Strategic Analysis and Research by the THE CENTER FOR STRATEGY, ENTERPRISE & INTELLIGENCE It is the rising political awareness of our people that we regard as our greatest triumph. … once we get into Parliament we will be able to work towards genuine democratization SEI ~ Nobel Peace laureate Aung San Suu Kyi speaking on Myanmar's parliamentary cen elections after a year of democratic reforms Report Life is tough here. We make just enough to survive. We just hope she can improve our lives ~ Father of four on democracy icon Aung San Suu Kyi's impending election victory Volume 2 - Number 13 • April 2-8, 2012
NATION 4 The Long Struggle to Silence the Guns After half a century of insurgency and counter-insurgency, are the government and the communists and separatists any closer to ending the bloodletting? Here’s a review of the long and winding trail to the elusive peace agreements. • 1968: A year of global revolutionary fervor spurs socialist and Muslim rebels in the Philippines • The ARMM Solution: Making peace in Mindanao under the Republic and the Constitution • Bangsamoro: Will awarding Muslim ancestral domains pacify the MILF? • Reds underground: From Hukabalahap to New People’s Army, the communists took on colonial and Filipino forces
11 Making Mining Serve Nation and Nature The government finds itself between a ton of rocks and a bunch of hard places • Academicians wondering aloud: The Ateneo School of Government asks a host of tough questions that are anything but academic
WORLD 20 Now, Say Hello to Generation C Meet the wired and wireless global community of social-networked, BBM-and-SMS- connected, bandwidth-hungry multitaskers who live and love, work and play via their phones, tablets and PCs. If you’re reading this, you must be one of them • Dissecting Facebook: Social media updates show how people think and tick • One is not enough: Multiple device screens match our life’s many facets • Eat, drink and be connected: It’s fine to text and tweet with food in your mouth • Analyzing Gen C: Booz & Co. charts what the connected lifers mean to the world
BUSINESS 30 Who Turned Off the Lights? After similar daily outages in the past two summers, Mindanao is again suffering eight-hour rotating blackouts. Amid administration talk of emergency presidential powers and an electricity summit, here’s the real picture of the nation’s power predicament and the tough issues facing policymakers and consumers in ensuring ample, affordable electricity for everyday life and long-term development. POINT & CLICK You can access TECHNOLOGY 42 Put It On and Switch It On online research Smartphones on your wrist. Grade-adjusting electronic eyewear. via the Internet Charging your cellphone with your shirt. Here are some of the by clicking amazing and stylish high-tech gear that goes right beside your Armanis and Guccis phrases in blue • Where to wear and wow: Don’t miss the big shows for wearable wonders
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Center for Strategy, Enterprise & Intelligence provides expertise in strategy and management, enterprise development, intelligence, Internet and media. For subscriptions, research, and advisory services, please e-mail [email protected] or call/fax +63-2-5311182. Links to online material on public websites are current as of the week prior to the publication date, but might be removed without warning. Publishers of linked content should e-mail us or contact us by fax if they do not wish their websites to be linked to our material in the future. Understanding the Problem Is the First Step in Solving It For three consecutive summers since 2010, Mindanao has suffered debilitating daily brownouts lasting as long as eight hours. So last week there was much chatter about a power summit and emergency presidential powers.
What’s wrong with this picture? If a problem has kept happening year after year, chances are the experts have analyzed it thoroughly and come up with some pretty good ideas on how to solve it. But lack of governance focus, political will or required investment may have held up the solution.
So the first step in addressing the problem is often a review of relevant studies and situationers.That’ s exactly what we offer in this week’s three reports on decades-old national problems: limited and costly electric power, the mining policy, and the half-century-long communist and separatist insurgencies.
The Nation article on the power crunch provides highlights of the Department of Energy’s Power Development Plan, 2009-2030, including projections on demand, capacity requirements, committed generating ventures, and the current or future power supply gaps, including those that may lead to intolerable outages.
Our Business report on mining sets out the main issues as presented in relevant statements and studies by major sides in the burning controversy: the Chamber of Mines, grouping extraction companies; the environmental advocates and institutions, including international conservation entities; and of course the state.
As in any highly politicized and intensely debated issue, the challenge for strategic analysis and research is faithfully and impartially presenting all major arguments and counter-arguments. If we don’t seem to strongly favor one side, then we must be correctly and professionally playing it right down the middle.
On the other hand, there are issues where we do take sides at the outset in the interest of national advancement, social harmony and moral rectitude. One such issue is the peace process. Arguing across the negotiating table is, hands and guns down, far better than shooting one another and decimating innocent collaterals.
Hence, while realpolitik advises that the key events in the struggle for lasting peace happens in the battlefield, the actual instrument for ending violence and joining hands as Filipinos has to be the legally binding agreements and memoranda, the focus of our Nation report on negotiations with communist and separatist rebel groups.
For any age-old problem, controversy, challenge or aspiration, getting the lay of the land and the state of the art and science is but the first and perhaps easiest step. From the framework of principles, facts and figures, policymakers and other stakeholders must explore and devise new solutions and invest time, resources and reputations to essay and effect positive change. We’ll tell you about that too.
4 THE cenSEI NATION Report
The Long Struggle to Silence the Guns of Rebellion After decades of communist and separatist insurgency, will peace agreements ever happen?
By Atty. John Carlo Gil M. Sadian
In the late 1960s, two distinct local posing any real military or political threat revolutionary movements rose from the to the Manila-based national government, activism that characterized that decade, their continuing existence -- as well as the one ideological (Muslim secession) and the underlying reasons for their resilience -- other geopolitical (worldwide communist has hounded six administrations as shown revolution). Despite the changes in the by the unsuccessful attempts to quell these world since then – including the collapse of insurgencies with various combinations of Communism as an ideology cum political diplomacy and force. movement, and the advent of globalization ushering in relative economic prosperity Seeking peace with Islamic separatists – the Philippines continues to be beset by these local insurgencies of communist After four decades of conflict with rebels and Muslim separatists. Muslim secessionists in Mindanao, the government, during the administration Even though the combined strength of these of Gloria Macapagal Arroyo, appeared to two rebel forces has not reached a point of be on the verge of accomplishing a major
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breakthrough in the peace process when it The Court eventually voted 9-6 to strike was announced that the Memorandum of down the MOA-AD as unconstitutional. Agreement on the Muslim Ancestral Domain (MOA-AD) would be signed on August This marked a major setback in the peace 5, 2008. The day before the scheduled process , which goes all the way back to the signing, however, the Supreme Court issued 1970s, when then-President Ferdinand E. a temporary restraining order against the Marcos started negotiations with the Moro signing of the MOA-AD, in response to five National Liberation Front (MNLF) led by petitions questioning its constitutionality. Nur Misuari.
1968: Two fuses are lit instead of accomplishing its goal of seizing power from the government, the CPP-NPA-NDF's rise set The Cold War between the United States and the the stage for an even more powerful government, Soviet Union may only be part of history books as then-President Ferdinand E. Marcos would for most of us, but for the activists who took part use the communist threat as the excuse for the in the public unrest during the pre-martial law era, declaration of martial law. it certainly was the spark that ignited the rise of a Maoist-inspired communist insurgency in the Also in 1969, on the heels of the Jabidah Philippines. Inspired by the rising unpopularity of Massacre, university professor Nur Misuari American imperialism set against the backdrop founded the MNLF, which began a protracted of escalating poverty across the country, the armed campaign against the government in 1970, Communist Party of the Philippines (CPP) was aimed at establishing an independent Bangsamoro established on December 26, 1968, under the Land. Things took a different turn in 1976, when leadership of Jose Ma. Sison. Libyan leader Muammar Gaddafi brokered an agreement that led to the signing of the Tripoli Earlier that year, at least 28 Muslim volunteers Agreement, which introduced the concept of an from Sulu who were being trained for a covert autonomous Muslim region in Mindanao. On commando mission to conquer Sabah were killed August 1, 1989, under the mandate of the new by government troops in an attempt to cover up 1987 Constitution, Congress enacted Republic the mission's existence, in what would popularly Act 6734 creating the Autonomous Region in be known as the Jabidah Massacre. The outrage Muslim Mindanao (ARMM). However, out of the over this massacre has been widely considered as 13 provinces and 9 cities that participated in the the catalyst that gave birth to the Islamic separatist plebiscite, only the provinces of Lanao del Sur, movements in Mindanao, pioneer of which was Nur Maguindanao, Sulu and Tawi-Tawi opted to be part Misuari’s Moro National Liberation Front (MNLF). of the ARMM.
Early attempts to quell these rebellions. Soon Instead of bringing the Muslim leaders together, after its founding, the CPP wasted no time in laying however, this agreement further fragmented the the groundwork for its ultimate goal of overthrowing MNLF, because some factions within the group the Philippine government. On March 29, 1969, the preferred independence over autonomy. Thus, a CPP launched its “protracted people’s war” with the group of officers led by Hashim Salamat broke establishment of the New People’s Army (NPA), away and formed the Moro Islamic Liberation Front with the National Democratic Front (NDF) serving (MILF) to continue their armed struggle for an as the CPP's political front organization. However, independent Moro nation in Mindanao.
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The junked MOA-AD was not the first Tripoli Agreement would be implemented. agreement entered into by the government The new charter took effect on February 2, with Muslim secessionist groups. Through 1987, with seven sections touching on the the intercession of Libyan leader Muammar creation of two autonomous regions, one Gaddafi, the Marcos administration sat in Muslim Mindanao and another in the down with the MNLF delegation and forged Cordilleras. the monumental 1976 Tripoli Agreement, which provided the framework for Peace with the MNLF, but a faction subsequent negotiations. breaks away. Aquino’s successor, retired General Fidel V. Ramos, was the one who This agreement recognized Philippine made the MNLF lay down their arms, sovereignty, but also introduced the through what the MNLF recognized as concept of “autonomy” for the Muslim a “bold and innovative initiative.” On areas of Mindanao “within the realm of the September 2, 1996, again through the sovereignty and territorial integrity of the intercession of Gaddafi, the Final Peace Republic of the Philippines.” Agreement was finally signed by the government and the MNLF peace panels When Marcos was ousted in 1986, the task “as a basis for a just, lasting, honorable and of implementing the provisions of the 1976 comprehensive solution to the problem in Tripoli Agreement fell upon the shoulders Southern Philippines within the framework of President Corazon Aquino, whose first of the Philippine Constitution.” Note concern was the overhaul of the entire that the peace agreement’s penultimate legal system. This included the drafting whereas clause states that “the parties of a new Constitution under which the affirm the sovereignty, territorial integrity
Creation of the ARMM As recounted by the Presidential Management Staff in a June 1992 paper, “The Aquino Management of the Presidency,” as posted on former President Aquino's official website, coryaquino.ph, Aquino went to Sulu in September 1986 to meet Misuari personally, and their meeting set the stage for further discussions with Misuari on expanding the groundwork for Muslim autonomy.
In compliance with Section 15, Article X of the 1987 Constitution, Congress enacted Republic Act 6734 in August 1989, creating the Autonomous Region in Muslim Mindanao (ARMM) to be composed of the provinces and cities who would vote in a November plebiscite on the issue of inclusion in the region.
The plebiscite would be conducted in 13 provinces – Basilan, Cotabato, Davao del Sur, Lanao del Norte, Lanao del Sur, Maguindanao, Palawan, South Cotabato, Sultan Kudarat, Sulu, Tawi-Tawi, Zamboanga del Norte, Zamboanga del Sur – and nine cities – Cotabato, Dapitan, Dipolog, General Santos, Iligan, Marawi, Pagadian, Puerto Princesa, and Zamboanga. However, only the provinces of Lanao del Sur, Maguindanao, Sulu and Tawi-Tawi opted to be part of the autonomous region.
Nonetheless, President Corazon Aquino welcomed the ARMM with high hopes that it would end hostilities in Mindanao.
