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Measures exempting small miners from taxes on gold sales sent to plenary

THE SENATE ways and means committee has presented to the plenary the bill which grants tax exemptions to small-scale miners who sell their gold to the Bangko Sentral ng Pilipinas (BSP).
Senate Bill No. 2127 seeks to amend Sections 32 and 151 of the National Internal Revenue Code (NIRC) in order to provide income and tax exemptions to registered small-scale miners and accredited traders on gold sales to the BSP.
“I strongly urge the honorable members of the Philippine Senate to approve the passage of this ‘Gold Bill’ to ensure the strength of the country’s gross international reserves and promote the Philippines’ greater monetary and external sector stability,” said committee chair Senator Juan Edgardo M. Angara in his sponsorship speech.
Its counterpart measure, House Bill No. 3297, was approved on third and final reading on Oct. 8.
Mr. Angara said the proposed measure was a “win-win” for both the central bank and the small-scale miners as it would help the BSP to increase the country’s GIR as well as support the development of the small-scale mining industry.
He added that the bill would enable the BSP to build up GIR by buying domestically-produced gold, noting that the indicator fell in October to $74.8 billion, its lowest level since July 2011.
The BSP purchases gold from small-scale miners in accordance with Republic Act No. 7076 or the People’s Small Scale Mining Act of 1991, aside from other sources. GIR totalled $78.461 billion in December, according to the BSP. The value of its gold holdings was at $8.154 billion in the same month.
“The bill also helps small-scale miners, who prefer to sell their gold to the BSP, which ensures that they would be able to receive a fair price for their gold, instead of selling the gold to the black market where prices are below market levels,” Mr. Angara said. — Camille A. Aguinaldo

Energy group confident Palace will sign efficiency measure

THE Philippine Energy Efficiency Alliance, Inc. (PE2) said the proposed energy efficiency and conservation law, as cleared by Congress, has narrowed the “positional gaps” between the government and the private sector, including their stand on fiscal incentives.
PE2 President Alexander Ablaza said his group believes the draft law, which reconciles Senate Bill 1531 and House Bill 8629, is well-placed for approval by the President.
“Both sides contributed largely to consensual draft law,” he said in a statement.
PE2, the private-sector group that has been pushing the passage of the proposed law, said the bicameral committee agreed to re-anchor the fiscal incentives provision on Executive Order No. 226, or the Omnibus Investments Code of 1987, as amended.
On Wednesday, the Bicameral Conference Committee convened to reconcile the disagreeing positions of the Senate and House bills. They approved the Energy Efficiency and Conservation (EE&C) Act on the same day.
The private sector alliance said the bicameral committee considered the “last-minute” recommendation of the Department of Finance (DoF) to cut the period of mandatory inclusion of energy efficiency projects in the investment priorities plan of the Board of Investments from the House-proposed 15 years to an adjusted 10 years.
In its description of what transpired on Wednesday, PE2 said the Senate panel viewed the adjustment as a reasonable balance between the incentive rationalization objectives of the DoF and the requirements of private investors.
The House panel agreed with the compromise reduction, but wanted to put on record that every peso of granted incentives to energy efficiency projects will result in a P2.31 reflow to the national treasury in the form of additional tax revenues, in addition to other socioeconomic benefits.
“The conferees from both chambers likewise agreed to exempt energy efficiency investments from Article 32(1) of EO 226, thereby enabling foreign-owned projects to avail of fiscal incentives,” PE2 said.
The alliance said the Senate and House panels agreed to insert “clearer language” that mandates local government units (LGUs) to establish energy efficiency and conservation offices and appoint officers, with the option to do so within their existing plantilla and resource framework.
Also, the bicameral body accepted the Senate panel’s recommendation to include a new section that would encourage innovative procurement, contracting and financing procedures for government-implemented energy efficiency projects in public facilities.
The Department of Interior and Local Government and the Department of Science and Technology were added to the proposed inter-agency energy efficiency and conservation committee.
Separately, Senator Sherwin T. Gatchalian said the Senate and House energy committees had agreed to adopt the senate version of the bill as the “base” of the reconciled bill.
“This bill is quite important in terms of growing our economy because we all know we need a lot of power supply in the next few years, but the power supply will not come in as a form of physical plants, that power supply can come in the form of savings,” he said.
He said both the Senate and House panels “have a general meeting of minds to approve this bill.” He said Congress had been trying to pass such a measure since the idea was brought up in the 8th Congress in 1988.
Mr. Gatchalian said estimates made by the EU Access to Sustainable Energy Programme put the savings generated by a 10% improvement in efficiency at P55.5 billion, translating to a P140 monthly or P1,680 yearly savings in the electricity bill of the average household.
He also said the World Bank estimates that government energy efficiency projects could result in savings of P3.4 billion a year.
Mr. Gatchalian said energy efficiency will also reduce the country’s dependency on imported coal, avoiding up to 290.2 million metric tons in imports over a 12-year period.
This would result in average annual savings of $392 million to $1.3 billion between 2018 to 2030 at the 50% and 100% efficiency standard, respectively, the legislator added. — Victor V. Saulon

