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US confirms China soybean sale, but size of orders smaller than expected

CHICAGO — China’s meager first purchase of U.S. soybeans since its trade war with the United States began in July disappointed farmers, grain traders and a U.S. government official hoping for larger sales to lift slumping prices and absorb a huge surplus across the U.S. farm belt, they said on Thursday.
The U.S. Department of Agriculture (USDA) announced private sales of 1.13 million tonnes of U.S. soybeans to China, confirming sales Reuters reported a day earlier.
But additional buying by the world’s top soybean importer has yet to materialize, traders said, even after U.S. President Donald Trump told Reuters in an interview on Tuesday that China is buying a “tremendous amount” of U.S. soybeans.
“Having a million, million-and-a-half tonnes is great, it’s wonderful, it’s a great step,” USDA Deputy Secretary Steve Censky said at an Iowa Soybean Association annual meeting on Thursday. “But there needs to be a lot more as well, especially if you consider it in a normal, typical year, we’ll be selling 30 to 35 million metric tonnes to China.”
Soybean prices fell as grain traders had hoped for more deals, eyeing a massive U.S. soybean surplus in storage and what is expected to be a record-large harvest from the world’s biggest soybean exporter Brazil just weeks away.
The sales came after Trump and China’s President Xi Jinping agreed to a 90-day detente in their tit-for-tat tariff war to negotiate a trade deal after meeting at the Group of 20 summit in Buenos Aires.
The purchases, which traders said were made by state-owned companies in China, were viewed as the most concrete evidence yet that Beijing is making good on pledges the U.S. government said Xi made when the two leaders met on Dec. 1 and agreed to a 90-day detente to negotiate a trade deal.
While it was the ninth largest single-day U.S. soybean sale on record, it amounted to just 3.5 percent of China’s U.S. soy purchases last year and 2 percent of U.S. shipments to all foreign buyers.
“If further activity and amounts aren’t confirmed, the trade could soon be ready to settle in for a long, cold, fundamentally bearish winter,” said Matt Zeller, market intelligence analyst with INTL FCStone.
TRADE AID DELAYED
The actively traded Chicago Board of Trade March soybean contract SH9 fell more than 1 percent on Thursday to the lowest in a week, in the steepest drop in 2-1/2 weeks.
The 25 percent tariff Beijing imposed on U.S. soy shipments in July in retaliation for American duties on Chinese goods remains in place.
China last year bought about 60 percent of U.S. soybean exports in deals valued at more than $12 billion. The purchases confirmed on Thursday were less than $500 million.
“There was talk we’d see like 5 million tonnes over the next few days, so we will need some follow-through buying from China, especially outside of Sino,” one U.S. trader said, referring to China’s state-run buyer Sinograin.
U.S. exports to China dropped to 8.2 million tonnes in the first 10 months of the year, with the vast majority of that shipped before the tariffs took effect in July. That was down from 21.4 million in the same 10-month period last year, according to government figures.
With exports to China drying up, U.S. soybean prices have traded around their lowest levels in a decade in recent months.
The White House this week delayed additional payments from a promised $12 billion aid package for farmers stung by the trade war because it expected Beijing to resume buying U.S. soybeans.
The U.S. Soybean Association said in a Thursday statement the sale announcement would not fix the “prolonged period of low prices soybean farmers have faced since the trade war began.”
Davie Stephens, the association’s president and a Kentucky grower, said “it is critically important that we see additional purchases and actual deliveries, and for USDA to make a payment on the second half of 2018 soybean production.” — Reuters

An unsatisfied customer starts his own spa

MASSAGE ENTHUSIAST Justin Xiao has tried various massage techniques during his stay in the Philippines. However, the various services left him frustrated.
To satisfy his unmet need, Mr. Xiao opened Breeze Oriental Spa and Massage in BGC, in Taguig city — 100 meters from Bonifacio High Street — which offers traditional Chinese oriental massage techniques.
“He is always in search for a good massage shop, but he gets frustrated that the services [he tried] did not give him the comfort for long,” Maideline A. Vego, operations manager of Breeze Oriental Spa and Massage told BusinessWorld during the spa’s launch on Dec. 4. “So, he came up with this concept [of a massage spa]. He wanted to give service to people which is not only short-term comfort.”
Chinese oriental massage treatments apply acupressure and focus on targeting one’s pressure points to relieve stress and pain.
The spa’s team of 20 therapists are led by four Chinese masters of oriental therapy. Signature treatments such as the Detoxify Oil Massage are designed to improve the lymphatic system. It is also recommended for pregnant women as it includes breast massage for lactation.
Other services which may be booked with master therapists include cupping therapy where warm cups are used to suction the back as a treatment for “blood statis”; back scraping using buffalo horn to remove dead skin; and a traditional pedicure which is said to improve blood circulation and includes a method where nails are trimmed with a traditional scalpel.
The treatments are done in air-conditioned private rooms equipped with reclining chairs.
This writer tried out the oriental foot massage which included soaking the feet in Chinese medicine. The treatment began with a different kind of shoulder massage since it was done by the therapist applying pressure on the shoulders with her forearms and which was quite painful at first.
The rest of treatment was relaxing and may eventually lead one to dose off midway. The treatment ended with the therapist serving either hot water or tea upon the guest’s preference.
“We encourage people to have the massage therapy in their daily lives to manage stress and fatigue and prevent the need for prescriptive medicine,” Ms. Vego said, adding that it is encouraged to have treatments at least once a month.
According to Ms. Vego, other branches are targeted to open in Makati and Parañaque’s Entertainment City.
Breeze Oriental Spa is located at Ore Central, 9th Ave. corner 31st St., BGC, Taguig. For reservations, call 0917-867-6699. Prices of treatments start at P450. The spa is open Monday to Friday, noon to 1 a.m., and on Saturdays and Sundays from 11 a.m. to 2 a.m. — Michelle Anne P. Soliman

