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The world economy in the near future

Last week, the economic counsellor of the embassy of Spain, Pedro Pascual, briefed the members of the Spanish Chamber of Commerce on the prospects of the world economy from 2020 and beyond. We are headed for challenging times.

Global growth is seen to decelerate from 3.8% in 2018 to 3% in 2019 and further down to 2.7% (World Bank data) in 2020 due to several reasons, the most significant of which is the trade war waged by the US against China and the EU. The effect of these trade wars is a reduction in global trade from its normal growth rate of 3% to just 1% in the next two years.

Exacerbating matters are the political uncertainties that persists in every continent of the globe. From Brexit in Europe to the specter of a presidential impeachment in the US. From Hong Kong’s civil unrest to the Chilean riots in Latin America. All these dampen global investments which is seen to decrease by as much as 40%.

The United States will likely post a growth rate of 2.4% in 2019, decelerating to 2.1% in 2020. This is because the pump priming initiatives of 2017 tax cuts will lose their effect. While employment will remain stable, investments in new enterprises are seen to drop. Similarly, consumption is seen to soften as the tariff increases on Chinese products begin to translate to higher retail prices.

As for China, it too will slow down. From a likely growth rate of 6.1% in 2019, it is seen to decelerate to just 5.8% in 2020. Public construction will ease dramatically as the communist government reigns-in its massive debts.

The trade war’s effect on China has not been as significant as one may expect. This is because the Chinese economy is now transitioning from an export-lead economy to one that is consumption-lead. The slack in demand for Chinese goods abroad are off-set by a spike in local consumption. Hence, a rise in the production of consumer goods is foreseen while production of capital goods will drop.

As for the EU, growth is seen to be almost static, from 1.2% in 2019 to 1.4% in 2020. Among the bigger economies of the EU, Spain will post the fastest growth rate of 2.2% and 1.8%, this year and next. Germany will struggle with growth of only .05% in 2019 and 1.2% in 2020.

At the heart of the EU woes is the drop in the production of automobiles. The production of cars, trucks, and their supply chain of parts comprises the largest chunk of the EU’s industrial output. For the first time in a decade, demand for automobiles is seen to drop by 3% across the board due to the rise of ride sharing services and a shift in preference away from diesel and gasoline to electric vehicles.

The trade war will also affect the EU adversely, especially Spain whose biggest export destination outside the EU is the United States. Investments in new factories will decrease but consumption will remain steady.

Emerging markets, including the Philippines will continue to drive global growth. Among the larger economies in this category, India, the Philippines, Vietnam, and Indonesia will post growth rates of between five and seven percent in 2019 and 2020.

The Philippines is seen to grow by 5.7% in 2019 and 6.3% in 2020. The country is on track towards graduating to an upper-middle income economy early next year. Since consumption and government spending drives the economy, the effects of the trade war is minimal.

Economic indicators in the Philippines are stable. Inflation stood at 1.7% as of August; the current account deficit is forecast to reach 2.4% of GDP by year-end, a level that is still manageable; unemployment was at 5.4% as of July; and gross international reserves stand at $85.7 billion, equivalent to 7.5 months of imports. These numbers suggests that the economy is healthy.

But there are fundamental weaknesses too, the most serious of which is the drop in foreign direct investments (FDIs) by a massive 40%. This is due to many reasons, among them is the uncertainty in the tax environment due to CITIRA and the slower-than-expected roll-out of infrastructure projects (which has turned off many investors).

It must be stressed, however, that the negative list of industries where foreigners are precluded (or limited) from participation as prescribed by the 1987 constitution is still the biggest dampener in the country’s ability to attract FDIs. President Duterte has yet to fulfill his promise to amend the charter. Doing so will open the floodgates of FDIs.

Other weaknesses that government has been slow to resolve are the relatively low education and talent quotient of the workforce, relatively slow adoption to information and communication technologies, low innovation capability, corruption, bureaucratic red tape, and a lethargic, corrupt justice system.

These weaknesses, taken collectively, have eroded Philippine competitiveness.

As I have always said, foreign direct investments is the silver bullet that can make the Philippine’s growth story sit on solid ground. Even today, despite the economy’s growth of 6% or more, I worry that our growth is driven by public consumption and government spending. The former is fueled by OFW remittances while the latter is funded by debt. Foreign direct investments brings in capital, technologies, jobs, and export earnings. The FDI growth path is fundamentally more solid as it based on productivity.

As we move forward to the 2020s, the world will face new realities, said Mr. Pascual. Immigration will persist due to economic reasons, climate reasons (erosion of coastal areas and extreme weather changes), as well as for reasons of domestic conflict; robotics and automation will take over manual labor; modes of mobility will change away from private cars to public transportation, rider sharing, and bicycles; and innovative services will continue to disrupt brick and mortar businesses.

These changes will bring about massive disruption to industries, worldwide — but they will also bring forth many opportunities. The losers will be those who resist change and fail to adapt. But the winners will be those who evolve, innovate, and create.

 

Andrew J. Masigan is an economist.

The Foundation for Economic Freedom and the Templeton Prize

On Nov. 7, during the Atlas Network’s Freedom Dinner at the Intrepid Sea, Air, and Space Museum in New York City, the Foundation for Economic Freedom, of which I’m President and co-Founder, received the prestigious Templeton Freedom Award. The Award was given in recognition of the Foundation’s work advocating and successfully pushing for legislation removing Commonwealth-era restrictions on agricultural patents, thereby immediately benefiting 2.5 million farmers and energizing the rural land market.

