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Antique airport reopens commercial operations

THE CIVIL AVIATION Authority of the Philippines (CAAP) resumed commercial operations at the Antique Airport on Sunday, starting with the inaugural flight from Clark International Airport by Philippine Airlines (PAL).
In a statement yesterday, CAAP said the airport was upgraded by building a canopy for arriving passengers; extending the runway to 1.4 kilometers; repainting markers along the runways, ramp and stop-way; and cutting trees that used to block the flight path to the airport.
Aside from these developments, CAAP said it will further improve the gateway with the construction of passenger terminal building, administrative building, powerhouse, vertical path angle, staff house, perimeter and security fence, and new apron and taxiway.
“Situated at the province’s capital of San Jose de Buenavista, Antique Airport, also known as Evelio Javier Airport, is a principal class 2 airport and the only airport serving the province of Antique,” it said.
PAL said in a separate statement it will mount twice weekly flights from Clark to Antique every Tuesday and Sunday, which will leave Pampanga at 6 a.m. and arrive San Jose de Buenavista at 7:20 a.m. Return flights will then depart from San Jose de Buenavista at 7:40 a.m. and arrive at 9 a.m.
The flag carrier said it will use its brand new Bombardier Next Generation Q400 aircraft for the route.
“This new route empowers Antiqueños to fly straight to the heart of Central Luzon. More convenient air access helps keep the economy humming in Antique,” PAL Corporate Communications Vice-President Jose E. L. Perez de Tagle said in the statement.
PAL noted its new route to Antique is now its 20th destination coming from the Clark International Airport. — Denise A. Valdez

McDonald’s to curb antibiotic use in its beef supply

MCDONALD’S Corp said on Tuesday it plans to reduce the use of antibiotics in its global beef supply, fueling projections that other restaurants will follow suit.
The move by the world’s biggest fast-food chain addresses concerns that the overuse of antibiotics vital to fighting human infections in farm animals may diminish the drugs’ effectiveness in people.
McDonald’s becomes the biggest beef buyer to tackle the issue in cattle, potentially creating a new standard for livestock producers and threatening sales by drug companies such as Merck & Co and Elanco Animal Health.
“McDonald’s iconic position and the fact that they’re the largest single global purchaser of beef make it hugely important,” said David Wallinga, a senior health adviser for the environmental group Natural Resources Defense Council.
McDonald’s said it will measure the use of antibiotics in its 10 biggest markets, including the United States, and set targets to curb their use by the end of 2020. The markets cover 85 percent of the company’s global beef supply chain.
Under the McDonald’s policy, medically important antibiotics cannot be used to routinely prevent disease in food animals in the supply chain.
The company does not expect the policy to raise hamburger prices, although franchisees set their own menu prices, spokeswoman Lauren Altmin said.
Franchisees operate about 90 percent of McDonald’s restaurants. — Reuters

San Miguel Corp. (SMC)

INVESTORS UNLOADED shares in San Miguel Corp. (SMC) last week after a court ruling ordering the return of assets acquired by several firms through the coconut levy fund, which include shares of the diversified conglomerate.
SMC was the ninth most traded stock in terms of value turnover last week, with around 6.82 million shares worth P1.022 billion exchanging hands from Dec. 10-14, data from the Philippine Stock Exchange showed.
The share price of SMC closed at P142 apiece on Friday, down by 12.5% from Dec. 7’s P162.20 finish. Year-to-date, it was up by 23.7%.
“I think what made SMC one of the most traded stocks [last] week is the news about Sandiganbayan’s move to junk all appeals against the turnover of at least P75 billion in coco levy fund to the government,” said Jervin S. de Celis, equity trader at Timson Securities, Inc. (Timson Trade).
“[T]his has made investors worried, making the stock price plunge from P175 in Dec. 4 to an intraday low of P139 [on Dec. 14]. Foreigners have sold around P770 million worth of shares within this month,” he added.
Appeals to stop the transfer of the Coconut Industry Investment Fund (CIIF) worth P75 billion to the government were denied by the anti-graft court’s second division last Dec. 3.
These motions for reconsideration were filed separately by the United Coconut Planters Life Assurance Corp. (Cocolife), the United Coconut Planters Bank (UCPB) as well as by the six companies comprising the CIIF Oil Mills Group (CIIF OMG) and 14 CIIF holding companies.
The Court also ordered the transfer of 753.8 million preferred shares of SMC that were currently being held by the Bureau of Treasury, along with the income of the CIIF companies and holding firms, “to be used only for the benefit of all coconut farmers and for the development of the coconut industry,” according to the resolution.
CIIF, or the coco levy fund, was a tax imposed on coconut farmers during the administration of then-President Ferdinand E. Marcos. However, the coco levy fund was also used for the expansion of a few chosen companies.
Meanwhile, the House of Representatives’ final approval of tax measures aimed at increasing excise tax on alcohol products had some effect on SMC’s activity last week.
“I believe the investors might be digesting its short-term impact for consumption and might soften the volume for SMC particularly the San Miguel Food and Beverage group and Petron Corp.,” Cristopher Adrian T. San Pedro, certified securities representative at Unicapital Securities, Inc. (Unicap) said.
OUTLOOK
“For 2019, earnings per share is projected to grow by 12.13% and if three of the biggest revenue segments of the company continue to grow, SMC’s [consolidated] revenue may reach by as much as P1.005 trillion this year and P1.086 trillion by December next year,” Timson Trade’s Mr. de Celis said.
“A bounce play may start around the P130-135 range next week as this was the former support of the stock before the company was cleared by the BIR (Bureau of Internal Revenue) to consolidate its food and beverage businesses as well as the announcement of their share sale,” he added.
Mr. de Celis said resistance is seen at P170-180.
Unicap’s Mr. San Pedro, on the other hand, pegged the stock’s support levels at P133-135 and resistance at P148-152.9 for the coming weeks.
In the first nine months, SMC posted P761.173 billion in unaudited consolidated sales, up 27.5% from the same period a year ago. Its net income attributable to equity holders of the parent company dipped 4.9% to P19.859 billion. — M.M.M. Ramos