How PSEi member stocks performed — December 16, 2018

Here’s a quick glance at how PSEi stocks fared on Friday, December 14, 2018.
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Philippine Stock Exchange’s most active stocks by value turnover — December 14, 2018
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Financial digitization is the hope of the future

By Sergey Sedov
THERE are several distinct features in the financial landscape of the Philippines. Their correlation determines the medium-term forecast of the development of the financial market considering the involvement of fintech and alternative lending. According to Sergey Sedov, founder of the international financial holding AS Robocash Group which is known as Robocash Finance Corp. in the Philippines, foreign experience and capital can help to fill the gaps to facilitate a further dynamic growth.
FOUR SIDES OF THE ISLAND LANDSCAPE
To start with, the Philippines has one of the largest populations in the world. At the same time, the country of 7,000 islands can hardly be called a concrete jungle. Only Manila, with its suburbs, and Davao are the true megalopolises and there are no more than 30 cities with a population of over 300,000. The vast majority of 106 million Filipinos live in numerous relatively small settlements across the country and about 53% of the population lives in rural areas. The latter figure has been stable for about 30 years and it is higher than the total for Asia (50%) and Southeastern Asia (51%). The United Nations predicted that even by 2050, the share of rural residents in the Philippines would account for 38%, which will be above the projected average for Asia. In other words, the relative dispersion of the population will remain in the Philippines in the long term.
Secondly, the Philippines is a country with a huge but still not fully realized potential when it comes to a decent standard of living. The country has an annually growing income per capita, however the dynamic is quite slow — 1.4% in 2009-2015 (in contrast, Malaysia grew by 5.9% in 2011-2015 annually and Thailand had 3% per year in 2010-2015). Despite the longstanding efforts of several presidents, more than 21% of citizens lived below the poverty line as of 2015. Last year, the country’s gross domestic product (GDP) per capita ranked 118th. Moreover, this year’s inflation and growing trade deficit further add difficulties to the national economy.
The mentioned points, however, do not hinder the country’s gradual and steady progress. For example, the Philippines’ poverty rate was higher in the recent past (26.3% in 2009). Next, the nominal GDP has been growing by an impressive 7% per year, and it is projected to expand at this rate until 2050. In 2017, the country was the 34th largest economy by nominal GDP in the world and third among ASEAN countries in — there is obviously room for improvement. To realize the potential improvement in the standard of living for each Filipino, there is required a qualitative catalyst.
This is where my third point comes in: bank lending has traditionally been such a catalyst throughout the world by allowing borrowers to improve their quality of living here and now, as well as secure investments for a decent future. The latter is highly relevant for the Philippines due to a highly developed sector of micro, small and medium enterprises (MSMEs). In 2016, 99.6% of all registered local companies belonged to this category, which was higher than the overall score of 96% in the Asia Pacific (APAC).
The increased need for credit funds is relevant for different levels. According to a survey conducted by the Bangko Sentral ng Pilipinas, in 2017, funds were borrowed to start or develop a business (53% of respondents), to cover the gap in a family budget in a weekly or monthly perspective (45%) or pay for unexpected needs (34%). As the World Bank stated in Findex, 58.6% of Filipinos borrowed money in 2017 while the same score for APAC comprised 46.8%.
According to the central bank, 2.1% of adult Filipinos had a valid loan in 2015, and only 0.6% in 2017. The same report also stated the main factors that hinder clients from applying for a loan: requirements of banks for documents (53%), lack of collateral (44%) or absence of necessary identity card (34%), and insufficient level of salary (28%).
Geographic fragmentation is another serious hurdle as it prevents banks from establishing a widespread network of branches: a third of towns and communities, and two-thirds of the population remains underserved by banks.
At the same time, the country has high Internet penetration estimated this year at 63%, which is about 10% higher than the global rate. Mobile connectivity, meanwhile, is 10% lower than the global rate but is growing steadily. Moreover, the Philippines ranks 13th in the number of mobile cellular telephone subscribers.
Such a solid digital base stands in contrast to the fact that citizens of the country are still not prepared for the effective use of a convenient and accessible solution to solve financial issues. According to the Global Findex, only 25.1% of Filipinos made or received digital payments in 2017 (as compared to APAC’s 58%) and only 7% used a mobile phone or the Internet to access a financial account (way below APAC’s 31%).
APPROACHING THE EVIDENCE
The mentioned points — geographical dispersion with the widely spread Internet and mobile communications and the insufficient living standards with lacking bank lending — stipulate a logical scenario for the further development of the national financial sector.
“The future of the financial system lies in going digital and using it to achieve financial inclusion. We are too fragmented geographically to reach out using traditional means.
Digital technology provides such a chance,” — this is how the Governor of the Central Bank of the Philippines Nestor A. Espenilla, Jr. sees the situation.
Considering the typical and inflexible traditional banking globally, it is not surprising that various alternative lending sources are rapidly growing in the country with a prevailing number of online services. They comprise microlending, which is the only “official” financial sector demonstrating a serious increase from 4.7% in 2015 to 7.6% in 2017, then peer-to-peer (p2p) lending with a steadily growing number of websites and volumes, and even initiatives in cryptocurrency. Undoubtedly, the development pace of the financial digitization will only strengthen over time, especially given the liberal state financial policy.
In our opinion, both the expansion of local start-ups and the appearance of experienced foreign fintech players having sufficient investment and technological potential are able to accelerate the process. The latter is important for the following reasons:

• Foreign capital provides taxes, new jobs, and investment injections that decrease the load on the national economy and contribute to the rapid growth of its indicators.

