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Thursday, March 6, 2014
TODAYS ISSUE:3SECTIONS24PAGES
P25METRO MANILA,PHILIPPINES
S1/1-12
www.bworldonline.com
Debt ratiobetter as of
Q3 last year
Debt, S1/3
GENERAL GOVERNMENT (GG)
debt as a percentage of the econo-
my improved as of the third quar-
ter of 2013 from a year earlier as
the state continued to manage its
liabilities.
The Finance department, in a
statement, placed the obligations
at P4.468 trillion as of September
2013, comprising 39.7% of gross
domestic product (GDP).
The GG-debt-to-GDP ratio is
an improvement from the 40.3%
recorded a year earlier as well as
the 40.6% recorded at the end of
2012.
General government debt con-
solidates the outstanding debt of
the national government (NG)
less those held by the Bond Sink-
ing Fund, local government units
(LGUs), Central Bank Board of
Liquidators (CB-BOL) and social
security institutions (SSIs).
It also excludes intra-sector
debt holdings, which comprise NG
debt held by SSIs and LGUs, and
LGU debt held by the Municipal
Development Fund Office.
February inflationlower than expected
INFLATION EASED to 4.1% in
February, the Philippine Statis-
tics Authority (PSA) reported on
Wednesday, giving monetary au-
thorities the leeway to keep policy
rates steady later this month.
The February headline n umber,
which was traced to lower price
hikes for alcoholic beverages, to-
bacco and transport, was down
from Januarys 4.2%. It was, how-
ever, significantly faster than the
3.4% registered a year earlier.
The result fell within the Bang-
ko Sentral ng Pilipinas (BSP) 3.8-
4.6% outlook for the month and
was lower than the 4.3% median
forecast in a BusinessWorldpoll.
Core inflation, which excludes
items such as food and energy with
vol ati le pri ce move men ts, also
went down to 3.0% in February
from 3.2% in January.
Inflation, S1/3
HaltedPolice block farmers at the gates of the House of R epresentatives in Quezon City in this photo taken yesterday. The farmers
were protesting the extension of the Comprehensive Agrarian Reform Program and proposed amendments to the Constitution.
By Judy Danibelle T. Chua CoSenior Researcher
REUTERS
Philippinesunder pressure over
high rice prices
Meralco says rates to go down
CUSTOMERS of Manila Electric
Co. (Meralco) can expect to pay
less for power this month, the dis-tribution utility yesterday said,
given lower costs incurred from
suppliers.
We have good news for our
customers. They may see another
decrease in the generation charge
in their March bills [following a re-
duction last month], the company
said in a statement.
Februarys generation charge
wa s P5. 54 pe r ki lo wa tt -h ou r
(kWh), down from the P5.67/kWh
imposed in January.
RICE PRICES in the Philippines
have risen for six straight weeks,piling pressure on the government
to import more of the national
staple to stabilize markets and
curb inflation already at two-year
highs.
While bumper harvests in other
countries have stoked a global
rice glut, prices in the Philippines
have climbed around 4% in the
last three months after super
typhoon Haiyan devastated key
growing regions and as the gov-
ernment clamps down on smug-
glers looking to avoid hefty taxes.
Increased purchases by the
Philippines, one of the worlds
largest rice buyers, would help
ease global oversupply, with
Vietnam and Thailand likely to bid
aggressively for any new deal from
their Southeast Asian neighbor.
National Food Authority (NFA)
spokesman Rex C. Estoperez
confirmed reports that Manila
has since late January doubled
the amount of rice being released
into markets from stockpiles most
days, looking to curb price gains.
Private traders are running out
of stocks, thats why we have re-
leased [more] rice into the market
from our warehouses, he said.
That has further drained
NFA stocks that had dwindled
to around 275,000 tons at the
start of the year equivalent to
eight days worth of consumption,
nearly half normal levels. Figuresfor January are due to be released
next week.
The US Department of
Agriculture has already said it
expects Philippine imports to hit
1.4 million tons in 2014, which
would be the highest in four years.
The country has yet to confirm
any purchases beyond 500,000
tons it bought from Vietnam in a
government-to-government deal in
November. Vietnam, the worlds
second-biggest rice exporter after
India, is traditionally the Philip-
pines biggest supplier as it usu-
ally offers cheaper rice.
For Thailand, a deal to sell
rice to the Philippines would help
offload some of its huge reserves
and raise much-needed money to
pay farmers that participated in a
controversial subsidy scheme.
The average retail price of well-
milled rice in the Philippines rose
a further 1.2% in February from
the previous month to P40.12
per kg, and was up 13.7% from a
year ago, data from the Bureau of
Agricultural Statistics showed on
Tuesday.
Mr. Estoperez said the NFA had
doubled the rice allocated each
day to government accredited
outlets to 2,500 kg per location.
Details on the number of accred-
Based on initial figures, the
cost of supply from our power
supply agreements, independent
power producers and from the
Wholesale Electricity Spot Market
have all gone down during the Feb-
ruary supply month, which will
impact on the March bill, Meralcosaid.
The generation charge the
cost of power sold to a power dis-
tributor accounts for around
57% of total charges in Meralcos
electricity bill. The rest comprises
the distribution charge (17.6%),
transmission charge (9%), system
loss charge (5%), and taxes and
other charges (11.5%).
The firm said the March gener-
ation rate was still being finalized.
Meralco utility economics head Meralco, S1/3
By Claire-Ann C. FelicianoReporter
Larry S. Fernandez said the figure
could be announced by Monday.
There are no figures yet. There
are strong indications that genera-
tion charge will be lower than Feb-
ruarys, Mr. Fernandez reiterated
in a text message.
Meralco also urged customersto prepare for the summer months
as electricity consumption histori-
cally goes up during the period.
According to our weather
bureau... we could start experi-
encing... hot weather starting
next month. Given this advisory,
we would like to encou rage our
customers to practice energy ef-
ficiency, the firm said.
Meralco suggested unplugging
appliances when not in use and
Rice, S1/3
SECTION 12 THE ECONOMY
4-5 OPINION
6 CORPORATE NEWS
7 PROPERTY
8 AGRIBUSINESS
9 WORLD
10-12 THE NATION
SECTION 21&3 BANKING & FINANCE
2 STOCK MARKET
4-5 WORLD SPORTS
6-7 ARTS & LEISURE8 SPECIAL FEATURE
SECTION 31-2 FINANCIAL TIMES
3 WORLD BUSINESS
4 WORLD MARKETS
CONTENTS VOL. XXVII, ISSUE 154
WORLD REVIEW
GENEVA
Mercedes, Infiniti to cooperate
Daimlers Mercedes and Nissans Infiniti
plan to pool development of compact
cars to cut costs, expand the German
car makers North American production
and broaden the Infiniti lineup, people
familiar with the matter said. S3/3
NEW YORK
Stocks rise on reduced tensions
US stocks rallied on Tuesday, with the
S&P 500 at a record high, as fears eased
of a confrontation between Russia and
Ukraine and Russian President Vladimir
Putin said there was no need to use military
force in the Crimea region for now. S3/4
5050
5120
5190
5260
5330
5400
4850
4960
5070
5180
5290
5400
STOCK MARKET
ASIAN MARKETS MARCH 5, 2014
JAPAN(NIKKEI225) 14897.63 176.15 1.20HONGKONG(HANGSENG) 22579.78 -77.85 -0.34TAIWAN(WEIGHTED) 8632.93 78.39 0.92THAILAND(SET INDEX) 1351.64 5.82 0.43
S.KOREA(KSECOMPOSITE) 1971.24 17.13 0.88SINGAPORE(STRAITSTIMES) 3116.64 11.93 0.38SYDNEY (ALLORDINARIES) 5446.23 46.00 0.85MALAYSIA(KLSECOMPOSITE) 1829.11 2.65 0.15
JAPAN (YEN) 102.390 101.810HONG KONG (HK DOLLAR) 7.760 7.761
TAIWAN (NT DOLLAR) 30.265 30.291THAILAND (BAHT) 32.290 32.460S.K OREA (WON) 1070.300 1071.550SINGAPORE (DOLLAR) 1.270 1.271INDONESIA (RUPIAH) 11580 11590MALAYSIA (RINGGIT) 3.270 3.276
WORLD MARKETS MARCH 4, 2014
WORLD CURRENCIES MARCH 5, 2014
ASIAN CURRENCIES MARCH 5, 2014
PESO DOLLAR RATE
DOWJONES 16395.880 227.85NASDAQ 4351.972 74.671S&P 500 1873.910 28.18FTSE 100 6823.770 115.42EUROSTOXX50 2957.040 56.27
$/UK POUND 1.6685 1.6702$/EURO 1.3722 1.3753$/AUSTDOLLAR 0.8959 0.8955CANADADOLLAR/US$ 1.1085 1.1084SWISSFRANC/US$ 0.8878 0.8836
INDEX
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COMPOSITE
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5.6CTVS.
