biznewsasia tony lopez

My EDSA I story (Part 2)

2010-03-03T07:12:00.000-08:00

Corazon Cojuangco Aquino didn’t win the snap election of February 1986. It was won by strongman Ferdi-nand Marcos by a margin of 800,000 votes. In the Comelec-sanctioned official count, the legal and official winner was Marcos, by a margin of two million votes.

It was thought Marcos had cheated because his Solid North votes were transmitted very late to the tabulation center at the PICC. Two Namfrel volunteers were hanged in Ilocos. The Ilocano votes were enough to overwhelm Cory’s lead in Metro Manila and other places. The canvassers claimed Marcos was cheating and so, led by the wife of a RAM major, walked out, as if on cue. The day before the celebrated incident, we, foreign correspondents, had been alerted about the planned walkout and to be there to cover it.

Initially, Cory Aquino didn’t have any participation in the four-day People Power revolt of February 22-25, 1986 or EDSA 1. EDSA 1 was triggered by greed because a henchman of the dreaded armed forces boss, Gen. Fabian C. Ver, had violated a gentleman’s agreement not to speculate on the peso-dollar rate being managed daily by the Binondo Central Bank under then Trade Minister Roberto V. Ongpin.

RVO had the Chinese trader arrested who unhappily died while under the custody of his 22 security men.

At dawn of February 22, a Saturday, Ver had the 22 military men arrested. The 22 belonged to RAM (Reform the Armed Forces Movement) of army Lt. Col. Gregorio “Gringo” Honasan.

Gringo and Enrile were plotting to overthrow Marcos. Enrile thought that with the arrest of the 22 Ongpin boys, Ver had uncovered their plot.

Enrile and RAM decided to make their last stand that noon, February 22, 1986, at Camp Aguinaldo. At 2 p.m., Enrile invited the armed forces vice chief of staff, Lt. Gen. Fidel V. Ramos, to join the rebellion. In the evening, Cory called Enrile asking what help she could provide. “Nothing, just pray for us,” the defense chief blurted.

Enrile wanted to take over as president. But the RAM wanted a more acceptable political figure, Cory.

Sunday morning, February 23, Cory flew by private plane to Manila from Cebu where she had spent the night (I didn’t say “hide”) at the Carmelite convent. At the airport, she was fetched by her car. On the Expressway going to Manila, she saw a column of tanks. Cory hid behind the driver’s seat. “I wasn’t sure
whether the tanks were friendly or enemy,” she explained to me later.

Sunday evening, the rebels had holed themselves up at Camp Crame. The place is more compact and easier to defend. Also, it had a bomb-proofed bunker that could take in only about 50 people. Enrile told me to go home because I couldn’t be accommodated in the bunker where enrolment was done by rank—from general to colonel to major to captain—you get the drift.

At past 9 p.m., General Ramos walked into the commotion, in tennis shirt, white shorts and jogging shoes and chomping an unlit cigar. “Who wants to join me for a walk in the camp?” he hollered.

Nobody volunteered. I did. Before we left, a aide showed him two telephone numbers, each starting with “6”—“Sir, these are the only clear lines,” he said. Those were clean lines to the Radyo Bandido of June Keithley. They were operating from the Jacinto Building near Malacañang.

General Ramos and I, with a handful of battle-ready security men, toured the Crame parade grounds. The troops were agitated because they were expecting a ground and aerial invasion by Ver’s men.

Underpowered and undermanned, the rebel troops were expecting casualties to be high, except among those inside the bunker. Ramos’s relaxed composure and casual getup somehow released tension. The master psy-war expert was in his elemental best. But the best was yet to come.

The following morning, February 24, Monday, I came to know why the “clean” landlines were important. Somebody gave Keithley a note to announce that “the Marcoses had left the country!” It was a lie.

But there was wild jubilation, nationwide. Hundreds of thousands spilled into EDSA to celebrate—not to rebel. The pictures of this throng came to be known as EDSA 1 People Power.

Tuesday morning, February 25, 1986, Cory was sworn in as President, pledging to enforce “just” laws.

Marcos was also sworn in too, becoming the only president to be reelected twice. In the evening, about 9 p.m., the Marcoses were kidnapped, according to him, by the Americans. He was brought to Hawaii, not to Paoay, his favorite hiding place.

By 10 p.m., Malacañang, the riverside presidential palace was ransacked—by the NPA for its armory, by some socialites for its jewelry, and by some foreign correspondents for its memory (Marcos’s diaries were stolen).

To be continued

biznewsasia@gmail.com

My EDSA I story (Part 1)

2010-03-03T07:11:00.000-08:00

My EDSA I story (1)

Thursday, 25 February 2010 00:00

BY TONY LOPEZ 

 There has been so much hype and hoopla about the two EDSAs—EDSA I and EDSA II. EDSA I is the February 22 to 25,1986 People Power that ousted Ferdinand Marcos and installed Corazon Cojuangco Aquino. EDSA II is the January 20, 2001 church- and NGO-backed military coup that ousted Joseph Estrada and installed Gloria Macapagal Arroyo. I covered not one, not two, but three EDSAs.
There was a third EDSA, the May 1, 2001 popular and pedestrian uprising that nearly ousted Mrs. Arroyo were it for the effective sniping job done by the military and the police on the protesters. Nobody knows for sure how many people died or were killed by the military to protect the palace from a hoi polloi revolt.
Nobody remembers about this EDSA III anymore, but to me, it was the most spontaneous and most genuine of the three revolts.  
Not many people know it but EDSA I was triggered by greed and was won by a lie. The crowds that massed at EDSA on February 24, Monday, and February 25, Tuesday, were there not to stage a revolt but to a hold a picnic.
June Keithley had announced on radio at 7 a.m. of February 24 that the Marcoses had left. It was a lie. In their glee and feeling that finally it was all over, people trooped to EDSA to celebrate.  
The greed arose from a Chinese forex trader who violated the peso-dollar trading band imposed by then unofficial central bank, the Binondo Central Bank managed and headed by then Trade and Industry Secretary Roberto V. Ongpin.   Ongpin had the erring trader arrested and loaded into a van. Unfortunately, the forex trader died. Unfortunately again, the trader happened to be a man of then Armed Forces chief Fabian C. Ver.
Angered, the dreaded military chief had 22 of Ongpin’s security men arrested. They were marching in full battle gear and dressed in SWAT uniform at about 4 a.m. inside Fort Bonifacio when arrested on February 22, 1986, a Saturday.
  At 11 a.m., at the Ministry of Trade and Industry, Ongpin went looking for his security men. He called up then Defense Minister Juan Ponce Enrile who was with the Club 365 at the Atrium in Makati.
Enrile thought the arrest of the 22 Ongpin security men, who turned out to be RAM Boys of Col. Gringo Honasan, was part of the crackdown against the plot to oust Marcos. The putsch was being planned by Enrile and his RAM Boys. The defense chief had grown disenchanted with Marcos, who was very ill, and become wary of the cabal led by Ver and the First Lady, Mrs. Imelda Romualdez Marcos.  
Enrile summoned his boys to his house on Morada Street, Dasmariñas Village. There they plotted their next moves. They decided to make a last stand at the armed forces headquarters Camp Aguinaldo in Quezon City. At 2 p.m., Enrile called then Vice Chief of Staff Lt. Gen. Fidel V. Ramos. “Are you with us?”  JPE asked Eddie. “I am with you all the way,” the latter assured.  
It was not until late in the evening that Saturday that Ramos actually joined the rebellion at Camp Aguinaldo. He had contacted his loyal PC-INP commanders, like Rene de Villa in Bicol, and Rodrigo Gutang in Cagayan de Oro and found to his dismay no troops could be readily sent to Manila to reinforce Enrile’s men, then numbering less than 50, undermanned and under-armed.   
Corazon Cojuangco Aquino learned about the brewing rebellion at 4 p.m. Saturday in Cebu. She led a destabilization and boycott rally there. I was there. I was covering the protest rally. After hearing about rumor of the defection, I went to the Mactan airport to book a flight to Manila. I landed in Manila shortly after 9 p.m.
With Boy del Mundo of then UPI, I took a taxi to Camp Aguinaldo.   I was surprised to find the camp commander welcoming us with open arms. Enrile and Gringo had no troops at that time. Enrile had made a deal with Marcos—no shooting on the first night. Also, foreign correspondents were to be allowed inside Camp Aguinaldo.
  Inside the Defense Ministry headquarters, Enrile and Ramos were giving an extended press conference. I Asked if Cory Aquino called them up, Enrile said yes. “What can I do for you?” she asked. “Nothing, just pray,” Enrile replied.  It was I who asked Enrile by how many votes he cheated in Cagayan on behalf of Marcos—300,000 votes.
Enrile also claimed Cory Aquino was the duly elected president. Wrong.  
A recount of the votes, by Namfrel, after Cory took over, showed Marcos was the real winner of the February 1986 snap election, not by two million votes, as canvassed by the Batasan, but by 800,000 votes as recounted by Namfrel.  
(To be continued)  
biznewsasia@gmail.com

My EDSA I story

2010-02-25T02:22:00.001-08:00

By Tony Lopez

There has been so much hype and hoopla about the two EDSAs – EDSA I and EDSA II. EDSA I is the Feb. 22-25,1986 People Power that ousted Ferdinand Marcos and installed Corazon Cojuangco Aquino. EDSA II is the January 20, 2001 church- and NGO-backed military coup that ousted Joseph Estrada and installed Gloria Macapagal Arroyo. I covered not one, not two, but three EDSAs.
There was a third EDSA, the May 1, 2001 popular and pedestrian uprising that nearly ousted Mrs. Arroyo were it for the effective sniping job done by the military and the police on the protesters. Nobody knows for sure how many people died or were killed by the military to protect the palace from a hoi polloi revolt. Nobody remembers about this EDSA III anymore, but to me, it was the most spontaneous and most genuine of the three revolts.
Not many people know it but EDSA I was triggered by greed and was won by a lie. The crowds that massed at EDSA on February 24, Monday, and February 25, Tuesday, were there not to stage a revolt but to a hold a picnic. June Keithley had announced on radio at 7 a.m. of February 24 that the Marcoses had left. It was a lie. In their glee and feeling that finally it was all over, people trooped to EDSA to celebrate.
The greed arose from a Chinese forex trader who violated the peso-dollar trading band imposed by then then unofficial central bank, the Binondo Central Bank managed and headed by then Trade and Industry Secretary Roberto V. Ongpin.
Ongpin had the erring trader arrested and loaded into a van. Unfortunately, the forex trader died. Unfortunately again, the trader happened to be a man of then Armed Forces chief Fabian C. Ver. Angered, the dreaded military chief had 22 of Ongpin’s security men arrested. They were marching in full battle gear and dressed in SWAT uniform at about 4 a.m. inside Fort Bonifacio when arrested on February 22, 1986, a Saturday.

At 11 a.m., at the Ministry of Trade and Industry, Ongpin went looking for his security men. He called up then Defense Minister Juan Ponce Enrile who was with the Club 365 at the Atrium in Makati. Enrile thought the arrest of the 22 Ongpin security men, who turned out to be RAM Boys of Col. Gringo Honasan, was part of the crackdown against the plot to oust Marcos. The putsch was being planned by Enrile and his RAM Boys. The defense chief had grown disenchanted with Marcos, who was very ill, and become wary of the cabal led by Ver and the First Lady, Mrs. Imelda Romualdez Marcos.

Enrile summoned his boys to his house on Morada Street, Dasmariñas Village. There they plotted their next moves. They decided to make a last stand at the armed forces headquarters Camp Aguinaldo in Quezon City. At 2 p.m., Enrile called then Vice Chief of Staff Lieut. Gen. Fidel V. Ramos. “Are you with us?” JPE asked Eddie. “I am with you all the way,” the latter assured.

It was not until late in the evening that Saturday that Ramos actually joined the rebellion at Camp Aguinaldo. He had contacted his loyal PC-INP commanders, like Rene de Villa in Bicol, and Rodrigo Gutang in Cagayan de Oro and found to his dismay no troops could be readily sent to Manila to reinforce Enrile’s men, then numbering less than 50, undermanned and under-armed.
Corazon Cojuangco Aquino learned about the brewing rebellion at 4 p.m. Saturday in Cebu. She led a destabilization and boycott rally there. I was there. I was covering the protest rally. After hearing about rumor of the defection, I went to the Mactan airport to book a flight to Manila. I landed in Manila shortly after 9 p.m.. With Boy del Mundo of then UPI, I took a taxi to Camp Aguinaldo.

I was surprised to find the camp commander welcoming us with open arms. Enrile and Gringo had no troops at that time. Enrile had made a deal with Marcos -- No shooting on the first night. Also, foreign correspondents were to be allowed inside Camp Aguinaldo.
Inside the Defense Ministry headquarters, Enrile and Ramos were giving an extended press conference. I asked if Cory Aquino called them up. Enrile said yes. “What can I do for you?” she asked. “Nothing, just pray,” Enrile replied.
It was me who asked Enrile by how many votes he cheated in Cagayan on behalf of Marcos – 300,000 votes. Enrile also claimed Cory Aquino was the duly elected president. Wrong.
A recount of the votes, by Namfrel, after Cory took over, showed Marcos was the real winner of the February 1986 snap election, not by two million votes, as canvassed by the Batasan, but by 800,000 votes as recounted by Namfrel.

biznewsasia@gmail.com

My EDSA I story

2010-02-25T02:21:00.001-08:00

My EDSA I story

2010-02-25T02:19:00.000-08:00

Tony Lopez not biased against Noynoy Aquino (Condensed Letter to Inquirer)

2010-02-21T07:16:00.000-08:00

The Inquirer asked me to reduce my Feb 18 letter to them to just 481 words. Here is my
Feb. 20, 2010 letter:

Mr. Isagani Yambot

I deny that I was biased against Noynoy Aquino at the PCCI Presidential Forum Feb. 16. He knew the speaking order and he was introduced properly.
I said he has “a very good pedigree, the grandson of a national hero, a son of national heroes, a congressman for nine years and senator for three years.”
The forum had a five-minute presentation by each of the candidates, two rounds of six questions, and a two-minute summation. For the opening speeches, the order of speaking was drawn by lot. Gibo Teodoro was the first to speak, followed by Manny Villar and Noynoy Aquino.
I introduced Gibo as a bar topnotcher, has a Harvard masters in law, and seven presidents were bar topnotchers; Villar “someone who is a self-made tycoon, former speaker, former Senate president and former future president, probably”; Joseph Estrada the most popularly elected president ever with the biggest number of vote-margin; Dick Gordon mayor, builder of Subic, action man, and senator; and Eddie Villanueva, as “someone who wants to produce a miracle”.
To answer the first six questions, the order was alphabetical, from A to Z starting with Aquino first, each time, and Villar the last.  
To answer the next six questions, the order was reversed alphabetical, Villar first; Aquino last.
For the two-minute closing, I went back to alphabetical order – A to V. since we came from V to A. After the first set of questions, a staffer of Noynoy Aquino handed me a note, “the format is getting boring. Pls. shuffle the respondents.”
That is exactly what I did for the final round.   Noynoy complained but I told him “a President should be prepared for surprises.” Besides, does it really take that long (the ten-minute difference between the first and last speaker) for a presidential candidate to assemble his canned thoughts? Can’t Noynoy think on his feet?
After the forum, instead of his program of government, Noynoy showed clippings of my columns to newsmen, indicating he came to the forum primarily to confront me and not to debate. Is this our leader?
I have written of Noynoy’s lackluster record as a congressman of nine years and senator for three years; little management experience, except for a brief period as a salesman of Nike shoes, shirts and shorts; and not having managed a household, because he has none.
This is a guy who wants to manage the Philippines, with a population that is the 12th largest in the world, a government budget of P1.5 trillion, state workers numbering two million, $54 billion in foreign debts, and two insurgencies—communism and Muslim separatism, both the longest-running in the world.  
I also wrote that the Cojuangcos have not given the 6,400-ha. Hacienda Luisita to its farmers although this was a condition for the behest loan they obtained to buy it in 1957.
Tony Lopez

Tony Lopez not biased against Noynoy Aquino

2010-02-21T07:14:00.000-08:00

The following is a letter I sent to the Inquirer Feb. 18, 2010

Mr. Isagani Yambot
Publisher, PDI
I deny that I was biased against Noynoy Aquino at the PCCI Presidential Forum Feb. 16. He knew the speaking order and he was introduced properly.
I said he has “a very good pedigree, the grandson of a national hero, a son of national heroes, a congressman for nine years and senator for three years.”
The forum had—a five-minute presentation by each of the candidates, two rounds of six questions, and a two-minute summation. For the opening speeches, the order of speaking was drawn by lot. Gibo Teodoro was the first to speak,followed by Manny Villar, Noynoy Aquino, Joseph Estrada, Richard Gordon, and Eddie Villanueva.
I introduced Gibo is a bar topnotcher, has a Harvard masters in law, and seven presidents were bar topnotchers; Villar as “someone who is a self-made tycoon, former speaker, former Senate president and former future president, probably”; Estrada as the most popularly elected president ever with the biggest number of vote-margin; Gordon as mayor, builder of Subic, action man, and senator; and Villanueva, “someone who wants to produce a miracle”.
In replying to the first set of six questions, the order was alphabetical, from A to Z starting with Aquino first, each time, and Villar the last.  
For the second set of six questions, the order was reversed alphabetical, V (Villar first) to Aquino (last to reply each time).
For the two-minute closing, I went back to alphabetical order – A to V. spiel, since, in the previous round the speaking order was V to A, I went back to alphabetical order, A to V. After the second round, a staffer of Noynoy Aquino handed me a note which said, “the format is getting boring. Pls. shuffle the respondents.”
That is exactly what I did for the final round.   Noynoy complained but I told him “a President should be prepared for surprises.” Besides, does it really take that long (the ten-minute difference between the first and last speaker) for a presidential candidate to assemble canned thoughts?
What I have been saying in my columns is that: one, Noynoy has had a lackluster record as a congressman of nine years and senator for three years; two, he has had very little management experience, except for a brief period as a salesman of Nike shoes, shirts and shorts; three, he has not even managed a household, because he has none; and four, yet, this is a guy who wants to manage the Philippines, with a population that is the 12th largest in the world, a government budget of P1.5 trillion, state workers numbering two million, $54 billion in foreign debts, and two insurgencies—communism and Muslim separatism, both the longest-running in the world.  
I also wrote that the Cojuangcos have not given the 6,400-ha. Hacienda Luisita to its farmers although this was a condition for the behest loan they obtained to buy it in 1957.
Tony Lopez

Noynoy not for the big league, says Belinda Cunanan

2010-02-19T06:53:00.001-08:00

Political Tidbits
Petulant Noynoy

By Belinda Olivares-Cunanan
Philippine Daily Inquirer
First Posted 22:12:00 02/17/2010

Filed Under: Benigno Aquino III, Elections, Politics

Most Read
LP PRESIDENTIAL CANDIDATE NOYNOY AQUINO WAS heard complaining about the “biased” treatment he received from the moderator of last Tuesday’s PCCI forum, Tony Lopez, editor and publisher of BizNews Asia. This came on the heels of his lament about the “bias” of Standard columnist Emil Jurado, which Noynoy gave as reason to turn down the MOPC’s invitation for him to guest at its presidential night. Newsmen were surprised to realize that he came to the forum prepared to lambast Lopez, as he later showed newsmen clippings of the latter’s writings.
I was at the PCCI forum and frankly I saw no basis for his complaint. Lopez was merely resorting to alliteration, a writing device, to liven up the forum, when he referred to Joseph Estrada as “past president” and to Manny Villar as “former future president, probably.” But Noynoy couldn’t complain, for Lopez cited him as “a man with a good pedigree, grandson of a national hero, son of national heroes” and four legislative terms. But the final proof of Lopez’s “bias,” as far as Noynoy was concerned, was when Lopez ruled that in the third round the first to respond to the questions would be Noynoy instead of Villar at the other end of the stage, as was the case in an earlier round. But does it really matter who answers first or last? Shouldn’t it be more what the candidate says on issues?
This latest episode demonstrates the increasing petulance and childishness and the seeming inability to brook criticism that Noynoy has been exhibiting, as the race tightens between him and Villar. But as President GMA knows only too well, the corridors of power are not always paved with hosannas and hallelujahs. He just isn’t ready for the big league.
* * *

Noynoy Aquino and Letter to the Inquirer

2010-02-19T06:51:00.000-08:00

Feb. 18, 2010
Mr. Isagani Yambot
Publisher
Philippine Daily Inquirer
Allow me to clarify your front page story of Feb. 17, regarding Senator Benigno Aquino’s allegedly being annoyed with me because of my bias as the moderator during the PCCI forum with the presidential candidates February 16.
I deny I was biased. On the contrary, I introduced Noynoy Aquino, the frontrunner presidential candidate, as one with “a very good pedigree, the grandson of a national hero and a son of national heroes—former President Corazon Aquino and slain opposition leader Ninoy Aquino, a congressman for nine years and senator for three years.” “He will tell us what he is going to do,” I said.  
No candidate was favored and the order of speaking and their replying to the two sets of questions were clear from the very start, except perhaps to Noynoy who was one of the latecomers.
The other presidential candidates were: former President Joseph Estrada, Senator Richard Gordon, former Defense Secretary Gilberto Teodoro, Bro. Eddie Villanuev, and Senator Manny Villar Jr.
The forum consisted of four rounds—a five-minute presentation by each of the candidates, two rounds of questions, and a two-minute summation by each candidate. For the opening speeches, the order of speaking was drawn by lot an hour before the show. Gibo Teodoro picked No. 1; so he was the first to speak. Villar was No. 2, Aquino No.3, Estrada No. 4, Gordon No. 5, and Villanueva No. 6.
I introduced Gibo is a bar topnotcher, has a Harvard masters in law, and seven presidents were bar topnotchers; Villar as “someone who is a self-made tycoon, former speaker, former Senate president and former future president, probably”; Estrada as the most popularly elected president ever with the biggest number of vote-margin over his rival; Gordon as mayor, builder of Subic, action man, and senator; and Villanueva, the last presentor, “is someone who wants to produce a miracle”.
In the second round, for the first six questions, the candidates were to reply in alphabetical order, from A to Z starting with Aquino first, each time, and Villar the last.  
The third round, for the second set of six questions, was in reverse alphabetical order, with Villar the first to speak each time, and Aquino, the last. Candidates were given a minute to reply to all 12 questions. The open forum lasted for more than 72 minutes.   
For final round, the two-minute closing spiel, since, in the previous round the speaking order was V to A, I went back to alphabetical order, A to V. After the second round, a staffer of Noynoy Aquino handed me a note which said, “the format is getting boring. Pls. shuffle the respondents.”
That is exactly what I did for the final round.  Aquino was asked to speak first and Villar the last. Noynoy complained but I told him “a President should be prepared for surprises,” to which he replied sarcastically, “especially with an unbiased moderator like you.”
In the PCCI script given me, it was clearly stated, “moderator to determine the order of closing statements.”   Noynoy had no reason to complain about the alleged bias of the moderator, myself. I understand from press reports, the senator showed clippings of my columns to show my bias.   
What I have been saying in my columns is that: one, Noynoy has had a lackluster record as a congressman of nine years and senator for three years; two, he has had very little management experience, except for a brief period as a salesman of Nike shoes, shirts and shorts; three, he has not even managed a household, because he has none; and four, yet, this is a guy who wants to manage the Philippines—the 12th largest nation on earth in population, with a government budget of P1.5 trillion and a work force of two million state workers, making it the country’s largest corporation; $54 billion in foreign debts, and two insurgencies—communism and Muslim separatism, both of them the longest-running in the world.  
Also, I have scored Noynoy about the 6,400-ha. Hacienda Luisita. This huge estate was acquired with government loans (from the central bank and GSIS) by the Cojuangco family of Corazon Aquino, using their political connections, under the condition that it would be subdivided later on and given to its tenant farmers. After half a century, the estate still is owned and controlled by the Cojuangco family. Cory’s share of the Hacienda, about 7 percent (or 448 hectares), has been divided among her children, with Noynoy getting 1/7 or 62 hectares.
  Noynoy keeps harping about corruption.
Please note that corruption is not simply the direct stealing of money from government coffers, thru kickbacks and commissions and overpriced sweetheart deals. It is also about abuse of power like using connections for aggrandizement.
Abuse of power is a more pernicious form of corruption.   Abuse of power is like rape using a condom. It gives you a feeling of security while you are being—you know the word. I am biased for the victim of that rape— you.
Tony Lopez
Editor, BizNewsAsia
biznewsasia@gmail.com

The petulant Noynoy Aquino

2010-02-19T06:50:00.000-08:00

Noynoy, my petulant candidate friend

Noynoy Aquino, the frontrunner presidential candidate, has become petulant.

On February 16, Tuesday afternoon, I served as moderator (no talent fee) of the Philippine Chamber of Commerce and Industry (PCCI) forum with six presidential candidates – Sen. Benigno “Noynoy” Aquino 3rd, former President Joseph Estrada, Senator Richard Gordon, former Defense Secretary Gilberto Teodoro, Bro. Eddie Villanueva, and Senator Manny Villar Jr.

The forum consisted of four rounds – a five-minute presentation by each of the candidates, two rounds of questions, and a two-minute summation by each candidate. The order of speaking in the first round was drawn by lot an hour before the show. Gibo Teodoro picked No. 1; so he was the first to speak. Villar was No. 2, Aquino No.3, Estrada No. 4, Gordon No. 5, and Villanueva No. 6. I called on Teodoro without giving an introduction about him.

Later during the forum, I said Gibo is a bar topnotcher, has a Harvard masters in law, and seven presidents were bar topnotchers. I introduced Villar as “someone who is a self-made tycoon, former speaker, former Senate president and former future president, probably”.

I introduced Noynoy Aquino as having “a very good pedigree”, being the grandson of a national hero and son of national heroes – former President Corazon Aquino and slain opposition leader Ninoy Aquino; a congressman for nine years and senator for three years. “He will tell us what he is going to do,” I said.
I introduced Estrada as the most popularly elected president ever with the biggest number of vote-margin over his rival. I called Gordon mayor, builder of Subic, action man, and senator. The last presentor, Villanueva, is someone who wants to produce a miracle, I said.

In the second round, the first question-and-answer forum, per the PCCI script, the candidates were to reply to the questions in alphabetical order, from A to Z starting with Aquino each time, and Villar the last.

The third round, which is the second set of six questions, was in reverse alphabetical order, with Villar the first to speak and Aquino, the last. Candidates were given a minute to reply to all 12 questions. The open forum lasted for more than 72 minutes.

For final round, the two-minute closing spiel, since, in the previous round the speaking order was V to A, I went back to alphabetical order, A to V. After the second round, a staffer of Noynoy Aquino handed me a note which said, “the format is getting boring. Pls. shuffle the respondents”. That is exactly what I did for the final round.

Aquino was asked to speak first and Villar the last. Noynoy complained but I told him “a President should be prepared for surprises”, to which he replied sarcastically, “especially with an unbiased moderator like you.” In the PCCI script given me, it was clearly stated, “moderator to determine the order of closing statements”.

Noynoy had no reason to complain about the alleged bias of the moderator, myself. I understand from press reports, the senator showed clippings of my columns.

What I have been saying in my columns is that: one, Noynoy has had a lackluster record as a congressman of nine years and senator for three years; two, he has had very little management experience, except for a brief period as a salesman of Nike shoes, shirts and shorts; three, he has not even managed a household, because he has none; and four, yet, this is a guy who wants to manage the Philippines – the 12th largest nation on earth in population, with a government budget of P1.5 trillion and a work force of two million state workers, making it the country’s largest corporation; $54 billion in foreign debts, and two insurgencies – communism and Muslim separatism, both of them the longest-running in the world.

Also, I have scored Noynoy about the 6,400-ha. Hacienda Luisita. This huge estate was acquired with government loans (from the Central Bank and GSIS) by the Cojuangco family of Corazon Aquino, using their political connections, with the condition that it would be subdivided later on and given to its tenant farmers. After half a century, the estate still is owned and controlled by the Cojuangco family. Cory’s share of the Hacienda, about seven percent (or 448 hectares), has been divided among her children, with Noynoy getting a percent.

Noynoy keeps harping about corruption. Please note that corruption is not simply the direct stealing of money from government coffers, thru kickbacks and commissions and overpriced sweetheart deals. It is also about abuse of power. Abuse of power is a more pernicious form of corruption.

Abuse of power is like rape using a condom. It gives you a feeling of security while you are being – -you know the word. I am biased for the victim of that rape – you.

biznewsasia@gmail.com

Noynoy Aquino and his rivals

2010-02-19T06:49:00.000-08:00

Grading the presidentiables

In his book, “The Art of War”, Sun Tzu said “Leadership is a matter of intelligence, trustworthiness, humaneness, courage, and discipline.” But he said:

“Reliance on intelligence alone results in rebelliousness. Exercise of humaneness alone results in weakness.
“Fixation on trust results in folly. Dependence on the strength of courage results in violence.
“Excessive discipline and sternness in command result in cruelty.
“When one has all five virtues together, each appropriate to its function, then one can be a leader.”
Sun Tzu is saying a leader must possess all qualities but with the right balance.
For instance, his supporters say Noynoy Aquino is trustworthy. But GE’s Jeff Immelt says to be trusted, one must be competent. You need competence to analyze problems, delegate, goad others into action, be able to make the right decisions and quickly.

On the other hand, Gibo Teodoro is perceived as highly intelligent and competent. But he trails in the survey simply because he hasn’t had enough exposure and for that reason, people aren’t sure whether to trust him.
Meanwhile, Joseph Estrada sometimes is not perceived as having a very high IQ but has a surfeit of EQ—emotional intelligence and plenty of executive experience in public office. He is charismatic and hugely popular despite his known habits of womanizing and drinking and early morning merrymaking. He has quit those, he says.
As commander-in-chief Erap is also the one who captured 46 camps of the MILF, the Muslim separatists. Had he lasted longer in the presidency, he would have broken the backbone of the communist New People’s Army. Therefore, he has courage. But courage, Sun Tzu warns, results in violence. And it did.
Dick Gordon and Bayani Fernando are advocates of discipline. But sternness could result in cruelty.
BizNewsAsia has graded the presidentiables, using Sun Tzu’s qualities of discipline and GE Jack Immelt’s practical concepts of leadership. Villar and Gibo Teodoro came on top of the heap with Noynoy Aquino having the lowest score.

Four things one can say about Aquino: One, Noynoy has had a lackluster record as a congressman of nine years and senator for three years; two, he has had very little management experience, except for a brief period as a salesman of Nike shoes, shirts and shorts; three, he has not even managed a household, because he has none; and four, yet, this is a guy who wants to manage the Philippines – the 12th largest nation on earth in population, with a government budget of P1.5 trillion and a work force of two million state workers, making it the country’s largest corporation; $54 billion in foreign debts, and two insurgencies – communism and Muslim separatism, both of them the longest-running in the world.

Also, has to account for the 6,400-ha. Hacienda Luisita. This huge estate was acquired with government loans (from the Central Bank and GSIS) by the Cojuangco family of Corazon Aquino, using their political connections, with the condition that it would be subdivided later on and given to its tenant farmers. After half a century, the estate still is owned and controlled by the Cojuangco family. Cory’s share of the Hacienda, about seven percent (or 448 hectares), has been divided among her children, with Noynoy getting a percent.

Noynoy keeps harping about corruption. Please note that corruption is not simply the direct stealing of money from government coffers, thru kickbacks and commissions and overpriced sweetheart deals. It is also about abuse of power. Abuse of power is a more pernicious form of corruption.

Abuse of power is like rape using a condom. It gives you a feeling of security while you are being – -you know the word. Screw.
biznewsasia@gmail.com

Noynoy and the other presidential candidates

2010-02-19T06:47:00.000-08:00

Why naming the next Philippine chief justice is a big deal

2010-02-19T06:40:00.000-08:00

Why naming the next chief justice is a big deal

The rigmarole on whether President Arroyo can appoint Chief Justice Reynato Puno’s successor when he retires this May 17 underscores the crucial role of the head of the judiciary in the life of the nation.

If President Arroyo names Puno’s successor, that chief justice and his court will have plenty of problems in their hands. Legal and constitutional questions that might arise from three possible events related to the May 10 presidential elections.

The possibilities are: One, there won’t be an elected president proclaimed by noon of June 30, when Arroyo’s term ends; two, Arroyo might just extend her term as holdover president because of the first; and three, she might be elected speaker of the House of Representatives and the speaker being No. 4 in the line of succession, she could take over as acting president, in the absence of a duly elected president, vice president, and Senate president (there will only be 12 incumbent senators after June 30 and 12 is a minority in a chamber of 24 senators).
Why won’t there be an elected president? Well, one reason is that this Comelec under Chairman Jose Melo is one of the most inexperienced poll bodies ever assembled. It has very little experience in managing an election, either manual or automated. Two, we are trying automation for the first time and doing it 100 percent and nationwide, and we expect it to be perfect, right away – an impossibility, considering that both cellular phone and electricity coverage is not 100 percent nationwide. ATM, the most pervasive computer, is not even nationwide. Some 500 towns have no bank branches.
The United States has been computerizing its elections for the past 60 years and still, they are at 80 percent level.
As Secretary of State Hillary Clinton told students in Manila in her recent visit, “based on our own experience, there will be some bumps in the road. When we moved toward automation, we had some problems…There could be some dry runs, not of a full election, but trying out the technology, making sure you know how it works, educating voters about it.”
Do we know how the Comelec automation works? No. Have voters been educated? No. Is Comelec up to the job? No.
Yet, automation must deliver 100 percent. Why? Because the presidential elections as this column predicted earlier, will be very, very tight. The latest Pulse Asia survey shows Senators Noynoy Aquino and Manny Villar in a tie, a dead heat, four months before May 10. In 1992, the presidency was won by Fidel Ramos by just four percent. In 2004, the presidency was won by Gloria Arroyo by just 3.5 percent.
So if the Comelec counting machines are able to count only 95 percent of the votes, that will be unacceptable. There won’t be an elected president, because the remaining five percent will decide the winner. Since there is no winner, there is no president. And since there is no president, President Arroyo could just conceivably stay on as holdover president. That’s infinitely better than having a General Tyrant Power or Sgt. Do Little taking over in a military dictatorship.

This may explain perhaps all those two-page spread ads of President Arroyo, making a litany of her achievements, and her recent accessibility to media. She is telling the people, “I am okay – as president”, after June 30.

Proof of difficulties is the Comelec’s endlessly postponing the printing of ballots. Unlike in past elections when the ballot was generic, that is applicable to almost every LGU, ballots this time will be customized by district, town, city, and province. The ballots for the first district of Manila, for instance, will be different from the ballots of the second district, third, fourth and so on, because there are different sets of candidates for each district. That kind of ballot takes time to print and is very difficult to deliver into every nook and cranny of the country – on time.

We come now to the Supreme Court chief justice, the new one. Arroyo’s takeover will be brought before the high court.

But then by that time, Arroyo would have appointed all 14 justices and the chief justice – 15-0. It takes only a majority vote, or eight, to get a favorable ruling for Mrs. Arroyo taking over as president, acting or whatever.
Relatedly, as speaker, Mrs. Arroyo could proceed to convert the House into a constituent assembly by itself since there is no majority in the Senate. That constituent assembly could bring about a parliamentary system with her as prime minister.

biznewsasia@gmail.com

A disturbing survey on Filipino leaders

2010-02-19T06:39:00.001-08:00

A disturbing Pulse Asia survey on Filipino leaders

On January 22-26, 2010, the respected pollster Pulse Asia conducted a survey among 1,800 people 18 and above on who are their most beloved Filipino leaders or politicians. The results are surprising and to me, disturbing.

Almost half, 48 percent, don’t idolize a Filipino leader, living or dead. In two regions, (Region 10 and Caraga), 70 percent said no Filipino leader is worth loving. In other words, for majority of Filipinos, their No. 1 choice for the most beloved Filipino leader is NOTA – None of the Above. The poor (or 47 percent of the E Class E) don’t have a beloved leader. So do promdis or those in rural areas (48 percent), those with little education (44 percent), and Cebuanos (39 percent). Metro Manilans (66 percent of them) and the elite (61 percent of the ABC classes) adore leaders.

