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Fish prices driving inflation, Finance dep’t warns

THE DEPARTMENT of Finance (DoF) called on the government to ensure stable fish supplies, noting that fish products have played a significant role in the elevated inflation levels of the past few months.
“To ensure the sufficient supply of fish in the country, advancement of technology to introduce innovative ways of aquafarming is important as aquaculture produces more than half of the total fish supply in the economy,” the Finance department said in an economic bulletin.
“A comprehensive program to ensure sustainability of seafaring needs to be put in place. This should include, among others, appropriate environmental management,” it added.
The DoF noted that inflation in fish prices hit 12% in the first quarter of 2018 from only 5% in the same period in 2017.
In June, inflation in fish prices was 11.2%, and contributed 0.6 percentage points to the 5.2% headline that month.
Food items are a major component in a developing country’s inflation indices. The Philippines has also seen elevated prices for rice, vegetables, and fuel, among others.
Inflation averaged 4.3% in the first half, exceeding the central bank’s 2-4% target range. The government expects inflation to come in at 4.5% this year, and fall back within the 2-4% range next year.
“Gross value added of fishing to GDP (gross domestic product) continued to register negative growth, (with) 4% and 0.9% drops in 2016 and 2017 respectively. In the first quarter of 2018, gross value added of fishing further declined by 3.7%,” the DoF said.
“In 2011 the growth of fisheries production started to decline. In 2017, among the three subsectors of fisheries, only aquaculture has registered positive growth (1.7%),” it noted.
It also noted that Republic Act No. 10654, or the amended Fisheries Code is not viewed as a major contributor to the decline in fish production.
“The 15-kilometer fishing restriction for large commercial fishing vessels is already in the 1998 law and remained in the 2015 law. Climate change may be the biggest factor in the (declining) production of fisheries,” the DoF said.
It noted that in 2016, total fish production declined 6.31% to 4.32 million metric tons, due to the “severe drought” that year and in 2015.
In 2017, fish production declined by 1%.
“During El Niño episodes, water temperature rises thus inducing fish to move to colder, deeper waters. Also, rougher seas ensue as typhoons and monsoon rains intensify thus increasing the danger to fishing activities,” the DoF said. — Elijah Joseph C. Tubayan

Competition Commission hoping to improve cross-border enforcement

THE Philippine Competition Commission (PCC) said it is cooperating with antitrust authorities in Southeast Asia to strengthen its enforcement activities against foreign companies operating in the Philippines.
At the first hearing of the congressional oversight committee on competition (COCC), PCC Commissioner Amabelle C. Asuncion said the “extra-territorial enforcement of rulings” by competition authorities has been a challenge for regulators everywhere.
She cited similar coordination among European Union authorities.
“There is that kind of coordination even during the time that they’re reviewing the cases,” she said, referring to the European Competition Network. “They’re already coordinating so that they can make sure that one, the rulings are consistent and number two, that they are enforceable,” Ms. Asuncion said.
“Now in our context, we’re starting to build similar networks with the ASEAN countries so that’s in the works,” she added.
Ms. Asuncion was responding to the questions raised by Senator Sherwin T. Gatchalian during the hearing regarding PCC’s ability to enforce anti-competitive rulings on cross-border or borderless transactions, citing the acquisition of ride-sharing application Grab of Uber’s operations in Southeast Asia.
The PCC Commissioner said the agency has jurisdiction over the merger because of the existence of assets and operations of Grab in the Philippines.
“They do have assets here. Their operations are here in the Philippines, so in that we have jurisdiction over those so we can still enforce the remedies in terms of how will they operate in the Philippines. We’re not totally powerless in that sense,” Ms. Asuncion said.
“But of course there’s still that challenge enforcing it outside the Philippines. But as I said we’re already coordinating with other competition agencies in the area,” she added.
The PCC chairman, Arsenio M. Balisacan, speaking at the hearing, identified “cross-border competition concerns” as among the emerging challenges facing the agency three years into its operations.
“The PCC is bracing itself given the realities of a globalized world. This means that cross-border competition concerns and global mergers or cartels are seen to intensify globalization. Also, disruptive innovations and the features of the digital economy make enforcement more complex and warrant appropriate technical expertise,” he said.
He also stressed the importance of strengthening the PCC’s capacity to deal with competition in e-commerce and the digital economy. He said the agency has been sharing its experiences with various countries, including the European Union, United States and Singapore to address these concerns.
The concerns go beyond human transactions but also “interaction… in the algorithm, the humanless and faceless art of controlling the markets. And that’s where we need to strengthen our capacity,” he said.
The congressional hearing was convened to update legislators on the implementation of Republic Act No. 10667 or the Philippine Competition Act, which was signed into law in 2015.
Senator Aquilino L. Pimentel III, who chairs the Senate committee on trade, commerce and entrepreneurship, told reporters after the hearing that there was no need to amend the law.
“We asked the Philippine Competition Commission if they feel if there is a need to amend the law, they are not ready to pass anything so that means the PCC can still live with the present law,” he said. — Camille A. Aguinaldo

