By Michael Angelo S. Murillo
The National Basketball Association free agency and/or transfer window has been open for a good two weeks and a lot of activities have been happening through it. One team that has been very busy of late retooling are the Minnesota Timberwolves, which have gotten a number of players who this space believes should help them in being a tight pack.
The Wolves got via trade All-Star Jimmy Butler from the Chicago Bulls and the 16th pick in this year’s rookie draft, which was used to get big man Justin Patton of Creighton, in exchange for upstarts Zach Lavine, Kris Dunn and no. 7 overall pick, which was used to select Arizona seven-footer Lauri Markkanen.
After that Minnesota traded away longtime point guard Ricky Rubio to the Utah Jazz for a future pick before signing former All-Star Jeff Teague from the Indiana Pacers as replacement for Rubio.
Recently, the Wolves inked a deal with power forward Taj Gibson to snatch the latter from the Oklahoma City Thunder. Gibson, like Butler, is reunited with former Bulls coach Tom Thibodeau in Minnesota.
Considering how the NBA landscape, particularly in the Western Conference where the Wolves are playing, has been severely altered by the “mind-blowing” transfers that have been happening in the last couple of years, change of one form or another was definitely needed for Minnesota.
While the team they had last season, led by young guns Karl-Anthony Towns and Andrew Wiggins, was being competitive, still direction arrows pointed to them still being a work in progress and might have to wait some time more to start reaping the fruits.
With the changes they have made of late, this space believes that the development process of the team to being more competitive has
been fast-tracked and would actually pay immediate dividends in a form of a playoff spot come next season.
The addition of Butler, with his solid two-way game, gives Minnesota a promising “Big Three,” the “It” word
it seems in The Association these days, with Towns and Wiggins.
Butler’s should complement the game of the young fellows in Minnesota, albeit admittedly all them have to make some sacrifices and adjustments to make their tandem work.
Leadership on both ends of the court is also something that Butler brings to the team as he can be an offensive stabilizer down the stretch as well as a defensive anchor to aid the still-developing thrust of Minnesota.
Teague, meanwhile, may not be the bulk assist man that Rubio is but he has shown the ability to play big when called upon, especially during his stay with the Atlanta Hawks where he was a one-time All-Star. He is an added threat and another veteran leader along with Butler.
Gibson, for his part, is another good addition as he is a tenacious defender and rebounder and will be energy guy for the Wolves,
much like what he did in Chicago for Coach Thibs. He is tandem with Gorgui Dieng at the power forward position, along with big man Towns, has upside written all over it.
The bench of Tyus Jones, Nemanja Bjelica and Patton (a former teammate of Gilas Pilipinas pool member Kobe Paras) still need some seasoning but if the team gets some steady veteran support in the offseason it should fortify its legs in the league.
So exciting times in Minnesota anew? Definitely and Wolves fans should expect better things from their team next season. A solid pack of Timberwolves are coming and the league should take notice.
Michael Angelo S. Murillo has been a columnist since 2003. He is a BusinessWorld reporter covering the Sports beat. msmurillo@www.bworldonline.com
Any trade for Paul George would have been a huge gamble. Given how he telegraphed his intentions for his 2018 free-agency foray, he positioned himself as an expensive one-year rental. It’s why most would-be suitors refrained from making a pitch for him.
It’s why the Lakers, his preferred employers, stayed away; he looked headed to his hometown, anyway. And it’s why the few serious ones deemed him the last piece to a championship puzzle in the era of the dynastic Warriors. When Day One of legal player swaps became history, however, none of the usual suspects got him; instead, the Thunder wound up nabbing him in a certified shocker of a deal that the Pacers could have — and probably should have — rejected.
Indeed, the Thunder won big in the arrangement. First, they didn’t have to tear down their roster to claim George; all they coughed up in exchange were Victor Oladipo (a so-so beyond-the-arc shooter and iffy passer off the drive, significant flaws in today’s pace-and-space setting) and Domantas Sabonis (a low-first-round prospect behind in development). More importantly, they acquired the marquee name they need to burn rubber alongside newly minted Most Valuable Player Russell Westbrook. For the immediate future, the development allows them to propel their progress post-Kevin Durant. In the longer term, it provides them with the ammunition they require to convince their resident star to stay.
