BusinessMirror January 31, 2015

  This represented an escalation from M3 growth of just 9.2 percent the previous November, and high-lights the importance of an aggre-gate that could make or break the $270- billion economy that even now continues to aspire for continued and sustainable expansion. The central bank said the coun-try’s money-supply growth, which hit P7.6 trillion last December, con-tinued to inflate due to sustained demand for credit. At the sidelines of the Security Bank’s economic fo-rum in Makati City on Friday, BSP

Governor Amando M. Tetangco Jr. said the slower liquidity growth in the final month of 2014 highlights the success of the tightening mea- sures the policy-making Monetary Board put in place in mid-2014. That liquidity growth continued to behave within expectations also reflects the success the BSP aimed for, as the full impact of the measure worked its way into the system. Tetangco, likewise, said so-called high base effects from a year earlier were at play in latest data.

PESO ExchangE ratES n US 44.1320 n jaPan 0.3729 n UK 66.4849 n hK 5.6930 n chIna 7.0646 n SIngaPOrE 32.6058 n aUStralIa 35.2127 n EU 49.9574 n SaUDI arabIa 11.7419 Source: BSP (30 January 2015)

See “M3,” A2

www.businessmirror.com.ph n Tuesday, November 18, 2014 Vol. 10 No. 40 P25.00 nationwide | 6 sections 28 pages | 7 days a weekn saturday, January 31, 2015 Vol. 10 No. 114

A broader look at today’s businessBusinessMirrorthrEE-tImE

rOtary clUb Of manIla jOUrnalISm awarDEE2006, 2010, 2012U.n. mEDIa awarD 2008

toyota targeting to spend P2.5 billion for Innova face-lift By Catherine N. Pillas

ToyoTA Motor Philippines Corp. (TMPC) is looking at spending as much as P2.5 bil-

lion this year, as the Japanese auto- maker prepares for the possible full model change of the Innova. TMPC President Michinobu Su-gata said the amount will be used for factory expansion and other initia-tives for the potential model change

of the Innova in its Santa Rosa, La-guna plant. Specifically, TMPC is tar-geting to expand its paint shop and speed up its assembly line to meet its goal of increasing its production of the Innova and the Vios. “From 41,644 units last year, we’re increasing output to 43,000 this year,” Sugata said. The TMPC official, however, clarified that the proposed capital expenditure has yet to be ap-proved by the company’s board.

TMPC’s Santa Rosa plant is capa-ble of producing a combined 35,000 units of the Vios and the Innova every year, but employees worked overtime to exceed output in 2014. It remains to be seen, however, if the Board of Investments (BoI) will allow TMPC to get incentives for re-modeling the Innova. The BoI has specified that only new models, and not improvements, will enjoy incen-tives. Sugata hinted that TMPC may

stick with the Innova despite the possibility that the company may not get incentives from the BoI. The Japanese automaker manu-factures the Vios and the Innova at its Santa Rosa facility. TMPC is targeting to sell as much as 110,000 units of vehicles in the Philippines this year. Known as the market leader in the local auto industry, TMPC sold 106,000 units last year, 40 percent higher than its sales in 2013.

M3 growth hit 9.6% in DecemberSUStaInED DEmanD fOr crEDIt cOntInUES tO bOOSt mOnEy SUPPly In PhIlIPPInES

gOvt, mUSlIm rEbElS agrEE On DISarmamEnt aftEr claSh

NeGoTIAToRS from the government and the Moro Islamic Liberation Front (MILF) signed a pact on disarming

Muslim rebels, just days after a clash killed 44 policemen in the nation’s south. The parties signed the arms decommission-ing protocol during a meeting on Thursday in the Malaysian capital Kuala Lumpur, where they reaffirmed their commitment to peace in the Muslim Mindanao region, according to a joint statement posted on a government web site. The peace panels will meet until today, January 31. Negotiators “resolved to strengthen their cooperation and coordination in addressing security concerns in the most effective and ap-propriate manner, and also in rebuilding trust and public confidence in the peace process,” ac-cording to the statement.

President Aquino has blamed a lack of co-ordination between police and Muslim rebels for the deadly encounter, as he sought to hold together a peace accord that seeks to end a four-decade insurgency that has killed as many as 200,000 people. An independent body, headed by an expert from Turkey, will manage the decommissioning process, which will be done in four phases, ac-cording to an e-mailed copy of the protocol. In the first phase, the MILF will make an inventory of its combatants’ weapons, while being given financial aid. Fifty-five high-powered firearms and 20 crew-served weapons will be decommis-sioned in a symbolic gesture.

‘free movement’The independent body will receive 30 percent

of the weapons in the second phase of the plan, with another 35 percent surrendered in the third phase. The rest will be decommissioned in the last phase. “The parties shall undertake measures to pro-mote and guarantee free movement and create an environment free of fear and intimidation,” according to the protocol. The commandos were killed in a predawn clash with Muslim rebels while searching for Malaysian bomb expert Zulkifli bin hir, alias Abu Marwan, who is on the US list of most-wanted terrorists. The bodies of the policemen arrived on Thursday at an air base near Manila, where Interior Secretary Manuel Roxas II led ceremonies to honor them. The peace accord provides a road map for a

By Bianca Cuaresma

Money that’s available to house-holds and businesses, known as M3 or domestic liquidity

among technocrats, posted single-digit growth in December last year, averaging 9.6 percent, the Bangko Sentral ng Pilipi-nas (BSP) said on Friday.

PresideNT aquino condoles with the families of the fallen Philippine National Police-special action Force commandos during the necrological service at the National Capital region Police Office Multi-Purpose Center of Camp Bagong diwa in Bicutan, Taguig City, on Friday. MalacañaNg Photo

The ALC Group of Companies and the BusinessMirror launched on Friday a campaign to raise funds to help the families of the 44 Philippine National Police-Special Action Force (PNP-SAF)

killed on January 25 in Mamasapano, Maguindanao. The fund-raising campaign recognizes the heroism of the hus-bands, sons, fathers or brothers who were killed in the line of duty. The fund drive also seeks to complement the campaign of the Phil-ippine government and the PNP to support the families of the slain SAF officers. Cash and check donations may be deposited to Citystate Savings Bank Account No. 001-11-000038-9 and BDo Savings Account No. 90173473. The ALC Group and the BusinessMirror also encourage anonymous donations.

ALC Group, ‘BM’ launch fund drive for families of SAF44

Continued on A2

new political entity called the Bangsamoro, whose structure will be defined by ongress. It will replace the failed Autonomous Region in Muslim Mindanao set up in 1989. Under the deal, MILF must abandon its pursuit of a separate state in return for more power, revenue and territory. A local referen-dum will determine which other provinces join the expanded autonomous region. The Philippine government and the MILF expressed sympathy and grief for the loss of lives in the Mamasapano, Maguindanao. In accordance with the statements made earlier by President Aquino and MILF Chair-man Al-Hajj Murad Ebrahim, the govern-ment and the Muslim rebel group reaffirmed their commitment to the attainment of peace that has long eluded Mindanao. The two parties resolved “to strengthen their cooperation and coordination in ad-dressing security concerns in the most ef-fective and appropriate manner, and also in rebuilding trust and public confidence in the peace process.” They also backed the conduct of investiga-tions by the Board of Inquiry and the MILF’s Special Investigative Commission. The Parties also commended members of the International Monitoring Team (IMT) and the Coordinating Committees on the Cessation of Hostilities of the Government and the MILF for their determination that led to the reinstatement of the cease-fire in the affected areas. “Their courageous efforts prevented fur-ther loss of lives and put to safety those who might have been put in harm’s way had the fighting escalated,” they said. Meanwhile, the US expressed its strong

support to the Philippine government’s counterterrorism efforts as it emphasized the need for a peaceful end to the conflict in Mindanao. “The United States reiterates its support for the Philippine government’s efforts to combat international terrorism while pro-moting a just and lasting peaceful resolution to the conflict in Mindanao,” its embassy in Manila said in a statement. Washington, a key supporter in the Philip-pines’s antiterror efforts by providing train-ing and assistance to its forces, expressed its “heartfelt condolences to the families, friends, and colleagues of the members of the PNP/SAF who lost their lives.” “The SAF units fought with bravery and demonstrated their commitment to ensur-ing peace and order in their country,” the embassy said.

National Day of MourningMALACAñANG declared on Friday as Nation-al Day of Mourning to honor the 44 members of the PNP-SAF. President Aquino assured that govern-ment trackers will soon arrest Abdul Ba-sit Usman, the other high-value terrorist target who escaped from members of the PNP-SAF who were massacred by Moro rebels last Sunday. Speaking at the necrological rites in Camp Bagong Diwa in Taguig, the President also said the government will provide maximum benefits to the families of the 44 dead PNP-SAF members. Mr. Aquino confirmed that he has ordered the PNP and the Armed Forces of the Philip-pines to arrest Usman and Malaysian bomber Zulkifli bin Hir alis Abu Marwan. In his speech, the President acknowledged

after-operation reports indicating that Mar-wan, the principal target of the SAF’s Mama-sampano raid, had been neutralized. He said the arrest of Usman is the govern-ment’s top priority and vowed that govern-ment security agencies will be able to appre-hend him.

