Lame brained and overtaken by events

July 23, 2019 | 7:00 pm

To be fair, many of the populist policies of the Duterte Administration are laudable, including bills he signed such as for expanded PhilHealth coverage and the free college tuition, which were at least partly an initiative of the opposition. But I am still smarting with dismay at the lame brained foreign policy with respect to the West Philippine Sea. Duterte’s ridiculous attempts in his SONA (State of the National Address) to justify his position on the issue just made me more frustrated, and even angry.

He seemed to be actually second-guessing what Xi Jinping would say about the issue, if asked. But it looks like we haven’t; and so, China has not made explicit statements on the issue. Not even on the Reed Bank ramming of the Filipino Fishermen’s fishing boat, beyond referring to it as a “marine incident” which it is hard to believe, is exactly what our President has said about the sad event, in anticipation of the Chinese president’s statement. It actually causes my backbone to ache.

Our President, who is mandated by our Constitution to defend and protect our territories, has blatantly stated that we cannot say we have sovereignty over the West Philippine Sea, because China “has possession.” He sounds like China’s mouthpiece, no less.

The Indonesians and Vietnamese have not hesitated to use their armaments including bombs against China’s intrusive boats; and yet China, obviously, has not retaliated in like manner. So, why is our President so frightened by Xi Jinping’s veiled threat of “trouble” if we resist their intrusions as reported by our President? Vietnam, a poor and small country, threw out the French, their colonial masters, and later the Americans, the world’s most powerful nation, with their resourceful, crafty, and, yes, courageous ragtag Ho Chi Minh Trail strategy. And, yes, we did fight the Spaniards and the Japanese; and our history is replete with heroes who uncompromisingly died for our country. How did we come to this?

We didn’t even have to offer our lives to defend our West Philippine Sea territories against China’s claims of the fictional Nine Dash Line. Having encountered China’s aggressiveness and superior military might at sea, our earlier foreign policy and justice leaders, recognizing our disadvantages, used their heads and resorted to multilateralism. They also filed a suit in the UN Arbitral Court and — hallelujah! — won our case! The UN Arbitral Court ruled that the Nine Dash Line was fiction!

How dare Duterte claim that former foreign Secretary Albert Del Rosario retreated from the West Philippine Sea upon encountering China’s might. He and his legal team filed a case in an international court and won it! In fact, this fearless super-senior has teamed up with his fellow super-senior and former Justice and Ombudsman Conchita Carpio Morales and demonstrated the courage to sue Xi Jinping for human rights violations in the International Criminal Court! They have experienced retaliation by China when they were later refused entry to Hong Kong.

How dare Duterte claim that the previous administration failed to stop China from taking over much of the South China Sea territories? The rapid takeover happened during his term; in fact, right after we won our case in the UN Permanent Arbitral Court and right after he became President. And he did nothing to stop China’s intrusions, claiming he did not want war because he did not want Filipinos to die. Please note that the Indonesians and Vietnamese fought back; and no war broke out. The Chinese were clearly in the wrong, and they knew it.

Aside from avoiding the multilateral option, instead of acceding to the bilateral option preferred by China on the South China Sea negotiations, the President of our poor and militarily weaker country chose the lame brained bilateral option. Such a position guaranteed our defeat! Didn’t he and his team consider alternative options to what China preferred? Wasn’t that a blatantly lame brained decision?

Even if we had considered asking the help of the United States, given our history of mutual cooperation, the Americans were too pre-occupied with Kim Jong-un’s missile saber-rattling; and had to set aside concerns about the South China Sea dispute, since they needed China’s help to neutralize their North Korean protégé. Besides, we weren’t complaining anyway.

The astute Chinese used the North Korea hiatus to rapidly occupy, reclaim and militarize the islands and atolls, including those inside our sovereign territories, based on the UNCLOS to which China and the Philippines are both signatories. They did not even care about the environmental destruction which the whole world would suffer for generations to come.

To make matters worse, our President, in response to a question, openly admitted (what to my mind should have been kept a secret) his pathetic strategy of how to deal with the sovereignty issue. While the China ambassador stared fixedly at him, our President said that once the Chinese begin to dig for oil in our seas, he would ask them to share with us the proceeds from their explorations. Here is still another example of a failure to consider alternatives. For example, we could have opened up for bidding service contracts for oil exploration in our territories to other nations or private firms. This is how we have been dealing with our lack of capital for exploration and development of our mineral resources. We did not have to cave in to illegal intrusion into our territories by begging for a share in our mineral wealth after it had been stolen from us. As our President has admitted, China has possession of our territories. We can no longer assert our sovereignty.

My backbone still aches from our one-track idiocy and lack of courage.

Teresa S. Abesamis is a former professor at the Asian Institute of Management and an independent development management consultant.

tsabesamis0114@yahoo.com

Provoking Iran over tanker can blow a hole in global oil flows

July 23, 2019 | 6:58 pm

By Julian Lee

THE CAPTURE of the Stena Impero shows just how easy it is for Iran to hamper shipping through the Strait of Hormuz. At the moment, this is a particularly British problem, but were it to widen, the implication for oil flows could be huge.

