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The gift of life

I lost a new IPhone. Worse, I lost it on the day of my wife Mae’s third death anniversary.
I asked myself: “Is Mae playing a joke on me?” Years ago, I likewise lost an IPhone, to Mae’s consternation. It hassled her that I asked for her phone, which she was comfortable with, as replacement. In exchange, I proposed buying her a new one.
She eventually found my phone, but it was already damaged. She was trying to figure out what caused the clogging of water in the toilet bowl. To her surprise, she discovered that my phone was the culprit. She had no choice but pull out the submerged phone from the toilet bowl. Perchance, losing my IPhone this time was Mae’s way of reminding me how my carelessness troubled her.
Like my sis Tata who would implore our departed dad to help her find a missing item, I asked Mae to help me find the phone. I needed the missing phone, especially on that day. I had to make calls and send messages to the Sta. Ana and Manalang families regarding the mass and dinner in remembrance of Mae.
In addition, the phone contains valuable recent photos, which I connect to Mae’s life. There’s a photo of Mae’s favorite grandniece Belle and her bubbly and chubby younger sister Bianca. Bianca reminds Lola Yeb of her sister Mae’s babyhood—a happy and hearty baby.
There’s a photo of the couple Cynch and Boying, taken when we had lunch at Casa Daza. Cynch was Mae’s bosom friend. On the day Mae died three years ago, Cynch found a symbolism. Mae died on her birthday. This signified love, togetherness, and continuity.
As I was struggling with the lost phone, I asked myself how Mae would have reacted to my situation. Mae was telling me not to be distracted and distressed by a missing phone. Be cool. Don’t sweat the small stuff.
The phone is replaceable. I can still communicate with family and friends through other means. The lost photos will not erase the fresh and vivid memories of my being with Belle and Bianca; with Cynch and Boying; with Freita, Mae’s friend from college who is likewise grieving over the death of her sister; with my grade school and high classmates who were also Mae’s friends.
I reminded myself of what friends have been telling me—“Mae wants you to be happy despite your grief.” Hence, on her third death anniversary, think of happy moments.
Indeed happy moments preceded the misfortune of losing the IPhone. I had fun with old pal Doc Eddie. My colleagues and I visited him regarding the universal health care advocacy. Eddie casually reiterated his invitation for me to join him in monkhood. But his idea of being a monk is different; one where he can still make love with his wife Oyen.
In the evening, I attended a get-together of my and Doc Eddie’s classmates. In that gathering, I was surprised to see Ody, who, despite his intelligence and his math wizardry, dropped out of high school because of conduct associated with being stoned.
Ody approached me and confided that though originally he did not intend to be at the gathering, he opted to go upon learning that I’d attend. Ody wanted to thank me again for a eulogy that I wrote about Mae. My story about Mae and our relationship—the ups and downs, the joys and disappointments, and ultimately the eternal love for each other, gave new meaning to Ody’s life. The life of Ody is a testament to how we transform and redeem ourselves, how we can change for the better.
It was nearing midnight night when the group called it a night. Meong, our inspirational guy who on that occasion gave me a book about a pilgrimage in the footsteps of Ignatius of Loyola, was in deep slumber. He had one drink too many. For he was unfit to drive home, Noel and I accompanied Meong, with me as the designated driver.
Meong was asleep during the whole trip. Noel, who lost wife Ditas a few months ago, and I had the time to talk about the life of being widowed. For a spiritual journey, Noel would like to do the Camino de Santiago. The book that Meong gave me might likewise interest Noel.
Noel got off first, and I safely returned Meong and his Innova to his place on Katipunan Avenue. I was of course relieved that Meong got home safe and sound. To return home, I took a Grab vehicle.
Before going to bed, I wanted to check my e-mail and messages, and I realized my phone was missing.
It was upon reflection that I banished the negative feelings about losing the phone. Mae was telling me: ”Be happy. You did good today. You gave encouragement to Ody. You gave Meong a helping hand. You comforted a grieving Noel.”
I affirm what I learned from Mae, from her departed sister Ginny, and her departed mom Cil: theirs were little acts of kindness. Little acts of kindness are as important, are as noble as grand heroic acts like fighting and dying for our country.
That was what the homily was all about when I attended the mass to honor Mae. The message was about the gift of life; that we live to fulfill a greater purpose.
Postscipt: The day after Mae’s death anniversary, I recovered the IPhone. The friendly driver of the Grab car, named Sunday Botero, was very kind to go out of his way and deliver to me the cellphone he found inside the sedan. Indeed, it is the people’s little acts of kindness, like Sunday’s, that make a wondrous, beautiful world.
 
Filomeno S. Sta. Ana III coordinates the Action for Economic Reforms.
www.aer.ph

End of the road for federalism?

