BUSINESS HEADLINES THIS PAST WEEK...
(Mini Reads followed by Full Reports below)

FITCH WARNS OF PROFIT SQUEEZE IN BANKS


JULY 14 ---Fitch Ratings said the imposition of higher Core Equity Tier 1 (CET1) ratios for banks deemed “too big to fail” and the entry of more foreign players in the domestic banking industry would put pressure on the profitability of Philippine banks as measured by return on equity (ROE). File photo
 - Profitability of Philippine banks is expected to come under pressure due to higher capital for potential losses imposed by the Bangko Sentral ng Pilipinas (BSP) as well as the entry of more foreign banks into the country, Fitch Ratings said. The international credit rating agency said the imposition of higher Core Equity Tier 1 (CET1) ratios for banks deemed “too big to fail” and the entry of more foreign players in the domestic banking industry would put pressure on the profitability of Philippine banks as measured by return on equity (ROE)“Profitability is expected to come under pressure as a result of core capital increases. This will add to profitability pressures caused by intensified competition from new foreign entrants,” Fitch said. READ MORE...

ALSO: Manila (54.96) dislodges Makati (54.11)as the most competitive city by 0.55 points


Manila Cathedral at Night (Photo by Maria Tan) MANILA BULLETIN FILE
Manila dislodged Makati City — the country’s financial center — as the most competitive highly urbanized city this year. In 2014, Makati held the top position. Manila has overall score of 54.96 points against Makati’s 54.41 points; only a difference of 0.55 points. The scores were based on the performance of cities in terms of economic dynamism, government efficiency and infrastructure where Manila consistently scored high. Manila topped other highly urbanized cities in terms of infrastructure with 17.72 points. Makati, on the other hand, ranked sixth in the infrastructure pillar. “It’s a data-driven exercise. We are collecting data. We’re not getting a vote from a board of judges. We don’t survey anybody,” National Competitiveness Council (NCC) co-chairman Guillermo Luz said. Luz, however, mentioned the recent issues involving Makati Mayor Jejomar Erwin “Junjun” Binay and the situation at the Makati City Hall “may have” affected the competitiveness of the metropolis to businesses. READ MORE...

ALSO: How to build a nation


Manny Pangilinan In his message to the UP College of Engineering Class of 2015, Metro Pacific Group chairman Manuel V. Pangilinan posed a very important question: How do we build a nation?  He says that for First Pacific, it has invested heavily in infrastructure in the Philippines because “it is an essential building block of nation building.”  Pangilinan said in his July 5 speech that their tollways group has just recently won the bid to build the Cavite-Laguna Expressway or Calax. According to him, Metro Pacific will spend no less than P50 billion to build a 45-km tollway from Cavitex to (Santa Rosa) Laguna. “This will spur growth in NCR and Calabarzon, and create jobs. It will improve traffic and property values. Tourism will rise in the area. Overall, we become a better nation,” MVP added. A few days after or on July 10, the Department of Public Works and Highways (DPWH) and MPCALA Holdings Inc., a unit of the Metro Pacific Investments Corp. (MPIC), signed the concession deal for Calax, said to be the government’s biggest road project under the Public-Private Partnership program (PPP). Also on July 10, MPCALA Holdings handed over to DPWH a whopping P5.46-billion representing the 20 percent upfront payment of the P27.3 billion. The balance of this concession fee is payable over nine years or until July 2024. READ MORE...

ALSO: DOTC delays bid submissions for regional airports projects


Airport NAIA runway 
The Department of Transportation and Communications (DOTC) has moved the deadline for the submission of qualification documents for the bidding of the development as well as operation and maintenance of five regional airports under the Public-Private Partnership (PPP) program.
“In view of the requests of prospective bidders, the Qualification Documents Submission Date will be moved to Aug. 10 (Monday) at 2 p.m., 14 calendar days from the July 27, deadline as set out in GBB (General Bid Bulletin) 07-2015,” DOTC Undersecretary Rene Limcaoco who also serves as chairman of the Prequalification, Bids, and Awards Committee said. The government is inviting firms interested in the development, operations and maintenance of five regional airports with an estimated total cost of P108.19 billion. The airport projects are being offered for bidding in two bundles, with the first covering the Bacolod-Silay and Iloilo airports and the second having the Davao, Laguindingan and New Bohol (Panglao) airports. The private partner will be responsible for providing additional facilities and other necessary improvements in the airports. It will also be involved in promoting the airports for direct international passenger traffic and to diversify revenue sources.

ALSO: Philippines, US ink deal to curb offshore tax evasion


Purisima (left) and Goldberg
The Philippines and the US have entered into an agreement to promote transparency in financial accounts under the latter’s Foreign Account Tax Compliance Act.
In a statement, the Department of Finance said the agreement would help both countries reduce offshore tax evasion and avoidance. “The Philippines continues to stand at the forefront of fiscal transparency across the Asia-Pacific region, reaping measurable returns for our people,” Finance Secretary Cesar Purisima said. “Tax evasion across borders is an alarming problem that we can beat back with openness and mutual cooperation. This (intergovernmental agreement) is an affirmation of that ideal,” he said. Purisima signed the agreement with US Ambassador Philip S. Goldberg yesterday. READ MORE...

ALSO: Look beyond MDGs as gauge of progress, gov't urged


IBON NEWS / Beyond pursuing MDG targets, government should undertake long-term solutions to poverty and lack of education.
Government's recent report to the United Nations (UN) that the Philippines can meet some of its targets under the Millennium Development Goals (MDG) for 2015 should not be interpreted as an indicator of progress. The lack of genuine measures to address underdevelopment makes government's steps towards meeting MDG targets superficial and shallow, said the group. The Aquino government reported to the United Nations Economic and Social Council (UNESCO) that there is a moderate chance that income poverty incidence will be reduced by midyear 2015. It also expressed optimism that the Philippines "is also likely to meet its target of universal access to primary education". The report cited as bases of this confidence government's supposed greater resource allocation to the education sector as well as 'clearly defined institutional arrangements and supportive policies on development planning, as well as programs and projects supporting the goals', among others. READ MORE...

