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

REMITTANCES INCREASED 6.1% TO $2.2B IN JUNE - BANGKO SENTRAL


AUGUST 17 --Money sent home by Filipinos working overseas climbed 6.1 percent in June to $2.18 billion from $2.05 billion a year ago, exceeding Bangko Sentral’s growth target of 5 percent for the year.
This brought total cash remittances in the first half to $12.1 billion, up 5.6 percent from $11.4 billion registered in the same six-month period in 2014, data showed. “In particular, cash remittances from land-based [$9.2 billion] and sea-based [$2.8 billion] workers grew by 6.2 percent and 3.7 percent, respectively,” Bangko Sentral said. Top sources of cash remittances were the United States, Saudi Arabia, the United Arab Emirates, the United Kingdom, Singapore, Japan, Hong Kong and Canada,” Bangko Sentral said. Personal remittances, which include non-cash items, increased 5.3 percent in the first half to $13.37 billion from $12.7 billion a year earlier. Personal remittances grew 5.8 percent to $2.4 billion in June from $2.27 billion a year ago. “The sustained growth in personal remittances for the first half was boosted by the continued remittance inflows from land-based workers with contracts of at least one year [6.1 percent] and sea-based and land-based workers with short-term contracts [3.7 percent],” Bangko Sentral said. Remittances remained robust partly due to stable demand for skilled Filipinos abroad, Bangko Sentral said. Preliminary data from the Philippine Overseas Employment Administration showed that total job orders reached 454,263 in the six month period. About 37.8 percent of total job orders were intended mainly for service, production and professional, technical and related workers in Saudi Arabia, Kuwait, Qatar, Taiwan and the United Arab Emirates. READ MORE...

ALSO: New UP campus to rise in Clark


AUGUST 19 --A University of the Philippines global campus will soon rise in Pampanga. Philstar.com/File
- A University of the Philippines global campus will soon rise in Pampanga as the government seeks to create an academic district in Clark Green City envisioned to become the “country’s brain capital.” 
State-owned Bases Conversion and Development Authority (BCDA) said it has signed a memorandum of agreement with UP president Alfredo Pascual for the establishment of the UP global campus in a 70-hectare property within Clark Green City. The new campus is scheduled to break ground by the first quarter of next year. Pascual said UP has the initial funds to implement construction of the campus and is ready to present the conceptual plan to the BCDA in the coming weeks. He added the project is a testament of the commitment of both the UP and BCDA to undertake initiatives that will help achieve the country’s dream of social progress and transformation. Under the agreement, BCDA will turn over some 700,000 square meters of property through a deed of conveyance to the state university, subject to a final ground survey that will be jointly conducted by both parties. READ MORE...

ALSO: Businessman Antonio Tiu, accused as Binay ‘dummy’ unhurt by Senate probe August 18, 2015 8:20 pm


AUGUST 18 --TIU's Agri-Nurture Inc. (ANI) recorded a 14-percent growth in the second quarter of the year despite efforts of some senators to drag the company into the controversy involving the family of the vice president.  Businessman Antonio Tiu, who was accused by Senator Alan Peter Cayetano of being a dummy of Vice President Jejomar Binay, has recovered from the effects of the Senate investigation as shown by his company’s consolidated revenue of nearly P800 million. Agri-Nurture Inc. (ANI) recorded a 14-percent growth in the second quarter of the year despite efforts of some senators to drag the company into the controversy involving the family of the vice president.  Tiu was accused as the dummy owner of Binay’s 350-hectare estate in Rosario, Batangas, where Tiu’s Sunchamp agritourism park is located. Tiu admitted that Greenergy owns Sunchamp but he denied being Binay’s dummy. “They are all lies and the facts have unfolded,” Tiu said in a statement. “We are upbeat and we remain out of the political limelight and for that we continue to grow. There is a very positive turnout. It is clear that the fundamentals are strong and no matter how we are besmirched, ANI will prevail,” he added.  Binay on Monday said one year of Senate investigations into alleged wrongdoings that he committed had produced only lies and rumors.  Tiu was among those summoned by the Senate to attend the inquiry.  The businessman took control of ANI in May this year. Tiu cited records from the Philippine Stock Exchange website which indicated that despite the odds, nearly P800 million was gained by ANI in the second quarter, up from the P702 million posted in the first quarter of the year. READ MORE...

