Jeremiah F. de Guzman
As part of an operation realignment plan, flagship carrier Philippine Airlines (PAL) will add domestic flights starting September as local demand for travel continues to soar.
In a statement yesterday, the Lucio C. Tan-led airline said new routes and destinations would be introduced next month. Daily flights for Cebu-Davao and Davao-Cebu destinations will be added, using the wide-bodied Airbus A330.
For the budget PAL Express airline, a daily flight will be added to the Cebu-Iloilo-Cebu flight using the 76-seater Q400 turboprop aircraft, while daily flights to Surigao and a twice-a-day service to Naga will also be introduced.
While the number of domestic passengers rose by 17% in the first quarter, the number of international passengers slipped by 8% amid slowing demand from the United States.
Under pressure to cut costs amid a global economic downturn, PAL said on Thursday that international flights would be reduced to match dipping passenger demand.
Flights to Los Angeles, for instance, are now down to seven per week from nine, while those for San Francisco have been cut to seven from eight per week. Next month, PAL will reduce its Vancouver flights to just five per week from daily. Flights to Japan, Australia and Hong Kong will also be trimmed to reduce the cost of operations.
The airline is also considering offering early retirement packages, executive pay cuts, and giving workers "breaks for a few days."
PAL will also sell a Boeing 737 to raise some $8 million to $10 million and will hold plane purchases except for Boeing 777-300ERs due for delivery this year.
PAL lost $301.4 million for its fiscal year ending March 2009 as a result of higher expenses brought about by the cost of operating more flights and last year’s record-high fuel prices. Fuel accounts for 44% of the airline’s expenses.
The carrier earned $30.6 million a year earlier.
For the year ended March 2009, revenues went up slightly to $1.6 billion but were not enough to cover operating expenses of $1.9 billion, up from $1.539 billion the previous year.
Saturday, 29 August 2009
Jeremiah F. de Guzman
Kristine Jane R. Liu
Ayala Land, Inc. has inked an agreement with the government to develop a Quezon City property into a central business district similar to Makati and Fort Bonifacio.
In a statement Friday, Ayala Land said it signed a joint venture agreement with the National Housing Authority (NHA) on Thursday to develop the 29.1-hectare North Triangle Property, portions of which have been occupied by shanties.
The listed property firm expects to start the P22-billion development two years from now.
The country’s biggest real estate developer said the business district would become the country’s first "transit-oriented, mixed-use central business district that will be a new nexus of commercial activity."
"The company aims to benefit the NHA in achieving its mandate of providing housing for informal settlers and transforming a non-performing asset into a model for urban renewal," Ayala Land said.
Ayala Land said the plan was consistent with the mandate of the Urban Triangle Development Commission to rationalize and speed up the development of the East and North Triangles of Quezon City into "well-planned, integrated and environmentally balanced, mixed-use communities."
"[Our] track record, strong branding, and ability to attract top locators will ensure that the development will achieve its highest potential value. In the development and management of central business districts (CBDs), Ayala Land’s signature projects include the master-planned Makati CBD, Bonifacio Global City, Cebu Business Park, and Madrigal Business Park in Alabang."
The signing of the agreement concluded the public bidding process conducted by the NHA in October last year. Ayala Land’s proposal was approved and declared by the NHA as compliant with the terms of reference for the public bidding and the National Economic Development Authority’s Joint Venture Guidelines earlier this year.
Shares in Ayala Land did not move at P10.75 apiece on Friday.
San Miguel bags Sual, Aboitiz gets Pagbilao
Jose Bimbo F. Santos
The government on Friday announced that it had bid out the right to utilize the output of two major power plants, moving a step closer to an open access regime which is expected to result in lower electricity costs.
A unit of conglomerate San Miguel Corp., San Miguel Energy Corp., bagged the independent power producer administrator (IPPA) contract for the 1,000-megawatt (MW) Sual in Pangasinan, while Aboitiz Power Corp. unit Therma Luzon, Inc. won the 700-MW Pagbilao facility in Quezon during a second bidding round on Thursday.
San Miguel Energy offered $1.07 billion for Sual, higher than the $1.02 billion offered by Therma Luzon. Pagbilao went to Therma Luzon after it offered $691 million, higher than SMEC’s $651 million.