• Business models have already been tested, usually in more than one country, and optimized in terms of data security, operational efficiency and convenience for customers. They usually consider the pipeline processing of big data, the use of deep learning, artificial intelligence and other advanced technologies that are not fully accessible to new entrants on the market. This simultaneously helps the country to integrate adequately into the mainstream of global digital realities.

• Foreign investors allocating funds to the local market are mostly interested in a strategic long-term presence. Thus, the main principle of customer service is not to press out all resources but preserve long-lasting respectful relationships with borrowers. At the same time, the status of foreigners demands from companies to provide excellent services and preserve an established business reputation.

• The advantages of an international experience in fintech are effective, scalable and high-quality scoring technologies. Operating on the international scale with a focus on the strategic presence is possible when serving a creditworthy audience. Otherwise, such a business model is not viable leading to wasted time and investments. This approach requires assessment of clients and provides an adequate debt burden of the population.

Thus, taking into account the national specifics, we think that fintech solutions (mainly remote ones) are able to unite the Filipino society in solving the issue of raising living standards in the immediate future. In this sense, inflation or the key interest rate increased by the Central Bank facilitates the expansion of alternative lending. The high degree of effective adaptation to global economic and technological processes that is inherent to the Philippines promotes this scenario. The rapid transformation of the country into a world leader by the number of outsourcing call centers is a bright example.
The main economic risk is the growth of the debt load on the population that should not be ignored. However, the expansion of fair competition on a market will contribute to the steady improvement of lending terms. The focus of experienced players on a financially reliable audience supported with initiatives designed to improve the financial literacy of the population can minimize the risk.
 
Sergey Sedov is chief executive officer of Robocash Group.

Carpenter versus plunderer

“Lo! unto us a child is born!” Not just any child but a child of a carpenter who would follow in his father’s footsteps (Mark 6:3). Carpentry creates value as it transforms plain wood into a beautiful cabinet. Honest hard work is carpentry’s signature. It is the exact opposite of plunder.
“A date that will live in infamy!” was Franklin Delano Roosevelt’s memorable description of the day, Dec. 7, 1941, when the Japanese Imperial Navy mounted a devastating sneak attack on the US naval forces at Pearl Harbor. The same phrase applies to Dec. 7, 2018, when the Sandiganbayan exonerated Ramon “Bong” Revilla Jr. of plunder in the pork barrel scam. And to August 17, 2015, when the Supreme Court allowed Juan Ponce Enrile to post bail for the non-bailable crime of plunder on the pretext of ill health, which seemed, however, to drain away the moment he stepped out of his confinement. These are sneak attacks on institutions of justice.
Within an hour of the exoneration of Revilla, a panel for Pilipinas Conference 2018 organized by the Stratbase Albert Del Rosario Institute (ADRI) was discussing the near-term prospect of the Philippine economy under the Duterte administration. The link between institutions and economic outcomes was raised in the Q&A. As an example of a broken institution, I cited with a fit not unlike rage the Sandiganbayan and the just promulgated exoneration of Revilla. After blurting “I cry for you, Pilipinas!” I doubled down with a hardly coherent attempt to pin economic failures on broken institutions via Adam Smith (The Wealth of Nations) and Acemoglu and Robinson (Why Nations Fail). Not wrong, mind you; just muddled. Unlike my betters whose frontal cortex sharpens in the face of a furious amygdala, my own frontal cortex did not linger. The issue deserves better.
Why do broken institutions lead to dismal economic outcomes? Economic development is, at its starkest, the growing of the economic pie. When the economic pie grows, everyone’s share of the pie grows — if sometimes, unevenly. But growing the pie requires honest hard work, carpentry as it were. The polity has to put its collective shoulder to the grindstone. Honest hard work anchors value creation and economic progress.
