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Reinvestments to soften blow as ECB slows QE

AS THE European Central Bank (ECB) prepares to slow its bond-buying program, policy makers are considering softening the blow by highlighting a related measure — the reinvestment of maturing debt.

An average of €15 billion ($18 billion) a month of assets held under quantitative easing (QE) will mature next year, according to euro-area central bank officials who said the figure was presented at the last Governing Council meeting.

While the plan to reinvest that cash has long been a part of policy, the ECB is concerned that investors are under-appreciating its impact, three people said. A spokesman for the central bank declined to comment.

Emphasizing the flow of spending needed to maintain its stock of holdings gives the ECB a way to play down a key risk burdening policy makers — that any decision to start reducing net asset purchases might tighten markets.

The dilemma is that more than €2 trillion of QE so far has provided robust economic growth, spurring calls in some quarters to end bond buying, but it hasn’t yet led to sustained inflation.

“I do constantly hear people asking whether it is time to start tapering,” ECB Executive Board member Peter Praet said in an interview with De Tijd published on Saturday. “But underlying inflation remains too low. We have to be patient and persevere with our policy, a substantial stimulus is still necessary. Everyone agrees that we have to make sure that the reduction of the stimulus takes place in an orderly manner, without any excessive shocks.”

BE CAREFUL
The last time the Governing Council adjusted QE, it extended purchases by nine months and slowed the monthly pace to €60 billion from €80 billion, citing an improved economic outlook. That schedule comes to an end in December, and President Mario Draghi has said the bulk of the decisions for 2018 will be taken in October.

Praet said the ECB will have to “be very careful about the words we use.”

While the ECB projects inflation of 1.2% next year and 1.5% in 2019, compared with a goal of just under 2%, most economists surveyed by Bloomberg predict purchases will soon start to be phased out.

Yet should the monthly pace be slowed — for example to €30 billion — the ECB could try to mitigate any negative impact by noting that total spending including reinvestments would average about €45 billion.

“Sounds like we could be in store for a ‘super-stealthy taper,’” said Richard Barwell, an economist at BNP Paribas Asset Management in London. “The second stage of the taper could be downplayed as a mere adjustment just like the first, even though going from 60 to 30 billion a month in January opens up the possibility of a hard stop in July, and now the true deceleration in net bond buying could be camouflaged by focusing attention on gross purchases.”

INEVITABLE DECISION
It’s not yet decided whether the ECB will disclose the specific value of reinvestments when it lays out next year’s plans, the people said, asking not to be named because the Governing Council’s deliberations are confidential. Details such as whether replacement purchases must match the nationality and duration of the maturing bonds also have yet to be agreed on, they said.

The ECB has two more policy meetings scheduled before the end of the year, on Oct. 26 and Dec. 14. Executive Board member Sabine Lautenschlaeger said this week that it’s time to take a decision “now” on scaling back bond purchases at the beginning of next year. Slovenian Governor Bostjan Jazbec said a decision to reduce buying will “inevitably” come but was postponed because economic developments don’t yet support it.

Draghi, who has previously urged patience and prudence in communicating the withdrawal of stimulus, is scheduled to speak in Frankfurt on Sept. 21 and Dublin the next day.

SILVER LINING
The reinvestments also offer potential room for flexibility on the type of purchases, which could help the ECB overcome any shortages.

Over half a trillion euros of debt issued by the top four beneficiary nations in the QE program — Germany, France, Italy and Spain — is due for redemption next year, with roughly €125 billion owned by the ECB, according to Bloomberg calculations.

Holdings will total almost €2.3 trillion by the end of 2017, and economists have warned that some asset classes such as German debt will soon become scarce.

The ECB has already been deviating from the so-called capital key, which links the volumes of public-sector purchases by national central banks to the relative sizes of the currency bloc’s economies.

That has allowed it to buy more debt from countries such as Italy and France, where availability is greater.

One consequence of the higher purchases is that they help depress yields in those nations, reducing the financing burden on governments. According to BNP’s Barwell, the pending discussions on reinvestments mean that bonus could continue.

“Once you set the precedent that reinvestments can be redeployed around the euro zone then you have the possibility that the composition of the bond portfolio could continue to shift toward Italy even when QE is done,” he said. “That would be a silver lining for Italy on an otherwise dark cloud of premature exit.” — Bloomberg

Nation at a glance — (09/18/17)

News stories from across the nation. Visit www.bworldonline.com (section: The Nation) to read more national and regional news from the Philippines.

Data analytics: What’s the buzz all about?

The use of data analytics to guide business decision-making is nothing new. Organizations have been adopting it to measure sales and improve customer satisfaction, among others. If so, then why all the recent hype? Is there a difference today?

Yes there is, according to a recent report published jointly by Ernst and Young (EY) and Forbes Insights. In an era of widespread business disruption, the stakes are higher than ever. To maximize the value of data analytics, executives are embedding it into all parts of their enterprises, beyond traditional pockets such as marketing and sales departments.