Of the 52 percent who love a Filipino leader, their No. 1 choice is former President Corazon Cojuangco Aquino. She gets 35 percent of the 52 percent—equivalent t0 18 percent, or one in every five Filipinos. No. 2 is the late President Ferdinand E. Marcos. He gets 15 percent of the 52 percent or 7.8 percent (or eight of every 100) adult Filipinos.
A close third is former President Joseph Estrada –13 percent of the 52 percent or almost seven of every 100 Filipinos.
A distant fourth is the late Senator Benigno S. Aquino eight percent of 52 percent or four of every 100 Filipinos. Fifth is the late President Ramon Magsaysay, seven percent of the 52 or almost four of every 100 Filipinos.
No. 6 is Senator Manny Villar – five percent of 52 percent or three of every 100 Filipinos. Gloria Arroyo and the late Fernando Poe Jr. are both No. 7, with two percent of 52 percent or one in every 100 Filipinos.
No. 9 to 15 with identical one percent of 52 percent are: former President Diosdado Macapagal, Senator Chiz Escudero, former President Fidel Ramos, the late Senator Raul Roco, national hero Jose Rizal, and Senators Loren Legarda and Mar Roxas. Not even one of every 100 Filipinos love them.
No. 16 is Gibo Teodoro with 0.2 percent of 52 percent. The rest have identical 0.1 percent and they include Imelda Marcos No. 27, Jinggoy Estrada No. 29, Joker Arroyo No. 36, and President Quezon No. 37. Senator Noynoy Aquino, the presidential frontrunner, is not even in the Top 18.
I say the Pulse Asia survey is disturbing because our schools don’t seem to inculcate or fail to inculcate in the minds of the young the value of heroism and good deeds. How can you explain Rizal being a poor No. 13 as the most beloved Filipino leader with less than one percent of the 52 percent who say they love a Filipino leader.
Maybe, Rizal was not seen as a leader. But Emilio Aguinaldo and Bonifacio clearly are leaders and they were not even mentioned. Aguinaldo, the founder of the Republic, is our George Washington. Bonifacio was the leader of the armed resistance against Spain though he lost most of his battles.
Villar, the second presidential frontrunner, rates well in the survey. About 92 percent of those who say he is the most beloved leader will vote for him; three percent will vote for Noynoy.
Of the Cory Aquino believers, 50 percent will vote for her son; 33 percent will vote for Villar. Of the Ninoy diehards, 65 percent will vote Noynoy; 22 percent will go Villar. Of the Erap worshippers, 46 percent will vote for him; 29 percent will pick Villar for president; 19 percent Noynoy.
Of the Arroyo followers, 58 percent will vote Villar; 17 percent Noynoy, 15 percent Gibo Teodoro. Among the Rizalistas, 66 percent will vote Noynoy; 10 percent Teodoro.
Making an extended analysis, using mainly the Pulse Asia survey, I conclude that: one, Villar will beat Noynoy; two, Ferdinand “Bongbong Marcos Jr. will be elected senator (his father has been rehabilitated in the public eye); three, Joseph Estrada will make a strong finish in the presidential elections; he will probably end up No. 2 (to Villar) or become the winner himself.

biznewsasia@gmail.com

Aquino's political missteps by Ninez Cacho Olivares Tribune

2010-02-19T06:34:00.000-08:00

Political missteps

FRONTLINE

Ninez Cacho-Olivares

02/19/2010

Noynoy Aquino and his band of Liberals are clearly panicking, their panic mode being mainly based on the speed within which his survey ratings have been falling. And the panic in them shows, as one big mistake after another is being committed by their standard bearer, who, along with his team, seems to be clueless on how to get back to the top rung — at least in surveys and even their political propaganda.

Their problem — if they have not realized it yet — stems from the fact that Noynoy, along with his frigging civil socialites, banked heavily on the wave of sympathy that arose from the death of Cory Aquino. Everything--especially their message, all hinged on this claimed euphoria, generated incidentally by the Yellow media’s non-stop coverage. And Noynoy, his sisters and the Liberals were much too confident of victory, and were ultra-smug, as though the presidency was Cory’s heir’s divine right to take.

And so the Liberals and Noynoy’s civil society group focused on that one theme: Noynoy’s “right” and “destiny” to become the next president of the republic — because he was the son of Cory Aquino and Ninoy Aquino.

Never mind that he had no experience in administration or even on management, apart from the fact that, during his almost nine years in Congress, as a legislator, he had done nothing by way of introducing legislative measures that would ease the plight of the poor, or even curbing corruption and other ills of government that he now rails against. He was Cory and Ninoy’s son, and that was enough. So they, in their arrogance, believed.

After all, there was his mother, who was just a housewife, knowing nothing about governance, and was projected as a near saint by the yellow media that were ever so protective of Cory, that all the corrupt practices, the abuse of her power to benefit the family’s fortunes and hacienda, were hardly ever brought to light, and she was president for over six years.

Predictably, the political spiel Noynoy and the Liberals came up with was a rehash of the Cory style of campaigning: Noynoy, like his mother, was a reluctant candidate (which is rubbish), thrust in the position of a presidential candidate fighting the “forces of evil” that he and his allies identified as the anti-Arroyo regime.

He is as clueless as his mother was, and with no experience in governing, as his mother was. And the reply to these was the same as it was during the Cory campaign: It’s the good genes inherited. He may be inexperienced, but inexperienced in the ways of graft and corruption.

They believed that which worked for Cory in 1985 would work for Noynoy — and it could have if there were only two candidates: He and Gloria. But Gloria isn’t running for the same post, and their forces of evil spiel doesn’t work for Noynoy.

But as his survey numbers were still up, with wide margins too, all the more they had become too confident and too smug, and much too arrogant, because his allies claimed that the wave of sympathy had become permanent, and transferred to Noynoy.

But euphoria is always ethereal and must perforce wane and disappear with time, as it did, and Noynoy was now being weighed by the electorate that are finding him wanting.

But where he could have made a different projection of himself as a presidential candidate, especially in the so-called debates and presidential forums, he displayed arrogance when he refused to answer any questions coming from survey cellar dwellers, stating it to be so and when he threatened to fire any chief justice appointed by Gloria.

Lately, it appears that he is losing his grip, coming off as much too petulant and spoiled, demanding too much, even in forums, and complaining about the unfair treatment he was getting from forum moderators. Yet he does not complain when his yellow media are so biased for him.

He obviously can’t take criticism and even seems paranoid about this to the extent of seeing those who criticize him as his enemies, really no different from his mother.

Since he can’t take the heat, he really should get out of the kitchen.

Ramon Tulfo on Aquino loses his cool

2010-02-19T06:22:00.000-08:00

On Target
Aquino loses his cool in debate

By Ramon Tulfo
Philippine Daily Inquirer
First Posted 20:49:00 02/17/2010

Filed Under: Benigno Aquino III, Politics, Elections

Most Read
IF SEN. NOYNOY AQUINO continues to show his annoyance toward some members of the media on the campaign trail like he did on Tuesday, he’s likely to lose many votes.
Aquino should remember that many voters who are still undecided are scrutinizing every candidate’s action in public.
His annoyance directed at Tony Lopez, Biznews publisher, for being allegedly biased toward his close rival, Sen. Manny Villar, could have turned off many business leaders who attended a debate sponsored by the Philippine Chamber of Commerce and Industry (PCCI).
Many business leaders can exert influence on how their employees vote.
Aquino complained that Lopez reversed the order in which candidates were to give their answers.
But Lopez, a feisty writer, replied: “A leader should be ready for surprises.”
To which Aquino shot back sarcastically: “Especially if the moderator is unbiased like you.”
Be that as it may, Aquino should have kept his cool knowing he was under public scrutiny.
Even people rooting for him were turned off by his show of annoyance in public.
I have no love lost for Tony Lopez, who sometimes rubbed people the wrong way, but he was right when he told Aquino that a good leader should be able to handle the unexpected.
A leader should always be cool under fire, which Aquino was not at the PCCI debate.
* * *
Actor Fernando Poe Jr., defeated by President Gloria in that very controversial 2004 presidential election, lost so many votes when he shamed on stage a reporter following him on the campaign trail in front of so many people.
People who would have voted for FPJ must have changed their minds at the sight of the popular actor berating a reporter in public.
The goody-goody image that FPJ projected on screen was gone in an instant.
* * *

Noynoy not ready for the big league --Belinda Cunanan

2010-02-19T06:21:00.001-08:00

Noynoy, my petulant candidate friend

2010-02-19T06:17:00.001-08:00

Noynoy, my petulant candidate friend

By Tony Lopez

Noynoy Aquino, the frontrunner presidential candidate, has become petulant.

On February 16, Tuesday afternoon, I served as moderator (no talent fee) of the Philippine Chamber of Commerce and Industry (PCCI) forum with six presidential candidates – Sen. Benigno “Noynoy” Aquino 3rd, former President Joseph Estrada, Senator Richard Gordon, former Defense Secretary Gilberto Teodoro, Bro. Eddie Villanueva, and Senator Manny Villar Jr.

The forum consisted of four rounds – a five-minute presentation by each of the candidates, two rounds of questions, and a two-minute summation by each candidate. The order of speaking in the first round was drawn by lot an hour before the show. Gibo Teodoro picked No. 1; so he was the first to speak. Villar was No. 2, Aquino No.3, Estrada No. 4, Gordon No. 5, and Villanueva No. 6. I called on Teodoro without giving an introduction about him.

Later during the forum, I said Gibo is a bar topnotcher, has a Harvard masters in law, and seven presidents were bar topnotchers. I introduced Villar as “someone who is a self-made tycoon, former speaker, former Senate president and former future president, probably”.

I introduced Noynoy Aquino as having “a very good pedigree”, being the grandson of a national hero and son of national heroes – former President Corazon Aquino and slain opposition leader Ninoy Aquino; a congressman for nine years and senator for three years. “He will tell us what he is going to do,” I said.
I introduced Estrada as the most popularly elected president ever with the biggest number of vote-margin over his rival. I called Gordon mayor, builder of Subic, action man, and senator. The last presentor, Villanueva, is someone who wants to produce a miracle, I said.

In the second round, the first question-and-answer forum, per the PCCI script, the candidates were to reply to the questions in alphabetical order, from A to Z starting with Aquino each time, and Villar the last.

The third round, which is the second set of six questions, was in reverse alphabetical order, with Villar the first to speak and Aquino, the last. Candidates were given a minute to reply to all 12 questions. The open forum lasted for more than 72 minutes.

For final round, the two-minute closing spiel, since, in the previous round the speaking order was V to A, I went back to alphabetical order, A to V. After the second round, a staffer of Noynoy Aquino handed me a note which said, “the format is getting boring. Pls. shuffle the respondents”. That is exactly what I did for the final round.

Aquino was asked to speak first and Villar the last. Noynoy complained but I told him “a President should be prepared for surprises”, to which he replied sarcastically, “especially with an unbiased moderator like you.” In the PCCI script given me, it was clearly stated, “moderator to determine the order of closing statements”.

Noynoy had no reason to complain about the alleged bias of the moderator, myself. I understand from press reports, the senator showed clippings of my columns.

What I have been saying in my columns is that: one, Noynoy has had a lackluster record as a congressman of nine years and senator for three years; two, he has had very little management experience, except for a brief period as a salesman of Nike shoes, shirts and shorts; three, he has not even managed a household, because he has none; and four, yet, this is a guy who wants to manage the Philippines – the 12th largest nation on earth in population, with a government budget of P1.5 trillion and a work force of two million state workers, making it the country’s largest corporation; $54 billion in foreign debts, and two insurgencies – communism and Muslim separatism, both of them the longest-running in the world.

Also, I have scored Noynoy about the 6,400-ha. Hacienda Luisita. This huge estate was acquired with government loans (from the Central Bank and GSIS) by the Cojuangco family of Corazon Aquino, using their political connections, with the condition that it would be subdivided later on and given to its tenant farmers. After half a century, the estate still is owned and controlled by the Cojuangco family. Cory’s share of the Hacienda, about seven percent (or 448 hectares), has been divided among her children, with Noynoy getting a percent.

Noynoy keeps harping about corruption. Please note that corruption is not simply the direct stealing of money from government coffers, thru kickbacks and commissions and overpriced sweetheart deals. It is also about abuse of power. Abuse of power is a more pernicious form of corruption.

Abuse of power is like rape using a condom. It gives you a feeling of security while you are being – -you know the word. I am biased for the victim of that rape – you.

biznewsasia@gmail.com

Noynoy Aquino the Petulant Candidate

2010-02-19T06:15:00.000-08:00

Following is a letter I sent to Inquirer Publisher Isagani Yambot Feb. 18,2010

Sirs:

I wonder in the interest of balance and fairness, if my attached
letter can be published in full to set the record straight on what I
really happened at the PCCI forum Feb. 16.

Mr. Isagani Yambot
Publisher
Philippine Daily Inquirer
Allow to clarify your front page story of Feb. 17, regarding Senator
Benigno Aquino’s allegedly being annoyed with me because of my bias as
the moderator during the PCCI forum with the presidential candidates
February 16.
I deny I was biased. On the contrary, I introduced Noynoy Aquino, the
frontrunner presidential candidate, as one with “a very good pedigree,
the grandson of a national hero and a son of national heroes—former
President Corazon Aquino and slain opposition leader Ninoy Aquino, a
congressman for nine years and senator for three years.” “He will
tell us what he is going to do,” I said.
No candidate was favored and the order of speaking and their replying
to the two sets of questions were clear from the very start, except
perhaps to Noynoy who was one of the latecomers.
The other presidential candidates were: former President Joseph
Estrada, Senator Richard Gordon, former Defense Secretary Gilberto
Teodoro, Bro. Eddie Villanuev, and Senator Manny Villar Jr.
The forum consisted of four rounds—a five-minute presentation by each
of the candidates, two rounds of questions, and a two-minute summation
by each candidate. For the opening speeches, the order of speaking was
drawn by lot an hour before the show. Gibo Teodoro picked No. 1; so he
was the first to speak. Villar was No. 2, Aquino No.3, Estrada No. 4,
Gordon No. 5, and Villanueva No. 6.
I introduced Gibo is a bar topnotcher, has a Harvard masters in law,
and seven presidents were bar topnotchers; Villar as “someone who is a
self-made tycoon, former speaker, former Senate president and former
future president, probably”; Estrada as the most popularly elected
president ever with the biggest number of vote-margin over his rival;
Gordon as mayor, builder of Subic, action man, and senator; and
Villanueva, the last presentor, “is someone who wants to produce a
miracle”.
In the second round, for the first six questions, the candidates were
to reply in alphabetical order, from A to Z starting with Aquino
first, each time, and Villar the last.
The third round, for the second set of six questions, was in reverse
alphabetical order, with Villar the first to speak each time, and
Aquino, the last. Candidates were given a minute to reply to all 12
questions. The open forum lasted for more than 72 minutes.
For final round, the two-minute closing spiel, since, in the previous
round the speaking order was V to A, I went back to alphabetical
order, A to V. After the second round, a staffer of Noynoy Aquino
handed me a note which said, “the format is getting boring. Pls.
shuffle the respondents.”
That is exactly what I did for the final round.  Aquino was asked to
speak first and Villar the last. Noynoy complained but I told him “a
President should be prepared for surprises,” to which he replied
sarcastically, “especially with an unbiased moderator like you.”
In the PCCI script given me, it was clearly stated, “moderator to
determine the order of closing statements.”   Noynoy had no reason to
complain about the alleged bias of the moderator, myself. I understand
from press reports, the senator showed clippings of my columns to show
my bias.
What I have been saying in my columns is that: one, Noynoy has had a
lackluster record as a congressman of nine years and senator for three
years; two, he has had very little management experience, except for a
brief period as a salesman of Nike shoes, shirts and shorts; three, he
has not even managed a household, because he has none; and four, yet,
this is a guy who wants to manage the Philippines—the 12th largest
nation on earth in population, with a government budget of P1.5
trillion and a work force of two million state workers, making it the
country’s largest corporation; $54 billion in foreign debts, and two
insurgencies—communism and Muslim separatism, both of them the
longest-running in the world.
Also, I have scored Noynoy about the 6,400-ha. Hacienda Luisita. This
huge estate was acquired with government loans (from the central bank
and GSIS) by the Cojuangco family of Corazon Aquino, using their
political connections, under the condition that it would be subdivided
later on and given to its tenant farmers. After half a century, the
estate still is owned and controlled by the Cojuangco family. Cory’s
share of the Hacienda, about 7 percent (or 448 hectares), has been
divided among her children, with Noynoy getting 1/7 or 62 hectares.
Noynoy keeps harping about corruption.
Please note that corruption is not simply the direct stealing of
money from government coffers, thru kickbacks and commissions and
overpriced sweetheart deals. It is also about abuse of power like
using connections for aggrandizement.
Abuse of power is a more pernicious form of corruption. Abuse of
power is like rape using a condom. It gives you a feeling of security
while you are being—you know the word. I am biased for the victim of
that rape— you.
Tony Lopez
Editor, BizNewsAsia
biznewsasia@gmail.com

Noynoy Aquino: A Presidency by Osmosis

2010-02-17T17:12:00.000-08:00

By Tony Lopez

You won’t believe this but the reason why 44 percent of survey respondents of Pulse Asia will vote for Benigno “Noynoy” Aquino 3rd is because they think he is “clean” (malinis).
In the Pulse Asia Oct.22 to 30 survey, the respondents claimed they would vote for a presidential candidate because of: “hindi kurakot/malinis” (not corrupt/clean), 21.2 percent; “may nagawa, may magagawa” (has done something/could do something), 14 percent; “para sa mahirap, galing sa mahirap” (for the poor/came from poverty), 12.23 percent; “tumutulong” (helpful), 12 percent; “reputasyon ng pamilya” (family reputation), 4.2 percent; mabait (kind), 3.87 percent; “may alam/sanay sa pamamalakad/may karanasan” (knowledgeable, an experienced manager, experienced), 3.6 percent; and “maka-Diyos” (God-fearing), 3.2 percent. The total is 74.1 percent.

There are two conclusions you can make from these figures. One is that the biggest answer is don’t know 25.9 percent (100 minus 74.1 percent). The other is that being clean (21.2 percent, that’s Noynoy) has a higher premium than performance (14 percent, that’s either Manny Villar, Erap Estrada or Gibo Teodoro), experience (3.6 percent, that’s Villar, Estrada or Teodoro), or being pro-poor (Estrada) and having been poor (Villar).

Voters in effect are saying you may be stupid or inexperienced but as long as you are perceived to be clean, then we will vote for you. However, being stupid or inexperienced or both can mean you are incompetent.

In other words, in 2010, voters will prefer incompetence to performance, intelligence and experience. To me, that is an insult to the Filipino voter. Which makes the Noynoy Aquino presidential candidacy frustrating it not outrageous for many concerned Filipinos.

Noynoy has little to show in his nine years as congressman and barely three years as senator to deserve to be elected president. His only claim for presidential gravitas is having had Ninoy Aquino, a martyr, as father, and Cory Aquino, a beloved president, as mother. In effect, he is offering a presidency by osmosis.

Osmosis, as you know, is the movement of water from an area of high water potential to an area of low water potential to produce energy, without input of energy. It is producing something without much effort or talent just because of your family background.

Now, ordinarily, clean means honest. Honest as in never been tainted by scandal or corruption. “Clean” could also mean clean, as in tabula rasa—nothing there. Or no record of performance.

Noynoy may or may not be aware of it but there is a text and joke brigade propaganda against him implying that he has nothing in between. This insidious image is bolstered by the fact that Sen. Mar Roxas keeps taking up the cudgels for him on many issues. Mar is not only a good running mate, he is also a good and articulate spokesman. He will make a good presidential spokesman or a presidential spokesman for economic affairs, ala Gary Olivar for GMA.

For a retort, Noynoy may pickup Manny Pacquiao’s oft-repeated insistence, “hindi ako bobo” (“I am not stupid”).

Noynoy is not stupid. I have known him since August 1983 after Ninoy Aquino’s assassination. He has always come across as an intelligent, decent, courteous gentleman. This is not to say he is not capable of meanness or double-dealing.

Noynoy has after all the genes of a Cojuangco and an Aquino—two of the most enduring political families in the Philippines. Some factions of the two clans are capable of rent-seeking and using political connections to gain a juicy contract or a lucrative concession.

The 6,300-hectare Hacienda Luisita was bought by the Co-juangcos (Cory Aquino wing), with a loan from the Central Bank on the condition that the family would cut it up and give parcels of it to sugar tenants. If the Cojuangcos then were not politically powerful or influential, do you think they would have gotten the loan?

If Cory Aquino were not president, do you think the family would be able to insert a vague provision in the Constitution putting “tenants” and “workers” in the same category as tenants as far as agrarian reform is concerned? And because of this provision, the Agrarian Reform Law was crafted in such a way that agrarian reform can be undertaken two ways—one for tenants and another for workers.

The Hacienda Luisita tenants became “workers” overnight. Because of the change in their status, the tenants were no longer entitled to land but to shares of stock since a company does not usually give away land but can give away shares of stock.

And since the “workers” had no money to buy the shares with, they had to pay for them by installment, and while the tenants were paying for the shares by installment, the voting rights for the shares were assigned to the Cojuangco family. In effect, the Cojuangco family, Cory wing, never lost control of the hacienda.

biznewsasia@gmail.com

Petulant Noynoy Aquino

2010-02-17T16:39:00.001-08:00

Noynoy Aquino, the frontrunner presidential candidate, has become petulant.

On February 16, Tuesday afternoon, I served as moderator (no talent fee) of the Philippine Chamber of Commerce and Industry (PCCI) forum with six presidential candidates—Sen. Benigno “Noynoy” Aquino 3rd, former President Joseph Estrada, Senator Richard Gordon, former Defense Secretary Gilberto Teodoro, Bro. Eddie Villanuev, and Senator Manny Villar Jr.

The forum consisted of four rounds—a five-minute presentation by each of the candidates, two rounds of questions, and a two-minute summation by each candidate. The order of speaking in the first round was drawn by lot an hour before the show. Gibo Teodoro picked No. 1; so he was the first to speak. Villar was No. 2, Aquino No.3, Estrada No. 4, Gordon No. 5, and Villanueva No. 6. I called on Teodoro without giving an introduction about him.

Later during the forum, I said Gibo is a bar topnotcher, has a Harvard masters in law, and seven presidents were bar topnotchers. I introduced Villar as “someone who is a self-made tycoon, former speaker, former Senate president and former future president, probably.”

I introduced Noynoy Aquino as having “a very good pedigree,” being the grandson of a national hero and son of national heroes—former President Corazon Aquino and slain opposition leader Ninoy Aquino; a congressman for nine years and senator for three years. “He will tell us what he is going to do,” I said.

I introduced Estrada as the most popularly elected president ever with the biggest number of vote-margin over his rival. I called Gordon mayor, builder of Subic, action man, and senator. The last presentor, Villanueva, is someone who wants to produce a miracle, I said.

In the second round, the first question-and-answer forum, per the PCCI script, the candidates were to reply to the questions in alphabetical order, from A to Z starting with Aquino each time, and Villar the last.

The third round, which had the second set of six questions, was in reverse alphabetical order, with Villar the first to speak and Aquino, the last. Candidates were given a minute to reply to all 12 questions. The open forum lasted for more than 72 minutes.

For final round, the two-minute closing spiel, since, in the previous round the speaking order was V to A, I went back to alphabetical order, A to V. After the second round, a staffer of Noynoy Aquino handed me a note which said, “the format is getting boring. Pls. shuffle the respondents.” That is exactly what I did for the final round.

Aquino was asked to speak first and Villar the last. Noynoy complained but I told him “a President should be prepared for surprises,” to which he replied sarcastically, “especially with an unbiased moderator like you.” In the PCCI script given me, it was clearly stated, “moderator to determine the order of closing statements.”

Noynoy had no reason to complain about the alleged bias of the moderator, myself. I understand from press reports, the senator showed clippings of my columns.

What I have been saying in my columns is that: one, Noynoy has had a lackluster record as a congressman of nine years and senator for three years; two, he has had very little management experience, except for a brief period as a salesman of Nike shoes, shirts and shorts; three, he has not even managed a household, because he has none; and four, yet, this is a guy who wants to manage the Philippines—the 12th largest nation on earth in population, with a government budget of P1.5 trillion and a work force of two million state workers, making it the country’s largest corporation; $54 billion in foreign debts, and two insurgencies—communism and Muslim separatism, both of them the longest-running in the world.

Also, I have scored Noynoy about the 6,400-ha. Hacienda Luisita. This huge estate was acquired with government loans (from the central bank and GSIS) by the Cojuangco family of Corazon Aquino, using their political connections, under the condition that it would be subdivided later on and given to its tenant farmers. After half a century, the estate still is owned and controlled by the Cojuangco family. Cory’s share of the Hacienda, about 7 percent (or 448 hectares), has been divided among her children, with Noynoy getting a percent.

Noynoy keeps harping about corruption. Please note that corruption is not simply the direct stealing of money from government coffers, thru kickbacks and commissions and overpriced sweetheart deals. It is also about abuse of power. Abuse of power is a more pernicious form of corruption.

Abuse of power is like rape using a condom. It gives you a feeling of security while you are being—you know the word. I am biased for the victim of that rape—you.

biznewsasia@gmail.com

Lucio Tan wants faster growth for RP

2009-12-23T08:17:00.000-08:00

Lucio Tan wants faster growth

On a recent trip to Shanghai, Lucio C. Tan climbed the 367 steps of Lupo Bridge without much difficulty. He recently had to be operated on in one leg to fix a torn ligament after he slipped while getting off his helicopter.
At 75, the Kapitan doesn’t show the wear and tear of a man his age. He plays six holes of golf daily, swims and exercises regularly, and keeps a daily grueling schedule. He is a voracious reader. His mind is like a sponge for information. He dutifully writes down important names, dates, and data. He keeps a small tape measure, a magnifying glass, and even a flashlight in his pocket. He attends to the macro and the minutiae of doing business.
A rags-to-richest legend, Tan has to keep himself in top shape and on top of the situation to oversee a huge and diversified conglomerate–airline, tobacco, brewery, distillery, chemicals, food, hotels, steel fabrication, education, even travel.
The group is one the Philippines’ biggest employers and biggest taxpayers. Despite the recent global financial crisis and the downturn in the local economy. “we have not closed any of our factories nor have we significantly reduced manpower,” he points out.
Being involved in different businesses is a unique challenge, he says, “we have to know everything about each of the industries we are in. The constant need to study, learn, innovate and make ourselves globally competitive is, to me, our greatest challenge.”
Tan owns the fourth largest banking group in the Philippines, the merger of PNB (P16.6 billion revenues and P744 million in profits in 2008); and Allied Bank (P9.38 billion in revenues and P345.3 million in profits). Together, PNB and Allied have combined assets of P460.84 billion (No.4), deposits of P350.37 billion (No.4), loans of P174.62 billion (No. 4), and equity of P47.97 billion (No. 3).
Tan owns the largest airline, Philippine Airlines (P62.9 billion revenues and P1.28 billion profits in 2008 fiscal year; for the 2009 fiscal year, PAL Holdings, which owns PAL, generated a record P75.3 billion revenues, up 13.56 percent but lost a colossal P12.95 billion); the largest tobacco company, Fortune Tobacco, (P33.2 billion in revenues in 2008 and P457 million in profits); the largest piggery, Foremost Farms (P1.28 billion in revenues and P38 million in losses); the biggest rhum company, Tanduay Distillers (P9 billion in revenues and P299 million in profits); as well as the 510-room Century Park Hotel in Manila, a full bank in Xiamen, Allied Bank; a 460-room five star hotel in Shanghai, The Eton (one should try the hotel to know what five-star means); a 500-room hotel under construction in Xiamen, the 36-story International Bank Center again in Xiamen, a 2.3-hectare planned commercial-residential and shopping mall planned also in Xiamen, a residential complex in Beijing, the Charter House in Makati and Hong Kong, and various other properties in the region. He is developing a city out 1,100 hectares south of Manila and overlooking Laguna Bay, The Eton.
One enterprise that has yet to deliver plenty of profits is the University of the East. Among major educational institutions in 2008, according to SEC data, UE was only No. 5 in revenues (P959 million) with profits of P77 million. FEU had P1.74 billion revenues and P593 million profits; University of Perpetual Help Rizal P1.32 billion revenues and P193 million net; CEU P1.2 billion revenues and P269 million net; and Malayan Colleges P1.14 billion revenues and P209 million net.
Despite his riches, Tan remains a plain-spoken man. He dresses simply, preferring the neat and practical over the elegant and fashionable. He believes in “ren” – the Chinese word for perserverance, and in the virtues of humility, frugality, and benevolence. They are, he stresses, important ingredients for success. “As one earns more, one must also practice humility and frugality by leading a simple lifestyle. Otherwise, everything that one has worked for could easily be lost.” Also, he adds, “one who shares is likely to get more in return.”
Tan is disappointed with the pace of development in the Philippines. He notes that in China, the landscape changes every year, for the better. To catch up with China’s phenomenal growth (9 percent to 10 percent a year in GDP rate), he winces, it will take 100 years; 200 years with the corruption; and probably 300 years with a militant union. He says we need a long-lasting industrial peace if we want to make Philippine brands globally competitive.
In China, Tan notes, labor strikes are banned. In such competitive countries, ne says, “you would see a level of worker productivity that is four or five times that our ours> Some countries have even scrapped minimum wage laws to boost employment generation and enhance productivity.”
He asserts, without hyperbole, that if a road were to cost P1 billion in China, the same road would cost P10 billion to P12 billion in the Philippines, with the scale of local corruption.

biznewsasia@gmail.com

Debacle in Copenhagen

2009-12-23T08:15:00.000-08:00

Climate change debacle

On Dec. 7 to 12, leaders of 193 nations gathered in Copenhagen to produce a treaty that would replace the Kyoto Protocol which expires in 2012. The rare summit, attended by no less than 120 heads of state and of government, was neither a great success nor a complete failure.

It was not a great success because the summit failed to produce a replacement to the Kyoto Treaty, failed to endorse a legally binding plan for reducing greenhouse gas emissions, and will certainly fail to curb global warming, that is prevent the earth’s temperature from rising 2 degrees Celsius to avoid disasters of many kinds.

But it was not a complete failure because the Conference of Parties or COP 15 as the summit came to be known, produced an interim accord that at first glance would curb greenhouse gases, provide mechanisms for verifying countries’ emissions, stop the destruction of rain forests, and raise money to help vulnerable nations adapt to climate change thru burden sharing by the world’s rich countries.

Some $100 billion a year has been pledged for the Copenhagen Green Climate Fund beginning in 2020 with startup of $10 billion a year for three years from 2010 to 2012, or $30 billion in three years. United Nations Secretary General Ban Ki Moon said “$100 billion a year is significant big money.” The Europen Union pledged $3.6 billion annually to the start-up fund. Japan and the US made unspecified amounts.

Some people credit United States President Barack Obama for preventing the summit’s total collapse which was certain in late afternoon of the last day, Friday, Dec. 18. He endured at least two instances of snub by Chinese Premier Wen, negotiated with India, Brazil and South Africa by inviting himself into closed-door meeting of the four countries and forged an agreement.
But China should also be given credit for success. It softened on its stand no to subject itself to international verification because it would hurt its sovereignty.
China’s willingness to submit to a verification system under which all countries would agree to report on their actions and open their books to inspection. Transparency is a huge issue in the US Congress. Obama stressed in his opening remarks on Friday that he would not agree to a deal unless China gave ground.

China, the world's largest emitter of greenhouse gases, lauded the outcome of the COP15 that ended with a nonbinding agreement that urges major polluters to make deeper emissions cuts — but does not require it. “It brought significant and positive results,” said China Foreign Minister Yang Jiechi.
Among the positive results, Yang said, were that it upheld the principle of "common but differentiated responsibilities" recognized by the Kyoto Protocol, and made a step forward in promoting binding emissions cuts for developed countries and voluntary mitigating actions by developing countries.

"Developing and developed countries are very different in their historical emissions responsibilities and current emissions levels, and in their basic national characteristics and development stages," Yang said in a statement. "Therefore, they should shoulder different responsibilities and obligations in fighting climate change."

Yang added the conference also created a consensus on key issues such as long-term global emissions reduction targets, funding and technology support to developing countries, and transparency.

"The Copenhagen conference is not a destination but a new beginning," Yang said

“We've made meaningful and unprecedented breakthrough here in Copenhagen,” said Obama following 13 hours of non-stop negotiations. “For the first time in history all major economies have come together to accept their responsibility to take action to confront the threat of climate change.”

“We agreed to join an international effort to provide financing to help developing countries, particularly the poorest and most vulnerable, adapt to climate change. And we reaffirmed the necessity of listing our national actions and commitments in a transparent way,” the US President said.
“These three components -- transparency, mitigation and finance -- form the basis of the common approach that the US and our partners embraced here in Copenhagen,” he explained. He hopes countries will reach consensus “around these three points, a consensus that will serve as a foundation for global action to confront the threat of climate change for years to come.”
Throughout the last day of COP15, Obama worked with Prime Minister Meles of Ethiopia, who was representing Africa, Premier Wen of China, Prime Minister Singh of India, President Lula of Brazil, and President Zuma of South Africa, to achieve what I believe will be an important milestone.
Earlier Friday evening, Obama had a meeting with the last four leaders -- from China, India, Brazil, and South Africa. In that meeting, he said, “we agreed to list our national actions and commitments, to provide information on the implementation of these actions through national communications, with international consultations and analysis under clearly defined guidelines. We agreed to set a mitigation target to limit warming to no more than 2 degrees Celsius, and importantly, to take action to meet this objective consistent with science.”

“We've come a long way,” Obama gushed, “but we have much further to go.”
The Copenhagen Accord underlines “that climate change is one of the greatest challenges of our time” and emphasizes the countries’ “strong political will to urgently combat climate change in accordance with the principle of common but differentiated responsibilities and respective capabilities."

The text acknowledges to keep average global temperatures from rising more than 2 degrees Celsius above pre-industrial times, "consistent with science and on the basis of equity."
all references to the lower number of 1.5 degrees — called for by island nations whose very survival is at risk — were removed from the final version.
Emissions reduction targets
The text acknowledges that deep cuts in global warming emissions are necessary, but it provides no targets.
All references to a 2050 goal were eliminated from the final version.

Initial drafts had called for cutting emissions to 50% of 1990 levels by then.
Initial versions also suggested that a 2020 goal would be added, but it did not appear. In the proposed text, the Annex I parties would commit to implement their individual emissions reduction goals for 2020 (see chartsthis page). The text, if approved, would require them to file those plans by February 2010, but it doesn't recommend an overall target or minimum reduction level.
There are no emissions reduction targets for developing nations. The closest the text comes to suggesting a target is this:
“We should cooperate in achieving the peaking of global and national emissions as soon as possible, recognizing that the timeframe for peaking will be longer in developing countries and bearing in mind that social and economic development and poverty eradication are the first and overriding priorities of developing countries and that a low-emission development strategy is indispensable to sustainable development.”

Financing
The text includes a combined $30 billion in fast-start money from developed nations across the 2010-2012 period.
That funding — meant to support adaptation, technology transfer and development, and mitigation efforts — would be prioritized for the most vulnerable developing countries, such as the least-developed countries, small island states and African countries.
Beyond 2012, the draft states that developed countries would “set a goal” of mobilizing $100 billion a year by 2020, with the money coming from a variety of public and private sources.
A Copenhagen Climate Fund would be established as the financial mechanism for funding projects, including forestry, adaptation, and capacity building. And a Technology Transfer Mechanism would be established “to accelerate technology development and transfer.”
Measure, report, verify
For oversight, a “High Level Panel” would be established under the Conference of Parties’ guidance, according to the proposal.
Developed nations would fall under a strict monitoring regime: “Delivery of reductions and financing by developed countries will be measured, reported and verified in accordance with existing and any further guidelines adopted by the Conference of Parties, and will ensure that accounting of such targets and finance is rigorous, robust and transparent.”
Among non-Annex I countries, only those seeking international support “will be subject to international measurement, reporting and verification in accordance with guidelines adopted by the Conference of Parties.” Other actions would fall under domestic measurement reporting and verification instead.
Completion date
The proposed text, still legally non-binding, offered no timetable for writing a legally binding accord. Initial drafts had set a goal of no later than the next Conference of Parties meeting in Mexico in 2010.

biznewsasia@gmail.com

The biggest story of 2009

2009-12-23T08:14:00.000-08:00

The biggest story of 2009

As the year draws to a close, may I point out the biggest story of 2009, for us Filipinos. It is not the Maguindanao massacre in which 57 people were killed by perhaps the most notorious and ruthless warlord clan ever to thrive on these islands. It is not the death of Michael Jackson. It is not the election of Barack Obama as the first black president of America.

It is the not the death of Corazon Aquino on Aug. 1 which catapulted to No. 1 the presidential candidacy of Noynoy Aquino whose lackluster nine years as congressman and barely three years as senator make me wonder whether the Filipino voter is indeed intelligent.

Noynoy’s presidential bid reminds me of the late Senator Ted Kennedy. His brother, President JFK, was assassinated. A second brother, the presidential frontrunner and almost president, RFK, was assassinated. Ted himself was eminently qualified, being a Harvard Law graduate and a reformist liberal senator who had chalked up a strong 18-year legislative record focused on economic and social justice by the time he sought the presidency in 1980 with a 2 to 1 advantage over Jimmy Carter in early polls. Yet, when he was asked why he was running for president, Ted couldn’t adequately explain why. His resurgent campaign suddenly fizzled out. He was beaten in the Democratic convention by the unpopular incumbent, a peanut farmer, who was easily defeated by a second-rate actor, Ronald Reagan. Ted’s dream died with him.