But honest hard work is distasteful to some. It is easier to just hoodwink, steal, or plunder one’s way to a bigger share of the economic pie. Isn’t it more tempting to sit by the pool sipping champagne made from the sweat of others? “Honest hard work” and “steal and plunder” are two fiercely conflicting ideas. Which one of them triumphs depends upon institutions, especially the institution of justice.
If institutions reward honest hard work, more and more people will heed the call to carpentry. And if so, the economic pie will grow. If institutions reward plunder, the ranks of plunderers will swell. And the economic pie heads south. This is the Murphy, Shleifer, and Vishny (1991) rent-seeking paradigm: broken institutions force talent to migrate away from honest hard work to plunder as a way of life and as a consequence the economic pie languishes or even shrinks. Its famous incarnation is the “Magee curve,” after Stephen P. Magee, the professor of finance and economics who argued that the greater the number of lawyers per thousand population, the slower is economic growth.
The Sandiganbayan exonerated Revilla of the crime of plunder in the face of the guilty finding on Janet Lim-Napoles and on trusted Revilla subordinate Richard Cambe. In effect, it formulated a new wrinkle in jurisprudence: “sine flagrante delicto non” — without a videotape of the handover, Revilla was just a naive boss of corrupt underlings. Revilla was blameless even if a trusted underling perpetrated a crime using the senator’s office as springboard. Adolf Hitler would have passed the test of sine flagrante delicto non since nobody saw Adolf pull down the lever of a gas chamber. The Mafia bosses in the US for so long evaded accountability for crimes of underlings by the same excuse. It was the Racketeer Influenced and Corrupt Organizations (RICO) Act of 1970 that plugged that easy pass for Mafia bosses. Under RICO, to be liable one no longer has to be caught flagrante delicto; one has just to head a criminal outfit. As it stands, can anybody blame co-accused Enrile, free on bail due to another legal innovation — this time by no less than the Supreme Court itself (“old age and/or ill-health” theory) — if he is beaming over a massive gift? Can you blame “Jinggoy” Estrada if he is popping champagne bottles? They know the new legal theory applies to them and exoneration is in the mail.
Indeed plunder by the rich and famous not only goes unpunished by the courts, it is also rewarded by the political system. They can now run for office and win on the wings of a powerful subliminal message: “Vote for me; I’m untouchable; I have ‘anting-anting.’” Ferdinand Marcos running on abilidad won a congressional seat after beating the Julio Nalundasan murder rap.
The institution of justice is the mother of all institutions of the land. And in the Philippines, it is broken. “Due process Philippine style” means that common sense is trumped by the littlest of technicalities. The Roman legal principle, viz., de minimis non curat lex (The law is not about little things) is stood on its head. The accused rich and powerful can afford many de minimis options: pay off, intimidate or neutralize witnesses, procure technicalities from judges (“Best judges money can buy”), delay proceedings forever (the Ampatuan massacre), wangle a legal innovation from the courts (the Enrile ill-health and old age), and failing everything else, finagle an absolute pardon from the chief executive of the land (as was Estrada’s by Arroyo). No wonder the poor ache for a salvific autocrat.
When institutions of justice and politics reward plunder, the tribe of the plunderers will increase and rule the land; the tribe of honest hard work will, as the intro to a Sinatra song goes, “… fold its tent and silently slink away.”* And economic development has little chance.
But despair need not be our lot this Advent. Rejection of plunder was the message of the Carpenter. He showed the way when he, now in the fullness of age, “entered the temple courts and drove out all who were buying and selling there…” saying, “But ye have made it a den of thieves!” (Matthew 21:12). If true to the message, we resist the allure of plunder, carpenters everywhere may still inherit the land.
*Frank Sinatra’s “Moonlight in Vermont”
 
