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Concerns about shift in gov’t form unresolved

THE MEETING last Wednesday of state economic managers and members of the Consultative Committee to review the 1987 Constitution failed to dispel worries about the fiscal impact of the draft federal charter, whose fate now lies with Congress.
Arthur N. Aguilar, who led the consultative body’s subcommittee on economic reforms, said in a telephone interview on Thursday that his group told state economic managers that there are “more than ample provisions in the constitutional design that ensure fiscal prudence.”
But Finance Secretary Carlos G. Dominguez III said more clarity is still needed on the fiscal impact of the proposed changes to the current Constitution.
Mr. Aguilar said much of their discussions last Wednesday revolved around the proposed revenue and expenditure sharing between the federal government and the federated regions.
“The 50-50 share is only in four taxes,” he said in a telephone interview yesterday, referring to income, excise, value-added tax and customs duty, meaning that the federal government will still get bulk of overall revenues.
Federated regions will have exclusive power to collect 12 taxes and fees while the federal government will collect all other levies.
“So the revenues, it’s about two-thirds federal and one-third federated regions,” said Mr. Aguilar.
“Expenditure finance follows functions. There are 21 exclusive powers of the federal government, 15 exclusive powers for the federated regions. Each exclusive power carries a budgetary implication.”
All other spending will be shared between the two governments.
“We’re just shifting marbles from one to another. We’re not creating a bigger pie,” Mr. Aguilar explained.
He also assured that “federated regions cannot incur indebtedness outside the guidelines of the federal government.”
Economic managers earlier warned that the proposed changes could cause the fiscal deficit to balloon beyond the prescribed three percent-to-gross domestic product (GDP) ratio.
Moody’s Investors Service last month flagged the planned shift to a federal form of government as a risk to the Philippines’ credit rating, which now stands a notch above minimum investment grade with a “stable” outlook.
The National Economic and Development Authority’s (NEDA) had cautioned that the proposed changes to the constitution could add 1.0-1.6 percentage points to the three percent-of-GDP fiscal deficit ceiling.
“In terms of the split, they said it’s a 50-50 split in terms of the revenues. But when we looked at the share in spending, it can actually go up to 80-20 if you consider debt payments,” NEDA Undersecretary for Policy and Planning Rosemarie G. Edillon told reporters late Wednesday after the meeting.
She noted that the draft federal charter was “not clear” on whether spending responsibilities will be shared in terms of subsidies, tax expenditures, financial expenses and capital outlays.
Ms. Edillon said that the government faces P156.6-243.50 billion in additional expenses — including personnel services and maintenance and operating expenses — in the first year of implementation of the new charter. She said that this does not include the cost of “around P10 billion to establish the new offices” in federated regions.
At least in the first few years of operation, therefore, the new government form “will impede the delivery of goods and services” and lead to “inevitable disruptions to the economy’s growth momentum and progress in infrastructure improvement efforts.”
The NEDA official said that there will also be “unquantifiable economic costs; repercussions and externalities [that] include impact on foreign direct investments and international trade, reaction of credit rating agencies to fiscal deficit and debt effects.”
After the meeting last Wednesday, Mr. Dominguez told reporters still that “We need more clarity, that’s all.”
“The document that was produced lacks clarity on these specific issues. We are not against federalism. It’s just that these things need to be clarified.”
The consultative committee submitted its draft to both chambers of Congress in July.
“Actually it’s already in Congress,” Mr. Dominguez said. “So it’s up to Congress already.”
Budget Secretary Benjamin E Diokno told reporters on Thursday that “the real decision makers here will be Congress,” adding that economic managers’ main concern was to “control the deficit.”
“That’s the major constraint: the size of the deficit.” — Elijah Joseph C. Tubayan