Appeal for sobrietyGov. Hermogenes Ebdane Jr., a former chief of the PNP who once commanded SAF ap-pealed for sobriety. Weighing in on the issue at the side-lines of the Central Luzon Regional De-velopment Council (RDC-3) meeting here on Friday, Ebdane said nothing would be solved by putting the blame on anybody at this time of the investigation. “Let the in-vestigators do their job,” Ebdane stressed during an interview. “If we want to solve the problem, let us allow resolutions to come forth,” he added. He said that as of now, what is important is to determine what really happened, and to correct whatever mistakes that were commit-ted which resulted in the massacre. “I feel sorry for the men who were killed. They died with their boots on,” said Ebdane ,who commanded the PNP-SAF from 1989 to early 1991. “But that’s how it is with any operation: You start with intelligence, come up with a plan and execute it. But sometimes the operation doesn’t succeed 100 percent,” he added. Ebdane also defended suspended PNP chief Director General Alan Purisima, who was blamed for the Mamasapano massacre. “If you read the plan for the operation [to get Marwan], you’d know that it was initiated by Purisima, that’s true. But he has been sus-pended [prior to the operation],” he said.

“An operation doesn’t get suspended be-cause its main planner has been suspended. So it has to be carried out [by somebody else],” Ebdane added. He said it was “very unfortunate” that the SAF members ventured into a territory controlled by the MILF, which is also a known haven of its breakaway group, the Bangsamoro Islamic Freedom Fighters. “In the service, it is always the command to get your target at all cost, but this is not something that we could have expected,” said Ebdane. 

Maguindanao’s economyTRADE Secretary Gregory L. Domingo said he hopes that the tragedy in Mamasapano in Maguindanao, will not affect investment prospects in the country. “I hope [this will] not [affect our investment prospects]. Investors now are more sophisti-cated, they know more about the Philippines,” Domingo said in an interview. “They realize that the conflict is just in a particular area in the country,” he added noting that the tragedy happened in a non-industrial area. “The area where the killings happened is far from our main producing areas,” Domingo said. Socioeconomic Plan-ning Secretary Arsenio M. Balisacan, for his part, said the underdevelopment of the Autonomous Region in Muslim Mindanao where Maguindanao is a part of the region, is linked to its long history of armed conflict. Balisacan said the per-capita gross domes-tic product (GDP) of Armm was only P14,565 in 2013, far from the national average per- capita GDP of P68,897. Poverty incidence in the region is also high at 55.8 percent of its total population. Bloomberg News, Butch Fernandez, PNA, Henry Empeño

Oil. . . Continued from A8 M3 . . Continued from A1

BusinessMirror [email protected] Saturday, January 31, 2015A2

News

Continued from A1

CoCo AlCuAz, business news head of ABS-CBN News Channel and forum moderator; Gilberto Teodoro, former secretary of the Department of National Defense; William Pesek; columnist of Bloomberg Asia Pacific; Rafael Garchitorena, managing director of Deutsche Regis Partners, Inc.; and Edu olbes, executive vice president of Security Bank answer queries at the Economic Forum 2015 organized by Security Bank at the Fairmont Hotel on January 30, 2015. The forum presents business analyses and economic forecasts to the diverse clients of Security Bank. It also tackles the need for transparent financial reporting on prevailing market conditions. Stephanie tumampoS

As a result, Tetangco said the vol-ume of liquidity in the system should be just the right amount to fuel the country’s expanding economy, and should gradually increase this year as the high base impact from last year measures wear off. The monetary authorities endeavor to provide the economy with just the correct amount of cash in the system to encourage businesses and households to engage in productive activities and with-out lighting inflationary fires. Excessively high liquidity growth for extended periods heighten the risks of developing pockets of instability, such as asset bubbles and upside inflation pressures. Earlier in 2014 liquidity growth averaged 30 percent and actually peaked in January 2014 at 38 percent. In a separate report, the central bank said loan growth slowed in the same pe-riod last year to 16.8 percent, from the 20.1 percent in November. Loans for production activities – which comprised about four-fifths of the banks’ aggregate loan portfolio – expanded by 15.4 percent during the period, slower than the 18.7 percent seen in November 2014. “The continued rise in production loans was driven primarily by increased lending to the following sectors: real es-tate, renting, and business services [11.8 percent]; electricity, gas and water [21.7 percent]; wholesale and retail trade [14.2 percent]; financial intermediation [19.1 percent]; manufacturing [8.2 percent]; and, transportation, storage and commu-nication [20.7 percent],” the BSP reported.

The peso appreciated 0.2 percent on January 23 and 0.1 percent on Friday to 44.075 a dollar as of 10:43 a.m. in Manila, prices from Tullett Prebon Plc. show. The currency has climbed 1.5 percent this month, the most since May, making it the second-best performer in Asia after India’s rupee. The Fed described the expansion in the world’s largest economy as “solid” after a meeting on Wednesday in Wash-ington, an improvement over the “moderate” performance it saw in December. Ten-year Philippine government bonds headed for their biggest monthly gain since July 2013. The yield on the 13.75 percent benchmark notes due 2024 fell 30 basis points, or 0.30 percentage point, this month through Thursday to 4.08 percent, according to fixing prices from the Phil-ippine Dealing & Exchange Corp. The rate dropped 11 basis points on January 23.

Bloomberg News

mostly by drillers, refiners and others in the oil business looking to lock in prices for crude that they needed to sell or buy in future months. Now, much of the trading is done by pension funds, hedge funds or day traders like Thomas, who almost never touch a barrel of oil. They have no use for it, except as a way of diversifying their investments or to make a quick buck for themselves or their clients. That futures market has ballooned in size and importance. Since futures need not involve an exchange of a single barrel, the number of these side bets can outstrip the number of actual barrels available. In a typical month, traders buy and sell con-tracts for 15 billion barrels of just one kind of crude, West Texas Intermediate, on the New York Mercantile Exchange. That’s five times the number of barrels of all types of oil consumed globally each month. Whether this furious trading distorts the market or helps it better reflect sup-ply and demand is a subject of fierce de-bate. There is little consensus in dozens of academic papers on the issue, and little evidence their bets have a lasting impact on price. Whatever the truth, oil traders today seem more at the mercy of the mar-ket than its masters. It is a market that Richard Weissman won’t touch right now. “I’m all about managing risk,” said Weissman, who writes about markets and trades com-modities and currencies from his home in Port Richey, Florida. “Right now oil is high risk.” Last summer the market didn’t seem so treacherous. It was even sleepy. The price of oil was hovering near $100 a barrel, as it had for much of the previous four years. on June 6 one measure of market volatil-ity—how quickly and dramatically prices change—reached its lowest level ever re-corded. The number of contracts traded was 29 percent below normal. But in the background, supply was ris-ing and demand falling, a combination that lowers prices. US production had risen 70 percent over six years. Demand was falling as rich countries became more fuel efficient and growth in the develop-ing world slowed. Then the economies of Europe and Ja-pan began to sputter, pinching demand further. Traders began selling. Buyers became scarce. volatility quadrupled be-tween June and December. As drivers watched pump prices drop and exporters like venezuela and Russia reeled from lost revenue, traders scrambled to make money. Trafigura Beheer, a giant trading firm based in Amsterdam, said the pickup in oil trading helped boost its profits 14 percent last year. Dominick Chirichella, an energy in-vestor and consultant, trades a fraction of what Trafigura does. But he also had a terrific few months as the market moved steadily lower. He kept betting that oil would fall further, but he was careful about it. He set up secondary trades that acted like insurance policies. When he was wrong and oil turned up, those trades would pull him out of the market quickly be-fore losses snowballed. “Whether you make 50 cents or $1, you don’t care, you’re making money,” he said. “And as it keeps going down you find yourself in something special.” oil ’s now around $44, down from $107 in June. And with little consensus about where crude’s headed, the deci-sion to buy or sell is more complicated. Bernstein Research—bullish on oil throughout the collapse—predicts higher prices this year. Citigroup says oil will begin to rise later this year, too, after more turmoil. Goldman Sachs thinks oil could fall to $39 over the next six months. For Boise trader Thomas, the fear these days is visceral. “You’re worried you’re go-ing to get your face ripped off,” he said. To help deal with stress and hone tactics, he likes to rehash his moves on daily Skype calls with other traders—“therapy ses-sions,” he calls them. The 40-year-old trader had amassed $300,000 worth of oil one day earlier this month, certain it was about to rise. But prices started dropping and his convic-tions evaporated. He dumped half of his holdings at a loss. Then, when prices began to rise, he bought back all the oil he had just sold, only to dump it again as prices renewed their fall. Within minutes, he had lost $5,000. “I can’t believe I just did that,” Thomas scolded himself. “You have to be patient.”AP

