Fed’s Bullard warns vs hikes amid low inflation

May 30, 2018 | 12:02 am

THE FEDERAL RESERVE should slow its pace of policy normalization to help re-align price expectations around 2% and maintain the credibility of its inflation target, Fed Bank of St. Louis President James Bullard said Tuesday in Tokyo.
“Inflation expectations in the US remain somewhat low, suggesting that further normalization may not be necessary to keep inflation near target,” Bullard said in prepared remarks for a seminar. “A reasonable policy going forward may be to temper the pace of normalization.”
He also said raising rates aggressively risked inverting the yield curve, an outcome that markets could interpret as signaling an impending economic downturn.
His comments come ahead of a likely rate increase at the Federal Open Market Committee’s (FOMC) meeting in June.
Bullard, who isn’t currently a voting member of the policy-setting committee, said continued low inflation expectations could inhibit the Fed’s ability to maintain the credibility of its 2% target.
He repeated his stance that the central bank should avoid raising interest rates at a pace that pushes up short-term rates above longer-term rates. Historically such a development has often preceded an economic downturn, especially in the US, he said.
Dallas Fed President Robert Kaplan and Atlanta Fed President Raphael Bostic have also expressed concern over a possible flipping of the yield curve.
“It is unnecessary for the FOMC to be so aggressive as to invert the yield curve,” Bullard said. “The US nominal yield curve could invert later this year or in 2019, which would be a bearish signal for US macroeconomic prospects.”
The Fed policy rate is already near neutral, putting neither upward or downward pressure on inflation, added Bullard, who has been the most dovish Fed official over the past two years. He has argued that the US economy has been saddled with persistently low growth, so there is little need to raise interest rates much.
The FOMC is likely to raise rates “soon” if the economy performs as expected, according to the minutes of the panel’s May 1-2 meeting released last week. Investors expect a hike in June, though the outlook for increases in the second half of the year is less certain.
The FOMC has raised interest rates six times since it began the current hiking cycle in December 2015. In March forecasts, the committee was split on whether to lift rates two or three additional times this year amid an improving economic outlook and rising inflation. — Bloomberg

Watches, furniture, art available at gavel&block’s back-to-back auctions

May 30, 2018 | 12:01 am

TIME AND HISTORY go under the gavel at Salcedo Auction gavel&block’s back-to-back auctions on June 2.
Starting at 2 p.m. is “12,” an all-Rolex and Patek Philippe capsule sale featuring 12 models by the renowned Swiss watch houses. Vintage pieces as well as modern watches that would take years on a waiting list to acquire come together in this tightly curated collection, whose highlight is a Patek Philippe ref. 5496 Perpetual Calendar in platinum in mint condition.
A Rolex Explorer I with a gilt tropical dial and a Sea Dweller 2000 open “6” also make the grade, together with a sought after “Tudor Monte Carlo.” Collectors can skip the very long queue by outbidding the competition for the Rolex Oyster Perpetual Cosmograph “Daytona Cerachrom” ref. 116500LN with the coveted white dial.
Starting at 3 p.m. is the “History” auction, featuring over 200 pieces including Philippine paintings and sculptures spanning over a century.
There are late 19^th century letras y figuras, displaying the witty charm of this unique Filipino visual art form that condenses the life story of a wealthy 19^th century woman with whimsical vignette details and stylized type; an oil on canvas boceto by National Artist Fernando Amorsolo whose impressionistic brush strokes stray from his classical repertoire to create a modern beauty adorned in mestiza attire; to a verdant landscape by the academic master Vicente Rivera y Mir.
The sale also features tribal and ethnographic art from northern Luzon and Mindanao, as well as collectible furniture from across the archipelago, such as a Thonet marble top console; a 19^th century marble top rococo lansena; and an ornate narra comoda designed by the master craftsman Nuguid. Also in the collection are an imposing polychromed comoda from Bohol; a bastonero whose detailed relief carvings denote the status and wealth of its original owner; and a “Comoda Laguna,” a light wooden piece with distinct inlay designs.
Former Elle Decor Philippines editor Devi de Veyra styled the preview exhibition, which is on view until June 1 at Three Salcedo Place, 121 Tordesillas St., Salcedo Village, Makati City.
A talk and afternoon tea titled “Cabinet Meeting: Appreciating Collectible Philippine Furniture” with Elemeterio Fulgencio, Salcedo Auctions’ consulting specialist for furniture, will be held on May 30, 3 p.m.
Admission to the talks and to the auctions is free and open to the public.
The online catalogue is available at salcedoauctions.com. For inquiries, call 659-4094, 823-0956, 0917-894-6550 or e-mail info@salcedoauctions.com.

