Business World (Jan. 13, 2016)

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P25IN METROMANILA,

PHILIPPINES

WEDNESDAY JANUARY 13 , 2 0 1 6 www.bworldonl ine.com S1/1-12 3 SECTIONS, 24 PAGES

Up to P3.5-trillion budget eyed for 2017

Budget, S1/3

Tax, S1/3

Export, S1/3

By Melissa Luz T. LopezReporter

By Keith Richard D. Mariano

By Kia B. ObangSenior Researcher

VOL. XXIX ISSUE 118

BUSINESSNEWSPAPEROF 2014AND 2015

ROTARYCLUB OFMANILA

Awarded by

THE GOVERNMENT is looking

to propose a national budget of

up to P3.5 trillion for 2017, with

a particular focus on climate

change mitigation alongside in-creased spending on infrastruc-

ture and agriculture, the coun-

trys Budget chief said.

In a recent interview, Budget

Secretary Florencio B. Abad said

his department will be draft-

ing a P3.4-3.5 trillion spending

program for next year, which is

13-17% more than the current

P3.002-trillion budget.

I dont know what the rev-

enue (collection targets) are, but

even if we borrow were grow-

ing [the budget] at 15.3%, so that

should be about another P400

billion. So thats P3.5 trillion or

P3.4 trillion, Mr. Abad said when

asked about the budget amount to

be proposed next year.

The 2016 budget is similarly

15.2% more than the P2.606 tril-

lion budget for last year.

AQUINOS LAST PROPOSALThe 2017 program will be the last

spending plan to be prepared by

the current administration, as

Pres. Benigno S. C. Aquino III

ends his six-year term on June 30.

The Aquino administration

has approved spending plans for

2011 to 2016 on time, ending the

trend of a reenacted budget seen

during the term of former presi-

dent now Pampanga Rep. Glo-

ria Macapagal-Arroyo (second

district) that left new programs

unfunded.

Under the budget cycle, the

Department of Budget and Man-

agement (DBM) will issue a bud-get call usually within the first

quarter of the prior year for

line departments, agencies, of-

fices and other units to submit

their funding estimates, which

facebook.com/BusinessWorldOnlinetwitter.com/bworldph

F O L L O W U S O N :

A NEWSPAPER IS A PUBLIC TRUST

Tax bureau sets targetsto exceed P2 trillion intotal collections this year

Export drop persists in November, though smallest in eight months

THE DECREASE in sales of the

countrys goods to foreign mar-

kets persisted in November lastyear in the face of a continued

slump in global demand, even

though that drop was the smallest

in eight months.

Preliminary data the Philip-

pine Statistics Authority (PSA)

Despite shrinking for most of

last year, exports could count on

electronics to provide a lift go-

ing forward, Mr. Balisacan said,

citing the 20-month high in Ja-

pans manufacturing purchasing

output growth that signals solid

growth in the Philippines top ex-port market.

Japan was the Philippines top

export market in November with

a 21.3% share of the total, fol-

lowed by the United States ( 14%),

Automobile sales top 2015 goalVEHICLE SALES increased

25.1% in December last year to

26,679 units, bringing the full-

year 2015 total to 288,609 units or

higher by nearly 23% compared

with the figure a year earlier.

In a statement, the Chamber of

Automotive Manufacturers of the

Philippines, Inc. (CAMPI) andthe Truck Manufacturers Asso-

ciation said that most vehicle cat-

egories performed well in 2015.

The industry was able to

maintain the growth momen-

tum of previous years. We again

surpassed our annual target of

272,000 units for CAMPI, CAM-

PI President Rommel R. Gutier-

rez said in the statement.

In December alone, passen-

ger car sales rose 10,461 units or

33.3% from 7,850 units in 2014s

comparable month. For the year,

the category hit sales of 116,381units, up 28.9% from 90,287 units

a year earlier. Sales grew in this

segment as new car models were

introduced and financing strate-

gies were intensified throughout

the year, the car groups said.

The same month saw commer-

cial vehicle sales growing 20.4%

to 16,218 units from 13,470 a year

earlier, bringing the year-to-date

total to 172,228 units, up 19.2%.

Among car companies, Toyota

Motor Philippines Corp. led with

a market share of 43.32%. Mit-

subishi Motors Philippines Corp.was seco nd wit h 18.74%. Ford

Motor Co. came out third with

8.79%. Isuzu Philippines Corp.

and Honda Cars Philippines, Inc.

round out the top five with a share

of 7.82% and 6.69%, respectively.

THE BUREAU of Internal Rev-

enue (BIR) targets to further in-

crease its collections to breach

the P2-trillion mark this year,

relying largely on income and

value-added taxes (VAT).

The Department of Finance

has set the bureaus collection

target at P2.025 trillion or 21%

above the P1.674-trillion goal

for 2015, according to Rev-

enue Memorandum Order No.

2-2016 that was issued on Jan.

6 and distributed to reporters

yesterday.

The target is the highest target

for the BIR under the six-year

watch of President Benigno S.C.

Aquin o III, who steps down on

June 30, Treasury data show.The government expects the

bureau to deliver the record col-

lection to cover 67% of the P3.002

trillion expenditure programmed

for the year.

The BIR aims to collect P1.230

trillion or 61% from large taxpay-

ers, a category that covers those

with total annual gross sales or

receipts of at least P1 billion andnet worth of at least P300 million

at the close of each fiscal year.

Large taxpayers also consist of

those paying at least P100,000

in VAT per quarter, P1 million

in annual excise tax, P1 million

in annual income tax, P1 million

in withholding tax, P100,000 in

percentage taxes per quarter, or

P1 million in annual documentary

stamp taxes.

ELECTION BOOSTHigher growth in 2016 will result

in higher corporate profits, Fi-

nance Undersecretary and Chief

Economist Gil S. Beltran said in

a text message when sought for

comment.

Elections will boost growth

by at least a percentage point.From its operations, the BIR

aims to collect P1.97 trillion,

consisting of P1.192 trillion in

taxes on net income and profits,

P405.11 billion in VAT, P170.72

billion in excise tax, P82.9 bil-

D E T R O I T

Hyundai aims to setbenchmark for luxurywith Genesis brandHyundai is reaching for the top

in launching a new

luxury brand,

Genesis, which

aims to repli-

cate the success

of Japanese ri-

vals while redefin-

ing the customer experience. The

Korean automaker unveiled its

flagship sedan, the G90, at the

Detroit auto show on Monday

that was designed to compete

with the top offerings of storied

brands like Mercedes and BMW

by offering best-in-class perfor-

mance and features.S3/3

N E W Y O R K

Dow, S&P 500 finishup in late reboundThe Dow and S&P 500 ended

a volatile session up slightly on

Monday in a late turnaround, but

a drop in biotechs and energy

shares kept a lid on the market.

The start of earnings season

added to investor nervousness.

The Nasdaq ended lower, led by

a drop in biotech company Cel-

gene, which fell 5.5% to $103.03

following a disappointing profit

forecast.S3/4

AROUNDTHEWORLD

released yesterday show mer-

chandise exports receipts slipped

1.1% year on year to $5.1 billion

in November, a reversal of the

19.7% increase logged in 2014s

comparable month. Novembers

drop was the smallest since April.

Meeting our export targetshas been very challenging as the

global economy remains weak,

which trans lates into weak de-

mand for the countrys export

products, Economic Planning

Secretary Arsenio M. Balisacan

said in a statement issued by the

National Economic and Develop-

ment Authority (NEDA).

Given the performance of

the export sector in the first 11

months of 2015, the full-year

target is unlikely to have been

met, said Mr. Balisacan, NEDAsdirector-general, in reference to

a $65-billion goal that reflected

a projected 4.7% increase from

2014s actual $62.102 billion.

He said exports would have to

log a total of $11 billion, equiva-

lent to a growth of 129%, in De-

cember to hit the full-year target.

The government has two pro-

jections for merchandise exports:

the Development Budget Coordi-

nation Committees downward-

revised 4% assumption and the

Export Development Councils8-10% goal.

Merchandise exports which

have historically accounted for up

to 40% of gross domestic product

(GDP) contracted 5.8% annu-

ally year-to-date.

