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Risks could keep Philippine growth from hitting official target

THE PHILIPPINES “continues to enjoy favorable macroeconomic prospects”, but risks ranging from weak state capacity to ramp up implementation of infrastructure projects to prospects for overheating could keep overall economic growth from hitting the government’s 7-8% annual target for much of President Rodrigo R. Duterte’s term, regional think tank ASEAN+3 Macroeconomic Research Office (AMRO) said in a report released on Friday.

The report was based on findings of AMRO’s annual consultation visit to the Philippines in September 2017 and data available as of Feb. 15. Such data include full-year 2017 and January 2018 inflation, as well as full-year factory output, international merchandise trade and gross domestic product (GDP), among others.

OVERALL GROWTH
AMRO’s 2017 Annual Consultation Report on the Philippines kept a 6.8% GDP growth projection for 2018 that was first penciled in October last year, down from an 7.0% forecast disclosed in the group’s maiden report in May 2017.

That will come from 2017’s 6.7% and a 6.3% average in 2010-2016 during the term of former president Benigno S.C. Aquino III.

AMRO also expects GDP in 2019-2022, when Mr. Duterte ends his six-year term, to average 6.9%, with only the final year in that period posting seven percent, the floor of the government’s 7-8% annual target in 2018-2022.

“The Philippine economy is forecast to grow by 6.8% in 2018, as exports are expected to remain buoyant, while hurdles to budget execution are gradually being overcome,” the report read.

The Duterte administration has made increased infrastructure spending — totaling some P6.79-8 trillion until 2022 — a linchpin for faster GDP growth that, in turn, should slash the country’s unemployment rate to 3-5% in the last year of this government from 5.5% in 2016 and overall poverty incidence to 13-15% also by 2022 from 21.6% in 2015.

Budget Secretary Benjamin E. Diokno told reporters at the start of this month that the government spent P568.8 billion for infrastructure last year, 15.4% more than the P493 billion disbursed in 2016 and topping a P549.4 billion program under the 2017 budget. Mr. Diokno said this placed infrastructure investments for the year at roughly 5.6% of GDP, higher than the planned 5.4% share and 2016’s 5.1%. By 2022, the ratio is projected to reach 6.1% under an updated projection released in February to 7.45% under the original projection.

ARMO noted that Philippine public investment in infrastructure has averaged around 2.7% of GDP in the past 15 years, compared to Thailand’s 6.3% and Malaysia’s 10.5% for the same period. Total Philippine public and private investment in infrastructure averaged 20% in that period, compared to 22-23% for Brunei and Malaysia, 25% for Thailand, 26% for Singapore and Laos, as well as 28-29% for Indonesia and Vietnam.

INFLATION
Headline inflation is expected to be generally supportive of economic growth despite a recent pickup.

Using the old 2006 price base, inflation is expected to peak at 4.3% this year from 3.2% in 2017, 1.8% in 2016, 1.4% in 2015 and 4.1% in 2014, before easing to 3.3% in 2019, 3.1% in 2020, 3.2% in 2021 and 3.0% in the last year of the Duterte administration.

Using 2012 prices as a new base starting February, headline inflation sped to 3.7% in this year’s first two months as tax reform’s higher rates took effect for several items from 2.9% in 2017, 1.3% in 2016, 0.7% in 2015, 3.6% in 2014 and 2.6% in 2013.

AMRO cited the price impact of higher excise tax rates for fuel and tobacco products, the additional levy on sugar-sweetened drinks, higher global energy prices and the peso’s continued weakness for its expectation of inflation’s pickup in the near term.

Its projections compare to the government’s own 2-4% target range, which the Bangko Sentral ng Pilipinas (BSP) said will be maintained despite the change in base year for the consumer price index (CPI). The BSP expects inflation to average 3.4% in 2018, using the old CPI base, before easing to 3.2% in 2019.

“… [A]s the impact of the excise tax increases diminishes, inflation is expected to ease back to within the target range in 2019,” the report read.

RISKS
At the same time, “the inflation outlook faces additional upside risks from higher disposable incomes arising from the reduction in personal income tax rates [also under tax reform] which could lead to higher food consumption, as well as the pending petitions for electricity rate adjustments,” it added, while noting that the planned deregulation of rice imports that will cut down prices of this staple and “dampened global economic recovery” as sources of downside pressures.

This and other “risk pockets”, AMRO said, “continue to warrant close monitoring.”

