo, defense un-dersecretary for finance, modern-ization and materiél, said the four helicopters arrived late last month and are already being assembled for their test flights. “They are now being assembled, and, according to a timeline I re-ceived, they will be flown to Clark Field, Pampanga, for testing and acceptance,” Manalo told military reporters on Wednesday. Two of the helicopters will go to the Navy to beef up its maritime mission and enhance its overall ca-pabilities, while the other two will go to the Air Force and served as attack helicopters. The Navy had earlier ordered five AW-109E helicopters from the Ang-lo-Italian company under a P1.33- billion contract that was signed in 2013, while the Air Force is acquir-ing eight attack helicopters from the same company under a P3.44 billion procurement project. “We really need those helicopters in internal-security operations, espe-cially now that our MG-520 gunships are just only few,” said earlier by a former Air Force vice commander, Maj. Gen. Raul Dimatatac. He said the helicopters will in-crease the number of the Air Force’s gunships as it only has 12, but only eight are operational. Dimatatac said the helicopters would be used by the Air Force for its close air-support missions, in-

cluding in the campaign against the New People’s Army. The choppers were among the big-ticket items that the military are procuring under its ongoing modern-ization program, whose end-goal is to give the Armed Forces a credible defense posture. While the list of projects have been made public by the Depart-ment of National Defense, several acquisitions under the same pro-curement program were not, how-ever, disclosed as they are consid-ered classified. Two of the classified acquisitions are the procurement of shoulder-fired and land-based missiles, which would bolster the military’s capa-bilities to counter aerial threats and other moving targets, even on sea. The acquisition of the missiles should also give the military a mod-est aerial firing capabilities, although the Air Force is already awaiting the delivery of a squadron of FA-50 “Golden Eagle” lead-in aircraft from South Korea. Manalo, however, admitted that the squadron of South Korean Fight-er jets, two of which are expected to be delivered this year, may still be small when it comes to the overall defense of the country. Another procurement for the military, but whose delivery is still being awaited, are the antitank weapons for the Army. Observers, however, said that the military does not need an-titank weapons, since the rebel groups in the country do not have armored vehicles. An observer said the danger is that the antitank weapons will be used against the Army’s and the Marine’s armored vehicles in case the weapons fall in rebel hands.

Military ready for delivery of four new helicopters

Fernando Manalo, defense un-dersecretary for finance, muni-tions and materiél, said that under this timeline, the government will spend P90.858 billion to buy war-ships, fighter jets, helicopters, an air-defense radar system and other defense equipment. This also includes upgrades and improvements of existing bases. Manalo declined to specify what types of equipment will be acquired under the second phase, but said these will mostly be for disaster re-sponse and protecting territories in the disputed West Philippine Sea. “It is sufficient [to say] we are heavy on humanitarian assistance and disaster relief, and protecting our interest in the West Philippine

Sea,” he said. He hinted that more fighter jets may be acquired under the phase, stating that the current 12 being bought from South Korea are “way, way below than what is needed by the Air Force.” Manalo also said the country’s maritime defenses will become more credible with the arrival of two missile-armed frigates and two ASW (antisurface warfare) helicopters. Manalo said obtaining such platforms was part of the coun-try’s efforts to develop a credible defense posture. “We look at it as part of the Navy’s ‘Strategic Sail Plan 2020,’” Manalo said. Sail Plan 2020 refers to the long-term modernization efforts of

the Navy. Patrick Velez , defense assistant secretary for acquisition, installa-tions and logistics, said the move may not signal the development of a “full blue-water” capability but certainly a path toward the creation of credible deterrence capability for the country. Manalo said the full implemen-tation of the 15-year Armed Forces Modernization Program trans-formed the military into force ca-pable of addressing disasters and territorial integrity challenges. A ranking Navy officer earlier expressed confidence that the contract for its two missile-armed frigates and two antisubmarine helicopters would be signed and awarded to qualified proponents early this year. Capt. Alberto Carlos, chief of na-val staff for logistics (N-4), said: “For the frigate and the antisubmarine helicopters, we are looking at sign-ing the contract by early next year.” He said both assets would be working together in tandem, giving the Navy a much-needed punch in securing the country’s vast territo-rial waters. Carlos said he expects these assets to be delivered within three to four years, as building brand-new ships

and helicopters is a lengthy process. The country is allocating P18 bil-lion for its two missile-armed frig-ates, which can also perform antiair, antisubmarine and antisurface mis-sions. Another P5.4 billion was allocated for the two antisubmarine helicop-ters. Both projects are undergoing bidding. In addition, efforts are now under way to acquire and equip military units with shoulder-fired antiair missiles. This is to ensure that all units will have the capability to handle air attacks and boost the country’s air-defense network. Aside from this, plans are also afoot to acquire mobile-missile bat-teries with fire-control radars and tracking devices. These weapons will be placed in strategic locations on major islands of the country, said a ranking defense official, who requested anonymity. The missile batteries also have interlocking fields of fire to maxi-mize coverage. The official also pointed out that position of the mobile-missile batter-ies will be shifted every once in a while to prevent possible adversaries from gaining a fix on their locations. PNA

Govt needs P90 billion to fund secondphase of Armed Forces modernization

ARANKING Department of National Defense (DND) official said on Monday that the

country may need more than P90.858 billion for the second phase of the Armed Forces modernization that will be implemented from 2018 to 2023.

THE Acquisition of additional South Korea-made F/A-50 “Golden Eagle” jet fighters

largely hinges on Korea Aerospace Industries’ (KIA) willingness to invest more money to make the aircraft more capable and potent. Fernando Manalo, defense undersecretary for finance, munition, modernization and materiel, when asked whether there are plans to acquire more F/A-50s to boost the Air Force jet fighter fleet said, “[We are not categorically saying that] we will be buying additional F/A-50s, what I know for sure is that we have an existing requirement for a multirole fighter aircraft. Acquisition of additional F/A-50s [in fulfilling the requirement] depends on KAI and how much it will invest to upgrade and further develop the F/A-50s.” He also admitted that the 12 F/A-50s can be considered small as the Air Force has a huge “capability gaps.” He did not specify the gaps but sources said that these concern air defense and interceptions. Manalo also said the decision to acquire more F/A-50s is also dependent on the input of Air Force planners on the squadron standards they will observe. “What standard are we going to

follow? Squads of 12 to 24 or about 36? It is included in the Flight Plan of the Air Force. I would say the 12 is not enough—way below what is needed by the Air Force,” he added. “Deliveries of the first two jets might be made earlier [than the projected December 2015 delivery date]. KAI officials are very proud that we have ordered and signed a contract for their F/A-50s,” Manalo earlier said. The Philippines has signed a P18.9-billion contract with KAI for the delivery of 12 F/A-50s. The Department of National De-fense official estimates that the two jets might be delivered within the third quarter of 2015. The F/A-50 has a top speed of Mach 1.5 or one and a half times the speed of sound and is capable of being fitted with air-to-air mis-siles, including the AIM-9 “Side-winder” air-to-air, heat-seeking missiles aside from light automatic cannons. The F/A-50 will act as the coun-try’s interim fighter until the Philip-pines get enough experience of op-erating fast jet assets and money to fund the acquisition of more capable fighter aircraft. PNA

Air Force to buy more ‘Golden Eagles’ if…

HRW lauds Supreme Court move to free 286 prisoners

Cops implement tighter security measures as pope’s visit nears

By Joel R. San Juan

AFIRE gutted the 14-story Philippine Nation-al Bank (PNB) Building on Escolta, Manila, prompting organizers of this year’s Trasla-

cion or transfer of the Black Nazarene’s image to slightly change the procession’s route. Fire investigators reported that blaze started at about 2:30 a.m. and reached task force bravo at 4:26 a.m. As of press time, firefighters are still trying to totally put out the fire that originated on the second floor. Two persons were reported injured during the fire and authorities are eying faulty wiring as its cause. It can be recalled that the building owned by the Manila City government has been declared condemned several years ago. Manila City Building Official Rogelio Legaspi said the city government will recommend a slight change on route of “Traslacion 2015” as it is no longer safe for devotees to pass through Escolta Street citing dangers from falling debris from the burned structure. “This is dangerous because just a little vibra-tion or a strong wind could cause something to fall. We will recommend a rerouting particularly on Dasmariñas Street which is quite near Escolta. It is just the other street and it is wide enough to accommodate the number of devotees who will join the yearly procession on Friday,” Legaspi said while admitting that Church officials would eventually decide on the matter. Devotees, however, resisted the move to reroute the procession to Dasmariñas Street saying that Dasmariñas is already in Binondo District and not Quiapo, the host of the Black Nazarene procession. Public Works Undersecretary Raul Asis said the Department of Public Works and Highways

will send structural engineers to check on the condition of the building, that is being used by the City College of Manila. “We need to see the area that we are going to cordon off. We would still have to assess the possible dangers. It seems that it is unlikely to collapse but there might be falling debris, that’s why we have to see the areas that we need to cordon off,” Asis said.