Emerging-market wobbles to test if Asia really is safer

HONG KONG/SINGAPORE — While Asia proved to be relatively stable through the Turkey-led emerging market sell-off this month, the region has its own vulnerabilities with the junk-bond market shaping up as a key area to watch.
The amount of such debt coming due in dollars from Asian issuers, excluding financial firms, will rise over the next three years to a record $24.2 billion in 2021. With global investors eyeing higher US interest rates as the Federal Reserve raises borrowing costs, Asia’s riskier firms will face pressure to offer juicier yields to lock in fresh funding.
Risks across the region vary from heavy debt piles in China, Korea, Taiwan, Hong Kong and Singapore to current account deficits in Indonesia, India and the Philippines.
Junk bonds are just one of a number of vulnerabilities investors will need to watch out for as the prospect of further interest-rate increases in the United States and the end of quantitative easing in Europe draw curtains on an era of easy money.
Here are some others:
UNDER WATER
Jitters have spread beyond junk securities to high-grade Asian corporate notes. The average price for investment-grade dollar notes in the region has stayed below 100 cents on the dollar since early April, an ICE BofAML index shows — that’s a longer period below par than stretches that preceded debt-market pain during financial crises in 1997 and 2008 and the 2013 “taper tantrum”.
CREDIT STRESS
Another worry stems from the sheer volume of debt in Asia’s developing economies.
“We believe the bigger vulnerability for Asia in coming months stems from domestic credit stress and evaporating market liquidity — not balance of payments or currency pressures — and the economies most exposed are China, Korea, Taiwan, Hong Kong, Singapore and Malaysia,” Robert Subbaraman, Singapore-based head of emerging markets economics at Nomura Holdings Inc., said in a note earlier this month.
HOUSEHOLD DEBT
Consumers are also racking up the bills, with South Korea most at risk of seeing budget-busting households fall underwater.
SOVEREIGN DEBT
Governments have run up their tabs, too.
Much of developing Asia is attempting to tackle ambitious infrastructure plans — billions of dollars’ worth of road and rail to connect rural areas with thriving urban centers.
While credit ratings firms have generally been supportive, balance sheet strains are starting to show.
In Southeast Asia, the Philippines remains in the cross hairs with President Rodrigo R. Duterte’s “Build, Build, Build” program applying pressure on the peso, which is down more than six percent this year against the dollar.
Indonesia has just pledged a record spending year for 2019 while claiming that higher revenue will shrink the swollen budget deficit.
TRADE TENSIONS
Bigger bills aren’t the only concern.
Simmering trade tensions between the US and China are also a threat for smaller export-oriented economies including South Korea, Taiwan, Thailand and Malaysia, along with financial hubs Singapore and Hong Kong.
A protracted trade war between the U.S. and China would reverberate. Fluctuations in China’s economy or financial markets now have up to three times the impact around Asia than they did before the global financial crisis, according to Goldman Sachs. Singapore and Hong Kong also play key trade hub roles that leave them exposed to the trade-war jitters.
CURRENT ACCOUNTS
Asia’s current-account positions are broadly in strong shape, but there are weak links.
India, Indonesia and the Philippines are the three deficit nations feeling the most strain from the emerging-market sell-off. While their domestic conditions vary and their deficits remain relatively narrow, they face more Fed interest-rate hikes, a brewing trade war and enduring emerging-market anxieties.
FOREIGN EXPOSURE
Indonesia has a particular need to calm investors, given that the proportion of its stocks and bonds held by foreign investors is higher than peers in the region. As a rule of thumb, the more foreign ownership, the more vulnerability to a reversal in market sentiment.
Even if Asia boasts better growth prospects and beefier buffers, its hefty weighting in many emerging-market benchmarks leaves it exposed to a broader sell-off. “Since Asia takes up 75% of the MSCI emerging market index, if people sell EM, they are going to naturally sell some Asia along with that — whether or not they actually feel negative about Asia per se,” Timothy Moe, chief Asia-Pacific equity strategist at Goldman Sachs in Hong Kong, told Bloomberg Television recently. — Bloomberg

IMF weighs Argentina plea for help as peso crashes

BUENOS AIRES — The International Monetary Fund (IMF) said it was studying a request from Argentina to speed up disbursement of a $50-billion loan program after a collapse in investor confidence in President Mauricio Macri’s government sent the peso tumbling more than seven percent on Wednesday.
It was the biggest one-day decline in the peso since the currency was allowed to float in December 2015. It closed at a record low of 34.10 per US dollar and is down more than 45.3% against the greenback this year, prompting massive central bank interventions.
Nerves are frayed in Latin America’s third-biggest economy as it struggles to break free from its notorious cycle of once-a-decade financial crises. The last one, which was punctuated by a 2002 debt default, tossed millions of middle-class Argentines into poverty.
The run on the peso prompted Argentina to turn to the IMF for the $50-billion credit line earlier this year. As part of the deal, Argentina’s government pledged to speed up plans to reduce the fiscal deficit.
But given the peso’s continued depreciation, which makes the country’s dollar-denominated debts more expensive to pay, investors are increasingly concerned that the IMF help may not be enough.
“We have agreed with the International Monetary Fund to advance all the necessary funds to guarantee compliance with the financial program next year,” Mr. Macri said in a televised address on Wednesday.
“This decision aims to eliminate any uncertainty,” Mr. Macri said.
“Over the last week we have seen new expressions of lack of confidence in the markets, specifically over our financing capacity in 2019.”
IMF Managing Director Christine Lagarde responded by saying in a statement that the multi-lateral lender’s staff would “reexamine the phasing of the financial program.”
She said that the “more adverse international market conditions” had not been “fully anticipated” when the IMF and Argentina reached the agreement in June.
“Authorities will be working to revise the government’s economic plan with a focus on better insulating Argentina from the recent shifts in global financial markets, including through stronger monetary and fiscal policies,” Ms. Lagarde said.
Argentina has $24.9 billion in peso- and foreign currency-denominated debt payments due next year, according to official data.
Speaking to reporters after the IMF statement was issued, Treasury Minister Nicolas Dujovne said the government would reduce the size of its financing program, but did not provide specifics.
If Mr. Macri was trying to calm investors, it did not work.
“The market is saying: ‘Just the fact that you are engaging in this conversation makes me very, very nervous,’” Daniel Osorio, president of New York-based consultancy Andean Capital Advisors, said in a telephone interview.
The peso’s decline has contributed to a jump in inflation, which hit a 12-month rate of 31.2% in July.
In response, the central bank has hiked interest rates to 45% and sold more than $13 billion in reserves, including $300 million in an auction on Wednesday.
All that — combined with the budget cuts promised to the IMF that will slow down public works projects — is contributing to a recession that will result in an economic contraction of one percent this year, according to the government.
That could hurt Mr. Macri’s re-election prospects in next year’s presidential race.
The June signing of the IMF deal reduced the need for costly bond market funding and briefly steadied the peso.
The government has since announced more than $2 billion in budget savings, a process Mr. Macri promised to continue.
“We will accompany the IMF support with all necessary fiscal efforts,” said Mr. Macri, who was elected in 2015 on a free market platform after eight years of deep government intervention in the economy under previous President Cristina Fernandez.
Argentina’s biggest labor group, the CGT, said on Wednesday it will call a 24-hour general strike on Sept. 25 to protest Mr. Macri’s belt-tightening measures.
Two smaller union groupings said they will go on a 36-hour strike on Sept. 24 to protest the IMF, which many blame for the 2002 crisis.
“I know that these tumultuous situations generate anxiety among many of you,” Mr. Macri said.
“I understand this, and I want you to know I am making all decisions necessary to protect you.” — Reuters

