BusinessMirror January 16, 2015

See “Traders,” A2

www.businessmirror.com.ph n Tuesday, November 18, 2014 Vol. 10 No. 40 P25.00 nationwide | 7 sections 32 pages | 7 DAYS A WEEKn Friday, January 16, 2015 Vol. 10 No. 99

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 44.8320 n JAPAN 0.3804 n UK 68.0101 n HK 5.7827 n CHINA 7.2330 n SINGAPORE 33.6324 n AUSTRALIA 36.5826 n EU 52.8031 n SAUDI ARABIA 11.9453 Source: BSP (14 January 2015)

Continued on A2

CUSTOM-MADE POPEMOBILE A customized Isuzu D-Max LS pickup, donated by Gencars Philippines (sister company of the BusinessMirror), ferried Pope Francis to the Apostolic Nunciature in Paco, Manila. Millions of Catholics lined the route of the papal convoy to welcome the pontiff, who arrived in the country on Thursday afternoon. ALYSA SALEN

Traders given 90 daysto reexport ‘empties’

ICC okays 7 key infra projects5 BIG PPPs, INCLUDING THE COUNTRY’S FIRST SUBWAY, NOW BEING READIED FOR NEDA BOARD APPROVAL

CBCP’S APPEAL TO POPE FRANCIS: HELP PHL FIGHT CLIMATE CHANGE

CATHOLIC bishops said on Thursday that they will appeal to Pope Francis

to help the Philippines address climate change, a phenomenon which urgently needs the Church’s “moral intervention.” The Catholic Bishops’ Confer-ence of the Philippines (CBCP) said their appeal will be contained in a letter that will be given by Manila Archbishop Luis Antonio Cardinal Tagle to Pope Francis, who arrived in the country on Thursday afternoon. Fr. Edwin Gariguez, executive secretary of the National Secre-tariat for Social Action-Caritas

Philippines (Nassa), said the Philippines has topped the list of countries most affected by natural disasters, such as strong typhoons and floods. Nassa is the social action arm of the CBCP. Gariguez cited in particular Supertyphoon Yolanda (interna-tional code name Haiyan), which killed more than 6,000 people and brought “catastrophic misery to our people.” “Facing hunger, increased mor-tality due to temperature increase, more destruction from extreme weather events, the Philippines is at the doorstep of all major threats

By Cai U. Ordinario

SEVEN key infrastructure projects were recently approved at the joint meeting of the technical board and

Cabinet Committee (Cabcom) of the interagency Investment Coordination Committee (ICC).  The seven projects include two official development assistance (ODA) and five public-private partnership (PPP) projects.  National Economic and Develop-ment Authority (Neda) Deputy Di-rector General for Programming Ro-lando G. Tungpalan said that while all the projects were approved, only the expansion of the Tarlac-Pangas-

inan-La Union Expressway (TPLEx) does not need to meet any additional requirement and suggestion before it advances to the Neda Board.  “Before they go to the Neda Board dapat naaral na nila ’yan. [They will not advance to the Neda Board] un-less they submit to us how they are complying with some suggestions

By David Cagahastian

FINANCE Secretary Cesar V. Purisima has approved a new customs administrative

order shortening the deadline for the reexport of empty containers from 150 days to 90 days to help address the problem of congestion at the ports. Purisima approved Customs Ad-ministrative Order (CAO) 1-2015 mandating that, all empty containers must be reexported on or before April 30, 2015, to avoid duties or taxes. Empty containers that are not reexported by April 30 shall be con-

sidered as imports for which import entries and the corresponding duties shall be filed and paid by the owners of the empty containers. CAO 1-2015 also provides that, for the period of January 30 to April 30, containers arriving as empty shall be reexported by July 29, and that containers stuffed with im-ported cargoes, which were returned to the shipping line during the said period, must be reexported also by July 29. From May 1 onward, con-tainers arriving as empty shall be reexported within 90 days from the date of the last discharge, while Continued on A2

and requirements,” Tungpalan told the BusinessMirror on Thursday. “Itong lahat pasok sa Neda Board, TPLEx was very clean, though.” Tungpalan said the projects that need clarifications in design include the North-South Railway Project (NSRP) and the country’s first sub-way, the Makati-Pasay-Taguig Mass Transit System Loop (MTSL).  The Neda official said the NSRP needs additional information on

how it will affect other modes of transportation, while the MTSL is still to address some alignment is-sues. He added that other projects also have to meet certain require-ments and suggestions to make the discussions for them “smoother” at the Neda Board.  “[The clarifications include those that are] likely to be asked by the Neda Board. We don’t want too many uncertainties,” he added.  Apart from the TPLEx, NSRP and MTSL, other PPP projects

approved were the Motor Vehicle Inspections System and the Civil Registry System Information Technology Phase II. The other ICC approvals in-clude the Bureau of Fire Protec-tion (BFP) Capacity Building Program Phase II, which seeks to add 76 fire trucks to the current fleet of the BFP. The project will be funded by a concessional loan from Austria.  The list of approvals also include the Light Rail Transit Line 2 West

Extension to Divisoria. The 1.62-kilometer extension will run from Recto to Delpan Street, in front of Tutuban, up to Divisoria Mall.  The ICC evaluates major na-tional projects. All projects ap-proved by the ICC are recommend-ed for approval by the Neda Board.  The Neda Board is the highest policy-making body of the Neda and is tasked with the approval of major government projects. It is chaired by the President.