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and the Constitution of the Republic of his successor, revived the peace process the Philippines.” This being inconsistent by signing the General Framework with their original goal of seceding from for the Resumption of Peace Talks Philippine sovereignty, a faction led by and its Implementing Guidelines on Hashim Salamat broke away and formed March 24, 2001. After seven years of on- the group that would later be known as the again-off-again talks, the peace panels Moro Islamic Liberation Front (MILF). of the government and the MILF finally agreed on a draft accord on the Ancestral A month before this peace agreement Domain Aspect of the Tripoli Agreement with the MNLF was signed, President (MOA-AD), which was scheduled for Ramos also jump-started exploratory signing on August 5, 2008. The most talks with the breakaway MILF faction important provisions of this MOA-AD as it continued its armed struggle for involved the government’s recognition of independence in some provinces in a transitory “associative” relation between Mindanao. The low-level negotiations the central government and the newly- continued until Joseph Ejercito Estrada introduced “Bangsamoro Juridical Entity” succeeded Ramos, but would adopt a (BJE), and the implied guarantee that radically different approach. By 1999, the the government would implement the peace talks would collapse under Estrada’s necessary constitutional amendments to all-out war policy against the MILF and all create a framework for the MOA-AD’s armed groups in Mindanao. implementation.
The MOA on Ancestral Domain. Upon Ruling on the petitions filed by the Estrada’s ouster in January 2001, Arroyo, provinces of North Cotabato, Zamboanga
Bangsamoro Land According to the MNLF official blogsite, maintained by John Remollo Petalcorin, its director for advocacy communication, Bangsamoro Land “was already a sovereign nation hundreds of years before it was illegally annexed as part of the Philippines in the 1935 Constitution of the Republic of the Philippines,” and then occupied by settlers who were encouraged by the government in the 1950s through the government's Homestead Program.
“There was no land titling system by the natives of Mindanao at the time. The Philippine government took advantage of the absense [sic] of land titles to give away lots in Mindanao to poor farmers and other migrants from other parts of the country,” the MNLF official blogsite relates in its History of Armed Conflict section.
Bangsamoro Land comprises Sulu, Mindanao, and Palawan, and consists of 25 provinces: Agusan del Norte, Agusan del Sur, Basilan, Bukidnon, Compostela Valley, Cotabato, Davao del Norte, Davao del Sur, Davao Oriental, Lanao del Norte, Lanao del Sur, Maguindanao, Misamis Occidental, Misamis Oriental, Palawan, Sarangani, South Cotabato, Sultan Kudarat, Sulu, Surigao del Norte, Surigao del Sur, Tawi-Tawi, Zamboanga del Norte, Zamboanga del Sur, Zamboanga Sibugay.
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del Norte, Sultan Kudarat, and the cities contingent in Al-Barka, Basilan, killing 19 of Zamboanga, Iligan, and Isabela, soldiers and wounding the Supreme Court struck down as 12 others. unconstitutional the “associative” relationship between the Philippine As of this day, the peace process with the government and the BJE. The decision MILF seems to be at a standstill, with chief written by Justice Conchita Carpio Morales government negotiator Marvic Leonen stressed that “the Constitution does not warning both government and MILF recognize any state within this country panels that the peace process is already on other than the Philippine State, much less the verge of reaching a “stalemate” because does it provide for the possibility of any of the generally acknowledged fact that transitory status to prepare any part of both the government and the MILF could Philippine territory for independence.” not agree on what constitutes “genuine autonomy.” The MILF, for its part, Likewise, the Court held as doesn't seem to be disagreeing with the unconstitutional the guarantees under government's assessment, as it apparently the MOA-AD that the government would wants a Muslim sub-state distinct from the implement the necessary constitutional Autonomous Region in Muslim Mindanao. amendments to create a framework for its implementation. According to the Seeking peace with communist insurgents Court, the peace panel and the President did not have the authority to make such Reaching out to the communists. It guarantees, because they do not have the was during the administration of President power to propose amendments to the Ramos, a retired soldier who fought Constitution, such power being vested communist rebels, that membership in exclusively in Congress. the CPP was decriminalized with the repeal of the Anti-Subversion Law in 1992. Stalemate. Sporadic fighting followed He also reached out to the communists the junking of the MOA-AD, with the by resuming peace talks with the CPP’s year 2008 setting a record-high 30 political wing, the National Democratic encounters between government troops Front (NDF). On September 1, 1992, the and MILF fighters. In an effort to salvage Hague Joint Declaration was signed by the negotiations, Arroyo declared the NDF vice chairman Luis Jalandoni and suspension of military operations against government emissary Jose Yap with the the MILF on July 2009. The peace understanding that “the holding of peace talks once again went on-and-off due to negotiations must be in accordance with questions about the MILF’s sincerity in mutually acceptable principles, including implementing the ceasefire agreement. national sovereignty, democracy and Arroyo’s successor, Benigno Aquino III, social justice.” continued the peaceful approach, and even met with MILF chairman Al Haj Murad The Hague Joint Declaration laid Ebrahim in Tokyo, and, two months later, down four phases in the peace process: refused to order military operations against (1) human rights and international rogue MILF forces that ambushed an Army humanitarian law, (2) socio-economic
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reforms, (3) political and constitutional One of the most valued agreements in reforms, and (4) end of hostilities and the peace talks with the NDF was the disposition of forces. Joint Agreement on Safety and Immunity
Communists driven Marcos issuing Proclamation 1081 placing the entire Philippines under martial law effective September underground 21, 1972. During the American occupation, one of the political parties that fielded candidates for national and According to the first whereas clause of the local elections was the original Partido Komunista proclamation, martial law was declared because ng Pilipinas (PKP). This left-wing faction of the of elements that have “entered into a conspiracy Nacionalista Party has been legally recognized until and have in fact joined and banded their resources October 26, 1932, when the Supreme Court ruled and forces together for the prime purpose of, and that since “the purpose of the party is to incite class in fact they have been and are actually staging, struggle, to overthrow the present government by undertaking and waging an armed insurrection and peaceful means or by armed revolution, to alter the rebellion against the Government of the Republic social order, and to commit the crimes of rebellion of the Philippines in order to forcibly seize political and sedition,” such organization “must necessarily and state power in this country, overthrow the duly be illegal.” Thereafter, the party continued to operate constituted government, and supplant our existing as an underground organization. political, social, economic and legal order with an entirely new one whose form of government, whose In line with this ruling, on June 20, 1957, President system of laws, whose conception of God and Carlos P. Garcia approved the Anti-Subversion Act religion, whose notion of individual rights and family (Republic Act 1700), thereby formally outlawing relations, and whose political, social, economic, membership in the communist party. At the height legal and moral precepts are based on the Marxist- of public unrest in the 1960s due to the rising Leninist-Maoist teachings and beliefs.” unpopularity of the Vietnam War and the escalating poverty across the country, Marxist-Leninist-Maoist Instead of stopping the communist threat, Marcos intellectuals established the new Communist Party used Proclamation 1081 to go after all his political of the Philippines (CPP) under the leadership of rivals, communist and non-communist alike. Jose Ma. Sison. The founding of this organization Throughout his term, the leaders and members of on December 26, 1968 has been touted by the the CPP-NPA and other non-communist members of new CPP as the “re-establishment” of the erstwhile the political opposition were subjected to warrantless communist party, whose major errors they blamed arrests, enforced disappearances, unexplained for the almost total destruction of the revolutionary deaths and other human rights abuses. Marcos movement in the 1950s. was eventually ousted and replaced by President Corazon Aquino, whose husband had been jailed by The CPP established its armed wing, the New the Marcos government on charges of association People’s Army (NPA), on March 29, 1969 with with the communist rebellion (and murdered in the goal of toppling the government. The threat of August 1983, as he was returning to Manila from communist insurrection reached a point that the exile in the U.S). During her term, nothing substantial national government often used them as an excuse was done regarding the CPP-NPA except for the for flexing the muscles of the military. Indeed, this signing of ceasefire agreements that eventually paranoia became a prelude to the establishment collapsed due to her support for the renewal of the of an eventual authoritarian regime with President Bases Agreement with the United States.
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Guarantees (JASIG) signed on February 24, Seeing the government’s proposed 1995. This provided that “all duly accredited amendment as a violation of the Hague persons as defined herein in possession of Joint Declaration, the NDF withdrew documents of identification or safe conduct from the peace talks, and Estrada later on passes are guaranteed free and unhindered declared an all-out-war against the CPP- passage in all areas in the Philippines, and NPA-NDF. What was supposed to be the in travelling to and from the Philippines in culmination of the first of four phases of connection with the performance of their the peace process fizzled out, causing the duties in the negotiations.” Up to this day, collapse of the peace talks. After his ouster, the NDF claims that the government has President Arroyo reversed this policy been violating the provisions of the and reached out again to JASIG whenever a member of communist rebels. the CPP-NPA-NDF is arrested, even for criminal offenses not On February 21, 2011, connected with rebellion. under the administration of Corazon Aquino's son, Two years later, in what Benigno Aquino III, the seemed to be the end to government and NDF peace he first phase laid down panels issued the Oslo Joint under the the Hague Joint Statement with a bold Declaration, the peace statement that “the draft panels successfully drafted Comprehensive Agreement the Comprehensive Agreement on Respect on End of Hostilities and Disposition of for Human Rights and International Forces (CAEHDF) may be completed and Humanitarian Law (CARHRIHL). However, signed by the Panels in June 2012.” The the government rejected the draft and CAEHDF is the fourth phase of the peace ordered its revision. The government’s process as laid down in the Hague revised version, on the other hand, was also Joint Declaration. rejected by the NDF for being “a mutilation and cannibalization” of the original draft. The 18-month timetable set by the Oslo Statement will end two months from After a year of further negotiations, the now. If the parties would indeed come up CARHRIHL was finallyapproved by with a signed CAEHDF in June, it would the NDF on April 10, 1998, and by the be a reason to join in the optimism of Philippine government on August 7, 1998. Presidential Adviser on the Peace Process However, President Estrada reneged on Teresita Deles that the peace talks with the the government’s commitment by sending NDF will end before 2016. But considering a delegation that proposed the deletion that a signed CAEHDF here would be just and amendment of certain articles of the the first phase, rather than the culmination already signed agreement, most important of a four-step, 20-year process, we can wish of which was placing the CARHRIHL Joint the government panel the best of luck, as Monitoring Committee under the Office of we wonder how close to – or how far from the President. -- peace the Philippines will be for it.
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Making Mining Serve Nation and Nature
Can the state boost the resources industry, while raising tax revenues and community benefits and protecting the land?
By Libby Gallentes
The Aquino administration, in seeking to STRATEGY POINTS “upgrade the environmental standards in the industry, resolve the issue of small- With a package of policy scale mining, harmonize national and measures, the government seems bent on increasing its local regulations on mining and optimize mining revenues and disciplining government revenue from mining,” has irresponsible miners promised a new executive order to govern the conduct of the industry. There may also be a crackdown on small miners, which big ones Since President Benigno Aquino III have blamed for environmental indicated in October that he asked a damage and tax evasion group of Cabinet officials and presidential advisers to come up with a comprehensive As with any complex, broad mining policy, considerable anticipation set of policies and rules, the has built up over a promised but still real challenge is sustained, unreleased executive order. consistent and strict enforcement and implementation Originally promised by the end of February, anticipation over the anticipated executive order – and the verbal jousting between mining companies and big business on one side and environmental and social activists
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over what should go in it – was intense anti-mining personalities, organized along enough that the government had to promise three basic questions: more consultations. 1. Has mining benefited/helped the country? ‘An urgent matter’ with no deadline. 2. Does the government have the will and the On March 26, the government announced capability to promote sustainable mining and that it was considering releasing a series of environmental safeguards? policies, rather than one executive order, to 3. Has mining helped local communities? cover the regulation of the mining industry, as reported in The Philippine Star on March The national government, if only by 29. According to Mines and Geosciences necessity, finds itself in the unenviable Bureau director Leo Jasareno, some position of having to mediate between all proposed reforms, i.e., increasing the share these disparate and oftentimes conflicting of the government by raising taxes on mining priorities. In the tangle of these various operations, would require legislation. priorities, one basic conflict still stands out.
