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Global FDI falls 16% in 2017; flows into developing Asia stable — UNCTAD

FOREIGN DIRECT investment (FDI) fell 16% worldwide to $1.52 trillion in 2017, led by a 27% decline in cross-border flows to developed countries after the normalization of investment to the UK and the US, which were coming off a high base in 2016, the United Nations Conference on Trade and Development (UNCTAD) said.

FDI to developing economies was flat, rising 2% to $653 billion, UNCTAD said in a report dated Jan. 22, driven partly by a 23% contraction in global mergers and acquisitions (M&A) activity to $666 billion after three years of expansion.

It said “greenfield” FDI projects — those representing projects being build from scratch — declined 32% to $571 billion based on preliminary data, which would be the lowest level since 2003.

UNCTAD said strong economic growth and rising trade and strong commodity prices projected for 2018 usually correlate to strong FDI activity, though political uncertainty and elevated geopolitical risk could end up dampening investment activity.

Flows to North America fell 33%, while those to Europe declined 27%. Investment flows to “transition economies” — those that are in the process of becoming market economies, led by many former Soviet States — fell 17%. Meanwhile, flows to Australia recovered in 2017, helping FDI for other developed economies rise 11%.

The United States was the top recipient of FDI at $311 billion, followed by China at $144 billion and Hong Kong at $85 billion. Singapore was the top recipient in Southeast Asia, placing eighth in the world at $58 billion. Among other Asian economies, India took in $45 billion, good for 10th place globally.

It said developing Asia took in $459 billion, up 2%, making it the largest regional recipient of FDI. The rise was propelled by sharp growth in cross-border M&A activity to $73 billion from $42 billion a year earlier, running contrary to the overall global trend. Top economies for cross-border M&A were Hong Kong, India and Singapore.

FDI into ASEAN rose about a third to $130 billion, with flows into Indonesia rising nearly sixfold to $22 billion, UNCTAD said.

It said the outlook for foreign investment will be influenced by protectionist sentiment, trade disputes, and uncertainty over the impact of a revamped tax system in the United States.

The Philippines took in over $2 billion in FDI in October, the highest total since $2.44 billion in April 2016. On a year-to-date basis, FDI at the end of October was $7.86 billion, closing in on the central bank’s 2017 target of $8 billion.

Anonymous bank accounts will be banned in S. Korea cryptocurrency trading

SEOUL — South Korea will ban the use of anonymous bank accounts in cryptocurrency trading from Jan. 30, regulators said on Tuesday in a widely telegraphed move designed to stop virtual coins from being used for money laundering and other crimes.

The measure comes on top of stepped up efforts by Seoul to temper South Koreans’ obsession with cryptocurrencies. Everyone from housewives to college students and office workers have rushed to trade the market despite warnings from global policy makers about investing in an asset that lacks broad regulatory oversight. The bitcoin price in South Korea extended loss following the latest regulatory announcement, down 3.34% at $12,699 as of 0409 GMT, according to Bithumb, the country’s second-largest virtual currency exchange.

Bitcoin slumped nearly 20% last week to a four-week low on the Luxembourg-based Bitstamp exchange, pressured by worries over a possible ban on trading the virtual asset in South Korean exchanges. In Tuesday afternoon trade, it was up 5.4% at $10,925.

Policy makers around the world are calling for tougher, coordinated regulation of cryptocurrency trading. South Korea’s chief financial regulator last week said the government may consider shutting down domestic virtual currency exchanges.

South Korea’s Presidential office has clarified that an outright ban on trading on the virtual currency exchanges is only one of the steps being considered, and not a measure that has been finalized.

“The government is still discussing whether an outright ban is needed or not, internally,” a government official who declined to be named said after Tuesday’s briefing.

Over the past month, government statements have underscored differences between the Justice Ministry, which has pushed for a more hardline approach, and regulators who have shown a reluctance to enforce an outright ban.

Starting Jan. 30, cryptocurrency traders in South Korea will not be allowed to make deposits into their virtual currency exchange wallets unless the names on their bank accounts matches the account name in cryptocurrency exchanges, Kim Yong-beom, vice chairman of the Financial Services Commission told a news conference in Seoul.