By Bettina Faye V. RocSenior Reporter
Lenten symbolA devotee with a cross marked on her
forehead takes part in the commemo-
ration of Ash Wednesday outside a
Roman Catholic church in Paraaque,
Metro Manila in this photo taken yes-
terday. Ash Wednesday, which serves
as a reminder that as a man is dust,
so unto dust he shall return, marked
the beginning of the 40-day Lenten Sea-
son in the Roman Catholic calendar.
REUTERS
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2/23
By Daryll Edisonn D. SaclagReporter
ASEAN-HK trade dealstudied
Malaysia, Philippinesagree to see biz
prospects
Two morebidders forSouthwest
Terminal PPP
Committee set up for petroleum,coal contract transparency
Public hearingsset for plastic materials,
steel products
Thursday, March 6, 20142/S1 TheEconomy
THE PHILIPPINES is studying a
possible ASEAN free trade agree-
ment (FTA) with Hong Kong,
Trade Secretary Gregory L. Do-
mingo yesterday said.
Were conducting studies and
scoping, Mr. Domingo said on the
proposed FTA.
But, so far, the Philippines is
likely to benefit from the proposed
trade pact as the balance is in the
countrys favor.
Data from the Trade depart-
ment Web site showed that Phil-
ippine exports to Hong Kong
reached $4.8 billion in 2012 while
imports amounted to $1.5 billion,
wit h elec tro nic s bei ng the top
traded goods between the two.
An FTA will reduce the friction
in terms of procedures and regula-tory measures thereby speeding
up the entry and exit of goods,
said Mr. Domingo.
IN ANTICIPATION of the next
Philippine Energy Contracting
Rounds (PECR), slated to take
place this year, the Energy depart-
ment has ordered the creation of a
committee to ensure a more trans-
parent and competitive system of
granting the rights to explore and
develop the countrys coal and pe-troleum resources.
The department, in a circular
posted on its Web site, has out-
lined procedures to govern the
system of awarding petroleum
service contracts and coal operat-
ing contracts.
This circular shall apply to the
determination of the legal, techni-
cal, and financial qualifications of
applicants, the evaluation of their
applications, and the award of cor-
responding service and operating
contracts for petroleum and coal
resources, the document, dated
Feb. 24, stated.
The circular creates a Review
and Evaluation Committee (REC)
to consist of the undersecretary in
charge of the Energy Resource De-
velopment Bureau, his assistant ,
and the directors of the ERDB, le-
gal services, and financial services.
As part of its responsibilities, the
REC is tasked to identify the pro-
spective coal and petroleum areas
within the countrys territory.
In this regard, the REC shall
notify the local government units of
the offered areas within their terri-
torial jurisdiction, prior to the inclu-
THE TARIFF Commission has set
a public hearing for petitions to
modify tariff lines for plastic mate-
rials and steel products, according
to a notice published in a newspa-
per yesterday.
The Tariff Commission will
conduct a public hearing on Mar.
20 at 9:00 a.m. regarding the pe-
titions on the tariff modification
of polylactic acid (PLA) film and
semi-finished products of iron
or non-alloy steel. Venue of the
hearing is at the Tariff Commis-
sion Conference Room, 5th floor,
Philippine Heart Center Building,
East Avenue, Quezon City, the
notice said.
Products that will be covered
by the hearing are other plates,
sheets, film, foil and strip, of
other polyesters with tariff code
3920.69.00 and semi-finished
products of iron or non-alloy
steel with tariff codes 7207.11.00,
7207.12.90, 7207.19.00, 7207.21.21,
7207.20.29, 7207.20.92, and
7207.20.99.
The petition to modify the tariff
line on PLA film was filed by plas-
tic maker First In Colours, Inc.
which imports the product from
Japan. The petition to modify the
tariff line on steel products was
not immediately provided, how-
ever. Daryll Edisonn D. Saclag
TAXWISEOR OTHERWISE
Carlos R. MateoThe right to due process in a tax assessment
THE BUREAU of Internal Reve-
nue (BIR) has the gargantuan task
of collecting P1.4 trillion in tax
revenue for 2014. Consequently,
various revenue issuances have
been circulated to enhance tax
compliance and intensify collec-
tion efforts. One such issuance is
Revenue Memorandum Circular
(RMC) No. 11-2014, clarifying cer-
tain issues arising from amend-
ments introduced by Revenue
Regulations No. 18-2013 on RR 12-
99 relative to the tax assessment
process. In fine-tuning policy in-
terpretations, the RMC raises sev-
eral points of interest.
Foremost, the RMC operation-
ally defines the term duly autho-
rized representative as referring
to Revenue Regional Directors,
Assista nt Commis sioner - Large
Taxpayers Service and Assistant
Commissioner - Enforcement
and Advocacy Service. Upon re-
ceipt of a preliminary assessment
notice (PAN) or Formal Letter of
Demand/Final Assessment Notice
(FLD/FAN) from the BIR, the tax-
payer must file a response or pro-
test letter with the duly authorized
representative who signed the
PAN or FAN. Filing with the wrong
office/person is fatal to the pursuit
as it will render such response or
protest as not filed at all. Conse-
quently, the findings become final,
resulting in the issuance of a FAN
(for wrongly filed response to the
PAN) or a non-appealable assess-
ment (for wrongly filed protest
letter to the FAN).
Although RR 18-2013 had elimi-
nated the need for the BIR to issue
a notice of informal conference
(NIC) as part of the assessment
process, taxpayers still have the
option of paying the deficiency
taxes and penalties prior to the
issuance of the PAN. In such cases,
voluntary payment stops the run-
ning of the 20% per annum pen-
alty interest. While this provides
momentary relief from escalating
tax liabilities, the option offers no
guarantee that the findings of the
Revenue District Office (RDO)
will be sustained by the reviewing
office (i.e., Regional Office, Legal
Service or equivalent office). In
other words, early settlement of
deficiency taxes may not provide
any benefit if the initial findings
are set aside and a new assessment
is issued by the reviewing office
that is different from the earlier
recommendations by the RDO.
Further, the RMC states that a
final demand letter for payment of
delinquent taxes may be considered
a decision on a disputed assess-
ment. Although such statement
finds basis in certain court deci-
sions, it would only seem fair to tax-
payers if the BIR will unequivocally
state that the final decision will
follow the specific form of a Final
Decision on Disputed Assessment
(FDDA) as provided in Section 3.1.5
of RR 18-2013. This would dispel
any confusion on whether a notice
is considered an FDDA or not.
Under the rules, once an FDDA is
issued by the BIR, the taxpayer has
only 30 days from receipt thereof to
file an appeal.
Under RR 18-2013, If the tax-
payer within 15 days from date of
receipt of PAN responds that he/it
disagrees with the findings of de-
ficiency tax or taxes, an FLD/FAN
shall be issued within 15 days from
filing/submission of the taxpayers
response, calling for payment of
the taxpayers deficiency tax li-
ability, inclusive of the applicable
penalties. While the non-obser-
vance of the 15-day period for the
issuance of the FAN shall not affect
its validity, the RMC provides that
the revenue officer who caused the
delay shall be subject to adminis-
trative sanctions.
The foregoing provision under
the RR denotes that any response
to the PAN will automatically be
denied and, thus, effectively negates
the pre-assessment notice stage.
This appears to violate the spirit of
the due process requirement under
Section 228 of the Tax Code, which
requires the BIR to first notify the
taxpayer of the findings and to re-
quire a response. If the taxpayer
fails to respond, the BIR shall issue
a FAN based on said findings.
It is also worthy to state that,
in a number of cases, the courts
have held that the 15-day period
for the taxpayer to formally reply
to the PAN is mandatory, and the
non-observance thereof is con-
sidered a violation of due process.
Thus, the CTA has, on occasion,
ruled against the BIR and nullified
assessments where the FAN was
issued without waiting for the tax-
payers reply to the PAN or before
the lapse of the 15-day period.
Though the current assessment
process still gives taxpayers a 15-
day period to respond to the PAN,
the fact that any such response
will automatically be denied wi th
the issuance of the FAN another
15 days after, effectively makes
the taxpayers response a mere
formality. One could say that the
grant of the 15-day period is with-
out any real value and thus goes
against the spirit of the due pro-
cess requirement under our laws.
Fundamentally, No person shall
be deprived of life, liberty and prop-
erty without due process of law, nor
shall any person be denied the equal
protection of the laws. (Article III,
Section I of the Bill of Rights of the
Philippine Constitution).
The power of taxation must be
exercised with restraint since it
deprives a taxpayer of his proper-
ty. Thus, in Roxas vs. Court of Tax
Appeals, G.R . No. L-25043, dated
April 26, 1968, the Supreme Court
held: The power of taxation is
sometimes called also the power to
destroy. Therefore it should be ex-
ercised with caution to minimize
injury to the proprietary rights of
a taxpayer. It must be exercised
fairly, equally and uniformly, lest
the tax collector kill the hen that
lays the golden egg. And, in order
to maintain the general publics
trust and confidence in the Gov-
ernment, this power must be used
justly and not treacherously.