No target date has been set for the release of Big mining vs. small miners. By law, new policies regarding the mining sector, but there are two types of mining. large-scale it is still “an urgent matter,” Jasareno was mining moves huge volumes of earth and quoted as saying. requires huge investments. Most large-scale mines are foreign-owned or controlled, Also on March 29, BusinessWorld reported as Filipino companies generally cannot that a draft policy statement, not an put up the capital for such big ventures. executive order, has been submitted to Foreign ownership and control of the mines President Aquino for approval. Whatever is allowed under special arrangements emerges – and whenever it does – the such as the Financial/Technical Assistance government seems set on increasing its share Agreement (FTAA) or the Mineral of revenues from mining operations, at the Production Sharing Agreement (MPSA) same time that it promises to crack down on and other agreements provided by RA unregistered mining operations. 7942. Passed in 1995 after several years of lobbying, RA 7942, the Mining Act of 1995 To be sure, the country's mineral potential has withstood the review of the Supreme has attracted many players to mining, giving Court when its provisions on the FTAA were rise to conflicts that manifest themselves questioned by some tribal leaders. in a host of issues, from environmental concerns and health hazards to miners and Small-scale miners (SSMs) are defined mining communities, to the open pit method by RA 7076, the People’s Mining Act of preferred by large mining companies but 1991, as Filipinos who engage individually banned by at least two provinces (South or together with other Filipinos form a Cotabato and Zamboanga del Norte). cooperative to engage in small-scale mining “which rely heavily on manual labor using The CenSEI Report has prepared a matrix simple implement and methods and do not of different broad issues surrounding use explosives or heavy mining equipment” the local mining industry, along with the and with a capitalization of not more than pronouncements of various major pro- and ₧3 million. To reserve portions of land for
CONTENTS NATION WORLD BUSINESS TECHNOLOGY Mining in the Philippines (Part 2): More fun or just the pits 13
Has Mining Benefited/Helped the Country? Pro-Mining Anti-Mining Mining potential According to a US State Department background note on the Philippines, the country's untapped mineral wealth is at over $ 840 billion.
Actual economic “In the 1970s, minerals accounted for about a fifth of our exports. “Average contribution of contribution At its peak, mining contributed 24% of our total exports.” –Philip metallic mining to total Romualdez exports – 2000-2009: 2.96% ; 201: 3.7%” -Christian Monsod
Employment The Chamber of Mines claims that the projected Large Scale Mining “The mineral industry is investments of $15 billion will generate 70,000 direct jobs. considered worldwide as a low job-generating activity.” –Christian Monsod
Jobs multiplier The estimated number of Artisanal and Small Scale Miners ranges Christian Monsod on mining from 300,000 to 500,000. multiplier: “The mineral extractive industry is considered worldwide as a low job-generating activity.”
Taxes, royalties e.1. For LSMs: MPSA – 2% of revenues; FTAA – 50% of revenues, “Total government taxes, currently paid to but including all forms of taxes and royalties paid by the company. fees and royalties 1997- government 2010: ₧ 64.2 Billion; or Chamber of Mines: a proposed additional 5% tax on LSMs is a major 7.6% of Total Production disincentive for investments. values of mining companies 1997-2010: P 842 Billion.” “It’s a bit strange why the Philippine government is not yet satisfied -Christian Monsod when it receives the highest share in the world.” -Philip Romualdez Finance Secretary Cesar Purisima says the 2% e.2. For Artisanal and SSMs: No accurate data. MGB Head Jasareno excise tax under the MPSA says 80% of small-scale miners are illegal and no taxes have been is “too little,” and “not collected from them. even enough to pay for environmental damages.” Small-scale miners are smuggling gold outside the country. -Chamber of Mines
Chamber of Mines proposes that SSMs be subject to the same regulations as LSMs.
Chamber of Mines: if RA 7942 is implemented well and tax leaks in the SSM sector could be plugged, no additional levies would be needed as the Philippines has the same or higher levels of taxes compared to other countries.
Costs vs. The Philippine Development Plan of 2011-2016 admits that data Mining involves the use benefits for resource valuation are inadequate, thus conclusions cannot be of resources other than drawn yet as to the value of the alternative uses of these resources. minerals – such as land The Ateneo School of Governance policy brief, Is There a Future to and water – which can be Mining in the Philippines?, echoes this observation. used more productively in other industries such as Manny Pangilinan on developing mining sites as tourism centers agriculture or tourism. “Have you gone to Padcal? Have you been to Silangan in Surigao del Norte? Who would go there and develop a tourism site?”
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Does the Government Have the Will and Capability Promote Sustainable Mining and Environmental Safeguards? Government’s Pronouncements Private Sector Perception Regulating DENR has started filing complaints against illegal (Both pro-mining and anti-mining SSMs miners and will issue cease and desist orders. “We are advocates share mixed views about already filing government’s capability.) complaints.” – MGB Dir. Leo Jasareno “As Philip Romualdez revealed, small- The MGB Director says two conflicting scale laws on small-scale mining as well as mining according to a Cabinet Secretary perennial lack of government geologists is the new jueteng with local government are among the reasons for the difficulty in executives colluding with small scale enforcing the law. miners who more often than not pose hazards to the environment because Mayors of Tampakan, South Cotabato and their activities are unregulated. “- Babe Kiblawan, Davao del Sur prefer LSMs because SSMs Romualdez are difficult to regulate. There’s a need to “improve the capacity President Aquino says small-scale mining will stay and competence of the State’s regulatory but practices will be different from those of the past staff.” – Manny Pangilinan to avoid the repeat of mining tragedies. “The local government unit said it had prohibited the return of the “... government capacity for resource people but the barangay allowed them to return.” – management is wanting ... enforcement Pres. Aquino, talking about a tragedy in a small-scale- of environmental laws and policies is mining town inadequate...” – Philippine Dev’t. Plan 2011-2016 as quoted by Christian Monsod.
Increasing “On the part of the DOF, we want more share in the If the country can implement RA 7942 LSMs’ revenues of the mining industry.” – DOF Sec. Cesar well and plug the leaks in the small-scale contribution Purisima, who also expressed preference for the mining sector, there would be no need for through FTAA’s 50-50 revenue sharing scheme over the additional levies.” - Chamber of Mines the new EO. MPSA’s 2% excise tax The LSM sector claims that their “Some provisions (of the Mining Law) are grossly payment equalled the collectible amount disadvantageous to the Philippine government” -- DTI and that the uncollected excise taxes are Secretary Gregory Domingo. He further noted that attributable solely to small-scale miners under the MPSA, government gets only 2% share of and quarrying. That may be true.... the revenues while under FTAA, government gets 50% but on a longer view, there is no such share but that all forms of taxes are drawn on that 50%. correlation.” – Christian Monsod, on the discrepancy of potential excise taxes and A proposal in the EO is for all mining sites to be actual collections for 2000-2009. declared mineral reservations to enable government to collect an additional 5% inroyalties, as provided “In the Philippines, there is a shallow for in RA 7942, says DENR Sec. Ramon Paje. Other participation of the mining community proposals include State-initiated exploration, the in policy-making procedures. The social auctioning of mining rights and creating a task force perception is that mining concessions against illegal mining. are giving away the natural resources of the country and a political agenda therewith related.” – a respondent to the Fraser Institute Survey of Mining 2011- 2012
The Chamber of Mines says auctioning mining rights cannot provide investors with a rational basis for determining the value of the mineral deposits – which should be done before a bid is tendered.
CONTENTS NATION WORLD BUSINESS TECHNOLOGY Mining in the Philippines (Part 2): More fun or just the pits 15
Has Mining Helped Local Communities and the Poor? Pro-Mining Anti-Mining Health/ Careful implementation of RA 7942 can avert Mercury and cyanide use is more prevalent Environment a repeat of the Marcopper accident. SMI Gen. among SSMs. Manager guarantees that the SMI Dams will not collapse. A World Bank–funded study determined that SSMs of gold in selected sites in 2 provinces “Landslides, soil subsidence and similar used from 10 to 20 times more mercury than accidents are caused by rampant and other SSMs worldwide. unregulated small scale mining.” - MGB The collapse of the Marcopper tailings dam Philex Mining considers setting up an office In 1996 has raised fears of a repeat of similar specifically for looking into environmental Incidents. An environmentalist, Clive Wicks, concerns. warned that a similar accident may happen to The Sagittarius Mines project in Tampakan as it is Lateritic soil is nutrient-poor, thus unsuitable for near a fault line. agriculture. The open-pit method preferred by large-scale Currently, LSMs occupy only a total of 60,000 mining entails moving massive amounts of earth, hectares, or 2% of the country’s total land area. causing displacement of communities and af- fecting biodiversity. Open-pit mining has been banned in at least 2 provinces. Gina Lopez:: “Biodiversity is irreplaceable.”
Mining causes landslides, tunnel collapse and similar accidents. Social costs LSMs are mandated by law to compensate Mining has deprived farmers and indigenous those affected by mining operations. Permits peoples of their farmlands. to operate cannot be granted unless affected peoples grant their full and prior informed Tribes and rural poor families have been consent. displaced from their communities, and tribal cultures were lost because of the massive area Manny Pangilinan on Philex Mining’s community requirements of Large-Scale Mining. development in Padcal: “We have a self- contained community, we provide free housing, Communities are destroyed because of the free hospitals, free education up to high schools displacement. and we have a post-rehab plan.” Mining destroys biodiversity, Mined-out Mining is prohibited in areas identified as areas become wastelands protected areas. RA 7942 mandates the rehabilitation of old mines and mined-out areas. Uplifting the LSMs have built communities, constructed Mining has the highest poverty incidence of any poor schools, provided medical benefits and livelihood, sector in the country: 48%.” Examples are the as in the example of Philex Mining. Bicol Region, CARAGA and Bataraza, Palawan.” – Christian Monsod their small-scale mining activities that sophisticated and mechanized equipment will not overlap with the mining claims for ore extraction and own ball mills to of large-scale miners, RA 7076 prescribes refine ore. that SSMs operate in areas designated as Minahan ng Bayan. Studies have indicated, Then there are a number of unregistered, however, that many of the so-called small- unregulated artisanal miners who operate scale miners are not the pick-and-shovel individually or in small groups, use picks miners described by the law but use more and shovels to bore tunnels into the earth
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and do not own processing equipment, Marcopper tailings dam spill to waterways particularly in the gold-rush areas of Davao and farms in Marinduque province, remains in Mindanao and the Camarines provinces. fresh in the minds of many Filipinos, even Photo-journalist Manuel Domes has written though it happened over a decade ago. The in his blog about life in Diwalwal, a mining National Statistical Coordination Board community of these small-scale and artisanal has published a chapter on the negative miners in Compostela Valley. impact of mining on the environment from 1990 to 1998 and the mitigating measures The exact number of artisanal workers is not expected of mining firms, as part of its known, as estimates ranging from 200,000 Compendium of Philippine Environment to 500,000 have lumped together both Statistics, compiled under the Philippine artisanal and small-scale miners. The actual Framework for the Development economic contribution of artisanal miners of Environment Statistics. is also not verified, although one study by Edmund Bugnosen claims that small-scale Other studies have and artisanal gold miners contribute cited the extensive from 50% to 80% of the country’s total use of mercury gold production. and cyanide in refining the ore, This distinction is important in present the pollution regulations, as the grant of permits for from a tailings Minahang Bayan operations covers only the spill or dam small-scale mining cooperatives, and not the collapse and artisanal miners, who obviously need more the dangers assistance and guidance from government. of tunnelling as the most There is little relationship between small- urgent and serious scale and large-scale miners, as pointed out environmental hazards by the Bugnosen study. Small-scale miners of the industry. generally regard large-scale operations as rivals in extracting the ore bodies. The However, while large-scale mining distinction between artisanal and small-scale operations draw a lot of admittedly deserved miners is therefore vital to the resolution of attention when there are disasters such as the conflicts over mining rights mentioned the afore-mentioned Marcopper tailings in the Israel/Asirot paper between large on dam spill and the pollution of waterways in one end and small-scale as well as artisanal Albay from the Rapu-Rapu mining project, miners on the other end. The MGB statement small-scale mining draws attention when that majority of SSMs are illegal and are the landslides occur in heavy rain. cause of mining accidents would refer to both artisanal miners and SSMs. Almost annually, there are reports of landslides or tunnels collapsing in Protecting health and environment. small-scale mining areas. The latest of these The concerns about health and accidents occurred last January in the gold- environmental hazards from mining are rich area of Pantukan, Compostela Valley. not without bases. The damage done by the A random listing of these accidents include
CONTENTS NATION WORLD BUSINESS TECHNOLOGY Mining in the Philippines (Part 2): More fun or just the pits 17
landslides in mining sites in Kingking, mercury and cyanide pollution is more Compostela Valley last year; New Bataan, prevalent among small-scale miners, even Compostela Valley also in 2011; and if these incidents involve smaller areas. Loakan, Baguio City in 2008. Table 3 of the Israel/Asirot paper listed some of the accidents between 1993 to But another less publicized danger 1998 involving small-scale miners. persists. A project on the safe handling of mercury, funded by the World Bank (The aforementioned National Statistical with the Geological Survey of Denmark Coordinating Board chapter on and Greenland and the Maximo T. Kalaw environment statistics quantified the Institute, was set up in 2006 to assist number of accidents that occurred in the small-scale gold miners and mining and quarrying industry between their families in selected 1993 to 1998, but did not segregate sites in two provinces, accidents caused by mercury or cyanide following a study pollution from other accidents.) that indicated that small-scale In gold mining, mercury and cyanide are miners of these required to process ore. Although some areas used from forms of cyanide are less dangerous than 10 to 25 times others, in that they dissipate when exposed the amount of to sunlight over a period of time, cyanide mercury for is generally harmful to human health. The gold extraction Carbon in Pulp (CIP) process that uses over the amount cyanide is more expensive to install and used by small- therefore used more often by larger mining scale miners companies, although some of the larger working elsewhere small-scale mining companies also use it. in the country. Open-pit vs. tunnels. The Chamber of Mines has balked at the proposal to shift A broader study, by Danilo Israel from open pit to other mining methods. and Jasminda Asirot for the Philippine For one, open pit is the least expensive Institute for Development Studies, that among mining methods, and most cost zeroed in on mercury pollution among effective in extracting low-grade ore small-scale gold miners mentions several located near the surface. Small-scale previous studies proving the high degree of miners in search of high-grade ore bodies mercury pollution in popular small-scale deep in the earth use the tunneling mining areas like Diwalwal. method because the open-pit method entails greater costs and because mining The paper also indicated that most if not low-grade ore, which is usually nearer the all miners reported siltation of waterways surface, would not be economically feasible after mining operations started and for them. that around 20% of them knew people who contracted diseases from mercury Just a matter of collecting from pollution. These studies indicate that small-scale miners? The large-scale
The cenSEI Report • March 26-April 1, 2012 THE cenSEI 18 Mining in the Philippines (Part 2): More fun or just the pits Report
mining companies, as represented by the Monsod might have been correct in Chamber of Mines, maintain that they are catching the large-scale miners' attempt to paying enough in excise taxes, and all that is oversimplify the issue. The government needed for the government to do is to plug the should regulate small-scale miners and collect tax leaks in the small-scale mining sector and proper taxes from their activity and help collect from the small-scale miners. protect them and the environment from their hazardous ore-extraction methods, it should be Christian Monsod, in his presentation on acknowledged, but that is an entirely separate mining as a social justice issue at the March matter from whether large-scale mining 2 forum on mining, refutes that argument by operations are contributing their fair share to saying that while that claim might have been the national government. accurate for 2008 and 2009, from 1997 to 2007, there is no such correlation between the In part 3, The CenSEI Report will examine discrepancy of potential excise taxes and actual the other factors surrounding mining rights collections for 2000-2009. “Actual collections in the country, including land ownership for 6 of the 11 years are lower than the and ancestral domain, large-scale mineral collectibles from LSM ranging from 4%-36%,” exploration, and how large- and small-scale he elaborated. mining operations get tangled up in regulation.