Govt, Muslim rebels agree on disarmament after clash

Peso . . Continued from A8

ToKYo—Japan’s industrial output edged higher in December, suggesting the world’s third-largest economy may

be turning the corner on a recession brought on by a hefty sales tax hike. Data released Friday showed manufac-turing output increased 0.3 percent in De-cember from a year earlier and by 1 percent from the month before. However, inflation moderated to 2.5 percent from a year earlier, compared with 2.7 percent in November. The core consumer price index, excluding food, fell 0.2 percent from the month before. Prime Minister Shinzo Abe has made pushing prices higher the main focus of economic policies aimed at ending years of deflation that have discouraged corporate

investment and stymied growth. Falling energy costs thanks to the plunge in oil  prices is countering that trend. But lower oil prices have had a limited effect on the economy, so far, since the CPI excluding both food and energy was unchanged from the previous month. Meanwhile, Japan’s jobless rate dipped to 3.4 percent from 3.5 percent the month before. But stagnant wages meant household spend-ing dropped 3.4 percent from a year earlier. When the impact of a 2-percentage point increase in the sales tax in April is excluded, Japan’s inflation rate was well below the 2 percent target set by the government and the central bank, which is spending trillions of yen (billions of dollars) a month to buy government

bonds and inject more cash into the economy. For the “Abenomics” strategy to work, Japan’s planners agree that wages must in-crease enough to boost consumer demand, which has stagnated as price increases have crimped household purchasing power. “However, there is no evidence that a tighter labor market has strengthened price pressure,” Marcel Thieliant of Capital Eco-nomics said in a commentary on Friday. “Ad-justing for the impact of the sales tax hike, prices are rising at the slowest rate since June 2013,” he said. He says the Bank of Japan will have to ex-pand its already extraordinary level of mon-etary stimulus to get prices moving closer to its inflation target. AP

FActory DAtA show JApAN turNiNG corNer oN recessioN

Binay to Purisima: Bare role in SAF massacreBy Recto Mercene

VICE President Jejomar C. Binay on Friday dared the suspended Philippine National Police

(PNP) chief, Director General Alan Purisima, to speak up about the encounter that cost the lives of 44 Special Action Force (SAF) troopers as he called for justice for the fatalities.

“Nagdadalamhati man tayo ngayon, dapat nating hanapan ng kasagutan ang mga katanungang bunsod ng masaklap na pangyayaring ito,” Binay said. “General Alan Purisima should break his silence. His name is al-ways mentioned in all the news that comes out, saying he is the chief planner and executor of the operation, although he was sus-pended from his job.” The vice president noted that a number of questions have been left unanswered, including who was accountable for the bloodshed. He wants to know who planned and gave orders for the operations to go through. “Sino sa bahagi ng MILF [Moro Islamic Liberation Front] at BIFF [Bangsamoro Islamic Freedom Fight-ers] ang nag-utos na tambangan ang mga miyembro ng SAF?” Binay asked. “Is it not proper that the leader-ship of the MILF and the BIFF be

made accountable for the pitiless killing of the SAF members?” “Hindi ba dapat at makatarungan lamang na panagutin ang mga tauhan ng MILF at BIFF na walang awang kumitil ng buhay ng mga kasapi ng SAF?” he asked. Binay stressed that the only way to honor the sacrifice of the fallen SAF members is to ensure they get the justice they deserve. In a statement on the National Day of Mourning for the fallen 44, the vice president said there should be an honest and transparent inves-tigation into the Mamasapano clash. “Para sa akin, ang tanging magaga-wa nating lahat na nanunungkulan upang parangalan ang sakripisyo ng 44 na kasapi ng SAF at maibsan ang dalamhati ng kanilang mga naulila ay ang tiyakin na makakamit ang husti-sya,” he said. He added that there should be an open and impartial investigation of

the killing and that all those respon-sible should be made answerable for their dastardly deeds. The vice president also called on the public to let calm prevail over anger. “Let us not allow anger to overcome our grief and, instead, let us pursue the way of peace in Mindanao for the sake of our be-loved mother land.” “Despite this, we must not fast-track the process because of what happened in Mamasapano, the more that we must give all sectors to be part of the creation of the  Bangsamoro basic law,” he added. Binay said he believes that, like in the previous times, the Filipino people will be able to triumph over such tragedy. “Buo ang pananalig natin sa maawaing Diyos. Malakas ang tiwala natin sa tibay ng loob ng mga Pilipino. At sa maraming hagupit ng kalamidad at iba pang pagsubok, bayanihan ang umiiral. Pagtutulungan ang nangib-abaw. At pagkalinga sa isa’t isa ang lumaganap,” he said. “Let us continue our unity and co-operation as a way of  honoring the 44 heroes of the SAF. Let us keep their sacrifices alive for a more peaceful and progressive society.” “Bilang parangal sa mga 44 bayani ng SAF, ipagpatuloy natin ang pag-kakaisa at pagtutulungan. Isabuhay natin ang kanilang sakripisyo para sa isang payapa, maayos at magin-hawang lipunan,” he added. Nationalist People’s Coalition Rep. Sherwin Gatchalian of Valen-zula at the same time to Purisima to come out from his “White House” in

Camp Crame and explain to the Fili-pino people his role in the January 25 Mamasapano operation. Gatchalian said Purisima cannot escape responsibility from the mas-sacre of 44 SAF commandos since he was identified by the relieved SAF commander, Director Getulio Napeñas, as the one calling the shots and that the SAF director was directly reporting to him. Even President Aquino, in his January 28 live telecast speech, admitted that Purisima was giv-ing him briefings on the top se-cret SAF operation to neutralize Malaysian national and Jema’ah Islamiyah bomb expert Sulkifli bin Hir, alias Marwan, who is among the most wanted terrorists by the Federal Bureau of Investigation with a $5-million bounty for his capture, dead or alive.

“General Purisima should be man enough to come out and tell everything he knew about the SAF operation since he was the one act-ing as conduit between SAF Director Napeñas and President Aquino,” said Gatchalian, who had earlier con-firmed from his PNP the alleged role of Purisima. “The least that the suspended na-tional police chief can do is to take the flak for the botched operation and, in so doing, absolve his sub-ordinate officer, General Napeñas, and protect his commander in chief from being pilloried for his failure to ensure safety of the SAF comman-dos in the Mamasapano operation,” Gatchalian added. Gatchalian maintained that the active involvement of Purisima in the SAF operation is one of the reasons he is not agreeable to the creation

of the PNP Board of Inquiry (BOI) to conduct the formal investigation of the SAF operation and the death of 44 commandos and wounding of 12 other SAF personnel. While he does not question the integrity and professionalism of the composition of the BOI, which is headed by Deputy Director Gen-eral Leonardo Espina, National Po-lice officer in charge, Gatchalian said it would be difficult for the board to summon and investigate Purisima, who still holds the rank of director general. Gatchalian pointed out that the board cannot even summon Execu-tive Secretary Paquito N. Ochoa Jr., who is concurrent chairman of the Presidential Anti-Organized Crime Commission, which allegedly funded the top-secret SAF operation. Being of Cabinet rank, Ochoa can only be investigated by an indepen-dent commission similar to congres-sional inquiries. “It is crucial for the fact-finding commission to be independent given the magnitude and gravity of the case at hand. It would be best if the PNP has no direct hand in this probe as to ensure that there will be no squelching of the truth and whitewash of the probe,” Gatchalian explained. He said the independent fact-finding commission can be headed by a retired Supreme Court justice and its members coming from the ranks of retired Armed Forces and PNP officials, who are known for their integrity, independence and investigative skills.