Why was a UK flagged vessel attempting to transit the waterway without close naval escort after specific threats had been made against British ships? It appears on the face of it to have been a very rash decision, although whether HMS Montrose could have prevented the Iranian action without opening fire remains an unanswered question. The use by Iran’s Republican Guard of airborne forces as well as boats suggests that this was a much more serious attempt than the one against the British Heritage, which now looks more like a probing mission intended to assess the nature of a British response.

The capture of the Stena Impero was a direct tit-for-tat response to the impounding of Iranian supertanker Grace 1 off Gibraltar earlier this month, but other actions haven’t been. The MT Riah, a small oil tanker that was taken last week, was either towed into Iranian waters for repair after suffering technical difficulties, according to Iran’s foreign ministry, or was it arrested for smuggling Iranian fuel, according to the Revolutionary Guards. Iraqi-owned, Panamanian-flagged and chartered by a company based in the UAE to carry fuel to Somaliland, that ship has no British connection.

GOTCHA!
Iran’s actions are understandable, though not forgivable, in response to the unilateral rejection of the nuclear deal by the US and, more importantly, President Donald Trump’s decision to force everybody else to toe his line. Although the other parties to the Iran nuclear deal — the European Union, Russia, and China — want to keep it alive, they have been almost powerless to preserve it in any meaningful way. By imposing extra-territorial sanctions on all buyers of Iranian crude with the threat of denying them access to US dollars and the American banking system on which international trade depends, Trump has effectively forced everyone else to stop buying Iran’s oil. To expect Iran to abide by its side of the nuclear deal without receiving any of the benefits of trade and investment that it was due to receive in return is naïve.

TUMBLING
But this creates a problem for the European and Asian countries that depend on the flow of oil through the Strait of Hormuz. By joining a proposed US-led coalition to protect shipping through the waterway they would, from Iran’s perspective, be driving another nail into the coffin of the nuclear deal. And that may provoke Iran to respond by widening its harassment of shipping in the Strait of Hormuz.

That would jeopardize all of the oil exports from southern Iraq, Kuwait, and Qatar, along with a significant proportion of those from Saudi Arabia and the United Arab Emirates. These have averaged about 14.7 million barrels a day in the first six months of the year and most of that volume can’t be exported any other way.

AT RISK
Iraq no longer has the ability to move crude from oil fields in the south to its northern export routes after its Strategic Pipeline was destroyed during the US-led invasion of 2003. Saudi Arabia could use its East-West Pipeline to move crude to export terminals on the Red Sea. It has a nameplate capacity of 5 million barrels a day, but last year carried only around 2.1 million barrels, much of which was delivered for processing at refineries at Yanbu. The spare capacity in the line is not enough to divert even half of Saudi Arabia’s crude exports from the Persian Gulf.

An escalation of tanker harassment could also impact liquefied natural gas exports from Qatar, which accounts for about a quarter of global LNG supplies. This is a bit less likely, as Qatar has good relations with Iran, but it can’t be ruled out.

Putting private armed guards on tankers and signalling their presence may have deterred some of the piracy off the east coast of Africa, but it is unlikely to have a similar effect on Iran’s Revolutionary Guard. Furthermore, any such forces would be foolish to open fire on an Iranian patrol boat.

Should Iran’s harassment of tankers escalate, the oil importing and shipping countries may have little option other than to align themselves with the Americans, at least as far as protecting vessels is concerned. But if they’re going to use naval ships to protect tankers, they’ll have to be prepared to use their weapons, and that is an escalation that everyone wants to avoid.

With nearly 15 million barrels a day of crude flows at risk, it is a step that may have to be taken, unless both sides step back from the brink and work to find a diplomatic solution. Iran may not close the Strait of Hormuz, but will probably step up its harassment of ships passing through it, raising both the cost and the risk of carrying oil from the Persian Gulf. President Trump is not going to starve Iran to the negotiating table, so he’s going to have to find a way to entice them, if he wants to avoid this conflict escalating.

Bloomberg Opinion

What makes a contract valid?

July 23, 2019 | 6:58 pm

I have conducted a few lectures on Obligations and Contracts, in partnership with the Department of Trade and Industry, to businesspeople with startups. I noticed that one of the most common misconceptions is that “contracts must always be in writing, otherwise there is no contract to speak of.”

To correct this misconception, one has to understand the elements of a valid contract and know which contracts have to be in writing.

The Civil Code defines a contract as “a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.” For there to be a valid contract, these three elements must be present: consent, object, and cause.

