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Power ‘oversupply’: Mindanao’s happy problem

By Victor V. Saulon
Sub-editor

When stakeholders in Mindanao talk about their power situation these days, among their concerns is electricity oversupply and their plan of action after overcoming years of power outages and thinning capacity reserves.

“I’m pleased to say that we’ve already started the ball rolling. We are fast tracking interconnection projects such as Visayas-Mindanao and for the small island provinces. This will allow us to make the most of Mindanao’s excess reserves,” said Energy Secretary Alfonso G. Cusi in his annual yearend plea for industry investors to come in.

In the private sector, making the most of excess power means pacing the completion of projects in time for an expected rise in demand. It also means looking beyond building new power plants, but refurbishing old ones, revisiting transmission plants, and finally pushing through with electricity retailing and trading.

“Now that power supply is no longer an issue, it can be said that Mindanao is truly open for business,” Antonio R. Moraza, Aboitiz Power Corp. president and chief operating officer, told participants in an investment conference in July.

The Aboitiz executive pressed on to suggest the rehabilitation of Mindanao’s Agus hydroelectric complex, which he said has a dependable capacity of around 400 megawatts (MW) or way below its 727 MW installed capacity.

Indeed, Mindanao’s power situation has become a lesser worry for the island. Based on figures from the Department of Energy (DoE), the island’s system peak demand hit 1,696 MW in 2017, which compared with an available capacity of 2,202 MW. Peak demand as a percentage of available supply gives a number that is way better than the country’s comparative figures of 13,684 MW and 15,393 MW, respectively.

The significant improvement is largely because of the new and big power plants that came online in the past two to three years, including a combined 825 MW from the coal-fired power plants of Sarangani Energy Corp., Therma South Inc., FDC Utilities, Inc. and San Miguel Consolidated Power Corp. Some of these plants have new units undergoing testing and commissioning.

DoE figures put 1,289-MW as committed capacity, or those that have secured project financing, and another 2,543-MW as “indicative” capacity that are in the initial stages of development.

LINKING GRIDS
Expectations of oversupply have allowed stakeholders to turn their attention to other energy-related projects.

In September 2017, the Energy Regulatory Commission (ERC) granted provisional authority to National Grid Corporation of the Philippines (NGCP) to implement the interconnection between the Visayas and Mindanao power grids for around P51.7 billion.

The project will link the power grids via Cebu in the Visayas and Dipolog City in Mindanao. The converter stations in Visayas and Mindanao will be located in Sibonga, Cebu and Aurora, Zamboanga del Sur, respectively.

ERC Commissioner Alfredo J. Non said the deficiency of supply in the Visayas may be supplied by importing power from Luzon or Mindanao.

“Hence, this Visayas-Mindanao Interconnection will help address the insufficient power supply and will also help optimize the available power supply in the Philippine Grid,” he added.

The project, under the NGCP’s helm, is estimated to be completed in 46 months or nearly four years and still within the term of the current political leadership, which ends in 2022. With an interconnected grid, the overall power supply security is expected to be improved as sharing of reserves will be possible.

The project also aims to support the operation of the electricity market by maximizing the use of available energy resources and additional generation capacities in Visayas and Mindanao which include the renewable energy resources, the ERC said.

Attention has also been focused lately on the Agus-Pulangi hydro complex, which should have been handed over to the private sector 10 years after Republic Act No. 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA) was passed.

Pio J. Benavidez, president and chief executive officer of National Power Corp. (Napocor), said the Pulangi hydroelectric power plant is best sold to the private sector, but the buyer should commit to build the other units of what was meant to be one of Mindanao’s biggest energy sources.

Napocor owns the government entity that owns the 255-MW hydroelectric power plant in Maramag, Bukidnon.

Department of Finance (DoF) Secretary Carlos G. Dominguez III, who chairs the Napocor board, earlier gave his support to Mr. Benavidez’s proposal to rehabilitate the Agus hydro complex using funds from China ahead of its eventual privatization.

Mr. Benavidez said the Pulangi plant, which has three power generating units, does not have the ownership issues that hampered previous plans to privatize the Agus complex.

Both plants are required to be privatized under EPIRA, the law that restructured the energy sector.

Mr. Benavidez said he had advised Mr. Dominguez that the government sell Pulangi on the condition that the winning bidder should also commit to build the four other plants that were meant to be built along the Pulangi river based on its original feasibility study.

Commissioned in December 1985, Pulangi 4 was the only one built out of several run-of-river hydroelectric power plants envisioned along one of Mindanao’s major tributaries. The Agus hydro complex, in contrast, consists of six cascading power plants from the mouth of Lake Lanao in Marawi City down to the Maria Cristina Falls in Iligan City.

Mr. Benavidez said the sale could proceed ahead of Napocor’s four-year timeline for the Agus complex, which he said should be rehabilitated based on a schedule that upgrades first the oldest of the six plants.

“Cost per kilowatt (kW) is the basis for awarding the [Agus rehabilitation],” he said. “The lower the cost per kW wins.”

On Agus, Mr. Benavidez said what will be privatized is only the operations and maintenance. The government, through Napocor, remains the owner of the complex. He said this mode satisfies the provisions of EPIRA.

SPOT MARKET IN THE SOUTH
Also moving forward is the plan to put up a wholesale electricity spot market (WESM) in Mindanao. The Philippine Electricity Market Corp. (PEMC), the entity that operates the spot market for the interconnected Luzon and Visayas, is currently testing local operations for a centralized venue for buyers and sellers to trade electricity as a commodity where its prices are based on actual use, or demand, and availability, or supply.