“Everyone knew this was coming, as the government already said they will enforce the real-name system before. Rather, I can see this as a chance to go in, not out. I don’t see any reason to take my money out,” said a local bitcoin investor who only agreed to be identified by his family name Ahn.

The regulator has previously said it will come up with detailed guidelines for local banks to properly identify its clients by their real names in cryptocurrency transactions.

To make deposits into virtual coin wallets, cryptocurrency traders will need to identify themselves with their real names at the exchange and have those matched with information at local banks by Jan. 30. — Reuters

Toyota Corolla Altis 2.0V

THE updated styling of the Toyota Corolla Altis is still not enough to communicate the competence of the model as declaratively as it should. This is not a failure of aesthetics, though. Rather, the car simply has plenty more of positive things to offer.

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• Well-proportioned and reasonably sized — neither too large nor too small — the car boasts a spacious, airy cabin that’s quite easy to see out of in any direction. Even the driver’s view toward the rear, which in many modern cars is obstructed by small windows and a high trunk, is clear.

• Room for any occupant is ample and approaches that found in executive cars. Even the middle passenger in the backseat will find sufficient legroom. The driver’s seat can also be adjusted low enough, perfect for those who want to feel they are sitting in a car rather than on it.

• Also as appreciated is a steering wheel that can be pulled closer to the driver.

• As well as space, materials lining the cabin are comparable to those on executive cars. The leather covering the dashboard, seats and door cards are accented by stitching; glossy black panels are contrasted by polished metal-like trim; and instruments are uniformly lit with bluish tones.

• The multimedia system, which rests against a sleek panel, has a huge touch screen display that uses equally large labels for the various functions. As expected, buttons on the steering wheel duplicate frequently accessed functions, and the multimedia can link to portable devices wirelessly or through a USB port.

• Controls and display for the climate settings are clearly defined as such. So it’s hard to confuse these with the controls for the multimedia unit’s touch screen located directly above them.

• Cabin’s all-black palette creates a tidy, somber vibe similar to that of luxury cars.

• Trunk is big and deep, with a flat floor and mostly flat sides. Its size can stand its own when compared against the cargo bays of some crossovers and compact SUVs.

• Engine spins smoothly; there is hardly any vibration coming from it that makes its way to driver touch points, like the steering wheel and pedals. Most of the sound it emits comes from the optional sport tailpipe fitted in the review car. Plus, it’s fairly frugal, too. In six days it averaged almost nine kilometers to a liter of fuel.

• CVT isn’t sluggish at selecting the next “gear” and, through paddles, is quick at shifting down. It also is willing to hold a “gear” for long even if the engine is spinning vigorously. Engaging sport mode elicits the same behavior.

• Not sure if it’s because of the meatier tires or if Toyota did tweak the Altis’s electric power-assisted steering, but whichever the reason the car’s steering is heftier, and so is more engaging to use compared to the previous car’s overly boosted system.

• Toyota has adjusted the Altis’s suspension so the car could corner flatter and turn in quicker. Thankfully, this does not come at the expense of ride quality; the car remains pliant enough on bumpy pavement and can still filter out the harshness coming from its contact with the road.

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• Tires, at 215/45, could use higher sidewalls. Their lower sidewalls make them stiffer, and while this trait quickens steering responses, it can also cause the suspension to crash over potholes or road expansion gaps. A little more ability to absorb road flaws would be welcome.

• While quite adequate during most instances, the engine’s 143-hp, 187 Nm output is paltry considering the 2.0-liter displacement. The Altis can feel strained when the throttle is floored.

• For its price, the Altis lacks some of the advanced features — semi-autonomous parking, trick traction control, automatic engine start/stop, for instance — some of its ilk could boast of.

