Land reform rules hamper credit

January 19, 2017 | 6:02 am

IDEA agriculture land reform IDEA RESTRICTIVE conditions set by past agrarian reform laws have prevented farmers from reaping the full benefits of land ownership, according to a group of economists.

According to the Institute for Development and Econometric Analysis, Inc. (IDEA), ample credit remains beyond the reach of agrarian reform beneficiaries (ARBs).

“The presence of a bank facilitates spending through credit [and in turn] spending facilitates growth in a region, province, or town. But this growth may not be inclusive because there may be sectors left behind, especially those who were not able to access credit, “IDEA said.

“The banking industry is hindered by our flawed agricultural and agrarian policies,” the group said.

More than four decades since land reform was first implemented nationwide by the late President Ferdinand E. Marcos, Sr., the government has distributed several million hectares of agricultural land to more than two million farmers.

Following Marcos’ ouster, his successor, Corazon C. Aquino, pushed for the passage of the Comprehensive Agrarian Reform Program (CARP) as her centerpiece social-justice program. The enactment into law of the CARP came more than a year after the fatal shooting of 13 farmers holding a protest rally several meters away from Malacañang on Jan. 22, 1987.

The fatal shooting was dubbed the “Mendiola massacre”, whose 30th anniversary falls on Sunday.

In 2009, President Gloria Macapagal-Arroyo successfully pushed for the extension of CARP, which was renamed CARPer, in line with RA 9700, or the CARP Extension with Reforms Act.

In 2014, the CARPer Law expired after President Benigno S. C. Aquino III failed to push for a second extension of his late mother’s centerpiece program.

Latest data from the Bangko Sentral ng Pilipinas showed that only P29.98 billion or 0.96% of loans in the Philippine banking system went to ARBs, a very small percentage compared to the 10% minimum quota set by the Republic Act (RA) 10000 or the Agri-Agra Reform Credit Act of 2009.

“The limited size of the land owned by the farmers does not help entice the banks to lend to them and it would be imprudent for banks to put their depositors’ money at risk,” IDEA said.

Agrarian reform programs — from Marcos’ Presidential Decree No. 27, s. 1972, to RA 6657 and its extension, RA 9700 — cap land distribution to a maximum of three hectares per ARB.

Landowners, on the other hand, may only retain up to five hectares. IDEA cited several reasons why such an arrangement is a disincentive to bank lending.

“Firstly, these can’t be transferred or sold within 10 years from award, so banks can’t foreclose on them and transfer their titles to them. Secondly, the Landbank (Land Bank of the Philippines) has prior lien on these properties on the basis of the amortizations that farmer beneficiaries must pay Landbank. Thirdly, the market for foreclosed CARP lands is limited since by law, it can only be sold to qualified CARP beneficiaries.”

Farmer beneficiaries shall pay for their land in 30 annual amortizations to Landbank at 6% interest per annum. Meanwhile, if a CARP beneficiary wants to sell or transfer a landholding within the 10-year lock-in period, the only eligible recipients are the spouse or heirs, another qualified beneficiary, or the State through Landbank. After 10 years, the land may be sold to the State or to an individual qualified under CARP, who owns not more than five hectares of agricultural land and must be a direct cultivator.

“Moreover, the fact that the majority of CLOAs or Certificate of Land Ownership Awards are still collective (i.e. not broken down into individual parcels) prevent farmer beneficiaries from accessing credit on an individual basis,” IDEA said.

So far, around 4.7 million hectares of agricultural land has been distributed by the Department of Agrarian Reform to 2.2 million beneficiaries.

Between 1972 and 2015, the agriculture, forestry, hunting and fishing sector’s annual output, as measured by gross value added, has grown 157% but their share of the country’s gross domestic product contracted to 9.5% from 19.6%.

To encourage lending in the rural sector, IDEA suggests amending the Agri-Agra Credit Act while at the same time, addressing property rights restrictions on rural land.

“Allowing the farmers to own lands the size beyond the set ceiling is one condition. There will then be demand from these qualified borrowers with their bankable assets,” IDEA said.

“Another condition is that banks should not be required to hold the foreclosed properties up to five years, as required by the Agri-Agra Law, to make whatever bankable assets the farmers have less risky for banks to accept as collateral.”

— Jochebed B. Gonzales To encourage lending in the rural sector, IDEA suggests amending the Agri-Agra Credit Act while at the same time, addressing property rights restrictions on rural land. — AFP

Davao City mixed-use zoning ordinance creating problems for farms caught in residential buildup

January 19, 2017 | 3:59 am

DAVAO CITY — The revised Davao City Comprehensive Land Use Plan (CLUP) and Zoning Ordinance, which was approved in 2013, has created confusion and subsequent problems for the agriculture sector.

The unhygienic practices of the various poultry and piggery operations in the city’s third district have been blamed for the fly infestation in the area early this year.

The poultry businesses in Mintal and Calinan have as much right to occupy the area, where their poultry farms are located, as the residents who have started to live in the area despite its being classified as an agricultural zone.

Councilor Mary Joselle D. Villafuerte, chair of the committee on health, said the city is alarmed by the fly infestation as it could cause the spread of disease.

The fly infestation has affected nine barangays in Calinan District and five barangays in Tugbok District.

The over 80 poultry and piggery owners who attended last Monday’s meeting at the City Council pointed out that their farms are located in an agricultural area and yet the construction of residences was allowed.

Elizabeth Banarez, representative of Mercks Poultry Farm, said while they are willing to abide by the laws especially on pollution, housing subdivisions should not have been allowed there in the first place as it has been identified as an agricultural area.

