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US online privacy rules unlikely this year, hurting big tech

WASHINGTON — A US online privacy bill is not likely to come before Congress this year, three sources said, as lawmakers disagree over issues like whether the bill should preempt state rules, forcing companies to deal with much stricter legislation in California that goes into effect on Jan. 1.

Without a federal law, technology companies, retailers, advertising firms and others dependent on collecting consumer data to track users and increase sales must adapt to the California law, potentially harming corporate profits over the long term.

The delay is a setback for companies ranging from Amazon and Facebook Inc to Alphabet Inc’s Google and retailers like Walmart Inc, who either directly collect shopper information to run their websites, or provide free services and derive revenues from advertising that relies on online data collection.

“This will be tremendously challenging… companies need to really focus on complying with California now because there is not going to be a life raft from a federal level,” Gary Kibel, a partner specializing in technology and privacy at law firm Davis & Gilbert.

While the sources, who are involved in the negotiations, still think it is possible at least one discussion draft of the bill could land before the year ends, congressional negotiators must still agree on whether it is adequate to simply ask consumers to consent to collection of personally identifiable information and give them the opportunity to opt out and how the new law would be enforced.

They are also negotiating how much information should be deemed private and where one should draw the line in terms of exchange of consumer information with third parties, the sources said.

The effort to draft a federal bill is being led by Democratic Senators Richard Blumenthal, Brian Schatz and Maria Cantwell along with Republican Senators Jerry Moran, Commerce Committee chairman Roger Wicker and the Senate’s No. 2 Republican, John Thune.

Two sources said Senators Blumenthal and Moran’s staff are working on the federal bill and expected to release a draft before the end of the year. One of those sources said a draft of the House version of the bill could land in a few weeks.

California’s data privacy law will affect any major company with an online presence and requires companies with data on more than 50,000 people to allow consumers to view the data they have collected on them. It also lets consumers request deletion of data, and opt out of having the data sold to third parties. Each violation carries a $7,500 fine. Companies are also waiting for the state attorney general to roll out regulations around the law in California.

While it is only meant to protect California consumers, it is not known whether companies adapt their business practices to work under one set of rules for the most populous US state, and existing rules for the other 49 states.

“California will go into effect without Congress doing anything this year on the federal bill,” said a source with direct knowledge of the matter, who did not wish to be named and is pushing for a federal privacy bill.

“That’s a big problem because of the business impact this will have,” the source said.

Facebook did not respond to a request for comment. Google and Amazon declined comment. President & CEO Michael Beckerman of the Internet Association, which counts Amazon, Facebook, Google, Microsoft as its members, said in a statement that there is broad bipartisan consensus for a federal privacy law and urged Congress to act on it now.

Walmart did not comment and referred Reuters to the Retail Industry Leaders Association (RILA). Nicholas Ahrens, a vice president at RILA, which counts Walmart as a member, said the group is continuing to work with Congress toward a federal legislation and is hopeful a bipartisan solution can be reached.

Despite the immediate delay, the privacy bill remains one of the few pieces of legislation that many lobbyists still believe has a decent chance of becoming law because it is a bipartisan concern and does not cost taxpayers money. — Reuters

Dining Out (10/03/19)

Braised Abalone Fried Rice with Wild Mushroom

Abalone featured at Lung Hin

THIS October, Marco Polo Ortigas’ authentic Cantonese restaurant Lung Hin restaurant features South African abalone with five specially crafted dishes available all month long. These include Braised South African Dried Abalone in different ways — in abalone sauce, with Japanese sea cucumber, or with foie gras. Double-boiled Mini Buddha Jump over the Wall with South African Fresh Abalone is also in the menu for soup, and Braised Abalone Fried Rice with Wild Mushroom for guests who prefer rice options. Lung Hin is open daily from noon to 2:30 p.m. for lunch, and from 6 to 10:30 p.m. for dinner. Visit www.marcopolohotels.com for more details.

Passionately Pink Wine dinner

THE Crimson Hotel gives guests a chance to dine, drink, and do some good deeds with its Passionately Pink Wine dinner — with a special performance by singer Jinky Vidal — on Oct. 18, 6 p.m., and the Crimson Grand Ballroom. The hotel’s culinary team is partnering with Philippine Wine Merchants for a four-course dinner with wine pairings. The event includes an auction to help raise funds for Stagezero by Project Pink Support Group, and a fashion show. The rate per person is P3,500 net. For inquiries or reservations, call 863-2222 or 0998-595-3769 or e-mail dining@crimsonhotel.com.