“The progress of the infrastructure program may be constrained by the weak implementation capacity of the government and private sector participants,” it explained.

“Notwithstanding these structural impediments, a strong pick-up in public infrastructure spending — accompanied by a crowding-in of private investment — cannot be ruled out, and this could cause the economy to overheat and the external imbalance to widen.”

Outside the country’s borders, US protectionist policies place remittances from Filipinos abroad and business process outsourcing (BPO) — two of the country’s key economic growth drivers — at risk. Already, approved BPO investment commitments dropped by 30.9% in 2017 from a year ago, contributing to the 51.8% decline in total approved FDI pledges in the same period. Cash remittances, however, increased by five percent to a record-high $26.9 billion last year.

“Against these risks, monetary policy should be on guard against an intensification of demand‑induced pressures with core inflation having trended upwards in recent months,” AMRO said.

The BSP has managed to keep monetary policy steady since a hike in policy rates in September 2014, save for operational rate tweaks as it shifted to an interest rate corridor system in June 2016 and a one-percentage-point cut in big banks’ reserve requirement ratio to 19% in mid-February which the central bank said should not be taken as changes in policy stance. The central bank’s policy-making monetary board is scheduled to meet next on March 22 amid mounting expectations that it will be forced to hike rates for the first time in three and a half years amid quickening inflation.

ARMO also called for reforms to stimulate private investment and address the labor market mismatch that is seen as a hurdle to the government’s ambitious infrastructure development drive.

AMRO — initially formed as a company in April 2011 and transformed into an international organization in February 2016 — conducts macroeconomic surveillance and supports the implementation of the Chiang Mai Initiative Multilateralization currency swap arrangement which members of the ASEAN+3 adopted as one mechanism to help avert any brewing financial crunch.

Gov’t signs $935-M JICA loan for subway phase I

THE PHILIPPINES and the Japan International Cooperation Agency (JICA) signed on Friday the first tranche of the loan agreement for the Metro Manila subway Phase 1.

The loan amounts to 104.53 billion yen, or $935 million, and carries a 0.1% interest rate per annum for non-consulting services and 0.01% per annum for consulting services payable in 40 years with a 12-year grace period.

The loan documents were signed by Finance Secretary Carlos G. Dominugez III, representing the Philippine government, and JICA Chief Representative Yoshio Wada. Also present during the signing ceremony were Budget Secretary Benjamin E. Diokno, former JICA Chief Representative Susumo Ito, Department of Transportation Undersecretary Timothy John R. Batan, and Japanese Financial Attache Noboru Kageyama.

The first phase of the Metro Manila Subway project will run from Mindanao Avenue in Quezon City through the FTI in Taguig City and end at the Ninoy Aquino International Airport in Parañaque City. The subway will help decongest traffic on EDSA and connect major business centers in Metro Manila to the country’s premier international gateway.

The project includes a depot in Valenzuela, electro-mechanical systems and rolling stock, and the establishment of a Philippine Railway Institute.

“The Institute will provide training as well as do research and development on regulation, train operations and maintenance. This will build a corps of expert train personnel to manage not only the subway system but all the commuter rail lines of the country. It is about time that our commuter lines be run by real experts,” said Mr. Dominguez.

“The detailed engineering design for the subway, which is being funded under a JICA grant, is currently ongoing. The design includes flood management features and applies the best seismic technology there is. We will acquire tunnel boring equipment to hasten the construction period. The Philippine government commits to working on this project to get it done at the soonest possible time,” he added.

Four tranches of loans are expected to complete financing for the whole project.

This tranche covers the first three stations of the subway, Mindanao Avenue-Quirino Highway, Tandang Sora, and North Avenue.

The overall project costs about P356.96 billion pesos or $7.05 billion, according to the Finance department.

Mr. Dominguez said that the subsequent loan tranches will follow the implementation of the first part of the project.

The Transportation department’s Mr. Batan said that his department — the implementing agency of the Subway — targets to begin groundbreaking by “December this year.”

Mr. Dominguez meanwhile said that the government aims to begin the operation of the stations by May 2022, and the entire central zone by 2025, including the construction of commercial space for lease in the subway stations that will “help defray the cost of operating this facility.”

He added that the government is planning to include two more areas including a North Zone that will extend to Bulacan and a South Zone that will extend to Cavite.