The element of consent is satisfied once the parties agree on the terms of the contract. In practice, it is a situation where one party makes an offer and the other party accepts it. However, if a party responds to an offer by proposing some form of modification to the offer, this proposal is called a “counter-offer” and there is then still no legal contract to speak of. In the second scenario, the responsibility to accept, decline, or propose another counter-offer shifts to the original offeror.

All things which are not outside the commerce of men may be the object of a contract. Similarly, all services which are not contrary to law, morals, good customs, public order, or public policy may be the object of a contract. This is why public bridges, rivers, illegal drugs, and sexual services may not be the object of a valid contract.

Cause or consideration is the essential reason which moves the parties to enter into a contract. This is the “why of the contract” which dictates the nature of the contract. For onerous contracts, this involves the promise of a service or thing by a party which need not be monetary but could entail other things or undertakings of value. For remuneratory contracts, the cause is a service or benefit which does not arise out of any legal obligation. For gratuitous contracts, the cause is the liberality or generosity of a party. Essentially, the latter involves contracts of donation.

Again, a written appearance or any form of documentation is not an element of a valid contract. As long as an agreement satisfies all of the aforesaid three elements, then there exists a valid contract regardless of whether or not it is in writing.

For this reason, a contract is a contract in whatever form it may be, unless the law requires that it be in writing for it to be valid or enforceable. Thus, an employment contract, or transactions over our day-to-day necessities need not be in writing.

Which brings us to the question: What contracts are required to be in writing?

For their enforceability, the following contracts must appear in a public document, that is, a document executed or acknowledged before a notary public: 1.) acts and contracts which have for their object the creation, transmission, modification or extinguishment of real rights over immovable property; 2.) cession, repudiation or renunciation of hereditary rights or those of conjugal partnership of gains; 3.) the power to administer property or any other power which has for its object an act appearing or which should appear in a public document, or should prejudice a third person; and, 4.) the cession of actions or rights proceeding from an act appearing in a public document.

In turn, for their enforceability, the following contracts covered by the statute of frauds must be in, at least, a private instrument: 1.) an agreement that is not to be performed within a year from its making; 2.) a special promise to answer for the debt, default, or miscarriage of another; 3.) an agreement made in consideration of marriage, other than a mutual promise to marry; 4.) an agreement for the sale of goods, chattels or things in action, at a price not less than P500; 5.) an agreement of the leasing for a longer period than one year, or for the sale of real property; and, 6.) a representation as to the credit of a third person.

When the law requires a contract to be in a public or private document for its enforceability, this means that the form is not required in order to validate the contract but merely to ensure its efficacy. Thus, the above-mentioned contracts are valid as between the parties, even when the contract has not been reduced to public or private documents.

In contrast, donations of real property, and contracts of partnership where real property or rights are contributed, or when the capital contribution is P3,000 or more, must be in a public document in order to be valid.

On the other hand, for their validity, the following contracts must be in, at least, a private instrument: 1.) donation of personal property, and its acceptance, when the value thereof exceeds P5,000; 2.) agency to sell land or any interest therein; 3.) contract of antichresis; 4.) stipulations to pay interest on loans; and, 5.) stipulations to reduce common carrier’s extraordinary diligence and to limit its liability.

While not all contracts are required to be in writing for their validity or enforceability, it is still best practice to reduce all agreements in writing. This will help the parties avoid any ambiguity in their agreements and ensure that all parties understand their obligations. With a written contract, it is also easier to prove one’s position in case of a dispute and avoid a “he said, she said” scenario. A well-crafted contract which outlines the consequences of a breach and the remedies thereto may help avoid costly litigation and maintain the harmony between the parties.

The views and opinions expressed in this article are those of the author. This article is for general informational and educational purposes only and not offered as and does not constitute legal advice or legal opinion.

Martin Luigi G. Samson is a Senior Associate of the Angara Abello Concepcion Regala & Cruz Law Office (ACCRALAW), Davao Branch.

(6382) 224-0996

mgsamson@accralaw.com

Compassionate leadership

July 23, 2019 | 6:55 pm

By Raju Mandhyan

HE WASN’T TOO BIG or dangerous looking and neither did he scream, shout, or pick up the stick against his students. Teacher Dinshaw N. Irani from the Sardar Dastur Hoshang Boy’s High School in my hometown of Pune, India was a tall, angular, fair-skinned, and somber-faced gentleman with graces and courtesies left over from an English era. His hair was close-cropped and his clothes were usually a pastel blue shirt matched with a light khaki trousers and thick sandals on his clean feet.

Effortlessly, he used to float from class to class teaching History and English to classrooms full of rowdy teenage boys, except that in his presence they used to all behave like angels in a church choir. Yes, he had that presence, that charisma and gravitas about him that people stopped all that they were doing to listen to him with downcast eyes. He was, in fact, so good at this presence and charisma thing that all other teachers used to call upon him to bail them out from a classroom gone wild. And, all he used to do was float into a chaotic class, stand still at the entrance for a while, then glance around, fold his arms across his chest, and slowly say the words: “What are you doing? Have you no shame? Do you wish not to learn?” In an instant the storm in the class would subside into a bunch of quiet, studious angels.

