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Upgrade of city airport sought

THE GOVERNMENT should consider upgrading the Zamboanga City airport so that it can be used in servicing destinations between Western Mindanao and regional neighbors such as those in the Brunei-Indonesia-Malaysia-Philippines-East Asean Growth Area (Bimp-Eaga), representatives of the business sector in the sub-region said last week. The call came after a Philippine-based airline had postponed its plan to service the route between Zamboanga City and Sandakan Malaysia. Datuk Roselan Johar Mohamed, former chair of BE Business Council, said the government must equip the Zamboanga City airport with the necessary landing facilities for aircraft to be able to land anytime of the day. “The Zamboanga airport was not ready to host an international flight due to the lack of a landing system,” he said last week as he turned over the chairmanship of the council, considered the fifth member country in the sub-region, to the Philippines as represented by Vicente T. Lao. The Malaysian official said the council hopes that before the end of the year, the Philippine government will eventually install the needed facilities to be able to attract the airlines to serve the route. Mr. Lao, who has assumed the chairmanship of the Mindanao Business Council, said: “We would like to strengthen connectivity to boost tourism and bring ease in doing business in Bimp-Eaga.” — Carmelito Q. Francisco

Naga’s Tree of Life

LAST AUGUST, Robinsons Land Corp. (RLC) opened Robinsons Place Naga, a 56,000-square meter mall located in Naga City, Camarines Sur. The mall opens up to a wide circular atrium whose highlight is a 15-meter fiberglass sculpture featuring the Bicol region’s quintessential gabi (taro) leaf at its center.

This fiberglass sculpture — called the Tree of Life — was designed by Fil-Am artist Jefre Figueras Manuel who is known for his larger-than-life installations such as Code Wall (a 264 foot-long installation filled with messages in binary code) currently showcased in Florida. He also did the Sculpture Contour Series in 2016 featuring painted steel sculptures of the Philippine Eagle and carabao, among others.

“[The tree] is really about establishing a moment when people walk into the mall itself into this grand atrium and then there is this ‘larger than life’ tree or sculpture that is also serving as a structural element of holding the building up. It’s a thing that you pass by when you enter the mall and also when you leave,” Mr. Manuel told BusinessWorld in an e-mail interview in late December.

But the Tree of Life isn’t just an fiberglass sculpture — it does, after all, stand two stories tall — it is also the country’s first permanent projection mapping project.

Projection mapping is a projection technology used to turn often irregularly shaped objects into a display surface for video projection. Similar projections have been done on historical sites in the country like the Aguinaldo house in Cavite, but those were temporary.

“The concept of the tree is really — more or less — sort of represents this idea of sort of establishing a ‘root’ in the province… [it’s] is really about where people learn about their morals and their values from their family and this idea of having a strong family tree. And so this Tree of Life … came about [with] this idea of creating a strong basis for people in terms of morals and values and how they can grow as an individual but also grow as a unit, as a family,” he explained.

The original nine-minute projection featured the creation of the universe starting with the Big Bang though over Christmas, the mapping also featured holiday imagery like gift-wrapped presents and Christmas lights. — ZBC

Hoge seizes Sony Open lead after missile mistake rocks PGA golfers

LOS ANGELES — Tom Hoge seized the third-round lead at the Sony Open on Saturday as US PGA Tour golfers shook off the panic caused by mistaken missile alert and got down to business in Hawaii.

“For sure, to get that missile threat on your phone, you don’t know what’s going to happen,” Hoge said of the early morning scare, in which an alert was sent to cellphones warning of “BALLISTIC MISSILE THREAT INBOUND TO HAWAII.”

Recipients were urged to seek shelter, and it was more than half an hour before authorities confirmed the alert was sent in error.

Journeyman John Peterson, who was tied for second after Friday’s second round, wrote on Twitter that he had taken evasive action after the warning.

“Under mattresses in the bathtub with my wife, baby and in laws,” Peterson wrote. “Please lord let this bomb threat not be real.”

In a separate tweet after confirmation that the alert was sent in error, Peterson wrote: “Man. How do you press the wrong button like that. COME ON MAN.”

But Hoge, a 28-year-old graduate of the developmental Web.com Tour who is seeking a first US PGA Tour title, showed no sign of any residual nerves as he put together a bogey-free round of six-under par 64 at Waialae in Honolulu.