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30DAYSTOJANUARY12,2016

DOWJONES 16,398.57 52.12

NASDAQ 4,637.989 -5.642

S&P 500 1,923.67 1.64

FTSE 100 5,871.830 -40.610

EUROSTOXX50 2,876.590 -11.250

JAPAN(NIKKEI225) 17,218.96 -479.00 -2.71HONGKONG(HANGSENG) 1 9,711.76 -176.74 -0.89TAIWAN(WEIGHTED) 7,768.45 -19.97 -0.26THAILAND(SET INDEX) 1,253.47 18.97 1.54S.KOREA(KSECOMPOSITE) 1,890.86 -3.98 -0.21SINGAPORE(STRAITSTIMES) 2691.78 -17.07 -0.63

SYDNEY(ALLORDINARIES) 4,925.13 -7.11 -0.14MALAYSIA(KLSECOMPOSITE) 1,641.37 3.78 0.23

S T OC K MA R K ET

JAPAN(YEN) 117.720 117.730HONGKONG(HK DOLLAR) 7.758 7.758

TAIWAN(NT DOLLAR) 33.452 33.288

THAILAND(BAHT) 36.310 36.260S. KOREA(WON) 1,209.740 1,203.880

SINGAPORE(DOLLAR) 1.438 1.434INDONESIA(RUPIAH) 13,905 13,870

MALAYSIA(RINGGIT) 4.409 4.380

$/UK POUND 1.4492 1.4570

$/EURO 1.0858 1.0884

$/AUSTDOLLAR 0.6985 0.7006

CANADADOLLAR/US$ 1.4227 1.4118

SWISSFRANC/US$ 0.9997 0.9984

INDEXOPEN: 6,322.87

HIGH: 6,433.75

LOW: 6,322.87

CLOSE: 6,330.55

VOL.: 1.199 BVAL(P): 4.699 B

FXOPEN P47.240

HIGH P47.195

LOW P47.450

CLOSE P47.440

W. AVE. P47.325VOL. $988.00 M

LATEST BID (0900GMT) PREVIOUS CLOSE NET % CLOSE NET CLOSE PREVIOUS

42.29 PTS.

0.67%

COMPOSITE

WEIGHTED AVE.

A S I A N MA R K ET S WOR LD MA R K ET S PE SO -DO LL A R R AT E S

30DAYSTOJANUARY12,2016

A S I A N C U R R EN C I ES W OR L D C U R R EN C I ES

5.4 CTVS.

OI L

DUBAI 28.10 29.20

WTI 31.41 33.16

BRENT 31.55 33.55

CLOSE PREVIOUSJANUARY 12, 2016 JANUARY 11, 2016

JANUARY 12, 2016 JANUARY 12, 2016 JANUARY 11, 2016

SOURCE: PHILIPPINE STATISTICS AUTHORITY BUSINESSWORLDGRAPHICS: BONG R. FORTIN

-20

-10

0

10

20

Nov. 2014 Dec. Jan. 2015 Feb. March April May June July Aug. Sept. Oct. Nov.

-15.51

0 500 1,000 1,500 2,000 2,500

November 2014

2,773.50

2,538.67

326.15

360.31

320.23207.75

318.02

338.33

222.21

196.11

November 2015

TOP 5 EXPORTSBy commodity groupOther

manufactures

Ignition wiringset and other

wiring sets usedin vehicles,

aircraftsand ships

Machineryand transportequipment

Electronicproducts

Woodcraftsand furniture

PHILIPPINE MERCHANDISEEXPORT PERFORMANCETotal exports, November

0 1,000 2,000 3,000 4,000 5,000

2014

2015

(FOB value in $ million)

(FOB value in $ million)

(Year-on-year growth, in %)

19.7

-1.1

5,174.90

5,117.35

Annual growth rate

19.65

-3.18

-0.02

-2.96

2.06

-4.10

-17.40

-1.79

-1.82 -6.27

-10.84

-1.11

(in %)

(in units)

SOURCE: CAMPI BUSINESSWORLDGRAPHICS: BONG R. FORTIN

2015 VEHICLE SALES

0

5

10

15

20

25

30

2014 2015Jan.

2015

Feb. March April May June July Aug. Sept. Oct. Nov. Dec.

18

,662

2

0,6

63

23,5

57

21,2

59

23,1

39

24,1

85

24,5

69

23,1

81

27,0

69

28,6

67

26,6

79

26,9

79

144,460

116,381

172,228

PASSENGER CARS

COMMERCIAL VEHICLES

22.9%

90,287

288,609234,747TOTAL


2/23

By Carmencita A. CarilloCorrespondent

Davaosari-saristores unfazedby upscale 7-Elevens entry

DAVAO CITY Entrepreneur

Macmac Lejano, who operates a

micro retail shop known as a

sari-saristore is not threatened

by the sudden mushrooming

of 7-Eleven convenience stores

around the city.

His six-year old shop, located

along Ilustre Street, is adj acent

to one of the newest 7-Eleven out-

lets along San Pedro Street in the

citys central area.

Despite competition from the

global brand, Mr. Lejano said the

store, which sells candy per piece

and basic kitchen necessities in

volumes as small as two spoon-

fuls, continues to generate a daily

income of about P600.

I still get almost the same earn-

ings every day since I have different

customers than those going to the

convenience stores, he said.

Letty Madrasto, who owns

a sari-sari store located near a

7-Eleven branch in Ulas an area

in the southern side of the city,

admitted her earnings have gone

down on some days, but quickly

added that there have also been

days when sales were brisk.

Ms. Madrasto said she is confi-dent that customers will continue

PLDT inks dealwith HK telco

PHILIPPINE Long Distance Telephone Co. (PLDT) has

inked an Internet Protocol Exchange (IPX) agreement

with a unit of Hong Kongs telco provider HKT, saying

this will make phone calls and Internet access faster for

both of their subscribers.

The IPX multi-service interconnection agreement is

expected to benefit their fixed, mobile, and interna-

tional customers.

The deal will also allow PLDT and HKTs interna-

tional operating division PCCW Global to expand

their relationship in new market segments.

Mobile operators connected to PCCW Global IPX

can enjoy access to its Mo bileXchange service suite

and cloud-based applications OTT (over-the-top) solu-

tions and more, PLDT said in a statement yesterday.

This will give mobile operators the ability to dif-

ferentiate themselves in roaming and in domestic

services, according to the local telco giant.

With PCCW Globals proven expertise in delivering

advanced and quality services, we believe that this

agreement will enable us to deliver a broader range

of digital services to our customers, especially to our

overseas Filipinos in Hong Kong and their families

back home, PLDT Chairman Manuel V. Pangilinan was

quoted in the statement as saying.

For PCCW Globa l Chief Execut ive Offi cer Marc

Halbfinger, the IPX interconnection was a natural

step, considering that PLDT has been its major partner

in several projects.

We are looking forward to bringing innovative

solutions to international services which could directly

benefit the Philippine market, Mr. Halbfinger said inthe statement.

The PCCW Global network, which covers over five

continents, has customers in more than 3,000 cities

and around 140 countries.

[It] is one of the largest in the world supporting GSMA

(Groupe Speciale Mobile Association) standardized services

and Cloud-based applications, enabling new revenue

streams for connected operators, PLDT said.

Hastings Holdings, Inc., a unit of PLDT Beneficial

Trust Fund subsidiary MediaQuest Holdings, Inc., has

a stake in BusinessWorldthrough the Philippine Star

Group, which it controls. Daphne J. Magturo

EDITORCATHY ROSE A. GARCIA

CARMENCITAA.

CARILLO

By Daphne J. Magturo Reporter

Globe seeks Open Access law for telco industry

GLOBE TELECOM, Inc. on Tues-

day said it wants to build 500 cell

sites to boost Internet speed in

the country but is held back by

red tape at the local govern-

ment units, and called for the cre-

ation of an Open Access Law.

[T]he government can expedite

legislation to mitigate bureaucratic

red tape and other political hurdles

that stand in the way in the deploy-

ment of telecommunication and

broadband infrastructure, such

as cell sites, Globe President and

Chief Executive Officer Ernest L.

Cu said in a statement.

Specifically, an Open Access

Law for the telco industry would

expedite the issuance of all the

relevant permits for all telecom-

munications facilities at the lo-

cal government level, he added,

although Globe noted there is

currently no such proposal filed

in Congress.

Telecommunication compa-

nies are required to secure sev-

eral permits before securing

approval to build cell sites, said

Mr. Cu.

This leads to delays that usu-

ally take between six months and

one year, Globe senior vice-pres-

ident for corporate communica-

tions Ma. Yolanda C. Crisanto said

in a mobile phone reply.

Mr. Cu said Globe has around

500 cell sites waiting to be built at

any given time.Ms. Crisanto said

the company is planning to put up

cell sites in National Capital Re-

gion, and North and South Luzon.

Philippine Long Distance Tele-

phone Co. (PLDT) agreed with

Globe on the issue, saying this is

indeed an industry concern.

[T]o install a single cell site,

you have to get something like

30 permits, from different agen-

cies, both local and national. So

if we could simplify that process,

then operators can deploy their

network infrastructure faster,

PLDT Spokesperson and Head of

Public Affairs Ramon R. Isberto

said in an e-mail interview.

Sought for comment, Senator

Ralph G. Recto, chair of the Com-

mittee on Science and Technol-

ogy, agreed there is a need for the

proposal.We must work with in-

vestors to promote greater Internet

access, improve speed and reduce

cost to increase our productivity

and create jobs in the 21stcentury,

he said in a mobile phone reply

when sought for comment.

The Ayala-led telco said if the

government prioritizes Internet

infrastructure, businesses can

build on their capabilities and

support the economys growth.