The report, High Stakes, High Rewards, revealed that only 7% of organizations have a well-established analytics strategy that is central to the overall business plan. Compare that with 38% of companies that have analytics strategies for specific lines of business, but not fully aligned across the enterprise; while 10% stated that they currently lack an analytics vision or strategy. Yet, of that 7% among organizations, 66% said they achieved revenue growth of 15% or more in 2016, while 63% reported a jump of at least 15% in their operating margins. Moreover, 60% of these companies said they also enhanced their risk profiles.

The report — which is based on a survey of 1,518 global executives belonging to organizations that had at least $500 million in annual revenue — found that given the returns, more than half of the respondents plan to invest at least $10 million in data analytics over the next two years.

Unsurprisingly, increased sales or revenue and improved customer satisfaction ranked highest overall in terms of the reasons for using data analytics. However, upon closer examination, organizations have varying motives, depending on their proficiency in applying data analytics. Those that have well-established strategies are interested in how they can use data to strengthen themselves for the future. In particular, they want to transform business models, develop new products, respond more quickly to market changes, and develop closer relationships with partners and vendors.

By contrast, companies that have less-developed strategies hope to accelerate decision-making, deploy personnel more effectively, and improve current products or services. In terms of the type of advanced analytical approaches, market-leading organizations use predictive modeling (67%), artificial intelligence (53%), and robotic process automation (43%).

The report also revealed that selected industries and business departments are better at understanding the importance of using data analytics more effectively and that they are finding ways to better capitalize on their rich data reserves. Companies in the manufacturing and financial services sectors demonstrated the most progress in developing a sophisticated data analytics strategy. Other sectors that posted solid progress were government, health care, and technology. What this means is that —  while every industry is being disrupted by new digital technology, market insurgents, and shifting customer demands — these five sectors are facing particularly intense competitive pressures. As a result, they turn to data analytics to differentiate themselves from competitors and evolve their products and services.

The need to enhance data analytics proficiency can also be felt across departmental functions. For human resources, the intense global competition for highly skilled talent is a top priority. Similarly, in the age of e-commerce and online reviews, maintaining a high level of customer outreach is the key to brand loyalty. Sales and marketing, two areas that have been long-time consumers of data, are under more pressure than ever to devise new ways to generate revenue and use targeted campaigns to connect with customers.

In the Philippines, many business owners are cognizant of the urgent need to incorporate a data analytics strategy into their overall business plan. The 2016 Microsoft Asia Digital Transformation Study — which surveyed 1,494 business leaders from Asia, including 111 from the Philippines — found that 86% of the Philippine respondents agreed that every organization should become a digital business to drive growth and that fresh data insights can generate new revenue streams. However, the journey to becoming a digital business remains a work in progress for most organizations, with only 32% having a full digital transformation strategy. Forty-three percent are in progress with specific digital transformation initiatives for selected parts of their business, while a quarter of the Filipino respondents have very limited or no strategy in place.

Respondents cited lack of leadership to formulate and execute a digital transformation plan, cyber threats and security concerns, lack of competent employees, and insufficient government support as barriers to digital transformation. These reasons resonate with the global findings of the EY-Forbes Insights study.

The EY-Forbes survey, however, revealed that the problems change as enterprises become more mature in their application of data analytics. The report said that organizations that have underdeveloped systems often struggle with issues relating to budgets, lack of full commitment by senior executives, and inadequate leadership. Companies that have started to implement an analytics strategy and view it as a key component of the business plan may have at least partially addressed those early problems, but other issues, such as a lack of collaboration among different stakeholders, become more prominent.

Organizations that have a fully developed analytics strategy are not immune to challenges either. In particular, the study found that they often encountered a lack of collaboration and alignment within the management committee, as well as insufficient senior-level commitment and support for data-driven cultures. When devising strategies, stakeholders should also find ways to overcome the lingering effects of intuition-based cultures where decisions are made on the basis of “gut feel” instead of relying on data.

To address these challenges, the report put forward several recommendations. First, stakeholders should clearly define their desired objectives and ensure that proposed initiatives are closely aligned to these goals. Second, businesses should prioritize recruiting, developing and retaining individuals who can serve as analytics “leaders” in various parts of the organization. Further, there is need to determine the competencies and roles that are needed across business teams to ensure that the right mix to drive initiatives actually exists. Third, data in itself can be considered a business asset and the insights derived from analytics can be used in assisting decision-makers of what new products, services, and capabilities to create. Fourth, the report encouraged closer collaboration among stakeholders from all relevant departments and the removal of organizational and policy barriers that prevent the successful implementation of data analytics strategy. Last, despite the increasing application of artificial intelligence and other forms of automation in business, human judgment will remain a vital element when making strategic decisions. Executives should continue to consider the change management effects of applying advanced analytics imperatives across the organization.