Academicians wondering aloud A policy brief, Is There a Future to Mining in the Philippines?, published by the Ateneo School of Government following an academic conference in November, states that conflicts in the industry are related to land use, benefits derived from mining and their distribution, social and environmental costs, government regulation plus a special concern for small-scale mining.
This policy brief sets out to answer ten very basic questions related to mining and governance:
1. What is the nature of mining in the Philippines? 2. Why does mining generate conflicts? 3. s mining beneficial to the country and to indigenous and local communities? 4. What are the real costs of doing mining in the Philippines? 5. How do we understand risks and conduct a cost-benefit analysis? 6. What is responsible mining, as applied to the Philippines? 7. What operational conditions must be met to conduct responsible mining in the Philippines? 8. What actions must the government take towards the management of responsible mining? 9. What interim measures must the government take while appropriate mining governance is instituted? 10. What is the future of mining in the Philippines?
The document's prescription – the government should declare a moratorium on mining until it can establish a responsible and sustainable governance environment for mining – might be considered unrealistic and impractical by some, but the process by which it arrives at its recommendation can nonetheless provide solid guidance for parties interested in achieving consensus.
CONTENTS NATION WORLD BUSINESS TECHNOLOGY 19 NEWS ON THE NET Nation
Pacquiao, senators just take the necessary actions such power is “self-terminating,” by filing the necessary charges and that “it is not a perpetual sort hit BIR 'harassment' against him and not “shame of authority, you use it when you people publicly and make circuses need it.” Senators Ramon Bong Revilla out of their circumstances.” Jr. and Ralph Recto came to the defense of Sarangani Rep. Ampatuan, Abalos Aquino thumbs Manny Pacquiao after the Bureau plead not guilty to of Internal Revenue (BIR) filed a down emergency poll sabotage criminal case against the boxing powers icon for violation of Section 266 of the National Internal Revenue Despite his admission that it Former Maguindanao Governor Code, for “failure to obey was the government’s neglect Andal Ampatuan Sr. and former summons” and not being able that caused the impending Commission on Elections to “produce books of accounts, power crisis in Mindanao, Chairman Benjamin Abalos records, memoranda or other President Benigno Aquino III pleaded not guilty to charges of papers, or to furnish information” stressed that “At this time, I’m poll sabotage in connection with to the Bureau. not sure if emergency powers the 2007 elections. The two arrived are what are needed.” This in in the morning of March 26, 2012 Seeing this move as response to proposals by his for their arraignment before Judge “harassment,” Pacquiao accused allies in Congress that he be Jesus Mupas of Branch 112 of the the BIR of “bad faith” for trying to granted emergency powers to Pasay City Regional Trial Court. single him out. Internal Revenue address the rotational brownouts Their co-accused, Pampanga Rep. Commissioner Kim Henares, on the country’s second-largest Gloria Macapagal-Arroyo, already however, clarified that they did island, some even lasting up to entered her not-guilty plea on Feb. not accuse Pacquiao of 15 hours a day. 23, 2012. anything yet and were only “investigating” whether he could Senator Antonio Trillanes IV and The case stemmed from a joint be liable for tax evasion. Rep. Rodolfo Biazon were among Comelec-DOJ investigation that the lawmakers who filed bills implicated Ampatuan, Abalos, and Arguing that the congressman in their respective chambers to Arroyo in massive cheating during “deserves a better treatment,” grant the president emergency the 2007 elections. Arroyo was Recto said that the BIR should powers similar to those granted arrested on Nov. 18, 2011, and is just run after Pacquiao's earnings President Fidel Ramos during currently under hospital arrest at from commercial endorsements the power crisis in 1992. Citing the Veterans Memorial Medical and other local income-generating the efficiency with which Ramos Center, while Abalos was arrested activities instead of trying to check solved the 1992 power crisis, on Dec. 14, 2011, and has since on his income from boxing, which Vice President Jejomar Binay been detained at the Southern has already brought in taxes defended moves to grant Aquino Police District headquarters. which could not be equaled by the same power to make it easier Ampatuan, on the other hand, the people running the Bureau. for the government to directly has been under detention for Revilla, on the other hand, added address the current power multiple murder charges in the that if the BIR is certain about shortage in Mindanao. Ramos, separate Nov. 2010 Maguindanao Pacquiao’s violations, it should however, reminded Aquino that massacre case.
The cenSEI Report • March 26-April 1, 2012 20 THE cenSEI WORLD Report
The Constantly Connected Club After Gen X, Y and Z, meet Generation C By Joanne Angela B. Marzan
STRATEGY POINTS A new generation is emerging, perpetually online and multi-tasking through a variety of digital devices
While multi-tasking might be increasingly common, especially among the young, some studies warn of the dangers of multi-tasking, including brain damage
Britney, 18, is your average American This digital behavior among Americans 18- teenager. She watches American Idol on 34 years old, according to the 2011 Nielsen TV (preparing to vote for her favorite and NM Incite’s U.S. Digital Consumer contestant via SMS), views the latest Report, best describes Nielsen’s newly video of Justin Bieber on YouTube, uploads dubbed Generation C. new photos of herself to Facebook, and tweets what she’s doing at that moment “(T)his group is taking their personal over her laptop. connection—with each other and content—
CONTENTS NATION WORLD BUSINESS TECHNOLOGY Generation C: Always connected 21
to new levels, new devices and new smartphone (39%),” as the report explains experiences like no other age group,” said and the chart below shows. the report. Data coming from the Nielsen-NM “The latest Census reports that Americans Incite study revealed that next to the 18-34 make up 23 percent of the U.S. computer (95.7%), the Smartphone population, yet they represent an outsized (58.8%) is the second most common device portion of consumers watching online video used by Generation C to access social- (27%), visiting social networking/blog sites networking sites. The gaming console (27%), owning tablets (33%) and using a is a far third with 5.3%, while 4.5% of
GENERATION C: HERE, THERE AND EVERYWHERE
TV VIEWERS 49% MALE 51% FEMALE 23% 2-17 23% 18-34 TABLETS ARE THE ONLY 21% 35-49 DIGITAL CATEGORY WHERE 20% 50-64 MALES MAKE UP THE 14% 65+ MAJORITY 16% HISPANIC 73% WHITE 13% BLACK, AFRICAN-AMERICAN 6% ASIAN OR PACIFIC ISLANDER
ONLINE VIDEO VIEWERS 47% MALE TABLET OWNERS 53% FEMALE 53% MALE 14% 2-17 47% FEMALE 27% 18-34 11% 13-17 28% 35-49 33% 18-34 22% 50-64 29% 35-49 10% 65+ 21% 50-64 12% HISPANIC 7% 65+ 78% WHITE 15% HISPANIC 11% BLACK, AFRICAN-AMERICAN 60% WHITE 3% ASIAN OR PACIFIC ISLANDER 11% BLACK, AFRICAN-AMERICAN 9% ASIAN OR PACIFIC ISLANDER
SOCIAL NETWORK/BLOG VISITORS SMARTPHONE OWNERS 46% MALE 50% MALE 54% FEMALE 50% FEMALE 13% 2-17 6% 13-17 27% 18-34 39% 18-34 28% 35-49 30% 35-49 22% 50-64 20% 50-64 9% 65+ 6% 65+ 12% HISPANIC 17% HISPANIC 79% WHITE 67% WHITE 10% BLACK, AFRICAN-AMERICAN 12% BLACK, AFRICAN-AMERICAN 3% ASIAN OR PACIFIC ISLANDER 6% ASIAN OR PACIFIC ISLANDER
Source: http://www.slideshare.net/ceobroadband/state-of-the-media-us-digital-consumer-report-q3q4-2011
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Generation C respondents prefer the iPad, on” and to be “in constant contact with their a relatively new device, for accessing social- friends through private communications networking sites. like instant messaging or mobile phones, as well as in public ways through social But what exactly are the youth doing that network sites such as MySpace and they need to be connected 24/7? Facebook.”
Using new media to hang out. A But apparently, not everyone goes online November 2008 joint research project for a reason. by the University of Southern California and the University of California, Berkeley, According to a Dec. 2011 Pew Internet & Living and Learning with New Media: American Life Project report, "The Internet Summary of findings from the Digital Youth as a diversion and destination," to report Project, provides an answer: “The majority that a staggering 81% of 18-to-29-year- of youth use new media to ‘hang out’ and old Americans go online “for no particular extend existing friendships.” reason, just for fun or to pass the time.” This trend, however, has been steadily Aside from this, the research added that increasing since 2000, with occasional dips, new media allows the youth to be “always across the board.