Indonesia’s push to nationalize energy assets could chill foreign investment

SINGAPORE/JAKARTA — Indonesia is pushing to nationalize more of its oil and gas assets as it tries to reduce imports and boost government revenue amid emerging market turbulence that has staggered Southeast Asia’s biggest economy.
Since 2015, whenever product-sharing contracts with international companies expire, the government has increased state-owned Pertamina’s stakes the related oil and gas fields.
The goal is to accelerate a four-year-old plan that aims to send domestic crude oil to Indonesian refineries for local use.
But experts say that is risky because it discourages investors and global energy companies who have expertise crucial to maintaining Indonesia’s output.
“Getting rid of the international oil companies’ involvement means Pertamina will be losing valuable technical and operational know-how,” said Den Syahril, a senior oil analyst at consultancy FGE, adding that it could result in “lower productivity at its fields.”
Oil and natural gas are two of Indonesia’s biggest cash earners, but their contribution to government revenue has declined along with output, shrinking from more than 20% a decade ago to under five percent last year, according to government data.
President Joko Widodo, running for re-election in 2019, told supporters this month that he would “safeguard national resources” by nationalizing assets like the large Rokan and Mahakam oil blocks.
In 2021, Pertamina will take over the Rokan block, Indonesia’s second-largest crude producing field, from current operator Chevron. It already took over Mahakam from France’s Total and Japan’s Inpex this year.
Consultancy PwC says in its 2018 oil and gas investment guide “that crude oil production in Indonesia has been on a downward trend for the past decade” and that its oil industry has entered a “transitional phase, with a growing domestic need for gas for both consumers and industrial use.”
Indonesia’s crude oil output has been declining for decades, from a peak of more than 1.5 million barrels per day (bpd) in the 1970s and 1990s, to below 800,000 bpd now, according to industry data.
Government oil and gas revenues have fallen too, from around 400 trillion rupiah ($22.60 billion) in 2010 to 135 trillion in 2017, according to data from SKKMigas.
The situation does not appear likely to improve on its own.
Indonesia is on track to spend far less than planned on its 2018 oil and gas investments. In the first half of the year it spent only $3.9 billion, compared with its target of $14.2 billion, according to regulator SKKMigas.
Just five years ago, the country was investing about $20 billion a year into the industry.
“The country’s failure to attract new foreign investment in the upstream sector has seen licensing activity and development drilling fall to decade low levels,” FGE’s Mr. Syahril said.
Indonesia must act soon if it wants to turn around its declining output, which has already forced the country out of the Organization of the Petroleum Exporting Countries.
Without significant spending increases, Rachel Chua of Moody’s Investors Service said Indonesia has only 10 years of oil production left, warning that nationalizing oil and gas fields would crimp foreign investment.
Pertamina has estimated that Rokan would require about $70 billion in investment over the 20-year life of its contract.
BEST CANDIDATE?
Other regional oil companies like Malaysia’s state-owned Petronas or Thailand’s PTT have successfully sought international partners for major projects.
In Indonesia, leases on a dozen oil and gas blocks will expire between 2021 and 2026, and 15 blocks expiring between 2017 and 2021 have already been given to Pertamina.
The country’s deputy energy minister, Arcandra Tahar, told reporters in August that Rokan was awarded Pertamina was because the company made the best offer.
Tahar said Pertamina offered the biggest signing bonus, the highest government production revenue and lower discretion of his ministry on production split made it easier for the energy minister to change how revenue is divided up.
He said these factors would be considered in awarding future leases on expiring blocks.
Pertamina aims to increase production by focusing on undeveloped fields in Rokan, said Syamsu Alam, the company’s former director of upstream.
He was replaced on Wednesday by Dharmawan Samsu, previously the country head of oil major BP. Samsu declined to comment.
“If it goes well, hopefully we can control the decline rate so that production after 2021 won’t drop too much,” Mr. Alam told Reuters.
“Hopefully we can maintain it or even increase it.”
Pertamina is poised to benefit regardless.
Ms. Chua of Moody’s said the addition of the Rokan block would increase the share of Indonesian oil Pertamina uses at its refineries, which have a combined capacity of 1 million bpd, to 40% from the current 35%.
At current costs for Brent crude, that equates to savings of $30 million per day. — Reuters