[email protected] Editor: Dionisio L. Pelayo • Saturday, January 31, 2015 A3BusinessMirrorThe Nation

PURISIMA BINAY

SUNRISE SUNSET

FULL MOON6:25 AM 5:54 PM

MOONRISEMOONSET

3:10 AM 2:55 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 CITY24 – 28°C

TACLOBAN CITY24 – 31°C

CAGAYAN DE ORO CITY

METRO DAVAO25 – 32°C

ZAMBOANGA CITY23 – 33°C

PHILI

PPIN

E ARE

A OF R

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NSIB

ILITY

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SABAH

PUERTO PRINCESA CITY 24 – 31°C METRO CEBU

23 – 31°C

ILOILO/BACOLOD

23 – 30°C

25 – 31°C

23 – 30°C 24 – 30°C 24– 31°C

23 – 31°C 24 – 31°C 24 – 31°C

24 – 31°C 24 – 31°C 24 – 32°C

24 – 32°C 24 – 32°C 23 – 32°C

24 – 33°C 23 – 33°C 23 – 32°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 31, 2015 | SATURDAY

HIGH TIDEMANILA

SOUTH HARBOR

LOW TIDE

3:55 AM-0.04 METER

TUGUEGARAO CITY 18 – 30°C

LAOAG CITY 18 – 30°C

TAGAYTAY CITY 16 – 28°C

SBMA/CLARK 21 – 30°C

20 – 31°C 21 – 31°C 21 – 31°C

19 – 29°C 20 – 29°C 19 – 30°C

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

HALF MOON

12:48 PMJAN 27

7:09 PMFEB 4

BAGUIO CITY12 – 24°C

23 – 31°C

7:43 PM0.97 METER

FEB 1SUNDAY

FEB 2MONDAY

FEB 3TUESDAY

FEB 1SUNDAY

FEB 2MONDAY

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Cloudy skies with rain showers and/or thunderstorms

23 – 31°C

Light rains

Partly cloudy to at times cloudywith rainshowers

NORTHEAST MONSOON AFFECTING LUZON.(AS OF JANUARY 30, 5:00 PM)

METRO MANILA19 – 30°C

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

widespread cloudiness with rain showers.

By Catherine N. Pillas

A drAft legislation seeking to grant duty-free access of goods made in Supertyphoon

Yolanda (international code name Haiyan)-devastated areas to the United States has been expanded to include Mindanao, according to the Philippine ambassador to the United States. 

PRIDE bill to include Mindanao products

Speaking to the media after a news conference of the US-Philip-pines Society, Philippine Ambassa-dor to the US Jose L. Cuisia Jr. said that the PRIDE bill, or the Philippine Recovery Investment Development Export draft bill, will not just focus on Yolanda-hit areas but will extend to Mindanao, as well. 

“...[the US Congress] want to help Yolanda survivors [but] we suggested [that] Mindanao be included [in the bill] because this will help the de-velopment of Mindanao. Initially, it was only going to be focused on areas affected by Yolanda but we decided to expand because our point was to help speed up the development of Mindanao,” Cuisia said. 

The idea to allow duty-free access of goods made in typhoon-hit areas in entering the US and to propose a bill for it to the US Congress was floated early in 2014, in the wake of the devastation of the super typhoon that hit Eastern Visayas in Novem-ber of 2013. 

The measure is aimed to spur economic development and business activity in areas damaged by Yolanda by attracting investors and develop-ers in the affected areas.  

The proposal, however, stalled in 2014 as the Philippine government waited for the midterm elections in the United States to conclude before they can again push for the bill to be sponsored. 

The draft legislation has yet to identify specific areas in Mindanao and in the Visayas that could qualify for the duty-free privilege, but Cuisia said there will be a list of proposed zones, which has to be approved by Malacañang.

Notably, Cuisia said the maxi-mum period for conferment of the privilege, if granted, will be for five years, a significant point since the Philippines is aiming to qualify for the broader Transpacific Partnership (TPP) agreement.

“It’s temporary because it will en-able us to build up our capacity to eventually joining TPP. We want to see the Philippines join the TPP, but we want to prepare our industries and make sure we’re qualified to join later on so we’re asking for this time frame as a transition for us,” Cuisia said. 

However, the United States’s pur-suit of the TPP trade pact, viewed as the US’s main trade tool to advance its economic interest in the Asia-Pacific region, may itself be facing a major hurdle.

“Let me tell you, it will be a chal-lenge because you know the US is fo-cused on TPP. They would not want to give trade preference to one country. They’re not entertaining bilateral agreements, they prefer it to be part of a larger trade pact,” Cuisia added. 

“It’s a big challenge for us but we will do it to assist our countrymen,” he added.

The TPP is a trade agreement among Australia, Brunei Darus-salam, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam and the United States. 

This group, if combined with Ja-pan’s accession, has a combined gross domestic product (GDP) of $28 tril-lion, or 40 percent of the world’s GDP.

The Department of Trade and In-dustry has earlier conceded that TPP would improve the country’s competi-tive position to become a regional hub for growth, investment and exports to the United States and key Asian markets. However, barriers in the eco-nomic provisions in the Constitution hinder the country’s entry. 

The US House of Representatives has reviewed the bill, while the Sen-ate has yet to see the draft. Cuisia, meanwhile, is slated to go to Wash-ington next week to discuss the draft and fine-tune details. 

“Right now our focus is showing the merits of the bill to members of Congress so we can find sponsors to file it,” Cuisia said. 

Shopping mecca a family embarks on a weekend shopping trip to Baclaran in search of big bargains and discounts for a number of household items and clothing. Baclaran has kept its popularity as a favorite place to shop among middle-class Filipinos. NoNie Reyes

By Lorenz S. Marasigan

THE problematic  Metro Rail Transit (MRT) Line 3 will have lesser problems come the sec-

ond quarter this year after the De-partment of Transportation and Communications (DOTC) awarded on Thursday the P61.5-million con-tract for the supply of steel rails for the mass-transit system. 

Transportation Spokesman  Mi-chael Arthur C. Sagcal said the deal was bagged by the group led by Jorg-man Planning & Development Corp., South Korean firm Daewoo Group and Germany’s MBTech Group.

“After the contract is finalized, the notice to proceed will be issued by next week at the latest,” he said in a text message. 

The group will then have 90 days to deliver 7,296 meters of rails and fastening materials for the train line that serves more than half-a-million passengers per day. 

The project will address the train system’s rail-supply deficit that was earlier seen to potentially halt the operations of the MRT. 

Experts from Hong Kong’s MTR Corp. Ltd. earlier said the overhead mass-transit system had major flaws in rails, emphasizing on the need to replace “unsafe tracks” that were backed by a fourfold increase in broken rails over a period of three years. 

The audit team concluded that most of the existing problems in the asset system of the 15-year line stemmed from insufficient attention in the management of the asset, han-dover, maintenance performance, and the overall planning and devel-opment of the railway line. 

The government is currently roll-ing out a P9.7-billion venture to over-haul the line. The complete makeover is expected to be done within the term of President Aquino. 

It includes the procurement of additional train coaches, train gen-eral overhauling, ancillary systems

upgrade, platform-edge doorstep, signalling system upgrade, rail steel replacement, communications sys-tem upgrade, traction motors re-placement and the improvement of the overhead catenary system. 

The rehab venture also includes security fence and noise barrier, con-sulting services, upgrade of convey-ance facilities, a footbridge for the North Avenue station, weather pro-tection cladding, Internet connec-tion, passenger information system and passenger hand straps. 

Separately, the local flagship of Hong Kong-based First Pacific Co. Ltd. is proposing to shoulder the upgrade cost of the train system and free the government from pay-ing billions of pesos in equity rental payments. 

Metro Pacific Investments Corp. President Jose Ma. K. Lim said his group will soon submit its $524-mil-lion proposal to the DOTC, which has already rejected the then $565-mil-lion offer. 

The lower budget for the offer, Metro Pacific Business Development Officer John B. Echauz explained, stemmed from the removal of the automated fare collection system and another component from the proposal. 

The unified ticketing system project was auctioned off by the transportation agency in 2013, and was awarded to the consortium be-tween Metro Pacific and Ayala Corp. in 2014. 

The total $524 million also in-cluded the $30-million working capital and a $229-million budget for the settlement of the government’s equity rental payment.

The group of businessman Man-uel V. Pangilinan earlier entered into a partnership agreement with the corporate owner of the MRT, a move that would have allowed the firm to invest roughly $600 mil-lion to improve the services of the train system. 

The venture would effectively

expand the capacity of the railway system by adding more coaches to each train, allowing it to carry more cars at faster intervals. The multimillion-dollar expansion plan would double the capacity of the line to 700,000 passengers 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. 

The government, on the other hand, intends to buy out the corpo-rate owner of the line, MRT Corp., which is wholly owned by MRT Hold-ings II Inc. of businessman Robert John L. Sobrepeña. 

The government aims to com-pletely take over the line by the time President Aquino steps down from office in 2016. But recent delays, in-cluding the “tying up of loose ends,” are forcing the government to double its efforts to effect the buyout. 

One of the requirements to ex-ecute the takeover is for the gov-ernment to strike up a compromise deal with the private owner of the train line. 

This would effectively end the on-going arbitration case in Singapore that was lodged against the govern-ment in 2008 due to its failure, as the operator of the line, to pay billions of equity rentals payment to the owner of the rail system. 

Should the buyout be completed in 2016, the transportation agency may then bid out the operations and maintenance contract of the line, thereby tapping private-sector efficiency and customer service orientation for operational needs, while retaining regulatory func-tions for passenger protection with government.

Since 2004 the train system has been operating at overcapacity. Currently, the line serves nearly 550,000 passengers per day, it even reached, at one point this year, the 650,000-daily passenger mark. It has a rated capacity of 350,000 daily passengers.  