Atlas Network’s Templeton Freedom Award is given annually after an international competition among think tanks and public policy organizations among Atlas Network’s partner organizations worldwide. It’s named after the late billionaire philanthropist John Templeton and supported by his foundation, the Templeton Religion Trust. As Atlas Network puts it, “This prestigious prize honors Sir John’s legacy by recognizing Atlas Network’s partner organizations for exceptional and innovative contributions to the understanding of free enterprise and the advancement of public policies that encourage prosperity, innovation, and human fulfilment.” The prize carries a $100,000 cash award.

The Foundation was one of six finalists in this year’s competition, which included one from Lebanon, one from Burundi, and three from the United States.

What are agricultural patents and why is the reform so momentous?

Agricultural patents are titles on lands from the alienable public domain given to farmers who have lived in and tilled the land for at least 30 years. They are different from Certificate of Land Ownership Awards (CLOAs), which are titles given to former peasants from private lands acquired by the government under the Comprehensive Agrarian Reform Program. Agricultural patent holders are, therefore, farmer entrepreneurs while CLOAs holders are former peasants who had tilled the land for a landlord. There are about 2.5 million agricultural patents versus 3.5 to 4.5 million CLOAs, the majority of which are collective CLOAs (i.e. not individually titled).

These agricultural patents were awarded on the basis of the Commonwealth-era Public Land Act of 1936. These patents carried three major restrictions (Section 44, Sections 118, 119, 121) which made them toxic to banks and investors and lowered their market value: 1. They can’t be sold or mortgaged within the first five years of the grant of the patent; 2. The patent holder or farmer beneficiary and his/her heirs have a perpetual right to buy back the property within five years from the date of sale or alienation; and 3. They are prohibited from being sold to a corporation.

The perpetual buy-back option made these patents unacceptable as loan collateral to banks, particularly rural banks, because they must be held for five years. As an illiquid asset, the value of the land would be charged against the rural bank’s capital. Moreover, due to the prohibition of ownership of agricultural patents by corporations, there was the legal uncertainty whether banks are allowed to foreclose them at all.

As for investors, why would they purchase the land to improve it if at the end of five years, the original owner or his/her heirs may buy back the improved property? The result was that these agricultural lands became “dead capital.”

The prohibition on corporations buying agricultural patents further diminished the market and therefore the value of these lands. Corporations couldn’t buy and develop them.

On the other hand, the removal of these restrictions would enable the land to go to “the highest and best use,” and, therefore, increase economic efficiency. It will spawn the extension of agricultural credit and promote investments in rural land. More than economic efficiency, however, the farmer will gain economic liberty and will have the option to pursue his best possible self.

Recognizing these punitive restrictions on property rights of farmers and their negative impact on the rural land market, inspired by the ideas of Nobel Laureate Ronald Coase on property rights and free markets, the Foundation for Economic Freedom advocated for the removal of these restrictions. It partnered with the Rural Bankers Association of the Philippines to advocate for a simple two-page bill that would remove these restrictions. Prominent agricultural economists, such as Dr. Rolando Dy, Dr. Ramon Clarete, Dr. Bruce Tolentino, and National Scientist Dr. Raul Fabella wrote to Congress expressing their support.

Fortunately, legislative champions emerged in the House and the Senate. The most ardent champion in the Senate was Senator Richard Gordon. Senator Gordon is a known supporter of strong property rights. As Senate Justice Committee Chairman, he swiftly conducted hearings on the bill and steered its passage in the Senate ahead of the Lower House.

In the House, Congressmen Joey Salceda, Kit Belmonte, LRay Villafuerte Jr., Reynaldo Umali, Romero Quimbo, Ferdinand Hernandez, Monsour del Rosario, Art Yap, and the Agri Party List solons, Orestes Salon and Delphine Lee, filed sponsorship bills. Former Speaker Gloria Macapagal-Arroyo and former House Justice Committee Chairman Doy Leachon prioritized its passage.

As a result, on Feb. 22, President Duterte signed into law Republic Act 11231, which liberated farmers from these onerous restrictions. It was Economic Freedom Day for farmer-beneficiaries of agricultural patents.

Upon receiving the award for the Foundation during the Freedom Dinner in New York, I gave the following response: “Thank you to the Templeton Religion Trust and to Atlas Network for this great honor in recognition of our work to help remove restrictions on agricultural patents, thereby benefiting 2.5 million farmers and energizing the rural land market. In the Philippines, the face of poverty is rural, and giving back to our farmers the right to do with their land as they see fit, is a giant step toward eliminating rural poverty and assuring rural prosperity. It will also, as a consequence, hopefully strengthen democracy, because economic freedoms are very much tied to political freedoms.

“I’m receiving this award and thanking you in behalf of the Foundation for Economic Freedom of the Philippines, our coalition partners who helped support and shepherded the landmark legislation into law, and most of all, in behalf of the most vulnerable sectors in our society, who are suffering from a lack of economic freedoms.

“If you trace the arc of Philippine economic history, from the time it was the second richest country in Asia after Japan in the 1950s to the economy’s nadir in the early 1980s, when it was considered the “sick man of Asia,” and then up to now, when the economy has regained its footing and seems headed toward fast, sustainable growth, you can rightly conclude that its economic fortunes fell with the decline in economic freedoms and rose when it started pushing back the boundaries for economic freedom.

“For us, the lesson is clear. The way forward is to strengthen property rights and promote economic liberty. The road is not always straightforward, especially in a democracy where vested interests can use their powers to throttle economic freedoms. However, this award can only inspire us to exert greater efforts. The end goal is to eliminate poverty, assure shared prosperity, strengthen democracy, and achieve peace and stability in our society.”