In essence, factors like technological innovation and new customer demands are rapidly transforming the way we do business. Organizations that are not adapting fast enough are at an increased risk of lagging both current competitors and emerging players that have placed data analytics at the core of their strategy. To stay competitive, it is vital for companies to find a way to analyze and give meaning to the massive amount of data flowing through their systems.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the authors and do not necessarily represent the views of SGV & Co.

Wilson P. Tan is the Vice Chairman and Deputy Managing Partner of SGV & Co.

FDI pledges more than halved in second quarter

COMMITTED foreign direct investments (FDI) dropped by more than a half annually in the three months to June, marking the fourth straight quarter of decline, while pledges by local investors surged 55%, the Philippine Statistics Authority (PSA) reported on Friday.

Preliminary PSA data showed approved foreign commitments by the country’s seven investment promotion agencies (IPAs) contracting 55% year on year to P18.16 billion last quarter from P40.39 billion a year ago.

The second-quarter result brought foreign commitments in the first half to P41 billion, down 38.4% from P66.63 billion a year ago.

Combined investment pledges by Filipino and foreign nationals totaled P230.46 billion in the second quarter, of which domestic investors accounted for P212.3 billion, up 54.6%

If they materialize, foreign and local investments pledged in the second quarter are expected to generate 95,131 jobs across industries, 76.2% more than the 53,998 estimated from commitments the same three months last year.

IPAs are government agencies that by law are authorized to grant tax and non-tax incentives to investors putting up businesses or expanding existing ones in priority sectors. The seven IPAs are the Board of Investments (BoI), Clark Development Corporation (CDC), Philippine Economic Zone Authority (PEZA), Subic Bay Metropolitan Authority (SBMA), Authority of the Freeport Area of Bataan (AFAB), BoI-Autonomous Region in Muslim Mindanao (BoI-ARMM) and Cagayan Economic Zone Authority (CEZA).

The three months to June saw PEZA contributing the most foreign investment pledges at P13.780 billion albeit smaller by 2.5% from P14.139 billion a year ago. This was followed by the BoI with P3.58 billion, down 83.3% from P21.447 billion a year ago. Rounding the rest of the IPAs were CDC’s 2.4% share at P441 million (down 40.5%), AFAB’s 1.5% at P279.2 million (up 258.2%), SBMA’s 0.3% at P62.4 million (-98.4%) and CEZA’s 0.1% at P21.1 million (-73.6%). BoI-ARMM data were not available.

Actual net FDI inflows in the second quarter – tracked separately by the central bank – were $2.116 billion, 25% less than the $2.846 billion received in last year’s comparable three months. For the first half, net FDI inflows were lower by 14% to $3.598 billion.

By industry, manufacturing continued to make up the bulk of the foreign investment pledges with a 36.7% share of the total at P6.662 billion, but it was 53.2% smaller than the year-ago P14.242 billion.

Administrative and support service activities came next with a 22.6% share at P4.113 billion although they were 33.9% lower than last year’s P6.222 billion, while real state came third with P3.827 billion, a 97.6% increase from P1.936 billion committed a year ago.

Dragging foreign commitments the most was agriculture, forestry and fishing with a 99.5% plunge. Other decliners in the same three months were “other service activities” (-98.2%); accommodation and food service activities (-98.9%); transportation and storage (-89.3%); financial and insurance activities (-82.2%); construction (-57.6%); electricity, gas, steam and air conditioning supply (-52.2%); wholesale and retail trade; repair of motor vehicles and motorcycles (-4.3%).

Among prospective investor countries, Japan topped with a 26.4% share of the total at P4.8 billion, though down 32.1% year-on-year. It was followed by Singapore’s 13% at P2.358 billion, though down 76.8%. The United States came in third with an 11% share at P2.005 billion but down 32%.

Economists seem unfazed by the sharp drop in foreign investment pledges, describing this development as “temporary.”

“This is somehow a temporary dip because, overall, the Philippines is still a top investment destination among ASEAN countries. Fundamentally, investor confidence is intact,” said Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, referring to the Association of Southeast Asian Nations.

“[D]omestic investors are more aggressive because they know what’s happening and the opportunities available versus somebody who sees the Philippines merely from the outside.”

For Angelo B. Taningco, economist at Security Bank Corp., the drop was due to the higher base in the previous year.

“I view the drop in Q2 foreign investment pledges to be a result of a high base effect,” he said. “I think the overall increase in Q2 total investment pledges driven more by Filipino investors was partly induced by more positive business confidence.”

Moving forward, the economists expect a recovery of foreign investment pledges on the back of robust economic growth and accelerated infrastructure development.

Mr. Asuncion said: “The trend may continue, but I see foreign investment pledges to kick in by [the third quarter] because the Philippine growth story is still by far one of the most attractive one is Southeast Asia.”