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The Altis may be lacking in certain areas — and not small ones, at that — but its level of refinement and practicality, as well as its newfound athleticism, still make it a top choice in the compact sedan class. Also, Toyotas’ reputation for easy upkeep and their known capacity at retaining their resale value even decades after could well be the deciding factors for many buyers. — Brian M. Afuang

BLUFFER’S BOX

Toyota Corolla Altis 2.0V

Price: P1.451 million

Engine: 2.0-liter, inline-four, dual VVT-i 16 valve with ACIS; 143hp @ 6,200 rpm, 187 Nm @ 3,600 rpm

Transmission: CVT

Drivetrain: Front-wheel drive

Wheels/Tires: 17 inches, 215/45

Key features: Bi-LED auto leveling head lamps with daytime running lights; LED tail lights; multi-information display; multimedia with touch screen and USB, aux-in, iPod and Bluetooth connectivity; leather steering wheel and seats; reversing camera and sensors; automatic climate control; smart entry with push-button start/stop; rain-sensing wipers; eight-way power-adjustable driver’s seat; eco driving meter; curtain and knee air bags; vehicle stability control

Federalism brand in front; dangerous agenda in back

Being a probinsiyana myself, I can sympathize with long time Davao Mayor Duterte’s passionate, and even seemingly sincere advocacy of Federalism.

In some earlier columns, having myself publicly espoused more power and budget authority to local governments, I see the benefits of a shift to a federal system of governance, if done right. Otherwise, it could just add one more decision and action layer to the already overburdened and slow bureaucracy. I also think it is time to return to regional, rather than national representation in the Senate which will allow probinsiyano leaders a chance to contribute to national policy, in lieu of too many showbiz and other celebrities who have national constituencies, thanks to their media impact.

Given the openly parochial thinking in the House of Representatives, I really hope the new Charter, if it comes to pass, will include the Senate in the legislature, for a broader, and perhaps wiser perspective on national policy.

However, what we have to watch out for is what I see as a hidden agenda to grant more and more authoritarian power to the current political leadership. Already, there are clear signs of the short sighted campaign to weaken constitutionally guaranteed independent institutions which were intended to strengthen and safeguard our democracy. There are brazen attacks on freedom of the Press (e.g., the Cases against Rappler), duplicating functions of the Ombudsman by creating the Presidential Adviser Against Crime and Corruption headed by the controversial Dante Jimenez with the sleazy, opportunistic reputation, the Presidential Committee on Human Rights to bypass the Constitutional Commission on Human Rights (CHR), which the President has openly defied and disparaged. The obsequious House even went as far as to decrease the CHR’s annual budget to one peso at one time.

Fortunately, strong local and international public outcry managed to restore the CHR Budget, but only by so much, practically killing its essential powers to investigate human rights abuses which have been increasing by leaps and bounds under this administration.

Aside from raising our fists against in your face, brazen attempts to railroad what can become a half-baked replacement of our imperfect but enlightened 1987 People’s Constitution, the fundamental law of the land which will guide our legal and governance policies in the future, we must push back more and more powerfully against short-sighted and politically motivated changes in our governance structures.

To begin with, we have to resist with voices loud and clear, the rush to pass so-called “Federalism” and get it into plebiscite in a few months! Thank God that PDP-Laban founder and former senate president Aquilino Pimentel, Sr., who has been espousing federalism for years, has cautioned against rushing Charter Change.

One of the desired reforms that has been simmering for several administrations, the end to political dynasties, has no chance of being realized under the Con-Ass resolution by the House. How can these lawmakers if turned into Constitutional delegates be expected to go against their own interests? No way, Jose.

Branding Constitutional Change as “Federalism” is a neat and devious way of getting the people to respond positively by blinding them to the hidden agendas that will weaken our democracy: weakening Press freedom, rendering the Ombudsman, protector of the people’s interests, null and void, and perhaps eliminating it as an instrument of anti-corruption, and practically killing the Commission on Human Rights, one of the many enlightened provisions of our 1987 People’s Constitution.

The 1987 Constitution while imperfect, being a product of human effort, is one of the best in the world. In fact, the best, in the opinion of the honorable Chief Justice Hilario Davide who has declared his willingness to die for the present Constitution. If it is to be revised or replaced; it has got to be by a better one. Under this authoritarian government, and under an obsequious Con-Ass, fat chance of that.

We need to wake up from our complacency and see the hidden agendas behind this razzle dazzle branding of Constitutional Change as Federalism. It is more than that. It is a threat to our democracy.

It is the duty of leaders of civil society, academe, the business community, the youth, and principled media professionals and owners to enable our people to see through these subtle and deft campaign Cha-Cha strategies if we are to protect our hard fought (by blood, sweat and tears) democracy which, let us remember, we lost not so long ago.

