PSALM to reduce floor price for Malaya thermal plant after failed tender

November 25, 2019 | 12:31 am

ANOTHER ATTEMPT of state-led Power Sector Assets and Liabilities Management Corp. (PSALM) to sell the 650-megawatt (MW) Malaya thermal power plant failed anew as most of the pre-qualified bidders backed off and a lone bidder submitted an offer below the floor price, the agency said.

“PSALM will report to its Board of Directors the outcome of today’s bidding so that it can take the necessary steps to lower the MBP (minimum bid price),” it said in a statement on Friday after going through the auction process. “The next round of bidding for the Malaya plant will commence at the soonest possible time.”

PSALM, the company formed by law to privatize state-owned energy assets, said the four entities that were prequalified to bid for the power plant and the underlying land in Pililla, Rizal all backed out even after passing the initial stage of the bidding.

“However, right before the deadline for submission of the financial bid at 12 noon today (Friday), Fort Pilar Energy, Inc., Panasia Energy, Inc., and AC Energy Philippines, Inc. sent letters to PSALM saying essentially that they cannot meet the minimum bid price (MBP) of P4,481,796,017,” PSALM said.

The agency said one other bidder, D.M. Wenceslao and Associates, Inc., submitted a sealed bid.

“PSALM declared a failure of the second round of public bidding because there was only one bid,” it said.

It added that pursuant to the bidding rules, the agency then proceeded to go through the process of a negotiated sale with D.M. Wenceslao.

“Nonetheless, when PSALM opened the lone bid from D.M. Wenceslao, it was below the MBP. Thus, PSALM was constrained to also declare a failure of the negotiated sale process.”

The plant remains operational and being dispatched as a “must-run” unit. A must-run plant is compelled to run and provide the needed power supply as deemed necessary to ensure reliability of power supply in the Luzon grid, especially in times of supply shortfall, system security and voltage support.

Based on the directive from the Department of Energy, once the plant is privatized on an “as is where is basis,” it would no longer be required to be a must-run unit. — Victor V. Saulon

Which subgroups have the most productive and well-compensated employees?

November 25, 2019 | 12:30 am

Manila, Seoul to highlight FTA talks’ progress amid banana, car parts impasse

November 25, 2019 | 12:30 am

THE Philippine free trade agreement (FTA) with South Korea will not be signed at this week’s ASEAN-Korea commemorative summit as initially targeted after negotiations reached a stalemate.

Instead, trade ministers of both countries will release a joint statement at the summit held in Busan City on Nov. 25 to 26.

Trade Secretary Ramon M. Lopez told reporters after a press conference on Friday that the statement will include the progress of negotiations.

“There will be an ‘early achievement package’… so far on what has been agreed and we basically commit to finalize and work towards the improvement of this package for next year’s completion,” Mr. Lopez explained.

The statement will include information on products that could be included in the FTA and the timetable for tariff reduction.

Mr. Lopez said that the statement will report certain “achievements” in negotiations, but not final agreements.

He said that the Trade department is still negotiating the shortening the number of years before liberalization.

“At least there are early negotiations on where we are,” he said in Filipino.

The negotiations, which started in June, reached a stalemate after the countries failed to agree on details of the reduction of tariffs on Philippine banana exports to Korea, and Korean auto parts exports to the Philippines.

DON’T ‘WORRY TOO MUCH’
University of Asia and the Pacific economist George N. Manzano, a former tariff commissioner, said in a mobile phone message that the FTA not pushing through this year will not be critical to overall bilateral trade.

“I wouldn’t worry too much for the timeframe… We have ASEAN-Korea [FTA] anyway and what’s at stake is incremental trade. Just means we won’t be shipping more bananas to Korea nor is Korea selling more vehicles,” he said.

According to preliminary data from the Philippine Statistics Authority, Philippine exports to South Korea reached $2.36 million year-to-date in September, growing 26.6% from the same nine months in 2018. The country is the Philippines’ sixth-largest export destination in that period.

