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Thursday, March 6, 2014

TODAYS ISSUE:3SECTIONS24PAGES

P25METRO MANILA,PHILIPPINES

S1/1-12

www.bworldonline.com

Debt ratiobetter as of

Q3 last year

Debt, S1/3

GENERAL GOVERNMENT (GG)

debt as a percentage of the econo-

my improved as of the third quar-

ter of 2013 from a year earlier as

the state continued to manage its

liabilities.

The Finance department, in a

statement, placed the obligations

at P4.468 trillion as of September

2013, comprising 39.7% of gross

domestic product (GDP).

The GG-debt-to-GDP ratio is

an improvement from the 40.3%

recorded a year earlier as well as

the 40.6% recorded at the end of

2012.

General government debt con-

solidates the outstanding debt of

the national government (NG)

less those held by the Bond Sink-

ing Fund, local government units

(LGUs), Central Bank Board of

Liquidators (CB-BOL) and social

security institutions (SSIs).

It also excludes intra-sector

debt holdings, which comprise NG

debt held by SSIs and LGUs, and

LGU debt held by the Municipal

Development Fund Office.

February inflationlower than expected

INFLATION EASED to 4.1% in

February, the Philippine Statis-

tics Authority (PSA) reported on

Wednesday, giving monetary au-

thorities the leeway to keep policy

rates steady later this month.

The February headline n umber,

which was traced to lower price

hikes for alcoholic beverages, to-

bacco and transport, was down

from Januarys 4.2%. It was, how-

ever, significantly faster than the

3.4% registered a year earlier.

The result fell within the Bang-

ko Sentral ng Pilipinas (BSP) 3.8-

4.6% outlook for the month and

was lower than the 4.3% median

forecast in a BusinessWorldpoll.

Core inflation, which excludes

items such as food and energy with

vol ati le pri ce move men ts, also

went down to 3.0% in February

from 3.2% in January.

Inflation, S1/3

HaltedPolice block farmers at the gates of the House of R epresentatives in Quezon City in this photo taken yesterday. The farmers

were protesting the extension of the Comprehensive Agrarian Reform Program and proposed amendments to the Constitution.

By Judy Danibelle T. Chua CoSenior Researcher

REUTERS

Philippinesunder pressure over

high rice prices

Meralco says rates to go down

CUSTOMERS of Manila Electric

Co. (Meralco) can expect to pay

less for power this month, the dis-tribution utility yesterday said,

given lower costs incurred from

suppliers.

We have good news for our

customers. They may see another

decrease in the generation charge

in their March bills [following a re-

duction last month], the company

said in a statement.

Februarys generation charge

wa s P5. 54 pe r ki lo wa tt -h ou r

(kWh), down from the P5.67/kWh

imposed in January.

RICE PRICES in the Philippines

have risen for six straight weeks,piling pressure on the government

to import more of the national

staple to stabilize markets and

curb inflation already at two-year

highs.

While bumper harvests in other

countries have stoked a global

rice glut, prices in the Philippines

have climbed around 4% in the

last three months after super

typhoon Haiyan devastated key

growing regions and as the gov-

ernment clamps down on smug-

glers looking to avoid hefty taxes.

Increased purchases by the

Philippines, one of the worlds

largest rice buyers, would help

ease global oversupply, with

Vietnam and Thailand likely to bid

aggressively for any new deal from

their Southeast Asian neighbor.

National Food Authority (NFA)

spokesman Rex C. Estoperez

confirmed reports that Manila

has since late January doubled

the amount of rice being released

into markets from stockpiles most

days, looking to curb price gains.

Private traders are running out

of stocks, thats why we have re-

leased [more] rice into the market

from our warehouses, he said.

That has further drained

NFA stocks that had dwindled

to around 275,000 tons at the

start of the year equivalent to

eight days worth of consumption,

nearly half normal levels. Figuresfor January are due to be released

next week.

The US Department of

Agriculture has already said it

expects Philippine imports to hit

1.4 million tons in 2014, which

would be the highest in four years.

The country has yet to confirm

any purchases beyond 500,000

tons it bought from Vietnam in a

government-to-government deal in

November. Vietnam, the worlds

second-biggest rice exporter after

India, is traditionally the Philip-

pines biggest supplier as it usu-

ally offers cheaper rice.

For Thailand, a deal to sell

rice to the Philippines would help

offload some of its huge reserves

and raise much-needed money to

pay farmers that participated in a

controversial subsidy scheme.

The average retail price of well-

milled rice in the Philippines rose

a further 1.2% in February from

the previous month to P40.12

per kg, and was up 13.7% from a

year ago, data from the Bureau of

Agricultural Statistics showed on

Tuesday.

Mr. Estoperez said the NFA had

doubled the rice allocated each

day to government accredited

outlets to 2,500 kg per location.

Details on the number of accred-

Based on initial figures, the

cost of supply from our power

supply agreements, independent

power producers and from the

Wholesale Electricity Spot Market

have all gone down during the Feb-

ruary supply month, which will

impact on the March bill, Meralcosaid.

The generation charge the

cost of power sold to a power dis-

tributor accounts for around

57% of total charges in Meralcos

electricity bill. The rest comprises

the distribution charge (17.6%),

transmission charge (9%), system

loss charge (5%), and taxes and

other charges (11.5%).

The firm said the March gener-

ation rate was still being finalized.

Meralco utility economics head Meralco, S1/3

By Claire-Ann C. FelicianoReporter

Larry S. Fernandez said the figure

could be announced by Monday.

There are no figures yet. There

are strong indications that genera-

tion charge will be lower than Feb-

ruarys, Mr. Fernandez reiterated

in a text message.

Meralco also urged customersto prepare for the summer months

as electricity consumption histori-

cally goes up during the period.

According to our weather

bureau... we could start experi-

encing... hot weather starting

next month. Given this advisory,

we would like to encou rage our

customers to practice energy ef-

ficiency, the firm said.

Meralco suggested unplugging

appliances when not in use and

Rice, S1/3

SECTION 12 THE ECONOMY

4-5 OPINION

6 CORPORATE NEWS

7 PROPERTY

8 AGRIBUSINESS

9 WORLD

10-12 THE NATION

SECTION 21&3 BANKING & FINANCE

2 STOCK MARKET

4-5 WORLD SPORTS

6-7 ARTS & LEISURE8 SPECIAL FEATURE

SECTION 31-2 FINANCIAL TIMES

3 WORLD BUSINESS

4 WORLD MARKETS

CONTENTS VOL. XXVII, ISSUE 154

WORLD REVIEW

GENEVA

Mercedes, Infiniti to cooperate

Daimlers Mercedes and Nissans Infiniti

plan to pool development of compact

cars to cut costs, expand the German

car makers North American production

and broaden the Infiniti lineup, people

familiar with the matter said. S3/3

NEW YORK

Stocks rise on reduced tensions

US stocks rallied on Tuesday, with the

S&P 500 at a record high, as fears eased

of a confrontation between Russia and

Ukraine and Russian President Vladimir

Putin said there was no need to use military

force in the Crimea region for now. S3/4

5050

5120

5190

5260

5330

5400

4850

4960

5070

5180

5290

5400

STOCK MARKET

ASIAN MARKETS MARCH 5, 2014

JAPAN(NIKKEI225) 14897.63 176.15 1.20HONGKONG(HANGSENG) 22579.78 -77.85 -0.34TAIWAN(WEIGHTED) 8632.93 78.39 0.92THAILAND(SET INDEX) 1351.64 5.82 0.43

S.KOREA(KSECOMPOSITE) 1971.24 17.13 0.88SINGAPORE(STRAITSTIMES) 3116.64 11.93 0.38SYDNEY (ALLORDINARIES) 5446.23 46.00 0.85MALAYSIA(KLSECOMPOSITE) 1829.11 2.65 0.15

JAPAN (YEN) 102.390 101.810HONG KONG (HK DOLLAR) 7.760 7.761

TAIWAN (NT DOLLAR) 30.265 30.291THAILAND (BAHT) 32.290 32.460S.K OREA (WON) 1070.300 1071.550SINGAPORE (DOLLAR) 1.270 1.271INDONESIA (RUPIAH) 11580 11590MALAYSIA (RINGGIT) 3.270 3.276

WORLD MARKETS MARCH 4, 2014

WORLD CURRENCIES MARCH 5, 2014

ASIAN CURRENCIES MARCH 5, 2014

PESO DOLLAR RATE

DOWJONES 16395.880 227.85NASDAQ 4351.972 74.671S&P 500 1873.910 28.18FTSE 100 6823.770 115.42EUROSTOXX50 2957.040 56.27

$/UK POUND 1.6685 1.6702$/EURO 1.3722 1.3753$/AUSTDOLLAR 0.8959 0.8955CANADADOLLAR/US$ 1.1085 1.1084SWISSFRANC/US$ 0.8878 0.8836

INDEX

30 DAYSTOMARCH5, 2014

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FX

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W. AVE. P44.759

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COMPOSITE

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5.6CTVS.