For Mr. Taningco, the foreign and domestic investment commitments will increase in the near term in the face of expected enactment and implementation of the first phase of tax reform that will reduce personal income tax rates – the second package will feature a cut in corporate income tax – and pickup in infrastructure spending. – Jochebed B. Gonzales

Economic prospects intact despite rising risks – Moody’s

THE PHILIPPINES faces rising capacity constraints and political risks that nevertheless have not dented the economy’s prospects, Moody’s Investors Service said in a Sept. 14 report showing the country’s “Baa2” credit rating – a notch above minimum investment grade – and “stable” outlook still reflect a balance of strengths and weaknesses.

“The Philippines’ credit profile balances sound economic and fiscal fundamentals against structural challenges to competitiveness and rising political risks,” Moody’s said in its annual credit analysis, more than two months after it affirmed the country’s credit grade and outlook.

A “stable” outlook signals that the credit rating will likely be maintained in the next 1-2 years.

“We expect robust economic growth to be sustained over the next few years, aided by the government’s focus on infrastructure development, buoyant private sector investment, and the recovery in external demand,” Moody’s added, saying it still expected gross domestic product (GDP) growth to clock 6.5% this year – the floor of the government’s 6.5-7.5% target range – and 6.8% in 2018, short of an official 7-8% goal.

GDP expansion has placed the Philippines either second- or third-fastest growing major Asian economy behind India and China this year, so far, with last semester’s 6.45% average pace approximating the lower end of the government’s target.

“Our assessment of the Philippines’ economic strength is ‘high’, which reflects its capacity to absorb shocks thanks to its rapid growth, large scale and economic diversification, although this is somewhat undermined by low income levels,” the debt watcher said, citing the country’s young, growing population, robust private investment growth, rising public spending, “potential” improvements in large infrastructure, strong domestic demand and low inflation as strengths.

But the Philippines’ $7,728 GDP per capita puts it at the bottom fifth of rated economies, “posing a prominent constraint to economic strength”.

The country has a “moderate (+)” score in terms of institutional strength, reflecting policy effectiveness, as suggested by slow, stable inflation, that is offset by below-median grades in terms of government effectiveness, rule of law and control of corruption when compared to similarly rated peers.

Much now depends on President Rodrigo R. Duterte’s ability to push his socioeconomic agenda, Moody’s said, noting that “[p]rogress on this agenda is likely to ultimately depend on whether the president deploys his considerable political capital towards these reforms”.

The Philippines has a “moderate (-)” assessment in terms of fiscal strength, with its low public debt burden compared with similarly rated peers balanced against currency risk caused by relatively high foreign currency-denominated debt. While the country’s government debt-to-GDP ratio is below median and state interest payments-to-GDP ratio is at the median, government debt as well as state interest payments in relation to revenues are above the same.

“We project the Philippines’ indebtedness to remain relatively low over the medium term,” the report read, adding that Moody’s expects the fiscal deficit “to remain around the government’s target of three percent of GDP”, keeping the recent trend of debt consolidation intact.

Finally, the country’s “susceptibility to event risk” – sudden events may severely strain public finances, thus increasing the country’s probability of default – has been marked “low (+)”

Under this indicator, Moody’s recently revised upwards its assessment of domestic political risk to “low (+)” from a mere “low” in the face of the battle against Islamic State-inspired militants in Marawi City that is nearing the end of its fourth month, the consequent declaration of martial law over all of Mindanao, Mr. Durterte’s preoccupation with law and order and his bloody campaign against the narcotics trade.

“Prior to the attack on Marawi by Muslim insurgents, the president had suggested that martial law, together with expanded emergency powers, could address issues other than domestic terrorism or rebellion, including the war on drugs and traffic congestion in Metro Manila,” Moody’s recalled.

“An unchecked expansion of the president’s authority could weaken constitutional checks and balances, and undermine the buoyant private sector sentiment that has underpinned the Philippines’s robust economic performance,” it warned.

“Moreover, while we expect strong economic and fiscal governance to remain, a prolonged focus on political matters could draw attention away from the government’s reform agenda, particularly economic and fiscal reforms including” tax reforms.”

And while “[t]he re-emergence of conflict in the southern Philippines and the administration’s focus on the eradication of illegal drugs represent a rising but unlikely risk to economic performance and institutional strength… A rapid escalation of domestic political conflict that undermines institutional strength and the government’s reform agenda would be credit-negative”.

The debt watcher said further that while the banking system is well-capitalized, profitable, competently managed and very liquid, “thus posing limited contingent risks to the government… [h]igh credit growth since 2014… exposes the banking system to unseasoned asset quality risk.”