ALSO: P424B pork in 2015 budget–Lacson
[“We found it in Section 70 and Section 73 of the General Provision of the 2015 GAA. Are we now looking at the rebirth of the DAP?” Lacson said.]


Former Sen. Panfilo “Ping” Lacson. INQUIRER FILE PHOTO
Lump-sum or discretionary funds, which are prone to corruption, can still be found in the national budget for this year, according to former Sen. Panfilo Lacson. Lacson has placed the lump-sum appropriations at P424 billion, an amount that could still go up. The former senator said he and his team discovered lump-sum appropriations in the national budget while they were reviewing the 2015 General Appropriations Act (GAA). “To date… we have already discovered a total of P424 billion worth of lump-sum appropriations, a.k.a. discretionary funds, parked in the budget of just 11 of the 21 major line agencies of the national government. Hold your breath. It is still counting,” Lacson said in a speech before the Philippine Institute of Certified Public Accountants at the Intercontinental Hotel in Makati City. “As professional accountants serving the interest of the public, I may speak on your behalf when I frown upon discretionary funds as these are prone to misuse and corruption,” Lacson said. READ MORE...


ALSO: How the Greek crisis changed Europe forever
[Amid drama and disagreement, a third bail-out for Greece is on the way to being secured, but the future is as uncertain as ever]


Greek crisis has exposed the eurozones flaws: A Greek presidential guard stands as he seen through the remains of a European Union flag half-burnt Photo: AP
Greece's debt drama almost took an unexpected turn this week. Just six months after Alexis Tsipras strode into the presidential palace to be sworn in as prime minister, he was nowhere to be seen in the parliamentary chamber as the country’s 300 MPs gathered to vote on the country’s future. Greece needed a third bail-out. The deal on offer was €86bn, but the costs were huge. Many described the terms, which included sacking re-hired public sector workers, tearing up Sunday trading laws and putting a “for sale” sign on €50bn of Greek assets as “humiliating”. The midnight deadline for the so-called “prior actions” to get through parliament had already passed in Athens. Around 1,500 miles north west in Berlin’s time zone, it was fast approaching.
#WhereisTsipras? Twitter asked, as people started to notice his empty chair. It turned out to be a false alarm. In an era where rules are made to be broken, the brief moment of drama became just another missed deadline.But there was no escaping from the reality of the deal Tsipras had struck in the early hours of Monday morning. As he stood up to speak, the firebrand prime minister was just the shell of a man who had stood in Syntagma square in January and told voters that Syriza would end “vicious cycle of austerity”. Tsipras had fought the Brussels machine and lost. The agreements for Greece’s bail-out were “made with personal costs for the sake of our people’s rights”, he said. While this was met with applause, to the outside world it was a Pyrrhic victory at best, complete capitulation at worst. READ MORE...

SO EDITORIAL: Too late the grumbling
[LACSON: DAP STILL IN 2016 BUDGET. CHIZ: P424 BILLION 'ONLY FOR TEMPORARY ITEMS']


Noynoy and his Rasputin Budget Secretary Butch Abad were again caught with their hands in the cookie jar as a result of the revelation of former Sen. Ping Lacson that the pre-election year budget of Noynoy is brimming with pork that totals P424 billion. Staunch Noy ally Sen. Chiz Escudero admitted that the pork barrel does exist in the 2015 budget but offered a lame excuse, saying that these were temporary items, since agencies are drawing up the projects on which the lump sums will be applied. Lacson responded saying there’s no such thing as a temporary item in the budget and it’s either a lump sum or a fixed appropriation. Escudero said the lump sums can’t be used unless an itemized listing is submitted. The problem, however, remains the same as the Priority Development Assistance Fund, the legislative pork barrel and the Disbursement Acceleration Program (DAP), which is considered as the presidential pork, since the approving authority is Abad who is also the chief strategist of the Liberal Party (LP). The “temporary” lump sums are all under the mercy of Abad and its use would not be as different as having the pork barrel and the DAP since the so-called itemized listings are issued after the budget’s enactment by Congress. Escudero’s finance panel cleared the budget proposal which is the reason for the assurances coming from him amid the Lacson revelations which the former senator said was the result of an incisive study made by a team he formed to look into the lump sum items in this year’s budget. READ MORE...


READ FULL MEDIA REPORTS HERE:

Fitch warns of profit squeeze in banks


Fitch Ratings said the imposition of higher Core Equity Tier 1 (CET1) ratios for banks deemed “too big to fail” and the entry of more foreign players in the domestic banking industry would put pressure on the profitability of Philippine banks as measured by return on equity (ROE). File photo

MANILA, JULY 20, 2015 (PHILSTAR) By Lawrence Agcaoili (The Philippine Star) | Updated July 14, 2015 - Profitability of Philippine banks is expected to come under pressure due to higher capital for potential losses imposed by the Bangko Sentral ng Pilipinas (BSP) as well as the entry of more foreign banks into the country, Fitch Ratings said.

The international credit rating agency said the imposition of higher Core Equity Tier 1 (CET1) ratios for banks deemed “too big to fail” and the entry of more foreign players in the domestic banking industry would put pressure on the profitability of Philippine banks as measured by return on equity (ROE).

“Profitability is expected to come under pressure as a result of core capital increases. This will add to profitability pressures caused by intensified competition from new foreign entrants,” Fitch said.

READ MORE...

However, the rating agency is convinced most Philippine banks could meet higher levels of capital for potential losses as most large and mid-sized banks have CET1 ratios comfortably above Basel III minimums.

Fitch said the largest banks’ CET1 ratios have fallen between 12 percent and 14 percent as of end-2014. The “too big to fail” or domestic systematically important banks (D-SIBS) framework is in line with the initiatives pursued under the Basel III reform agenda.

D-SIBs are characterized as banks whose distress or disorderly failure would cause significant disruptions to the wider financial system and economy. The banks identified by the BSP as D-SIBs are required to maintain additional CET1 of between 150 and 250 basis points of the bank’s risk-weighted assets beginning January 2017 until the same are fully in place by January 2019.

