BusinessMirror February 11, 2015

By Cai U. Ordinario

The National economic and D e ve lo pme nt A ut hor i -ty (Neda) warned that the

weaker Chinese economy and the deflation in europe could temper exports growth in 2015.  Neda Director General and So-cioeconomic Planning Secretary Arsenio M. Balisacan, however, said that the recovery in the US, a major trading partner of the Philippines, will be a plus factor. 

“What could provide an upside support to exports is the continu-ing US recovery and possibly some respite from Japan, which may re-alize economic expansion toward end-2015,” Balisacan said. Balisacan shared this outlook on the heels of the Philippine Sta-tistics Authority’s (PSA) release of the preliminary export data for 2014 on Tuesday.  Data showed that exports growth grew 9 percent in 2014 to $61.810

www.businessmirror.com.ph n TfridayNovember 18, 2014 Vol. 10 No. 40 P25.00 nationwide | 7 sections 32 pages | 7 days a weekn wednesday, February 11, 2015 Vol. 10 No. 125

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 44.3150 n jaPan 0.3737 n uK 67.4253 n hK 5.7158 n china 7.0936 n singaPore 32.7507 n australia 34.6861 n eu 50.1912 n saudi arabia 11.8104 Source: BSP (10 February 2015)

Continued on A8

See “US growth,” A2

INSIDE

xiaomi is aPPle rival to watch

a thousandfor ‘PoP’

vista residences offers valuable ProPerty investment

‘Entertainment for all’ from Smart

WHETHER it’s movies or music that you like, wireless services leader Smart Communications Inc.

(Smart) is bringing you an “entertainment for all” package that powers your mobile lifestyle needs with the help of mobile entertainment apps Deezer and Blink.

If you’re one of those who often mishears the lyrics of your favorite songs, global music-streaming service Deezer has good news for you: now you can sing along to your favorite tracks with lyrics baked right into Deezer’s mobile and Web apps.

And to make things even sweeter, Smart is throwing in an added treat for users who subscribe to its Deezer music packs by way of a free movie through Blink, the country’s premier movie and TV series-streaming app.

Simply subscribe to the Deezer 250 Flexibundle as an add-on to your current postpaid plan and enjoy full and unlimited access to Deezer’s 35 million tracks, thousands of playlists, free 250 of all-network texts and now one free movie via Blink accessible via its Web, Android and iOS apps. This promo is valid until March 31.

“Smart is bringing entertainment for all to its subscribers so they can have fun and fulfill their enjoyment needs anytime, be it music from Deezer or movies from Blink,” said Kathryn Carag, postpaid marketing head at Smart. “This latest promo from Smart (tinyurl.com/lps4fru) will surely give users a worry-free way to enjoy the hottest tracks and the latest flicks powered by the country’s largest network.”

MOVIES, MUSIC AND LYRICSWITH over 5 million Google searches performed for song lyrics every day, music fans’ thirst for getting the words right is bigger than ever. Deezer’s unique Lyrics feature now makes access to lyrics much simpler—and much more fun.

Deezer partnered with LyricFind, the world’s leader in legal lyrics solutions to offer the first-ever implementation of synchronized lyrics from a major streaming service.

“Our team of transcribers has been capturing and time-stamping lyrics literally for years,” LyricFind CEO Darryl Ballantine said. “We are excited to be launching this with a brand that is as international as we are. This is a huge day for music fans.”

To instantly enjoy the latest feature of Deezer, simply download the app on your iOS or Android phones or visit www.deezer.com. Using your Smart Postpaid account, subscribe to the Deezer 250 Flexibundle by dialing *121# to avail. Subscribers can enjoy music anytime, anywhere with no additional data charges when they subscribe to Deezer Flexibundles.

Blink is a new and innovative mobile app that lets them watch Hollywood blockbusters and TV shows on their mobile phones, with access to the latest movies. To enjoy your free Blink movie, log in or create an account on www.blink-now.com and watch your movies via the Blink iOS or Android apps.

LifeBusinessMirrorEditor: Gerard S. Ramos • [email protected]

U.P. TRAINS THE SPOTLIGHT

ON HISTORY AS ART D4

DEAR Lord, how important we are then, that we are worth the life of the Son of God? It’s a

mystery we cannot fathom: the mystery of Your love. Teach us never again to doubt how precious we are, that nothing we do is useless or unimportant. It is Christ who lives in us. All we do is an act of Christ. Amen!

HOW PRECIOUS WE ARE!

LEARNING GOD’S WORD, LOUIE M. LACSONWord&Life Publications • [email protected]

Wednesday, February 11, 2015 D1

B A C J M

Los Angeles Times

IT wasn’t long ago that everybody wondered whether Apple Inc. could effectively compete against a tough bunch of homegrown smartphone makers in China.

Then came the company’s blowout earnings report last week, which included a stunning 70 percent year-over-year increase in its China region revenue, driven by its new iPhones.

That answered the question in the affirmative—but it doesn’t mean Apple can breathe easy. Chinese smartphone makers are growing fast, led by an aggressive company hardly anyone in the US had heard of until recently: Xiaomi.

Based in Beijing, Xiaomi is fast emerging as the Apple rival to watch—not just in China, but around the world. Last year it sold 61 million smartphones, more than three times its 2013 total. A few weeks ago, the five-year-old company raised $1.1 billion in new funding at a valuation of $45 billion.

“The trend over the last couple of years has been for local vendors, plus Samsung, to dominate the market and make it hard for others,” said Chris Jones, principal analyst on the mobile team at research firm Canalys. “They’ve been driving down the prices of smartphones and driving up the screen sizes and quality.”

Xiaomi sells smartphones at about half the cost of the iPhone. That’s a big deal in a country such as China, where average incomes are a fraction of those in the US.

Besides selling relatively inexpensive phones, Xiaomi’s strategy has been to primarily sell its phones online, which boosts profit margins by taking expensive real estate out of the equation.

It also uses a savvy “preorder” system, manufacturing the phone after an order is placed and paid for by the user; with the price of smartphone components constantly declining, Xiaomi ends up benefiting because the cost to produce the phone ends up being cheaper than when the phone first went on sale, said Wang Jun of Analysys International in Beijing.

Xiaomi’s chief executive, Lei Jun, has often been called “China’s Steve Jobs,” although he protests the comparison. The company has won over millions of Chinese consumers, and, like Apple, enjoys strong brand loyalty among its fans.

“I have three Xiaomi phones,” said Hao Ran, a sales manager at a Beijing theater. “The iPhone is just too expensive and isn’t worth the money.”

In a way, that serves both companies well, because each appeals to a different segment of the market: premium shoppers for Apple and price-conscious ones for Xiaomi.

“Xiaomi’s user base doesn’t really overlap with iPhone users that much, especially with loyal Xiaomi and Apple fans who would never buy a smartphone from a different brand,” Wang Jun said.

For some Chinese consumers, there’s more than just the price consideration. Ran, 27, also said he worried about his privacy being compromised by Apple and Samsung.

“I trust Chinese smartphone makers more,” he said.

In recent months, the Chinese government has been ramping up its restrictions on foreign hardware and software makers, as well as Internet giants. US companies have complained of a protectionist regime, saying such rules stifle innovation and make it increasingly difficult to do business in China.

So far, that hasn’t seemed to hamper Apple.Revenue in the company’s “Greater China”

region—encompassing China, Taiwan and Hong Kong—totaled $16.1 billion for the October-December quarter. The 70-percent increase was, by far, the biggest percentage jump by region for Apple; in comparison, its Americas revenue rose 23 percent compared with a year earlier.

Apple’s success in China was largely due to the iPhone 6 and 6 Plus, which finally gave Chinese consumers what they know and love: large-screen smartphones.

Many Chinese consumers use their phones as their primary—and oftentimes only—Internet-connected device, so big screen sizes are a huge draw.

There are also socioeconomic factors in play. As millions of Chinese become more affluent and join the swelling middle class, status and brands have become more important—and

Apple fits right into that, said Murillo Campello, a professor of management and finance at Cornell University.

“You get a cachet: Made in California,” he said. “With Xiaomi, you get the functionality of having a smartphone, but it’s just not as impressive.”

By mid-2016, Apple plans to more than double its number of greater China retail locations, to 40 in all. It already opened two stores in the region this month. To get the stores up and running, Apple has reportedly been wooing store employees to relocate to China.

Apple may be on top right now, but China is a volatile, relatively young market. To stay ahead, the company will have to constantly innovate while maintaining its status as the desirable “it” brand—not only in China, but in other emerging markets where price is a strong consideration.

In the meantime, other major tech players will continue to jostle for position, and analysts say they expect big fluctuations in the months to come.

“The market share between the top vendors is pretty close, so if the winds blow in the right direction, any one of them can move into the leadership position,” Canalys’s Jones said. “Xiaomi, Samsung, Lenovo, Huawei, Apple—they’re all in there.”

■ Chang reported from Los Angeles and Makinen from Beijing. Tommy Yang in the Los Angeles Times’s Beijing bureau contributed to this report.

B Q WSan Jose Mercury News

SAN FRANCISCO—When it comes to attracting more users, Twitter still has a lot to prove.

About 288 million people logged into the service at least once a month in the fourth quarter, a slight uptick from 284 million users in the third quarter, the social network said last Thursday as it released earnings.

Analysts and investors have been watching Twitter’s user growth rate closely as an important measure of the company’s financial health and future.

“The question was whether they could attract and retain new users. They’ve pretty much failed to do that,” said Nate Elliott, an

analyst for Forrester Research. But Twitter also reported sales of $479 million in the fourth quarter, compared to $242 million during the same period last year. That beat the $453 million in sales analysts on average surveyed by Thomas Reuters expected the company to report on Thursday and Twitter’s shares were up in early after-hours trading.

“We closed out the year with our business advancing at a great pace,” Twitter CEO Dick Costolo said in a statement.

The social network hasn’t made a profit yet, reporting a net loss of $125 million, or 20 cents a share in the fourth quarter. Excluding certain one-time expenses such as stock-based compensation, Twitter reported a profit of 12 cents per share, beating Wall Street’s expectations.

Twitter has been trying to convince

investors that its audience is much larger than the monthly user numbers and they can make money from users who are logged off of the microblogging site. People see tweets when they’re embedded in web sites, mobile apps or Web searches.

The social network said on Tuesday it is teaming up with the news-reading app Flipboard and Yahoo! Japan, allowing them to show tweets paid for by advertisers on those two services. It also struck a deal with Google that would make tweets more searchable on the Web browser.

Meanwhile, Twitter has been rolling out new features in the last month including direct group messaging, mobile videos and making tweaks to its timeline.

Twitter’s shares were up 1.41 percent to $41.29 when the market closed on Thursday.

Twitter’s user growth lags even as sales grow

TWITTER CEO Dick Cosotolo AP

LEI JUN, CEO of China’s smartphone manufacturer Xiaomi, introduces the research and development process of Xiaomi products during its annual new product release conference on July 22, 2014, in Beijing, China.