The constitutional right to
due process has primacy over the
power of taxation, such that In
balancing the scales between the
power of the State to tax and its
inherent right to prosecute per-
ceived transgressors of the law on
one side, and the constitutional
rights of a citizen to due process of
law and the equal protection of the
laws on the other, the scales must
tilt in favor of the individual, for a
citizens right is amply protected
by the Bill of Rights under the Con-
stitution. Thus, while taxes are
the lifeblood of the government,
the power to tax has its limits, in
spite of all its plenitude. (CIR vs.
Metro Star Superama, Inc.)
Based on the foregoing, it is sin-
cerely hoped that the BIR would
revisit the provision of RR 18-2013
(as reiterated in RMC 11-2014) and
consider the arguments raised by
the taxpayer in response to the
PAN, instead of issuing an outright
denial by the issuance of a FAN.
In creating consonance, there is
wisdom to reconciling confli cting
interests. While citizens must pay
taxes without much hindrance,
the authority to tax must also be
wiel ded wit h utmo st con side r-
ation for the common good.
The author is a director at the tax
services department of Isla Lipana
& Co., the Philippine member firm
of the PwC network. Readers may
call (02) 845-2728 or e-mail the
author at [email protected].
com for questions or feedback. The
views or opinions presented in this
article are solely those of the author
and do not necessarily represent
those of Isla Lipana & Co. The firm
will not accept any liability arising
from the article.
BUSINESSMEN from Malaysia and
the Philippines have agreed to ex-
plore investment opportunities in
each others palm oil, rubber, infra-
structure, and tourism sectors, Trade
Secretary Gregory L. Domingo yester-
day said.
These interests were expressed
at business matching activities held
last week in Kuala Lumpur, which co-
incided with President Benigno S.C.
Aquino IIIs state visit there, the Trade
official noted.
In one of the business meet-
ings, Mr. Domingo said government
officials met with representatives ofMalayan Banking Bhd (Maybank), re-
sort operator Genting Malaysia Bhd,
and low-cost airline AirAsia Bhd.
TWO more firms are bidding for
the P2.5-billion Integrated Trans-
port System (ITS) Southwest
Terminal Project under the De-
partment of Transportation and
Communications (DoTC).
The DoTCs Special Bids and
Awards Commi ttee on Tues day
released General Bid Bulletin
No. 07-2014, which added State
Properties Corp. and Expedition
Properties Corp. to the nine com-
panies vying for the public-private
partnership (PPP) project.
The second of two rounds of
meetings was initially to take place
Mar. 17-19 but was extended for
the new entrants, which will both
be present on Mar. 20.
The bid bulletin also required
participants to submit any ques-tions three calendar days before
their scheduled conference with
the DoTC.
Bid submission deadline and
opening of qualification docu-
ments have been set for May 15,
with scrutiny of the latter occur-
ring within ten days of submission.
Technical proposals will be
opened in June and evaluated
within 20 days of submission. Fi-
nancial proposals will also be
opened that month and evaluated
in 15 days.
The Notice of Award (NoA) will
be released within five days from
the winners selection.
Upon receiving the NoA, the
winning bidder must prove com-
pliance before signing the Date ofConcession Agreement.
The nine other participant com-
panies, in order of scheduled meet-
ings, are D.M. Wenceslao and As-
sociates, Inc.; the co-bidding Ayala
Land, Inc. and Ayala Corp.; Metro
Pacific Tollways Corp.; San Miguel
Corp.; Vicente T. Lao Construction;
Egis Projects SA; Robinsons Land
Corp.; Filinvest Land, Inc.; and
Megawide Construction Corp.
The ITS Southwest Terminal
Project will be built southwest of
Metro Manila near the Manila-
Cavite Expressway and will serve
Manila-bound commuters from
Cavite.
Accord ing to the PPP Cent er
Web sit e, pre vi ous ly awa rde d
contracts for PPPs as of Feb. 14,
2014 are the P2.01-billion Daang
Hari-SLEX Link Road Project,
P16.28-billion PPP for School
Infrastructure Project Phase I,
P15.52-billion NAIA Expressway
Project, P3.86-billion PSIP Phase
II, P5.69-billion Modernization of
the Philippine Orthopedic Center,
and the P1.72-billion Automatic
Fare Collection System. Anton
Joshua M. Santos
Acco rding to the Hong Kong
governments Web site, the FTA
is expected to cover elimination
of tariff and non-tariff barriers;
preferential rules of origin; lib-
eralization of trade in services;
liberalization, promotion and pro-
tection of investment; and dispute
settlement mechanism.
Hong Kong, according to the
ASEAN (Association of Southeast
Asian Nations) Web site, initially
proposed to join the ASEAN-Chi-
na FTA in 2011.
But, Mr. Domingo said the
10-member bloc counter-pro-
posed a separate trade pact with
Hong Kong last year.
At that time, Hong Kong was
requesting accession into ASEAN-
China FTA. But we thought it isbetter to negotiate a separate one
since accession is more difficult,
the Trade official said.
Since then, he said, ASEAN
member-states Brunei, Cam-
bodia, Indonesia, Laos, Malaysia,
Myanmar, the Philippines, Sin-
gapore, Thailand, and Vietnam
have started their own studies on
the proposed trade pact.
Aside from the FTA with China,
the bloc also has trade agreements
with Japan, Australi a, New Zea-
land, South Korea, and India.
Mr. Domingo said ASEAN and
Hong Kong have not yet set a time-
table for the agreement.
The Trade official also said he
does not see the Manila hostage
crisis involving Hong Kong na-
tionals in 2010 as a roadblock.
For me, its business as usual,
he said.
ASEAN is Hong Kongs secondlargest trading partner after China
for trade in goods. Daryll Edi-
sonn D. Saclag
We invited Maybank to look at
shariah banking in the Philippines.
They said they will look at it. For
AirAsia, they said they will study very
seriously a Kuala Lumpur-Davao link.
For Genting, we requested them to
make an all-Philippine-islands tour,
and they said they will consider it.
They also expressed interest in palm
oil plantation in Mindanao, said Mr.
Domingo.
Investor interest in the Philip-
pines is expected to increase
further once the Comprehensive
Agreement on the Bangsamoro be-
tween the government and the Moro
Islamic Liberation Front is signed
this year, he added.
The Trade chief also said that the
Philippines offered Malaysia assis-
tance in accrediting halal products.Philippine exports to Malaysia
reached $1.017 billion in 2012 while
imports amounted to $2.503 billion.
sion to the PECR, the circular read.
The committee will also have
the obligation to examine, evaluate
and review the technical, financial,
and legal capabilities of project ap-
plicants and, after which, recom-
mend to the Secretary the award
of contracts.
It is also the RECs responsibil-ity to [r]esolve issues in relation
to the legal, technical and financial
capabilities of applicants, includ-
ing motions for reconsideration.
The circular also detailed the
procedure for awarding petroleum
service contracts and coal operat-
ing contracts.
Since the REC will determine
the prospective areas, it should
also prepare the PECR documents
with description of available data.
Such data should include the
location map and technical de-
scription of areas being offered and
schedule of activities for the PECR.
A pre-sub missi on confe rence
for PECR applications should be
scheduled to discuss relevant rules
and entertain clarifications from
prospective applicants.
Submission of applications
should be based on the existing
guidelines.
The evaluation should be based
on legal qualification using a pass or
fail criterion; work program (40%);
technical qualification (20%); and
financial qualification (40%).
The highest ranked applicant
who meet s the. .. requ irem ent s
shall be selected, the circular read.
The legal department and
ERDB should prepare the final
contract that will be awarded.
Applican ts, within seven days
from the receipt of the award no-
tice, should pay necessary fees and
charges.
State-owned PNOC ExplorationCorp. (PNOC-EC) has been given a
reserved option to acquire a maxi-
mum of 10% interest in a contract
involving one or more Filipino
participants and 15% for a contract
with no Filipino participant.
All rights, privileges, benefits,
costs, expenses, obligations and
liabilities of PNOC-EC shall be
in proportion to its participating
interest in the proposed service
contract, the circular noted.
Previous contractors with can-
celled to terminated contracts due
to outstanding work and financial
obligations are no longer allowed
to join the PECR.
The circular will take effect fif-
teen days following its publication
in two newspapers.
Under the PECR 4 which
took place last year the Energy
department offered 38 coal and 15
petroleum blocks for exploration
and development.
The auction received 69 bids
for 28 coal contracts and 20 offers
for 11 petroleum contracts, but the
department only awarded 11 coal
and four petroleum contracts.
Claire-Ann Marie C. Feliciano
TARIFF lines for steel products are up for possible modification.
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5/26/2018 b w Digitized 030614
3/23
Thursday, March 6, 2014 S1/3
Inflation,
from S1/ 1
Year-to-date inflation averaged
4.2%, still within the BSPs 3-5%
target for 2014.
Central bank Governor Aman-
do M. Tetangco, Jr., in a text mes-
sage to reporters, said the latest re-
sults would help keep the average
inflation over the policy horizon
withi n the govern ments [3-5%]
target range.
Moving forward, Mr. Tetangco
said monetary authorities would
continue to monitor global de-
velopments, adding: We will also
be watchful of trends in domestic
liquidity and lending.
