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Masayoshi Son’s Japanese bankers worried about their favorite client

MASAYOSHI SON’S Japanese bankers are taking a hard look at their most important client.

After the costly rescue of office-sharing startup WeWork and a series of other high-profile setbacks for Mr. Son, senior executives at two of Japan’s biggest banking groups have said privately that they’ve grown less comfortable with the eccentric billionaire’s management of SoftBank Group Corp.’s $100-billion Vision Fund.

One executive, speaking in mid-November, said his firm wants to see a convincing turnaround plan for WeWork before lending more money to SoftBank. A rival said around the same time his bank is taking a cautious approach toward the company and has doubts about Mr. Son’s strategy of investing big sums in highly valued start-ups. The two lenders are among those approached by SoftBank for a roughly $2.7-billion loan.

While neither of the bankers, who asked not to be named, signaled a dramatic reduction in ties with SoftBank, their misgivings highlight how perceptions of Son are changing — even among his most reliable supporters.

Japanese banks have helped finance Mr. Son’s ventures for almost four decades and are currently sitting on at least $15 billion of loans to SoftBank and the Vision Fund. They also have extensive investment banking relationships with Mr. Son, advising him on deals and helping SoftBank raise more money from Japan’s corporate bond market than any other issuer. SoftBank has paid more than $1.9 billion in fees to global banks since 2015, much of which flowed to Japanese lenders, according to Freeman & Co.

If the industry tightens its purse strings or pushes for a greater say in how Mr. Son funds his businesses, it could complicate the tycoon’s plans to turn his debt-laden empire into a global leader in everything from artificial intelligence to health care. A key test may come in the next few weeks, as SoftBank works to finalize terms on as much as 300 billion yen ($2.7 billion) in fresh financing.

“Japanese banks have provided loans in part because of Son’s management power and capability,” said Kazumi Tanaka, an analyst at DZH Financial Research, Inc. “The WeWork issue has chipped away at one of the elements that convinced them” to back Mr. Son, Mr. Tanaka said.

The 62-year-old entrepreneur turned telecom magnate turned tech kingmaker is Japan’s most prominent businessman, and SoftBank is its biggest payer of investment-banking fees by far. In a country where lenders are grappling with near-zero interest rates and moribund demand for credit, few companies loom larger over the financial industry.

But the SoftBank that lenders dealt with for much of the past two decades was a telecom-focused conglomerate with stable earnings. Today, the company is effectively a massive venture capital operation, taking on unprecedented risks that make its finances much harder to predict.

Son’s recent string of stumbles has tested banks’ commitment to the new model. Tumbling valuations for marquee holdings including WeWork and Uber Technologies, Inc. led SoftBank to report a nearly $6.5-billion operating loss in the fiscal second quarter, its first in 14 years.

The senior Japanese banker who wants to see a WeWork turnaround plan said any additional loans to SoftBank would bring his firm close to internal limits on single-borrower exposure. That wouldn’t necessarily prevent it from extending more credit, because banks can temporarily overshoot those limits, he said. But over the longer term, the lender could be restricted in doling out more loans to SoftBank.

The biggest Japanese banks that SoftBank approached for its loan — Mitsubishi UFJ Financial Group, Inc. (MUFG), Sumitomo Mitsui Financial Group, Inc. and Mizuho Financial Group, Inc. — would see their combined lending to SoftBank climb above $15 billion if they fund the entire deal, based on figures from March 31.

MUFG and Sumitomo Mitsui declined to comment. Mizuho, which gave Son his first loan some 37 years ago and is the biggest lender to SoftBank with $5.5 billion of loans outstanding as of March, also declined to comment, as did SoftBank.

While Mr. Son has acknowledged making mistakes, he mounted an impassioned defense of his approach during SoftBank’s earnings presentation last month. He has acted to stanch the bleeding at WeWork by ousting controversial founder Adam Neumann and installing trusted lieutenant Marcelo Claure as executive chairman. Mr. Claure has launched sweeping cost cuts, outlined a five-year turnaround plan and brought in fresh management, including former Publicis Groupe SA CEO Maurice Levy.

In a sign that debt markets remain open to Mr. Son, Goldman Sachs Group, Inc. is said to be arranging a $1.75-billion line of credit as part of WeWork’s rescue package. SoftBank is listed as the borrower and WeWork is co-borrower, the people said. It’s unclear whether any Japanese banks will participate in the Goldman debt deal.

SoftBank may ultimately prove irresistible to Japanese banks given their long-standing ties. Son got his first loan from the predecessor to Mizuho in 1982 when he was just 24, then proved a daring and reliable client over almost four decades. In October, just as WeWork’s troubles made headlines around the world, SoftBank’s Tokyo headquarters were jammed with sprawling flower arrangements from Japanese investment banks congratulating Son on his baseball team winning the national league.

There’s also a dearth of profitable lending alternatives in Asia’s second-largest economy. The company’s low credit ratings mean banks charge higher rates, said Bloomberg Intelligence analyst Shin Tamura. SoftBank is rated BB+ at S&P, one level below investment grade. Toyota Motor Corp., another large Japanese borrower, is seven notches higher at AA-.