The Power Sector Assets and Liabilities Management Corp. (PSALM) said both bids had met reserve prices. PSALM said it would issue notices of award after verification of bid documents.
Both companies had participated in the first bidding last June 26, which was declared a failure after their offers failed to meet the government’s reserve prices.
The companies will manage the contracted capacity of Sual and Pagbilao, which are operated by Team Energy under a build-operate-transfer agreement.
The two plants represent around 34.7% of the contracted capacity of the IPP contracts for Luzon and the Visayas, about half of the 70% required under the Electric Power Industry Reform Act. The privatization rule is a precondition for the declaration of open access and retail competition.
San Miguel Energy has now won two power assets in a week after it also bagged the 620-MW Limay Combined Cycle Power plant in Bataan last Wednesday. The firm acquired the plant for $13.5 million in a negotiated sale.
Limay was its first successful bid for a generation asset after a number of failed attempts.
Aboitiz Power, meanwhile, also concluded last July 31 a negotiated bid for the purchase of two barge-mounted diesel plants in Mindanao with a generating capacity of 100 MW each. The prices offered for the two, known as PB 117 and PB 118, were $16 million and $14 million, respectively.
PSALM said that it was now set to implement Phase II of its IPPA selection process, which will involve the contracts of the Casecnan, Bakun, and San Roque hydropower plants. The contracted capacities of these facilities are 140 MW, 70 MW, and 95 MW, respectively. —
Friday, 28 August 2009
Recession avoided following surprise second-quarter result
From reports by MPTJ and ADBR, with inputs from Reuters
BETTER-THAN-EXPECTED second-quarter growth has allowed the Philippines to avoid a recession and diminished concerns that this year’s down-scaled target would be missed.
Seasonally adjusted, gross domestic product (GDP) growth for the April to June period was 2.4%, the highest in over two years and a reversal of the revised -2.1% contraction in the first quarter.
On an annual basis, second-quarter GDP was up 1.5%, exceeding the -0.1% to 0.9% range forecast by the National Economic and Development Authority (NEDA) and narrowly topping the 1.45% average outlook of six analysts polled by BusinessWorld.
January to March growth from a year earlier was just 0.6%, according revised government data. The original announcement of 0.4% had prompted the government to trim this year’s forecast to 0.8-1.8% from 3.1-4.1% previously.
Economic managers said they were confident that full-year growth would be in the upper end of the forecast, and also raised the possibility that official targets could be adjusted.
"The DBCC (Development Budget Coordination Committee) will need to discuss that," Finance Undersecretary Gil S. Beltran said in a text message.
Officials said the second half would be stronger given expected spending for the Christmas holidays and next year’s national elections.
The DBCC, which consists of the Budget and Finance departments, NEDA and the Bangko Sentral ng Pilipinas, has cut the growth forecast four times from the original 6.1-7.1% set last year.
National Statistical Coordination Board (NSCB) Secretary-General Romulo A. Virola, in announcing the second-quarter result, said "The economy’s growth was supported by services and agriculture, [but] the industry sector was still in contraction mainly due to manufacturing."
The service sector grew by 3.1% from last year, while the agriculture, fishery and forestry sector also grew, albeit at a smaller rate, by 0.33%.
The industry sector, meanwhile, contracted for the second straight quarter by 0.33% as a 7.2% year-on-year decline in manufacturing "could not be offset by [gains in] other sub-sectors" such as a 21.4% increase in mining and quarrying and a 16.9% hike in construction, Mr. Virola said.
The NEDA, for its part, attributed the second quarter result as due to effective government intervention.
"Government and private sector hiring programs, flexible working arrangements, and the front-loading of infrastructure projects under the Economic Resiliency Plan, all helped to cushion the economy’s growth and employment from the global recession," acting NEDA Director-General Augusto B. Santos said in the same briefing yesterday.
Government spending climbed by 9.1% in the second quarter from a year earlier, twice as fast as the 4.5% expansion in the first three months.
Private spending grew 2.2% in April to June from a year earlier, higher than the 1.3% gain in the first quarter. Consumption fuels about three-fourths of the economy.