“I am confident that the succeeding administrations will get this done,” said Mr. Dominguez.

JICA’s Mr. Wada meanwhile said that the project is a “game changer,” noting it would cut travel time from Quezon City to Parañaque to 30 minutes from an hour and a half.

“This constitutes seamless mobility of goods and people in Mega Manila and in some areas transport infrastructure development,” he said.

“The timely completion of the subway project will crown the aggressive infrastructure program the administration of President Duterte has initiated. It will likewise crown the achievement of the economic diplomacy the Duterte administration has undertaken,” Mr. Dominguez said.

Aside from the subway, Japan is also funding the Cavite Industrial Area Flood Risk Management Project, the Arterial Road Bypass Project Phase 3, the Malolos-Clark Railway Project, the Philippine National Railways South Commuter and South Longhaul Project, and the Maritime Safety Capability Project 2.

The loans were agreed by Japanese Prime Minister Shinzo Abe during his visit to the Philippines in January, when he offered some 1 trillion yen, or $9 billion in Official Development Assistance (ODA) throughout the current administration’s term. — Elijah Joseph C. Tubayan

Napoles placed under witness protection program

DETAINED businesswoman Janet L. Napoles, the alleged mastermind in the 2013 pork-barrel scandal, is to be placed under the Witness Protection Program (WPP) of the Department of Justice’s (DoJ), Justice Secretary Vitaliano N. Aguirre II said on Friday.

“We confirm that Janet L. Napoles has been placed under Provisional Admission of WPP subject to [an] affidavit she submitted which is now undergoing assessment,” Mr. Aguirre said in a text message.

But he also qualified that, “as of the moment, physically she is not under WPP due to provisional status of admission.”

Sought for comment by reporters, DoJ Undersecretary Erickson H. Balmes said “[the] contents of her [Ms. Napoles’s] provisional admission [are] confidential.”

Ms. Napoles, who surrendered to then president Benigno S.C. Aquino III in 2013, is alleged to be the mastermind in the misuse of some P10 billion of the Priority Development Assistance Fund (PDAF) allotted to legislators. Three incumbent senators at the time were arrested soon after her detention, but two of them have since been released.

Ms. Napoles was acquitted last year by the Court of Appeals from charges of serious illegal detention of her second cousin, PDAF whistleblower Benhur Luy, but she remains detained in Camp Bagong Diwa in connection with the pork-barrel scam.

In response to this development, Senate President Aquilino Martin L. Pimentel III called it “unbelievably crazy.”

He added: “Do some people in the DOJ really believe that Janet Lim Napoles is qualified to be a state witness in the PDAF scam which she herself invented organized and perpetuated???”

For his part, Senator Panfilo M. Lacson said “the DoJ has no control whatsoever over her possible discharge as a state witness,” because the Office of the Ombudsman is handling Ms. Napoles’s cases in the Sandiganbayan.

He added: “Even if the DoJ is prosecuting, it is still the court that will decide whether or not a respondent may be dropped from the case and discharged as a witness.” — Dane Angelo M. Enerio, with Camille A. Aguinaldo

DOLE says no timetable for signing EO abolishing ‘endo’

THE labor department has no timetable for the signing of the executive order (EO) which hopes to abolish the practice of contractualization or “endo,” as promised by President Rodrigo R. Duterte during his campaign.

“The President did not deny the fact that he made that commitment to end endo or contractualization in his campaign. However, the executive order was prepared by labor groups. The President said he will have it studied first so no deadline has been set,” Department of Labor and Employment (DOLE) Undersecretary Jacinto V. Paras said in a news conference on March 16.

Mr. Duterte reportedly promised to sign the EO on March 15. His inaction on the EO on Thursday triggered protests from labor groups.

Contractualization denies workers a path to permanent employment and benefits by terminating their employment before the law makes them eligible for such status.

Mr. Paras noted that the President is seeking to balance the interests of industry and workers.

“As a matter of fact, I can speak being the undersecretary that handles legislative (coordination), we are actually pushing for the passage of a law that would end contractualization,” Mr. Paras said.

“From my personal point of view, even if you issue the EO only for the Congress to pass a law later, the law will prevail… that would be the Bible for ending contractualization,” Mr. Paras added.