Cevichow

Eastwood Café+Bar’s new menu offerings

EASTWOOD Richmonde Hotel’s all-day dining restaurant and bar, Eastwood Café+Bar (EC+B),is now serving up unique new dishes with novel flavors, original items that showcase the best of Filipino ingredients, feature global flavors, and are healthy to boot. There’s the Red Cabbage Chicharon, which is vegan-friendly and is an alternative to the usual cracklings; Adlai Bisque, made with a gluten-free rice substitute and seasoned with shrimp bits, vegetables, and cream; and Dapithapon, which is made of carrot hummus, black quinoa, and roasted vegetables (the salad was given special recognition during last year’s 12th National Food Showdown). Then there is Baked Bass served whole with torched Choron sauce. Meat lovers can opt for the Lamb Carbonade which is a stew of slow-cooked lamb shanks, onion soubise, and beer sauce. Popular dishes like Baked An addition to EC+B’s new menu is an array of meat-free and vegan selections for health buffs. Together with the revamped menu, Eastwood Café+Bar is rolling out a slew of dining deals: until Oct. 31, get 20% off across all items in the à la carte menu; on weekends, for a minimum food & beverage spend of at least P1,000, accompanying children aged 12 years old and below can avail of a complimentary dish from the menu’s Kids at Heart selections (available every Saturday and Sunday until Nov. 30); enjoy “Meatless Mondays” with Eastwood Café+Bar partner Quorn, plus get a free vegan soup and a wholesome drink with every order from the menu’s Healthy Options (available all Mondays until Nov. 25). For inquiries and reservations, call 570-7777 or 0917-821-0333.

BenCab “Art” Afternoon Tea

BenCab-inspired ‘Art’ afternoon tea at The Pen

UNTIL Oct. 15, there’s a new reason to enjoy Afternoon Tea at The Lobby of The Peninsula Manila, especially if one has an eye for art and objects of beauty. The hotel has just launched a BenCab “Art” Afternoon Tea created by Executive Pastry Chef Xavier Castello that is inspired by National Artist for the Visual Arts, Benedicto “BenCab” Cabrera, whose iconic Sabel and Larawan images have been printed into tapestries that are currently on view at the hotel’s iconic lobby. Eight works are on display, one of the largest group of tapestries the artist has ever exhibited. Presented by Abitare Internazionale, Philippine purveyor of contemporary design, eight paintings by BenCab have been transformed into “tapestry art” by MOOOI Carpets. The BenCab “Art” Afternoon Tea is accompanied by a guidebook that guests can use when exploring the tapestries on display at The Lobby — they can discuss their favorites over Curried prawn and apple salad with citrus aioli on shortbread; Smoked turkey ham, mature Cheddar, and tomato on wheat bread; Cured salmon, dill cream cheese, and golden trout roe on spinach bread; Grilled herbed squash and caramelized onions on a brioche roll; Mushroom quiche; Davao chocolate truffle cake; Mango panna cotta; Coconut pandan éclair; Calamansi meringue tartlet; Sans Rival macaron; and Peninsula raisin scones served with lemon curd, Baguio strawberry jam, and clotted cream. The BenCab “Art” Afternoon Tea is available at P1,590 per guest or P2,190 with a flute of Champagne. The BenCab “Art” Afternoon Tea is served daily until Oct. 15, from 2:30 to 5:30 p.m.

Oktoberfest at Clark Marriott

THE Clark Marriott, one of five Marriott properties in the Philippines, brings the authentic flavor of Germany to Clark, Pampanga with its first-ever Oktoberfest on Oct. 11 and 12, 6 p.m., at an air-conditioned tent at the back of the hotel. Festivalgoers can enjoy free-flowing Weihenstephan beer, a fine German wheat beer, and their fill of German food. A Munich-based Oktoberfest band will provide entertainment. Tickets to the festival are P2,500 and include complimentary German beer mugs and other freebies. The hotel will raffle off overnight stays and dining gift certificates. For details call +6345-598-5000 or visit www.clarkmarriott.com.

Max’s Restaurant Double Feast Meals

MAX’S Restaurant now offers Double Feast Meals — two of Max’s favorite dishes in one plate, starting at P499, and meant for sharing. Valid for dine-in in all stores nationwide every Monday to Thursday, until Oct. 31. The Standard Double Feast (P499) includes two orders of Max’s Sarap-To-The-Bones Fried Chicken Leg Quarter with rice, a bowl of either Sinigang na baboy and Sinigang na tiyan ng bangus (sour soup with pork and with milkfish belly), and two glasses of Pepsi. The Deluxe Double Feast (P599, photo), offers two classic Fried Chicken Leg Quarters with rice, two glasses of Pepsi, and Max’s newest dishes — Seafood Kare-Kare (a combination of shrimp, squid, and fish slow cooked in peanut sauce) and Lechon sisig (roast pig chopped and served on a hot plate). For more information, visit http://www.facebook.com/maxsrestaurant.

Too big to lend? JPMorgan’s cash hit Fed limits, roiling US repo mart

NEW YORK — JPMorgan Chase & Co. has become so big that some rival banks and analysts say changes to its $2.7-trillion balance sheet were a factor in a spike last month in the US “repo” market, which is crucial to many borrowers.

Rates in the $2.2-trillion market for repurchase agreements rose as high as 10% on September 17 as demand for overnight cash from companies, banks and other borrowers exceeded supply.

While not seen as an sign of distress as it was during the collapse of Bear Stearns and Lehman Brothers in 2008, the spike did prompt the US Federal Reserve to promise to lend at least $75 billion each day until Oct. 10 to relieve the pressure.

Analysts and bank rivals said big changes JPMorgan made in its balance sheet played a role in the spike in the repo market, which is an important adjunct to the Fed Funds market and used by the Fed to influence interest rates.

Without reliable sources of loans through the repo market, the financial system risks losing a valuable source of liquidity. Hedge funds, for example, use it to finance investments in US Treasury securities and banks turn to it as option for raising suddenly-needed cash for clients.