He noted that the policy-mak-
ing Monetary Board would make
adjustments to policy levers as
appropriate to ensure that liquid-
ity continues to be channeled to
productive sectors of the economy
and that inflation expectation re-
main well-anchored.
During its first policy meet-
ing for the year last Feb. 6, the
Monetary Board kept the BSPs
overnight borrowing and lending
rates at record lows of 3.5% and
5.5%, respectively. The inflation
forecast for this year, however, was
trimmed to 4.3% from 4.5% while
that for 2015 was hiked to 3.3%
from 3.2%.
The BSP has kept its overnight
borrowing and lending rates at
3.5% and 5.5% since October 2012.
The rate on all special deposit ac-
count (SDA) maturities has been
steady at a uniform 2% since June
2013.
Economists were in agreement
that the central bank was likely to
keep key rates steady at its March
27 policy-setting meeting. Tight-
ening, they said, could start in the
second half of the year.
We expect both the policy
overnight rate and the special de-
posit accounts rate to stay steady
through the first half, as the central
bank has enough space to main-
tain a wait-and-see approach until
its third policy rate meeting, said
Eugenia Fabon Victorino, ANZ
economist for the Asia-Pacific.
We forecast the tightening
cycle to commence by the second
half and expect the interest rate
to rise by at least 50 basis points
(bps) by yearend, she added.
Jeff Ng, economist at Standard
Chartered Bank in Hong Kong,
agreed, adding that domestic price
pressures remain in food and en-
ergy.
We expect the central bank
to keep rates unchanged in the
first half as inflation remains man-
ageable. Nonetheless, we expect
a 25-bps hike in the third quarter
and another 25 bps in the fourth
quarter, as price pressures remain
in food and energy, especially with
recent uptrends in international
food and crude oil prices, he said.
Gundy Cahyadi, economist at
DBS Bank Ltd., meanwhile, said
inflation was coming in below
expectations given that some of
the cost-push factors werent as
strong.
We are re-looking at our infla-
tion forecast for the year and we
maintain our stance that the cen-
tral bank will continue to stay put
for now. But we still expect them
to raise rates by at least 50 bps by
yearend to prevent the economy
from overheating, he said.
The PSA, meanwhile, said in a
statement that the February infla-
tion reading was due to slower
annual movements registered in
the indices of alcoholic beverages
and tobacco and transport.
Prices of alcoholic beverages
and tobacco rose by 7.1% in Febru-
ary, easing from 17.6% in January,
while transport costs rose by 1.0%,
down from 1.2%.
Citi economist Jun Trinidad
noted temporary relief from up-
side inflation risk coming from
easing excise tax effects on ciga-
rettes and alcoholic beverages.
Prices of cigarettes and al-
coholic beverages rose by high
double digits last year after excise
taxes were adjusted in January
2013. Taxes will be adjusted again
in 2015.
The heavily weighted food and
non-alcoholic beverages index,
meanwhile, rose by 5.5%, un-
changed from the previous month.
The food alone index, however,
accelerated to 5.9% from 5.7%.
Prices of rice, milk, cheese, eggs,
oils and fats, fruits, sugar, jam,
honey, chocolate, and other food
products rose at a faster pace.
Higher increases were also
recorded in the indices of cloth-
ing and footwear; housing, water,
electricity, gas and other fuels;
furnishing, household equipment
and routine maintenance index;
and health. with a report from
A. R. R. Gregorio
ited outlets in the Philippines were
not immediately available.
He also noted that government
moves to crack down on smugglers
had pushed prices higher. Philip-
pines customs have been on a drive
to curb smuggling that has been rife
as some importers look to avoid a
whopping 40% duty on private ship-
ments of rice and to get around a
quota system.
Critics have long argued the tariff
should be reduced to encourage legal
imports, but President Benigno S.
C. Aquino IIIs government says it is
necessary to support local farmers. Reuters
Rice,
from S1/ 1
Debt,
from S1/ 1
Before President Benigno
S. C. Aquino III took office, GG
debt to GDP was 44.3% in 2009.
By reducing government debt, we
are attempting to ensure the sus-
tainability of our recent economic
resurgence, Finance Secretary
Cesar V. Purisima was quoted as
saying in the statement.
The Aquino administration
continues working towards the
virt uous cycl e of good gove rn-
ance through proactive liability
management. As a result of these
initiatives, we are creating fiscal
space in the budget to increase
investments in our people, our key
driver of economic growth, he
added.
The Finance department said
the annual decline was mainly due
to the national governments pur-
chase of more debt from domestic
sources at cheaper interest and
longer maturities.
Of the total NG debt as of the
third quarter, 66% came from do-mestic sources and 34% from for-
eign creditors an improvement
from the 61:39 mix recorded in the
comparable 2012 period.
This was likewise reflected in
the overall GG debt mix, which in
the period was at 59:41 in favor of
domestic sources versus the 51%
domestic and 48% foreign mix re-
corded as of September 2012, the
department said.
A decline in Local Government
Unit debt to P70.7 billion, or 0.6%
of GDP, as compared to the Sep-
tember 2012 level of P71.3 billion,
or 0.7% of GDP, also contributed to
the decline in GG debt, it added.
Debt as a percentage of GDP
is a measure used by many debt
watchers to assess t he creditwor-thiness of sovereigns.
Meralco,
from S1/ 1
setting a timer for air conditioners
before bedtime so that the units
would not have to run the entire
night.
In buying appliances, check
and compare the energy efficien-
cy factor (EEF) of the different
brands, it added, explaining that
a higher EEF means better energy
efficiency.
The utilitys announcement of
possible lower March generation
charges comes in the wake of com-
plaints on a bill format that has
caused confusion.
The Energy Regulatory Com-mission has asked Meralco to ex-
plain the format, which included
components such as the Balance
from Previous Billing, Total Cur-
rent Amount and Total Amount
Due.
The Balance From Previous
Billing covers unpaid amounts
relating to a planned rate hike that
is being reviewed by the Supreme
Court.
A P4. 15/k Wh in cre ase sup -
posed to have been implemented
in tranches beginning last Decem-
ber has been ordered shelved by
the high court, which is hearing a
complaint filed by party-list legis-lators and consumer groups.
An additional P5.33/kWh rat e
hike, also to be charged in stages,
is being sought by Meralco, which
says that this covers unpaid bal-
ances to power suppliers.
Meralco has said that it has no
intention to collect the deferred
amount, which it claimed was
included in the bill only for trans-
parency purposes.
In recognition of the feed-
back we got from our customers,
though, we will make it clearer
in their March bills as to which
amount they will only have to pay.
In addition, the deferred amountwill no longer be included in the
Total Amount Due, the company
said.
Meralco also said that only
7% of its 5.5 million customers
received bills with the deferred
amount itemized, adding that
those who paid in full would be
refunded.
Meralcos controlling stake-
holder, Beacon Electric Asset
Holdings, Inc., is partly owned
by Philippine Long Distance
Telephone Co. (PLDT). Hastings
Holdings, Inc., a unit of PLDT
Beneficial Trust Fund subsidiary
MediaQuest Holdings, Inc., has amajority stake inBusinessWorld.
-
5/26/2018 b w Digitized 030614
4/23
BERKELEY
Readi ng throu gh
the just-released
transcriptsoftheUS
Federal Reserves
Federal OpenMar-
k et C om mi tt ee
(FOMC) meetings
i n 2 00 8, I f ou nd
myself asking thesame overarching question:Whataccountedfor the
FOMCsblinkeredmindsetas crisiseruptedall aroundit?
Tobe sure,some understoodthe truenatureofthe situation.As Jon
Hilsenrathofthe WallStreetJournalpointsout,WilliamDudley,then the
executivevice-presidentofthe NewYorkFedsMarketsGroup, presented
staffresearchthatsought,politelyandcompellingly, toturnthe princi-
palsattentionto whereitneededto befocused.And FOMCmembers
JanetYellen,DonaldKohn, EricRosengren, andFrederic Mishkin,along
withthe Boardof Governorsin Washingtonclearlygot themessage. But
theFOMCsothereightmembers,andtherestofthe seniorstaff?Notso
much(albeitto greatlyvaryingdegrees).
AsI readthe transcripts,Irecalledthe longhistorydatingback to1825,
andbefore,in which theuncontrolledfailureof majorbankstriggered
panic,a flightto quality,thecollapseofassetprices,and depression.But
thereinthe FOMCsmid-September2008report, manymembersexpress
self-congratulationforhavingfoundthestrengthtotakethe incompre-
hensibledecisionnotto bailout LehmanBrothers.
Ifind myselfthinkingbacktothe winterof 2008,whenIstole and
usedasmuchaspossible anobservationbytheeconomistLarrySum-
mers.In theaftermathof thehousingbubblescollapseand extraordinary
lossesin thederivativesmarket,Summersnoted,bankswouldhaveto
diminishleverage.Whileitwould notmattermuch toany individualbank
whetherit didso byreducing itsloan portfolioor byraising itscapital, it
matteredverymuchtotheeconomythatthebankschosethesecond.