 

Teresa S. Abesamis is a former professor at the Asian Institute of Management and an independent development management consultant.

tsabesamis0114@yahoo.com

Houston Rockets’ juggernaut continues to roll over top teams

LOS ANGELES — The Houston Rockets aren’t the type of team to rest on their laurels. Just two days after beating the reigning league champion Golden State Warriors, the Houston quickly refocused on Monday night with a 99-90 victory over the Miami Heat in a battle of leading NBA teams.

James Harden scored a team-high 28 points while Chris Paul had 16 points, six rebounds and six assists for the Rockets, who are blasting through one of the toughest stretches of their season.

Eric Gordon came off the bench to score 16 points and Clint Capela delivered 14 for the Rockets, who won for the first time when scoring under 100 points in a game.

Hassan Whiteside led the Southeast Division-leading Heat with 22 points and 13 rebounds, while Josh Richardson finished with 12 in the loss in front of a crowd of 18,050 at the Toyota Center arena.

The Rockets, who are first in the Southwest Division, improved to 33-12 on the season by overcoming a sizeable early deficit against the Heat.

Their last three wins have all come over leading teams, Golden State, Miami and the Minnesota Timberwolves.

Houston welcomed both Trevor Ariza and Gerald Green back to their rotation after they served their suspensions for trying to get into the Los Angeles Clippers’ locker room following a physical game at Staples Center arena.

Monday’s contest marked the first time in a while that the Rockets were fully healthy and the hope now is they can continue to find the right chemistry with all their injured and suspended players back in the lineup. — AFP

As US goes quiet on close naval patrols, China speaks out

HONG KONG/BEIJING — While the Pentagon plays down patrols close to Chinese-controlled reefs and islands in the South China Sea, Beijing is sounding the alarm about them, seeking to justify what experts say will be an even greater presence in the disputed region.

Chinese officials publicized the latest US “freedom of navigation patrol,” protesting the deployment last week of the destroyer USS Hopper to within 12 nautical miles of Scarborough Shoal, an atoll west of the Philippines which Beijing disputes with Manila.

It was the second time in recent months that confirmation of a patrol came from Beijing, not Washington, which had previously announced or leaked details.

Bonnie Glaser, a security expert at Washington’s Center for Strategic and International Studies, said while the administration of US President Donald J. Trump had a policy of keeping the patrols regular but low key, China was willing to publicly exploit them to further their military ends.

“It is difficult to conclude otherwise,” she said. “Even as it pushes ahead with these (patrols), I don’t think the Trump administration has really come to terms with what it will tolerate from China in the South China Sea, and what it simply won’t accept, and Beijing seems to grasp this.”

In official statements, Chinese foreign ministry official Lu Kang said China would take “necessary measures to firmly safeguard its sovereignty” in the resource-rich sea.

Some regional diplomats and security analysts believe that will involve increased Chinese deployments and the quicker militarization of China’s expanded facilities across the Spratlys archipelago.

While US officials did not target China in their comments, couching freedom-of-navigation patrols as a “routine” assertions of international law, Beijing was quick to cast Washington as the provocateur.

The Communist Party’s official People’s Daily newspaper on Monday accused the US of upsetting recent peace and co-operation and “wantonly provoking trouble,” saying China had must now strengthen its presence in the strategic waterway.

CONSTRUCTION AND MILITARIZATION
In recent years, China has built up several reefs and islets into large-scale airstrips and bases as it seeks to assert and enforce its claims to much of the sea, through which some $3 trillion in trade passes annually. The Philippines, Vietnam, Malaysia and Brunei, as well as Taiwan, hold rival claims.

Chinese coastguard and People’s Liberation Army navy ships patrol vast swathes of the South China Sea, routinely shadowing US and other international naval deployments, regional naval officers say.

Zhang Baohui, a mainland security analyst at Hong Kong’s Lingnan University, told Reuters he believed Beijing was rattled by Mr. Trump’s sharpening Asia strategy and they might be tempted to react in the South China Sea, even after months of relative calm.

“We can perhaps expect the Chinese to push ahead with militarization as retaliation,” he said.

A new US national defense strategy unveiled last week stressed the need to counter the rising authoritarian powers of China and Russia, outlining a need to better support allies and newer partners against coercion.