Publicly-filed data shows JPMorgan reduced the cash it has on deposit at the Federal Reserve, from which it might have lent, by $158 billion in the year through June, a 57% decline.

Although JPMorgan’s moves appear to have been logical responses to interest rate trends and post-crisis banking regulations, which have limited it more than other banks, the data shows its switch accounted for about a third of the drop in all banking reserves at the Fed during the period.

“It was a very big move,” said one person who watches bank positions at the Fed but did not want to be named. An executive at a competing bank called the shift “massive”.

Other banks brought down their cash, too, but by only half the percentage, on average.

For example, Bank of America Corp., the second-biggest US bank by assets, with a $2.4 trillion balance sheet, took down 30% of its deposits, a $29 billion reduction.

Overall deposits at the Fed from banks have come down over the past year as a consequence of the central bank’s decision to gradually reduce the vast holdings of bonds it had acquired to bolster the economy after the financial crisis. As the Fed has run off its bond portfolio, its deposits from banks have also declined.

“All of the banks were doing this to a degree,” said one Wall Street banking analyst, requesting anonymity because he was not authorized to speak on the record, adding: “JPMorgan does look like an outlier here”.

POST-CRISIS RULES
In the past JPMorgan would have gladly seized the opportunity to lend cash in the repo market, where loans are backed by the best collateral, often US Treasury securities.

But on Sept. 17 even as the majority of repo loans were being made at 5% and above, twice the usual rates, JPMorgan was limited in how much of its remaining cash it could provide because of regulatory and other constraints, a person familiar with the trading said.

The spike in rates reflected extra demand for cash, which was widely anticipated due to corporations requiring cash to make scheduled tax payments and banks and other firms needing it to buy newly-issued US Treasury securities.

Without the constraints on JPMorgan, the rate wouldn’t have spiked to 10%, the person said.

JPMorgan made the biggest draws from the Fed late last year and bought securities, winning praise from analysts for locking in fixed interest rates before Federal Reserve cuts. Buying the securities also offset pressure on JPMorgan’s mortgage loan portfolio from falling rates.

JPMorgan also needs cash for sudden demands by corporate depositors and to meet government requirements for reserves on checking account deposits.

It must also comply with rules adopted since the financial crisis which require banks to keep additional cash in case they fail and the government needs to transfer their operations in viable condition to other firms. Banks do not disclose how much of this so-called resolution cash they must hold, but some analysts believe the amount is significant.

Another post-crisis regulation imposes a capital surcharge on banks that are most important to the global financial system and it gives JPMorgan particular reason not to make repo loans going into the last three months of the year.

That is especially true for repos with firms from abroad, which include US branches of foreign banks and Cayman Islands-registered hedge funds.

Such loans could push JPMorgan’s surcharge higher, requiring it to carry an additional $8 billion of capital, a Goldman Sachs research note said.

JPMorgan’s capital surcharge is already the highest of any US bank, which means its must make more profit from its business to produce the same return on shareholder equity.

Goldman analysts see the repo market pressures continuing under the regulatory constraints and what they believe is a shortage of extra cash on deposit at the Fed.

The Federal Reserve has said it is considering bolstering the market in the longer term by encouraging banks to build up their cash deposits. It has also discussed opening a standing repo facility to be a reliable source of cash loans. — Reuters

How PSEi member stocks performed — October 2, 2019

Here’s a quick glance at how PSEi stocks fared on Wednesday, October 2, 2019.

 

Data Science and Finance

FREEPIK

We are now living in the age of Data Science and Big Data, as the ubiquity and availability of large amounts of data plus advances in technology to store, process, and analyze such data have revolutionized ways of thinking about things and of doing business. If you take a look at your social media accounts and wonder how these outfits are able to anticipate the kind of content you like to consume, the answer is that data science and big data analytics are being harnessed to try to guess exactly that, and with very good results. Want to buy a book from your favorite online merchant and out pop some other suggested books that you never even thought about, but you buy them anyway thanks to the prompt? You guessed it, data science and data analytics had a hand in this as well.

Even the CFA Institute, the organization that grants the Chartered Financial Analyst designation globally, has for years integrated data science and big data into its curriculum, with a major emphasis on finance as the domain expertise. Thus, data science, machine learning, fintech, etc. are all par for the course and part of the study materials, as applied to finance and investments.

But what is Data Science in the first place? Lillian Pearson defines it as “…the practice of using a set of analytical techniques and methodologies to derive and communicate valuable and actionable insights from raw data.” This key is really “insighting,” the ability to extract insights from data that is processed in order to help, say, target customers to consume a particular product or determine which assets to trade via algorithmic trading, etc.

To come up with such insights, there is a great reliance on statistical analyses and procedures such as multivariate linear regression, cluster analysis, principal components analysis, factor analysis, etc. At any rate, this kind of quantitative analytical work is an exciting growth area and demand for data scientists has been steadily increasing through the years. So, for somebody who wishes to study data science and its application specifically in finance, where can one start?