LCS Group marks fintech foray with cryptocurrency

A CRYPTOCURRENCY owned by Luis “Chavit” Singson’s LCS Group of Companies is set to be launched early next year as part of efforts to push more Filipinos to transact and pay through digital means.
Dubbed as Gold Chavit Coin (GCC), the virtual currency set to be launched next year marks the company’s foray into the financial technology industry.
In a statement yesterday, LCS said it will list GCC in local cryptocurrency exchanges where it can be traded using fiat money or other virtual currencies.
“Many Filipinos still have no access to a bank account, which prevents them from saving for their future and participating in basic financial transactions such as simple payments,” Mr. Singson was quoted as saying in the statement. “GCC aims to change all that by offering [an] ubiquitous currency that they can use for nearly all types of transactions, both in the country and abroad.”
GCC will be based on ERC-20 standards used in the Etherium blockchain network.
Cryptocurrencies such as Bitcoin, Etherium and Ripple are virtual currencies not regulated by any state or central bank. They rely on cryptography to secure and verify transactions as well as control the creation of more units.
Cryptocurrencies are based on distributed ledgers called blockchain, which involves a large network of entities where data is stored in “blocks.” The storage units are continuously updated and being secured using cryptography, making data management and data-driven processes decentralized, tamper-proof and more transparent.
Virtual currencies can also be used to pay for goods through internet, and can be treated as investments given their fluctuating valuations.
Mr. Singson said a mobile application is being developed alongside GCC for bill payments and online and in-store purchases with affiliate retailers and banks, beginning with transactions among LCS Group of Companies.
“We plan to leverage the entire LCS network, in addition to partnerships with other vendors and firms, to drive mass adoption, which in turn will increase GCC’s market value,” Mr. Singson added.
The mobile application is being developed with Billion System Corp., the Japanese fintech company behind the PayB payment app.
“Blockchain in the Philippines remains in its infancy, but it has tremendous disruptive potential that can help not only individuals, but also the economy as a whole by further expanding e-commerce access in the country,” Mr. Singson added. — K.A.N. Vidal

Shares seen sideways ahead of Christmas break

By Arra B. Francia
Reporter
LOCAL SHARES may trade sideways in the week ahead amid a lack of leads and as investors go on break for the Christmas holidays.
The 30-company Philippine Stock Exchange index (PSEi) eked out a gain of 0.01% or 1.45 points to close at 7,524.37 last Friday. On a weekly basis, the main index was up 0.85%.
The counters for holding firms and services lifted the market as they gained 1.93% and 1.33%, respectively, for the week. Turnover improved by 2.08% to P8.88 billion last week, while foreign investors were net buyers at P796 million, marking the third straight week of foreign inflows.
Eagle Equities, Inc. Research Head Christopher John Mangun noted that the PSEi’s breakthrough to the 7,500 level was “exactly what the market needed,” citing the target for the index to break above its 7,630 resistance for a possible close above 7,700 this year.
“However, this will all come down to whether investors will continue to trade and not go on early vacation. If turnover value is low for the week then we may see it trade sideways and stay within the range at 7,400-7,600,” Mr. Mangun said in a weekly market note.
“But if foreigners continue to be net buyers, there is a strong possibility that we end the year closer to 8,000 rather than 7,500.”
For online brokerage 2TradeAsia.com, the PSEi could see volatility in the coming days since fund managers will “retool their portfolio.”
“No new leads might be in store at the fiscal front, with Congress set to adjourn for their holiday break this week. However, more corporate actions ahead of 2019 prospects would be at the forefront, specifically on debt re-strategies and inventory loading,” 2TradeAsia.com said in a weekly market note.
It added that some companies may close the year with prospects for mergers and acquisitions, particularly those with plans for backdoor listing.
On the international front, investors could look at the US Federal Reserve’s policy-setting Federal Open Market Committee’s (FOMC) policy meeting on Dec. 18-19. The committee’s decision could signal whether the global rate hike cycle will soon come to an end.
“Officials might give leeway to resolve the ongoing trade relations between US-China, which could significantly influence both nations’ economies. If a status quo is upheld by US FOMC, that would lead to a more dovish Fed and improve lending liquidity, at least in first quarter 2019,” 2TradeAsia.com explained.
The country’s own central bank also had its last policy meeting last week, where it chose to maintain policy rates on signs that inflation has already peaked. Benchmark interest rates remain at a nine-year high of 4.25-5.25%.
Eagle Equities’s Mr. Mangun placed the market’s resistance at 7,630 to 7,700, while support is at 7,350 to 7,500.