IN his third State of the Nation Address (SONA) in July, President Rodrigo Durterte urged Congress to work on his proposal to change the Constitution to enable the Philippines to shift from the current presidential to a federal form of government. Curiously as we observed in our brief, he did it less forcefully then what many had expected considering that federalism, along with the drug war and anti-corruption drive, had been an oft-repeated subject of his lengthy monologues. Today, a month after that speech, the drive for federalism seems to be waning.
What happened? To start with, there was never popular support for federalism, nor even awareness, of what the proposal was about. Then on the day of the SONA, the fiercest champion of federalism in Congress, the then speaker, was ousted and replaced with former President Gloria Arroyo who does not seem to share her predecessor’s enthusiasm for fast-tracking the proposal. Then, when asked, the President’s own economic team was critical of the proposal’s dire fiscal impact with the Finance Secretary telling members of the Senate that he would “absolutely” not vote for it. The economic team’s position was soon echoed by business and civil society in a rare joint statement issued by seven large business groups and 19 advocacy organizations. Too, the Supreme Court’s ruling granting local governments a larger stake in national taxes may have helped assuage some of the regional discontent with “Imperial Manila.”
And yet, the fuss over federalism is continuing with Malacañang now promoting voter education for public support. Is this another example of a strongman trying to get his way no matter what?
Those who charge the President with chiseling away at Philippine democratic institutions would readily agree, and perhaps they have grounds to believe so.
Nevertheless, there is another possibility that we find hard to refute. This view argues that for President Duterte, the federalism campaign is just a matter of keeping options open. The ultimate objective, per this line of reasoning, is effective succession planning, one that would allow him to escape Philippine democracy’s disturbing cycle of successive leaders sending their predecessors to jail. Indeed, many have observed that in the country’s post-democracy era, only President Corazon Aquino had managed her succession successfully.
If this is the case, then fate has favored him with an unequalled ally in the person of Speaker Arroyo. The former president, who had been under hospital arrest during most of her successor’s term, had tried to amend the Constitution through various means during her presidency ( though she preferred then a unitary parliamentary to a federal presidential system). From all indications, Speaker Arroyo remains committed to this vision. She has, however, only nine months remaining in her third and last congressional term and has dismissed the former speaker’s plan to cancel the 2019 mid-term elections (supposedly to give Congress time to work on federalism).
What will she do then? For one who considers politics the art of the possible, she would most likely have several cards under her sleeve and close to her chest. For now, she has put the onus of setting the President’s proposal aside on the Senate, which has refused to participate in a constituent assembly, the President’s preferred avenue for changing the Constitution. Meanwhile, she has busied herself tending to matters that the President has no appetite for, i.e., the economy, and possibly filling a vacuum in leadership. The months ahead will reveal how the stars will align for the two most powerful people in the country.
In the meantime, the success of the President’s daughter (the mayor of Davao City) in forming a formidable alliance between her regional party (Hugpong Ng Pagbabago or HNP) and nine other national and local parties has opened up another path that may allow the President to retire in peace to his hometown at the end of his term. Of course, he still has four years to go in his term and in Philippine politics, that is light years away.”
 
Romeo L. Bernardo was Finance Undersecretary during the Cory Aquino and Ramos administrations. He is a fellow of the Foundation for Economic Freedom and a Governor of the Management Association of the Philippines.
romeo.lopez.bernardo@gmail.com