Well, De La Salle University has a graduate program, MS Computational Finance (MSCF), where modern finance and investments are covered, alongside a healthy dose of data science and computer applications. In the program, students learn modern portfolio theory, standard finance, plus behavioral finance, in addition to core quant subjects used in data science, from linear regression, statistics, probabilities, factor analysis, cluster analysis, etc. On top of that, there is heavy use of computer applications for analytical work, from the extensive use of MS Excel and VBA programming for data analytics, plus coding using R, widely used as the main statistical analysis software in the field of big data and which is now being especially emphasized in the program.

What the MSCF Program actually aims to do is marry all three major areas in one seamless application: finance, quantitative analysis, and computer software and technology. But this is exactly what data science does as well, marrying a domain expertise with quantitative analysis and computer technology, so graduates of the program can rightfully consider themselves data scientists, but with a particular domain expertise in finance. What’s even better is that the skills learned in the MSCF Program, while geared towards finance, can be ported to other data science domains since the skills themselves are really widely applicable and portable in the first place.

Additionally, in the current Trading, Software, and Programming class, Day Trading is being introduced as a unique and standalone module, this with the help of a former Wall Street trader. This is because the previous treatment of trading has mostly been from an investments angle rather than from a day trading angle but the current market reality is that there is a need for proprietary traders who can do day trading as a profession. There are a lot of urban myths out, and there are claims that one can do day trading and be a millionaire by just mastering the art of technical analysis. But the truth is more complicated than that. What is sure is that there appears to be big need for a course on Day Trading treated as a profession and the MSCF Program is being upgraded to address this market need as well, on top of its core strengths.

Interested in Data Science with a particular twist in Finance and Day Trading? Maybe the DLSU MSCF Program is the right place for you to start.

 

Ildemarc C. Bautista, CFA is Vice-President and Head of Research at Metrobank, and has been teaching the core courses of the De La Salle University MS Computational Finance program for almost two decades.

Idelmarc.bautista@dlsu.edu.ph

PPP: Public-Private (Parking) Partnership

About a couple of years ago, a big parking lot was put up at the corner of Yakal St. and Chino Roces Ave. in Brgy. San Antonio, Makati City. At the start, very few cars could be seen parked there. But now, it is usually full. The lot appears privately owned, and the parking privately managed. But the benefit is to the public, particularly the San Antonio community.

The parking facility was opened before one-side street parking was implemented in San Antonio. In short, even before the new parking regulation came in, there was already a facility available to those who might be affected. The lot now hosts not only the cars of residents but also delivery trucks of local businesses and even commuter jeepneys.

While the pay-parking lot, despite its size, is still not big enough to service all San Antonio residents, it was a good start, I believe. So, imagine if every Metro Manila barangay can find the means to put up a public parking facility for its residents? Barangays can get extra income from parking fees — and better manage on-street pay parking — while partly addressing congestion.

Of course, there are very few wealthy barangays that can actually afford to put up a parking facility for residents. And land is now very expensive anywhere in Metro Manila. An option is to look for suitable government land, or properties owned by the national government or government-owned and -controlled corporations. Or, land to be auctioned because of unpaid real estate taxes.

Municipal or city parking is one area where, I believe, the PPP or Public-Private Partnership can work well. Local governments can make land available to private parties through build-operate arrangements. Multi-level parking is ideal, possibly with some commercial and office spaces for rent. While the city can collect parking fees, the proponent earns from the rentals. The city retains land ownership. The PPP arrangement can be for 25-50 years.

I am certain that development institutions like the World Bank and the Asian Development Bank will also be interested in financing such projects. An option is for the city to issue bonds to investors to raise money to buy land, while a private proponent comes in to build the parking facility. Both city and proponent earn from parking and rental, and repay bond investors.

In many places in Metro Manila now, we need parking as much as we need roads, for the simple reason that part of our roads is used for parking. I still believe that efficient public transportation is the answer. If efficient, convenient, and affordable public transportation is available, why will people bother to take cars? For now, however, more parking will help clear more roads.

GSIS, for instance, owns a huge tract of land at the Quezon Memorial Circle, just off Commonwealth Avenue. For decades, that property has been practically vacant. GSIS also owns a building in Legaspi Village in Makati. Landbank, I believe, owns a vacant building on Buendia/Gil Puyat Avenue. Then, there is the old NEDA building on Amorsolo.

The government has also assumed control over the entire strip that includes Sunvar Plaza, Mile Long, and Creek Side also on Amorsolo St. in Makati. There is talk that the property is now being prepped for development by private parties, and that Makati City is being convinced to put up a subway station in the area. If so, then this makes the property suited for multi-level parking as well.

The World Bank’s Public-Private Partnership Legal Resource Center (WBPPPLRC) lists a number of PPP projects that involved parking facilities. In Australia, for example, it noted that a Build, Own, Operate and Transfer (BOOT) agreement was signed for a car park at a public hospital. PPP was also used for a parking concession for Light-Weight Vehicles in the Tabo Commune in Valparaiso, Chile.

MMDA personnel tows a vehicle parked along Club Filipino Avenue during a clearing operation last July 25. — PHILIPPINE STAR/MICHAEL VARCAS

The WBPPPLRC also said that in Bhutan, in Thimphu City, a PPP agreement was signed for the development and management of an integrated parking system that will include two new multi-level car parks with at least 550 parking spaces as well as the upgrading and management of about 1,000 off-street and on-street surface parking in the city. This is to be done through a design, build, finance, operate and transfer concession (DBFOT).