Lenders’ thirst for yield, and for lucrative investment-banking mandates, could be a big factor in Mr. Son’s corner as he tries to negotiate the new loan. SoftBank met with Japan’s three largest banks on Nov. 26 to discuss the facility, people briefed on the matter said. During the meeting, executives outlined their plans for WeWork, although the parties didn’t discuss terms for the loan, according to the people.

It wasn’t clear whether the presentation eased the banks’ qualms about WeWork.

Son and his Japanese bankers may ultimately be bound together by the sheer size of SoftBank’s junk-rated debt pile. It has $131 billion in long-term debt, more than any other listed non-financial company after AT&T Inc., according to data compiled by Bloomberg. Any signs of a funding crunch would also shake confidence in SoftBank’s main lenders.

Japanese banks “may be getting more concerned, but they still have to provide more support,” said Michiaki Tanaka, a former investment banker who is now a professor at Rikkyo University’s Graduate School of Business.

Should banks become less accommodating, Mr. Son could turn to other funding avenues, including tapping into SoftBank’s $39 billion of cash and equivalents. The company could also issue more bonds, although those carry higher interest rates than bank loans. Then there’s possibly the biggest ace up Son’s sleeve: SoftBank’s stake in Alibaba Group Holding Ltd., valued at $129 billion as of Friday.

Nevertheless, a cooling relationship with domestic banks could have wide-ranging implications for Mr. Son, who is trying to raise a second $100-billion Vision Fund so he can keep up the frenetic pace of dealmaking. Any signs of diminished confidence among the backers with the most at stake could complicate efforts by SoftBank to raise money elsewhere, said Yasuhide Yajima, chief economist at NLI Research Institute in Tokyo.

“If the banks start putting their noses in the air, it makes things more difficult for SoftBank,” Yajima said. — Bloomberg

How PSEi member stocks performed — December 16, 2019

Here’s a quick glance at how PSEi stocks fared on Monday, December 16, 2019.

 

The politics of water

The current tussle between the concessionaires and President Rodrigo R. Duterte (PRRD) stems from two arbitration awards by separate arbitration panels in favor of Maynilad Water (P7.4 Billion) and Manila Water (P3.4 Billion), in July 2017 and November 2018. The claimed amounts allegedly represent their accumulated losses after the Regulatory Office under the Metropolitan Waterworks and Sewerage System (MWSS) refused to grant their petitions to raise their tariffs from 2014 to 2018.

The arbitration was allegedly kept secret by the Aquino administration with the consent of then President Noynoy Aquino and Solicitor-General Florin Hilbay. When it came to light recently, President Duterte hit the roof considering that both water companies were suspected of hoarding water earlier in the year. According to PRRD, his suspicions mounted when water flowed again immediately after he cursed the water companies and its owners. He refused to pay and threatened the abrogation of the concession agreements as those were inimical to public interest.

Human security was the basis for MWSS’ privatization in 1997 after the passage two years earlier of R.A. 8041, or the National Water Crisis Act of 1995, because the MWSS was unable to fulfill its mandate, which resulted in poor service to the public characterized by water loss of around 65%; decades of underinvestment in water, sanitation, and sewerage; mounting government debt in excess of $1 billion, and continuing to generate insufficient earnings to settle its financial obligations on account of unabated inefficiency, corruption, negligence, and incompetence.

The primary objectives of MWSS’ privatization, therefore, were to transfer the financial burden of providing water to the private sector, improve service standards, increase operational efficiency, and minimize tariff impact. The government then entered into separate 25-year concession agreements with two private consortia comprised of local and international partners. The government, through the MWSS, continues to own the system. The private sector, through the two winning bidders, took over the operations, maintenance, expansion, and improvement of the system.

Ayala’s Manila Water took over the East Zone, while Maynilad Water took over the West Zone, originally operated by the Lopez group which, on account of political risk, returned the concession to MWSS in 2006. In 2008, MWSS re-privatized the West Zone. The Pangilinan-Consunji consortium won that bid. Both concessionaires have specific targets to meet for water, sanitation, and sewerage. The concession period was for 25 years after which it would be returned to MWSS with all the improvements and, hopefully, to a transformed government. During the latter years of the Arroyo administration, a MOA extended the life of the service contracts by another 15 years causing another legal controversy.

On orders of PRRD, MWSS cancelled the MOA based on a Department of Justice recommendation. Justice Secretary Menardo Guevarra found that the extension had no legal basis. Furthermore, he said that the concessionaires have not denied to this day the existence of inequitable provisions in the contracts and have, in fact, expressed their willingness to renegotiate. He noted that the proper time to renew the contracts was upon their expiration in 2022 as provided for in the agreements. There’s no provision that allows for their extension before the original expiry date.