His 16-under total of 194 put him one stroke in front of overnight leader Brian Harman, who carded a 68, and Patton Kizzire, who climbed up the leaderboard with a 64 for 195.

American Kyle Stanley was alone in fourth after a 65 for 196 and compatriot Chris Kirk fired a 67 for 197.

Hoge’s six birdies included a 40-foot bomb at the 17th. He seized sole possession of the lead with a birdie from a greenside bunker at the par-five 18th.

While he has yet to win on the PGA Tour, Hoge said some solid performances early in the 2017-18 season had given him confidence.

Harman started the day with a three-shot lead. He managed birdies at the fifth and 10th to keep his pursuers at bay, but bogeyed the 11th. He was tied for the lead after a birdie at 16, but he settled for a par at the last after finding the rough off the tee.

Kizzire opened with an inauspicious double-bogey at the first, but reeled off five straight birdies from the sixth through the 10th to power into contention. He added birdies at 14 and 16 to seize a share of the lead heading to 18, where he salvaged a birdie despite driving into a hospitality area. — AFP

The missing link in our tourism strategy

About this time last year, members of Skål International, the world’s foremost organization of tourism professionals, had a meeting with the newly installed Chief Operating Officer of the Tourism Promotions Board (TPB), actor Cesar Montano. I attended that meeting as a member of the group.

Understandably, sentiments of doubt and trepidation filled the room given Mr. Montano’s lack of experience in the tourism trade and absence of bureaucratic management skills. We wondered: What relevant skills does Mr. Montano bring to the table? Does he even have a plan? Can the fragile state of the tourism industry survive a COO who is learning on the job?

For those unaware, the TPB is the promotional arm of the Department of Tourism and is responsible for all facets of advertising and communications. This includes participation in international tourism expositions; promotion of Meetings Incentives, Conference and Events (MICE); creation of cultural and sporting events; and marketing communications through tri-media advertising, below-the-line advertising, public relations and internet adverts, among others. The TPB has a budget of P2.5 billion.

Before Mr. Montano addressed the group, we were all advised not to ask questions as he will not be entertaining them. It was an ominous sign.

In his pre-written speech, Montano casually shared what he thought was the most potent means to promote the Philippines to the world. His “grand idea” was to produce movies set in the Philippines.

Montano spoke about two films, in particular, which the TBP intended to co-produce and utilize its budget on. One is a film about pre-colonial Philippines and another, a romantic comedy entitled, Prayerfully Yours, starring Megan Fox and — surprise, surprise — Montano himself. Both films are to highlight the country’s landscapes, seascapes, flora and fauna in the hopes of doing for the Philippines what the Lord of the Rings did for New Zealand.

There was no talk about country branding, thematic or tactical advertising, MICE or forging alliances with international tour operators. It was all about Montano’s film fantasies. When members of the group huddled after Montano’s talk, we all agreed that we were royally screwed.

NINE MONTHS AFTER
As of October 2017, Philippine tourism arrivals grew by 11% to 5.474 million visitors.

By all indications, the TPB and the Department of Tourism (DoT) will likely reach its target of 6.5 million visitors for the entire year. Not bad. It seems we weren’t screwed after all.

Upon reviewing the TPB’s accomplishments, I discovered that the lion’s share of the its budget were spent on legitimate promotional activities, not on Montano’s movie fantasies. Thankfully, sanity prevailed.

The Chinese were the drivers of growth with more than a million of them visiting our shores. They are now our second largest market, following Korea. While we all know that this is largely due to the cozy diplomatic relations between China and the Philippines, I would like to think that the TPB had something to do with it too.

Records show that the TPB successfully facilitated dozens of familiarization tours with travel operators and media; it participated in numerous international exhibitions like the ASEAN Tourism Forum in Singapore, Guangzhou International Travel Fair, OZTEK Dive Conference in Sydney and the Luxury Travel Congress in Dubai; it produced local tourism events such as the World Food Congress, Anilao Scuba Diving Festival and the Boracay Dragon Boat Festival; and it facilitated (or supported) multiple MICE event primarily relating to the ASEAN summit.

While the year may have been busy for the TPB, regretfully, sheer number of promotional activities are no longer enough to push Philippine tourism arrivals to the level of Indonesia or even Vietnam.

