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PHL needs to invest in knowledge capital

Parang lahat ng inyong budget puro research? Baliw na baliw kayo sa research. Aanhin niyo ba yung research” (It seems like all of your budget goes to research. You are so crazy about research. What will you do with those research?)”

This was the comment of Senator Cynthia Villar during the recent Senate budget hearing for the Department of Agriculture (DA) and its attached agencies. She was referring to the P150 million proposed budget of the National Corn Program for 2020.

While this budget figure in absolute terms may be significant relative to others line items such as that for seeds and machinery for farmers. But this underscores a glaring stance — our policy and law makers do not place much importance in investing in research in particular, and to the country’s knowledge capital, in general.

The knowledge capital of a nation, broadly defined as the approaches and capacity in creating innovations and improvements in the processes of production and distribution, has been the linchpin of the long-term economic development of a country, as proven in the landmark book of Hanushek and Woessmann, The Knowledge Capital of Nations: Education and the Economics of Growth, published in 2015.

The authors argued, through rigorous economic and empirical analysis, that the long-run economic growth of a nation is overwhelmingly a function of the cognitive skills of the population, or the knowledge capital of a nation. “The historical consequences of increased knowledge capital prove to be huge — multiples of GDP,” the authors averred.

But sorrily, the Philippines lags in knowledge capital globally and among ASEAN peers. This is evidenced by the 2018 Global Innovation Index (GII) study co-sponsored by the United Nations World Intellectual Property Organization which ranked the Philippines 73rd out of 126 economies, which was steady from a year ago.

While strengths of our country were cited such as knowledge absorption, firms offering formal training and research talent in business enterprise, trade, competition and market scale and market capitalization; key weaknesses were likewise highlighted such as in human capital and research index as determined by expenditure on education, pupil-teacher ratio, global research and development companies’ expenditure, and ease of doing business — positioning the Philippines as ‘below average’ in regional innovation ranking.

Additionally in the area of scientific publications, a leading indicator of a country’s knowledge capital, the Philippines likewise lags among its Asian neighbours. In a paper authored by Dr. Tereso Tullao, Adjunct Professor in Economics of the De La Salle University, he analysed and compared the production of scientific journals from private universities in the country in the areas of medicine, agricultural and biological sciences, social sciences, biochemistry, engineering environmental sciences, and computer science, as listed in Scorpus, the largest global database of published journals.

The study revealed again the poor ranking of our country. In 2018 alone, The Philippine private universities published 4,234 scientific research outputs, compared to 10,348 and 37,677 published from Vietnam and Indonesia, respectively. Though Dr Tullao’s study revealed an improvement from previous years, the Philippines still fall behind other neighbouring countries.

As the 4th Industries Revolution sets in, it’s urgent that our policy makers focus on building our knowledge capital. For one, overhauling our education system to develop critical thinking among students is a necessary ingredient to make this happen. Budgets in research and development among government agencies including state universities and colleges should be sufficient. The private sector, on the other hand, should sponsor and fund research activities in universities to spur the production of research outputs.

We should do these now, or suffer the consequence of being a laggard in the 4th Industrial Revolution.

 

Reynaldo C. Lugtu, Jr is CEO of Hungry Workhorse Consulting, a digital and culture transformation consulting firm. He is the Chairman of the Information and Communications Technology Committee of the Financial Executives Institute of the Philippines. He teaches strategic management in the MBA Program of De La Salle University. The author may be emailed at rey.lugtu@hungryworkhorse.com

How PSEi member stocks performed — October 10, 2019

Here’s a quick glance at how PSEi stocks fared on Thursday, October 10, 2019.

 

DoE plans tanker storage if strategic reserve not ready

By Victor V. Saulon
Sub-Editor

THE Department of Energy (DoE) said its strategy for possible petroleum supply disruptions is to stockpile refined product, government-to-government supply deals, and a possible resort to vessel storage as a short-term measure.

The DoE made the disclosures after the Senate Thursday asked the department to come up with a written plan of action detailing its contingency measures in case of supply disruptions from the country’s main sources of imported petroleum in the Persian Gulf.

Meron na kami. Matagal na nating ginagawa ‘yan (We have had a plan for some time),” Energy Secretary Alfonso G. Cusi told reporters yesterday on the sidelines of the department’s Senate budget hearing.