US confirms China soybean sale, but size of orders smaller than expected

CHICAGO — China’s meager first purchase of U.S. soybeans since its trade war with the United States began in July disappointed farmers, grain traders and a U.S. government official hoping for larger sales to lift slumping prices and absorb a huge surplus across the U.S. farm belt, they said on Thursday.
The U.S. Department of Agriculture (USDA) announced private sales of 1.13 million tonnes of U.S. soybeans to China, confirming sales Reuters reported a day earlier.
But additional buying by the world’s top soybean importer has yet to materialize, traders said, even after U.S. President Donald Trump told Reuters in an interview on Tuesday that China is buying a “tremendous amount” of U.S. soybeans.
“Having a million, million-and-a-half tonnes is great, it’s wonderful, it’s a great step,” USDA Deputy Secretary Steve Censky said at an Iowa Soybean Association annual meeting on Thursday. “But there needs to be a lot more as well, especially if you consider it in a normal, typical year, we’ll be selling 30 to 35 million metric tonnes to China.”
Soybean prices fell as grain traders had hoped for more deals, eyeing a massive U.S. soybean surplus in storage and what is expected to be a record-large harvest from the world’s biggest soybean exporter Brazil just weeks away.
The sales came after Trump and China’s President Xi Jinping agreed to a 90-day detente in their tit-for-tat tariff war to negotiate a trade deal after meeting at the Group of 20 summit in Buenos Aires.
The purchases, which traders said were made by state-owned companies in China, were viewed as the most concrete evidence yet that Beijing is making good on pledges the U.S. government said Xi made when the two leaders met on Dec. 1 and agreed to a 90-day detente to negotiate a trade deal.
While it was the ninth largest single-day U.S. soybean sale on record, it amounted to just 3.5 percent of China’s U.S. soy purchases last year and 2 percent of U.S. shipments to all foreign buyers.
“If further activity and amounts aren’t confirmed, the trade could soon be ready to settle in for a long, cold, fundamentally bearish winter,” said Matt Zeller, market intelligence analyst with INTL FCStone.
TRADE AID DELAYED
The actively traded Chicago Board of Trade March soybean contract SH9 fell more than 1 percent on Thursday to the lowest in a week, in the steepest drop in 2-1/2 weeks.
The 25 percent tariff Beijing imposed on U.S. soy shipments in July in retaliation for American duties on Chinese goods remains in place.
China last year bought about 60 percent of U.S. soybean exports in deals valued at more than $12 billion. The purchases confirmed on Thursday were less than $500 million.
“There was talk we’d see like 5 million tonnes over the next few days, so we will need some follow-through buying from China, especially outside of Sino,” one U.S. trader said, referring to China’s state-run buyer Sinograin.
U.S. exports to China dropped to 8.2 million tonnes in the first 10 months of the year, with the vast majority of that shipped before the tariffs took effect in July. That was down from 21.4 million in the same 10-month period last year, according to government figures.
With exports to China drying up, U.S. soybean prices have traded around their lowest levels in a decade in recent months.
The White House this week delayed additional payments from a promised $12 billion aid package for farmers stung by the trade war because it expected Beijing to resume buying U.S. soybeans.
The U.S. Soybean Association said in a Thursday statement the sale announcement would not fix the “prolonged period of low prices soybean farmers have faced since the trade war began.”
Davie Stephens, the association’s president and a Kentucky grower, said “it is critically important that we see additional purchases and actual deliveries, and for USDA to make a payment on the second half of 2018 soybean production.” — Reuters

An unsatisfied customer starts his own spa

MASSAGE ENTHUSIAST Justin Xiao has tried various massage techniques during his stay in the Philippines. However, the various services left him frustrated.
To satisfy his unmet need, Mr. Xiao opened Breeze Oriental Spa and Massage in BGC, in Taguig city — 100 meters from Bonifacio High Street — which offers traditional Chinese oriental massage techniques.
“He is always in search for a good massage shop, but he gets frustrated that the services [he tried] did not give him the comfort for long,” Maideline A. Vego, operations manager of Breeze Oriental Spa and Massage told BusinessWorld during the spa’s launch on Dec. 4. “So, he came up with this concept [of a massage spa]. He wanted to give service to people which is not only short-term comfort.”
Chinese oriental massage treatments apply acupressure and focus on targeting one’s pressure points to relieve stress and pain.
The spa’s team of 20 therapists are led by four Chinese masters of oriental therapy. Signature treatments such as the Detoxify Oil Massage are designed to improve the lymphatic system. It is also recommended for pregnant women as it includes breast massage for lactation.
Other services which may be booked with master therapists include cupping therapy where warm cups are used to suction the back as a treatment for “blood statis”; back scraping using buffalo horn to remove dead skin; and a traditional pedicure which is said to improve blood circulation and includes a method where nails are trimmed with a traditional scalpel.
The treatments are done in air-conditioned private rooms equipped with reclining chairs.
This writer tried out the oriental foot massage which included soaking the feet in Chinese medicine. The treatment began with a different kind of shoulder massage since it was done by the therapist applying pressure on the shoulders with her forearms and which was quite painful at first.
The rest of treatment was relaxing and may eventually lead one to dose off midway. The treatment ended with the therapist serving either hot water or tea upon the guest’s preference.
“We encourage people to have the massage therapy in their daily lives to manage stress and fatigue and prevent the need for prescriptive medicine,” Ms. Vego said, adding that it is encouraged to have treatments at least once a month.
According to Ms. Vego, other branches are targeted to open in Makati and Parañaque’s Entertainment City.
Breeze Oriental Spa is located at Ore Central, 9th Ave. corner 31st St., BGC, Taguig. For reservations, call 0917-867-6699. Prices of treatments start at P450. The spa is open Monday to Friday, noon to 1 a.m., and on Saturdays and Sundays from 11 a.m. to 2 a.m. — Michelle Anne P. Soliman