Vietnam attracted 12.9 million tourists last year, a whopping 29% increase from the year before. Indonesia welcomed 15 million visitors, a 21% leap from 2016. Within the ASEAN context, the Philippines is an underperformer and its growth rate, lethargic.

COUNTRY BRANDING
The gaping hole in the TPB efforts is country branding and a strong thematic advertising campaign to support it. This is where the TPB falls short.

To define terminologies, a country brand refers to how a nation is perceived by the world on several dimensions. Not only does it include a country’s attractiveness as a tourism destination, it also speaks about a nation’s heritage and history. It touches upon its culture, the stereotypes of its people, its exports and the global brands associated with it (like Jollibee). It reflects where a nations stands in terms of its economy. In short, a country brand is a snapshot of a country’s past, present, and future.

The concept of country branding has been around since the 1950s and progressive nations around the world have leveraged it for various purposes. Germany, for instance, built an image associated with precision and technology. France established theirs based on design and craftsmanship. Both nations have intentionally crafted these images to lend credibility to their exports, industries and of course, in tourism.

A thematic campaign, on the other hand, refers to a series of advertisement messages that share a single idea and theme which make up an integrated marketing communication.

Former TPB head, Chicoy Enerio and former DoT secretary, Mon Jimenez, did it right.

The Philippine tourism industry grew from the doldrums to 6 million visitors over five years on the back of the “Its more Fun in the Philippines” campaign. It was a brilliant thematic campaign that evolved to become our country brand. It was utilized not only by the tourism sector but also in investment promotions and diplomacy.

We still recall how Philippine investment forums in Europe, Asia, and America would go by the theme, “Doing Business is more fun in the Philippines.” They were packed to the rafters every time.

In diplomacy, bilateral government meetings would be themed as “Partnerships are More Fun in the Philippines.” The word “fun” gave the country its character.

The “Its More Fun in the Philippines” campaign was a runaway success since it was supported by a multimedia blitz utilizing TV, print, billboards, cinema ads, digital ads, and special events. It included advertising spots on CNN International, BBC, the Asian Food Channel, and MTV.

Throughout the life of the campaign, the Philippines became a “fun” place to visit, a “fun” economy to do business in and a “fun” people to collaborate with. It changed the Philippine paradigm in the eyes of the world. It was a smart and effective way to spend the TPB budget.

This is what is lacking in the TPB and DoT today. I would even venture to say that the 11% growth realized in 2017 was largely due to the residual effect of the “Its ore Fun in the Philippines” campaign.

Last June, the DoT launched a new campaign called “Experience the Philippines.” It was aborted, still-born, due to allegations of plagiarism of its TV commercial entitled “Sights.” The DoT and TPB have since reverted to “Its More Fun in the Philippines” as its slogan, but it is not promoted as aggressively as it was before. It is neither seen on international TV nor in billboards in Time Square, Piccadilly Square, or Ginza as it once was.

The TBP must deliver more than 11% growth if it is to be regionally competitive. The TBP, with its P2.5-billion budget, must spend strategically so that growth rates can approximate that of Vietnam and Indonesia.

More than five million people depend on the tourism industry for their livelihood. Tourism provides a trickle down effect with turbo-charged power. This is why the TBP and DoT are just as important as the Departments of Trade & Industry or even the Department of Finance. Let’s not forget, tourism accounts for more than 10% of our gross domestic product. We simply cannot dismiss tourism as a minor cog in our machine.

At this juncture, familiarization-tours, occasional MICE and sporting events no longer cut it. The TPB must think strategically and give due focus on country branding. This is the hole that needs to be filled. Only with growth rates above 20% can the tourism industry uplift the lives of more Filipinos.

 

Andrew J. Masigan is an economist.

Goldman, Morgan Stanley fined for foreclosure cases

THE FEDERAL RESERVE is closing the book on sanctions against US banks over improper handling of post-crisis mortgage foreclosures, fining firms including Goldman Sachs Group Inc. and the IndyMac successor formerly chaired by Treasury Secretary Steven Mnuchin.