On a sobering note that signals government’s evenhandedness, the authorities are now discussing matters with the concessionaires, making it clear that government’s intent is not to reject the concession agreements in their entirety but to merely repudiate the onerous provisions that violate the law. The original concession agreement has undergone changes, so what’s the current contract like? The agreements allow for periodic contract reviews to include rate rebasing. So that would be a valid exercise of duty and responsibility on government’s part.

In a Dec. 4 letter to President Duterte, former President Fidel V. Ramos defended the integrity of the concession agreements. He said that privatization brought in much needed capital to expand, extend and modernize water, sewerage, and sanitation services that benefited end-users. Over 18 million people (from 10 million in 1997) now have access to sustainable water supply. Funding mobilized by the private sector, from foreign and local sources, was due to the Philippine government’s guarantee that adherence to the sanctity of contracts and rule of law would be observed. “Our word must be our bond.”

PRRD reacted to alleged threats by the two companies to raise water rates “by 100%” after the MWSS decided on Dec. 5 to revoke the extension of their concession deals, from 2022 to 2037. He rose in defense of social welfare. The concessionaires later issued separate letters that they would no longer collect on their arbitral awards. But even without the rate increases they demanded, the MWSS says that their income during those years under litigation totaled P67 billion, averaging P13.4 billion, higher than the P10.5 billion of the previous five years.

Consequently, the brawl between the President and the water companies resulted in collateral damage last week of up to P127 billion in the stock market. Metro Pacific Investments Corp. (MPIC), parent conglomerate of Maynilad, lost P53 billion as stock prices tumbled 38.4%. Manila Water’s share price slid 41.8% while its parent company, Ayala Corp., slid by 7.5% equivalent to P39.52 billion. DMCI Holdings suffered a 21% drop in value, shaving off P17.93 billion in its market capitalization. The collateral damage extended to the equity positions of state-run pension funds SSS and GSIS by almost P4 billion.

There’s a crying need for prudence and circumspection in the utterances and acts of all parties concerned. Business continuity of PPPs are contingent on all parties doing their part to fulfill their contractual obligations. Inertia, opportunism, corruption, and profiteering are not part of it. That’s why the contracts allow for a periodic review of performance, the policy and operating environment, and the rates to be charged. Everyone wants clarity, stability, and certainty, especially the funders. Without them, no money no honey.

From a policy perspective, the sanctity of contracts is imperative. The lack of it impacts on the funding for future long-term projects and on foreign direct investment; and raises political risk.

 

Rafael M. Alunan III is a former Secretary of Interior and Local Government and chairs the Philippine Council for Foreign Relations.

rmalunan@gmail.com

map@map.org.ph

http://map.org.ph

Investigating the water contracts

Now THAT we know that there is problem with our national power grid, it being run by state-owned company of China, and how to solve it (https://www.bworldonline.com/investigating-the-grid), we turn our attention to our problem with water.

The same thing that happened to NAWASA — the National Waterworks and Sewerage System Authority — when it was privatized and two private corporations took over our supply of water even if people today continue to use the old acronym to mean water supply.

It changed to the present MWSS — the Metropolitan Waterworks and Sewerage System — with its two 25-year concessionaires (1997-2022) that we have, East Zone to the Ayala’s Manila Water Company, Inc. and West Zone to the Lopez’s Maynilad Water Services, Inc. before being bought out by the Pangilinan and Consunji group in 2007.

The first easy point is why the renewal in 2009, or halfway to the agreed period. The quick answer is that the Lopez group was in deep debt post-financial crisis. To make business sense, the new owners/operators needed a new period to make it worth their while, hence, the renewal up to 2037, or 28 years, a period longer than the original 25 years.

Why these number of years and why was the early renewal also given to the Ayala zone with the same operator which now has a concessionaire period of 40 years (1997 to 2037)? The difficult answer is that only the operators know and this is a problem in privatization.

A public utility exists for the benefit and welfare of consumers, in this case, each Filipino that lives in the covered areas. True, we put up with bad service but cheap rates when run by government. But when private companies take over, profits become the primary motive. Water service may have improved but at what price? The last few years we experienced water crisis which ought to be the responsibility of the operators.

But with its lack of knowledge and paucity of expertise, the regulator, MWSS, is actually reliant and totally dependent on the regulated companies on “how best” to manage the water supply. There are issues of governance in the MWSS that at one point had a board member act as the Chief Regulator — a clear case of conflict of interest.

The situation is one of asymmetrical information between the regulator and regulated which results in the regulated companies providing all the data, whether technical, financial, or operational. With the specter of “regulatory capture” when private companies dictate the actions of the regulator, there is no concept of utility for the public but rather the maximization of the return on investment (ROI).

The two concessionaries say they are agents. Legally as agents, they act under the direction and for the interest of the principal. The reason for existence of the principal, MWSS, is for the Filipino consumers. For any regulated entity, its biggest risk and concern is displeasing the principal as its regulator. In the present case, it is the agents who dare take the principal to court.

The contract called for hearings in a foreign jurisdiction, Singapore. Technically it is arbitration but can you imagine the Republic of the Philippines being sued by two Filipino companies in a foreign country? Can you picture the US answering to a court in Hong Kong? Or China agreeing to a summons by foreign judges? And do you know that we are the ones ultimately paying for the costly legal fees in dollars for the proceedings?