DTI seeks competition review of charges by foreign shippers

THE Department of Trade and Industry said it asked the Philippine Competition Commission (PCC) to look into “excessive” charges imposed by foreign shipping companies.
“We are requesting the Philippine Competition Commission, through Chairman Arsenio M. Balisacan, to act on the concerns of the business sector regarding questionable destination and origin charges imposed on local importers/exporters,” Trade Secretary Ramon M. Lopez said in a statement on Thursday.
“These excessive charges and fees are recurring issues that have brought significant negative impact on our local industries.”
The issue of fees charged by foreign carriers was again raised by logistics service providers recently, according to the DTI.
The issue of shipping fees was the subject of a 2017 study jointly conducted by DTI-Export Development Council and National Competitiveness Council.
The findings questioned the destination and origin charges cited by Mr. Lopez in his statement.
The study also alleges that some shipping firms are making freight costs less transparent to the benefit of overseas exporters at the expense of Philippine importers, costing the economy roughly $2 billion to $5 billion annually.
Mr. Lopez said that Philippine exporters also bear the brunt of excessive fees while consumers also absorb the additional costs of imported goods passed on to them. — Janina C. Lim

NEDA sees no disruption to ongoing projects in Bangsamoro region

NATIONAL government projects that are currently being implemented will not be disrupted by the enactment of the Bangsamoro Organic Law, the National Economic and Development Authority (NEDA) said on Thursday.
NEDA said many ongoing projects in the Autonomous Region in Muslim Mindanao (ARMM) will likely “continue as they are now.”
“Those that are currently ongoing, especially those funded by loans, most likely we will just allow them to continue as they are now. In fact, many of the ARMM projects carried out by the Public Works (department) have a MoA (memorandum of agreement) between national public works and local public works,” NEDA Undersecretary Rolando G. Tungpalan said in a briefing in Pasig City.
“The implementation arrangement will just continue for a time, but those that have yet to be started, I guess it is where we have to discuss how it will be funded and how it will be affected,” he added.
Socioeconomic Planning Secretary Ernesto M. Pernia, however, said that although he expects the impact to be minimal, NEDA has yet to study the local economic implications of the organic law, as it is one of the fastest-growing regions in the country, and takes up a large share of public spending relative to the size of its economy.
“We will have to review our plans in terms of the new landscape. We haven’t done that yet because the law has yet to be implemented. But there will be some changes, which shouldn’t be too drastic,” Mr. Pernia said.
The region “would have more say, but there will still be collaboration between the new Bangsamoro region and the national government,” he added.
According to NEDA data, ARMM’s economy grew 7.3% in 2017, faster than the national average of 6.7%. NEDA added that the region has the highest public investment-to-gross regional domestic product ratio among all the regions at 17.51%, well above the national average of 6.28% and Metro Manila’s 4.21%.
ARMM will receive 1,340 projects in the medium-term, worth P63.24 billion, or 0.82% of the total P7.74-trillion public investment program. This compares with the National Capital Region’s 320 projects worth P964.68 billion, representing 12.47% of the overall investment plan.
The Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) will have its own government with expanded powers of taxation.
NEDA said it is preparing a list of regional projects with the potential to be structured as Public-Private Partnerships (PPPs).
“We at the Regional Development Offices, we are preparing something to encourage more PPPs in the regions, even small projects. We will be able to present this as… PPP opportunities that the private sector might very attractive,” NEDA Undersecretary Adoracion M. Navarro said.
This initiative will supplement the knowledge centers of the PPP Center that were launched in January.
“What we would like to happen is for the business sectors to look at these projects, because they can best judge the PPP potential. We have to subject them to an assessment to the private sector,” she said.
She added that NEDA will conduct capacity-building for those local government units (LGUs) whose ability to implement projects is deficient.
“There are LGUs which are capable of implementing some infrastructure projects, there are areas which need help,” she said.
However, Ms. Navarro noted that it is not only local government who faces capacity issues.
“It’s not only LGUs but also private sector in those regions. There are contractors who are really the problem. Let us not assume that only LGUs need improvement, but also private sector… civil society groups have a role in the monitoring of the implementation of projects,” she said.
She said that of over 11,000 local sub-projects carved out of the 4,490 medium-term government projects, about 2.45% were suspended and 0.32% terminated, or in the process of termination.
“In fact line agencies are starting to weed out contractors that have fallen behind schedule of their own account… so there’s a cleaning up to make sure that we are able to deliver on time, and of course with quality, the various infrastructure projects,” Mr. Tungpalan said. — Elijah Joseph C. Tubayan