Moody’s also cautioned that “capacity constraints are emerging – including labor shortages in certain sectors – and these could prove more stringent than we currently envisage…”

To Bangko Sentral ng Pilipinas Deputy Governor Diwa C. Guinigundo, however, recent economic growth – clocking 6.9% last year and averaging 6.2% in 2010-2015 – has increased capacity.

“In terms of capacity, the potential growth of the Philippines has gone up compared to previous years. The balloon has grown. So even if you pump in more water or air, it can accommodate. It has the bigger capacity to do that without going into capacity constraint,” Mr. Guinigundo said in a press conference yesterday.

“What brought about the increase in potential output is the increase in total factor productivity, the economy has become more productive, and also in terms of capital productivity,” he explained.

“When you are going into capacity constraint, the telltale sign is very clear: mataas ang growth mo (economic growth is fast), and if you have capacity constraint, then it should tell on your inflation. Inflation should be surging, but it’s not,” he noted, referring to headline inflation rate that, while picking up from last year, has averaged 3.1% in the eight months to August against the central bank’s 3.2% full-year forecast for 2017. – with E. J. C. Tubayan

July remittances rise fastest in four months

MONEY SENT HOME in July by overseas Filipino workers (OFWs) increased by their fastest pace in four months, the Bangko Sental ng Pilipinas (BSP) said on Friday.

Cash remittances saw a 7.1% rise to $2.283 billion in July from the $2.131 billion a year ago.

“Cash remittances from land-based workers (at US$1.8 billion) and from sea-based workers (at US$0.5 billion), posted 6.8% and 8.4% growth, respectively, compared to the levels reported a year ago,” the BSP said.

The United States, United Arab Emirates (UAE), Singapore and Japan were the biggest sources of cash remittances in July, contributing 3.3 percentage points, 1.1 points, 0.8 points and 0.6 points, respectively, in July.

“I think the OF cash remittance growth in July was largely supported by sustained external demand for OF workers – brought about by healthy employment conditions in the major host countries of OF workers – as well as the depreciation in the Philippine peso,” Angelo B. Taningco, economist at Security Bank Corp., said in an e-mail.

Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, said the early Christmas season for Filipinos has begun to kick in.

“At the same time, the weak peso, I think, encouraged our OFWs to send more remittances. The 7.1% growth was better than what we expected at 6.2%,” said Mr. Asuncion in a separate e-mail.

“With the holiday season closing rapidly in, I expect more robust growth from OFW remittances. This can help buoy further domestic demand consequently fueling better growth prospects for the last six months of 2017.”

The seven months to July saw cash remittances grow five percent to $16.095 billion from $15.323 billion in 2016’s comparable period.

Land-based workers sent in $12.8 billion remittances as of July, while sea-based workers remitted $3.3 billion in the same seven months.

The BSP cited preliminary data from the Philippine Overseas Employment Administration showing deployed OFWs reached 1,222,003 in the seven months to July, more than half of the 2,112,331 workers deployed in the entire 2016.

“US, Saudi Arabia, UAE, Singapore, Japan, United Kingdom, Qatar, Kuwait, Germany and Hong Kong comprised about 80% of total cash remittances in the first seven months of 2017,” the BSP noted. – Elijah Joseph C. Tubayan

NCRPO: Entire Caloocan police force sacked

THE entire police force of Caloocan City has been sacked, National Capital Region Police Office (NCRPO) Director Oscar D. Albayalde announced Friday.

Mr. Albayalde said at an event in Camp Bagong Diwa in Taguig City that the more than 1,000 personnel of the Caloocan police will undergo retraining and reorientation, and then be reassigned to other stations.

This does not count officers who are facing administrative and criminal charges over abuses.

The relief order came a day after media reports on 14 personnel from Police Assistance Center 12, which is under Caloocan Police Community Precinct 4, who entered an old woman’s home in Barrio Sta. Rita, Barangay 188, Tala with two civilians, including a minor, and apparently robbed the place in an incident captured on closed circuit television.

The officers involved in the incident have been ordered disarmed and sidelined while criminal charges have been filed against them.

Before this, the Caloocan police were already embroiled in controversy over the separate killing last month of teenagers Kian Lloyd delos Santos and Carl Angelo Arnaiz, both allegedly slain in shootouts but with subsequent investigations indicating they might have been executed, and their possible involvement as well in the death of 14-year old Reynaldo de Guzman, who was with Arnaiz when they went missing.

Mr. Albayalde said the Caloocan police would be relieved by batches beginning with Precincts 2, 6 and 7.

“Maglalagay tayo ng mga responsible officers at sila ang bahala sa peace and order doon (We will place responsible officers and they will be responsible for peace and order there),” the NCRPO said.

The NCRPO chief said the move was a preemptive measure against more abuses.

“Sa nakita natin baka ito ay ginagawa or patuloy na gagawin ng iba pa so mabuti na ito ay isang preemptive measure para maiwasan ang mga nangyari (From what we have seen this has been done or will continue to be done by others so it is best to implement this preemptive measure to avoid similar incidents),” he said.

