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A changed man?

Ultimate Fighting Championship superstar Conor McGregor made it a triumphant return to the Octagon on Sunday (Manila time) at “UFC 246,” defeating Donald “Cowboy” Cerrone in the headlining welterweight fight in just 40 seconds (!).

Coming off a controversy-filled loss in his last fight to Khabib Nurmagomedov in October 2018, McGregor showed solid form against Cerrone, pounding the latter with shoulder strikes and punctuating it with a head-kick that all but signaled the end for the fighter with the most victories in the UFC.

But as much as impressive was McGregor’s UFC return after a 15-month layoff, what stood out for this space during Sunday’s event, and in the lead-up, actually, was how “The Notorious” was calmer and collected in how he went about things.

There was not so much of the devil-may-care attitude which bordered to being obnoxious that marked his previous fights — from pre-fight, during the fight and post-fight.

He was rather more “respectful” of his opponent and his team, the UFC and the fans, something that came few and far between in the past, if at all.

McGregor was cordial with Cerrone, even apologizing for being late in the weigh-in.

He also has good words to say to his conquered opponent and had a poignant moment after with Cerrone’s grandmother.

McGregor would eventually show his trademark bravado and antics in calling out the “big wigs” in the division after the fight, but it was not enough to overshadow the “tamer” demeanor he had for the most part of UFC 246.

These being said, it begs the question, “Is McGregor now a changed man?”

Well, it remains to be seen if this is a complete sea change for The Notorious or just an act.

But as an observer of the sport and the UFC as an organization, I hope this version of McGregor stays.

Definitely he is one of the more engaging fighters in all of mixed martial arts, combining skills and entertainment value.

Sometimes, however, the off-fight antics of his overshadowed those that happened in the Octagon, which was really unfortunate.

Just think of that last fight with Khabib — which in my opinion, while intriguing, was just stressful and “full of hate” right from the moment it was announced all the way to the after-fight fracas between the two camps.

In this latest fight, there was just balance from his end, entertaining and impressive at the same time which made the whole affair more eventful.

Here’s hoping McGregor stays this kind of course. For all his talent in the Octagon he already has a captive following but coupled with better sense of propriety and respect, he will be in better favor with more people.

 

Michael Angelo S. Murillo has been a columnist since 2003. He is a BusinessWorld senior reporter covering the Sports beat.

msmurillo@bworldonline.com

Aussie Open

Day One of the Australian Open came and went with 32 matches either suspended or postponed for today, but not for reasons players feared would affect the schedule. Even as decades-worst bushfires continued to ravage parts of the country, air quality turned out to be just fine for those who managed to take to the court; instruments continually measuring particulates churned out ideal numbers for competition, in stark contrast to conditions that affected qualifying matches last week. Instead, rain proved the tournament’s nemesis, limiting contests to Melbourne Park’s three arenas with retractable roofs once it made its presence felt.

To be sure, the onslaught of water brought about other problems for organizers. For instance, Rod Laver Arena suffered from leaks during defending champion Novak Djokovic’s set-to against Jan-Lennard Struff. Not that they mattered; he went on to win as expected, albeit in four sets. Ditto perennial favorite Roger Federer, who made short work of Steve Johnson. On the distaff side, Serena Williams’ bid to tie Margaret Court for the most Grand Slam titles ever got off to an easy start; Anastasia Potapova managed to claim a mere three games all told. Hometown heroine Ashleigh Barty had to put in considerably more effort, coming from a set down to win even as she insisted that she never lost control.

Time will tell if the Australian Open will keep siding with conventional wisdom. For the most part, it has traditionally done so because of the premium it places on experience. From sweltering heat to rain to air, it offers up extraneous variables that enhance its reputation as a grueling test of wills for would-be contenders. How and when the attrition will occur this year remains subject to speculation, but the hope is that little to nothing off the court will affect actual performances. Of course, veterans know staying locked in regardless of circumstance is part and parcel of success.

Tennis has invariably been touted as a sport that requires triumph over self. For all the qualifications of the given opponent on the other side of the net, the result is ultimately one’s to carve. It’s why the best of the best have been around for a while, and why so-called peers struggle to keep pace. The Australian Open may be a big question mark, but one thing is clear: those left standing in the end will have earned their place in the spotlight.

 

Anthony L. Cuaycong has been writing Courtside since BusinessWorld introduced a Sports section in 1994. He is a consultant on strategic planning, operations and Human Resources management, corporate communications, and business development.

Easing doing business in the Philippines

How difficult is it to do business in the Philippines in comparison to other economies?

One way to answer this complex question is to look at the annual Ease of Doing Business Index issued by the World Bank. As its name suggests, the Index ranks almost all the world’s economies according to how easy it is to do business. The Index is based on a study of laws, regulations, and practices in a given country, taking into account the following factors: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, and resolving insolvency.