While most analysts and regional envoys believe China remains keen to avoid an actual conflict with the significantly more powerful US navy in the South China Sea, it is working to close the gap.

China has added bunkers, hangars and advanced radars on its new runways in the Spratlys, although it has not fully equipped them with the advanced surface-to-air and anti-ship missiles they use to protect the Paracels grouping further north.

Similarly, Beijing has yet to land jet fighters in the Spratlys — test flights some experts are expecting this year.

POTENTIAL FLASHPOINT
The latest patrol was at least the fifth such patrol under the Trump administration and the first to Scarborough — one of the more contentious features in the region.

Scarborough, once a US bombing range, was blockaded by the Chinese in 2012, prompting the Philippines to launch its successful legal case in the Hague against China’s excessive territorial claims.

China allowed Filipino fishermen back to Scarborough’s rich waters last year, but it remains a potential flashpoint as both sides claim sovereignty and China maintains a steady presence of ships nearby.

While experts and regional envoys expect China to ramp up operations from the Spratlys, none expect it to build on Scarborough — something widely believed to be a red line that would provoke the United States, given its long-standing security treaty with the Philippines.

Shi Yinhong, who heads the Center for American Studies at Beijing’s Renmin University, said China had “lived with” US patrols for several years but the key facts on the ground remained in China’s favor and broader tensions had “improved remarkably.”

“These islands, especially those with reclaimed land and military capability already deployed, they’re still in Chinese hands,” Mr. Shi, who has advised the Chinese government on diplomacy, told Reuters.

“I don’t think Trump has the stomach and the guts to change this fundamental status quo.” — Reuters

Fernandes says AirAsia may buy more jets

AIRASIA Bhd., the budget airline that has grown to become one of the biggest customers of Airbus SE planes, could consider buying more aircraft as economic expansion across India, China and the Southeast Asian nations propel travel demand across the continent.

“Right now, we are short of aircraft,” Tony Fernandes, AirAsia group chief executive officer, said in an interview with Bloomberg TV’s Haslinda Amin in Davos on Tuesday. “Demand is very, very robust. We would have to look at an order eventually but not at present.”

The British-educated Fernandes, 53, is expanding his Malaysia-based carrier across the continent, doing what Ryanair Holdings Plc did in Europe and Southwest Airlines Co. achieved in North America. A rash of low-cost airlines have come across Asia, driving down fares and enabling more people to take to the skies.

Fernandes’s AirAsia operates an all-Airbus fleet and he is known to make big orders at air shows. In 2016, he announced a $12.6-billion jetliner order with Airbus during the Farnborough Air Show. AirAsia group has more than 200 planes in its fleet and hundreds in order.

“Airbus has been great,” Fernandes said. “We have brought forward some of our deliveries. We don’t have plans to do so at the moment.”

AirAsia isn’t too worried about the recent rise in oil prices, Fernandes said, adding that the airline doesn’t plan to adjust its hedging program or impose fuel surcharges. He said that oil prices around $60 is still a “honeymoon period” compared with $100 a barrel in 2014.

AirAsia shares are hovering at almost record levels in Malaysia amid a surge in traffic for the carrier. The stock, which has climbed 23% this year, fell 0.7% to 4.11 ringgit as of 3:58 p.m. in Kuala Lumpur on Tuesday. — Bloomberg

AIG to acquire reinsurer Validus for $5.56 billion

AMERICAN International Group, Inc. on Monday said it would buy reinsurer Validus Holdings Ltd for $5.56 billion in cash, ending a long period of retrenchment for AIG as new Chief Executive Brian Duperreault plots an expansionist path.

Duperreault initiated the deal to buy Bermuda-based Validus, which comes four months after US regulators said AIG was no longer “too big to fail,” a designation that carries more stringent government oversight and capital requirements. AIG has dramatically shrunk since the New York-based insurer’s near-death experience during the 2008 financial crisis.

Bermuda’s insurance industry is familiar turf for Duperreault, who was born there and founded and ran the Bermuda-based Hamilton Insurance Group Ltd before heading to AIG.

Validus has four parts, spanning reinsurance, US specialty lines, asset management and a Lloyd’s of London underwriter.

