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Coal power and economic development

My Cup of Liberty — Bienvenido S. Oplas, Jr.

Cheaper and stable energy means cheaper production costs for the industrial, agricultural, and services sectors of the economy. Cheaper energy also results in increased convenience for consumers too as many activities now are impossible without stable electricity supply.

In the modern history of Asian economies’ rapid growth, the use of coal power is an important contributor for their economic expansion.

These numbers show three important things:

(1) Countries that have high and fast coal consumption are also those that experienced faster economic expansion (at least three times expansion of GDP size). Most especially China, India, South Korea, Indonesia, Vietnam, Malaysia, and Philippines.

(2) Countries with declining coal use are also those with slow economic expansion (below three times expansion of GDP size). Most notable are the US, Russia, Germany, and UK.

(3) Philippines’ coal use is actually small compared to its neighbors; its 2016 use is just nearly 1/2 of Malaysia and Vietnam’s consumption, just 1/3 of Taiwan’s and almost 1/5 of Indonesia’s. South Korea, Japan, India, and China’s consumption are many times bigger than the Philippines’.

Recently, groups have suddenly scored seven coal power plants that entered into power supply agreements (PSA) with Meralco last year. These coal projects are (1) Atimonan One Energy (A1E) 1,200 MW, (2) Global Luzon (GLEDC) 600 MW, (3) Central Luzon Premiere (CLPPC) 528 MW, (4) Mariveles Power (MPGC) 528 MW, (5) St. Raphael Power (SRPGC) 400 MW, (6) Redondo Peninsula (RPE) 225 MW, and (7) Panay Energy (PEDC) 70 MW.

This covers a total of 3,550 MW of stable and affordable energy that can lead to cheaper and reliable electricity supply for more than 20 million people in Metro Manila, Bulacan, Rizal, Cavite, Laguna, and parts of Batangas and Quezon provinces.

These groups — Center for Energy, Ecology, and Development (CEED), Philippine Movement for Climate Justice (PMCJ), Sanlakas, Freedom from Debt Coalition (FDC), Koalisyong Pabahay ng Pilipinas (KPP), Power for People (P4P) member organizations, others — argue that coal plants are detrimental for the people’s health and livelihood as well as bad for the environment.

They are wrong.

What is bad for the people’s health and livelihood are more candles and noisy gensets running on diesel when there are frequent brownouts coming from intermittent, unreliable renewables like solar and wind. Candles are among the major causes of fires in houses and communities.

What is bad for people’s health and security are dark streets at night that contribute to more road accidents, more street robberies, abduction and rapes, murders and other crimes. Many LGUs reduce costs of street lighting when electricity prices are high (ever-rising feed-in-tariff or FiT for renewables, more expensive oil peaking plants are used during peak hours, etc.). Expensive and unstable electricity can kill people today, not 100 years from now.

Seeking to disenfranchise some 3,550 MW of stable and cheaper energy supply from seven coal plants is suspicious. There are no big hydro, geothermal, and biomass plants coming in. Wind and solar are limited by their intermittent nature, have low capacity factors, high capital expenditures, and often are located far away from the main grid. The only beneficiaries of disenfranchising big capacity coal plants then would be the owners of new natural gas plants.

Are natural gas cheaper than coal power? From the recent experience of Mindanao where many big coal plants were commissioned almost simultaneously, the answer seems to be No. The generation price in Mindanao has gone down to below P3/kWh, on certain days even below P2.50/kWh. Which means coal power has big leeway for lower price if competition becomes tighter. This cannot be said of natural gas plants here.

Consumer groups and NGOs should bat for cheaper, stable electricity. If they fight for something else like intermittent and expensive renewables, or more expensive gas plants, then they abdicate their role as representatives of consumer interests. Pathetic.


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Bienvenido S. Oplas, Jr. is the head of Minimal Government Thinkers and a Fellow of SEANET, both are members of Economic Freedom Network (EFN) Asia.

minimalgovernment@gmail.com

The Geopolitics of the Hague Ruling on the South China Sea Dispute

Thinking Beyond Politics — Renato Cruz De Castro

On 12 July 2016, the Permanent Court of Arbitration delivered its long-awaited ruling on the protracted dispute between the Philippines and China. The PCA ruled in favor of the Philippines in 14 of its 15 claims against China in the South China Sea. To recap, here are a few of the court’s important findings:

¥ China’s claims — defined by the nine-dash line — is a violation of international law.

¥ Although the Spratly Islands were historically used by small groups of fishermen and several fishing and guano mining enterprises, these land features could not sustain habitation by a stable community.

¥ None of the Spratly Islands is capable of generating extended maritime zones. It noted that these features now have installations with maintenance personnel.

¥ These modern presences are dependent on outside resources. In fact, many of the features have been modified to improve their habitability.

¥ Chinese reclamation and construction projects infringe on Philippine territorial rights.

¥ China erred in destroying the maritime environment by building artificial islands and illegally preventing Filipinos from fishing and exploring oil in area.

Furthermore, the PCA determined that China violated the rights and obligations of nations utilizing the ocean by destroying the marine environment through its constructions of artificial islands; openly defied Philippines sovereign rights by interfering with oil and gas exploration at the Reed Bank; and illegally constructed a facility on Mischief Reef, which sits on the Philippine continental shelf.

THE GEOPOLITICS OF THE PCA RULING
The PCA award is a strong assertion of the impartiality and effectiveness of the dispute resolution mechanism of UNCLOS and, more significantly, the triumph of the Philippines’ liberal approach over China’s realpolitik approach.

The ruling, however, is not simply a sweeping legal victory and a decisive setback for China. It is a game changer that may transform the strategic milieu of the disputes, reshaping the actors’ strategies and identities, and strongly motivating them to change their courses of actions.

At the core of this change is the newfound clarity that China’s claim, based on the nine-dash line, has neither legal nor historical foundation. The ruling made clear that no country can lawfully assert “historic rights” in the high seas.

The ruling exposed China’s expansive claim as a component of a long-term maritime strategy aimed at eroding America’s preponderant position in the region, weakening the credibility of US security commitments, fragmenting ASEAN and other regional bodies, and coercing specific regional states to accommodate its self-defined and self-proclaimed “core interests.”