 

Calixto V. Chikiamco is a board director of the Institute for Development and Econometric Analysis.

idea.introspectiv@gmail.com

www.idea.org.ph

Sexist bullying

We already know, from immersion near drowning in the universal storm for gender equality, that men should respect women and vice versa.

Respect means that the rights of the other are not transgressed either in actuality as in rape and sexual exploitation, or in perception as in discrimination or rejection because of gender stereotypes. Filipino men (except for a Hadean few) respect women highly as figures of their mothers and sisters. But the irony of gender equality is that it brings down the respect for women from that high pedestal in the heart of a son or brother to the crass level of rough and tumble competitiveness in the “equal playing field” of workaday life.

When will gender be totally a non-issue in the rise up the corporate ladder, for example? This happened at the regular Monday ManCom meeting in a big, respected business conglomerate: the top executives and department heads were discussing how to “soften” the Bureau of Internal Revenue on the multi-million peso assessment of underpaid income taxes. “Let’s send Annie to negotiate,” the president said. The 10 male executives around the conference table guffawed. Annie was a young widow, pretty and sexy. Never mind that she had a Ph.D in Economics. The four lady VPs at the meeting, including Annie, smiled wryly but said nothing.

Perhaps the “saying nothing” excited the pheromones even more in the challenged male executives who deep within might have begrudged Annie’s “undue advantage” by her sex appeal. Through no fault of hers, she was objectified: to be open prey to those men who pruriently fantasized some “action” with her or those who decided up front that they could never have her — and punished her for this by alienating her and giving her a hard time in the necessary coordination and cooperation between departments in the corporation. It was sexist bullying. Of course there were still other more grounded males in the organization who observed proper respect for the lady and her position, and continued to be strictly professional in their dealings with Annie.

But not the corporation’s president — the top honcho, top macho. Tricking Annie to his office one evening when all the staff had gone home, he groped and kissed her, and attempted to pin her down on the sofa. Of course Annie fought him off and stormed out. The next day she spoke confidentially to the SVP in charge of Personnel. No witnesses, he said. He advised her to just forgive and forget, if she wanted to stay in the company. Annie needed the job. She stayed until the year-end evaluation and merit increases in pay. No increase for her that time. She stayed until the reorganization and her possible promotion from VP to SVP. No promotion. Annie had to resign and look for another job.

There is R.A. 7877, an “Act Declaring Sexual Harassment Unlawful in the Employment, Education or Training Environment, and for other purposes” approved on Feb. 14, 1995 and effective on March 5, 1995. There is also the Anti-Discrimination bill, S.B. 948 of July 2018, which was revived and refined this year from the Sexual Orientation, Gender Identity and Expression (SOGIE) Equality bill in Congress, a more encompassing discrimination bill that addressed the concerns of everybody, from those who have different sexual preferences to persons with disabilities (PWDs) and children with special needs.

(https://www.philstar.com/headlines/2019/09/12).

But it is not laws that we need, but a real change in our cultural stereotypes for men and women. “Babae lang ’yan” (She’s just a woman). “Eh, kasi lalake” (It’s because he’s a man). Can we ever move away from generally excusing males from wrongdoing when they are urged by that machismo that our confused culture forgives and upholds? And applauds.

Why do we see, in countless live video clips on national television, crowds who are President Rodrigo Duterte’s audience at his public speeches applaud him and laugh at his sexist jokes? Never have we had a president who talked this way, so liberal with his “putang ina” (son of a bitch) that running his speeches would have to be peppered with blips and tut-tuts.

Tut-tut, presidential spokesperson Salvador Panelo said, “That style made him the president,” quoted in Philstar.com of Oct. 29, 2018 that reported women human rights defenders’ grave concern over President Duterte’s supposed displays of sexism and misogyny. Indeed, he won as president, when even in his campaign sorties made a joke about the rape and killing of an Australian missionary in Davao City in 1989, saying he, as mayor then, “should have been first” (inquirerdotnet, Feb. 1, 2017).

“But it’s for Senator Leila De Lima that he (Duterte) has reserved his brightest misogynist colors,” The Diplomat of Nov. 21 this year said in its article “Is Duterte Waging a War on Women Opposition in the Philippines?” It was de Lima’s 1,000th day in a Quezon City prison, as she has been detained for alleged drug trafficking in collusion with her ex-driver, her admitted ex-lover. Slut-shaming strengthened convicted felons’ testimony on her complicity as then Justice Secretary with certain Bureau of Corrections (BuCor) officials.

The Diplomat article also pointed to “the needling of Vice President Leni Robredo over her comments on the drug war in recent weeks and the gleeful doggedness in which Duterte allies are engaging in an effort to ensure she’ll ‘lose’ are evidence of this.” The drama was not over yet when The Diplomat spoke thus. Robredo was offered the position of co-chair of the Inter-Agency Committee on Anti-Illegal Drugs (ICAD) on Oct. 31; she accepted the position on Nov. 6; on Nov. 24, she was sacked by Duterte from both ICAD and as “Drug Czar.”

President Duterte must think so low of Leni Robredo as to make her, our country’s Vice-President, only co-chair with Enforcement Agency Director General Aaron Aquino, who only has the rank of an Undersecretary. Robredo was not given the rank of Cabinet Secretary as Duterte earlier teased her with. “I cannot trust her… If I make her one of the Cabinet members then she would participate in the discussion and would know everything that is classified,” he said, as quoted in The Philippine Daily Inquirer of Nov. 19.