In law, the principal has every right to revoke the agency if the agency is no longer performing its functions, or if the agent misbehaves.

Even with the change of name from NAWASA to MWSS, the mandate is not only for waterworks but also for sewerage. This is the subject of a Supreme Court case that ruled that both concessionaires have not lived up to their promise to connect consumers to a sewage system and penalized them for each day of non-compliance.

Connecting the sewerage system is perhaps as costly as supplying the water without the revenues. Honesty requires the same effort to work with stakeholders. For every consumer supplied with revenue water, an equivalent connection to the sewerage is a good measure. No excuse is acceptable.

So the President of the Philippines, regardless of some flawed policies and many bad selection of personnel, is right to demand a thorough and balanced review of the contracts. The review will have to determine how much were the dividends paid out by the private companies and what were their rates of return on investment over the years? These will answer whether the contracts are onerous or not, and their consequent revocation or continuance.

ASEAN agri-food sector intensities: The Philippines in catch-up mode

In my past columns, comparative metrics on ASEAN agriculture were discussed. They included growth, diversification, export patterns, and total factor productivity, among others. These factors happen to influence rural poverty reduction.

For this article, the focus is on gross domestic product (GDP) and land area, as well as exports, both land- and aqua-based.

GDP-LAND RATIO
Malaysia, a tree-crops based agricultural economy (specifically, oil palm and rubber), ranked first in terms of GDP-land ratio, followed by diversified Vietnam. Both are highly export-oriented. The Philippines ranked third, a bit ahead of Indonesia, while Thailand landed last.

The third-place ranking of the Philippines is a surprise. This can be partly explained by the high proportion of commodities with high farm prices due to tariff protection. These are rice, sugarcane, livestock and poultry. This is so because most of the crops have low productivity and aquaculture is in the doldrums.

The low ranking of Thailand is an enigma. It has a diversified agriculture and a leading exporter.

LAND-BASED AGRICULTURE EXPORTS
Malaysia, Thailand and Vietnam are ahead with way over $1,300 exports per hectare. The Philippines is trailing at barely $400 per hectare. The Philippine export intensity is only one-sixth of Malaysia and only one-fourth that of Thailand and Vietnam.

AQUA-BASED EXPORTS
Vietnam led in export intensity of aqua-based exports, followed by Thailand. Both have short coastlines. Vietnam is huge in catfish/dory fish export from ponds fed by the Mekong River as well as shrimps. Thailand is big in prepared fish.

The Philippines, despite its very long coastline, ranked last. Its exports are only one-eighth of Vietnam’s and one-fifth of Indonesia’s, another archipelagic country.

WHAT NOW?
There are two faces of the poor Philippine scorecard. One, the Philippines has to move fast when it comes to productivity and diversity. It will be a long haul before it catches up.

Another is that it has greater potential to grow given its low base and under-utilized resources.

Vision, mission, and strategies are important. But greater still are two key implementation hurdles.

First is how to bring more private investments to the countryside. The five-hectare land limit under agrarian reform is a major hurdle. Good farmers cannot expand while the poor landholders are mired in poverty due to low productivity. Most are better off working in modern farms and agri-processing plants.

Second is how to bring implementation teams to speed at the Department of Agriculture (DA). The agency, in contrast to the other departments, suffers from lack of continuity and poor institutional memory.

The DA suffers not only from weak managerial capacity, but also from the mismatch of the requirements of the technical positions with personnel capability. If these mismatches are not addressed, Philippine agriculture will further trail behind, and rural poverty will persist. President Duterte’s target of reducing rural poverty to 20% in 2022 from 30% in 2015 will hang in the balance. Reducing poverty can be his greatest legacy.

This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or the MAP.

 

Rolando T. Dy is the Co-Vice Chair of the MAP AgriBusiness Committee, and the Executive Director of the Center for Food and AgriBusiness of the University of Asia & the Pacific.

map@map.org.ph

rdyster@gmail.com

http://map.org.ph

Culion the movie and SMB

Leprosy or Hansen’s disease, ketong in Tagalog and aro in Ilongo, was a dreaded disease. People with the disease, or even just suspected of having it, were avoided, even ridiculed and ostracized. And the Culion leper colony in Palawan became the national dumping ground of people with leprosy, even those without the disease but who were victims of witch hunts by some politicians or envious neighbors.

Over bottles of beer, a former dorm-mate in the Narra Residence Hall in UP Diliman, Peter Sing, mentioned his observations about the Culion leper colony in Palawan and said that his company, iOptions Ventures Corp., would produce a movie about it.

I must admit that I myself was among those who dreaded people with leprosy when I was young in the 1970s. After a brief research about Culion, here is what I gathered. (See the Table. — Ed.)

So it was a harrowing, dangerous situation from 1907 to the 1930s with “compulsory apprehension, detention” of people. Literal abduction of people by the hundreds, or thousands, from around the country who were brought to Culion against their will, with actual or fictional leprosy.