For decades since then I used to wonder why was it possible for him to have such power and command over people when others failed at it. Why was it that a bunch of hooligans would turn into quiet boy scouts at the sound of his voice? He did not scream, shout, raise a stick, or punish us in any way.

Today, from insights into leadership, emotional intelligence, and the neurosciences, I conclude that teacher Dinshaw N. Irani truly and authentically cared for us, his kids from a school with a reputation. The fact that we sensed and knew that he cared for us gave him that power over us.

Leaders across all walks of life need to know and truly lean upon the fact that people can and will follow you to the end of the earth if they know that you care for them. A father that truly cares becomes a role model for his children to idolize, love, and help them become better citizens of the world. A business owner who is truly compassionate towards his employees will earn more than just an extra mile from each of his employees, but will end up creating and cultivating a strong and a self-driven enterprise. Corporate heads who live out a value known as “malaasakit” in the Philippines, will build great teams and unleash productivity and profitability in his organization.

This is one powerful leadership competency that cannot be learned in a classroom. You can pick it up and make it a part of your own authentic personality when you get deal with failures, successes, heartbreaks, disasters and celebrations with your teams day in and day out. It will become a part of your traits when you keep your eyes on brilliant horizon for your family and communities and slog together towards it. This is one leadership competency that you cannot “fake it till you make it.” You have to really make it such that you will never have to fake it. It is called compassionate leadership. You truly care for your people and your customers before, during, and after every moment, after every endeavor, and after every journey towards a brilliant horizon.

Raju Mandhyan is an author, coach and speaker.

www.mandhyan.com

Duterte pushes reforms, rails vs graft

July 23, 2019 | 12:32 am

By Norman P. Aquino
Associate Editor

PRESIDENT Rodrigo R. Duterte on Monday asked lawmakers to pass more tax reforms starting with a proposal to cut corporate income tax, overhaul fiscal incentives given out to companies and further increase tobacco and alcohol excise tax rates.

In his yearly state of the nation address to Congress halfway through his six-year term, Mr. Duterte also asked Congress to restore the death penalty for drug trafficking, plunder and other heinous crimes, while promising to defend Philippine rights in the South China Sea “in a peaceful way.”

“It inspires me with determination to pursue relentlessly what we have started at the start of my administration,” the president said in a speech that started an hour late and lasted about one-and-a-half hours.

“Believe me, I will end my term fighting.”

Mr. Duterte, 74, started his address bragging about his sky-high approval ratings, even as he admitted that government corruption continues and the illegal drug menace persists.

Mr. Duterte, the first Filipino president from Mindanao, marks his midterm with an 85% approval rating, according to Pulse Asia Research, Inc. despite what his critics regard as a head-in-the-sand response to Chinese aggression in the South China Sea.

He said further tax reforms would energize micro, small and medium enterprises to expand their businesses that would hopefully generate more jobs in the coming years.

Unexpectedly absent from the president’s speech is his earlier call for lawmakers to relax economic provisions of a three-decade-old constitution, as well as his previous push for a shift to a federal government system so growth will spread outside Manila, the capital.

Instead, Duterte zeroed in, aside from illegal drugs, on the territorial dispute with China and persistent government corruption.

He later told reporters it wasn’t the proper time to talk about constitutional amendments.

“The West Philippine Sea is ours, there’s no ifs and buts, it is ours,” the tough-talking leader said in his address, referring to the South China Sea, more than 80% of which China claims.

“But we have to temper it with the times and the realities we face today,” he added, noting an armed conflict with China would only bring “grief and misery.”

Mr. Duterte blamed Benigno S.C. Aquino III, his predecessor, for allegedly giving way to China after a 2012 standoff in Scarborough Shoal that later allowed the regional power to occupy the shoal.

“The president struggles to make sure that he will not be a lame duck president in the remaining three years of his term,” Marlon M. Villarin, a political science professor from the University of Santo Tomas, said by telephone. He added that having a super-majority in Congress “gives Mr. Duterte a political assurance that his programs and activities will be delivered.”

Mr. Villarin noted that the president thinks that the only way to resolve the sea dispute with China is through diplomatic means. “But what is unprecedented is when he blamed his predecessor about the Scarborough Shoal. It is so not like him.”

‘NO SACRED COW’
In his speech, the president said the recent uncovering of massive fraud perpetrated against the public health insurance system proves that corruption is pervasive. “Huge amounts of medical funds were released to cover padded medical claims and imaginary treatment of ghost patients. I am grossly disappointed,” he said.

At the same time, Mr. Duterte claimed to have fired and caused the resignation of more than a hundred officials and appointees of government “without regard to relationship, friendship and alliance.”

“There is no sacred cow, as the saying goes, in my administration.”

The president likewise vowed to pave the way for the removal of corrupt officials at the Bureau of Customs, where more than 60 people are under investigation for corruption.

