MBAs can make a positive difference

June 12, 2019 | 6:55 pm

For the first time, Harvard Business School and the Booth School of Business at the University of Chicago have not increased tuition for their MBA programs. Applications to the US business schools have been dropping due to online alternatives and more specialized courses. Worse, many international applicants have been scared off by anti-foreigner sentiment in many parts of the US. Some business schools, such as the University of Illinois Gies College of Business, have gone further and shut down their on-campus MBA programs altogether.

While the MBA program remains generally popular, it has been heavily criticized. Action learning pioneer Reg Revans of Manchester University has complained that the emphasis on technical skills and theoretical frameworks in the US model of the MBA program leads to “moral bankruptcy assured” — referring to the initials of the program. Revans had tremendous foresight because decades later, many of the spectacular business scandals, such as Enron at the turn of the century and the bank collapses leading to the Global Financial Crisis, were overseen by MBAs.

Peter Navarro, Professor at the University of California-Irvine, critiqued the top MBA programs for lacking ideal features that would produce better business leaders such as: a curriculum built on a foundation of multidisciplinary and integrative problem-solving; experiential exercises aimed at real-world problem-solving and student-centered learning; emphasis on the learning of soft skills such as communication, leadership, negotiation, interpersonal adeptness, and teambuilding; a global perspective and information technology focus; and ethics and corporate social responsibility.

In my observation, most MBA programs use paper case studies to train students to analyze management problems and propose solutions. As a result, MBA graduates learn to argue their recommendations based on “facts” described in the paper case. Similarly, the final requirement of the MBA is often an analysis of a company based on publicly available information and then a set of recommended strategies. This training approach based on static cases may help develop students’ analytical and argumentation skills when dealing with paper-based information. However, without training in ethics, interpersonal skills, and real-world problem-solving, MBA graduates can be weak in introducing practical needed change in actual organizations.

At De La Salle University, we redesigned the MBA program several years ago to try to avoid the weaknesses of traditional MBA programs. We aligned the program more closely with the university’s mission to be a force for social transformation in terms of human development and social justice through its graduates.

We orient students on the ethical mandates for business social responsibility enunciated in the Constitution, business law, and Catholic social principles. We train them on a Code of Ethics for Business that specifies their moral duty to promote human dignity and the common good. The Code mainly calls on students to avoid conflicts of interest, treat others with respect and dignity, preserve the environment, offer socially positive products and services, and be transparent in reporting company performance. Most, if not all of the major business scandals of the past two decades, have resulted from violations of these tenets.

We changed the final requirement of the program from merely recommending strategic actions that may be proposed to a company to, instead, actually implementing action within their own organizations. This insider action research project, as it is called, requires the student to collaborate with people within the organization to confront a real and important organizational problem. Using scientific papers and practical knowledge from experience, the collaborators plan and implement needed changes. They then evaluate the outcomes of their change efforts and reflect on how they have personally and professionally developed from having worked on the project. Finally, the student derives an experiential theory that can help others to better understand how similar issues in other organizations may be addressed.

Our students have pursued many worthwhile insider action research projects. For example, a BPO agent worked with his team to lessen the chronic body pains they experience at work. They proposed and implemented wellness and ergonomic activities and more flexible work schedules. Their work comfort improved significantly, but they identified additional needed work.

A CFO dealt with strong criticisms of the budgeting process from budget units that had difficulties complying with submission requirements. Through empathetic face-to-face dialogues, the CFO redesigned the budgeting process to better meet the needs of the budget units while meeting the financial planning needs of the company as a whole.

An MBA degree does not guarantee successful business leadership in the workplace. But we are hopeful that business leaders grounded in social responsibility, reflection, collaboration, and scientific problem-solving can better address the dynamic challenges of the business world.

Dr. Benito L. Teehankee is the Jose L. Cuisia Professor of Business Ethics and Coordinator of the Business for Human Development Network at De La Salle.

benito.teehankee@dlsu.edu.ph

Right tool for the job

June 12, 2019 | 6:54 pm

If you have car engine troubles, do you bring it to a vulcanizing shop? If you have leaky plumbing, do you call a mason to “cement” the job? Or, if you need to tighten a screw, do you get a hammer? I guess the answers to these questions are pretty obvious, right? Common sense dictates that you use the right tool for the work required.

Economics, in a way, can be seen in a similar light. A wise man I once knew remarked that even economics, to an extent, was common sense. No need to complicate concepts like buying low and selling high, or adjusting prices depending on supply and demand, or matching opportunity with need. Even an unschooled farmer will have the sense to sell his goods at the highest price.

And this brings me to one of the issues of the day: Manila’s airport congestion. My apologies if I oversimplify the issue, but this I may do only to show a point. I do not claim to be an expert in airport operations of flight management. However, I am a user or beneficiary of both, and I believe that to an extent, even end-users like me have a point of view.

To my mind, an airport is basically a place where aircraft can take off and land. In short, the runway is the meat, everything else is gravy. More than 20 years ago I had the pleasure of visiting the scenic town of Bongao, Tawi-Tawi. The Fokker from Zamboanga City landed on the airstrip, dropped us off, picked up passengers, and then flew away. A runway and a small terminal were enough. Perhaps this may no longer be the case to date, but at the time, it was the right tool for the job.

Since after the war, from 1949 onwards, we have had two runways for all commercial flights, general aviation flights, as well as Air Force flights to and from the Manila airport. This was after international flights were moved to the Nichols Air Base area (now Villamor) from the Nielson Tower in what is now known as Ayala Triangle Gardens in Makati City.

