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Pagbilao project certified as ‘nationally significant’

ENERGY WORLD Corp. Ltd. (EWC) said its 650-megawatt (MW) power project in Pagbilao, Quezon was certified as an “energy project of national significance” by the Department of Energy (DoE).
Energy World is building the first liquefied natural gas (LNG) fired combined cycle gas turbine (CCGT) power station, which will be the anchor tenant of its Pagbilao LNG hub terminal.
“Confirmation that our project is of national significance shows the continued support from the Philippines Department of Energy at the highest level, and the project will now benefit from specific provisions set out in Executive Order (EO) 30, issued by President Rodrigo Roa Duterte to support important energy projects, which are deemed to help the development and security of the country, which were at risk of being delayed by excessive ‘red tape’ and to further enforce cooperation between various government agencies and franchise,” EWC told the Australian Securities Exchange on Nov. 28.
Under EO 30, energy projects of national significance will be allowed to go through a simplified regulatory permitting process.
EWC received the certificate, signed by Energy Secretary Alfonso G. Cusi, on Nov. 26.
The certification of national significance recognizes that the power plant will be the anchor off-taker of the LNG project, the company said.
EWC is developing the Philippines’ first LNG hub terminal, which consists of two full containment, onshore LNG tanks — each with a pumpable capacity of 130,000 cubic meters of LNG. It will also have a dedicated jetty and marine infrastructure to support LNG ships, as well as a regasification facility.
“We have always remained committed to bringing clean and affordable energy to the Philippines. This Certification of National significance from the DoE recognizes, in line with the concerns of President Duterte, that many important projects have been held up by issues which are beyond the developer’s control. We appreciate the continued support from the DoE while we work to bring this project to commercial operation,” EWC Chief Executive Officer and Managing Director Stewart Elliott was quoted as saying in the statement.
The DoE has been trying to encourage proponents of an LNG import terminal ahead of the expected depletion of the Malampaya gas-to-power project starting in 2024.
Natural gas, said to be the cleanest fossil fuel, is usually transported through a pipeline, but if the deposit is large and the market is overseas, the gas may be liquefied for ease of shipping and moved via specialized tankers. Imported LNG is then regasified or reverted to its former state in the country of destination.

BPI sees double-digit loan increase in 2019 as it boosts retail business

BANK OF THE Philippine Islands (BPI) expects double-digit loan growth next year amid improving economic conditions as it continues to expand its retail lending business.
In a media luncheon on Thursday, BPI President and Chief Executive Officer Cezar P. Consing said its loan growth for 2019 is expected to be “in the teens” given that the economy “continues to grow the same way it has been growing.”
“It may not be the same pace of the last four, five years, but it will still be a healthy growth,” Mr. Consing told reporters yesterday.
He added that the Ayala-led bank can now be “more optimistic” given that price increases should “begin to taper off.”
“I think…the combination of oil prices having come down and with the interventions done by the government on the food side, the inflationary pressures are probably less, so inflation should begin to taper off,” he said.
“And if inflation begins to taper off, the pressure to raise interest rates will subside a little bit and I think that it might be better for the economy as a whole.”
Inflation stood at 6.7% in October, matching the previous month’s print which was a nine-year high. Month-on-month inflation likewise eased to 0.3% from 0.9% posted in September.
The central bank has raised its policy rates by 175 bps after five straight hikes to quell inflation expectations as prices of basic goods and services surged beyond the 2-4% target for 2018.
As BPI is looking at booking “healthy” loan growth next year, Mr. Consing said the bank wants to continue expanding its consumer business to hit 35% of its total loan book.
To achieve this, the official said BPI should “grow [its] consumer loans faster than the corporate segment every year. So over time, the share of the corporate comes down.”
Currently, BPI’s retail loans make up 20% of its total lending portfolio, while the corporate segment is at 80%.
Earlier this month, the lender raised P25 billion via its peso-denominated bond offer, higher than the initial guidance of P5 billion and the P15 billion announced previously. Proceeds of the fundraising activity will be used to support its expansion plans and diversify funding sources.
The Ayala-led bank reported a P5.98-billion net profit in the third quarter on the back of the double-digit expansion of its net interest income.
BPI shares went up by 20 centavos or 0.21% to P94 apiece on Thursday. — Karl Angelo N. Vidal