Transportation dept closes P61.5-M steel rail-supply deal for MRT 3

By Lenie Lectura

POWER utility giant Manila Electric Co. (Meralco) has re-ceived an approval from the

Energy Regulatory Commission (ERC) for the development of a 115- kilovolt (kV) switching station in Caloocan City that costs P154.091 million.

In its 22-page decision, the ERC approved Meralco’s application for authority to develop a 115-kV switch-

ing station at Sitio Gitna, Kaybiga, Caloocan City, because the project “will redound to the benefit of con-sumers in terms of continuous, re-liable and efficient power supply.”

The project involves the con-struction of around 3.6 kilometers of 115-kV line on steel poles from the corner of General Luis and P. de la Cruz streets to the Sitio Gitna’s 115-kV station.

The ERC agreed when Meralco said the proposed facility is the best

solution to address the large capacity, as well as the reliability requirements for subtransmission facilities of the Metrodragon Steel Corp. (MSC) and ANK Steel and future industrial cus-tomers in Valenzuela, Caloocan and Quezon City.

MSC is an existing Meralco cus-tomer with a steel-rolling mill also in Sitio Gitna. It is applying for a 40-megawatt (MW) induction fur-nace as expansion for the said plant.

On the other hand, ANK is a new

customer with a proposed smelting 20-MW induction furnace plant in the same area.

Both of their facilities are in Meralco’s franchise area. The com-bined applied load of MSC and ANK is 60 MW, which is scheduled to be commissioned in the first half of 2015. These significant new loads will be connected to Meralco’s  dis-tribution system.

Steel furnaces are known to con-tribute voltage flicker and harmonic

distortions that may cause power- quality problems in the electronic power system.

Meralco said that with the current trend in economic growth, there is also a rapid growth in power demand in Meralco’s franchise, especially the commercial and industrial areas within Metro Manila.

“The development of the Sitio Gitna 115-kV switching station will accommodate the load applications of MSC and ANK,” Meralco said.

ERC OKs installation of P154.091-M switching station in Caloocan

Saturday, January 31, 2015 • Editors: Vittorio V. Vitug and Max V. de Leon

EconomyBusinessMirrorA4 [email protected]

Baywalk reconStruction construction workers work double time to finish a sidewalk-repair project at the Baywalk area along roxas Boulevard in manila in line with manila city hall’s drive to beautify the area and attract more visitors and tourists. KeviN de la CRuz

By Cai U. Ordinario

THE Philippine Institute for Development Studies (PIDS) and three other local think

tanks were deemed among the best in the world and the region by the Think Tanks and Civil Societies Pro-gram (TTCSP) at the University of Pennsylvania. 

In the 2014 Global Go To Think Tanks Report, PIDS remained the top social-policy think tank in Southeast Asia and 37th among the top 50 in the world. It was also ranked 69th among the top 80 international de-velopment think tanks—one notch higher than its ranking in 2013.  Meanwhile, the institute is now part of the 55 top education-policy think tanks in the world at 33rd place.

“Despite having only a handful of researchers compared to other better-endowed research institutes in the region and in the Philippines, PIDS has consistently made sig-nificant contribution and influence on Philippine development policy through its active and close collab-oration with government agencies, academic and research institutions, and international organizations,” PIDS President Gilberto Llanto said. 

Other think tanks in Southeast Asia that made it to the list under these categories were Thailand Development Research Institute (TDRI); Singapore Institute of In-ternational Affairs (SIIA); Institute of Southeast Asian Studies (ISEAS), which is also in Singapore, and Ma-laysia’s Centre for Public Policy Stud-ies; and Third World Network. 

TDRI ranked 20th among the edu-cation-policy think tanks and 66th in the international development think tanks category; SIIA and Third World Network ranked 70th and 72nd, re-spectively, among the international development think tanks; while IS-EAS ranked 41st among the social- policy think tanks. 

Meanwhile, three other Filipino think tanks that were deemed among Southeast Asia and the Pacific’s best were the Institute for Strategic and International Studies, ranked 22nd in the region; Institute for Strategic and Development Studies, 28th; and Asian Institute of Management Policy Center, 58th. 

The top 5 think tanks in South-east Asia and the Pacific for 2014 were the Australian Institute for International Affairs; Indonesia’s Centre for Strategic and Interna-tional Studies; New Zealand’s Cen-tre for Strategic Studies; SIIA; and Australia’s Lowy Institute for Inter-national Policy. 

The Go To Think Tanks Index is a comprehensive ranking of the world’s top think tanks and has been described as the premier database and measure of world think tanks. 

It aims to increase the profile, performance and impact of think tanks, and to create a transnational and interdisciplinary network of centers of public-policy excellence.

Think tanks are public-policy research analysis and engagement organizations that generate policy-oriented research, analysis, and ad-vice on domestic and international issues, thereby enabling policy-mak-ers and the public to make informed decisions about public policy. 

For its latest rankings, 6,618 think tanks from 182 countries were invited or nominated to participate in the process.

Established in 1989, the TTCSP aims to acknowledge the important contributions and emerging global trends of think tanks worldwide. Of-ten referred to as the “think tanks’ think tank,” the program maintains a database and network of more than 6,600 think tanks in 182 countries.

PIDS, 3 other local think tanks among world’s best

Saturday, January 31, 2015

OpinionBusinessMirrorA6

The price of peaceeditorial

THE Philippines suffered a horrible loss this past week that warrants a chapter in the history of this nation.

The words of Pope Francis during his homily in Tacloban to the Supertyphoon Yolanda victims are particularly poignant and perhaps even prophetic.

“So many of you have lost everything. I do not know what to tell you. But surely He knows what to tell you! So many of you have lost members of your family. I can only be silent; I accompany you silently, with my heart.”

The scant and perhaps even unreliable information that we have at this time makes it impossible to draw any specific conclusions. How-ever, we do know that the operation conducted by the Special Action Force of the Philippine National Police went terribly wrong.

While it is unjustified to draw any concrete conclusions at this point, it would seem that at almost every step of the way, there were errors in judgment and mistakes in the execution of the plan.

A section of a poem by Scotsman Robert Burns, paraphrased in English, comes to mind, “The best laid plans of mice and men often go awry and leave us nothing but grief and pain instead of promised joy”.

Understanding exactly what happened and what went wrong through a thorough and unbiased investigation is the first step to resolving our grief, anger, and despair. That is the singular duty of the government at this time. No stone must be left unturned in the search for truth. Every potential participant in the decision making process that led to this operation or involved in its implementation must be called to give answers that the public and the families of the fallen dead demand.

Justice must be served. But justice can only be genuine when the truth is fully revealed.

There are those that will use this tragedy to further their own agen-das. It will take large amounts of Pope Francis’s “mercy and compas-sion” to condone their actions. But we must expect that and temper our response.

While all Filipinos urgently seek peace and a beneficial resolution to the generational bloodshed in Mindanao, this event cannot be ignored or easily dismissed. Peace and progress can only come when all factions are willing to give up something important to achieve that peace and pros-perity. Peace and freedom both come with a price and unless that price is paid, peace will always be transitory. And what might that price be?

That is a question that can only be answered by all stakeholders involved. So then the question becomes for both groups and individu-als: What are you willing to give up, what price are you willing to pay, for peace in Mindanao?

THE pricing mechanism is the most basic part of an economy. William Shaw, a professor and former chairman of the Philosophy Department at San Jose State University in

the US, describes it this way in his book, Business Ethics: It is “the manner in which the prices of commodities affect the demand and supply of goods and services. Price mechanism affects both buyers and sellers who negotiate prices of goods or services.”

The problem with the markets

The pricing mechanism includes the law of supply and demand where-by increased demand increases prices and increased supply theoretically lowers prices. But other factors are equally important.

The quality of a product will help determine price. An electric hot wa-ter pot that never reaches boiling temperature might sell only if the price were low enough to attract buyers who were not concerned with having boiling temperature water. A shirt made with fabric that irritates your skin might never sell no mat-ter how low the price is dropped. Consumer preference plays a major part in the pricing mechanism where one color sells well in one year and is ignored in another.

However, as long as both sellers and buyers are able to freely nego-tiate the price, the flow of goods

and services functions pretty well without constant shortages or over-supply. The price mechanism clears the market.

But we have seen constant re-minders that interference in the pric-ing mechanism causes disruptions of supply. Venezuela has been facing constant shortages of basic goods as government determines the price outside of production costs. A pro-ducer will not produce if prices can-not at least cover production costs. Yet, the Venezuelan government has mandated prices at or below the cost of production and then cannot fig-ure out why there are not any goods available in the market.

The communist governments of the 20th century attempted central planning of both production and price and failed miserably. Yet the so-called free market capitalist nations

of the 21st century did not learn any lessons from that failure.