ZHANG JIN/XINHUA/ZUMA PRESS/TNS

Beijing-based Xiaomi is fast emerging as the

APPLE RIVAL TO WATCH

A THOUSAND FOR ‘POP’

BusinessMirrorBusinessMirrorSportsC | W, F , • Editor: Jun [email protected] • [email protected]

OKLAHOMA City’s Kevin Durant scored 40 points and Russell Westbrook

had 26 as the � under beat the Nuggets, 124-114, to hand Denver its sixth loss in a row on Monday in the National Basketball Associa-tion (NBA). Durant matched a career best by hitting seven three-pointers and � nished 13 of 19 from the � oor. Mitch McGary added 17 points and 10 rebounds for the � under. � e Nuggets, who have lost 13 of 14, were led by Wilson Chan-dler’s 23 points. Stephen Curry scored 20 points for Golden State and Lean-dro Barbosa had 16 o� the bench as the Warriors ended the Philadel-phia 76ers’ four-game home win-ning streak. Klay � ompson and former Sixer Andre Iguodala added 13

points apiece for the Warriors (41-9), who have won four of � ve and two straight after opening their four-game road trip with a loss to the Hawks on Friday. In Minneapolis, Al Horford scored a season-high 28 points and grabbed eight rebounds, and De-Marre Carroll added a career-best 26 points to lift the Atlanta Hawks over the Minnesota Timberwolves, 117-105. Paul Millsap had 19 points, nine rebounds and seven assists for the Hawks (43-10), who bounced back from a loss to Memphis the previous night. � e NBA-leading Hawks still have not lost back-to-back games since November 18. � ey shot 51 percent and outscored Minnesota 58-44 in the paint. Kevin Martin scored 21 points and Shabazz Muhammad had 18 points and eight rebounds

for Minnesota. � e Washington Wizards downed the Orlando Magic 96-80 after John Wall fell one point short of his � rst triple-double of the season, and Marcin Gortat had 14 points and 14 rebounds. Wall hit a three-pointer early in the third quarter—the � rst shot made from beyond the arc by either team—to open an 11-0 run that put Washington in control. He wound up with nine points, 10 assists and 10 rebounds after missing a � oater with about 50 seconds left. In other games, Chris Bosh scored 32 points and Mario Chalm-ers added 18 as the Miami Heat defeated the New York Knicks 109-95, the Milwaukee Bucks beat the Brooklyn Nets 103-97 and the Utah Jazz were 100-96 winners over the New Orleans Pelicans.

When Popovich agreed to chat with USA Today Sports recently, it was only because his favorite big man was the topic du jour. Duncan is days away from making his 15th All-Star appearance, his selection as a reserve considered controver-sial to some, but certainly not to his gray-haired and grizzled coach known as “Pop.” He wanted to help people un-derstand what they might be miss-ing, how the basic statistics—14.6 points, 10.1 rebounds and 1.9 blocks a game—don’t come any-where close to explaining the in-credible impact Duncan has had on the reigning champion’s challenging season. Popovich is always the � rst to tell you that he owes almost ev-erything to Duncan, the 38-year-old who has been his partner through nearly two decades of historic suc-cess. And this season, one in which his team has won 10 of its past 13 games to improve to 33-19 (sev-enth in the Western Conference), is like any other in that respect. “I’m not amazed [by Duncan] because I know what he does in the summertime, what he puts in his body with his little routines, whether he’s swimming or box-ing or just using his knee brace on his knee to try to keep his exten-sion as much as he can because one leg doesn’t work well,” said Popovich, the � ve-time champion whose overall record is 1,000-462 and whose winning percentage (0.684) trails only Phil Jackson (0.704) among 1,000-win coaches. “So I know all that, but still, he’s a human. He’s made up of the same stu� you and I are, and here he comes out [in a game] and I’ll think he was just Joe Blow on the court

and there it is—13 points, 11 re-bounds or something like that.” In terms of two-way impact, no player at Duncan’s age or older has produced like this. It’s special stu� , the kind of play that Popovich wants the fans to appreciate like he does. Even with Popovich recently predicting that Duncan will play one more season if he keeps producing at this level, and considering his own admission that he wasn’t likely to complete the � ve-year contract he signed last summer, he’s well aware that their time together is nearing an end. “I think about [Duncan retir-ing] every week or so, just because I try to imagine practice without Timmy walking out on the court,” Popovich said. “We have this mar-riage kind of relationship, where we don’t have to speak, or I’ll stick him one time or another with something [verbally] and he’ll give it right back to me. Nobody else on the team will even know what the hell we’re doing, and they’re like, ‘� ose guys are weird. What the hell was that about?’ � at sort of thing. But we understand it, and I’m going to miss that. He is a re-ally intelligent—a highly intelli-gent—young man. And on top of that, he’s a wise-ass, which nobody really knows. He’s got a good sense of humor. I’m going to miss that dearly whenever he stops, or if I stop before him.... � is year, it has come up in my mind quite often.” � at reality hangs over them in every arena, during every game, with Popovich always reminding Duncan to take it all in. “� ere have been a couple times at games where I’ll say, ‘Hey Timmy, look around. What if this is the last time you’re in [that

arena]?’” Popovich said. “� en he goes, ‘I’m there. I’m with you. I’m enjoying it. I’m trying to enjoy it.’ “When you’re in a season, it’s like a roller coaster. You just go and you don’t stop. I’m in a place with him where I’m saying, ‘Now re-member, we did this [in the respec-tive arena], or we did this there. Every one of these games, enjoy it. If we win by 20 or we get our ass kicked by 20, who cares? Enjoy that you were here and you were able to compete and play, because you’re going to miss it when you’re done.” Popovich, like so many oth-ers, thought Duncan may have been done after the last season. As his Spurs made their march to the NBA Finals rematch against the Miami Heat, the pain of their 2013 ending so prevalent through-

out, their leader quietly wondered whether Duncan might retire when the summer arrived. “I kept thinking, ‘You know, whether we get it done or not, is this going to be it?’” he said. “And it would pop through my mind maybe once a month or once every three weeks or so. We didn’t dwell on it. He and I didn’t talk about it. � e only time we talked about it was during the summer, after the championship.” True to form, the Spurs’ one-of-a-kind core—Popovich, Duncan, Tony Parker and Manu Ginobili—met at the team’s practice facility to discuss whether their memora-ble tour had run its course. “We said, ‘Are we gonna? Are we gonna do this?’” Popovich re-called. “And I’d say, ‘Well, let’s take

some time. You give me a call. I’ll give you a call.’ We went back and forth trying to decide what we felt like, and we came to the conclusion that it would almost be rude not to come back and go another year. You just have to do that. I sort of have a commitment with Manu and Tony and we all met together.... We talk-ed about it, and I told them that I was starting to think about what I might want to do.” To that end, Popovich can even see a scenario when he’s out of the game before Duncan. It’s unlikely, but the pull of his non-basketball interests gets stronger every year. � e 66-year-old man with the Air Force Academy upbringing, a vo-racious appetite for reading and a well-chronicled a� nity for wine has always been the worldly and cul-

tured sort. He’s a family man, too, a father of two who has been married to his wife, Erin, for 39 years. “� ere are a lot of things that I enjoy in the world, and basket-ball is probably not the No. 1 thing,” Popovich revealed. “It’s my job, but I don’t bleed it like a lot of people. I don’t think I’m a lifer. [ESPN analyst and former coach] Hubie Brown is a lifer. He’s a real basketball guy. For me, it’s my job. I try to do it well. I love basketball. I’m from Indiana, but I’m just not a lifer. “� ere’s a nuance there, but...I can win a game and be � ne, [and] I can lose a game and be � ne. And I move on. I don’t get excited for the win, or de� ated because of the loss. I just move on to the next day.” While trying to enjoy every last one.

OKLAHOMA City Thunder forward Kevin Durant regains control of the ball, after it was knocked out of his hands by the Nuggets’ Danilo Gallinari. AP

THUNDER CLOBBER NUGGETS

Even as the legendary coach of the San Antonio

Spurs approached his latest milestone—the 1,000-win club of which Greg Popovich became the ninth member with Monday

night’s 95-93 win over the Indiana Pacers—the focus was

on Tim Duncan.

SAN Antonio Coach Greg Popovich joins the 1,000-win club. AP

B S A | USA Today

THIS is how Gregg Popovich wanted it. Even as the legendary coach of the San Antonio Spurs

approached his latest milestone—the 1,000-win club of which Popovich be-came the ninth member with Monday night’s 95-93 win over the Indiana Pac-ers—the focus was on Tim Duncan.Just as he always liked it.

BusinessMirrorBusinessMirrorBusinessMirrorWednesday, February 11, 2015E1 Editor: Tet Andolong

Vista Residences is the high-rise property development arm of the Philippines’s largest home builder, Vista Land. Its portfolio boasts of 16 condominium developments either under way or ready for occupan-cy. Vista Residences’s university projects, namely, Crown Tower University Belt, 878 España, Vista Taft, Vista 309 Katipu-nan, and now the latest addi-tions to the list, Vista GL Taft and Vista Heights-Legarda, are all conveniently located near the Phil-ippines’s most premier institutions of learning. Crown Tower Univer-sity Belt (CTUB) and 878 España are both in the university belt area in Manila.

Aimed at providing the collegiate population in the Metro the homes they deserve, Vista GL Taft and Vista Heights, like their other Vista Res-idences’s university project coun-terparts, are vertical developments that will be well-maintained, boast-ing of round-the-clock security and easy accessibility to schools, o� ces, churches, transportation and other necessary conveniences. � ese prop-

erties prove to be valuable invest-ments to parents as they give them peace of mind to know that their children are in safe environments, while still being able to give them the freedom to live on their own.

What’s more, any investment-savvy individual who’s consider-ing an investment in real estate can � nd the perfect property ven-ture with Vista GL Taft and Vista Heights. With the ever-growing student population, the rise of the business-process outsourcing sec-tor and start-up families all look-ing for a place to nest in, there is a continued demand for residential homes in the city now more than ever. Nothing but a smart choice for a property investment, Vista Residences’s university projects do not only provide a secure and ac-cessible living condition.

� ey also a� ord its residents building amenities that one doesn’t normally get in a typical condo resi-dence in Manila. CTUB, 878 España, Vista Taft, Vista 309 Katipunan, Vista GL Taft and Vista Heights are all equipped with modern-day

facilities like a swimming pool, a function room, a game room, a gym and a sky garden—all are perfect avenues for play, � tness and leisure, all of which are done in a single envi-ronment without having to exit the comfort of your home.

As for students who want to clock in some serious study time, they can with the study lounges provided in every Vista Residences’s university development. � ese study rooms provide an ambient learning environment to students swamped with homeworks, as well as to those who simply want to have a quiet reading time. � ese rooms come with a Wi-Fi connec-tion and electrical sockets for them to plug their laptops and devices.

“� e greatest bene� t of living near your school is that it gives you time to focus more on your studies. Since transportation is not a prob-lem, it gives you an ample amount of rest time and the right amount of

energy to keep up with your school activities without having to worry about curfew or the availability of vehicles for

you to get home,” Vista Residences Divi-sion Head Elizabeth M. Kalaw said.

www.vistaresidences.com.ph.