PRC reviewing CPD Law rules to ease burden on professionals

THE Professional Regulation Comission (PRC) plans to reduce the requirements on licensed professionals in order to ease the burden of complying with the Continuing Professional Development (CPD) Law.
In an interview with BusinessWorld on Wednesday, PRC Commissioner Teofilo S. Pilando Jr. said: “Right now we’ll be reviewing to see where we can reduce the burden on the professional.”
Republic Act No. 10912 or the Continuing Professional Development Act of 2016 was enacted in 2016 and took effect in 2017, after the PRC released Resolution No. 1032, which are the law’s implementing rules and regulations (IRR).
The PRC was called on by senators on Wednesday to amend the IRR to ease the burden on professionals required to complete a CPD course load.
In a hearing conducted by Senators Antonio F. Trillanes IV, Ralph G. Recto, Juan Miguel F. Zubiri, and Aquilino L. Pimentel III, the lawmakers agreed that the mandatory nature of CPD programs should be less onerous.
Mr. Pilando added “We had such high expectations at that time the law was passed but now maybe we’re realizing that things have to be resolved.”
The PRC also said that implementing the CPD Law has been hobbled by a lack of funding.
“We are limited in resources. Many know that we don’t have the budget to implement CPD. We’re limited in monitoring,” he said, adding that the PRC apologizes for the complaints of professionals regarding the law’s implementation.
On the mandatory nature of CPD course work, Mr. Pilando said that some fields really require CPD units. He also pointed out that the commission issued Memorandum Circular (MC) No. 07, Series of 2017 which allows professionals to sign undertakings to complete the required course work at some point in the future.
“We came up with the concept of the ‘undertaking’ so no one is being denied of the renewal because we believe the professionals are honorable persons. Why would you deny him the renewal of his (professional) ID?” he added. — Gillian M. Cortez

Waitress is fun and sweet

By Nickky F. P. de Guzman, Reporter
Theater Review
Waitress
Presented by Atlantis Theaterical Entertainment Group
Until Dec. 2
Carlos P. Romulo Auditorium, RCBC
Plaza, Ayala Ave. corner Gil Puyat Ave., Makati

(Spoilers ahead.)
TWO WOMEN in front of me couldn’t stop reacting to what they were watching on stage. Sometimes the other woman would slap her friend’s shoulder, out of kilig (thrill) and sometimes because of laughter. Then at one point, I saw them wiping away their tears. We were watching Atlantis Theatrical’s Waitress last Friday night.
The women’s big gestures, albeit done silently, could have been major distractions, but I found myself smiling at them because Waitress was able to elicit feelings that were relatable.
Waitress, really, has all the right ingredients to trigger one’s emotions. For this reason alone, Waitress is a stage success: it’s a musical with catchy songs (music and lyrics Sara Bareilles, book by Jessie Nelson) and it’s fun to watch, but it’s not detached from reality.
Based on an indie film from 2007, Waitress is anchored on the idea of women empowerment and the realities and difficulties that women face every day like dealing with abusive relationships and gender inequality. It tells the story of Jenna (well played by veteran actress Joanna Ampil), a pie-making genius who works at Joe’s Diner. She lives with an abusive douche bag of a husband Earl (also well played by George Schulze) who verbally mistreats her. You’ll love to hate Earl and his selfishness, especially when he makes Jenna promise that she’ll never love their baby as much as she must love him. Pregnant by accident, Jenna is learning to embrace her growing baby bump despite her anxieties and apprehensions about having a child, especially since she doesn’t love the father.
Jenna’s pies — and their names — are inspired by what is going on in her life, and songs around their creation punctuate the scenes set in Joe’s classic American South diner (the eye-catching set was designed by award-winning set designer David Gallo). It is through this creation that Jenna breaks the ennui of the everyday life. Ms. Ampil’s stellar performance as the unfortunate Jenna is totally believable — it’s as if she is Jenna and Jenna is her. The highlight of her performance was when she tearfully sang Bareilles’ “She Used to be Mine,” which is about how she misses her old self and the pain of her problems. This is when I noticed the two women in front of me silently sobbing along with the lead character on stage.
But Jenna is not alone — she is supported by her friends and fellow waitresses Dawn (Maronne Cruz) and Becky (Bituin Escalante), who have their own share of personal problems. The trio put layers to the story: Jenna is sweet and kind, Dawn is neurotic and nerdy, while Becky is outspoken and sassy. Despite their problems, all remain hopeful about their future.
Ms. Escalante embodies Becky as the typical “Big Southern Girl” with her thick accent, her big hoop earrings, high ponytail, and her strong personality. Becky is dealing with her own love life and family problems and Ms. Escalante’s solo performance of “I Didn’t Plan It” in the Act 2 reveals to the audience her character’s surprise twist.
Meanwhile, Ms. Cruz’ portrayal of Dawn as the nerdy and introvert waitress was so convincingly good. She looks and acts like she is the real-life Dawn. Her fun solo number, “When He Sees Me,” tells of her paranoia about dating and finally finding love for the first time. She has an even nerdier suitor, a magician named Ogie whom she met online (Nino Alejandro). Ogie’s laugh-out-loud number “Never Getting Rid of Me” was fun and funny. Their love team is awkwardly hilarious, but gentle and sweet nonetheless.
Jenna also has her own romantic moments — not with her abusive husband, but with her gynecologist Dr. Pomatter (played by a charming Bibo Reyes, who looks like Zac Efron and sounds like Christian Bautista, by the way). While both are cheating on their respective spouses, their romantic attraction is such that the audience had to root for their love team and wish for it to last. Their chemistry was oozing and that made the two ladies in front of me giggle among themselves. Act 1 ends with Ms. Ampil and Mr. Reyes’ duet of “Bad Idea” as they kiss and end up doing the deed.
The story ends happily. Act 2 progresses towards Jenna’s redemption: getting out of her abusive relationship, taking care of her baby, and having her own diner after Joe (Steven Conde), the owner of Joe’s Diner, gives it to her.
Dawn and Becky also find love and peace. All’s well that ends well in Waitress. Sweet.