And then in Santiago, Chile, a concession was granted for the operation of Parking Meters on Public Roads of Providence Commune. The concession is for the provision, maintenance, functioning, and use of the parking meter system on public roads. The eight-year contract was awarded based on highest per transaction payment to the municipality. Also, penalties were set for non-performance or not meeting service standards.

In Bogota, Colombia, a concession agreement was also signed between the City of Bogota’s Urban Development Institute and Union Temporal City Parking, a private entity. This is for the maintenance, administration, and operation of the Public Parking Facilities owned by the Urban Development Institute (a municipal public entity for the City of Bogota).

The two-year agreement is renewable by mutual accord. The contract does not commit the public sector to minimum revenue payments. It contemplates fixed and variable payments from the private to the public entity, reviewed annually to keep with inflation. Maximum tariffs (parking fees) are set by decree. There are minimum service requirements and duties outlined in the contract and its bases; however, the contract is not a performance-based or results-based agreement. But there are penalties for non-performance.

In Uttar Pradesh, India and in Nairobi, Kenya, concession agreements were drafted for the construction and operation of multi-level car parks. And in Vilnius, Lithuania, the agreement was for the concessionaire to finance renovations, purchase new land and property, operate the car park, and transfer it on expiry of the concession.

In Peru, the Municipality of Miraflores established a public-private partnership with a private consortium for the construction of a 573-slot underground parking lot, with a projected private investment of approximately $9 million, to be completed in a year. The public sector invested in the studies and offered the real estate.

Also, in Peru, in San Borja, the was a public-private partnership for the construction and operation of a 350-slot Underground Parking facility. The public-private partnership was for the design, financing, construction, operation, maintenance, and transfer of 14,320 square meters of space, including an underground parking lot and commercial space at ground level.

The period of the contract is 32 years from the date of signing. The municipality will receive 8% of income from the parking operations and rental income from commercial space. The private party is free to set prices on both the parking and rental operations. The contract provides for rebalancing of economic and financial terms due to changes in law.

There are many ways that local government, private companies, and development institutions can work together on municipal parking projects. I am sure we have many other examples locally where state and citizens came together to address development issues. Parking is a problem in all urban areas. It is about time we get more creative with our solutions.

 

Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippines Press Council.

matort@yahoo.com

The DoH budget and drug price control

The Philippines’ public health sector is not a “deprived” sector in terms of annual budget to fulfill various agencies’ functions and mandates. There are three reasons why.

One, the annual budget of the Department of Health (DoH) keeps rising and constitutes around 7% of total budgets by all departments, the Legislative, and Judiciary. The data in the table comes from the Department of Budget and Management (DBM), Budget of Expenditures and Sources of Financing (BESF), submitted to Congress usually days after the President’s SONA.

Two, there are many other national agencies that also provide public health services and subsidies, like the hospitals of state universities including the University of the Philippines’ Philippine General Hospital, hospitals by other agencies like Armed Forces of the Philippines Hospital, Philippine National Police Hospital, plus health subsidies by Philippine Amusement and Gaming Corp., Philippine Charity Sweepstakes Office, and other national agencies.

Three, local government units (LGUs) have their own provincial hospitals, or district hospitals, even city hospitals. Plus the various barangay health centers, city and provincial centers.

If all the public spending by national government and LGUs are combined, the Philippines would probably have at least 5% of GDP minimum health spending.

Now the DoH has revived the drug price control policy, officially called Maximum Retail Price (MRP), under the Cheaper Medicines Law of 2008 (RA 9502).

In 2009, the DoH and Department of Trade and Industry (DTI) jointly imposed the MRP, but because of heavy politicking that year before the 2010 Presidential elections, they avoided using the term “MRP” (which could mean “Mar Roxas for President”) and used “MDRP” (maximum drug retail price) instead. Then they invented another term, GMAP (Government mediated access price) to refer to “voluntary” price reduction. The subliminal meaning of GMAP of course was Gloria Macapagal Arroyo Price. There was no “health emergency” that year, only political emergencies for both the administration and opposition.

The DoH Secretary that time was Francisco Duque. And he is the DoH Secretary again now, and he is using the same political maneuvering to impose drug price dictatorship again.

Luckily, the DTI Secretary now does not believe in government price dictatorship and in arm-twisting innovator pharma companies to bring down their prices or face huge penalties.

The DoH target now is 120 drugs that address leading diseases and “catastrophic” conditions in the Philippines like hypertension, diabetes, cardiovascular disease (CVD), chronic lung diseases, neonatal diseases, and major cancers.

From the DoH press release, “Medicines were chosen on the basis of burden of disease in terms of magnitude and the severity of the conditions, high price arbitrage when compared with selected reference countries, and the presence of limited competition.”

These are illegal criteria, not found in the law.

Under Section 7, Chapter 6 of the IRR, among the many factors to consider in recommending MRP are the following:

“…Cost to the manufacturer, importer, trader, distributor, wholesaler or retailer such as but not limited to: The exchange rate of the peso to the foreign currency with which the drug or any of its component, ingredient or raw material was paid for; Any change in the amortization cost of machinery brought about by any change in the exchange rate of the peso to the foreign currency with which the machinery was bought through credit facilities; Any change in the cost of transporting or distributing the medicines to the area of destination; Marketing Costs (per drug and total global costs); Research Costs (local and global/per drug); Promotion Costs; Advertising Costs; Incentives and Discounts; Taxes and other fees, impost, duties, and other charges imposed by competent authority…”

These were not considered when price control was imposed in 2009, and again not considered when price control will be imposed in 2019. The DoH, as main implementer of RA 9502, becomes the chief violator of the provisions of the law — not good.