The biggest story is the fact that the Philippines escaped the recession while two-thirds of the world suffered from it. And that is a tribute to the Filipino consumer who kept spending his money. Almost a third, 27.7 percent, of his income is savings. It is also a tribute to the reforms carried out by President Arroyo who presided over the longest economic expansion in the history of this country (35 quarters of consecutive growth). The Filipino people repaid her with spite, making her the most hated president in history. In such a vacuum came Noynoy. He wants to be the opposite of everything bad in Gloria.

The Philippines is one of the few countries in the Asia, and in fact, the world, whose economy is still growing, with a 0.7 percent GDP growth in the third quarter. In Asia, four other major countries are growing – China 8.9 percent, Indonesia 4.2 percent, South Korea and Singapore, both with identical 0.6 GDP growth in the third quarter.
In the rest of the world, Denmark leads the recession with negative 7.2 percent growth in the third quarter. No wonder Copenhagen badly mismanaged the climate change summit. Not far behind in negative growth are Britain (which Obama gingerly ignored in fashioning out a last-minute climate deal with China, India, Brazil and South Africa) with minus 5.1 percent; Germany 4.8; Japan 4.5 percent; Euro area 4.1 percent; US 2.5 percent; and France 2.4 percent.

In Asia, Malaysia had 1.2 percent negative growth in the third quarter, Thailand 2.8 percent, Hongkong 2.4 percent, and Taiwan 1.3 percent.
Happily, the global recession ended in the third quarter. It raged for two years and was the worst in 60 years.

Bangko Sentral Governor Amando Tetangco says “The (Philippine) economy continued to draw strength from strong domestic demand and solid macroeconomic fundamentals.” “For many economies,” he noted, “the experience during this crisis has been characterized by the ‘vicious spiral’ wherein weaknesses in the financial markets propagated real market contractions.” BSP helped rescue the Philippines from recession, financial meltdown and freezing of credit with what Tetangco calls “monetary policy that was appropriately accommodative”. In other words, money was easy and cheap.

Of course, inflation spiked to 9.3 percent in 2008 from 2.8 percent in 2007. It has eased to 3.2 percent in the January-November this year. The country today has enough dollars to pay for its imports, service foreign loans, and cover capital outflows. The balance of payments was in surplus by $4.1 billion in November and foreign reserves are at $44.2 billion which can buy 8.1 months of imports and can pay 9.2 times of short-term foreign debts.

If recovery is slow in the country’s major markets, it could hurt exports and slow down inflow of investments. But then the Philippines has ten million overseas workers. They will remit an estimated $17 billion this year and another $18 billion in 2010. Bansan Choa of I-Remit estimates that OFWs remit only about 35 percent of their total income. So if $18 billion is 35 percent, then Filipinos abroad are actually earning $51 billion a year, enough to pay our foreign debts.

The conclusion then: The economy will be better in 2010. Consumption will remain strong. And so will the Filipino’s will to survive and stay happy. Merry Christmas.

biznewsasia@gmail.com

The soft state holds an election

2009-11-30T11:28:00.000-08:00

The soft state holds an election

I wrote last week about the Philippines being a soft state – with a government that cannot enforce its laws, cannot discipline its citizens, and cannot summon the respect of foreigners living in this country.

I cited the example of one Jason Ivler, the stepson of a Stephen Pollard, a British bureaucrat economist of the Asian Development Bank. Ivler has been involved in two major killings --- that of Undersecretary for Resettlement Nestor Ponce in 2004 and of Renato Victor Ebarle Jr., son of undersecretary Renato Ebarle Sr. of the Office of the Executive Secretary Malacañang.

Ponce and his wife, Evangeline, were driving to Tagaytay one early Sunday morning in August 2004 to pray that their son pass the bar, when his Isuzu trooper was slammed by a wayward Land Cruiser coming from the opposite or northward side of the C5 Ortigas flyover. Ponce died instantly, from massive loss of blood due to injuries.

The young Ebarle was shot pointblank by a man who looked like Ivler on Nov. 18 at a usually busy intersection in Quezon City. A policeman saw the incident and gave chase to the killer who disappeared in one of the garages in upscale New Manila. Ivler has gone missing, armed and dangerous.

The victims are powerful or politically well-connected people. And yet, Ivler cannot be found, coddled by Pollard who invokes his so-called diplomatic immunity. Pollard should have been arrested by the police instantly, for obstruction of justice. Since the Philippines is a soft state, we cannot do that.

Now comes the biggest proof that we are indeed a soft state. A political warlord of Maguindanao and top goon of Mindanao is accused of killing no less than 57 people who were going to participate in one of the most elegant rites of democracy – the filing of a certificate of candidacy for local elective positions. At least 30 of the 57 were mediamen – the largest number of press people killed in a single incident in the history of mankind.

Naturally, there is a national and global outrage from all freedom-loving citizens of the world. President Arroyo is on the defensive. Plainly, the blame lies at her doorstep.

In other countries, that kind of massacre will trigger calls for the President’s resignation. But why ask her to resign when she has barely six months left of her nine years of presidency? Besides, the last time there was a call for her to resign, she instead imposed a 12 percent value added tax which miraculously saved her government and the country from falling into the precipice of a gargantuan budget deficit.

Sure, the massacre will make Mrs. Arroyo even more unpopular. Majority of Filipinos don’t like her work despite her having produced 35 consecutive quarters of economic growth, doubling the per capita GNP to $2,000, a feat never done before.

What to do then? Media has n come out as a single voice and confront her. Tell her -- Arrest the Ampatuans, disarm them and lock them in jail.

Can she do that? So far, one Ampatuan has been arrested, the mayor who is said to have masterminded the whole savagery.

Secretary of State Hillary Clinton said in her recent Manila visit that an outgoing executive actually has greater political will. “It is easier to make difficult decisions when you are on the way out of office, because you know what’s at stake and you are willing to brave the political fires,” she told a televised gathering of students Nov. 13.

President Arroyo can exercise political will if she wants to. Her executive order freezing prices of refined petroleum products for nearly a month was an act of political will. It angered the oil cartel and caused shortages in supplies here and there. But she proved that the oil companies are manipulating supplies and prices and operate indeed, like a cartel, contrary to what her own energy secretary had been claiming. Now, she has put on notice to the oil companies, “if you become unruly again, I will reimpose price controls”.

In the case of Maguindanao and the rest of Mindanao, there are a lot more at stake than simply controlling prices. The most important consideration is the May 10, 2010 election when the nation chooses Arroyo’s successor.

Trouble here and there, killings here and there, can create conditions of chaos, leading of failure of elections. No elections, no clearly elected leader. Who takes over then?

You know the answer.

biznewsasia@gmail.com

BizNewsAsia's 2009 BREW Awardees

2009-11-30T10:51:00.000-08:00

BizNewsAsia’s 2009
BREW awardees

TERESITA SY

She is a rara avis of business, the most powerful woman CEO in the Philippines today, having taken on greater responsibilities in managing the SM banking, retailing, and property group. She nurtured Shoemart into what it is today, the largest, the best, most experienced and most elegant department store chain in the country. She is the chairman of Banco de Oro, the biggest bank in the Philippines with assets of P793.5 billion, deposits of P625 billion, loan portfolio of PP440 billion, equity of P61 billion, 665 branches and 14.6 percent of the market.
She is the vice chairman of SM Investments Corp., the holding company for SM which has 102 stores nationwide, including, by yearned, 36 malls (four of them among the world’s largest), 201 cinemas, 35 department stores, 26 supermarkets, 18 SaveMore branches, 16 Hypermarkets, and 12 Makro wholesale outlets. The malls are visited by 2.5 million people a day or 900 million a year. SM opens stores at the rate of 11 per year. SM’s property group is in residential, commercial, leisure and hotel development and among the fastest growing in the industry.

Ambassador AMABLE “KING” AGUILUZ V
He owns and manages the largest computer school system in Asia with 208 campuses and 150,000 students in eight countries. The IT school system keeps expanding with operations in the Middle East, China and the United States.

His pioneering work in developing an IT-enabled and skilled manpower enabled the Philippines to attract business process outsourcing (BPO) which business has now over 400,000 seats and revenues of $5 billion. The BPO industry, in turn, is a major source of demand for office space and housing for call center workers, sustaining the property boom.

In real estate, he has piled up P13 billion worth of assets, enough for him to dream to become one of the country’s three largest developers over the next five years.

Secretary ACE DURANO

The youngest Tourism secretary and the youngest member of the Arroyo cabinet, he rationalized the country’s tourism drive, formulated well-focused campaigns, and launched ecological tourism programs that market the vibrancy and natural endowments of Philippines travel sites. As a result, Philippine tourism is booming, one of the few in Asia to show growth in arrivals amid the global economic slowdown. The country’s tourism machinery is rated the best-improved and best performing in Asia.

From barely two million when he took over the DOT in 2004, arrivals from abroad are reaching three million per year, which added to the five million domestic arrivals, make for eight million in tourists annually, triggering a massive hotel buildup to solve a serious room shortage.

ANTONINO T. AQUINO
He is the Management Association of the Philippines’ “Management Man of the Year”, a well-deserved plum given that he does not own the companies he has managed and thus he didn’t have an easy time as their CEO. As CEO of Manila Water from 1999 to 2008, he turned a virtually moribund public service company into a publicly listed private firm and steering it thru remarkable growth and profitability.

At Ayala Land, his latest assignment, he and his management team are taking steps to further grow the business and capture more value by expanding in the provinces and focusing on a market Ayala paid little heed to before – the so-called bottom of the pyramid (BOP) which happily happens to be the biggest consumer market in the Philippines and which oftentimes is recession-proof.

BANSAN C. CHUA

He set up I-Remit, the largest non-bank Filipino-owned remittance company with $1 billion in remittance business and operations in 27 countries providing quality, efficient and affordable remittance services to overseas Filipino workers who now number over ten million. His Sterling Bank of Asia specializes in supporting the development and growth of small and medium enterprises. His Surewell Equities, Inc. develops affordable and first class homes and secure investment outlets for savings. As president of the Philippine Retirement, Inc., he seeks to bring retirees, expats and Filipinos, to the Philippines, for them to live, work and invest in the country, thus opening up a new market for the homebuilding industry.

CamSur Governor “LRAY” VILLAFUERTE
He transformed Camarines Sur, once a dirt poor typhoon-battered province of Bicol, into CamSur, the first LGU developed as an economic enterprise. It is now one of the country’s ten richest in income, an emerging premier tourist destination and a global venue for sports such as wakeboarding, dragon boat racing, marathon and Iron Man, the Holy Grail of Triathlon. CamSur is the first LGU-operated IT park and tourism zone in the country.
CamSur Watersports Center (CWC) is one of the best wakeboarding lakes in the world. CamSur’s Caramoan beach resort has become a popular destination overnight, thanks to savvy marketing and global television exposure with five Survivor franchises using it as their location.

Albay GOVERNOR JOEY SALCEDA
He helped improve the standard of living of the people of Albay during his incumbency as governor and its CEO, with his focus on the five Es—economy, education, environment, equity and health. He made the province a model for disaster preparedness and zero casualty, and for climate change mitigation and adaptation. No LGU executive has embraced disaster preparation and climate change mitigation and adaptation with more passion and intelligence. His vision is to make Albay a little California during the early part of the 21st century, a progressive ecosystem, clean and green.
He is one of the country’s preeminent economic advisers, an expertise honed by a distinguished work in the private sector and 12 years of public service.

RAUL T. CONCEPCION
As chairman of the Consumer and Oil Price Watch, he has done a tremendous job seeking more reasonable pricing from the oil companies and manufacturers of basic goods, exposing their lust for excessive profits and their manipulative attempts to hide their true cost of goods. His is the genuine consumer advocacy-- consistent, conscientious, compelling, and effective.
He has also called for true energy reform to bring down the cost of energy the cost of most basic goods, including oil. He puts his money where his mouth is, buying expensive newspaper ads to make his point and call the attention of all concerned in the name of reasonable pricing.
His Concepcion-Carrier airconditioning joint venture is one of the most efficient and innovative in the world.

ELIZABETH H. LEE
She has succeeded where many men of greater talent and training have failed—in the art of marketing, management and group leadership. As president of the Chamber of Automotive Manufacturers, Inc. (CAMPI), which groups the country’s 12 largest auto companies, she helped save the industry from collapse with a vigorous campaign against smuggled second-hand vehicles which for a time were dominating the domestic market and brought it to its highest level of sales in the past ten years.

At Universal Motors Corp., she developed the “Ur Van Ur Business” (UVUB), a business plan and a corporate social responsibility (CSR) program to train buyers to become entrepreneurs and provide them a vehicle for income growth, career fulfillment, and lifestyle enhancement.

Architect FELINO PALAFOX JR.
He is the Philippines’ foremost exponent of green architecture, green urbanism and sustainability as typified by the principle that people must work, play and worship no farther than 400 meters from their home. In design, the focus is on the triple bottom line –the economy, environment, and social equity. His Palafox and Associates is the largest architectural firm in Southeast Asia and since 2003 one of the top 200 in the world, with projects in 32 countries and clients who are among the largest and most prestigious land developers, building owners, tycoons and taipans, not to mention sheiks, kings and sultans.
He puts his money where his mouth is. He gave up a $1-million fee to protest a Korean client’s attempt cut down 366 trees in an urban area of Subic. After Ondoy, he recommends developers to reckon with the worst flood events
and disasters of the past 100 years to build for the future.

Marikina Mayor MARIDES FERNANDO
As mayor from 1998 to the present, she made Marikina one of the most dynamic, progressive and green cities in the Philippines, a model for good governance, IT preparedness, environmental sensitivity, and a culture of creativity and discipline. She effectively leveraged the city’s four key assets – infrastructure, innovation, human capital, and quality of place. Five years ago, Marikina was already one of the three most livable cities in Metro Manila. Three years later, it became the most competitive metro city in the Philippines.

Marikina was a veritable Little Singapore when Ondoy struck on Sept. 26, 2009. Still, the city displayed remarkable grit and resiliency, cleaning in just one month mountains of typhoon debris that would have taken at least six months to dissipate. Now, that’s governance.

MANUEL PAOLO A. VILLAR
As the Wharton-educated Chief Financial Officer of Vista Land and Landscapes (VLL), the largest homebuilder in the Philippines with 250,000 homes, he infuses the rigorous discipline of financial management and a creative and innovative eye to enable the company to stay ahead of its competitors while helping put the P53 billion enterprise on a firmer financial footing and more sustainable growth pattern. An IPO on 2007 was hugely successful, raising P14 billion which will help fund expansion in the provinces. VLL has four distinct brands of business units -- Brittany, Crown Asia, Camella Homes, and Communities Philippines, and a vast housing portfolio, from low-cost to luxury houses.

REGHIS M. ROMERO II
After turning Tondo’s Smokey Mountain dump, from a symbol of national poverty and misery into a decent housing community for the masses and a hub for business and having built the world-class Harbour Centre Port Terminal, he has turned his sights on mass transit with an elevated railway from Manila to booming Cavite and a railway from Balintawak to Central Luzon. He is modernizing the Manila North Harbor to enhance its status as the premier domestic port and spur trade and commerce in the country. North Harbor, in turn, will be linked to expressways north and south of Manila. In between, he has been building low-cost houses for the poor and the lower middle class, greatly enhancing the life and lifestyle of many Filipinos.

JOSE RENE D. ALMENDRAS
As the president and CEO, he must enhance substance and performance in the area of sustainability and poverty alleviation at Manila Water which has been cited as one of the Ten Greenest Companies in Asia and which is being used as a template by the Ayala Group in making sustainability a core value of its business. Manila Water brought safe and reliable drinking water 24/7 to one million poor Filipinos in its concession area and gave business contracts, such as making street signs or painting jobs, to the communities rather than to traditional suppliers.
Ayala now puts sustainability above profit-making and looking at financial statements and balance sheets.

REYNALDO G. DAVID
A veteran banker of more than 40 years, he made state-owned Development Bank of the Philippines very liquid (awash with cash), intensely focused, and immensely profitable. DBP did better financially than many of its peer banks in the private sector. He also brought the bank into relatively new and innovative areas of banking such as financial advisory, mergers and acquisitions, investment banking and of late, Islamic banking.
He did so even while coping with difficult economic scenarios and remaining true to DBP’s mission, which is to promote the country’s development by providing relatively medium and long-term, reasonably-priced financing to major as well as small and medium enterprises and building the country’s logistics network and nautical highways. The Holy Grail of DBP, he likes to explain, “is development banking, rather than commercial banking” which means the bank can lose money as long as development takes place since the bottomline is benefit to the people. It did not lose money.

DELFIN J. “DING” WENCESLAO JR.
He has 45 years of construction experience, from road, highway and bridge construction, foundation piling, land reclamation to businesses like land banking, real estate development, and mass housing. High-caliber service and quality work are his hallmarks. His D.M. Wenceslao and Associates, Inc. (DMWAI) built World Bank-financed highway projects in Iloilo and Panay and the major roads, drainages, utilities and bridges in Parañaque’s 204-hectare Asean Business Park.
His specialty is forming construction consortia to handle super infra projects, the latest of which is the P5-billion, 88-km North Luzon Expressway extension from La Paz, Tarlac to Rosario, La Union, cutting travel time to Baguio by several hours. Consortia system creates infra assets at zero cost to the government which in turn generates tax revenues and jobs, thus stimulating the economy.
He believes construction is a major sector of the economy, essential to infra development and as training ground for some two million skilled Filipino construction workers deployed abroad.

BizNewsAsia turns 8 this year

2009-11-30T10:33:00.000-08:00

Dec 1, 2009

BizNewsAsia marks its 8th year

The magazine I founded and edit, BizNewsAsia, marks its eighth year tomorrow, Dec. 2, as the Philippines’ largest business newsweekly, with a gala dinner at the Hotel Intercon Makati.

President Arroyo and Vice President Noli de Castro have confirmed their attendance as did the country’s leading tycoons and taipans and the shakers and doers in the real estate business.

BizNewsAsia has unrivalled high-end readership with unbeatable decision-making and purchasing power. Its biggest selling issue is the annual BizNewsAsia Power 100, a listing of the most influential and powerful Filipinos – in business and in politics. It sells 35,000 yearly. Echcopy is read by ten people on the average. BNA thus has a pass-on readership of 350,000.

As it has done in the past two years, BNA will celebrate excellence by giving awards to outstanding tycoons, this time in three categories – BREW or the BizNewsAsia Who’s Who in Real Estate, Business Icon Gold (BIG), and Business Excellence.

The Business Excellence trophy goes to Henry Sy Sr., chair and founder of the SM group of companies; Ramon S. Ang, president and COO of San Miguel Corp., Andrew Tan, chair and CEO of Alliance Global; and Felipe Gozon, chair and CEO of GMA Network, Inc.. The Business Excellence trophy is given heads of businesses for the consistent quality of their product or service or the success and viability of their business model.

The BIG Award goes to Washington SyCip, founder of SGV, the Philippines’ largest accounting and professional services firm. The BIG Trophy goes to individuals who because of their record in business or enhancing the economy have become inspirational models or icons, the gold standard.

The BREW Awardees are:

Vice President de Castro, Teresita Sy, vice chairman of SM Investments Corp. and chair of BDO; Reynaldo David, president of the Development Bank of the Philippines; Raul Concepcion, chairman of the Consumer and Oil Price Watch, Paolo Villar, CFO of Vista Land and Landscapes; Ambasador Amable King Aguiluz, founder of Asia’s largest school network, AMA; Antonino Aquino, president of Ayala Land; Rene Almendras, president of Manila Water; Reghis Romero, CEO of RII Builders; Elizabeth H. Lee, president of the Chamber of Automotive Manufacturers, Inc.; Tourism Secretary Ace Durano, Albay Governor Jose Salceda, Camarines Sur Governor LRay Villafuerte, Marikina Mayor Marides Fernando, leading green architect Felino “Jun” Palafox; Bansan Choa, CEO of I-Remit; and Ding Wenceslao, CEO of Wenceslao and Associates.

The BREW awardees are people who have made their mark in real estate or have contributed immensely to enhancing the lifestyle of Filipinos.

The BNA anniversary also celebrates the economy’s resilience and growth amid the global financial crisis that plunged two-thirds into a recession.

Credit for that goes to President Arroyo. In nine years at the presidency, she rebuilt the economy, made it globally competitive, doubled its size, doubled per capita income even as 18 million more Filipinos were born, scored 35 quarters of consecutive growth – the longest and best economic expansion this country has ever witnessed.

She linked the archipelago from north to south with three major nautical highways. Electricity reaches nearly 100 percent of the barangays. Wireless phone coverage is 98 percent with 75 percent of 90 Filipinos having a cellular phone (those who don’t are too young to have it).

The President also achieved a regime of record-low interest rates, record low inflation rate, record government revenues, record government spending on infra, and very high savings rate.

She helped create an industry that never existed when she became president in 2001 – the call center and BPO business. Today, the BPO business employs more than 400,000 and generates $5 billion in revenues.

And of course, during her presidency, the number of OFWs tripled to more than ten million today and they remit yearly $17 billion or P816 billion, more than half of the P1.5 trillion national government budget.

Let me then congratulate President Arroyo. Not many people want to give her credit for what she has done. She undertook many reforms which were a bitter pill, initially to both business and the people, and they hated her for it.

In due time, history will be warmer and kinder to her.

biznewsasia@gmail.com

Rebuilding Marikina

2009-11-22T23:51:00.000-08:00

Before the Great Flood of Sept. 26, Marikina was one of the most dynamic and progressive cities in the Philippines.

For 17 years, under Mayor Bayani Fernando from 1992 to 1998, and his wife, Mayor Marides, from 1998 to the present, Marikina underwent a massive if an almost magical transformation.
From a sleepy town with annual income of just P80 million in 1992, Marikina became a city with a robust record income of P1.5 billion in 2008.
Before 1992, it appeared Marikina was sleeping the sleep of the dead for 362 years, despite its huge size – 2,000 hectares, twice the size of Makati, --- and proximity to Quezon City, the national capital. The pueblo that is Marikina today was visited by the Jesuits in 1630.
Marikina became a model on how to build a small village by the riverbanks into a city that is a standout for being business friendly, technologically current, environmentally sensitive, extremely peaceful, and with a remarkably effective governance.
This may explain the influx of big investors into the city capped last year by the opening of SM City Marikina. All the country’s top taipans have a factory or facility in the city. Tourists flock to Marikina although it is not even considered a tourist destination.
Parks mushroomed like sari-sari stores. Trees were being planted with precision and persuasion. Marikina was close to achieving its vision of being squatter-free, despite population hitting close to 500,000.
As Mayor Marides Fernando told the city residents in February this year, “over the past years, our city has effectively leveraged four key assets – infrastructure, innovation, human capital, and quality of place.”
Key to that achievement is a form of governance which, according to Mayor Marides, “encourages growth, embraces reform, and celebrates creativity.”

In 2003, the Metrobank Foundation cited Marikina as one of the three most livable cities in Metro Manila. In 2003, it was the third most competitive city in the Philippines and the most competitive in the national capital region, according to the AIM.
In 2006, Marikina was the most competitive metro city in the Philippines, according to again, AIM. Marikina’s next goal was to become the Model City in Competitiveness in Southeast Asia by 2015.
Marikina was well on the way to being the Philippines’ Little Singapore when a typhoon and tragedy struck on Sept. 26. Ondoy flooded most of the city, caused unprecedented devastation and loss of lives.
From the ruins of the flood, Mayor Fernando must now rebuild Marikina.

biznewsasia@gmail.com

Manny Villar will be President from Day One

2009-11-22T23:49:00.000-08:00

Manny Villar will be President from Day One

By Antonio S. Lopez

For Senator Manny Villar, the next president should have two endearing qualities that more or less guarantee his success as CEO of the Philippines. One is being born poor. Another is experience, particularly experience in managing a large enterprise and in managing a significant political office.
Villar is a compelling rags-to-riches story. He was born 60 years ago to poor parents in Tondo. His father was from Iloilo, his mother from Pampanga. They were fish vendors. “I lived as a poor boy for the early part of my life,” he relates.
He became a fish vendor too. He would wake up early in the morning to accompany his mother to Divisoria, the poor man’s wholesale mart.
There wasn’t much of a future in it. So his best chance was to get a good education. He got that at the University of the Philippines where he finished business administration. At UP, he met a classmate, Cynthia Aguilar, his future wife. Villar completed MBA, too, at UP.
An accountant, he got employed by an investment house. He saw no future in it. He went into business. He began by delivering gravel and sand. At BF Homes Parañaque, he saw the potential of odd-sized lots, bought them, built houses on them, and sold the house and lot packages to newly married couples.l That’s how he made his first million. And the next million. And his billions. The rest, as the cliché goes, is history. By 1997, his property company was worth more than $1 billion, making him a veritable billionaire—the first Filipino brown billionaire, in dollars.
If Villar relishes his poor background, it is to inspire others. And to tell voters to be choosy in the coming elections.
“To experience poverty and hunger is something else,” Villar muses, his voice somewhat muted. “Not knowing whether or not you will have something to eat the following day, not knowing where to get money to go to a doctor, seeing a loved one unable to get good medical treatment because you have no money, not knowing where to get the next matriculation fee. These things I experienced.”
Why is that background relevant? Because the economy has been mismanaged, he replies.
“When you talk about choosing a president, when we make mistakes that’s all right, we don’t feel it because the A (income class) will still eat. But make a mistake in electing a leader (and) it’s the poor who suffer. This spells the difference whether they will eat or not, whether they will be getting medical treatment or not, whether they will get jobs or not. That is why I feel that we have no room for just using emotions here.”
Villar has been spending a fortune in TV infomercials not as an ego trip but to make public the story of the masa boy who made good yet is also awesomely good looking, people often mistake him for a coño or mestizo kid.
He says: “There is this unique advantage of having experienced poverty, having come from a poor family. I’ve experienced what I have been preaching, sipag at tiyaga. At the same time, I can present my credentials as an experienced person. I can show my experience and say, as a private sector leader, I rebuilt from nothing my business which became the largest; I became Speaker of the House, became Senate president.”
Villar likes to point out that among the declared candidates for president, none has his unique experience. The pauper who became rich through hard work and perseverance, ran for congressman of a suburban town, built that town (Las Piñas) plus the next town, Muntinlupa, into a city, was elected Speaker in 1998 and Senate president in 2007—the only political leader since the War to have done so. “That combination is something that I’m very proud to show our people,” he points out. Also, he built 250,000 houses (more than any other individual) most of them low-cost, and planted one million trees, just like Senator Loren Legarda.
The current leader, per SWS surveys is Senator Benigno “Noynoy” Aquino III. His ancestry is remarkable. His grandfather, Benigno Sr. was a senator. His father, Senator Ninoy Aquino, was a martyr and hero. His mother, the widow-turned-president, Corazon Cojuangco Aquino, is supposedly the Mother of Democracy, the Joan of Arc who saved the country from tyranny. When she died last August, a million people turned out to pay homage.
But then, Noynoy never had a problem every poor boy had—waking up wondering whether he would have something to eat. His problem—his mother’s problem—was, one of choice, “’Noy, ano ang ulam mo?”.
After finishing economics from Ateneo, Noynoy easily got a cozy job given by a supporter of the family, Tony Gonzalez of Mondragon. He became a salesman for Nike shoes, shorts and shirts. Of course, you don’t become a billionaire doing so. Gonzalez became a billionaire, but not from selling Nike accessories. He made a pile selling golf shares in Clark. He later went into bankruptcy.
Noynoy has never managed an enterprise, not even a household, because he has none. He is the son of a hacendera, his Cojuangco clan being owner of the 6,300-hectare Hacienda Luisita, a plantation bought with government loan on condition it would be cut up for the tenant farmers later. His running mate, Senator Mar Roxas, is also the son of a haciendera, being the sole heir to the vast Araneta Cubao complex and some sugar plantations. Mar is also the grandson of a former president and the son of the late Senator Gerry Roxas.
The Philippines is the 12th largest country in the world, with a population of 90 million, one of every four of whom are dirt poor. The government is the largest Philippine corporation with a budget of P1.5 trillion, a deficit of P300 billion, and a work force of two million, not a few of whom do not have a culture of integrity and genuine public service.
To be sure, Villar was almost bankrupted by the 1997 Financial Crisis, having accumulated more debts than he could pay. But he revived his real estate conglomerate. His CMP Homes, heavily in debt, became Vista Land and Lifescapes. It conducted a hugely successful IPO in 2007.
As of Sept. 30, 2009, Vista Land had assets of P52.8 billion, net worth of P34.5 billion, retained earnings of P7.32 billion, nine-month revenue of P8.5 billion, net income of P2.12 billion and as of Oct. 11, market cap of P17.4 billion. Villar’s family owns about 65% of Vista. He is worth P11 billion.
Vista Land has four brands—Camella, Communities Philippines, Crown Asia, and Brittany, each catering to a particular income segment. Vista Land remains the biggest home builder for the poor and the middle class.
Thus, Villar has faced a crisis at least twice in his life. The crisis of childhood poverty, which he overcame. And the crisis of business bankruptcy, after 1997, which he also overcame. Now he wants to tackle the biggest challenge of them all – how to manage the Philippines which President Arroyo herself has described as the most difficult country in the world to manage.
If elected, Villar vows to be president from Day One. “There is no on-the-job training,” he says. His administration won’t tolerate corruption, will focus on remedying an expected P300-billion deficit in the P1.5-trillion national budget, spend heavily on agriculture, especially irrigation, and build a culture of entrepreneurship to create small businesses and generate jobs.
He reckons the economy must grow 7% to 8% a year to create the two million jobs a year to reduce unemployment and poverty.
In 2010, Villar sees a very serious fiscal crisis. “I’m looking at P300 billion, possibly it could hit P325 billion-P350 billion deficit, from less than P100 billion in 2008.”
“If we will have an OJT or an on-the-job trainee, the fiscal crisis is something that could deteriorate. Our country could really be facing very serious economic problems. Our tax revenues have gone down, the efficiency from a high of 17% during the time of FVR (Fidel Ramos) to 12% right now. That 5% drop translates to about P300 billion-P350 billion and that’s a lot. The next president should immediately give the highest priority to this, of bridging this gap. We are recovering from the economic crisis, yes and no, but the next president has no time to practice. He has to start, he has to hit the ground running Day One. He must know how to manage the country.” Says Camarines Sur Governor Luis Raymund “LRay” Villafuerte who has joined Villar’s NP: “You need an experienced CEO for this country, one who has been in business, who built a business from scratch, and a proven leader.”
The next president, Villar warns, “will have a tough first year.” The burden will be considerably lighter, if he were the CEO.

biznewsasia@gmail.com

Obama: The US is a Pacific power

2009-11-22T23:46:00.000-08:00

Obama: The US is a Pacific power
The United States will remain a Pacific power. That is the main message of Barack Obama’s four-nation tour of Asia. His first stop was Japan, followed by Singapore where he attended the APEC summit of 21 economic leaders, before he leapfrogged to China whose emergence as a global economic and military power worries many Americans, and then South Korea.
Obama’s trip is like the return of the prodigal patriarch who has gone astray, done many bad things, wants to make amends and occupy his rightful throne in the household called Asia. Unfortunately for him, somebody else, China, is claiming part of the territory. China is rich and big. It also happens to be Uncle Sam’s biggest lender. If today, China collects the $800 billion of US IOU holdings, Washington DC will beg for mercy. Thankfully for Obama, Japan is also wary of China and looks to the US for guidance.
For the Philippines, Obama sent her charming secretary of state, Hillary Clinton for a 24-hour visit, Nov. 12 and 13. She wowed Filipinos, especially the young, with her wit, intelligence, warmth and remarkable candidness. Because of Hillary, Filipinos forgot that Obama didn’t bother to drop by Manila although the capital is midway between Tokyo and Singapore.
In Tokyo at the Suntory Hall Nov. 14, Obama defined America’s strategic stake and gameplan in Asia. He said “for generations we have also been a nation of the Pacific. Asia and the United States are not separated by this great ocean; we are bound by it. We are bound by our past -- by the Asian immigrants who helped build America, and the generations of Americans in uniform who served and sacrificed to keep this region secure and free. We are bound by our shared prosperity -- by the trade and commerce upon which millions of jobs and families depend. And we are bound by our people -- by the Asian Americans who enrich every segment of American life, and all the people whose lives, like our countries, are interwoven.”
Obama’s own life is a part of that story. As a boy, Obama visited Japan where he looked at the great bronze Amida Buddha in Kamakura and where he focused more on matcha ice cream.
Obama-san claims to be America’s first Pacific president, whatever that means. He said: “I am an American president who was born in Hawaii and lived in Indonesia as a boy. My sister Maya was born in Jakarta, and later married a Chinese-Canadian. My mother spent nearly a decade working in the villages of Southeast Asia, helping women buy a sewing machine or an education that might give them a foothold in the world economy. So the Pacific Rim has helped shape my view of the world.”
Asserted Obama: “We have a stake in the future of this region, because what happens here has a direct effect on our lives at home. This is where we engage in much of our commerce and buy many of our goods. And this is where we can export more of our own products and create jobs back home in the process. This is a place where the risk of a nuclear arms race threatens the security of the wider world, and where extremists who defile a great religion plan attacks on both our continents. And there can be no solution to our energy security and our climate challenge without the rising powers and developing nations of the Asia Pacific.”
To meet these common challenges, Obama said “the US looks to strengthen old alliances and build new partnerships with the nations of this region. To do this, we look to America's treaty alliances with Japan, South Korea, Australia, Thailand and the Philippines -- alliances that are not historical documents from a bygone era, but abiding commitments to each other that are fundamental to our shared security.”
At his press conference in Tokyo, Obama declared: “Throughout my trip and throughout my presidency, I intend to make clear that the United States is a Pacific nation, and we will be deepening our engagement in this part of the world… We have to understand that the future of the United States and Asia is inextricably linked.”
Under President George Bush, the US lost a lot of respect and prestige abroad. He invaded Iraq by lying about the alleged presence of weapons of mass destruction. He ordered mass arrests of Al Qaeda suspects. He incurred the ire of Muslims around the world, not a few of whom volunteered to commit jihad. The Bush administration engaged in torture of non-combatants and maintained detention cells abroad where human rights violations were the norm among US soldiers.
And then the financial meltdown happened, triggered mainly by the greed and recklessness of American banks and their executives. Large US companies that should have been allowed to fall were rescued with taxpayers’ money even as millions of Americans lost their homes and suffered massive declines in wealth.
biznewsasia@gmail.com

Noynoy Aquino: A Presidency by Osmosis

2009-11-22T23:44:00.000-08:00

A presidency by osmosis

You won’t believe this but the reason why 44 percent of survey respondents of Pulse Asia will vote for Benigno “Noynoy” Aquino III is because they think he is “clean” (malinis).
In the Pulse Asia Oct.22-30 survey, the respondents claimed they would vote for a presidential candidate because of: “hindi kurakot/malinis” (not corrupt/clean), 21.2 percent; “may nagawa, may magagawa” (has done something/could do something) 14 percent; “para sa mahirap, galing sa mahirap” (for the poor/ came from poverty) 12.23 percent; “tumutulong” (helpful) 12 percent; “reputasyon ng pamilya” (family reputation) 4.2 percent; mabait (kind) 3.87 percent; “may alam/sanay sa pamamalakad/may karanasan” (knowledgeable, an experienced manager, experienced) 3.6 percent; and “maka-Diyos” (God-fearing) 3.2 percent. The total is 74.1 percent.
There are two conclusions you can make from these figures. One is that the biggest answer is don’t know 25.9 percent (100 minus 74.1 percent). The other is that being clean (21.2 percent, that’s Noynoy) has a higher premium than performance (14 percent, that’s either Manny Villar, Erap Estrada or Gibo Teodoro), experience (3.6 percent, that’s Villar, Estrada or Teodoro), or being pro-poor (Estrada) and having been poor (Villar).
Voters in effect are saying you may be stupid or inexperienced but as long as you are perceived to be clean, then we will vote for you. However, being stupid or inexperienced or both can mean you are incompetent.
In other words, in the 2010, voters will prefer incompetence over performance, intelligence and experience. To me, that is an insult to the Filipino voter. Which makes the Noynoy Aquino presidential candidacy frustrating it not outrageous for many concerned Filipinos.
Noynoy has little to show in his nine years as congressman and barely three years as senator to deserve to be elected president. His only claim for presidential gravitas is having had Ninoy Aquino, a martyr, as father, and Cory Aquino, a beloved president, as mother. In effect, he is offering a presidency by osmosis.
Osmosis, as you know, is the movement of water from an area of high water potential to an area of low water potential to produce energy, without input of energy. It is producing something without much effort or talent just because of your family background.
Now, ordinarily, clean means honest. Honest as in never been tainted by scandal or corruption. “Clean” could also mean clean, as in tabula rasa - -nothing there. Or no record of performance.
Noynoy may or may not be aware of it but there is a text and joke brigade propaganda against him implying that he has nothing in between. This insidious image is bolstered by the fact that Senator Mar Roxas keeps taking up the cudgels for him on many issues. Mar is not only a good running mate, he is also a good and articulate spokesman. He will make a good presidential spokesman or a presidential spokesman for economic affairs, ala Gary Olivar for GMA.
For a retort, Noynoy may pick up Manny Pacquiao’s oft-repeated insistence, “hindi ako bobo” (“I am not stupid”).
Noynoy is not stupid. I have known him since August 1983 after Ninoy Aquino’s assassination. He has always come across as an intelligent, decent, courteous gentleman. This is not to say he is not capable of meanness or double-dealing.
Noynoy has after all the genes of a Cojuangco and an Aquino – two of the most enduring political families in the Philippines. Some factions of the two clans are capable of rent-seeking and using political connections to gain a juicy contract or a lucrative concession.
The 6,300-hectare Hacienda Luisita was bought by the Cojuangcos (Cory Aquino wing), with a loan from the Central Bank on the condition that the family would cut it up and give parcels of it to sugar tenants. If the Cojuangcos then were not politically powerful or influential, do you think they would have gotten the loan?
If Cory Aquino were not president, do you think the family would be able to insert a vague provision in the Constitution putting “tenants” and “workers” in the same category as tenants as far as agrarian reform is concerned? And because of this provision, the Agrarian Reform Law was crafted in such a way that agrarian reform can be undertaken two ways – one for tenants and another for workers.
The Hacienda Luisita tenants became “workers” overnight. Because of the change in their status, the tenants were no longer entitled to land but to shares of stock since a company does not usually give away land but can give away shares of stock.
And since the “workers” had no money to buy the shares with, they had to pay for them by installment, and while the tenants were paying for the shares by installment, the voting rights for the shares were assigned to the Cojuangco family. In effect, the Cojuangco family, Cory wing, never lost control of the hacienda.

biznewsasia@gmail.com

"Armed and dangerous" and an ADB bureaucrat

2009-11-22T23:43:00.000-08:00

Nov. 23, 2009

“Armed and dangerous”

“Armed and dangerous” is how the police describe a Filipino-American, Jason Ivler. He has been implicated in two major killings. Both his victims involved ranking officials of Malacañang, the Office of the President, the center of political power in the Philippines.
The way I understand “armed and dangerous”, it is a code word for “kill him, if necessary”, that is, because the suspect tried to shoot it out with lawmen or was trying to escape while shooting recklessly into the air or at the pursuing lawmen. Anyway, “armed and dangerous” gives policemen a lot of flexibility in handling a suspect, especially of the Jason Ivler type and especially, if the reputation and prestige of the much-maligned Philippine National Police are at stake, which is the case in the Ivler criminal offense.
Ivler’s first victim was former Congressman Nestor Ponce, a good friend of mine and the brother-in-law of a classmate of mine in high school. Ponce and his wife, Evangeline, were driving to Tagaytay one early Sunday morning in August 2004 to pray that their son pass the bar, when his Isuzu trooper was slammed by a wayward Land Cruiser coming from the opposite or northward side of the C5 Ortigas flyover. Ponce died instantly, from massive loss of blood due to injuries. He was the presidential adviser on housing of President Arroyo. The driver of the Toyota – Jason Ivler.
The other victim is Renato Victor Ebarle Jr., son of undersecretary Renato Ebarle Sr. of Malacañang. The young Ebarle was shot pointblank by a man who looked like Ivler on Nov. 18 at a usually busy intersection in Quezon City. A policeman saw the incident and gave chase to the killer who disappeared in one of the garages in upscale New Manila.
The suspect’s car had a diplomatic plate which later was traced to a British economist working with the Asian Development Bank. The Brit, who goes by the name Stephen Pollard, is the stepfather of Ivler. Now, ADB staff, especially, if they are foreigners, carry what is euphemistically called “diplomatic immunity” –- a code word for being able to bring imported goods into the country tax-free and for committing minor traffic infractions, like illegal parking, without being bothered by the police. But a murder? How could a large country middle-class country like the Philippines (No. 12 in the world in size of population) sanction a murder in the guise of diplomatic immunity?
But that is exactly what the British bureaucrat of ADB did -- invoke diplomatic immunity in a murder involving a car that carried his name and his personal blue plate. He went to the police station, accompanied by a nattily dressed lawyer, with the air of haughtiness and contempt only a dirty British colonialist in old India could sport. He refused to cooperate with police investigators whom he treated like they were born yesterday. This is the kind of arrogance that in other developing countries with very high self-esteem would trigger a national outrage and even a revolution.