Leni Robredo cannot be trusted with state secrets? Never mind if she is Vice-President, the constitutional successor of the President? “I don’t think she will be ready to govern a country. Reason? Incompetence,” said Duterte in an interview with reporters in Clark, Pampanga, as reported by Rappler on July 18, 2018. A later Rappler article quoted Duterte: “You’re better off with a dictator the likes of Marcos.” He said he prefers either Ferdinand Marcos, Jr., son of the late dictator Ferdinand Marcos, or Senator Francis Escudero to succeed him if he resigns. Malacañang has said Duterte would step down if Marcos wins his electoral protest against Robredo (Rappler, Aug., 30, 2018).

The 18-day appointment of Robredo is yet the most blatant sexist bullying by the top honcho, top macho of the land. But guess who won?

Never underestimate a woman.

 

Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.

ahcylagan@yahoo.com

FOI Initiative is back

FOI Youth Initiative (FYI) is the youth arm of the Right to Know, Right Now! (R2KRN) Coalition. It has been advocating an accountable and transparent government by enabling youth participation in public affairs.

Since its inception in August 2012, FYI has advanced the youth-led campaign for Freedom of Information (FOI). As a national network of youth and student organizations, FYI has reached out far and wide not only to the young but to the general population in pushing for a law on FOI.

Enshrined in the 1987 Constitution of the Republic of the Philippines (Article III, Sec. 7) is the right of the people to access information on matters of public concern. But this needs an enabling law.

In the 16th Congress, FYI was the only youth group to co-sponsor the Peoples’ FOI Act through a petition for indirect initiative. Unfortunately, the bill did not pass. It was paradoxical that the Chief Executive then, who branded himself as an anti-corruption advocate, lacked the political determination to secure the passage of FOI.

This reminds me of a conversation I once had with one of my mentors. She told me that some leaders can disappoint us, but others might surprise us.

In Congress, the politicians vote for different reasons. Some believe in the principles or the merits of the proposal. Others are motivated by public interest, but one can argue that the majority of politicians act on self-interest. Loyalty and subservience as well as bribes and pressure can also explain how they vote.

Even when least expected, a politician can change position overnight. In the case of the tobacco tax, despite the loudness of senators who opposed a high tax, they eventually succumbed and voted for the tax. Whatever the reason behind the sudden change of heart, these politicians avoided becoming villains in the end.

The point is that in legislation, even if conditions look bad, anything can still happen.

Ponder this: Rodrigo Duterte signed Executive Order (EO) No. 2, series of 2016, which operationalized Freedom of Information in the Executive branch. It was an important victory for the FOI campaign. This created space for citizens to get information and make government more transparent and accountable.

Did I see this EO coming? Honestly, no. I was surprised that this happened under the current leadership, and not during the preceding one.

That it has been put in place is an advance for the good governance advocacy. But this EO is far from meeting desired goals. Three years after it rolled out, the EO has accommodated 15,300 requests to 450 government agencies, using the e-FOI portal. Of these requests, 42% were successfully granted. However, the completeness and quality of the information provided leave much to be desired.

In addition, the EO’s scope excludes the legislative and judiciary branches and the local government units.

In short, the EO cannot replace a law on FOI. Furthermore, an FOI Law can address other weaknesses of the EO, such as the absence of sanctions for unlawful denial or delay of access to information.

Hence, the FYI, together with other groups advocating transparent government should continue pressing Congress for FOI legislation. The previous Congress slept on it.

But who knows whether the 18th Congress will be receptive to FOI? After all the current Speaker of the House, the controversial Allan Peter Cayetano, was an articulate champion and a bill sponsor of FOI. In the Senate, past experience tells us that the passage of FOI is predictable.

For the FYI then, it will use every little opportunity to have the FOI passed in the 18th Congress. The truth is, no legislator will speak in public opposing FOI. But for legislators to act favorably, public pressure is necessary.

With this in mind, FYI will intensify efforts within and beyond the halls of Congress. As a generation empowered by social media, the youth will continue to harness creative and innovative means to turn their collective call into a resounding clamor heard across cyberspace and the real world.

 

Patrick Acupan is a convenor of the FOI Youth Initiative and a campaigner for the sin tax team of Action for Economic Reforms.

No drums, please

By Tony Samson

AT THE timeouts on the second game of the men’s basketball finals of UAAP Season 82, both the courtside announcer and the jumbotron display pleaded the two sides to refrain from excessive noise — no drums, please. One side completely ignored the request as its team rallied to within a one-point separation. This injunction is intended to ensure that the frantic coaches are heard by the players. (Where are we going for dinner afterwards?)

So much has been written about the historic game and the unprecedented achievement. Let’s not get into that. Only one statistic stands out — the winning team made 11 treys (five from one player) as opposed to the losing team, which is celebrated for taking the most number of rainbow shot attempts all season, making only eight. Both teams made 31 attempts each.

So many posts and pieces have been tweeted, printed, and shared on the teams, players, statistics, first-ever achievements, and plans for the next season. This corner will not recycle the clichés and chest-thumping.

There are some uncommented numbers and incidents surrounding that momentous game that are reported here for the first time. Is it maybe because they did not directly affect the outcome of the game? Does that mean they are insignificant? Anyway, Barbara Tuchman notes on her essays on her craft: “Practicing History” (1989) that it is helpful to check the social conditions and even the weather when events (especially battles) take place as it sets the mood and the challenges when history takes place. I’m excerpting and paraphrasing her point here.

So here are the facts (or factoids) that have escaped other sports analysts’ attention. These citations are not subject to audit as they are based solely on anecdotes and a bit of fiction.

The crowd size of over 20,000 for both sides consists of over 43% (that’s almost 9,000) over the age of 50. This shows that many of the loud attendants are alums, spouses of the alums, parents of players (including aunts from the provinces) and T-shirt collectors — some were observed to be wearing the numbers of already graduated players.