House Bill 6908 or the Security of Tenure Bill was approved by the House of Representatives on third reading on Jan. 29. The Senate version, meanwhile, is still pending with the Senate committee on labor. — Minde Nyl R. Dela Cruz

Max’s sets capex at P600M, boosts 2017 earnings

LISTED restaurant operator Max’s Group, Inc. (MGI) said it has set a capital spending budget of roughly P600 million mainly to modernize and for the makeover of “select flagship” stores.

The company made the announcement on Friday as it reported earnings rose by 12% in 2017 to P626.69 million, from P561.74 million in 2016, helped by sales as it boosted its store count and improved efficiency.

“Capital spending programmed at approximately P600 million will redeploy assets into other strategic initiatives such as a system modernization program to reinforce support services, and the construction and renovation of select flagship stores to improve the customer experience,” MGI said in a statement.

For 2018, the company said it will be focusing on a franchising-led business model to drive expansion. With its planned roll out of 80 to 90 new outlets primarily through franchising its core brands, MGI said it “will be able to ensure an active presence in key geographies, and at the same time, generate higher fee-based contributions to revenue.”

Delivering a fresh boost to sales were its 78 new stores opened in 2017, 14 of them are located overseas.

MGI, whose brands include Max’s Restaurant, Pancake House, Yellow Cab Pizza, Krispy Kreme, Jamba Juice, Max’s Corner Bakery, Teriyaki Boy, Dencio’s, Meranti, Sizzlin’ Steak, Maple, Kabisera, Le Coeur De France and Singkit, has a store network of 673 branches, with 55 across various cities in North America, the Middle East and Asia.

The restaurant operator’s top line rose 11% to P12.66 billion from P11.44 billion, with restaurant sales recording an 11% increase of P10.46 billion from P9.42 billion, driven by sustained same store sales performance and revenue contribution of new stores.

Its delivery business posted a steady growth, MGI said, increasing by 27% to P1.37 billion from P1.08 billion attributable to its efforts to broaden online ordering channels and upgrade delivery infrastructure.

MGI said “strengthened franchising operations” contributed to the 13% increase in commissary sales of P1.42 billion from P1.26 billion.

Earnings before interest, taxes, depreciation and amortization (EBITDA) stood at P1.24 billion.

Max’s shares were up 0.12% or P0.02 to end at P16.52 each. — with report from P. P. C. Marcelo

One-year withdrawal from ICC begins as PHL sends UN note verbale

By Camille A. Aguinaldo

THE countdown for the one-year withdrawal period of the Philippines from the International Criminal Court (ICC) started Friday, March 15, as the country formally transmitted its notice to the international body that it has decided to opt out of the Rome Statute.

In a statement, Foreign Affairs Secretary Alan Peter S. Cayetano said the withdrawal was formally conveyed in a note verbale handed over to the UN Secretary General Chef de Cabinet Maria Luiza Ribeiro Viotti by Philippine Permanent Representative Teodoro L. Locsin Jr.

“The decision to withdraw is the Philippines’ principal stand against those who politicize and weaponize human rights, even as its independent and well-functioning organs and agencies continue to exercise jurisdiction over complaints, issues, problems and concerns arising from its efforts to protect its people,” stated the March 15 letter addressed to UN Secretary-General Antonio M. Guterres.

According to the Rome Statute, a country wishing to withdraw from the ICC should send a written notification to the UN Secretary-General. The withdrawal would take effect one year after the date of notification, “unless the notification specifies a later date.”

The Philippines assured the international community in its March 15 letter that it continues to be guided by the rule of law embodied in its Constitution and long-standing tradition of upholding human rights.

“The Government affirms its commitment to fight against impunity for atrocity crimes, notwithstanding its withdrawal from the Rome Statute, especially since the Philippines has a national legislation punishing atrocity crimes,” the note stated.

“The Government remains resolute in effecting its principal responsibility to ensure the long-term safety of the nation in order to promote inclusive national development and secure a decent and dignified life for all,” it added.

Mr. Cayetano said the country’s decision to pull out of the Rome Statute stemmed from the “well-orchestrated campaign to mislead the international community” regarding human rights issues hounding President Rodrigo R. Duterte.

“It is doubly lamentable that members of the international community, who include our own partners in the war against terror, have allowed themselves to be used as pawns by these individuals and organizations in undermining our own efforts to restore the rule of law,” he said in a statement issued shortly arriving in Sydney for the ASEAN-Australia Special Summit.