Available rice for tolerable poverty

Mang Pedro, temporary construction helper, married, father of three, could not even afford the P38-lunch sold on the sidewalk. He squatted in a corner, away from the other workers boisterously competing for the bigger slices and the more generous-looking rice portions of Aling Rosa’s food. He carefully opened his “baon” (packed lunch). It was plain boiled white rice — but twice the quantity of Aling Rosa’s serving. No viand. Over the rice, he squeezed the ketchup from the frayed foil packet that he picked up from a fast food outlet.
“Ayos. Basta may kanin!” (Ok, as long as there’s rice.)
In the Philippines, rice is the major staple, accounting for nearly half of the calorie intake of the population. Of 105 million Filipinos, about one-fifth or about 21 million are poor. Availability of rice at affordable price can be the palliative for tolerable poverty. What if rice is scarce and expensive?
According to a study of the government think-tank Philippine Institute for Development Studies (PIDS No. 2011-11, May 2011), rice consumption had been increasing: from 84 kilograms (kg) in 1990, annual per capita consumption has risen to 120 kg by 2009. Add that the population continued to grow at a rapid clip (2% annually), further accelerating the growth of demand. Since the growth of domestic supply has not kept pace with growth of demand, the country started to import rice, the PIDS said (Ibid.).
In 2007-2008 world food prices increased dramatically causing political and economic instability and social unrest in both poor and developed nations. Causes identified were droughts in grain-producing nations and rising oil prices, which increased the costs of fertilizers, food transportation, and industrial agriculture. Some analysts said the increasing use of biofuels in developed countries (e.g., corn) also exacerbated the world-wide food shortage (The New York Times. April 10, 2008). A similar price-spike emergency happened again in 2013, when world rice availability was a major challenge to the Philippines, which held the dubious reputation as top rice importer of the world since 2004.
“Why does the Philippines import rice?” economists from the International Rice Research Institute (IRRI) effectively asked themselves (D.C. Dawe, P.F. Moya, C.B. Casiwan, 2004). For IRRI, the largest nonprofit agricultural research center in Asia, was set up in the 1960s by the Ford Foundation, the Rockefeller Foundation, and the Government of the Philippines purposely to “reduce poverty and hunger, improve the health of rice farmers and consumers, and ensure environmental sustainability of rice farming” (IRRI website). Dawe et al. premise that the Philippines imports rice because it is a nation of islands without any major rice deltas like those in Thailand and Vietnam, the world’s top two rice exporters. But it has been economic history more than geography.
In globalization and its liberalized trade, quantitative restrictions (QRs) set by the World Trade Organization (WTO) upon food exporting countries tried to temper the imbalance between demand and supply, and to ensure availability, fair pricing and distribution of food. Calibrated tariffication balanced importations vis-à-vis the local supply, to protect farmers and local suppliers. Rice, the staple food of nearly one-half of humanity (IRRI, 2015) has been an exemption for many countries from the WTO standards. “The Philippines, second most heavily populated in the region after Indonesia with about 105 million people, consumes roughly 11.7 million tons of rice every year. The country limits private rice imports to protect its farmers, buying up to 805,200 tons of rice with a 35 percent import tariff, under the WTO deal” (Reuters June 19, 2018).
The PIDS explains that “QRs are enforced through the import monopoly provided by law to the National Food Authority (NFA), a state-owned agency. The volume to be imported by the NFA is set annually by the NFA Council, upon recommendation of an interagency committee. The NFA is mandated to stabilize rice prices and supply both at the producer and consumer level, and ensure food security throughout the country. To do this, the NFA tries to ensure that farm gate prices are high enough for farmers to gain reasonable returns, retail prices remain affordable to consumers, and rice distribution is restored quickly in calamity stricken areas (PIDS, op. cit.).
“Following its mandate, the NFA engages in procurement (buying rice free of tariffs) and distribution, setting a procurement price for palay while subsidizing retail price (buy high, sell low) of milled rice. It also maintains a food security reserve, with rice stocks kept at levels equivalent to 15 days of consumption year-round, rising to not less than 30 days equivalent consumption every first of July” (Ibid.)
What panic when in February, NFA Administrator Jason Aquino said in a media briefing that “the inventory of NFA rice is very low, but we have high supplies in the commercial and household. There is no rice shortage, but we don’t have much to give to the poorest of the poor.” The NFA takes care of 10 percent of the total rice consumption of the country, for Classes D and E, or around 8 to 10 million Filipinos. Aquino said with the only 1.2 million bags of rice remaining with the NFA, their stocks can only assist the poor for 18 days (CNN Philippines, Feb 7, 2018).
Aquino said that with the NFA rice shortage, the masses have to resort to buying commercial rice — the price of which has already hiked up due to the lack of supply. NFA rice is more affordable at P27 to P32 per kilo compared to commercial rice, which sells from P36 to P65 per kilo (Ibid.). Agriculture Secretary Manny Piñol accused private rice traders of resorting to spreading rumors of a shortage to escalate prices (Ibid.).
The NFA blamed the 10-member multi-agency NFA Council headed by Cabinet Secretary Leoncio “Jun” Evasco (directly reporting to President Rodrigo Duterte) for delaying, since November, a request to import 250,000 metric tons of rice, which will take 45 days to arrive. The required 15-day buffer stock or around 400,000 metric tons that the NFA should have in store at any given time is raised to 30 days or 800,000 metric tons from July to September every year, when there is almost no rice production due to the storms that hit the country around that time, Aquino explained (Ibid.).
President Duterte intervened, directing immediate rice importation, leaving it to the NFA Council to determine process and procedure. One pro-Duterte commentator cited by Rappler asked why Evasco’s NFA Council opted to go G2P (government-to-private) which would take 45 to 60 days instead of the traditional G2G (government-to-government) importation which takes only 30 days — was there something about corruption here? (Rappler Mar 24, 2018).
And Duterte’s men accusatively pointed to at each other in mainstream and social media, diverting attention from the most urgent problem of (possible) food scarcity and further food inflation, especially as it threatens the most vulnerable — the poor.
In Senate hearings on the rice shortage, opposition Senators Francis Pangilinan and Paolo Benigno Aquino IV called for the resignation of Duterte-appointed Jason Aquino as NFA Administrator for inefficiency. Senator Sherwin Gatchalian topped the opposition’s recommendation by pushing for the total abolition of the NFA (Rappler Aug. 29, 2018). Citing financial data, Gatchalian said NFA’s revenue shrank 38 % to P17.93 billion in 2017, from P29.3 billion in 2016. NFA’s losses, on the other hand, swelled to P150 billion (Ibid.).
Piñol pushes for tariffication as the solution, saying that if the Philippines would import around two million metric tons of rice under the proposal, about 40% tariff would be collected which is equivalent to US$400 million or P21.6 billion a year. He clarified, though, that the measure would reduce rice prices by only about P1.00 per kilogram, but it is primarily to protect Filipino rice farmers against the influx of imported rice (ph.news.yahoo.com Aug 2, 2018.)
Farmer groups and rice research organizations do not agree with the House of Representatives’ move to lift the QRs on rice imports and instead apply a 35% tariff on unlimited rice importation. “This will practically decrease farmgate prices, said IBON, but not necessarily lower retail rice prices as government claims” (mindanaoexaminer.com Aug. 10, 2018).
“Then senator Macapagal-Arroyo pushed for the country’s entry to the World Trade Organization in 1995, and after decades, rice farmers’ livelihood were ravaged by the influx of imported rice, but still, prices remain unaffordable to the poor, and now, the Duterte administration is doing a repeat, but worse, as it will unleash the flooding of imported rice in the local market,” Anakpawis party-list Rep. Ariel “Ka Ayik” B. Casilao said during a protest (conceptnewscentral Aug. 6, 2018).
Yes, that is perhaps the most discerning of the rice situation, and the more prudent action/reaction that can be done at this time: Focus on rice availability and its critical impact on the government’s professed objective of inclusion of the poorest of the poor. Look inward, and not mimic and mime what the big boys in global liberalized trading are doing — for themselves, and not for the struggling developing countries like the Philippines. Perhaps drastic tariffication, and/or dismantling of the NFA can be studied more deeply, before hasty decision and implementation.
Address the simple problem of internal regulation for the procurement, pricing, and distribution for today’s rice situation. Curb smuggling and profiteering. Address government officials’ accountability. Government must do its job, and not shunt responsibility to the new rules for Tomorrow.
 
Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.
ahcylagan@yahoo.com

Jim Rogers favors several sectors in China stocks amid global volatility


IN AN exclusive interview with Jim Rogers, he said he favors several sectors in the Chinese stock market amid global volatility and US-China trade tensions.
The author of “A Bull in China: Investing Profitably in the World’s Greatest Market,” and a famous global investor who co-founded the first international investment fund with George Soros in 1973, has made several remarkable predictions. The most recent was Jim’s short positions in the US real estate in 2006 or so before the subprime crisis occurred in 2007.
As a pioneer in investing in China’s shares back in the 1990s, Jim has deep and broad knowledge on China’s economy and he believes some Chinese industries have a bright future ahead as he personally owns Chinese fintech companies such as Beijing-based Tiger Broker and he feels there are ample opportunities in Chinese stocks.
Some of his quick picks mentioned are those supported by the Chinese government such as pollution clean-up with regards to air, water and soil; health care; and agriculture. This is in relation to the Chinese government’s efforts to create a cleaner environment.
He foresees tourism to be great in the longer term, for the next 10-20 years, as Chinese citizens have more purchasing power to travel and spend overseas.
Another theme he highlighted are the industries in the Belt and Road Initiative (BRI).
When asked about the possibility of Fed hikes which could affect the global economy, his response was that other central banks have to follow suit and take their interest rates higher. And the “interest rates have never been like this in the history of the world.”
“Central banks do not know what is happening and it is their experiment at best,” Jim added. The world’s debts will increase as a result of the interest rates going higher.
Jim is also particularly concerned about the peer-to-peer lending business and that business has been coming under pressure. The recent clean-up was a way to prevent it from getting out of control.
He feels that although China financial markets haven’t been performing as of late, China will be leading the run when it is the time for the bull market.
Currently, Jim resides in Singapore and runs Rogers Holding and Beeland Interests Inc. And both his daughters are fluent in Chinese.
CHINAKNOWLEDGE

Chinese bridge pushes Maldives deeper in debt: opposition

Maldives — The Maldives opposition said Friday that President Abdulla Yameen had pushed the Indian Ocean nation deeper into a Chinese “debt trap” with a new $200 million bridge opened just ahead of the country’s election.
Yameen commissioned the bridge with a Chinese fireworks display late Thursday night amid his campaign for the controversial September 23 vote, ahead of which he has jailed or forced into exile all of his main opponents.
The opposition Maldivian Democratic Party (MDP) said the 1.4 kilometre (0.9 mile) three-lane bridge linking the congested capital of Male to the airport island was a symbol of Yameen’s “corruption”.
“There was huge corruption involved in this deal,” MDP spokesman Hamid Abdul Ghafoor told AFP in Colombo where he lives in self-imposed exile. “We are getting pushed into the Chinese debt trap.”
The government has repeatedly denied claims of corruption.
The International Monetary Fund reported that the Maldives’ external debt was estimated at 42.8 percent of GDP in 2018, up from 38.29 percent in 2017.
Yameen pledged to build the bridge during his 2013 election campaign and made infrastructure development a key plank in his reelection bid.
He said at the inauguration that the new bridge marked “the dawn of a new era” for the Sunni Muslim nation of 340,000 people.
“We see our future unfolding into an age of progress and tranquility.”
The project was launched when China’s President Xi Jinping visited the Maldives in 2014 and Male pledged support for China’s ambitious $1 trillion Belt and Road infrastructure project across Asia and Europe.
Housing minister Mohamed Muizz said in May a Chinese grant, as well as a loan from China’s EXIM bank, would make up most of the project’s funding.
The Maldives, some 1,192 coral islands stretching across 800 kilometres (500 miles), straddles the highly strategic east-west maritime route.
The upmarket tourist paradise has been on edge since Yameen imposed a 45-day state of emergency in February.
The country’s first democratically elected leader, Mohamed Nasheed, lost elections in 2013 in controversial circumstances.
The Supreme Court annulled the results of the first round of voting when Nasheed was in the lead.
The subsequent vote was then twice delayed, allowing Yameen time to forge alliances that helped him narrowly win the contested run-off. Nasheed has been barred from running in the September vote. — AFP

Gold drops for fifth month amid a rally in dollar, stocks

Gold is set for a fifth straight monthly decline, the longest losing run in half a decade, hit by a strengthening dollar and U.S. equities at record highs.
Bullion for immediate delivery, which was at $1,205.96 an ounce on Friday, has lost 1.5 percent in August, and the run of monthly declines is the longest since 2013. Prices hit a 19-month low on Aug. 16 and are down 7.4 percent this year, while the Bloomberg Dollar Spot Index has risen 1.7 percent.
The precious metal has been dumped as investors weigh prospects for further tightening by the Fed amid a robust U.S. economy, with global holdings in gold-backed exchange-traded funds declining to the lowest level since November. The latest developments on the trade war front have further aided the dollar, with President Donald Trump expected to move ahead with tariffs on an additional $200 billion in Chinese imports as soon as next week.
“The problem for gold bulls is that while inflation remains contained around the world and there’s no driver there for people to buy gold, that strengthening U.S. dollar will be a key factor,” Michael McCarthy, chief market strategist at CMC Markets in Sydney, said by phone. While there’s potential for trade wars to slow global growth, that’s not seen as a crisis and isn’t likely to spur haven buying, according to McCarthy.
Net-Short Position
While prices have stabilized near $1,200 this month, bets on declines are still piling up with money managers boosting their net-short position to a record for a fifth straight week. Analysts at Citigroup Global Markets have said nobody needs gold in a world where yields and equities are rising.
Fed Chairman Jerome Powell said this month that gradual rate increases are likely, and that with inflation still low he wasn’t worried about the economy overheating. The U.S. central bank looks set to deliver four more hikes before pausing, according to UBS Group AG’s wealth management unit.
“In the short term, we’ll have further strength in the dollar,” said UBS’s Wayne Gordon, Singapore-based executive director for commodities and foreign exchange. Beyond that, gold may get a reprieve “when people start to look more further forward to the Fed effectively reaching what it sees as neutral, or slightly above neutral,” he said. — Bloomberg