“We are on test operations [in Mindanao], so PEMC is continuously looking at what’s going on and the status of the actual operations,” said Jose M. Layug, Jr., one of the members of the five-man transition committee set up in July after PEMC officials were asked to resign.

Mr. Layug said Mindanao has to enjoy the benefits of having an electricity spot market, including what he claims to be cheaper power costs as WESM trading classifies renewable energy sources such as solar and wind as priority and must be dispatched first. The dispatch hierarchy displaces power sourced from, say, the costlier diesel-fired plants.

“Mindanao is not able to enjoy the benefit of FiT [feed-in-tariff] savings because they are not yet connected. They are not part of the market. So we’re pushing hard to make sure that Mindanao WESM will be in place already, fully,” he said.

He placed those savings at P20 billion for Luzon and the Visayas, which he said translates to 8.6 centavos per kilowatt-hour.

“Consistent with what is mandated by EPIRA, we should have done this a long time ago, we’re working on having that structure where you have a truly independent market operator and PEMC will be your governing company, much like the structure of PSE (Philippine Stock Exchange) and SEC (Securities and Exchange Commission),” Mr. Layug said.

Military anticipating NPA attacks

THE MILITARY in Eastern Mindanao said it is ready with a massive operational plan against the New People’s Army (NPA) here after the Yuletide break. Capt. Jerry Lamosao, 10th Infantry Division spokesperson, said ground troops have been ordered to go on “pro-active combat measures to protect vulnerable communities nationwide from armed threats and deception of the NPA.” Mr. Lamosao, however, said the military will still continue its “efforts on assisting other line government agencies on infrastructure development and community health engagements.” He added that some of the soldiers were also ordered to help local governments in their efforts to prevent disaster and other related activities in relation to calamities. The military unit’s commander, Maj. Gen. Noel S. Clement, said the unit has received reports of rebels harassing communities. “The NPAs forced the people to participate in their activities and to provide food for their group,” Mr. Clement said, referring to the rebels’ commemoration, in Mati City, of the Communist Party of the Philippines’ founding anniversary on Dec. 26 last year. — Carmelito Q. Francisco

PHL, Indonesia to meet on maritime security

REPRESENTATIVES OF the Philippines and Indonesia will start today a four-day meeting on enhancing border cooperation. Major Ezra L. Balagtey, spokesperson of the Eastern Mindanao Command (EastMinCom), the host of this gathering, said they will discuss “sustainable maritime defense and security cooperation” and other concerns. To lead the Philippine delegation will be Lt. Gen Benjamin Madrigal, EastMinCom commander, with Indonesian Eastern Fleet Commander Ramd Didik Setiyono as his counterpart. Last year, the two countries launched a joint maritime patrol within a 600-kilometer common border to strengthen the security of their common border. “Both countries aim to make the border patrol more regular this time due to the terror threat,” said Mr. Balagtey. The patrol was a trial initiative that included Malaysia as the three countries announced then their initiatives to fight piracy, terrorism and illegal drug trade in their common borders. — C.Q. Francisco

Targeting unbanked Mindanaoans

By Melissa Luz T. Lopez
Senior Reporter

EFFORTS by the administration of President Rodrigo R. Duterte to make economic growth more inclusive extend to the financial sphere, with Mindnaoans seen as potential key beneficiaries of this thrust.
Aside from introducing big-ticket infrastructure projects, the government is looking for ways to bring more Filipinos in Mindanao — some of whose provinces and regions remain among the country’s poorest — on board formal financial channels, enabling them to contribute more to economic growth.

MORE HURDLES
But it is in this field that Mindanaoans seem to face more hurdles than other Filipinos.
Apart from the usual documentary and monetary barriers that keep many locals from opening deposit accounts, the Muslim community is also limited by business models in which commercial lenders operate.

Many residents conduct financial transactions mostly via cooperatives and microfinance nongovernment organizations, according to the Bangko Sentral ng Pilipinas’ (BSP) National Baseline Survey on Financial Inclusion published in 2015. Of those who have savings, some 73.9% said they keep money at home rather than in formal institutions.

There were 243 unbanked cities and towns in Mindanao as of end-June, according to latest BSP data. About a fifth of the country’s 571 unbanked localities were in the Autonomous Region in Muslim Mindanao alone.

This has prodded the BSP to push for the creation of a legal framework for Islamic banking in the country, although such proposal has languished in Congress in recent years.

“BSP would like that to be passed into law so that it would address underbanked people in Mindanao,” BSP Deputy Governor Chuchi G. Fonacier said in a recent interview, noting that Islamic banking poses a huge potential to bring Muslim Filipinos aboard the financial system.

Islamic banking differs from commercial banking in that it adheres to Shari’ah principles that, among others, prohibit the charging of interest on loans – instead, the lender earns via lease-to-own deals with borrowers for instance.

OPTIONS
Ms. Fonacier said the BSP is exploring two routes to open Islamic banking to more players in the country.

The first option is to amend the charter of the Al-Amanah Islamic Investment Bank —which is currently the sole bank offering the service in the Philippines — to serve as the framework for a Shari’ah-compliant lending platform.

However, being subject to the same laws for commercial banks left this lender less attractive to potential clients.

The alternative is to amend Republic Act No. 8791, or the General Banking Law of 2000, to allow all other firms to open their own Islamic banking windows.

