The Daily News

Vol. 16 No. 12 January 23, 2015 WEATHER FORECAST

METRO MANILA 23°C to 31°C The Nation CEBU 25°C to 29°C DAVAO 22°C to 31°C  More probing against Vice President Binay  …as tax evasion raps filed against Currency Currency 1 Peso in COUNTRY Antonio Tiu in Peso in US$1 Currency  DOE Chief, 6 others re-appointed to US (dollar) 44.4960 1.0000 0.0225 posts Japan (yen) 0.3777 0.0085 2.6476

UK (pound) 67.3847 1.5144 0.0148

Hong Kong (dollar) 5.7398 0.1290 0.1742 The Economy and Business 0.1610 0.1396  Hunger situation improves in 2014 China (yuan) 7.1635  Net outflow posted for hot money Canada (dollar) 36.0759 0.8108 0.0277  BOC crackdown on importers of Australia (dollar) 36.3946 0.8179 0.0275

canned meat products New Zealand (dollar) 34.2356 0.7694 0.0292

EMU (euro) 51.6554 1.1609 0.0194

Corporate Briefs PESO–DOLLAR RATE  Philippine Airlines Inc. postpones 30 trading days to January 22, 2015 delivery of 40 aircrafts Open: P 44.360

 International Container Terminal 43.50 Close: P 44.320 Services Inc. unit completes tender 44.00 offering High: P 44.300  Del Monte Pacific Ltd. Shelves plan 44.50 to raise $360Mn from sales of Low: P 44.440 preferred shares 45.00 W.A.: P 44.361 45.50 Vol.: 683.20 Mn

PSE COMPOSITE INDEX 30 trading days to January 22, 2015 Open: 7,475.09

High: 7,475.09 7700 7500 Low: 7,400.03 7300 7100 Close: 7,416.31 6900 6700 Index: 7,416.31 6500

6300 Vol.: 4.060 Bn 6100

Val.: 19.799 Bn

Disclaimer: The articles in this Daily News have been culled from various media sources. We cannot, therefore, vouch for the accuracy of what is reported. For more information on the WBF, you can call 810-96-06 to 09, or visit our website1 at www.wallacebusinessforum.com.

The Nation

More probing against Vice President Binay The ongoing probe on corruption allegations against Vice President Jejomar Binay is expected to last longer after a senator filed a resolution that sought to investigate another supposedly questionable transaction involving the official, a government-controlled body and a private company. On Thursday, Senator Antonio Trillanes IV filed Senate Resolution 1114, directing the Senate blue ribbon committee to conduct a probe on the alleged irregular transactions entered into by the Boy Scouts of the Philippines (BSP), a government-owned and -controlled corporation, and real estate development firm Alphaland Corp. According to former Makati City vice- mayor Ernesto Mercado, star witness of the blue ribbon committee in its probe on Mr. Binay, the Vice President reportedly received millions of pesos in kickbacks from the deal, initially amounting to P188,973,460. During a Senate blue ribbon subcommittee hearing on Thursday, Mr. Mercado, a former political ally of Vice President Binay, said that the deal was reached in 2010, when a piece of land owned by the BSP in the business district of Makati City was used as a collateral by Alphaland to the Development Bank of the Philippines (DBP) to get a P1.7-billion loan.

…as tax evasion raps filed against Antonio Tiu The businessman who claimed ownership of a 350-hectare farm alleged to be owned by Vice President Jejomar Binay in Batangas is facing a P73.34-million tax evasion case before the Department of Justice (DOJ). The Bureau of Internal Revenue (BIR) accused Mr. Antonio Tiu of substantial under-declaration of income for 2008 and 2013 to avoid payment of taxes. Mr. Tiu had claimed ownership of the sprawling 350-hectare “Hacienda Binay” in Rosario town. He found himself immersed in more trouble after allegedly racking up more than P73 million in tax debt in 2008 and 2013. Mr. Tiu is chairman of publicly listed companies AgriNurture Inc. and Greenergy Holdings Inc. BIR Commissioner Kim Henares said Mr. Tiu had a total tax deficiency of P73.34 million inclusive of penalties and surcharges. Sought for comment, Mr. Tiu described the filing of the tax case as “unfair, premature and unfounded.”