The social stigma was horrible — in some areas patients were forced to wear demeaning bells to warn everyone of their presence so others could avoid them. It was also believed that the disease was a curse and punishment for sinners and the “unclean.”

Although Culion was “the largest and best known institution of its kind in the world, and beyond comparison in area and natural facilities,” scientific understanding at that time was still limited and so social ostracization based on myths and unscientific beliefs persisted.

And since land and sea transportation that time was poor, it was very difficult or impossible for many families of the detained or abducted to visit their loved ones. Bordering on inhumanity.

Now Culion is one of the few selected movies to be shown in the up-coming Metro Manila Film Festival (MMFF) 2019. The team behind it is composed of some big shots in the Philippines movie industry — scriptwriter Ricky Lee, director Alvin Yapan, cinematographer Neil Daza, producer Mark Shandii Bacolod, actresses Iza Calzado, Merryl Soriano, and Jasmine Curtis-Smith.

I am very happy to learn that the couple behind iOptions Ventures Corp., Peter and Gilie Sing, both fellow UP alumni, put lots of time, money, and other resources to produce this kind of movie. Put faces and cinematic facts to those harrowing experiences of many decades, among the dark days of the Philippines’ medical history. With families separated by disease, ignorance, and sometimes politics, the human suffering and anguish was terrible. But in the end, human spirit, hope, and resilience prevailed.

This is a recommended movie to watch starting next week. Also a recommended place to visit, Culion island in Palawan.

Now, speaking of beer, I want to share this “translation/explanation” revolving around the words found on the San Miguel bottle that I heard from many drinking buddies in UP Diliman in the 1980s. On the bottle, we see these marks, from top to bottom:

“Pale Pilsen/ San Miguel/ Expertly Brewed Beer

Pale Pilsen/ And Bottled By

San Miguel Brewery/ Philippines.”

The older bottles have this mark at the bottom, “Net Contents 320 ml.”

Here’s what the letters stand for:

PALE PILSEN — Pag Ang Labanan E Pabilisan, Ingat Lang Sapagkat Etong Nangyari. (If the fight is fast, be careful as this is what happens.)

SAN MIGUEL — Sa Aming Nayon May Isang Grupo Uminom E Lasing) In our town there was this group that drank and got drunk)

EXPERTLY BREWED BEER — Erbe at Ekis, Pinaghalo, Eh Rindi, Talagang Lasingan Yan (Beer and gin were mixed, that is really getting drunk)

Bawat Round E War freak Eh Di / Bawat Enuman E Riot (With each round they’s become war freaks/ after each drink a riot)

PALE PILSEN — Pati Ako Lasing Eh, P__ Ina, Lasing Sila, Enjoy Na (Even I would get drunk, son of a bitch, they were drunk, time to enjoy)

AND BOTTLED BY — Ang Nangyari Dito, Bawat Order Tiyak Trouble, Lasing Eh, Dumampot/ Buti Yelo (What happened here is with each order, trouble was sure, they were drunk, picked something up/ good thing it was ice)

SAN MIGUEL BREWERY — Sampu Ang Naupakan, May Isang Gago, Umeksena Eh Loko. Binanatan, Rumesbak Eh Walang Enabutan, Riot Yan (Ten were beaten up, there was one idiot, acted crazy. Beaten, fought back but got nowhere, it was a riot)

PHILIPPINES — Pati Hostess Inupakan, Lahat Inupakan, Pati Pulis Inupakan, Nahuli Eh Stockade (Even the hostess was beaten up, all were beaten up, even the police were beaten up, they were caught and landed in the stockade)

NET CONTENTS 320 ML — Ngayon Etong Tangang COnstabulary Nakatulog Tangengot Eh, Nakatakas, Tumuloy Sauna, 320 Masahe Lang (Now this idiot of a Constabulary policeman slept, he is an idiot you see, escaped, went to the sauna, P320 for just a massage).

Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers.

minimalgovernment@gmail.com

The European Green Deal

By Ursula von der Leyen
President of the European Commission

DO WE, humans, want to continue living well and safely on this planet? Humanity faces an existential threat — the whole world is beginning to see.

Forests burn from America to Australia. Deserts are advancing across Africa and Asia. Rising sea levels threaten our European cities as well as Pacific islands. Mankind has seen such phenomena before, but never at this speed.

Science tells us that we can still stop this epidemic, but we are running out of time. The new European Commission is wasting no time. Today, less than two weeks into our mandate, we present our roadmap for a European Green Deal.

Our goal is to become the first climate-neutral continent by 2050, slowing down global warming and mitigating its effects. This is a task for our generation and the next, but change must begin right now — and we know we can do it.

The European Green Deal that we present today is Europe’s new growth strategy. It will cut emissions while also creating jobs and improving our quality of life.

It is the green thread that will run through all our policies — from transport to taxation, from food to farming, from industry to infrastructure. With our Green Deal we want to invest in clean energy and extend emission trading, but we will also boost the circular economy and preserve Europe’s biodiversity.