While some of the farms have established good agricultural practices, some of the small scale poultry and hog farmers said the mitigating measures required by law are too expensive for them.

“We cannot close these poultry farms or stop their businesses. They have been there even before it became a residential area,” Vice-Mayor Paolo Z. Duterte said in an interview.

Mr. Duterte said the presence of flies is to be expected when there are poultry farms. However, he said, it is up to the City Health Office and the City Council committee on health to come up with a guidelines to ensure proper sanitary measures are observed.

Mr. Duterte admitted that the city has a problem with its zoning and it is not just in the Mintal and Calinan areas. He said even parts of the second district classified as industrial have become residential areas.

The Davao City Chamber of Commerce and Industry, Inc. (DCCCII) said it is willing to provide training for poultry and hog raisers to introduce best practices in fly control. The Chamber provided similar training during last year’s Davao Agricultural Trade Expo (DATE).

The hog and poultry farmers have agreed to find a solution to the problem by organizing themselves.

Councilor Danilo C. Dayanghirang, chair of the committee on finance, ways and means, said the CLUP is outdated and should be amended. He said the city’s population was reckoned at only 1,000,840 in 1995 but this has increased by 2.52% to 1,363,337 in 2007. Even the city’s urban population has substantially increased from 604,508 in 1990 to about 785,668 in 2007.

“Population increase will require the allocation of more land for residential,commercial and industrial purposes and this is expected to reduce the area that was once devoted to agricultural production,” he said.

The city’s production of agricultural products like coconut, palay, corn and fruit trees excluding bananas have contributed to 4.08% to the aggregate production of the country.

The city has been classified as an agricultural center because of the availability of land that can be devoted to agricultural production. At least 40.23% or 98,151 hectares of the city’s total land was agricultural in 1996.

But while the city’s Development Plan acknowledges the need to steer the city towards agricultural development, there is a need to shift from purely agricultural development to agri-industrial development. — Carmencita A. Carillo

Coffee stakeholders want industry council, pricing system

January 19, 2017 | 3:59 am

DAVAO CITY — With the National Coffee Roadmap 2017-2022 in place, stakeholders are now aiming to establish an industry council within the year and begin setting up a pricing system, especially for special varieties.

Department of Trade and Industry (DTI)-Compostela Valley Provincial Director Lucky Siegfred M. Balleque said in an interview that coffee growers have been pushing for the creation of a Philippine Coffee Council to consolidate and coordinate all efforts for the industry’s development.

“We have finalized the National Coffee Roadmap and we are working on, hopefully by 2017, on the creation of the Philippine Coffee Council,” Mr. Balleque said.

Industry representatives met on Jan. 5, he said, to discuss the council’s establishment and plan for the drafting of an executive order that will create it, to be signed by President Rodrigo R. Duterte.

Existing private groups such as the Philippine Coffee Board and the Philippine Coffee Alliance, which have already been undertaking interventions for the industry, are expected to continue their industry leadership within the council.

The five-year road map was presented during the 2nd National Coffee Congress held in Baguio City on Nov. 23-24, 2016.

Meanwhile, the DTI and the Department of Agriculture, along with economic development organization ACDI/VOCA, are now working on establishing a new pricing system for Philippine coffee, which will be based on international standards of cupping and grading.

“That (pricing) will be based on the quality of the coffee,” said Thellonius Trimmell, ACDI/VOCA chief of party.

Mr. Trimmel pointed out that quality coffee is known to be growing in the country, but other aspects such as post-harvest handling still need improvement.

“We want to convert from commercial grade coffee to specialty grade coffee that will be determined through a cupping process with a standard score of above 80 points for a premium price,” he said.

The cupping process will also be used to develop a profile of various Philippine coffee varieties, he added.

The DTI recently introduced four newly licensed coffee graders from Mindanao who could be tapped for cupping. They are: Daniel Byron Pantoja of Coffee for Peace, Omar Santos of Dayaw Coffee and Tea, Franco Roque of Meridian Specialty Coffee, and Pamela Jean Guingona of Imdalsa Cooperative.

ACDI/VOCA, through its US-funded Mindanao Productivity in Agricultural Commerce and Trade (MinPACT) Project, is also helping some 10,600 smallholders of coffee, cacao, and coconut improve output and increase their income.

The coffee program of MinPACT aims to transition Mindanao from a commercial grade coffee grower to a producer of fine Robusta and specialty Arabica coffee.

Mr. Trimmel said demand for high-quality and specialty coffee has been growing in the last decade, especially in the US, Japan, South Korea, Australia, and Europe.

“A lot of (operators of) coffee shops travel around the world, in coffee producing countries, to identify the highest quality coffee… They identify the bean being harvested, they make sure that the beans are harvested properly, ensure that the post-harvest processes are properly done and take those good and well-dried beans.” — Maya M. Padillo

ASEAN investments sought for agribusiness, manufacturing

January 19, 2017 | 3:59 am

DAVAO CITY — Department of Trade and Industry (DTI) Assistant Secretary Arturo P. Boncato in an interview said with the Philippine chairmanship of ASEAN, it is now the time to promote agribusiness and manufacturing ventures to investors from the region.

Mr. Boncato said Philippines can offer agribusiness, manufacturing and other value-adding activities. He said agri products that are canned or processed are of special interest to DTI.

He also said that all industries in the Philippines are open in Mindanao, including construction, manufacturing, housing materials, medical services, tourism, with not only ASEAN investors welcome to these segments but also investors from the US, Japan, China, and South Korea.