Imports from South Korea dropped 24.7% to $6.31 million year-to-date in September. It is the Philippines third-largest source of imports after China and Japan.

South Korea is the second-biggest source of committed foreign direct investment reported by the Board of Investments in September with P34.1 billion.

The two countries are also expected to sign cooperation deals on tourism, education, fisheries, and social security during President Rodrigo R. Duterte’s visit for the summit. — Jenina P. Ibañez

Duterte fires VP as drug czar

November 25, 2019 | 12:13 am

President Rodrigo R. Duterte yesterday fired Vice President Maria Leonor G. Robredo as her drug czar after she allegedly failed to improve the government’s campaign against illegal drugs.

“She wasted such opportunity and used the same as a platform to attack the methods undertaken by this Administration,” presidential spokesman Salvador S. Panelo said in a statement.

“Such tack was even motivated by hubris to prove their past arguments against the anti-illegal drug operations were correct,” he said. “It at once crumbled as her request for police data validated the falsity of their arguments that the extra-judicial killings are state-sponsored.”

Ms. Robredo this month said she had agreed to head the Duterte administration’s anti-illegal drug campaign, if only to stop the killings. She accepted the post against the advice of many of her party mates, who said the appointment might be a trap.
The opposition leader has vowed to enforce the state’s anti-illegal drug campaign within the bounds of the law. She said she would treat the drug problem not only as a crime, but also as a health issue.

Philippine police have said they have killed about 6,000 people in illegal drug raids, many of them resisting arrest. Some local nongovernmental organizations and the national Commission on Human Rights have placed the death toll at more than 27,000.

“The appointment and the eventual firing of VP Leni as anti-drug co-chair prove what we have been saying all along: Both the war on drugs and the appointment of the vice president… are bluff and bluster,” the Liberal Party said in an emailed statement.
“Their scheme to make VP Leni look weak backfired. Just two weeks after her appointment, she has shown courage and competence in facing the problem at hand and redirected the anti-drug war track from a criminal justice issue to a public health problem,” it said.

Ms. Robredo had criticized the government’s deadly war on drugs, saying it needed to be reassessed given the rising number of drug dependents.
She also sought confidential information about the drug campaign, but the government refused to give her access.

Mr. Panelo said firing Ms. Robredo was a “response” to the suggestion of Senator Francis N. Pangilinan on Friday to fire her instead of insulting her. The lawmaker earlier said the president’s statement that he didn’t trust Ms. Robredo was an insult.

“The president has been more than patient enough, giving the vice president adequate opportunity to discuss possible courses of action with him,” Mr. Panelo said. Since assuming the post as Mr. Duterte’s drug czar more than two weeks ago, Ms. Robredo had “not presented any new program that she envisioned to implement,” he said.

“In a campaign where people’s lives are at risk, a day is an eternity. The government cannot twiddle its thumb and sit idly hoping for a flash of brilliance from the vice president,” he added.

After accepting the post, Ms. Robredo met with US Embassy and United Nations officials to discuss the drug war, which majority of Filipinos support even if it has drawn international criticism.

Labor sector criticizes non-inclusive growth

November 25, 2019 | 12:11 am

RISING joblessness in the Philippines shows economic growth has not trickled down to the masses, labor groups said yesterday.

“For all the growth the country has had, it hasn’t trickled down to ordinary folks,” Julius C. Cainglet, vice president of the Federation of Free Workers, said in a mobile-phone message.

Joblessness inched up in the third quarter to 21.5% or about 10 million adults, from 20.7% in June or about 9.8 million, according to a Social Weather Stations (SWS) poll released at the weekend.

“Big business owners managed to keep their wealth to themselves and their families,” Mr. Cainglet said. “Couple this with the recent World Bank study that said real wages in the Philippines nationwide, across regions and across skills have not increased over the past decade and a half, then you will see the worsening inequality and the proliferation of poverty for both the employed and the unemployed,” he added.

Philippine gross domestic product (GDP) growth averaged 5.8% in the past three quarters, according to the Philippine Statistics Authority. GDP growth stood at 6.2% in the third quarter.