In the mid-1980s, Admiral Liu Huaqing, the commander of the People’s Liberation Army Navy (PLAN), announced the “Near Seas Active Defense” doctrine. This doctrine called for the People’s Liberation Army (PLA) to form layered defenses to deter a potential adversary from threatening China from the sea. In the 1990s, China developed an arsenal of ballistic and cruise missiles aimed at virtually every US airbase and port in the Western Pacific.

These weapons are also designed to sink vessels operating hundreds of miles off China’s coast. Chinese military planners believe that their missiles, with anti-access/area denial (A2/AD) capabilities, can adequately prevent the US Navy from intervening or provoking a confrontation with China. Chinese control of the South China Sea will extend the PLA’s A2/AD. This will enable the PLA to deploy submarines, surface combatants, and aircraft to delay or deter US response to regional crisis.

Using satellite photos, the Asia Maritime Transparency Initiative revealed that while the ASEAN and China are negotiating a framework of a binding Code of Conduct, the construction of military and dual-use facilities on Chinese-occupied land features continues. The PLA has built missile shelters, radar/communication facilities, and other infrastructures that imply that while China is engaged in negotiations with ASEAN, it remains committed in developing its military capabilities.

STATUS QUO OR REVISIONISM?
In the light of these developments, the PCA ruling forces states in the region to take sides — either to be on the side of international law (or the status quo) or against it (revisionism leading to China’s domination of the South China Sea). Prior to the ruling, regional states articulated their own interpretations of the disputes and preferred to be fence-sitters.

The PCA award also produces the basis and motivation for cooperation among states that are threatened by China’s expansion and are supportive of international law. Before the ruling, the maxim of “each to his own” hindered these states from engaging in robust cooperation to constrain China’s maritime expansion. With the PCA’s ruling, littoral states like the Philippines, Malaysia, Indonesia, and Vietnam can join forces and lawfully align themselves with major naval powers like the United States, Japan, Australia, and India to defend their EEZ against Chinese encroachment, and rationalize this effort to uphold international law.

If cooperation before the ruling could be interpreted as taking sides and ganging up on China, now it can be regarded as a collective effort by the international community to defend the rule-based order against an aggressive and expansionist power.

On July 12, Stratbase ADR Institute will hold a forum titled “The Framework Code of Conduct, One Year After Arbitration.” The by-invitation forum will feature insights from Defense Secretary Delfin Lorenzana, Justice Antonio Carpio, Dr. Jay Batongbacal, former National Security adviser Roilo Golez, Dr. Ginnie Bacay-Watson, and Mr. Koichi Ai, in addition to Ambassador Albert del Rosario.

Renato Cruz De Castro is a Trustee of Stratbase ADR Institute, and a Professor in DLSU-Manila.

A realistic view of Philippine-American relations

Ad Lib — Greg B. Macabenta

With the observance of Philippine-American Friendship Day last July 4, and the current “tentative” state of relations between the Philippines and the United States, there is a need to take a more realistic view of this relationship.

The popular impression is that the “special relations” between our two countries had always been an immutable fact, until the election of President Rodrigo Duterte. Just a few months into his presidency, Duterte is said to have spoiled that “ideal” relationship with his harsh — even vulgar — statements against America and President Barack Obama, as well as Duterte’s announced “separation” from the US, and his overt efforts to cuddle up to China and Russia.

While Duterte may have, indeed, ruffled feathers in Washington DC and the US embassy in Manila, America appears to have taken a more “tolerant” attitude towards the Philippines in the face of his loose cannon actuations. One indication is the assistance that US forces readily gave to the Philippine military in fighting ISIS-backed insurgents in Marawi, a conflict that continues to rage as of this writing.

Knowledgeable observers believe that Philippine-US relations were more stressed with the closure of the Subic Bay Naval Base and Clark Air Base during the incumbency of President Corazon Aquino, and the decision of President Gloria Macapagal-Arroyo to withdraw the small Philippine military contingent from the US-led allied forces in Iraq.

But even that had no significant impact on Philippine-US trade relations, and the bilateral bond between the two countries subsequently normalized, during the incumbency of President Benigno S. C. Aquino III.

The truth is that relations between the Philippines and the US have always been both close and distant, affectionate and troubled, special and yet not as special as American relations with other countries like its former enemy, Japan.

But it is a relationship that will last because it is mutually beneficial.

The reason why the US will continue to have a special interest in the Philippines, an interest that a “temporary” pain in the neck like Duterte will not permanently impair, is that it is necessary for the US — politically, economically, and militarily — to maintain a strong presence in Asia, and the Philippines occupies a strategic geographical position in the area This has become particularly important with the emergence of China as a threat to America’s pivotal role in the region.

Similarly, it is important for the Philippines to have the US as a trading partner and as a military shield, no matter what kind of bluster may be mouthed by Duterte and the anti-US “nationalists.” The current fighting in Marawi has simply underscored that dependence on US military assistance.

This is the pragmatic reality of Philippine-US relations on a government-to-government basis. But it is different from the genuinely special relationship between the two countries on a people-to-people basis.

In the latter respect, the special relationship was established over a century ago when the Philippines became a colony of America. It was forged on the blazing anvil of battle during World War II and the blood-drenched fields of Corregidor and Bataan.

This relationship saw America setting up the Philippine civil service, teachers aboard the USS Thomas (the Thomasites) realigning the Philippine educational system away from Spain and towards the new colonizers, and Filipino pensionados being dispatched for special studies in the US in preparation for the Commonwealth and, thence, independence.

In the early 1900s, this relationship also saw droves of Filipino workers being recruited for America’s farmlands in California and Washington State, and the canneries in Alaska (the forerunners of the manongs). In the mid ’60s, planeloads of Filipino doctors, nurses, accountants, and other professionals immigrated to America to work and reside permanently — a diaspora different from the short-term dispersal of OFWs to the Middle East.

This special relationship has resulted in today’s ethnic Filipino population in the US of over four million, with the majority either assuming US citizenship or comprising a growing second and third generation of Americans with roots in the Philippines.

