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Embracing the light

It’s summer 2019 and the sun is beating down hard on the equator. Draught and dying crops are littering the Philippine landscape. Physical but especially mental activity is a hard slog. In the Serengeti Wildlife Reserve in Equatorial Africa, lion prides ignore prey to doze off in the shade for hours. The lions are not being lazy; they are just obeying the rule of efficient energy use. Under the harsh midday sun, the endotherms’ most energy-efficient posture is supine and asleep under the shade.
Westerners who found themselves in the equator have called the natives “lazy” but Dr. Jose Rizal in “The Indolence of the Filipino” had alluded to this partly as “adaptation” to climate. When it’s chilly in the temperate latitudes, there is always a sufficient layering of clothing that keeps one warm inside and physically and mentally alert. In the equator, extreme disrobing does not suffice. Any exertion heats up the body; which in fact gives comfort on a cold and discomfort on a hot day. Heat speeds up oxidation and decay in organics: foodstocks, wood materials, etc., while it supports a plethora of harmful bacteria and viruses. This is the backdrop for the so-called “equatorial paradox” the closer to the equator the lower is per capita income. The equator seems at times like a cruel tyrant exacting high tributes from hapless natives. No wonder that equatorial latitudes, like the Sub-Saharan Africa, host the most abject poverty.
Equatorians can’t be blamed if sometimes they curse the light that brings heat; if sometimes they woe the accident of their birth. But while equatorians can’t change their heritage of solar surfeit, they now can, as in Jujitsu, turn it in their favor. For equatorial poverty, unlike equatorial tyranny, is not destiny.
History shows that technology has allowed humans to transcend the limits of geography. Modern refrigeration has rendered certain closed spaces in the equator suitable for food preservation and for mental and physical activity. I, for one, take refuge in air-cooled coffee shops to think and work. But this comfort has been achieved by burning the by-product of yesterday’s solar radiation, fossil fuel. By the same token have we built a massive system of power generation, transmission and distribution on the back of Michael Faraday’s rotating magnet; furthermore, we have built an immense concrete transportation system to host Nicolaus Otto’s internal combustion engine. We dismissed the possibility that today’s solar abundance can be deployed to loosen the grip of equatorial tyranny with a once valid excuse, that being price differential and intermittence.
That excuse is now kaput. Solar photovoltaic (PV) and battery storage technology have changed the calculus of electricity provision and propulsion. Already, under five-cent-per-watt bids have won power supply contract auctions in oil-rich and solar radiation abundant Dubai and Qatar. The Philippines is also richly endowed with solar radiation. New electric vehicles (EVs) now go over 300 miles on one charge. And advances in grid-scale electricity storage employing graphene-based supercapacitors are pushing renewable intermittence into our rear-view mirror. Cost, once the bastion of the fossil-based empire, has changed sides. The sun is truly setting on the empire of Faraday and Otto.
The proverbial crossing of the Rubicon in power coincides with the leap from ethics to economics from “helping mother earth” to “helping the bottom line.” Tree-hugging zealots made news, but it is shrewd capitalists making huge bets in emerging renewable revenue streams that are ramming the gates open. European electricity and gas supplier giant, Eon, has begun divesting its fossil-based assets to concentrate on renewables. Norway’s sovereign wealth fund is divesting its oil and gas holdings that have become more risky. Norway’s oil and gas giant, Statoil, is also moving into renewables for reasons now purely economic. At the current furious rate of technical advance, the stranding risk of gas and coal assets is fast ramping up.
The demand side of the power market poses the other stranding risk factor. Large establishments with ample capital, such as malls and supermarkets, will now begin to save and even make money by converting ample idle roof space into solar farms to meet part or all of their needs, to charge grid-scale batteries thus avoiding the cost of diesel-fired backup generators and to shave off peak power demand for a more stable grid power. Or they can rent out these idle roof spaces to new solar power entrepreneurs or retail electricity suppliers. Fossil-free fast food outlets will become commonplace. Residential PVs will also follow suit when the capital constraint is eased. The disruption here will be as immense as any promised by the Fourth Industrial Revolution.
That is not to say that government should prohibit new fossil-based investments by the private sector. Market players are better at reading the short and long investment horizon than government and, anyway, they wager their own money in a competitive market. Aboitiz Power is carrying the cost of its mothballed bunker fuel-burning power barges. Privatization spared the NPC and the taxpayers of their stranded cost!
Government can however employ policy “nudges” rather than mandates. The share of electric vehicles (EVs) in government vehicle purchase should progressively rise. New public school and office buildings should now be solar PV-equipped for part of their largely daytime needs besides jump-starting students in the wonders of electrochemistry. EVs could be exempt from number coding. PEZA should now plan for fossil-free ecozones. The seamless integration of distributed and centralized generation requires urgent government attention.
Solar PV and storage technology now allow us to transform the abundance of light from a liability into an enormous asset, one which promises to leapfrog the problem of high electricity cost. But to monetize it, we have to let Capitalism’s creative destruction take its course. Government forbearing, profit calculus and market competition will propel the nation to a bountiful embrace of the light.
 