ALSO: US presses China to continue reforms after yuan devalued


AUGUST 22 -(FILES) Investors react in front of screens showing stock market movements at a brokerage house in Shanghai on July 29, 2015. An 8.48 percent plunge on July 27 -- the biggest in eight years -- renewed fears about the government's management and the health of the underlying economy, in which growth has already slowed to levels unseen since the global financial crisis. AFP PHOTO / JOHANNES EISELE (FILES)
US Treasury Secretary Jacob Lew pressed China to continue with economic and financial reforms Friday in the wake of Beijing’s surprise devaluation of the yuan last week.
Lew told Chinese Vice Premier Wang Yang in a phone conversation that Washington recognized the progress China had made on financial reform, especially toward a more transparent, market-determined exchange rate for the yuan, according to a Treasury Department account of the call. “But, Secretary Lew emphasized that it is critical China continue with reforms which are necessary to move towards an economy driven primarily by household consumption rather than exports, which is in both China’s and America’s best interests,” the Treasury said. READ MORE...

ALSO BSP: No need to devalue peso
[
CITING STRONG LOCAL CONSUMPTION, PRIVATE

CAPITAL FORMATION, PUBLIC SPENDING]


AUGUST 19 -Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. (left) and Deputy governor Diwa Guinigundo answer reporters’ questions about the BSP’s monetary policy stance in a recent media briefing. PhOtO By ABBy PALMONES Philippines does not need to follow other Asian economies on the currency devaluation path to maintain competitiveness as strong domestic fundamentals provide enough cushion for the impact of weakening overseas markets, a central bank official said. Reacting to Vietnam’s decision on Wednesday to devalue the dong for the third time this year after China relaxed the renminbi’s peg to the US dollar earlier, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said the Philippines is not overly dependent on exports for its current accounts health. “Exporters have reasons to be wary about what they call a currency war. But we need to understand why they are doing it. Soft economic prospects drive some countries to devalue because their dependence on external trade is so much,” Guinigundo said in a text message to reporters on Wednesday. In the case of the Philippines, resilient domestic factors are a strong feature of the economy, including consumption, private capital formation and public spending, he said. “Thus, directly devaluing the currency or reducing interest rates to force the currency’s weakening does not make much sense [here] because there could be unintended, unwanted consequences on imports, debt servicing and price movements,” Guinigundo pointed out. READ MORE...

ALSO THE BIZ OF THE MWSS: Anti-consumer, anti-poor
[Foreign businessmen are worried. European Chamber of Commerce of the Philippines (ECCP) vice president Henry Schumacher was quoted as saying: “First, the rules are changed midstream through a PPP. Second, the government does not even respect the decision to implement the arbitration ruling. Why would companies get involved in business here?”]


AUGUST 23 -By Mary Ann LL. Reyes
This government never ceases to amaze – what with the never-ending stories of incompetence, corruption, insensitive remarks, and government officials working in different directions in the pursuit of their own agenda and away from a goal that will benefit this country. Take for instance the defiance by the Metropolitan Waterworks and Sewerage System (MWSS) of the order from the International Chamber of Commerce (ICC) Appeals Panel on the long overdue upward adjustments in water rates. No less than the Department of Finance which oversees the MWSS has rebuked the water agency, saying that its refusal to recognize the ICC arbitral award is not only baseless but will be costly for government. The DOF, in two confidential documents addressed to President Aquino said there was no basis for MWSS to delay or defy the ICC ruling because not only are arbitral decisions final, but this particular decision if ignored will compel the national government to pay Maynilad Water Services Inc. over P5 billion in corporate losses since the regular rate-rebasing process began in January 2013, plus P208 million for every month since the ICC court handed out its verdict on Dec. 29, 2014, in keeping with the sovereign guarantee to compensate the water concessionaire for whatever financial losses arising from MWSS’ non-compliance with or breach of the original concession agreement that both parties signed in 1997. The finance department added that it would hurt the Philippine government’s credibility before the international community, and, in the process, hurt confidence in President Aquino’s privatization thrusts and investment-generation programs like the public-private partnership (PPP) program. After the MWSS-Regulatory Office (RO) ignored the Dec. 29 order by the ICC Appeals Panel for it to grant the rate adjustment of Maynilad that was due in 2013, the concessionaire went back to the Singapore court five months ago to file a second arbitration complaint seeking P3.44 billion in damages to cover its ever-increasing corporate losses resulting from MWSS’ defiance and continued inaction. READ MORE...