If we want cheaper medicines, there are many factors that government itself can do. Like reducing or abolishing import duties on medicines, taxes and VAT on medicines. Have more competition among pharma companies, innovators and generics, more competition among drug stores and pharmacies, among hospitals. Not to mention, reduce government corruption in the procurement of medicines.

The main function of government in this case is to ensure the good quality of medicines, to go after manufacturers and sellers of fake, counterfeit, and substandard medicines. Cheap but substandard medicines can kill when the disease is not controlled and mutates to something more serious.

 

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

minimalgovernment@gmail.com

Nothing beats learning to learn

By Raju Mandhyan

A FEW YEARS ago, I had the honor of interviewing the Director of Application Services of Hewlett Packard, Philippines, Noel Mendoza, and though the subject of our discussions was information technology and its growing impact on the world, there was something he said outside of the interview that got velcroed to my heart and I share that thought with you here today.

Mr. Mendoza mentioned that his father, the distinguished Professor Gabby Mendoza of the Asian Institute of Management, had left an indelible mark on him and that mark stated that nothing is more important in a human being’s life than building and sustaining one’s ability in learning to learn. No diplomas, no degrees or doctorates granted by any institution can match up to one’s ability to become a self-driven learner at work and in life.

And, what applies in our daily lives and in our self-development and leadership initiatives also applies to selling and serving the needs of our customers.

Years ago there was this humorous story going around the internet about an inept salesman selling Bibles across the small towns of America. It’s a great story and puts across the point of eagerness and learning.

This Bible salesman would knock upon doors, mumble his way through his introduction, stumble through his presentation, and make an overall mess of what was considered to be an easy sale back in the day.

Upon seeing his inadequacy at his job, most of the people answering the door would get frustrated at his approach and respond with,

“You don’t know a thing about selling, do you?”

“No, ma’am, not really! I am new to this job and also quite clumsy around it.”

“Oh, you nitwit you, there’s nothing tough about selling, you know!”

“Yes, ma’am, you’re absolutely right. I need to trust that fact.”

“Oh, come now,” they’d rebuke, “let me show you how.”

And, the customer would then go about teaching this nitwit of a salesperson how to sell correctly. Well, at the end, you guessed it. His sales multiplied and he often made it to superstar status in his company.

His approach might be considered tricky today, but the essence of the Bible salesperson’s story lies in our wanting to learn. When your buyer senses and is convinced you want to learn about them to help them improve, then they often lean over backwards and hand you their trust in spades.

My belief is this “wanting to learn” is about innate curiosity. This desire to learn and add value is the anti-thesis, the opposite of what has been considered a standard selling process. In the standard selling process, the seller shamelessly shoves features, advantages, and benefits towards the prospective buyer. The reversal of this attitude and the desire to learn creates a good vacuum that draws the buyer in to where solutions can be created.

I massively trust and profess success from the process of inquiry and questioning at any time and place. This is the process of diagnostics and counselling that community workers, therapists, and doctors utilize. It is the process of interacting, learning, and understanding our clients prior to prescribing solutions. Interacting, inquiring deeply to learn about the customer is the true Heart of the Close.

A good teacher makes for a non-intrusive and gentle guide who creates an atmosphere to encourage students to think boldly, to talk freely, and to act judiciously. He makes available opportunities for them to exercise initiative, to grow and shape their own growth and development. A good sales leader does the same for his customers. He helps them create their own solutions and own them for tomorrow.

 

Raju Mandhyan author, coach and learning facilitator.

www.mandhyan.com

Singapore has some tough advice for the US and China

By Hal Brands

THESE ARE fraught times for Asia-Pacific nations caught in the crossfire of the intensifying US-China rivalry. I recently wrote about how one longtime US ally, the Philippines, is repositioning itself between Washington and Beijing. But Manila is hardly alone in trying to protect itself as the geopolitical giants clash.

Singapore confronts a similar challenge, which was thrown into relief by an interview that its prime minister, Lee Hsien Loong, gave last week. Lee’s remarks may rankle some US analysts. Yet they highlight the dilemmas faced by weaker states — and point to some imperatives of success for America.

First under the legendary Lee Kuan Yew, and now under his eldest son, Singapore has pulled off a shrewd balancing act in a contentious neighborhood. Singapore’s dynamic economy has been buoyed by Chinese trade and investment, and its population is mostly ethnic Chinese. Yet getting too close to a powerful China can be dangerous, so Singapore’s government has long viewed Washington as a critical counterweight to Beijing’s power. As that power has increased in recent decades, so has Singapore’s security cooperation with the US.

Singapore’s armed forces regularly train with (and in) the US, and Singapore hosts the US Navy’s Logistics Group Western Pacific as well as deployments of littoral combat ships and P-8 maritime surveillance planes. US aircraft carriers conduct port visits in Singapore, a visible reminder that Washington takes an interest in the country’s security. Singapore remains officially neutral; unlike the Philippines, it does not have a treaty relationship with the US. Yet if the Philippines is an ally that acts like a partner, as a senior US official once put it, Singapore is a partner that acts like an ally.