Apart from manufacturing and agribusiness other areas with potential for investment are human resources, engineering, infrastructure and practically all areas that are open to partnerships and investment from foreigners.

“The Philippine is very much open for those and we’re looking for partners, foreign direct investments are also one indicator that we would like to focus on to increase the flow of investments into the Philippines,” Mr. Boncato said.

Mr. Boncato said the department is also focusing on growing micro, small and medium enterprises (MSMEs) and also to push them to grow their businesses through e-commerce.

“We are focused on MSMEs for e-commerce, agribusiness, manufacturing in practically all areas — there are opportunities for growth in Mindanao,” he said.

He said the chairmanship of ASEAN is an opportunity because the Philippines can take the lead in terms of meetings. He said there is a chance to showcase Filipino hospitality and also the country’s determination to grow the economy.

“The ASEAN launch opens a lot of doors because for one year a lot of economic meetings will be happening in different parts of the Philippines. This is a good opportunity for us to show them the physical areas where they can actually invest in and it would be a good opportunity for us to really link with individual and groups and organizations and companies and corporation who want to expand their businesses within the Philippines coming from Japan and many parts in ASEAN as development partners,” he said.

He also said the activities associated with the ASEAN launch are part of DTI’s efforts to share information about the entire Philippines.

“During the visit of the [Japan’s] Prime Minister Shinzo Abe we had the really very successful roundtable discussion in Malacanang among the CEOs of big corporations together with CEOs coming from Japan. It was a very intimate gathering and we were able to talk about specific needs of the Japanese investors and partners who would like to invest more in the Philippines,” he said.

He also said that activities in Davao City focused on the bright spots in Mindanao in terms of investment particularly from Japan. — Maya M. Padillo

NFA seeks tougher import permit regime for agriculture

January 19, 2017 | 3:59 am

THE NATIONAL Food Authority (NFA) and the Bureau of Customs (BoC) have agreed to strictly implement the anti-agricultural smuggling act, and crack down on smuggling opportunities in the import process.

In a news conference yesterday, NFA supervisor and Cabinet Secretary Leoncio B. Evasco, Jr. said that the government will prevent import leakages in accordance with Republic Act 10845, which classifies large-scale agricultural smuggling as economic sabotage.

This followed an emergency meeting last week held by the office of the Cabinet Secretary with the BoC and stakeholders, in which they agreed on new measures to ensure zero smuggling.

Under the law, importers that misdeclare agricultural goods with a market value of P1 million and P10 million for rice, shall face a maximum penalty of life imprisonment and a fine twice the fair value of the smuggled goods.

The Cabinet Secretary said among the measures being considered are a stricter process for issuing import permits.

Mr. Evasco said that the Bureau currently allows commodities to be released pending an application for an import permit.

“There should be no exemptions. Violations will merit the seizure of goods,” said Mr. Evasco.

He also proposed that the bureau allow only up to 2% overlanding of rice as allowance for potential leakage and damages. This means that the country can only import up to 2% in excess of the allowed amount.

Also, the NFA supervisor wants the removal of freeport zones as points of entry for agricultural goods.

The measures will form part of a draft Customs order promulgating the implementing rules and regulations (IRR) of the anti-agricultural smuggling law, which was submitted to the Department of Finance for final review yesterday.

Mr. Evasco added that the authorities are studying the possibility of donating the seized goods to Department of Social Welfare and Development, to serve the needs of disaster victims rather than auctioning them to the importers who smuggled the goods in the first place. — E.J.C. Tubayan

AFP

China building prototype of fastest super computer technology

January 19, 2017 | 3:52 am

BEIJING, CHINA — China plans to develop a prototype exascale computer by the end of the year, state media said Tuesday, as it seeks to win a global race to be the first to build a machine capable of a billion, billion calculations per second.

The IBM Blue Gene/P supercomputer installation at the Argonne National Laboratory, in Lemont, Illinois, USA. — Argonne National Laboratory/Wikimedia Commons

If successful, the achievement would cement its place as a leading power in the world of supercomputing.

The Asian giant built the world’s fastest supercomputer, the Sunway TaihuLight machine, in June last year, which was twice as fast as the previous number one.

It used only locally made microchips, making it the first time a country has taken the top spot without using US technology.

Exascale computers are even more powerful, and can execute at least one quintillion (a billion billion) calculations per second.

Though a prototype was in the pipeline, a complete version of such a machine would take a few more years to complete, Xinhua news agency cited Zhang Ting, application engineer at the National Supercomputer Center in the port city of Tianjin, as saying.

“A complete computing system of the exascale supercomputer and its applications can only be expected in 2020, and will be 200 times more powerful than the country’s first petaflop computer Tianhe-1, recognized as the world’s fastest in 2010,” said Mr. Zhang.

The exascale computer could have applications in big data and cloud computing work, he added, noting that its prototype would lead the world in data transmission efficiency as well as calculation speed.

As of last June, China for the first time had more top-ranked supercomputers than the US, with 167 compared to 165, according to a survey by supercomputer tracking Web site Top500.org

Of the top 10 fastest computers, two are in China and five in the US as of November, the ranking said. Others are in Japan and Switzerland.

China has poured money into big-ticket science and technology projects as it seeks to become a high-tech leader. But despite some gains the country’s scientific output still lags behind, and its universities generally fare poorly in global rankings. — AFP

Mark Zuckerberg questioned at trial over virtual reality VR Oculus

January 19, 2017 | 3:47 am

FACEBOOK, Inc. chief executive Mark Zuckerberg took the witness stand in Dallas federal court on Tuesday and denied an allegation by a rival company that the virtual-reality technology of Facebook’s Oculus unit was stolen.