He also defended the government’s anti-drug campaign, stressing that it was a “legitimate law enforcement operation” guided by the rules of law embodied in the Constitution, statutes and human rights obligations.

“The campaign we are waging against illegal drugs is consistent with the sovereign duty of any State to protect its people. Contrary to what some parties are trying to make it appear, there is no failure on the part of the Philippine Government in dealing with issues, problems, and concerns arising from this campaign,” Mr. Cayetano said.

For its part, the European Union in a statement to the UN Human Rights Council Geneva on Wednesday said of the Philippines: “The EU remains deeply concerned about the high number of killings associated with the campaign against illegal drugs in the Philippines. The EU emphasizes the importance of carrying out the campaign with a focus on public health and in full compliance with due process, national law and international human rights law. It is imperative to conduct prompt, effective, impartial and transparent investigations of all cases of death leading to prosecution in all cases of unlawful killing.”

Foreign debt falls to $73.1-B at end-2017, under 20% of GDP

OUTSTANDING foreign debt fell to $73.1 billion at the end of 2017 from $74.763 billion a year earlier, with the share of foreign debt in the economy falling to under 20%, the Bangko Sentral ng Pilipinas (BSP) said.

Compared with the end of September 2017, debt rose about 1% from $72.4 billion.

Outstanding foreign debt combines all foreign currency-denominated borrowings held by Filipinos, Philippine companies, and the national government from foreigners.

The BSP said the debt increased on a quarter-on-quarter basis due to foreign investors holding more Philippine debt, which it said was an indication of confidence in the economy.

Net principal payments totaled $643 million, which the BSP said “had a dampening effect on debt stock.”

Around 62.4% of the outstanding foreign loans are denominated in dollars, while yen debt accounted for 12.8%.

BSP Governor Nestor A. Espenilla, Jr. said the key external debt indicators “remained at comfortable levels” in 2017.

Foreign debt accounted for 19.4% of gross domestic product (GDP), little changed from a quarter earlier but lower than the 20.4% level for 2016.

GDP grew 6.6% in the three months to December, and 6.7% in 2017.

The BSP considers buffers to be sufficient in the event of a funding crisis, with $81.6 billion in gross international reserves as of end-2017, equivalent to 5.7 times the Philippines’ short-term liabilities.

The debt service ratio (DSR) improved to 6.2% at the end of 2017 from 7% a year earlier. DSR measures the adequacy of foreign exchange earnings to meet maturing obligations.

Loans due in more than a year account for 80.5% of the total debt stock, with medium to long-term maturities averaging 17.3 years.

“Public sector borrowings [had] a longer average term of 23.1 years compared to 7.8 years for the private sector,” the central bank said.

Meanwhile, short-term liabilities, or loans due in less than a year, accounted for 19.5% of the total debt stock, composed of bank dues and trade credits amounting to $14.218 billion.

Public-sector debt accounted for 51.3% of the total debt at $37.5 billion.

Credit obtained from bilateral and multilateral lenders totaled $3.8 billion, while loans from foreign banks and other financial institutions hit $22.5 billion. Notes issued to foreigners hit $21.8 billion, and $5 billion was owed to foreign suppliers and exporters.

The Philippines borrows from both domestic and external sources to help fund its budget deficit and support a growing economy, particularly to support the ambitious P8.44-trillion infrastructure spending plan. — Karl Angelo N. Vidal

LT Group profit rises 15% in 2017 lifted by PNB

LT Group, Inc. (LTG) posted a net income of P10.83 billion in 2017, higher by 15% compared with P9.39 billion in the earlier year, with its banking unit accounting for nearly half of earnings, the listed holding firm told the stock exchange on Friday.

Philippine National Bank (PNB) accounted for P4.83 billion of the attributable income, or 45% of the total, while the tobacco business, 40% or P4.39 billion.

Tanduay Distillers, Inc. contributed P631 million or 6%, while Asia Brewery, Inc. made up P551 million or 5%. Eton Properties Philippines, Inc. accounted for P348 million or 3%, while Victorias Milling Co., Inc., where the firm has a 30.9% stake, provided P174 million or 2%.

“LTG’s balance sheet remains strong,” the listed conglomerate said.

As of end-2017, the cash balance of the parent firm stood at P1.6 billion, with the debt-to-equity ratio at 3.70:1 with PNB, and 0.15: 1 without the banking unit.

In particular, PNB recorded a net income of P8.56 billion, up 16% from P7.38 billion a year earlier.