By Bettina Faye V. RocSenior Reporter

Lenten symbolA devotee with a cross marked on her

forehead takes part in the commemo-

ration of Ash Wednesday outside a

Roman Catholic church in Paraaque,

Metro Manila in this photo taken yes-

terday. Ash Wednesday, which serves

as a reminder that as a man is dust,

so unto dust he shall return, marked

the beginning of the 40-day Lenten Sea-

son in the Roman Catholic calendar.

REUTERS

5/26/2018 b w Digitized 030614

2/23

By Daryll Edisonn D. SaclagReporter

ASEAN-HK trade dealstudied

Malaysia, Philippinesagree to see biz

prospects

Two morebidders forSouthwest

Terminal PPP

Committee set up for petroleum,coal contract transparency

Public hearingsset for plastic materials,

steel products

Thursday, March 6, 20142/S1 TheEconomy

THE PHILIPPINES is studying a

possible ASEAN free trade agree-

ment (FTA) with Hong Kong,

Trade Secretary Gregory L. Do-

mingo yesterday said.

Were conducting studies and

scoping, Mr. Domingo said on the

proposed FTA.

But, so far, the Philippines is

likely to benefit from the proposed

trade pact as the balance is in the

countrys favor.

Data from the Trade depart-

ment Web site showed that Phil-

ippine exports to Hong Kong

reached $4.8 billion in 2012 while

imports amounted to $1.5 billion,

wit h elec tro nic s bei ng the top

traded goods between the two.

An FTA will reduce the friction

in terms of procedures and regula-tory measures thereby speeding

up the entry and exit of goods,

said Mr. Domingo.

IN ANTICIPATION of the next

Philippine Energy Contracting

Rounds (PECR), slated to take

place this year, the Energy depart-

ment has ordered the creation of a

committee to ensure a more trans-

parent and competitive system of

granting the rights to explore and

develop the countrys coal and pe-troleum resources.

The department, in a circular

posted on its Web site, has out-

lined procedures to govern the

system of awarding petroleum

service contracts and coal operat-

ing contracts.

This circular shall apply to the

determination of the legal, techni-

cal, and financial qualifications of

applicants, the evaluation of their

applications, and the award of cor-

responding service and operating

contracts for petroleum and coal

resources, the document, dated

Feb. 24, stated.

The circular creates a Review

and Evaluation Committee (REC)

to consist of the undersecretary in

charge of the Energy Resource De-

velopment Bureau, his assistant ,

and the directors of the ERDB, le-

gal services, and financial services.

As part of its responsibilities, the

REC is tasked to identify the pro-

spective coal and petroleum areas

within the countrys territory.

In this regard, the REC shall

notify the local government units of

the offered areas within their terri-

torial jurisdiction, prior to the inclu-

THE TARIFF Commission has set

a public hearing for petitions to

modify tariff lines for plastic mate-

rials and steel products, according

to a notice published in a newspa-

per yesterday.

The Tariff Commission will

conduct a public hearing on Mar.

20 at 9:00 a.m. regarding the pe-

titions on the tariff modification

of polylactic acid (PLA) film and

semi-finished products of iron

or non-alloy steel. Venue of the

hearing is at the Tariff Commis-

sion Conference Room, 5th floor,

Philippine Heart Center Building,

East Avenue, Quezon City, the

notice said.

Products that will be covered

by the hearing are other plates,

sheets, film, foil and strip, of

other polyesters with tariff code

3920.69.00 and semi-finished

products of iron or non-alloy

steel with tariff codes 7207.11.00,

7207.12.90, 7207.19.00, 7207.21.21,

7207.20.29, 7207.20.92, and

7207.20.99.

The petition to modify the tariff

line on PLA film was filed by plas-

tic maker First In Colours, Inc.

which imports the product from

Japan. The petition to modify the

tariff line on steel products was

not immediately provided, how-

ever. Daryll Edisonn D. Saclag

TAXWISEOR OTHERWISE

Carlos R. MateoThe right to due process in a tax assessment

THE BUREAU of Internal Reve-

nue (BIR) has the gargantuan task

of collecting P1.4 trillion in tax

revenue for 2014. Consequently,

various revenue issuances have

been circulated to enhance tax

compliance and intensify collec-

tion efforts. One such issuance is

Revenue Memorandum Circular

(RMC) No. 11-2014, clarifying cer-

tain issues arising from amend-

ments introduced by Revenue

Regulations No. 18-2013 on RR 12-

99 relative to the tax assessment

process. In fine-tuning policy in-

terpretations, the RMC raises sev-

eral points of interest.

Foremost, the RMC operation-

ally defines the term duly autho-

rized representative as referring

to Revenue Regional Directors,

Assista nt Commis sioner - Large

Taxpayers Service and Assistant

Commissioner - Enforcement

and Advocacy Service. Upon re-

ceipt of a preliminary assessment

notice (PAN) or Formal Letter of

Demand/Final Assessment Notice

(FLD/FAN) from the BIR, the tax-

payer must file a response or pro-

test letter with the duly authorized

representative who signed the

PAN or FAN. Filing with the wrong

office/person is fatal to the pursuit

as it will render such response or

protest as not filed at all. Conse-

quently, the findings become final,

resulting in the issuance of a FAN

(for wrongly filed response to the

PAN) or a non-appealable assess-

ment (for wrongly filed protest

letter to the FAN).

Although RR 18-2013 had elimi-

nated the need for the BIR to issue

a notice of informal conference

(NIC) as part of the assessment

process, taxpayers still have the

option of paying the deficiency

taxes and penalties prior to the

issuance of the PAN. In such cases,

voluntary payment stops the run-

ning of the 20% per annum pen-

alty interest. While this provides

momentary relief from escalating

tax liabilities, the option offers no

guarantee that the findings of the

Revenue District Office (RDO)

will be sustained by the reviewing

office (i.e., Regional Office, Legal

Service or equivalent office). In

other words, early settlement of

deficiency taxes may not provide

any benefit if the initial findings

are set aside and a new assessment

is issued by the reviewing office

that is different from the earlier

recommendations by the RDO.

Further, the RMC states that a

final demand letter for payment of

delinquent taxes may be considered

a decision on a disputed assess-

ment. Although such statement

finds basis in certain court deci-

sions, it would only seem fair to tax-

payers if the BIR will unequivocally

state that the final decision will

follow the specific form of a Final

Decision on Disputed Assessment

(FDDA) as provided in Section 3.1.5

of RR 18-2013. This would dispel

any confusion on whether a notice

is considered an FDDA or not.

Under the rules, once an FDDA is

issued by the BIR, the taxpayer has

only 30 days from receipt thereof to

file an appeal.

Under RR 18-2013, If the tax-

payer within 15 days from date of

receipt of PAN responds that he/it

disagrees with the findings of de-

ficiency tax or taxes, an FLD/FAN

shall be issued within 15 days from

filing/submission of the taxpayers

response, calling for payment of

the taxpayers deficiency tax li-

ability, inclusive of the applicable

penalties. While the non-obser-

vance of the 15-day period for the

issuance of the FAN shall not affect

its validity, the RMC provides that

the revenue officer who caused the

delay shall be subject to adminis-

trative sanctions.

The foregoing provision under

the RR denotes that any response

to the PAN will automatically be

denied and, thus, effectively negates

the pre-assessment notice stage.

This appears to violate the spirit of

the due process requirement under

Section 228 of the Tax Code, which

requires the BIR to first notify the

taxpayer of the findings and to re-

quire a response. If the taxpayer

fails to respond, the BIR shall issue

a FAN based on said findings.

It is also worthy to state that,

in a number of cases, the courts

have held that the 15-day period

for the taxpayer to formally reply

to the PAN is mandatory, and the

non-observance thereof is con-

sidered a violation of due process.

Thus, the CTA has, on occasion,

ruled against the BIR and nullified

assessments where the FAN was

issued without waiting for the tax-

payers reply to the PAN or before

the lapse of the 15-day period.

Though the current assessment

process still gives taxpayers a 15-

day period to respond to the PAN,

the fact that any such response

will automatically be denied wi th

the issuance of the FAN another

15 days after, effectively makes

the taxpayers response a mere

formality. One could say that the

grant of the 15-day period is with-

out any real value and thus goes

against the spirit of the due pro-

cess requirement under our laws.

Fundamentally, No person shall

be deprived of life, liberty and prop-

erty without due process of law, nor

shall any person be denied the equal

protection of the laws. (Article III,

Section I of the Bill of Rights of the

Philippine Constitution).

The power of taxation must be

exercised with restraint since it

deprives a taxpayer of his proper-

ty. Thus, in Roxas vs. Court of Tax

Appeals, G.R . No. L-25043, dated

April 26, 1968, the Supreme Court

held: The power of taxation is

sometimes called also the power to

destroy. Therefore it should be ex-

ercised with caution to minimize

injury to the proprietary rights of

a taxpayer. It must be exercised

fairly, equally and uniformly, lest

the tax collector kill the hen that

lays the golden egg. And, in order

to maintain the general publics

trust and confidence in the Gov-

ernment, this power must be used

justly and not treacherously.