Seventy years after, we still have only two runways in operation at the Manila Ninoy Aquino International Airport (NAIA) — but now serving four passenger terminals and all civilian and military flights out of the metropolis. In 1949, the Philippine population was estimated at about 19.7 million. Now, it is about 108 million. In 2018, all terminals at NAIA reportedly handled a record-breaking annual passenger traffic of over 45 million.

What does “simple” economics tell us about this situation? Do we need more airport terminals? Yes. Do we need more efficient airport operations? Without doubt. But, do we need more runways? This, to me, is the real issue and should be the priority. NAIA desperately needs more runways and additional taxiways that are wide enough to allow for safe “wingtip to wingtip clearance” for the largest-capacity aircraft.

A third and fourth runway will help ease congestion at NAIA, but building them is easier said than done. Expropriation in Pasay or Paranaque cities, or reclamation at Manila Bay, will be difficult to pursue. But those are the only ways one can acquire more space for new runways. An option is to close NAIA, flatten the place, and build anew but making better use of space available. This will be difficult, painful, and perhaps unnecessary.

If we cannot build more runways at NAIA, which does not appear to be feasible at the moment, then we should decongest NAIA by looking for a nearby “third runway.” In the regard, I believe the government’s decision to tap the Atienza Air Base at Sangley Point in Cavite City for general aviation is a step in the right direction. By sea, the distance between NAIA and Sangley is about 10 kilometers. By land, it is about 30 kilometers.

Sangley actually has the potential to service commercial flights, but this will require “updating” the runway and building a new terminal as well as parking facilities. More planning is required for this. But while “converting” Sangley will also take time and resources, I believe this to be a more practical approach to “expansion” rather than “expanding” NAIA itself. For one, working on Sangley will not affect NAIA operations.

Sangley need not be fancy. Take the case of an aircraft carrier, which is a “floating airport” that consists mainly of a runway, hangars, and a control tower. Without an operating runway, or a damaged catapult, an aircraft carrier is effectively dead in the water. So, the runway is the most important element. “Have runway, can fly” should be the objective here.

I have been on the US Navy amphibious ship USS Bonhomme Richard. Sized about two-thirds of a regular aircraft carrier, the ship secures the Asian region with its load of helicopters, fixed-wing aircraft that take off and land on their own power, amphibious as well as armored vehicles, heavy equipment, and about 2,500 Navy crew members and a Marine expeditionary force.

The ship has a 15-bed intensive care unit and a 44-bed hospital ward. It feeds about 2,500 people with four meals daily. It runs on steam, with boilers running on the same jet fuel used on aircraft on board. The ship also has its own ability to recycle the condensation from its propulsion system and at the same generate potable water for drinking and cooking and for sanitation use, among others.

While offshore, the ship directs air traffic and flight operations. It caters to helicopters and fixed-wing aircraft in need of servicing and refueling. In short, it is a floating airport that can be easily deployed to where there are deep enough waters, and from its belly it can deploy amphibious vehicles and landing craft for a beach landing. One can only imagine how efficient crew and operations must to effectively run a ship like the Richard.

This is not to say that Sangley can and should be operated as such. However, there are lessons to be learned from aircraft carriers and Landing Helicopter Docks or LHDs like the Richard. Building new airports, additional ones and not replacements, are necessary. But while new facilities are still to be built, improving existing operations will be crucial to running a “tight ship.”

The Sangley option is significant. Improving Clark airport will also be crucial. The Bulacan airport is the long-term option. Once Sangley and Clark are in order and Bulacan is operational, then long-term plans for NAIA can be put into effect. Meantime, we need to focus on providing transportation links to Cavite, Clark, and Bulacan from Metro Manila.

Of course, all these options will take time. And will come at a cost. Nobody but nobody, even the government, will build for free. Users like me should be prepared to pay fees for such efficiency, or must be ready to pay more in taxes. And while the government can borrow to fund these projects, we should always be conscious of the fact that a government loan today is a tax tomorrow.

To my mind, any “airport” can sufficiently operate even without a large, well-appointed terminal as long as it has enough runways for aircraft to safely but quickly takeoff and land. Much like an aircraft carrier. So, if this means that Sangley can be operated for commercial flights even in a spartan manner, then we should consider this.

Well-appointed terminals and lounges or even “tubes” can be foregone. Duty-free shopping and recreational areas can be dispensed with. Spartan accommodations will do, as long as we move people quickly and safely. Comfortable, airconditioned buses/coaches can be used to ferry people from NAIA to Sangley. On the bus, during the drive, passengers can already be processed by ambulant Immigration personnel.

Initial customs and security inspection of baggage can be done curbside at NAIA prior to riding the bus, and can be tagged as pre-inspected. Then they will be loaded into a separate truck or bus dedicated to air cargo. Baggage and cargo can be “reprocessed” on site before they are loaded on board. Upon arrival at Sangley, “processed” passengers disembark from the bus at the tarmac and get on stairs straight into the plane.

This is a far-fetched scenario. Perhaps an oversimplification, but not altogether impossible. But under the theory “have runway, will fly”, this approach for Sangley remains to be a “budget” option for passengers — and a government — that are willing to trade comfort and luxury for efficiency and a quick and safe way to fly.