The income growth was attributed to higher net interest income, net service fee income and higher gain from the sale of real and other properties acquired (ROPA) at P4.16 billion, up 62% from P2.56 billion 2016.

Net interest income increased by 13% to P22.07 billion on the back of a 17% growth in loans and receivables. Net service fees and commission income rose by 20% to P3.2 billion from P2.66 billion because of higher loan, remittance and deposit-related fees.

Other income slipped by 7% to P8.62 billion from P9.29 billion after the decline in trading and foreign exchange gains, which was partly offset by higher gains from ROPA sale.

The tobacco business recorded an income of P4.4 billion, while equity in net earnings from the 49.6% stake in PMFTC, Inc. reached P4.37 billion. The higher earnings resulted from “better pricing and improved mix,” the company said.

In November 2016, PMFTC raised the price of the Marlboro brand, the first time it did so since 2013.

“The industry’s total volume was estimated to have decreased by 6% to 74.9 billion sticks, largely due to excise tax driven price increases, tempered by trade loading towards the end of 2017, in anticipation of more price increases as the excise tax was further increased starting 2018,” the company said.

Tanduay Distillers recorded a 31% decline in net income last year to P631 million from P908 million previously.

Liquor revenues were up 20% to P15.19 billion, with the unit cornering a market share of 61% in the Visayas and 65% in Mindanao, based on Nielsen estimates.

However, revenues from ethanol dropped 31% to P1.6 billion as volume fell 21% coupled by lower selling prices.

Asia Brewery also recorded lower net income at P552 million, down 69% from P1.76 billion in 2016, “primarily due to higher spending on new products,” the company said.

It said the 2016 income included P594 million in extraordinary income arising from the gain after the revaluation of the beer assets.

The lower profit came despite a 17% increase in revenues to P13.89 billion from P11.85 billion, with the higher contribution from bottled water, soymilk and packaging partly offset by the decline from energy drinks.

LTG said the unit’s Cobra Energy Drink and Vitamilk soymilk continued to lead the market, while Absolute and Summit bottled water had the “second-largest” market share.

The firm said operating expenses were higher because of increased spending on advertising and selling expenses “due to the competitive environment in the carbonated beverage segment, and to promote the recently launched Vitamilk in returnable glass bottles.”

Asia Brewery also had to book additional depreciation expenses from the new soymilk plant, the group said.

Property unit Eton also reported a decline in its net income by 11% to P348 million from P390 million as revenues dropped by 21% to P2.23 billion, with sales slipping after the unit’s change in strategy to focus on increasing its recurring income base.

Leasing revenues rose 9% to P1.39 billion with the opening of 2,100 square meters of additional retail space in Eton Tower Makati and higher lease rates.

“Eton’s BPO (business process outsourcing) office buildings had a take-up rate of 99% as of end-2017,” the company said.

Shares in LTG on Friday dropped 1.51% to close at P19.60 each. — Victor V. Saulon

Makati Business Club to leaders in gov’t: ‘Follow impeachment process’

By Minde Nyl R. Dela Cruz

THE Makati Business Club (MBC) in a statement on Friday urged “the country’s political and judicial leaders” to let Congress “follow the impeachment process set forth in the Constitution” against Chief Justice Maria Lourdes P.A. Sereno.

“Regardless of the outcome of the process, giving the chief justice the chance to defend herself within our constitutionally-defined process is essential to demonstrate this country’s respect for the rule of law and to assure all Filipinos that we are protected by our laws,” said the influential group.

“It is absolutely essential for businesses that laws and contracts will be upheld for them to invest and create more jobs which is what will ultimately reduce poverty in a sustainable way,” the business group added.

Solicitor-General Jose C. Calida last week petitioned the Supreme Court for a quo warranto petition questioning the validity of Ms. Sereno’s appointment over her alleged failure to submit complete statements of assets, liabilities, and net worth (SALNs) as required by the Judicial and Bar Council (JBC) — a move seen as intended to oust Ms. Sereno through means other than impeachment.

Oriental Mindoro Rep. Reynaldo V. Umali, who chairs the House justice committee hearing the impeachment complaint against Ms. Sereno, had also cited the quo warranto petition which the opposition, on the other hand, says affirms the weakness of the impeachment case.

House Majority Floor Leader Rodolfo C. Fariñas also said the Supreme Court could have already decided on the quo warranto petition even before the House plenary could vote on impeachment after the congressional break.