Facebook CEO Mark Zuckerberg is seen on stage during a town hall at Facebook’s headquarters in Menlo Park, California September 27, 2015. Picture taken February 27, 2015. REUTERS/Stephen Lam/File Photo

Mr. Zuckerberg, the founder of one of the world’s largest companies, faced hours of tough, public questioning about where Oculus obtained its ideas and how much he knew about the start-up when Facebook bought it for $2 billion.

A jury is hearing evidence in a civil lawsuit brought by videogame publisher ZeniMax Media, Inc. against Oculus in 2014, in the middle of the Facebook-Oculus deal. ZeniMax said that Oculus unlawfully used its intellectual property to develop the virtual-reality system that includes the Rift headset.

During one heated exchange with ZeniMax lawyer Tony Sammi, Mr. Zuckerberg told a jury in the crowded courtroom that the technology was not even fully formed when Facebook bought it.

“Improving on that technology doesn’t make it yours,” Mr. Sammi countered. “If you steal my bike, paint it and put a bell on it, does that make it your bike?”

Mr. Zuckerberg, wearing a dark suit and striped tie rather than his typical T-shirt and jeans, answered, “no,” but then added, “The idea that Oculus technology is based on someone else’s is just wrong.”

The 32-year-old Facebook founder has spoken about virtual reality as an important part of the company’s future business, especially as the technology becomes less expensive and its uses clearer.

The Oculus acquisition was more expensive than the $2-billion price tag indicated, Mr. Zuckerberg said in court, describing $700 million spent to retain employees and $300 million in payouts for reaching milestones. Oculus originally wanted $4 billion, he said.

Mr. Sammi questioned whether Facebook knew what it was doing when it made the acquisition. Mr. Zuckerberg said the Oculus deal was done over a weekend in 2014, which Mr. Sammi said did not show sufficient due diligence. Mr. Zuckerberg said, though, in later testimony that Facebook researched Oculus for months.

At the time, Mr. Zuckerberg testified, he was not aware of any theft claims against Oculus.

“It’s pretty common when you announce a big deal that people just come out of the woodwork and claim they own some part of the deal,” Mr. Zuckerberg said.

On the stand, he also gave details about Facebook’s $22-billion purchase of messaging service WhatsApp in 2014. While the deal was in progress, another company he did not identify made a last-minute bid that was higher, Mr. Zuckerberg said, but WhatsApp declined because of its good relationship with Facebook.

The Oculus lawsuit, in the sixth day of a jury trial, relates in part to programmer John Carmack.

Well-known for helping to conceive games such as Quake and Doom, Mr. Carmack worked for id Software LLC before that company was acquired by ZeniMax. He is now the chief technology officer at Oculus.

Mr. Zuckerberg denied that Mr. Carmack has unfairly used computer code from his previous position. “There is no shared code in what we do,” he said.

Mr. Zuckerberg said he has been interested in virtual reality since he was a student, but thought it was decades away from happening before he encountered Oculus. He told jurors how he used virtual reality to capture his daughter’s first steps, so her grandparents could experience it later.

“We want to get closer to this kind of perfect representation, so you can capture a moment you had,” he said. — Reuters
Facebook CEO Mark Zuckerberg is seen on stage during a town hall at Facebook’s headquarters in Menlo Park, California, Sept. 27, 2015. — Reuters

Courtside — Anthony L. Cuaycong

January 19, 2017 | 3:46 am

Domineering Warriors.

First off, let’s be clear about one thing: The Warriors’ victory over the Cavaliers the other day has absolutely no bearing at all in regard to their bid to claim the Larry O’Brien Trophy in June. For all the celebrating the 35-point trouncing elicited in the 19,516-strong Oracle Arena, it was, in the final analysis, a single outing midway through a long campaign. True, the way it unfolded was nothing short of perfect for the blue and gold; they got off to a scorching start and sustained their focus until the final buzzer, exposing the defending champions as overmatched at best. On the other hand, it’s precisely because they don’t have the hardware on their mantel that they would do well not to delve on the significance of their accomplishment.

Indeed, the Warriors understand the pitfalls of premature revelry. This time last year, they likewise schooled the Cavaliers; in fact, the 34-point drubbing compelled the latter to institute internal overhauls designed to keep pace with the evident front-runners. They then went on to post two National Basketball Association milestones; they became owners of both the best regular-season record and the worst Finals collapse in pro hoops history. So if there’s anything their bitter experience taught them, it’s that the finish is far more important than anything before it.

That said, the Warriors cannot but be pleased with how they competed against the Cavaliers, who hitherto seemed to have their number. Their travails have made them wiser, and their potential to contend consistently in the medium term have also made them more intimidating; one-time league Most Valuable Player Kevin Durant would not have joined them had they managed to defend their title. And, as they stamp their class anew, they appreciate the irony of their Finals failure setting up their future success.

In the aftermath of the Warriors’ triumph, vital cog Draymond Green professed his belief that they have a rivalry with the Cavaliers. In truth, they’re a cut above all and sundry. At their best, they have no equal, which is to say they need not go beyond their own backyard to find their most formidable foils. When they’re full of confidence, as they are these days, they don’t just win; they dominate.

Anthony L. Cuaycong has been writing Courtside since BusinessWorld introduced a Sports section in 1994. He is the Senior Vice-President and General Manager of Basic Energy Corp.

Land reform rules hamper credit — IDEA

January 19, 2017 | 3:46 am

RESTRICTIVE conditions set by past agrarian reform laws have prevented farmers from reaping the full benefits of land ownership, according to a group of economists.