Red Cross team readyTHE Philippine Red Cross (PRC) is ready for the two-day event which starts on Thursday at the Quirino Grandstand for the Black Nazarene’s pahalik and the Translacion from Luneta to Quiapo Church on the following day after an early morning Mass. To ensure the safety of the devotees, PRC has organized its operations to be fully visible to the devotees should they need medical assistance. PRC’s target is to maintain zero death during the procession, a figure the same as last year’s. During the 2014 procession, the Red Cross attended to the medical needs of 1,032 patients and has assisted 88 people in its welfare desks. This year, anticipating more devotees, the PRC will deploy 300 volunteers and staff mem-bers from its chapters in Metro Manila along the routes ready to serve. The Red Cross will also mo-bilize 19 rescue vehicles for immediate transport comprised of 14 ambulances, three plastic boats on the Pasig River, a firetruck and a rescue truck. In addition, the PRC will set up 11 first-aid health stations. PRC Chairman Richard Gordon said that aside from the 300 trained personnel at the first-aid stations, about 10,000 volunteers un-der the Red Cross 143 program in Metro Manila along with its rescue vehicles and equipment are ready to respond in case of a mass-casualty incident. With Claudeth Mocon-Ciriaco

Escolta fire prompts organizersto reasses route of procession

By Recto Mercene

All 10 of the United Kingdom’s (UK) ambassadors in Asean have agreed that they have to strengthen their linkages with the region due to its immense potential

as a consumer class and as sources of investments for the home country. “By 2030, the Asean economy is predicted to eclipse Japan to be the fourth-largest market after the European Union, the United States and China [not necessarily in that order],”according to Brit-ish Ambassador to the Philippines Asif Ahmad.   “Our ambition is to make the UK home to Asian investment and Asian finance in Europe,” citing as example the £430 million acquisition of Whyte & MacKay Scotch whiskey by Emperador, the largest Philippine overseas investment in 2014. The ambassadors are in Manila at Ahmad’s residence in Forbes Park for the next two days, not only to plot their strat-egy on how to take advantage of the growing economic clout of the region. Citing the Asian Development Bank, Ahmad said the prediction is that the middle class in emerging Asia will rise from 24 percent of the population in 2020 to 65 percent in 2030. He said that equates to almost 300 million new members of the consuming class by 2030, and only 1 percent of the population is likely to be living in extreme poverty. Ahmad added the region punches above its weight in terms of UK exports.  “Total UK exports to the six largest Asean economies—In-donesia, Thailand, Malaysia, Singapore, the Philippines and Vietnam—combined in 2012 were equivalent to over three times the UK export to Brazil, twice India’s and 50 percent more than Japan’s.” He said goods export to Asean is rising more faster than Brit-ish export globally.  “UK services exports to Asean, the bulk of which to Singapore, exceed those to mainland China or Japan, [and both] are much larger economies than Asean,” Ahmad added. But the group is also aware of the potential for conflict and subsequent disturbance that might impact on business due to the unresolved territorial conflict in the South China Sea, or West Philippine Sea (WPS) to the Philippines. “This is one of the international hot spots, not just for the Phil-ippines but also for Vietnam as well, and we like to take a view to make this claims resolved by peaceful means,” says Tom Dodd, head of the Asean Department at the UK’s Foreign and Common-wealth Office.  “We very much support Asean in trying to find a way forward, a collective way to bring to resolve this issue and to diffuse ten-sion,” he said, adding that the developments in the WPS directly affects business, as well.   “So this is the reason why we need to take an interest, along with other parties, to put a set of mechanism for managing or resolving this issue, which leads to peaceful resolution, reduce the risk of miscalculation and international law is respected.”  Todd said details of the resolution of conflict is for the involved parties to work it out themselves and the UK can provide assis-tance by way of conflict resolutions.

BusinessMirror news@businessmirror.com.ph A4

Economy

By Lorenz S. Marasigan

THE  Department of Transpor-tation and Communications (DOTC) is aggressively pushing

for the modernization of the country’s public land-transport services by crack-ing down on illegal operations and the introduction of electric public-utility vehicles (PUVs).  Transportation  Secretary Joseph Emilio A. Abaya said the issuance of the brand-new, security feature-packed yellow license plates to public trans-port vehicles for the first time and the proposal to deploy electric jeepney (e-jeep) services in Quezon City would aid his office in improving land transporta-tion in the country.  “Safety and sustainability—these are key concepts in our modernization programs. Today is a milestone in the promotion of road safety through the use of new yellow license plates, and in the shift to sustainable, environmentally friendly public transportation through electric-powered PUVs,” he said.  The new plates, he added, will eventually eliminate illegal transport operators.  “They cannot be removed and transferred from one vehicle to an-other. They will indicate the vehicle type as well as the place of its regis-tration. The ‘third-plate’ windshield sticker will also display the PUV’s plate number and authorized route,” the Cabinet official explained. The new yellow-and-black plates is-sued by the land Transportation Office (lTO) have the same security features as the white-and-black private motor vehicle plates, such as tamper-resistant locks and screws to permanently attach

the plate to the vehicle, thereby prevent-ing tanggal-plaka practices, and reflec-torized sheeting to make the PUV plates visible from afar and from any angle. “Meanwhile, our inspection of the very first proposed route for e-jeepney services ushers in a new paradigm for public land-transport services. We hope this is the start of replacing smoke-belching and poorly maintained jeeps with high-tech, ef-ficient and environmentally friendly

e-jeepneys,” Abaya said.  land Transportation Franchising and Regulatory Board Chairman Win-ston M. Ginez said his office supports the sustainable PUV services in line with established policies. “It is mandated to hear and rule on the petition for issuance of new cer-tificates of public convenience for e-jeepney,” he said.  The new transportation means will carry modern features, such as a cash-

less-payment system using reloadable cards, fixed stops, GPS and Internet connectivity, side entrance for easier boarding and closed-circuit television cameras to better ensure passenger safety, among others. Initially, the e-jeep services will be available, when approved, from SM North to Katipunan, Novaliches, Makati loop, and Eastwood, said Global Electric Transport Co. ltd. President Sigfrido R. Tinga. 

By Butch Fernandez

MAlACAñANG, signaling that it was retaining Bureau of Customs (BOC) Commis-

sioner John Philip Sevilla, on Wednes-day shot down talks of a looming BOC leadership shakeup amid wranglings for the coveted post. At a Palace briefing, Secretary Edwin lacierda, likewise, debunked specula-tions that President Aquino had already launched a search committee to vet nominees for new BOC chief following reports that Sevilla had already filed his resignation.

“Wala kaming balita na nag-submit siya ng resignation...na si Commis-sioner Sevilla nag-submit ng resig-nation letter. So hintayin na lang na-tin,” lacierda told reporters. “Kami nga nabibigla sa mga ganoong tanong. In fact, I was asked about that yes-terday [Tuesday].” President Aquino’s Spokesman added that Sevilla had also issued a separate statement to clarify that he had not resigned as customs chief. Asked if this meant the Palace is still satisfied with the performance of the BOC, cited reforms set in motion when Sevilla took over as head of the

allegedly graft-ridden revenue collec-tion agency. “Maraming reforms na ginagawa si Commissioner Sunny Sevilla so… Maraming reforms na ginawa, institu-tional reforms; like we removed and replaced a number of commissioners. We also removed a number of collectors. So [may] mga reforms na ginagawa,” the Palace official added. lacierda said he saw no reason re-ports are being circulated that Sevilla would be replaced. “Nag-improve ang collection sa Cus-toms, so wala kaming nakikitang katu-wiran kung bakit nagkaroon ng ganitong

balitang magbibitiw si Commissioner Sunny Sevilla,” he said. On reports pinning the blame for the Manila port congestion on the BOC, lacierda noted that Cabinet Secretary Rene D. Almendras re-ported just the other day cargos are already being moved out of the port area on schedule. “Gumagalaw na ’yon. Naiibsan na ang port congestion. So, again, we have not—at least, I—have not received any information officially and we have not heard of any planned resignation by Commissioner Sunny Sevilla,” laci-erda said.

“We will wait for the court’s ac-tion and comply with its directive to the ERC,” ERC Executive Direc-tor Saturnino Juan said in a text message when sought for comment on the temporary restraining order (TRO) petition filed by a lawyer be-fore the Supreme Court (SC). As far as the commission is con-cerned, Juan said the collection of the FIT from electricity end-users starting this month is pushing through if no TRO is issued. The said rate will be reflected in the consumers’ electricity bills as a separate item, as mandated by the Renewable Energy Act of 2008 (Re-

public Act 9513). The FIT-All will serve as an in-centive to renewable-energy (RE) developments such as those on wind, run-of-river hydro, solar and biomass facilities. It was established pursuant to Renewable Energy Act of 2008, which aims to spur the develop-ment of green power sources, which have been hampered by high in-vestment costs and limited mar-kets compared with conventional generating plants. lawyer Remigio Michael Anche-ta, in his 32-page petition, filed the TRO petition. He also asked the SC

By Jovee Marie N. dela Cruz

The investigation of the house Committee on Transportation on the recently imple-mented Light Rail Transit (LRT) Lines 1 and