China Bank injects P40M into MCBL

CHINA BANKING Corp. (China Bank) will be infusing additional capital into its insurance unit to support business expansion, the lender said yesterday.
In a disclosure, the Sy-led bank said its board of directors approved on Wednesday the infusion of P40 million into Manulife China Bank Life Assurance Corp. (MCBL).
This forms part of a P100-million capital hike for the insurer matched by a P60-million investment from the Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife Philippines).
“On top of complying with the higher capital requirements for insurance companies, the additional capital will improve MCBL’s capacity to underwrite more business and enhance its competitive position,” China Bank told the Philippine Stock Exchange.
Republic Act 10607 or the Amended Insurance Code of the Philippines requires existing insurers to have a paid-up capital of P900 million by December 2019, higher than the P550 million mandated as of December 2016. The minimum capital requirement will rise to P1.3 billion by December 2022.
MCBL held P500 million in paid-up capital as of end-2017, according to latest data from the Insurance Commission (IC).
China Bank partnered with Manulife for a bancassurance joint venture in 2007, with the listed lender initially taking a five percent stake in MCBL before it was raised to 40% in 2014. This arrangement allows agents and tellers to sell insurance products at China Bank branches.
The bank reported a P5.56 billion net income for the first nine months, down 2.1% from the P5.68 billion profit booked during the comparable period in 2017.
China Bank shares closed at P27.65 apiece on Thursday, 0.36% higher than the previous day’s close. — Melissa Luz T. Lopez