SUNRISE SUNSET

NEW MOON6:25 AM 5:46 PM

MOONRISEMOONSET

1:46 PM 1:56 AM

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 CITY24 – 29°C

TACLOBAN CITY23 – 28°C

CAGAYAN DE ORO CITY

METRO DAVAO23 – 31°C

ZAMBOANGA CITY23 – 33°C

PHILI

PPIN

E ARE

A OF R

ESPO

NSIB

ILITY

(PAR

)

SABAH

PUERTO PRINCESA CITY 25 – 30°C METRO CEBU

24 – 30°C

ILOILO/BACOLOD

24 – 31°C

23 – 29°C

23 – 29°C 23 – 29°C 24 – 31°C

22 – 28°C 22 – 27°C 22 – 28°C

24 – 30°C 23 – 29°C 24 – 31°C

24 – 31°C 24 – 31°C 24 – 32°C

23 – 34°C 23 – 34°C 24 – 34°C

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

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

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

www.panahon.tv

@PanahonTV

JANUARY 16, 2015 | FRIDAY

HIGH TIDEMANILA

SOUTH HARBOR

LOW TIDE

2:35 AM0.14 METER

TUGUEGARAO CITY 20 – 29°C

LAOAG CITY 19 – 29°C

TAGAYTAY CITY 17 – 28°C

SBMA/CLARK 22 – 30°C

20 – 31°C 19 – 29°C 19 – 28°C

19 – 28°C 18 – 28°C 19 – 28°C

19 – 28°C 18 – 28°C 18 – 28°C

12 – 21°C 12 – 21°C 13 – 21°C

17 – 27°C 17 – 27°C 17 – 26°C

22 – 28°C23 – 28°C 23 – 28°C

24 – 31°C 24 – 32°C

22 – 29°C23 – 31°C 22 – 29°C

23 – 29°C23 – 29°C 24 – 31°C

Partly cloudy to cloudy skies withisolated rain showers and/or thunderstorms

Cloudy skies with rain showersand/or thunderstorms.

HALF MOON

5:46 PMJAN 13

9:14 PMJAN 20

BAGUIO CITY13 – 21°C

25 – 31°C

4:37 PM0.86 METER

JAN 17SATURDAY

JAN 18SUNDAY

JAN 19MONDAY

JAN 17SATURDAY

JAN 18SUNDAY

JAN 19MONDAY

Light rains

Partly cloudy to at times cloudywith rainshowers

Tropical Storm is a cyclone category with winds of 64 - 118 kph.TROPICAL STORM AMANG WAS ESTIMATED AT

765 KM EAST OF GUIUAN, EASTERN SAMAR.(AS OF JANUARY 15, 5:00 PM)

METRO MANILA19 – 30°C

Oil futures. . . Continued from A8

Traders. . . Continued from A1

BusinessMirror [email protected] Friday, January 16, 2015A2

NewsContinued from A1

Continued from A1

ICC okays 7 key infra projectscommodities after a decadelong bull mar-ket led companies to boost production and a stronger dollar diminished their allure to investors. The Bloomberg Commodity Index of 22 energy, agriculture and metal products decreased to the lowest level since November 2002 on January 13, ex-tending a 17-percent loss last year.

Record outputWEST Texas Intermediate (WTI) for Febru-ary delivery declined as much as 41 cents to $48.07 a barrel in electronic trading on the New York Mercantile Exchange and was at $48.18 at 2:44 p.m. Sydney time. The contract advanced $2.59, or 5.6 percent, to $48.48 on Thursday. The volume of all futures traded more than three times the 100-day average. Brent for February settlement dropped as much as 58 cents, or 1.2 percent, to $48.11 a barrel on the London-based ICE Futures Europe exchange. The contract, which expires on Thursday, traded at a premium of 6 cents to WTI. The more-active March future was 44 cents lower at $49.42. US crude production accelerated by 60,000 barrels a day in the week ended January 9, the EIA reported on Wednes-day. Stockpiles expanded by 5.39 mil-lion barrels to 387.8 million, more than 9 percent above the five-year average for this time of year, according to the Energy

Department’s statistical arm. Inventories at Cushing, Oklahoma, the delivery point for New York-traded futures, climbed for a sixth week.

‘Fundamentally changed’THE speed at which investment can return to shale output is hurting prospects for a price recovery, Jeff Currie, Goldman’s New York-based head of commodities research, said in an interview on Bloomberg Televi-sion on Wednesday. “Shale has fundamentally changed this market,” he said. “The lead time between when you put money in the ground and when you get production has collapsed from three to four years, all the way down to 30 days.” The US oil boom has been driven by a combination of horizontal drilling and hydraulic fracturing, which has unlocked shale formations, including the Eagle Ford and Permian in Texas and the Bakken in North Dakota. WTI will fall to $40 a barrel by the end of the first quarter, while Brent may decrease to $42 amid the “war” for mar-ket share, according to Australia & New Zealand Banking Group. For the year, futures are projected at $48 and $50, respectively, analysts, including Mark Pervan in Melbourne, said in an e-mailed report on Thursday.

Bloomberg News

containers stuffed with imported cargoes shall be reexported within 90 days from their return to the shipping line. The customs administrative or-der said failure to reexport the sub-ject containers means that the con-tainers shall be treated as imports, for which import entries must be filed and the corresponding duties

paid at the prescribed periods for doing so. If the import entries and the duties are not paid, the containers shall be subject to the issuance of a warrant of seizure and detention. The problem of port conges-tion, which surfaced last year, was partly caused by the slow reexport of empty containers.

of climate change,” he said. Gariguez said Catholic bishops would also ask the pope to de-mand governments to commit to various climate-change mitigation measures and to support calls that would end the continued burning of fossil fuel and other projects that threaten the environment. Francis is expected to issue an encyclical on climate change with-in the year to spur global action to address it. Meanwhile, the CBCP said there will be no changes in the itinerary of Francis despite the threat posed by Tropical Storm Amang which could bring torrential rains in parts of Luzon and the Visayas. Archbishop Socrates Villages, president of CBCP, made the statement after the Philippine Atmospheric, Geophysical and Astronomical Services Adminis-tration said moderate to heavy rain is expected in Leyte and Ma-