VISTA RESIDENCES OFFERS VALUABLE PROPERTY INVESTMENT AS the demand for clean and

secure student-housing options continues to grow

year after year, Vista Residences is at the forefront of developing homes away from home for the ever-growing student population—giving them the advantage of unmatched accessibility by being near their schools while enjoying a kind of accommodation one cannot fi nd in a typical dormitory in the city.

B R R R

BEING a country with a huge coastline next only to the US, the Philippines has a big

potential in coastline-development projects that could generate a wide variety of economic activities.

Arch. Felino Palafox Jr. said it is logical for the Philippines to devel-op its coastal resources since it has more than 7,000 islands. “Property development has a big potential, especially in tourism projects,” said Palafox in a recent brie� ng on SEA-EX, the country’s lead-ing boat show and nautical life-style expo organized by Headsail Inc. and the European Chamber of Commerce of the Philippines (ECCP).

He cited his � rm’s project in Dubai, where they only reclaimed 70 hectares that has generated millions of dollars in revenues as tourist sites.

Palafox, an active advocate of sustainable and adaptive architec-ture, said he drafted rehabilitation plan on Leyte to make it the Ca-

ribbean of Asia and the Paci� c. � e proposal did not push through be-cause of the so-called bureaucratic roadblocks.  “However, we have a lot of obsolete laws that hamper our development,” he pointed out.

Martial Beck, ECCP vice presi-dent and general manager, said marine-development programs around the world bene� ted the countries that pursued it. With the proper support from the con-cerned stakeholders, he said ma-rine-based tourism can be a major contributor to economic growth.

He cited the US, where marinas generate an average of 0.3 jobs per berth—meaning that a 200-berth marina could provide 60 jobs and a payroll in excess of $1 million.

A size of a country does not matter in pursuing marine devel-opment. Belgium, a country with only 12 marinas and 3,500 boats along the North Sea coast, gener-ated $6.75 million annually di-rectly, plus $3 million indirectly.

In order to promote marine development in the country, Headsail and ECCP are orga-

nizing the SEA-EX expo, which will be participated in by busi-nesses  engaged in manufacture and distribution of yachts, sail boats, boating accessories, wa-ter-sports equipment, summer apparel and resort gateways.

“� e goal of this conference, like the show, is to bring together key people with great ideas and projects all related to the marine industry and start a discussion about applying di� erent strate-gies and concepts to make the Philippines what it should be, the next Mediterranean of Asia,” said Angelo Olondriz, president of Headsail.

Topics to be discussed are promoting the Philippines as a mecca for marine tourism; devel-oping the country’s boat-manu-facturing industry and sustain-able development and protecting the Philippines’s marine biodi-versity for ecotourism.

� e three-day event is sched-uled from February 20 to 22 at the SMX Convention Center in Pasay City.

Philippines urged to pursue coastal development

JUST like 2014, it will be another � ourish-ing year for the Philippine property sec-tor as the country’s major developers will

continue to invest on new projects to carry on the growth momentum last year.

“The property market in the Philippines is still in a sweet spot. This year we have seen some big investments rise from the ground, with local developers and foreign investors creating a new landscape, doing their best to deliver to the increasing demand and ac-tivity in the market. Metro Manila’s central business districts (CBDs) and other prime locations in the city have become home to new residential communities and have been the hot spots for expanding o� ce developments and booming retail mar-kets,” said Antton Nordberg,   manager of research and consultancy, KMC MAG Group Inc., in his blog posted on the com-pany’s web site (http://kmcmaggroup.com/blog/2014/12/19/2015-economic-and-industry-outlook-philippines).

Nordberg said the performance of the property market in the third quarter in-dicated a bullish attitude of the investors in the country. He said the o� ce market remains the most popular of all the assets and property types.

Although residential real estate remains a popular item on investors, Nordberg said there is an indication the market is shifting toward the lower segment.

“The steady � ow of OFW [overseas Fili-pino workers] remittances, booming IT-BPO [information technology-business-process outsourcing] industry, increasing domestic demand, and growth in tourist arrivals over the next few years drive growth in the prop-erty market. With the Philippines’s fast-grow-ing economy, it is suited to become a top real-estate market in the coming years,” he said.

In the o� ce market space, Nordberg said demand in the leasing market in serviced o� ces will be sustained in 2015, which would be boosted with the expansion of the IT-BPO, knowledge-process out-sourcing industry, and small and medium enterprises that want to test the mar-ket.  “Investors and developers should ex-plore the idea of developing new CBDs, as BGC, Makati and Ortigas start to � ll to the brim and become saturated. Great lo-cations would be Quezon City and Bay City. CBDs can also be developed in other parts of the country, with the rise of Next Wave Cities that have turned into promising investment destinations,” he said.  

Nordberg said middle-income market will contribute in sustaining demand for resi-dential units. He urged developers and inves-tors to take advantage of the trend as more people in the middle segment continue to invest in property units.  “The high demand in the residential market will be sustained, with global businesses, international brands and foreign investors in� ltrating the local market because of the generally positive business sentiment,” he said.

As far as tourism is concerned, Nordberg said the developers’ move of extending the developments outside Metro Manila and into other prime tourist spots, such as Cebu and Palawan, is a good move to enable to distrib-ute the growth around the country.

“But while a good number of hotel and leisure developments in the country are up to par with world-class facili-ties, there’s much to be desired when it comes to providing vital infrastruc-ture and improving accessibility to the country. We’re talking about renovating the airports, transport links and other ac-cess, beyond cosmetic enhancements. The country can make great strides by building an airport city and other top-class facilities,” he said.  Rizal Raoul Reyes

PHL PROPERTY SECTOR A SWEET SPOT

A LIVING-LEARNING community that integrates learning and fun in one conducive environment.

VISTA Heights architect’s perspective

THE e-library is complete with Wi-Fi access and charging stations for the

benefit of the residents.

oil Poised for swift recovery, but not to $110The price of oil is poised for

a “relatively swift” recovery following the recent col-

lapse to under $50 a barrel, but it will not come close to returning to the highs of past years, the In-ternational energy Agency (IeA) predicted on Tuesday. In a report, the Paris-based orga-nization of 29 major oil-importing nations said the rebound in recent days of the oil price “will be compar-atively limited in scope, with prices stabilizing at levels higher than re-cent lows but substantially below the highs of the last three years.” The US benchmark oil contract

fell from nearly $110 a barrel last summer to under $45 this year, before a recovery to around $53 in recent days. The IeA says the current price recovery is unlike those of the past, because of the sharp increase in production by nonmembers of the Organization of Petroleum exporting Countries, especially in the US, as well as slowing de-mand in China and slimmed- down fuel intensiveness in the developed world. The agency also said that, unlike past cycles, the low oil price is not expected to greatly boost economic

output, because low demand was, itself, part of the reason for the recent price collapse. “The fact that lackluster demand was part of the reason for the recent price collapse suggests that the sell-off will only go so far in boosting economic growth and lifting oil de-mand,” the agency said. The IeA now forecasts global oil demand to reach 93.3 million bar-rels a day in 2015, well below the 94.2 million barrels forecast in its last report. “Unlike earlier price drops, this one is both supply- and demand-driven,” the IeA said. AP

‘MRT 3 buyout plan flawed’sobrePeÑa says Pursuing the P54-b gov’t taKeover will only delay the rail system’s rehab

liFe d1

sporTs c1

properTy e1

US growth story to giveexports needed push

MaMasapaNo proBe philippine National police-special action Force (saF) director Getulio pascual Napeñas and his assistants review documents on the second day of hearing on the Mamasapano clash, where 44 saF members were killed on January 25. ROY DOMINGO

By Lorenz S. Marasigan

EVERYTHING about the state’s planned multibil-lion-peso takeover of the

Metro Rail Transit (MRT) Line 3 is flawed, so a government buyout, at this time, would not address the persistent woes of the mass transit line, the chief honcho of the company that holds the concession for the train system said.

Instead, MRT holdings II Inc. Chairman Robert John L. Sobrepeña said the government must open its ears, and listen to the private sector to correct the mistakes of the past and improve the train facility.  Sobrepeña said his company, for instance, has been submitting proposals to augment the capacity of the line and upgrade its facilities since the early part of the new century.  however, three administrations had passed and the proposals were left untouched, causing chronic conges-tion at the train system.    “We have been trying to improve the train system, proposing several times, in different modes of imple-mentation, to upgrade the MRT’s facilities and augment its capacity. But they ignored them,” the businessman

SUNRISE SUNSET

FULL MOON6:22 AM 5:59 PM

MOONRISEMOONSET

10:53 AM 11:47 PM

TODAY’S WEATHERMETROMANILA

LAOAG

BAGUIO

SBMA/CLARK

TAGAYTAY

LEGAZPI

PUERTOPRINCESA

ILOILO/BACOLOD

TUGUEGARAO

METROCEBU

CAGAYANDE ORO

METRODAVAO

ZAMBOANGA

TACLOBAN

3-DAYEXTENDEDFORECAST

3-DAYEXTENDEDFORECAST

CELEBES SEA

LEGAZPI CITY23 – 31°C

TACLOBAN CITY23 – 28°C

CAGAYAN DE ORO CITY

METRO DAVAO23 – 32°C

ZAMBOANGA CITY23 – 34°C

PHILI

PPIN

E ARE

A OF R

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NSIB

ILITY

(PAR

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SABAH

PUERTO PRINCESA CITY 21 – 32°C METRO CEBU

24 – 30°C

ILOILO/BACOLOD

23 – 31°C

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24 – 31°C 23 – 31°C 23 – 30°C

24 – 28°C 23 – 28°C 23 – 28°C

22 – 32°C 22 – 31°C 21 – 31°C

24 – 32°C 24 – 31°C 23 – 31°C

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

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

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FEBRUARY 11, 2015 | WEDNESDAY

HIGH TIDEMANILA

SOUTH HARBOR

LOW TIDE

7:54 AM0.18 METER

TUGUEGARAO CITY 19 – 27°C

LAOAG CITY 20 – 29°C

TAGAYTAY CITY 19 – 29°C

SBMA/CLARK 21 – 31°C

21 – 30°C 21 – 31°C 20 – 31°C

18 – 27°C 18 – 27°C 19 – 28°C

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23 – 32°C24 – 31°C 23 – 31°C

Partly cloudy to at times cloudy withrain showers and/or thunderstorms

Cloudy to at times cloudy with rain showersand/or thunderstorms

HALF MOON

11:50 AMFEB 12

7:09 PMFEB 4

BAGUIO CITY11 – 22°C

22 – 32°C

2:55 AM0.66 METER

FEB 12THURSDAY

FEB 13FRIDAY

FEB 14SATURDAY

22 – 31°C

Light rains

FEB 12THURSDAY

FEB 13FRIDAY

FEB 14SATURDAY

Partly cloudy to at times cloudywith rainshowers

NORTHEAST MONSOON AFFECTING LUZON.TAIL-END OF A COLD FRONT AFFECTING EASTERN VISAYAS.