In other words, the Index is used as an indicator of the simplicity of business laws and regulations and the level of protection for businessmen and their property rights. As such, the Index is often cited by legislators as a catalyst for the issuance of new laws and regulations to facilitate ease of doing business.

In the 2020 Ease of Doing Business Report, the Philippines ranked 95th among 190 economies. Although this ranking was a significant improvement from last year’s performance, the Philippines still ranks last among the founding members of the Association of Southeast Asian Nations — Singapore is ranked 2nd place, Malaysia 12th, Thailand 21st, and Indonesia is at 73rd place.

According to the World Bank, it takes an average of 13 procedures to start a business, nine procedures to register property, and 22 procedures to build a physical establishment in the Philippines. Once the business has been set up, the company makes 13 annual tax payments. If a contract is broken and a business needs to resolve a dispute with its customers or suppliers, it takes an average of 962 days to resolve an issue through our courts.

These inefficiencies have long been sought to be corrected by different Congresses. Fortunately, the Ease of Doing Business and Efficient Government Service Delivery Act of 2018 was signed and became effective on June 17, 2018. The Implementing Rules and Regulations (IRR) were passed on July 17, 2019.

The IRR seeks to provide simple and straightforward regulations for entrepreneurs, micro-, small-, and medium-sized businesses and ordinary citizens:

• All government agencies and offices in the Executive Department including Local Government Units (LGUs) and government-owned or -controlled corporations that issue licenses, clearances, or permits (LCPs) to business entities are covered.

• Each agency/office must submit a Citizen’s Charter which outlines a comprehensive checklist of requirements, step-by-step procedures, and schedule of fees.

• There are prescribed processing times for LCPS — a maximum of three working days for simple applications, seven working days for complex applications, and 20 working days for applications that require technical evaluations and other conditions, subject to qualifications.

• Each agency/LGU must adopt a Zero-Contact Policy where interactions between applicants and government employees are limited. Electronic submission of requests and requirements is preferred.

• Upon lapse of the processing time, submission of complete documents and payment of all fees, the LCP is automatically deemed approved or extended.

• The IRR prescribes penalties for: (a.) refusal to accept applications/requests and to act on them despite complete submission of documents and payment of fees; (b.) failure to give written notice of disapproval; (c.) imposition of additional irrelevant requirements or costs; (d.) failure to render service during regular working hours and within prescribed processing times; (e.) failure or refusal to issue receipts; and (f.) colluding with fixers. The penalties range from administrative liability and six months suspension to criminal liability, dismissal, and perpetual disqualification to hold public office, imprisonment of up to six years and a fine of not more than $40,000.

• A Unified Business Application Form will be used in processing new applications and renewals. This consolidates all the information for an application such as local taxes and clearances, sanitary permits, zoning clearances, and the like. In the same vein, there are streamlined procedures for securing fire safety clearances.

• The IRR establishes a National Policy on Anti-Red Tape and Ease of Doing Business. This refers to a comprehensive business registration and regulatory management policy to improve competitiveness and ease bureaucratic and regulatory burdens on businessmen. It also adopts a Whole-of-Government approach, where agencies focus on providing integrated and streamlined public service.

• Finally, the IRR creates an Anti-Red Tape Authority and Advisory Council. Essentially, these bodies implement the IRR and craft policies on business registration and regulatory management.

Any significant improvement in the ease of doing business in the Philippines requires a whole-of-country effort. The efforts by legislators, government agencies, and private corporations are a welcome start to improving the business climate. Hopefully, these efforts will significantly reduce the entry barriers to business which, ultimately, will lead to economic efficiency for the benefit of the ordinary Filipino.

 

Paula P. Plaza is an Associate of the Litigation and Dispute Resolution Department of ACCRALAW Offices.

ppplaza@accralaw.com

(02) 8830-8000.

Education quality beyond basic education

The issue of education quality has just been highlighted by reports on the Department of Education’s (DepEd) participation in the 2018 cycle of the Program for International Student Assessment (PISA). Implemented by the Organization for Economic Cooperation and Development (OECD), PISA tests students’ ability to apply knowledge they gained from formal education to “everyday situations.”

Given our very dismal PISA results, DepEd is now pushing its Sulong EduKalidad program as a response to the rapidly changing education landscape.

However, the issue of education quality is not just a concern at the level of basic education (elementary and high school levels). Tertiary level or higher education institutions (HEIs) must also be accountable.

Allow me then to outline below some policy propositions that could help nurture further the development of Philippine HEIs. These are ideas that I and a team of other researchers drew out of a series of case studies done on selected HEIs, Local University and Colleges (LUCs) in particular, in 2015.

As there exists a big disparity between HEIs with regard to financial resources and capacity, we need to promote and strengthen partnerships among HEIs to facilitate co-learning and capacity building. These efforts serve as a venue to build learning and capacity. HEI “best practices” even on governance aspects such as resource generation, effective school management, program development, research, and community engagement, should be considered.