According to the Institute for Development and Econometric Analysis, Inc. (IDEA), ample credit remains beyond the reach of agrarian reform beneficiaries (ARBs).

“The presence of a bank facilitates spending through credit [and in turn] spending facilitates growth in a region, province, or town. But this growth may not be inclusive because there may be sectors left behind, especially those who were not able to access credit,” IDEA said.

“The banking industry is hindered by our flawed agricultural and agrarian policies,” the group said.

Following Marcos’s ouster, his successor, Corazon C. Aquino, pushed for the passage of the Comprehensive Agrarian Reform Program (CARP) as her centerpiece social-justice program. The enactment into law of the CARP came more than a year after the fatal shooting of 13 farmers holding a protest rally several meters away from Malacanang on Jan. 22, 1987. The fatal shooting was dubbed the “Mendiola massacre” whose 30th anniversary falls on Sunday.

In 2009, President Gloria Macapagal-Arroyo successfully pushed for the extension of CARP, which was renamed CARPer, in line with RA 9700, or the CARP Extension with Reforms Act. In 2014, the CARPer Law expired after President Benigno S. C. Aquino III failed to push for a second extension of his late mother’s centerpiece program.

“The limited size of the land owned by the farmers does not help entice the banks to lend to them and it would be imprudent for banks to put their depositors’ money at risk,” IDEA said.

Agrarian reform programs — from Marcos’; Presidential Decree No. 27, s. 1972, to RA 6657 and its extension, RA 9700 — cap land distribution to a maximum of three hectares per ARB. Landowners, on the other hand, may only retain up to five hectares.

IDEA cited several reasons why such an arrangement is a disincentive to bank lending.

“Firstly, these can’t be transferred or sold within 10 years from award, so banks can’t foreclose on them and transfer their titles to them. Secondly, the Landbank (Land Bank of the Philippines) has prior lien on these properties on the basis of the amortizations that farmer beneficiaries must pay Landbank. Thirdly, the market for foreclosed CARP lands is limited since by law, it can only be sold to qualified CARP beneficiaries.”

After 10 years, the land may be sold to the State or to an individual qualified under CARP, who owns not more than five hectares of agricultural land and must be a direct cultivator.

“Moreover, the fact that the majority of CLOAs or Certificate of Land Ownership Awards are still collective (i.e. not broken down into individual parcels) prevent farmer beneficiaries from accessing credit on an individual basis,” IDEA said.

So far, around 4.7 million hectares of agricultural land has been distributed by the Department of Agrarian Reform to 2.2 million beneficiaries.

To encourage lending in the rural sector, IDEA suggests amending the Agri-Agra Credit Act while at the same time, addressing property rights restrictions on rural land.

“Allowing the farmers to own lands the size beyond the set ceiling is one condition. There will then be demand from these qualified borrowers with their bankable assets,” IDEA said.

“Another condition is that banks should not be required to hold the foreclosed properties up to five years, as required by the Agri-Agra Law, to make whatever bankable assets the farmers have less risky for banks to accept as collateral.”; — Jochebed B. Gonzales

To encourage lending in the rural sector, IDEA suggests amending the Agri-Agra Credit Act while at the same time, addressing property rights restrictions on rural land. — AFP

Chess Piece — Bobby Ang

January 19, 2017 | 3:20 am

Tumbaga memories.

I’d like to introduce BW readers to Mr. Eliseo Tumbaga. He has been a journalist and then later an entrepreneur, corporate executive and business consultant for the past 43 years.

As regards, chess he is a FIDE-licensed trainer with rank of National Instructor and secretary of the Professional Chess Trainers Association of the Philippines. Eli is also the founder and admin of the Facebook group Chess News Views, which I urge all our readers to join.

It was in his Facebook page that I learned several months ago that chess legend GM William Lombardy was facing imminent eviction from his New York City home of the past 30 years due to rent in arrears.

William Lombardy was one of the best players in the USA during the 50’s and 60’s. He won the 1957 World Junior Championship with a perfect 11-0 score (one of his victims was Rudy Tan Cardoso), a record that stands to this day.

In 1967, he was ordained a Roman Catholic priest but left the priesthood in the 80’s to get married and have a son. His main claim to fame was for being the coach and second of Bobby Fischer from the time Bobby was 11 years old all the way up to the 1972 World Championship match with Boris Spassky. It is said that Lombardy was a key figure in keeping Fischer in Reykjavik despite several threats to withdraw and to finish the match victoriously.

Mr. Tumbaga reported that Lombardy’s problem with the rent was solved when a generous family in the Chicago area offered to let him move in with them. Eli then shared some of his memories of William Lombardy when he came to Manila to participate in the 1973 Manila International, the very first attempt of the Philippines to organize a big international tournament. In the 1960s, Meralco organized tournaments with guest grandmasters, even bringing in Bobby Fischer once, but in the 1970s, Mr. Florencio Campomanes started organizing big international tournaments in the Philippines, and even made the impossible dream come true of having a chess Olympiad brought to Manila shores in 1992.

That was still many years away. With the chess popularity after the 1972 match of the century between Bobby Fischer and Boris Spassky “Campo” invited world championship candidate Bent Larsen, top players from world powers Yugoslavia, USA and Argentina and some more other European players to come to the Philippines and play in the inaugural Manila International Chess tournament. The players were to be wined and dined and treated like kings, even brought to Malacañan Palace where President Ferdinand Marcos feted them.

Eli Tumbaga’s memories:

“I had the pleasure of meeting GM Lombardy in 1973 when I was just starting out as a 19-year-old sportswriter with The Times Journal one of the three leading English-language newspapers in the Philippines.