There are still many Philippine nationalists who cannot forget that over a quarter of a million Filipino lives were lost in the colonization and pacification of the country at the turn of the last century, and that the granting of independence to the Philippines had military and economic strings attached.

This has rankled and was one of the reasons why the observance of Philippine Independence Day was moved from July 4th, granted by the US, to June 12th, the date of Gen. Emilio Aguinaldo’s declaration of kasarinlan in Kawit, Cavite,

But the benefits that Filipinos believe they have received from America far outweigh the memories of past atrocities, even if Duterte has raked up these atrocities in his tirades against the US.

Opinion polls indicate that, in spite of Duterte’s seeming hostility, 92% of Filipinos regard America and the American people favorably. Typical of the Pinoy character (a combination of childlike naivete and a capacity for unending loyalty), Filipinos expect the same attitude from Americans — a paternalistic attitude or, at least, the attitude of a big brother towards a younger sibling.

The book, Little Brown Brother, by Leon Wolff, takes a more pragmatic view of this attitude and the expectation of special treatment for the Philippines by the US — an expectation that puzzles ordinary American and officials in Washington DC.

America was born out of a desire of the colonists, the pioneers and the frontiersmen for independence from Great Britain. Americans are raised from childhood to be self-reliant. They are trained to believe that there is no such thing as a free lunch. They are accustomed to setting out on their own upon reaching adulthood, or paying rent in their parents’ household once they have a job. Thus, they generally, do not feel an obligation to give their aging parents the special care that Filipinos believe they owe their elders.

While this may disturb the elderly, Filipinos in America must confront the harsh reality that their children, and their children’s children, are Americans, raised according to American norms of self-reliance. In their old age, Pinoy parents must accept the fact that the babies that they raised, fed, clothed and supported into adulthood now have their own families to raise, feed, and support.

This is one reason why many Filipino-American old-timers are seriously considering retiring in the Philippines. In the land of their birth, they will be surrounded and pampered by relatives and househelp, the latter being affordable even on their meager social security pensions. The downside is that they expect relatives to constantly ask them for a handout. Another, even more critical, downside is the lack of health care facilities, particularly preventive and maintenance care.

President Duterte has declared that he wants to demonstrate that the Philippines is an independent and sovereign nation beholden to no foreign power. That is well and good.

In such a case, the Filipino people will have to accept the blunt reality that any special favors that they expect from the United States will require a quid pro quo. A special favor in return. An equivalent pound of flesh.

The days of the Little Brown Brother are long gone.

Greg B. Macabenta is an advertising and communications man shuttling between San Francisco and Manila and providing unique insights on issues from both perspectives.

gregmacabenta@hotmail.com

Trade, factory data back growth hopes

By Ranier Olson R. Reusora
Researcher
and Patrizia Paola C. Marcelo

MERCHANDISE EXPORTS grew by double-digit pace for the third straight month, while factory output increased at a faster clip in May, the Philippine Statistics Authority (PSA) reported yesterday, supporting hopes for robust economic growth this quarter.

Preliminary data from the PSA showed merchandise export sales grew by 13.7% to $5.489 billion last May, slower than the previous month’s 19.1% increment, but still a turnaround from the revised 1.5% contraction in May of last year.

With total imports recording a 16.6% expansion to $8.242 billion last May, the country’s balance of trade in goods deficit widened by 22.9% to $2.753 billion, a monthly record, according to Nomura Global Research.

The latest merchandise export turnout brought year-to-date receipts to $26.112 billion, an acceleration of 16.3% from the $22.46 billion in the same five months of last year.

The year-to-date growth is now way above the Development Budget Coordination Committee’s projection of five percent for the entire 2017.

Despite the slowdown, Nomura in a report said the growth was still robust since the average increase in April and May was on track to sustaining first quarter’s 16.3% expansion.

Outbound shipments of manufactured goods, which accounted for 84% of total exports in May, went up 8.5% to $4.611 billion, while mineral products — with a 6.7% share of the total — increased by 56.2% to $370.465 million.


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Outbound shipments of agro-based and forest products registered sharp increases as well of 53.4% ($373.42 million) and 648.5% ($11.194 million), respectively.

“The overall improvement in global demand is the main reason for the recovery in exports,” said Guian Angelo S. Dumalagan, market economist at the Land Bank of the Philippines (Landbank).

Adding to robust demand was the depreciation of the peso against the dollar, which also boosted exports by making Philippine products relatively cheaper in foreign currency terms, he added.

Japan remained the Philippines’ top export market in May with a 17.1% market share at $939.63 million, albeit a decrease of 9.4% from $1.039 billion in May 2016. The United States came in second with 14.1% share at $772.5 million, up by 7.1% from last year.

“In terms of markets, countries in East Asia remain strong trade partners with 48.3% share in export revenue and 46.2% share in imports. Trade with ASEAN (Association of Southeast Asian Nations) is also strong, with 15.7% share in export receipts and 26.1% share in inward shipments,” the National Economic and Development Authority (NEDA) quoted its head, Socioeconomic Planning Secretary Ernesto M. Pernia, as saying.

Mr. Pernia noted that the sixth straight month of merchandise export growth “is consistent with the global pickup.”

NEDA noted further that exports to the European Union marked their third consecutive month of double-digit growth at 38.5%, and that ASEAN remained “a promising destination for exports”, with exports to neighbors growing by 25.6% in May.

Going forward, Mr. Pernia said the government “expects Philippine exports to increase by about $100 million annually in the next five years.”

In the short run, Nomura expects exports growth to remain firm, citing the strength of imports of capital goods and raw materials.

By major type of product, raw materials and intermediate goods — which accounted for 38.9% of total import payments — increased by 14.5% to $3.209 billion.

Capital goods, which had a 33.6% share — increased by 20.1% to $2.772 billion.

Consumer goods as well as mineral fuels, lubricants and related materials likewise recorded increases of 8.3% (to $1.354 billion) and 33.1% (to $874.5 million), respectively.

Year-to-date, total inbound shipments grew 12.3% to $37.154 billion, against the government’s 10% target for 2017.