We should also promote and strengthen partnerships among HEIs and key stakeholder organizations (e.g., accrediting agencies, government organizations, and civil society organizations). As knowledge partners, HEIs, together with pertinent organizations, can develop programs for capacity development. A “knowledge alliance” may be mustered to implement local development programs where HEIs can have strategic roles. This knowledge alliance can also engage local government units as partners in various co-learning activities.

In recognition of the need to establish Local College Boards (LCBs) for LUCs, it would be logical to establish LCBs that are to be convened by local governments and reactivate the National Education Coordinating Council. This mechanism shall provide spaces for parents, students, faculty members, and civil society to participate in the decision making. More so, the College Board should also serve as a means to monitor school governance and in effect “depoliticize” LUC administration. One variation on this suggestion is that LCBs could be inter-LGU or probably provincial or regional entities since LUCs do not only cater to the constituents of their respective LGUs.

At the national level, the Commission on Higher Education (CHED), Department of Education (DepEd), and Technical Education and Skills Development Authority (TESDA) should act in collaboration to provide more effective guidance to HEIs, especially in view of developments in the ASEAN.

Furthermore, incentives may encourage more private industry partnerships and investments with HEIs. As government becomes more burdened with several priorities, private groups assisting HEIs can have a big impact by facilitating the improvement of HEIs. In return, HEIs can contribute to private sector organizations by producing graduates with skills that match their desired competencies.

Local government units (LGUs) that have local colleges must be responsible for providing baseline financial support to the LUCs they established. National government must adequately support other public HEIs. Quality education requires a modicum of investment in the formal school system. On this count, government should craft laws to ensure LGU and National Government Agency (NGA) support for the improvement of HEIs’ performance.

There is a need to study how the Special Education Funds (SEF) facility of Philippine LGUs can be utilized in the improvement of LUCs. The SEFs, which are usually used for facilities and personnel development of elementary and secondary public schools, should be tapped. On the other hand, if LUCs, under the K-to-12 system, set part of their services for the provision of a senior high school program with TESDA-certified offerings, clearly the SEF can then be utilized to support these LUCs.

Finally, we should emphasize the Developmental Role of CHED towards LUCs. A 2018 study of 211 CHED Memorandum Orders (CMOs) revealed that 92 (43.60%) of these orders pertained to the agency’s regulatory role while 119 (56.40%) addressed its developmental roles. A more directed probe into these CMOs may be done to underscore and promote real HEI concerns that are related to education quality. In the case of basic education, teachers feel that they are overburdened by non-teaching work assignments. Is the case with public HEIs the same?

After all is said and done, national legislation needs to align existing policies and resolve hanging policy questions. There has to be a mechanism by which HEIs must be made accountable and responsive to national development plans. Education quality issues must address alignment to the national development agenda. HEIs, after all, are not just institutions of learning. They are part of the continuing nation-building efforts that have become even more challenged in the age of information and globalization.

 

Louie C. Montemar is an Education Fellow at the Stratbase ADR Institute, and a Professor of Sociology and Political Science.

Impeach be with you

REUTERS

Pinoys are punny.

When President Joseph “Erap” Estrada was being impeached, the predominantly Catholic Pinoy populace could not resist making a pun of the quintessential Christian greeting, “Peace be with you!”

“Impeach be with you!” was thus added to the glossary of Erap jokes.

That greeting — or rather, that wish — has now been added to the Trump lexicon, along with Trumputin and covfefe.

But there’s nothing funny about the current impeachment trial of President Donald J. Trump. For only the third time in the history of the United States, a president is being threatened with removal from office through the process prescribed by the Constitution.

President Richard Nixon could have made it four. But Nixon avoided impeachment by resigning before the House could vote on it.

The Democrat-controlled House of Representatives passed two Articles of Impeachment against Trump: one for Abuse of Presidential Powers and the second for Obstruction of Congress. The House is the sole entity empowered by the US Constitution to initiate the impeachment of the President. However, it is the Senate that is mandated to conduct an impeachment trial and decide on conviction or acquittal. A two-thirds majority vote is required to convict.

The first to be impeached was 17th US President Andrew Johnson. This was in 1868. But the Senate fell one vote short of the two-thirds majority needed for his removal from office. President Bill Clinton, POTUS 42, was impeached but was acquitted.

This makes Trump the 3rd to be impeached. But it is almost certain that he will be acquitted by a Republican-dominated Senate. The Senators will act as the jurors in the trial and will render the verdict. The Majority Leader, Senator Mitch McConnell has already declared that he has no intentions of conducting an “impartial” trial. So has Senator Lindsey Graham, GOP Chairman of the Senate Judiciary Committee. They both aver that the Democrats in the Senate also have no intentions to vote impartially, thus they are really all being hypocrites about claiming to conduct an impartial trial.

And yet, each Senator took an oath before the Chief Justice of the Supreme Court (who will preside over the trial) solemnly swearing that, “in all things appertaining to the trial of the impeachment of Donald John Trump, president of the United States, now pending, I will do impartial justice according to the Constitution and laws, so help me God.”