Visits to the restrooms during game time were restricted by the SRO crowd necessitating the limiting of toilet breaks to the warm-up period, half-time (with the longest queue), and the time right after the confetti shower. In the last restroom gap, the lines were shorter as one side of the crowd was still watching the post-game huddling and coach-hoisting.

Certain personalities known as photo bombers who rush to the hardcourt for pictures with the team and the coaching staff were physically barred from this pesky behavior and fastened to their assigned seats.

Championship shirts were already available at the stalls right after the ball was thrown up in the air at the last buzzer with the Finals MVP gladiatorially facing the crowd with raised arms and three fingers out on each fist indicating the significance of the win. Entrepreneurs understand risk and do not consider it bad luck to print shirts with a particular outcome. One professional team we will not mention here has a whole closet full of failed championship shirts useful only for sleepwear for the team owner’s close relatives in the provinces.

Connoisseurs of boring games with early double-digits held all throughout the game were alarmed. After all, the odds gave a double-digit gap for the winner. The running back and forth, full court press, and popping of rainbow shots did little to assure a leisurely conversation with a seat mate on the merits of the metaphysical poets John Donne and Andrew Marvell. (What? The lead is down to one point?)

As to popcorn sales, the vendors (like the washroom seekers) had to limit their radius of sales with mobility severely hampered by full seats, cheerleaders on the aisles, and kids with placards requiring those at the back to stand up and further clog the passageways.

As to the restaurants, it is to be noted that service time is longer by 20 minutes and the turnover slower by a factor of five. Diners hung on to their tables one hour longer as they nursed their empty coffee cups.

What about parking, you ask? Even three hours before the game (when they were giving out individual awards to players of other schools) only the fifth floor was still open. It was easy getting out, like going down from the hill; down to the world go I — was I humming?

It was a good day for wearing blue.

 

Tony Samson is Chairman and CEO, TOUCH xda.

ar.samson@yahoo.com

Yes, there are things to be thankful for in Tech

By Shira Ovide

IN A TRUE Thanksgiving cliché, I would like to enumerate what I’m thankful for in technology.

I know, it sure doesn’t feel like there are many things to feel good about. Tech tools have allowed misinformation, bullying, and social division to spread like a virus. They have empowered tyrants and monsters, and created an underclass of impossible jobs. Some days I want to do a Road Runner cartoon dynamite to the internet and start fresh.

But my point was… uh… hopefulness. Even with the technology horribles, I want to give thanks for the mostly good.

I’m grateful for the boring stuff: Technology isn’t only things that scream TECHNOLOGY like virtual-reality goggles for cows, cars without human drivers, and hot-air balloons that beam internet service to a remote Amazon rain forest. Technology is also changes in dairy-barn ventilation that make farms more productive. Technology is french fries that keep up with our changing eating habits, stripped-down smartphones that are affordable and usable enough for billions of people, and software that can reduce airport delays by predicting when jet engines need repairs.

I can’t gloss over ways that all technology, even the unglamorous stuff, can have horrible consequences for individuals or painful structural upheavals for economies and job markets. But I also don’t want to underplay the genuinely good changes that are arising from the big and small innovations happening all around us that we may never notice.

MINISTRY OF AGRICULTURE AND FOOD OF THE MOSCOW REGION

I’m grateful for people’s creativity: One of my first “aha” moments about Snapchat came from Jerome Jarre, the young Frenchman who got big on the six-second-video service Vine (R.I.P.) and then on Snapchat. In a story from around 2015, I think, Jarre — in snippets of videos and photos — showed himself traveling to a town in Africa and coaching young children to make solar-powered lights from plastic bottles. (I’m pretty sure there was a marketing tie-in, because internet.) Jarre told a complete story in jagged bits over a couple of minutes, and the personality of the children and Jarre shone through despite — or perhaps because of — the confined format.

These billion-dollar internet companies are nothing without the people harnessing new tools to do genuinely novel, fun, outrageous, or informative things. Yes, these tools of human expression are also hijacked for horror and greed, but every day I see a brilliant moment of distilled human storytelling on YouTube, TikTok, Instagram, Twitter or some other app. It might come from a 100-year-old news organization or a kid in France, but either way I feel something: joy, outrage, or an understanding of a world I never knew. I’m confident this will keep happening, whatever new ways of communication catch on in the future.

I’m grateful for fear: Every business is terrified of being mowed over by technological change, and wow, is it good for you and me. Companies have to try harder than ever to keep people happy. Does anyone lament the days when cable companies could count on getting paid by 95% of US households, no matter how garbage their products were? Customers of retail stores, car-rental services, airlines, banks and (yes) news organizations are better off with companies that are no longer insulated by monopoly economics and relatively hard to reach with complaints. There’s nothing like being scared of death to bring out the best in companies.

I’m grateful for the watchdogs and the whistleblowers: The horribles of technology are real. That’s why we need academics and researchers who systematically study how misinformation spreads online or root out how our personal privacy is undermined. We need the people working in technology who take the risk of speaking up when they believe something is wrong. We need journalists — self-serving alert — shedding light on the glorious and grim in technology. And even though they get a lot of justified heat, we need regulators and lawmakers to help protect people from the downsides of technology changes. All of us might get it wrong sometimes, but I’m grateful that there are watchful eyes keeping the powerful accountable.

After today, I’ll go back to being grumpy about everything. I promise.

 

BLOOMBERG OPINION

NEDA Board approves tycoons’ NAIA rehab proposal

By Beatrice M. Laforga

THE National Economic Development Authority (NEDA) Board on Friday approved an unsolicited proposal from the country’s top tycoons to rehabilitate the Ninoy Aquino International Airport (NAIA), as well as five other infrastructure projects and the revised list of infrastructure flagship projects.

