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Gifts or bribes: What’s in a name?

President Rodrigo R. Duterte started the cauldron bubbling when on Aug. 9, during the celebration of the 118th police service anniversary at Camp Crame, he said that he believes police officers should accept gifts if these are given out of gratitude or generosity. “Well, if you’re given a gift, accept it. It cannot be bribery because it is allowed by law. What I mean if there is generosity in them, the anti-graft law says you cannot accept gifts. (Kalokohan ’yan) That’s nonsense,” he was quoted by The Philippine Star as saying in its Aug. 11 issue.

Is it allowed, or not allowed by law for civil servants to accept “gifts”? Republic Act 6713, or the Code of Conduct and Ethical Standards for Public Officials and Employees, Section 7 (d) expressly says, “Public officials and employees shall not solicit or accept, directly or indirectly, any gift, gratuity, favor, entertainment, loan or anything of monetary value from any person in the course of their official duties or in connection with any operation being regulated by, or any transaction which may be affected by the functions of their office.”

“If you are able to solve a crime and the family would like to be generous to you or would nurture a feeling of gratitude for what you accomplish, then by all means, accept it,” Mr. Duterte insisted. But he seemingly made even the policemen themselves uneasy and embarrassed. Philippine National Police (PNP) spokesman Brig. Gen. Bernard Banac immediately stepped forward to say they are still bound by RA 6713 that expressly prohibits the solicitation or acceptance of gifts in any form despite the pronouncement of the President. Mr. Banac stressed there is no need for groups or individuals to gift policemen for tasks accomplished (since) taxpayers are already paying the policemen their salaries, the Star article noted.

Senator Panfilo Lacson, a “career policeman” who immediately opted for commissioning into the Philippine Constabulary (PC) upon graduation from the Philippine Military Academy in 1971, and who retired in 2001 as Chief of the PNP — a 1991 merger of the military PC and the civilian Integrated National Police (INP) — also did not agree with Mr. Duterte’s revision of the police rules of conduct. “Mr. President, insatiable greed starts with simple, petty graft. It could be more addicting than drugs. There is no detox, nor is there rehab facility available for addiction to money,” Mr. Lacson said in his Twitter account.

In his website pinglacson.net, Mr. Lacson recalled that he was a Lieutenant Colonel with the PC-Metrocom in 1981 when he led a team that rescued the young Robina Gokongwei, daughter of taipan John Gokongwei, Jr. (JG Summit Group), from a kidnap-for-ransom gang. According to a post on his website called “Lacson: Time to Revisit, Make Anti-Graft Laws More Implementable” (Aug. 19), “Robina’s grateful family offered him and his team a hefty reward, but he had a strict ‘no-take’ policy and he declined it, pointing out he does not want his men to have the mentality of not helping ‘poor’ complainants who may not afford to give them a reward. To show their gratitude, the Gokongwei family decided to donate mobile patrol vehicles to the PC for Robina’s successful rescue. The donation was coursed through then PC chief Maj. Gen. Fidel V. Ramos via a deed of donation in favor of the PC Metrocom.”

Yet for Senator Ronald “Bato” de la Rosa (PMA 1986), also a former PNP chief (from July 1, 2016 to April 19, 2018), receiving gifts is no big deal as long as they are given out of gratitude. “The President is a very pragmatic individual. Anything that is given in the spirit of goodwill is not a problem,” Mr. De la Rosa told GMA News. Hard to imagine how two PMA “cavaliers,” both graduates of the Philippine Military Academy, can think so differently — black-and-white for one, and shades of grey for another. And a little-known phrase in RA 6713 has been called forth by defenders of the President’s shocking dispensation to police officers to accept “gifts” in appreciation of good service:

RA 6713 (d) of Definitions: “‘Receiving any gift’ includes the act of accepting directly or indirectly, a gift from a person other than a member of his family or relative as defined in this Act, even on the occasion of a family celebration or national festivity like Christmas, if the value of the gift is neither nominal nor insignificant, or the gift is given in anticipation of, or in exchange for, a favor.”

The phrase “nominal or insignificant” is what Presidential Anti-Corruption Commission (PACC) Commissioner Greco Belgica (who was appointed by Mr. Duterte in January 2018) drummed upon to justify the “gifts” go-ahead by the President. (Remember that the PACC was Panfilo Lacson’s organization with the absolute “no-take” policy on gifts and bribes.) Mr. Belgica stressed the qualified quantitative “way-out” for a civil servant to accept “rewards” or tokens of appreciation for a job well done — in one TV interview he gave the example of an airport employee receiving P100,000 for returning P1 million he found to the office and to the appreciative owner.