NEDA expects Palace to sign 11th FINL ‘soon’

THE National Economic and Development Authority (NEDA) said that President Rodrigo R. Duterte is expected to sign the upcoming 11th Foreign Negative Investment List (FINL) “soon.”
NEDA submitted the draft Executive Order (EO) to the Office of the President “two months ago.”
“We have proposed to the President who wanted actually to liberalize the current foreign investment negative list. We have already drafted an EO, and that EO is ready for signing. It will be signed pretty soon,” Socioeconomic Planning Secretary Ernesto M. Pernia said in a media briefing on Thursday in Pasig City.
“The coverage of the reduction of restrictions in the FINL includes: private recruitment whether for local or overseas employment, practice of particular professions — we’re allowing foreign participation down to the benefit to the public; contracts for the construction and repair of locally funded works, projects — remember before foreign contractors cannot participate in locally funded projects but now that will be eased,” Mr. Pernia said.
“And then public services except activities and systems that are recognized as public utilities such as transmission and distribution of electricity and sewerage pipeline system. In other words, telcos will be out… they’re not public utilities,” he added.
Mr. Pernia also noted that the upcoming negative list will ease restrictions on foreign ownership in industries like culture; production, milling and processing, trading, except retailing of rice and corn, and trading in rice and corn and by-products; teaching higher education, and the retail trade.
“Some of these have to be legislated. But there are bills in Congress already… some of them in advanced stages. That will allow us to liberalize these other items. For others that need constitutional amendments — we did not include those,” Mr. Pernia said.
The liberalization of foreign ownership rules is expected to boost foreign direct investment.
Current prohibitions on foreign participation apply to licensed professions, retail, cooperatives, private security agencies, small-scale mining, enterprises that involve the utilization of marine resources, the ownership, operation and management of cockpits, and manufacture, repair, stockpiling and/or distribution of nuclear weapons.
Foreigners can take stakes of up to 25% in private recruitment firms for local or overseas employment and companies that construct and repair locally funded public works like infrastructure.
Areas where foreigners can own up to 30% are: advertising; companies that explore, develop and utilize natural resources; private lands; public utilities; education; rice and corn administration; financing and investment companies; suppliers to state-owned corporations and agencies; defense-related structures; public utility franchises; and private domestic and overseas construction contracts.
The industries allowing up to 40% foreign ownership include security; defense; those industries that pose a risk to health and morals, such as gambling, bath houses and massage clinics; and small-scale and medium-scale enterprises of a certain size. — Elijah Joseph C. Tubayan

Used-car prices rise in line with TRAIN, OLX says

ONLINE buy-and-sell platform OLX said prices of second-hand commercial vehicles posted on its website have jumped by as much as P150,000, amid speculation starting in late 2017 over the price impact of the Tax Reform for Acceleration and Inclusion (TRAIN) Law.
OLX said in a statement that the resale value of one- to two-year-old vehicles during the January 2017 to April 2018 review period rose an average of P90,000.
The increases were seen in units with an original retail price of at least P1 million such as Toyota Innova, Honda CR-V, Toyota Fortuner, Mitsubishi Montero and Ford Everest, which are sport utility vehicles officially classified as commercial vehicles.
“Speculation about the TRAIN Law fueled the price increase in the 3rd quarter of 2017 and continue long after it was implemented early this year,” OLX said in its statement Thursday.
Republic Act No. 10963 or the TRAIN law was signed by President Rodrigo R. Duterte in December. It took effect on Jan. 1, 2018.
The new law raised the excise tax on cars, with the increase varying depending on the vehicle’s selling price.
“The data we released is our way of guiding buyers in determining which second-hand vehicles have significantly increased in price,” OLX Head of Cars Xervin Maulanin said in the statement.
“This will also help them evaluate the difference in buying pre-owned versus brand new cars.” — Janina C. Lim