“That is one area where we need more focus,” Philippine Chamber of Commerce and Industry Chairman George T. Barcelon, said by telephone, referring to Mr. Duterte’s call on the Land Transportation Office, Social Security System, Bureau of Internal Revenue and Bureau of Customs to shape up.

“The president should also have mentioned about the needed investment in training workers given the job-skill mismatch.”

“The European Chamber of Commerce of the Philippines (ECCP) urges the government to further improve the efficiency of tax collection and address leakages,” ECCP Executive Director Florian Gottein said in an e-mailed response to questions.

“On top of the list is the TRABAHO (Tax Reform for Attracting Better and High-Quality Opportunities) bill where the ECCP urges the government to start reducing the corporate income tax rate as quickly as possible.”

The chamber wants to government to lower the tax to 25% at the onset and an annual 1 point cut until the proposed 20% tax rate is reached.

“We also urge the government to come up with a competitive fiscal regime as quickly as possible to dispel any uncertainties,” Mr. Gottein said.

Under Mr. Duterte’s leadership, Congress cut personal income taxes and increased levies on some goods and services. Lawmakers also replaced quantitative restrictions on rice with tariffs to bring down prices, as well as passed a measure easing business processes in the country.

A continuing reform thrust, despite political noise, convinced S&P Global Ratings to lift the Philippines’ debt score to “BBB+” — a historic high for the country — with a “stable” outlook from “BBB,” two notches above minimum investment grade and a step away from an “A” rating.

Mr. Duterte asked legislators to approve a Salary Standardization Law that will benefit underpaid public teachers, and a National Land Use Act that will help local governments craft development plans as foreign investors start coming in. This will help disperse economic activities to the countryside, particularly the Visayas and Mindanao, he said.

The president likewise sought the approval of a bill that will streamline the bureaucracy, and vowed to pave the way for the use of coconut levy funds for farmers.

The economy has grown about 6.5% in the past two years compared with 6.3% in the six years through 2016, and Mr. Duterte’s original target of 7-8% until 2022.

Inflation has been easing back this year into the central bank’s 2-4% target after successive multi-year monthly peaks that averaged a nine-year-high of 5.2% last year. — with Arjay L. Balinbin

National government fiscal performance (June 2019)

July 23, 2019 | 12:31 am

THE NATIONAL GOVERNMENT’s fiscal balance swung to a deficit in June after two straight months of surplus — even amid relatively flat state spending and a double-digit hike in tax collections — with the first half nevertheless yielding a much smaller budget gap than a year ago, the Bureau of the Treasury reported on Monday. Read the full story.

Fiscal balance swings to deficit in June, but 1st half gap shrinks

July 23, 2019 | 12:31 am

By Karl Angelo N. Vidal
Reporter

Treasury data bared a P41.8-billion fiscal deficit last month that was 22.93% smaller than the year-ago P54.3 billion, as revenues grew 4.32% to P233.9 billion from P224.2 billion and expenditures slipped by 0.99% to P275.7 billion from 278.5 billion.

Tax collections, which contributed 90% to total revenues, increased by 11.85% to P210.5 billion from P188.2 billion. The Bureau of Internal Revenue (BIR), which accounted for three-fourths of tax collections and 67.46% of total revenues, collected 15.39% more at P157.8 billion from P136.8 billion, while the Bureau of Customs, which contributed less than a fourth to tax collections and more than a fifth to total revenues, raked in 2.5% more at P51.3 billion from P50 billion.

Last month also saw non-tax revenues — consisting mainly of subsidies for taxes on government transactions — fall by 35.06% to P23.4 billion from P36 billion even as the Treasury collected 37.13% more at P10.7 billion, compared to P7.8 billion a year ago, while other offices’ take was more than halved to P12.7 billion from P28.2 billion.

Despite the mid-April approval of the P3.662-trillion national budget that caused government expenditures to increase by 7.8% in May (with primary expenditures — or net of interest payments — growing by nine percent that month), a 3.06% drop to P246.6 billion in June’s primary expenditures — which include spending on infrastructure and other capital outlays — from P254.4 billion a year ago offset a 20.91% rise in interest payments to P29.1 billion from P24.1 billion.

FIRST-HALF DEFICIT SMALLER
The year-to-date budget balance stood at a P42.6-billion deficit that was 77.91% smaller than the year-ago P193-billion gap.

Total revenues increased by 9.71% to P1.548 trillion last semester from P1.411 billion a year ago, with tax revenues growing by a tenth to P1.381 trillion from P1.255 trillion. The BIR collected 10.56% more at P1.066 trillion from P964.5 billion, while Customs grew collections by 8.45% to P303 billion from P279.4 billion.

Non-tax revenues increased by 6.95% to P166.6 billion from P155.8 billion, as the Treasury increased collections by 32.48% to P87.6 billion from P66.1 billion while other offices’ take dropped 11.89% to P79 billion from P89.7 billion.