nila where the pontiff will hold masses on Saturday and Sunday. Earlier reports said there is a possibility that Francis’s visit in Tacloban and Palo in Leyte on Sat-urday would be canceled due to the tropical storm. Palo Archbishop John Du, how-ever, said it’s all systems go for Francis’s visit in Leyte. Du also said any changes in the pontiff’s five-day visit would have to come from the Vatican. Francis’s plane touched down at the Villamor Air Base at 5:32 p.m. on Thursday. President Aquino, other government officials, Church repre-sentatives and hundreds of school-children were on hand to welcome the pontiff. The pope traveled to the Apos-tolic Nunciature in Paco, Manila aboard a customized Isuzu D-Max popemobile. Thousands of Catho-lics patiently waited along the route of the papal convoy to get a glimpse of His Holiness. On Friday morning, Francis will

meet Mr. Aquino in Malacañang as part of the official rites for the visiting head of the Vatican state. Government agencies are set to enforce more stringent security measures to ensure a glitch-free meeting between the pontiff and President Aquino. As head of the Vatican, listed as the smallest state in the world, Francis will be accorded full mili-tary honors when he arrives at the Palace. Communications Secretary Herminio B. Coloma Jr. said the meeting would be “freewheeling.” “I think as of now, there is no set agenda. There has been no intima-tion of any specific agenda item for discussion,” Coloma said. Meanwhile, the Civil Avia-tion Authority of the Philippines (Caap) said on Thursday that all general aviation flights will be prohibited within the country from Saturday morning until Monday morning. Caap issued a Notice to Airmen,

which indicated that special op-erations will be effective at 5 a.m. on January 17 until 7:59 a.m. on January 19. Rodante Joya, Caap deputy director general for operations, said the no-f ly zone and no-drone policy are in effect on Thursday on areas covered by an earlier Notam issued by the agency, including f lying schools operating nationwide. Joya sought the public’s under-standing on the inconvenience that may be caused by the restrictions on Philippine air space. The Armed Forces of the Philip-pines (AFP) also called on Catholic faithful to junk prank text mes-sages and information that could otherwise compromise security and muddle the fruitful stay and visit of Francis in the country. AFP Chief of Staff Gregorio Pio Catapang Jr. made the appeal fol-lowing a last-minute briefing on security preparations made by con-cerned government agencies.

CBCP’S APPEAL TO POPE FRANCIS: HELP PHL FIGHT CLIMATE CHANGE

ANG Nars Party-list group has asked the Supreme Court (SC) to compel the government to enforce a pro-

vision under the Philippine Nursing Act of 2002 that puts a nurse’s base pay at P25,000 and up.

In a 28-page petition for mandamus, Ang Nars Party-list Rep. Leah Primitiva Samaco-Paquiz also asked the Court to declare null and void a ruling by former President Gloria Arroyo contradicting Re-public Act (RA) 9173.

RA 9173 rules that the minimum base pay of nurses in the government health institutions should not be lower than Sal-ary Grade (SG) 15, which is equivalent to $561.30 at current exchange rates.

Samaco-Paquiz said Section 6 of Ex-ecutive Order 811 issued by Mrs. Arroyo, however, declares the entry level of Nurse 1 from SG 10 to SG 11.

“When the law is clear, government agencies are bound to implement the same. When jurisdiction is exercised beyond that of what is actually mandated by law, the findings made in abuse of the legal power, of the jurisdiction given, is null and void,” the petitioner said.

The party-list group is joined in the petition by the Public Services Labor Independent Confederation headed by Annie Geron. Ang Nars is an accredited party-list organization that promotes the rights of nurses.

They named Executive Secretary Paqui-to Ochoa Jr., Budget Secretary Florencio B. Abad and the Department of Health in the petition.

Paquiz claimed the Department of Budget and Management (DBM) acknowl-edged the existence of a law providing for the entry level of government nurses to SG 15.

But, the DBM stated, the implemen-tation of such law will distort the hier-archical relationships of medical and allied positions in the bureaucracy and will require additional public funding, Paquiz said.

She added that the group has sought the legal opinion of the Department of Justice (DOJ) to shed light on the conflict-ing pronouncements of the DBM with the provision of RA 9173.

However, the DOJ declined to render an opinion, according to Paquiz.

“EO [Executive Order] 811, as an ad-ministrative issuance, must be consistent with laws and should not amend or modify the law,” the petition noted.

“By reducing the salary grade of nurses from SG 15, as provided for by RA 9173, to SG 11, EO 811 has violated the principle of nondiminution of pay expressly provided for in Joint Resolution 4.”

Paquiz insisted that government nurses are entitled to enjoy SG 15 in accordance with Section 32 of the law and its imple-menting rules and regulations.

It’s the ministerial duty of the respond-ents to implement the law, notwithstand-ing the existence of EO 811, she added. Joel R. San Juan

“The rotor was damaged. It is up for replace-ment. Before March is the online date,” said Mylene Capongcol, director for Electric Power Industry Management Bureau of the Depart-ment of Energy (DOE).

The power plant, owned by Kepco Philip-pines Inc., is composed of two units with a ca-pacity of 600 megawatts (MW) each. Unit 2 is scheduled to undergo a maintenance outage during the very same time that the Malampaya natural-gas facility goes offline from March 15 to April 15.

The Malampaya gas field in offshore Pala-wan supplies natural gas to two more power

plants in Luzon—the 1,000-MW Santa Rita and 500-MW San Lorenzo power plants, both owned by the Lopez group.

Capongcol said Ilijan Block A was put on maintenance outage last Monday, due to “dam-aged compressor turbine and casing.”

There is no definite date as to when Block A will be operational again but the DOE official said maintenance work could stretch all the way to March 3.

Meanwhile, Block B was put on forced out-age since Tuesday due to “condenser tube leak.”

“There is no estimated date of completion of repair for Ilijan’s Block B,” Capongcol added,

[email protected] Editor: Dionisio L. Pelayo • Friday, January 16, 2015 A3BusinessMirrorThe Nation

Malampaya-fueled power plant shut down after glitchTHE Ilijan natural gas power plant, the largest

of the three natural gas plants fueled by the Malampaya deep water gas-to-power

facility, encountered technical glitches early this week, prompting owners to temporarily shutdown the facility, ahead of the scheduled 30-day shutdown set in March.

although some sources said repair could take a few days only.