DoE issues rules for renewable energy option program

THE Department of Energy (DoE) said on Thursday that Secretary Alfonso G. Cusi had signed a department circular providing the guidelines on how power users can avail of renewable energy (RE) as their source of electricity.
In a statement, the DoE said the circular, “Promulgating the Rules and Guidelines Governing the Establishment of the Green Energy Option Program Pursuant to the Renewable Energy Act of 2008,” was signed by Mr. Cusi on July 18.
The circular was issued pursuant to Section 9, Chapter III of the Renewable Energy Law, which authorizes the DoE to establish a Green Energy Option Program, or GEOP.
GEOP gives electricity end-users the option to source their energy requirements from renewable energy resources. Its rules establish the general guidelines and procedures governing transactions between consumers, RE suppliers and network service providers, on choosing and using RE resources at the least cost and in a sustainable manner.
“A voluntary program, all end-users with a monthly average peak demand of 100kW (kilowatts) and above for the past 12 months may opt to participate in the GEOP,” the DoE said.
“Those with an average peak demand below 100 kW may also participate in the GEOP,” but only after the department, in consultation with the National Renewable Energy Board and industry stakeholders, “is able to determine that the technical requirements and standards are met by the end-user.”
The DoE said with the promulgation of the GEOP rules, it hopes to attract more consumers to source their power from renewables.
The department said it believes that the GEOP “will not only promote sustainability, but will also empower more Filipinos by giving them a wider variety of options for their energy requirements.”
It said the program is also in line with its strategy “to aggressively promote the development, utilization and commercialization of indigenous and clean sources of energy, while ensuring the sustainable and secure supply of power for the country.” — Victor V. Saulon