“Early one morning, before 7 o’clock, I went to the Manila International Airport to meet GM Lombardy and GM Lubomir Kavalek. They were arriving from San Francisco to take part in the Manila International Chess Championship and I was assigned by my editor to interview them.

“When I arrived at the airport, Mr. Florencio Campomanes was already there waiting for the two GMs. As you know, he always wanted to be in control of any situation and I think he was annoyed that I was going to interview them. Mrs. Irina Kavalek arrived with them, by the way, and the Times Journal photographer was also there. Campo couldn’t say directly that interviews were banned but his glare said it all. He couldn’t box me out totally because there were three visitors and I was able to interview them in round-robin fashion as they were walking towards Immigration desk and then to the exit.

“In the evening, the two American GMs conducted a simultaneous exhibition and my boss managed to get a seat for me. I was assigned to Kavalek, who had acted as Fischer’s second in the second half of the match with Spassky after Fischer had a disagreement with Lombardy.

“The simuls were held at the penthouse of the Manila Bank building on Ayala Avenue which is now the head office of China Bank Savings. Manila Bank was owned by the Puyat family and Lito Puyat, president of the Basketball Association of the Philippines at the time, invited them to watch a basketball game at the Rizal Memorial Coliseum after the conclusion of their joint exhibition.

“As it turned out, I was the last man standing among the chess amateurs who showed up that evening. No one anticipated that I would put up stiff resistance against GM Kavalek. Because our game was taking too long, the visitors were in danger of missing the basketball game altogether. At one point, GM Lombardy said to GM Kavalek in a loud stage whisper: Give him a draw so we can watch the ballgame!

“GM Kavalek ignored the plea. I played the Najdorf Variation of the Sicilian Defense against him, not knowing that he was one of the foremost experts in the world on that opening, and I was holding my own deep into the middlegame.

Perhaps GM Kavalek considered it a matter of honor not to concede a draw in his area of expertise to an unknown amateur, who only a few months before had played in the national junior championship — his first tournament.

I lost the match eventually but I wasn’t unhappy about it. I learned later that the visiting grandmasters arrived at the basketball venue with just minutes remaining in the game.

“In the evening, I was worried that Campo might still be mad at me. But he kept a poker face and then turned on the charm when the simuls were about to begin. When I was the only one left playing, I saw him with a wide grin beside GM Lombardy. They stood behind GM Kavalek, looking at the position on the board with much interest. I think he was telling GM Lombardy that I was one of the products of his junior tournaments in the Philippines. By the time my match with GM Kavalek was finished, I think I had been forgiven for my transgression in the morning.

“A few days later, my editor, Gus Villanueva, told me that Campo called and had some nice words about my play.

“It was certainly one of my most memorable experiences as a chess player who had never before played a GM. The Philippines — and the whole of Asia — did not have a GM yet at the time. Eugene Torre got his GM title the following year, after the World Chess Olympiad in Nice, France. Sadly, I lost the scoresheet as I kept moving from place to place.

“I certainly hope that our chess-playing friends in Chicagoland, particularly IM Angelo Young and Florentino Inumerable, will find the time to welcome GM Lombardy to his new place of residence.”

Manila 1973

Final Standings

1. GM Bent Larsen DEN 2620, 12.5/15

2. GM Ljubomir Ljubojevic YUG 2565, 11.5/15

3. GM Lubomir Kavalek USA 2565, 11.0/15

4. GM Svetozar Gligoric YUG 2595, 9.5/15

5-6. GM William Lombardy USA 2520, GM Florin Gheorghiu ROM 2550, 9.0/15

7-8. IM Stefano Tatai ITA 2430, GM Borislav Ivkov YUG 2520, 8.5/15

9-10. GM Miguel Najdorf ARG 2525, GM Miguel Angel Quinteros ARG 2520, 8.0/15

11-12. IM Eugenio Torre PHI 2430, IM Rodolfo Tan Cardoso PHI 2375, 6.5/15

13. IM Renato Naranja PHI 2420, 4.5/15

14. NM Edgar de Castro PHI 2285, 4.0/15

15-16. IM Max Arie Wotulo INA 2330, IM Haji Ardiansyah INA 2350, 1.5/15

Manila 1973 was among the strongest international tournaments in 1973. GM William Lombardy finished fifth and won the $1,000 “Brilliancy Prize” for the following game (also in the Najdorf Variation).

* * *

Lombardy, William James (2520) — Quinteros, Miguel Angel (2520) [B99]

Manila (13), 03.11.1973
1.e4 c5 2.Nf3 d6 3.d4 cxd4 4.Nxd4 Nf6 5.Nc3 a6 6.Bg5 e6 7.f4 Be7 8.Qf3 h6 9.Bh4 Qc7 10.0 — 0 — 0 Nbd7 11.Be2

The bishop goes to e2 to support the g2 — g4 pawn push. If he pushes the pawn now Black has 11.g4? g5! 12.fxg5 Ne5 13.Qg3 Nfxg4 14.gxh6 Bxh4 15.Qxh4 Qe7 the second player is doing very well.

11…Rb8

Removing the rook from the long diagonal in anticipation of the e4-e5 pawn push by White.

12.Qg3

Attacking g7 and also threatening Nxe6

12…Rg8 13.Rhf1!

GM Lombardy had been writing a book on the 1973 USA Championship and had studied intensively this move, which John Grefe used with deadly effect against Walter Browne in the 1973 USA Championship.