Needless to say, the Thunder are angling to both get Westbrook to bite the supermax carrot and keep George in the fold. The hope is that the one-two punch will be as good on the court as it looks on paper. Their talents appear complementary; they may be equally hungry for the rock, but their skill sets underscore their potential for a higher ceiling together than separately. Sure, their numbers will be depressed, but so will their burden; the ideal has them welcoming the help they give to each other.
In any case, the Thunder have gone all in, and, if nothing else, they’ve laid the groundwork for an interesting season in transition. They’re crossing their fingers Westbrook realizes that one-man shows in a team sport aren’t sustainable. Likewise, they’re betting George gets to like their professional but cozy vibe enough to abandon plans to move to the Lakers. A humongous risk? Of course, albeit one with considerable upside, and one they simply had to take in the final analysis.
Anthony L. Cuaycong has been writing Courtside since BusinessWorld introduced a Sports section in 1994. He is the Senior Vice-President and General Manager of Basic Energy Corp.
THE STOCK MARKET failed to sustain gains posted in the last two trading sessions on Tuesday, signaling weakness in the absence of any positive drivers.
The bellwether Philippine Stock Exchange index (PSEi) shed 0.41% or 32.56 points to 7,833.96 points yesterday.
The broader all-shares index also fell 0.17% or 8.11 points to 4,696.90 points.
“The numbers presented above are just a handful of a growing body of objective evidence pointing to and raising concerns over a developing weakness in the market. At best, we could be matching the character of 2015 trades,” read the market recap of Philstocks Financial, Inc. on Tuesday.
Harry G. Liu, president of Summit Securities, Inc., said the market continues to test both resistance and support levels and will need more catalysts to bring the PSEi back to 8,000.
“In the long term, it is still going through consolidation while waiting for a catalyst to push to the 8,000 level,” Mr. Liu said in a phone interview on Tuesday, noting that the prolonged crisis in Marawi may be contributing to present uncertainties.
“[I]t has been our familiar refrain that the markets needs a fresh and positive catalyst to push prices higher and past existing records,” Philstocks said.
“The overall consensus outlook for the Philippine economy continues to be robust. Forecast numbers still positions us to be among the fastest in terms of growth. This alone could be an overriding reason for the sustained attractiveness of Philippine risk assets,” the report added.
Only two sectors posted gains on Tuesday. Services rose 0.38% or 6.44 points to 1,687.95 and industrials inched up 0.06% or 7.13 points to 11,045.19.
On the other hand, property dropped 0.67% or 24.8 points to 3,629.85; mining and oil declined 0.52% or 66.71 points to 12,639.56; financials slid 0.44% or 8.61 points to 1,937.32; and holding firms went down 0.32% or 25.7 points to close the session at 7,851.85.
Value turnover reached P4.74 billion, slightly lower than the P4.89 billion on Monday, with 1.53 billion shares changing hands.
Foreigners dumped their shareholdings yesterday with net selling logged at P508.48 million, a turnaround from the net purchases of P268.27 million seen the prior session.
Advancers outnumbered losers at 109 to 94, while 41 issues were unchanged.
Other Southeast Asian stocks slipped on Tuesday as risk appetite took a hit after North Korea test-launched a ballistic missile.
The launch of the missile, which landed in Japan’s Exclusive Economic Zone, came days before leaders from the Group of 20 nations are due to discuss steps to rein in Pyongyang’s weapons programs.
The Jakarta Composite Index led the losses in the region, falling 0.6%.
Meanwhile, Singapore inched down 0.4% and Vietnam shares fell 0.5%. — Janina C. Limwith Reuters
VERSAILLES/PARIS — France’s new president, Emmanuel Macron, told parliament in a ceremonial address on Monday that he would seek direct approval from voters in a referendum if parliament failed to sign off his intended institutional reforms quickly enough.
French President Emmanuel Macron walks through the Galerie des Bustes (Busts Gallery) to access the Versailles Palace’s hemicycle for a special congress gathering both houses of parliament (National Assembly and Senate), near Paris, France, July 3, 2017. REUTERS/Etienne Laurent/Pool TPX IMAGES OF THE DAY
Elected only two months ago by a hefty majority, Mr. Macron told the lawmakers of both houses, summoned especially to the Palace of Versailles, that he wanted to cut the number of lawmakers by a third, curb the executive’s role in naming magistrates, and introduce a “dose” of proportional representation.