The ADB is morally bound to convince its so-called economist to cooperate. ADB has had the habit of lecturing borrowers like the Philippines on such human values like equality before the law, good governance and no-corruption. Such moralizing is in exchange for millions of dollars of loans that the Philippines doesn’t actually need. How much does the ADB extend in loans to the Philippines annually? $2 billion? How much do overseas Filipinos remit to the Philippines annually? $17 billion.
ADB should be the last institution on earth to exploit a country’s weakness as a soft state. The bank itself is a massive failure. When it first opened shop in Manila, more than 30 years ago, the Philippines was the second most prosperous country in Asia, after Japan. I used to pound the ADB beat in the 1970s when it was still in Makati. It seems to me its values deteriorated over the years and I will give you a hint why.

More than three decades later, the number of poor Filipinos actually tripled, to 30 million, and many consider the Philippines an economic basket case and a soft state – unable to enforce its laws, instill discipline among its citizens, and earn the respect of people working in places like the ADB, whose tennis court is ground zero for the worst pollution in the Philippines.
“Soft state” is a Myrdal concept. This refers to governance system, plagued by corruption and rent-seeking. Myrdal viewed this issue as one of the greatest barriers to economic progress in developing nations and advocated dramatic government reform for struggling countries.

It’s your turn to speak, ADB.

biznewsasia@gmail.com

Life in the time of meltdown

2008-10-27T12:28:00.000-07:00

Life in the time of meltdown

It seems we are in for a long and dreadful economic slowdown. In the Philippines. In Asia. In America. In Europe. Throughout the world.

The International Monetary Fund forecasts economic growth as measured by the rise in the Gross Domestic Product (GDP or the total output of goods and services in a given year) to be 4.4 percent for the Philippines during 2008 and 3.8 percent during 2009. The 4.4 percent 2008 GDP growth will be the lowest for the country in six years and the lowest among the ten member countries of the ASEAN, except Brunei. In 2009, however, Singapore will grow slower than the Philippines – 3.5 percent vs. 3.8 percent.
Still, the 4.4 percent 2008 GDP growth remains far better than the 2.8 percent average growth during 1990-1999 which was one of the worst decades for the Philippine economy. Having gone through the worst, Filipinos should be able to breeze through 2008 and 2009 suffering damage no worse than having shallower pockets and a more frugal lifestyle.
According to the IMF, developing Asia will grow 8.4 percent in 2008 and 7.7 percent in 2009, down from 10 in 2007 and 9.9 percent in 2006. China will grow by 9.7 percent in 2008 and 9.3 percent in 2009, down from 11.9 percent in 2007 and 11.6 percent in 2006. The US will grow by 1.5 percent in 2008 and by 0.1 in 2009; Japan by 0.7 percent in 2008 and 0.5 in 2009, down from 2.1 percent in 2007 and 2.4 percent in 2006. The world output will grow by just 3.9 percent in 2008 and 3.0 percent in 2009, down from 5.0 percent in 2007 and 5.1 percent in 2006.
There has never been a time like it. My advice: Enjoy it. Make the most of it. During times like these, the fixed income people will do better than the so-called entrepreneurs or businessmen. If you have a well-paying job, keep it. Work hard. Be useful. Be productive. Be creative. This is no time to malinger or absent yourself from work. As a professional manager, you will do better than the SOB – son of the boss.
As I keep saying, an economic slowdown will be good for the Philippines. It will force Filipinos to return to basics. Save rather than spend. Buy the cheaper goods rather than the exorbitantly priced models.
At Greenhills, you can buy a decent brand-new Nokia phone with SIM card included for just P1,500. Compare that with the P50,000 being charged for an iPhone which is nothing more than a glorified iPod MP3. Panasonic plasma tv sets are selling at 30 to 40 percent lower than the overpriced models of Samsung and Sony. Buy the A650 Panasonic series. They are as good, if not better, than the Series 6 of Samsung and the W series of Sony. True, Panasonic panels are plasma, not LCD, unlike those of Samsung and Sony. Plasma tvs are good in the dark and watching movies is still best in the dark. By the way, do not buy HDMI Blu-Ray DVD players. They cost eight to ten times the ordinary HDMI players.
There has never been a time like it. My advice: Enjoy it. Make the most of it. During times like these, the fixed income people will do better than the so-called entrepreneurs or businessmen. If you have a well-paying job, keep it. Work hard. Be useful. Be productive. Be creative. This is no time to malinger or absent yourself from work.
cregular HDMI players.
Izod has been selling 100 percent cotton non-iron dress chino pants at 50 to 60 percent off. They are much better designed and look better on you than Dockers or Armani pants. Nikon’s D40 cameras are as good and as competent as the Nikon D300 or D700 at a third of the price. The Nikon D700, whose body seems to have been crafted from a tank, is as heavy as a checked-in luggage. Heavy too is the price – at least P125,000, body only. The Mazda3 drives as excellently as the BMW Series 3 at a fifth of the latter’s price, with a better service to boot. The Nissan Patrol to me remains the best buy in high-end SUVs. They are priced just half of and are far more durable than the marquee brands of Europe. You also get better service.
You can have a life and a lifestyle and still have some savings stashed in the bank.
Stocks? Share prices of major Philippine companies are selling at their 52-week lows and below book value. There has never been a better time to invest in stocks than now. Buy chunks of the companies of Henry Sy, Jaime Augusto Zobel de Ayala, George SK Ty, Lucio Tan, Andrew Tan or even Manny Villar at 60 to 70 percent discount. Come the time for annual meetings next year, you will be glad you did because you will be able to heckle these people and ask them to explain just what they did in 2008 that made their companies do so well --- or do so badly.

biznewsasia@gmail.com

Four positive things for the Filipino

2008-10-27T12:27:00.000-07:00

There are four things positive you must remember despite or because of the so-called financial crisis. Oil prices are down 60 percent. Rice prices are down 30 percent. The peso is down 17 percent, from P42 to P49. The real estate business remains robust or is up. There is no way all those four factors can be negative for the economy, for the people, for you and me.

Oil is a bellwether product. It determines the price of your electricity, your diesel, your gasoline and many other things. Oil was $147 per barrel in July. It is now hovering at $60. Utilities–fuel, light and water–constitute about 7 percent of the consumer price index (CPI). For every P100, utilities constitute P7 of expenditures.

Food is even weightier. It is 55 percent of the CPI for low-income families. If food goes down by 30 percent, its contribution to CPI goes down to just 38.5 percent. If oil goes down by 60 percent, its contribution to the CPI goes down to just 4.2 percent so that the total effect of both food and oil to the CPI declines to 42.7 percent, from 62 percent, a drop of 19.3 percent. Multiply the 19.3 percent to the 12.5 percent inflation rate and immediately you bring down inflation rate to single digit.

Since the CPI is also used by the banks, by the telephone, water and cellular companies in pegging their prices or rates, the prices of these services should likewise go down. The only two industries that have refused to respect the law of supply and demand and to down their prices are the giant oil companies and the Meralco. Their pricing is excessive by now. Your local gasoline or diesel price is overpriced by at least P10 per liter or by 25 percent. Your electricity rate is overpriced by at least 20 percent per kilowatt hour.

On the other hand, the 17 percent peso devaluation means an additional purchasing power of P112 billion in the hands of the country’s ten million OFWs. The $16 billion they remitted last year was worth only P672 billion at P42 to $1. This year, when they remit that same amount of dollars it is worth P784 billion. The P112 billion if translated back into dollars is worth $2.3 billion–an amount far bigger than any local rescue fund the Bangko Sentral can assemble if our banks become beleaguered and far bigger than the so-called economic stimulus package of the government.

Now for real estate. It was up almost 22 percent in the first half. Hans Sy tells me demand for the SM residences that sit cheek by jowl with their SM malls remains strong, so strong, in fact, that prices have doubled from two years ago to about P100,000 per square meter. The SM units are small, about 40 sq. m., or P4 million per unit. Two factors explain why they sell well. The OFWs and an emerging phenomenon–people want to live near their places of work or schools.

Don’t believe the BS that OFWs will be hurt by the so-called financial crisis. The Filipino OFWs are unique–highly educated, easily trainable, very skilled, and English speaking and therefore, they will remain in demand. Next to perhaps Mexico, the Philippines is now the largest exporter of expatriate manpower and the world’s biggest earner. Also, in the last five years, the number of OFWs has doubled. So any reduction in income has been made up for by the rapid rise in the volume or number of OFWs.

This year, the Bangko Sentral ng Pilipinas projects remittances of $18 billion from OFWs. Divide that by ten million (the number of OFWs) and you get $1,800. Ten million of the country’s 16 million households have an additional per family income of $1,800 per year or $327 per capita. Add the $327 to the $1,600 average domestic per capita income and you have ten million families having per capita income of $2,000—usually the benchmark income for middle class.

Ten million Filipino families are middle class! Unlike the American middle class whose wealth is built on vapor—house on credit, car on credit, credit card bills on credit, wealth on credit—our Filipino middle class has real assets–a concrete house on a lot averaging 200 sq. m. for which a 20 percent downpayment has been made, a jeepney or a Revo or Innova or an Urvan for which at least 20 percent downpayment has been made and some savings in the bank, an average of P200,000. Now, that’s what I call the real economy.

biznewsasia@gmail.com

Sponsored Links

Buyers beware

2008-10-20T09:02:00.000-07:00

Oct.9, 2008

Buyers beware

If you are buying a condominium, be sure to measure the size of the unit you are buying. A friend of mine bought a unit at Lancaster Condominium on Shaw Boulevard and found to his dismay the unit is about a square meter less than what the developer stated in the contract to sell. My friend is complaining but so far, the developer, Pacific Concord Properties, has been giving him a runaround.

***
I never thought in my lifetime I would see a country going bankrupt. But there it is – Iceland. It is trying to borrow $5.4 billion from Russia because its western neighbors and friends are not willing to lend it money. With a population of about 350,000, Iceland apparently is nothing more than all steam, all glacier, and all volcano. It has no real resources to brag about.
And yet, the western world has consistently rated Iceland the most developed country in the world (meaning the richest), according to the UN Development Index; the fourth most productive country per capita, and one with among the highest levels of economic and civil freedom. In other words, its rankings are nothing more than hot air.
Yet, the same people who have rated Iceland very highly in degree of development and level of economic and civil freedoms rate the Philippines very poorly in degree of development, economic and civil freedoms. The ratings given the Philippines are nothing more than BS.
Another country that should be bankrupt by now is the United States. The US is the No. 1 country in the world in terms of competitiveness, meaning it has the most developed economic and financial system and the highest degree of economic and civil freedoms. Philippines is No. 71. Yet, the US is on the brink of bankruptcy.
TV reports indicate the US government’s liabilities have reached $10 trillion. The size of the US economy is $13 trillion in purchasing power parity. US debts equal the value of its entire economic production in a given year. George Bush is supposed to be the first Harvard MBA president. That guy is the most unpopular president in history and has brought his country to the lowest level of economic despair in 80 years. Should Harvard be blamed? Should his MBA training be blamed? Or the blame is Bush’s and Bush’s alone?
The Philippines has total foreign debts of $54 billion. The size of the Philippine economy is $300 billion. Our economic production can pay for our foreign debts almost six times over. From these figures, you can see who has got more cash and which is the one on a very solid financial footing.
During this 21st century, what is important are people and their intelligence and talent. By this token, Filipinos will conquer the world. The rest of the world is aging and running out of jobs to take care of their young and their elders. The Philippines is getting younger and smarter by the day. And by the way, the Philippines will survive the current financial turmoil. This country has been in a much worse situation and survived mightily.
In the meantime, what do the few banks of Iceland, enjoying among the highest degree of economic freedom in the world do? The banks took the money of the Icelanders and invested n the money abroad in some fancy higher paying derivative investments. When those investments evaporated, Iceland ran out of money.
***
Philamlife has been running daily two-page spread ads intended to assure the public that it is a solid financial institution – “the crown jewel of AIG and has built an excellent brand equity”.
The owner of the jewel, AIG, is gone. It went bankrupt because it bet wrongly on so-called credit default swaps (CDS). The CDS market has risen to $62.2 trillion, nearly five times the size of the US economy. AIG is believed to have bet up to $450 billion in CDS. Then the CDS market collapsed because of the collapse in home mortgages.
CDS is a kind of financial derivative. It provides “insurance” on risky mortgage bonds. If the mortgage turns sour, the insurance company pays for the loss.
Philamlife is reported to be claiming a value of P92 billion for buyers to pay. To me, Philamlife is worth no more than P12 billion. It incurred about P1.5 billion in forex losses derivatives last year, resulting in a 63 percent decline in its profits to P887.6 million from P2.37 billion in 2006.
You are better off buying First Holdings which owns majority of Meralco. First Holdings has a market value of less than P8 billion. You buy First Holdings and you control the Philippines’ largest power distributor and the second largest company in sales.
biznewsasia@gmail.com

Bailout money for the rich, crumbs for the poor

2008-10-20T08:59:00.000-07:00

Bailout money for the rich;
nothing for the hungry poor

Albay Governor Joey Salceda, an economic adviser to President Arroyo, laments that the world’s richest countries, notably the United States and England, are spending a total of $6.8 trillion to bail out banks and investment houses made bankrupt by the financial crisis sweeping through America and Europe.
Yet, when food prices doubled early this year bringing to the precipice of hunger up to 130 million very poor, all these rich countries could scrounge was $850 million to bail these people out of hunger.
“The elite controls governments and in a crisis, they save their ilk first,” sneers Salceda who made his pile as one of Asia’s leading analysts. With the multi-trillion bailouts, the rich countries will be piling up huge debts chargeable to their taxpayers. Salceda frets that “funds for social services and international development will be displaced, causing income inequality to deteriorate.”
How true.
***
That the small people will be the biggest victims of the financial crash in America is amply demonstrated by the way Philamlife is treating its plan holders in the Philippines. Philamlife is the subsidiary of global insurance giant AIG which went bankrupt on Sept. 15 and had to be bailed out by the US government with $85 billion in expensive rescue fund plus another $37 billion later.
A harried mother of three went to Philamlife offices on Dasmariñas, Cavite to inquire if she can cash in her Brilliance University educational insurance. She was told she wouldn’t get anything. Zero. Zilch. For her P87,000 initial payment, she will get a cash surrender value of P1,055 -- but only in the second year.
By any measure, this seems to me like a big swindle. Even banks, if you place a time deposit and want to get out, you pay a termination fee of just 20 percent. With Philam, the pretermination fee is 100 percent. You lose all your money. They take away your money. Just like that. Cannot the Insurance Commission or the SEC do something about this?
What grates the poor housewife is that the people at Philamlife sounded and acted even cold, impersonal, haughty and arrogant. Something like, “if you want your money back, maghintay ka, bruha!”
Wow! And to think that Philamlife is for all practical purposes bankrupt. Its mother company, AIG, owes the US government at least $122 billion, money it cannot possibly raise considering the debts it has piled up, about $450 billion in credit default swaps (CDS) much of it can no longer be converted into cash. To raise money, AIG has to sell its assets including Philamlife.
The sale clearly obscures the outlook of Philamlife. What are the chances of the new owners of Philamlife honoring Philamlife’s obligations?
***
Sen. Chiz Escudero has filed a bill increasing the insurance cover of deposits to P500,000 from the present P250,000. The measure also mandates the Philippine Deposit Insurance Corp. (PDIC) to tighten supervision over banks, check abuses of bank owners and executives as regards pay and bonuses, and ensure regular, prompt and transparent disclosure of financial condition.
The bill affirms the power of the PDIC to invest in banks. This is the Philippine equivalent of a contingent bailout if the financial crisis abroad worsens and starts sweeping through Manila.
In the meantime, our banks and financial houses seem to be on a sound financial footing. Banking, however, is a confidence game. Once a bank loses the confidence of its clients and depositors, the institution, no matter how old, venerable and seemingly stable, can be toppled overnight.
Also, clients, depositors and investors remember who treated them well in good times. And bad.

biznewsasia@gmail.com

Turmoil to last at least a year

2008-10-20T08:55:00.000-07:00

Turmoil to last at least a year

The world remains in turmoil. Share prices in Asia and the rest of the world are nose-diving to their five-year lows.
Meanwhile, capitalist bastions America and England will end up owning much of their banking systems as they reassure depositors and clients their money is safe and prod banks to begin lending to each other.
In true only-an-SOB-knows-another-SOB fashion, banks don’t trust each other. Since they don’t trust each other, banks don’t want to lend to each other although the interest for interbank lending is at near-record high. Since they don’t want to lend to each other, there is no confidence and credit remains in the Ice Age. Since credit is frozen, no manufacturing, no business activity, no housing sale is moving.
The result is an economic paralysis that is bringing the US economy to near recession. In turn, the global economy is in slowdown. Major suppliers of products and services to the USA like Japan, South Korea, Taiwan and Europe will suffer drastic cuts in their growth rates.
The IMF says the US economy grew by a paltry 1.5 percent in the three most recent quarters and will likely contract in the current quarter and into early 2009, “with recession now increasingly likely.”
In America and England, politicians, finance and central bankers took the easiest way to solve the crisis – print and give away taxpayers’ money.
The UK Treasury will inject up to $87 billion into British banks to shore up their capital. It will also guarantee up to $435 billion of borrowings by banks using commercial paper. For its part, the Bank of England will provide cash of $348 billion in Treasury Bills which banks can swap for their less saleable assets. That’s a total rescue package of $870 billion, British style. The UK government had to act fast because share prices of British banks had declined by as much as 40% by October 7, thus eroding public confidence in their banking system.
The US Congress, meanwhile, approved a $700-billion bailout law that will buy so-called toxic assets which were used as collateral for loans that went sour.
The US Federal Reserve doubled to $900 billion the amount of money it will lend to banks on a short-term basis. It will also lend directly to private companies by agreeing to buy their commercial papers or IOUs. The Fed is also buying shares of stocks of banks. In less than a month, the US government has become America’s – and the world’s – largest commercial bank, investment bank, and mortgage lender. Very soon, the US government will also take over ailing General Motors and Ford so they can sell more vehicles. US vehicle sales are the lowest in 16 years.
Or maybe the US government take over Boeing, which has been hit by a strike for a month, so it can sell more planes and compete better with Airbus which is owned and supported by various European governments. For its unique version of free enterprise, the US government has incurred liabilities reaching $10 trillion –money which generations of Americans, including the unborn, will pay somehow.
The IMF says balance sheet repair in the US “will be long and arduous. It will take considerable time before losses are fully recognized, banks are recapitalized, leverage is reduced, and market confidence is regained.” Bank lending, already tight, “is likely to remain tight throughout 2009.” US consumers have less income. House prices have declined five to 17 percent in one year, the deepest since the Depression, and will drop another 10 percent by yearend. More than 10 million households owe more than the market value of their homes. Employment since January has dropped. The average work week has shrunk. Unemployment has risen by a full percentage point. Wages have stagnated. Gas prices remain high. IMF estimates the wealth of US households to be down 10 percent as a ratio of the GDP. US has a GDP of $13.8 trillion.
Intervention has become global. The US Federal Reserve, the European Central Bank and the Bank of England all cut their interest rates by half a percent. They were joined by the central banks of Canada, Sweden, Switzerland, Hongkong, South Korea and Taiwan and Australia. China’s central bank joined the choir and cut its lending rate by 27 basis points, not much but good enough for China to be considered part of the global banking barkada. Among all the countries in crisis or near-crisis, China has the deepest pocket. It has $1.7 trillion in foreign reserves—more than the bailout money combined of UK and the US. The only problem is that $1trillion of that is invested in America.
The IMF says recovery will begin in late 2009 and even so it will be very gradual.

biznewsasia@gmail.com

A crash in confidence

2008-10-20T08:54:00.000-07:00

A crash in confidence

It is now becoming increasingly clear that what the United States is suffering from is not a financial crisis, not a credit crisis, not a meltdown, but a leadership crisis. You can see the global damage of what incompetent leadership can do. The meltdown in confidence in the present American leadership is so deep and so widespread it will take at least two years for confidence to return.
The American public, and indeed, much of the world public, have lost confidence in George Bush, in his vice president, Dick Cheney, in his central bank and Treasury leaders, in America’s banking and financial leaders. Treasury Secretary Henry Paulson lost much credibility when he allowed Lehman Brothers (long-time rival of Goldman Sachs, where he was CEO for many years) to go bankrupt and rescued Bear Stearns, Merrill Lynch and AIG. The closure of Lehman added to the fear of investors which spread worldwide.
Bush and Cheney are the two guys who spent the present value equivalent of $2 trillion to invade and occupy Iraq using a lie – that Saddam Hussein had weapons of mass destruction. And all the while, the enemy they should have been looking for was hiding in Pakistan, in its northwestern frontier. Bush gave the unlamented Pakistani dictator Musharaf $12 billion so he would cooperate. Instead, Pakistan descended into a political and economic crisis.
Bush and Cheney also engaged in mass arrests without warrants of hundreds of suspects, many of them found to be innocent later, and jailing and torturing them in some far away place called Guantanamo. Only the vigilance of the New York Times and the US Supreme Court slowed down Bush and Cheney in committing more mass violations of human rights. This is unprecedented in the history of America.
The irony is that Bush and Cheney didn’t realize that right inside America were the financial equivalent of weapons of mass destruction – the so-called derivatives known either as credit default swaps (CDS) or collaterialized debt obligations (CDOs). The value of CDS rose to a steep $62 trillion, more than the value of the world GDP which was $54.34 trillion in 2007.
Can you imagine that, US banks and financial houses accumulating debt papers whose value is more than the combined economic output of all countries of the world in one year?
Surely, somebody should be penalized for all this recklessness. As it turns out, it is the American taxpayer. Not just the American taxpayer. All the old people whose pension money has just evaporated. All the children of working Americans whose future has now dimmed because their parents have lost their jobs and therefore, the money to send them to school. All of them will suffer. As do all of us here in Asia.
***
I was looking at the stock market prices of some listed companies. Based on their closing prices on Friday, Oct. 10, many of these companies have lost more than half of their market values compared with their 52-week high, opening opportunities for a buy.
Here are some of the price declines (as of Oct. 10, 2008; stocks rose marginally Monday, Oct. 13 so the values still hold) – Ayala Corp. 65 percent; Metrobank 64 percent; Ayala Land 60 percent; JG Summit Holdings 57 percent; RCBC 56 percent; PNB 53 percent; Banco de Oro 50 percent; Bank of PI 49 percent; Meralco 47 percent; China Bank 43 percent; and SM Investments Corp. 43 percent.
The best performer is terms of bucking the trend is San Miguel Corp.. At P49, its share price has lost only 20 percent from its 52-week high of P61.50. Henry Sy’s companies are also holding well.
Surprising to me is the weakness of the Ayala companies Ayala Corp. and Ayala Land as sell as BPI.
In any case, it may be time to go and buy stocks. It is not clear, however, where the bottom is. I feel the market still has a downside of about 20 percent, until after the November 4 US elections. Remember the cardinal rule of stock market trading – buy when blood is in the streets. Blood here meaning carnage and massive losses in values.

biznewsasia@gmail.com

Good news: Prices are down

2008-10-20T08:53:00.001-07:00

Good news: Prices are down

The best news about the so-called global recession is that prices of major commodities have declined dramatically in recent months.
Rice has dropped to about $735 per ton in price from the record $1,038 per ton for the Thai 100 percent grade B set on May 21, 2008.
This week, oil crashed to below $70 per barrel at $69.85, the lowest in 14 months. In just three weeks, oil has tumbled by $40 a barrel. Demand for energy will decline with the slowdown in economic production because of the so-called global recession. There is no recession actually. Global growth in 2009 will be 3.0 percent.
On July 17, oil hit a high of $147. Yet, the 52 percent drop has not been reflected by the local petroleum companies.
After hitting a high of P60 per liter, Manila gasoline should be priced around P30 per liter today. Assuming the peso has devalued against the dollar by 20 percent, the current price should be no more than P36 per liter. So if gasoline is priced at P48 per liter when it should be selling only at P36 per liter, the oil companies are making excessive profits of about 25 percent. What is the government doing about this obvious price gouging? Nothing.
In America, retailers have reflected the 25 percent price drop. Gasoline is now about $3.08 per gallon (3.8 liters in one gallon), down from $4.11 per gallon from last summer (July and August).
The cut in oil prices should also result in lower electricity bills, not higher. The Malampaya gas pricing is pegged to crude prices, as are coal used by local power plants operated by foreigners.
When oil exceeded $100 per barrel, energy began to cost more as a component cost of production than labor. Energy has eaten up about 15 to 20 percent of the cost of producing goods. For households, fuel, light and water (lumped as utilities) were burning up to 20 percent of total household bills, up from the eight percent average.
The sharp price cuts for rice and oil mean a dramatic fall in the inflation rate after hitting a 16-year record-high of 12.5 percent in August 2008. More than half of the consumer basket, measured by the consumer price index, is food (mainly rice) while another seven percent is utilities. The price declines for food and utilities should lop off at least 2.3 percentage points from the inflation rate in the coming months, bringing the rate down to 10 percent, if not lower.
Meanwhile, world prices for steel billets are down 70 percent since May. Major steel producers like ArcelorMittal of India, Severstal of Russia, and Boasteel of China are cutting back production by 10 to 20 percent beginning in the third quarter. Prices of iron ore, copper, and nickel have nosedived 50 percent and aluminum by 30 percent.
What these price cuts, dictated by the law of supply and demand, mean in the short and long run, are much, much lower prices of goods --- of cars, appliances, furniture, and construction materials. This Christmas season, then, when shopping for your long dreamt of plasma or LCD tv sets and DVD player, ask for a discount. Very likely, you will get it.
With prices of most goods down in the coming months, expect a robust Christmas shopping season, perhaps the best in many years.
***
Philamlife President Joey Cuisia called me up the other day (Oct. 16) to protest what I wrote in my previous column, claiming that Philamlife is, for all practical purposes, bankrupt. He said Philamlife is not bankrupt and that it is an institution in the Philippines. Philamlife is being sold by its mother company, the giant New York-based insurer AIG.
I made the bankruptcy remark based on what has happened to Philamlife’s mother company, AIG which went bankrupt on Sept. 15 just before the Federal Reserve took it over with an $85 billion bailout money, plus another $37.8 billion later. AIG has already used up $82.9 billion of the $122.8 billion bailout money.
In New York, AIG share prices have hit a low of $1.25 a share, 98 percent down from the 52-week high of $66.64. AIG’s market cap based on its Oct. 16 closing price of $2.43 per share, is $6.53 billion. At its low $1.25 a share price, AIG was worth only $3.17 billion. Philamlife, reports say, is claiming it is worth $2 billion. If this is true, you are better off buying the mother company, AIG. You get the mother and you get the subsidiary, Philamlife.
Bloomberg quotes analysts expressing doubt that AIG CEO Edward Liddy can garner enough from selling units to repay the government loan.

biznewsasia@gmail.com

Why AIG collapsed

2008-10-20T08:51:00.000-07:00

Why the collapse of AIG
The best explanation on how and why giant New York-based insurer AIG collapsed comes from David Paul of The Huffington Post. In his article, “Credit Default Swaps, the Collapse of AIG and Addressing the Crisis of Confidence” of Oct. 18, 2008, David explains what happened to AIG and why it is now being broken up and sold to pay for huge debts. AIG overexposed itself in so-called credit default swaps (CDS).
David says “credit default swaps are financial products that allows for the transfer of the default risk related to owning a corporate bond from one party to another.”
For example, he explains, “imagine that before the current market meltdown, CalPERS -- the large California public pension fund -- owned $100 million of IBM bonds, but wanted to insure against the risk of a bond default. CalPERS could accomplish this by negotiating a $100 million, five-year credit default swap with AIG -- which up until a month ago was a global, triple-A rated financial institution.”
“Under the terms of the swap, CalPERS would make an annual swap payment to AIG equal to -- for example – one percent of the $100 million swap notional amount. In return, AIG would pay CalPERS the amount of any losses that CalPERS realized in the event of a default by IBM. For example, if IBM went bankrupt during the contract period, and bondholders were only repaid twenty cents on the dollar, AIG would pay CalPERS $80 million. And to secure AIG's obligations, the swap contract would require that if AIG were downgraded from triple-A level to below double-A, AIG would post collateral equal to 20 percent of the notional amount of the swap contract, or $20 million.”
Then came the AIG collapse.
David says the AIG collapse “was a direct consequence of AIG's CDS exposure. Four weeks ago, AIG was a triple-A rated insurance company. Today, it is being dismantled. If AIG had large investment losses in mortgage-backed securities, but no CDS exposure, AIG would still be in business today.”
David says AIG's collapse came as a result of the following sequence of events:
“1. In the wake of the decline in real estate prices, the market value of mortgage-backed securities declined. 2. Under accounting rules that were established after the downfall of Enron -- implemented to require rapid disclosure of investment losses -- AIG marked down the value of its mortgage-backed securities portfolio. 3. These investment losses resulted in a reduction of AIG's capital reserves -- the core measure of its financial strength.  4. As a result of the decline in AIG's capital reserves, Standard & Poor's and Moody's Investors Service downgraded AIG from triple-A to the single-A level. 5. These rating downgrades to the single-A level triggered collateralization requirements under AIG's CDS contracts.  6. The amount of the collateral that AIG had to produce under its estimated $450 billion of CDS contracts approximated $100 billion.
“And AIG did not have $100 billion in available funds.
“This was the explosive event that destroyed AIG. It was not the market losses on its investments in mortgage-backed securities. It was not payouts on CDS contracts where default events had actually occurred. It was a collateral call.
“The AIG story illustrates two important aspects of the current crisis of confidence within the financial markets. First, AIG's collapse in a matter of days resulted from the collateral requirements under the terms of contracts that are opaque, unregulated and difficult to track on corporate financial statements. As Buffett and others have suggested, the risk in the AIG derivatives portfolio was explosive -- and ignored until it was too late.
“Second, the AIG story illustrates how a collateral call under a CDS contract can have the effect of positioning the CDS counterparty -- the institution on the other side that claims rights to the collateral -- senior to the AIG policy holders and bondholders.
“As US and European central bankers are working to define a collective strategy to rebuild confidence in the financial system and to reinvigorate inter-bank lending, the destabilizing impact of the CDS market remains one of the central problems to be addressed.
“The problem seems straightforward. After the AIG collapse, how does one institution trust its exposure to another? If CitiBank seeks a loan from JPMorgan, how does JPMorgan know whether some event might be looming that will result in a collateral call under some of the myriad derivatives contracts to which CitiBank is a party, a collateral call that in a matter of hours could bring Citibank to its knees.”