“The rebound in capital goods and consumer goods imports point to robust domestic demand, consistent with a re-acceleration of government capex after a relatively slow start to the year, and resilient household consumption,” Nomura said.

“The pick-up in raw materials also suggests that electronics exports will remain robust in the next few months,” it added.

MANUFACTURING PICKS UP
The rebound in imports was mirrored by the pickup in manufacturing output in May.

The preliminary result from the Monthly Integrated Survey of Selected Industries showed that factory output, measured by the volume of production index, grew by 5.8% year-on-year.

This figure is higher than the downward-revised 4.3% growth rate in April, but lower than the 7.4% posted last year.

The result meets expectations of manufacturing output picking up speed from the slowdown in April, albeit below analysts’ estimates. Moody’s Analytics on Monday estimated a 7.8% increase, citing strong domestic demand and robust household spending as drivers of accelerated growth. Nikkei’s Purchasing Managers’ Index (PMI) had estimated a five-month high of 54.3 that kept the Philippines in Southeast Asia’s lead for the second straight month.

In a statement, NEDA credited the acceleration in manufacturing output growth to an increase in production of export-oriented and construction-related goods, specifically basic metals, fabricated metals and non-metallic mineral products.

Fabricated metal products contributed significantly to the growth in factory output, posting the biggest gain of 116.9%.

Eleven sectors registered double-digit gains: leather products (44.3%); footwear and wearing apparel (34.6%); furniture and fixtures (34.4%); basic metals (29.1%); tobacco products (28.2%); printing (28.2%); non-metallic mineral products (22.6%); transport equipment (22.2%); petroleum products (16.8%); electrical machinery (13.0%) as well as paper and paper products (11.1%).

Capacity utilization rate, which represents how much of factory capacity is in use, averaged 83.8%, with 11 of the 20 sectors registering capacity utilization rates of at least 80%.

NEDA also holds a positive outlook for factory output growth results for the rest of the second quarter, to be influenced by an expected growth in construction product outputs toward the end of the year, backed by the government’s massive infrastructure spending.

“Manufacturing output is expected to sustain its growth toward the end of the second quarter, driven by buoyant domestic demand and optimistic business outlook,” the agency said further in its statement.

Last May’s factory output marks the 23rd straight month since July 2015 that industrial output growth stayed in positive territory.

Angelo B. Taningco, economist at Security Bank, pointed to greater client demand due to high corporate incomes as the driving force behind the acceleration in factory output growth.

“… The acceleration in manufacturing output growth in May from April may have been driven by more robust growth in new manufactured goods orders amid greater client demand,” Mr. Taningco said in an e-mail.

“Positive corporate earnings and business sentiment may have induced the increase in demand for manufactured items.”

Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, said that the acceleration in May reflects the positive view on local manufacturing despite domestic political issues.

“This acceleration is consistent with the observation that Philippine manufacturing is resurging despite the general sentiment of uncertainty brought about by external factors including local political situations. This confirms that the manufacturing sector is on a positive growth path,” Mr. Asuncion said in an e-mailed comment.

Analysts expect growth to speed up in the next months due to improving economic conditions that will continue to fuel demand.

“[The] outlook on manufacturing sector in the next couple of months is still positive especially since I expect increasing demand for manufactured products amid improving economic conditions,” Security Bank’s Mr. Taningco said.

Union Bank’s Mr. Asuncion agreed, saying: “Philippine manufacturing [growth] is still expected to be positive and will likely pick up as the global economy continues to recover… The general confidence on the growth potential of the Philippine economy continues despite external and internal political challenges.”

Improving manufacturing is expected to have contributed to gross domestic product (GDP) growth this quarter which NEDA’s Mr. Pernia expects to come close to seven percent when the PSA reports data on Aug. 17.

GDP grew by a slower-than-expected 6.4% in the first quarter, even as this placed the Philippines second among major Asian economies next to China, whose growth clocked 6.9% in the same three months. The government targets the economy to grow 6.5-7.5% this year from 2016’s actual 6.9%.

Remittance, outsourcing inflows to help offset growing trade gap

THE STEADY stream of remittance inflows and business process outsourcing (BPO) receipts cushion the country’s external payments position from a ballooning trade deficit, the central bank chief said yesterday.

Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla, Jr. said the country’s balance of payments (BoP) remains “manageable” even as it remained in deficit. The first five months of 2017 saw the country’s external payments position at a $136-million deficit, reversing the $216-million surplus recorded in 2016’s comparable period.

The BoP gives a picture of the country’s overall transactions with the rest of the world within a specific period. A deficit means funds that left the economy offset those that came in.

“Our external payments position remains very manageable. Robust remittances from overseas Filipino workers (OFWs) and ample receipts from the BPO sector continue to fuel economic growth,” Mr. Espenilla said in his speech during the annual appreciation lunch yesterday in Manila.

BSP Deputy Governor Diwa C. Guinigundo had attributed May’s $59-million BoP deficit to central bank moves to temper foreign exchange volatility as well as payments made by the national government to settle external debt that offset income from investments abroad.

The Philippine Statistics Authority yesterday reported a $2.753-billion balance of trade deficit in May that was more than a fifth bigger than the year-ago $2.24 billion.

Mr. Espenilla said it was not unusual for a growing economy to see rapid growth in imports: “Capital goods imports support a growing economy.”

“That is not a surprising outcome,” he said of latest trade data showing a widening deficit.

Instead, the new BSP chief said robust inflows continue to support the country’s overall external position, coupled with sound macroeconomic fundamentals.

Money sent home by Filipinos working abroad totalled $9.036 billion in the four months to April, 4.2% more than the $8.67 billion seen during the comparable year-ago period and accounting for a third of the BSP’s $28-billion projection for the entire year.

On the other hand, inflows from the BPO industry reached $5.5 billion in the first quarter, up 9.9% from $5 billion recorded in 2016’s comparable three months, according to latest central bank data.

With the wider trade-in-goods deficit seen in the first five months, the central bank expects the country’s BoP position to settle at a $500-million deficit for the year, equivalent to 0.2% of gross domestic product (GDP). In 2016, the BoP stood at a $420-million deficit at 0.1% of GDP.