How PSEi member stocks performed — December 16, 2018

Here’s a quick glance at how PSEi stocks fared on Friday, December 14, 2018.
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Philippine Stock Exchange’s most active stocks by value turnover — December 14, 2018
pseiactive121418

Financial digitization is the hope of the future

By Sergey Sedov
THERE are several distinct features in the financial landscape of the Philippines. Their correlation determines the medium-term forecast of the development of the financial market considering the involvement of fintech and alternative lending. According to Sergey Sedov, founder of the international financial holding AS Robocash Group which is known as Robocash Finance Corp. in the Philippines, foreign experience and capital can help to fill the gaps to facilitate a further dynamic growth.
FOUR SIDES OF THE ISLAND LANDSCAPE
To start with, the Philippines has one of the largest populations in the world. At the same time, the country of 7,000 islands can hardly be called a concrete jungle. Only Manila, with its suburbs, and Davao are the true megalopolises and there are no more than 30 cities with a population of over 300,000. The vast majority of 106 million Filipinos live in numerous relatively small settlements across the country and about 53% of the population lives in rural areas. The latter figure has been stable for about 30 years and it is higher than the total for Asia (50%) and Southeastern Asia (51%). The United Nations predicted that even by 2050, the share of rural residents in the Philippines would account for 38%, which will be above the projected average for Asia. In other words, the relative dispersion of the population will remain in the Philippines in the long term.
Secondly, the Philippines is a country with a huge but still not fully realized potential when it comes to a decent standard of living. The country has an annually growing income per capita, however the dynamic is quite slow — 1.4% in 2009-2015 (in contrast, Malaysia grew by 5.9% in 2011-2015 annually and Thailand had 3% per year in 2010-2015). Despite the longstanding efforts of several presidents, more than 21% of citizens lived below the poverty line as of 2015. Last year, the country’s gross domestic product (GDP) per capita ranked 118th. Moreover, this year’s inflation and growing trade deficit further add difficulties to the national economy.
The mentioned points, however, do not hinder the country’s gradual and steady progress. For example, the Philippines’ poverty rate was higher in the recent past (26.3% in 2009). Next, the nominal GDP has been growing by an impressive 7% per year, and it is projected to expand at this rate until 2050. In 2017, the country was the 34th largest economy by nominal GDP in the world and third among ASEAN countries in — there is obviously room for improvement. To realize the potential improvement in the standard of living for each Filipino, there is required a qualitative catalyst.
This is where my third point comes in: bank lending has traditionally been such a catalyst throughout the world by allowing borrowers to improve their quality of living here and now, as well as secure investments for a decent future. The latter is highly relevant for the Philippines due to a highly developed sector of micro, small and medium enterprises (MSMEs). In 2016, 99.6% of all registered local companies belonged to this category, which was higher than the overall score of 96% in the Asia Pacific (APAC).
The increased need for credit funds is relevant for different levels. According to a survey conducted by the Bangko Sentral ng Pilipinas, in 2017, funds were borrowed to start or develop a business (53% of respondents), to cover the gap in a family budget in a weekly or monthly perspective (45%) or pay for unexpected needs (34%). As the World Bank stated in Findex, 58.6% of Filipinos borrowed money in 2017 while the same score for APAC comprised 46.8%.
According to the central bank, 2.1% of adult Filipinos had a valid loan in 2015, and only 0.6% in 2017. The same report also stated the main factors that hinder clients from applying for a loan: requirements of banks for documents (53%), lack of collateral (44%) or absence of necessary identity card (34%), and insufficient level of salary (28%).
Geographic fragmentation is another serious hurdle as it prevents banks from establishing a widespread network of branches: a third of towns and communities, and two-thirds of the population remains underserved by banks.
At the same time, the country has high Internet penetration estimated this year at 63%, which is about 10% higher than the global rate. Mobile connectivity, meanwhile, is 10% lower than the global rate but is growing steadily. Moreover, the Philippines ranks 13th in the number of mobile cellular telephone subscribers.
Such a solid digital base stands in contrast to the fact that citizens of the country are still not prepared for the effective use of a convenient and accessible solution to solve financial issues. According to the Global Findex, only 25.1% of Filipinos made or received digital payments in 2017 (as compared to APAC’s 58%) and only 7% used a mobile phone or the Internet to access a financial account (way below APAC’s 31%).
APPROACHING THE EVIDENCE
The mentioned points — geographical dispersion with the widely spread Internet and mobile communications and the insufficient living standards with lacking bank lending — stipulate a logical scenario for the further development of the national financial sector.
“The future of the financial system lies in going digital and using it to achieve financial inclusion. We are too fragmented geographically to reach out using traditional means.
Digital technology provides such a chance,” — this is how the Governor of the Central Bank of the Philippines Nestor A. Espenilla, Jr. sees the situation.
Considering the typical and inflexible traditional banking globally, it is not surprising that various alternative lending sources are rapidly growing in the country with a prevailing number of online services. They comprise microlending, which is the only “official” financial sector demonstrating a serious increase from 4.7% in 2015 to 7.6% in 2017, then peer-to-peer (p2p) lending with a steadily growing number of websites and volumes, and even initiatives in cryptocurrency. Undoubtedly, the development pace of the financial digitization will only strengthen over time, especially given the liberal state financial policy.
In our opinion, both the expansion of local start-ups and the appearance of experienced foreign fintech players having sufficient investment and technological potential are able to accelerate the process. The latter is important for the following reasons:

• Foreign capital provides taxes, new jobs, and investment injections that decrease the load on the national economy and contribute to the rapid growth of its indicators.