Consumer and employment interests and the Public Service Act

The Philippines has a huge and increasing economic potential mainly because of its big population, estimated at 108 million as of mid-2018 and the 13th largest in the world. Which means more entrepreneurs and workers, more producers and consumers.
We are also an archipelago with more than 7,500 islands and islets, lots of white sand beaches and deep fishing grounds (under Chinese control in certain areas now, to be sure). This means huge potential in tourism and fishery. Other countries, as we now see, are envious of coastal ones. One of the reasons for regional and world wars is the need by some countries to have more access to the sea, hence the need to invade and occupy their coastal neighbors.
The Philippines, however, is not able to optimize these potentials. Foreign direct investments (FDI), an important indicator for a country’s attractiveness to business, is not big. In the table below, I use FDI inward stock, the estimated accumulated FDIs in the country, and not FDI inflows. A country may attract $50 billion a year of inflows but if outflows are more than that, then net inflows will be negative. Data are from the UN Conference on Trade and Development (UNCTAD) World Investment Report (WIR) 2018.
Economy, FDI, & Tourism
We are also not able to optimize our huge tourism potential. Consider Macao with just 0.6 million population, yet they were able to attract $35.6 billion in tourism receipts in 2017, while the Philippines got only $7 billion. International tourism data are from the UN World Tourism Organization (UNWTO) Tourism Highlights 2018.
A big reason for these not so beautiful numbers for the Philippines is our non-friendly policies to foreign investments via Constitutional restrictions and the 83-year-old Public Service Act (PSA) enacted in 1936. That law has several sectors listed as “public utilities” where foreigners are prohibited from owning more than 40% equity.
An important legislative proposal at the moment is the PSA Amendment where telecommunications and transport (land, sea, air) are to be removed from the list of “public utilities,” thus allowing foreigners to own more than 50% and up to 100% equity. Only three sectors will be retained in the list — transmission of electricity, distribution of electricity, and water works and sewerage system. Explicit is a certain provision from Senate Bill 1754 (New Public Service Law of the Philippines) that “No other business or service shall be deemed a public utility other than those listed in this section.”
Two congressional bills seek to make the PSA Amendment. HB 5828 (Amending Commonwealth Act No. 146, known as the “Public Service Act”) was passed on third reading by the House of Representatives in September 2017. SB 1754 remains a committee report and needs to be passed on third reading so that a bicameral meeting may be set soon, for its enactment into law possibly before the congressional break during the May election campaign.
More investment liberalization measures should be done, especially airline and shipping line liberalization. Foreign investors and their managers need to see their potential and existing projects as often as possible. They want to see their investments here are secured and protected. Unlike in mainland Asia where tourists and investors can travel by land, say, from Thailand to Cambodia, Laos and Vietnam, they cannot do that in the Philippines.
Passengers are interested to see more choices in their domestic and international air travels. More choices in routes, days and time of flight, and airfare.
Consumers, investors and employees will greatly benefit from having more airline competition, with more airlines attracting more local and foreign visitors and entrepreneurs. This will create more domestic jobs, minimize labor migration, and fight poverty in the Philippines without the need for more taxes and public borrowings to finance endless government welfarist programs because many people are poor and have low-paying jobs.
 
Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers.
minimalgovernment@gmail.com