Prioritizing the Open Access

law for the telco industry would

help fast track fiber builds that

will incr ease [I]n tern et acces s

and speeds in the country, he

said. The government can help

by providing the right regulatory

environment for an Internet in-

frastructure that would develop

local industries information and

communications technology ca-

pabilities, he added.

PHILIPPINES TOP 10 SEMICONDUCTOR EXPORTERS(in million pesos, 2014)

TI (Philippines), Inc.

GROSS REVENUE NET INCOME

Rohm Electronics

Philippines, Inc.

Samsung Electro-

Mechanics Philippines Corp.

Amkor Technology

Philippines, Inc.

STMicroelectronics, Inc.

NXP Semiconductors

Cabuyao, Inc.

Phoenix Semiconductor

Philippines Corp.

Ibiden Philippines, Inc.

Integrated Micro-

Electronics, Inc.

San Technology, Inc.

Source: BusinessWorldTop 1000 Corporations in the PhilippinesBusinessWorldGraphics: Samantha Gonzales

Electronics remain the Philippines core export. According to the latest Philippine Statistics

Authority data, electronics comprised 54.2% of exports in November last year, of which

semiconductors made up the biggest at 38.3% of the total. Thirty-five semiconductor

makers made it to the Top 1000 Corporations in the Philippines. All told, electronics

exporters contributed 4.4% of the gross revenue generated by the countrys top 1,000

corporations. Ranier Olson R. Reusora

135,923

26,113

24,596

22,299

19,440

15,950

10,451

10,049

9,844

8,898

13,551

462

-316

-857

590

83

775

157

-585

-89

to buy from her store because

she handles every transaction

promptly, and people never have

to line up to make a purchase as

they sometimes have to in conve-

nience stores.

Davao City Investment and

Promotion Center Chief Ivan

Chin Cortez said the local gov-

ernment expects these neighbor-

hood shops to remain a strong

sector under the micro, small

and medium enterprises because

7-Eleven is still largely seen by

the local market as a rather up-

scale shop.

Nonetheless, Mr. Cortez said

7-Eleven operator Philippine Sev-

en Corp. (PSC) has discovered a

growing demand among the citys

consumers They are continu-

ously expanding and will reach 70

stores by June this year, based onits submitted business plan.

Listed firm PSC launched its

foray into Mindanao last year

with the opening of its first store

in Davao City in May.

Department of Trade and

Industry-Davao City Director Ed-

win O. Banquerigo said 7-Elevens

aggressive roll-out of branches

is a rational business strategy in

terms of cost-effective opera-

tions.

We can attribute the growth

of the 7-Eleven stores in the

city to economies of scale, Mr.

Banquerigo said, noting the cost

of operating and maintaining a

central warehouse for the goods

that are distributed to the conve-

nience shops.

Prior to the entry of 7-Eleven

stores here, Davao Citys conve-

nience store sector was domi-

nated by homegrown chains, theDavao Central Convenience Store

operated by the Felcris group and

Choice Mart and HB1 owned by

LTS Pinnacle Holdings, Inc.

Both Felcris and LTS Pinnacle

also have a chain of supermarkets

to complement their convenience

stores.

Jojo N. Canda, LTS Pinnacle

vice-president for supermarkets,

in an earlier interview said they

are planning to open at least five

convenience stores per year given

the changing lifestyle of the citys

residents.

If we look at the picture of the

retail landscape, it is changing

Consumers nowadays are getting

busier like the working moms,

they do not want to go to the far-

ther and bigger [shopping] malls

but instead go to small and n earby

stores, Mr. Canda said.

LTS Pinnacle has seven Choice

Mart grocery stores and 51 of the

smaller shops with a pharmacy

branded as HB1.

On the other hand, Davao

Central Convenience Store, the

pioneer 24/7 retailer in Davao

City, has a network of 82 shops,

including those in other parts of

the Davao Region.

Mr. Cortez said similar to the

comparison with sari-saristores,

7-Eleven shops are seen as cater-

ing to the high-end market while

the local convenience stores arefor everyone.

Sia-led Hotel of Asia brings

Chinese brand to ManilaCHINESE HOTEL brand Jinji-

ang Inn is hoping to take advan-

tage of the growing Philippine

tourism market, with the opening

of two hotels in Metro Manila.

In a statement, Hotel of Asia,

Inc. (HOA), the hospitality firm led

by Mang Inasal founder Edgar J. Sia

II, said two Jinjiang Inn hotels in

Ortigas and Makati both had their

soft opening on Sept. 22, 2015.

The Ortigas hotel, which has

95 rooms, is located at San Miguel

Ave. cor ner Lour des Dri ve in

Ortigas Center, Pasig City. The

59-room Makati hotel is along A.

Arnaiz Avenue, Makati City.

Through its subsidiary CSIHotels, Inc., HOA became the

Philippine master franchise

holder for Jinjiang Inn in 2011,

after signing the deal with Chinas

largest hospitality conglomerate

Jin Jiang Hotels.

HOA is a company owned

by Mr. Sias Injap Investments,

Inc., tycoon Carlos Chans Oishi

Liwayway Marketing Corp. and

Steineil Development Corp. Mr.

Sia is the chairman and chief ex-

ecutive o ffi cer of the co mpany.

With 1,566 hotels worldwide,

Jin Jiang Hotels is said to be

the 9th largest hotel chain in the

world.

Whi le Jin jia ng Inn is con -

sidered a budget hotel chain in

China, HOA said the hotels in the

Philippines offers business bou-

tique accommodations.

Jinjiang Inn in the Philip-

pines will be a notch higher than

its counterpart in China, as it pro-

vides guests with 3-star business

boutique accommodations with

comfort and convenience in mind

in its full-serviced hotels in keycities in the Philippines, HOA

said in a statement.

In the Philippines, Jinjiang

Inn is managed by HOAs hotel

management company, Hotel 101.

Aside from Jinjiang Inn, HOA

also manages and operates the

Injap Tower Hotel in Iloilo City,

and the upcoming Hotel 101 Ma-

nila in the Mall of Asia Complex.

CRAG

A 7-ELEVEN store in

Davao City, where

Philippine Seven Corp.

is aiming to open a

network of 70 stores

by June this year.

A VIEW of the Jinjiang Inn M akati, located along A. Arnaiz Avenue.

HANOI Japans ANA Hold-

ings said it plans to buy 8.8%

of Vietnam Airlines for about

$108 million, as both carriers

seek to take advantage of grow-

ing travel demand in Southeast

Asia.The deal is likely to be the

first stake sale by a major Viet-

namese firm this year, giving a

much needed boost to the gov-

ernments privatization drive

whi ch has bee n cri ti ciz ed for

being sluggish and lacking ap-

peal.

Vietnam Airlines, which raised

$51.2 million by selling 3.47% of

the company at its 2014 initial

public offering, has been seeking

to sell a 20% holding to strategic

partners.

As part of the deal, ANA will

dispatch an executive to the

board of Vietnam Airlines and

provide it with operational and

management know-how to helpsupport service quality, the com-

panies said in a statement.

The stake sale could come as

soon as the middle of this year,

Viet nam Airli nes Chief Execu-

tive Offi cer Pham Ngoc Min h told

Reuters in a text message.

Vietnam Airlines is targeting a

pre-tax profit of 2.3 trillion dong

($103 million) this year, up 64%

from 2015, the company has said.

Reuters

Japan carrier ANA to buy8.8% of Vietnam Airlines

2/S1 Corporate News WEDNESDAY, JANUARY 13, 2016


3/23

Budget,

from S1/ 1

will then be subject to delibera-

tions within the Executive.

Once finalized, the program

will be submit ted by the Presi-

dent to Congress for discussion,

adjustment and approval before

it goes back to Malacaang for

signing into law.

However, the proposed 2017

spending plan will be taken up

by a new president who will take

office at noontime of June 30 and

by a new set of legislators who will

win the May 9 national elections.

PRIORITIES

Currently, the governments in-

ter-agency Development Budget

Coordination Committee com-

posed of economic managers who

set macroeconomic assumptions

for budgeting purposes still

expects the Philippine economy

to grow between 7-8% until 2018,

though the target is seen good as

missed for 2015 due to slower-

than-expected public spending

and a contraction in export of

goods.Growth averaged 5.6% for the

first nine months of 2015 as the

economy grew 5% in the first

quarter, 5.8% in the second quar-

ter and 6% in the third q uarter.

The government had set a

7-8% growth goal for 2015, but

to hit even a 6% average for that

year, the economy must have ex-

panded by 6.9% in the last three

months a pace deemed not

difficult by Mr. Abad given faster

government spending seen in the

second half of 2015.

Asked what sector s could be

the focus of spending in 2017, Mr.

Abad replied: Significant invest-

ments would be climate change,

and then of course continuing

infrastructure and then agricul-

ture.

We will push infrastructure

even further to 6% (of gross do-

mestic product, or GDP).

The budget had identified as

this years priorities: pursuit

of good governance and anti-

corruption measures; making

growth inclusive; creating more

and better jobs by sustaining the

growth momentum; managing

disaster risks; as well as establish-

ing an enabling environment of

just and lasting peace and the rule

of law.

