Facebook Instagram Linkedin X Youtube
Home Blog Page 12409

The science of IFRS 9 and the art of Basel: Use of parametric thinking in provisioning

(First of three parts)
IFRS 9 is an International Financial Reporting Standard (IFRS) promulgated by the International Accounting Standards Board on July 24, 2014. It addresses the accounting for financial instruments and features three main topics: classification and measurement of financial instruments; impairment of financial assets; and hedge accounting. It will become effective in 2018 and replaces International Accounting Standards (IAS) 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. In this article, IFRS 9 is referred to as a “science” because of its systematically organized body of information and measurements on specific topics.
Basel III (or the Third Basel Accord or Basel Standards) is a global, voluntary regulatory capital and liquidity framework agreed upon by the members of the Basel Committee on Banking Supervision (BCBS) in 2010–11. It was scheduled to be introduced from 2013 until 2015; however, the implementation has been extended to March 31, 2019. Another round of changes was agreed upon in 2016 and 2017 (informally referred to as Basel IV) and the BCBS is proposing a nine-year implementation timetable, with a “phase-in” period to commence in 2022 and full implementation expected by 2027. Basel III was developed in response to the deficiencies in financial regulation that came to light after the financial crisis of 2007–08. Basel III is intended to strengthen banks’ capital requirements, liquidity, maturity profile, and leverage. It also introduced macroprudential elements and capital buffers designed to improve the banking sector’s ability to absorb shocks from financial and economic stress; and reduce spillover effects from the financial sector to the real economy. Basel is an “art” form in the context of the need to perform skillful planning and creative visualization in fully comprehending its dynamic processes and uncertainties.
Financial institutions recognize that provisioning and stress testing need to go together, allowing, at any given time, the determination of the credit cost and capital usage of an account, transaction or portfolio. This desired state poses complex and tremendous challenges. It would be helpful to frame at the onset that these exercises can be broadly classified into two types, as an adaptation of Daniel Kahneman’s view on the two selves: Type 1 system for fast, intuitive and unconscious views, and Type 2 system for slow, calculating and conscious thoughts. At the risk of oversimplifying, we do not know yet which exercise will become which system, but what is clear is the emergence of parametric thinking to grapple with the foreseeable function required for calculating expected credit loss (ECL) provisions under IFRS 9 and the related capital usage that will be highlighted with the implementation of the stress testing rules under BSP Circular 989. Here’s a sample illustration on how exposures will be viewed in the coming months (stripped of technical assumptions): Assume a corporate exposure with a moderate quality rating, belonging to an industry that is exhibiting concentration risk, within a benign macroeconomic scenario. If the recovery experience is 65% and the overlay-adjusted probability of default (PD) is 1%, the ECL provisioning cost is .35% and the capital usage is 5%. If recovery experience falls to 55%, the provisioning cost is .45% and capital usage at 7%. If the macroeconomic scenario deteriorates — assume PD at 3%, the provisioning cost is 1.35% and its capital usage is 10%.
The illustration may make computational sense, but note the gap between the ECL and the capital usage. At some point, the ECL will increase to consider the “transmission” from the macro-economic assessment to the credit risk pertaining to the obligor, and this scenario is likely to happen as the IFRS 9 and stress testing exercises become clearly linked in the next 12 to 15 months.
This scenario requires adaptive yet rigorous models and estimation approaches, but the current situation is an irreversible progression from historical, incurred-loss oriented IAS 39 models to Basel-based techniques that are being extended to meet the expected loss criteria and forward-looking view of IFRS 9. As the techniques undergo development or enhancements, it would be helpful to view the provisioning exercise as consisting of parameter drivers — namely the base parameters for Exposure at Default (EAD), Loss-Given Default (LGD) and PD, adjusted for the overlay mechanism and the discounting process (these same parameter drivers can be used as inputs for portfolio management and capital planning, adjusted for horizon, confidence interval and other properties). There is literature available for these parameters so we will skip the introductory discussion and discuss three areas to strengthen the parametric approach to provisioning — clarity on the definition of default, strengthening the staging assessments, and plumbing the overlay mechanism.
Default and staging assessments should be clear, both operationally and in principle. The definition of credit impaired defines what should be Stage 3 for IFRS 9 and is loosely equal to our understanding of non-performing loan exposures. This definition is key for both modeling and estimation approaches, as well as disclosure purposes. The definition of default should be consistent with internal credit risk management practices, and for purposes of assessing significant deterioration, could be different to that used for regulatory models — not all default events are immediately considered credit-impaired. However, in practice, what we are seeing is that the definition of default is shaped mainly by regulatory requirements, and we would not be surprised with an alignment between financial and regulatory reporting for consistency and simplicity, especially for modeling purposes. This means that the 90-day definition looks like a prescription that will be generally observed, although the 30-day backstop does not automatically mean an exposure is considered in default — at most, it would attract a lifetime ECL until the default state is concluded, in which case there is already an outcome (i.e., PD is 100%) and the situation shifts to a recovery strategy issue. This is where financial institutions are advised to regularly perform their stress testing of those jumps or non-linear increases, on top of strengthening the governance around the staging assessments, ranging from the default tagging and classification process to early warning indicators and quantitatively-supported risk assessments to supplement a financial institution’s credit evaluation process.
We previously mentioned that institutions that adopted the now-replaced IAS 39 regime and are immersed in the internal ratings-based approaches of Basel will feel that there is a collective déjà vu, as quantitative and statistical techniques start to dominate the methodology discussions. There are actually three mental models that need to be fused and redesigned, with iteration through time, in coming up with an operationally rigorous IFRS 9 — IAS 39, Basel IRB, and stress testing. We expect a few of the IAS 39 models to be extended as interim measures under IFRS, before eventually being discarded or even mutating if the proxy factors become the norm, especially in micro and retail exposures. But most of the changes — especially for corporate and institutional exposures — will be borrowed from the IRB approaches, which would include adaptation of the capital requirement parameters of Basel, requiring high standards around governance and model development and validation. In its capital adequacy state, the IRB models are generally conservative that use downturn assumptions and scenarios, use a 12 month horizon and use a cost of capital discounting treatment (rather than the effective interest rate).
In the second part of this article, we will continue the discussion on IFSR 9 and Basel, looking at the parameters relevant to the base Expanded Credit Loss model.
This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the authors and do not necessarily represent the views of SGV & Co.
 