The Associated Labor Unions-Trade Union Congress of the Philippines said poor policies that don’t equate to employment opportunities have contributed to the rise in the joblessness rate.

“Unaddressed problems on the high cost of electricity, traffic congestion, red tape and poor and aging transport and logistics are the traditional main drivers of the recent survey showing an increase in the unemployment rate,” spokesperson Alan A. Tanjusay said in a statement yesterday.

A plan to rationalize corporate income taxes and incentives could drive away investors, he added.

The Department of Finance (DoF) expects to generate 1.5 million jobs once the measure takes effect. But the Joint Foreign Chambers (JFC) has said 700,000 workers will lose jobs under the proposed law.

“So as early as now, they begin to retrench employees and anticipate a full-blown shutdown and transfer as soon as the Corporate Income Tax and Incentives Rationalization Act becomes a law,” Mr. Tanjusay said.

Of the 10 million jobless Filipinos in September, 4.4 million voluntarily had left their jobs while 3.9 million were retrenched, according to SWS. Only 1.6 million were first time job seekers.

Despite the higher jobless rate, SWS cited the optimism of Filipinos on job availability — 53% of Filipinos said they were positive about job opportunities in the next 12 months. Only 13% were pessimistic.

The net optimism score was +40 for September, which was still excellent, but 3 points below the record +43 in June 2019, SWS said. — Gillian M. Cortez

Nickel miners see stronger 2020 due to Indonesian export ban

November 25, 2019 | 12:10 am

THE Philippine Nickel Industry Association (PNIA) is projecting stronger production in 2020 on the back of a nickel export ban by Indonesia and higher prices.

“We are looking at stronger production year next year with the Indonesian ore ban. We are looking forward to seeing what the market holds. Hopefully the prices… they dipped a little bit right but we are looking at a stronger year next year,” PNIA Chairman Clarence J. Pimentel, Jr. told reporters.

“We are about 25% above (year-earlier) production this year… I think most of us are at that level at this point,” he said. Higher prices are also expected towards the end of the year.

Mines and Geosciences Bureau (MGB) said nickel production grew 3% to 11.306 million dry metric tons (DMT) in the first half of 2019. The United States Geological Survey noted in a report published in February that in 2018, Indonesia was the top nickel producer with 560,000 tons, followed by the Philippines, with 340,000 tons.

Indonesia has banned nickel ore exports starting 2020 in a bid to develop a processing industry, thereby capturing more value-added from the nickel trade.

Regarding the investment outlook, Mr. Pimentel said he is hoping for an improved climate with greater clarity on the government’s stance on revenue-sharing from mineral extraction, the ban on open pit mining, and the moratorium on the issuance of new mining permits.

“We are getting there, and the government is trying its best to invite more investment and it’s easing up a little bit. I am hoping that next year, we’ll see a step forward,” he said.

PNIA is also discussing with the Department of Trade and Industry (DTI) plans to join the International Nickel Study Group (INSG).

“We are crossing our fingers with the DTI…. We are looking forward to it, but it’s something that the government has to take the lead on. Not the private sector,” he said.

Meanwhile, PNIA said it has entered into a partnership with the China Industrial Association of Power Sources (CIAPS) through its Power Battery Application committee in a bid to tap demand from the growing electric vehicle industry.

“We believe that there is a great opportunity for the nickel industry in the Philippines. Aside from the country’s wealth of natural nickel reserves, champions of nickel mining are encouraged by developments that are vital in driving business and investment growth around the world,” Mr. Pimentel said in a statement.

A memorandum of understanding (MoU) was signed on Nov. 15 with the Chinese producers which contemplates possible joint ventures and investment agreements. — Vincent Mariel P. Galang

Valenzuela orders reassessment of real properties

November 25, 2019 | 12:10 am

VALENZUELA City has ordered the re-evaluation of properties that the local government seeks to take for public use.

The city passed an ordinance to reassess properties subject to expropriation based on final court decisions to determine taxes.

The ordinance also covers cases already filed or to be filed by the city government of Valenzuela where just compensation is not yet paid.