Governments and central banks have attempted to move the asset and financial markets and prices in the direction they have wanted them to go. This has been done through intervention and outright manipulation. When the US govern-ment decided that everyone should be able to buy a home, the loans for purchases were guaranteed by the government regardless that many of the borrowers would never have the financial capability to repay the debt. Creating artificial demand this way also raised the prices of homes far beyond the normal boundaries of the price mechanism and the in-evitable crash occurred.

The same process is being used in the financial and equity markets. We constantly hear that the Philippine Stock Exchange it too expensive in relation to other regional markets. I would contend the opposite. The re-gional markets are too cheap in rela-tion to the Philippine Stock Exchange.

The ‘experts’ tend to benchmark stock markets by those that are being fueled by the interference of artificial non-market driven interest rates set by the central banks. In the Philip-pines we have a stock market driven by actual productive economic activ-ity, growing corporate profits, and market based interest rates.

The pricing mechanism in a free and unmanipulated environment has priced the Philippine Composite

Index at 7,600. Further it is not cheap credit foreign money that is driving prices higher. We know foreigners were selling in the fourth quarter of 2014 and still at the beginning of the year.

I argue that investors are properly pricing the PSE. Perhaps conditions are so bad in the other nations that their markets should be lower. But do not criticize or scorn the PSE for being priced at a level that the buyers and sellers freely agree upon. That is the way an efficient and effective stock market or any other good or service is supposed to work.

The negotiation between buyers and sellers based on both supply and demand is what the pricing mecha-nism is all about. When outside forces interfere, then both parties cannot realistically set a price. The US Fed-eral Reserve and government says stock prices should be higher and then provides the money to buy and then prices magically go up. That is a market that may be too expensive.

A stock market where hard earned cash is taken out of pocket to buy stocks is a market that is fairly valued and fairly priced. That is the Philip-pine stock market.

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

OUTSIDE THE BOXJohn Mangun

IN September the world will commemorate the 30th anniversary of the Plaza Accord. That agreement to weaken the dollar and boost the yen still stands as a landmark of economic

cooperation–something that’s sadly lacking in our chaotic and deflationary times.

Central bankers, unite!

This week’s panicky move by Singa-pore’s central bank shows why it may be time for another round of currency talks. Thirteen days after the Swiss National Bank let the franc soar, the Monetary Au-thority of Singapore unexpectedly eased policy and allowed the Singapore dollar to weaken. The unilateral moves dis-rupted markets around the world, add-ing to the general climate of volatility.

While the two banks’ moves may seem divergent, they’re battling the same problem: fallout from too much liquidity zooming around the globe. Thus far, the debate surrounding quantitative easing has focused on the risks to big econo-mies–the US, Japan and the euro zone.

But actions by “the major advanced economy central banks portend high lev-els of capital flow and currency volatility in global financial markets,” says Cornell

University’s Eswar Prasad, author of The Dollar Trap. “Emerging markets and small economies with open capital accounts, such as Singapore and Switzerland, are likely to feel whiplash effects from this volatility.”

In the last year alone, about $14 bil-lion of overseas hot money poured into equity markets in Indonesia, the Phil-ippines and Thailand. Taiwan’s equity bourses have seen over $5 billion of foreign buying. These flows could easily reverse as soon as the Federal Reserve begins hiking interest rates or Greece’s troubles push the euro back into crisis.

That’s making it devilishly hard for smaller nations to manage risks to their economies–and driving them to act be-fore competitors do. The fact that highly conservative Singapore felt compelled to surprise the market is a sign of how

worried officials there must be.The problem is that as more and

more nations slash rates in an attempt to keep their export-focused economies competitive, returns are diminishing. Eventually, nations trying to out-stim-ulate each other are, in central banker parlance, pushing on a string. Quan-titative easing programs are already generating more financial-market side effects–including excessive volatil-ity, bubbles and impossibly low bond yields–than actual growth.

This should worry the big econo-mies as well. I’m reminded of a fascinat-ing lunch I had with the late Karl Otto Poehl in October 1998. As the head of Germany’s Bundesbank in 1985, Poehl was one of the Plaza Accord principals. During our chat (right across from New York’s Plaza Hotel, where the talks took place), he offered a useful analogy in-volving wine grapes. Vineyards often surround vines with rose bushes, he explained, as an early-warning system. Since rose bushes are vulnerable to dis-ease, wine makers know their grapes are in trouble long before disaster strikes. Small, open economies like Singapore and Switzerland serve a similar role for the global economy.

Asking countries to work together to head off a potential currency war will be a tough sell. Still, the need for greater coordination should be obvious. Central bankers could calm volatility by address-ing deep fissures over exchange rates,

budget- and current-account deficits and other imbalances. Signs of cooperative-ness–and in particular a united approach to fighting deflation–would cheer global markets. Perhaps policymakers might even gin up some out-of-the-box ideas, such as pegging the yen to the dollar in order to battle deflation, or establish-ing a regional exchange-rate system in Southeast Asia.

“Some sort of international coordina-tion may be preferable at this point to a growing wave of competitive devalua-tions,” says Russell Green of Rice Uni-versity’s Baker Institute (named after James Baker, US Treasury secretary at the time of the Plaza Accord). In partic-ular, Green suggests, the International Monetary Fund “needs to step forward and establish some ground rules. Check-ing exchange rate competition is one of its major mandates, so it needs to provide the intellectual leadership that others can coalesce around.”

Perhaps as a unit, the gathered cen-tral bankers could even shame their governments into repairing economies once and for all. “The problem remains that central banks are being asked to do most of the heavy lifting in terms of propping up growth and prices, and monetary policy invariably has spill-overs across national borders,” Prasad says. “What I would wish for is a better mix of policies in the major economies, with less reliance on monetary policy.”

Time to book rooms at the Plaza.

HOM

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Saturday, January 31, 2015

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Evangelii Gaudium

49th part

Unity prevails over conflict

CONFLICT cannot be ignored or concealed. It has to be faced. But if we remain trapped in conflict, we lose our perspective, our horizons shrink and reality itself begins

to fall apart. In the midst of conflict, we lose our sense of the profound unity of reality.

When conflict arises, some people simply look at it and go their way as if nothing happened; they wash their hands of it and get on with their lives. Others embrace it in such a way that they become its prisoners; they lose their bearings, project onto institu-tions their own confusion and dis-satisfaction and thus make unity impossible. But there is also a third way, and it is the best way to deal with conflict. It is the willingness to face conflict head on, to resolve it and to make it a link in the chain of a new process. “Blessed are the peacemak-ers!” (Matthew 5:9).

In this way it becomes possible to build communion amid disagree-ment, but this can only be achieved by those great persons who are will-ing to go beyond the surface of the conflict and to see others in their deepest dignity. This requires ac-knowledging a principle indispens-able to the building of friendship in society: namely, that unity is greater than conflict. Solidarity, in its deep-est and most challenging sense, thus becomes a way of making history in a life setting where conflicts, ten-sions and oppositions can achieve

a diversified and life-giving unity. This is not to opt for a kind of syn-cretism, or for the absorption of one into the other, but rather for a reso-lution which takes place on a higher plane and preserves what is valid and useful on both sides.

This principle, drawn from the Gospel, reminds us that Christ has made all things one in himself: heaven and earth, God and man, time and eternity, flesh and spir-it, person and society. The sign of this unity and reconciliation of all things in him is peace. Christ “is our peace” (Ephesians 2:14). The Gospel message always begins with a greet-ing of peace, and peace at all times crowns and confirms the relations between the disciples. Peace is pos-sible because the Lord has overcome the world and its constant conflict “by making peace through the blood of his cross” (Colossians 1:20). But if we look more closely at these bibli-cal texts, we find that the locus of this reconciliation of differences is within ourselves, in our own lives, ever threatened as they are by frag-mentation and breakdown. If hearts are shattered in thousands of pieces,

it is not easy to create authentic peace in society.

The message of peace is not about a negotiated settlement but rather the conviction that the unity brought by the Spirit can harmonize every di-versity. It overcomes every conflict by creating a new and promising syn-thesis. Diversity is a beautiful thing when it can constantly enter into a process of reconciliation and seal a sort of cultural covenant resulting in a “reconciled diversity”. As the bish-ops of the Congo have put it: “Our ethnic diversity is our wealth… It is only in unity, through conversion of hearts and reconciliation, that we will be able to help our country to develop on all levels.”

Realities are more important than ideasTHERE also exists a constant tension between ideas and realities. Realities simply are, whereas ideas are worked out. There has to be continuous dia-logue between the two, lest ideas become detached from realities. It is dangerous to dwell in the realm of words alone, of images and rhetoric. So a third principle comes into play: realities are greater than ideas. This calls for rejecting the various means of masking reality: angelic forms of purity, dictatorships of relativism, empty rhetoric, objectives more ideal than real, brands of ahistorical fun-damentalism, ethical systems bereft of kindness, intellectual discourse bereft of wisdom.