AIG said the deal would boost AIG’s earnings per share and return on equity but did not provide details on cost cuts or projected returns.

“The deal is not predicated on cost cuts or synergies. In fact, it’s the opposite,” Duperreault said in an interview. “The deal hinges around that it puts us in businesses that we are not in now.”

AIG’s $68 per share offer represents a 45.5% premium to Validus’ Friday close.

“It’s well worth the price and we’ll get our money’s worth out of it,” Duperreault said. “I’ve thought this through.”

Shares of Validus were trading at $67.32, close to the offer price, in afternoon trade. AIG shares were down nearly 1%.

The acquisition is AIG’s largest since the financial crisis, when the insurer received a $182-billion bailout, based on the US government’s belief that an AIG failure would cause more damage to the economy than using public money to keep it afloat, a concept known as “too big to fail.” AIG paid off its last debt to the US government at the end of 2012.

The deal marks AIG’s reentry into the Lloyd’s insurance market, where underwriters get access to a wide variety of international insurance and reinsurance business, often in complex or hard-to-cover areas, which can be risky but also offers more profit potential.

“I was really thrilled to see the news,” Lloyd’s of London Chief Executive Officer Inga Beale said in an interview. “We are delighted to have any of these big reputable players as part of Lloyd’s.”

AIG’s deal will also expand its reach in other areas such as the reinsurance market at a time when the insurer, like its rivals, is facing stiff pricing pressure. Validus Re, a major Validus business, sells property-casualty reinsurance for disasters such as hurricanes.

Other Validus businesses include AlphaCat, which manages $3.2 billion on behalf of clients who invest in insurance-linked securities products, a repackaging of insurance risk as debt that is often linked to natural catastrophes.

The deal will also add crop insurance to AIG’s product lineup.

‘LIKE A GLOVE’
“I particularly like the reinsurance business as additive to what we do. There are a lot pieces to this company that fit us like a glove,” Duperreault said on a conference call with analysts.

Reinsurers play an important role in the financial industry by assuming risks that are either too large or too unpredictable for their insurance clients to take on their own.

“We would be buyers (of AIG) as we focus on the accretion from this transaction, the strong underlying margins VR brings and the fact that AIG will still have excess capital after this deal is done,” Wells Fargo Securities analyst Elyse Greenspan said in a note.

AIG revenue fell in three of the past four quarters and the company has been plagued by losses related to prior-year accident claims.

Duperreault, who replaced Peter Hancock last year, is seen as a turnaround expert and has promised to streamline AIG’s operations and boost profitability.

As his first major restructuring action since taking over, Duperreault reorganized AIG into three new units. The new structure is expected to reflect in the company’s fourth-quarter results on Feb. 8.

The Validus deal is expected to close in mid-2018.

Citigroup Global Markets Inc, Perella Weinberg Partners LP and Debevoise & Plimpton LLP advised AIG. Willkie Farr & Gallagher LLP represented Perella as financial advisor to AIG in this transaction. Validus was advised by J.P. Morgan Securities LLC and Skadden, Arps, Slate, Meagher & Flom LLP. — Reuters

SC ruling to ultimately decide competitive selection’s fate — ERC

THE Energy Regulatory Commission (ERC) told consumer groups to manage their expectations on how their issues against the competitive selection process (CSP) for power supply contracts will be resolved as a case on the matter remains pending with the Supreme Court.

In a statement on Tuesday, ERC Chairman Agnes T. Devanadera said she had reached out to the consumer groups — in particular, Freedom from Debt Coalition and United Filipino Consumers and Commuters — to listen to their concerns and clear issues involving CSP.

“This consumer dialogue started from a simple conversation and has now developed into a forum where we can discuss the consumers’ issues and concerns on electricity matters,” she said.

“We will take their issues into consideration, but we also have to manage their expectations considering the fact that there is already a pending case before the Supreme Court on CSP,” she added.

CSP requires power supply agreements (PSAs) between energy generation companies and distribution utilities to be subjected to price challengers, a process aimed at drawing the lowest cost of electricity for consumers.

In November 2016, a consumer group asked the Supreme Court to block ERC approval of the PSAs between Manila Electric Co. (Meralco) and a number of power generation companies covering 3,551 megawatts.