Raul V. Fabella is a retired professor of the UP School of Economics and a member of the National Academy of Science and Technology. He gets his dopamine fix from hitting tennis balls with wife Teena and bicycling.

A broken justice system

The last of the triad of Senators accused of receiving hundreds of millions in kickbacks from the pork barrel scam walked away a free man on Dec. 7. Former Senator Ramon “Bong” Revilla, Jr. was acquitted for plunder and was released by the Sandiganbayan from Camp Crame.
Revilla’s acquittal follows the release of Jinggoy Estrada and Juan Ponce Enrile’s from police custody, both of whom were given back their freedoms after posting bail for a crime that is supposedly non-bailable.
It will be recalled that back in July 2016, Gloria Macapagal-Arroyo was also released from hospital arrest after being cleared of plunder by the Supreme Court.
It is now a clean sweep! The four big fish that were tried and convicted for graft and corruption are back walking among us. They are also back in the political fray — GMA as Speaker of the House and the three stooges as senatorial candidates.
Meanwhile, the woman who championed the drive to put these big fish behind bars, former Justice Secretary and Senator Leila de Lima is herself languishing in Camp Crame. The irony could not be more succinct.
REVILLA’S ACQUITTAL
At the heart of Revilla’s victory at the Sandiganbayan was former state witness Marina Sula, who changed her story and became a friendly witness for Revilla.
Sula testified that she did not personally see Revilla receiving money from Janet Lim-Napoles. She further stated that it was Benhur Luy, the other whistleblower and state witness, who supposedly forged the signature of Revilla for the release of pork barrel funds to bogus NGOs. She also said that it was former Prosecutor, Director Joefferson Toribio, who coached her on what to say when she first testified against Revilla back in 2013.
Records showed that Revilla received the largest kickbacks from Napoles amounting to P224.5 million, later recomputed down to P124.5 million.
Sula’s testimony is what convinced Justices Geraldine Econg, Edgardo Caldona and Georgina Hidalgo to vote in favor of Revilla’s acquittal. Respected ethics professor and the Sandiganbayan’s moral compass, Justice Efren de la Cruz, dissented.
I am not a lawyer, so my opinions are merely based on practical sense. It seems the three judges made a farce of the case and sold us out. These are my thoughts:
Granted, Revilla is not the sharpest pencil in the box, I don’t think he is imprudent enough to sign the endorsement letters himself, let alone collect cold cash from Napoles. The fact that Sula never saw him in the act doesn’t mean that he wasn’t aware of the scam and was not a party to it.
Also, why was Revilla’s right-hand man, Richard Cambe, found guilty while his boss goes scot free for the same crime? Are we supposed to believe that Cambe acted on his own accord without Revilla’s knowledge?
Further, according to a report of the Anti-Money Laundering Council submitted to the Office of the Ombudsman, the bank deposits and investments made by Revilla, his wife and their children amounted to P87,626,587.63 from April 6, 2006, to April 28, 2010. This was within the same period indicated on the ledger of Benhur Luy that Revilla received his share of commissions and rebates.
There are also glaring disparities on Revilla’s Statement of Assets and Liabilities (SALN) during the heyday of the Priority Development Assistance Fund (PDAF) scam.
For instance, in 2008 and 2009, Revilla declared a total of P6.4 million and P6.5 million in cash and deposits, respectively, on his SALN. But the total inflows to his accounts for those years amounted to P16.1 million and P24.1 million, respectively. Why the disparity? Where did the extra cash come from?
Making matters more dubious is that the realty firm controlled by Revilla’s wife, Nature Concepts Development and Realty Corp., received P27.745 million in deposits during the period. The realty firm was not operating at this time. Again, where did the money come from?
These questions seem to have been glossed over by the Sandiganbayan and left unanswered. This is why I find the Sandiganbayan’s decision suspect. The Sandiganbayan is taking the Filipino people for fools!
THE JUSTICE SYSTEM
The turn of events says a lot about the justice system.
First, it tells us that the Judiciary, including the Sandiganbayan and the Supreme Court, is not truly an independent branch of government but one swayed by the biases and influences of the Executive branch and even lower ranking government officials. The courts decide according to the preference of Malacañang, whether it be under a cape of yellow or red. We have seen it happen before — judges bend the rules, make exceptions and interpret the law in a manner that suits the agenda of the person they are trying to please.
A swayable (or negotiable) judiciary is a public threat. By being the obedient attack or defense dog of certain powerful politicians, the judiciary, in effect, ceases to be the mechanism for checks and balances against the executive and legislative branches. It is no longer an equal branch of government but one that is beneath and beholden to the two.
To Juan de la Cruz, it means that he cannot be absolutely certain of a fair trial should his rights be violated by Malacañang or any member of the legislature. The judiciary’s biased ways undermine the people’s rights to blind justice. It ceases to be become the refuge of last resort of the people.
Secondly, it tells us that the justice system treats those who are aligned with the administration with kid gloves while those in the opposition are made to face the full wrath of the law. The law has become selective, depending on one’s political persuasion.
It tells people currently holding government positions that they can escape the consequences of graft so long as they are in the right political party and have cushy relations with the people who matter.
By finding loopholes for convicted plunderers, the Sandiganbayan and the Supreme Court have opened Pandora’s box. They have practically declared an open-season for graft and corruption for those associated with this administration. If the three senators can walk away as free men after being convicted, why not other plunderers?
In one fell swoop, the judiciary negated the tenets of honest public governance that the past administration worked so hard to instill among government workers. It put us back to the dark age when corruption and abuse in government was the rule, not the exception.
We don’t have to look far to see how abuse among government officials has become the new normal. In our streets, government officials, down to some bloody congressman’s aides, bamboozle regular citizens out of their way to allow them unobstructed passage. They bully us with sirens and police patrol escorts as if their journeys are more important than ours. Shame is gone and entitlement is back in full bloom.
Third, it tells the rest of the world that we are losing our fight against corruption and that our law enforcement institutions are the problem, not the solution. Acquitting Arroyo and allowing Enrile to post bail was viewed as one step forward and two steps back in our fight against corruption. This negative perception is reflected in our global competitiveness rankings.
The World Economic Forum has ranked the Philippines a lowly 95th place (out of 140 nations) in terms of corruption; 123rd in term of reliability of police and law enforcement agencies; 105th in terms of the independence of the judiciary; 100th in terms of efficiency of our legal framework; and 121st in terms of conflict of interest regulations. Transparency International’s Corruption Perception Index placed the Philippines as the 111th most corrupt country in the world out of 180 nations evaluated. It’s quite pathetic.
With the acquittal of Revilla and the release of Estrada on bail this year, I am certain our global rankings will take a new plunge next year.
The Philippines presently stands at 56th place in terms of global competitiveness. Looking at the various components of our assessment, it is clear that our weak institutions, principally our justice system, are dragging us down. This is because many judges are abettors of corruption and crime, not champions against it.
Until they are obliterated, the nation will never be free from the cancer of corruption. Our justice system is broken; it is the weakest link in our nation.
 
Andrew J. Masigan is an economist.