In an interview on The Chiefs on Cignal TV last Friday, Mr. Belgica said, “Kunwari ako, sir, commissioner po ako, ako po na nakakuha (For example, I as commissioner was the one to receive) — That’s my salary sir. For me, the P100,000 is just to get me by, so it’s really not a significant amount to me because that’s how much I get paid a month.”

Was it insignificant to the airport employee in his example?

According to a write-up in The Philippine Star (March 27, 2013) — written at a time when Mr. Belgica was running for Senator — as an elder and pastor at The Lord’s Vineyard Covenant Community (founded by his father, Butch Belgica), he “capitalizes on the support and votes of his fellow Christians — 63,000 evangelical churches all over the Philippines, spread over 42,000 barangays,” Mr. Belgica said then. With that “influence,” could the preacher not have preached a detachment to mundane “gifts,” and quoted Matthew the evangelist (Ch. 5, v. 12): “Rejoice and be glad, for your reward is great in heaven.”

The keyword in the controversy is “influence.” Outright bribes are definitely quid pro quo for the power to influence an outcome expected by the giver. But would the government employee, at whatever level, have received the “gift” or token of appreciation if she/he were not in the position and place to influence the outcome of a situation or predicament of the taxpayer/gift-giver? Even a “reward,” by Mr. Lacson’s “no-take” policy at the PACC in his time, would be a “bribe” for the continuance of the built-in position of influence and power of a civil servant over the common good. Perhaps gifts and rewards can be called an “investment” of the giver for future favors.

What’s in a name? “Bribes,” “gifts,” “rewards” are all dangerous substances to a civil servant. Once a bounty beyond salary is experienced, expectations are subliminally raised. An “addiction to money” in a government employee is indeed more pernicious than drug addiction, as Mr. Lacson reminds givers and takers alike.

But as the controversy rages about “gifts” and the thin line between these and bribes, Justice Secretary Menardo Guevarra took up from Mr. Belgica’s offered allowable “take” of P100,000, and urged a review of RA 3019 the Anti-Graft and Corrupt Practices Act and RA 6713 or the Code of Ethical Standards. “It is difficult to give specific guidelines because according to the law, it would depend on the local customs and traditions of the place where the gift-giving happens. So it is really a relative term, unless of course the Civil Service Commission would give an exact or precise definition, let’s say no gift exceeding P1,000 in any occasion. Right now there is no such rule, so the concept is flexible, very relative,” Mr. Guevarra said (The Philippine Star Aug. 20, 2019).

You might have missed the point, Sir.

Rep. Carlos Zarate of Bayan Muna got the point: “Under the Code of Conduct for Public Officials and Employees, acceptance of anything of value is prohibited,” he said (Philippine Star Aug. 23, 2019).

 

Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.

ahcylagan@yahoo.com

Higher alcohol taxes will improve population health and augment UHC funds

Noncommunicable diseases have become the leading cause of death and illness in the Philippines. Alcohol consumption is associated with more than 10% of noncommunicable disease burden worldwide, including liver disease and cancer. The Global Burden of Disease (GBD) Compare published by the Institute of Health Metrics and Evaluation, University of Washington revealed that in 2017 alone, there were 29,506 deaths attributable to alcohol use in the Philippines. The idea that moderate alcohol consumption (“one glass of wine a day”) is safe, has recently been denounced by the World Health Organization (WHO). Their report estimates that alcohol kills one person every 10 seconds. There is no safe dose for alcohol consumption.

The cost-effective prevention and control of noncommunicable diseases, such as those associated with alcohol consumption, can be achieved through policy that targets an entire population over individuals. Among the most cost-effective interventions is increasing taxation. The Alliance for Improving Health Outcomes was commissioned by the Department of Health (DoH) through the Philippine Council for Health Research and Development to run simulations that quantified the health effects and consequences of updating alcohol tax policies in the Philippines. There are two proposed tax structures by executive agencies: Department of Health-Department of Finance (DoH-DoF) and House of Representatives (HoR).

From the 2018 baseline consumption, the simulation shows that implementation of either the DoH-DoF and HoR proposals will decrease alcohol consumption. With the DoH-DoF proposal, the consumption of spirits, beer, and wine will decrease by 18.5%, 20.5%, and 4.7% respectively five years after implementation. With the HoR proposal, the consumption of spirits, beer, and wine will decrease by 11.5%, 7.2%, and 4.5% respectively five years after implementation. The DoH-DoF proposal appears to be a more effective deterrent to alcohol consumption owing to the espousal of much higher taxes (compared to the HoR proposal) on the sale of alcoholic products.