D-SIBs must also meet higher supervisory expectations. In the annual submission of their Internal Capital Adequacy Assessment Process (ICAAP) document, D-SIBS must have in place acceptable recovery plans to be carried out in the event of breaches in capital requirements.

BSP Governor Amando Tetangco Jr. earlier said the higher bar for D-SIBs in terms of capital requirement and supervisory expectations serves to strengthen the system by lowering the probability of systemic bank failures.

Tetangco said banking system remains in a strong position and that the D-SIBs guidelines are “pro-active measures to sustain such strength.”

BSP Deputy Governor Nestor Espenilla Jr. earlier said there is more room to accommodate the entry of foreign banks in the country.

“To begin with the foreign bank penetration in the country is actually very small,” he said.

Espenilla said foreign banks operating in the Philippines currently account for only 11 percent of the total assets of the country’s banking industry compared to the 40 percent ceiling.

The BSP’s Monetary Board approved the application of Yuanta Bank of Taiwan to operate in the Philippines by acquiring 100 percent of a local thrift bank last June 25.


TRIBUNE

Manila dislodges Makati as the most competitive city
Written by Tribune Wires Saturday, 18 July 2015 00:00


Manila Cathedral at Night (Photo by Maria Tan) MANILA BULLETIN FILE


Manila dislodged Makati City — the country’s financial center — as the most competitive highly urbanized city this year. In 2014, Makati held the top position.

Manila has overall score of 54.96 points against Makati’s 54.41 points; only a difference of 0.55 points.

The scores were based on the performance of cities in terms of economic dynamism, government efficiency and infrastructure where Manila consistently scored high.

Manila topped other highly urbanized cities in terms of infrastructure with 17.72 points. Makati, on the other hand, ranked sixth in the infrastructure pillar.

“It’s a data-driven exercise. We are collecting data. We’re not getting a vote from a board of judges. We don’t survey anybody,” National Competitiveness Council (NCC) co-chairman Guillermo Luz said.

Luz, however, mentioned the recent issues involving Makati Mayor Jejomar Erwin “Junjun” Binay and the situation at the Makati City Hall “may have” affected the competitiveness of the metropolis to businesses.

READ MORE...

“It’s not the controversy that will affect all of the sudden. It’s really a performance over a year. To become number one, you have to have some consistency. You’ve got to place high in economic dynamism, infrastructure and government efficiency,” he stressed.

Manila Mayor Joseph Ejercito Estrada received the award the other day from the NCC during rites held at the Philippine International Convention Center in behalf of the City of Manila.

In his remarks, Estrada said he was happy independent and outside institutions have noticed the progress of Manila.

“This will inspire us even more to work hard for the benefit of Manila residents. We have paid most of the city’s debts and are now delivering infrastructure and other basic services with the taxes that we are collecting,” Estrada said.

Meanwhile, the Cities and Municipalities Competitiveness Index (CMCI) 2015 named Naga City, Camarines Sur as most competitive component city followed by San Fernando, Pampanga and Imus, Cavite.

The country’s most competitive municipalities are General Trias in Cavite, Sta. Maria in Bulacan and Taytay in Rizal.


PHILSTAR

How to build a nation HIDDEN AGENDA By Mary Ann LL. Reyes (The Philippine Star) | Updated July 19, 2015 - 12:00am 0 9 googleplus0 0


By Mary Ann LL. Reyes

In his message to the UP College of Engineering Class of 2015, Metro Pacific Group chairman Manuel V. Pangilinan posed a very important question: How do we build a nation?

He says that for First Pacific, it has invested heavily in infrastructure in the Philippines because “it is an essential building block of nation building.”
 

Pangilinan said in his July 5 speech that their tollways group has just recently won the bid to build the Cavite-Laguna Expressway or Calax.

According to him, Metro Pacific will spend no less than P50 billion to build a 45-km tollway from Cavitex to (Santa Rosa) Laguna.

“This will spur growth in NCR and Calabarzon, and create jobs. It will improve traffic and property values. Tourism will rise in the area. Overall, we become a better nation,” MVP added.


Manny Pangilinan

A few days after or on July 10, the Department of Public Works and Highways (DPWH) and MPCALA Holdings Inc., a unit of the Metro Pacific Investments Corp. (MPIC), signed the concession deal for Calax, said to be the government’s biggest road project under the Public-Private Partnership program (PPP).

Also on July 10, MPCALA Holdings handed over to DPWH a whopping P5.46-billion representing the 20 percent upfront payment of the P27.3 billion. The balance of this concession fee is payable over nine years or until July 2024.

READ MORE...

On top of the P5.4-billion downpayment, MPCALA also reimbursed the government about P36.07 million in transaction fees.

Based on news reports, MPIC is actually spending as much as P62.7 billion on the four-lane Calax, which will connect the Manila-Cavite Toll Expressway (Cavitex), which is run by MPIC’s Cavitex Infrastructure Corp. (CIC), to the South Luzon Expressway (SLEx).

Construction work will take place from July 2016 to July 2020.

MPCALA has made an aggressive offer to win Calax, as it is part of a grand scheme to make travel between and among Northern, Central and Southern Luzon a better experience for motorists and passengers alike.

MPIC runs the North Luzon Expressway (NLEX) which will soon be seamlessly connected to the Subic-Clark-Tarlac Expressway (SCTEX). Then there is proposed Connector Road project that will link NLEX to SLEX, which will in turn be connected to Cavitex and Calax. And of course, the group is looking at other PPP projects that will be put on the auction block, such as the Central Luzon Link Expressway (CLLEX) that will extend SCTEX eastward to Nueva Ecija.

MPIC unit Metro Pacific Tollways Corp. (MPTC) is expanding NLEX from Bulacan to Caloocan and Manila’s port area through several Harbor Link sub-projects. There is also a project that will extend NLEX to Commonwealth Avenue in Quezon City and another one that will integrate NLEX and SCTEX with the Tarlac-Pangasinan-La Union Expressway (TPLEX).