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

matort@yahoo.com

Break up big tech or not, society should know the technical implications for the Internet

June 12, 2019 | 6:53 pm

By Rajnesh Singh

AGAINST the backdrop of growing unease worldwide about the power of big technology companies, whether governments should break them up has become a common talking point.

US Democratic presidential contender Elizabeth Warren threw a spotlight on the issue in March with a proposal that would lead to the breakup of big Silicon Valley platform firms, including Google, Amazon, and Facebook.

“You can be the umpire in a baseball game, or you can have a team in the game,” Warren explained this in terms of a baseball analogy, “but you don’t get to be the umpire and have a team in the game.”

The analogy drives the message home but obscures the fact that the technology giants’ products are wildly popular all around the world. So many of us use a similar set of Internet services every day to text, search, or shop, among other online activities.

Today, a handful of actors play a significant role in our increasingly connected societies. Besides the Silicon Valley firms, Tencent and Alibaba are also growing their dominance, particularly in the Asia-Pacific region, and across multiple dimensions including payment services.

The debate on the influence of these companies has typically focused on the economics, namely how they could buy out potential competitors and use their dominance to move into other lines of business. Other arguments include worsening income inequality, weakening workers’ bargaining power, and slowing innovation. But, this is not just about big tech; it is also about the Internet.

As the markets concentrate, it is time society ponders what it means for not only competition and consumer choice, but also the technical aspects of the Internet.

The technical implications for the Internet could be real and are too important to ignore. We should be clear-eyed about the possibility that a more centralized Internet could impede its resilience, openness, and diversity — properties that have made the Internet thrive.

These platforms run on what we call total service environments. They have evolved into providing a range of communications, entertainment, and productivity and lifestyle services and tools designed to be “one-stop shops” on the Internet. To keep users engaged and continue to grow revenues, they expand into new service and content areas. They also gain market share in their respective markets due to data control and network effects.

In fact, our continuous research into the area, spearheaded by our flagship Global Internet Report 2019 (https://future.internetsociety.org/2019/), shows trends of consolidation are taking place not only in applications, but also in access provision, such as Internet Service Providers (ISP) and mobile network operators, and service infrastructure, such as naming and addressing management and hosting and distribution of content.

The effect is that the open, collaborative, and interoperable Internet is increasingly influenced by a small number of large companies, and organizational scale and market share play a significant role in the development and deployment of the open technical standards on which the Internet depends.

We observe the growing use of largely platform-driven application programming interfaces (API) puts more of the Internet’s functionality and interoperability in the hands of powerful ecosystems, whose interests may not align with those of others.

Finally, future innovation, services, and applications may depend on the availability of a small set of proprietary platforms and services, rendering those applications less resilient, reliable, and capable of supporting further innovation.

There are clear benefits to operating at scale, including how platforms can greatly benefit the user by providing services that offer seamless experiences. However, it is unclear what the impact is on innovation, entrepreneurship and, importantly, competition.

We believe that the Internet and the important properties that make the Internet such a powerful platform empower users with certain abilities. These abilities underpin the social value that the Internet provides to people, and includes the ability to connect, speak, innovate, share, choose, and trust. Some of these are bound to be more susceptible to impact from consolidation if this trend continues unabated.

None of this comment is to urge policymakers to regulate, which in turn could lead to consumers potentially not being able to use the popular products they appreciate. It is important that we realize measures against consolidation could create unintended consequences both for markets and the Internet.

It is why before society decides if, or how, it should regulate big tech, we should further the understanding of how an increased consolidation may shape the technical future of the Internet — and what we need to do to preserve it.

Rajnesh Singh is Regional Director of the Asia-Pacific Regional Bureau at the Internet Society.

@RajneshSingh

Cutting fisheries subsidies crucial for oceans and for development

June 12, 2019 | 6:52 pm

By Roberto Azevêdo

RECENT STUDIES on the health of our oceans offer irrefutable evidence that something very disturbing is taking place and that the threat to marine life has never been graver.

The evidence has never been more compelling that many fish stocks are rapidly being depleted. According to the United Nation’s Food and Agriculture Organization 33% of global stocks are overfished — compared with 10% in 1974. In some regions, the picture is even more dire, with 60% of stocks overfished in the Mediterranean Sea, the Black Sea, the Southeast Pacific, and the Southwest Atlantic.

A UN report issued last month says that the pace of species extinction is accelerating and that roughly 1 million animal and plant species face extinction within decades. About a third of reef-forming corals, sharks, and marine mammals are threatened with extinction.

The cause of this looming catastrophe is no mystery. According to the UN, two-thirds of the global marine environment has been significantly altered by human actions.

This should be of concern to everyone. More than 40 million people worldwide earn their living through fishing. What’s more, fish make up 20% of the protein intake for 3.2 billion people.

It is certainly a matter of relevance for the 164 Members of the World Trade Organization (WTO). Negotiations are under way at the WTO which aim to prohibit the use of government subsidies for fishers who engage in illegal, unreported or unregulated fishing along with government support that leads to overcapacity and overfishing. In addition to protecting our oceans, an agreement to curb fisheries subsidies would help ensure the viability of smaller enterprises and create better conditions for economic development in coastal regions.

These negotiations also represent a critically important litmus test as to whether the WTO can continue to deliver multilateral agreements, as we have done in recent years. Trade Ministers meeting in Buenos Aires in 2017 pledged to strike such a deal by the end of 2019 and leaders from more than 190 countries agreed in 2015 that as part of the Sustainable Development Goals an accord would be in place by 2020. Good progress was made last year but the pace of negotiations needs to shift into high gear as these talks are rapidly approaching a critical stage.