Despite this, the power supply appears to be adequate until the last day of the state and pastoral visit of Pope Francis to the Philippines.

Based on the power situation outlook pro-vided by the National Grid Corp. of the Phil-ippines (NGCP) for January 16, Luzon’s avail-able capacity stands at 7,834 MW, while peak demand could reach 6,555 MW. This would result in 1,279 MW of gross reserves.

For January 17, gross reserve is estimated at 898 MW in Luzon, with available capacity and peak demand reaching 7,128 MW and 6,230 MW, respectively.

Gross reserves for January 18 and 19 are at 1,728 MW and 1,428 MW, respectively.

The NGCP has put in place contingency plans to monitor and quickly address any grid disturbance or major line trippings.

Aside from Ilijan, there are many more power plants scheduled for maintenance shutdown until July this year. In all, a total capacity of 4,162.6 MW will not be available. However, the maintenance shutdown and forced outages will not happen simultaneously, NGCP said in a statement. Lenie Lectura

Group seeks SC help to prompt govt action in nurses’ pay row

THE Philippine Drug enforcement Agency (PDEA) on Thursday said the laboratory examinations con-

ducted on the pieces of drug evidence seized from a 39-year-old Mexican na-tional yielded positive results for cocaine.PDEA Director General Undersecretary Arturo G. Cacdac Jr. said the chemistry report from the PDEA Laboratory Service showed the illegal drug, contained inside 10 self-sealing transparent plastic bags, weighed roughly 2,265 grams.

The bags of cocaine were seized from Mexico City native Horacio Herrera Her-nandez during a buy-bust operation. The operation was conducted by elements of the PDEA Special Enforcement Service (PDEA-SES), the Philippine National Police (PNP) Anti-Illegal Drugs Special Operations Task (PNP-AIDSOTF) and Makati City Police in front of a Korean BBQ restaurant along Makati Avenue, Barangay Poblacion, Makati City on January 11, 2015.

According to reports, Hernandez is a high-rank member of Sinaloa Drug Car-tel, a dangerously powerful international drug trafficking organization based in Mexico City.

Hernandez’s arrest has proven one thing: The Mexican Sinaloa Drug Cartel has been actively operating in the coun-try for over a year now as evidenced by the confiscation of some P420 million worth of methamphetamine hydrochlo-ride, or shabu, during a joint PDEA-PNP Christmas Day raid in 2013 at a game fowl ranch in Lipa City, Batangas, where the seized illegal drugs are said to have been smuggled, according to Cacdac.

The ranch is leased by Mexican na-tionals, who are alleged members of the drug cartel, he added.

“The Sinaloa Drug Cartel has found Southeast Asia, particularly the Philip-pines, being an archipelagic country de-marcated by porous borders and bodies of water, as a possible market and trans-shipment point for methamphetamine hydrochloride. At the moment, they are probably testing the waters for cocaine use,” Cacdac said.

Hernandez is facing charges for vio-lation of Section 5 (Sale of Dangerous Drugs), Article 2 of Republic Act 9165, or The Comprehensive Dangerous Drugs Act of 2002, before the court. He is currently under the custody of PDEA-SES. PNA

PDEA lab finds presence of cocaine on drugs seized from Mexican national

TOP economists writing a weekly column for the BusinessMirror would be presenting their views on

the Philippine economy and their outlook for the domestic market this year.

The Ateneo de Manila Universi-ty’s macroeconomic forecasting unit Ateneo Eagle Watch will be present-ing its 2015 Economic and Market Outlook on January 22, 2015 at the Ateneo Rockwell Campus.

The outlook will focus on the direction of economic growth, growth drivers and dampeners, exchange rate, inflation and interest rates forecasts.

There will also be a special session on the political economy and economic direc-tions after 2016.

The forum would also seek to respond to key questions, like how the forthcoming elections affect the economy, business and the markets. Likewise, the forum speak-

ers would discuss the most likely policy direction of potential candidates.

The speakers during the forum include former Socioeconomic Planning Secretary Cielito F. Habito, former Philippine Eco-nomic Society President Alvin Ang and Luis Dumlao, Chairman of the ADMU’s Department of Economics.

Habito would discuss the 2016 elec-tions, its economic implications and what it means for the Philippines. Ang, 2013 president of the Philippine Economic So-ciety, will discuss the financial and equi-ties market outlook of the Philippines and its relation to the global markets. Dumlao will assess the current Philippine economic environment and ascertain whether the proper groundwork has been laid to ensure continuous economic growth.

The forum is in cooperation with the International Federation of Professional Managers Philippines Inc.

Top Ateneo economists to share views, outlook on PHL economy

PAQUIZ: “It’s the ministerial duty of the respondents to

implement the law, notwithstanding

the existence of Executive Order 811.”

BusinessMirrorFriday, January 16, 2015A4

rockstar welcome for pope francisPAPAL VISIT PhILIPPIneS 2015

News

‘Bienvenido, papa Francisco‘ Thousands of flag-waving teens welcome pope Francis upon his arrival at the villamor air Base in pasay city. The pope would at one point wave in their direction to acknowledge their effort but would not approach them, as some had expected. photo on the right captures the arrival of pope Francis on the stretch of scenic roxas Boulevard in parañaque, where thousands more patiently stood in line, waiting to catch even just a glimpse of the passing pontiff.

PHOTO BY NORIEL DE GUZMAN

PHOTO BY ROY DOMINGO PHOTO BY ROY DOMINGO

PHOTO BY STEPHANIE TUMAMPOS

PHOTO BY KEVIN DE LA CRUZ

PHOTO BY RECTO MERCENE

BusinessMirror

rockstar welcome for pope franciswww.businessmirror.com.ph | Friday, January 16, 2015 A5

News

PHOTO BY NONOY LACZA

PHOTO BY ALYSA SALEN

PHOTO BY NONiE rEYES

PHOTO BY STEPHANiE TumAmPOS

PHOTO BY STEPHANiE TumAmPOS

PHOTO BY KEViN DE LA CruZ

Friday, January 16, 2015

OpinionBusinessMirrorA6

‘Viva Il Santo Papa’ Philippine style

editorial

DURING the last two weeks leading up to the visit of His Holiness Pope Francis, we have been ex-cited, our patience has been tried and we have been disappointed.