READ FULL MEDIA REPORTS HERE:

Remittances increased 6.1% to $2.2b in June — Bangko Sentral

MANILA, AUGUST 24, 2015 (MANILA STANDARD) By Julito G. Rada | Aug. 17, 2015 - Money sent home by Filipinos working overseas climbed 6.1 percent in June to $2.18 billion from $2.05 billion a year ago, exceeding Bangko Sentral’s growth target of 5 percent for the year.

This brought total cash remittances in the first half to $12.1 billion, up 5.6 percent from $11.4 billion registered in the same six-month period in 2014, data showed.

“In particular, cash remittances from land-based [$9.2 billion] and sea-based [$2.8 billion] workers grew by 6.2 percent and 3.7 percent, respectively,” Bangko Sentral said.

Top sources of cash remittances were the United States, Saudi Arabia, the United Arab Emirates, the United Kingdom, Singapore, Japan, Hong Kong and Canada,” Bangko Sentral said.

Personal remittances, which include non-cash items, increased 5.3 percent in the first half to $13.37 billion from $12.7 billion a year earlier.

Personal remittances grew 5.8 percent to $2.4 billion in June from $2.27 billion a year ago.

“The sustained growth in personal remittances for the first half was boosted by the continued remittance inflows from land-based workers with contracts of at least one year [6.1 percent] and sea-based and land-based workers with short-term contracts [3.7 percent],” Bangko Sentral said.

Remittances remained robust partly due to stable demand for skilled Filipinos abroad, Bangko Sentral said.

Preliminary data from the Philippine Overseas Employment Administration showed that total job orders reached 454,263 in the six month period.

About 37.8 percent of total job orders were intended mainly for service, production and professional, technical and related workers in Saudi Arabia, Kuwait, Qatar, Taiwan and the United Arab Emirates.

READ MORE...

Cash remittances posted a record $24.308 billion in 2014, or 5.8-percent higher than $22.968 billion in 2013. It also accounted for 8.5 percent of gross domestic product last year.

Bangko Sentral aims for a conservative 5-percent growth in remittances but officials earlier said this target could still be reviewed and adjusted in the coming months alongside other economic data.

Bangko Sentral Deputy Governor Diwa Guinigundo said the growth target of 5 percent for remittances this year remained “realistic” even as the peso breached the 46-per-dollar mark for the first time in five years.

Guinigundo some migrant workers could take advantage of the weak peso and send more foreign exchange. “My own view remains that on balance, a 5-percent growth in remittances continues to be realistic. We continue to deploy more workers in response to sustained demand for Filipino workers,” Guinigundo said.

The peso closed at 46.325 against the US dollar Monday.


PHILSTAR

New UP campus to rise in Clark By Richmond S. Mercurio (The Philippine Star) | Updated August 19, 2015 - 12:00am 1 3 googleplus1 0


A University of the Philippines global campus will soon rise in Pampanga. Philstar.com/File

MANILA, Philippines - A University of the Philippines global campus will soon rise in Pampanga as the government seeks to create an academic district in Clark Green City envisioned to become the “country’s brain capital.”

State-owned Bases Conversion and Development Authority (BCDA) said it has signed a memorandum of agreement with UP president Alfredo Pascual for the establishment of the UP global campus in a 70-hectare property within Clark Green City.

The new campus is scheduled to break ground by the first quarter of next year.