Now, my good friend Joey Cuisia insists AIG didn’t go bankrupt. AIG’s Philippine subsidiary, Philamlife, also did not go bankrupt, he asserts. I leave it to my readers to make their own conclusions.

biznewsasia@gmail.com

The food crisis; Smart phone's lousy service

2008-05-18T05:45:00.000-07:00

The food crisis, Smart’s lousy service

In my previous column, I wrote about the triple whammy of credit crisis, food crisis, and the energy crisis.
The worst of the three is the food crisis. World cereal stocks are at their lowest in 30 years. And there is little prospect of them being replenished what with global warming, the shift of agricultural areas to biofuel, simple negligence, and global panic over dwindling food supplies.
In Bangladesh, two floods and a devastating typhoon further impoverished 60 percent of the poor who spend 60 percent of their income on rice. Workers have gone on strike to demand higher pay to cope with rising food prices. They see their government as corrupt and unable to meet the emergency. The army is effectively in control. That Bangladesh situation, a template for disaster, could happen here.
Even China, which has grain reserves of 30 to 40 percent of its production or up to 200 million tons, has begun to worry. Using its vast foreign reserves ($1.5 trillion as of last count), China last year went on a buying spree for wheat. So now it has surplus wheat. Manila wanted to buy some of it (to prevent the local pan de sal from shrinking further), but was refused, a sure sign that Beijing is starting to panic.
Normally, you need a buffer of 17 to 18 percent of production to ensure adequate supply. So if you need 12 million tons of rice, you have to store at least 14 million tons of supply to guard against speculation, hoarding and disasters like a major typhoon or flooding.
As it is, we don’t even have the 12 million tons. So the effective shortage is not two million but four million tons. The government has contracted to import 2.7 million tons. Despite that, the rice queues have not disappeared. They have lengthened, widened and broadened. The possibility of riots is now there, the assurances of the Defense Secretary Gilberto Teodoro, notwithstanding.
Famine or mass starvation is now staring us in the face. Food is 55 percent of a Filipino household’s average income. Last year, per surveys, some 16 million Filipinos said they missed a meal at least once in the previous three months. That was when rice was easily and at P18 per kilo.
Rice is available, but at P30 a kilo, a 66 percent increase. Using past experience, the 16 million who said they missed a meal last year could conceivably swell to 26 million – the numerical equivalent of local mass hunger or starvation.
The World Bank estimates there are one billion people who live on $1 a day – the universal measure of abject poverty The Economist estimates some 100 million more will join the ranks of those in absolute poverty if food prices rise by 20 percent, and they have.
Even those who earn more than $1 a day will be hit hard. The Economist says the so-called middle class in poor countries will give up health care and eating meat to be able to eat three meals a day. The middling poor will pull out their children from school and stop eating vegetables to be able to eat rice. Those who eat three meals a day will reduce intake by one or two meals to just one meal a day.
The effect is malnutrition on a large scale. A malnourished population becomes illiterate and unproductive And illiterate population is an angry people. And an angry people is bad for democracy. So rice is literally the future.
***
I have often wondered why PLDT Smart has very few (less than two percent of total subscribers) or post-paid or business subscribers. Now, I know why. The answer is bad service. I don’t get the P3,500 I pay monthly as a post-paid Smart subscribers.
At Greenhills Smart, I popped in last April and was made to get a queue number three times, first to be entertained for my query for SIM replacement, second to pay my bill, and third to see if I could be given a complimentary phone for “loyalty”. Twice, I was asked for an ID by two Smart people who know each other and are seated only four feet apart, and knew that I have been in the store for more than 30 minutes. You don’t feel like a VIP for being loyal and they distrust you and make you fill out all kinds of documents as if you are applying for a US or Japanese visa.
biznewsasia@gmail.com

Rice prices highest in 20 years

2008-05-18T05:44:00.001-07:00

Rice prices highest in 20 years

The Food and Agricultural Organization (FAO) rice price index (with 2000 as base year) reached 142 in October 2007, the highest in 20 years. In 2007, the rice price index was up 16 percent over 2006. Yet, says FAO, the rise was small compared with agricultural commodities such as wheat and dairy products.

Rice available for trade is now limited, 30 million tons, a measly 1.7 percent increase from 2006. Egypt imposed an export tax on rice, India restricted non-basmati rice export, Viet Nam imposed export quotas.

FAO notes increased imports by Bangladesh, North Korea, Indonesia, Nepal and the Philippines “which would help them overcome severe domestic supply shortages, and in some cases, would be reaching them in the form of food aid.” Thailand is the only country with ample rice supplies for export.

The aromatic Japonica rice rose 24 percent, reflecting limited supplies in India and Pakistan. Export prices of lower quality Indica rice were up 18 percent. Major rice producers China and Pakistan have increased prices while large exporter Vietnam has restricted exports. India, a key player in the international rice market, has imposed an indefinite ban on export of non-basmati rice and pegged its minimum price at $425 a ton.

FAO predicts that “unless the sizes of the crops soon to be harvested are much larger than currently foreseen world rice prices could undergo further increases in the next few months.”

Global paddy production was estimated in 2007 at 643 million tons (429 million tons in rice terms), up marginally over 2006. World average paddy yield remain at 4.1 tons per hectare. In Asia, paddy production was estimated in 2007 to be 585 million tons, up just three million tons.

Bangladesh, China, India, Indonesia, and Myanmar showed large production gains in 2007 but Japan, the Philippines, Sri Lanka, Turkey and Vietnam suffered contractions, says FAO.

The volume of rice held by the five largest rice exporters, India, Pakistan, Thailand, Viet Nam and the US is almost the same as in the previous season.

Their rice inventories would cover 16.3 percent of their own rice disappearance (domestic consumption plus export) in 2007/08, down from the previous year, “a sign that world market conditions may remain tight in 2008.”
***

biznewsasia@gmail.com

Coping with the food crisis

2008-05-18T05:43:00.001-07:00

Coping with the food crisis

The food crisis is real and will last for a long time. The more we inject less politics to it, the less will be our problems coping with the food crisis. The shortage of food is worldwide. Rice, corn, bread, milk, pork, chicken and beef will cost much more than you can ever imagine, assuming they are even available.

You will see long lines of people buying their staple food. You will see boycotts, riots, and governments being overthrown. Food price inflation has reduced considerably people’s purchasing power. In Manila, the rice that could be bought for just P18 a kilo last year is no longer available, unless you pay P30 a kilo, a 66 percent increase.

The Food and Agricultural Organization (FAO) rice price index (with 2000 as base year) reached 142 in October 2007, the highest in 20 years. In 2007, the rice price index was up 16% over 2006. Yet, says FAO, the rise was small compared with agricultural commodities such as wheat and dairy products.

The aromatic Japonica rice rose 24%, reflecting limited supplies in India and Pakistan. Export prices of lower quality Indica rice were up 18%. Major rice producers China and Pakistan have increased prices while large exporter Vietnam has restricted exports. India, a key player in the international rice market, has imposed an indefinite ban on export of non-basmati rice and pegged its minimim price at $425 a ton.

FAO predicts that “unless the sizes of the crops soon to be harvested are much larger than currently foreseen world rice prices could undergo further increases in the next few months.”

Global paddy production was estimated in 2007 at 643 million tons (429 million tons in rice terms), up marginally over 2006. World average paddy yield remain at 4.1 tons per hectare. In Asia, paddy production was estimated in 2007 to be 585 million tons, up just three million tons.

Bangladesh, China, India, Indonesia, and Myanmar showed a large production gains in 2007 but Japan, the Philippines, Sri Lanka, Turkey and Vietnam suffered contractions, says FAO.

Rice available for trade is now limited, 30 million tons, a measly 1.7% increase from 2006. Egypt imposed an export tax on rice, India restricted non-basmati rice export, VietNam imposed export quotas.

FAO notes increased imports by Bangladesh, North Korea, Indonesia, Nepal and the Philippines “which would help them overcome severe domestic supply shortages, and in some cases, would be reaching them in the form of food aid.” Thailand is the only country with ample rice supplies for export.

West Bengal and Mexico have had food riots. India, Yemen, Burkina Faso and other countries are seeing signs of food riots. Australia ousted its prime minister this year after a ten-year drought that devastated that country’s wheat crop.

In the Philippines, 16 million Filipinos said they missed a meal at least once in three months last year. That happened when rice was still P18 a kilo. Even at that price, there was a shortage of eight percent (or one million tons) of total demand for rice. That’s the official estimate before the crisis erupted. After the crisis, the government of President Arroyo ordered 1.5 million tons of rice from Vietnam and is tapping additional supplies from Thailand. The shortage, more likely, is more than two million tons valued at $1.4 billion (P58 billion) at current rice price of $700 a ton.

The Arroyo government, already under siege following allegations of lying, cheating, and stealing, will have a difficult time delivering what it cannot deliver –food on every table, which she promises to do by the end of her term. What will happen is that with her heavy infra spending you will have beautiful roads where no food trucks will pass through simply because the provincial harvest has not been enough to load into trucks to service food-starved urban areas like Metro Manila.

To me, what should be done is put a stop to everything that is being done –building roads, power plants, industrial zones, high-end villages – and focus on just one thing – produce food. It can be done.

If a 50-km first class highway like the Clark-Subic-Tarlac Expressway can be built at a cost of P27 billion in less than two years, there is no reason why we cannot open half a million hectares of new ricelands for probably same amount of money. We have plenty of idle lands. The government alone has two million hectares; the private sector more so. Don’t worry. There is plenty of kickback money in agriculture. Jocjoc Bolante has proved it, with his irrigation scam (more than P700 million disappeared). Cito Lorenzo’s Quedancor has proved it with its swine scam (more than P1.5 billion disappeared).

What we can do is allow the bureaucrats to steal and steal big, as long as they produce rice, the staple food of Luzon, and corn, the staple food of Visayas and Mindanao. Anyway, even if the bureaucrats overprice rice projects by 100 percent, the price of rice will double in the next five years, if not earlier. So today’s greed will be cured by time, just so people will have something to eat. Greed is the opposite of hunger. And usually during crises like what we have now, they remarkably go in tandem to meet a need like food.

It takes P100,000 to irrigate again every hectare of rice land. Some 400,000 hectares of rice lands need to be rehabilitated with new canals and mini-dams. That will cost P40 billion. To open up new rice lands, you need P1 million per hectare with entirely new dams and irrigation systems. Each hectare produces 3.77 tons of rice. To cover the two million-ton shortage, you will need to irrigate 530,000 hectares and provide them hybrid seeds, fertilizer and plenty of water.

So there – P40 billion to solve the rice crisis. Overprice that by 100 percent and you will need P80 billion. How much did GMA collect from the E-VAT? P80 billion. So money is not a problem. Political will is. And greed.

biznewsasia@gmail.com

The U.S. begins a recession

2008-05-18T05:42:00.001-07:00

The US begins a recession

It’s not official but it has begun. The United States is now in recession.

A recent issue of the prestigious Economist magazine points to signs of recession in the world’s largest economy -- —a jump in the unemployment rate to 5.1 percent and the loss of 98,000 private-sector jobs in March, the fourth consecutive month of decline; surveys of manufacturing and services, and Federal Reserve Chairman Ben Bernanke admitting on April 2 that output was unlikely to “grow much, if at all, over the first half of 2008 and could even contract slightly.” Since December, the US economy has lost about 80,000 jobs a month. In a full blown recession, job losses will be twice that.
The usual definition of a recession is two consecutive quarters of decline in economic output. That has not taken place. On Feb. 14, when I interviewed her, President Arroyo said the US was not yet in recession, using the classic definition. At that time though, the rice crisis was not yet apparent. Arroyo had thought she would pump-prime the economy with infra spending to cushion the Philippine economy from a US slump.
However, the US National Bureau of Economic Research (NBER)—defines a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production and wholesale-retail sales.” Using this criteria, many economists, including those with The Economist, believe the US is now in recession.
The question then is: How long will the recession last? Albay Governor Joey Salceda believes the US slowdown will be short and sharp. He thinks if the Philippines grew by 7.3 percent in 2007, it will grow by between 5 and 6 percent this year, a drop of two percentage points at worst because of a US slowdown. Government economists project GDP growth rate of 6.3 to 7 percent this year.
The Economist Magazine is surprised that the slowdown “seems remarkably gentle, given that many think America is suffering its worst financial shock since the Great Depression.”
It predicts that the “labor market will surely worsen as firms cut back in the face of weaker consumer spending. But a buoyant world economy is still boosting American exports; a fiscal stimulus is on the way; real interest rates are around zero and likely to fall further; and, with the rescue of Bear Stearns, the Fed has given an implicit guarantee to Wall Street. So few forecasters expect outright slump. A liberal enough loosening of fiscal and monetary policy can stop recession turning into depression, and American policymakers have left little doubt that they will use their recession-fighting weaponry freely.”
In the Philippines, Filipinos are not as concerned with a US recession as they are with vanishing rice stocks and rapidly rising prices of basic commodities – rice, corn, pan de sal, LPG, canned goods, and vegetables.
Former Finance Secretary Cesar Virata, in my talk to him, estimates inflation this year to be hitting 12 percent. In 2007, headline inflation was hitting 4.9 percent while bank lending rate was 6.9 percent.
If inflation rises to double digits, then you have a negative real interest rate, meaning inflation is higher than the cost of borrowing money. Simply translated, when you buy a car or a house using borrowed money, you in effect gain because the price (of what you buy) is rising while the interest rate has remained the same.
In its latest World Economic Outlook, published on April 9, the IMF slashed its forecasts for America's economy for bot 2008 and 2009. The Fund now expects US GDP to shrink in every quarter of this year. By the fourth quarter the economy will be 0.7 percent smaller than a year before. (Only three months ago the fund expected a rise of 0.9 percent.) In 2009, US GDP will grow, but at well below its trend rate.
Recent US recessions, as defined by the NBER, have been both short and shallow. The recessions of 1990-91 and 2001 each lasted eight months, below the post-war average of ten. If the Fed is right, the 2008 recession may be shorter and shallower still. “That would be remarkable, given the extent of the housing bust and credit turmoil,” The Economist points out.

biznewsasia@gmail.com

Three major crises: Credit, food and energy

2008-05-18T05:40:00.000-07:00

Three major crises: Credit, food and energy

The world today is facing three major crises – the financial crisis, the food and commodities crisis, and the energy crisis. Each has become global in scale which explains why many countries are in turmoil.

The financial crisis began in the United States in August last year with the so-called sub-prime mortgage crisis. Big and venerable banks which should know better lent oodles of money to poor and undesirable housing borrowers who didn’t know any better. Then interest rates began climbing. The borrowers, of course, couldn’t pay. They had no capacity to pay in the first place. This situation multiplied over a million times resulting in massive defaults and foreclosures (which could reach $300 billion), crashing home prices (by 14 to 22 percent during 2007 and 2008), and bankruptcies among lenders like Northern Rock and Bear Stearns (losses of lenders are estimated at $200 billion).
The crash, some analysts claim, is the worst since the Depression. the credit crunch will linger for longer than two years, probably four years, if not longer. In a credit squeeze, consumers won’t be able to borrow money to buy a house, a car, or simply go shopping. Corporations won’t be able to borrow money to open businesses, expand or conduct R and D. The result is an economic slowdown.

The Economist thinks the US is now in recession. The International Monetary Fund says “the continuing deep correction in the US housing market and the unresolved financial sector problems have led the US economy to the verge of recession.”

“We are now anticipating that the US will indeed slip into (a mild) recession – meaning it will experience two or more quarters of negative growth – during the course of 2008, before starting a moderate recovery at some point in 2009.”

The housing bubble has spread to Britain and the credit jitter has leapfrogged to Europe. The US and Europe are Asia’s biggest markets. If they slow down, then Asia slows down. The IMF sees a 25 percent chance global growth will decline to three percent or less per year in 2008 and 2009— “equivalent to a global recession.” “The greatest risk comes from the still unfolding events in the financial markets,” the Fund points out.
To me, the greatest risk comes from the food crisis. Rice prices are the highest in 20 years and climbing.

The food crisis began when world cereal stocks last year came to their lowest in 30 years (to just 57 days so that a drought, flood or crisis will cause massive disruption in supplies). This is the effect of a combination of factors like climate change or global warming, America’s shifting a fifth of its corn production to producing ethanol, and loss of focus on agriculture by the major food producing countries and international research and aid agencies. This was aggravated by the insatiable demand for food by huge countries like China (pop. 1.32 billion) and India (pop. 1.12 billion). Food production has been growing by one percent while the world population is rising by 1.3 percent per year.

You wonder why despite the fact that the International Rice Research Institute has been in Laguna for 30 years, the Philippines and the rest of Asia still suffer from food shortages and food imbalances leading to the crisis we are in today.

The world has 6.67 billion people. More than half of the population depends on rice. About 90 percent of global rice production comes from Asia.

The IMF Managing Director Dominique Strauss-Kahn told a press briefing on April 12 in Washington DC that “if food prices go on as they are today, then the consequences on the population in a large set of countries, including Africa, but not only Africa, will be terrible. Hundreds of thousands of people will be starving. Children will suffer from malnutrition, with consequences all of their lives.”
“The consequences will be such that disruptions may occur in the economic environment, trade balances, current, so that at the end of the day most of governments, having done well during the last five or ten years, willsee what they hae done totally destroyed and their legitimacy facing the population destroyed also,” says Strauss-Kahn. “So it’s not only a humanitarian question. It is not only an economic question. It is also a democratic question. Those kind of questions sometimes end into war.”
Indeed, if the US, the world’s richest country, went to war in Iraq because of oil, why not other countries, because of food?
As for energy, oil will remain at $100 per barrel. Some analysts predict a $150 to $250 per barrel oil.

biznewsasia@gmail.com

Rice is the new gold

2008-05-18T05:36:00.000-07:00

Rice is the new gold

Rice is the new gold, not gold itself, not oil. It’s rice. True the price of gold rose to $1,000 an ounce in March, up 18 percent in three months. The price of oil has also climbed to almost $128 per barrel, an increase of over 70 percent year on year. But their price increases cannot match the jump in the price of rice. Thai rice for export has doubled in price in less than four months this year. A 100 percent increase in four months is equivalent to 300 percent surge on an annual basis. That’s a terrific increase. Not even the stock market will give you that kind of gains in so short a time, unless of course you manipulate the bourse.

Investors and banks, burned by the subprime mortgage crisis, are rushing to buy grain futures. Wall Street money is being plowed into American wheat as foreign buyers stockpile on the commodity following a panic that began last December and which has easily spread worldwide.

You know who are these foreign buyers? Well, the Philippines is one of them. Buy at any price, is Manila’s mandate. The country is joined by Japan and South Korea, both eminently wealthy. It’s like competing with guys who drive a Ferrari and all you have is a rundown jeepney.

The era of cheap food is over. The Washington Post says prices of wheat have begun to come down as farmers rush to plant more wheat. A price decline of 30 percent is expected in the coming months. However, that still shows a 45 percent increase in price over last year.
There is money in food. It used to be that margins you could get from food were between five and 15 percent. Ask San Miguel. Ask JG Summit. Ask Jollibee. Ask McDo. No more. Profits on food exceed the cost of money, the cost of inflation, the opportunity cost of all other business alternatives. So invest in food.
I suggest some entrepreneur invest in massive rice production. He can organize the farmers into a cooperative and consolidate their land. He can involve the New People’s Army to guard the farmlands from poachers and yes, corrupt government people. The NPA can stick the gun into the heads of corrupt NIA personnel and force them to turn on irrigation pumps and dikes without their hands being greased by bribe money. The entrepreneur can borrow cheap money from DBP, the Land Bank, and Coconut Bank which loses money by billions in corrupt loan deals. Last time I heard about Cocobank, the government infused P20 billion in fresh equity. In less than one year, the P20 billion was gone. Now, Cocobank is again asking for equity money. Also P20 billion.
I suggest Cocobank use that money to finance the production loan of rice farmers. At least if the money goes down the drain, it will be money well spent. In the name of food. In the name of poverty alleviation.
I also suggest that all the 24 senators and all the 236 congressmen pool their pork barrel money and invest in rice production. That pork, about P20 billion, is enough to rehabilitate the irrigation systems of about 250,000 hectares --- half of some 500,000 hectares whose irrigation system has become decrepit and in urgent need of rehab. Did you know that the original concept of pork barrel was about food?
The senators and congressmen should be given their usual kickback on their pork barrel – between 20 and 50 percent or P5 billion to P10 billion on their P20 billion. That can be covered since rice prices will climb to $1,500 per ton this year.
I estimate local cost to produce a ton of rice is about $500, if not less. That is assuming cost per hectare of P45,000 divided by yield per hectare of 3.77 tons or P11,936 or $284 per ton. You sell it at $1,500, you make a $1,000 per ton profit – enough to give the farmer his due reward and the senators and congressmen their commissions.
How about it, Congress?
biznewsasia@gmail.com

Rice crisis a chance for President Arroyo to recover

2008-05-18T05:34:00.000-07:00

Rice crisis a chance for GMA to recover

The ongoing rice crisis is a golden opportunity for President Arroyo to recover from the depths of unpopularity and distrust. The latest SWS survey shows a 54 percent dissatisfaction rating with her performance, a drop of ten percentage points from December 2007. The 54 percent is below her scores of the past two years.
The rice problem is a question of two million tons – the shortage or gap between demand and supply. Some ten million tons of rice are needed this year. The supply is less than that, at a little above nine million, plus some inventory to make up for distribution inefficiencies, speculation and corruption. That is the two million.
The government has secured supplies from Vietnam and Thailand, up to 2.7 million tons. Still, there are long queues at government rice retail outlets. The reason is price distortion. The government sells rice at P18.25; the private sector at not less than P30 a kilo. If you are poor, the P11.75 difference is worth spending time at rice lines. Each family of five to six people needs about 1.5 kilos of rice a day. Multiply 1.5 by P11.75 and you have a paper gain of P17.62, enough to buy yourself almost another kilo of rice. That explains the long lines and the frayed nerves.
President Arroyo wants to make sure every poor family – at least two million families – can buy rice at P18.25 a kilo. Food is 55 percent of a poor man’s household spending. Of that 15 percent is rice.
Please note that a poor person makes only less than a dollar or P40 a day or P200 for a family of five per day. Each day, a family spends P28 (the 15 percent) of that for rice, leaving P172, for other expenses like other kinds of food (remember it spends 55 percent on expenses for food or P110 of every P200). The remaining 45 percent or P90 goes to utilities (like electricity, LPG, water, cellphone and transportation), personal upkeep, clothes and housing, if any. Given that financial straightjacket, it is not difficult to imagine why the masses don’t like their government.
If GMA can deliver rice to the poor, by whatever means, she can do wonders. She is going after rice hoarders and smugglers and anyone who messes up the supply chain of rice. She applies the shock and awe approach to the problem. Show the culprits you can give them hell and hell se will deliver. She calls top-level meetings of her officials almost daily on the rice situation. She is on the warpath.
***
The SM group has emerged as the biggest donor to the Myra V. Lopez Scholarship Fund for journalism and entrepreneurship created in honor of my eldest child who died at age 37 on March 29 from brain stem compression due to cerebellar hemorrhage. Myra was the chairman of the board of my BizNewsAsia weekly business magazine. She finished journalism and MBA both at Ateneo.
The passing away of my daughter is the saddest moment of my life. It has scarred my heart and soul forever. I thought of remembering Myra always with a scholarship program named after her. Thankfully, many have responded to my call. The SM Group has donated a total of P205,000 – P100,000 from SM patriarch Henry Sy Sr., P50,000 from SM Investments Corp., P30,000 from Tessie Sy, P20,000 from Shoemart, and P5,000 from Dennis Navarro, the pr consultant of the group.
President Arroyo is next biggest with P100,000; President Estrada P50,000; UP Regent Nelia Gonzalez P46,425; Metrobank Chair Tony Abacan P25,000, Joey Leviste P25,000, Energy Secretary Angelo Reyes P20,000, BSP Governor Amando Tetangco P20,000; Ayala, Globe Telecom, Plantersbank, Philamlife, Raul Concepcion and Obet Pagdanganan, P10,000 each; Manila Rotarian Justo Ortiz, PEZA Director General Lilia de Lima, ABS-CBN’s Bong Osorio, Full Circle Communications, and PCGG Chair Camilo Sabio, P5,000 each. We will list the others later.
Many more are making donations. Words are not enough to acknowledge the generosity of these people and companies. I pray that their tribe increase.

biznewsasia@gmail.com

The business model of the Lopez family of Meralco

2008-05-18T05:33:00.000-07:00

The Lopez family’s business model

In 2007, the Lopez family of First Philippine Holdings Corp., Meralco and ABS-CBN Broadcasting Corp. determined that profits are to be generated and their wealth enhanced through one simple strategy – heavy investment in power and tolllways.
Electricity and infrastructure are two of the major crippling inadequacies in the Philippines, two factors why investments cannot be greater nor more robust than they already are. You meet the need for electricity and infra and you make money.
Thus, the Lopezes increased their holdings in Meralco, vastly expanded their portfolio of power plants, and acquired more tollways contracts.
However, the Lopezes didn’t reckon early enough with one imponderable: A hostile administration like Gloria Macapagal Arroyo’s and a nosy and brashy investor like President Winston Garcia of the Government Service Insurance System (GSIS). True, there was ABS-CBN to soften the tandem. But what do you do when an official’s public image has been pummeled to such low point it can go nowhere but up?
Now, the Lopezes find themselves in a dilemma. Do they surrender or shoot it out till the last man standing?
In 2007, the Lopezes became the single biggest stockholder of Meralco, the country’s largest electricity distributor and a monopoly. Through First Holdings, the Lopezes increased their holdings to 33.4 percent from 17.7 percent. They bought the 6.6 percent of the Meralco Pension Fund for P8.3 billion, and the 9.1 percent of the Spanish investor Union Fenosa for $250 million (P10.5 billion at P42 to $1). Valued in 2007 at P18.8 billion, the 15.7 percent is now worth below P12 billion.
Why Meralco? The family has always considered Meralco their crown jewel, the proud symbol of their economic might and political influence. While 33.4 percent seems like a minority, it has veto power because you need a 70 percent vote to buy and sell assets in a company. First Holdings also has 30 percent of Panay Electric, the fifth largest electricity distributor.
Meanwhile, the state Energy Regulatory Commission (ERC) is on paper an independent body. Between the public consumers and the private owners of Meralco, ERC should take the side of the public.
Last year, the ERC decided to be friendly to Meralco. It agreed to a new system of fixing electricity prices called performance-based rate setting (PBR) mechanism beginning mid-2008. In simple terms, PBR assured Meralco yearly rate increases guaranteeing the utility handsome profits or a return of 12.8 centavos for every P100 of average cost of capital. This is significantly higher than the 8 to 12 percent return under the old return on rate base (RORB), the practice for 80 years. Also, under RORB, rate increases were subjected to public hearings which could be high profile and politically unpalatable.
PBR is based on Meralco’s forecast of electricity demand, operational expenses and capital expenditures. ERC then prescribes distribution rates which increase annually over a four-year period, from 2008 to 2011 to cover cost increases due to inflation and the peso depreciation. In effect, Meralco could singlehandedly determine what it could charge the public its so-called distribution rate. Imagine there is a price control body and you (the regulated) determine the ceilings set by that agency. In terms of profit potential, that’s a mind-boggling sweetheart deal. If the ERC takes time to decide the PBR rate, the delay will be charged to future rate increases. There is a built-in penalty for inefficiency and the consumer pays for it.
With increased profits from Meralco, the Lopezes could pour excess cash into other businesses, like Rockwell to generate even more profits.
At the same time, the Lopezes increased ten-fold their holdings in power generation. Thru First Gen, owned 66.2 percent by First Holdings, the Lopez family is the largest Filipino independent power producer with an installed capacity of 2,582.4 megawatts or 16 percent of the country’s generating capacity. Of every 100 megawatts, 6.25 mw is provided by the Lopezes.
The two biggest Lopez power plants are the 1,000-mw Santa Rita and the 500-mw San Lorenzo which are on their eighth and sixth year, respectively, of their 25-year purchase power agreement with Meralco. The plants rely on natural gas piped in from the Malampaya gas field in Palawan.
In December, the family bought a 40 percent economic interest and 60 percent voting rights in the state-owned geothermal company PNOC Energy Development Corp. . It paid P58 billion, three times EDC’s IPO price. EDC is the Philippines’ largest and the country the second biggest geothermal producer in the world. It has seven geothermal steam fields and an installed capacity of 1,198 mw.
First Holdings will manage the 94-km Subic Clark Tarlac Expressway, Phase 2 of the Manila North tollways to connect the 84-km NLEX to C-5 and Port Area, part of the C6 Expressway, and the 88-km Tarlac-La Union expressway.
In all these deals, the Lopez family will have to talk turkey with the government. In the meantime, with little capital, the family has overborrowed. Much of their liabilities carry government guarantees or invested with state generosity.
biznewsasia@gmail.com

The Lopez family's business model

2008-05-18T05:32:00.000-07:00

What happens when oil hits $200
This May, the Organization of Petroleum Exporting Countries (OPEC) again reduced its estimate for world oil demand this year, from its original forecast. That means demand for oil is weaker than earlier thought.
Growth in global oil demand will be 1.2 million barrels per day, a slight downward revision from OPEC’s forecast in April. That is 40,000 barrels a day less than the previous forecast. The last cut, of 70,000 barrels a day, was in February.
China, the Middle East, India and Latin America will account for all the demand growth. Demand in North America will be flat while oil demand in other OECD regions will decline due to weakening transport fuel demand in the second quarter.
Yet, speculation persists crude oil will climb to $200 per barrel. Goldman Sachs has said so. The president of OPEC, Chakib Kheli, has said so. A Deutsche Bank energy analyst has said oil could even reach $250 a barrel. And no one has said they are crazy to make such predictions.
OPEC insists factors other than supply and demand are driving up oil prices to record highs. The weakness of the dollar, speculative trading and political tension are lifting prices, not a shortage of oil.
OPEC is the source for two of every five barrels of oil worldwide. It is not the only industry group to trim its projection for world oil demand.
World oil price has reached more than $126.98 per barrel. If crude breaches $200 per barrel, Filipinos will have to drastically change their lifestyle. A $200 per barrel oil translates into gasoline at P100 per liter at the pump. At least half of vehicle owners won’t be able to afford it. That means reduced traffic, and more woes for the common man. Workers would demand higher wages on top of the P20 per day promised by President Arroyo. Minimum wages would have to rise by P50 per day easily. Overall, costs of almost everything will escalate.
Around the world, there will be so much turbulence. Imagine Russia (which already has the world’s largest pool of billionaires), Venezuela (whose Hugo Chavez hates America), and Iran (another America hater) having double the oil revenues they already have today. These petropowers will transform themselves into global political powers.
Dubai already has the world’s only seven-star hotel. It is the world’s boom town, with oil at $100 a barrel. It will become an even more spectacular global hub. Its Emirates airline will dominate international aviation.
If rice at $1,000 per ton will add 100 million to the ranks of the very poor, how many people will be impoverished by a $200 oil? Rice will probably climb to $2,000 per ton too because there seems to be now a direct correlation between the price of oil and the price of the cereal which is consumed by half of the world’s population. To speculators, rice and oil are one and the same thing – a commodity to be traded, hoarded, bartered and damn the consumers.
Newsweek thinks oil at $200 will make the world less “flat”. Globalization will stumble. The magazine cites Jeff Rubin, chief economist of Canada’s CIBC, who says oil at $100 has added enough cost to the cost of shipping to wipe out 45 years of tariff reductions that have lowered borders to trade and allowed India, China and other countries to boom.
Rubin says oil at $200 could start displacing labor costs as the chief factor for companies to determine where to locate their offshore production. With oil at $200, it would cost $10,000 more to send a 40-foot container to the Eastern United States from China, rather than from Mexico. China thus will look for customers in Japan, not in the US. Western Europe could turn to Eastern Europe and regionalization would be the new globalization.
For the Philippines, regionalization could be good. Asia has two of the world’s largest consumers and the fastest-growing – China and India. We probably have to stop conducting those hearings on the ZTE broadband overpricing scandal. And Filipino tourists should start appreciating the Taj Mahal rather than posing before the White House. India is only half the distance between Manila and Washington DC.
OPEC on May 15 cut its forecast for global growth in oil demand in 2008 for the second time this year, a sign that record crude prices were slowing consumption in the industrialized world.
"Oil demand growth is expected to experience the typical seasonal low consumption in the second quarter," OPEC said. "This year's summer driving season is not likely to show its normal annual growth due to the anticipated weaker gasoline demand in the U.S."
Gasoline use usually rises in the summer as vacationing American motorists hit the road, but the slowing economy and record prices are expected to weigh on demand.
The rise in oil prices has prompted the industrialized countries to pressure OPEC to increase oil production.
OPEC's May report blames another factor it has frequently cited for oil's rally: limited capacity at refineries and its impact on the crude market. The rising premium of higher-quality crude grades to lower-quality grades reflects a shortage of refineries able to make light oil products, like gasoline, from lower-quality crude.
biznewsasia@gmail.com

What happens when oil hits $200

2008-05-18T05:30:00.000-07:00

A Valentine's Day with GMA

2008-02-19T13:33:00.000-08:00

I had a thoroughly enjoyable moment with President Arroyo on Feb. 14, Valentine’s Day. I had a 30-min exclusive interview at 11 a.m. at the Quezon Room of the Palace, followed by listening to Claire dela Fuente belting out Carpenters favorites with the piano accompaniment of Richard Carpenter. The President joined them for the last number singing “I Have You” (“I have always been a dreamer… I believe in happy endings”, you get the drift) magnificently until she faltered midway. Buffet lunch (catered by Cibo) followed at the open courtyard of the Kalayaan Hall.

This is a President whose resignation is being demanded by various groups, including the Makati Business Club. Excerpts from our conversation:

On the economic situation

Of course, you are much better at analyzing the economy than I am. The economy has reached a level of maturity and stability with some of the strongest macro economic fundamentals in three decades. Moody’s upgraded our credit rating to positive, and for a very good reason. Our 7.3% growth is the highest in 31 years. Our peso is the highest (against the dollar) in many years. Our stock market is one of the best performing in Asia. Investments are pouring in. We created seven million jobs in seven years.

The rate of poverty is down, both the objective measure and the self-rated poverty (to 46% from 66% in July 2001). We created seven million jobs in seven years. So having said that, of course, we are conscious about the global economic situation. And because the more interconnected we become, the more we have to manage the ups and downs of other nations’ bubbles, and any further the volatility in the US economy. The good news about the Philippines is that because of macro economic fundamentals, we have reached a level of maturity and diversification to make us resilient to the external shocks.
For instance, we have developed our markets. Trade with China is $31 billion, growing by leaps and bounds and the balance of trade is in our favor. The US is now 18% of our markets vs. 28% several years ago. We have diversified our economy and our markets very much. For instance, in Dubai almost all the bananas come from the Philippines.

If everything is all right

Like all nations, whether rich or poor, we still have the challenge to close the gap in income inequality. But only a strong economy can do that. To that extend, we have turned the economy around. If you want to reduce income inequality, the most important thing to do is create jobs and by increasing our expenditures in social services in quantities we haven’t done in many, many years.

On possible downside

On the economy front, we do have to be alert about the global economic situation. As regards the US, recession is a very technical term. It’s two quarters of negative economic growth which has not happened. We believe that any US recession will be short and sharp. We believe as far as the Philippines is concerned, it will be manageable because of our diversification, our maturity, our capability to frontload our spending and have a construction surge to pump-prime the economy during this short and sharp period. This refers to infra, especially on roads and school buildings.

We are spending hundreds of millions on infra. I don’t think we ever had an education budget of P160 billion plus and an infrastructure budget of P200 billion, including that of government corporations and local governments. The infra with the biggest multiplier is housing. We are doing farm-to-market roads and irrigation because the multiplier effect is greater in the rural areas. For irrigation, we are spending P500 million a month or P6 billion a year. It’s P200 million a month for North Luzon, P200 million a month for Mindanao and P100 a month for other regions which are less agricultural. The biggest irrigation item is the downstream irrigation of the San Roque Dam which was mainly a flood control project.
Agriculture has been doing quite well. We have been spending at least P20 billion a year on agriculture, which is also an unprecedented amount.

On focus of the remaining years

Make the reforms permanent. We have achieved all of these things. The pain of raising taxes must now be followed by the gain of investing in human and physical infrastructure. That’s the way to make the gains permanent. We are spending on infrastructure to have a good business environment to create jobs. We are spending on social services, health and anti-hunger programs, education, cutting down on red tape and corruption, peace in Mindanao, and fighting terrorism.

On charter change and peace in Mindanao

That’s one of the reasons. In fact, it is an imperative. Many of the wishes of the MILF (Moro Islamic Liberation Front) will have to do with constitutional change.

On federalism

It is still hard at this point in time to define what it will be. I think it is better for us to wait for the final peace agreement and let the MILF have what will be the specifics of their ancestral domain. Ancestral domain is where we are now. I believe that we are overcoming the final difficulties on ancestral domain. Any negotiation has its difficulties. I am optimistic we can overcome the difficulties.

On the New People’s Army

The NPA is very much diminished in strength, about half of its strength in 2001. We want to neutralize them by 2010 when they will no longer be a threat to our peace and security.

On poverty reduction

There has been a reduction in income while growth is taking place only in the years 2003 and 2006 but not when compared with the previous administration. The reduction was because of the pain of tax reforms and the fact that we had a reenacted budget in 2006. In the next survey, I hope it will show a dramatic increase in income.

On the problem with politics

I have always said that we have two Philippines. The Philippines on the economy and the Philippines on politics. One is working well and the other is a broken system. That is why I have been advocating constitutional reforms thru charter change.

On cha-cha and extending her term

Constitutional reform is not intended to extend my term. We have been able to make the most difficult reforms and the next president will just have to maintain it.

On her legacy
I made very difficult decisions and the reforms on the economy. I have been able to institute a permanent change and bring about a reduction in poverty. Our vision is to achieve reforms to make the Philippines ready for the First World in 20 years. I am hoping that by the end of my term we would have launched the Philippines way into that vision.

On the people not appreciating her

What is more important for me in the result on the economy not my self-aggrandizement. To me, I do what is right, I do my best and let God take care of the rest.

email biznewsasia@gmail.com

Ben Abalos should come clean

2008-02-11T08:08:00.000-08:00

Ben Abalos should come clean

President Gloria Macapagal Arroyo’s men came in full force at the Senate hearing yesterday (Feb. 11, 2008) on the National Broadband Network project of ZTE Corp. of China which was aborted by her last year. They included Environment and Natural Resources Secretary Lito Atienza, Deputy Executive Secretary Manuel Gaite, former Presidential Management Staff Chief Michael Defensor, the chief of the Philippine National Police Avelino Razon, private lawyer Antonio Bautista, and the chief of the airport.