Theater of the Absurd

A television comedy director was supposed to direct it, and did hold at least one rehearsal over the weekend. But the directorial prowess of Joyce Bernal wasn’t in much evidence except in President Rodrigo Duterte’s subdued though less than forthright State of the Nation Address (SONA) this year.
Together with the protest outside the House of Representatives by some 40,000 men and women of various political persuasions united in their opposition to his regime’s policies as well as to Mr. Duterte’s own misogyny, attacks on the Church and profanities and insults against journalists, the leaders of other countries, and even God Himself, what went on inside the House before he delivered his SONA and the fantasy world of the actual address itself did more to accurately describe the true state of the nation.
Mr. Duterte’s address was delivered over an hour late this year because of the overthrow, timed for his appearance before the joint session of both Houses of Congress, by the House of Representatives majority of “no-el” (no elections) proponent Pantaleon Alvarez. The honorable gentlemen of the aptly named Lower House replaced him with former President, now Pampanga Representative Gloria Macapagal-Arroyo as Speaker.
The culprits responsible advanced a number of seemingly sound reasons for it, but it basically meant nothing except to themselves. A petty tyrant and consummate guardian of his imagined entitlements, wealth and power was replaced, for God knows what considerations, by just another Duterte ally accused of plunder, corruption, election fraud and gross human rights violations during her problematic, nearly decade-long occupation of Malacañang. Tweedle-dum had merely been replaced by tweedle-dee.
But Arroyo, it is widely assumed, is likely to occupy some exalted post like the Presidency once a federal form of government is rammed down the people’s throats, hence her sudden rise in the esteem of her fellow conspirators.
If the split among Mr. Duterte’s allies was of no significance to the long suffering Filipino millions, so was his address as meaningless. The only bright spot in his speech was the absence of the rants, the rambling, and the profanities that have characterized his other public appearances.
Mr. Duterte didn’t depart from his prepared speech either, thus sparing the nation another display of bad manners. But he nevertheless began his 48-minute SONA with a threat to continue the “war” on illegal drugs that he began when he assumed the Presidency in 2016 — and which has so far cost the lives of some 20,000 men, women and even children suspected of being either petty drug dealers or users, and widowed and orphaned thousands more in its bloody wake.
He vowed to make that “war” even more “chilling,” meaning even more murderous than ever, but in almost the same breath claimed to be concerned with human lives, unlike, he said, the critics of his anti-poor campaign against the illegal drug trade who’re concerned “only” with human rights.
That expression of “concern” for life earned him the first of the surprisingly tentative rounds of applause that he got five times in the course of his third SONA. But what both he and his partisans missed was that human rights are precisely about human lives, the right to life being a fundamental human right. He nevertheless again justified the killings for which he’s likely to be indicted by the International Criminal Court (ICC) by echoing police claims that those killed “violently resist(ed) arrest.”
Mr. Duterte dwelt on the drug issue at length, and claimed that the critics of the way it was being addressed with a number of extrajudicial killings unprecedented in the history of the Republic were merely concerned with the present while he was himself worried over “the present and the future.” Again, however, he was obviously unaware that the killing of children, minors, and young men is itself an assault on hope and the future, the young being, in the words of Rizal, “the hopes of the Fatherland.”
He went on to say that neither human rights advocates nor Church leaders have protested drug-dealing and “druglordism” as loudly as they have protested the well-established misdeeds of “errant law enforcers.” Although a lawyer, Mr. Duterte can’t appreciate the fact that it is State actors such as the police, rather than human rights groups and the Church, that are charged with law enforcement, and are also required to do so in compliance with the law of which they’re supposed to be the guardians.
Mr. Duterte also defended the misleadingly named Tax Reform for Acceleration and Inclusion (TRAIN) Act despite protests that it is mostly responsible for the surge in the inflation that’s adding to the already vast miseries of the Filipino poor. He claimed that the revenues, mostly from the excise taxes on fuel that have led to increases in the cost of various commodities, are necessary for sustained growth. He did not mention that despite his claims that he’s for the poor, whatever economic growth TRAIN has generated has mostly benefited only the already wealthy.
But what about China’s occupation and militarization of the Philippines’ Exclusive Economic Zone? In his other public declarations, Mr. Duterte had limited Philippine options to either capitulation to imperialist China or war with it. This time he pledged to “defend” the West Philippine Sea, which is indisputably Philippine waters, but did not specify how he intends to do so. In the meantime, China not only controls the area; it also bars Filipino fisherfolk from their traditional fishing grounds, and its coast guard even steals the catch of those who manage to elude its vessels.
He did talk about the need to end corruption and crowed about his firing and forced resignations of officials whom he admitted were mostly his friends and supporters, but failed to address the fact that many of them have been reappointed to other, even higher posts. What’s even worse is how, over the last two years, billions of pesos of the people’s taxes have been squandered by, among other offices, the Department of Tourism (DoT) and the Presidential Communications Operations Office (PCOO).
With nary a word did he mention his regime’s rush to federalism and a new Constitution despite most Filipinos’ ignorance of what federalism is, and their opposition to amending, much more changing, the 1987 Constitution. Neither did he say anything about his scuttling of the government’s peace talks with the National Democratic Front of the Philippines (NDFP) right at the point when both peace panels were about to discuss the social and economic reforms that if implemented could have led to the end of the 49-year civil war.
Conclusion: Mr. Duterte’s address was long in words but short in truth and reality, and was distinguished more by what it failed to say than for what it said.
If “Theater of the Absurd” playwright Samuel Beckett were alive today, what happened last Monday, July 23, 2018 — the ludicrous jockeying for power among the alleged representatives of the people, and the SONA that might as well have been describing another dimension — would have qualified as one of his more engaging productions for the light it threw on the real state of this oh-so-unfortunate nation. Instead of Beckett, however, only Joyce Bernal, a stranger to the theater, was available. And the most she could do was keep Mr. Duterte relatively sober and almost, though not quite, presidential.
 
Luis V. Teodoro is on Facebook and Twitter (@luisteodoro). The views expressed in Vantage Point are his own and do not represent the views of the Center for Media Freedom and Responsibility.
www.luisteodoro.com