Pascual said UP has the initial funds to implement construction of the campus and is ready to present the conceptual plan to the BCDA in the coming weeks.

He added the project is a testament of the commitment of both the UP and BCDA to undertake initiatives that will help achieve the country’s dream of social progress and transformation.

Under the agreement, BCDA will turn over some 700,000 square meters of property through a deed of conveyance to the state university, subject to a final ground survey that will be jointly conducted by both parties.

READ MORE...

UP, in turn, will develop the site into an academic and research campus as well as operate and manage the property.

“We are excited that UP will be part of Clark Green City’s academic district. In this project, BCDA will enable UP to achieve its leadership role in higher education and national development,” Pascual said.

BCDA president and chief executive officer Arnel Casanova said the UP global campus would become the melting pot of new technologies, innovation, and creative industries in the innovative and academic district of Clark Green City which is eyed to be the brain capital of the Philippines.

Casanova said the BCDA is also committed to help UP achieve its vision of social transformation through education.

“The UP global campus in Clark Green City will play a pivotal role in jumpstarting the innovative and academic district in Clark Green City,” Casanova said.

“For every poor Filipino who needs to be educated, there must be place that UP could provide for them. For every creative and innovative mind that our country could produce, UP must be able to provide the opportunity for them. The UP Clark Green City will make this happen,” he added.

Casanova said UP would develop the property at its own expense in accordance with the parameters, land use plan, and other design guidelines provided in the Clark Green City master development plan.

The agreement between BCDA and UP has a term of 50 years renewable for another 50 years.


MANILA TIMES

Businessman Antonio Tiu, accused as Binay ‘dummy’ unhurt by Senate probe August 18, 2015 8:20 pm


TIU's Agri-Nurture Inc. (ANI) recorded a 14-percent growth in the second quarter of the year despite efforts of some senators to drag the company into the controversy involving the family of the vice president.

Businessman Antonio Tiu, who was accused by Senator Alan Peter Cayetano of being a dummy of Vice President Jejomar Binay, has recovered from the effects of the Senate investigation as shown by his company’s consolidated revenue of nearly P800 million.

Agri-Nurture Inc. (ANI) recorded a 14-percent growth in the second quarter of the year despite efforts of some senators to drag the company into the controversy involving the family of the vice president.

Tiu was accused as the dummy owner of Binay’s 350-hectare estate in Rosario, Batangas, where Tiu’s Sunchamp agritourism park is located.

Tiu admitted that Greenergy owns Sunchamp but he denied being Binay’s dummy.

“They are all lies and the facts have unfolded,” Tiu said in a statement.

“We are upbeat and we remain out of the political limelight and for that we continue to grow. There is a very positive turnout. It is clear that the fundamentals are strong and no matter how we are besmirched, ANI will prevail,” he added.

Binay on Monday said one year of Senate investigations into alleged wrongdoings that he committed had produced only lies and rumors.

Tiu was among those summoned by the Senate to attend the inquiry.
The businessman took control of ANI in May this year.

Tiu cited records from the Philippine Stock Exchange website which indicated that despite the odds, nearly P800 million was gained by ANI in the second quarter, up from the P702 million posted in the first quarter of the year.

READ MORE...

This means that from a continuous net loss in the previous quarters, ANI has recovered with a P3 million net income as compared with a net loss of P41.7 million from the previous quarter.

According to Tiu, the company expanded its network and took in investors here and abroad.

ANI is a listed fruit and vegetable company whose two key officials resigned last May. Tiu took over as president and chief executive officer while Kenneth S. Tan was named chief financial officer.

The company’s operations are divided into exports, local distribution, retail and franchising, banana farming, among others. It exports bananas, coconut water, mangoes, and pineapples to mainland China, Hong Kong, Middle East, North America, and Europe.

Its foreign operations consist mostly of fruits and vegetable trading in Hong Kong China and Australia.

AgriNurture is also commercially distributing fresh fruits and vegetables to retail establishments, as well as to hotels, restaurants, public wet markets, and catering companies through its subsidiaries, First Class Agriculture (FCA); Fresh and Green (FG); and Lucky Fruit and Vegetables (LF).