Both proposals, however, remain stuck in the legislative mill.

Shari’ah-compliant banks — which observe “risk-sharing” banking — will be allowed to accept or create demand deposits, take in savings for safekeeping, act as collection agents for interest-free payments, as well as provide collateral-free financing, among others.

Southeast Asia’s economic integration would also add some pressure for the Philippines to embrace Islamic banking, Ms. Fonacier said, as foreign banks could beat local players in serving this untapped market.

SUKUK BONDS
The same legal barriers to this form of banking also stand in the way of the Philippine efforts to tap Islamic financing.

Finance Secretary Carlos G. Dominguez III had earlier floated the idea of issuing sukuk bonds to further diversify the Philippines’ debt profile and access new sources of funding, alongside venturing into the Chinese market via panda bonds.

After over a year of preparations, the Philippines is ready to offer yuan-denominated debt papers to Chinese investors by the first quarter of 2018, awaiting only approval of the People’s Bank of China.

STRONG INTEREST
Overall, there has been “renewed interest” among banks to set up branches in Mindanao – Mr. Duterte’s bailiwick – over the past few years.

BSP’s Ms. Fonacier said the strongest signal that monetary authorities have seen so far is BDO Unibank, Inc.’s acquisition of the Davao-based One Network Bank in 2015, alongside applications from big players to set up bank branches in the region.

Despite the five-month battle for Marawi City that displaced over 77,000 families or more than 350,000 individuals and disrupted economic activity, Ms. Fonacier said this has actually sent a “good signal” for investors to keep looking to Mindanao for growth, with damage from the seige seen contained and recovery plans underway.

Mindanao-based lenders are likewise upping their game by venturing into financial technology, the central bank official said, with the regulator receiving requests from rural lenders as they try out cloud computing.

Upcoming reforms eyed by the central bank to broaden financial inclusion — such as no-frills basic deposit accounts and the “branch lite” concept, designed to offer basic financial services to underserved and unbanked localities — are likewise being counted on to bring more Filipinos into the banking system.

Still, the demand for accessible banking will not stop until the last town and sitio in Mindanao finds its way into formal banking channels.

SHARI’AH-COMPLIANT STOCKS
In still another financial realm, the Philippine Stock Exchange (PSE) opened its doors for Muslim investors after seeing the huge potential of Islamic finance.

In 2013, the bourse unveiled an initial batch of 47 listed companies that satisfy Shari’ah principles after partnering with IdealRatings Inc. to screen companies in accordance with the Accounting and Auditing of Islamic Financial Companies (AAOIFI) standards.

That list, which is updated quarterly, increased to 60 in June — the biggest complement so far since October 2015.

The maintenance of a list of Shari’ah-compliant stocks was aimed at improving liquidity in the local stock market and enabling the exchange to tap global Islamic funds.

Prior to the release of the list of Shari’ah-compliant firms, there were no Muslim investors in the Philippine stock market, with most of them opting to trade in Malaysia’s bourse.

These Shari’ah-compliant equities do not derive sales from conventional interest-based lending, financial institutions, pork, alcohol, intoxicants, tobacco, arms and weapons, gambling, casinos, derivatives, pornography, music/entertainment and human stem-cell research.

In terms of financial ratios, their cash and interest-bearing investments must not exceed 30% of the total, interest bearing debts must not go beyond 30% and accounts receivables must not surpass 67% of market capitalization.

Standards for Shari’ah compliance are different from the set of filters that govern other PSE sub-indexes such as market capitalization, public float and liquidity.

Gauged according to these standards, only six component companies of the bellwether PSE index were deemed Shari’ah-compliant in June.

Identifying Shari’ah-compliant stocks sets the stage for the creation of more products catering to Islamic investors.

One product that the PSE hopes to create is a sub-index that will facilitate the launch of mutual funds or exchange-traded funds for Shari’ah-compliant stocks. That initiative has yet to take off, with the bourse focusing on other initiatives such as its merger with the Philippine Dealing and Exchange Corp. — with Krista Angela M. Montealegre

CHED head hit anew for unreleased allowances

By Minde Nyl R. Dela Cruz

AFTER the allegations of unauthorized travels, Commission on Higher Education (CHED) Chairperson Patricia B. Licuanan was hit anew with calls for resignation over unreleased allowances for beneficiaries of its scholarship program.

In a press statement on Sunday, Jan. 7, Iligan City Rep. Frederick W. Siao said he is “stopping short of asking for the resignation of the CHED chairman and of the CHED executive director” as “they are not getting away from this that easily.”

“If, however, Dr. Licuanan’s health makes her unable to run the CHED well in the months ahead, then my suggestion is the honorable exit which is for her to resign,” Mr. Siao stated.

CHED International Affairs Staff Director Lily Frieda Milla had said Ms. Licuanan has vertigo when they responded to the allegations of Pwersa ng Bayaning Atleta party-list Rep. Jericho Jonas B. Nograles about unauthorized travels.

In a report by the Philippine Star, Ms. Licuanan said she gets “travel authority from the Office of the President for all my travel, including personal trips. This is well documented.”

Mr. Siao said he continues receive complaints from scholars of the K to 12 Transition Program who have not yet received their allowances.

“Despite assurances and notice last December that allowances to some of the faculty studying in Manila will be released, they still had zero allowances,” Mr. Siao said.

Mr. Siao said he cannot “accept the excuse that they [were] unable to anticipate the volume of work.”