Robotics is now here

May 30, 2018 | 12:01 am

PNB’s Human Resource Head Bong Austero recently arranged a Robotics workshop attended by PNB’s Board and Senior Management Team. Yes, you read it correctly: robotics! We assembled our own robots and programmed them to move in a specific way. It was challenging at first as we familiarized ourselves with programming language, but once we moved to the testing stage when we checked if our robots were moving in the way we wanted them to, it became fun.
The workshop was capped by an engaging activity where we pitted the robots against each other in a friendly “robot war.” My robot lost to PNB’s youngest director Vivienne Tan, with the robot of Chief Credit Officer Nanette Vergara as overall winner.
You might be wondering what baby boomers and veterans were doing assembling and programming robots which is an activity associated with millennials. Or maybe you are wondering why bankers were undergoing a learning session on robotics. That’s because robotics is no longer an object of enthralment in sci-fi movies or pocketbooks. Robotics is already here and its many applications, reinforced by artificial intelligence, are pervasive in all activities, including banking.
We see applications of robotics everywhere — automated toll gates at superhighways, self-driving vehicles in manufacturing plants, robotics surgery in hospitals. The top five banks in Japan, Europe and the United States all have one thing in common — they are now rolling out the first prototypes of company robots that will handle routine customer information requirements and other repetitive tasks. Robots are machines that can be programmed to perceive, move, modify, or process the physical properties of objects thereby freeing manpower from doing repetitive functions. Robotics is the domain in artificial intelligence that deals with the study of creating intelligent and efficient robots.
Thanks to advances in computing technology, robotics can now be learned intuitively, just like learning to operate an iPad on one’s own. Anybody can learn how to do it with the right mindset, being open to change, innovation, and new technologies.
Actually, robotic applications have been with us for quite some time — it’s just that most of us have not been conscious about them. For example, automated teller machines are really robots that do what human tellers used to do, which is count cash and dispense it over the counter. Today, there are ATMs that accept cash deposits or perform other financial transactions.
The most common application of robotics nowadays is in robotics process automation which involves the use of programs that mimic processes done by human workers to accomplish routine, repetitive, non-value adding tasks. Today, most companies employ what are called chat bots to respond to basic customer inquiries or to perform basic requests such as changing passwords.
Will these mean that robots will replace people in the workplace? Repetitive and tedious back office tasks done manually may now be accomplished by virtual robots that operate from the desktops of employees. But no matter the level of sophistication, robots will not be able to replace humans completely. Robots will take over the repetitive tasks allowing people to focus on innovation, creative problem solving, better customer interaction, and other tasks that require higher thinking skills.
The challenge for leaders is to design the emerging workplace in ways that effectively harness the synergy between robotics and artificial technology and people. In the shorter term, the imperative for everyone is to start appreciating the potentials that robotics have in terms of helping people do their jobs faster, better, and smarter. We need to start learning about robotics and artificial intelligence, just like what we did recently. We had lots of fun as we witnessed how the robots we assembled and programmed performed in the friendly competition staged at the end of the workshop. There were a number of learnings that I took home from the robotics workshop foremost of which was that the old truism “you cannot teach old dogs new tricks” has really become irrelevant.
Advances in instructional technology have made learning engaging for all kinds of learners including the “young once.” But equally important was the realization that while robots will never fully replace human capability, they can improve efficiencies in the workplace significantly through significant reduction in errors, increased turnaround time and accuracy, and major cost savings. Indeed, robots and robot process automation will transform business and banking in many ways.
Flor G. Tarriela is Chairman of Philippine National Bank. She was the first Filipina Vice President of Citibank N.A. and was formerly Undersecretary of Finance when Jose T. Pardo was DOF Secretary. She is a natural farmer and an environmentalist.

Muntinlupa taps PayMaya for citizen card

May 30, 2018 | 12:01 am

PAYMAYA Philippines, Inc. has partnered with the local government unit (LGU) of Muntinlupa for cashless transactions through the expanded care card for the city’s residents.
The digital payments unit of PLDT, Inc.’s Voyager Innovations Inc partnered with the Muntinlupa city government to allow student scholars, senior citizens, and small businesses can have access to the Muntinlupa Care Card (MCC) Plus card which will be used to receive cash benefits and allowances.