Raul V. Fabella is a retired professor of the UP School of Economics and a member of the National Academy of Science and Technology. He gets his dopamine fix from hitting tennis balls with wife Teena and bicycling.

Eating my frustrations away

We’ve been worn down by a lot of bad news lately. The long drawn-out impasse between the Senate and the House over the General Appropriations Act is the most worrisome of all. Unresolved, it could mean a deceleration of the economy from 6.5% growth to just 4.2% this year. Add to this the water crisis, the country’s withdrawal from the International Criminal Court and the inclusion of two convicted plunderers in the senate’s magic 12. For those who don’t know any better, it’s easy to assume that the country is rowing in the wrong direction, economically and politically.
wine
I’ve been frustrated by the country’s state affairs all week. But having been an observer of national affairs for as long as I have, I know that the spate of bad news, however dire and frequent, is always temporary. It won’t be long before we hear good news again. That’s just the way this country rolls. In the whole scheme of things, the country is still on the path of progress, albeit turbulently and oftentimes, frustratingly. The trick is to wait it out until favorable developments occur again. When they do, frustration will give way to optimism.
Last week, I opted to take a step back, let things be as they are, and simply wait for things to get better. After all, there is only so much a humble columnist like myself can do.
I decided to combat my frustrations by indulging in what I enjoy most…. food and wine. It turned out to be an educational experience. The meal I had was so interesting that I thought you, my readers, would enjoy the diversion as well.
A DELICIOUSLY EDUCATIONAL MEAL
I am part of a small group, the members of whom take turns hosting unique gastronomic experiences. Last week, it was the turn of our Belgian buddy, Harmen Haringsma, the CEO of S&L Fine Foods. Harmen is as much a businessman as he is a cheese connoisseur, having worked as an exporter of European cheeses since 2004.
Harmen’s company, S&L Fine Foods, is one of the country’s largest importers of fine foods from Europe and Australia. Their range of products include a vast selection of European dairy goods, cold cuts, beef, lamb and essential Mediterranean ingredients like oils, dried fruits, spices and condiments. S&L has been in business since 2007 and is one of the foremost suppliers of ingredients to restaurants and hotels today. Some of their products are also available in high-end supermarkets.
S&L has recently opened a restaurant at the Park Terraces, Makati to showcase its products. The name of the restaurant is Brera Delicatessen, and this is where Harmen invited us to dinner. My anticipation was building all week as I looked forward to sampling the meats and cheeses that Brera has to offer. It was the perfect diversion from all the bad news going on.
Friday night came and my wife and I turned up at Brera. It is a sizable restaurant of roughly 300 square meters filled to the brim with food products and wines from Europe. Its dining room is elegant in a rustic kind of way. It reminded me of old taverns in Italy.
For those unaware, Brera is an ancient district in Milan which is also its artistic heart. It is a place where you will find artisan shops and chef-owned restaurants, side by side. The district is quaint, picturesque and distinctly European. The soul of Brera is what the restaurant captures.
Our menu for the night was quite extraordinary. We started off with a platter of rare cheeses to appreciate, then segued to a plate of sausages. The main course was a sampling of four grades of beef, the purpose of which was to “experience” their differences.
We sampled five types of cheeses including French Saint Paulin, Italian Pecorino con Tartufo, Spanish Manchego, French Coulommier and Dutch Gouda with Green Pesto.
Hands down, my favorite was the Italian Pecorino made from 100% sheep’s milk. I liked it for its firm texture, savory aroma and salty-smoky taste. The notes of black truffles made it even more savory, which I like. The French Coulommier was exceptional too. It looks and tastes like Brie but with a markedly nuttier flavor. The cheeses went well with the 2013 Salvano Barbaresco wine, made from nebbiolo grapes. The wine was expertly served at 17 degrees celsius, a telling sign that the establishment knows how to keep, serve and respect wine.
The sausages were served next. On the platter were Rostbratwurstel and genuine Vienna sausages, both imported from Austria. Contrary to the perception of most Filipinos about Vienna sausages, the real McCoy is about six inches long and rather slender. Its distinguishing characteristic is its casing. Made from premium sheep’s intestines, the casing should snap when bit into, allowing an explosion of porky juices in your mouth. The Rostbratwurstel is a three-inch sausage which is similar to an English banger. It was salty, herby and peppery. This is a sausage best eaten for breakfast, I thought.
With appetizers done, we were ready for the mains. As promised, Harmen served four grades of steaks, three of which originated from John Dee of Australia and one from Kiwami of Japan.
John Dee is the oldest family owned meat processing institution in Australia and reputed to be among the world’s best as far as beef processing goes. Based in Queensland, the 75-year-old cattle raiser is an authority in cattle husbandry, feedlotting and grain feed development.
The folks at John Dee have mastered the science of instilling its desired flavor, texture and fat content to its meats. It all begins from the time the cows are weaned from mothers milk. The number of days the cows are fed and whether they are fed grass, grains or some other feedstock determines the meat’s characteristics. John Dee’s cattle are of the black angus breed.
The first steak we sampled was the Premium grass fed striploin. Although an entry level steak, I thought it was equally succulent as those available in most fine restaurants in Manila. It had a clean (not gamey) flavor with a sweetish note. This would be a perfect steak for everyday dining considering its quality and price.
We then progressed to the John Dee Silver tenderloin. These steaks originated from cattle which were put on a diet of grains for 100 days. It was remarkably juicier than the first steak and also more tender. It had a rounded flavor that reminded me of beef cooked in butter. The silver tenderloin is affordable enough to be considered everyday luxury.
The John Dee Gold Tenderloin was the next one served. These steaks came from cattle fed with grains for at least 150 days. It had a marbling score of 3 which indicates a high fat content. It was tender and juicy but still firm to the bite. Its flavor was even more buttery than the silver tenderloin. This is the kind of steak you would serve on a special occasion.
Finally, the star of the meal was laid down before us, the aromatic Kiwami Rib Eye Steak. Kiwami, meaning “outstanding excellence” is a Japanese brand. It is arguably the finest Wagyu commercially available in Manila. The steak had a marbling score of 9+ (very high, with 12 as the maximum score). Coming from cattle of the finest Wagyu pedigree, the steaks oozed with juices even after resting. When I bit into it, a burst of beefy nectar flooded my mouth. I have never experienced a sensation like this before. The meat was remarkably tender but not mushy. I would describe its texture as being silky, if that makes sense. Flavor-wise, it tasted like brown butter sauce — rich, savory and lingering. Bar none, this was the best piece of meat I have tasted, better than the Wagyu I had at the famed Katsura Steak House in Sapporo. This is the kind of steak to enjoy during milestones in your life.
The steaks were complimented by bottles of 2015 Fratelli Vogadori Amarone de la Valpolicella wine, an inspired combination of corbina, corvinone and rondinella grapes. This wine garnered 4.4 stars from Vivino (over 5), a respectably high rating considering its reasonable price.
That night, I ate my frustrations away. The food and wine put me in a better headspace immediately. True enough, a few days later, it was announced that the impasse between the House and Senate over the budget was being worked out by both parties. Things were looking up already. Just like that, my frustration gave way to optimism yet again, as it always does.
 