Mr. Espenilla said the lower ratio of foreign debt to GDP, coupled with “more than adequate” reserves held by the central bank, provide additional buffers against external shocks. Foreign exchange reserves totaled $81.413 billion in June, enough to cover 8.7 months’ worth of the country’s outstanding import payments. — Melissa Luz T. Lopez

Duterte tells business to do part vs corruption

By Arra B. Francia

PRESIDENT Rodrigo R. Duterte set foot in the Philippine Stock Exchange (PSE) for the first time as the country’s chief executive on Tuesday on the occasion of the 10th listing anniversary of Phoenix Petroleum Philippines, Inc., reminding businessmen to do their share in improving the nation’s economic and social landscape.

“It’s not only about money: it’s about improving the landscape… economic [and] social — and really until now, [addressing] the prevalence of corruption,” Mr. Duterte said in impromptu remarks that were laced with the usual invectives against critics.

Zeroing in on the problem of corruption — a nagging blight on the country’s investment promise according to Transparency International’s Corruption Perceptions Index 2016, The Heritage Foundation’s latest Index of Economic Freedom and the US State Department’s Investment Climate Statements for 2017, among others — Mr. Duterte told his audience at the PSE: “Kung kayo nasa gobyerno (If you deal with government), any slightest intimation of graft, sabihin mo na agad (report it at once).”

“Alam ninyo, ang makakahinto ng corruption sa gobyerno, kayo lang, sa totoo lang. (To tell you the truth, you are the only ones who can stop corruption in government),” he emphasized.

“… Kaya nga dito, I’m trying to appeal to you sa corruption. But little by little mangyayari ‘to (we will get rid of it).”

Mr. Duterte said he repeatedly reminds cabinet men that he can promptly dismiss anyone he appoints at the slightest whiff of corruption. Earlier this year, he had dismissed Ismael D. Sueno as chief of the Department of Interior Local Government while his presidential campaign spokesman, Peter T. Laviña, resigned as National Irrigation Administration head, both on mere suspicion of corruption.

“Lahat ng appointed ko, kaya kong paalisin (All those I appointed, I can fire anytime).”

Turning to another concern that has increasingly entered the radar screen of some credit raters and bank analysts, Mr. Duterte told his audience yesterday that he expects conflict in Marawi — which erupted on May 23 — to take “15 more days” to resolve.

He then turned to a speech prepared for him on the 10th listing anniversary of Phoenix Petroleum Philippines, Inc., the oil company of Davao-based businessman Dennis A. Uy, a known supporter of the president. “As mayor of Davao City, I personally witnessed how the business improved as a single gasoline station in the city into one of the fastest-growing oil companies,” Mr. Duterte said.

Phoenix Petroleum now has more than 500 gasoline stations nationwide, and is one of the dominant players in the Visayas and Mindanao region.

“I am also grateful that we continue to share in (the company’s) socio and civic plans for the local economy,” the president said.

In celebration of Phoenix Petroleum’s 10th anniversary as a public company, Mr. Uy announced that his group will establish a P100-million mutual fund for soldiers and policemen, including their families. The fund called “LIFE” will offer financial security to uniformed personnel and their families. “The LIFE Fund is our commitment of support to our military and police, who protect and defend us with their lives. Without their efforts to keep peace, we will not be here celebrating milestones in our companies,” Mr. Uy said in his speech.

The president was scheduled to ring the closing bell along with the officials of Phoenix Petroleum, PSE, and the Securities and Exchange Commission, but was almost an hour late for the ceremony. He went on to ring the bell anyway.

Phoenix Petroleum was one of PSE’s biggest gainers yesterday, its share price jump- ing 5.04% to close at P10.22 apiece against the PSE index’s 0.26% rise and the 0.05% decline of the industrial index under which the company’s shares are classified.

Mr. Uy — one of the financiers of Mr. Duterte’s successful presidential bid in 2016 — will soon see another one of his companies join the bourse, after the Securities and Exchange Commission yesterday approved Chelsea Logistics Corp.’s P8-billion initial public offer.

How helpful will Mr. Uy’s long-time association with the president be to his business plans?

“My two cents is that this is an opportunity for Mr. Uy to send a message to the business community at large. That message is that he is close to the president,” PNB Securities President Manuel Antonio G. Lisbona said in a mobile phone message.

For Summit Securities President Harry G. Liu: “He is a friend of the president, but that does not mean that he (Mr. Duterte) is going to do (Mr. Uy) favors.”

“But it will definitely help this businessman.”

Geopolitics takes back seat in oversupplied oil markets

By Mriganka Jaipuriyar

THE MIDDLE EAST witnessed two major geopolitical events in June — a diplomatic crisis that left Qatar isolated and a regime change in Saudi Arabia. The fact that oil prices hardly reacted to either underscores the persistent supply glut facing the market.

On June 5, Saudi Arabia, the UAE, Bahrain, and Egypt abruptly severed diplomatic and transport ties with Qatar over longstanding allegations that the maverick emirate had been financing Islamist terrorist groups that threatened the security of its Arab neighbors.

They isolated Qatar through closure of the state’s only land border — with Saudi Arabia — by banning Qatari planes from neighboring airspace, and Qatari ships from its neighbors’ territorial waters and ports.

In the past, such potentially destabilizing events in the Middle East sent jitters through the market and drove prices sharply higher. But barring a knee-jerk reaction when the market assessed the impact the diplomatic crisis could have on the OPEC/non-OPEC production cut agreement (Qatar is a small oil producer and is party to the agreement), the focus went back to the over-supplied state of the market.

Crude oil prices hit seven-month lows last month with ICE Brent touching $44.82/barrel and NYMEX WTI $42.53/barrel as rising production out of the US, Libya and Nigeria sent jitters through the market.

But what the Qatar diplomatic crisis did do is throw Asian oil buyers’ logistics in complete disarray as confusion emerged on whether buyers lifting Qatari crude oil will be able to stop at ports in the UAE to co-load cargoes or bunker for fuel in the regional bunkering hub of Fujairah.