Ideas—conceptual elabora-tions—are at the service of com-munication, understanding, and praxis. Ideas disconnected from re-alities give rise to ineffectual forms of idealism and nominalism, capable at most of classifying and defining, but certainly not calling to action. What calls us to action are realities illuminated by reason. Formal nomi-

nalism has to give way to harmoni-ous objectivity. Otherwise, the truth is manipulated, cosmetics take the place of real care for our bodies. We have politicians—and even religious leaders—who wonder why people do not understand and follow them, since their proposals are so clear and logical. Perhaps it is because they are stuck in the realm of pure ideas and end up reducing politics or faith to rhetoric. Others have left simplicity behind and have imported a rational-ity foreign to most people.

Realities are greater than ideas. This principle has to do with incar-nation of the word and its being put into practice: “By this you know the Spirit of God: every spirit that con-fesses that Jesus Christ is come in the flesh is from God” (1 John 4:2). The principle of reality, of a word already made flesh and constantly striving to take flesh anew, is es-sential to evangelization. It helps us to see that the Church’s history is a history of salvation, to be mind-ful of those saints who inculturated the Gospel in the life of our peoples and to reap the fruits of the Church’s rich bimillennial tradition, without pretending to come up with a sys-tem of thought detached from this treasury, as if we wanted to reinvent the Gospel. At the same time, this principle impels us to put the word into practice, to perform works of justice and charity which make that word fruitful. Not to put the word into practice, not to make it real-ity, is to build on sand, to remain in the realm of pure ideas and to end up in a lifeless and unfruitful self-centeredness and Gnosticism.

For comments, e-mail [email protected]. For donations to Caritas Manila, call 563-9311. For inquiries, call 563-9308 or 563-9298. Fax: 563-9306.

By Arun GandhiTribune News Services

ON January 30, 1948, my grandfather Mohandas Karamchand Gandhi, the

great Indian leader and champion of nonviolence, fell to an assas-sin’s bullets. Indian society has recently faced a sustained assault by people of the same ideological ilk as the man who fired those fatal shots.

India’s drift away from Gandhi’s ideals of nonviolence and respect for religious pluralism has been steady over the last few decades. However, events since the national election that made Narendra Modi in charge of the country last May have shown that what is now tak-ing place is a brazen assassination of the Mahatma’s legacy.

Matters have come to a point where Gandhi’s assassin, Nathuram Godse, has been praised by a mem-ber of India’s Parliament belong-ing to the ruling Bharatiya Janata Party (BJP). A Hindu extremist or-ganization has plans to celebrate the assassination and install the

assassin’s statue in various parts of the country.

Prime Minister Modi–who since assuming office has both been ac-corded a warm welcome by President Obama and played host to him in In-dia–was long banned from entering the United States. This was because of a horrific pogrom in 2002 that happened in the state of Gujarat (Gandhi’s home province) while he was in charge.

Clearly, his electoral victory has emboldened supremacist groups across the country. This is because the Modi and the ruling party’s ideological roots lie in the Rashtriya Swayamsevak Sangh (RSS), a vast ultranationalist outfit that posi-tions itself as a service organiza-tion but seeks to dismantle India’s secular polity in order to impose a Hindu state on India’s religiously and ethnically diverse populace. (My grandfather’s killer also belonged to this group.) The writings of the organization’s ideologues, their sustained majoritarian and anti-minority rhetoric, and the policy positions of the outfit’s political wing (the party currently govern-

ing India) have made this amply clear. Moreover, the entity and its offshoots have been implicated in mass violence against minorities over the years.

The group has spawned a closely knit mesh of organizations. This grassroots network has always been against my grandfather’s phi-losophy.

Modi’s views on minorities, sec-ularism, and pluralism have been largely shaped by the RSS, whose ideology he has openly endorsed. Modi has proudly stated: “I got the inspiration to live for the na-tion from the RSS. ... I owe it all to the RSS.” Since Modi’s party has come to power, it has engaged in cynical posturing: praising Gandhi in public, while simultaneously seeking to demolish everything he stood for.

It is not surprising that mi-norities in India now feel a rapidly shrinking space for religious free-dom. Hate campaigns against mi-norities include bizarre theories of Muslim youth luring Hindu girls as a form of “love jihad.” A number of churches have been attacked in and

around the country’s capital. There have been group conversions under duress of minorities to Hinduism, an affront to India’s secular Consti-tution. It is a measure of the sheer audacity of Hindu sectarian outfits that they are actively seeking funds to convert Muslims and Christians to Hinduism. And there have been incendiary statements by ruling party officials. A cabinet member, for instance, used expletives to refer to minorities.

Mahatma Gandhi once said the quality of democracy should be judged from the way minorities are treated. On the 67th anniversary of his assassination, I shudder to think of what lies ahead for India’s minorities. The land the Mahatma fought so hard to free from British colonialists is now hostage to a di-visive and hateful ideology.

Arun Gandhi is the grandson of Ma-hatma Gandhi and the author of several books on poverty, politics and nonvio-lence. Readers may write to the author at: Progressive Media Project, 409 East Main Street, Madison, Wis. 53703 or e-mail: [email protected].

How India is assassinating Gandhi’s legacy

SERVANT LEADERRev. Fr. Antonio Cecilio T. Pascual

DATAbASECecilio T. Arillo

Why compromise national security andpublic safety interests?

THE recurring image the government is conveying to the public over the preventable death of 42 officers and men of the Philippine National Police Special Action Force who

were mercilessly slaughtered in Maguindanao last week while serving warrant of arrests on two international terrorists is that of a country compromising its own national security and public safety interests.

Worse, some of its officials are inept, reactive rather than proactive and appeared to operate without a clearly defined chain of command.

This is reflected by the ceaseless issuances of conflicting statements by the same government officials who tend to aggravate the situation rather than to offer a lasting solu-tion to the country’s deteriorating national security and public safety situations.

It must be understood that one of the paramount responsibilities of the government is not to com-promise to the enemies of state the safety and security of the people and territory (air, land and sea) in all circumstances.

National security is not just about the defense of the State from the military and police viewpoints. It is also about jobs, food, housing, water, electricity, traffic and disaster pre-paredness, to cite only a few.

A chain of command is a system in a military or civil organization by which instructions are passed from the Commander in Chief or Chief Executive to a selective few in the armed services or the bureaucracy.

In the country, the chain of com-mand in the military starts from the President or Chief Executive whose order is relayed to the Chief of Staff (COS) and from the COS, to the deputy chief of staff who disseminate the instruction to the selective field commanders chosen to implement the order. The defense secretary is not a member of the chain of command.

In the police organization, it’s similar in structure only that the secretary of the Department of In-terior and Local Government (DILG) is included in the chain of command because the organization is civilian in character and nationwide in scope and it has to deal with local govern-ment units on public safety matters, among others.

How the DILG Sec. Mar Roxas and Acting PNP Director General Leon-ardo Espina, both key members of the police chain of command, were completely disregarded in the botch operation that led to the massacre of the SAF officers and men is an im-portant issue that must be clarified.

According to the Moro Islamic Liberation Front (MILF) and some

incompetent observers, it was a misencounter.

A misencounter refers to friendly forces.

Can you consider the MILF ter-rorists as friendly forces and not enemies of the State?

Consider this: The government is now locked in a peace talk with the MILF rebels who before the peace negotiation had declared a war against the government, curved out a large portion of our territory, declared them to be their own bangsamoro homeland and wanted to wangle a statehood from us under the guise of creating another autonomy.

To the uninitiated, the require-ments for statehood are people, ter-ritory, government and sovereignty. The MILF claimed they have all of the four requirements and it cited the US, Malaysia and Japan as sup-porting them.

It’s not surprising at all why they are supporting them be-cause they have their own vested national interests to protect in Mindanao, a part of the Philip-pine territory rich in oil and other mineral resources.

The country as well as US, Ja-pan and Malaysia are dependent on Middle East oil. Mindanao com-mands such strategic waterways as the Straits of Malacca, Sunda, Lom-bok and Macassar which Japan and other East Asian countries’ oil and other trade must move. Through its security alliances, it acts as the buffer against terrorist attack and other threats.

The potential for terrorist dis-ruption of vital political, social and economic interests in the region and the Middle East is formidable and has far-reaching implications on the national security situation in the Philippines, the Pacific Rim and other east Asian countries.

Just imagine if the MILF is grant-ed statehood, you think the countries supporting them will still negotiate with the Philippine government?

Besides, are we not negotiating with the enemies of the state on a wrong premise, that of creating peace without requiring them first to sur-render their arms?