The constitutional right to

due process has primacy over the

power of taxation, such that In

balancing the scales between the

power of the State to tax and its

inherent right to prosecute per-

ceived transgressors of the law on

one side, and the constitutional

rights of a citizen to due process of

law and the equal protection of the

laws on the other, the scales must

tilt in favor of the individual, for a

citizens right is amply protected

by the Bill of Rights under the Con-

stitution. Thus, while taxes are

the lifeblood of the government,

the power to tax has its limits, in

spite of all its plenitude. (CIR vs.

Metro Star Superama, Inc.)

Based on the foregoing, it is sin-

cerely hoped that the BIR would

revisit the provision of RR 18-2013

(as reiterated in RMC 11-2014) and

consider the arguments raised by

the taxpayer in response to the

PAN, instead of issuing an outright

denial by the issuance of a FAN.

In creating consonance, there is

wisdom to reconciling confli cting

interests. While citizens must pay

taxes without much hindrance,

the authority to tax must also be

wiel ded wit h utmo st con side r-

ation for the common good.

The author is a director at the tax

services department of Isla Lipana

& Co., the Philippine member firm

of the PwC network. Readers may

call (02) 845-2728 or e-mail the

author at carlos.mateo@ph.pwc.

com for questions or feedback. The

views or opinions presented in this

article are solely those of the author

and do not necessarily represent

those of Isla Lipana & Co. The firm

will not accept any liability arising

from the article.

BUSINESSMEN from Malaysia and

the Philippines have agreed to ex-

plore investment opportunities in

each others palm oil, rubber, infra-

structure, and tourism sectors, Trade

Secretary Gregory L. Domingo yester-

day said.

These interests were expressed

at business matching activities held

last week in Kuala Lumpur, which co-

incided with President Benigno S.C.

Aquino IIIs state visit there, the Trade

official noted.

In one of the business meet-

ings, Mr. Domingo said government

officials met with representatives ofMalayan Banking Bhd (Maybank), re-

sort operator Genting Malaysia Bhd,

and low-cost airline AirAsia Bhd.

TWO more firms are bidding for

the P2.5-billion Integrated Trans-

port System (ITS) Southwest

Terminal Project under the De-

partment of Transportation and

Communications (DoTC).

The DoTCs Special Bids and

Awards Commi ttee on Tues day

released General Bid Bulletin

No. 07-2014, which added State

Properties Corp. and Expedition

Properties Corp. to the nine com-

panies vying for the public-private

partnership (PPP) project.

The second of two rounds of

meetings was initially to take place

Mar. 17-19 but was extended for

the new entrants, which will both

be present on Mar. 20.

The bid bulletin also required

participants to submit any ques-tions three calendar days before

their scheduled conference with

the DoTC.

Bid submission deadline and

opening of qualification docu-

ments have been set for May 15,

with scrutiny of the latter occur-

ring within ten days of submission.

Technical proposals will be

opened in June and evaluated

within 20 days of submission. Fi-

nancial proposals will also be

opened that month and evaluated

in 15 days.

The Notice of Award (NoA) will

be released within five days from

the winners selection.

Upon receiving the NoA, the

winning bidder must prove com-

pliance before signing the Date ofConcession Agreement.

The nine other participant com-

panies, in order of scheduled meet-

ings, are D.M. Wenceslao and As-

sociates, Inc.; the co-bidding Ayala

Land, Inc. and Ayala Corp.; Metro

Pacific Tollways Corp.; San Miguel

Corp.; Vicente T. Lao Construction;

Egis Projects SA; Robinsons Land

Corp.; Filinvest Land, Inc.; and

Megawide Construction Corp.

The ITS Southwest Terminal

Project will be built southwest of

Metro Manila near the Manila-

Cavite Expressway and will serve

Manila-bound commuters from

Cavite.

Accord ing to the PPP Cent er

Web sit e, pre vi ous ly awa rde d

contracts for PPPs as of Feb. 14,

2014 are the P2.01-billion Daang

Hari-SLEX Link Road Project,

P16.28-billion PPP for School

Infrastructure Project Phase I,

P15.52-billion NAIA Expressway

Project, P3.86-billion PSIP Phase

II, P5.69-billion Modernization of

the Philippine Orthopedic Center,

and the P1.72-billion Automatic

Fare Collection System. Anton

Joshua M. Santos

Acco rding to the Hong Kong

governments Web site, the FTA

is expected to cover elimination

of tariff and non-tariff barriers;

preferential rules of origin; lib-

eralization of trade in services;

liberalization, promotion and pro-

tection of investment; and dispute

settlement mechanism.

Hong Kong, according to the

ASEAN (Association of Southeast

Asian Nations) Web site, initially

proposed to join the ASEAN-Chi-

na FTA in 2011.

But, Mr. Domingo said the

10-member bloc counter-pro-

posed a separate trade pact with

Hong Kong last year.

At that time, Hong Kong was

requesting accession into ASEAN-

China FTA. But we thought it isbetter to negotiate a separate one

since accession is more difficult,

the Trade official said.

Since then, he said, ASEAN

member-states Brunei, Cam-

bodia, Indonesia, Laos, Malaysia,

Myanmar, the Philippines, Sin-

gapore, Thailand, and Vietnam

have started their own studies on

the proposed trade pact.

Aside from the FTA with China,

the bloc also has trade agreements

with Japan, Australi a, New Zea-

land, South Korea, and India.

Mr. Domingo said ASEAN and

Hong Kong have not yet set a time-

table for the agreement.

The Trade official also said he

does not see the Manila hostage

crisis involving Hong Kong na-

tionals in 2010 as a roadblock.

For me, its business as usual,

he said.

ASEAN is Hong Kongs secondlargest trading partner after China

for trade in goods. Daryll Edi-

sonn D. Saclag

We invited Maybank to look at

shariah banking in the Philippines.

They said they will look at it. For

AirAsia, they said they will study very

seriously a Kuala Lumpur-Davao link.

For Genting, we requested them to

make an all-Philippine-islands tour,

and they said they will consider it.

They also expressed interest in palm

oil plantation in Mindanao, said Mr.

Domingo.

Investor interest in the Philip-

pines is expected to increase

further once the Comprehensive

Agreement on the Bangsamoro be-

tween the government and the Moro

Islamic Liberation Front is signed

this year, he added.

The Trade chief also said that the

Philippines offered Malaysia assis-

tance in accrediting halal products.Philippine exports to Malaysia

reached $1.017 billion in 2012 while

imports amounted to $2.503 billion.

sion to the PECR, the circular read.

The committee will also have

the obligation to examine, evaluate

and review the technical, financial,

and legal capabilities of project ap-

plicants and, after which, recom-

mend to the Secretary the award

of contracts.

It is also the RECs responsibil-ity to [r]esolve issues in relation

to the legal, technical and financial

capabilities of applicants, includ-

ing motions for reconsideration.

The circular also detailed the

procedure for awarding petroleum

service contracts and coal operat-

ing contracts.

Since the REC will determine

the prospective areas, it should

also prepare the PECR documents

with description of available data.

Such data should include the

location map and technical de-

scription of areas being offered and

schedule of activities for the PECR.

A pre-sub missi on confe rence

for PECR applications should be

scheduled to discuss relevant rules

and entertain clarifications from

prospective applicants.

Submission of applications

should be based on the existing

guidelines.

The evaluation should be based

on legal qualification using a pass or

fail criterion; work program (40%);

technical qualification (20%); and

financial qualification (40%).

The highest ranked applicant

who meet s the. .. requ irem ent s

shall be selected, the circular read.

The legal department and

ERDB should prepare the final

contract that will be awarded.

Applican ts, within seven days

from the receipt of the award no-

tice, should pay necessary fees and

charges.

State-owned PNOC ExplorationCorp. (PNOC-EC) has been given a

reserved option to acquire a maxi-

mum of 10% interest in a contract

involving one or more Filipino

participants and 15% for a contract

with no Filipino participant.

All rights, privileges, benefits,

costs, expenses, obligations and

liabilities of PNOC-EC shall be

in proportion to its participating

interest in the proposed service

contract, the circular noted.

Previous contractors with can-

celled to terminated contracts due

to outstanding work and financial

obligations are no longer allowed

to join the PECR.

The circular will take effect fif-

teen days following its publication

in two newspapers.

Under the PECR 4 which

took place last year the Energy

department offered 38 coal and 15

petroleum blocks for exploration

and development.

The auction received 69 bids

for 28 coal contracts and 20 offers

for 11 petroleum contracts, but the

department only awarded 11 coal

and four petroleum contracts.

Claire-Ann Marie C. Feliciano

TARIFF lines for steel products are up for possible modification.

5/26/2018 b w Digitized 030614

3/23

Thursday, March 6, 2014 S1/3

Inflation,

from S1/ 1

Year-to-date inflation averaged

4.2%, still within the BSPs 3-5%

target for 2014.

Central bank Governor Aman-

do M. Tetangco, Jr., in a text mes-

sage to reporters, said the latest re-

sults would help keep the average

inflation over the policy horizon

withi n the govern ments [3-5%]

target range.