The President’s men were claiming government authorities didn’t abduct or kidnap or hold against his will consultant Rodolfo Noel “Jun” Lozada as soon as he landed at the Manila airport in the afternoon on Feb. 5, Tuesday to prevent him from testifying before the Senate regarding the NBN ZTE deal. There was no kidnapping, no obstruction of justice.

The men were trying to dispute or discredit what “Jun” Lozada had told the same Senate body when he testified on Friday, Feb. 8. In that hearing, Lozada indicated he was taken against his will at the airport tarmac in the afternoon of Tuesday, Feb.5, made to ride a Toyota car unknown to him, driven by a person unknown to him and where he was joined by another person unknown to him. The man was apparently armed and constantly making phone and radio contact with other mysterious people. The stranger even told Lozada that he is able to monitor all his (Lozada’s) texts and calls. Lozada sat in the back of the car, alone, but it was trailed by several other vehicles. He was literally taken for a ride for several hours to various places in Metro Manila and nearby provinces Laguna andCavite. Late in the evening the following day, Feb. 6, he was brought to La Salle Greenhills. At 2 a.m.Feb. 7, he gave a press conference covered live on television.

At 10 a.m. Feb. 8, Lozada related his ordeal before the Senate and made a number of shocking revelations. Then NEDA Director General Romulo Neri advised him to “moderate their greed”, a reference apparently to resigned Comelec Chair Benjamin Abalos trying to collect $130 million “commission” on a project that should have cost just $132 million. Because of Abalos’s insistence on his commission, the project cost rose to $232 million. Because of Abalos’s insistence that the project be financed by a loan from China, the project cost rose further to $329 million, apparently to accommodate other people who wanted a share of the fun or fund. As a result, as claimed by Speaker Jose de Venecia before his ouster on Feb. 4, 2008, the NBN project was overpriced by $200 million.

At the Feb. 8 Senate hearing, Lozada implied that greed that is moderate is a 22 percent commission, the ratio applied when a $70 million bribe was allegedly taken from the SouthRail project, from Manila to Calamba to Bicol. Lozada had suggested that perhaps the $130 million Abalos commission could be cut to $65 million. For six hours onFeb. 8, Lozada made two major points – his apparent kidnapping at the airport and the overprice on the aborted NBN ZTE contract.

To me, the issue is not the attempted kidnapping (yes, there was, despite lawyer Antonio Bautista’s claim as Lozada’s limited vocabulary) but the overpricing of the NBN contract. The issue is Ben Abalos trying to collect a $130 million in a telecommunications deal that has no relevance whatsoever to his work as Comelec chair. The issue is whether the First Gentleman was really involved in the contract (in fairness to him, his name should be cleared if he is not guilty).

The pivot person then is Abalos. At this point “Abalos” is now synonymous with greed, graft, corruption in high places. At Google, there are now 181,000 entries on “Abalos”, most of them and the most recent of which is about the ZTE mess. In Wikipedia, the free encyclopedia, Abalos is cited in four major scandals – the impeachment against him in September 2007, the ZTE broadband controversy, Hello Garci, and Mega Pacific’s P1.3 billion contract for automated counting machines. As these scandals unwind, the unfavorable entries on Abalos will lengthen futher good enough to circumnavigate the globe.

My suggestion is that Abalos should come clean. Tell the truth. Do not obfuscate. Your name is at stake. The name of your children and your grandchildren is at stake. If you truly love your family, do it for them. If you are truly a public servant, do it for the people. If you are a true patriot, do it for the country. There is no other choice, Ben. You will be hanged, anyway. Email me biznewsasia@gmail.com

The 2007 Management Man of the Year:Joey Cuisia

2008-02-10T05:34:00.001-08:00

Cuisia is the 2007 Management Man of the Year

CEOs of Philamlife tend to have unusually long reigns. That is because the top honchos of Manila’s largest insurance company are usually highly qualified and competent, the best and the brightest in the business. They also are a rare and an exclusive breed. In 61 years, Philamlife has had only four presidents. Philamlife is owned by the AIG of New York.

Jose L. Cuisia Jr. fits the typical mould of the insurance giant’s CEO. He is the longest serving Filipino CEO of Philamlife, having been at helm so far for a total of 15 years. His predecessors, Cesar Zalamea and Rodrigo delos Reyes, both were president for 12 years. In length of service, the honor goes to Earl Carroll, president of 22 years.

That of Cuisia, however, is unique in many ways. His watch straddles two centuries, combining the old-style of doing business of the 20th century and the technology and frenetic pace of the 21st. His stewardship became a singularly trying one following the 1997 Asian Crisis and the 2005 scandal over massive defaults in the pre-need business. Also, the institution Joey inherited in 1993 is not the same Philamlife today in terms of size, presence and reach, profitability, diversity of products, and strength.

In 1993, Philamlife had only about P60 billion in resources. Today, the company, with its subsidiaries, is a P165 billion conglomerate (the amount includes P117 billion of Philamlife only assets). In 1993, Philamlife had less than P13 billion in revenues. In 2006, the latest year for which data is available, gross revenues amounted to P22.2 billion. In 2004, consolidated networth was P28.46 billion. In 2006, equity had risen to P54.97 billion, an increase of 93 percent.

Philamlife has been the only insurance company locally to earn the prestigious Readers Digest trusted brand platinum award, besting more than 200 major financial institutions in the Philippines. “We take pride in that,” smiles Joey, “the criteria for being slected is value of the products, the brand, the integrity of the company, and quality of management.”

Cuisia has been able to sustain Philamlife’s No. 1 position. The company has been the largest for 59 of the last 60 years. Beside being No. 1in size, “we are the leader in product innovation,” he asserts with pride. “We have the widest range of products, the most extensive agency network (up to 11,000 agents), and over 90 regional and automated insurance centers.

Why is Philamlife No. 1? “The No. 1 reason is the qualify of our people,” is Cuisia’s ready reply. Education and training Philamlife’s people is one of the major things he worked on early on when he came to the company. “A lot of our managers have an excellence in education award from Atlanta,” Cuisia points out, referring to the US institute where insurance managers are made to undergo a ten-course program before being given a coveted diploma as a fellow. Many of the graduates invariably are pirated by Philamlife’s rivals. And not surprisingly too, at least three presidents of insurance companies cut their teeth or held senior positions at Philamlife.

The No. 2 reason for Philamlife’s enviable leadership is product innovation. No. 3 is unrivalled network. Finally, there is the quality of management led by Cuisia.

The competition, however, has been catching up with Philamlife. One aggressive rival is the Philippine affiliate of the European insurance giant AXA. In less than 18 months, AXA Philippines, under Andrew Alcid, has doubled its business and overtaken industry leaders Insular Life and Sun Life. Perhaps to help Joey cope with the aggressiveness of competitors is Michel Khalaf deputy president since 2006 in charge of sales, marketing operations and finance. He was CEO of AIG Poland before coming to Manila.

Cuisia came to Philamlife 15 years ago after having served as governor for four years of the now defunct Central Bank of the Philippines and laid the foundation for its successor, the Bangko Sentral ng Pilipinas. Before CB, he was administrator of the Social Security System, the private sector pension fund, for four years.

On Feb. 12, Cuisia receives the prestigious “Management Man of the Year” award for 2007. In 40 years, only 30 men have won it.

The award is bestowed on individuals in the business community or government for “attaining unquestioned distinction in the practice of management and for contributing to the country’s progress,” said the announcement by the Management Association of the Philippines (MAP).
The MAP said Cuisia was chosen for his leading Philamlife in the firm’s successful efforts to remain the country’s leading life insurance provider.
Cuisia was also cited for work in seeing to the growth and development of the former Insular Bank of Asia and America -- formed with the merger of two small banks -- and for steering Union Bank of the Philippines, newly created out of the remains of a financially troubled investment bank.
To be sure, not everyone given the award carried on mightily after receiving it. More than half faltered actually. A third of the 30 died. Six went bankrupt (inexplicable given that MAP had considered them management hotshots). Seven are either retired or jobless (a sheer waste of talent and excellence). At least four are professional managers sporting high-sounding titles but with little say in companies they serve.

There are, of course, gold-plated entrepreneurs or business owners, including four taipans – Al Yuchengco (1992), Henry Sy (1999), Tony Tan Caktiong (2002; he also became the Entrepreneur of the Year the same year), and George SK Ty (2006). All four taipans are rags-to-riches stories.

The rest are tycoons who own and manage their companies or conglomerates – Vicente T. Paterno (whose 7-11 is still struggling), Raul Concepcion (now a consumer advocate and the air-con king), Oscar Lopez (who has turned around the family corporate crown jewels after going on a dollar borrowing spree in the mid-1990s), Manuel V. Pangilinan (who made PLDT the most profitable listed company for two consecutive years with a single product, phones), and Jaime Augusto Zobel de Ayala (who runs the Philippines’ oldest, most diversified and most profitable conglomerate).

So being “Management Man of the Year” does not automatically invest the awardee infallibility in management or continued success in business.

The award has also missed a number of really good and long overdue choices, like John Gokongwei Jr., the quintessential entrepreneur; Eduardo “Danding” Cojuangco Jr., CEO of the largest industrial company; or for that matter, Henry Gozon (who made GMA Channel 7 the No. 1 and most profitable broadcast giant) as well as Andrew Tan and Manny Villar both of whom became dollar taipans starting with very little money after the 1990s. Any and all of them would have added sheen and prestige to the MAP plum. Without them in the roster of “Management Men of the Year”, some cynics might think of the award as one among select members of an old-boy network.

Cuisia, meanwhile, is a class by himself. Educated abroad, he had done the rounds of executive positions in key companies and excellent in each job before joining Philamlife.

Write me at biznewsasia@gmail.com

Just how do you moderate greed?

2008-02-10T05:20:00.000-08:00

Just how do you moderate greed?

“Moderate their greed” is how then NEDA Director General Romulo Neri instructed the NEDA consultant Rodolfo “Noel” Jun Lozada studying the economics of the National Broadband Network (NBN) deal awarded to Chinese telecom company ZTE and financed with a $329 million loan from China.

The state broadband project was apparently overpriced almost three times its reasonable price, thanks to the greed of a certain Chair Abalos, who wanted $130 million for himself and was brokering the deal provided it was financed by a Chinese loan, ala Northrail, and the greed of some other prominent personalities dipping their fingers into the pie.

Testifying before the first part of a joint hearing of the Senate for more than three hours Friday (Feb. 8), Lozada estimated the norm for kickbacks in government to be around 22 percent – which is the overprice, equivalent to $70 million, for the Calamba to Bicol SouthRail project which has been approved and is now being implemented. Lozada suggested a $65 million “commission” for Chair Abalos would have been enough but the latter exploded with all kinds of expletives at the thought of losing or reducing his share of the loot. The resigned Comelec chair also threatened to kill Lozada. Abalos later arranged and hosted a dinner meeting at Shangri-La Makati with Lozada, Neri, original NBN proponent Joey de Venecia, and the First Gentleman. At that din ner , Abalos told the FG: “Pare, OK na kami nina Joey, okay na kami sa NEDA.” (My friend, we are now okay with Joey (de Venecia); we are now okay with NEDA).

The ZTE overprice went beyond the normal ceilings. An engineer, Lozada told the Senate hearing the broadband project should have cost around $132 million. Apparently $130 million was added to it, representing Abalos’s kickback, to bring up the cost to $262 million. President Arroyo wanted the project to be BOT – build, operate and transfer the ownership to the private project proponent, meaning the government would not incur any loan or risk. When the project was finally approved by NEDA, it became a loan and had ballooned in cost to $329 million. There was an overprice of almost $199 million or 153 percent or almost seven times the norm of 22 percent, the apparent definition of moderate greed.

The Friday he testified at the Senate, millions were glued to their tv or radio sets to listen to Lozada, narrate in between tears, smirks and pained smiles, how he was “grabbed” by four military-looking men as soon as he alighted form his plane on Feb. 5, bypassing customs and immigration, and boarded into a car accompanied by a convoy of mysterious vehicles. The men monitored his calls and texts and even the phone calls of Senate personnel who went to fetch him at NAIA Tuesday. Lozada was taken for a ride to Fort Bonifacio, C-5, the South Expressway, Dasmariñas in Cavite, and Calamba and Los Baños, Laguna. In Dasma, he remembered Bubby Dacer who was abducted in broad daylight at the South Expressway, brought to Cavite and killed.

What the ZTE deal proves is that greed has no limit and no satiation. Those consumed by greed know no rules of conduct, no ethics, no scruples, and no sense of history. They don’t give a damn, as long as they can enrich themselves. Which is why many of those who saw Lozada on television cried with him and felt a sense of outrage similar to what they felt right after the Aquino Assassination. You know what the people did then? The removed the sitting government.

Email me at biznewsasia@gmail.com. Go to my blog “tony lopez biznewsasia”.

How a US recession will hurt the Philippines

2008-01-29T21:06:00.002-08:00

How a US recession will hurt the Philippines

The United States accounts for a fifth of global production.   It is the world’s single largest consumer market which spends more than what the consumers of China and India combined spend. Morgan Stanley Asia Chairman Stephen Roach estimates US yearly consumer spending at $9.5 trillion, China $1 trillion, and India $650 million.

The US also buys 30 percent of total world exports.   Since China is now one of the world’s biggest exporters, then it will certainly be hurt by a US slowdown. Since much on Asia now depends on China, then the rest of Asia, including the Philippines, will certainly suffer.   How bad we will suffer is not clear. Should the US stumble, Roach warns, the world would face “the mother of all recessions”.

As a result of the US subprime mortgage crisis, banks have become more strict with their lending, even to blue chip companies. If large corporations have difficulty borrowing money they will have difficulty expanding or even sustaining existing operations. If they cut back, there will be layoffs. If there are layoffs, consumers will spend less. If consumers spend less, industries will sell less. It’s chain.

In Davos, the World Economic Forum conducted a survey on the greatest threats to global growth. The top four answers are: lack of coordinated response/leadership 18.5 percent; mismanagement of the crisis 18.1 percent; broad-based collapse of confidence 16.7 percent; and recession in the US 15.9 percent.   In three of the four, the US is the guilty party – leadership, mismanagement, and recession. Their weight is 52.5 percent.

The world is in crisis. Economically. And the US is mainly to blame.
The financial slide began in the US in August 2007 with the dislocation of key credit markets and losses associated with the subprime mortgage crisis.   The situation has been aggravated by soaring oil prices, the endless rise in commodity prices (particularly of food, raising the specter of serious shortages), a devaluing dollar, and massive losses by banks. “The likelihood is more conservative lending,” predicts Jeffrey Rosen, deputy chair, Lazard, USA.

The debate now, Professor Nouriel Roubini, Roubini Global Economics USA, told the WEF session on economics on Jan. 23, is not whether the US will fall into recession, but how severe it will be. He predicts a deep and prolonged decline, perhaps lasting as long as a year. The Fed’s recent easing, while necessary, comes too late to do more than make the recession "slightly more shallow and less protracted" than otherwise, due to the exhausted finances of US consumers and a severely stressed banking system. A major downturn in the world’s largest economy will inevitably result in a severe slowdown in growth – but probably not an outright recession – in the rest of the world, Roubini contends.
Roach of Morgan Stanley Asia, shares Roubini’s pessimism. He blames the US Fed.
“What we have now are the foreseeable consequences of bad economic management,” agrees Joseph Stiglitz, a Nobel prize winner and professor of economics at Columbia.   He traces the crisis to the White House tax cuts in 2001 that encouraged Americans to take out mortgages they could not pay. This was compounded by the Iraq war, soaring oil prices, and over-consumption that wiped out US savings to zero for the first time since the Depression.
By cutting interest rates in response to the recent slump in equity prices, the Fed signalled that it regards its primary job as defending the stock market, not managing the real economy, Roach argues. "The Fed’s attitude is that they are here to clean up after bubbles burst, not prevent them from happening in the first place," he complains. "This is a dangerous and irresponsible and reckless way to run the world’s largest economy." Hopes for a decoupling from the US are a fantasy, Roach asserts.   Like Roubini, he sees a prolonged global slowdown, not a recession.
A US recession is a particularly difficult policy challenge for China, according to Yu Yongding, director, Institute of World Economics and Politics, Chinese Academy of Social Sciences (CASS), China.   The country must create at least 24 million new jobs a year to keep up with population growth and the migration of rural workers to the cities. But, inflationary pressures are mounting. Yu predicts policy-makers in Beijing will emphasize fighting inflation at the expense of growth. However, those priorities could change if the US recession proves severe.
"It’s too late for 2008 if we rely on traditional monetary and fiscal policy. But it’s not too late if we have a coordinated response. We need out-of-the-box macroeconomic coordination and out-of-the-box intervention in the US housing market. The biggest problem is the lack of leadership in the US," says Laura D. Tyson, professor of business administration and economics, University of California, Berkeley.
"There is a concern that oil will go up to US$ 200 driven by geopolitical crises. This is intertwined with concern about an outbreak of protectionism, which would disrupt emerging economies. There is concern about mistrust in the US, which resonates back to the anxiety over the lack of US leadership," winces C. Fred Bergsten, director, Peterson Institute for International Economics, USA

biznewsasia@gmail.com

America has pneumonia

2008-01-29T21:06:00.001-08:00

America has pneumonia

Last week, the world’s major stock markets teetered on the brink of collapse. This prompted the US Federal Reserve Board to cut by 75 basis points the interest rate for money the federal government borrows to 3.5 percent. Since the Fed fund rate is used as basis by the banks in pricing their loans, the cut has the effect of reducing interest rates for borrowers – for home and car buyers and businesses so they get cheaper loans.

The Fed cut enabled Asian markets to rise yesterday with the Philippines showing a 2.6 percent gain. But US stocks continued their collapse.

The rate reduction should also lower the cost of money in the Philippines; otherwise, foreign money will flow into the country in search of higher short-term yields, thus boosting foreign reserves (now at record high) and the peso rate against the dollar. The peso has appreciated by 26.7 percent from its low of P56 per dollar.

Cheap money, however, has the effect of triggering inflation because more money in consumers’ hands when there is not enough supply of goods (which is our case in the Philippines) results in higher prices.

One wonders how long the Fed Open Market Committee rate reduction will have a positive impact. The gnawing feeling is that a US recession is inevitable. That is why global markets are tumbling because a slowdown has a grave impact, real and imagined, on most economies, including the Philippines.

Said the FOMC in taking the surprise and massive rate reduction Tuesday morning: “The Committee took this action in view of a weakening of the economic outlook and increasing downside risks to growth. While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households. Moreover, incoming information indicates a deepening of the housing contraction as well as some softening in labor markets.
“The Committee expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation developments carefully.
“Appreciable downside risks to growth remain. The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks.” Translation: It is getting more difficult (for consumers and businesses) to borrow money because banks are tightening in their lending. If you cannot borrow, you don’t consume or you don’t produce. The result is layoffs or “softening in labor markets”.
The Fed cut doesn’t solve America’s fundamental economic problem. The US government is overborrowed, overextended and has overreached. The Bush administration has very little respect and credibility overseas. America has no longer a moral ascendancy because of human rights violations and abuses committed against prisoners kept in Guantanamo and Abu Ghraib prisons, the behavior of mercenary American security guards in Iraq, and the wiretapping of overseas calls of Americans.

Also, Bush, a Harvard MBA, has mismanaged the American economy to a point it no longer is competitive. America has become dependent on Arab oil but has little money to pay for it. It has devalued the dollar against most currencies to cheapen American exports. The Arabs, the Chinese and even the Singaporeans are making an economic invasion of America, gobbling up US financial and corporate crown jewels.

The Abu Dhabi Investment Authority poured $7.5 billion and Singapore $12.5 billion into Citigroup, Nokia Finland $7.6 billion into Navteq, Canada $7.8 billion into Thomson Learning, Iberdrola of Spain $8.1 billion into Energy East, Toronto Dominion Bank $8.6 billion into Commerce Bancorp., Sabic of Saudi Arabia $11.6 billion into GE Plastics, AstraZeneca of Britain $14.7 billion into Medimmune, Banco Bilbao $9.9 billion into Compass Bancshares, and Petrochemical Industries of Kuwait $9.5 billion into Dow Chemical. These are New York Times figures.

The US is the best place in the world to invest or spend your money. For Filipino tourists, the prices of iPhones, iPods, Macs, plasma and LCD tvs, cars, and yes, homes, are about 20 percent cheaper now than they were a year ago, thanks to the appreciation of the peso against the US dollar and the collapse in home prices. You can buy on sale big ticket items like large screen plasma tvs from Costco, ship it door to door (you pay probably from $100 to $500, depending on the size of the tv), and after a month, you have the latest Sony Bravia or Samsung flat panel at 30 to 50 percent lower than Manila prices in your bedroom or living room.

The White House is talking of stimulus for the economy like tax rebates and tax cuts. To some analysts, however, the best stimulus is for Bush and the Republicans to leave the presidency.

biznewsasia@gmail.com

Gokongwei on how to conquer the world

2008-01-29T21:05:00.000-08:00

John Gokongwei on his life,
entrepreneurship and globalization

On Nov. 21, 2007, taipan John Gokongwei Jr. addressed the National Ad Congress in Subic, the former US naval facility that is now a bustling freeport. Here is the full text of the speech of the founder and chairman emeritus of Philippine property and industrial conglomerate JG Summit, Inc.:

Before I begin, I want to say please bear with me,
an 81-year-old man who just flew in from San
Francisco 36 hours ago and is still suffering from
jet lag. However, I hope I will be able to say what
you want to hear.

Ladies and gentlemen, good evening. Thank you very
much for having me here tonight to open the Ad
Congress. I know how important this event is for our
marketing and advertising colleagues. My people get
very excited and go into a panic, every other year,
at this time.

I would like to talk about my life,
entrepreneurship, and globalization. I would like
to talk about how we can become a great nation.

You may wonder how one is connected to the other,
but I promise that, as there is truth in
advertising, the connection will come.

Let me begin with a story I have told many times.
My own.

I was born to a rich Chinese-Filipino family. I
spent my childhood in Cebu where my father owned a
chain of movie houses, including the first
air-conditioned one outside Manila. I was the eldest
of six children and lived in a big house in Cebu's
Forbes Park.

A chauffeur drove me to school everyday as I went
to San Carlos University, then and still one of the
country's top schools. I topped my classes and had
many friends. I would bring them to watch movies for
free at my father's movie houses.

When I was 13, my father died suddenly of
complications due to typhoid. Everything I enjoyed
vanished instantly. My father's empire was built on
credit. When he died, we lost everything, our big
house, our cars, our business to the banks.

I felt angry at the world for taking away my
father, and for taking away all that I enjoyed
before. When the free movies disappeared, I also
lost half my friends. On the day I had to walk two
miles to school for the very first time, I cried to
my mother, a widow at 32. But she said: "You
should feel lucky. Some people have no shoes to walk
to school. What can you do? Your father died with
10 centavos in his pocket."

So, what can I do? I worked.

My mother sent my siblings to China where living
standards were lower. She and I stayed in Cebu to
work, and we sent them money regularly. My mother
sold her jewelry. When that ran out, we sold roasted
peanuts in the backyard of our much-smaller home.
When that wasn't enough, I opened a small stall in a
palengke.
I chose one among several palengkes a few miles
outside the city because there were fewer goods
available for the people there. I woke up at five
o'clock every morning for the long bicycle ride to
the palengke with my basket of goods.

There, I set up a table about three feet by two
feet in size. I laid out my goods, soap, candles, and
thread and kept selling until everything was bought.
Why these goods? Because these were hard times and
this was a poor village, so people wanted and needed
the basics -- soap to keep them clean, candles to light
the night, and thread to sew their clothes.

I was surrounded by other vendors, all of them much
older. Many of them could be my grandparents. And
they knew the ways of the palengke far more than a
boy of 15, especially one who had never worked
before.

But being young had its advantages. I did not tire
as easily, and I moved more quickly. I was also more
aggressive. After each day, I would make about 20
pesos in profit! There was enough to feed my
siblings and still enough to pour back into the
business. The pesos I made in the palengke were the
pesos that went into building the business I have
today .

After this experience, I told myself, " If I can
compete with people so much older than me, if I can
support my whole family at 15, I can do anything!"

Looking back, I wonder, what would have happened
if my father had not left my family with nothing?
Would I have become the man I am? Who knows?

The important thing to know is that life will
always deal us a few bad cards. But we have to play
those cards the best we can. And WE can play to
win!

This was one lesson I picked up when I was a
teenager. It has been my guiding principle ever
since. And I have had 66 years to practice
self-determination. When I wanted something, the
best person to depend on was myself.

And so I continued to work. In 1943, I expanded and
began trading goods between Cebu and Manila. From
Cebu, I would transport tires on a small boat called
a batel. After traveling for five days to Lucena, I
would load them into a truck for the six- hour trip
to Manila. I would end up sitting on top of my
goods so they would not be stolen! In Manila, I
would then purchase other goods from the earnings I
made from the tires, to sell in Cebu.

Then, when WWII ended, I saw the opportunity for
trading goods in post-war Philippines. I was 20
years old. With my brother Henry, I put up Amasia
Trading which imported onions, flour, used clothing,
old newspapers and magazines, and fruits from the
United States. In 1948, my mother and I got my
siblings back from China. I also converted a
two-story building in Cebu to serve as our home,
office, and warehouse all at the same time. The
whole family began helping out with the business .

In 1957, at age 31, I spotted an opportunity in
corn-starch manufacturing. But I was going to
compete with Ludo and Luym , the richest group in
Cebu and the biggest cornstarch manufacturers. I
borrowed money to finance the project. The first
bank I approached made me wait for two hours, only
to refuse my loan. The second one, China Bank,
approved a P500,000-peso clean loan for me. Years
later, the banker who extended that loan, Dr. Albino
Sycip said that he saw something special in me.
Today, I still wonder what that was, but I still
thank Dr. Sycip to this day.

Upon launching our first product, Panda corn
starch , a price war ensued. After the smoke
cleared, Universal Corn Products was still left
standing. It is the foundation upon which JG Summit
Holdings now stands.

Interestingly, the price war also forced the
closure of a third cornstarch company, and one of
their chemists was Lucio Tan, who always kids me
that I caused him to lose his job. I always reply
that if it were not for me, he will not be one of
the richest men in the Philippines today.

When my business grew, and it was time for me to
bring in more people, my family, the professionals,
the consultants, more employees, I knew that I had to
be there to teach them what I knew. When dad died at
age 34, he did not leave a succession plan. From
that, I learned that one must teach people to take
over a business at any time. The values of hard work
that I learned from my father, I taught to my
children. They started doing jobs here and there
even when they were still in high school. Six years
ago, I announced my retirement and handed the reins
to my youngest brother James and only son Lance. But
my children tease me because I still go to the
office every day and make myself useful. I just
hired my first Executive Assistant and moved into a
bigger and nicer office.

Building a business to the size of JG Summit was
not easy. Many challenges were thrown my way. I
could have walked away from them, keeping the
business small, but safe. Instead, I chose to fight.
But this did not mean I won each time.

By 1976, at age 50, we had built significant
businesses in food products anchored by a branded
coffee called Blend 45, and agro-industrial
products under the Robina Farms brand. That year, I
faced one of my biggest challenges, and lost. And my
loss was highly publicized, too. But I still
believe that this was one of my defining moments.

In that decade, not many business opportunities
were available due to the political and economic
environment. Many Filipinos were already sending
their money out of the country. As a Filipino, I
felt that our money must be invested here. I decided
to purchase shares in San Miguel, then one of the
Philippines' biggest corporations. By 1976, I had
acquired enough shares to sit on its board.

The media called me an upstart. " Who is Gokongwei
and why is he doing all those terrible things to San
Miguel?" ran one headline of the day. In another
article, I was described as a pygmy going up against
the powers-that-be. The San Miguel board of
directors itself even paid for an ad in all the
country's top newspapers telling the public why I
should not be on the board.
On the day of reckoning, shareholders quickly
filled up the auditorium to witness the battle. My
brother James and I had prepared for many hours for
this debate. We were nervous and excited at the same
time.

In the end, I did not get the board seat because
of the Supreme Court Ruling. But I was able to prove
to others and to myself that I was willing to put up
a fight. I succeeded because I overcame my fear, and
tried. I believe this battle helped define who I am
today. In a twist to this story, I was invited to
sit on the board of Anscor and San Miguel Hong Kong
5 years later. Lose some, win some.

Since then, I've become known as a serious player
in the business world, but the challenges haven't
stopped coming.

Let me tell you about the three most recent
challenges. In all three, conventional wisdom bet
against us. See, we set up businesses against market
Goliaths in very high-capital industries: airline,
telecoms, and beverage.

Challenge No. 1 : In 1996, we decided to start an
airline. At the time, the dominant airline in the
country was PAL, and if you wanted to travel
cheaply, you did not fly. You went by sea or by
land.

However, my son Lance and I had a vision for Cebu
Pacific: We wanted every Filipino to fly.

Inspired by the low-cost carrier models in the
United States, we believed that an airline based on
the no-frills concept would work here. No hot
meals. No newspaper. Mono-class seating. Operating
with a single aircraft type. Faster turn around
time. It all worked, thus enabling Cebu Pacific
to pass on savings to the consumer.

How did we do this? By sticking to our philosophy
of "low cost, great value ."

And we stick to that philosophy to this day. Cebu
Pacific offers incentives. Customers can avail
themselves of a tiered pricing scheme, with
promotional seats for as low a P1. The earlier you
book, the cheaper your ticket.

Cebu Pacific also made it convenient for passengers
by making online booking available. This year,
1.25 million flights will be booked through our
website. This reduced our distribution costs
dramatically.

Low cost. Great value.

When we started 11 years ago, Cebu Pacific flew
only 360,000 passengers, with 24 daily flights to 3
destinations. This year, we expect to fly more than
five million passengers, with over 120 daily
flights to 20 local destinations and 12 Asian
cities. Today, we are the largest in terms of
domestic flights, routes and destinations.

We also have the youngest fleet in the region after
acquiring new Airbus 319s and 320s. In January, new
ATR planes will arrive. These are smaller planes
that can land on smaller air strips like those in
Palawan and Caticlan. Now you don't have to take a
two-hour ride by mini-bus to get to the beach.

Largely because of Cebu Pacific, the average
Filipino can now afford to fly. In 2005, 1 out of 12
Filipinos flew within a year. In 2012, by
continuing to offer low fares, we hope to reduce
that ratio to 1 out of 6. We want to see more and
more Filipinos see their country and the world!

Challenge No. 2: In 2003, we established Digitel
Mobile Philippines, Inc. and developed a brand for
the mobile phone business called Sun Cellular. Prior
to the launch of the brand, we were actually
involved in a transaction to purchase PLDT shares of
the majority shareholder.

The question in everyone's mind was how we could
measure up to the two telecom giants. They were
entrenched and we were late by eight years! PLDT
held the landline monopoly for quite a while, and
was first in the mobile phone industry. Globe was
a younger company, but it launched digital mobile
technology here.

But being a late player had its advantages. We
could now build our platform from a broader
perspective. We worked with more advanced
technologies and intelligent systems not available
ten years ago. We chose our suppliers based on the
most cost-efficient hardware and software. Being a
Johnny-come-lately allowed us to create and launch
more innovative products, more quickly.

All these provided us with the opportunity to give
the consumers a choice that would rock their world.
The concept was simple. We would offer Filipinos to
call and text as much as they want for a fixed
monthly fee. For P250 a month, they could get in
touch with anyone within the Sun network at any
time. This means great savings of as much as 2/3 of
their regular phone bill! Suddenly, we gained
traction. Within one year of its introduction, Sun
hit one million customers.

Once again, the paradigm shifts - this time in the
telecom industry. Sun's 24/7 Call and Text unlimited
changed the landscape of mobile-phone usage.

Today, we have over 4 million subscribers and 2000
cell sites around the archipelago. In a country
where 97% of the market is pre-paid, we believe we
have hit on the right strategy.

Sun Cellular is a Johnny-come-lately, but it's
doing all right. It is a third player, but a
significant one, in an industry where Cassandras
believed a third player would perish. And as we have
done in the realm of air travel, so have we done in
the telecom world: We have changed the marketplace.

In the end, it is all about making life better for
the consumer by giving them choices.

Challenge No. 3: In 2004, we launched C2, the
green tea drink that would change the face of the
local beverage industry -- then, a playground of
cola companies. Iced tea was just a sugary brown
drink served bottomless in restaurants. For many
years, hardly was there any significant product
innovation in the beverage business.

Admittedly, we had little experience in this area.
Universal Robina Corporation is the leader in snack
foods but our only background in beverage was
instant coffee. Moreover, we would be entering the
playground of huge multinationals. We decided to
play anyway.

It all began when I was in China in 2003 and
noticed the immense popularity of bottled iced tea.
I thought that this product would have huge
potential here. We knew that the Philippines was
not a traditional tea-drinking country since more
familiar to consumers were colas in returnable glass
bottles. But precisely, this made the market ready
for a different kind of beverage. One that refreshes
yet gives the health benefits of green tea. We
positioned it as a "spa" in a bottle. A drink that
cools and cleans, thus, C2 was born.

C2 immediately caught on with consumers. When we
launched C2 in 2004, we sold 100,000 bottles in the
first month. Three years later, Filipinos drink
around 30 million bottles of C2 per month. Indeed,
C2 is in a good place.

With Cebu Pacific, Sun Cellular, and C2, the JG
Summit team took control of its destiny. And we did
so in industries where old giants had set the rules
of the game. It's not that we did not fear the
giants. We knew we could have been crushed at the
word go. So we just made sure we came prepared
with great products and great strategies. We ended
up changing the rules of the game instead.

There goes the principle of self-determination,
again. I tell you, it works for individuals as it
does for companies. And as I firmly believe, it
works for nations.

I have always wondered, like many of us, why we
Filipinos have not lived up to our potential. We
have proven we can. Manny Pacquiao and Efren Bata
Reyes in sports. Lea Salonga and the UP Madrigal
Singers in performing arts. Monique Lhuillier and
Rafe Totenco in fashion. And these are just the
names made famous by the media. There are many more
who may not be celebrities but who have gained
respect on the world stage.

But to be a truly great nation, we must also excel
as entrepreneurs before the world. We must create
Filipino brands for the global market place.

If we want to be philosophical, we can say that,
with a world-class brand, we create pride for our
nation. If we want to be practical, we can say that,
with brands that succeed in the world, we create
more jobs for our people, right here.

Then, we are able to take part in what's really
Important giving our people a big opportunity to
raise their standards of living, giving them a real
chance to improve their lives.

We can do it. Our neighbors have done it.
So can we.
In the last 54 years, Korea worked hard to rebuild
itself after a world war and a civil war destroyed
it. From an agricultural economy in 1945, it shifted
to light industry, consumer products, and heavy
industry in the '80s. At the turn of the 21 st
century, the Korean government focused on making
Korea the world's leading IT nation. It did this by
grabbing market share in key sectors like
semiconductors, robotics, and biotechnology.

Today, one remarkable Korean brand has made it to
the list of Top 100 Global Brands: Samsung. Less
then a decade ago, Samsung meant nothing to
consumers. By focusing on quality, design, and
innovation, Samsung improved its products and its
image. Today, it has surpassed the Japanese brand
Sony. Now another Korean brand, LG Collins, is
following in the footsteps of Samsung. It has also
broken into the Top 100 Global Brands list.

What about China? Who would have thought that only
30 years after opening itself up to a market
economy, China would become the world's fourth
largest economy? Goods made in China are still
thought of as cheap. Yet many brands around the
world outsource their manufacturing to this country.
China's own brands like Lenovo, Haier, Chery QQ,
and Huaweiare fast gaining ground as well. I have
no doubt they will be the next big electronics,
technology and car brands in the world.

Lee Kwan Yu's book "From Third World to First"
captures Singapore's aspiration to join the First
World. According to the book, Singapore was a
trading post that the British developed as a nodal
point in its maritime empire. The racial riots there
made its officials determined to build a
"multiracial society that would give equality to all
citizens, regardless of race, language or religion."

When Singapore was asked to leave the Malaysian
Federation of States in 1965, Lee Kwan Yew developed
strategies that he executed with single-mindedness
despite their being unpopular. He and his cabinet
started to build a nation by establishing the
basics: building infrastructure, establishing an
army, weeding out corruption, providing mass
housing, building a financial center. Forty short
years after, Singapore has been transformed into the
richest South East Asian country today, with a per
capita income of US$32,000.

These days, Singapore is transforming itself once
more. This time it wants to be the creative hub in
Asia, maybe even the world. More and more, it is
attracting the best minds from all over the world in
filmmaking, biotechnology, media, and finance.
Meantime, Singaporeans have also created
world-class brands: Banyan Tree in the hospitality
industry, Singapore Airlines in the Airline
industry and Singapore Telecoms in the telco
industry.

I often wonder: Why can't the Philippines, or a
Filipino, do this?

Fifty years after independence, we have yet to
create a truly global brand. We cannot say the
Philippines is too small because it has 86 million
people. Switzerland, with 9 million people, created
Nestle. Sweden, also with 9 million people, created
Ericsson . Finland, even smaller with five million
people, created Nokia. All three are major global
brands, among others.