ONLINE FOR NOTHING IN PARTICULAR AND EVERYTHING INBETWEEN
100%
90%
80% 81%
70% 66%
60% 58% All adults 18-29 50% 50% 47% 30-49 40% 35% 50-64 30% 29% 65+ 23% 20% 18%
10% 6% 0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Across the board, the percentages of all adults going online for no particular reason/just for fun/to pass the time has doubled from 29% in 2000 to 58% in 2011. Source: “The Internet as a diversion and destination,” Lee Rainie, Pew Internet & American Life Project, Dec. 2, 2011.
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Dissecting Facebook status updates In 2010, Facebook analyzed one million Facebook status updates of US English speakers to find out what exactly they were talking about.
“[W]e looked at the usage of words in different ‘word categories’ in status updates. This led us to discover some patterns in how people use status updates differently, and how their friends interact with different status updates,” said Facebook data-science intern Lisa Zhang in the December 23 article, “What’s on your mind?”
The study turned up the following interesting findings:
Younger people express more negative emotions (including anger) and swear more. They use more pronouns referring to oneself (“I”, “my”, etc.) and talk more about school.
• Older people write longer updates, use more prepositions and articles, and talk more about other people, including their family.
• People with more friends tend to use more of the pronoun “you” and other second person pronouns. They write longer updates, and use more words referring to music and sports. They also talk less about their families, are less emotional overall, use fewer past tense and present tense verbs and words related to time.
• Emotional content of status updates depends on the time of day. Positive emotional word use is higher in the mornings, when the corresponding usage of negative emotional words is low. Negative word use increases as the day goes on, as positivity decreases.
The Pew Internet & American Life than one media activity at a time, is a Project report attributes the upsurge to a common occurrence (p.1).” number of factors: the rise of broadband connections, the increasing use of Foehr added, “New technologies, such as video because of the rise of broadband the computer, appear to foster obsessive connections, and the explosion of social ‘multitasking,’ namely constantly switching networking, which reflects the growing between such activities as instant trend of using the Internet “for fun.” messaging (IM), email, ordering a book online and catching a quick headline (p.1).” A multitasking generation. According to the 2006 study, Media Multitasking Hence, the result of Foehr’s study of among American Youth: Prevalence, 3rd–12th graders (through a media diary) Predictors and Pairings, by Ulla G. Foehr, and 7th–12th graders (through a survey, Ph.D., “Anecdotal evidence suggests that revealed that young people who are most ‘media multitasking,’ or engaging in more prone to multitask are: “those who are
The cenSEI Report • March 26-April 1, 2012 THE cenSEI 24 Report
Multi-tasking across various screens Another revealing finding of the 2011 U.S. Digital Consumer report is that “consumers are multi-tasking across their various screens.” In fact, the report showed that 57% of tablet and Smartphone owners checked email, 44% continued to surf the Internet, and another 44% logged on to a social-networking site while the TV was on (the report also showed that the figures were the same whether a program was on or on a commercial break).
Just as noteworthy is the finding that while watching TV, 29% of owners looked up information related to the TV program they were watching, 19% looked up product information for an ad they saw, and 16% searched for coupons or deals related to a TV advertisement.
57% CHECKED EMAIL
44% SURFED FOR RELATED INFO DURING PROGRAM WHAT ARE TABLET VISITED SOCIAL AND SMARTPHONE 44% NETWORKING SITE OWNERS DOING WHILE WATCHING TV?
59% CHECKED EMAIL
44% SURFED FOR RELATED INFO DURING COMMERCIAL VISITED SOCIAL 44% NETWORKING SITE
TOP WEBSITES VISITED WHILE WATCHING TV 1. Facebook 6. Craigslist 2. YouTube 7. eBay 3. Zynga 8. Electronic Arts (EA) Online 4. Google Search 9. MSN/Windows Live/Bing 5. Yahoo! Mail 10. Yahoo! Homepage
Source: http://www.slideshare.net/ceobroadband/state-of-the-media-us-digital-consumer-report-q3q4-2011
CONTENTS NATION WORLD BUSINESS TECHNOLOGY Generation C: Always connected 25
exposed to the most media,” “those "The toll in terms of slowdown is extremely who are sensation seekers,” “those who large--amazingly so," Meyer warned. live in highly TV-oriented households,” and girls. "If a teenager is trying to have conversation on an e-mail chat line while doing algebra, “These characteristics seem to point to two she’ll suffer a decrease in efficiency, factors that may drive media multitasking: compared to if she just thought about a need, or a motivation, to media multitask algebra until she was done,” explained (to fit in everything they want to do), and Meyer. the opportunity to media multitask,” said the report (p.23). In an experiment conducted by Carnegie Mellon University’s Dr. Marcel, he tested Multitasking may damage your brain. the brain’s ability to do two things at once. University of Michigan Brain, Cognition and Action Laboratory Director David E. His findings revealed, “Overall brain Meyer said in a May 2006 Time article that activity decreases when people try to do two “the ability to multiprocess has its limits, things at the same time.” even among young adults.” In a 2009 Stanford University study, Meyer said that people who try to perform conducted by Professors Clifford Nass, Eval two or more related tasks are more Ophir and Anthony Wagner, 100 students susceptible to errors and the amount of divided into heavy and light multitaskers time to finish a task takes much longer. were given three tests that measured how
YOUR BRAIN ON MULTI-TASKING
Language Comprehension Object Rotation Task Object Rotation + Language Comprehension Task Subjects listened to complex Subjects had to compare pairs sentences and had to answer of three-dimensional objects Subjects performed both tasks true/false questions. and rotate them mentally to see at the same time. if they were the same.
Temporal lobes Temporal lobes
Source: Column Five Media for Rasmussen College
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well they can filter out irrelevant "We kept looking for what they're better information, organize at, and we didn't find it," said their memories, and Ophir. switch from one instruction to In addition, according to a another. Stanford press release, the researchers are still trying The study to figure out if “chronic revealed that media multitaskers are low multitasking born with an inability to individuals performed concentrate or are damaging better than their high- their cognitive control by willingly multitasking counterparts in all of the tests. taking in so much at once.”
Eating and social media: An unlikely pair According to the 2012 study, Clicks & Cravings: The Impact of Social Technology on Food Culture, by Hartman Group, social media and food is emerging to be an unlikely multitasking pair.
“Consumers virtually break bread by sharing their food experiences, uploading photos and posting stories,” said the study.
Below are some of the most interesting findings of the Hartman Group study when it comes to the multitask pairing of eating and accessing social networking sites:
• 29% of online consumers have used a social networking site while eating or drinking at home in the last month • 19% of online consumers used a social networking site while eating or drinking away from home • 32% of consumers have either texted or used a social networking site or app in the last month while eating or drinking • 47% of Millennials (Generation Y) have either texted or used a social networking site or app in the last month while eating or drinking
In addition, the study added, “While lunch is by far the most common locus of online-social eating, this activity otherwise happens evenly throughout the day.”
Based on a 2011 University of Hafia study conducted by Professors Yael Latzer and Ruth Katz of Haifa uni’s Faculty of Social Welfare and Health Sciences and Zohar Spivak in Israel, constant access to Facebook may have dire health consequences for adolescent girls.
The study surveyed a group of 248 girls aged 12-19 on their Internet and television viewing habits.
“Results showed that the more time girls spend on Facebook, the more they suffered conditions of bulimia, anorexia, physical dissatisfaction, negative physical self-image, negative approach to eating and more of an urge to be on a weight-loss diet,” it was reported in a February 7 University of Hafia press release.
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Booz & Company’s Generation C: Always clicking
In 2010, a year before Nielsen and NM Incite’s U.S. Digital Consumer Report, global management consulting firm Booz & Company released its own study, The Rise of Generation C: Implications for the World of 2020.
In its study, Booz & Company describes Generation C – those “born after 1990 and lived their adolescent years after 2000” – as “connected, communicating, content-centric, computerized, community-oriented, always clicking.”
By 2020, Generation C will comprise 40% of the population in the U.S., Europe, and the BRIC countries (Brazil, Russia, India and China), and 10% of the population in the rest of the world, enough to make it the largest group of consumers worldwide (p. 2).
According to Booz & Company, Generation C will transform the world, and “their interests will help drive massive change in how people around the world socialize, work, and live their passions – and in the transformation and communication technologies they use to do so.”
The “digital natives” of Generation C, the study predicts, “will live ‘online’ most of their waking hours, comfortably participate in social networks with several hundred or more contacts, generate and consume vast amounts of formerly private information, and carry with them a sophisticated ‘personal cloud’ that identifies them in the converged online and offline worlds.” (p. 1)
The study proceeds to discuss how different aspects of life in the coming decade – from consumer behavior to entrepreneurship in the developing world – will likely be affected, as business, society, and technology develop to accommodate the rise of Generation C.
TIMELINE OF THE UPCOMING DECADE: CONNECTIVITY GALORE
Booz & Company’s vision of the decade to come, when just about everything will be wired, just in time for Generation C, who will still be under 30 by then, to come into its own
Source: “The Rise of Generation C: Implications for the World of 2020,” Booz & Company, 2010, p. 16.
The cenSEI Report • March 26-April 1, 2012 THE cenSEI 28 Generation C: Always connected Report
Opportunity and a challenge. February 23 article, The Challenge of The aforementioned 2011 U.S. Digital Wooing Generation C, posted on the Consumer Report asserts that Generation CNET website. C poses an opportunity as well as a challenge for both marketers and content So while it remains to be seen how providers. Opportunity, because they’re Generation C will affect marketers and always online and have dual or even content providers alike, the summary multiple devices, making them easier to of findings from the aforementioned reach. Challenge, because they multitask, Digital Youth Project of two California flitting about from one activity to another. universities offers a positive perspective on the fascination and dedication of the “Advertisers will probably like this youth on digital media. stat out of the Nielsen report: 19% of smartphone and tablet owners also “The research shows that today’s youth searched for product information and may be coming of age and struggling for 16% looked up coupons or deals while autonomy and identity amid new worlds the television was on. This makes us for communication, friendship, play, and perfect targets for ads, but also so used self-expression,” the study said. Having to a constant onslaught of information said that, the digital world is “creating while multitasking that we can be new opportunities for youth to grapple incredibly adept at filtering out the data with social norms, explore interests, we don't care about,” affirmed CNET develop technical skills, and experiment Associate Editor Emily Dreyfuss in the with new forms of self-expression.”
CONTENTS NATION WORLD BUSINESS TECHNOLOGY 29 NEWS ON THE NET World Pope calls for announced plans for a long-range He also met with President Barack rocket launch. North Korea claims Obama to discuss his concerns, greater freedoms in the launch in April will only set and even testified before the U.S. Cuba a satellite into orbit for scientific Senate about the humanitarian purposes, but the U.S. insists that crisis along the border of the two Pope Benedict XVI last week it will be a long-range missile test. African countries. ended his visit to Cuba by speaking out and referencing a President Benigno Aquino III Activists see no need for "authentic freedom." last week urged North Korea to The religious leader also met with forego the launch, saying he may signs of Syria revolutionary icon Fidel Castro raise the issue at the 20th Asean following peace and called for an end to the U.S. summit in Phnom Penh this week. plan trade embargo against Cuba. This is in connection with worries The 50-year embargo was put that the rocket debris may go Though Syria has agreed to a in place to topple the island's down and hit Philippine territory. U.N.-backed peace initiative, communist government; thus far Japan has also reacted, saying it there is no evidence that the it has impacted Cuban citizens' will shoot down a North Korean regime is carrying out the plan. economic and social rights rocket if necessary. Last Wednesday at least 26 heavily. At the start of his visit people were killed in a clash, – while still aboard a flight from adding to the bleak U.N. estimate Rome – the pope denounced the Sudan and South of more than 9,000 killed since violence caused by the drug war March 2011. in Mexico (which recently visited), Sudan could slide and criticized Cuba's Marxist back to war Syrian President Bashar al-Assad political system. has said that he will support Kofi World powers are warning that Annan's peace plan, but that Pope Benedict XVI's homily Sudan and South Sudan may it will not work if what he calls at the open-air Mass held last be sliding back toward war, amid "terrorist groups" continue to Wednesday was less forceful reports that Sudan is bombing receive outside support. This and critical, focusing more on South Sudan, which gained reaction has been fueled by religious openness. independence in 2011 after years reports of Saudi Arabia seeking of civil war over oil-rich territory. to provide weapons and the U.K. U.S. confirms The U.S. has called for a halt in aiming to double non-military aid suspension of military activities in the area. The for the resistance fighters. Syria European Union echoed a similar blames "terrorists" for violence in North Korea food sentiment, while the U.N. and the country, though most reports aid plans the African Union have urged the suggest that the government is leaders of the two African countries killing civilians – even children – The U.S. has confirmed that it has to convene for talks before another in order to wipe out dissidents. suspended planned food aid to war begins. North Korea. The food assistance The U.N. is determined to stick was part of a missile test Actor and outspoken activist to the peace plan, and has begun moratorium deal the two countries George Clooney was arrested this planning for the negotiated agreed upon last February. The month for protesting outside the monitoring mission to be sent suspension came after Pyongyang embassy of Sudan in Washington. to Damascus.