Moving forward, Mr. Tetangco

said monetary authorities would

continue to monitor global de-

velopments, adding: We will also

be watchful of trends in domestic

liquidity and lending.

He noted that the policy-mak-

ing Monetary Board would make

adjustments to policy levers as

appropriate to ensure that liquid-

ity continues to be channeled to

productive sectors of the economy

and that inflation expectation re-

main well-anchored.

During its first policy meet-

ing for the year last Feb. 6, the

Monetary Board kept the BSPs

overnight borrowing and lending

rates at record lows of 3.5% and

5.5%, respectively. The inflation

forecast for this year, however, was

trimmed to 4.3% from 4.5% while

that for 2015 was hiked to 3.3%

from 3.2%.

The BSP has kept its overnight

borrowing and lending rates at

3.5% and 5.5% since October 2012.

The rate on all special deposit ac-

count (SDA) maturities has been

steady at a uniform 2% since June

2013.

Economists were in agreement

that the central bank was likely to

keep key rates steady at its March

27 policy-setting meeting. Tight-

ening, they said, could start in the

second half of the year.

We expect both the policy

overnight rate and the special de-

posit accounts rate to stay steady

through the first half, as the central

bank has enough space to main-

tain a wait-and-see approach until

its third policy rate meeting, said

Eugenia Fabon Victorino, ANZ

economist for the Asia-Pacific.

We forecast the tightening

cycle to commence by the second

half and expect the interest rate

to rise by at least 50 basis points

(bps) by yearend, she added.

Jeff Ng, economist at Standard

Chartered Bank in Hong Kong,

agreed, adding that domestic price

pressures remain in food and en-

ergy.

We expect the central bank

to keep rates unchanged in the

first half as inflation remains man-

ageable. Nonetheless, we expect

a 25-bps hike in the third quarter

and another 25 bps in the fourth

quarter, as price pressures remain

in food and energy, especially with

recent uptrends in international

food and crude oil prices, he said.

Gundy Cahyadi, economist at

DBS Bank Ltd., meanwhile, said

inflation was coming in below

expectations given that some of

the cost-push factors werent as

strong.

We are re-looking at our infla-

tion forecast for the year and we

maintain our stance that the cen-

tral bank will continue to stay put

for now. But we still expect them

to raise rates by at least 50 bps by

yearend to prevent the economy

from overheating, he said.

The PSA, meanwhile, said in a

statement that the February infla-

tion reading was due to slower

annual movements registered in

the indices of alcoholic beverages

and tobacco and transport.

Prices of alcoholic beverages

and tobacco rose by 7.1% in Febru-

ary, easing from 17.6% in January,

while transport costs rose by 1.0%,

down from 1.2%.

Citi economist Jun Trinidad

noted temporary relief from up-

side inflation risk coming from

easing excise tax effects on ciga-

rettes and alcoholic beverages.

Prices of cigarettes and al-

coholic beverages rose by high

double digits last year after excise

taxes were adjusted in January

2013. Taxes will be adjusted again

in 2015.

The heavily weighted food and

non-alcoholic beverages index,

meanwhile, rose by 5.5%, un-

changed from the previous month.

The food alone index, however,

accelerated to 5.9% from 5.7%.

Prices of rice, milk, cheese, eggs,

oils and fats, fruits, sugar, jam,

honey, chocolate, and other food

products rose at a faster pace.

Higher increases were also

recorded in the indices of cloth-

ing and footwear; housing, water,

electricity, gas and other fuels;

furnishing, household equipment

and routine maintenance index;

and health. with a report from

A. R. R. Gregorio

ited outlets in the Philippines were

not immediately available.

He also noted that government

moves to crack down on smugglers

had pushed prices higher. Philip-

pines customs have been on a drive

to curb smuggling that has been rife

as some importers look to avoid a

whopping 40% duty on private ship-

ments of rice and to get around a

quota system.

Critics have long argued the tariff

should be reduced to encourage legal

imports, but President Benigno S.

C. Aquino IIIs government says it is

necessary to support local farmers. Reuters

Rice,

from S1/ 1

Debt,

from S1/ 1

Before President Benigno

S. C. Aquino III took office, GG

debt to GDP was 44.3% in 2009.

By reducing government debt, we

are attempting to ensure the sus-

tainability of our recent economic

resurgence, Finance Secretary

Cesar V. Purisima was quoted as

saying in the statement.

The Aquino administration

continues working towards the

virt uous cycl e of good gove rn-

ance through proactive liability

management. As a result of these

initiatives, we are creating fiscal

space in the budget to increase

investments in our people, our key

driver of economic growth, he

added.

The Finance department said

the annual decline was mainly due

to the national governments pur-

chase of more debt from domestic

sources at cheaper interest and

longer maturities.

Of the total NG debt as of the

third quarter, 66% came from do-mestic sources and 34% from for-

eign creditors an improvement

from the 61:39 mix recorded in the

comparable 2012 period.

This was likewise reflected in

the overall GG debt mix, which in

the period was at 59:41 in favor of

domestic sources versus the 51%

domestic and 48% foreign mix re-

corded as of September 2012, the

department said.

A decline in Local Government

Unit debt to P70.7 billion, or 0.6%

of GDP, as compared to the Sep-

tember 2012 level of P71.3 billion,

or 0.7% of GDP, also contributed to

the decline in GG debt, it added.

Debt as a percentage of GDP

is a measure used by many debt

watchers to assess t he creditwor-thiness of sovereigns.

Meralco,

from S1/ 1

setting a timer for air conditioners

before bedtime so that the units

would not have to run the entire

night.

In buying appliances, check

and compare the energy efficien-

cy factor (EEF) of the different

brands, it added, explaining that

a higher EEF means better energy

efficiency.

The utilitys announcement of

possible lower March generation

charges comes in the wake of com-

plaints on a bill format that has

caused confusion.

The Energy Regulatory Com-mission has asked Meralco to ex-

plain the format, which included

components such as the Balance

from Previous Billing, Total Cur-

rent Amount and Total Amount

Due.

The Balance From Previous

Billing covers unpaid amounts

relating to a planned rate hike that

is being reviewed by the Supreme

Court.

A P4. 15/k Wh in cre ase sup -

posed to have been implemented

in tranches beginning last Decem-

ber has been ordered shelved by

the high court, which is hearing a

complaint filed by party-list legis-lators and consumer groups.

An additional P5.33/kWh rat e

hike, also to be charged in stages,

is being sought by Meralco, which

says that this covers unpaid bal-

ances to power suppliers.

Meralco has said that it has no

intention to collect the deferred

amount, which it claimed was

included in the bill only for trans-

parency purposes.

In recognition of the feed-

back we got from our customers,

though, we will make it clearer

in their March bills as to which

amount they will only have to pay.

In addition, the deferred amountwill no longer be included in the

Total Amount Due, the company

said.

Meralco also said that only

7% of its 5.5 million customers

received bills with the deferred

amount itemized, adding that

those who paid in full would be

refunded.

Meralcos controlling stake-

holder, Beacon Electric Asset

Holdings, Inc., is partly owned

by Philippine Long Distance

Telephone Co. (PLDT). Hastings

Holdings, Inc., a unit of PLDT

Beneficial Trust Fund subsidiary

MediaQuest Holdings, Inc., has amajority stake inBusinessWorld.

5/26/2018 b w Digitized 030614

4/23

BERKELEY

Readi ng throu gh

the just-released

transcriptsoftheUS

Federal Reserves

Federal OpenMar-

k et C om mi tt ee

(FOMC) meetings

i n 2 00 8, I f ou nd

myself asking thesame overarching question:Whataccountedfor the

FOMCsblinkeredmindsetas crisiseruptedall aroundit?

Tobe sure,some understoodthe truenatureofthe situation.As Jon

Hilsenrathofthe WallStreetJournalpointsout,WilliamDudley,then the

executivevice-presidentofthe NewYorkFedsMarketsGroup, presented

staffresearchthatsought,politelyandcompellingly, toturnthe princi-

palsattentionto whereitneededto befocused.And FOMCmembers

JanetYellen,DonaldKohn, EricRosengren, andFrederic Mishkin,along

withthe Boardof Governorsin Washingtonclearlygot themessage. But

theFOMCsothereightmembers,andtherestofthe seniorstaff?Notso

much(albeitto greatlyvaryingdegrees).

AsI readthe transcripts,Irecalledthe longhistorydatingback to1825,

andbefore,in which theuncontrolledfailureof majorbankstriggered

panic,a flightto quality,thecollapseofassetprices,and depression.But

thereinthe FOMCsmid-September2008report, manymembersexpress

self-congratulationforhavingfoundthestrengthtotakethe incompre-

hensibledecisionnotto bailout LehmanBrothers.

Ifind myselfthinkingbacktothe winterof 2008,whenIstole and

usedasmuchaspossible anobservationbytheeconomistLarrySum-

mers.In theaftermathof thehousingbubblescollapseand extraordinary

lossesin thederivativesmarket,Summersnoted,bankswouldhaveto

diminishleverage.Whileitwould notmattermuch toany individualbank

whetherit didso byreducing itsloan portfolioor byraising itscapital, it

matteredverymuchtotheeconomythatthebankschosethesecond.

