WeeklyPhilippine Update

WEEKLY UPDATE WE TELL IT LIKE IT IS

VOLUME I, NO. 7 Feb. 13 - 17, 2017 ______PHIL. Copyright 2002

_ THE WALLACE BUSINESS FORUM, INC. accepts no liability for the accuracy of the data or for the editorial views contained in this report.__ Political

Court upholds Marcos protest "Quotes The Supreme Court, sitting as the Presidential Electoral Tribunal (PET), has allowed former senator Ferdinand “Bongbong” Marcos Jr.’s election protest against Vice President Maria of the Week" Leonor “Leni” Robredo to proceed, declaring it “sufficient in form and substance.” In an 8- page resolution dated January 24, the tribunal dismissed VP Robredo’s claim that Mr. Marcos’ accusations of cheating and vote-buying were just a “series of wild accusations, guesses and surmises.” The tribunal also rejected VP Robredo’s argument that it had no “Release Napoles, the number one enabler of plunderers jurisdiction over the case. VP Robredo claimed Mr. Marcos improperly raised before the in government, and we might as well dissolve our justice system and declare this government a electoral tribunal the authenticity of Certificates of Canvass (COCs), which she said should government of criminals, where the innocent are have been raised in a pre-proclamation case filed before Congress acting as the National imprisoned and the criminals liberated. Maybe next they will be setting free the convicted drug lords who testified Board of Canvassers. against me.”

Senator Leila de Lima on the reported move by Duterte ready to resign if Trillanes proves P2Bn bank deposit allegation Solicitor-General Jose Calida to acquit pork barrel President denied Senator Antonio Trillanes IV’s allegation that he has P2 “queen” Janet Napoles. billion in his bank accounts, saying he is ready to resign if the senator can prove that he “We have a political landscape where people tend to has even just a quarter of the amount. Pres. Duterte said Sen. Trillanes, whom he called make this kind of noise. The President is not focused on “tulisan” (brigand) was just bringing up an old issue that he already answered before he these things. He’s not trying to defend himself; the President is more focused on nation-building.” won the presidential race. The President tried to turn the tables on Sen. Trillanes as he accused him of using his office to ask for retainers, an act that he described has become a Presidential Spokesperson reacting to the renewed claims of Senator Antonio Trillanes “lucrative business” for the senator. about the P2 billion in President Rodrigo Duterte’s bank accounts.

‘Pay-off, not bribery’: Sombero qualifies role in BI scandal “This most significant historical achievement stands to Retired police superintendent Wenceslao “Wally” Sombero attended for the 1st time the benefit the Filipino peasant majority. It would be regrettable if the gains reached would be set aside by Senate inquiry on the alleged bribery of Bureau of Immigration (BI) officials for the release those in the government and the ruling elites who are of more than a thousand Chinese nationals illegally employed in the Fontana resort trying to derail the peace process.” operated by casino mogul Jack Lam. Charlie “Atong” Ang, a business partner of Mr. Lam, National Democratic Front of the Philippines Legal and Fontana managing director Norman Ng and services manager Alex Yu were also Consultant Atty. Rachel Pastores expressing her allowed to testify. Former immigration commissioner Al Argosino previously identified Mr. optimism that Pres. Duterte will reverse his decision of ending the peace talks. Ng and Mr. Yu as Mr. Lam’s interpreters. Mr. Sombero refused to call the P50-million transaction between him and former Bureau of Immigration Commissioners Argosino and “When I say we are not afraid of President Duterte, Michael Robles extortion or bribery, choosing to use the term “pay-off” instead. He also don’t get me wrong. I’m not picking a fight, I am not saying we are equals. What I am saying is, there is only said that the money did not come from Mr. Lam but instead it came from the people leasing one thing that makes us afraid and that is sin.” IT-BPOs inside of Fontana. Lingayen-Dagupan Archbishop Socrates Villages on the relationship of the Catholic Bishops Government, MNLF to resume talks Conference of the Philippines with Pres. Duterte.