He also warned that other districts in the metropolis could face similar sanctions if they did not shape up.

“‘Yan ang gagawin natin sa lahat ng mga district dito kung may makita tayo na may mga ganyang pangyayari (That’s what we’ll do to all districts here if we see similar incidents happening),” he said.

Mr. Albayalde railed at the Caloocan personnel, saying: “Wala akong makitang dahilan para hindi n’yo ko maintindihan at hindi n’yo maintindihan ang batas at (I see no reason why you can’t understand me and can’t understand the law and) policy.”

“Hindi naman siguro mabababa yung IQ natin (Our IQ can’t be that low),” he added. “Panindigan n’yo ‘yang ginawa n’yo (You should suffer the consequences).”

Addressing the personnel involved in the latest incident, he said: “Sayang ‘yung pagkakataon na binigay sa inyo ng gobyerno para kayo ay magsilbi, para kayo maging pulis – hindi ‘yung para kayo magnakaw (You have wasted the opportunity given you by government to serve, to be policemen – not be robbers).”

Magdalo party-list Representative Gary Alejano, a former soldier, welcomed the move because it showed “that our PNP is sensitive enough in addressing the wrongdoings of its members.”

However, he stressed, the wholesale sacking “will have no significant impact without (the PNP) reviewing its rules of engagement and policies in carrying out war on drugs, and without denouncing extrajudicial killings and committing to run after vigilantes who kill without let-up.”

“Kung hindi, palabas lang ito at ang mga ganitong gawain ay magpapatuloy. Ako ay naniniwala na laganap na ang ganitong abuso, mangyari lamang na nakunan ito ng CCTV. Kung walang (If not, this will be for show and these abuses will continue. I believe such abuses are widespread, except this was captured on CCTV. If there was no) CCTV, people will assume that everything is okay,” he added. – with reports from Loreen Ordono and Lira Dalangin-Fernandez/InterAksyon

House leaders defend CHR budget cut amid criticism

AMID increasing criticism of the House of Representatives’ measly P1,000 budget for the Commission on Human Rights (CHR) next year, House leaders held a news conference in Makati on Friday, Sept. 15, but stood pat on their chamber’s approval of the said budget.

In that televised press conference, House Speaker Pantaleon D. Alvarez said the CHR should first do its job so the House may restore the proposed P678 million budget for CHR. He was supported in this stand by House Majority Leader Rodolfo C. Fariñas and Oriental Mindoro Rep. Reynaldo V. Umali, chairman of the House Committee on Justice.

Mr. Alvarez cited, among others, the CHR’s inaction on the Jan. 25, 2015 Mamasapano operation in which 44 police operatives were killed in the hands of secessionist rebels.

But online criticism of the House emphasized, among other facets, crimes not committed by the police and military as being outside CHR’s scope.

Senators, on the other hand, maintained their collective stand, crossing party lines, that they would restore the original proposed budget for CHR.

Senate Minority Leader Franklin M. Drilon said in a message to the media on Friday that majority of the senators will support the CHR’s budget as approved for the plenary by the Senate Committee on Finance.

“Yes, majority of the senators will stand by the Senate’s decision to maintain CHR(‘s) budget. We will not agree with the cut of the HoR. If no agreement is reached, a deadlock by Dec. 31, 2017 means 2017 GAA is reenacted for 2018 for the whole government, including that of CHR,” Mr. Drilon said.

Senate President Pro-Tempore Ralph G. Recto, for his part, said in a statement in response to House leaders: “Relax lang. Government says EJK is not state-sponsored – then it should not be afraid of providing more resources to CHR, the duly constituted office whose mandate is to protect human rights.”

Mr. Recto added: “I believe the President when he says he has not ordered it. But it is highly possible that there are rogue policemen abusing their authority. Let’s strengthen all institutions of government, including the CHR.”

Minority Senator Paolo Benigno A. Aquino IV said he hopes the Senate committee report that retained the CHR budget will be supported by the Senate Majority during the plenary debates.

“This is a more immediate step that needs to be tackled even before talking about the bicam,” Mr. Aquino said in a text message to the media.

On Thursday, Senate President Senator Aquilino Martin L. Pimentel III said in an online message to Senate reporters that “the push for the CHR proper budget is a majority cause.”

Also on Thursday night, the Senate Committee on Finance approved for the plenary the P1.1 billion proposed budget of the National Commission on Indigenous Peoples (NCIP) after the House also slashed this agency’s budget to a measly P1,000.

Along with CHR and NCIP, the Energy Regulatory Board was also given a P1,000 budget by the House of Representatives.

For his part, Presidential Communications Assistant Secretary Michel Kristian R. Ablan said in a press briefing on Friday, “We’re hopeful that the budget we submitted to the Congress would be approved by the Congress.”