The cenSEI Report • March 26-April 1, 2012 30 THE cenSEI BUSINESS Report Electric Shocks Hit the Philippines Mindanao blackouts and rising power costs nationwide burden families and industries. What can be done? By Ricardo Saludo
First, the good news: Mindanao’s eight- hour blackouts may end next month. That’s the hope of Energy Secretary Jose Rene Almendras. “Assuming nothing else goes wrong,” he told media, “no plant breakdowns, no equipment mishaps — then sometime in May we will be able to handle the situation.”
Still, the former banking and water services CEO isn’t minimizing the gravity of the problem. “We admit responsibility,” Almendras declared. “I won't have problems if I'm asked to resign, because I'm here to serve the nation. If the President says he has no confidence in me, then I will resign.”
The island’s daily power interruptions have prompted no less than President Benigno STRATEGY POINTS Aquino III to call for summit on the crisis in April. His Congress allies pushed The Philippines needs investors to add emergency powers for him to address 15,500 megawatts of capacity between the crisis, though senators and even Sec. 2009 and 2030. That’s the priority, more Almendras are unsure about the idea. than cutting charges The latter now says maintenance work on power plants will finish before June. That’s Mindanao’s lower rates and much also the time Mindanao hydroelectric smaller market than the Luzon-Visayas dams, which account for half the island’s interconnected grid make power power capacity, begin filling up and producers head north instead generating again after the dry season. Global power investment is down due to world economic woes, but with Now, the bad news: Assuming the lights the right policies, the Philippines can go on again sometime in coming weeks, attract generating firms there will be higher electricity charges all
CONTENTS NATION WORLD BUSINESS TECHNOLOGY Electric shocks hit the Philippines 31
across the archipelago starting this month, over 70% of total electricity charges, with by about 10% from the March 26-April transmission and distribution comprising 25 billing period. The Energy Regulatory roughly 8% and 20%. Commission (ERC) approved rate hike petitions from National Power Corp. (NPC) Applying those ratios, the new NPC and Power Sector Assets and Liabilities generation charges would add about Corp. (PSALM), which runs some 10% to the typical power bill if all its generating plants, for increases of 69.04 power comes from Napocor. That’s ₧1,000 centavos/kilowatt-hour in Luzon, 60.60 in more per month for a family or firm the Visayas, and 4.42 in Mindanao. paying ₧10,000 when the April bill arrives next month. The increase covers higher Napocor expenditures in 2007-10 under the Asia’s biggest electric bill. Clearly, the Generation Rate Adjustment Mechanism burden on Filipino families and industries (GRAM) and Incremental Currency of having the among the highest electricity Exchange Rate Adjustment (ICERA). The costs in Asia, not to mention the deterring approved rise would raise NPC’s effective effect on investors, looks set to get worse. rates by about one-seventh or about 14% to Already, Manila and Cebu rank third- and ₧5.7064/kwh in Luzon, with corresponding second-highest in per-kwh costs as reported charges of ₧4.68 in the Visayas, up 14.9%, in the April 2011 business costs survey and ₧2.9763 or 15.1% more in Mindanao. of Japan External Trade Organization (JETRO). Singapore power a bit dearer (see According to a Department of Energy electricity rate table next page), but the (DOE) paper on power sector reforms, entrepot offers so many pluses to offset the the cost of generating power accounts for slightly higher power cost.
IN YOUR BILL NEXT MONTH NPC and PSALM Rate Increases Starting April
Grids Gram Rate ICERA Rate Totral (Php/kWh) (PhP/kWh) Luzon 0.3267 0.3637 0.6904 Visyas 0.4847 0.1213 .6060 Mindanao 0.0536 (0.0094) 0.442
Source: ERC press release on NPC and PSALM rate adjusments
The cenSEI Report • March 26-April 1, 2012 THE cenSEI 32 Report
CHARGING THROUGH THE NOSE Electricity Rates in JETRO Survey of Investment-Related Costs
U.S. cents per kilowatt-hour Business Rate General Rate Singapore 18 20 Cebu 18-19 19 Manila 12-13 23 Hong Kong 13 12-15 Shanghai 12-13 9.3-9.4 Beijing 12 7 Bangkok 12 6 Taipei 8-11 7-17 Kuala Lumpur 9 7-15 Jakarta 8 9 Seoul 6 7 Hanoi 2.8-9.9 3.4-10.7
Source: JETRO Survey of Investment-Related Costs, April 2011
Indeed, expensive electricity is one reason
why the Philippines ranks lowest among Residential Power Rates, US$/kwh Industrial Power Rates, US$/kwh the five original members of Association of 20 16 Southeast Asian Nations (ASEAN) as well 18 14 as the tiger economies of Hong Kong, Korea 16 14 12 and Taiwan in the profitability of Japanese 12 10 businesses in these countries. 10 8 8 6 6 In another JETRO report, “Survey of 4 4 2 2 Japanese-Related Firms in Asia and 0 0 Oceania,” published just last October, Philippines Japan Singapore Thailand Malaysia Indonesia Vietnam Singapore PhilippinesP s Japan TThailandhailand Malaysia Korea Vietnam InIndonesiadonesia charts on page 7 show that about six out (Manila) (Tokyo) (Manila) (Tokyo) of every 10 Japanese companies in the Philippines achieved surpluses last year, below the 70% and higher ratios in the other ASEAN and tiger economies. Luzon Energy Sales land Peak Demand Average Annual Growth Rate, 2009-2030 For its part, the Arangkada Philippines Period Energy Sales, Peak Demand, report published in December 2010 by GWH MW the Joint Foreign Chambers of Commerce Base year 2008 41,275 6,822 (Actual Level) in the Philippines, also cited high power 2009 42,768 7,038 rates as a major stumbling block to 2018 64,303 10,393 investment and business expansion, as 2030 109,477 17,636 its backgrounder and charts on electricity AAGR % % show (see chart right above). 2009-2018 4.53 4.3 2019-2030 4.53 4.51 Why Mindanao is power-starved. Energy czar Almendras notes that Luzon
CONTENTS NATION WORLD BUSINESS TECHNOLOGY Electric shocks hit the Philippines 33
has a generating capacity reserve of 2,000 double the 7,000 MW of projects approved megawatts, while Visayas has 500 MW so far, with 3,771 MW under consideration. excess power. “Why is it in Mindanao In sum, we have much catching up to keep we are short?” he sighed. “In very simple more blackouts away. terms, because people stopped building generating plants in MIndanao.” As the tables below show, DOE’s Power Development Plan, 2009-2030 forecasts: How did that happen? It’s a long story, “By 2030, the country’s energy sale is and it’s not over yet, especially with the projected to increase from 55,417 GWh country needing an additional 15,500 [gigawatt-hours] in 2008 to 86,809 GWh MW of generating capacity by 2030, by by 2018, up to 149,067 GWh by 2030. DOE’s forecast. That’s nearly as much as These are translated to peak demand from the current installed capacity of 16,350 9,226 MW in 2008 to 14,311 MW by 2018, MW nationwide as of 2010, and more than to about 24,534 MW by 2030.”
WHEN BEING FIRST ISN’T GOOD Residential Power Rates, US$/kwh Industrial Power Rates, US$/kwh
20 16 18 14 16 14 12 12 10 10 8 8 6 6 4 4 2 2 0 0 Philippines Japan Singapore Thailand Malaysia Indonesia Vietnam Singapore PhilippinesP s Japan TThailandhailand Malaysia Korea Vietnam InIndonesiadonesia (Manila) (Tokyo) (Manila) (Tokyo) Source: International Energy Consultants, cited in Arangkada Philippines report on power
OUR SURGING HUNGER FOR POWER
Visyas Energy Sales land Peak Demand Average Mindanao Energy Sales land Peak Demand Average Annual Growth Rate, 2009-2030 Annual Growth Rate, 2009-2030 Period Energy Sales, Peak Demand, Period Energy Sales, Peak Demand, GWH MW GWH MW Base year 2008 6,565 1,176 Base year 2008 7,578 1,228 (Actual Level) (Actual Level) 2009 6,857 1,331 2009 7,966 2,031 2018 10,601 1,887 2018 11,904 1,887 2030 19,121 3,404 2030 20,470 3,493 AAGR % % AAGR % % 2009-2018 4.91 4.89 2009-2018 4.62 5.18 2019-2030 5.04 5.04 2019-2030 4.62 4.62
Source: DOE Power Development Plan, 2009-2030, pages 2-3
The cenSEI Report • March 26-April 1, 2012 THE cenSEI 34 Report
Besides supplying future demand, about between 2009 and 2018 exceeds the entire two-fifths of present facilities must be projected 2030 consumption in Mindanao replaced over the next 18 years. Thus, in less of 20,470 GWh. Unless there are incentives than a generation the Philippines needs to to offset such price and demand advantages, install nearly as much generating capacity electricity producers will go north. as we have now. Or else: darkened homes, offices, shops and factories, and stunted Put generation before competition. economic growth, as the nation suffered Then there is the electricity policy under the first Aquino administration. environment itself, which affects current and prospective power producers all over Current and forecast data partly explain the country. For Professor Rowaldo del why power producers prefer to set up in Mundo and Edna Espos of the University Luzon than Mindanao. At NPC’s new Luzon of the Philippines National Engineering rate of ₧5.70/kwh, powering the largest Center (UP-NEC), the key problem is Philippine island grosses nearly double one of priorities. the approved Mindanao charge of ₧2.98. Thus, Luzon offers a 91% revenue gain In their 2010 study, “Philippine Electric over Mindanao, and the Visayas a 57% Power Industry Market and Policy advantage, assuming new plants have to be Assessment,” supported by both UP- competitive with NPC’s charges. NEC and UP Engineering Research & Development Foundation, Del Mundo Moreover, for investors seeking the and Espos found “critical disincentives to profitability of future demand growth, it generation investments” even in the Luzon is significant that the expected increase in grid, on which their study focused. And Luzon power sales of nearly 22,000 GWh several of their key recommendations aimed
CONTENTS NATION WORLD BUSINESS TECHNOLOGY Electric shocks hit the Philippines 35
to provide power producers the security of policy reform in Chile and Brazil of long-term supply contracts with limited prioritized generation adequacy over market spot-market volatility. liberalization.”