The European Green Deal is not just a necessity: it will be a driver of new economic opportunities. Many European firms are already going green. They are cutting their carbon footprint and discovering the clean technologies. They understand that there are planetary boundaries: European companies of all sizes understand that everyone has to take care of our common home. They also know that if they discover the sustainable solutions of tomorrow, this will give them first mover advantage.

What businesses and change-makers need from us is easy access to financing. To pull this off, we will deliver a Sustainable Europe Investment Plan. It will support one trillion euros of investment over the next decade. We will work hand in hand with the European Investment Bank, Europe’s climate bank.

Next March, we will propose the first-ever European Climate Law to chart the way ahead and make it irreversible: investors, innovators, and entrepreneurs need clear rules to plan their long-term investments.

While we will promote transformation in how we produce and consume, live and work, we must also protect and accompany those who risk being hit harder by such change. This transition must work for all or it will not work at all. I will propose to set up a Just Transition Fund — and I want it to mobilise, together with the leverage of the European Investment Bank and private money, one hundred billion euros in investment over the next seven years. We will make sure that we help those European regions who will have to take a bigger step, so that we leave no one behind.

Across Europe, people young and old are not only asking for climate action. They are already changing their lifestyle: think of the commuters who take the bike or public transport, parents who choose reusable diapers, companies that renounce single-use plastics and bring sustainable alternatives to the market.

Many of us are part of this European and global movement for climate. The EU is also formulating a new action in the Philippines on the utilisation of remote sensing technology from the EU Copernicus program specifically for climate change-induced disaster response and in the management of other forms of natural disasters.

Nine European citizens out of 10 ask for decisive climate action. Our children rely on us. Europeans want their Union to act at home and lead abroad. In these very days, the whole world has gathered in Madrid for the United Nations’ conference on climate, to discuss collective action against global warming.

The European Green Deal is Europe’s response to our people’s call. It is a deal by Europe, for Europe and a contribution for a better world. Every European can be part of the change.

Probe urged into motorcycle taxi pilot stage

COMMUTER rights associations called for a Congressional hearing into the decisions made behind the scenes by government agencies regarding the six-month pilot period extension for motorcycle taxi services, claiming they were not consulted on the matter and that the new entrants joining the pilot program might not offer safe services.

The office of Senator Grace Poe-Llamanzares, who chairs the Senate Committee on Public Services, received a petition from the groups, as did that of Representative Edgar Mary S. Sarmiento of Samar’s first district, who chairs the House Committee on Transportation.

Ariel P. Lim, an adviser to Ms. Poe, said he received the petition Monday from five groups which he identified as Legal Engagement Advocating for Development and Reform (LEADER), Komyut, Move Metro Manila, Transport Watch, and Lawyers for Commuter Safety and Protection (LCSP).

LCSP President Antonio E. Inton, Jr. reading out the petition to reporters, said: “We respectfully urge Congress, both the Senate Committee on Public Services under the chairpersonship of Senator Grace Poe, and the House of Representative Committee on Transportation under the chairpersonship of Rep. Edgar Mary S. Sarmiento, to conduct committee hearings to update the riding public and other stakeholders on the discussions and concessions made during the TWG (technical working group).”

Government agencies initially permitted a six-month pilot period for motorcycle taxis in Metro Manila and Metro Cebu which expires Dec. 26. The Department of Transportation’s (DoTr) TWG has since recommended a six-month extension of the pilot program in order to involve more potential entrants.

The current pilot program only involves motorcycle ride-hailing platform Angkas (DBDOYC, Inc.), after the DoTr’s TWG set guidelines on fares, speed limits and safety equipment.

Mr. Lim told reporters that he expects the public hearing could be held in the first quarter of 2020. “Next year na ‘yan, first quarter, mga ganun (It will happen next year, at around the first quarter)“ he said.

The commuters’ groups claimed in their petition that the TWG did not include them in the decision-making process for the six-moth extension of the program.

“Despite repeated requests from the sector for the TWG to convene, a secret meeting was conducted in November 2019, with solely government agencies in attendance, to make an assessment. Hence, the consumers, advocacy groups and other stakeholders, were excluded from decision making,” they said.

They said it was during the November meeting when the government members of the TWG decided to recommend the six-month extension of the pilot period and allow more potential entrants into the program, instead of allowing the pilot program to expire and for the service to begin regular operations.

The transportation department said in a statement on Dec. 10 that Land Transportation Franchising and Regulatory Board (LTFRB) Board Member, Retired Police Major General Antonio B. Gardiola, Jr., who heads the TWG, “sees the extension as an expansion of the study by allowing new motorcycle taxi providers to participate in the pilot run in the interest of giving the riding public a wider choice, and thus push the multiple providers to ensure a higher standard of service.”

The LTFRB was asked to comment but had yet to reply as of deadline time.

The Land Transportation and Traffic Code does not permit single motorcycles to operate as public transport, though in some provincial areas without jeepney or tricycle service, motorcycle taxis known as habal-habal are a recognized means of getting around.