The continued womanization of men

So, apparently, Frank Sinatra, John Wayne, and Steve McQueen are toxic.
That is, if the American Psychological Association is to be believed.
In the APA’s new “Guidelines for Psychological Practice With Boys and Men,” which “was developed by several groups of individuals beginning in 2005 and continuing with updates and revisions through 2018,” apparently manly virtues such as stoicism, not showing vulnerability, self-reliance, competitiveness, achievement, eschewal of the appearance of weakness, and adventure are all considered malevolent.
Thus, when millions of men see Val Kilmer as Doc Holiday utter “I’m your Huckleberry,” Batman’s gritty fights in the dark, James Bond drawing his Walther PPK, or Indiana Jones tipping his hat, what they’re actually admiring are symptoms of toxicity, of that evil patriarchy, the upholding of which continues the oppression of women (as well as all the other thousands of genders that the Progressive Left has unearthed).
Interestingly, the Guidelines early on indicated its working assumption: that “boys and men, as a group, tend to hold privilege and power based on gender.”
Unfortunately for the APA, this was immediately debunked by another study, released almost simultaneously, finding men on the losing side of discrimination worldwide vis-à-vis women.
You read that right: after decades of feminist shrieking into our collective mentality that the patriarchy has been oppressing women for decades, holding them back in their careers, creating the wage gap, and preventing them from being what they want to be, here comes a group of researchers from the University of Essex and the University of Missouri-Columbia (in their paper, “A simplified approach to measuring national gender inequality”) saying that men are actually more discriminated against than women.
Thus, countries with “medium and high levels of development are typically associated with disadvantages for boys and men. Countries with the highest levels of human development are closest to gender parity, albeit typically with a slight advantage for women.”
And yet worth noting: out of the 134 countries studied, 19 of them see men being considerably worse off than women.
Illustrative of the study is Saudi Arabia, “frequently portrayed as unfair to women in the media (but) has a relatively high level of overall average gender parity.”
Relatedly, the study makes three important points: “The first is that the lack of gender inequality does not imply that women or men have abundant opportunities in life, and neither does it mean that a country is free of sexist attitudes; all that matters for the expression of gender parity using the BIGI (or any other composite measure of gender inequality) is whether there are overall differences in disadvantages between the sexes.”
Second, “the general focus in the area of gender inequality is often on issues relevant to women, while discounting men’s issues. For example, while the issue of Saudi women not being allowed to drive has received much media attention, little is reported about issues affecting Saudi men.”
Finally, “differences in cultural and religious views may influence one’s assessment of advantages and disadvantages in life. For example, most people in Saudi Arabia subscribe to a set of societal rules that may be difficult to understand from a Western point of view and may well be seen as a disadvantage by non-Muslims.”
The crucial point: “disadvantages cannot always be defined objectively.”
Indeed, this column previously cited The Federalist’s Bre Payton’s report that: “Men account for 77% of the nation’s suicides, they (are) more than twice as likely to become alcoholics, they are more likely to die of an overdose than women, and 90% of inmates are men.”
Also: the US has unfortunately been plagued by school shootings. But what mainstream liberal media refuse to report is that most, if not all of the shooters were bereft of fathers, “whether due to divorce, death, or imprisonment,” as Susan Goldberg points out (“When Will We Have the Guts to Link Fatherlessness to School Shootings?,” February 2018).
Then there’s this: “72 percent of adolescent murderers grew up without fathers; the same for 60 percent of all rapists. 70 percent of juveniles in state institutions grew up in single- or no-parent situations. The number of single-parent households is a good predictor of violent crime in a community, while poverty rate is not” (Terry Brennan, Co-Founder, Leading Women for Shared Parenting.)
It’s time we say enough to this progressive attempt to degrade masculinity in the name of gender equality. Society has been damaged enough already.
Finally, although Helen Pluckrose, James Lindsay, and Peter Boghossian already admirably exposed rubbish liberal research (similar to the APA Guidelines), nevertheless, the APA Guidelines’ lack of credibility is conclusively sealed by the Guidelines itself: “It is critical to acknowledge that gender is a non-binary construct that is distinct from, although interrelated to, sexual orientation.”
In short, gender is just a social construct and is no longer limited to merely male and female.
If that were true, then a study singling out men and boys is obviously utterly pointless.
 
Jemy Gatdula is a senior fellow of the Philippine Council for Foreign Relations and a Philippine Judicial Academy law lecturer for constitutional philosophy and jurisprudence.
jemygatdula@yahoo.com
www.jemygatdula.blogspot.com
facebook.com/jemy.gatdula
Twitter @jemygatdula