Finance Secretary Carlos G. Dominguez III said on Friday that the P102-billion proposal to rehabilitate the NAIA has secured its final approval from the NEDA Board, which President Rodrigo R. Duterte chairs.

With the approval, the NAIA rehabilitation will be subjected to a Swiss challenge.

Under the Swiss challenge, companies are invited to submit counterproposals to the project, which the original proponent may then match.

A “super consortium” composed of seven conglomerates, had offered to rehabilitate and expand NAIA over 15-year period at a project cost of P102 billion. The conglomerates involved are Aboitiz InfraCapital, Inc.; AC Infrastructure Holdings Corp.; Alliance Global Group, Inc.; Asia’s Emerging Dragon Corp.; Filinvest Development Corp.; JG Summit Holdings, Inc.; and Metro Pacific Investments Corp., had

The NAIA rehabilitation is expected to increase its capacity to handle passengers to 47 million a year in the first two years and further expand this to 65 million after four years.

The international airport has been operating beyond its 30.5-million passenger capacity with 45.3 million passengers last year, 42 million in 2017 and 39.5 million in 2016.

FLAGSHIP PROJECTS
In a phone message on Friday, Bases Conversion and Development Authority (BCDA) President and Chief Executive Officer Vivencio B. Dizon said that the NEDA Board approval of the revised list of infrastructure flagship projects showed how serious the government is in implementing the Build, Build, Build program.

Among the approved projects that are included in the list, Mr. Dizon said, are the proposals for NAIA rehabilitation, the Bohol-Panglao International Airport, Samal Island-Davao City Connector (SIDC) project and the Davao public transport modernization project.

“All these are in the list of 100 flagship projects so this shows how serious the government is in swiftly moving towards the realization of the Build, Build, Build program and allow our people — to use the words of the President — to use use use them in order to live a more comfortable life,” said Mr. Dizon, who is also the presidential adviser for flagship infrastructure projects.

Midway through the administration’s term, the government reviewed and decided to revise its list of infrastructure flagship program to 100 from the previous 75 projects, scrapping those deemed no longer feasible while including “small but game-changing ones”.

OTHER PROJECTS
In a statement released Friday, the NEDA Board has approved a total of seven new projects on Friday with an estimated total project cost of P187.34 billion.

Socioeconomic Planning Secretary Ernesto M. Pernia was quoted in the statement, saying that five out of seven projects will be implemented outside the National Capital Region.

“This shows that the administration is committed to develop growth centers in the regions and maximize the economic benefits of connectivity of communities,” Mr. Pernia said.

Among the projects that secured NEDA Board’s nod are the unsolicited proposal for the new Bohol-Panglao International Airport and the P18.66-billion Davao public transport modernization project of the Department of Transportation (DoTr).

The Davao public transport modernization project will be financed through official development assistance (ODA) loans and is targetted for construction next year through 2023. The project “involves the delivery of a modern, high priority bus system (HPBS) for Davao City,” the statement read.

Three projects of the Department of Public Works and Highways (DPWH) were also approved, namely the P14.97 billion Pasacao-Balatan Coastal Tourism Highway, the P23.04-billion SIDC project and the P9.23 billion Camarines Sur High-Speed Highway.

The Pasacao-Balatan Coastal Tourism Highway is earmarked for implementation next year until 2023 and is expected to be opened by 2024.

The project plans to construct a “four-lane coastal tourism highway along the west coast of Camarines Sur, with a total length of 40.69 kilometers,” as well as the construction of 13 bridges.

The SIDC project aims to construct a permanent road linking Davao City and the Island Garden City of Samal by 2025.

“The Project involves the construction of a toll-free four-lane [two-lane each direction] bridge with an approximate length of 2.80 kilometers, a width of 24.2 meters, and a vertical clearance of 45 meters that can serve around 25,000 vehicles a day,” it said.

Meanwhile, the Camarines Sur High-Speed Highway, a 15.21-kilometer four-lane highway, will provide an alternative route from Legazpi to Caramoan to Manila, and vice versa.

Lastly, Department of Health’s P15.53 billion Development Objective Assistance agreement for improved health for undeserved Filipinos was also approved and is expected to be completed by Sept. 30, 2024.

“The program will respond to the issues on logistics and pharmaceutical management, shortages of qualified health professionals in underserved areas, and inadequate public sector capacity in policy development, financing and private sector engagement. The following are the planned activities under the program: tuberculosis; family planning; and health systems strengthening,” NEDA said.

Also during the same meeting, the NEDA Board said that Investment Coordination Committe-Cabinet Committee approved to increase the cost and change the scope of Mindanao Railway Project: Tagum-Davao-Digos Segment to PhP81.69 billion.

“The NEDA Board also noted the earlier confirmation ad referendum of 20 projects from August 22 to October 9 this year. These include projects from DPWH (9), DoTr (3), Department of Finance (3), Philippine Competition Commission (1), Department of Agriculture (1), Landbank of the Philippines (1), National Irrigation Administration (1), and Metropolitan Waterworks and Sewerage System (1),” the statement read further.

Fruitas rises in stock market debut

By Denise A. Valdez, Reporter

SHARES in Fruitas Holdings, Inc. soared as much as 46% in their market debut on Friday, but closed only 1.79% higher amid overall negative market sentiment.

The food and beverage kiosk operator’s shares opened at P1.82 each, up 8% from its initial public offering (IPO) priceof P1.68 each. It reached as high as P2.45 before ending the day at P1.71 apiece.