Eventoday,I cannotcomprehendthen-NewYork FedPresidentTimo-
thyGeithnersdeclarationin March2008that, itisvery hardto makethe
judgmentnowthat thefinancialsystem asa wholeor thebanking system
asawholeis undercapitalized.Geithnersviewat thetimewas thatthere
isnothingmoredangerous...thanforpeople...tofeed...concernsabout...
thebasiccorestrengthofthe financialsystem.Ofcourse,wenowknow
thatindifferencetosuchconcernsturnedouttobefarmoredangerous.
Likewise,I lookathistoryandseethatitis coreinflation(whichstrips
outvolatilefoodand energyprices),notheadlineinflation,thatmatters
forpredictingfutureinflation(even futureheadlineinflation).ThenI read
declarationslikethatby DallasFederalReservePresidentRichard Fisher,
thatdangerous inflationarypressurewas buildingduring thesummer of
2008,andIfindmyselfata loss.
Someofthe2008-eramindset(mostofit?)mostlikelystemmedfrom
the fact that there are things that are very real and solid to monetary
economists.Wecansee, touch,and feelhowa financial-deleveragingcycle
depressesaggregatedemand.Weknowthatthisyearschangein aninertial
price,suchaswages,tellsus alotabout nextyearswagechanges,whilethis
yearschangeina non-inertialprice,suchasoil,tellsusnextto nothing.
Andwe knowhow herdbehavior byinvestors meansthat asingle salient
bankfailurecanturnafinancialmaniaintoapanic,andthenacrash.
Butothersdo notsee,touch, andfeelthese things.Fornon-economists,
theyaresimplyshadowsonthewallsofacave.
Thatdistinctionwaslessrelevantinthe past.TheFed ofold usuallyhad
acharismatic,autocratic,professionalcentralbankerat itshead:Benjamin
Strong,MarrinerEccles,WilliamMcChesneyMartin,PaulVolcker,andAlan
Greenspan.When itworked whichwasnotalwaystrue the chairruled
theFOMC withan ironhand andwith thenear-lockstepvotingsupportof
thegovernors.Theviews ofthe othermembers withtheirvarying back-groundsinbanking,regulation,andelsewherewereoflittleor noconcern.
But former Chairman Ben Bernankes FOMC was different. It was
collegial,respectful,andconsensus-oriented.Asa result,therewasa deep
disconnect between Bernankes policy views, which followed from his
analysesinthe 1980sand 1990sof theGreat DepressionandJapanslost
decades,andtheFOMCsfailure in2008to sensewhatwascoming andto
guardagainstthe majordownsiderisks.
SoI find myselfwondering: Whatif thosewhounderstood thenature
of the crisis and those who did not had been compelled to make their
cases toBernanke inprivate? IfBernanke had thensaid, This is whatwe
aregoingto do, rather thanseekingconsensus thatis,if Bernankes
Fed had beenlikethe old Fed would better monetary-policydecisions
havebeenmadein2008?
(Theauthor,a formerdeputyassistantsecretaryof theUSTreasury,is
Professor of Economicsat the Universityof California at Berkeleyand a
research associate at the National Bureau of Economic Research. www.
project-syndicate.org)
Thursday, March 6, 20144/S1 Thursday, March 6, 2014 S1/5OpinionOpinion
Revisitingthe Feds crisis
Transportation mobilityand sustainability
Game play remains at heartof changing lifestyles
THE VIEWFROM TAFT
Brian C. Gozun
ASwe goon our dailygrind ofm ov-
ingfromour homes to our offices,
thebig T thatis traffic has been
g etti ng w ors e by themi nu te, by
thehour,by theday,and through
t he y ea rs . T he g ov er nm en t,
through theMetropolitanManila
Development Authority (MMDA)
and other departments,has been
working full-time and overtime
toalleviate this seeminglyendless
agonyoftraffic. Thenewlycoined
term carmageddon, combin-
ing car and Armageddon, is
trulyappropriatefor thedeath of
vehicular movement along EDSA
and other major thoroughfares in
themetro.Ifvehicles docometo a
completehalt, whatwould happen
to p eop le l i ke u s w ho commu te
hours per dayusingvarious modesfromcars that havenever experi-
enced goingbeyond 10kilometers
per hour to trains thathavenever
ever experienced under-capacity
intheir lifetimes?
For commuters, traffic goes
beyond the huge parking lot that
EDSA has become. It is all about
the ability to move from our
homes to our destinations with
ease,comfort,securityand, above
all, satisfaction. Our ability to do
our duties to our families,clients,
and friends as we move from one
placeto another rests oninclusive
mobility, which is a holistic con-
ceptthatpromotes themovement
from a car-centric paradigm to
more people- and environment-
friendlytransportation modes.
Dr. Danielle Guillen, an expert
ontransportation policyand plan-
ning from the Ateneo Institute of
Sustainability, espouses inclusive
mobility through the concept of
sustainabletransportation, which
entails expansionof levels ofser-
vice,diversification of transporta-
tion modes, a balanced land-use
plan, more efficient use of energy
and low polluting technologies,
reduction of health and safety
risks, reduction of environmental
impact and integrating the con-
cept of social equity and citizen
transportation.The definition of sustainable
transportation is similar to our
definitionof sustainabilityinbusi-
ness, which espouses balance not
only in our financials but also in
our relationships with our stake-
holders, community, country,
and Mother Earth. The start of
this so-called carmageddon has
made us more aware of the need
to understand the trade-offs that
we mak e as commute rs. Sh ould
we tak e our cars and be par t of
thethousands of cars idlingalong
roads that were once highways in
the not-so-distant past? Should
we take the LRT and MRT in the
weehours of themorning evenif it
is notyet SimbangGabi (midnight
mass) season? Should we walk or
evencycletoworkevenifitmeans
losing thousands of pesos on our
glutathioneinjections and whiten-
ingsoaps, creams,and whatnots?
The risks that we take as we
move from the security of our
homes to the insecurity of our
streets entail the need for trans-
portationsolutions thatgo beyond
the construction of roads, which
eventuallyleads to theincreasein
vehicles. Laws, ord inances, rules,
and regulations that have been
tried and tested (and arestill being
tweaked) by the MMDA and the
Cityof Manila will all goto wasteif we do not do our small yet im-
pactful share in alleviating traffic
congestion.
These are the things that ir-
ritate me the most. As a pedes-
trian, I pray my rosary every time
I cross our intersections because
pedestrians and drivers alike have
become terribly colorblind. A few
seconds of waiting will not hurt
as we wait for the traffic lights to
change color! Also, LRT and MRT
management can make the level of
service in our trains a little more
humane. Even sardines would
not want to squeeze themselves
into our sauna-like train carriages
packed with sweating passengers
who can barely breathe. And for
our vehicle-driving commuters,
it would be great if we could car-
pool with friends and family alike
and choose wisely when to use
our cars over cabs. Let us not text
while driving, and let us have hap-
py thoughts to avoid road rage.
Heavytraffic,sad tosay,is now
the norm in our metropolis, but
let us all do our part in trying to
alleviate congestion through sus-
tainabletransportation.
All aboard,please!
(The author is an associate
professor o f the Decision Sciences
and Innovation Department of theRamon V. Del Ro sario Co llege of
Businessof DeLa SalleUniversity.
Although the a uthor is f rom the
green s chool while D r. Guillen is
fromthe blueschool, both universi-
ties adhere to the principles that
Mother Earths cover must forever
be green and her skies and oceans
forever be blue. The green guy can
be reached at brian.gozun@dlsu.
edu.ph. The views expressed above
are the authors and do not neces-
sarilyreflect theofficial position of
DLSU, its faculty, and its adminis-
trators.)
SANFRANCISCO For almostas
longas therehave beencomput-
ers,therehavebeenpeopleintent
inplaying games withthem.
Since young programmers at
the Massachusetts Institute of
Technologycameupwith Space-
war! some50 years ago,the world
of videogames has exploded intoa
multibillion-dollar industry.
From the earliest days of
computer, these folks went after
computer graphics and went after
videogames, Gartner consumer
technologies research director
BrianBlau told AFP.
Peopleenjoygames,and mar-
rying the concept of real-world
games witha computer and inter-
activityis reallypowerful.
Gartner predicts the world-
wide videogam e market combin-
ing console, online, mobile, and
personal computer offerings will
expand from$101billionthis year
to $111 billion next year and top
$128billionin2017.
Whileplayonhigh-performance
desktop or laptop computers has
long captivated hardcore video-
gamelovers, rival consolemakers
Microsoft,Sony,andNintendohave
successfully turned games into
standard family household enter-
tainmentduringthepast20years,
with X box, PlayStation and Wii
hardwarerespectively.
CONSOLE KINGS
New-generation Xbox One and
PlayStation 4 consoles released
late last year are credited with
b ri ng in g n ew
lifeto a section
o f t he m ar ke t
under pressurefrom thepopular-
ityof smartphones and tablets.
But Nintendos latest console,
Wii U, has had trouble gaining
tractionamong players.