Journalism in troubled times

Should the media report everything government officials do and say for the sake of that elusive concept called “objectivity”? Philippine practice suggests that that’s what most journalists assume — and that, no matter how erroneous, outrageous or potentially harmful the statements and actions of those sources may be, their responsibility ends with accurately quoting them.
It’s a question that has never been raised except in these troubled times. Targeted for, and succumbing to manipulation by various political forces aware of its power, the press is in danger of losing the trust and respect of the media audience that’s crucial to its survival and capacity to provide the information democratic discourse can’t do without. In the age of “fake news,” religiously reporting the “alternative facts” of the powerful detracts from rather than contributes to the duty of providing the media audience the information it needs to understand events and public issues.
Only in a constitutional regime of press and media freedom is the question relevant. During the Ferdinand Marcos kleptocracy, the “partner in governance” the controlled press had been forced to become had no choice. It could neither ignore reporting what the government wanted the public to read, hear and watch, nor be critical of what it was really up to — if indeed the press even knew about it, access to information being limited only to that which validated the dictatorship’s portrait of itself as God’s gift to the Filipino people.
The question of whether it is at all necessary for the press to report everything those in power said or did wasn’t raised then. But neither was it raised during the succeeding Aquino, Ramos, Estrada, or even Macapagal-Arroyo, and Aquino III regimes.
It wasn’t because those administrations were not aware of the need to manage the information about themselves that they wanted the citizenry to hear. Each had its own way of doing exactly that, whether it was the filing of libel suits against columnists, reporters and editors as Corazon Aquino and Gloria Macapagal-Arroyo’s husband did, Fidel Ramos’ berating reporters and inviting columnists to breakfast, Joseph Estrada’s advertising boycott against his most hated broadsheet, or Benigno Aquino’s III’s chastising journalists for supposedly being inaccurate and focusing on his love life.
But there was one major difference between those regimes and the present one. Not one of those presidents — not even Joseph Estrada — came close to the outrageousness, profanities, blatant falsehoods and sheer lack of civility of current President Rodrigo Duterte’s declarations, harangues and diatribes.
Last week, for example, Mr. Duterte told “istambay” ( loose translation: loiterers and idlers) to be on the lookout for bishops and to rob and kill them, which was once more dismissed as just another joke by his coterie of apologists and trolls in government and social media. As if that were not enough, he went on to declare that rape is “part of the territory” of being Overseas Filipino Workers (OFW), whom he referred to as “slaves.”
What Mr. Duterte’s flunkies said was a joke may not be so interpreted by others, and by inciting people to violence, qualifies as hate speech. That and his other “jokes,” such as his tirade against the Commission on Audit (CoA) which he ended with the suggestion to “kidnap and torture” CoA auditors, contribute nothing to, and in fact detract from, public understanding of the imperative of government accountability and even his own declared fight against corruption.
On the other hand, his rape-as-part-of-the-territory statement is likely to be interpreted as a license for overseas employers to abuse their Filipina OFWs, because of its implication that, since that’s the way things are, no one — not the Philippine government — is likely to do anything about it.
press
Despite their obvious irrationality and potential harm, Mr. Duterte’s rants, insults, threats and profanities against anyone and any group that’s critical of him and his regime are nevertheless religiously reported by the news media — much of which he has also threatened and even tried to silence through the use of state power.
The press similarly reported his telling an audience of businessmen last week that the reason why he is “testing” the limits of civility is because critics have been “maligning” him since the 2016 campaign, apparently referring to reports that he at least approved of the Davao Death Squad if he did not organize and fund it, as well as to questions some journalists raised about his health.
While proclaiming for all the world to hear that rape is “part of the territory” for OFWs, he has obviously never understood that being criticized and held to account for their statements, acts and policies are necessarily part of the territory for candidates for political office, which he was in 2016, and for government officials, especially presidents of this unfortunate Republic, such as he has been since July that year.
All these and more have made the question of what purpose reporting such patently harmful, debased and debasing, and totally senseless diatribes against the church, priests and bishops, women, the press, government functionaries who are just doing their mandated jobs, human rights defenders, opposition senators, and even the Vice President of the Republic serves other than Mr. Duterte’s and his accomplices’ campaign to drive public discourse, this country, its culture, and its people to further ruin.
There is a journalistic precept that demands of journalists the exercise of the ethical responsibility of minimizing harm in the course of their reporting, or commenting on and interpreting the news. It would seem that they need to be reminded of that principle today.
But totally ignoring Mr. Duterte’s and his lackeys’ outrageous, erroneous and misleading rants, invectives and accusations for the sake of minimizing harm would deny the public its right to being informed not only of what those to whom they have delegated their sovereign powers are thinking and saying, but also of what kind of creatures these are and whether they deserve their continuing support.
It’s a dilemma that needs to be resolved not only because of Mr. Duterte’s debasement of public discourse but also because of the impact on the lives and safety of the groups and individuals at the receiving end of his threats and incitements to violence.
The only way out of the problem is for journalists to always keep in mind the fundamental imperative of providing a background and a history to everything they report. What’s needed is “Accountability Journalism”: journalism focused on investigative reporting, and always aware of the consequences for good or for harm of reporting, comment and analysis — which makes holding the powerful to account for what they say and do the primary journalistic responsibility, and which takes the greatest care to be sure of the accuracy of its facts as well as the validity of its interpretation of their meaning. It’s journalism not only for these troubled times but for all times.
Rather than simply noting that Mr. Duterte’s declaration that rape is part of OFW territory is likely to “rile women’s groups,” the journalist reporting it could have also pointed out its implications on the lives of the thousands of Filipinas working abroad and on their families in the Philippines.
Instead of just recalling that Mr. Duterte has been attacking the Catholic Church, its bishops and religion itself, the reporter on the scene could have also warned the public that his “rob and kill bishops” statement could be taken literally by the legions of thugs and killers in and out of the government of this violence-ruled land.
It’s been said before, but bears repeating: for journalism to be truly responsible, relevant and capable of engaging its audience, it must provide not only the news but also its meaning. Context is still everything.
 