2, and the Metro Rail Transit Line 3 (MRT 3) fare increase is expected to start on Thursday. Liberal Party Rep. Cesar Sarmiento of Cat-anduanes, chairman of the committee, said expected to attend Thursday’s hearing are rep-resentatives from the Department of Transpor-tation and Communications (DOTC), MRT 3, LRT and the Philippine National Railways.  he added the probe will be conducted in re-sponse to house Resolution 111, filed by Party-list Reps. Neri Colmenares and Carlos Isagani Zarate of Bayan Muna. “We assure the public that we will hear all sides of the fare-hikes issue,” Sarmiento said. The fare adjustments took effect on January 4, which marks the first such hike in ticket prices for Metro Manila’s train riders in a decade. The base fare for the LRT Lines 1 and 2 and the MRT is now P11 and an additional P1 will be charged for every kilometer from the station of origin. This means that a single-journey ticket from Baclaran station to Roosevelt station will cost P30 from the present fare of P20. Passengers who use stored-value tickets for end-to-end trips on the LRT 1 and 2 will get a P1 discount. For MRT 3 single-journey and stored-value tickets from Taft station to North Avenue station, or vice versa, the journey will cost P28 from the current P15. Colmenares, meanwhile, said he hopes admin-istration allies in the lower chamber will not use the investigation to justify the fare hike.  “I hope that the hearing would not just be used by administration allies as a venue to justify the

fare hike,” Colmenares, the senior deputy minority leader, added. earlier, several house leaders expressed support to the fare adjustments, saying the increase would enable the government to save P2 billion in annual subsidies, or 17 percent of the P12 billion that it allots each year to subsidize the LRT, MRT train systems.  “Malacañang could make better use of the P2 billion in subsidy savings to rev up these vital mass- transport systems for the benefit of Metro Manila commuters and to fund other nonrail-development projects for non-MRT and LRT users in the Visayas and Mindanao,” they said.  The government is paying P25 for every LRT pas-senger and P45 for every MRT passenger. They also noted, for instance, that the P2 billion in projected annual savings would be enough to build 8,240 classrooms or 82 kilometers of farm-to-market roads, or irrigate 11,240 hectares of cropland. Moreover, Colmenares, who filed a tem-porary restraining order against the fare hike before the Supreme Court on Wednesday, said the mass-railway transits are a public service and should be the responsibility of the government and not a burden to the people.   “Malacañang is taking the people for a ride because there is no need to increase fares. Annual MRT and LRT revenues outstrip operation expense so it is deceptive for the government to insist that it is losing. MRT earned P2.2 billion ticket sales and only spent P1.8 billion in operation expense last year. LRT earned P2.5 billion, but only spent P1.03 billion for operation expense. even if it is losing, it is the government’s task to fund mass transport. The fare hike is, beyond doubt, unjustifiable because up till now the DOTC has yet to account for the more than P120.7 B it has spent on the MRT for the pass 10 years,” Colmenares said.

Thursday, January 8, 2015 • Editors: Vittorio V. Vitug and Max V. de Leon

house probe into MRT, LRT fare increase starts on Thursday 

to declare as unconstitutional the FIT Rules and Guidelines and the ERC order dated October 7, 2014, that granted the National Trans-mission Corp.’s (Transco) applica-tion for a provisional FIT-All. The provisional authority will allow Transco to perform its duties as a fund administrator and pay the RE developers on time their entitled FIT rate, thereby allowing continued production of RE electricity. Ancheta argued that the FIT rules and guideline wrongly provided for the advance collection of the payment to FIT-eligible RE developers, which advance collection is not provided or contemplated in the law, through the creation of the FIT-All Fund. Based on his own calculations, the petitioner said a typical residential Meralco customer consuming 200 kWh in a month should expect an additional charge of P8.12 under the FIT system. The petitioner stressed that under Renewable Energy Act of 2008, the establishment of FIT System is for electricity produced from wind, so-lar, ocean, run-of-river hydropower and biomass. However, Ancheta said the ERC committed grave abuse of discretion

when it issued the FIT Rules and FIT guidelines as it unduly expanded the implementation of the RE law. With the ERC’s order, the pe-titioner noted that the consum-ers are being compelled to pay in advance of the production of elec-tricity considering that the power plants covered by the FIT program have yet to operate or have yet to be constructed. “Otherwise stated, the public would be made to pay for electricity that has yet to be generated,” he said. Using the year 2015 forecast national sales of 68,016,055,191 kWh submitted in the application of Transco to ERC, Ancheta said the FIT-All will translate to P230.12 mil-lion per month, or P2.7 billion for the whole 2015. “Unless this Honorable Court strikes down this unreasonable and oppressive attempt to collect from the public an amount that they can otherwise use for basic necessities, the consumers will be required to bear the burden by the start of the year 2015,” the petitioner said. Named respondents in the peti-tion were the ERC, the Department of Energy, Transco, National RE Board and Manila Electric Co.

Only a court order could stop power-rate hike, ERC exec says

By Lenie Lectura

The energy Regulatory Commission (eRC) said on Wednesday that the P0.0406

per kilowatt-hour (kWh) additional power-rate hike representing the feed-in tariff allowance (FIT-All) is still a go unless restrained by a court.

DOTC adopts multi-pronged approach to modernize PUV services UK envoys agree to forge stronger Asean linkage

Palace shoots down talks of looming BOC shakeup

TransporTaTion secretary Joseph Emilio a. abaya (right) and Land Transportation office (LTo) Chief assistant secretary alfonso V. Tan Jr. show the new license plate series issued to public-utility vehicle (pUV) at a news conference at the LTo in Quezon City. The replacement of old license plates is being done as part of LTo’s plate standardization program, which commenced last year. The replacement of old plates is also part of the transportation department’s multi-pronged approach to modernize pUV services. But unlike newly registered vehicles, old ones will retain their existing three-letter-and-three-number license plate numbers. NONOY LACZA

By Lenie Lectura  

THE Department of Energy (DOE) on Wednesday said it continues to hold negotia-

tions with prospective participants of Interruptible Load Program (ILP), an initiative of the department which, it stressed, remains the main focus to avert a looming power short-age this coming summer.  “In times like this, we need the collective effort and assistance of those who are willing to extend their hands…our search has never been in vain. In fact, ILP partici-pants have been growing, reflect-ing the private sector’s role in this initiative,” Energy Secretary Carlos Jericho L. Petilla said.  This, as the Manila Electric Co. (Meralco) said it has signed up a committed interruptible load of 205 megawatts (MW) as of January 5.  “Among captive customers, com-pared to the December 15, 2014, update, we signed up two additional services—Sunlife of Canada & Ser-endra—equivalent to 2.24 MW of interruptible load.  This brings the total signed-up interruptible load to 205 MW from 43 companies, with 160 services. We are still compiling updates on ILP participants of cus-tomers already being served by re-tail electricity suppliers [RES],” said Meralco Spokesman Joe Zaldarriaga, when sought for an ILP update.  As early as December 2013, the DOE has called Meralco for the in-troduction of the ILP as a last resort. The three largest participants are SM Prime Holding Inc., 57.96 MW; Robinsons Land Corp., 23.15 MW; and Waltermart Malls, 14.30 MW. In addition, the DOE said, there have been expressions of com-mitment for signing between the con-testable customers and their respec-tive RES at 408 MW.  Petilla already expressed his appreciation to the participants for being part of the solution in answering the imminent power shortage this summer. Contestable customers are those with monthly average peak demand of at least 1 MW. They are

allowed to choose the supplier of their energy requirement under the retail competition and open access (RCOA) regime.  The suppliers whom the con-testable customers will choose are called the RES. They will directly negotiate and contract on a whole-sale level with power-generation companies so they can sell elec-tricity to contestable customers at competitive rates.  These rates will be reflected in the generation-charge portion of the bill, which typically comprises a certain percentage of the monthly electricity bill.  When a contestable customer chooses a RES to supply his needs, this RES will also be in charge of the customer’s monthly billing and col-lection of payments. Prior to RCOA, these tasks of energy sourcing, sup-ply, billing and payment collection were done by the local distribution utility, Meralco.  Meralco said it will still continue to distribute electricity to all con-testable customers in its franchise area. The corresponding distribution charge due to Meralco for rendering this service will be reflected in the RES’s monthly bill. Moreover, al l power distri-bution-related concerns—like scheduled and unscheduled inter-ruptions, new service applications for electricity, application for in-creased power requirements and energizing new facilities—will still be coursed by the contestable customers to Meralco.  Presently, there are still ongoing negotiations for prospective partici-pants, the DOE said. The energy chief stated that several meetings and invitations have been scheduled to secure more participants before the end of January.  Petilla is positive that the con-tinued encouragement will lead to the  entrance of more ILP partici-pants. ILP works by calling on busi-ness customers with loads of at least 1 MW to run their own generator sets, if needed, instead of drawing power from the grid.

By Jovee Marie N. dela Cruz

Lawmakers on wednesday said manila water and maynilad should first refund to consumers at least P6 billion they

have collected for unimplemented water and sewerage-improvement projects, along with dam projects, before the implementation of the water-rate adjustment. Party-list reps. Neri Colmenares and Carlos Zarate of Bayan muna, in a news statement, said the metropolitan waterworks and sewerage system-regulatory Office (mwss-rO) should not have approved the rate hike, because the two private water concessionaires have yet to refund the P6 billion to their respective customers. “manila water and maynilad must first refund billions of pesos [they] collected from the public for still unimplemented water projects before [they] could talk about increase water charges. among these projects are the angat water reliability and Laiban Dam projects,” Colmenares said. Colmenares, citing manila water Corpo-rate Communications Head Jeric sevilla, said the 1.33-percent increase in foreign-currency differential adjustment (FCDa) will reflect a water-rate increase of P10 to P20 for resi-dential customers consuming 20 to 30 cubic meters a month. He said the west Zone concessionaire may-nilad will implement a 1.12-percent increase in FCDa. residential customers using 30 cubic meters a month will pay P9 more. He added that the water-cost adjustment has been approved, although consumers have never been given direct access to information into the formula used as basis for the mwss-rO to approve the hike. “They have not given the public the oppor-tunity to challenge the increase. Public informa-tion and consultation are imperative requisites that the mwss-rO, which supposedly serves as the protector of public interest, has totally been denied to the populace,” Colmenares added. Zarate also questioned the justification of the water-rate hike by manila water and maynilad, which took effect last monday. “why should maynilad and manila water pass on to consumers the supposed additional capital they have infused? The consumers have no responsibility to shoulder the capital used by companies or help them recover their losses. That is a risk businesses take, and it should not be passed on to consumers,” he said. moreover, Colmenares said the water-rate hike due FCDa should be shouldered by these water concessionaires. “also, in other businesses, they are the ones who absorb bad business decisions and business risks, like the foreign-currency dif-ferential adjustment and pay their own taxes but these water concessionaires are raking in billions by fooling us. They even pass to