NEDA policy and planning director Dennis M. Arroyo claimed "an easing of fear" among overseas Filipino worker families as remittances grew by 3.1% in the second quarter and reached a record high of $1.5 billion in June, defying central bank predictions of flat growth for the year.
Asked to comment, University of Asia and the Pacific economist Peter Lee U said the government’s positive expectations were "doable."
But he said hitting the higher end of the full-year target hinged heavily on the global economic recovery attaining "surer footing", as well as more pronounced impacts from pump-priming efforts.
But University of the Philippines economist Benjamin E. Diokno disagreed, saying that for the first semester consumption had actually declined.
"[Consumption] dropped sharply during the first half of the year. Consumers are spending less because of their lower income and rising uncertainty about job opportunities," the former Budget secretary said.
He also rejected the assessment that spending ahead of the 2010 elections would spur the economy. "Election spending won’t matter much in an P8-trillion economy. Moreover, it has limited multiplier effect."
The Bangko Sentral ng Pilipinas’ (BSP), meanwhile, said the data supported its decision last week to end an eight-month easing cycle, central bank Deputy Governor Diwa C. Guinigundo told Reuters by text message.
"This clearly shows stronger signs of economic recovery," he said. "The recent decision to pause was correct, from which perspective, a possible shift in monetary policy may be decided."
The BSP has kept its rate at a record low of 4.0% to join Asian peers in assessing the impact of accommodative policies. Rates have been cut by two percentage points since December 2008.
Analysts said the government would likely sustain spending and the BSP could keep rates steady for the rest of the year.
Thursday, 27 August 2009
Outside the Box
Your response to the idea of eliminating income taxes was refreshing. One thing bothered me, though. As I thought over a large portion of the e-mail that you sent, it seemed that eliminating income tax was like talking about a dying old relative you might miss once he is gone.
There were also well-meaning individuals who were not really willing to give up income taxes but felt there was a need for some changes to the income-tax structure. I had the feeling that I was listening to an older child looking at an almost-forgotten stuffed animal thinking how nice it would be to cuddle it again. Just a good washing and maybe sew that hole in the arm, and it would be good as new. Sorry, I do not buy that argument.
Income tax has always been an insidious weapon of government. The income tax is presumed to have been created in modern times. Not true. The Chinese Emperor Wang Mang started the first income tax in the year 10. It was a flat-rate tax on the profits of professionals and skilled labor. Sounds familiar?
The “progressive income tax” of modern times, where the more you make, the higher your tax rate, comes from the unprogressive times of feudal kingdoms when kings built their wealth from the labor of serfs. The king’s men would come by around harvest time and take, for your tax payment, half of the production of your farm subject to a minimum tax amount. If that minimum did not leave much left over to keep the family from starvation, well, that was just bad luck for you. Kings and emperors like income tax because it is guaranteed. People have to make some sort of income to eat. And understand this: Legally taxing your income means that the government owns a portion of the fruits of your labor before you touch it, exactly like the king was divinely entitled to a portion of your crops.
However, if abolishing the income tax is too radical a change for you in this quest for more creative government policy, suppose we change the laws that govern the income earners, if not the income.
Philippine labor laws have been described as some of the most pro-labor in the world. That might be a valid assessment. They might also be described as the most anti-job creation and anti-worker in the world also.
In my humble opinion, Philippine labor laws may be the most schizophrenic on the planet; that is, laws that are similar to a mental disorder characterized by abnormalities in the perception of reality. Simply put, they are unreal and need some creative changes from the next administration.
The Philippines’ pro-labor laws institutionalized the idea that an employee should be employed nearly forever and nearly regardless of performance or conduct. Therefore, it is extremely difficult for a company to terminate an undesirable employee. The legal rights of a tenured employee are very strong in its ability to keep that employee in his position.
To counter those tenured-employee rights, a class of workers, contract employees, have virtually no rights at all. They can be terminated virtually without due process for any reason at any time. There is only a slight chance for career advancement or advanced training. These thousands of contract employees pay the penalty for the thousands of tenured employees to be able to keep their jobs. Companies pay a price, too, in that they are scared to death of increasing their roster of tenured employees for fear that those who deserve to be fired cannot be fired. And they lose the opportunity of spending time and money developing talent from a vast pool of potentially great employees who make up their contract work force.