(AS OF FEBRUARY 10, 5:00 PM)

METRO MANILA20 – 31°C

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

characterized by widespread cloudiness with rain showers.

Tail-end of a cold front is the extended part of the boundary, which happens when the cold air and warm air meet. This may bring rainfall and cloudiness over affected areas. It is felt at the northern

hemisphere winter season.

US growth. . . Continued from A1

BusinessMirror [email protected] Wednesday, February 11, 2015A2

NewsContinued from A8

Continued from A8

billion, from $56.698 billion in the same pe-riod of 2013. This is within the government’s 7-percent to 11-percent target this year.  This, despite the 3.2-percent contraction in export growth in December 2014—the lowest since the 3-percent drop recorded in January 2014.  Compared to other economies in the re-gion, the Philippines’s full-year exports growth performance was relatively strong despite the challenging external environment. This is a good indication of the growing resiliency of our sectors given that economies in the euro area, Japan and

China remain sluggish, causing regional trade flows to soften,” Balisacan said.  Last December, PSA data showed that the decline in the country’s export revenues was largely due to the 52.8-percent drop in revenues from shipments of other manufactures.  Revenues from the export of other manu-factures, the country’s second top export with a 14.1-percent share, in December only reached $330.51 million from $699.82 million in De-cember 2013. The country’s top export, Elec-tronic Products, kept December exports afloat

as it accounted for 49.5 percent of total export earnings.  Revenues from the export of Elec-tronic Products grew 9.9 percent to $2.377 billion in December 2014 from $2.162 billion registered in December 2013.   Among the major groups of electronic prod-ucts, Components/Devices (Semiconductors), comprised 35.7 percent of the total exports and shared the biggest with export earnings worth $1.712 billion and accelerated by 12.9 percent from $1.517 billion recorded in December 2013. Balisacan further said the sluggish outturns

in coconut products and sugar products pulled down revenues from total agro-based products by 24.9 percent from $388.7 million in Decem-ber 2013 to $291.8 million in December 2014. “While outward sales of other agro-based products reached $81.7 million, higher by 10.2 percent compared to $74.2 million in Decem-ber 2013, decline in coconut oil exports drove outward shipments from coconut products to drop from $145.1 million in December 2013 to $79.5 million in the same month of 2014,” Balisacan said.

assistance to countries fighting against terrorism, like the $200-mil-lion nonmilitary contribution Abe pledged last month to six Middle Eastern countries fighting against Islamic State militants. Days later, the militant group demanded Japan pay the same amount in ransom for two Japanese citizens in a hostage crisis that ended with the behead-ing of both. Abe’s Cabinet last year eased a self-imposed ban on military ex- ports, and adopted a new interpreta-tion of Japan’s war-renouncing Con-stitution to allow Japan to defend its top ally US or other nations in case of a foreign attack. Parliamentary approval of necessary legislation is still needed for the change to take effect. Japan currently can use force only for its own self-defense. With regional and global security environments turning more severe, the guidelines said no single nation can defend its own peace and sta-bility by itself. “Development assis-tance is one of most effective tools [in diplomacy] and is significant as ‘an investment for the future,’” the guidelines said. Last year Japan signed deals with the Philippines and Vietnam to pro-vide coast guard vessels to help their patrolling in waters disputed with China. Japan’s official development assistance budget peaked in 1997 at ¥1.17 trillion ($10 billion), but dropped to ¥550 billion ($4.7 billion) by last year, according to government figures. AP

Japan OKs new aid policy to gain more global clout

In response, Sobrepeña said the gov-ernment is only cutting reserves in the $270-billion economy. “It is unbelievable that they would do such a thing. Imagine spending P54 bil-lion to buy something that they practi-cally owned,” he said with utter disbelief. “The only thing that this initiative will accomplish is delaying the solution.” The amount for the takeover, the businessman said, could already trans-late to over 100 brand-new light-rail vehicles for the train system, plus a complete overhaul of the line. “Yet they want to spend it to noth-ing,” he lamented, explaining that the government practically controls the mass-transit system through govern-ment appointees in the MRTC’s board. The solution to the chronic problems of the MRT, Sobrepeña said, lies on mu-tual cooperation. He said the government must be open to the proposals of the private concessionaire to improve the line. “We submitted a new proposal to improve the MRT last month. It involves

the procurement of a total of 96 new train cars, the rehabilitation of the ex-isting 73 coaches, and extend the MRT all the the way to Caloocan. We want to fix the whole line,” he said. The P6.75-billion proposal, he said, would also free the government from paying billions of equity rental pay-ments to MRTC annually. “The proposal is at no cost to the government. We’ll bring back Sumi-tomo Corp. for the rehab and mainte-nance and bring back the single point of responsibility for the line. Instead of spending billions of pesos to buy out the private partner, we urge the gov-ernment to consider our proposal,” So-brepeña said. He said the current set up of reha-bilitating the MRT 3 is, likewise, flawed. Chopping off a P9.7-billion rehab deal to different contractors slows down the process, while increasing the possibility of pointing fingers should one system bog down after another. “The objective is to fix the trains but in the fastest way,” he said. The Filipino company’s proposal with Japanese firm Sumitomo would

also augment the capacity of the line, increasing it fourfold to 1.2 million daily passengers. He allayed fears that the company would increase the fares sharply should its proposal be adopted by the government. “We will not increase the fares sharply. It will be done staggeringly, and will only be equal to bus fares,” the businessman said, adding that he was not in favor of the fare adjustment that took effect on January 4 this year. “I am not in favor of the increase because the service is not good. The increase should only come when the system is fixed and improved,” Sobrepe-ña said. Aside from the proposal with Sumitomo, the railway company also has a separate offer with Metro Pacific Investments Corp. The local flagship of Hong Kong-based conglomerate First Pacific Co. Ltd. is proposing to shoulder the upgrade costs of the train system and free the government from paying billions of pesos in equity rental payments. The group of businessman Manuel V. Pangilinan, which earlier entered into a partnership agreement with the

corporate owner of the MRT, intends to spend $524 million to overhaul the line. The agreement would allow the firm to invest roughly $600 million to im-prove the services of the train system. The venture would effectively ex-pand the capacity of the railway sys-tem by adding more coaches to each train, allowing it to carry more cars at faster intervals. The multimillion-dollar expansion plan would double the ca-pacity of the line to 700,000 passen-gers a day from the current 350,000 passengers daily. It was submitted in 2011, but the transportation agency’s chief, back then, rejected the proposal. “They are planning to submit the pro-posal within a week or two,” Sobrepeña said. “I’m open to any of the proposals from the private sector. What we intend to do is to upgrade the system.” The government has been struggling to improve the train line. It even failed to procure a maintenance provider twice. The two auctions for the P2.38-billion MRT maintenance contract were snubbed by railway companies despite a sweeter deal.

Multinational and local companies like Busan Transport Corp., Mosan-In-ekon Phils Ltd. Co., SMRT International Pte. Ltd., Miescorrail Inc., and D.M. Con-sunji Inc. backed out from the first ten-der, while none of them even expressed their interest in a much better upkeep deal. Investors were spooked by the glaring defects of the train system, a rail expert said. The government is now looking for other ways on how to successfully procure a reputable maintenance pro-vider for the MRT 3. “No maintenance provider, who, in his right mind, would take the contract, no matter how they sweeten the deal. No one would want to maintain a broken train system,” So-brepeña said. Government officials were sought for comment on the businessman’s com-ments and suggestions, but no one re-plied to the BusinessMirror’s queries. MRT Line 3 has been operating at overcapac-ity since 2004. Currently, the line serves nearly 550,000 passengers per day. It even reached, at one point last year, the 650,000-daily passenger mark. It has a rated capacity of 350,000 daily passengers.

‘MRT 3 buyout plan flawed’

BusinessMirror [email protected] A4

Economy

By Catherine N. Pillas

A N advocacy group is pushing for the strict oversight of campaign spending in the 2016 national

elections, and urged presidential and vice-presidential candidates to open their books for scrutiny.

Gov’t Watch Chairman Raul T. Concepcion warned political hopefuls in a news statement that overspending contributes to corruption because of the need to recover what politi-cians spent. Moreover, the advocacy group said it is imperative for those running for public office, especially presidential and vice-

presidential bets, to submit a list of their campaign expenditures—specifically their source of funds and campaign donors—in the interest of transparency.  The group, likewise, aired doubts on the integrity of the Precinct Count Optical Scan (PCOS) machines, which is now the subject of a petition before the Supreme Court. 

The Court last week ordered the Commis-sion on Elections (Comelec) and Smartmat-ic-Total Information Management Corp. to respond to petitions from citizen-advocacy groups to stop the repair of the 80,000 PCOS units for the 2016 polls.  The repair deal, said to cost some P300 million, has been dubbed by the petition-

ers as a “midnight deal,” as it allegedly did not undergo the legal process of public and competitive bidding, among other claims.  The group said explanations from the Comelec and the Aquino administration continue to fall short of convincing a huge sector of the voting public.

By Cai U. Ordinario

ThE government expects the country’s manufacturing sec-tor to post higher growth once

the Manufacturing Resurgence Pro-gram (MRP) is implemented by vari-ous line agencies.  National Economic and Devel-opment Authority and Socioeco-nomic Planning Secretary Arsenio M. Balisacan said the MRP will help improve the competitiveness of local manufacturers.  “The MRP is expected to rebuild the domestic production base and improve competitiveness through innovation in order to compete in the export mar-ket. In addition, the government needs to be mindful of infrastructure bottle-necks, and stability of energy supply, likewise, needs be ensured in order to foster a stable business environment,” Balisacan said. The Philippine Statistics Author-ity’s (PSA) Monthly Integrated Survey of Selected Industries report showed that the country’s manufacturing out-

put or the Volume of Production Index grew 7.5 percent, while the Value of Production Index grew 4.2 percent in December 2014.  Balisacan said this was due to the robust domestic and sustained exports demands for certain products and ser-vices, such as printing, beverages, basic metals, wood and wood products. “The Philippine manufacturing sector is on a catch-up phase. Reforms undertaken thus far have helped the manufacturing sector get back on track to a higher-growth trajectory,” Balisacan said.  “Moreover, expectations remain high in the first quarter of 2015 due to brighter job prospects, stable prices of commodities, and higher household incomes,” he added.  The PSA also said that average ca-pacity utilization in December 2014 for total manufacturing was recorded at 83.6 percent.  More than 50 percent, or 11 of the 20 major industries, operated at 80 percent and above capacity utiliza-tion rates.