By Cai U. Ordinario

IF the national government will cut bus trips along Edsa’s super corridor from Magallanes to East

Avenue by 20 percent, this would result in a P19.86 billion worth of benefit in a span of only six years. This was among the key findings of the study released by state-owned think tank Philippine Institute for De-velopment Studies (PIDS), titled “Di-agnostic Report on the Bus Transport Sector,” authored by PIDS Supervising Research Specialist Sonny Domingo, Research Fellow II Roehlano Briones and Consultant Debbie Gundaya. By doing so, the authors estimated that this will yield a net present value of P13.2 billion in the medium term, or three years, and P19.86 billion in the long term, or six years. “An effective decongestion policy that will lead to a decrease in bus trips by at least 20 percent within the Edsa super corridor, while still sufficiently servicing existing passenger demands, will yield substantial returns in the me-dium and long term,” the authors said. Based on the results of the study, the authors said the annual cost due to congestion was estimated at P5.51 billion. This is composed of P4.57 billion in foregone wages of passengers and bus operator’s cost of P939.21 million. The authors noted that the cost brought about by congestion is five times higher than the cost on the part of the bus operator. “Results showed that the value of

time wasted due to traffic congestion is immense. Reducing bus trips eases congestion and permits faster travel time on average; buses can also achieve faster turnover, hence, passengers can expect equal availability of bus serv-ice,” the authors said. To ease congestion, the authors said there is a need to limit the number of buses and/or operators in the fran-chised routes. This will allow for more effective monitoring and compliance. Further, they said there is a need to target the totality of vehicles us-ing the routes, particularly private automobiles that constitute the bigger number of road users. The authors also stressed that maximizing the benefits of these measures require proper and strict enforcement of these policy chang-es, as well as existing traffic and transport policy, particularly on franchise agreements. The study stressed that in the 1992 liberalization policy for the trans-port sector, there is a moratorium on franchise issuance as indicated in the 2000 to 2003 directives; a 15-year age requirement for vehicles; and the regulated fare-setting for all public-utility vehicles. “Industry accommodations have allowed new operators to bypass the moratorium directive, while selective enforcement [or non enforcement in this case] has allowed older buses to service the public,” the study stated. The study stated that Metro Manila is inhabited by around 12 million peo-ple at 191 persons per hectare.

Without waiting for the full re-port of the panel investigating the mayhem involving Cebu Pacific, the Cabinet official concluded that the airline violated provisions of the law and the rights of its passengers.  “The old Civil Aeronautics Act, signed way back in the 1950s, pro-vides for a P5,000 fine for every viola-tion that an airline commits,” he said. “But nowadays, P5,000 is something that they will just laugh at.” The transport chief was referring to Republic Act 776 of 1952, which outlines the rules and regulations in the country’s commercial avia-tion industry.  “There is a need to amend the law. Definitely P5,000 for a  mul-

tibillion-peso airline industry is nothing. I’m sure congressmen are hearing this,” he said. “The P5,000 fine is something ‘dispro-porationate’ to the inconvenience our passengers experienced.” Moreover, the amount, according to an airport official, was equivalent to buying two new vehicles when it was passed.  “It is very outdated,” the of-ficial, who requested anonymity, commented.  The law, however, demands that the fines be paid to the government, not to the passengers.  Cebu Pacific is currently under government scrutiny after it caused chaos at the Ninoy Aquino Interna-

news@businessmirror.com.ph Editor: Dionisio L. Pelayo • Thursday, January 8, 2015 A5BusinessMirrorEconomy

tional Airport (Naia) Terminal 3 during the Christmas rush.  Initial data submitted by the airline to the panel last December 29 showed that the carrier posted a total of 20 canceled flights and 288 delayed flights at the Naia 3 from December 24 to 26. Cebu Pacific, in an earlier state-ment, said the delays and the dislo-cation of a large volume of passen-gers were caused by air-traffic con-gestion, coupled with the weather condition on the 24th of December, resulting in a spillover of traffic to the next day. The fiasco, it added, was also fueled by the large number of ab-sentee check-in personnel that resulted in the delayed processing of passengers. The  Civil Aeronautics Board (CAB), the Manila International Airport Authority (Miaa) and the Civil Aviation Authority of the Phil-ippines (Caap) are jointly investigat-ing the issue.  The Gokongwei-led carrier has submitted all pertinent data that the three agencies need to come up with an intelligent conclusion and recommendation.  It is expected to be resolved before this month ends. 

Aside from government fines, Cebu Pacific passengers, under the Air Passenger Bill of Rights, are entitled to compensation depend-ing on the gravity of the airline’s shortcoming.  The dominant budget carrier of-fers flights to 28 international des-tinations, namely, Bali, Bangkok, Beijing, Brunei Darussalam, Busan, Dammam, Dubai, Guangzhou, Hanoi, Ho Chi Minh, Hong Kong, Incheon (Seoul), Jakarta, Kota Kinabalu, Kuala Lumpur, Kuwait, Macau, Na-goya, Narita, Osaka, Phuket, Riyadh, Shanghai, Siem Reap, Singapore, Syd-ney, Taipei and Xiamen. It also operates the most extensive airline network in the Philippines, with 55 routes and 44 destinations. The airline’s 52-strong fleet is comprised of 10 Airbus A319, 29 Airbus A320, five Airbus A330 and eight ATR-72 500 aircraft. Between 2015 and 2021, Cebu Pacific will take delivery of nine more brand-new Air-bus A320, 30 Airbus A321neo and one Airbus A330 aircraft. The fiasco has caused Cebu Pa-cific shares to fall by 3 percent to P84.25 apiece  on Wednesday. It has been at the downward trend since  the stock market reopened after the holidays. 

After holidAy-rush mAyhem At NAiA 3 lAst moNth iNvolviNg locAl budget cArrier

Abaya asks Congress to amend laws on commercial aviation

By Lorenz S. Marasigan

TRANSPORTATION Secretary Joseph Emilio A. Abaya admitted that laws on commercial civil

aviation are already antiquated, urging Congress to amend such regulations in light of the recent fiasco at the third terminal in Manila. 

PIDS: Cut on Edsa bus trips to yield P19.86B in 6 years

Petilla says energy dept’s ILP continues to draw more participants

consumers losses due to changes in foreign- exchange rates,” Colmenares said. He added that since the privatization of water utilities in 1997, maynilad and manila water have increased the water rates by 600 percent. “This shows that privatization is wrong and the practice of automatic pass-through of forex losses should not be allowed by the government,” he said. Colmenares also hit the practice of manila water and maynilad of passing their income taxes, value-added tax, documentation stamps and other taxes to consumers. Quoting the advo-cacy group water for the People Network (wPN), he said the practice has been going on for seven years, and now amounts to at least P15 billion. The lawmaker already filed House resolution 39 to investigate the said practice “so that this will be stopped and not happen again.” “From the investigation we will produce a law that will prohibit this practice of only allow-ing profit-hungry businesses to serve as public utilities,” he added. Junk concession agreement THe wPN, meanwhile, urged the aquino ad-ministration and policymakers to terminate the concession agreement (Ca) with private water

concessionaires maynilad and manila water. The group reiterated this call, after the arbitration panel ruled in favor of maynilad and granted an increase in its basic charge. The advocacy group, in a news statement, said the concession agreement goes against public interest, as blatantly shown by the arbi-tration process. Under the Ca, the two private water giants will resort to arbitration to settle disputes with the metropolitan waterworks and sewerage system (mwss) that cannot be resolved through negotiation. But arbitra-tion shows how water privatization favors the two water concessionaires, which have been found illegally passing on dubious and onerous charges, such as corporate income-tax costs, advertising and donations, etc. That consumers will shoulder the expendi-tures related to the arbitration process highlights further the fundamentally flawed concession agreement. The group said that the contract was drafted to make sure that water rates are regularly adjusted to guarantee the profits of the two private firms, as well as the repayment of loans incurred by the mwss privatization. aside from the rate rebasing every five years, the ba-sic charge is also adjusted to include inflation adjustments, extraordinary price adjustment

and environmental charges, etc. Consumers are also being double-charged for currency fluctuations through the FCDa and the currency exchange-rate adjustment (Cera), which is incorporated in the basic charge of manila water and now in maynilad. The FCDa and the Cera are among mechanisms meant to protect the water concessionaires from losses brought about by forex fluctuations that could bloat their loans. according to the wPN, the Ca has practi-cally eliminated effective public control and regulation over water service: it is overly pro-concessionaire, allows overbilling and under-servicing, while guarantees profits for manila water and maynilad. Proposing amendments to the Ca, as was done in the past, is no longer viable, and demands the immediate termination of the agreement. The group reiterated that this latest blow to water consumers affirms that the Ca and privatization are detrimental to public welfare and interest. water rates will never be just and reasonable under privatization and terminating the Ca is a step toward resolving unjust water rates. The advocacy network urges policy-makers to rescind the concession agreement and start reversing mwss privatization.