Our disappointment comes from some politicians who cannot keep their egos in check and their political insecurity controlled. Banners and posters fea-turing the picture of both Pope Francis and your local politician have popped up all over the place. In their haste to equate themselves with the Holy Father, some never noticed spelling mistakes like “chrurch” and ‘aura’ instead of ‘awa’.

However, with his apparent sense of humor, Pope Francis would probably laugh at these examples of our human frailty and faults.

Residents of Metro Manila have had their patience tested these last few days as ‘dry runs’ have created massive traffic jams almost throughout the Metro area. Road closures and rerouting kept commuters in traffic for hours as security personnel make sure that the travel routes are secure and efficient.

While annoying at times, it has illustrated how much of a critical part we are all going to play in making sure everything goes well and that Pope Fran-cis is both comfortable and safe. In truth, we all have sacrificed a little bit and contributed to the preparations for the Pope’s visit and that is special when you think about it.

Our excitement comes from knowing that this is not just a Catholic event but truly a Filipino event. The head of the Roman Catholic Church has always been something of a rock-star kind of celebrity because he holds such unique position. But Pope Francis is also different from all the others.

Much of Metro Manila is in a fiesta mood. Watching the coverage of the Pope interacting with the Filipino reporters on the papal airplane, he looks like he would easily fit in having a glass of wine at any barangay fiesta or birthday party in the Philippines.

Pope Francis, like the Philippines, is a partial by-product of Spanish co-lonialism and Spanish Catholicism. The Philippines, like Central and South America, is ‘Latino’ at heart in many cultural ways. But it is not just the Span-ish influence that brings the Pope and the Philippines closer together.

“Il Papa” can identify with the grinding poverty found in some places of the Philippines and has lived with oppressive politics and military adventur-ism. He, like many Filipinos, has faced choices between doing the right thing and survival pragmatism.

Pope Francis probably understands the Philippines and the Filipino more than we think. His gesture and effort to visit the Supertyphoon Yolanda victims is very ‘Filipino’, a trait some of our politicians have lost.

Thank you, your Holiness for coming to our country. May we all be blessed by your presence.

I GOT a peek at the pope when I was a kid. I remember the women in my family cooing and swooning over the rosy-cheeked Pole. “He’s so handsome,” they tittered, as they swapped stories about

how Karol Wojtyla used to be an actor and a ladies’ man. There was no denying his charisma and his ability to uplift a person’s spirit with nothing more than a smile. As I was growing up, I would often flashback on that smile and it would remind me that things were not as bad as they seemed.

Social Media Papa

And it could get pretty bad.Imagine the world at the end of

the last century. Wars from the Gulf to Eastern Europe to the Congo, genocide in Rwanda, the Taliban in Afghanistan and Monica Lewinsky in the White House. Capitalism was spreading, and with it, the pressures of the rat race never seemed so great. For many people, particularly the youth, it was a very difficult time to be adrift, and I was one of them.

So when the pope waded into the fray and, through the savvy use of multimedia, began reminding people that there was refuge to be had in the Church, it was as though someone had thought to bring a

lantern into the dark. Some might argue that he brought

very little doctrinal change, and they’re probably right. But to focus on that is to miss the point of John Paul II’s ministry. By making the Roman Catholic Church more accessible to young people, rather than present-ing it as an overbearing monolithic cathedral of musty old doctrines; by speaking to them in loving and avuncular tones, instead of trying to scare everyone into obedience (the Bolshoi’s Sunday Morning immedi-ately comes to mind); by sharing his sense of wonder at the extent of God’s love, rather than just demanding that people believe they were loved, John

Paul II gave them—us—a place to turn to as a kind of safe haven from the harshness of life.

You may well disagree with what the Church teaches, but it offered a sense of stability and safety you could hardly find anywhere else, around the turn of the century.

Of course I’m older now, and the world is scarier than ever before. I can accept that John Paul II’s meth-ods might no longer be as effective in connecting with today’s youth as it was, connecting with us. I mean, who buys CDs anymore, right? Today, it’s all downloads and streaming.

But alongside these new ways of doing things, the youth of the world are also inundated with input from all sources. It’s gotten so bad that scientists have had to actually point out that we are losing sleep from all the small screens we take into bed with us at night, and that it’s kill-ing us slowly but surely. And while we’re still alive, all this hyper-con-nectivity is turning us into a society where everyone knows everything xcept ourselves.

Not a moment too soon then, a new pope emerges and pushes the frontiers of ministry further than John Paul II did. From the multi-media Pope, we are now in the age of the social media papa.

Whether unwittingly or other-

wise, Pope Francis is tailor-made for the world of Facebook, Twitter and the 24-hour news cycle. His sound bites translate very well into the noisy spheres of timelines and online forums, even when they are ideologically contradicted by his sub-sequent actions.

His willingness to mingle with people echoes the digital native’s own craving for human contact and expe-rience and, yes, we can relate to how fearless and open this Pope is, even if we ourselves are nowhere near as courageous as he is. He presents an image of how we wish we ourselves could be, but more important, he of-fers us a glimpse of what the Church could be, if only it would throw the shutters wide open and let the mil-lennial winds blow through the nave.

And now, he is here. Just like Pope John Paul II in 1981 and 1995, he brings with him the hope of a revital-ized Church, more in tune with the needs of the times. And whatever your position on the Church and its teachings might be, there will be no doubt that Pope Francis will touch the minds and hearts of young peo-ple and everyone else struggling to find meaning in the midst of sensory overload.

James Jimenez is the spokesman of the Commission on Elections.

spoxJames Jimenez

HOM

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Friday, January 16, 2015

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annotationstito Genova Valiente

I entered the city and saw a place quite undisturbed. the calm before the storm, or the visitation. It is thursday and, in the afternoon, Pope Francis arrives.