The WTO may not seem the obvious place for negotiations aimed at striking a deal to help restore global fish stocks. But the WTO is unique in that it is the only organization in the world that has the authority to negotiate binding disciplines in the complex field of government subsidies. The WTO and its predecessor the General Agreement on Tariffs and Trade have already negotiated pacts which limit trade-distorting subsidies in the fields of industry and agriculture. Not all subsidies are deemed harmful in those areas and it is clear that new disciplines would not cover all government support for fishers.

Because there is a dearth of reliable data, precise figures on government support for the fisheries sector are hard to come by. Nonetheless, most experts peg government outlays at between $14 billion and $54 billion per year.

No one questions the link between government subsidies and the depletion of global fish stocks. But subsidies are a complex topic and these negotiations have been complicated by the difficulty in finding common ground on sensitive issues like the role of national authorities and Regional Fish Management Organizations and how best to support artisanal fishers.

Another important issue is transparency. If an agreement is to be reached, WTO Members need to understand the scale of the problem and this means governments must spell out exactly how much they are allocating in support of their fishing fleets. In the WTO, this is done through notifications provided to the organization that describe the breadth and depth of fisheries support programs. WTO Members have agreed to provide such data but so far only 25 WTO Members have provided this information and the deadline for submitting notifications is June 30.

It is not too late to reverse the alarming depletion of fish stocks. Mexico, South Africa, and Costa Rica are among those implementing fishery management that have produced positive results. When Mexican authorities established a national park near the village of Cabo Pulmo on the Gulf of California, for instance, the strict conservation measures put in place led to an increase in fish biomass of 463% in just 10 years. According to one study, this is perhaps the largest ever recovery of life in a marine reserve.

But the time to act is now. WTO Members must set aside their differences and find the compromises needed to bring about a deal. A new WTO agreement cannot be expected to cover all factors that lead to the depletion of fisheries, nor to solve this problem entirely. But it can offer a decisive and vital contribution. Failure to act now would make our debate moot because the fish will all be gone.

Roberto Azevêdo is Director-General of the World Trade Organization.

@WTODGAzevedo

Ten things people in finance should never say

June 12, 2019 | 6:52 pm

By Barry Ritholtz

AT A RECENT EVENT in New York City, I chatted with a money manager whose presentation had impressed me. At least, I was impressed until he uttered one of those hackneyed phrases that just make me flinch. This is an occupational hazard in the world of economic and market commentary. Any of us can lapse into lazy shorthand. But it is something best avoided: Use of trite or clichéd formulations neither reflects well on us, nor does it show respect for the reader or listener.

I shared my dislike of wince-worthy platitudes with financial-Twitter, and received more than 500 examples of your most-hated phrases. Indeed, cringe-inducing financial nonsense that sounds smart, but falls apart upon closer inspection, seems to be everywhere.

As a public service to consumers of financial news, I am hereby undertaking a campaign to urge my fellow pundits to shun the worst of these. Below are some of the most egregious offenders, in no particular order:

1 “This is the next Amazon (or Apple or Google or . . . )” : The laziest of all ways to titillate stock investors is to dangle the potential of a giant winner in front of them. Just imagine how much money you will make if XYZ is the next Amazon, although odds of it going broke are infinitely greater. Despite the rise in popularity of indexing, this stratagem still seems to work.

2 “But what’s that worth adjusted for inflation?”: I have long been an inflation skeptic, believing that Bureau of Labor Statistics understate inflation. But pre-financial-crisis inflation skepticism morphed into something entirely different in the deflationary post-crisis era. Inflation truthers refused to accept any data, especially if it showed the economy was improving under former President Barack Obama. Recall the entire argument that quantitative easing would cause hyperinflation. That didn’t happen, of course. Using inflation to critique anything you dislike is an exercise in bad-faith argument.

3 “The stock market hates uncertainty”: This one may rate as the worst. Buyers and sellers operate probabilistically, not with certainty. Without some degree of uncertainty, who would ever buy when you want to sell, and vice versa? Second, uncertainty isn’t the same as risk. As discussed here, when the range of outcomes is understood, you don’t have uncertainty. Last, the only times I recall that there was certainty was in late 1999, when everyone was sure markets had no limits, and again in March 2009, when everyone believed markets were going to zero. It seems whenever there is certainty, the herd is wrong.

4 “The easy money has already been made”: This was a common refrain in about 2010-11, often by traders who missed the rebound from the March 2009 market lows. But buying at a bottom and selling at a peak is one of the hardest trades you are ever going to make. If you are wrong, or even a little too early, you kick yourself for being such an idiot. It is never easy money.

5 “Without quantitative easing/zero interest rates/the Federal Reserve, markets would tank”: To channel Bridgewater Associates founder Ray Dalio, investors must embrace reality as it is, and not some version of how they want it to be. Regardless of your views of the many post-crisis interventions, they were, and remain, real. Arguing that they are misguided, wishing they would go away or ignoring them won’t help. Financial crises, and for that matter the smooth functioning of a modern economy, ALWAYS requires government action. You may not like it, but ignore this truism at your own financial peril.

6 “It’s Uber for _____”: This is the venture-capital version of the “next-Amazon” trope. Any long-shot idea is given a patina of respectability by comparing it to a successful VC-funded startup. Try it yourself; it’s surprisingly effective.