From the outset, that oath is intended to be violated. And Chief Justice John Roberts, as presiding officer, really has no power to do anything about it — unless he outright refuses to be party to a sham. He may not want to go down in history as having presided over a kangaroo court.

But things are not as cut-and-dried as they seem.

The Democrats are insisting that witnesses be allowed to testify at the trial to support the charges in the Articles of Impeachment. The majority of Americans agree, even while about half do not believe that Trump should necessarily be removed from office.

By allowing witnesses to testify, the GOP could at least give the trial a semblance of fairness. But the Republicans would rather not allow the potential witnesses to testify. They are former National Security Adviser John Bolton who has already branded as a “drug deal” one of the bases for impeaching Trump. The others, Acting Chief of Staff Mick Mulvaney and the non-partisan Government Accountability Office (GAO), have already made public statements that support the accusations against Trump.

On the other hand, the Republicans would still like to avoid the spectacle of a flat-out sham trial for fear of being punished in the elections in November this year. Several GOP Senators, including McConnell, are running for reelection. A kangaroo court could scandalize the American electorate, and the backlash could cause the GOP to lose control of the Senate.

Even assuming that Trump will win a second term, a Senate and House controlled by the Democrats could initiate a new impeachment process that could send Trump to jail.

In fact, when Trump steps down from the presidency there could be charges waiting for him, specifically in the Southern District of New York, that could send him to the slammer.

The Democrats, meanwhile, are hoping that at least four Republican Senators will vote in favor of a resolution to allow witnesses to testify. That would result in a 51-vote majority, enough to overcome any resistance from McConnell.

Observers have bewailed the fact that “only four GOP Senators” appear willing to consider voting for witnesses in the trial out of the many Republicans in the Senate. All the others appear to have been bullied by the Masters of the Party into blindly following orders and protecting Trump.

Of course, the main reason is because they are protecting their own political careers. But if they can give an impression of objectivity, even while supporting Trump, that would be a life-saver for them, thus the possibility of an affirmative vote for witnesses.

Mind you, these are officials who have sworn to do their duty to the country — over and beyond their own political and personal interests.

Indeed, President Manuel Quezon, who was president of the Philippine Commonwealth under the United States, would have shamed them with his immortal words, “My loyalty to my party ends where my loyalty to my country begins.”

Meanwhile there are thousands of young American soldiers deployed in danger zones overseas. These young men and women are under orders to lay down their lives for the United States, should that be required. While the politicians in Washington DC worry about their political interests, these thousands of young Americans, in the prime of their lives, are all expected to echo Alfred Lord Tennysons’ line in the epic poem, “The Charge of the Light Brigade”:

“Ours is not to reason why. Ours is but to do and die.”

What a shame. Impeach be with you!

 

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

Let’s go back to calling it Global Warming

By Faye Flam

AS SCIENTIFIC terms go, “climate change” is lame. It sounds like something created by committee. And it’s hard to understand as a crisis when we also hear scientists talking about ice ages and other natural changes to the climate happening throughout earth’s history. “Global warming” is something people have worried about for years, though. It’s essentially another term for the same thing, but conveys a planet-wide danger.

There’s good evidence that global warming is exacerbating the wildfires raging in southern Australia, but when we call it “climate change,” non-scientists may well wonder what the connection is and how it could have been averted. Call it “global warming,” though, and it’s intuitively easy to understand that if the world is getting warmer on average, then of course some hot places will get even hotter, and eventually some really hot places, such as southern Australia, will go up in flames.

Yet nobody seems to be talking about global warming these days.

Scientists sometimes argue that “climate change” is a broader, more accurate term — encompassing a wider range of phenomena. That’s fine for climate scientists communicating with one another, but the term is too broad to convey much of anything to the average person. And that’s a problem, because the future hinges on non-scientists mustering the political will to do something about it.

In 2014, researchers from Yale and George Mason Universities surveyed 1,657 Americans on the two terms, and found that many people were concerned about global warming, while far fewer were concerned about climate change. The latter term left people feeling disengaged and confused about what it was supposed to mean. (I wrote a piece about this report back when it came out.)

Is global warming still a scientifically correct term? Scientists recognized a century ago that at 93 million miles from the sun, our planet would be frozen to the equator if not for certain heat-trapping components of our atmosphere — especially carbon dioxide.

By the early 20th century, scientists predicted that burning coal would increase the amount of carbon dioxide in the atmosphere, which would in turn lead to a warmer planet. And now those predictions have come true — as increasingly sensitive measurements show, the total carbon dioxide in the atmosphere has increased more than 45% and the temperatures of our atmosphere and oceans have warmed exactly as predicted.

How, then, did the term “climate change” come to dominate its more descriptive predecessor? Some news organizations have pointed to memo, intended to be secret, from George W. Bush adviser Frank Luntz. In it, Luntz proposed avoiding the term “global warming” because it might scare people.