Eventoday,I cannotcomprehendthen-NewYork FedPresidentTimo-

thyGeithnersdeclarationin March2008that, itisvery hardto makethe

judgmentnowthat thefinancialsystem asa wholeor thebanking system

asawholeis undercapitalized.Geithnersviewat thetimewas thatthere

isnothingmoredangerous...thanforpeople...tofeed...concernsabout...

thebasiccorestrengthofthe financialsystem.Ofcourse,wenowknow

thatindifferencetosuchconcernsturnedouttobefarmoredangerous.

Likewise,I lookathistoryandseethatitis coreinflation(whichstrips

outvolatilefoodand energyprices),notheadlineinflation,thatmatters

forpredictingfutureinflation(even futureheadlineinflation).ThenI read

declarationslikethatby DallasFederalReservePresidentRichard Fisher,

thatdangerous inflationarypressurewas buildingduring thesummer of

2008,andIfindmyselfata loss.

Someofthe2008-eramindset(mostofit?)mostlikelystemmedfrom

the fact that there are things that are very real and solid to monetary

economists.Wecansee, touch,and feelhowa financial-deleveragingcycle

depressesaggregatedemand.Weknowthatthisyearschangein aninertial

price,suchaswages,tellsus alotabout nextyearswagechanges,whilethis

yearschangeina non-inertialprice,suchasoil,tellsusnextto nothing.

Andwe knowhow herdbehavior byinvestors meansthat asingle salient

bankfailurecanturnafinancialmaniaintoapanic,andthenacrash.

Butothersdo notsee,touch, andfeelthese things.Fornon-economists,

theyaresimplyshadowsonthewallsofacave.

Thatdistinctionwaslessrelevantinthe past.TheFed ofold usuallyhad

acharismatic,autocratic,professionalcentralbankerat itshead:Benjamin

Strong,MarrinerEccles,WilliamMcChesneyMartin,PaulVolcker,andAlan

Greenspan.When itworked whichwasnotalwaystrue the chairruled

theFOMC withan ironhand andwith thenear-lockstepvotingsupportof

thegovernors.Theviews ofthe othermembers withtheirvarying back-groundsinbanking,regulation,andelsewherewereoflittleor noconcern.

But former Chairman Ben Bernankes FOMC was different. It was

collegial,respectful,andconsensus-oriented.Asa result,therewasa deep

disconnect between Bernankes policy views, which followed from his

analysesinthe 1980sand 1990sof theGreat DepressionandJapanslost

decades,andtheFOMCsfailure in2008to sensewhatwascoming andto

guardagainstthe majordownsiderisks.

SoI find myselfwondering: Whatif thosewhounderstood thenature

of the crisis and those who did not had been compelled to make their

cases toBernanke inprivate? IfBernanke had thensaid, This is whatwe

aregoingto do, rather thanseekingconsensus thatis,if Bernankes

Fed had beenlikethe old Fed would better monetary-policydecisions

havebeenmadein2008?

(Theauthor,a formerdeputyassistantsecretaryof theUSTreasury,is

Professor of Economicsat the Universityof California at Berkeleyand a

research associate at the National Bureau of Economic Research. www.

project-syndicate.org)

Thursday, March 6, 20144/S1 Thursday, March 6, 2014 S1/5OpinionOpinion

Revisitingthe Feds crisis

Transportation mobilityand sustainability

Game play remains at heartof changing lifestyles

THE VIEWFROM TAFT

Brian C. Gozun

ASwe goon our dailygrind ofm ov-

ingfromour homes to our offices,

thebig T thatis traffic has been

g etti ng w ors e by themi nu te, by

thehour,by theday,and through

t he y ea rs . T he g ov er nm en t,

through theMetropolitanManila

Development Authority (MMDA)

and other departments,has been

working full-time and overtime

toalleviate this seeminglyendless

agonyoftraffic. Thenewlycoined

term carmageddon, combin-

ing car and Armageddon, is

trulyappropriatefor thedeath of

vehicular movement along EDSA

and other major thoroughfares in

themetro.Ifvehicles docometo a

completehalt, whatwould happen

to p eop le l i ke u s w ho commu te

hours per dayusingvarious modesfromcars that havenever experi-

enced goingbeyond 10kilometers

per hour to trains thathavenever

ever experienced under-capacity

intheir lifetimes?

For commuters, traffic goes

beyond the huge parking lot that

EDSA has become. It is all about

the ability to move from our

homes to our destinations with

ease,comfort,securityand, above

all, satisfaction. Our ability to do

our duties to our families,clients,

and friends as we move from one

placeto another rests oninclusive

mobility, which is a holistic con-

ceptthatpromotes themovement

from a car-centric paradigm to

more people- and environment-

friendlytransportation modes.

Dr. Danielle Guillen, an expert

ontransportation policyand plan-

ning from the Ateneo Institute of

Sustainability, espouses inclusive

mobility through the concept of

sustainabletransportation, which

entails expansionof levels ofser-

vice,diversification of transporta-

tion modes, a balanced land-use

plan, more efficient use of energy

and low polluting technologies,

reduction of health and safety

risks, reduction of environmental

impact and integrating the con-

cept of social equity and citizen

transportation.The definition of sustainable

transportation is similar to our

definitionof sustainabilityinbusi-

ness, which espouses balance not

only in our financials but also in

our relationships with our stake-

holders, community, country,

and Mother Earth. The start of

this so-called carmageddon has

made us more aware of the need

to understand the trade-offs that

we mak e as commute rs. Sh ould

we tak e our cars and be par t of

thethousands of cars idlingalong

roads that were once highways in

the not-so-distant past? Should

we take the LRT and MRT in the

weehours of themorning evenif it

is notyet SimbangGabi (midnight

mass) season? Should we walk or

evencycletoworkevenifitmeans

losing thousands of pesos on our

glutathioneinjections and whiten-

ingsoaps, creams,and whatnots?

The risks that we take as we

move from the security of our

homes to the insecurity of our

streets entail the need for trans-

portationsolutions thatgo beyond

the construction of roads, which

eventuallyleads to theincreasein

vehicles. Laws, ord inances, rules,

and regulations that have been

tried and tested (and arestill being

tweaked) by the MMDA and the

Cityof Manila will all goto wasteif we do not do our small yet im-

pactful share in alleviating traffic

congestion.

These are the things that ir-

ritate me the most. As a pedes-

trian, I pray my rosary every time

I cross our intersections because

pedestrians and drivers alike have

become terribly colorblind. A few

seconds of waiting will not hurt

as we wait for the traffic lights to

change color! Also, LRT and MRT

management can make the level of

service in our trains a little more

humane. Even sardines would

not want to squeeze themselves

into our sauna-like train carriages

packed with sweating passengers

who can barely breathe. And for

our vehicle-driving commuters,

it would be great if we could car-

pool with friends and family alike

and choose wisely when to use

our cars over cabs. Let us not text

while driving, and let us have hap-

py thoughts to avoid road rage.

Heavytraffic,sad tosay,is now

the norm in our metropolis, but

let us all do our part in trying to

alleviate congestion through sus-

tainabletransportation.

All aboard,please!

(The author is an associate

professor o f the Decision Sciences

and Innovation Department of theRamon V. Del Ro sario Co llege of

Businessof DeLa SalleUniversity.

Although the a uthor is f rom the

green s chool while D r. Guillen is

fromthe blueschool, both universi-

ties adhere to the principles that

Mother Earths cover must forever

be green and her skies and oceans

forever be blue. The green guy can

be reached at brian.gozun@dlsu.

edu.ph. The views expressed above

are the authors and do not neces-

sarilyreflect theofficial position of

DLSU, its faculty, and its adminis-

trators.)

SANFRANCISCO For almostas

longas therehave beencomput-

ers,therehavebeenpeopleintent

inplaying games withthem.

Since young programmers at

the Massachusetts Institute of

Technologycameupwith Space-

war! some50 years ago,the world

of videogames has exploded intoa

multibillion-dollar industry.

From the earliest days of

computer, these folks went after

computer graphics and went after

videogames, Gartner consumer

technologies research director

BrianBlau told AFP.

Peopleenjoygames,and mar-

rying the concept of real-world

games witha computer and inter-

activityis reallypowerful.

Gartner predicts the world-

wide videogam e market combin-

ing console, online, mobile, and

personal computer offerings will

expand from$101billionthis year

to $111 billion next year and top

$128billionin2017.

Whileplayonhigh-performance

desktop or laptop computers has

long captivated hardcore video-

gamelovers, rival consolemakers

Microsoft,Sony,andNintendohave

successfully turned games into

standard family household enter-

tainmentduringthepast20years,

with X box, PlayStation and Wii

hardwarerespectively.

CONSOLE KINGS

New-generation Xbox One and

PlayStation 4 consoles released

late last year are credited with

b ri ng in g n ew

lifeto a section

o f t he m ar ke t

under pressurefrom thepopular-

ityof smartphones and tablets.

But Nintendos latest console,

Wii U, has had trouble gaining

tractionamong players.