‘refund P6-billion collection from consumers before water-rate adjustment’

coiN purse sAle An enterprising elderly man peddles bundles of colorful fish-shaped leather coin purses for P35 a piece to tourists and passersby around the vicinity of Fort Santiago in Manila on Wednesday. rOy DOmiNgO

Thursday, January 8, 2015

OpinionBusinessMirrorA6

The new global fairy godmother?

editorial

You can count on China’s decades-long shore up of funds to carve out for Beijing pockets as deep as the Marianas Trench. This is, in fact, sine qua non if we were to understand what the People’s

Republic of China (PRoC) is up to as regards its bailout of Russia.

First, the question: Why Russia? And why the recent aid to Venezuela and Argentina? Is China really in the thick of jump-starting floundering econo-mies? or is it, by all intents and purposes, simply raking in loyalties for the all-important quid pro quo: China’s help for a floundering country’s support?

Experts believe that the PRoC is on the verge of a major buildup plan. And as in any attempt at bolstering China’s sociopolitical grip in the world, the legal tender will have to play a crucial role. The question, “What’s in it for China” takes on a new meaning here. Many believe it’s the beginning of a new world order, where the former sleeping dragon had just finished its second mug of coffee.

Besides, with few strings attached when compared with the International Monetary Fund’s (IMF) loan conditions, one can be starkly sure countries will queue up for China’s dole-outs, leaving the IMF, the World Bank or the Asian Development Bank bereft of clientele.

If recent news were to be any indication of China’s motives, then we have our answers. Everything, from the craving for more oil to current territorial disputes, would play a part in this money game. A significant bailout plan offered by China could spur a condition that would force the floundering economy to rethink its stance on the disputes, giving China the nod. This could tip the balance of power anywhere in the world.

Things can only get worse as China tries to pull off a “fairy godmother” sce-nario on a global scale. Years 2011 and 2012 saw Europe fawning over Beijing, as the latter rescued its euro-bond markets. As such, experts fear European leaders might pull back their punches when it comes to who gets the credit as far as territorial disputes are concerned.

Experts are at the edge of their seats. China’s financial support for rogue governments, like Zimbabwe and Sudan, could make matters worse. With China pulling a quick one over the united States as the current topnotcher in the global economy, what is stopping China from funding rogue militant gov-ernment just to keep its place? As most economies suffer strained relationships with the uS, it’s a reality the world would have to deal with sooner or later.

Here comes another Cold War, with a threat ratio built on economic sur-vival. China is in need of nations that will backstop its claims, and it will pay good money to get it. The problem with China’s current blueprint for power, however, is that it needs to shore up more funds for more countries as the years progress. This could put China’s own economy in a bind if it’s not careful. But then again, the uS owes the PRoC $1.15 trillion in bonds.

But will this be enough to sustain its plans? It’s one thing to build an economy, quite another to build a new world order.

THE Philippines is an unusual country with an unusual history.Located in Asia, the Philippines was “Westernized” long

before our neighbors. The united States strongly supported Cuban revolutionaries in their struggle to gain independence from Spain while killing Filipinos who desired the same independence.

FoR China and India, 2015 should be a pivotal year. Both Chinese President Xi Jinping and Indian Prime Minister Narendra Modi have for months been making grand

pronouncements about structural change, while moving only timidly to fulfill them. With oil dropping below $50 a barrel, some of the urgency to implement those painful reforms is sure to fade away. So, too, however, will the excuses for not acting.

PHL: The country they love to hate

Cheap oil is rich opportunity for Asia

But it is not just the Americans who have a history of strange rela-tions with the Philippines. When the Spaniards reached the island of Luzon in 1571, they found Japanese colonies and settlements in Manila and in other parts of the island. In the early 20th century, the area around Davao City was called Ko Nippon Koku, or “Little Japan” in Japanese. Yet, the Japanese showed incred-ible cruelty when they might have otherwise been accepted by many as liberators during World War II.

But the most unusual thing about the Philippines, in the minds of many commentators, is that the country has been able to thrive and succeed at all.

Last week I wrote in this column:

“In the last few years, no matter what the result from the global economic coin toss, it has been, ‘Heads, PHL wins; Tails, PHL still wins.’” Many responses were that it was foolish on my part to be “bullish” or optimistic about the future of this economy. “Look at how badly the Philippines ranks in doing business compared to the rest of the world” one e-mail stated. True, the Philippines gets a lot of bad press. But, interestingly, no one ever talks about the high profit-ability of Filipino companies.

Most negative analysis about the Philippine economy is based on com-parisons with other nations. What I find is that many local Filipino eco-nomic bashers are really ignorant of the other nations they compare

the Philippines to. The foreign com-mentators, on the other hand, are ignorant about the way the Philip-pines functions, and their compari-sons are faulty also.

We have been hearing about a “bubble” in Philippine property for years, how prices are going up too high and too fast. I challenge you to find one article or opinion that does not cite rents and sales prices in either Bonifacio Global City or the Central Business District of Makati. That is usually the data used by the foreigners.

Where is the data for Bacolod City or Cagayan de oro City to support an overbuilding or too high prices bubble? Even in the National Capital Region, the vast majority of housing was built decade ago and as personal wealth grows, so too has the need for modern housing.

one Filipino commentator has been harping on the fact that there is a bubble in shopping malls. He bases some of his analysis on the uS, which has seen literally hundreds of these malls fail and close.

Henry Sy went from the “Dumb-est man in the Philippines” when he built SM City North Edsa in 1985 to the “Richest Man in the Philippines” with his company’s 50 malls. How can you compare the Philippines

with the uS? For example, the Philippines has a young and grow-ing population. The uS is growing older. The uS has virtually run out of cheap, underutilized land, which made the 1960’s mall boom viable.

The new SM City BF Parañaque replaced a bunch of wooden buildings housing auto repair shops, carinderia and junk shops that sat on Sucat Road (Dr. A. Santos Avenue) for decades. That mall is not the sign of a bubble; it is a sign of progress in a growing economy.

If Filipinos had listened to all the detractors during the last 25 years, the Pacific Star Building in Makati City would still be the tallest in the nation and much of the metropolitan areas of the nation would be empty, unproductive space.

We shouldn’t listen to the detrac-tors. Believe your own eyes about the overall positive economic situation. Maybe a line from the recent movie The Interview sums it up best: “They hate us because they ain’t us.”

Send me an e-mail to mangun@gmail.com. Visit my website at www.mangunonmarkets.com. Follow me on Twitter at @mangunonmarkets. PSE stock-market information and technical analysis tools provided by the COL Financial Group Inc.

Across Asia, the lowest crude prices since 2009 are an almost un-mitigated boon. Already, they’ve given Indonesia and Malaysia room to curb budget-busting fuel subsidies (although Malaysia, an energy ex-porter, will suffer from a drop in oil revenues). In Japan, the Philippines, Singapore, South Korea, Taiwan and Thailand, sliding energy costs stand to boost disposable incomes, house-hold demand and corporate profits. Economist Glenn Maguire at Austra-lia & New Zealand Banking Group thinks this “confidence multiplier” will lead to higher-than-expected growth. The drop in oil prices so far could add as much as 1 percentage point to global output. “We think

this will be the defining, construc-tive dynamic that underpins Asian growth in 2015 and most probably 2016,” Maguire says.

As India’s Modi prepares to un-veil his first full budget in Febru-ary, he could hardly ask for a fairer tailwind. In the short run, says Pe-ter Redward, principal at Redward Associates, oil trends will lead to a “massive improvement” in India’s current-account deficit, repair the government’s balance sheet and re-strain inflation, which should allow the central bank to cut rates.

Whether the pickup in growth can be sustained will depend on how bold Modi chooses to be next year. The Indian prime minister wisely

slashed diesel subsidies when oil prices dropped, easing the hit con-sumers felt at the pump. But that was the easy part; it’ll be tougher to cut subsidies on liquefied petro-leum gas and kerosene, which mil-lions of Indians use for cooking. Together with diesel, subsidies for those two fuels cost the govern-ment $11 billion in the last fiscal year. Likewise, Modi will have to spend considerable political capital to abandon discounts on fertilizer. Without such cuts, it’ll be difficult to free up space for more productive fiscal spending on infrastructure, education and health care.

Nor can Modi afford to delay supply-side reforms. In addition to lower fuel bills, 2015 will feature a light election calendar: only two of India’s 29 states will hold contests. This could well be the prime min-ister’s best chance to push through politically difficult measures, such as allowing foreigners to hold majority stakes in key domestic sectors.

For its part, despite lower en-ergy bills, China is worried about faltering growth: That’s at least part of the reason the government just accelerated 300 new infrastruc-ture projects worth more than $1.1 trillion. Still, like Modi, Xi would be wise to avoid short-term thinking. Falling oil prices risk derailing mo-mentum in both countries to reduce

their carbon footprints. Cheaper oil “should not be an excuse to slow or stall alternative-energy and energy-efficiency policies,” Maguire says. “Medium- to longer-term demo-graphic and population pressures will still require Asia to de-carbon-ize growth and forge radical new paths in energy efficiency over the longer term.”

As Rajiv Biswas of IHS Global Insight points out, lower oil costs should make it easier for China’s central bank to cut interest rates and offer relief for hard-pressed borrow-ers. Xi needs to exploit those relaxed monetary conditions to rein in state-owned enterprises as he’s promised to do. only by shifting the economy away from inefficient smokestack in-dustries, and unleashing the animal spirits in China’s more productive private sector, will Xi be able to set the economy on a truly sustainable growth path.