The typical cargo size in the Middle East is 500,000 barrels, which leads to Asian oil buyers co-loading four cargoes from various ports to fill a VLCC (Very Large Crude Carrier) before it heads to Asia.

Though the UAE after a couple of weeks of confusion cleared the air, saying that vessels going to or coming from Qatar can stop in the UAE ports, buyers have become cautious and are even considering shunning Qatari crude and looking for alternatives from elsewhere.

Meanwhile, Fujairah’s loss was Singapore’s gain. Singapore, the world’s largest bunkering port, witnessed a jump in bunker fuel sales as shipowners heading to the Middle East preferred to play it safe and tank up in the city-state.

Against the backdrop of the diplomatic crisis, Saudi Arabia’s King Salman appointed his son Mohammed bin Salman as the kingdom’s new crown prince, removing Prince Mohammed bin Naif al-Saud of his posts of crown prince, deputy premier and interior minister, and settling what had been seen as a power struggle between the two rival princes.

The 31-year-old Mohammed bin Salman has spearheaded Saudi Arabia’s National Transformation Plan, which includes the sale of up to 5% of state-owned oil company Saudi Aramco through an IPO.

As well as economic planning, Mohammed bin Salman was already firmly in control of Saudi military strategy and foreign policy. Over the last two years, the kingdom has embarked on a protracted war in Yemen, and this month cut diplomatic, transport and logistic ties with Qatar. Its stance towards its regional rival Iran has also hardened.

Along with Aramco’s IPO, one of Mohammed bin Salman’s policies has been attempting to re-exert OPEC’s ability to manage the oil market. His elevated status could mean that Saudi Arabia will continue to aggressively pursue the output cut plan.

Despite these seemingly bullish factors, oil prices have only moved lower and not surprisingly, the reason lies in the data.

Paris-based International Energy Agency in its latest report estimated that global oil supply had risen by 1.25 million b/d in May, led by non-OPEC countries, amounting to the largest increase since February 2016.

The IEA went on to say that commercial oil stocks in OECD countries had risen by 19 million barrels in April, to 3.05 billion barrels, putting them 292 million barrels above the five-year average, and higher than at the time of OPEC’s production cut agreement last year.

On the demand side, the IEA kept in place its estimate of this year’s global oil demand growth, of 1.3 million barrels per day (b/d), but noted that growth in the first quarter had been just 900,000 b/d on the year — a two-and-a-half year low.

Though US crude stocks have declined — the surplus to the five-year average which stood at 147.60 million barrels in February this year has come off to 107.4 million barrels recently, US crude output is showing no signs of slowing down. Output is up 580,000 b/d since the end of 2016 to around 9.3 million b/d — the highest since August 2015.

It is this data and data on rising Libyan and Nigerian oil production that the OPEC and non-OPEC monitoring committee is going to pour over when it meets in late July to chart the future course of action.

Mriganka Jaipuriyar is the Associate Editorial Director for Asia & Middle East Energy News & Analysis of S&P Global Platts.

WBO review rules Australian Jeff Horn beat Filipino legend Manny Pacquiao

SYDNEY — Australian Jeff Horn’s shock welterweight title victory over Manny Pacquiao was confirmed Tuesday after a scoring review by the World Boxing Organization declared him the clear winner.

The WBO took a close look at the fight after Pacquiao, backed by the Philippine government’s sports regulatory body, criticized the referee and the judges and demanded a review after losing in Brisbane on July 2.

Horn stunned the Filipino legend — who has won world titles in an unprecedented eight weight divisions — with his ultra-aggressiveness to earn a unanimous 12-round decision.

The WBO — which does not have the power to reverse a decision unless fraud or law violations are proven — set up a panel of independent and anonymous judges who were asked to watch the bout without sound and determine who won each round.

The results were tabulated to show clearly the rounds each fighter won using an average scale based on 60%, 80% and 100%, with three of the five officials needing to be in agreement.

A similar method has been used to review WBO title fights before.

“Upon the analysis, the findings stated that Pacquiao won the 3rd, the 8th and 9th by 100%; the 5th round was won by 80%; and the 11th round by 60%,” the WBO said in a statement.

“Horn won the 1st, 6th and 12th rounds by 100%; rounds 2, 4, and 7 by 80%; and then, the 10th round by 60%.

“From the results, it can be established that Pacquiao won five rounds while Horn won seven rounds. Based on this analysis, Jeff Horn was the winner of the bout.”

The original fight was scored 117-111, 115-113 and 115-113 by judges Waleksa Roldan, Chris Flores and Ramon Cerdan respectively.

CONCRETE EVIDENCE
Horn, a former schoolteacher written off before the bout by most observers, welcomed the ruling as confirming what he already knew.

“It gives me evidence behind me that I can just use now. Instead of saying I think I won the fight, now a heap of other people — professionally — think I won the fight,” he told reporters in Brisbane.

“It’s definitely nice to have it finally put on paper. I thought I’d won the fight on the day and I think Pacquiao thought it as well. Now just to have it clear in front of us is good.”

He has made clear he is keen for a rematch and Brisbane’s Courier-Mail said talks were already under way for a possible November duel between the two in the same city.

Both the Philippine board and Pacquiao had criticized American referee Mark Nelson for supposedly allowing the underdog Australian to get away with illegal tactics without giving him warnings or point deductions.

The loss sparked calls in the Philippines for the 38-year-old Pacquiao, a national icon after rising from poverty to be considered one of the greatest fighters of his generation, to retire and concentrate on politics.

Pacquiao briefly quit boxing last year to pursue his long-held political ambitions and was elected senator. But he quickly made a successful comeback against Jessie Vargas in November, saying he still felt like a youngster. — AFP

Venus rising as Konta eyes Halep revenge; Muguruza beats top seed Kerber

LONDON — Venus Williams is ready to roll back the years as the American star eyes a place in the Wimbledon semifinals, while British contender Johanna Konta faces a grudge match against Simona Halep on Tuesday.

It is eight years since Williams last reached the Wimbledon final, but the 37-year-old showed she is still a formidable force on grass by thrashing Ana Konjuh in the fourth round.