7 “Virtue signaling”: A dishonest but clever way to attack not an idea but the person stating it. Unless you are showing problems such as conflicts of interest or a history of fraud, going after a person’s motivations is simply an unacceptable ad hominem attack. Instead, debunk the idea, not its author.

8 “How much is that in yen?”: The last refuge of wayward commodity traders, this currency dodge operates to make a bad trade look better. It works like this: You bought gold at $1,600, but it fell to $1,200. Rather than acknowledge a mistake, cite a different currency to make the trade look like a winner.

9 “The future obligations of Social Security and Medicare will bankrupt the country”: This represents the mistake of only looking at one half of a balance sheet — the liability side. Extrapolating the increased costs of these (or other government) programs while ignoring the increases in the revenue side is misleading, or worse — an argument advanced by those who want to undo the social safety net.

10 “Homebuyers caused the financial crisis.” The cause(s) of the financial crisis still remain misunderstood by much of the public. (The short, rather unsatisfying answer: it’s complicated). However, there are some people who intentionally make false statements about the crisis, mainly for ideological reasons.

I will stop at 10, but the list could run to the hundreds. What it is about finance that invites these terrible, vapid pronouncements? Do these trivialities reflect a lack of intellectual rigor, or are they merely a refuge for those who don’t want to get pinned down?

What financial clichés annoy you?

BLOOMBERG OPINION

Barry Ritholtz is an American author, newspaper columnist, blogger, equities analyst, CIO of Ritholtz Wealth Management, and guest commentator on Bloomberg Television.

A time to remember and reflect

June 12, 2019 | 9:00 am

It was on June 12, 1898, when the “Act of the Proclamation of Independence of the Filipino People” was read at General Emilio Aguinaldo’s ancestral house in Kawit, Cavite. The country’s independence, however, was not achieved quickly.

Through the Treaty of Paris, the Spaniards ceded its control of the islands to the Americans, causing the Philippine-American War and, consequently, United States’ rule of the country. It was only on July 4, 1946, when independence was totally granted to the Philippines. Since then, Independence Day was celebrated on July 4.

Then in 1962, the country’s ninth President, Diosdado Macapagal, proclaimed June 12 a public holiday “in commemoration of our people’s declaration of their inherent and inalienable right to freedom and independence.” The change was confirmed through Republic Act No. 4166 in 1964.

President Macapagal explained why such a move is appropriate in a speech he delivered on June 12, 1962.

Since the nation’s right to liberty is not derived from the grant or recognition of another but is an attribute it naturally holds, Mr. Macapagal found it “proper that what we should celebrate not the day when other nations gave recognition to our independence, but the day when we declared our desire to exercise our inherent and inalienable right to freedom and independence.”

He further explained that compared to the independence granted by the Americans in 1946, the declaration of independence in 1898 is signified by the determination and unity of local government leaders to revolt.

He credited General Aguinaldo for galvanizing the entire nation to action, that when he “formally assumed political command and declared his country free from [colonizers], a nation came into being.”

Former President Diosdado Macapagal — commons.wikimedia.org

“There had been other Asian revolutions before. But the revolution which culminated on June 12, 1898 was the first successful national revolution in Asia since the coming of the West, and the Republic to which it gave birth was the first democratic Republic outside of the Western hemisphere,” he added.

President Macapagal’s speech also hinted at reasons why Philippine independence is worth celebrating.

Independence Day obviously stands as a reminder of that long-fought battle for freedom and the people behind it.

Many who are very observant of our history might see the nuances within the narratives, which are worth exploring. It still stands true, nonetheless, that the June 12 declaration was a fruit of a united resolve.

“I moved the observance of the anniversary of our independence to this day,” President Macapagal spoke, “because a nation is born into freedom on the day when such a people, molded into a nation by a process of cultural evolution and a sense of oneness born of common struggle and suffering, announces to the world that it asserts its natural right to liberty and is ready to defend it with blood, life and honor.”

The nation’s rough yet triumphant journey to freedom is one of those things Filipinos should never forget. This commemoration is an admonition for Filipinos to cultivate a thirst for knowing the rich history of the country, including its struggle for independence.

Mr. Macapagal, in fact, recognized in his speech the heroes whose “acts of patriotism and nationalism” contributed towards gaining the independence that the nation now enjoys.

He cited heroes such as Lapu-Lapu; Rajah Soliman; Rajah Lakandula; Francisco Dagohoy; Diego and Gabriela Silang; Apolonario de la Cruz; Fathers Gomez, Burgos, and Zamora (more known as GomBurZa); and Dr. Jose Rizal, among others.

Independence Day also serves as an apt moment for Filipinos to reflect on who they are in light of all these, and of what they could give in return as benefactors of this emancipation which took pains to be attained.

“[I]t is fitting that as we commemorate the anniversary of the declaration of our independence and as we recall the glorious events surrounding it,” the late statesman said, “we should examine ourselves and ask if we have been worthy of the heritage of freedom which our heroes bequeathed to us and for which thousands of our patriots so willingly shed their blood. Let independence day therefore be an occasion not only for commemoration, but for spiritual self-examination.”

For President Macapagal, the heroes have a right to ask of Filipinos how strong their Republic is today. This evokes a sense of responsibility left for us to be productive and truthful citizens.

These heroes, he added, might well ask the businessman if he did his best to improve his methods of production and to increase his marketing efficiency. They also might well ask students if they have been diligently studying “not only for high marks, but for the sake of learning,” in order to fully contribute to the nation’s overall progress. They might well ask politicians if they are placing the Nation’s greater good above their “narrow self-interest”.