StrUCtUrAL transformation is the sustaining element of the development process. It is both a cause and an effect of economic growth. As I explained in my last article,

structural transformation presupposes that labor can move across sectors—from those with low productivity to those with high productivity—and thereby increase overall labor productivity in the economy. this process is the contribution of structural change to overall productivity growth. the contribution is positive (or, productivity-enhancing) if labor primarily migrates from lower to higher productivity sectors.

Visitations

SMEs, poverty and structural transformation

the preparations had been under-way for months and the tediousness of the rehearsal and dry-runs and run-throughs have been fastidious. the military and the police alertness are unprecedented, if one is to believe the releases. the city authorities have gone full steam as to order its men to stay in their place, not to selfies and be really selfless for a day.

this is a day for heroes and hero-ism. All for the pope, who is now known as the People’s Pope.

this is the third time that a pope is coming to the country. the first time, there was a dictatorship. A cardinal whose family name is Sin was still alive the Holy Father was arriving at a country ruled by dicta-tors. Martial law, which was in exist-ence for decades, was lifted, Sort of. the so-called conjugal dictator built a palace. the Coconut Palace it was called. the material was coconut and the name sounded like royal animals would be dwelling in it. the astute visitor realized the bait and opted to snob the place. If he had stayed

there, that action would have been interpreted as condoning and not the condemning that Catholics then were looking forward to.

the Coconut Palace has since been appropriated as the office of the Vice-President of the republic.

the next time the same pope vis-ited the country, it was World Youth day. It was a festival, with the pope at the leading actor. He was a hit. the youths of the world were fantastic. the Filipino youths were at the center of the world for several days.

now that pope is a saint. As our bus moved into the city,

everyone was wary that somewhere, roadblocks would stop us to get to our homes. But the city was eerily calm.

When I got home, I opened the tV to the free channel and caught news-casters and program hosts dressed in native attires. the word “native” is such an artifice in this land it is something we wear and take off. For today, as early as 7 in the morning, the tV programs are all keyed up for the arrival of the visitor.

However, the effect of structural transformation can also be negative (or productivity-reducing). this oc-curs when as a result of structural change workers ended up displaced or hired in less productive activities (emphasis mine). In other words, the rationalization of manufacturing industries may have come at the ex-pense of inducing growth-reducing structural change. the decline in the contribution of structural change

has been a key factor behind the de-terioration of productivity growth in Latin America.

In the Philippines, most of these displaced workers may have found their way into the small- and medium-scale enterprises (SMes). Based on the 2010 survey of establishments, two-thirds of the employed are found in the SMe sector, which comprises 99 percent of the enterprises in the coun-try. However, a significantly share of

We are at our best exterior-wise. the Filipinoness of our identity is brandished like a gleaming sword. It is scary. It is frightening when we for a day or moment claim our identity. It is so artificial and it is so dangerous.

In another program, a series of Catholic songs are being sung. the hosts flash their sweetest smiles. One glibly comments how we are so blessed this thursday.

this thursday, as I write this col-umn, we are all good people.

We are a claiming bunch. We claim blessings as if they are cookies pre-ordered. Like the free SMS in a prepaid cards.

the singer of what is now called the theme song of the visit is asked what she will do if she gets to meet the pope. enthusiastically, she re-sponds: “Mag bi-bless ako.” Language is power. Language can be sinister. It is interesting that when we ask for blessing, we use terms that put the action in reverse. It appears that we are the ones giving the blessing.

On tV also guidelines are an-nounced as to how we can conduct ourselves during the next three or four days. Oddly enough but not that odd, one of the “gentle re-minders” is how to participate in the Mass. We are told to really be part of the Mass. We know where these guidelines are coming from. In churches where a clique of a choir exists, the community cannot par-ticipate as the singers go into vocal exercises. We Filipinos know how we go to the Mass.

In grade school, I used to be baf-fled by these words on the Missal: “do not pray in the Mass; Pray the Mass.”

We have our own businesses in the church and the Mass sometimes becomes a mere site, a background to our own purposes. So, for this visit, let us be more Catholic in the Mass.

the gentle reminders include warning on littering. this is a givea-way of who we are. We throw our dirt and our trash anywhere. So, for the visit of the Pope, let us be clean. that is the subtext of the reminders that need to be prefaced as gentle.

there is also in the reminder a note on traffic. the words call our attention to places where vehicles are not allowed. Which is again strange because on ordinary days, whether we like it or not, there are places in the city where vehicles and people cannot go because of traffic.

Gently, the reminder asks us to observe traffic rules. So, for the dura-tion of the visitation, the Filipino, at least in Metro Manila, will heed the rules on the use of the street.

As I end this column, the voice over television still trails: “We are all God’s children/We are all the same.”

I am tempted to sing: “We are all God’s children/We are not the same.”

It is thursday and more than ever, inequality, poverty and pretentious-ness shine like colors of a rainbow across the visiting sky.

Tito Genova Valiente can be reached

via [email protected]

these workers are found in less pro-ductive kind of jobs, with roughly 35 percent of these workers in retail trade and repair services.

despite in the aggregate they make a rather static contribution to the economy and although they employ a significant proportion of people, they do not contribute much to em-ployment growth. Many only have a relatively short life expectancy, per-haps of three to five years, although this depends on the industry. Most of these SMes are presently in the ‘at risk’ or ‘insulated’ categories, and the main issue that they face is how to best adapt to the increasing com-petitive pressures occasioned by open regionalism. In other words, SMes have low productive capacity mainly because of their limited capabilities that Amartya Sen defines as poverty.

According to Sen, the usual dollar-a-day poverty measure doesn’t take into account many variations that influence the conversion of income into good living. A good example are the victims of the recent floods: their reduced income are noted, but the difficulties they face during re-settlement—the deleterious effects on education and on the availability

of proper medical care—would not be captured in an income measure like gross domestic product per capita (the metric commonly used by econo-mists). Poverty should be captured in a multidimensional measure. For the SMes, it is this poverty that results in limited access to resources and outmoded technology.