Users can also use the card for payments in 5,000 sari-sari stores and small businesses. Muntinlupa residents can also use the card to avail of free e-jeepney rides within the city.

“As we work towards building a ‘cashless Philippines,’ we need the support of communities like Muntinlupa in order to build ecosystems that will support this vision around the country. We congratulate Muntinlupa City for being one of the first, and now one of the most advanced, adopters of cashless technologies that will truly empower their citizens,” PayMaya Philippines President and CEO Orlando B. Vea was quoted as saying in a statement.
PayMaya has partnerships with merchants which include SM Group, Robinsons Retail Holdings, Inc., and Bounty Agro Ventures, Inc. (BAVI), the company behind Chooks-to-Go.
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — P.P.C. Marcelo

How ‘inclusive’ is the internet in the Philippines?

May 30, 2018 | 12:00 am

How PSEi member stocks performed — May 29, 2018

May 30, 2018 | 12:00 am

Here’s a quick glance at how PSEi stocks fared on Tuesday, May 29, 2018.

Family of murdered OFW in Kuwait given two months to file case against suspects

May 29, 2018 | 11:45 pm

By Gillian M. Cortez
The Department of Foreign Affairs said that the family of slain OFW Joanna Demafelis only has two months to file for a case or their right to pursue the case will be dismissed.
During a organizational meeting of the Congressional Oversight Committee on Overseas Workers Affairs (COCOWA), Department of Foreign Affairs (DFA) Undersecretary Sarah Lou Y. Arriola said the family of Ms. Demafelis “has two months to file a case” against Mona Hassoun, wife of the OFW’s employer, Nader Essam Assaf.
Ms. Arriola added that if the family doesn’t pursue the case within the two-month period, “Under Syrian Law, it’s like you waived your right to file a case.”
“We just need a special power of attorney for [Ms. Demafelis’ family] for our embassy in Syria to file a case against the wife,” Ms. Arriola said.
Both Mr. Assaf and Ms. Hassoun are under police custody.
The DFA reported that the suspects flew to Damascus last May 22 and to Beirut on May 23 to discuss with lawyers the Demafelis case. Legal services will be used to cover the civil and criminal cases filed against Mr. Assaf.
The DFA admitted they are having difficulty in handling the case. “The complexities of the legal systems in the Middle East also baffles us because even if the spouses are tried in Kuwait, they can still be tried in Damascus for the wife and for the husband, in Beirut.”
As for settlement, Ms. Arriola emphasized Demafelis’ family “has exclusive and sole right to determine the amount” of the fee. “In the case for Lebanon, there’s a possibility for the family to get 100,000 dollars. So the advise of the lawyers is not to settle (the case).”

Government debt posts slight decrease

May 29, 2018 | 10:04 pm

By Elijah Joseph C. Tubayan
Reporter
THE NATIONAL government’s outstanding debt had a slight decrease in April “due to the stronger peso and third currency fluctuations,” the Bureau of the Treasury (BTr) said.
The total unpaid debt was recorded at P6.874 trillion as of April, 0.10% lower than the P6.879 trillion posted as of March.
However, debt was actually 7.9% higher than the P6.37 trillion of end-April 2017.
The current outstanding debt is equivalent to 98.27% of the P6.995-trillion total expected debt by yearend.
Of the overall unpaid obligations, 34.56% or P2.376 trillion is owed to foreign creditors while 65.44% or P4.499 trillion is owed to local sources.
The external debt was 1.5% lower than the P2.413 trillion logged in the previous month, due to the “downward adjustments on both peso and 3^rd currency-denominated debt amounting to P23.83 billion and P11.28 billion, respectively, adding to net repayments of P2.15 billion,” according to the BTr.
The domestic debt, meanwhile, was 0.70% higher compared to March’s P4.466 trillion, due to the “P33.34-billion net issuance of government securities tempered by the P0.26 billion effect of the stronger peso.”
BTr said the local currency in April was pegged at P51.734 versus the greenback, from the P52.25 in end-March.
The government borrows from local and foreign sources to fund its budget deficit, which for this year is capped at 3% of the country’s gross domestic product.
This year, it has set a 65-35% borrowing mix in favor of domestic creditors, as it plans to borrow a total of P888.227 billion.
The government also seeks to take advantage of favorable interest rates abroad as it widened the share of debt sourced externally versus the 26% share earlier programmed for this year and 20% in 2017.
The government expects the debt as a share to the economy to decline from 42.6% in the first quarter this year to 38.9% by 2022.