The government and the Moro National Liberation Front (MNLF) are set to resume their “By its very concept, I believe that CCT will not address talks on the final implementation of the 1996 peace agreement. Mr. Emmanuel Fontanilla, poverty. I don’t think it will ever, ever address poverty. To end poverty, we must address its roots in MNLF spokesman and member of the peace panel, said they were just waiting for the underdevelopment and inequality.” composition of the government panel for the resumption of talks. Mr. Fontanilla explained that the MNLF would not be part of the newly formed Bangsamoro Transition Commission National Anti-Poverty Commission Chairperson on the effectivity of the Pantawid that would discuss peace with the Moro Islamic Liberation Front (MILF) because the MILF Pamilya Pilipino Program (4Ps), the Philippines’ would have separate talks with the government. He said the resumption of talks with the version of conditional cash transfer scheme. government would be confined to 3 remaining unresolved issues for the final implementation of the 1996 peace accord, which was brokered by the Organization of Islamic Cooperation (OIC). These issues are governance, wealth sharing and territory.

Optimism stays ‘very high’ -- SWS President Rodrigo Duterte ended his first 6 months in office with Filipinos retaining “very DISCLAIMER high” optimism over quality of life and the economy in the year ahead, according to a The articles in this Philippine Weekly Update (PWU) have been culled from various media sources. We cannot, therefore, vouch for the accuracy of what is reported.

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December Social Weather Stations (SWS) survey that also showed the FINANCIAL INDICATORS Latest Week Week-ago Year-ago those who felt their lives improved from a year ago steadied. The 4Q2016 Social Weather Survey showed that readings generally steadied across T-Bill Rates (February 13, 2017 average) geographic areas and social classes from the preceding July-October 91-day 2.252 N.T. N.I. round. December’s survey found 37% of respondents saying their lives 182-day 2.467 N.T. N.I. improved (“gainers”) from 12 months ago and 21% saying they worsened 364-day 2.766 N.T. N.I. (“losers”), yielding a +16 “net gainers” score (the difference of gainers over losers) which SWS classifies as “very high,” roughly steady from the September survey’s record “very high” +19 (36% gainers, 17% losers). PESO DEPOSIT RATES (% p.a., January 30 – February 03, 2017)

Savings Deposit 0.00 0.00 0.00 Vitangcol to face trial for $30 Mn MRT extort Time Deposit The Sandiganbayan will proceed with the trial of a graft case against Below 1 year 1.70 1.60 1.68 former Metro Rail Transit (MRT) general manager Al Vitangcol in 1 - 2 years 3.46 1.78 1.51 2.03 Over 2 years 3.17 3.38 3.19 connection with his alleged attempt to extort $30 million from Czech company Inekon Group in 2012. In a 5-page resolution dated Feb. 9, the DOLLAR DEPOSIT RATES (% p.a., January 30 – February 03, 2017)

Sandiganbayan 6th Division denied Mr. Vitangcol’s motion to quash the Savings Deposit 0.22 0.21 0.18 case. The anti-graft court found no merit on Vitangcol’s arguments that the Time Deposit court has no jurisdiction over the case and that the facts cited in the case 60 days & below 0.56 0.60 0.54 information sheet do not constitute a crime. In his motion, Mr. Vitangcol 61-90 days 0.66 0.63 0.63 said that under Section 2 of Republic Act 10660, a regional trial court shall 91-180 days 0.77 0.75 0.72 181 days & above 1.00 1.00 0.94 have the “exclusive original jurisdiction” in cases that do not allege bribery or damage to the government or if the amount of the alleged bribery or LIBOR/SIBOR (% p.a., February 13 – 14, 2017) damage to the government is below P1 million. Libor 90 days 1.04 1.04 0.62 Council to review DENR closure of mining firms Sibor 90 days 0.96 0.96 0.86 Libor 180 days 1.34 1.34 1.25 The government’s Mining Industry Coordinating Council (MICC) is bent on Sibor 180 days 1.25 1.25 1.31 subjecting to review the recent decision of Environment Secretary Regina Lopez to close down some mining firms and terminate existing government FOREIGN EXCHANGE RATE (% p.a., February 17, 2017) contracts with mining companies. Finance Undersecretary and Legal Services Group head Bayani Agabin reiterated that the Department of PDS Weighted Ave. (P/US$) 49.99 49.92 47.67 Blackmarket (P/US$) 50.15 50.00 47.80 Environment and Natural Resources (DENR)’s closure and suspension PDS Weighted Ave. (P/EURO) 53.30 53.20 52.80 orders are appealable to the Office of the President, and as such could be reversed, modified or altered by Malacañang. PRIME LENDING RATE (% p.a., February 17, 2017)