Luis V. Teodoro is on Facebook and Twitter (@luisteodoro).
www.luisteodoro.com

The binge

After the long holiday break, there is a frantic struggle to look well, lose weight and to feel healthy. This happens when the individual takes an objective look at the mirror, weighing scale, tries to fit into good clothes. One becomes aware probably after a visit to the ER or the doctor for shortness of breath and hypertension.
The nonstop celebrations all revolved around buffet feasts. People indulged relentlessly in the binge of food and drink — at every occasion from Halloween to Christmas, New Year and The Feast of the Three Kings.
Family and friends came to town and there is always an excuse to eat nonstop with brief respites. Exercise schedules went topsy-turvy as many gyms closed. Sports enthusiasts continue with their favorite games in a more sedate way. It is slow motion for runners, swimmers, weight moves more slowly.
It’s rare to find a person who did not gain a few pounds and inches of avoirdupois.
The obsession with food is traced back to thousands of years ago when the original cavemen hunted for food to survive and feed the family. They were carnivorous, and agriculture was not yet developed. Cereal was not yet part of the diet. The extinct dinosaurs were herbivores and omnivores — that ate plants or animals.
Ages later, we have many variations and profiles of food lovers and foodies.
People eat to live; love to eat; live to eat. We need to satisfy energy requirements and psychological cravings.
Filipinos of all ages enjoy food. The exception would be the nervous anorexic. Social, business, religious and family events such as contract signings, inaugurations, trade exhibits happen with breakfast, lunch, cocktails or dinner.
Visiting corporate heads from the regional and international head offices are entertained by genuine and sometimes lavish hospitality. The reasons are endless: baptisms, reunions, weddings, wakes, funerals, corporate or personal breakups.
The amusing part of doing an informal the food profile is observing the generational nuances and quirks.
Among the urban set, the pattern is discernible. One can classify them according to age, food choices (epicurean taste) and diet.
The generation of our parents and grandparents (WWII and Liberation) have been fondly labeled the Spam gang. The tag comes from the PX tin can goods of processed food meat and the US military mess. They became accustomed to the diet with high sodium and preservatives. They liked canned milk and chocolate bars, chewing gum and soda that came from the bases.
They were like Boy Scouts who were conditioned to survive on no-fuss instant food in shiny tin cans and instant soup noodles.
The dietary habits of the next generation have an eclectic flavor coming from the best and the worst on nutrition. It would be a dietician’s nightmare.
As kids, many were force-fed oatmeal, carrots and other tasteless veggies, unpalatable bitter ampalaya, beans. Then we were treated to sinful rewards like cake, ice cream, cookies.
Breakfast had cholesterol rich eggs, fried eggs, pancakes and French toast, refined and many canned foods with white bread. Desserts were fruit cocktail and peaches with syrup. We had canned powdered milk in the absence of tasty fresh milk. Dietary deficiencies were offset by multi-colored vitamin pills and capsules the size of marbles.
There are times that we crave for certain dishes. This is due to the programming we have had since childhood to swing from one extreme to the other in the food chart.
The food pyramid chart and food gurus to guide our hungry palate was a more recent innovations. The Michelin star restaurants have been around for a long time, but the celebrity chefs and TV celebrity food show hosts are now more prominent in the culinary firmament. Thus, more people are aware and have become more obsessed with food. It’s the “In” thing.
Although we consider ourselves enlightened, we still tread the food tightrope of pleasure and pain. We still manifest races of the old mentality peculiar to the older generations — the occasional hankering for unhealthy foods that wreak havoc on the body.
On a lighter vein, have you ever peeped into the balikbayan boxes at the airport carousel? There are the usual appliances and cosmetics plus the canned goods for emergencies.
They are probably gifts for some grizzly characters (such as war veterans and jungle survivors) who crave for a sodium nitrate fix on rainy days. (As they say, old soldiers and old habits never die.)
Observers say that food tastes are evolving to healthy levels. Canned sardines, processed food and bacon strips have been replaced by tasteless but fibrous muesli, bran and fruit. Organic food and fiber are in. Preservatives and sprayed vegetables are out — except for embalmers and unscrupulous farmers.
The world is getting smaller. Travelers are exposed to global trends and are acquiring diverse culinary preferences from different cultures. Developing a worldly epicurean range is an adventure for foodies of all ages and shapes. The exploration on a culinary level has become the link that connects and diffuses generational differences.
Eating well is good. But one should remember to savor the nuances and qualities — good taste in small portions.
Whatever the occasion and the season, one should think healthy, avoid “inflation” and win the battle of the bulge. Stop the binge!
 
Maria Victoria Rufino is an artist, writer and businesswoman. She is president and executive producer of Maverick Productions.
mavrufino@gmail.com