Workers, then, are given jobs and not careers. Bad employees are allowed to continue to work, which is to the detriment of the company and the employees themselves. There is no reason to improve skills and abilities if there is little chance to be penalized for bad performance.
A presidential candidate was recently asked by a company owner why it is so hard to fire an employee for illegal-drug use. The candidate replied that processes must be followed, meaning verbal warning, written warning, final warning. Yet that same employee found with drugs on the street is charged with a crime without the verbal, written and final warning. So the drug user can go to jail but not necessarily be fired for the same drug use. Does that make sense? Deliberately break the coffee machine at the office, and you are required to pay for it and you get a warning. Do the same thing at the Shoemart appliance department and you get arrested.
Despite all the pro-labor laws that are not pro-worker, in many ways workers are taken huge advantage of. For example, companies get generous financial incentives. Companies in the special economic zones are given the privilege not to pay taxes on their profits for many years. Yet the workers who create those profits are taxed without any benefit or special privilege. The company makes profits off the worker tax-free, but the worker pays taxes and does not share in the tax benefits. That does not sound very pro-labor. And these laws, like so many others, are not very smart for the economy, either.
Tuesday, 25 August 2009
Dinna Chan Vasquez
COMMUTERS to Tutuban in Manila from Bicutan in Taguig and back now may ride air-conditioned trains that take only 45 minutes to cover the distance and charge only P16 one way.
State-run Philippine National Railways has three of the new Commuter Express coaches and has 15 more coming from South Korea. It is also refurbishing 30 of its old coaches at a cost of P5.3 million per coach.
The first train leaves Tutuban at 6 a.m. and Bicutan at 6:40 a.m. Six trains leave the two stations between 6 a.m. and 7 a.m., and then restart at 3:30 p.m. for Tutuban and at 4:47 p.m. for Bicutan.
“The trains are still very crowded especially during rush hours, but hopefully the situation will improve once more trains are running,” said Estelito Nierva, Railways’ operations manager.
“We will definitely improve the system.”
Many commuters had been wary of taking the trains for years because people occupying the squatter shanties facing the railroad tracks used to throw garbage—even feces—at the coaches each time they passed. The old coaches were also open, allowing anyone to get in and giving rise to thefts and holdups.
“The lack of doors meant anybody could get in,” Nierva said.
“Now that the trains are new and clean, we have not had one report of anyone throwing garbage at them. We also have not had any reports of holdups. I guess when anybody can just jump into the train, that’s unavoidable.”
The new coaches, the refurbishment of old trains, the rehabilitation of the old tracks and the construction of new ones resulted from a deal between the Philippine government and the Korean Export-Import Bank.
Railways had ordered 18 coaches from Hyundai Rotem Co., an affiliate of the Korea-based Eukor Car Services. The new’ trains interiors resemble those of luxury buses with fiberglass seats on the sides and an LCD TV in the middle.
The old trains will be refurbished and then used for the Tutuban-Bicol route, Nierva says.
Railways chairman Michael Defensor earlier said that the goal was for trains to leave at 10-minute intervals from Kalookan to Alabang, a distance of 21 kilometers.
Railways is clearing the perimeter of the railroad tracks of squatters and upgrading the tracks. The cost of rehabilitating the tracks from Tutuban to Bicol has been estimated at $300 million to make them at par with those in New York and Rome.
Nierva says Railways has outsourced the security for the trains and stations. The coaches travel with security escorts to help keep passengers safe.
Railways is also studying its ticketing system to avoid crowding and the scrambles to get into the trains, she says.
JONATHAN M. HICAP
SINGAPORE — Filipino math wizards won 102 medals, including 16 golds, in the 5th International Mathematics Contest (IMC) which was held here from August 20-24.
The IMC drew 557 contestants from Singapore, China, Hong Kong, Taiwan, Indonesia, Malaysia, India and the Philippines.
Dr. Simon Chua, head of delegation and president of the Mathematics Trainers Guild-Philippines, told the Manila Bulletin that the country won 16 gold medals, 27 silvers and 59 bronze medals for a total of 102, compared to 75 medals the country won last year in the IMC.