Roads and other transportation facilities, power generation and other utilities, and communications systems are what are referred to as “core” infrastructure.

Transport networks connect producers and consumers to markets, utilities provide essential inputs such as power and water for both production and consumption, and communications networks facilitate the exchange and dissemination of information and knowledge.

As such, infrastructure is an indispensable input in an economy’s production, one that is highly complementary to other more conventional inputs such as labor and non-infrastructure capital. (www.imf.org)

Incidentally, the Metro Pacific Group provides electricity (via Meralco), water (Maynilad), telecommunications (PLDT and Smart), and builds and maintains a massive network of roads, among others.

For a developing country like the Philippines, the impact of new infrastructure projects is more pronounced. All these road projects mentioned are expected to help ease port congestion and provide alternate routes to businesses getting their goods out of the Manila-based ports. Not to mention the expected easing up of traffic along EDSA and C-5 once the NLEX-SLEX Connector Road project is there.

CCTV monitoring

Local newspapers reported just recently that Bureau of Internal Revenue (BIR) commissioner Kim Henares will order leading cigarette manufacturer Philip Morris Fortune Tobacco Corp. (PMFTC) to install CCTV cameras in its production lines and warehouses to allow government to monitor its volume of production and to ensure that the proper taxes are paid.

According to Henares, the move is an offshoot of the recent seizure of large amounts of untaxed cigarettes or those without the required strip tax stamps during raids of various distribution and retail outlets in Batangas and Nueva Ecija by anti-tax fraud agents.

Most of the items, according to the news reports, were Marlboro cigarettes which PMFTC manufactures.

The BIR had earlier installed CCTV cameras at the factory of another cigarette maker Mighty Corp. in Bulacan. PMFTC controls more than 90 percent of the local cigarette market.

The rule requiring PMFTC and other tobacco firms to install CCTV cameras at their plants will be provided in a revenue regulation that will be issued soon.

BIR’s move is a step in the right direction since it goes to show that alleged smuggling efforts and non-payment of taxes, even by the largest cigarette manufacturer and brand, will not be allowed to go unpunished by the government.


PHILSTAR

DOTC delays bid submissions for regional airports projects By Louella D. Desiderio (The Philippine Star) | Updated July 19, 2015 - 12:00am 0 3 googleplus0 0


Airport NAIA runway

MANILA, Philippines - The Department of Transportation and Communications (DOTC) has moved the deadline for the submission of qualification documents for the bidding of the development as well as operation and maintenance of five regional airports under the Public-Private Partnership (PPP) program.

“In view of the requests of prospective bidders, the Qualification Documents Submission Date will be moved to Aug. 10 (Monday) at 2 p.m., 14 calendar days from the July 27, deadline as set out in GBB (General Bid Bulletin) 07-2015,” DOTC Undersecretary Rene Limcaoco who also serves as chairman of the Prequalification, Bids, and Awards Committee said.

The government is inviting firms interested in the development, operations and maintenance of five regional airports with an estimated total cost of P108.19 billion.

The airport projects are being offered for bidding in two bundles, with the first covering the Bacolod-Silay and Iloilo airports and the second having the Davao, Laguindingan and New Bohol (Panglao) airports.

The private partner will be responsible for providing additional facilities and other necessary improvements in the airports.

It will also be involved in promoting the airports for direct international passenger traffic and to diversify revenue sources.

READ MORE...

The airport projects will follow the two-stage bidding process wherein interested parties will have to submit qualification documents before the technical and financial proposals.

The PPP Center said six groups have applied to pre-qualify and bid for the projects. These are GMR-Megawide, Metro Pacific - JG Summit Consortium, Aboitiz Equity Ventures, San Miguel Corp., Philippine Skylanders Inc. and Union Equities.

The government is looking to issue the notice of award for the two bundles by March next year.

The regional airports deal is the second to be rolled out under the PPP program.

Last year, the government awarded the P17.52-billion Mactan-Cebu International Airport Passenger Terminal Building project to GMR Infrastructure and Megawide Consortium.

The project awarded last year involves the construction of a new passenger terminal building in the Mactan-Cebu International Airport as well as operation of the old and new facilities.


PHILSTAR

Philippines, US ink deal to curb offshore tax evasion By Kathleen A. Martin (The Philippine Star) | Updated July 14, 2015 - 12:00am 0 0 googleplus0 0


Purisima (left) and Goldberg

MANILA, Philippines - The Philippines and the US have entered into an agreement to promote transparency in financial accounts under the latter’s Foreign Account Tax Compliance Act.

In a statement, the Department of Finance said the agreement would help both countries reduce offshore tax evasion and avoidance.

“The Philippines continues to stand at the forefront of fiscal transparency across the Asia-Pacific region, reaping measurable returns for our people,” Finance Secretary Cesar Purisima said.

“Tax evasion across borders is an alarming problem that we can beat back with openness and mutual cooperation. This (intergovernmental agreement) is an affirmation of that ideal,” he said.

Purisima signed the agreement with US Ambassador Philip S. Goldberg yesterday.

READ MORE...

The deal for the automatic reporting of financial accounts held by US persons in the Philippines to the Bureau of Internal Revenue. The BIR, then, will relay this information to the US Internal Revenue Service.

Goldberg, for his part, said the development marks a “significant step” in both countries’ efforts to fight tax evasion.

“By working together to detect, deter, and discourage tax abuses through increased transparency and enhanced reporting, we can help to build a stronger, more stable, and more accountable global financial system,” Goldberg said.

The Philippines and the US have an existing tax treaty with an Exchange of Information, allowing for the free flow of data requested by one party.

The DOF said the new agreement mandates an automatic reporting system is based on the assumption that there are measures in place to ensure confidentiality of information being relayed between the countries’ tax agencies.

---------------------------------------------

[PHNO REFRESHER INFO]

FROM BLOOMBERGBUSINESS

Hon. Cesar V. Purisima is the Co-Owner of Prople, an outsourcing and of shoring industry. Hon. Purisima serves as the Chairman of the Board of National Power Corporation. He serves as a Governor at Asian Development Bank.