Last year, MBC issued a statement expressing concern over the series of impeachment cases against top government officials, noting that this may have an “unfavorable impact” on the government’s socioeconomic agenda.

Also on Friday, lawyer Romeo B. Igot petitioned the high court to compel Ms. Sereno “to submit her SALNs (Statement of Assets, Liabilities, and Net Worth) covering the missing years 2003 to 2005 and 2007 to 2008 as well as to show evidence that she indeed passed the psychological examination administered on her.”

The petition said that otherwise, Ms. Sereno should “be prohibited from further assuming her functions as the Chief Justice of the Supreme Court and…her appointment as Chief Justice of the Philippine Supreme Court (be declared) null and void.”

Mr. Igot claimed his petition — which uses the same arguments as Mr. Calida’s quo warranto — “is the fastest way to remove the Chief Justice.” — with Dane Angelo M. Enerio

First Gen posts flat earnings

FIRST Gen Corp. reported “flat earnings growth” for 2017, at $163 million, as the natural calamities that struck Leyte last year hit the performance of its geothermal and hydroelectric plants in the area.

Lopez-led First Gen previously reported its 2016 recurring net income attributable to equity holders of the parent firm at $162 million.

Francis Giles B. Puno, First Gen president and chief operating officer, said the “flat earnings growth” did not reflect the “noteworthy” achievements of the company last year that “strongly positions” it to develop a cost-competitive and flexible platform.

“This platform is best prepared to both enable and address a low-carbon energy future,” he said in a statement.

The company also told the stock exchange that its non-recurring net income in 2017 reached $134 million, lower by $29 million compared with the one-time effect of break funding costs. The company presents its financial report in US dollars, which is its functional currency.

The costs were incurred as a result of the $500 million refinancing of the 1,000-megawatt (MW) Santa Rita power plant’s long-term debt in May 2017, as well as premiums paid for the partial buyback of the US dollar-denominated bonds of First Gen and subsidiary Energy Development Corp. (EDC).

These costs were in addition to EDC’s earthquake- and typhoon-related expenditures, the company said.

First Gen said its natural gas platform posted recurring earnings of $120 million, up from $112 million in 2016.

Its geothermal and hydroelectric platforms both suffered from lower recurring earnings, which the company blamed on natural calamities and weak spot market prices. But these were offset by lower expenses at the parent firm as $309 million of debt was prepaid.

First Gen reported that its consolidated revenues from the sale of electricity increased by 9% to $1.71 billion. The company’s natural gas portfolio accounted for $1.04 billion, or 61% of the total, and higher by 24% compared with the figure in the earlier year.

The increase was attributed mainly on the full-year contributions of the Avion and San Gabriel plants, and higher fuel revenues of the Santa Rita and the 500-MW San Lorenzo power plants.

The total recurring earnings contribution from First Gen’s natural gas portfolio increased by $8 million to $120 million in 2017, the company said.

“On our clean low-carbon gas platform, we closed out the residual technical issues in operating the 420 MW San Gabriel flex plant and the 97 MW Avion peaking plant in the first half of 2017,” Mr. Puno said.

“First Gen is also progressing with the site preparation of its LNG (liquefied natural gas) regasification terminal to be located in its First Gen Clean Energy Complex in Batangas. The LNG facility will ensure the continued supply of natural gas for all of its gas-fired power plants,” he added.

First Gen said EDC’s geothermal, wind and solar revenues provided $628 million, or 37% of total consolidated revenues. But the unit’s revenues slipped by 7% as a result of the shutdown of the Unified Leyte facility after the earthquake in July.

The site suffered more damage when Typhoon Urduja struck in December. Recurring attributable earnings from EDC, excluding First Gen Hydro Power Corp., was lower by 12% at $87 million because of the calamities and the foreign exchange translation of the unit’s peso books into dollars.

First Gen said it was worth noting that the 140-MW BacMan power plant and the 150-MW Burgos wind project delivered more earnings last year because of the higher contracted sales and dispatch, respectively.

FG Hydro, owner of the 132-MW Pantabangan-Masiway hydroelectric plants, reported a 32% decrease in revenues to $33 million as its ancillary service contract expired in February 2017.

The hydro plants accounted for 2% of First Gen’s total consolidated revenues. Consequently, FG Hydro’s recurring attributable earnings contribution slipped by $6 million to $8 million in 2017.