Final court decisions in expropriation cases will also be taken into account when determining fair market value, and just compensation, according to the ordinance.

The fair market value of properties will depend on size, shape, location, elevation, price of adjacent lots, developments and flooding conditions, and mostly on zonal valuation made by the Bureau of Internal Revenue (BIR). The latter is usually higher than the fair market value in the tax declaration, it said.

The City Assessor’s Office is mandated to reassess the market value of real properties based on the “judicially determined fair market valuation of the court” for payment of just compensation and zonal valuation made by the BIR.

The City Treasurer’s Office, meanwhile, must recompute real property tax liabilities of the owners with an interest of 2% but not exceeding 36 months based on the reassessed value.

The Treasurer’s Office must recompute the real property tax and interest based on the new declaration.

Failure or refusal to settle dues would allow the Treasurer’s Office to deduct the real property tax deficiency and interest from the compensation.

Under the local law, the re-assessment of market value and re-computation of taxes will be reckoned from Jan. 1, 1993 or the date of issuance of certificate of title of the last owner, whichever is later, up to the actual date of taking. — Vann Marlo M. Villegas

DTI sees 2020 partial launch for online business registration

November 25, 2019 | 12:09 am

TRADE Secretary Ramon M. Lopez said an online portal for business registration for some government documents required for business registration could be up and running early next year.

Speaking with BusinessWorld, Mr. Lopez said that the Department of Trade and Industry (DTI) is collaborating with the Department of Information and Communications Technology (DICT). The DICT had committed to complete an online Business Portal for permits and documents needed to register businesses.

“We’re working with DICT so hopefully by next year… They said by February they will launch the online (portal) up to a certain point… covering from SEC (Securities and Exchange Commission) registration, DTI to the Social Security System (SSS) up to the mayors’ business permit,” he said.

Mr. Lopez said the DTI is currently in talks with the Bureau of Internal Revenue (BIR) to include its reqirements for businesses in the online portal. He added, “Ang kulang na lang ay yung BIR (Whta’s missing so far is the BIR). We are also talking with the BIR para maisama na sila din sila sa (So we can include them) online so we can say that this will be an end-to-end registration.”

The target for the Business Portal is to streamline the business registration process to one hour, the DTI said in August.

That month, the DTI said it will be piloting its National Business One-Stop Shop (NBOSS) before the rollout of the online end-to-end registration system.

NBOSS includes the services of the SEC, SSS, BIR, Philippine Health Insurance Corp. (PhilHealth), Home Development Mutual Fund (Pag-IBIG), and the local government units (LGUs).

NBOSS cuts the busines registration process to five steps and promises a transaction period of three to six days. — Gillian M. Cortez

MG to deploy 80 vehicles as SEAG mobility partner

November 25, 2019 | 12:09 am

Words and photos by Kap Maceda Aguila

AS THE WHOLE country braces for the official start of the 30^th edition of the Southeast Asian Games (SEAG) and the 10^th ASEAN Para Games, Morris Garages (or MG) inked an agreement with the Philippine Southeast Asian Games Organizing Committee (PHISGOC) and Mediapro Asia to become the official mobility partner of the biennial regional sports spectacle.

This obviously is a major achievement for the car brand with a rich British heritage dating back to 1924, which had just last year reopened shop in the country under the aegis of established The Covenant Car Company, Inc. (TCCCI) which also handles Chevrolet.

Under the agreement, MG Philippines will field 80 of its vehicles in the lineup to “ferry athletes and teams to and from games.” Though there’s no official breakdown of model types, all vehicles to be used will bear the 30^th SEAG logo.

The Games, slated to run officially from Nov. 30 to Dec. 11 (as some initial matches will ensue beforehand for seeding purposes), will involve 11 countries participating in 56 sporting events. An estimated 11,000 athletes and team officials along with 2,050 tech officials, 12,000 volunteers, and 1,500 members of the media will converge in the various venues.

“Our goal is to provide meaningful assistance to all the Filipino and international participants by equipping them with a safe, comfortable, and stylish ride for the duration of the games,” said MG Philippines President and CEO Atty. Albert Arcilla in a speech.