Central bank flags even faster August inflation

‘Higher price of rice and key food items due to weather disturbances and supply disruptions, increase in gasoline and LPG prices, and slight upward adjustment in electricity rates in Meralco-serviced areas contributed to upward price pressures in August.’ — Bangko Sentral ng Pilipinas

By Melissa Luz T. Lopez, Senior Reporter
THE OVERALL INCREASE in prices of widely used goods likely clock in around 5.9% in August — marking a fresh multiyear high — the Bangko Sentral ng Pilipinas (BSP) said in a statement on Friday, noting that food and utility costs maintained their ascent.
In a statement, the BSP’s Department of Economic Research gave a 5.5-6.2% estimate range, implying that prices have climbed faster than July’s 5.7% reading and the 2.6% reading seen in August 2017.
The range is higher than the central bank’s 5.1-5.8% estimate for July inflation.
This would be in line with BSP Governor Nestor A. Espenilla, Jr.’s signals that inflation will clock in faster this month, though not beyond six percent.
At the same time, the BSP department noted that “[t]he central forecast implies a slight deceleration of the month-on-month inflation”.
The Philippine Statistics Authority (PSA) is scheduled to report August inflation data on Wednesday, Sept. 5.
This is the first time that the BSP gave a specific figure for headline inflation ahead of the official PSA data. If realized, this will mark a fresh multiyear high for inflation using 2012 prices as base.
“Higher price of rice and key food items due to weather disturbances and supply disruptions, increase in gasoline and LPG prices, and slight upward adjustment in electricity rates in Meralco-serviced areas contributed to upward price pressures in August,” the central bank said.
Oil companies introduced four waves of pump price increases last month to reflect movements in global crude prices. Year-to-date prices saw a net increase of P6.90 per liter for gasoline and P7.15/liter for diesel as of Aug. 28, according to the Department of Energy’s oil monitor.
Manila Electric Co., the biggest power distributor in the country, also announced a P0.0265 increase per kilowatt-hour for electricity bills due to a higher generation charge.
On the flipside, lower diesel and kerosene prices, as well as a “modestly appreciated peso” likely helped ease price pressures for the month.
The peso has been trading weaker than P53 versus the dollar in recent weeks, even as it briefly touched the P52 level earlier this month.
Mr. Espenilla has been saying in recent weeks that inflation will peak by August or September before gradually easing back to the 2-4% target range by 2019.
Prices of widely-used goods and services have surged by an average of 4.5% as of end-July, while full-year inflation is expected at 4.9%. The central bank has blamed supply-side factors such as surging global oil prices, additional excise taxes on certain products which took effect this year, as well as weather disturbances that disrupted food supply as the key reasons behind July price spike.
In response, the BSP fired off its strongest response in a decade by raising interest rates by 50 basis points (bp) in its Aug. 9 meeting. This pushed yields 100bp higher year to date, with the benchmark yields now at 3.5-4.5%.
“The BSP will remain watchful of economic and financial developments that could affect the inflation outlook and will closely monitor inflation expectations and emergence of further second-round effects ahead of the September 2018 Monetary Board policy meeting,” the central bank added.
Mr. Espenilla said in a forum earlier this week that the BSP has “kept the door open” for succeeding rate hikes in order to ease inflation pressures, noting that the economy can still accommodate further monetary policy tightening while growing at a rapid pace.
Inflation momentum has been “slowing” in recent months, although prices will likely remain “elevated” until yearend, the BSP chief added.

Money supply growth slows in July

GROWTH of money supply eased to its slowest pace in nearly three years in July amid smaller reserves held by the Bangko Sentral ng Pilipinas (BSP), even as bank lending accelerated in the same month.
Domestic liquidity or M3, or the broadest measure of money in an economy, grew by 11% to P11.103 trillion in July from P10.004 trillion a year ago, slower than the 11.8% to P11.062 trillion logged in June.
This is the slowest M3 growth seen since a 9.4% increase in December 2015.
Month on month, liquidity rose by 0.6%.
Claims on the national government and other sectors through securities picked up by 16.1% in July, matching the rate seen the previous month. Net claims on the government grew by a slower 12.3% in July from 12.8% the previous month, while increase of claims on other sectors (other financial corporations, public nonfinancial corporations, local governments and the private sector) picked up to 16.9% from 16.7% in the same comparative months.
Contributing to the moderation of money supply growth was the 0.1% year-on-year increase in net foreign assets (NFA), compared to a 2.8% year-on-year pickup in June. “The BSP’s NFA position declined in July relative to June, reflecting the decrease in gross international reserves,” the central bank said.
Dollar reserves dipped to $76.713 billion in July from $77.521 billion amid lower gold valuations and as the BSP used its reserves to intervene in the daily peso-dollar trading.
On the other hand, foreign assets held by banks rose due to bigger loans and investments in debt papers.
The BSP raised interest rates by another 25 basis points (bp) in its June policy meeting following the first hike of the same magnitude in nearly four years in May, as policy makers sought to rein in inflation expectations. This was later on followed by a strong 50bp rate hike in August.
LENDING PICKS UP
Banks also handed out more credit in July, marking the fastest climb since April.
Bank lending surged by 19.6% compared to June’s 19.1% increase.
Counting reverse repurchase deals as well, total loans grew by 18.7% in July compared to 17.7% the preceding month.
Most of the loans went to production activities, surging 19.7% from a year ago. Lending to the construction sector saw the biggest increase at 37.6%, according to latest data. This comes amid the government’s aggressive infrastructure spending push.
Other industries which received additional credit were financial and insurance activities (35.9%); wholesale and retail trade, repair of motor vehicles and motorcycles (25.6%); manufacturing (19%); and real estate (15.9%).
At the same time, July saw lending for administrative and support services activities slashed by nearly half and that for agriculture cut by 7.1%.
Lending for retail borrowers slowed to a 16.9% increase compared to June’s 17.8% climb due to lower salary-based credit and car loans. These tempered the impact of a jump in credit card borrowings, the BSP said.
“The BSP will continue to ensure that the expansion in domestic credit and liquidity proceeds in line with overall economic growth, while remaining consistent with the BSP’s price and financial stability objectives,” the central bank said. — Melissa Luz T. Lopez