The simulation shows that the health impact of implementing the proposed taxes will be nothing short of dramatic. The DoH-DoF proposal will prevent the death of over 57,000 Filipinos after four years of implementation. The HoR version, on the other hand, will save over 22,000 lives after four years of implementation. As much as a 51% reduction in deaths attributable to alcohol per year may be achieved if the DoH-DoF tax proposal is adopted, and as much as a 20% reduction if the HoR tax proposal is adopted.

This demonstrates that increasing tax rates for alcoholic beverages to the proposed structure of either the DoH-DoF or the HoR would result in public health gains. Even then, preventing deaths of Filipinos may just represent the proverbial “tip of the iceberg” as a result of tax intervention. Those who become ill because of alcohol use are expected to be unable to earn and will affect productivity even of family members taking care of them. Moreover, while all alcohol drinkers carry health and economic risks, the risks are greater for those with lower socioeconomic status, as they are less likely to afford healthcare when needed and earn while ill. Alcohol-related diseases also contribute to rising healthcare costs. Hence, it is imperative that increasing alcohol tax is understood as both a health and economic policy.

The government revenues raised from the higher taxes can be used to fund other public health initiatives like Universal Health Care. In settings with constraints on public finances and healthcare resources, taxing alcohol, tobacco, and sugar-sweetened beverages could provide a means to prevent disease, improve population health, and raise revenue to fund healthcare. Sweetened beverages have been taxed since 2018. On June 25, President Rodrigo R. Duterte signed into law the bill raising excise tax for tobacco products. It is now the time to update the law governing alcohol taxation.

Alliance for Improving Health Outcomes (AIHO), a partner of Action for Economic Reforms, is public health consulting firm composed of experienced and credible public health experts. Dr. Michael Mo and Dr. Dante Salvador, Jr. are public health physicians, health economists, and part of AIHO. Kim Sales is the current Deputy Director of AIHO.

An error in the excise tax structure

An amendment to the excise tax structure for alcohol and tobacco products recently passed the third reading in the lower house. It will now be deliberated upon at the Senate and nursed to passage by Senator Sonny Angara who heads the committee of ways and means.

The increase in excise taxes for alcohol and tobacco products is part of government’s second tax reform package called the Corporate Income Tax and Incentives Reform Act, or CITIRA. Among CITIRA’s key features is to cut corporate income taxes by two percentage points per year starting 2021, eventually reducing the rate from 30% today to 20%. The move is meant to make the country’s tax framework more competitive and more attractive to foreign investors.

Finance Undersecretary Karl Kendrick Chua admitted that government stands to incur a revenue loss of about P62 billion once the bill is implemented. Hence, the Department of Finance must find ways to off-set the loss. Levying higher excise taxes on alcohol and tobacco is one of the ways.

To increase excise taxes on “sin products” is the prerogative of government which we all accept. However, as I looked deeper into the tax structure approved by congress, I could not ignore certain inconsistencies and faulty assumptions that could backfire. This is particularly true in the way excise taxes were structured for sparkling wine.

In the first place, the bill makes a stark difference between sparkling wine and carbonated wine. For those unaware, sparkling wines like Champagne, Cava and Prosecco are bubbly wines that develop their carbonation in the bottle through a second fermentation. On the other hand, carbonated wines are still wines infused with carbonation outside the bottle.

The premise is that sparkling wines are a premium products while carbonated wines are not. This is a misnomer. Truth is, both have different grades in quality. A sparkling wine can be inferior to a carbonated wine if the pedigree of the carbonated wine’s grapes and production process conform to a higher standard. The reverse is true. In short, there are various determinants to superiority. It cannot be said that one is automatically superior to the other.

Because the authors of the tax scheme automatically count all sparkling wines to be superior, it levied a whopping P522 excise tax for all 750 ml bottles, regardless of whether its net retail price (or landed cost) is P50 or P3,000.In contrast, carbonated wines are saddled with an excise tax of only P45 per bottle, regardless of its net retail price.

With slight differences between sparkling wines and carbonated wines, the former is levied an excise tax that is nearly 12 times more than the latter. Not only does this give undue advantage to carbonated wines in the marketplace, it also deprives the public from enjoying sparkling wine at a fair price.

Another point to consider is that the new tax scheme levies the same excise tax (P522/ 750 ml bottle) regardless of the value of the sparkling wine. In other words, a low quality sparkling wine whose net retail price is P200 will now be valued at P722, after tax. This brings the tax component to 72% of its value. In contrast, a high quality sparkling wine whose net retail price is P2,000 will now be valued at P2,522, after tax. In which case, its tax component is only 21%.