The 2016 budget allots roughly

P766.5 billion equivalent to

5% of GDP for infrastructure

spending, taking off from 2015s

P431.57 billion.

The Budget chief earlier said

that the current spending pro-

gram focuses on the building and

rehabilitation of national roads

and bridges, while next yearsbudget will allot bulk of infra-

structure funds for construction

and repair of provincial thor-

oughfares.

But analysts of Natixis Asia

Research, a unit of the Paris-

based investment bank, said

that while the g over n men t

has gradually increased dis-

bursements for infrastructure,

the persistence of absorption

constraints reflected by histori-

cally smaller-than-programmed

spending will likely mean alloca-

tions for this year will suffer a

similar fate.

The 2017 budget will set in-

vest men ts for cli mat e chan ge

mitigation and adaptation, Mr.

Abad said , foll owin g the land -

mark agreement among countries

forged in Paris last month.

With submis sion of the pro-

posed 2017 budget to Congress

still months away, the govern-

ment has enough time to identify

investments needed to fulfill the

Philippines commitment under

the 21st Conference of Parties

(COP21) agreement that was

signed in France, the Budget chief

added.

Countries made individual

commitments at the Paris sum-

mit in a collective bid to cap the

increase in global temperature

at below 2 degrees Centigrade,

to strive for a 1.5C cap and to

update national targets every five

years. In Paris, the Philippines

led the so-called Vulnerable 20

emerging economies deemed

most exposed to the risks of ex-

treme weather conditions. The

pact is subject to ratification byeach country.

Prior to the COP21 pact, the

2016 budget already earmarks

some P132 billion for climate

change-related spending the

highest so far for such purpose,

Mr. Abad said.

DBM data showed that bulk

of the funds some P59.8 billion

will be used for flood control

projects under the Department

of Public Works and Highways,

P10.2 billion for reforestation,

and P12.9 billion to build farm-

to-market roads under the Agri-

culture department.

Hong Kong (10.9%), China ( 9.8%)

and Taiwan (7.6%).

BUCKING THE TREND

The countrys positive perfor-

mance in the sales of semicon-

ductors bucked the international

trend as worldwide sales were

down in November 2015, said

Mr. Balisacan.

Thus, the modest growth in

exports of goods from the elec-

tronics and semiconductors

segment is expected to continue

propping up total merchandise

exports.

Sales of manufactured goods,whic h made up 90.4% of tota l

export bill in November, went

up 3.6% to $4.6 billion. Of this,

electronics comprised 54.2% and

grew by 9.3%, accelerating from

the 7.3% rise in October but still

slower than the 26.6% gain a year

earlier.

Semiconductors, which com-

prised the largest electronics ex-

port at 38.3% of the total, rose by

5.7% year-on-year.

Nicholas Antonio T. Mapa,

associate economist at the Bank

of the Philippine Islands, agreed

that the latest export reading

was driven mainly by electronics

shipments, as expansion in this

sector reflects possible modest

but steady demand for semi-fin-

ished electronics products.

[B]ut despite the near-double

digit growth of more than half of

the export basket, the total print

was still below water, he said in

an e-mail.

So are exports really recov-

ering? Probably not our other

sectors, which had driven the

unusual strong performance in

2014.

PSA data showed sales of

garments plunged by 42.7% inNovember, followed by chemi-

cals which dropped by 39.4%.

Exports of furniture and fixtures

also suffered 34.9% drop that

month.

Standard Chartered econo-

mist Jeff Ng said it was still too

early to call it a recovery, as export

growth to most major economies

was weak.

We still see some headwinds

for export growth at least for the

next six months. We think that

net exports may still pose limited

support to growth in the fourth

quarter, he said in an e-mail.

But DBS Singapore economist

Gundy Cahyadi remained hope-

ful, saying separately via e-mail:

As long as electronic exports

continue to post decent growth,

we are not too worried about the

export n umbers.

We know it is mostly a result

of the weak global demand and

there is not much that the policy-

makers can do to alter this.

Mr. Cahyadi said GDP growth

this year would likely pick up to

6.1%, against the governments

7-8% goal, while inflation is set to

be relatively low at 2.5%.

And more importantly, theeconomy is still very much depen-

dent on the domestic economy. At

this juncture, we continue to view

that the economy is still in a sweet

spot, he said in an e-mail.

GDP grew 5.6% in the first

nine months of 2015 against an

official 7-8% full-year target, but

Mr. Balisacan as early as August

conceded growth could settle be-

tween 6-6.5%. In order to hit just

6%, the economy would have to

have grown by 6.9% in the fourth

quarter. PSA is scheduled to re-

lease 2015 fourth-quarter and

full-year data on Jan. 28.

Tax,

from S1/ 1

Export,

from S1/ 1

lion in percentage taxes and

P118.86 billion worth of other

taxes.

Collections from non-BIR op-

erations or those from govern-

ment agencies and corporations

are expected to reach P55.67

billion. The amount consists of

P50.99 billion worth of taxes on

net income and profits and P4.68-

billion other taxes.

Under the Aquino adminis-

tration, the BIR has consistently

missed its full-year targets, al-

though actual revenues have

grown steadily year-on-year. The

bureau had collected P1.945 tril-

lion as of end-November 2015.

Taxmen will try their best to

hit the 2016 target, Mr. Beltran

said.

S1/3WEDNESDAY, JANUARY 13, 2016


4/23

4/S1 TheEconomy WEDNESDAY, JANUARY 13, 2016 EDITORTIMOTHY ROY MEDINA

INDUSTRIAL PRODUCTION in

November grew at its fastest pace

in eight months, fueled by strong

domestic demand, the govern-

ment reported yesterday.

Preliminary results of the

Monthly Integrated Survey of

Selected Industries of the Philip-

pine Statistics Authority (PSA)

showed that the Volume of Pro-

duction Index a measure of fac-

tory output expanded 7.5% year

on year in the penultimate month

of 2015.

This was slower than the 9.1%

recorded in November 2014, but

was al so t he fastest since March

2015s 14.9%.

The increased growth in

ma nu f a c tu r ing despite the

continued weak global demand

shows the resiliency of our do-

mestic economy, Economic

Planning Secretary Arsenio

M. Balisacan said in a separate

statement issued by the National

Economic and Development Au-

thority (NEDA).

Mr. Balisacan, who is also

NEDA director-general, expects

the manufacturing sector to end

the year on a positive note on the

back of robust domestic demand,

increased inflow of remittances,

stable inflation, and low fuel

prices.

Year to date, manufacturing

growth averaged 2.6%.

Growth in November came

mainly from the manufacture of

electrical machinery (20.1%), ma-

chinery except electrical (29.6%),

petroleum products (12.5%), ba-

sic metals (25.1%), and tobacco

products (52.7%).

In contrast, production in

the following industries con-

tracted: food manufacturing

(-10%), printing (-19.7%), fur-

niture and fixtures (-20.6%),

and wood and wood products

(-26%).

In a separate report (see related

story on S1/1), the PSA said manu-

factured goods comprised 90.4%

of total exports last November,

and grew 3.6% year on year, buck-

ing the 1.1% contraction of total

exports for the month.

M a nu f a c tu r ed g oods ei-

ther go local or for export, and

they sometimes go up because

of local consumption, Sergio

R. Ortiz-Luis, Jr., president of

the Philippine Exporters Con-

federation, Inc., told Busine ss-

World.

Exports are not doing well

because of the markets abroad,

Mr. Ortiz-Luis added.

Nov. factory output highest in 8 monthsBy Jochebed B. GonzalesResearcher

ENERGY REMAINS a major con-

straint for manufacturing, which

is more electricity-intensive than

most sectors of the economy, the

economic planning secretary said

in discussing what could possibly

derail the governments drive to

boost industrial production.

There are many opportu-

nities [in manufacturing]. We

know what has gone wrong in

the past. We were not able to

move manufacturing as much as

our neighbors did, said Arsenio

M. Balisacan, director-general of

the National Economic and De-

velo pme nt Auth orit y (NE DA),

on the sidelines of an energy

conference at the New World

Hotel in Makati City.The issues all the time is in-

frastructure, high cost of doing

business, regulatory issues and

the cost of energy, he said.

Mr. Balisacans comments

follow the Trade departments

announcement last week that it

would be focusi ng more on the

governments manufacturing re-

surgence program, which aims

to rebuild the existing capacity of

industries, bolster new ones, and

keep the competitiveness of those

with comparative advantage.

The program also seeks to

build on agriculture-based manu-

facturing industries that gener-

ate employment. It is expected

to promote inclusive economic

growth as it is the manufacturing

sector is source of much-needed

jobs.

We have been pushing for

this since the beginning of this

administration because our abil-

ity to generate high-quality jobs

depends so much on our ability to

revive our industries, Mr. Bali-

sacan said.

The Department of Trade

and Industry has said that the

agriculture sector would cornerthe biggest share of the program

at P14 billion. The other sectors

with big allocations are the Phil-

ippine Coconut Authority at P7.1

billion, the Department of Labor

and Employment at P1.2 billion.