Mr. Macron’s upstart Republic on the Move party has secured a comfortable majority in the National Assembly — but France’s youngest leader since Napoleon made clear his impatience to complete the reshaping of the political landscape that he has begun.
“The French people are not driven by patient curiosity, but by an uncompromising demand. It is a profound transformation that they expect,” Mr. Macron told the specially convened joint session of parliament.
“I want all these deep reforms that our institutions seriously need to be done within a year. These reforms will go to parliament but, if necessary, I will put them to voters in a referendum.”
Mr. Macron also pressed his case for reform of Europe.
An ardent advocate of deeper European Union integration who put reviving Europe’s Franco-German axis and treaty reform at the center of his presidential campaign, Mr. Macron said excessive bureaucracy had fueled euroskepticism among the public.
“The last 10 years have been cruel for Europe. We have managed crises but we have lost our way,” Mr. Macron said.
“I firmly believe in Europe, but I don’t find this skepticism unjustified.”
Mr. Macron, whose centrist platform has routed both the traditional rightist and leftist parties of government, is not the first French leader to convene a so-called Congress of both houses, though past presidents have tended to use it in times of crisis or for constitutional reforms.
Mr. Macron’s aides had said that, by bringing parliament’s 925 lawmakers to the 17th century palace built outside Paris by Louis XIV — the ‘Sun King’ — the president was seeking to restore old-fashioned grandeur to the role.
‘JUPITERIAN’ PRESIDENT
Mr. Macron himself has said he plans a “Jupiterian” presidency — as a remote, dignified figure, like the Roman god of gods, who weighs his rare pronouncements carefully. It would be a marked break from his unpopular and often-mocked predecessor Francois Hollande’s man-of-the-people style.
While many in France still hold dear the trappings of presidential power, Mr. Macron’s style has grated with others who lament the strong powers that the constitution drawn up by the war hero Charles de Gaulle bestows on the presidency.
A commanding parliament majority, including dozens of legislators who are new to politics, has tightened Mr. Macron’s grip further still.
Nonetheless, his opponents said his address was light on details.
“We’re none the wiser coming out than we were going in,” said far-right leader Marine Le Pen, who Mr. Macron defeated in the presidential run-off vote. “He speaks of a dose of proportional representation, but we don’t know if he’s talking about a small dose or a big dose.”
Ms. Le Pen blames France’s electoral system for her National Front party’s poor representation in parliament.
Beyond the plans for institutional reform, which had been outlined in his campaign manifesto, there were few concrete announcements and no specifics on the far more controversial measures that he plans, most notably in liberalizing a highly regulated labor market.
Many of those were likely to be sketched out by Mr. Macron’s prime minister, Edouard Philippe, when he addresses parliament on Tuesday. — Reuters
MOSCOW — Russian President Vladimir Putin and Chinese leader Xi Jinping were due to hold formal talks Tuesday against a backdrop of mounting tensions over North Korea ahead of G20 summit talks with Donald J. Trump.
The meeting in Moscow comes as North Korea claimed the launch of its first intercontinental ballistic missile, and US President Trump urged China to “end this nonsense once and for all.”
Chinese state news agency Xinhua reported Messrs. Putin and Xi “agreed to jointly push for a proper settlement of the peninsula issue via dialogue and negotiation” at a closed Kremlin meeting Monday evening on the eve of the official talks.
Beijing — North Korea’s closest diplomatic ally — and Moscow have called repeatedly for calm on all sides, but Mr. Trump has warned Washington’s patience with Pyongyang is nearing an end.
Messrs. Xi and Putin once again slammed the US Terminal High Altitude Area Defense missile system installed in South Korea to protect against the North, Xinhua said. Both leaders argue that it threatens the strategic balance in the region.
The Kremlin gave no details on what was discussed at the “informal” tete-a-tete Monday.
While the latest tensions over North Korea figured high on the agenda, the main focus of the Putin-Xi meeting was set to remain boosting growing trade and political ties between the two increasingly close partners.
The giant neighbors are expected to oversee the inking of a raft of deals worth billions of dollars as Moscow continues a pivot towards China it has ramped up since ties with the West slumped over Ukraine.
Ahead of his arrival in Moscow Mr. Xi said that relations with Russia were currently enjoying their “best time in history” as he and Putin have struck up a close relationship.