Mr. Inton’s LCSP has asked a Quezon City court to stop We Move Things Philippines, Inc. (Joyride), Habal Rides Corp., I-Sabay, Sampa-Dala Corp. and Trans-Serve Corp. from operating. The group said such companies are inadequately organized and expose their customers to undue risk. — Arjay L. Balinbin

Senate signals low priority for constitutional amendments

AMENDMENTS to the 1987 Constitution as proposed by the House of Representatives are not among the priorities of the Senate for the 18th Congress, Senate President Vicente C. Sotto III said Monday.

The House Committee on Constitutional Amendments on Dec. 11 approved an unnumbered Resolution of Both Houses (RBH), which will ease restrictions on foreign investments and extend the terms of local officials.

Mr. Sotto said, however, that the proposed changes are not deemed important by his chamber.

“Wala kaming kinalaman dahil (We have nothing to do with it because they are) not a priority in the Senate,” Mr. Sotto told reporters in a briefing Monday.

“It’s not in any of the committees, there is no resolution filed, we are not even talking about it.”

Shifting to a federal government was among the campaign promises of President Rodrigo R. Duterte beginning with the appointment of a 22-member Constitutional Commission (ConCom), led by retired Chief Justice Reynato S. Puno, in January 2018.

The ConCom, which reviewed the 1987 Constitution, drafted the Bayanihan Federalism bill for submission to the 17th Congress. The draft, however, was set aside as then House members approved their own version, designated RBH No. 15.

The resolution passed the House, but failed to obtain final-reading approval in the Senate before the session adjourned on June 3.

Mr. Duterte in a June 25 speech pushed Congress to amend the Constitution, which Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno then said would be “disruptive,” considering the President is already halfway through his term.

Mr. Sotto did not entirely dismiss the resolution, noting the Senate will still tackle the proposal once it is transmitted.

“The House can do whatever it wants, and perhaps if they decide on something, then they can transmit it to us; and then we can talk about it if it’s transmitted to us.”

The House Committee, led by Cagayan de Oro-2nd district Rep. Rufus B. Rodriguez, proposed to allow legislation to ease restrictions on foreign investment and franchise grants for the operation of public utilities, among other economic provisions.

The resolution also proposed to increase the number of elected senators to 27 from the current 24. It provided that three senators each represent the National Capital Region, Northern Luzon, Southern Luzon, Bicol region, eastern Visayas, Western Visayas, Northern Mindanao, Southern Mindanao and the Bangsamoro Autonomous Region.

Under the proposal, Senators’ terms of office will be reduced to five years from the current six; while members of the House will serve five years, up from the current three years. — Charmaine A. Tadalan

DA cash transfers to rice farmers to start Dec. 23

THE Department of Agriculture (DA) and government banks have agreed on the mechanisms for disbursing P5,000 worth of cash assistance to rice farmers most affected by the decline in the price of palay, or unmilled rice, due to the Rice Tariffication Law, with payouts to start Dec. 23.

The DA, the Land Bank of the Philippines (LANDBANK), and the Development Bank of the Philippines (DBP) signed a memorandum of agreement on Monday, which sets aside P3 billion for the Rice Farmer Financial Assistance (RFFA) program, an unconditional cash transfer targeted at 600,000 rice farmers. The eligible farmers till between one and a half to two hectares.

The Rice Tariffication Law liberalized the entry of cheap imported rice with a 35% tariff imposed on Southeast Asian grain.

The option to sell imported rice has led private traders to offer softer prices to domestic farmers, with palay currently at P15.52 per kilo, down 22.6% year-on-year. The prices paid by traders are well below the support price offered by the National Food Authority (NFA), which is P19.

As a result, President Rodrigo R. Duterte ordered the immediate implementation of the cash assistance program.

Funding for the program initially came from excess government revenue. Next year, another P3 billion will be allocated to the program, to be divided equally between LANDBANK and DBP to disburse to 300,000 rice farmers each. Funding for next year will be sourced from tariff collections in excess of the P10 billion required to finance the Rice Competitiveness Enhancement Fund (RCEF). — Vincent Mariel P. Galang

“The roll out will start Dec. 23, and we will do it morning of the 23rd in Pangasinan, and afternoon roll out, as well, in Nueva Ecija. We will have to consider a roll out there because these are the most affected (by) falling rice prices,” Agriculture Secretary William D. Dar said during the signing ceremony in Manila Monday.

The government has selected 33 provinces where rice farmers were deemed most severely affected by the price drop.

“We did a comparative price analysis and considered the average marketable surplus, and gains and losses in those provinces, so hindi lahat ng mga probinsya na nakaranas (not all provinces were affected). There are big impacts and small impacts, so talagang doon lang sa mga probinsya na mas mataas yung pagbagsak ng palay prices (we will really focus on provinces where the fall in palay prices was really high),” he said.