The tax scheme effectively makes low cost sparkling wines scandalously overpriced while making premium sparkling wines reasonably priced. This works to the disadvantage of middle to lower income Filipinos who can only afford wines with a cheaper net retail price. It works to the advantage of the rich as they get a good deal on their premium wines. It is a case of penalizing the middle class while subsidizing the rich.

As a whole, the manner in which sparkling wines are taxed is a disservice to the Filipino people. Sparkling wines are beverages not taken every day but only during festive occasions. Every Filipino should be given the opportunity to enjoy the product at a sensible price, regardless of their economic standing.

As a middle class consumer, I would like sparkling wines to be taxed at the same level as still wines (wines with no bubbles), which is P28.47 per 750 ml bottle. If this is too much to ask, then levy the same excise tax as carbonated wines which is P45 per 750 ml bottle. I reiterate, to charge P522 is disproportionate and unreasonable.

The latest statistics show that the share of sparkling wine against the total consumption of wines in the Philippines is only 1.36%. Thus, even if government were to reduce the excise tax to match the levels of carbonated wine, its impact on revenues will not be substantial. On the contrary, we can even expect a spike in demand given more reasonable prices. The increase in volume will surely compensate for the forgone revenues from the excise tax roll back. Best of all, it will put the product within reach of middle class Filipinos. It is a win-win situation.

To leave the tax structure as it is, or the way Congress approved it, will lead to a contraction in sparkling wine demand and inevitably, to lower excise tax revenues for government. This, while depriving Filipinos of a festive wine they can enjoy. Everybody loses.

I know Senator Angara to be a reasonable, diligent legislator. I trust he will look into this matter in the spirit of correctness and fairness.

 

Andrew J. Masigan is an economist.

Toyota redefines the family van

By Manny N. de los Reyes

THE TOYOTA ALPHARD better start looking over its shoulders. There’s a new kid on the block and it’s eyeing the same audience that the highly in-demand Alphard commands.

Fortunately for the Alphard’s maker, it comes from the same family. Yes, Toyota now has a people-mover that has most of the Alphard’s luxurious amenities, yet tops those off with a bigger and more spacious interior, a vastly more economical turbo-diesel engine, and a substantially lower price.

Toyota Motor Philippines (TMP) has completed its best-selling Hiace lineup with the introduction of the all-new Super Grandia, which comes in three new variants: the entry-level Fabric, the midrange Leather, and the top-of-the-line Elite.

“The Hiace Super Grandia is a preferred van of companies in various industries, and is quite popular as a family vehicle. It has indeed become a symbol of comfort, convenience, and durability,” says TMP President Satoru Suzuki. “We are excited to bring a higher level of luxury and a delightful ride experience that Filipinos truly deserve with the all-new Hiace Super Grandia. We expect this model to further elevate the Hiace which currently has a 54.6% share in its segment, year-to-date as of July.”

A series of developments on the Hiace’s design, performance, and safety features resulted in a strong and refined exterior while retaining an inviting and comfortable interior to embody grand luxury and omotenashi (hospitality). One glance at the cabin and you’ll see that the Super Grandia promises a stress-free drive for driver and passengers and provides a ride experience and atmosphere that resembles business-class air travel.

Elegant chrome accents add an upscale element to the large front grille, which merges with the defined bi-beam LED headlamps. The rear chrome garnish mirrors the front design and is also complemented by the distinctive shape of the LED rear taillamps. The low center of gravity and wide stance is accentuated by the chrome lining that runs along the side to the bottom of the rear bumper.

The power sliding doors (available for the Elite variant) ushers in passengers to the luxurious cabin. Upon entry, the interior illumination sets a relaxing mood, which can be adjusted to the passenger’s preference. Illumination can be set to blue, amber, or white for the Elite variant. Passengers enjoy luxurious personal space with the captain’s seats that occupy the first and second rows. Quilted leather four-way power adjustable captain’s chairs with retractable legrests replace the first rear row for the Super Grandia Elite. For all variants of the Super Grandia, bench-type seats at the rearmost row can accommodate four passengers. Rear personal reading lamps provide each passenger a greater sense of personal control and convenience, giving them the option of better visibility in their personal space — much like in aircraft. Automatic climate control ensures passenger comfort all throughout the drive, with Nano-E air purifying technology for the Elite variant.

Living up to renowned Toyota efficiency, the frugal 174-hp 1GD-FTV 2.8-liter turbo-intercooled diesel engine (with 6-speed automatic transmission) powers the new Super Grandia. The McPherson strut front suspension provides car-like handling and stability while the four-link coil spring rear suspension reduces cabin noise, vibration, and harshness, ensuring a smooth and comfortable ride even on long drives.