Williams’ quarterfinal opponent — Latvia’s Jelena Ostapenko — was just 11 when Venus won the last of her five Wimbledon titles in 2008.

The 20-year-old idolized Venus’s sister Serena Williams, the reigning champion who is absent while she prepares to have her first child, and has modeled her go-for-broke game after the American legend.

Having stunned the tennis world by becoming the first unseeded player to win the French Open, Ostapenko is brim full of confidence.

Williams, this year’s Australian Open runner-up, is the oldest Wimbledon quarterfinalist for 23 years and she knows she’ll have to summon the kind of dominant display that made her so deadly a decade ago.

“She had an amazing moment in Paris. She’s riding on that momentum,” Williams said of Ostapenko.

“I’m playing pretty solid. I’d like to win every round in straight sets. If not, all that matters is you win.

“Winning never gets old at any stage in your career, ever.”

Serena, in 2002 and 2015, is the last player to win the French Open and Wimbledon back to back, with Ostapenko not yet looking that far ahead.

“The first couple of matches here were tough. I wasn’t playing my best. But I still won. I was fighting. That’s the key for getting your confidence and playing better with every match,” she said.

British star Konta and Romanian world number two Halep clash in what promises to be a heated affair with so much at stake for both players.

Halep can replace Angelique Kerber on top of the world rankings with a win, while Konta is looking to move a step closer to becoming the first woman to win Wimbledon since Virginia Wade in 1977.

As if that wasn’t enough to fuel emotions on Centre Court, the pair were involved in a spiteful Fed Cup clash between their countries in April.

Konta was reduced to tears by what she felt were threats and intimidation from the Romanian fans in Constanta during her match against Sorana Cirstea.

THREATENED
Romania coach Ilie Nastase was sent from the court after calling Konta and his British counterpart Anne Keothavong “bitches” and was later banned from the stadium following a foul-mouthed rant at a British journalist.

Halep didn’t exactly soothe Konta’s wounds ahead of their last eight clash, saying: “In my opinion, the public was very fair.”

Konta couldn’t hide her frustration went told of Halep’s unsympathetic attitude.

“They were not in my shoes. They were not being verbally threatened. I think it’s very difficult for them to understand my position,” she said.

Beaten in the 2015 final by Serena, Spain’s Garbine Muguruza admits she and many of her title rivals know they have a golden opportunity to lift the Venus Rosewater Dish while the 23-time major winner is away.

Muguruza, who faces Russia’s Svetlana Kuznetsova, said: “I think so, because she’s always in the final.

“Of course, it’s a big change. More players have the chance to get to the final.”

Kuznetsova, a former French and US Open champion, is in her first Wimbledon quarterfinal for 10 years as the 32-year-old tries to silence the doubters by reaching the last four for the first time.

“Coming to Wimbledon, I didn’t have any press attention before the tournament. I’m, like, why don’t I have? And then I was, like, okay I had too much of it in French Open, too much pressure,” Kuznetsova said.

“I feel more free. It actually helped me and I don’t care if people don’t believe. It’s their choice.”

Inspired by her coach Pat Cash’s celebrations of the 30th anniversary of his Wimbledon title, American 24th seed Coco Vandeweghe is targeting her first Wimbledon semifinal.

Vandeweghe faces Slovakia’s Magdalena Rybarikova, who has a 17-1 record on grass this season.

“I know Pat was celebrating with his team. With the 30-year anniversary, this tournament has been very special for him,” Vandeweghe said. — AFP

Muller knocks out Nadal as Murray, Federer coast

LONDON — Rafael Nadal’s bittersweet relationship with Wimbledon endured another twist Monday when he was knocked out in a five-set, fourth round epic by Luxembourg journeyman Gilles Muller.

Nadal’s stunning 6-3, 6-4, 3-6, 4-6, 15-13 defeat came after defending champion Andy Murray and seven-time winner Roger Federer had cruised into the last-eight in straight sets.

The four hour and 48-minute stunner on Court One had the knock-on effect of pushing Novak Djokovic’s last-16 clash against France’s Adrian Mannarino back to Tuesday.

Djokovic had been the last match scheduled on the court but officials chose to postpone the tie instead of shifting it to Centre Court where it could, if necessary, have been completed under lights.

Just weeks after winning his 10th French Open title, Nadal was condemned to his fifth exit before the quarterfinals in his last five visits to Wimbledon.

“It was not my best match against a very uncomfortable opponent,” said world number two Nadal, the 2008 and 2010 champion.

“Well done to him. He played great, especially in the fifth set but I fought to the last ball.”

MULLER TIRED BUT THRILLED
Nadal converted just two of 16 break points, while Muller fired 30 aces and 95 winners.

Muller, seeded 16th, will make his first Wimbledon quarterfinal appearance against former US Open champion Marin Cilic on Wednesday.

“Tired! It was a long match. I did really well in the first two sets then Rafa stepped it up and in the end it was just a big battle,” said Muller, who won on a fifth match point, more than an hour and a half after his first.

In a pulsating final set, which stretched to 95 minutes, Nadal saved two match points in the 10th game and two more in the 20th.

In between, Muller had to fight off a break point in the 13th game and four more in the 19th.

Nadal was always chasing the score and he finally cracked in the 28th game of the decider when he went long with a return.

“I said, ‘just give it a shot, go 100%,’ and it’s a great feeling to be winning that match,” added Muller whose only other win over the great Spaniard also came at Wimbledon, 12 years ago.

MURRAY THROUGH
Defending champion Murray reached a 10th successive Wimbledon quarterfinal with a 7-6 (7/1), 6-4, 6-4 win over France’s Benoit Paire.

World number one Murray will face Sam Querrey for a place in the semifinals.

“I thought I played well. Maybe a couple of sloppy service games in the first set but that was by far the best I’d hit the ball so far in the tournament. So I’m really pleased with that,” said Murray.

Only Federer and Jimmy Connors (11 each) have reached more consecutive Wimbledon quarterfinals than Murray.

Murray’s win meant that with Johanna Konta also making the last-eight in the women’s tournament, it is the first time since 1973 that Britain has two players in the quarterfinals.