Asian companies set for first quarterly profit drop since mid-2016

HONG KONG — Holiday-quarter profit at Asian companies is likely to drop for the first time in more than two years, following a small rise in the July-September period, as slowing exports, falling factory output and the Sino-US trade war take their toll.
Analysts expect profit to drop by an average 8% for about 2,000 Asian companies over October-December from a year ago, weighed down by slowing growth for firms in the technology, telecommunications and auto sectors, Refinitiv data shows.
The last time things were so dire was the second quarter of 2016, when profit fell 9.4% as oil prices recovered from multi-year lows hit earlier that year, pressuring profit margins, a Reuters analysis of more than 5,000 firms showed.
“Fundamental risks that investors have anticipated since Q2 are starting to show in numbers,” Mixo Das, a strategist at JPMorgan said, adding that signs of margin pressure were emerging.
Profit growth in the September quarter had slipped to 2.4% after a 15.7% rise in the first two quarters of the year, on an average.
The outlook for global growth in 2019 dimmed for the first time last month, according to Reuters polls of economists who said trade protectionism and tightening financial conditions would trigger the next downturn.
Markets worldwide are bracing for a chill.
MSCI’s broadest index of Asia-Pacific shares outside Japan has slumped 14.6% so far this year, more than double the decline in the World index.
Analysts for Asian companies slashed their fourth-quarter and 2019 earnings expectations by 7.3% and 3.7%, respectively, in the last 90 days, Refinitiv data showed.
“Growth slowdown is coming from a very high base as 2017 was a year of recovery,” said Frank Benzimra, head of Asia equity strategy at Societe Generale, adding that companies are likely to cut their 2019 outlook after a disappointing fourth quarter.
The effects from higher tariffs and softer growth in China are more tangible in the fourth quarter, he said.
China and the US have been locked in a debilitating trade war for months, in which the countries have imposed tit-for-tat tariffs on billions of dollars of imports.
The effect has been felt most keenly by tech companies and firms that supply them with components, as well as auto makers who do not produce cars locally.
Corporate earnings in Japan are expected to plunge by nearly a quarter over October-December, their first drop since early 2016, on slowing profit growth at telecom firms SoftBank Group Corp. and NTT Docomo, Inc. and the three top car makers — Toyota, Nissan and Honda.
Echoing a slowing economy, China corporate earnings growth is expected to fall 4.4% versus a 3.5% growth in the third quarter, as companies including tech giants Tencent Holdings Ltd. and Baidu, Inc. register softening profits. With oil LCOc1 at its lowest in over a year, analysts expect energy firms’ profits to come under pressure in the current quarter, taking away what was the brightest spot in the third quarter. — Reuters

DBP net income up in first nine months

DEVELOPMENT BANK of the Philippines (DBP) reported higher net income in the first nine months propelled by its lending business.
In a statement sent to reporters Thursday, the state-owned DBP said it booked a P4.49-billion net income in the nine months ended September, up 13% from the P3.98 billion recorded in the same period a year ago.
This also exceeded DBP’s P4.06-billion nine-month target and is already 81% of its full-year profit goal of P5.56 billion.
DBP President and Chief Executive Officer Cecilia C. Borromeo said the bank’s financial performance in the nine-month period was on the back of robust growth in its lending activities as well as its “revitalized” branch operations.
DBP’s loan portfolio stood at P250.3 billion, already 98% of its year-end target of P256.6 billion, with new loan approvals at P85.9 billion.
By priority thrust, Ms. Borromeo said the infrastructure and logistics sector received the biggest chunk of the lender’s assistance, booking P104.5 billion in the first three quarters.
DBP also lent P26.2 billion to the social services sector as well as P15 billion to the small and medium enterprises segment, while loans to borrowers reached P246 billion, up 22% from P202 billion in the same period last year.
On the other hand, total deposits reached P447.83 billion in the nine-month period, 22% higher than the P367.3 billion a year ago.
DBP saw double-digit deposit growth in Northern Luzon with 29.3%, Southern Luzon with 27.6%, Metro Manila with 25.9%, Northern Mindanao with 25%, as well as Central and Eastern Visayas with 23.3%.
The state-led bank also installed 154 new automated teller machines (ATM) this year, bringing the total to a network of 756 machines nationwide.
Ms. Borromeo said DBP will continue to put up more ATMs this year, especially in underserved areas, to support the government’s financial inclusion agenda.
“DBP has surpassed most of its fiscal targets for the year, and at the same time, remains financially strong to support the various development initiatives of the government,” she added.
For the first nine months, DBP’s gross earnings reached P18.85 billion, up 14% from P16.54 billion a year ago.
Overall, the lender’s total assets jumped 13% year-on-year to P632.93 billion from P557.84 last year.
Capital adequacy ratio was at 14.51% while common equity Tier 1 ratio was at 10.96%.
DBP was the eighth-largest commercial bank in the country in asset terms as of end-June and is the designated infrastructure bank by the government. It provides lending to four key sectors of the economy, namely infrastructure and logistics, SMEs, social services and community development as well as the environment. — K.A.N. Vidal