The Hiace Super Grandia is equipped with advanced safety features, giving peace of mind and confidence for both the driver and passenger. All Super Grandia variants have Anti-Lock Brake System (ABS), Vehicle Stability Control with Brake Assist, Hill Start Assist, Clearance and Back Sonars, Back Monitor, nine SRS air bags (driver, front passenger, driver knee, front side, and curtain shield), and Emergency Locking Retractor (ELR) 3-point seatbelts for the driver and all passengers.

The Super Grandia Elite is the first model in Toyota Motor Philippines’ vehicle lineup which boasts Toyota Safety Sense (TSS). TSS incorporates advanced active safety features which identify factors that may cause accidents and aid the driver in eliminating these factors. Features for this variant include the Pre-Collision System (PCS), Lane Departure Alert (LDA), Adaptive Cruise Control (ACC), and Automatic High Beam (AHB).

The Hiace Super Grandia will be available in Toyota dealerships nationwide starting today, August 26, in the following variants, prices, and colors:

TEST-2019 Mitsubishi Eclipse Cross SE S-AWC

Text by Kevin C. Limjoco; Photos by Isabel N. Delos Reyes

THE MITSUBISHI Eclipse name is back — but it is not a hot sporting coupé. Instead it has become a very comfortable utilitarian compact crossover. Which begs the question of why use the Eclipse name? I trust that Mitsubishi, at its simplest, wanted to use the name for good recall purposes. Anyhow, our good-looking Bronze Metallic Eclipse Cross SE test model turned out to be a very competent and overachieving five-seat crossover that I reckon would be competitive in our Philippine market.

In North America, the Eclipse Cross is positioned between their Outlander models. The chassis is quite good — It uses a Mitsubishi GS “Project Global” platform that is used in the award-winning seven-seat Xpander, the ASX, the Lancer Evolution X (shocked?), the Jeep Compass, and the upcoming Peugeot 4008, just to name a few. Unlike in the Xpander, though, the Eclipse Cross uses an independent multi-link rear suspension, appropriately larger all-disc brakes (11.6-in vented disc in front and 11.9-in discs at the rear), a turbocharged version of the 1.5-liter engine with 152 bhp and 184 lb-ft of torque (0-100 km/h in 8.9 seconds with a top speed of 190 km/h, 25 mpg City & 26 mpg Highway), and when the S-AWC is engaged, has AWD capability for all-weather driving confidence.

On-road ride comfort is actually remarkable and it was very fuel-efficient. Even if the modest engine felt labored at full throttle, it worked very well under normal driving conditions. When the roads get tighter, however, the soft dampers do yield to a lot of body roll, but its forgivable. The standard wheel setup was good too; it rides on low-rolling resistance Bridgestone Ecopia H/L 422 Plus P225/55R-18 97H tires on handsome-looking alloy rims.

It’s actually a lot of vehicle for the money and is a very good value. Acceleration is competent enough; it will outrun a Subaru Crosstrek and a Mazda CX-3 with a quieter and more spacious cabin. The infotainment system was sufficient with its seven-inch touchscreen but it lacked the oomph found in other Mitsubishi vehicles and it is managed by an inconsistent touchpad controller. For its affordable price, it does have blind-spot monitoring, rain-sensing wipers, cruise control, a comprehensive safety suite of electronic nannies, and a proximity key with push-button start.

The Mitsubishi Eclipse Cross has a lot of potential and if it is packaged more competitively in the right market it could be a dark horse hit.

Avel and Alden join forces for online athleisure line

An outfit from the new Avel x Alden collection

AFTER last year’s successful collaboration with actor Matteo Guidicelli, fashion designer Avel Bacudio is back with another collaboration, this time an “affordable athleisure” line done with actor Alden Richards which is available online.

“We’ve been working on this collection longer than the Avel x Matteo collection. We launched this later because Alden has been so busy,” Mr. Bacudio told BusinessWorld during the launch on Aug. 22 at the Xylo club in Bonifacio Global City, Taguig.

He said that Alden Richards (whose real name is Richard Faulkerson, Jr.) has been incredibly involved in the process of making the collection.

“From the fabric, the style, everything, he gave his opinions and his approval,” Mr. Bacudio said before adding that due to the actor’s busy schedule — he recently came out in the film Hello, Love, Goodbye, directed by Cathy Garcia-Molina — it took them months of back and forth discussions before completing the collection.

“I’ve always been a fan of Avel Bacudio’s designs. He’s been a good friend of mine for the longest time. As such, I am really psyched to have my very first fashion collaboration with Avel Bacudio,” Mr. Richards was quoted as saying in a release.