DOE Chief, 6 others re-appointed to posts President Aquino has reappointed Sec. Carlos Jericho Petilla as energy secretary. Sec. Petilla is the only member of the Aquino Cabinet who has not been confirmed by the Commission on Appointments (CA). Also reappointed were Mr. Arthur Lim as member of the Commission on Elections and Ms. Nieves Osorio as member of the Civil Service Commission. 6 ambassadors were issued new appointments: Ms. Mary Jo Aragon (Thailand and United Nations Economic and Social Commission for Asia and the Pacific), Ms. Maria Zenaida Angara Collinson (Austria, Croatia, Slovenia, and the Slovak Republic), Ms. Maria Teresita Daza (India and Nepal), Mr. Alfonso Ver (Bahrain), Mr. Pedro Renato Villa (Kuwait), and Ms. Lourdes Yparraguierre (United Nations in New York). The CA bypassed the appointees when Congress went on its month-long Christmas break last Dec. 19, prompting President Aquino to reappoint them. Their papers have been submitted to the CA. Not in the list of appointees Malacañang has sent to the appointments commission for confirmation is acting Health Secretary Janette Garin, who has replaced resigned secretary Enrique Ona.

The Economy & Business

Hunger situation improves in 2014 The ranks of those who went hungry thinned last quarter -- with a significant decline tracked in Luzon -- helping to bring hunger nationwide in 2014 to the lowest point in 7 years, the Social Weather Stations (SWS) said in a new report. But while state officials pointed to the results as proof government’s anti-poverty effort was making headway, one analyst described any improvement as “insignificant.” Results of a Nov. 27- Dec. 1, 2014 survey among 1,800 adults nationwide -- with sampling error margins of ±2% for national percentages; ±6% each for Metro Manila, “Balance Luzon” and Mindanao; and ±3% for the Visayas -- found 17.2% of respondents, equivalent to an estimated 3.8 million families, saying they experienced involuntary hunger at least once in the past 3 months. The 4th quarter result was 4.8 points below the 22% (estimated 4.8 million families) recorded in the September survey. While last year’s average hunger rate was the lowest annual result since 2007’s 17.9%, it was steady -- slipping just 1.2 points -- from 19.5% in 2013.

Net outflow posted for hot money Foreign portfolio investments posted a net outflow last year -- a turnaround from 2013’s inflows -- in the face of the move by the US Federal Reserve (Fed) to gradually terminate its massive bond-buying stimulus, the Bangko Sentral ng Pilipinas (BSP) yesterday reported. Hot money -- called so given the ease by which these enter and leave the country -- posted a net outflow of $310 million last year, which was a turnaround from the $4.224- billion net inflow seen at end-2013. “The investment flows reflected investor reaction to the tapering of the quantitative easing program of the United States,” BSP said in a statement. Last October, the Fed ended its 2

massive asset purchasing program that had kept the world’s biggest economy afloat since the 2008 global financial crisis. Market volatility is expected to persist as investors try to second-guess the Fed’s next step: an increase in policy rate.

BOC crackdown on importers of canned meat products The Bureau of Customs (BOC) started its crackdown on importers of canned meat products which deliberately undervalue their goods to avoid taxes. Based on the government’s latest TaxWatch campaign advertisement, the BOC zeroed in on unscrupulous importers of Palm, Hereford, Hormel, Libby’s and Pampeano corned beef. The BOC cited the ridiculously low import values declared by some importers at P3 to P4 per can when the retail prices of these products range from P122 to P200 each. It identified Federated Distributors Inc. which declared an import value of only P3.89 for a 326 gram can of Palm corned beef. This product is being retailed at P173 to P200 in supermarkets. In contrast, the BOC noted that Duty Free Philippines Corp. declared a can of Palm as P103.50. Federated Distributors likewise was found to have undervalued imports of Libby’s and Hereford. The declared value for each can was only P3.18 for Hereford and P4.34 for Libby’s.