He continued that MG “is a car brand as much as it is a lifestyle brand,” that endeavors to communicate its values “through several channels of interest, like music, travel, youth, culture, and art.”

“One channel we have tapped into, and one that many Filipinos have a close affinity with, is sports. Sports is an inherent part of the MG brand, and that is why being part of the 30^th SEAG that features so many milestones and firsts is a distinct honor for us at MG Philippines… MG identifies and celebrates the pursuit of excellence.”

Meanwhile, PHISGOC Senior Managing Director Jojit Alcazar thanked MG for “the opportunity to partner with a brand with such a rich motoring heritage (and for) providing everyone in the SEA Games with the ability and the means to move around all our many game venues all over the country.”

For his part, Lars Heidenreich, managing director of Mediapro Asia, said, “We are thrilled to have another partner on board through us. With MG, we hope this sponsorship turns the Philippines into a stronghold for the brand.”

In an exclusive interview with Velocity, MG Philippines Executive Vice-President and Director for Marketing and Communication Services Lyn Buena revealed that work for the agreement and sponsorship started in the second quarter of the year, and it is one that truly makes sense for MG.

“Sports and music (through MG Live) are two touchpoints that speak to Filipinos,” she said. “Through the 30^th SEAG, there will be a lot of stories to be told, and we’d like to think that MG Philippines and TCCCI share the same values as athletes — commitment, discipline, and passion. The Games are a great avenue for us to convey this message. This is our element, and it doesn’t feel contrived.”

MG Philippines, also a Platinum Sponsor of the Games, additionally saw to the training of the assigned drivers and their orientation on the vehicles. Ms. Buena added that the 80 brand-new cars to be used will go on sale at “special prices” after their SEAG duty.

Cambodia asked to resolve arrest of Filipino workers

November 25, 2019 | 12:09 am

THE Philippine government asked Cambodia to resolve a “misunderstanding” involving the arrest of Filipino workers there whose job agency had lost its license.

“Tell Cambodia our continuing diplomatic relations will depend entirely on the swift outcome of this non-problem. And I mean it,” Foreign Affairs Secretary Teodoro L. Locsin, Jr. said in a social media post on Sunday.

Mr. Locsin said Philippine officials are in Siem Reap “gathering the loose ends.” The detained Filipinos had been allowed to be sent home, he said at the weekend.

“The Filipinos detained in Siem Reap on their way home” he said. “It’s what we do best: bring ‘em back.”

Meanwhile, the top Philippine diplomat raised concern about the trafficking of two Filipinos in Morocco who had been repatriated through the Philippine Embassy in Libya.

“This happens because government agencies in cahoots with illegal recruiters prevent reform measures offered by host governments in Arab lands who don’t want it anymore than we do,” Mr. Locsin said in a social media post on Saturday.

“The unregulated environment offers P80,000 to P 250,000 per trafficked person,” he said. — Charmaine A. Tadalan

Debt service bill rises nearly 55% in September

November 25, 2019 | 12:08 am

THE government posted a higher debt service bill in September, the bulk of which went to settle interest payments, according to the Bureau of the Treasury (BTr).

The national government’s total debt payments rose 54.9% year-on-year to P48.92 billion in September. The month’s total was also higher than the P31.58 billion paid in August.

Some 88% of the total, or P43.09 billion. went to interest payments, up 31.89% year-on-year, with P34.33 billion going to domestic creditors and P8.75 billion to foreign lenders.

Amortization in September accounted for 11.89% of the total debt service bill, or P5.82 billion, which was less than the year-earlier total of P5.91 billion.

All principal payments went to settle foreign debt.

In the nine months to September, debt service payments amounted to P558.21 billion, accounting for 63.12% of the P884.29 billion programmed for the year, according to the Budget of Expenditures and Sources of Financing (BESF) report.

During the period, the government paid P293.74 billion to settle interest obligations while the remaining P264.47 billion went to principal payments.