NGCP’s approved maximum revenue translates to an indicative transmission charge of P0.6161 per kilowatt-hour (kWh), down from P0.6416 per kWh last year.  “Compared to the MAR 2014, the

effective MAR for 2015 increased by P575.27 million. however, the actual rate impact to the customers is projected to be a decrease, since the percentage increase in billing determinant is higher than the per-

Wednesday, February 11, 2015 • Editors: Vittorio V. Vitug and Max V. de Leon

centage increase in the MAR. This is because the higher [is] the billing determinant, the lower [will be] the resulting rate per unit,” the ERC in its 12-page decision.  NGCP’s MAR for 2015 will be implemented in its January 2015 bill-ing, the ERC added. The ERC’s order was docketed on January 23, 2015, but was released only on Monday.  In the same order, the ERC did not include the performance incentive scheme (PIS) of NGCP, “considering that NGCP has yet to substantiate the same.”  NGCP is claiming a PIS of P923.08 million. The PIS provides for rewards or penalties based on certain perfor-mance standards.  NGCP’s application for MAR and PIS forms part of an annual verification and adjustment of

tariffs allowed under the Elec-tric Power Industry Reform Act of 2001.  NGCP is responsible for dispatch-ing electricity from the power plants via its transmission facilities all the way to the distribution utilities (DUs) and electric cooperatives (ECs), which, in turn, distribute power to end-consumers.  NGCP earns by charging trans-mission fees from the DUs and ECs, which are collected from end-users of electricity.   NGCP’s transmission charges are for power-delivery service, system operations and metering services. These charges recover the cost of conveying electricity to or from the grid, the cost of system operation services and the cost metering facili-ties, respectively.

NGCP gets ERC nod to hike revenue ceiling to P43.079B

By Lenie Lectura

The National Grid Corp. of the Philippines (NGCP) has received the nod of the energy

Regulatory Commission (eRC) to raise its maximum allowable revenues (MAR) to P43.079 billion, from P42.507 billion last year.

MRP seen to boost PHL manufacturing growth

Group pushes for strict oversight on campaign spending in 2016 polls

By Joel R. San Juan

THE Court of Appeals (CA) has denied the bid of the govern-ment to stop the Mandaluy-

ong City government from taking over the properties of Metro Rail Transit Corp. (MRTC) for its failure to pay real-property taxes, amount-ing to P2.4 billion, covering the pe-riod between 2003 and 2005. In an eight-page ruling penned by Associate Justice Noel Tijam, the CA’s Sixth Division held that it has no juris-diction to decide on the petition filed

by the Department of Transportation and Communications (DOTC)  and MRTC, seeking to set aside the orders issued by the Regional Trial Court of Mandaluyong City on September 15, 2006, and March 9, 2007.  The trial court, in the said orders, junked the petition filed by the DOTC, seeking the issuance of a writ of pre-liminary injunction to enjoin the Mandaluyong City government from auctioning off the MRTC properties.  The CA pointed out that the Su-preme Court ruled in the case of City of Manila v Grecia-Cuerdo that the

With the country’s lingering problem on perennial flooding, the Department of Budget and Management (DBM) said it

has allocated P47.3 billion for this year to estab-lish flood-control infrastructures that will cover 18 major river basins and areas that are situated below sea level. Budget Secretary Florencio B. Abad said the funds were allocated to the Department of Public Works and highways as part of the projects that will be included in the overall “Build Back Better” program to make the country resilient amid harsh typhoons and natural calamities. the budget chief also said that a total of P276.9 million was allocated this year to the Metropolitan Manila Development Authority for the flood control and sewerage-management program in Metro Manila. Some projects, Abad said, were funded under the Build Back Better program to pro-tect the environment, as well as neutralize possible environmental issues. these in-clude the Forest Protection Program of the Department of Environment and Natural Resources (DENR) that seeks to neutralize 31 hotspots areas and protect not only the existing forest cover of 6,839,718 hectares but also establish plantations in lands cov-ering 1,005,013 hectares. “to intensify the construction of DPWh’s flood control and drainage projects, a P 47.3 billion budget is allocated. this is among the investments that support the shift to proactive approach rooted on prevention and preparedness,” said Abad in a statement on budget for 2015. he said the Department of Budget Man-agement (DBM) allocated P14 billion to the National Disaster Risk Reduction and Man-agement Fund (NDRMMF), formerly known as the Calamity Fund, to address needs during natural calamities. Abad also said the DBM has released P7.02 billion for the DENR’s National Green-ing Program to improve carbon sequestra-tion and reduce flooding by planting 225 million seedlings in 300,000 hectare area across the country. the DBM also released P398 million for 2015 to the National Mapping and Resource information Authority (NAMRiA) for the Unified Mapping Project to produce 1,500 image maps covering 360,000 hectares, including 18 river basins. this project will provide up-to-date geospatial information for zoning and development. he said the government’s total allocation for the Build Back Better Program worth P21.7 billion is an offshoot of lessons learned from the Supertyphoon Yolanda’s devastation in No-vember 2013 that caused massive devastation across the Visayas region. Estrella Torres

Electricity bills are going up this month by P0.84 per kilowatt-hour (kWh), or by P168, for Meralco cus-tomers with a monthly consumption of 200 kWh.   Meralco said all bill compo-nents for February will shoot up to P10.51 per kWh. The upward adjustment also translates to an increase in overall power rates by P252 for consumers with a monthly consumption of 300 kWh; P336 for 400 kWh; and P420 for 500 kWh.  Still, the overall P10.51-per- kWh rate is still lower compared to rates in February 2014, which was at P11.04 per kWh. This month’s rates are, likewise, lower than the average for 2014, which was P10.72 per kWh, Meralco said.  A Meralco bill is made up of many charges. The largest component is the generation charge, or the por-tion of the bill that goes to the gen-eration companies or power produc-ers. This went up by P0.52 per kWh to P5.24 per kWh.  The increase in generation charge was mainly due to a P1-per-kWh increase in the rates of generation companies under the Power Supply Agreement (PSA), as capacity fees normalized from a low level in the preceding month.     For the year 2014, SPPC-Ilijan, SMEC-Sual and TLI-Pagbilao had not fully utilized their  respective outage allowances. Thus, they were able to operate more days resulting in accelerated collection of their fixed annual capacity fees. The remaining unpaid amount of the fixed fees by the December supply month, was thus, greatly reduced.  Generation costs also went up due to the lower dispatch of most genera-tion companies. This could, in part, be attributed to the lower demand

in the January supply month, which covered the Christmas holidays and the five-day holiday at the National Capital Region. The January 2015 supply month was, likewise, cooler compared to the December 2014 supply month.  Contributing also to the lower dispatch levels were the scheduled outages of Masinloc and Quezon Power, and the forced de-rating of Ilijan.    The effects of the lower dis-patch levels was partly mitigated by lower fuel prices, so that the fuel component from both PSAs and independent power produc-ers (IPPs) went down. IPP charge registered a net reduction of P0.08 per kWh.  Higher incidence of scheduled and forced outages of generating plants during the January supply month, likewise, had an upward pressure on Wholesale Electric-ity Spot Market (WESM) prices. However, the higher trading prices in the WESM were offset by a reduction of billing adjustments from prior months, so that WESM charges registered a net reduction of P1.15 per kWh.  The PSA, WESM and IPP share Meralco’s power requirements, pegged between 47 percent and 49. 4 percent.   In addition to the generation charge, the transmission charge also went up by P 0.12 per kWh to P0.99 per kWh. This was brought about by the increase in both the wheeling and ancillary charge components of the National Grid Corp. of the Philippines’s (NGCP) billing. Taxes also went up by around P0.08 per kWh to P1 per kWh, while other charges such as system loss charge and lifeline subsidy increased by P 0.08 per

[email protected] Wednesday, February 11, 2015 A5BusinessMirrorEconomy

kWh to P0.55 per kWh and P0.14 per kWh, respectively.  The February 2015 billing will also reflect the new FiT-All (Feed- in Tariff) charge of P 0.04 per kWh, a uniform charge that will be billed to all on-grid electricity consumers nationwide in support of the Feed-in-Tariff Program.    This charge will form part of the fund which the National Transmis-sion Corp. will use to pay the FiT-eligible renewable-energy develop-ers for the energy they will produce. The FiT Program is a mandate under Section 7 of the Renewable Energy Act of 2008. Meralco reiterated that it does not earn from the pass-through charges, such as the generation and transmis-sion charges.   Payment for the generation charge goes to the power suppliers such as the plants selling to Meralco through the WESM and under the PSAs, as well as the IPPs. Payment for the transmission charge, mean-

while, goes to the NGCP. Of the total bill, only the distribution, supply and metering charges accrue to Meralco.   Distribution charge remained at P2.20 per kWh.   Meanwhile, oil firms separately announced a P2.40-per-liter increase in gasoline products, P2.15 per liter for kerosene, and P1.9 per liter for diesel. The price hike took effect at 6 a.m. of February 10.  Oil firms said the upward adjust-ment reflects movements in the in-ternational oil market.  Asian benchmark Dubai crude rose by an average of $7.50 per barrel last week over the previous week. The surge can be attributed to weak US economic data and the announcement of oil majors that they will cut capital expenditures for 2015.   For February, Dubai crude is av-eraging $52 per barrel versus the January average of $45.50 per bar-rel, a 14-percent increase.   Moreover, MOPS (Mean of Platts

Singapore) gasoline increased by $8.50 per barrel last week versus the previous week’s average.    Gasoline is averaging nearly $66 per barrel in February versus Janu-ary’s full-month average of just over $57 per barrel.  Asian diesel prices, meanwhile, increased by an average of $6 per barrel last week versus the previous week. The increase was supported by lower stockpiles in Japan and demand from other Asian countries ahead of maintenance turnarounds at several refineries.   Since the start of the second se-mester of 2014 when international oil prices started to drop until the first week of February 2015, gasoline and diesel have decreased between P18 and P19 per liter.  And since the year started, gas-oline prices have decreased four times totaling P3.60 per liter, while diesel has been rolled back five times amounting to a total rollback over P4 per liter.  

Double whammy for consumers

meralco hikes power rates as oil firms raise gas prices By Lenie Lectura

AN upward adjustment in power rates was announced by the Manila Electric Co. (Meralco)

on Tuesday, the same day when oil firms implemented a hefty price hike in gasoline products.