The “forum” between the ERC and the consumer groups, which took place on Friday, was attended by consumer advocates who provided documents to Ms. Devanadera “to apprise and aid her” in addressing their issues, the regulator said.

Although the talks focused on  bringing down the cost of electricity, the groups also requested for a response on their position papers from the ERC chair, who assumed office in early December last year.

The ERC said future fora will tackle performance-based regulation and other regulatory concerns. The commission said the same consumer groups, together with civil society organizations, had staged a rally in front of the ERC on Jan. 15, 2018.

“This is a positive development and this is just the first of the many forums to be held of this kind. Our doors are open and we expect that the consumer groups will go along with these forums with an open mind and understanding that each of us has a role to play in order to have checks and balances in our regulatory system,” Ms. Devanadera said.

Separately, the ERC has yet to receive any directive from the Department of Energy (DoE) on the policy maker’s move to allow power generation companies to continue their operations despite having lapsed certificates of compliance (CoC).

“We have not been furnished a copy of the said directive. However, we understand the concern of the DoE in ensuring that there be continuous supply in the country,” said Floresinda B. Digal, ERC spokesperson.

Earlier this week, the DoE said it had agreed with the Philippine Electricity Market Corp. to allow power generation companies with expired CoCs — including those with pending applications — to continue operating and trading at the wholesale electricity spot market.

The move comes in view of fears about possible delays in the processing of CoC applications with the ERC as a result of the suspension of its four commissioners. The CoC is proof that a power plant complies with the applicable regulations, clearing it as safe to switch on and operate.

“For the ERC part, all staff work at the level of services were completed for these applications but were not presented to the Commission for its deliberation because of the suspension,” Ms. Digal said. — Victor V. Saulon

PhilJets plans to add aircraft this year to meet growing demand

PHILJETS Group is planning to add four to five aircraft to its fleet this year, as the company seeks to address growing demand from domestic and international customers. 

“We need both lighter single engine and lighter twin-engine helicopter in our fleet, as well as a good twin-engine turboprop fixed wing,” Augustus Elciario, head of charter services at PhilJets, was quoted as saying in a statement.

Geoffroy Cahen, PhilJets head of sales and marketing, said the company is working to address requests from customers to acquire certain aircraft types or brands.

With the additional aircraft, its fleet will exceed P4.5 billion in asset value under management this year. In 2017, PhilJets acquired two helicopters (1 Bell 407 GX and 1 Airbus H145) and three fixed wing aircraft (1 Bombardier Challenger 350 and 2 Cessna Citation XLS+) to end the year with 11, with an asset value of P3.8 billion.

For this year, the business aviation operator is considering expansion into the education, logistics and tourism sectors, as it plans to open bases in the provinces.

PhilJets is also working to upgrade its license from the Civil Aviation Authority (CAAP) from non-scheduled domestic to non-scheduled international, which is key to entering the jet market. The company has a Cessna Citation XLS+ and a Cessna Citation Business Jet, as it plans to capture a slice of the region’s business aviation market.

“It is very challenging to manage growth for a start-up in aviation, we are looking at innovating opportunities and the best way to develop them while always keeping safety and customer service as our core priorities,” PhilJets Chairman Thierry Tea was quoted as saying.

PhilJets is a company of the Starline Global Industries Group. Its units include PhilJets Aero Services, Inc. and PhilJets Aero Charter Corporation.

Dashboard (01/24/18)

Aston Martin trackday

Aston Martin bares car club activities

ASTON Martin Manila announced it organized in December 2017 the inaugural Aston Martin Track Day for members of the Aston Martin Owners Club – Manila (AMOC-Manila). The event was held at the Clark International Speedway in Pampanga.

Showcased during the track day were the Rapide S, Vanquish and Vantage lineup, the British brand’s local distributor said. It added the cars were used for various driving exercises conducted by race driver JP Tuason.

“We are committed to support all the needs of our clients… [as we] give them a complete ownership experience. We also pride ourselves in providing a first-class service in sales, after-sales and ownership experience,” said Marc Louie Y. Tagle, chairman and president of Aston Martin Manila.

The local distributor said future club activities include road trips, a whisky appreciation night and other lifestyle activities that are intended to “pave the way for a deeper connection” to the Aston Martin brand.