It is in this area where most of the assistance to SMes fail. For sure, labor productivity can grow within these sectors through capital ac-cumulation, technological change, or improved allocation of resources across plants through targeting. However, programs attempting to improve SMes by means of such in-puts are not necessarily effective for two main reasons.

First, skeptical views question the validity of considering firm size as an exogenous determinant of economic growth. From the industrial organi-zation literature, natural resource endowments, technology, policies, and institutions help determine a nation’s industrial composition and optimal firm size. this means that for certain countries, larger size firms, not smaller ones, are efficient. Hence, conditioning on firm size will

not necessarily make these SMes more efficient and policy on SMes can result in inefficiency.

A second skeptical view regarding the efficacy of SMe policies consid-ers the business environment view, and casts doubts on the crucial role of SMes. Instead, this stresses the importance of the conditions facing all firms, whether big or small. the cost of doing business, including low entry and exit barriers, well-defined property rights, and effective contract enforcement, characterizes a busi-ness environment that is conducive to competition and private commer-cial transactions. While these factors may encourage SMes, the focus of the business environment view is not on SMes per se; it is on the environment facing all businesses

It is important to choose the type of intervention in order to help SMes. One should be able to relate SMe policy to the broader policy agenda of human transformation. More-over, much of SMe policy should be concerned with the provision of public goods such as education and health which bring about enhanced productivity. From this perspective, industrial policy is just good econom-

ic policy that addresses the poverty problem directly, and not through some discarded trickle down process. the capacity to provide these public goods effectively is an important part of the social capabilities needed to generate development. this, in turn, requires good institutions. Such in-stitutional development is at the core of today’s orthodox development agenda. In both senses, then, the agenda of industrial policy does not differ greatly from today’s broader, conventional poverty agenda; in fact, it is part and parcel of it.

the dynamics described here in-dicate that strategic efforts seeking to raise labor productivity and reduce poverty have to inevitably incorpo-rate the broader structural transfor-mation process and its requirements as the basic framework for growth. In short, structural transformation should lead to more inclusivity.

Leonardo A. Lanzona Jr., PhD, is the director of the Ateneo de Manila University’s Ateneo Center for Eco-nomic Research and Development, and a senior fellow of Eagle Watch, the school’s macroeconomic research and forecasting unit.

tHe improving US economy has brought some welcome cheer to officials in Beijing, which reported an unexpectedly high 9.7 percent jump in december exports on tuesday. If those

numbers continued in months ahead, they’d also be good news for a global economy that’s running short on viable growth engines.

For China, even good numbers don’t add up

EaGLE WatCHLeonardo a. Lanzona Jr.

not all analysts are convinced they will; many predict that China will have to loosen monetary policy soon in order to ensure gross domes-tic product (GdP) growth stays above last year’s target of 7.5 percent (it’s currently around 7.3 percent). that’s worrisome because of a different number entirely: 251.

that, in percentage terms, is Stan-dard Chartered’s working estimate for China’s debt-to-GdP ratio. Al-ready worryingly high compared to where Japan was 25 years ago when its own bubble burst, the number will only rise further with additional stimulus. the more China gins up growth in 2015, the more irrespon-sible lending it will have to service in the decade ahead.

the math simply doesn’t work out. even if China could somehow return to the heady days of 10 percent-plus GdP growth, its debt mountain would by then be nearly unmanageable. “We’ve got the big-gest debt bubble that the world has ever seen and credit is continuing to grow twice as fast” as output, Charlene Chu, a former Fitch rat-ings analyst, told Bloomberg Televi-sion earlier this week. those who believe China can somehow grow its way out of this problem are fooling themselves. “Mathematically, that’s impossible when something is twice as big as something else and growing twice as fast,” as Chu noted.

From Japan to Argentina to Greece, recent decades offer many examples of governments thinking 1 + 1 = 3. It took Japan more than a decade after its bubble burst in 1990 to create the resolution and Collec-tion Corp., modeled after America’s resolution trust Corp., to dispose of bad loans. China can’t afford to wait that long to head off a full-blown crisis. It’s one thing for a $24 billion economy like Argentina to blow up; it would be quite another if the world’s second-biggest plunged into turmoil.

Yet for all the official talk about curbing borrowing and adjusting to a “new normal” of lower growth, Xi’s government still hasn’t shown the stomach necessary to bring China’s debt problems out into the open and

deal with them. even one of the first defaults on an offshore bond by a Chinese developer last week ended happily. Kaisa Group missed a $23 million interest payment, but quickly received a waiver from HSBC. Since all property companies won’t get last-minute reprieves, these kind of maneuvers just delay a reckoning.

What should China be doing? First, clamp down more firmly on new borrowing, particularly to the state sector. While that would roil credit markets and crimp growth, it’s vital to gaining control of the fi-nancial system. next, conduct a truly transparent audit of public debt and the shadow banking system. China doesn’t offer data on the latter, leav-ing the private sector to guestimate. Chu, who’s now with Autonomous research in Hong Kong, put Chinese bank assets at around $28 trillion at the end of 2014, a huge increase from $9 trillion in 2008. As any 12-step program participant can attest, sobriety requires first admitting the magnitude of one’s problem—and publicly.

Finally, China needs to create a mechanism to collect and write down bad assets. Only by doing so can Beijing prod wobbly banks to act openly and quickly to repair bal-ance sheets. there are many ways China could go—a Japan-like rCC or a Sweden-like purge and bank re-capitalization. the point is to address its math problem frontally. However cheery, trade and GdP figures are the wrong numbers to focus on.

It took Japan more than a decade after its bubble burst in 1990 to create the Resolution and Collection Corp., modeled after America’s Resolution Trust Corp., to dispose of bad loans. China can’t afford to wait that long to head off a full-blown crisis. It’s one thing for a $24 billion economy like Argentina to blow up; it would be quite another if the world’s second-biggest plunged into turmoil.