Christian G. Lauron is a Partner of SGV & Co.

Joint exploration with China in the West Philippine Sea

What is ours, is ours. This includes the trove of resources in the West Philippine Sea.
As I have written in this corner a few months ago, beneath the pristine waters of the West Philippine Sea lies an estimated 11 billion barrels of oil, 190 trillion feet of natural gas, and 10 percent of the world’s fishing resources. The sheer amount of natural resources is among the reasons why China covets our sovereign territory and those of Vietnam, Brunei, Taiwan, and Malaysia.
China has laid absolute claim to the entire stretch of the West Philippine Sea by asserting a territorial delineation called the nine-dash line. In reality, the nine-dash line is nothing but a vague, disjointed demarcation of domain that was first published in 1947. Fairly recent, in historical terms.
In recent years, China declared that it is expanding its claim to a ten-dash line which now includes the entire island of Taiwan. Only a country like China can make a “historical claim” pliable at its caprice.
China is a signatory of the United Nation’s convention of the Laws of the Seas, a global treaty among 120 nations. The treaty specifies that all waters, islands, and resources within 200 nautical miles from the shores of a particular nation’s mainland forms part of its domain or Exclusive Economic Zone (EEZ).
In a move to grab the territories from smaller claimants, China has defied this global treaty and militarized the area. Satellite images show that it has built a military airbase and naval base, complete with a refueling depot on Fiery Cross, Subi, and Mischief Reefs. Military grade radars were also erected in Cuarteron, Gaven, Johnson and Hughs Reefs. This enables China to monitor air and sea traffic in any point of the waters.
Since 2013, China began to assert its conjured sovereignty over the disputed area by requiring vessels, including those from the Philippines, to seek permission for passage and even to fish. Those who enter its nine dash line without clearance are bulldozed by heavily-armed patrol vessels. It is a ‘grab-by-force’ strategy that a typical playground bully would employ.
PRINCIPLED PRAGMATISM
President Duterte has opted to make a friend of China instead of being combative towards it. The idea is to get the most of the country’s aggressor without provoking it.
In diplomatic parlance, this is called “principled pragmatism,” a strategy designed to get maximum results from a delicate situation, without sacrificing anything. This is done by finding common ground of interest to build upon.
Clever nations around the world have employed principled pragmatism with spectacular results. President Duterte, however, has gotten flack for it.
The reason he gets flack is his own doing. In his attempt to befriend the playground bully, the President has resorted to over-the-top acts of accommodation and grandiose declarations of friendship which has spawned unease among the populace.
Shock waves rippled through the land when the President said that “China should turn the Philippines into a Chinese province.” These words were uttered before the Chinese Filipino Business Club.
To many, it was as if our own Chief Executive had already ceded the nation to its illegal invader. Malacañang’s spin doctors went on overdrive to tell us not to take the words of the President literally. Still, the populace took the President’s words to heart. Who can blame them? After all, he is still the President and his words reflect the sentiments of the state. His words cut deep, especially to the patriots among us.
The situation is exacerbated by the President’s relentless acts of flirtation towards China like a teenage boy raging with hormones.
We recall how, within the halls of the Chinese Parliament no less, he announced his separation from the United States and proposed a tri-axis of power between China, Russia, and the Philippines.
His standing orders to pedal softly and not assert our victory at the United Nations Permanent Court of Arbitration in the Hague (that deemed China’s nine-dash line invalid) does not inspire confidence either.
Recently, the Palace has allowed Chinese historical documentaries to air on PTV-4 to strengthen Chinese propaganda in our shores.
These acts, taken collectively, give the impression that Malacañang is playing on China’s team. Understandably, people have become insecure, worried, and scared. Again, the populace cannot be blamed.
This, however, is all part of the principled pragmatism strategy, albeit done in a uselessly exaggerated manner.
Beneath the hyperbolic acts of love by the President towards China is the intent to make the most out of the sticky situation we are in. Time will tell if the strategy pays off.
In the end, the strategy can only be deemed a success if the Philippines gets more trade concessions, more investments and more Official Development Assistance from China without sacrificing a speck of its sovereignty.
Recent developments, however, indicate that the strategy is yielding some favorable results.
During the Asian Forum in Hainan last April, Chinese President Xi Jinping committed to ensure stability and cooperation in the disputed area. It was further agreed that both nations would treat the disputed territories as a “sea of cooperation and friendship.”
If anything, Jinping’s statement assures us that China will exercise maximum restraint in the use of armed aggression, at least for now. It also assures us that a common ground of mutual benefit will be pursued.
JOINT EXPLORATION AND ITS CONSTITUTIONALITY
Talks have started to jointly explore and extract Liquid Natural Gas (LNG) in the West Philippine Sea. This is welcome news since our main source of LNG, Malampaya, will be depleted in 12 years, if not sooner. LNG from Malampaya supplies gas to three power plants with a collective capacity of 2,700 megawatts. It powers approximately 50% of Luzon’s power needs.
We need a new source of LNG soon and the West Philippine Sea has 190 trillion feet of it. With the declaration of the disputed area as a “sea of cooperation and friendship,” we are now free to tap this resource.
Joint exploration should not be seen a cessation of sovereignty, rather, it is an assertion of it. The West Philippine Sea and its resources belong to the Filipino people and it is our right to extract it.
This begs the question — since China is the encroacher and the Philippines is the encroached, is it safe and constitutional sound for the Philippines to jointly explore the disputed waters with China? The answer is yes, provided certain safeguards are put in place. These are the constitutional provisions pertinent to the issue:
Section 2, paragraph 4 of Article XII of the Constitution states that: “The President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by law, based on real contributions to the economic growth and general welfare of the country. In such agreements, the State shall promote the development and use of local scientific and technical resources.”
The constitution further includes the proviso that “the exploration, development, and utilization of natural resources should be under the full control and supervision of the State.”
In other words, joint exploration can be pursued so long as the deal is governed not by a bilateral treaty but by a mere Commercial Agreement written under Philippine laws. It must explicitly identify the Philippine government as the owner of the resource and China as the technical partner that only provides capital and technology. The agreement must further state that absolute control and supervision of the resources belongs to the Philippines and that the agreement is only good for a fixed term, say 25 years.
This is the same agreement entered into by the Philippine government with Shell Philippines Exploration B.V. in the exploration and extraction of LNG in Malampaya. It has worked without complications.
In fact, another claimant to the disputed waters, Vietnam, has a standing joint exploration agreement with China National Offshore Oil Corporation. The Vietnamese are already benefiting from the resources of their part of the disputed waters. We should too.
Entering into a joint exploration agreement with China is a slippery slope. Done right, we can enjoy the resources of our territories without compromising our claims over it. Done wrong, the joint exploration can be construed as a cessation of territory. This is why we must follow the constitutional provisions to a tee.
What is ours, is ours. No entity should prevent us from benefitting from our own natural resources. Engaging in joint exploration with China, or any other nation for that matter, works to our best interest so long as constitutional safeguards are satisfied.
 