P47.3B allotted for flood-control projects–DBM

Downtown hanDicraft shopping Assorted handicrafts showcasing the Filipino artistry, creativity and culture from all over the country are showcased the whole year round at stalls under the Quezon Bridge in Quiapo, Manila. The spot is equally famous among bargain hunters and balikbayan alike. KEViN DE lA CRUz

CA junks bid to halt seizure, auction of MRTC real estate in Mandaluyong Court of Tax Appeals (CTA) has jurisdic-tion over petitions for certiorari ques-tioning interlocutory orders of courts or administrative agencies in cases falling within its exclusive jurisdiction.  In the said case, the SC held that the CA was correct when it dismissed the pe-tition for certiorari questioning the order of the trial court granting the private re-spondents’ plea for a writ of preliminary injunction in a local tax case. The CA noted that, under Republic Act 9282, which pertains to the CTA’s jurisdiction, the appellate tax court has jurisdiction to review decisions of the Central Board of Assessment Appeals in the exercise of it appellate jurisdiction over cases involving the assessment and taxation of real prop-erty originally decided by the provin-cial board of assessment appeals.  “Indeed, the instant controversy sprung from the city government’s as-sessment of real-property tax over the trains of Edsa Metro Railway Transit [3.] In our minds, judicial respect to a coequal court and broader interests of justice are served by deferring the resolution of the instant issue to the CTA,” the CA ruled. “In other words, since the appellate jurisdiction over cases involving assess-ment and taxation of real-properties lies with the CTA, it follows that petitions for certiorari seeking the nullification of intelocutory orders issued in such tax cases should, likewise, be filed before said appellate court,” it added.  Concurring with the ruling were As-

sociate Justices Mario Lopez and Myra Carcia-Fernandez.  In its complaint for declaration of nullity of real-property tax assessment and writ of preliminary injunction filed against the Mandaluyong city govern-ment, the DOTC argued that, since the actual use, possession and operation is with the DOTC, the respondent cannot impose taxes upon it.  The case involves real properties in Mandaluyong City that form part of the Metro Rail Transit System, consisting of buildings that serve as MRT 3 sta-tions, railways and carriageways, as well as improvements of the stations. The DOTC added that the issuance of the warrant of levy and the eventual conduct of public auction, and the con-sequent annotation of any of the pro-ceedings on the tax declaration and or title covering the Edsa MRT 3 properties would be prejudicial to public purpose, thus, should be struck down. On the other hand, the Mandaluy-ong City government claimed that the provisions of the build, lease and transfer agreement, where the DOTC assumed MRTC’s liability for payment of real-estate taxes is null and void, as it is contrary to law and public policy. It further argued that the Execu-tive department, or any of its agencies, cannot grant tax exemption privileges to a private entity by merely assuming the responsibility for the payment of real-estate tax due on an otherwise taxable property. 

cageD hearts Colorful heart-shaped balloons fill the makeshift wall of a flower shop in Dangwa, Manila, known as Metro Manila’s flower capital. The stall owner says balloons and stuffed toys are best sellers, especially during Valentine season in February. AlYSA SAlEN

Wednesday, February 11, 2015

OpinionBusinessMirrorA6

A tax-assessment framework applicable to all

editorial

A government agency going by the rather ponderous name of Philippine extractive Industries transparency Initiative (PH-eItI) is doing an important job, and deserves commendation for a task recently completed. the PH-eItI collects, assembles and

analyzes tax-payment records of Philippine mining industries, on the one hand, and tax-collection records of relevant government agencies, on the other. It then reconciles these records to produce comprehensive reports on actual taxes paid and collected, with any discrepancy, called unreconciled amounts, identified for future adjudication and settlement.

As conveyed by the news, the PH-eItIs latest report, contained in two volumes launched recently, found that the mining industry in the Philippines paid and the government received taxes amounting to P52.7 billion for the year 2012, with a discrepancy of P52.4 million (less than one-tenth of total collected) for future resolution. that, the P52.7-billion tax collection, is no small amount, but it is not the point of this discussion.

the data gathered and reconciled came from 52 gold-, nickel- and copper-mining compa-nies in mindanao and Luzon, seven national tax-collecting agencies, and 32 local government units’ tax-collecting offices.

Aside from imparting transparency to the taxpaying efforts of the mining companies and the tax-collecting activities of relevant government agencies, the PH-eItI information provides solidity to proclamations of good citizenship by the mining companies.

At this point in time, when the mining sector in the Philippines is under siege by environ-mentalists (and by the government salivating for higher taxes), it can use the PH-eItI data as indication of its importance in the development of our economy and the uplift of the welfare of our population.

As far as the government is concerned, it can refer to the reconciled information as proof of its efficiency and dedication.

of greater importance, however, is the significance of the work procedure of PH-eItI to the tax-collection system as a whole of the government. Inferred from its description, the PH-eItI’s work procedure is a partial replication of a closed Leontief input-output system, where pay-ments are on the columns and receipts are on the rows. In this system, the cell distribution of collected data shows not just payments made and collected, including conflicting ones, but empty cells, as well, indicating a no-payment, no-receipt situation. the cells immediately suggest the course of action to be taken if the deficiency is to be corrected.

Incidentally, the value-added tax (vAt) becomes easily comprehensible when it is cast in an I-o framework. We assume that the Department of Finance uses this framework in its administration of the vAt. Sometimes we doubt it does, because of the nature of some of the issues that crop up every now and then in the course of the vAt’s collection.

We suggest that the PH-eItI framework be adopted in the other sectors of the economy. this will not only make life more bearable to the producing entities of our economy, but also convert tax administration into a systematic readily comprehensible enterprise transparent to all interested parties.

Cutting the red tape through ARTA compliance

Is Greece Europe’s first domino?

Republic Act 9485, also known as the Anti-Red Tape Act (ARTA) of 2007, was enacted to “improve the efficiency in the delivery of government service to the public by

reducing bureaucratic red tape, preventing graft and corruption, and providing penalties therefore….” eight years after, the civil Service commission (cSc)—the agency tasked to ensure the proper implementation of and monitor compliance to this law—has gone a long way in carrying out its task.

By Mark GilbertBloomberg View

WHAT you make of Greece’s predicament depends on how you think it happened. Greece was either a drug addict whose wealthy friend and enabler loaned it money to buy

recreational pharmaceuticals; now, the friend is demanding its money back even though Greece is broke, jobless and trying to kick its bad habits through cold turkey. Or, Greece was a spendthrift who cheated its way into membership in a club where it couldn’t afford the dues, sponged off its friends for years, promised repeatedly to mend its ways and now wants to renege on the accumulated iOus.

All About Social SecuritySusie G. Bugante

The concept of “red tape” is used today as a noun to describe excessive and complicated regulations in the bureaucracy. The concept connotes complex and time-consuming pro-cesses required to get government approval for something. The exact origins of the term “red tape” is not clear but there are stories that, dur-ing the 16th century, the Holy Roman empire of Spanish King charles V began to use red tapes to bind im-portant documents of government to help them identify them from less important documents. The practice spread to other governments and, eventually, became a symbol of bu-reaucratic resistance to public access to such documents.

Today governments across the world are looking for ways to “cut the red tape,” as it is often seen as a barrier to doing business and en-

trepreneurial competitiveness. Re-ducing red tape is also demanded by citizens availing themselves of public services.

At the home front, the fight against red tape continues but with brighter prospects of winning the battle, when the cSc introduced the ARTA Watch. As the personnel agency of the government, the cSc included compliance with ARTA in the annual performance assessment of government agencies. Simply put, a government agency will not be granted its performance-based bo-nus if it fails the ARTA Watch.

Five core areas were checked in the ARTA Survey of cSc—front-line service, service quality, physical working condition and overall client satisfaction. Two phases of valida-tion were done by the cSc employ-ees, including representatives from

both metaphors have merits, distor-tions and exaggerations, and the truth has always probably been somewhere in the middle. What’s not ambiguous, however, is that the risk that Greece ends up exiting the euro—an outcome that would have dangerously unpredict-able repercussions for all of europe—has risen exponentially in the past few days.

The somewhat schizophrenic nature of the european union’s (eu) response to Greece’s overtures was reflected in week-end comments from Austrian chancel-lor Werner Faymann. “i am not in favor of handing over money to the Greeks,” he said in a newspaper interview. “i do, however, support negotiations over tech-nical credit conditions so that the coun-try will have more room to maneuver to exit the crisis.”

Other officials offered similarly mixed messaging. So even as eurogroup Jeroen Dijsselbloem said on Friday “we don’t do” bridge loans, French Finance Minister Michel Sapin acknowledged on Tuesday that “we must safeguard the funding, without which Greece will be at the mercy of whatever state of the markets’ panic.”

investors are definitely beginning to panic. Greece’s three-year yield blew past 20 percent this morning with barely a pause as it made its way above 21.5 per-cent. Just four short months ago, that yield was about 4 percent.

eu officials are likely to find them-selves castigated at today’s Group of 20 gathering in istanbul for allowing the risk of a Greek collapse to endanger the global economy. uS Treasury Secretary

the private sector with some coming from non-governmental organiza-tions. As one of the agencies of the government with the most number of clients (31 million members), the ARTA Watch has been setting its sights on the Social Security System (SSS) for some time now.

last year out of 139 SSS offices surveyed by the cSc ARTA Watch, 138, or 99.2 percent, passed the test. Not bad, considering that the SSS serves different clients across all social strata, with varying standards for customer service. Out of the 138 offices, 27, or about 20 percent, were rated “excellent.”

Obviously, not all SSS offices were surveyed last year, since there are 262 local branches and service offices na-tionwide as of end-December 2014. Some would argue the results of the cSc ARTA Watch survey, especially those who experienced bad service with the SSS. but with random vis-its and surprise spot checks done by the cSc and its mystery clients, the ARTA survey results are regarded as credible.

Furthermore, a public assistance and complaints counter is a standard setup in SSS branches for clients who were less than happy with the servic-es they received. A Member Relations Department at the head office moni-tors and addresses complaints filed by members so that improvements can be made and lapses in service delivery can be corrected. Members can also e-mail their concerns to [email protected].

Admittedly, there is still plenty of room for improvement in the de-livery of service. Serving 31 million members and their beneficiaries is no mean feat. Serving them with excellence is a very big challenge! it is for this reason that the pension fund has been expanding its service network to bring its services closer to its members. last year 25 new branches were opened across the country, aside from the 13 service of-fices located in malls and municipal halls, while three new representative offices were opened overseas, bring-ing the total SSS office network here and abroad to 283.

Aside from the physical bricks and mortar, the SSS is also improv-ing its electronic points of service to clients. Members who want to know their contribution record or payment history have the option to enroll in the My.SSS online fa-cility found on the SSS web site, www.sss.gov.ph. More innovations making use of new technology are under way to give members greater convenience and easier access to services.

For more information about the SSS and its programs, call our 24-hour call center at (632) 920-6446 to 55, Monday to Friday, or send an e-mail to [email protected].

Susie G. Bugante is the vice president for public affairs and special events of the Social Security System. Send com-ments about this column to [email protected].

Jack lew, tamping down the rhetoric, said on Tuesday that there needs to be a “pragmatic” solution.

There seems to be a worrying lack of willingness to compromise—on both sides. Apart from dropping his demand for debt forgiveness, Greek prime Min-ister Alexis Tsipras isn’t doing enough to endear himself to his creditors. His speech on Sunday promising to raise the minimum wage and restore previ-ous tax thresholds amounts to writing domestic checks that he can’t afford to cash; demanding World War ii repara-tions from Germany shows a lack of judgment unbecoming of the head of a european government, no matter how new he is to the job.

Nobel laureate Joseph Stiglitz, writ-ing for project Syndicate last week, ar-gued that ignoring the mandate voters have given the new Greek government would seal the eu’s reputation as an un-democratic institution:

“every [advanced] country has real-ized that making capitalism work re-quires giving individuals a fresh start. The debtors’ prisons of the 19th cen-tury were a failure—inhumane and not exactly helping to ensure repayment. What did help was to provide better incentives for good lending, by making creditors more responsible for the con-sequences of their decisions. if europe

has allowed these debts to move from the private sector to the public sector—a well-established pattern over the past half-century—it is europe, not Greece, that should bear the consequences. in-deed, Greece’s current plight, including the massive run-up in the debt ratio, is largely the fault of the misguided troika programs foisted on it.”