Lessons from the latest market tantrum

By Steve Brice
THE fourth quarter of 2018 was the second-worst quarter for global stocks since the 2008 financial crisis. No major equity market was spared. A benchmark of global stocks dropped 13% during the quarter, and 11% in all of last year, recording its biggest annual loss in a decade as investors were spooked by the US Federal Reserve’s interest rate hikes amid slowing global growth and corporate earnings.
What can we learn from the latest market tantrum and how do we use the lessons to position for 2019?
Let’s start with arguably the most reassuring aspect of the latest volatility. As stocks plunged, bonds and other so-called “‘safe-haven” assets rose. An index of US Treasuries gained 2.6% during the fourth quarter, gold rose almost 7%, and the Japanese yen strengthened 3.7%. This resurrects the traditional role of these assets as an offset against equities.
The main lesson for investors here is that of the importance of diversification. Our preferred broad-based allocation for conservative investors, spread across Developed and Emerging Market stocks, government and corporate bonds, gold and other alternative assets, lost only 2.1% in the last quarter and 1.3% in all of 2018, significantly outperforming a portfolio focused solely on equities.
One cannot overemphasize the benefits of diversification, especially as we get closer to the end of the current economic cycle. Too often, investors over-allocate towards their preferred asset class and markets, thus taking on inordinate amount of risk, only to suffer significant drawdown when markets turn against them. There is now a significant body of academic research which shows that an investor’s asset allocation contributes most of his/her investment returns. A broadly diversified allocation helps maximize returns for a given level of risk appetite.
Once an investment portfolio is broadly diversified, the next lesson is that of rebalancing the portfolio to bring various asset classes to their desired allocations. This is typically done once or twice a year. The recent market volatility would have made this particularly necessary for most investors.
For instance, the drawdown in stocks in the fourth quarter of 2018 likely reduced their share in the overall investment allocation below the desired level. The pullback would be a good opportunity for investors to rebalance their portfolio by adding to their equity holdings at a more attractive price, while trimming other assets which may have exceeded their desired weights due to outperformance.
Such a rebalancing strategy is a disciplined way of following the time-tested principle of “buying low and selling high.”
The recent volatility also highlights the importance of holding a reasonable cash balance. In early December, when we issued our 2019 Outlook report, we concluded it was time to dial back our positioning in risk assets and raise allocation to cash. The rationale for this decision was threefold. First, USD-denominated cash yields have increased from virtually zero during a large part of the current economic cycle to levels which are now attractive, both in absolute terms and relative to other asset classes, once adjusted for the volatility of various assets. Second, we believed markets will continue to be volatile in 2019 and holding a sizable allocation in cash would help reduce the volatility of the overall holdings. Third, we want to have cash as reserve firepower which can be deployed quickly when short-term, tactical opportunities present themselves.
December’s market tantrum has presented a few such opportunities to add exposure. For one, valuations for US equities have turned more attractive on the back of strong corporate earnings growth and recent weakness in prices. For sure, there are increased concerns about the possibility of a US recession over the next 1-2 years. However, our scorecard, which incorporates a wide array of factors to assess the risk of a US recession, does not have many signals that are flashing red, at least for now.
In fact, we expect healthy but modestly slower pace of US growth this year fueled by solid consumption and the lowest unemployment rate in almost 50 years. If the current economic cycle, now in its 10th year, stretches until Q2 of 2019, it would be the longest US expansion in modern history.
We also believe US inflationary pressures have peaked. The combination of slowing, but still-robust, economic growth and near-target inflation implies the Fed is likely to hike rates at a much slower pace than in 2018, possibly even pausing in the first half of the year to assess the impact from its previous rate hikes.
A cautious Fed is likely to be positive for US equities over the coming months. Asia ex-Japan and other Emerging Market stocks could also benefit from a Fed pause. A breakthrough in the current trade talks between the US and China to help resolve their disputes would also be positive for these markets.
In early December 2018, we turned more constructive on bonds generally, although the decline in US Treasury yields since then makes us more selective. In the higher yielding area, Emerging Markets USD-denominated government bonds are particularly attractive. They now offer similar yields compared with Developed Market High Yield bonds, while bearing lower credit risk. Asian USD bonds have become more attractive over the past year. While China-related risks are a justifiable concern, the market is already pricing in elevated default rates at a time when China’s authorities are increasingly taking measures to support growth.
All in all, the recent market tantrums would have undoubtedly dented the risk appetite of many a hardy, battle-tested investor. Yet, that is just the time to rebuild positions, especially in areas which have turned more attractive. We believe 2019 is likely to offer many such tactical opportunities.
 
Steve Brice is chief investment strategist at Standard Chartered Private Bank.

SM Prime, Ayala help fuel bourse’s recovery

By Arra B. Francia, Reporter
SHARES bounced back on Thursday as index heavyweights SM Prime Holdings, Inc. (SMPH) and Ayala Corp. (AC) recovered from heavy losses in the previous session.
The benchmark Philippine Stock Exchange index (PSEi) rose 62.50 points or 0.79% to close at 7,927.20, while broader all-shares index likewise firmed up by 28.71 points or 0.6% to end at 4,743.84.
“The PSEi managed to recover today as it closed in the green… AC and SMPH — the two heavyweights that brought down the index yesterday — notably closed in the green with the former ending 0.44% up and the latter at 3.51%,” Papa Securities Corp. Sales Associate Gabriel Jose F. Perez said in an e-mail after Thursday’s trades.
SM Prime was sold down last Wednesday on news that the Department of Interior and Local Government opposed reclamation projects in Manila Bay. The firm has a P100-billion reclamation project covering 600 hectares planned in the area.
Ayala stocks had also plunged the previous session after Japanese firm Mitsubishi Corp. cut its stake in the firm at a discount.
Regina Capital Development Corp. Managing Director Luis A. Limlingan attributed the PSEi’s rise to regional sentiment. “Philippine shares made a comeback, driven by the overnight regional session, as investors cheered mostly positive earnings from financial institutions amid uncertainty from a partial government shutdown [in the United States],” Mr. Limlingan said in a mobile phone message.
Wall Street’s main indices gained as firms like Goldman Sachs reported good earnings even as the US investigation on Chinese tech firm Huawei revived fears about a trade war between the world’s two biggest economies. The Dow Jones Industrial Average, S&P 500 and the Nasdaq Composite Index closed 0.59%, 0.22% and 0.15% higher respectively.
Back home, four sectoral indices moved to positive territory, led by property which soared 3.27% or 125.65 points to 3,957.23. Financials rose 0.25% or 4.59 points to 1,809.23; holding firms went up 0.23% or 18.13 points to 7,851.25; while mining and oil added 0.05% or 4.71 points to 8,803.23.
In contrast, industrials dropped 0.36% or 42.34 points to 11,458.24, while services shed 0.22% or 3.45 points to 1,540.23.
Turnover thinned to 1.22 billion shares worth P14.17 billion from Wednesday’s 1.13 billion shares worth P20.15 billion. Stocks that advanced slightly outnumbered those that lost 101 to 99, while 51 others were unchanged.
Foreign investors were back to buying mode with P3.84-billion net purchases on Thursday, turning around from Wednesday’s P1.19-billion net sales.
Papa Securities’ Mr. Perez noted that the foreign inflow was mostly due to Puregold Price Club, Inc.’s block sale. The Lucio L. Co-led supermarket operator disclosed its P4.69-billion top-up placement on Thursday.