Riding through history


By Michelle Anne P. Soliman, Reporter
At 10 a.m. on a Saturday, the festive sound of drums joined in with the clatter of the approaching train at the LRT-1 Central station. Eleven teams of four members — made up of an LRT-1 driver, an LRT-1 teller, a blogger, and a reporter — hurriedly lined up at the ticketing booth to load their Beep cards, catch the next train, and explore specific cultural and historical landmarks on a list. All were determined to arrive first at the finish line — and in the process, the teams explored Manila, despite the continuous rains.
EXPLORING MANILA BY TRAIN
Exploring Manila and seeing what the nearly 450-year-old city has to offer need not be a hassle as anyone may enjoy it, rain or shine.
The Light Rail Manila Corp., (LRMC) in partnership with the Department of Tourism (DoT), Tralulu, Walk This Way, Old Manila Walks, and Kapitbahayan sa Kalye Bautista, launched IkotMNL, a tourism campaign which aims to help people rediscover Manila with the LRT-1 as the main mode of transportation.
The project hopes to “maximize the tourism potential with LRT-1 and drive more riders on weekends when people have time [for] sightseeing,” LRMC president and CEO Juan F. Alfonso told the press during the launch — and race — on Aug. 11.
Mr. Alfonso noted that on weekdays, the LRT-1 has an estimated 500,000 riders while about 400,000 and 280,000 people go for a ride on Saturdays and Sundays, respectively.
“Along with LRT-1’s accelerated rehabilitation, continuous operational improvements efforts, and stations that are strategically located, LRMC is steadfast in its commitment not just to accommodate more passengers, but also to draw more foreign and local tourists to Metro Manila’s rich and diverse attractions and cultural experiences through ikotMNL,” Mr. Alfonso was quoted as saying in a press release.
“Tourism is inevitably linked to transport. As the LRT-1 operator, we are in a unique position to connect local and foreign tourists to the city’s most important and historic places in the quickest land travel possible,” he added.
TOURING THE CITY
IkotMNL offers special guided day tours and unguided tours which can tackle everything from architecture and art, to shopping and dining.
The special day tours are given to small groups which can either be moderated by a single or multiple tour operators.
The “Grand Manila: Glorious Architecture and Art” tour explores the art and architecture of Escolta, Malate, with stops at specific locations in architect Daniel Burnham’s original plan for Manila, and the Manila Cathedral Park. The “Mass Transit: Following Manila’s lost Tranvia Lines” tour explores the Quiapo to Malate route of the old street car line which serviced the city from the late 1800s to World War II.
Visitors may also check out four unguided tours: “Glorious Architecture” which explores heritage churches and monuments; “Museum and the Arts” which features several cultural stops including the Museum of Contemporary Art and Design (MCAD) of DLSU’s College of St. Benilde, The National Museum Complex, and The HUB: Make Lab in Escolta; “Bargains and Bites” which explores shopping destinations; and “Nature and Nurture” which features famous monuments and parks.
“We tried to do it with the DoT because we want to work with them on the different tourism areas,” Mr. Alfonso said, noting that the LRMC intends to complement other tours in Manila and not give tour operators any competition.
Maps of the destinations are mounted in each station to help tourists navigate the city.
During the tours, riders may opt to buy unlimited-ride cards for P99 which give them access to the trains for the entire day. The offer is valid until Sept. 28 and is only applicable for rides on LRT-1.
Meanwhile, the IkotMNL tours are planned to continue beyond that date. “We’ll just keep it as long as we feel it’s useful,” Mr. Alfonso said.
“We at the LRMC recognize our role to promote cultural, architectural, gastronomic spots in Manila to the use of the fastest land travel available,” Mr. Alfonso said in a speech during the launch.
The LRMC has had various improvement projects since assuming operations of the train line in 2015, such as adding more trains, trips, extending operating hours, and improving security and cleanliness in all stations.
Construction for the Cavite extension project is expected to begin in October and is targeted for completion in 2021.
AMAZING RACE
During the race, the 11 teams were first tasked to get down at Vito Cruz Station, head to De La Salle-College of Saint Benilde’s School of Design and Arts for the first task — deciphering three hidden messages posted on a wall.
On the way to the second station in Yamaha Monumento all the participants got soaking wet. As we got down from the station, the teams crossed to the rotunda to find the next clue.
(Last February, Yamaha got a three-year naming rights deal for the station, originally named Momumento Station after Caloocan’s Monumento Circle, which houses the Bonifacio Monument.)
Getting off at Carriedo Station next, we walked to Binondo for lunch, then the teams were tasked to head back to Central Station where the final task of the race was enumerating all the LRT-1’s 20 stations’ names on paper.
The three winning teams won cash prizes of P50,000, P30,000, and P20,000.
This writers’s team did not win.
For more information, visit www.ikotMNL.com and www.facebook.com/ikotMNL/. For guided tours, visit www.tralulu.com.