AFFORDABLE PRICES
There was also an emphasis on making the clothes “affordable,” with the lowest-priced item, the Bowery shirt, going for P759. The most expensive item is the P1,399 Surrey Men’s Jogging Pants.

Unlike his previous collection with Mr. Guidicelli which focused on jeans, Mr. Bacudio said they decided on creating an athleisure line because it’s Mr. Richard’s style of choice.

“He wants something comfortable yet stylish,” he explained.

The collection will have “40 styles for men and 40 styles for women” and will include pullovers, hoodies, and track pants, among others.

The items come in shades of maroon, gray, navy blue, black, and off-white. The colors are of a special significance to Mr. Bacudio as he said that when he underwent eye surgery a few years back, the first colors he saw were the colors he eventually used in this collection.

“The doctor told me that I was seeing these colors because my eyesight is coming back,” he said.

And in order not to overwhelm the market, Mr. Bacudio said that they will schedule “monthly drops” where a selection from the line will be available online exclusively on the Southeast Asian e-commerce site, Zilingo.

The first items from the line, which dropped the same night as the launch, sold out “in the first 10 minutes of it being live,” said Edryan Lorenzo, PR and influencer marketing manager at Zilingo Philippines, in a statement.

“Zilingo is going to restock in the days to come,” he added.

Mr. Bacudio said that he will have pop-up stores in several Megaworld Lifestyle Malls, as he did for his jeans collection.

Part of the proceeds of this collection will be given to the Northern Luzon Association for the Blind.

“I don’t have a concrete goal of how much I want to go to our beneficiary but my main goal is to provide the children shelter and food,” Mr. Bacudio said.

The Avel x Alden collection is currently available on zilingo.com/en-ph/. — Zsarlene B. Chua

Initial exploration of ‘Area 7’ to need up to $2M

THE Philodrill Corp. and PXP Energy expect a “firm” investment commitment of between $1 million and $2 million for the initial stage of their partnership to explore Sulu Sea Basin or “Area 7” of the 14 pre-determined areas offered by the Energy department for prospective investors.

“Normally, $1-2 million,” said Alessandro O. Sales, Philodrill vice-president for exploration and production, in a chance interview last week when asked about the capital outlay for the first phase of the project’s work program.

“Not much,” he said, adding that the amount covers spending for the first 18 to 24 months of the project. “This is the step before you decide whether there is something to drill.”

Incorporated in 1969, Philodrill is one of the pioneers in the Philippine oil exploration industry and remains one of the most active.

Early in its history, the company successfully participated in the drilling of several oil discoveries in the offshore Palawan area, funding its steady growth and profitability through the ’70s and the early ’80s.

Towards the mid-’80s, its petroleum revenues started to taper off, prompting it to diversity out of petroleum operations into emerging economic growth areas. It made investments in property development, manufacturing, mining and financial services, but remaining in local oil exploration.

Mr. Sales said Area 7 in the Sulu Sea Basin has been in Philodrill’s sight since the company bid for a substantial area during a past contracting round under the previous administration.

No award came out of its previous bid, thus the company bid again under the current administration’s Philippine Conventional Energy Contracting Program (PCECP), the new licensing scheme for awarding petroleum service contracts.

Mr. Sales said Philodrill and PXP Energy had previous partnerships, resulting in the decision for the two listed companies to jointly bid for Area 7. No other company submitted a bid for the area.

“Philodrill [is] participating 60%. PXP will participate to the extent of 40%,” he said. “That’s normal joint venture agreement sa mga (in the) service contracts sa (in the) Philippines.”

He said the partners would want to review the “concepts” used in the previous bid to determine why they failed to find a volume of gas or oil that is large enough for commercial use.

“We have to sit down and review the causes for failure,” he said. “May (There was) discovery but not commercial. We want to know before we proceed to drill it.”

He said Philodrill is “very confident” that it would be awarded a service contract for the area after the submission of the legal, financial and technical requirements for Area 7.

“It’s just a matter of completeness,” he said, adding that Philodrill and PXP Energy are “very transparent” with their financial position because their shares are traded in the local stock exchange.

Separately, PXP Energy President Daniel Stephen P. Carlos described Area 7 as having good potential.

“Dati itong area ng (This is the previous area of) Tap Oil of Australia, tapos katabi siya nu’ng (then it is next to) SC (service contract) 56,” he said, referring to an area operated by Total E&P Philippines B.V.

“Sixty percent and operator sila (Philodrill), 40% ang PXP,” he said, adding that the partners are open to taking other partners in the future.