The Kremlin strongman is set to present Mr. Xi with a prestigious Russian state award at the Kremlin.
After their meeting in Moscow the two leaders are set to head to the G20 summit in Hamburg where they will come face-to-face with Mr. Trump, a first meeting for Mr. Putin with the US president. — AFP
FRANKFURT — Austria has moved four armored vehicles close to its border with Italy to guard against migrants and will likely set up controls on a key trade crossing “very soon,” defense ministry officials said on Tuesday.
The planned controls will include the busy Alpine Brenner pass, a defense ministry spokesman said — a move that Italy warned last year would break European Union (EU) rules on free movement.
“I expect border controls will be introduced very soon,” Defense Minister Peter Doskozil told daily newspaper Kronenzeitung in an interview published on Tuesday.
Both Italy and Austria are members of the EU’s Schengen open-border zone, but free movement has been jeopardized by the reimposition of controls at many crossings across the bloc since the surge in migrants seen in 2015/16.
Mr. Doskozil’s spokesman said there was no concrete timetable for the new controls.
“But we see how the situation in Italy is becoming more acute and we have to be prepared to avoid a situation comparable to summer 2015.”
Italy has taken in more than 80,000 refugees and migrants so far this year. — Reuters
SEOUL — North Korea launched an intercontinental ballistic missile (ICBM) Tuesday as the US prepared to mark its Independence Day, triggering a Twitter outburst from President Donald J. Trump who urged China to “end this nonsense once and for all.”
Analysts said the rocket could bring Alaska within range of the North’s devices.
The launch was the latest in a series of provocations that have ratcheted up tensions over the nuclear-armed North’s weapons ambitions, and came days after Seoul’s new leader Moon Jae-In and Mr. Trump focused on the Pyongyang threat in their first summit.
The “unidentified ballistic missile” was fired from a site in North Phyongan province, the South’s Joint Chiefs of Staff said in a statement, and came down in the East Sea, the Korean name for the Sea of Japan.
It flew for “more than 930 kilometers,” they added.
The device may have come down in Japan’s exclusive economic zone, a spokeswoman for Tokyo’s defense ministry told AFP — waters extending 200 nautical miles from its coast.
Japanese Chief Cabinet Secretary Yoshihide Suga said the missile flew “for about 40 minutes” — an unusually long flight time, with Prime Minister Shinzo Abe telling reporters: “This launch clearly shows that the threat has grown.”
The US, Japan and South Korea will hold a summit on the sidelines of this week’s G20 meeting on the issue, he added. “Also I will encourage President Xi Jinping and President Putin to take more constructive measures.”
The United Nations has imposed multiple sets of sanctions on Pyongyang over its weapons programs, which retorts that it needs nuclear arms to defend itself against the threat of invasion.
It has a goal of developing a missile capable of delivering a warhead to the US mainland — something that Mr. Trump has vowed “won’t happen.”
There are doubts whether the North can miniaturize a nuclear weapon sufficiently to fit it onto a missile nose cone, or master the technology needed for it to survive reentry into the Earth’s atmosphere.
But analysts say the isolated, impoverished country has made great progress in its military capabilities in the years since young leader Kim Jong-Un inherited power.
TRUMP TAKES TO TWITTER
In response to the latest launch, Mr. Trump asked on Twitter: “Does this guy have anything better to do with his life?”
US Pacific Command confirmed the test and said it was a land-based, intermediate range missile that flew for 37 minutes and did not pose a threat to North America.
But David Wright, of the Union of Concerned Scientists, said the available figures implied a significant increase in the range of Pyongyang’s missiles.
The missile would have had to have flown on a “very highly lofted trajectory” and reached a maximum altitude of more than 2,800 kilometers, he said.
“If the reports are correct, that same missile could reach a maximum range of roughly 6,700 km on a standard trajectory,” he wrote on the organization’s allthingsnuclear blog.
“That range would not be enough to reach the lower 48 states or the large islands of Hawaii, but would allow it to reach all of Alaska.”
INDEPENDENCE DAY
The North has carried out multiple launches since Mr. Moon — who backs engagement with the North but also stresses the need for sanctions — was elected in May, and he summoned the South’s National Security Council in response to the latest firing.
Shea Cotton, a researcher at the James Martin Center for Nonproliferation Studies in the US, suggested the launch was deliberately timed to coincide with the anniversary of the US declaration of independence.