Andrew J. Masigan is an economist

The banks always win

Big banks posted another banner year in 2018, with profits growing by a tenth at a time of higher borrowing costs and a weaker peso. Total operating income grew by 14.9% to P564.202 billion from P491.227 billion the past year, central bank data showed (BusinessWorld Feb. 11, 2019).
Much of operating income came from net interest income of P431.782 billion, which after adding net non-interest income, applying provisions for losses on loans and other financial assets, writing off bad debts and claiming recovery from charged-off other financial assets, etc., net income of the “big banks” — universal commercial banks (UKBs) — came up to P179.03 billion. Income taxes paid when including share in the profit/loss of unconsolidated subsidiaries, associates and joint ventures was 20% of total profit of P200 billion before tax.
Not bad for the 42 UKBs. The lending was brisk in 2018, increasing 14.6% to bring outstanding credit to P9.018 trillion as end-December, versus P7.867 trillion in 2017 (Ibid.). Observe that the banks’ lending rate moved up from 5.566% in November 2017 to 6.602% in October 2018 (www.ceicdata.com).
This was the time when the Bangko Sentral ng Pilipinas (BSP), set five rate increases to curb rising inflationary pressures (because of the domestic rice shortage, exacerbated by the increase in world oil prices). With the 175 basis points increase, the overnight reverse repurchase rates was brought to 4.75%, the overnight deposit rate to 4.25% and the overnight lending facility at 5.25%. (The Philippine Star Nov. 16, 2018). It was a purposeful move by the BSP to sop up excess liquidity by discouraging the availment of loans (which will increase money supply) by the increased rates.
Naturally, the banks increased their own lending rates. Quoted lending rates of commercial banks as of March 4, 2019 were, for example: Banco de Oro (BDO, largest UKB) lent at a high of 10.625% per annum, and at a low of 6.625%; Bank of the Philippine Islands (second largest UKB) lent 10.7% to 6.25%; and Citibank lent from 8.3040% down to 5.3880% (bsp.gov.ph). Note that these lending rates might have been higher in November, 2018.
But unnaturally, borrowers seemed not to balk at the increased rates. In 2018 banks enjoyed a 14.6% increase in loans giving a net interest income of P431.782 billion. Outstanding credit stood at P9.018 trillion as end-December 2018, versus P7.867 trillion in 2017 (BusinessWorld op. cit).
So many projects were already on stream with the Build, Build, Build program and collateral activities that borrowers just had to “bite the bullet”. Also, with the depreciation of the peso to critical levels nearing P54-55 to the US$, businessmen had to borrow more for the bloated costs of foreign exchange. It aggravated the situation that the country is a net importer, and so the depreciation of the peso and inflation plus (or because of?) the rice shortage brought the economy to near-crisis in 2018.
Perhaps the position of advantage of a bank in good times and in bad can tempt business opportunism. While enjoying the higher lending rates, did the banks increase their deposit rates to still enjoy a conscionable spread (net profit), if only to alleviate the plight of the Filipino in crunch time?
Savings and time deposit rates of commercial banks are featured in some blogs that cater mostly to those “investors”/savers managing their own personal finances. Many big banks advertise their rates directly. The Bank of the Philippine Islands (BPI, second largest UKB) offers 0.50% interest for its “Maxi-Saver” for a minimum maintaining balance of P25,000. If one commits to a maintaining balance of P100,000, interest will be 0.75%, while P1,000,000 will be paid 1.75% under the “Advance Savings Account with Passbook”. All still subject to 20% final withholding tax on interest earned. The BDO Optimum Savings Account pays the same interest of 1.75% for a minimum balance of only P30,000. Citibank’s peso bonus saver asks for an initial maintaining balance of P50,000 at 0.60% interest, climbing up to 1.56% as the depositor’s “total relationship account” balance tops P1 million (sample data from moneymax.ph Jan. 29, 2019).
Time deposits for P1 million and above, 360 days, range from 1.0% [BDO and Metrobank] to 1.25% [BPI], with incentivized rates for time deposits of over P1 million (sample data from philpad.com Jan. 2019). By this, we think of the poor depositor with his depreciated peso and high prices in inflation, and ask, is the banking industry feeling for the people with limited money, whose necessary activities for survival are curtailed by the tightening lack? Juxtaposed with the high borrowing rates, justified as “market driven,” there seems to be a dimming horizon for that noble social objective of our struggling economy for “financial inclusion.” In bad times, the rich get richer (for they hold more of limited resources of the economy), and the poor get poorer.
Imagine the bank spread between lending rates of around 10% and time deposit rates of around 1.0%. Even considering the low-end of lending rates of 5% versus 1% deposit rate would give from about 4.0% to 9.0% profit margin to the banks. Time was when bank spreads were watched by the regulator (called the Central Bank of the Philippines then). Discussions with contemporaries in the Financial Executives Association of the Philippines (FINEX) in the 1980s recall how corporate treasurers would chide bank account officers about making too much money on them, as these finance people would adeptly compute the bank’s profit from the transaction/loan, even imputing the bank’s reserve requirement and the cost of this; the cost of capital to the borrower and the lender; and argue on that “fair spread” of the bank which can allow a lower interest rate to the borrower. At that time, the critical spread was about 2.5-3.0 percentage points.
And so the big banks enjoy double-digit profitability, and double-digit growth, while their publics do not even enjoy inflation cover with their measly interest earnings and heavy borrowings. But it is unfair to pummel banks for their success, in these very different times. Even yields to investors in government bonds do not even cover inflation. Government 10-year bonds went down to 3.04% when inflation was raging above 6.0%! Aren’t government securities the perfect counter-balance to inflation?
Something must be wrong somewhere. And the banks just can’t be bothered. Perhaps the new BSP Governor can think of some creative “correction” on the financial market’s situation. Some moral suasion, at least — in the fashion of today’s governance?
 
Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.
ahcylagan@yahoo.com

The march for Women’s Health

“There is no tool for development more effective than the empowerment of women,” according to Kofi Annan, former UN Secretary-General.
By breaking barriers in fields that were exclusive to men such as education and science, the pioneering efforts of women all over the world have led to groundbreaking changes in the course of history.
In the Philippines, we dedicate the month of March to celebrate the vital role of women in our society. Since 1988, the National Women’s Month has been part of Filipino tradition, and it forms part of the worldwide observance of International Women’s Day held on March 8.
The key to empowering women is the realization of rights and their role as change makers in all aspects of society. By doing so, we are able to inch closer to reaching the sustainable development goal of gender equality.
One of the landmark reforms that helped advance women’s rights in the country is the Responsible Parenthood and Reproductive Health (RPRH) Law. The RPRH Law has strengthened the prioritization of women’s health. But in this regard, the sin tax law of 2012 was crucial in augmenting the funds for the effective implementation of the RPRH services.
The enactment of the sin tax law resulted in a threefold increase in the budget of the Department of Health (DoH). The revenue from this law led to the birth of numerous health programs. The funds generated continue to nurture and develop these programs further. In many ways, it is fitting to brand sin tax as the mother of health programs.
Among the programs that have benefited from the expansion of the health budget are the programs for Family Health and Responsible Planning. By 2017, services for RPRH constituted almost 40% of the DoH budget.
The utilization of RPRH services has been increasing. About a fifth (21%) of the total PhilHealth benefit claims are from RPRH services, the bulk of which is for Maternal Neonatal and Child Health Services,
All told, however, the Philippines is still far from achieving its target health outcomes for women. Data from the DoH’s 4th RPRH Annual report states that maternal mortality ratio in the Philippines remains high at 114 per 100,000 live births. The unmet need for family planning (FP) in the Philippines is still 49% among unmarried, sexually active women and 17% among married women. And while FP services are provided at no cost to the public by government health facilities and PhilHealth-accredited institutions, gaps in coverage, especially among the poor, still remain.
Given the effectiveness of the sin tax law in augmenting the budget for women’s health, another significant increase in sin taxes should provide a viable source of funding to help our country reach its RPRH targets.
Furthermore, a substantial increase in tobacco taxes is needed to safeguard the health of women because, alarmingly, female smoking prevalence in the Philippines has remained among the highest in the ASEAN region.
According to the Southeast Asia Tobacco Control Alliance (SEATCA), the Philippines has the fourth highest smoking prevalence among female adults in the ASEAN region. Among the female youth, the picture is even more disturbing. Female youth smoking prevalence in ASEAN is highest in the Philippines at 9.1%. This figure is almost four percent higher than Thailand, which is second with 5.2%.
Calculations show that if we do not pass a high tobacco tax increase, we will be powerless to stop at least one million Filipinos from starting to smoke by 2022. To put it more specifically, non-passage of the tax increase means that we will be unable to stop women smokers (adult and youth alike) from potentially facing the health consequences brought about by tobacco use.
According to the Philippine Cancer Society, the four leading cancer cases for women include cancers of the breast, cervix, colon, and the lung. Multiple studies show that the risk of contracting these cancers increases when exposed to cigarette smoke, whether firsthand or secondhand.
Moreover, exposure to cigarette smoke has a marked effect on the reproductive health of women. The World Health Organization states that female smokers are more likely to suffer from infertility. For those who are able to conceive, they are more susceptible to stillbirth, and neonatal death compared to non-smokers. Cigarette smoking affects not only the health of the mother, but of the baby as well.