The government spent 0.83% less at P1.59 trillion last semester from P1.604 trillion a year ago, as a 1.94% drop in primary expenditures — “mainly because the government operated under a reenacted budget during the first four months of 2019” as well as the ban on new public works 45 days ahead of the May 13 midterm elections — to P1.41 trillion from P1.438 trillion offset an 8.8% increase in interest payments to P180.1 billion from P165.5 billion.

“We are still making our analysis, but basically the decline is due to delayed passage of the 2019 GAA (General Appropriations Act) and ban on implementation of projects due to the local and national elections,” Budget Assistant Secretary Rolando U. Toledo said in a mobile phone message when asked for an explanation for June’s smaller public spending.

The government operated on a reenacted 2018 budget from January to April 15, when President Rodrigo R. Duterte signed this year’s national budget into law but vetoed P95.3 billion in appropriations that he said were not in accordance with the administration’s priorities, slashing the total to P3.662 trillion.

The delay prompted the inter-agency Development Budget Coordination Committee (DBCC) in mid-March to cut its 2019 GDP growth assumption to 6-7% from 7-8% originally.

Economic managers had also blamed delayed budget enactment for the slowdown in GDP growth in the first quarter to 5.6% — its worst quarterly performance in four years.

Nicholas Antonio T. Mapa, senior economist at ING Bank N.V. Manila, said the spending drop could result in “lackluster” second-quarter GDP growth, which will be reported on Aug. 8. “Despite the government’s best efforts to implement ‘catch up spending’, the projected misstep coming from the government spending side coupled with possible handicapped capital formation could mean 2Q GDP struggles to get past six percent again,” Mr. Mapa told reporters in an e-mail.

Still, Mr. Mapa said the Philippines could end 2019 at the lower-end of the state’s 6-7% GDP target on the back of reinvigorated household spending, a resurgence in capital formation as the Bangko Sentral ng Pilipinas cuts policy rates further and stepped-up government spending.

Meanwhile, Rizal Commercial Banking Corp. economist Michael L. Ricafort said the year-on-year increase in BIR collections signals “improvements in recurring revenue collections that reflect improvement in overall fiscal performance,” which could lead to further upgrades in the country’s credit ratings.

According to the latest DBCC meeting last week, revenue collections are projected to reach P3.15 trillion in 2019, equivalent to 16.4% of GDP. Disbursements, meanwhile, are targeted to reach P3.77 trillion this year, equivalent to 19.6% of GDP.

The programmed deficit ceiling was maintained at 3.2% of GDP from 2019 to 2022 “to sustain the government’s investments on infrastructure and human capital development.”

Gov’t seeks to limit power plant outages as part of performance benchmark

July 23, 2019 | 12:30 am

THE ENERGY REGULATORY COMMISSION (ERC) has asked the public to submit comments on its proposed interim benchmark for reliability of power generation units in the country, especially in terms of allowable outage days per year.

“The commission intends that the outage allowance in days per year, as determined herein, will serve as the maximum or cap per technology for all power plants,” the ERC’s proposal said.

The benchmark sets varied number of days during which power plants using specific technologies can go on planned and unplanned outage. Technology classifications consist of: pulverized coal, circulating fluidized bed, combined cycle, gas turbine, diesel, geothermal, hydroelectric, oil-fired thermal and biomass.

In order to address the need for a standard on outage allowance of power generating plants, the ERC reviewed their performance, particularly in terms of outages. The commission took into account the monitoring and evaluation of the performance of conventional generating plants with total capacity of at least 20 megawatts (MW).

From 2015 up to the first half of 2019, the ERC’s review showed that, on the average, oil-fired thermal power plants had the most number of outage days per year at 84.5, of which 50.4 were unplanned.

Diesel-fired plants had the least number of outage days at 15.8, followed by combined cycle plants at 19.1 days.

Pulverized coal power plants had average outage days of 50.1, of which 28 were unplanned. Circulating fluidized bed coal power plants had outage days per year of 40.8, of which 24.3 were unplanned. Coal-fired power plants account for the biggest share of the country’s generating capacity.

The ERC used data from the grid reliability monitoring system, a Web-based application that encompasses report submission by power generation companies and generation of reliability performance indices.

In terms of availability factor — or the ratio of available hours to total hours that a generating unit should be operating — the power plant technology without the highest average reliability performance is diesel at 95.66%, followed by combined cycle at 94.78% and geothermal at 94.40%.

Biomass plants are the least reliable at 72.91% followed by oil-fired power plants at around 76.86%.

The ERC said it also looked into the 50^th, 60^th and 70^th percentile of reliability performance indices of generating units with the lowest outage rates or better performance.

It said it was considering the 50^th percentile as the interim reliability performance benchmark.