The Catholic Church’s gay problem

The figures are staggering: perhaps 5% of all priests have committed sexual abuse on minors, with the US alone accounting for 6,000 such priests and 100,000 victims within the past half-century. The Philippine Catholic Church apologized in 2002 for the sexual abuses of more than 200 priests, and President Duterte himself confessed to being molested by a Jesuit as a teen.
What to make of the foregoing?
Most of the blame, previously, was heaped on the priestly celibacy of the Catholic Church. But this runs up against the fact that families have even a worse record in terms of sexual abuse: a 2009 study from the University of Barcelona reported the prevalence of incest rapes of around 34.4% for Africa, 23.9% for Asia, 10.1% America, 9.2% for Europe. Numbers far higher than priestly abuses.
The problem is not celibacy but homosexuality. This was pointed out by — of all publications — the liberal Washington Post, in an article by Robert Mickens (July 2018): “There is no denying that homosexuality is a key component to the clergy sex abuse (and now sexual harassment) crisis. With such a high percentage of priests with a homosexual orientation, this should not be surprising.”
For once, agreement is made by conservative commentators. Matt Walsh demonstrating with utter clarity that: “Sexual activity between priests, and between priests and seminarians, is not uncommon. I think it is rather difficult to separate these facts from the fact that teen boys were so often sexually victimized. Is it just a coincidence that gay priests exist in such large numbers, protected by gay cabals within the Church, and at the same time there happen to be a bunch of priests molesting pubescent boys?”
But this is where it gets confusing: the Catholic Church persistently balks about admitting its homosexuality problem when studies clearly show that the number of gay priests have increased exponentially since the 1970s, all the while trying to look the other away from the Catechism of the Catholic Church which teaches that the homosexual orientation is “objectively disordered” and that no homosexual act is morally justifiable, and finally ignoring a warning by the Congregation for the Doctrine of the Faith that “increasing numbers of people today, even within the Church, are bringing enormous pressure to bear on the Church to accept the homosexual condition as though it were not disordered and to condone homosexual activity. xxx The Church’s ministers must ensure that homosexual persons in their care will not be misled by this point of view.”
Defense is made that the abusive priests are not homosexuals but pedophiles. But this was debunked by the John Jay College of Criminal Justice study “The Causes and Context of Sexual Abuse of Minors by Catholic Priests in the United States, 1950-2010,” which found that only 4% of the 6,000 identified abusive priests were pedophiles.
And yet, as Walsh correctly states, “80% of the victims in the Church have been males. Is it difficult to see how thousands of boys may have been spared this experience if there had not been so many homosexuals in the priesthood? Or are we going to pretend that even a heterosexual may attempt to get his thrills by molesting a 15-year-old boy? If so, I have no idea what the words heterosexual and homosexual mean anymore.”
Having said that, ultimately the problem also lies with society’s current confusion towards sexuality: as noted above, incest rape rates are truly depressing. But then one has increasing numbers of single teen mothers, the sexual revolution’s correlation to female depression and anxiety, and the cultural push to do away with gender.
What is unfortunate is that the priesthood is reflecting the struggles that society is grappling with right now rather than being the objective unchanging signpost pointing the faithful to the proper way.
Rev. Thomas Berg (writing for First Things, July 2018) perceptively writes that a “fact that has been overlooked for too long is the connection between priests who abuse minors and priests who are sexually active with adults. Toleration of the latter sin has made it harder to detect, criticize, and root out the former.”
Which is commonsensically correct: Fr. Jaime Achacoso, secretary of the Canon Law Society in the Philippines, in a 2017 interview for Al Jazeera, confirms that in some remote dioceses in the Philippines, “one in five priests has had children.”
The Catholic Church’s response to this crisis must be to be even stronger, unambiguous, and unabashed in teaching and defending its doctrines.
And while giving greater emphasis to priestly formation, the priests themselves (including the bishops, perhaps even more so) should step back and encourage the laity to assume greater responsibility for the Church — perhaps even over certain aspects of the clergy, badly in need of monitoring, discipline, and transparency.
The Catholic Church has consistently taught about the evils of “clericalism.” Now is a good time to truly get rid of it.
 
Jemy Gatdula is a Senior Fellow of the Philippine Council for Foreign Relations and a Philippine Judicial Academy law lecturer for constitutional philosophy and jurisprudence.
jemygatdula@yahoo.com
www.jemygatdula.blogspot.com
facebook.com/jemy.gatdula
Twitter @jemygatdula