Malaysia debt watcher raises Philippine rating further into investment grade

THE PHILIPPINES bagged a credit rating upgrade from a Malaysian debt watcher, which cited progress on the infrastructure front and reforms which are expected to help sustain economic growth.
RAM Rating Services Berhad raised the Philippines’ global rating to “gBBB2(pi)” — which is one notch above minimum investment grade on its scale — with a “stable” outlook.
“The upgrade is premised on sustained growth momentum, a persistent uptrend in FDI (foreign direct investment) inflows and continuous progress in reforms,” RAM said in a statement issued late Wednesday.
“The stable outlook reflects the country’s strong external position and economic resilience, balanced by the government’s narrow revenue base and elevated underemployment and poverty rates.”
This comes a year after RAM Ratings upgraded the Philippines’ rating outlook to “positive”, signalling better chances of a higher credit score.
A higher credit rating improves the chances for a country to borrow funds from foreign sources at cheaper rates, particularly from Malaysian investors in this case.
RAM Ratings also bumped up the Philippines’ rating in the former’s regional scale to “seaAA3(pi)”, citing the country’s “superior capacity to meet its financial obligations.”
In particular, the Malaysian debt watcher said the government has “made some headway” in its “Build, Build, Build” infrastructure program with 35 of 75 priority projects already approved for implementation.
“While there are execution challenges to the infrastructure push, the shift in the government’s budgeting framework from obligation-basis to cash-basis next year should help address underspending issues,” Esther Lai, RAM’s Head of Sovereign Ratings, was quoted as saying.
The Budget department last July submitted to Congress a P3.757-trillion spending plan for 2019 which requires all agencies to spend their funds within the year, plus a three-month extension for payment. A recent meeting with leaders of the House of Representatives yielded an agreement to extend payment period by three more months — or a total of six months after the end of the fiscal year — for infrastructure projects.
The reform is expected to end underspending and ensure prompt delivery of state-funded projects, coming from two-year validity of budgets in previous years under the obligation-based system.
Some House leaders had question the shift in budget system ahead of the May 2019 mid-term elections, saying they were amenable to the shift in 2020.
Recent reforms signed by President Rodrigo R. Duterte into law include the Philippine ID system and the Ease of Doing Business Act.
MOMENTUM INTACT
Malaysian credit analysts also said that the slowdown of economic growth and surging inflation are expected to be “manageable” and “transitory,” and are unlikely to affect the country’s fiscal position and investor appeal.
Philippine gross domestic product (GDP) eased to a disappointing six percent in April-June, slower than the downward-revised 6.6% during the first quarter and the year-ago 6.6%, while inflation surged to a nine-year-high 5.7% in July that pushed the seven-month pace to 4.5%, well above the 2-4% target.
Strong FDI inflows — which hit a record $10 billion in 2017 and are on track for a fresh banner year in 2018 — could help plug the growing trade deficit that has been fueled largely by heavy importation of capital equipment for business expansion, the credit rater added.
“This reflects investor optimism over the country’s growth potential as well as the continuous passage of business-enhancing reforms,” RAM Ratings said, even as it flagged that Executive-legislative differences over the second tax reform package “could hold back future investments.”
A measure that seeks to gradually cut corporate income tax rates gradually to 25% from 30% awaits plenary approval at the House of Representatives. The foregone revenues were supposed to be offset by removing tax incentives deemed redundant, but the House has stonewalled on this segment of the package, warning it could scare investors away. That left this package — initially designed by the Finance department to be revenue neutral — in a revenue-negative mode.
Watering down this package, analysts of Fitch Ratings and Moody’s Investors Service had warned two weeks ago, risks slowing the momentum of progress in state revenues and infrastructure spending.
Despite this, the debt watcher expects a 6.5% growth this year, still faster compared to the projected expansion of other Asian economies although below the government’s 7-8% goal.
Finance Secretary Carlos G. Dominguez III said the latest rating upgrade affirms the Duterte administration’s thrust to boost the “economic competitiveness” of the Philippines by pursuing fiscal reforms.
RAM Ratings’ upgrade follows similar moves from S&P Global Ratings and Fitch Ratings, which put the country on higher investment grade. — Melissa Luz T. Lopez