Andrew J. Masigan is an economist.

Ease of setting up and closing down business operations

Last June 6, I attended the “Seminar on Protecting your Trademarks and Inventions Overseas” jointly organized by the Philippine Chamber of Commerce and Industry (PCCI) and the World Intellectual Property Organization (WIPO), held at the PCCI building in McKinley Hill, Taguig City.
The main audience of that seminar were entrepreneurs and companies big and small to help them be aware of existing intellectual property rights (IPR) rules and their protection, commercialization, licensing and dispute resolution. I do not represent any SME or big company but I was invited there by Jess Varela, Chairman of PCCI Committee on IPR.
The three important speakers that day were Dennis Broze and Peter Willimott of WIPO Office in Singapore and Atty. Allan Gepte, Commissioner of the Tariff Commission and former Director-General of the Intellectual Property Office (IPO).
Then last June 13, I attended the 6th Ease of Doing Business (EODB) Summit 2018 at the PICC, organized by the Department of Trade and Industry (DTI). It is an annual event sponsored by the DTI with one important goal — to raise or improve the Philippines’ global ranking in the World Bank’s (WB) Doing Business (DB) annual reports. The DB 2018 report was recently released and the Philippines’ global rank has worsened, compared to its ranking in the last two or three years.
This year, the EODB 2018 event is more optimistic because of the passage of the “Ease of Doing Business Act of 2018” or RA 11032 which was signed into law only last month. The DTI and various agencies including SEC, LRA, BIR, BOC, BFP, LGUs have adopted various measures to hasten the law’s implementation.
Among the important speakers in the EODB 2018 were DTI Secretary Ramon Lopez, who is also the Chairman, Ease of Doing Business and Anti-Red Tape Advisory Council; Senators Juan Miguel Zubiri and Aquilino “Koko” Pimentel III, and Mr. Guillermo Luz, former Co-Chairman of the National Competitiveness Council (NCC). Sen. Zubiri is the main author of the law in the Senate and also the Majority Leader while Sen. Pimentel is former Senate President and now Chairman of the Committee on Trade.
In both the PCCI-WIPO and DTI events, the over-riding subject is competitiveness of the Philippine economy and its businesses.
Below are results of three annual reports, the WB’s DB, World Economic Forum’s (WEF) Global Competitiveness Index (GCI), and WIPO, INSEAD and Johnson Cornell University’s Global Innovation Index (GII) annual reports.
Global Competitiveness Ranking of Select Asian Economies
Numbers in parentheses represent the number of countries and economies covered in that particular annual report.
While the results in global ranking vary among the three reports, one trend can be identified — the most competitive Asian economies are Singapore, South Korea, Hong Kong, Japan, Malaysia, and Thailand.
The Philippines is among the least competitive in the region, which is not good for us.
I have three wish lists on this matter.
One, the prioritization and signing into law of RA 11032 is among the very few measures of the Duterte administration that I support. I wish that he will do more ease of doing business policies, not the ease of closing businesses such as when he moved to close Boracay for six months or the ease by which the government over-taxed people via TRAIN.
Two, I wish there was a provision on the ease of closing a business in RA 11032. Among the best incentives to attract investment is a contestable market or free/easy entry, free/easy exit. If businesses see that government will bureaucratize and harass them if they decide to close shop someday, they will think twice about coming in.
Three, I wish there was another law mandating that work in government (local and national, elected and appointed, continuous or on-off) will only be a maximum 15 years, prompting officials and staff to go back to the private sector.
Since many officials intend to become regulators and bureaucrats until they retire, they tend to be more prohibitionist and extortionist since their over-regulations and taxation of business will not apply to them.
 