“It’s already 4th of July in North Korea,” he said on Twitter. “I somewhat suspect they’re shooting off some fireworks today specifically because of that.”
Washington, South Korea’s security guarantor, has more than 28,000 troops in the country to defend it from its Communist neighbor, and fears of conflict reached a peak earlier this year as the Trump administration suggested military action was an option under consideration.
There has also been anger in the United States after Otto Warmbier, an American student detained in North Korea on a tourist trip around 18 months ago, was returned home in a coma in June, dying days later.
Mr. Trump has been pinning his hopes on China — North Korea’s main diplomatic ally — to bring pressure to bear on Pyongyang.
Last week he declared that Beijing’s efforts had failed, but returned to the idea on Twitter following the launch:
“Perhaps China will put a heavy move on North Korea and end this nonsense once and for all!”
But a former foreign policy adviser to Hillary Clinton warned that his comments risked undermining the credibility of both the US deterrent, and its assurances to its allies in Seoul and Tokyo. She added: “Picking a twitter fight with a nuclear-armed dictator is not wise — this is not reality TV anymore.” — AFP
MOSCOW — Russian President Vladimir Putin and Chinese leader Xi Jinping were due to hold formal talks Tuesday against a backdrop of mounting tensions over North Korea ahead of G20 summit talks with Donald J. Trump.
The meeting in Moscow comes as North Korea claimed the launch of its first intercontinental ballistic missile, and US President Trump urged China to “end this nonsense once and for all.”
Chinese state news agency Xinhua reported Messrs. Putin and Xi “agreed to jointly push for a proper settlement of the peninsula issue via dialogue and negotiation” at a closed Kremlin meeting Monday evening on the eve of the official talks.
Beijing — North Korea’s closest diplomatic ally — and Moscow have called repeatedly for calm on all sides, but Mr. Trump has warned Washington’s patience with Pyongyang is nearing an end.
Messrs. Xi and Putin once again slammed the US Terminal High Altitude Area Defense missile system installed in South Korea to protect against the North, Xinhua said. Both leaders argue that it threatens the strategic balance in the region.
The Kremlin gave no details on what was discussed at the “informal” tete-a-tete Monday.
While the latest tensions over North Korea figured high on the agenda, the main focus of the Putin-Xi meeting was set to remain boosting growing trade and political ties between the two increasingly close partners.
The giant neighbors are expected to oversee the inking of a raft of deals worth billions of dollars as Moscow continues a pivot towards China it has ramped up since ties with the West slumped over Ukraine.
Ahead of his arrival in Moscow Mr. Xi said that relations with Russia were currently enjoying their “best time in history” as he and Putin have struck up a close relationship.
The Kremlin strongman is set to present Mr. Xi with a prestigious Russian state award at the Kremlin.
After their meeting in Moscow the two leaders are set to head to the G20 summit in Hamburg where they will come face-to-face with Mr. Trump, a first meeting for Mr. Putin with the US president. — AFP
Austria blocks migrants at border FRANKFURT — Austria has moved four armored vehicles close to its border with Italy to guard against migrants and will likely set up controls on a key trade crossing “very soon,” defense ministry officials said on Tuesday.
The planned controls will include the busy Alpine Brenner pass, a defense ministry spokesman said — a move that Italy warned last year would break European Union (EU) rules on free movement.
“I expect border controls will be introduced very soon,” Defense Minister Peter Doskozil told daily newspaper Kronenzeitung in an interview published on Tuesday.
Both Italy and Austria are members of the EU’s Schengen open-border zone, but free movement has been jeopardized by the reimposition of controls at many crossings across the bloc since the surge in migrants seen in 2015/16.
Mr. Doskozil’s spokesman said there was no concrete timetable for the new controls.
“But we see how the situation in Italy is becoming more acute and we have to be prepared to avoid a situation comparable to summer 2015.”
Italy has taken in more than 80,000 refugees and migrants so far this year. — Reuters
BRUSSELS — The European Union (EU) and Japan expect to commit to signing a free trade deal on Thursday, the EU said, in what both see as a push back against a feared US turn toward protectionism under President Donald J. Trump.