But the term “climate change” also caught on among scientists, who have argued that it’s more encompassing, including all the side effects of the carbon dioxide buildup — not only warming, but also changes in rainfall patterns, sea level rise, more dangerous storms, floods and droughts. Seen that way, “climate change” should be the scarier term, but ironically, the Yale/George Mason survey found non-scientists had the opposite reaction — global warming carried a much stronger suggestion of potential catastrophe.

Scientific terms, like all words, can take on a life of their own. They emerge and stick through historical accident. The term “big bang” to describe a prevailing theory of cosmology, for example, has come in for years of criticism because, among other reasons, the birth of the universe would not have made any noise.* But as science writer John Horgan put the matter in a 1995 issue of Scientific American, “Words are like harpoons. Once they go in, they are very hard to pull out.”

According to Dennis Overbye’s book Lonely Hearts of the Cosmos, a subsequent, more refined theory of our universe’s origin, inflation, was named by its primary inventor, Alan Guth, after the economic inflation that was going on at the end of the 1970s.

Mammals were named by Carl Linnaeus during the 1700s, and while there are many traits that make our kind of animal distinct from other vertebrates, he chose to label us with the Latin word for breasts. And really, if we’re honest, there’s no evidence that our species, Homo sapiens (wise man) was any wiser than Homo erectus or Homo neanderthalensis.

Nonetheless, these terms are locked in. In 1993, Sky and Telescope Magazine held a contest for readers to replace the big bang with something that better described the origin of the universe. While they got more than 1,000 entries, nothing stuck. And so there’s not much hope in getting scientists or the public to start calling the result of carbon emissions “global heating,” as James Lovelock has suggested, or “global climate disruption,” as former president Obama’s science adviser John Holdren once proposed.

But “global warming” does resonate with the public, it’s scientifically accurate, and it should be revived. It correctly implies a serious problem and creates a helpful sense of urgency. “Climate change” might still be useful in some contexts, but we should make sure that harpoon doesn’t get stuck.

BLOOMBERG OPINION

* The name traces its origin to BBC radio broadcasts by astronomer Fred Hoyle, who didn’t agree with the notion that our universe had expanded from some primordial seed. The name big bang apparently didn’t catch on till the late 1960s.

China’s viral immune system open to economic pox

By Pete Sweeney

HONG KONG — China’s political system has weak immunity to viruses. A bungled swine flu cover-up doubled pork prices last year. Now a mysterious outbreak of pneumonia is panicking citizens just days before the start of what’s usually a $150 billion spending boom: the lunar new year holiday. President Xi Jinping’s corruption purge may have made officials less venal, but not, apparently, more credible.

Concealing epidemics, environmental crises, and product scandals was once reflexive behavior for local governments. Burying bad news can head off career-ending popular protests. Now officials must manage the flow of facts and rumor about a virus that emerged in Wuhan, a large city in central China.

When it comes to infectious disease, local censorship slows medical response and facilitates transmission. That’s what happened with the Severe Acute Respiratory Syndrome (SARS) in 2003, a coronavirus similar to that found in Wuhan. SARS killed nearly 800 people, docked a percentage point from China’s economic growth, and erased up to $18 billion in travel, tourism and retail sales in Asia, according to one academic estimate.

Beijing scored transparency points with its handling of the H7N9 avian flu in 2013, but then fumbled its response to African swine flu, which some officials initially tried to cover up. Around half of China’s herd had to be culled.

Distrust is a tax that distorts consumption. After the Sichuan earthquake in 2008, some residents of the provincial capital disregarded official reassurances, hoarding bottled water and camping outside for months on end, refusing to believe their buildings were safe. The 2011 Fukushima nuclear accident in Japan caused a bizarre rush on iodized salt in China.

The coronavirus has already killed four and infected hundreds. It has spread overseas. With an estimated 400 million Chinese planning to travel for the holiday, the question is how many will still go and spend.

Xi’s massive purge of corrupt officials made him popular, but it was packaged with tighter control of media, and suppression of negative economic commentary. This encourages officials to report only good news, so some will naturally try to control disease outbreaks before they become public. When that backfires, the result is personal tragedy and economic waste.

REUTERS BREAKINGVIEWS

Private equity’s mountain of dry powder is a danger sign

By Nisha Gopalan

INVESTORS KEEP flocking to private equity in Asia even though returns are declining. They should take heed: Payouts are likely to get worse from here, rather than better.

The hunt for yield in a low-interest world has spurred institutional investors from China Investment Corp. to Japan’s Government Pension Investment Fund to join the rush into the alternative asset class. Private equity firms founded by former veterans of Warburg Pincus and KKR & Co. are seeking to raise at least $4.5 billion for new funds investing in China, Cathy Chan of Bloomberg News reported Thursday, in the latest sign of the region’s burgeoning appetite for nonpublic investments.