In an enforcement case that has stretched across seven years, the Fed is ending its role by fining five companies, the agency said in a statement Friday. More than $35 million in new penalties include $14 million for Goldman Sachs, $8 million for Morgan Stanley, $4.4 million for US Bancorp, $3.5 million for PNC Financial Services Group Inc. and $5.2 million for CIT Group Inc., which had purchased OneWest Bank — the firm that bought IndyMac.

Mnuchin was chairman of OneWest and Comptroller of the Currency (OCC) Joseph Otting was its chief executive officer when the firm faced earlier foreclosure sanctions.

The Fed had earlier fined other banks, including Bank of America Corp., JPMorgan Chase & Co., Ally Financial Inc., Suntrust Banks Inc. and HSBC Holdings Plc.

BOTCHING FORECLOSURES
After the banks were accused of botching thousands of foreclosures in 2011, the Fed and other regulators required lenders to fix problems in their servicing of residential mortgages. The Fed’s termination of the earlier enforcement actions means the regulator is satisfied that the firms have improved their practices, the agency said.

IndyMac Bancorp failed in 2008 as one of the mortgage meltdown’s major casualties. That same year, Mnuchin, a former Goldman Sachs banker, led a group of investors that included hedge fund billionaire John Paulson and finance giant George Soros in buying the bank.

IndyMac’s name was changed to OneWest and Mnuchin hired Otting, a veteran West Coast banker, to run it. The firm — beset by the foreclosure scrutiny — was sold off to CIT in 2015, and Mnuchin and Otting joined the Trump administration last year.

The 2011 actions from the Fed, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. were among the largest coordinated enforcement efforts in the years following the crisis.

INEFFECTIVE EFFORT
The regulators first tried to set up what was known as the Independent Foreclosure Review in which the largest US mortgage firms were meant to comb through thousands of foreclosures looking for errors, but the agencies eventually decided that effort was overly time-consuming and ineffective.

So, in 2013 they fined firms hundreds of millions of dollars and ordered them to pay out about $3.6 billion in cash to compensate borrowers, though many of the firms had lingering problems complying with orders to fix their internal systems.

The OCC’s settlements with banks were completed a year ago, including final fines of $70 million for Wells Fargo & Co. and $48 million for JPMorgan after the two were accused of failing to move fast enough to satisfy the earlier orders.

In 2014, the Fed was faulted by its internal watchdog for its handling of complex settlements. Its Office of Inspector General said lax preparation and management led to poor execution of the settlement with the mortgage servicers. — Bloomberg

Israel destroys tunnel from Gaza strip

JERUSALEM — Israel said Sunday it used a combination of air strikes and other means to destroy a tunnel stretching from the Gaza Strip into the country and continuing into Egypt.

Israeli military spokesman Jonathan Conricus said the tunnel belonged to Palestinian Islamist movement Hamas and was intended for attacks as opposed to smuggling.

Such tunnels have been used to carry out attacks in the past.

He said he was not aware of any casualties from the destruction of the tunnel, which was still being built.

It ran underneath the main goods crossing between Israel and the blockaded Gaza Strip — known as Kerem Shalom — as well as gas and fuel pipelines, he said.

According to Mr. Conricus, Israeli air strikes late Saturday along with other unspecified means were used to destroy the tunnel.

The strikes occurred within the Gaza Strip, while further means were used in Israeli territory.

The tunnel began east of the city of Rafah in the Gaza Strip, crossed into Israel some 180 meters, then continued into Egypt for an unspecified length, with no exit point detected, he said.

Mr. Conricus said Israel had coordinated with Egypt on the operation.

The tunnel stretched a total length of around a kilometer and a half, he said.

Defense Minister Avigdor Lieberman said: “Destroying the network of offensive tunnels is an essential component in our policy of systematically damaging the strategic abilities of Hamas.”

“The message to the Gaza leadership and residents is clear — invest in life and not burial tunnels,” Lieberman said in a statement.

Israel says it has been developing a new method to identify and destroy such tunnels, though it does not comment on details.

It is also building an underground wall in the area around the Gaza Strip to stop such tunnels. — AFP

PLDT, Globe wary of government’s plan to reallocate frequencies

By Patrizia Paola C. Marcelo, Reporter

PLDT, Inc. and Globe Telecom, Inc. are wary of the plan of the Department of Information and Communications Technology (DICT) to ensure a more “equitable” allocation of frequencies in the telecommunications industry, particularly when a third player comes in.