Bienvenido S. Oplas, Jr. is President of Minimal Government Thinkers, a member-institute of Economic Freedom Network (EFN) Asia.
minimalgovernment@gmail.com.

The widow’s mite

“Where can I place my P100,000 funds?” What are the investment options for a risk-averse widow, in this time of rising inflation? “Since you do not trust equities or corporate bonds, and not even the managed pooled funds, perhaps the only easily withdrawable and guaranteed (insured) placement would be a time deposit in our bank,” the account officer sheepishly offered. “And how much interest will the bank pay me?” The account officer was definitely embarrassed to say, “0.88%, Ma’am, or P704 net of 20% final withholding tax, for 360 days.”
Yes, the bank should be embarrassed.
With banks estimated to be enjoying continued annual net profits of 15% to 17% in the next two years (bworldonline Aug 24, 2017), it is unconscionable to give 0.00704 net profit after tax on a widow’s time deposit. But the bank always makes money for itself, in good times and in bad.
Yet it can be a problem, too, when the market is awash with cash. The objective and dispassionate law of supply and demand simply urges the lower price offer for deposits and investments, when there is already so much money for the banks to lend out, in the uneasy times of unpredictable fiscal and monetary changes here and abroad.
From the US financial crisis of 2009, and through the change of administration, various US Fed decisions and indecisions have made the affected financial world continually nervous. There is also the political noise globally, with strongmen-leaders further agitating the pandemic and progressively growing terrorist-religious/political threat.
Yet indefatigable marketing and promotions can “photoshop” even the direst “doom and gloom” scenarios for financial products and services to savers and investors. But even for the self-serving “prophets of boom” that financial traders and brokers, and credit rating agencies might be — surely deep within, they feel the swaying volatility in the markets, though of course they can gamble more stoically with funds not their own.
“Try and find me T-Bills or RTBs,” the frugal widow said. At least government securities, Treasury Bills (short term — maturing within one year) and Retail Treasury Bonds (medium to long term), are “safe haven” in times of market volatility.
On the KYC (Know your client) info sheet, she declared to her bank that her priority for investment is always safety of principal; sureness of income stream (interest earnings more than in-out trading gains); and that it should not be difficult to withdraw even if only partially, amounts needed for emergencies.
Being a senior citizen, the careful widow did not want to invest more than five years in a financial instrument or product. She is “Class A-B”, the account officer said, meaning that the widow is risk averse, but not really depending on interest income or dividend cash flows as critically necessary to her day-to-day survival.
In mid-June, the government offered the 21st tranche of RTBs for minimum denominations of P5,000, with a coupon rate of 4.875%, and to mature in three years, in 2021 (BusinessWorld June 11, 2018). Perfect investment-savings for the cautious group of “widows and orphans.” And the market-feel of banks and financial institutions for strong demand from the greater public pushed total tenders of P92.8 billion at the rate-setting auction for which the Bureau of Treasury (BTr) accepted P66 billion or about 70% against total tenders (Ibid.).
Earlier in the month, the BTr fully awarded close to P10 billion of 91-day T-Bills at an average rate of 3.296% and 182-day T-bills at an average rate of 3.677%, but accepted less than half or P4.239 billion 364-day securities at 4.3% as the market showed preference for shorter-dated securities amid concerns on rising inflation and interest rates (The Philippine Star June 5, 2018). National Treasurer Rosalia de Leon said results of the auctions reflected the market’s preference for short-term securities considering the inflationary environment, as well as expectations of policy rate hikes in the US (Ibid.)
The market’s overbearing inclination towards short-term securities and the widow’s gingerly step to the 3-year RTBs, as examples, reflect the apprehensions of the investing public of the economy vis-à-vis their own economic situation — what will happen to me and my savings and investments in the near and medium-near future — at most, in the next five years, when the governance of the country will have been turned over to an administration hopefully more predictable and less impulsive? Let’s face it — despite the so-called surveys saying “all’s well,” the fears of uncertainty and unknown risks are there, deep in the minds and hearts of the ever-smiling, laughing, and joking Filipino — especially those that have less in life and wherewithal — as the widow analyzing her very few options for less risky investment in these tremulous times.
Consider that even the safest haven of government securities give from 2.63% to 3.44% net of tax (T-bills) and 3.9% net of tax (3-yer RTBs) — which net yields are below the current announced inflation rate of 4.6% as of May.
When net of tax GS rates are further adjusted for inflation, this would mean that the widow is actually not earning any money (negative 0.7%) from lending her P100,000 to the government. But she has no safe choice but to subsidize the government for the grandiose P8.44-trillion development plans of “Build, build, build” structured on the TRAIN (Tax Reform for Acceleration and Inclusion) Law and its expected $1.8 billion in revenues (first year — philstar.com Dec 17, 2017), with whatever shortfall to be from a stepped-up “Borrow, borrow, borrow” from domestic and foreign lenders.
The Bangko Sentral ng Pilipinas and the National Economic and Development Authority, explained that the TRAIN Law accounted only for 0.4% of the five-year high 4.5% inflation rate in April [4.6% in May] (CNN Philippines May 30, 2018). It is the increase in world oil prices, and the weakness of the peso, government economists said (Ibid.). But with the world oil price increase, “the Philippines has the fastest inflation among the six biggest Southeast Asian economies with price growth at a 5% high (Bloomberg.com June 5, 2018). There are more major reasons for the compounding of inflation upon inflation in the turbulence of the present Philippine economic and political working environment.
If the TRAIN Law indeed espouses financial inclusion for the less-privileged Filipinos, there should be options and equitable returns for investors: so their capital can be made useful here in the country, for them and the common good of national development.
In the Bible is the story of “The Widow’s Mite” (Lk 21:1-4), where the widow put into the treasury her two mites (low-denominated coins) — all she had — while the rich proudly contributed grand gifts which were actually a small proportion of their wealth.
Take not the widow’s mite.
 
Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.
ahcylagan@yahoo.com

One father is more than a hundred schoolmasters

By Raju Mandhyan
BEYOND just helping me out a bit with math, science, or English grammar during my youth, Dad rarely ever sat me down and said, “Today, we will spend time learning values,” or “Son, let me tell you all about how businesses work.”
But if ever I had a question about things he’d try his best to explain it in the most kindest and patient way. I once asked him about the meaning of a Hindi word, “phuhar” while holding a book of the same title. He glanced at the book which had a Mills and Boon kind of a cover image and hesitated for a second but answered, “fountain” and went about his work. I felt cheated by his brief response, I wanted to know more and I wanted him to share his thoughts on the book since it was in a script I was struggling with. Years later, I did manage to read the book, I understood his hesitation and curtness at that moment. The book and its contents were much more suited for a slightly more grown up an audience at that time, in conservative India.
At that time, I thought Dad was being conservative but over the years I realized that he wanted the wisdom of things to dawn upon me rather than him downloading stuff that he thought was right and proper.
Today, as I think back to that moment and thousands of other similar exchanges with Dad, I realize many were little teaching moments that stuck to me big time and many of them are coming handy as I continue to play the role of a father to my kids. Many a times I feel like jumping in and highlight what is right and proper but I hold back, get patient and creative in my approach and then as time passes I see the light that they get to see on their own. It is a great feeling this feeling of living out fatherhood gently and creatively for which I must thank my own Dad. George Herbert was right, “One father is more than a hundred schoolmasters.”
On this Fathers’ Day, the thoughts that I feel like sharing with fellow fathers or fathers to be are a few but inspired by the life and fathering style of my own Dad.
First and foremost, be there for them. Yes, just be. You don’t need to know how to solve the Pythagoras Theorem for them. You don’t need to be able to scale up mountains in a single leap and, most of all, you also do not need to have a very handy credit card available to them all the time. They just want you around sitting there or be seen putzing around with your car or being a lean-in-pillow when they need one. Just be. Just be around and it is also okay if you are shaped round.
Second, make a sincere effort to fill a real need when it arises.
When a child needs an answer to perplexing question it is the effort that is taken which matters and not the correctness of the answer. Children know that they are an extension of you and you and extension of them…so, yes, they need all parts to function when action is needed to be taken.
Years later, they will remember your efforts and laugh happily at the results. My Dad was great at drawing and writing stuff but terrible at tightening up the nuts and bolts of my bicycle but he tried and I loved him for that.
Third, give them space, sometimes a lot of space. Yes, space enough to scrape their knees and elbows and also to bring home your car with the windshield smashed in. It is okay. Accidents are accidents and many a times, life and business failures are also accidents. Share cautionary wisdom, offer support but never loose your cool when you think they are not driving in the right lane or getting caught up in tricky life situations. You know what Kahlil Gibran said, “They are sons and daughters of Life’s longing for itself. They come through you but not from you. And though they are with you, they belong not to you.”
I know it is hard but always make an effort to think back to the times when you were their age.
My daughter is in her mid-twenties and the tangled world of real business is just unraveling for her slowly. I am of the age where I can simply and easily unravel business shenanigans for her but I hold back thinking back to the day of how Dad held back, once, from talking about the contents of a book called Phuhar.
All said and done, my belief is that of all the purposes in life the mission of being a parent and being the father is one of the highest purposes in life.
Man wasn’t just placed on the earth to build buildings and bridges or gather gold and silver but to live out the gift of life well, to enjoy it and then to hand it over to the next generation so they can do the same.
Fatherhood, in this game of life, is being the captain of a team, a team that is bond with love and cherishment of each other and life itself.
Happy Fathers’ Day!