Hon. Purisima served as a Secretary of Department of Finance, Republic of the Philippines from February 2005 to July 2005.

Hon. Purisima served as Secretary of the Department of Finance at Energy Development Corporation since June 30, 2010.

He served as Secretary, Department of Trade & Industry, Republic of the Philippines from 2004 to 2005 and Chairman & Managing Partner, Sycip, Gor es and Velayo (SGV) & Company-Member Practice of Ernst & Young Global from 1999 to 2004. He serves as Chairman of Department of Finance at National Power Corporation.

Hon. Purisima serves as the Chairman of National Transmission Corporation, Power Sector Assets and Liabilities Management Corp. and Philippine Deposit Insurance Corporation. He serves as the Chairman of the Board of Land Bank of the Philippines. He served as Governor of the World Bank Group. He has been Chairman of the Executive Committee of CibaCapital Inc. since 2006. He served as Chairman of the Board of Power Sector Assets and Liabilities Management Corporation

Hon. Purisima has been a Member of the board of Trustees of Makati Business Club since 2008. He served as an Independent Director of iRipple Inc. from June 1, 2009 to June 29, 2010. He served as a Director of Benguet Corp. from November 14, 2008 to June 29, 2010. He served as Independent Director of Energy Development Corporation from July 2009 to June 30, 2010. He served as a Director of Integrated Microelectronics Inc. from April 19, 2010 to July 2010. He served as a Director of National Power Corporation and Land Bank of the Philippines. He served as Member of the Monetary Board of the Bangko Sentral ng Pilipinas.

Hon. Purisima obtained his Bachelor of Science in Commerce, Majors in Accounting & Management of Financial Institutions from De la Salle University in 1979 and his MBA from JL Kellogg Graduate School of Management, Northwestern University in Chicago, Illinois in 1983.

He was a top placer in the 1979 Certified Public Accountant Board Examination.


IBON FOUNDATION RESEARCH GROUP

Look beyond MDGs as gauge of progress, gov't urged

IBON NEWS / Beyond pursuing MDG targets, government should undertake long-term solutions to poverty and lack of education.

Government's recent report to the United Nations (UN) that the Philippines can meet some of its targets under the Millennium Development Goals (MDG) for 2015 should not be interpreted as an indicator of progress. The lack of genuine measures to address underdevelopment makes government's steps towards meeting MDG targets superficial and shallow, said the group.

The Aquino government reported to the United Nations Economic and Social Council (UNESCO) that there is a moderate chance that income poverty incidence will be reduced by midyear 2015. It also expressed optimism that the Philippines "is also likely to meet its target of universal access to primary education".

The report cited as bases of this confidence government's supposed greater resource allocation to the education sector as well as 'clearly defined institutional arrangements and supportive policies on development planning, as well as programs and projects supporting the goals', among others.

READ MORE...

IBON cautioned that the measures which government took to meet MDG targets such as poverty reduction and universal access to primary education have only been artificial and short-sighted. Instead of generating secure jobs and supporting agriculture to raise workers' and farmers incomes, the poverty methodology was modified to lower living standards, assigning the poverty line to a very low ​Php52 per day.

This same poverty methodology did not count the homeless and street-dwellers of Metro Manila among the poor, for example, thus reducing poverty incidence in the capital region by millions.

Using this methodology, official data reports a family poverty incidence of just 19.7%. Yet, based on the same official data, the research group estimates that about 68% of the population live off some Php125 or much less per day, which is still below the cost of living. IBON's May 2015 survey meanwhile revealed that 67% of respondents rated themselves as poor.

The Aquino administration's centerpiece poverty alleviation project Pantawid Pamilyang Pilipino Program (4Ps) and Universal Kindergarten Law have reportedly increased school participation of children aged five to fifteen years old from 2010 (90%) to 2013 (95%) and reduced the number of out-of-school- children significantly.

The increasing commercialization however of Philippine education coupled with jobs quality deterioration will remain obstacles to the full realization of the Filipino youth's potential as the nation's developers, IBON said.

Beyond pursuing the MDG targets, government should undertake long-term solutions to poverty and lack of education. According to the group, it can start by investing in domestic agricultural and industrial production and providing efficient and accessible social services. (end)

----------------------------------------------

[PHNO REFRESHER INFO]

FROM IBON FOUNDATION WEBSITE

IBON Foundation is a non-stock non-profit development organization. We have been serving the Filipino people through research and education since 1978.

IBON seeks to promote an understanding of socioeconomics that serves the interests and aspirations of the Filipino people. We study the most urgent social, economic and political issues confronting Philippine society and the world.

We explain issues in a popular and understandable manner. We provide information and education services especially to people’s organizations. We publish and distribute progressive materials and have an increasing presence in the formal education sector through textbooks, journals and seminars.

We build or participate in Philippine and international networks of civil society organizations, NGOs, institutions and agencies sharing our aims and objectives. We engage policy-makers, government, bilateral and multilateral agencies and officials to advocate on issues important to marginalized sectors in the country and abroad. We do all of this in close partnership with people’s organizations.


INQUIRER

P424B pork in 2015 budget–Lacson SHARES: New VIEW COMMENTS By: Christine O. Avendaño, Jerry E. Esplanada @inquirerdotnet Philippine Daily Inquirer 01:13 AM July 14th, 2015


Former Sen. Panfilo “Ping” Lacson. INQUIRER FILE PHOTO

Lump-sum or discretionary funds, which are prone to corruption, can still be found in the national budget for this year, according to former Sen. Panfilo Lacson.

Lacson has placed the lump-sum appropriations at P424 billion, an amount that could still go up.

The former senator said he and his team discovered lump-sum appropriations in the national budget while they were reviewing the 2015 General Appropriations Act (GAA).