He echoed Mr. Sales’s projected initial investment in the next two years. He also said that PXP Energy was part of the consortium that previously bid for the area under a past contracting round.

PXP Energy has interests in various petroleum service contracts in the Philippines and Peru held directly and through major subsidiaries. — Victor V. Saulon

Peso to trade sideways

THE PESO could trade sideways this week after the less dovish remarks from the US Federal Reserve chair’s speech last Friday.

Last Friday, the peso ended at P52.27 against the dollar, down by 1.5 centavos from Thursday’s close of P52.255 versus the greenback ahead of US Federal Reserve Chairman Jerome Powell’s speech in Jackson Hole that day.

On a week-on-week basis, the local unit went up 17 centavos from its Aug. 16 close of P52.44 per dollar.

“We’re waiting for the Jackson Hole event. That I think will be the focus of the market. So, for the most part [of last week], wait and see na eh (markets were on a wait-and-see mode). We want to hear more from the Fed as the market is already pricing in an aggressive rate cut. However, we are not sure if the Fed is aligned with the market’s perception,” a currency trader said via phone interview late Friday.

“The Powell speech [last Friday] will dictate the direction of the market this week,” the trader said.

Michael L. Ricafort, economist at Rizal Commercial Banking Corp. (RCBC), said in an e-mail: “The peso could still improve [this week] if Federal Reserve Chairman Jerome Powell provides more dovish signals during his speech at the Jackson Hole annual gathering of central bankers.”

For his part, Robert Dan J. Roces, chief economist at Security Bank Corp., expects the peso to trade sideways this week with an upward bias.

“Players will seek direction post-Jackson Hole events and probably some signals from the G7,” he said in an e-mail.

In his keynote speech in the annual gathering of central bankers in Jackson Hole last Friday, Fed Chair Powell cited the ongoing trade war between the US and China, tension in Hong Kong, and signs of a global economic slowdown as “significant” risks to the economy.

Mr. Powell also said the US economy is in a “favorable place” now and he stressed limits to the Fed’s ability to respond to the trade issues.

He said officials need to “look through” short-term turbulence, and stopped short of endorsing or signaling the pace and depth of rate cuts markets widely expect and that US President Donald J. Trump has demanded.

There are “no recent precedents to guide any policy response to the current situation,” Mr. Powell said, adding that monetary policy “cannot provide a settled rulebook for international trade.”

The Federal Open Market Committee will next meet on Sept. 17-18.

The currency trader sees the peso trading between P52.10 and P52.60 this week.

“However, if we’re going to see an aggressive move lower for the dollar peso [this] week, probably the P52.10 might be breached,” the trader added.

RCBC’s Mr. Ricafort expects peso to trade from P52.00 to P52.50, while Security Bank’s Mr. Roces sees the local unit at around P52.30 to P52.50 this week.

Local financial markets are closed today in observance of the National Heroes Day. — Mark T. Amoguis

Nissan PitStop promo offers free PMS for up to 3 years

AS PART of its ongoing PitStop promotion, Nissan customers can enjoy big cash discounts and exciting service packages when they buy a participating vehicle, from now until Sept. 30. Nissan’s exclusive deals include the Nissan Almera, Juke, Navara, Terra, Sylphy, X-Trail, Patrol, and Urvan to give buyers a wide range of options.

Those who purchase any of the participating models will be entitled to a free periodic maintenance service (PMS) for up to three years. The support comes with the standard and complete PMS package.

And patrons who buy a vehicle through EastWest Bank, RCBC, BPI, and Maybank can receive a reduced down payment promotion. They can drive away in a brand new Nissan car, for as low as P33,000. Those who obtain financing from EastWest Bank are entitled to an additional P10,000 discount on select variants.

Meanwhile, redemption using cash payment and purchase order, or financing with non-participating banks can receive discounts of up to P100,000.

Nissan’s thrilling deals are part of its commitment to changing the way people drive and live through innovative products and the best end-to-end experience. The Japanese automaker aims to do this by upholding its key pillars: products, service, customer experience, and people.

Dar promises easier LANDBANK loan access for farmer sector

DAVAO CITY — Agriculture Secretary William D. Dar has assured farmers that simplified loan access will soon be provided by government-owned Land Bank of the Philippines (LANDBANK), with the terms of the new lending arrangements now being finalized.

“Rest assured that in the next three months we can smoothen everything,” Mr. Dar said at a news conference here Saturday.

The newly-installed head of the Department of Agriculture (DA) said he brought up the need to ease loan processing during a recent meeting of the LANDBANK board of directors, where he sits as a member.

Mr. Dar said farmers would be able to avail of a one-time loan of P15,000 per hectare, payable in eight years without interest.