PLDT Chairman, CEO and President Manuel V. Pangilinan said the public should “give careful attention” to the possible reallocation of frequencies, adding the 700 megahertz (MHz) spectrum acquired by PLDT and Globe from San Miguel Corp. in 2016 are already being “extensively used.”

“That’s a serious matter of public interest. I think we should give careful attention to that particular subject matter. So far as we’re concerned, we are clearly using extensively the frequencies we acquired from San Miguel. They’re actively, extensively used by Smart, Sun, Talk and Text,” Mr. Pangilinan told reporters on Jan. 10.

Globe Senior Vice-President for Corporate Communications Yolanda C. Crisanto said the telecommunications company is using the 700 MHz spectrum “to serve the public.”

“As an incumbent, the number of customers we currently serve is our basis for the spectrum we have. Even in the buyout of the 700 MHz assets, we returned a good number of spectrum to the government on the basic principle that this resource should be used for public good. What the government should avoid from happening again is that any single entity holds a large number of spectrum and does not use it to benefit the public,” Ms. Crisanto said in a text message.

PLDT and Globe in 2016 acquired the telecommunications assets of SMC, including the coveted low-band 700 MHz.

The Philippine Competition Commission (PCC) earlier estimated only 12.8% of the spectrum will be available for a potential third player in the country.

This is why the DICT is looking at allocating the remaining uncommitted frequencies to a third player, which could possibly be structured as a consortium.

Mr. Rio told reporters last month the DICT does not favor distributing the remaining frequencies to many players, which might lead to buyouts by PLDT and Globe.

Public hearings for spectrum reallocation are expected to be conducted by the middle of February, Mr. Rio has said.

Mr. Pangilinan said PLDT welcomes the possible entry of a third player, and continues to prepare for this.

“But also the main job for us is to really build a superior network for fixed and wireless, to ensure the service is world-class. We said late last year that we would show that with the level of capex that we would announce, hopefully soon enough, that would be north of P50 billion, that is a historic high for PLDT, to demonstrate that we’re getting serious about not only our wireless network but also our fixed (line business),” Mr. Pangilinan told reporters.

Mr. Pangilinan said capital spending on fixed broadband will see “significant increments” compared to 2017.

Globe is keeping its capex flat for 2018, retaining the $850-million capex of 2017. The company said the budget will be used primarily to meet demand for bandwidth-intensive content.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a stake in BusinessWorld through the Philippine Star Group, which it controls.

Locator makes first export launch

PANABO CITY-PhilDutch Polymer, Inc, the first locator in the Anflo Industrial Economic (AIE) zone, recently made its first export launch. In an interview Frank R. Jaeckel said about 10 tons of resin granules (one container) were exported during the launch to main markets such as China and Vietnam. Co-owner Ferdie Y. Maranon said that, in terms of volume, they’re expecting to export 40 to 50 containers a month. PhilDutch is the first PEZA non-agricultural exporting company in the Davao Region, which started operating in November last year its processing plant for engineering polymers. Mr. Jaeckel said very soon they will start putting up their processing line. The factory will be fully operational by March. “We’re not yet finished completing the structure that will hold most of the equipment. We will employ about 75 people but as we grow, we might be employing more people from Mindanao,” he said. Co-owner Gregory S. Maranon for his part said; “This is a PEZA zone and as a PEZA rule you have to be 70% of your production will be for export.” He said they already have contracts with three companies in China. — Maya M. Padillo

Famed photographer Mario Testino accused of sexual harassment

NEW YORK — Veteran photographer Mario Testino — a global icon in celebrity and fashion photography — was accused of sexual harassment by 13 people Saturday.

Fashion photographer Bruce Weber — already sued over harassment claims in December by model Jason Boyce — was also implicated in a New York Times article on allegations against both photographers.

The allegations are the latest in a deluge of accusations concerning influential figures in entertainment, media, fashion and politics, sparked by revelations about longtime film producer Harvey Weinstein.

Peruvian-born Testino, 63, has photographed dozens of campaigns for big fashion houses and seen his work published in the likes of Vogue magazine over his career, which has spanned four decades.

His photograph of tennis player Serena Williams and her baby daughter appears on Vogue’s February edition, unveiled this week — while his other works include the Duke and Duchess of Cambridge’s engagement photo and a series of images of Princess Diana in 1997 published in Vanity Fair.