Diversity and the role of the ‘T-shaped’ investor

By Clive McDonnell
LABELS such as “value investor,” personified by Warren Buffett who describes his holding period as “forever” or the “bond king” Bill Gross who made billions during the bond bull market are familiar to investors. Even for such legendary investors, finding value in equities and bonds have become challenging in recent years. Perhaps, it is time for an investor to consider alternative approaches that have a better chance of succeeding in the coming years.
As we explored the alternatives, we zeroed in on the importance of diversification in getting more accurate answers to the outlook for markets, as exemplified by Victorian statistician Francois Galton. Galton was one of the first to observe the power of diversity in generating accurate answers to hard-to-answer questions — he labeled this the “wisdom of crowds.” His breakthrough came when he was attending a village fair and observed a game of guessing the weight of an ox. While individual guesses of the ox’s weight varied widely, the accuracy increased significantly when he averaged the guesses of the crowd. The average of the diverse estimates of the crowd was superior to that of the individual.
In recent years, a growing body of academic research has shown that diversity in decision-making creates better investment outcomes. This is reflected in our own performance since 2012 when we started to incorporate this body of research into our own process. A key challenge for investment firms is to find individuals who are able to perform the investment equivalent of thinking “outside the box.” While this concept is easy to describe, it is a challenge to find individuals who truly fit the description, the so-called “T-shaped” expert.
The consultancy McKinsey popularized the search for “T-shaped” consultants in the 1980s. They were described as individuals who have specialized knowledge — the vertical element of the “T” — but also have a wider understanding and perspective — the horizontal element of the “T.”
The “T-shaped” investor captures the diversity that an investment team needs to search for when hiring. Such individuals add to the diversity and create better investment outcomes.
The importance diversity plays in investment outcomes was observed in January 2018 when a collapse in diversity had a dramatic effect on markets.
The surge in US stocks in late 2017 and early 2018 following the announcements of US tax reform led to a drop in diversity, or the range of views on the outlook for the market.
In effect, everyone became bullish on equities and, when this combined with the late-January 2018 surge in bond yields, we had a catalyst for a market correction. While diversity has since returned to markets, the February correction exemplifies the importance of a range of diverse views on the outlook for markets to bring about balance. Without the multiplicity of views, the market becomes unbalanced and at risk of a sudden change once a catalyst emerges to break up the narrow range of outlooks.
However, for diverse views to thrive and “T-shaped” investors to succeed, we need a wide variety of informational inputs. This is achieved by operating an open platform so that members of an investment committee have access to a broad spectrum of views on the market. These sources can include traditional investment bank research, independent research providers, asset management firms, as well as information generated by big data available from Google Trends or trending themes on social media.
Big data, for instance, can provide insight on the frequency at which people search for terms such as ‘growth’ or “recession,” as well as trending themes on social media such as the popularity of multi-player games. These insights can bring added diversity to decision making on whether it is time to switch from bonds to equities, or adding the stock of a company that is benefiting from a surge in popularity of an online game to a conviction list.
“T-shaped” investors know how to tap into these diverse sources of information to make investment decisions even when it is outside their core area of knowledge.
At Standard Chartered, we have consciously strived to incorporate this diversity when making investment decisions, believing that group of diverse “T-shaped” investment professionals can reach better investment decisions. The combination of these varied views has shown to produce an investment outcome that is unbiased and, as we have seen since we started applying this approach in 2012, profitable for our clients.
 
Clive McDonnell is head of equity strategy at Standard Chartered Private Bank.

Patients and customers

By Tony Samson
WAITING at the doctor’s office, say when he’s running late on his clinic hours due to a meeting or an emergency operation or you just happen to be the fourth person on the queue even if you were on time but others happened to be there already ahead of you (first come first served, Sir), makes you realize why in this encounter where supply and demand meet, the consumer is referred to as a patient and not customer. The marketing mantra, “the customer is king” which translates into “please attend to this buyer right away” does not apply here.
Still, in the health care business, while waiting patiently (the same root word for patient) is often a requirement, there are some exceptions. Some sectors in the medical field strive hard to serve the customer instantly. The eyewear business for one which provides vision enhancement quickly attends to the drop-in customer with a speedy ophthalmology seating to check the required grade of lenses (can you read the bottom line?) and an eager salesman bringing out an array of frames for the proper matching on different facial shapes.
The customer bias, that embraces quick service and instant attention to ensure patronage, applies as well to other health care areas such as independent outpatient testing clinics, fitness centers, and hospital emergency rooms. As to the last category, a “triage system” even puts a latecomer ahead of the queue if his needs are urgent, say a knife wound from a shirtless vagrant, or a choked throat from a fish bone.
Back to the patient. There is no intention to belittle, or heaven forbid, criticize, the medical profession on the enforced waiting that a patient is subjected to. In the areas of consultation and even elective procedures, like wart removal, circumcision, or liposuction, requiring the service of a medical specialist, the patient (noun) needs to be patient (adjective). The temporary unavailability of the designated physician due to trips abroad or conventions to attend or the limited capacity of certain required facilities need to be accepted. This customer/patient happens to need a particular service provider or procedure, not a generic product like potato chips. Rushing to get alternates (a second opinion) to provide the service raises risks and discomfort levels.
The term “patient” seems limited to the field of health and wellness, which covers the whole range of ministrations from diagnosis to cure and pain alleviation. The dictionary defines “patient” as “the ability to accept suffering in the form of delay, inconvenience, or even pain without becoming annoyed or anxious.” This characteristic seems to fit the description of one in need of relief and made to wait for its delivery. The metaphor for the patient man is of course the biblical Job on whom was visited by plagues, deaths, and loss of wealth as a test of faith.
The etymology of the word itself is Latin (of course) and is the present participle of the verb “patior” — patiens literally means “I am suffering.” Can it be any clearer how the term came to be applied to those awaiting comfort?
Why is the term for the sufferer in need of healing been solely applied to the medical field. Aren’t there service providers who also offer relief from stress who refer to the recipients of their ministrations not as patients but customers? Think about foot massage, nail spas, and landscape architecture.
The demand side of an exchange of goods and services is not always patient when made to wait or suffer. Doesn’t a restaurant with rude waiters, slow delivery of orders, and salty food eventually lose customers and shut down?
In the daily transactions of life, there is too the giving and taking of pain or relief, joy or sadness, help or hindrance, the one on the receiving end is not always patient. His relegation to be a sufferer is not always a matter of choice. Aren’t the citizens of a country made to take its ups and downs, its inconveniences and embarrassments, as well as its daily shocks?
Playwright George Bernard Shaw observes, “The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man.”
The first step to being unreasonable is to lose patience. Only then can change happen, as the patient turns into a demanding customer.
 