On Dec. 22, 2017, CHED explained the delays in the implementation of the program as being brought about by “discrepancies in documentary requirements” and “large volume of documents, which stands at approximately 11,000 sets to date.”

Mr. Siao said, “They could have hired additional personnel to deal with all those 11,000 sets of documents. They could have designated a dedicate lane or process for the K to 12 Transition Program. They could have done many other measures.”

CHED earlier stated it will address the delays by hiring “additional manpower.” CHED also said it will introduce “quality checks” for early detection of discrepancies and conduct “closer coordination with the Regional Offices.”

Ms. Licuanan has yet to respond to a request for comment as of this reporting.

Phoenix snarls NLEX

By Michael Angelo S. Murillo
Senior Reporter

THE Phoenix Fuel Masters won their second straight game in the ongoing PBA Philippine Cup as they defeated erstwhile immaculate NLEX Road Warriors, 102-95, yesterday in the Philippine Basketball Association’s (PBA) first offering for 2018.

Getting solid contributions from their bench to complement the steady play of their starters, the Fuel Masters were able to withstand the early bombardment of the Road Warriors then make a key run in the second half and keep the previously streaking Road Warriors at bay en route to the victory.

NLEX took early command of the contest with guard Juami Tiongson setting the tempo in the opening quarter with 10 points to help his team to a 25-19 lead at the end the first canto.

The Fuel Masters though would gain some traction to start the second frame, with veteran Jeff Chan taking the lead to tow Phoenix and tie the affair at 28-all in the first two minutes.

Phoenix would build on the momentum of its strong start thereafter, outscoring the Road Warriors, 16-9, to build a seven-point cushion, 44-37, at the 5:28 mark.

But NLEX, given a shot in the arm by veterans Cyrus Baguio and Larry Fonacier off the bench, charged back, narrowing their deficit to just a solitary point, 54-53, at the halftime break.

The Fuel Masters had an explosive third quarter as the Matthew Wright waxed hot en route to guiding his team to a 76-63 advantage with five minutes to go.

NLEX tried to claw its ways back only to be rebuffed by Phoenix with the latter even extending its lead to 15 points, 88-73, heading into the final 12 minutes of the contest.

Sensing that the game was slowly slipping for their hands, the Road Warriors opened the payoff quarter with a 10-2 run to trim their deficit to just seven, 90-83, with four minutes lapsing.

They were able to narrow it further to four points, 92-88, at the 6:05 mark of the game.

But that was the closest the Road Warriors would get as Mr. Wright and RJ Jazul buoyed the Fuel Masters the rest of the way to book their second victory in three games so far in the season-opening tournament.

Mr. Chan came off the bench to score 18 points on top of six rebounds and three assists to backstop top scorer Mr. Wright who had 19 markers.

Mr. Jazul had 15 while rookie Jason Perkins and Justin Chua also provided quality minutes and contributions as substitutes with 14 and 12 points, respectively.

NLEX, which dropped to 2-1, was paced by Mr. Fonacier with 22 points while Mr. Tiongson added 12.

“Hopefully we can sustain this kind of game for us the rest of the way. Coach Louie [Alas] wants us to be consistent and I think we were able to show that today. We were able to build a big lead. NLEX cut it down but we stayed composed and held on for the win,” said best player of the game Chan after their win.

Phoenix next plays the Rain or Shine Elasto Painters on Jan. 17 while NLEX tries to bounce back against the Magnolia Hotshots on Jan. 14.

Build, Build, Build: Speeding up infrastructure development

THE ADMINISTRATION of President Rodrigo R. Duterte has been more particular on improving the country’s infrastructure.

Days before they assumed office, Mr. Duterte and his economic managers said in a business conference that they aim to accelerate annual infrastructure spending to an equivalent of five percent of gross domestic product (GDP) in 2017 alone, increasing to 7.45% of GDP when the administration ends its six-year term in 2022.

In line with the government’s plan to usher the country into the “golden age of infrastructure,” the Department of Public Works and Highways (DPWH) has embarked on pushing Mindanao’s potentials in terms of enhancing mobility and connectivity.

Out of the 24 DPWH projects in the “Build, Build, Build” infrastructure push, six will be built in Mindanao. These will cost the government P112.58 billion and are expected to be accomplished during or shortly after Mr. Duterte’s term.

The Mindanao Logistics Infrastructure Network (MLIN) is the biggest among DPWH’s major projects in Mindanao.

Karen Olivia V. Jimeno, DPWH Undersecretary for Legal Affairs and Priority Projects, said the MLIN tops the department’s priorities.

“[W]e’re really prioritizing the completion of the Mindanao Logistics Infrastructure Network since this will further attract potential investors who might opt to set up their business in the region,” Ms. Jimeno said in a recent e-mail.

According to information on the Build Build Build Web portal, the MLIN aims to better interconnect Mindanao’s regions via an intermodal logistics system, thereby enhancing the island’s agribusiness competitiveness. The P80.41-billion project, which will be funded through the national budget, is expected to be finished in December 2018.

“MLIN is composed of smaller projects which shall all be constructed with equal urgency since each of them forms part of the envisioned seamless road system in the Mindanao region,” Ms. Jimeno explained.

DAVAO BYPASS ROAD
Another big-ticket project for Mindanao is the Davao City Bypass Road.

Once completed by end-2022, the road is estimated to cut travel time via Pan Philippine Highway and Diversion Road to 49 minutes from an hour and 44 minutes.