Wage growth slows globally despite strong economies — ILO

THE International Labor Organization (ILO) has found that global wage growth declined to its lowest level in almost 10 years despite rapid economic growth.
ILO said in its Global Wage Report 2018/19: “Global wage growth in 2017 was not only lower than in 2016, but fell to its lowest growth rate since 2008, remaining far below the levels obtaining before the global financial crisis. Global wage growth in real terms (that is, adjusted for price inflation) has declined from 2.4% in 2016 to just 1.8% in 2017.”
“The slowdown in wage growth in 2017 occurred in spite of more rapid economic growth,” the report added.
ILO Director-General Guy Ryder said in a statement earlier this week: “Such stagnating wages are an obstacle to economic growth and rising living standards. Countries should explore, with their social partners, ways to achieve socially and economically sustainable wage growth.”
Despite the decline globally, Asia and the Pacific registered one of the highest real wage growth rates among all the regions in the study. The ILO said that the region’s real wage growth last year fell to 3.5% from 4.8%, driven by wage growth in China, India,Thailand, and Vietnam.
Regions that experienced a decline in real wage growth were Africa (minus 3% from minus 1.3%); Northern, Southern and Western Europe (0% from 1.3%), and Central and Western Asia (0.5% from 3.0%).
Regions that experienced growth between 2016 to 2017 were Latin America and the Caribbean (0.7% from 0.1%); North America (0.7% from 0.6%); and the Arab States (3.4% from 2.8%). Eastern Europe was the only other region which experienced growth of more than 1% at 5.0% in 2017 from 2.8% a year earlier.
In the Philippines, the average real wage growth from 2008 to 2017 was 1.0%, lagging the regional median for Southeast Asia of 4.0%. Between 2000 and 2017, annual average real wage growth in the Philippines from 2000 to 2017 was 4.6%.
According to the National Wages and Productivity Commission (NWPC), the real minimum wage for workers in the private sector of Metro Manila was P473.61. NWPC also reported that for other regions, the real minimum wage as of October was between P221.69 and P340.14. — Gillian M. Cortez

Bobby Brown sues Showtime, BBC over Whitney docu

NEW YORK — Whitney Houston’s former husband Bobby Brown and the estate of their daughter Bobbi Kristina have sued Showtime Networks and the BBC over alleged unauthorized footage used in a 2017 documentary about the late singer, Whitney: Can I Be Me. According to a complaint filed on Wednesday with the US District Court in Manhattan, Mr. Brown, the R&B singer formerly of New Edition, and Bobbi Kristina’s estate never consented to the airing of footage used in the documentary. The plaintiffs said the material is approximately 15 years old, predating Mr. Brown’s 2007 divorce from Ms. Houston and her 2012 death, and its unauthorized use has harmed Mr. Brown, his business and Bobbi Kristina’s estate. “Every person should have the right to control how their identity or likeness or personality, or voice, name or image is commercialized by others,” the complaint said. Whitney: Can I Be Me premiered in August 2017 on Showtime, a unit of CBS Corp., and the BBC has aired it in the United Kingdom. It draws on interviews with Ms. Houston’s friends and people who knew her, as well as archival footage. Showtime declined to comment, and the BBC did not immediately respond to requests for comment. Mr. Brown’s lawyer, Christopher Brown, did not immediately respond to similar requests. The plaintiffs are seeking at least $2 million for violations of their rights of publicity and false advertising, and an injunction against the documentary’s distribution. Unspecified punitive damages also are being sought. Several other defendants were also sued. The documentary focuses on Ms. Houston’s mid-career struggles, which came long after she shot to stardom with hits in the mid-1980s such as “How Will I Know,” “The Greatest Love of All,” “I Wanna Dance With Somebody,” and 1992’s “I Will Always Love You.” Ms. Houston was 48 when she drowned in a Beverly Hills hotel bathtub, with heart disease and cocaine use as contributing factors. Bobbi Kristina Brown died at age 22 in 2015 of pneumonia after nearly six months in a coma. The case is Brown et al v Showtime Networks Inc et al, U.S. District Court, Southern District of New York, No. 18-11078. — Reuters