The government borrows from both domestic and foreign lenders to pay for public projects and programs not covered by its ability to generate revenue. — Beatrice M. Laforga

‘Time is Life’

November 25, 2019 | 12:08 am

TIME MOVES ever so quickly, and yet the entities that remind us of its passing move so slowly. I’m talking about watch companies. Built up on one generation following another, time freezes for many of them, and they remain the same, unlike the world that surrounds them.

That wasn’t quite the case for Hublot, founded in 1980 by Carlo Crocco, himself a member of the watchmaking Binda Group family. The brand was helmed in the 2000s by Jean-Claude Biver, before ultimately being absorbed into the LVMH family in 2008. As it is, thanks to Mr. Biver’s skill in handling watch brands (he had his own watch brand, Blancpain, until 2003, and was part of the Omega brand as well), he appointed President of the Watches Division, LVMH Group in January 2014, and oversees TAG Heuer, Hublot and Zenith. BusinessWorld met Mr. Biver when he visited the Philippines earlier this month to open the Philippine leg of the Hublot: The Art of Fusion exhibition, a roving exhibit which has been seen at some of the world’s style capitals, such as London and New York. The Philippine leg ended on Nov. 15.

Filled with the energy of a young man, Mr. Biver talked about Hublot’s role in the industry. “The whole concept is based on disruption. In the watch business, we had very little disruption. The watch business used to be a very traditional business. Traditional brands, traditional shapes.”

Hublot’s style is masculine and maximalist, just like the people who wear it: Jay Z has been sporting one, along with many other luminaries in the entertainment industry.

Meanwhile, Mr. Biver explained that celebrity partnerships, such as a watch designed in collaboration with athlete Usain Bolt, are meant to raise funds and awareness for charities that the celebrities are already involved with. “With Depeche Mode, we raised I don’t know how many millions for kids with cancer in England,” he said.

“Hublot is the first luxury brand to take inspiration from streetwear, from rappers, from millennials. In that sense, Hublot has become a very avant-garde and fashionable brand. That explains the success,” he noted.

One might think that attaining, collecting, and hoarding luxury is in the realm of the old, but Mr. Biver thinks otherwise. “The young are very sensitive to luxury. The young are extremely brand-conscious,” he said, pointing out the sneaker craze that had seen the Yeezy flying off shelves despite costing $300. “The young are now at the forefront of fashion. The young dictate fashion.

“Young people give inspiration to old ones… that is probably also our success. If we seduce the young, then the old will buy. Because older people don’t want to buy old products. They’re already old themselves. If you are old, and you buy old products, then you are getting really never-young. If you are old, and you connect to the young, that maintains your youth.”

That perhaps would explain Hublot’s foray into sports, such as serving as official watch and timekeeper of Ferrari and FIFA. “Wherever our customer goes, we will follow. Most of the brands, they make one decision,” he said, pointing to luxury brands’ preference for yachting or golf events. “Which means, the customer meets them only when he goes to golf. We see our customer, wherever he moves.”

One might think that watches merely serve as a way to track our movements within time, but Mr. Biver makes a case for making us think of watches reminding us of life beyond time — or, that is, carefully alloted time. “Our timepieces are not made [for you to] look at what time it is. Our timepieces are a way, are a part of a lifestyle. Our timepieces are part of an experience, are part of a story, a dream, a desire; of sexy appeal. That is our product,” he said. “We are not a mere timekeeper; we are producing art.”

“We produce irrationality. And the irrationality is the most beautiful part of life. The rationality of life is a little bit boring. It’s depressing. What is rational is horrible. Rational means, ‘I’m going to pay taxes, I’m going to get old, I’m going to die.’ We want irrationality. We want dreams.”

Owning a watch that can cost millions of dollars is indeed a luxury, but the money that went into the watch cannot buy time — the rarest commodity of all. “The greatest luxury is eternity,” said Mr. Biver. “I know only one guy who had that. It’s God. All the other people have zero eternity,” he continued with some laughter. “They have limited time. Time is life, but time is also above life.” — Joseph L. Garcia