New York-based KKR, meanwhile, is targeting more than $12.5 billion for its fourth Asian fund, which would surpass the record $10.6 billion raised by China’s Hillhouse Capital Group in 2018. At the end of June, private equity firms in Asia were sitting on a record $361 billion of unspent capital, according to London-based market research firm Preqin.

The returns haven’t lived up to the hype. Funds focused on Asia generated an internal rate of return of 12.8% last year, down from 15.5% in 2018, according to Preqin. That’s below what investors could have made outside the region: North American funds chalked up an IRR of 16.4% in 2019 while those centered on Europe returned 18%.

Even brand-name private equity shops have sputtered. Hillhouse’s $10.6 billion fund saw its IRR slip by 5.16 percentage points between September 2018 and the third quarter of 2019. Over the same period, the MSCI Asia Pacific Index dropped 3.3%, according to data compiled by Bloomberg. KKR’s two existing Asian mega-funds have had varying success.

It’s getting harder for private equity firms to realize returns by selling companies on stock markets as the world wakes up to the reality that not all hot technology start-ups will be IPO winners. That follows disappointing debuts for high-profile names such as Uber Technologies Inc. and Lyft Inc., along with the collapse of WeWork’s US share offering last year.

Much of the private-equity action in Asia has focused on China, which has also had its share of setbacks. OneConnect Financial Technology Co., a unit of Ping An Insurance (Group) Co., cut the size of its US IPO by almost half last month, while Oyo Hotels is firing thousands of staff in China and India. Like WeWork and Uber, both companies are backed by Japan’s SoftBank Group Corp.

The US-China trade war has also had a damping effect, with some private equity-invested companies finding themselves embroiled in the tensions. Facial recognition start-up Megvii Technology Ltd. delayed its IPO in Hong Kong after it was included in a US blacklist cutting off its access to key American technology. Bytedance Inc., owner of the wildly popular video app TikTok, is now a subject of a US national security review, and is weighing the sale of a majority stake in the unit.

All that considered, it isn’t surprising that the value of private-equity backed trade sales dropped 14% to $28.5 billion last year, according to data compiled by Bloomberg, while share sales by private equity owners slumped 27% to $6.4 billion, declining for a third year to the lowest since 2013.

While the US-China phase one trade deal signed last week offers some hope of an improvement in conditions, money is still likely to keep piling up in Asian private equity. For one thing, there aren’t many better alternatives. Institutional investors need to diversify: They can’t keep all their funds in US equities, even if these have been going gangbusters for years.

But that doesn’t mean individuals need to follow suit. Private equity investments are more risky because they are illiquid and take years to pay off. Smart investors should see the ever-growing piles of dry powder as a sign of danger rather than success.

BLOOMBERG OPINION

Government set to issue euro bonds

THE Bureau of the Treasury (BTr) is set to issue euro-denominated bonds again this year, according to National Treasurer Rosalia V. de Leon, with the government also gauging the market’s appetite for dollar-denominated papers.

“We have announced the appointment of four banks and we started the investor calls… We still have to see the market conditions but we have already done the indication in terms of tenor — both for three years and nine years,” Ms. De Leon told reporters on the sidelines of the Treasury bills auction held in Manila, Monday.

Reuters said UBS, Citigroup, Standard Chartered Bank, and Credit Suisse are joint lead managers and joint bookrunners for the transaction.

Ms. De Leon said they opted to make euro bonds their first issuance for the year in order to have the “give-and-take advantage of the negative yields” in the Euro zone.

Asked how much they are looking to issue, she said: “It’s indicated — benchmark. So we still have to get indications of interest (from) investors after the calls.”

Ms. De Leon said while dollar issuances are always on the table for the Treasury as there have been successful dollar bond issues from corporates, the government is offering euro bonds first following the strong demand it saw for last year’s offering of these papers.

“But this time, we would want to approach the European investors coming from a very strong order book last year,” she said.

“May mga (There are) spillovers pa ’dun na (from that offer that) we were not able to accept. So we’re coming back for this issue,” Ms. De Leon added.

The Treasury returned to the European capital market after 13 years in May last year, raising €750 million ($852 million) via an offer of eight-year euro bonds, which carry a coupon rate of 0.875%.

The offer was six times oversubscribed, with orders hitting almost €3 billion. This caused the government to upsize its initial target issue size of €500 million.

S&P Global Ratings assigned a BBB+ rating to the proposed issuance, while Fitch Ratings gave it an expected rating of BBB. Both are at par with the debt watchers’ respective credit ratings on the Philippines.

Analysts are bullish about the upcoming euro-denominated issuance as they see lower borrowing costs due to the negative interest rates in the Euro zone, but did note the need to manage foreign exchange risks.

“The euro is off to a good start this year… At this point, the euro is a good choice,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a text message on Monday.

Mr. Asuncion said a factor to consider in issuing foreign-denominated bonds would be the exposure of the government to other currencies.

“I think the BTr has set a limit of how much the economy should be exposed to volatile currency movements,” he said.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said this bodes well for the government’s diversification of its funding sources.