SM unveils business continuity program facility for partners

By Arra B. Francia, Reporter
SM PRIME Holdings, Inc. unveiled on Thursday a business continuity program (BCP) facility for its partners to enhance their protection and preparedness against natural disasters.
Speaking at the United Nations Strategy on Disaster Risk Reduction (UNISDR)’s Top Leaders Forum on Thursday, SM Prime Executive Committee Chairman Hans T. Sy said the company is extending its sustainability practices to business partners, especially small to medium enterprises (SMEs).
“This BCP facility will serve as their back up and redundant setup to recover and restore important data among others as part of their business continuity and disaster recovery plans. This initiative is aligned with our business resilience program,” Mr. Sy said in a speech during the program at SMX Convention Center in Pasay City.
Through the facility, SM Prime will offer SME tenants a free data storage facility that will house their operational and insurance documents, allowing them to easily claim insurance and recover should a disaster affect their business.
Citing a report by UNISDR, Mr. Sy said the Philippines is the fourth most vulnerable country in the world in terms of disaster and calamity impact.
The launch of the program is in line with SM Prime’s goal to promote resilience and sustainable practices. The property giant said it has been one of the leading figures in bringing together the private sector to discuss disaster risk reduction issues in the business industry.
Through the National Resilience Council, the private sector led by Mr. Sy has partnered with the national government to enhance the capacity of local government units for resilience. The public side is headed by Defense Secretary Delfin N. Lorenzana.
“Disasters derail progress and push communities further behind sustainable development. I firmly believe that active and actionable DRR (disaster risk reduction) collaboration with public-private partnership will strengthen the resilience of cities and provinces. DRR properly practiced will permeate stronger communities and cities, and ultimately create a safer population over time,” Mr. Sy explained.
For his part, Mr. Lorenzana said promoting resiliency is a shared responsibility between the public and private sector, noting that this calls for a change in mindset and behavior in addressing disasters.
“The Philippine government will always be at the forefront of disaster risk reduction and response, and disaster resilience. Over the past few years we have achieved successes, the latest of which is a legislative front is the proposal to establish a Department of Disaster Resilience,” Mr. Lorenzana said in his speech during the forum.
Special Representative to the United Nations Secretary General Mami Mizutori meanwhile lauded the private and public sector’s efforts, saying this will help the Philippines achieve targets in the Sendai Framework for Disaster Risk Reduction adopted by the UN in 2015.
“We are pleased that SM Prime is in the process of creating a national disaster registry, which will help in the systematic collection of disaster loss and damage data. This is a very practical measure that can make a significant contribution in the Philippines towards achieving the targets of the Sendai framework,” Ms. Mizutori said in a speech.
Ms. Mizutori explained that the knowledge of the damage and losses after a disaster is critical in deciding comprehensive national and local strategies to ensure “inclusive, gender equitable, and climate change adaptation and disaster risk reduction and thus leading to sustainable development.”

LRT-1 operator to spend P100M for CCTV system

LIGHT RAIL Transit Line 1 (LRT-1) operator Light Rail Manila Corporation (LRMC) said it is allocating P100 million to upgrade its surveillance system.
In a statement on Thursday, the company said it tapped Filipino firm Commsec, Inc. for its new closed-circuit television (CCTV) system, which is expected to improve safety in the train line.
“Commsec will install almost 500 high resolution surveillance cameras with increased storage capacity to ensure the safety and security of passengers and employees in and around LRT-1’s passenger stations, depot and other facilities,” Juan F. Alfonso, LRMC president and chief executive officer, said in the statement.
The new CCTV cameras will monitor the train doors, which will be projected on a monitor that the train driver will see. LRMC said this will ensure all doors are safely shut as a train car moves from one station to another.
The new surveillance system would also be equipped with technology that could count the number of passengers in a station’s queue line. It will likewise keep an eye on guarded locations for any security breach.
“With the upgrade, which is estimated to take two years to complete, crowd monitoring will be more effective. This will also later on feed into an automated system that will inform passengers which stations are heavy, moderate or light, thus helping them plan their trips better,” Mr. Alfonso added.
LRMC is the consortium of Ayala Corp., Metro Pacific Light Rail Corp., of Metro Pacific Investments Corp. and Macquarie Infrastructure Holdings (Philippines) Pte. Ltd.
Metro Pacific Investment Corp. is one of three Philippine subsidiaries of Hong Kong’s First Pacific Co. Ltd., the others being PLDT, Inc. and Philex Mining Corp. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., maintains an interest in BusinessWorld through the Philippine Star Group. — Denise A. Valdez