“To date… we have already discovered a total of P424 billion worth of lump-sum appropriations, a.k.a. discretionary funds, parked in the budget of just 11 of the 21 major line agencies of the national government. Hold your breath. It is still counting,” Lacson said in a speech before the Philippine Institute of Certified Public Accountants at the Intercontinental Hotel in Makati City.

“As professional accountants serving the interest of the public, I may speak on your behalf when I frown upon discretionary funds as these are prone to misuse and corruption,” Lacson said.

READ MORE...

He said the government lost P10 billion in the scam allegedly perpetuated by Janet Lim-Napoles with the connivance of lawmakers in misusing their pork barrel fund, or the Priority Development Assistance Fund (PDAF).

Unconstitutional

Amid protests nationwide for the scrapping of PDAF and other corruption-prone lump-sum budget items, the Supreme Court declared the PDAF unconstitutional in November 2013.

In July last year, the high court declared unconstitutional parts of the Disbursement Acceleration Program (DAP), pooled funds from savings of agencies that financed projects outside the approved national budget.

Lump-sum funds included the President’s Social Fund, Special Purpose Funds and Malampaya Fund, the People’s Initiative against Pork Barrel said last year.

The group’s proposed Pork Barrel Abolition Act sought to prohibit the inclusion of pork barrel or lump-sum funds in the budget, except calamity and intelligence or confidential funds. It also sought to require line-item appropriations for all proposed budgets.

The bill proposed to abolish the President’s Social Fund and require all unspent, unobligated and unreleased funds to revert to the general fund by the end of the fiscal year.

Missing budget codes

Lacson said his team looked into the appropriations of the agencies in the 2015 budget when they were analyzing the new coding system, or the United Accounts Code Structure (UACS), in the government financial processes.

In a random analysis of the coding system of the National Irrigation Administration (NIA), the team found missing codes, the former senator said.

For insertions

“To our surprise, such ‘missing codes’ were utilized to insert some projects during the budget deliberations in the House of Representatives,” he said.

Lacson said his team discovered a lump sum of P11.3 billion in the NIA budget.

Curious about the discovery, Lacson said his group looked into the appropriations of other agencies.

Of the P39 billion budget of the Department of Agriculture, for instance, P6.25 billion for farm-to-market roads were lump sums, he said.

Lacson said this budget, based on the national expenditures program as well as the Senate and House versions of the GAA bill, should have been allocated to regional offices.

Lacson said his group was surprised when it found out that these “regional lump sums” disappeared in the 2015 GAA and were replaced by 1,389 line budget items for farm-to-market road projects in different parts of the country.

“Does this mean the return of the ghost of PDAF, which had earlier been declared unconstitutional by the Supreme Court in a landmark ruling on July 1, 2014?” he said.

Lump sums by department

Lump sums of different departments, an agency and the police that Lacson’s group found:
— Department of Social Welfare and Development, P102.6 billion;
— Department of Education, P80.7 billion;
— Department of Interior and Local Government, P80.7 billion;
— Department of Health, P75.4 billion;
— Department of National Defense, P66.4 billion;
— Department of Agriculture, P29.9 billion;
— Department of Public Works and Highways, P11.4 billion;
— Department of Transportation and Communications, P11.4 billion;
— National Irrigation Authority, P13 billion;
— Philippine National Police, P6.7 billion;
— Department of Environment and Natural Resources, P6.1 billion
Lacson wondered whether the DAP had been revived.

Reincarnation

“After the PDAF, we also discovered the obvious reincarnation of the SC unconstitutionality declared Budget Circular No. 541, which earlier gave the DBM (Department of Budget and Management) the authority to pool and declare as savings unobligated, unutilized and unreleased appropriations, not at the end of the fiscal year but the second quarter,” he said.

“We found it in Section 70 and Section 73 of the General Provision of the 2015 GAA. Are we now looking at the rebirth of the DAP?” Lacson said.


THE TELEGRAPH ONLINE - UK

How the Greek crisis changed Europe forever
[Amid drama and disagreement, a third bail-out for Greece is on the way to being secured, but the future is as uncertain as ever] - By Szu Ping Chan, and Mehreen Khan2:39PM BST 18 Jul 2015Comments442


Greek crisis has exposed the eurozones flaws: A Greek presidential guard stands as he seen through the remains of a European Union flag half-burnt Photo: AP

Greece's debt drama almost took an unexpected turn this week.

Just six months after Alexis Tsipras strode into the presidential palace to be sworn in as prime minister, he was nowhere to be seen in the parliamentary chamber as the country’s 300 MPs gathered to vote on the country’s future.

Greece needed a third bail-out. The deal on offer was €86bn, but the costs were huge.

Many described the terms, which included sacking re-hired public sector workers, tearing up Sunday trading laws and putting a “for sale” sign on €50bn of Greek assets as “humiliating”.

The midnight deadline for the so-called “prior actions” to get through parliament had already passed in Athens. Around 1,500 miles north west in Berlin’s time zone, it was fast approaching.

#WhereisTsipras? Twitter asked, as people started to notice his empty chair. It turned out to be a false alarm. In an era where rules are made to be broken, the brief moment of drama became just another missed deadline.

But there was no escaping from the reality of the deal Tsipras had struck in the early hours of Monday morning. As he stood up to speak, the firebrand prime minister was just the shell of a man who had stood in Syntagma square in January and told voters that Syriza would end “vicious cycle of austerity”.

Tsipras had fought the Brussels machine and lost. The agreements for Greece’s bail-out were “made with personal costs for the sake of our people’s rights”, he said. While this was met with applause, to the outside world it was a Pyrrhic victory at best, complete capitulation at worst.

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“The atmosphere was tense, exactly because this was a historic moment, and everyone understood that,” says George Katrougalos, Greece's new labour minister. “There was a psychological burden hanging over everybody”.

Outside, citizens born in the birthplace of democracy faced the reality that their “no” in the referendum on austerity was now a firm “yes”, as the motion for years of extra belt-tightening was agreed by 229 out of 300 MPs.

Banners outside exclaimed “No to privatisations” and “No to the 'povertisation’ of the people”. Others abandoned words, instead throwing molotov cocktails at police as violence erupted on Athens’ streets. For many, there was nothing left to lose.