Console kings are also the big

names behind titles for play on

their hardware, but third-party

studios such as Activision Bliz-

zard, Electronic Arts, Ubisoft,

Disney Interactive, and Warner

Brothers are established titans in

gamesoftware.

While movie-lik e im mersion

inplayand broadeningentertain-

ment menus to include streamed

films and television shows has

consoles provingtheir worth, mo-

bilegames areonfire.

There are more game apps

for smartphones or tablets than

any other type of mini-program

for mobiledevices and it is thetop

revenue-producing category, ac-

cordingtoGartner.

APPS ON FIRE

Smartphones and tablets have

lured players from dedicated

handheld mo-

b il e g am e d e-

vices that, for a

time,were a hitwith people who

wanted toplay onthe go.

Mobile game revenues can

comefrompeoplepayingtodown-

load apps or fromin-game trans-

actions inwhichplayers poney-up

to advance more quickly through

levels or buy abilities or digital

items.

Britain-based King Digital En-

tertainment, which is behind the

Candy Crush Saga game craze,

is set for a keenly anticipated

stockmarket debut.Other sizzling

mobile game firms include Rovio,

Wooga,and Supercell.

Even Zynga, which pioneered

online social games only to get

caught on its heels when players

turned tomobiledevices,is notout

for thecount.

The San Francisco company is

intent on reviving a lineup that

includes Farmville and Words

WithFriends alongwith a popu-

lar Zynga Poker title.

Mobile game revenue globally

is setto nearlydoubleinthe next

twoyears to$22 billion,according

toGartner.

SPECTATOR SPORT

A new and flourishing eSport cat-

eg ory i n w hich vi deogame p l ay

is spectator sportcompletewith

commentators, sponsors and ads

has yet to be factored i nto the

global videogamerevenue model.

Computer graphics represent

a newinteraction paradigm, Blau

said.Todays high-detail graphics

and more immersive experiences

arealmost sciencefiction-like.

Innovations in game hardware

and softwarefrom Internet-linked

eyewear toaugmented realitypro-

grams areexpected tofuel increas-

ingdemand for play.

Too latethe ( justice) hero

STRATEGICPERSPECTIVE

Ren B. Azurin

IS SE NA TE P res i dent Frankli n

D ril on al ready tryi ng to create

s ome di stance betw een hi ms elf

and his boss, President Aquino,

perhaps to re-insinuate himself

i nto the convers ati on on vi abl e

presidential or vice-presidential

candidates for the2 016elections?

When, last weekend, he publicly

assailed the Sandiganbayans

slowdispositionof cases, hewas

clearly contradictingparty mate

Aquinowho boasted recently,We

are movi ng cl os er to obtai ni ng

truejustice throughthe cases filed

againstthose whohave committed

crimes...(and) Weare destroying

the last bastions of corruption.

Since observers had jeered the

Presidents boasts as patently ri-

diculous,itmaybe thatMr.Drilonis nowtryingtocurryfavor witha

public openlyfrustrated at thetai

chi-l ike movement of j u sti ce i n

this country.

Maybe Mr. D ri l on w ants

to paint himself as the justice

champion. The hero who rides

i nto tow n and, w i th s i x-g u ns

bl az i ng , bri ng s back l aw and

order to the lawless frontier.

The long-sought answer to the

peoples prayers. If so, its not

a bad image to cultivate for an

aspiring president or vice-presi-

dent. The problem is persuading

people that the image is even

credible. And, as far as thats

concerned, one could reason-

ably argue that in some 28 years

in the public service as sena-

tor, Senate president (twice),

and Justice secretary (twice)

Mr. Drilon has had more than

enough chances to do the save-

the-people bit and implement

his Justice Agad (j u s ti ce at

once) vision. But, in fact, as a

long-time member of the Sen-

ate and several years as its

leader it is hard for him to

claim not to have at least sanc-

tioned assuming, charitably,

that he wasnt actually a part of

all the pork barrel scams and

influence peddling going on all

around him all these years.

Mr. Drilon is quoted as say-

ing, If we are to outrun graft and

corruption, it is imperative that

we re suscitat e an d r econdi tion

our existing prosecutorial and

adjudicatory institutions against

this opponent. Sure. Of course.

But many reform advocates have

been saying the same thing for

years. And those in positions of

power to institute meaningful

improvements to our law en-

forcement and legal system like

Mr. Drilon have typically, overthe years, just played deaf, dumb,

and suspiciously blind.

If anything can illustrate viv-

idlythe gapingholes inour justice

system, it is the pork barrel scam

investigations that the President

(strangely) imagines must dem-

onstratehis administrations com-

mitment to a campaign against

corruption and to a daang matu-

wid(straight path). Eight months

after itwas firstexposed bya news-

paper (theInquirer) note,not by

a lawenforcementbodyor justice

official there has been virtually

nothing happening in the subject

caseother than press conferences

and televised hearings inthe Sen-

ate that are no more than occa-

sions for posturingsenators to lay

outfor the public their intellectual

shortcomings.

Irritatingly, moreover,the cur-

rent Justice secretary, Atty. Leila

de Lima, maybe mirroring her

boss, boasts in media statements

of slam dunk evidence and yet

cannot explain why no one has

thus far been arrested, much less

COMMENTARY

J. Bradford DeLong

China, S1/ 5

ChinafromS1/ 4

ANSHUN,China After a lifetime

offarmingand mininginthe hills

ofsouthwestChina,ZhangZongfu

was thrustintosubsidized housing

closer to town,and intoa monu-

mental urbanization driveaimed

atboosting growth.

Zhanglikes his newlybuiltdigs,

whichare effectivelyfree, but city

lifehas beenharder to settleinto.

The 48-year-old villager lacks job

skills or prospects puttinga ma-

jor wrinkle in Beijings blueprint

for prosperity.

Withoutwork Imin trouble,

he said in his living room, over-

lookingneatrows offreshlypaint-

ed apartmentblocks on theedgeof

Anshunin Guizhou,one ofChinas

poorestprovinces.

The house is fine. But if you

have a house to live in and cant

feed yourself, whats the point?

heasked.

Zhangs situation illustrates

thedevelopmental dilemma facing

China as its rubberstamp parlia-

ment, the National Peoples Con-

gress,meets this week.

Economic growth and rising

prosperityarekeyto theCommu-

nistPartys claimto a rightto rule,

and the legislators will put their

imprimatur on

reforms it has

promised.

By 2030, projections say a bil-

lion Chinese will live in cities

up 300 million from now, nearly

equal to the population of the

United States.

Beijing hopes that if the urban

influx earnand spend moreit will

both reduce poverty faster and

helpswitchthe economyto grow-

ing through consumption rather

thaninvestment.

Butif local governments simply

build the shells of cities with no

economythat former farmers can

participatein, theymaysimplybe

digging a deeper investment hole

and creatingneighborhoods full

ofidle inhabitants.

This is certainly something

Ive seen in other places, where

you have people cut off from the

waytheyve madetheir living their

entire life. Then theres nothing

really thattheycan do, said Tom

Miller,the Beijing-based author of

ChinasUrban Billion.

And if this

h a p p e n s o n

a g rand s cal e

across the country, then poten-

tiallyyoure buildingup enormous

problems, hesaid.Thats thefear,

ifyoulook10to 15years ahead.

Guizhou is constructing 180

sites toresettle twomillion people

by 2020, surpassing even the 1.3

million relocated for the vast

ThreeGorges Dam.

But while the first batches of

villagers have been taken to their

newwhite-trim homes inAnshun,

it has not yet taken the country-

sideoutofthevillagers.

Several said theymissed the se-

curity of growing their own food.

Justincase,Zhangand his wife

who heaved a basket packed with

vegetables up four flights of stairs

to their apartment have filled

one of their three bedrooms with

giantsacks ofrice.

NOWAYTOGO BACK

Under Xi Jinpingthe Communist

partyhas promised to speed up

changes to a hukou residency

systemwhich denies rural incom-

ers equal access toservices suchas

schoolingand healthcare.

But specifics are still pending

and cities, especially large and

crowded ones,haveresisted lifting

hukou restrictions and spending

moreonmigrants.

Experts call suchreforms criti-

cal, as a social safety net would

encouragemigrants tospend more

and better education would im-

prove the prospects of the next

generation.

Relocated villagers in Anshun

complained that government offi-

cials promised compensation and

jobs but, since the move in June

2013, have only provided a few

daystraining onsmarter farming.

ANALYSIS

Chinas urban drive risksdigging economic hole

tried and convicted. Further, for

the last five months, the Office of

theOmbudsmanhas been inves-

tigating the evidencebut has yet

tofilea caseagainstthoseaccused

in this massive plunder of the

peoples money.

My, my. The Filipino people

are well in their rights to throw

up their hands in sheer exaspera-

tion and ask, is this slow motion,

snail-paced, tai chi-like move-

ment at all appropriate for the

administration of justice in a

society? And, are the drawn-out,

protracted, purported investiga-

tions into the pork barrel scam

not actually an attempt to just

limit the damage and cover up the

involvement of key administra-

tion allies?President Aquino is clearly

delusional ifhe thinks his govern-

ment has adequatelyd emonstrat-

ed its stand withjustice, honesty,

and accountability or that he is

shaping a better society for a

justice-deprived Filipino people.