Appetite for Fruitas’ IPO was strong. The company offered 533,660,000 primary common shares with an over-allotment option of up to 68,340,000 outstanding common shares, which it said was more than 2.5 times oversubscribed.

Fruitas’ market capitalization upon listing was P3.58 billion.

Diversified Securities, Inc. Equity Trader Aniceto K. Pangan said despite the overall increase in its share price, Fruitas was not able to meet market expectations that were driven by its oversubscription during the IPO.

“Definitely not after reports (that it was almost) 3x oversubscribed. Anyway, a negative market sentiment will always influence the investors,” he said in a text message, referring to the decline of the main index on Friday.

The PSE index fell 29.70 points or 0.38% to close at 7,738.96 on Friday as investors reacted to US President Donald Trump’s signing of a pro-Hong Kong bill, once again raising worries on the country’s trade talks with China.

“It corrected when price could not surpass P2.45/share as local market was down,” Mr. Pangan added, referring to Fruitas shares.

Papa Securities Corp. Sales Associate Gabriel Jose F. Perez shared the same sentiment, saying in an email: “Fruitas had a disappointing IPO after it took back majority of its gains as it closed at P1.71 (from IPO price of P1.68) after reaching as high as P2.45 intraday.”

After the listing ceremony at the PSE Tower in Bonifacio Global City on Friday morning, Fruitas Chief Financial Adviser Calvin F. Chua bared the company’s aggressive expansion plans through 2022.

“We have set aside about P600 million in the next three years… The P600 million covers network expansion as well as store improvement and all the necessary logistics that we’ll need to actually deliver our products to our stores,” he said.

He added the capital expenditure will be supported by an estimate of “around P820 million” coming from net proceeds of around P1 billion from the IPO, and the rest from internally-generated cash.

Fruitas is targeting to open 150 to 250 stores every year in the next three years and to acquire foodservice businesses, introduce new concepts and diversify its distribution channels.

Proceeds from the IPO will also be used for debt repayment, commissary expansion and food park business expansion.

“Ang pangarap namin na ang bawat Pilipino ay tatangkilikin ang isa sa aming mga produkto araw-araw. Yang pangarap na yan… yan ang tatrabahuin namin [Our goal is for every Filipino to patronize at least one of our products every day. That goal… that’s what we’ll work for,” Fruitas President and Chief Executive Officer Lester C. Yu said at the briefing.

Fruitas is the fourth and last company to conduct its IPO in 2019, the others being Kepwealth Property Phils, Inc. in August and Axelum Resources Corp. and AllHome Corp. last month.

BSP: Inflation likely picks up in November

THE overall rise in prices of widely used goods likely quickened in November, the central bank said on Monday, citing higher electricity and fuel costs.

In a statement, the Bangko Sentral ng Pilipinas (BSP) Department of Economic Research pegged November inflation at between 0.9-1.7%.

The range is beyond the 0.8% print in October. However, it is slower than the 6% logged in November 2018.

“The increase in electricity rates as well as higher prices of gasoline, LPG (liquefied petroleum gas) and selected food items are seen as the primary sources of upward price pressures for the month,” the central bank said.

“Meanwhile, inflation could be tempered by lower domestic rice prices and the appreciation of the peso,” it added.

The BSP said will continue to watch evolving inflationary conditions “to ensure that the monetary policy stance remains consistent with the BSP’s price stability mandate”.

Year-to-date inflation is at 2.6%, well within the central bank’s 2-4% target range for 2019, but higher than the official 2.5% forecast full-year average.

The Philippine Statistics Authority (PSA) is set to report the official November inflation data on Tuesday, Dec. 3. — LWTN

Energy chief slams NGCP for refusing inspection of control center

By Victor V. Saulon, Sub-editor

ENERGY SECRETARY Alfonso G. Cusi on Friday issued a stronger statement against National Grid Corporation of the Philippines (NGCP), the operator of the country’s transmission system, and the privately owned company’s link to China and the foreign country’s alleged capability to remotely shut down the local power grid.

His statement comes after NGCP earlier this week dismissed talk that the State Grid Corporation of China (SGCC) could cripple the Philippines’ power transmission.

“I wouldn’t say it’s unfounded. It’s a concern that has been raised before. Potentially, I repeat potentially, they can do it (remotely shut down) considering its digital nature,” Mr. Cusi said in a text message to reporters.

“Unfortunately, NGCP has been uncooperative to open itself for an audit to once and for all answer the issue,” he added.

Mr. Cusi said NGCP had prevented and continues to deny state-led National Transmission Corp. (TransCo) from inspecting the power transmission’s control centers “and how they use the other infrastructure under their control.”

“It has always been our position that the Systems Operations should be recovered by the government for the reason that a private company or a private individual should not be given the control over the most critical infrastructure of the state — the transmission grid network — capable of transmitting power and digital data,” he said.

“Systems Operations comprises just about 6% of the whole transmission business. It is not critical to the business of NGCP. It should not have been included in the Concession Contract in the first place. However, it is critical for the existence of the State. It is critical too for making sure it aligns with the operations of WESM (Wholesale Electricity Spot Market),” he added.

Initially, the Energy chief said what he wants is a full independent audit with appropriate agencies of government properly represented. He added that he directed TransCo to write NGCP on the matter.

“After all, they already stated they are now willing to open their systems to the government,” he said.

TRANSCO LETTER
TransCo has written to NGCP President and Chief Executive Officer Anthony L. Almeda on Friday to propose a vulnerability assessment and penetration testing (VAPT) of the transmission network and system, including telecommunications, and its associated applications and software.

In his letter, TransCo President and Chief Executive Officer Melvin A. Matibag also criticized NGCP’s statement that it was an “open book” and was willing to be audited.