“Managing foreign exchange risks involved in foreign borrowings of the government is also important, while also taking advantage of lower borrowing costs compared to peso-denominated borrowings…,” Mr. Ricafort said in a text message.

“This also effectively reduces pressure on local interest rates from going up,” he added.

The Treasury is programmed to borrow $3.7 billion from external sources for 2020. This will help finance the government’s P4.1-trillion ($80.52 billion) budget this year, which is 12% higher than last year’s spending plan.

The government plans to raise P1.4 trillion this year from local and foreign lenders to plug its budget deficit, which is expected to widen to as much as 3.2% of gross domestic product. — Luz Wendy T. Noble with Reuters

BoP swings to surplus in 2019

By Luz Wendy T. Noble

THE PHILIPPINES welcomed more dollars in 2019, driving a balance of payments (BoP) surplus that was the biggest since 2012 and reversing the deficit in 2018, the Bangko Sentral ng Pilipinas (BSP) said on Monday.

Data from the central bank showed that BoP — which is the summary of the country’s economic transactions with the rest of the world within a given period — was at a surplus of $7.843 billion in 2019, the biggest surfeit since the $9.236 billion tracked in 2012.

The surplus was a turnaround from the $2.306-billion deficit in 2018.

This also compares to the BSP’s upgraded $4.8-billion surplus projection for 2019 penciled in last November, from the $3.7-billion surplus forecast it gave in May.

“Based on preliminary data, the surplus was supported by higher net receipts of trade in services, personal remittance inflows from overseas Filipinos and sustained net inflows of foreign direct investments and portfolio investments,” the central bank said in a statement.

BoP settled at a $1.57-billion surplus in December 2019, the highest since the $2.7-billion surplus in January of the same year. However, December’s surplus is thinner compared to the $2.442 surplus seen in December 2018.

“Inflows in December 2019 reflected the BSP’s net foreign exchange purchases from its foreign exchange operations and income from its investments abroad, and increase in the national government’s net foreign currency deposits,” the central bank said.

Gross international reserves (GIR) stood at $87.84 billion as of end-December which, according to the BSP, covers more-than-ample liquidity buffer for 7.7 months’ worth of imports of goods and payments of services and primary income.

“It is also equivalent to 5.5 times the country’s short-term external debt based on original maturity and 4.3 times based on residual maturity,” the central bank said.

Analysts attributed the turnaround to surplus in BoP to a narrower trade deficit, continued strong support from OFW remittances and business process outsourcing revenues, as well as inflows from Philippine offshore gaming operators (POGOs).

“BOP surplus…[was] largely reflective of the record high gross international reserves amid narrower trade deficit, as well as the sustained growth in the country’s structural US dollar/foreign currency inflows such as OFW remittances, BPO revenues, foreign tourism receipts, POGO revenues, and net foreign investment inflows,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in an e-mail.

University of Asia and the Pacific professor Victor A. Abola attributed the 2019 BoP surplus to both the lower trade deficit and the buoyant POGO sector.

The surplus reiterates the resiliency story of the country’s economic growth, according to UnionBank of the Philippines Inc. Chief Economist Ruben Carlo O. Asuncion.

“Even with the uncertainties brought by the global trade war in the last 17 months or more, the Philippines’ external position is still very robust,” Mr. Asuncion said in an e-mail.

Data from the Philippine Statistics Authority (PSA) showed that trade deficit stood at $34.59 billion in the 11 months to November, thinning from the $39.36 billion gap seen in the same period of 2018. This was on the back of the eight consecutive months of decline in imports.

Meanwhile, cash remittance from OFWs grew by 4.4% year on year to $27.231 billion in the January to November period. The BSP targeted to grow remittances by 3% in 2019.

For 2020, the BSP projects a BoP surplus of $3 billion. Analysts said this year will be a different story given the trade deficit environment.

“2020 may represent a different scenario with the current account deficit expected to widen with import demand set to rise on government spending and private investment momentum returns after falling into contraction in 2019,” ING Bank-NV Manila Senior Economist Nicholas Antonio T. Mapa said in an e-mail.

Meanwhile, Mr. Abola warned of a “worsening” trade deficit flows.

“Mag-woworsen na uli ang trade deficit flows (The trade deficit flows will again worsen)…OFW [remittance] would not be sufficient to cover the deficit,” he said.

With this, what is needed is an inflow of both foreign portfolio investments (FPI) and hot money, as well as better foreign direct investment figures, he added.

Year-to-date, FDI fell 32.8% to $5.79 billion in the January to October period. The government targets $8.8 billion worth of FDI for 2019.

Meanwhile, hot money saw a net outflow of $1.9 billion in 2019 as global uncertainties took its toll on investor sentiment on emerging economies, including the Philippines.

The net outflow is a turnaround from the $1.204 billion of net inflows seen in 2018. It also fell short of the $8 billion worth of net inflows the BSP projected for 2019.