A smaller amount of P376 million

has been set aside for the Depart-

ment of Energy (DoE).

In his prepared speech yester-

day, Mr. Balisacan said: Energy

remains a crucial element in the

countrys endeavor to stay on its

current growth trajectory. How-

ever, the sector is faced with many

policy, investment, and regula-

tory issues affecting incentives

and efficiency within the sector

and across the economy.

These include coordinations

between the public sector and the

private sector, and the seemingly

incongruous objectives of the

Electric Power Industry Reform

Act and the Renew able Energy

Act. It is then through research

and discussion that we can equip

the country with evidence-based

energy policies to address all of

these, he added.

On the sidelines of the con-

ference, Mr. Balisacan gave an

update on the P14.721-billion

Batangas-Manila 1 Natural Gas

Pipeline project of the Philippine

National Oil Co. The project has

been lined up for NEDA board

approval.

He said there were certain is-

sues raised by the Energy depart-

ment, and that NEDA was waiting

for the re-submission from Secre-

tary Zenaida Y. Monsada.

It has to do with the assump-

tions of the project, he said.

We are aiming it as a PPP

(public-private partnership)

project but DoE wanted to re-

visit other option s. Its up t o the

DoE and the proponents. NEDA

is facilitating the process, mak-

ing sure it meets all the require-

ments, he said.The two-day conference was

organized by the Economic Policy

and Development Program, an

initiative launched in 2014 for

research, policy development

and advisory, capacity-building,

and communication. It is funded

by the United States Agency for

International Development and

implemented by the UPEcon

Foundation, Inc. Vic tor V.

Saulon

No industrial revival without addressing energy issues Balisacan

BW FILE PHOTO

MAGAT Hydroelectric Power Plant in Northern Luzon

THE BUSINESS process out-

sourcing (BPO) industry will

continue flourishing in the Phil-

ippines for at least 10 more years,

boostin g demand for offi ce as well

as residential space, according to

a real estate advisory firm.

I think the downturn in the

Chinese stock market, and other

markets as well, will only force

multinational [companies] to

outsource more vigorously, CB

Richard Ellis (CBRE) Philippines,

Inc. founder Rick M. Santos told

reporters yesterday.

This will sustain demand for

office space in the Philippines,

wh os e yo un g an d En gl is h-

speaking population make it a

preferred location for BPOs, Mr.

Santos added.

What we see now is cities do

not work in isolation. So when

BPOs come in, that will also

necessitate [demand for] retail,

maybe movie theaters and also

residential.

CBRE expects the demand

for residential space to continue

growing, although the market

presents stronger competition

among developers because of the

higher supply.

From a residential perspec-

tive, with infrastructure being lim-

ited, public-private partnerships

not moving quickly enough, we

are in a situation where peoples

commutes are getting too long...

so more people would probably

continue to want to live closer to

where they work, Mr. Santos said.

The company, which forms

part of the US-based CBRE Group

Inc., also expects rising labor

costs and other issues hounding

China to provide a boost to the

Philippine manufacturing sector.

As land prices go up in business

districts, they are going out to Sta.

Rosa, Cavite, Clark, Central Luzon.

We see them continue expanding

outside major cities, he said.

But the Philippines will see

stronger growth in its services

sector for now, Mr. Santos said,

noting that establishing a BPO

business costs less at about

$40,000 compared to the $1-mil-

lion investment needed for a

manufacturing firm.

As the new presi dent of the

American Chamber of Commerce

in the Philippines, Mr. Santos

cited infrastructure and security

among the persisting concerns

for US businesses in the Philip-

pines.

Investors are pretty comfort-

able from what they have seen

from a governance perspective,

Mr. Santos said. In terms of

policies, there will always be chal-

lenges.

The chamber expects the next

administration to continue en-

sure transparency in the govern-

ment and accelerate investment

in infrastructure and education,

among others.

There is a great opportu-

nity or a great challenge, Mr.

Santos said. Keith Richard D.

Mariano

China slump gives BPO boom 10 more years to run CBRE

0

5

10

15

20

Sept.2012

Oc t. Nov. D ec. Jan .2013

F eb. March Apri l M ay June Jul y Au g. Sept. O ct. Nov. Dec . Jan.2014

F eb. March A pri l M ay Jun e Ju ly A ug. Sept. Oc t. Nov. D ec . Ja n.2015

Feb. March Apri l M ay June Jul y A ug. Se pt . O ct. Nov.

VOLUME OF PRODUCTION INDEX (Year-on-year growth rates for Manufacturing sector, in %)

SOURCE: PHILIPPINE STATISTICS AUTHORITY BUSINESSWORLD GRAPHICS: BONG R. FORTIN

9.8

20.7

11.7

10.5

10.0

5.3

9.0

20.2

8.9

14.5 17.5

19.0

21.1

18.8

22.8

4.4

6.0

-0.03

10.8

12. 7 12. 7

7.6

4.7

5.7

8.7 9.1

4.7

-

2.1

2.6

14.9

-1.1

1.8

-1.6

0.1

2.1 2.8

1.7

7.5

-1.0

ORGANIZATION of the Pe-

troleum Exporting Countries

(OPEC) will soon make efforts to

convene before the next scheduled

meeting in June as the slump in

oil prices is hurting producers, in-

cluding the worlds biggest export-

er, Saudi Arabia, said Emmanuel

Kachikwu, Nigerias minister of

state for petroleum resources.

The 13 members of the OPEC

will work toward meeting in earlyMarch, Mr. Kachikwu said in an

interview in Abu Dhabi on Tues-

day. Members are already engaged

in informal discussions with some

non-OPEC producers, including

Russia, to join any future produc-

tion cut to shore up prices, he said.

We are definitely looking at a

time frame in very early March,

Mr. Kachikwu said. You will very

necessarily have to have an OPEC

meeting because the group

first has to meet and decide on

its position before having formal

meetings with other producers to

coordinate a cut, he said.

Benchmark Brent crude closed

at $43 a barrel on the day of the last

OPEC meeting on Dec. 4, and was

trading at $30.98 a barrel at 9:12

a.m. on Tuesday in London. OPEC,

which supplies about 40% of the

worlds oil, effectively abandoned

output limits in December, po-

tentially worsening a glut created

after producers from the US to

Russia and Saudi Arabia pumped

more than demand warranted.

PRICES SLIDINGNo OPEC members, including

Saudi Arabia, are happy with the

slide in prices since the groups

last meeting in December, Mr.

Kachikwu said earlier at a confer-

ence in Abu Dhabi. He didnt wish

to name the member countries

seeking an early meeting, and

said that in December, Saudi Ara-

bia was supportive of such meet-

ing, if there was consensus for it.After the lack of consensus at

the December meeting, OPEC

ministers knew oil prices would

fall, Mr. Kachikwu said. High-cost

shale oil producers are showing

resilience to low prices and are

becoming a constant equation in

the oil dynamics, he said.

I certainly hope that it doesnt

go below $30 for the sake and sur-

vival of everybody Mr. Kachikwu

said. My perception is that we

will see it get worse before it gets

better. Oil is seen ending the year

at $40 to $50 a barrel, he said.

Bloomberg

OPEC may callemergencyconference inMarch Nigeria

THE RATE at which banks charge each

other to borrow yuan in Hong Kong surged

to a record high on Tuesday, with Chinas

central bank thought to be buying huge

amounts of the unit to fend off speculators.

The overnight Hong Kong Interbank

Offered Rate for the offshore yuan jumped

53 percentage points to almost 67% owing

to tight liquidity. The one-week rate also

surged to 33.8% from 11.%.

But analysts say the move could

backfire and further damage confidence

in the Chinese economy, a key driver of

global growth.

The surge comes as traders around the

world grow increasingly worried about

Chinas economy as it suffers a painful

slowdown that has convulsed markets.

Beijings decision last week to lower

the value of the yuan against the dollar

to a five-year low added to concerns,

with the leaderships handling of the

crisis being called into question.

This in turn has caused h eavy selling

of the Chinese unit, leading the Peoples

Bank of China (PBoC) to step in to buy

yuan and sell dollars, tightening liquidity.

Albert Leung, a Hong Kong-based

rates strategist at Nomura Holdings said:

The PBoCs suspected intervention in

the offshore currency market further

tightened the liquidity. Yuan interest

rates are expected to remain highly

volatile in the next couple of days.

But economist Chong Tai-Leung,

executive director of the Chinese Univer-

sity of Hong Kongs institute of global

economics and finance, told AFP the

intervention was a bad idea.

I dont think its a good method

because you hurt your own economy,

he said. Rising interest rates may or

may not curb speculation, but it will hurt

investment.

Mr. Chong said the move could

prompt a further sell-off in the countrys

stock markets, which have already fallen

about 15% so far this year.

The government is running out of

tools. People will lose confidence and

think the government may not have

any more methods to control the stock

market in that case they will sell off,

he said.