Mr. Cusi said his department had held initial talks with Russia, Qatar and Brunei, as well as traditional supplier Saudi Arabia, for a possible fuel supply agreement. He said he cannot ensure that the price of fuel from these sources will be lower than those currently offered by Philippine oil companies.

Asked for details, Undersecretary Donato D. Marcos said the agency is looking at onshore storage and offshore storage options for imported finished product.

Kung sakali lang hindi umabot sa deadline ‘yung onshore na strategic petroleum reserve (SPR), p’wede ‘yan sa floating vessel. Depende, ang laki kasi ng sizes niyan may 60 million liters, meron ding 30 million lang (If we don’t have a strategic petroleum reserve up and running, we can turn to vessel storage, some of which are 60 million liters, while others are 30 million),” he said.

Mr. Marcos said the DoE has yet to determine whether Philippine National Oil Co. (PNOC), the agency’s commercial arm, will be tasked to handle the imports. He said the oil for the strategic reserves could be used to “resolve” oil price spikes.

Mr. Marcos said if the onshore facility is not completed in two years, the department could turn to tanker vessels for storage.

When the SPR is operational, the country’s minimum inventory requirement (MIR) will double, Mr. Marcos said. The DoE has said that the MIR is equivalent to 30 days’ supply for oil refiners, 15 days for bulk marketers, and seven days for liquefied petroleum gas firms.

He said during initial meetings on maintaining reserves, private oil companies raised the issue of cost related to putting up privately-owned infrastructure for oil reserves. Should they do the stockpiling, the required capital expenditure will be passed on to consumers, he added.

Kaya government will intervene (That’s why government will intervene),” Mr. Marcos said. The DoE asked for P2.3 billion for 2020, up 7.2% from a year earlier.

Mr. Cusi said his department has been negotiating with foreign governments for a bilateral agreement for an allocation from oil producers in case of a supply problem in the future.

“We are developing the agreement,” he said.

On Sept. 14, a coordinated drone attack on state-run Saudi Arabian Oil Co. (Aramco) oil processing facilities at Abqaiq and Khurais resulted in the suspension of crude oil production totaling of 5.7 million barrels per day, or nearly 60% of the country’s average production, the DoE has said. Saudi Arabia produced 9.8 million barrels per day in Aug. 2019, it added.

Customs collections rise 13% in September

COLLECTIONS by the Bureau of Customs (BoC) rose 13% year-on-year in September on growing import volumes as well as an enhanced ability to tax due to the Tax Reform for Acceleration and Inclusion (TRAIN) Law and the Rice Tariffication Law.

The BoC said in a statement Thursday that September collections totaled P59.209 billion, compared with P52.42 billion a year earlier, based on preliminary data compiled by the bureau’s Statistical Analysis Division (SAD).

“According to SAD, growth in revenue collection last month was due to increase in the volume of imports, higher collections as a result of the (TRAIN) Law, Rice Tariffication Law and the National Food Authority (NFA) tax expenditure collection,” the BoC said.

Earlier, the BoC reported that its running total for the year was P477.522 billion in the nine months to September, up 9.24% from a year earlier.

The two BoC stations that reported the highest collections were the Port of Batangas and the Manila International Container Port, collecting P15.514 billion and P14.634 billion, respectively. However, the two missed their targets for the month, the BoC said.

Of the 17 collection districts, the BoC reported that nine exceeded their targets for the month, led by the Ports of Limay, Cagayan de Oro and Subic with total collections of P5.065 billion, P3.197 billion and P3.107 billion, respectively.

Also on target were the Ports of San Fernando, La Union (P333.25 million), Iloilo (P257.38 million), Tacloban (P145 million), Surigao (P4 million), Zamboanga (P26.81 million) and Aparri (P13.53 million).

Ports that missed their targets were the Manila (P5.667 billion), Ninoy Aquino International Airport (P3.745 billion), Cebu (P2.598 billion), Davao (P1.997 billion), Legaspi (P13.56 million) and Clark (P187.83 million).

In a separate statement, Customs said that it will begin the full implementation of its World Customs Organization (WCO) Cargo Targeting System (CTS) in the third week of October which will increase its ability to profile and target high-risk cargoes.

It said that CTS will be used to develop advanced profiling of shipments still overseas through data provided by shipping lines and airlines.