Paris aquarium offers haven for unwanted goldfish

PARIS — Paris’ biggest aquarium has created a refuge for goldfish, providing a second life for any unwanted pets who might otherwise find themselves flushed down the toilet.
The Aquarium de Paris allows the city’s residents to drop off their fish, with the numbers using the service swelling around the time of the long summer holidays.
Instead of facing death in the city’s sewerage system, the rejected goldfish find themselves given a full medical check up involving antibiotics and anti-parasite treatments.
After a month in quarantine, during which a minority succumb to the trauma caused by the change in location, they are then released into a giant tank where they go on display to the public.
“Some of them arrive very weak,” said Celine Bezault, who cares for the fish at the giant aquarium complex which is located opposite the Eiffel Tower.
Since it was created two years ago, the goldfish rescue service has been used by around 50 people a month and the tank now contains about 600 specimens, mostly the classic golden-red version, as well as striped and black ones.
Rather than spending all day banging into the glass of a small bowl, here the fish have space to swim and plenty of company, allowing them to socialize and move around in groups.
Some owners hand over their pets tearfully, motivated by concern for their fish, while others appear relieved to be rid of them and the routines of feeding and cleaning.
“It was in a small bowl and I think it’ll be better here,” a 32-year-old called Alexandre told an AFP reporter as he dropped off a friend’s goldfish called Nemo before the holidays. “It’s better than flushing it away.”
NEW LIFE
Once in the bigger tank, some of the fish undergo a remarkable transformation.
Being confined in a bowl stunts their growth, but the bigger space means some of them will expand to full adult size.
“They can reach up to 20-30 centimeters (8-12 inches),” Bezault said.
For Alexis Powilewicz, director of the Aquarium, the service is part of efforts to promote awareness about animal welfare.
Goldfish are domesticated forms of wild carp originally found in east Asia and the practice of keeping them in bowls has existed for hundreds of years. It is thought to have originated in China.
“I think there’s growing awareness that the mistreatment of animals is a real problem,” Powilewicz told AFP.
For goldfish owners, the aquarium advises that the tank should be at least 100 liters (20 gallons), should contain more than one fish, as well as a filtration system and decoration.
The animal rights group People for the Ethical Treatment of Animals (PETA) has long campaigned against keeping goldfish in bowls or giving away fish in plastic bags as prizes at funfairs.
In 2004, the Italian town of Monza made headlines when it banned putting goldfish in bowls, while Switzerland has animal rights legislation that makes flushing a fish down the toilet illegal.
For those who dispose of their pets in ponds or rivers, scientific studies have found that some goldfish thrive afterwards — but at a cost to the local ecosystem because the fish are an invasive non-native species.
In 2015, officials in the western Canadian province of Alberta launched a “Don’t Let it Loose” campaign, pleading with locals to stop releasing goldfish into the waterways.
The ethical disposal service available at the Aquarium de Paris is aimed at offering an alternative.
Owners are also able to return afterwards to try to spot their former pets: quite a challenge in a tank of 600. — AFP

State-led PNOC seeks partners for integrated LNG hub project

By Victor V. Saulon, Sub-editor
STATE-LED PHILIPPINE National Oil Co. (PNOC) is seeking partners to build an integrated liquefied natural gas (LNG) hub under new terms that defines the project under a “solicited” scheme, after the government agency failed to attract acceptable proponents.
“They (PNOC) asked the approval of the board to look for a partner through solicited terms,” Department of Energy (DoE) Undersecretary Donato D. Marcos told reporters in a chance interview after a Senate hearing on Thursday.
The DoE Secretary chairs the PNOC board by virtue of his position as head of the department. PNOC President and Chief Executive Officer Reuben S. Lista previously said he preferred an unsolicited proposal for the project, which would give the original proponent a chance to match any counter-proposal from a challenger.
The Asian Development Bank (ADB), which the PNOC tapped to advise on the project, described a solicited tender as one that would require the bank to assist the agency in structuring the project.
The assistance includes preparing the pre-feasibility or feasibility study, drafting the tender and legal documents, and assisting in the negotiation of the project with the winning bidder until the concession agreement is signed.
Mr. Marcos said they did not receive any offers that were compliant, adding that no proponents submitted a comprehensive proposal.
Under a solicited proposal, Mr. Marcos said PNOC and its chosen partner would establish their own terms of reference.
“It is a race,” he said, with the bidders presenting their technical, legal and financial qualifications. The DoE would be the final approving agency with the issuance of permits that clear the project’s compliance with existing regulations.
Late last year, PNOC first hinted at bidding out the LNG project, which is expected to cost around $2 billion, after the unsolicited proposals submitted by foreign entities failed to meet specific requirements set by the company.
Mr. Lista had said the first proposal evaluated by the technical working group came from Korea Electric Power Corp. (Kepco). The submission was assessed but returned to the proponent because of unmet requirements, he said.
The technical panel then evaluated a submission from Lloyds Energy Group LLC and its partner Itochu Corp., which was also returned.
A proposal from China National Offshore Oil Corp. (CNOOC) was also returned because it was directed to the DoE instead of the PNOC technical working group, Mr. Lista said.
Mr. Marcos said the DoE had so far completed pre-application conferences with around 15 groups keen on putting up an integrated LNG hub, including the project being envisioned by PNOC.
He said the department would be meeting again on Friday with CNOOC, which he said partnered with Phoenix Petroleum Philippines, Inc.

A small person in a big role

By Susan Claire Agbayani

ONANAY is Jo Berry’s first major television series. She had previously acted in just one episode of a TV show.