The regulator is giving interested parties until July 26 to submit their comments on the proposed benchmark. — Victor V. Saulon

Ayala acquires property firm based in Pampanga for P2.4B

July 23, 2019 | 12:09 am

AYALALAND Logistics Holdings Corp. (ALLHC) continues its expansion with the acquisition of a real estate firm based in Pampanga for P2.39 billion.

In a disclosure to the stock exchange on Monday, the listed company said it has acquired 100% of shares in Unity Realty & Development Corp. (URDC) last Friday.

The transaction value, which was agreed upon by both parties, will be paid in three installments. URDC will then become a wholly owned subsidiary of the Ayala-led firm.

ALLHC said URDC owns a property in Mabalacat, Pampanga, which is a suitable location for a new industrial park.

“The transaction further strengthens the vision of ALLHC to be the leading real estate logistics and industrial estate developer in the Philippines,” the company said.

The Philippine Stock Exchange, Inc. imposed a one-hour trading halt on ALLHC’s shares on Monday morning to allow investors to digest the material information.

URDC’s 2018 audited financial statement shows that it has 612,445 shares worth P30.62 million. The company reported a net loss of P313,153 in the 2018, higher than its P12,500 loss in the year before. It had no revenues to be recognized in both reporting periods.

Parent Ayala Land, Inc. has mandated ALLHC to be its main vehicle in the development of industrial estates in the country. The company’s portfolio includes a majority stake in Laguna Technopark, Inc., which manages the 460-hectare Laguna Technopark in Sta. Rosa and the 135-hectare Cavite Technopark in the municipality of Naic.

It is currently developing a logistics and warehousing facility in Laguna Technopark that will offer a leasable area of more than 60,000 square meters (sq.m.). The property will be divided into 40 units with cuts of 1,200-1,500 sq.m.

ALLHC is also developing an industrial park in Cagayan de Oro near the Laguindingan airport, where it looks to offer 42 parcels of land with cuts of 7,000 sq.m. It has another industrial park in the pipeline located in Central Luzon.

Aside from its foray into industrial parks, the company continues to expand and rehabilitate Tutuban Center in Manila, which now has a gross leasable area of about 53,000 sq.m. and new retail and wholesale concepts.

Previously known as Prime Orion Philippines, Inc until its name change in February, ALLHC booked a net income attributable to the parent of P113.57 million in the first quarter of 2019, 1,366% higher year on year. Gross revenues also surged 454% to P985.4 million.

Shares in ALLHC jumped 3.49% or 14 centavos to close at P4.15 apiece at the stock exchange on Monday. — Arra B. Francia

QC set to become the most connected city

July 23, 2019 | 12:09 am

QUEZON CITY will soon become the “most connected city” in the country in the coming years, thanks to the major public infrastructure projects such as the Skyway Stage 3, Metro Manila Subway and Metro Rail Transit Line 7 (MRT-7).

Jettson P. Yu, founder and managing director of commercial real estate consultancy firm Prime Philippines, said these projects would boost Quezon City’s connectivity to other areas in Metro Manila.

“I think Quezon City in the next three to five years will be the most connected city in the Philippines,” he said during the Philippine Real Estate Investment Forum 2019 organized by Prime Philippines.

“Quezon City will also be the gateway of the north… The Skyway Stage 3 will also help connect Makati and Quezon City in just less than 15 minutes, so the way we see Quezon City, maybe in the next ten years or twenty years… it’s going to be a… highly connected city. Main railway stations will be completed in Quezon City, and not only that, it will be a place where people live, work, shop,” he explained.

The Skyway Stage 3 project is an 18.68-kilometer elevated toll road that will connect Gil Puyat (formerly Buendia) in Makati City to the North Luzon Expressway (NLEX) toll plaza in Balintawak, Quezon City. This is being constructed by Citra Central Expressway Corp. (CCEC), a unit of San Miguel Corp. (SMC).

The Metro Manila Subway project will have its first three station along Mindanao Avenue, Tandang Sora, and North Avenue in Quezon City. This project is funded by the Japan International Cooperation Agency (JICA).

Another major project is the 22-kilometer MRT-7 which will have 14 stations running from North Avenue in Quezon City to San Jose del Monte in Bulacan. This is also being developed by SMC.

These public infrastructure projects have prompted developers to launch new projects in Quezon City. Ayala Land, Inc. is continuing to develop its Vertis North development, near the North Avenue Grand Central Station that will host the MRT-3, MRT-7 and Light Rail Transit (LRT) Line 1.

DMCI Project Developers, Inc. earlier said it is spending around P7 billion on the construction of two more condominium projects in Quezon City this year, after seeing continued robust sales of existing condominiums in the area.

NEXT-GEN CITY
Meanwhile, Julius M. Guevara, vice-president for corporate planning at D.M. Wenceslao & Associates (DMWAI), said the company is positioning its flagship project Aseana City as the “next-generation city” of Metro Manila.