Wheel Gallery brings in Breyton

Wheel Gallery brings in Breyton

WHEEL GALLERY announced it is now the country’s distributor of Breyton Wheels. The brand joins Wheel Gallery’s range of Black Rhino, TSW and Concept One products.

“The addition of Breyton to our lineup will open up new avenues for us. It would also provide our customers with more options with which to visually improve their cars, as well as to raise their performance,” said Samuel G. Liuson, managing partner at Wheel Gallery.

Breyton, a car tuning firm based in Stokach, Germany, produces various wheels for BMW, Porsche and Mini. Wheel Gallery said the brand has “accumulated expertise in wheel design and over 30 years of experience in making wheels.”

The Renewable Portfolio Standards (RPS) and Renewable Energy Market (RE Market)

The implementation of the Renewable Portfolio Standards (RPS) is an important development for the Renewable Energy (RE) Market, and impacts the public as a whole. Republic Act No. 9513 or the Renewable Energy Law gives both fiscal and non-fiscal incentives to investors in order to encourage the promotion and development of renewable energy in the Philippines. Toward this end, the RPS serves as a market-based policy mechanism which makes use of the RE Market to facilitate and commercialize trading in RE Certificates, the latter which are used to satisfy the RPS requirements and increases RE generation in the country.

On Dec. 30, 2017, Department of Energy (DoE) Circular No. DC2017-12-0015, or the RPS On-Grid Rules, took effect, requiring Distribution Utilities (DUs), Electricity Suppliers, generating companies supplying directly connected customers, and other mandated energy sector participants to source or produce a certain share of electricity from their Energy Mix from eligible RE resources. These eligible RE facilities include the following technologies: biomass, waste to energy technology, wind, solar, hydro, ocean, geothermal, and other RE technologies later identified by the DoE.

The RPS On-Grid Rules mandates energy sector participants to comply with the minimum annual RPS requirement in order to meet the aspirational target of thirty-five (35%) in the generation mix by 2030.

This minimum RE requirement, however, will not be imposed immediately but in 2020. 2018 and 2019 are considered transition years to help mandated participants comply with the DoE Circular. Additionally, the RPS On-Grid Rules implements a Minimum Annual Incremental RE Percentage to be sold by mandated participants. It is initially set at a minimum of one percent (1%) and applied to net electricity sales or annual energy demand for the next ten (10) years, and used to determine the current year’s requirement for RE Certificates (RECs) of the Mandated Participant.

The long-anticipated RPS On-Grid Rules shall be implemented in the Luzon, Visayas, and Mindanao grids. The RPS On-Grid Rules envisions the creation of a RE Market where mandated participants comply with the Minimum Annual RPS Requirement through the allocation, generation, purchase or acquisition, or generation from net metering arrangements, of RE Certificates, one certificate which represents one MWh of generation produced from a registered eligible RE facility. Further, all mandated participants must undertake a competitive selection process (CSP) in sourcing RE generation supply to its customers. RE tracking and compliance shall be done by the RE Registrar, who serves as the market operator of the RE Market, and who keeps and verifies the RECs to monitor compliance.

Upon signing of the RPS, DoE Secretary Alfonso Cusi pronounced that “the Renewable Portfolio Standard (RPS) for On-Grid rules outlined various safety nets to protect the electricity end-users and to ensure that this new venture will not result in higher electricity rates,” a statement reflected in the DoE Circular itself, which provides that any additional cost arising from the compliance of Mandated Participants in the RPS should not result in higher electricity rates to their consumers.

The RPS, along with its other well-known counterpart, the feed-in-tariff (FiT), provide policies used by many countries in promoting renewable energy.

Given that renewable energy is more difficult to develop and produce, however, the impact to the consuming public may ultimately result in higher electricity rates. This is because, in requiring mandated participants source energy from eligible RE resources, energy suppliers are assured that their eligible RE resources will always be in demand, thus allowing them to correspondingly raise their prices.

This article is for general informational and educational purposes only and not offered as and does not constitute legal advice or legal opinion.

 

Aileen Charisse P. Cruz is an Associate of the Litigation and Dispute Resolution Department (LDRD) of the Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW).

apcruz@accralaw.com

(02) 830-8000

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