DoJ asked to reopen Okada estafa cases

By Dane Angelo M. Enerio
Tiger Resort, Leisure and Entertainment, Inc. (TRLEI), owner of casino resort Okada Manila, has asked the Department of Justice (DoJ) to reverse the dismissal of the Office of the City Prosecutor (OCP) of Parañaque City of the two separate estafa cases filed against Japanese gambling mogul Kazuo Okada.
In two separate motions received by the DoJ on June 13 and 14, TRLEI urged the department to void and vacate Assistant City Prosecutor Romeo G. Bautista IV’s decisions dated May 11 and 18 which dismissed for lack of probable cause the cases against Mr. Okada and several others that charged them with misappropriation of funds and fraud amounting to $10 million.
The DoJ was also asked to indict the respondents anew with the same charges as according to both motions, “the Assailed (Resolutions are) void and must be vacated for having been resolved and issued in violation of complainant’s due process rights.”
The OCP of Parañaque was also criticized for granting Mr. Okada’s counter-affidavit, saying, “it smacks of partiality and was grave error for the OCP Parañaque to have extended concessions and granted Respondent Okada’s Motion to Reopen and admitted Respondent Okada’s consularized Counter-Affidavit dated 22 January 2018.”
Citing the 2008 Revised Manual for Prosecutors, TRLEI said in their motions, “[o]nly a counter-affidavit subscribed and sworn to by the respondent before the public prosecutor can dispute or put at issue the allegations in the complaint.”
Pointing out that Mr. Okada’s counter-affidavit was not subscribed and sworn to before a public prosecutor in the Philippines but was rather consularized abroad, TRLEI explained, “[c]learly, this is not in accord with the 2008 Revised Manual for Prosecutors” and that “the OCP Parañaque, with due respect, committed grave error and again showed partiality to Respondent Okada.”
According to TRLEI’s motions to vacate, “the admitted leakage of the assailed (resolutions) to respondent Okada’s camp/Chloe Kim before its official release to the parties casts serious doubt on the impartiality, fairness, and credibility of City Prosecutor Paudac and constitutes a grave denial of due process.”
On the $3,158,835.62 misappropriation of funds charge against Mr. Okada and former Okada Manila chief operating officer and president Takahiro Usui, TRLEI said “[T]he OCP Parañaque gravely erred in dismissing the criminal complaint against respondents based on false assumptions, tenuous grounds, and wrong conclusions.”
TRLEI said it was “gravely erroneous for the OCP Parañaque to hastily conclude that the criminal complaint filed by Complainant against Respondents is an intra-corporate dispute, despite the lack of any existing intra-corporate relations between them” and that they have “sufficiently shown that all elements of estafa under Article 315, paragraph 1(B) of the Revised Penal Code are present.”
As for the $7,091,065.78 fraud case against Mr. Okada, his supply company Aruze Philippines Manufacturing, Inc. (APMI), Kengo Takeda, and Tetsuya Yokota, TRLEI insisted, “the OCP Parañaque gravely erred in not finding probable cause to believe that respondents committed the crime of estafa.”
TRLEI had sought for the inhibition of City Prosecutor Amerhassan C. Paudac after copies of the unreleased resolutions were leaked on social media platforms as early as May 18 by a certain Chloe Kim, who was a previous food and beverage manager at Okada Manila where Mr. Okada was chief executive officer until he was sacked in June of last year.
Mr. Paudac would inhibit himself from the case, along with Prosecutor General Jorge G. Catalan who was also requested by TRLEI to recuse for being involved in a previous perjury case against Mr. Okada. The DoJ would also assign the National Bureau of Investigation (NBI) to investigate the leak following TRLEI’s request.