Foreign vessels and aircraft or their agents will have to transmit in advance information on their cargos electronically, after which the data will be subject to profiling and assessment, including for terrorism and criminal risk.

“As provided by the Customs Modernization and Tariff Act (CMTA), BoC will be requiring shipping lines to comply with mandated timelines for the submission of manifests through the CTS,” the BoC said.

BoC completed its pilot testing of the system on Oct. 2. — Beatrice M. Laforga

Exports of wearables faltering despite trade war as investment shifts to Myanmar

THE Philippines’ failure to take advantage of opportunities from the US-China trade war is reflected in the decline of exports in wearable products, the Confederation of Wearable Exporters of the Philippines (ConWEP) said.

ConWEP Executive Director Marites Jocson-Agoncillo told reporters at an investment forum on Tuesday that the expected growth did not come and that she was taking the decline as a warning.

“I’m not enjoying the trade war. That’s a very big sign — how come we don’t have growth? There’s a trade war — but (orders) are not coming in for apparel,” Ms. Jocson-Agoncillo said in English and Filipino.

ConWEP initially forecast 15-20% export revenue growth in 2019, but assumed that the Philippines captures some of the market from China.

Instead, ConWEP saw a 15% decline in textiles in the first seven months of 2019. Apparel exports fell 4%, while footwear rose 27%, and travel goods up 5%.

She said investments are shifting to Myanmar due to the country’s lower labor costs. In her presentation, she estimated Myanmar’s monthly wage at about $85-95, compared with the Philippines’ $190-274.

Ms. Agoncillo added that the reduced fiscal incentives proposed in the Corporate Income Tax and Incentives Rationalization Act (CITIRA) bill add “fuel to the fire.”

She estimates that CITIRA could cause job displacement in the apparel sector of 40% in the first 12-18 months.

“The cost of doing business is already very, very tough on us. And then there’s this added threat,” she said. — Jenina P. Ibañez

Sept. gov’t spending up 34.6%; year to date behind target

GOVERNMENT spending grew by more than a third in September, with year-to-date totals still behind target, the Bureau of the Treasury said, citing preliminary data.

Deputy Treasurer Sharon P. Almanza said total expenditure rose 34.6% last month, driven by subsidies to state-owned firms and increased spending by the Department of Public Works and Highways (DPWH) and Department of Education (DepEd).

“For September, the preliminary data based on our cash flow indicates (growth of) around 34.6%. year-on-year for September. It’s mostly driven by subsidies to GOCCs (government owned and controlled corporations) and then higher spending by DPWH and DepEd,” Ms. Almaza told reporters during a media roundtable on Wednesday evening.

However, she noted that spending in the nine months to September was 6.7% short of targets.

“It’s still below program. Around 6.7%. The difference between actual and program, from January to September (is 6.67%),” she said.

The BTr reported late last month that total expenditures in August grew 8.78% to P282.2 billion. Primary expenditures, netting out interest payments, picked up by 13.61% to P262.6 billion.

This brought the eight months spending total to P2.212 trillion, up 0.94%, which reversed the 0.11% contraction in the seven months to July.

The Finance department’s chief economist Gil S. Beltran said spending should grow by at least 30% from September to December to hit the P3.662 trillion expenditure program set this year.

“September to December, dapat (needs to be at) 30%,” Mr. Beltran told reporters.

Finance Secretary Carlos G. Dominguez III has said infrastructure spending is picking up, and has benefited from favorable weather, which minimizes construction delays. — Beatrice M. Laforga

Consumers shifted to chicken in mid-Sept. amid ASF outbreak, growers say

CHICKEN PRICES are rising at the farmgate level as consumers seek alternatives to pork following the outbreak of African Swine Fever (ASF) in the domestic pig herd, chicken growers said.

United Broilers and Raisers Association (UBRA) President Elias Jose M. Inciong said demand began to rise in mid-September, which he attributed to a shift in consumer preference away from pork.

“The week of Sept. 15 to 20, doon nag-umpisa yan (that is when it started)…. there is pressure from the demand side (because) there was a definite shift,” he told BusinessWorld by phone.

He said September prices are usually soft “dahil madaling mag-alaga (it is easy to raise chicken at this time of year) and at the same time import volumes are high,” he said.