For whom the bells toll

When after 117 years, the three Balangiga bells taken as war booty by the US Army in 1901 were returned to Samar Island, there was victorious jubilation on the Philippine side. In the crack of the Balangiga clash in the midst of the Philippine American War, bolo-wielding Filipino insurgents won over the superiorly equipped American infantry. It is said that in rabid retaliation for the 48 of 74 men of Company C who were ambushed and killed while at breakfast, the US reportedly massacred more than 2,500 of the village people. Historians cannot agree on the numbers. But of course history is written by the victors and rewritten by the losers if given a chance.
It was Fr. Horacio de la Costa of the Department of History at the Ateneo de Manila University who first wrote a letter in November 1957, asking the Thirteenth Air Force at Clark Air Force Base “to return the Balangiga bells because these belonged to the Franciscan community who ran the parish” (McKinnon Jr., Daniel W. “Veterans of Foreign Wars,” Wyoming: 2008, cited in Wikipedia). Fr. De la Costa, the historian, did not judge the moral winner in the Battle of Balangiga. He called down instead the property theft — land and improvements whereupon a parish church and appurtenant structures are titled to the corporation sole that is the bishopric — while alluding to moral turpitude in the desecration of the sacramental that the bells were. Bells, in the Catholic tradition, are the Godly call to worship.
How ironically humbling that the Catholic Church should be “kept whole” by the return of the Balangiga bells, urged as it was seemingly by the rough rhetoric of a man who once publicly called God “stupid.” Why, when all presidents since Fidel Ramos asked for the return of those bells? “Give us back those Balangiga bells. They are ours. They belong to the Philippines. They are part of our national heritage,” President Rodrigo Duterte said in his second State of the Nation Address (SONA) in 2017 (ABS-CBN News, Nov. 15, 2018). US Ambassador to the Philippines Sung Y. Kim was physically in Duterte’s audience at that time. Amb. Kim, American-born of South Korean ancestry, worked on the return of the three Balangiga bells to Samar. The two big bells were at the former base of the 11th Infantry Regiment (that fought in the Philippine-American War), at F. E. Warren Air Force Base in Cheyenne, Wyoming. The third and smallest bell, the one that pealed the deadly call to action to the Filipino attackers of the US barracks at Balangiga, was at the 9th Infantry Regiment at Camp Red Cloud, their base in South Korea.
When Amb. Kim made his speech for the turnover of the bells, he made no apologies, no explanations for the confiscation of the bells by the US. He simply said, “In World War II and in Korea, our soldiers fought, bled, died, and sacrificed side by side. Together they made possible the peace and prosperity we enjoy today… Our relationship has withstood the tests of history and flourishes today. And every day our relationship is further strengthened by our unbreakable alliance, robust economic partnership, and deep people-to-people ties” (usembassy.gov, Dec 11, 2018).
Somehow, Amb. Kim’s careful diplomatic allusions to “our relationship” cannot but call back Pres. Duterte’s oft-repeated open disdain for the US (specially for past US President Barack Obama and for immediate-past Ambassador Philip Goldberg). Duterte’s rejection has progressively been made more painful to the US, juxtaposed to his open and gushy declaration of love for Chinese President Xi Jinping and all things Chinese. In the current heightened US-China global trade and political war, the suddenly rushed return of the Balangiga bells might plaintively ring: but we two — the Philippines and the US — we are friends, are we not?
President Duterte attended the handover of the bells in Balangiga, Eastern Samar, but he did not attend the concelebrated Holy Mass attended by thousands. He said, “I do not want to hear the mass. I have heard all the masses in the world” (The Philippine Star, Dec. 14, 2018). Perhaps to the nation’s political leader, the Balangiga bells had no “sacramental value” as the local parish priest devoutly explained on national news, nor the religious symbolism and affirmation that tearfully dawned on the 85% Christian believers that “(our) Faith has saved us” at the Balangiga battles as in every situation that call the Faithful to prayer.
And insistently, triumphantly, the bells will toll again at Balangiga. But for whom, and for what will the bells toll?
The once-silenced Balangiga bells must peal and boom even more urgently now than in the chilling wars of betrayal and treachery for dominance and power in the early 1900s. The jubilation for national pride redeemed by the return of the symbolic bells is confused by the sickening feeling in the pit that the horned specter of dominance and greed still hovers, in the appearance of the Filipino’s own skin and mien. For colonization and dominance, and its treachery and betrayals can also be by our own leaders.
So many issues in our country that overwhelm us at yearend: is there really democracy guided by the rule of law, in the insuppressible and persistent “rumors” of extrajudicial killings and transgressions of human rights, protested and called down locally and by foreign observers?
Have we not observed and experienced first-hand how the constitution and the laws have been turned upside down in shockingly unorthodox little-known legal trickeries like the quo warranto to remove a Chief Justice; and the revocation of amnesty granted to one particular ex-putschist senator and present critic of the administration? Why are other politicians accused of plunder and other high crimes pardoned? What about the fate of another senator languishing in jail for alleged drug involvement? And are we not chilled by the continuous extension of martial law in Mindanao, justified by an Armed Forces who should have been doing its job as it is supposed to be competently doing?
Are we not aghast and terrified at the blatant dishonesty and corruption that are dismissed lightly for “friends” of those in power versus the persecution by evidently trumped-up charges for the vulnerable non-friends or those “unfriended” for lost utility? And we are overwhelmed in anxiety for a 2019 budget not yet approved, discovering in painful bits and pieces the self-serving “insertions” and allocations of “savings” in hidden pork barrel that was already deemed unconstitutional in the previous administration. Players in the controlling “team” seem to be fighting each other in sibling rivalry for opportunistic control of the resources of government — nay, the resources of the people.
But the unkindest cut of all by the “new colonizers” that we may call those who want to perpetuate themselves in economic and political power, is rushing the charter change for federalism to be transfused into our life veins. We will not be a free people anymore if the Hadean concepts are installed and institutionalized of unlimited terms for government positions, allowed political dynasties forever, and the divide-and-rule over federal regions controlled by a president practically for life, with a convenient vice-president of the president’s own party and personal subservience — among other self-serving and opportunistic insurances of control and impunity by those already in power.
The Balangiga bells must toll for freedom and democracy in the Philippines.
 
Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.
ahcylagan@yahoo.com

Analysts’ inflation forecasts helped spur price growth — DoF

THE DEPARTMENT of Finance (DoF) said “faulty” inflation forecasts by analysts in 2018 raised inflation expectations, thereby contributing to the actual rise in prices.
In a statement on Sunday, the DoF said analysts’ inflation forecasts between January and November were off by as much as 0.4 percentage points from the actual data released by the Philippine Statistics Authority (PSA).
The Finance department’s Strategy, Economics and Results Group (SERG) conducted a study based on the forecasts of analysts and economists from various private and academic institutions in BusinessWorld’s monthly poll during the first 11 months of the year.
“The 13 analysts included in the SERG study are from prominent institutions which publicly announce their forecasts in major leading newspapers. However, some of the forecasts swung so much that some of the calculations we did yielded a margin of error (MOE) of between 11 and 14.9%,” Finance Undersecretary Karl Kendrick T. Chua said.
“We did the assessment to see how well analysts are in forecasting inflation and the results show how far off some of them were in their projections. We think that these forecasts have also driven inflation expectations that, as we know from global experience, have a tendency to become self-fulfilling prophecies,” he added.
Expectations of higher inflation tend to encourage consumers to buy goods ahead of the price increases, effectively feeding into actual inflation.
Inflation in consumer prices rose to as high as 6.7% in September and October, before falling to 6% in November. Average inflation in the January-November period was 5.2%, above the central bank’s 2-4% target. The average is at the high end of the government’s official 4.8-5.2% forecast for this year.
The government itself has likewise been off with its inflation forecasts. The Development Budget Coordination Committee (DBCC) initially set a 2-4% inflation target band for 2018 and 2019 in December 2017, but revised the 2018 forecast to 4-4.5% in April. In its October meeting, it adjusted upwards the 2018 and 2019 forecast to 4.8-5.2%, and 3-4%, respectively.
The DoF’s Tax Reform for Acceleration and Inclusion (TRAIN) law was largely blamed as a trigger for rising prices as it added taxes on fuel, sugar-sweetened beverages, automobiles, tobacco, coal, and minerals, among others. It also removed some value-added tax exemptions, although it lowered personal income taxes, estate, and donor’s taxes.
The DoF said that TRAIN only accounted for about 0.4 percentage points of inflation, and that its effects were more pronounced only in the first three months of the year. In the succeeding months, inflation was mainly caused by high world oil prices, a weak peso, food supply and distribution issues, especially rice, fish, and vegetables, as well as the effect of typhoons.
The government addressed inflationary concerns by issuing administrative orders to boost food supply, and ease red tape in connection with food imports and distribution.
Mr. Chua also said analysts were also off on their quarterly gross domestic product (GDP) growth forecasts.
He said that deviations of the forecasts from the actual figure for the first three quarters of 2018 ranged from 0.25 percentage points with a 7.4% MOE, to 0.45 percentage points with a 13.7% MOE.
The DoF said that only eight of the 13 institutions had acceptable margins of error.
“All of us should remain cognizant of negative unintended consequences. Researchers are taught that early on in college and graduate school. It is an even more crucial lesson when your research is no longer subject to a university’s Institutional Review Board,” Assistant Finance Secretary Antonio Joselito G. Lambino II said. — Elijah Joseph C. Tubayan

Boracay water rates to rise on Jan. 1

WATER RATES in Boracay are set to increase starting Jan. 1, 2019 equivalent to 18.08% of this year’s basic water and sewer charge, the island’s water regulator said in a notice published during the weekend.
“The increase represents the third tranche of the approved 2017 Rate Rebasing adjustment and the corresponding inflation rate,” said the Tourism Infrastructure and Enterprise Zone Authority-Regulatory Office.
“Furthermore a 3.0% increase shall be applied to the Basic Water and Sewer Charge to account for Foreign Currency Differential Adjustment (FCDA),” it added in the notice to Boracay Island Water Co., Inc. customers.
Starting next year, the basic water charge for residential “A” category water users or those consuming no more than 10 cubic meters (cu.m.) will be at P557.82 per connection from P472.41 previously.
For those consuming 11 to 20 cu.m., the new rate will be P105.99 per cu.m., while for those using 21 to 50 cu.m., the rate will be P156.18 per cu.m.
Their previous rates were P89.76 and P132.27 per cu.m., respectively.
For residential “B” consumers using no more than 10 cu.m., the new rate will be P313.48 per connection from P313.48 previously.
For commercial “A” consumers, or those using no more than 10 cu.m., the basic charge will be P1,394.51 per connection.
Those consuming 11 to 50 cu.m. will be charged P167.33 per cu.m., while those using 51 to 100 cu.m. will be pay P195.25 per cu.m. Consumers using more than 100 cu.m. will be charged P223.10 per cu.m.
The rate for Commercial “B” consumers using 10 cu.m. and below will be P836.71 per connection. Consumers in the 11-50 cu.m., 51-100 cu.m. and more than 100 cu.m. brackets will pay P153.39, P181.28 and P209.18 per cu.m., respectively.
Water concessionaires are allowed to recover losses or give back gains through the FCDA tariff mechanism that factors in the movements of the peso against foreign currencies.
The FCDA mechanism was set because the water concessionaires pay foreign currency-denominated concession fees, as well as loans to fund service improvement projects that will expand and upgrade water and wastewater services.
It also allows them to sustain their program to cut water losses or non-revenue water and bring the supply to the underserved and unserved sectors in their service areas.
Boracay Water is a subsidiary of Manila Water Philippine Ventures, Inc., which is in turn a wholly owned subsidiary of Manila Water Co., Inc. — Victor V. Saulon