He said distributions will be completed in a month’s time, and will come in the form of cash cards from LANDBANK or over-the-counter withdrawals from LANDBANK and DBP conduits and accredited payout centers. — Vincent Mariel P. Galang

Plenary to consider bill protecting consumers from billing charges

THE Senate Committee on Trade, Commerce and Entrepreneurship will endorse for plenary approval legislation that will institutionalize consumer protections against fees charged on the issuance of paper bills.

The panel, led by Senator Aquilino L. Pimentel III, tackled Senate Bill No. 779, which introduces a new provision in Republic Act No. 7394, or the Consumer Act of the Philippines.

Section 1 of the bill specifies that billing statements may be printed or sent in an electronic form “at the option of, and without any additional cost, to consumers.”

At present, government agencies have issued a joint administrative order addressing consumer complaints on telecommunication services, and a memorandum circular, banning extra charges on e-billing.

“We came up with joint administrative order 18-01 s. 2018 and then NPC (National Privacy Commission) subsequently issued a separate memorandum circular, some time in March this year, prohibiting telcos from charging a fee for paper bills,” Trade Undersecretary for Consumer Protection Ruth B. Castelo said during the hearing.

The Energy Regulatory Commission, for its part, issued Resolution No. 8, s. 2017 that allowed consumers to receive electronic bills or paper bills free of charge.

“This actually paved way for giving electricity consumers the option to receive e-bills and other electronic communication in lieu of paper bills, but this one is supposedly for free,” ERC Office of the General Counsel lawyer Arjay Louie B. Cuanan told the panel.

The Bangko Sentral ng Pilipinas (BSP) said its regulations do not explicitly state that service providers cannot impose charges on certain billing options.

In the same hearing, Mr. Pimentel raised concerns over pre-approved credit cards that subjects consumers to penalties.

“‘Yung tao ba who did not know that he or she has a credit card and did not pay, and has incurred penalties, ‘yung delinquency ba n’ya is now reported to this credit information bureau? (For any person who did not know he or she has a credit cars and has incurred penalties, are the delinquencies now reported to credit information bureaus?)” Mr. Pimentel asked BSP Director Pia Bernadette R. Tayag.

The BSP said it has banned such schemes and imposed penalties on such banks, but noted it is still receiving complaints.

“The idea is to be reported but then it will be corrected,” she said. “Our penalty framework is dependent on what the institution did and the penalty is beyond the fine related to what was the shortcoming of the supervised institution. It could go beyond just penalties.”

The Philippine Retailers Association proposed to establish a single code that will cover all consumer concerns, instead of amending the decades-old Consumer Act of the Philippines, a proposal supported by the Department of Trade and Industry.

“I think it’s really high time to overhaul the Consumer Act, to put in all these proposed amendments into one code, since the Consumer Act was enacted 20 years ago,” PRA Chairman Paul A. Santos said.

“Maybe changes occurred in the regulatory environment and a lot of them have to do with even more agencies and government dealings with consumer regulatory matters. In the old Law, we only five departments that dealt with consumer matters, but today you have agencies such as the NPC and the BSP.” — Charmaine A. Tadalan

TIEZA approves P4 billion in tourism infrastructure projects

THE Tourism Infrastructure and Enterprise Zone Authority (TIEZA) approved almost P4 billion in tourism infrastructure projects in November, bringing its 2019 total to P5 billion.

TIEZA in a statement said that it approved during a November board meeting projects for creating sustainable tourism, rehabilitating cultural and historical sites, and improving visitor experiences in Benguet, Palawan, Iloilo, Pampanga, and Pangasinan.

“Our tourism infrastructure is a work in progress. We need to develop and build better facilities to ensure that our local and foreign tourists will continue to enjoy our beautiful destinations without compromising environmental sustainability,” TIEZA Chief Operating Officer Pocholo Joselito D. Paragas said.

He said that the new investments are intended to create jobs in local communities and ensure sustainability at each site.

“The approved projects were recommended by the TIEZA Infrastructure Committee to the Board after careful evaluation and various consultations with different LGUs and regional tourism officials, as well as with concerned stakeholders in the respective areas.”

Big-ticket projects include P400 million for the rehabilitation of the Burnham Lake and Children’s Park in Baguio, to improve its “recreational appeal and tourist value.”

The infrastructure arm of the Department of Tourism allocated P854 million for Palawan, to construct a wastewater treatment facility, modular floating docks, and solar streetlights in Coron; build modular floating docks in Puerto Princesa; and create housing for hyberbaric chamber facilities for the use of the diving communities in El Nido and Coron.

“While we want to boost tourism investment and revenue in our island destinations, we also want to protect our natural resources. We are investing P500 million for the Coron Wastewater Treatment Facility to prevent water pollution that is detrimental to coastal and marine resources,” Mr. Paragas said.

TIEZA also approved P135 million to rehabilitate three plazas in Iloilo — Arevalo, Molo, and La Paz plazas. It is investing P83 million for the reconstruction of San Agustin Church and San Guillermo Church in Pampanga.

TIEZA earlier this year approved P1.2 billion in tourism infrastructure projects, including the rehabilitation of the Chocolate Hills complex. — Jenina P. Ibañez

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