• Business models have already been tested, usually in more than one country, and optimized in terms of data security, operational efficiency and convenience for customers. They usually consider the pipeline processing of big data, the use of deep learning, artificial intelligence and other advanced technologies that are not fully accessible to new entrants on the market. This simultaneously helps the country to integrate adequately into the mainstream of global digital realities.

• Foreign investors allocating funds to the local market are mostly interested in a strategic long-term presence. Thus, the main principle of customer service is not to press out all resources but preserve long-lasting respectful relationships with borrowers. At the same time, the status of foreigners demands from companies to provide excellent services and preserve an established business reputation.

• The advantages of an international experience in fintech are effective, scalable and high-quality scoring technologies. Operating on the international scale with a focus on the strategic presence is possible when serving a creditworthy audience. Otherwise, such a business model is not viable leading to wasted time and investments. This approach requires assessment of clients and provides an adequate debt burden of the population.

Thus, taking into account the national specifics, we think that fintech solutions (mainly remote ones) are able to unite the Filipino society in solving the issue of raising living standards in the immediate future. In this sense, inflation or the key interest rate increased by the Central Bank facilitates the expansion of alternative lending. The high degree of effective adaptation to global economic and technological processes that is inherent to the Philippines promotes this scenario. The rapid transformation of the country into a world leader by the number of outsourcing call centers is a bright example.
The main economic risk is the growth of the debt load on the population that should not be ignored. However, the expansion of fair competition on a market will contribute to the steady improvement of lending terms. The focus of experienced players on a financially reliable audience supported with initiatives designed to improve the financial literacy of the population can minimize the risk.
 
Sergey Sedov is chief executive officer of Robocash Group.

Carpenter versus plunderer

“Lo! unto us a child is born!” Not just any child but a child of a carpenter who would follow in his father’s footsteps (Mark 6:3). Carpentry creates value as it transforms plain wood into a beautiful cabinet. Honest hard work is carpentry’s signature. It is the exact opposite of plunder.
“A date that will live in infamy!” was Franklin Delano Roosevelt’s memorable description of the day, Dec. 7, 1941, when the Japanese Imperial Navy mounted a devastating sneak attack on the US naval forces at Pearl Harbor. The same phrase applies to Dec. 7, 2018, when the Sandiganbayan exonerated Ramon “Bong” Revilla Jr. of plunder in the pork barrel scam. And to August 17, 2015, when the Supreme Court allowed Juan Ponce Enrile to post bail for the non-bailable crime of plunder on the pretext of ill health, which seemed, however, to drain away the moment he stepped out of his confinement. These are sneak attacks on institutions of justice.
Within an hour of the exoneration of Revilla, a panel for Pilipinas Conference 2018 organized by the Stratbase Albert Del Rosario Institute (ADRI) was discussing the near-term prospect of the Philippine economy under the Duterte administration. The link between institutions and economic outcomes was raised in the Q&A. As an example of a broken institution, I cited with a fit not unlike rage the Sandiganbayan and the just promulgated exoneration of Revilla. After blurting “I cry for you, Pilipinas!” I doubled down with a hardly coherent attempt to pin economic failures on broken institutions via Adam Smith (The Wealth of Nations) and Acemoglu and Robinson (Why Nations Fail). Not wrong, mind you; just muddled. Unlike my betters whose frontal cortex sharpens in the face of a furious amygdala, my own frontal cortex did not linger. The issue deserves better.
Why do broken institutions lead to dismal economic outcomes? Economic development is, at its starkest, the growing of the economic pie. When the economic pie grows, everyone’s share of the pie grows — if sometimes, unevenly. But growing the pie requires honest hard work, carpentry as it were. The polity has to put its collective shoulder to the grindstone. Honest hard work anchors value creation and economic progress.