Earlier this year, President Rodrigo Duterte certified the tobacco tax increase as an urgent measure. The Senate Committee on Ways and Means chair Senator Sonny Angara has stated that an agreement has been made in principle to pass a tobacco tax increase that will significantly reduce smoking prevalence among the youth. Should this reform be passed, it will shoot two birds with one stone. It will not only discourage women from smoking, but will also ensure that programs that put women’s health at the forefront are well-funded.
The signing of the Universal Health Care Law in February 2019 will definitely improve the health and well-being of our people. We do hope that before the Seventeenth Congress ends in June, we can add another increase in sin taxes to the growing list of health laws that further empower the lives of Filipinos, especially women.
 
Viviane Apostol and Carlos Jacinto are researchers of Action for Economic Reforms’ health financing team.

BSP likely to cut rates by May

The Monetary Board, led by new central bank governor Benjamin E. Diokno, decided to keep the policy rate unchanged at 4.75% during Thursday’s meeting. Photo by GEREMY PINTOLO, The Philippine Star

By Melissa Luz T. Lopez, Senior Reporter
THE Bangko Sentral ng Pilipinas (BSP) will likely reduce key interest rates by May, noting that policy makers are likely growing more confident after inflation forecasts were slashed anew on Thursday.
Global market watchers called for a 25 basis point (bp) cut in benchmark rates during the May 9 policy meeting.
The Monetary Board decided to keep the policy rate unchanged at 4.75%, remaining at a decade-high. Thursday’s meeting was the first led by new BSP Governor Benjamin E. Diokno, who signalled earlier this month that he is seeing “room to ease” policy settings coming from last year’s series of hikes worth a total of 175bp.
From a peak of 6.7% in September and October, inflation has steadily dropped to 3.8% in February, the lowest in a year and returning to the BSP’s 2-4% target range. However, the year-to-date average is still at 4.1%.
BSP Deputy Governor Diwa C. Guinigundo said the inflation forecast has been slashed to three percent from 3.1% previously, with authorities seeing the easing monthly print sustained for the rest of 2019.
In a commentary, Capital Economics said they see the BSP cutting rates in its next meeting, noting that latest signals from Mr. Diokno “sounded more hawkish” than they expected.
“[W]ith inflation set to fall back further over the next couple of months, we are sticking with our view that the central bank will cut interest rates at its next scheduled meeting in May,” said Asia economist Alex Holmes.
The London-based think tank also pointed out that the sustained fall in inflation should open doors for a rate cut, but flagged that the BSP appears “too optimistic” about the economic outlook.
Mr. Diokno said they see domestic activity remaining firm, despite snags drawn from delays in implementing the P3.757-trillion national budget that leaves new and continuing programs unfunded.
ANZ Research also said they see the central bank kicking off a series of rate cuts worth 75bp, starting with a 25bp cut on May 9 as signs clearly point to a sustained downtrend for inflation.
“Overall, we believe that the BSP is progressively becoming comfortable with the evolving inflation scenario. We concur with this comfort,” said ANZ chief economist Sanjay Mathur. “Our view is that the ongoing correction in inflation has opened the door to an easing cycle.”
For the reserve requirement, ANZ projects a cut of at least 200bps this year.
The reserve requirement ratio (RRR) also stood untouched this week, with Mr. Guinigundo said that it remains a live issue but that the Monetary Board members “want to get the timing right.”
HSBC economist Noelan Arbis said separately that it is “most prudent” for the central bank to wait until inflation is firmly back to target before touching the policy rates, as there remains risks like the El Niño phenomenon on food prices.
Mr. Arbis’ call is a 100bp cut in the RRR before a 25bp cut in the policy rate in the second quarter.
Currently, banks need to keep 18% of total deposits untouched, which is among the highest in the world. The BSP slashed this in two moves early last year, but paused as surging inflation became the biggest concern for policy makers.