Bahrain readies austerity push, keeping wary eye on opposition

DUBAI — Bahrain’s new parliament is expected to swiftly pass sensitive austerity measures needed to secure a Gulf aid package, but the U.S. — allied government may implement the belt-tightening in stages to avoid provoking public anger.
The Sunni-led authorities have kept a lid on dissent since a Shi’ite uprising in the island kingdom in 2011 was quelled with the help of neighboring Saudi Arabia, which fears instability in Bahrain will encourage unrest among its own Shi’ite minority.
But Bahrain, a cornerstone of US military power in the region, could face a fresh test of its ability to curb opposition unrest as it implements reforms to subsidies and pensions required by Gulf Arab donors to avert a debt crisis.
Authorities are expected to phase in the changes, hoping to soften the impact, to prevent protests by opposition forces who see the assembly as illegitimate after they were barred from contesting last week’s elections, analysts said.
Bahrain, which lacks the vast oil wealth of other Gulf states, needs to slash state spending because its finances have been hit by an oil price slump since 2014. Bahrain has struggled to curb outlays while avoiding public anger over fiscal reforms.
“The economy will be the biggest issue for the new House of Representatives,” said Jamal Fakhro, deputy president of Bahrain’s upper house. “The new parliament has to be aware that there are some issues that can’t be delayed, because any delay won’t be in Bahrain’s interest.”
Saudi Arabia, Bahrain’s main backer, along with the United Arab Emirates and Kuwait, offered Manama a $10 billion aid package over five years to 2022 to bail out the government if it pushes through fiscal reforms to achieve budget balance.
The austerity measures are likely to face resistance from Shi’ite Bahrainis who say they are already deprived of jobs and government services and treated as second class citizens in the country of 1.5 million, home to the US Fifth Fleet.
The authorities deny discrimination and accuse Iran of fomenting unrest that has seen protesters clash with security forces, who have been targeted by bomb attacks. Tehran denies the charges.
Activists have described the elections as a “farce” after the government dissolved the main opposition groups and barred their members from running.
The opposition may use austerity measures to challenge the legitimacy of the new parliament.
“We are studying calling for protests and moving the street against austerity and new taxes,” said Ali Al Asawad, a leader of closed opposition group al-Wefaq, who lives in self-imposed exile in London and has been sentenced in absentia to life in prison on espionage charges, which he denies.
Al-Wefaq, Bahrain’s biggest opposition group, once controlled almost half of Bahrain’s lower house with 18 seats in 2010. Opposition groups boycotted the 2014 elections.
ECONOMIC PINCH
While Bahrain may see rallies against rising costs, anti-austerity protests are unlikely to be widespread, said Glen Ransom, a senior analyst at Control Risks Middle East, noting that previous subsidy cuts, the introduction of excise tax and approval of value-added tax did not cause significant unrest.
“The government will attempt to reduce any public backlash by easing the impact on Bahraini nationals, which may include targeted subsidies and a phased approach to austerity measures.”
Most candidates running in last week’s elections defended the economic reforms as necessary to maintain stability.
“The VAT has to do with the political will and is part of the obedience to our guardians… and in everybody’s interest,” Jamal Daoud, a lawmaker and candidate said on social media.
Bahrain released a 33-page fiscal plan last month after signing the Gulf aid agreement to fix its finances and abolish its budget deficit by 2022. Manama had projected a $3.5 billion budget deficit in 2018.
Bahrain is due to receive up to $2 billion by the end of the year as a first aid package installment after legislators approved introducing value-added tax (VAT) in 2019.
Bahrain’s parliament has limited power but the two houses approve the state budget and economic policy.
“The new parliament will be involved in every step of the government’s Fiscal Balance Program,” a government spokeswoman told Reuters.
Ali Al Aradi, deputy president of the outgoing House of Representatives, said the government plan would be approved in January, and the state budget for 2019 and 2020, which are expected to see more cuts, by next April.
Other wealthier Gulf states have passed similar subsidies and tax reforms after oil prices plunged in 2014.
Bahrainis are being asked to accommodate austerity measures at a time when their incomes and opportunities are stagnant, said Elizabeth Dickinson, Senior Analyst for the Arabian Peninsula at the International Crisis Group.
“These trends align with growing sentiment among many Bahrainis, particularly the communities that backed the government in the 2011 uprising and its aftermath, that the pace of economic change and the improvement of social services is just too slow.” — Reuters