Philippines seeks fresh China funds for studies on 12 big projects

THE PHILIPPINES has made a fresh bid for Chinese grants for studies on planned inter-island bridges as well as Mindanao’s first railway, the Department of Finance (DoF) announced in a statement on Friday.
The department said it has submitted a list of 12 big-ticket infrastructure projects to the China International Development Cooperation Agency (CIDCA), as Manila seeks the aid agency’s help in conducting feasibility studies.
The statement quoted Finance Secretary Carlos G. Dominguez III as saying that members of President Rodrigo R. Duterte’s economic team made the pitch to CIDCA chairman Wang Xiaotao for additional grants from Beijing, in line with the Philippines’ aggressive infrastructure push.
The projects proposed for CIDCA financing are the future phases of the Mindanao Railway Project; Ipo Dam No. 3 in Norzagaray, Bulacan; Port Irene Development-Navigational Channel in Cagayan; Cabadbaran Small Reservoir Irrigation Project in Agusan del Norte; the River Basin and Watershed Management Project in Camarines Sur; the Luzon-Samar (Matnog-Alen) Bridge; Dinagat (Leyte)-Surigao Link Bridge; Camarines Sur-Catanduanes Friendship Bridge; development of the Luzon Eastern Seaboard; Bohol-Leyte Link Bridge; Cebu-Bohol Link Bridge and the Negros-Cebu Link Bridge.
Socioeconomic Planning Secretary Ernesto M. Pernia presented the proposed list to CIDCA during the group’s Aug. 22-24 visit to Beijing.
“These projects are selected considering geographic spread, the size of the investment requirement and the Duterte administration’s focus on connectivity, rural development and disaster prevention, among other considerations,” Mr. Pernia was quoted as saying.
The Philippine team is the first high-level delegation received by CIDCA since the agency was established in April, the statement quoted Mr. Wang as saying.
Mr. Dominguez suggested that CIDCA assign a “portfolio officer” to monitor and coordinate on Philippine projects.
During the same visit, CIDCA’s Mr. Wang and Public Works Secretary Mark A. Villar also signed a $13.4-million grant for the feasibility study of the Panay-Guimaras-Negros bridge project in the Visayas.
Following the meeting with CIDCA, the Philippine delegation also met with Export-Import Bank of China chairperson Hu Xiaolin to discuss loan financing and co-financing arrangements for the Philippines’ infrastructure projects, DoF added.
The Philippines previously sealed the first loan agreement for a partial P3.69-billion funding of the P4.37-billion Chico River Pump Irrigation Project in northern Luzon with an interest rate of two percent per annum and a 20-year maturity period, inclusive of a seven-year grace period.
China had also approved a P4.13-billion grant for the construction of the Binondo-Intramuros and Estrella-Pantaleon bridges, a feasibility study for the Davao City Expressway Project, provision of radio and broadcasting equipment to the Presidential Communications Operations Office and the third phase of the Philippine-Sino Center for Agricultural Technology-Technical Cooperation Program.
In 2016, Mr. Duterte secured a pledge for $9 billion worth of official development assistance from Chinese President Xi Jinping as the former moved the Philippines closer to its Northeast Asian neighbor. — Melissa Luz T. Lopez

Robredo to Duterte: Assure people you are on top of problems

VICE-PRESIDENT Maria Leonor G. Robredo, in a statement on Friday, called on President Rodrigo R. Duterte to “use his podium to assure the people that he is on top” of the nation’s problems.
On Friday evening, she also spoke against “the winds of authoritarianism” and of “freedoms…being challenged in ways that are not seen in the last few decades” at ceremonies in honor of this year’s recipients of the Ramon Magsaysay Foundation Award, Asia’s equivalent of the Nobel Prize.
Ms. Robredo’s statement was in response to Mr. Duterte’s latest attack on the Vice-President, saying in part that the country is “better off choosing a dictator the likes of Marcos,” and that Ms. Robredo “cannot hack it (the presidency).”
The Vice-President called the President’s speech in Mandaue City on Thursday evening “recycled rants conveniently used to deflect attention from the failures of this administration.”
She added: “And while he may be intending to flatter me by keeping me at the top of his mind these days when he stands behind the seal of his office, I’d still prefer that he focus on the many important matters that he needs to address—as rising prices continue to make life difficult for our fellow Filipinos, especially for those in need.”
“Perhaps he can use his podium to assure the people that he is on top of these problems—and to use his power to intervene when his appointed officials struggle to come up with coherent solutions to the rising prices of rice and other basic commodities.”
“Despite these many problems, the drug war clearly remains highest on the President’s agenda, so much so that he is now pinning blame on a blind man.” Ms. Robredo said further, referring to his brother-in-law Butch Robredo, whom Mr. Duterte has accused of trafficking drugs in her hometown of Naga City.
Mr. Duterte on Thursday reaffirmed his accusation that Naga City, Ms. Robredo’s hometown, is a “hotbed of shabu.”
“Ang (It’s her) brother-in-law niya ang nagdala ng (who brought) drugs sa (to) Bicol. Totoo iyan. Siyempre (That’s true. Of course),” he added.
Ms. Robredo also said in her statement: “Perhaps instead of constantly repeating this ridiculous allegation, and throwing mud on the name of a city that thrives on good governance—and that staunchly supports the call to fight illegal drugs—he can turn his attention to the P6.8-billion shabu shipment that slipped past his customs officials, and not just shrug off the insistent report of his own PDEA chief regarding the magnetic lifters found in Cavite.”
Naga City was cited by the Ramon Magsaysay Foundation when Ms. Robredo’s late husband, Jesse M. Robredo, won the Ramon Magsaysay Award in 2000 for his administration as city mayor.
She also cautioned Mr. Duterte against “continuing to glorify a dictator who stole billions from our country, drove the nation into debt, and presided over the murder and imprisonment of thousands of Filipinos….”
Mr. Duterte on Thursday had also said, “If I stop now my crusade against drugs and if there is no order in this place, the Philippines, and corruption will continue, patay yun (it won’t work). I said you’re better off choosing a dictator the likes of Marcos. That’s what I suggested.”
“Puwede kayong magkaroon ng (You can follow the) constitutional succession, si Robredo, but she cannot hack it,” he also said.
Ms. Robredo faces an electoral protest by former senator Ferdinand R. Marcos, Jr., son of the late dictator Ferdinand E. Marcos.
On Aug. 16, Presidential Spokesperson Harry L. Roque, Jr. said in a press briefing, “If he (Mr. Marcos) becomes vice-president, perhaps the President will make true his word that he will step down. Because what he is worried about is that if we were to use constitutional succession, then the successor may not be qualified.”
On Friday, sought for comment by the media on Mr. Duterte’s remarks in Mandaue City, Mr. Roque said it was the President’s “personal belief” that “everyone can be better than the… Vice President. With all due respect to the Vice President, that’s a personal assessment made by the President.”
At the Ramon Magsaysay Awards ceremonies on Friday, Ms. Robredo acknowledged the presence of past awardees Hilario G. Davide Jr. and Conchita Carpio-Morales, as well as former president Fidel V. Ramos, former social welfare secretary Corazon J. Soliman, and the Magsaysay family including the late president ‘s son, former senator Ramon B. Magsaysay Jr.
Ms. Robredo cited President Magsaysay as a leader who “chose to listen and reach out to the poor when the winds of authoritarian rule were starting to sweep across many nations. He sparked an ethos that brought purpose to a region marred by poverty, inequality and violence.”
“Today, you and I live in another period of great tumultuous change,” she continued. “This is a time when many feel that darkness has almost eclipsed hope, when violence has become commonplace—even necessary. Many are saying they could hardly recognize what humanity has become.”
“Where is Asia in this era of transition?…The Asia we know carries a rich legacy of humanity, where despite the countless threats and attacks against humankind, we remain resilient, ensuring that human lives will not be snuffed out by any tyrant. We have had a long history of bloody struggles in very dark times, and I refuse to believe that we suffered them for nothing.”
“The Asia we know carries a rich legacy of leadership, where leaders inspire courage rather than fear, bringing out the best in our people rather than fanning the flames of our darkest inclinations.”
Ms. Robredo praised this year’s awardees, including Howard Dee of the Philippines who, among his other endeavors, “crafted a concerted response to life-threatening emergencies in Mindanao in Southern Philippines including Tabang Mindanao, which means Help Mindanao; and took up the cause of indigenous peoples rights through legislative advocacy, scholarships, leadership training, and IP development programs, like the Pamulaan Center for Indigenous People’s Foundation in Mindanao.”
“The Board of Trustees of the Ramon Magsaysay Foundation was right in calling Mr. Dee ‘quietly heroic’in his half-century service to the Filipino people,” Ms. Robredo said.
She said further: “Quiet courage and empathy, and leaders that put in the hard work of actually transforming the lives of people, are rarities in these times, when dictatorship is claimed by some to be better.”
“When those trusted by the electorate threaten lives instead of protect them, divide the nation instead of unite it, attack people’s cherished beliefs instead of nourishing them, and present themselves only through bravado and empty promises as the antidote to what they say are outdated and decaying ideas like democracy, we don’t move towards a better future. We move towards a scorched-earth existence where people are killed, institutions are decimated, and our very way of life is threatened,” Ms Robredo also said.