The first phase of the project will cover 28.8 kilometers (km) and will be funded by the Japan International Cooperation Agency, while the second phase will consist of 44.6 km and will be funded by the government.

“The bypass road will connect Toril (in the south of Davao City) through Barangay Magtuod to Panabo (City, Davao del Norte). The first phase will stop at Magtuod, which will host two tunnels,” Davao City Planning and Development Office Chief Ivan C. Cortez said in an August interview.

ZAMBOANGA, AGUSAN, BUKIDNON
Still another — the Zamboanga City Bypass Road — is a 36.77-km project that will link Zamboanga City’s east and west coasts.

Aside from the road component, the project will also see construction of six bridges.

The project costs around P2.23 billion — to be funded by the national budget — and is expected to be finished in December 2018.

On the other hand, the 57 km East-West Lateral Road project — which will also have six bridges — will connect the provinces of Agusan del Sur and Bukidnon. Construction of the road — targeted to be opened to the public in April — will cost P4.87 billion.

BRIDGES
Meanwhile, the P400-million Pinguiaman Bridge in Sultan Kudarat will be 600 meters long and is one of the alternate routes going to Cotabato City and Midsayap, North Cotabato.

Ms. Jimeno said the route can also be used going to other municipalities in Maguindanao and Sultan Kudarat.

The Panguil Bay Bridge, for its part, spans 3.48 kilometers and, once completed, will connect the city of Tagum in Misamis Occidental and municipality of Tubod in Lanao del Norte.

The project is funded under a loan agreement with the Korean Economic Development Cooperation, and is expected to be completed in December 2020.

SECURITY THREAT
Despite the ambitious plans of the government in the “land of the promise,” hurdles are inevitable, Ms. Jimeno said.

“One main issue that we’re currently facing in pushing through with our projects is the security threat brought about by the terrorists and rebels,” she said, citing the recently concluded siege in Marawi City.

The five-month battle against the Islamic State-inspired militants have not only cost lives of soldiers and civilians, but has also displaced more than 350,000 people and reduced the city into rubbles.

In a separate interview, DPWH Undersecretary for Visayas and Mindanao Operations Rafael C. Yabut said the final master plan of the Marawi rehabilitation will be implemented after the post-conflict assessment has been accomplished.

“As of to-date, the post-conflict needs assessment for Marawi City and other affected localities is still ongoing,” Mr. Yabut said in an e-mail.

“DPWH is actively involved in the quick-response activities to improve living conditions of the internally displaced persons in various evacuation centers.”

Mr. Yabut added that the department is also developing the site that will house transitional shelters in Sagonsongan, Marawi in collaboration with the National Housing Authority and local governments among others.

Aside from the construction of transitional shelters, the DPWH intends to accomplish the following projects for Marawi next year:

• demolition, clearing and hauling of debris from Marawi City to designated disposal areas after construction of access roads leading to these areas;

• repair of damaged roads and bridges, such as crack and joint resealing, pothole patching, lane markings, painting of bridges and drainage de-clogging;

• major repair, rehabilitation and construction of school buildings (in coordination with the Department of Education);

• and construction of the city public market.

NEW CITIES
For architect and urban planner Felino A. Palafox Jr., the government should build new hubs outside Marawi, while the city is being rehabilitated.

“We [should] create new cities outside Marawi — new cities that are master-planned, Islamic… smart, safe and sustainable,” Mr. Palafox said in an interview.

Mr. Palafox noted that, after the second world war, new cities outside heavily damaged Manila, such as Makati, were developed to supplement the old city. “While reconstructing Manila, the fourth most devastated [city] in the world, seven kilometers away, there’s Makati.”

Mr. Palafox added that some of Marawi’s ruins should be left to serve as a memorial.

“The cross-section of the roads should be a third for trees and landscaping, a third for pedestrians and bicycles, and a third for the moving traffic lanes,” he said, adding that power lines should run underground since overhead networks “makes our cities ugly and hazardous.”

And in order to deter terrorists and criminals, “[i]f possible, no high [and] concrete walls.”

“The high walls hid the rebels during the conflict. Beyond the walls, there were armories, tunnels and even [a narcotics] factory,” Mr. Palafox added. — K.A.N. Vidal

AFC playoffs: Tennessee edges Kansas City, 22-21

LOS ANGELES — Tennessee quarterback Marcus Mariota caught an astonishing touchdown pass from himself as the Titans rallied from an 18-point deficit Saturday to beat the Kansas City Chiefs, 22-21, in the NFL playoffs.

The Titans notched their first playoff victory in 14 years, stunning the Chiefs in Kansas City in the American Football Conference (AFC) first-round clash.

Mariota’s two touchdown passes included a 22-yard go-ahead toss to Eric Decker 6:06 left in the fourth quarter.

With the Titans trailing 21-3 at halftime, he got the comeback going by marched them 91 yards to open the second half and scored on an incredible play.

Mariota rolled to his left and threw toward the end zone, but Chiefs cornerback Darrell Revis deflected the pass back toward him.

Mariota reeled in the loose ball and plunged into the end zone — credited with a six-yard TD pass to himself.

“I was just in the right place at the right time,” Mariota said.

The Titans scored again early in the fourth when running back Derrick Henry raced 35 yards for a touchdown.

The two-point conversion attempt failed, leaving Tennessee down, 21-16.