“Our heroes might well ask us all: What have you done for your country?” he concluded. — Adrian Paul B. Conoza

Philippine trade year-on-year performance (April 2019)

June 12, 2019 | 12:33 am

THE COUNTRY’s trade-in-goods deficit narrowed in April as merchandise exports grew while imports declined, but did not prevent the year-to-date trade gap from increasing, according to data released by the Philippine Statistics Authority (PSA) on Tuesday. Read the full story.

PHL trade deficit narrows in April

June 12, 2019 | 12:33 am

By Carmina Angelica V. Olano
Researcher

The value of merchandise exports went up 0.4% annually to $5.51 billion in April from $5.48 billion a year ago, and slipped 6.7% from $5.91 billion in March.

This marked the first time it posted growth in five months or since the 1% growth logged in November 2018.

On a cumulative basis, merchandise exports were down 2.1% to $21.92 billion from $22.39 billion in 2018’s comparable four months. This was below the six-percent target set by the Development Budget Coordination Committee (DBCC) for 2019.

On the other hand, the merchandise import bill fell by 1.9% to $9 billion in April from $9.2 billion in the same month in 2018. This is the first time it posted a decline in four months or since December 2018’s -4.9%.

Year to date, merchandise imports posted a 2.9% growth to $35.18 billion from $34.19 billion in January-April 2018, against the DBCC’s 9% projection for the year.

These flows brought the country’s trade deficit to $3.5 billion in April, which is 5.4% less than the $3.7 billion shortfall last year.

Cumulatively, however, the country’s trade deficit grew 12.4% to $13.26 billion compared to last year’s gap of $11.8 billion.

In a statement, the National Economic and Development Authority (NEDA) noted the country’s total merchandise trade declined by one percent year-on-year to $14.51 billion in April from $14.66 billion in the same month last year.

NEDA attributed the decline in imports to reduced payments for raw materials and intermediate goods, the almost zero growth in capital goods imports, and the slowdown in the purchases of consumer goods.

On the other hand, NEDA noted the “continued recovery” of the exports of agro-based products as well as the uptick in the sale of manufactured goods.

Exports of manufactured goods, which comprised 84.1% of total sales in April, went up by 2% to $4.63 billion from $4.54 billion in the same month last year.

Electronics, which made up 56.7% of total export sales, grew 3% to $3.12 billion from $3.03 billion.

Agro-based products, which accounted for 8.1% of exports, saw a 23% growth to $444.68 million in April from last year’s $361.64 million. Exports of forest products likewise surged 16.8% to $23.71 million.

Bucking the trend were declines in the outbound sales of petroleum products (-94.2%) and mineral products (-2.7%).

Dragging imports were raw materials and intermediate goods, which posted a 16.3% drop to $3.31 billion in April from $3.96 billion in the same month last year.

Meanwhile, imports of mineral fuels, lubricant and related materials went up by 36.5% to $1.22 billion, followed by consumer goods with a 7.6% growth to $1.55 billion.

Capital goods, which accounted for 31.4% of total imports, recorded a 0.03% growth in April to $2.83 billion.

TEMPORARY GAINS?
Economists said gains made in exports may be temporary as the electronics sub-sector may be affected by the ongoing US-China trade war.

“[Exports] managed to post a marginal expansion for April, tracking a similar bounce in technology partner countries like Taiwan and Korea for electronics in April. Given our reliance on the electronics sub-sector, the fortunes of the entire sector will likely be challenged given that Taiwan and South Korean semiconductor indices all headed south in wake of the escalating US-China trade war,” ING Bank N.V.-Manila Branch senior economist Nicholas Antonio T. Mapa said in an e-mail to reporters.

Mr. Mapa said the decline in imports “can be tied to the similar contraction in government spending.” He added that the flat growth in capital goods may be due to “elevated borrowing costs and the likely maturity in the investment cycle.”

“The budget delay, which put government projects on hold, led to the contraction of importation of construction materials,” Robert Dan J. Roces, chief economist at Security Bank Corp., said.

For exports, Mr. Roces explained that while seasonal demand for agro-based products may have pushed growth in the total exports figure in April, other goods “posted further contraction” during the period.

“[Semiconductors], in particular, [are] looking bleak as the pinch from the US-China trade war is starting to be felt…,” Mr. Roces said in a separate e-mail to reporters. “The fortunes of our exports number is closely tied with that of the electronics sector, with the data now showing low imports of raw materials used for electronics that may eventually point to weak electronics exports eventually.”

UnionBank of the Philippines, Inc. chief economist Ruben Carlo O. Asuncion noted bananas and gold led the export gainers.

“These are clearly commodity exports. These may be temporary increases, though,” he said in an e-mail.

Outbound shipments of bananas and gold rose by 76.7% and 36.1%, respectively. Bananas accounted for 3.2% of total exports, while gold contributed a 2.2% share.

The decline in import payments, Mr. Asuncion said, may be attributed to the slowdown in infrastructure spending.

“Note that due to the budget impasse, infrastructure spending was slower than initially planned,” he added.

OUTLOOK
According to UnionBank’s Mr. Asuncion, the US-China trade war fallout will continue to be a risk to local trade.

“Another would be the softer global demand in the long-term due to a possible economic slowdown brought by the trade conflict,” Mr. Asuncion said, adding that DBCC’s full-year targets may be difficult to achieve considering the current trade environment.