But honest hard work is distasteful to some. It is easier to just hoodwink, steal, or plunder one’s way to a bigger share of the economic pie. Isn’t it more tempting to sit by the pool sipping champagne made from the sweat of others? “Honest hard work” and “steal and plunder” are two fiercely conflicting ideas. Which one of them triumphs depends upon institutions, especially the institution of justice.
If institutions reward honest hard work, more and more people will heed the call to carpentry. And if so, the economic pie will grow. If institutions reward plunder, the ranks of plunderers will swell. And the economic pie heads south. This is the Murphy, Shleifer, and Vishny (1991) rent-seeking paradigm: broken institutions force talent to migrate away from honest hard work to plunder as a way of life and as a consequence the economic pie languishes or even shrinks. Its famous incarnation is the “Magee curve,” after Stephen P. Magee, the professor of finance and economics who argued that the greater the number of lawyers per thousand population, the slower is economic growth.
The Sandiganbayan exonerated Revilla of the crime of plunder in the face of the guilty finding on Janet Lim-Napoles and on trusted Revilla subordinate Richard Cambe. In effect, it formulated a new wrinkle in jurisprudence: “sine flagrante delicto non” — without a videotape of the handover, Revilla was just a naive boss of corrupt underlings. Revilla was blameless even if a trusted underling perpetrated a crime using the senator’s office as springboard. Adolf Hitler would have passed the test of sine flagrante delicto non since nobody saw Adolf pull down the lever of a gas chamber. The Mafia bosses in the US for so long evaded accountability for crimes of underlings by the same excuse. It was the Racketeer Influenced and Corrupt Organizations (RICO) Act of 1970 that plugged that easy pass for Mafia bosses. Under RICO, to be liable one no longer has to be caught flagrante delicto; one has just to head a criminal outfit. As it stands, can anybody blame co-accused Enrile, free on bail due to another legal innovation — this time by no less than the Supreme Court itself (“old age and/or ill-health” theory) — if he is beaming over a massive gift? Can you blame “Jinggoy” Estrada if he is popping champagne bottles? They know the new legal theory applies to them and exoneration is in the mail.
Indeed plunder by the rich and famous not only goes unpunished by the courts, it is also rewarded by the political system. They can now run for office and win on the wings of a powerful subliminal message: “Vote for me; I’m untouchable; I have ‘anting-anting.’” Ferdinand Marcos running on abilidad won a congressional seat after beating the Julio Nalundasan murder rap.
The institution of justice is the mother of all institutions of the land. And in the Philippines, it is broken. “Due process Philippine style” means that common sense is trumped by the littlest of technicalities. The Roman legal principle, viz., de minimis non curat lex (The law is not about little things) is stood on its head. The accused rich and powerful can afford many de minimis options: pay off, intimidate or neutralize witnesses, procure technicalities from judges (“Best judges money can buy”), delay proceedings forever (the Ampatuan massacre), wangle a legal innovation from the courts (the Enrile ill-health and old age), and failing everything else, finagle an absolute pardon from the chief executive of the land (as was Estrada’s by Arroyo). No wonder the poor ache for a salvific autocrat.
When institutions of justice and politics reward plunder, the tribe of the plunderers will increase and rule the land; the tribe of honest hard work will, as the intro to a Sinatra song goes, “… fold its tent and silently slink away.”* And economic development has little chance.
But despair need not be our lot this Advent. Rejection of plunder was the message of the Carpenter. He showed the way when he, now in the fullness of age, “entered the temple courts and drove out all who were buying and selling there…” saying, “But ye have made it a den of thieves!” (Matthew 21:12). If true to the message, we resist the allure of plunder, carpenters everywhere may still inherit the land.
*Frank Sinatra’s “Moonlight in Vermont”
 