Console kings are also the big
names behind titles for play on
their hardware, but third-party
studios such as Activision Bliz-
zard, Electronic Arts, Ubisoft,
Disney Interactive, and Warner
Brothers are established titans in
gamesoftware.
While movie-lik e im mersion
inplayand broadeningentertain-
ment menus to include streamed
films and television shows has
consoles provingtheir worth, mo-
bilegames areonfire.
There are more game apps
for smartphones or tablets than
any other type of mini-program
for mobiledevices and it is thetop
revenue-producing category, ac-
cordingtoGartner.
APPS ON FIRE
Smartphones and tablets have
lured players from dedicated
handheld mo-
b il e g am e d e-
vices that, for a
time,were a hitwith people who
wanted toplay onthe go.
Mobile game revenues can
comefrompeoplepayingtodown-
load apps or fromin-game trans-
actions inwhichplayers poney-up
to advance more quickly through
levels or buy abilities or digital
items.
Britain-based King Digital En-
tertainment, which is behind the
Candy Crush Saga game craze,
is set for a keenly anticipated
stockmarket debut.Other sizzling
mobile game firms include Rovio,
Wooga,and Supercell.
Even Zynga, which pioneered
online social games only to get
caught on its heels when players
turned tomobiledevices,is notout
for thecount.
The San Francisco company is
intent on reviving a lineup that
includes Farmville and Words
WithFriends alongwith a popu-
lar Zynga Poker title.
Mobile game revenue globally
is setto nearlydoubleinthe next
twoyears to$22 billion,according
toGartner.
SPECTATOR SPORT
A new and flourishing eSport cat-
eg ory i n w hich vi deogame p l ay
is spectator sportcompletewith
commentators, sponsors and ads
has yet to be factored i nto the
global videogamerevenue model.
Computer graphics represent
a newinteraction paradigm, Blau
said.Todays high-detail graphics
and more immersive experiences
arealmost sciencefiction-like.
Innovations in game hardware
and softwarefrom Internet-linked
eyewear toaugmented realitypro-
grams areexpected tofuel increas-
ingdemand for play.
Too latethe ( justice) hero
STRATEGICPERSPECTIVE
Ren B. Azurin
IS SE NA TE P res i dent Frankli n
D ril on al ready tryi ng to create
s ome di stance betw een hi ms elf
and his boss, President Aquino,
perhaps to re-insinuate himself
i nto the convers ati on on vi abl e
presidential or vice-presidential
candidates for the2 016elections?
When, last weekend, he publicly
assailed the Sandiganbayans
slowdispositionof cases, hewas
clearly contradictingparty mate
Aquinowho boasted recently,We
are movi ng cl os er to obtai ni ng
truejustice throughthe cases filed
againstthose whohave committed
crimes...(and) Weare destroying
the last bastions of corruption.
Since observers had jeered the
Presidents boasts as patently ri-
diculous,itmaybe thatMr.Drilonis nowtryingtocurryfavor witha
public openlyfrustrated at thetai
chi-l ike movement of j u sti ce i n
this country.
Maybe Mr. D ri l on w ants
to paint himself as the justice
champion. The hero who rides
i nto tow n and, w i th s i x-g u ns
bl az i ng , bri ng s back l aw and
order to the lawless frontier.
The long-sought answer to the
peoples prayers. If so, its not
a bad image to cultivate for an
aspiring president or vice-presi-
dent. The problem is persuading
people that the image is even
credible. And, as far as thats
concerned, one could reason-
ably argue that in some 28 years
in the public service as sena-
tor, Senate president (twice),
and Justice secretary (twice)
Mr. Drilon has had more than
enough chances to do the save-
the-people bit and implement
his Justice Agad (j u s ti ce at
once) vision. But, in fact, as a
long-time member of the Sen-
ate and several years as its
leader it is hard for him to
claim not to have at least sanc-
tioned assuming, charitably,
that he wasnt actually a part of
all the pork barrel scams and
influence peddling going on all
around him all these years.
Mr. Drilon is quoted as say-
ing, If we are to outrun graft and
corruption, it is imperative that
we re suscitat e an d r econdi tion
our existing prosecutorial and
adjudicatory institutions against
this opponent. Sure. Of course.
But many reform advocates have
been saying the same thing for
years. And those in positions of
power to institute meaningful
improvements to our law en-
forcement and legal system like
Mr. Drilon have typically, overthe years, just played deaf, dumb,
and suspiciously blind.
If anything can illustrate viv-
idlythe gapingholes inour justice
system, it is the pork barrel scam
investigations that the President
(strangely) imagines must dem-
onstratehis administrations com-
mitment to a campaign against
corruption and to a daang matu-
wid(straight path). Eight months
after itwas firstexposed bya news-
paper (theInquirer) note,not by
a lawenforcementbodyor justice
official there has been virtually
nothing happening in the subject
caseother than press conferences
and televised hearings inthe Sen-
ate that are no more than occa-
sions for posturingsenators to lay
outfor the public their intellectual
shortcomings.
Irritatingly, moreover,the cur-
rent Justice secretary, Atty. Leila
de Lima, maybe mirroring her
boss, boasts in media statements
of slam dunk evidence and yet
cannot explain why no one has
thus far been arrested, much less
COMMENTARY
J. Bradford DeLong
China, S1/ 5
ChinafromS1/ 4
ANSHUN,China After a lifetime
offarmingand mininginthe hills
ofsouthwestChina,ZhangZongfu
was thrustintosubsidized housing
closer to town,and intoa monu-
mental urbanization driveaimed
atboosting growth.
Zhanglikes his newlybuiltdigs,
whichare effectivelyfree, but city
lifehas beenharder to settleinto.
The 48-year-old villager lacks job
skills or prospects puttinga ma-
jor wrinkle in Beijings blueprint
for prosperity.
Withoutwork Imin trouble,
he said in his living room, over-
lookingneatrows offreshlypaint-
ed apartmentblocks on theedgeof
Anshunin Guizhou,one ofChinas
poorestprovinces.
The house is fine. But if you
have a house to live in and cant
feed yourself, whats the point?
heasked.
Zhangs situation illustrates
thedevelopmental dilemma facing
China as its rubberstamp parlia-
ment, the National Peoples Con-
gress,meets this week.
Economic growth and rising
prosperityarekeyto theCommu-
nistPartys claimto a rightto rule,
and the legislators will put their
imprimatur on
reforms it has
promised.
By 2030, projections say a bil-
lion Chinese will live in cities
up 300 million from now, nearly
equal to the population of the
United States.
Beijing hopes that if the urban
influx earnand spend moreit will
both reduce poverty faster and
helpswitchthe economyto grow-
ing through consumption rather
thaninvestment.
Butif local governments simply
build the shells of cities with no
economythat former farmers can
participatein, theymaysimplybe
digging a deeper investment hole
and creatingneighborhoods full
ofidle inhabitants.
This is certainly something
Ive seen in other places, where
you have people cut off from the
waytheyve madetheir living their
entire life. Then theres nothing
really thattheycan do, said Tom
Miller,the Beijing-based author of
ChinasUrban Billion.
And if this
h a p p e n s o n
a g rand s cal e
across the country, then poten-
tiallyyoure buildingup enormous
problems, hesaid.Thats thefear,
ifyoulook10to 15years ahead.
Guizhou is constructing 180
sites toresettle twomillion people
by 2020, surpassing even the 1.3
million relocated for the vast
ThreeGorges Dam.
But while the first batches of
villagers have been taken to their
newwhite-trim homes inAnshun,
it has not yet taken the country-
sideoutofthevillagers.
Several said theymissed the se-
curity of growing their own food.
Justincase,Zhangand his wife
who heaved a basket packed with
vegetables up four flights of stairs
to their apartment have filled
one of their three bedrooms with
giantsacks ofrice.
NOWAYTOGO BACK
Under Xi Jinpingthe Communist
partyhas promised to speed up
changes to a hukou residency
systemwhich denies rural incom-
ers equal access toservices suchas
schoolingand healthcare.
But specifics are still pending
and cities, especially large and
crowded ones,haveresisted lifting
hukou restrictions and spending
moreonmigrants.
Experts call suchreforms criti-
cal, as a social safety net would
encouragemigrants tospend more
and better education would im-
prove the prospects of the next
generation.
Relocated villagers in Anshun
complained that government offi-
cials promised compensation and
jobs but, since the move in June
2013, have only provided a few
daystraining onsmarter farming.
ANALYSIS
Chinas urban drive risksdigging economic hole
tried and convicted. Further, for
the last five months, the Office of
theOmbudsmanhas been inves-
tigating the evidencebut has yet
tofilea caseagainstthoseaccused
in this massive plunder of the
peoples money.
My, my. The Filipino people
are well in their rights to throw
up their hands in sheer exaspera-
tion and ask, is this slow motion,
snail-paced, tai chi-like move-
ment at all appropriate for the
administration of justice in a
society? And, are the drawn-out,
protracted, purported investiga-
tions into the pork barrel scam
not actually an attempt to just
limit the damage and cover up the
involvement of key administra-
tion allies?President Aquino is clearly
delusional ifhe thinks his govern-
ment has adequatelyd emonstrat-
ed its stand withjustice, honesty,
and accountability or that he is
shaping a better society for a
justice-deprived Filipino people.