SEC drafts rules on perpetual corporate existence

By Arra B. Francia, Reporter
THE Securities and Exchange Commission (SEC) is seeking comments from the investing public for its proposed guidelines on the perpetual existence of corporations.
The country’s corporate regulator on Friday posted the draft guidelines on a firm’s corporate term, as amended in Section 11 of the Revised Corporation Code of the Philippines.
The Revised Corporation Code, which was signed into law by President Rodrigo R. Duterte last Feb. 20, states that firms may now exist forever, as opposed to the previous 50-year limit which can be renewed thereafter.
SEC Chairperson Emilio B. Aquino said the grant of a perpetual corporate term will make the country more conducive for business.
“Perpetual existence does not only mean less paperwork. It also preserves legitimate and productive corporations that support our economy’s growth and fosters a sense of longevity that encourages corporations to implement long-term and sustainable projects and investments,” Mr. Aquino said in a statement.
However, firms that choose to retain its specific corporate term as stated in its articles of incorporation may do so.
The draft guidelines state that a company must secure approval during its stockholders’ annual or special meeting on whether they want to retain their specific corporate term.
The company must then send a notice to the SEC of its decision, signed by at least a majority of the members of the board of directors or trustees, and attested by the corporate secretary.
“Such decision must receive affirmative votes from stockholders representing a majority of the corporation’s outstanding capital stock or a majority of the members, in case of a non-stock corporation,” the company said.
The notice must be sent to the SEC Company Registration and Monitoring Department within two years from Feb. 23.
Companies that wish to have perpetual existence no longer have to send such notices to the commission.
The SEC is inviting the investing public to submit comments until April 5.
The Revised Corporation Code now allows one-person corporations (OPC), the use of remote communication in stockholder and board meetings, and the implementation of an electronic filing and monitoring system to improve the ease of doing business in the country, among others.
The previous corporation code under Batas Pambansa Blg. 68 required at least five stockholders to form a company. The SEC is also in the process of soliciting comments for its draft guidelines on OPCs. The proposed draft states that an OPC may only be formed by a natural person of legal age, a trust, or an estate.
For the electronic filing and monitoring system, the SEC is already operating a fully automated and online company registration system for pre-processing of corporations and partnerships and amendments of the articles of incorporation.

Summer is officially here: PAGASA says El Niño may run until August

THE Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) declared the official start of the dry season on Friday, saying that the El Niño phenomenon may last until August.
“With this development, the day-to-day weather across the country will gradually become warmer, though isolated thunderstorms are also likely to occur,” said state weather bureau in a statement on Friday, March 22.
However, PAGASA said that extreme Northern Luzon may still experience the occasional northeasterly wind flow.
The weather bureau also noted that the ongoing weak El Niño, which is affecting large areas of the country, may result in prolonged dry spells and hotter air temperature in the coming months.
In a press briefing, PAGASA deputy administrator for research and development Flaviana D. Hilario said: “’Yung pong ating El Niño… ang forecast po as of now ay hanggang August. ’Yung dating June ay medyo tumaas yung probability, more than 50% [or] around 60% ay pwedeng hanggang Agosto ay meron tayong El Niño.” (We forecast that El Niño will last until August. After the previous report that it may last until June, the probability got higher, more than 50% or around 60% is the chance that we might experience El Niño until August.)
Meanwhile, PAGASA climate monitoring head Analiza S. Solis said during the press briefing that 55 cities and provinces have been officially experiencing dry spell as of March 19, with the provinces of Ilocos Norte, Zamboanga Del Sur, Zamboanga Sibugay, Maguindanao, and Sulu have been experiencing a drought since Feb. 28. Of the 55 areas, 28 are in Luzon, 12 in Visayas, and 15 in Mindanao.
“Ito po yung mino-monitor at tinitigan ng PAGASA kung itong mga areas under dry spell sa kasalukuyang panahon ay magpo-prolong pa o magtutuloy-tuloy pa in next coming months, April, May, and June,” said Ms. Solis. (We are monitoring if the dry spells in these areas will continue in the next coming months, from April, May, and June.) — Vince Angelo C. Ferreras