Indeed, he has yet to answer sat-

isfactorily the question, what are

these so-called reforms you say

youhave instituted?

Mr. Drilon is reported to have

lamented the fact that the San-

diganbayan takes an average of

sevenyears todecidea case,from

thefilingoftheinformationto the

promulgation of judgment, He

thenis said tohaveadded,rather

superfluously, Such a drawn-out

process of litigationis injusticein

itself. Thepeopledo notneed him

totell themthat.

From a wider perspective,

though, Mr. Drilon is guilty of

selective targeting because the

glaring faults in our justice sys-

tem encompass more than just

the Sandiganbayan. According to

the Davide-era Action Program

for Judicial Reform, the crucial

issues that need to be addressed

if we are to have a justice sys-

tem that is fair, accessible and

efficient, independent and self-

governed are: i) case congestion

and delay, ii) budget deficiencies,

iii) the politicized system of ju-

dicial appointments, iv) the lack

of judicial autonomy, v) human

resource inadequacies, vi) dys-

functional administrative struc-

ture and operating systems, vii)

insufficient public information

and collaboration with society,

viii) perce ived cor ruption in the

judiciary, and i x) lim ited ac cess

to justice by the poor. To that, one

has to add other elements neces-

sary to bring about reform in our

system for bringing lawbreakersto justice. These would include

programs and equipment invest-

ments to enhance law enforce-

ment capabilities (for the preven-

tion and solution of crimes) and

to improve correction facilities

(for the punishment and reha-

bilitation of criminals). Action is

such areas is directly within the

sole power of the President and,

four years into Mr. Aquinos ad-

ministration, nothing significant

has been done in this connection.

Buying the police Glock pistols

does not qualify as institutional

reform.

Indisputably,sinceMr.Aquino

has not taken meaningful action

to introduce reforms in the areas

that he has repeatedly stressed

arethe focus ofhis administration

corruption and lack of justice

thenhecan nolonger qualifyas

thepeoples heroand savior.Thus,

perhaps, the attempt by Aquino

ally (and once-rabid Arroyo sup-

porter) Drilonto begintoportray

himselfnowinthatrole.Itis prob-

ablymuchtoolate.

Several ridiculed the idea, say-

ing they had left their land and

sold their farmingequipment.

Theres noway togo backand

farm, said 60-year-old NuoMin-

gsheng.Its toof ar away,the land

has notbeen cultivated,thefarm-

ingtools aregone,the houses have

beendugup.

Right now Im living off the

farming tools and other things I

sold from my old home, and Im

not sure what Ill do after that,

hesaid.

For urbanisation to work local

authorities will have to adapt to

reality, said University of Wash-

ingtonprofessor KamWing Chan.

With some exce ptio ns, he

said, Local bureaucrats are very

bureaucratic, they just follow

the plan without seriously con-

sidering the local situation.

But the trend of urbanisation

is inexorable, especially among

young people, said Jonathan

Woetzel, a Shanghai-based direc-

tor at consultancy McKinsey and

Company and co-chair of the Ur-

banChina Initiative.

Even without a job guarantee

or hukou reform, he pointed out,

it hasnt stopped anybody from

migratingso far.

As productivity increases you

expect to see better standards of

living, hesaid.

Yetbackin Anshun,GuoTaifu,a

43-year-oldformerminer,wondered

howhewouldsupporthisthreechil-

dren.Officialshadofferedworkat a

constructionsitebut villagerscon-

sideredthepaytoolow,hesaid.

Imworried, period.

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By Carol HuangAFP

FEATURE

TORKHAM GATE, Afghanistan

Trundling across the Afghan-

Pakistani border in a handcart,

Shayma dismisses militant

threats and conspiracy theories

about polio vaccinators while her

four children receive drops that

could finally eradicate the crip-

pling disease.

About 1.3 million oral vacci-

nations are administered every

year to children at the Torkham

Gate crossing, the focal point of

an intense global campaign to

eradicate polio by 2018.

But Afghanistan and Pakistan

two ofthe threeremainingen-

demicpolionations facea tough

taskdueto fightingon either side

of the border, Taliban opposition

to vaccinations and rumors that

thedrops couldcause impotency.

Families hurrying through

the Torkham mountain pass are

diverted down a channel where

health workers deftly deliver two

liquid drops into the mouths of all

children aged under five.

We want the vaccinations so

that my children dont become

disabled, Shayma told AFP from

behind an all-enveloping blue

burqa as she headed home from

Peshawar in Pakistan to the Af-

ghan city of Jalalabad.

It is not true that the vacci-

nation is bad. I dont agree with

this, she said. I believe it stops

polio.

Pakistan is a major concern foranti-polio experts with 93 cases

last year, up from 58 in 2012.

Vaccin ators have been shot

dead, bombed or taken hostage in

Peshawar, Karachi and elsewhere,

and some anti-polio programs

have been suspended.

Twelve people were killed and

11 injured when three roadside

bombs targeting a polio vaccina-

tion team in Pakistans restive

northwest exploded Saturday.

The Pakistan Taliban oppose

immunisation,sayingit is a cover

forUSspying,andsomepeoplebe-

lieveitis alsoaplottopoisonMus-

limchildrenand causeinfertility.

Polios last stand on the Afghan-Pakistan borderBy Ben Sheppard AFP

By Glenn ChapmanAFP

While Afgha nista n has had

notable success in tackling polio,

with 80 cases in 2011 and just 14

in 2013, eradication may be a long

way off d ue to the constant flood

of people back and forth across

the porous border.

SOME FAMILIES REFUSE

VACCINE

It does pose a big challenge in

trying to ensure each and every

child is vaccinated every sin-

gle time, UNICEF spokesman

Kshitij Joshi said.

Afghanistan and Pakistan are

the same epidemiological block

and it is important that children

on either side of the border are

vaccinated toensure absolutepro-

tection.

Vac cin ate d chi ldr en are

marked on the thumb with a pen

that lasts one month, but catch-

ing every child is nearly impos-

sible in the crush of people on

the colonial-era

frontier, which

is not officially

recognised by Afghanistan.

The vaccine is voluntary and

is rejected by some families. One

elderly man shouted at health

workers and refused t o allow his

child to receive drops.

Sometimes we find a person

like this, but the majority of

people know that it is good, said

vaccination supervisor Asif ullah

who, like many Afghans, only uses

one name.

In Jalalabad city, on the main

road to Kabul, UNICEF also tar-

gets migrant communities who

move regularly between the two

c o u n t r i e s i n

search of work.

One father

living in a makeshift tent said he

had been told that the drops had

a bad effect and would make his

children naughty.

After a discussion, UNICEF fe-

male coordinator Rana persuaded

him to allow his family to receive

the vaccine.

Female volunteers are crucial

tothe anti-poliocampaignasthey

areabletoenterprivatehomes,but

they cant access more dangerous

areasintheAfghanborderregion.

It is difficult for women to go

to several districts, said Rana.

We are not allowed as the secu-

rity is not good.

Taliban militants in southern

Afghan istan gener ally support

vaccination a result, says UNI-

CEF, of years of work ensuring

that the program is seen as strict-

ly neutral.

B u t i n P aki s tan and s ome

parts of eastern Afghanistan, the

Taliban have stopped vaccinators

reaching children in key polio

enclaves.

The Taliban in Kunar and

Nang arhar p rovi nces op p os e

the vacci nati ons , s o w e have

20,000 children there who have

been unvaccinated for several

months, Faizullah Kakar, the

Afghan presid ents polio special-

ist, told AFP.

These places are near Kabul,

so we are very nervous that if it

gets to the capital it could spread

quickly.

The risk was highlighted last

month when Kabul recorded its

first polio case since 2001 after a

three-year-old girl was diagnosed,

probably due to her father carry-

ing the disease from Pakistan.

TACKLING TALIBAN

PROPAGANDA

The problem is firstly the Tali-

ban, but it is also refugees in Ku-

nar who are somehow convinced

that vaccinations are not good for

their children and they also tell

local Afghans not to vaccinate,

said Kakar.

We stopped three FM radio

stations from constantly broad-

casting propaganda against the

polio campaign.

And we try to halt books circu-

lating that pick bits of science and

claim that vaccines are from pig

products or cause infertility.

The Taliban use how Osama

bin Laden was found (in part

through a fake vaccination pro-

gram), so they say it is about spy-

ing.

Worldwid e, polio is n ow re-

stricted to two endemic areas

the Afghan-Pakistan border and

northern Nigeria.

But unless vaccination at key

points such as Torkham Gate

succeeds in stamping polio out

completely, the risk of outbreaks

in other countries will always re-

main.

For Kakar, there is one main

obstacle to ridding the world of

a highly contagious disease that

easily preventable but impossible

to cure.

If we have peace here, we

would hope to end polio very

soon, he said. Without peace, it

is a lot more uncertain.AN Afghan man pushes a cart transporting his family as they cross over the border from Pakistan at the main Torkham border in Nagarhar Province on Feb. 23. More than 1.3

million vaccinations are administered every year to children crossing at Torkham Gate,a focal point of the global campaign to eradicate polio by 2018.