The firm also manufactures fruit beverages through its subsidiaries M2000 Imex in Bulacan; Hansung Agro in FTI Taguig; and Fruitilicious in Cagayan de Oro. JEFFERSON ANTIPORDA


MANILA DAILY BULLETIN

US presses China to continue reforms after yuan devalued by AFP August 22, 2015 Share0 Tweet8 Share0 Email0 Share18


(FILES) Investors react in front of screens showing stock market movements at a brokerage house in Shanghai on July 29, 2015. An 8.48 percent plunge on July 27 -- the biggest in eight years -- renewed fears about the government's management and the health of the underlying economy, in which growth has already slowed to levels unseen since the global financial crisis. AFP PHOTO / JOHANNES EISELE (FILES)

US Treasury Secretary Jacob Lew pressed China to continue with economic and financial reforms Friday in the wake of Beijing’s surprise devaluation of the yuan last week.

Lew told Chinese Vice Premier Wang Yang in a phone conversation that Washington recognized the progress China had made on financial reform, especially toward a more transparent, market-determined exchange rate for the yuan, according to a Treasury Department account of the call.

“But, Secretary Lew emphasized that it is critical China continue with reforms which are necessary to move towards an economy driven primarily by household consumption rather than exports, which is in both China’s and America’s best interests,” the Treasury said.

READ MORE...

Long under US pressure to free up its controls on the yuan, which Washington has seen as undervalued versus the dollar, Beijing let the currency drop 2.8 percent last week in response to a weakening economy.

The People’s Bank of China also adjusted the way the yuan’s value is set to better reflect market trends, although the value has moved little since the initial slide of August 10-12.

Washington remains worried that a weaker yuan policy would aim at promoting Chinese exports at the expense of imports.

Lew was speaking with Wang ahead of the visit to Washington by Chinese President Xi Jinping in September, when China’s economic policies will be one of several key topics for discussion with US President Barack Obama.


MANILA TIMES

BSP: No need to devalue peso  August 19, 2015 9:23 pm
by MAYVELIN U. CARABALLO, REPORTER

CITING STRONG LOCAL CONSUMPTION, PRIVATE CAPITAL FORMATION, PUBLIC SPENDING


Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. (left) and Deputy governor Diwa Guinigundo answer reporters’ questions about the BSP’s monetary policy stance in a recent media briefing. PhOtO By ABBy PALMONES

Philippines does not need to follow other Asian economies on the currency devaluation path to maintain competitiveness as strong domestic fundamentals provide enough cushion for the impact of weakening overseas markets, a central bank official said.

Reacting to Vietnam’s decision on Wednesday to devalue the dong for the third time this year after China relaxed the renminbi’s peg to the US dollar earlier, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said the Philippines is not overly dependent on exports for its current accounts health.

“Exporters have reasons to be wary about what they call a currency war. But we need to understand why they are doing it. Soft economic prospects drive some countries to devalue because their dependence on external trade is so much,” Guinigundo said in a text message to reporters on Wednesday.

In the case of the Philippines, resilient domestic factors are a strong feature of the economy, including consumption, private capital formation and public spending, he said.

“Thus, directly devaluing the currency or reducing interest rates to force the currency’s weakening does not make much sense [here] because there could be unintended, unwanted consequences on imports, debt servicing and price movements,” Guinigundo pointed out.

READ MORE...

Competitiveness comes easy with devaluation but Guinigundo stressed that the more durable, more sustainable sources of external competitiveness go beyond that. External competitiveness may be achieved through comparatively lower costs of power, of doing business in the country and through better quality goods, he said.

Caution vs weakness spread

In a separate message to reporters regarding devaluations, BSP Governor Amando Tetangco Jr. warned that such central bank actions could result in the spread of currency weakness in the region.

“Authorities will do what is best to address country-specific concerns . . . but because our markets are interconnected, it is reasonable to expect that these actions of central banks in the region could result in weakness in the other currencies, including the peso,” Tetangco said.

The BSP governor, however, added that as long as markets do not overact and adjustments are orderly, these policy actions should lead to overall stability in the region and higher regional growth in the medium term.