In particular, the report urged deferring However, ordinary Filipinos burdened by retail competition in the power sector rising prices but not by long daily blackouts until there was “adequacy of generation, will not warm to policies that prioritize transmission networks, and customer attaining needed generating capacity over switching systems; and ... promulgation bringing down power rates. National leaders by the ERC of all pertinent rules and must convince the public that, as SMC regulations governing retail competition and Power boss Alan Ortiz remarked, “the most open access.” expensive power is no power.” Blackouts hut down businesses, deter investors, and even In short, getting enough power plants endanger lives. That’s far more expensive installed should be put ahead of lowering than even high-priced electricity. rates through free competition. The UP- NEC experts cited two countries with The coming capacity crunch. Which successful power sectors: “The sequencing is why it’s important to keep watch on the
LUZON PLUGS IN Projected Electricity Usage (MWh) and Required Generating Capacity (MW), 2011-30 YEAR Low Economic Growth Moderate Economic High Economic Growth Growth MW MWh* MW MWh* MW MWh* 2011 7,487 46,742,269 7,581 47,327,033 7,675 47,911,797 2015 8,093 50,522,013 8,641 53,943,104 9,232 57,635,019 2020 8,958 55,920,626 10,292 64,252,883 11,877 74,142,908 2025 9,960 62,179,097 12,400 77,411,064 15,585 97,296,077 2030 11,122 69,434,382 15,090 94,204,608 20,787 129,769,595 *Estimated based on 2009 Load Factor of Luzon Grid (71.26%) Source: “Philippine Electric Power Industry Market and Policy Assessment,” UP-NEC, 2010, page 22
GET READY FOR BLACKOUTS Luzon Grid Projected Power Capacity and Demand, Reserve Ratio and Load of Loss Expectation Days, 2011-14 YEAR Capacity (MW) Demand (MW) Reserve (%) LOLE (Days/Yr) 2011 9583 7581 26.41% 5.07 2012 9624 7827 22.96% 12.08 2013 9657 8085 19.44% 5.27 2014 9657 8356 15.57% 82.27 Source: “Philippine Electric Power Industry Market and Policy Assessment,” UP-NEC, 2010, page 35
The cenSEI Report • March 26-April 1, 2012 THE cenSEI 36 Report
country’s generating plants, which must 75 MW of new capacity coming on stream, maintain a safe reserve of unused capacity the UP study expected the reserve ratio to above peak demand. The UP-NEC paper fall to 15.57%, leading to 82 LOLE days in forecast megawatt-hours consumed and Luzon (see power demand and reserve table the required MW capacity needed to meet below). That’s nearly three months of power demand in Luzon, where some three- outages just two years from now. quarters of economic output is produced. Low, moderate and high economic growth If DOE isn’t as worried as UP-NEC, it’s scenarios were used to estimate future because its updated 2010 list of existing generating needs if gross domestic product plants estimated Luzon’s total installed rose by 3%, 5% and 7% a year (see Luzon capacity at nearly 12,000 MW, with about Plugs In table previous page). 10,500 MW rated as dependable. Plus: a 600-MW plant in Mariveles, Bataan, is due To maintain a loss of load expectation to be finished by GN Power before the end (LOLE) of one blackouts day in a year, the of this year, going by the list of committed reserve or excess capacity should be 28.7% plants on page 3 of the department’s Power of peak demand. The present 2,000 MW Development Plan, 2009-2030. That should reserve is about 26%, with LOLE of five days keep Luzon blackouts tolerable for several a year. At medium GDP growth and with just more years.
ELECTRIFYING THE DECADE Philippine Consumption (GWh) and Capacity (MW), 2009-2020
2009 2010 2011 2012 2012 2014 2015 2020 Consumption (GWh) Industry 17,350 18,600 19,467 20,504 21,644 22,900 24,247 Transport 118 125 133 141 149 158 168 222 Residential 17,439 18,251 19,103 19,986 20,905 21,865 23,078 28,212 Commercial & 14,702 15,762 16,887 18,133 19,350 20,641 22,013 30,223 public service Other 5,345 5,533 5,748 5,990 6,251 6,531 6,835 8,527 TOTAL 54,954 58,272 61,339 64,754 68,301 72,095 76,341 99,199 Annual Growth 3.4% 6% 5.3% 5.6% 5.5% 5.6% 5.9% 5.3% Capacity (MW) Coal/Gas/Oil 10,941 11,557 12,244 12,994 13,794 14,674 15,584 20,844 Nuclear 0 0 0 0 0 0 0 0 Hydro 3,361 3,421 3,571 3,751 3,941 4,414 4,341 6,141 Non-hydro renewa- 2,680 3,278 3,897 4,526 5,155 5,789 6,424 11,074 bles Geothermal 1,196 1,794 2,392 2,990 3,588 4,186 4,785 8,785 Solar 7 7 7 8 9 10 11 31 Wind 33 33 53 83 113 148 183 813 Net maximum 16,982 18,256 19,712 21,271 22,890 24,604 26,349 38,059 Economist Intelligence Unit table; EIU estimates for 2009-10; EIU forecasts for 2011-20
CONTENTS NATION WORLD BUSINESS TECHNOLOGY Electric shocks hit the Philippines 37
COMMITTED GENERATING PLANT PROJECTS, 2010-2014 Grid Project Name Capacity Target Completion Location Proponent (MW) Luzon 2x300MW Coal-Fired 600 4th Qtr. of 2012 Marovele, Bataan GN Power Power Plant Sub_total Luzon 600 Visayas 3x80MW CFB Power Plant 240 Unit I-March 2010 Brgy. Daanlungsod, Cebu Energy Expansion Project Unit II-June 2010 Toledo City, Cebu Development Unit III-Jan 2011 Corporation (Global Business Power Corp.) 2x100MW Cebu Coal-Fired 200 Unit 1-Feb 2011 Naga, Cebu KEPCO SPC Power Power Plant Unit 2-May 2011 Corporation (KSPC) 17.5MW Panay Biomass 17.5 2011 Brgy. Green Power Panay Power project Cabalabaguan, Phils., Inc. Mina, Iloilo Nasulo Geothermal Plant 20 2011 Nasuji, Valencia, Energy development Negros Oriental Corporation 2x80MW CFB Power Plant 160 Unit I-Sep 2010 Brgy. Igore, La Paz, Panay Energy Unit II-Dec 2010 Iloilo Development Corporation (Global Business Power Corp.) Sub-total Visayas 638 Mindanao Sibulan Hydroelectric 43 Unit I-Feb 2010 Sta. Cruz, Daval Hedcor Sibulan, Inc. Power (Unit I-16.5MW) Unit II-Apr 2010 del Sur (Unit II-26MW) Cabulig Mini-Hydro Power 8 June 2011 Plaridel, Jasaan, Minadano Energy Plant Misamis Oriental Systems, Inc. (MINRGY) Mindanao 3 Geothermal 50 July 2014 Kidapawan, North Energy Development Cotabato Corporation Sub-total Mindanao 101 Philippines 1,338 Source: Tables from Power Development Plan, 2009-2030, DOE, 2009, pages 3-4 But matching power capacity and demand and DOE tables pages 44-46). Net maximum means getting two volatile vectors to converge capacity, which accounts for old plants with an adequate reserve between them. closing, is forecast to more than double — if That requires juggling varying consumption investors come in. forecasts by experts, even more variable generating plans by companies, plus So far, based on DOE’s list of committed unpredictable weather and unforeseen generating projects, only 1,338 MW of accidents that could down plants, just as El new capacity is due by 2014, compared Niño drought in 2010 cut 90% of Mindanao’s with the additional 1,700 MW needed up to hydroelectric output — half of its power. that year, according to the agency’s generation needs projection (see Power Development For the decade ahead, the Economist Plan, 2009-2030, pages 3-4). The big Intelligence Unit table on power needs question for millions of families and firms, and capacities forecasts a near-doubling of lives and livelihoods: Will enough capital and demand between 2009 and 2020 (see EIU capacity come in to keep the lights on?
The cenSEI Report • March 26-April 1, 2012 THE cenSEI 38 Report
POWER CAPACITY NEEDS, 2009-2030
Year Luzon Grid Visayas Grid Mindanao Grid Plant Type Total Plant Type Total Plant Type Total Baseload Midrange Peaking Baseload Midrange Peaking Baseload Midrange Peaking 2009 150 150 2010 50 50 2011 300 300 50 50 2012 300 300 200 200 2013 100 100 2014 300 150 450 100 100 2015 450 450 100 100 2016 300 150 450 100 100 2017 500 500 2018 300 300 600 100 100 100 100 2019 500 150 650 100 50 150 100 100 2020 500 500 100 100 100 100 2021 500 150 650 100 50 150 100 100 2022 500 150 650 100 100 100 100 2023 500 150 650 100 50 150 100 50 150 2024 500 300 800 100 50 150 100 50 150 2025 500 150 650 100 50 150 100 50 150 2026 500 300 800 100 100 200 100 50 150 2027 600 300 900 100 50 150 100 50 150 2028 500 300 650 100 100 200 200 200 2029 600 300 900 200 200 100 50 150 2030 900 900 200 200 200 200 Total 5,000 3,900 3,000 11,900 1,400 750 2,150 2,000 500 2,500 Source: Tables from Power Development Plan, 2009-2030, DOE, 2009, pages 3-4
Building new plants will require 2-5 years, The electricity investment climate. so if the 300-MW-plus gap between needed A temporary return to state investment in and committed capacity till 2014 is to be power generation is no long-term solution closed, projects will have to be approved and to the country’s electricity needs. Private started now. That won’t happen anytime investment from here and abroad will be soon, unless the government itself does it. needed to power the economy, especially if the Aquino administration’s target of 7% But that would require Congress to repeal GDP growth is to be achieved. And for capital or suspend the ban on state investment to come in, power sector policy must be in generating ventures, stipulated in the made attractive to generating companies. Electric Power Industry Reform Act of 2001 (EPIRA, Republic Act 9136). That’s one Considering the country’s huge and emergency power President Aquino may expanding power consumption, Johns need to address power shortages nationwide. Hopkins-trained economist Elliott Morse
CONTENTS NATION WORLD BUSINESS TECHNOLOGY Electric shocks hit the Philippines 39
sees value for investors in the sector. “The IEA noted that investment in coal- and gas- Philippine electricity industry is recession- fired plants were favored when oil prices proof,” said the former Harvard educator, fell, than more capital-intensive facilities noting in a 2011 report that the sector kept like nuclear and renewables. The last growing through the group suffered particularly, 1997-98 Asian financial falling by an estimated 39% To cut power costs, crisis and the 2008-09 in 2009, though government world financial crisis. make sure the incentives for renewable government must energy helped moderate the EIU noted in its March there is decline. 2011 report on the ample generating Philippine energy sector The hopeful news, however, that key EPIRA reforms capacity. Then rates is that targeted reductions have been implemented, will fall. That’s the in greenhouse-gas emissions including privatization law of supply under the 450 Policy Scenario of 70% of NPC’s global plan would require and demand generating capacity, the trebling of renewable advancing power sector investment from recent years liberalization. But GR Business Online (see chart next page). Endowed with sun, believes that local and global investment wind, wave and geothermal resources, the in power generation is discouraged by a Philippines should aim to snare our share policy framework which limits foreign of such capital. equity to 40% in utilities, and does not spur electricity distributors to wire up more But there’s a big if: power sector policy of the archipelago and thus expand the must be attractive to investors. For UP- market for power. NEC experts Del Mundo and Espos, EPIRA’s priority to establish an unfettered There are also external constraints on electricity spot market and cut power capital for electricity generation. On the rates, fails to give generation companies global stage, the West’s financial and the security of long-term contracts with economic woes have curtailed investment predictable rates. And with massive and in energy projects. That’s the assessment unrelenting political pressure on the of the International Energy Agency (IEA) government to cut electricity costs, the in its 2009 report, “The Impact of rate-setting ERC will always think many Financial and Economic Crisis on Global times before adjusting rates upward, even if Energy Investment.” gencos lose money.
At the time, dropping fuel and power For his part, Senator Sergio Osmeña demand due to contracting economies held wants Mindanao plugged into the Luzon- back projects; so did more cautious lenders Visayas grid and its increasingly liberalized and portfolio investors after the 2008 electricity market. In his Statement on the banking troubles. Many of these conditions Mindanao Power Shortage the Cebuano remain to this day, so global capital will be legislator recounted that Mindanao slow in flowing to generating ventures. representatives back in 2001 got Congress
The cenSEI Report • March 26-April 1, 2012 THE cenSEI 40 Electric shocks hit the Philippines Report
CAPITAL TO COOL THE WORLD Renewable Energy Investment in 2008-09 and under 420 Policy Scenario
Values in constant 2008 U.S. dollars. Chart from “The Impact of Financial and Economic Crisis on Global Energy Investment.”, IEA, 2009, page 62
to exempt Napocor plants in Mindanao said Sen. Osmeña, “electricity would be from EPIRA privatization. “Even worse,” cheaper for everyone if distributed over he added, “the bicam committee agreed a bigger transmission grid that a smaller to postpone the construction of the one.” Indeed, costs would moderate in the transmission line interconnection between long run if power capacity increased, far Leyte and Surigao.” more than if it was stunted by unattractive market policies. That kept power rates in Mindanao down well below Luzon and Visayas up to now. That’s not EPIRA, but a much older and But that made the north more attractive far more immutable statute: the law of to power producers than the south. And supply and demand. Sadly, politicians and now that latter is short of electricity, it the people often learn that basic economic cannot even tap the 380 MW of excess lesson only after so much pain, expense, capacity in the Visayas grid. Moreover, and long hours in the dark.