Japanese Prime Minister Shinzo Abe speaks to the media upon arrival at his official residence in Tokyo on July 3, 2017. Abe on July 3 acknowledged a major defeat in Tokyo assembly elections, as the official result showed his ruling party lost more than half of its seats in the July 2 vote. / AFP PHOTO / KAZUHIRO NOGI
Confirming on Tuesday that Japanese Prime Minister Shinzo Abe would meet heads of EU institutions in Brussels on the eve of a G20 summit with Mr. Trump and other world leaders in Germany, the European Council said: “Leaders are expected to announce a political agreement on the EU-Japan free trade agreement.”
That would be short of a final accord ironing out all the commercial intricacies between two of the world’s biggest economies and EU officials said on Tuesday that some key issues still needed to be settled before Thursday’s EU-Japan summit.
However, confirming Mr. Abe’s attendance is a sign of confidence that a deal will be ready for his signature and also puts pressure on trade negotiators to secure at least outline agreements on opening up each other’s markets, including in the trickiest areas such as Japanese cars and European farm produce.
Both sides, having seen Mr. Trump pull back from free trade relationships, are keen to show they remain committed to removing barriers they say hamper growth.
“It is important for us to wave the flag of free trade in response to global moves toward protectionism by quickly concluding the free trade agreement with Europe,” Mr. Abe told ministers at a meeting on Tuesday about the EU negotiations.
“This agreement is also important for our growth strategy. We will negotiate with all our energy until the very end to achieve the best deal for Japan.”
Mr. Abe will meet European Council President Donald Tusk, who speaks for the 28 EU national leaders, and European Commission President Jean-Claude Juncker, the bloc’s executive head.
Mr. Juncker’s Trade Commissioner Cecilia Malmstrom was in Japan at the weekend and said after her talks that she was “quite confident” that a broad agreement could be announced on Thursday. EU officials had said that Mr. Abe would only visit Brussels if both sides were certain that the political agreement would be signed.
Ms. Malmstrom said: “You can do good, fair, transparent and sustainable trade agreements where you win and I win, and not the American view, which seems to be, ‘You lose and I win.’”
Messrs. Abe, Tusk and Juncker will go on to Hamburg on Friday for the G20 summit.
The host, German Chancellor Angela Merkel, is expected to lead calls for Mr. Trump to keep trade open. He pulled out of the Trans-Pacific Partnership (TPP) with Japan and 10 other states on his first day in office in January. US-EU talks on a trade pact called Transatlantic Trade and Investment Partnership or TTIP have been in limbo since then.
Volker Treier, head of the foreign trade unit of Germany’s DIHK Chambers of Commerce, said on Tuesday that the state of world affairs was such that a trade war with the United States could not be ruled out.
Japan and the EU launched their bilateral negotiations in 2013 but have been struggling to achieve breakthroughs in key areas, such as Japan scrapping tariffs on EU cheese and wine and Europe giving greater access for Japanese cars and car parts.
Although Japan and the EU account for about a third of global gross domestic product, their trade relationship has room to grow — also by a third according to EU officials, who see a deal boosting the EU economy by 0.8% and Japan’s by 0.3% long-term. — Reuters Japanese Prime Minister Shinzo Abe — AFP
(Below is the keynote speech delivered by Manuel V. Pangilinan, Chairman of Metro Pacific Investments Corp. during the BusinessWorld Economic Forum at Shangri-La at the Fort on May 19)
PANGILINAN: We hope for a Philippines that provides opportunities for our people, without regard to privilege or pedigree. (Photo: Bernard Testa/InterAksyon)
I would like first to thank BusinessWorld and Miguel Belmonte for this opportunity to be with you today. No, I did not invite myself to speak – but I guess it helps to be a proud owner of the paper.
Our group invested in BusinessWorld six years ago. So yes, technically our reporter janina lim works for me! God bless you, hija!
Let me congratulate Miguel, the editors, reporters, and staff of BusinessWorld. For the first time in many years, BusinessWorld has turned profitable for the full year 2016 — a feat, which Prime Minister Virata and Professor Raul Fabella noted took more than a decade to accomplish!
So I guess there is hope for TV 5!
Let me also thank the sponsors of this forum. And special congratulations to sponsor Turkish Airlines in particular.
Turkish airlines has been named Europe’s best airline for six years straight. But now it has a new title: Turkish Airlines — official airlines of the Asean.
I understand the Ambassador of Turkey is here. Welcome, Ms. Ambassador.