No more hearings on water situation — GMA

HOUSE Speaker Gloria Macapagal-Arroyo said on Friday that she is planning to cancel any further congressional meetings on the water situation and would rather focus on addressing Metro Manila’s water supply rather than discuss the idea that Manila Water Company, Inc.’s customers not be billed this month.
In an ambush interview with reporters on Friday, Ms. Macapagal Arroyo said she did not want to discuss reports that the Metropolitan Waterworks and Sewerage System (MWSS) plans to study not billing Manila Water’s customers for this March due to the water shortage.
“I don’t want to get into those proposals like that… I read from the papers that the regulator wants to do that (and) that’s their business. What we’d like to see is the water coming back to the tap,” she said.
The Speaker of the House said that she is planning to cancel hearings on the water shortage since they have already heard the the concerned stakeholders’ plans to address the problem.
“As far as the Congress Oversight [committee] is concerned, we want to see the solutions — immediate, short-term, and long-term — soon. So we already had our briefing and I think that’s it. I’m going to ask the Congress to terminate already the hearings because they’ve already heard what they have to hear for the immediate term,” Ms. Macapagal-Arroyo said.
Ms. Macapagal-Arroyo presided over a House meeting on the Metro Manila water supply problem this week. The water crisis first started when the La Mesa dam, the emergency water source for Manila Water, fell below the critical level of 68 meters above sea level (masl), leading to dry faucets in Manila Water’s concession area.
An immediate solution to the water crisis, she pointed out, is reopening the pipes between Manila Water and the other concessionaire, Maynilad Water Services, Inc., in order for the later to share its supply with Manila Water. Two pipes were opened last Thursday while 48 more are still being repaired in order to improve the flow of water from Maynilad to Manila Water.
Ms. Macapagal-Arroyo also noted that another immediate solution they are looking into is having more stationary water tanks to further address water interruptions in selected areas.
Manila Water also recently resumed its operation of the Cardona water treatment plant, which would have prevented the water shortage had it’s opening not been delayed for three months. Ms. Macapagal-Arroyo said that the resumption of operations is one immediate solution, adding “The Cardona plant is part of the solution of using the Laguna Lake as drinking water.”
Meanwhile, the China-funded Kaliwa Dam project is pegged by the House Speaker as the “longer term solution.” The dam, whose construction has not started, is planned to be operational in 2023. — Gillian M. Cortez

Duterte EO bans junkets

PRESIDENT Rodrigo R. Duterte has issued an executive order prohibiting “all forms” of junkets for government officials and employees, and the conduct of planning workshops and team building activities abroad.
Citing the need to update the “outdated” rates of expenses and allowances for official travels, Mr. Duterte signed Executive Order (EO) No. 77 on March 15 which “prescribes the rules and regulations, rates of expenses and allowances for official local and foreign travel by government personnel.”
Section 19 of the EO states: “All forms of travel junkets shall be strictly prohibited. The conduct of strategic planning workshops or team building activities abroad shall not be allowed.”
“If travel circumstances, such as the nature of activity, purpose and itinerary, indicate that the trip is mainly intended for personal purposes, no part thereof shall be considered as official.”
The EO further says that taking personal leave immediately before or after an official activity is “highly discouraged.”
Also not allowed are trips funded fully or partially by suppliers or contractors with “pending requests or application or future dealing with any branch, department, bureau or office of the National Government or LGUs concerned.” The prohibition covers “invitations to travel purportedly to undertake study or assessment of the proponents’ capabilities as such contractors or suppliers.”
Foreign travel authorized under this EO refers to international conferences or meetings to which the Philippine government has commitments; scholarships, fellowships, trainings, and studies abroad which are grant-funded or undertaken at minimal cost; and invitations for speaking engagements or receiving of awards from foreign governments or institutions whether fully or partially funded by the government, upon the endorsement of the Department of Foreign Affairs.
Officials traveling on the government’s dime must take economy class (but not premium economy class). But certain officials — department secretaries, undersecretaries, assistant secretaries and those with equivalent ranks — may take business class for long haul flights, which are defined as flights exceeding four hours without counting lay-overs.
The Office of the President will have to approve all foreign travel by government officials and employees “regardless of the length of travels abroad and the number of delegates.”
Those who travel abroad, according to the EO, will be granted a daily subsistence allowance (DSA) based on the daily rates established by the International Civil Service Commission (ICSC) of the United Nations.
Pre-departure expenses not exceeding P3,500 will be allowed to cover expenses like taxi fares, passport processing, immunization and medical laboratory fees, photographs, porterage, airport terminal fees, among others.
Government officials and employees who travel abroad are also entitled to a clothing allowance if the trip will last for more than one month. They will receive $200 to $400, depending on the number of months of their trip. — Arjay L. Balinbin

Angara calls for amendment of PHL water code

SENATOR Juan Edgardo M. Angara is proposing to amend the 43-year-old Water Code of the Philippines to ensure that there is enough water “across the country at all times.”
Mr. Angara, in a statement released on Friday, said the water problem in Metro Manila and Rizal “brings to light the urgent need to put in place an integrated water resource master plan for water security.”
”With the dry spell getting severe each year, climate change and increasing population, it is imperative that we secure all available and accessible water resources,” he added.
“Every year our water dams drop to critical levels. Unless we address these and come up with long-term and integrated solutions, we are all in trouble,” he said.
Hence, the lawmaker is proposing to amend the 43-year-old Water Code of the Philippines, or Presidential Decree No. 1067. “We have to make the law more responsive to the needs of the times,” he said.
This should include an “audit of all government agencies and institutions dealing with water resource and its management whose functions seem to be teeming with duplication.”
Over 30 agencies manage and oversee the country’s water resources notes a 2018 study by Arangkada Philippines.
“This is a very complicated environment, and rather than come out with a timely response to water problems, it may be impeding our government agencies,” Mr. Angara said.
He also said that the government should appoint an “anti-El Niño czar” who will “orchestrate a multiagency response to the dry spell, which is already causing farm harvest to dip.”
For her part, Senator Loren B. Legarda released a statement on Friday saying “The La Mesa Dam breaching critical level, the lowest in years, and the dry climate outlook for most of our provinces in light of the weak El Niño and climate change should serve as a reminder for all of us to use our water resources more sustainably, also as a means to protect public health, food security, and ecosystems.”
Citing the “confirmation” by the Philippine Atmospheric, Geophysical and Astronomical Services Administration that 2019 “is set to be the warmest year on record” due to El Niño, she said: “We must treat this issue as a climate change concern and not just a water supply issue. The El Niño phenomenon is a natural process, but its varying effects are compounded by climate change.” — Arjay L. Balinbin