Several models and ex-assistants of Testino accuse him of making increasingly aggressive sexual advances.

“He was a sexual predator,” said Ryan Locke, a supermodel in the late 1990s.

Locke alleged that during a photo shoot on a bed, Testino asked his team to leave the room and then climbed onto the bed on top of him.

“I’m the girl, you’re the boy,” the photographer allegedly told the model, who said he walked out of the room.

A former photography assistant, Hugo Tillman, recalled a similar experience — while another, Roman Barrett, accused Testino of rubbing up his leg and masturbating in front of him.

“Sexual harassment was a constant reality,” he said.

Mario Testino did not immediately respond to requests for comment.

For the same New York Times article, 15 current or retired male models also accused Bruce Weber of sexual harassment. Weber also did not respond to a request for comment.

CONDE NAST BANS TESTINO, WEBER
Conde Nast — publisher of glossy magazines including Vogue — said it would stop working with the two photographers.

“We are deeply disturbed by these accusations and take this very seriously,” CEO Bob Sauerberg and Vogue editor Anna Wintour said in a joint statement.

“In light of these allegations, we will not be commissioning any new work with Bruce Weber or Mario Testino for the foreseeable future,” they added.

The company also announced it had begun to formulate a code of conduct to protect models from sexual harassment in October, according to the Times.

The newspaper reported the guidelines include a ban on under-18 models and alcohol on sets — and recommend that models are not left alone with photographers or other team members.

Nudity or poses of a “sexually suggestive” nature will be detailed and agreed upon before a shoot.

In October, several magazines and fashion houses also said they would no longer work with fashion photographer Terry Richardson after he too was accused of harassing models, following years of rumors about his behavior. — AFP

EU more dependent on Russian gas despite bid to diversify

DESPITE repeatedly vowing to reduce its energy dependency on Moscow, Europe is more reliant on Russian gas than ever before — and there are few signs of this trend reversing.

Russian gas giant Gazprom said this month it had completed record deliveries towards Europe and Turkey in 2017 at a total of 193.9 billion cubic meters — eight percent higher than its previous record, set in 2016.

This result was not only a financial victory for the company, whose exports are its main source of profit, but also a political one at a time when diplomatic relations between Russia and the European Union (EU) are at their worst since the Cold War.

The numbers “show the increasing demand from European countries for Russian gas, but also the reliability of these deliveries in the required amount,” Gazprom’s Chairman Alexei Miller said.

Deliveries to Germany and Austria reached a historic high and exports to France rose by 6.7% compared to 2016, according to Gazprom’s figures.

Brussels set goals to diversify its energy sources following a series of gas crises between Moscow and Kiev that affected deliveries to Europe. But the percentage of Russian gas in Europe has only increased in recent years and now represents a third of the total gas consumption in the EU.

That goal was reinforced by tensions between Brussels and Moscow following the start of the Ukrainian crisis in 2014 that led to fears of Moscow using its gas leverage for geopolitical means.

Meanwhile, diversification became easier to achieve with the development of the market for liquefied natural gas (LNG), which is transported by ship rather than pipelines, allowing for the import of supplies from Qatar and even the United States.

However a number of factors have worked to push up consumption of Russian gas.

According to Valery Nesterov, an oil and gas analyst at Russian bank Sberbank CIB, EU demand for gas is rising due to “economic recovery” in Europe and thanks to gas prices being “more competitive” than those of coal.

Other reasons pushing up demand include cold winters, the decline of European (mainly Dutch) gas output and the closure of nuclear power plants, such as in Germany.

If Nesterov envisages a possible reduction of Russian exports to EU this year after record results in 2017, he nonetheless says the general tendency will not change: “Gazprom will likely keep its market share in the EU.”

Strong European demand has allowed Gazprom to increase production after weak results in recent years due to a decline of its market share on its home market and the loss of Ukraine, an important client which stopped buying Russian gas in 2015.

Gazprom is also looking to develop new pipelines with the support of major European companies to maintain its part in the market. But the EU is wary.

Brussels blocked South Stream, a Russian project to ease exports to southern European nations, and has been resisting other projects such as TurkStream, a pipeline planned via Turkey, and North Stream 2, via the Baltic Sea, which Gazprom justifies as necessary for the increased European demand in the future.