BLooMBERG ViEWWilliam Pesek

A8

2ndFront PageBusinessMirror

www.businessmirror.com.phFriday, January 16, 2015

Fiscal incentives costPHL ₧200B annually

Energy, infra still top concerns of AmCham

U.S. OUTPUTSURGE CAUSESOIL FUTURESTO FALL ANEW

Oil resumed its decline after the biggest gain since June 2012 as US crude production in-

creased, bolstering speculation a global supply glut that spurred last year’s price collapse may persist. Futures dropped as much as 0.9 percent in New York. US output surged to 9.19 million barrels a day last week, the fastest pace in weekly records dating back to January 1983, the Energy information Administration reported on Wednes-day. Crude may fall below a six-month forecast of $39 a barrel and rallies could be thwarted by the speed at which lost shale production can recover, accord-ing to Goldman Sachs Group inc. Oil slumped almost 50 percent last year, the most since the 2008 financial crisis, as the Organization of Petroleum Exporting Countries resisted cutting output even amid the US shale boom, exacerbating a surplus estimated by Kuwait at 1.8 million barrels a day. Prices rose on Wednesday as a relative strength index rebounded after more than two weeks below 30, a level that typically signals the market is oversold. “You tend to arrive at points every now and then in major trends like this, where you just see a little bit of short covering and profit-taking,” Ric Spoon-er, a chief strategist at CMC Markets in Sydney, said by phone on Thursday. “Supply is still the general theme.” Oil is leading this week’s slide in

See “Oil futures,” A2

By Cai U. Ordinario

The national government is losing P200 billion annually by giving out various fiscal incentives that seek

to entice local and foreign investors to do business in the Philippines, according to the World Bank. 

World Bank senior country eco-nomist Karl Kendrick Chua said these incentives are often extended to firms that do not deserve them. This, he said, only reflects the in-equality of the country’s tax system.  “What we are proposing here is that, in terms of tax policy, we need to shift into a system wherein the rates are lower but then we broaden the base, meaning, we exempt as few people as possible,” Chua said.  Chua said the Washington-based lender is encouraging the govern-ment to make fiscal incentives more targeted, transparent, performance driven and temporary.  He said the government must post the recipients of these incen-tives in an accessible web site. These incentives, Chua added, must also be

extended to companies that meet certain criteria.  These criteria include export tar-gets that have been implemented in Japan, Taiwan and South Korea. Chua said the government can in-clude job creation as a criteria to en-courage firms to expand and provide jobs to more Filipinos.  “We find that among manufac-turing firms, the effective tax base of those receiving incentives is just one-third of the effective tax rate of those receiving no incentive and this is highly unfair,” Chua added.  Apart from fiscal incentives, Chua said, the government must also up-date certain taxes, such as excise taxes and property taxes, which no longer reflect market prices.  He said in terms of excise taxes,

Filipinos have been paying P4.35 per liter of gasoline for the past 17 years. But this only reduces the tax burden of the rich.  Chua said based on the latest household survey, around 16 per-cent of the consumption of gasoline is spent by the top 10 percent.  In terms of property taxes, Chua said valuations in many places na-tionwide have not been adjusted in the past 10 to 30 years.  This means that those who own houses nationwide, particularly in cities, have seen property prices go up and their tax burden decline in the past three decades. “What we have been doing is to lower the tax burden of the rich,” Chua said. “All these can change if we shift to a more equitable tax system.”  Meanwhile, these tax reforms must be complemented by the eco-nomic reforms that seek to improve competition. Encouraging competi-tion through liberalization will re-duce prices, raise productivity and create jobs, he noted.  Chua said cheap telecommuni-cation and airfare rates, as well as giving job opportunities to 5 million Filipinos, are the result of the Ramos administration’s effort to liberalize these sectors in the 1990s. 

By Catherine N. Pillas

AMERICAn businessmen see a positive year ahead for Phil-ippine-American economic

relations and outlined key areas of focus for 2015. “There is so much interest in 2015, and it has a lot to do with the Asia Pacific Economic Cooperation [Apec] hosting. Of course, we’re waiting to see the fourth-quarter GDP [gross domestic product]; but overall, the attitude is very posi-tive toward the Philippines, even more positive than 2014,” said Ebb Hinchliffe, executive director at the American Chamber of Commerce (AmCham) in the Philippines. Hinchliffe said that, while American firms will certainly be looking, focusing their attention on the Philippines this year due to the Apec hosting, AmCham put forward three areas of concern that need to be addressed immediately to sustain the interest of US busi-nesses: energy, infrastructure, and trade and investments. For the strengthening of trade and commerce ties, Hinchliffe said that, in February alone, an American trade mission will be visiting to look at possible areas for investments in the medical sector. In March a group engaged in alternative fuels will also be ar-riving to check out opportunities in the Philippine market. AmCham, like other foreign chambers, deplores the energy situ-ation in the Philippines and backs the proposal to give the Chief Execu-

tive emergency powers to avert the feared energy crisis and ensure stable supply of power. On infrastructure, AmCham sees a ripe opportunity for American busi-nesses to extend a hand in improving the poor state of infrastructure here. This, the group said, is the upcoming conference in the US. “There are so many needs here and there is so much capability on the part of American firms. So, from February 25 to 27, there will be a conference dealing with infrastruc-ture in new York and I understand, key Cabinet members will be there. Public Works Secretary Rogelio L. Singson, from my understanding, may be going,” Hinchliffe said in a phone interview. Despite the upbeat outlook, a dilemma that the foreign chamber sees may dampen prospects for 2015 is the prolonged port-congestion problem and the implementation of a controversial customs measure. “One that would be a negative is the PSI [preshipment inspection], if that is implemented. We like the modernization that the customs is undertaking. But if the PSI is con-tinued, along with the port conges-tion, it’s just going to be a really big problem,” Hinchliffe said. “For members, they don’t see any relief in sight for the first quar-ter. Before there were 6,000 trucks needed to manage the ports’ vol-ume of containers. now 20,000 are needed for the same volume,” he said. The executive director said fast-moving consumer-goods firms are the hardest-hit by this extended dilemma.