CONTENTS NATION WORLD BUSINESS TECHNOLOGY 41 NEWS ON THE NET Business
to be in line with Maynilad's published on the subject as well, Muscovado finds expansion efforts. The water particularly by the International sweet success concessionaire has allotted ₧2.64 Research Journal of Finance abroad billion to improve and extend its and Economics and the Asian water services in Paranaque, Development Bank Institute. Recent developments in the Muntinlupa, Las Pinas and Cavite; ₧ local sugar industry have been and spending 186.5 million to lay discouraging. Costs have pipelines in Valenzuela City, for Residential gone up, and the demand is the same reasons. property sector low. Moreover, the Asian Free Trade Agreement and the MPIC's core net income in 2011 seen facing establishment of the Asean went up 32% from the previous oversupply woes Economic Community in 2015 year mainly due to its utility will open up the sector to holdings. "The rise in core net The residential market of the more competition. This did not income is due mainly to higher Philippine real estate sector dissuade sugar planter Alejandro profit from Maynilad Water may face "risks arising from Florian Alcantara, who adapted Services Inc. (Maynilad) and oversupply," according to by selling muscovado through from Manila Electric Company the World Bank's Philippines global niche marketing; his Brown (Meralco) as well as a strong Quarterly Update. “The Philippine Sugar Milling Co. Inc. is now performance across the Hospital real estate market today is significantly dependent on export Group," the company said. largely driven by BPOs [business revenue. process outsourcing] and Asean steps up remittances,” the report goes The interest in muscovado on to say. The BPO industry has since gone up; a state- financial systems has dramatically increased the run agency is carrying out a integration talks demand for office space and benchmark study in order to raise even residential units; in contrast, yield and promote efficient mass Members of the Asean have remittances fuel the demand for production. The Department of intensified talks regarding the low-end to mid-range residential Science and Technology is also integration of their financial spaces. The industry's effect involved in a possible muscovado systems in the belief that this will on real estate is discussed in plant project in Ormoc City. further the development objectives property services firm Jones of the region and their respective Lang LaSalle Leechiu's report nations. However, unlike the "Sustaining the Competitiveness Metro Pacific, DMCI European Union, Asean countries of the Philippine Outsourcing and confirm talks to are not keen on having a common Offshoring (O&O) Industry." currency or a common monetary bring in Marubeni authority, according to officials. Despite the positive outlook, as Maynilad partner The goal for Asia is to move the World Bank points out that toward making it easier to conduct the residential market may soon Metro Pacific Investments Corp. business within the region and face an oversupply problem due (MPIC) and DMCI Holdings Inc. engage in financial transactions to potentially lower remittances have confirmed that they are in across boundaries. (attributed to global factors, talks to bring Japanese trading such as unrest in the Middle giant Marubeni in Maynilad In spite of all this, there is still a East, slowed growth in the U.S., Water Services Inc. as a strategic push for currency integration; recession in Europe, and upward partner. The decision appears several studies have been pressure on oil prices).
The cenSEI Report • March 26-April 1, 2012 42 THE cenSEI TECHNOLOGY Report
Now, Gadgets That Computer and Make You Look Cool and Cute A look at digital devices you'll soon be able to wear
STRATEGY POINTS Computers have migrated from metal cases sitting on tables and desktops, to notebooks Many companies and scientists are developing for us to carry, and then to smartphones wearable gadgets, prompting some to predict that can fit in our pockets. So are you ready that 2012 could be the year of the wearables to wear your technology on your sleeve? Tech titans Apple and Google are rumored to To be sure, while technological advances be working on prototype wearable devices, have paved the way for the mass production and Google’s product could be on the market of portable gadgets, the further evolution of by end of 2012 technology from portability to wearability is only beginning.
Wearable devices are creating a buzz these days, with big players rumored to be joining the race and sources predicting 2012 to be the year of wearables.
1. A curved-glass iPhone peripheral for your wrist. The wristwatch, one of the earliest examples of wearable (if mechanical) technology, is somewhat passé now, but work is apparently underway to replace it with something else you can wear on your wrist.
In December 2011, it was rumored that industry leaders Apple and Google were secretly developing prototype wearable devices in order to boost smartphone sales. According to a New York Times article, Apple is working on several products that
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could communicate with the iPhone and display information on other Apple devices. The author says that “a person with knowledge of the company’s plans” informed him that “one idea being discussed is a curved-glass iPod that would wrap around the wrist,” with which users could interact with Apple’s artificial intelligence software Siri. Could Apple be testing the waters by encouraging users to The iPod nano worn as a wristwatch credit wear their iPod nanos on their wrists? Source: Apple website
2. Google glasses ala The Terminator. Google, on the other hand, is said to be developing something that looks like normal thick-rimmed glasses but with the ability to display a computer interface right in the user’s field of vision, according to 9to5 Google, “a news, reviews, and information source covering all things Google and the ecosystem around Google” (but not affiliated with Google). Contrary The Samsung flexible AMOLED display at the 2011 Consumer to a New York Times report it cited, 9to5 Electronics Show Google says it will not be a smartphone Source: Video uploaded to YouTube by IntoMobile peripheral, but rather, a device that communicates directly with the Cloud and Wearable technology conferences pushes information onto the display based Every year, experts on wearable technologies around the on location, preferences, and Google’s world gather to discuss advances in this growing field. Some information as the wearer walks around. of the biggest conferences include: The device will likely use a transparent LCD or AMOLED display similar to what Wearable Technologies Conference – held in Munich, Samsung demonstrated (video right) at the Germany this year, and has been running since 2008 2011 Consumer Electronics Show (CES). Insiders say the glasses could be on the International Symposium on Wearable Computers – probably market by the end of 2012, and will sell the longest running wearable computer conference, having for $250-600, according to the New York started in 1997 Times blog post. International Conference on Wearable and Implantable Body At the 2012 CES, companies like Sensor Networks (BSN) – the 2012 BSN will be held from Lumos Optics, Vuzix, and Sensics also May 9-12 in London, U.K. A list of accepted research papers demonstrated similar devices. is available on their website.
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3. WiMM Labs’ Android-powered cost of thermoelectric devices, most of miniature computer. At the 2012 CES, which currently use the more expensive but WiMM Labs showed off a small, square- more efficient inorganic compound called shaped device that runs on Google’s bismuth telluride. Study co-author and Android platform, has micro apps, and can Wake Forest graduate student Corey Hewitt communicate with a smartphone via Wi- hopes to one day make Power Felt efficient Fi or Bluetooth. According to the official enough to power an iPod or a phone. website, it is a highly portable, multi- Results of the study are published in the function wearable computer that is fully journal Nano Letters. customizable to become anything the user wants it to be, from a health monitoring device that hangs as a pendant to a smart watch on your wrist. It will not be directly available to consumers, however. Reports web magazine Mashable, “The company has no plans to sell the Android Watch to consumers. Instead, OEMs have the option of buying the device in module form and selling it with a variety of watch bodies or disaggregating it into its parts (screen, PC board and battery) Study co-author and Wake Forest University graduate student and building something new on the Corey Hewitt holds a piece of the thermoelectric fabric Source: Wake Forest University News Center WiMM Labs
4. Charge your phone with your clothes. In February of this year, researchers at the Wake Forest Center for Nanotechnology and Molecular Materials introduced Power Felt, a thermoelectric fabric made of carbon nanotubes that can harness energy from body heat. It uses temperature differences, such as that between room temperature and body temperature, to create a charge. PixelOptics’ electronic eyeglasses let users shift WiM
The research is groundbreaking from one prescription to another and in that it significantly reduces the Source: PixelOptics website
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5. Electronic-focusing eyeglasses. connectivity will be the norm and “every Virginia-based PixelOptics has created item in your life, from your refrigerator to a line of electronic eyeglasses, called your fridge magnets, will soon connect to emPower, that lets wearers toggle between the Internet or communicate other Internet- close-up and distance vision just by either connected gizmos.” tilting their head downward or pressing a spot on the side of the frames. According “By 2020, industry analysts say the to CNN, these use lenses manufactured amount of cellular traffic created by by Panasonic that “feature a thin layer of smartphones and tablets will be dwarfed crystal sandwiched between two by the data generated from the world of layers of plastic.” While already connected 'things,'” Goldman reports, available from a few retailers in the adding that, “Shoes, watches, appliances, U.S. for $1,000-1,250, the company cars, thermostats and door locks will all hopes to expand their reach in the be on the network.” coming years. Just as we were wondering how to make Is ubiquitous computing upon the most out of 4G-capability in mobile us? Reporting on the recently phones, now comes word that the wireless concluded 2012 Mobile World industry is thinking about 5G wireless, Congress in Barcelona, David which doesn't even officially exist yet. “With Goldman, writing in CNNMoney the rapid pace of change in the wireless predicts that, in 10 years, embedded industry, current 4G technology alone will be inadequate in just five years,” Goldman reports, citing Tod Sizer, head of wireless research at Alcatel- Lucent's Bell Labs.
It remains to be seen whether speculation regarding Apple’s and Google’s products will pan out, and whether all these wearable products will pass the marketplace tests of functionality and affordability (not to mention fashion-worthiness), but even now, with a number of wearable devices already on the market and many others in development, it seems M Labs’ Android-powered “smart watch” runs micro apps inevitable that our devices will be connects to the Internet via Wi-Fi or Bluetooth more interactive – not just with us Source: WiMM Labs website but with each other.
The cenSEI Report • March 26-April 1, 2012 THE cenSEI 46 Report NEWS ON THE NET Technology U.S.-Microsoft raid Facebook has acquired 750 project. The project is currently patents from IBM. Additionally, in a crucial stage, as a delayed targets cyber-Mafia the social networking company announcement on where the has applied to the U.S. Patent array will be based is eagerly As part of what is called and Trademark Office for at least being awaited. The decision will Operation B71, U.S. marshals 500 more. These actions serve be between previously shortlisted accompanied by Microsoft to beef up Facebook's patent locations in two countries – South representatives raided two Web- portfolio, which is paltry compared Africa and Australia. hosting outfits last March 23. with the thousands owned by the Microsoft seized servers and likes of Microsoft and Apple. Many While waiting for the took control of websites used to tech companies strategically use announcement, Canada was amass around $100 million in patents to both generate revenue formally recognized by the SKA criminal gains. These were the and discourage competition; board of directors as part of the tools used to manipulate part of prodded by Yahoo's absurd claims, effort. 13 million computers infected with it seems that Facebook is joining "Zeus," a computer bug designed the patents-armed club. to steal people's bank account EU push for ocean information. The swift disruption In connection with these recent energy falls short of the botnet operation was events, Facebook has added made possible through clever details of the current patent Europe's ocean energy initiative is legal maneuvering by Microsoft, lawsuit with Yahoo to its IPO filing. which based its petition for the likely to disappoint and not reach Facebook is set to make its stock EU expectations for its carbon warrant to seize the servers on market debut in May. the Racketeer Influenced and reduction target this 2020. It may Corrupt Organizations Act. The take well over a decade for wave software giant took an interest in and tidal energy to significantly the issue because these types of Super telescope make an impact, even though cyber-criminal activities typically may hold the key it is currently growing rapidly and attracting much attention in take advantage of Microsoft's to secrets of the infrastructure. Europe. The new industry has universe attracted many investors over the Organized cyber-crime rings past year, and has garnered an have been hit by the U.S. and Said to potentially be the most estimated several hundred million Microsoft before, though not in sensitive radio telescope ever dollars in funding from companies tandem; previous targets were built, the Square Kilometer such as Siemens and Vattenfall. the Rustock botnet and the Array (SKA) is an international Coreflood virus. effort with 20 countries and 70 However, even with hundreds institutions already on board in of millions of dollars in funding, addition to private backers. "It the marine power sector still Facebook buys 750 will have a deep impact on the maintains that it needs more patents from IBM way we perceive our place in the public funding in order to reach its universe and how we understand full potential, cross the threshold After Yahoo sued Facebook for its history and its future," says into commercial viability, and infringing several of its software Michiel van Haarlem, interim eventually work toward cost patents, reports are saying that director general of the SKA efficiency.
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