For Mr. Asuncion, the expected normalization in government spending given that the national budget was passed on time will support economic prospects for this year.

“The perception on the economic prospects of the Philippines will further improve, resulting to stronger net inflows of foreign direct and portfolio investments,” he said.

Meanwhile, Mr. Ricafort pointed that the diversification of foreign borrowings bodes well for BoP in 2020, with the Bureau of the Treasury set to issue euro bonds.

“Continued increase and diversification of the government’s foreign borrowings for 2020 would also add to the country’s BOP surplus for 2020, on a cash flow perspective, that would also add up to the country’s GIR, which already reached new record highs,” Mr. Ricafort said.

Motorcycle ride-hailing industry faces the axe

A GOVERNMENT BODY has recommended ending a program temporarily allowing motorcycles to transport commuters, which will effectively make their operations illegal.

The Transportation department’s technical working group (TWG) submitted the report to Congress and Transportation Secretary Arthur P. Tugade on Jan. 17. It recommended the termination of the pilot test, which was supposed to run until March, after one of the three motorcycle ride-hailing operators filed a lawsuit questioning some aspects of the program.

“We are resorting to legal rigmarole with what’s happening here,” Antonio N. Gardiola, Jr., who heads the TWG that oversees the program, told reporters on Monday after a Senate hearing.

The transport regulator formed the TWG in December 2018 to address calls to include the two-wheeled vehicle as a legal transportation mode. The law does not recognize single motorcycles to operate for public transport.

Mr. Gardiola said their study on the viability and safety of motorcycle taxis had been impeded by the lawsuit filed by dominant player Angkas “so it’s better to terminate it.”

Motorcycle operations would probably end in a week, he added.

Mr. Tugade has endorsed the action to lawmakers, who were supposed to pass a bill based on the success of the program, Mr. Gardiola said.

Senator Grace S. Poe-Llamanzares, whose public transport committee heard a hearing on motorcycle taxis yesterday, criticized the move.

“We want to pass a bill but it should be based on your study,” the lawmaker told Monday’s hearing in Filipino. “We are not experts and we were depending on you because you have the mandate to do that study,” she told Mr. Gardiola.

“You are canceling the program because you don’t want to do your job,” Ms. Poe said.

ANGKAS BLACKLISTED?
In a report submitted to Mr. Tugade dated Jan. 17, the TWG led by Mr. Gardiola recommended the termination of the pilot study, citing “numerous obstacles perpetrated” by DBDOYC, Inc., the operator of Angkas. These included a rally staged by Angkas riders, filing of petition for injunction by DBDOYC, and “numerous social media statements disparaging the TWG.”

It also recommended that the Land Transportation Franchising and Regulatory Board (LTFRB) blacklist DBDOYC “from further participating as a motorcycle taxi service provider via ride hailing platform or application…. as they blatantly exhibited defiance on mandated guidelines set forth by the TWG.”

In a statement issued after the Senate committee hearing, the TWG said that it is “considering the sentiments raised by the members of the Senate Committee on Public Services, as well as by other stakeholders.”

“In fact, right after the Senate hearing, the TWG immediately convened to initially discuss such sentiments. The TWG shall further discuss all these on Wednesday. After which, a report shall be submitted to (Secretary) Tugade,” it said.

The TWG also scheduled another meeting with stakeholders, Angkas, JoyRide (We Move Things Philippines, Inc.), and Move It (We-Load Transcargo Corp.) on Friday.

“I think this is a positive development on both sides. We will be sitting down with the technical working group and hopefully, maayos ang mga issues (the issues will be resolved),” George I. Royeca, Angkas head of regulatory and public affairs, told reporters on the sidelines of the hearing.

Asked if Angkas would be willing to withdraw the cases, Mr. Royeca said: “we are.”

“Our only issue is the cap per operator and if we’re able to resolve that then there’s no issue or any court cases,” he said.

A Quezon City trial court earlier stopped the government from cutting the service bikers of motorcycle taxi operator Angkas to 10,000 from 27,000.

The technical working group had extended its pilot run of motorcycle taxi services from December to March, but set an equal cap among three providers: Angkas, JoyRide and Move It.

The three must split the new limit of 39,000 bikers among them, with each being allocated 10,000 bikers for Metro Manila and 3,000 bikers each for Cebu City.

Mr. Gardiola earlier said they added two more operators to avoid a monopoly during the data-gathering process. Angkas riders may even choose to transfer to other operators.

Angkas, which warned of job losses, had been the sole service provider during the initial six-month trial run that ended last month, in which 27,000 of its bikers participated. — Charmaine A. Tadalan and Arjay L. Balinbin

Taal Volcano eruption’s impact on Calabarzon’s economic activities

FOREGONE income from Taal Volcano’s eruption could hit as much as P4.314 billion, equivalent to 0.17% of the region’s economic output in 2018 according to the National Economic and Development Authority (NEDA). Read the full story.

Taal Volcano eruption’s impact on Calabarzon’s economic activities

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