Bank of America 5.78 5.78 5.84 Economy BPI 5.60 5.35 5.40 Citibank 3.24 3.31 4.34 Inflation to continue above 2% -- DOF BDO 5.69 5.56 5.34 The Finance department expects headline inflation to increase in the near Hong Kong & Shanghai Bank 3.63 3.95 4.38 ING Bank 5.50 4.50 4.40 term but the indicator will remain within the government’s targeted range, Metrobank 5.50 5.50 6.25 amid rising energy prices after oil-exporting countries cut production. PNB 7.90 7.90 7.90 “Inflation will likely clock above 2.0% in the coming months as suggested RCBC 6.75 6.75 6.75 by [January] core inflation of 2.5%. Rising energy prices will contribute to Security Bank 6.13 6.13 6.13 higher inflation,” Department of Finance (DOF) Undersecretary and Chief Standard Chartered Bank 4.11 4.11 6.03 UCPB 6.00 6.00 6.00 Economist Gil Beltran said. The projected rise is within the Bankgo Sentral Union Bank 6.00 6.00 6.00 ng Pilipinas’ (BSP) target band of 2-4% inflation. Core inflation, which strips out volatile items such as food and energy, remained at 2.5% in January L/C SELLING RATE-IMPORT (P/US$, February 17, 2017) compared with the previous month, but grew 0.7% from a year earlier, according to the Philippine Statistics Authority (PSA). Meanwhile, inflation Bank of America 49.98 49.94 47.70 BPI 50.08 50.00 47.70 grew to 2.7% last month -- the fastest pace in 2 years -- increasing by 1.4% Citibank 49.89 49.90 47.60 year on year, and from December’s 2.6% on the back of higher food prices. Equitable PCI Bank 50.05 50.05 47.80 Hong Kong & Shanghai Bank 50.69 50.60 48.35 Business ING Bank 50.09 50.10 47.80 Metrobank 50.15 50.15 47.85

PNB 50.10 50.10 47.85 Foreign business groups back e-receipts policy RCBC 50.10 50.05 47.67 Foreign business chambers have backed a government proposal for the Standard Chartered Bank 50.15 50.10 47.75 mandatory use of electronic receipts (e-receipts) contained in the Finance Security Bank 50.10 50.10 47.67 UCPB 50.15 50.10 47.90 department-backed comprehensive tax reform program. “We strongly Union Bank 50.10 50.09 47.88 support using digital technology to the maximum extent in the conduct of business both between registered business and their customers and with the BIR (Bureau of Internal Revenue),” according to a position paper *T-Bills transaction is every two weeks submitted by Joint Foreign Chambers of the Philippines (JFC) to the House Ways and Means committee, referring to the e-receipt provision of House Bill 4774. Citing a 2014 JICA report that estimated the daily cost of traffic in