ERC commissioners ordered suspended anew

By Victor V. Saulon, Sub-editor

Photo by Victor V. Saulon

THE FOUR commissioners of the Energy Regulatory Commission (ERC) who have been ordered suspended by the Office of the Ombudsman in a case relating to electricity consumers’ bill deposits have filed a petition for temporary restraining order (TRO) with the Court of Appeals (CA), their lawyer said.
“The suspension order is now the subject of a petition we filed with the Court of Appeals,” said Rolando B. Faller, the legal counsel of ERC commissioners Alfredo S. Non, Gloria Victoria C. Yap-Taruc, Josefina Patricia M. Asirit and Geronimo D. Sta. Ana.
“We will await the action of the CA on our request for TRO,” Mr. Faller said. He did not immediately answer when asked about when the petition was filed.
He said the commissioners stated the need for a TRO because the ERC, as a collegial body, cannot act on matters concerning public interest as the law requires a quorum of three to discharge the functions of the commission.
Mr. Faller also said that since the four commissioners are under the Office of the President (OP), “we will also wait for the disposition of the OP as to whether it will cause the implementation of the suspension order.”
Floresinda B. Digal, ERC spokesperson, did not respond to a request for comment in behalf of the commission but instead referred the matter to Mr. Faller. She said the lawyer was overseas as of Sunday. He responded to queries via Viber messaging app.
The suspension came after consumer advocacy group National Association of Electricity Consumers of Reforms, Inc. (Nasecore), represented by its Executive Director Rafael Antonio M. Acebedo, filed the complaint of grave misconduct against the commissioners on Dec. 13, 2017.
The case stemmed from Nasecore’s allegation of “unauthorized use” by distribution utility Manila Electric Co. (Meralco) of the bill deposits of consumers over a 10-year period until 2016, as well as unjust/discriminatory fixing of interest rates on them and their non-crediting in favor of consumers.
Nasecore said the total misappropriated deposits amounted to P61.36 billion, whereas the utility only declared P26.51 billion in its financial statements.
A representative of Meralco declined to comment on the case ahead of the ERC’s official statement.
In a statement during the weekend, Nasecore thanked the Ombudsman for the decision, saying it “is long overdue justice for the consumers against ERC’s regulatory failure.”
The 14-page decision was dated May 18 and was signed by Cherry T. Bautista-Bolo, the Ombudsman’s graft investigation and prosecution officer. It was approved by Overall Deputy Ombudsman Melchor Arthur H. Carandang.
The commissioners were found guilty of simple neglect of duty and were ordered suspended for three months from the service without pay.
Nasecore said: “This is the second time the Ombudsman has ordered the suspension of the same ERC Commissioners, the first was in December of last year ‘for conduct prejudicial to the best interest of the service aggravated by simple misconduct and simple neglect of duty’ for allegedly excluding [Meralco] and other firms from a competitive selection process (CSP) meant to ‘elicit the best price’ for consumers.”
It cited the Ombudsman’s finding that the commissioners “continuously refrain from strictly implementing rules defining the nature of BDs (bill deposits) as ‘mere guarantee in payment of bills’ which must be returned upon termination of the DUs’ (distribution utility’s) service.”
Nasecore also pointed to the decision that said the commissioners “failed to issue rules or policies such as creation of a separate escrow account to avoid commingling of BDs with the capital or operational expenses of [Meralco] or any DU for that matter. They tolerated the use of BDs as [Meralco’s] capital without the benefit of a reasonable return of interest to accrue yearly to consumers.”
During the weekend, Senator Sherwin T. Gatchalian, the chairman of the Senate energy committee, weighed in on the case, saying the ERC “was created to safeguard the rights and welfare of power consumers, who would otherwise be defenseless against unfair, anti-competitive, and outright anti-consumer practices of powerful, well-moneyed energy industry players — a perfect example of which is the outrageous misuse of bill deposits by distribution utilities.”
“Unfortunately, instead of standing up for the consumers, the ERC allowed an energy industry titan to appropriate billions of pesos worth of consumer deposits for its own corporate purposes. This is absolutely unacceptable,” he added.
“What is even more unacceptable is the fact that this is the second time within the past seven months that the Ombudsman has found the ERC commissioners administratively liable for failing to fulfill their duty to protect the interests of the consumers. Quite frankly, it’s an embarrassment,” he said.
He said there is an urgent need to implement sweeping reforms that will restore the institutional integrity of the ERC and rebuild the public confidence in it “that has been virtually eliminated by the never-ending list of recent scandals.”
He said as chairman of the Senate committee on energy, he would fast-track the passage of the ERC Governance Act, which he described as “a pivotal piece of energy legislation which seeks to accomplish the needed reforms by deconcentrating power.” — with C.A. Tadalan

Senator seeks inquiry on Build, Build, Build

SENATOR Sherwin T. Gatchalian has filed a resolution, seeking to review the status and sustainability of the government’s massive infrastructure program.
Senate Resolution 759 called for an inquiry on the financial requirements of the “Build, Build, Build” program to ensure “transparency, accountability and prudent use of loans,” according to Mr. Gatchalian, who also heads the Senate committee on economic affairs.
“It is incumbent upon us senators, in the exercise of our power of the purse, to ensure that public funds diverted from health, education, and social services financing for debt services payment are properly appropriated,” Mr. Gatchalian said in a statement Sunday.
Mr. Gatchalian said the Official Development Assistance (ODA) will fund only 40 out of the 75 approved infrastructure projects as of July 2017, which will cost P1.006 trillion.
The Duterte administration is expected to spend P8 to 9 trillion from 2017 to 2022, about P1.4 trillion annually, for the infrastructure program.
The government has incurred a total of P6.65 trillion in debt as of December 2017, noting too that P329.05 billion was allocated to debt servicing in the General Appropriations Act of 2018. — C.A.T.

PHL Coast Guard off to Beijing to tackle issues on patrol, fishing

REPRESENTATIVES of the Philippine Coast Guard (PCG) as well as the Department of Agriculture (DA) are set to travel to China in July to discuss with their Chinese counterparts the issues on patrolling and fishing in the disputed West Philippine Sea, the Philippines’ top diplomat said.
“[The Philippine and Chinese] coast guards are talking. This July, pupunta ‘yung (our) coast guard group natin sa (will go to) China….Yung (Our) fisheries department natin; agriculture-to-agriculture; fisheries-to-fisheries, mag-uusap din (will also talk),” Foreign Affairs Secretary Alan Peter S. Cayetano said in an interview with CNN last Friday, July 15.
He said ongoing talks between the Philippines and China show that President Rodrigo R. Duterte’s administration is being “prudent” in addressing the issue.
Mr. Cayetano also cited, as a result of the warming ties between the two states, the “tentative fishing agreement” allowing Filipino fishermen in the disputed waters. But on June 11, Spokesperson Geng Shuang of the Chinese Foreign Ministry called it a gesture of “goodwill.”
“China has made appropriate arrangement for the Philippine fishermen to fish in relevant waters out of goodwill. This policy remains unchanged. At this point, the China-Philippines friendly relations have taken on a positive trend, and China has a clear and firm determination to commit itself to consolidating and strengthening China-Philippines relations,” Mr. Geng said.
For his part, Mr. Cayetano said, “It’s a tentative fishing agreement, that’s why I’m saying [we are] prudent, patient, [and] quiet kami magtrabaho [we’re quiet in doing our job]. Hindi sa [Not through the] microphone.”
“It’s a tentative fishing agreement,” he repeated. “Well, if you ask them why, of course, they will say ‘goodwill,’ because they cannot say, ‘because it’s yours,’ then they will give up their position. In the same manner sa atin (that to us), hindi tatanggapin ng Chinese people na kaya nandoon ang fishermen dahil atin ‘yun (the Chinese people will not accept that our fishermen are there because we claim it’s ours). We’re saying,… the only reason you’re there is because we are peace-loving, but that’s ours. Never natin binabago ‘yun (we never changed that). That’s on the record,” he said.
Mr. Cayetano also called the vocal critics of China, especially opposition Magdalo Partylist Rep. Gary C. Alejano, “liars” for claiming that Sandy Cay, a shoal near the Pag-asa Island in the disputed West Philippine Sea, has been in control of China since last year.
“They’re liars. They’re trying to take down the government, and they are lying left and right…. No one built on Sandy Cay. It’s an uninhabited [island] and katabi siya ng (it’s near) Pag-asa, so we’re free to patrol there. Our fishermen can go, but all the others — Malaysia, Vietnam, China, etc., do not want us to build there because we have a DOC,” he said, referring to the Declaration on the Conduct of Parties in the South China Sea (DOC) signed in 2002 in Phnom Penh, Cambodia.
Section 5 of the said declaration states, “The Parties undertake to exercise self-restraint in the conduct of activities that would complicate or escalate disputes and affect peace and stability including, among others, refraining from action of inhabiting on the presently uninhabited islands, reefs, shoals, cays, and other features and to handle their differences in a constructive manner.” — A.L. Balinbin