For Security Bank’s Mr. Roces, the trade war “may provide opportunities” for the country’s export sector “if sector-changing reforms are initiated.”

“To be able to transcend this trade war, Philippine trade may need to unbundle from just one product and develop a blueprint for supply chain enhancement of other products as well,” he said.

Socioeconomic Planning Secretary Ernesto M. Pernia, who is also NEDA’s director-general, noted the agency’s push for legislative agenda to make the export industry more competitive.

“To further drive exports up, we are looking at continuously increasing market access for Philippine products and reforms to improve productivity and lower production costs,” Mr. Pernia said in a statement.

He said the NEDA is pushing for amendments to the Public Service Act, the Foreign Investment Act, the Retail Trade Act, and the Tax Reform for Attracting Better and High-Quality Opportunities or TRABAHO bill.

“With the passage of these reforms, we can leverage the Philippines’ attractiveness to both foreign and local investors. These investments can help our industry to improve production efficiency and product diversification,” the NEDA chief said.

BoI investment registration performance

June 12, 2019 | 12:32 am

FRESH PROJECTS pledged at the Board of Investments (BoI) in the first five months of the year climbed 40.1% from a year ago, with power projects spurring the growth. Read the full story.

Investment pledges climb 40% in January-May

June 12, 2019 | 12:32 am

FRESH PROJECTS pledged at the Board of Investments (BoI) in the first five months of the year climbed 40.1% from a year ago, with power projects spurring the growth.

In a statement on Monday, the government’s lead investment promotion agency said the value of projects in January to May totalled P290.6 billion, up from the P207 billion in the comparable period last year.

Power-related investments made up the bulk or 63.8% of the projects as pledges for the sector grew 74% to P185.4 billion from P106.5 billion last year.

“Power projects are essential as it fuels the Build, Build, Build program of the government and the demands of a growing population. There are big power projects that will complement the infrastructure projects in the coming months even as we exercise due diligence for projects that are deserving of incentives. At the end of the day, we have to ensure our power supply will accommodate the strong demand not only of our massive infrastructure projects and population but also the rapid expansion of our industries, lead by the manufacturing sector,” Trade Undersecretary and BoI Managing Head Ceferino S. Rodolfo was quoted as saying in a statement.

Manufacturing projects followed, more than doubling its recorded value of commitments to P44.6 billion from P19.4 billion in the same period in 2018.

Commitments for the information and communication sector surged to P33.2 billion from P340 million last year. Pledges for tourism accommodation facilities also soared to P8.4 billion to P1 billion in 2018.

For May alone, the BoI said it approved the P700-million shipping project of Southwest Gallant Ferries, Inc. which will service the Batangas, Romblon and Roxas City routes; the P400-million Cavendish banana facility of Tren2 Agri-Industries in Agusan del Sur, whose products will be exported once operational; and eight low-cost housing projects worth P2 billion spread across the Cavite-Laguna-Batangas-Rizal-Quezon (CALABARZON) and Central Luzon regions.

Bulk of the projects in the five-month period were from local proponents, growing 11.48% to P223.50 billion from P200.50 billion last year.

Region IV-A or CALABARZON was the top investment destination, accounting for P200.9 billion of locally-generated investments. It was followed by Region III or Central Luzon with P27.1 billion, the National Capital Region with P7.9 billion, Region VII or Central Visayas with P5.7 billion, and Region II or Cagayan Valley with P4.4 billion.

Meanwhile, approved investments from foreign sources saw an upswing to P67 billion in the five-month period from P6.9 billion last year.

Singapore was the biggest foreign investor during the period with P35.4 billion. Netherlands placed second with P9.1 billion and Thailand followed with P8.5 billion. Capping the top five sources were Japan with P5.5 billion and the United States with P2.4 billion.

“With the Philippine economy up four notches to 46th in the latest World Competitive Yearbook rankings, the vote of confidence of the administration affirmed in the May mid-term elections with the resounding victory of most of its candidates and allies, is seen to sustain investor confidence for the Philippines,” Trade Secretary and BoI Chairman Ramon M. Lopez said.

The Trade chief added that the recent visit of President Rodrigo R. Duterte to Japan will boost the local investment climate as he was able to attract nearly P300 billion in investment deals, business expansion and letters of intent from Japanese firms to channel more capital into the country expected to create over 80,000 additional jobs for Filipinos.

“We will continue to spread economic development in the regions as records show barely three percent of investments are located in the NCR with the rest (97%) going to the countryside,” Mr. Rodolfo said. — Janina C. Lim

Sangley to handle general aviation by December

June 12, 2019 | 12:31 am

By Denise A. Valdez
Reporter

PRESIDENT Rodrigo R. Duterte on Monday evening ordered the Department of Transportation (DoTr) to immediately utilize the Danilo Atienza Air Base in Sangley Point, Cavite to help decongest the country’s main gateway, the Ninoy Aquino International Airport (NAIA).

But the DoTr said it expects the Sangley airport to start handling general aviation flights by December.

In a text message Tuesday, Transportation Undersecretary for Aviation Manuel Antonio L. Tamayo told BusinessWorld the DoTr is almost done with the redevelopment of Sangley for non-commercial air transport, and the transfer of such flights to Cavite is scheduled before the end of the year.

When asked about the DoTr’s timeline to open the Sangley gateway, he said, “Dec. 2019. Runway 2,300 x 45 meters is done. It’s the pax (passenger) terminal, hangars, ramp and drainage we are working on.”