Peso falls against dollar

peso remittance
THE PESO Is expected to trade between P52.30 and P52.50 today. — PHILSTAR/KJROSALES

THE PESO plunged against the dollar on Thursday from its eight-month highs, as investors cut their short dollar positions amid geopolitical developments in the United Kingdom and the United States.
The local unit closed the session at P52.41 against the dollar on Thursday, down 28 centavos from the P52.13-per-dollar finish on Wednesday.
The peso opened the session weaker at P52.15 versus the dollar, its best showing for the day. Meanwhile, it traded to as low as P52.46 intraday.
Dollars traded surged to $932.22 million from the $679.2 million that switched hands the previous day.
A foreign exchange trader said the peso slumped versus the dollar as market players cut their short greenback position.
“We broke past the resistance levels at around P52.31-P52.35. When we broke past those, we saw the market cut their position,” the trader said in a phone interview.
“When we broke the P52.35 level, it signified that the market is ready to cut their losses at that point.”
The trader added that the peso movement yesterday was “headline-driven,” particularly the developments in the UK’s exit from the European Union as well as the partial US government shutdown.
British Prime Minister Theresa May won a confidence vote in the Parliament on Wednesday amid an impasse on the Brexit agreement, Reuters reported.
Meanwhile, US President Donald J. Trump on Wednesday enacted a law granting some 800,000 federal employees back pay amid the partial government shutdown as he continued to demand funding to build a border wall.
“We still see momentum pushing the dollar higher. There might be some consolidation at current level, but the trend is still pointing for a stronger dollar,” the trader said.
Meanwhile, another trader said in an e-mail the peso depreciated against its US counterpart amid heightened tensions between the US and China after news that the US authorities are in advanced stages of a criminal probe against Chinese tech giant Huawei.
For today, the two traders expect the peso to trade between P52.30 and P52.50. — Karl Angelo N. Vidal

Recto seeks inquiry on China-funded data project

SENATE President Pro Tempore Ralph G. Recto has filed a resolution seeking an inquiry into the China-funded video surveillance and emergency response project of the Department of Interior and Local Government (DILG).
In Senate Resolution No. 990 filed on Wednesday, Mr. Recto raised concerns over the primary equipment supplier of DILG’s Safe Philippines Project — Phase 1, Huawei Technologies Co. Ltd., which he said was hounded by national security and data protection issues in other countries.
“Recent developments placed considerable security risk in employing Chinese citizens, corporation and organizations to implement government programs and projects,” the Senate leader said in his resolution.
The Safe Philippines Project concerns the construction of integrated operations and command centers equipped with video surveillance systems in 18 local government units in Metro Manila and Davao City.
The project’s commercial contract was signed between DILG and Chinese firm China International Telecommunications Construction Corp. (CITCC) on Nov. 20 last year, as witnessed by President Rodrigo R. Duterte and Chinese President Xi Jinping. CITCC’s supplier in the project is Huawei.
The project, estimated to cost P20.3 billion, seeks to integrate the emergency and disaster management system, law enforcement system, traffic management, peace and order, as well as public safety management system.
Mr. Recto cited reports of Huawei officials being apprehended in Canada and Poland as well as the Chinese company being banned for public procurement of equipment in United States, Japan, Australia, and New Zealand due to “rising security concerns.” He sought the Senate inquiry in order to mitigate potential risks to national security from foreign-assisted projects of government.
“It is imperative that the Philippine government review and evaluate government programs and projects and their impact on national security and public interest,” he said.
DILG Secretary Eduardo M. Año has said measures are being undertaken by the department to ensure data protection in the Safe Philippines Project.
“The DILG will install the necessary fire walls to protect the system from hackers and other threats. This will be installed by the DILG and funded by our government. The public doesn’t have to worry about data breaches in the project as there will be no storage of classified data or information inimical to national security in the CCTV system,” Mr. Año was quoted as saying in a Dec. 17, 2018, DILG press release.