SOME actors can work their entire lives and never get anything bigger than a supporting role, but sometimes all it takes is one breakout role.
That is what happened to Jo Berry.
A few weeks ago, GMA 7 gambled on Onanay, a new TV series about the life of “a small person” — literally — and took an even bigger gamble on an unknown lead actress. The only acting credit Ms. Berry had to her name before Onanay came along was a single episode of the drama Magpakailanman. The episode was about the real life love story of the Franciscos: Lorna, a little person, and Teddy, a regular-sized man.
“Maganda ang concept pitch [for Onanay] ni Borj,” Senior Program Manager Helen Sese told BusinessWorld, referring to John Borgy “Borj” Danao, a writer in GMA’s Drama Department.
“I first saw Jo Berry in the Magpakailanman episode,” said Mr. Danao in a Facebook post. “I was [so] inspired by her performance that I conceptualized a storyline for little persons with the structure of Bakekang,” he wrote, referring to the 2006 GMA 7 drama series about an ugly girl who succeeds despite difficulties and discrimination. “I was able to pitch the concept to the creative bosses (Aloy Adlawan, Suzette Doctolero, Richard Dode Cruz, and Roy Iglesias),” he wrote.
While GMA management gave the new show the green light, it had specific instructions that the lead actress had to be “magaling” (good).
Ms. Berry did well in the VTR, and it was apparent that she “can play this role,” noted Ms. Sese. There were really no other contenders for the role. Still, it was a risk on GMA’s part, said Ms. Sese, since the actress was new and unknown to viewers. But GMA’s drama programs in the past had always had “strong, brave and innovative concepts” (think My Husband’s Lover which tackled homosexual relationships and infidelity).
“They told me that after that [Magpakailanman] episode, they wrote the story of Onay. So I’m really grateful that they remembered me (even) a year after the episode was aired,” Ms. Berry said during an interview on the show’s set in a slum community in Santol, Quezon City, close to the border with the city of Manila.
Onanay is about a woman named Onay (Jo Berry) who was born with Achondroplasia, a bone growth disorder which leads to dwarfism. Throughout her life, she is subject to ridicule, yet she chooses to remain positive about life. She marries Elvin Montenegro (Adrian Alandy), an engineer and the son of a France-based beauty queen-turned-entrepreneur Helena (Cherie Gil).
Their union produces Rosemarie (Kate Valdez), but when Elvin dies, Rosemarie is sent to be raised by Helena who calls her Natalie. Meanwhile, Onay is raped and gives birth to another girl Maila (Mikee Quintos).
Maila grows up to be a nice and attentive daughter, while Rosemarie/Natalie grows up arrogant and disobedient. They become classmates, not knowing that they are half-sisters; and eventually they become rivals in love.
SMALL PERSON, BIG DEAL
Mr. Danao noted that while Ms. Berry is not the first little person to get a big break in Philippine showbiz, listing Dagul, Mahal, Mura, and Ernesto de la Cruz a.k.a. Wengweng, it was still a risky proposition for the network.
“GMA is now ready to take a risk in introducing an unconventional lead in a prime time slot,” said Mr. Danao. “Why is it a big deal? It is a big deal because this is the first time that an actress like her would get the lead in a prime time soap as usually the lead is an actress with a strong fan base.
“Jo Berry did not win a reality competition. She is not as beautiful as Marian Rivera and Liza Soberano. She does not have a million followers on Instagram like Kyline Alcantara and Anne Curtis. She also does not have a love team with a solid fan base like BiGuel, JaDine, and KathNiel. Jo Berry is an ordinary woman but like them she has an extraordinary talent when it comes to acting,” he wrote in a Facebook post in a mix of English and Filipino.
Since GMA departed from the norm of casting a lead with movie-star looks, and opted to give a big break to someone with exceptional talent, he expressed hope that people realize that there’s value beyond mere physical beauty.
“Hopefully this show will help inspire little people and all of us; and start to open the minds of viewers on the value and idea of inclusivity and representation — not just in showbiz — but even in other careers and life in general.”
WHO IS JO BERRY?
“My real name is Josephine Bibit Berry,” the actress told BusinessWorld. “I played the role of Lorna for an episode of Magpakailanman, ‘My Little Wife,’ back in 2015. That’s where they discovered me for the role of Onay.
“I’m 24, and I am the youngest in the family. After graduating with a degree in Computer Science from Infotech Makati, I worked for a BPO company for almost two years. My forte is Finance.”
Three coaches were tapped to give the newbie actress acting workshops, and one of them, actress and acting coach Anne Villegas, continues to assist her during tapings.
Ms. Berry also had “familiarity workshops” with her leading man Adrian Alandy, “Para maganda ang lumabas sa chemistry nila (So the chemistry would come out well). And it did, based on the episodes we’ve shown,” said Ms. Sese.
“Adrian (Alandy) is a real gentleman, so I didn’t need to adjust much,” said Ms. Berry.
“(Ms. Berry) is very, very smart. It’s so easy to give her instructions. She’s able to draw out emotions needed for the scenes,” noted Ms. Sese, who said actress-turned-director Gina Alajar, who megs the teleserye, was “impressed” with her work
“Jo Berry exceeded our expectations. She’s good. Her acting has many levels, it has nuance, and truth,” Mr. Danao remarked after having watched two episodes of the “raw mats” of Onanay.
STARSTRUCK
No matter how good an actress is, she can get starstruck — and when your co-stars are Nora Aunor and Cherie Gil, this is really not a surprise.
Ms. Sese said that they already had Ms. Aunor in mind when they were conceptualizing the show. It helped that Ms. Aunor is a mother and is petite. Because she is so new in the business, Ms. Sese stressed the importance of giving Ms. Berry support via the presence of seasoned and multi-awarded actresses like Ms. Aunor and Ms. Gil.
In spite of having acted together over the last few weeks, Ms. Berry admits to still being “star struck” by her reel mother-in-law Cherie Gil whom she describes as “nice” off camera.
She was even more star struck by singer-actress Nora Aunor who plays her mother in the series — “Syempre, superstar (of course, she’s a superstar).” They hit it off camera, and she said that the “sobrang bait (extremely nice)” veteran talks to her and gives her tips on how to get along with fans, and tells her not to get swell-headed.
Ms. Aunor is herself impressed with the young actress. “Jo is good. She does not need tips nor advice from me. All of them are good; all of them have their own approaches to acting,” Ms. Aunor said during an ambush interview during the taping at the slum area.
They are a few weeks into the show and Ms. Berry admits, “I still get the jitters. [I] don’t think it will go away.”
Asked if the show’s story is realistic, Ms. Berry replied: “It is. The genuine love of Elvin and Onay happens in real life. It happened to my parents (her father is a small person). It happened to Lorna and Teddy Francisco, whom I played in [Magpakailanman].”
She added, “Our goal is to inspire people and show them that little people are not just for funny shows, and they shouldn’t be discriminated on. No one deserves that!”
Onanay will run for a minimum of three months. It airs weeknights on GMA telebabad.