They edged ahead on Mariota’s TD pass to Decker. The two-point conversion attempt failed — and nearly brought disaster for the Titans when Mariota was sacked, but officials ruled he was down before the ball came loose.

Similar drama unfolded on the Titans’ final drive, when Henry was hit by Chiefs cornerback Marcus Peters and the ball came loose.

Kansas City linebacker Derrick Johnson raced to the end zone with the apparent fumble for a touchdown, but it was overturned as officials deemed Henry was down and the play complete before Johnson scooped up the ball.

The Chiefs had built a quick 14-0 lead in the first quarter, when quarterback Alex Smith used big completions to wide receiver Tyreek Hill and tight end Travis Kelce to set up touchdowns. The first came on a one-yard run by Kareem Hunt and the second on a 13-yard catch by Kelce.

The Titans got on the board with a 49-yard field goal by Ryan Succop, but Kansas City made it 21-3 in the final seconds of the first half on a 14-yard scoring pass from Smith to Demarcus Robinson.

The Chiefs’ suffered a blow when Kelce suffered a concussion late in the first half on a helmet-to-helmet hit from Titans safety Johnathan Cyprien.

Kelce didn’t return to the game and the Chiefs struggled offensively in the second half.

The Titans advance to a divisional game against either the Super Bowl Champion New England Patriots or the Pittsburgh Steelers.

“Special,” Mariota said of the win. “I’m part of a great group of guys that really just believe in each other and it’s something special. I look forward to playing next week.”

In National Football Conference action later Saturday, the Los Angeles Rams hosted the Atlanta Falcons. — AFP

TUCP calls for fire safety inspection of malls nationwide

LABOR GROUP Trade Union Congress of the Philippines (TUCP) in a statement on Sunday called for a joint fire safety audit of malls nationwide by the Department of Labor and Employment (DoLE) and the Bureau of Fire Protection (BFP). “The ongoing Metro Ayala Mall and the Gaisano mall and the NCCC Mall fires are symptoms of the wanton disregard of department store owners to go around our building safety laws and ignore workplace policy on workers’ health and safety. We have to find out other malls nationwide how safe or how fire-risks these are,” TUCP president Raymond Mendoza said. According to Associated Labor Unions-Trade Union Congress of the Philippines (ALU-TUCP) spokesman Alan Tanjusay, they envision the joint DoLE-BFP safety audit inspections to be conducted immediately to coincide with the forthcoming dry season when most fire incidents happen.

Business looks southward even as reality hits home

By Krista A. M. Montealegre
National Correspondent

THE RISE to power of President Rodrigo R. Duterte fuelled hopes of finally ending decades of insurgency in Mindanao to help unlock its potential as an investment haven.

When Mr. Duterte emerged as the clear winner in the 2016 national elections, businesses turned south and pledged to allocate more of their resources to Mindanao, which has suffered from underdevelopment due to the longstanding armed conflict. After all, there is a reason to be optimistic: Mr. Duterte, the mayor of Davao City for two decades, is the first president to come from Mindanao.

Then, nearly a year into the Duterte administration, terror struck Mindanao. Islamic State (IS)-inspired militants attacked Marawi City on May 23, forcing Mr. Duterte to cut short his trip to Russia and declare Martial Law in the southern island region.

It was back to square one for once-bullish investors, who were reminded of the gravity of Mindanao’s insurgency problem.

“Sayang lang (It was a pity) because there was strong momentum when [Mr.] Duterte won the elections. When all these promises turned to reality and that reality became Marawi, nagkaroon ng hesitation (returned),” Rens V. Cruz II, analyst at Regina Capital Development Corp., said in a phone interview.

There is definitely room for private sector investment in Mindanao, which has some of the highest poverty rates in the entire Philippines, especially in conflict-affected areas. The province of Lanao del Sur, home to Marawi City, had the highest poverty incidence among provinces in the Philippines at 71.9% in 2015, according to data from the Philippine Statistics Authority.

Still, there were some brave souls who bet big on the long-term prospects of Mindanao despite the attack on Marawi.

Amid the standoff between the army and militants in Marawi, Metro Pacific Investments Corp. (MPIC) pushed through last June with its acquisition of a 50% stake in Alcantara-led Alsons Thermal Energy Corp., which owns base load coal-fired power plant assets in Mindanao.

The investment expanded MPIC’s Mindanao footprint beyond two hospitals: Davao Doctors Hospital and Western Mindanao Medical Center in Zamboanga.

“From what I know, you go there in Mindanao and it’s normal. It’s business as usual,” Karim G. Garcia, MPIC’s executive vice-president for Business Development, said in an interview.

“As opportunities come up, we’ll take a look and if there’s synergies with the group’s core businesses and strengths, we’ll definitely invest.”

After 148 days of fighting, President Duterte announced last Oct. 17 that Marawi had been liberated after Omar Maute and Isnilon Hapilon, leaders of the terrorists, were killed in battle.

The focus now shifts to rebuilding Marawi, which sustained significant damage to infrastructure, agricultural resources and other sources of livelihood. Around 400,000 citizens have been displaced due to the conflict.

“The speed in which a place is able to recover is a big representation of the whole market. If Marawi can come back quickly than what happened in Leyte, that’s a good sign for the big names to come in,” Regina Capital’s Mr. Cruz said, referring to rehabilitation efforts in Leyte which supertyphoon Yolanda hit in early November 2013.

With the Marawi incident still fresh in the minds of investors, businesses are taking it slow and adopting a cautious approach.