Mr. Ablan said the Department of Budget Management (DBM) and the Office of the President (OP) had submitted a budget of at least P600 million for the CHR in 2018.

Mr. Ablan also noted the slash in the CHR’s budget at the House was just in “the earlier stage” of the budget process.

“If we recall, every year, we start our budget…our budget process, at the earliest, January of the past… the previous year. And then the passage is hopefully by November and December. We’re only in September right now and we’re at the level of the House of Representatives. This budget, although cut, will still have to be sent to the Senate for further discussion and deliberation,” he said.

“We still have a long way to go. In fact, after the Senate – since the version of the Senate and the House may not always be the same – there will still be the Bicameral Conference Committee. So we’re still a long, long way from the budget approval,” Mr. Ablan added. – with Mario M. Banzon and Rosemarie A. Zamora

Lorenzana plays down Duterte’s remarks on nationwide martial law

WILL President Rodrigo R. Duterte declare martial law or a holiday on Sept. 21?

Defense Secretary Delfin N. Lorenzana on Friday, Sept. 15, sought to clarify Mr. Duterte’s recent remarks about the possibility of his declaring martial law nationwide – following after Ferdinand E. Marcos, whose Sept. 21, 1972, martial-law proclamation is expected to be observed next week by critics and followers alike of the late dictator.

“Sinabi na rin ni Presidente ‘yan eh (The President already mentioned that). (He said…if the) Left will try to have a massive protest, magsunog sila sa kalsada (burning in the streets), they will disrupt the country, then I might,” Mr. Lorenzana said in a press briefing on Friday.

“Sinabi na rin niya ang rason eh. But I don’t think…sa aking pananaw naman, estimate ko…very remote naman mangyari (He also cited the reason. But I don’t think…in my view, my estimate,…that possibility is very remote),” he also said, adding:

“Pero si Presidente lang kasi (But the President is just) is very concerned that it might get out of hand. So sabi niya (he said), ‘I might declare martial law.’”

“But I don’t think the possibility that the Left will be able to conduct a massive demonstration across the country, disrupting the civil government or the lives of the people, eh hindi naman siguro mangyayari ‘yun (that probably won’t happen).”

Mr. Lorenzana is currently the martial-law administrator in Mindanao, which Mr. Duterte placed under martial rule on May 23, a state that Congress thereafter extended, amid the still unresolved siege of Marawi City by the terrorist Maute group.

Mr. Lorenzana also disclosed that a number of countries have pledged donations to Marawi’s rehabilitation – Australia, P1 billion; the United States, P730 million; Japan and Thailand, P1 million; and China, P85 million. The European Union has also pledged P49 million, he added.

HOLIDAY?
Despite Mr. Duterte’s raising the possibility of threats from the Left, Mr. Lorenzana said: “Wala naman kaming nakikita (We don’t see any threats)….Our intelligence people or…our field people cannot… do not have any indication that magkakaroon ng talagang malakihan na katulad nung mga nakaraan taon (there’ll be something as big as what happened before)…We do not have that indications in our reports.”

“Even the civilian LGUs, wala din naman silang nararamdaman sa baba eh (they don’t sense anything on the ground),” Mr. Lorenzana also said.

He added: “(D)uring my interaction with him early this week, sinabi niya na…pagka magkaroon ng massive rally sa Metro Manila (he said if there’s a massive rally in Metro Manila), as it might inconvenience the public,…’Hindi ko na lang sila papasukin (I won’t let the workers report for work). I will declare walang papasok sa mga opisina (that no one will go to work).’”

“So just…para…sabi niya, magkaroon sila ng ‘yung demonstration (he said, if they hold a demonstration), they have free hand kung anong gawin nila diyan sa mga demonstration nila (on what they’ll do in their demonstration). That’s what he… he said during our ano (conversation).”

“Pero hindi naman niya sinabi kung anong araw (But he didn’t say what day), but since the Left is threatening to have this massive demonstration on the 21st and siguro baka (maybe the) 21st…basta papakiramdaman naman daw niya kung kailan ‘yan gagawin ng Left, ‘yung kanilang threatened demonstration (he’ll see what he would do with regards to their threatened demonstration).” – with Rosemarie A. Zamora

Auto sales up 8.7% in Aug. – CAMPI, TMA

CAR sales in August rose by 8.7% to 35,309 as most vehicle categories continued to post double-digit growth, the latest industry tally show, bringing automakers closer to their yearend goal.

The month’s sales report raised the year-to-date total to 268,424 units, up 16.7% year-on-year, according to the joint report from the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and Truck Manufacturers Association (TMA).

“August sales results remained stable, driven by the good sales performance of key models from major manufacturers,” said CAMPI President Rommel R. Gutierrez.