Lorenzana: Funding for Reds a challenge to government

DEFENSE Secretary Delfin N. Lorenzana said funding for the underground communist movement remains a challenge to the government in its objective to end the insurgency.
“For me, funding, more than top-level leadership, is the more critical challenge for the government in 2019. We enter an election year. CPP-NPA generates huge funds by extorting money and collecting permit-to-campaign fees from local candidates,” Mr. Lorenzana said in his speech at a forum in Makati City on Thursday, Jan. 17.
He added, “What can we do? To businesses and the private sector, stop giving so-called ‘protection money’ to the CPP-NPA. They are actual threats, you need to work closely with the AFP and PNP in your area.”
The Defense chief added, “To local candidates, show your love for our country. Do not pay any PTCF (permit-to-campaign fees). Stop funding the communist insurgents who do nothing but sow terror and anguish within our communities.”
Last Sunday, the Department of Interior and Local Government warned about the “permit-to-campaign fees” imposed by communist rebels in areas where they operate.
Interior Secretary Eduardo M. Año has released Memorandum Circular 2018-211 reminding local officials that accommodating such illegal fees is a violation of Republic Act No. 10168 or The Terrorism Financing Prevention and Suppression Act of 2012.
Mr. Año said the collection of the said fees is prevalent in Mindanao. Martial law continues to be enforced in this region.
“This is prevalent in communist insurgency affected areas like in Eastern Mindanao, Western Samar, and Bicol. Konting areas lang pero inaabuso ng (Just a few areas but this is abused by the) CPP, NPA, NDF. They collect from mayors, governors, councilors, and even congressmen,” he said in an interview.
“If they can campaign in those areas, that’s an advantage against their political opponents and that means votes. Also they are hoping the NPAs will endorse them.”
In another development, Malacañang on Thursday said President Rodrigo R. Duterte did not authorize Movie and Television Review and Classification Board (MTRCB) member Avelino L. Andal to initiate back-channel talks with exiled National Democratic Front of Philippines (NDFP) Chief Jose Maria C. Sison for the resumption of the peace talks.
“Mr. Andal was not authorized. He was not authorized to do back-channeling, the President himself had said so,” Presidential Spokesperson Salvador S. Panelo said in a press briefing.
In a DZMM interview on Tuesday, Mr. Andal said the President ordered him “last week” to lead backdoor talks with Mr. Sison.
“Siguro puyat na siya, baka inaantok na siya, baka (He was probably sleepy, so) he misunderstood the conversation. Can’t blame him,” Mr. Panelo said, referring to Mr. Andal’s conversation with the President. — Vince Angelo C. Ferreras and Arjay L. Balinbin

Comelec to hold mock polls to test automated system

By Vann Marlo M. Villegas, Reporter
THE Commission on Elections (Comelec) will hold mock elections on Jan. 19 in 60 clustered precincts in 30 areas to test-run the automated system for the May 13 midterm polls.
The mock elections will be conducted in Quezon City (1st and 2nd Districts), Manila (5th District), Pasig (2nd District), Taguig, Pateros, Valenzuela City (1st District), Muntinlupa City, Alaminos City and Dagupan City in Pangasinan, Tuguegarao City and Aparri in Cagayan, Sorsogon City and Matnog in Sorsogon, and Iriga City and Buhi in Camarines Sur. Mock polls will also be conducted in Cebu City (1st District) and Santander in Cebu; Albuquerque and Cortes in Bohol; Dapitan City and Sergio Osmeña, Sr. in Zamboanga del Norte; Digos City and Bansalan in Davao del Sur; General Santos City and Surallah in South Cotabato, Jolo and Tongkil in Sulu; and Lamitan and Sumisip in Basilan.
Comelec spokesperson James B. Jimenez said the mock election is required under Republic Act No. 9369, the law which authorizes Comelec to conduct an automated system.
“The mock election will test and ensure the security features, accuracy, and functional capability of all these elements: the voter registration verification system (VRVS), the VCMs (vote counting machine), transmission devices and the consolidation and the canvassing system,” Mr. Jimenez said.
“Isang purpose ng mock elections is to ensure na magkaroon tayo ng opportunity na makita kung ‘yung mga proseso natin ay gumagana ba. Mapa-fine tune natin ‘yung mga procedure na nakabalot naman doon sa sistema (The purpose of mock elections is to ensure that we will have an opportunity to see the if the process works. We will fine-tune the procedures included in the system),” he added.
Mr. Jimenez also said the Comelec will test in three clustered precincts (one each from Pasig City, Quezon City, and Manila) the VRVS which uses biometrics data of voters to check if they are registered with the poll body.
He said that in the actual elections, only the precincts in Manila, Quezon City, unidentified municipalities in Pangasinan, Cavite, Cebu, Negros Occidental, Zamboanga del Sur, Davao del Sur and all provinces in the Autonomous Region in Muslim Mindanao will use the new system.
Mr. Jimenez also said the new system would add an estimated five minutes in the voting procedure.
“(W)e expect that it’s only for the pilot test na makikita natin ito, kasi (that we can only see this, because) when we go into full implementation in the future, ‘yun na lang ang prosesong gagamatin mo (that will be the process used). So ni-replace mo lang ‘yung libro (you just replaced the book), and to that point it will be even quicker kasi ‘yung (because) search mo digital na, hindi ka na magli-lift through a book (the search will be digital, you don’t have to lift through a book).”