Price monitoring by UBRA indicates that on Sept. 27, the average price of regular-sized chicken was P97.33 per kilo, up from P96 a week earlier. The price of prime-sized chicken rose to P104.21 from P93.69 previously.

Mr. Inciong said chicken supply is adequate despite strong demand.

Kinakaya pa ng industry (the industry can still handle it)…. but we will see. Apparently, the ASF scare is dying down. Baka naman mag-normalize na ang situation (The situation could normalize),” he said.

Asked when he expects the situation to normalize, Mr. Inciong said, ”We really don’t know. It depends on the consumers if they calm down and start consuming pork again, (chicken) prices should normalize.” — Vincent Mariel P. Galang

Palay farmgate price falls to P15.96/kilo

THE AVERAGE farmgate price of palay, or unmilled rice, fell 1.4% in the third week of September to P15.96 per kilogram (kg), the Philippine Statistics Authority (PSA) said.

The PSA said in its weekly price update that the average wholesale price of well-milled rice declined 0.6% week-on-week to P38.21 per kg. At retail, it fell 0.3% to P42.11.

The wholesale price of regular-milled rice fell 0.6% to P34.09 week-on-week. The retail price fell 0.3% to P37.66.

The palay price has been declining in the past few months due to larger volumes of imported rice following the implementation of the Rice Tariffication Law.

The Department of Agriculture said it is looking into the possible imposition of safeguard measures to address the matter. A decision is due to be announced today, Friday, going by the 30-day period set under the Safeguards Measures Act. — Vincent Mariel P. Galang

Senate panel questions DoE electrification ‘lump-sum’ funding

THE Senate Committee on Finance on Thursday raised concerns over a lump-sum P1.1-billion subsidy for the electrification of sitios and barangays under the 2020 budget of the Department of Energy (DoE).

The panel cited the Department’s lack of master plan for achieving the administration’s 100% electrification goal by 2022.

“Right now, it’s ‘pork barrel,’ ‘lump sum,’ whoever gets to lobby with you, ‘yun ang mabibigyan (that is the party that will receive the funds),” Senate Majority Leader Juan Miguel F. Zubiri said during the department’s budget hearing Thursday.

The subsidy for sitio electrification is expected to cover 775 sitios or a total of 460,000 households.

Senator Sherwin T. Gatchalian, who chaired the hearing, asked the DoE for its comprehensive electrification strategy while questioning a P500 million proposed allocation for electrification.

“From my point of view, the lump sum fund has already been given out arbitrarily, yet, we don’t have a strategy to guide (spending),” Mr. Gatchalian said.

“That’s why I was asking you to submit the Department’s total electrification program plan.”

Energy Secretary Alfonso G. Cusi said the department has required cooperatives to submit their master plans for energizing their areas covered in their franchise.

“What we are doing now is we are collating the master plans made by the respective cooperatives,” Mr. Cusi said.

The 2020 National Expenditure Program allocated P2.302 billion for the DoE in 2020, of which 1.148 billion will fund maintenance and other operating expense, P521 million for capital outlay and 580 million for personnel services. — Charmaine A. Tadalan

Online business registration portal up and running by early 2020

THE Department of Information and Communications Technology (DICT) is targeting the formal launch of the Central Business Portal (CBP) by the first quarter of 2020, which aims to streamline the process of establishing a business in line with the goals of the Ease of Doing Business Law.

“We also expect the full launch of the system with end-to-end functionalities by first quarter 2020,” DICT Secretary Gregorio B. Honasan II said during the pilot program launch for the CBP on Thursday in Quezon City.

Ang objective natin ngayon ay pabilisin ang pagsisimula ng negosyo. Mawala yung pila, maging paperless ang transactions (Our objective is to speed up the process of starting a business, to make it queue less and paperless),” he said after the launch.

The CBP hopes to provide a faster and more convenient means of applying for business registration.

Under Section 13 of Republic Act 11032, or the Ease of Doing Business and Efficient Government Service Delivery Act of 2018, the DICT is tasked to establish and operate the CBP to “eliminate red tape, avert graft and corrupt practices and to promote transparency and sustain ease of doing business.”

The system may be accessed through www.business.gov.ph by end of October. It will initially offer Securities and Exchange Commission (SEC) services, one of the requirements for registering a business.