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Metro Manila at P2.4 billion, the business chambers said that “[w]hile CORPORATE BRIEFS we do not know how much of the traffic involves moving paper invoices and official receipts between business and their clients, we believe that encouraging the maximum use of digital technology is an Technology company AudioWav Media Inc. (WAV) is pushing through with its initial public offering (IPO) next month in which it seeks to raise as much important policy to ease traffic congestion.” as P2.66 billion. WAV president and CEO Carlos Hinolan said proceeds of the IPO would be used to embark on an aggressive expansion move in China, Industry outraged over cancellation of 75 mining deals Indonesia, Thailand, and Vietnam this year. WAV plans to offer 900 million common shares, with an offer price from P1.77 to P2.96 per share. Mining companies voiced outrage over Environment Secretary ’s decision to cancel 75 mining contracts, days after she ordered Earnings of Ayala-led Bank of the Philippine Islands grew 20.9% last 23 mines shut and 5 other suspended. The Chamber of Mines of the year on the back of the robust performance of its core businesses amid volatile market conditions. BPI president and CEO Cezar Consing explained Philippines said it would fight Sec. Lopez’s decision, warning it that the bank took advantage of market opportunities to grow its net threatened $22 billion worth of projects. The contracts are for projects income to P22.05 billion last year from P18.23 billion in 2015. BPI said total in the pipeline but are not yet operating. “She’s out to kill the industry. revenues went up 12.1% to P66.55 billion last year from P59.36 billion in 2015. We do not see a future for us under her,” said Ronald Recidoro, the chamber’s vice president for legal and policy affairs. Sec. Lopez’s First Philippine Holdings Corp. (FPH) has taken control of the Asian Eye decision has put the government at risk of spending “several billions of Institute, following its acquisition of an additional stake in the medical dollars” in taxpayer money should the mining companies go to court facility for P19.5 million. The Lopez-led conglomerate disclosed its purchase of the 149,999 common shares along with a founder’s share in Asian Eye and sue for full reimbursement of their investments, according to Institute from Dr. Felipe Tolentino. The acquisition brings the stake of FPH Dante Bravo, president of Global Ferronickel Holdings Inc. and its in Asian Eye Institute to 50.57%, and makes the hospital its subsidiary, subsidiary, Platinum Group Metals Corp. according to the disclosure.

International Container Terminal Services, Inc. (ICTSI) said the Gaming sector faces rising competition expiration of its contract to operate the Brunei port will have minimal effect The Philippines faces stiffer competition from other Asia-Pacific to its financial performance. ICTSI Senior Vice President for Asia Pacific Christian Gonzalez reported that the listed port operator owned by tycoon economies in the gaming industry, according to Fitch Ratings, but the Enrique Razon has very little exposure to the New Muara Container Terminal local market should still see a high single-digit revenue growth this since it only has a “management contract” with the sultanate’s leading year. Fitch Ratings expects that, in the ‘longer term, competition from trading gateway.