This Singaporean balancing act was underscored by Lee’s interview with the Washington Post. Building on a speech he gave in May, at the annual Shangri-La Dialogue, Lee gave a warning to America and China alike.

The trend toward seeing the US-China competition as “a conflict between two systems, almost two civilizations” is “very worrying,” he said. The US should not delude itself into thinking that pressure can bring about the collapse of the Chinese Communist Party; it should bear in mind that an economic and technological divorce between the world’s leading powers would create an impossible situation for America’s friends “so deeply enmeshed with the Chinese.” If the US insists that these countries choose sides, it might not like the results: “Where is your part of the world, and who will be in your system?”

At the same time, Lee acknowledged that China’s behavior has become more truculent, due to rising geopolitical ambitions and growing internal difficulties. He also argued that China can no longer act like a developing country, but must bear its “share of responsibility upholding and supporting the global system” that has made it so rich and powerful. If a disastrous geopolitical showdown is to be averted, “statesmanship, consistency, perseverance and wisdom” will be required from both sides.

Some of Lee’s comments are a bit grating, from an American perspective. He implies a certain moral equivalency between the US and China, and alludes only obliquely to Beijing’s horrifying abuses of the Uighurs in Xinjiang. Other aspects of his comments reflect an attitude better suited to 2005 than 2019: It is abundantly clear by now that China just won’t become a “responsible stakeholder” in an American-led system. Yet Lee’s comments shouldn’t be dismissed, because they illuminate three critical issues the US will face in rallying an international coalition to counter Chinese power.

First, a larger confrontation with China will be economically painful for US — but it could be economically devastating for America’s key allies and partners in the Asia-Pacific, all of which are deeply interdependent with Beijing in commercial, financial, and technological terms. The prospect of a technological or economic Iron Curtain coming down is alarming for countries whose economic interests pull one way while their security interests pull another. To be sure, the US can’t compete successfully with China unless its friends become less dependent on Beijing: Some selective de-coupling from the Chinese economy is important, even if wholesale de-coupling remains implausible. Yet the only way to get countries such as Singapore to reduce their dependence on Beijing is to vastly deepen the possibilities for economic, financial, and technological integration within the US-led coalition. Here, America presently seems like an uncertain partner, at best.

Second, Lee underlines the dangers of combining hard-line rhetoric with inconsistent policy. Many countries in the region were quietly happy for the Trump administration to take a tougher approach to China, but now they worry that the administration is better at talking competition than walking it.

For example, Washington has pressured its friends in the Asia-Pacific and elsewhere to avoid reliance on Chinese 5G technology, but efforts to provide alternatives have lagged far behind. Asia-Pacific countries have been jerked back and forth by the unexpected US effort to cripple Huawei Technologies Co., and then subsequent indications that Washington might relax its sanctions on the Chinese telecom giant. The US has increased its defense budget and revived the “quad” (a security and diplomatic mechanism involving the US, Australia, Japan, and India), yet Trump has derided America’s alliance commitments to an unprecedented degree. An unreliable America does a small, exposed Singapore no good, and won’t be very effective in winning the loyalties of frontline states over time.

Finally, Americans need to keep in mind that different messages will appeal to different parts of a prospective counter-China coalition. I have argued before that embracing the deep ideological conflict between liberal and illiberal forms of government is essential to rallying democratic countries to the cause. But other governments will find this argument less persuasive.

Singapore is, after all, a police state, albeit a comparatively benign one. Other key partners, such as Vietnam, are deeply authoritarian. These countries may not be interested in making the world safe for democracy. But they do value self-determination — the idea that they should be able to work out their own destinies free of coercion and intimidation. That’s the sort of message that can be broadly effective in the Asia-Pacific region, because it’s a concept that both liberal and friendly illiberal regimes can get behind.

 

BLOOMBERG OPINION

Decision on exploration bids seen in 30 days

By Arjay L. Balinbin, Reporter

THE Department of Energy (DoE) hopes to release within 30 days its final decision on the seven groups that bid for areas it offered for petroleum exploration, Energy Assistant Secretary Leonido J. Pulido said.

“Hopefully within the next 30 days,” Mr. Pulido said at an economic briefing in Malacañang, referring to the final decision on the seven groups that bid in a contracting round that seeks to revive efforts to find another major energy source like Malampaya.

Four entities bid for four out of the 14 pre-determined areas offered by the department, while three entities “nominated” or proposed to explore areas outside the department’s list.

Asked about the criteria for the decision, he said: “We put more emphasis on a company’s technical capability. (We used to focus more on) a company’s financial capability.”

He added: “The Secretary of Energy feels now, it’s time to prioritize, sino po iyong mga kompanya na talagang seryoso at may kakayahan na ituloy po iyong exploration para umabot po tayo sa production (which companies are serious and capable of bringing exploration to the production stage)… If you compare us to our neighbors, Malaysia, Indonesia, medyo mabagal po iyong offshore energy exploration natin (our process for offshore exploration is slow), so we want companies who have the technical know-how and capability to really explore.”