In a text message, Mr. Honasan said that the full integration of Department of Trade and Industry (DTI) and Cooperative Development Authority (CDA) services is targeted for the second quarter of 2020.

Users will need to create an account, and fill out online forms, while fees can be paid through electronic means. The status of transactions can also be tracked through the website.

“Hopefully, maubusan at mawalan na ng isusumbong kasi wala nang (I hope complaints will fall since there will be no more) human intervention. Every signature, every stop that you need to talk to a government employee is always an opportunity for corruption kaya itong streamlining natin na ginagawa nito is end-to-end (We are hoping to achieve end-to-end streamlining of the process),” Anti-Red Tape Authority (ARTA) Director-General Jeremiah B. Belgica told reporters. — Vincent Mariel P. Galang

ONE ready to roll out landmark ‘Century’ event this weekend

By Michael Angelo S. Murillo
Senior Reporter

TOKYO — The landmark 100th show of Asia’s largest sport media property ONE Championship finally happens this weekend here promising an explosive offering attesting to how far the organization has come since opening shop in 2011.

Dubbed ONE: Century, the much-anticipated event will take place on Sunday, Oct. 13, at the famed Ryogoku Kokugikan in Sumida City and will feature 22 matchups, split into two equally exciting shows of 11 fights each.

The matches will feature five Filipinos, two of which are fighting for world titles and one for a grand prix belt.

ONE Championship chairman and CEO Chatri Sityodtong said Century is a celebration of the organization’s inroads in bringing to fore what true martial arts is, built around time-tested values like integrity, humility, honor, respect, courage, discipline and compassion.

“ONE Championship has come a long way since 2011 and is ushering in a new era for martial arts across the globe. ONE: Century is our historic 100th live event and the biggest and brightest stars of ONE Championship are ready to shine in Tokyo, and fans will surely not want to miss the festivities,” said Mr. Sityodtong in the lead-up to the event which is the second to be staged in Japan after a highly successful debut show in March.

Part One of Century will be headlined by the atomweight world championship fight between reigning champion Angela “The Unstoppable” Lee and challenger and women’s strawweight champ “The Panda” Xiong Jing Nan of China.

Co-main events are the world grand prix finals in the flyweight and lightweight divisions.

Flyweight will have mixed martial arts legend Demetrious “Mighty Mouse” Johnson against Filipino fighter Danny “The King” Kingad.

In the lightweight division, meanwhile, it will between Saygid “Dagi” Guseyn Arslanaliev of Turkey versus reigning lightweight champ Christian “The Warrior” Lee, who replaced Eddie “The Underground King” Alvarez of the United States because of injury.

Supporting Part One of Century are eight topnotch preliminary fights, including that of debuting Team Lakay strawweight Lito “Thunder Kid” Adiwang against Japanese Senzo Ikeda.

Part One of Century is scheduled in the morning and will be broadcast on TNT in the United States.

The second part, meanwhile, will air live across 140-plus countries late in the afternoon and is bannered by the light heavyweight clash of champion Aung La “The Burmese Python” N Sang of Myanmar against ONE heavyweight champion Brandon “The Truth” Vera of the Philippines.

Mr. Vera called out Aung La in March to put himself in a position to fulfill a dream of becoming a two-division champion and the latter readily agreed, setting up the marquee battle.

Under the N Sang-Vera fight are three world-class co-main events led by the world bantamweight championship fight between reigning champion Bibiano “The Flash” Fernandes of Brazil and former champ Kevin “The Silencer” Belingon of the Philippines.

This marks the fourth time that Messrs. Fernandes and Belingon will face each other for the belt.

The flyweight muay thai world championship fight between champion Rodtang Jitmuangnon of Thailand and Walter Goncalves of Brazil as well as the featherweight kickboxing world grand prix championship final between Italy’s Giorgio Petrosyan and France’s Samy Sana are the two other co-main events.

Filipino Honorio “The Rock” Banario is part of the main card, fighting Japanese legend and former ONE lightweight champion Shinya Aoki.

Also included in Part Two of Century are champion versus champion fights from MMA organizations Shooto and Pancrase.

“ONE: Century is undoubtedly the biggest event in the eight-year existence of ONE Championship, highlighting full day of nonstop action with two stacked cards being hosted on the same day. The stunning 22-bout spectacle marks the Singapore-headquartered organization’s 100th event, and there is no better way to commemorate it by having a double-header offering,” said Filipino combat sports analyst Nissi Icasiano when asked for his thoughts on Century.