I have only one request if Turkey is to become a member of Asean. Turkey can join Asean — but it may not join SEABA!
Growth drivers
This forum seeks to identify the engines which could drive long-term growth of our country.
I may suggest three drivers:
First, the government’s tax reform for acceleration and inclusion; second, infrastructure; and third, investment in businesses which could propel growth. There could be a fourth game changer – gas in the south china sea.
Let me now speak about the first driver: the government’s Comprehensive Tax Reform Program or CTRP.
CTRP will reconstitute our tax system to make it:
Simpler and fairer — by decreasing the number of income tax brackets from 7 to 6, reducing the rate in most brackets, especially for those with lower incomes, simplifying requirements for small taxpayers; more efficient — limit exemptions of VAT to necessities like raw food, education, and healthcare; raise excise tax on fuel and automobiles; more friendly for business — lower the tax rates for corporates.
With these changes, CTRP aims to raise the requisite funds to finance infrastructure in part, as well as education, social safety nets, and health. The goal is to raise incremental resources by P2.2 trillion over six years – or P366 billion a year.
CTRP is central to dutertenomics; it is in fact the catalyst to the government’s 10-point economic program. That is why I believe the business sector should support it.
President Duterte and [Finance] Secretary Dominguez, and the DoF team, should be congratulated for crafting this pivotal tax policy.
Second growth driver – infrastructure.
The fiscal space which CTRP could provide, complemented by ample liquidity here and abroad, could mean financing available for infrastructure – the 2nd growth driver I turn to now.
We all know the government plans to spend a massive P8.4 trillion on infrastructure until 2022, with spending rising from 5.4 percent to 7.4 percent of GDP by the time president Duterte leaves office.
To cover this prodigious outlay, the plan is to combine the resources raised by CTRP with local borrowings and ODAs, in the proportion of 80-20, respectively. The budget deficit will therefore rise from 2.7 percent of GDP in 2016, to about 3 percent between now and 2022.
Central to this financing plan is the assumption that GDP will continue rising robustly over the period, to accommodate government’s rising debts. The plan is of course not totally without risks — if for some reason, our growth targets are missed, the 3% debt cap could get breached, with possibly unpleasant consequences. That’s why it’s important for business to support in whatever way it can to keep the GDP engine going at 6 to 7%, or better.
Hybrid PPP approach
As well, government has decided to adopt the “Hybrid PPP approach” to infrastructure — government to build the projects and, upon completion, bid out the operations and maintenance of it.
This hybrid approach has prompted some conversation: First, do we have the capacity to execute these large projects? Are there enough local contractors and sub-contractors with the necessary size, experience, and skills to execute them? And within the contracting and supply context, can the private sector participate and help?
Second, considering that a good portion of infra spend will be financed by debt, how can these be effectively serviced?
In regard to this Hybrid PPP, let me speak about the subic-clark expressway model. This tollway was built by government on JICA financing, and ultimately privatized by way of a concession agreement, not O&M.
From our perspective, this was a win-win formula for both government and business: first, the tollways got done; second, tollway fees paid to government are sufficient to service JICA’s long-term loan; third, the concessionaire and not the government, shoulders the O&M expenses; fourth, the concession agreement enhances the equity value of our tollways group because it confers a quasi-ownership interest in the business — which an o&m contract doesn’t.
We’re also aware that certain existing infra requires immediate attention – NAIA and MRT-3, in particular. The government appears to be leaning towards Clark Airport — frankly, this is the only viable option we have for now. NAIA is filling quickly to the brim, and a new airport will take years to complete.
As to MRT-3, what more can be said? In 2016: 2,619 trains removed from daily run due to glitches, 63 service shutdowns, 586 emergency passenger disembarkations.
Third growth driver — investing in business
The third driver refers to those businesses that infrastructure and CTRP intend to support. Remember that both infrastructure and taxes are enablers of business — an airport is built or expanded if tourism and other businesses in its vicinity can be established or developed. Investment in the tourism ecosystem — in hotels, inns, restaurants, markets, entertainment — has to be made principally by the private sector. Without these investments, an airport by itself cannot be economically justified.
Of course, infrastructure breeds its own collateral businesses to feed its requirements — cement and steel plants, aggregates, labor and contracting services.