LRMC to push through with Cavite extension despite fare hike delay

LIGHT RAIL MANILA Consortium is seeking to raise fares at the Light Rail Transit Line 1. — PHILSTAR/EDD GUMBAN

By Denise A. Valdez
THE LIGHT RAIL Manila Corp. (LRMC) said it will push through with the construction of the Light Rail Transit Line 1 (LRT-1) Cavite extension project despite possible delays in the implementation of a fare hike.
“We are already committed to building the Cavite Extension. We have already issued the Notice to Proceed to the EPC (engineering, procurement and construction) contractors Bouygues and Alstom,” LRMC President Juan F. Alfonso told BusinessWorld in a text message on Thursday.
“We have completed the clearing operations for the pre-cast yard to give way to the plant where we will be fabricating the viaduct beams,” he added.
This comes after Transportation Secretary Arthur P. Tugade told reporters on Tuesday that he hopes the private concessionaire for the LRT-1 wouldn’t let construction of the Cavite extension rely on the approval of its fare hike.
“Dapat ‘wag nilang sabihin na yung extension sa LRT-1 depende sa rate increase [They shouldn’t say that the LRT-1 extension will depend on the rate increase],” Mr. Tugade said.
In July, the LRT-1 operator said the fare hike “will assure the construction of (the train’s) extension to Sucat, Las Piñas and Bacoor,” as banks would be more open to lend funds for the company if it can recover its investment.
But Mr. Alfonso noted its concession agreement indicates the government should allow a 5% increase in LRT-1 fares every two years.
LRMC filed an application to the Department of Transportation (DoTr) in March for a P5 to P7 hike in LRT-1 fares. It was supposed to be implemented within August, but Mr. Tugade said no public hearing has been conducted yet.
“Pinag-uusapan pa po yan, may public hearing pa po yan. Pagkatapos ng public hearing may publication, and then the decision making [It’s still under discussion, there will be a hearing. After the public hearing, it will be published, then the decision making],” Mr. Tugade said.
The Transportation secretary also said the government is not open to subsidizing any LRT-1 fare increase.
“Kasi hindi kami naniniwala sa subsidiya. Kung ikaw mag-nenegosyo sa gobyerno, dapat walang guarantee, walang subsidiya, walang contractual commitment [We don’t believe in subsidies. If you’re doing business with the government, they should be no guarantee, no subsidies, no contractual commitment],” Mr. Tugade said.
For his part, Mr. Alfonso said, “As far as fare hike is concerned, we are still applying and hoping to secure approval within the year.”
Metro Pacific Investment Corp. is one of three Philippine subsidiaries of Hong Kong’s First Pacific Co. Ltd., the others being PLDT, Inc. and Philex Mining Corp. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., maintains an interest in BusinessWorld through the Philippine Star Group.

The veterans on the set

VETERAN performers Nora Aunor and Cherie Gil play grandmothers in the GMA drama Onanay. While this is not a new role for Ms. Aunor who essayed the role of Kris Bernal’s grandmother in another teleserye, Little Nanay, and is a grandmother in real life, this is all new for Ms. Gil.
“Playing Helena opposite Nora Aunor as Nelia and being directed by Gina Alajar is what makes this project special and unique,” said Ms. Gil. “Though I play the antagonist once again” — Ms. Gil is best know for her contrabida (villain) roles — “it touches on the deep love of a mother. Through the story I have the opportunity to express my character in a more human way though feisty. As any mother would probably be to protect her children at any cost,” Ms. Gil told BusinessWorld in an online interview.
“The big difference, I think, is that I am basically the grandmother to Natalie. This is a first for me. I don’t even have grandchildren in real life! Though as the story flows, that fact becomes a blur since Natalie recognizes me as her mother who raised her.”
CHEERFUL SET
Working in television is gruelling, with long hours spent waiting between takes. It is the company that can make all the difference in a happy set.
“We always look forward to seeing her on the set,” said Onanay’s Senior Program Manager Helen Sese about Ms. Aunor. “She is respectful towards the cast and crew, and is always a source of joy on the set. Sometimes, she would initiate a game, say by giving a quiz to the crew, then she would give a prize. She’s fun to be with.”
“Mababait at masaya ang mga kasama ko, kaya enjoy kami dito,” the superstar told BusinessWorld during a break on the show’s set.
“Magaling ang mga artista. Si Onay, magaling na artista. Magaling si direk Gina [Alajar] at si direk Aya [Topacio, 2nd unit director] (The staff and crew are nice and cheerful, we enjoy ourselves on the set. The actors are good. Onay [Jo Berry], is a good actress. We have skilled directors on set, both Gina and Aya).”
“Masaya ako na na naisipan nila akong kunin uli sa teleserye (I’m happy that they thought of tapping me for another teleserye),” said Ms. Aunor. — S.C. Agbayani