“It is stacked with a collection of established names and up-and-coming talents and it has never been done before by any promotion in the world. It’s hands down the biggest martial arts event in Asian history,” he added.

ONE: Century will be carried live locally by both ESPN5 and Cignal, and ABS-CBN Sports and iWant Sports. Part one will be aired beginning at 8 a.m. and part two at 4 p.m.

Cards ride 10-run 1st inning into Game 5 rout of Braves

ATLANTA — Neither the St. Louis Cardinals nor Atlanta Braves could really put into words what happened Wednesday afternoon in the first inning of Game 5 of the National League Division Series.

But they both understood how it sent both franchises on familiar paths.

The visiting Cardinals became the first team ever to score 10 runs in the opening inning of a postseason game, and they cruised to a 13-1 win in the decisive NLDS game.

St. Louis will face either the Dodgers or the Nationals in the NL Championship Series beginning Friday night. Washington and host Los Angeles were playing Game 5 of the other NLDS later Wednesday.

“It felt like we blinked and the next thing you know, it was 10-0,” Cardinals infielder Matt Carpenter told Fox Sports Midwest.

There was no waking up from the nightmare for the Braves during a 26-minute inning in which the Cardinals sent 14 batters to the plate against starter Mike Foltynewicz and reliever Max Fried.

“I haven’t processed it enough,” Braves manager Brian Snitker said. “I don’t know. I don’t know that I’ve seen that many guys hit in the first inning that quick in my entire life. I don’t know. It wasn’t how we drew it up, I know that.

“I don’t know. That thing just kept rolling, and we couldn’t stop it.”

Marcell Ozuna (single), Carpenter (walk), Tommy Edman (two-run double), pitcher Jack Flaherty (walk), Dexter Fowler (two-run double) and Kolten Wong (two-run double) all collected RBIs in the first for the Cardinals, who extended their lead to 10-0 when Wong raced home from third on a wild pitch on strike three to Ozuna.

The 10 runs tied the record for most runs scored in any postseason inning.

St. Louis joined the Philadelphia Athletics (seventh inning of Game 4 of the 1929 World Series), Detroit Tigers (third inning of Game 6 of the 1968 World Series) and Anaheim Angels (seventh inning of Game 5 of the 2002 AL Championship Series) in the select club.

The Cardinals’ victory marked the fourth time a team won a winner-take-all game by 10 or more runs.

Now the Cardinals, who were 44-45 on July 12 but went 47-26 the rest of the way to win the NL Central by two games, will head into the NLCS with momentum.

The Cardinals are in the NLCS for the fifth time this decade and the 14th time in the division-play era (since 1969). St. Louis is looking to reach the World Series for the first time since 2013 and win it all for the first time since 2011.

“We have what it takes, just the character and stuff in the clubhouse,” said Fowler, who set the tone in the first by drawing a leadoff walk against Foltynewicz on a 3-2 pitch. “When our back’s against the wall, there’s nobody in the trenches I’d rather have than these guys at this point.

“We’ve come out and we faced adversity for a lot of the season. A lot of people have counted us out, and I don’t think we’re going to give up soon.”

The storyline Wednesday was a familiar one for the NL East champion Braves, who were four outs away from winning Game 4 and advancing on Monday before once again failing to reach the NLCS for the first time since 2001. Only five other teams have not reached an LCS in that span — one of them the Nationals, who could end their drought Wednesday night.

The loss Wednesday was the Braves’ fifth straight in winner-take-all games since 2002: four defeats in Game 5 of an NLDS and one loss in the NL wild-card game.

“You put this thing together, your goal is to get in the playoffs because anything can happen after that,” Snitker said. “I guess we saw that. Anything did happen.”

Paul DeJong (RBI double in the second, RBI single in the third) and Harrison Bader (RBI single in the third) added run-scoring hits for St. Louis.

Flaherty (1-1) allowed one run on four hits and one walk while striking out eight over six innings.

Josh Donaldson homered in the fourth for the Braves, who loaded the bases with two outs in the fifth before Freeman hit into a force out.

Foltynewicz (1-1) was charged with seven runs (six earned) on three hits and three walks while getting just one out. — Reuters

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