“A sort of schizophrenia exists between Europe’s diplomacy and its market. The market chooses the cheapest gas to produce and use in Europe, which is Russian gas. Europe is said to be too dependent but nothing has been done to change this,” said Thierry Bros, researcher at the Oxford Institute for Energy Studies.

“We could say that the speed limit signs are in place but they are ineffective because there is no speed check. There are mechanisms for regulation but there is nothing to verify that they are respected,” he added.

And Russia is not content with just pipelines. The country recently took a major step into the LNG market by launching the Yamal LNG terminal in the Arctic, financed by Russian gas producer Novatek with the help of France’s Total. The Yamal project will supply both Europe and Asia via sea routes.

Diversification for the EU is prevented by a simple obstacle, said Thierry Bros: it “requires additional costs and the question is: who is going to pay?” — AFP

World economic federalism and nation-state federalism

There is no clear and commonly used definition, no settled common denominator of “federalism,” according to Dr. Anna Gamper (Associate Professor, University of Innsbruck). She says “the concept of federalism requires a distinction between the statehood of federal states (the state as a whole) and the statehood of the constituent units (or the central state), as this would otherwise create a confederal system (Anna Gamper, Global Theory of Federalism: The Nature and Challenges of a Federal State: German Law Journal Vol. 6, No. 10, 2005).”

What America had in its early years was a confederation of independent states, until the end of the Civil War, when government was centralized under a new federal constitution that addressed the gaps and overlaps of responsibilities and powers between big and small states mainly, amidst the conflicts of race and social issues, and the need for checks and balances in economic/fiscal and political administration (as related in Gerston, Larry: American Federalism: A Concise Introduction, 2007). The test of the new system came in the Depression of the 1930s, when President Franklin D. Roosevelt’s “New Deal” policies forced a dramatic shift to a strong national government leading the federation of states (Lowi, Theodore, The End of the Republican Era: 1995).

And America’s concept of federalism became the blueprint for action in the wake of world wars and depression: nations needed to cooperate for the good of each other and all. And what might be called a world economic federalism started with the common management of international money.

After World War II, the world powers faced post-war economic reconstruction.

The Allied powers met in Bretton Woods (USA) in 1944, and agreed to peg currencies against the US dollar at a fixed rate of exchange with the price of gold. In the fashion of federalism, super-agencies were established to oversee and administer the participating nations’ independent but cooperative efforts and shared guiding principles: the International Monetary Fund (IMF) to provide emergency funding; the International Bank for Reconstruction and Development (now part of the World Bank group) for development projects; and in 1947, the General Agreement on Tariffs and Trade (GATT) to rebuild international trade (from The Economics Book, London: 2012).

The IMF and the World Bank still thrive to today in perhaps the intuitive need of the world for some central “government/regulator” for international trade and economics, as the United Nations has survived from the wars as sociopolitical central authority figure for a now-majority democratic world. And the concept of cooperation and of “family” among like-minded nations has persisted, with globalization validating economic and pseudo-political federalism at the international level.

A group called the World Federalist Association (formed 1987) cites the “cosmic and evolutionary reality” that “a single intelligent species, living on a single (and cosmically insignificant) planet, ought to regulate its affairs through common, and therefore necessarily global, political institutions,” urging a formal world federalist government.

Joseph Stiglitz, 2001 Nobel laureate in Economic Sciences, in his 2002 book, Globalization and its Discontents, explains that “globalization could be either a success or a failure, depending on its management. There is success when it is managed by national government by embracing their characteristics of each individual country; however, there is failure when it is managed by international institutions such as IMF.” Many reacted adversely to Stiglitz, with the Cato Institute calling the book a “score-settling exercise distorted by the author’s own political prejudices and personal animus (http://www.cato.org).” But, using the Asian Financial Crisis as case study (and the contradictory handling of Malaysia to IMF advice) Stiglitz surely not unintentionally pointed out the reality that the world is far from the cosmic nirvana of global economic federalism.