The rate rise lifted the yuans value

in Hong Kong, where it is more freely

traded than on the mainland. Last week

it was almost 3% below its rate in

Shanghai.

Its a conscious effort to make fund-

ing costs high for speculators, Andy Ji,

a Singapore-based foreign-exchange

strategist at Commonwealth Bank of

Australia, told Bloomberg News.

The Hong Kong Monetary Authority

is notably absent from the market. Theyre

trying to help the PBoC achieve its objec-

tive of converging the yuan spot rates.

The PBoCs decision in August to

devalue the yuan by about 5% sparked

a global rout that wiped trillions off

valuations and shattered traders

nerves.

Last month the International Mon-

etary Fund welcomed the yuan into its

elite reserve currency basket, recogniz-

ing the ascendancy of the Asian power

in the global economy and boosting

Beijings dream of internationalizing the

currency. AFP

Banks borrowing rate for yuan in Hong Kong at record levels

CALL CENTER agents at a business

process outsourcing in Quezon City

BW FILE PHOTO


5/23

GROWTH in the fourth quar-

ter was likely the fastest in 2015,

ING Bank said, due to favorable

developments in government

spending late in the year.

ING Bank senior economist

Jose Mario I. Cuyegkeng said

gross domestic product (GDP)

growth likely surpassed the third

quarters 6%.

We expect at least a 6% 4Q

2015 GDP growth, according to

Mr. Cuyegkengs latest market

view. Domestic demand is likely

to remain strong not only because

of government spending but also

strong private sector spendinggrowth, favorable construction

activity as well as steadily growing

service sector. Election spending

has already started and is likely to

accelerate.

Growth averaged 5.6% at end-

September, after a 5% rise in the

first quarter and 5.8% in the sec-

ond. The target range is 7%-8%

for the year, with the economy

needing to hit 6.9% in the last

three months to ensure 6% ex-

pansion.

The average October-No-

vember spendin g growth in 2015

reached 18%-21% year-on-year

a major reversal of flat growth in

4Q 2014. The rebound in govern-

ment spending delivers a boost to

4Q GDP, the economist added.

State spending in November

was P17 1.42 bil lio n, Tre asu ry

data showed, bringing year-to-

date expenditure growth to 13%

at P1.992 trillion. This remained

well belo w the P2.3 35-t rill ion

goal for the period.

The 11-month budget balance

was a P46.5 45- bil lio n def ici t,

well below the P246.67 bill ion

programmed for the period. Thedeficit cap for the year is P283.69

billion.

The Bangko Sentral ng Pili-

pinas will likely keep monetary

policy settings unchanged early

this year with inflation within ex-

pectations, Mr. Cuyegkeng said,

but warned of possible confu-

sion once the central bank shifts

to the interest rate corridor sys-

tem by the second quarter, affect-

ing sentiment and even the pesos

performance.

Mr. Cuyegkeng sees the cen-

tral bank adjusting policy rates

in three tranches to achieve a

100-basis point (bps) spread from

the current 350 bps.

As planned, the special deposit

account (SDA) rate will be the

floor, currently at 2.5%. The over-

night borrowing or reverse repur-

chase (RRP) rate, currently 4%

will be the key policy rate, while

the repurchase rate, now 6%, will

be the ceiling.

Implementation (of the cor-

ridor) that involves a reduction

of the RRP rate even as the SDA

rate is steady could be inter-

preted by the markets as accom-modative.

Meanwhile, Natixis Asia Re-

search is calling 2015 growth at

5.7%, down from 6.1% a year earli-

er, though it believes the economy

will outpace the region this year.

It sees 5.9% growth in 2016

according to projections stated in

a report: The Philippines: A Win-

ner of China and Japans Excess

Capacity?.

Receipts from the business

process outsourcing sector and

from remittances the two ma-

jor sourc es of inco me could

have reached a point of fatigue,

Natixis said, arguing for a shift to

agriculture, tourism, and manu-

facturing.

We expect the (peso) to out-

perform in 2016 due to a slight

uptick of growth. Low oil is a boon

for consumption in the country,

said analysts Trinh D. Nguyen

and Gary Ng. The Philippines

has an easy problem of investing

its excess savings to ensure that

growth reaches potential. So yes,

the Philippines is well-positioned

to be a big winner.

The report also cited ripeconditions for an infrastructure

investment boom by 2016, but

the Philippines will still not take

up its full 5% of GDP allotment

for infrastructure after a his-

tory of underspending, and a

possible pause in private sector

investment pending the election

outcome.

S1/5TheEconomyWEDNESDAY, JANUARY 13, 2016

DAVAO CITY The Brunei Da-

russalam-Indonesia-Malaysia-

Philippines-East ASEAN (Associ-

ation of Southeast Asian Nations)

Growth Area (BIMP-EAGA)

is putting flesh into the policy

framework that is intended to

guide the sub-regions develop-

ment strategy from 2017 to 2025

by identifying priority projects to

receive investment.

Romeo M. Montenegro, direc-

tor for investment promotions

and public affairs of the Mind-

anao Development Authority,

said offi cials of t he four memb er

countries will meet here on Feb.

23-26 to draft the programs for

the framework, approved last

month in Kota Kinabalu.

Our priorities are consistent

with develo ping Minda nao and

Palawan and will provide us lever-

age with the national government

to ensure that the two areas are

developed, Mr. Montenegro said.

The projects to be proposed

will develop Mindanao and Pala-

wan as food baskets, destinations,

and connecting points within the

ASEAN Economic Community.

If we improve the ports in

Mindanao and Palawan, it will

also result in an i ncrease in tr affi c

across BIMP-EAGA and across

ASEAN, he said.

At the Kota Kinabalu meeting,

the four countries agreed on the

BIMP-EAGA Vision 2025, which

is to develop a resilient, inclu-

sive, sustainable and economi-

cally competitive sub-region.

We continue to recognize that

improvement in connectivity is

vital for the seamless movement

of goods and people from EAGA,

the group said in a joint statement.

Mr. Montenegro said the proj-

ect planned for the Philippines

will be presented to the next ad-

ministration.

This is why it is critical to

identify the key projects so that

these can be integrated into the

priorities of the incoming admin-

istration, he said.

The first BIMP-EAGA blue-

pr in t was dr afted for 2 01 2 -

2016.

Under this framework, the na-

tional government implemented

several infrastructure projects,

including the upgrade of the road

between the cities of Davao and

General Santos, which both have

seaports, and the port in Puerto

Princesa City.

DAVAO CITY Better and bigger ports areneeded in the Davao Region to attract more

investment from member nations of the Eu-

ropean Union (EU), according to the EUs top

representative in the country.

EU Ambassador to the Philippines Franz

Jessen, who visited the city for the first time

on Jan. 11-12, said European businesses are

considering ventures in the region after the

completion of a proposed free-trade agree-

ment (FTA) between the EU and the Philip-

pines, but logistics concerns will first have to

be addressed.

Logistics and the issue of ports have to

be looked into to make sure bigger ships can

operate here, Mr. Jessen said after hearing a

briefing by local offi cials on inves tment pros -

pects in the city on Monday.

Ivan C. Cortez, acting head of the Davao City

Investment and Promotion Center, assured

Mr. Jessen that a P40-billion reclamation proj-

ect by Mega Harbor Development Corp., whichthe city government plans to sign an agree-

ment for within the year, includes a modern

port that can accommodate larger vessels.

Mr. Cortez, however, did not mention the

planned P18.99-billion modernization project

for the existing Sasa Port in the city, which will

be undertaken by the Department of Trans-

portation and Communications through the

public-private partnership scheme.

Mr. Jessen said the conclusion of an FTA

will expan d trade betwee n the EU and the

Philippines, benefiting areas such as Davao.

The growth of the Philippine population

has substantially made it a larger economy and

this is important for Europe, he said.

The EU and the Philippines agreed to start

formal negotiations for an FTA last December

and the first round of discussions are expected

within the first half of this year.

The visit of Mr. Jessen, who was also in Co-

tabato City last month, was partly intended to

reaffi rm the EUs commitment to contribute

to development initiatives in Mindanao.

With him were EU Commission Desk Offi cer

Thomas Wiersing and EU Delegation to the

Philippines Minister Counsellor Mattias Lentz.

IP HEALTH PROJECTMr. Jessen also checked on developments at

the Pamulaan Foundation at the University of

South Eastern Philippines.

Pamulaan Foundation is the EUs part-

ner organization in the implementation of

the Indigenous Peoples MNCHN (Maternal,

Neonatal and Child Health and Nutrition)

project that is intended to address the needs

of indigenous peoples and other marginalized

communities in Mindanao.The IP MNCHN is being implemented in

the provinces of North Cotabato, Compostela

Valley, Bukidnon, Agusan del Sur and Zambo-

anga del Sur.

In a project brief, Estelito L. Ocampo, IP

MNCHN project communication specialist,

said the project has led to the formulation of

the Ancestral Domain Investment Plan for

Health, which has become the basis of the

local government unit fund allocation for IP

health programs and services at the municipal

and provincial levels.