Federer reached his 50th Grand Slam quarterfinal and 15th at Wimbledon with a 6-4, 6-2, 6-4 win over Grigor Dimitrov.

The Swiss star will now face Milos Raonic, the 2016 runner-up, after the sixth-seeded Canadian clinched a 4-6, 7-5, 4-6, 7-5, 6-1 win over Alexander Zverev of Germany, the 10th seed.

Raonic defeated Federer in the semifinals at Wimbledon in 2016.

Federer, 35, is the second oldest man to make the quarterfinals at Wimbledon behind Ken Rosewall who was 39 when he reached the last-eight in 1971.

“I’m thrilled to be back in the quarters again,” said Federer who took his record over Dimitrov to 6-0.

SAFETY ISSUE
The All England Club defended the decision not to switch Djokovic against Mannarino to Centre Court.

“It was determined the match could not be moved to Centre Court due to the number of spectators remaining in the grounds,” said a statement.

“As late as 8:30 p.m., 30,000 people still remained in the grounds, and therefore moving the match would have created a significant safety issue.”

“Both players were explained the rationale of postponing the match.”

Querrey, the US 24th seed who knocked out Djokovic in 2016, made the quarterfinals for a second successive year with a 5-7, 7-6 (7/5), 6-3, 6-7 (13/11), 6-3 over unseeded Kevin Anderson of South Africa.

Seventh seeded Cilic downed Roberto Bautista Agut of Spain 6-2, 6-2, 6-2.

Cilic will look to reach his first semifinal at the All England Club when he faces Muller.

Czech 11th seed Tomas Berdych downed eighth-seeded Dominic Thiem of Austria 6-3, 6-7 (1/7), 6-3, 3-6, 6-3.

Berdych, the 2010 runner-up, will face either three-time champion Djokovic or Mannarino for a place in the semifinals. — AFP

Lyceum Pirates rout JRU in season debut

By Michael Angelo S. Murillo
Reporter

THE Lyceum of the Philippines University Pirates further underscored their “dark horse” standing in Season 93 of the National Collegiate Athletic Association (NCAA) yesterday, winning their season opener over the Jose Rizal University (JRU) Heavy Bombers, 96-75.

Had it solid in the preseason that had the entire league noticing, the Pirates trumpeted what they are capable of doing with an impressive win over the Bombers, led by do-it-all forward CJ Perez.

Earlier in the day, the Perpetual Help Altas also won their season opener, beating the College of St. Benilde Blazers, 69-65.

The win was put under protest though as the Altas wore their dark uniforms instead of the designated light ones they should have for said game.

Lyceum raced to a strong start against JRU with Perez and import Mike Harry Nzeusseu anchoring their team’s attack.

The Pirates went on to claim the opening period, 27-18.

JRU, however, would come to life in the second quarter, trimming their deficit to six points, 36-30, at the halfway juncture of the period.

Lyceum halted the Bombers’ push but the latter would not relent in their thrust to keep the game close, 43-37, at the half.

Teytey Teodoro and the Bombers came out aggressive in the third quarter and had the Pirates lead trimmed to 47-43 early on.

But Lyceum countered back with a 16-5 run to build its biggest lead of 15 points, 63-48, with a little over three minutes to go in the period.

The quarter ended with Lyceum on top, 68-54.

Gaining momentum in the preceding canto, the Pirates kept the pressure on the Bombers at the start of the fourth quarter.

They stretched their lead to 27 points, 89-62, with 4:10 remaining in the game and never looked back after in booking the victory.

Perez had a double-double of 22 points and 10 rebounds to go along with four assists and two steals.

Nzeusseu had 13 points and Jesper Ayaay finished with 11 points and 10 boards for Lyceum.

Jed Mendoza was the high point man for JRU with 18 while Ervin Grospe had 15 and Teodoro 13 points.

“We take this win despite showing lapses on our part on the way to it. You don’t win championships with one game and we have to continue on improving,” said Pirates coach Topex Robinson in the post-game press conference.

Lyceum takes on defending champion San Beda College on Friday while JRU battles Perpetual Help also on that day.

ALTAS OVER BLAZERS
Perpetual Help, meanwhile, banked on a collective effort to fend off a resilient challenge from CSB.

While they led for much of the way, the Las Piñas-based Altas did not have it easy as the Blazers were hot on their trail and kept the game close.

The Altas were severely challenged in the third canto and saw them overtaken by the Blazers.

But Perpetual Help would stand up to the challenge in the closing moments of the payoff period before holding on for its first victory in Season 93.

Gab Danganon led the way for Perpetual Help with 14 points to go along with 10 rebounds.

Genmar Ylagan and Jonathan Yuhico had 12 points each while Prince Eze had 11 points, 12 rebounds and five blocks.

Flash Sadiwa was the other Altas player in double digits with 10 points.

Kendrix Belgica paced CSB with 16 points while guard Matt Johnson had 10.

“We are happy to have come up with a win despite committing a lot of turnovers,” said Altas coach Jimwell Gican.

“I understand that the game was put under protest but I’ll let our ManCom (management committee) handle that,” Mr. Gican added.

As of press time, no decision yet has been handed down by the NCAA regarding the protest.

Perpetual Help next plays on Friday against JRU while CSB also sees action on said day versus the Emilio Aguinaldo College Generals.

Mayweather, Jr. seeks delay on 2015 tax bill

LOS ANGELES — Floyd Mayweather has asked US authorities for more time to pay his 2015 tax bill, the year of his money-spinning mega-fight with Manny Pacquiao, filings showed Monday.

Mayweather, who is coming out of retirement to fight UFC star Conor McGregor next month, has requested he be allowed to settle his 2015 taxes after he is paid for his Aug. 26 bout.

The McGregor fight is expected to net Mayweather a nine-figure payday, boosting career earnings that have already topped $700 million according to one estimate in Forbes magazine.

Although the 40-year-old pocketed a mammoth $220 million for his May 2015 bout with Pacquiao, a filing to the Internal Revenue Service posted by the Law360.com said Mayweather’s assets were mostly “illiquid.” — AFP

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