Indeed, he has yet to answer sat-
isfactorily the question, what are
these so-called reforms you say
youhave instituted?
Mr. Drilon is reported to have
lamented the fact that the San-
diganbayan takes an average of
sevenyears todecidea case,from
thefilingoftheinformationto the
promulgation of judgment, He
thenis said tohaveadded,rather
superfluously, Such a drawn-out
process of litigationis injusticein
itself. Thepeopledo notneed him
totell themthat.
From a wider perspective,
though, Mr. Drilon is guilty of
selective targeting because the
glaring faults in our justice sys-
tem encompass more than just
the Sandiganbayan. According to
the Davide-era Action Program
for Judicial Reform, the crucial
issues that need to be addressed
if we are to have a justice sys-
tem that is fair, accessible and
efficient, independent and self-
governed are: i) case congestion
and delay, ii) budget deficiencies,
iii) the politicized system of ju-
dicial appointments, iv) the lack
of judicial autonomy, v) human
resource inadequacies, vi) dys-
functional administrative struc-
ture and operating systems, vii)
insufficient public information
and collaboration with society,
viii) perce ived cor ruption in the
judiciary, and i x) lim ited ac cess
to justice by the poor. To that, one
has to add other elements neces-
sary to bring about reform in our
system for bringing lawbreakersto justice. These would include
programs and equipment invest-
ments to enhance law enforce-
ment capabilities (for the preven-
tion and solution of crimes) and
to improve correction facilities
(for the punishment and reha-
bilitation of criminals). Action is
such areas is directly within the
sole power of the President and,
four years into Mr. Aquinos ad-
ministration, nothing significant
has been done in this connection.
Buying the police Glock pistols
does not qualify as institutional
reform.
Indisputably,sinceMr.Aquino
has not taken meaningful action
to introduce reforms in the areas
that he has repeatedly stressed
arethe focus ofhis administration
corruption and lack of justice
thenhecan nolonger qualifyas
thepeoples heroand savior.Thus,
perhaps, the attempt by Aquino
ally (and once-rabid Arroyo sup-
porter) Drilonto begintoportray
himselfnowinthatrole.Itis prob-
ablymuchtoolate.
Several ridiculed the idea, say-
ing they had left their land and
sold their farmingequipment.
Theres noway togo backand
farm, said 60-year-old NuoMin-
gsheng.Its toof ar away,the land
has notbeen cultivated,thefarm-
ingtools aregone,the houses have
beendugup.
Right now Im living off the
farming tools and other things I
sold from my old home, and Im
not sure what Ill do after that,
hesaid.
For urbanisation to work local
authorities will have to adapt to
reality, said University of Wash-
ingtonprofessor KamWing Chan.
With some exce ptio ns, he
said, Local bureaucrats are very
bureaucratic, they just follow
the plan without seriously con-
sidering the local situation.
But the trend of urbanisation
is inexorable, especially among
young people, said Jonathan
Woetzel, a Shanghai-based direc-
tor at consultancy McKinsey and
Company and co-chair of the Ur-
banChina Initiative.
Even without a job guarantee
or hukou reform, he pointed out,
it hasnt stopped anybody from
migratingso far.
As productivity increases you
expect to see better standards of
living, hesaid.
Yetbackin Anshun,GuoTaifu,a
43-year-oldformerminer,wondered
howhewouldsupporthisthreechil-
dren.Officialshadofferedworkat a
constructionsitebut villagerscon-
sideredthepaytoolow,hesaid.
Imworried, period.
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By Carol HuangAFP
FEATURE
TORKHAM GATE, Afghanistan
Trundling across the Afghan-
Pakistani border in a handcart,
Shayma dismisses militant
threats and conspiracy theories
about polio vaccinators while her
four children receive drops that
could finally eradicate the crip-
pling disease.
About 1.3 million oral vacci-
nations are administered every
year to children at the Torkham
Gate crossing, the focal point of
an intense global campaign to
eradicate polio by 2018.
But Afghanistan and Pakistan
two ofthe threeremainingen-
demicpolionations facea tough
taskdueto fightingon either side
of the border, Taliban opposition
to vaccinations and rumors that
thedrops couldcause impotency.
Families hurrying through
the Torkham mountain pass are
diverted down a channel where
health workers deftly deliver two
liquid drops into the mouths of all
children aged under five.
We want the vaccinations so
that my children dont become
disabled, Shayma told AFP from
behind an all-enveloping blue
burqa as she headed home from
Peshawar in Pakistan to the Af-
ghan city of Jalalabad.
It is not true that the vacci-
nation is bad. I dont agree with
this, she said. I believe it stops
polio.
Pakistan is a major concern foranti-polio experts with 93 cases
last year, up from 58 in 2012.
Vaccin ators have been shot
dead, bombed or taken hostage in
Peshawar, Karachi and elsewhere,
and some anti-polio programs
have been suspended.
Twelve people were killed and
11 injured when three roadside
bombs targeting a polio vaccina-
tion team in Pakistans restive
northwest exploded Saturday.
The Pakistan Taliban oppose
immunisation,sayingit is a cover
forUSspying,andsomepeoplebe-
lieveitis alsoaplottopoisonMus-
limchildrenand causeinfertility.
Polios last stand on the Afghan-Pakistan borderBy Ben Sheppard AFP
By Glenn ChapmanAFP
While Afgha nista n has had
notable success in tackling polio,
with 80 cases in 2011 and just 14
in 2013, eradication may be a long
way off d ue to the constant flood
of people back and forth across
the porous border.
SOME FAMILIES REFUSE
VACCINE
It does pose a big challenge in
trying to ensure each and every
child is vaccinated every sin-
gle time, UNICEF spokesman
Kshitij Joshi said.
Afghanistan and Pakistan are
the same epidemiological block
and it is important that children
on either side of the border are
vaccinated toensure absolutepro-
tection.
Vac cin ate d chi ldr en are
marked on the thumb with a pen
that lasts one month, but catch-
ing every child is nearly impos-
sible in the crush of people on
the colonial-era
frontier, which
is not officially
recognised by Afghanistan.
The vaccine is voluntary and
is rejected by some families. One
elderly man shouted at health
workers and refused t o allow his
child to receive drops.
Sometimes we find a person
like this, but the majority of
people know that it is good, said
vaccination supervisor Asif ullah
who, like many Afghans, only uses
one name.
In Jalalabad city, on the main
road to Kabul, UNICEF also tar-
gets migrant communities who
move regularly between the two
c o u n t r i e s i n
search of work.
One father
living in a makeshift tent said he
had been told that the drops had
a bad effect and would make his
children naughty.
After a discussion, UNICEF fe-
male coordinator Rana persuaded
him to allow his family to receive
the vaccine.
Female volunteers are crucial
tothe anti-poliocampaignasthey
areabletoenterprivatehomes,but
they cant access more dangerous
areasintheAfghanborderregion.
It is difficult for women to go
to several districts, said Rana.
We are not allowed as the secu-
rity is not good.
Taliban militants in southern
Afghan istan gener ally support
vaccination a result, says UNI-
CEF, of years of work ensuring
that the program is seen as strict-
ly neutral.
B u t i n P aki s tan and s ome
parts of eastern Afghanistan, the
Taliban have stopped vaccinators
reaching children in key polio
enclaves.
The Taliban in Kunar and
Nang arhar p rovi nces op p os e
the vacci nati ons , s o w e have
20,000 children there who have
been unvaccinated for several
months, Faizullah Kakar, the
Afghan presid ents polio special-
ist, told AFP.
These places are near Kabul,
so we are very nervous that if it
gets to the capital it could spread
quickly.
The risk was highlighted last
month when Kabul recorded its
first polio case since 2001 after a
three-year-old girl was diagnosed,
probably due to her father carry-
ing the disease from Pakistan.
TACKLING TALIBAN
PROPAGANDA
The problem is firstly the Tali-
ban, but it is also refugees in Ku-
nar who are somehow convinced
that vaccinations are not good for
their children and they also tell
local Afghans not to vaccinate,
said Kakar.
We stopped three FM radio
stations from constantly broad-
casting propaganda against the
polio campaign.
And we try to halt books circu-
lating that pick bits of science and
claim that vaccines are from pig
products or cause infertility.
The Taliban use how Osama
bin Laden was found (in part
through a fake vaccination pro-
gram), so they say it is about spy-
ing.
Worldwid e, polio is n ow re-
stricted to two endemic areas
the Afghan-Pakistan border and
northern Nigeria.
But unless vaccination at key
points such as Torkham Gate
succeeds in stamping polio out
completely, the risk of outbreaks
in other countries will always re-
main.
For Kakar, there is one main
obstacle to ridding the world of
a highly contagious disease that
easily preventable but impossible
to cure.
If we have peace here, we
would hope to end polio very
soon, he said. Without peace, it
is a lot more uncertain.AN Afghan man pushes a cart transporting his family as they cross over the border from Pakistan at the main Torkham border in Nagarhar Province on Feb. 23. More than 1.3
million vaccinations are administered every year to children crossing at Torkham Gate,a focal point of the global campaign to eradicate polio by 2018.