It was the conclusion of a week where the idea of “Grexit” was for the first time suggested collectively by the Eurogroup of finance ministers. It was also the week that leaders lost their cool. “I’m not stupid”, Wolfgang Schaeuble, Germany’s finance minister snapped at Mario Draghi, the head of the European Central Bank.

Countries that share the same language were singing from different hymn sheets. Werner Faymann, Austria’s chancellor, said it was not “morally right” for Germany to be calling for a Greek “time-out” from the eurozone. Back in Britain, policymakers weren’t happy either.

The news that the UK could be on the hook for Greece’s bail-out infuriated George Osborne, who rushed to Brussels demanding that someone else pick up the bill. This was the European Union in action – but it was anything but united.

Irreparable damage?

“IMF get out! Delete the debt”, the banner exclaimed as protesters marched it through Syntagma Square. Those six words were to sum-up a relationship between the eurozone, Washington and Greece that has been tested to its limits.

Tsipras fought doggedly to keep the IMF out of the country’s new rescue programme.

“Our insistence not to have the IMF as a complement to the programme was based on two considerations,” says Katrougalos. “First it is not logical for a non-European institution to have a decisive say in something that is obviously a European affair.

"The second is because of the clear neo-liberal agenda that the IMF always takes.

"On the other hand, the IMF says clearly what is obvious now that the debt is unsustainable. So those of out partners that want the IMF in the programme, they cannot have it both ways. They must accept this view.”

During the 17-hour session inside the Lex building in Brussels, Christine Lagarde, IMF managing director, made stark the unpalatable choices facing the Europeans: provide Greece with massive debt relief in the form of “deep upfront haircuts”, or consider the toxic alternative of “explicit annual transfers to the Greek budget”.

Most hated

The first option would require a breach of EU treaties. The second would open the way for a “fiscal union”, anathema to Europe’s creditor nations, led by Germany. The IMF’s incendiary intervention was evidence for some that Greece’s senior creditor and the world’s “lender of last resort” finally wanted out.

            
   “This is a defining moment for the IMF"
                Alessandro Leipold


“This is a defining moment for the IMF,” says Alessandro Leipold, former acting head of the IMF’s Europe department.

“Greece is its biggest loan programme in history, the first developed economy to have ever fallen into arrears, and there is severe criticism about the quality of the programme and the IMF blindly following the Europeans.”

The IMF has always been the chief villain of the Troika, says Leipold.

“If you look at the history of other bail-outs in Ireland and Portugal, it was always the opposite,” he says. “The IMF was always quite popular, but in Greece, the fund has been seen as the toughest taskmaster.”

Poul Thomsen, the former head of the IMF’s mission in Greece, carried the ignominious title of being one of the “Most Hated Men in Greece”, during his five years in the country.

He now visits with 24-hour bodyguard protection on the recommendation of the Greek police, in his new role as Europe director.

For all the internecine squabbling over debt relief, the eurozone’s creditor nations are desperate to maintain the IMF’s presence in a new rescue.

Alexander Stubb, Finland’s finance minister, has said IMF involvement is the sine qua none for his country to reluctantly continue shelling out rescue money to the debtor nation.

The IMF will now provide a further €16bn to Greece up until its programme officially expires in March 2016. “The question that remains hanging in the air, is will the fund resume its lending?,” says Leipold. “They have to find that debt is sustainable with a “high probability” but what is certain is that the IMF has now laid down its red lines on debt relief.”

Rebuilding trust

It is clear if the eurozone is to move forward, trust will need to be rebuilt across the 19 nation bloc.

Ralph Brinkhaus, an MP in Angela Merkel’s CDU party, says it’s up to the Greeks to do so. “The German view is very sceptical because within the last five months we have had a tremendous loss of trust regarding the Greek government. They were the ones who left the negotiations, they have said different things in Brussels and to their own people in Athens, and they have led a campaign against the programme of the eurozone.”

Others say Greece’s decision to vote No to the creditors’ rescue proposals caused irreparable damage: “Even the most peaceful people in Germany in my constituency are telling me no, we are completely fed up with the Greeks, let them leave because we do not believe them anymore,” said one MP.

But members of Tsipras’s government say he is determined to stay in Maximos Mansion and finish the job he started.

Insiders confirm snap elections in September are likely. But Tsipras will not resign. In fact, he is determined to win a majority.

        "The disaster will continue as long as it is financed"
            Hans-Werner Sinn


“Tsipras will not abandon the Greek people. But it is impossible for the coalition as it stands can continue because we have idelogical differences,” says one Syriza member. “We can’t ally ourselves with those [in opposition] who have supported these austerity demands. We want the elections to give us a more coherant majority.”

Katrougalos says that, while he understands why some members of Syriza voted no last week, the party remains strong.

“We managed to neutralise a political coup – of several wings of Europe that wanted to overthrow the government,” he says. “Even this language about the lack of trust hides the preference of the political circles in Europe to see us out of business.”

He admits the latest bail-out will be very hard to implement, saying: “The new fiscal obligations will be impossible by many measures because many people within the middle classes have now been left impoverished. I cannot understand the thinking of some of our partners insisting on measures that have proven to be ineffective in the past.”

Hans-Werner Sinn, head of the respected Ifo think-tank, remains adamant that Grexit is the only way the country can regain competitiveness - a view now shared by Schaeuble. Sinn says more bail-out funds are just “poison” for Greece.

“The money will create a temporary Keynesian boom and keep wages and prices above the market clearing level and preserve structural mass unemployment,” he says. “The disaster will continue as long as it is financed.”

Juhana Vartiainen, a Finnish MP in the National Coalition Party, supports the rescue package, but says it is only right that eurozone leaders take the carrot and stick approach - with the stick leading the way.

“I see very sound logic in this northern European position that we must be stringent on the need for reforms. But if reforms are passed through the parliament and implemented then the rest of Europe also needs to be forthcoming as to support an eventual debt relief.