Duterte’s ending peace talks is nothing new — Sison

COMMUNIST Party of the Philippines (CPP) founder Jose Maria C. Sison said that the latest call of President Rodrigo R. Duterte to permanently end the peace talks with the communist party is nothing new.
“Duterte is like an old broken record repeating ad nauseam his termination of the GRP-NDFP [Government of the Republic of the Philippines-National Democratic Front of the Philippines] peace negotiations. As far as the NDFP is concerned, Duterte formally killed the peace negotiations on Nov. 23, 2017 with his Proclamation 360 terminating them,” said Mr. Sison in a statement released late Thursday evening, March 21.
The President said on Thursday that he is ending the peace negotiations and told the communist rebels just to talk to the next administration.
“I am officially announcing the permanent termination of our talks between the government panel and the Communist Party of the Philippines,” said Mr. Duterte during the 122nd Philippine Army Founding Anniversary at Fort Andres Bonifacio in Taguig City.
He added, “My sense is that maybe you can talk to the next President of this republic one day.”
The exiled communist leader said that Mr. Duterte is just “merely driving more nails into the coffin of the peace negotiations under his regime” as he continue to use armed conflict as an excuse to impose on the people a de facto martial law nationwide.
“Instead of peace negotiations at the national level by the duly-authorized panels of the GRP and the NDFP, what Duterte wants is fake localized peace negotiations staged and controlled by the military and military-occupied Office of the Presidential Adviser for the Peace Negotiations,” said Mr. Sison.
Mr. Sison said that he is still hoping for the resumption of peace talks under the next administration.
“The GRP-NDFP peace negotiations can be resurrected in the future by a new GRP administration. The Duterte regime is not eternal. It can be finished with the success of the oust movement, with the end of his term in 2022, or with his certain overthrow as he forces his way to a fascist dictatorship,” he said.
Meanwhile, the Armed Forces of the Philippines (AFP) said that cancelling the peace talks was the right move.
“Dapat lang (It should be). Thirty-one years of deceptive ploys using peace talks, across five administrations, only resulted to more terrorist NPAs being released, an opportunity for the CTG [communist terrorist groups] to recruit and recover lost areas of influence, publicity for Joma [Sison] in the international arena as a ‘dove,’ wasted government funds spent for negotiations and junkets, opportunity losses for investments and development because of prolonged and intermittent fighting,” said AFP deputy chief of staff for civil-military operations Brig. Gen. Antonio Parlade, Jr. in a message to reporters on Friday.
Mr. Parlade added, “They had their best chance when peace was offered again to them by PRRD [President Rodrigo R. Duterte], offering cabinet posts in good faith for them to help in good governance but they blew it by attacking projects, killing society forces, and even innocent civilians.”
Malacañang announced on Thursday that a new panel will be created to pursue localized peace talks with members of the communist movement, particularly those fighting on the ground, in line with the government’s new whole-of-nation approach to end the 50-year armed struggle. — Vince Angelo C. Ferreras

18 Chinese arrested for access device fraud, illegal online gambling

EIGHTEEN Chinese nationals were arrested for access device fraud and illegal online gambling, the National Bureau of Investigation (NBI) reported on Friday.
Not only did the NBI find evidence of access device fraud — crime that involve credit or debit cards, ATM cards, bank cards, etc. in electronic monetary transactions — but they said that the Chinese nationals also operated illegal online casino websites.
The NBI said in a statement that the Chinese nationals were arrested after the Regional Trial Court Branch 66 of Capas, Tarlaca issued a search warrant for Royal Genghis International Development Inc., located at Savers Mall, McArthur Highway, Balibago, Angeles City.
“Sufficient information warranting the application of the Search Warrant was based on the verification process and surveillance operations conducted by the NBI operatives,” NBI said.
During the search, the NBI seized evidence such as “mobile phones, desktop computers, laptops, blank java cards, skimming devices, debit cards, unused sim cards, flash drives, routers, and network hubs” in the premises.
The Chinese nationals will undergo an inquest before the Department of Justice (DoJ) for violating the Access Devices Regulation Act and the Illegal Gambling Law. — Gillian M. Cortez

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