AFP
FEATURE
RURAL residents doing their washing near the city of Anshun,Guizhou Province,China
on Feb. 20. Chinas leaders have pledged to better integrate the rural migrants pouring
into cities but who are often kept on the margins and denied government assistance.
AFP
-
5/26/2018 b w Digitized 030614
5/23
Thursday, March 6, 20146/S1 Corporate News
Separate brands maintained
By Claire-Ann M. C. FelicianoReporter
No sense seen in merging Maxs, Pancake House menus
JONATHAN L. CELLONA
MAXs Group President Robert F. Trota (right), concurrent president and chief executive officer of Pancake House, Inc., and Jim T.
Fuentebella, Maxs Group branding director and a director of Pancake House, pose after their press conference yesterday at The
Peninsula Manila hotel in Makati City.
MAXs Group of Companies is
firming up strategies on growing
the newly acquired restaurant
chain of Pancake House, Inc.,
building on synergies between
them even as it keeps existing
brands separate, company officials
said in a briefing yesterday at The
Peninsula Manila in Makati City.
Maxs Group President Robert
F. Trota, who also now sits as presi-
dent and chief executive officer
(CEO) of listed Pancake House,
said synergies are being explored
to leverage Maxs and Pancake
House brands.
Both brands are positionedfor growth. Right now we are in
the process of firming up numbers
in terms of growth strategy, Mr.
Trota said when asked on expan-
sion plans.
PLANS
Mr. Trota said Maxs Group will
continue opening 10-15 stores
composed of Maxs Restaurant,
Krispy Kreme and Jamba Juice
every year.
At the same time, the group
which has a network of 13 Maxs
Restaurants overseas plans to
open six more stores in the Middle
East in the next two years, the same
official said. We do plan to open
six more stores in the Middle East
in the next year or two, he said,adding this would add to its three
existing branches in that region.
For North America, where the
company has 10 stores, Mr. Trota
said: We are continuously looking
for opportunities in North Ameri-
ca. This is all part of the expansion
plan.
We are also looking at other
Asian countries, but we havent set
our foot there. We are maximizing
our resources by growing where
we already are, he added.
Maxs Group has over 150 stores
here and abroad. Founders of
homegrown Maxs Restaurant also
introduced international brands
Krispy Kreme and Jamba Juice in
the Philippines.
Meanwhile, Pancake House
Group has 105 outlets of its flag-
ship Pancake House brand. It also
has close to 300 outlets of other
brands: Dencios, Kabisera ng
Dencios, Teriyaki Boy, Sizzlin
Pepper Steak, Le Coeur De France,
The Chicken Rice Shop, Maple and
Yellow Cab.
Now that were working with
the Pancake House Group, we are
looking at how we are going togrow the Pancake House and Yel-
low Cab [ brands], Mr. Trota said.
He said the company will con-
duct strategic planning with key
individuals of Pancake House
Group to draw up an expansion
strategy and set targets.
Were going to be there to grow
the business. Its something were
working with the different CEOs
of the brands, Mr. Trota added.
Maxs Group last Feb. 25 com-
pleted its acquisition of an 89.95%
interest in Pancake House and
promptly assumed leadership of
the listed firm.
The acquisition involved pur-
chase of 193,183,967 privately held
shares of Pancake House from
former principal shareholders and
a tender offer for 39,967,233 pub-
licly held shares.
Asked on plans to infuse Maxs
Groups assets into Pancake House
leading to a backdoor listing of
the former Mr. Trota replied:
It was more of a strategic acquisi-
tion.
Whether it was listed or not,
we would still buy it.
The official also said there areno plans for now to consolidate the
two restaurant networks into one
holding firm.
Well keep the two groups sep-
arate and run them as they are,
Mr. Trota stressed.
There are advantages in keep-
ing them separate. We can still
create synergies among the two,
he added.
We almost have similar cost
structures: cost of sales, labor,
and expenses. We will try to lever-
age on that so we can bring down
costs, he explained.
Shared services like IT (infor-
mation technology) can be imple-
mented. We have our separate HR
(human resource) directors so
they could collaborate and come
up with best practices that can
benefit both groups.
Jim T. Fuentebella, Maxs
Group branding director and a
director of Pancake House, said
made more sense to keep the iden-
tity of each brand intact.
People go to these brands. It
doesnt make business sense for
us to merge all recipes together.
Thats the core of the businessesand that is what will make them
strong, Mr. Fuentebella ex-
plained.
I think the idea is understand-
ing each brand really well and
adapting to changes but never
forgetting what makes each of the
brands so special.
Pancake House recorded a net
income of P116.11 million as of
September last year, up by 53.02%
from P75.88 million in the same
nine months in 2012. Revenues
grew 8% to P2.7 billion from P2.5
billion, while cost of sales rose
5.82% to P2.18 billion from P2.06
billion. Its shares ended at P23.25
apiece yesterday, down P8.75 or
27.35% from P32 each on Tuesday.
By Daryll Edisonn D. SaclagReporter
EMPERADOR Distillers Inc.,
the liquor arm of Alliance Global
Group, has inked an agreement
with United Kingdom-based
multinational alcoholic beverage
maker Diageo to bring the latters
brands here, the Andrew L. Tan-
led firm yesterday said in a state-
ment attached to a disclosure.
Emperador Distillers, Inc., the
largest distilled spirits company
in the Philippines, and Diageo, the
worlds leadin g premiu m drinks
business, have signed an agree-
ment to bring world-iconic brands
to the Philippines, read the dis-closure.
The partnership signals op-
portunities for growth in the al-
coholic drinks sector driven by
the Philippines thriving economy
and a rapidly growing middle class
that is expected to almost double
by 2020.
No other details of the agree-
ment were provided nor were of-
ficials immediately available for
comment.
Diageo, according to its Web
site, produces Johnnie Walker,
Crown Royal, J&B, Windsor, Bu-
chanans and Bushmills whiskies;
Smirnoff, Ciroc and Ketel One
vodkas; as well as Baileys, Captain
Morgan, Tanqueray and Guinness.
Emperador, in May 2012,bought the manufacturing facility
of the Philippine unit of Diageo
in Laguna to increase production
and enhance competitiveness.
Emperador is the company be-
hind its namesake brandy, Gener-
oso Brandy and The BaR flavored
vodka.
Its lineup also includes Em-
perador Deluxe Spanish Edition
brandy, which it produces in Spain
and which it introduced in the
Philippines in March last year, as
well as E& J Gal lo wines which it
imports from California. It also
distributes potato snack products
under the Pik-Nik brand.
Its net income grew by nearly a
fifth to P5.8 billion last year from
P5 billion in 2012 as revenues
surged 25.6% to P29.6 billion from
P23.6 billion.
Its sales volume, however,
climbed just 7% due to the impact
of higher excise tax implemented
last year.
[But] with a sales volume of 33
million cases, Emperador main-
tains its position as the worlds
largest selling brandy brand in
2013, aside from being the larg-
est liquor company in the Philip-
pines, the company had claimed
in a disclosure last month.
To further boost sales, Empera-dor said it will be spending some P4
billion this year to expand produc-
tion capacity in the Philippines.
Moreover, the company said it
has invested P5.8 billion, so far, in
vineyards, distilleries and bodegas
in Spain.
Grupo Emperador Spain S.A.,
a subsidiary of Emperador, last
month agreed to invest P3.7 billion
for a 50% interest in Bodega Las
Copas S.L., a company owned by
Gonzales Byass S.A. Emperador
had described Bodega Las Copas
as a fully integrated brandy pro-
duction company that owns and
operates a vineyard near Toledo,
a distillery in Tomelloso, Ciudad
Real province, and brandy produc-
tion premises in Jerez.Grupo Emperador, in October
last year, acquired a 49-hectare
(ha) of vineyard land in the prov-
ince of Madrid, Spain, bringing the
total area of its vineyards in that
country to nearly 1,000 ha.
Emperador is a subsidiary of
Alliance Global, which is into food
and beverage business, real estate,
hotel and gaming, and quick ser-
vice restaurants.
Its shares added 16 centavos or
1.38% to end P11.74 apiece yester-
day from P11.58 each on Tuesday.
Emperador teams upwith producer
of Johnnie Walker
ABS-CBN Corp. has borrowed
P1.65 billion to refinance debt, the
Lopez-owned broadcaster said in a
brief disclosure yesterday.
ABS-CBN Corp. obtained a
four-year term loan of P1.65 bil-
lion from Security Bank Corp. on
Feb. 28. The loans interest rate is
4.25% per annum, the disclosure
read, adding that the company had
secured last Jan. 30 approval of its
board of directors for the debt.
It said debt proceeds will be
used to refinance its P1.65-billion
loan with Security Bank, and that
the latest transaction was ar-
ranged by SB Capital Investment
Corp., a wholly owned subsidiary
of Security Bank.Yesterdays disclosure also put
ABS-CBNs total outstanding debt
at P20.364 billion.
The broad