With the total medal haul this year, the Philippines placed second overall behind China.
“This is the best performance of our students in the competition. Almost all our contestants each won a medal,” said Chua.
Dr. Chua identified the gold medalists as Andrea Aiyanna Borbe of UNO High School, Christopher Kohchet-Chua of Saint Jude Catholic School, Mark Christopher Uy of Xavier School, Farrell Eldrian Wu of MGC New Life Christian Academy, Josh Thomas Clement of West Visayas State University, Miguel Lorenzo Ildesa of PAREF Westbridge School-Iloilo, Andrew Vince Lee of Xavier School, Raphael Villaluz of San Beda College Alabang, Andrew Brandon Ong of Chiang Kai Shek College, Czarina Angela Lao of Saint Jude Catholic School, Neil Phillip Poral of West Visayas State University, Ana Karenina Batungbakal of San Beda College Alabang, Allen Cedrick Domingo of San Beda College Alabang, Audrey Celine Lao of Saint Jude Catholic School, Camille Tyrene Dee of Immaculate Concepcion Academy, and Hazel Joy Shi of Philippine Cultural High School.
The silver medalists are: Kevin Brian Branzuela of Saint Jude Catholic School Sage Javis Co of Xavier School, Rainielle Maegan Cua of Saint Jude Catholic School, Luis Salvador Diy of Xavier School, Xavier Jefferson Ray Go of Zamboanga Chong Hua High School, Sedrick Scott Keh of Xavier School, Matthew Johann Uy of Xavier School, Alyssa Guevara of De La Salle Santiago Zobel, Clyde Wesley Ang of Chiang Kai Shek College, Jillian Therese Robredo of Unibersidad de Sta. Isabel, Felix Suarez Jr. of Oton Central Elementary School, Ramon Galvan III of Children Integrated School of Alta Tierra, Andrew Lawrence Sy of Saint Jude Catholic School, Raymond Joseph Fadri of San Beda College Alabang, Rafael Jose Santiago of PAREF Southridge School, Jasper John Segismundo of Pasig Catholic College, Jean Leonardo Abagat of Notre Dame of Greater Manila, Deanne Rochelle Abdao of Integrated Montessori Center, Jose Agerico Bacal II of Rosevale School, Ma. Christiana Guillermo of O.B. Montessori Center, Kaye Janelle Yao of Grace Christian College, Jerome Claude Palaganas of Angelicum College, Casey Oliver Turingan of San Beda College Alabang, Zixin Zhang of Grace Christian College, Lance Robin Chua of Bayanihan Institute, Alvin Ian Chan of St. Paul College of Ilocos Sur, and Gisel Ong of Grace Christian College.
If there’s one concrete project that the Arroyo administration can leave as a legacy to Metro Manilans, it’s the ongoing Light Rail Transit (LRT) Line 1 extension from Monumento in Caloocan to North Triangle in Quezon City. Once completed, this will connect the oldest light-rail transit route in the country, LRT Line 1 running from Monumento to Baclaran, to Metro Rail Transit (MRT) 3 running from North Triangle to Baclaran.
Work on the LRT Line 1 extension began late last year, and at the rate it’s going, it should be finished by middle of next year. The interconnections will complete what transportation sector officials call a “loop,” the first in the country’s urban rail transport system.
That “loop” will allow commuters to travel to the major business and commercial districts in Metro Manila using the more efficient, more environment-friendly rail-transit system. That “loop” should also help ease the volume of street-level traffic in three major thoroughfares: Edsa, Taft Avenue and Rizal Avenue.
The extension and interconnection projects are the third major accomplishments of administration in the rail-transport system. The first was the low-profile construction and inauguration of LRT Line 2 which runs from C.M. Recto in Manila to Santolan in Pasig. This LRT line ferries thousands of students daily through two important academic districts: the University Belt area and UP-Katipunan.
The second is the recent acquisition of brand-new commuter coaches now plying the Monumento-Alabang route of the Philippine National Railways. President Arroyo recently inaugurated those units together with PNR Chairman Mike Defensor, who remains bullish about the prospects of the transportation sector in the country.