He invited the NGCP official to “a meeting at your most convenient time” to discuss national security protocols.

“Moreover, to remove fear of the public as to issue of national security, we also propose representations from the Department of National Defense (DND) and the Department of Information and Communications Technology (DICT). Corollary to the conduct of the VAPT is the conduct of physical inventory of all transmission projects,” Mr. Matibag said.

NGCP did not immediately respond when asked to comment on Mr. Cusi’s statement and Mr. Matibag’s letter.

The company on Wednesday said SGCC has a 40% stake in NGCP, but the controlling 60% belongs to Filipino companies Monte Oro Grid Resources Corp. and Calaca High Power Corp. with 30% shares each.

As such, SGCC has only three nominees who sit as members of the NGCP board of directors, representing the company and proportionate to its capital shares, it added.

“SGCC serves only as the technical adviser of the consortium, but the management and the control of NGCP, including its Systems Operation, are exclusively exercised by Filipinos,” Mr. Almeda said.

He added that Mr. Cusi had inspected the NGCP facilities in August 2017, and that the company had not entered into other businesses, other than those permitted under its concession agreement.

Telecommunication companies use NGCP facilities through co-location agreements, the company said. These deals allow a third-party to “piggy-back” on its right-of-way or existing facilities except tapping into or using the transmission service provider’s fiber optic cables, it said.

Smooth sailing seen for 2020 budget in bicam

By Charmaine A. Tadalan, Reporter

THE PROPOSED P4.1-trillion national budget for 2020 is seen to smooth-sail in the bicameral conference committee, according to a senator, citing less contention in the House leadership.

The bicameral panel on Friday set to work on the annual spending plan, beginning with the submission of proposed amendments by each chamber, which will be tackled in a one-on-one meeting between the leaders of the House and Senate contingent.

Both congressional chambers are working to prevent a repeat of the 2019 budget delay scenario, which forced the government to operate under a reenacted budget for four months.

The delay stemmed from an impasse between the House of Representatives and the Department of Budget and Management, and later with the Senate.

“I think that dispute was a product nung (of) leadership sa (in the) House, e. Ito, mukhang wala namang pagbabago (This, it looks like there are no changes,) so I think, smoother,” Senator Juan Edgardo M. Angara, who chairs the finance committee, told reporters on the sidelines of the bicameral conference committee meeting at the Manila Polo Club.

The first day of the bicameral deliberation saw the exchange of each chamber’s new proposed amendments, which Mr. Angara and Davao 3rd District Rep. Isidro T. Ungab, chair of the House appropriations committee, will discuss.

“What will happen is, I think, the House and the Senate will study the respective changes… each version of the budget, tapos (then) we’ll meet again next week, I think to reconcile,” Mr. Angara said.

“I think the final decision is one-on-one. But there’s always a consultation. What happens is usually, pag may (if there are) amendments they don’t agree with, we’ll have to discuss it with the senator or the congressman who made the amendment.”

AMENDMENTS
Senator Panfilo M. Lacson in a separate chance interview, said among the amendments proposed by the Senate was the reduction of the budget of the Department of Transportation and the Department of Public Works and Highways (DPWH), and an increase for the Defense and Health departments.

For the Department of Health, the increase would cover the higher pay for nurses as mandated by law.

On the other hand, Mr. Lacson said some P45 billion lump sum appropriation under the DPWH budget was deleted. This was later re-submitted by the DPWH as itemized projects, but was no longer accepted by the chamber.

“The DPWH, being an agency of the executive branch, cannot participate in amending the appropriations measure. Kami lang ang pwedeng mag-amend (We are the only ones who can make amendments),” he said.

BSP orders banks to be on alert for Ponzi, other illegal investment schemes

AMID THE recent spate of illegal investment schemes that victimize people mainly in cities and towns outside the capital, the Bangko Sentral ng Pilipinas (BSP) has issued a warning to the public against being lured by high returns on their money and asked banks to be on alert for unusual financial activities.

“These types of investment schemes include ‘Ponzi scheme’ wherein a fraudster lures investors with the promise of high returns that are to be generated through the investment or business efforts of the fraudster,” the central bank said in a memorandum published in its Website on Friday.

The memorandum, signed by Deputy Governor Chuchi S. Fonacier, called on BSP-supervised financial institutions (BSFIs) to be on alert for such schemes as they could be used to channel funds from such activities through deposit accounts of the lead perpetrators as well as their associates and related entities.

The central bank said it is “imperative” that BSFIs maintain a robust risk management system in place to help them protect their clients.

Some red flag indicators cited are frequent or significant deposits which do not match the customer’s financial profile, sudden spikes in account activities, ownership of several accounts where transaction movements deviate from the declared or known activities.

Other red flags include a newly-established business that has an unusually high volume of transactions, high volume of check issuances from a single customer not matching the client’s profile, and an unusual increase in bank branch transactions in areas that have been identified as sites for illegal investment schemes.

The central bank laid down guidelines for BFSIs to help their clients avoid becoming prey to such activities as well as monitoring suspected operators.

One of the guidelines is the use of preventive measures such as conducting strict customer due diligence, including verification of identity, background, financial profile, and sources of funds.

BFSIs are also urged to have a “surveillance mechanism to timely capture information, advisories, or news reports that identify personalities or entities involved in illegal investment schemes”.

“The SEC (Securities and Exchange Commission) regularly releases these advisories which should be considered as part of holistic assessment of the risk profile of a customer, including their relationship to those directly identified in the SEC advisories,” the BSP said.

BFSIs are also asked to ensure that branch personnel are duly informed of policies and procedures when coming across suspicious transactions. — Luz Wendy T. Noble

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