Pulitzer-awarded writer Thomas Friedman (New York Times) states that “individual countries must sacrifice some degree of economic sovereignty to global institutions (such as capital markets and multinational corporations), a situation he has termed the ‘golden straitjacket (Friedman, Thomas L. The Lexus and the Olive Tree. Farrar, Straus and Giroux: 1999). ’”

And, same as the children of globalization, the trade and economic groups that have formed among nations and regions that call for the lifting of trade barriers, tariffs, and the banning of protectionist practices such as local subsidies among other rules and restrictions that homogenize the playing field for big and small nations, rich or poor — are these “golden straightjackets” in the aspired-for world economic federalism?

The unorthodox US President Donald Trump will not be straightjacketed. From his campaign to now, he has unqualifiedly declared that political, social and economic borders of America will be restored and protected, as he threatens illegal immigrants, specially from neighbor Mexico, while attacking the North American Free Trade Agreement (NAFTA), and the global multilateral institution, the World Trade Organization/WTO (New York Times, Oct. 31, 2017). “America First” is a marked inward-looking stance where the US about-faces from its role as big brother-model to the intuitive world economic federalism in present-day globalization.

Anent Trump’s behavior, we note Oxford economists’ reminder of two critical aspects of a federal system: first, one cannot assume that different governments in a federation will automatically cooperate and, second, the government at all levels is composed of self-interested individuals (M. Govinda Rao and Nirvikar Singh, “Political and Economic Theories of Federalism (http://www.oxfordscholarship.com).”

In a small, developing country like the Philippines, would it be wise to be a late-entrant into federalist government, creating a plurality of centers of unpredictable and unreliable independent power at this tenuous time of world political economics?

Currently, there are about thirty federal states, including the United States, Canada, Switzerland, Germany, Austria, Belgium, Australia, South Africa, Nigeria, India, Indonesia, Malaysia, Mexico, Argentina and Brazil — none as small an economy, and of land and people as the Philippines.

 

Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.

ahcylagan@yahoo.com

PHL shares to move lower as market consolidates

By Arra B. Francia, Reporter

SHARES are seen to trade lower this week as investors reposition their portfolios, with eyes set on the release of the implementing rules and regulations (IRR) of the first package of the tax reform program.

The benchmark Philippine Stock Exchange index (PSEi) finished last week flat at 8,814.62, posting an increase of just 0.01% or 1.37 points. Week on week, the market gained 0.51% or 44.62 points.

This climb was supported by a 3.2% uptick in financials and 0.80% rise in services. Decliners outpaced advancers 110 to 96 week on week.

Foreign investors continued their buying spree last week, as net foreign inflows averaged at P500 million. The market was valued at P37.64 billion.

Analysts noted the market would be taking pauses in the coming weeks in preparation for its rise to the 9,000 level.

“We saw somewhat of a pullback last week which I think is going to continue into [this] week as we create a base between the 8,500 and 8,700 to build more momentum to breach 9,000. If [we] see the market lose a hundred points or more next week, I would not be worried as these are buying opportunities,” Eagle Equities, Inc. Research Head Christopher John Mangun said in a report.

Online stock brokerage 2TradeAsia noted the same, saying such pauses would be healthy for the market.

“Large fund managers are on comparison mode among houses’ outlook and portfolio repositioning is expected as a result,” 2TradeAsia.com said in a weekly market note.

The brokerage added that investors will be assessing the IRR of the first package of Republic Act No. 10963, otherwise known as the Tax Reform for Acceleration and Inclusion Act. New tax rates have been implemented since the start of the year, which has allowed for lower personal income taxes alongside higher taxes sugar-sweetened beverages, fuel and oil, among others.

“Merits will be assessed on its rollout plus achievement of the Finance bureau’s estimated numbers,” 2TradeAsia.com said.

Meanwhile, Eagle Equities’ Mr. Mangun said that with the market’s current path, the PSEi will manage to breach the 9,000 level in “the next couple of weeks.”

“I think we will continue to see the foreigners increase their positions in the weeks to come,” Mr. Mangun added.

The market’s immediate support is pegged within the 8,770 to 8,800 range, with resistance seen from 8,850 to 8,870.

Two companies will be holding their annual stockholders’ meetings this week, namely Oriental Peninsula Resources Group, Inc. and Ramon S. Ang-led San Miguel Pure Foods Company, Inc.

On Friday, foreign markets ended mostly up, with the Dow Jones Industrial Average jumping 0.89% or 228.46 points to 25,803.19 as fund managers picking up energy shares following crude’s rise.

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