13…b5

The Grefe game continued 13…g5 14.fxg5 Ne5 15.Nf3! b5 16.Nxe5 b4 17.Nxf7! bxc3 18.gxf6! Rxg3 19.fxe7 Rg5 20.Bxg5 hxg5 21.Nxd6+ 1 — 0 Grefe,J (2200)-Browne,W (2530) El Paso 1973.

14.Nxe6!?

Lombardy took an hour before deciding on the text move. Actually, recent analysis has shown that a better way to continue is 14.Bxf6! Bxf6 (14…Nxf6 15.e5 dxe5 16.fxe5 Nd7 17.Nd5! exd5 18.Bh5 Bg5+ 19.Kb1 Rf8 20.Rxf7! too much!) 15.f5 Bxd4 (15…Nc5 16.fxe6 Bg5+ 17.Kb1 Bxe6 18.Nxe6 Nxe6 19.Nd5 Qc5 20.h4 Be7 21.Bg4 White just has too many threats and he has not even sacrificed anything) 16.fxe6 fxe6 17.Bh5+ Kd8 18.Rxd4 b4 19.Ne2 Rb5 20.Qg6 Qc5 21.Qxe6 Nf6 22.Qb3 Qxh5 23.Rxf6 White has a decisive advantage.

14…fxe6 15.Qg6+ Kd8

[15…Kf8 16.e5 dxe5 17.f5 (threat is Bh5) 17…e4 18.Bxf6 gxf6 (18…Nxf6 19.Bh5) 19.Qxh6+ Rg7 20.fxe6 followed by Nd5]

16.e5 dxe5

POSITION AFTER 16…DXE5

17.f5!?

During the time of this game Lombardy’s 17.f5 was hailed as a brilliant solution, but in the light of the Black defense pointed out later it appears that 17.Qf7 is more correct. 17…Re8 18.Qxg7 Nd5 19.Bh5 Bxh4 20.Bxe8 N7b6 21.Qxh6 Qe7 22.Ne4! Kxe8 23.fxe5 Kd8 24.g3 White’s material advantage will win the game for him.

17…exf5 18.Bxf6 Bxf6 19.Nd5 Qc6! 20.Rxf5 Rf8 21.Bg4 Rb6?

The losing move. Black can still miraculously hold the position with 21…Qe6! after best play 22.Rf3 (22.Rxf6? Rxf6! tables are turned and it is now Black who is winning) 22…Qe8 23.Qe4 Bg5+ 24.Kb1 Rxf3 25.Qxf3 Qf8 it looks like the worst is over for Black.

22.Rxf6! gxf6

22…Rxf6? 23.Qxg7 Re6 24.Qf7 there doesn’t seem to be anything Black can do. If 24…Qd6 then 25.Nxb6 Qxb6 26.Bxe6 Qc6 27.Qf8+ Kc7 28.Qe7 e4 29.Bf5 a5 30.Bxe4 Qb6 31.Bf5.

23.Qg7 Rb7

[23…Re8 24.Nxb6 Re7 25.Qg8+ Re8 26.Bxd7!]

24.Qe7# 1 — 0

A nice finish.

Bobby Ang is a founding member of the National Chess Federation of the Philippines (NCFP) and its first Executive Director. A Certified Public Accountant (CPA), he taught accounting in the University of Santo Tomas (UST) for 25 years and is currently Chief Audit Executive of the Equicom Group of Companies.

bobby@cpamd.net

Fence Sitter — A. R. Samson

January 19, 2017 | 2:46 am

Putting a value on character.

In their evaluation process for making loans, banks and other lending institutions look at the five “C’s” of credit. Aside from Capacity, Capital, Collateral, and recently Conditions which include matters like industry structure, technology change, or external factors, there is “Character.” This “C” focuses on a borrower’s track record in paying up credit cards, utility bills, and caterers to indicate his sense of fiscal responsibility. After all, not all those with money to pay actually settle their bills on time.

Is there too in the valuation of a stock a character premium or discount? Do analysts and investors go beyond financial ratios, industry structures, market shares, and historical performance into the leadership styles, succession plans, or spending habits of management?

There is a case to be made for paying attention to the reputation of the principal behind a company. In the new field of behavioral economics, the value of character in a corporation is becoming part of the metric in picking stocks.

Thomas Schelling, a 2005 Nobel laureate in economics, cited for his conflict-collaboration game theory, used the term “egonomics” to refer to self-management in personal matters, weighing costs and benefits of acquisitions and purchases, or being rid of addictions. The ego of a person in the sense of his core personality as well as striving for status can play a role in economic decisions.

On the supply side, ego plays a part too. Is the listed company of a particular player worthy of a premium or a discount? Some positives driving premium pricing includes the management’s track record of transparency and fiscal prudence combined with a working growth strategy. A character discount can involve fuzzy accounting, weak second-tier management, over-the-top spending habits (how many corporate planes?), and a whimsical strategy of acquisitions by the principal.

Characters as stock pickers (demand side) also affect market sentiment. A market maker like Warren Buffet “betting all-in on the future of the American recovery” with the purchase of railroad stocks, like the Burlington Northern Santa Fe (BNSF) four years ago, can make the bears take flight and change market sentiment for certain stocks.

In our small local market, character reigns.

Stocks are identified by their principals and lumped together as the “XYZ” group, if that combination of letters is a person or family. The difficulties that befall one subsidiary can affect even the group’s holding in unrelated businesses. Rumors of a takeover of a company by a particular character are enough to lift a sleepy stock into the stratosphere or make it go on free fall. The research analysts’ valuations, based on future cash flows and acquisition synergy drive up not just the target stock but also the shares of perimeter companies associated with specific characters.