PIDS cites need for broader transparency in investment negative list

May 29, 2018 | 10:03 pm

THE PHILIPPINE Institute for Development Studies (PIDS) wants to broaden the level of transparency in the government’s foreign investment negative list to aid prospective foreign investors in making more informed decisions.
According to the state-run think tank, the current Regular Foreign Investment Negative List (RFINL) only contains information on the threshold allowed for foreign investments in a particular sector.
PIDS pointed out, however, that foreign investors are interested in the whole gamut of restrictions that may apply to them in the country’s investment regime, to help them accurately assess the potential impact in a given industry on their investments.
“They need to know all the regulatory measures that affect them and their investment from establishment, operation, and disposition. From a transparency perspective, such information should be made available and accessible to the public in a form that is easy to understand,” read PIDS policy note this month as authored by Glenda T. Reyes.
The report noted that the current structure of the negative list “does not take into account regulatory measures that have crosscutting implications on all sectors and activities, such as limitations on the citizenship of board of directors and economic needs test on employment of foreign nationals.”
“Banks and other financial institutions under the General Banking Act and other laws under the ambit of the Bangko Sentral ng Pilipinas are also excluded from its scope,” it added.
The report cited examples of these regulatory measures including the limitations on the number of suppliers, value of transactions, total number of natural persons, measures requiring specific type of legal entity or joint venture, and exceptions to the general rule where foreign participation may be allowed in specific circumstances, among others.
“As such, potential foreign investors still have to do further work to search for these information, which entails additional costs on their part and adds to the risks of doing business in the Philippines,” the policy note read.
Enhancing the level of transparency for foreign investors is “critical,” PIDS said, adding this should be a priority of government amid an “ever-increasing level of global competition,” with other countries having already expanded their respective negative lists.
It added that a broadened scope of the negative list covering regulatory measures “have as much impact as equity limitations on foreign participation and can affect them at the pre- and post-establishment phases of operation.”
“Taken together, these measures bear upon the decision-making process of foreign investors,” PIDS added.
However, changes in the RFINL structure may still need amendments to Republic Act No. 7042, or the Foreign Investments Act of 1991, as this serves to guide the content of the said list.
“Notwithstanding, the Executive department can call upon its departments and agencies to come up with a transparency list to supplement and address the deficiencies of the FINL,” PIDS said.
The 11^th RFINL is currently under review by the Office of the Executive Secretary before it is endorsed for President Rodrigo R. Duterte’s signature.
Mr. Duterte has ordered concerned government agencies to “exert utmost efforts” in easing or lifting foreign restrictions on Philippine industries in a bid to increase investments to the country, after the 10^th RFINL was generally unchanged from the previous one.
However, the National Economic and Development Authority said the upcoming list only contains eased sectors allowed by the law and the Constitution. NEDA will still pursue necessary amendments for a more robust liberalization of the RFINL. — Elijah Joseph C. Tubayan

Customs: Fuel-marking program under way

May 29, 2018 | 10:03 pm

THE BUREAU of Customs (BoC) wants to implement the fuel- marking program by next month, as it seeks to cap more than half of the revenue leakages by yearend.
“Based on the pronouncements of the Commissioner, gusto nga niya before July ma-implement na natin ’yan (he even wants this implemented before July),” Customs Director for Enforcement and Security Service Yogi Felimon L. Ruiz told reporters on Tuesday on the sidelines of the Fight Illicit Trade forum in Makati City.
He said the government loses P40 billion annually in foregone revenues from smuggled fuel.
“Based on the presentation of the BoC, P40 billion ang loss natin (our loss is at P40 billion). Hopefully we can fill that gap with the fuel marking, the P40 billion with the remaining six months, implement natin ’yan (we implement it), hopefully we can recover more than half.”
The Department of Finance said the terms of reference for the fuel-marking program are ready, with a bidding process to begin by the third quarter.
Mr. Ruiz also pointed out, however, that the BoC has already pilot-tested the program in Subic last month to prepare for the actual rollout, and is also readying the implementing rules and regulations (IRR).
“The fuels that have been marked, mas malaking deterrent ’yan sa smugglers (that’s a bigger deterrent on smugglers),” said the BoC official. This is one of the priority programs of the Commissioner as part of the enforcement efforts of the BoC. It will really help because smugglers will have a hard time.”
“Ongoing ’yung pag-draft natin ng IRR (A draft of the IRR is under way), but for sure malayo na ’yung (in) two months it will be implemented,” he added.
The fuel-marking program is among the tax administration measures mandated by the Tax Reform for Acceleration and Inclusion Law, or Republic Act No. 10963, wherein imported or locally refined fuel is marked with colored dyes to determine whether batches of petroleum products have gone through the supply chain legally and respective taxes have been paid.
If products are found to have no markings, it will be used as evidence against erring fuel importers or manufacturers for nonpayment of proper taxes.
However, fuel is not the only product frequently smuggled through Customs ports. The BoC last month seized P18.5 million worth of imported cigarettes from China bearing local brands such as Mighty and Marvels, and another P36.5 million last week.
Mr. Ruiz said the BoC has started tightening its watch on smuggled products after creating a joint task force with the Bureau of Internal Revenue and the addition of more security equipment.
“Right now, I think they will be having a hard time bringing it in through smuggling (because the) Commissioner, aside from adding personnel, (also added) X-ray machines,” Mr. Ruiz said. — Elijah Joseph C. Tubayan