So, which businesses? I say those which create jobs – businesses with significant labor input:
First, businesses unique to their geographic and resource advantages, such as tourism and mining. These are located in rural areas where most poverty exists. Tourism is labor-intensive and plays to the strength of our people’s service orientation. Mining is capital intensive, has significant export potential, and is located in outlying areas.
Stop redistributing poverty
Speaking of mining, we welcome a break in the impasse on policy with the appointment of a new DENR secretary. I’m told Secretary Cimatu went to NU before going to PMA, then took his MBA at the Ateneo. Hopefully, we can have an open dialogue with him, beginning with this topic – how to dethrone La Salle.
A second category are by-products of our people’s migration abroad, and of global ageing. These are medical tourism and retirement homes, both of which are labor-intensive.
Third, agriculture.
Despite its critical place in our economy, it has regrettably been accorded step-child attention. Agriculture accounts for about 27% of our labor force, but only 8.8% of our GDP. Most importantly, 70% of our poor live in rural areas. Of the estimated 21.6 million poor, some 17 million are directly and indirectly dependent on agriculture.
The anemic performance of agriculture must be attributable mainly to the comprehensive agrarian reform program, or CARP.
There are many reasons why CARP has failed in its almost 30 years of life.
With its five-hectare ownership limit, CARP has effectively discouraged private capital from agriculture. It has presumed that farmers will become entrepreneur-businessmen by owning their land. But with no more than a hectare under cultivation on average, how on earth can we expect our farmer-entrepreneur to make a living?
Dr. Fabella once wrote – “to everything there is a season, and now is the time to let go. We now have to redirect our agricultural focus from land equity to farm efficiency. Private capital must be attracted back into agriculture.”
It is time, in other words, to stop redistributing poverty.
Areas for commercial farming – to coconuts, cocoa, rubber, coffee and staples such as rice, sugar and corn – must be opened up and leased.
When I was in China recently, I was told that China can buy all the fruits we can produce. And right on our doorstep, Indonesia imports about 4.0 million tons of raw sugar each year.
Investing in productive, diversified agriculture will bring in agri-processing plants and our ability to export agri-products. These will provide sustainable jobs to the countryside and deploy excess labor from small farms. We’re doing this by propagating coconut oil mills in various parts of the country where coconuts are abundant. Remember world population will grow from 7.5 billion people this year to 11.2 billion by the year 2100. Food therefore must figure into our long-term planning.
Resources in the South China Sea
Finally, the South China Sea, and its resource potential.
We know that Malampaya will start depleting in 2024. It is imperative that we start looking for alternative sources of gas now — failing which, gas has to be imported. We simply cannot leave the three gas plants of 3,000 MWs in Batangas stranded — brownouts will ensue, for certain. The first critical step is to determine if there are indeed commercial gas resources in the area.
In 2012, Philex petroleum disclosed the highlights of an interpretation report of new 3D and 2D results, together with the vintage data acquired earlier, over service contract 72. A best estimate of contingent resources in the north bank was reported — equivalent to about 2.6 trillion cubic feet of gas — about the size of Malampaya — plus oil and condensate gas of 65 million barrels.
There is of course no assurance at this time that these estimates are accurate until further drilling and technical evaluations are made.
But we’re encouraged that the Duterte government has provided an accommodating environment with its open, constructive approach to China. A bilateral consultation mechanism has recently been formed to agree a code of conduct in the region.
It is time to close. But before I do, let me congratulate the two Gilas teams for winning the SEABA tournament. Dutertenomics seem to represent a workable, actionable plan for the economy and its growth prospects. Combined with the President’s strong political will and bias for action, supported by his continued high trust rating, it stands a good chance of execution. So this inspires hope.
Leaders after all should be merchants of hope.
We must hope for a great future for our country – a future in which we can match our strength with our moral values, our wealth with wisdom, our power with purpose.
We must hope for a Philippines that provides the opportunities for, and raises the welfare of all our people, without regard to privilege or pedigree.
We must hope for a country which protects our environment, rewards fulfillment in sports, recognizes achievements in business, in arts, and in our armed services.
And we must hope for a Philippines that commands respect in the world – for our people, for our culture and our history.
Any trade for Paul George would have been a huge gamble. Given how he telegraphed his intentions for his 2018 free-agency foray, he positioned himself as an expensive one-year rental. It’s why most would-be suitors refrained from making a pitch for him.