Macau and other Asia-Pacific countries will restrain growth’ in Jollibee Foods Corp. (JFC) booked 25% more earnings in 2016 after revenues of privately owned casinos in the country. In a Jan. 27 report opening a record number of stores within and outside the Philippines, an entitled “Eye in the Sky Series: Philippines,” the global debth watcher expansion it intends to continue by investing another P14 billion. The listed company said its net income attributable to the parent increased to P6.14 said: “the greater Manila market is showing signs of maturation with billion from the P4.93 billion recorded in 2015. This translates to P5.72 in Resorts World Manila -- the first privately owned resort -- showing earnings per share. steep declines amid the ramp-up of the newer resorts.” Okada Manila is formally opening next month with the commencement of casino operations catering to high rollers and the unveiling of the 2-hectare BIR to meet with cigarette firms on fake tax stamps dancing fountain, indoor beach and other facilities under its 1st phase. In a statement, Tiger Resorts, Leisure & Entertainment, Inc. announced it issue targets to hold the grand opening of its integrated casino and resort before The Bureau of Internal Revenue (BIR) revealed that it is planning to the end of March. The company of Japanese gaming tycoon Kazuo Okada convene all players in the cigarette industry to get to the bottom of the had previously scheduled the grand opening of Okada Manila by end- February or 2 months after a “preview” of the development and a “soft proliferation of fake tax stamps in different parts of the country. BIR opening” of the casino area. commissioner Caesar Dulay said the bureau would invite all cigarette companies to get their recommendations in addressing the rampant The PLDT Group is partnering with Chinese electronics giant Huawei for research and development on fifth-generation (5G) wireless broadband, as manufacture and use of fake tax stamps in cigarette packages. The it lays the groundwork for the rollout of the next-generation technology in commissioner added that the meeting would happen after the BIR the country by 2020. PLDT and Smart Communications, Inc. Chairman, concludes all its tax campaign launches. Comm. Dulay clarified that President and CEO Manuel Pangilinan signed the memorandum of the BIR is not singling out cigarette manufacturer Mighty Corp., which understanding (MoU) with Huawei Technologies Philippines CEO Jacky Gao Kexin during a Jan. 13 visit to the Huawei headquarters in Shenzen, China. was served with a letter of authority by the bureau earlier. The BIR explained that it would expand its investigation to include all firms in San Miguel Corp. (SMC) plans to spend P699 billion for its proposed the industry. Jesus Clint Aranas, BIR deputy commissioner for legal international airport in Bulacan, which is currently being reviewed by the Department of Transportation (DOTr). Transportation Undersecretary service, said the bureau is currently processing the letters of authority Roberto Lim bared details on SMC’s unsolicited proposal seen as a potential it will issue to other cigarette firms. alternative to the heavily-congested Ninoy Aquino International Airport. Construction of the new airport is targeted to be completed in 6 years, should it be approved by the government. Weekly Indicators Solar Philippines Power Project Holdings, Inc. plans to expand the capacity of its solar panel manufacturing plant in to 2 gigawatts Remittances rise 5% in 2016, hit record $26.9 Bn within the year, a period when it also looks at exporting its output while Remittances from overseas Filipino workers went up by 5% to a new developing projects abroad. The company said the expansion was meant “to record high of $26.9 billion last year from $25.61 billion in 2015, the gain economies of scale and make the Philippines the leader for solar energy in Southeast Asia.” Bangko Sentral ng Pilipinas (BSP) or central bank reported. The 5% growth in cash remittances was also faster than the 4% growth target Universal Robina Corporation (URC) has entered into a joint venture of the BSP. Remittances from land-based Filipino workers went up by with the Vitasoy Group of Hong Kong to unlock the market potential of plant-based beverages in the Philippines. The Gokongwei-led beverage and 7.6% to $21.3 billion while money sent home by sea-based workers snack food manufacturer announced the partnership that will serve up declined 3.8% to $5.6 billion due to stiffer competition in the supply of beverages such as soy milk, coconut milk and almond milk, among others, seafarers particularly from East Asia and Eastern Europe. BSP Deputy in the country. Governor Diwa Guinigundo said remittances from the Middle East went up more than 12% last year due to higher inflows from Qatar,

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Kuwait, Oman, and the United Arab Emirates. Remittances from Filipinos based in Asia rose 7.4%, buoyed by transfers originating from Singapore, Japan, China, and Taiwan.

‘Hot money’ flows off to a strong start More foreign capital entered the Philippines as the year opened, ending a 2-month streak of outflows on the back of renewed optimism and strong economic growth reported last month, the Bangko Sentral ng Pilipinas (BSP) or central bank said. Foreign portfolio investments -- also called “hot money” due to the ease by which such funds enter and leave markets -- saw a $301.33-million net inflow in January, reversing outflows amounting to $129.85 million a year ago and ending a trend of outbound capital seen during the past 2 months. Net hot money outflows hit $314.65 million in December and $607.31 million in November, which central bank officials described as a “very challenging” time for financial markets due to key events in the United States.