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.

A broken justice system

The last of the triad of Senators accused of receiving hundreds of millions in kickbacks from the pork barrel scam walked away a free man on Dec. 7. Former Senator Ramon “Bong” Revilla, Jr. was acquitted for plunder and was released by the Sandiganbayan from Camp Crame.
Revilla’s acquittal follows the release of Jinggoy Estrada and Juan Ponce Enrile’s from police custody, both of whom were given back their freedoms after posting bail for a crime that is supposedly non-bailable.
It will be recalled that back in July 2016, Gloria Macapagal-Arroyo was also released from hospital arrest after being cleared of plunder by the Supreme Court.
It is now a clean sweep! The four big fish that were tried and convicted for graft and corruption are back walking among us. They are also back in the political fray — GMA as Speaker of the House and the three stooges as senatorial candidates.
Meanwhile, the woman who championed the drive to put these big fish behind bars, former Justice Secretary and Senator Leila de Lima is herself languishing in Camp Crame. The irony could not be more succinct.
REVILLA’S ACQUITTAL
At the heart of Revilla’s victory at the Sandiganbayan was former state witness Marina Sula, who changed her story and became a friendly witness for Revilla.
Sula testified that she did not personally see Revilla receiving money from Janet Lim-Napoles. She further stated that it was Benhur Luy, the other whistleblower and state witness, who supposedly forged the signature of Revilla for the release of pork barrel funds to bogus NGOs. She also said that it was former Prosecutor, Director Joefferson Toribio, who coached her on what to say when she first testified against Revilla back in 2013.
Records showed that Revilla received the largest kickbacks from Napoles amounting to P224.5 million, later recomputed down to P124.5 million.
Sula’s testimony is what convinced Justices Geraldine Econg, Edgardo Caldona and Georgina Hidalgo to vote in favor of Revilla’s acquittal. Respected ethics professor and the Sandiganbayan’s moral compass, Justice Efren de la Cruz, dissented.
I am not a lawyer, so my opinions are merely based on practical sense. It seems the three judges made a farce of the case and sold us out. These are my thoughts:
Granted, Revilla is not the sharpest pencil in the box, I don’t think he is imprudent enough to sign the endorsement letters himself, let alone collect cold cash from Napoles. The fact that Sula never saw him in the act doesn’t mean that he wasn’t aware of the scam and was not a party to it.
Also, why was Revilla’s right-hand man, Richard Cambe, found guilty while his boss goes scot free for the same crime? Are we supposed to believe that Cambe acted on his own accord without Revilla’s knowledge?
Further, according to a report of the Anti-Money Laundering Council submitted to the Office of the Ombudsman, the bank deposits and investments made by Revilla, his wife and their children amounted to P87,626,587.63 from April 6, 2006, to April 28, 2010. This was within the same period indicated on the ledger of Benhur Luy that Revilla received his share of commissions and rebates.
There are also glaring disparities on Revilla’s Statement of Assets and Liabilities (SALN) during the heyday of the Priority Development Assistance Fund (PDAF) scam.
For instance, in 2008 and 2009, Revilla declared a total of P6.4 million and P6.5 million in cash and deposits, respectively, on his SALN. But the total inflows to his accounts for those years amounted to P16.1 million and P24.1 million, respectively. Why the disparity? Where did the extra cash come from?
Making matters more dubious is that the realty firm controlled by Revilla’s wife, Nature Concepts Development and Realty Corp., received P27.745 million in deposits during the period. The realty firm was not operating at this time. Again, where did the money come from?
These questions seem to have been glossed over by the Sandiganbayan and left unanswered. This is why I find the Sandiganbayan’s decision suspect. The Sandiganbayan is taking the Filipino people for fools!
THE JUSTICE SYSTEM
The turn of events says a lot about the justice system.
First, it tells us that the Judiciary, including the Sandiganbayan and the Supreme Court, is not truly an independent branch of government but one swayed by the biases and influences of the Executive branch and even lower ranking government officials. The courts decide according to the preference of Malacañang, whether it be under a cape of yellow or red. We have seen it happen before — judges bend the rules, make exceptions and interpret the law in a manner that suits the agenda of the person they are trying to please.
A swayable (or negotiable) judiciary is a public threat. By being the obedient attack or defense dog of certain powerful politicians, the judiciary, in effect, ceases to be the mechanism for checks and balances against the executive and legislative branches. It is no longer an equal branch of government but one that is beneath and beholden to the two.
To Juan de la Cruz, it means that he cannot be absolutely certain of a fair trial should his rights be violated by Malacañang or any member of the legislature. The judiciary’s biased ways undermine the people’s rights to blind justice. It ceases to be become the refuge of last resort of the people.
Secondly, it tells us that the justice system treats those who are aligned with the administration with kid gloves while those in the opposition are made to face the full wrath of the law. The law has become selective, depending on one’s political persuasion.
It tells people currently holding government positions that they can escape the consequences of graft so long as they are in the right political party and have cushy relations with the people who matter.
By finding loopholes for convicted plunderers, the Sandiganbayan and the Supreme Court have opened Pandora’s box. They have practically declared an open-season for graft and corruption for those associated with this administration. If the three senators can walk away as free men after being convicted, why not other plunderers?
In one fell swoop, the judiciary negated the tenets of honest public governance that the past administration worked so hard to instill among government workers. It put us back to the dark age when corruption and abuse in government was the rule, not the exception.
We don’t have to look far to see how abuse among government officials has become the new normal. In our streets, government officials, down to some bloody congressman’s aides, bamboozle regular citizens out of their way to allow them unobstructed passage. They bully us with sirens and police patrol escorts as if their journeys are more important than ours. Shame is gone and entitlement is back in full bloom.
Third, it tells the rest of the world that we are losing our fight against corruption and that our law enforcement institutions are the problem, not the solution. Acquitting Arroyo and allowing Enrile to post bail was viewed as one step forward and two steps back in our fight against corruption. This negative perception is reflected in our global competitiveness rankings.
The World Economic Forum has ranked the Philippines a lowly 95th place (out of 140 nations) in terms of corruption; 123rd in term of reliability of police and law enforcement agencies; 105th in terms of the independence of the judiciary; 100th in terms of efficiency of our legal framework; and 121st in terms of conflict of interest regulations. Transparency International’s Corruption Perception Index placed the Philippines as the 111th most corrupt country in the world out of 180 nations evaluated. It’s quite pathetic.
With the acquittal of Revilla and the release of Estrada on bail this year, I am certain our global rankings will take a new plunge next year.
The Philippines presently stands at 56th place in terms of global competitiveness. Looking at the various components of our assessment, it is clear that our weak institutions, principally our justice system, are dragging us down. This is because many judges are abettors of corruption and crime, not champions against it.
Until they are obliterated, the nation will never be free from the cancer of corruption. Our justice system is broken; it is the weakest link in our nation.
 
Andrew J. Masigan is an economist.