Once the LRT Line 1 extension and interconnection projects are completed, Defensor’s boss would have accomplished much as far as urban mass transportation is concerned.
Add to these urban mass-transport gains the opening and operation of Terminal 3 of the Ninoy Aquino International Airport and that unheralded “Strong Republic” nautical highway. In fairness to Mrs. Arroyo, these should be considered part of the legacy of her administration.
Outside the Box
It would appear that the 2010 election season is in full swing. Potential candidates are either testing the waters or full out focusing their sights on the next step up in their careers. The problem is that the faces change but the song always remains the same. Maybe that is one reason the Philippines never seems to reach its potential and move forward with any sustained vigor.
Being President of the Philippines could be the best political office on the planet. For the most part, the legislature, and to a lesser extent the judicial branch, follows the lead of whoever sits in Malacañang. It is almost like having all the influence and force of a one-man-rule system without needing to watch your back for someone to put a knife in it. Unfortunately, all that official power is rarely, if ever, combined with any creativity or imagination.
In an elementary-school class, the teacher might ask the little ones to write one or two things they might do if they were the President. One might answer that free ice cream would be his first official act. That might seem impractical and not feasible, but then again it is not any sillier than some of the suggestions that come from some of the people who want you to make them President for real.
Another child might suggest that math classes be made easier or even abolished. Foolish? I am not sure that is any more foolish than some of the regulations that business people must face and hurdle when they try to set up or expand their commercial enterprises.
It would be refreshing to hear a single candidate for the presidency say something different from what has been said a million times before. It is always, always the same ideas but with the conviction that if this person or that person tried those ideas, it would be successful this time.
Albert Einstein said, “Insanity is doing the same thing over and over again and expecting different results.” Does that sound like the pattern of the Philippine government?
On the rare occasions that something new is attempted, it is met with fierce opposition. The value-added tax (VAT) is a good example of that last point.
Perhaps the insanity of Albert Einstein can be found in the call for a return to oil deregulation. Now I am not saying that this is a good or bad idea. But I do remember this. There were repeated calls for de-regulation 20 years ago because the government, who then completely owned Petron, was supposedly keeping prices artificially high for their own gains.
I for one would like to see a single presidential candidate offer a new solution to the corruption issue, for example.
Traditionally, all candidates have called for stronger enforcement and harsher penalties for corruption. Perhaps then, the ultimate solution is to torture and then burn at the stake anyone involved with income-tax fraud, both in the private sector and with the Bureau of Internal Revenue (BIR). That might get people to respect the rules. Or maybe people are never going to fully obey income-tax rules and maybe there will always be corrupt government tax officials.
Perhaps a more creative and effective solution would be to abolish income taxes completely.
Income taxes are not pro-poor, anti-rich or any of that nonsense. Income taxes are anti-hard working people of all income brackets. The company president and the company messenger both pay income taxes. The drug dealer does not. The working person is penalized for following the rules. The drug dealer is not. Some 2,500 years ago Plato said, “When there is an income tax, the just man will pay more and the unjust less on the same amount of income.”
The same applies to corporations and corporate taxes. If your company employs 100 people and you make a profit, your tax rate is 30 percent or more. But if you run a nice and tidy gambling operation with a 100 people employed, your profit is taxed at zero percent. Now tell me the progressive income tax is fair. To whom?
The creative approach would be to abolish all income taxes. No more tax cheats that do not follow the rules. No more government corruption at the BIR. Everyone, rich and poor, are then treated equally.
The government can easily make up the revenue shortfall with an increase in the sales or VAT tax. Sales tax is the fairest of all taxes. As long as food, medicine, clothing and other essentials are exempted, there is no penalty on the lower-income earners and lower economic groups. The “rich” man and the “poor” man both pay the same amount of tax on their newly purchased washing machine.
Do not say that an increase in the VAT will reduce consumer spending. With the abolition of income taxes, the consumer will have more money to spend. The difference is that the consumer will choose how to spend the money, not the government.
The point of my rant is simply that we need creative solutions to the problems and it does not seem that the politicians have the boldness, the courage to propose something out of the ordinary.
When will come a candidate who offers new ideas and not just the offer of a new face to battle the economic and social problems of the Philippines?