CARMENCITA A. CARILLO

EUROPEAN AMBASSADOR to the Philippines Franz Jessen (center) visits the Davao City Public Safety

and Security Command Center on Jan. 11, where he was given a briefing by local offi cials on investment

opportunities and the city-wide computerized security system.

By Carmelito Q. FranciscoCorrespondent

By Melissa Luz T. LopezReporter

By Carmencita A. Carillo Correspondent

Davao told to build better portsto attract more EU investment

Food, transport, travel are BIMP-EAGA priorities

Fourth-quarter growth at least6% on govt spending ING

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*amended to at most five (5 ) from minimum of three (3) prospective bidders as previously published in accordance to

Sec. 24.5.2 of the Revised IRR of R.A. 9184

**amended to any from each member firm as previously published

1. The Philippine Reclamation Authority (PRA) , through its 2015 Corporate OperatingBudget (COB), intends to apply the sum of Four Hundred Eight Million FourHundred Thirty One Thousand Two Hundred Seventy Nine Pesos and 86/100(Php408,431,279.86)being the Approved Budget for the Contract (ABC) to paymentsunder the contract for the Consultancy Services for the Programmatic Environmental

Assessment, Planning and Engineering Studies for the Coastal Adaptation StrategyFormulation in the Manila Bay Area. Bids received in excess of the ABC shall be automaticallyrejected at the opening of the financial proposals.

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Bidding is open to all interested bidders, whether local or foreign, subject to theconditions for eligibility provided in the IRR of RA 9184.

7. The Procuring Entity shall evaluate bids using the Quality-Cost Based Evaluation (QCBE)procedure. Bids whose technical proposals pass the minimum technical rating of seventyfive percent (75%) shall have its financial propo sals opened and evaluated. The technicalproposal shall carry eighty five percent (85%) in the bid evaluation. The criteria andrating system for the evaluation of bids shall be provided in the Instructions to Bidders.

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January 12, 2016

(Sgd.) FLORO C. URCIABAC Chairman

Request for Expression of Interest for thePROGRAMMATIC ENVIRONMENTAL ASSESSMENT, PLANNING AND ENGINEERING

STUDIES FOR THE COASTAL ADAPTATION STRATEGY FORMULATION IN THEMANILA BAY AREA (PBCONS 15-004)


6/23

The problem with retaining

the restrictive provisions in

RA 9225 may be likened to the

oft-rejected proposal to pass

a Divorce Law. Many of those

who cann ot lega lly separ ate

from their Number One resort

to the next best thing which

is to maintain a Number One-A

and even a Number One-B. Even

the Church has provided a way

around divorce by allowing an-

nulment an option that only

the wealthy and influential can

avail of.

In the case of the restrictions

imposed by RA 9225, there have

beenmanyinstances whenthosedetermined to runfor electiveof-

ficein thePhilippines havecom-

plied withthe lawby renouncing

their foreign citizenship before

a Philippine official. However,

that is not valid under US law.

Renunciation of US citizenship

has tobe madebeforean Ameri-

canconsular officer outsideof the

United States.

This musthavebeenwhyPoe,

after having renounced her US

citizenshipbeforea Philippineof-

ficial,decided todoitagainbefore

a USconsular officer.Some would question why

foreigners should be allowed

to run for public office or be ap-

pointed tokey governmentposts

inour country.That begs another

question: Whynot?

Aren t we one of the main

reasons for the booming Phil-

ippine economy? Shouldnt we

have a say in the governance of

a country that we are support-

ing with our hard work and long

distancedevotion?

Another question that invari-

ably follows that first one is,

Arent there enough competent

and qualified Pinoys availablelo-

callyfor thosepositions?

IfI were toanswer thatques-

tion in a truthful and forthright

manner, some folks would be

insulted. Suffice it to say that

those competent and qualified

individuals arenotmanagingthe

Department of Transportation

& Communications, as well as a

number ofgovernment agencies.

Thefactis thattherearethou-

sands of overseas Filipinos who,

after having assumed foreign

citizenship, have retained or re-

acquired their Philippinecitizen-

shipbecauseofa sinceredesireto

helptheir Motherland.

Tocitea currentexample,the

protests against Chinas bullying

incursions into the South China

Sea gained momentum because

of the aggressive and relentless

efforts of US Pinoys for Good

Governance,led by FilAms Loida

Nicolas-Lewis, Rodel Rodis, Ted

Laguatanand CharitoBenipayo.

These are the same commit-

ted individuals, along with the

lateAlex Esclamado,who lobbied

long and hard for the passage of

theOverseas AbsenteeVoting Act

and RA 9226. They did it out of

lovefor theland oftheir birth.

I dont think it is fair for

anyone to question their sincer-

ity.Neither should theychallenge

Poes motive for renouncing her

US citizenship. What social or

economic advantage could she

have expected from assuming

a low-paying mid-level govern-

mentjob?

The truth is that, when Presi-

dent Benigno S. C. Aquino III

won the presi denc y, seve ral

leading FilAms expressed in-

terest in serving in his govern-

ment. I did, too.

It was not for lack of love for

Amer ica, a coun try to which

we owe much of wh at we have

become a nd w here w e ha ve

raised our children and grand-

children. It was because of a

fervent desire to be of service to

our Motherland.

If I have been critical of Sen.

Gra ce P oe, i t ha s onl y been

because of her dogged deter-

mination to push ahead with

her presidential aspirations,

in spite of being clearly handi-

capped and restricted under

our Constitution.

She could have chosen the

elegant option which was to, at

least, wait for one handicap

residency to be mitigated by

time. And, in the spirit of the

half-a-loaf principle, as a sena-

tor, she could also have chosen to

push for a more humane defini-

tion of natural born citizen to

include foundlings.

HillaryClinton waited outtwo

terms ofPresident BarackObama

tooncemoreaspirefor the presi-

dencyofthe United States.Grace

Poe has time on her side. Maybe

she should stop listening to her

Rasputin,whoever thatscheming

adviser mightbe.n

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EDITOR ROBERTJ.A.BASILIO,JR.

AD LIBGREG B. MACABENTA

The pseudo-nationalists and Facebook patriots who read this

piece will likely criticize us for (a) turning our b acks on the

Motherland and (b) wanting to have our cake and eat it

too. But I bet many of them would jump at the opportunity to

get a green card and US citizenship and not necessarily due

to lack of love for the Philippines.

MY CUP OF LIBERTYBIENVENIDO S. OPLAS, JR.

Provisions on feed in tariff (FIT) and renewable

portfolio standards (RPS) in the Renewable

Energy law should be removed.

ASEAN @ASEANMostof the #ASEANpopulationareyoung people

belowtheageof 30.

BusinessWorld@bworldphYellowCab Pizza toenter China marketl owl.li/

WTy2Y

Breaking News Feed @pzfBREAKINGNEWS - HISTORIC: Nobodywon

tonights Powerball jackpot. Wednesdays

estimated Powerball drawing jumps to$1.3 billion.

ADB Publications @adbpublicationsConditions of cashtransfer adaptto thetimes, ex.

climateresilienceactivities @dinkysunflower

#CCTConference

CHINA @chinaThe10 mostinteresting things Jack Ma said last

year ow.ly/WTMhj by @ChinaGeeks

MITSloan ExecEd @MITSloanExecEdNewfrom our blog: Areyou duefor a digital

detox? mitsin.co/WU9IE

World Economic Forum @wefCanair pollutionaffect your earnings, as well as

your #health? wef.ch/1OKDVQe #environment

UBS @UBSUrbanization: Oneof threedrivers for longer term

investmentideas #UBSHouseView #CIOow.ly/

Wnu2R

#bworldfeed

Climatechangesfromwarm-

ingto coolingto warming

tocooling, inendlessnatu-

raland cyclicalpattern. A period

of global warming for decadesis

followedbya periodofglobal cool-

ing,whichalsolastsfor decades.So

globalwarming hasprecedents, it

isnotunprecedented.

There was global warming in

thepastwhentherewas noteven

a single car or coal power plant.

This chart shows that modern

warm period that peaked in the

last century was not exceptional

or scary. (SeeTable1)

Energypolicies inmanycoun-

tries have been heavily distorted

by governments to fight man-

made or anthropogenic global

warmingand climate change.

But how can governments,

the United Nations and vari-

ous environmental groups fight

something that naturally occurs,

likedayand night,likewet-dryor

winter-spring-sum mer-fall sea-

sons,likeEl Nio-La Nia cycles?

This will be my main argu-

mentwhenI presentmypaper at

the Energy Policy Development

Program (EPDP) Conference

2016, with the theme Toward

Inclusiveand SustainableEnergy

Development thatwould beheld

at New World Hotel in Makati

City,Jan.12-13,2016.

The recent extreme or severe

floodingand droughtthat people

say as proof of man-made

warming and c limate change is

not true. As shown in the above

figure, the Little Ice Age from

1200s to 1700s showed severe

cooling and flooding, brutal win-

ter for decades and centuries.