For whom the bells toll

When after 117 years, the three Balangiga bells taken as war booty by the US Army in 1901 were returned to Samar Island, there was victorious jubilation on the Philippine side. In the crack of the Balangiga clash in the midst of the Philippine American War, bolo-wielding Filipino insurgents won over the superiorly equipped American infantry. It is said that in rabid retaliation for the 48 of 74 men of Company C who were ambushed and killed while at breakfast, the US reportedly massacred more than 2,500 of the village people. Historians cannot agree on the numbers. But of course history is written by the victors and rewritten by the losers if given a chance.
It was Fr. Horacio de la Costa of the Department of History at the Ateneo de Manila University who first wrote a letter in November 1957, asking the Thirteenth Air Force at Clark Air Force Base “to return the Balangiga bells because these belonged to the Franciscan community who ran the parish” (McKinnon Jr., Daniel W. “Veterans of Foreign Wars,” Wyoming: 2008, cited in Wikipedia). Fr. De la Costa, the historian, did not judge the moral winner in the Battle of Balangiga. He called down instead the property theft — land and improvements whereupon a parish church and appurtenant structures are titled to the corporation sole that is the bishopric — while alluding to moral turpitude in the desecration of the sacramental that the bells were. Bells, in the Catholic tradition, are the Godly call to worship.
How ironically humbling that the Catholic Church should be “kept whole” by the return of the Balangiga bells, urged as it was seemingly by the rough rhetoric of a man who once publicly called God “stupid.” Why, when all presidents since Fidel Ramos asked for the return of those bells? “Give us back those Balangiga bells. They are ours. They belong to the Philippines. They are part of our national heritage,” President Rodrigo Duterte said in his second State of the Nation Address (SONA) in 2017 (ABS-CBN News, Nov. 15, 2018). US Ambassador to the Philippines Sung Y. Kim was physically in Duterte’s audience at that time. Amb. Kim, American-born of South Korean ancestry, worked on the return of the three Balangiga bells to Samar. The two big bells were at the former base of the 11th Infantry Regiment (that fought in the Philippine-American War), at F. E. Warren Air Force Base in Cheyenne, Wyoming. The third and smallest bell, the one that pealed the deadly call to action to the Filipino attackers of the US barracks at Balangiga, was at the 9th Infantry Regiment at Camp Red Cloud, their base in South Korea.
When Amb. Kim made his speech for the turnover of the bells, he made no apologies, no explanations for the confiscation of the bells by the US. He simply said, “In World War II and in Korea, our soldiers fought, bled, died, and sacrificed side by side. Together they made possible the peace and prosperity we enjoy today… Our relationship has withstood the tests of history and flourishes today. And every day our relationship is further strengthened by our unbreakable alliance, robust economic partnership, and deep people-to-people ties” (usembassy.gov, Dec 11, 2018).
Somehow, Amb. Kim’s careful diplomatic allusions to “our relationship” cannot but call back Pres. Duterte’s oft-repeated open disdain for the US (specially for past US President Barack Obama and for immediate-past Ambassador Philip Goldberg). Duterte’s rejection has progressively been made more painful to the US, juxtaposed to his open and gushy declaration of love for Chinese President Xi Jinping and all things Chinese. In the current heightened US-China global trade and political war, the suddenly rushed return of the Balangiga bells might plaintively ring: but we two — the Philippines and the US — we are friends, are we not?
President Duterte attended the handover of the bells in Balangiga, Eastern Samar, but he did not attend the concelebrated Holy Mass attended by thousands. He said, “I do not want to hear the mass. I have heard all the masses in the world” (The Philippine Star, Dec. 14, 2018). Perhaps to the nation’s political leader, the Balangiga bells had no “sacramental value” as the local parish priest devoutly explained on national news, nor the religious symbolism and affirmation that tearfully dawned on the 85% Christian believers that “(our) Faith has saved us” at the Balangiga battles as in every situation that call the Faithful to prayer.
And insistently, triumphantly, the bells will toll again at Balangiga. But for whom, and for what will the bells toll?
The once-silenced Balangiga bells must peal and boom even more urgently now than in the chilling wars of betrayal and treachery for dominance and power in the early 1900s. The jubilation for national pride redeemed by the return of the symbolic bells is confused by the sickening feeling in the pit that the horned specter of dominance and greed still hovers, in the appearance of the Filipino’s own skin and mien. For colonization and dominance, and its treachery and betrayals can also be by our own leaders.
So many issues in our country that overwhelm us at yearend: is there really democracy guided by the rule of law, in the insuppressible and persistent “rumors” of extrajudicial killings and transgressions of human rights, protested and called down locally and by foreign observers?
Have we not observed and experienced first-hand how the constitution and the laws have been turned upside down in shockingly unorthodox little-known legal trickeries like the quo warranto to remove a Chief Justice; and the revocation of amnesty granted to one particular ex-putschist senator and present critic of the administration? Why are other politicians accused of plunder and other high crimes pardoned? What about the fate of another senator languishing in jail for alleged drug involvement? And are we not chilled by the continuous extension of martial law in Mindanao, justified by an Armed Forces who should have been doing its job as it is supposed to be competently doing?
Are we not aghast and terrified at the blatant dishonesty and corruption that are dismissed lightly for “friends” of those in power versus the persecution by evidently trumped-up charges for the vulnerable non-friends or those “unfriended” for lost utility? And we are overwhelmed in anxiety for a 2019 budget not yet approved, discovering in painful bits and pieces the self-serving “insertions” and allocations of “savings” in hidden pork barrel that was already deemed unconstitutional in the previous administration. Players in the controlling “team” seem to be fighting each other in sibling rivalry for opportunistic control of the resources of government — nay, the resources of the people.
But the unkindest cut of all by the “new colonizers” that we may call those who want to perpetuate themselves in economic and political power, is rushing the charter change for federalism to be transfused into our life veins. We will not be a free people anymore if the Hadean concepts are installed and institutionalized of unlimited terms for government positions, allowed political dynasties forever, and the divide-and-rule over federal regions controlled by a president practically for life, with a convenient vice-president of the president’s own party and personal subservience — among other self-serving and opportunistic insurances of control and impunity by those already in power.
The Balangiga bells must toll for freedom and democracy in the Philippines.
 
Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.
ahcylagan@yahoo.com

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