Energy department mulls sourcing of fuel from Russia, other countries

May 29, 2018 | 10:02 pm

By Victor V. Saulon
Sub-Editor
THE Department of Energy (DoE) said it was planning to source petroleum products from Russia and other countries that are not members of the oil cartel Organization of the Petroleum Exporting Countries (OPEC).
It said the move was meant to “establish a strategic petroleum reserve (SPR) to cushion the impact of the rising price of oil in the international market.”
“The government is aware of the country’s vulnerabilities to abrupt changes in the international oil situation and impending threats on the same, hence we are formulating various strategies to address those vulnerabilities to cushion the impact for our consumers,” Energy Secretary Alfonso G. Cusi said in a statement.
He said the DoE has “two-pronged strategies” on its oil stockpiling.
Mr. Cusi said he had tasked the Philippine National Oil Co.-Exploration Corp. (PNOC-EC) to prepare for oil trading and retail “to provide competition to existing oil industry players and pacify domestic oil prices.” The secretary is ex-officio chairman of PNOC-EC.
Through a board resolution, the company has been directed and authorized to engage in the retail or selling of petroleum products sourced from Russia and non-OPEC members to independent petroleum dealers and to individual public consumers.
At present, the department requires oil companies to maintain a minimum inventory requirement of in-country stocks equivalent to 30 days of crude and products for refiners. It also requires 15 days of products for importers and bulk suppliers, and seven days of liquefied petroleum gas (LPG) stocks for LPG players.
The DoE, citing its Oil Industry Management Bureau, said the creation of the strategic petroleum reserve is founded on a number of joint international studies.

Opening of C3 Harbor Link targeted by Oct.

May 29, 2018 | 10:02 pm

By Denise A. Valdez
THE Department of Public Works and Highways (DPWH) and North Luzon Expressway Corp. (NLEx) are looking to open by October the NLEx Harbor Link Segment 10 connecting Karuhatan, Valenzuela City, to C3 road in Caloocan City.
After a progress inspection on Tuesday, DPWH Secretary Mark A. Villar said more than 90% of the right of way for the 5.7-kilometer segment has already been acquired.
“In the past, this project faced many delays. But under the ‘Build, Build, Build’ (infrastructure project of the government), [attention was given to] Harbor Link and we can see the right of way issues were resolved quickly,” he said.
For his part, NLEx President Rodrigo E. Franco told reporters the remaining 10% in the right of way is still crucial.
Meanwhile, the 2.6-kilometer extension road from C3 in Caloocan City to R-10 in Dagat-Dagatan, Navotas City, is nearing completion in the fourth quarter of 2019.
The total Harbor Link Segment 10 linking Valenzuela City, Malabon City, Caloocan City and Navotas City is expected to accommodate 30,000 to 50,000 cars a day when it opens.
Mr. Villar said this is DPWH’s first “major blow” in solving Metro Manila traffic. “The cars that used to pass through C5, Metro Manila and Quezon City may now head straight to NLEx via the Harbor Link,” he said in Filipino. Mr. Franco, for his part, said using the Harbor Link will cut travel time to only 30 to 45 minutes.
NLEx is also targeting the construction of the NLEx connector road by the first quarter of 2019 or sooner, as it works on resolving right-of-way issues on affected properties.
The NLEx connector road is an 8-kilometer elevated road that will connect NLEx to the South Luzon Expressway (SLEx).
DPWH also launched on Monday its “Jobs Jobs Jobs” online portal for work opportunities in the department. It said there are 11,063 infrastructure-related jobs available on the website as of opening day.