Infrastructure

DoE wants power to issue ECCs for critical electricity projects The Department of Energy (DoE) has drafted an executive order that will certify as urgent energy development projects as being of national significance, giving it the power to issue a key environmental clearance to hasten their completion. “Because of the need for additional (power) capacity we need to fast-track the implementation of power plants,” DoE Secretary said on the sidelines of a Senate hearing. Sec. Cusi explained that a draft of the executive order has been submitted by his department to the Executive Secretary, whose say on the matter is awaited by the DoE to move the initiative forward. He added that among the draft’s key measures is a provision that will “delegate” to the DoE of the responsibility to issue environmental compliance certificate (ECC) from the Department of Environment and Natural Resources (DENR).

Sangley airport complements Clark – ARRC The country needs 2 international airports, with one located in Sangley and another in Clark, to serve passengers in the northern and southern parts of Luzon as well as cope with future demand, according to All-Asia Resources Reclamation Corp. (ARRC). “These two are strategically located to serve the northern and southern parts of Luzon. Those in Metro Manila can choose which one is more convenient to them which will also help ease traffic,” ARRC vice chairman Edmund Lim said. ARRC, which is composed of the Tieng family and SM Group’s Belle Corp., plans to build an international airport, seaport as well as mixed use development on reclaimed land off the coast of Sangley Point in .

Government puts NAIA upgrade on hold The government is putting the Ninoy Aquino International Airport (NAIA) upgrade project on hold as it studies various options and proposals being floated to develop airports to serve Mega Manila or the Greater Capital Region. Public-Private Partnership (PPP) Center Executive Director Ferdinand Pecson said the government also needs to have a complete or holistic approach in developing airports for Mega Manila or the areas of Bulacan, Rizal, Laguna and Cavite, aside from Metro Manila. The P74.6-billon NAIA PPP project involves the upgrade of the country’s main international gateway aimed at improving the safety and security and maximizing the capacity of the NAIA through infrastructure or assets for air traffic and landside management.

NGCP putting up 20 transmission projects this year The National Grid Corp. of the Philippines (NGCP) is re-investing its revenues in 20 projects scheduled for implementation this year as part of its mandate to improve the country’s transmission network, a company official said. Of the total, 7 are major backbone projects, NGCP spokesperson Cynthia Alabanza said. These projects are the Calaca-Dasmariñas 500-kilovolt (kV) Project, the Hermosa-San Jose 500-kV Project, Pagbilao extra-high voltage Project, the Cebu-Negros-Panay 230-kV Interconnection Project, the Mindanao 230- kV Backbone Project, the Luzon and Visayas Voltage Improvement Projects and the Tuguegarao-Magapit 230-kV Project. NGCP will start construction of these projects this year, which will take around 3 to 5 years to complete.

Congresswatch

House committee approves FoI bill The House committee on public information, chaired by ACT-Teachers party-list Representative Antonio Tinio, has approved the freedom of information bill. The approved substitute bill covers all government agencies in the executive, legislative and judicial branches as well as the constitutional bodies of all agencies, departments, bureaus, offices and instrumentalities of the national government. It also covers both houses of Congress, the Armed Forces of the Philippines (AFP), Philippine National Police (PNP), Supreme Court (SC) and all lower courts.

Senators back BIR exemption from gov’t salary rules Senators said they support an exemption for the Bureau of Internal Revenue (BIR) personnel from the Salary Standardization Law (SSL), thereby making the agency more attractive to work for, discouraging corruption and bringing its roster closer to full strength. “BIR salaries are quite low compared to other professionals and workers in other agencies of government like the Insurance Commission (IC) or the Securities and Exchange Commission (SEC),” Senate Ways and Means Committee Chair Juan Edgardo Angara said. In the explanatory note to Senate Bill 1314, Sen. Angara noted that an entry-level BIR accountant has a monthly pay of P19,077, while an entry-level IC accountant earns P46,104 monthly, while an SEC counterpart earns P50,238. The BIR has 21,491 staff positions but has filled only 9,835.

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