Corporate Briefs

Philippine Airlines Inc. (PAL) has decided to extend the delivery of close to 40 aircraft by 4 years…PAL president and chief operating officer Jaime Bautista told reporters yesterday at the airline’s headquarters in Pasay City that it has deferred the delivery of the aircraft to 2024 instead of 2020…Bautista said the airline is supposed to take the delivery of the remaining 38 Airbus A321 aircraft until 2020…a unit of port giant International Container Terminal Services Inc. (ICTSI) has completed a tender offer involving $350 million worth of outstanding debt launched last Jan. 12…ICTSI treasury director Arthur Tabuena informed the Philippine Stock Exchange (PSE) that $229.841 million worth of securities of ICTSI’s Royal Capital BV were tendered during the offer period that ended last Jan. 21…Del Monte Pacific Ltd. (DMPL) has decided to temporarily shelve a plan to raise $360 million from the sale of preferred shares, citing unfavorable market conditions…the bridge loan from Banco de Oro (BDO), according to the company, was used to partially fund its acquisition of Del Monte Food Corp.’s food consumer business in February last year.

Word‐for‐Word

Philippine Star columnist Boo Chanco wrote:

It has finally happened. I have been writing about this need for years. CAAP has inaugurated a state of the art Eurocat 200 air traffic and navigational system at NAIA. We needed a new system like this ages ago to replace our outdated system. But the project was unreasonably delayed by then DOTC Sec Mar Roxas.

Former CAAP director general Ramon Gutierrez, in a conversation I had with him, emphasized the need for this upgrade way back in 2012. But Gutierrez lamented that the rules for doing anything in government are just too cumbersome and political. Here is how I reported it in this column April 2, 2012:

“Take a vital piece of equipment that guides planes in our air space as they fly through and as they take off and land. The strategic vision of the international civil aviation community is to achieve integrated global air traffic management through the worldwide implementation of Communications, Navigation, Surveillance and Air Traffic Management (CNS/ATM). They are talking of seamless skies… using satellites instead of land based radars.

“Our horse and buggy system, needless to say, needed upgrading a long time ago. We are internationally committed to have this state of the art system by 2015. During her watch, Ate Glue’s minions at DOTC enlisted JICA to help. But it took them too long to get anything done and by the time they signed contracts, the new administration came in.”

I understand why former DOTC Sec Ping de Jesus reviewed the project when he took over. No one can trust the DOTC kapulisan of the Arroyo administration that brought us the ZTE-NBN deal.

After reviewing the contracts, Sec Ping cleared the implementation of the CNS/ATM system before he left office. But when Mar took over, he stopped implementation to study it again. And when I talked with Gutierrez, it was nine months after and nothing was moving.

Gutierrez said that if and when the decision to go is given, the specifications must be redesigned to account for the growth of budget carriers and the adoption of open skies. The system should be able to handle the increased traffic…

We needed that system like as of yesterday. One of the reasons planes have to circle around NAIA and why flights are always delayed with long lines of aircrafts waiting to take-off is because we don’t have a modern system for air traffic control. The delay we experienced certainly has implications to our economy’s competitiveness, something every airline passenger over the last few years have experienced in terms of delayed take-offs and landings.

What was inaugurated this week is a step in the right direction, even if it still is a stop-gap measure. It is not enough. This one is only for Manila. We need the ATM/CNS system to cover the whole country and we won’t have that until the end of 2016. Indeed, I am told, this newly inaugurated P160-million system upgrade may be dismantled when the ATM/CNS comes on line.

Still, we should be thankful for small miracles. This Eurocat 200 features a computerized air traffic control and management solution that control en route, over flights, arriving, and departing air traffic from as far as 250 nautical miles.

As CAAP director general William Hotchkiss explained, the Eurocat 200 would enable the Philippines to detect any entry of commercial flights into Philippine airspace. It would enable us to bill airlines flying over our airspace, and thus, if we had it earlier, it could have paid for itself too. It could monitor all types of aircraft, either civilian or military.

Hotchkiss explained that “before the upgrade, flights at the NAIA, specially during rainy seasons, are affected by continuous outage resulting to flights cancellation or diversion of flights as the ageing system had outlived its lifespan for over 19 years and parts are already obsolete and unavailable for replacement.”

CAAP said the improvement is essential to NAIA operations because the P13-billion next-generation satellite- based Communications, Navigation, Surveillance/Air Traffic Management (CNS/ATM) project that was signed during the previous administration “was delayed and would not be in place until the end of 2016.”