“Our tag line is Aseana City is the next generation city for Metro Manila… The city is not just about entertainment and casinos. It’s going to be a full-blown CBD [central business district] and sustainable and sufficient, and inclusive… and we are creating a very diverse CBD,” he during the same forum.

Aseana City is a mixed-use development in Parañaque City being developed by the DMWAI. Projects include Aseana One, Aseana Two, Aseana Three, and MidPark Towers. — Vincent Mariel P. Galang

Zalora PHL targeting 50% annual sales growth

July 23, 2019 | 12:08 am

By Arra B. Francia, Senior Reporter

ONLINE fashion retailer Zalora Philippines (ZPH) is projecting a 50% annual growth in sales for the next five years as it sees more Filipinos shifting to online shopping.

“We will end the year with more than 50% growth year on year, and we expect that trajectory to continue,” Zalora Group Chief Executive Officer Gunjan Soni told BusinessWorld on the sidelines of a company event last week, referring to the group’s operations in the Philippines.

Aside from the Philippines, Zalora also has operations in Singapore, Malaysia, Thailand, Vietnam, Taiwan, and Hong Kong.

ZPH President and Chief Executive Officer Paolo L. Campos III expressed confidence the growth will continue for the next five years, given Filipinos’ increasing preference for online shopping.

“We actually see that trend continuing in terms of very high double-digit growth for at least the next five years. We don’t see growth tapering, we see it sustaining at the very high double-digit level,” Mr. Campos said in a separate interview.

The ZPH top executive added that sales events, such as the 11/11 shopping event in November and 12/12 sale in December, helped boost volumes by five to 10 times compared to a normal day.

E-commerce adoption is also seen to accelerate. Ms. Soni said that e-commerce adoption in the Philippines is currently at two percent, much lower compared to the United States which is already at 25%.

“We think that the Philippines is going to get there in a far more accelerated way because already the Philippines is number one when it comes to time spent on social media,” she said.

On the other hand, the group is also looking to introduce what it calls a country-agnostic shipping strategy, which will allow customers to choose products from both local and international players.

“One of the propositions we expect to be able to bring is that we will be able to allow them (retailers) to enlist with us, it will not just be listed for the Philippines but listed for all markets. This will allow them to market there, and we will support that growth and expansion,” Ms. Soni explained.

This strategy will also promote new talent and designers in the platform, as they will be able to export their creations to other countries as well.

ZPH recently broke ground for its newest fulfillment center on a 3.7-hectare property in Muntinlupa City. The facility will have 40,000 square meters of racking space and a 7.2-million item storage capacity, on top of 5,000 sq.m of office space for its customer service and e-production teams.

NEX Tower bags ULI Asia Pacific Award for Excellence

July 23, 2019 | 12:08 am

NEX TOWER recently received the Asia Pacific Award for Excellence from the Urban Land Institute (ULI), the only project in the Philippines to receive such an honor.

Besting over 50 projects from the region’s leading developers, the 28-storey structure was developed by the Nova Group.

The ULI Award for Excellence is widely regarded as the property industry’s most prestigious awards program, recognizing projects that showcase best land use practice across Asia Pacific.

According to Ricardo C. Cuerva, managing director of Nova Group, NEX Tower, which has over 38,400 square meters (sq.m.) of premium grade A office space, is envisioned to be a model of urban regeneration.

“We envisioned to build a state-of-the-art office tower using the highest standards in design, performance, and sustainability… We hope that with NEX Tower, we can inspire others to build innovative structures that are well-attuned to today’s and tomorrow’s needs and improve the quality of life in the city,” Mr. Cuerva said during a recent press conference.

Designed by the acclaimed international architectural and engineering firm Skidmore, Owings & Merrill (SOM), NEX Tower integrates form and function and meets international standards.

Standing boldly along Ayala Avenue, Makati City with its “striking crystalline form,” NEX Tower has a very distinct shape that allows for diagonal fins that reduce solar flare and heat in the building.

The building’s green spaces show its biophilic design, aimed at creating an environment wherein the health and wellness of tenants are addressed.

“(Tenants) like that there is always green spaces inside the building, which is kind of unique,” Mr. Cuerva said.

NEX Tower has also received confirmation of its Leadership in Energy and Environmental Design (LEED) Platinum Certification by the US Green Building Council. This certification is the highest rating for environmentally responsible and sustainable design, and efficient resources management granted by the said organization.

With leasable space of 34,500 sq.m. and an occupancy rate of 72% to date, NEX Tower currently houses the headquarters of an insurance company, an auction house, and several multinationals.

From its beginnings in the 1980’s developing small- and medium-scale projects, Nova Group has made its presence around the bustling areas of Metro Manila. Co-developing with Century Properties Group, Inc., Nova Group is behind projects such as Essensa, Century City, Gramercy Residences, Azure Urban Residences, Commonwealth by Century, and Acqua Private Residences. NEX Tower is Nova Group’s first foray into the premium commercial market. — Adrian Paul B. Conoza

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