The DoE on Aug. 19 opened the bids for the 14 pre-determined areas — mostly offshore — under its Philippine Conventional Energy Contracting Program (PCECP), which represents the department’s bid to spur exploration of areas in the country with potential oil and gas reserves.

Up for grabs were: a site in Cagayan, three in east Palawan, three in the Sulu Sea, two in Agusan-Davao, one in Cotabato, and four in west Luzon. The application period was 180 days. None of the areas lies in waters contested by China and the Philippines.

The four companies that submitted bids were Israel’s Ratio Petroleum Ltd. (Area 3-East Palawan Basin); Sulu Sea Energy Resources Development Corp. (Area 6-Sulu Sea Basin); the partnership of The Philodrill Corp. and PXP Energy Corp. (Area 7-Sulu Sea Basin); and Esmaulana Global Ventures Company, Inc. (Area 6-Sulu Sea Basin).

Under PCECP, companies may also nominate other areas of interest at any time of the year. Their proposals will be subjected to challenge within a 60-day period.

The three companies that proposed to explore other areas are Sulu Sea Energy (Sulu Sea Basin); Troika Giant Power Corp. (Northwest Palawan Basin); and Superior (SG) Shipyards, Inc. (Southeast Luzon Basin).

Energy dep’t warns of prosecutions over small fuel price cuts

By Arjay L. Balinbin
Sub-Editor

THE Department of Energy (DoE) said it could file charges against oil companies that did not roll back fuel retail prices as much as they could have.

“If we believe that either the rollback or the increase — rollback for liquid petroleum products and the increase in LPG — is unreasonable then we will refer it to the DoE-DoJ (Department of Justice) Task Force to study the possibility of filing either administrative or criminal cases against these companies,” Energy Assistant Secretary Leonido J. Pulido III said at an economic briefing in Malacañang.

He added: “As far as price is concerned, the government cannot dictate what the prices are. However, the Oil Deregulation Law points out that a task force called the DoE-DoJ Task Force has the authority to investigate anti-competitive practices.”

Oil companies on Monday announced a price rollback of P1.45 per liter for gasoline, P0.60 for diesel, and P1.00 for kerosene. Ahead of their advisories, Phoenix Petroleum Philippines cut the prices of its gasoline and diesel products on Sunday by P1.55 and P0.50 per liter, respectively.

When compared with the DoE’s estimate for the retreat in prices, “mas mababa po ‘yung rollback nila by about 22 cents for gasoline and about .06 cents for diesel (their rollback is lower by about 22 cents for gasoline and about .06 cents for diesel).” And we want them to explain it. Hindi naman po namin sinasabi na mali sila (We’re not saying they’re wrong) but we want to give them the opportunity to explain to us.” Mr. Pulido said.

Eastern Petroleum chairman and chief executive Fernando L. Martinez and Shell Philippines were asked to comment but had not replied at deadline time.

Oil companies that sell liquefied petroleum gas (LPG) also announced on Monday an increase in cooking gas prices by P4.50 per kilogram, and auto LPG by P2.50 per liter to reflect the international contract price of LPG.

“For LPG, when we computed kung magkano po dapat ‘yung iaakyat ng presyo ng LPG this week or this month, mas mataas po ‘yung ini-inform nila, mas mataas po ‘yung iaakyat ng produkto na LPG kumpara sa dapat iakyat niya compared po sa world market at sa sinusundan po natin na tinatawag natin na Mean of Platts of Singapore. (When we computed the LPG price increase, the price hikes announced by the companies was higher than expected based on the Mean of Platts Singapore benchmark) So we’re asking also LPG importers and suppliers in the Philippines to explain within three days bakit po mas mataas iyong presyo po ng LPG na pag-akyat po nila (why their price hikes were that high),” Mr. Pulido said.

This week’s price adjustment comes after oil firms last week implemented a hefty increase in the price of gasoline, diesel and kerosene on supply fears brought about by the drone attack on major Saudi Arabian facilities. — Victor V. Saulon

House bill seeks to expand NTC enforcement powers

A LEGISLATOR has filed a bill which seeks to expand the power of the National Telecommunication Commission (NTC) to impose fines and sanctions on the telecommunications industry.

Representative Michael L. Romero of the 1-Pacman Party-list filed House Bill No. 4886, aiming to give NTC the power to punish violations of Republic Act 7925 or the Public Telecommunications Policy Act of the Philippines.

“My bill amends RA 7925 with a whole set of law enforcement teeth because the 1995 law does not have penalty provisions and no means to hold erring entities and people liable for wrongdoing and not doing when they should have acted decisively,” Mr. Romero said in a statement.

Mr. Romero said one particular issue where enforcement capacity is needed is spectrum allocation.

He cited an NTC report citing the regulator’s inability to consolidate unused or unpaid-for frequency held by government agencies and the private sector.

“We have only three major telecom players and dozens of bit players. We have a number of unused spectrum frequencies. The spectrum policy has been described by some experts as ‘a mess’. The country has thousands of telecom dead spots nationwide,” he said.

The bill requires the government to allocate the spectrum to service providers who will use it efficiently and effectively to meet public demand, and the establishment of fair and reasonable tariff structures.

The proposed amendment provides for a fine of up to P1 million for violations of the act. — Vince Angelo C. Ferreras

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