China already counts as a “grand winner,” says Kenneth Courtis, for-mer Asia vice chairman at Goldman Sachs, as a shrinking fuel bill has allowed the country to build up its strategic energy reserves. But cheap-er oil on its own won’t eliminate the structural challenges facing Asia’s biggest economy. Both Xi and Modi have been presented with an oppor-tunity only; the burden remains on them to grasp it.

HOM

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OUTSIDE THE BOXJohn Mangun

BLOOMBERG VIEWWilliam Pesek

Thursday, January 8, 2015

OpinionA7BusinessMirroropinion@businessmirror.com.ph

The Beloved Son

THE Lord is mighty and blesses His people with peace (Psalm 29:1–2, 3-4, 3, 9–10). His beloved Son Jesus comes anointed with the Spirit, to baptize us with the Holy Spirit

(Mark 1:7–11).

God blesses His people with peacePsalM 29 is a hymn of praise extol-ling God as the sovereign over the heavens and the earth. The heavenly beings in the celestial assembly are commanded to acclaim the glory and might of God. These “sons of God” are charged to pay homage to God and give to God the glory due to His name. God’s name embodies His di-vine power: the wondrous name of God must be revered both in heaven and on earth—the people of Israel were forbidden to pronounce the divine name.

God’s sovereignty is manifested also in His power over the forces of nature: the Lord’s voice ruling and thundering over the waters. Echo-ing probably a Canaanite hymn to the storm-god, Baal, the mighty and majestic voice of God is pictured as quelling the forces of chaos, the vast and ruthless water. The God of glory sits triumphantly enthroned above the flood. As in the ancient account of creation, the voice of God

is splendidly powerful and creative (Genesis 1:1–2:4). And this divine power is further manifested in the flood and in His promise that the world would not be destroyed again in this way (Genesis 7:17; 9:15). The scene closes with the heavenly as-sembly praising God with a joyous acclamation “Glory!” because God reigns forever as king of heaven and earth, after the flood blessing His people with peace.

The spirit descended upon HimTHE narration about the baptism of Jesus by John at the Jordan says nothing as to what John did. The focus is on Jesus coming up out of the water, a sign of the new cre-ation, a theophany revealing God’s might and glory. Jesus himself saw the heavens being torn open as if giving birth. And the Spirit of God descended upon Him like a dove, recalling the dove at the end of the flood and the triumph of divine mer-cy and compassion, the beginning

of peace on earth. The return of the Spirit makes manifest God’s reign in the very person of the one anointed like the prophets of old (Isaiah 61:1).

And God’s mighty and majes-tic voice addressed Jesus, “You are My beloved Son; with You I am well pleased.” The heavens acknowledged the royal aspect of Jesus’ person (Psalm 2:7) and messianic mission, just as kings were believed to possess divine dimensions. But the address recalls, too, the description of the servant of the Lord: “Here is my ser-vant whom I uphold, my chosen one with whom I am pleased, upon whom I have put my spirit; he shall bring forth justice to the nations” (Isaiah 42:1). The servant driven by God’s Spirit is finally at hand, pleasing to God because very much like another “beloved son,” Isaac, to be offered as a holocaust on a height (Genesis 22:2). In the revelation of Jesus as God’s anointed one is included from the beginning the specter of death and sacrifice.

He will baptize with the Holy SpiritJESuS baptism by John was not in-tended to lead Jesus to repentance for sins as it did to others, but was simply the occasion for the revelation of the ultimate victory over sin through the reign of God in Jesus Christ. John prepared the people for Jesus by his message that “one mightier than I is coming after me.” John admitted he was not even worthy to perform the menial task of loosening the strap of his sandal. Glorifying Jesus, not just

demeaning himself, he told the peo-ple plainly that his baptism was only with water while Jesus “will baptize you with the Holy Spirit.”

The water of baptism, as in all ritual washings, has the inner sym-bolism of cleansing and rebirth. It harks back to the primordial coming of life and the victory over chaos as in the first creation. John’s baptism simply underlined the need for re-pentance and rebirth from sin. He pointed to the baptism in the name of Jesus that will really bring new life and signal the eschatological time of fulfillment because it will be a baptism with the Holy Spirit, with water empowered by the Spirit of God. God promised His people: “I will sprinkle clean water upon you to cleanse you from all your impurities...I will give you a new heart and place a new spirit within you” (Ezekiel 36:25–26).

Alálaongbagá, if in the psalm the “sons of God” are commanded to praise God, in the gospel God praises His beloved Son. The psalmist sees God’s glory revealed in God’s mighty name; the gospel account presents Jesus, God’s Son, as the revelation of God’s glory in salvation history, and the baptism with the Holy Spirit as ultimate recreation of humankind in peace and in divine mercy.

Join me in meditating on the Word of God every sunday, 5 to 6 a.m. on DWIZ 882, or by audio-streaming on www.dwiz882.com.

AlálAong BAgáMsgr. Sabino A. Vengco Jr.

Recession’s lost generations: Long shadow of a long slumpBy Mike Dorning

Bloomberg View

THE worst global economic slump since the Great Depression is ending and things are looking up. But for some, the recession’s toll will last for decades. Chief among them are the young

adults who had the bad luck to come of age in hard times—and are on track to be this downturn’s lost generation. History shows they’re unlikely to fully recover from the chances they’ve missed: career-launching first jobs, early promotions, quick raises, strategic leaps from one employer to another. Those who graduated from college into the teeth of the 1981-1982 uS recession languished behind their peers long after the economy rebounded, with lower earnings and less prestigious jobs even in middle age. Lost generations span the globe from Europe, where the longest-ever slump left almost a quarter of young people out of work, to the Middle East, where the prospects of the young remain blighted even after Arab Spring uprisings fueled by their frustration.

Application for qualification and accreditation of Pera participants and investment products

The situationIN the hard-hit southern tier of the European union, youth unemploy-ment hit highs of more than 50 per-cent in Spain and close to 60 percent in Greece, and by some estimates is worse than in the Great Depression. In the uS, unemployment in early 2014 among 20- to 24-year-olds was still about double the national rate, and for black youths it ranged up to 19.7 percent. Not only the unem-ployed are being hurt: In 2012 and 2013 only 44 percent of young uS col-lege graduates held jobs commensu-rate with their education—meaning they were pushing less-skilled work-ers down the ladder or into unem-ployment. The natural churn in the labor market also has been unusually slow for more than five years, with fewer people quitting jobs and fewer

new hires, reducing the chances for job-hopping that is a key avenue to early career advancement.

The backgroundNO one ever thought recessions were a great time to find a first job. But re-cent research shows that the damage to career trajectory is surprisingly long lasting. Even 17 years later, members of classes that completed college in the uS during the 1981-1982 recession earned an average of 10 percent less than colleagues who got their starts in boom times, and fewer of them held professional or prestigious jobs. By then, the cumula-tive cost of a poorly timed graduation already had exceeded $100,000 on average. The impact on earnings of Stanford Business School graduates was found to persist at least 20 years.

Following 20 graduating classes of Canadian college students across two recessions showed that the big-gest contributor to the lag was initial jobs that offered poor positioning on career and salary ladders. Lower-skill college graduates have a particularly hard time making up lost ground, even when the economy booms. An-other study of Japanese workers also found persistent effects on those who start work during a recession.

The argumentEuROPE’S leaders have called youth unemployment a catastrophe for the continent. France and Germany unveiled a proposal last year to put young people to work by spurring business lending that they compared to the uS’s New Deal of the 1930s. The plan was criticized as a token ef-fort with little new money behind it, although Germany’s call for others to adopt its successful apprentice-

ship system generated wide interest, if little action. In the uS, as well as Europe, calls for increased spending on jobs programs have been blocked by opposition to deficits by con-servatives who argued that today’s young people would be the taxpayers stuck with the bill later. Diminished prospects for the young in southern Europe haven’t translated into large-scale political movements. In 2011 youths took to the streets in Spain and Greece, but those protests faded as the worst of the crisis passed. Emi-gration, particularly within the open borders of the Eu, may be providing a safety valve for social pressure, while in the uS, more young people may be staying in school till growth returns. In the Middle East, new leaders in countries like Tunisia and Egypt are struggling to live up to the expecta-tions of unemployed youths whose anger brought down governments across the region in 2011.

WHAT if I told you that Is-lam once produced the world’s most scientifically

advanced and intellectually produc-tive civilization?

It’s true, and you’ll probably hear more about it, this being 2015, the united Nations International Year of Light and Light-based Technologies, in which Islamic science will be showcased.

Many Americans might find far-fetched the idea that Islam spawned the most advanced and sophisticated civili-zation of its time—especially now that some Islamic sects slaughter thousands of innocents in their bloody campaign to spread tyrannical Sharia law.

Yet Islam’s Golden Age, extend-ing from the 7th century to the 13th century, flourished while Europe and Christendom wallowed in the Dark

Ages. Western society was considered a backwater, if considered at all.

Islam generated impressive ad-vances in medicine, chemistry, physics, mathematics, astronomy, optics and philosophy. It created cities, observa-tories and libraries, and it engaged in far-flung commerce well before Chris-topher Columbus set sail.

Credit Islamic genius for the mag-netic compass and navigational innova-tion, for algebra and the refinement of the numbering system that originated in India, for papermaking and the sci-entific method. While Greek and Roman learning faded in the medieval West, Islamic scholars were preserving and enlarging it—long before the European Renaissance or Age of Enlightenment.

All this and more will be spotlighted during the International Year, which

will open on January 19 at the united Nations Educational, Scientific and Cul-tural Organization headquarters in Paris and will aim to raise awareness of light science and its importance to mankind.