A construction company executive urged the government to let the military start the rebuilding process in Marawi before letting the private sector take over.

“We are as good kung sasama ang mga tao namin (if we are in this togehter). Kung gusto namin pero ayaw sumama ng tao because of security, mahirap sabihin (If we are willing but others are not because of fears to their security, it will be difficult to say when rebuilding can start),” the official said.

Despite the apprehension, Mary Jade Roxas-Divinagracia, managing partner for deals and corporate finance at PwC Philippines, sees the agriculture, utilities and infrastructure sectors getting “a lot of interest” from local businessmen, even as foreign investors remain “jittery.”

“I hope peace will come to Mindanao sooner. With that, investments in other sectors will also flourish like tourism and even manufacturing,” Ms. Divinagracia said in a mobile phone message.

Another major bet in Mindanao is San Miguel Corp.’s 2,000-hectare industrial estate in Malita, Davao Occidental where the conglomerate is building a $700-million integrated packaging plant and a 600-megawatt power generation facility.

San Miguel plans to bring small- and medium-scale enterprises and a number of manufacturing companies into the estate.

Apart from security, other concerns have deterred investments in Mindanao.

A World Bank report showed that cities in Mindanao have trailed other East Asian cities on Doing Business indicators. For instance, Mindanao top performers General Santos and Davao ranked 124th and 125th respectively, among 151 cities for starting a business, compared to Singapore (1st), Thailand (59th) and Malaysia (71st).

The same report bared that skills shortages have plagued various sectors like information technology-business process outsourcing, manufacturing and construction because of the minimal investment in basic education, inadequate training programs and the migration of skilled workers.

Also, the time spent and cost involved in registering a property in Mindanao’s cities were the worst in the Philippines, the World Bank report showed, noting it has resulted in reduced incentives to develop land and slowed infrastructure projects with right-of-way issues.

Ironically, most of the Philippine tycoons’ exposure in Mindanao is in real estate, with behemoths Ayala Land, Inc. and Megaworld Corp. bringing their expertise in building mixed-use developments particularly in Davao City.

“We’re already significantly invested in Mindanao, both socially and business-wise. Ayala Land’s there. We’re all over,” AC Infrastructure Holdings, Inc. President and CEO Jose Rene D. Almendras said in an interview.

Between now and 2021, there are around 10,000 residential condominium units, 60,000 square meters of office space, 70,000 square meters of retail space and more than 1,200 hotel keys in the pipeline in Mindanao, Claro dG. Cordero, Jr., head of Jones Lang LaLSalle (JLL) Philippines’ research, consulting and valuation advisory services, said in a mobile phone message.

Most of the developments are mainly located in the urban centers, particularly Davao City followed by Cagayan de Oro City, Mr. Cordero added.

”I believe Mindanao as a future growth center would be [Mr.] Duterte’s legacy,” Cristina S. Ulang, First Metro Investment Corp. (FMIC) head of Research, said in an interview.

“It is the prospect of peace and security made credible by [Mr.] Duterte’s ability to deliver on his anti-terrorism campaign, (with the) defeat of Maute in Marawi. It is raising hopes for Mindanao’s bankability as an investment destination.”

Are Mindanao’s MSMEs ready?

The Philippines stands to benefit from improved access to the Association of Southeast Asian Nations (ASEAN) member countries, but are Mindanao’s businesses particularly micro, small and medium enterprises (MSMEs), ready to compete in the highly competitive market?

Mindanao Business Council President Vicente T. Lao believes products made in the region have a fighting chance in the ASEAN market, especially in terms of quality and presentation.

“We just have to keep our costs at a reasonable level and government has to do their job in getting concessions from the different countries we are doing business with, so that our products will be competitive when it arrives at their shores,” he said in an interview with BusinessWorld.

Data from the Department of Trade and Industry (DTI) showed as of 2014 there are 3,414 SMEs in Zamboanga Peninsula, 4,473 in Northern Mindanao, 4,781 in the Davao region, 4,952 in Soccskargen, 2,459 in Caraga and 973 in the Autonomous Region in Muslim Mindanao.

MSMEs are defined by size of assets and the number of employees. Micro-enterprises have an asset size of up to P3 million and up to nine employees, while small enterprises have an asset size above P3 million up to P15 million and have up to 99 employees. Medium enterprises have assets from above P15 million to P100 million, and a workforce of 100 to 199 employees.

In terms of industry, 46.37% of the MSMEs in Mindanao are engaged in wholesale or retail trade, while 13.5% are in accommodation and food service activities, and 12.48% are into manufacturing. The rest are in information and communication, financial and insurance activities, agriculture, forestry and fishing, mining, construction, utilities, education, and other types of industries.

Mr. Lao said MSMEs in Mindanao need help in terms of financing and market access. He said the Department of Trade and Industry (DTI) and Department of Finance (DoF) should come up with better programs for MSMEs to help them go head-to-head with ASEAN firms.

In a separate interview, Ateneo School of Government Dean and economist Ronald U. Mendoza noted the DTI “despite its best efforts, is still not reaching all of the MSMEs.”

“It is only reaching a fraction of the MSMEs. There are any number agencies that can provide support to the SMEs in ways that actually are more sustainable — not the kind that are continuous subsidies,” he said.

“I think the other part of the support will be to bring in more of the private sector to support these MSMEs, such as interconnecting them with strong value chains that go to export markets or connecting to the large conglomerates that also want to tap the comparative advantages of MSMEs and that is still missing in our countries,” Mr. Mendoza added.