Poverty database bill filed in Senate

SENATE Majority Leader Juan Miguel F. Zubiri filed a bill creating a consolidated poverty data collection (CPDC) system that will serve as the basis for targeting beneficiaries of the government’s poverty alleviation programs.
Senate Bill No. 2132, filed on Dec. 10, seeks to institute a poverty data collection system in every local government unit (LGU) with the Philippine Statistics Authority (PSA) as the lead national agency in charge.
Under the bill, LGUs will serve as the primary data collecting authority within their jurisdiction. LGUs also must designate a statistician to collect, preserve, and safekeep the data retained at the city or municipal level.
Meanwhile, the PSA is tasked with setting standards for the data collection process and to serve as the national repository of all poverty data collected by LGUs.
The PSA will also upgrade the capacity of LGUs in the collection of data through the Philippine Statistical Research and Training Institute, in collaboration with state universities and colleges.
The bill also directs the Department of Information and Communications Technology (DICT) to “develop institutional arrangements on data sharing.”
Provinces may access the poverty data within their jurisdiction. National government agencies, on the other hand, may request PSA for specific data to be used for their own social protection and welfare programs.
The proposed measure also ensures the confidentiality of information collected by the government. Both the LGUs and PSA are required to undertake measures to ensure the integrity and safety of the data.
Respondents involved in the data collection will have the option to authorize the LGU to disclose their identity and other personal information. They may also refuse to answer questions at any point of the data collection activities.
The bill requires the LGU to collect poverty data every three years during the first six years of the program’s implementation. After six years, annual data collection is prescribed.
In his explanatory note, Mr. Zubiri said the bill will help government carry out comprehensive poverty analysis and design appropriate policies and interventions.
“The data will provide the evidence base to ensure that policies are timely, well-targeted, and effective for the poor and most vulnerable,” he said.
The bill also constitutes a joint congressional oversight committee that will review the implementation of the program.
It also provides a one-year transition period from the effectivity of the Implementing Rules and Regulations (IRR) for national government agencies currently collecting poverty data for their respective social protection programs until PSA takes over.
The Department of Social Welfare and Development (DSWD) has its own information management system that identifies who and were the poor are in the country called the Listahanan or the National Household Targeting System for Poverty Reduction. Beneficiaries of the government’s conditional cash transfer program and the Philippine Health Insurance Corporation’s universal health care program are selected from the Listahanan. — Camille A. Aguinaldo

DWRX operator’s franchise renewal clears House on 2nd reading

A BILL renewing the broadcast franchise of Audiovisual Communicators, Inc. (ACI) was passed by the House of Representatives on second reading via voice vote.
If enacted, House Bill No. 8786 will extend for another 25 years the franchise, allowing ACI “to construct, install, operate and maintain radio and television broadcasting stations in the Philippines.”
ACI operates contemporary radio station DWRX, known by its marketing name of Monster RX93.1, which serves Metro Manila, the Calabarzon region, Bulacan and Pampanga, among others.
It also operates DYBT, or Monster Radio BT105.9, and DXBT, or Monster Radio BT99.5, based in Cebu City and Davao City, respectively.
The broadcast franchise of ACI, which was granted in 1995, is set to expire in 2020.
The bill requires ACI to provide a maximum of 10% of paid commercial time to public service programming.
ACI is required to submit an annual report to Congress on or before April 30 every year. — Charmaine A. Tadalan

CTA dismisses PSALM appeal on P3.81-B tax deficiency

THE Court of Tax Appeals (CTA) dismissed a petition of Power Sector Assets and Liabilities Management Corp. (PSALM) to cancel its alleged P3.81-billion tax deficiency, citing a lack of jurisdiction and affirming an earlier decision issued on Aug. 28.
In a Nov. 5 resolution, the CTA Special Second Division denied the motion for reconsideration of PSALM, a government-owned and controlled corporation, citing a Supreme Court (SC) ruling that “’all disputes, claims, and controversies’ between or among offices, agencies and instrumentalities of the national government” must be resolved under a process outlined by Presidential Decree No. 242.
PD 242 requires all disputes between government agencies including GOCCs to be settled or adjudicated by the Secretary of Justice, Solicitor General or the Government Corporate Counsel, depending on the issues at hand.
PSALM was assessed by the Bureau of Internal Revenue a tax deficiency for the year 2009 including delinquency interest.
“This Court merely applies the doctrine laid down by the highest court in the said PSALM case and that the change of jurisdiction for the resolution of cases involving government entities will not prejudice them considering that there are adequate remedies available for them under the law,” the CTA said.
“Wherefore, premises considered, petitioner’s Motion for Reconsideration is hereby denied for lack of merit. Accordingly, the assailed decision promulgated on Aug. 28, 2018 is hereby affirmed,” it added.
The resolution was written by Associate Justice Catherine T. Manahan and concurred in by Associate Justice Juanito C. Castañeda. — Vann Marlo M. Villegas

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