He’s right. Greece needs breathing space, and its suggestion to swap ex-isting debt for loans that are tied to its economic performance has merit and deserves consideration. On Wednesday, Greek Finance Minister Yanis Varoufakis meets his peers at an emergency meet-ing in brussels. They need to recognize that it’s impossible to predict whether losing a euro member would be a con-trolled explosion, or a nuclear strike that risks destroying the entire common currency project.

The eu needs to take the initiative. it should ignore Greek rhetoric aimed at the domestic political audience, and instead address the very real crisis that Greece is facing. it could run out of money this month without some form of continued assistance that’s both pal-atable to the new administration, and compatible with the expressed wish of the nation’s voters. Otherwise, the first country to exit the euro may not be the last.

HOM

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China’s dangerous debt drag

The outlook for the Philippine property market in 2015

FEW buzz phrases scare economists more than “new paradigm.” If such things existed, Japan would still dominate the world economy, risk would have been eliminated from

Wall Street, and the euro would have spread boundless prosperity from Berlin to Athens.

By Rodolfo G. Valencia

First of two parts

AS 2014 drew to a close, I received many queries from friends and colleagues in the business sector and from local and foreign investors about the state of the Philippine

property market.

So why do so many market observ-ers continue to insist that basic prin-ciples of growth and stability don’t apply to China? News that exports fell 3.3 percent year on year in January, while imports fell 19.9 percent—the most in more than five years—don’t seem to have fazed many analysts. Bloomberg China economist Tom Orlik points out that the numbers may have been skewed by pre-Lunar New Year buying last year and a crack-down on misinvoicing of exports to Hong Kong. More broadly, though, optimists are simply convinced that President Xi Jinping will soon intro-duce more stimulus measures to keep growth ticking above 7 percent.

The idea that China can bor-row indefinitely, in order to prop up growth, simply doesn’t wash. In a new report on the world’s grow-ing debt glut, McKinsey highlights three huge risks: unsustainably high government borrowing, households in over their heads and China. The

mainland earns its singular position because of another trio of concerns: too much debt concentrated in real estate; the scale and complexity of its shadow-banking entities; and ram-pant off-balance sheet borrowing by local governments.

Driven by the vast shadow-bank-ing sector (which contains at least $6.5 trillion of debt) and a construc-tion boom fueled by local officials, China’s debt buildup accounted for a third of all borrowing globally since 2007. In that period, total Chinese debt quadrupled to $28 trillion by mid-2014, from $7 trillion. China’s public debt now stands at 282 percent of gross domestic product (GDP)—a far higher debt ratio than that of advanced economies like the US, Germany and Australia.

Why does that matter? When investors scrutinize China’s balance sheet, they’re looking for immedi-ate threats—what might trigger a true financial meltdown. One could

make the case that with almost $4 trillion of currency reserves, vast state wealth and a controlled finan-cial system, China can head off any crisis by bailing out developers and propping up stocks.

Yet, as McKinsey notes, high debt levels don’t just raise the risk of a dra-matic crash: They “have historically placed a drag on growth.” The prob-lem is diminishing returns. As Japan proved over the past two decades and Europe confirms, highly indebted na-tions require ever-bigger stimulus in-jections to lift GDP. Economists at the International Monetary Fund gener-ally put the drag-on-growth threshold at about 96 percent of GDP—a line China long ago blew past.

For an advanced economy like Ja-pan, this poses a difficult problem. For China, which has yet to reach middle-income status and must still lift tens of millions of citizens out of poverty, it’s hard to distinguish from a crisis. Expanding public debt risks suffocating a private sector that’s still in its infancy. The cost of servic-ing that debt will hog resources that could otherwise be invested in educa-tion, health care and productivity-in-creasing technologies. New airports, six-lane highways and skyscrapers will produce more overcapacity than household demand.

What’s the answer? The most obvious is to allow growth to decel-erate to the 4 percent-to-5 percent range needed to wean China off ex-cessive investment and debt. That would help purge Beijing’s excesses,

including the rampant corruption Xi has pledged to eliminate. It also would give the government room to rein in state-owned giants, which live off of easy credit.

Barring such shock therapy, the government could develop, as McKinsey writes, “a broader range of tools to avoid excessive borrow-ing and efficiently restructure debt.” Half the loans made since 2007 are linked to the cooling real-estate sec-tor. A wider range of financial prod-ucts, a broader pool of intermediaries and tax incentives to issue nonpro-perty debt would reduce risks. Bei-jing should clamp down on nonbank lending, America’s downfall in the late 2000s. A broader array of debt-restructuring mechanisms—like stronger investor-rights clauses—would curb irresponsible borrowing.

China should also employ more so-called macroprudential tools to deflate bubbles. The government could impose tight limits on loan-to-value ratios and ban risky mortgages like interest-only loans.

Finally, Beijing must get serious about improving transparency. Debt reporting is dangerously lax. The list of things we don’t know is daunting: the breadth of shadow-bank lend-ing; how much local-government fi-nancing is off the books; the scale of intra-local-government borrowing; the state of unfunded pension and health-care liabilities and the fitness of household finances. The first step to fixing China’s problems is admit-ting just how bad they really are.

JOrDAN’S King Abdullah II was in battle gear last week, quoting Clint Eastwood and bombing Islamic State (IS) targets in retaliation for the horrific burning-alive of a

Jordanian pilot. Is this a sign that Jordan is entering the war against the insurgent group in earnest, or is it a temporary show for a stunned Jordanian public?

Why Jordan is Islamic State’s next target

The complicated reality is that Jordan and IS are enmeshed in an extended, dynamic, repeat-play game in which the rules are just now being set. In fact, Abdullah was signaling to IS that if it engages in further public challenges to the Hashemite Kingdom, he’s prepared to devote real resources to the war against the militants.

For its part, IS was testing Abdullah by publicizing the video, trying to figure out how vulnerable Jordan’s ever-cautious monarchy is, or thinks it is, to being under-mined by an external threat that could easily become internal. The lesson of last week’s exchange of messages between Jordan and IS is that the struggle between them may just be getting started.

To see how that struggle is likely to evolve, begin with IS’s strategic interests vis-à-vis Jordan. The shape-shifting entity now has forces within or near the borders of three weak states, one strong state and Jordan. The two weak-est states are Syria and Iraq, from which Islamic State has carved out great swaths of territory. The third weak state is Lebanon, where IS could potentially find adher-ents among radical Sunnis, at the cost of finding itself in a pitched battle with Lebanese Hezbollah and Christian militias. So far, the group has held back from confron-tation there. The strong state is Turkey, which IS has no realistic chance of confronting successful-ly; instead it has taken advantage of Turkey’s ambivalence about a spreading Kurdish state to fight Kurdish forces in the shadow of the Turkish border, as at Kobani.

Then there’s Jordan. The state is much stronger than its Levan-tine neighbors, benefiting from a religiously heterogeneous Sunni Arab population. Its internal fault line has traditionally been between Jordanians of Palestinian origin, who by some accounts make up two-thirds of its population, and ur-Jordanians of tribal origin and (sometimes) continuing affiliation. To simplify a complex history, the Hashemite monarchy has owed its continued existence to a skillful and permanent juggling act be-tween these constituencies. The tribes demand patronage and of-fer loyalty; the Palestinians offer entrepreneurship and seek influ-ence in return.

Without a reliable source of rev-enue such as petroleum to buy off its population, Jordan has been, and remains, vulnerable to funda-mentalist challenges. remember Abu Musab al-Zarqawi, the feared leader of Al-Qaeda in Mesopota-mia, one of IS’s predecessor orga-nizations? He was from Zarqa, a Jordanian town 15 miles northeast of Amman. This city of 700,000 produced not only Zarqawi, who took the town’s name as his nom de guerre, but also a number of other radical jihadis.

To IS, then, Jordan offers a po-tential target of opportunity. The group wouldn’t challenge Jorda-nian sovereignty directly—for now. But over the medium to long term, it could plausibly strive to delegitimize the monarchy from without and within. It could do so with the mixed strategy of show-ing the regime’s weakness by kill-ing Jordanians and promoting acts of terrorism within the kingdom. Even if efforts to weaken Abdullah

failed, IS would still be on the offensive against Jordan, which would be better than the defen-sive. Jordan is the most likely base from which to stage the efforts of any serious coalition to take on the insurgents.

From Jordan’s perspective, IS is unquestionably bad news. The radi-cal destabilization of neighboring Syria and Iraq is perhaps worse for Jordan than any other country. As happened during the birth of the Iraqi refugee crisis, early refugees from Syria came to Jordan with money—but they stayed after their money ran out, and were followed by penniless refugees whose pres-ence further destabilizes Jordan. Some international financial aid has eased the burden, but a coun-try whose population consists in no small part of Palestinian refu-gees will never take its eye off the refugee problem.

And Abdullah understands perfectly well that he represents a target of opportunity to IS. That explains the aggressiveness of his public response to the pilot’s grue-some death. Abdullah is trying to communicate to IS leadership that there’s no percentage in humiliat-ing him by killing his airmen. IS does not yet pose an existential threat to Abdullah—but if it chose to focus on his regime, it could.

So long as the militants get the message and back down, Abdullah’s interest lies in helping anti-IS ef-forts without committing himself irrevocably to them and hurting his standing with Sunni Jordani-ans who may feel sympathy with their Syrian and Iraqi counter-parts. Abdullah could have played it cool, hoping that anti-insurgent sentiment would eventually burn out any nascent support. But this would be an extremely risky strate-gy given the inherent vulnerability of the monarchy to delegitimation. Holding back could easily be con-strued as weakness, not wisdom.

But escalation, even rhetorical escalation, has its own risks. IS may well escalate in return—which would require Jordan to commit more serious and long-term re-sources against it, possibly includ-ing ground troops. This would thrill the US and probably please Saudi Arabia, because both have a de-sire to fight IS without using their ground troops. IS, of course, knows all this, too—but it might welcome the chance for a limited ground war against Jordanian forces, calculat-ing that survival would turn the group into a permanent, credible regional actor.

This isn’t the beginning of the end or even the end of the begin-ning. As far as Jordan and IS are concerned, it’s the beginning of the beginning.

BLOOMBERG VIEWWilliam Pesek

Abdullah understands perfectly well that he represents a target of opportunity to IS. That explains the aggressiveness of his public response to the pilot’s gruesome death. Abdullah is trying to communicate to IS leadership that there’s no percentage in humiliating him by killing his airmen. IS does not yet pose an existential threat to Abdullah—but if it chose to focus on his regime, it could.

BLOOMBERG VIEWNoah Feldman

Is it overheating? Is there a glut in any of the market segments? Should we see cautionary signs in the economy? Are we ready for the Association of Southeast Asian Na-tions (Asean) economic integration? Can we compete with the more ad-vanced real-estate markets? Which investment areas should we be looking at for real opportunities? And so on.