The effect of character on the value of the stock is a tricky connection.

With corporate reputation now driven just by word of mouth and social media with its fake news, the character impact can be overblown. Matters of a lavish lifestyle with yachts and private jets, and opportunism associated with political connections are random stories told of corporate chiefs.

In a small economy where all the characters and their reputations are well known, change in management and ownership matters a lot. Specific personalities dominate the financial space.

Buying into a company through its shares is a declaration of faith in its principals. As my friend and stock market guru, Wilson Sy, puts it, “Buying a stock is like going into a partnership with the principals of a company.”

Character analysis is not a static science as personalities change too. New names come up and quickly grow into conglomerates. Old names drop out of the picture. New tech companies rise and fall. Still, it is the track record, sometimes a very short one that determines whether character will play a big part in the price of the stock.

In a small market like ours it is a small group of players that needs to be watched as closely as the ticker tape.

Fortunately for the character witnesses, there are just a few players to track and they don’t necessarily talk to each other. And when they do… is it time to buy or sell?

A. R. Samson is chair and CEO of Touch DDB.

ar.samson@yahoo.com

Killing me softly

January 19, 2017 | 2:44 am

Killing me softly

Fourteen years ago, my mother succumbed to cancer. She died eight days short of her 60th birthday. That was more than a decade ago, and since then billions of dollars have been spent on cancer research worldwide. And yet, today we are nowhere nearer to finding a cure for cancer than we were 14 years ago. And cancer medicines have remained just as expensive.

To be shot in the head can mean almost instantaneous death. Cancer, on the other hand, can mean a “slower” death. But, dealing with the high prices of cancer medicine is what I refer to as “killing me softly.” It is bad enough that you are dying of cancer, but why do you have to suffer from “profiteering” as well in the hands of unscrupulous “legal” drug merchants?

I am fully aware of the enormous amount of money spent by pharmaceutical companies and the effort they put into cancer research, and the development of new medicines — without any assurances of success. I understand that RD can make or break a pharmaceutical company, and flush down the drain millions if not billions of dollars coming from their investors.

A pharmaceutical company may tend to prioritize the interest of shareholders above other stakeholders like customers, who may be cancer patients. Business is business, after all. And unless it operates at a profit, a drug maker can simply fold tent. My concern, however, is the lack of transparency in determining fair as opposed to excessive profit for drug makers.

If ensuring profitability means keeping prices high, then this limits access even to life-saving drugs particularly for poorer cancer patients. How then do we balance the interests of both the drug maker and the drug user? Who gets to decide whether or not a drug maker is making too much profit from a particular cancer drug? Do we leave everything to market forces?

To cite an example, I was informed that about a year ago, a particular cancer drug was retailing for about P100,000 for a box of pills good for a month. The medicine, while made by a foreign drug maker, was available from an exclusive distributor in Metro Manila. The distributor’s price later on went up to P120,000, and then to almost P150,000.

The high price was actually unsurprising to me, having been left with the impression since my mother’s time that cancer medicines have always been expensive. What surprised me, however, was how the price for this particular cancer drug was rising significantly over a relatively short period of time. Perhaps a case of high demand + low supply?

Now, if you are a retiree living on a pension, and given the paltry sum that you receive from the Social Security System (SSS), and despite your membership in PhilHealth, and even with senior citizen’s discount on medicine, how can you possibly afford to sustain a life-saving medical intervention that costs you roughly P150,000 a month?

And then you learn, rather belatedly, that a similar cancer drug — a generic version of it, so to speak — is available in India at only a fraction of the Philippine price? Maybe at just 25% of the Philippine price? And while there may be concerns about the Indian version’s efficacy, you just have to ask yourself how India can sell a similar drug at just 25% of the branded version’s cost?

Perhaps this is one of the reasons why the drug’s branded version sold in the Philippines, just recently, reportedly lowered its retail price (from the distributor) to about half of the original price. The cancer drug, I was told, now retails for less than P70,000 when at its peak several months ago, it was selling at almost double that.

The price drop, I am sure, is a welcome development for Filipino cancer patients. But, what gets me riled up is the fact that the drug can actually be sold at half its original price, and yet, for the longest time it was selling at a high. Or, is it now on “sale” and sold at a bargain? High inventory + low demand = lower price? Is the price cut meant only to move inventory?

If the price goes up again in the near or even distant future, then there is really something wrong with the way the government is regulating — or not regulating — retail prices particularly for cancer drugs. This is precisely my point regarding lack of transparency in drug pricing. Cancer patients are at the mercy of pharmaceuticals, and lack recourse against profiteering.

About a month ago, President Duterte made public his opinion against the Trans-Pacific Partnership (TPP) trade agreement proposed by the United States. He was quoted as saying that his concern about the TPP was how it would affect the Philippines’s access to “generic medicine,” given the agreement’s provisions on the stricter protection of patents.

If under the TPP we would be precluded from selling unbranded or generic medicine, he said, then this would a great loss to our people. “We are promoting generic because we are a poor nation and we can buy the medicines at [cheaper] costs [from India and Pakistan],” the President told media.

And by medicine, I believe, this can refer not only to generic “maintenance” medicines for hypertension and diabetes, for example, but also to cancer medicine. And, while I understand that drug makers need to be sufficiently prosperous to continue their work, there has to be a way to protect the interest of patients who need but cannot afford life-saving medicine.

In this line, we need to put in place a better system, perhaps with government intervention, than simply relying on market forces for balancing and protecting the interests of both drug makers and poor cancer patients, especially retirees.

Marvin A. Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippines Press Council

matort@yahoo.com

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