Australian nun to file petition for review of deportation case

By Vann Marlo M. Villegas
AUSTRALIAN missionary Patricia Fox will file at the Department of Justice (DoJ) on Monday a petition for review of the Bureau of Immigration’s (BI) deportation order against her.
“Ang amin pong magiging (Our) course of action is we will be filing an appeal (at) the Department of Justice on Monday. It was supposed to be filed today but unfortunately, we need to firm up additional arguments,” a lawyer of Ms. Fox, Joebert I. Pahilga, said in a press conference on Friday that the Australia nun also attended.
Ms. Fox, for her part, said, “Gusto kong lalaban itong kaso hanggang sa katapusan….Sinabi ko dati mahal ang Pilipinas sa akin. Ayoko umalis kung ganito ang kalagayan.” (I want to pursue this case until the end….I said before that the Philippines is dear to me. I don’t want to leave like this.)
The BI upheld the deportation order against Ms. Fox issued in July, saying “no new matters raised that warrant the modification or reversal of the resolution.”
“She was authorized to conduct only missionary works, but had attended numerous political activities contrary to the limitations of her visa. She was likewise seen as undesirable for joining protests, which she also admitted in her affidavit,” BI spokesperson Dana Krizia Sandoval was quoted as saying in a statement by the bureau.
Maria Sol Taule, another lawyer of Ms. Fox, said: “There are no new arguments daw na nilatag namin sa aming (that we presented in the) MR. But then again, we should take note that the BI never faced squarely the issues that we raised. Wala silang sinabi tungkol sa missionary work ni Sister tungkol doon sa pagaakusa nila na political work ito at iba pa.” (They did not say anything about the missionary work of the Sister in their accusation that this constituted political work.)
Presidential spokesperson Harry L. Roque Jr. said that they are “according her all the remedies provided by law….”
He added: “I understand she has 30 days or so to appeal again to the DoJ. So binibigay po natin sa kaniya iyan at pagkatapos na ma-exhaust ang lahat ng remedies at kapag hindi nagbago and desisyon (So we are giving her that, and after exhausting all remedies and the decision will not change), she will be deported. Dura lex sed lex mensahe sa mga dayuhan, huwag po kayong mamulitika habang kayo po ay on temporary visa dito sa Pilipinas (Dura lex sed lex is the message to foreigners, do not politicize your activities while you are on temporary visa in the Philippines).”
Ms. Fox’s lawyers noted that her missionary visa will expire on Sept. 5. Mr. Pahilga said Ms. Fox already applied for the renewal of her missionary visa on Aug. 20.
Sought for comment, Justice Secretary Manardo I. Guevarra told reporters that Ms. Fox’s visa “may be downgraded to a tourist visa only, for a limited period.” But this, he said, is still subject to the outcome of her deportation case.

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