ConCom ready to submit new constitution draft by July 9 as regional road shows start this week

THE CONSULTATIVE Committee to Review the 1987 Constitution (ConCom) is confident of meeting the August 19 deadline for the proposal on the Federal Constitution as stipulated under Executive Order 10 issued in 2016.
“According to Executive Order 10 , the ConCom shall endeavor to finish its job within six months from the day of convening. We convened on February 19 so until August 19, the job should be finished,” ConCom Media and Technological Officer Conrado I. Generoso said during a media briefing at the Philippine International Convention Center last week.
The ConCom will submit the draft to President Rodrigo R. Duterte on July 9, a few weeks before his 3rd State of the Nation Address (SONA) on July 23.
“Our commitment to the President is to submit this before the SONA so we can give him time to review,” Mr. Generoso said.
In the meantime, public consultations and presentations in the different regions, which was launched this week in Dumaguete City, will be held until August.
The draft, Mr. Generoso stressed, remains a work in progress.
“What we did in the first place is consultations with the experts,” he added, then the preparation of the draft, which will then be presented during the public consultations.
“Whatever feedback we get, we will still submit to the President and it is up to the President whether or not he’ll submit that feedback to the Congress,” Mr. Generoso said. — Gillian M. Cortez

Urbanized Metro Manila to have direct vote for leaders under draft federal system

Prof. Julio C. Teehankee — DLSU.ACADEMIA.EDU

PHILIPPINE CAPITAL Metro Manila will have a different type of regional government under the proposed federal system given that it is composed of mainly urbanized areas. The proposed Metropolitan Manila Region will still “be a federated region in a sense that (it will have) all the powers that have been identified in the other federated regions,” said Prof. Julio C. Teehankee, Chairman for the Subcommittee on Political Reforms and Leveling the Political Field for the The Consultative Committee to Review the 1987 Constitution. “In the case of Metro Manila, the regional governor and vice governor shall be directly elected by the poll within the metropolitan,” he said during a media briefing at the Philippine International Convention Center last week. Other regions, he explained, will have their governor and vice governor elected by a regional assembly composed of representatives of provinces and cities. “Given the specific characteristic of Metro Manila being the first and only region that is entirely, almost, composed of cities, not provinces. Plus one municipality: the municipality of Pateros, we have patterned it after the system of the Greater London authority which has been the template for the Tokyo Metropolitan government and we have looked at the example of the New York state government,” he said. Mr. Teehankee also clarified that it has yet to be finalized whether the Metropolitan Manila Region will be proposed as the Federal Capital. — Gillian M. Cortez

Future of 2 Negros provinces up for discussion in federalism road show

THE FUTURE of Negros Island, which is composed of two provinces that belong to two separate regions, is up for discussion during the first of a series of federalism road shows that was launched Sunday, June 17, in Dumaguete City. Negros Oriental is under the Central Visayas Region, while Negros Occidental is part of Western Visayas. “Let us all be informed about the issues surrounding the regions, particularly the Negros Island, and how federalism will help us surpass our current problems in the unitary system,” said Interior and Local Government Assistant Secretary and Spokesperson Jonathan E. Malaya, Administrator of the Center for Federalism and Constitutional Reform (CFCR). Mr. Malaya said the Consultative Committee (Concom) tasked to review the 1987 Constitution will discuss with Negrenses its proposed consolidation of the two Negros provinces into one as well as issues on agrarian reform, ancestral domain, and youth development. “We expect the Negrenses to take an active part in the discussions today (June 18) because we want to hear their voice on this very important issue that is close to their heart,” he said. On Aug. 7, 2017, President Rodrigo R. Duterte dissolved the Negros Island Region (NIR) due to a lack of funds. The NIR was created through Executive Order No. 138 signed during the previous administration under former President Benigno S. C. Aquino III.
Print

1...12,40812,40912,410...14,215Page 12,409 of 14,215
© 2024 BusinessWorld Publishing.
All rights reserved.
Read our privacy guidelines
Facebook Instagram Linkedin X Youtube