SUPPORT FOR MSMEs
For its part, the DTI has continued to provide support for MSMEs through the Investments Priorities Plan (IPP) which is provides fiscal incentives to “inclusive business” projects benefiting MSMEs, as well as financing schemes such as the Pondo Para sa Pagbabago at Pag-Asenso (P3) program.

The DTI has also rolled out the Go! Lokal retail concept stores which gives MSMEs a chance to test their products’ marketability without incurring costs of operating retail spaces.

Another part of the government’s program to develop MSMEs is the Shared Service Facility (SSF) Project, which aims to improve the competitiveness of small businesses by providing machinery, equipment, tools, systems, skills, and knowledge under a shared system.

At the same time, the Duterte administration is pouring in significant amounts for programs supporting the development of MSMEs.

Trade Secretary Ramon M. Lopez said President Rodrigo R. Duterte recently already ordered the allocation of P50 billion for the development of MSMEs, acknowledging their importance to the economy.

“With regard to incentives and other forms of government support, we are coordinating with the Department of Finance to ensure that these are performance-based, time-bound, transparent, and easy to administer. We maintain that incentives can be effective tools for industry development and ensure our competitiveness,” Mr. Lopez said in his speech during the Manufacturing Summit 2017.

The DTI chief noted the government is supporting SME development “by boosting their growth and profitability through the 7Ms (Mind-set, Mastery, Mentoring, Money, Machine, Market, and Models) as well as programs focusing on the establishment of common service facilities, and improving access to finance, technology, and skilled workers.”

Despite government efforts, National Competitiveness Council Co-Chairman Guillermo M. Luz said the government has limitations, such as granting credit to the MSMEs in Mindanao, which he said is just as important as improving infrastructure in the region.

“I don’t think that can come from the government but it can come from the banking system. Connectivity, internet, all those types of things — e-commerce those things which will have to be provided by the private sector. I don’t think the government is in the position to supply everything,” Mr. Luz said in a separate interview.

CONNECTIVITY
Noting poor connectivity among the islands, the Duterte administration kicked off the “Build Build Build” program, which includes 70 infrastructure projects nationwide. Only 12 of these projects are directed towards Mindanao — 10 of which are under project development while two are already being implemented.

Mr. Lopez said the DTI and the Board of Investments (BoI) are working together with the Department of Public Works and Highways (DPWH) for the Roads Leveraging Linkages for Industry and Trade (ROLL IT) program to provide better connectivity in the region, particularly establish a more efficient supply chain linking larger enterprises with the MSMEs in far-flung regions.

“The goal of this program is to prioritize and implement road access infrastructure that leads to various industries and economic zones. Through ROLL IT, we are proposing P12.3 billion-worth of road infrastructure across the country under the proposed 2018 budget,” he added.

Trade Undersecretary for Competitiveness and Ease of Doing Business Group Ruth B. Castelo said the infrastructure projects in Mindanao already serve as the beacon for investors to flock the region.

“If we do not have adequate logistics, we cannot provide for business. It’s going to make their business faster otherwise without infrastructure development, it will be very hard for the investors to come and they will be turned off with all that traffic,” she added.

Ms. Castelo, who previously headed the Construction Industry Authority of the Philippines, said the infrastructure projects will also give a change to link small contractors to the supply chain of larger firms.

“In Mindanao, not only in Mindanao actually, but with the roll out of the projects, the big construction companies with the financial capability cannot of course cannot complete the projects on their own. We have a lot of small and medium contractors, as a matter of fact, there are more of them than big contractors,” she said.

“So, in terms of construction, of course the bigger companies will be able to give opportunities to our smaller contractors for them to develop, in terms of their expertise, their technology and manpower.”

Last April, a roll-on, roll-off route was launched, connecting Davao, General Santos, and Bitung in Sulawesi, Indonesia, the first of many projects aimed to improve connectivity in the Brunei Darussalam-Indonesia-Malaysia-Philippines-East ASEAN Growth Area (BIMP- EAGA).

“Mindanao is the closest to the other ASEAN countries. We can expect a boom in Mindanao in the next five years — not only in terms of construction and infrastructure but also in other industries that we’re developing,” Ms. Castelo said. — Anna Gabriela A. Mogato

Free tertiary education funding assured

DAVAO CITY Representative and House appropriations committee chairman Karlo Alexei B. Nograles said there would be continued funding for free higher education beginning this year and in the succeeding years. “We allocated P40 billion for the implementation of the free higher education law and we are happy that the Senate did not touch it,” Mr. Nograles said, in connection with Republic Act 10931 or the Universal Access to Quality Tertiary Education Act, which President Rodrigo R. Duterte signed into law before the end of 2017. The law guarantees free tuition and miscellaneous fees next schoolyear for students who will enroll in the almost 112 state universities and colleges (SUCs) in various locations in the Philippines. This year’s budget will also pave the way for the implementation of free wi-fi for SUCs nationwide. “The next budget for free education is on 2019. We will try every year to put budget for higher education,” Mr. Nograles said. He said the SUCs already have a capital outlay for the construction of buildings and other infrastructure requirement. On top of that, an additional P10 million for each of the SUCs will be allotted for the construction of new buildings. Mr. Nograles said teachers are also set to get an additional P1,000 cash allowance every month which means an increase from P2,500 to P3,500 cash allowance per month. — Carmencita A. Carillo

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