To date, the Philippine currency continues to trade on the soft side against the US dollar, remaining at its weakest level in five years.

The peso traded flat on Wednesday and closed at P46.35:$1, remaining at its weakest finish since July 22, 2010, when it stood at P46.49 to the greenback.

The peso opened at P46.25 to $1 on the Philippine Dealing System (PDS) on Wednesday before trading between P46.25:$1 and P46.35:$1.

Total volume transacted on the PDS rose to $555.5 million from $468.6 million in previous trading.


PHILSTAR BUSINESS COLUMN

Anti-consumer, anti-poor HIDDEN AGENDA By Mary Ann LL. Reyes (The Philippine Star) | Updated August 23, 2015 - 12:00am 1 5 googleplus0 0


By Mary Ann LL. Reyes

This government never ceases to amaze – what with the never-ending stories of incompetence, corruption, insensitive remarks, and government officials working in different directions in the pursuit of their own agenda and away from a goal that will benefit this country.

Take for instance the defiance by the Metropolitan Waterworks and Sewerage System (MWSS) of the order from the International Chamber of Commerce (ICC) Appeals Panel on the long overdue upward adjustments in water rates.

No less than the Department of Finance which oversees the MWSS has rebuked the water agency, saying that its refusal to recognize the ICC arbitral award is not only baseless but will be costly for government.

The DOF, in two confidential documents addressed to President Aquino said there was no basis for MWSS to delay or defy the ICC ruling because not only are arbitral decisions final, but this particular decision if ignored will compel the national government to pay Maynilad Water Services Inc. over P5 billion in corporate losses since the regular rate-rebasing process began in January 2013, plus P208 million for every month since the ICC court handed out its verdict on Dec. 29, 2014, in keeping with the sovereign guarantee to compensate the water concessionaire for whatever financial losses arising from MWSS’ non-compliance with or breach of the original concession agreement that both parties signed in 1997.

The finance department added that it would hurt the Philippine government’s credibility before the international community, and, in the process, hurt confidence in President Aquino’s privatization thrusts and investment-generation programs like the public-private partnership (PPP) program.

After the MWSS-Regulatory Office (RO) ignored the Dec. 29 order by the ICC Appeals Panel for it to grant the rate adjustment of Maynilad that was due in 2013, the concessionaire went back to the Singapore court five months ago to file a second arbitration complaint seeking P3.44 billion in damages to cover its ever-increasing corporate losses resulting from MWSS’ defiance and continued inaction.

READ MORE...

It is not surprising therefore that the MWSS is 58th among 64 government agencies and state-run firms in terms of satisfaction ratings in the latest Makati Business Club Executive Outlook Survey, the first time the MWSS has joined the list of worst performers in the public sector.

It was the Bayan Muna bloc led by House Reps. Neri Colmenares and Isagani Zarate that leaked to the press the Feb. 20 and March 4 memoranda by Finance Secretary Cesar Purisima submitted to President Aquino which discussed the implications of the separate arbitration cases that Maynilad and the Manila Water Co. (MWC), the water concessionaires in Metro Manila’s west and east zones, had filed before the ICC Appeals Panel.

Maynilad and MWC had to go to arbitration after MWSS reduced water rates, instead of granting the two companies upward adjustment petitions at the end of the 2013 rate-rebasing process.

In the Feb. 20 memo, Purisima said “a call on the undertaking letter may result in a drop in our credit rating as ratings agencies increase the assumed probabilities of our contingent liabilities being called. The DOF chief was referring to the sovereign guarantee that the national government would have to assume owing to MWSS’ inaction on the rate-adjustment petition, contained in the letters of Undertaking that the government issued in 1997 and in 2010 as part of the concession agreements with Maynilad and MWC.

Meanwhile, in the March 4 letter to the President, Purisima said the DOF disagrees with MWSS’ position and that Maynilad’s call upon the performance of the undertaking might result in the payment of about P5 billion for Jan. 1, 2013 to Jan. 31, 2015, plus P208 million for every month of delay in payment.