Tony Samson is chair and CEO of Touch DDB.
ar.samson@yahoo.com

Beermen versus Kings

By Michael Angelo S. Murillo
Senior Reporter
THE best-of-seven finals of the Philippine Basketball Association (PBA) Commissioner’s Cup featuring the defending champions San Miguel Beermen and Barangay Ginebra San Miguel Kings in a “Beverage War” begins today with Game One set for 7 p.m. at the Smart Araneta Coliseum.
A battle between two of the more popular teams in the league, the Beermen and Kings try to set early control of the series as they work to see their respective causes through.
San Miguel, also the Philippine Cup champion, hopes to add the midseason PBA title to stay on track of another shot at a Grand Slam while Barangay Ginebra shoots for a third title in six PBA conferences.
The two teams will face in the championship once again after meeting in the Philippine Cup finals in 2017 where the Beermen won in five games, 4-1.
The Beermen started the tournament on the wrong foot, losing their first three assignments but finished the classification phase strong, winning six of their last eight matches after deciding to replace original import Troy Gillenwater with erstwhile PBA-banned import Renaldo Balkman.
San Miguel wound up at sixth place heading into the playoffs where it continued with its turnaround, sweeping the third-seeded TNT KaTropa in their best-of-three quarterfinals before ousting the second-seeded Alaska Aces, 3-1, in their best-of-five semifinals to barge into the finals.
Now back in the finals, the Beermen expressed their readiness to take on all comers and defend the title they won last year over TNT.
“We’re happy we were able to pull ourselves through despite the tough start for us in the tournament. Good thing we replaced our import with Renaldo Balkman and the locals eventually found their game collectively and picked it up. In the finals it’s a 50/50 chance. Anything can happen,” said San Miguel coach Leo Austria upon his team’s entry into the championship series.
“I think it will a good series against Ginebra. It is very hot right now. And I am sure they will come in very prepared for the series,” he added.
LIKE THEIR CHANCES
Like San Miguel, Barangay Ginebra had a rough start to the tournament, going 1-5 in its first six games that also saw it replace import midway.
It swept its last five matches in the elimination round to wind up at fifth place.
The Kings shut out the Meralco Bolts in the quarterfinals, 2-0, and got the better of top seeds Rain or Shine Elasto Painters in the semifinals, 3-1.
The Kings recognize that they still have their work cut out for them against a team like San Miguel in the finals but nonetheless like their chances, especially with a beefed-up roster that includes Greg Slaughter, Jeff Chan and import Justin Brownlee.
“San Miguel is a great team and is a handful. Renaldo Balkman is a good fit for them and we can see that from how they play. But I like our chances against them this time around. I’m not saying we are going to beat them outright but we should compete better against them. It’s going to be another classic match between us,” said Barangay Ginebra coach Tim Cone, using the 2017 Philippine Cup finals as gauge of reference.
“We have won 10 of our last 11 games. [I give] credit to the players for not hanging their heads after a 1-5 start. They could have easily given up but here we are now, in the finals against San Miguel,” he added.
San Miguel is playing in its seventh finals in the last 11 PBA conferences and is looking to pad its total championship haul to 26.
Barangay Ginebra, for its part, is gunning for its 11th PBA title.