Separately, First Gen told the stock exchange that its board of directors approved on Friday the increase in the company’s authorized capital stock to P11.6 billion from P8.6 billion by the creation of 300 million Series H preferred shares with a par value of P10 each.

On Friday, shares in First Gen dropped by 0.83% to close at P16.80 each. — Victor V. Saulon

Senators voice concern over Boracay shutdown

By Camille A. Aguinaldo

SENATORS on Friday expressed their dismay over the recommendation of the Department of Environment and Natural Resources (DENR), Department of Interior and Local Government (DILG) and Department of Tourism (DoT) for a one-year total closure of Boracay Island for rehabilitation.

“A one-year total closure may not be the best solution for the island and its locals,” said Senator Maria Lourdes Nancy S. Binay in a statement, noting that the three government agencies seemed unaware of the potential job losses their decision would lead to.

“A phase-by-phase rehabilitation where government can strictly enforce the law and at the same time implement the needed corrective measures could be the better option for Boracay,” she added.

Ms. Binay, who chairs the Senate committee on tourism, also noted that the government did not mention any plans for stakeholders who could be displaced because of the recommendation by the three agencies.

For his part, Senator Sherwin T. Gatchalian, chair of the Senate committee on economic affairs, offered alternative measures to solve the environmental problems in the country’s top tourist destination.

He said the government could consider shutting down erring business establishments only and filing administrative cases against negligent local officials.

Local businesses could also be mandated to improve their waste disposal systems. He also proposed a 90-day phase on the improvement of the drainage system and solid waste management.

“A complete shutdown of the island will displace 30,000 direct and indirect workers who are considered low-skilled workers. Poverty and hunger will also worsen if unemployment will rise,” Mr. Gatchalian said.

For his part, Senator Emmanuel Joel J. Villanueva, chair of the Senate committee on labor, employment and human resources development, warned that the full shutdown of Boracay may cripple the tourism industry.

“It could also have a devastating economic impact for the businesses that are compliant and for the formal and informal workers who rely on the island for their livelihood,” he said.

He urged the national government to simply ensure the compliance of business establishments with environmental laws, such as the Clean Air Act, Clean Water Act and Solid Waste Management Act.

Senator Joseph Victor G. Ejercito, however, said the inter-agency task force’s recommendation may be “worth considering.”

“Boracay has been abused and exploited through the years. Boracay has to be allowed to breathe, to recuperate and to be allowed for its wounds to heal,”

DENR Secretary Roy A. Cimatu has said the total closure of the island from tourism would give them “ample time” to implement measures restoring and sustaining the tourist destination.

In an online interview, presidential spokesperson Harry L. Roque assured that the President would be fair on deciding the island’s fate.

“I think, from the way I know the President, he will be fair and above all else, I think he will not act on the basis of political considerations. He will act based on his concerns that the beauty of Boracay must be preserved for the future generation,” he said in a mix of English and Filipino.

Meanwhile, the management of D’Mall of Boracay belied allegations that its establishment was built on wetlands, noting that its location was a “composite of lands that were classified as Commercial, Agricultural, Residential and Cocal.”

It also clarified that the mangrove and swamp area identified as wetlands is located in a lake across the Boracay road from D’Mall.

“It’s imperative that our establishments in Boracay conduct business in a manner that’s environmentally sustainable and socially responsible,” said D’Mall head of legal and regulatory compliance group Rudolph Jularbal, adding that the establishment has secured its environmental compliance certificates (EECs) from the DENR.

Tacloban airport’s expanded terminal inaugurated

THE Department of Transportation (DoTr) said it inaugurated the expanded passenger terminal building of the Daniel Z. Romualdez Airport in Tacloban City.

The current expansion increased the total floor area of the terminal to 1,100 square meters and added 275 seats to the departure area, for a total of 635 seats.

The project addresses the growing demand for space in the airport, including the expansion of the check-in and pre-departure areas.

The project was funded through the CAAP Infrastructure Project from 2016, with an approved budget of P20 million and a contract amount of P17.33 million.

Ongoing since October 2017 are the construction of asphalt overlays, a newly designed parking area, shore protection, and site development for the new terminal area that includes a one-kilometer perimeter fence.

DoTr Secretary Arthur P. Tugade said these other improvements will be completed by January next year. — Patrizia Paola C. Marcelo

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