He pointed out that the undertaking letters “clearly guarantee against delays in legitimate rate increases and do not foresee recovery of delays over the concession period,” and that “non-compliance with the arbitral award will reverse significant gains made by [the Aquino] administration in inspiring confidence in both privatization efforts and the public-private partnership program.”

In connection with the second arbitration case filed by Maynilad, Purisima told legislators recently that Maynilad and MWSS have yet to agree on the third member of the three-member ICC panel.

Budget Secretary Florencio Abad said that if the petition for damages is resolved against the government, an item in the national budget may be tapped given available funds. He explained that a P30-billion unprogrammed item called risk management program is part of the proposed 2016 GAA that can cover such payments, but this budget outlay was not created particularly for the Maynilad case. The arbitral tribunal of the ICC ruled in favor of Maynilad last Dec. 29, and ordered MWSS to grant this West Zone concessionaire a rate increase equivalent to P3.06 per cubic meter (cu. m.).

But rather than carry out the ICC order, MWSS refused to grant the rate increase and instead wanted to further slash contract-allowed corporate expenses passed on to consumers, based on a subsequent ICC ruling on the separate MWC arbitration case.

This prompted Maynilad last March to file a second arbitration complaint before the ICC demanding payment of damages totaling P3.44 billion. MWC has also filed a separate complaint last April to demand recovery of estimated losses totaling P79 billion till 2037.

As if the two concessionaries woes weren’t enough, Bayan Muna led by Colmenares and Zarate asked the Supreme Court last week to stop government from paying the damage claims of Maynilad and MWC.

The group specifically petitioned the SC to declare as unconstitutional among other things, Article 12 of the concession agreements, which provide for the submission of disputes to arbitration and the State’s express waiver of its right to appeal, as well as the letters of undertaking by government which provide for the sovereign guarantee to compensate the concessionaires for losses stemming from MWSS’ contract infringements.

This move by Bayan Muna is actually anti-consumer. If these concessionaires, who were promised certain rates of return for their billions of pesos in investment, are not able to recover, then what would stop stem from adopting a wait-and-see attitude and putting on hold, if not totaling scrapping,their planned expenditures and expansion programs?

Maynilad chief finance officer Randy Estrellado has pointed out that of the P3.06/cu.m. increase they have now, about P2 accounts for the recovery of income tax, adding that they still have roughly P60 billion that they need to recover and that doesn’t include future investments.

Other than the income tax recovery, he said the rate increase would cover unfinished projects such as sewerage coverage expansions and improvement of water pressure in households.

Estrellado added that while they have complied with their yearly obligations to set aside over P10 billion in capex, “it is rather difficult to fulfill our commitments if the contract is not followed.” Meanwhile, Metro Pacific Investments Corp. (MPIC) CFO David Nicol was quoted as saying that MPIC could lose P2 billion in net income this 2015 owing to the government’s continued denial of subsidiary Maynilad’s tariff rate hike.

MPIC chairman Manuel V. Pangilinan himself has warned that increasing regulatory risks, of which tariff adjustments are the principal but by no means the only component, may eventually degrade the level of services, “a prospect we ourselves wish to avoid.”

Foreign businessmen are worried. European Chamber of Commerce of the Philippines (ECCP) vice president Henry Schumacher was quoted as saying:

“First, the rules are changed midstream through a PPP. Second, the government does not even respect the decision to implement the arbitration ruling. Why would companies get involved in business here?”

For his part, John Forbes, a senior advisor at the American Chamber of Commerce of the Philippines (AmCham), noted that “when a Philippine GOCC does not honor its contract even after an arbitration decision rules against its position, the investment climate of the country is harmed. This case is being watched closely as it affects investor confidence.”

Takashi Ishigami, president of the Japanese Chamber of Commerce and Industry of the Philippines (JCCIPI), has also said before that Japanese firms were wary of investing in the PPP partly because of concerns over MWSS’ cases with its two concessionaires. Japanese companies Marubeni and Mitsubishi are respective investors in Maynilad and MWC.


Chief News Editor: Sol Jose Vanzi

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