And by doing that, it necessarily will have to highlight Islamic achieve-ments. For example, the opening event will focus on the multiple accomplish-ments of the 11th-century polymath Ibn al-Haytham in optics, mathemat-ics and astronomy. The Golden Age will get more attention on September 14 during a conference on its impact on “knowledge-based society.”

So what went wrong? How did Is-lamic society fall from one so open and inquisitive to the repressive and closed one that has produced few scientific advances and staggering intolerance?

Historians have offered complex and

conflicting explanations that seem to fall along two lines: a) It’s our fault. Or, b) it’s their fault.

“Our” being the Christian, degener-ate Western democracies: Our coloniza-tion and partition of the Middle East into nations of our own design. Our corruption of Islamic values.

But that happened well after the Golden Age began its decline. If any-thing, Islam needs to look to itself for the present state of disarray and violence. I’m no Islamic scholar, but a number of historical accounts indicate that the decline was the result of an internal conflict.

One branch of Islam valued inquiry and rationalism.

As a backlash, the other figured that the word of God needed no embellish-ment of the type that science, philoso-

phy and other disciplines would bring.Guess which one dominated?The view that God was not the

watchmaker who created and then stepped back and watched mankind run its course. God, instead, controls everything, from each flap of a mon-arch butterfly’s wings to world wars. God wills each and every act, good or, in the case of applying vengeance, bad.

Reason, on the other hand, leads us to question and to seek other causes, other explanations—a heresy when dogma decrees that God is the one and only cause.

Never mind the contradiction im-plied: if God controls everything, hu-mankind has no free will, and thus can-not be held accountable for its actions. And the bad stuff that God inflicts on mankind makes no sense.

Aside from such theological puzzle-ments, a culture inspired by centuries of this thinking can only be stultifying and headed downhill.

Not that Western societies haven’t had their own problems with the Gali-leos and other rationalists who crossed swords with the given wisdom. But somehow, reason and faith became sep-arate paths in Western society, leading to the rich vein of invention, discovery and, most of all, the freedom that mark a workable, advanced culture.

Reason and faith can live side-by-side, as Western society has proved. But it’s not always easy. Fanatics on both sides can be found wanting to stomp out the other. It’s a danger to keep in mind in the Year of Light as the uN trumpets the achievements of a society that long ago strangled itself. Chicago Tribune/TNS

TAx lAw for BuSineSSAtty. esther M. weigand

What happened to Islam?

uNDER Republic Act (RA) 9505, otherwise known as the Personal Equity and Retirement Account [Pera] Act of 2008,” individuals are allowed to set up Pera, which are voluntary retirement accounts

established by and for their exclusive use and benefit, for the purpose of being invested solely in Pera investment products in the Philippines. In order to further the state’s policy of promoting savings mobilization and capital market development, the government, through the Bureau of Internal Revenue (BIR) and the Bangko Sentral ng Pilipinas (BSP), has issued the pertinent guidelines to further implement the said law.

under the Pera Act of 2008, contri-butions to Pera accounts, as well as the income and distributions therefrom, are granted certain tax incentives and privileges. To fully implement such tax incentives and privileges, the BIR issued Revenue Regulations (RR) 17-2011 on October 27, 2011.

Likewise, the BSP, on November 28, 2014, issued BSP Circular 860, series of 2014, which provides the guidelines on the qualification and accreditation requirements of Pera market partici-pants and Pera investment products. Such circular was issued pursuant to the provisions of the Pera Act of 2008, which provides that the BSP is the lead agency in establishing the rules and regulations pertaining to qualification and disqualification standards for Pera market participants, including their di-rectors and officers, and qualified and/or eligible Pera investment products, among others.

under the said BSP circular, the Pera investment products, considered as eli-gible Pera investment products are unit investment trust funds (uITFs), debt instruments such as long-term nego-tiable certificates of deposit, and unse-cured subordinated debt, deposits and government-issued securities. Other investment products may be allowed by the BSP, provided that they are non-speculative, readily marketable and with a track record of regular income pay-ments to investors.

It must be noted that not just any en-tity or person may participate in the Pera market. under the above-mentioned BSP circular, Pera market participants, which are the administrators, investment man-agers and custodians, must first be con-sidered as BSP-eligible, and are required to file their applications for qualification or accreditation with the BSP. An adminis-trator is an entity responsible for oversee-ing the Pera, and only banks, trust entities and other entities determined by the BSP as eligible to act as such, are qualified to be Pera administrators. Such administrators are required to hold eligible government securities, as security for the faithful per-formance of their duties under the Pera Act of 2008, equivalent to 1 percent of the book value of the total volume of Pera assets administered by it, earmarked in favor of the BSP. It must be noted that Pera administrators merely apply for qualifica-tion with the BSP, as those who are able to satisfy all the requirements therefore will be issued by the BSP a “Qualification Certificate”, and thereafter, they are still required to file another application with the Pera Processing Office of the BIR in order to complete their application for accreditation.

An investment manager is a regulated person or entity authorized by an indi-vidual to make investment decisions for

his Pera account. Trust entities and other entities determined by the BSP as having the qualifications to be accredited as Pera investment managers are eligible to ap-ply for accreditation. They are required to have at least five years’ experience in professional investment management, and unlike administrators, they need not complete their application for ac-creditation by filing another application with the BIR.

Last, Custodians may either be cash custodians or securities custodians, and are separate and distinct entities unre-lated to the administrator, accredited by the BSP, providing services in connection with the custodianship of funds and securities comprising the Pera invest-ments. Only banks are eligible to be cash custodians, while banks and trust enti-ties with trust licenses are eligible to be securities custodians. Just like invest-ment managers, they need not complete their application for accreditation by filing another application with the BIR.

These eligible entities seeking quali-fication or accreditation as Pera market participants shall file their applications for qualification or accreditation with the appropriate department of the Su-pervision and Examination Sector of the BSP, signed by their CEOs. These applications shall be accompanied by the following documents:

1. Certified true copy of the resolu-tion of their board of directors authoriz-ing the application;

2. Certification signed by their CEOs stating that they have complied with all relevant requirements, and an undertaking to comply with the said requirements while they act as Pera market participant; and

3. Relevant Pera forms, board-approved policies on fees and charges, and, if they wish to become Pera admin-istrators, they must provide proof that they have sufficient personnel who have undergone training prescribed by the BSP to educate individuals on the nature of Pera, the privileges, conditions and requirements thereof, its risks and benefits, and the respec-tive roles of the different Pera market participants.

The author is a junior associate of Du-Baladad and associates law Offices (BDB law), a member-firm of World Tax services (WTs) alliance. The article is for general information only and is not intended, nor should be construed as a substitute for tax, legal or financial advice on any specific mat-ter. applicability of this article to any actual or particular tax or legal issue should be sup-ported therefore by a professional study or advice. If you have any comments or ques-tions concerning the article, you may e-mail the author at esther.weigand@bdblaw.com.ph or call 403-2001 local 340. sources: U.s. Bureau of labor statistics, Eurostat

By Lenie Lectura

Customers of the manila electric Co. (meralco) will enjoy lower elec-tricity bills this month—about a P38

drop for those with a 200-per-kilowatt-hour (kWh) monthly consumption—following a decrease in generation charge, the largest component of the bill. the utility firm said on Wednesday power rates will go down by P0.19 per kWh.  this is the third straight month that meralco rates have gone down. A meralco bill is made up of many charges. Generation charge, or the portion of the bill that goes to the generation companies or power producers, has further decreased by P0.22 centavos, from P4.94 last Decem-ber to P4.72 this January.  this is the lowest generation charge in 15 months. the reduction in the generation charge was mainly driven by lower charges from

the huge drop was again credited to lack of substantial power projects. According to investment-approvals data released by the BoI, fresh foreign investments

totaled P36.85 billion in 2014, a plunge of 69.42 percent from the P120 billion estimated in 2013.  the P120-billion haul in 2013 was comprised mainly of the British Virgin Islands’ (BVI)

By Catherine N. Pillas

New projects committed by foreign firms that were approved by the

Board of Investments (BOI) dropped by 69 percent in 2014, data from the investment- promotion agency showed.

Need to raiseinterest ratesdiminished onlow inflation

By Bianca Cuaresma

the Bangko sentral ng Pilipinas (BsP) is not under any pressure to make mon-etary-policy changes over the next 12

months, according to the university of Asia and the Pacific (uA&P). At the sidelines of the biannual tie-up Philippine economic Briefing, hosted jointly by First Pacific metro Investment Corp. (FmIC) and the uA&P, FmIC senior Vice President reynaldo B. montalbo Jr. said manageable inflation and foreign fund inflows should help temper the need for the BsP to scale up the rate at which it borrows from or lends to banks soon. Various banks, financial institutions and their analysts were of the view the BsP was likely to announce an adjustment in policy rates, either around midyear or toward year-end, as direct consequence of an expected monetary-policy adjustments by the us Federal reserve (the Fed). however, montalbo said the urgency for the BsP to hike rates has diminished. “there is less pressure for the BsP to change the policy rates. Last year the policy rate was too high, and the market’s was low. so, toward the end of the year, the two rates have intersected. so, I think, with policy rates almost at par with markets’, there is really no pressure from the BsP to change the policy rates,” montalbo said. While the FmIC executive acknowledged the anticipated hike in us interest rates as part of its recovery and monetary-policy nor-malization, montalbo said the current policy settings in the Philippines are considered ap-propriate, even with the anticipated adjust-ments of us rates.  “the only other pressure would probably be a Fed policy-rate increase, but we were discussing that even if the Fed increases the rate, the policy rate is different from the market rate. the market rate will still be driven by demand, and, I think, the mere fact that everybody is moving and flocking to the us, will temper any policy-rate hike by the Fed; and, with that, I think the BsP will also not be pressured to follow suit,” montalbo said.  “Adding to that is the low inflation. Last year their focus really was inflation. But now that inflation has gone below 3 percent, I don’t think they have pressure. even if the Fed increases the rate by 12.5 to 25 basis points, I think, there is less pressure on the part of the BsP,” he added. earlier this week following the latest in- flation data from the Philippine statistics Authority, BsP Governor Amando m. tetang-co Jr. said manageable inflation over the policy horizon gave policy-makers some “scope to focus on maintaining supportive conditions for domestic demand.”  the seven-man policy-making monetary Board will meet on February 6 to make neces-sary adjustments—if any—to the country’s current monetary-policy stance. this will be its first meeting for the year.  At present, repurchase or lending rate stands at 6 percent, while reverse repurchase or borrowing rate is at 4 percent. the special deposits account interest rate, meanwhile, is set at 2.5 percent. 