He added that other and bigger loan packages would also be made available.

LANDBANK President Cecilia C. Borromeo last month said the bank is aiming to expand loans to the agricultural sector by at least 20%.

Mr. Dar also said that the DA is continuing to seek amendments to the Agri-Agra Reform Credit Act, which requires all banks to allocate 15% of their loan portfolio to the agricultural sector and another 10% for agrarian reform beneficiaries.

“There could be other schemes that will encourage commercial banks to lend to the sector,” Mr. Dar said.

He cited as an example agriculture-related infrastructure, such as farm-to-market roads, which could be included as a loan destination compliant with the law’s requirements.

Mr. Dar said he has also met with the Philippine Guarantee Corp. to “increase the guarantee fund (for agriculture) and to make agricultural credit affordable and accessible.” — Carmelito Q. Francisco

Fashion titans sign pact to curb environmental harm

FASHION giants including Nike, H&M, Armani and Chanel have signed onto an agreement intended to curb the apparel industry’s environmental impact.

The pact, spearheaded by Gucci-owner Kering and a French environmental ministry, is one of several private-sector accords set to be unveiled as President Emmanuel Macron prepares to host the G7 summit, which takes place this weekend in Biarritz, France.

Companies signing the pact produce nearly 150 brands and represent more than 30% of the fashion industry’s output by volume, French officials said in a press briefing. The brands agreed to targets including elimination of disposable plastic packaging by the end of the next decade and becoming carbon-neutral by 2050.

Recent years have seen fashion companies race to show consumers and regulators they’re willing to fix their damaging impact on the environment, but efforts have not offset the industry’s rapid growth. Fashion is responsible for roughly 8% of the world’s carbon emissions, a 2018 Quantis report found — as well as water pollution from fabric dyes, chromium used to tan leather, and pesticides from growing cotton.

While fashion makers have been working separately to improve practices, “taking a united approach will lead to deep change,” Marie-Claire Daveu, Kering’s chief sustainability officer, said.

REAL BUSINESS PROBLEM
Fashion companies have incentives to tackle climate change and protect the environment that go beyond just doing what’s right, Daveu said.

“Fashion owes everything to nature,” she said. “If we can’t find good quality supplies of materials like cotton and cashmere, in addition to ethics you have a real business problem.”

Other targets in the agreement include transitioning to 100% renewable energy by 2030, providing incentives for suppliers to do the same, and ensuring brands do not contribute to the loss of natural forests.

Participants include retailer Carrefour, Zara-owner Inditex, Calvin Klein-owner PVH Corp., and luxury names like Burberry Group, Prada, and Hermes International.

LVMH, France’s most valuable company and the owner of brands like Louis Vuitton and Christian Dior, declined to participate.

Getting a critical mass of companies to sign on to the goals sometimes meant compromising on deadlines, Daveu said. A shorter timeline for eliminating plastics, for example, would have discouraged some members from signing, she said. — Bloomberg

NLEX to start work on connector road next month

NLEX Corp. is targeting to begin next month the construction of the toll road that will link North Luzon Expressway (NLEx) to South Luzon Expressway (SLEx).

Luigi L. Bautista, president of NLEX, told reporters last week the company may soon begin groundwork on the P23.3-billion NLEx-SLEx Connector Road as it is close to getting significant amount of right of way for the expressway.

“Next month na. ’Yan ang pangako sa atin ng DPWH [We can start construction next month. That’s what the Department of Public Works and Highways promised us],” he said. “We need a sufficient length of the road to be turned over to us so that we can start construction.”

Currently, the DPWH has turned over about half of the right of way of the affected area for the NLEx-SLEx Connector Road. Mr. Bautista said ideally, 70% of the right of way is awarded to the company before it may start construction.

NLEX has completed preliminary works on the project after a ground-breaking ceremony was held last February. Preliminary works included the ground survey, finalization of design, and clearing of roads through tree cutting and relocation of informal settlers.

The 8-kilometer toll road linking the tail of NLEx Harbor Link Segment 10 in C3 Road, Caloocan City to PUP Sta. Mesa, Manila aims to provide an alternate route for trucks coming from the port area. From Sta. Mesa, vehicles traversing the expressway may connect to the Metro Manila Skyway Stage 3 through an elevated road.

The target is to open the expressway by December 2021. Once operational, it is expected to reduce travel time from NLEx to SLEx to 20 minutes from the usual two hours. It will have a capacity of 35,000 motorists daily.

NLEX is part of the Metro Pacific Tollways Corp., the tollways unit of Metro Pacific Investments Corp. (MPIC).

MPIC is one of three key Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Denise A. Valdez

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