In a statement regarding the 38th Cabinet Meeting held Monday night, Presidential Spokesperson Salvador S. Panelo said Mr. Duterte had expressed “dismay” at the NAIA operations after he conducted a surprise inspection at the Terminal 2 earlier that day.

“Transportation Secretary Arthur P. Tugade raised some operational concerns. To ease congestion at the Ninoy Aquino International Airport, the plan to transfer general aviation or domestic flights to Sangley Airbase… The President directed the operations in Sangley Point to start immediately,” he said.

Mr. Panelo added that Mr. Tugade reported there are ongoing tests of ferries that can carry passengers from Mall of Asia in Pasay City to Sangley Point in Cavite in just 18 to 24 minutes.

General aviation flights are non-commercial operations that cover charter, corporate, military and pilot training flights. Such operations commonly use light aircraft and involve fewer passengers versus commercial flights.

The Civil Aviation Authority of the Philippines (CAAP) said the average number of general aviation flights flying out of NAIA monthly is at 3,000, comprised of 1,500 fixed wing aircraft and 1,500 helicopter-type aircraft.

Mr. Tamayo said DoTr will be transferring such flights from NAIA to Sangley by “as much as can be accommodated.”

Local airlines Philippine Airlines (PAL) and Cebu Pacific, however, said the DoTr decision will not affect their operations as both companies operate commercial flights.

PAL Spokesperson Cielo C. Villaluna said in a text message the company supports the government’s effort to decongest NAIA. “This is a step in the right direction, as it will benefit our country’s commercial aviation sector as a whole,” she said.

“We support efforts to improve NAIA and will work with the government to achieve this. Transferring General Aviation or private aircraft movements to Sangley will yield immediate positive results for NAIA,” Cebu Pacific Director for Corporate Communications Charo L. Lagamon said in a text message.

But the government is not discounting the possibility of using the Sangley gateway for commercial operations in the future, as the National Economic and Development Authority (NEDA) is reviewing a $10-billion proposal from the provincial government of Cavite which aims to add two extra runways to the Sangley air base to be used commercially.

For the Manila gateway, there is also an effort from a consortium of seven conglomerates to conduct a P102-billion, 15-year rehabilitation and expansion of NAIA, which the NEDA is also evaluating.

The consortium is backed by PAL Holdings, Inc. Chairman Lucio C. Tan through Asia’s Emerging Dragon Corp.; and Cebu Air, Inc.’s Lance Y. Gokongwei through JG Summit Holdings, Inc.

Other members of the consortium are Aboitiz InfraCapital, Inc.; AC Infrastructure Holdings Corp.; Alliance Global Group, Inc.; Filinvest Development Corp. and Metro Pacific Investments Corp.

MRT-7 completion to be delayed to 2022

June 12, 2019 | 12:30 am

By Arra B. Francia
Senior Reporter

SAN MIGUEL CORP. (SMC) expects the completion of the Metro Rail Transit Line 7 (MRT-7) to be pushed back to 2022, with partial operations seen by 2021 as the company encounters right of way issues.

SMC President and Chief Operating Officer Ramon S. Ang said they will be able to operate the first portion of the railway running from the North EDSA common station to Fairview by the end of 2021.

This is against SMC’s earlier target to complete the railway by 2020.

“Yung first portion 2021 pwede nang buksan, but we think matatapos lahat yan by year 2022. Maraming right of way problem eh. Kasi yung dinadaanan puro masisikip (The first portion we can open by 2021, but we think everything will be finished by 2022. There are many right of way problems. The roads are very narrow),” Mr. Ang told reporters in a briefing after the company’s annual shareholders’ meeting in Mandaluyong on Tuesday.

He noted that the partial operations of the MRT-7 will already be a big help to commuters, as the North EDSA-Fairview segment is expected to carry the largest volume of passengers.

Mr. Ang added that they have already resolved the train depot issue in a Bulacan court. To recall, the company’s acquisition of a 33-hectare property in Bulacan for the train depot was earlier disrupted due to expropriation issues.

The P62.7-billion MRT 7 project will run from North Avenue in Quezon City to San Jose del Monte City in Bulacan. It has three components, namely a 22-kilometer rail transit system with 14 stations, a six-lane highway between North Luzon Expressway and a planned Intermodal Transportation Terminal that can accommodate 200 buses at a time.

The new train system is seen to serve about 420,000 passengers a day once competed. It will also have a common station with MRT 3.

RENEWABLE ENERGY
Meanwhile, Mr. Ang also said they will be adding at least 800 megawatts (MW) of renewable energy to their portfolio by March next year. The additional energy will come from a combination of solar, wind, pump, and hydro sources.

This forms part of the company’s plans to have 1,200 MW of renewable energy by 2024, which it disclosed earlier this month.

“Nine months from now, by March 2020, we will invite you guys. Isi-switch on ko na ‘yon,” Mr. Ang said.

Mr. Ang declined to give further details on where the plant will be located, but noted that the plant will have no off-take agreement.

“Walang kakontrata yan (There is no contract). It is a merchant plant na iooffer sa public,” he said.

SMC booked a net income attributable to the parent of P5.71 billion in the first quarter of 2019, 22% lower than the P7.34 billion it realized in the same period a year ago. Gross revenues meanwhile picked up seven percent to P250.92 billion.

Shares in SMC rose 0.11% or 20 centavos to close at P182.20 each at the stock exchange on Tuesday.

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