Also driving the month’s sales growth is “the competitive promotional support and marketing activities to further push vehicles,” said Mr. Gutierrez, who is also first vice-president for government and industry affairs of Toyota Motor Philippines Corp.

August sales growth, however, was slower than the previous month’s 23.3% when 36,951 units were sold.

On a month-on-month comparison, sales for August were lower for both light commercial vehicles and passenger cars.

Sales of light commercial vehicles slipped by 0.8% to 24,051 unit month-on-month. Passenger car sales were also lower by 11.4% at 11,258 units. Asian utility vehicles also declined to 6,864 units, down 11.6%.

In August, Mr. Gutierrez said that despite the sales growth in July, carmakers remained cautious as they entered the second half of the year.

During the eight-month period, commercial vehicles cornered the biggest share at 66.05% with a total of 177,285 units sold, up 22.3% from a year earlier.

Light commercial vehicles followed with a share of 63.64% for the 112,827 units sold during the January-August period, which had sales growing by 19.4% year-on-year.

Passenger cars accounted for the third-biggest share at 33.95%, followed by Asian utility vehicles at 30.31%. Light trucks along with trucks and buses accounted for a share in the single digits or less.

Toyota Motor maintained its lead as the top-selling car company in the Philippines with a market share of 44.1%. It was followed by Mitsubishi Motors Philippines Corp. with a share of 17.68%. Ford Motor Co. Philippines, Inc. came out third with a 8.51% share.

Isuzu Philippines Corp. and Honda Car Philippines Inc. round out the top five with a share of 6.84% and 6.71%, respectively.

CAMPI is expecting car sales this year to hit 450,000, a record for the industry, which has been enjoying robust monthly sales in part due to easier financing programs and consumers’ greater spending power. The association is the biggest grouping in the Philippine automotive industry. – Victor V. Saulon

Weaker peso forces Manila Water, Maynilad to raise water tariff

By Victor V. Saulon, Sub-Editor

MANILA Water Co. and Maynilad Water Services, Inc. will be raising water rates for the fourth quarter of the year to factor in the weakening of the peso against foreign currencies.

Maynilad, the water concessionaire in Metro Manila’s west zone, notified customers of a “slight increase” in its foreign currency differential adjustment (FCDA) starting on Oct. 1, 2017.

The latest FCDA, at P0.38 per cubic meter, is equivalent to 1.09% of the average basic charge of P34.51/cu.m. Compared to the previous quarter, that P0.38/cu.m. FCDA is up by P0.11/cu.m. from the previous quarter, “following the depreciation of the Philippine peso.” It will be in effect from Oct. 1 to Dec. 31, 2017.

“Maynilad customers consuming 10 cubic meters or less every month will see their water bill increase by P0.34 from P118.61 to P118.95, while those consuming 20 cubic meters every month will see their water bill increase from P444.29 to P445.56, a difference of P1.54,” the company said in a statement on Friday.

“Meanwhile, households consuming 30 cubic meters a month will note an increase of P2.60 in their water bill, from the current P906.94 to P909.54,” it added.

Water concessionaires are allowed to recover losses or give back gains through the FCDA tariff mechanism that factors in the movements of the peso against foreign currencies.

The FCDA mechanism has been set because the water concessionaires pay foreign currency-denominated concession fees to the state agency Metropolitan Waterworks and Sewerage System as well as loans to fund service improvement projects that will expand and upgrade water and wastewater services.

It also allows them to sustain their program to cut water losses or non-revenue water and bring the supply to the underserved or unserved sectors in their service areas.

MANILA WATER TOO
Separately, east zone concessionaire Manila Water said an FCDA of P1.21/cu.m. will be imposed in about 15 days, or at the start of October.

It said the adjustment is based on the exchange rates of P50.6382 per US dollar and P0.4504 per Japanese yen.

“The FCDA component of the water bill will be adjusted to 4.86% of the basic charge,” it said.

Manila Water said customers using 10 cu.m. of water a month will see their bill rise by P1.22 to P138.22 from P137. Those consuming 20 cu.m. will see a P2.72 increase in their monthly bill to P304.66 from P301.94, while those using 30 cu.m. can expect a P5.53 increase to P620.33 from P614.80 from the previous quarter.

Maynilad serves most of Manila, parts of Quezon and Makati cities, as well as the cities of Caloocan, Pasay, Parañaque, Las Piñas, Valenzuela, Navotas and Malabon. Its franchise area includes the cities of Bacoor and Imus and the municipalities of Kawit, Noveleta and Rosario in Cavite.

Manila Water provides water and used water services to Mandaluyong, Pasig, San Juan, Marikina, Pateros, Taguig, Makati, southeastern part of Quezon City and San Andres and Sta. Ana in Manila. It also serves several towns of Rizal province, including San Mateo, Rodriguez, Antipolo, Cainta, Taytay, Angono, Binangonan, Baras and Jalajala.

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