Local SMEs plan to increase exports outside Asia Pacific

TWO out of three small and medium enterprises (SMEs) in the Philippines are planning to continue or increase their export activities beyond Asia Pacific within the next 12 months, according to a study commissioned by FedEx Express.
The study “Global is the New Local,” which focused on the changing international trade patterns of small businesses in Asia Pacific, was based on interviews with senior executives of more than 4,500 SMEs (including 500 from the Philippines) between March and April 2018.
Based on the report, majority or 67% of SMEs in the Philippines aim to increase their exports outside Asia Pacific for the next 12 months, while 56% say they will raise exports within the region.
The FedEx Express study showed exports accounted for the bulk (89%) of the SMEs’ total annual revenues with a combined value of $1.4 billion, above the Asia Pacific average of 71%.
Majority of SMEs surveyed (69%) currently export within Asia Pacific, particularly China, Singapore and Hong Kong. More than half of the SMEs (53%) export outside Asia Pacific, with India and the United States the top markets.
The report also showed SMEs source 41% of supplies abroad, with some respondents noting the higher quality of imported materials.
Around 55% of SMEs surveyed anticipate the value of their imports to rise further in the coming year.
However, the FedEx Express study cited local SMEs’ most common challenges are — customs procedures (66%) and logistics issues (53%) in both exports and imports.
E-COMMERCE
At the same time, the study showed 96% of SMEs in the Philippines use e-commerce, which generate 52% of their total revenues.
Majority (73%) of Philippine SMEs expect their e-commerce business to increase in the next year. The study also showed 89% of the SMEs are using mobile commerce, with 74% saying they see higher mobile commerce revenues in the next 12 months.
Social media is likewise being used as a tool by 95% of SMEs surveyed, which they say account for 48% of their revenues.
“When I look at the results from the survey, it says that over 90% of SMEs are using either e-commerce, mobile commerce or social commerce,” FedEx Express Managing Director for the Philippines John D. Peterson said in a media briefing in Makati City on Thursday.
“The SMEs in the Philippines are now competing against SMEs in France, SMEs in Vietnam. So you want to make sure that the platforms they have are competitive so they can continue to compete,” he added.
Mr. Peterson noted mobile commerce is important in helping SMEs, particularly in the Philippines where government data shows 77.4% don’t have access to bank accounts.
“These mobile payments are allowing young entrepreneurs that don’t have bank accounts to be able to access market that they normally wouldn’t be able to reach. So what I would say is, what the study has found is SMEs in the Philippines are embracing the new technologies at a very high rate,” he said.
“The Philippine SMEs are embracing the technology. It’s giving them now a level playing field…. It’s breaking down the borders and allowing the cross border trade from the Philippines,” Mr. Peterson added. — D.A.Valdez

Security Bank sets up $1-B note facility

SECURITY BANK Corp. is looking to tap international debt markets. — AFP

SECURITY BANK Corp. has set up a medium-term note (MTN) facility of up to $1 billion as it seeks to tap offshore capital markets for financing.
In a regulatory filing on Thursday, the listed lender said it has established an MTN program worth $1 billion or its equivalent in other currencies. The program is expected to be listed on the Singapore Stock Exchange.
Security Bank has mandated Citigroup, CLSA, MUFG and UBS as joint lead arrangers for the program.
With the establishment of the note facility, the lender said it will “gain the flexibility to tap the international debt capital markets” which is subject to market conditions.
The MTN program will broaden the base of Security Bank for fund raising. The notes are offered on a continuing basis until the ceiling is reached.
Global debt watcher Moody’s Investors Service has assigned a (P)Baa2 long-term foreign currency senior unsecured rating to Security Bank’s note issuance, matching the debt rating of the Philippine government and a notch above the minimum investment grade.
Moody’s said the rating reflects the baa3 baseline credit assessment of the bank, underpinned by its “above-industry-average asset quality and strong capital buffers, boosted by a capital infusion from its new strategic partner, MUFG Bank, Ltd.”
In April 2016, Security Bank received additional capital of P36.9 billion from the Japanese lender.
In turn, the local bank issued the foreign lender 150.7 million common shares and 200 million preferred shares, representing MUFG Bank’s 20% ownership of the bank.
Recently, local banks have been conducting various fundraising activities to expand their networks and beef up their capital buffers.
On Wednesday, Bank of the Philippine Islands raised $600 million through a drawdown from its $2-billion MTN program, which fetched a 4.25% coupon.
Philippine National Bank and Rizal Commercial Banking Corp. have also tapped the foreign debt market recently, raising $300 million and $150 million, respectively, from their own medium-term note facilities.
Security Bank booked a net income of P4.3 billion in the first semester, down 18% from the year-ago level primarily due to a continued decline in trading gains.
Shares in Security Bank closed unchanged at P199.90 apiece on Thursday. — Karl Angelo N. Vidal

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