AFP

FEATURE

RURAL residents doing their washing near the city of Anshun,Guizhou Province,China

on Feb. 20. Chinas leaders have pledged to better integrate the rural migrants pouring

into cities but who are often kept on the margins and denied government assistance.

AFP

5/26/2018 b w Digitized 030614

5/23

Thursday, March 6, 20146/S1 Corporate News

Separate brands maintained

By Claire-Ann M. C. FelicianoReporter

No sense seen in merging Maxs, Pancake House menus

JONATHAN L. CELLONA

MAXs Group President Robert F. Trota (right), concurrent president and chief executive officer of Pancake House, Inc., and Jim T.

Fuentebella, Maxs Group branding director and a director of Pancake House, pose after their press conference yesterday at The

Peninsula Manila hotel in Makati City.

MAXs Group of Companies is

firming up strategies on growing

the newly acquired restaurant

chain of Pancake House, Inc.,

building on synergies between

them even as it keeps existing

brands separate, company officials

said in a briefing yesterday at The

Peninsula Manila in Makati City.

Maxs Group President Robert

F. Trota, who also now sits as presi-

dent and chief executive officer

(CEO) of listed Pancake House,

said synergies are being explored

to leverage Maxs and Pancake

House brands.

Both brands are positionedfor growth. Right now we are in

the process of firming up numbers

in terms of growth strategy, Mr.

Trota said when asked on expan-

sion plans.

PLANS

Mr. Trota said Maxs Group will

continue opening 10-15 stores

composed of Maxs Restaurant,

Krispy Kreme and Jamba Juice

every year.

At the same time, the group

which has a network of 13 Maxs

Restaurants overseas plans to

open six more stores in the Middle

East in the next two years, the same

official said. We do plan to open

six more stores in the Middle East

in the next year or two, he said,adding this would add to its three

existing branches in that region.

For North America, where the

company has 10 stores, Mr. Trota

said: We are continuously looking

for opportunities in North Ameri-

ca. This is all part of the expansion

plan.

We are also looking at other

Asian countries, but we havent set

our foot there. We are maximizing

our resources by growing where

we already are, he added.

Maxs Group has over 150 stores

here and abroad. Founders of

homegrown Maxs Restaurant also

introduced international brands

Krispy Kreme and Jamba Juice in

the Philippines.

Meanwhile, Pancake House

Group has 105 outlets of its flag-

ship Pancake House brand. It also

has close to 300 outlets of other

brands: Dencios, Kabisera ng

Dencios, Teriyaki Boy, Sizzlin

Pepper Steak, Le Coeur De France,

The Chicken Rice Shop, Maple and

Yellow Cab.

Now that were working with

the Pancake House Group, we are

looking at how we are going togrow the Pancake House and Yel-

low Cab [ brands], Mr. Trota said.

He said the company will con-

duct strategic planning with key

individuals of Pancake House

Group to draw up an expansion

strategy and set targets.

Were going to be there to grow

the business. Its something were

working with the different CEOs

of the brands, Mr. Trota added.

Maxs Group last Feb. 25 com-

pleted its acquisition of an 89.95%

interest in Pancake House and

promptly assumed leadership of

the listed firm.

The acquisition involved pur-

chase of 193,183,967 privately held

shares of Pancake House from

former principal shareholders and

a tender offer for 39,967,233 pub-

licly held shares.

Asked on plans to infuse Maxs

Groups assets into Pancake House

leading to a backdoor listing of

the former Mr. Trota replied:

It was more of a strategic acquisi-

tion.

Whether it was listed or not,

we would still buy it.

The official also said there areno plans for now to consolidate the

two restaurant networks into one

holding firm.

Well keep the two groups sep-

arate and run them as they are,

Mr. Trota stressed.

There are advantages in keep-

ing them separate. We can still

create synergies among the two,

he added.

We almost have similar cost

structures: cost of sales, labor,

and expenses. We will try to lever-

age on that so we can bring down

costs, he explained.

Shared services like IT (infor-

mation technology) can be imple-

mented. We have our separate HR

(human resource) directors so

they could collaborate and come

up with best practices that can

benefit both groups.

Jim T. Fuentebella, Maxs

Group branding director and a

director of Pancake House, said

made more sense to keep the iden-

tity of each brand intact.

People go to these brands. It

doesnt make business sense for

us to merge all recipes together.

Thats the core of the businessesand that is what will make them

strong, Mr. Fuentebella ex-

plained.

I think the idea is understand-

ing each brand really well and

adapting to changes but never

forgetting what makes each of the

brands so special.

Pancake House recorded a net

income of P116.11 million as of

September last year, up by 53.02%

from P75.88 million in the same

nine months in 2012. Revenues

grew 8% to P2.7 billion from P2.5

billion, while cost of sales rose

5.82% to P2.18 billion from P2.06

billion. Its shares ended at P23.25

apiece yesterday, down P8.75 or

27.35% from P32 each on Tuesday.

By Daryll Edisonn D. SaclagReporter

EMPERADOR Distillers Inc.,

the liquor arm of Alliance Global

Group, has inked an agreement

with United Kingdom-based

multinational alcoholic beverage

maker Diageo to bring the latters

brands here, the Andrew L. Tan-

led firm yesterday said in a state-

ment attached to a disclosure.

Emperador Distillers, Inc., the

largest distilled spirits company

in the Philippines, and Diageo, the

worlds leadin g premiu m drinks

business, have signed an agree-

ment to bring world-iconic brands

to the Philippines, read the dis-closure.

The partnership signals op-

portunities for growth in the al-

coholic drinks sector driven by

the Philippines thriving economy

and a rapidly growing middle class

that is expected to almost double

by 2020.

No other details of the agree-

ment were provided nor were of-

ficials immediately available for

comment.

Diageo, according to its Web

site, produces Johnnie Walker,

Crown Royal, J&B, Windsor, Bu-

chanans and Bushmills whiskies;

Smirnoff, Ciroc and Ketel One

vodkas; as well as Baileys, Captain

Morgan, Tanqueray and Guinness.

Emperador, in May 2012,bought the manufacturing facility

of the Philippine unit of Diageo

in Laguna to increase production

and enhance competitiveness.

Emperador is the company be-

hind its namesake brandy, Gener-

oso Brandy and The BaR flavored

vodka.

Its lineup also includes Em-

perador Deluxe Spanish Edition

brandy, which it produces in Spain

and which it introduced in the

Philippines in March last year, as

well as E& J Gal lo wines which it

imports from California. It also

distributes potato snack products

under the Pik-Nik brand.

Its net income grew by nearly a

fifth to P5.8 billion last year from

P5 billion in 2012 as revenues

surged 25.6% to P29.6 billion from

P23.6 billion.

Its sales volume, however,

climbed just 7% due to the impact

of higher excise tax implemented

last year.

[But] with a sales volume of 33

million cases, Emperador main-

tains its position as the worlds

largest selling brandy brand in

2013, aside from being the larg-

est liquor company in the Philip-

pines, the company had claimed

in a disclosure last month.

To further boost sales, Empera-dor said it will be spending some P4

billion this year to expand produc-

tion capacity in the Philippines.

Moreover, the company said it

has invested P5.8 billion, so far, in

vineyards, distilleries and bodegas

in Spain.

Grupo Emperador Spain S.A.,

a subsidiary of Emperador, last

month agreed to invest P3.7 billion

for a 50% interest in Bodega Las

Copas S.L., a company owned by

Gonzales Byass S.A. Emperador

had described Bodega Las Copas

as a fully integrated brandy pro-

duction company that owns and

operates a vineyard near Toledo,

a distillery in Tomelloso, Ciudad

Real province, and brandy produc-

tion premises in Jerez.Grupo Emperador, in October

last year, acquired a 49-hectare

(ha) of vineyard land in the prov-

ince of Madrid, Spain, bringing the

total area of its vineyards in that

country to nearly 1,000 ha.

Emperador is a subsidiary of

Alliance Global, which is into food

and beverage business, real estate,

hotel and gaming, and quick ser-

vice restaurants.

Its shares added 16 centavos or

1.38% to end P11.74 apiece yester-

day from P11.58 each on Tuesday.

Emperador teams upwith producer

of Johnnie Walker

ABS-CBN Corp. has borrowed

P1.65 billion to refinance debt, the

Lopez-owned broadcaster said in a

brief disclosure yesterday.

ABS-CBN Corp. obtained a

four-year term loan of P1.65 bil-

lion from Security Bank Corp. on

Feb. 28. The loans interest rate is

4.25% per annum, the disclosure

read, adding that the company had

secured last Jan. 30 approval of its

board of directors for the debt.

It said debt proceeds will be

used to refinance its P1.65-billion

loan with Security Bank, and that

the latest transaction was ar-

ranged by SB Capital Investment

Corp., a wholly owned subsidiary

of Security Bank.Yesterdays disclosure also put

ABS-CBNs total outstanding debt

at P20.364 billion.

The broad