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Thursday, January 8, 2015

BOI-approved foreigninvestments down 69%

OIL NEARING $40 MEANS BOONFOR SOME, BANE FOR OTHERSthe plummeting price of oil means

no more trout ice cream.Coromoto, a parlor in merida, Ven-

ezuela, famous for its 900 flavors, closed during its busiest season in November because of a milk shortage caused by the country’s 64-percent inflation rate, the world’s fastest. that’s the plight of an oil-producing nation. At the same time, consum-ing countries like the us are taking advantage. trucks, which burn more gasoline, outsold cars in December by the most since 2005, according to data from Ward’s Automotive Group. the biggest collapse in energy prices since the 2008 global recession is shift-ing wealth and power from autocratic petro-states to industrialized consum-ers, which could make the world safer, according to a Berenberg Bank AG re-port. surging us shale supply, weak-ening Asian and european demand, and a stronger dollar are pushing oil past threshold after threshold to a five- and-half-year low, with a dip below $40 a barrel “not out of the question,” said rob haworth, a seattle-based se-nior investment strategist at us Bank Wealth management, which oversees about $120 billion. “oil prices are the big story for 2015,” said Kenneth rogoff, a harvard university economics professor. “they are a once-in-a-generation shock, and will have huge reverberations.”

Weak pricesBreNt crude, the international bench-mark, fell as low as $50.52 a barrel on tuesday, the lowest since April 2009. Prices dropped 48 percent in 2014, after three years of the highest average prices in history. West texas Intermediate, the us benchmark, plunged to $47.93 on tuesday, a 55-percent decline from its June high. “We see prices remaining weak for the whole of the first half” of 2015, said Gareth Lewis-Davies, an analyst at BNP Paribas in London. If the price falls past

$39 a barrel, we could see it go as low as $30 a barrel, said Walter Zimmerman, chief technical strategist for united-Icap in Jersey City, New Jersey, who projected the 2014 drop. “Where prices bottom will be based on an emotional decision,” Zimmerman said. “It won’t be based on the supply- de-mand fundamentals, so it’s guaranteed to be overdone to the downside.” the biggest winner would be the Phil-ippines, whose economic growth would accelerate to 7.6 percent on average over the next two years if oil fell to $40, while russia would contract 2.5 percent over the same period, according to an oxford economics Ltd.’s December analysis of 45 national economies.

Inflation outlookAmoNG advanced economies, hong Kong is the biggest winner, while saudi Arabia, russia and the united Arab emirates fare the worst, according to oxford economics. one concern of central bankers is the effect of falling oil prices on inflation. If crude remains below $60 per barrel this quarter, global inflation will reach levels not seen since the worldwide recession ended in 2009, according to JP morgan securities Llc. economists, led by Bruce Kasman in New York. Kasman and his team are already predicting global inflation to reach 1.5 percent in the first half of this year, while sustained weakness in oil suggest a de-cline to 1 percent, they said. the euro area would probably witness negative inflation, while rates in the us, the uK and Japan also would weaken to about 0.5 percent. For what it calls price stabil-ity, the Federal reserve’s inflation target is 2 percent. emerging-market inflation would also fade, although lower currencies and policies aimed at slowing the effects on retail prices may limit the fall. As for growth, a long-lasting price of $60 would add 0.5 percentage point

Meralco’sJan billingto drop by₧0.19/kWh MONTALBO: “The only

other pressure would probably be a Fed policy-

rate increase, but we were discussing that even if the

Fed increases the rate, the policy rate is different

from the market rate.”

P61.5-billion investment. BVI’s energy City Philippines hold-ings Inc. registered a project worth some P45 billion. total approved investments in 2014, meanwhile, were at P354.5 billion, a slide of 24 per-cent from 2013’s P466.03 billion.   In 2014 the share of foreign investments to the total ap-proved amount was at 10 per-cent. In 2013 foreign-sourced investments took a share of 26 percent. the Netherlands took the top share of foreign invest-ments in 2014, with a total of P10.2 billion. Based on the data released, the substantial proj-ects with Dutch equity include consumer-goods giant unile-ver’s P9.2-billion investment, followed by Biliran Geothermal Inc.’s P1.2-billion investment.

the Netherlands’s share to total foreign investment in 2014 was at 71.63 percent. In 2013 BVI was at the top of the list of foreign investors, with committed investments at P61.51 billion.  other top sources of for-eign investments are Indone-sia, P7.3 billion; switzerland, P1.7 billion; the united King-dom, P1.5 billion; and Japan, P1.3 billion. Notably, data also show that eight countries that invested in 2013 failed to infuse any investment in 2014. Denmark, Italy, Vanuatu, Liberia, New Zealand, Germany, Norway and Latvia all registered zero investments in 2014, according to the BoI data. these coun-tries collectively invested P704 million last year.

to spend on Southeast Asian assets, including an energy target that would boost its sales by more than 50 percent; while in September 2014 Ang said SMC had $4 billion ready to fund an oil and gas acquisition. The plunge in oil may mean SMC is ready to pull the trigger on its move into the upstream energy business sometime this year. “An oil and gas field is the biggest investment we’re preparing for,” he said. “We can acquire something now at a more realistic valuation.” Ang said the valuation of the overseas energy target may have dropped by half from about $20 billion, putting the investment within reach for the company.

Revenue boostThe company that started as a brewer more than 100 years ago has more than $4 billion it can read-ily deploy to fund acquisitions outside its legacy food and drinks businesses. SMC has boosted revenue fivefold to $20 billion, after investing in heavy industries such as oil, power and infra-structure, Ang said. SMC’s oil business under unit Petron Corp. will provide stable margins as long as prices aren’t volatile, Ang said. Petron will invest $1.5 billion to upgrade its 88,000-barrel-a-day refin-ery in Malaysia and $500 million more to increase its gasoline stations by at least 100 from 560 now, he said. The company completed a $2-billion upgrade of its 180,000-barrel-a-day refinery in the Philip-pines in November last year. Benchmark US oil dropped below $50 a barrel for the first time since April 2009, amid specula-tion rising global output will exacerbate a supply glut that’s driven prices into a bear market. ‘Right direction’PriCeS slumped almost 50 percent in 2014, the most since the 2008 financial crisis, as the Orga-nization of the Petroleum exporting Countries resisted calls to cut output amid a battle with US producers for market share. “San Miguel is likely to make money out of volume, as more people get to travel more with

cheaper oil,” harry Liu, president of Summit Secu-rities inc. in Manila, said in a phone interview. “Oil will remain a big part of people’s energy require-ments, as population growth and infrastructure expansion continue. expanding its oil business could be a step in the right direction.” Petron hedges about a fourth of its fuel re-quirements, SMC CFO Ferdinand Constantino said on Tuesday. To manage costs, SMC plans to cut dollar-denominated debt amid prospects for a stronger US currency, while refinancing expen-sive loans, the CFO said. “There would be refinancing in food, power and oil businesses,” Ang said. SMC shares fell 0.1 percent at the noon trad-ing break in Manila on Wednesday, after rising 18 percent last year. Petron fell 0.3 percent after a 24-percent drop in 2014. Making dealsThe most acquisitive company in the Philip-pines since at least 2008, SMC has successfully bought and sold assets for profit. in 2007 SMC sold Australia’s National Foods Ltd. to Japa-nese brewer Kirin holdings Co. for about $2.6 billion, after acquiring the food company for $1.5 billion in 2005. in 2013 the company sold a 27-percent stake in Manila electric Co. for P72 billion ($1.6 billion). it had bought the shares in the power company from Government Service insurance System in 2008 for P27 billion. As a result of acquisitions, debts have piled up. SMC has the equivalent of about $12.2 bil-lion of debt and interest obligations, about $9.4 billion of which is in dollars, according to data compiled by Bloomberg. Cash and equivalents rose 33 percent to P237.7 billion at the end of the third quarter. Oil accounted for 60 percent of sales in the July-to-September period; food and drinks made up a fourth; and power generation con-tributed 10 percent, according to data compiled by Bloomberg. in 2008 food and drinks were 90 percent of sales. SMC is in talks with several groups interested in its unit Bank of Commerce, Ang said. The company hired Citigroup inc. last year to help sell its stake in the lender that Ang said is valued at $500 million. Bloomberg News

Crude slump opening door for deals–Ang

Continued from A1

See “Oil,” A2