Yes, our country is well-known for its labor, as we
continue to export people around the world. And
after India, we are grabbing a bigger chunk of the
pie in the call-center and
business-process-outsourcing industries. But by and
large, the Philippines has no big industrial base,
and Filipinos do not create world-class products.

We should not be afraid to tryeven if we are
laughed at. Japan, laughed at for its cars,
produced Toyota. Korea, for its electronics,
produced Samsung. Meanwhile, the Philippines'
biggest companies 50 years ago majority of which are
multinational corporations such as Coca-Cola,
Procter and Gamble, and Unilever Philippines, for
Example, are still the biggest companies today. There
are very few big, local challengers.

But already, hats off to Filipino entrepreneurs
making strides to globalize their brands.

Goldilocks has had much success in the Unites
States and Canada, where half of its customers are
non-Filipinos. Coffee-chain Figaro may be a small
player in the coffee world today, but it is making
the leap to the big time. Two Filipinas, Bea Valdez
and Tina Ocampo , are now selling their
Philippine-made jewelry and bags all over the world.
Their labels are now at Barney's and Bergdorf's in
the U.S. and in many other high-end shops in Asia,
Europe, and the Middle East.

When we started our own foray outside the
Philippines 30 years ago, it wasn't a walk in the
park. We set up a small factory in Hong Kong to
manufacture Jack and Jill potato chips there.
Today, we are all over Asia. We have the
number-one-potato-chips brand in Malaysia and
Singapore. We are the leading biscuit manufacturer
in Thailand, and a significant player in the candy
market in Indonesia. Our Aces cereal brand is a
market leader in many parts of China. C2 is now
doing very well in Vietnam, selling over 3 million
bottles a month there, after only 6 months in the
market. Soon, we will launch C2 in other South East
Asian markets.

I am 81 today. But I do not forget the little boy
that I was in the palengke in Cebu. I still
believe in family. I still want to make good. I
still don't mind going up against those older and
better than me. I still believe hard work will not
fail me. And I still believe in people willing to
think the same way.

Through the years, the market place has expanded:
between cities, between countries, between
continents. I want to urge you all here to think
bigger. Why serve 86 million when you can sell to
four billion Asians? And that's just to start you
off. Because there is still the world beyond Asia.
When you go back to your offices, think of ways to
sell and market your products and services to the
world. Create world-class brands.

You can if you really tried. I did. As a boy, I
sold peanuts from my backyard. Today, I sell
snacks to the world.

I want to see other Filipinos do the same.

Thank you and good evening once again.

Henry Sy: From shoe salesman to super billionaire

2008-01-29T21:04:00.000-08:00

From shoe salesman to superbillionaire

On Saturday, Jan. 19, 2008, the family, relatives, friends and business associates of Henry Sy Sr. gathered at the cavernous SMX Convention Center to honor one of the Philippines’ authentic heroes. Some 1,500 guests showed up to mark the 50th year of Shoemart as a department store and of SM as a formal establishment.

Within those 50 years, Henry rose from a simple shoe salesman to a super billionaire, the Philippines’ richest individual with wealth estimated at $3.9 billion. No individual, no company comes close to Tatang, as he is fondly called. Henry parlayed his P100,000 in capital in 1958 into a P200 billion enterprise, the market value of SM Investments Corp., his retailing, property, banking and tourism holding company.

The Zobel de Ayala family, which owns half of Ayala Corp. has wealth valued at $2.67 billion representing their 50.89 percent ownership in the property, banking, telecom and industrial conglomerate which has a market cap of P215 billion.

Third in wealth is taipan Lucio Tan. I estimate the value of his holdings in PAL Holdings, which owns Philippine Airlines, Fortune Tobacco, the country’s biggest tobacco company, and his two banks, PNB and Allied Banking Corp., at $1.56 billion.

Henry’s rival in banking, George SK Ty, owns Metrobank which has a market cap of P80.42 billion. The Toyota King owns 80 percent of that or P64 billion ($1.56 billion), same as Lucio Tan’s, his balae.

Henry’s closest rival in mall and retailing business is John Gokongwei Jr. His family owns 70 percent of JG Summit Holdings valued at $1.2 billion.

SM owns 30 malls, probably the largest chain in the world. Two million visit the malls on weekdays, up to four million on weekends and peak days.

The malls have combined floor area of 3.9 million square meters, 9,144 tenants, 883 mall food tenants, 185 cinemas with total seating capacity of 122,826, 156 bowling lanes, and 48,267 parking slots. “Going to the malls is a complete experience,” says Henry. You shop, you eat, you play, you watch a movie, book a flight, listen to entertainers, have a haircut, a massage or a dental checkup, stroll by the bay, bring the family out, meet with friends. The malls are a complete ecosystem, to use the favorite word of the Microsoft people. Lately, at his flagship Mall of Asia Henry has added a convention center (the SMX), call centers, and soon hotels.

How did Henry become so rich and so successful? Through plain hard work, a minimum of 12 hours a day, even these days, despite being 83 and having legs weakened by too much walking (visiting his malls). And also, he says, “being honest and fair to other people.” And yes, innovation.

He used to go to the US twice a year to source his shoes and observe the latest trends in products and retailing. As a young man, he endured the 45 hours of plane ride from Manila to New York and then take the train to Boston to look for shoes to sell. The reason why Henry went into garments and other soft lines is because he ran out of shoes to sell. His suppliers and manufacturers couldn’t make the shoes fast enough.

He priced his shoes so cheap, despite the quality, so that he could sell in volume. Metro Manila in the days after the war had about 300,000 people. He figured if he could sell a pair to each of them and then make P1, then he would be richer by P300,000.

Henry built the first air-conditioned shoe store, the first shopping center, the first mall, the first appliance showroom, the first home furnishing shop, the first malls with ice skating rinks, the largest I-Max theater in the world, among many firsts. In the process, he also the Philippines’ first (in size, deposits and networth) bank, the combination of Banco de Oro and China Bank.

For the long term, Henry is looking at tourism. His Hamilo Coast in Batangas has more than 5,000 hectares, much of it in pristine condition.

Henry had uncanny timing. His breaks come at the wrong time. He buys assets when blood is spilled literally in the streets. He opened the first SM department store two months after martial law in 1972. He started the SM North EDSA property right after the Ninoy Aquino Assassination and amid a debt moratorium. He opened his first mall in November1985, in the middle of the gravest economic and political crisis. He opened Megamall in the middle of an energy crisis, cement shortages and coups. He began planning for the Mall of Asia in 1997, just as the Asian Crisis was beginning to take its toll.

biznewsasia@gmail.com

A tribute to Henry Sy Sr

2008-01-29T21:03:00.000-08:00

Tatang Henry Sy Sr. was honored by his family, friends and business associates as a glittering song, dance, musical and dinner party (catering by Mandarin, drinks by Coke) last Saturday, Jan. 19, 2008 at his cavernous SMX Convention Center just next door to SM Mall of Asia. More than 1,500 guests showed up for the “evening of music and memories, dances and dreams, tribute and thanksgiving entitled, “ I Dream”. It lasted from 6 p.m. to past 11 p.m.

There were no public officials around, except perhaps for Congressman Cynthia Villar who joined the presidential table, and Makati Mayor Jojo Binay who joined Tessie Sy’s table. Henry and his wife Felicidad shared their table with SGV Founder Washington SyCip, JG Summit CEO James Go, PLDT Chairman Manuel V. Pangilinan, stern-looking Senen Mendiola, and Eduardo Yu. Other notable tycoons I saw were Lucio Tan, Jaime Augusto Zobel de Ayala (who left after the cocktails), and Oscar Lopez and Ramon del Rosario Sr. with whom I had shared a table.

At a little past 7 p.m., Tatang was wheeled into the hall by his children, led by Tessie, the eldest, Henry Jr., Hans, Herbert and Harley. He looked dapper in a black off-the-shelf suit and striped black tie. He spoke little during the night.

The night was about the Henry Sy Lega-Sy, from the time when he was a boy of 12 in Jinjiang, China in 1936 and taking the hazardous boat ride to Manila to join his father in the Philippine capital. Seeing his father’s operation, he cried, “this is not the way to make a living.”

And so Henry went solo, without much schooling, without much capital, but with plenty of guts and bravado. Initially, he set up a buy and sell business to create the capital he needed to fulfill his dream. He lived simply and frugally. He hated borrowing money and thus saved hard to raise enough capital.

Henry began his shoe retailing business in earnest in 1958 when he opened a shoe store with a fitting name, Shoemart, on Avenida Rizal.

Before that, he had run a nameless shoe shop in Quiapo that sold other goods on the side. Initially, he sourced his shoes from enterprising American GIs who had landed in Manila to liberate the city. Later, he made trips to the United States, particularly in New York and Boston where he sourced the more fashionable shoes with more exciting designs.

Henry succeeded mightily, earning money the old-fashioned way – thru sheer hard work. He adds, “being honest and fair to other people.” And of course, innovation. He set up the first airconditioned shoe store. The first integrated mall. The first chain of malls. And the region’s largest and today, his showcase of retailing genius and prowess, the Mall of Asia. In the process, he also became the Philippines’ largest banker ($1.69 billion equity) and the biggest long-term investor in tourism.

Today, the P100,000 capital he invested in Shoemart is now worth P201 billion, the market cap of his holding company, SM Investments Corp. (SMIC). He and his wife and six children own about 80 percent of SMIC. That makes him worth P160.8 billion or $3.92 billion. Asked about being the wealthiest individual, Sy merely smiles, “maybe, I am not good at hiding my wealth.”

Henry finished elementary but not high school because of the war. Then he went to FEU where he negotiated with the dean that instead of producing his high school diploma, he be allowed to take an equivalent exam to enter college. He passed but dropped out of college after two years. He didn’t have time to attend class because of the demands of his shoe business and the need for him to travel abroad, especially the US, to source his shoes and pick up the latest trends in business.

The Philippines’ oldest conglomerate, Ayala Corp., has market value of P215.28 billion. About 50.89 percent of it is owned by the Zobel Ayala family through their family holding company, Mermac, Inc.. That makes the Zobels worth only P109.55 billion or $2.67 billion. Most of it came from inherited wealth (from their aunt Mercedes McMicking or Mermac).

The Ayala wealth is not a rags-to-riches story. Also, it grew immensely, thanks to a pool of highly competent and hardworking professional managers and the generosity of government. Ayala employs among the best CEO talents in the business. The family’s Globe Telecom has been a beneficiary of a net operating loss carryover (NOLCO) amounting to P7 billion a year for three years. Manila Water has received annual rate increases averaging 50 percent per year. The telephone and water concessions were awarded the Ayalas during Fidel Ramos’s presidency.

Says Sy: “SM can only be bigger.”

biznewsasia@gmail.com

Stimulating the Philippine economy

2008-01-29T21:01:00.000-08:00

At the Newsmakers Breakfast Forum yesterday, Jan. 30, 2008, Albay Governor Joey Salceda elaborated on his P75 billion economic stimulus plan. He makes a lot of sense.

Some 2.3 million low-income tax filers (not necessarily taxpayers) will receive a P7,000 check each from the Bureau of Internal Revenue. The money presumably will be spent by the 2.3 million to pay for their water bill, electric bill, tuition of their children, e-loading their cellphones, and to buy basic necessities.

There is debate in the cabinet as what to call the P7,000 – a tax rebate, a tax refund, or a conditional cash transfer. To me, it is a cash doleout. “We are putting money in the pockets of ordinary people,” explains Salceda, a former economics student of President Arroyo at Ateneo. The goal is economic prosperity, he adds. And what better way to do that than giving away cash handouts. No sweat.

And it is a good move.

Did you know that under the EPIRA (the so-called electricity reform law) made poor electricity consumers pay P34 billion more annually in favor of the rich, the owners of factories and industries? This is because the electricity rate of industries was lowered and that of households increased.

Salceda says a P16 billion consumption money has a multiplier effect of at least twice, especially if that money is spent in the rural areas or in agriculture where the multiplier effect is at least 2.3 times.

Where will the government get the P16 billion in cash doleout and the P59 billion balance of the P75-billion economic stimulus? Joey suggests P24 billion from earnings of the Malampaya natural gas field, P14 billion from the sale of the idle Food Terminal, Inc. property in Taguig which sits cheek-by-jowl with the Fort Bonifacio business district, and the balance of P37 billion from a deficit spending of the government.

Deficit spending a new orthodoxy that even the World Bank and the IMF have now found fashionable, for the first time since their founding. At the World Economic Forum on Jan. 26 on the Global Economic Outlook, Harvard Prof. Lawrence Summers called it “mildly historic” an event that the IMF managing director, Dominique Strauss-Kahn, had for the first time, called for increasing a budget deficit and fiscal stimulus, rather than making the usual plea for fiscal consolidation.

Kahn had told the forum that low interest rates, high liquidity, a breakdown in credit and risk management practices, and a shortcoming in US financial regulation and supervision had produced an economic “perfect storm” in the financial world.

The IMF chief suggested that an economic slowdown might decrease the price of commodities, including oil, which would provide room for a more active monetary policy. For larger financial institutions, he recommended raising capital instead of selling off assets.

In the Philippines, Governor Salceda is dismayed that banks are not lending money but instead are making money trading with each other. He cites data not exactly good for the banks. The loans to deposit ratio of the banking system has fallen dramatically from 0.95 in October 1999 (when the Estrada government was pump-priming the economy following a recession under President Ramos) to 0.65 today. Where nine years ago, banks were lending almost every peso of their deposits, today they are lending only 65 centavos. Where are they hiding the 35 centavos? Where? Ask the banks and the government.

In terms of loans to GDP ratio, you can say the banks have almost stopped lending. In 1997, 65 percent of the value of economic output or GDP was financed with bank loans. Today, the ratio has fallen by more than half to just 30 percent. Ordinary people, presumably our OFWs who make $14 billion a year, are financing economic growth.

The banks are not contributing much to the growth of the economy. They just collect and collect and dispense little in return – to the people and to the economy. Is this the reason why our banks are so awash with cash and our bank owners are four to five times richer now than they were five years ago?

What happened to corporate social responsibility? Maybe, the President should call a summit of bankers, not a summit on energy. The problem may be unused money (parked in the banks), not high prices of energy. To respond to this column, email biznewsasia@gmail.com

biznewsasia@gmail.com

A dinner with President Arroyo

2007-10-09T18:39:00.000-07:00

A dinner with President Arroyo

The officers and governors of the Manila Overseas Press Club had a thoroughly enjoyable night with President Gloria Arroyo Tuesday (September 18). The MOPC contingent was led by myself as BizNewsAsia publisher and chairman of Asia’s oldest press club and the Philippines’ most prestigious press club, Philippine Star’s Babe Romualdez as president, and Manila Standard Today’s Emil Jurado as vice-president.

With the President was the affable and dapper Press Secretary Toting Bunye, the former Ayala exec who became mayor of Muntinlupa and converted it into a bustling city and alternative business center. He has been GMA’s longest-serving press secretary and the longest serving, postmar tial law.

The five-course dinner was preceded by cocktails with red and white wine and nuts. The President walked into the Palace Music Room looking radiant and ebullient in blue dress and with very little jewelry, except for a diamond brooch and a blue leather-strapped watch which showed two time zones. She had a long day having come from Zamboanga.

The President said she missed Max Soliven. “The defender of the faith,” I remarked. “No, Max was very objective,” she clarified. Someone mentioned Diosdado Macapagal, GMA’s father. I informed GMA “he was the first Philippine president I ever met, in Malacañang, during a Boys and Girls Week event. He had warmth and simplicity but with an aura of power.” He didn’t have GMA’s short fuse, a trait our gracious hostess denied having during the 90-minute dinner.

I was the last journalist who interviewed President Dadong with then Senator Gloria Arroyo serving as interpreter in 1995 at their modest Forbes Park bungalow with a sprawling garden. Dadong talked about his legacy and gave me his book, A Stone for the Edifice, which President Arroyo uses occasionally as her governance bible. Known as the poor boy from Lubao and “The Incorruptible,” Dadong was a bar topnotcher and had a doctorate in both civil law and economics. After the interview, his wife, Eva Macaraeg Macapagal, invited me as “special guest” to dinner at their Forbes Park home. I thought I was the only guest. It turned out to be a victory party for Senator Arroyo’s reelection victory. The main course was chicken.

After that, Dadong fell ill and died in 1997, at the age of 86. “He was no longer lucid,” GMA recalled to us of her father’s final days. I remember Dadong as the president who abolished land tenancy and imposed the first genuine land reform. Rejecting a White House invitation for a state visit, Macapagal changed Independence Day from July 4 to June 12, declared Sabah belonged to the Philippines, and presided over an economy that was the No. 1 in Asia, outside Japan, from 1962 to 1965.

As GMA ushered us into the adjoining formal dining room, she again gave me credit for pointing out for her 2006 State of the Nation address, that the economy has had its strongest and longest expansion “in the last quarter century.” “The last quarter century” would be her favorite expression in succeeding speeches. Of late, the phrase has been replaced by “the best in a generation,” which is 30 years.

The economy was the main topic with the President during the rather sumptuous (by GMA’s Spartan standards, anyway) of seared fish fillet and pasta, capped with luscious chocolate cake and brewed coffee. She was agog about the Wall Street Journal’s gung-ho page one article by James Hookway, a frequent Manila visitor. WSJ reported September 13 “the perpetual sick man of Asia is making an unexpected recovery,” quotes Adrian Mowat, a stock strategist, saying, “the Philippines could be the next India in terms of its ability to surprise” and gives credit to President Arroyo. “The next India”—the President relished it. I reminded her India is not exactly a good metaphor because as a ratio of the population or percentage-wise, the Philippines has a greater middle class.

“The stock market has soared over the past two years, although it has faltered recently. Foreign investors are coming back, attracted by the Philippines’ young population—the average age of its 89 million people is 22—and the widespread use of English, a legacy of its past as an American colony. The call-center business is thriving, some of it poached from India,” Hookway asserted. “Two years ago, with thousands of street pro testors threatening to oust her and the country drifting toward a financial crisis, she pushed a higher sales tax through Congress and signed it into law over the objections of her advisers. The move raised the tax to 12 percent from 10 percent and expanded it to a range of new products and services, including gasoline.”

I am glad the foreign press is finally getting the drift which my BizNewsAsia weekly magazine had been pointing out, before anybody was looking—the Philippine economy was growing at its best “in the last quarter century” and will be, as Goldman Sachs predicts, become one of the 15 richest countries on earth in 50 years.

President Arroyo was all vivacity and verve during the dinner, oblivious of any problem or negative concern. Her secret? “I hear Mass every day, do aerobics three times a week, and have seven hours of sleep every night.” “Do you ever have a problem?” I asked her. She just smiled.

Email me at biznewsasia@gmail.com

Who are making money

2007-10-09T18:36:00.000-07:00

The rich Filipinos

The top moneymakers of 2006 were also the top money makers in the first half of 2007in the Philippines. This proves the viability of the business model of these companies, all listed in the Philippine Stock Exchange, and the sustainability of the economic takeoff.

Also, the very richest Philippine families keep getting richer everyday because they are the owners of these immensely profitable companies. As I keep saying, only 160 families own the economy and the politics of this country. The Philippines has one of the world’s worst income inequality ratios, according to World Bank data.

In 2006, the biggest publicly listed money spinners in terms of profits were: 1. Philippine Long Distance Telephone of telcom mogul Manny Pangi linan and the Salim family of Indonesia, P35.3 billion; 2. First Philippine Holdings Corp. of the (Oscar) Lopez family, P15.46 billion; 3. SM Investments Corp. of Henry Sy Sr., P15.24 billion; 4. Ayala Corp. of the Zobel-Ayala family, P14.46 billion; 5. Meralco, again, of the (Oscar and Manolo) Lopez family, P13.88 billion, 6. Globe Telecom, again of the Ayala family, P11.75 billion; 7. San Miguel Corp. of Danding Cojuangco, Henry Sy and Kirin Brewery, P10.17 billion; 8. Piltel of again, Manny Pangilinan, P10.07 billion; 9. Bank of PI of still again, the Ayala family, P9.14 billion; and 10. JG Summit Holdings of taipan John Gokongwei Jr., P8.69 billion.

Among the holding companies, the biggest money makers in 2006 were: 1. SM Investments Corp. P15.24 billion; 2. Ayala Corp. P14.4 billion; 3. JG Summit Holdings P8.69 billion; 4. Benpres Holdings, also of Lopez, P4.6 billion; 5. Aboitiz Equity Holdings P3.8 billion; 6. A. Soriano Corp. P3.1 billion; 7. Filinvest Development of Andrew Gotianun, P1.42 billion; 8. DMCI Holdings of the Consunji family, P1.38 billion; 9. PAL Holdings of Lucio Tan, P1.2 billion; and 10. Alliance Global of Andrew Tan and George Yang, P888 million.

In the first half of 2007, the 10 largest profit makers were: 1. PLDT P17 billion; 2. Ayala Corp. P11.49 billion; 3. SMC P7.87 billion; 4. Globe P6.42 billion; 5. PAL Holdings P6.32 billion; 6. SM Investments Corp. P5.86 billion; 7. Bank of PI P5.7 billion; 8. PNOC Energy Development P4.2 billion; 9. JG Summit P3.83 billion; and Metrobank of taipan George Ty P3.69 billion.

In the first semester, listed domestic companies increased their earnings by a whopping 41.4 percent to P148.75 billion from P105.2 billion in the same period last year.

Francis Lim, president and CEO of the Philippine Stock Exchange that conducted the study, says “the performance of the listed companies last year once again provides clear proof that steps being taken by the government to improve the country’s macro-economic environment, especially to lower interest and inflation rates, have benefited companies.”

Lim says the combined gross revenues of the listed companies went up by15.1 percent to P1.18 trillion during the first half of the year from P1.02 trillion a year earlier.

Lim sees further improvement in the balance of 2007 and a continued rise in the stock market.

As of June 30, 2006, the market capitalization of listed companies amounted to P6.33 trillion. That increased to P7.6 trillion in the first quarter and further to P8.32 trillion in the second quarter of 2007. Between June 2006 and June 2007, owners of listed stocks hauled in an additional P1.987 trillion in wealth. That’s 1,987 billion pesos of added wealth without their owners exerting much effort.

If you assume that the 160 richest families of this country owned the listed stocks, each of these families made additional wealth of P12.42 billion on the average, in just 12 months. Of course, some of the listed companies are owned by foreign investors, in whole and in part. In terms of voting control, for instance, PLDT is run by foreign owners, with Manny Pangilinan serving as their surrogate.

Indeed, of total market cap of P8.32 trillion, only P4.38 billion is domestic capitalization, leaving P3.94 trillion or 47.3 percent as foreign market cap. The P3.94 trillion foreign market cap is understated because companies like PLDT, which is foreign-controlled, is reckoned as domestic.

The PSE-listed companies reported combined six-month net income of P148.75 billion. Holding companies accounted for P38.9 billion or 26 percent of total profits, followed by the industrial sector, P35.27 billion or 23.7 percent, services P31.79 billion or 21.4 percent, financials P24.27 billion or 16.3 percent, property P14.8 billion or 10 percent; and mining P3.62 billion 2.4 percent. SMEs had a P54.57 million share or a paltry one-third of one percent or 0.03 percent.

The Big Boys made 99.7 percent of total profits of listed stocks; the SMEs settled for barely a third of a percent. That’s how ridiculous the income disparity is.

Email me at biznewsasia@gmail.com

John Gokongwei's Nine Rules of Success

2007-10-09T15:49:00.000-07:00

Gokongwei’s nine rules

Ateneo has produced a book on John Gokongwei Jr., The Path of Entrepreneurship by Marites A. Khanser. John gave me a copy with his dedication, “To my dear friend.” More than a biography, the tome is a textbook on management and entrepreneurship.

The book also uses data, anecdotes and stories from articles in the course of my coverage of John Gokongwei since 1974 when I first met him fighting for a board seat in San Miguel Corp. He made three or four forays into SMC and failed each time. The board battles and proxy wars brought John to the limelight and he benefited immensely from the experience.

Just before the old man Andres Soriano Jr. died (of cancer), the SMC CEO invited John to join the SMC Hong Kong and the Anscor boards and sold him the Itemcop property on Pioneer at a spectacular bargain, P1,000 per square meter. Today, it is worth 50 times and has become John’s Cyber Park.

To me, the most important chapter in the book is Chapter 20, “The Nine Rules for Business Success” which John himself wrote.

1. Change is inevitable and flexibility is the key.

2. Personal stakes in the company encourage everyone to work hard.

3. Mistakes and disappointments are inevitable.

4. Good brand building equals reputation.

5. Family support is crucial.

6. Never lose sleep thinking of business risks.

7. Pausing to recharge brings new vigor.

8. Reading and traveling enrich one’s mind.

9. Philanthropy is a personal satisfaction.

The rules sound very good—on paper and if you are already a John Gokongwei. If you are budding entrepreneur with little capital in a fiercely competitive market, I don’t think you can subscribe to Rule No. 6 (about never losing sleep) and Rule No. 9 (you cannot give what you don’t have yet).

On Rule One, John says he always looks for “new developments in the business environment for information and policies, which may affect our operations. The decision to move from peddling soap on bicycles to bringing tires to Manila on batels, to opening the first flour company, to being one of the largest conglomerates in the Philippines today is a testament to that flexibility. Even during the difficult times under martial law or during the 1997 Asian financial crisis, our group was one of the Filipino companies to survive and prosper because of our flexibility and adaptability to change and adversity.”

On Rule No. 2, John gave each of his siblings’ shares in the company. “They all worked very hard for its progress,” he says. “However, it is not my siblings, but also our employees who are committed to making our business successful. We are currently studying a stock option plan to be given to employees worth promoting and keeping, giving them the same sense of ownership like those of my siblings. I am happy to note that JG Summit’s stockholder’s equity has grown more than eleven times since 1990 from P6.797 billion to P68.866 billion.” Net worth is P95 billion by now.

On Rule Three, John made a number of mistakes. They include, I believe, the purchase of Oriential Petroleum (it didn’t produce oil) and the money-losing ice cream, petrochemicals and textile businesses. John lost more than P3 billion from petrochemicals last year but made up for that by hauling P2 billion in profits in six months of 2007 from Cebu Pacific. He lost billions from Oriental but gained billions from profits and sale of his PCIBank stake.

Says John: “Take them [the mistakes] in stride, learn the lessons, and move on. One rule we abide by in any business dealings is risking only up to 15% of our net worth in any single venture. When businesses aren’t growing, we let it go.”

On Rule No. 2, John says “one of the most important things in our business is building brands. Having good brands translates to quality, reputation, and good governance. Our conglomerate is now in seven industries, and we continuously build top brands.” Universal Robina Corp.’s Branded Consumer Foods Group is the largest and is now present in seven Asian countries.

Rule No. 5 is the same as Rule No. 2. John’s anchor is his wife, Bia, who “has always been there to support all my decisions and never got in the way. Oftentimes, she serves as my sounding board. She is receptive and gives good advice. In fact, most do not know that she organized what is now our retail business. She was also there, taking care of the children, making sure they grew up to be good, responsible individuals, while I was busy expanding the business. She has indeed done a good job.”

He also attributes his success to the support of his mother, Juanita Lim, and his siblings, Henry, Lily, Johnson and James, and his close friends, Gabriel Singson, Pacifico Yap, and Ignacio Gotao, and his old friends in Cebu, Mario Mendezona, Atty. Paquito Borromeo, and Ramiro Valenzuela.

On Rule No. 6, John says “sleeping is a joy of life. My daily routine consists of an afternoon nap. As much as possible, I do not accept lunch appointments so as not to miss my nap that invigorates me to work in the office up to dinnertime.”

Email me at biznewsasia@gmail.com

The writ of Amparo, Philippine style

2007-10-09T15:46:00.000-07:00

The writ of amparo, RP style

Not many people know it but the Supreme Court of the Philippines is a Congress by itself. It can legislate, which means it may violate one of the basic principles of a democracy— no taxation without representation.

As a legislature, our Supreme Court has adopted what is called the writ of amparo. The writ of amparo is a concept enshrined in the Mexican Constitution since 1857 and adopted by a dozen other Latin American countries but which in the Philippines nobody has heard about until the 1991 bar examinations when Ateneo law professor Adolf Azcuna incorporated it as a perplexing question. Not surprisingly in the 1991 bar, Ateneo graduates were the topnotchers. Adolf is now an SC justice which may explain why the High Tribunal is suddenly warm to the idea.

The writ of amparo, says our Supreme Court, is a remedy available to any person whose right to life, liberty and security is violated or threatened with violation by an unlawful act or omission of a public official or employee, or of a private individual or entity. The writ shall cover extralegal killings and enforced disappearances or threats of extralegal killings and enforced disappearances.

In Mexico, the writ is applied against government officials, particularly the president. Here, the writ is applied against both public officials and private persons, both government corporations and private corporations. In that sense, the writ of amparo becomes a very powerful protection for rights of citizens and of corporations. Amparo is Spanish for protection.

Under this broad meaning and applying it as a layman, I take to use the writ of amparo as intended to protect not just life, not just liberty, not just security—but economic security which to me means your job, your livelihood.

In that sense, I believe the writ of amparo is an awesome tool against corruption, by both government and the private sector. You can argue that you are poor because you have no job or economic security. You have no economic security because the economy is doing poorly. The economy is doing poorly because the government is corrupt. It sounds like an extended logic but it is an argument easy to understand.

As a tool against corruption, the writ of amparo can be construed as a means to lessen government corruption. Lawyers, if they know their marbles, should explore this possibility—using the writ of amparo as a veritable weapon against corruption.

The writ of amparo can be filed, at any time, with any courts in the Philippines—regional trial courts, Sandigan, Court of Appeals, the Supreme Court or any justice of such courts. The writ is enforceable anywhere in the country. There are no docket fees. Thus, it is a pro-poor measure.

The respondent must file within 72 hours a written reply, with supporting affidavits. The respondent must say he did not violate or threaten to violate the right to life, liberty and security of the aggrieved party, through any act or omission. Omission means even if you did not act, it is an act by itself.

One beautiful thing about the writ is its power of discovery. It wants to know what the respondent has done to determine the fate or whereabouts of the aggrieved party and the person or persons responsible for the threat, act or omission and what information the respondent has in this regard.

If the respondent is a government official, he must state what further actions he will take to verify the identity of the aggrieved party, recover and preserve evidence related to the death or disappearance; identify witnesses and obtain statements from them; determine the cause, manner, location and time of death or disappearance, as well as any pattern or practice that may have brought about the death or disappearance; identify and apprehend the suspects, and bring the suspects before a competent court.

So if you are the chief of staff of the Armed Forces or the chief of the Philippine National Police, you cannot just claim the dead or missing person is not in your territory (the usual answer in a writ of habeas corpus). You tell the court where the dead or missing person could possibly be, locate it, identify the suspects, apprehend them, gather information and evidence, and bring the suspects to court. In effect, if you are the suspect mastermind, you must turn yourself in, gather evidence against yourself, and help in your own prosecution.

What is your penalty for not doing so? You will be subject to contempt of court. So if you are General Hermogenes Esperon of the Armed Forces of the Philippines or General Avelino Razo of the Philippine National Police, take the contempt of court anytime. It is a lesser penalty than being the suspect yourself.

Also, the complainants or agents of the court can visit, inspect and ransack your office to gather evidence and locate the dead or missing person.

Imagine Gloria Arroyo coming forward and proclaiming herself guilty of hundreds of disappearances and unexplained killings. Or guilty of the poverty of the people. Can that happen? No way, Jose.

Email me at biznewsasia@gmail.com

2007-10-09T15:44:00.000-07:00

The writ of amparo, RP style

Not many people know it but the Supreme Court of the Philippines is a Congress by itself. It can legislate, which means it may violate one of the basic principles of a democracy— no taxation without representation.

As a legislature, our Supreme Court has adopted what is called the writ of amparo. The writ of amparo is a concept enshrined in the Mexican Constitution since 1857 and adopted by a dozen other Latin American countries but which in the Philippines nobody has heard about until the 1991 bar examinations when Ateneo law professor Adolf Azcuna incorporated it as a perplexing question. Not surprisingly in the 1991 bar, Ateneo graduates were the topnotchers. Adolf is now an SC justice which may explain why the High Tribunal is suddenly warm to the idea.

The writ of amparo, says our Supreme Court, is a remedy available to any person whose right to life, liberty and security is violated or threatened with violation by an unlawful act or omission of a public official or employee, or of a private individual or entity. The writ shall cover extralegal killings and enforced disappearances or threats of extralegal killings and enforced disappearances.

In Mexico, the writ is applied against government officials, particularly the president. In the Philippines, the writ is applied against both public officials and private persons, both government corporations and private corporations. In that sense, the writ of amparo becomes a very powerful protection for rights of citizens and of corporations. Amparo is Spanish for protection.

Under this broad meaning and applying it as a layman, I take to use the writ of amparo as intended to protect not just life, not just liberty, not just security—but economic security which to me means your job, your livelihood.

In that sense, I believe the writ of amparo is an awesome tool against corruption, by both government and the private sector. You can argue that you are poor because you have no job or economic security. You have no economic security because the economy is doing poorly. The economy is doing poorly because the government is corrupt. It sounds like an extended logic but it is an argument easy to understand.

As a tool against corruption, the writ of amparo can be construed as a means to lessen government corruption. Lawyers, if they know their marbles, should explore this possibility—using the writ of amparo as a veritable weapon against corruption.

The writ of amparo can be filed, at any time, with any courts in the Philippines—regional trial courts, Sandigan, Court of Appeals, the Supreme Court or any justice of such courts. The writ is enforceable anywhere in the country. There are no docket fees. Thus, it is a pro-poor measure.

The respondent must file within 72 hours a written reply, with supporting affidavits. The respondent must say he did not violate or threaten to violate the right to life, liberty and security of the aggrieved party, through any act or omission. Omission means even if you did not act, it is an act by itself.

One beautiful thing about the writ is its power of discovery. It wants to know what the respondent has done to determine the fate or whereabouts of the aggrieved party and the person or persons responsible for the threat, act or omission and what information the respondent has in this regard.

If the respondent is a government official, he must state what further actions he will take to verify the identity of the aggrieved party, recover and preserve evidence related to the death or disappearance; identify witnesses and obtain statements from them; determine the cause, manner, location and time of death or disappearance, as well as any pattern or practice that may have brought about the death or disappearance; identify and apprehend the suspects, and bring the suspects before a competent court.

So if you are the chief of staff of the Armed Forces or the chief of the Philippine National Police, you cannot just claim the dead or missing person is not in your territory (the usual answer in a writ of habeas corpus). You tell the court where the dead or missing person could possibly be, locate it, identify the suspects, apprehend them, gather information and evidence, and bring the suspects to court. In effect, if you are the suspect mastermind, you must turn yourself in, gather evidence against yourself, and help in your own prosecution.

What is your penalty for not doing so? You will be subject to contempt of court. So if you are General Hermogenes Esperon of the Armed Forces of the Philippines or General Avelino Razon of the Philippine National Police take the contempt of court anytime. It is a lesser penalty than being the suspect yourself.

Also, the complainants or agents of the court can visit, inspect and ransack your office to gather evidence and locate the dead or missing person.

Imagine Gloria Arroyo coming forward and proclaiming herself guilty of hundreds of disappearances and unexplained killings. Or guilty of the poverty of the people. Can that happen? No way, Jose.

Email me at biznewsasia@gmail.com

Comnmercialism from Pacquiao'sfight

2007-10-09T15:40:00.001-07:00

Commercialism

The Oct. 7, 2007 Manny Pacquiao-Marco Antonio Barrera fight is a classic example of crass commercialism by the television station that bagged the contract, GMA Network Channel 7. There were at least a dozen commercials for each round break. Now publicly listed, Channel 7 must have hauled in a fortune in broadcasting the fight which lasted the full distance of 12 rounds.

Good for the station, the sponsors and the advertisers, both fighters, normally knock-out specialists, had the strength and stamina for an extended title fight. A number of tv viewers must have been irritated with the overwhelming number of commercials. What should take 45 minutes lasted three hours on television. But what can viewers do?

Fortunately for those with Internet connection, the results of the fight, including the round by round tally, were on the web, an hour ahead of Channel 7.

***

A reader who goes by the pen name, Jose Pidal, reacted to my column last week. On Oct. 5, I wrote that it is getting more difficult each day to do business in the Philippines. Regulations have not been simplified. They have become more complex. Red tape has not been reduced. It has worsened.

The latest survey by the World Bank of 178 countries, the Philippines ranks No. 133 in ease of doing business, down 12 rungs from 121 in 2006. The country is not competitive for businessmen, local and foreign, to do business in. Singapore, for the second year running, tops the aggregate rankings of 178 economies on the ease of doing business.