To reach the writer, e-mail [email protected]

5 years after the spill: What BP owes the Gulf CoastBy David Yarnold

CQ-Roll Call/TNS

IT’S been nearly five years since BP slimed the Gulf Coast, tak-ing the lives of 11 men, wreck-

ing livelihoods and killing tens of thousands of helpless coastal birds. Finally, federal Judge Carl Barbier is heading into the final stretch, decid-ing how much the third largest oil company in the world will have to pay in pollution fines for the worst oil spill in US history.

It’s time to hold BP accountable for the environmental damage it continues to cause the wildlife and people of the Gulf Coast. The Gulf Coast’s way of life is a rich stew, a place that’s uniquely American, where drilling and shrimping go hand-in-hand. But we also know

whether you’re talking about a curfew for your kids or creating a safe construction site, there have to be consequences when rules are blatantly ignored. America’s laws acknowledge that deep sea drilling is risky business that requires ex-traordinary safety measures—and that’s why there are penalties for lawbreakers.

BP already admitted it broke America’s laws and has pleaded guilty to felony manslaughter, envi-ronmental crimes and lying to Con-gress. One of its executives is await-ing trial on other criminal charges.

While the third and final phase of the civil trial is under way to de-termine how much BP will have to pay in environmental Clean Water Act penalties, BP continues to em-ploy the big lie strategy: It’s all bet-

ter. Nothing to see here on the Gulf Coast, folks. Move along.

BP has also been trying to muddy the waters inside the courtroom, but the judge has not been fooled, and neither has the public.

In the previous two rounds of the trial, Barbier found BP “grossly negligent” for its role in the disaster and chastised the British oil corpo-ration for covering up from the very beginning how much oil gushed out of the Deepwater Horizon well dur-ing the spring and summer of 2010.

Barbier conceded we may never know precisely how much oil spewed into the Gulf of Mexico, writing, “there was no meter counting off each barrel of oil as it exited the well.” He has ruled that expert tes-timony indicates at least 3.19 billion barrels poured into the currents of

the Gulf in the nearly three months before BP managed to cap the well as it should have in the early hours of the crisis.

But we do know that scientists continue to find oil and uncover new damages—from lung disease in dolphins to the destruction of critical wetlands.

To be sure, the long-term en-vironmental damage isn’t as easy to show in pictures and video as those early heartbreaking images of pelicans and herons covered in oily brown goo.

How do you show a “bathtub ring” of oil residue the size of Rhode Island on the floor of the Gulf where deep-water coral has been bleached and stunted? How do you photograph the continuing kills of Louisiana coastal insects that are the primary

food for countless birds, fish and other wildlife? How do you show dolphins suffering from reproduc-tive problems?

Even more troubling is the mounting evidence that the dam-age from the oil spill has accelerated marsh erosion in a place where every square foot of wetland is essential to protect people and wildlife from powerful hurricanes and rising sea levels. The money BP is required to pay under the Clean Water Act will go a long way to helping to preserve and restore coastal areas.

In this final phase of the civil trial, Barbier will consider a range of eight different factors in deter-mining the amount BP should pay. Those issues range from BP’s his-tory of violations to the British oil company’s revenues—its ability to

pay the fines.The most recently totaled num-

bers show BP was the third largest petroleum company in the world based on just over $440 billion in revenues in 2013. If Barbier rules BP should pay the maximum allowed under law for 3.19 million barrels of spilled oil, the bill will be just under $14 billion.

But times are tough in the oil business, say BP’s attorneys. Barbier surprised them in the first hours of the trial when he asked if a payment plan might ease the pain. Caught off guard, BP’s best and brightest said they’d never considered it.

Holding BP fully accountable for the 2010 Gulf oil disaster is what the law mandates. After five long years, justice is close. The Gulf has waited long enough.

NEW YORK—The plunge in oil has crushed the Russian ruble, erased $80 billion

from Exxon Mobil’s market value and pushed Venezuela to the brink of economic collapse. But, to Justin Thomas, the real drama in oil unfolds on a smaller scale, a story told in tiny, second- by-second moves in prices on his computer screen. Lately, most of the moves have been down, tak-ing a toll on him and other traders, who believe oil should have turned up by now. “It was quiet, then there was chaos,” Thomas said after a few losing bets earlier this month from his one-man office in Boise, Idaho. “The market changes, and you lose your confidence.” Thomas is one of thousands of oil traders, who have helped turn market fundamentals—lots of oil, not enough demand—into a plunge of nearly 60 percent in the price of crude in seven months, a drop with few precedents. He trades futures contracts, and uses them to bet on where prices are headed. His bets, and hundreds of thousands of others like them, affect what drivers pay for gasoline, airlines pay for jet fuel and truckers pay for diesel. Futures used to be traded

THE Philippine peso is this week’s sole gainer among Asian currencies on opti-

mism the nation’s economy will benefit from the slide in oil prices and a recovery in the US, its second-biggest export market Gross domestic product (GDP) rose 6.9 percent last quarter from a year earlier, official data showed on Thursday. That beat the 6-percent median estimate in a Bloomberg survey. The Philippines, which im-ports almost all of its oil, may not need additional support, as the slump in prices cuts costs and boosts incomes, Bangko Sentral ng Pilipi-nas Governor Amando M. Tetangco Jr. said on January 20. Brent crude has plunged 56 percent since the end of June. The Federal Reserve (the Fed) this week boosted its as-sessment of the US economy. “The Philippines is one of the better growth stories in the emerg-ing-market space,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. in Singapore. “The US growth recovery makes it more enticing. It’s also not pulled as much by the drop in commodity prices.”

A8

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www.businessmirror.com.ph

See “Oil,” A2

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Saturday, January 31, 2015

‘MCC grants to Philippines transcend administrations’

PHL peso soleAsia gainer this week on economic optimism

For traders, oil’s plunge takes a toll on egos and accountsBy Cai U. Ordinario

The Millennium Challenge Corp. (MCC) assured that, even if the term of President Aquino is com-

ing to a close, the implementation of its second compact with the Philippines will continue. MCC Department of Com-pact Operations Vice President Kamran M. Khan told reporters on Friday that the granting of the second compact to the Philip-pines was an “apolitical” move for the US foreign-aid agency, which transcends administrations.  Khan said the Philippines is the only country given a second com-pact by the MCC a year ahead of the completion of its first compact. The decision of the MCC to grant a second compact to the country was finalized in December 2014.  “This is a part-nership between the people of the United States and the people of the Philippines. This is not determined by one administration or another. We do this process from a very apo-litical standpoint,” Khan said. 

well in terms of the 20 indicators that MCC monitors. The country managed to improve in 13 out of the 20 indicators in just a few years.  One indicator that was remark-able for MCC is the country’s perfor-mance in the control of corruption. Data from organizations, like Trans-parency International, showed that the country has improved 37 notches in its ranking since 2012.  “We are confident that, based on those indicators, based on what we see through our eyes and the eyes of our embassy and through our partnership, this is not a country that is going to go offline just be-cause it’s going through a transi-tion,” Khan said. “This democracy has evolved. I guess, what we are trying to say is that we have faith and we see the best as a possibility and we don’t fear the worst,” he added. The MCC estimates that it will require around 12 to 24 months to complete the process of studying and selecting the projects for the second compact.  Khan said projects to be funded through the MCC grant will have to be determined after a thor-ough joint study is done by represen-tatives of both governments.  These projects will be selected according to the needs of the coun-try and which projects can bring the most economic benefit to the Philippines.  Each project, Khan said, must pass a minimum require-ment of 10-percent economic rate of

return, which is the approved hurdle rate for MCC-funded projects.  Khan also said the projects must also be doable in five years, which is the maximum time frame of completing MCC-funded projects.  On the average, Khan said the MCC grants $350 million for projects funded by various compacts world-wide. The Philippines, however, got a bigger amount for its first compact at $388 million. The grants were used for three projects: the Kapit-bisig Laban sa Kahirapan-Comprehensive and Integrated Delivery of Social Ser-vices, which received $120 million; the Secondary National Roads Pro-gram, specifically a 222-kilometer road in Samar, $214 million; and the Revenue Administration Re-form Project at the Bureau of In-ternal Revenue, $54.3 million.  The MCC was created by the US Congress in 2004 to deliver American foreign assistance by focusing on good poli-cies, country ownership and results. Compacts are multiyear agree-ments between the MCC and a country to fund specific programs targeted at reducing poverty and stimulating economic growth. MCC has approved almost $9.8 billion in various programs world-wide. These grants support projects in multiple sectors, including agri-culture and irrigation; transpor-tation infrastructure; water sup-ply and sanitation; and access to health-care services.

Khan said the Philippines is the

only country given a second compact by

the MCC a year ahead of the completion of

its first compact.

Compacts are large, five-year grants for countries that pass MCC’s eligibility criteria. Khan said the MCC decided to grant the Philippines a second compact on the basis of its performance in the first compact, which is already around 80 percent to 90 percent on track to completion in 18 months.  He also said the Philippines did