The good news—and there is plenty—is that, by all accounts, the Philippine property market remains strong. While there has been a perceptible cooling of the market in the emerging economies, the Philippines has maintained its competitive position. Even the slight decline in the gross domestic prod-uct (GDP) in the first three quarters of last year has not dampened the optimism for the country among the

international funding institutions, credit agencies and fund managers. There is clear consensus that the Philippines can easily recover lost ground and resume its former pace of growth in 2015.

The optimism is well founded. Take a look at what has been hap-pening in the property market, par-ticularly at the policy and regulatory levels, and at the development of new products and services.

All the speculation about the bubble bursting anytime soon has been laid to rest by the timely and decisive action of the Bangko Sen-tral ng Pilipinas (BSP). To prevent overheating of the real-estate mar-ket, the BSP has devised a number of preemptive measures. It has man-dated all commercial banks to pro-vide adequate capital requirements in light of their increasing exposure

to real-estate loans—something like a real-estate stress test.

The objective is to make sure the banks would be capable of absorb-ing risks in the event of a shock. The BSP has also proactively seen it fit to release its real-estate price index in 2015. This would enable it to bet-ter monitor prices, precisely to avoid possible bubble assets from forming.

The demand for choice land in preparation for projects in the pipe-line is driving the price of land in the growth areas beyond the 1997 levels. Land values today are breach-ing the peak prices of land 17 years ago, when the Asian financial cri-sis struck. But there are no signs of nervousness. Colliers International reports that two parcels of land, both 1,600 square meters (sq m) in Fort Bonifacio, owned by the Gov-ernment Service Insurance System were sold at a record P500,000 and P458,000 per sq m.

It is obvious that property de-velopers have so much confidence in the local property market that they are prepared to bid high for the limited supply of suitable and large enough land in Metro Manila, even if this has the effect of pushing up skyrocketing prices of land in the

growth areas.Then, there is the boom in the

retail market. In early 2013 some 170,000 sq m of new retail space entered the market. Of this, some 100,000 sq m is expected to have been completed before the end of 2014.

Ours is obviously a consumption-driven economy, and this is what is fueling the growth of the retail sector. Look at the new malls that opened in 2014—the Fisher Mall and Fairview Terraces in Quezon City; the Century Mall in Makati City; and The District and Unimart Capitol Commons in Pasig City.

As more malls are put up, inter-national brands are coming in from everywhere and fueling greater spending. In 2014 more than 250 in-ternational establishments—under coffee and restaurants, luxury and business and midrange fashion re-tailers—entered the Philippines. In mid-October Swedish retailer H&M unveiled its 3,000-sq-m flagship store in SM Megamall, with four more H&M branches set to open before year-end.

We cannot help but notice the sudden proliferation of convenience stores all over the metropolis and into the secondary cities in the provinces. In 2012, according to a Wall Street Journal report, only 7-Eleven and Mini Stop controlled the convenience-store market. In re-cent months, they have been joined by FamilyMart, All Day, Circle K, Alfamart and Lawson. The current forecast is for the number of conve-nience stores to double, from 2,000 today to about 4,000, in four years.

Thankfully, all these are not hap-pening in Metro Manila alone.

During my days in Congress and as chairman of the congressional Committee on Housing and Urban Development, we were already sounding the alarm that Metro Manila had breached its carrying capacity, and that it was time to push development to other areas. It now appears real-estate developers are making this happen.

To be continued

Rodolfo G. Valencia is national pres-ident of the Philippine Institute of Real Estate Service Practitioners Inc. and CEO of the RGV Real Estate Group of Cos. This is an abridged version of his speech delivered at the Philippine As-sociation of Local Treasurers and As-sessors Inc.’s 82nd Annual Convention and Seminar-workshop on February 3.

lamented during an interview with the BusinessMirror.  The 15-year-old mass-transit sys-tem, which ferries more than half a million passengers daily, has been in a state of decay. Passengers frequently complain of long queues caused by the lack of light-rail vehicles. The public was also outraged by the MRT’s inefficient ticketing system, humid train cars, faulty elevators, and escalators, and rude tellers.  But what is more alarming, So-brepeña said, is the overall state of the once-mighty train system.  “The train system already poses security risks to passengers,” he said, citing the findings of the asset evalua-tion conducted by experts from Hong Kong’s MTR Corp. Ltd.  Nine rail specialists concluded

that the line is already exhibiting signs of obsolesce, hence improvements must be made in order to address the risks posed to the lives of commuters.  In order to address the persistent woes of the train system that connects the northern and southern corridors of Metro Manila, the Department of Transportation and Communications (DOTC) wants to buy the concession-aire out through a P54-billion take-over deal.  But buying out the MRT Corp. (MRTC), Sobrepeña said, would never address the problems of the line. In-stead, it only worsens the condition of the train system, as it delays the much-needed upgrades that were supposed to be rolled out about a decade ago.  “What they are doing will resut in loss of lives. I’m telling you, every-thing in the equity-value buyout is wrong. It is legally flawed,” he said. 

The deal that the government is pursuing, he said, would only provide for the exchange of money from one government agency to another.  “The P54-billion budget is only enough for the 80-percent economic interest held by the two government-owned banks. It does not include the remaining 20 percent, and the equity in MRTC,” Sobrepeña explained.  Congress took his word. The budget for the buyout was initially included in the P2.6-trillion appropriations this year. It was, however, slashed out, after lawmakers found the ini-tiative as having no “economic value.” With no funding for the takeover deal, Transportation Undersecretary Jose Perpetuo M. Lotilla has said his agency is now  considering tapping the local debt market to bankroll the multibillion-peso initiative.  

SeeKINg more assertive diplomatic and national security role internationally, Japan’s Cabinet on Tuesday adopted

new guidelines for international aid that, for the first time, clearly state that it will allow provisions for foreign armed forces, although limited to nonmilitary purposes. And the guidelines say Japan should pri-oritize aid to Southeast Asia to strengthen cooperation amid China’s growing presence

in the region.It says Japan should spend aid money

more effectively to serve its national inter-ests amid limited budgets and sporadic ef-forts to boost Japan’s economy. Japan, for instance, plans to continue assistance for Caribbean island-countries, many of them supporters of Japan’s campaign for commer-cial whaling, a Foreign Ministry official said on condition of anonymity, because he made

the comment before the official release of the guidelines.

The changes, the first in 12 years, are in line with Prime Minister Shinzo Abe’s push to bolster Japan’s international role in diplomacy and national security.

“Taking into consideration that armed forces are increasingly playing major roles in postconflict reconstruction and disaster- relief efforts, we specified our policy regard-

ing nonmilitary projects,” Foreign Minister Fumio Kishida told reporters.

The guidelines say Japan’s pacifist aid policy remains unchanged and that each pro-vision will be scrutinized carefully, although it raised concerns about whether Japan can ensure that the money is not funneled into military use.

Japan will also expand humanitarian

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Wednesday, February 11, 2015

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Taiwan’s Kinpo investing another₧1.4B to expand Batangas facility

By Catherine N. Pillas

Taiwanese electronics maker Kinpo Group, fresh from setting up a P1.4-billion facility in Batangas province last

year, is now looking at investing an additional P1.4 billion to expand factory operations within the year. 

Retail lendershike usage ofrediscountingwindow of BSP

By Bianca Cuaresma

The country’s thrift units took advantage of the central bank’s peso-liquidity mecha-nism, and sold P61 million worth of their

receivables in January at the rediscounting win-dow of the Bangko Sentral ng Pilipinas (BSP). The continued patronange of the peso re-discounting window of the central bank by the various retail-lending units of the banking sys-tem demonstrates yet again the highly liquid state of the financial system as a whole, and the continued refusal by the big universal and commercial lenders to tap the facility to their advantage. Data from the BSP show the rediscounting window having nearly doubled in January, as the small lenders endeavored to take advantage of the BSP facility for their own lending require-ments during the period. The central bank on Tuesday said the total availment of thrift and rural banks from the re-discounting window hit P61 million in January. This was 69.4 percent higher than the P36 million the thrift units took from the centarl bank in the same period last year. The peso-rediscounting window helps the banks boost their capacity to lend and, by exten-sion, their capacity to generate profits for their shareholders. This is made possible by allowing qualified banks to obtain loans or advances from the BSP using eligible papers of its borrowers as collateral. A low volume of availment by banks usually indicates an industry that has not much need for liquidity assistance, as they have enough of their own to underwrite their lending operations. An uptick in availment indicates the opposite.

Japan OKs new aid policy to gain more global clout

‘MRT 3 buyout plan flawed’

In a statement, Kinpo group CeO Si-mon Shen said the company is eyeing to be the main production base of consumer-electronics goods, such as calculators, for a popular Japanese brand.  The Taiwanese company already invested P1.4 billion in setting up a new factory in Batangas—to be operated by its subsidiary

Kinpo electronics Inc.—which will begin op-erations in March.  The investment this year will be used for factory expansion, and is said to account for a hefty 10 percent to 30 percent of the group’s total revenues in the future.  The initial setup and the planned ex-pansion are expected to employ 4,000 to

6,000 workers.  “We are continuously bringing to frui-tion the government’s efforts to boost Philippine economic relations with Tai-wan, as we welcome more inbound-trade missions from Taiwan and enable busi-nesses like New Kinpo to f lourish in the Philippines,” Trade Undersecretary Pon-ciano C. Manalo Jr. said. With the growth of companies like the Kinpo electronics group in the Philippines, Manalo noted that the country is taking part in Taiwan’s move to become a major supply-chain source of industries in the region.  Taiwan is currently one of the Philip-pines’s top trading partners, contributing 7.9 percent of the total import bill last Oc-tober, with import value of $411.58 million. export receipts from Taiwan for the same month reached $180.20 million, yielding a total trade value of $591.78 million and a trade deficit of $231.38 million.

The Kinpo group’s previous invest-ments in the Philippines include the project of its subsidiaries, such as AcBel Polytech Inc., for the manufacture of light-emitting diode lighting and smart grid solutions; and CalComp electronics and Communications Co., for the production of handsets, printers and liquid-crystal-display televisions. Kinpo electronics Inc. is a leading global original-design manufacturer and electron-ics-manufacturing services partner.  At present, the group has a total of 96,000 employees worldwide and has 23 subsidiar-ies, seven of them publicly listed. New Kinpo group Technology is one of the major subsid-iaries of Kinpo group. The group produces a wide range of con-sumer-electronics products , such as calcula-tors, printers, 3D printers, external hard-disc drives, modems and motherboards for brands like HP, Toshiba, Western Digital and Casio.

Ilocos trIathlon trisports Inc. (tsI) formalizes its partnership with the BusinessMirror as its official media partner for its upcoming tri Ilocos north 3 triathlon event on March 28. leading the agreement signing are (from left) tsI Marketing associate Bea Grabador, tsI Marketing head carlo sampan, tsI President Mikey chua, BusinessMirror Publisher t. anthony cabangon, BusinessMirror advertising sales VP Marvin Estigoy and BusinessMirror Events officer carlo abalos. ALYSA SALEN

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