“Just giving them debt relief or keeping them in without any conditionality would change nothing because they would continue to run deficits and even if you forgave all of their debts, they would in a couple of decades be over indebted again.”

   "If Greece fell out of the euro then their banking system would collapse and they would have no functioning state. It would be a failed state."  Juhana Vartiainen

However, he warns that Greece risks becoming a "failed state" without Europe's help. If Greece fell out of the euro then their banking system would collapse and they would have no functioning state.

"It would be a failed state on the southern rim of Europe with all the opportunities that this might create for illegal trade in people or narcotics or weapons - so I sincerely hope that there will be a compromise."

Economists point out that monetary union just does not work unless it is accompanied by fiscal union. Mariano Rajoy, the prime minister of Spain, called last week for the next steps towards more fiscal pooling.

However, many feel the dynamics of the eurozone have changed so much that this option is no longer viable.

For Sinn, some countries are already picking up the bill for others. “Europe has now turned into a transfer union where the lack of competitiveness of some countries will be permanently financed by others,” he says.

“The recipient countries will permanently suffer from a 'Dutch disease’, where wages are too high to be competitive.”

Anders Borg, Sweden’s former finance minister, is also sceptical.

“We’re not talking about good and bad outcomes here, we are talking about only very problematic alternatives,” he says. “If you push for further fiscal integration, moving more decisions to Brussels, taxing northern European countries more heavily and subsidising countries with long term competitive issues and deep problems in the south you will obviously have a strong right-wing reaction which will only serve to undermine the political support for that direction and create a less open and less liberal and a less dynamic Europe.

“I think there are great risks in connection with the course that we now hear. There is no voter base for that and it’s not certain either that you’re dealing with the right focus.”

He is doubtful that any country, including those obliged to join the euro like Sweden, will be abandoning their national currencies any time soon
Mr Borg, who voted for Sweden to join the euro in 2003, says the country's membership was unlikely for "decades".

"It's very difficult to argue today to our population that it's a well functioning system."

        "The basic obligation of a solider is not to surrender,
         but to remain alive until the next battle."
         George Katrougalos, Greece's labour minister

Katrougalos remains hopeful that, while Greece may not have won this battle, it will win the war.

“We managed to alter the long term dynamics of the eurozone so we no longer have a monolithic block of extreme austerity. We have seen important countries: France is the primary example, but also Italy and Austria that have differentiated themselves from the this bloc.

His message to the Greek people? “They must give us time to try to implement our policies in a relatively fair way. These measures are harsh, but now will be the time also for the rich Greeks to pay,” he says.

“We will keep on fighting. After all, the basic obligation of a solider is not to surrender, but to remain alive until the next battle.”


TRIBUNE EDITORIAL

Too late the grumbling Written by Tribune Editorial Thursday, 16 July 2015 00:00

Noynoy and his Rasputin Budget Secretary Butch Abad were again caught with their hands in the cookie jar as a result of the revelation of former Sen. Ping Lacson that the pre-election year budget of Noynoy is brimming with pork that totals P424 billion.

Staunch Noy ally Sen. Chiz Escudero admitted that the pork barrel does exist in the 2015 budget but offered a lame excuse, saying that these were temporary items, since agencies are drawing up the projects on which the lump sums will be applied.

Lacson responded saying there’s no such thing as a temporary item in the budget and it’s either a lump sum or a fixed appropriation.

Escudero said the lump sums can’t be used unless an itemized listing is submitted.

The problem, however, remains the same as the Priority Development Assistance Fund, the legislative pork barrel and the Disbursement Acceleration Program (DAP), which is considered as the presidential pork, since the approving authority is Abad who is also the chief strategist of the Liberal Party (LP).

The “temporary” lump sums are all under the mercy of Abad and its use would not be as different as having the pork barrel and the DAP since the so-called itemized listings are issued after the budget’s enactment by Congress.

Escudero’s finance panel cleared the budget proposal which is the reason for the assurances coming from him amid the Lacson revelations which the former senator said was the result of an incisive study made by a team he formed to look into the lump sum items in this year’s budget.

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The Senate cleared the budget despite the warning from senators during the hearings, particularly Sen. Miriam Defensor-Santiago who seemed to have had an inkling of the extent of fat in the P2.26-trillion budget but her estimate of pork in it was a modest P37 billion.

The main source of pork are the bottom-up-budget projects that are mostly under the supervision of the Department of Interior and Local Government (DILG) headed by the presumptive LP standard bearer Mar Roxas.

Local government heads are allocated up to P15 million each in lump sums under the scheme.

The DILG was also granted diverse fundings for functions beyond its mandate such as providing housing and ensuring the provision of water supply.

Abad’s excuse for the huge windfall that the DILG gets is that Roxas’ agency has an “efficient absorption rate.”

With Roxas at its helm, the DILG has been efficiently absorbing political patronage to boost his ambitions for next year.

In a privilege speech, Santiago said the 2015 budget is vulnerable to corruption due to the new definition of government savings and the retention of pork barrel or lump sum funds to be spent at the discretion of the legislators.

“In other words, the 2015 budget which contains two dangerous minefields leading to corruption, is not what people expect. It is what administration candidates expect,” she said.

Santiago also scored the branded Noynoy’s propensity for lump sums as hyper-presidentialism.

Despite a Supreme Court ruling against it, the Palace was able to insert provisions in the yearly budget that redefined savings.

Santiago said the new definition was unconstitutional for being over-broad and vague. She cited section 68 of the proposed budget which stated that savings can be declared at any time for whatever might be considered “justifiable reasons.”

Santiago said the Palace redefinition of savings demolishes and overturns not only the constitutional and legislated meaning of savings but it also goes against the generally accepted meaning of the word itself.

Despite the red flags on the revival of the pork barrel in the budget, it easily sailed through both chambers of Congress.

Now all the bellyaching becomes useless since the budget plus the “temporary” pork have Congress’ approval. And that’s because Escudero, the finance committee chief, isn’t independent at all, even when he portrays himself as one.


Chief News Editor: Sol Jose Vanzi

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