In the Philippines, many in-

stances of severe flooding killed

thousands of Filipinos many

The p robl em confronti ng

Sena tor Gra ce P oe ha d

its antecedents in certain

provisions of the Dual Citizen-

shipLaw,RA 9225,thatFilipino-

Americans objected to,evenas we

lobbied hard for its passage.

Iw a s p a rtofa g rou p tha tmet

with both President Gloria Ma-

capagal-Arroyo and then Senate

President Franklin M. Drilon to

appealforthe deletionofthe pro-

visionsinthe lawthatrequired re-

nunciationof foreign citizenship

inordertorun forpublicofficeor

toaccepta keygovernmentpost.

Section 5(2) of the RA 9225

states:Thoseseekingelectivepub-lic office in the Philippines shall

meetthequalificationsfor holding

public office as required by the

Constitution and existing laws

and,atthetimeof thefilingofthe

certificate of candidacy, make a

personaland swornrenunciation

ofany andall foreigncitizenship

before any public officer autho-

rizedto administeranoath;

Section 5(3) states: Those ap-

pointed toany public officeshall

subscribe and swear to an oath

of allegiance to the Republic of

the Philippines and its duly con-

stituted authorities prior to the

assumption of office; Provided,

that they renounce their oath of

allegiance to the country where

theytookthatoath.

We felt that the se restric tive

provisions would resultina waste

ofvaluable humanresources: po-

tential public servants imbued

with the values, work ethic, civic

spirit and training developed

from living in more advanced

countries likethe US.

Quite frankly, much as we

were ea ger to serve t he land of

our birth,few ofus wereprepared

to renounce our US or foreign

citizenship. We had our reasons,

mostofthemvalid.

The pseudo-nationalists and

Facebook patriots who read this

piece will likely criticize us for

(a) turning our backs on the

Motherland and (b) wanting

to have our cake and eat it too.

But, hypocrisy aside, I bet that

many of them would jump at the

opportunity to get a green card

and US citizenship and not

necessarily due to lack of love for

the Philippines.

In this regard, those who

have severely criticized Poe for

renouncing her US citizenship

in order to get appointed chair-

manof theMovieand Television

Review and Classification Board

(MTRCB) should get a reality

check.Thedecisionshemadewasnot an easy one and only a few

would havedone whatshe did.

I franklythinkthatsheshould

be given credit for making that

difficultdecision. I doubtthat she

had any inkling at the time that

she would run for senator and,

subsequently,for president.

At any rate, President Arroyo,

prevailed uponour lobbygroup to

acceptthe proposed billin spiteof

therestrictiveprovisionsbasedon

thehalfa loafprincipal(Halfaloaf is better than no loaf at all).

Shepointedoutthatit wasourbest

chancetohavesucha lawpassed.

Y ou ca n a l w a ys ha ve i t

amended later, she said. But,

atleast,youwill havean existing

law to work on. Mr. Drilon said

as much.

All of us in the original lobby

group still believe that RA 9225

shouldbe amended toallowdual

citizenstorunfor publicofficeor

to occupy key government posts

without having to renounc e our

foreign citizenship,as longaswe

have retained or reacquired our

Philippinecitizenship. There are

manyinternational precedentsto

support this position. Israel, for

one,doesnot requirerenunciation

ofUSc itizenshiptoserveinthe Is-

raeligovernmentand themilitary.

Thereverseis evenmorecom-

mon, namely, Israeli-American

citizens occupyingsensitiveposts

in the US government without

having to renounce their Israeli

citizenship, among them, former

Deputy Defense Secretary Paul

Wolfowitz,Michael Chertoff who

headed theDepartment ofHome-

land Security, and former Secre-

taryofStateHenryKissinger.

Ofcourse,themostprominent

dual citizenof themall is Arnold

Schwarzenegger, who retained

his Austriancitizenship whenhe

becamegovernor ofCalifornia.

The National Internal

R ev en ue C od e o f 1 9 97

(Tax Code) provides

a myriad of remedies either

civil or judicial, whichthe Bu-

reauof Internal Revenue(BIR)

canchoosefromto collecttaxes

fromtaxpayers.

Among th ese civil remedies

is a tax lienon all thetaxpayers

properties, which is automati-

cally created,

byoperationof

law, in favor of

theState,from

the ti me the

tax becomes due and payable.

Thepurposeof this lienis tore-

servestatus quountil collection.

To be effective against third

persons, the Commissioner of

Internal Revenue (CIR) files

for the annotation of a Notice

of Tax Lien in the office of the

Register of Deeds of the prov-

ince or city where the property

is situated.The tax lienattaches

tothepropertyevenifthe same

is nolonger in thehands ofthe

delinquenttaxpayer.

Naturally, a tax lien attaches

foras longas thedeficiencytaxes

andcorresponding interestsand

surcharges,if any,remainunpaid.

Hence,paymentoftheunpaidtax-

esconstituteasa groundfor the

cancellationofthetaxlien.Thetax

lienisalsocanceledwhenthere

isavailmentoftax amnesty,orif

thereisno findingoftax deficien-

cyat all,asin avoid assessment

(Chemfields,Inc.v.CIR,CTACase

No.4840,22April1996), andeven

prescriptionofthe BIRsrightto

collectthedeficiency taxes.Once

prescriptionsetsin,thetaxpayers

liabilityceases andconsequently,

thetaxlieniserased.

However,granted thetax lien

is canceled,does this automati-

cally result to the lifting of the

Noticeof Tax Lienannotated on

theproperty?

A third person purch aser

of a property annotated with a

Notice of Tax Lien, which lien

may have been already canceled

or erased, may be in a dilemma

on getting a clean title to the

newly-acquired encumbered

property. Does he go to court to

initiate an action to quiet title

to get an Order canceling the

tax lien and lifting the Notice of

Tax Lien? Can he simply go to

the BIR for the same objective?

The power

or a u thori ty

to lift a Notice

of Tax Lien is

not expressly

providedin theTaxCode.How-

ever, Section 207 of the same

lawgrantstheCIRthe powerto

liftwarrantsof distraintorlevy,

which are also among the civil

remediesto collecttaxes.While

Section207(B)issilent,itisnec-

essarily implied that the CIRs

authority extends to cancella-

tionofanannotationoflien.The

power of the BIR to administer

taxespertainsto theproperen-

forcementoftheTaxCode.

In rel a ti on to Secti on 2

thereof, the BIRs mandate is

not only to collect taxes, but

also to effectively ensure the

Tax Code is properly enforced.

This necessarily includes the

lifting of the Notice of Tax Lien

when the tax lien has been ef-

fectively canceled.

Also,it canbe arguedthat the

powertolifta NoticeofTaxLien

falls under the other matters

jurisdiction of the BIR, un der

Section 4 of the Tax Code. The

underlying issue in the lifting

ofa Noticeof TaxLienrequires

expertiseofthe BIR.Thedeter-

minationof theproprietyof the

taxlienandthe liftingthereofis

governedby theTaxCode, would

sproutseveralincidentaltax is-

sues, which under our system

are not expected to be resolved

by regular courts and are prop-

erlyunderthejurisdictionofthe

BIR.Hingedonthe administra-

tive principle of primary juris-

diction,the BIRis presumedto

haveacquired expertiseandspe-

cialknowledgeon taxmatters.

This authority has also been

recognized in BIR rulings DA-

503-07), issuances (Revenue

MemorandumO rder No.76-98)

and even in a case decided by

theCourt ofTax Appeal (Chem-

fields,Inc.v. CIR).

Itthusappearsthat theproper

actiontolift theannotationoftax

lienis toinitiallyrequestthe BIR

toorder thesame, citinggrounds

forthecancellationofthetax lien.

Ifnot acted(within180 days

asthisactionisakintoa protest

onassessment)orwhendenied,

thetaxpayer mayappealthe case

tothe CTAbeforefinallyraising

thecasetotheSupremeCourt.

Evenifnot expresslyprovid-

ed in theTax Code,theactionfor

the lifting of the Notice of Tax

Lienshould besubmitted firstto

theBIR,the agencytasked with

theadministrationoftaxes.Tax

laws, which are strictly inter-

preted against the government,

should be construed ina wayas

to provide taxpayers with rem-

edies for necessary and logical

consequences of its enforce-

ment.Surely,itis the intention

ofthe legislaturethattaxpayers

are not left without recoursefor theactions oftheBIRin the

enforcementoftheTax Code. n

The views and opinions ex-

pressed in this article are those

of the author. This article is for

general info rmational and edu-

cational purposes only and not

offered asand doesnot constitute

legal adviceorlegal opinion.

Should dual citizensbe allowed to runfor public office?

Something to lien on

Ha pp y N ew Y ea r, d ea r

readers!

Am back, refre shed

after vacationing in Turkey with

myfamily.I will,in theverynear

future, extol the beauty and cul-

tureofTurkey.

Today, we, who are immersed

in autonomy for the indigenous

Muslims of the Philippines, can

learnmuchfromtheinitiatives of

theFather