Our neighbors, notably, China, India, Vietnam and even Indonesia have leapfrogged over us in making things easy for businessmen.
The World Bank says starting a business here takes 15 steps and 58 days and will cost 26.8 percent of your capital. That’s very expensive. The government takes away – in fees, licenses, and approval money, more than a quarter of your capital even before you could begin business.

Reader Pidal comments:

“I enjoyed your column on "Doing business"
In my town I go often to City Hall to deal with the multitude of things just to keep all my taxes, fees and permits and licenses up to date so I can run the business. When there, I notice more and more people sitting inside the offices with each visit.

“When I inquire, the answer is always the same. Those are the casuals, supporters of the Mayor in the last election.. And therein lies the old adage "too many cooks spoil the broth"...
“With all these people now touching and handling every single scrap of paper no wonder there is more red tape! The City Hall is duty bound to create more bureaucracy to support all the people it has to keep busy on a daily basis.”
“For weeks after the last mayoral election in our town, I had a hard time getting to my mother-in-law's home as she lived next door to the incoming mayor. There were lines of people waiting up and down the street just to get in and soak up the gravy. Some days it was impossible to even park in her driveway as it was filled with people.
I'm sure this is played out in cities and towns across our country after every election. As long as we behave this way, it will be more and more difficult to start an enterprise in this country. For many of our youth, there are really only 2 options, #1 try to get out, or #2 if you can't get out, then try for a job in our only growth industry - City Hall.”

“What can be done about this? The fact that there is so much money to be had or made one way or another by being in politics is the root cause of this. This country lags way behind
many others in fighting even the most basic corruption. Many of our politicians even lack the basic delicadezza to hide their greed. In my town all public works contracts go to the mayor's construction company, on a provincial basis the contracts go to the governor's company or get soaked up through the efforts of our governor's brother.. who is our congressman.”
“Whenever I visit the NCR and I stay there, I can always tell who is soaking up the cash by the prominent letter at the base of the streetlights. My niece visiting from the Spain once asked if the streetlights were privately owned. I told her that a certain family felt that indeed they owned the streetlights, but they used public money to build them.....as long as this goes on and on, common people will continue to be used to it as a ‘normal’ way of life and nothing will change or ever get better.”
“I appreciate your column on doing business, I just wish doing business here was getting easier!”

Email me at biznewasia@gmail.com

Where it is easy to do business

2007-10-09T15:38:00.000-07:00

Where it is easy to do business

In my previous yesterday, I said it is getting more difficult to do business in the Philippines, primarily because of the increasing red tape and time-consuming, if not costly, procedures. If you are a business taxpayer, you have to go to the Bureau of Internal Revenue and other collection agencies 47 times in a year, to pay taxes, and spend as many as 195 hours doing so.
In the meantime, most of the world is simplifying its procedures for doing business.

In Asia, China was a standout in regulatory reform in 2006/07, according to the latest World Bank survey of doing business in 178 countries. In that survey, the Philippines ranked 133rd, down from 121 in 2006. Singapore is No. 1, where red tape has been cut to almost nil and corruption is also almost nil.
The top reformer in Asia and among the top 10 in the world, China introduced far-reaching protection of private property rights and a new bankruptcy law. Not surprisingly, China attracts $50 billion in foreign investments yearly.
Worldwide, the top 10 reformers are, in order, Egypt, Croatia, Ghana, FYR Macedonia, Georgia, Colombia, Saudi Arabia, Kenya, China and Bulgaria.
Singapore, for the second year running, tops the aggregate rankings of 178 economies on the ease of doing business. Worldwide, the top 25 in the rankings are, in order, Singapore, New Zealand, United States, Hong Kong, Denmark, the United Kingdom, Canada, Ireland, Australia, Iceland, Norway, Japan, Finland, Sweden, Thailand, Switzerland, Estonia, Georgia, Belgium, Germany, the Netherlands, Latvia, Saudi Arabia, Malaysia and Austria
Asia accounts for two of the top 10, with Singapore ranking first and Hong Kong fourth. Other top-ranking economies in the region are Thailand (15), Malaysia (24), Fiji (36), Tonga (47) and Taiwan (China) (50).

Worldwide, Eastern Europe and Central Asia is the leading reformer, with three countries from the former Soviet Union—Estonia, Georgia and Latvia—all in the top 25 on the ease of doing business. South Asia, led by India, has also picked up speed in reform, outpacing East Asia and the Pacific.
Worldwide, 200 reforms in 98 economies were introduced between April 2006 and June 2007, says the World Bank.
In Asia, the most popular reform was to ease access to credit, with improvements in China, Indonesia, Micronesia and Vietnam. The second most popular was to simplify business start-up, with action in Laos, Malaysia and Timor-Leste.
“Equity returns are highest in countries that are reforming the most,” says Michael Klein, World Bank/IFC vice president for financial and private sector development.
“Investors are looking for upside potential, and they find it in economies that are reforming—regardless of their starting point,” he adds. Large emerging markets are reforming fast: China, Egypt, India, Indonesia, Turkey and Vietnam all improved on the ease of doing business.
The report also finds that as more countries simplify regulation to make it easier to do business, more entrepreneurs are going into business.
Other notable reforms in East Asia and the Pacific:
• Fiji introduced judicial reforms to improve court efficiency.
• Laos implemented border cooperation agreements that would help speed up trade and eased licensing requirements for new businesses.
• Malaysia streamlined business start-up, reduced corporate income taxes and simplified online tax filing.
• Micronesia implemented its first secured transactions law and launched a unified online registry for all security rights in movable property. The registry covers all types of creditors and debtors.
• Mongolia put in place new laws for corporate income, value-added and personal income taxes, introducing a new flat tax for individual income. It also reduced the top marginal rate for corporate income tax from 30 percent to 25 percent.
• Thailand introduced an electronic one-stop shop for traders, cutting the time to import and export by five days.
Higher rankings on the ease of doing business are associated with higher percentages of women among entrepreneurs and employees.
“The benefits of increased regulatory reform are especially large for women,” stresses Justin Yap, an author of the report. Women often face regulations that may be aimed at protecting them but that have a counterproductive effect, forcing them into the informal sector, where women have little job security and few social benefits. “These regulations can take work away from willing workers and business opportunities away from potential entrepreneurs,” he adds.

The WB rankings are based on 10 indicators of business regulation that track the time and cost to meet government requirements in business start-up, operation, trade, taxation and closure. They do not reflect such areas as macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions, or crime rates.
Since 2003 Doing Business has inspired or informed more than 113 reforms around the world.

Email me at biznewsasia@gmail.com

Joseph Estrada wants guilty verdict overturned

2007-10-09T15:36:00.000-07:00

Estrada wants guilty verdict overturned

Lawyer Rene Saguisag has filed a motion for reconsideration which in effect seeks to overturn the Sandigan anti-graft court’s Sept. 12 guilty verdict against former President Joseph Estrada. Erap was found guilty of two counts of plunder and sentenced to life imprisonment. He remains at his Tanay rest house, 50 kms east of Manila.

Saguisag anchored his MR on five grounds:

One, mistrial. Estrada was deprived his constitutional right to due process and to be informed of the nature and cause of the accusation against him.

Two, he was deprived of his constitutional right to be informed when he was convicted of an offense not included in the information sheet against him filed by the Ombudsman.

Three, though not accused, other people did “amass, accumulate, or acquire” ill-gotten wealth but were not charged. That’s Chavit Singson.

Four, Estrada was deprived of his constitutional right to confront witnesses against him when hearsay evidence against him was admitted. No jueteng lord came forward to claim he gave protection money to Estrada.

Five, he was denied his constitutional right to presumption of innocence as the Sandigan court convicted him on the basis of surmises, inferences, and speculative evidence. Singson’s ledgers were unverified.

According to the 63-page MR, the Ombudsman’s “amended information” of April 18, 2001 charged him with only a single offense of plunder.

The information named Estrada, his son, Jinggoy, his lawyer Edward Serapio, gambling czar Charlie “Atong” Ang and four others of one act of plunder, for the following four acts: one, receiving P545 million in kickbacks from illegal gambling; misappropriating P130 million in tobacco taxes; three, receiving P189.7 million in commissions from the sale of Belle shares to the GSIS and SSS; and four, unjust enrichment in the amount of P3.233 billion deposited in the Jose Velarde account. Plunder is a series of acts. The prosecution must prove at least two of the acts for a single offense of plunder involving at least P50 million. Instead, the court considered each of the four acts as one offense of plunder, or a total of four offenses of plunder.

According to Saguisag, as it turns out, the prosecution needed to prove only one of the four cases and they had Estrada nailed for plunder. On the other hand, the defense needed to prove Erap innocent on all four cases because each was a plunder case by itself. So the burden of Estrada and the defense was four times heavier than that of the prosecution. That’s unfair.

On Sept. 12, the court found the ousted president guilty for two acts of plunder for the P545 million jueteng kickbacks and the so-called P189.7 million Belle commissions. He was not guilty of the two other offenses – tobacco tax and Jose Velarde.

Estrada, Saguisag contended, “never knew” that each of the (four) acts constituted an offense of plunder. The president understood that the four acts were the means for the so-called accumulation of wealth.

Saguisag and Estrada were senators when the Plunder Law was approved by the Senate. Jueteng was farthest from their mind as constituting plunder when the bill was being debated. The plunder contemplated was Marcosian, not juetengan.

First, jueteng is not taxpayers’money. It is private funds, bets placed by small people in the hope of winning a modest fortune.

Second, jueteng, disguised as lotto, is operated by the government Philippine Charity Sweepstakes Office. If lotto were plunder, then PCSO would be the biggest plunderer of them all and its officers and directors would be subject to life imprisonment. “In a society where big time gambling is sponsored by the government”, jueteng may be graft, but not plunder, says Saguisag.

Third, there was no proof Estrada tolerated illegal gambling. Without toleration or protection, argues Saguisag, “the crime of plunder could not be committed”. In fact, Erap wanted to legalize jueteng by replacing it with the Bingo2 Balls. Legalizing jueteng was the subject of Estrada’s very first privilege speech at the Senate.

Fourth, jueteng can be undertaken by a private individual or a government official. Estrada doesn’t need to be a government official to be engaged in jueteng. The prosecution never alleged that Estrada’s jueteng protection was “by reason of his public office”. This failure to allege, Saguisag contends, “precluded conviction for plunder”. Toleration or protection of illegal gambling “does not show that public office was an essential element to the crime of receiving jueteng money since other persons, whether in the public or private sector, could tolerate or protect illegal gambling.”

Finally, Saguisag laments that the Sandigan gave credence to Chavit Singson’s ledgers or listahan when the court itself did not give credence to his testimony on the tobacco tax case. The entries in the ledgers were not properly verified and therefore, were hearsay.

Email me at biznewsasia@gmail.com

Getting more difficult to do business in the Philippines

2007-10-09T15:29:00.000-07:00

Getting more difficult to to do business in the Philippines

It is getting more difficult each day to do business in the Philippines. Regulations have not been simplified. On the contrary, they have become more complex.
Red tape has not been reduced. On the contrary, bureaucratic procedures remain cumbersome to comply with—and expensive.
If you think we are lying, ask the World Bank. Or try to open up a business in the Philippines.
Starting a business takes 15 steps and 58 days and will cost you 26.8 percent of your capital. That’s very expensive if the government takes away more than a quarter of your capital even before you could begin doing business.
In the 2007 survey of the World Bank, it took only 11 steps and 48 days to start a business and 18.7 percent of your capital.
Happily, there have been some improvements.
Dealing with licenses now takes just 21 steps, down from 23; and 177 days, down by 20 days from 197.
If the Bureau of Internal Revenue does not keep its collection targets, blame red tape.
Businesses must pay the BIR 47 times a year. That’s an improvement from 59 times but it now takes twice as much of your time to make payments—195 hours vs. 95 hours before.
The tax rate is horrrendous—52.8 percent of your profit. The government makes more money than you do, from your own business. No wonder a number of Makati businessmen hate the Gloria Arroyo administration and want to overthrow her.
Exporters, though, should be happier now. It takes only 17 days to make a shipment. It used to be 18 days. That was a colossal improvement of—one day.
But the government made sure you do additional paperwork. Export documents needed now —eight. It used to be six. Export cost per container is $800, down a magnificent 40 percent from $1,336, which is one of the highest in the world. Blame the Bureau of Customs.
You want to import machinery and raw materials? Well, that will take you eight documents, 18 days and $800 for each container. It used to be seven documents, 20 days, and $1,336.
In the World Bank’s “Doing Business 2008” published late September, the Philippines ranked No. 133 among 178 countries surveyed.
That’s a decline from its 2007 ranking of No. 126, which was a drop from its 2006 ranking of 121. In two years, the Philippines has fallen by 12 rungs. It is getting more difficult each year to do business in the country.
That is a stark contrast with the Philippines’ neighbors and competitors in Asia, which simply keep improving as a place for doing business.
The World Bank study has singled out China, India, Indonesia and Vietnam as among fast reformers to make their countries more hospitable for business. These countries simplified regulation to make it easier to do business.
As they do the reforms, businessmen take notice and come in. Hence, more entrepreneurs are going into business.
China’s new property law put private property rights on equal footing with state property rights, reports the bank.
The law also expanded the range of assets that can be used as collateral to include inventory and accounts receivable. The new bankruptcy law gives secured creditors priority to the proceeds from their collateral. Construction also became easier, with electronic processing of building permits reducing delays by two weeks.
Runner-up reformer in Asia is Indonesia. It simplified the process for getting construction permits, cutting delays from 49 days to 21. It also expanded the coverage of loans by the public credit registry and strengthened investor protections by increasing disclosure requirements.
Vietnam made it easier for businesses to access credit by allowing general description of assets and obligations in collateral agreements as well as the use of future assets to secure debt. It adopted a new securities law that establishes a securities exchange and trading center. And it strengthened investor protection through a new enterprise law. The law requires that investors be involved in major company actions, increases disclosure for related-party transactions, and introduces fiduciary duties for company directors.

Here is what the World Bank says about the doing business scenario for 2008:
East Asia and the Pacific ranks second-to-last among regions on the pace of business reform, according to Doing Business 2008—the fifth in an annual report series issued by the World Bank and IFC.
China was a standout in regulatory reform in 2006/07, bucking the regional trend. The top reformer in the region and among the top 10 in the world, China introduced far-reaching protection of private property rights and a new bankruptcy law.
Worldwide, the top 10 reformers are, in order, Egypt, Croatia, Ghana, FYR Macedonia, Georgia, Colombia, Saudi Arabia, Kenya, China and Bulgaria.
Singapore, for the second year running, tops the aggregate rankings of 178 economies on the ease of doing business.
Eastern Europe and Central Asia is the leading reformer among regions, with three countries from the former Soviet Union—Estonia, Georgia and Latvia—all in the top 25 on the ease of doing business. South Asia, led by India, has also picked up speed in reform, outpacing East Asia and the Pacific.
Worldwide, 200 reforms in 98 economies were introduced between April 2006 and June 2007.
In East Asia and the Pacific the most popular reform was to ease access to credit, with improvements in China, Indonesia, Micronesia and Vietnam. The second most popular was to simplify business start-up, with action in the Lao People’s Democratic Republic, Malaysia and Timor-Leste.
The report finds that equity returns are highest in countries that are reforming the most,” says Michael Klein, World Bank/IFC vice president for financial and private sector development.
“Investors are looking for upside potential, and they find it in economies that are reforming—regardless of their starting point,” he adds. Large emerging markets are reforming fast: China, Egypt, India, Indonesia, Turkey and Vietnam all improved on the ease of doing business.
The report also finds that as more countries simplify regulation to make it easier to do business, more entrepreneurs are going into business.
Other notable reforms in East Asia and the Pacific:
• Fiji introduced judicial reforms to improve court efficiency.
• Lao PDR implemented border cooperation agreements that would help speed up trade and eased licensing requirements for new businesses.
• Malaysia streamlined business start-up, reduced corporate income taxes and simplified online tax filing.
• Micronesia implemented its first secured transactions law and launched a unified online registry for all security rights in movable property. The registry covers all types of creditors and debtors.
• Mongolia put in place new laws for corporate income, value-added and personal income taxes, introducing a new flat tax for individual income. It also reduced the top marginal rate for corporate income tax from 30 percent to 25 percent.
• Thailand introduced an electronic one-stop shop for traders, cutting the time to import and export by five days.
Worldwide, the report finds that higher rankings on the ease of doing business are associated with higher percentages of women among entrepreneurs and employees.
“The benefits of increased regulatory reform are especially large for women,” stresses Justin Yap, an author of the report. Women often face regulations that may be aimed at protecting them but that have a counterproductive effect, forcing them into the informal sector, where women have little job security and few social benefits. “These regulations can take work away from willing workers and business opportunities away from potential entrepreneurs,” he adds.
Doing Business 2008 ranks 178 economies on the ease of doing business. East Asia and the Pacific accounts for two of the top 10, with Singapore ranking first and Hong Kong fourth. Other top-ranking economies in the region are Thailand (15), Malaysia (24), Fiji (36), Tonga (47) and Taiwan (China) (50).

Worldwide rankings
Worldwide, the top 25 in the rankings are, in order, Singapore, New Zealand, United States, Hong Kong, Denmark, the United Kingdom, Canada, Ireland, Australia, Iceland, Norway, Japan, Finland, Sweden, Thailand, Switzerland, Estonia, Georgia, Belgium, Germany, the Netherlands, Latvia, Saudi Arabia, Malaysia and Austria.
The rankings are based on 10 indicators of business regulation that track the time and cost to meet government requirements in business start-up, operation, trade, taxation and closure. They do not reflect such areas as macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions, or crime rates. Since 2003 Doing Business has inspired or informed more than 113 reforms around the world.
Thirteen countries saw new governments sworn in. Earlier analysis suggested that the region might experience a reform boom next year, as nearly 85 percent of reforms take place in the first 15 months of a new government.
Egypt is the top reformer for 2006/07, improving in five of the 10 areas studied by Doing Business. Egypt’s reforms went deep. They made starting a business easier, slashing the minimum capital requirement from 50,000 Egyptian pounds to 1,000 and halving start-up time and cost.
With more properties registered and less evasion, revenue from title registrations jumped by 39 percent in the six months after the reform. New one-stop shops were launched for traders at the ports, cutting the time to import by seven days and the time to export by five. The first private credit bureau was established. Builders now face less bureaucracy in getting construction permits.
Croatia is the runner-up, with reforms in four of the Doing Business areas. Two years ago registering a property in Croatia took 956 days. Now it takes 174. Croatia also sped company start-up, consolidating procedures at the one-stop shop and allowing pension and health services registration online. Two procedures and five days were cut from the process. Credit became easier to access: a new credit bureau got of the ground, and a unified registry now records all charges against movable property in one place.
Large emerging economies—fast reformers China, Egypt, India, Indonesia, Turkey and Vietnam all improved in the ease of doing business.
In China a new property law put private property rights on equal footing with state property rights. The law also expanded the range of assets that can be used as collateral to include inventory and accounts receivable.
China also passed a new bankruptcy law, which gives secured creditors priority to the proceeds from their collateral. Construction became easier, with electronic processing of building permits reducing delays by two weeks.
India rivaled this pace of reform. Traders can now submit customs declarations and pay customs fees online before the cargo arrives in port. It takes 18 days to meet all the administrative requirements to export—in 2006 it took 27. The credit bureau expanded to include payment histories on businesses as well as individuals.
Russia’s first credit bureau started up in 2006 and by July 2007 had extended its coverage to more than six million people. Before, banks had no central database to tap when judging a client’s creditworthiness. Now they can turn to the new bureau for data on both individuals and firms—and for positive as well as negative information (for example, on payment history and number and frequency of late payments).
Some countries slipped backward. Venezuela had the largest negative reforms. Doing business there was already hard. In 2006/07 it got harder. Exporters now need a separate license for each transaction.
Singapore is No. 1 again. For the second year running, Singapore tops the rankings on the ease of doing business. New Zealand, United States and Hong Kong follow close behind. Denmark is next, demonstrating that countries can be business friendly and provide strong social protection.
Georgia and Saudi Arabia entered the top 25. Many countries with the most business-friendly regulations continued to reform, such as Australia, Denmark, the Netherlands, Norway and Switzerland. Some stopped—and slipped in the rankings. The message: if you are not reforming, another country will overtake you. Some 200 reforms made business easier—27 made it more difficult.

Caveat
Rankings on the ease of doing business do not tell the whole story. The indicator is limited in scope: it covers only business regulations. It does not account for a country’s proximity to large markets, the quality of its infrastructure services (other than those related to trading across borders), the security of property from theft and looting, the transparency of government procurement, macroeconomic conditions or the underlying strength of institutions.
Still, a high ranking on the ease of doing business does mean that the government has created a regulatory environment conducive to operating a business. Opportunities for women payoffs from reform can be large. Higher rankings on the ease of doing business are associated with more growth, more jobs and a smaller share of the economy in the informal sector.
The benefits are especially large for women. Countries with higher scores on the ease of doing business have larger shares of women in the ranks of both entrepreneurs and workers. When reformers simplified business start-up, business registrations shot up. The increase in first-time business owners was 33 percent higher for women than men.
In some countries explicit discrimination in laws compounds the effects of complex regulations. Women in the United Arab Emirates and Yemen are forbidden to work at night. In the Democratic Republic of Congo they need their husband’s consent to start a business. Women run only 18 percent of the small businesses there. In neighboring Rwanda, which has no such regulations, women run more than 41 percent of small businesses.
Some countries are taking action. Lesotho passed a law in November 2006 allowing married women to own and transfer property and engage in legal acts without their husband’s signature. Before the reform the law classified women as legal minors.
What gets measured gets done. Publishing comparative data on the ease of doing business inspires governments to reform. Since its start in October 2003 the Doing Business project has inspired or informed 113 reforms around the world. In 2006 Georgia targeted the top 25 list and used Doing Business indicators as benchmarks of its progress. It now ranks 18 on the ease of doing business, and the government has set an even more ambitious goal. Saudi Arabia and Mauritius have targeted the top 10. Both have made tremendous progress: Saudi Arabia now ranks 23, and Mauritius 27.
Mozambique is reforming several aspects of its business environment, with the goal of reaching the top rank on the ease of doing business in southern Africa. The result: it rose by six places in the rankings.
Comparisons among cities within a country are even stronger drivers of reform. The time to obtain a business license in India ranges from 159 days in Bhubaneshwar to 522 in Ranchi. The time to register property, from 35 days in Hyderabad to 155 in Calcutta. A hypothetical Indian city with the country’s top performance in each of the Doing Business indicators would rank 55 places higher on the ease of doing business than Mumbai. The Indian government is taking action. This year India is the top reformer in trading across borders.
Reforms go beyond the fixes that improve the Doing Business rankings. When the Philippines issued a decree to lower administrative fees, it covered all types of licenses and permits, not just those measured in Doing Business. In Malawi and Rwanda reformers are using the indicators to encourage simplification across all government agencies. Kenya is reforming all business licenses.
To help reformers, this year the Doing Business project published a book of 11 case studies of successful reforms. These span the globe—from El Salvador to Serbia, from Egypt to Nigeria—and show what it takes to succeed. In cooperation with the US Agency for International Development, Doing Business also created a prize to recognize leading reformers. The first one went to Zurab Nogaideli, the prime minister of Georgia. Since then, several reformist governments—such as those in Azerbaijan, Guatemala and Mozambique—have studied the Georgian reform experience for ideas on how to reform.

Email biznewsasia@gmail.com

Junk JPEPA, love our OFWs

2007-10-09T15:27:00.000-07:00

Junk JPEPA, love our OFWs

An assault on the Constitution.

That is how three prominent lawyer have described the Japan-Philippines Economic Partnership Agreement. The lawyers are Justice Florentino Feliciano, former University of the Philippines law dean Merlin Magalona, and former senator Wigberto Tañada. I listened to the three Monday morning make their presentation before the two Senate committees conducting hearings on the proposed treaty –Foreign Relations chaired by Miriam Defensor Santiago and Trade and Commerce chaired by Mar Roxas.

I see no compelling nor cogent reason why the Senate should ratify JPEPA, now and in the future. JPEPA is simply a bad deal. It will enable the Japanese to dump waste in the Philippines and yet treat Filipino nurses as temporary workers even after they have learned to speak – and write – in Japanese, fluently. It runs roughshod of the Constitution. Every Filipino who loves himself, loves his people and loves his country should raise his fist in protest against this treaty.

After five hearings, Senator Santiago says JPEPA is dead and Mar Roxas says the government side, represented Monday by three cabinet members, Peter Favila of Trade, Arthur Yap of Agriculture, and Francisco Duque of Health, has yet to win a round. Speaking mostly extemporaneously, Justice Undersecretary Manuel Teehankee made a rather lame defense of the constitutional aspects of JPEPA. A bar topnotcher, he even tended to take the side of lawyer Feliciano.

Peter Favila, who of late has become detached from media (he doesn’t answer nor return your phone calls) and even from his industry sector (he didn’t bother to attend the August opening of the Chamber of Automotive Manufacturers, Inc.’s first ever international auto show, which was a rousing success) has failed miserably in selling JPEPA to the public.

Feliciano, who is in Washington DC and who Miriam described as genius, presented the best paper at Monday’s Senate hearing. His memo was read for him by lawyer Roberto San Juan. Feliciano anchored his objections to JPEPA on its two major provisions – Article 89 (national treatment) and Article 93 (prohibition of performance requirements).

Article 89 treats the Japanese and their companies like Filipinos “with respect to the establishment, acquisition, expansion, management, operation, maintenance, use, possession, liquidation, sale or other disposition of investments”.

What can Filipinos do in the Philippines? Filipinos can own land, own at least 60 percent of public utilities, franchises, and companies engaged in water, minerals, coal, petroleum, energy, fisheries, forestry, timber, wildlife, flora and fauna, and marine resources in the country’s territory, including its archipelagic waters and exclusive economic zone; own at least 100 percent retail, schools and media, and engage in the professions. These rights are given the Japanese under JPEPA.

Under Article 93, you cannot impose any condition on the Japanese before they could invest in the Philippines. Such conditions include a minimum level or value of export (if the Japanese register with the Board of Investments as exporter and then say later they don’t want to export anything, you can’t do anything about it), minimum local content (thus, Japanese cars can come in completely built-up, without local content and without paying any tariff), and requiring them to -- give preference to your products, peg the volume or value of their imports to the amount of their investments, employ Filipinos as executives, managers, or as directors; employ a minimum number of Filipinos; transfer their technology or process even if that is ordered by a court or an unfair trade body; locate their plant or headquarters in the Philippines, conduct R and D, and make Philippine companies their suppliers.

In addition, in the future, we cannot put restrictions on the Japanese on what businesses and areas they will engage in, unless we identify those areas now or say we restrict them now.

For all that bullshit, what do we get? Japanese money. How much? We exported $7.9 billion to Japan in 2006. Our exports grow by no more than nine percent per year. The Japanese brought in $401 million in foreign direct investments (FDI) last year. Japanese FDI has been declining in the past three years.

How much do ALL foreign investors bring to the Philippines yearly? Not more than $2.5 billion a year. How much is FDI growth per year? FDI has been declining since 1998.

How much did Filipino workers remit to the Philippines in 2006? $12.7 billion. Annual growth rate: at least ten percent per year. OFW earnings have doubled in the past five years.

The conclusion is obvious: Junk JPEPA. Don’t pay much attention to foreign investors, Japanese or whatever. But take care of our OFWs. Yearly, they bring in more money than all investors –Filipinos and foreign – combined.

President Arroyo was right after all. Given the choice whether she would allow the beheading a kidnapped OFW in the Middle East and being in the good graces of George Bush, she chose the former. Good call, Ma’am.

biznewsasia@gmail.com

D-Day for Joseph Estrada (Second version)

2007-09-11T12:53:00.000-07:00

Today (Sept. 12) is D-Day or Decision Day for ousted President Joseph Ejercito Estrada.
Up to Sept. 12, 2007, he had been in jail for six years, four months and 18 days – far longer than the 30 months he served as president of the Philippines, from noon of June 30, 1998 to the afternoon of January 20, 2001.

Erap will either be acquitted or convicted in any or in all four cases tried by the anti-graft court Sandiganbayan—illegal gambling, tobacco kickback, BelleCorp. stocks deals, and the Jose Velarde account. He was accused of having received P545 million in bribe money from jueteng (illegal gambling) lords. He allegedly took P130 million from the P200-million tobacco tax money. He allegedly pressured the state-run pension funds GSIS and SSS to buy stocks of the gaming firm Belle and took commission from the transaction. And he allegedly received bribe money and gifts totaling P3 billion and parked it in a secret bank account with a fictitious name, Jose Velarde.

First, stealing is bad, especially if what is stolen is taxpayers’ money. Second, using public office to gain advantage over the others is abuse of power. And abuse of power is corruption. Third, hiding one’s stolen money is a natural instinct. But don’t get caught doing it or leave paper trail doing it. After all, a substantial and a hugely lucrative part of global banking is hiding people’s money. Look at the Swiss, they charge you interest, not them paying you interest, for hiding your money. You may call the interest charged parking fee or warehousing fee. Their system became generic for hiding stolen money and the Swiss are not at all embarrassed by it. They also have the honor of guarding the Pope.

In making a decision, the Sandigan must prove that Estrada stole money. It must also prove that the actor turned president abused his power. And it must prove that Erap hid illegally acquired funds in a secret bank account using a fictitious name. The first two are crimes. I don’t think the third, having a secret bank deposit, is a crime. The penalty for the first two crimes is life imprisonment, or worse, death. The penalty for the third should be nothing more than embarrassment for being stupid.

The Sandigan special graft court has an image problem. It is not perceived as being impartial or independent or even fair. I am not saying it has no integrity although that is a rare commodity nowadays in a judiciary notorious for its corruption and the nefarious “business” practices of judges and justices. The head of the three-person panel has been nominated for a seat in the 15-person Supreme Court which becomes vacant in October 2007. President Arroyo will do the appointing.

Transparency International gives the Philippines a three (a failure) out of a maximum ten, in its strength of legal rights index. The Philippines ranks 126th among 175 countries monitored as an ideal place for doing business, mainly because of rampant corruption and the corrupt judiciary.

This is why, Reynato Puno, one of the most intellectual and arguably one of the best chief justices ever, has one of the worst trust ratings for a public figure. Only 19 percent of the people have a big trust in him, according to Pulse Asia in April 2007. President Arroyo has 25 percent (and she is the most unpopular president in history), Fidel Ramos 25 percent, Tessie Aquino 18 percent, and Armed Forces boss Hermogenes Esperon 16 (the lowest). The much-despised (and to me, the worst) Comelec chair, Ben Abalos has even a higher trust rating, 20 percent, than Puno and the CJ has not been accused of cheating in an election or trying to broker an overpriced Chinese contract. The guy accused of and imprisoned for stealing, Estrada, has 38 percent, double Puno’s trust rating.

Therefore, a Sandigan verdict, whether an acquittal or a conviction, will trigger a national outrage. Either way will be bad for President Arroyo who has declared a national day of prayer on D-Day. She had been advised not to go out of the palace for reasons of security. The police and the armed forces are on the highest level of alert, although considering the record of the police and the AFP, I can’t see how that will make a difference.

In today's Philippine Star, one of Estrada’s lawyers, former senator Rene Saguisag, said his client vowed not to seek power again or undermine public interest if he is acquitted.
“He just wants his name cleared,” Saguisag told ABS-CBN television.
He said political considerations – including the Supreme Court’s decision affirming Mrs. Arroyo’s takeover of the presidency – may make it difficult for the anti-graft court to acquit Estrada.
“That is the dilemma because punishment came before the trial,” Saguisag said. “This is an extremely unusual case in that one of those who decided to get rid of him in 2001 was the Supreme Court itself in a role that was never designed to be its own.”

A former political arch enemy of Estrada, former Vice President Teofisto Guingona now wants him freed saying he “has suffered enough” and that “justice has been served.”

Estrada suffered enough for his alleged wrongdoings,Guingona said. Arroyo's first vice president said he hopes the Sandiganbayan would decide favorably for Estrada. “The people are waiting. It’s enough, free him,” he said.

Estrada himself made a last-ditch appeal for a fair ruling from Sandiganbayan justices and for them not to succumb to political pressure.
“I would say that they should be enlightened in deciding the case. They should decide through the merits of the case not by pressure by anybody on top or any political pressure,” he said.
“Perhaps this is the only way that the Filipino will respect our judiciary if the judgment will be fair,” Estrada said.
Estrada also called the government’s security preparations “an overkill.” He said the tight security showed that his accusers in government are “paranoid” and “afraid of their own shadows” because they “unconstitutionally removed me from office.”
“I am at peace now because what is important to me is the will of the people, the expression of the people. What more can I ask for? As the saying goes, vox populi, vox dei. The voice of the people is the voice of God,” Estrada added.
But he appealed to his supporters to accept the Sandiganbayan decision.
“My only message for my supporters, I have to thank them for their support that they have given me all these years. I would say that they should be calm whatever the decision,” Estrada said.
In a privilege speech at the Senate, Jinggoy discussed the “stark contrast” between his father and Mrs. Arroyo, saying his father – unlike his successor – allowed an impeachment trial to proceed.
“He did not influence, pressure or intimidate anyone to avoid the charges. He did not resort to cover-ups, whitewash or any acts that may diminish the process or the proceedings,” he said.
“This is in stark contrast to the present regime where witnesses are bullied into withholding truthful testimonies or are prevented from testifying,” Jinggoy said.

Estrada’s family has expressed fears of a guilty verdict and the former president himself has declared he is ready to go to prison. I don’t think he is.

To me, what makes this case revolting is the utter hypocrisy of it all and the unfairness of the setup. The Arroyo administration will go down in history as one of the most graft-ridden and one of the most abusive, in terms of human rights violations with more than 800 estimated to have been killed thru extrajudicial killings.

To his eternal credit, Estrada has had the humility to endure the humiliation, the opprobrium, and the ignominy of being the only Philippine president to go to jail for corruption. He could have run away as advised by then Executive Secretary Edgardo Angara or as proffered by Arroyo’s boys in 2001. He didn’t, claiming he was innocent of all the charges. For that, Erap, guilty or not guilty by the Sandigan verdict, will be judged by the people – and history -- in a better light.

biznewsasia@gmail.com

Fear of flying in the US (1)

2007-09-11T12:51:00.001-07:00

Fear of flying in the US

If you are complaining about how bad air travel is in the Philippines and how bad the service is of the local carriers, Philippine Airlines, Cebu Pacific and Air Philippines, not to mention Asian Spirit and SeaAir, take a domestic flight in the United States.

Filipino airline service is not bad at all. PAL and Cebu Pacific are often on time—defined as leaving or arriving within 15 minutes of schedule. For several days this August, PAL President Jimmy Bautista tells me, on-time reliability of PAL domestic flights has been 100 percent. Yes, 100 percent. Of course, PAL offers solid meals on its local flights, if you are flying business class.

What is bad about Philippine domestic flights is not the flights but the airports. They look like dilapidated comfort rooms compared with, say, the old airports of China’s provinces. China, it seems to me, no longer has old airports. Nearly all its airports look modern, especially the provincial facilities which can put to shame any time, the old NAIA.

The present French-inspired Centennial Terminal being used by PAL and Air Philippines appears to me like a small airport in some off-the-beaten track in China.

Delayed departure and arrival times are standard on US domestic flights. Standard means three hours delay. Biscuits and water are standard for flights of two to four hours, even if you are flying from San Francisco or Los Angeles to New York or Washington, D.C.

The US carriers employ grouchy (I don’t like to say aging) stewardesses, except the attendants on SouthWest who try their best to serve and exude a sense of humor. The carriers offer no solid or hot meals complete with linen napkins and spoons and forks. They do offer, occasionally, red wine for free, handed out in plastic cups. Have you ever tried red wine with nothing to go with it? The NASA astronauts probably feel better while trying to fix a defect in their shuttle out there in outer space.

On the ground, security checks are so tedious and laborious I often wonder why no major al-Qaeda suspect has ever been found attempting to board those flights in the past six years since 9/11. Bags are routinely being opened in your absence. The only saving grace is that TSA leaves you a note inside your bag that it has been rummaged through and feels apologetic for it.

Even before 9/11, the situation with US domestic flights was already very bad. It just so happens the US government has 9/11 as good cover to make passengers get the mis impression the hassle is all in the name of security.

June 2007 was the worst month ever for US domestic aviation with more flights delayed by three hours or more than in all of 1995.

The situation will get worse. Some 750 million passengers are taking to the skies each year. The volume will reach one billion in eight years. The result of that will be gridlock in the skies—and on the ground.

The Washington Post says the system was already in trouble way back in 2000 but got a reprieve with 9-11 which discouraged air travel.

Now, Americans have lost their fear of flying and disdain for high-priced airline tickets and high fuel charges. They are flying high, come hell or congested airports.

It’s ironic that a government that spends $200 billion of American taxpayers’ money a year trying to impose itself in Iraq and be loved by the Iraqis can’t pour as much to improve its domestic aviation.

biznewsasia@gmail.com